Restatement

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, we restated our consolidated financial statements for the years ended December 31, 2013 and 2012 and our unaudited quarterly financial information for the first three quarters in the year ended December 31, 2014 and for each of the quarters in the year ended December 31, 2013, to correct errors in prior periods primarily related to (i) a long-term contract (“Contract”) following the discovery of misconduct by employees in the recording of direct labor costs to the Contract from 2009 through the third quarter 2014 which resulted in the identification of a forward loss provision that should have been recorded in 2009 and the impact on subsequent periods of adjustments to the forward loss provision based on information available at the time (“Forward Loss Adjustments”); and (ii) the year end reconciliation of income taxes payable and deferred tax balances identified errors primarily in 2013, 2012, and 2011 (“Tax Adjustments”). The misconduct and its related financial impact were concealed from our senior management, internal auditors, and external auditors.

Also as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, the Forward Loss Adjustments were based on certain assumptions and estimates. To determine the loss on the Contract, we estimated the number of units we would have expected to ship over the life of the Contract at inception of the Contract using external market industry data for fiscal years 2009, 2010, 2011, 2012, and 2013. We used data obtained directly from the customer for 2014 and 2015. The total estimated costs at any given point in time would typically include actual historical costs up to that time plus the estimated cost to produce units to be delivered. In addition, the estimated total cost for the life of the Contract includes certain inefficiencies on labor, material, and overhead costs during the initial start-up period. However, as we progress along the learning curve, the direct labor hours and overhead rates are expected to decrease as we gain technical knowhow and efficiency in producing the product. As a result of the misconduct by the employees in the recording of direct labor hours to the Contract, the historical actual direct labor hours charged to the Contract were inaccurate. As a result, we estimated the costs to complete future units at the end of each period based on an estimate of the direct labor hours chargeable to the Contract, including consideration of anticipated learning curve efficiencies that would decrease the direct labor hours over the remaining term of the Contract. Further, we used the actual direct labor hours incurred by the employees assigned to the Contract as a basis for projecting future hours, less an estimate of the time not allocable to the Contract. Using this model, we calculated the Forward Loss Adjustments from the inception of the Contract in 2009 through the expected life of the Contract. As a result of the Forward Loss Adjustments, cost of goods sold increased (decreased) approximately $6.7 million in 2009, $1.3 million in 2010, $(0.3) million in 2011, $(2.2) million in 2012, $(0.9) million in 2013, and $(0.8) million in the nine months ended September 27, 2014.

Further, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, the Tax Adjustments were necessary as a result of certain calculation errors. The Tax Adjustments resulted in a net decrease to income tax expense of approximately $0.9 million in 2013 and zero in 2012. The Tax Adjustments in 2011 resulted in a reduction to the carrying value of goodwill totaling approximately $4.0 million due to a calculation error in the original purchase price allocation and subsequent performance of step 2 of our annual goodwill impairment analysis related to deferred income taxes and thus, (i) reduced deferred income taxes by approximately $2.7 million and (ii) generated a pre-tax goodwill impairment charge of approximately $1.4 million. Further, the Tax Adjustments in 2011 reduced deferred tax assets by approximately $1.6 million that were established as a result of shared-based compensation expenses recorded previously and should have been reduced as the tax deductions were utilized. Moreover, the restated amounts include previously identified and disclosed immaterial adjustments.

In evaluating whether our previously issued consolidated financial statements were materially misstated, we evaluated the cumulative impact of these items on prior periods in accordance with the guidance in ASC 250-10, “Accounting Changes and Error Corrections,” relating to SEC Staff Accounting Bulletin No. 99, “Materiality” (“SAB 99”), and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”), and we concluded these errors were in the aggregate material to the prior reporting periods, and therefore, restatement of previously filed financial statements was necessary to our previously issued 2013, 2012, 2011, and 2010 financial statements.

This Quarterly Report on Form 10-Q for the quarter ended October 3, 2015 includes the impact of the restatement on the comparative unaudited quarterly financial information for the quarter ended September 27, 2014. Certain reclassifications have been made to prior period amounts to conform to the current year’s presentation.

The account balances labeled “As Reported” in the following tables for the quarter ended September 27, 2014 represent the previously reported unaudited balances in our Quarterly Report on Form 10-Q for the quarter ended September 27, 2014. The effects of these prior period errors on our unaudited condensed consolidated financial statements are as follows (in thousands, except per share data):



	September 27, 2014
Unaudited Condensed Consolidated Balance Sheet:	As Reported			Adjustments			As Restated
Assets
Current Assets
Cash and cash equivalents	$	40,852		$	—		$	40,852
Accounts receivable (less allowance for doubtful accounts of $275 at September 27, 2014)	104,396			—			104,396
Inventories	145,468			—			145,468
Production cost of contracts	10,375			—			10,375
Deferred income taxes	13,664			1,521			15,185
Other current assets	20,444			1,486			21,930
Total Current Assets	335,199			3,007			338,206
Property and Equipment, Net	93,181			—			93,181
Goodwill	161,940			(4,371		)	157,569
Intangibles, Net	157,694			—			157,694
Other Assets	7,657			—			7,657
Total Assets	$	755,671		$	(1,364	)	$	754,307
Liabilities and Shareholders’ Equity
Current Liabilities
Current portion of long-term debt	$	26		$	—		$	26
Accounts payable	55,083			—			55,083
Accrued liabilities	42,916			3,871			46,787
Total Current Liabilities	98,025			3,871			101,896
Long-Term Debt, Less Current Portion	310,157			—			310,157
Deferred Income Taxes	73,078			(500		)	72,578
Other Long-Term Liabilities	16,858			(300		)	16,558
Total Liabilities	498,118			3,071			501,189
Commitments and Contingencies
Shareholders’ Equity
Common stock - $0.01 par value; 35,000,000 shares authorized; 10,945,806 shares issued at September 27, 2014	109			—			109
Additional paid-in capital	72,563			(1,633		)	70,930
Retained earnings	188,551			(2,802		)	185,749
Accumulated other comprehensive loss	(3,670		)	—			(3,670		)
Total Shareholders’ Equity	257,553			(4,435		)	253,118
Total Liabilities and Shareholders’ Equity	$	755,671		$	(1,364	)	$	754,307



	Three Months Ended September 27, 2014									Nine Months Ended September 27, 2014
Unaudited Condensed Consolidated Statement of Income:	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated
Net Revenues	$	188,164		$	—		$	188,164		$	554,433		$	—		$	554,433
Cost of Sales	154,770			282			155,052			448,526			(798		)	447,728
Gross Profit	33,394			(282		)	33,112			105,907			798			106,705
Selling, General and Administrative Expenses	23,050			—			23,050			65,005			—			65,005
Operating Income	10,344			(282		)	10,062			40,902			798			41,700
Interest Expense	(6,975		)	—			(6,975		)	(21,094		)	—			(21,094		)
Other Income	1,600			—			1,600			1,600			—			1,600
Income Before Taxes	4,969			(282		)	4,687			21,408			798			22,206
Income Tax Expense	2,347			(593		)	1,754			7,685			(190		)	7,495
Net Income	$	2,622		$	311		$	2,933		$	13,723		$	988		$	14,711
Earnings Per Share
Basic earnings per share	$	0.24		$	0.03		$	0.27		$	1.26		$	0.09		$	1.35
Diluted earnings per share	$	0.24		$	0.03		$	0.26		$	1.23		$	0.09		$	1.31
Weighted-Average Number of Shares Outstanding
Basic	10,921			—			10,921			10,902			—			10,902
Diluted	11,150			—			11,150			11,202			—			11,202



	Three Months Ended September 27, 2014								Nine Months Ended September 27, 2014
Unaudited Condensed Consolidated Statement of Comprehensive Income:	As Reported			Adjustments		As Restated			As Reported			Adjustments		As Restated
Net Income	$	2,622		$	311	$	2,933		$	13,723		$	988	$	14,711
Pension Adjustments
Amortization of actuarial loss and prior service costs, net of tax benefit of approximately $40 and $124 for the three months and nine months ended September 27, 2014	(66		)	—		(66		)	(192		)	—		(192		)
Other Comprehensive Loss	(66		)	—		(66		)	(192		)	—		(192		)
Comprehensive Income	$	2,688		$	311	$	2,999		$	13,915		$	988	$	14,903



	Nine Months Ended September 27, 2014
Unaudited Condensed Consolidated Cash Flow Statement:	As Reported			Adjustments			As Restated
Cash Flows from Operating Activities
Net Income	$	13,723		$	988		$	14,711
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and amortization	21,829			—			21,829
Stock-based compensation expense	2,520			—			2,520
Deferred income taxes	1,775			298			2,073
Excess tax benefits from stock-based compensation	(139		)	—			(139		)
Recovery of doubtful accounts	(214		)	—			(214		)
Other	649			(798		)	(149		)
Changes in Assets and Liabilities:
Accounts receivable	(12,273		)	—			(12,273		)
Inventories	(4,961		)	—			(4,961		)
Production cost of contracts	(1,408		)	—			(1,408		)
Other assets	7,121			(488		)	6,633
Accounts payable	(2,447		)	—			(2,447		)
Accrued and other liabilities	(5,400		)	—			(5,400		)
Net Cash Provided by Operating Activities	20,775			—			20,775
Cash Flows from Investing Activities
Purchases of property and equipment	(9,329		)	—			(9,329		)
Proceeds from sales of assets	83			—			83
Insurance recoveries related to property and equipment	1,600			—			1,600
Net Cash Used in Investing Activities	(7,646		)	—			(7,646		)
Cash Flows from Financing Activities
Repayments of senior unsecured notes and term loans	(22,500		)	—			(22,500		)
Repayment of other debt	(19		)	—			(19		)
Excess tax benefits from stock-based compensation	139			—			139
Net proceeds from issuance of common stock under stock plans	1,289			—			1,289
Net Cash Used in Financing Activities	(21,091		)	—			(21,091		)
Net Decrease in Cash and Cash Equivalents	(7,962		)	—			(7,962		)
Cash and Cash Equivalents at Beginning of Year	48,814			—			48,814
Cash and Cash Equivalents at End of Year	$	40,852		$	—		$	40,852