[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
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ___________ to ____________
|
NEW JERSEY
|
|
22-1463699
|
(State of incorporation)
|
|
(I.R.S. Employer Identification No.)
|
Title of Each Class |
|
Name of Each Exchange
on which Registered |
Class A Common Stock ($0.10 par value)
|
|
NASDAQ Global Select Market
|
Class B Common Stock ($0.10 par value)
|
NASDAQ Global Select Market
|
Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
|
Yes [ ] |
No [X] |
Indicate by checkmark if the registrant is not required to file reports to Section 13 or 15(d) of the Act.
|
Yes [ ]
|
No [X]
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
Yes [X]
|
No [ ]
|
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
|
Yes [X]
|
No [ ]
|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
|
[X]
|
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
|
Large accelerated
filer [ ]
|
Accelerated
filer [X]
|
Non-accelerated
filer [ ]
|
Smaller reporting
company [X]
|
Emerging growth
company [ ]
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
|
[ ]
Yes [ ]
|
No [X]
|
Title of Each Class |
|
Number of Shares of Common Stock Outstanding as of March 1, 2019
|
Class A Common Stock
|
|
2,174,912
|
Class B Common Stock
|
10,089,852
|
BEL FUSE INC.
|
|||
Page
|
|||
Cautionary Notice Regarding Forward-Looking Information
|
1
|
||
Part I
|
|||
Item 1.
|
2
|
||
Item 1A.
|
6
|
||
Item 1B.
|
13
|
||
Item 2.
|
13
|
||
Item 3.
|
14
|
||
Item 4.
|
14
|
||
Part II
|
|||
Item 5.
|
|||
15
|
|||
Item 6.
|
16
|
||
Item 7.
|
|||
16
|
|||
Item 7A.
|
27
|
||
Item 8.
|
27
|
||
Item 9.
|
|||
65
|
|||
Item 9A.
|
65
|
||
Item 9B.
|
65
|
||
Part III
|
|||
Item 10.
|
66
|
||
Item 11.
|
66
|
||
Item 12.
|
|||
66
|
|||
Item 13.
|
66
|
||
Item 14.
|
66
|
||
Part IV
|
|||
Item 15.
|
67
|
||
Item 16.
|
68
|
||
Signatures | 69 |
Product Line
|
Function
|
Applications
|
Brands Sold Under
|
|
Magnetic Solutions
|
Integrated Connector Modules (ICMs)
|
Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission and provide RJ45 and USB connectivity.
|
Network switches, routers, hubs, and PCs used in multi-speed Gigabit Ethernet, Power over Ethernet (PoE), PoE Plus and home networking applications.
|
Bel, TRP Connector®, MagJack®
|
Power Transformers
|
Safety isolation and distribution.
|
Power supplies, alarm, fire detection, and security systems, HVAC, lighting and medical equipment. Class 2, three phase, chassis mount, and PC mount designs available.
|
Signal
|
|
SMD Power Inductors & SMPS Transformers
|
A passive component that stores energy in a magnetic field. Widely used in analog electronic circuitry.
|
Switchmode power supplies, DC-DC converters, LED lighting, automotive and consumer electronics.
|
Signal
|
|
Discrete Components-Telecom
|
Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission.
|
Network switches, routers, hubs, and PCs used in multi-speed Gigabit Ethernet and Power over Ethernet (PoE).
|
Bel
|
Product Line
|
Function
|
Applications
|
Brands Sold Under
|
|
Power Solutions & Protection
|
Front-End Power Supplies
|
Provides the primary point of isolation between AC main line (input) and the low-voltage DC output that is used to power all electronics downstream
|
Servers, telecommunication, network and data storage equipment
|
Bel Power Solutions
|
Board-Mount Power Products
|
These are designed to be mounted on a circuit board. These converters take input voltage and provide localized on-board power to low-voltage electronics.
|
Telecommunication, networking and a broad range of industrial applications
|
Bel Power Solutions, MelcherTM
|
|
Industrial Power Products
|
Converts between AC main line inputs and a wide variety of DC output voltages.
|
Rail, transportation, automation, test and measurement, medical, military and aerospace applications.
|
Bel Power Solutions, MelcherTM
|
|
Module Products
|
Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission within a highly integrated, reduced footprint.
|
Broadband equipment, home networking, set top boxes, and telecom equipment supporting ISDN, T1/E1 and DSL technologies. Industrial applications include Smart Meters, Smart Grid communication platforms, vehicle communications and traffic management.
|
Bel
|
|
Circuit Protection
|
Protects devices by preventing current in an electrical circuit from exceeding acceptable levels.
|
Power supplies, cell phone chargers, consumer electronics, and battery protection.
|
Bel
|
Product Line
|
Function
|
Applications
|
Brands Sold Under
|
|
Connectivity Solutions
|
Expanded Beam Fiber Optic Connectors, Cable Assemblies and Active Optical Devices (transceivers and media converters)
|
Harsh-environment, high-reliability, flight-grade optical connectivity for high-speed communications.
|
Military/aerospace, oil and gas well monitoring and exploration, broadcast, communications, RADAR
|
Stratos®, Fibreco®
|
Copper-based Connectors / Cable Assemblies-FQIS
|
Harsh-environment, high-reliability connectivity and fuel quantity monitoring (FQIS).
|
Avionics, smart munitions, communications, radar and various industrial equipment
|
Cinch®
|
|
RF Connectors, Cable Assemblies, Microwave Devices and Low Loss Cable
|
Connectors and cable assemblies designed to provide connectivity within radio frequency (RF) applications.
|
Military/aerospace, test and measurement, high-frequency and wireless communications
|
Johnson, Trompeter, Midwest MicrowaveTM, Semflex®
|
|
RJ Connectors and Cable Assemblies
|
RJ45 and RJ11 connectivity for data/voice/video transmission.
|
Largely Ethernet applications including network routers, hubs, switches, and patch panels; and emerging internet-of-things (IoT) applications
|
Stewart Connector
|
•
|
|
foreign exchange controls and tax rates;
|
•
|
|
foreign currency exchange rate fluctuations, including devaluations;
|
•
|
|
the potential for changes in regional and local economic conditions, including local inflationary pressures;
|
•
|
|
restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including antidumping duties, tariffs, embargoes and prohibitions or restrictions on acquisitions or joint ventures;
|
•
|
|
changes in laws and regulations, including the laws and policies of the United States affecting trade, tariffs and foreign investment;
|
•
|
|
the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems;
|
•
|
|
variations in protection of intellectual property and other legal rights;
|
•
|
|
more expansive legal rights of foreign unions or works councils;
|
•
|
|
changes in labor conditions and difficulties in staffing and managing international operations;
|
•
|
|
inability or regulatory limitations on our ability to move goods across borders;
|
•
|
|
social plans that prohibit or increase the cost of certain restructuring actions;
|
•
|
|
the potential for nationalization of enterprises or facilities; and
|
•
|
|
unsettled political conditions and possible terrorist attacks against U.S. or other interests.
|
·
|
announcements of technological or competitive developments;
|
·
|
general market or economic conditions;
|
·
|
market or economic conditions specific to particular geographical areas in which we operate;
|
·
|
acquisitions or strategic alliances by us or our competitors;
|
·
|
the gain or loss of a significant customer or order; or
|
·
|
changes in estimates of our financial performance or changes in recommendations by securities analysts regarding us or our industry
|
Location
|
Approximate
Square Feet |
Owned/
Leased |
Percentage
Used for Manufacturing |
||||||
|
|
||||||||
Dongguan, People's Republic of China
|
650,000
|
Leased
|
28
|
%
|
|||||
Pingguo, People's Republic of China
|
256,000
|
Leased
|
69
|
%
|
|||||
Shenzhen, People's Republic of China
|
227,000
|
Leased
|
100
|
%
|
|||||
Zhongshan, People's Republic of China
|
315,000
|
Leased
|
86
|
%
|
|||||
Zhongshan, People's Republic of China
|
118,000
|
Owned
|
100
|
%
|
|||||
Zhongshan, People's Republic of China
|
78,000
|
Owned
|
100
|
%
|
|||||
Louny, Czech Republic
|
11,000
|
Owned
|
75
|
%
|
|||||
Dubnica nad Vahom, Slovakia
|
35,000
|
Owned
|
100
|
%
|
|||||
Dubnica nad Vahom, Slovakia
|
70,000
|
Leased
|
100
|
%
|
|||||
Worksop, United Kingdom
|
52,000
|
Leased
|
28
|
%
|
|||||
Chelmsford, United Kingdom
|
21,000
|
Leased
|
60
|
%
|
|||||
Sudbury, United Kingdom
|
12,000
|
Leased
|
90
|
%
|
|||||
Dominican Republic
|
33,000
|
Leased
|
85
|
%
|
|||||
Cananea, Mexico
|
42,000
|
Leased
|
60
|
%
|
|||||
Reynosa, Mexico
|
77,000
|
Leased
|
56
|
%
|
|||||
Inwood, New York
|
39,000
|
Owned
|
40
|
%
|
|||||
Glen Rock, Pennsylvania
|
74,000
|
Owned
|
60
|
%
|
|||||
Waseca, Minnesota
|
124,000
|
Leased
|
83
|
%
|
|||||
McAllen, Texas
|
40,000
|
Leased
|
56
|
%
|
|||||
Melbourne, Florida
|
18,000
|
Leased
|
64
|
%
|
|||||
Tempe, Arizona
|
8,000
|
Leased
|
100
|
%
|
|||||
|
|
||||||||
|
2,300,000
|
|
(a)
|
Market Information
|
(d)
|
Common Stock Performance Comparisons
|
(e)
|
Issuer Purchases of Equity Securities
|
Period
|
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 Plan
|
||||||||||||
October 1 - October 31, 2018
|
6,034
|
$
|
19.87
|
6,034
|
$
|
206,844
|
||||||||||
November 1 - November 30, 2018
|
300
|
19.32
|
300
|
-
|
||||||||||||
December 1 - December 31, 2018
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
6,334
|
$
|
19.84
|
6,334
|
$
|
-
|
·
|
Revenues – The Company's revenues increased by $56.6 million, or 11.5%, in 2018 as compared to 2017, despite a $5.5 million decline in sales related to the NPS divestiture. Sales growth was seen across all of our major product groups as certain project wins from 2017 are in full production and we continue to see strength in sales through our distribution partners. Approximately 27% of 2018 sales were generated through the Company's distribution partners.
|
·
|
Backlog – Our backlog of orders totaled $171.2 million at December 31, 2018, representing an increase of $24.7 million, or 17%, from December 31, 2017. Since the 2017 year-end, we saw a 28% increase at Magnetic Solutions, driven by a strong position with our integrated connector modules in next-generation switching products. The backlog for our Connectivity Solutions products increased by 16%, driven by recent awards on key military programs, and heightened structured cabling demand for our passive connectors. Our Power Solutions and Protection backlog grew by 11%, led by higher demand for our power supplies and circuit protection products through our distribution partners.
|
·
|
Product Mix – Material and labor costs vary by product line and any significant shift in product mix between higher- and lower-margin product lines will have a corresponding impact on the Company's gross margin percentage. In general, our connectivity products have the highest contribution margins, our magnetic products are more labor intensive and are therefore less profitable than the connectivity products and our power products are on the lower end of our profit margin range, due to their high material content. Fluctuations in sales volume among our product groups will have a corresponding impact on Bel's profit margins.
|
·
|
Pricing and Availability of Materials – There have been recent supply constraints related to components that constitute raw materials in our manufacturing processes, particularly with resistors, capacitors, mosfets and printed circuit boards. Lead times have been extended and the reduction in supply has also caused an increase in prices for certain of these components throughout 2018. As a result, the Company's material costs as a percentage of sales increased to 41.9% during 2018 from 40.2% during 2017. We've started to see some relief in availability and pricing of passive components and capacitors in early 2019 as compared to 2018 levels though pricing remains high compared to pre-2018 levels. We anticipate our material costs as a percentage of sales will continue to be elevated during the first half of 2019 as we work through our higher-cost inventory on hand. The preceding sentence represents a Forward-Looking Statement. See "Cautionary Notice Regarding Forward-Looking Statements."
|
·
|
Labor Costs – Labor costs increased from 10.8% of sales during 2017 to 11.5% of sales during 2018, primarily due to the appreciation of the Renminbi against the U.S. Dollar, particularly during the first half of 2018, minimum wage increases in the PRC, and growth in sales of our labor-intensive integrated connector module (ICM) products. Effective February 1, 2018, the PRC government issued an increase to the minimum wage in a region where one of Bel's factories is located. Effective July 1, 2018, government-mandated minimum wage increases went into effect at Bel's other three manufacturing facilities in the PRC. We anticipate labor costs will continue to be a challenge in 2019 in the areas in which we operate, particularly in Mexico, where an increase in minimum wage rate took effect on January 1, 2019, and in the PRC. The preceding sentence represents a Forward-Looking Statement. See "Cautionary Notice Regarding Forward-Looking Statements."
|
·
|
Restructuring – The Company continues to implement restructuring programs to increase operational efficiencies and incurred $0.2 million in restructuring costs during 2018. By the end of the third quarter, we had completed the transition of one of our product lines from a third party factory in Malaysia to an existing Bel facility in the PRC. Annual savings of approximately $1.4 million are expected from the initiatives completed during 2018 (primarily within cost of sales). Additional restructuring efforts are expected to continue into 2019 as we realign our R&D resources dedicated to our Power Solutions and Protection group. We expect the 2019 initiative to result in incremental restructuring costs of approximately $0.4 million with annualized cost savings of $1.5 million once implemented. The preceding sentence represents a Forward-Looking Statement. See "Cautionary Notice Regarding Forward-Looking Statements."
|
·
|
Impact of Foreign Currency – During 2018, the Company realized foreign exchange transactional gains of $2.7 million, offset by higher labor and overhead costs of $0.8 million related to unfavorable fluctuation in exchange rates versus 2017. Since we are a U.S. domiciled company, we translate our foreign currency-denominated financial results into U.S. dollars. Due to the changes in the value of foreign currencies relative to the U.S. dollar, translating our financial results and the revaluation of certain intercompany as well as third-party transactions to and from foreign currencies to U.S. dollars may result in a favorable or unfavorable impact to our consolidated statements of operations and cash flows. The Company was unfavorably impacted by transactional foreign exchange losses in 2018 due to the appreciation of the Euro, Pound, and Renminbi against the U.S. dollar as compared to exchange rates in effect during 2017. The Company has significant manufacturing operations located in the PRC where labor and overhead costs are paid in local currency. As a result, the U.S. Dollar equivalent costs of these operations were $0.8 million higher in 2018. The Company monitors changes in foreign currencies and may implement pricing actions to help mitigate the impact that changes in foreign currencies may have on its consolidated operating results.
|
·
|
ERP System Implementation – In January 2019, the Company completed the first phase of its ERP system implementation with the successful transition of its Power Solutions business onto the new system without any notable issues. The Company incurred expenses of $2.2 million during 2018 related to this project. The other phases of this project will largely leverage Bel's trained internal resources which should result in lower implementation costs going forward, including the elimination of redundant systems. In connection with the completion of this first phase of the project, we anticipate annualized savings of $1.3 million beginning in the second quarter of 2019.
|
·
|
Effective Tax Rate – The Company's effective tax rate will fluctuate based on the geographic segment in which the pretax profits are earned. Of the geographic segments in which the Company operates, the U.S. and Europe's tax rates are generally equivalent; and Asia has the lowest tax rates of the Company's three geographical segments. See Note 9 to the Company's Consolidated Financial Statements - "Income Taxes".
|
Years Ended December 31, | ||||||||||||||||
2018
|
2017
|
|||||||||||||||
North America
|
$
|
271,691
|
50
|
%
|
$
|
245,834
|
50
|
%
|
||||||||
Asia
|
187,203
|
34
|
%
|
167,680
|
34
|
%
|
||||||||||
Europe
|
89,290
|
16
|
%
|
78,097
|
16
|
%
|
||||||||||
$
|
548,184
|
100
|
%
|
$
|
491,611
|
100
|
%
|
Years Ended December 31, | ||||||||
2018
|
2017
|
|||||||
Total segment sales:
|
||||||||
North America
|
$
|
284,245
|
$
|
257,541
|
||||
Asia
|
279,965
|
249,506
|
||||||
Europe
|
103,853
|
89,765
|
||||||
Total segment sales
|
668,063
|
596,812
|
||||||
Reconciling item:
|
||||||||
Intersegment sales
|
(119,879
|
)
|
(105,201
|
)
|
||||
Net sales
|
$
|
548,184
|
$
|
491,611
|
||||
Income from operations:
|
||||||||
North America
|
$
|
6,769
|
$
|
6,195
|
||||
Asia
|
16,621
|
8,964
|
||||||
Europe
|
6,221
|
2,227
|
||||||
$
|
29,611
|
$
|
17,386
|
Years Ended
|
||||||||||||||||
December 31,
|
||||||||||||||||
2018
|
2017
|
|||||||||||||||
Connectivity solutions
|
$
|
186,724
|
34
|
%
|
$
|
170,337
|
35
|
%
|
||||||||
Magnetic solutions
|
185,407
|
34
|
%
|
161,011
|
33
|
%
|
||||||||||
Power solutions and protection
|
176,053
|
32
|
%
|
160,263
|
32
|
%
|
||||||||||
$
|
548,184
|
100
|
%
|
$
|
491,611
|
100
|
%
|
Years Ended
|
||||||||
December 31,
|
||||||||
2018
|
2017
|
|||||||
Material costs
|
41.9
|
%
|
40.2
|
%
|
||||
Labor costs
|
11.5
|
%
|
10.8
|
%
|
||||
Research and development expenses
|
5.4
|
%
|
5.9
|
%
|
||||
Other expenses
|
21.2
|
%
|
22.3
|
%
|
||||
Total cost of sales
|
80.0
|
%
|
79.2
|
%
|
Payments due by period (dollars in thousands)
|
|||||||||||||||||||||
Contractual Obligations
|
Total
|
Less than 1 year
|
1-3
years |
3-5
years |
More than
5 years |
||||||||||||||||
Long-term debt obligations(1)
|
$
|
115,988
|
$
|
2,974
|
$
|
11,896
|
$
|
101,118
|
$
|
-
|
|||||||||||
Interest payments due on long-term debt(2)
|
17,939
|
4,884
|
9,182
|
3,873
|
-
|
||||||||||||||||
Capital expenditure obligations
|
5,192
|
5,192
|
-
|
-
|
-
|
||||||||||||||||
Operating leases(3)
|
23,321
|
7,363
|
10,984
|
4,532
|
442
|
||||||||||||||||
Raw material purchase obligations
|
58,903
|
58,491
|
412
|
-
|
-
|
||||||||||||||||
First quarter 2019 quarterly cash dividend declared
|
837
|
837
|
-
|
-
|
-
|
||||||||||||||||
Total
|
$
|
222,180
|
$
|
79,741
|
$
|
32,474
|
$
|
109,523
|
$
|
442
|
(1)
|
Represents the principal amount of the debt required to be repaid in each period.
|
(2)
|
Includes interest payments required under our CSA related to our term loans and revolver balance. The interest rate in place under our CSA on December 31, 2018 was utilized and this calculation assumes obligations are repaid when due.
|
(3)
|
Represents estimated future minimum annual rental commitments primarily under non-cancelable real and personal property leases as of December 31, 2018.
|
·
|
Applying a compounded annual growth rate for forecasted sales in our projected cash flows through 2023.
|
Reporting Unit
|
Compounded Annual Growth Rate
|
|
North America
|
2.0%
|
|
Europe
|
2.0%
|
·
|
Applying a terminal value growth rate of 2% for our reporting units to reflect our estimate of stable and perpetual growth.
|
·
|
Determining an appropriate discount rate to apply to our projected cash flow results. This discount rate reflects, among other things, certain risks due to the uncertainties of achieving the cash flow results and the growth rates assigned. The discount rates applied were as follows:
|
Reporting Unit
|
Discount Rate
|
|
North America
|
13.0%
|
|
Europe
|
14.5%
|
·
|
A weighting of the results of the income approach of 75% of our overall fair value calculation for each reporting unit.
|
BEL FUSE INC.
|
|||
INDEX
|
|||
Financial Statements
|
Page
|
||
29
|
|||
30
|
|||
31
|
|||
32
|
|||
33
|
|||
34
|
|||
36
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
(dollars in thousands, except share and per share data)
|
||||||||
December 31,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
53,911
|
$
|
69,354
|
||||
Accounts receivable - less allowance for doubtful accounts
|
||||||||
of $1,638 and $1,745 at December 31, 2018 and 2017, respectively
|
91,939
|
78,808
|
||||||
Inventories
|
120,068
|
107,719
|
||||||
Unbilled receivables
|
15,799
|
-
|
||||||
Other current assets
|
8,792
|
10,218
|
||||||
Total current assets
|
290,509
|
266,099
|
||||||
Property, plant and equipment, net
|
43,932
|
43,495
|
||||||
Intangible assets, net
|
62,689
|
69,366
|
||||||
Goodwill
|
19,817
|
20,177
|
||||||
Deferred income taxes
|
496
|
4,155
|
||||||
Other assets
|
26,081
|
27,973
|
||||||
Total assets
|
$
|
443,524
|
$
|
431,265
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
56,171
|
$
|
47,947
|
||||
Accrued expenses
|
32,290
|
30,508
|
||||||
Current maturities of long-term debt
|
2,508
|
2,641
|
||||||
Other current liabilities
|
15,061
|
6,204
|
||||||
Total current liabilities
|
106,030
|
87,300
|
||||||
Long-term liabilities:
|
||||||||
Long-term debt
|
111,705
|
120,053
|
||||||
Liability for uncertain tax positions
|
27,553
|
27,948
|
||||||
Minimum pension obligation and unfunded pension liability
|
18,683
|
19,134
|
||||||
Deferred income taxes
|
1,161
|
1,567
|
||||||
Other long-term liabilities
|
1,922
|
17,303
|
||||||
Total liabilities
|
267,054
|
273,305
|
||||||
Commitments and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock, no par value, 1,000,000 shares authorized; none issued
|
-
|
-
|
||||||
Class A common stock, par value $.10 per share, 10,000,000 shares
|
||||||||
authorized; 2,174,912 shares outstanding at each date (net of
|
||||||||
1,072,769 treasury shares)
|
217
|
217
|
||||||
Class B common stock, par value $.10 per share, 30,000,000 shares
|
||||||||
authorized; 10,092,352 and 9,859,352 shares outstanding, respectively
|
||||||||
(net of 3,218,307 treasury shares)
|
1,009
|
986
|
||||||
Additional paid-in capital
|
31,387
|
28,575
|
||||||
Retained earnings
|
168,695
|
147,807
|
||||||
Accumulated other comprehensive loss
|
(24,838
|
)
|
(19,625
|
)
|
||||
Total stockholders' equity
|
176,470
|
157,960
|
||||||
Total liabilities and stockholders' equity
|
$
|
443,524
|
$
|
431,265
|
||||
See accompanying notes to consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
(in thousands, except per share data)
|
||||||||
|
||||||||
|
Year Ended December 31,
|
|||||||
|
2018
|
2017
|
||||||
|
||||||||
|
||||||||
Net sales
|
$
|
548,184
|
$
|
491,611
|
||||
Cost of sales
|
438,414
|
389,262
|
||||||
Gross profit
|
109,770
|
102,349
|
||||||
|
||||||||
Selling, general and administrative expenses
|
79,937
|
84,655
|
||||||
Restructuring charges
|
222
|
308
|
||||||
Income from operations
|
29,611
|
17,386
|
||||||
|
||||||||
Interest expense
|
(5,317
|
)
|
(6,802
|
)
|
||||
Interest income and other expense, net
|
(678
|
)
|
(941
|
)
|
||||
Earnings before provision for income taxes
|
23,616
|
9,643
|
||||||
|
||||||||
Provision for income taxes
|
2,907
|
21,540
|
||||||
Net earnings (loss) available to common shareholders
|
$
|
20,709
|
$
|
(11,897
|
)
|
|||
|
||||||||
|
||||||||
Net earnings (loss) per common share:
|
||||||||
Class A common shares - basic and diluted
|
$
|
1.62
|
$
|
(0.97
|
)
|
|||
Class B common shares - basic and diluted
|
$
|
1.73
|
$
|
(0.99
|
)
|
|||
|
||||||||
Weighted-average shares outstanding:
|
||||||||
Class A common shares - basic and diluted
|
2,175
|
2,175
|
||||||
Class B common shares - basic and diluted
|
9,939
|
9,857
|
||||||
|
||||||||
Dividends paid per common share:
|
||||||||
Class A common shares
|
$
|
0.24
|
$
|
0.24
|
||||
Class B common shares
|
$
|
0.28
|
$
|
0.28
|
||||
|
||||||||
|
||||||||
See accompanying notes to consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
(dollars in thousands)
|
||||||||
|
||||||||
|
||||||||
|
Year Ended December 31,
|
|||||||
|
2018
|
2017
|
||||||
|
||||||||
|
||||||||
Net earnings (loss)
|
$
|
20,709
|
$
|
(11,897
|
)
|
|||
|
||||||||
Other comprehensive (loss) income:
|
||||||||
Currency translation adjustment, net of taxes of $51 and $183
|
(6,098
|
)
|
12,439
|
|||||
Unrealized holding losses on marketable securities arising during
|
||||||||
the period, net of taxes of ($85) and ($177)
|
(133
|
)
|
(279
|
)
|
||||
Change in unfunded SERP liability, net of taxes of $954 and ($237)
|
1,018
|
(488
|
)
|
|||||
Other comprehensive (loss) income:
|
(5,213
|
)
|
11,672
|
|||||
|
||||||||
Comprehensive income (loss)
|
$
|
15,496
|
$
|
(225
|
)
|
|||
|
||||||||
|
||||||||
See accompanying notes to consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
|
Accumulated
|
|||||||||||||||||||||||
|
Other
|
Class A
|
Class B
|
Additional
|
||||||||||||||||||||
|
Retained
|
Comprehensive
|
Common
|
Common
|
Paid-In
|
|||||||||||||||||||
|
Total
|
Earnings
|
(Loss) Income
|
Stock
|
Stock
|
Capital
|
||||||||||||||||||
Balance at December 31, 2016
|
$ |
158,434
|
$ |
161,287
|
$ |
(31,297
|
)
|
$ |
217
|
$ |
985
|
$ |
27,242
|
|||||||||||
|
||||||||||||||||||||||||
Cash dividends declared on Class A common stock
|
(522
|
)
|
(522
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||
Cash dividends declared on Class B common stock
|
(2,757
|
)
|
(2,757
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||
Issuance of restricted common stock
|
-
|
-
|
-
|
-
|
5
|
(5
|
)
|
|||||||||||||||||
Forfeiture of restricted common stock
|
-
|
-
|
-
|
-
|
(4
|
)
|
4
|
|||||||||||||||||
Foreign currency translation adjustment, net of taxes of $183
|
12,439
|
-
|
12,439
|
-
|
-
|
-
|
||||||||||||||||||
Unrealized holding losses on marketable securities
|
||||||||||||||||||||||||
arising during the year, net of taxes of ($177)
|
(279
|
)
|
-
|
(279
|
)
|
-
|
-
|
-
|
||||||||||||||||
Stock-based compensation expense
|
3,030
|
-
|
-
|
-
|
-
|
3,030
|
||||||||||||||||||
Change in unfunded SERP liability, net of taxes of ($237)
|
(488
|
)
|
-
|
(488
|
)
|
-
|
-
|
-
|
||||||||||||||||
Reclassification of APIC pool upon adoption of ASU 2016-09
|
-
|
1,696
|
-
|
-
|
-
|
(1,696
|
)
|
|||||||||||||||||
Net loss
|
(11,897
|
)
|
(11,897
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||
|
||||||||||||||||||||||||
Balance at December 31, 2017
|
|
157,960
|
|
147,807
|
|
(19,625
|
)
|
|
217
|
|
986
|
|
28,575
|
|||||||||||
|
||||||||||||||||||||||||
Cash dividends declared on Class A common stock
|
(522
|
)
|
(522
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||
Cash dividends declared on Class B common stock
|
(2,796
|
)
|
(2,796
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||
Issuance of restricted common stock
|
-
|
-
|
-
|
-
|
26
|
(26
|
)
|
|||||||||||||||||
Forfeiture of restricted common stock
|
-
|
-
|
-
|
-
|
(3
|
)
|
3
|
|||||||||||||||||
Foreign currency translation adjustment, net of taxes of $51
|
(6,098
|
)
|
-
|
(6,098
|
)
|
-
|
-
|
-
|
||||||||||||||||
Unrealized holding losses on marketable securities
|
||||||||||||||||||||||||
arising during the year, net of taxes of ($85)
|
(133
|
)
|
-
|
(133
|
)
|
-
|
-
|
-
|
||||||||||||||||
Stock-based compensation expense
|
2,835
|
-
|
-
|
-
|
-
|
2,835
|
||||||||||||||||||
Change in unfunded SERP liability, net of taxes of $954
|
1,018
|
-
|
1,018
|
-
|
-
|
-
|
||||||||||||||||||
Effect of adoption of ASU 2014-09 (Topic 606)
|
3,497
|
3,497
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Net earnings
|
20,709
|
20,709
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance at December 31, 2018
|
$
|
176,470
|
$
|
168,695
|
$
|
(24,838
|
)
|
$
|
217
|
$
|
1,009
|
$
|
31,387
|
|||||||||||
|
||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
(dollars in thousands)
|
||||||||
|
||||||||
|
Years Ended December 31,
|
|||||||
|
2018
|
2017
|
||||||
|
||||||||
Cash flows from operating activities:
|
||||||||
Net earnings (loss)
|
$
|
20,709
|
$
|
(11,897
|
)
|
|||
Adjustments to reconcile net earnings (loss) to net cash
|
||||||||
provided by operating activities:
|
||||||||
Depreciation and amortization
|
18,207
|
20,718
|
||||||
Stock-based compensation
|
2,835
|
3,030
|
||||||
Amortization of deferred financing costs
|
531
|
2,259
|
||||||
Deferred income taxes
|
2,490
|
(315
|
)
|
|||||
Unrealized (gains) losses on foreign currency revaluation
|
(2,663
|
)
|
2,770
|
|||||
Loss on disposal of property, plant and equipment
|
141
|
109
|
||||||
Other, net
|
795
|
1,897
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(13,004
|
)
|
(2,948
|
)
|
||||
Unbilled receivables
|
(1,263
|
)
|
-
|
|||||
Inventories
|
(24,735
|
)
|
(6,160
|
)
|
||||
Other current assets
|
966
|
(2,423
|
)
|
|||||
Other assets
|
922
|
(1,621
|
)
|
|||||
Accounts payable
|
8,995
|
(1,426
|
)
|
|||||
Accrued expenses
|
1,911
|
(1,861
|
)
|
|||||
Other liabilities
|
(15,708
|
)
|
16,566
|
|||||
Income taxes payable
|
8,968
|
5,422
|
||||||
Net cash provided by operating activities
|
10,097
|
24,120
|
||||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Purchase of property, plant and equipment
|
(11,594
|
)
|
(6,425
|
)
|
||||
Payment for acquisition, net of cash acquired
|
(2,177
|
)
|
-
|
|||||
Proceeds from surrender of company-owned life insurance
|
433
|
-
|
||||||
Purchase of company-owned life insurance
|
(433
|
)
|
-
|
|||||
Proceeds from sale of marketable securities within rabbi trust
|
1,348
|
-
|
||||||
Purchase of marketable securities within rabbi trust
|
(1,348
|
)
|
-
|
|||||
Proceeds from disposal/sale of property, plant and equipment
|
77
|
76
|
||||||
Net cash used in investing activities
|
(13,694
|
)
|
(6,349
|
)
|
||||
|
||||||||
(continued)
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
|
||||||||
(dollars in thousands)
|
||||||||
|
||||||||
|
Year Ended December 31,
|
|||||||
|
2018
|
2017
|
||||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Dividends paid to common shareholders
|
(3,295
|
)
|
(3,281
|
)
|
||||
Deferred financing costs
|
-
|
(2,012
|
)
|
|||||
Borrowings under revolving credit line
|
7,500
|
6,000
|
||||||
Repayments under revolving credit line
|
(7,500
|
)
|
(6,000
|
)
|
||||
Reduction in notes payable
|
-
|
(225
|
)
|
|||||
Proceeds from long-term debt
|
-
|
125,000
|
||||||
Repayments of long-term debt
|
(9,012
|
)
|
(143,799
|
)
|
||||
Net cash used in financing activities
|
(12,307
|
)
|
(24,317
|
)
|
||||
Effect of exchange rate changes on cash
|
461
|
2,489
|
||||||
|
||||||||
Net decrease in cash and cash equivalents
|
(15,443
|
)
|
(4,057
|
)
|
||||
|
||||||||
Cash and cash equivalents - beginning of year
|
69,354
|
73,411
|
||||||
|
||||||||
Cash and cash equivalents - end of year
|
$
|
53,911
|
$
|
69,354
|
||||
|
||||||||
|
||||||||
Supplemental cash flow information:
|
||||||||
|
||||||||
Cash paid during the year for:
|
||||||||
Income taxes, net of refunds received
|
$
|
7,483
|
$
|
756
|
||||
Interest payments
|
$
|
4,775
|
$
|
4,353
|
||||
|
||||||||
Details of acquisition:
|
||||||||
Fair value of identifiable net assets acquired
|
$
|
1,298
|
$
|
-
|
||||
Goodwill
|
1,290
|
-
|
||||||
Fair value of net assets acquired
|
$
|
2,588
|
$
|
-
|
||||
|
||||||||
Fair value of consideration transferred
|
$
|
2,588
|
$
|
-
|
||||
Less: Cash acquired in acquisition
|
(411
|
)
|
-
|
|||||
Cash paid for acquisition, net of cash acquired
|
$
|
2,177
|
$
|
-
|
||||
|
||||||||
See accompanying notes to consolidated financial statements.
|
Years Ended December 31, | ||||||||
|
2018
|
2017
|
||||||
Numerator:
|
||||||||
Net earnings (loss)
|
$
|
20,709
|
$
|
(11,897
|
)
|
|||
Less dividends declared:
|
||||||||
Class A
|
522
|
522
|
||||||
Class B
|
2,796
|
2,757
|
||||||
Undistributed earnings (loss)
|
$
|
17,391
|
$
|
(15,176
|
)
|
|||
|
||||||||
Undistributed earnings (loss) allocation - basic and diluted:
|
||||||||
Class A undistributed earnings (loss)
|
$
|
2,999
|
$
|
(2,635
|
)
|
|||
Class B undistributed earnings (loss)
|
14,392
|
(12,541
|
)
|
|||||
Total undistributed earnings (loss)
|
$
|
17,391
|
$
|
(15,176
|
)
|
|||
|
||||||||
Net earnings (loss) allocation - basic and diluted:
|
||||||||
Class A net earnings (loss)
|
$
|
3,521
|
$
|
(2,113
|
)
|
|||
Class B net earnings (loss)
|
17,188
|
(9,784
|
)
|
|||||
Net earnings (loss)
|
$
|
20,709
|
$
|
(11,897
|
)
|
|||
|
||||||||
Denominator:
|
||||||||
Weighted average shares outstanding:
|
||||||||
Class A - basic and diluted
|
2,175
|
2,175
|
||||||
Class B - basic and diluted
|
9,939
|
9,857
|
||||||
|
||||||||
Net earnings (loss) per share:
|
||||||||
Class A - basic and diluted
|
$
|
1.62
|
$
|
(0.97
|
)
|
|||
Class B - basic and diluted
|
$
|
1.73
|
$
|
(0.99
|
)
|
As of
|
||||
October 1, 2018
|
||||
Acquisition Date
|
||||
Identifiable assets acquired
|
$ |
2,986
|
||
Liabilities assumed
|
(1,688
|
)
|
||
Net identifiable assets acquired
|
1,298
|
|||
Goodwill
|
1,290
|
|||
Net assets acquired
|
$
|
2,588
|
||
Fair value of consideration transferred
|
$
|
2,588
|
·
|
Direct with customer: This includes contracts with original equipment manufacturers (OEMs), original design manufacturers (ODMs), and contract manufacturers (CMs). The nature of Bel's products are such that they represent components which are installed in various end applications (e.g., servers, aircraft, missiles and rail applications). The OEM, ODM or CM that purchases our product for further installation are our end customers. Contracts with these customers are broad-based and cover general terms and conditions. Details such as order volume and pricing are typically contained in individual purchase orders, and as a result, we view each product on each purchase order as an individual performance obligation. Incremental services included in the contracts, such as training, tooling and other customer support are determined to be immaterial in the context of the contract, both individually and in the aggregate. Revenue under these contracts is generally recognized at a point in time, generally upon shipping or delivery, which closely mirrors the shipping terms dictated by the applicable contract.
|
·
|
Distributor: Distribution customers buy product directly from Bel and sell it in the marketplace to end customers. Bel contracts directly with the distributor. These contracts are typically global in nature and cover a variety of our product groups. Similar to contracts with OEMs, ODMs and CMs, each product on each purchase order is considered an individual performance obligation. Revenue is recognized at a point in time, generally upon shipping or delivery, which closely mirrors the shipping terms dictated by the applicable contract.
|
·
|
Consignment: These customers operate under a type of concession agreement whereby the Company ships goods to a warehouse or hub, where they will be pulled by the customer at a later date. The terms specified in the consignment contracts specify that the Company will not invoice the customer for product until it is pulled from the warehouse or hub. Once product arrives at the hub, it is generally not returned to Bel unless there is a warranty issue (see "Warranties" section below). Similar to the contracts described above, each product on each purchase order is considered an individual performance obligation. Under ASC 606, it was determined that the majority of these hubs are customer-controlled, and therefore control transfers to the customer upon either delivery from Bel's warehouse, or arrival at the customer-controlled hub, depending upon the applicable shipping terms. Effective January 1, 2018, revenue is recognized as control of the product is transferred to the customer (for customer-controlled hubs, this is at the time product is shipped to the hub). This gives rise to an unbilled receivable balance, as we do not have the right to invoice the customer until product is pulled from the hub.
|
·
|
Licensing Agreements: License agreements are only applicable to our Power Solutions and Protection product group, and include provisions for Bel to receive sales-based royalty income related to the licensing of Bel's patents or other intellectual property (IP) utilized by a third-party entity. Income related to these agreements is tracked by the licensee throughout the year based on their sales of product that utilize Bel's IP, and that data is reported to Bel either on a quarterly or annual basis, with payment generally received within 30 days of the reporting date. Our performance obligation is satisfied upon delivery of the IP at the beginning of the license period, as the licenses are functional in nature. However, the recognition of revenue associated with these licenses is subject to the sales- or usage-based constraint on variable consideration. As such, the Company records a constrained estimate of this variable consideration as royalty income in the period of the underlying customers' product sales, with adjustments made as actual licensee sales data becomes available.
|
Year Ended December 31, 2018
|
||||||||||||||||
North
|
||||||||||||||||
America
|
Asia
|
Europe
|
Consolidated
|
|||||||||||||
By Product Group:
|
||||||||||||||||
Connectivity solutions
|
$
|
135,454
|
$
|
17,140
|
$
|
34,130
|
$
|
186,724
|
||||||||
Magnetic solutions
|
37,805
|
137,998
|
9,604
|
185,407
|
||||||||||||
Power solutions and protection
|
98,432
|
32,065
|
45,556
|
176,053
|
||||||||||||
$
|
271,691
|
$
|
187,203
|
$
|
89,290
|
$
|
548,184
|
|||||||||
By Sales Channel:
|
||||||||||||||||
Direct to customer
|
$
|
175,290
|
$
|
161,114
|
$
|
62,255
|
$
|
398,659
|
||||||||
Through distribution
|
96,401
|
26,089
|
27,035
|
149,525
|
||||||||||||
$
|
271,691
|
$
|
187,203
|
$
|
89,290
|
$
|
548,184
|
Balance at
|
Adjustments
|
Balance at
|
||||||||||
December 31,
|
Due to
|
January 1,
|
||||||||||
2017
|
ASC 606
|
2018
|
||||||||||
Balance Sheet
|
||||||||||||
Unbilled receivables
|
$
|
-
|
$
|
14,536
|
$
|
14,536
|
||||||
Inventory
|
107,719
|
(11,044
|
)
|
96,675
|
||||||||
Other current liabilities
|
6,204
|
43
|
6,247
|
|||||||||
Retained earnings
|
147,807
|
3,449
|
151,256
|
As of December 31, 2018
|
||||||||||||
Balances
|
Effect of
|
|||||||||||
As
|
Without Adoption
|
Change
|
||||||||||
Reported
|
of ASC 606
|
Higher/(Lower)
|
||||||||||
Balance Sheet
|
||||||||||||
Assets
|
||||||||||||
Unbilled receivables
|
$
|
15,799
|
$
|
-
|
$
|
15,799
|
||||||
Inventories
|
120,068
|
131,885
|
(11,817
|
)
|
||||||||
Liabilities
|
||||||||||||
Other current liabilities
|
15,061
|
15,041
|
20
|
|||||||||
Equity
|
||||||||||||
Retained earnings
|
168,695
|
164,734
|
3,961
|
Year Ended December 31, 2018
|
||||||||||||
Balances
|
Effect of
|
|||||||||||
As
|
Without Adoption
|
Change
|
||||||||||
Reported
|
of ASC 606
|
Higher/(Lower)
|
||||||||||
Statement of Operations
|
||||||||||||
Net sales
|
$
|
548,184
|
$
|
546,922
|
$
|
1,262
|
||||||
Cost of sales
|
438,414
|
437,641
|
773
|
|||||||||
Operating income
|
29,611
|
29,122
|
489
|
|||||||||
Provision for income taxes
|
2,907
|
2,930
|
(23
|
)
|
||||||||
Net earnings
|
20,709
|
20,197
|
512
|
|
December 31,
|
January 1,
|
||||||
|
2018
|
2018
|
||||||
|
||||||||
Contract assets - current (unbilled receivable)
|
$
|
15,799
|
$
|
14,536
|
||||
Contract liabilities - current (deferred revenue)
|
$
|
1,036
|
$
|
855
|
|
Year Ended
|
|||
|
December 31, 2018
|
|||
Balance, January 1
|
$
|
855
|
||
New advance payments received
|
6,517
|
|||
Recognized as revenue during period
|
(6,322
|
)
|
||
Currency translation
|
(14
|
)
|
||
Balance, December 31
|
$
|
1,036
|
·
|
Financing Components: Bel has elected the practical expedient which enables management to disregard the effects of a financing component if the time difference between delivery of goods or services and payment for the goods or services is within one year.
|
·
|
Costs to Obtain a Contract: As part of negotiations, Bel may incur incremental costs to obtain a contract. Incremental costs are only those costs that would not have been incurred if the contract had not been obtained (e.g. sales commissions). Bel has elected the practical expedient that allows incremental costs to obtain a contract to be expensed as incurred when the expected amortization period is one year or less.
|
4.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
|
Total
|
North America
|
Asia
|
Europe
|
||||||||||||
|
||||||||||||||||
Balance at January 1, 2017:
|
||||||||||||||||
Goodwill, gross
|
$ |
146,542
|
S |
63,364
|
$ |
54,508
|
$ |
28,670
|
||||||||
Accumulated impairment charges
|
(128,591
|
)
|
(54,474
|
)
|
(54,508
|
)
|
(19,609
|
)
|
||||||||
Goodwill, net
|
|
17,951
|
|
8,890
|
|
-
|
|
9,061
|
||||||||
|
||||||||||||||||
Foreign currency translation
|
2,226
|
-
|
-
|
2,226
|
||||||||||||
|
||||||||||||||||
Balance at December 31, 2017:
|
||||||||||||||||
Goodwill, gross
|
148,768
|
63,364
|
54,508
|
30,896
|
||||||||||||
Accumulated impairment charges
|
(128,591
|
)
|
(54,474
|
)
|
(54,508
|
)
|
(19,609
|
)
|
||||||||
Goodwill, net
|
|
20,177
|
|
8,890
|
|
-
|
|
11,287
|
||||||||
|
||||||||||||||||
Goodwill allocation related to acquisition
|
1,290
|
-
|
-
|
1,290
|
||||||||||||
Foreign currency translation
|
(1,650
|
)
|
-
|
-
|
(1,650
|
)
|
||||||||||
|
||||||||||||||||
Balance at December 31, 2018:
|
||||||||||||||||
Goodwill, gross
|
148,408
|
63,364
|
54,508
|
30,536
|
||||||||||||
Accumulated impairment charges
|
(128,591
|
)
|
(54,474
|
)
|
(54,508
|
)
|
(19,609
|
)
|
||||||||
Goodwill, net
|
$
|
19,817
|
$
|
8,890
|
$
|
-
|
$
|
10,927
|
Reporting Unit
|
% by Which Estimated Fair Value Exceeds Carrying Value
|
|||
North America
|
20.3
|
%
|
||
Europe
|
23.8
|
%
|
December 31, 2018
|
December 31, 2017
|
|||||||||||||||||||||||
Gross Carrying
|
Accumulated
|
Net Carrying
|
Gross Carrying
|
Accumulated
|
Net Carrying
|
|||||||||||||||||||
Amount
|
Amortization
|
Amount
|
Amount
|
Amortization
|
Amount
|
|||||||||||||||||||
Patents, licenses and technology
|
$
|
38,845
|
$
|
18,281
|
$
|
20,564
|
$
|
39,218
|
$
|
14,926
|
$
|
24,292
|
||||||||||||
Customer relationships
|
44,588
|
14,193
|
30,395
|
44,704
|
11,478
|
33,226
|
||||||||||||||||||
Non-compete agreements
|
2,683
|
2,683
|
-
|
2,711
|
2,711
|
-
|
||||||||||||||||||
Trademarks
|
11,770
|
40
|
11,730
|
11,888
|
40
|
11,848
|
||||||||||||||||||
$
|
97,886
|
$
|
35,197
|
$
|
62,689
|
$
|
98,521
|
$
|
29,155
|
$
|
69,366
|
December 31,
|
Amortization Expense
|
|||
2019
|
$
|
6,289
|
||
2020
|
6,263
|
|||
2021
|
6,248
|
|||
2022
|
4,877
|
|||
2023
|
3,621
|
5.
|
FAIR VALUE MEASUREMENTS
|
6.
|
OTHER ASSETS
|
7.
|
INVENTORIES
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Raw materials
|
$
|
63,348
|
$
|
46,712
|
||||
Work in progress
|
21,441
|
17,688
|
||||||
Finished goods
|
35,279
|
43,319
|
||||||
Inventories
|
$
|
120,068
|
$
|
107,719
|
8.
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Land
|
$
|
2,251
|
$
|
2,259
|
||||
Buildings and improvements
|
30,119
|
30,761
|
||||||
Machinery and equipment
|
126,747
|
122,773
|
||||||
Construction in progress
|
4,687
|
1,511
|
||||||
163,804
|
157,304
|
|||||||
Accumulated depreciation
|
(119,872
|
)
|
(113,809
|
)
|
||||
Property, plant and equipment, net
|
$
|
43,932
|
$
|
43,495
|
Year Ended December 31, | ||||||||
2018
|
2017
|
|||||||
Liability for uncertain tax positions - January 1
|
$
|
30,430
|
$
|
27,828
|
||||
Additions based on tax positions
|
||||||||
related to the current year
|
1,703
|
2,168
|
||||||
Additions relating to acquisitions
|
-
|
-
|
||||||
Translation adjustment
|
(657
|
)
|
804
|
|||||
Settlement/expiration of statutes of limitations
|
(2,525
|
)
|
(370
|
)
|
||||
Liability for uncertain tax positions - December 31
|
$
|
28,951
|
$
|
30,430
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Current:
|
||||||||
Federal
|
$
|
(3,517
|
)
|
$
|
16,055
|
|||
State
|
152
|
115
|
||||||
Foreign
|
3,782
|
5,685
|
||||||
417
|
21,855
|
|||||||
Deferred:
|
||||||||
Federal
|
2,895
|
(1,312
|
)
|
|||||
State
|
196
|
(329
|
)
|
|||||
Foreign
|
(601
|
)
|
1,326
|
|||||
2,490
|
(315
|
)
|
||||||
$
|
2,907
|
$
|
21,540
|
Years Ended December 31,
|
||||||||||||||||
2018
|
2017
|
|||||||||||||||
$ |
|
%
|
$ |
|
%
|
|||||||||||
Tax provision computed at the
|
||||||||||||||||
federal statutory rate
|
$
|
4,959
|
21
|
%
|
$
|
3,375
|
35
|
%
|
||||||||
Increase (decrease) in taxes resulting from:
|
||||||||||||||||
Different tax rates applicable to foreign operations
|
1,231
|
5
|
%
|
(2,531
|
)
|
(26
|
%)
|
|||||||||
(Reversal of) increase in liability for uncertain
|
||||||||||||||||
tax positions - net
|
(822
|
)
|
(3
|
%)
|
1,082
|
11
|
%
|
|||||||||
Impact of U.S. Tax Reform
|
(2,628
|
)
|
(11
|
%)
|
19,171
|
199
|
%
|
|||||||||
Utilization of research and experimentation, solar and foreign
|
||||||||||||||||
tax credits
|
(300
|
)
|
(1
|
%)
|
(272
|
)
|
(3
|
%)
|
||||||||
State taxes, net of federal benefit
|
322
|
1
|
%
|
(261
|
)
|
(3
|
%)
|
|||||||||
Foreign tax on gain, net of federal benefit
|
-
|
0
|
%
|
1,223
|
13
|
%
|
||||||||||
Other, including qualified production activity credits, SERP/COLI
|
||||||||||||||||
income, under/(over) accruals, unrealized foreign exchange gains
|
||||||||||||||||
and amortization of purchase accounting intangibles
|
145
|
1
|
%
|
(247
|
)
|
(3
|
%)
|
|||||||||
Tax provision computed at the Company's
|
||||||||||||||||
effective tax rate
|
$
|
2,907
|
12
|
%
|
$
|
21,540
|
223
|
%
|
|
December 31,
|
|||||||
|
2018
|
2017
|
||||||
|
Tax Effect
|
Tax Effect
|
||||||
|
||||||||
Deferred tax assets:
|
||||||||
State tax credits
|
$
|
1,000
|
$
|
1,033
|
||||
Unfunded pension liability
|
605
|
1,139
|
||||||
Reserves and accruals
|
2,483
|
2,828
|
||||||
Federal, state and foreign net operating loss
|
||||||||
and credit carryforwards
|
8,370
|
10,524
|
||||||
Depreciation
|
850
|
917
|
||||||
Other accruals
|
5,641
|
4,915
|
||||||
Total deferred tax assets
|
18,949
|
21,356
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
1,666
|
989
|
||||||
Amortization
|
7,930
|
8,490
|
||||||
Other accruals
|
893
|
946
|
||||||
Total deferred tax liabilities
|
10,489
|
10,425
|
||||||
Valuation allowance
|
9,200
|
8,343
|
||||||
Net deferred tax (liabilities)/assets
|
$
|
(740
|
)
|
$
|
2,588
|
10.
|
DEBT
|
2019
|
$
|
2,974
|
||
2020
|
5,948
|
|||
2021
|
5,948
|
|||
2022
|
101,118
|
|||
Total long-term debt
|
115,988
|
|||
Less: Current maturities of long-term debt
|
(2,974
|
)
|
||
Noncurrent portion of long-term debt
|
$
|
113,014
|
|
December 31,
|
|||||||
|
2018
|
2017
|
||||||
Sales commissions
|
$
|
2,609
|
$
|
2,461
|
||||
Subcontracting labor
|
1,550
|
1,408
|
||||||
Salaries, bonuses and related benefits
|
18,275
|
16,531
|
||||||
Warranty accrual
|
1,078
|
1,769
|
||||||
Other
|
8,778
|
8,339
|
||||||
|
$
|
32,290
|
$
|
30,508
|
Years Ended December 31, | ||||||||
2018
|
2017
|
|||||||
Net Sales to External Customers:
|
||||||||
North America
|
$
|
271,691
|
$
|
245,834
|
||||
Asia
|
187,203
|
167,680
|
||||||
Europe
|
89,290
|
78,097
|
||||||
$
|
548,184
|
$
|
491,611
|
|||||
Net Sales:
|
||||||||
North America
|
$
|
284,245
|
$
|
257,541
|
||||
Asia
|
279,965
|
249,506
|
||||||
Europe
|
103,853
|
89,765
|
||||||
Less intercompany
|
||||||||
net sales
|
(119,879
|
)
|
(105,201
|
)
|
||||
$
|
548,184
|
$
|
491,611
|
|||||
Income from Operations:
|
||||||||
North America
|
$
|
6,769
|
$
|
6,195
|
||||
Asia
|
16,621
|
8,964
|
||||||
Europe
|
6,221
|
2,227
|
||||||
$
|
29,611
|
$
|
17,386
|
|||||
Total Assets:
|
||||||||
North America
|
$
|
177,902
|
$
|
172,674
|
||||
Asia
|
175,713
|
152,447
|
||||||
Europe
|
89,909
|
106,144
|
||||||
$
|
443,524
|
$
|
431,265
|
|||||
Capital Expenditures:
|
||||||||
North America
|
$
|
4,836
|
$
|
1,734
|
||||
Asia
|
5,661
|
2,617
|
||||||
Europe
|
1,097
|
2,074
|
||||||
$
|
11,594
|
$
|
6,425
|
|||||
Depreciation and Amortization Expense:
|
||||||||
North America
|
$
|
8,906
|
$
|
10,641
|
||||
Asia
|
5,842
|
6,728
|
||||||
Europe
|
3,459
|
3,349
|
||||||
$
|
18,207
|
$
|
20,718
|
Years Ended December 31, | ||||||||
|
2018
|
2017
|
||||||
Net Sales by Geographic Location:
|
||||||||
|
||||||||
United States
|
$
|
271,691
|
$
|
245,834
|
||||
Macao
|
187,204
|
167,681
|
||||||
United Kingdom
|
26,340
|
24,110
|
||||||
Slovakia
|
24,123
|
14,194
|
||||||
Germany
|
15,298
|
13,857
|
||||||
Switzerland
|
13,279
|
15,366
|
||||||
All other foreign countries
|
10,249
|
10,569
|
||||||
Consolidated net sales
|
$
|
548,184
|
$
|
491,611
|
||||
|
||||||||
Net Sales by Major Product Line:
|
||||||||
|
||||||||
Connectivity solutions
|
$
|
186,724
|
$
|
170,337
|
||||
Magnetic solutions
|
185,407
|
161,011
|
||||||
Power solutions and protection
|
176,053
|
160,263
|
||||||
Consolidated net sales
|
$
|
548,184
|
$
|
491,611
|
December 31, | ||||||||
2018
|
2017
|
|||||||
Long-lived Assets by Geographic Location:
|
||||||||
United States
|
$
|
27,505
|
$
|
27,594
|
||||
People's Republic of China (PRC)
|
29,563
|
30,151
|
||||||
Slovakia
|
6,475
|
7,625
|
||||||
Switzerland
|
3,023
|
3,632
|
||||||
United Kingdom
|
2,330
|
1,345
|
||||||
All other foreign countries
|
1,117
|
1,121
|
||||||
Consolidated long-lived assets
|
$
|
70,013
|
$
|
71,468
|
Years Ended December 31, | ||||||||
2018
|
2017
|
|||||||
Service Cost
|
$
|
732
|
$
|
700
|
||||
Interest Cost
|
664
|
673
|
||||||
Net amortization
|
443
|
375
|
||||||
Net periodic benefit cost
|
$
|
1,839
|
$
|
1,748
|
Years Ended December 31, | ||||||||
|
2018
|
2017
|
||||||
Fair value of plan assets, January 1
|
$
|
-
|
$
|
-
|
||||
Company contributions
|
325
|
240
|
||||||
Benefits paid
|
(325
|
)
|
(240
|
)
|
||||
Fair value of plan assets, December 31
|
$ |
-
|
$ |
-
|
||||
Benefit obligation, January 1
|
$ |
19,134
|
$ |
16,900
|
||||
Service cost
|
732
|
700
|
||||||
Interest cost
|
664
|
673
|
||||||
Benefits paid
|
(325
|
)
|
(240
|
)
|
||||
Plan amendments
|
39
|
198
|
||||||
Actuarial (gains) losses
|
(1,568
|
)
|
903
|
|||||
Benefit obligation, December 31
|
18,676
|
19,134
|
||||||
Underfunded status, December 31
|
$
|
(18,676
|
)
|
$
|
(19,134
|
)
|
Years Ending
|
||||
December 31,
|
||||
2019
|
$
|
379
|
||
2020
|
659
|
|||
2021
|
679
|
|||
2022
|
902
|
|||
2023
|
941
|
|||
2024 - 2028
|
5,409
|
December 31, | ||||||||
2018
|
2017
|
|||||||
Prior service cost
|
$
|
918
|
$
|
1,135
|
||||
Net loss
|
1,977
|
3,732
|
||||||
$
|
2,895
|
$
|
4,867
|
Years Ended December 31, | ||||||||
2018
|
2017
|
|||||||
Net periodic benefit cost:
|
||||||||
Discount rate
|
3.50
|
%
|
4.00
|
%
|
||||
Rate of compensation increase
|
3.00
|
%
|
3.00
|
%
|
||||
Benefit obligation:
|
||||||||
Discount rate
|
4.00
|
%
|
3.50
|
%
|
||||
Rate of compensation increase
|
2.50
|
%
|
3.00
|
%
|
|
Weighted Average
|
||||||||
Restricted Stock
|
Weighted Average
|
Remaining
|
|||||||
Awards
|
Shares
|
Award Price
|
Contractual Term
|
||||||
|
|
||||||||
Outstanding at January 1, 2018
|
424,500
|
$
|
23.23
|
3.0 years
|
|||||
Granted
|
262,000
|
24.68
|
|
||||||
Vested
|
(129,600
|
)
|
21.88
|
|
|||||
Forfeited
|
(29,000
|
)
|
21.69
|
|
|||||
Outstanding at December 31, 2018
|
527,900
|
$
|
24.37
|
3.5 years
|
Year Ending
|
||||
December 31,
|
||||
|
||||
2019
|
$
|
7,363
|
||
2020
|
6,017
|
|||
2021
|
4,967
|
|||
2022
|
3,338
|
|||
2023
|
1,194
|
|||
Thereafter
|
442
|
|||
|
$
|
23,321
|
December 31, | ||||||||
2018
|
2017
|
|||||||
Foreign currency translation adjustment
|
$
|
(22,635
|
)
|
$
|
(16,537
|
)
|
||
Unrealized holding gain on available-for-sale
|
||||||||
securities, net of taxes of $0 and $85 as of
|
||||||||
December 31, 2018 and 2017
|
12
|
145
|
||||||
Unfunded SERP liability, net of taxes of ($680) and ($1,635)
|
||||||||
as of December 31, 2018 and 2017
|
(2,215
|
)
|
(3,233
|
)
|
||||
Accumulated other comprehensive loss
|
$
|
(24,838
|
)
|
$
|
(19,625
|
)
|
|
Unrealized Holding
|
|
|||||||||||||||
|
Foreign Currency
|
Gains on
|
|
||||||||||||||
|
Translation
|
Available-for-
|
Unfunded
|
|
|||||||||||||
|
Adjustment
|
Sale Securities
|
SERP Liability
|
|
Total
|
||||||||||||
|
|
||||||||||||||||
Balance at January 1, 2017
|
$
|
(28,976
|
)
|
$
|
424
|
$
|
(2,745
|
)
|
|
$
|
(31,297
|
)
|
|||||
Other comprehensive income (loss) before reclassifications
|
12,439
|
(279
|
)
|
(733
|
)
|
|
11,427
|
||||||||||
Amounts reclassified from accumulated other
|
|
||||||||||||||||
comprehensive income (loss)
|
-
|
-
|
245
|
(a)
|
245
|
||||||||||||
Net current period other comprehensive income (loss)
|
12,439
|
(279
|
)
|
(488
|
)
|
|
11,672
|
||||||||||
|
|
||||||||||||||||
Balance at December 31, 2017
|
(16,537
|
)
|
145
|
(3,233
|
)
|
|
(19,625
|
)
|
|||||||||
|
|
||||||||||||||||
Other comprehensive income (loss) before reclassifications
|
(6,098
|
)
|
37
|
679
|
|
(5,382
|
)
|
||||||||||
Amounts reclassified from accumulated other
|
|
||||||||||||||||
comprehensive income (loss)
|
-
|
(170
|
)
|
339
|
(a)
|
169
|
|||||||||||
Net current period other comprehensive income (loss)
|
(6,098
|
)
|
(133
|
)
|
1,018
|
|
(5,213
|
)
|
|||||||||
|
|
||||||||||||||||
Balance at December 31, 2018
|
$
|
(22,635
|
)
|
$
|
12
|
$
|
(2,215
|
)
|
|
$
|
(24,838
|
)
|
(a)
|
This reclassification relates to the amortization of prior service costs and gains/losses associated with the Company's SERP plan. This expense is allocated between cost of sales and selling, general and administrative expense based upon the employment classification of the plan participants.
|
Plan Category
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(a) |
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
(b) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
(c) |
|||||||||
Equity compensation plans approved by security holders:
|
||||||||||||
2011 Equity Compensation Plan
|
-
|
$
|
-
|
359,100
|
||||||||
|
||||||||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||||
|
||||||||||||
Totals
|
-
|
$
|
-
|
359,100
|
Exhibits, Financial Statement Schedules
(a) Documents filed as a part of this Annual Report on Form 10-K:
(1) Financial Statements
See Index to Consolidated Financial Statements and Schedule of this Form 10-K.
(2) Exhibits
|
|||
Exhibit No.:
|
|||
3.1
|
Restated Certificate of Incorporation, as amended, is incorporated by reference to (i) Restated Certificate of Incorporation filed as Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 and (ii) Certificate of Amendment to the Company's Restated Certificate of Incorporation filed as Exhibit 3.1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
|
||
3.2
|
|||
10.1†
|
|||
10.2†
|
|||
10.3†
|
|||
10.4
|
|||
10.5
|
|||
10.6
|
|||
11.1
|
A statement regarding the computation of earnings per share is omitted because such computation can be clearly determined from the material contained in this Annual Report on Form 10-K.
|
||
21.1*
|
|||
23.1*
|
24.1*
|
|||
31.1*
|
|||
31.2*
|
|||
32.1**
|
|||
32.2**
|
|||
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
|
By:
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
|
Dated: March 8, 2019
|
Signature
|
Title
|
Date
|
||
/s/ Daniel Bernstein
|
President, Chief Executive Officer
|
March 8, 2019
|
||
Daniel Bernstein
|
and Director
|
|||
/s/ Robert H. Simandl
|
Director
|
March 8, 2019
|
||
Robert H. Simandl
|
||||
/s/ Peter Gilbert
|
Director
|
March 8, 2019
|
||
Peter Gilbert
|
||||
/s/ John Tweedy
|
Director
|
March 8, 2019
|
||
John Tweedy
|
||||
/s/ Avi Eden
|
Director
|
March 8, 2019
|
||
Avi Eden
|
||||
/s/ Mark Segall
|
Director
|
March 8, 2019
|
||
Mark Segall
|
||||
/s/ Norman Yeung
|
Director
|
March 8, 2019
|
||
Norman Yeung
|
/s/ Eric Nowling
|
Director
|
March 8, 2019
|
||
Eric Nowling
|
||||
/s/ Vincent Vellucci
|
Director
|
March 8, 2019
|
||
Vincent Vellucci
|
||||
/s/ Craig Brosious
|
Vice President of Finance and Secretary
|
March 8, 2019
|
||
Craig Brosious
|
(Principal Financial Officer and Principal
|
|||
Accounting Officer)
|
Exhibit 21.1
|
|||||
SUBSIDIARIES OF THE REGISTRANT
|
|||||
BCMZ Precision Engineering Limited
|
England and Wales
|
||||
Bel Components Ltd.
|
Hong Kong
|
||||
Bel Connector Inc.
|
Delaware
|
||||
Bel Fuse (Macao Commerical Offshore) Limited
|
Macao
|
||||
Bel Fuse Limited
|
Hong Kong
|
||||
Bel Power (Hangzhou) Co. Ltd.
|
PRC
|
||||
Bel Power Europe S.r.l.
|
Italy
|
||||
Bel Power Inc.
|
Massachusetts
|
||||
Bel Power Solutions Co. Ltd.
|
China
|
||||
Bel Power Solutions GmbH
|
Switzerland
|
||||
Bel Power Solutions Inc.
|
Delaware
|
||||
Bel Power Solutions Ireland Limited
|
Ireland
|
||||
Bel Power Solutions s.r.o.
|
Slovakia
|
||||
Bel Sales (Hong Kong) Ltd.
|
Hong Kong
|
||||
Bel Stewart GmbH
|
Germany
|
||||
Bel Stewart s.r.o.
|
Czech Republic
|
||||
Bel Transformer Inc.
|
Delaware
|
||||
Bel Ventures Inc.
|
Delaware
|
||||
BPS Asia Pacific Electronics (Shenzhen) Co. Ltd.
|
China
|
||||
BPS Cooperatief U.A.
|
Netherlands
|
||||
Cinch Connectivity Solutions (Shanghai) Co., Ltd.
|
China
|
||||
Cinch Connectivity Solutions LTD
|
England and Wales
|
||||
Cinch Connectivity Solutions, Inc.
|
Delaware
|
||||
Cinch Connectors de Mexico, S.A. de C.V.
|
Mexico
|
||||
Cinch Connectors Limited
|
England and Wales
|
||||
Cinch Connectors, Inc.
|
Delaware
|
||||
Dongguan Transpower Electric Products Co., Ltd.
|
PRC
|
||||
PAI Capital LLC
|
Delaware
|
Shireoaks Worksop Holdings Ltd.
|
England and Wales
|
|||
Signal Dominicana, S.R.L.
|
Dominican Republic
|
|||
Stewart Connector Systems de Mexico, S.A. de C.V.
|
Mexico
|
|||
Stratos International, LLC
|
Delaware
|
|||
Stratos Lightwave LLC
|
Delaware
|
|||
Stratos Lightwave-Florida LLC
|
Delaware
|
|||
Transpower Cooperatief U.A.
|
Netherlands
|
|||
Transpower Technologies (HK) Limited
|
Hong Kong
|
|||
Trompeter Electronics, Inc.
|
Delaware
|
|||
TRP Connector B.V.
|
Netherlands
|
|||
TRP Connector Limited
|
Macao
|
|||
TRP International*
|
PRC
|
|||
Winsonko (Guangxi Pingguo) Electron Co., Ltd.
|
PRC
|
|||
* TRP International is a China Business Trust
|
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 controls 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: March 8, 2019
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
1. |
I have reviewed this annual report on Form 10-K of Bel Fuse 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 controls 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: March 8, 2019
|
/s/ Craig Brosious
|
Craig Brosious
|
|
Vice President of Finance and Secretary
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
(1) |
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and consolidated results of operations of the Company for the periods presented.
|
Date: March 8, 2019
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and consolidated results of operations of the Company for the periods presented.
|
Date: March 8, 2019
|
/s/ Craig Brosious
|
Craig Brosious
|
|
Vice President of Finance and Secretary
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Mar. 01, 2019 |
Jun. 30, 2018 |
|
Entity Information [Line Items] | |||
Entity Registrant Name | BEL FUSE INC /NJ | ||
Entity Central Index Key | 0000729580 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Public Float | $ 237.6 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Class A Common Stock [Member] | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 2,174,912 | ||
Class B Common Stock [Member] | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 10,089,852 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Current Assets: | ||
Accounts receivable, allowance for doubtful accounts | $ 1,638 | $ 1,745 |
Stockholders' Equity: | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Class A Common Stock [Member] | ||
Stockholders' Equity: | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, outstanding (in shares) | 2,174,912 | 2,174,912 |
Common stock, treasury shares (in shares) | 1,072,769 | 1,072,769 |
Class B Common Stock [Member] | ||
Stockholders' Equity: | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, outstanding (in shares) | 10,092,352 | 9,859,352 |
Common stock, treasury shares (in shares) | 3,218,307 | 3,218,307 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2018 |
Dec. 31, 2017 |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract] | ||
Net earnings (loss) | $ 20,709 | $ (11,897) |
Other comprehensive (loss) income: | ||
Currency translation adjustment, net of taxes | (6,098) | 12,439 |
Unrealized holding losses on marketable securities arising during the period, net of taxes | (133) | (279) |
Change in unfunded SERP liability, net of taxes | 1,018 | (488) |
Other comprehensive (loss) income: | (5,213) | 11,672 |
Comprehensive income (loss) | $ 15,496 | $ (225) |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2018 |
Dec. 31, 2017 |
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Other comprehensive (loss) income: | ||
Foreign currency translation adjustment, tax expense | $ 51 | $ 183 |
Unrealized holding losses on marketable securities arising during the period, tax (benefit) | (85) | (177) |
Change in unfunded SERP liability, tax expense (benefit) | $ 954 | $ (237) |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [Abstract] | ||
Foreign currency translation adjustment, tax expense | $ 51 | $ 183 |
Unrealized holding losses on marketable securities arising during the period, tax (benefit) | (85) | (177) |
Change in unfunded SERP liability, tax (benefit) expense | $ 954 | $ (237) |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Bel Fuse Inc. and subsidiaries ("Bel," the "Company," "we," "us," and "our") design, manufacture and sell a broad array of products that power, protect and connect electronic circuits. These products are used in the networking, telecommunication, high-speed data transmission, commercial aerospace, military, broadcasting, transportation and consumer electronic industries around the world. We manage our operations geographically through our three reportable operating segments: North America, Asia and Europe. All amounts included in the tables to these notes to consolidated financial statements, except per share amounts, are in thousands. Principles of Consolidation - The consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates - The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including but not limited to those related to product returns, provisions for bad debt, inventories, goodwill, intangible assets, investments, Supplemental Executive Retirement Plan ("SERP") expense, income taxes, contingencies, litigation and the impact related to tax reform. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Cash Equivalents - Cash equivalents include short-term investments in money market funds and certificates of deposit with an original maturity of three months or less when purchased. Accounts at each institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. Some of our balances are in excess of the FDIC insured limit. Allowance for Doubtful Accounts - We maintain an allowance for doubtful accounts for estimated losses from the inability of our customers to make required payments. We determine our allowance by both specific identification of customer accounts where appropriate and the application of historical loss experience to non-specific accounts. Effects of Foreign Currency – In non-U.S. locations that are not considered highly inflationary, we translate the balance sheets at the end of period exchange rates with translation adjustments accumulated within stockholders' equity on our consolidated balance sheets. We translate the statements of operations at the average exchange rates during the applicable period. In connection with foreign currency denominated transactions, including multi-currency intercompany payable and receivable transactions and loans, the Company incurred net realized and unrealized currency exchange gains (losses) of $2.7 million and ($2.8) million for the years ended December 31, 2018 and 2017, respectively, which were included in SG&A expenses on the consolidated statements of operations. Concentration of Credit Risk - Financial instruments which potentially subject us to concentrations of credit risk consist principally of accounts receivable and temporary cash investments. We grant credit to customers that are primarily original equipment manufacturers and to subcontractors of original equipment manufacturers based on an evaluation of the customer's financial condition, without requiring collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. We control our exposure to credit risk through credit approvals, credit limits and monitoring procedures and establish allowances for anticipated losses. See Note 12, "Segments," for disclosures regarding significant customers. We place temporary cash investments with quality financial institutions and commercial issuers of short-term paper and, by policy, limit the amount of credit exposure in any one financial instrument. Inventories - Inventories are stated at the lower of weighted-average cost or market. Costs related to inventories include raw materials, direct labor and manufacturing overhead which are included in cost of sales on the consolidated statements of operations. The Company utilizes the average cost method in determining amounts to be removed from inventory. Revenue Recognition – On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under ASC 605. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the transfer of control of the Company's goods and services and provides financial statement readers with enhanced disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of sales. Product Warranties – Warranties vary by product line and are competitive for the markets in which the Company operates. Warranties generally extend for one to three years from the date of sale, providing customers with assurance that the related product will function as intended. The Company reviews its warranty liability quarterly based on an analysis of actual expenses and failure rates accompanied with estimated future costs and projected failure rate trends. Factors taken into consideration when evaluating our warranty reserve are (i) historical claims for each product, (ii) volume increases, (iii) life of warranty, (iv) historical warranty repair costs and (v) other factors. To the extent that actual experience differs from our estimate, the provision for product warranties will be adjusted in future periods. Actual warranty repair costs are charged against the reserve balance as incurred. See Note 11, "Accrued Expenses." Product Returns – We estimate product returns, including product exchanges under warranty, based on historical experience. In general, the Company is not contractually obligated to accept returns except for defective product or in instances where the product does not meet the Company's product specifications. However, the Company may permit its customers to return product for other reasons. In certain instances, the Company would generally require a significant cancellation penalty payment by the customer. The Company estimates such returns, where applicable, based upon management's evaluation of historical experience, market acceptance of products produced and known negotiations with customers. Such estimates are deducted from sales and provided for at the time revenue is recognized. Distribution customers often receive what is referred to as "ship and debit" arrangements, whereby Bel will invoice them at an agreed upon unit price upon shipment of product and a price reduction may be granted if the market price of the product declines after shipment. Distributors may also be entitled to special pricing discount credits, and certain customers are entitled to return allowances based on previous sales volumes. Bel deducts estimates for anticipated credits, refunds and returns from sales each quarter based on historical experience. Goodwill and Identifiable Intangible Assets – Goodwill represents the excess of the aggregate of the following (1) consideration transferred, (2) the fair value of any noncontrolling interest in the acquiree and, (3) if the business combination is achieved in stages, the acquisition-date fair value of our previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Identifiable intangible assets consist primarily of patents, licenses, trademarks, trade names, customer lists and relationships, non-compete agreements and technology based intangibles and other contractual agreements. We amortize finite lived identifiable intangible assets over the shorter of their stated or statutory duration or their estimated useful lives, ranging from 1 to 16 years, on a straight-line basis to their estimated residual values and periodically review them for impairment. Total identifiable intangible assets comprise 14.1% and 16.1% in 2018 and 2017, respectively, of our consolidated total assets. We use the acquisition method of accounting for all business combinations and do not amortize goodwill or intangible assets with indefinite useful lives. Goodwill and intangible assets with indefinite useful lives are tested for possible impairment annually during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. Impairment and Disposal of Long-Lived Assets – For definite-lived intangible assets, such as customer relationships, contracts, intellectual property, and for other long-lived assets, such as property, plant and equipment, whenever impairment indicators are present, we perform a review for impairment. We calculate the undiscounted value of the projected cash flows associated with the asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over the fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate. For indefinite-lived intangible assets, such as trademarks and trade names, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over the fair value, if any. In addition, in all cases of an impairment review we re-evaluate whether continuing to characterize the asset as indefinite-lived is appropriate. See Note 4, "Goodwill and Other Intangible Assets," for additional details. Depreciation - Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated primarily using the straight-line method over the estimated useful life of the asset. The estimated useful lives primarily range from 2 to 33 years for buildings and leasehold improvements, and from 3 to 15 years for machinery and equipment. 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 consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities 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. See Note 9, "Income Taxes". We record net deferred tax assets to the extent we believe these assets will more-likely-than-not be realized. In making such 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 recent financial operations. We have established valuation allowances for deferred tax assets that are not likely to be realized. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of our net recorded amount, we would adjust the valuation allowance, which would reduce the provision for income taxes. We establish reserves for tax contingencies when, despite the belief that our tax return positions are fully supported, it is probable that certain positions may be challenged and may not be fully sustained. The tax contingency reserves are analyzed on a quarterly basis and adjusted based upon changes in facts and circumstances, such as the conclusion of federal and state audits, expiration of the statute of limitations for the assessment of tax, case law and emerging legislation. Our effective tax rate includes the effect of tax contingency reserves and changes to the reserves as considered appropriate by management. Earnings per Share – We utilize the two-class method to report our earnings per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and participation rights in undistributed earnings. The Company's Certificate of Incorporation, as amended, states that Class B common shares are entitled to dividends at least 5% greater than dividends paid to Class A common shares, resulting in the two-class method of computing earnings per share. In computing earnings per share, the Company has allocated dividends declared to Class A and Class B based on amounts actually declared for each class of stock and 5% more of the undistributed earnings have been allocated to Class B shares than to the Class A shares on a per share basis. Basic earnings per common share are computed by dividing net earnings by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share, for each class of common stock, are computed by dividing net earnings by the weighted-average number of common shares and potential common shares outstanding during the period. There were no potential common shares outstanding during the years ended December 31, 2018 and 2017 which would have had a dilutive effect on earnings per share. The earnings and weighted average shares outstanding used in the computation of basic and diluted earnings per share are as follows:
Research and Development ("R&D") - Our engineering groups are strategically located around the world to facilitate communication with and access to customers' engineering personnel. This collaborative approach enables partnerships with customers for technical development efforts. On occasion, we execute non-disclosure agreements with our customers to help develop proprietary, next generation products destined for rapid deployment. R&D costs are expensed as incurred, and are included in cost of sales on the consolidated statements of operations. Generally, R&D is performed internally for the benefit of the Company. R&D costs include salaries, building maintenance and utilities, rents, materials, administration costs and miscellaneous other items. R&D expenses for the years ended December 31, 2018 and 2017 amounted to $29.4 million and $28.8 million, respectively. Fair Value Measurements - We utilize the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. We classify our fair value measurements based on the lowest level of input included in the established three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: Level 1 - Observable inputs such as quoted market prices in active markets Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions For financial instruments such as cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amount approximates fair value because of the short maturities of such instruments. See Note 5, "Fair Value Measurements," for additional disclosures related to fair value measurements. Recently Issued Accounting Standards Recently Adopted Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. Subsequently, the FASB issued several other updates related to revenue recognition (collectively with ASU 2014-09, the "new revenue standards" or "ASC 606"). We adopted the guidance under the new revenue standards effective January 1, 2018 using the modified retrospective approach by recognizing the cumulative effect of initially applying the new standard as an increase to the opening balance of retained earnings. Upon adoption, the new revenue standards replaced most existing revenue recognition guidance in U.S. GAAP. Based on our review of representative samples of contracts and other forms of agreements with customers globally and our evaluation of the provisions under the five-step model specified by the new revenue standards, the Company has implemented changes with respect to timing of revenue recognition primarily related to arrangements for which the customer takes the Company's products from a facility holding consignment inventory. In connection with the modified retrospective application of the new revenue standards, we recorded an adjustment to increase retained earnings of $3.4 million upon the January 1, 2018 adoption date. Apart from this adjustment and the inclusion of additional required disclosures in Note 3, the adoption of the new revenue standards did not have a material impact on the Company's consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new guidance, entities will be required to measure certain equity investments at fair value and recognize any changes in fair value in net earnings, unless the investments qualify for the new practicability exception. The new standard was effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017. We adopted this guidance on January 1, 2018. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This guidance addresses diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This accounting guidance was effective for annual reporting periods beginning after December 31, 2017, including interim reporting periods within those annual reporting periods, and should be applied retrospectively to all periods presented. This guidance was adopted by the Company effective January 1, 2018 and it did not have any impact on the Company's consolidated statement of cash flows in the periods presented. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. Prior U.S. GAAP prohibited the recognition of current and deferred income taxes for intra-entity asset transfer until the asset has been sold to an outside party. The new guidance eliminates the exception and requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This accounting guidance was effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. This guidance was adopted by the Company effective January 1, 2018 and it did not have a material impact on the Company's consolidated financial position or results of operations. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"), to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU 2017-01 provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. The Company adopted ASU 2017-01 on January 1, 2018, and the guidance will be applied on a prospective basis. In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). This guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. ASU 2017-07 requires employers to present the service cost component of the net periodic benefit cost in the same income statement line as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service costs and actuarial gains/losses, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. The guidance also specifies that the amount of costs that can be capitalized will be limited to service cost only. The Company adopted the guidance of ASU 2017-07 on January 1, 2018 and elected to apply the practical expedient and use the amounts disclosed in Note 13 to the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 as the basis for applying the retrospective application required by the standard. The amounts reclassified within the statement of operations for the year ended December 31, 2017 were not material. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). This update provides guidance about which changes to the terms or conditions of a share-based payment require an entity to apply modification accounting in Topic 718. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company adopted ASU 2017-09 on January 1, 2018, and the guidance within this update will be applied to any future award modifications. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to simplify the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. Under the new guidance, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit on the statements of operations. Under prior GAAP, excess tax benefits were recognized in additional paid-in capital while tax deficiencies were recognized either as an offset to accumulated excess tax benefits, if any, or on the statements of operations. The Company adopted this guidance effective January 1, 2017. Certain provisions required retrospective/modified retrospective transition while others were applied prospectively. In accordance with this guidance, the Company reclassified $1.7 million of cumulative excess tax benefits from additional paid-in capital to retained earnings within the equity section of the consolidated balance sheet as of January 1, 2017. The Company has elected to continue its method of estimating forfeitures in determining its stock-based compensation expense throughout the year. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which requires entities to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The update is effective for fiscal years beginning after December 15, 2016, and interim periods therein. We adopted this guidance on January 1, 2017. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Accounting Standards Issued But Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"), to provide a new comprehensive model for lease accounting. Under this guidance, lessees and lessors should apply a "right-of-use" model in accounting for all leases (including subleases) and eliminate the concept of operating leases and off-balance sheet leases. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. This guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The Company will adopt ASU 2016-02 effective January 1, 2019 using the modified retrospective approach. In connection with the adoption, we will elect to utilize the Comparatives Under 840 Option whereby the Company will continue to present prior period financial statements and disclosures under ASC 840. In addition, we will elect the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification and initial direct costs. Further, we will elect a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. We are finalizing the necessary changes to our accounting policies, processes, disclosures and internal control over financial reporting, and have implemented a new lease system to facilitate the requirements of the new standard. Adoption of the new standard is expected to result in the recording of right-of-use assets and lease liabilities related to our operating leases, each in an amount ranging from $18-$22 million, on our consolidated balance sheet as of January 1, 2019. The difference between the lease assets and lease liabilities, which is expected to be immaterial, will be recorded as an adjustment to retained earnings. The standard is not expected to materially affect the Company's consolidated net earnings or have any impact on cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is required to adopt ASU 2017-04 for its annual or any interim goodwill impairment tests for annual periods beginning after December 15, 2019, and the guidance is to be applied on a prospective basis. In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act, which was enacted on December 22, 2017. This guidance is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the U.S. Tax Cuts and Jobs Act is recognized. Early adoption is permitted. We are currently in the process of evaluating this new standard update. In May 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. This guidance will better align the treatment of share-based payments to nonemployees with the requirements for such share-based payments granted to employees. This guidance is effective for all public entities for fiscal years beginning after December 15, 2018, including interim periods within that year. We are currently in the process of evaluating this new standard update. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions. In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"). This guidance removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. The standard is effective for fiscal years ending after December 15, 2020. The amendments in ASU 2018-14 would need to be applied on a retrospective basis. We are currently assessing the impact the new guidance will have on our disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Cost. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company is currently evaluating the impacts that adoption of this ASU will have on its consolidated financial statements. |
ACQUISITION |
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ACQUISITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITION | 2. ACQUISITION On October 1, 2018, the Company completed the acquisition of BCMZ Precision Engineering Limited ("BCMZ"), a UK manufacturer of precision machined components, for approximately $2.6 million in cash. The transaction was funded with cash on hand. BCMZ has a diversified portfolio of customers in the automotive, aerospace, defense, telecommunication, fibre-optic and medical industrial sectors and has been a long-term key supplier of precision machined components for our Cinch Connectivity Solutions UK business. BCMZ is additionally expected to give Cinch the capability to continue to support key defense and industrial customers across Europe with localized in-house machining ability. The results of operations of BCMZ have been included in the Company's consolidated financial statements for the period subsequent to its acquisition date. During the year ended December 31, 2018, BCMZ contributed revenue of $0.5 million and an immaterial amount to operating income within the Company's consolidated financial results. During the year ended December 31, 2018, the Company incurred less than $0.1 million of acquisition-related costs relating to BCMZ. These costs are included in selling, general and administrative expense in the accompanying consolidated statement of operations for the year ended December 31, 2018. As of the acquisition date, balances recorded approximated fair value. The identifiable assets acquired included $0.4 million assigned to customer relationships which will be amortized over its estimated future life of 10 years utilizing the straight-line method.
The goodwill noted above related to the BCMZ acquisition will be allocated to the Company's Europe operating segment. The Company is uncertain at this time how much of the goodwill, if any, will be deductible for tax purposes. The inclusion of BCMZ's results, assuming the acquisition of BCMZ was completed as of January 1, 2017, would not have had a material impact on the Company's consolidated results of operations during 2017 or 2018. |
REVENUE |
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REVENUE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | 3. REVENUE Nature of Goods and Services Our revenues are substantially derived from sales of our products. In our connectivity solutions product group, we provide connectors and cable assemblies to the aerospace, military/defense, commercial, rugged harsh environment and communication markets. This group also includes passive jacks, plugs and cable assemblies that provide connectivity in networking equipment, as well as modular plugs and cable assemblies used within the structured cabling system, known as premise wiring. In our power solutions and protection group, we provide AC-DC and DC-DC power conversion devices and circuit protection products. Applications range from board-mount power to system-level architectures for servers, storage, networking, industrial and transportation. In our magnetic solutions group, we provide an extensive line of integrated connector modules (ICM), where an Ethernet magnetic solution is integrated into a connector package. Products within the Company's magnetic solutions group are primarily used in networking and industrial applications. The Company also provides incremental services to our customers in the form of training, technical support, special tooling, and other support as deemed necessary from time to time. For purposes of ASC 606, all such incremental services were concluded to be immaterial in the context of the contracts. Types of Contracts Substantially all of the Company's revenue is derived from contracts with its customers under one of the following types of contracts:
Significant Payment Terms Contracts with customers indicate the general terms and conditions in which business will be conducted for a set period of time. Individual purchase orders state the description, quantity and price of each product purchased. Payment for products sold under direct contracts with customers or contracts with distributors is typically due in full within 30-90 days from the transfer of title to customer. Payment for products sold under consignment contracts is typically due within 60 days of the customer pulling the product from the hub. Payment due related to our licensing agreements is generally within 30 days of receiving the licensee sales data, which is either on a quarterly or annual basis. Since the customer agrees to a stated price for each product on each purchase order, the majority of contracts are not subject to variable consideration. However, the "ship and debit" arrangements with distributors, royalty income associated with our licensing agreements, and the product returns described above are each deemed to be variable consideration which requires the Company to make constrained estimates based on historical data. Disaggregation of Revenue The following table provides information about disaggregated revenue by product group and sales channel, and includes a reconciliation of the disaggregated revenue to our reportable segments:
The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 were as follows:
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our balance sheet as of December 31, 2018 and consolidated statement of operations for the year ended December 31, 2018 was as follows:
Contract Assets and Contract Liabilities: A contract asset results when goods or services have been transferred to the customer but payment is contingent upon a future event, other than passage of time. In the case of our consignment arrangements, we are unable to invoice the customer until product is pulled from the hub by the customer, which generates an unbilled receivable (a contract asset) when revenue is initially recognized. A contract liability results when cash payments are received or due in advance of our performance obligation being met. We have certain customers who provide payment in advance of product being shipped, which results in deferred revenue (a contract liability). The balances of the Company's contract assets and contract liabilities at December 31, 2018 and January 1, 2018 are as follows:
The change in balance of our unbilled receivables from January 1, 2018 to December 31, 2018 primarily relates to a timing difference between the Company's performance (i.e. when our product is shipped to a customer-controlled hub) and the point at which the Company can invoice the customer per the terms of the customer contract (i.e. when the customer pulls our product from the customer-controlled hub). A tabular presentation of the activity within the deferred revenue account for the year ended December 31, 2018 is presented below:
Transaction Price Allocated to Future Obligations: The aggregate amount of transaction price allocated to remaining performance obligations that have not been satisfied as of December 31, 2018 related to contracts that exceed one year in duration amounted to $18.2 million, with expected contract expiration dates that range from 2020 - 2024. It is expected that 78% of this aggregate amount will be recognized in 2020, 20% will be recognized in 2021 and the remainder will be recognized in years beyond 2021. The majority of the Company's total backlog of orders at December 31, 2018 is related to contracts that have an original expected duration of one year or less, for which the Company is electing to utilize the practical expedient available within the guidance, and are excluded from the transaction price related to these future obligations. The Company will generally satisfy the remaining performance obligations as we transfer control of the products ordered to our customers. The transaction price related to these future obligations also excludes variable consideration consisting of sales or usage-based royalties earned on licensing agreements. The variability related to these sales or usage-based royalties will be resolved in the periods when the licensee generates sales related to the licensed intellectual property. Other Practical Expedients: In the application of the recognition and measurement principles of ASC 606, the Company elected to utilize the following additional practical expedients which are provided for within the guidance:
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GOODWILL AND OTHER INTANGIBLE ASSETS |
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GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS |
Goodwill Goodwill represents the excess of the purchase price and related acquisition costs over the fair value assigned to the net tangible and other intangible assets acquired in a business acquisition. The changes in the carrying value of goodwill classified by our segment reporting structure for the years ended December 31, 2018 and 2017 are as follows:
As discussed in Note 5, Fair Value Measurements, goodwill is reviewed for impairment on a reporting unit basis annually during the fourth quarter of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The goodwill impairment test involves a two-step process. In the first step, the fair value of each reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, the second step of the impairment test must be performed to measure the amount of impairment loss. In the second step, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss and a reduction to goodwill. We estimated the fair value of these reporting units using a weighting of fair values derived from income and market approaches. Under the income approach, we determine the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. 2018 Annual Impairment Test During the fourth quarter of 2018, the Company completed step one of our annual goodwill impairment test for our reporting units. We concluded that the fair value of each of the Company's reporting units exceeded the respective carrying values and that there was no indication of impairment. The excess of estimated fair values over carrying value, including goodwill for each of our reporting units that had goodwill as of the 2018 annual impairment test were as follows:
As noted above, the fair value determined under step one of the goodwill impairment test completed in the fourth quarter of 2018 exceeded the carrying value for each reporting unit. Therefore, there was no impairment of goodwill. However, if the fair value decreases in future periods, the Company may fail step one of the goodwill impairment test and be required to perform step two. In performing step two, the fair value would have to be allocated to all of the assets and liabilities of the reporting unit. Therefore, any potential goodwill impairment charge would be dependent upon the estimated fair value of the reporting unit at that time and the outcome of step two of the impairment test. The fair values of the assets and liabilities of the reporting unit, including the intangible assets, could vary depending on various factors. The future occurrence of a potential indicator of impairment, such as a decrease in expected net earnings, adverse equity market conditions, a decline in current market multiples, a decline in our common stock price, a significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, unanticipated competition, strategic decisions made in response to economic or competitive conditions, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could require an interim assessment for some or all of the reporting units before the next required annual assessment. In the event of significant adverse changes of the nature described above, it may be necessary for us to recognize an additional non-cash impairment of goodwill, which could have a material adverse effect on our consolidated financial condition and results of operations. 2017 Annual Impairment Test Based on annual impairment tests performed in the prior year, there was no indication of goodwill impairment at the October 1, 2017 testing date. Other Intangible Assets Other identifiable intangible assets include patents, technology, license agreements, non-compete agreements and trademarks. Amounts assigned to these intangible assets have been determined by management. Management considered a number of factors in determining the allocations, including valuations and independent appraisals. Trademarks have indefinite lives and are reviewed for impairment on an annual basis. Other intangible assets, excluding trademarks, are being amortized over 1 to 16 years. The Company tests indefinite-lived intangible assets for impairment using a fair value approach, the relief-from-royalty method (a form of the income approach). At December 31, 2018, the Company's indefinite-lived intangible assets related to the trademarks acquired in the Power Solutions, Connectivity Solutions, Cinch and Fibreco acquisitions. The components of definite and indefinite-lived intangible assets are as follows:
Amortization expense was $6.4 million and $6.7 million in 2018 and 2017, respectively. Estimated amortization expense for intangible assets for the next five years is as follows:
2018 Annual Impairment Test The Company completed its annual indefinite-lived intangible assets impairment test during the fourth quarter of 2018, noting no impairment. Management has concluded that the fair value of these trademarks exceeded the related carrying values at December 31, 2018 and that there was no indication of impairment. |
FAIR VALUE MEASUREMENTS |
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Dec. 31, 2018 | |||
FAIR VALUE MEASUREMENTS [Abstract] | |||
FAIR VALUE MEASUREMENTS |
As of December 31, 2017, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of securities that are among the Company's investments in a rabbi trust which are intended to fund the Company's Supplemental Executive Retirement Plan ("SERP") obligations, and other marketable securities described below. The securities that are held in the rabbi trust are categorized as available-for-sale securities and are included as other assets in the accompanying consolidated balance sheets at December 31, 2017. The gross unrealized gains associated with the investments held in the rabbi trust were $0.2 million at December 31, 2017. Such unrealized gains are included, net of tax, in accumulated other comprehensive income. During 2018, the Company sold its securities and realized a gain on sale of $0.2 million. The proceeds of $1.3 million were reinvested in other securities within the rabbi trust. As of December 31, 2018 and 2017, our available-for-sale securities, which primarily consist of investments held in a rabbi trust of $1.4 million and $1.5 million, respectively, are measured at fair value using quoted prices in active markets for identical assets (Level 1) inputs. The Company does not have any financial assets measured at fair value on a recurring basis categorized as Level 3, and there were no transfers in or out of Level 1, Level 2 or Level 3 during 2018 or 2017. There were no changes to the Company's valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during 2018. There were no financial assets accounted for at fair value on a nonrecurring basis as of December 31, 2018 or 2017. The Company has other financial instruments, such as cash and cash equivalents, accounts receivable, restricted cash, accounts payable, accrued expenses and notes payable, which are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. The fair value of the Company's long-term debt is estimated using a discounted cash flow method based on interest rates that are currently available for debt issuances with similar terms and maturities. At December 31, 2018 and 2017, the estimated fair value of total debt was $117.9 million and $124.8 million, respectively, compared to a carrying amount of $114.2 million and $122.7 million, respectively. The Company did not have any other financial liabilities within the scope of the fair value disclosure requirements as of December 31, 2018 and 2017. Nonfinancial assets and liabilities, such as goodwill, indefinite-lived intangible assets and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment upon the occurrence of a triggering event or in the case of goodwill, on at least an annual basis. See Note 4, "Goodwill and Other Intangible Assets," for further information about goodwill and other indefinite-lived intangible assets. |
OTHER ASSETS |
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OTHER ASSETS [Abstract] | |||
OTHER ASSETS |
At December 31, 2018 and 2017, the Company has obligations of $18.7 million and $19.1 million, respectively, associated with its SERP. As a means of informally funding these obligations, the Company has invested in life insurance policies related to certain employees and marketable securities held in a rabbi trust. At December 31, 2018 and 2017, these assets had a combined value of $13.0 million and $14.0 million, respectively. Company-Owned Life Insurance Investments in company-owned life insurance policies ("COLI") were made with the intention of utilizing them as a long-term funding source for the Company's SERP obligations. However, the cash surrender value of the COLI does not represent a committed funding source for these obligations. Any proceeds from these policies are subject to claims from creditors. The cash surrender value of the COLI of $11.6 million and $12.3 million at December 31, 2018 and 2017, respectively, is included in other assets in the accompanying consolidated balance sheets. The volatility in global equity markets in recent years has also had an effect on the cash surrender value of the COLI policies. The Company recorded (expense) income to account for the (decrease) increase in cash surrender value in the amount of ($0.4) million and $1.3 million during the years ended December 31, 2018 and 2017, respectively. These fluctuations in the cash surrender value were allocated between cost of sales and selling, general and administrative expenses on the consolidated statements of operations for the years ended December 31, 2018 and 2017. The allocation is consistent with the costs associated with the long-term employee benefit obligations that the COLI is intended to fund. Other Investments At December 31, 2018 and 2017, the Company held, in the aforementioned rabbi trust, available-for-sale investments at a cost of $1.4 million and $1.3 million, respectively. Together with the COLI described above, these investments are intended to fund the Company's SERP obligations and are classified as other assets in the accompanying consolidated balance sheets. The Company monitors these investments for impairment on an ongoing basis. At December 31, 2018 and 2017, the fair market value of these investments was $1.4 million and $1.5 million, respectively. The gross unrealized gain of $0 and $0.2 million at December 31, 2018 and 2017, respectively, has been included, net of tax, in accumulated other comprehensive income (loss). |
INVENTORIES |
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INVENTORIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES |
The components of inventories are as follows:
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PROPERTY, PLANT AND EQUIPMENT, NET |
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PROPERTY, PLANT AND EQUIPMENT, NET [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, NET |
Property, plant and equipment, net consist of the following:
Depreciation expense for the years ended December 31, 2018 and 2017 was $11.8 million and $14.0 million, respectively. |
INCOME TAXES |
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INCOME TAXES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | 9. INCOME TAXES The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations by tax authorities for years before 2015 and for state examinations before 2012. Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2008 in Asia and generally 2010 in Europe. At December 31, 2018 and 2017, the Company has approximately $28.9 million and $30.4 million, respectively, of liabilities for uncertain tax positions ($1.4 million and $2.5 million, respectively, is included in other current liabilities on the consolidated balance sheets and $27.5 million and $27.9 million, respectively, is included in liability for uncertain tax positions on the consolidated balance sheets). These amounts, if recognized, would reduce the Company's effective tax rate. As of December 31, 2018, approximately $1.1 million of the Company's liabilities for uncertain tax positions are expected to be resolved during the next twelve months by way of expiration of the related statute of limitations. As a result of the expiration of the statutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized benefits for tax positions taken regarding previously filed tax returns may change materially from those recorded as liabilities for uncertain tax positions in the Company's consolidated financial statements at December 31, 2018. A total of $1.1 million of the liability for uncertain tax positions, of which $1.0 million related to the 2008 tax year is scheduled to expire on June 1, 2019. The remaining $0.1 million relates to the 2015 tax year and is scheduled to expire on September 15, 2019. A total of $2.5 million of the liability for uncertain tax positions expired during the year ended December 31, 2018, of which $1.1 million related to the 2006 tax year and $1.4 million related to the 2014 tax year. A reconciliation of the beginning and ending amount of the liability for uncertain tax positions, including the portion included in income taxes payable, is as follows:
The Company's policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes. During the years ended December 31, 2018 and 2017, the Company recognized $1.3 million and $0.9 million, respectively, in interest and penalties in the consolidated statements of operations. During the years ended December 31, 2018 and 2017, the Company recognized a benefit of $0.3 million and zero, respectively, for the reversal of such interest and penalties, relating to the expiration of statues of limitations and settlement of a liability for uncertain tax positions, respectively. The Company has approximately $3.8 million and $3.2 million accrued for the payment of interest and penalties at December 31, 2018 and 2017, respectively, which is included in both income taxes payable and liability for uncertain tax positions in the consolidated balance sheets. The Company's total earnings (loss) before provision (benefit) for income taxes included earnings (loss) from domestic operations of $0.3 million and ($2.0) million for 2018 and 2017, respectively, and earnings (loss) before provision (benefit) for income taxes from foreign operations of $23.3 million and $11.7 million for 2018 and 2017, respectively. The provision (benefit) for income taxes consists of the following:
A reconciliation of taxes on income computed at the U.S. federal statutory rate to amounts provided is as follows:
The Company holds an offshore business license from the government of Macao. With this license, a Macao offshore company named Bel Fuse (Macao Commercial Offshore) Limited has been established to handle the Company's sales to third-party customers in Asia. Sales by this company consist of products manufactured in the PRC. This company is not subject to Macao corporate profit taxes which are imposed at a tax rate of 12%. On September 21, 2018, the Executive Council of the Macao SAR Government proposed to abolish the existing Offshore Law. It is proposed that the existing law and the relevant regulations related to the offshore business will be abolished, and that the operating permit to carry on offshore business will be terminated on January 1, 2021. The Company is currently looking at other options for the Company's operations. Additionally, the Company established TRP International, a China Business Trust ("CBT"), when it acquired the TRP group, as previously discussed. Sales by the CBT consists of products manufactured in the PRC and sold to third-party customers inside and outside Asia. The CBT is not subject to PRC income taxes, which are generally imposed at a tax rate of 25%. As of December 31, 2018, the Company has gross foreign income tax net operating losses ("NOL") of $35.6 million, foreign tax credits of $0.3 million and capital loss carryforwards of $0.2 million which amount to a total of $8.2 million of deferred tax assets. The Company has established valuation allowances totaling $8.2 million against these deferred tax assets. In addition, the Company has gross federal and state income tax NOLs of $2.1 million, including $1.8 million of NOLs acquired from Array, which amount to $0.4 million of deferred tax assets and tax credit carryforwards of $1.5 million. The Company has established valuation allowances of $1.0 million against these deferred tax assets. The foreign NOL's can be carried forward indefinitely, the NOL acquired from Array expires at various times during 2026 – 2027, the state NOL's expire at various times during 2019 – 2032 and the tax credit carryforwards expire at various times during 2025 - 2034. The Company's intention is to repatriate certain amounts of cash from its China operations, which include its wholly owned PRC subsidiary, Dongguan Transpower Electric Products Co., Ltd, a Chinese Limited Liability Company, to the U.S. Applicable income and dividend withholding taxes of $0.4 million have been reflected in the accompanying consolidated statements of operations for the year ended December 31, 2018. During the fourth quarter of 2018, the Company completed the analysis of the impacts of the U.S. tax reform and recognized the tax consequences of all unremitted foreign earnings. At December 31, 2017, we had made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax in which we recognized a provisional amount of $18.1 million, which was included as a component of income tax expense from continuing operations. On the basis of revised earnings and profit computations that were completed during the year ended December 31, 2018, the Company recognized a measurement-period adjustment reducing the deemed repatriation tax by $2.6 million, resulting in the reduction of the Company's provisional estimate from $18.1 million to $15.5 million. After payments made during 2018, the remaining deemed repatriation taxes payable of $10.8 million is included in other current liabilities on the Company's consolidated balance sheet at December 31, 2018 due to an Internal Revenue Service notice received in December 2018. Except for the distribution noted above, management's intention is to permanently reinvest the remaining unremitted earnings of our foreign subsidiaries as of December 31, 2018. Due to the practicality of determining the deferred taxes on outside basis differences in our investments in our foreign subsidiaries, we have not provided for deferred taxes on outside basis differences and determined that these basis differences will be indefinitely reinvested. Components of deferred income tax assets are as follows:
The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes. |
DEBT |
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DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||
DEBT |
At December 31, 2018 and 2017, borrowings outstanding related to the respective term loans described below were $116.0 million and $125.0 million, respectively, with no borrowings outstanding under the applicable revolver at either date. The unused credit available under the applicable credit facility was $75.0 million at each of December 31, 2018 and December 31, 2017. At December 31, 2018 and 2017, the carrying value of the debt on the consolidated balance sheets is reflected net of $1.8 million and $2.3 million, respectively, of deferred financing costs. The interest rate in effect at December 31, 2018 was 4.31%, which consisted of LIBOR of 2.56% plus the Company's margin of 1.75%. The interest rate in effect at December 31, 2017 was 3.38%, which consisted of LIBOR of 1.63% plus the Company's margin of 1.75%. In connection with its outstanding borrowings and amortization of the deferred financing costs described below, the Company incurred $5.3 million and $6.8 million of interest expense during the years ended December 31, 2018 and 2017, respectively. 2014 Credit and Security Agreement On June 19, 2014, the Company entered into a senior Credit and Security Agreement with KeyBank National Association ("KeyBank"), as administrative agent and lender, which was amended on June 30, 2014 principally to add a syndicate of additional lenders (as so amended, the "2014 CSA"). The 2014 CSA consisted of (i) a $50 million revolving credit facility ("Revolver"), (ii) a $145 million term loan facility ("Term Loan") and (iii) a $70 million delayed draw term loan ("DDTL"). The maturity date of the 2014 CSA was June 18, 2019. The Company recorded $5.8 million of deferred financing costs associated with the 2014 CSA, to be amortized through interest expense over the 5-year term of the agreement. 2016 Amendment In March 2016, the Company amended the terms of the 2014 CSA to modify (i) the date by which the Company was obligated to make excess cash flow prepayments in 2016 on account of excess cash flow achieved for fiscal year 2015, (ii) the method of application of mandatory and voluntary prepayments related to the Company's loans, and (iii) the maximum Leverage Ratio of the Company allowed under the 2014 CSA for the period from the effective date of the amendment through September 2016. In connection with this amendment to the 2014 CSA, the Company paid $0.7 million of deferred financing costs, and the modification to the amortization schedule resulted in $0.5 million of existing deferred financing costs to be accelerated and recorded as interest expense during the first quarter of 2016. 2017 Amendment and Refinancing On December 11, 2017, the Company refinanced the borrowings under the 2014 CSA and further amended its terms as follows: (i) extended the maturity date to December 11, 2022, (ii) revised the amount of the Term Loan to $125.0 million, (iii) increased the amount available under the Revolver to $75.0 million, (iv) reduced mandatory amortization payments over the first four years of the new 5-year term; and (v) reduced the pricing grid related to interest expense, among other items (the "2017 CSA"). Concurrent with its entry into the 2017 CSA, the Company's outstanding balances due under the DDTL and Revolver were paid in full. In connection with 2017 CSA and related refinancing, the Company paid $1.8 million of deferred financing costs. Due to the magnitude of the modifications to the 2014 CSA, including a reduction in the number of lenders within the syndicate, this modification was deemed an extinguishment of the balances outstanding related to the Term Loan and DDTL that originated under the 2014 CSA. As a result, $1.0 million of existing deferred financing costs were accelerated and recorded as interest expense during the fourth quarter of 2017. Under the terms of the 2017 CSA, the Company is entitled, subject to the satisfaction of certain conditions, to request additional commitments under the revolving credit facility or term loans in the aggregate principal amount of up to $75 million to the extent that existing or new lenders agree to provide such additional commitments and/or term loans. The obligations of the Company under the 2017 CSA are guaranteed by certain of the Company's material U.S. subsidiaries (together with the Company, the "Loan Parties") and are secured by a first priority security interest in substantially all of the existing and future personal property of the Loan Parties, certain material real property of the Loan Parties and certain of the Loan Parties' material U.S. subsidiaries, including 65% of the voting capital stock of certain of the Loan Parties' direct foreign subsidiaries. The borrowings under the 2017 CSA bear interest at a rate equal to, at the Company's option, either (1) LIBOR, plus a margin ranging from 1.375% per annum to 2.75% per annum depending on the Company's leverage ratio, or (2)(a) an "Alternate Base Rate," which is the highest of (i) the federal funds rate plus 0.50%, (ii) KeyBank's prime rate and (iii) the LIBOR rate with a maturity of one month plus 1.00%, plus (b) a margin ranging from 0.375% per annum to 1.75% per annum, depending on the Company's leverage ratio. The 2017 CSA contains customary representations and warranties, covenants and events of default and financial covenants that measure (i) the ratio of the Company's total funded indebtedness, on a consolidated basis, to the amount of the Company's consolidated EBITDA, as defined, ("Leverage Ratio") and (ii) the ratio of the amount of the Company's consolidated EBITDA to the Company's consolidated fixed charges ("Fixed Charge Coverage Ratio"). If an event of default occurs, the lenders under the CSA would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor. At December 31, 2018, the Company was in compliance with its debt covenants, including its most restrictive covenant, the Fixed Charge Coverage Ratio. Scheduled principal payments of the total debt outstanding at December 31, 2018 are as follows (in thousands):
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ACCRUED EXPENSES |
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ACCRUED EXPENSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES | 11. ACCRUED EXPENSES Accrued expenses consist of the following:
The change in warranty accrual during 2018 primarily related to repair costs incurred and adjustments to pre-existing warranties. There were no new material warranty charges incurred during 2018. |
SEGMENTS |
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SEGMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS | 12. SEGMENTS The Company operates in one industry with three reportable operating segments, which are geographic in nature. The segments consist of North America, Asia and Europe. The primary criteria by which financial performance is evaluated and resources are allocated are net sales and income from operations. The following is a summary of key financial data:
Net Sales – Segment net sales are attributed to individual segments based on the geographic source of the billing for such customer sales. Intercompany sales include finished products manufactured in foreign countries which are then transferred to the United States and Europe for sale; finished goods manufactured in the United States which are transferred to Europe and Asia for sale; and semi-finished components manufactured in the United States which are sold to Asia for further processing. Income from operations represents net sales less operating costs and expenses and does not include any amounts related to intercompany transactions. The following items are included in the segment data presented above: Entity-Wide Information The following is a summary of entity-wide information related to the Company's net sales to external customers by geographic area and by major product line.
The following is a summary of long-lived assets by geographic area as of December 31, 2018 and 2017:
Long-lived assets consist of property, plant and equipment, net and other assets of the Company that are identified with the operations of each geographic area. The territory of Hong Kong became a Special Administrative Region ("SAR") of the PRC in the middle of 1997. The territory of Macao became a SAR of the PRC at the end of 1999. Management cannot presently predict what future impact this will have on the Company, if any, or how the political climate in the PRC will affect the Company's contractual arrangements in the PRC. A significant portion of the Company's manufacturing operations and approximately 41.3% of its identifiable assets are located in Asia. Net Sales to Major Customers The Company had net sales to one customer in excess of ten percent of consolidated net sales in each of 2018 and 2017. The net sales associated with this customer was $67.7 million in 2018 (12.3% of sales) and $57.7 million in 2017 (11.7% of sales). Net sales related to this significant customer were primarily reflected in the Asia operating segment during each of the two years discussed. |
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RETIREMENT FUND AND PROFIT SHARING PLAN [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT FUND AND PROFIT SHARING PLAN | 13. RETIREMENT FUND AND PROFIT SHARING PLAN The Company maintains the Bel Fuse Inc. Employees' Savings Plan, a defined contribution plan that is intended to meet the applicable requirements for tax-qualification under sections 401(a) and (k) of the Internal Revenue Code of 1986, as amended (the "Code"). The Employees' Savings Plan allows eligible employees to voluntarily contribute a percentage of their eligible compensation, subject to Code limitations, which contributions are matched by the Company in an amount equal to 100% of the first 1% of compensation contributed by participants, and 50% of the next 5% of compensation contributed by participants. The Company's matching contribution is made in the form of Bel Fuse Inc. Class A common stock. Prior to January 1, 2012, the Company's matching and profit sharing contributions were made in the form of shares of Bel Fuse Inc. Class A and Class B common stock. The expense for the years ended December 31, 2018 and 2017 amounted to $1.3 million and $1.2 million, respectively. As of December 31, 2018, the plan owned 114,839 and 127,733 shares of Bel Fuse Inc. Class A and Class B common stock, respectively. The Company's subsidiaries in Asia have a retirement fund covering substantially all of their Hong Kong based full-time employees. Eligible employees contribute up to 5% of salary to the fund. In addition, the Company must contribute a minimum of 5% of eligible salary, as determined by Hong Kong government regulations. The Company currently contributes 7% of eligible salary in cash or Company stock. The expense for the years ended December 31, 2018 and 2017 amounted to approximately $0.3 million in each year. As of December 31, 2018, the plan owned 3,323 and 17,342 shares of Bel Fuse Inc. Class A and Class B common stock, respectively. The Company maintains a SERP, which is designed to provide a limited group of key management and other key employees of the Company with supplemental retirement and death benefits. Participants in the SERP are selected by the Compensation Committee of the Board of Directors. The SERP initially became effective in 2002 and was amended and restated in April 2007 to conform with applicable requirements of Section 409A of the Internal Revenue Code and to modify the provisions regarding benefits payable in connection with a change in control of the Company. The Plan is unfunded. Benefits under the SERP are payable from the general assets of the Company, but the Company has established a rabbi trust which includes certain life insurance policies in effect on participants as well as other investments to partially cover the Company's obligations under the Plan. See Note 6, "Other Assets," for further information on these assets. The benefits available under the SERP vary according to when and how the participant terminates employment with the Company. If a participant retires (with the prior written consent of the Company) on his normal retirement date (65 years old, 20 years of service, and 5 years of Plan participation), his normal retirement benefit under the Plan would be annual payments equal to 40% of his average base compensation (calculated using compensation from the highest five consecutive calendar years of Plan participation), payable in monthly installments for the remainder of his life. If a participant retires early from the Company (55 years old, 20 years of service, and five years of Plan participation), his early retirement benefit under the Plan would be an amount (i) calculated as if his early retirement date were in fact his normal retirement date, (ii) multiplied by a fraction, with the numerator being the actual years of service the participant has with the Company and the denominator being the years of service the participant would have had if he had retired at age 65, and (iii) actuarially reduced to reflect the early retirement date. If a participant dies prior to receiving 120 monthly payments under the Plan, his beneficiary would be entitled to continue receiving benefits for the shorter of (i) the time necessary to complete 120 monthly payments or (ii) 60 months. If a participant dies while employed by the Company, his beneficiary would receive, as a survivor benefit, an annual amount equal to (i) 100% of the participant's annual base salary at date of death for one year, and (ii) 50% of the participant's annual base salary at date of death for each of the following four years, each payable in monthly installments. The Plan also provides for disability benefits, and a forfeiture of benefits if a participant terminates employment for reasons other than those contemplated under the Plan. The expense related to the Plan for the years ended December 31, 2018 and 2017 amounted to $1.8 million and $1.7 million, respectively. Net Periodic Benefit Cost The net periodic benefit cost related to the SERP consisted of the following components during the years ended December 31, 2018 and 2017:
The service cost component of net benefit cost is presented within cost of sales or selling, general and administrative expense on the accompanying statements of operations, in accordance with where compensation cost for the related associate is reported. All other components of net benefit cost, including interest cost and net amortization noted above, are presented within other income/expense, net in the accompanying statements of operations. Obligations and Funded Status Summarized information about the changes in plan assets and benefit obligation, the funded status and the amounts recorded at December 31, 2018 and 2017 are as follows:
The Company has recorded the 2018 and 2017 underfunded status as a long-term liability on the consolidated balance sheets. The accumulated benefit obligation for the SERP was $16.5 million as of December 31, 2018 and $16.1 million as of December 31, 2017. The aforementioned company-owned life insurance policies and marketable securities held in a rabbi trust had a combined value of $13.0 million and $14.0 million at December 31, 2018 and 2017, respectively. See Note 6, "Other Assets," for additional information on these investments. The estimated net loss and prior service cost for the SERP that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $0.2 million. The Company expects to make contributions of $0.3 million to the SERP in 2019. The Company had no net transition assets or obligations recognized as an adjustment to other comprehensive income and does not anticipate any plan assets being returned to the Company during 2019, as the plan has no assets. The following benefit payments, which reflect expected future service, are expected to be paid:
The following gross amounts are recognized net of tax in accumulated other comprehensive loss:
Actuarial Assumptions The weighted average assumptions used in determining the periodic net cost and benefit obligation information related to the SERP are as follows:
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SHARE-BASED COMPENSATION |
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SHARE-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION | 14. SHARE-BASED COMPENSATION The Company has an equity compensation program (the "Program") which provides for the granting of "Incentive Stock Options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options and restricted stock awards. The Company believes that such awards better align the interest of its employees with those of its shareholders. The 2011 Equity Compensation Plan provides for the issuance of 1.4 million shares of the Company's Class B common stock. At December 31, 2018, 359,100 shares remained available for future issuance under the 2011 Equity Compensation Plan. The Company records compensation expense in its consolidated statements of operations related to employee stock-based options and awards. The aggregate pretax compensation cost recognized for stock-based compensation amounted to approximately $2.8 million and $3.0 million for 2018 and 2017, respectively, and related solely to restricted stock awards. The Company did not use any cash to settle any equity instruments granted under share-based arrangements during 2018 and 2017. At December 31, 2018 and 2017, the only instruments issued and outstanding under the Program related to restricted stock awards. Restricted Stock Awards The Company provides common stock awards to certain officers and key employees. The Company grants these awards, at its discretion, from the shares available under the Program. Unless otherwise provided at the date of grant or unless subsequently accelerated, the shares awarded are typically earned in 25% increments on the second, third, fourth and fifth anniversaries of the award and are distributed provided the employee has remained employed by the Company through such anniversary dates; otherwise the unearned shares are forfeited. The market value of these shares at the date of award is recorded as compensation expense on the straight-line method over the applicable vesting period from the respective award dates, as adjusted for forfeitures of unvested awards. During 2018 and 2017, the Company issued 262,000 shares and 46,400 shares of the Company's Class B common stock, respectively, under a restricted stock plan to various officers and employees. A summary of the restricted stock activity under the Program for the year ended December 31, 2018 is presented below:
As of December 31, 2018, there was $8.7 million of total pretax unrecognized compensation cost included within additional paid-in capital related to non-vested stock based compensation arrangements granted under the restricted stock award plan. That cost is expected to be recognized over a period of 3.8 years. This expense is recorded in cost of sales and SG&A expense based upon the employment classification of the award recipients. The Company's policy is to issue new shares to satisfy restricted stock awards. Currently the Company believes that substantially all restricted stock awards will vest. |
COMMON STOCK |
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COMMON STOCK [Abstract] | |
COMMON STOCK | 15. COMMON STOCK As of December 31, 2018, according to regulatory filings, there was one shareholder of the Company's common stock (other than shareholders subject to specific exceptions) with ownership in excess of 10% of Class A outstanding shares with no ownership of the Company's Class B common stock. In accordance with the Company's certificate of incorporation, the Class B Protection clause is triggered if a shareholder owns 10% or more of the outstanding Class A common stock and does not own an equal or greater percentage of all then outstanding shares of both Class A and Class B common stock (all of which common stock must have been acquired after the date of the 1998 recapitalization). In such a circumstance, such shareholder must, within 90 days of the trigger date, purchase Class B common shares, in an amount and at a price determined in accordance with a formula described in the Company's certificate of incorporation, or forfeit its right to vote its Class A common shares. As of December 31, 2018, to the Company's knowledge, this shareholder had not purchased any Class B shares to comply with these requirements. In order to vote its shares at Bel's next shareholders' meeting, this shareholder must either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until its Class A holdings are under 10%. As of December 31, 2018, to the Company's knowledge, this shareholder owned 23.6% of the Company's Class A common stock in the aggregate and had not taken steps to either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until its Class A holdings fall below 10%. Unless and until this situation is satisfied in a manner permitted by the Company's Restated Certificate of Incorporation, the subject shareholder will not be permitted to vote its shares of common stock. Throughout 2018 and 2017, the Company declared cash dividends on a quarterly basis at a rate of $0.06 per Class A share of common stock and $0.07 per Class B share of common stock. The Company declared and paid cash dividends totaling $3.3 million in each of 2018 and 2017. There are no contractual restrictions on the Company's ability to pay dividends, provided that the Company is not in default under its credit agreements immediately before such payment and after giving effect to such payment. |
COMMITMENTS AND CONTINGENCIES |
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COMMITMENTS AND CONTINGENCIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES Leases The Company leases various facilities under operating leases expiring through May 2027. Some of these leases require the Company to pay certain executory costs (such as insurance and maintenance). Future minimum lease payments for operating leases are approximately as follows:
Rental expense for all leases was approximately $8.0 million and $8.2 million for the years ended December 31, 2018 and 2017, respectively. Other Commitments The Company submits purchase orders for raw materials to various vendors throughout the year for current production requirements, as well as forecasted requirements. Certain of these purchase orders relate to special purpose material and, as such, the Company may incur penalties if an order is cancelled. The Company had outstanding purchase orders related to raw materials in the amount of $58.9 million and $45.4 million at December 31, 2018 and December 31, 2017, respectively. The Company also had outstanding purchase orders related to capital expenditures in the amount of $5.2 million and $3.0 million at December 31, 2018 and December 31, 2017, respectively. Legal Proceedings The Company is party to a number of legal actions and claims, none of which individually or in the aggregate, in the opinion of management, are expected to have a material adverse effect on the Company's consolidated results of operations or financial position. In connection with the acquisition of Power Solutions, there is an ongoing claim by the Arezzo Revenue Agency in Italy concerning certain tax matters related to what was then Power-One Asia Pacific Electronics Shenzhen Co. Ltd. (now Bel Power Solutions Asia Pacific Electronics Shenzhen Co. Ltd, or "BPS China") for the years 2004 to 2006. In September 2012, the Tax Court of Arezzo ruled in favor of BPS China and cancelled the claim. In February 2013, the Arezzo Revenue Agency filed an appeal of the Tax Court's ruling. The hearing of the appeal was held on October 2, 2014. On October 13, 2014, BPS China was informed of the Regional Tax Commission of Florence ruling which was in favor of the Arezzo Revenue Agency and against BPS China. An appeal was filed on July 18, 2015 before the Regional Tax Commission of Florence and rejected. On December 5, 2016, the Arezzo Revenue Agency filed an appeal with the Supreme Court and BPS China filed a counter-appeal on January 4, 2017. The Supreme Court has yet to render its judgment. The estimated liability related to this matter is approximately $12.0 million and has been included as a liability for uncertain tax positions on the accompanying consolidated balance sheets. As Bel is fully indemnified in this matter per the terms of the stock purchase agreement with ABB, a corresponding other asset for indemnification is also included in other assets on the accompanying consolidated balance sheets at December 31, 2018 and December 31, 2017. In 2015, the Company was provided notice of a potential patent infringement claim by Setec Netzwerke AG ("Setec"), a German company for the alleged infringement of their patent EP 306 934 B1. Setec subsequently filed a lawsuit against the Company and three of its subsidiaries in the Regional Court of Dusseldorf, Germany on January 29, 2016 for patent infringement. The Company filed its defense to Setec's Complaint and a nullity lawsuit against Setec's patent on August 31 2016. The Court hearing on infringement took place on March 23, 2017. Upon hearing argument from both parties, the Court issued a decision on April 6, 2017 staying final judgment in the infringement case pending resolution of the nullity lawsuit in the Federal Patents Courts in Munich, Germany. The Federal Patents Courts issued its preliminary opinion regarding the patent-in-suit on March 29, 2018, stating that it considers the patent-in-suit to not be novel over the prior art documents presented in the case. The parties agreed to withdraw from the pending infringement and nullity proceedings and entered into a settlement agreement on June 29, 2018. The Company paid Setec 75,000 Euro in exchange for a perpetual, worldwide royalty-free license to the patent-in-suit and all its counterparts. In 2015, one of the Company's subsidiaries in the PRC, Dongguan Transpower Electric Products Co., Ltd. ("Dongguan Transpower"), was provided notice of a claim by DG Yu Shing Industrial Development Company Limited against Dongguan Transpower and three other defendants for past due construction costs of approximately $3.2 million. In April 2018, the 3rd People Court of Dongguan ruled and provided an unfavorable judgment against Dongguan Transpower and two of the other defendants requiring payment of the aforementioned amount. The defendants were held to be jointly and severally liable for approximately $3.2 million in costs. Due to the fact that none of the other defendants had sufficient funds to pay the damages amount, the Court ordered the entire amount (CNY 20,133,174) to be paid by Dongguan Transpower. On May 25, 2018, the Court enforced its order and withdrew the damages amount from Dongguan Transpower's bank accounts. On May 31, 2018, Dongguan Transpower filed an action against the other defendants in CP Court to recoup the damages amount paid pursuant to an indemnification letter dated October 16, 2015. The Court heard arguments on July 2, 2018 and rendered a verdict on July 9, 2018 ordering the Jinmei entities (defendants) to pay CNY 20,133,174 back to Dongguan Transpower together with the incurred interest. On August 27, 2018, Dongguan Transpower received payment of CNY 20,430,203 (approximately $3.2 million) from the defendants and this case was closed. On June 1, 2018, the Company filed an action against Unipower, LLC in the United States District Court for the Southern District of New York for breach of contract. Specifically, the Company alleges in its Complaint that Unipower has willfully violated the Master Services Agreement ("MSA") entered into by the parties on January 23, 2015 by failing to make payment for the products it contracted for under the MSA. The parties entered into a settlement agreement on December 17, 2018 resolving all outstanding claims and a Stipulation of Dismissal was filed and entered on January 10, 2019. The Company is not a party to any other legal proceeding, the adverse outcome of which is likely to have a material adverse effect on the Company's consolidated financial condition or results of operations. |
ACCUMULATED OTHER COMPREHENSIVE LOSS |
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ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | 17. ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive loss as of December 31, 2018 and 2017 are summarized below:
Changes in accumulated other comprehensive (loss) income by component during the years ended December 31, 2018 and 2017 are as follows. All amounts are net of tax.
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RELATED PARTY TRANSACTIONS |
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RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONS In connection with its acquisition of Power Solutions, the Company acquired a 49% interest in a joint venture in the People's Republic of China ("PRC"). The joint venture purchased raw components and other goods from the Company and sold finished goods to the Company as well as to other third parties. The Company did not purchase any inventory from the joint venture during 2017. During the fourth quarter of 2017, the Company divested its 49% interest in the joint venture in exchange for an extinguishment of an accounts payable balance of $0.5 million. As the interest in the joint venture had a carrying value of zero, a $0.5 million gain was recorded within cost of sales during 2017 related to this divestiture. |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
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Use of Estimates | Use of Estimates - The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including but not limited to those related to product returns, provisions for bad debt, inventories, goodwill, intangible assets, investments, Supplemental Executive Retirement Plan ("SERP") expense, income taxes, contingencies, litigation and the impact related to tax reform. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
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Cash Equivalents | Cash Equivalents - Cash equivalents include short-term investments in money market funds and certificates of deposit with an original maturity of three months or less when purchased. Accounts at each institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. Some of our balances are in excess of the FDIC insured limit. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts - We maintain an allowance for doubtful accounts for estimated losses from the inability of our customers to make required payments. We determine our allowance by both specific identification of customer accounts where appropriate and the application of historical loss experience to non-specific accounts. |
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Effects of Foreign Currency | Effects of Foreign Currency – In non-U.S. locations that are not considered highly inflationary, we translate the balance sheets at the end of period exchange rates with translation adjustments accumulated within stockholders' equity on our consolidated balance sheets. We translate the statements of operations at the average exchange rates during the applicable period. In connection with foreign currency denominated transactions, including multi-currency intercompany payable and receivable transactions and loans, the Company incurred net realized and unrealized currency exchange gains (losses) of $2.7 million and ($2.8) million for the years ended December 31, 2018 and 2017, respectively, which were included in SG&A expenses on the consolidated statements of operations. |
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Concentration of Credit Risk | Concentration of Credit Risk - Financial instruments which potentially subject us to concentrations of credit risk consist principally of accounts receivable and temporary cash investments. We grant credit to customers that are primarily original equipment manufacturers and to subcontractors of original equipment manufacturers based on an evaluation of the customer's financial condition, without requiring collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. We control our exposure to credit risk through credit approvals, credit limits and monitoring procedures and establish allowances for anticipated losses. See Note 12, "Segments," for disclosures regarding significant customers. We place temporary cash investments with quality financial institutions and commercial issuers of short-term paper and, by policy, limit the amount of credit exposure in any one financial instrument. |
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Inventories | Inventories - Inventories are stated at the lower of weighted-average cost or market. Costs related to inventories include raw materials, direct labor and manufacturing overhead which are included in cost of sales on the consolidated statements of operations. The Company utilizes the average cost method in determining amounts to be removed from inventory. |
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Revenue Recognition | Revenue Recognition – On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under ASC 605. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the transfer of control of the Company's goods and services and provides financial statement readers with enhanced disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of sales. |
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Product Warranties | Product Warranties – Warranties vary by product line and are competitive for the markets in which the Company operates. Warranties generally extend for one to three years from the date of sale, providing customers with assurance that the related product will function as intended. The Company reviews its warranty liability quarterly based on an analysis of actual expenses and failure rates accompanied with estimated future costs and projected failure rate trends. Factors taken into consideration when evaluating our warranty reserve are (i) historical claims for each product, (ii) volume increases, (iii) life of warranty, (iv) historical warranty repair costs and (v) other factors. To the extent that actual experience differs from our estimate, the provision for product warranties will be adjusted in future periods. Actual warranty repair costs are charged against the reserve balance as incurred. See Note 11, "Accrued Expenses." |
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Product Returns | Product Returns – We estimate product returns, including product exchanges under warranty, based on historical experience. In general, the Company is not contractually obligated to accept returns except for defective product or in instances where the product does not meet the Company's product specifications. However, the Company may permit its customers to return product for other reasons. In certain instances, the Company would generally require a significant cancellation penalty payment by the customer. The Company estimates such returns, where applicable, based upon management's evaluation of historical experience, market acceptance of products produced and known negotiations with customers. Such estimates are deducted from sales and provided for at the time revenue is recognized. Distribution customers often receive what is referred to as "ship and debit" arrangements, whereby Bel will invoice them at an agreed upon unit price upon shipment of product and a price reduction may be granted if the market price of the product declines after shipment. Distributors may also be entitled to special pricing discount credits, and certain customers are entitled to return allowances based on previous sales volumes. Bel deducts estimates for anticipated credits, refunds and returns from sales each quarter based on historical experience. |
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Goodwill and Identifiable Intangible Assets | Goodwill and Identifiable Intangible Assets – Goodwill represents the excess of the aggregate of the following (1) consideration transferred, (2) the fair value of any noncontrolling interest in the acquiree and, (3) if the business combination is achieved in stages, the acquisition-date fair value of our previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Identifiable intangible assets consist primarily of patents, licenses, trademarks, trade names, customer lists and relationships, non-compete agreements and technology based intangibles and other contractual agreements. We amortize finite lived identifiable intangible assets over the shorter of their stated or statutory duration or their estimated useful lives, ranging from 1 to 16 years, on a straight-line basis to their estimated residual values and periodically review them for impairment. Total identifiable intangible assets comprise 14.1% and 16.1% in 2018 and 2017, respectively, of our consolidated total assets. We use the acquisition method of accounting for all business combinations and do not amortize goodwill or intangible assets with indefinite useful lives. Goodwill and intangible assets with indefinite useful lives are tested for possible impairment annually during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. |
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Impairment and Disposal of Long-Lived Assets | Impairment and Disposal of Long-Lived Assets – For definite-lived intangible assets, such as customer relationships, contracts, intellectual property, and for other long-lived assets, such as property, plant and equipment, whenever impairment indicators are present, we perform a review for impairment. We calculate the undiscounted value of the projected cash flows associated with the asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over the fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate. For indefinite-lived intangible assets, such as trademarks and trade names, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over the fair value, if any. In addition, in all cases of an impairment review we re-evaluate whether continuing to characterize the asset as indefinite-lived is appropriate. See Note 4, "Goodwill and Other Intangible Assets," for additional details. |
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Depreciation | Depreciation - Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated primarily using the straight-line method over the estimated useful life of the asset. The estimated useful lives primarily range from 2 to 33 years for buildings and leasehold improvements, and from 3 to 15 years for machinery and equipment. |
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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 consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities 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. See Note 9, "Income Taxes". We record net deferred tax assets to the extent we believe these assets will more-likely-than-not be realized. In making such 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 recent financial operations. We have established valuation allowances for deferred tax assets that are not likely to be realized. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of our net recorded amount, we would adjust the valuation allowance, which would reduce the provision for income taxes. We establish reserves for tax contingencies when, despite the belief that our tax return positions are fully supported, it is probable that certain positions may be challenged and may not be fully sustained. The tax contingency reserves are analyzed on a quarterly basis and adjusted based upon changes in facts and circumstances, such as the conclusion of federal and state audits, expiration of the statute of limitations for the assessment of tax, case law and emerging legislation. Our effective tax rate includes the effect of tax contingency reserves and changes to the reserves as considered appropriate by management. |
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Earnings per Share | Earnings per Share – We utilize the two-class method to report our earnings per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and participation rights in undistributed earnings. The Company's Certificate of Incorporation, as amended, states that Class B common shares are entitled to dividends at least 5% greater than dividends paid to Class A common shares, resulting in the two-class method of computing earnings per share. In computing earnings per share, the Company has allocated dividends declared to Class A and Class B based on amounts actually declared for each class of stock and 5% more of the undistributed earnings have been allocated to Class B shares than to the Class A shares on a per share basis. Basic earnings per common share are computed by dividing net earnings by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share, for each class of common stock, are computed by dividing net earnings by the weighted-average number of common shares and potential common shares outstanding during the period. There were no potential common shares outstanding during the years ended December 31, 2018 and 2017 which would have had a dilutive effect on earnings per share. The earnings and weighted average shares outstanding used in the computation of basic and diluted earnings per share are as follows:
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Research and Development ("R&D") | Research and Development ("R&D") - Our engineering groups are strategically located around the world to facilitate communication with and access to customers' engineering personnel. This collaborative approach enables partnerships with customers for technical development efforts. On occasion, we execute non-disclosure agreements with our customers to help develop proprietary, next generation products destined for rapid deployment. R&D costs are expensed as incurred, and are included in cost of sales on the consolidated statements of operations. Generally, R&D is performed internally for the benefit of the Company. R&D costs include salaries, building maintenance and utilities, rents, materials, administration costs and miscellaneous other items. R&D expenses for the years ended December 31, 2018 and 2017 amounted to $29.4 million and $28.8 million, respectively. |
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Fair Value Measurements | Fair Value Measurements - We utilize the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. We classify our fair value measurements based on the lowest level of input included in the established three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows: Level 1 - Observable inputs such as quoted market prices in active markets Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions For financial instruments such as cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amount approximates fair value because of the short maturities of such instruments. See Note 5, "Fair Value Measurements," for additional disclosures related to fair value measurements. |
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Recently Adopted Accounting Standards | Recently Issued Accounting Standards Recently Adopted Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. Subsequently, the FASB issued several other updates related to revenue recognition (collectively with ASU 2014-09, the "new revenue standards" or "ASC 606"). We adopted the guidance under the new revenue standards effective January 1, 2018 using the modified retrospective approach by recognizing the cumulative effect of initially applying the new standard as an increase to the opening balance of retained earnings. Upon adoption, the new revenue standards replaced most existing revenue recognition guidance in U.S. GAAP. Based on our review of representative samples of contracts and other forms of agreements with customers globally and our evaluation of the provisions under the five-step model specified by the new revenue standards, the Company has implemented changes with respect to timing of revenue recognition primarily related to arrangements for which the customer takes the Company's products from a facility holding consignment inventory. In connection with the modified retrospective application of the new revenue standards, we recorded an adjustment to increase retained earnings of $3.4 million upon the January 1, 2018 adoption date. Apart from this adjustment and the inclusion of additional required disclosures in Note 3, the adoption of the new revenue standards did not have a material impact on the Company's consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new guidance, entities will be required to measure certain equity investments at fair value and recognize any changes in fair value in net earnings, unless the investments qualify for the new practicability exception. The new standard was effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017. We adopted this guidance on January 1, 2018. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This guidance addresses diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This accounting guidance was effective for annual reporting periods beginning after December 31, 2017, including interim reporting periods within those annual reporting periods, and should be applied retrospectively to all periods presented. This guidance was adopted by the Company effective January 1, 2018 and it did not have any impact on the Company's consolidated statement of cash flows in the periods presented. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. Prior U.S. GAAP prohibited the recognition of current and deferred income taxes for intra-entity asset transfer until the asset has been sold to an outside party. The new guidance eliminates the exception and requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This accounting guidance was effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. This guidance was adopted by the Company effective January 1, 2018 and it did not have a material impact on the Company's consolidated financial position or results of operations. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"), to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU 2017-01 provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. The Company adopted ASU 2017-01 on January 1, 2018, and the guidance will be applied on a prospective basis. In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). This guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. ASU 2017-07 requires employers to present the service cost component of the net periodic benefit cost in the same income statement line as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service costs and actuarial gains/losses, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. The guidance also specifies that the amount of costs that can be capitalized will be limited to service cost only. The Company adopted the guidance of ASU 2017-07 on January 1, 2018 and elected to apply the practical expedient and use the amounts disclosed in Note 13 to the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 as the basis for applying the retrospective application required by the standard. The amounts reclassified within the statement of operations for the year ended December 31, 2017 were not material. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). This update provides guidance about which changes to the terms or conditions of a share-based payment require an entity to apply modification accounting in Topic 718. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company adopted ASU 2017-09 on January 1, 2018, and the guidance within this update will be applied to any future award modifications. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to simplify the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. Under the new guidance, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit on the statements of operations. Under prior GAAP, excess tax benefits were recognized in additional paid-in capital while tax deficiencies were recognized either as an offset to accumulated excess tax benefits, if any, or on the statements of operations. The Company adopted this guidance effective January 1, 2017. Certain provisions required retrospective/modified retrospective transition while others were applied prospectively. In accordance with this guidance, the Company reclassified $1.7 million of cumulative excess tax benefits from additional paid-in capital to retained earnings within the equity section of the consolidated balance sheet as of January 1, 2017. The Company has elected to continue its method of estimating forfeitures in determining its stock-based compensation expense throughout the year. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which requires entities to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The update is effective for fiscal years beginning after December 15, 2016, and interim periods therein. We adopted this guidance on January 1, 2017. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Accounting Standards Issued But Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"), to provide a new comprehensive model for lease accounting. Under this guidance, lessees and lessors should apply a "right-of-use" model in accounting for all leases (including subleases) and eliminate the concept of operating leases and off-balance sheet leases. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. This guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The Company will adopt ASU 2016-02 effective January 1, 2019 using the modified retrospective approach. In connection with the adoption, we will elect to utilize the Comparatives Under 840 Option whereby the Company will continue to present prior period financial statements and disclosures under ASC 840. In addition, we will elect the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification and initial direct costs. Further, we will elect a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. We are finalizing the necessary changes to our accounting policies, processes, disclosures and internal control over financial reporting, and have implemented a new lease system to facilitate the requirements of the new standard. Adoption of the new standard is expected to result in the recording of right-of-use assets and lease liabilities related to our operating leases, each in an amount ranging from $18-$22 million, on our consolidated balance sheet as of January 1, 2019. The difference between the lease assets and lease liabilities, which is expected to be immaterial, will be recorded as an adjustment to retained earnings. The standard is not expected to materially affect the Company's consolidated net earnings or have any impact on cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is required to adopt ASU 2017-04 for its annual or any interim goodwill impairment tests for annual periods beginning after December 15, 2019, and the guidance is to be applied on a prospective basis. In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act, which was enacted on December 22, 2017. This guidance is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the U.S. Tax Cuts and Jobs Act is recognized. Early adoption is permitted. We are currently in the process of evaluating this new standard update. In May 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. This guidance will better align the treatment of share-based payments to nonemployees with the requirements for such share-based payments granted to employees. This guidance is effective for all public entities for fiscal years beginning after December 15, 2018, including interim periods within that year. We are currently in the process of evaluating this new standard update. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions. In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"). This guidance removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. The standard is effective for fiscal years ending after December 15, 2020. The amendments in ASU 2018-14 would need to be applied on a retrospective basis. We are currently assessing the impact the new guidance will have on our disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Cost. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company is currently evaluating the impacts that adoption of this ASU will have on its consolidated financial statements. |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings and Weighted Average Shares Outstanding used in Computation of Basic and Diluted Earnings Per Share | The earnings and weighted average shares outstanding used in the computation of basic and diluted earnings per share are as follows:
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ACQUISITION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Consideration Transferred and Identifiable Net Assets Acquired |
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REVENUE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table provides information about disaggregated revenue by product group and sales channel, and includes a reconciliation of the disaggregated revenue to our reportable segments:
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Cumulative Effect of Changes Made to Consolidated Balance Sheet | The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 were as follows:
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Impact of Adoption of Balance Sheet and Consolidated Statement of Operations | In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our balance sheet as of December 31, 2018 and consolidated statement of operations for the year ended December 31, 2018 was as follows:
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Contract Assets and Contract Liabilities | The balances of the Company's contract assets and contract liabilities at December 31, 2018 and January 1, 2018 are as follows:
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Deferred Revenue | A tabular presentation of the activity within the deferred revenue account for the year ended December 31, 2018 is presented below:
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Value of Goodwill Classified by Segment Reporting Structure | The changes in the carrying value of goodwill classified by our segment reporting structure for the years ended December 31, 2018 and 2017 are as follows:
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Excess of Estimated Fair Values over Carrying Value Including Goodwill | The excess of estimated fair values over carrying value, including goodwill for each of our reporting units that had goodwill as of the 2018 annual impairment test were as follows:
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Components of Definite and Indefinite-Lived Intangible Assets | The components of definite and indefinite-lived intangible assets are as follows:
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Estimated Amortization Expense for Intangible Assets | Estimated amortization expense for intangible assets for the next five years is as follows:
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INVENTORIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventories | The components of inventories are as follows:
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PROPERTY, PLANT AND EQUIPMENT, NET (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, NET [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, plant and equipment, net consist of the following:
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INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Beginning and Ending Amount of Liability for Uncertain Tax Positions | A reconciliation of the beginning and ending amount of the liability for uncertain tax positions, including the portion included in income taxes payable, is as follows:
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Provision (Benefit) for Income Taxes | The provision (benefit) for income taxes consists of the following:
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Reconciliation of Taxes on Income Computed at Federal Statutory Rate | A reconciliation of taxes on income computed at the U.S. federal statutory rate to amounts provided is as follows:
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Deferred Income Tax Assets | Components of deferred income tax assets are as follows:
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DEBT (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||
DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||
Principal Payments of Total Debt Outstanding | Scheduled principal payments of the total debt outstanding at December 31, 2018 are as follows (in thousands):
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ACCRUED EXPENSES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued expenses consist of the following:
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SEGMENTS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Financial Data | The following is a summary of key financial data:
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Entity-Wide Information Net Sales to External Customers by Geographic Area and by Major Product Line | The following is a summary of entity-wide information related to the Company's net sales to external customers by geographic area and by major product line.
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Long-Lived Assets by Geographic Area | The following is a summary of long-lived assets by geographic area as of December 31, 2018 and 2017:
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RETIREMENT FUND AND PROFIT SHARING PLAN (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT FUND AND PROFIT SHARING PLAN [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SERP Expense | The net periodic benefit cost related to the SERP consisted of the following components during the years ended December 31, 2018 and 2017:
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Changes in Plan Assets and Benefit Obligation, Funded Status | Summarized information about the changes in plan assets and benefit obligation, the funded status and the amounts recorded at December 31, 2018 and 2017 are as follows:
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Expected Benefit Payments | The following benefit payments, which reflect expected future service, are expected to be paid:
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Gross Amounts Recognized in Accumulated Other Comprehensive Loss, Net of Tax | The following gross amounts are recognized net of tax in accumulated other comprehensive loss:
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Weighted Average Assumptions Used in Determining Periodic Net Cost and Benefit Obligation Related to SERP | The weighted average assumptions used in determining the periodic net cost and benefit obligation information related to the SERP are as follows:
|
SHARE-BASED COMPENSATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Activity | A summary of the restricted stock activity under the Program for the year ended December 31, 2018 is presented below:
|
COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments for Operating Leases | Future minimum lease payments for operating leases are approximately as follows:
|
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss as of December 31, 2018 and 2017 are summarized below:
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Changes in Accumulated Other Comprehensive Loss by Component | Changes in accumulated other comprehensive (loss) income by component during the years ended December 31, 2018 and 2017 are as follows. All amounts are net of tax.
|
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
Segment
| |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Number of reportable segments | 3 |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Research and Development (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Research and Development ("R&D") [Abstract] | |||
Research and development costs | $ 29,400 | $ 28,800 | $ 26,700 |
ACQUISITION (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Oct. 01, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Details of Acquisition [Abstract] | |||
Net sales | $ 548,184 | $ 491,611 | |
BCMZ [Member] | |||
Details of Acquisition [Abstract] | |||
Purchase price in cash | $ 2,600 | ||
Net sales | 500 | ||
Identifiable assets acquired | 2,986 | ||
BCMZ [Member] | Maximum [Member] | |||
Details of Acquisition [Abstract] | |||
Acquisition-related costs | $ 100 | ||
BCMZ [Member] | Customer Relationships [Member] | |||
Details of Acquisition [Abstract] | |||
Identifiable assets acquired | $ 400 | ||
Estimated future life | 10 years |
ACQUISITION, Fair Values of Consideration Transferred and Identifiable Net assets Acquired (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Oct. 01, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Fair Values of Consideration Transferred and Identifiable Net assets Acquired [Abstract] | ||||
Goodwill | $ 19,817 | $ 20,177 | $ 17,951 | |
BCMZ [Member] | ||||
Fair Values of Consideration Transferred and Identifiable Net assets Acquired [Abstract] | ||||
Identifiable assets acquired | $ 2,986 | |||
Liabilities assumed | (1,688) | |||
Net identifiable assets acquired | 1,298 | 1,298 | 0 | |
Goodwill | 1,290 | 1,290 | 0 | |
Net assets acquired | 2,588 | 2,588 | 0 | |
Fair value of consideration transferred | $ 2,588 | $ 2,588 | $ 0 |
REVENUE, Cumulative Effect of Changes made to Consolidated Balance Sheet (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Balance Sheet [Abstract] | ||
Unbilled receivables | $ 15,799 | $ 0 |
Inventory | 120,068 | 107,719 |
Other current liabilities | 15,061 | 6,204 |
Retained earnings | 168,695 | 147,807 |
ASU 2014-09 [Member] | ||
Balance Sheet [Abstract] | ||
Unbilled receivables | 14,536 | |
Inventory | 96,675 | |
Other current liabilities | 6,247 | |
Retained earnings | 151,256 | |
Adjustments Due to ASC 606 [Member] | ASU 2014-09 [Member] | ||
Balance Sheet [Abstract] | ||
Unbilled receivables | 15,799 | 14,536 |
Inventory | (11,817) | (11,044) |
Other current liabilities | 20 | 43 |
Retained earnings | 3,961 | $ 3,449 |
Balances Without Adoption of ASC 606 [Member] | ASU 2014-09 [Member] | ||
Balance Sheet [Abstract] | ||
Unbilled receivables | 0 | |
Inventory | 131,885 | |
Other current liabilities | 15,041 | |
Retained earnings | $ 164,734 |
REVENUE, Impact of Adoption on Balance Sheet (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets [Abstract] | ||
Unbilled receivables | $ 15,799 | $ 0 |
Inventories | 120,068 | 107,719 |
Liabilities [Abstract] | ||
Other current liabilities | 15,061 | 6,204 |
Equity [Abstract] | ||
Retained earnings | 168,695 | 147,807 |
ASU 2014-09 [Member] | ||
Assets [Abstract] | ||
Unbilled receivables | 14,536 | |
Inventories | 96,675 | |
Liabilities [Abstract] | ||
Other current liabilities | 6,247 | |
Equity [Abstract] | ||
Retained earnings | 151,256 | |
Balances Without Adoption of ASC 606 [Member] | ASU 2014-09 [Member] | ||
Assets [Abstract] | ||
Unbilled receivables | 0 | |
Inventories | 131,885 | |
Liabilities [Abstract] | ||
Other current liabilities | 15,041 | |
Equity [Abstract] | ||
Retained earnings | 164,734 | |
Effect of Change Higher/(Lower) [Member] | ASU 2014-09 [Member] | ||
Assets [Abstract] | ||
Unbilled receivables | 15,799 | 14,536 |
Inventories | (11,817) | (11,044) |
Liabilities [Abstract] | ||
Other current liabilities | 20 | 43 |
Equity [Abstract] | ||
Retained earnings | $ 3,961 | $ 3,449 |
REVENUE, Impact of Adoption on Consolidated Statement of Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Statement of Operations [Abstract] | ||
Net sales | $ 548,184 | $ 491,611 |
Cost of sales | 438,414 | 389,262 |
Operating income | 29,611 | 17,386 |
Provision for income taxes | 2,907 | 21,540 |
Net earnings | 20,709 | $ (11,897) |
Balances Without Adoption of ASC 606 [Member] | ASU 2014-09 [Member] | ||
Statement of Operations [Abstract] | ||
Net sales | 546,922 | |
Cost of sales | 437,641 | |
Operating income | 29,122 | |
Provision for income taxes | 2,930 | |
Net earnings | 20,197 | |
Effect of Change Higher/(Lower) [Member] | ASU 2014-09 [Member] | ||
Statement of Operations [Abstract] | ||
Net sales | 1,262 | |
Cost of sales | 773 | |
Operating income | 489 | |
Provision for income taxes | (23) | |
Net earnings | $ 512 |
REVENUE, Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Contract with Customer, Asset and Liability [Abstract] | ||
Contract assets - current (unbilled receivable) | $ 15,799 | $ 0 |
Contract liabilities - current (deferred revenue) | 1,036 | |
Deferred Revenue [Roll Forward] | ||
Balance, beginning of period | 855 | |
New advance payments received | 6,517 | |
Recognized as revenue during period | (6,322) | |
Currency translation | (14) | |
Balance, end of period | $ 1,036 | |
ASU 2014-09 [Member] | ||
Contract with Customer, Asset and Liability [Abstract] | ||
Contract assets - current (unbilled receivable) | 14,536 | |
Contract liabilities - current (deferred revenue) | $ 855 |
REVENUE, Transaction Price Allocated to Future Obligations (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
REVENUE [Abstract] | |
Revenue, remaining performance obligation | $ 18.2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Transaction Price Allocated to Future Obligations [Abstract] | |
Remaining performance obligation percentage | 78.00% |
Remaining performance satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Transaction Price Allocated to Future Obligations [Abstract] | |
Remaining performance obligation percentage | 20.00% |
Remaining performance satisfaction period |
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Fair Value Measurement [Abstract] | ||
Proceeds from sale of marketable securities within rabbi trust | $ 1,348 | $ 0 |
Transfers in out between levels | 0 | 0 |
Fair value of total debt | 117,900 | 124,800 |
Carrying amount of long-term debt | 114,200 | 122,700 |
Investments held in Rabbi Trust [Member] | ||
Fair Value Measurement [Abstract] | ||
Available-for-sale securities measured at fair value | 1,400 | 1,500 |
Investments held in Rabbi Trust [Member] | SERP [Member] | ||
Fair Value Measurement [Abstract] | ||
Gross unrealized gains associated with the investment held in the rabbi trust | 200 | |
Realized gains on sale of securities | 200 | |
Proceeds from sale of marketable securities within rabbi trust | 1,300 | |
Nonrecurring [Member] | ||
Fair Value Measurement [Abstract] | ||
Financial assets accounted at fair value | $ 0 | $ 0 |
OTHER ASSETS (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Other assets [Abstract] | |||
Cash surrender value of the COLI | $ 11,600 | $ 12,300 | |
Increase (decrease) in cash surrender value | (400) | 1,300 | |
Investments held in Rabbi Trust [Member] | |||
Other assets [Abstract] | |||
Cost of investments | 1,400 | 1,300 | |
Securities measured at fair value | 1,400 | 1,500 | |
Unrealized gain on investments | 0 | 200 | |
Supplemental Employee Retirement Plans [Member] | |||
Other assets [Abstract] | |||
Benefit obligation | 18,676 | 19,134 | $ 16,900 |
Value of assets earmarked for SERP use but not restricted to that use | $ 13,000 | $ 14,000 |
INVENTORIES (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Components of inventories [Abstract] | ||
Raw materials | $ 63,348 | $ 46,712 |
Work in progress | 21,441 | 17,688 |
Finished goods | 35,279 | 43,319 |
Inventories | $ 120,068 | $ 107,719 |
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | $ 163,804 | $ 157,304 |
Accumulated depreciation | (119,872) | (113,809) |
Property, plant and equipment, net | 43,932 | 43,495 |
Depreciation expense | 11,800 | 14,000 |
Land [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 2,251 | 2,259 |
Buildings and Improvements [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 30,119 | 30,761 |
Machinery and Equipment [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 126,747 | 122,773 |
Construction in Progress [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | $ 4,687 | $ 1,511 |
INCOME TAXES, Deferred Income Tax Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets [Abstract] | ||
State tax credits | $ 1,000 | $ 1,033 |
Unfunded pension liability | 605 | 1,139 |
Reserves and accruals | 2,483 | 2,828 |
Federal, state and foreign net operating loss credit carryforwards | 8,370 | 10,524 |
Depreciation | 850 | 917 |
Other accruals | 5,641 | 4,915 |
Total deferred tax assets | 18,949 | 21,356 |
Deferred tax liabilities [Abstract] | ||
Depreciation | 1,666 | 989 |
Amortization | 7,930 | 8,490 |
Other accruals | 893 | 946 |
Total deferred tax liabilities | 10,489 | 10,425 |
Valuation allowance | 9,200 | 8,343 |
Net deferred tax assets | $ 2,588 | |
Net deferred tax liabilities | $ (740) |
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
ACCRUED EXPENSES [Abstract] | ||
Sales commissions | $ 2,609 | $ 2,461 |
Subcontracting labor | 1,550 | 1,408 |
Salaries, bonuses and related benefits | 18,275 | 16,531 |
Warranty accrual | 1,078 | 1,769 |
Other | 8,778 | 8,339 |
Accrued expenses | $ 32,290 | $ 30,508 |
RETIREMENT FUND AND PROFIT SHARING PLAN, SERP, Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
us-gaap_SupplementalEmployeeRetirementPlanDefinedBenefitMember | us-gaap:DefinedBenefitPlanTypeExtensibleList | |
SERP [Member] | ||
Components of SERP expense [Abstract] | ||
Service cost | $ 732 | $ 700 |
Interest cost | 664 | 673 |
Net amortization | 443 | 375 |
Net periodic benefit cost | $ 1,839 | $ 1,748 |
RETIREMENT FUND AND PROFIT SHARING PLAN, SERP, Actuarial Assumptions (Details) - SERP [Member] |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Net periodic benefit cost [Abstract] | ||
Discount rate | 3.50% | 4.00% |
Rate of compensation increase | 3.00% | 3.00% |
Benefit obligation [Abstract] | ||
Discount rate | 4.00% | 3.50% |
Rate of compensation increase | 2.50% | 3.00% |
ACCUMULATED OTHER COMPREHENSIVE LOSS, Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accumulated other comprehensive loss [Abstract] | ||
Foreign currency translation adjustment | $ (22,635) | $ (16,537) |
Unrealized holding gain on available-for-sale securities, net of taxes of $0 and $85 as of December 31, 2018 and 2017 | 12 | 145 |
Unfunded SERP liability, net of taxes of ($680) and ($1,635) as of December 31, 2018 and 2017 | (2,215) | (3,233) |
Accumulated other comprehensive loss | (24,838) | (19,625) |
Accumulated other comprehensive loss, tax [Abstract] | ||
Unrealized holding gains on available-for-sale securities, tax | 0 | 85 |
Change in unfunded SERP liability, tax | $ (680) | $ (1,635) |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2018 |
|
Related Party Transaction [Abstract] | |||
Gain from divestiture of business | $ 0.5 | ||
Power Solutions [Member] | |||
Related Party Transaction [Abstract] | |||
Minority interest ownership percentage | 49.00% | ||
People's Republic of China Joint Venture [Member] | |||
Related Party Transaction [Abstract] | |||
Inventory purchase payment from joint venture | $ 0.0 | ||
Extinguishment of debt | $ 0.5 |
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