Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
þ | Accelerated filer | ¨ | Non-accelerated filer | ¨ | Smaller reporting company |
Class | Number of Shares |
Common Stock, $.10 par value per share |
PAGE | |||
SEPTEMBER 29, 2019 | DECEMBER 30, 2018 | ||||||
(UNAUDITED) | |||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net | |||||||
Inventories, net | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Property and equipment, net | |||||||
Operating lease right-of-use assets | |||||||
Deferred tax asset | |||||||
Goodwill and intangibles, net | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | $ | |||||
Accrued expenses | |||||||
Current portion of operating lease liabilities | |||||||
Current portion of long-term debt | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Operating lease liabilities | |||||||
Deferred income taxes | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
Commitments and contingencies | |||||||
Shareholders’ equity | |||||||
Preferred stock | |||||||
Common stock | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive loss – foreign currency translation | ( | ) | ( | ) | |||
Accumulated other comprehensive (loss) income – cash flow hedge | ( | ) | |||||
Accumulated other comprehensive loss – pension liability | ( | ) | ( | ) | |||
Total shareholders’ equity | |||||||
Total liabilities and shareholders’ equity | $ | $ |
THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||
SEPTEMBER 29, 2019 | SEPTEMBER 30, 2018 | SEPTEMBER 29, 2019 | SEPTEMBER 30, 2018 | ||||||||||||
NET SALES | $ | $ | $ | $ | |||||||||||
Cost of Sales | |||||||||||||||
GROSS PROFIT ON SALES | |||||||||||||||
Selling, General and Administrative Expenses | |||||||||||||||
Restructuring Charges | |||||||||||||||
OPERATING INCOME | |||||||||||||||
Interest Expense | |||||||||||||||
Other Expense | |||||||||||||||
INCOME BEFORE INCOME TAX EXPENSE | |||||||||||||||
Income Tax Expense | |||||||||||||||
NET INCOME | $ | $ | $ | $ | |||||||||||
Earnings Per Share – Basic | $ | $ | $ | $ | |||||||||||
Earnings Per Share – Diluted | $ | $ | $ | $ | |||||||||||
Common Shares Outstanding – Basic | |||||||||||||||
Common Shares Outstanding – Diluted |
THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||
SEPTEMBER 29, 2019 | SEPTEMBER 30, 2018 | SEPTEMBER 29, 2019 | SEPTEMBER 30, 2018 | ||||||||||||
Net Income | $ | $ | $ | $ | |||||||||||
Other Comprehensive (Loss) Income, Foreign Currency Translation Adjustment | ( | ) | ( | ) | ( | ) | |||||||||
Other Comprehensive (Loss) Income, Cash Flow Hedge | ( | ) | ( | ) | |||||||||||
Other Comprehensive Income (Loss), Pension Liability Adjustment | ( | ) | |||||||||||||
Comprehensive Income | $ | $ | $ | $ |
NINE MONTHS ENDED | |||||||
SEPTEMBER 29, 2019 | SEPTEMBER 30, 2018 | ||||||
OPERATING ACTIVITIES: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Stock compensation amortization expense | |||||||
Deferred income taxes and other | ( | ) | ( | ) | |||
Amortization of acquired intangible assets | |||||||
Amortization of acquired inventory step-up | |||||||
Working capital changes: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Inventories | ( | ) | ( | ) | |||
Prepaid expenses and current assets | ( | ) | ( | ) | |||
Accounts payable and accrued expenses | |||||||
CASH PROVIDED BY OPERATING ACTIVITIES | |||||||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Cash paid for business, net of cash acquired | ( | ) | |||||
Other | |||||||
CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | |||
FINANCING ACTIVITIES: | |||||||
Repayments of long-term debt | ( | ) | ( | ) | |||
Borrowing of long-term debt | |||||||
Tax withholding payments for share-based compensation | ( | ) | ( | ) | |||
Proceeds from issuance of common stock | |||||||
Debt issuance costs | ( | ) | |||||
Dividends paid | ( | ) | ( | ) | |||
Repurchase of common stock | ( | ) | ( | ) | |||
Other | ( | ) | |||||
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES: | ( | ) | |||||
Net cash provided by operating, investing and financing activities | |||||||
Effect of exchange rate changes on cash | ( | ) | ( | ) | |||
CASH AND CASH EQUIVALENTS: | |||||||
Net change during the period | |||||||
Balance at beginning of period | |||||||
Balance at end of period | $ | $ |
Geography | Percentage of Net Sales | |
Americas | ||
Europe | ||
Asia-Pacific |
September 29, 2019 | December 30, 2018 | ||||||
(In thousands) | |||||||
Finished Goods | $ | $ | |||||
Work in Process | |||||||
Raw Materials | |||||||
Inventories, net | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
Earnings Per Share: | |||||||||||||||
Basic Earnings Per Share: | |||||||||||||||
Distributed Earnings | $ | $ | $ | $ | |||||||||||
Undistributed Earnings | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Diluted Earnings Per Share: | |||||||||||||||
Distributed Earnings | $ | $ | $ | $ | |||||||||||
Undistributed Earnings | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Basic earnings per share | $ | $ | $ | $ | |||||||||||
Diluted earnings per share | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In millions) | |||||||||||||||
Net Income Attributable to Participating Securities | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||
(In thousands) | |||||||||||
Weighted Average Shares Outstanding | |||||||||||
Participating Securities | |||||||||||
Shares for Basic Earnings Per Share | |||||||||||
Dilutive Effect of Stock Options | |||||||||||
Shares for Diluted Earnings Per Share |
Asset Derivatives as of September 29, 2019 | Liability Derivatives as of September 29, 2019 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Derivative instruments designated as hedging instruments: | |||||||||||
Foreign currency contracts | Other current assets | $ | Accrued expenses | $ | |||||||
Interest rate swap contracts | Other current assets | Accrued expenses | |||||||||
$ | $ |
Asset Derivatives as of December 30, 2018 | Liability Derivatives as of December 30, 2018 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Derivative instruments designated as hedging instruments: | |||||||||||
Foreign currency contracts | Other current assets | $ | Other current liabilities | $ | |||||||
Interest rate swap contract | Other current assets | $ | Other current liabilities | ||||||||
$ |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Foreign currency contracts gain (loss) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Interest rate swap contracts (loss) gain | ( | ) | ( | ) | |||||||||||
(Loss) gain recognized in accumulated other comprehensive income | $ | ( | ) | $ | $ | ( | ) | $ |
Three Months Ended | Nine Months Ended | ||||||||
Statement of Operations Location | September 29, 2019 | September 29, 2019 | |||||||
(In thousands) | |||||||||
Foreign currency contracts | Cost of sales | $ | $ |
SHARES | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | RETAINED EARNINGS | PENSION LIABILITY | FOREIGN CURRENCY TRANSLATION ADJUSTMENT | CASH FLOW HEDGE | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Balance at December 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||
Stock issuances under employee plans | — | — | — | — | ||||||||||||||||||||||
Other issuances of common stock | — | — | — | — | ||||||||||||||||||||||
Unamortized stock compensation expense related to restricted stock awards | — | — | ( | ) | — | — | — | — | ||||||||||||||||||
Cash dividends paid | — | — | — | ( | ) | — | — | — | ||||||||||||||||||
Forfeitures and compensation expense related to stock awards | ( | ) | ( | ) | — | — | — | — | ||||||||||||||||||
Share repurchases | — | — | — | — | — | — | — | |||||||||||||||||||
Pension liability adjustment | — | — | — | — | ( | ) | — | — | ||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | ) | — | ||||||||||||||||||
Cash flow hedge unrealized loss | — | — | — | — | — | — | ( | ) | ||||||||||||||||||
Balance, at March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||
Stock issuances under employee plans | — | — | — | — | — | |||||||||||||||||||||
Other issuances of common stock | ( | ) | — | — | — | — | — | — | ||||||||||||||||||
Unamortized stock compensation expense related to restricted stock awards | — | — | — | — | — | — | ||||||||||||||||||||
Cash dividends paid | — | — | — | ( | ) | — | — | — | ||||||||||||||||||
Forfeitures and compensation expense related to stock awards | ( | ) | ( | ) | — | — | — | — | ||||||||||||||||||
Share repurchases | ( | ) | ( | ) | ( | ) | — | — | — | — | ||||||||||||||||
Pension liability adjustment | — | — | — | — | — | — | ||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | ||||||||||||||||||||
Cash flow hedge unrealized loss | — | — | — | — | — | — | ( | ) | ||||||||||||||||||
Balance, at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||
Stock issuances under employee plans | — | — | — | — | — | — | — | |||||||||||||||||||
Other issuances of common stock | — | — | — | — | — | — | — | |||||||||||||||||||
Unamortized stock compensation expense related to restricted stock awards | — | — | — | — | — | — | — | |||||||||||||||||||
Cash dividends paid | — | — | — | ( | ) | — | — | — | ||||||||||||||||||
Forfeitures and compensation expense related to stock awards | — | — | — | — | — | — | ||||||||||||||||||||
Share repurchases | — | — | — | — | — | — | — | |||||||||||||||||||
Pension liability adjustment | — | — | — | — | — | — | ||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | ) | — | ||||||||||||||||||
Cash flow hedge unrealized loss | — | — | — | — | — | — | ( | ) | ||||||||||||||||||
Balance at September 29, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
SHARES | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | RETAINED EARNINGS | PENSION LIABILITY | FOREIGN CURRENCY TRANSLATION ADJUSTMENT | CASH FLOW HEDGE | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Balance, at December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||
Stock issuances under employee plans | — | — | — | — | ||||||||||||||||||||||
Other issuances of common stock | — | — | — | — | ||||||||||||||||||||||
Unamortized stock compensation expense related to restricted stock awards | — | — | ( | ) | — | — | — | — | ||||||||||||||||||
Cash dividends paid | — | — | — | ( | ) | — | — | — | ||||||||||||||||||
Forfeitures and compensation expense related to stock awards | ( | ) | ( | ) | — | — | — | — | ||||||||||||||||||
Share repurchases | ( | ) | ( | ) | ( | ) | — | — | — | — | ||||||||||||||||
Pension liability adjustment | — | — | — | — | ( | ) | — | — | ||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | ||||||||||||||||||||
Cash flow hedge unrealized gain | — | — | — | — | — | — | ||||||||||||||||||||
Balance, at April 1, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||
Stock issuances under employee plans | — | — | — | — | — | |||||||||||||||||||||
Other issuances of common stock | — | — | — | — | — | — | — | |||||||||||||||||||
Unamortized stock compensation expense related to restricted stock awards | — | — | — | — | — | — | — | |||||||||||||||||||
Cash dividends paid | — | — | — | ( | ) | — | — | — | ||||||||||||||||||
Forfeitures and compensation expense related to stock awards | ( | ) | ( | ) | — | — | — | — | ||||||||||||||||||
Share repurchases | — | — | — | — | — | — | — | |||||||||||||||||||
Pension liability adjustment | — | — | — | — | — | — | ||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | ) | — | ||||||||||||||||||
Cash flow hedge unrealized gain | — | — | — | — | — | — | ||||||||||||||||||||
Balance, at July 1, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||
Stock issuances under employee plans | — | — | — | — | ||||||||||||||||||||||
Other issuances of common stock | — | — | — | — | ||||||||||||||||||||||
Unamortized stock compensation expense related to restricted stock awards | — | — | ( | ) | — | — | — | — | ||||||||||||||||||
Cash dividends paid | — | — | — | ( | ) | — | — | — | ||||||||||||||||||
Forfeitures and compensation expense related to stock awards | — | — | — | — | — | — | ||||||||||||||||||||
Share repurchases | — | — | — | — | — | — | — | |||||||||||||||||||
Pension liability adjustment | — | — | — | — | ( | ) | — | — | ||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | ||||||||||||||||||||
Cash flow hedge unrealized gain | — | — | — | — | — | — | ||||||||||||||||||||
Balance, at September 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Restricted Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding at December 30, 2018 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited or canceled | ( | ) | ||||
Outstanding at September 29, 2019 | $ |
Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding at December 30, 2018 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited or canceled | ( | ) | ||||
Outstanding at September 29, 2019 | $ |
September 29, 2019 | ||||||||
(In thousands) | ||||||||
Balance Sheet Location | Operating Leases | Finance Leases | ||||||
Operating lease right-of-use assets | $ | |||||||
Current portion of operating lease liabilities | $ | |||||||
Operating lease liabilities | ||||||||
Total operating lease liabilities | $ | |||||||
Property and equipment | $ | |||||||
Accrued expenses | $ | |||||||
Other long-term liabilities | ||||||||
Total finance lease liabilities | $ |
Three Months Ended | Nine Months Ended | ||||||
September 29, 2019 | September 29, 2019 | ||||||
Lease cost | (In thousands) | ||||||
Finance lease cost: | |||||||
Amortization of right-of-use assets | $ | $ | |||||
Interest on lease liabilities | |||||||
Operating lease cost | |||||||
Short-term lease cost | |||||||
Variable lease cost | |||||||
Total lease cost | $ | $ | |||||
Other supplemental information | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows from finance leases | $ | $ | |||||
Operating cash flows from operating leases | |||||||
Financing cash flows from finance leases | |||||||
Right-of-use assets obtained in exchange for new finance lease liabilities | |||||||
Right-of-use assets obtained in exchange for new operating lease liabilities |
September 29, 2019 | ||
Weighted-average remaining lease term – finance leases (in years) | ||
Weighted-average remaining lease term – operating leases (in years) | ||
Weighted-average discount rate – finance leases | % | |
Weighted-average discount rate – operating leases | % |
Fiscal Year | Operating Leases | Finance Leases | |||||
(In thousands) | |||||||
2019 (excluding the nine months ended September 29, 2019) | $ | $ | |||||
2020 | |||||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
Thereafter | |||||||
Total future minimum lease payments (undiscounted) | |||||||
Less: Present value discount | ( | ) | ( | ) | |||
Total lease liability | $ | $ |
Fiscal Year | Amount | |||
(In thousands) | ||||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter | ||||
Total minimum rent commitments | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||
Defined Benefit Retirement Plans (Europe) | September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||
Interest cost | ||||||||||||||||
Expected return on assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Amortization of prior service cost | ( | ) | ||||||||||||||
Amortization of net actuarial losses | ||||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||
Salary Continuation Plan | September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||
Interest cost | ||||||||||||||||
Amortization of net actuarial losses | ||||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||
Nora Defined Benefit Plan | September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||
Interest cost | ||||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ |
As of August 7, 2018 | |||
(In thousands) | |||
Assets acquired (excluding goodwill) | $ | ||
Liabilities assumed | ( | ) | |
Net assets acquired | |||
Purchase price | |||
Goodwill, excess of purchase price | $ |
Nine Months Ended | |||
September 30, 2018 | |||
(In thousands) | |||
Revenue | $ | ||
Net income |
AMERICAS | EUROPE | ASIA- PACIFIC | TOTAL | |||||||||||||
(In thousands) | ||||||||||||||||
Three Months Ended September 29, 2019: | ||||||||||||||||
Net Sales | $ | $ | $ | $ | ||||||||||||
Depreciation and amortization | ||||||||||||||||
Total assets | ||||||||||||||||
Three Months Ended September 30, 2018: | ||||||||||||||||
Net Sales | $ | $ | $ | $ | ||||||||||||
Depreciation and amortization | ||||||||||||||||
Nine Months Ended September 29, 2019: | ||||||||||||||||
Net Sales | $ | $ | $ | $ | ||||||||||||
Depreciation and amortization | ||||||||||||||||
Nine Months Ended September 30, 2018: | ||||||||||||||||
Net Sales | $ | $ | $ | $ | ||||||||||||
Depreciation and amortization |
Three Months Ended | Nine Months Ended | |||||||||||||||
DEPRECIATION AND AMORTIZATION | September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands) | ||||||||||||||||
Total segment depreciation and amortization | $ | $ | $ | $ | ||||||||||||
Corporate depreciation and amortization | ||||||||||||||||
Reported depreciation and amortization | $ | $ | $ | $ |
ASSETS | September 29, 2019 | ||
(In thousands) | |||
Total segment assets | $ | ||
Corporate assets | |||
Eliminations | ( | ) | |
Reported total assets | $ |
Balance at Beginning of Year | Deductions 2019 | Charged to Expenses 2019 | Balance at September 29, 2019 | ||||||||||||
(in thousands) | |||||||||||||||
Workforce Reduction | $ | $ | $ | $ | |||||||||||
Other Exit Costs | |||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||
Net sales | 100 | % | 100 | % | 100 | % | 100 | % | |||
Cost of sales | 61.0 | 68.6 | 61.2 | 64.1 | |||||||
Gross profit on sales | 39.0 | 31.4 | 38.8 | 35.9 | |||||||
Selling, general and administrative expenses | 26.2 | 26.4 | 28.5 | 27.3 | |||||||
Restructuring charges | 0.2 | 0.0 | 0.1 | 0.0 | |||||||
Operating income | 12.6 | 5.0 | 10.2 | 8.6 | |||||||
Interest/Other expenses | 2.2 | 2.0 | 2.2 | 1.7 | |||||||
Income before tax expense | 10.4 | 2.9 | 8.0 | 6.9 | |||||||
Income tax expense | 2.8 | 0.4 | 1.8 | 1.7 | |||||||
Net income | 7.6 | 2.6 | 6.2 | 5.2 |
Three Months Ended | Percentage Change | |||||||||
September 29, 2019 | September 30, 2018 | |||||||||
(In thousands) | ||||||||||
Net Sales | $ | 348,352 | $ | 318,325 | 9.4 | % |
Nine Months Ended | Percentage Change | |||||||||
September 29, 2019 | September 30, 2018 | |||||||||
(In thousands) | ||||||||||
Net Sales | $ | 1,003,547 | $ | 842,514 | 19.1 | % |
Three Months Ended | Percentage Change | |||||||||
Cost and Expenses | September 29, 2019 | September 30, 2018 | ||||||||
(In thousands) | ||||||||||
Cost of sales | $ | 212,590 | $ | 218,380 | (2.7 | )% | ||||
Selling, general and administrative expenses | 91,414 | 84,160 | 8.6 | % |
Nine Months Ended | Percentage Change | |||||||||
Cost and Expenses | September 29, 2019 | September 30, 2018 | ||||||||
(In thousands) | ||||||||||
Cost of sales | $ | 613,797 | $ | 539,839 | 13.7 | % | ||||
Selling, general and administrative expenses | 286,123 | 230,199 | 24.3 | % |
Period(1) | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
July 1-31, 2019(2) | 651 | $ | 14.47 | — | $ | — | ||||||||
August 1 - 31, 2019(2) | 502 | 10.59 | — | — | ||||||||||
September 1-29, 2019 | — | — | — | — | ||||||||||
Total | 1,153 | $ | 12.78 | — | $ | — |
EXHIBIT NUMBER | DESCRIPTION OF EXHIBIT |
Section 302 Certification of Chief Executive Officer. | |
Section 302 Certification of Chief Financial Officer. | |
Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350. | |
Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350. | |
101.INS | XBRL Instance Document – The Instance Document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Presentation Linkbase Document. |
101.DEF | XBRL Taxonomy Definition Linkbase Document. |
104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 29, 2019, formatted in Inline XBRL |
INTERFACE, INC. | ||
Date: November 7, 2019 | By: | /s/ Bruce A. Hausmann |
Bruce A. Hausmann Chief Financial Officer (Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Interface, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date:November 7, 2019 | |
/s/ Jay D. Gould | |
Jay D. Gould Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Interface, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date:November 7, 2019 | ||||
/s/ Bruce A. Hausmann | ||||
Bruce A. Hausmann | ||||
Chief Financial Officer |
(1) | the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 29, 2019 (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. |
November 7, 2019 | |||
/s/ Jay D. Gould | |||
Jay D. Gould | |||
Chief Executive Officer |
(1) | the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 29, 2019 (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. |
November 7, 2019 | |||
/s/ Bruce A. Hausmann | |||
Bruce A. Hausmann | |||
Chief Financial Officer |
Earnings Per Share - Calculation of Income (Loss) Per Shares (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
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Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Net income | $ 26,210 | $ 8,172 | $ 62,768 | $ 43,858 |
Weighted Average Shares Outstanding (in shares) | 57,915 | 58,917 | 58,599 | 58,974 |
Participating Securities (in shares) | 518 | 579 | 518 | 579 |
Shares for Basic Earnings Per Share (in shares) | 58,433 | 59,496 | 59,117 | 59,553 |
Dilutive Effect of Stock Options (in shares) | 1 | 40 | 5 | 41 |
Shares for Diluted Earnings Per Share (in shares) | 58,434 | 59,536 | 59,122 | 59,594 |
Participating Securities | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Net income | $ 200 | $ 100 | $ 600 | $ 400 |
Revenue Recognition - Narrative (Details) |
9 Months Ended |
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Sep. 29, 2019 | |
Carpet, Modular Resilient Flooring, and Related Products | |
Percent of revenue due to contracts with customers (percentage) | 98.00% |
Installation of Carpet and Other Flooring Related Material | |
Percent of revenue due to contracts with customers (percentage) | 2.00% |
Income Taxes Income Taxes |
9 Months Ended |
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Sep. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate and records any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs, including discrete tax items. For the nine months ended September 29, 2019, the Company’s effective tax rate was 22.0%, as compared to 24.3% in the first nine months of 2018. The effective tax rate decreased due to the favorable impact of discrete items recognized during the period related to company-owned life insurance and the remeasurement of unrecognized tax benefits. Accounting standards require that all tax positions be analyzed using a two-step approach. The first step requires an entity to determine if a tax position is more-likely-than-not to be sustained upon examination. In the second step, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, that is more-likely-than-not to be realized upon ultimate settlement. In the first nine months of 2019, the Company decreased its liability for unrecognized tax benefits by $2.2 million. As of September 29, 2019, the Company had accrued approximately $25.9 million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company’s deferred tax asset as of September 29, 2019 reflected a reduction of $2.8 million related to these unrecognized tax benefits.
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Long-term Debt |
9 Months Ended |
---|---|
Sep. 29, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | LONG-TERM DEBT Syndicated Credit Facility On August 7, 2018, the Company amended and restated its syndicated credit facility (the “Facility”) in connection with the nora Holding GmbH (“nora”) acquisition. The purpose of the amended and restated Facility was to fund the nora purchase price and related fees and expenses of the acquisition, and to increase the credit available to the Company and its subsidiaries following the closing of the nora acquisition in view of the larger enterprise. At September 29, 2019, the amended and restated Facility provided to the Company and certain of its subsidiaries a multicurrency revolving loan and U.S. denominated and multicurrency term loans. Interest on base rate loans was charged at varying rates computed by applying a margin depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. Interest on LIBOR-based loans and fees for letters of credit were charged at varying rates computed by applying a margin over the applicable LIBOR rate, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. In addition, the Company paid a commitment fee per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility. In connection with the amended and restated Facility as discussed above, the Company recorded $8.8 million of debt issuance costs in the third quarter of 2018 associated with the new term loans that are reflected as a reduction of long-term debt in accordance with applicable accounting standards. As these fees are expensed over the life of the outstanding borrowing, the debt balance will increase by the same amount as the fees that are expensed. As of September 29, 2019, the unamortized debt costs recorded as a reduction of long-term debt were $6.8 million. As of September 29, 2019, the Company had outstanding $588.0 million of term loan borrowing and $45.1 million of revolving loan borrowings under the Facility, and had $2.5 million in letters of credit outstanding under the Facility. As of September 29, 2019, the weighted average interest rate on borrowings outstanding under the Facility was 3.62%. Under the Facility, the Company is required to make quarterly amortization payments of the term loan borrowings, which commenced in the fourth quarter of 2018. The amortization payments are due on the last day of the calendar quarter. The Company is currently in compliance with all covenants under the Facility and anticipates that it will remain in compliance with the covenants for the foreseeable future. Other Lines of Credit Subsidiaries of the Company have an aggregate of the equivalent of $9.4 million of other lines of credit available at interest rates ranging from 2.0% to 6.0%. As of September 29, 2019, there were no borrowings outstanding under these lines of credit.
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Employee Benefit Plans |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS The following tables provide the components of net periodic benefit cost for the three-month and nine-month periods ended September 29, 2019 and September 30, 2018, respectively:
In accordance with applicable accounting standards, the service cost component of net periodic benefit costs is presented within Operating Income in the consolidated condensed statement of operations, while all other components of net periodic benefit costs are presented within other expense in the consolidated condensed statement of operations.
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Segment Information - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 29, 2019 | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of reportable segments | 1 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 26,210 | $ 8,172 | $ 62,768 | $ 43,858 |
Other Comprehensive (Loss) Income, Foreign Currency Translation Adjustment | (18,585) | 4,964 | (19,539) | (6,979) |
Other Comprehensive (Loss) Income, Cash Flow Hedge | (941) | 286 | (8,914) | 2,565 |
Other Comprehensive Income (Loss), Pension Liability Adjustment | 1,076 | (196) | 1,814 | 1,047 |
Comprehensive Income | $ 7,760 | $ 13,226 | $ 36,129 | $ 40,491 |
Inventories |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES Inventories are summarized as follows:
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Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
|
Supplemental Cash Flow Information [Abstract] | ||
Cash payments for interest | $ 18.1 | $ 7.4 |
Income tax payments, net of refunds | $ 26.5 | $ 21.2 |
Restructuring and Asset Impairment Charges - Restructuring Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
|
Restructuring Reserve [Roll Forward] | ||||
Charged to Expenses 2019 | $ 672 | $ 0 | $ 672 | $ 0 |
2018 Restructuring Plan | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at Beginning of Year | 11,907 | |||
Deductions 2019 | 6,262 | |||
Charged to Expenses 2019 | 672 | |||
Balance at September 29, 2019 | 6,317 | 6,317 | ||
2018 Restructuring Plan | Workforce Reduction | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at Beginning of Year | 10,763 | |||
Deductions 2019 | 5,892 | |||
Charged to Expenses 2019 | 0 | |||
Balance at September 29, 2019 | 4,871 | 4,871 | ||
2018 Restructuring Plan | Other Exit Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at Beginning of Year | 1,144 | |||
Deductions 2019 | 370 | |||
Charged to Expenses 2019 | 672 | |||
Balance at September 29, 2019 | $ 1,446 | $ 1,446 |
Leases - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 29, 2019 | |
Lessee, Lease, Description [Line Items] | |
Lease renewal term | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease contract term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease contract term | 20 years |
Shareholders' Equity - Activity in Shareholders' Equity (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Mar. 31, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
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Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | $ 354,663 | $ 354,663 | ||||||
Net income | $ 26,210 | $ 8,172 | 62,768 | $ 43,858 | ||||
Share repurchases | $ (25,200) | |||||||
Pension liability adjustment | 1,076 | (196) | 1,814 | 1,047 | ||||
Foreign currency translation adjustment | (18,585) | 4,964 | (19,539) | (6,979) | ||||
Cash flow hedge unrealized gain (loss) | (941) | $ 286 | (8,914) | $ 2,565 | ||||
Balance | $ 357,378 | $ 357,378 | ||||||
Common Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance (in shares) | 58,433 | 60,016 | 59,508 | 59,493 | 59,498 | 59,806 | 59,508 | 59,806 |
Balance | $ 5,843 | $ 6,002 | $ 5,951 | $ 5,949 | $ 5,950 | $ 5,981 | $ 5,951 | $ 5,981 |
Stock issuances under employee plans (shares) | 2 | 509 | 10 | 4 | 175 | |||
Stock issuances under employee plans | $ 51 | $ 1 | $ 17 | |||||
Other issuances of common stock (in shares) | (1) | 224 | 2 | 187 | ||||
Other issuances of common stock | $ 22 | $ 1 | $ 19 | |||||
Forfeitures and compensation expense related to stock awards (in shares) | (28) | (225) | (9) | (55) | ||||
Forfeitures and compensation expense related to stock awards | $ (3) | $ (22) | $ (1) | $ (6) | ||||
Share repurchases (in shares) | (1,556) | (615) | ||||||
Share repurchases | $ (156) | $ (61) | ||||||
Balance (in shares) | 58,433 | 58,433 | 60,016 | 59,505 | 59,493 | 59,498 | 58,433 | 59,505 |
Balance | $ 5,843 | $ 5,843 | $ 6,002 | $ 5,951 | $ 5,949 | $ 5,950 | $ 5,843 | $ 5,951 |
ADDITIONAL PAID-IN CAPITAL | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | 247,221 | 270,655 | 270,269 | 262,285 | 260,115 | 271,271 | 270,269 | 271,271 |
Stock issuances under employee plans | 6 | 379 | 86 | 35 | 102 | |||
Other issuances of common stock | 3,900 | 40 | 4,769 | |||||
Unamortized stock compensation expense related to restricted stock awards | 52 | (3,922) | (40) | (4,788) | ||||
Forfeitures and compensation expense related to stock awards | 1,303 | 1,506 | 29 | 2,929 | 2,135 | 3,185 | ||
Share repurchases | (24,998) | (14,424) | ||||||
Balance | 248,524 | 247,221 | 270,655 | 265,300 | 262,285 | 260,115 | 248,524 | 265,300 |
RETAINED EARNINGS | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | 251,009 | 225,373 | 222,214 | 215,383 | 198,649 | 187,433 | 222,214 | 187,433 |
Net income | 26,210 | 29,499 | 7,059 | 8,172 | 20,602 | 15,084 | ||
Cash dividends paid | (3,798) | (3,863) | (3,900) | (3,866) | (3,868) | (3,868) | ||
Balance | 273,421 | 251,009 | 225,373 | 219,689 | 215,383 | 198,649 | 273,421 | 219,689 |
PENSION LIABILITY | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | (42,872) | (43,701) | (43,610) | (55,311) | (58,770) | (56,554) | (43,610) | (56,554) |
Pension liability adjustment | 1,076 | 829 | (91) | (196) | 3,459 | (2,216) | ||
Balance | (41,796) | (42,872) | (43,701) | (55,507) | (55,311) | (58,770) | (41,796) | (55,507) |
FOREIGN CURRENCY TRANSLATION ADJUSTMENT | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | (102,441) | (106,690) | (101,487) | (90,886) | (70,113) | (78,943) | (101,487) | (78,943) |
Foreign currency translation adjustment | (18,585) | 4,249 | (5,203) | 4,964 | (20,773) | 8,830 | ||
Balance | (121,026) | (102,441) | (106,690) | (85,922) | (90,886) | (70,113) | (121,026) | (85,922) |
CASH FLOW HEDGE | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | (6,647) | (1,980) | 1,326 | 3,183 | 2,536 | 904 | 1,326 | 904 |
Cash flow hedge unrealized gain (loss) | (941) | (4,667) | (3,306) | 286 | 647 | 1,632 | ||
Balance | $ (7,588) | $ (6,647) | $ (1,980) | $ 3,469 | $ 3,183 | $ 2,536 | $ (7,588) | $ 3,469 |
Revenue Recognition (Tables) |
9 Months Ended | ||||||||||||||||||
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Sep. 29, 2019 | |||||||||||||||||||
Revenues [Abstract] | |||||||||||||||||||
Disaggregation of Revenue | For the nine months ended September 29, 2019, revenue from the Company’s customers is broken down by geography as follows:
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Shareholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | The following tables depict the activity in the accounts which make up shareholders’ equity for the three and nine months ended September 29, 2019 and September 30, 2018:
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Share-based Payment Arrangement, Restricted Stock Unit, Activity | The following table summarizes restricted stock outstanding as of September 29, 2019, as well as activity during the nine months then ended:
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Schedule of Nonvested Performance-based Units Activity | The following table summarizes the performance shares outstanding as of September 29, 2019, as well as the activity during the nine months then ended:
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Earnings Per Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE The Company computes basic earnings per share (“EPS”) by dividing net income by the weighted average common shares outstanding, including participating securities outstanding, during the period as discussed below. Diluted EPS reflects the potential dilution beyond shares for basic EPS that could occur if securities or other contracts to issue common stock were exercised, converted into common stock or resulted in the issuance of common stock that would have shared in the Company’s earnings. The Company includes all unvested stock awards which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted EPS calculations when the inclusion of these shares would be dilutive. Unvested share-based awards of restricted stock are paid dividends equally with all other shares of common stock. As a result, the Company includes all outstanding restricted stock awards in the calculation of basic and diluted EPS. Distributed earnings include common stock dividends and dividends earned on unvested share-based payment awards. Undistributed earnings represent earnings that were available for distribution but were not distributed. The following tables show distributed and undistributed earnings:
The following table presents net income that was attributable to participating securities:
The weighted average shares for basic and diluted EPS were as follows:
For all periods presented, there were no stock options or participating securities excluded from the computation of diluted EPS.
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Income Taxes - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
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Income Tax Disclosure [Abstract] | ||
Effective income tax rate, percent | 22.00% | 24.30% |
Unrecognized tax benefits, period decrease | $ 2.2 | |
Unrecognized tax benefits | 25.9 | |
Decrease in deferred tax assets | $ 2.8 |
Derivative Instruments - Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
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Derivative [Line Items] | ||||
Foreign currency contracts, losses reclassified from AOCI | $ 450 | $ 450 | ||
Cash Flow Hedging | Derivative instruments designated as hedging instruments | ||||
Derivative [Line Items] | ||||
(Loss) gain recognized in accumulated other comprehensive income | (941) | $ 286 | (8,914) | $ 2,565 |
Foreign currency contracts gain (loss) | Cash Flow Hedging | Derivative instruments designated as hedging instruments | ||||
Derivative [Line Items] | ||||
(Loss) gain recognized in accumulated other comprehensive income | 627 | (167) | 468 | (167) |
Interest rate swap contracts (loss) gain | Cash Flow Hedging | Derivative instruments designated as hedging instruments | ||||
Derivative [Line Items] | ||||
(Loss) gain recognized in accumulated other comprehensive income | $ (1,568) | $ 453 | $ (9,382) | $ 2,732 |
Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories are summarized as follows:
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Cost | Lease Costs
The table below represents a summary of the balances recorded in the consolidated condensed balance sheet related to our leases as of September 29, 2019:
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Lease Liability Maturity Schedule | Maturity analysis of lease payments under non-cancellable leases were as follows:
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Lease Liability Maturity Schedule | Maturity analysis of lease payments under non-cancellable leases were as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | At December 30, 2018, aggregate minimum rent commitments under operating leases with initial or remaining terms of one year or more consisted of the following:
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Earnings Per Share - Distributed and Undistributed Earnings (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
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Basic Earnings Per Share: | ||||
Distributed Earnings (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.19 | $ 0.20 |
Undistributed Earnings (in dollars per share) | 0.38 | 0.07 | 0.87 | 0.54 |
Basic earnings per share, total (in dollars per share) | 0.45 | 0.14 | 1.06 | 0.74 |
Diluted Earnings Per Share: | ||||
Distributed Earnings (in dollars per share) | 0.07 | 0.07 | 0.19 | 0.20 |
Undistributed Earnings (in dollars per share) | 0.38 | 0.07 | 0.87 | 0.54 |
Diluted earnings per share, total (in dollars per share) | 0.45 | 0.14 | 1.06 | 0.74 |
Basic earnings per share (in dollars per share) | 0.45 | 0.14 | 1.06 | 0.74 |
Diluted earnings per share (in dollars per share) | $ 0.45 | $ 0.14 | $ 1.06 | $ 0.74 |
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) |
Dec. 30, 2018 |
Sep. 29, 2019 |
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Operating lease right-of-use assets | $ 0 | $ 110,051,000 |
Operating lease liabilities | $ 107,260,000 | |
Cumulative effect on retained earnings | 0 | |
Accounting Standards Update 2016-02 | ||
Operating lease right-of-use assets | 115,000,000 | |
Operating lease liabilities | $ 115,000,000 |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | DERIVATIVE INSTRUMENTS Interest Rate Risk Management In the third quarter of 2017 and the first quarter of 2019, the Company entered into interest rate swap transactions in notional amounts of $100 million and $150 million, respectively, to fix the variable interest rate on a portion of its term loan borrowing in order to manage a portion of its exposure to interest rate fluctuations. The Company’s objective and strategy with respect to these interest rate swaps is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability to cash flows relating to interest payments on a portion of its outstanding debt. The Company is meeting its objective by hedging the risk of changes in its cash flows (interest payments) attributable to changes in LIBOR, the designated benchmark interest rate being hedged (the “hedged risk”), on an amount of the Company’s debt principal equal to the outstanding swap notional amounts. Cash Flow Interest Rate Swap Both of the interest rate swaps described above are designated and qualify as cash flow hedges of forecasted interest payments. The Company reports the effective portion of the fair value gain or loss on the swaps as a component of other comprehensive income (or other comprehensive loss). Gains or losses (if any) on any ineffective portion of derivative instruments in cash flow hedging relationships are recorded in the period in which they occur as a component of interest expense in the consolidated condensed statement of operations and as a component of operating activities in the consolidated condensed statement of cash flows. The aggregate notional amount of the interest rate swaps as of September 29, 2019 was $250 million. Forward Contracts Our nora operations are party to currency forward contracts designed to hedge the cash flow risk of intercompany sales from the manufacturing facility in Europe to the Americas. The Company’s objective and strategy with respect to these currency forward contracts is to protect the Company against adverse fluctuations in currency rates by reducing its exposure to variability in cash flows related to receipt of payment on intercompany sales. The Company is meeting its objective by hedging the risk of changes in its cash flows (intercompany payments for inventory) attributable to changes in the U.S. dollar/Euro exchange rate (the “hedged risk”). Changes in fair value attributable to components other than exchange rates will be excluded from the assessment of effectiveness and amortized to earnings on a straight-line basis. Changes in fair value related to the effective portion of these contracts will be reflected as a component of other comprehensive income (or other comprehensive loss). As of September 29, 2019, all foreign currency forward contracts have expired. The table below sets forth the fair value of derivative instruments as of September 29, 2019 (in thousands):
The table below sets forth the fair value of derivative instruments as of December 30, 2018 (in thousands):
There was no significant impact to earnings from the changes in fair value of derivatives designated as cash flow hedges or from amounts excluded from the assessment of hedge effectiveness during the three and nine months ended September 29, 2019. The amount of hedged items expected to be reclassified from accumulated other comprehensive income in the next 12 months is not significant. The following table summarizes the impact that changes in the fair value of derivatives designated as cash flow hedges and included in the assessment of hedge effectiveness had on accumulated other comprehensive income during the three and nine months ended September 29, 2019, and September 30, 2018 (in thousands):
The following table summarizes the losses reclassified from accumulated other comprehensive income during the three and nine months ended September 29, 2019 (in thousands):
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Acquisition of Nora |
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Sep. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Nora | ACQUISITION OF NORA On August 7, 2018, the Company completed the acquisition of nora for a purchase price of €385.1 million, or $447.2 million at the exchange rate as of the transaction date, including acquired cash of €40.0 million ($46.5 million) for a net purchase price of €345.1 million ($400.7 million). The transaction was accounted for as a business combination using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recorded at their fair market values as of the acquisition date. The results of operations for this acquisition have been consolidated with those of the Company from the acquisition date forward. Tangible assets and liabilities of nora systems GmbH were valued as of the acquisition date using a market analysis, and intangible assets were valued using a discounted cash flow analysis. During the second quarter of 2019, the Company recognized a measurement period adjustment to adjust provisional amounts initially recorded for assumed deferred tax liabilities. This measurement period adjustment resulted in an increase to assumed deferred tax liabilities of $17.2 million and a corresponding increase to goodwill. The fair values of the assets acquired and liabilities assumed are final and include all measurement period adjustments. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date, including all measurement period adjustments.
On August 7, 2018, acquired intangible assets of $103.3 million include $60.8 million of trademarks and tradenames that are not subject to amortization and will instead be subject to annual impairment testing, or more frequent testing should there be a significant change in business conditions. The remaining intangible assets include developed technology of $39.1 million that will be amortized on a straight-line basis over the estimated useful life of 7 years and backlog of $3.4 million that will be amortized on a straight-line basis over the estimated useful life of 6 months. The acquired inventory includes a step-up of inventory to fair value of approximately $26.6 million which will be recognized in earnings over the expected turns of the inventory. This step-up of inventory to fair value was fully amortized by the end of 2018. The 2018 period below represents the pro forma consolidated statement of operations as if nora had been included in the consolidated results of the Company beginning January 1, 2018 to the acquisition date. These are estimated for pro forma purposes only and do not necessarily reflect what the consolidated results of the Company would have been had the Company owned nora as of the first day of 2018.
Pro forma net income for 2018 excludes any transaction related costs as these are non-recurring costs for the combined Company.
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Items Reclassified From Other Comprehensive Income |
9 Months Ended |
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Sep. 29, 2019 | |
Equity [Abstract] | |
Items Reclassified From Other Comprehensive Income | ITEMS RECLASSIFIED FROM OTHER COMPREHENSIVE INCOME During the first nine months of 2019 and 2018, the Company reclassified $1.1 million and $1.2 million, respectively, out of accumulated other comprehensive income related to the Company’s defined benefit retirement plans and salary continuation plan. These reclassifications were included in the other expense line item of the Company’s consolidated condensed statement of operations. Other reclassifications out of accumulated other comprehensive income related to currency forward contracts are discussed in Note 6 entitled "Derivative Instruments".
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Segment Information - Operating Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
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Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
Dec. 30, 2018 |
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Segment Reporting Information [Line Items] | |||||
Net Sales | $ 348,352 | $ 318,325 | $ 1,003,547 | $ 842,514 | |
Depreciation and amortization | 10,880 | 9,877 | 33,578 | 27,067 | |
Total assets | 1,424,537 | 1,424,537 | $ 1,284,644 | ||
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 348,352 | 318,325 | 1,003,547 | 842,514 | |
Depreciation and amortization | 9,528 | 8,698 | 29,650 | 24,511 | |
Total assets | 1,520,316 | 1,520,316 | |||
AMERICAS | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 195,900 | 182,660 | 563,776 | 494,265 | |
Depreciation and amortization | 3,238 | 3,373 | 9,789 | 10,464 | |
Total assets | 704,088 | 704,088 | |||
EUROPE | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 106,115 | 88,223 | 294,830 | 220,645 | |
Depreciation and amortization | 4,255 | 3,181 | 13,586 | 7,483 | |
Total assets | 619,307 | 619,307 | |||
ASIA- PACIFIC | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 46,337 | 47,442 | 144,941 | 127,604 | |
Depreciation and amortization | 2,035 | $ 2,144 | 6,275 | $ 6,564 | |
Total assets | $ 196,921 | $ 196,921 |
Derivative Instruments - Narrative (Details) - USD ($) $ in Millions |
Sep. 29, 2019 |
Mar. 31, 2019 |
Oct. 01, 2017 |
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Interest Rate Swap 1 | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 100 | ||
Interest Rate Swap 2 | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 150 | ||
Interest rate swap contracts (loss) gain | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 250 |
Leases - Balance Sheet Information (Details) - USD ($) $ in Thousands |
Sep. 29, 2019 |
Dec. 30, 2018 |
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Leases [Abstract] | ||
Operating lease right-of-use assets | $ 110,051 | $ 0 |
Current portion of operating lease liabilities | 15,780 | 0 |
Operating lease liabilities | 91,480 | $ 0 |
Total operating lease liabilities | 107,260 | |
Property and equipment | 3,951 | |
Accrued expenses | 1,150 | |
Other long-term liabilities | 972 | |
Total finance lease liabilities | $ 2,122 |
Restructuring and Asset Impairment Charges - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
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Dec. 29, 2018 |
Sep. 29, 2019
USD ($)
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Dec. 30, 2018
USD ($)
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Sep. 30, 2018
USD ($)
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Sep. 29, 2019
USD ($)
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Sep. 30, 2018
USD ($)
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Restructuring Cost and Reserve [Line Items] | ||||||
Number of employees | 200 | |||||
Restructuring charges | $ 20,500 | |||||
Severance costs | 10,800 | |||||
Asset impairment charges | 8,600 | |||||
Other restructuring costs | $ 1,100 | |||||
Estimated restructuring costs remaining | $ 12,000 | $ 12,000 | ||||
Expected savings from restructuring | 12,000 | 12,000 | ||||
Restructuring Charges | 672 | $ 0 | 672 | $ 0 | ||
Workforce Reduction | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Estimated restructuring costs remaining | $ 10,800 | $ 10,800 |
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