x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended December 31, 2018 |
OR | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Indiana | 35-0225010 | |||||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | |||||
4925 Indiana Avenue, Lisle, IL (Address of principal executive offices) | 60532 (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common stock, without par value | New York Stock Exchange |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
Emerging growth market o |
(1) | Portions of the Proxy Statement to be filed for the annual meeting of shareholders to be held on or about May 16, 2019 are incorporated by reference in Part III. |
ITEM | PAGE | ||||
2018 | 2017 | 2016 | |
Industry | |||
Transportation | 64% | 65% | 66% |
Industrial | 18% | 18% | 17% |
Medical | 9% | 8% | 7% |
Aerospace and Defense | 5% | 4% | 4% |
Telecommunications and IT | 4% | 5% | 6% |
% of consolidated net sales | 100% | 100% | 100% |
Product Description | Transportation | Industrial | Medical | Aerospace and Defense | Telecom and IT |
SENSE | l | l | l | l | |
(Controls, Pedals, Piezo Sensing Products, Sensors, Switches, Transducers) | |||||
CONNECT | l | l | l | l | |
(EMI/RFI Filters, Capacitors, Frequency Control, Resistors, RF filters) | |||||
MOVE | l | l | l | ||
(Piezo Microactuators, Rotary Actuators) |
Years Ended December 31, | |||
2018 | 2017 | 2016 | |
Total of 15 largest customers / net sales | 63.7% | 64.4% | 63.1% |
Years Ended December 31, | |||
2018 | 2017 | 2016 | |
Cummins Inc. | 15.2% | 13.4% | 9.9% |
Honda Motor Co. | 10.5% | 11.2% | 10.7% |
Toyota Motor Corporation | 10.5% | 10.2% | 10.4% |
Years Ended December 31, | |||
2018 | 2017 | 2016 | |
Net sales from non-U.S. operations | 33% | 32% | 30% |
Years Ended December 31, | |||
2018 | 2017 | 2016 | |
Total assets at non-U.S. operations | 46% | 49% | 48% |
Name | Age | Positions and Offices | ||
Kieran O'Sullivan | 56 | President, Chief Executive Officer and Chairman of the Board | ||
Ashish Agrawal | 48 | Vice President and Chief Financial Officer | ||
Luis Francisco Machado | 56 | Vice President, General Counsel and Secretary |
Manufacturing Facilities | Square Footage | Owned/Leased | ||
Albuquerque, New Mexico | 114,525 | Leased | ||
Bolingbrook, Illinois | 30,600 | Leased | ||
Elkhart, Indiana | 319,000 | Owned | ||
Haryana, India | 19,400 | Leased | ||
Hopkinton, Massachusetts | 32,000 | Owned | ||
Hradec Kralove, Czech Republic | 30,680 | Leased | ||
Juarez, Mexico | 114,600 | Leased | ||
Kaohsiung, Taiwan | 75,900 | Owned | (1) | |
Kvistgaard, Denmark | 30,680 | Leased | ||
Lisle, Illinois | 31,000 | Leased | ||
Matamoros, Mexico | 51,000 | Owned | ||
Nogales, Mexico | 64,000 | Leased | ||
Ostrava, Czech Republic | 67,600 | Leased | ||
Prague, Czech Republic | 13,660 | Leased | ||
Tianjin, China | 225,000 | Owned | (2) | |
Zhongshan, China | 112,600 | Leased | ||
Total manufacturing | 1,332,245 |
Non-Manufacturing Facilities | Square Footage | Owned/Leased | Description | |
Brownsville, Texas | N/A | Owned | Land | |
Brownsville, Texas | 10,000 | Leased | Warehouse | |
El Paso, Texas | 22,400 | Leased | Office and warehouse | |
Matamoros, Mexico | 20,000 | Leased | Warehouse | |
Elkhart, Indiana | 93,000 | Owned | Idle facility | |
Farmington Hills, Michigan | 1,800 | Leased | Sales office | |
Glasgow, Scotland | 18,600 | Leased | Administrative offices and research | |
Lisle, Illinois | 74,925 | Leased | Administrative offices and research | |
Malden, Massachusetts | 3,600 | Leased | Administrative offices and research | |
Nagoya, Japan | 800 | Leased | Sales office | |
Singapore | 5,600 | Leased | Sales office | |
Yokohama, Japan | 1,400 | Leased | Sales office | |
Total non-manufacturing | 252,125 |
(in thousands, except share data) | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share | (c) Total Value of Shares Purchased as Part of Plans or Program | (d) Maximum Value of Shares That May Yet Be Purchased Under the Plans or Programs(1) | |||||||
Balance at December 31, 2017 | $ | 17,554 | |||||||||
January 1, 2018 - September 30, 2018 | — | $ | — | $ | — | $ | 17,554 | ||||
October 1, 2018 – December 31, 2018 | 342,100 | $ | 27.60 | $ | 9,440 | $ | 8,114 |
2018 | % of Sales | 2017 | % of Sales | 2016 | % of Sales | 2015 | % of Sales | 2014 | % of Sales | ||||||||||||||||
Summary of Operations | |||||||||||||||||||||||||
Net sales | $ | 470,483 | 100.0 | $ | 422,993 | 100.0 | $ | 396,679 | 100.0 | $ | 382,310 | 100.0 | $ | 404,021 | 100.0 | ||||||||||
Cost of goods sold | 305,510 | 64.9 | 282,562 | 66.8 | 256,251 | 64.6 | 255,201 | 66.8 | 274,058 | 67.8 | |||||||||||||||
Gross Margin | 164,973 | 35.1 | 140,431 | 33.2 | 140,428 | 35.4 | 127,109 | 33.2 | 129,963 | 32.2 | |||||||||||||||
Selling, general and administrative expenses | 73,569 | 15.6 | 71,943 | 17.0 | 61,624 | 15.5 | 59,586 | 15.6 | 61,051 | 15.1 | |||||||||||||||
Research and development expenses | 25,304 | 5.4 | 25,146 | 5.9 | 24,040 | 6.1 | 22,461 | 5.9 | 22,563 | 5.6 | |||||||||||||||
Non-recurring environmental expense | — | — | — | — | — | — | 14,541 | 3.8 | — | — | |||||||||||||||
Restructuring and impairment charges | 5,062 | 1.1 | 4,139 | 1.0 | 3,048 | 0.8 | 14,564 | 3.8 | 5,941 | 1.5 | |||||||||||||||
Loss (gain) on sale of assets | — | — | 708 | (2.9 | ) | (11,450 | ) | (2.9 | ) | (2,156 | ) | (0.6 | ) | (1,915 | ) | (0.5 | ) | ||||||||
Operating earnings | 61,038 | 13.0 | 38,495 | 9.1 | 63,166 | 15.9 | 18,113 | 4.7 | 42,323 | 10.5 | |||||||||||||||
Other (expense) income | (2,935 | ) | (0.6 | ) | 1,758 | 0.4 | (5,921 | ) | (1.5 | ) | (5,852 | ) | (1.5 | ) | (2,975 | ) | (0.7 | ) | |||||||
Earnings before income taxes | 58,103 | 12.3 | 40,253 | 9.5 | 57,245 | 14.4 | 12,261 | 3.2 | 39,348 | 9.8 | |||||||||||||||
Income tax expense | 11,571 | 2.5 | 25,805 | 6.1 | 22,865 | 5.8 | 5,307 | 1.4 | 12,826 | 3.2 | |||||||||||||||
Net earnings | $ | 46,532 | 9.9 | $ | 14,448 | 3.4 | $ | 34,380 | 8.7 | $ | 6,954 | 1.8 | $ | 26,522 | 6.6 | ||||||||||
Retained earnings - beginning of year | 420,160 | 410,979 | 381,840 | 380,145 | 358,997 | ||||||||||||||||||||
Dividends declared | (5,278 | ) | (5,267 | ) | (5,241 | ) | (5,259 | ) | (5,374 | ) | |||||||||||||||
Implementation of new accounting standard | 17,433 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Retained earnings - end of year | $ | 478,847 | $ | 420,160 | $ | 410,979 | $ | 381,840 | $ | 380,145 | |||||||||||||||
Net earnings per share: | |||||||||||||||||||||||||
Basic | $ | 1.41 | $ | 0.44 | $ | 1.05 | $ | 0.21 | $ | 0.79 | |||||||||||||||
Diluted | $ | 1.39 | $ | 0.43 | $ | 1.03 | $ | 0.21 | $ | 0.78 | |||||||||||||||
Average basic shares outstanding (000s) | 33,024 | 32,892 | 32,728 | 32,959 | 33,618 | ||||||||||||||||||||
Average diluted shares outstanding (000s) | 33,569 | 33,420 | 33,251 | 33,484 | 34,130 | ||||||||||||||||||||
Cash dividends per share (annualized) | $ | 0.160 | $ | 0.160 | $ | 0.160 | $ | 0.160 | $ | 0.160 | |||||||||||||||
Capital expenditures | $ | 28,488 | $ | 18,094 | $ | 20,500 | $ | 9,723 | $ | 12,949 | |||||||||||||||
Depreciation and amortization | $ | 22,514 | $ | 20,674 | $ | 18,992 | $ | 16,254 | $ | 16,971 | |||||||||||||||
Financial Position at Year End | |||||||||||||||||||||||||
Current assets | $ | 239,359 | $ | 233,609 | $ | 215,707 | $ | 245,954 | $ | 240,401 | |||||||||||||||
Current liabilities | 103,993 | 102,412 | 98,129 | 94,620 | 79,982 | ||||||||||||||||||||
Current ratio | 2.3 to 1 | 2.3 to 1 | 2.2 to 1 | 2.5 to 1 | 3.0 to 1 | ||||||||||||||||||||
Working capital | 135,366 | 131,197 | 117,578 | 151,334 | 160,419 | ||||||||||||||||||||
Inventories | 43,486 | 36,596 | 28,652 | 24,600 | 27,887 | ||||||||||||||||||||
Net property, plant and equipment | 99,401 | 88,247 | 82,111 | 69,872 | 71,414 | ||||||||||||||||||||
Total assets | 548,341 | 539,696 | 517,697 | 483,373 | 456,926 | ||||||||||||||||||||
Long-term debt | 50,000 | 76,300 | 89,100 | 90,700 | 75,000 | ||||||||||||||||||||
Long-term obligations, including long-term debt | 66,419 | 93,479 | 101,686 | 107,099 | 87,155 | ||||||||||||||||||||
Shareholders' equity | 377,929 | 343,805 | 317,882 | 281,654 | 289,789 | ||||||||||||||||||||
Common shares outstanding (000s) | 32,751 | 32,938 | 32,762 | 32,548 | 33,392 | ||||||||||||||||||||
Equity (book value) per share | $ | 11.54 | $ | 10.44 | $ | 9.70 | $ | 8.65 | $ | 8.68 | |||||||||||||||
Stock price range | 24.07-39.20 | 19.30-28.35 | 12.87-24.80 | 15.30-20.25 | 15.58-21.65 |
Three Months Ended December 31, | Percent of Net Sales | |||||||||||
2018 | 2017 | Percent Change | 2018 | 2017 | ||||||||
Net sales | $ | 120,073 | $ | 110,910 | 8.3 | 100.0 | 100.0 | |||||
Cost of goods sold | 77,428 | 78,035 | (0.8 | ) | 64.5 | 70.4 | ||||||
Gross margin | 42,645 | 32,875 | 29.7 | 35.5 | 29.6 | |||||||
Selling, general and administrative expenses | 18,128 | 24,973 | (27.4 | ) | 15.1 | 22.5 | ||||||
Research and development expenses | 5,804 | 6,714 | (13.6 | ) | 4.8 | 6.1 | ||||||
Restructuring and impairment charges | 1,698 | 1,197 | 41.9 | 1.4 | 1.1 | |||||||
(Gain) loss on sale of assets | (2 | ) | 10 | (120.0 | ) | — | — | |||||
Total operating expenses | 25,628 | 32,894 | (22.1 | ) | 21.3 | 29.7 | ||||||
Operating earnings (loss) | 17,017 | (19 | ) | 89,663.2 | 14.2 | — | ||||||
Other (expense) income, net | (144 | ) | 164 | (187.8 | ) | (0.1 | ) | 0.1 | ||||
Earnings before income tax | 16,873 | 145 | 11,536.6 | 14.1 | 0.1 | |||||||
Income tax (benefit) expense | (691 | ) | 13,766 | (105.0 | ) | (0.6 | ) | 12.4 | ||||
Net earnings (loss) | $ | 17,564 | $ | (13,621 | ) | 228.9 | 14.6 | (12.3 | ) | |||
Diluted earnings per share: | ||||||||||||
Diluted net earnings (loss) per share | $ | 0.52 | $ | (0.41 | ) |
Three Months Ended December 31, | ||||||
2018 | 2017 | |||||
Interest expense | $ | (484 | ) | $ | (1,134 | ) |
Interest income | 459 | 370 | ||||
Other (expense) income | (119 | ) | 928 | |||
Total other (expense) income, net | $ | (144 | ) | $ | 164 |
Three Months Ended December 31, | ||||
2018 | 2017 | |||
Effective tax rate | (4.1 | )% | 9,493.8 | % |
Years Ended December 31, | Percent of Net Sales | ||||||||||
2018 | 2017 | Percent Change | 2018 | 2017 | |||||||
Net sales | $ | 470,483 | $ | 422,993 | 11.2 | 100.0 | 100.0 | ||||
Cost of goods sold | 305,510 | 282,562 | 8.1 | 64.9 | 66.8 | ||||||
Gross margin | 164,973 | 140,431 | 17.5 | 35.1 | 33.2 | ||||||
Selling, general and administrative expenses | 73,569 | 71,943 | 2.3 | 15.6 | 17.0 | ||||||
Research and development expenses | 25,304 | 25,146 | 0.6 | 5.4 | 5.9 | ||||||
Restructuring and impairment charges | 5,062 | 4,139 | 22.3 | 1.1 | 1.0 | ||||||
Loss on sale of assets | — | 708 | (100.0 | ) | — | 0.2 | |||||
Total operating expenses | 103,935 | 101,936 | 2.0 | 22.1 | 24.1 | ||||||
Operating earnings | 61,038 | 38,495 | 58.6 | 13.0 | 9.1 | ||||||
Other (expense) income, net | (2,935 | ) | 1,758 | (267.0 | ) | (0.6 | ) | 0.4 | |||
Earnings before income tax | 58,103 | 40,253 | 44.3 | 12.4 | 9.5 | ||||||
Income tax expense | 11,571 | 25,805 | (55.2 | ) | 2.5 | 6.1 | |||||
Net earnings | 46,532 | 14,448 | 222.1 | 9.9 | 3.4 | ||||||
Diluted earnings per share: | |||||||||||
Diluted net earnings per share | $ | 1.39 | $ | 0.43 |
Years Ended December 31, | ||||||
2018 | 2017 | |||||
Interest expense | $ | (2,085 | ) | $ | (3,343 | ) |
Interest income | 1,826 | 1,284 | ||||
Other (expense) income | (2,676 | ) | 3,817 | |||
Total other (expense) income, net | $ | (2,935 | ) | $ | 1,758 |
Years Ended December 31, | ||||
2018 | 2017 | |||
Effective tax rate | 19.9 | % | 64.1 | % |
Years Ended December 31, | Percent of Net Sales | ||||||||||
2017 | 2016 | Percent Change | 2017 | 2016 | |||||||
Net sales | $ | 422,993 | $ | 396,679 | 6.6 | 100.0 | 100.0 | ||||
Cost of goods sold | 282,562 | 256,251 | 10.3 | 66.8 | 64.6 | ||||||
Gross margin | 140,431 | 140,428 | — | 33.2 | 35.4 | ||||||
Selling, general and administrative expenses | 71,943 | 61,624 | 16.7 | 17.0 | 15.5 | ||||||
Research and development expenses | 25,146 | 24,040 | 4.6 | 5.9 | 6.1 | ||||||
Restructuring and impairment charges | 4,139 | 3,048 | 35.8 | 1.0 | 0.8 | ||||||
Loss (gain) on sale of assets | 708 | (11,450 | ) | (106.2 | ) | 0.2 | (2.9 | ) | |||
Total operating expenses | 101,936 | 77,262 | 31.9 | 24.1 | 19.5 | ||||||
Operating earnings | 38,495 | 63,166 | (39.1 | ) | 9.1 | 15.9 | |||||
Other income (expense), net | 1,758 | (5,921 | ) | (129.7 | ) | 0.4 | (1.5 | ) | |||
Earnings before income tax | 40,253 | 57,245 | (29.7 | ) | 9.5 | 14.4 | |||||
Income tax expense | 25,805 | 22,865 | 12.9 | 6.1 | 5.8 | ||||||
Net earnings | 14,448 | 34,380 | (58.0 | ) | 3.4 | 8.7 | |||||
Diluted earnings per share: | |||||||||||
Diluted net earnings per share | $ | 0.43 | $ | 1.03 |
Years Ended December 31, | ||||||
2017 | 2016 | |||||
Interest expense | $ | (3,343 | ) | $ | (3,702 | ) |
Interest income | 1,284 | 1,305 | ||||
Other expense (income) | 3,817 | (3,524 | ) | |||
Total other expense (income), net | $ | 1,758 | $ | (5,921 | ) |
Years Ended December 31, | ||||
2017 | 2016 | |||
Effective tax rate | 64.1 | % | 39.9 | % |
As of December 31, | ||||||
2018 | 2017 | |||||
Total credit facility | $ | 300,000 | $ | 300,000 | ||
Balance Outstanding | $ | 50,000 | $ | 76,300 | ||
Standby letters of credit | $ | 1,940 | $ | 2,065 | ||
Amount available | $ | 248,060 | $ | 221,635 | ||
Weighted-average interest rate | 3.10 | % | 2.30 | % | ||
Commitment fee percentage per annum | 0.20 | % | 0.25 | % |
• | Credit reviews of all new significant customer accounts, |
• | Ongoing credit evaluations of current customers, |
• | Credit limits and payment terms based on available credit information, |
• | Adjustments to credit limits based upon payment history and the customer's current creditworthiness, |
• | An active collection effort by regional credit functions, reporting directly to the corporate financial officers, and |
• | Limited credit insurance on the majority of our international receivables. |
• | Significant decline in market capitalization relative to net book value, |
• | Significant adverse change in legal factors or in the business climate, |
• | Adverse action or assessment by a regulator, |
• | Unanticipated competition, |
• | More-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of, |
• | Testing for recoverability of a significant asset group within a reporting unit, and |
• | Allocation of a portion of goodwill to a business to be disposed. |
• | Significant decline in market capitalization relative to net book value, |
• | Significant underperformance relative to expected historical or projected future operating results, |
• | Significant changes in the manner of use of the acquired assets or the strategy for the overall business, |
• | Significant negative industry or economic trends. |
Payments due by period | |||||||||||||||
Total | 2019 | 2020-2021 | 2022-2023 | 2024-beyond | |||||||||||
Long-term debt, including interest | $ | 51,680 | $ | 1,045 | $ | 50,635 | $ | — | $ | — | |||||
Operating lease payments | 31,029 | 3,859 | 6,209 | 4,875 | 16,086 | ||||||||||
Retirement obligations | 6,663 | 779 | 1,476 | 1,370 | 3,038 | ||||||||||
Total | $ | 89,372 | $ | 5,683 | $ | 58,320 | $ | 6,245 | $ | 19,124 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Net sales | $ | 470,483 | $ | 422,993 | $ | 396,679 | |||
Cost of goods sold | 305,510 | 282,562 | 256,251 | ||||||
Gross Margin | 164,973 | 140,431 | 140,428 | ||||||
Selling, general and administrative expenses | 73,569 | 71,943 | 61,624 | ||||||
Research and development expenses | 25,304 | 25,146 | 24,040 | ||||||
Restructuring and impairment charges | 5,062 | 4,139 | 3,048 | ||||||
Loss (gain) on sale of assets | — | 708 | (11,450 | ) | |||||
Operating earnings | 61,038 | 38,495 | 63,166 | ||||||
Other (expense) income: | |||||||||
Interest expense | (2,085 | ) | (3,343 | ) | (3,702 | ) | |||
Interest income | 1,826 | 1,284 | 1,305 | ||||||
Other (expense) income | (2,676 | ) | 3,817 | (3,524 | ) | ||||
Total other (expense) income, net | (2,935 | ) | 1,758 | (5,921 | ) | ||||
Earnings before taxes | 58,103 | 40,253 | 57,245 | ||||||
Income tax expense | 11,571 | 25,805 | 22,865 | ||||||
Net earnings | $ | 46,532 | $ | 14,448 | $ | 34,380 | |||
Net earnings per share: | |||||||||
Basic | 1.41 | 0.44 | 1.05 | ||||||
Diluted | 1.39 | 0.43 | 1.03 | ||||||
Basic weighted-average common shares outstanding | 33,024 | 32,892 | 32,728 | ||||||
Effect of dilutive securities | 545 | 528 | 523 | ||||||
Diluted weighted-average common shares outstanding | 33,569 | 33,420 | 33,251 | ||||||
Cash dividends declared per share | $ | 0.16 | $ | 0.16 | $ | 0.16 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Net earnings | $ | 46,532 | $ | 14,448 | $ | 34,380 | |||
Other comprehensive earnings (loss): | |||||||||
Changes in fair market value of hedges, net of tax | 795 | 110 | 553 | ||||||
Changes in unrealized pension cost, net of tax | (1,830 | ) | 13,687 | 6,412 | |||||
Cumulative translation adjustment, net of tax | (311 | ) | 437 | (1,154 | ) | ||||
Other comprehensive (loss) earnings | $ | (1,346 | ) | $ | 14,234 | $ | 5,811 | ||
Comprehensive earnings | $ | 45,186 | $ | 28,682 | $ | 40,191 |
December 31, | ||||||
2018 | 2017 | |||||
ASSETS | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 100,933 | $ | 113,572 | ||
Accounts receivable, net | 79,518 | 70,584 | ||||
Inventories, net | 43,486 | 36,596 | ||||
Other current assets | 15,422 | 12,857 | ||||
Total current assets | 239,359 | 233,609 | ||||
Property, plant and equipment, net | 99,401 | 88,247 | ||||
Other Assets | ||||||
Prepaid pension asset | 54,100 | 57,050 | ||||
Goodwill | 71,057 | 71,057 | ||||
Other intangible assets, net | 60,180 | 66,943 | ||||
Deferred income taxes | 22,201 | 20,694 | ||||
Other assets | 2,043 | 2,096 | ||||
Total other assets | 209,581 | 217,840 | ||||
Total Assets | $ | 548,341 | $ | 539,696 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current Liabilities | ||||||
Accounts payable | $ | 51,975 | $ | 49,201 | ||
Accrued payroll and benefits | 14,671 | 11,867 | ||||
Accrued expenses and other liabilities | 37,347 | 41,344 | ||||
Total current liabilities | 103,993 | 102,412 | ||||
Long-term debt | 50,000 | 76,300 | ||||
Long-term pension obligations | 6,510 | 7,201 | ||||
Deferred income taxes | 3,990 | 3,802 | ||||
Other long-term obligations | 5,919 | 6,176 | ||||
Total Liabilities | 170,412 | 195,891 | ||||
Commitments and Contingencies (Note 10) | ||||||
Shareholders' Equity | ||||||
Common stock | 306,697 | 304,777 | ||||
Additional contributed capital | 42,820 | 41,084 | ||||
Retained earnings | 478,847 | 420,160 | ||||
Accumulated other comprehensive loss | (97,739 | ) | (78,960 | ) | ||
Total shareholders' equity before treasury stock | 730,625 | 687,061 | ||||
Treasury stock | (352,696 | ) | (343,256 | ) | ||
Total shareholders' equity | 377,929 | 343,805 | ||||
Total Liabilities and Shareholders' Equity | $ | 548,341 | $ | 539,696 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Cash flows from operating activities: | |||||||||
Net earnings | $ | 46,532 | $ | 14,448 | $ | 34,380 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 22,514 | 20,674 | 18,992 | ||||||
Stock-based compensation | 5,256 | 4,184 | 2,738 | ||||||
Pension and other post-retirement plan expense (income) | 422 | 11,570 | (1,599 | ) | |||||
Deferred income taxes | (1,008 | ) | 16,710 | 10,297 | |||||
Loss (gain) on sale of assets | — | 708 | (11,450 | ) | |||||
(Gain) loss on foreign currency hedges, net of cash received | (82 | ) | 94 | (36 | ) | ||||
Changes in assets and liabilities, net of acquisitions and divestitures: | |||||||||
Accounts receivable | (9,877 | ) | (5,198 | ) | (7,120 | ) | |||
Inventories | (7,521 | ) | (5,404 | ) | (2,290 | ) | |||
Other assets | (2,675 | ) | (1,531 | ) | (289 | ) | |||
Accounts payable | 5,113 | 5,387 | 537 | ||||||
Accrued payroll and benefits | 2,349 | (1,666 | ) | 1,876 | |||||
Accrued expenses | (3,795 | ) | 28 | 451 | |||||
Income taxes payable | 1,564 | (4,555 | ) | 966 | |||||
Other liabilities | (258 | ) | 2,918 | 52 | |||||
Pension and other post-retirement plans | (382 | ) | (319 | ) | (303 | ) | |||
Total adjustments | 11,620 | 43,600 | 12,822 | ||||||
Net cash provided by operating activities | 58,152 | 58,048 | 47,202 | ||||||
Cash flows from investing activities: | |||||||||
Capital expenditures | (28,488 | ) | (18,094 | ) | (20,500 | ) | |||
Proceeds from sale of assets | 3 | 541 | 12,296 | ||||||
Payment for acquisitions, net of cash acquired | — | (19,121 | ) | (73,063 | ) | ||||
Net cash used in investing activities | (28,485 | ) | (36,674 | ) | (81,267 | ) | |||
Cash flows from financing activities: | |||||||||
Payments of long-term debt | (1,060,100 | ) | (1,518,200 | ) | (2,458,400 | ) | |||
Proceeds from borrowings of long-term debt | 1,033,800 | 1,505,400 | 2,456,800 | ||||||
Payments of short-term notes payable | — | (1,150 | ) | — | |||||
Purchase of treasury stock | (9,440 | ) | — | — | |||||
Dividends paid | (5,285 | ) | (5,260 | ) | (5,234 | ) | |||
Taxes paid on behalf of equity award participants | (1,468 | ) | (1,604 | ) | (1,809 | ) | |||
Net cash used in financing activities | (42,493 | ) | (20,814 | ) | (8,643 | ) | |||
Effect of exchange rate on cash and cash equivalents | 187 | (793 | ) | (415 | ) | ||||
Net decrease in cash and cash equivalents | (12,639 | ) | (233 | ) | (43,123 | ) | |||
Cash and cash equivalents at beginning of year | 113,572 | 113,805 | 156,928 | ||||||
Cash and cash equivalents at end of year | $ | 100,933 | $ | 113,572 | $ | 113,805 | |||
Supplemental cash flow information: | |||||||||
Cash paid for interest | $ | 1,582 | $ | 2,130 | $ | 2,939 | |||
Cash paid for income taxes, net | $ | 9,916 | $ | 10,884 | $ | 10,471 | |||
Non-cash investing and financing activities: | |||||||||
Purchase of assets with short-term notes payable | $ | — | $ | — | $ | 1,006 | |||
Capital expenditures incurred not paid | $ | 4,312 | $ | 5,914 | $ | 3,214 |
Common Stock | Additional Contributed Capital | Retained Earnings | Accumulated Other Comprehensive Earnings/(Loss) | Treasury Stock | Total | |||||||||||||
Balances at January 1, 2016 | $ | 300,909 | $ | 41,166 | $ | 381,840 | $ | (99,005 | ) | $ | (343,256 | ) | $ | 281,654 | ||||
Net earnings | — | — | 34,380 | — | — | 34,380 | ||||||||||||
Changes in fair market value of hedges, net of tax | — | — | — | 553 | — | 553 | ||||||||||||
Changes in unrealized pension cost, net of tax | — | — | — | 6,412 | — | 6,412 | ||||||||||||
Cumulative translation adjustment, net of tax | — | — | — | (1,154 | ) | — | (1,154 | ) | ||||||||||
Cash dividends of $0.16 per share | — | — | (5,241 | ) | — | — | (5,241 | ) | ||||||||||
Issued shares on vesting of restricted stock units | 1,923 | (3,307 | ) | — | — | — | (1,384 | ) | ||||||||||
Stock compensation | — | 2,662 | — | — | — | 2,662 | ||||||||||||
Balances at December 31, 2016 | $ | 302,832 | $ | 40,521 | $ | 410,979 | $ | (93,194 | ) | $ | (343,256 | ) | $ | 317,882 | ||||
Net earnings | — | — | 14,448 | — | — | 14,448 | ||||||||||||
Changes in fair market value of hedges, net of tax | — | — | — | 110 | — | 110 | ||||||||||||
Changes in unrealized pension cost, net of tax | — | — | — | 13,687 | — | 13,687 | ||||||||||||
Cumulative translation adjustment, net of tax | — | — | — | 437 | — | 437 | ||||||||||||
Cash dividends of $0.16 per share | — | — | (5,267 | ) | — | — | (5,267 | ) | ||||||||||
Issued shares on vesting of restricted stock units | 1,945 | (3,549 | ) | — | — | — | (1,604 | ) | ||||||||||
Stock compensation | — | 4,112 | — | — | — | 4,112 | ||||||||||||
Balances at December 31, 2017 | $ | 304,777 | $ | 41,084 | $ | 420,160 | $ | (78,960 | ) | $ | (343,256 | ) | $ | 343,805 | ||||
Net earnings | — | — | 46,532 | — | — | 46,532 | ||||||||||||
Changes in fair market value of hedges, net of tax | — | — | — | 795 | — | 795 | ||||||||||||
Changes in unrealized pension cost, net of tax | — | — | — | (1,830 | ) | — | (1,830 | ) | ||||||||||
Cumulative translation adjustment, net of tax | — | — | — | (311 | ) | — | (311 | ) | ||||||||||
Cash dividends of $0.16 per share | — | — | (5,278 | ) | — | — | (5,278 | ) | ||||||||||
Acquired 342,100 shares for treasury stock | — | — | — | — | (9,440 | ) | (9,440 | ) | ||||||||||
Issued shares on vesting of restricted stock units | 1,920 | (3,389 | ) | — | — | — | (1,469 | ) | ||||||||||
Implementation of ASU No. 2018-02 (see Note 1) | — | — | 17,433 | (17,433 | ) | — | — | |||||||||||
Stock compensation | — | 5,125 | — | — | — | 5,125 | ||||||||||||
Balances at December 31, 2018 | $ | 306,697 | $ | 42,820 | $ | 478,847 | $ | (97,739 | ) | $ | (352,696 | ) | $ | 377,929 |
Years Ended December 31, | |||
2018 | 2017 | 2016 | |
Cummins Inc. | 15.2% | 13.4% | 9.9% |
Honda Motor Co. | 10.5% | 11.2% | 10.7% |
Toyota Motor Corporation | 10.5% | 10.2% | 10.4% |
December 31, | ||||||
2018 | 2017 | |||||
Cost of molds, dies and other tools included in other current assets | $ | 5,388 | $ | 3,382 |
Years Ended December 31, | ||||||
2018 | 2017 | |||||
Reimbursements received from customers | $ | 4,483 | $ | 4,299 |
Instrument | Method for determining fair value | |
Cash, cash equivalents, accounts receivable and accounts payable | Cost, approximates fair value due to the short-term nature of these instruments. | |
Revolving credit facility | The fair value of long-term debt approximates carrying value and was determined by valuing a similar hypothetical coupon bond and attributing that value to our credit facility. | |
Interest rate swaps and forward contracts | The fair value of our interest rate swaps and forward contracts are measured using a market approach which uses current industry information. |
Years Ended December 31, | ||||||
(units) | 2018 | 2017 | 2016 | |||
Antidilutive stock options and RSUs | 18,138 | 22,110 | 35,189 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Foreign currency (losses) gains | $ | (2,619 | ) | $ | 3,052 | $ | (3,714 | ) |
• | Identify the contract(s) with a customer |
• | Identify the performance obligations |
• | Determine the transaction price |
• | Allocate the transaction price |
• | Recognize revenue when the performance obligations are met |
As of | |||||||
December 31, | December 31, | ||||||
2018 | 2017 | ||||||
Contract Assets | |||||||
Prepaid rebates included in Other current assets | $ | 65 | $ | 52 | |||
Prepaid rebates included in Other assets | 999 | 465 | |||||
Total Contract Assets | $ | 1,064 | $ | 517 | |||
Contract Liabilities | |||||||
Customer discounts and price concessions included in Accrued liabilities | $ | (1,656 | ) | $ | (1,133 | ) | |
Customer rights of return included in Accrued liabilities | (325 | ) | (462 | ) | |||
Total Contract Liabilities | $ | (1,981 | ) | $ | (1,595 | ) |
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||
Transportation | $ | 76,729 | $ | 71,566 | $ | 300,124 | $ | 275,251 | |||||||
Industrial | 21,164 | 19,537 | 86,968 | 74,605 | |||||||||||
Medical | 11,370 | 10,474 | 40,663 | 35,264 | |||||||||||
Aerospace & Defense | 6,504 | 4,978 | 23,323 | 18,813 | |||||||||||
Telecom & IT | 4,306 | 4,355 | 19,405 | 19,060 | |||||||||||
Total | $ | 120,073 | $ | 110,910 | $ | 470,483 | $ | 422,993 |
As of December 31, | ||||||
2018 | 2017 | |||||
Accounts receivable, gross | $ | 79,902 | $ | 70,941 | ||
Less: Allowance for doubtful accounts | (384 | ) | (357 | ) | ||
Accounts receivable, net | $ | 79,518 | $ | 70,584 |
As of December 31, | ||||||
2018 | 2017 | |||||
Finished goods | $ | 10,995 | $ | 9,203 | ||
Work-in-process | 12,129 | 12,065 | ||||
Raw materials | 25,746 | 21,150 | ||||
Less: Inventory reserves | (5,384 | ) | (5,822 | ) | ||
Inventories, net | $ | 43,486 | $ | 36,596 |
As of December 31, | ||||||
2018 | 2017 | |||||
Land | $ | 1,136 | $ | 1,130 | ||
Buildings and improvements | 70,522 | 64,201 | ||||
Machinery and equipment | 231,619 | 223,650 | ||||
Less: Accumulated depreciation | (203,876 | ) | (200,734 | ) | ||
Property, plant and equipment, net | $ | 99,401 | $ | 88,247 |
For the Years Ended | |||||||||
2018 | 2017 | 2016 | |||||||
Depreciation expense | $ | 15,697 | $ | 14,071 | $ | 13,177 |
U.S. Pension Plans | Non-U.S. Pension Plans | ||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||
Accumulated benefit obligation | $ | 205,319 | $ | 228,934 | $ | 1,936 | $ | 2,535 | |||||
Change in projected benefit obligation: | |||||||||||||
Projected benefit obligation at January 1 | $ | 228,934 | $ | 247,276 | $ | 3,140 | $ | 2,866 | |||||
Service cost | — | — | 43 | 48 | |||||||||
Interest cost | 7,123 | 8,273 | 42 | 34 | |||||||||
Benefits paid | (14,781 | ) | (39,177 | ) | (669 | ) | (210 | ) | |||||
Actuarial (gain) loss | (15,957 | ) | 12,562 | 287 | 164 | ||||||||
Foreign exchange impact | — | — | (87 | ) | 238 | ||||||||
Projected benefit obligation at December 31 | $ | 205,319 | $ | 228,934 | $ | 2,756 | $ | 3,140 | |||||
Change in plan assets: | |||||||||||||
Assets at fair value at January 1 | $ | 284,762 | $ | 292,044 | $ | 1,777 | $ | 1,523 | |||||
Actual return on assets | (11,757 | ) | 31,559 | 67 | 17 | ||||||||
Company contributions | 103 | 336 | 300 | 319 | |||||||||
Benefits paid | (14,781 | ) | (39,177 | ) | (669 | ) | (210 | ) | |||||
Foreign exchange impact | — | — | (50 | ) | 128 | ||||||||
Assets at fair value at December 31 | $ | 258,327 | $ | 284,762 | $ | 1,425 | $ | 1,777 | |||||
Funded status (plan assets less projected benefit obligations) | $ | 53,008 | $ | 55,828 | $ | (1,331 | ) | $ | (1,363 | ) |
Post-Retirement Life Insurance Plan | ||||||
2018 | 2017 | |||||
Accumulated benefit obligation | $ | 4,595 | $ | 5,134 | ||
Change in projected benefit obligation: | ||||||
Projected benefit obligation at January 1 | $ | 5,134 | $ | 4,952 | ||
Service cost | 2 | 2 | ||||
Interest cost | 156 | 161 | ||||
Benefits paid | (157 | ) | (165 | ) | ||
Actuarial loss | (540 | ) | 184 | |||
Projected benefit obligation at December 31 | $ | 4,595 | $ | 5,134 | ||
Change in plan assets: | ||||||
Assets at fair value at January 1 | $ | — | $ | — | ||
Actual return on assets | — | — | ||||
Company contributions | 157 | 165 | ||||
Benefits paid | (157 | ) | (165 | ) | ||
Other | — | — | ||||
Assets at fair value at December 31 | $ | — | $ | — | ||
Funded status (plan assets less projected benefit obligations) | $ | (4,595 | ) | $ | (5,134 | ) |
U.S.Pension Plans | Non-U.S. Pension Plans | ||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||
Prepaid pension asset | $ | 54,100 | $ | 57,050 | $ | — | $ | — | |||||
Accrued expenses and other liabilities | (100 | ) | (100 | ) | — | — | |||||||
Long-term pension obligations | (992 | ) | (1,122 | ) | (1,331 | ) | (1,363 | ) | |||||
Net prepaid (accrued) cost | $ | 53,008 | $ | 55,828 | $ | (1,331 | ) | $ | (1,363 | ) |
Post-Retirement Life Insurance Plan | ||||||
2018 | 2017 | |||||
Accrued expenses and other liabilities | $ | (407 | ) | $ | (418 | ) |
Long-term pension obligations | (4,188 | ) | (4,716 | ) | ||
Total accrued cost | $ | (4,595 | ) | $ | (5,134 | ) |
U.S.Pension Plans | Non-U.S. Pension Plans | ||||||
Unrecognized Loss | Unrecognized Loss | ||||||
Balance at January 1, 2017 | $ | 89,763 | $ | 1,743 | |||
Amortization of retirement benefits, net of tax | (3,685 | ) | 10 | ||||
Settlements | (8,585 | ) | — | ||||
Net actuarial (loss) gain | (1,753 | ) | 2 | ||||
Foreign exchange impact | — | 143 | |||||
Balance at January 1, 2018 | $ | 75,740 | $ | 1,898 | |||
Amortization of retirement benefits, net of tax | (4,538 | ) | (126 | ) | |||
Settlements | 19,083 | — | |||||
Net actuarial (loss) gain | (12,351 | ) | 196 | ||||
Foreign exchange impact | — | (52 | ) | ||||
Tax impact due to implementation of ASU 2018-02 | 17,560 | — | |||||
Balance at December 31, 2018 | $ | 95,494 | $ | 1,916 |
Unrecognized Gain | |||
Balance at January 1, 2017 | $ | (560 | ) |
Amortization of retirement benefits, net of tax | 64 | ||
Net actuarial gain | 117 | ||
Balance at January 1, 2018 | $ | (379 | ) |
Amortization of retirement benefits, net of tax | 36 | ||
Net actuarial loss | (418 | ) | |
Tax impact due to implementation of ASU No. 2018-02 | (88 | ) | |
Balance at December 31, 2018 | $ | (849 | ) |
As of December 31, | ||||||
2018 | 2017 | |||||
Projected benefit obligation | $ | 3,848 | $ | 4,361 | ||
Accumulated benefit obligation | $ | 3,028 | $ | 3,757 | ||
Fair value of plan assets | $ | 1,426 | $ | 1,776 |
Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||
U.S. Pension Plans | Non-U.S. Pension Plans | ||||||||||||||||||
2018 | 2017 | 2016 | 2018 | 2017 | 2016 | ||||||||||||||
Service cost | $ | — | $ | — | $ | 87 | $ | 43 | $ | 48 | $ | 51 | |||||||
Interest cost | 7,123 | 8,273 | 11,024 | 42 | 34 | 46 | |||||||||||||
Expected return on plan assets(1) | (12,898 | ) | (16,243 | ) | (18,976 | ) | (25 | ) | (20 | ) | (26 | ) | |||||||
Amortization of unrecognized loss | 5,863 | 5,785 | 5,994 | 162 | 155 | 140 | |||||||||||||
Settlement loss | — | 13,476 | — | — | — | — | |||||||||||||
Net expense (income) | $ | 88 | $ | 11,291 | $ | (1,871 | ) | $ | 222 | $ | 217 | $ | 211 | ||||||
Weighted-average actuarial assumptions(2) | |||||||||||||||||||
Benefit obligation assumptions: | |||||||||||||||||||
Discount rate | 4.30 | % | 3.63 | % | 4.16 | % | 1.13 | % | 1.38 | % | 1.13 | % | |||||||
Rate of compensation increase | 0.00 | % | 0.00 | % | 0.00 | % | 3.00 | % | 2.00 | % | 2.00 | % | |||||||
Pension income/expense assumptions: | |||||||||||||||||||
Discount rate | 3.63 | % | 4.16 | % | 4.43 | % | 1.38 | % | 1.13 | % | 1.63 | % | |||||||
Expected return on plan assets(1) | 4.72 | % | 5.61 | % | 6.63 | % | 1.38 | % | 1.13 | % | 1.63 | % | |||||||
Rate of compensation increase | 0.00 | % | 0.00 | % | 0.00 | % | 2.00 | % | 2.00 | % | 2.00 | % |
(1) | Expected return on plan assets is net of expected investment expenses and certain administrative expenses. |
(2) | During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted. |
Post-Retirement Life Insurance Plan | |||||||||
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Service cost | $ | 2 | $ | 2 | $ | 3 | |||
Interest cost | 156 | 161 | 207 | ||||||
Amortization of unrecognized gain | (46 | ) | (101 | ) | (149 | ) | |||
Net expense | $ | 112 | $ | 62 | $ | 61 | |||
Weighted-average actuarial assumptions (1) | |||||||||
Benefit obligation assumptions: | |||||||||
Discount rate | 4.26 | % | 3.59 | % | 4.10 | % | |||
Rate of compensation increase | 0 | % | 0 | % | 0 | % | |||
Pension income/post-retirement expense assumptions: | |||||||||
Discount rate | 3.59 | % | 4.10 | % | 4.43 | % | |||
Rate of compensation increase | 0 | % | 0 | % | 0 | % |
(1) | During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted. |
Target Allocations | Percentage of Plan Assets at December 31, | |||
Asset Category | 2019 | 2018 | 2017 | |
Equity securities | 13% | 12% | 11% | |
Debt securities | 83% | 84% | 82% | |
Other | 4% | 4% | 7% | |
Total | 100% | 100% | 100% |
As of December 31, | ||||||
2018 | 2017 | |||||
Equity securities - U.S. holdings(1) | $ | 20,469 | $ | 19,487 | ||
Equity securities - non-U.S. holdings(1) | — | 1,131 | ||||
Equity funds - U.S. holdings(1) (8) | 54 | 1,314 | ||||
Bond funds - government(5) (8) | 19,146 | 3,126 | ||||
Bond funds - other(6) (8) | 202,393 | 231,710 | ||||
Real estate(7) (8) | 2,652 | 1,235 | ||||
Cash and cash equivalents(2) | 5,866 | 11,145 | ||||
Partnerships(4) | 9,172 | 10,787 | ||||
International hedge funds(3) | — | 6,604 | ||||
Total fair value of plan assets | $ | 259,752 | $ | 286,539 |
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Not Leveled | Total | |||||||||||
Equity securities - U.S. holdings(1) | $ | 20,469 | $ | — | $ | — | $ | — | $ | 20,469 | |||||
Equity funds - U.S. holdings(1) (8) | — | — | — | 54 | 54 | ||||||||||
Bond funds - government(5) | — | — | — | 19,146 | 19,146 | ||||||||||
Bond funds - other(6) (8) | — | — | — | 202,393 | 202,393 | ||||||||||
Real estate(7) (8) | — | — | — | 2,652 | 2,652 | ||||||||||
Cash and cash equivalents(2) | 5,866 | — | — | — | 5,866 | ||||||||||
Partnerships(4) | — | — | 9,172 | — | 9,172 | ||||||||||
Total | $ | 26,335 | $ | — | $ | 9,172 | $ | 224,245 | $ | 259,752 |
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Not Leveled | Total | |||||||||||
Equity securities - U.S. holdings(1) | $ | 19,487 | $ | — | $ | — | $ | — | $ | 19,487 | |||||
Equity securities - non-U.S. holdings(1) | 1,131 | — | — | — | 1,131 | ||||||||||
Equity funds - U.S.holdings(1) (8) | — | — | — | 1,314 | 1,314 | ||||||||||
Bond funds - government(5) (8) | — | — | — | 3,126 | 3,126 | ||||||||||
Bond funds - other(6) (8) | — | — | — | 231,710 | 231,710 | ||||||||||
Real estate(7) (8) | — | — | — | 1,235 | 1,235 | ||||||||||
Cash and cash equivalents(2) | 11,145 | — | — | — | 11,145 | ||||||||||
Partnerships(4) | — | — | 10,787 | — | 10,787 | ||||||||||
International hedge funds(3) (8) | — | — | — | 6,604 | 6,604 | ||||||||||
Total | $ | 31,763 | $ | — | $ | 10,787 | $ | 243,989 | $ | 286,539 |
(1) | Comprised of common stocks of companies in various industries. The Pension Plan fund manager may shift investments from value to growth strategies or vice-versa, from small cap to large cap stocks or vice-versa, in order to meet the Pension Plan's investment objectives, which are to provide for a reasonable amount of long-term growth of capital without undue exposure to volatility, and protect the assets from erosion of purchasing power. |
(2) | Comprised of investment grade short-term investment and money-market funds. |
(3) | This fund allocates its capital across several direct hedge fund organizations. This fund invests with hedge funds that employ "non-directional" strategies. These strategies do not require the direction of the markets to generate returns. The majority of these hedge funds generate returns by the occurrence of key events such as bankruptcies, mergers, spin-offs, etc. Investments can be redeemed at the share Net Asset Value ("NAV") as of the last business day of each calendar quarter with at least a sixty-five day prior written notice to the administrator. |
(4) | Comprised of partnerships that invest in various U.S. and international industries. |
(5) | Comprised of long-term government bonds with a minimum maturity of 10 years and zero-coupon Treasury securities ("Treasury Strips") with maturities greater than 20 years. |
(6) | Comprised predominately of investment grade U.S. corporate bonds with maturities greater than 10 years and U.S. high-yield corporate bonds; emerging market debt (local currency sovereign bonds, U.S. dollar-denominated sovereign bonds and U.S. dollar-denominated corporate bonds); and U.S. bank loans. |
(7) | Comprised of investments in securities of U.S. and non-U.S. real estate investment trusts (REITs), real estate operating companies and other companies that are principally engaged in the real estate industry and of investments in global private direct commercial real estate. Investments can be redeemed immediately following the valuation date with a notice of at least fifteen business days before valuation. |
(8) | Comprised of investments that are measured at fair value using the NAV per share practical expedient. In accordance with the provisions of ASC 820-10, these investments have not been classified in the fair value hierarchy. The fair value amount not leveled is presented to allow reconciliation of the fair value hierarchy to total fund pension plan assets. |
• | Level 1: Fair value measurements that are based on quoted prices (unadjusted) in active markets that the pension plan trustees have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. |
• | Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly. Level 2 inputs include quoted prices for similar assets in active or inactive markets, and inputs other than quoted prices that are observable for the asset, such as interest rates and yield curves that are observable at commonly quoted intervals. |
• | Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. |
Amount | |||
Fair value of Level 3 partnership assets at January 1, 2017 | $ | 12,862 | |
Capital contributions | 343 | ||
Realized and unrealized gain | 2,107 | ||
Capital distributions | (4,525 | ) | |
Fair value of Level 3 partnership assets at December 31, 2017 | 10,787 | ||
Capital contributions | 78 | ||
Realized and unrealized gain | 1,154 | ||
Capital distributions | (2,847 | ) | |
Fair value of Level 3 partnership assets at December 31, 2018 | $ | 9,172 |
U.S. Pension Plans | Non-U.S. Pension Plans | Post-Retirement Life Insurance Plan | |||||||
2019 | $ | 15,537 | $ | 52 | $ | 407 | |||
2020 | 15,519 | 57 | 393 | ||||||
2021 | 15,409 | 66 | 379 | ||||||
2022 | 15,226 | 91 | 365 | ||||||
2023 | 14,988 | 82 | 351 | ||||||
2024-2027 | 70,462 | 658 | 1,551 | ||||||
Total | $ | 147,141 | $ | 1,006 | $ | 3,446 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
401(k) and other plan expense | $ | 3,256 | $ | 3,141 | $ | 2,841 |
As of December 31, 2018 | ||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Amount | Weighted Average Remaining Amortization Period (in years) | |||||||||
Other intangible assets: | ||||||||||||
Customer lists / relationships | $ | 64,323 | $ | (37,088 | ) | $ | 27,235 | 9.6 | ||||
Technology and other intangibles | 44,460 | (13,715 | ) | 30,745 | 10.1 | |||||||
In process research and development | 2,200 | — | 2,200 | — | ||||||||
Other intangible assets, net | $ | 110,983 | $ | (50,803 | ) | $ | 60,180 | 9.8 | ||||
Amortization expense for the year ended December 31, 2018 | $ | 6,817 |
Amortization expense | |||
2019 | $ | 6,754 | |
2020 | 6,624 | ||
2021 | 6,467 | ||
2022 | 6,230 | ||
2023 | 4,225 | ||
Thereafter | 29,880 | ||
Total future amortization expense | $ | 60,180 |
As of December 31, 2017 | |||||||||
Gross Carrying Amount | Accumulated Amortization | Net Amount | |||||||
Other intangible assets: | |||||||||
Customer lists / relationships | $ | 64,323 | $ | (33,685 | ) | $ | 30,638 | ||
Patents | 10,319 | (10,319 | ) | — | |||||
Technology and other intangibles | 44,460 | (10,355 | ) | 34,105 | |||||
In process research and development | 2,200 | — | 2,200 | ||||||
Other intangible assets, net | $ | 121,302 | $ | (54,359 | ) | $ | 66,943 | ||
Amortization expense for the year ended December 31, 2017 | $ | 6,603 | |||||||
Amortization expense for the year ended December 31, 2016 | $ | 5,815 |
Total | |||
Goodwill as of December 31, 2016 | $ | 61,744 | |
Increase from acquisitions | 9,313 | ||
Goodwill as of December 31, 2017 | 71,057 | ||
Increase from acquisition | — | ||
Goodwill as of December 31, 2018 | $ | 71,057 |
Years Ended December 31, | ||||||
2018 | 2017 | 2016 | ||||
Restructuring and impairment charges | 5,062 | 4,139 | 3,048 |
June 2016 Plan | Planned Costs | Actual costs incurred through December 31, 2018 | |||||
Workforce reduction | $ | 3,075 | $ | 2,975 | |||
Building and equipment relocation | 9,025 | 7,807 | |||||
Other charges | 1,300 | 964 | |||||
Restructuring and impairment charges | $ | 13,400 | $ | 11,746 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Restructuring and impairment charges | $ | 4,559 | $ | 4,139 | $ | 3,048 |
April 2014 Plan | Planned Costs | Actual costs incurred through December 31, 2018 | ||||
Inventory write-down | $ | 850 | $ | — | ||
Equipment relocation | 1,800 | 444 | ||||
Other charges | 1,400 | 113 | ||||
Restructuring-related charges, included in cost of goods sold | 4,050 | 557 | ||||
Workforce reduction | 4,200 | 4,423 | ||||
Other charges, including pension termination costs | 1,700 | 3,916 | ||||
Restructuring and impairment charges | 5,900 | 8,339 | ||||
Total restructuring, impairment and restructuring-related charges | $ | 9,950 | $ | 8,896 |
April 2014 Plan and June 2016 Plan | Restructuring Liability | ||
Restructuring liability at January 1, 2018 | $ | 1,913 | |
Restructuring charges | 5,062 | ||
Cost paid | (5,465 | ) | |
Other activities (1) | 76 | ||
Restructuring liability at December 31, 2018 | $ | 1,586 |
As of December 31, | ||||||
2018 | 2017 | |||||
Accrued product-related costs | $ | 4,377 | $ | 5,297 | ||
Accrued income taxes | 6,914 | 5,475 | ||||
Accrued property and other taxes | 1,976 | 997 | ||||
Accrued professional fees | 3,350 | 2,228 | ||||
Contract liabilities | 1,981 | 1,595 | ||||
Dividends payable | 1,310 | 1,318 | ||||
Remediation reserves | 11,274 | 17,067 | ||||
Other accrued liabilities | 6,165 | 7,367 | ||||
Total accrued expenses and other liabilities | $ | 37,347 | $ | 41,344 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Balance at beginning of period | $ | 17,067 | $ | 18,176 | $ | 20,603 | |||
Remediation expense | 1,182 | 307 | 556 | ||||||
Remediation payments | (6,967 | ) | (1,416 | ) | (2,983 | ) | |||
Other activity (1) | (8 | ) | — | — | |||||
Balance at end of the period | $ | 11,274 | $ | 17,067 | $ | 18,176 | |||
(1) Other activity includes currency translation adjustments not recorded through remediation expense |
Operating Leases | |||
2019 | $ | 3,859 | |
2020 | 3,622 | ||
2021 | 2,587 | ||
2022 | 2,411 | ||
2023 | 2,464 | ||
Thereafter | 16,086 | ||
Total minimum lease obligations | $ | 31,029 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Rent expense | $ | 5,726 | $ | 4,762 | $ | 5,694 |
As of December 31 | ||||||
2018 | 2017 | |||||
Total credit facility | $ | 300,000 | $ | 300,000 | ||
Balance outstanding | $ | 50,000 | $ | 76,300 | ||
Standby letters of credit | $ | 1,940 | $ | 2,065 | ||
Amount available | $ | 248,060 | $ | 221,635 | ||
Weighted-average interest rate | 3.10 | % | 2.30 | % | ||
Commitment fee percentage per annum | 0.20 | % | 0.25 | % |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Unrealized (loss) gain | $ | (394 | ) | $ | (255 | ) | $ | 593 | |
Realized gain reclassified to interest expense | $ | 421 | $ | 37 | $ | 928 |
As of December 31, | |||||||
2018 | 2017 | ||||||
Foreign currency hedges reported in Accrued expenses and other liabilities | $ | — | $ | 742 | |||
Foreign currency hedges reported in Other current assets | $ | 393 | $ | — | |||
Interest rate swaps reported in Other current assets | $ | 576 | $ | 278 | |||
Interest rate swaps reported in Other assets | $ | 369 | $ | 693 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Foreign Exchange Contracts: | |||||||||||
Amounts reclassified from AOCI to earnings: | |||||||||||
Net sales | $ | 383 | $ | (488 | ) | $ | (124 | ) | |||
Cost of goods sold | (6 | ) | 497 | 111 | |||||||
Selling, general and administrative | 107 | 45 | 1 | ||||||||
Total amounts reclassified from AOCI to earnings | 484 | 54 | (12 | ) | |||||||
Loss recognized in other expense for hedge ineffectiveness | — | (1 | ) | (1 | ) | ||||||
Loss recognized in other expense for derivatives not designated as cash flow hedges | — | (15 | ) | (5 | ) | ||||||
Total derivative gain (loss) on foreign exchange contracts recognized in earnings | $ | 484 | $ | 38 | $ | (18 | ) | ||||
Interest Rate Swaps: | |||||||||||
Interest Expense | $ | (421 | ) | $ | (37 | ) | $ | (928 | ) | ||
Total income (loss) on derivatives recognized in earnings | $ | 63 | $ | 1 | $ | (946 | ) |
• | Unrealized gains (losses) on hedges relate to interest rate swaps to convert the revolving credit facility's variable rate of interest into a fixed rate and foreign currency forward contracts used to hedge our exposure to changes in exchange rates affecting certain revenues and costs denominated in foreign currencies. These hedges are designated as cash flow hedges, and we have deferred income statement recognition of gains and losses until the hedged transaction is settled. Amounts reclassified to income from AOCI for hedges are included in interest expense, cost of sales, or net sales. Further information related to our interest rate swaps and foreign currency hedges is included in Note 13, "Derivatives". |
• | Unrealized gains (losses) on pension obligations are deferred from income statement recognition until the gains or losses are realized. Amounts reclassified to income from AOCI are included in net periodic pension expense. Further information related to our pension obligations is included in Note 6, "Retirement Plans". |
• | Cumulative translation adjustment relates to our non-U.S. subsidiaries that have designated a functional currency other than the U.S. dollar. We are required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of other comprehensive income. Transfer of foreign currency translation gains and losses from AOCI to income are included in other income (expense) in our Consolidated Statements of Earnings. |
As of December 31, 2017 | Gain (Loss) Recognized in OCI | Gain (Loss) reclassified from AOCI to income | Impact of ASU No. 2018-02 | As of December 31, 2018 | |||||||||||
Changes in fair market value of hedges: | |||||||||||||||
Gross | $ | 289 | $ | 1,932 | $ | (905 | ) | $ | — | $ | 1,316 | ||||
Income tax (expense) benefit | (105 | ) | (437 | ) | 205 | 39 | (298 | ) | |||||||
Net | 184 | 1,495 | (700 | ) | 39 | 1,018 | |||||||||
Changes in unrealized pension cost: | |||||||||||||||
Gross | (130,096 | ) | — | (2,358 | ) | — | (132,454 | ) | |||||||
Income tax benefit (expense) | 52,837 | — | 528 | (17,472 | ) | 35,893 | |||||||||
Net | (77,259 | ) | — | (1,830 | ) | (17,472 | ) | (96,561 | ) | ||||||
Cumulative translation adjustment: | |||||||||||||||
Gross | (1,985 | ) | (306 | ) | — | — | (2,291 | ) | |||||||
Income tax benefit (expense) | 100 | (5 | ) | — | — | 95 | |||||||||
Net | (1,885 | ) | (311 | ) | — | — | (2,196 | ) | |||||||
Total accumulated other comprehensive (loss) income | $ | (78,960 | ) | $ | 1,184 | $ | (2,530 | ) | $ | (17,433 | ) | $ | (97,739 | ) |
As of December 31, 2016 | (Loss) Gain recognized in OCI | Gain (Loss) reclassified from AOCI to income | As of December 31, 2017 | |||||||||
Changes in fair market value of hedges: | ||||||||||||
Gross | $ | 116 | $ | 264 | $ | (91 | ) | $ | 289 | |||
Income tax (expense) benefit | (42 | ) | (96 | ) | 33 | (105 | ) | |||||
Net | 74 | 168 | (58 | ) | 184 | |||||||
Changes in unrealized pension cost: | ||||||||||||
Gross | (151,618 | ) | — | 21,522 | (130,096 | ) | ||||||
Income tax benefit (expense) | 60,672 | — | (7,835 | ) | 52,837 | |||||||
Net | (90,946 | ) | — | 13,687 | (77,259 | ) | ||||||
Cumulative translation adjustment: | ||||||||||||
Gross | (2,414 | ) | 429 | — | (1,985 | ) | ||||||
Income tax benefit | 92 | 8 | — | 100 | ||||||||
Net | (2,322 | ) | 437 | — | (1,885 | ) | ||||||
Total accumulated other comprehensive (loss) income | $ | (93,194 | ) | $ | 605 | $ | 13,629 | $ | (78,960 | ) |
As of December 31, | ||
2018 | 2017 | |
Preferred Stock | ||
Par value per share | No par value | No par value |
Shares authorized | 25,000,000 | 25,000,000 |
Shares outstanding | — | — |
Common Stock | ||
Par value per share | No par value | No par value |
Shares authorized | 75,000,000 | 75,000,000 |
Shares issued | 56,786,849 | 56,632,488 |
Shares outstanding | 32,750,727 | 32,938,466 |
Treasury stock | ||
Shares held | 24,036,122 | 23,694,022 |
As of December 31, | ||||
2018 | 2017 | |||
Balance at beginning of the year | 32,938,466 | 32,762,494 | ||
Repurchases | (342,100 | ) | — | |
Restricted stock unit issuances | 154,361 | 175,972 | ||
Balance at end of period | 32,750,727 | 32,938,466 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Service-Based RSUs | $ | 2,036 | $ | 1,762 | $ | 1,997 | |||
Performance-Based RSUs | 3,089 | 2,350 | 665 | ||||||
Cash-settled awards | 131 | 72 | 76 | ||||||
Total | $ | 5,256 | $ | 4,184 | $ | 2,738 | |||
Income tax benefit | 1,188 | 1,573 | 1,029 | ||||||
Net | $ | 4,068 | $ | 2,611 | $ | 1,709 |
Unrecognized compensation expense at December 31, 2018 | Weighted- average period | |||
Service-Based RSUs | $ | 1,598 | 1.21 | |
Performance-Based RSUs | 2,539 | 1.56 | ||
Total | $ | 4,137 | 1.43 |
2018 Plan | 2014 Plan | 2009 Plan | 2004 Plan | Directors' Plan | ||||||
Awards originally available to be granted | 2,500,000 | 1,500,000 | 3,400,000 | 6,500,000 | N/A | |||||
Performance stock options outstanding | — | 275,000 | — | — | — | |||||
Maximum potential RSU and cash settled awards outstanding | 25,200 | 722,035 | 92,600 | 35,952 | 5,522 | |||||
Maximum potential awards outstanding | 25,200 | 997,035 | 92,600 | 35,952 | 5,522 | |||||
RSUs and cash settled awards vested and released | — | — | — | — | — | |||||
Awards available to be granted | 2,474,800 | — | — | — | — |
Units | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||
Outstanding at January 1, 2018 | 399,347 | $ | 14.60 | ||||||
Granted | 99,422 | 26.95 | |||||||
Released | (137,500 | ) | 14.68 | ||||||
Forfeited | (5,679 | ) | 22.07 | ||||||
Outstanding at December 31, 2018 | 355,590 | $ | 17.91 | 22.46 | $ | 9,206 | |||
Releasable at December 31, 2018 | 209,474 | $ | 13.76 | 33.63 | $ | 5,423 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Weighted-average grant date fair value | $ | 26.95 | $ | 24.32 | $ | 15.07 | |||
Intrinsic value of RSUs released | $ | 4,015 | $ | 4,485 | $ | 1,520 |
RSUs | Weighted Average Grant Date Fair Value | ||||
Nonvested at January 1, 2018 | 139,536 | $ | 18.56 | ||
Granted | 99,422 | 26.95 | |||
Vested | (87,163 | ) | 19.05 | ||
Forfeited | (5,679 | ) | 22.07 | ||
Nonvested at December 31, 2018 | 146,116 | $ | 23.84 |
Units | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||
Outstanding at January 1, 2018 | 271,305 | $ | 18.77 | ||||||
Granted | 72,043 | 28.75 | |||||||
Released | (72,456 | ) | 18.66 | ||||||
Forfeited | (21,700 | ) | 17.66 | ||||||
Added by performance factor | 18,600 | 17.66 | |||||||
Outstanding at December 31, 2018 | 267,792 | $ | 21.44 | 1.14 | $ | 6,933 | |||
Releasable at December 31, 2018 | — | $ | — | — | $ | — |
Description | Grant Date | Vesting Year | Vesting Dependency | Target Units Outstanding | Maximum Number of Units to be Granted | ||
2016-2018 Performance RSUs | February 16, 2016 | 2018 | 35% RTSR, 35% sales growth, 30% cash flow | 92,840 | 185,680 | ||
Single Crystal Performance RSUs | March 31, 2016 | 2018 | Various | 4,000 | 8,000 | ||
2017-2019 Performance RSUs | February 9, 2017 | 2019 | 35% RTSR, 35% sales growth, 30% cash flow | 71,796 | 143,592 | ||
2017-2019 Performance RSUs | February 9, 2017 | 2020 | Operating Income | 27,113 | 27,113 | ||
2018-2020 Performance RSUs | February 8, 2018 | 2021 | 35% RTSR, 35% sales growth, 30% cash flow | 40,223 | 80,446 | ||
2018- 2020 Performance RSUs | February 16, 2018 | 2021 | 35% RTSR, 35% sales growth, 30% cash flow | 31,820 | 63,640 | ||
Total | 267,792 | 508,471 |
Asset Carrying Value at December 31, 2018 | Quoted Prices in Active Markets for Identical (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Loss (gain) for Year Ended December 31, 2018 | |||||||||||
Interest rate swap | $ | 945 | $ | — | $ | 945 | $ | — | $ | 421 | |||||
Foreign currency hedges | $ | 393 | $ | — | $ | 393 | $ | — | $ | (484 | ) |
Asset (Liability) Carrying Value at December 31, 2017 | Quoted Prices in Active Markets for Identical (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Loss (gain) for Year Ended December 31, 2017 | |||||||||||
Interest rate swap | $ | 971 | $ | — | $ | 971 | $ | — | $ | 37 | |||||
Foreign currency hedges | $ | (742 | ) | $ | — | $ | (742 | ) | $ | — | $ | (38 | ) |
Interest Rate Swaps | Foreign Currency Hedges | |||||
Balance at January 1, 2017 | $ | 753 | $ | (601 | ) | |
Cash settlements paid (received) | 37 | (132 | ) | |||
Total gains (losses) for the period: | ||||||
Included in earnings | (37 | ) | 38 | |||
Included in other comprehensive earnings | 218 | (47 | ) | |||
Balance at January 1, 2018 | $ | 971 | $ | (742 | ) | |
Cash settlements paid (received) | 421 | (402 | ) | |||
Total gains (losses) for the period: | ||||||
Included in earnings | (421 | ) | 484 | |||
Included in other comprehensive earnings | (26 | ) | 1,053 | |||
Balance at December 31, 2018 | $ | 945 | $ | 393 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
U.S. | $ | 30,815 | $ | 9,315 | $ | 25,746 | |||
Non-U.S. | 27,288 | 30,938 | 31,499 | ||||||
Total | $ | 58,103 | $ | 40,253 | $ | 57,245 |
Years Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Current: | |||||||||
U.S. | $ | (397 | ) | $ | 1,635 | $ | (1,312 | ) | |
Non-U.S. | 12,538 | 7,150 | 13,729 | ||||||
Total Current | 12,141 | 8,785 | 12,417 | ||||||
Deferred: | |||||||||
U.S. | (330 | ) | 17,597 | 13,245 | |||||
Non-U.S. | (240 | ) | (577 | ) | (2,797 | ) | |||
Total Deferred | (570 | ) | 17,020 | 10,448 | |||||
Total provision for income taxes | $ | 11,571 | $ | 25,805 | $ | 22,865 |
As of December 31, | ||||||
2018 | 2017 | |||||
Post-retirement benefits | $ | 1,061 | $ | 1,160 | ||
Inventory reserves | 1,236 | 1,128 | ||||
Loss carry-forwards | 4,647 | 5,401 | ||||
Credit carry-forwards | 16,909 | 10,793 | ||||
Nondeductible accruals | 5,685 | 7,062 | ||||
Research expenditures | 16,847 | 20,002 | ||||
Stock compensation | 2,142 | 1,803 | ||||
Foreign exchange loss | 2,245 | 1,373 | ||||
Other | 207 | 220 | ||||
Gross deferred tax assets | 50,979 | 48,942 | ||||
Depreciation and amortization | 11,500 | 9,819 | ||||
Pensions | 11,736 | 12,387 | ||||
Subsidiaries' unremitted earnings | 1,258 | 1,662 | ||||
Gross deferred tax liabilities | 24,494 | 23,868 | ||||
Net deferred tax assets | 26,485 | 25,074 | ||||
Deferred tax asset valuation allowance | (8,274 | ) | (8,182 | ) | ||
Total net deferred tax assets | $ | 18,211 | $ | 16,892 |
As of December 31, | ||||||
2018 | 2017 | |||||
Non-current deferred tax assets | $ | 22,201 | $ | 20,694 | ||
Non-current deferred tax liabilities | $ | (3,990 | ) | $ | (3,802 | ) |
Total net deferred tax assets | $ | 18,211 | $ | 16,892 |
Years Ended December 31, | ||||||
2018 | 2017 | 2016 | ||||
Taxes at the U.S. statutory rate | 21.0 | % | 35.0 | % | 35.0 | % |
State income taxes, net of federal income tax benefit | 1.2 | % | 1.1 | % | 1.4 | % |
Non-U.S. income taxed at rates different than the U.S. statutory rate | 0.8 | % | (9.0 | )% | (7.5 | )% |
Foreign source income, net of associated foreign tax credits | 4.1 | % | 0.1 | % | 5.3 | % |
Benefit of tax credits | (0.9 | )% | (1.4 | )% | (1.0 | )% |
Non-deductible expenses | 1.3 | % | 1.5 | % | 0.7 | % |
Stock compensation - excess tax benefits | (0.9 | )% | (1.5 | )% | (0.8 | )% |
Adjustment to valuation allowances | (0.6 | )% | (4.4 | )% | 3.8 | % |
Other changes in tax laws and rates | (6.1 | )% | — | % | — | % |
Change in unrecognized tax benefits | (1.7 | )% | 2.0 | % | 3.3 | % |
Impacts of unremitted foreign earnings | 1.1 | % | 0.9 | % | 0.6 | % |
Impacts related to the 2017 Tax Cuts and Jobs Act | (0.6 | )% | 44.7 | % | — | % |
Other | 1.2 | % | (4.9 | )% | (0.9 | )% |
Effective income tax rate | 19.9 | % | 64.1 | % | 39.9 | % |
2018 | 2017 | |||||
Balance at January 1 | $ | 7,306 | $ | 12,347 | ||
Increase related to current year tax positions | 55 | — | ||||
(Decrease) increase related to prior year tax positions | (36 | ) | 1,290 | |||
Decrease related to lapse in statute of limitation | (1,076 | ) | — | |||
Decrease related to settlements with taxing authorities | (46 | ) | (6,331 | ) | ||
Balance at December 31 | $ | 6,203 | $ | 7,306 |
Fair Values at May 15, 2017 | ||||
Current assets | $ | 2,836 | ||
Property, plant and equipment | 580 | |||
Other assets | 395 | |||
Goodwill | 9,313 | |||
Intangible assets | 9,142 | |||
Fair value of assets acquired | 22,266 | |||
Less fair value of liabilities acquired | (3,145 | ) | ||
Net cash paid | $ | 19,121 |
Carrying Value | Weighted Average Amortization Period (in years) | ||||
Developed technology | $ | 7,581 | 15.0 | ||
Customer relationships | 937 | 10.0 | |||
Other | 624 | 3.0 | |||
Total | $ | 9,142 | 13.7 |
Fair Values at March 11, 2016 | ||||
Current assets | $ | 4,215 | ||
Property, plant and equipment | 6,173 | |||
Other assets | 37 | |||
Goodwill | 27,879 | |||
Intangible assets | 35,427 | |||
Fair value of assets acquired | 73,731 | |||
Less fair value of liabilities acquired | (668 | ) | ||
Net cash paid | $ | 73,063 |
Carrying Value | Weighted Average Amortization Period (in years) | ||||
Developed technology | $ | 23,730 | 15.0 | ||
Customer relationships and contracts | 11,502 | 14.6 | |||
Other | 195 | 0.8 | |||
Total | $ | 35,427 | 14.8 |
Net Sales | Years Ended December 31, | ||||||||
2018 | 2017 | 2016 | |||||||
United States | $ | 313,489 | $ | 287,092 | $ | 276,033 | |||
Singapore | 6,724 | 5,596 | 6,668 | ||||||
Taiwan | 20,802 | 18,586 | 17,121 | ||||||
China | 79,380 | 66,510 | 59,506 | ||||||
Czech Republic | 36,528 | 34,476 | 34,767 | ||||||
Other non-U.S. | 13,560 | 10,733 | 2,584 | ||||||
Consolidated net sales | $ | 470,483 | $ | 422,993 | $ | 396,679 |
Long-Lived Assets | Years Ended December 31, | |||||
2018 | 2017 | |||||
United States | $ | 53,950 | $ | 44,010 | ||
China | 32,973 | 32,464 | ||||
Taiwan | 3,752 | 3,540 | ||||
Czech Republic | 5,976 | 5,518 | ||||
Other non-U.S | 2,750 | 2,715 | ||||
Consolidated long-lived assets | $ | 99,401 | $ | 88,247 |
First | Second | Third | Fourth | |||||||||
2018 | ||||||||||||
Net sales | $ | 113,530 | $ | 118,021 | $ | 118,859 | $ | 120,073 | ||||
Gross margin | $ | 38,433 | $ | 41,813 | $ | 42,082 | $ | 42,645 | ||||
Operating earnings | $ | 13,359 | $ | 14,544 | $ | 16,118 | $ | 17,017 | ||||
Net earnings | $ | 11,548 | $ | 7,209 | $ | 10,211 | $ | 17,564 | ||||
Basic earnings per share | $ | 0.35 | $ | 0.22 | $ | 0.31 | $ | 0.53 | ||||
Diluted earnings per share | $ | 0.34 | $ | 0.21 | $ | 0.30 | $ | 0.52 | ||||
2017 | ||||||||||||
Net sales | $ | 100,154 | $ | 105,686 | $ | 106,243 | $ | 110,910 | ||||
Gross margin | $ | 34,224 | $ | 35,794 | $ | 37,538 | $ | 32,875 | ||||
Operating earnings (loss) | $ | 12,196 | $ | 13,208 | $ | 13,111 | $ | (19 | ) | |||
Net earnings (loss) | $ | 8,484 | $ | 9,966 | $ | 9,619 | $ | (13,621 | ) | |||
Basic earnings (loss) per share | $ | 0.26 | $ | 0.30 | $ | 0.29 | $ | (0.41 | ) | |||
Diluted earnings (loss) per share | $ | 0.25 | $ | 0.30 | $ | 0.29 | $ | (0.41 | ) |
(in thousands) | Balance at Beginning of Period | Charged to Expense | Charged to Other Accounts | (Write-offs) / Recoveries | Balance at End of Period | ||||||||||
Year ended December 31, 2018 Allowance for doubtful accounts | $ | 357 | $ | 56 | $ | (8 | ) | $ | (21 | ) | $ | 384 | |||
Year ended December 31, 2017 Allowance for doubtful accounts | $ | 170 | $ | 248 | $ | 9 | $ | (70 | ) | $ | 357 | ||||
Year ended December 31, 2016 Allowance for doubtful accounts | $ | 133 | $ | 44 | $ | — | $ | (7 | ) | $ | 170 |
Plan Category | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, RSUs, Warrants and Rights (2) | (b) Weighted-Average Grant Date Fair Value of Outstanding Options, RSUs, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | ||||
Equity compensation plans approved by security holders | 1,133,539 | $ | 13.48 | 2,474,800 | |||
Equity compensation plans not approved by security holders(1) | 5,522 | — | — | ||||
Total | 1,139,061 | 2,474,800 |
(3)(i) | |||
(3)(ii) | |||
(10)(a) | |||
(10)(b) | |||
(10)(c) | |||
(10)(d) | |||
(10)(e) | |||
(10)(f) | |||
(10)(g) | |||
(10)(h) | |||
(10)(i) | |||
(10)(j) | |||
(10)(k) | |||
(10)(l) | |||
(10)(m) | |||
(10)(n) | |||
(10)(o) | |||
(10)(p) | |||
(10)(q) | |||
(10)(r) | |||
(10)(s) | |||
(10)(t) | |||
(10)(u) | |||
(10)(v) | |||
(10)(w) | |||
(10)(x) | |||
(21) | |||
(23) | |||
(31)(a) | |||
(31)(b) | |||
(32)(a) | |||
(32)(b) | |||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Management contract or compensatory plan or arrangement. |
CTS Corporation | |||
Date: February 22, 2019 | By: | /s/ Ashish Agrawal | |
Ashish Agrawal Vice President and Chief Financial Officer (Principal Financial Officer) | |||
Date: February 22, 2019 | By: | /s/ William Cahill | |
William Cahill Chief Accounting Officer (Principal Accounting Officer) |
Date: February 22, 2019 | By: | /s/ Kieran O'Sullivan | |
Kieran O'Sullivan Chairman, President, and Chief Executive Officer (Principal Executive Officer) | |||
Date: February 22, 2019 | By: | /s/ Robert A. Profusek | |
Robert A. Profusek Lead Director | |||
Date: February 22, 2019 | By: | /s/ Patricia K. Collawn | |
Patricia K. Collawn Director | |||
Date: February 22, 2019 | By: | /s/ Gordon Hunter | |
Gordon Hunter Director | |||
Date: February 22, 2019 | By: | /s/ William S. Johnson | |
William S. Johnson Director | |||
Date: February 22, 2019 | By: | /s/ Diana M. Murphy | |
Diana M. Murphy Director | |||
Date: February 22, 2019 | By: | /s/ Alfonso G. Zulueta | |
Alfonso G. Zulueta Director | |||
CTS Corporation Lisle, IL February 22, 2019 | |
/s/ Kieran O'Sullivan | |
Kieran O'Sullivan Chairman, President and Chief Executive Officer (Principal Executive Officer) | |
/s/ Ashish Agrawal | |
Ashish Agrawal Vice President and Chief Financial Officer (Principal Financial Officer) |
Subsidiary: | Jurisdiction | |
CTS Corporation | Delaware | |
CTS Automotive Holdings, L.L.C. | Delaware | |
CTS Advanced Materials, L.L.C. | Delaware | |
CTS Electronic Components, Inc. | Delaware | |
LTB Investment Corporation | Delaware | |
Filter Sensing Technologies, Inc. | Delaware | |
Tusonix, LLC. | Arizona | |
CTS Electronic Components (California), Inc. | California | |
CTS Printex, Inc. | California | |
CTS Automotive, L.L.C. | Illinois | |
CTS Automotive Holdings 2, L.L.C. | Illinois | |
CTS SRL-CV Holdings 1, L.L.C. | Illinois | |
CTS Valpey Corporation | Maryland | |
Dynamics Corporation of America | New York | |
CTS Czech Republic S.R.O. | Czech Republic | |
CTS Europe GmbH | Germany | |
CTS Electronics Hong Kong Ltd. | Hong Kong Special Administrative Region of the People's Republic of China | |
CTS India Private Limited | India | |
CTS Japan, Inc. | Japan | |
CTS Electro de Mexico, S. DE R.L. DE C.V. | Republic of Mexico | |
CTS International B.V. | The Netherlands | |
CTS Overseas Holdings, B.V. | The Netherlands | |
CTS (Tianjin) Electronics Co., Ltd. | Peoples' Republic of China | |
CTS (Zhongshan) Technology Co. Ltd. | People's Republic of China | |
CTS of Canada Co. | Province of Nova Scotia (Canada) | |
CTS of Canada Holding Co. | Province of Nova Scotia (Canada) | |
CTS of Canada G.P., Ltd. | Province of Ontario (Canada) | |
CTS of Canada L.P. | Province of Ontario (Canada) | |
CTS Components Taiwan, Ltd. | Republic of China | |
CTS Electro de Matamoros, S.A de C.V. | Republic of Mexico | |
Technologia Mexicana, S de R.L.de C.V. | Republic of Mexico | |
CTS of Panama, S de R.L. | Republic of Panama | |
CTS Singapore Pte. Ltd. | Republic of Singapore | |
CTS Corporation U.K. Limited | Scotland | |
CTS Ceramics Denmark A/S | Denmark | |
CTS Ceramics Czech Republic S.R.O. | Czech Republic | |
CTS U.K. Holdings Limited | England | |
MAQ Holdings PTE. Ltd. | Republic of Singapore |
1. | I have reviewed this annual report on Form 10-K of CTS Corporation: |
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; and |
(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 statement for external purposes in accordance with generally accepted accounting principles; and |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusion 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 registrant's board of directors (or persons performing the equivalent function): |
(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: February 22, 2019 | /s/ Kieran O'Sullivan | ||
Kieran O'Sullivan Chairman, President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of CTS Corporation: |
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; and |
(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 statement for external purposes in accordance with generally accepted accounting principles; and |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusion 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 registrant's board of directors (or persons performing the equivalent function): |
(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: February 22, 2019 | /s/ Ashish Agrawal | ||
Ashish Agrawal Vice President and Chief Financial Officer |
(1) | the 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 22, 2019 | /s/ Kieran O'Sullivan | |
Kieran O'Sullivan Chairman, President and Chief Executive Officer |
(1) | the 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 22, 2019 | /s/ Ashish Agrawal | |
Ashish Agrawal Vice President and Chief Financial Officer |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 19, 2019 |
Jun. 30, 2018 |
|
Document and Entity Information | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | CTS | ||
Entity Registrant Name | CTS CORP | ||
Entity Central Index Key | 0000026058 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 32,750,727 | 32,734,227 | |
Entity Public Float | $ 1,176,000,000 | ||
Entity Shell Company | false |
Consolidated Statements of Comprehensive Earnings - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Consolidated Statements of Comprehensive Earnings | |||
Net earnings | $ 46,532 | $ 14,448 | $ 34,380 |
Other comprehensive earnings (loss): | |||
Changes in fair market value of hedges, net of tax | 795 | 110 | 553 |
Changes in unrealized pension cost, net of tax | (1,830) | 13,687 | 6,412 |
Cumulative translation adjustment, net of tax | (311) | 437 | (1,154) |
Other comprehensive (loss) earnings | (1,346) | 14,234 | 5,811 |
Comprehensive earnings | $ 45,186 | $ 28,682 | $ 40,191 |
Consolidated Statements of Shareholders Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Increase (Decrease) in Stockholders' Equity | |||
Cash dividends declared per share (in dollars per share) | $ 0.160 | $ 0.16 | $ 0.160 |
Treasury stock acquired (shares) | 342,100 | 0 | 0 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Description of Business: CTS Corporation ("CTS", "we", "our", "us" or the "Company") is a global manufacturer of sensors, electronic components, and actuators. We operate manufacturing facilities located throughout North America, Asia and Europe and service major markets globally. CTS consists of one reportable business segment. Principles of Consolidation: The consolidated financial statements include the accounts of CTS and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Fiscal Calendar: We began using a calendar period end in 2016. Prior to that, we operated on a 4 week/ 4 week/ 5 week fiscal quarter, and each fiscal quarter ended on a Sunday that always began on January 1 and ended on December 31. Use of Estimates: The preparation of financial statements in conformity with the accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Cash and Cash Equivalents: All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable consists primarily of amounts due from normal business activities. We maintain an allowance for doubtful accounts for estimated uncollectible accounts receivable. Our reserves for estimated credit losses are based upon historical experience and specific customer collection issues. Accounts are written off against the allowance account when they are determined to no longer be collectible. Concentration of Credit Risk: Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and trade receivables. Our cash and cash equivalents, at times, may exceed federally insured limits. Cash and cash equivalents are deposited primarily in banking institutions with global operations. We have not experienced any losses in such accounts. We believe we are not exposed to any significant credit risk on cash and cash equivalents. Trade receivables subject us to the potential for credit risk with major customers. We sell our products to customers principally in the aerospace and defense, industrial, information technology, medical, telecommunications, and transportation markets, primarily in North America, Europe, and Asia. We perform ongoing credit evaluations of our customers to minimize credit risk. We do not require collateral. The allowance for doubtful accounts is based on management's estimates of the collectability of its accounts receivable after analyzing historical bad debts, customer concentrations, customer creditworthiness, and current economic trends. Uncollectible trade receivables are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted. Our net sales to significant customers as a percentage of total net sales were as follows:
We sell automotive parts to these three customers for certain vehicle platforms under purchase agreements that have no volume commitments and are subject to purchase orders issued from time to time. No other customer accounted for 10% or more of total net sales during these periods. Inventories: We value our inventories at the lower of the actual cost to purchase or manufacture or the net realizable value using the first-in, first-out ("FIFO") method. We review inventory quantities on hand and record a provision for excess and obsolete inventory based on forecasts of product demand and production requirements. Retirement Plans: We have various defined benefit and defined contribution retirement plans. Our policy is to annually fund the defined benefit pension plans at or above the minimum required by law. We: 1) recognize the funded status of a benefit plan (measured as the difference between plan assets at fair value and the benefit obligation) in our Consolidated Balance Sheets; 2) recognize the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit/cost as a component of other comprehensive earnings; and 3) measure defined benefit plan assets and obligations as of the date of our fiscal year-end. See Note 6, "Retirement Plans" for further information. Property, Plant and Equipment: Property, plant and equipment is stated at cost. Depreciation and amortization is computed primarily over the estimated useful lives of the various classes of assets using the straight-line method. Useful lives for buildings and improvements range from 10 to 45 years. Machinery and equipment useful lives range from 3 to 15 years. Depreciation on leasehold improvements is computed over the lesser of the lease term or estimated useful lives of the assets. Amounts expended for maintenance and repairs are charged to expense as incurred. Upon disposition, any related gains or losses are included in operating earnings. Income Taxes: We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more-likely-than-not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In 2016, we elected to early adopt Accounting Standards Update ("ASU") No. 2015-17 "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes", on a retrospective basis allowing for all deferred tax items to be classified as non-current. Certain non-current deferred tax assets and non-current deferred tax liabilities were not netted since these items relate to different tax jurisdictions. We record uncertain tax positions in accordance with Accounting Standards Codification ("ASC") Topic 740 on the basis of a two-step process in which (1) we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying Consolidated Statements of Operations. Accrued interest and penalties are included on the related tax liability line in the Consolidated Balance Sheets. See Note 18, "Income Taxes" for further information. Goodwill and Indefinite-lived Intangible Assets: Goodwill represents the excess of the purchase price over the fair values of the net assets acquired in a business combination. We test the impairment of goodwill at least annually as of the first day of our fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. In addition to goodwill, we also have acquired in-process research and development ("IPR&D") intangible assets that are treated as indefinite-lived intangible assets and therefore not subject to amortization until the completion or abandonment of the associated research and development efforts. If these efforts are abandoned in the future, the carrying value of the IPR&D asset will be expensed. If the research and development efforts are successfully completed, the IPR&D will be reclassified as a finite-lived asset and amortized over its useful life. We have the option to perform a qualitative assessment (commonly referred to as "step zero" test) to determine whether further quantitative analysis for impairment of goodwill and indefinite-lived intangible assets is necessary. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and our own overall financial and share price performance, among other factors. If, after assessing the totality of events or circumstances, we determine that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, we do not need to perform a quantitative analysis. We completed our annual impairment test during 2018 by performing a qualitative assessment and determined that our goodwill was not impaired as of the measurement date. We have not recorded any impairment of goodwill or other indefinite-lived intangible assets in the years ended December 31, 2018, 2017 and 2016. Other Intangible Assets and Long-lived Assets: We account for long-lived assets (excluding indefinite-lived intangible assets) in accordance with the provisions of ASC 360. This statement requires that long-lived assets, which includes fixed assets and finite-lived intangible assets, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an impairment test is warranted, recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount in which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Intangible assets (excluding indefinite-lived intangible assets) consist primarily of technology, customer lists and relationships, patents, and trade names. These assets are recorded at cost and usually amortized on a straight-line basis over their estimated lives. We assess useful lives based on the period over which the asset is expected to contribute to cash flows. Revenue Recognition: Beginning in January 2018, CTS adopted the provisions ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". Product revenue is recognized upon the transfer of promised goods to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods. We follow the five step model to determine when this transfer has occurred: 1) identify the contract(s) with the customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; 5) recognize revenue when (or as) the entity satisfies a performance obligation. Prior to January 1, 2018, product revenue was recognized once four criteria were met: 1) we have persuasive evidence that an arrangement exists; 2) delivery has occurred and title has passed to the customer, which generally happens at the point of shipment provided that no significant obligations remain; 3) the price is fixed and determinable; and 4) collectability is reasonably assured. Research and Development: Research and development ("R&D") costs include expenditures for search and investigation aimed at discovery of new knowledge to be used to develop new products or processes or to significantly enhance existing products or production processes. R&D costs also include the implementation of new knowledge through design, testing of product alternatives, or construction of prototypes. We expense all R&D costs as incurred, net of customer reimbursements for sales of prototypes and non-recurring engineering charges. We create prototypes and tools related to R&D projects. A prototype is defined as a constructed product not intended for production resulting in a commercial sale. We also incur engineering costs related to R&D activities. Such costs are incurred to support such activities to improve the reliability, performance and cost-effectiveness of our existing products and to design and develop innovative products that meet customer requirements for new applications. Furthermore, we may engage in activities that develop tooling machinery and equipment for our customers. We occasionally enter into agreements with our customers whereby we receive a contractual guarantee to be reimbursed the costs we incur to construct molds, dies, and other tools that are used to make many of the products we sell. The costs we incur are included in other current assets on the Consolidated Balance Sheets until reimbursement is received from the customer. Reimbursements received from customers are netted against such costs and included in our Consolidated Statements of Earnings if the amount received is in excess of the costs that we incur. The following is a summary of amounts to be received from customers as of December 31, 2018 and 2017:
The following is a summary of amounts received from customers for molds, dies, and other tools during the years ended December 31, 2018 and 2017:
Financial Instruments: We use forward contracts to mitigate currency risk related to forecasted foreign currency revenue and costs. These forward contracts are designed as cash flow hedges. At least quarterly, we assess the effectiveness of these hedging relationships based on the total change in their fair value using regression analysis. In addition, we use interest rate swaps to convert a portion of our revolving credit facility's variable rate of interest into a fixed rate. As a result of the use of these derivative instruments, the Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors and by using netting agreements. Our established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. We estimate the fair value of our financial instruments as follows:
Debt Issuance Costs: We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. Stock-Based Compensation: We recognize expense related to the fair value of stock-based compensation awards, consisting of restricted stock units ("RSUs"), cash-settled restricted stock units, and stock options, in the Consolidated Statements of Earnings. We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option pricing model. A number of assumptions are used by the Black-Scholes option pricing model to compute the grant date fair value of an award, including expected price volatility, option term, risk-free interest rate, and dividend yield. These assumptions are established at each grant date based upon current information at that time. Expected volatilities are based on historical volatilities of CTS' common stock. The expected option term is derived from historical data of exercise behavior. Actual option terms can differ from the expected option terms as a result of different groups of employees exhibiting different exercise behavior. The dividend yield is based on historical dividend payments. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve at the time of grant. The fair value of awards that are ultimately expected to vest is recognized as expense over the requisite service periods of the awards in the Consolidated Statements of Earnings. The grant date fair values of our service-based and performance-based RSUs are the closing price of our common stock on the date of grant. The grant date fair value of our market-based RSUs is determined by using a simulation, or Monte Carlo, approach. Under this approach, stock returns from a comparative group of companies are simulated over the performance period, considering both stock price volatility and the correlation of returns. The simulated results are then used to estimate the future payout based on the performance and payout relationship established by the conditions of the award. The future payout is discounted to the measurement date using the risk-free interest rate. Both our stock option and RSU awards primarily have a graded vesting schedule. We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. See Note 16, "Stock-Based Compensation" for further information. In 2016, we elected to early adopt the provisions of ASU No. 2016-09 "Compensation-Stock Compensation (Topic 718): Improvement to Employee Share based Payment Accounting". Pursuant to this adoption, we recorded excess tax benefits within income tax expense for the year ended December 31, 2016, where previously these were recorded as increases or decreases to additional contributed capital. In addition, we have elected to account for forfeitures of awards as they occur. Both of these changes have been applied prospectively, and therefore no adjustments were made to prior periods. In accordance with the guidance, we retrospectively reported cash paid on behalf of employees for withholding shares for tax-withholding purposes as a financing activity in the Consolidated Statements of Cash Flows. Additionally, excess tax benefits were classified as an operating activity, applied prospectively. Adoption of this ASU did not result in a material change in our earnings, cash flows, or financial position. Earnings Per Share: Basic earnings per share excludes any dilution and is computed by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if dilutive securities, such as stock options and unvested restricted stock units, were exercised or resulted in the issuance of common stock. Diluted earnings per share is calculated by adding all potentially dilutive shares to the weighted average number of common shares outstanding for the denominator. If the common stock equivalents have an anti-dilutive effect, they are excluded from the computation of diluted earnings per share. Our antidilutive stock options and RSUs consist of the following:
Foreign Currencies: The financial statements of our non-U.S. subsidiaries, except the United Kingdom ("U.K.") subsidiary, are remeasured into U.S. dollars using the U.S. dollar as the functional currency with all remeasurement adjustments included in the determination of net earnings. Foreign currency gains (losses) recorded in the Consolidated Statement of Earnings includes the following:
The assets and liabilities of our U.K. subsidiary are translated into U.S. dollars at the current exchange rate at period end, with the resulting translation adjustments made directly to the "accumulated other comprehensive loss" component of shareholders' equity. Our Consolidated Statement of Earnings accounts are translated at the average rates during the period. Shipping and Handling: All fees billed to the customer for shipping and handling are classified as a component of net sales. All costs associated with shipping and handling are classified as a component of cost of goods sold or operating expenses, depending on the nature of the underlying purchase. Sales Taxes: When applicable, we classify sales taxes on a net basis in our consolidated financial statements. Subsequent Events: We have evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date the financial statements are issued. On February 7, 2019, the Board of Directors authorized a new stock repurchase program with a maximum dollar limit of $25 million and no set expiration date. This new program replaces the previous program that was approved in April 2015. On February 12, 2019, CTS entered into an amended and restated five-year Credit Agreement with a group of banks (the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility of $300 million, which may be increased by $150 million at the request of the Company, subject to the administrative agent’s approval. This new unsecured credit facility replaces the prior $300 million unsecured credit facility, which would have expired August 10, 2020. Borrowings of $50 million under the prior credit agreement were refinanced into the Credit Agreement and the prior agreement was terminated as of February 12, 2019. Changes in Accounting Principles: Beginning in January 2018, CTS adopted the provisions of ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. This approach was applied to contracts not completed as of December 31, 2017. At date of adoption, there was no significant change to our past revenue recognition practices and therefore no adjustment to the opening balance of retained earnings was required. Beginning in April 2018, CTS elected to adopt the provisions of ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities" under the modified retrospective method, which may require a cumulative effect adjustment to the opening balance of retained earnings. Prior to adoption, the company measured hedge effectiveness for all cash flow hedges quarterly and recognized any ineffectiveness in earnings in the current period. Upon adoption the company elected to review hedge effectiveness qualitatively as described further in Note 13 - Derivatives. At the date of adoption there was no significant hedge ineffectiveness recorded in earnings for hedged assets existing as of January 1, 2018, and therefore no adjustment to the opening balance of retained earnings was required. In 2018, CTS adopted the provision of ASU No. 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This ASU allows for the reclassification from Accumulated Other Comprehensive Income ("AOCI") to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act that was enacted in December 2017. The total impact due to adoption of this standard was an increase in retained earnings of $17,433. Change in Estimate: Beginning in January 2017, we changed the method we use to calculate the service and interest cost components of net periodic benefit cost for our U.S. pension and other post-retirement benefit plans. Previously, we calculated the service and interest cost components using a single weighted-average discount rate derived from the yield curve to measure the benefit obligation at the beginning of the period. In 2017, we began using a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot-rates along the yield curve to the relevant projected cash flows. This approach better aligns each of the projected benefit cash flows to the corresponding spot rates on the yield curve, resulting in a more precise measurement of service and interest costs. The change in method resulted in a decrease in the service and interest components of pension costs in 2017. Any decrease to these components as a result of adoption of this approach is equally offset by a decrease in the actuarial losses included in our accumulated other comprehensive loss, with no impact on the measurement of the benefit obligation. This change is accounted for prospectively as a change in accounting estimate. Reclassifications: Certain reclassifications have been made to prior year amounts to conform to the current year presentation. The reclassifications had no impact on previously reported net earnings. Recently Issued Accounting Pronouncements ASU No. 2018-14 "Compensation - Retirement Benefits - Defined Benefit Plans - General" In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General." This ASU modifies the disclosure requirements for defined benefit and other postretirement plans. This ASU eliminates certain disclosures associated with accumulated other comprehensive income, plan assets, related parties, and the effects of interest rate basis point changes on assumed health care costs; while other disclosures have been added to address significant gains and losses related to changes in benefit obligations. This ASU also clarifies disclosure requirements for projected benefit and accumulated benefit obligations. The amendments in this ASU are effective for fiscal years ending after December 15, 2020 and for interim periods therein with early adoption permitted. Adoption on a retrospective basis for all periods presented is required. This ASU will impact our financial statement disclosures but will not have an impact on our consolidated financial position, results of operations, or cash flows. ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement" In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement". This ASU modified the disclosures related to recurring and nonrecurring fair value measurements. Disclosures related to the transfer of assets between Level 1 and Level 2 hierarchies have been eliminated and various additional disclosures related to Level 3 fair value measurements have been added, modified or removed. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted upon issuance of the standard for modified or removed disclosures, with a delay in adoption for the additional required disclosures until their effective date. This ASU is not expected to have a significant impact on our financial statement disclosures. ASU No. 2016-16 "Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory" In October 2016, the FASB issued ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory". This ASU is meant to improve the accounting for the income tax effect of intra-entity transfers of assets other than inventory. Currently, U.S. GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfers until the asset is sold to a third party. This ASU will now require companies to recognize the income tax effect of an intra-entity asset transfer (other than inventory) when the transaction occurs. This ASU is effective for public companies in fiscal years beginning after December 15, 2019 and interim periods within those annual reporting periods. Early adoption is permitted and is to be applied on a modified retrospective bases through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. This guidance is not expected to have a material impact on our consolidated financial statements. ASU No. 2016-02 "Leases (Topic 842)" In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)", which requires companies to record almost all leases on the balance sheet as a lease liability with a corresponding right of use asset. The lease liability is based on the present value of minimum lease payments discounted using our secured incremental borrowing rate at the date of adoption. Existing deferred rent liability balances, resulting from historical straight-lining of operating leases, will be reclassified upon adoption to reduce the measurement of the lease assets, causing a difference between the lease liability and asset. The majority of our leases are operating leases where expense will be recognized in the consolidated statement of income in a manner similar to current accounting guidance. Accounting for finance leases requires amortization of the right-of-use asset and an interest expense component, similar to the prior account for capital leases. Lessor accounting under the new standard is substantially unchanged. We will adopt the new standard effective January 1, 2019, and intend to elect the optional transition method that allows us to recognize a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption, if necessary, without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance, which among other things, allows us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have also elected the practical expedient to not separate lease and non-lease components for the majority of our leases and the election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet. We have assessed the impact of the new standard and have concluded it will not have a material effect on our results from operations or cash flows. However it will materially impact our financial position by increasing lease assets and liabilities. We have estimated our lease liability to be in the range of $24-$28 million and expect our lease asset to be lower than the lease liability by approximately $3 million as a result of our existing deferred rent liability balances. We do not expect any adjustment to the opening balance of retained earnings. We will include the impact of the new standard and the additional required disclosures beginning with our Form 10-Q for the first quarter of 2019. |
Revenue Recognition (Notes) |
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Revenue from Contract with Customer [Text Block] | Revenue Recognition The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle:
We recognize revenue when the performance obligations specified in our contracts have been satisfied, after considering the impact of variable consideration and other factors that may affect the transaction price. Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery based on shipping terms stipulated in the contract. We usually expect payment within 30 to 90 days from the shipping date, depending on our terms with the customer. None of our contracts as of December 31, 2018, contained a significant financing component. Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method based on an analysis of historical experience and current facts and circumstances, which requires significant judgment. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Contract Assets and Liabilities Contract assets and liabilities included in our Condensed Consolidated Balance Sheets are as follows:
During the three and twelve months ended December 31, 2018, we recognized a decrease of revenues of $46 and an increase of $22, respectively, that were included in contract liabilities at the beginning of the period. The increase in contract liabilities as of December 31, 2018 is primarily due to net increases in estimated future discounts and price concessions, offset by net settlements of products sold with rights of return. Disaggregated Revenue The following table presents revenues disaggregated by the major markets we serve:
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Accounts Receivable | Accounts Receivable The components of accounts receivable are as follows:
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Inventories | Inventories Inventories consist of the following:
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Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is comprised of the following:
Depreciation expense recorded in the Consolidated Statements of Earnings includes the following:
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans | Retirement Plans We have a number of noncontributory defined benefit pension plans ("pension plans") covering approximately 1% of our active employees. Pension plans covering salaried employees provide pension benefits that are based on the employees´ years of service and compensation prior to retirement. Pension plans covering hourly employees generally provide benefits of stated amounts for each year of service. We also provide post-retirement life insurance benefits for certain retired employees. Domestic employees who were hired prior to 1982 and certain domestic union employees are eligible for life insurance benefits upon retirement. We fund life insurance benefits through term life insurance policies and intend to continue funding all of the premiums on a pay-as-you-go basis. We recognize the funded status of a benefit plan in our consolidated balance sheets. The funded status is measured as the difference between plan assets at fair value and the projected benefit obligation. We also recognize, as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit/cost. The measurement dates for the pension plans for our U.S. and non-U.S. locations were December 31, 2018, and 2017. During 2017, we offered certain former vested employees in our U.S. pension plan a one-time option to receive a lump sum distribution of their benefits from pension plan assets. The pension plan made approximately $23,912 in lump sum payments to settle its obligation to these participants. These settlement payments decreased the projected benefit obligation and plan assets by $23,912, and resulted in a non-cash settlement charge of $13,476 related to unrecognized net actuarial losses that were previously included in accumulated other comprehensive loss. The measurement date of this settlement was December 31, 2017. The following table provides a reconciliation of benefit obligation, plan assets, and the funded status of the pension plans for U.S. and non-U.S. locations at the measurement dates.
The measurement dates for the post-retirement life insurance plan were December 31, 2018, and 2017. The following table provides a reconciliation of benefit obligation, plan assets, and the funded status of the post-retirement life insurance plan at those measurement dates.
The components of the prepaid (accrued) cost of the domestic and foreign pension plans are classified in the following lines in the Consolidated Balance Sheets at December 31:
The components of the accrued cost of the post-retirement life insurance plan are classified in the following lines in the Consolidated Balance Sheets at December 31:
We have also recorded the following amounts to accumulated other comprehensive loss for the U.S. and non-U.S. pension plans, net of tax:
We have recorded the following amounts to accumulated other comprehensive loss for the post-retirement life insurance plan, net of tax:
The accumulated actuarial gains and losses and prior service costs and credits included in other comprehensive income are amortized in the following manner: The component of unamortized net gains or losses related to our qualified pension plans is amortized based on the expected future life expectancy of the plan participants (estimated to be approximately 17 years at December 31, 2018), because substantially all of the participants in those plans are inactive. The component of unamortized net gains or losses related to our post-retirement life insurance plan is amortized based on the estimated remaining future service period of the plan participants (estimated to be approximately 4 years at December 31, 2018). The Company uses a market-related approach to value plan assets, reflecting changes in the fair value of plan assets over a five-year period. The variance resulting from the difference between the expected and actual return on plan assets is included in the amortization calculation upon reflection in the market-related value of plan assets. In 2019, we expect to recognize approximately $5,270 and $0 of pre-tax losses included in accumulated other comprehensive loss related to our pension plans and post-retirement life insurance plan, respectively. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for those Pension Plans with accumulated benefit obligation in excess of fair value of plan assets is shown below:
Net pension expense (income) includes the following components:
Net post-retirement expense includes the following components:
The discount rate utilized to estimate our pension and post-retirement obligations is based on market conditions at December 31, 2018, and is determined using a model consisting of high quality bond portfolios that match cash flows of the plans' projected benefit payments based on the plan participants' service to date and their expected future compensation. Use of the rate produced by this model generates a projected benefit obligation that equals the current market value of a portfolio of high quality bonds whose maturity dates match the timing and amount of expected future benefit payments. The discount rate used to determine 2018 pension and post-retirement expense is based on market conditions at December 31, 2017, and is the interest rate used to estimate interest incurred on the outstanding projected benefit obligations during the period. We utilize a building block approach in determining the long-term rate of return for plan assets. Historical markets are reviewed and long-term relationships between equities and fixed-income are preserved consistent with the generally accepted capital market principle that assets with higher volatility generate a greater return over the long term. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established via a building block approach with proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed to ensure for reasonableness and appropriateness. Our pension plan asset allocation at December 31, 2018, and 2017, and target allocation for 2019 by asset category are as follows:
We employ a liability-driven investment strategy whereby a mix of equity and fixed-income investments are used to pursue a de-risking strategy which over time seeks to reduce interest rate mismatch risk and other risks while achieving a return that matches or exceeds the growth in projected pension plan liabilities. Risk tolerance is established through careful consideration of plan liabilities and funded status. The investment portfolio primarily contains a diversified mix of equity and fixed-income investments. Other assets such as private equity are used modestly to enhance long-term returns while improving portfolio diversification. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and asset/liability studies at regular intervals. The following table summarizes the fair values of our pension plan assets:
The fair values at December 31, 2018, are classified within the following categories in the fair value hierarchy:
The fair values at December 31, 2017, are classified within the following categories in the fair value hierarchy:
The pension plan assets recorded at fair value are measured and classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs available in the marketplace used to measure fair value as discussed below:
The table below reconciles the Level 3 partnership assets within the fair value hierarchy:
The partnership fund manager uses a market approach in estimating the fair value of the plan's Level 3 asset. The market approach estimates fair value by first determining the entity's earnings before interest, taxes, depreciation and amortization and then multiplying that value by an estimated multiple. When establishing an appropriate multiple, the fund manager considers recent comparable private company transactions and multiples paid. The entity's net debt is then subtracted from the calculated amount to arrive at an estimated fair value for the entity. We expect to make $100 of contributions to the U.S. plans and $271 of contributions to the non-U.S. plans during 2019. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
Defined Contribution Plans We sponsor a 401(k) plan that covers substantially all of our U.S. employees. Contributions and costs are generally determined as a percentage of the covered employee's annual salary. Expenses related to defined contribution plans include the following:
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets We evaluate finite-lived intangible assets for impairment if indicators of impairment exist. No indicators were identified for the years ended December 31, 2018, or December 31, 2017. Other intangible assets consist of the following:
Amortization expense remaining for other intangible assets is as follows:
In 2018, a goodwill impairment test was performed by management with the assistance of a third-party valuation firm. As of December 31, 2018, it was concluded that the fair value of each of our reporting units exceeded their carrying values, and accordingly, no goodwill impairment was required. Changes in the net carrying value amount of goodwill were as follows:
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Costs Associated with Exit and Restructuring Activities |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Costs Associated with Exit and Restructuring Activities | Costs Associated with Exit and Restructuring Activities Restructuring and impairment charges are reported as a separate line within operating earnings in the Consolidated Statements of Earnings. Total restructuring and impairment charges were:
In June 2016, we announced plans to restructure operations by phasing out production at our Elkhart, IN facility and transitioning it into a research and development center supporting our global operations ("June 2016 Plan"). Additional organizational changes will also occur in various other locations. In 2017, we amended this plan to include costs related to the relocation of our corporate headquarters and Bolingbrook, Illinois manufacturing operations. The cost of the plan, which is expected to be completed in mid 2019, is estimated to be approximately $13,400 and impacts approximately 230 employees. Additional costs related to line movements, equipment charges, and other costs will be expensed as incurred. The total restructuring liability related to the June 2016 Plan was $668 at December 31, 2018. The following table displays the planned restructuring and impairment charges associated with the June 2016 Plan as well as a summary of the actual costs incurred through December 31, 2018:
During the years ended December 31, 2018 and 2017, total restructuring and impairment charges for the June 2016 Plan were as follows:
During April 2014, we announced plans to restructure our operations and consolidate our Canadian operations into other existing facilities as part of our overall plan to simplify our business model and rationalize our global footprint ("April 2014 Plan"). These restructuring actions, which were substantially completed during 2015, resulted in the elimination of approximately 120 positions. The following table displays the planned restructuring and restructuring-related charges associated with the April 2014 Plan, as well as a summary of the actual costs incurred through December 31, 2018:
Restructuring charges under the April 2014 Plan were $503, $0, and $4,923 during the years ended December 31, 2018, 2017, and 2016, respectively. The total restructuring liability related to the April 2014 Plan was $918 at December 31, 2018. The following table displays the restructuring liability activity for the year ended December 31, 2018:
(1) Other activities includes currency translation adjustments not recorded through restructuring expense. The total liability of $1,586 is included in Accrued expenses and other liabilities at December 31, 2018. |
Accrued Liabilities and Other Liabilities |
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Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Accrued Expenses and Other Liabilities The components of accrued expenses and other liabilities are as follows:
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Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contingencies | Contingencies Certain processes in the manufacture of our current and past products create by-products classified as hazardous waste. We have been notified by the U.S. Environmental Protection Agency, state environmental agencies, and in some cases, groups of potentially responsible parties, that we are potentially liable for environmental contamination at several sites currently and formerly owned or operated by CTS. Some sites, such as Asheville, North Carolina and Mountain View, California, are designated National Priorities List Superfund sites under the U.S. Environmental Protection Agency’s Superfund program. We reserve for probable remediation activities at these sites and for claims and proceedings against CTS with respect to other environmental matters. We record reserves on an undiscounted basis. In the opinion of management, based upon presently available information relating to such matters, adequate provision for probable and estimable costs have been recorded. We do not have any known environmental obligations where a loss is probable or reasonably possible of occurring for which we do not have a reserve, nor do we have any amounts for which we have not reserved because the amount of the loss cannot be reasonably estimated. Due to the inherent nature of environmental obligations, we cannot provide assurance that our ultimate environmental liability will not materially exceed the amount of our current reserve. Our reserve and disclosures will be adjusted accordingly if additional information becomes available in the future. A roll-forward of remediation reserves on the balance sheet is comprised of the following:
Unrelated to the environmental claims described above, certain other legal claims are pending against us with respect to matters arising out of the ordinary conduct of our business. Although the ultimate outcome of any potential litigation resulting from these claims cannot be predicted with certainty, and some may be disposed of unfavorably to CTS, management believes that adequate provision for anticipated costs have been established based upon all presently available information. Except as noted herein, we do not believe we have any pending loss contingencies that are probable or reasonably possible of having a material impact on our consolidated financial position, results of operations or cash flows. |
Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Minimum future obligations under all non-cancelable operating leases as of December 31, 2018, are as follows:
Rent expense for operating leases charged to operations was as follows:
Operating leases include a variety of properties around the world. These properties are used as manufacturing facilities, distribution centers and sales and administrative offices. Lease expirations range from 2018 to 2033 with breaking periods specified in the lease agreements. Sublease income was $455 in 2018. Future sublease income is $444 in 2019, $423 in 2020, and $846 thereafter. Some of our operating leases include renewal options and escalation clauses. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long-term debt was comprised of the following:
Our revolving credit facility requires, among other things, that we comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Failure to comply with these covenants could reduce the borrowing availability under the revolving credit facility. We were in compliance with all debt covenants as of December 31, 2018. The revolving credit facility requires us to deliver quarterly financial statements, annual financial statements, auditors certifications and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the revolving credit facility contains restrictions limiting our ability to dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with our subsidiaries and affiliates; and make stock repurchases and dividend payments. Interest rates on the revolving credit facility fluctuate based upon the London Interbank Offered Rate and the Company's quarterly total leverage ratio. We pay a commitment fee on the undrawn portion of the revolving credit facility. The commitment fee varies based on the quarterly leverage ratio. We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. Amortization expense was approximately $185 in 2018 and 2017, and $163 in 2016, and was recognized as interest expense. We use interest rate swaps to convert the revolving credit facility's variable rate of interest into a fixed rate on a portion of the debt as described more fully in Note 13 "Derivatives". These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive earnings. Interest rate swaps activity recorded in other comprehensive earnings before tax included the following:
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Derivatives Derivative Financial Instruments (Notes) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivatives Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts and interest rate swaps to manage our exposure to these risks. The use of derivative financial instruments exposes the Company to credit risk, which relates to the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements. The effective portion of derivative gains and losses are recorded in accumulated other comprehensive (loss) income until the hedged transaction affects earnings upon settlement, at which time they are reclassified to interest expense, cost of goods sold, or net sales. If it is probable that an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to other income (expense). On April 1, 2018, the company adopted the provisions of ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities". As a result, hedge effectiveness was reviewed qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. No recognition of ineffectiveness was recorded in our Consolidated Statement of Earnings as a result of this qualitative analysis for the year ended December 31, 2018. Foreign Currency Hedges In January of 2016, we began using forward contracts to mitigate currency risk related to a portion of our forecasted foreign Euro denominated revenues and Mexican Peso denominated expenses. The currency forward contracts are designed as cash flow hedges and are recorded in the Consolidated Balance Sheets at fair value. As of December 31, 2018, we were hedging a portion of our forecasted Peso expenses for the following twelve months. We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At December 31, 2018, we had a net unrealized loss of $371 in accumulated other comprehensive loss, of which $318 is expected to be reclassified to income within the next 12 months. The notional amount of foreign currency forward contracts outstanding was $15,700 at December 31, 2018. Interest Rate Swaps We use interest rate swaps to convert the revolving credit facility’s variable rate of interest into a fixed rate on a portion of our debt balance. In the second quarter of 2012, we entered into four separate one-year interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2012, we entered into four additional one-year interest rate swap agreements to fix interest rates on $25,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2016, we entered into three additional one-year interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods August 2017 to August 2020. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled. These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive income (loss). The estimated net amount of the existing gains or losses that are reported in accumulated other comprehensive income (loss) that is expected to be reclassified into earnings within the next twelve months is approximately $576. The location and fair values of derivative instruments designated as hedging instruments in the Consolidated Balance Sheets as of December 31, 2018, are shown in the following table:
The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20 (Balance Sheet, Offsetting). On a gross basis, there were $423 foreign currency derivative assets and foreign currency derivative liabilities were $30. The effect of derivative instruments on the Consolidated Statements of Earnings is as follows:
The table below provides a reconciliation of the recurring financial assets and liabilities related to interest rate swaps and foreign currency hedges:
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Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Shareholders' equity includes certain items classified as accumulated other comprehensive loss ("AOCI") in the Consolidated Balance Sheets, including:
In 2018, CTS adopted the provision of ASU No. 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This ASU allows for the reclassification from AOCI to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act that was enacted in December 2017. The total impact due to adoption of this standard was an increase in retained earnings of $17,433. The components of AOCI for 2018 are as follows:
The components of AOCI for 2017 are as follows:
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Shareholders' Equity |
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Shareholders' Equity | Shareholders' Equity Share count and par value data related to shareholders' equity are as follows:
We use the cost method to account for our common stock purchases. During the year ended December 31, 2018 we purchased 342,100 shares for $9,440. During the year ended December 31, 2017, we did not purchase any shares of common stock under our board-authorized share repurchase program. Approximately $8,114 was available for future purchases under the previously authorized stock repurchase program that was approved by our Board of Directors in April 2015. As discussed in Note 1, the Board or Directors authorized a new stock repurchase program with a maximum dollar limit of $25 million that replaced the previous program. A roll forward of common shares outstanding is as follows:
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Equity-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation | -Based Compensation At December 31, 2018, we had five stock-based compensation plans: the Non-Employee Directors' Stock Retirement Plan ("Directors' Plan"), the 2004 Omnibus Long-Term Incentive Plan ("2004 Plan"), the 2009 Omnibus Equity and Performance Incentive Plan ("2009 Plan"), the 2014 Performance & Incentive Plan ("2014 Plan"), and the 2018 Equity and Incentive Compensation Plan ("2018 Plan"). Future grants can only be made under the 2018 Plan. These plans allow for grants of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance shares, performance units, and other stock awards subject to the terms of the specific plans under which the awards are granted. The following table summarizes the compensation expense included in selling, general and administrative expenses in the Consolidated Statements of Earnings related to stock-based compensation plans:
The fair value of all equity awards that vested during the periods ended December 31, 2018, 2017, and 2016 were $5,805, $5,471, and $4,959, respectively. We recorded a tax deduction related to equity awards that vested during the year ended December 31, 2018, in the amount of $1,312. The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized:
We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. The following table summarizes the status of these plans as of December 31, 2018:
Stock Options Stock options are exercisable in cumulative annual installments over a maximum 10-year period, commencing at least one year from the date of grant. Stock options are generally granted with an exercise price equal to the market price of our stock on the date of grant. The stock options generally vest over four years and have a 10-year contractual life. The awards generally contain provisions to either accelerate vesting or allow vesting to continue on schedule upon retirement if certain service and age requirements are met. The awards also provide for accelerated vesting if there is a change in control event. We estimate the fair value of the stock option on the grant date using the Black-Scholes option-pricing model and assumptions for expected price volatility, option term, risk-free interest rate, and dividend yield. Expected price volatilities are based on historical volatilities of our common stock. The expected option term was derived from historical data of exercise behavior. The dividend yield was based on historical dividend payments. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. There were no outstanding stock options at December 31, 2018, or 2017 other than the performance-based stock options described below. Performance-Based Stock Options During 2015 and 2016, the Compensation committee of the Board of Directors (the "Committee") granted a total of 350,000 performance-based stock options, of which 275,000 remain outstanding after forfeitures. The Performance-Based Option Awards have an exercise price of $18.37, a term of five years and generally will become exercisable (provided the optionee remains employed by the Company or an affiliate) upon our attainment of at least $600,000 in revenues during any of our four-fiscal-quarter trailing periods (as determined by the Committee) during the term. We have not recognized any expense on these Performance-Based Option Awards for the years ended December 31, 2018 and 2017, since the revenue target is not deemed likely to be attained based on our current forecast. Service-Based Restricted Stock Units Service-based RSUs entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers, key employees and non-employee directors as compensation. Generally, the RSUs vest over a three-year period. RSUs granted to non-employee directors vest one year after being granted. Upon vesting, the non-employee directors elect to either receive the stock associated with the RSU immediately, or defer receipt of the stock to a future date. The fair value of the RSUs is equivalent to the trading value of our common stock on the grant date. A summary of RSUs for all Plans is presented below:
A summary of nonvested RSUs is presented below:
Performance-Based Restricted Stock Units We grant performance-based restricted stock unit awards ("PSUs") to certain executives and key employees. Units are usually awarded in the range from zero percent to 200% of a targeted number of shares. The award rate for the 2016-2018, 2017-2019, and 2018-2020 PSUs is dependent upon our achievement of sales growth targets, cash flow targets, and relative total shareholder return ("RTSR") using a matrix based on the percentile ranking of our stock price performance compared to a peer group over a three-year period. These awards are weighted 35% for achievement of the sales growth metric, 30% for achievement of the cash flow metric, and 35% for achievement of the RTSR metric. Other PSUs are granted from time to time based on other performance criteria. A summary of PSUs for all Plans is presented below:
The following table summarizes each grant of performance awards outstanding at December 31, 2018:
Cash-Settled Restricted Stock Units Cash-Settled RSUs entitle the holder to receive the cash equivalent of one share of common stock for each unit when the unit vests. These RSUs are issued to key employees residing in foreign locations as direct compensation. Generally, these RSUs vest over a three-year period. Cash-settled RSUs are classified as liabilities and are remeasured at each reporting date until settled. At December 31, 2018, and 2017, we had 17,248 and 14,082 cash-settled RSUs outstanding, respectively. At December 31, 2018, and 2017, liabilities of $300 and $241, respectively were included in Accrued expenses and other liabilities on our Consolidated Balance Sheets. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The table below summarizes the financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2018 and the (gain) loss recorded during the year ended December 31, 2018:
The table below summarizes the financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2017 and the (gain) loss recorded during the year ended December 31, 2017:
The fair value of our interest rate swaps and foreign currency hedges were measured using standard valuation models using market-based observable inputs over the contractual terms, including forward yield curves, among others. There is a readily determinable market for these derivative instruments, but the market is not active and therefore they are classified within level 2 of the fair value hierarchy. The table below provides a reconciliation of the recurring financial assets and liabilities related to interest rate swaps and foreign currency hedges:
Our long-term debt consists of a revolving credit facility which is recorded at its carrying value. There is a readily determinable market for our revolving credit debt and it is classified within Level 2 of the fair value hierarchy as the market is not deemed to be active. The fair value of long-term debt approximates carrying value and was determined by valuing a similar hypothetical coupon bond and attributing that value to our credit facility. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Earnings before income taxes consist of the following:
Significant components of income tax provision/(benefit) are as follows:
Significant components of our deferred tax assets and liabilities are as follows:
The long-term deferred tax assets and long-term deferred tax liabilities are as follows below:
At each reporting date, we weigh all available positive and negative evidence to assess whether it is more-likely-than-not that the Company's deferred tax assets, including deferred tax assets associated with accumulated loss carryforwards and tax credits in the various jurisdictions in which it operates, will be realized. As of December 31, 2018, and 2017, we recorded deferred tax assets related to certain U.S. state and non-U.S. income tax loss carryforwards of $4,647 and $5,401, respectively, and U.S. and non-U.S. tax credits of $16,909 and $10,793, respectively. The deferred tax assets expire in various years primarily between 2021 and 2038. Generally, we assess if it is more-likely-than-not that our net deferred tax assets will be realized during the available carry-forward periods. As a result, we have determined that valuation allowances of $8,274 and $8,182 should be provided for certain deferred tax assets at December 31, 2018, and 2017, respectively. As of December 31, 2018, the valuation allowances relate to certain U.S. state and non-U.S. loss carry-forwards and certain U.S. state tax credits that management does not anticipate will be utilized. No valuation allowance was recorded in 2018 against the U.S. federal foreign tax credit carryforwards of $7,316, which expire in varying amounts between 2023 and 2025 as well as the research and development tax credits of $6,516, which expire in varying amounts between 2021 and 2038. We assessed the anticipated realization of those tax credits utilizing future taxable income projections. Based on those projections, management believes it is more-likely-than-not that we will realize the benefits of these credit carryforwards. The following table reconciles taxes at the U.S. federal statutory rate to the effective income tax rate:
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We recognized a provisional amount of $18,001 as an additional income tax expense in the fourth quarter of 2017. This amount included $11,734 related to the mandatory deemed one-time transition tax and $6,267 related to the remeasurement of certain deferred tax assets and liabilities. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The remeasurement period for SAB 118 ended on December 22, 2018, and upon completion of our analysis we determined the final impact of the Tax Act resulted in an additional tax benefit of $348 during the fourth quarter of 2018. This amount included a $589 tax benefit related to the one-time transition tax and $241 tax expense related to the remeasurement of certain deferred tax assets and liabilities. Generally, outside of Canada and the United Kingdom, it has been our historical practice to permanently reinvest the earnings of our non-U.S. subsidiaries in those operations. As previously noted, the Tax Act made significant changes to the taxation of undistributed foreign earnings, requiring that all previously untaxed earnings and profits of our controlled foreign corporation be subjected to a one-time mandatory deemed repatriation tax. The transition tax substantially eliminated the basis differences that existed prior to the Tax Act. However, there are limited other taxes that could continue to apply such as foreign withholding and certain state taxes. We completed the evaluation of our indefinite reinvestment assertion as a result of the Tax Act during the fourth quarter of 2018 and decided not to reinvest the current year earnings of our primary operations, except for in the Czech Republic, Denmark, India, Mexico and Taiwan. We intend to continue to indefinitely reinvest the earnings in these non-U.S. subsidiaries. The Tax Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein taxes on foreign income are imposed in excess of a deemed return on tangible assets of foreign corporations. We elected to recognize the tax on GILTI as an expense in the period the tax is incurred. We have not provided deferred taxes related to temporary differences that upon their reversal will impact the amount of income subject to GILTI in the period. We recognize the financial statement benefit of a tax position when it is more-likely-than-not, based on its technical merits, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not threshold is then measured to determine the amount of benefit to be recognized in the financial statements. As of December 31, 2018, we have approximately $6,203 of unrecognized tax benefits, which if recognized, would impact the effective tax rate. We do not anticipate any significant changes in our unrecognized tax benefits within the next 12 months. A reconciliation of the beginning and ending unrecognized tax benefits is provided below:
Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2018, and 2017, $2,515 and $2,596, respectively, of interest and penalties were accrued. We are subject to taxation in the U.S., various states, and in non-U.S. jurisdictions. Our U.S. income tax returns are primarily subject to examination from 2015 through 2017; however, U.S. tax authorities also have the ability to review prior tax years to the extent loss carryforwards and tax credit carryforwards are utilized. The open years for the non-U.S. tax returns range from 2010 through 2017 based on local statutes. |
Business Acquisitions |
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Business Acquisitions | Business Acquisitions On May 15, 2017, we acquired 100% of the equity interests in Noliac A/S, a privately-held company, for $19.3 million in cash. Noliac A/S is a designer and manufacturer of tape cast and bulk piezoelectric material as well as transducers for use in the telecommunications, industrial, medical, and defense industries. This acquisition will enable us to increase our product base within our ceramics product lines as well as expand our presence in the European market. The purchase price of $19,121, net of cash acquired of $199, has been allocated to the assets acquired and liabilities assumed on the acquisition date based on their fair values. The following table summarizes the fair values of the assets acquired and the liabilities assumed at the date of acquisition:
Goodwill recorded in connection with this acquisition represents the value we expect to be created by combining the operations of the acquired business with our existing operations, including the expansion into markets within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to this acquisition is expected to be deductible for tax purposes. The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:
We incurred $291 in transaction related costs during the year ended December 31, 2017. These costs are included in selling, general, and administrative costs in our Consolidated Statements of Earnings. On March 11, 2016, we acquired all of the outstanding membership interests in CTG Advanced Materials, LLC (“CTG-AM”), a privately-held company, for $73 million in cash plus a working capital adjustment. CTG-AM, formerly operated as H.C. Materials, is the market leading designer and manufacturer of single crystal piezoelectric materials, serving major original equipment manufacturers throughout the medical marketplace. These materials enable high definition ultrasound imaging (3D and 4D), as well as intravascular ultrasound applications. Other applications for these materials include wireless pacemakers, implantable hearing aids, and defense technologies. With the CTG-AM acquisition, we gained technology and proprietary manufacturing methods that expand our offering of piezoelectric materials. This allows us to become the leading large-scale commercial producer of both single crystal materials and traditional piezoelectric ceramics. The purchase price of $73,063, net of cash acquired of $4, has been allocated to the fair values of assets and liabilities acquired as of March 11, 2016. The following table summarizes the fair values of the assets acquired and the liabilities assumed at the date of acquisition:
Goodwill recorded in connection with this acquisition represents the value we expect to be created by combining the operations of the acquired business with our existing operations, including the expansion into markets within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to this acquisition is expected to be deductible for tax purposes. The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:
We incurred $804 in transaction related costs during the year ended December 31, 2016. These costs are included in selling, general, and administrative costs in our Consolidated Statements of Earnings. |
Geographic Data |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Data | Geographic Data Financial information relating to our operations by geographic area were as follows:
Sales are attributed to countries based upon the origin of the sale.
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Quarterly Financial Data |
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Quarterly Financial Data | Quarterly Financial Data Quarterly Results of Operations (Unaudited)
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | CTS CORPORATION
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Business | Description of Business: CTS Corporation ("CTS", "we", "our", "us" or the "Company") is a global manufacturer of sensors, electronic components, and actuators. We operate manufacturing facilities located throughout North America, Asia and Europe and service major markets globally. CTS consists of one reportable business segment. |
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Principles of Consolidation | Principles of Consolidation: The consolidated financial statements include the accounts of CTS and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
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Fiscal Calendar | Fiscal Calendar: We began using a calendar period end in 2016. Prior to that, we operated on a 4 week/ 4 week/ 5 week fiscal quarter, and each fiscal quarter ended on a Sunday that always began on January 1 and ended on December 31. |
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Use of Estimates | Use of Estimates: The preparation of financial statements in conformity with the accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. |
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Cash and Cash Equivalents | Cash and Cash Equivalents: All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. |
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Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable consists primarily of amounts due from normal business activities. We maintain an allowance for doubtful accounts for estimated uncollectible accounts receivable. Our reserves for estimated credit losses are based upon historical experience and specific customer collection issues. Accounts are written off against the allowance account when they are determined to no longer be collectible. |
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Concentration of Credit Risk | Concentration of Credit Risk: Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and trade receivables. Our cash and cash equivalents, at times, may exceed federally insured limits. Cash and cash equivalents are deposited primarily in banking institutions with global operations. We have not experienced any losses in such accounts. We believe we are not exposed to any significant credit risk on cash and cash equivalents. Trade receivables subject us to the potential for credit risk with major customers. We sell our products to customers principally in the aerospace and defense, industrial, information technology, medical, telecommunications, and transportation markets, primarily in North America, Europe, and Asia. We perform ongoing credit evaluations of our customers to minimize credit risk. We do not require collateral. The allowance for doubtful accounts is based on management's estimates of the collectability of its accounts receivable after analyzing historical bad debts, customer concentrations, customer creditworthiness, and current economic trends. Uncollectible trade receivables are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted. |
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Inventories | Inventories: We value our inventories at the lower of the actual cost to purchase or manufacture or the net realizable value using the first-in, first-out ("FIFO") method. We review inventory quantities on hand and record a provision for excess and obsolete inventory based on forecasts of product demand and production requirements. |
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Retirement Plans | Retirement Plans: We have various defined benefit and defined contribution retirement plans. Our policy is to annually fund the defined benefit pension plans at or above the minimum required by law. We: 1) recognize the funded status of a benefit plan (measured as the difference between plan assets at fair value and the benefit obligation) in our Consolidated Balance Sheets; 2) recognize the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit/cost as a component of other comprehensive earnings; and 3) measure defined benefit plan assets and obligations as of the date of our fiscal year-end. See Note 6, "Retirement Plans" for further information. |
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Property, Plant and Equipment | Property, Plant and Equipment: Property, plant and equipment is stated at cost. Depreciation and amortization is computed primarily over the estimated useful lives of the various classes of assets using the straight-line method. Useful lives for buildings and improvements range from 10 to 45 years. Machinery and equipment useful lives range from 3 to 15 years. Depreciation on leasehold improvements is computed over the lesser of the lease term or estimated useful lives of the assets. Amounts expended for maintenance and repairs are charged to expense as incurred. Upon disposition, any related gains or losses are included in operating earnings. |
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Income Taxes | Income Taxes: We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more-likely-than-not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In 2016, we elected to early adopt Accounting Standards Update ("ASU") No. 2015-17 "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes", on a retrospective basis allowing for all deferred tax items to be classified as non-current. Certain non-current deferred tax assets and non-current deferred tax liabilities were not netted since these items relate to different tax jurisdictions. We record uncertain tax positions in accordance with Accounting Standards Codification ("ASC") Topic 740 on the basis of a two-step process in which (1) we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying Consolidated Statements of Operations. Accrued interest and penalties are included on the related tax liability line in the Consolidated Balance Sheets. See Note 18, "Income Taxes" for further information. |
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Goodwill and Other Intangible Assets | Goodwill and Indefinite-lived Intangible Assets: Goodwill represents the excess of the purchase price over the fair values of the net assets acquired in a business combination. We test the impairment of goodwill at least annually as of the first day of our fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. In addition to goodwill, we also have acquired in-process research and development ("IPR&D") intangible assets that are treated as indefinite-lived intangible assets and therefore not subject to amortization until the completion or abandonment of the associated research and development efforts. If these efforts are abandoned in the future, the carrying value of the IPR&D asset will be expensed. If the research and development efforts are successfully completed, the IPR&D will be reclassified as a finite-lived asset and amortized over its useful life. We have the option to perform a qualitative assessment (commonly referred to as "step zero" test) to determine whether further quantitative analysis for impairment of goodwill and indefinite-lived intangible assets is necessary. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and our own overall financial and share price performance, among other factors. If, after assessing the totality of events or circumstances, we determine that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, we do not need to perform a quantitative analysis. We completed our annual impairment test during 2018 by performing a qualitative assessment and determined that our goodwill was not impaired as of the measurement date. We have not recorded any impairment of goodwill or other indefinite-lived intangible assets in the years ended December 31, 2018, 2017 and 2016. Other Intangible Assets and Long-lived Assets: We account for long-lived assets (excluding indefinite-lived intangible assets) in accordance with the provisions of ASC 360. This statement requires that long-lived assets, which includes fixed assets and finite-lived intangible assets, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an impairment test is warranted, recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount in which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Intangible assets (excluding indefinite-lived intangible assets) consist primarily of technology, customer lists and relationships, patents, and trade names. These assets are recorded at cost and usually amortized on a straight-line basis over their estimated lives. We assess useful lives based on the period over which the asset is expected to contribute to cash flows. |
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Revenue Recognition | Revenue Recognition: Beginning in January 2018, CTS adopted the provisions ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". Product revenue is recognized upon the transfer of promised goods to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods. We follow the five step model to determine when this transfer has occurred: 1) identify the contract(s) with the customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; 5) recognize revenue when (or as) the entity satisfies a performance obligation. Prior to January 1, 2018, product revenue was recognized once four criteria were met: 1) we have persuasive evidence that an arrangement exists; 2) delivery has occurred and title has passed to the customer, which generally happens at the point of shipment provided that no significant obligations remain; 3) the price is fixed and determinable; and 4) collectability is reasonably assured. |
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Research and Development | Research and Development: Research and development ("R&D") costs include expenditures for search and investigation aimed at discovery of new knowledge to be used to develop new products or processes or to significantly enhance existing products or production processes. R&D costs also include the implementation of new knowledge through design, testing of product alternatives, or construction of prototypes. We expense all R&D costs as incurred, net of customer reimbursements for sales of prototypes and non-recurring engineering charges. We create prototypes and tools related to R&D projects. A prototype is defined as a constructed product not intended for production resulting in a commercial sale. We also incur engineering costs related to R&D activities. Such costs are incurred to support such activities to improve the reliability, performance and cost-effectiveness of our existing products and to design and develop innovative products that meet customer requirements for new applications. Furthermore, we may engage in activities that develop tooling machinery and equipment for our customers. |
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Financial Instruments | Financial Instruments: We use forward contracts to mitigate currency risk related to forecasted foreign currency revenue and costs. These forward contracts are designed as cash flow hedges. At least quarterly, we assess the effectiveness of these hedging relationships based on the total change in their fair value using regression analysis. In addition, we use interest rate swaps to convert a portion of our revolving credit facility's variable rate of interest into a fixed rate. As a result of the use of these derivative instruments, the Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors and by using netting agreements. Our established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. We estimate the fair value of our financial instruments as follows:
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Debt Issuance Costs | Debt Issuance Costs: We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. |
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Equity-Based Compensation | Stock-Based Compensation: We recognize expense related to the fair value of stock-based compensation awards, consisting of restricted stock units ("RSUs"), cash-settled restricted stock units, and stock options, in the Consolidated Statements of Earnings. We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option pricing model. A number of assumptions are used by the Black-Scholes option pricing model to compute the grant date fair value of an award, including expected price volatility, option term, risk-free interest rate, and dividend yield. These assumptions are established at each grant date based upon current information at that time. Expected volatilities are based on historical volatilities of CTS' common stock. The expected option term is derived from historical data of exercise behavior. Actual option terms can differ from the expected option terms as a result of different groups of employees exhibiting different exercise behavior. The dividend yield is based on historical dividend payments. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve at the time of grant. The fair value of awards that are ultimately expected to vest is recognized as expense over the requisite service periods of the awards in the Consolidated Statements of Earnings. The grant date fair values of our service-based and performance-based RSUs are the closing price of our common stock on the date of grant. The grant date fair value of our market-based RSUs is determined by using a simulation, or Monte Carlo, approach. Under this approach, stock returns from a comparative group of companies are simulated over the performance period, considering both stock price volatility and the correlation of returns. The simulated results are then used to estimate the future payout based on the performance and payout relationship established by the conditions of the award. The future payout is discounted to the measurement date using the risk-free interest rate. Both our stock option and RSU awards primarily have a graded vesting schedule. We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. See Note 16, "Stock-Based Compensation" for further information. In 2016, we elected to early adopt the provisions of ASU No. 2016-09 "Compensation-Stock Compensation (Topic 718): Improvement to Employee Share based Payment Accounting". Pursuant to this adoption, we recorded excess tax benefits within income tax expense for the year ended December 31, 2016, where previously these were recorded as increases or decreases to additional contributed capital. In addition, we have elected to account for forfeitures of awards as they occur. Both of these changes have been applied prospectively, and therefore no adjustments were made to prior periods. In accordance with the guidance, we retrospectively reported cash paid on behalf of employees for withholding shares for tax-withholding purposes as a financing activity in the Consolidated Statements of Cash Flows. Additionally, excess tax benefits were classified as an operating activity, applied prospectively. Adoption of this ASU did not result in a material change in our earnings, cash flows, or financial position. |
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Earnings Per Share | Earnings Per Share: Basic earnings per share excludes any dilution and is computed by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if dilutive securities, such as stock options and unvested restricted stock units, were exercised or resulted in the issuance of common stock. Diluted earnings per share is calculated by adding all potentially dilutive shares to the weighted average number of common shares outstanding for the denominator. If the common stock equivalents have an anti-dilutive effect, they are excluded from the computation of diluted earnings per share. |
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Foreign Currencies | Foreign Currencies: The financial statements of our non-U.S. subsidiaries, except the United Kingdom ("U.K.") subsidiary, are remeasured into U.S. dollars using the U.S. dollar as the functional currency with all remeasurement adjustments included in the determination of net earnings. Foreign currency gains (losses) recorded in the Consolidated Statement of Earnings includes the following:
The assets and liabilities of our U.K. subsidiary are translated into U.S. dollars at the current exchange rate at period end, with the resulting translation adjustments made directly to the "accumulated other comprehensive loss" component of shareholders' equity. Our Consolidated Statement of Earnings accounts are translated at the average rates during the period. |
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Shipping and Handling | Shipping and Handling: All fees billed to the customer for shipping and handling are classified as a component of net sales. All costs associated with shipping and handling are classified as a component of cost of goods sold or operating expenses, depending on the nature of the underlying purchase. |
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Sales Tax | Sales Taxes: When applicable, we classify sales taxes on a net basis in our consolidated financial statements. |
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New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Changes in Accounting Principles: Beginning in January 2018, CTS adopted the provisions of ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. This approach was applied to contracts not completed as of December 31, 2017. At date of adoption, there was no significant change to our past revenue recognition practices and therefore no adjustment to the opening balance of retained earnings was required. Beginning in April 2018, CTS elected to adopt the provisions of ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities" under the modified retrospective method, which may require a cumulative effect adjustment to the opening balance of retained earnings. Prior to adoption, the company measured hedge effectiveness for all cash flow hedges quarterly and recognized any ineffectiveness in earnings in the current period. Upon adoption the company elected to review hedge effectiveness qualitatively as described further in Note 13 - Derivatives. At the date of adoption there was no significant hedge ineffectiveness recorded in earnings for hedged assets existing as of January 1, 2018, and therefore no adjustment to the opening balance of retained earnings was required. In 2018, CTS adopted the provision of ASU No. 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This ASU allows for the reclassification from Accumulated Other Comprehensive Income ("AOCI") to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act that was enacted in December 2017. The total impact due to adoption of this standard was an increase in retained earnings of $17,433. |
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Accounting Changes and Error Corrections [Text Block] | Change in Estimate: Beginning in January 2017, we changed the method we use to calculate the service and interest cost components of net periodic benefit cost for our U.S. pension and other post-retirement benefit plans. Previously, we calculated the service and interest cost components using a single weighted-average discount rate derived from the yield curve to measure the benefit obligation at the beginning of the period. In 2017, we began using a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot-rates along the yield curve to the relevant projected cash flows. This approach better aligns each of the projected benefit cash flows to the corresponding spot rates on the yield curve, resulting in a more precise measurement of service and interest costs. The change in method resulted in a decrease in the service and interest components of pension costs in 2017. Any decrease to these components as a result of adoption of this approach is equally offset by a decrease in the actuarial losses included in our accumulated other comprehensive loss, with no impact on the measurement of the benefit obligation. This change is accounted for prospectively as a change in accounting estimate. |
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Reclassifications [Text Block] | Reclassifications: Certain reclassifications have been made to prior year amounts to conform to the current year presentation. The reclassifications had no impact on previously reported net earnings. |
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Recent Accounting Pronouncements | Recently Issued Accounting Pronouncements ASU No. 2018-14 "Compensation - Retirement Benefits - Defined Benefit Plans - General" In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General." This ASU modifies the disclosure requirements for defined benefit and other postretirement plans. This ASU eliminates certain disclosures associated with accumulated other comprehensive income, plan assets, related parties, and the effects of interest rate basis point changes on assumed health care costs; while other disclosures have been added to address significant gains and losses related to changes in benefit obligations. This ASU also clarifies disclosure requirements for projected benefit and accumulated benefit obligations. The amendments in this ASU are effective for fiscal years ending after December 15, 2020 and for interim periods therein with early adoption permitted. Adoption on a retrospective basis for all periods presented is required. This ASU will impact our financial statement disclosures but will not have an impact on our consolidated financial position, results of operations, or cash flows. ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement" In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement". This ASU modified the disclosures related to recurring and nonrecurring fair value measurements. Disclosures related to the transfer of assets between Level 1 and Level 2 hierarchies have been eliminated and various additional disclosures related to Level 3 fair value measurements have been added, modified or removed. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted upon issuance of the standard for modified or removed disclosures, with a delay in adoption for the additional required disclosures until their effective date. This ASU is not expected to have a significant impact on our financial statement disclosures. ASU No. 2016-16 "Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory" In October 2016, the FASB issued ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory". This ASU is meant to improve the accounting for the income tax effect of intra-entity transfers of assets other than inventory. Currently, U.S. GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfers until the asset is sold to a third party. This ASU will now require companies to recognize the income tax effect of an intra-entity asset transfer (other than inventory) when the transaction occurs. This ASU is effective for public companies in fiscal years beginning after December 15, 2019 and interim periods within those annual reporting periods. Early adoption is permitted and is to be applied on a modified retrospective bases through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. This guidance is not expected to have a material impact on our consolidated financial statements. ASU No. 2016-02 "Leases (Topic 842)" In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)", which requires companies to record almost all leases on the balance sheet as a lease liability with a corresponding right of use asset. The lease liability is based on the present value of minimum lease payments discounted using our secured incremental borrowing rate at the date of adoption. Existing deferred rent liability balances, resulting from historical straight-lining of operating leases, will be reclassified upon adoption to reduce the measurement of the lease assets, causing a difference between the lease liability and asset. The majority of our leases are operating leases where expense will be recognized in the consolidated statement of income in a manner similar to current accounting guidance. Accounting for finance leases requires amortization of the right-of-use asset and an interest expense component, similar to the prior account for capital leases. Lessor accounting under the new standard is substantially unchanged. We will adopt the new standard effective January 1, 2019, and intend to elect the optional transition method that allows us to recognize a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption, if necessary, without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance, which among other things, allows us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have also elected the practical expedient to not separate lease and non-lease components for the majority of our leases and the election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet. We have assessed the impact of the new standard and have concluded it will not have a material effect on our results from operations or cash flows. However it will materially impact our financial position by increasing lease assets and liabilities. We have estimated our lease liability to be in the range of $24-$28 million and expect our lease asset to be lower than the lease liability by approximately $3 million as a result of our existing deferred rent liability balances. We do not expect any adjustment to the opening balance of retained earnings. We will include the impact of the new standard and the additional required disclosures beginning with our Form 10-Q for the first quarter of 2019. |
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Subsequent Events | Subsequent Events: We have evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date the financial statements are issued. On February 7, 2019, the Board of Directors authorized a new stock repurchase program with a maximum dollar limit of $25 million and no set expiration date. This new program replaces the previous program that was approved in April 2015. On February 12, 2019, CTS entered into an amended and restated five-year Credit Agreement with a group of banks (the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility of $300 million, which may be increased by $150 million at the request of the Company, subject to the administrative agent’s approval. This new unsecured credit facility replaces the prior $300 million unsecured credit facility, which would have expired August 10, 2020. Borrowings of $50 million under the prior credit agreement were refinanced into the Credit Agreement and the prior agreement was terminated as of February 12, 2019. |
Summary of Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of net sales to significant customers as a percentage of total net sales | Our net sales to significant customers as a percentage of total net sales were as follows:
We sell automotive parts to these three customers for certain vehicle platforms under purchase agreements that have no volume commitments and are subject to purchase orders issued from time to time. No other customer accounted for 10% or more of total net sales during these periods. |
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Summary of Molds, Dies and Other Tools | We occasionally enter into agreements with our customers whereby we receive a contractual guarantee to be reimbursed the costs we incur to construct molds, dies, and other tools that are used to make many of the products we sell. The costs we incur are included in other current assets on the Consolidated Balance Sheets until reimbursement is received from the customer. Reimbursements received from customers are netted against such costs and included in our Consolidated Statements of Earnings if the amount received is in excess of the costs that we incur. The following is a summary of amounts to be received from customers as of December 31, 2018 and 2017:
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Summary of customer reimbursement receivable | The following is a summary of amounts received from customers for molds, dies, and other tools during the years ended December 31, 2018 and 2017:
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Fair Value Measurements, Recurring and Nonrecurring | We estimate the fair value of our financial instruments as follows:
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Summary of foreign currency gain (loss) recorded in the statement of operations | Foreign currency gains (losses) recorded in the Consolidated Statement of Earnings includes the following:
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Options | |||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of antidilutive stock options | Our antidilutive stock options and RSUs consist of the following:
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Revenue Recognition Revenue from Contract with Customer (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset and Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset and Liability [Table Text Block] | Contract Assets and Liabilities Contract assets and liabilities included in our Condensed Consolidated Balance Sheets are as follows:
During the three and twelve months ended December 31, 2018, we recognized a decrease of revenues of $46 and an increase of $22, respectively, that were included in contract liabilities at the beginning of the period. The increase in contract liabilities as of December 31, 2018 is primarily due to net increases in estimated future discounts and price concessions, offset by net settlements of products sold with rights of return. |
Revenue Recognition Disaggregation of Revenue (Tables) |
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Disaggregation of Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | Disaggregated Revenue The following table presents revenues disaggregated by the major markets we serve:
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Accounts Receivable (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accounts Receivable | The components of accounts receivable are as follows:
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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 (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property, Plant and Equipment Assets | Property, plant and equipment is comprised of the following:
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Summary of Depreciation Expense | Depreciation expense recorded in the Consolidated Statements of Earnings includes the following:
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Retirement Plans (Tables) |
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Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Benefit Obligation, Plan Assets, and Funded Status | The following table provides a reconciliation of benefit obligation, plan assets, and the funded status of the pension plans for U.S. and non-U.S. locations at the measurement dates.
The measurement dates for the post-retirement life insurance plan were December 31, 2018, and 2017. The following table provides a reconciliation of benefit obligation, plan assets, and the funded status of the post-retirement life insurance plan at those measurement dates.
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Components of Prepaid (Accrued) Cost | The components of the prepaid (accrued) cost of the domestic and foreign pension plans are classified in the following lines in the Consolidated Balance Sheets at December 31:
The components of the accrued cost of the post-retirement life insurance plan are classified in the following lines in the Consolidated Balance Sheets at December 31:
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Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block] | We have also recorded the following amounts to accumulated other comprehensive loss for the U.S. and non-U.S. pension plans, net of tax:
We have recorded the following amounts to accumulated other comprehensive loss for the post-retirement life insurance plan, net of tax:
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Projected Benefit Obligation Accumulated Benefit Obligation and Fair Value of Plan Assets | The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for those Pension Plans with accumulated benefit obligation in excess of fair value of plan assets is shown below:
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Net Pension Income or Postretirement Expense | Net pension expense (income) includes the following components:
Net post-retirement expense includes the following components:
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Asset Allocation and Target Allocation Plan | Our pension plan asset allocation at December 31, 2018, and 2017, and target allocation for 2019 by asset category are as follows:
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Summary of Fair Values of Pension Plan | The following table summarizes the fair values of our pension plan assets:
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Summary of Categories in Fair Value Hierarchy | The fair values at December 31, 2018, are classified within the following categories in the fair value hierarchy:
The fair values at December 31, 2017, are classified within the following categories in the fair value hierarchy:
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Estimated Future Benefit Payments | The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
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Summary of 401K and Other Plan Expense | Expenses related to defined contribution plans include the following:
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Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Level 3 Hedge Fund Asset Within Fair Value Hierarchy | The table below reconciles the Level 3 partnership assets within the fair value hierarchy:
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Goodwill and Other Intangible Assets (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 |
Dec. 31, 2017 |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Intangible Assets | Other intangible assets consist of the following:
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Summary of Amortization Expense | Amortization expense remaining for other intangible assets is as follows:
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Summary of Reconciliation of Goodwill | Changes in the net carrying value amount of goodwill were as follows:
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Costs Associated with Exit and Restructuring Activities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Reserve Activity | The following table displays the restructuring liability activity for the year ended December 31, 2018:
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April 2014 Plan and June 2016 Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Restructuring Related Charges of Actual Costs | Restructuring and impairment charges are reported as a separate line within operating earnings in the Consolidated Statements of Earnings. Total restructuring and impairment charges were:
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June2016 Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Restructuring Related Charges of Actual Costs | The following table displays the planned restructuring and impairment charges associated with the June 2016 Plan as well as a summary of the actual costs incurred through December 31, 2018:
otal restructuring and impairment charges for the June 2016 Plan were as follows:
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April 2014 Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Restructuring Related Charges of Actual Costs | The following table displays the planned restructuring and restructuring-related charges associated with the April 2014 Plan, as well as a summary of the actual costs incurred through December 31, 2018:
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Accrued Liabilities and Other Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accrued Liabilities | The components of accrued expenses and other liabilities are as follows:
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Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Remediation Reserve Activity | A roll-forward of remediation reserves on the balance sheet is comprised of the following:
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum non-cancelable operating lease payments | Minimum future obligations under all non-cancelable operating leases as of December 31, 2018, are as follows:
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Summary of operating lease rent expense | Rent expense for operating leases charged to operations was as follows:
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Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Long-Term Debt | Long-term debt was comprised of the following:
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Summary of Interest Rate Swaps Activity Recorded in Other Comprehensive Income Before Tax | Interest rate swaps activity recorded in other comprehensive earnings before tax included the following:
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Derivatives Derivative Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The location and fair values of derivative instruments designated as hedging instruments in the Consolidated Balance Sheets as of December 31, 2018, are shown in the following table:
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Derivative Financial Instruments | Derivatives Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts and interest rate swaps to manage our exposure to these risks. The use of derivative financial instruments exposes the Company to credit risk, which relates to the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements. The effective portion of derivative gains and losses are recorded in accumulated other comprehensive (loss) income until the hedged transaction affects earnings upon settlement, at which time they are reclassified to interest expense, cost of goods sold, or net sales. If it is probable that an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to other income (expense). On April 1, 2018, the company adopted the provisions of ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities". As a result, hedge effectiveness was reviewed qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. No recognition of ineffectiveness was recorded in our Consolidated Statement of Earnings as a result of this qualitative analysis for the year ended December 31, 2018. Foreign Currency Hedges In January of 2016, we began using forward contracts to mitigate currency risk related to a portion of our forecasted foreign Euro denominated revenues and Mexican Peso denominated expenses. The currency forward contracts are designed as cash flow hedges and are recorded in the Consolidated Balance Sheets at fair value. As of December 31, 2018, we were hedging a portion of our forecasted Peso expenses for the following twelve months. We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At December 31, 2018, we had a net unrealized loss of $371 in accumulated other comprehensive loss, of which $318 is expected to be reclassified to income within the next 12 months. The notional amount of foreign currency forward contracts outstanding was $15,700 at December 31, 2018. Interest Rate Swaps We use interest rate swaps to convert the revolving credit facility’s variable rate of interest into a fixed rate on a portion of our debt balance. In the second quarter of 2012, we entered into four separate one-year interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2012, we entered into four additional one-year interest rate swap agreements to fix interest rates on $25,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2016, we entered into three additional one-year interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods August 2017 to August 2020. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled. These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive income (loss). The estimated net amount of the existing gains or losses that are reported in accumulated other comprehensive income (loss) that is expected to be reclassified into earnings within the next twelve months is approximately $576. The location and fair values of derivative instruments designated as hedging instruments in the Consolidated Balance Sheets as of December 31, 2018, are shown in the following table:
The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20 (Balance Sheet, Offsetting). On a gross basis, there were $423 foreign currency derivative assets and foreign currency derivative liabilities were $30. The effect of derivative instruments on the Consolidated Statements of Earnings is as follows:
The table below provides a reconciliation of the recurring financial assets and liabilities related to interest rate swaps and foreign currency hedges:
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Accumulated Other Comprehensive Loss (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Earnings/(Loss) | The components of AOCI for 2018 are as follows:
The components of AOCI for 2017 are as follows:
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Shareholders' Equity (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share Count and Par Value Data Related to Shareholders' Equity | Share count and par value data related to shareholders' equity are as follows:
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Summary of Common Shares Outstanding | A roll forward of common shares outstanding is as follows:
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Equity-Based compensation (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Equity-Based Compensation Expense | The following table summarizes the compensation expense included in selling, general and administrative expenses in the Consolidated Statements of Earnings related to stock-based compensation plans:
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Schedule of Unrecognized Equity-Based Compensation Expense | The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized:
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Summary of Status of Equity-Based Compensation Plans | The following table summarizes the status of these plans as of December 31, 2018:
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Summary of Service-Based Restricted Stock Units | A summary of RSUs for all Plans is presented below:
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Schedule of Weighted Average Grant Date Fair Value and Intrinsic Value of RSU's |
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Summary of Changes of Nonvested RSU's | A summary of nonvested RSUs is presented below:
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Schedule of Components of Performance-Based RSU's | A summary of PSUs for all Plans is presented below:
The following table summarizes each grant of performance awards outstanding at December 31, 2018:
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Fair Value Measurement (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Liability Measured at Fair Value on a Recurring Basis | The table below summarizes the financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2018 and the (gain) loss recorded during the year ended December 31, 2018:
The table below summarizes the financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2017 and the (gain) loss recorded during the year ended December 31, 2017:
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Reconciliation of Recurring Financial Liability Related to Interest Rate Swaps | Derivatives Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts and interest rate swaps to manage our exposure to these risks. The use of derivative financial instruments exposes the Company to credit risk, which relates to the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements. The effective portion of derivative gains and losses are recorded in accumulated other comprehensive (loss) income until the hedged transaction affects earnings upon settlement, at which time they are reclassified to interest expense, cost of goods sold, or net sales. If it is probable that an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to other income (expense). On April 1, 2018, the company adopted the provisions of ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities". As a result, hedge effectiveness was reviewed qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. No recognition of ineffectiveness was recorded in our Consolidated Statement of Earnings as a result of this qualitative analysis for the year ended December 31, 2018. Foreign Currency Hedges In January of 2016, we began using forward contracts to mitigate currency risk related to a portion of our forecasted foreign Euro denominated revenues and Mexican Peso denominated expenses. The currency forward contracts are designed as cash flow hedges and are recorded in the Consolidated Balance Sheets at fair value. As of December 31, 2018, we were hedging a portion of our forecasted Peso expenses for the following twelve months. We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At December 31, 2018, we had a net unrealized loss of $371 in accumulated other comprehensive loss, of which $318 is expected to be reclassified to income within the next 12 months. The notional amount of foreign currency forward contracts outstanding was $15,700 at December 31, 2018. Interest Rate Swaps We use interest rate swaps to convert the revolving credit facility’s variable rate of interest into a fixed rate on a portion of our debt balance. In the second quarter of 2012, we entered into four separate one-year interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2012, we entered into four additional one-year interest rate swap agreements to fix interest rates on $25,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2016, we entered into three additional one-year interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods August 2017 to August 2020. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled. These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive income (loss). The estimated net amount of the existing gains or losses that are reported in accumulated other comprehensive income (loss) that is expected to be reclassified into earnings within the next twelve months is approximately $576. The location and fair values of derivative instruments designated as hedging instruments in the Consolidated Balance Sheets as of December 31, 2018, are shown in the following table:
The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20 (Balance Sheet, Offsetting). On a gross basis, there were $423 foreign currency derivative assets and foreign currency derivative liabilities were $30. The effect of derivative instruments on the Consolidated Statements of Earnings is as follows:
The table below provides a reconciliation of the recurring financial assets and liabilities related to interest rate swaps and foreign currency hedges:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Before Income Taxes | Earnings before income taxes consist of the following:
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Significant Components of Income Tax Provision/(Benefit) | Significant components of income tax provision/(benefit) are as follows:
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Significant Components of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets and liabilities are as follows:
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Schedule of current and long-term deferred tax assets and current and long-term deferred tax liabilities | The long-term deferred tax assets and long-term deferred tax liabilities are as follows below:
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Reconciliation of Effective Income Taxes Rate | The following table reconciles taxes at the U.S. federal statutory rate to the effective income tax rate:
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Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending unrecognized tax benefits is provided below:
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Business Acquisitions (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noliac A/S [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions | On May 15, 2017, we acquired 100% of the equity interests in Noliac A/S, a privately-held company, for $19.3 million in cash. Noliac A/S is a designer and manufacturer of tape cast and bulk piezoelectric material as well as transducers for use in the telecommunications, industrial, medical, and defense industries. This acquisition will enable us to increase our product base within our ceramics product lines as well as expand our presence in the European market. The purchase price of $19,121, net of cash acquired of $199, has been allocated to the assets acquired and liabilities assumed on the acquisition date based on their fair values. The following table summarizes the fair values of the assets acquired and the liabilities assumed at the date of acquisition:
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Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:
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CTG Advanced Materials, LLC [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions | On March 11, 2016, we acquired all of the outstanding membership interests in CTG Advanced Materials, LLC (“CTG-AM”), a privately-held company, for $73 million in cash plus a working capital adjustment. CTG-AM, formerly operated as H.C. Materials, is the market leading designer and manufacturer of single crystal piezoelectric materials, serving major original equipment manufacturers throughout the medical marketplace. These materials enable high definition ultrasound imaging (3D and 4D), as well as intravascular ultrasound applications. Other applications for these materials include wireless pacemakers, implantable hearing aids, and defense technologies. With the CTG-AM acquisition, we gained technology and proprietary manufacturing methods that expand our offering of piezoelectric materials. This allows us to become the leading large-scale commercial producer of both single crystal materials and traditional piezoelectric ceramics. The purchase price of $73,063, net of cash acquired of $4, has been allocated to the fair values of assets and liabilities acquired as of March 11, 2016. The following table summarizes the fair values of the assets acquired and the liabilities assumed at the date of acquisition:
Goodwill recorded in connection with this acquisition represents the value we expect to be created by combining the operations of the acquired business with our existing operations, including the expansion into markets within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to this acquisition is expected to be deductible for tax purposes. |
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Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:
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Business Acquisitions Schedule of Finite-Lived Intangible Assets (Tables) - USD ($) $ in Thousands |
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May 15, 2017 |
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Dec. 31, 2018 |
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Noliac A/S [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:
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Schedule of Business Acquisitions, by Acquisition [Table Text Block] | On May 15, 2017, we acquired 100% of the equity interests in Noliac A/S, a privately-held company, for $19.3 million in cash. Noliac A/S is a designer and manufacturer of tape cast and bulk piezoelectric material as well as transducers for use in the telecommunications, industrial, medical, and defense industries. This acquisition will enable us to increase our product base within our ceramics product lines as well as expand our presence in the European market. The purchase price of $19,121, net of cash acquired of $199, has been allocated to the assets acquired and liabilities assumed on the acquisition date based on their fair values. The following table summarizes the fair values of the assets acquired and the liabilities assumed at the date of acquisition:
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Fair Value | $ 9,142 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 13 years 8 months | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noliac A/S [Member] | Developed Technology | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value | $ 7,581 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noliac A/S [Member] | Customer Relationships and Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | $ 937 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noliac A/S [Member] | Other Intangible Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | $ 624 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CTG Advanced Materials, LLC [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:
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Schedule of Business Acquisitions, by Acquisition [Table Text Block] | On March 11, 2016, we acquired all of the outstanding membership interests in CTG Advanced Materials, LLC (“CTG-AM”), a privately-held company, for $73 million in cash plus a working capital adjustment. CTG-AM, formerly operated as H.C. Materials, is the market leading designer and manufacturer of single crystal piezoelectric materials, serving major original equipment manufacturers throughout the medical marketplace. These materials enable high definition ultrasound imaging (3D and 4D), as well as intravascular ultrasound applications. Other applications for these materials include wireless pacemakers, implantable hearing aids, and defense technologies. With the CTG-AM acquisition, we gained technology and proprietary manufacturing methods that expand our offering of piezoelectric materials. This allows us to become the leading large-scale commercial producer of both single crystal materials and traditional piezoelectric ceramics. The purchase price of $73,063, net of cash acquired of $4, has been allocated to the fair values of assets and liabilities acquired as of March 11, 2016. The following table summarizes the fair values of the assets acquired and the liabilities assumed at the date of acquisition:
Goodwill recorded in connection with this acquisition represents the value we expect to be created by combining the operations of the acquired business with our existing operations, including the expansion into markets within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to this acquisition is expected to be deductible for tax purposes. |
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Fair Value | $ 35,427 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 14 years 9 months 20 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CTG Advanced Materials, LLC [Member] | Developed Technology | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | $ 23,730 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CTG Advanced Materials, LLC [Member] | Customer Relationships and Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | $ 11,502 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 14 years 7 months 6 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CTG Advanced Materials, LLC [Member] | Other Intangible Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | $ 195 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 9 months 18 days |
Geographic Data (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue and Long-Lived Assets by Geographic Areas | Financial information relating to our operations by geographic area were as follows:
Sales are attributed to countries based upon the origin of the sale.
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Quarterly Financial Data (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results of Operations | Quarterly Results of Operations (Unaudited)
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Summary of Significant Accounting Policies - Additional Information (Details 2) |
12 Months Ended |
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Dec. 31, 2018
segment
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Description of Business | |
Number or reportable segments | 1 |
Cash and Cash Equivalents | |
Maturity period of highly liquid investments | 3 months |
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details 3) - Sales Revenue, Goods, Net - Customer Concentration Risk |
12 Months Ended | ||
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Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Cummins, Inc. [Member] | |||
Summary of Significant Accounting Policies | |||
Concentration of risk, percentage | 15.20% | 13.40% | 9.90% |
Honda Motor Co. | |||
Summary of Significant Accounting Policies | |||
Concentration of risk, percentage | 10.50% | 11.20% | 10.70% |
Toyota Motor Corporation | |||
Summary of Significant Accounting Policies | |||
Concentration of risk, percentage | 10.50% | 10.20% | 10.40% |
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details 4) |
12 Months Ended |
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Dec. 31, 2018 | |
Building and Building Improvements | Minimum | |
Property, Plant and Equipment | |
Property, Plant and Equipment, useful lives | 10 years |
Building and Building Improvements | Maximum | |
Property, Plant and Equipment | |
Property, Plant and Equipment, useful lives | 45 years |
Machinery and Equipment | Minimum | |
Property, Plant and Equipment | |
Property, Plant and Equipment, useful lives | 3 years |
Machinery and Equipment | Maximum | |
Property, Plant and Equipment | |
Property, Plant and Equipment, useful lives | 15 years |
Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets (Details 5) |
12 Months Ended |
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Dec. 31, 2018 | |
Goodwill and Other Intangible Assets | |
Finite-Lived Intangible Assets, Remaining Amortization Period | 9 years 9 months |
Customer-Related Intangible Assets | |
Goodwill and Other Intangible Assets | |
Finite-Lived Intangible Assets, Remaining Amortization Period | 9 years 7 months 6 days |
Technology and other intangibles | |
Goodwill and Other Intangible Assets | |
Finite-Lived Intangible Assets, Remaining Amortization Period | 10 years 1 month 1 day |
Summary of Significant Accounting Policies - Research and Development (Details 6) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Research and Development | ||
Recovery of Direct Costs | $ 4,483 | $ 4,299 |
Other Current Assets | ||
Research and Development | ||
Cost of molds, dies and other tools included in other current assets | $ 5,388 | $ 3,382 |
Summary of Significant Accounting Policies - Earnings Per Share (Details 7) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Anti-dilutive Securities | |||
Antidilutive stock options and RSUs | 18,138 | 22,110 | 35,189 |
Summary of Significant Accounting Policies - Foreign Currencies (Details 8) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Other Nonoperating Income (Expense) [Member] | |||
Foreign Currencies | |||
Foreign currency (loss) gain | $ (2,619) | $ 3,052 | $ (3,714) |
Summary of Significant Accounting Policies - Goodwill and Indefinite-lived Intangibles Impairment (Details 9) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Impairment of Long-Lived Assets and Long-lived Assets to be Disposed of | |||
Goodwill, loss | $ 0 | $ 0 | $ 0 |
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | $ 0 | $ 0 | $ 0 |
Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Reclassification (Details 10) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Other current assets | $ 15,422 | $ 12,857 |
Deferred income taxes | 22,201 | 20,694 |
Accrued Liabilities, Current | $ (37,347) | $ (41,344) |
Revenue Recognition Contract with Customer, Asset and Liability (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Contract with Customer, Asset and Liability [Abstract] | |||
Contract with Customer, Liability, Revenue Recognized | $ (46) | $ 22 | |
Contract with Customer, Asset, Net, Current | 65 | 65 | $ 52 |
Contract with Customer, Asset, Net, Noncurrent | 999 | 999 | 465 |
Contract with Customer, Asset, Net | 1,064 | 1,064 | 517 |
Contract with Customer, Liability, Discounts | (1,656) | (1,656) | (1,133) |
Contract with Customer, Right to Recover Product | (325) | (325) | (462) |
Contract with Customer, Liability, Current | $ (1,981) | $ (1,981) | $ (1,595) |
Revenue Recognition Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disaggregation of Revenue [Line Items] | |||||||||||
Revenues | $ 120,073 | $ 118,859 | $ 118,021 | $ 113,530 | $ 110,910 | $ 106,243 | $ 105,686 | $ 100,154 | $ 470,483 | $ 422,993 | $ 396,679 |
Aerospace and Defense [Member] | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenues | 4,306 | 4,355 | 19,405 | 19,060 | |||||||
Industrial [Member] | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenues | 21,164 | 19,537 | 86,968 | 74,605 | |||||||
Medical [Member] | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenues | 11,370 | 10,474 | 40,663 | 35,264 | |||||||
Telecommunications & IT [Member] | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenues | 6,504 | 4,978 | 23,323 | 18,813 | |||||||
Transportation [Member] | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenues | $ 76,729 | $ 71,566 | $ 300,124 | $ 275,251 |
Accounts Receivable - Components of Accounts Receivable (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounts Receivable | ||
Accounts receivable, gross | $ 79,902 | $ 70,941 |
Less: Allowance for doubtful accounts | (384) | (357) |
Accounts receivable, net | $ 79,518 | $ 70,584 |
Inventories - Summary of Inventories (Detail) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventories | ||
Finished goods | $ 10,995 | $ 9,203 |
Work-in-process | 12,129 | 12,065 |
Raw materials | 25,746 | 21,150 |
Less: Inventory reserves | (5,384) | (5,822) |
Inventories, net | $ 43,486 | $ 36,596 |
Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment | ||
Less: Accumulated depreciation | $ (203,876) | $ (200,734) |
Property, plant and equipment, net | 99,401 | 88,247 |
Land | ||
Property, Plant and Equipment | ||
Property, plant and equipment gross | 1,136 | 1,130 |
Buildings and improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment gross | 70,522 | 64,201 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment gross | $ 231,619 | $ 223,650 |
Property, Plant and Equipment - Depreciation Expense (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Continuing Operations | |||
Property, Plant and Equipment | |||
Depreciation expense | $ 15,697 | $ 14,071 | $ 13,177 |
Retirement Plans - Components of Prepaid (Accrued) Cost (Details 3) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Retirement Plans | ||
Prepaid pension asset | $ 54,100 | $ 57,050 |
Post-Retirement Life Insurance Plan | ||
Retirement Plans | ||
Accrued expenses and other liabilities | (407) | (418) |
Long-term pension obligations | (4,188) | (4,716) |
Components of prepaid (accrued) cost, net | (4,595) | (5,134) |
Domestic Plan [Member] | ||
Retirement Plans | ||
Prepaid pension asset | 54,100 | 57,050 |
Accrued expenses and other liabilities | (100) | (100) |
Long-term pension obligations | (992) | (1,122) |
Components of prepaid (accrued) cost, net | 53,008 | 55,828 |
Foreign Plan [Member] | ||
Retirement Plans | ||
Prepaid pension asset | 0 | 0 |
Accrued expenses and other liabilities | 0 | 0 |
Long-term pension obligations | (1,331) | (1,363) |
Components of prepaid (accrued) cost, net | $ (1,331) | $ (1,363) |
Retirement Plans - Projected benefit obligation, accumulated benefit obligation and fair value of plan assets (Details 5) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Retirement Plans | ||
Projected benefit obligation | $ 3,848 | $ 4,361 |
Accumulated benefit obligation | 3,028 | 3,757 |
Fair value of plan assets | $ 1,426 | $ 1,776 |
Retirement Plans - Pension Plan Asset Allocation (Details 7) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Retirement Plans | ||
Target allocations | 100.00% | |
Percentage of plan assets | 100.00% | 100.00% |
Equity Securities | ||
Retirement Plans | ||
Target allocations | 13.00% | |
Percentage of plan assets | 12.00% | 11.00% |
Debt securities | ||
Retirement Plans | ||
Target allocations | 83.00% | |
Percentage of plan assets | 84.00% | 82.00% |
Other | ||
Retirement Plans | ||
Target allocations | 4.00% | |
Percentage of plan assets | 4.00% | 7.00% |
Retirement Plans - Reconciliation of Level 3 Hedge Fund Asset Within Fair Value Hierarchy (Details 11) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Reconciliation of Level 3 fund assets | |
Beginning Balance | $ 286,539 |
Ending Balance | 259,752 |
International hedge funds | |
Reconciliation of Level 3 fund assets | |
Beginning Balance | 6,604 |
Ending Balance | 0 |
Significant Unobservable Inputs (Level 3) | |
Reconciliation of Level 3 fund assets | |
Beginning Balance | 10,787 |
Ending Balance | 9,172 |
Significant Unobservable Inputs (Level 3) | International hedge funds | |
Reconciliation of Level 3 fund assets | |
Beginning Balance | $ 0 |
Ending Balance |
Retirement Plans - Reconciliation of Level 3 Partnership Assets Within Fair Value Hierarchy (Details 12) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Reconciliation of Level 3 fund assets | ||
Beginning Balance | $ 286,539 | |
Ending Balance | 259,752 | $ 286,539 |
Partnership | ||
Reconciliation of Level 3 fund assets | ||
Beginning Balance | 10,787 | |
Ending Balance | 9,172 | 10,787 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Reconciliation of Level 3 fund assets | ||
Beginning Balance | 10,787 | |
Ending Balance | 9,172 | 10,787 |
Significant Unobservable Inputs (Level 3) [Member] | Partnership | ||
Reconciliation of Level 3 fund assets | ||
Beginning Balance | 10,787 | 12,862 |
Capital contributions | 78 | 343 |
Realized and unrealized gain | 1,154 | 2,107 |
Capital distributions | (2,847) | (4,525) |
Ending Balance | $ 9,172 | $ 10,787 |
Retirement Plans - Reconciliation of Level 3 Fixed Annuity Contracts Within Fair Value Hierarchy (Details 13) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Reconciliation of Level 3 fund assets | ||
Beginning Balance | $ 286,539 | |
Benefits paid | (157) | $ (165) |
Ending Balance | 259,752 | 286,539 |
Significant Unobservable Inputs (Level 3) | ||
Reconciliation of Level 3 fund assets | ||
Beginning Balance | 10,787 | |
Ending Balance | $ 9,172 | $ 10,787 |
Retirement Plans - Defined Contribution Plans (Details 15) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Defined Contribution Plans | |||
401(k) and other plan expense | $ 3,256 | $ 3,141 | $ 2,841 |
Goodwill and Other Intangible Assets - Amortization Expense Remaining (Details 2) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Amortization expense remaining | ||
2016 | $ 6,754 | |
2017 | 6,624 | |
2018 | 6,467 | |
2019 | 6,230 | |
2020 | 4,225 | |
Thereafter | 29,880 | |
Net Amount | $ 60,180 | $ 66,943 |
Goodwill and Other Intangible Assets - Summary of Reconciliation of Goodwill (Details 3) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill | ||
Beginning balance | $ 71,057 | $ 61,744 |
Increase from acquisition | 0 | 9,313 |
Ending balance | $ 71,057 | $ 71,057 |
Accrued Liabilities and Other Liabilities - Components of Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Accrued Liabilities | ||||
Accrued product-related costs | $ 4,377 | $ 5,297 | ||
Accrued income taxes | 6,914 | 5,475 | ||
Accrued property and other taxes | 1,976 | 997 | ||
Accrued Professional Fees, Current | 3,350 | 2,228 | ||
Contract with Customer, Liability | 1,981 | 1,595 | ||
Dividends payable | 1,310 | 1,318 | ||
Remediation reserves | 11,274 | 17,067 | $ 18,176 | $ 20,603 |
Other accrued liabilities | 6,165 | 7,367 | ||
Total accrued expenses and other liabilities | $ 37,347 | $ 41,344 |
Contingencies - Rollforward of Remediation Reserves (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Contingencies | |||
Accrued liabilities start of period | $ 17,067 | $ 18,176 | $ 20,603 |
Remediation expense | 1,182 | 307 | 556 |
Remediation payments | (6,967) | (1,416) | (2,983) |
Accrued liabilities end of period | 11,274 | $ 17,067 | $ 18,176 |
Accrual for Environmental Loss Contingencies, Foreign Currency Translation Gain (Loss) | $ (8) |
Leases - Minimum future obligations (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Minimum future obligations | |
2016 | $ 3,859 |
2017 | 3,622 |
2018 | 2,587 |
2019 | 2,411 |
2020 | 2,464 |
Thereafter | 16,086 |
Total minimum lease obligations | $ 31,029 |
Leases - Rent expense (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Sublease income | |||
Rent expense | $ 5,726 | $ 4,762 | $ 5,694 |
Leases - Lease terms (Details 3) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Sublease income | |
Sublease income | $ 455 |
Operating Leases, Future Minimum Payments Receivable, Current | 444 |
Future Minimum Sublease Rentals, Sale Leaseback Transactions, within Two Years | 423 |
Future Minimum Sublease Rentals, Sale Leaseback Transactions, Thereafter | $ 846 |
Debt - Long-Term Debt (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Disclosure [Abstract] | |||
Amortization of Debt Issuance Costs | $ 185,000 | $ 185,000 | $ 163,000 |
Long-term debt | |||
Balance outstanding | $ 50,000,000 | $ 76,300,000 | |
Long-term Debt, Weighted Average Interest Rate, at Point in Time | 3.10% | 2.30% | |
Amount available | $ 248,060,000 | $ 221,635,000 | |
Weighted-average interest rate | 300,000,000 | 300,000,000 | |
Standby letters of credit | $ 1,940,000 | $ 2,065,000 | |
Commitment fee percentage per annum | 0.20% | 0.25% |
Debt - Additional Information (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Amortization expense | |||
Amortization expense | $ 185 | $ 185 | $ 163 |
Debt - Summary of Interest Rate Swaps Activity Recorded in Other Comprehensive Income Before Tax (Details 3) - Interest Rate Swap - Designated as Hedging Instrument - Cash Flow Hedge - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Derivative Instruments, Gain (Loss) [Line Items] | |||
Unrealized (loss) gain | $ (394) | $ (255) | $ 593 |
Unrealized (loss) gain | 26 | (218) | |
Interest Expense | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Realized gain reclassified to interest expense | $ 421 | $ 37 | $ 928 |
Shareholders' Equity - Summary of Share Count and Par Value Data Related to Shareholders' Equity (Details) - $ / shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Preferred Stock | |||
Par value per share | $ 0 | $ 0 | |
Shares authorized, shares | 25,000,000 | 25,000,000 | |
Shares outstanding, shares | 0 | 0 | |
Common Stock | |||
Par value per share | $ 0 | $ 0 | |
Shares authorized, shares | 75,000,000 | 75,000,000 | |
Shares issued, shares | 56,786,849 | 56,632,488 | |
Shares outstanding | 32,750,727 | 32,938,466 | 32,762,494 |
Treasury stock | |||
Shares held, shares | 24,036,122 | 23,694,022 |
Shareholders' Equity - Additional Information (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Common Stock | |||
Treasury Stock, Value, Acquired, Cost Method | $ 9,440 | ||
Treasury Stock, Shares, Acquired | 342,100 | 0 | 0 |
Common stock repurchased, shares | 342,100 | 0 | |
Shares available for future purchases | $ 8,114 |
Shareholders' Equity - Summary of Common Shares Outstanding (Details 3) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Roll forward of common shares outstanding | ||
Balance at the beginning of the year, shares | 32,938,466 | 32,762,494 |
Repurchases, shares | (342,100) | 0 |
Restricted share issuances, shares | 154,361 | 175,972 |
Balance at the end of the period, shares | 32,750,727 | 32,938,466 |
Equity-Based Compensation - Summary of Equity-Based Compensation Expense (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity-Based Compensation | |||
Restricted stock units | $ 5,256 | $ 4,184 | $ 2,738 |
CTS Cash Settled Awards [Member] | |||
Equity-Based Compensation | |||
Restricted stock units | 131 | 72 | 76 |
Service-Based RSUs | |||
Equity-Based Compensation | |||
Restricted stock units | 2,036 | 1,762 | 1,997 |
Performance-Based RSUs | |||
Equity-Based Compensation | |||
Restricted stock units | 3,089 | 2,350 | 665 |
RSUs | |||
Equity-Based Compensation | |||
Restricted stock units | 5,256 | 4,184 | 2,738 |
Income tax benefit | 1,188 | 1,573 | 1,029 |
Allocated Share-based Compensation Expense, Net of Tax | $ 4,068 | $ 2,611 | $ 1,709 |
Equity-Based Compensation - Summary of Equity-Based Compensation Expense related to Non-Vested RSUs (Details 3) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Equity-Based Compensation | |
Weighted average period | 1 year 5 months 5 days |
Service-Based RSUs | |
Equity-Based Compensation | |
Unrecognized compensation cost | $ 1,598 |
Weighted average period | 1 year 2 months 16 days |
Performance-Based RSUs | |
Equity-Based Compensation | |
Unrecognized compensation cost | $ 2,539 |
Weighted average period | 1 year 6 months 22 days |
RSUs | |
Equity-Based Compensation | |
Unrecognized compensation cost | $ 4,137 |
Income Taxes - Earnings Before Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings before income taxes | |||
Earnings before income taxes | $ 58,103 | $ 40,253 | $ 57,245 |
U.S. | |||
Earnings before income taxes | |||
Earnings before income taxes | 30,815 | 9,315 | 25,746 |
Non-U.S. | |||
Earnings before income taxes | |||
Earnings before income taxes | $ 27,288 | $ 30,938 | $ 31,499 |
Income Taxes - Significant Components of Income Tax Provision/(Benefit) (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Current: | |||
U.S. | $ (397) | $ 1,635 | $ (1,312) |
Non-U.S. | 12,538 | 7,150 | 13,729 |
Total Current | 12,141 | 8,785 | 12,417 |
Deferred: | |||
U.S. | (330) | 17,597 | 13,245 |
Non-U.S. | (240) | (577) | (2,797) |
Total Deferred | (570) | 17,020 | 10,448 |
Total provision for income taxes | $ 11,571 | $ 25,805 | $ 22,865 |
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details 3) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Significant components of deferred tax assets and liabilities | ||
Post-retirement benefits | $ 1,061 | $ 1,160 |
Inventory reserves | 1,236 | 1,128 |
Loss carry-forwards | 4,647 | 5,401 |
Credit carry-forwards | 16,909 | 10,793 |
Nondeductible accruals | 5,685 | 7,062 |
Research expenditures | 16,847 | 20,002 |
Stock compensation | 2,142 | 1,803 |
Foreign exchange loss | 2,245 | 1,373 |
Other | 207 | 220 |
Gross deferred tax assets | 50,979 | 48,942 |
Depreciation and amortization | 11,500 | 9,819 |
Pensions | 11,736 | 12,387 |
Subsidiaries' unremitted earnings | 1,258 | 1,662 |
Gross deferred tax liabilities | 24,494 | 23,868 |
Net deferred tax assets | 26,485 | 25,074 |
Deferred tax asset valuation allowance | (8,274) | (8,182) |
Total net deferred tax assets | $ 18,211 | $ 16,892 |
Income Taxes - Current and Long-Term Deferred Tax Assests and Liabilities (Details 4) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Operating Loss Carryforwards [Line Items] | ||
Non-current deferred tax assets | $ 22,201 | $ 20,694 |
Non-current deferred tax liabilities | (3,990) | (3,802) |
Total net deferred tax assets | 18,211 | 16,892 |
Total net deferred tax assets | $ 18,211 | $ 16,892 |
Minimum | Operating Loss Carryforward [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2021 | |
Maximum | Operating Loss Carryforward [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2038 |
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details 7) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Reconciliation of the unrecognized tax benefits | ||
Unrecognized tax benefits, beginning balance | $ 7,306 | $ 12,347 |
Increase related to current year tax positions | 55 | 0 |
Unrecognized Tax Benefits, Decrease Resulting from Prior Period Tax Positions | (36) | |
(Decrease) increase related to prior year tax positions | 1,290 | |
Decrease related to lapse in statute of limitation | (1,076) | 0 |
Unrecognized Tax Benefits, Decrease Resulting from Settlements with Taxing Authorities | (46) | (6,331) |
Unrecognized tax benefits, ending balance | $ 6,203 | $ 7,306 |
Geographic Data - Schedule of Revenue by Geographic Areas (Details 2) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, Plant and Equipment, Net | $ 99,401 | $ 88,247 |
United States | Operating Segments | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, Plant and Equipment, Net | 53,950 | 44,010 |
China | Operating Segments | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, Plant and Equipment, Net | 32,973 | 32,464 |
Taiwan | Operating Segments | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, Plant and Equipment, Net | 3,752 | 3,540 |
Czech Republic | Operating Segments | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, Plant and Equipment, Net | 5,976 | 5,518 |
Other non-U.S | Operating Segments | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, Plant and Equipment, Net | $ 2,750 | $ 2,715 |
Quarterly Financial Data - Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Selected Quarterly Financial Information | |||||||||||
Revenues | $ 120,073 | $ 118,859 | $ 118,021 | $ 113,530 | $ 110,910 | $ 106,243 | $ 105,686 | $ 100,154 | $ 470,483 | $ 422,993 | $ 396,679 |
Gross margin | 42,645 | 42,082 | 41,813 | 38,433 | 32,875 | 37,538 | 35,794 | 34,224 | 164,973 | 140,431 | 140,428 |
Operating earnings | 17,017 | (16,118) | (14,544) | (13,359) | 19 | (13,111) | (13,208) | (12,196) | (61,038) | (38,495) | (63,166) |
Net (loss) earnings | $ 17,564 | $ 10,211 | $ 7,209 | $ 11,548 | $ (13,621) | $ 9,619 | $ 9,966 | $ 8,484 | $ 46,532 | $ 14,448 | $ 34,380 |
Basic earnings per share (usd per share) | $ 0.53 | $ 0.31 | $ 0.22 | $ 0.35 | $ (0.41) | $ 0.29 | $ 0.30 | $ 0.26 | $ 1.41 | $ 0.44 | $ 1.05 |
Diluted earnings per share (usd per share) | $ 0.52 | $ 0.30 | $ 0.21 | $ 0.34 | $ (0.41) | $ 0.29 | $ 0.30 | $ 0.25 | $ 1.39 | $ 0.43 | $ 1.03 |
Schedule II - Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Valuation and Qualifying Accounts | |||
Balance at Beginning of Period | $ 357 | $ 170 | $ 133 |
Charged/ (Credit) to Expense | (56) | (248) | (44) |
Charged to Other Accounts | (8) | 9 | 0 |
Deductions | (21) | (70) | (7) |
Balance at End of Period | $ 384 | $ 357 | $ 170 |
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