x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
North Dakota | 43-1481791 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) | |
100 Clark Street, St. Charles, Missouri | 63301 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x |
Non-accelerated filer | ¨ | Smaller Reporting Company | ¨ |
Item Number | Page Number |
September 30, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 198,049 | $ | 298,064 | |||
Restricted cash | 16,758 | 16,917 | |||||
Short-term investments—available for sale securities | 9,076 | — | |||||
Accounts receivable, net | 25,050 | 29,018 | |||||
Accounts receivable, due from related parties | 5,923 | 9,401 | |||||
Income taxes receivable | 2,199 | 3,058 | |||||
Inventories, net | 84,788 | 96,965 | |||||
Prepaid expenses and other current assets | 5,391 | 4,058 | |||||
Total current assets | 347,234 | 457,481 | |||||
Property, plant and equipment, net | 175,858 | 176,311 | |||||
Railcars on leases, net | 894,967 | 848,717 | |||||
Goodwill | 7,169 | 7,169 | |||||
Investments in and loans to joint ventures | 27,464 | 27,397 | |||||
Other assets | 5,457 | 7,999 | |||||
Total assets | $ | 1,458,149 | $ | 1,525,074 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 37,291 | $ | 36,080 | |||
Accounts payable, due to related parties | 1,895 | 4,477 | |||||
Accrued expenses and taxes, including loss contingency of $16,973 and $0 at September 30, 2016 and December 31, 2015, respectively | 32,832 | 6,344 | |||||
Accrued compensation | 8,554 | 11,459 | |||||
Short-term debt, including current portion of long-term debt | 25,596 | 125,784 | |||||
Total current liabilities | 106,168 | 184,144 | |||||
Long-term debt, net of unamortized debt issuance costs of $4,918 and $5,081 as of September 30, 2016 and December 31, 2015, respectively | 551,823 | 570,756 | |||||
Deferred tax liability | 242,024 | 222,338 | |||||
Pension and post-retirement liabilities | 8,444 | 8,484 | |||||
Other liabilities | 2,650 | 3,055 | |||||
Total liabilities | 911,109 | 988,777 | |||||
Stockholders’ equity: | |||||||
Common stock, $0.01 par value, 50,000,000 shares authorized, 19,386,971 and 19,844,531 shares outstanding as of September 30, 2016 and December 31, 2015, respectively | 213 | 213 | |||||
Additional paid-in capital | 239,609 | 239,609 | |||||
Treasury Stock | (74,825 | ) | (57,423 | ) | |||
Retained earnings | 388,157 | 361,153 | |||||
Accumulated other comprehensive loss | (6,114 | ) | (7,255 | ) | |||
Total stockholders’ equity | 547,040 | 536,297 | |||||
Total liabilities and stockholders’ equity | $ | 1,458,149 | $ | 1,525,074 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Manufacturing (including revenues from affiliates of $40 and $816 for the three and nine months ended September 30, 2016, respectively, and $34,510 and $217,449 for the same periods in 2015) | $ | 93,546 | $ | 123,318 | $ | 314,886 | $ | 489,610 | |||||||
Railcar leasing | 32,798 | 31,174 | 98,775 | 83,975 | |||||||||||
Railcar services (including revenues from affiliates of $5,933 and $21,176 for the three and nine months ended September 30, 2016, respectively, and $5,402 and $18,188 for the same periods in 2015) | 18,618 | 18,175 | 57,965 | 54,856 | |||||||||||
Total revenues | 144,962 | 172,667 | 471,626 | 628,441 | |||||||||||
Cost of revenues: | |||||||||||||||
Manufacturing | (79,671 | ) | (91,132 | ) | (263,389 | ) | (373,380 | ) | |||||||
Other operating loss (refer to Note 11, Commitments and Contingencies) | (16,973 | ) | — | (16,973 | ) | — | |||||||||
Railcar leasing | (10,577 | ) | (9,714 | ) | (31,108 | ) | (26,408 | ) | |||||||
Railcar services | (15,131 | ) | (14,269 | ) | (45,788 | ) | (42,851 | ) | |||||||
Total cost of revenues | (122,352 | ) | (115,115 | ) | (357,258 | ) | (442,639 | ) | |||||||
Gross profit | 22,610 | 57,552 | 114,368 | 185,802 | |||||||||||
Selling, general and administrative | (6,583 | ) | (7,768 | ) | (21,837 | ) | (20,764 | ) | |||||||
Net gains on disposition of leased railcars | 58 | — | 225 | 25 | |||||||||||
Earnings from operations | 16,085 | 49,784 | 92,756 | 165,063 | |||||||||||
Interest income (including income from related parties of $404 and $1,288 for the three and nine months ended September 30, 2016, respectively, and $520 and $1,615 for the same periods in 2015) | 429 | 542 | 1,360 | 1,655 | |||||||||||
Interest expense | (5,632 | ) | (5,645 | ) | (17,216 | ) | (16,077 | ) | |||||||
Loss on debt extinguishment | — | — | — | (2,126 | ) | ||||||||||
Other income | 57 | 3 | 58 | 14 | |||||||||||
Earnings from joint ventures | 1,614 | 1,402 | 4,558 | 5,340 | |||||||||||
Earnings before income taxes | 12,553 | 46,086 | 81,516 | 153,869 | |||||||||||
Income tax expense | (4,864 | ) | (16,729 | ) | (31,139 | ) | (56,567 | ) | |||||||
Net earnings | $ | 7,689 | $ | 29,357 | $ | 50,377 | $ | 97,302 | |||||||
Net earnings per common share—basic and diluted | $ | 0.40 | $ | 1.39 | $ | 2.58 | $ | 4.58 | |||||||
Weighted average common shares outstanding—basic and diluted | 19,397 | 21,054 | 19,524 | 21,252 | |||||||||||
Cash dividends declared per common share | $ | 0.40 | $ | 0.40 | $ | 1.20 | $ | 1.20 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net earnings | $ | 7,689 | $ | 29,357 | $ | 50,377 | $ | 97,302 | |||||||
Currency translation | (113 | ) | (715 | ) | 570 | (1,529 | ) | ||||||||
Postretirement plans (1) | 120 | 115 | 359 | 347 | |||||||||||
Short-term investments (2) | 212 | — | 212 | — | |||||||||||
Comprehensive income | $ | 7,908 | $ | 28,757 | $ | 51,518 | $ | 96,120 |
(1) | Net of tax effect of $0.1 million and less than $0.1 million for the three months ended September 30, 2016 and 2015, respectively, and $0.2 million and $0.2 million for the nine months ended September 30, 2016 and 2015. |
(2) | Net of tax effect of $0.1 million for the three and nine months ended September 30, 2016. |
Nine Months Ended | |||||||
September 30, | |||||||
2016 | 2015 | ||||||
Operating activities: | |||||||
Net earnings | $ | 50,377 | $ | 97,302 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation | 38,729 | 33,185 | |||||
Amortization of deferred costs | 379 | 305 | |||||
(Gain) loss on disposal of property, plant, equipment and leased railcars | (16 | ) | 45 | ||||
Earnings from joint ventures | (4,558 | ) | (5,340 | ) | |||
Provision for deferred income taxes | 19,342 | 21,892 | |||||
Provision for allowance for doubtful accounts receivable | (963 | ) | 65 | ||||
Dividends received from short-term investments | (50 | ) | — | ||||
Items related to financing activities: | |||||||
Loss on debt extinguishment | — | 2,126 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 5,377 | (5,970 | ) | ||||
Accounts receivable, due from related parties | 3,520 | 18,856 | |||||
Income taxes receivable | 1,055 | 21,867 | |||||
Inventories, net | 12,248 | (8,960 | ) | ||||
Prepaid expenses and other current assets | (1,327 | ) | (848 | ) | |||
Accounts payable | 1,208 | (5,890 | ) | ||||
Accounts payable, due to related parties | (2,582 | ) | 55 | ||||
Accrued expenses and taxes | 23,572 | 2,471 | |||||
Other | 2,389 | (3,757 | ) | ||||
Net cash provided by operating activities | 148,700 | 167,404 | |||||
Investing activities: | |||||||
Purchases of property, plant and equipment | (16,021 | ) | (26,376 | ) | |||
Grant Proceeds | 75 | — | |||||
Capital expenditures - leased railcars | (69,387 | ) | (215,096 | ) | |||
Proceeds from the sale of property, plant, equipment and leased railcars | 879 | 118 | |||||
Purchase of short-term investments - available for sale securities | (8,750 | ) | — | ||||
Proceeds from repayments of loans and distributions from joint ventures | 4,430 | 5,750 | |||||
Net cash used in investing activities | (88,774 | ) | (235,604 | ) | |||
Financing activities: | |||||||
Repayments of long-term debt | (119,288 | ) | (426,150 | ) | |||
Proceeds from long-term debt | — | 625,306 | |||||
Change in interest reserve related to long-term debt | 159 | (9,843 | ) | ||||
Stock repurchases | (17,402 | ) | (49,441 | ) | |||
Payment of common stock dividends | (23,373 | ) | (25,304 | ) | |||
Debt issuance costs | (13 | ) | (5,271 | ) | |||
Net cash (used in) provided by financing activities | (159,917 | ) | 109,297 | ||||
Effect of exchange rate changes on cash and cash equivalents | (24 | ) | (223 | ) | |||
(Decrease) Increase in cash and cash equivalents | (100,015 | ) | 40,874 | ||||
Cash and cash equivalents at beginning of period | 298,064 | 88,109 | |||||
Cash and cash equivalents at end of period | $ | 198,049 | $ | 128,983 |
September 30, 2016 | December 31, 2015 | ||||||
(in thousands) | |||||||
Accounts receivable, gross | $ | 25,492 | $ | 30,422 | |||
Less allowance for doubtful accounts | (442 | ) | (1,404 | ) | |||
Total accounts receivable, net | $ | 25,050 | $ | 29,018 |
September 30, 2016 | December 31, 2015 | ||||||
(in thousands) | |||||||
Raw materials | $ | 47,729 | $ | 65,575 | |||
Work-in-process | 35,168 | 31,184 | |||||
Finished products | 5,328 | 3,393 | |||||
Total inventories | 88,225 | 100,152 | |||||
Less reserves | (3,437 | ) | (3,187 | ) | |||
Total inventories, net | $ | 84,788 | $ | 96,965 |
September 30, 2016 | December 31, 2015 | ||||||
(in thousands) | |||||||
Operations / Corporate: | |||||||
Buildings | $ | 179,530 | $ | 167,537 | |||
Machinery and equipment | 227,639 | 219,488 | |||||
Land | 4,313 | 3,687 | |||||
Construction in process | 4,208 | 16,784 | |||||
415,690 | 407,496 | ||||||
Less accumulated depreciation | (239,832 | ) | (231,185 | ) | |||
Property, plant and equipment, net | $ | 175,858 | $ | 176,311 | |||
Railcar Leasing: | |||||||
Railcars on leases | $ | 975,476 | $ | 906,786 | |||
Less accumulated depreciation | (80,509 | ) | (58,069 | ) | |||
Railcars on leases, net | $ | 894,967 | $ | 848,717 |
Remaining 3 months of 2016 | $ | 32,992 | |
2017 | 119,000 | ||
2018 | 106,074 | ||
2019 | 87,622 | ||
2020 | 52,333 | ||
2021 and thereafter | 78,606 | ||
Total | $ | 476,627 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Total depreciation expense | $ | 13,113 | $ | 12,214 | $ | 38,729 | $ | 33,185 | |||||||
Depreciation expense on leased railcars | $ | 7,614 | $ | 7,050 | $ | 22,493 | $ | 18,894 |
September 30, 2016 | December 31, 2015 | ||||||
(in thousands) | |||||||
Carrying amount of investments in and loans to joint ventures | |||||||
Ohio Castings | $ | 7,660 | $ | 7,776 | |||
Axis | 19,804 | 19,621 | |||||
Total investments in and loans to joint ventures | $ | 27,464 | $ | 27,397 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Results of operations | |||||||||||||||
Revenues | $ | 12,497 | $ | 16,728 | $ | 39,834 | $ | 60,623 | |||||||
Gross profit | $ | 866 | $ | 699 | $ | 2,080 | $ | 5,061 | |||||||
Net earnings (loss) | $ | 63 | $ | (205 | ) | $ | (317 | ) | $ | 2,324 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Results of operations | |||||||||||||||
Revenues | $ | 17,442 | $ | 17,812 | $ | 49,939 | $ | 57,229 | |||||||
Gross profit | $ | 4,584 | $ | 4,571 | $ | 14,444 | $ | 14,848 | |||||||
Earnings before interest | $ | 4,330 | $ | 4,333 | $ | 13,665 | $ | 14,097 | |||||||
Net earnings | $ | 3,521 | $ | 3,341 | $ | 11,085 | $ | 10,891 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Liability, beginning of period | $ | 1,584 | $ | 1,378 | $ | 1,415 | $ | 953 | |||||||
Provision for warranties issued during the period, net of adjustments | (14 | ) | 341 | 430 | 1,235 | ||||||||||
Adjustments to warranties issued during previous periods | (7 | ) | (4 | ) | (18 | ) | (12 | ) | |||||||
Warranty claims | (41 | ) | (163 | ) | (305 | ) | (624 | ) | |||||||
Liability, end of period | $ | 1,522 | $ | 1,552 | $ | 1,522 | $ | 1,552 |
Remaining 3 months of 2016 | $ | 20,515 | |
2017 | 69,128 | ||
2018 | 56,341 | ||
2019 | 40,929 | ||
2020 | 21,941 | ||
2021 and thereafter | 22,989 | ||
Total | $ | 231,843 |
Remaining 3 months of 2016 | $ | 6,495 | |
2017 | 25,588 | ||
2018 | 25,590 | ||
2019 | 25,507 | ||
2020 | 26,354 | ||
2021 and thereafter | 472,974 | ||
Total | $ | 582,508 |
Pension Benefits | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Service cost | $ | 52 | $ | 44 | $ | 156 | $ | 132 | |||||||
Interest cost | 246 | 236 | 738 | 710 | |||||||||||
Expected return on plan assets | (284 | ) | (320 | ) | (851 | ) | (961 | ) | |||||||
Amortization of net actuarial loss/prior service cost | 206 | 202 | 618 | 605 | |||||||||||
Net periodic cost recognized | $ | 220 | $ | 162 | $ | 661 | $ | 486 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Share-based compensation expense (income) | |||||||||||||||
Cost of revenues: Manufacturing | $ | 28 | $ | (147 | ) | $ | (145 | ) | $ | (93 | ) | ||||
Cost of revenues: Railcar services | 5 | (21 | ) | (12 | ) | (18 | ) | ||||||||
Selling, general and administrative | 362 | (594 | ) | 265 | (360 | ) | |||||||||
Total share-based compensation expense (income) | $ | 395 | $ | (762 | ) | $ | 108 | $ | (471 | ) |
Accumulated Short-term Investment Transactions | Accumulated Currency Translation | Accumulated Postretirement Transactions | Accumulated Other Comprehensive Income (Loss) | ||||||||||||
(in thousands) | |||||||||||||||
Balance December 31, 2015 | $ | — | $ | (2,230 | ) | $ | (5,025 | ) | $ | (7,255 | ) | ||||
Currency translation | — | 570 | — | 570 | |||||||||||
Reclassifications related to pension and postretirement plans, net of tax effect of $150 (1) | — | — | 359 | 359 | |||||||||||
Unrealized gain on available for sale securities, net of tax effect of $114 (2) | 212 | — | — | 212 | |||||||||||
Balance September 30, 2016 | $ | 212 | $ | (1,660 | ) | $ | (4,666 | ) | $ | (6,114 | ) |
(1)— | These accumulated other comprehensive income components relate to amortization of actuarial loss/(gain) and prior period service costs/(benefits) and are included in the computation of net periodic costs for our pension and postretirement plans. See Note 10 for further details and pre-tax amounts. |
(2)— | The unrealized gain on available for sale securities, net of tax represents the change in fair value estimates that are based on quoted prices with an active trading market (Level 1). |
Three Months Ended September 30, 2016 | |||||||||||||||
Revenues | |||||||||||||||
External | Intersegment | Total | Earnings (Loss) from Operations | ||||||||||||
(in thousands) | |||||||||||||||
Manufacturing | $ | 93,546 | $ | 31,283 | $ | 124,829 | $ | (2,773 | ) | ||||||
Railcar leasing | 32,798 | — | 32,798 | 19,320 | |||||||||||
Railcar services | 18,618 | 167 | 18,785 | 2,797 | |||||||||||
Corporate | — | — | — | (2,649 | ) | ||||||||||
Eliminations | — | (31,450 | ) | (31,450 | ) | (610 | ) | ||||||||
Total Consolidated | $ | 144,962 | $ | — | $ | 144,962 | $ | 16,085 | |||||||
Three Months Ended September 30, 2015 | |||||||||||||||
Revenues | |||||||||||||||
External | Intersegment | Total | Earnings (Loss) from Operations | ||||||||||||
(in thousands) | |||||||||||||||
Manufacturing | $ | 123,318 | $ | 106,541 | $ | 229,859 | $ | 54,984 | |||||||
Railcar leasing | 31,174 | — | 31,174 | 18,603 | |||||||||||
Railcar services | 18,175 | 642 | 18,817 | 3,457 | |||||||||||
Corporate | — | — | — | (5,095 | ) | ||||||||||
Eliminations | — | (107,183 | ) | (107,183 | ) | (22,165 | ) | ||||||||
Total Consolidated | $ | 172,667 | $ | — | $ | 172,667 | $ | 49,784 | |||||||
Nine Months Ended September 30, 2016 | |||||||||||||||
Revenues | |||||||||||||||
External | Intersegment | Total | Earnings (Loss) from Operations | ||||||||||||
(in thousands) | |||||||||||||||
Manufacturing | $ | 314,886 | $ | 64,180 | $ | 379,066 | $ | 35,451 | |||||||
Railcar leasing | 98,775 | — | 98,775 | 59,232 | |||||||||||
Railcar services | 57,965 | 1,735 | 59,700 | 9,364 | |||||||||||
Corporate | — | — | — | (11,598 | ) | ||||||||||
Eliminations | — | (65,915 | ) | (65,915 | ) | 307 | |||||||||
Total Consolidated | $ | 471,626 | $ | — | $ | 471,626 | $ | 92,756 | |||||||
Nine Months Ended September 30, 2015 | |||||||||||||||
Revenues | |||||||||||||||
External | Intersegment | Total | Earnings (Loss) from Operations | ||||||||||||
(in thousands) | |||||||||||||||
Manufacturing | $ | 489,610 | $ | 313,965 | $ | 803,575 | $ | 195,363 | |||||||
Railcar leasing | 83,975 | — | 83,975 | 50,343 | |||||||||||
Railcar services | 54,856 | 838 | 55,694 | 10,204 | |||||||||||
Corporate | — | — | — | (11,944 | ) | ||||||||||
Eliminations | — | (314,803 | ) | (314,803 | ) | (78,903 | ) | ||||||||
Total Consolidated | $ | 628,441 | $ | — | $ | 628,441 | $ | 165,063 |
Total Assets | September 30, 2016 | December 31, 2015 | |||||
(in thousands) | |||||||
Manufacturing | $ | 250,529 | $ | 272,721 | |||
Railcar leasing | 1,234,932 | 1,190,180 | |||||
Railcar services | 62,134 | 56,880 | |||||
Corporate/Eliminations | (89,446 | ) | 5,293 | ||||
Total Consolidated | $ | 1,458,149 | $ | 1,525,074 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Manufacturing | — | % | 20.0 | % | 0.2 | % | 34.6 | % | |||
Railcar leasing | — | % | — | % | — | % | — | % | |||
Railcar services | 4.1 | % | 3.1 | % | 4.5 | % | 2.9 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Manufacturing revenues from significant customers | 38.9 | % | 46.7 | % | 29.7 | % | 44.9 | % |
September 30, 2016 | December 31, 2015 | ||||
Manufacturing receivables from significant customers | 23.0 | % | 20.9 | % |
• | our prospects in light of the cyclical nature of our business; |
• | the health of and prospects for the overall railcar industry; |
• | the risk of being unable to market or remarket railcars for sale or lease at favorable prices or on favorable terms or at all; |
• | fluctuations in commodity prices, including oil and gas; |
• | risks relating to our compliance with the FRA directive and any costs or loss of revenue related thereto, including risks that the FRA may not provide any further clarification regarding the FRA Directive or, if it does, what those clarifications may entail; |
• | the impact, costs and expenses of any claims and/or litigation we may be subject to now or in the future; |
• | risks relating to our compliance with, and the overall railcar industry's implementation of, United States and Canadian regulations related to the transportation of flammable liquids by rail released on May 1, 2015; |
• | the highly competitive nature of the manufacturing, railcar leasing and railcar services industries; |
• | the variable purchase patterns of our railcar customers and the timing of completion, customer acceptance and shipment of orders, as well as the mix of railcars for lease versus direct sale; |
• | our ability to manage overhead and variations in production rates; |
• | our ability to recruit, retain and train adequate numbers of qualified personnel; |
• | the impact of an economic downturn, adverse market conditions and restricted credit markets; |
• | our reliance upon a small number of customers that represent a large percentage of our revenues and backlog; |
• | fluctuations in the costs of raw materials, including steel and railcar components, and delays in the delivery of such raw materials and components; |
• | fluctuations in the supply of components and raw materials we use in railcar manufacturing; |
• | the ongoing risks related to our relationship with Mr. Carl Icahn, our principal beneficial stockholder through Icahn Enterprises L.P. (IELP), and certain of his affiliates; |
• | the sufficiency of our liquidity and capital resources, including long-term capital needs to further support the growth of our lease fleet; |
• | the impact of repurchases pursuant to our Stock Repurchase Program on our current liquidity and the ownership percentage of our principal beneficial stockholder through IELP, Mr. Carl Icahn; |
• | the risks associated with our current joint ventures and anticipated capital needs of, and production at our joint ventures; |
• | the conversion of our railcar backlog into revenues equal to our reported estimated backlog value; |
• | the risks associated with ongoing compliance with environmental, health, safety, and regulatory laws and regulations, which may be subject to change; |
• | the risks and impact associated with potential joint ventures, acquisitions, strategic opportunities or new business endeavors; |
• | the implementation, integration with other systems and ongoing management of our new enterprise resource planning system; and |
• | the risks related to our and our subsidiaries' indebtedness and compliance with covenants contained in our and our subsidiaries' financing arrangements. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | $ | % | September 30, | $ | % | ||||||||||||||||||||||||
2016 | 2015 | Change | Change | 2016 | 2015 | Change | Change | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||
Manufacturing | $ | 93,546 | $ | 123,318 | $ | (29,772 | ) | (24.1 | ) | $ | 314,886 | $ | 489,610 | $ | (174,724 | ) | (35.7 | ) | |||||||||||
Railcar leasing | 32,798 | 31,174 | 1,624 | 5.2 | 98,775 | 83,975 | 14,800 | 17.6 | |||||||||||||||||||||
Railcar services | 18,618 | 18,175 | 443 | 2.4 | 57,965 | 54,856 | 3,109 | 5.7 | |||||||||||||||||||||
Total revenues | $ | 144,962 | $ | 172,667 | $ | (27,705 | ) | (16.0 | ) | $ | 471,626 | $ | 628,441 | $ | (156,815 | ) | (25.0 | ) | |||||||||||
Cost of revenues: | |||||||||||||||||||||||||||||
Manufacturing | $ | (79,671 | ) | $ | (91,132 | ) | $ | 11,461 | 12.6 | $ | (263,389 | ) | $ | (373,380 | ) | $ | 109,991 | 29.5 | |||||||||||
Other operating loss | (16,973 | ) | — | (16,973 | ) | * | (16,973 | ) | — | (16,973 | ) | * | |||||||||||||||||
Railcar leasing | (10,577 | ) | (9,714 | ) | (863 | ) | (8.9 | ) | (31,108 | ) | (26,408 | ) | (4,700 | ) | (17.8 | ) | |||||||||||||
Railcar services | (15,131 | ) | (14,269 | ) | (862 | ) | (6.0 | ) | (45,788 | ) | (42,851 | ) | (2,937 | ) | (6.9 | ) | |||||||||||||
Total cost of revenues | $ | (122,352 | ) | $ | (115,115 | ) | $ | (7,237 | ) | (6.3 | ) | $ | (357,258 | ) | $ | (442,639 | ) | $ | 85,381 | 19.3 | |||||||||
Selling, general and administrative | (6,583 | ) | (7,768 | ) | 1,185 | 15.3 | (21,837 | ) | (20,764 | ) | (1,073 | ) | (5.2 | ) | |||||||||||||||
Net gains on disposition of leased railcars | 58 | — | 58 | * | 225 | 25 | 200 | * | |||||||||||||||||||||
Earnings from operations | $ | 16,085 | $ | 49,784 | $ | (33,699 | ) | (67.7 | ) | $ | 92,756 | $ | 165,063 | $ | (72,307 | ) | (43.8 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Ohio Castings | $ | 49 | $ | 68 | $ | (19 | ) | $ | (116 | ) | $ | 947 | $ | (1,063 | ) | ||||||||
Axis | 1,565 | 1,334 | 231 | 4,674 | 4,393 | 281 | |||||||||||||||||
Total Earnings from Joint Ventures | $ | 1,614 | $ | 1,402 | $ | 212 | $ | 4,558 | $ | 5,340 | $ | (782 | ) |
Three Months Ended September 30, | |||||||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
External | Intersegment | Total | External | Intersegment | Total | Change | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||
Manufacturing | $ | 93,546 | $ | 31,283 | $ | 124,829 | $ | 123,318 | $ | 106,541 | $ | 229,859 | $ | (105,030 | ) | ||||||||||||
Railcar leasing | 32,798 | — | 32,798 | 31,174 | — | 31,174 | 1,624 | ||||||||||||||||||||
Railcar services | 18,618 | 167 | 18,785 | 18,175 | 642 | 18,817 | (32 | ) | |||||||||||||||||||
Eliminations | — | (31,450 | ) | (31,450 | ) | — | (107,183 | ) | (107,183 | ) | 75,733 | ||||||||||||||||
Total Consolidated | $ | 144,962 | $ | — | $ | 144,962 | $ | 172,667 | $ | — | $ | 172,667 | $ | (27,705 | ) | ||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
External | Intersegment | Total | External | Intersegment | Total | Change | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||
Manufacturing | $ | 314,886 | $ | 64,180 | $ | 379,066 | $ | 489,610 | $ | 313,965 | $ | 803,575 | $ | (424,509 | ) | ||||||||||||
Railcar leasing | 98,775 | — | 98,775 | 83,975 | — | 83,975 | 14,800 | ||||||||||||||||||||
Railcar services | 57,965 | 1,735 | 59,700 | 54,856 | 838 | 55,694 | 4,006 | ||||||||||||||||||||
Eliminations | — | (65,915 | ) | (65,915 | ) | — | (314,803 | ) | (314,803 | ) | 248,888 | ||||||||||||||||
Total Consolidated | $ | 471,626 | $ | — | $ | 471,626 | $ | 628,441 | $ | — | $ | 628,441 | $ | (156,815 | ) | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||
Earnings (Loss) from Operations | |||||||||||||||||||||||||||
Manufacturing | $ | (2,773 | ) | $ | 54,984 | $ | (57,757 | ) | $ | 35,451 | $ | 195,363 | $ | (159,912 | ) | ||||||||||||
Railcar leasing | 19,320 | 18,603 | 717 | 59,232 | 50,343 | 8,889 | |||||||||||||||||||||
Railcar services | 2,797 | 3,457 | (660 | ) | 9,364 | 10,204 | (840 | ) | |||||||||||||||||||
Corporate | (2,649 | ) | (5,095 | ) | 2,446 | (11,598 | ) | (11,944 | ) | 346 | |||||||||||||||||
Eliminations | (610 | ) | (22,165 | ) | 21,555 | 307 | (78,903 | ) | 79,210 | ||||||||||||||||||
Total Consolidated | $ | 16,085 | $ | 49,784 | $ | (33,699 | ) | $ | 92,756 | $ | 165,063 | $ | (72,307 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Segment Operating Margins | |||||||||||
Manufacturing | (2.2 | )% | 23.9 | % | 9.4 | % | 24.3 | % | |||
Railcar leasing | 58.9 | % | 59.7 | % | 60.0 | % | 59.9 | % | |||
Railcar services | 14.9 | % | 18.4 | % | 15.7 | % | 18.3 | % |
Nine Months Ended September 30, | |||||||||||
2016 | 2015 | Change | |||||||||
(in thousands) | |||||||||||
Net cash provided by (used in): | |||||||||||
Operating activities | $ | 148,700 | $ | 167,404 | $ | (18,704 | ) | ||||
Investing activities | (88,774 | ) | (235,604 | ) | 146,830 | ||||||
Financing activities | (159,917 | ) | 109,297 | (269,214 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (24 | ) | (223 | ) | 199 | ||||||
(Decrease) Increase in cash and cash equivalents | $ | (100,015 | ) | $ | 40,874 | $ | (140,889 | ) |
• | applicable warranties and leasing arrangements; |
• | implementing changes to our manufacturing personnel or processes; and |
• | claims, litigation, settlements and/or regulatory proceedings. |
Period | Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | ||||||||||
July 1, 2016 through July 31, 2016 | 502 | $ | 37.99 | 502 | $ | 175,646,650 | ||||||||
August 1, 2016 through August 31, 2016 | — | $ | — | — | $ | 175,646,650 | ||||||||
September 1, 2016 through September 30, 2016 | 12,282 | $ | 37.96 | 12,282 | $ | 175,180,448 | ||||||||
Total (2) | 12,784 | 12,784 |
(1) | On July 28, 2015, the Company's board of directors authorized the Stock Repurchase Program pursuant to which the Company may, from time to time, repurchase up to $250.0 million of its common stock. The Stock Repurchase Program will end upon the earlier of the date on which it is terminated by the Board or when all authorized repurchases are completed. |
(2) | We repurchased 25,139 shares under our Stock Repurchase Program subsequent to September 30, 2016 and through October 26, 2016, at a cost of $0.9 million, resulting in 19,361,832 shares outstanding as of such date. |
Exhibit No. | Description of Exhibit | |
31.1 | Rule 13a-14(a), 15d-14(a) Certification of the Chief Executive Officer* | |
31.2 | Rule 13a-14(a), 15d-14(a) Certification of the Interim Chief Financial Officer* | |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
101.INS | XBRL Instance Document* | |
101.SCH | XBRL Taxonomy Extension Schema Document* | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | |
101.PRE | XBRL Taxonomy Presentation Linkbase Document* | |
101.DEF | XBRL Taxonomy Definition Linkbase Document* |
* | Filed herewith |
** | Furnished herewith |
AMERICAN RAILCAR INDUSTRIES, INC. | ||||
Date: | October 28, 2016 | By: | /s/ Jeffrey S. Hollister | |
Jeffrey S. Hollister, President and Chief Executive Officer | ||||
By: | /s/ Luke M. Williams | |||
Luke M. Williams, Interim Senior Vice President, Interim Chief Financial Officer and Interim Treasurer |
Exhibit No. | Description of Exhibit | |
31.1 | Rule 13a-14(a), 15d-14(a) Certification of the Chief Executive Officer* | |
31.2 | Rule 13a-14(a), 15d-14(a) Certification of the Interim Chief Financial Officer* | |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
101.INS | XBRL Instance Document* | |
101.SCH | XBRL Taxonomy Extension Schema Document* | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | |
101.PRE | XBRL Taxonomy Presentation Linkbase Document* | |
101.DEF | XBRL Taxonomy Definition Linkbase Document* |
* | Filed herewith |
** | Furnished herewith |
1. | I have reviewed this quarterly report on Form 10-Q of American Railcar Industries, Inc.; |
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 registrant as of, and for, the periods presented in this report; |
4. | The registrant’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 registrant and 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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 registrant’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 registrant’s internal control over financial reporting. |
Date: | October 28, 2016 | /s/ Jeffrey S. Hollister | |
Jeffrey S. Hollister, President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of American Railcar Industries, Inc.; |
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 registrant as of, and for, the periods presented in this report; |
4. | The registrant’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 registrant and 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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 registrant’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 registrant’s internal control over financial reporting. |
Date: | October 28, 2016 | /s/ Luke M. Williams | |
Luke M. Williams, Interim Senior Vice President, Interim Chief Financial Officer and Interim Treasurer |
1. | the quarterly report on Form 10-Q of the Company for the three months ended September 30, 2016 (the “Quarterly Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | October 28, 2016 | /s/ Jeffrey S. Hollister | |
Jeffrey S. Hollister, President and Chief Executive Officer |
1. | the quarterly report on Form 10-Q of the Company for the three months ended September 30, 2016 (the “Quarterly Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | October 28, 2016 | /s/ Luke M. Williams | |
Luke M. Williams, Interim Senior Vice President, Interim Chief Financial Officer and Interim Treasurer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 26, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | American Railcar Industries, Inc. | |
Entity Central Index Key | 0001344596 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 19,361,832 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Unamortized Debt Issuance Expense | $ 4,918,000 | $ 5,081,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares outstanding (in shares) | 19,386,971 | 19,844,531 |
Loss Contingency Accrual | $ 16,973,000 | $ 0 |
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Revenues from affiliates included in manufacturing | $ 40 | $ 34,510 | $ 816 | $ 217,449 |
Revenues from affiliates included in railcar services | 5,933 | 5,402 | 21,176 | 18,188 |
Interest income from related parties | $ 404 | $ 520 | $ 1,288 | $ 1,615 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|||||||
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Tax | $ 100 | $ 225 | $ 200 | |||||||
Other Comprehensive Income (Loss), Available-for-sale Securities, Tax | 100 | $ 0 | 0 | 0 | ||||||
Net earnings | 7,689 | 29,357 | 50,377 | 97,302 | ||||||
Currency translation | (113) | (715) | 570 | (1,529) | ||||||
Postretirement plans (1) | [1] | 120 | 115 | 359 | 347 | |||||
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, before Tax | 212 | [2] | 0 | 212 | [2] | 0 | ||||
Comprehensive income | $ 7,908 | 28,757 | $ 51,518 | $ 96,120 | ||||||
Maximum [Member] | ||||||||||
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Tax | $ 100 | |||||||||
|
Description of the Business |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Description of the Business | Description of the Business The condensed consolidated financial statements included herein have been prepared by American Railcar Industries, Inc. (a North Dakota corporation) and subsidiaries (collectively the Company or ARI), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The consolidated balance sheet as of December 31, 2015 has been derived from the audited consolidated balance sheet as of that date. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, the information contained herein reflects all adjustments necessary to present fairly our financial position, results of operations and cash flows for the interim periods reported. The results of operations of any interim period are not necessarily indicative of the results that may be expected for a fiscal year. Certain prior-period amounts in the notes to the consolidated financial statements have been reclassified to conform to current-period presentation. These reclassifications had no effect on the reported results of operations. The condensed consolidated financial statements of the Company include the accounts of ARI and its direct and indirect wholly-owned subsidiaries: Castings, LLC (Castings), ARI Component Venture, LLC (ARI Component), ARI Fleet Services of Canada, Inc., Longtrain Leasing I, LLC (LLI), Longtrain Leasing II, LLC (LLII), Longtrain Leasing III, LLC (LLIII), ARI Railcar Services LLC and Southwest Steel Casting Company, LLC. All intercompany transactions and balances have been eliminated. |
Recent accounting pronouncements |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Description of New Accounting Pronouncements Not yet Adopted | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification (ASC) Topic 718, Compensation - Stock Compensation. This ASU simplifies several aspects of the accounting for share-based payment award transactions, including (i) income tax consequences, (ii) classification of awards as either equity or liabilities, (iii) whether or not to estimate forfeitures or account for them when they occur and (iv) classification on the statement of cash flows. The standard is effective for interim and annual periods beginning after December 31, 2016. Early adoption will be permitted with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is evaluating the impact of this standard on its consolidated financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases, which amends ASC Topic 840, Leases, and is intended to increase the transparency and comparability of accounting for lease transactions. This ASU requires most leases to be recognized on the balance sheet. Lessees will need to recognize a right-of-use asset and a lease liability for virtually all leases. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting remains similar to the current model. Targeted improvements were made to lessor accounting to align, where necessary, with certain changes to the lessee model and the new revenue recognition standard. The ASU will require both quantitative and qualitative disclosures regarding key information about leasing arrangements. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the impact of this standard on its consolidated financial statements and disclosures. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which amends FASB ASU Subtopic 835-30, Interest - Imputation of Interest. The new standard requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The standard is effective for interim and annual periods beginning after December 31, 2015 and is required to be applied on a retrospective basis. The retrospective adoption of this guidance during the first quarter of 2016 resulted in a reclassification of debt issuance costs related to the Company's long-term debt on the Company's September 30, 2016 and December 31, 2015 balance sheets and did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new revenue recognition standard also requires disclosures that sufficiently describe the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This ASU was amended by ASU No. 2015-14, issued in August 2015, which deferred the original effective date by one year; the effective date of this ASU is for fiscal years, and interim reporting periods within those years, beginning after December 15, 2017, using one of two retrospective application methods. Early adoption is permitted only as of the annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company currently intends to adopt this new guidance on January 1, 2018 using the modified retrospective application method and continues to evaluate the new standard, but does not, at this time, anticipate a material impact to the financial statements once implemented. |
Accounts Receivable, net |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, net | Accounts Receivable, net Accounts receivable, net, consists of the following:
|
Inventories |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of the following:
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Property, Plant and Equipment and Railcars on Leases, net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, net | Property, Plant, Equipment and Railcars on Leases, net The following table summarizes the components of property, plant, equipment and railcars on leases, net:
Railcars on lease agreements The Company leases railcars to third parties under multi-year agreements. Railcars subject to lease agreements are classified as operating leases and are depreciated in accordance with the Company’s depreciation policy. Capital expenditures for leased railcars represent cash outflows for the Company’s cost to produce railcars shipped or to be shipped for lease. As of September 30, 2016, future contractual minimum rental revenues required under non-cancellable operating leases for railcars with terms longer than one year are as follows (in thousands):
Depreciation expense The following table summarizes depreciation expense:
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Investments in and Loans to Joint Ventures |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in and Loans to Joint Ventures | Investments in and Loans to Joint Ventures As of September 30, 2016, the Company was party to two joint ventures: Ohio Castings Company LLC (Ohio Castings) and Axis LLC (Axis). Through its wholly-owned subsidiary, Castings, the Company has a 33.3% ownership interest in Ohio Castings, a limited liability company formed to produce various steel railcar parts for use or sale by the ownership group. Through its wholly-owned subsidiary, ARI Component, the Company has a 41.9% ownership interest in Axis, a limited liability company formed to produce railcar axles for use or sale by the ownership group. The Company accounts for these joint ventures using the equity method. Under this method, the Company recognizes its share of the earnings and losses of the joint ventures as they accrue. Advances and distributions are charged and credited directly to the investment accounts. From time to time, the Company also makes loans to its joint ventures that are included in the investment account. The investment balance for these joint ventures is recorded within the Company’s manufacturing segment. The carrying amount of investments in and loans to joint ventures, which also represents ARI’s maximum exposure to loss with respect to the joint ventures, are as follows:
See Note 15, Related Party Transactions, for information regarding financial transactions with ARI's joint ventures. Ohio Castings Ohio Castings produces railcar parts that are sold to one of the joint venture partners. This joint venture partner then sells these railcar parts to outside third parties at current market prices and sells them to the Company and the other joint venture partner at Ohio Castings' cost plus a licensing fee. The Company has determined that, although the joint venture is a variable interest entity (VIE), accounting for its activity under the equity method is appropriate given that the Company is not the primary beneficiary, does not have a controlling financial interest and does not have the ability to individually direct the activities of Ohio Castings that most significantly impact its economic performance. The significant factors in this determination were that neither Castings nor the Company has rights to the majority of returns, losses or votes, all major and strategic decisions are decided between the partners, and the risk of loss to the Company and Castings is limited to its investment in Ohio Castings. Summary financial results for Ohio Castings, the investee company, in total, are as follows:
Axis ARI, through ARI Component, a wholly-owned subsidiary, owns a portion of a joint venture, Axis, to manufacture and sell railcar axles. ARI currently owns 41.9% of Axis, while a minority partner owns 9.7% and the other significant partner owns 48.4%. Under the terms of the joint venture agreement, ARI and the other significant partner are required, and the minority partner is entitled, to contribute additional capital to the joint venture, on a pro rata basis, of any amounts approved by the joint venture’s executive committee, as and when called by the executive committee. Under the amended Axis credit agreement (Axis Credit Agreement), whereby ARI and the other significant partner are equal lenders, principal payments are due each fiscal quarter, with the last payment due on December 31, 2019. During the first nine months of 2016 and the full year of 2015, the applicable interest rate for the loans under the Axis Credit Agreement was 7.75%. Interest payments are due and payable monthly. The balance outstanding on these loans, due to ARI Component, was $19.2 million and $23.6 million as of September 30, 2016 and December 31, 2015, respectively. The Company has determined that, although the joint venture is a VIE, accounting for its activity under the equity method is appropriate given that the Company is not the primary beneficiary, does not have a controlling financial interest and does not have the ability to individually direct the activities of Axis that most significantly impact its economic performance. The significant factors in this determination were that neither ARI Component nor the Company has rights to the majority of returns, losses or votes, the executive committee and board of directors of the joint venture are comprised of one representative from each significant partner with equal voting rights and the risk of loss to the Company and ARI Component is limited to its investment in Axis and the loans due to the Company under the Axis Credit Agreement. Summary financial results for Axis, the investee company, in total, are as follows:
As of September 30, 2016, the investment in Axis was comprised entirely of ARI’s term loan. The Company has evaluated this loan to be fully recoverable. |
Warranties |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranties | Warranties The overall change in the Company’s warranty reserve is reflected on the condensed consolidated balance sheets in accrued expenses and taxes and is detailed as follows:
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Long-term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Debt Subsidiary Lease Fleet Financings From time to time, the Company, through its wholly-owned subsidiaries LLI, LLII and LLIII, has entered into lease fleet financings in order to, among other things, support and grow its railcar leasing business. The lease fleet financings are obligations of the respective wholly-owned subsidiary, are generally non-recourse to ARI, and are secured by a first lien on the subject assets of the respective subsidiary, consisting of railcars, railcar leases, receivables and related assets, subject to limited exceptions. ARI has, however, entered into agreements containing certain representations, undertakings, and indemnities customary for asset sellers and parent companies in transactions of this type, and ARI has been and is obligated to make any selections of transfers of railcars, railcar leases, receivables and related assets to be transferred to LLI, LLII and LLIII without any adverse selection, to cause American Railcar Leasing LLC (ARL), as the manager, to maintain, lease, and re-lease LLI's, LLII's and LLIII's equipment no less favorably than similar portfolios serviced by ARL, and to repurchase or replace certain railcars under certain conditions set forth in the respective loan documents. See Note 15, Related Party Transactions, for further discussion regarding these agreements with ARL. January 2015 private placement notes In January 2015, LLIII issued $625.5 million in aggregate principal amount of notes pursuant to an indenture (the Indenture). The notes are fixed rate secured railcar equipment notes bearing interest at a rate of 2.98% per annum for the Class A-1 Notes and 4.06% per annum for the Class A-2 Notes (collectively, the Notes), each payable monthly. Of the aggregate principal amount, $408.5 million was used to refinance the LLI and LLII lease fleet financing facilities, resulting in net proceeds of $211.6 million. In conjunction with the refinancing, the Company incurred a $2.1 million loss, which is shown as 'Loss on debt extinguishment' on the condensed consolidated statements of operations. This non-cash charge is related to the accelerated write-off of deferred debt issuance costs incurred in connection with the LLI and LLII lease fleet financings. As of September 30, 2016, there were $207.0 million and $375.5 million of Class A-1 and Class A-2 notes outstanding, respectively. The Notes have a legal final maturity date of January 17, 2045 and an expected principal repayment date of January 15, 2025. While the legal final maturity date of the Notes is January 17, 2045, cash flows from LLIII's assets will be applied, pursuant to the flow of funds provisions of the Indenture, so as to achieve monthly targeted principal balances. Also, under the flow of funds provisions of the Indenture, early amortization of the Notes may be required in certain circumstances. Pursuant to the terms of the Indenture, the Company is required to maintain deposits in a liquidity reserve bank account equal to nine months of interest payments. As of September 30, 2016 and December 31, 2015, the liquidity reserve amount was $16.1 million and $16.9 million, respectively, and included within 'Restricted cash' on the condensed consolidated balance sheets. LLIII can prepay or redeem the Class A-1 Notes, in whole or in part, on any payment date, subject to the payment of a make-whole amount with respect to certain prepayments or redemptions made on or prior to the payment date occurring in January 2018. LLIII can prepay or redeem the Class A-2 Notes, in whole or in part, on any payment date occurring on or after January 16, 2018, subject to the payment of a make-whole amount with respect to certain prepayments or redemptions made on or prior to the payment date occurring in January 2022. The Company was in compliance with all of its covenants under the Indenture as of September 30, 2016. The fair value of the Notes was $588.9 million and $608.4 million as of September 30, 2016 and December 31, 2015, respectively, and is calculated by taking the net present value of future principal and interest payments using a discount rate that is based on the Company's most recent fixed debt transaction. The inputs used in the calculation are classified within Level 2 of the fair value hierarchy. ARI Lease Fleet Financings December 2015 revolving credit facility In December 2015, the Company completed a financing of its railcar lease fleet with availability of up to $200.0 million under a credit agreement (2015 Credit Agreement). See 'Liquidity and Capital Resources' section for further discussion regarding the incremental borrowing provision under the 2015 Credit Agreement. The initial amount obtained at closing was approximately $99.5 million, net of fees and expenses (the amounts extended under the 2015 Credit Agreement, inclusive of any amounts extended under the incremental facility, the Revolving Loan). In February 2016, the Company repaid amounts outstanding under the Revolving Loan in full and as of September 30, 2016, the Company had borrowing availability of $200.0 million under this facility. The Revolving Loan accrues interest at a rate per annum equal to Adjusted LIBOR (as defined in the 2015 Credit Agreement) for the applicable interest period, plus 1.45%, for a rate of 1.9% as of December 31, 2015. Interest is payable on the last day of each 1, 2, or 3-month interest period, the day of any mandatory prepayment, and the maturity date. The Revolving Loan and the other obligations under the 2015 Credit Agreement are fully recourse to the Company and are secured by a first lien and security interest on certain specified railcars (together with specified replacement railcars), related leases, related receivables and related assets, subject to limited exceptions, a controlled bank account, and following an election by the Company (the Election), the applicable railcar management agreement with ARL. See Note 15, Related Party Transactions, for further discussion regarding this agreement with ARL. Subject to the provisions of the 2015 Credit Agreement, the Revolving Loan may be borrowed and reborrowed until the maturity date. The Revolving Loan may be prepaid at the Company’s option at any time without premium or penalty (other than customary LIBOR breakage fees and customary reimbursement of increased costs). The final scheduled maturity of the Revolving Loan is December 10, 2018, or such earlier date as provided in the 2015 Credit Agreement. The Company was in compliance with all of its covenants under the 2015 Credit Agreement as of September 30, 2016. As of September 30, 2016 and December 31, 2015, the net book value of the railcars that were pledged as part of the Company's and its subsidiaries' Lease Fleet Financings was $549.0 million and $563.7 million, respectively. The future contractual minimum rental revenues related to the railcars pledged as of September 30, 2016 are as follows (in thousands):
The remaining principal payments under the Notes as of September 30, 2016 are as follows (in thousands):
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Income Taxes |
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Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s federal income tax returns for tax years 2013 and beyond remain subject to examination, with the latest statute of limitations expiring in September 2019. Certain of the Company's 2008 through 2012 state income tax returns and all of the Company's state income tax returns for 2013 and beyond remain open and subject to examination, with the latest statute of limitations expiring in December 2020. The Company’s foreign income tax returns for 2012 and beyond remain open to examination by foreign tax authorities. The Company began its implementation of the recent regulations concerning amounts paid to acquire, produce, or improve tangible property and recovery of basis upon disposition with the filing of its 2014 tax return. The Company then completed its implementation efforts with the filing of its 2015 tax return, without any material impact. |
Employee Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Plans The Company is the sponsor of three defined benefit plans that are frozen and no additional benefits are accruing thereunder. Two of the Company's defined benefit pension plans cover certain employees at designated repair facilities. The assets of these defined benefit pension plans are held by independent trustees and consist primarily of equity and fixed income securities. The Company also sponsors an unfunded, non-qualified supplemental executive retirement plan that covers several of the Company's current and former employees. The components of net periodic benefit cost for the pension plans are as follows:
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Commitments and Contingencies |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is subject to comprehensive federal, state, local and international environmental laws and regulations relating to the release or discharge of materials into the environment, the management, use, processing, handling, storage, transport or disposal of hazardous materials and wastes, and other laws and regulations relating to the protection of human health and the environment. These laws and regulations not only expose ARI to liability for the environmental condition of its current or formerly owned or operated facilities, and its own negligent acts, but also may expose ARI to liability for the conduct of others or for ARI’s actions that were in compliance with all applicable laws at the time such actions were taken. In addition, these laws may require significant expenditures to achieve compliance and are frequently modified or revised to impose new obligations. Civil and criminal fines and penalties and other sanctions may be imposed for non-compliance with these environmental laws and regulations. ARI’s operations that involve hazardous materials also raise potential risks of liability under common law. Certain real property ARI acquired from ACF Industries LLC (ACF) in 1994 had been involved in investigation and remediation activities to address contamination both before and after their transfer to ARI. ACF is an affiliate of Mr. Carl Icahn, the Company’s principal beneficial stockholder through Icahn Enterprises L.P. (IELP). Substantially all of the issues identified with respect to these properties relate to the use of these properties prior to their transfer to ARI by ACF and for which ACF has retained liability for environmental contamination that may have existed at the time of transfer to ARI. ACF has also agreed to indemnify ARI for any cost that might be incurred with those existing issues. As of the date of this report, ARI does not believe it will incur material costs in connection with activities relating to these properties, but it cannot assure that this will be the case. If ACF fails to honor its obligations to ARI, ARI could be responsible for the cost of any additional investigation or remediation that may be required. The Company believes that its operations and facilities are in substantial compliance with applicable laws and regulations and that any noncompliance is not likely to have a material adverse effect on its financial condition or results of operations. ARI is party to a collective bargaining agreement with a labor union at a parts manufacturing facility that will expire in April 2017, unless extended or modified. ARI is also party to collective bargaining agreements with labor unions at two repair facilities that will expire in January and September 2021, respectively, unless extended or modified. The Company has various agreements with and commitments to related parties. See Note 15, Related Party Transactions, for further detail. Certain claims, suits and complaints arising in the ordinary course of business, as well as the Gyansys, Inc. (Gyansys) litigation discussed below, have been filed or are pending against ARI. In the opinion of management, based on information currently available, all such claims, suits, and complaints are without merit or would not have a significant effect on the future liquidity, results of operations or financial position of ARI if disposed of unfavorably. However, resolution of certain claims or suits by settlement or otherwise, could impact the operating results of the reporting period in which such resolution occurs. Gyansys On October 24, 2014, the Company filed a complaint in United States District Court for the Southern District of New York against Gyansys. The complaint asserts a claim against Gyansys for breaching its contract with ARI to implement an enterprise resource planning system. The Company seeks to recover monetary damages in an amount still to be determined, but which ARI alleged exceeds $25 million. Gyansys filed a response to the suit denying its responsibility. It also counterclaimed against ARI for a breach of contract and wrongful termination, seeking damages in excess of $10 million and equitable relief. At this time, the Company does not have sufficient information to reasonably form an estimate of the potential outcome (gain or loss) of this litigation. On September 9, 2015, the court denied ARI's motion to dismiss the wrongful termination counterclaim. A trial date has been tentatively scheduled for January 17, 2017. The Company continues to believe that Gyansys' counterclaims lack merit and will continue to vigorously defend against these counterclaims. FRA Directive On September 30, 2016, the Federal Railroad Administration (FRA) released Railworthiness Directive Number 2016-01 (the FRA Directive). The FRA Directive addressed certain welding practices in one weld area in specified DOT 111 tank railcars manufactured between 2009 and 2015 by ARI and ACF Industries LLC (ACF). ACF is an affiliate of Mr. Carl Icahn, the Company's principal beneficial stockholder through IELP. The FRA became involved as a result of one tank railcar manufactured by ARI having a leak identified in 2014. The FRA Directive indicated that approximately 14,800 general purpose tank railcars could be subject to the FRA Directive. The FRA Directive requires owners of all subject railcars to identify tank railcars in their respective fleets covered by the FRA Directive by October 30, 2016 and to ensure appropriate inspection, testing and repairs, if needed, during a period that ranges from 12 to 24 months from September 30, 2016, depending on the commodity service of the railcar. Owners, including the Company as a railcar lessor, and lessees of the subject railcars will likely incur future costs associated with compliance with this requirement, including but not limited to, freight costs for transporting these railcars to and from repair facilities, inspection, cleaning and repair, if necessary. Lessors of subject railcars, including the Company in its capacity as a lessor, may also experience loss of revenue during periods of rent abatement, if applicable, as a result of railcars being out of service due to compliance with the FRA Directive. The incurrence of such costs and/or any such loss of revenue may be subject to the terms of any applicable warranty coverage and the terms of any applicable lease. The Company's contractual obligations under its operating leases for railcars in its lease fleet may vary from lease to lease. The Company has evaluated its potential exposure related to the FRA Directive and has established a loss contingency of $17.0 million to cover its probable and estimable liabilities, as of September 30, 2016, with respect to the Company's remedial response to the FRA Directive, taking into account currently available information and the Company's contractual obligations in its capacity as both a manufacturer and lessor of railcars subject to the FRA Directive. This amount is included in accrued expenses and taxes on the condensed consolidated balance sheet and will continue to be evaluated as ARI's and its customers' compliance with the FRA Directive progresses and the Company's understanding of the impact the FRA Directive may have on its business, including results of operations and cash flows, evolves. Actual results could differ from this estimate. Legal fees incurred with respect to this matter will be expensed in the period in which they occur, in accordance with the Company's accounting policy. |
Share-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation | Share-based Compensation The following table presents the amounts incurred by ARI for share-based compensation, or stock appreciation rights (SARs) and the corresponding line items on the condensed consolidated statements of operations that they are classified within:
As of September 30, 2016, unrecognized compensation costs related to the unvested portion of SARs were estimated to be $1.0 million and were expected to be recognized over a weighted average period of 27 months. |
Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table presents the balances of related after-tax components of accumulated other comprehensive income (loss).
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Stock Repurchase Program |
9 Months Ended |
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Sep. 30, 2016 | |
Treasury Stock [Abstract] | |
Treasury Stock | Stock Repurchase Program On July 28, 2015, the Company's board of directors authorized a stock repurchase program (the Stock Repurchase Program) pursuant to which the Company may, from time to time, repurchase up to $250.0 million of its common stock. The Stock Repurchase Program will end upon the earlier of the date on which it is terminated by the board of directors or when all authorized repurchases are completed. Under the Stock Repurchase program, 12,784 and 457,560 shares were repurchased, during the three and nine months ended September 30, 2016, respectively, at a cost of $0.5 million and $17.4 million, respectively. See Note 17, Subsequent Events, for discussion of the Company's stock repurchase activity subsequent to September 30, 2016. |
Related Party Transactions |
9 Months Ended |
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Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Agreements with ACF The Company has the following agreements with ACF, a company controlled by Mr. Carl Icahn, the Company’s principal beneficial stockholder through IELP. Each agreement described below has been unanimously approved by the independent directors of the Company's audit committee. Component purchases The Company has from time to time purchased components from ACF under a long-term agreement, as well as on a purchase order basis. Under the manufacturing services agreement entered into in 1994 and amended in 2005, ACF agreed to manufacture and distribute, at the Company’s instruction, various railcar components. In consideration for these services, the Company agreed to pay ACF based on agreed upon rates. The agreement automatically renews unless written notice is provided by the Company. Also in April 2015, ARI entered into a parts purchasing and sale agreement with ACF. Under this agreement, ARI and ACF may, from time to time, purchase and sell to each other certain parts for railcars (Parts). ARI also provides a non-exclusive and non-assignable license of certain intellectual property to ACF related to the manufacture and sale of Parts to ARI. The buyer under the agreement must pay the market price of the parts as determined in the agreement or as stated on a public website for all ARI buyers. ARI may provide designs, engineering and purchasing support, including all materials and components to ACF. Subject to certain early termination events, the agreement terminates on December 31, 2020. ARI purchased $1.5 million and $4.4 million of components from ACF during the three and nine months ended September 30, 2016, respectively, and $3.7 million and $13.0 million during the comparable periods in 2015. Purchasing and engineering services agreement In January 2013, ARI entered into a purchasing and engineering services agreement and license with ACF. Under this agreement, ARI provides purchasing support and engineering services to ACF in connection with ACF’s manufacture and sale of tank railcars at its facility in Milton, Pennsylvania. Additionally, ARI has granted ACF a non-exclusive, non-assignable license to certain of ARI’s intellectual property, including certain designs, specifications, processes and manufacturing know-how required to manufacture and sell tank railcars during the term of the agreement. In November 2015, ARI and ACF amended this agreement to, among other provisions, extend the termination date to December 31, 2016 from December 31, 2015, subject to certain early termination events. In consideration of the services and license provided by ARI to ACF in conjunction with the agreement, ACF pays ARI a royalty and, if any, a share of the net profits (Profits) earned on each railcar manufactured and sold by ACF under the agreement, in an aggregate amount equal to 30% of such Profits, as calculated under the agreement. Profits are net of certain of ACF’s start-up and shutdown expenses and certain maintenance capital expenditures. If no Profits are realized on a railcar manufactured and sold by ACF pursuant to the agreement, ARI will still be entitled to the royalty for such railcar and will not share in any losses incurred by ACF in connection therewith. In addition, any railcar components supplied by ARI to ACF for the manufacture of these railcars are provided at fair market value. Under the agreement, ACF had the exclusive right to manufacture and sell subject tank railcars for any new orders scheduled for delivery to customers on or before January 31, 2014. ARI has the exclusive right to any sales opportunities for tank railcars for any new orders scheduled for delivery after that date and through termination of the agreement. ARI also has the right to assign any sales opportunity to ACF, and ACF has the right, but not the obligation, to accept such sales opportunity. Any sales opportunity accepted by ACF will not be reflected in ARI’s orders or backlog. Revenues of zero and $0.7 million for the three and nine months ended September 30, 2016, respectively, compared to $2.7 million and $8.6 million for the same periods in 2015 were recorded under this agreement for sales of railcar components to ACF and for royalties and profits on railcars sold by ACF and are included under manufacturing revenues from affiliates on the condensed consolidated statements of operations. Repair services and support agreement In April 2015, ARI entered into a repair services and support agreement with ACF. Under this agreement, ARI provides certain sales and administrative and technical services, materials and purchasing support and engineering services to ACF to provide repair and retrofit services (Repair Services). Additionally, ARI provides a non-exclusive and non-assignable license of certain intellectual property related to the Repair Services for railcars. ARI receives 30% of the net profits (as defined in the agreement) for Repair Services related to all railcars not owned by ARL or its subsidiaries and 20% of the net profits for Repair Services related to all railcars owned by ARL or its subsidiaries, if any, but does not absorb any losses incurred by ACF. Under the agreement, ARI has the exclusive right to sales opportunities related to Repair Services, except for any sales opportunity related to Repair Services presented to ACF by ARL with respect to ARL-owned railcars. ARI also has the right to assign any sales opportunities related to Repair Services to ACF, and ACF has the right, but not the obligation, to accept such sales opportunity. Subject to certain early termination events, the agreement terminates on December 31, 2020. For the three and nine months ended September 30, 2016 revenues of less than $0.1 million were recorded under this agreement. No revenues were recorded under this agreement for the nine months ended September 30, 2015. Agreements with IELP Entities The Company has or had the following agreements with companies controlled by Mr. Carl Icahn, the Company’s principal beneficial stockholder through IELP, including, but not limited to, ARL and/or ARL's wholly-owned subsidiary, AEP Leasing LLC (collectively, the IELP Entities). Each agreement described below has been unanimously approved by the independent directors of the Company's audit committee. Railcar services agreement In April 2011, the Company entered into a railcar services agreement with ARL (the Railcar Services Agreement). Under the Railcar Services Agreement, ARI provides ARL railcar repair, engineering, administrative and other services, on an as needed basis, for ARL’s lease fleet at mutually agreed upon prices. The Railcar Services Agreement had an initial term of three years and automatically renews for additional one year periods unless either party provides at least sixty days prior written notice of termination. Revenues of $5.9 million and $21.2 million for the three and nine months ended September 30, 2016, respectively, compared to $5.4 million and $18.2 million for the same periods in 2015, respectively, were recorded under the Railcar Services Agreement. These revenues are included under railcar services revenues from affiliates on the condensed consolidated statements of operations. Railcar management agreements From time to time, the Company and its wholly-owned subsidiaries have entered into railcar management agreements with ARL, pursuant to which the Company and its respective wholly-owned subsidiaries engaged ARL to manage, sell, operate, market, store, lease, re-lease, sublease and service ARI's railcars, subject to the terms and conditions of the agreement. These agreements provide that ARL will manage the leased railcars (as identified in the respective agreement) including arranging for services, such as repairs or maintenance, as deemed necessary. Subject to the terms and conditions of each agreement, ARL receives, in respect of leased railcars, a management fee based on the lease revenues. On February 29, 2012, the Company entered into a railcar management agreement with ARL (the ARI railcar management agreement). The agreement was effective as of January 1, 2011, will continue through December 31, 2018 and thereafter it automatically renews for additional one-year periods unless written notice is received from either party at least six months prior to the expected renewal or either party chooses to terminate the agreement after a change in control (as defined therein) of the other party. In December 2012, LLI entered into a railcar management agreement with ARL (as amended in January 2014, the LLI railcar management agreement). On October 16, 2014, LLII entered into a railcar management agreement with ARL (the LLII railcar management agreement). Under the ARI and LLI railcar management agreements, in addition to the management fee, ARL receives a fee consisting of a lease origination fee, and, in respect of railcars sold by ARL, sales commissions. In January 2015, in connection with the Company's refinancing of its lease fleet financings, the LLI and LLII railcar management agreements were terminated and LLIII entered into a railcar management agreement with ARL. This agreement extends through the Notes' final maturity date of January 17, 2045, unless terminated earlier pursuant to its terms (together with the railcar management agreements discussed above, collectively the Railcar Management Agreements). Total lease origination and management fees incurred under the Railcar Management Agreements were $1.7 million and $5.0 million for the three and nine months ended September 30, 2016, respectively, compared to $2.0 million and $5.5 million for the same periods in 2015. These fees are included in cost of revenues for railcar leasing on the condensed consolidated statements of operations. Sales commissions of $0.1 million and $0.7 million were incurred for each of the three and nine months ended September 30, 2016, respectively, compared to $0.2 million and $0.6 million for the same periods in 2015. These costs are included in selling, general and administrative costs on the condensed consolidated statements of operations. Railcar orders The Company has from time to time manufactured and sold railcars to the IELP Entities under long-term agreements as well as on a purchase order basis. During the three and nine months ended September 30, 2016 there were no revenues from railcars sold to the IELP Entities compared to $31.8 million and $208.9 million for the same periods in 2015. These revenues are included in manufacturing revenues from affiliates on the condensed consolidated statements of operations. Any related party sales of railcars under an agreement or purchase order have been and will be subject to the approval or review by the independent directors of the Company’s audit committee. Agreements with other related parties The Company’s Axis joint venture entered into a credit agreement in 2007. During 2009, the Company and the other significant partner acquired the loans from the lenders party thereto, with each party acquiring a 50.0% interest in the loans. The balance outstanding on these loans, due to ARI Component, was $19.2 million and $23.6 million as of September 30, 2016 and December 31, 2015, respectively. See Note 6, Investments in and Loans to Joint Ventures, for further information regarding this transaction and the terms of the underlying loans. ARI is party to a scrap agreement with M. W. Recycling (MWR), a company controlled by Mr. Carl Icahn, the Company’s principal beneficial stockholder through IELP. Under the agreement, ARI sells and MWR purchases scrap metal from several ARI plant locations. This agreement had an initial term through November 2015 and was renewed in September 2016, with an effective date in December 2015, to among other things, extend through May 2019, after which the agreement continues until terminated by either party, in accordance with the provisions of the agreement. MWR collected scrap material totaling $0.8 million and $1.6 million for the three and nine months ended September 30, 2016, respectively, compared to $1.1 million and $3.8 million for the same periods in 2015. This agreement was unanimously approved by the independent directors of the Company’s audit committee. Insight Portfolio Group LLC (Insight Portfolio Group) is an entity formed and controlled by Mr. Carl Icahn in order to maximize the potential buying power of a group of entities with which Mr. Carl Icahn has a relationship in negotiating with a wide range of suppliers of goods, services and tangible and intangible property at negotiated rates. ARI, and a number of other entities with which Mr. Carl Icahn has a relationship, have minority ownership interests in, and pay fees as part of being a member of Insight Portfolio Group. Fees incurred as a member of the Insight Portfolio Group were less than $0.1 million during the three months ended September 30, 2016 and 2015 and were $0.1 million for the nine months ended September 30, 2016 and 2015. These charges are included in selling, general and administrative costs on the condensed consolidated statements of operations. Financial information for transactions with related parties Cost of revenues for manufacturing included $19.2 million and $54.0 million for the three and nine months ended September 30, 2016, respectively, compared to $34.4 million and $113.8 million for the same periods in 2015 for railcar components purchased from joint ventures. Inventory as of September 30, 2016 and December 31, 2015, included $5.9 million and $7.9 million, respectively, of railcar components purchased from joint ventures and all profit for this inventory still on hand was eliminated. |
Operating Segment and Sales and Credit Concentrations |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment and Sales and Credit Concentrations | Operating Segments and Sales and Credit Concentrations ARI operates in three reportable segments: manufacturing, railcar leasing and railcar services. These reportable segments are organized based upon a combination of the products and services offered and performance is evaluated based on revenues and segment earnings (loss) from operations. Intersegment revenues are accounted for as if sales were to third parties. Manufacturing Manufacturing consists of railcar manufacturing, and railcar and industrial component manufacturing. Intersegment revenues are determined based on an estimated fair market value of the railcars manufactured for the Company’s railcar leasing segment, as if such railcars had been sold to a third party. Revenues for railcars manufactured for the Company’s railcar leasing segment are not recognized in consolidated revenues as railcar sales, but rather lease revenues are recognized over the term of the lease. Earnings from operations for manufacturing include an allocation of selling, general and administrative costs, as well as profit for railcars manufactured for the Company’s railcar leasing segment based on revenue determined as described above. Railcar leasing Railcar leasing consists of railcars manufactured by the Company and leased to third parties under operating leases. Earnings from operations for railcar leasing include an allocation of selling, general and administrative costs and also reflect origination fees paid to ARL associated with originating the lease to the Company’s leasing customers. The origination fees represent a percentage of the revenues from the lease over its initial term and are paid up front. Railcar services Railcar services consists of railcar repair services provided through the Company's various repair facilities, including mini repair shops and mobile repair units, offering a range of services from full to light repair. Earnings from operations for railcar services include an allocation of selling, general and administrative costs. Segment financial results The information in the following table is derived from the segments’ internal financial reports used by the Company’s management for purposes of assessing segment performance and for making decisions about allocation of resources.
Sales to Related Parties As discussed in Note 15, Related Party Transactions, ARI has numerous arrangements with related parties. As a result, from time to time, ARI offers its products and services to affiliates at terms and pricing no less favorable to ARI than the terms and pricing provided to unaffiliated third parties. Below is a summary of revenue from affiliates for each operating segment reflected as a percentage of total consolidated revenues.
Sales and Credit Concentration Manufacturing revenues from customers that accounted for more than 10% of total consolidated revenues are outlined in the table below. The railcar leasing and railcar services segments had no customers that accounted for more than 10% of the total consolidated revenues for the three and nine months ended September 30, 2016 and 2015.
Manufacturing accounts receivable from customers that accounted for more than 10% of consolidated receivables (including accounts receivable, net and accounts receivable, due from related parties) are outlined in the table below. The railcar leasing and railcar services segments had no customers that accounted for more than 10% of the consolidated receivables balance as of September 30, 2016 and December 31, 2015.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 26, 2016, the board of directors of the Company declared a cash dividend of $0.40 per share of common stock of the Company to shareholders of record as of December 9, 2016 that will be paid on December 22, 2016. The Company repurchased 25,139 shares under the Stock Repurchase Program subsequent to September 30, 2016 and through October 26, 2016, at a cost of $0.9 million, resulting in 19,361,832 shares outstanding as of such date. |
Accounts Receivable, net (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of accounts receivable, net | Accounts receivable, net, consists of the following:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of inventories | Inventories consist of the following:
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Property, Plant and Equipment and Railcars on Leases, net (Tables) |
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Components of property, plant and equipment | The following table summarizes depreciation expense:
The following table summarizes the components of property, plant, equipment and railcars on leases, net:
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Summary of future contractual minimum rental revenues required under non-cancellable operating leases for railcars | As of September 30, 2016, future contractual minimum rental revenues required under non-cancellable operating leases for railcars with terms longer than one year are as follows (in thousands):
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Investments in and Loans to Joint Ventures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of financial information |
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Ohio Castings [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of financial information | Summary financial results for Ohio Castings, the investee company, in total, are as follows:
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Axis [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of financial information | Summary financial results for Axis, the investee company, in total, are as follows:
|
Warranties (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in the Company's warranty reserve | The overall change in the Company’s warranty reserve is reflected on the condensed consolidated balance sheets in accrued expenses and taxes and is detailed as follows:
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Long-term Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||
Property Subject to or Available for Operating Lease [Line Items] | |||||||||||||||||||||||||||||||||||||
Future Minimum Rental Revenues for Operating Leases | As of September 30, 2016, future contractual minimum rental revenues required under non-cancellable operating leases for railcars with terms longer than one year are as follows (in thousands):
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Summary of remaining principal payments under existing debt agreements | The remaining principal payments under the Notes as of September 30, 2016 are as follows (in thousands):
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Lease Fleet Financing [Member] | |||||||||||||||||||||||||||||||||||||
Property Subject to or Available for Operating Lease [Line Items] | |||||||||||||||||||||||||||||||||||||
Future Minimum Rental Revenues for Operating Leases | The future contractual minimum rental revenues related to the railcars pledged as of September 30, 2016 are as follows (in thousands):
|
Employee Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost for pension and postretirement plans | The components of net periodic benefit cost for the pension plans are as follows:
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Share-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share-based compensation expense | The following table presents the amounts incurred by ARI for share-based compensation, or stock appreciation rights (SARs) and the corresponding line items on the condensed consolidated statements of operations that they are classified within:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the balances of related after-tax components of accumulated other comprehensive income (loss) | The following table presents the balances of related after-tax components of accumulated other comprehensive income (loss).
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Operating Segment and Sales and Credit Concentrations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting information | The information in the following table is derived from the segments’ internal financial reports used by the Company’s management for purposes of assessing segment performance and for making decisions about allocation of resources.
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Schedule of sales to related parties | Below is a summary of revenue from affiliates for each operating segment reflected as a percentage of total consolidated revenues.
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Sales Revenue, Segment [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of sales and credit concentration |
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Accounts Receivable [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of sales and credit concentration |
|
Accounts Receivable, net (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Receivables [Abstract] | ||
Accounts receivable, gross | $ 25,492 | $ 30,422 |
Less allowance for doubtful accounts | (442) | (1,404) |
Total accounts receivable, net | $ 25,050 | $ 29,018 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 47,729 | $ 65,575 |
Work-in-process | 35,168 | 31,184 |
Finished products | 5,328 | 3,393 |
Total inventories | 88,225 | 100,152 |
Less reserves | (3,437) | (3,187) |
Total inventories, net | $ 84,788 | $ 96,965 |
Property, Plant and Equipment and Railcars on Leases, net (Details 1) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
Remaining 3 months of 2016 | $ 32,992 |
2017 | 119,000 |
2018 | 106,074 |
2019 | 87,622 |
2020 | 52,333 |
2021 and thereafter | 78,606 |
Total | $ 476,627 |
Property, Plant and Equipment (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Property, Plant and Equipment [Abstract] | ||||
Total depreciation expense | $ 13,113 | $ 12,214 | $ 38,729 | $ 33,185 |
Depreciation expense on leased railcars | $ 7,614 | $ 7,050 | $ 22,493 | $ 18,894 |
Investments in and Loans to Joint Ventures (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Carrying amount of investments in and loans to joint ventures | ||
Total investments in and loans to joint ventures | $ 27,464 | $ 27,397 |
Ohio Castings [Member] | ||
Carrying amount of investments in and loans to joint ventures | ||
Total investments in and loans to joint ventures | 7,660 | 7,776 |
Axis [Member] | ||
Carrying amount of investments in and loans to joint ventures | ||
Total investments in and loans to joint ventures | $ 19,804 | $ 19,621 |
Investments in and Loans to Joint Ventures (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Ohio Castings [Member] | ||||
Results of operations | ||||
Revenues | $ 12,497 | $ 16,728 | $ 39,834 | $ 60,623 |
Gross profit | 866 | 699 | 2,080 | 5,061 |
Net earnings/(loss) | 63 | (205) | (317) | 2,324 |
Axis [Member] | ||||
Results of operations | ||||
Revenues | 17,442 | 17,812 | 49,939 | 57,229 |
Gross profit | 4,584 | 4,571 | 14,444 | 14,848 |
Income before interest | 4,330 | 4,333 | 13,665 | 14,097 |
Net earnings/(loss) | $ 3,521 | $ 3,341 | $ 11,085 | $ 10,891 |
Investments in and Loans to Joint Ventures (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Income (Loss) from Equity Method Investments | $ 1,614 | $ 1,402 | $ 4,558 | $ 5,340 | |
Axis Credit Agreement [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Interest rate | 7.75% | 7.75% | 7.75% | 7.75% | |
Balance outstanding on loans | $ 19,200 | $ 19,200 | $ 23,600 | ||
Ohio Castings [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage of interest held in joint venture | 33.30% | 33.30% | |||
Axis [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage of interest held in joint venture | 41.90% | 41.90% | |||
Minority partner in joint venture | 9.70% | 9.70% | |||
Other significant partner in joint venture | 48.40% | 48.40% |
Warranties (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Change in the Company's warranty reserve | ||||
Liability, beginning of period | $ 1,584 | $ 1,378 | $ 1,415 | $ 953 |
Provision for warranties issued during the period, net of adjustments | (14) | 341 | 430 | 1,235 |
Adjustments to warranties issued during previous periods | (7) | (4) | (18) | (12) |
Warranty claims | (41) | (163) | (305) | (624) |
Liability, end of period | $ 1,522 | $ 1,552 | $ 1,522 | $ 1,552 |
Long-term Debt (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Summary of future contractual minimum rental revenues required under non-cancellable operating leases for railcars | |
Remaining 3 months of 2016 | $ 32,992 |
2017 | 119,000 |
2018 | 106,074 |
2019 | 87,622 |
2020 | 52,333 |
2021 and thereafter | 78,606 |
Total | 476,627 |
Lease Fleet Financing [Member] | |
Summary of future contractual minimum rental revenues required under non-cancellable operating leases for railcars | |
Remaining 3 months of 2016 | 20,515 |
2017 | 69,128 |
2018 | 56,341 |
2019 | 40,929 |
2020 | 21,941 |
2021 and thereafter | 22,989 |
Total | $ 231,843 |
Long-term Debt (Details 1) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Summary of remaining principal payments under existing debt agreements [Line Items] | |
Remaining 3 months of 2016 | $ 6,495 |
2017 | 25,588 |
2018 | 25,590 |
2019 | 25,507 |
2020 | 26,354 |
2021 and thereafter | 472,974 |
Total | $ 582,508 |
Employee Benefit Plans (Details) - Pension Benefits [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Components of net periodic cost (benefit) for pension and postretirement plans | ||||
Service cost | $ 52 | $ 44 | $ 156 | $ 132 |
Interest cost | 246 | 236 | 738 | 710 |
Expected return on plan assets | (284) | (320) | (851) | (961) |
Defined Benefit Plan Amortization Of Actuarial Loss Gain And Prior Service Cost Credit | 206 | 202 | 618 | 605 |
Net periodic cost recognized | $ 220 | $ 162 | $ 661 | $ 486 |
Employee Benefit Plans (Details Textual) |
Sep. 30, 2016
plan
|
---|---|
Compensation and Retirement Disclosure [Abstract] | |
Number of total defined benefit plans | 3 |
Number of repair pension plans | 2 |
Commitments and Contingencies Commitments and Contingencies (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | ||
Number of repair facilities with labor union collective bargaining agreements | 2 | |
Gain Contingency, Unrecorded Amount | $ 25,000,000 | |
Loss Contingency, Damages Sought, Value | 10,000,000 | |
Loss Contingency Accrual | $ 16,973,000 | $ 0 |
Share-based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense/(Income) | $ 395 | $ (762) | $ 108 | $ (471) |
Cost of revenues: Manufacturing [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense/(Income) | 28 | (147) | (145) | (93) |
Cost of revenues: Railcar services [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense/(Income) | 5 | (21) | (12) | (18) |
Selling, general and administrative [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense/(Income) | $ 362 | $ (594) | $ 265 | $ (360) |
Share-based Compensation (Details Textual) - SARs Grant [Member] $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation costs related to the unvested portion of SARs | $ 1.0 |
Period over which compensation cost expected to be realized | 27 months |
Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss) (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Equity [Abstract] | |||
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Tax | $ 100 | $ 225 | $ 200 |
Stock Repurchase Program Stock Repurchase Program (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2016 |
Jul. 28, 2015 |
|
Stock Repurchase Program, Authorized Amount | $ 250.0 | ||
Stock Repurchased During Period, Shares | 12,784 | 457,560 | |
Stock Repurchased During Period, Value | $ 0.5 | $ 17.4 |
Operating Segment and Sales and Credit Concentrations (Details 2) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Affiliated Entity [Member] | Manufacturing [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Concentration Risk, Percentage | 0.00% | 20.00% | 0.20% | 34.60% | |
Affiliated Entity [Member] | Railcar Leasing [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Concentration Risk, Percentage | 0.00% | 0.00% | 0.00% | 0.00% | |
Affiliated Entity [Member] | Railcar Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Concentration Risk, Percentage | 4.10% | 3.10% | 4.50% | 2.90% | |
Sales Revenue, Segment [Member] | Manufacturing [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Concentration Risk, Percentage | 38.90% | 46.70% | 29.70% | 44.90% | |
Accounts Receivable [Member] | Manufacturing [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of total consolidated revenues from significant customers | 23.00% | 23.00% | 20.90% |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Oct. 26, 2016 |
|
Subsequent Event [Line Items] | ||
Entity Common Stock, Shares Outstanding | 19,361,832 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Cash dividend declared (usd per share) | $ 0.40 | |
Stock Repurchased During Period, Shares | 25,139 | |
Entity Common Stock, Shares Outstanding | 19,361,832 | |
Maximum [Member] | Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Stock Repurchased During Period, Value | $ 0.9 |
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