10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10‑K

(Mark One)

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transaction period from ____ to ____

Commission file number:   1‑4743

Standard Motor Products, Inc.

(Exact name of registrant as specified in its charter)

New York	11-1362020
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
37-18 Northern Blvd., Long Island City, N.Y.	11101
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code:	(718) 392-0200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
Common Stock, par value $2.00 per share	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☑ No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No  ☑

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 ☑          No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes ☑      No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K 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. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer  ☑	Accelerated Filer ☐
Non-Accelerated Filer    ☐ (Do not check if a smaller reporting company)	Smaller reporting company   ☐
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  ☑

The aggregate market value of the voting common stock based on the closing price on the New York Stock Exchange on June 30, 2017 (the last business day of registrant’s most recently completed second fiscal quarter) of $52.22 per share held by non-affiliates of the registrant was $1,064,087,671.  For purposes of the foregoing calculation only, all directors and officers have been deemed to be affiliates, but the registrant disclaims that any of such are affiliates.

As of February 16, 2017, there were 22,477,480 outstanding shares of the registrant’s common stock, par value $2.00 per share.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Report is incorporated herein by reference from the registrant’s definitive proxy statement relating to its annual meeting of stockholders to be held on May 17, 2018.

STANDARD MOTOR PRODUCTS, INC.

INDEX

PART I.		Page No.
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	22
Item 4.	Mine Safety Disclosures	22
PART II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 8.	Financial Statements and Supplementary Data	47
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	92
Item 9A.	Controls and Procedures	92
Item 9B.	Other Information	93
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	93
Item 11.	Executive Compensation	93
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	93
Item 13.	Certain Relationships and Related Transactions	93
Item 14.	Principal Accounting Fees and Services	93
PART IV.
Item 15.	Exhibits, Financial Statement Schedules	94
	Signatures	98

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PART I

In this Annual Report on Form 10-K, “Standard Motor Products,” “we,” “us,” “our” and the “Company” refer to Standard Motor Products, Inc. and its subsidiaries, unless the context requires otherwise. This Report, including the documents incorporated herein by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements in this Report are indicated by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “estimates,” “projects,” “strategies” and similar expressions. These statements represent our expectations based on current information and assumptions and are inherently subject to risks and uncertainties.  Our actual results could differ materially from those which are anticipated or projected as a result of certain risks and uncertainties, including, but not limited to, changes in business relationships with our major customers and in the timing, size and continuation of our customers’ programs; changes in our receivables factoring arrangements, such as changes in terms, termination of contracts and/or the impact of rising interest rates; the ability of our customers to achieve their projected sales; competitive product and pricing pressures; increases in production or material costs that cannot be recouped in product pricing; the performance of the aftermarket, heavy duty, industrial equipment and original equipment markets; changes in the product mix and distribution channel mix; economic and market conditions; successful integration of acquired businesses; our ability to achieve benefits from our cost savings initiatives; product liability and environmental matters (including, without limitation, those related to asbestos-related contingent liabilities and remediation costs at certain properties); as well as other risks and uncertainties, such as those described under Risk Factors, Quantitative and Qualitative Disclosures About Market Risk and those detailed herein and from time to time in the filings of the Company with the SEC. Forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. In addition, historical information should not be considered as an indicator of future performance.

ITEM 1. BUSINESS

Overview

We are a leading independent manufacturer and distributor of replacement parts for motor vehicles in the automotive aftermarket industry with a complementary focus on heavy duty, industrial equipment and the original equipment market.  We are organized into two major operating segments, each of which focuses on specific lines of replacement parts.  Our Engine Management Segment manufactures and remanufactures ignition and emission parts, ignition wires, battery cables, fuel system parts and sensors for vehicle systems.  Our Temperature Control Segment manufactures and remanufactures air conditioning compressors, air conditioning and heating parts, engine cooling system parts, power window accessories, and windshield washer system parts.

We sell our products primarily to large retail chains, warehouse distributors, original equipment manufacturers and original equipment service part operations in the United States, Canada, Latin America, and Europe.  Our customers consist of many of the leading auto parts retail chains, such as NAPA Auto Parts (National Automotive Parts Association, Inc.), Advance Auto Parts, Inc./CARQUEST Auto Parts, AutoZone, Inc., O’Reilly Automotive, Inc., Canadian Tire Corporation Limited and The Pep Boys Manny, Moe & Jack, as well as national program distribution groups, such as Auto Value and All Pro/Bumper to Bumper (Aftermarket Auto Parts Alliance, Inc.), Automotive Distribution Network LLC, The National Pronto Association (“Pronto”), Federated Auto Parts Distributors, Inc. (“Federated”), Pronto and Federated’s affiliate, the Automotive Parts Services Group or The Group, Auto Plus and specialty market distributors. We distribute parts under our own brand names, such as Standard®, Blue Streak®, BWD®, Select®, Intermotor®, GP Sorensen®, TechSmart®, Tech Expert®, OEM®, LockSmart®, Four Seasons®, EVERCO®, ACi® and Hayden® and through co-labels and private labels, such as CARQUEST®, Duralast®, Duralast Gold®, Import Direct®, Master Pro®, Omni-Spark®, Ultima Select®, Murray®, NAPA® Echlin®, NAPA Proformer™ Mileage Plus®, NAPA Temp Products™, NAPA® Belden®, Cold Power®, Driveworks^TM and ToughOne^TM .

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Business Strategy

Our goal is to grow revenues and earnings and deliver returns in excess of our cost of capital by being the best-in-class, full-line, full-service supplier of premium products to the engine management and temperature control markets. The key elements of our strategy are as follows:

· Maintain Our Strong Competitive Position in the Engine Management and Temperature Control Businesses.  We are a leading independent manufacturer and distributor serving North America and other geographic areas in our core businesses of Engine Management andTemperature Control. We believe that our success is attributable to our emphasis on product quality, the breadth and depth of our product lines for both domestic and import vehicles, and our reputation for outstanding value-added services.

To maintain our strong competitive position in our markets, we remain committed to the following:

· providing our customers with full-line coverage of high quality engine management and temperature control products, supported by the highest level of value-added services;

· continuing to maximize our production, supply chain and distribution efficiencies;

· continuing to improve our cost position through increased global sourcing, increased manufacturing at our low-cost plants, and strategic transactions with manufacturers in low-cost regions; and

· focusing on our engineering development efforts including a focus on bringing more product manufacturing in house.

· Provide Superior Value-Added Services, Product Availability and Technical Support.  Our goal is to increase sales to existing and new customers by leveraging our skills in rapidly filling orders, maintaining high levels of product availability, offering a product portfolio that provides comprehensive coverage for all vehicle applications, providing insightful customer category management, and providing technical support in a cost‑effective manner. In addition, our category management and technically skilled sales force professionals provide product selection, assortment and application support to our customers.

· Expand Our Product Lines.  We intend to increase our sales by continuing to develop internally, or through acquisitions, the range of Engine Management and Temperature Control products that we offer to our customers. We are committed to investing the resources necessary to maintain and expand our technical capability to manufacture multiple product lines that incorporate the latest technologies, including product lines relating to safety, advanced driver assistance and collision avoidance systems.

· Broaden Our Customer Base.  Our goal is to increase our customer base by (a) continuing to leverage our manufacturing capabilities to secure additional original equipment business globally with automotive, industrial, marine, military and heavy duty vehicle and equipment manufacturers and their service part operations as well as our existing customer base including traditional warehouse distributors, large retailers, other manufacturers and export customers, and (b) supporting the service part operations of vehicle and equipment manufacturers with value-added services and product support for the life of the part.

· Improve Operating Efficiency and Cost Position.  Our management places significant emphasis on improving our financial performance by achieving operating efficiencies and improving asset utilization, while maintaining product quality and high customer order fill rates. We intend to continue to improve our operating efficiency and cost position by:

· increasing cost‑effective vertical integration in key product lines through internal development;

· focusing on integrated supply chain management, customer collaboration and vendor managed inventory initiatives;

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· evaluating additional opportunities to relocate manufacturing to our low-cost plants;

· maintaining and improving our cost effectiveness and competitive responsiveness to better serve our customer base, including sourcing certain materials and products from low cost regions such as those in Asia without compromising product quality;

· enhancing company‑wide programs geared toward manufacturing and distribution efficiency; and

· focusing on company‑wide overhead and operating expense cost reduction programs.

· Cash Utilization.  We intend to apply any excess cash flow from operations and the management of working capital primarily to reduce our outstanding indebtedness, pay dividends to our shareholders, repurchase shares of our common stock, expand our product lines and grow revenues through acquisitions.

The Automotive Aftermarket

The automotive aftermarket industry is comprised of a large number of diverse manufacturers varying in product specialization and size. In addition to manufacturing, aftermarket companies allocate resources towards an efficient distribution process and product engineering in order to maintain the flexibility and responsiveness on which their customers depend. Aftermarket manufacturers must be efficient producers of small lot sizes and do not have to provide systems engineering support. Aftermarket manufacturers also must distribute, with rapid turnaround times, products for a full range of domestic and import vehicles on the road. The primary customers of the automotive aftermarket manufacturers are large retail chains, national and regional warehouse distributors, automotive repair chains and the dealer service networks of original equipment manufacturers (“OEMs”).

The automotive aftermarket industry differs substantially from the OEM supply business. Unlike the OEM supply business that primarily follows trends in new car production, the automotive aftermarket industry’s performance primarily tends to follow different trends, such as:

· growth in number of vehicles on the road;

· increase in average vehicle age;

· change in total miles driven per year;

· new or modified environmental and vehicle safety regulations, including fuel-efficiency and emissions reduction standards;

· increase in pricing of new cars;

· economic and financial market conditions;

· new car quality and related warranties;

· changes in automotive technologies;

· change in vehicle scrap rates; and

· change in average fuel prices.

Traditionally, the parts manufacturers of OEMs and the independent manufacturers who supply the original equipment (“OE”) part applications have supplied a majority of the business to new car dealer networks. However, certain parts manufacturers have become more independent and are no longer affiliated with OEMs, which has provided, and may continue to provide, opportunities for us to supply replacement parts to the dealer service networks of the OEMs, both for warranty and out‑of‑warranty repairs.

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Financial Information about our Operating Segments

The table below shows our consolidated net sales by operating segment and by major product group within each segment for the three years ended December 31, 2017.  Our two major reportable operating segments are Engine Management and Temperature Control.

	Year Ended December 31,
	2017					2016					2015
	Amount		% of Total			Amount		% of Total			Amount		% of Total
	(Dollars in thousands)
Engine Management:
Ignition, Emission and Fuel System Parts	$	657,287		58.9	%	$	616,523		58.2	%	$	598,161		61.6	%
Wires and Cables		172,126		15.4	%		149,016		14.1	%		99,860		10.3	%
Total Engine Management		829,413		74.3	%		765,539		72.3	%		698,021		71.9	%
Temperature Control:
Compressors		148,377		13.3	%		148,623		14	%		127,861		13.2	%
Other Climate Control Parts		130,750		11.7	%		135,117		12.8	%		136,617		14.1	%
Total Temperature Control		279,127		25.0	%		283,740		26.8	%		264,478		27.3	%
All Other		7,603		0.7	%		9,203		0.9	%		9,476		0.8	%
Total	$	1,116,143		100	%	$	1,058,482		100	%	$	971,975		100	%

The following table shows our operating profit and identifiable assets by operating segment for the three years ended December 31, 2017.

	Year Ended December 31,
	2017					2016					2015
	Operating Income (Loss)			Identifiable Assets		Operating Income (Loss)			Identifiable Assets		Operating Income (Loss)			Identifiable Assets
	(In thousands)
Engine Management	$	97,403		$	527,200	$	101,529		$	506,625	$	88,007		$	413,102
Temperature Control		19,609			177,006		17,563			171,136		6,382			177,201
All Other		(18,838	)		83,361		(21,025	)		90,936		(18,529	)		90,761
Total	$	98,174		$	787,567	$	98,067		$	768,697	$	75,860		$	681,064

“All Other” consists of items pertaining to our corporate headquarters function and our Canadian business unit, each of which does not meet the criteria of a reportable operating segment.

Engine Management Segment

Breadth of Products.

We manufacture and distribute a full line of engine management replacement parts, including electronic ignition control modules, fuel injectors, remanufactured diesel injectors and pumps, ignition wires, coils, switches, relays, EGR valves, distributor caps and rotors, various sensors primarily measuring temperature, pressure and position in numerous vehicle systems (such as camshaft and crankshaft position, fuel pressure, vehicle speed, tire pressure monitoring (TPMS) and mass airflow sensors), electronic throttle bodies and many other engine management components primarily under our brand names Standard®, Blue Streak®, BWD®, Select®, Intermotor®, OEM®, LockSmart®, TechSmart®, Tech Expert® and GP Sorensen®, and through co-labels and private labels such as CARQUEST®, Duralast®, Duralast Gold®, Import Direct®, Master Pro®, NAPA® Echlin®, NAPA Proformer^TM Mileage Plus®, NAPA® Belden®, Omni-Spark®, Ultima Select® and Driveworks^TM.

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We are a basic manufacturer of many of the engine management parts we market.  Our strategy includes expanding our product lines through strategic acquisitions in addition to sourcing certain materials and products from low cost regions such as those in Asia.  In our Engine Management Segment, replacement parts for ignition, emission control and fuel systems accounted for approximately 59% of our consolidated net sales in 2017, 58% of our consolidated net sales in 2016 and 62% of our consolidated net sales in 2015.

Computer-Controlled Technology. Nearly all new vehicles are factory‑equipped with computer‑controlled engine management systems to monitor and control ignition, emissions, fuel economy, transmission and many other automotive systems.  The on‑board computers monitor inputs from many types of sensors located throughout the vehicle, and control a myriad of valves, solenoids, coils, switches and motors to manage engine and vehicle performance. Computer-controlled engine management systems enable the engine to operate with improved fuel efficiency and reduced levels of hazardous emissions.

Government mandated emissions and fuel economy regulations have been implemented throughout the United States. The Clean Air Act imposes strict emissions control test standards on existing and new vehicles, and remains the preeminent legislation in the area of vehicle emissions.  As many states have implemented required inspection/maintenance tests, the Environmental Protection Agency, through its rulemaking ability, has also encouraged both manufacturers and drivers to reduce vehicle emissions.  Automobiles must now comply with emissions standards from the time they were manufactured and, in most states, until the last day they are in use.  This law and other government emissions laws and fuel economy regulations have had a positive impact on sales of our ignition, emissions control and fuel delivery parts since vehicles failing these laws may require repairs utilizing parts sold by us.

Our sales of sensors, valves, solenoids and related parts have increased as automobile manufacturers equip their cars with more complex engine management systems.

Safety, Driver Assistance and Collision Avoidance Systems.An increasing number of new vehicles are factory equipped with government-mandated safety devices, such as anti-lock braking systems and air bags. As these systems mature, requiring servicing and repair, we anticipate increased sales opportunities for many of our products such as ABS sensors, tire pressure monitoring systems, and traction control products.  Newer automotive systems include Advanced Driver Assistance Systems and Collision Avoidance Systems to alert the driver to potential problems, or to avoid collisions by implementing safeguards. Many of these systems use on-board computers to monitor inputs from sensing devices located throughout the vehicle.  As the use and complexity of these systems continue to develop and proliferate, we expect to identify and benefit from new sales opportunities within this category such as ultrasonic sensors.

Wire and Cable Products. Wire and cable parts accounted for approximately 15% of our consolidated net sales in 2017, 14% of our consolidated net sales in 2016 and 10% of our consolidated net sales in 2015.  These products include ignition (spark plug) wires, battery cables, pigtails, sockets and a wide range of electrical wire, terminals, connectors and tools for servicing an automobile’s electrical system.

We have historically offered ignition wires and battery cables under premium brands, which capitalize on the market’s awareness of the importance of quality, along with “value” priced brands for older vehicle applications. We extrude high voltage ignition wire for use in our wire sets. The vertical integration of this critical component offers us the ability to achieve lower costs and a controlled source of supply and quality.

In May 2016, we acquired the North American automotive ignition wire business of General Cable Corporation.  The acquisition included General Cable Corporation’s automotive ignition wire business in the United States, Canada and Mexico.  For additional information regarding this acquisition and our integration efforts, refer to the information set forth under the captions “2016 Business Acquisitions” and “Integration Costs” appearing in Notes 2 and 3, respectively, of the Notes to Consolidated Financial Statements in Item 8 of this Report.

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Temperature Control Segment

We manufacture, remanufacture and distribute a full line of replacement parts for automotive temperature control (air conditioning and heating) systems, engine cooling systems, power window accessories and windshield washer systems, primarily under our brand names of Four Seasons®, EVERCO®, ACi® and Hayden® and through co-labels and private labels such as NAPA Temp Products™, Cold Power®, Driveworks^TM, ToughOne^TM and Murray®.  The major product groups sold by our Temperature Control Segment are new and remanufactured compressors, clutch assemblies, blower and radiator fan motors, filter dryers, evaporators, accumulators, hose assemblies, thermal expansion devices, heater valves, heater cores, AC service tools and chemicals, fan assemblies, fan clutches, oil coolers, window lift motors, window regulators and assemblies, and windshield washer pumps.  Our temperature control products accounted for approximately 25% of our consolidated net sales in 2017, and approximately 27% of our consolidated net sales in 2016 and 2015.

Our Temperature Control business continues to implement cost savings initiatives in response to offshore competitive price pressures.  We have consolidated excess manufacturing facilities and have implemented a program to improve our manufacturing and distribution efficiencies.  In February 2016, we began implementation of a plant rationalization initiative to relocate certain production activities from our Grapevine, Texas manufacturing facility to facilities in Greenville, South Carolina and Reynosa, Mexico, relocate certain service functions from Grapevine, Texas to our administrative offices in Lewisville, Texas, and close our Grapevine, Texas facility.  We are also continuing to improve our cost position through our global sourcing initiatives in low cost regions and by increasing our production of remanufactured and new compressors in our facility in Reynosa, Mexico.  As of December 31, 2017, all of our Grapevine Texas production activities have been relocated.

We are also continuing to improve our cost position through our global sourcing initiatives in low cost regions, increasing our production of remanufactured and new compressors in our facility in Reynosa, Mexico, and through strategic transactions with manufacturers in low cost regions.  In April 2014, we formed a joint venture with Gwo Yng Enterprise Co., Ltd., a China-based manufacturer of air conditioning accumulators, filter driers, hose assemblies, and switches.  In November 2017, we formed a separate joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd., a China-based manufacturer of air conditioning compressors.  We believe that these transactions will enhance our position as a basic low-cost manufacturer and a leading supplier of temperature control parts to the aftermarket, as well as provide us with an opportunity for growth in the China market.

Today’s vehicles are being produced with more complex AC systems that are designed to improve their efficiency and reduce their size.  Our Temperature Control Segment continues to be a leader in providing superior training to service dealers who require access to up-to-date knowledge in proper maintenance and repair for changing technologies utilized in today’s vehicles.  We believe that our training module (Diagnosing and Repairing the Top Automotive HVAC Problems) remains one of the most sought-after training clinics in the industry and among professional service dealers.

Financial Information about Our Foreign and Domestic Operations and Export Sales

We sell our line of products primarily in the United States, with additional sales in Canada, Europe, Asiaand Latin America.  Our sales are substantially denominated in U.S. dollars.

The table below shows our consolidated net sales by geographic area for the three years ended December 31, 2017.

	Year Ended December 31,
	2017		2016		2015
	(In thousands)
United States	$	996,433	$	952,019	$	881,206
Canada		56,575		53,324		48,072
Mexico		24,521		24,429		14,707
Europe		14,088		14,703		16,305
Other foreign		24,526		14,007		11,685
Total	$	1,116,143	$	1,058,482	$	971,975

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The table below shows our long‑lived assets by geographic area for the three years ended December 31, 2017.

	Year Ended December 31,
	2017		2016		2015
	(In thousands)
United States	$	202,875	$	204,592	$	155,438
Canada		2,017		1,344		1,190
Mexico		4,449		3,877		1,012
Europe		18,530		13,612		12,324
Other foreign		31,185		19,924		20,622
Total	$	259,056	$	243,349	$	190,586

Sales and Distribution

In the traditional channel, we sell our products to warehouse distributors, who supply auto parts jobber stores. Jobbers in turn sell to professional technicians and to “do-it-yourselfers” who perform automotive repairs on their personal vehicles. In recent years, warehouse distributors have consolidated with other distributors, and an increasing number of distributors own their jobber stores or sell down channel to professional technicians. In the retail channel, customers buy directly from us and sell directly to professional technicians and “do-it-yourselfers” through their own stores. Retailers are also consolidating with other retailers and have begun to increase their efforts to sell to professional technicians adding additional competition in the “do-it-for-me,” or the professional technician segment of our industry.

As automotive parts and systems become more complex, “do-it-yourselfers” are less likely to service their own vehicles and may become more reliant on automotive dealerships and independent service dealer technicians.  In addition to new car sales, automotive dealerships sell OE brand parts and service vehicles.  The products available through the dealers are purchased through the original equipment service (“OES”) network.  Traditionally, the parts manufacturers of OEMs have supplied a majority of the OES network.  However, certain parts manufacturers have become independent and are no longer affiliated with OEMs.  In addition, many Tier 1 OEM suppliers are disinterested in providing service parts requirements for up to 15 years after the OE model has gone out of production.  As a result of these factors, there are additional opportunities for independent automotive aftermarket manufacturers like us to supply the OES network.

Our sales force is structured to meet the unique needs of our traditional and retail customers across the distribution channel, allowing us to provide value-added services that we believe are unmatched by our competitors.  We also believe that our sales force is the premier direct sales force for our product lines due to our concentration of highly‑qualified, well‑trained sales personnel.  We provide our sales personnel extensive instruction at our training facility in Irving, Texas and provide an extensive continuing education program that allows our sales force to stay current on troubleshooting and repair techniques.  The continuing education courses along with monthly supplemental web-based training are an integral part of our sales force development strategy.

In addition to training our sales personnel in the function and application of our products, we thoroughly train our sales personnel in proven sales techniques.  Our traditional and retail customers, therefore, have come to depend on these sales personnel as a reliable source for technical information and to assist with sales to their customers (i.e., jobber stores, “do-it-yourselfers,” and professional technicians).  In this manner, we direct a significant portion of our sales efforts to our customers’ customers to generate demand for our products, and we believe that the structure of our sales force facilitates these efforts by enabling us to implement our sales and marketing programs uniformly throughout the distribution channel.  One of the ways we generate this demand is by offering technician seminars, which teach over 65,000 technicians annually how to diagnose and repair vehicles equipped with complex systems related to our products. We also offer on-demand webinars through the Internet on similar topics.  Approximately 15,000 technicians were registered to participate in such sessions in 2017.  To help our sales personnel to be effective teachers and trainers, we focus our recruitment efforts on candidates who have technical backgrounds as well as strong sales experience.

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We offer a variety of strategic customer discounts, allowances and incentives to increase customer purchases of our products.  For example, we offer cash discounts for paying invoices in accordance with the specified discounted terms of the invoice, and we offer pricing discounts based on volume purchased from us and participation in our cost reduction initiatives.  We also offer rebates and discounts to customers as advertising and sales force allowances, and allowances for warranty and overstock returns are also provided.  We believe these discounts, allowances and incentives are a common practice throughout the automotive aftermarket industry, and we intend to continue to offer them in response to competitive pressures and to strategically support the growth of all our products.

Customers

Our customer base is comprised largely of warehouse distributors, large retailers, OE/OES customers, other manufacturers and export customers.  Our five largest individual customers accounted for approximately 70% of our consolidated net sales in 2017 and 2016, and approximately 68% of our consolidated net sales in 2015.  During 2017, O’Reilly Automotive, Inc., Advance Auto Parts, Inc., NAPA Auto Parts, and AutoZone, Inc. accounted for 21%, 17%, 16% and 10% of our consolidated net sales, respectively.  Net sales from each of the customers were reported in both our Engine Management and Temperature Control Segments.

Competition

We are a leading independent manufacturer and distributor of replacement parts for product lines in Engine Management and Temperature Control. We compete primarily on the basis of product quality, product availability, value-added services, product coverage, order turn‑around time, order fill rate, technical support and price. We believe we differentiate ourselves from our competitors primarily through:

· a value‑added, knowledgeable sales force;

· extensive product coverage in conjunction with market leading brands;

· rigorous product qualification standards to ensure that our parts meet or exceed exacting performance specifications;

· sophisticated parts cataloguing systems, including catalogues available online through our website and our mobile application;

· inventory levels and logistical systems sufficient to meet the rapid delivery requirements of customers;

· breadth of manufacturing capabilities; and

· award-winning marketing programs and sales support and technical training.

In the Engine Management business, we are one of the leading independent manufacturers and distributors in the United States. Our competitors include ACDelco, Delphi Technologies PLC, Denso Corporation, Continental AG, Hitachi, Ltd., Motorcraft, Robert Bosch GmbH, Visteon Corporation, NGK Spark Plug Co., Ltd., Dorman Products, Inc. and several privately-owned companies importing products from Asia.

Our Temperature Control business is one of the leading independent manufacturers and distributors of a full line of temperature control products in North America and other geographic areas. ACDelco, MAHLE GmbH, Behr Hella Service GmbH, Denso Corporation, Motorcraft, Sanden International, Inc., Continental AG, and several privately-owned companies are some of our key competitors in this market.

The automotive aftermarket is highly competitive, and we face substantial competition in all markets that we serve.  Our success in the marketplace continues to depend on our ability to offer competitive prices, improved products, superior value-added services and expanded offerings in competition with many other suppliers to the aftermarket.  Some of our competitors may have greater financial, marketing and other resources than we do.  In addition, we face competition from automobile manufacturers who supply many of the replacement parts sold by us, although these manufacturers generally supply parts only for cars they produce through OE dealerships.

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Seasonality

Historically, our operating results have fluctuated by quarter, with the greatest sales occurring in the second and third quarters of the year and revenues generally being recognized at the time of shipment. It is in these quarters that demand for our products is typically the highest, specifically in the Temperature Control Segment of our business.  In addition to this seasonality, the demand for our Temperature Control products during the second and third quarters of the year may vary significantly with the summer weather and customer inventories. For example, a cool summer, as we experienced in 2017, may lessen the demand for our Temperature Control products, while a warm summer, as we experienced in 2016, may increase such demand.  As a result of this seasonality and variability in demand of our Temperature Control products, our working capital requirements typically peak near the end of the second quarter, as the inventory build‑up of air conditioning products is converted to sales and payments on the receivables associated with such sales have yet to be received. During this period, our working capital requirements are typically funded by borrowing from our revolving credit facility.

Working Capital and Inventory Management

Automotive aftermarket companies have been under increasing pressure to provide broad SKU (stock keeping unit) coverage due to parts and brand proliferation. In response to this, we have made, and continue to make, changes to our inventory management system designed to reduce inventory requirements. We have a pack‑to‑order distribution system, which permits us to retain slow moving items in a bulk storage state until an order for a specific branded part is received. This system reduces the volume of a given part in inventory. We also expanded our inventory management system to improve inventory deployment, enhance our collaboration with customers on forecasts and inventory assortments, and further integrate our supply chain both to customers and suppliers.

We face inventory management issues as a result of overstock returns.  We permit our customers to return new, undamaged products to us within customer-specific limits (which are generally limited to a specified percentage of their annual purchases from us) in the event that they have overstocked their inventories.  In addition, the seasonality of our Temperature Control Segment requires that we increase our inventory during the winter season in preparation of the summer selling season and customers purchasing such inventory have the right to make returns.

Our profitability and working capital requirements are seasonal due to our sales mix of Temperature Control products.  Our working capital requirements peak near the end of the second quarter, as the inventory build‑up of air conditioning products is converted to sales and payments on the receivables associated with such sales have yet to be received.  These increased working capital requirements are funded by borrowings from our revolving credit facility.

Suppliers

The principal raw materials purchased by us consist of brass, electronic components, fabricated copper (primarily in the form of magnet and insulated cable), steel magnets, laminations, tubes and shafts, stamped steel parts, copper wire, stainless steel coils and rods, aluminum coils, fittings, rods, cast aluminum parts, lead, steel roller bearings, rubber molding compound, thermo‑set and thermo plastic molding powders, and chemicals.  Additionally, we use components and cores (used parts) in our remanufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps.

We purchase materials in the U.S. and foreign open markets and have a limited number of supply agreements on key components. A number of prime suppliers make these materials available. In the case of cores for air conditioning compressors, diesel injectors, and diesel pumps, we obtain them either from exchanges with customers who return cores subsequent to purchasing remanufactured parts or through direct purchases from a network of core brokers. In addition, we acquire certain materials by purchasing products that are resold into the market, particularly by OEM sources and other domestic and foreign suppliers.

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We believe there is an adequate supply of primary raw materials and cores. In order to ensure a consistent, high quality and low cost supply of key components for each product line, we continue to develop our own sources.  We are not dependent on any single commodity, however, there can be no assurance over the long term that increases in commodity prices will not materially affect our business or results of operations.

Production and Engineering

We engineer, tool and manufacture many of the components used in the assembly of our products. We also perform our own plastic molding operations, stamping and machining operations, wire extrusion, automated electronics assembly and a wide variety of other processes. In the case of remanufactured components, we conduct our own teardown, diagnostics and rebuilding for air conditioning compressors, diesel injectors, and diesel pumps. We have found this level of vertical integration provides advantages in terms of cost, quality and availability. We intend to continue selective efforts toward further vertical integration to ensure a consistent quality and supply of low cost components. In addition, our strategy includes sourcing an increasing number of finished goods and component parts from low cost regions such as those in Asia.

Employees

As of December 31, 2017, we employed approximately 4,200 people, with 1,900 people in the United States and 2,300 people in Mexico, Canada, Poland, the U.K., Hong Kong and Taiwan.  Of the 4,200 people employed, approximately 2,100 people are production employees. We operate primarily in non‑union facilities and have binding labor agreements with employees at other unionized facilities.  We have approximately 90 production employees in Edwardsville, Kansas who are covered by a contract with The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) that expires in April 2019.  We expect to renew this agreement with the UAW upon mutually agreeable terms.  We also have approximately 1,100 employees in Mexico who are covered under union agreements negotiated at various intervals.

We believe that our facilities are in favorable labor markets with ready access to adequate numbers of skilled and unskilled workers, and we believe our relations with our union and non‑union employees are good. Our employees share our corporate values of ethics, integrity, common decency and respect of others, values which have been established since our company was founded in 1919.

Available Information

We are a New York corporation founded in 1919. Our principal executive offices are located at 37‑18 Northern Boulevard, Long Island City, New York 11101, and our main telephone number at that location is (718) 392‑0200. Our Internet address is www.smpcorp.com.  We provide a link to reports that we have filed with the SEC.  However, for those persons that make a request in writing or by e-mail (financial@smpcorp.com), we will provide free of charge our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.  These reports and other information are also available, free of charge, at www.sec.gov.

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ITEM 1A. RISK FACTORS

You should carefully consider the risks described below.  These risks and uncertainties are not the only ones we face.  Additional risks and uncertainties not presently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business and results of operations.  If any of the stated risks actually occur, they could materially and adversely affect our business, financial condition or operating results.

Risks Related to Our Operations

We depend on a limited number of key customers, and the loss of any such customer, or a significant reduction in purchases by such customer, could have a material adverse effect on our business, financial condition and results of operations.

Our five largest individual customers accounted for approximately 70% of our consolidated net sales in 2017 and 2016, and approximately 68% of our consolidated net sales in 2015.  During 2017, O’Reilly Automotive, Inc., Advance Auto Parts, Inc., NAPA Auto Parts, and AutoZone, Inc. accounted for 21%, 17%, 16% and 10% of our consolidated net sales, respectively.  The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them, could have a materially adverse impact on our business, financial condition and results of operations. In addition, any consolidation among our key customers, such as Advance Auto’s acquisition of CarQuest in 2014, may further exacerbate our customer concentration risk.

Also, we do not typically enter into long-term agreements with any of our customers.  Instead, we enter into a number of purchase order commitments with our customers, based on their current or projected needs.  We have in the past, and may in the future, lose customers or lose a particular product line of a customer due to the highly competitive conditions in the automotive aftermarket industry, including pricing pressures, consolidation of customers, customer initiatives to buy direct from foreign suppliers or other business considerations.  A decision by any significant customer, whether motivated by competitive conditions, financial difficulties or otherwise, to materially decrease the amount of products purchased from us, to change their manner of doing business with us, or to stop doing business with us, including a decision to source products directly from a low cost region such as Asia, could have a material adverse effect on our business, financial condition and results of operations.

Because our sales are concentrated, and the market in which we operate is very competitive, we are under ongoing pressure from our customers to offer lower prices, extend payment terms, increase marketing allowances and other terms more favorable to these customers.  These customer demands have put continued pressure on our operating margins and profitability, resulted in periodic contract renegotiation to provide more favorable prices and terms to these customers, and significantly increased our working capital needs.

Our industry is highly competitive, and our success depends on our ability to compete with suppliers of automotive aftermarket products, some of which may have substantially greater financial, marketing and other resources than we do.

The automotive aftermarket industry is highly competitive, and our success depends on our ability to compete with domestic and international suppliers of automotive aftermarket products. In the Engine Management Segment, our competitors include ACDelco, Delphi Technologies PLC, Denso Corporation, Continental AG, Hitachi, Ltd., Motorcraft, Robert Bosch GmbH, Visteon Corporation, NGK Spark Plug Co., LTD., Dorman Products, Inc. and several privately-owned companies importing products from Asia.   In the Temperature Control Segment, we compete with ACDelco, MAHLE GmbH, Behr Hella Service GmbH, Denso Corporation, Motorcraft, Sanden International, Inc., Continental AG, and several privately-owned companies.  In addition, automobile manufacturers supply many of the replacement parts we sell.

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Some of our competitors may have larger customer bases and significantly greater financial, technical and marketing resources than we do.  These factors may allow our competitors to:

· respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive aftermarket products and services;

· engage in more extensive research and development;

· sell products at a lower price than we do;

· undertake more extensive marketing campaigns; and

· make more attractive offers to existing and potential customers and strategic partners.

We cannot assure you that our competitors will not develop products or services that are equal or superior to our products or that achieve greater market acceptance than our products or that in the future other companies involved in the automotive aftermarket industry will not expand their operations into product lines produced and sold by us.  We also cannot assure you that additional entrants will not enter the automotive aftermarket industry or that companies in the aftermarket industry will not consolidate.  Any such competitive pressures could cause us to lose market share or could result in significant price decreases and could have a material adverse effect upon our business, financial condition and results of operations.

There is substantial price competition in our industry, and our success and profitability will depend on our ability to maintain a competitive cost and price structure.

There is substantial price competition in our industry, and our success and profitability will depend on our ability to maintain a competitive cost and price structure.  This is the result of a number of industry trends, including the impact of offshore suppliers in the marketplace (particularly in China) which suppliers do not have the same infrastructure costs as we do, the consolidated purchasing power of large customers, and actions taken by some of our competitors in an effort to ‘‘win over’’ new business.  We have in the past reduced prices to remain competitive and may have to do so again in the future.  Price reductions have impacted our sales and profit margins and are expected to do so in the future.  Our future profitability will depend in part upon our ability to respond to changes in product and distribution channel mix, to continue to improve our manufacturing efficiencies, to generate cost reductions, including reductions in the cost of components purchased from outside suppliers, and to maintain a cost structure that will enable us to offer competitive prices.  Our inability to maintain a competitive cost structure could have a material adverse effect on our business, financial condition and results of operations.

Our business is seasonal and is subject to substantial quarterly fluctuations, which impact our quarterly performance and working capital requirements.

Historically, our operating results have fluctuated by quarter, with the greatest sales occurring in the second and third quarters of the year and with revenues generally being recognized at the time of shipment.  It is in these quarters that demand for our products is typically the highest, specifically in the Temperature Control Segment of our business. In addition to this seasonality, the demand for our Temperature Control products during the second and third quarters of the year may vary significantly with the summer weather and customer inventories.  For example, a cool summer, as we experienced in 2017, may lessen the demand for our Temperature Control products, while a warm summer, as we experienced in 2016, may increase such demand.  As a result of this seasonality and variability in demand of our Temperature Control products, our working capital requirements peak near the end of the second quarter, as the inventory build-up of air conditioning products is converted to sales and payments on the receivables associated with such sales have yet to be received.  During this period, our working capital requirements are typically funded by borrowing from our revolving credit facility.

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We may incur material losses and significant costs as a result of warranty-related returns by our customers in excess of anticipated amounts.

Our products are required to meet rigorous standards imposed by our customers and our industry. Many of our products carry a warranty ranging from a 90-day limited warranty to a lifetime limited warranty, which generally covers defects in materials or workmanship, failure to meet industry published specifications and/or the result of installation error. In the event that there are material deficiencies or defects in the design and manufacture of our products and/or installation error, the affected products may be subject to warranty returns and/or product recalls. Although we maintain a comprehensive quality control program, we cannot give any assurance that our products will not suffer from defects or other deficiencies or that we will not experience material warranty returns or product recalls in the future.

We accrue for warranty returns as a percentage of sales, after giving consideration to recent historical returns. While we believe that we make reasonable estimates for warranty returns in accordance with our revenue recognition policies, actual returns may differ from our estimates. We have in the past incurred, and may in the future incur, material losses and significant costs as a result of our customers returning products to us for warranty-related issues in excess of anticipated amounts. Deficiencies or defects in our products in the future may result in warranty returns and product recalls in excess of anticipated amounts and may have a material adverse effect on our business, financial condition and results of operations.

Our profitability may be materially adversely affected as a result of overstock inventory-related returns by our customers in excess of anticipated amounts.

We permit overstock returns of inventory that may be either new or non-defective or non-obsolete but that we believe we can re-sell. Customers are generally limited to returning overstocked inventory according to a specified percentage of their annual purchases from us. In addition, a customer’s annual allowance cannot be carried forward to the upcoming year.

We accrue for overstock returns as a percentage of sales, after giving consideration to recent historical returns. While we believe that we make reasonable estimates for overstock returns in accordance with our revenue recognition policies, actual returns may differ from our estimates. To the extent that overstocked returns are materially in excess of our projections, our business, financial condition and results of operations may be materially adversely affected.

We may be materially adversely affected by asbestos claims arising from products sold by our former brake business, as well as by other product liability claims.

In 1986, we acquired a brake business, which we subsequently sold in March 1998. When we originally acquired this brake business, we assumed future liabilities relating to any alleged exposure to asbestos-containing products manufactured by the seller of the acquired brake business. In accordance with the related purchase agreement, we agreed to assume the liabilities for all new claims filed after September 2001.  Our ultimate exposure will depend upon the number of claims filed against us on or after September 2001 and the amounts paid for indemnity and defense of such claims.

Actuarial consultants with experience in assessing asbestos-related liabilities conducted a study to estimate our potential claim liability as of August 31, 2017.  The updated study has estimated an undiscounted liability for settlement payments, excluding legal costs and any potential recovery from insurance carriers, ranging from $35.2 million to $54 million for the period through 2060.  The change from the prior year study was a $4.2 million increase for the low end of the range and a $6.3 million increase for the high end of the range.  The increase in the estimated undiscounted liability from the prior year study at both the low end and high end of the range reflects our actual experience over the prior twelve months, our historical data and certain assumptions with respect to events that may occur in the future.  Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range of settlement payments was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required.  Based upon the results of the August 31, 2017 actuarial study, in September 2017 we increased our asbestos liability to $35.2 million, the low end of the range, and recorded an incremental pre-tax provision of $6 million in earnings (loss) from discontinued operations in the accompanying statement of operations.  Future legal costs, which are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations, are estimated, according to the updated study, to range from $44.3 million to $79.6 million for the period through 2060.

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At December 31, 2017, approximately 1,530 cases were outstanding for which we may be responsible for any related liabilities.  Since inception in September 2001 through December 31, 2017, the amounts paid for settled claims are approximately $23.8 million.  A substantial increase in the number of new claims or increased settlement payments or awards of damages could have a material adverse effect on our business, financial condition and results of operations.

Given the uncertainties associated with projecting asbestos-related matters into the future and other factors outside our control, we cannot give any assurance that significant increases in the number of claims filed against us will not occur, that asbestos-related damages or settlement awards will not exceed the amount we have in reserve, or that additional provisions will not be required. Management will continue to monitor the circumstances surrounding these potential liabilities in determining whether additional reserves and provisions may be necessary. We plan on performing a similar annual actuarial analysis during the third quarter of each year for the foreseeable future.

In addition to asbestos-related claims, our product sales entail the risk of involvement in other product liability actions.  We maintain product liability insurance coverage, but we cannot give any assurance that current or future policy limits will be sufficient to cover all possible liabilities.  Further, we can give no assurance that adequate product liability insurance will continue to be available to us in the future or that such insurance may be maintained at a reasonable cost to us. In the event of a successful product liability claim against us, a lack or insufficiency of insurance coverage could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to achieve the benefits that we expect from our cost savings initiatives.

We continue to implement a number of cost savings programs including closing our Grapevine, Texas facility, closing our recently acquired wire set assembly operation in Nogales, Mexico, closing our Orlando, Florida facility and moving some US production to other facilities, both domestically and to our facilities in Mexico and Poland.  We are also integrating and transferring acquired assets and businesses to company facilities.  Although we expect to realize cost savings as a result of these initiatives, we may not be able to achieve the level of benefits that we expect to realize or we may not be able to realize these benefits within the time frames we currently expect.  Our ability to achieve any anticipated cost savings could be affected by a number of factors such as changes in the amount, timing and character of charges related to such initiatives and failure to complete or a substantial delay in completing such initiatives.  Failure to achieve the benefits of our cost saving initiatives could have a material adverse effect on us.  Our cost savings is also predicated upon maintaining our sales levels.

Severe weather, natural disasters and other disruptions could adversely impact our operations at our manufacturing and distribution facilities.

Severe weather conditions and natural disasters, such as hurricanes, floods and tornados, could damage our properties and effect our operations, particularly our major manufacturing and distribution operations at foreign facilities in Canada, Mexico and Poland, and at our domestic facilities in Florida, Indiana, Kansas, South Carolina, Texas, and Virginia. In addition, our business and operations could be materially adversely affected in the event of other serious disruptions at these facilities due to fire, electrical blackouts, power losses, telecommunications failures, terrorist attack or similar events.  Any of these occurrences could impair our ability to adequately manufacture or supply our customers due to all or a significant portion of our equipment or inventory being damaged. We may not be able to effectively shift the manufacture or delivery of products to our customers if one or more of our manufacturing or distribution facilities are significantly disrupted.

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Our operations would be materially and adversely affected if we are unable to purchase raw materials, manufactured components or equipment from our suppliers.

Because we purchase various types of raw materials, finished goods, equipment, and component parts from suppliers, we may be materially and adversely affected by the failure of those suppliers to perform as expected.  This non-performance may consist of delivery delays or failures caused by production issues or delivery of non-conforming products.  The risk of non-performance may also result from the insolvency or bankruptcy of one or more of our suppliers.  Our suppliers’ ability to supply products to us is also subject to a number of risks, including availability and cost of raw materials, destruction of their facilities, or work stoppages.  In addition, our failure to promptly pay, or order sufficient quantities of inventory from our suppliers may increase the cost of products we purchase or may lead to suppliers refusing to sell products to us at all.  Our efforts to protect against and to minimize these risks may not always be effective.

Our operations could be adversely affected by interruptions or breaches in the security of our computer and information technology systems.

We rely on information technology systems throughout our organization to conduct day-to-day business operations, including the management of our supply chain and our purchasing, receiving and distribution functions.  We also routinely use our information technology systems to send, receive, store, access and use sensitive data relating to our Company and its employees, customers, suppliers, and business partners, including intellectual property, proprietary business information, and other sensitive materials.  Our information technology systems have been subject to cyber threats, including attempts to hack into our network and computer viruses.  Such hacking attempts and computer viruses have not significantly impacted or interrupted our business operations.  While we implement security measures designed to prevent and mitigate the risk of cyber attacks, our information technology systems, and those functions that we may outsource, may continue to be vulnerable to computer viruses, attacks by hackers, or unauthorized access caused by employee error or malfeasance.  The exploitation of any such vulnerability in our information technology systems, or those functions that we may outsource, could unexpectedly compromise the information security of our customers, suppliers and other business partners.  Furthermore, because the techniques used to carry out cyber attacks change frequently and in many instances are not recognized until after they are used against a target, we may be unable to anticipate these changes or implement adequate preventative measures.  If our information technology systems are subject to cyber attacks, such as those involving significant or extensive system interruptions, sabotage, computer viruses or unauthorized access, we could experience disruptions to our business operations and incur substantial remediation costs, which could have a material adverse effect on our business, financial condition or results of operations.

Risks Related to Liquidity

We are exposed to risks related to our receivables factoring arrangements.

We have entered into factoring arrangements with financial institutions to sell certain of our customers’ trade accounts receivable without recourse.  If we do not enter into these factoring arrangements, our financial condition, results of operations and cash flows could be materially and adversely affected by delays or failures in collecting trade accounts receivables.  In addition, if any of the financial institutions with which we have factoring arrangements experience financial difficulties or otherwise terminate our factoring arrangements, we may experience material and adverse economic losses due to the loss of such factoring arrangements and the impact of such loss on our liquidity, which could have a material and adverse effect upon our financial condition, results of operations and cash flows. The utility of our factoring arrangements also depends upon LIBOR, as it is a component of the discount rate applicable to each arrangement. If LIBOR increases such that the cost of factoring becomes more than the cost of servicing our receivables with existing debt, we may not be able to rely on such factoring arrangements, which could have a material and adverse effect upon our financial condition, results of operations and cash flows.

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Increasing our indebtedness could negatively affect our financial health.

We have an existing revolving bank credit facility of $250 million with JPMorgan Chase Bank, N.A., as agent, and a syndicate of lenders, which we refer to throughout this Report as our revolving credit facility.  As of December 31, 2017, our total outstanding indebtedness was $61.8 million, of which amount $57 million of outstanding indebtedness and approximately $142.9 million of availability was attributable to this revolving credit facility.  Any significant increase in our indebtedness could increase our vulnerability to general adverse economic and industry conditions and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.

In addition, we have granted the lenders under our revolving credit facility a first priority security interest in substantially all of our currently owned and future acquired personal property and other assets. We have also pledged shares of stock in our subsidiaries to those lenders.  If we default on any of our indebtedness, or if we are unable to obtain necessary liquidity, our business could be adversely affected.

We may not be able to generate the significant amount of cash needed to service our indebtedness and fund our future operations.

Our ability either to make payments on or to refinance our indebtedness, or to fund planned capital expenditures and research and development efforts, will depend on our ability to generate cash in the future. Our ability to generate cash is in part subject to:

· general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control;

· the ability of our customers to pay timely the amounts we have billed; and

· our ability to factor receivables under customer draft programs.

The occurrence of any of the foregoing factors could result in reduced cash flow, which could have a material adverse effect on us.

Based on our current level of operations, we believe our cash flow from operations, available cash and available borrowings under our revolving credit facility will be adequate to meet our future liquidity needs for at least the next twelve months.  Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity or capital requirements. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as:

· deferring, reducing or eliminating future cash dividends;

· reducing or delaying capital expenditures or restructuring activities;

· reducing or delaying research and development efforts;

· selling assets;

· deferring or refraining from pursuing certain strategic initiatives and acquisitions;

· refinancing our indebtedness; and

· seeking additional funding.

We cannot assure you that, if material adverse developments in our business, liquidity or capital requirements should occur, our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our revolving credit facility in amounts sufficient to enable us to pay the principal and interest on our indebtedness, or to fund our other liquidity needs. In addition, if we default on any of our indebtedness, or breach any financial covenant in our revolving credit facility, our business could be adversely affected.

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Risks Related to External Factors

We conduct our manufacturing and distribution operations on a worldwide basis and are subject to risks associated with doing business outside the United States.

We have manufacturing and distribution facilities in many countries, including Canada, Poland, Mexico and China, and increasing our manufacturing footprint in low cost regions is an important element of our strategy.  There are a number of risks associated with doing business internationally, including: (a) exposure to local economic and political conditions; (b) social unrest such as risks of terrorism or other hostilities; (c) currency exchange rate fluctuations and currency controls; (d) the effect of potential changes in U.S. trade policy; and (e) the potential for shortages of trained labor.  In particular, there has been social unrest in Mexico and any increased violence in or around our manufacturing facilities in Mexico could impact our business by disrupting our supply chain, the delivery of products to customers, and the reluctance of our customers to visit our Mexican facilities.  In addition, the increased violence in or around our manufacturing facilities in Mexico could present several risks to our employees who may be directly affected by the violence and may result in a decision by them to relocate from the area, or make it difficult for us to recruit or retain talented employees at our Mexican facilities.  Furthermore, changes in U.S. trade policy, particularly as it relates to Mexico and China, could impose increased taxes on us or could impact the classification and treatment of our products for the purpose of assessing duties.  The likelihood of such occurrences and their potential effect on us is unpredictable and may vary from country to country. Any such occurrences could be harmful to our business and our financial results.

We may incur liabilities under government regulations and environmental laws, which may have a material adverse effect on our business, financial condition and results of operations.

Domestic and foreign political developments and government regulations and policies directly affect automotive consumer products in the United States and abroad.  Regulations and policies relating to over-the-highway vehicles include standards established by the United States Department of Transportation for motor vehicle safety and emissions.  The modification of existing laws, regulations or policies, or the adoption of new laws, regulations or policies could have a material adverse effect on our business, financial condition and results of operations.

In August 2012, as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted rules requiring us to provide disclosure regarding the use of specified minerals, known as conflict minerals, which are mined from the Democratic Republic of the Congo and adjoining countries.  The rules require us to engage in ongoing due diligence efforts, and to disclose the results of our efforts in May of each year.  The rules could affect the sourcing and availability of such minerals used in the manufacture of our products as the number of suppliers who provide conflict-free minerals may be limited.  In addition, we expect to incur additional costs and expenses in order to comply with these rules, including for (i) due diligence to determine whether conflict minerals are necessary to the functionality or production of any of our products and, if so, to verify the sources of such conflict minerals; and (ii) any changes that we may desire to make to our products, processes, or sources of supply as a result of such diligence and verification activities.  It is also possible that we may face reputational harm if we determine that certain of our products contain minerals not determined to be conflict-free and/or we are unable to alter our products, processes or sources of supply to avoid such materials.  We may also face difficulties in satisfying customers who may require that our products be certified as having conflict-free minerals, which could place us at a competitive disadvantage if we are unable to do so and lead to a loss of revenue.

Our operations and properties are subject to a wide variety of increasingly complex and stringent federal, state, local and international laws and regulations, including those governing the use, storage, handling, generation, treatment, emission, release, discharge and disposal of materials, substances and wastes, the remediation of contaminated soil and groundwater and the health and safety of employees. Such environmental laws, including but not limited to those under the Comprehensive Environmental Response Compensation & Liability Act, may impose joint and several liability and may apply to conditions at properties presently or formerly owned or operated by an entity or its predecessors, as well as to conditions at properties at which wastes or other contamination attributable to an entity or its predecessors have been sent or otherwise come to be located.

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The nature of our operations exposes us to the risk of claims with respect to such matters, and we can give no assurance that violations of such laws have not occurred or will not occur or that material costs or liabilities will not be incurred in connection with such claims.  We are currently monitoring our environmental remediation efforts at one of our facilities and our reserve balance related to the environmental clean-up at this facility is $0.6 million at December 31, 2017.  The environmental testing and any remediation costs at such facility may be covered by several insurance policies, although we can give no assurance that our insurance will cover any environmental remediation claims.  We also maintain insurance to cover our existing U.S. and Canadian facilities. We can give no assurance that the future cost of compliance with existing environmental laws and the liability for known environmental claims pursuant to such environmental laws will not give rise to additional significant expenditures or liabilities that would be material to us. In addition, future events, such as new information, changes in existing environmental laws or their interpretation, and more vigorous enforcement policies of federal, state or local regulatory agencies, may have a material adverse effect on our business, financial condition and results of operations.

Our future performance may be materially adversely affected by changes in technologies and improvements in the quality of new vehicle parts.

Changes in automotive technologies, such as vehicles powered by fuel cells or electricity, could negatively affect sales to our aftermarket customers. These factors could result in less demand for our products thereby causing a decline in our results of operations or deterioration in our business and financial condition and may have a material adverse effect on our long-term performance.

In addition, the size of the automobile replacement parts market depends, in part, upon the growth in number of vehicles on the road, increase in average vehicle age, change in total miles driven per year, new or modified environmental and vehicle safety regulations, including fuel-efficiency and emissions reduction standards, increase in pricing of new cars and new car quality and related warranties. The automobile replacement parts market has been negatively impacted by the fact that the quality of more recent automotive vehicles and their component parts (and related warranties) has improved, thereby lengthening the repair cycle. Generally, if parts last longer, there will be less demand for our products and the average useful life of automobile parts has been steadily increasing in recent years due to innovations in products and technology. In addition, the introduction by original equipment manufacturers of increased warranty and maintenance initiatives has the potential to decrease the demand for our products. When proper maintenance and repair procedures are followed, newer AC systems in particular are less prone to leak resulting in fewer AC system repairs. These factors could have a material adverse effect on our business, financial condition and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

We maintain our executive offices in Long Island City, New York. The table below describes our principal facilities as of December 31, 2017.

Location	State or Country	Principal Business Activity	Approx. Square Feet	Owned or Expiration Date of Lease
Engine Management
Orlando	FL	Manufacturing	50,600	2019
Ft. Lauderdale	FL	Distribution	23,300	Owned
Ft. Lauderdale	FL	Distribution	30,000	Owned
Mishawaka	IN	Manufacturing	153,100	Owned
Edwardsville	KS	Distribution	363,500	Owned
Independence	KS	Manufacturing	337,400	Owned
Long Island City	NY	Administration	75,800	2023
Greenville	SC	Manufacturing	184,500	Owned
Disputanta	VA	Distribution	411,000	Owned
Nogales	Mexico	Manufacturing	67,200	2019
Reynosa	Mexico	Manufacturing	175,000	2024
Reynosa	Mexico	Manufacturing	153,000	2018
Bialystok	Poland	Manufacturing	108,400	2022
Temperature Control
Lewisville	TX	Administration and Distribution	415,000	2024
Grapevine (a)	TX	Manufacturing	180,000	Owned
St. Thomas	Canada	Manufacturing	40,000	Owned
Reynosa	Mexico	Manufacturing	82,000	2019
Reynosa	Mexico	Manufacturing	118,000	2021
Other
Mississauga	Canada	Administration and Distribution	128,400	2023
Irving	TX	Training Center	13,400	2021

(a) As of December 31, 2017, all of our Grapevine, Texas production activities have been relocated and the building is being marketed for sale.

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ITEM 3. LEGAL PROCEEDINGS

The information required by this Item is incorporated herein by reference to the information set forth in Item 8, “Financial Statements and Supplementary Data” of this Report under the captions “Asbestos” and “Other Litigation” appearing in Note 19, “Commitments and Contingencies” of the notes to our consolidated financial statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock trades publicly on the New York Stock Exchange (“NYSE”) under the trading symbol “SMP.” The following table shows the high and low sales prices per share of our common stock as reported by the NYSE and the dividends declared per share for the periods indicated:

	High		Low		Dividend
Fiscal Year ended December 31, 2017:
First Quarter	$	54.36	$	46.23	$	0.19
Second Quarter		53.82		46.93		0.19
Third Quarter		54.73		43.29		0.19
Fourth Quarter		49.66		40.56		0.19
Fiscal Year ended December 31, 2016:
First Quarter	$	38.30	$	26.69	$	0.17
Second Quarter		39.79		32.66		0.17
Third Quarter		48.00		39.15		0.17
Fourth Quarter		55.37		45.84		0.17

The last reported sale price of our common stock on the NYSE on February 16, 2018 was $48.20 per share.  As of February 16, 2018, there were 478 holders of record of our common stock.

Dividends are declared and paid on the common stock at the discretion of our Board of Directors (the “Board”) and depend on our profitability, financial condition, capital needs, future prospects, and other factors deemed relevant by our Board. Our current practice is to pay dividends on a quarterly basis.  In February 2018, our Board voted to increase our quarterly dividend from $0.19 per share in 2017 to $0.21 per share in 2018.  Our revolving credit facility permits dividends and distributions by us provided specific conditions are met.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for a further discussion of our revolving credit facility.

There have been no unregistered offerings of our common stock during the fourth quarter of 2017.

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

For a discussion of our stock repurchases, see the “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The following table provides information relating to the Company’s purchases of its common stock for the fourth quarter of 2017:

Period	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)		Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Programs (2)
October 1-31, 2017		—	$	—		—	$	10,000,045
November 1-30, 2017		19,300		43.87		19,300		9,153,395
December 1-31, 2017		88,519		44.42		88,519		5,221,477
Total		107,819	$	44.32		107,819	$	5,221,477

(1) All shares were purchased through the publicly announced stock repurchase programs in open market transactions.

(2) In February 2017, our Board of Directors authorized the purchase of up to $20 million of our common stock under a stock repurchase program.  In November 2017, our Board of Directors authorized the purchase of up to an additional $10 million of our common stock under another stock repurchase program.  Stock will be purchased from time to time, in the open market or through private transactions, as market conditions warrant. Under these programs, during the three months and twelve months ended December 31, 2017, we repurchased 107,819 shares and 539,760 shares of our common stock, respectively, at a total cost of $4.8 million and $24.8 million, respectively.  As of December 31, 2017, there was approximately $5.2 million available for future stock repurchases under the programs.  During the period from January 1, 2018 through February 16, 2018, we repurchased an additional 35,756 shares of our common stock under the programs at a total cost of $1.7 million, thereby leaving approximately $3.5 million available for future stock purchases under the programs.

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Stock Performance Graph

The following graph compares the five year cumulative total return on the Company’s Common Stock to the total returns on the Standard & Poor’s 500 Stock Index and the S&P 1500 Auto Parts & Equipment Index, which is a combination of automotive parts and equipment companies within the S&P 400, the S&P 500 and the S&P 600.  The graph shows the change in value of a $100 investment in the Company’s Common Stock and each of the above indices on December 31, 2012 and the reinvestment of all dividends. The comparisons in this table are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of the Company’s Common Stock or the referenced indices.

	SMP		S&P 500	S&P 1500 Auto Parts & Equipment Index
2012		100	100		100
2013		168	132		165
2014		176	151		171
2015		179	153		160
2016		255	171		168
2017		218	208		222

* Source: S&P Capital IQ

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ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data for the five years ended December 31, 2017.  This selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the notes thereto included elsewhere in this Form 10-K.  Certain prior period amounts have been reclassified to conform to the 2017 presentation.

	Year Ended December 31,
	2017			2016			2015			2014			2013
				(Dollars in thousands)
Statement of Operations Data:
Net sales	$	1,116,143		$	1,058,482		$	971,975		$	980,392		$	983,704
Gross profit		326,656			322,487			280,988			289,630			290,454
Litigation charge (1)		—			—			—			10,650			—
Operating income		98,174			98,067			75,860			85,338			86,863
Earnings from continuing operations (2)		43,630			62,412			48,120			52,899			53,043
Loss from discontinued operations, net of tax		(5,654	)		(1,982	)		(2,102	)		(9,870	)		(1,593	)
Net earnings (3)		37,976			60,430			46,018			43,029			51,450
Per Share Data:
Earnings from continuing operations (2):
Basic	$	1.92		$	2.75		$	2.11		$	2.31		$	2.31
Diluted		1.88			2.70			2.08			2.28			2.28
Earnings per common share (2) (3):
Basic		1.67			2.66			2.02			1.88			2.24
Diluted		1.64			2.62			1.99			1.85			2.21
Cash dividends per common share		0.76			0.68			0.60			0.52			0.44
Other Data:
Depreciation and amortization	$	23,916		$	20,457		$	17,637		$	17,295		$	17,595
Capital expenditures		24,442			20,921			18,047			13,904			11,410
Dividends		17,287			15,447			13,697			11,905			10,107
Cash Flows Provided By (Used In):
Operating activities	$	64,617		$	97,805		$	65,171		$	46,987		$	57,616
Investing activities		(31,228	)		(88,018	)		(18,011	)		(51,200	)		(24,762	)
Financing activities		(35,944	)		(7,756	)		(41,155	)		15,316			(39,295	)
Balance Sheet Data (at period end):
Cash and cash equivalents	$	17,323		$	19,796		$	18,800		$	13,728		$	5,559
Working capital		210,194			190,380			195,198			178,670			190,128
Total assets		787,567			768,697			681,064			673,551			615,523
Total debt		61,778			54,975			47,505			56,816			21,481
Long‑term debt (excluding current portion)		79			120			62			83			16
Stockholders’ equity		453,654			441,028			391,979			374,153			349,432

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Notes to Selected Financial Data

(1) During 2014, we recorded a $10.6 million litigation charge in connection with a settlement agreement in a legal proceeding with a third party.  The settlement amount was funded from cash on hand and available credit under our revolving credit facility.

(2) During 2017, we recorded an increase of $17.5 million to the provision for income taxes resulting from the remeasurement of our deferred tax assets, and the tax on deemed repatriated earnings of our foreign subsidiaries as a result of the enactment of the Tax Cuts and Jobs Act.

(3) We recorded an after tax charge of $5.7 million, $2 million, $2.1 million, $9.9 million, and $1.6 million as loss from discontinued operations to account for legal expenses and potential costs associated with our asbestos‑related liability for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively.  Such costs were also separately disclosed in the operating activity section of the consolidated statements of cash flows for those same years.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto. This discussion summarizes the significant factors affecting our results of operations and the financial condition of our business during each of the fiscal years in the three-year period ended December 31, 2017.

Overview

We are a leading independent manufacturer and distributor of replacement parts for motor vehicles in the automotive aftermarket industry, with a complementary focus on heavy duty, industrial equipment and the original equipment market.  We are organized into two major operating segments, each of which focuses on specific lines of replacement parts.  Our Engine Management Segment manufactures and remanufactures ignition and emission parts, ignition wires, battery cables, fuel system parts and sensors for vehicle systems.  Our Temperature Control Segment manufactures and remanufactures air conditioning compressors, air conditioning and heating parts, engine cooling system parts, power window accessories, and windshield washer system parts.

We sell our products primarily to large retail chains, warehouse distributors, original equipment manufacturers and original equipment service part operations in the United States, Canada, Latin America, and Europe.  Our customers consist of many of the leading auto parts retail chains, such as NAPA Auto Parts (National Automotive Parts Association, Inc.), Advance Auto Parts, Inc./CARQUEST Auto Parts, AutoZone, Inc., O’Reilly Automotive, Inc., Canadian Tire Corporation Limited and The Pep Boys Manny, Moe & Jack, as well as national program distribution groups, such as Auto Value and All Pro/Bumper to Bumper (Aftermarket Auto Parts Alliance, Inc.), Automotive Distribution Network LLC, The National Pronto Association (“Pronto”), Federated Auto Parts Distributors, Inc. (“Federated”), Pronto and Federated’s affiliate, the Automotive Parts Services Group or The Group, Auto Plus and specialty market distributors. We distribute parts under our own brand names, such as Standard®, Blue Streak®, BWD®, Select®, Intermotor®, GP Sorensen®, TechSmart®, Tech Expert®, OEM®, LockSmart®, Four Seasons®, EVERCO®, ACi® and Hayden® and through co-labels and private labels, such as CARQUEST®, Duralast®, Duralast Gold®, Import Direct®, Master Pro®, Omni-Spark®, Ultima Select®, Murray®, NAPA®, NAPA® Echlin®, NAPA Proformer™ Mileage Plus®, NAPA Temp Products™, NAPA® Belden®, Cold Power®, Driveworks^TM and ToughOne^TM.

Business Strategy

Our goal is to grow revenues and earnings and deliver returns in excess of our cost of capital by being the best-in-class, full-line, full-service supplier of premium products to the engine management and temperature control markets. The key elements of our strategy are as follows:

· Maintain Our Strong Competitive Position in the Engine Management and Temperature Control Businesses.  We are a leading independent manufacturer and distributor serving North America and other geographic areas in our core businesses of Engine Management andTemperature Control. We believe that our success is attributable to our emphasis on product quality, the breadth and depth of our product lines for both domestic and import vehicles, and our reputation for outstanding value-added services.

To maintain our strong competitive position in our markets, we remain committed to the following:

· providing our customers with full-line coverage of high quality engine management and temperature control products, supported by the highest level of value-added services;

· continuing to maximize our production, supply chain and distribution efficiencies;

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· continuing to improve our cost position through increased global sourcing, increased manufacturing at our low-cost plants, and strategic transactions with manufacturers in low-cost regions; and

· focusing on our engineering development efforts including a focus on bringing more product manufacturing in house.

· Provide Superior Value-Added Services, Product Availability and Technical Support.  Our goal is to increase sales to existing and new customers by leveraging our skills in rapidly filling orders, maintaining high levels of product availability, offering a product portfolio that provides comprehensive coverage for all vehicle applications, providing insightful customer category management, and providing technical support in a cost‑effective manner. In addition, our category management and technically skilled sales force professionals provide product selection, assortment and application support to our customers.

· Expand Our Product Lines.  We intend to increase our sales by continuing to develop internally, or through potential acquisitions, the range of Engine Management and Temperature Control products that we offer to our customers. We are committed to investing the resources necessary to maintain and expand our technical capability to manufacture multiple product lines that incorporate the latest technologies, including product lines relating to safety, advanced driver assistance and collision avoidance systems.

· Broaden Our Customer Base.  Our goal is to increase our customer base by (a) continuing to leverage our manufacturing capabilities to secure additional original equipment business globally with automotive, industrial, marine, military and heavy duty vehicle and equipment manufacturers and their service part operations as well as our existing customer base including traditional warehouse distributors, large retailers, other manufacturers and export customers, and (b) supporting the service part operations of vehicle and equipment manufacturers with value added services and product support for the life of the part.

· Improve Operating Efficiency and Cost Position.  Our management places significant emphasis on improving our financial performance by achieving operating efficiencies and improving asset utilization, while maintaining product quality and high customer order fill rates. We intend to continue to improve our operating efficiency and cost position by:

· increasing cost‑effective vertical integration in key product lines through internal development;

· focusing on integrated supply chain management, customer collaboration and vendor managed inventory initiatives;

· evaluating additional opportunities to relocate manufacturing to our low-cost plants;

· maintaining and improving our cost effectiveness and competitive responsiveness to better serve our customer base, including sourcing certain materials and products from low cost regions such as those in Asia without compromising product quality;

· enhancing company‑wide programs geared toward manufacturing and distribution efficiency; and

· focusing on company‑wide overhead and operating expense cost reduction programs.

· Cash Utilization.  We intend to apply any excess cash flow from operations and the management of working capital primarily to reduce our outstanding indebtedness, pay dividends to our shareholders, repurchase shares of our common stock, expand our product lines and grow revenues through potential acquisitions.

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The Automotive Aftermarket

The automotive aftermarket industry is comprised of a large number of diverse manufacturers varying in product specialization and size. In addition to manufacturing, aftermarket companies allocate resources towards an efficient distribution process and product engineering in order to maintain the flexibility and responsiveness on which their customers depend. Aftermarket manufacturers must be efficient producers of small lot sizes and do not have to provide systems engineering support. Aftermarket manufacturers also must distribute, with rapid turnaround times, products for a full range of domestic and import vehicles on the road. The primary customers of the automotive aftermarket manufacturers are large retail chains, national and regional warehouse distributors, automotive repair chains and the dealer service networks of original equipment manufacturers (“OEMs”).

The automotive aftermarket industry differs substantially from the OEM supply business. Unlike the OEM supply business that primarily follows trends in new car production, the automotive aftermarket industry’s performance primarily tends to follow different trends, such as:

· growth in number of vehicles on the road;

· increase in average vehicle age;

· change in total miles driven per year;

· new or modified environmental and vehicle safety regulations, including fuel-efficiency and emissions reduction standards;

· increase in pricing of new cars;

· economic and financial market conditions;

· new car quality and related warranties;

· changes in automotive technologies;

· change in vehicle scrap rates; and

· change in average fuel prices.

Traditionally, the parts manufacturers of OEMs and the independent manufacturers who supply the original equipment (“OE”) part applications have supplied a majority of the business to new car dealer networks.  However, certain parts manufacturers have become more independent and are no longer affiliated with OEMs, which has provided, and may continue to provide, opportunities for us to supply replacement parts to the dealer service networks of the OEMs, both for warranty and out‑of‑warranty repairs.

Seasonality.  Historically, our operating results have fluctuated by quarter, with the greatest sales occurring in the second and third quarters of the year and revenues generally being recognized at the time of shipment. It is in these quarters that demand for our products is typically the highest, specifically in the Temperature Control Segment of our business.  In addition to this seasonality, the demand for our Temperature Control products during the second and third quarters of the year may vary significantly with the summer weather and customer inventories.  For example, a cool summer, as we experienced in 2017, may lessen the demand for our Temperature Control products, while a warm summer, as we experienced in 2016, may increase such demand.  As a result of this seasonality and variability in demand of our Temperature Control products, our working capital requirements typically peak near the end of the second quarter, as the inventory build‑up of air conditioning products is converted to sales and payments on the receivables associated with such sales have yet to be received. During this period, our working capital requirements are typically funded by borrowing from our revolving credit facility.

Inventory Management. We face inventory management issues as a result of overstock returns. We also permit our customers to return new, undamaged products to us within customer-specific limits (which are generally limited to a specified percentage of their annual purchases from us) in the event that they have overstocked their inventories. In addition, the seasonality of our Temperature Control Segment requires that we increase our inventory during the winter season in preparation of the summer selling season and customers purchasing such inventory have the right to make returns. We accrue for overstock returns as a percentage of sales, after giving consideration to recent returns history.

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Discounts, Allowances, and Incentives. We offer a variety of usual customer discounts, allowances and incentives.  First, we offer cash discounts for paying invoices in accordance with the specified discount terms of the invoice.  Second, we offer pricing discounts based on volume purchased from us and participation in our cost reduction initiatives.  These discounts are principally in the form of “off-invoice” discounts and are immediately deducted from sales at the time of sale. For those customers that choose to receive a payment on a quarterly basis instead of “off-invoice,” we accrue for such payments as the related sales are made and reduce sales accordingly.  Finally, rebates and discounts are provided to customers as advertising and sales force allowances, and allowances for warranty and overstock returns are also provided.  Management analyzes historical returns, current economic trends, and changes in customer demand when evaluating the adequacy of the sales returns and other allowances. Significant management judgments and estimates must be made and used in connection with establishing the sales returns and other allowances in any accounting period.  We account for these discounts and allowances as a reduction to revenues, and record them when sales are recorded.

Tax Cuts and Jobs Act

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which included a broad range of tax reform affecting businesses, including the reduction of the federal corporate tax rate from 35% to 21%, changes in the deductibility of certain business expenses, and the manner in which international operations are taxed in the U.S.  Although the majority of the changes resulting from the Act are effective beginning in 2018, U.S. GAAP requires that certain impacts of the Act be recognized in the income tax provision in the period of enactment.  In connection with the enactment of the Act, our income tax provision for the fourth quarter of 2017 included an increase of $17.5 million, reflecting an increase of $16.1 million for the remeasurement of our net deferred tax assets and an increase in tax of $1.4 million due to the deemed repatriation of earnings of our foreign subsidiaries.

As related to the deemed repatriation of earnings of foreign subsidiaries, the Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries.  As a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued are now subject to U.S. tax.  In accordance with the guidelines provided in the Act, we have aggregated the estimated untaxed foreign earnings and profits, and utilized participating exemption deductions and available foreign tax credits in deriving the $1.4 million repatriation tax, which will be payable currently.  Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest most or all of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts.

Although we believe that the impact of the Act has been properly reflected in the fourth quarter of 2017, there may be further adjustments in the coming quarters as the relevant authorities provide further guidance on the impacts of the Act.  Based upon our initial reviews, and assuming no further adjustments, we estimate that our effective tax rate for 2018 will be approximately 26%. 

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Comparison of Fiscal Years 2017 and 2016

Sales.  Consolidated net sales for 2017 were $1,116.1 million, an increase of $57.6 million, or 5.4%, compared to $1,058.5 million in the same period of 2016.  Consolidated net sales increased due to the higher results achieved by our Engine Management Segment.

The following table summarizes consolidated net sales by segment and by major product group within each segment for the years ended December 31, 2017 and 2016 (in thousands):

	Year Ended December 31,
	2017		2016
Engine Management:
Ignition, Emission and Fuel System Parts	$	657,287	$	616,523
Wire and Cable		172,126		149,016
Total Engine Management		829,413		765,539
Temperature Control:
Compressors		148,377		148,623
Other Climate Control Parts		130,750		135,117
Total Temperature Control		279,127		283,740
All Other		7,603		9,203
Total	$	1,116,143	$	1,058,482

Engine Management’s net sales increased $63.9 million, or 8.3%, to $829.4 million for the year ended December 31, 2017.  Net sales in the ignition, emissions and fuel systems parts product group for the year ended December 31, 2017 were $657.3 million, an increase of $40.8 million, or 6.6%, compared to $616.5 million in the same period of 2016.  Net sales in the wire and cable product group for the year ended December 31, 2017 were $172.1 million, an increase of $23.1 million, or 15.5%, compared to $149 million in the same period of 2016.  In May 2016, we acquired the North American automotive ignition wire business of General Cable Corporation.  Incremental net sales from the acquisition of $38.4 million were included in net sales of the wire and cable product group for the year ended December 31, 2017.  Excluding the incremental sales from the acquisition, net sales in the wire and cable product group declined $15.3 million, or 10.3%, and Engine Management net sales increased $25.5 million, or 3.3%, compared to the year ended December 31, 2016, in line with our expectations of low single digit organic growth.

Temperature Control’s net sales decreased $4.6 million, or 1.6%, to $279.1 million for the year ended December 31, 2017.  Net sales in the compressors product group for the year ended December 31, 2017 were $148.4 million, a decrease of $0.2 million, or 0.2%, compared to $148.6 million in the same period of 2016.  Net sales in the other climate control parts product group for the year ended December 31, 2017 were $130.8 million, a decrease of $4.4 million, or 3.2%, compared to $135.1 million for the year ended December 31, 2016.  Temperature Control’s decrease in net sales for the year ended December 31, 2017 of 1.6% reflects the impact of a cool 2017 summer following a very warm 2016, and is slightly better than our customers’ reported year-to-date net sales decrease of 4%.  Demand for our Temperature Control products may vary significantly with summer weather conditions and customer inventories.

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Gross Margins.  Gross margins, as a percentage of consolidated net sales, decreased to 29.3% for 2017, compared to 30.5% for 2016.  The following table summarizes gross margins by segment for the years ended December 31, 2017 and 2016, respectively (in thousands):

Year Ended December 31,	Engine Management			Temperature Control			Other			Total
2017
Net sales (a)	$	829,413		$	279,127		$	7,603		$	1,116,143
Gross margins		243,791			73,254			9,611			326,656
Gross margin percentage		29.4	%		26.2	%		—	%		29.3	%
2016
Net sales (a)	$	765,539		$	283,740		$	9,203		$	1,058,482
Gross margins		239,710			72,547			10,230			322,487
Gross margin percentage		31.3	%		25.6	%		—	%		30.5	%

(a) Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.

Compared to 2016, gross margins at Engine Management decreased 1.9 percentage points from 31.3% to 29.4%, and gross margins at Temperature Control increased 0.6 percentage points from 25.6% to 26.2%. The gross margin percentage decrease in Engine Management compared to the prior year reflects inefficiencies and redundant costs incurred during our various planned production moves.  The gross margin percentage increase in Temperature Control compared to the prior year resulted primarily from transferring production manufacturing to our lower cost Reynosa, Mexico facility.

Selling, General and Administrative Expenses.  SG&A expenses increased to $223.6 million, or 20% of consolidated net sales in 2017, as compared to $221.7 million, or 20.9% of consolidated net sales in 2016.  The $1.9 million increase in SG&A expenses as compared to 2016 is principally due to higher distribution expenses and higher costs incurred in our accounts receivable factoring program, both of which are associated with increased sales volumes offset, in part, by the benefits from our General Cable integration and lower incentive compensation expenses.

Restructuring and Integration Expenses.  Restructuring and integration expenses were $6.2 million in 2017 compared to restructuring and integration expenses of $4 million in 2016.  The $2.2 million year-over-year increase in restructuring and integration expenses reflects the impact of the plant rationalization program that commenced in February 2016, the wire and cable relocation program announced in October 2016, and the Orlando plant rationalization program that commenced in January 2017.

Other Income, Net. Other income, net was $1.3 million in 2017 compared to $1.2 million in 2016.  During 2017 and 2016, we recognized $1 million of deferred gain related to the sale-leaseback of our Long Island City, New York facility.

Operating Income.  Operating income was $98.2 million in 2017, compared to $98.1 million in 2016.  The year-over-year increase in operating income of $0.1 million reflects the impact of higher consolidated net sales offset, in part, by lower gross margins as a percentage of consolidated net sales, higher SG&A expenses and higher restructuring and integration expenses.

Other Non-Operating Income, Net.  Other non-operating income, net was $0.6 million in 2017, compared to other non-operating income, net of $2.1 million in 2016.  Included in other non-operating income, net in 2017 is a noncash impairment charge of approximately $1.8 million related to our minority interest investment in Orange Electronics Co., Ltd.

Interest Expense.  Interest expense was $2.3 million in 2017 compared to $1.6 million in 2016.  The year-over-year increase reflects the impact of higher year-over-year average interest rates on our revolving credit facility, and higher average outstanding borrowings during 2017 when compared to 2016.

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Income Tax Provision. The income tax provision for 2017 was $52.8 million at an effective tax rate of 54.8%, compared to $36.2 million at an effective tax rate of 36.7% in 2016.  During 2017, we recorded an increase of $17.5 million to the income tax provision resulting from the remeasurement of our net deferred tax assets, and the tax on deemed repatriated earnings of our foreign subsidiaries as a result of the enactment of the Tax Cuts and Jobs Act.  Excluding the impact of the Tax Cuts and Jobs Act, the income tax provision for 2017 was $35.3 million at an effective tax rate of 36.6%.

Loss from Discontinued Operations.  Loss from discontinued operations, net of income tax, reflects information contained in the most recent actuarial studies performed as of August 31, 2017 and 2016, other information available and considered by us, and legal expenses associated with our asbestos-related liability.  During 2017 and 2016, we recorded a loss of $5.7 million and $2 million from discontinued operations, respectively.  The loss from discontinued operations for 2017 includes a $6 million pre-tax provision reflecting the impact of the results of the August 2017 actuarial study.  No adjustment was made in 2016 to our asbestos liability as the difference between the low end of the range in the August 2016 actuarial study and our recorded liability was not material.  As discussed more fully in Note 19 in the notes to our consolidated financial statements, we are responsible for certain future liabilities relating to alleged exposure to asbestos containing products.

Comparison of Fiscal Years 2016 and 2015

Sales.  Consolidated net sales for 2016 were $1,058.5 million, an increase of $86.5 million compared to $972 million in the same period of 2015.  Consolidated net sales increased due to the higher net sales achieved by both our Engine Management and Temperature Control Segments.

The following table summarizes consolidated net sales by segment and by major product group within each segment for the years ended December 31, 2016 and 2015 (in thousands):

	Year Ended December 31,
	2016		2015
Engine Management:
Ignition, Emission and Fuel System Parts	$	616,523	$	598,161
Wire and Cable		149,016		99,860
Total Engine Management		765,539		698,021
Temperature Control:
Compressors		148,623		127,861
Other Climate Control Parts		135,117		136,617
Total Temperature Control		283,740		264,478
All Other		9,203		9,476
Total	$	1,058,482	$	971,975

Engine Management’s net sales increased $67.5 million, or 9.7%, to $765.5 million for the year ended December 31, 2016.  Net sales in the ignition, emissions and fuel systems parts product group for the year ended December 31, 2016 were $616.5 million, an increase of $18.3 million, or 3.1%, compared to $598.2 million in the same period of 2015.  Net sales in the wire and cable product group for the year ended December 31, 2016 were $149 million, an increase of $49.1 million, or 49.2%, compared to $99.9 million in the year ended December 31, 2015.  In May 2016, we acquired the North American automotive ignition wire business of General Cable Corporation.  Incremental net sales from the acquisition of $52.9 million were included in net sales of the wire and cable product group from the date of acquisition through December 31, 2016.  Excluding the incremental sales from the acquisition, net sales in the wire and cable product group declined $3.8 million, or 3.8%, and Engine Management net sales increased $14.6 million, or 2.1%, compared to the same period of 2015.

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Temperature Control’s net sales increased $19.3 million, or 7.3%, to $283.7 million for the year ended December 31, 2016.  Net sales in the compressors product group for the year ended December 31, 2016 were $148.6 million, an increase of $20.7 million, or 16.2%, compared to $127.9 million in the same period of 2015.  Net sales in the other climate control parts product group for the year ended December 31, 2016 were $135.1 million, a decrease of $1.5 million, or 1.1%, compared to $136.6 million in the year ended December 31, 2015.  Temperature Control’s increase in net sales for the year ended December 31, 2016 of 7.3% reflects the impact of the first warm summer in three years, and is slightly less than our customers’ reported year-to-date net sales increase of 9%.  Demand for our Temperature Control products may vary significantly with summer weather conditions and customer inventories.

Gross Margins.  Gross margins, as a percentage of consolidated net sales, increased to 30.5% for 2016, compared to 28.9% for 2015.  The following table summarizes gross margins by segment for the years ended December 31, 2016 and 2015, respectively (in thousands):

Year Ended December 31,	Engine Management			Temperature Control			Other			Total
2016
Net sales	$	765,539		$	283,740		$	9,203		$	1,058,482
Gross margins		239,710			72,547			10,230			322,487
Gross margin percentage		31.3	%		25.6	%		—	%		30.5	%
2015
Net sales	$	698,021		$	264,478		$	9,476		$	971,975
Gross margins		212,021			57,977			10,990			280,988
Gross margin percentage		30.4	%		21.9	%		—	%		28.9	%

Gross margins at Engine Management increased 0.9 percentage points from 30.4% to 31.3%, and gross margins at Temperature Control increased 3.7 percentage points from 21.9% to 25.6%.  The gross margin percentage increase in Engine Management compared to the prior year was primarily the result of the year-over-year increase in production volume and the impact of one-time costs incurred in the prior year to improve our diesel manufacturing production processes.  The gross margin percentage increase in Temperature Control compared to the prior year resulted primarily from year-over-year increased production volumes, and unabsorbed manufacturing overheads charged in the prior year results which negatively impacted 2015 gross margins.

Selling, General and Administrative Expenses.  SG&A expenses increased to $221.7 million, or 20.9% of consolidated net sales in 2016, as compared to $206.3 million, or 21.2% of consolidated net sales, in 2015.  The $15.4 million increase in SG&A expenses as compared to 2015 is principally due to (1) higher selling and marketing costs, higher distribution expenses, and higher costs incurred in our accounts receivable factoring program, all associated with increased sales volumes; and (2) incremental expenses of $7.5 million from our acquisition of the North American automotive ignition wire business of General Cable Corporation, including amortization of intangible assets acquired.

Restructuring and Integration Expenses (Income).  Restructuring and integration expenses were $4 million in 2016 compared to restructuring and integration income of $0.1 million in 2015.  The $4.1 million year-over-year increase in restructuring and integration expenses reflects primarily the impact of the plant rationalization program that commenced in February 2016 and the wire and cable relocation program announced in October 2016.

Other Income, Net. Other income, net was $1.2 million in 2016 compared to $1 million in 2015.  During 2016 and 2015, we recognized $1 million of deferred gain related to the sale-leaseback of our Long Island City, New York facility.

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Operating Income.  Operating income was $98.1 million in 2016, compared to $75.9 million in 2015.  The year-over-year increase in operating income of $22.2 million is the result of higher consolidated net sales and higher gross margins as a percentage of consolidated net sales offset, in part, by higher SG&A expenses and higher restructuring and integration expenses.

Other Non-Operating Income, Net.  Other non-operating income, net was $2.1 million in 2016, compared to other non-operating expense, net of $0.2 million in 2015.  The year-over-year increase in other non-operating income, net resulted primarily from the increase in equity income from our joint ventures, the favorable impact of changes in foreign currency exchange rates and the year-over-year impact of the write-off in 2015 of $0.8 million of unamortized deferred finance costs associated with the refinancing of the prior revolving credit facility.

Interest Expense.  Interest expense was $1.6 million in 2016 compared to $1.5 million in 2015.  The impact of the year-over-year increase in average outstanding borrowings during 2016 when compared to 2015 was partially offset by the slight decline in average interest rates on our revolving credit facility.  The year-over-year increase in our average outstanding borrowings resulted primarily from our May 2016 acquisition of the North American automotive ignition wire business of General Cable Corporation for approximately $67.5 million which was funded by our revolving credit facility.

Income Tax Provision. The income tax provision for 2016 was $36.2 million at an effective tax rate of 36.7%, compared to $26 million at an effective tax rate of 35.1% in 2015.  The higher year-over-year effective tax rate is the result of a change in the mix of pre-tax income from lower foreign tax rate jurisdictions to the U.S., and the year-over-year increase in state and local effective tax rates.

Loss from Discontinued Operations.  Loss from discontinued operations, net of income tax, reflects information contained in the most recent actuarial studies performed as of August 31, 2016 and 2015, other information available and considered by us, and legal expenses associated with our asbestos-related liability.  During 2016 and 2015, we recorded a loss of $2 million and $2.1 million, net of tax, from discontinued operations, respectively.  Based upon the actuarial studies performed as of August 31, 2016 and 2015, a favorable adjustment to the asbestos liability was not recorded in our consolidated financial statements in each of 2016 and 2015 as the difference between the low end of the range in each of the actuarial studies and our recorded liability was not material.  As discussed more fully in Note 19 of the notes to our financial statements, we are responsible for certain future liabilities relating to alleged exposure to asbestos containing products.

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Restructuring and Integration Programs

Plant Rationalization Program

In February 2016, in connection with our ongoing efforts to improve operating efficiencies and reduce costs, we finalized our intention to implement a plant rationalization initiative.  As part of the plant rationalization, certain production activities will be relocated from our Grapevine, Texas manufacturing facility to facilities in Greenville, South Carolina and Reynosa, Mexico, certain service functions will be relocated from Grapevine, Texas to our administrative offices in Lewisville, Texas, and our Grapevine, Texas facility will be closed.  As of December 31, 2017, all of our Grapevine, Texas production activities have been relocated to facilities in Greenville, South Carolina and Reynosa, Mexico.  In addition, as part of the program, certain production activities were relocated from our Greenville, South Carolina manufacturing facility to our manufacturing facility in Bialystok, Poland.  The following table summarizes the Plant Rationalization Program’s current forecast estimate through the end of the program, and the amounts incurred through December 31, 2017:

	Forecast		Amounts Incurred Through December 31, 2017
	(In thousands)
Restructuring and integration expense	$	5,800	$	5,610
Capital expenditures		3,900		3,900
Temporary incremental operating expense		3,100		3,082
Total	$	12,800	$	12,592

Temporary incremental operating expense consists of labor and overhead inefficiencies during the program resulting from running duplicate facilities.

Wire and Cable Relocation

In connection with our acquisition of the North American automotive ignition wire business of General Cable Corporation in May 2016, we incurred certain integration expenses, including costs incurred in connection with the consolidation of the General Cable Corporation Altoona, Pennsylvania wire distribution center into our existing wire distribution center in Edwardsville, Kansas and the relocation of certain machinery and equipment.  In October 2016, we further announced our plan to relocate all production from the acquired Nogales, Mexico wire set assembly operation to our existing wire assembly facility in Reynosa, Mexico and to close the Nogales, Mexico plant.  The following table summarizes the Wire and Cable Relocation Program’s current forecast estimate through the end of the program, and the amounts incurred through December 31, 2017:

	Forecast		Amounts Incurred Through December 31, 2017
	(In thousands)
Restructuring and integration expense	$	4,100	$	2,473
Capital expenditures		700		550
Temporary incremental operating expense		5,900		4,189
Total	$	10,700	$	7,212

Temporary incremental operating expense consists of labor and overhead inefficiencies during the program resulting from running duplicate facilities.

Orlando Plant Rationalization Program

In January 2017, to further our ongoing efforts to improve operating efficiencies and reduce costs, we finalized our intention to implement a plant rationalization initiative at our Orlando, Florida facility.  As part of the plant rationalization, we will relocate production activities from our Orlando, Florida manufacturing facility to Independence, Kansas, and close our Orlando, Florida facility.  In addition, certain production activities will be relocated from our Independence, Kansas manufacturing facility to our manufacturing facility in Reynosa, Mexico.  The following table summarizes the Orlando Plant Rationalization Program’s current forecast estimate through the end of the program, and the amounts incurred through December 31, 2017:

	Forecast		Amounts Incurred Through December 31, 2017
	(In thousands)
Restructuring and integration expense	$	2,900	$	1,758
Capital expenditures		800		530
Temporary incremental operating expense		300		158
Total	$	4,000	$	2,446

Temporary incremental operating expense consists of labor and overhead inefficiencies during the program resulting from running duplicate facilities.

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For a detailed discussion on the restructuring and integration costs, see Note 3, “Restructuring and Integration Expense (Income),” of the notes to our consolidated financial statements.

Liquidity and Capital Resources

Operating Activities.  During 2017, cash provided by operations was $64.6 million, compared to $97.8 million in 2016.  During 2017, the year-over-year decrease in operating cash flow is primarily the result of (1) lower net earnings, which was offset, in part, by the decrease in deferred tax assets as a result of the enactment of the Tax Cuts and Jobs Act; (2) the year-over-year decrease in accounts payable compared to the year-over-year increase in accounts payable in the same period of 2016; (3) the year-over-year decrease in sundry payables and accrued expenses compared to the year-over-year increase in sundry payables and accrued expenses in the same period of 2016; and (4) the year-over-year increase in prepaid expenses and other current assets compared to the year-over-year decrease in prepaid expenses and other current assets in the same period of 2016.  Partially offsetting the unfavorable result in operating cash flow was (1) the smaller year-over-year increase in accounts receivable; and (2) the smaller year-over-year increase in inventories.

Net earnings during 2017 were $38 million compared to $60.4 million in the same period of 2016.  As a result of the enactment of the Tax Cuts and Jobs Act, included in net earnings in 2017 is a noncash increase in the provision for income taxes of $17.5 million, resulting from the remeasurement of our deferred tax assets of $16.1 million, and an increase in tax of $1.4 million due to the deemed repatriation of earnings of our foreign subsidiaries, which offset, in part, the year-over-year decline in net earnings.  During the year ended December 31, 2017, (1) the year-over-year decrease in accounts payable was $7.2 million compared to the year-over-year increase in accounts payable of $7.3 million in 2016; (2) the year-over-year decrease in sundry payables and accrued expenses was $6 million compared to the year-over-year increase in sundry payables and accrued expenses of $21 million in 2016; (3) the year-over-year increase in prepaid expenses and other current assets was $4.9 million compared to the year-over-year decrease in prepaid expenses and other current assets of $3.5 million in 2016; (4) the year-over-year increase in receivables was $5.1 million compared to the year-over-year increase in receivables of $8.8 million in 2016; and (5) the year-over-year increase in inventories was $13.9 million compared to the year-over-year increase in inventories of $20.2 million in 2016.  The decrease in sundry payables and accrued expenses reflects the impact of lower year-over-year incentive compensation expenses.  We continue to actively manage our working capital to maximize our operating cash flow.

During 2016, cash provided by operations was $97.8 million, compared to $65.2 million in 2015.  During 2016, cash provided by operations was favorably impacted by (1) net earnings of $60.4 million compared to net earnings of $46 million in 2015; (2) the increase in accounts payable of $7.3 million compared to the year-over-year increase in accounts payable of $1.9 million in 2015; (3) the increase in sundry payables and accrued expenses of $21 million compared to the year-over-year increase in sundry payables and accrued expenses of $1.9 million in 2015; and (4) the decrease in prepaid expenses and other current assets of $3.5 million compared to the year-over-year decrease in prepaid expenses and other current assets of $0.4 million.  Partially offsetting the favorable result in operating cash flow was (1) the increase in accounts receivable of $8.8 million compared to the year-over-year increase in accounts receivable of $2 million in 2015; and (2) the increase in inventory of $20.2 million compared to the year-over-year increase in inventory of $12.5 million in 2015.  The higher year-over-year increase in sundry payables and accrued expenses in 2016 as compared to 2015 reflects higher employee compensation, and restructuring and integration accruals, which were paid in 2017.  The higher year-over-year increase in inventories in 2016 as compared to 2015 is the result of “safety stock” built in connection with our restructuring and integration programs, while the comparative increase in accounts receivable is the result of the impact of our May 2016 acquisition of the North American automotive ignition wire business of General Cable Corporation.  We continue to actively manage our working capital to maximize our operating cash flow.

Investing Activities.  Cash used in investing activities was $31.2 million in 2017, compared to $88 million in 2016 and $18 million in 2015.  Investing activities in 2017 consisted of (1) the payment $6.8 million representing the first two contributions of the approximate $12.5 million for our acquisition of a 50% interest in a joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd., a China-based manufacturer of air conditioning compressors for the automotive aftermarket and the Chinese OE market and (2) capital expenditures of $24.4 million.

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Cash used in investing activities was $88 million in 2016.  Investing activities in 2016 consisted of (1) our acquisition of certain assets and the assumption of certain liabilities of General Cable Corporation’s automotive ignition wire business in North America as well as 100% of the equity interests of a General Cable subsidiary in Nogales, Mexico for $67.3 million, net of cash acquired and (2) capital expenditures of $20.9 million.

Cash used in investing activities was $18 million in 2015 which consisted of capital expenditures of $18 million.

Financing Activities.  Cash used in financing activities was $35.9 million in 2017, compared to $7.8 million in 2016, and $41.2 million in 2015.  During 2017, borrowings under our revolving credit facility and our Polish overdraft facility, along with cash provided by operating activities were used to fund the first two contributions of our acquisition of a 50% interest in a joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd., purchase shares of our common stock, pay dividends and fund our capital expenditures.  During 2017, we increased borrowings under our revolving credit facility by $2.2 million; borrowed $4.1 million under the Polish overdraft facility, net of payments under our capital lease obligations; and made cash payments of $24.4 million for the repurchase of our common stock.

Cash used by finance activities was $7.8 million in 2016.  Borrowings under our revolving credit facility, along with cash provided by operating activities, were used to fund the acquisition of the North American automotive ignition business of General Cable Corporation, purchase shares of our common stock, pay dividends and fund capital expenditures.  During 2016, we increased borrowings under our revolving credit facility by $7.4 million and made cash payments of $0.4 million for the repurchase of our common stock.

Cash used by finance activities was $41.2 million in 2015.  Cash provided by operating cash flow in 2015 was used to fund capital expenditures, pay dividends, purchase shares of our common stock and reduce borrowings under our revolving credit facility.  During 2015, we reduced borrowings under our revolving credit facilities by $9.1 million and made cash payments of $19.6 million for the repurchase of our common stock.

Dividends of $17.3 million, $15.4 million and $13.7 million were paid in 2017, 2016 and 2015, respectively.  Quarterly dividends were paid at a rate of $0.19 per share in 2017, $0.17 per share in 2016 and $0.15 per share in 2015.  In February 2018, our Board of Directors voted to increase our quarterly dividend from $0.19 per share in 2017 to $0.21 per share in 2018.

Liquidity

Our primary cash requirements include working capital, capital expenditures, regular quarterly dividends, stock repurchases, principal and interest payments on indebtedness and acquisitions.  Our primary sources of funds are ongoing net cash flows from operating activities and availability under our secured revolving credit facility (as detailed below).

In October 2015, we entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as agent, and a syndicate of lenders for a senior secured revolving credit facility with a line of credit of up to $250 million (with an additional $50 million accordion feature) and a maturity date in October 2020.  The line of credit under the agreement also allows for a $10 million line of credit to Canada as part of the $250 million available for borrowing.  Direct borrowings under the credit agreement bear interest at LIBOR plus a margin ranging from 1.25% to 1.75% based on our borrowing availability, or floating at the alternate base rate plus a margin ranging from 0.25% to 0.75% based on our borrowing availability, at our option.  The credit agreement is guaranteed by certain of our subsidiaries and secured by certain of our assets.

Borrowings under the credit agreement are secured by substantially all of our assets, including accounts receivable, inventory and certain fixed assets, and those of certain of our subsidiaries.  Availability under the credit agreement is based on a formula of eligible accounts receivable, eligible inventory, eligible equipment and eligible fixed assets.  After taking into account outstanding borrowings under the credit agreement, there was an additional $142.9 million available for us to borrow pursuant to the formula at December 31, 2017.  Outstanding borrowings under the credit agreement, which are classified as current liabilities, were $57 million and $54.8 million at December 31, 2017 and 2016, respectively.  Borrowings under the credit agreement have been classified as current liabilities based upon the accounting rules and certain provisions in the agreement.

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At December 31, 2017, the weighted average interest rate on our credit agreement was 2.7%, which consisted of $57 million in direct borrowings.  At December 31, 2016, the weighted average interest rate on our credit agreement was 2.3%, which consisted of $45 million in direct borrowings at 2% and an alternative base rate loan of $9.8 million at 4%.   Our average daily alternative base rate/index loan balance was $3.8 million and $2.6 million during 2017 and 2016, respectively.

At any time that our borrowing availability is less than the greater of either (a) $25 million, or 10% of the commitments if fixed assets are not included in the borrowing base, or (b) $31.25 million, or 12.5% of the commitments if fixed assets are included in the borrowing base, the terms of the credit agreement provide for, among other provisions, a financial covenant requiring us, on a consolidated basis, to maintain a fixed charge coverage ratio of 1:1 at the end of each fiscal quarter (rolling four quarters).  As of December 31, 2017, we were not subject to these covenants.  The credit agreement permits us to pay cash dividends of $20 million and make stock repurchases of $20 million in any fiscal year subject to a minimum availability of $25 million.  Provided specific conditions are met, the credit agreement also permits acquisitions, permissible debt financing, capital expenditures, and cash dividend payments and stock repurchases of greater than $20 million.

In December 2017, our Polish subsidiary, SMP Poland sp.z.o.o., entered into an overdraft facility with HSBC Bank Polska S.A. (“HSBC Poland”) for Zloty 30 million (approximately $8.2 million).  The facility expires on December 2018.  Borrowings under the overdraft facility will bear interest at a rate equal to WIBOR + 0.75% and are guaranteed by Standard Motor Products, Inc., the ultimate parent company.  At December 31, 2017, borrowings under the overdraft facility were Zloty 16.2 million (approximately $4.7 million).

In order to reduce our accounts receivable balances and improve our cash flow, we sell undivided interests in certain of our receivables to financial institutions.  We enter these agreements at our discretion when we determine that the cost of factoring is less than the cost of servicing our receivables with existing debt.  Under the terms of the agreements, we retain no rights or interest, have no obligations with respect to the sold receivables, and do not service the receivables after the sale.  As such, these transactions are being accounted for as a sale.

Pursuant to these agreements, we sold $780.5 million and $759.2 million of receivables for the years ended December 31, 2017 and 2016, respectively.  A charge in the amount of $22.6 million, $19.3 million and $14.3 million related to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015, respectively.  If we do not enter into these arrangements or if any of the financial institutions with which we enter into these arrangements were to experience financial difficulties or otherwise terminate these arrangements, our financial condition, results of operations and cash flows could be materially and adversely affected by delays or failures to collect future trade accounts receivable.

In February 2015, our Board of Directors authorized the purchase of up to $10 million of our common stock under a stock repurchase program.  In July 2015, our Board of Directors authorized the purchase of up to an additional $10 million of our common stock under another stock repurchase program.  Under these programs, during the year ended December 31, 2015, we repurchased 551,791 shares of our common stock at a total cost of $19.6 million.  As of December 31, 2015, there was approximately $0.4 million available for future stock repurchases under the programs.  In January 2016, we repurchased an additional 10,135 shares of our common stock under the programs at a total cost of $0.4 million, thereby completing the 2015 Board of Directors authorizations.  Our Board of Directors did not authorize a stock repurchase program in 2016.

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In February 2017, our Board of Directors authorized the purchase of up to $20 million of our common stock under a stock repurchase program.  In November 2017, our Board of Directors authorized the purchase of up to an additional $10 million of our common stock under another stock repurchase program.  Under these programs, during the year ended December 31, 2017, we repurchased 539,760 shares of our common stock at a total cost of $24.8 million.  As of December 31, 2017, there was approximately $5.2 million available for future stock repurchases under the programs.  During the period from January 1, 2018 through February 16, 2018, we repurchased an additional 35,756 shares of our common stock under the programs at a total cost of $1.7 million, thereby leaving approximately $3.5 million available for future stock purchases under the programs.

In February 2016, in connection with our ongoing efforts to improve operating efficiencies and reduce costs, we finalized our intention to implement a plant rationalization initiative.  As part of the plant rationalization, certain production activities will be relocated from our Grapevine, Texas manufacturing facility to facilities in Greenville, South Carolina and Reynosa, Mexico, certain service functions will be relocated from Grapevine, Texas to our administrative offices in Lewisville, Texas, and our Grapevine, Texas facility will be closed.  As of December 31, 2017, all of our Grapevine, Texas production activities have been relocated to facilities in Greenville, South Carolina and Reynosa, Mexico.  In addition, as part of the program, certain production activities were relocated from our Greenville, South Carolina manufacturing facility to our manufacturing facility in Bialystok, Poland.  One-time plant rationalization costs of approximately $12.8 million are expected to be incurred, consisting of restructuring and integration expenses of approximately $5.8 million related to employee severance and relocation of certain machinery and equipment; capital expenditures of approximately $3.9 million; and temporary incremental operating expenses of approximately $3.1 million, which consists of labor and overhead inefficiencies during the program resulting from running duplicate facilities.  Substantially all of the one-time plant rationalization costs have been incurred as of December 31, 2017, a portion of which will result in future cash expenditures.  As of December 31, 2017, cash expenditures of approximately $11.1 million have been made related to the program.  The plant rationalization program is substantially completed.

In connection with our acquisition of the North American automotive ignition wire business of General Cable Corporation in May 2016, we incurred certain integration expenses, including costs incurred in connection with the consolidation of the General Cable Corporation Altoona, Pennsylvania wire distribution center into our existing wire distribution center in Edwardsville, Kansas and the relocation of certain machinery and equipment.  In October 2016, we further announced our plan to relocate all production from the acquired Nogales, Mexico wire set assembly operation to our existing wire assembly facility in Reynosa, Mexico and to close the Nogales, Mexico plant.  One-time plant rationalization costs related to the program of approximately $10.7 million are expected to be incurred, consisting of restructuring and integration expenses of approximately $4.1 million related to employee severance and relocation of certain machinery and equipment; capital expenditures of approximately $0.7 million; and temporary incremental operating expenses of approximately $5.9 million, which consists of labor and overhead inefficiencies during the program resulting from running duplicate facilities.  Substantially all of the one-time rationalization costs are expected to result in future cash expenditures and will be recognized throughout the program.  As of December 31, 2017, cash expenditures of approximately $6.9 million have been made related to the program.  We anticipate that the wire and cable relocation program will be completed by the second half of 2018.

In January 2017, to further our ongoing efforts to improve operating efficiencies and reduce costs, we finalized our intention to implement a plant rationalization initiative at our Orlando, Florida facility.  As part of the plant rationalization, we will relocate production activities from our Orlando, Florida manufacturing facility to Independence, Kansas, and close our Orlando, Florida facility.  In addition, certain production activities will be relocated from our Independence, Kansas manufacturing facility to our manufacturing facility in Reynosa, Mexico.  One-time plant rationalization costs related to the program of approximately $4 million are expected to be incurred, consisting of restructuring and integration expenses of approximately $2.9 million related to employee severance and relocation of certain machinery and equipment; capital expenditures of approximately $0.8 million; and temporary incremental operating expenses of approximately $0.3 million, which consists of labor and overhead inefficiencies during the program resulting from running duplicate facilities.  Substantially all of the one-time rationalization costs are expected to result in future cash expenditures and will be recognized throughout the program.  As of December 31, 2017, cash expenditures of approximately $1.5 million have been made related to the program.  We anticipate that the Orlando plant rationalization program will be completed by the second half of 2018.

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We anticipate that our cash flow from operations, available cash and available borrowings under our revolving credit facility will be adequate to meet our future liquidity needs for at least the next twelve months.  Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity or capital requirements.  If material adverse developments were to occur in any of these areas, there can be no assurance that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our revolving credit facility in amounts sufficient to enable us to pay the principal and interest on our indebtedness, or to fund our other liquidity needs.  In addition, if we default on any of our indebtedness, or breach any financial covenant in our revolving credit facility, our business could be adversely affected.

The following table summarizes our contractual commitments as of December 31, 2017 and expiration dates of commitments through 2026(a) (b):

(In thousands)	2018		2019		2020		2021		2022			2023- 2026	Total
Lease obligations	$	9,485	$	8,078	$	6,990	$	6,355	$	5,364	$	3,932	$	40,204
Postretirement		440		42		38		33		29		91		673
Severance payments related to restructuring and integration		2,413		209		163		56		13		—		2,854
Total commitments	$	12,338	$	8,329	$	7,191	$	6,444	$	5,406	$	4,023	$	43,731

(a) Indebtedness under our revolving credit facilities is not included in the table above as it is reported as a current liability in our consolidated balance sheets.  As of December 31, 2017, amounts outstanding under our revolving credit facilities were $57 million.

(b) We anticipate total aggregate future severance payments of approximately $2.9 million related to the plant rationalization program, the wire and cable relocation program and the Orlando plant rationalization program.  All programs are expected to be completed by the second half of 2018.

Critical Accounting Policies

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 1 of the notes to our consolidated financial statements. You should be aware that preparation of our consolidated annual and quarterly financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. We can give no assurance that actual results will not differ from those estimates.  Although we do not believe that there is a reasonable likelihood that there will be a material change in the future estimate or in the assumptions that we use in calculating the estimate, unforeseen changes in the industry, or business could materially impact the estimate and may have a material adverse effect on our business, financial condition and results of operations.

Revenue Recognition. We derive our revenue primarily from sales of replacement parts for motor vehicles from both our Engine Management and Temperature Control Segments.  We recognize revenues when products are shipped and title has been transferred to a customer, the sales price is fixed and determinable, and collection is reasonably assured.  For certain of our sales of remanufactured products, we also charge our customers a deposit for the return of a used core component which we can use in our future remanufacturing activities.  Such deposit is not recognized as revenue but rather carried as a core liability.  The liability is extinguished when a core is actually returned to us.  We estimate and record provisions for cash discounts, quantity rebates, sales returns and warranties in the period the sale is recorded, based upon our prior experience and current trends.  As described below, significant management judgments and estimates must be made and used in estimating sales returns and allowances relating to revenue recognized in any accounting period.

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Inventory Valuation.  Inventories are valued at the lower of cost and net realizable value.  Cost is determined on the first-in, first-out basis.  Where appropriate, standard cost systems are utilized for purposes of determining cost; the standards are adjusted as necessary to ensure they approximate actual costs.  Estimates of lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation of the inventory.

We also evaluate inventories on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand.  For inventory deemed to be obsolete, we provide a reserve on the full value of the inventory. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates our estimate of future demand.  Future projected demand requires management judgment and is based upon (a) our review of historical trends and (b) our estimate of projected customer specific buying patterns and trends in the industry and markets in which we do business.  Using rolling twelve month historical information, we estimate future demand on a continuous basis.  As such, the historical volatility of such estimates has been minimal.

We utilize cores (used parts) in our remanufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps.  The production of air conditioning compressors, diesel injectors, and diesel pumps involves the rebuilding of used cores, which we acquire either in outright purchases from used parts brokers or from returns pursuant to an exchange program with customers.  Under such exchange programs, we reduce our inventory, through a charge to cost of sales, when we sell a finished good compressor, diesel injector, or diesel pump and put back to inventory the used core exchanged at standard cost through a credit to cost of sales when it is actually received from the customer.

Sales Returns and Other Allowances and Allowance for Doubtful Accounts. We must make estimates of potential future product returns related to current period product revenue.  We analyze historical returns, current economic trends, and changes in customer demand when evaluating the adequacy of the sales returns and other allowances.  Significant judgments and estimates must be made and used in connection with establishing the sales returns and other allowances in any accounting period.  At December 31, 2017, the allowance for sales returns was $35.9 million.

Similarly, we must make estimates of the uncollectability of our accounts receivables. We specifically analyze accounts receivable and analyze historical bad debts, customer concentrations, customer credit‑worthiness, current economic trends and changes in our customer payment terms when evaluating the adequacy of the allowance for doubtful accounts.  At December 31, 2017, the allowance for doubtful accounts and for discounts was $5 million.

New Customer Acquisition Costs.  New customer acquisition costs refer to arrangements pursuant to which we incur change-over costs to induce a new customer to switch from a competitor’s brand.  In addition, change-over costs include the costs related to removing the new customer’s inventory and replacing it with Standard Motor Products inventory commonly referred to as a stocklift.  New customer acquisition costs are recorded as a reduction to revenue when incurred.

Accounting for Income Taxes.  As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate.  This process involves estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes.  These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we believe that it is more likely than not that the deferred tax assets will not be recovered, we must establish a valuation allowance.  To the extent we establish a valuation allowance or increase or decrease this allowance in a period, we must include an expense or recovery, respectively, within the tax provision in the statement of operations.

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We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized.  In determining whether a valuation allowance is warranted, we evaluate factors such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies. We consider all positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the deferred tax asset.  We consider cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings.  Assumptions regarding future taxable income require significant judgment.  Our assumptions are consistent with estimates and plans used to manage our business, which includes restructuring and integration initiatives that are expected to generate significant savings in future periods.

The valuation allowance of $0.4 million as of December 31, 2017 is intended to provide for the uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers. The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income in these jurisdictions and the period over which our deferred tax assets will be recoverable.  Based on these considerations, we believe it is more likely than not that we will realize the benefit of the net deferred tax asset of $32.4 million as of December 31, 2017, which is net of the remaining valuation allowance.

In the event that actual results differ from these estimates, or we adjust these estimates in future periods for current trends or expected changes in our estimating assumptions, we may need to modify the level of the valuation allowance which could materially impact our business, financial condition and results of operations.

In accordance with generally accepted accounting practices, we recognize in our financial statements only those tax positions that meet the more-likely-than-not recognition threshold. We establish tax reserves for uncertain tax positions that do not meet this threshold.  As of December 31, 2017, we do not believe there is a need to establish a liability for uncertain tax positions.  Penalties and interest associated with income tax matters are included in the provision for income taxes in our consolidated statement of operations.

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (“the Act”), which included a broad range of tax reform affecting businesses, including the reduction of the federal corporate tax rate from 35% to 21%, changes in the deductibility of certain business expenses, and the manner in which international operations are taxed in the U.S.  For a discussion of the impact of the Act on our consolidated financial statements, see Note 16, “Income Taxes,” of the notes to our consolidated financial statements.

Valuation of Long‑Lived and Intangible Assets and Goodwill.  At acquisition, we estimate and record the fair value of purchased intangible assets, which primarily consists of customer relationships, trademarks and trade names, patents and non-compete agreements.  The fair values of these intangible assets are estimated based on our assessment.  Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.  Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment.  Intangible assets determined to have definite lives are amortized over their remaining useful lives.

We assess the impairment of long‑lived assets, identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  With respect to goodwill and identifiable intangible assets having indefinite lives, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value is below its carrying amount.  Factors we consider important, which could trigger an impairment review, include the following: (a) significant underperformance relative to expected historical or projected future operating results; (b) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (c) significant negative industry or economic trends.  We review the fair values using the discounted cash flows method and market multiples.

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When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, than the two-step impairment test is not required.  If we are unable to reach this conclusion, then we would perform the two-step impairment test.  Initially, the fair value of the reporting unit is compared to its carrying amount.  To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit; we are required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired.  In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize a charge for impairment to the extent the carrying value exceeds the implied fair value. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.  In addition, identifiable intangible assets having indefinite lives are reviewed for impairment on an annual basis using a methodology consistent with that used to evaluate goodwill.

Intangible assets having definite lives and other long-lived assets are reviewed for impairment whenever events such as product discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable.  In reviewing for impairment, we compare the carrying value of such assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition.  When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets fair value and their carrying value.

There are inherent assumptions and estimates used in developing future cash flows requiring our judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and long‑lived asset impairment including projecting revenues, interest rates, tax rates and the cost of capital.  Many of the factors used in assessing fair value are outside our control and it is reasonably likely that assumptions and estimates will change in future periods.  These changes can result in future impairments.  In the event our planning assumptions were modified resulting in impairment to our assets, we would be required to include an expense in our statement of operations, which could materially impact our business, financial condition and results of operations.

Postretirement Medical Benefits.  Each year, we calculate the costs of providing retiree benefits under the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 712, Nonretirement Postemployment Benefits.  The determination of postretirement plan obligations and their associated costs requires the use of actuarial computations to estimate participant plan benefits the employees will be entitled to.  The key assumptions used in making these calculations are the eligibility criteria of participants and the discount rate used to value the future obligation.  The discount rate reflects the yields available on high-quality, fixed-rate debt securities.

Share-Based Compensation.  The provisions of FASB ASC 718, Stock Compensation, require the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on estimated fair values on the grant date.  The value of the portion of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service periods in our condensed consolidated statement of operations.  Forfeitures are estimated at the time of grant based on historical trends in order to estimate the amount of share-based awards that will ultimately vest.  We monitor actual forfeitures for any subsequent adjustment to forfeiture rates.

Environmental Reserves.  We are subject to various U.S. Federal, state and local environmental laws and regulations and are involved in certain environmental remediation efforts. We estimate and accrue our liabilities resulting from such matters based upon a variety of factors including the assessments of environmental engineers and consultants who provide estimates of potential liabilities and remediation costs. Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years.  Potential recoveries from insurers or other third parties of environmental remediation liabilities are recognized independently from the recorded liability, and any asset related to the recovery will be recognized only when the realization of the claim for recovery is deemed probable.

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Asbestos Litigation. We are responsible for certain future liabilities relating to alleged exposure to asbestos-containing products.  In accordance with our accounting policy, our most recent actuarial study as of August 31, 2017 estimated an undiscounted liability for settlement payments, excluding legal costs and any potential recovery from insurance carriers, ranging from $35.2 million to $54 million for the period through 2060.  Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range of settlement payments was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required.  Based upon the results of the August 31, 2017 actuarial study, in September 2017 we increased our asbestos liability to $35.2 million, the low end of the range, and recorded an incremental pre-tax provision of $6 million in earnings (loss) from discontinued operations in the accompanying statement of operations.  In addition, according to the updated study, future legal costs, which are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations, are estimated to range from $44.3 million to $79.6 million for the period through 2060.  We will continue to perform an annual actuarial analysis during the third quarter of each year for the foreseeable future.  Based on this analysis and all other available information, we will continue to reassess the recorded liability and, if deemed necessary, record an adjustment to the reserve, which will be reflected as a loss or gain from discontinued operations.

Other Loss Reserves. We have other loss exposures, for such matters as legal claims and legal proceedings.  Establishing loss reserves for these matters requires estimates, judgment of risk exposure, and ultimate liability.  We record provisions when the liability is considered probable and reasonably estimable.  Significant judgment is required in both the determination of probability and the determination as to whether an exposure can be reasonably estimated.  As additional information becomes available, we reassess our potential liability related to these matters.  Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

Recently Issued Accounting Pronouncements

For a detailed discussion on recently issued accounting pronouncements and their impact on our consolidated financial statements, see Note 1, “Summary of Significant Accounting Policies” of the notes to our consolidated financial statements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk, primarily related to foreign currency exchange and interest rates. These exposures are actively monitored by management. Our exposure to foreign exchange rate risk is due to certain costs, revenues and borrowings being denominated in currencies other than one of our subsidiary’s functional currency.  Similarly, we are exposed to market risk as the result of changes in interest rates, which may affect the cost of our financing. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage exposures.  We do not hold or issue derivative financial instruments for trading or speculative purposes.  As of December 31, 2017, we did not have any derivative financial instruments.

Exchange Rate Risk

We have exchange rate exposure, primarily, with respect to the Canadian Dollar, the Euro, the British Pound, the Polish Zloty, the Mexican Peso, the Taiwan Dollar, the Chinese Yuan Renminbi and the Hong Kong Dollar.  As of December 31, 2017, our monetary assets and liabilities which are subject to this exposure are immaterial, therefore, the potential immediate loss to us that would result from a hypothetical 10% change in foreign currency exchange rates would not be expected to have a material impact on our earnings or cash flows.  This sensitivity analysis assumes an unfavorable 10% fluctuation in the exchange rates affecting the foreign currencies in which monetary assets and liabilities are denominated and does not take into account the incremental effect of such a change on our foreign currency denominated revenues.

Interest Rate Risk

We manage our exposure to interest rate risk through the proportion of fixed rate debt and variable rate debt in our debt portfolio. To manage a portion of our exposure to interest rate changes, we have in the past entered into interest rate swap agreements.  We invest our excess cash in highly liquid short-term investments.  Substantially all of our debt is variable rate debt as of December 31, 2017 and 2016.  Depending upon the level of borrowings under our revolving credit facility and our Polish overdraft facility, and our excess cash, the effect of a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate may have an approximate $0.8 million negative impact on our earnings or cash flows.

In addition, from time to time, we sell undivided interests in certain of our receivables to financial institutions.  We enter these agreements at our discretion when we determine that the cost of factoring is less than the cost of servicing our receivables with existing debt.  During the year ended December 31, 2017, we sold $780.5 million of receivables.  Depending upon the level of sales of receivables pursuant these agreements, the effect of a hypothetical, instantaneous and unfavorable change of 100 basis points in the margin rate may have an approximate $7.8 million negative impact on our earnings or cash flows.  The charge related to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page No.
Management’s Report on Internal Control over Financial Reporting	48
Report of Independent Registered Public Accounting Firm—Internal Control Over Financial Reporting	49
Report of Independent Registered Public Accounting Firm—Consolidated Financial Statements	51
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015	52
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015	53
Consolidated Balance Sheets as of December 31, 2017 and 2016	54
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015	55
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015	56
Notes to Consolidated Financial Statements	57

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MANAGEMENT’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

To the Stockholders of

Standard Motor Products, Inc. and Subsidiaries:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act). Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Because of these inherent limitations, internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation, and may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control - Integrated Framework.  Based on our assessment using those criteria, we concluded that, as of December 31, 2017, our internal control over financial reporting is effective.

Our independent registered public accounting firm, KPMG LLP, has audited our consolidated financial statements as of and for the year ended December 31, 2017 and has also audited the effectiveness of our internal control over financial reporting as of December 31, 2017.  KPMG’s report appears on the following pages of this “Item 8. Financial Statements and Supplementary Data.”

48

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM –

INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Stockholders and Board of Directors

Standard Motor Products, Inc. and Subsidiaries:

Opinion on Internal Control Over Financial Reporting

We have audited Standard Motor Products, Inc. and subsidiaries (the “Company”) internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts (collectively, the “consolidated financial statements”), and our report dated February 22, 2018 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

New York, New York

February 22, 2018

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM –

CONSOLIDATED FINANCIAL STATEMENTS

To the Stockholders and Board of Directors

Standard Motor Products, Inc. and Subsidiaries:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Standard Motor Products, Inc. and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2017, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, 2018 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2010.

New York, New York

February 22, 2018

51

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2017			2016			2015
	(Dollars in thousands, except share and per share data)
Net sales	$	1,116,143		$	1,058,482		$	971,975
Cost of sales		789,487			735,995			690,987
Gross profit		326,656			322,487			280,988
Selling, general and administrative expenses		223,584			221,658			206,287
Restructuring and integration expense (income)		6,173			3,957			(134	)
Other income, net		1,275			1,195			1,025
Operating income		98,174			98,067			75,860
Other non-operating income (expense), net		597			2,059			(220	)
Interest expense		2,329			1,556			1,537
Earnings from continuing operations before taxes		96,442			98,570			74,103
Provision for income taxes		52,812			36,158			25,983
Earnings from continuing operations		43,630			62,412			48,120
Loss from discontinued operations, net of income tax benefit of $3,769, $1,322 and $1,401		(5,654	)		(1,982	)		(2,102	)
Net earnings	$	37,976		$	60,430		$	46,018
Net earnings per common share – Basic:
Earnings from continuing operations	$	1.92		$	2.75		$	2.11
Discontinued operations		(0.25	)		(0.09	)		(0.09	)
Net earnings per common share – Basic	$	1.67		$	2.66		$	2.02
Net earnings per common share – Diluted:
Earnings from continuing operations	$	1.88		$	2.70		$	2.08
Discontinued operations		(0.24	)		(0.08	)		(0.09	)
Net earnings per common share – Diluted	$	1.64		$	2.62		$	1.99
Dividends declared per share	$	0.76		$	0.68		$	0.60
Average number of common shares		22,726,491			22,722,517			22,811,862
Average number of common shares and dilutive common shares		23,198,392			23,082,578			23,142,394

See accompanying notes to consolidated financial statements.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Net earnings	$	37,976		$	60,430		$	46,018
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		7,027			(5,294	)		(5,739	)
Pension and postretirement plans:
Amortization of:
Prior service benefit		—			(54	)		(112	)
Unrecognized (gain) loss		(661	)		763			2,261
Unrecognized actuarial gains		481			542			462
Plan settlement		—			—			654
Foreign currency exchange rate changes		—			3			(23	)
Income tax related to pension and postretirement plans		72			(514	)		(1,325	)
Pension and postretirement plans, net of tax		(108	)		740			1,917
Total other comprehensive income (loss), net of tax		6,919			(4,554	)		(3,822	)
Comprehensive income	$	44,895		$	55,876		$	42,196

See accompanying notes to consolidated financial statements.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2017			2016
	(Dollars in thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	17,323		$	19,796
Accounts receivable, less allowances for discounts and doubtful accounts of $4,967 and $4,425 in 2017 and 2016, respectively		140,057			134,630
Inventories		326,411			312,477
Prepaid expenses and other current assets		12,300			7,318
Total current assets		496,091			474,221
Property, plant and equipment, net		89,103			78,499
Goodwill		67,413			67,231
Other intangibles, net		56,261			64,056
Deferred incomes taxes		32,420			51,127
Other assets		46,279			33,563
Total assets	$	787,567		$	768,697
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Notes payable	$	57,000		$	54,812
Current portion of other debt		4,699			43
Accounts payable		77,990			83,878
Sundry payables and accrued expenses		51,911			45,147
Accrued customer returns		35,916			40,176
Accrued rebates		35,346			29,127
Payroll and commissions		23,035			30,658
Total current liabilities		285,897			283,841
Long-term debt		79			120
Other accrued liabilities		14,561			12,380
Accrued asbestos liabilities		33,376			31,328
Total liabilities		333,913			327,669
Commitments and contingencies
Stockholders’ equity:
Common Stock - par value $2.00 per share:
Authorized 30,000,000 shares, issued 23,936,036 shares		47,872			47,872
Capital in excess of par value		100,057			96,850
Retained earnings		357,153			336,464
Accumulated other comprehensive income		(4,109	)		(11,028	)
Treasury stock - at cost (1,424,025 shares and 1,101,487 shares in 2017 and 2016, respectively)		(47,319	)		(29,130	)
Total stockholders’ equity		453,654			441,028
Total liabilities and stockholders’ equity	$	787,567		$	768,697

See accompanying notes to consolidated financial statements.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	37,976		$	60,430		$	46,018
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		23,916			20,457			17,637
Amortization of deferred financing cost		343			346			635
Increase to allowance for doubtful accounts		972			210			3,371
Increase to inventory reserves		3,300			5,371			1,864
Amortization of deferred gain on sale of buildings		(1,048	)		(1,048	)		(1,048	)
Equity (income) loss from joint ventures		602			(2,029	)		(976	)
Employee Stock Ownership Plan allocation		2,159			2,021			2,208
Stock-based compensation		7,638			6,127			5,379
Excess tax benefits related to exercise of employee stock grants		—			(849	)		(1,254	)
(Increase) decrease in deferred income taxes		19,059			(691	)		(1,494	)
Increase (decrease) in tax valuation allowance		(128	)		65			87
Loss on discontinued operations, net of tax		5,654			1,982			2,102
Change in assets and liabilities:
Increase in accounts receivable		(5,100	)		(8,826	)		(1,996	)
Increase in inventories		(13,901	)		(20,155	)		(12,503	)
(Increase) decrease in prepaid expenses and other current assets		(4,869	)		3,475			367
Increase (decrease) in accounts payable		(7,186	)		7,345			1,882
Increase (decrease) in sundry payables and accrued expenses		(6,015	)		20,990			1,874
Net changes in other assets and liabilities		1,245			2,584			1,018
Net cash provided by operating activities		64,617			97,805			65,171
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of and investments in businesses		(6,808	)		(67,289	)		—
Capital expenditures		(24,442	)		(20,921	)		(18,047	)
Other investing activities		22			192			36
Net cash used in investing activities		(31,228	)		(88,018	)		(18,011	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line-of-credit agreements		2,188			7,384			(9,131	)
Net borrowings (payments) of other debt and capital lease obligations		4,065			89			(170	)
Purchase of treasury stock		(24,376	)		(377	)		(19,623	)
Increase (decrease) in overdraft balances		(534	)		(254	)		851
Payments of debt issuance costs		—			—			(748	)
Proceeds from exercise of employee stock options		—			—			109
Excess tax benefits related to the exercise of employee stock grants		—			849			1,254
Dividends paid		(17,287	)		(15,447	)		(13,697	)
Net cash used in financing activities		(35,944	)		(7,756	)		(41,155	)
Effect of exchange rate changes on cash		82			(1,035	)		(933	)
Net increase (decrease) in cash and cash equivalents		(2,473	)		996			5,072
CASH AND CASH EQUIVALENTS at beginning of year		19,796			18,800			13,728
CASH AND CASH EQUIVALENTS at end of year	$	17,323		$	19,796		$	18,800
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	1,944		$	1,207		$	901
Income taxes	$	34,543		$	32,505		$	27,513
Noncash investing activity:
Accrual for final contribution of acquired investment	$	5,740		$	—		$	—

See accompanying notes to consolidated financial statements.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years Ended December 31, 2017, 2016 and 2015

	Common Stock		Capital in Excess of Par Value		Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Total
(In thousands)
BALANCE AT DECEMBER 31, 2014	$	47,872	$	91,411	$	259,160		$	(2,652	)	$	(21,638	)	$	374,153
Net earnings		—		—		46,018			—			—			46,018
Other comprehensive loss, net of tax		—		—		—			(3,822	)		—			(3,822	)
Cash dividends paid ($0.60 per share)		—		—		(13,697	)		—			—			(13,697	)
Purchase of treasury stock		—		—		—			—			(19,623	)		(19,623	)
Stock-based compensation and related tax benefits		—		833		—			—			5,700			6,533
Stock options exercised and related tax benefits		—		2		—			—			207			209
Employee Stock Ownership Plan		—		1,001		—			—			1,207			2,208
BALANCE AT DECEMBER 31, 2015		47,872		93,247		291,481			(6,474	)		(34,147	)		391,979
Net earnings		—		—		60,430			—			—			60,430
Other comprehensive loss, net of tax		—		—		—			(4,554	)		—			(4,554	)
Cash dividends paid ($0.68 per share)		—		—		(15,447	)		—			—			(15,447	)
Purchase of treasury stock		—		—		—			—			(377	)		(377	)
Stock-based compensation and related tax benefits		—		3,148		—			—			3,828			6,976
Employee Stock Ownership Plan		—		455		—			—			1,566			2,021
BALANCE AT DECEMBER 31, 2016		47,872		96,850		336,464			(11,028	)		(29,130	)		441,028
Net earnings		—		—		37,976			—			—			37,976
Other comprehensive income, net of tax		—		—		—			6,919			—			6,919
Cash dividends paid ($0.76 per share)		—		—		(17,287	)		—			—			(17,287	)
Purchase of treasury stock		—		—		—			—			(24,779	)		(24,779	)
Stock-based compensation		—		2,193		—			—			5,445			7,638
Employee Stock Ownership Plan		—		1,014		—			—			1,145			2,159
BALANCE AT DECEMBER 31, 2017	$	47,872	$	100,057	$	357,153		$	(4,109	)	$	(47,319	)	$	453,654

See accompanying notes to consolidated financial statements.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Principles of Consolidation

Standard Motor Products, Inc. and subsidiaries (referred to hereinafter in these notes to the consolidated financial statements as “we,” “us,” “our” or the “Company”) is engaged in the manufacture and distribution of replacement parts for motor vehicles in the automotive aftermarket industry with a complementary focus on heavy duty, industrial equipment and the original equipment service market. The consolidated financial statements include our accounts and all domestic and international companies in which we have more than a 50% equity ownership.  Our investments in unconsolidated affiliates are accounted for on the equity method, as we do not have a controlling financial interest but have the ability to exercise significant influence.  All significant inter-company items have been eliminated.

Use of Estimates

In conformity with generally accepted accounting principles, we have made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Some of the more significant estimates include allowances for doubtful accounts, cash discounts, valuation of inventory, valuation of long-lived assets, goodwill and other intangible assets, depreciation and amortization of long-lived assets, product liability exposures, other postretirement benefits, asbestos, environmental and litigation matters, valuation of deferred tax assets, share based compensation and sales returns and other allowances.  We can give no assurances that actual results will not differ from those estimates.  Although we do not believe that there is a reasonable likelihood that there will be a material change in the future estimate or in the assumptions that we use in calculating the estimate, unforeseen changes in the industry, or business could materially impact the estimate and may have a material adverse effect on our business, financial condition and results of operations.

Reclassification

Certain prior period amounts in the accompanying consolidated financial statements and related notes have been reclassified to conform to the 2017 presentation.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Allowance for Doubtful Accounts and Cash Discounts

We do not generally require collateral for our trade accounts receivable.  Accounts receivable have been reduced by an allowance for amounts that may become uncollectible in the future.  These allowances are established based on a combination of write-off history, aging analysis, and specific account evaluations.   When a receivable balance is known to be uncollectible, it is written off against the allowance for doubtful accounts.  Cash discounts are provided based on an overall average experience rate applied to qualifying accounts receivable balances.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Inventories

Inventories are valued at the lower of cost and net realizable value.  Cost is determined on the first-in first-out basis.  Where appropriate, standard cost systems are utilized for purposes of determining cost; the standards are adjusted as necessary to ensure they approximate actual costs.  Estimates of lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation of the inventory.

We also evaluate inventories on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand.  For inventory deemed to be obsolete, we provide a reserve on the full value of the inventory.  Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates our estimate of future demand.  Future projected demand requires management judgment and is based upon (a) our review of historical trends and (b) our estimate of projected customer specific buying patterns and trends in the industry and markets in which we do business.  Using rolling twelve month historical information, we estimate future demand on a continuous basis.  As such, the historical volatility of such estimates has been minimal.  We maintain provisions for inventory reserves of $41.5 million and $47.9 million as of December 31, 2017 and 2016, respectively.

We utilize cores (used parts) in our remanufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps.  The production of air conditioning compressors, diesel injectors, and diesel pumps involves the rebuilding of used cores, which we acquire either in outright purchases from used parts brokers, or from returns pursuant to an exchange program with customers.  Under such exchange programs, we reduce our inventory, through a charge to cost of sales, when we sell a finished good compressor, diesel injector, or diesel pump and put back to inventory the used core exchanged at standard cost through a credit to cost of sales when it is actually received from the customer.

Property, Plant and Equipment

These assets are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows:

	Estimated Life
Buildings	25 to 33-1/2 years
Building improvements	10 to 25 years
Machinery and equipment	5 to 12 years
Tools, dies and auxiliary equipment	3 to 8 years
Furniture and fixtures	3 to 12 years

Leasehold improvements are depreciated over the shorter of the estimated useful life or the term of the lease.  Costs related to maintenance and repairs which do not prolong the assets useful lives are expensed as incurred.  We assess our property, plant and equipment to be held and used for impairment when indicators are present that the carrying value may not be recoverable.

Valuation of Long-Lived and Intangible Assets and Goodwill

At acquisition, we estimate and record the fair value of purchased intangible assets, which primarily consists of customer relationships, trademarks and trade names, patents and non-compete agreements.  The fair values of these intangible assets are estimated based on our assessment.  Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.  Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment.  Intangible assets determined to have definite lives are amortized over their remaining useful lives.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We assess the impairment of long‑lived assets, identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  With respect to goodwill and identifiable intangible assets having indefinite lives, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value is below its carrying amount.  Factors we consider important, which could trigger an impairment review, include the following: (a) significant underperformance relative to expected historical or projected future operating results; (b) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (c) significant negative industry or economic trends. We review the fair values using the discounted cash flows method and market multiples.

When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is not required.  If we are unable to reach this conclusion, then we would perform the two-step impairment test.  Initially, the fair value of the reporting unit is compared to its carrying amount.  To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit; we are required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired.  In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize a charge for impairment to the extent the carrying value exceeds the implied fair value.  The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.  In addition, identifiable intangible assets having indefinite lives are reviewed for impairment on an annual basis using a methodology consistent with that used to evaluate goodwill.

Intangible assets having definite lives and other long-lived assets are reviewed for impairment whenever events such as product discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable.  In reviewing for impairment, we compare the carrying value of such assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets fair value and their carrying value.

There are inherent assumptions and estimates used in developing future cash flows requiring our judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and long‑lived asset impairment including projecting revenues, interest rates, tax rates and the cost of capital.  Many of the factors used in assessing fair value are outside our control and it is reasonably likely that assumptions and estimates will change in future periods.  These changes can result in future impairments.  In the event our planning assumptions were modified resulting in impairment to our assets, we would be required to include an expense in our statement of operations, which could materially impact our business, financial condition and results of operations.

New Customer Acquisition Costs

New customer acquisition costs refer to arrangements pursuant to which we incur change-over costs to induce a new customer to switch from a competitor’s brand.  In addition, change-over costs include the costs related to removing the new customer’s inventory and replacing it with our inventory commonly referred to as a stocklift. New customer acquisition costs are recorded as a reduction to revenue when incurred.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Foreign Currency Translation

Assets and liabilities of our foreign operations are translated into U.S. dollars at year-end exchange rates.  Income statement accounts are translated using the average exchange rates prevailing during the year.  The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) and remains there until the underlying foreign operation is liquidated or substantially disposed of.  Foreign currency transaction gains or losses are recorded in the statement of operations under the caption “other non-operating income (expense), net.”

Revenue Recognition

We derive our revenue primarily from sales of replacement parts for motor vehicles from both our Engine Management and Temperature Control Segments.  We recognize revenues when products are shipped and title has been transferred to a customer, the sales price is fixed and determinable, and collection is reasonably assured.  For certain of our sales of remanufactured products, we also charge our customers a deposit for the return of a used core component which we can use in our future remanufacturing activities.  Such deposit is not recognized as revenue but rather carried as a core liability.  The liability is extinguished when a core is actually returned to us.  We estimate and record provisions for cash discounts, quantity rebates, sales returns and warranties in the period the sale is recorded, based upon our prior experience and current trends.  Significant management judgments and estimates must be made and used in estimating sales returns and allowances relating to revenue recognized in any accounting period.

Selling, General and Administration Expenses

Selling, general and administration expenses include shipping costs and advertising, which are expensed as incurred.  Shipping and handling charges, as well as freight to customers, are included in distribution expenses as part of selling, general and administration expenses.

Deferred Financing Costs

Deferred financing costs represent costs incurred in conjunction with our debt financing activities.  Deferred financing costs related to our revolving credit facility are capitalized and amortized over the life of the related financing arrangement.  If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired and are recorded in the statement of operations under the caption other non-operating income (expense), net.

Post-Retirement Medical Benefits

The determination of postretirement plan obligations and their associated expenses requires the use of actuarial valuations to estimate participant plan benefits employees earn while working as well as the present value of those benefits.  Inherent in these valuations are financial assumptions including the eligibility criteria of participants and discount rates at which liabilities can be settled.  Management reviews these assumptions annually with its actuarial advisors.  The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions, or longer or shorter life spans of participants.  We recognize the underfunded or overfunded status of a postretirement plan as an asset or liability and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income, which is a component of stockholders’ equity.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Share-Based Compensation

We measure and recognize compensation expense for all share-based payment awards made to employees and directors based on estimated fair values on the grant date.  The value of the portion of the award that is ultimately expected to vest is recognized as an expense on a straight-line basis over the requisite service periods in our consolidated statements of operations.  Forfeitures are estimated at the time of grant based on historical trends in order to estimate the amount of share-based awards that will ultimately vest.  We monitor actual forfeitures for any subsequent adjustment to forfeiture rates.

Accounting for Income Taxes

Income taxes are calculated using the asset and liability method.  Deferred tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as measured by the current enacted tax rates.

We maintain valuation allowances when it is more likely than not that all or a portion of a deferred asset will not be realized.  The valuation allowance is intended to provide for the uncertainty regarding the ultimate utilization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  In determining whether a valuation allowance is warranted, we consider all positive and negative evidence and all sources of taxable income such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies to estimate if sufficient future taxable income will be generated to realize the deferred tax asset.  The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable.  In the event that actual results differ from these estimates, or we adjust these estimates in future periods for current trends or expected changes in our estimating assumptions, we may need to modify the level of valuation allowance which could materially impact our business, financial condition and results of operations.

The valuation allowance of $0.4 million as of December 31, 2017 is intended to provide for the uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  Based on these considerations, we believe it is more likely than not that we will realize the benefit of the net deferred tax asset of $32.4 million as of December 31, 2017, which is net of the remaining valuation allowance.

Tax benefits are recognized for an uncertain tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority.  For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority.  The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available.  Such adjustments are recognized entirely in the period in which they are identified.  The effective tax rate includes the net impact of changes in the liability for uncertain tax positions.  As of December 31, 2017, we do not believe there is a need to establish a liability for uncertain tax positions.

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which included a broad range of tax reform affecting businesses, including the reduction of the federal corporate tax rate from 35% to 21%, changes in the deductibility of certain business expenses, and the manner in which international operations are taxed in the U.S.  For a discussion of the impact of the Act on our consolidated financial statements, see Note 16, “Income Taxes,” of the notes to our consolidated financial statements.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Net Earnings per Common Share

We present two calculations of earnings per common share.  “Basic” earnings per common share equals net income divided by weighted average common shares outstanding during the period. “Diluted” earnings per common share equals net income divided by the sum of weighted average common shares outstanding during the period plus potentially dilutive common shares.  Potentially dilutive common shares that are anti-dilutive are excluded from net earnings per common share.  The following is a reconciliation of the shares used in calculating basic and dilutive net earnings per common share.

	2017		2016		2015
	(In thousands)
Weighted average common shares outstanding – Basic		22,726		22,723		22,812
Plus incremental shares from assumed conversions:
Dilutive effect of restricted shares and performance shares		472		360		330
Weighted average common shares outstanding – Diluted		23,198		23,083		23,142

The average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or because they were excluded under the treasury method.

	2017		2016		2015
	(In thousands)
Restricted and performance shares		248		304		307

Environmental Reserves

We are subject to various U.S. Federal and state and local environmental laws and regulations and are involved in certain environmental remediation efforts.  We estimate and accrue our liabilities resulting from such matters based upon a variety of factors including the assessments of environmental engineers and consultants who provide estimates of potential liabilities and remediation costs.  Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years.  Potential recoveries from insurers or other third parties of environmental remediation liabilities are recognized independently from the recorded liability, and any asset related to the recovery will be recognized only when the realization of the claim for recovery is deemed probable.

Asbestos Litigation

In evaluating our potential asbestos-related liability, we use an actuarial study that is prepared by a leading actuarial firm with expertise in assessing asbestos-related liabilities.  We evaluate the estimate of the range of undiscounted liability to determine which amount to accrue.  Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required.  Legal costs are expensed as incurred.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Loss Contingencies

We have loss contingencies, for such matters as legal claims and legal proceedings.  Establishing loss reserves for these matters requires estimates, judgment of risk exposure and ultimate liability.  We record provisions when the liability is considered probable and reasonably estimable.  Significant judgment is required for both the determination of probability and the determination as to whether an exposure can be reasonably estimated.  We maintain an ongoing monitoring and identification process to assess how the activities are progressing against the accrued estimated costs.  As additional information becomes available, we reassess our potential liability related to these matters.  Adjustments to the liabilities are recorded in the statement of operations in the period when additional information becomes available.  Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

Product Warranty and Overstock Returns

Many of our products carry a warranty ranging from a 90-day limited warranty to a lifetime limited warranty, which generally covers defects in materials or workmanship and failure to meet industry published specifications and/or the result of installation error.  In addition to warranty returns, we also permit our customers to return new, undamaged products to us within customer-specific limits (which are generally limited to a specified percentage of their annual purchases from us) in the event that they have overstocked their inventories. We accrue for product warranties and overstock returns as a percentage of sales at the time products are sold, based upon estimates established using historical information on the nature, frequency and average cost of claims.  Revision to the accrual is made when necessary, based upon changes in these factors.  We regularly study trends of such claims.

Trade Receivables

In compliance with accounting standards, sales of accounts receivable are reflected as a reduction of accounts receivable in the consolidated balance sheet at the time of sale and any related expense is included in selling, general and administrative expenses in our consolidated statements of operations.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments and accounts receivable.  We place our cash investments with high quality financial institutions and limit the amount of credit exposure to any one institution.  Although we are directly affected by developments in the vehicle parts industry, management does not believe significant credit risk exists.

With respect to accounts receivable, such receivables are primarily from warehouse distributors and major retailers in the automotive aftermarket industry located in the U.S.  We perform ongoing credit evaluations of our customers’ financial conditions.  Our five largest individual customers accounted for approximately 70% of our consolidated net sales in 2017 and 2016, and approximately 68% of our consolidated net sales in 2015.  During 2017, O’Reilly Automotive, Inc., Advance Auto Parts, Inc., NAPA Auto Parts, and AutoZone, Inc. accounted for 21%, 17%, 16% and 10% of our consolidated net sales, respectively.  Net sales from each of the customers were reported in both our Engine Management and Temperature Control Segments.  The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them, could have a materially adverse impact on our business, financial condition and results of operations.

Substantially all of the cash and cash equivalents, including foreign cash balances, at December 31, 2017 and 2016 were uninsured.  Foreign cash balances at December 31, 2017 and 2016 were $13.1 million and $16.5 million, respectively.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Recently Issued Accounting Pronouncements

Standards not yet adopted as of December 31, 2017

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”), which replaces numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single comprehensive revenue recognition model for recognizing revenue from contracts with customers. Under the new guidance, an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application.  In July 2015, the FASB approved ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date which defers by one year the mandatory effective date of its revenue recognition standard.  The new standard is effective for annual reporting periods beginning after December 15, 2017.

Effective January 1, 2018, we will adopt the requirements of Topic 606 using the modified retrospective method.  Upon adoption, we will recognize the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings.  Using the modified retrospective method of adoption, the comparative information for periods prior to 2018 will not be restated and instead will continue to be reported under the accounting standards in effect for those periods.

We anticipate that the adoption of the new standard will not result in a material difference between the recognition of revenue under Topic 606 and prior accounting standards.  For the majority of our net sales, revenue will continue to be recognized when products are shipped from our distribution facilities, or when received by our customers, depending upon the terms of the contract.  Under the new revenue standard, (1) the return of cores from customers used in our manufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps will be estimated and recorded to inventory at the time of sale instead of upon receipt of the returned cores, and (2) overstock returns will be recorded gross of expected recoveries.  Adoption of the new standard will result in an increase in inventory and accrued customer returns, and offsetting changes in net sales and cost of sales, with no material change to our net income on an ongoing basis.  In addition, to meet the disaggregation disclosure requirements under Topic 606, we anticipate our disclosure of revenue disaggregation will be by major product group, geographic area and major sales channels.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table provides a brief description of the additional recent accounting pronouncements that could have an impact on our financial statements:

Standard	Description	Date of adoption	Effects on the financial statements or other significant matters
Standards that are not yet adopted as of December 31, 2017
ASU 2016-02, Leases	This standard outlines the need to recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease).  For income statement purposes, the FASB retained the dual model, requiring leases to be classified as either operating or financing.  Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern.	January 1, 2019, with early adoption permitted	The new standard must be adopted utilizing a modified retrospective transition, and provides for certain expedients.  The new standard will require that we recognize all of our leases, including our current operating leases, on the balance sheet.  To date, we have taken an inventory of all of our operating leases, which consist primarily of real estate and auto leases, and are currently evaluating the appropriate discount rates to use in calculating the right to use asset.  We will be continuously assessing the impact of the new standard and the impact on our systems and processes through January 1, 2019, our planned date of adoption.
ASU 2016-15, Statement of Cash Flows	This standard is intended to reduce diversity in practice and to provide guidance as to how certain cash receipts and cash payments are presented and classified in the statement of cash flows.	January 1, 2018, with early adoption permitted	The new standard requires application using a retrospective transition method.  We do not anticipate that the adoption of this standard will have a material effect on our consolidated financial statements.
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This standard is intended to simplify the accounting for goodwill impairment.  ASU 2017-04 removes Step 2 of the test, which requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.	January 1, 2020, with early adoption permitted	The new standard should be applied prospectively.  We will consider the new standard when performing our annual impairment test and evaluate when we will adopt the new standard.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Standard	Description	Date of adoption	Effects on the financial statements or other significant matters
Standards that are not yet adopted as of December 31, 2017
ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost	This standard requires employers that present operating income in their consolidated statement of operations to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs).  The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in other non-operating income (expense).  The new standard requires retrospective reclassification of the effects of the new standard on the statement of operations.	January 1, 2018, with early adopted permitted	The new standard will require that we retrospectively reclassify all components of net periodic pension cost and net periodic postretirement benefit cost, other than the service cost component, in our statement of operations from selling, general and administrated expenses, as presently reported, to other non-operating income (expense).

Standard	Description	Date of adoption	Effects on the financial statements or other significant matters
Standards that were adopted

ASU 2015-17, Balance Sheet Classification of Deferred Taxes	This standard requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The new guidance requires entities to offset all deferred tax assets and liabilities (and valuation allowances) for each tax-paying jurisdiction within each tax-paying component.  The net deferred tax must be presented as a single noncurrent amount.	January 1, 2017	The adoption of the new standard resulted in the reclassification of deferred tax assets previously reported as current deferred tax assets to noncurrent deferred tax assets in our consolidated balance sheets.  We adopted the new standard retrospectively, and as such, all prior period current deferred tax assets in our consolidated balance sheets have also been reclassified to noncurrent deferred tax assets for comparative purposes.
ASU 2015-11, Simplifying the Measurement of Inventory	This standard changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value for entities that measure inventory using first-in, first-out or average cost.  In addition, this standard eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximate normal profit margin when measuring inventory.	January 1, 2017	The prospective adoption of the new standard did not have a material effect on our consolidated financial statements.

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Standard	Description	Date of adoption	Effects on the financial statements or other significant matters
Standards that were adopted

ASU 2016-09, Improvements to Employee Share-Based Payment Accounting This standard requires (1) that the tax effects related to share-based payments at settlement (or expiration) be recorded through the tax provision (benefit) in the income statement rather than in equity as permitted under prior guidance under certain circumstances; (2) that all tax-related cash flows resulting from share-based payments be reported as operating activities on the statement of cash flows, a change from the requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities; and (3) that when computing diluted earnings per share, the effect of “windfall” tax benefits be excluded from the hypothetical proceeds used to calculate the repurchase of shares under the treasury stock method. January 1, 2017 We adopted the new standard prospectively.  The adoption of the new standard did not have a material effect on our consolidated financial statements for the year ended December 31, 2017.

2. Business Acquisitions and Investments

2017 Equity Investment

Foshan FGD SMP Automotive Compressor Co., Ltd.

In November 2017, we formed a 50/50 joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd. (“FGD”), a China-based manufacturer of air conditioning compressors for the automotive aftermarket and the Chinese OE market.  We acquired our 50% interest in the joint venture for approximately $12.5 million.  We determined that due to a lack of a voting majority, and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting.

2016 Business Acquisitions

General Cable Corporation North American Automotive Ignition Wire Business Acquisition

In May 2016, we acquired the North American automotive ignition wire business of General Cable Corporation for approximately $67.5 million.  The acquisition was paid for in cash funded by our revolving credit facility with JPMorgan Chase, as agent.  The acquisition includes the purchase of certain assets and the assumption of certain liabilities of General Cable Corporation’s (and certain of its affiliates) automotive ignition wire business in North America as well as 100% of the equity interests of a General Cable subsidiary in Nogales, Mexico.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed, based on their fair values (in thousands):

Purchase Price				$	67,451
Assets acquired and liabilities assumed:
Receivables	$	3,130
Inventory		12,567
Other current and noncurrent assets (1)		334
Property, plant and equipment, net		2,660
Intangible assets		42,440
Goodwill		12,746
Current liabilities		(6,426	)
Net assets acquired				$	67,451

(1) Other current and noncurrent assets includes $0.2 million of cash acquired.

Intangible assets acquired of $42.4 million consists of customer relationships of $39.4 million that will be amortized on a straight-line basis over the estimated useful life of 15 years; a non-compete agreement of $2.2 million that will be amortized on a straight-line basis over the estimated useful life of 5 years; and a supply agreement of $0.8 million that will be amortized on a straight-line basis over the estimated useful life of 1 year.  Goodwill of $12.7 million was allocated to the Engine Management Segment and is deductible for income tax purposes.  The goodwill reflects relationships, business specific knowledge and the replacement cost of an assembled workforce associated with personal reputations, as well as the value of expected synergies.

Incremental net sales from the acquisition included in our consolidated statements of operations were $38.4 million for the year ended December 31, 2017.

3. Restructuring and Integration Expense (Income)

The aggregated liabilities included in “sundry payables and accrued expenses” and “other accrued liabilities” in the consolidated balance sheet relating to the restructuring and integration activities as of and for the years ended December 31, 2017 and 2016, consisted of the following (in thousands):

	Workforce Reduction			Other Exit Costs			Total
Exit activity liability at December 31, 2015	$	270		$	591		$	861
Restructuring and integration costs:
Amounts provided for during 2016		2,934			1,023			3,957
Cash payments		(392	)		(1,154	)		(1,546	)
Reclassification to ongoing accrued liabilities (1)		(236	)		(460	)		(696	)
Exit activity liability at December 31, 2016	$	2,576		$	—		$	2,576
Restructuring and integration costs:
Amounts provided for during 2017		2,220			3,953			6,173
Cash payments		(1,979	)		(3,702	)		(5,681	)
Foreign currency exchange rate changes and other		37			(251	)		(214	)
Exit activity liability at December 31, 2017	$	2,854		$	—		$	2,854

(1) Applies to liabilities associated with the prior year restructuring and integration programs which relate primarily to employee severance and other retiree benefit enhancements to be paid through 2020 and environmental clean-up costs at our Long Island City, New York location in connection with the closure of our manufacturing operations at the site.  These amounts were reclassified out of the restructuring and integration liability and into ongoing accrued liabilities as of December 31, 2016.

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Restructuring Costs

Plant Rationalization Program

In February 2016, in connection with our ongoing efforts to improve operating efficiencies and reduce costs, we finalized our intention to implement a plant rationalization initiative.  As part of the plant rationalization, certain production activities will be relocated from our Grapevine, Texas manufacturing facility to facilities in Greenville, South Carolina and Reynosa, Mexico, certain service functions will be relocated from Grapevine, Texas to our administrative offices in Lewisville, Texas, and our Grapevine, Texas facility will be closed.  As of December 31, 2017, all of our Grapevine, Texas production activities have been relocated to facilities in Greenville, South Carolina and Reynosa, Mexico.  In addition, as part of the program, certain production activities were relocated from our Greenville, South Carolina manufacturing facility to our manufacturing facility in Bialystok, Poland.  Restructuring and integration expenses expected to be incurred throughout the program of approximately $5.8 million consists of employee severance and relocation of certain machinery and equipment.  Through December 31, 2017, total restructuring and integration expenses related to the program of $5.6 million were recognized.  As of December 31, 2017, the plant rationalization program is substantially completed.

Activity, by segment, for the year ended December 31, 2017 and 2016 related to our plant rationalization program consisted of the following (in thousands):

	Engine Management			Temperature Control			Other		Total
Exit activity liability at December 31, 2015	$	—		$	—		$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2016		844			2,361			—		3,205
Cash payments		(833	)		(318	)		—		(1,151	)
Exit activity liability at December 31, 2016	$	11		$	2,043		$	—	$	2,054
Restructuring and integration costs:
Amounts provided for during 2017		631			1,774			—		2,405
Cash payments		(642	)		(2,341	)		—		(2,983	)
Exit activity liability at December 31, 2017	$	—		$	1,476		$	—	$	1,476

Orlando Plant Rationalization Program

In January 2017, to further our ongoing efforts to improve operating efficiencies and reduce costs, we finalized our intention to implement a plant rationalization initiative at our Orlando, Florida facility.  As part of the plant rationalization, we will relocate production activities from our Orlando, Florida manufacturing facility to Independence, Kansas, and close our Orlando, Florida facility.  In addition, certain production activities will be relocated from our Independence, Kansas manufacturing facility to our manufacturing facility in Reynosa, Mexico.  Restructuring and integration expenses expected to be incurred throughout the program of approximately $2.9 million consists of employee severance and relocation of certain machinery and equipment.  Through December 31, 2017, total restructuring and integration expenses related to the program of $1.8 million were recognized.  We anticipate that the Orlando plant rationalization will be completed by the second half of 2018.

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Activity, by segment, for the year ended December 31, 2017 related to our Orlando plant rationalization program consisted of the following (in thousands):

	Engine Management			Temperature Control		Other		Total
Exit activity liability at December 31, 2016	$	—		$	—	$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2017		1,758			—		—		1,758
Cash payments		(772	)		—		—		(772	)
Exit activity liability at December 31, 2017	$	986		$	—	$	—	$	986

Integration Costs

Wire and Cable Relocation

In connection with our acquisition of the North American automotive ignition wire business of General Cable Corporation in May 2016, we incurred certain integration expenses, including costs incurred in connection with the consolidation of the General Cable Corporation Altoona, Pennsylvania wire distribution center into our existing wire distribution center in Edwardsville, Kansas and the relocation of certain machinery and equipment.  In October 2016, we further announced our plan to relocate all production from the acquired Nogales, Mexico wire set assembly operation to our existing wire assembly facility in Reynosa, Mexico and to close the Nogales, Mexico plant.  Integration expenses expected to be incurred related to the closure of the Nogales, Mexico plant include employee severance and the relocation of certain machinery and equipment.  Total integration expenses of $4.1 million are expected to be incurred related to the wire and cable relocation program.  Through December 31, 2017, integration expenses related to the program of $2.5 million were recognized.  We anticipate that the wire and cable relocation program will be completed by the second half of 2018.

Activity, by segment, for the year ended December 31, 2017 and 2016 related to our wire and cable relocation program consisted of the following (in thousands):

	Engine Management			Temperature Control		Other		Total
Exit activity liability at December 31, 2015	$	—		$	—	$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2016		714			—		—		714
Cash payments		(192	)		—		—		(192	)
Exit activity liability at December 31, 2016	$	522		$	—	$	—	$	522
Restructuring and integration costs:
Amounts provided for during 2017		1,759			—		—		1,759
Cash payments		(1,926	)		—		—		(1,926	)
Foreign currency exchange rate changes		37			—		—		37
Exit activity liability at December 31, 2017	$	392		$	—	$	—	$	392

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4. Sale of Receivables

From time to time, we sell undivided interests in certain of our receivables to financial institutions.  We enter these agreements at our discretion when we determine that the cost of factoring is less than the cost of servicing our receivables with existing debt.  Under the terms of the agreements, we retain no rights or interest, have no obligations with respect to the sold receivables, and do not service the receivables after the sale.  As such, these transactions are being accounted for as a sale.

Pursuant to these agreements, we sold $780.5 million and $759.2 million of receivables for the years ended December 31, 2017 and 2016, respectively.  A charge in the amount of $22.6 million, $19.3 million and $14.3 million related to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015, respectively.  If we do not enter into these arrangements or if any of the financial institutions with which we enter into these arrangements were to experience financial difficulties or otherwise terminate these arrangements, our financial condition, results of operations and cash flows could be materially and adversely affected by delays or failures to collect future trade accounts receivable.

5. Inventories

	December 31,
	2017		2016
	(In thousands)
Finished goods	$	209,800	$	203,700
Work-in-process		7,536		6,823
Raw materials		109,075		101,954
Total inventories	$	326,411	$	312,477

6. Property, Plant and Equipment

	December 31,
	2017		2016
	(In thousands)
Land, buildings and improvements	$	46,930	$	46,447
Machinery and equipment		132,467		128,650
Tools, dies and auxiliary equipment		45,769		44,683
Furniture and fixtures		28,352		27,482
Leasehold improvements		10,348		8,369
Construction-in-progress		16,318		14,419
Total property, plant and equipment		280,184		270,050
Less accumulated depreciation		191,081		191,551
Total property, plant and equipment, net	$	89,103	$	78,499

Depreciation expense was $15.4 million in 2017, $12.8 million in 2016 and $12.1 million 2015.

7. Goodwill and Other Intangible Assets

Goodwill

We assess the impairment of long‑lived and identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  With respect to goodwill, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value of a reporting unit is below its carrying amount.  We completed our annual impairment test of goodwill as of December 31, 2017.

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When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is not required.  If we are unable to reach this conclusion, then we would perform the two-step impairment test.  We elected to bypass the qualitative assessment and have decided to perform the two-step impairment test for goodwill at both the Engine Management and Temperature Control reporting units at December 31, 2017.  The first step of the impairment analysis consists of a comparison of the fair value of the reporting units with their respective carrying amounts, including goodwill.  If the fair value of the reporting unit exceeds the carrying amount of the reporting unit, step two of the impairment analysis is not required.  The fair values of the Engine Management and Temperature Control reporting units were determined based upon the Income Approach, which estimates the fair value based on future discounted cash flows, and the Market Approach, which estimates the fair value based on market prices of comparable companies.  We base our fair value estimates on projected financial information which we believe to be reasonable.  We also considered our total market capitalization as of December 31, 2017.  Our December 31, 2017 annual goodwill impairment analysis did not result in an impairment charge as it was determined that the fair values of our Engine Management and Temperature Control reporting units were in excess of their carrying amounts.  While the fair values exceed the carrying amounts at the present time and we do not believe that impairments are probable, the performance of the business and brands require continued improvement in future periods to sustain their carrying values.

Changes in the carrying values of goodwill by operating segment during the years ended December 31, 2017 and 2016 are as follows (in thousands):

	Engine Management			Temperature Control		Total
Balance as of December 31, 2015:
Goodwill	$	79,099		$	14,270	$	93,369
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	40,611		$	14,270	$	54,881
Activity in 2016
Acquisition of the North American automotive ignition wire business of General Cable Corporation.	$	12,746		$	—	$	12,746
Foreign currency exchange rate change		(396	)		—		(396	)
Balance as of December 31, 2016:
Goodwill		91,449			14,270		105,719
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	52,961		$	14,270	$	67,231
Activity in 2017
Foreign currency exchange rate change		182			—		182
Balance as of December 31, 2017:
Goodwill		91,631			14,270		105,901
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	53,143		$	14,270	$	67,413

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Acquired Intangible Assets

Acquired identifiable intangible assets as of December 31, 2017 and 2016 consist of:

	December 31,
	2017			2016
	(In thousands)
Customer relationships	$	87,290		$	87,070
Trademarks and trade names		6,800			6,800
Non-compete agreements		3,193			3,189
Patents		723			723
Supply agreements		800			800
Leaseholds		160			160
Total acquired intangible assets		98,966			98,742
Less accumulated amortization (1)		(43,853	)		(35,830	)
Net acquired intangible assets	$	55,113		$	62,912

(1) Applies to all intangible assets, except for related trademarks and trade names totaling $5.2 million, which have indefinite useful lives and, as such, are not being amortized.

Total amortization expense for acquired intangible assets was $8 million for the year ended December 31, 2017, $7.1 million for the year ended December 31, 2016, and $4.9 million for the year ended December 31, 2015.  Based on the current estimated useful lives assigned to our intangible assets, amortization expense is estimated to be $7.6 million for 2018, $6.3 million in 2019, $5.9 million in 2020, $4.6 million in 2021 and $25.5 million in the aggregate for the years 2022 through 2031.

Other Intangible Assets

Other intangible assets include computer software.  Computer software as of December 31, 2017 and 2016 totaled $17.2 million and $16.7 million.  Total accumulated computer software amortization as of December 31, 2017 and 2016 was $16.1 million and $15.6 million, respectively.  Computer software is amortized over its estimated useful life of 3 to 10 years.  Amortization expense for computer software was $0.5 million, $0.6 million and $0.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.

8. Other Assets

	December 31,
	2017		2016
	(In thousands)
Equity in joint ventures	$	31,184	$	19,924
Deferred compensation		13,612		10,763
Long term receivables		—		1,061
Deferred financing costs, net		630		973
Other		853		842
Total other assets, net	$	46,279	$	33,563

Deferred compensation consists of assets held in a nonqualified defined contribution pension plan as of December 31, 2017 and 2016, respectively.

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Equity Method Investments

In November 2017, we formed a 50/50 joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd. (“FGD”), a China-based manufacturer of air conditioning compressors for the automotive aftermarket and the Chinese OE market.  We acquired our 50% interest in the joint venture for approximately $12.5 million.  We determined that due to a lack of a voting majority, and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting.  Purchases from FGD from the date of acquisition through December 31, 2017 were not significant.

In April 2014, we formed a 50/50 joint venture with Gwo Yng Enterprise Co., Ltd. (“Gwo Yng”), a China-based manufacturer of air conditioner accumulators, filter driers, hose assemblies and switches for the automotive aftermarket and OEM/OES markets.  We acquired our 50% interest in the joint venture for $14 million.  We determined that due to a lack of a voting majority and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting.  During the years ended December 31, 2017 and 2016, we made purchases from Gwo Yng of approximately $15.1 million and $15.4 million, respectively.

In January 2013, we acquired an approximate 25% minority interest in Orange Electronic Co., Ltd. (“Orange”) for $6.3 million.  Orange is a manufacturer of tire pressure monitoring system sensors and is located in Taiwan.  As of December 31, 2017, our minority interest in Orange of 19.4% is accounted for using the equity method of accounting as we have the ability to exercise significant influence.  During the fourth quarter of 2017, after a review of the recent financial performance and near term prospects for Orange, we determined that the decline in quoted market prices below the carrying amount of our investment in Orange is other than temporary and, as such, recognized a noncash impairment charge of approximately $1.8 million in the quarter.  The impairment charge has been reported in our Engine Management Segment and is included in other non-operating income (expense), net in our consolidated statements of operations.  Purchases from Orange during the years ended December 31, 2017 and 2016 were approximately $4.3 million and $5 million, respectively.

9. Credit Facilities and Long-Term Debt

Total debt outstanding is summarized as follows:

	December 31,
	2017		2016
	(In thousands)
Revolving credit facilities	$	57,000	$	54,812
Other (1)		4,778		163
Total debt	$	61,778	$	54,975
Current maturities of debt	$	61,699	$	54,855
Long-term debt		79		120
Total debt	$	61,778	$	54,975

(1) Other includes borrowings under our Polish overdraft facility of Zloty 16.2 million (approximately $4.7 million).

Maturities of long-term debt are not material for the year ended December 31, 2018 and beyond.

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Revolving Credit Facility

In October 2015, we entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as agent, and a syndicate of lenders for a senior secured revolving credit facility with a line of credit of up to $250 million (with an additional $50 million accordion feature) and a maturity date in October 2020.  The line of credit under the agreement also allows for a $10 million line of credit to Canada as part of the $250 million available for borrowing.  Direct borrowings under the credit agreement bear interest at LIBOR plus a margin ranging from 1.25% to 1.75% based on our borrowing availability, or floating at the alternate base rate plus a margin ranging from 0.25% to 0.75% based on our borrowing availability, at our option.  The credit agreement is guaranteed by certain of our subsidiaries and secured by certain of our assets.

Borrowings under the credit agreement are secured by substantially all of our assets, including accounts receivable, inventory and certain fixed assets, and those of certain of our subsidiaries.  Availability under the credit agreement is based on a formula of eligible accounts receivable, eligible inventory, eligible equipment and eligible fixed assets.  After taking into account outstanding borrowings under the credit agreement, there was an additional $142.9 million available for us to borrow pursuant to the formula at December 31, 2017.  Outstanding borrowings under the credit agreement, which are classified as current liabilities, were $57 million and $54.8 million at December 31, 2017 and 2016, respectively.  Borrowings under the credit agreement have been classified as current liabilities based upon the accounting rules and certain provisions in the agreement.

At December 31, 2017, the weighted average interest rate on our credit agreement was 2.7%, which consisted of $57 million in direct borrowings.  At December 31, 2016, the weighted average interest rate on our credit agreement was 2.3%, which consisted of $45 million in direct borrowings at 2% and an alternative base rate loan of $9.8 million at 4%.   Our average daily alternative base rate loan balance was $3.8 million and $2.6 million during 2017 and 2016, respectively.

At any time that our borrowing availability is less than the greater of either (a) $25 million, or 10% of the commitments if fixed assets are not included in the borrowing base, or (b) $31.25 million, or 12.5% of the commitments if fixed assets are included in the borrowing base, the terms of the credit agreement provide for, among other provisions, a financial covenant requiring us, on a consolidated basis, to maintain a fixed charge coverage ratio of 1:1 at the end of each fiscal quarter (rolling four quarters).  As of December 31, 2017, we were not subject to these covenants.  The credit agreement permits us to pay cash dividends of $20 million and make stock repurchases of $20 million in any fiscal year subject to a minimum availability of $25 million.  Provided specific conditions are met, the credit agreement also permits acquisitions, permissible debt financing, capital expenditures, and cash dividend payments and stock repurchases of greater than $20 million.

Polish Overdraft Facility

In December 2017, our Polish subsidiary, SMP Poland sp.z.o.o., entered into an overdraft facility with HSBC Bank Polska S.A. (“HSBC Poland”) for Zloty 30 million (approximately $8.2 million).  The facility expires on December 2018.  Borrowings under the overdraft facility will bear interest at a rate equal to WIBOR + 0.75% and are guaranteed by Standard Motor Products, Inc., the ultimate parent company.  At December 31, 2017, borrowings under the overdraft facility were Zloty 16.2 million (approximately $4.7 million).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred Financing Costs

We had deferred financing costs of approximately $1 million and $1.3 million as of December 31, 2017 and 2016, respectively.  Deferred financing costs as of December 31, 2017 are related to our revolving credit facility.

Scheduled amortization for future years, assuming no prepayments of principal is as follows:

(In thousands)
2018	$	343
2019		343
2020		287
Total amortization	$	973

10. Stockholders’ Equity

We have authority to issue 500,000 shares of preferred stock, $20 par value, and our Board of Directors is vested with the authority to establish and designate any series of preferred, to fix the number of shares therein and the variations in relative rights as between each series.  In December 1995, our Board of Directors established a new series of preferred shares designated as Series A Participating Preferred Stock. The number of shares constituting the Series A Preferred Stock is 30,000.  The Series A Preferred Stock is designed to participate in dividends, ranks senior to our common stock as to dividends and liquidation rights and has voting rights.  Each share of the Series A Preferred Stock shall entitle the holder to one thousand votes on all matters submitted to a vote of the stockholders of the Company.  No such shares were outstanding at December 31, 2017 and 2016.

In February 2015, our Board of Directors authorized the purchase of up to $10 million of our common stock under a stock repurchase program.  In July 2015, our Board of Directors authorized the purchase of up to an additional $10 million of our common stock under another stock repurchase program.  Under these programs, during the year ended December 31, 2015, we repurchased 551,791 shares of our common stock at a total cost of $19.6 million.  As of December 31, 2015, there was approximately $0.4 million available for future stock repurchases under the programs.  In January 2016, we repurchased an additional 10,135 shares of our common stock under the programs at a total cost of $0.4 million, thereby completing the 2015 Board of Directors authorizations.   Our Board of Directors did not authorize a stock repurchase program in 2016.

In February 2017, our Board of Directors authorized the purchase of up to $20 million of our common stock under a stock repurchase program.  In November 2017, our Board of Directors authorized the purchase of up to an additional $10 million of our common stock under another stock repurchase program.  Under these programs, during the year ended December 31, 2017, we repurchased 539,760 shares of our common stock at a total cost of $24.8 million.  As of December 31, 2017, there was approximately $5.2 million available for future stock repurchases under the programs.  During the period from January 1, 2018 through February 16, 2018, we repurchased an additional 35,756 shares of our common stock under the programs at a total cost of $1.7 million, thereby leaving approximately $3.5 million available for future stock purchases under the program.

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11. Accumulated Other Comprehensive Income

Changes in Accumulated Other Comprehensive Income by Component

	Foreign Currency Translation Adjustments			Unrecognized Postretirement Benefit Costs (Credit)			Total
	(In thousands)
Balance at December 31, 2015	$	(5,958	)	$	(516	)	$	(6,474	)
Other comprehensive income before reclassifications		(5,294	)		332			(4,962	)
Amounts reclassified from accumulated other comprehensive income		—			408			408
Other comprehensive income, net		(5,294	)		740			(4,554	)
Balance at December 31, 2016	$	(11,252	)	$	224		$	(11,028	)
Other comprehensive income before reclassifications		7,027			289			7,316
Amounts reclassified from accumulated other comprehensive income		—			(397	)		(397	)
Other comprehensive income, net		7,027			(108	)		6,919
Balance at December 31, 2017	$	(4,225	)	$	116		$	(4,109	)

Reclassifications Out of Accumulated Other Comprehensive Income and into the Consolidated Statements of Operations

	Year Ended December 31,
Details About Accumulated Other Comprehensive Income Components	2017			2016
Amortization of postretirement benefit plans:	(In thousands)
Prior service benefit (1)	$	—		$	(54	)
Unrecognized (gain) loss (1)		(661	)		763
Total before income tax		(661	)		709
Income tax expense		264			(301	)
Total reclassifications for the period	$	(397	)	$	408

(1) These accumulated other comprehensive income components are included in the computation of net periodic postretirement benefit costs, which are included in selling, general and administrative expenses in our consolidated statements of operations (see Note 14 for additional information).

12. Stock-Based Compensation Plans

Our stock-based compensation program is a broad-based program designed to attract and retain employees while also aligning employees’ interests with the interests of our shareholders.  In addition, members of our Board of Directors participate in our stock-based compensation program in connection with their service on our board.  In May 2016, our Board of Directors and Shareholders approved the 2016 Omnibus Incentive Plan.  The 2016 Omnibus Incentive Plan supersedes the 2006 Omnibus Incentive Plan, which terminated in May 2016.  The 2016 Omnibus Incentive Plan is the only remaining plan available to provide stock-based incentive compensation to our employees, directors and other eligible persons.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Under the 2016 Omnibus Incentive Plan, which terminates in May 2026, we are authorized to issue, among other things, shares of restricted and performance-based stock to eligible employees and restricted stock to directors of up to 1,100,000 shares.  Shares issued under the plan that are cancelled, forfeited or expire by their terms are eligible to be granted again under the 2016 Omnibus Incentive Plan.  Awards previously granted under the 2006 Omnibus Incentive Plan are not affected by the plan’s termination, while shares not yet granted under the plan are not available for future issuance.

We account for our stock-based compensation plans in accordance with the provisions of FASB ASC 718, Stock Compensation, which requires that a company measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.  The service period is the period of time that the grantee must provide services to us before the stock-based compensation is fully vested.

Stock-based compensation expense under our existing plans was $7.1 million ($3.2 million, net of tax), $5.7 million ($3.6 million, net of tax), and $5 million ($3.2 million, net of tax) for the years ended December 31, 2017, 2016 and 2015, respectively.

Restricted Stock and Performance Share Grants

We currently grant shares of restricted stock to eligible employees and our independent directors and performance-based stock to eligible employees.  Selected executives and other key personnel are granted performance awards whose vesting is contingent upon meeting various performance measures with a retention feature.  Performance-based shares are subject to a three year measuring period and the achievement of performance targets and, depending upon the achievement of such performance targets, they may become vested on the third anniversary of the date of grant.  Each period we evaluate the probability of achieving the applicable targets and we adjust our accrual accordingly.  Restricted shares granted to employees become fully vested upon the third anniversary of the date of grant; and for selected key executives certain additional restricted share grants vest 25% upon the attainment of age 60, 25% upon the attainment of age 63 and become fully vested upon the attainment of age 65.  Restricted shares granted to directors become fully vested upon the first anniversary of the date of grant.  Commencing with the 2015 grants, restricted and performance shares issued to certain key executives and directors are subject to a one or two year holding period upon the lapse of the three year vesting period.

Prior to the time a restricted share becomes fully vested or a performance share is issued, the awardees cannot transfer, pledge, hypothecate or encumber such shares.  Prior to the time a restricted share is fully vested, the awardees have all other rights of a stockholder, including the right to vote (but not receive dividends during the vesting period).  Prior to the time a performance share is issued, the awardees shall have no rights as a stockholder.  All shares and rights are subject to forfeiture if certain employment conditions are not met.

Under the 2016 Omnibus Incentive Plan, 1,100,000 shares are authorized to be issued.  At December 31, 2017, under the plan, there were an aggregate of (a) 418,000 shares of restricted and performance-based stock grants issued, net of forfeitures, and (b) 682,000 shares of common stock available for future grants.  For the year ended December 31, 2017, 207,975 restricted and performance-based shares were granted (152,975 restricted shares and 55,000 performance-based shares).

In determining the grant date fair value, the stock price on the date of grant, as quoted on the New York Stock Exchange, was reduced by the present value of dividends expected to be paid on the shares issued and outstanding during the requisite service period, discounted at a risk-free interest rate.  The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the restriction or vesting period at the grant date. In addition, a further discount for the lack of marketability reduced the fair value of grants issued to certain key executives and directors subject to the one or two year post vesting holding period.  Assumptions used in calculating the discount for the lack of marketability include an estimate of stock volatility, risk-free interest rate, and a dividend yield.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The fair value of the shares at the date of grant is amortized to expense ratably over the vesting period.  Forfeitures on restricted stock grants are estimated at 5% for employees and 0% for executives and directors, respectively, based on evaluation of historical and expected future turnover.

As related to restricted and performance stock shares, we recorded compensation expense of $7.1 million ($3.2 million, net of tax), $5.7 million ($3.6 million, net of tax) and $5 million ($3.2 million, net of tax), for the years ended December 31, 2017, 2016 and 2015, respectively.  The unamortized compensation expense related to our restricted and performance-based shares was $16.6 million and $15.6 million at December 31, 2017 and 2016, respectively and is expected to be recognized over a weighted average period of 4.8 years and 0.3 years for employees and directors, respectively, as of December 31, 2017 and over a weighted average period of 5.7 years and 0.3 years for employees and directors, respectively, as of December 31, 2016.

Our restricted and performance-based share activity was as follows for the years ended December 31, 2017 and 2016:

	Shares			Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2015		758,550		$	27.19
Granted		212,500			42.93
Vested		(138,427	)		31.55
Forfeited		(9,775	)		31.79
Balance at December 31, 2016		822,848			30.46
Granted		207,975			42.79
Vested		(169,615	)		31.26
Forfeited		(7,250	)		37.24
Balance at December 31, 2017		853,958		$	33.25

The weighted-average grant date fair value of restricted and performance-based shares outstanding as of December 31, 2017, 2016 and 2015 was $28.4 million (or $33.25 per share), $25.1 million (or $30.46 per share), and $20.6 million (or $27.19 per share), respectively.

13. Retirement Benefit Plans

Defined Contribution Plans

We maintain various defined contribution plans, which include profit sharing and provide retirement benefits for substantially all of our employees. Matching obligations, in connection with the plans which are funded in cash and typically contributed to the plans in March of the following year, are as follows (in thousands):

	U.S. Defined Contribution
Year ended December 31,
2017	$	9,980
2016		8,625
2015		8,445

We maintain a defined contribution Supplemental Executive Retirement Plan for key employees.  Under the plan, these employees may elect to defer a portion of their compensation and, in addition, we may at our discretion make contributions to the plan on behalf of the employees.  In March 2016, contributions of $0.3 million were made related to calendar year 2015.  In March 2017, contributions of $0.3 million were made related to calendar year 2016.  We have recorded an obligation of $0.6 million for 2017.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We also have an Employee Stock Ownership Plan and Trust (“ESOP”) for employees who are not covered by a collective bargaining agreement.  In connection therewith, we maintain an employee benefits trust to which we contribute shares of treasury stock.  We are authorized to instruct the trustees to distribute such shares toward the satisfaction of our future obligations under the plan. The shares held in trust are not considered outstanding for purposes of calculating earnings per share until they are committed to be released. The trustees will vote the shares in accordance with its fiduciary duties.  During 2017, we contributed to the trust an additional 43,300 shares from our treasury and released 43,300 shares from the trust leaving 200 shares remaining in the trust as of December 31, 2017.  The provision for expense in connection with the ESOP was approximately $2.2 million in 2017, $2 million in 2016 and $2.2 million in 2015.

Defined Benefit Pension Plan

We maintain a defined benefit unfunded Supplemental Executive Retirement Plan (“SERP”).  The SERP, as amended, is a defined benefit plan pursuant to which we will pay supplemental pension benefits to certain key employees upon the attainment of a contractual participant’s payment date based upon the employees’ years of service and compensation.  There was no benefit obligation outstanding related to the SERP as of December 31, 2017 and 2016.

We recorded no expense related to the plan during the years ended December 31, 2017 and December 31, 2016.  Net periodic benefit cost of $2.5 million was recorded related to the plan for the year ended December 31, 2015.

14. Postretirement Medical Benefits

We provided, and continue to provide, certain medical and dental care benefits to eligible retired U.S. and Canadian employees. Under the U.S. plan, for non-union employees, a Health Reimbursement Account (“HRA”) was established beginning January 1, 2009 for each qualified U.S. retiree.  Annually, and through the year ended December 31, 2016, a fixed amount was credited into the HRA to cover both medical and dental costs for all current and future eligible retirees.  Under the Canadian plan, retiree medical and dental benefits were funded using insurance contracts.  Premiums under the insurance contracts were funded on a pay-as-you-go basis.  The postretirement medical plans to substantially all eligible U.S. and Canadian employees terminated on December 31, 2016.  For U.S. plan participants, balances in the HRA accounts at December 31, 2016 will remain available for use until December 31, 2018.  Any remaining balance at December 31, 2018 will be forfeited.  Postretirement medical and dental benefits to eligible employees will continue to be provided to the 24 former union employees in the U.S.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The benefit obligation, funded status, and amounts recognized in the consolidated financial statements for our postretirement medical benefit plans as of and for the years ended December 31, 2017 and 2016, were as follows (in thousands):

	Postretirement Benefit Plans
	U.S. Plan						Canadian Plan
	2017			2016			2017		2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,574		$	2,928		$	—	$	74
Service cost		—			—			—		—
Interest cost		8			11			—		2
Benefits paid		(429	)		(831	)		—		(17	)
Actuarial gain		(481	)		(534	)		—		(9	)
Translation adjustment & other		—			—			—		(50	)
Benefit obligation at end of year	$	672		$	1,574		$	—	$	—
(Unfunded) status of the plans	$	(672	)	$	(1,574	)	$	—	$	—

	Postretirement Benefit Plan
	U.S. Plan
	2017			2016
Amounts recognized in the balance sheet:
Accrued postretirement benefit liabilities	$	672		$	1,574
Accumulated other comprehensive (income) loss (pre-tax) related to:
Unrecognized net actuarial losses (gains)		(194	)		(374	)
Unrecognized prior service cost (credit)		—			—

The estimated net gain that is expected to be amortized from accumulated other comprehensive income into postretirement medical benefits cost during 2018 is not material.

Net periodic benefit cost related to our plans includes the following components (in thousands):

	December 31,
U.S. postretirement plan:	2017			2016			2015
Service cost	$	—		$	—		$	—
Interest cost		8			11			24
Actuarial net (gain) loss		(661	)		809			1,548
Net periodic benefit cost (credit)	$	(653	)	$	820		$	1,572
Canadian postretirement plan:
Service cost	$	—		$	—		$	—
Interest cost		—			2			3
Amortization of prior service cost		—			(54	)		(112	)
Actuarial net gain		—			(46	)		(22	)
Net periodic benefit cost (credit)	$	—		$	(98	)	$	(131	)
Total net periodic benefit cost (credit)	$	(653	)	$	722		$	1,441

Actuarial assumptions used to determine costs and benefit obligations related to our U.S. postretirement plan are as follows:

	December 31,
	2017			2016			2015
Discount rate		0.0	%		0.0	%		0.0	%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Actuarial assumptions used to determine costs and benefit obligations related to our Canadian postretirement plan are as follows:

	December 31,
	2017		2016			2015
Discount rates		N/A		3.00	%		3.00	%
Current medical cost trend rate		N/A		N/A			5.71	%
Ultimate medical cost trend rate		N/A		N/A			5	%
Year trend rate declines to ultimate		N/A		N/A			2017

The Company’s discount rates are determined by considering current yield curves representing high quality, long-term fixed income instruments.  We set our discount rate for the U.S. plan based on a review of the Citigroup Pension Discount Curve and the duration of expected payments in the plan. We set our discount rate for the Canadian plan based upon similar benchmarks in Canada.

The following benefit payments which reflect expected future service, as appropriate, are expected to be paid (in thousands):

2018	$	440
2019		42
2020		38
2021		33
2022		29
Years 2023 – 2027		91

A one-percentage-point change in assumed health care cost trend rates would not have a material impact on our plans for 2018.

15. Other Non-Operating Income (Expense), Net

The components of other non-operating income (expense), net are as follows:

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Interest and dividend income	$	91		$	153		$	151
Equity income (loss) from joint ventures (1)		(602	)		2,029			976
Gain (loss) on foreign exchange		950			(276	)		(719	)
Write-off of deferred financing costs		—			—			(773	)
Other non-operating income, net		158			153			145
Total other non-operating income (expense), net	$	597		$	2,059		$	(220	)

(1) Year ended December 31, 2017 includes a noncash impairment charge of approximately $1.8 million related to our minority interest investment in Orange Electronic Co., Ltd.  (See Note 8 for additional information).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. Income Taxes

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which included a broad range of tax reform affecting businesses, including the reduction of the federal corporate tax rate from 35% to 21%, changes in the deductibility of certain business expenses, and the manner in which international operations are taxed in the U.S.  Although the majority of the changes resulting from the Act are effective beginning in 2018, U.S. GAAP requires that certain impacts of the Act be recognized in the income tax provision in the period of enactment.  In connection with the enactment of the Act, our income tax provision for the fourth quarter of 2017 included an increase of $17.5 million, reflecting an increase of $16.1 million for the remeasurement of our net deferred tax assets and an increase in tax of $1.4 million due to the deemed repatriation of earnings of our foreign subsidiaries.

As related to the deemed repatriation of earnings of foreign subsidiaries, the Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries.  As a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued are now subject to U.S. tax.  In accordance with the guidelines provided in the Act, we have aggregated the estimated untaxed foreign earnings and profits, and utilized participating exemption deductions and available foreign tax credits in deriving the $1.4 million repatriation tax, which will be payable currently.  Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest most or all of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts.

Although we believe that the impact of the Act has been properly reflected in the fourth quarter of 2017, there may be further adjustments in the coming quarters as the relevant authorities provide further guidance on the impacts of the Act. The following includes the impact of the Act on the year ended December 2017 disclosures.

The income tax provision (benefit) consists of the following (in thousands):

	Year Ended December 31,
	2017		2016			2015
Current:
Domestic	$	30,742	$	33,156		$	22,943
Foreign		3,139		3,628			4,324
Total current		33,881		36,784			27,267
Deferred:
Domestic		18,833		(387	)		(1,210	)
Foreign		98		(239	)		(74	)
Total deferred		18,931		(626	)		(1,284	)
Total income tax provision	$	52,812	$	36,158		$	25,983

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Reconciliations between taxes at the U.S. Federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes are as follows (in thousands):

	Year Ended December 31,
	2017			2016			2015
U.S. Federal income tax rate of 35%	$	33,755		$	34,500		$	25,936
Increase (decrease) in tax rate resulting from:
State and local income taxes, net of federal income tax benefit		3,138			2,944			1,857
Income tax (tax benefits) attributable to foreign income		(149	)		(887	)		(1,705	)
Other non-deductible items, net		(1,319	)		(464	)		(192	)
Impact of Tax Cuts and Jobs Act		17,515			—			—
Change in valuation allowance		(128	)		65			87
Provision for income taxes	$	52,812		$	36,158		$	25,983

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the accompanying consolidated balance sheets (in thousands):

	December 31,
	2017			2016
Deferred tax assets:
Inventories	$	11,498		$	18,323
Allowance for customer returns		8,678			15,092
Postretirement benefits		170			607
Allowance for doubtful accounts		1,181			1,589
Accrued salaries and benefits		8,500			11,482
Capital loss		154			234
Tax credit carryforwards		272			420
Deferred gain on building sale		55			489
Accrued asbestos liabilities		8,886			12,638
		39,394			60,874
Valuation allowance		(377	)		(505	)
Total deferred tax assets		39,017			60,369
Deferred tax liabilities:
Depreciation		5,495			7,410
Other		1,102			1,832
Total deferred tax liabilities		6,597			9,242
Net deferred tax assets	$	32,420		$	51,127

In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some portion or the entire deferred tax asset will be realized.  Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforwards can be utilized.  We consider the level of historical taxable income, scheduled reversal of temporary differences, carryback and carryforward periods, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted.  We also consider cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings. Assumptions regarding future taxable income require significant judgment. Our assumptions are consistent with estimates and plans used to manage our business.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The valuation allowance of $0.4 million as of December 31, 2017 is intended to provide for uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  Based on these considerations, we believe it is more likely than not that we would realize the benefit of the net deferred tax asset of $32.4 million as of December 31, 2017, which is net of the remaining valuation allowance.

At December 31, 2017, we have foreign tax credit carryforwards of approximately $0.3 million that will expire in varying amounts by 2020.

In accordance with generally accepted accounting practices, we recognize in our financial statements only those tax positions that meet the more-likely-than-not recognition threshold.  We establish tax reserves for uncertain tax positions that do not meet this threshold.  During the years ended December 31, 2017, 2016 and 2015 we did not establish a liability for uncertain tax provisions.

We are subject to taxation in the U.S. and various state, local and foreign jurisdictions.  As of December 31, 2017, the Company is no longer subject to U.S. Federal tax examinations for years before 2014.  We remain subject to examination by state and local tax authorities for tax years 2013 through 2016.  Foreign jurisdictions have statutes of limitations generally ranging from 2 to 6 years.  Years still open to examination by foreign tax authorities in major jurisdictions include Canada (2013 onward), Hong Kong (2012 onward), Mexico (2013 onward) and Poland (2012 onward).  We do not presently anticipate that our unrecognized tax benefits will significantly increase or decrease over the next 12 months; however, actual developments in this area could differ from those currently expected.

17. Industry Segment and Geographic Data

We have two major reportable operating segments, each of which focuses on a specific line of replacement parts.  Our Engine Management Segment manufactures and remanufactures ignition and emission parts, ignition wires, battery cables, fuel system parts and sensors for vehicle systems.  Our Temperature Control Segment manufactures and remanufactures air conditioning compressors, air conditioning and heating parts, engine cooling system parts, power window accessories and windshield washer system parts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1).  The following tables contain financial information for each reportable segment (in thousands):

	Year Ended December 31,
	2017			2016			2015
Net sales (a):
Engine Management	$	829,413		$	765,539		$	698,021
Temperature Control		279,127			283,740			264,478
Other		7,603			9,203			9,476
Total net sales	$	1,116,143		$	1,058,482		$	971,975
Intersegment sales (a):
Engine Management	$	24,995		$	22,268		$	20,178
Temperature Control		7,334			7,293			6,542
Other		(32,329	)		(29,561	)		(26,720	)
Total intersegment sales	$	—		$	—		$	—
Product Line Net Sales (a):
Engine Management
Ignition, Emission and Fuel System Parts	$	657,287		$	616,523		$	598,161
Wire and Cable		172,126			149,016			99,860
Total Engine Management		829,413			765,539			698,021
Temperature Control
Compressors		148,377			148,623			127,861
Other Climate Control Parts		130,750			135,117			136,617
Total Temperature Control		279,127			283,740			264,478
All Other		7,603			9,203			9,476
Total Net Sales	$	1,116,143		$	1,058,482		$	971,975
Depreciation and Amortization:
Engine Management	$	17,981		$	15,008		$	12,256
Temperature Control		4,373			4,287			4,329
Other		1,562			1,162			1,052
Total depreciation and amortization	$	23,916		$	20,457		$	17,637
Operating income (loss):
Engine Management	$	97,403		$	101,529		$	88,007
Temperature Control		19,609			17,563			6,382
Other		(18,838	)		(21,025	)		(18,529	)
Total operating income	$	98,174		$	98,067		$	75,860
Investment in equity affiliates:
Engine Management	$	4,162		$	6,221		$	6,430
Temperature Control		27,022			13,703			14,192
Other		—			—			—
Total investment in equity affiliates	$	31,184		$	19,924		$	20,622
Capital expenditures:
Engine Management	$	17,750		$	14,202		$	13,038
Temperature Control		5,151			3,652			3,027
Other		1,541			3,067			1,982
Total capital expenditures	$	24,442		$	20,921		$	18,047

Total assets:
Engine Management	$	527,200	$	506,625	$	413,102
Temperature Control		177,006		171,136		177,201
Other		83,361		90,936		90,761
Total assets	$	787,567	$	768,697	$	681,064

a) Segment and product line net sales include intersegment sales in our Engine Management and Temperature Control segments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other consists of items pertaining to our corporate headquarters function, as well as our Canadian business unit that does not meet the criteria of a reportable operating segment.

Reconciliation of segment operating income to net earnings:

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Operating income	$	98,174		$	98,067		$	75,860
Other non-operating income (expense)		597			2,059			(220	)
Interest expense		2,329			1,556			1,537
Earnings from continuing operations before taxes		96,442			98,570			74,103
Income tax expense		52,812			36,158			25,983
Earnings from continuing operations		43,630			62,412			48,120
Discontinued operations, net of tax		(5,654	)		(1,982	)		(2,102	)
Net earnings	$	37,976		$	60,430		$	46,018

	Year Ended December 31,
	2017		2016		2015
Revenues:	(In thousands)
United States	$	996,433	$	952,019	$	881,206
Canada		56,575		53,324		48,072
Mexico		24,521		24,429		14,707
Europe		14,088		14,703		16,305
Other foreign		24,526		14,007		11,685
Total revenues	$	1,116,143	$	1,058,482	$	971,975

		December 31,
		2017		2016		2015
Long-lived assets:	(In thousands)
United States		$	202,875	$	204,592	$	155,438
Canada			2,017		1,344		1,190
Mexico			4,449		3,877		1,012
Europe			18,530		13,612		12,324
Other foreign			31,185		19,924		20,622
Total long-lived assets		$	259,056	$	243,349	$	190,586

Revenues are attributed to countries based upon the location of the customer.  Long-lived assets are attributed to countries based upon the location of the assets.

Our five largest individual customers accounted for approximately 70% of our consolidated net sales in 2017 and 2016, and approximately 68% of our consolidated net sales in 2015.  During 2017, O’Reilly Automotive, Inc., Advance Auto Parts, Inc., NAPA Auto Parts, and AutoZone, Inc. accounted for 21%, 17%, 16% and 10% of our consolidated net sales, respectively.  Net sales from each of the customers were reported in both our Engine Management and Temperature Control Segments.

18. Fair Value of Financial Instruments

The carrying value of our financial instruments consisting of cash and cash equivalents, deferred compensation, and short term borrowings approximate their fair value.  In each instance, fair value is determined after considering Level 1 inputs under the three-level fair value hierarchy.  For fair value purposes, the carrying value of cash and cash equivalents approximates fair value due to the short maturity of those investments.  The fair value of the assets held by the deferred compensation plan are based on the quoted market prices of the underlying funds which are held in registered investment companies. The carrying value of our revolving credit facilities, classified as short term borrowings, equals fair market value because the interest rate reflects current market rates.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19. Commitments and Contingencies

Total rent expense for the three years ended December 31, 2017 was as follows (in thousands):

	Total		Real Estate		Other
2017	$	11,954	$	8,983	$	2,971
2016		10,171		7,550		2,621
2015		9,756		7,218		2,538

At December 31, 2017, we are obligated to make minimum rental payments through 2024, under operating leases, which are as follows (in thousands):

2018	$	9,485
2019		8,078
2020		6,990
2021		6,355
2022		5,364
Thereafter		3,932
Total	$	40,204

Warranties

We generally warrant our products against certain manufacturing and other defects.  These product warranties are provided for specific periods of time depending on the nature of the product.  As of December 31, 2017 and 2016, we have accrued $20.9 million and $24.1 million, respectively, for estimated product warranty claims included in accrued customer returns.  The accrued product warranty costs are based primarily on historical experience of actual warranty claims.  Warranty expense for each of the years 2017, 2016 and 2015 were $94.4 million, $99.1 million and $94.6 million, respectively.

The following table provides the changes in our product warranties:

	December 31,
	2017			2016
	(In thousands)
Balance, beginning of period	$	24,072		$	23,395
Liabilities accrued for current year sales		94,367			99,092
Settlements of warranty claims		(97,510	)		(98,415	)
Balance, end of period	$	20,929		$	24,072

Letters of Credit

At December 31, 2017, we had outstanding letters of credit with certain vendors aggregating approximately $5.3 million.  These letters of credit are being maintained as security for reimbursements to insurance companies and as security to the landlord of our administrative offices in Long Island City, New York.  The contract amount of the letters of credit is a reasonable estimate of their value as the value for each is fixed over the life of the commitment.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Change of Control Arrangements

We entered into a change in control arrangement with one key officer. In the event of a change of control (as defined in the agreement), the executive will receive severance payments and certain other benefits as provided in his agreement.

Asbestos

In 1986, we acquired a brake business, which we subsequently sold in March 1998 and which is accounted for as a discontinued operation. When we originally acquired this brake business, we assumed future liabilities relating to any alleged exposure to asbestos-containing products manufactured by the seller of the acquired brake business. In accordance with the related purchase agreement, we agreed to assume the liabilities for all new claims filed on or after September 2001. Our ultimate exposure will depend upon the number of claims filed against us on or after September 2001 and the amounts paid for indemnity and defense thereof.  At December 31, 2017, approximately 1,530 cases were outstanding for which we may be responsible for any related liabilities.  Since inception in September 2001 through December 31, 2017, the amounts paid for settled claims are approximately $23.8 million.

In evaluating our potential asbestos-related liability, we have considered various factors including, among other things, an actuarial study of the asbestos related liabilities performed by an independent actuarial firm, our settlement amounts and whether there are any co-defendants, the jurisdiction in which lawsuits are filed, and the status and results of settlement discussions.  As is our accounting policy, we consider the advice of actuarial consultants with experience in assessing asbestos-related liabilities to estimate our potential claim liability.  The methodology used to project asbestos-related liabilities and costs in our actuarial study considered: (1) historical data available from publicly available studies; (2) an analysis of our recent claims history to estimate likely filing rates into the future; (3) an analysis of our currently pending claims; and (4) an analysis of our settlements to date in order to develop average settlement values.

The most recent actuarial study was performed as of August 31, 2017.  The updated study has estimated an undiscounted liability for settlement payments, excluding legal costs and any potential recovery from insurance carriers, ranging from $35.2 million to $54 million for the period through 2060.  The change from the prior year study was a $4.2 million increase for the low end of the range and a $6.3 million increase for the high end of the range.  The increase in the estimated undiscounted liability from the prior year study at both the low end and high end of the range reflects our actual experience over the prior twelve months, our historical data and certain assumptions with respect to events that may occur in the future.  Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range of settlement payments was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required.  Based upon the results of the August 31, 2017 actuarial study, in September 2017 we increased our asbestos liability to $35.2 million, the low end of the range, and recorded an incremental pre-tax provision of $6 million in earnings (loss) from discontinued operations in the accompanying statement of operations.  Future legal costs, which are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations, are estimated, according to the updated study, to range from $44.3 million to $79.6 million for the period through 2060.

We plan to perform an annual actuarial evaluation during the third quarter of each year for the foreseeable future. Given the uncertainties associated with projecting such matters into the future and other factors outside our control, we can give no assurance that additional provisions will not be required. We will continue to monitor the circumstances surrounding these potential liabilities in determining whether additional provisions may be necessary.  At the present time, however, we do not believe that any additional provisions would be reasonably likely to have a material adverse effect on our liquidity or consolidated financial position.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other Litigation

We are currently involved in various other legal claims and legal proceedings (some of which may involve substantial amounts), including claims related to commercial disputes, product liability, employment, and environmental.  Although these legal claims and legal proceedings are subject to inherent uncertainties, based on our understanding and evaluation of the relevant facts and circumstances, we believe that the ultimate outcome of these matters will not, either individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations.  We may at any time determine that settling any of these matters is in our best interests, which settlement may include substantial payments.  Although we cannot currently predict the specific amount of any liability that may ultimately arise with respect to any of these matters, we will record provisions when the liability is considered probable and reasonably estimable.  Significant judgment is required in both the determination of probability and the determination as to whether an exposure can be reasonably estimated.  As additional information becomes available, we reassess our potential liability related to these matters. Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

20. Quarterly Financial Data (Unaudited)

	2017 Quarter Ended
	Dec. 31			Sept. 30			June 30			Mar. 31
	(In thousands, except per share amounts)
Net sales	$	239,978		$	281,058		$	312,729		$	282,378
Gross profit		69,345			82,535			90,666			84,110
Earnings (loss) from continuing operations		(8,106	)		17,108			18,261			16,367
Loss from discontinued operations, net of taxes		(541	)		(3,983	)		(497	)		(633	)
Net earnings (loss)	$	(8,647	)	$	13,125		$	17,764		$	15,734

Net earnings (loss) from continuing operations per common share:
Basic	$	(0.36	)	$	0.75	$	0.80	$	0.72
Diluted	$	(0.36	)	$	0.74	$	0.78	$	0.70
Net earnings (loss) per common share:
Basic	$	(0.38	)	$	0.58	$	0.78	$	0.69
Diluted	$	(0.38	)	$	0.57	$	0.76	$	0.67

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

	2016 Quarter Ended
	Dec. 31			Sept. 30			June 30			Mar. 31
	(In thousands, except per share amounts)
Net sales	$	229,799		$	300,795		$	288,977		$	238,911
Gross profit		66,771			95,644			87,076			72,996
Earnings from continuing operations		8,839			21,055			19,862			12,656
Loss from discontinued operations, net of taxes		(487	)		(425	)		(618	)		(452	)
Net earnings	$	8,352		$	20,630		$	19,244		$	12,204
Net earnings from continuing operations per common share:

Basic	$	0.39	$	0.93	$	0.87	$	0.56
Diluted	$	0.38	$	0.91	$	0.86	$	0.55
Net earnings per common share:
Basic	$	0.37	$	0.91	$	0.85	$	0.54
Diluted	$	0.36	$	0.89	$	0.84	$	0.53

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON  ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act, as of the end of the period covered by this Report. This evaluation also included consideration of our internal controls and procedures for the preparation of our financial statements as required under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.

(b) Management’s Report on Internal Control Over Financial Reporting.

Pursuant to Section 404 of the Sarbanes-Oxley Act, as part of this Report we have furnished a report regarding our internal control over financial reporting as of December 31, 2017. The report is under the caption “Management’s Report on Internal Control Over Financial Reporting” in “Item 8. Financial Statements and Supplementary Data,” which report is included herein.

(c) Attestation Report of Independent Registered Public Accounting Firm.

KPMG LLP, our independent registered public accounting firm, has issued an opinion as to the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. The opinion is under the caption “Report of Independent Registered Public Accounting Firm−Internal Control Over Financial Reporting” in “Item 8. Financial Statements and Supplementary Data” for this attestation report, which is included herein.

(d) Changes in Internal Control Over Financial Reporting.

During the quarter ended December 31, 2017 and subsequent to that date, we have not made changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We continue to review, document and test our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 Internal Control–Integrated Framework.  We may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.  These efforts may lead to various changes in our internal control over financial reporting.

92

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item is incorporated herein by reference to the information in our Definitive Proxy Statement to be filed with the SEC in connection with our 2018 Annual Meeting of Stockholders (the “2018 Proxy Statement”) set forth under the captions “Election of Directors,”  “Management Information,” “Corporate Governance” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

The Board of Directors of the Company has adopted a Code of Ethics that applies to all employees, officers and directors of the Company.  The Company’s Code of Ethics is available at www.smpcorp.com under “Investor Relations─Governance Documents.”  The Company intends to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Company’s Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by disclosing such information on the Company’s website, at the address specified above.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to the information in our 2018 Proxy Statement set forth under captions “Corporate Governance,” “Compensation Discussion & Analysis,” “Executive Compensation and Related Information” and “Report of the Compensation and Management Development Committee.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by reference to the information in our 2018 Proxy Statement set forth under the captions “Executive Compensation and Related Information” and “Security Ownership of Certain Beneficial Owners and Management.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated herein by reference to the information in our 2018 Proxy Statement set forth under the captions “Corporate Governance” and “Executive Compensation and Related Information.”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item is incorporated herein by reference to the information in our 2018 Proxy Statement set forth under the captions “Audit and Non-Audit Fees.”

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) (1) The Index to Consolidated Financial Statements of the Registrant under Item 8 of this Report is incorporated herein by reference as the list of Financial Statements required as part of this Report.

(2) The following financial schedule and related report for the years 2017, 2016 and 2015 is submitted herewith:

Schedule II - Valuation and Qualifying Accounts

All other schedules are omitted because they are not required, not applicable or the information is included in the financial statements or notes thereto.

(3) Exhibits.

The exhibit list in the Exhibit Index is incorporated by reference as the list of exhibits required as part of this Report.

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STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit Number
3.1	Restated By-Laws, dated May 23, 1996.
3.2	Restated Certificate of Incorporation, dated July 31, 1990.
3.3	Certificate of Amendment of the Certificate of Incorporation, dated February 15, 1996.
10.1	Amended and Restated Employee Stock Ownership Plan and Trust of Standard Motor Products, Inc., dated January 1, 2015 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015).
10.2	2006 Omnibus Incentive Plan of Standard Motor Products, Inc., as amended.
10.3	Supplemental Compensation Plan, effective October 1, 2001 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.4	Severance Compensation Agreement, dated December 12, 2001, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.5	Amendment to the Standard Motor Products, Inc. Supplemental Compensation Plan, effective December 1, 2006 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006).
10.6	Retention Bonus and Insurance Agreement dated December 26, 2006, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006).
10.7	Purchase and Sale Agreement, dated December 21, 2007, between Standard Motors Products, Inc. and EXII Northern Boulevard Acquisition LLC (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007).
10.8	Lease Agreement, dated March 12, 2008, between Standard Motors Products, Inc. and 37-18 Northern Boulevard LLC (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007).
10.9	Amendment to Severance Compensation Agreement, dated as of December 15, 2008, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009).
10.10	Amended and Restated Supplemental Executive Retirement Plan, dated as of December 31, 2010 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).

95

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit Number
10.11	Amendment to Severance Compensation Agreement, dated as of March 8, 2011, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).
10.12	Credit Agreement, dated as of October 28, 2015, among Standard Motor Products, Inc., as borrower and the other loan parties thereto, and JPMorgan Chase Bank, N.A., as agent and lender, J.P. Morgan Securities LLC, as sole bookrunner and joint lead arranger, Bank of America, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and joint lead arrangers, and the other lenders thereto (incorporated by reference to the Company’s Form 8-K filed October 30, 2015).
10.13	Standard Motor Products, Inc. 2016 Omnibus Incentive Plan and forms of related award agreements (incorporated by reference to the Company’s Registration Statement on Form S-8 (Registration No. 333-211461) filed on May 19, 2016).
10.14	Stock and Asset Purchase Agreement, dated as of May 23, 2016, among General Cable Industries, Inc., Prestolite de Mexico, S.A. de C.V., GK Technologies, Inc., General Cable de Mexico, S.A. de C.V., General Cable Technologies Corporation, Servicios Latinoamericanos GC S.A. de C.V., Standard Motor Products, Inc., Standard Motor Products de Mexico, S. de R.L. de C.V. and Motortronics, Inc. (incorporated by reference to the Company’s Form 10-Q filed August 4, 2016).
21	List of Subsidiaries of Standard Motor Products, Inc.
23	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
24	Power of Attorney (see signature page to Annual Report on Form 10-K).
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

96

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

EXHIBIT INDEX

101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document

** In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to the Original Filing shall be deemed to be “furnished” and not “filed.”

97

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

STANDARD MOTOR PRODUCTS, INC.

(Registrant)

/s/ Eric P. Sills

Eric P. Sills

Chief Executive Officer, President and Director

/s/ James J. Burke

James J. Burke

Executive Vice President Finance,

Chief Financial Officer

New York, New York

February 22, 2018

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eric P. Sills and James J. Burke, jointly and severally, as his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

February 22, 2018	/s/	Eric P. Sills
		Eric P. Sills
		Chief Executive Officer, President and Director
		(Principal Executive Officer)
February 22, 2018	/s/	James J. Burke
		James J. Burke
		Executive Vice President Finance and Chief Financial Officer
		(Principal Financial and Accounting Officer)

98

February 22, 2018	/s/   Lawrence I. Sills
	Lawrence I. Sills, Director
February 22, 2018	/s/   John P. Gethin
	John P. Gethin, Director
February 22, 2018	/s/   Pamela Forbes Lieberman
	Pamela Forbes Lieberman, Director
February 22, 2018	/s/   Patrick S. McClymont
	Patrick S. McClymont, Director
February 22, 2018	/s/   Joseph W. McDonnell
	Joseph W. McDonnell, Director
February 22, 2018	/s/   Alisa C. Norris
	Alisa C. Norris, Director
February 22, 2018	/s/   Frederick D. Sturdivant
	Frederick D. Sturdivant, Director
February 22, 2018	/s/   William H. Turner
	William H. Turner, Director
February 22, 2018	/s/   Richard S. Ward
	Richard S. Ward, Director
February 22, 2018	/s/   Roger M. Widmann
	Roger M. Widmann, Director

99

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

Schedule II ‑ Valuation and Qualifying Accounts

Years ended December 31, 2017, 2016 and 2015

			Additions
Description	Balance at beginning of year		Charged to costs and expenses			Other		Deductions		Balance at end of year
Year ended December 31, 2017:
Allowance for doubtful accounts	$	3,353,000	$	970,000		$	—	$	499,000	$	3,824,000
Allowance for discounts		1,072,000		10,664,000			—		10,593,000		1,143,000
	$	4,425,000	$	11,634,000		$	—	$	11,092,000	$	4,967,000
Allowance for sales returns	$	40,176,000	$	137,416,000		$	—	$	141,676,000	$	35,916,000
Year ended December 31, 2016:
Allowance for doubtful accounts	$	3,201,000	$	949,000		$	—	$	797,000	$	3,353,000
Allowance for discounts		1,045,000		10,039,000			—		10,012,000		1,072,000
	$	4,246,000	$	10,988,000		$	—	$	10,809,000	$	4,425,000
Allowance for sales returns	$	38,812,000	$	138,407,000		$	—	$	137,043,000	$	40,176,000
Year ended December 31, 2015:
Allowance for doubtful accounts	$	4,894,000	$	3,371,000	(1)	$	—	$	5,064,000	$	3,201,000
Allowance for discounts		1,475,000		9,872,000			—		10,302,000		1,045,000
	$	6,369,000	$	13,243,000		$	—	$	15,366,000	$	4,246,000
Allowance for sales returns	$	30,621,000	$	133,355,000		$	—	$	125,164,000	$	38,812,000

(1) Includes a net $3,514,000 charge relating to one of our customers that filed a petition for bankruptcy in January 2016.

100

EX-3.1

Exhibit 3.1

RESTATED AS OF

MAY 23, 1996

RESTATED BY-LAWS

OF

STANDARD MOTOR PRODUCTS, INC.

SECTION 1.    The annual meeting of the stockholders of the Corporation shall be held at the office of the Corporation in Long Island City, unless the Board of Directors shall have designated for the holding of such meeting in the manner required by statute, some other place within the State of New York, on the last Tuesday in April of each year (unless such day be a legal holiday, then the next succeeding business day) at 2 o’clock in the afternoon, unless the Board of Directors shall have designated another time and date (not later than 30 days after the last Tuesday in April) and there shall have been mailed, not later than the last Tuesday in April, to stockholders, in the manner provided by

laws, a notice of such meeting.

SECTION 2.    Special meetings of the stockholders may be held upon call of the president, a majority of the number of directors in office or of stockholders holding a majority of the outstanding shares of stock entitled to vote at such meeting.

SECTION 3.    Notice of the time and place of every meeting of stockholders shall be given in the manner provided by law.

SECTION 4.    The holders of a majority of the outstanding shares of stock of the Corporation entitled to vote at any meeting of stockholders must be present in person or by proxy at such meeting to constitute a quorum, less than such quorum, however, having power to adjourn any meeting from time to time without notice.

The Board of Directors may, before any meeting of stockholders, appoint two inspectors of election to serve at such meeting.  If the Board fails to make such appointment, or if their appointees or either of them fail to appear at such meeting, the chairman of the meeting may appoint inspectors or an inspector to act at such meeting.

SECTION 5.    Meetings of stockholders shall be presided over by the president, or, in his absence, a vice-president, or in the absence of all of them, by a chairman to be elected at the meeting.  The secretary or an assistant secretary of the Corporation shall act as secretary at such meeting, if present, and in the absence of all of them, the chairman of the meeting may appoint a secretary.

SECTION 6.    The stock of the Corporation shall be transferable or assignable on the books of the Corporation by holders in person or by attorney on surrender of the certificates therefore duly endorsed.  Certificates of stock shall be in such form and executed in such manner as may be prescribed by law and the Board of Directors.

SECTION 7.    The directors shall be elected at the annual meeting of stockholders or as soon thereafter as practicable by a plurality of the votes at such election, and shall hold office until the next annual meeting of the stockholders and until their successors are elected and qualified.

The number of directors of the Corporation shall be fixed, from time to time, by resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies, provided that such number may not be less than three.

If the number of directors be increased by reason of any such resolution fixing the number of directors, the additional director or directors may, unless otherwise required by law, be elected by a majority of the directors in office at the time of the increase, or by the stockholders at a special meeting of stockholders called for that purpose, or, if not so elected prior to the next annual meeting of stockholders, they shall be elected by the stockholders at such annual meeting.

Directors need not be stockholders of the Corporation.  Any and all of the directors may be removed at any time without cause assigned, at any meeting called for that purpose, by the vote of the holders of 75% of each class of the outstanding capital stock of the Corporation then outstanding and entitled to vote on such action.  Vacancies caused by such removal may be filled at any annual meeting or at any special meeting called for that purpose by a plurality of votes at such election.

All vacancies in the Board of Directors not hereinabove provided for may be filled by a majority of the directors then in office.

SECTION 8.    Meetings of the Board of Directors shall be held at the times fixed by the Board or upon call of the president or a majority of the number of directors in office and may be held at any place within or without the State of New York.  The Secretary or other officer performing his duties shall give reasonable notice (which need not in any event exceed  two days) of all meetings of directors, provided that a meeting may be held without notice immediately after the annual election and notice need not be given of regular meetings held at times fixed by resolution of the Board.  Meetings may be held at any time without notice if all the directors are present or if those not present waive notice either before or after the meeting.  A majority of the whole Board shall constitute a quorum and the act of such a majority of the whole Board at any meeting shall be the act of the Board.  Less than such quorum shall have power to adjourn any meeting from time to time without notice.  Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time.  Participation by such means shall constitute presence in person at a meeting.

2

SECTION 9.    The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Corporation, which, to the extent provided in such resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, including the power to authorize the seal of the Corporation to be affixed to all papers which may require it.  Each such committee shall make its own rules of procedure and shall keep regular minutes of its proceedings and report the same to the Board when required.  The Board of Directors may, by resolution passed by a majority of the whole Board, appoint one of its members chairman of the Board.  Such chairman shall preside at all meetings of the Board of Directors.

SECTION 10.  By a Resolution of the Board, directors may receive a specified salary or retainer for their services as directors or as members of a committee of directors.  In addition, a fixed fee and expenses of attendance may be allowed for attendance at each meeting of the Board of Directors or at a meeting of a committee of the Board of Directors.  Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as officer, agent or otherwise and receiving compensation therefore.

No contract or other transaction between the Corporation and any other corporation, and no act of the Corporation shall in any way be affected or invalidated by the fact that any of the directors of the Corporation are pecuniarily or otherwise interested in, or are directors, officers or stockholders of, such other corporation;  any director individually, or any firm or corporation of which such director may be a member, director, officer or stockholder or in which such director may have any other interest, may be a party to, and may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation, provided that the fact that he or such firm or corporation is so interested shall be disclosed or shall have been known to the Board of Directors or a majority thereof; and any director of the Corporation who is also a director, officer or stockholder of such other corporation, or who is so interested, may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the Corporation which shall authorize such contract or transaction, and may vote thereat to authorize such contract or transaction, with like force and effect as if he were not such director or officer of such other corporation and not so interested.

SECTION 11.  The Board of Directors, as soon as may be convenient after the election of directors in each year, shall appoint one of their number president, and shall also appoint a treasurer and a secretary and may, from time to time, appoint one or more vice-presidents and such other officers as they may deem proper.  The same person may be appointed to more than one office.

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SECTION 12.  The term of office of all officers shall be until the next election of directors and until their respective successors are chosen and qualify, but any officer may be removed from office at any time by the Board of Directors.  Vacancies in the offices shall be filled by the Board of Directors.

SECTION 13.  The president shall be the chief executive officer of the Corporation, shall have general supervision of the affairs of the Corporation and shall report to and be responsible to the Board of Directors and the stockholders.

The other officers of the Corporation shall have such powers and duties, except as modified by the Board of Directors, as generally pertain to their offices respectively, as well as such powers and duties as from time to time shall be conferred by the Board of Directors.

SECTION 14.  Except to the extent expressly prohibited by the New York Business Corporation Law, the Corporation shall indemnify each person made or threatened to be made a party to, or called as a witness or asked to submit information in, any action or proceeding by reason of the fact that such person or such person’s testator or intestate is or was a director or officer of the Corporation, or serves or served at the request of the Corporation any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, penalties, amounts paid in settlement and reasonable expenses, including attorneys’ fees, incurred in connection with such action or proceeding, or any appeal therein, provided that no such indemnification shall be made if a judgment or other final adjudication adverse to such person establishes that his or her acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled, and provided further that no such indemnification shall be required with respect to any settlement or other nonadjudicated disposition of any threatened or pending action or proceeding unless the Corporation has given its prior consent to such settlement or other disposition.  In this Section 14, reference to any action or proceeding includes, without limitation, any pending or threatened action, proceeding, hearing or investigation, whether civil or criminal, whether judicial, administrative or legislative in nature, and whether or not in the nature of a direct or a shareholders’ derivative action brought by or on behalf of the Corporation or any other corporation or enterprise which the director or officer of the Corporation serves or has served at the Corporation’s request.

The Corporation shall advance or promptly reimburse upon request any person entitled to indemnification hereunder for all expenses, including attorneys’ fees, reasonably incurred in defending any action or proceeding in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such person to repay such amount if such person is ultimately found not to be entitled to indemnification or, where indemnification is granted, to the extent the expenses so advanced or reimbursed exceed the amount to which such person is entitled, provided, however, that such person shall cooperate in good faith with any request by the Corporation that common counsel be utilized by the parties to an action or proceeding who are similarly situated unless to do so would be inappropriate due to actual or potential differing interests between or among such parties.

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The Corporation shall also promptly pay or reimburse such person for all expenses, including fees and expenses of counsel, reasonably incurred by such person in successfully enforcing his or her rights pursuant to this Section 14.

Noting herein shall limit or affect any right of any person otherwise than hereunder to indemnification or expenses, including attorneys’ fees, under any statute, rule, regulation, certificate of incorporation, By-Law, insurance policy, contract or otherwise.

Anything in these By-Laws to the contrary notwithstanding, no elimination of this Section 14, and no amendment of this Section 14 adversely affecting the right of any person to indemnification or advancement of expenses hereunder shall be effective until the 60th day following notice to such person of such action, and no elimination of or amendment to this Section 14 shall deprive any person of his or her rights hereunder arising out of alleged or actual events or acts occurring prior to such 60th day or actual or alleged failures to act prior to such 60th day.

The Corporation shall not, except by elimination or amendment of this Section 14 in a manner consistent with the preceding paragraph, take any corporate action or enter into any agreement which prohibits, or otherwise limits the rights of any person to, indemnification in accordance with the provisions of this Section 14.  The indemnification of any person provided by this Section 14 shall continue after such person has ceased to be a director or officer of the Corporation and shall inure to the benefit of such person’s heirs, executors, administrators and legal representatives.

The Corporation is authorized to enter into agreements with any of its directors or officers extending rights to indemnification and advancement of expenses to such person to the fullest extent permitted by applicable law, but the failure to enter into any such agreement shall not affect or limit the rights of such person pursuant to this Section 14, it being expressly recognized hereby that all directors or officers of the Corporation, by serving as such after the adoption hereof, are acting in reliance hereon and that the Corporation is estopped to contend otherwise.

In case any provision in this Section 14 shall be determined at any time to be unenforceable in any respect, the other provisions shall not in any way be effected or impaired thereby, and the affected provision shall be given the fullest possible enforcement in the circumstances, it being the intention of the Corporation to afford indemnification and advancement of expenses to its directors and officers, acting in such capacities or in the other capacities mentioned herein, to the fullest extent permitted by applicable law.

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For purposes of this Section 14, the Corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his or her duties to the Corporation also impose duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan, and excise taxes assessed on a person with respect to an employee benefit plan pursuant to applicable law shall be considered indemnifiable expenses.  For purposes of this Section 14, the term “Corporation” shall include any legal successor to the Corporation, including any corporation which acquires all or substantially all of the assets of the Corporation in one or more transactions.

A person who has been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding of the character described in the first paragraph of this Section 14 shall be entitled to indemnification as authorized in such paragraph.  Except as provided in the preceding sentence and unless ordered by a court, any indemnification under this Section 14 shall be made by the Corporation if, and only if, authorized in the specific case:

(1)          By the Board of Directors acting by quorum consisting of directors who are not parties to such action or proceeding upon a finding that the director or officer has met the standard of conduct set forth in the first paragraph of this Section 14, or,

(2)          If such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs:

(a)      By the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the standard of conduct set forth in the first paragraph of this Section 14 has been met by such director or officer, or

(b)      By the shareholders upon a finding that the director or officer has met the applicable standard of conduct set forth in such paragraph.

SECTION 15.  These By-Laws may, at any time, be added to, amended or repealed in whole or in part by the affirmative vote of a majority of the number of directors in office given at a duly convened meeting of the board, the notice of which includes notice of such proposed action.  No such notice need be given if all members of the Board of Directors are present at the meeting.

All By-Laws, including any By-Laws made, amended or repealed by the directors, shall be subject to amendment, repeal or re-enactment by the stockholders entitled to vote at any annual meeting, or any such meeting called for that purpose.

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EX-3.2

Exhibit 3.2

Restated Certificate of Incorporation

of

Standard Motor Products, Inc.

Under Section 807 of the

Business Corporation Law

*          *          *          *          *

We, Lawrence I. Sills and Mark S. Chanko, being respectively the President and the Secretary of Standard Motor Products, Inc. hereby certify:

1.         The name of the corporation is Standard Motor Products, Inc.

2.         The certificate of incorporation was filed by the Department of State on the 30th day of December, 1926.

3.         The certificate of incorporation, as amended heretofore, is further amended as follows:

(a)         to add article “NINTH” relating to the indemnification of the directors, officers and employees of the corporation pursuant to Article 7 of the Business Corporation Law of the State of New York; and

(b)         to add article “TENTH” relating to the eliminating or limiting of the personal liability of the directors to the corporation and its shareholders pursuant to Section 402(b) of the Business Corporation Law of the State of New York.

In order to effect the foregoing, articles “NINTH” and “TENTH” shall read as follows:

“NINTH:          The corporation shall, to the fullest extent permitted by Article 7 of the Business Corporation Law of the State of New York, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said Article from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said Article, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which any person may be entitled under any By-Law, resolution of shareholders, resolution of directors, agreement, or otherwise, as permitted by said Article, as to action in any capacity in which he or she served at the request of the corporation.

TENTH:           The personal liability of the directors of the corporation is eliminated to the fullest extent permitted by the provisions of paragraph (b) of Section 402 of the Business Corporation Law of the State of New York, as the same may be amended and supplemented.”

4.         The text of the restated certificate of incorporation, as further amended, is hereby restated to read as herein set forth in full:

FIRST:             The name of the corporation is: STANDARD MOTOR PRODUCTS, INC.

SECOND:        The purposes for which it is formed are as follows:

(a)         To manufacture or otherwise produce automobile parts, equipment, accessories, or any articles which may be in any way connected with or belonging to automobiles, or motor vehicles, of any kind, character or description.

(b)         To buy, sell at wholesale or retail, import, export, lease or rent, or otherwise deal in automobile parts, equipment, accessories, and any other articles of any kind, character, or description, which may be in any way connected with or belonging to automobiles or motor vehicles of any kind, character or description.

(c)         To alter or otherwise change the character of any and all automobile parts, accessories, equipment, or of any articles of any kind, character, or description, which may be in any way connected with or belonging to automobiles or motor vehicles of any kind, character or description.

(d)         To buy, sell, lease or rent, import, export, manufacture, produce, or otherwise trade and deal in motor vehicles of any kind, character or description.

(e)         To manufacture or otherwise purchase, and to alter and change the character of goods, wares, merchandise and personal property of any and every class, kind and description which may be lawfully manufactured, produced or altered by corporations under the statutes of the State of New York.

(f)          To make and execute contracts for the purchase and sale of the articles of merchandise hereinabove mentioned and to purchase and sell options therefor.

(g)         To conduct what is generally known as a mail order business, subject to any restrictions placed thereon by law.

(h)         To buy, exchange, lease or otherwise acquire real estate and any interest or right therein, and to hold, own, operate, control, maintain and manage and improve and develop the same, and to build, construct, maintain, alter, manage and control directly or through ownership of stock in any other corporation, any and all kinds of buildings, edifices, stores, offices, warehouses, mills, shops, factories, machinery and plants, and any and all other structures and erections.

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(i)          To sell, assign, alienate, transfer and convey, lease or otherwise dispose of, and to mortgage or otherwise encumber the lands, buildings and any and all sorts of real property of this corporation, wherever situate and any and all legal and equitable interests therein.

(j)          To apply for, obtain, register, purchase, lease, or otherwise acquire and to hold, use, own and sell, assign, or otherwise dispose of any trademarks, trade names, patents, inventions and improvements accrued under letters patent of the United States or elsewhere or otherwise; and to use and grant licenses in respect of, or otherwise turn to account any such trademarks, patents, licenses, inventions, and the like or any such property or rights.

(k)         To acquire by purchase, subscription or otherwise, and to sell, assign, pledge or otherwise dispose of the stocks and bonds or any obligations of any corporation, and to exercise in respect thereof all the rights, powers and privileges of individual owners including the right to vote thereon, the ownership of which is conducive to and consistent with the purposes of this corporation; and to issue in exchange for such stocks, bonds and obligations of such corporation, the stocks, bonds and obligations of this corporation.

(l)          To aid in any manner permitted by law any corporation of which any bonds and other securities or evidences of indebtedness or stocks are held by this corporation, and to do any acts for the protection, preservation or enhancement of the value of such bonds or other securities or evidences of indebtedness or stock.

(m)        To engage in and carry out all the purposes and objects herein set forth, and to acquire all the property, rights and to exercise all the rights, privileges and powers herein enumerated, in the United States, and any foreign country.

(n)         The foregoing and following clauses shall be construed as objects and powers in furtherance and not in limitation of the general powers conferred by the laws of the State of New York, and it is hereby expressly provided that the foregoing and following enumeration of powers shall not be held to limit or restrict in any manner the powers of this corporation, and this corporation may do all and everything necessary, suitable or proper for the accomplishments of any of the purposes or objects hereinabove enumerated either alone or in association with other corporations, firms, or individuals to the same extent and as fully as individuals might or could do as principal, agents, contractors or otherwise.

(o)         Nothing in this certificate contained, however, shall authorize the corporation to carry on any business or exercise any powers in any state or country which a similar corporation organized under the laws of the State or country could not carry on or exercise, or to engage within or without the State of New York in the business of a lighting or transportation corporation or in the common carrier business or to issue bills, notes, or other evidence of debt for circulation as money.

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THIRD:            The amount of the Capital Stock which the Corporation is authorized to issue is $70,000,000, consisting of 30,000,000 shares of par value of $2.00 per share and 500,000 shares of the par value of $20.00 per share. The number of shares which are to be without par value is none.

FOURTH:        The shares of Capital Stock which the Corporation is authorized to issue shall be divided into two classes, consisting of 500,000 shares of Preferred Stock, $20.00 par value which may be issued in one or more series, and 30,000,000 shares of Common Stock, $2.00 par value.

DESIGNATIONS AND RELATIVE RIGHTS

OF PREFERRED STOCK

The Board of Directors is vested with authority to establish and designate series of the Preferred, to fix the number of shares therein, and the variations in the relative rights, preferences and limitations as between series.

RELATIVE RIGHTS OF

COMMON STOCK

The restrictions and qualifications upon the preferences, privileges and voting powers of Common Stock are as follows:

The holders of shares of Common Stock shall be entitled to receive such dividends as shall be declared from time to time by the Board of Directors.

Nothing contained herein shall limit any legal right of the Corporation to purchase any shares of its Common Stock, or any options to purchase shares of Capital Stock of the Corporation of any class whatsoever.

75% VOTE REQUIRED UNDER CERTAIN CIRCUMSTANCES

Any merger or consolidation of the Corporation, or any of its subsidiaries, with or into any other corporation; any sale, lease, exchange or other disposition by the Corporation, or any of its subsidiaries, of all or substantially all of its assets to any other corporation, person, entity, or any purchase, lease or other acquisition by the Corporation, or any of its subsidiaries, of any assets or securities or combination thereof, from any other corporation, person or entity in exchange for voting securities (or securities convertible into voting securities or options, warrants or rights to purchase voting securities or securities convertible into voting securities) of the Corporation, or any of its subsidiaries, shall require the affirmative vote of the holders of (i) at least seventy-five percent (75%) of the outstanding shares of each class of capital stock of the Corporation entitled to vote in elections of directors and (ii) at least a majority of the remaining outstanding shares (which are not beneficially owned, directly or indirectly, by such other corporation, person or entity) of each class of capital stock of the Corporation entitled to vote in elections of directors, if, as of the record date for the determination of shareholders entitled to notice thereof and to vote thereon, such other corporation, person or entity which is a party to such transaction is the beneficial owner, directly or indirectly, of five percent (5%) or more of the outstanding shares of any class of capital stock of the Corporation entitled to vote in elections of directors. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange.

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Beneficial Owner Defined. For purposes of this Article Fourth any other corporation, person or entity shall be deemed to be the beneficial owner of any shares of capital stock of the Corporation:

(a)       which it owns directly or indirectly, whether or not of record;

(b)       which it has the right to acquire pursuant to any agreement or understanding or upon exercise of conversion rights, warrants or options or otherwise;

(c)       which are beneficially owned, directly or indirectly (including shares deemed to be owned through application of Subsection (b) above), by any “affiliate” or  “associate” as those terms were defined on February 19, 1976 in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934; or

(d)       which are beneficially owned, directly or indirectly (including shares deemed to be owned through application of Subsection (b) above), by any other corporation, person or entity with which it, or its “affiliate” or “associate”, has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of shares of capital stock of the Corporation.

For the purposes of this Article Fourth the outstanding shares of any class of capital stock of the Corporation shall include any shares deemed owned through the application of Subsection (b), (c) and (d) above, but shall not include any other shares that may be issuable by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants, options, or otherwise.

Power of Board. The Board of Directors shall have the power and duty to determine for the purposes of this Article on the basis of information available to the Corporation, whether:

(a)       such other corporation, person or entity beneficially owns five percent (5%) or more of the outstanding shares of any class of capital stock of the Corporation entitled to vote in election of directors;

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(b)       such other corporation, person or entity is an “affiliate” or “associate” (as defined above) of another;

(c)       the memorandum of understanding referred to below accurately describes the transaction to which it relates; and

(d)       the proposed transaction is in the best interests of the Corporation and its shareholders.

In determining that the transaction is in the best interests of the Corporation and its shareholders the directors may give due consideration to all relevant factors including but not limited to the consideration offered, their view of the future prospects and value of the Corporation, the social and economic effects on the employees, customers, suppliers and other constituents of the Corporation and its subsidiaries. Any such determination shall be conclusive and binding for all purposes of this Article.

Exceptions. The 75% shareholder approval provisions of this Article shall not apply to any merger, consolidation, sale, lease, exchange, purchases, or other transactions described herein:

(a)       if the Board of Directors of the Corporation, shall have approved by resolution of a memorandum of understanding with the other corporation, person or entity with whom the transaction is proposed after determining that it is in the best interest of the Corporation and its shareholders;

(b)       if the transaction involves only the Corporation, or any of its subsidiaries, and a corporation of which a majority of the outstanding shares of each class of capital stock entitled to vote in election of directors is owned of record or beneficially by the Corporation or any of its subsidiaries.

Any director may be removed at any time, without cause, by the affirmative vote, at any shareholders meeting, by the holders of at least seventy-five percent (75%) of the outstanding shares of each class of capital stock of the Corporation entitled to vote at such meeting.

This Article shall not repealed or amended  in any respect unless such repeal or amendment is approved by the affirmative vote of the holders of not less than seventy-five (75%) percent of the outstanding shares of stock of each class of the Corporation entitled to vote thereon.

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NO PREEMPTIVE RIGHTS

No holder of any shares of any class of the Corporation shall be entitled as of right to purchase or subscribe for any part of any capital stock of the Corporation authorized by this Certificate or of any additional capital stock of any class to be issued by reason of any increase of the authorized capital stock of the Corporation, or of any bonds, certificates of indebtedness, debentures or other securities convertible into capital stock of the Corporation, but any capital stock authorized by this Certificate, or any such additional authorized issue of new capital stock or of securities convertible into capital stock may be issued and disposed of by the Board of Directors to such persons, firms, corporations or associations for such consideration and upon such terms and in such manner the Board of Directors may in their discretion determine, without offering any thereof on the same terms or on any terms to the stockholders then of record or to any class of stockholders.

AUTHORITY OF BOARD TO ISSUE CAPITAL STOCK

AND CONSIDERATION THEREOF

Without action by the stockholders, the shares of capital stock may be issued by the Corporation from time to time for such consideration, not less than the par value thereof in case of shares having a par value, as may be fixed from time to time by the Board of Directors thereof, and any and all such shares so issued, the full consideration for which has been paid or delivered, shall be deemed fully paid stock and not liable to any further call or assessment thereon, and the holder of such shares shall not be liable for any further call or assessment thereon or for any further payment thereon.

FIFTH:             The office of the Corporation is to be located in the County of Queens, State of New York.

SIXTH:            The duration of the Corporation is to be perpetual.

SEVENTH:      The Secretary of State of New York is hereby designated as the Agent of the Corporation upon who process in any action or proceeding against it may be served. The address to which the Secretary of State shall mail a copy of process in any action or proceeding against the Corporation which may be served upon him is c/o Mr. Bernard Fife, 37-18 Northern Boulevard, Long Island City, New York 11101.

EIGHT:             Any one or more members of the Board of Directors or any Committee thereof may participate in a meeting of such Board or Committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time.  Participation by such means shall constitute presence in persons at a meeting.

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NINTH:  The corporation shall to the fullest extent permitted by Article 7 of the Business Corporation Law of the State of New York as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said Article from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said Article, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which any person may be entitled under any By-Law, resolution of shareholders, resolution of directors, agreement, or otherwise, as permitted by said Article, as to action in any capacity in which he or she served at the request of the corporation.

TENTH:   The personal liability of the directors of the corporation is eliminated to the fullest extent permitted by the provisions of paragraph (b) of Section 402 of the Business Corporation Law of the State of New York, as the same may be amended and supplemented.

5.         The foregoing amendments to the Restated Certificate of Incorporation were authorized by the affirmative vote of a majority of the shares of stock entitled to vote thereon.

IN WITNESS WHEREOF, we hereunto sign our names and affirm that the statements made herein are true under the penalties of perjury, this 31st day of July, 1990.

/s/ Lawrence I. Sills

Lawrence I. Sills,

President

/s/ Mark S. Chanko

Mark S. Chanko,

Secretary

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EX-3.3

Exhibit 3.3

CERTIFICATE OF AMENDMENT

of the

CERTIFICATE OF INCORPORATION

of

STANDARD MOTOR PRODUCTS, INC.

under Section 805 of the Business Corporation Law

Lawrence I. Sills, President, and Sanford Kay, Secretary of Standard Motor Products, Inc., a New York corporation for profit with its principal place of business at 37-18 Northern Boulevard, Long Island City, New York  11101, (hereinafter called the “Corporation”), hereby certify pursuant to Sections 502 and 805 of the New York Business Corporation Law (“BCL”) as follows:

1. The name of the Corporation is Standard Motor Products, Inc.

2. The Certificate of Incorporation of the Corporation was filed by the Department of State on December 30, 1926.  The Restated Certificate of Incorporation of the Corporation under Section 807 of the BCL was filed at the Department of State on August 1, 1990.

3. The Certificate of Incorporation of the Corporation is hereby amended by the addition of a provision stating the number, designation, relative rights, preferences and limitations of the Corporation's Series A Participating Preferred Stock, par value $20.00 per share, as authorized and fixed by the Corporation's Board of Directors at a meeting duly called and held on the 17^th day of January, 1996 in accordance with Article Fourth of the Corporation's Certificate of Incorporation, as follows:

“Series A Participating Preferred Stock:

Section 1. Designation and Amount.  The shares of such series shall be designated as “Series A Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting the Series A Preferred Stock shall be 30,000.

Section 2. Dividends and Distributions.

(A)  Subject to the rights of the holders of any shares of any class of Preferred Stock ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $2.00 per share (the “Common Stock”), of the Corporation, and of any other junior stock, shall be  entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B)  The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

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(C)  Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.  The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:

(A)  Each share of Series A Preferred Stock shall entitle the holder thereof to one thousand votes on all matters submitted to a vote of the stockholders of the Corporation.  The holders of fractional Series A Preferred Stock (except for holders of integral multiples of one one-thousandth of a share of Series A Preferred Stock) shall not be entitled to any vote on any matter submitted to a vote of the shareholders of the Corporation.

(B)  The holders of Series A Preferred Stock shall be entitled to elect two directors of the Corporation whenever dividends payable on Series A Preferred Stock shall be in default as qualified therein.  For purposes of exercising such right, the Corporation's Bylaws and other provisions of law shall apply, as if the Series A Preferred Stock were the only class of the Corporation's shares outstanding.

(C)  Except as otherwise provided herein, in the Restated Certificate of Incorporation of the Corporation, in any other Certificate of Amendment creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(D)  Except as set forth herein, in the Restated Certificate of Incorporation of the Corporation, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

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Section 4. Certain Restrictions.

(A)  Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i)  declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

(ii)  declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled,

(iii)  redeem, purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock at least to the same extent as the junior stock so redeemed, purchased or acquired; or

(iv)  redeem, purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B)  The Corporation shall not permit any subsidiary of the Corporation to redeem, purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, redeem, purchase or otherwise acquire such shares at such time and in such manner.

Section 5.  Reacquired Shares.  Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their cancellation become authorized but unissued Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Corporation's Restated Certificate of Incorporation, or in any other Certificate of Amendment creating a series of Preferred Stock or any similar stock or as otherwise required by law.

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Section 6.  Liquidation, Dissolution or Winding Up.  Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1,000.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 7.  Consolidation, Merger, etc.  In case the Corporation shall enter into any  consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

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Section 8.  No Redemption.  The shares of Series A Preferred Stock shall not be redeemable.

Section 9.  Rank.  The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, on a parity with any other series of Preferred Stock.

Section 10.  Amendment.  Subject to the provisions of Article FOURTH of the Corporation's Restated Certificate of Incorporation, the Bylaws of the Corporation shall not be amended, altered or repealed in any manner which would affect adversely the voting powers, rights or preferences of the holders of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class.”

IN WITNESS WHEREOF, this Certificate of Amendment is subscribed and affirmed as true under the penalties of perjury on behalf of the Corporation by its President and its Secretary this 15th day of February, 1996.

/s/ Lawrence I. Sills

Lawrence I. Sills

President; Chief Operating Officer

/s/ Sanford Kay

Sanford Kay

Secretary

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EX-10.2

Exhibit 10.2

Standard Motor Products, Inc.

2006 Omnibus Incentive Plan

Article 1. Establishment, Purpose, and Duration

1.1          Establishment. StandardMotor Products, Inc., a New York corporation (hereinafter referred to as the “Company”), establishes an incentive compensation plan to be known as the Standard Motor Products, Inc. 2006Omnibus Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document.

This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, and Other Stock-Based Awards.

This Plan shall become effective upon shareholder approval (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

1.2          Purpose of this Plan. The purpose of this Plan is to provide a means whereby Employees, Directors, and Third Party Service Providers develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its shareholders. A further purpose of this Plan is to provide a means through which the Company may attract able individuals to become Employees or serve as Directors or Third Party Service Providers and to provide a means whereby those individuals upon whom the responsibilities of the successful administration and management of the Company are of importance, can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company.

1.3          Duration of this Plan. Unless sooner terminated as provided herein, this Plan shall terminate ten (10) years from the Effective Date. After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan’s terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten (10) years after the earlier of (a) adoption of this Plan by the Board, or (b) the Effective Date.

Article 2. Definitions

Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

2.1 “Affiliate” shall mean any corporation or other entity (including, but not limited to, a partnership or a limited liability company), that is affiliated with the Company through stock or equity ownership or otherwise, and is designated as an Affiliate for purposes of this Plan by the Committee.

2.2 “Annual Award Limit” or “Annual Award Limits” have the meaning set forth in Section 4.3.

2.3 “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards,or Other Stock-Based Awards, in each case subject to the terms of this Plan.

2.4 “Award Agreement” means either (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.

2.5 “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

2.6 “Board” or “Board of Directors” means the Board of Directors of the Company.

2.7 “Cash-Based Award” means an Award, denominated in cash, granted to a Participant as described in Article 10.

2.8 “Cause” means, unless otherwise specified in an Award Agreement or in an applicable employment agreement between the Company and a Participant, with respect to any Participant, as determined by the Committee in its sole discretion:

(a) Willful failure to substantially perform his or her duties as an Employee (for reasons other than physical or mental illness) or Director after reasonable notice to the Participant of that failure;

(b) Misconduct that materially injures the Company or any Subsidiary or Affiliate;

(c) Conviction of, or entering into a plea of nolo contendere to, a felony; or

(d) Breach of any written covenant or agreement with the Company or any Subsidiary or Affiliate.

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2.9 “Change of Control” means any of the following events:

(a) The acquisition by any Person of Beneficial Ownership of twenty percent (20%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of Directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this Section 2.9, the following acquisitions shall not constitute a Change of Control: (i) any acquisition by a Person who on the Effective Date is the Beneficial Owner of twenty percent (20%) or more of the Outstanding Company Voting Securities, (ii) any acquisition directly from the Company, including without limitation, a public offering of securities, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, or (v) any acquisition by any corporation pursuant to a transaction which complies with subparagraphs (i), (ii), and (iii) of Section 2.9(c); provided, however, the acquisition by any Person of Beneficial Ownership of twenty percent (20%) or more of the combined voting power shall not constitute a Change in Control if Standard Motor Products, Inc. maintains a Beneficial Ownership of more than fifty percent (50%) of the then-outstanding voting securities of the Company entitled to vote generally in the election of Directors;

(b) Individuals who constitute the Board as of the Effective Date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a Director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election or removal of the Directors of the Company or other actual or threatened solicitation of proxies of consents by or on behalf of a Person other than the Board;

(c) Consummation of a reorganization, merger, or consolidation to which the Company is a party or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case unless, following such Business Combination: (i) all or substantially all of the individuals and entities who were the Beneficial Owners of Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Successor Entity”) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Voting Securities; and (ii) no Person (excluding any Successor Entity or any employee benefit plan, or related trust, of the Company or such Successor Entity) beneficially owns, directly or indirectly, twenty percent (20%) or more of the combined voting power of the then outstanding voting securities of the Successor Entity, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the Successor Entity were members of the Incumbent Board (including individuals deemed to be members of the Incumbent Board by reason of the proviso to paragraph (b) of this Section 2.9) at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

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(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

2.10 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.

2.11 “Committee” means the Compensation and Management Development Committee of the Board or a subcommittee thereof, or any other committee designated by the Board to administer this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board. If the Committee does not exist or cannot function for any reason, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.

2.12 “Company” means Standard Motor Products, Inc., a New York corporation, and any successor thereto as provided in Article 20 herein.

2.13 “Covered Employee” means any salariedEmployee who is or may become a “Covered Employee,” as defined in Code Section 162(m), and who is designated, either as an individual Employee or class of Employees, by the Committee within the shorter of (i) ninety (90) days after the beginning of the Performance Period, or (ii) twenty-five percent (25%) of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such applicable Performance Period.

2.14 “Director” means any individual who is a member of the Board of Directors of the Company.

2.15 “Effective Date” has the meaning set forth in Section 1.1.

2.16 “Employee” means any individual performing services for the Company, an Affiliate, or a Subsidiary and designated as an employee of the Company, its Affiliates, and/or its Subsidiaries on the payroll records thereof. An Employee shall not include any individual during any period he or she is classified or treated by the Company, Affiliate, and/or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other than the Company, Affiliate, and/or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company, Affiliate, and/or Subsidiary during such period.

2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

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2.18 “Fair Market Value” or “FMV” means a price that is based on the opening, closing, actual, high, low, or average selling prices of a Share reported on the New York Stock Exchange (“NYSE”) or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Unless the Committee determines otherwise, Fair Market Value shall be deemed to be equal to the average between the reported high and low selling price of a Share on the most recent date on which Shares were publicly traded. In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate. Such definition(s) of FMV shall be specified in each Award Agreement and may differ depending on whether FMV is in reference to the grant, exercise, vesting, settlement, or payout of an Award.

2.19 “Full Value Award” means an Award other than in the form of an ISO, NQSO, or SAR, and which is settled by the issuance of Shares.

2.20 “Grant Date” means the date an Award is granted to a Participant pursuant to the Plan.

2.21 “Grant Price” means the price established at the time of grant of an SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.

2.22 “Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 to an Employee and that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422, or any successor provision.

2.23 “Insider” shall mean an individual who is, on the relevant date, an officer, or Director of the Company, or a more than ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.

2.24 “Net Income” means the consolidated net income before taxes for the Plan Year, as reported in the Company’s annual report to shareholders or as otherwise reported to shareholders.

2.25 “Nonemployee Director” means a Director who is not an Employee.

2.26 “Nonemployee Director Award” means any NQSO, SAR, or Full Value Award granted, whether singly, in combination, or in tandem, to a Participant who is a Nonemployee Director pursuant to such applicable terms, conditions, and limitations as the Board or Committee may establish in accordance with this Plan.

2.27 “Nonqualified Stock Option” or “NQSO” means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.

2.28 “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.

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2.29 “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

2.30 “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.

2.31 “Participant” means any eligible individual as set forth in Article 5 to whom an Award is granted.

2.32 “Performance-Based Compensation” means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) for certain performance-based compensation paid to Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall be construed to mean that an Award which does not satisfy the requirements for performance-based compensation under Code Section 162(m) does not constitute performance-based compensation for other purposes, including Code Section 409A.

2.33 “Performance Measures” means measures as described in Article 12 on which the performance goals are based and which are approved by the Company’s shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation.

2.34 “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

2.35 “Performance Share” means an Award under Article 9 herein and subject to the terms of this Plan, denominated in Shares, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved.

2.36 “Performance Unit” means an Award under Article 9 herein and subject to the terms of this Plan, denominated in units, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved.

2.37 “Period of Restriction” means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.

2.38 “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

2.39 “Plan” means the Standard Motor Products, Inc. 2006Omnibus Incentive Plan.

2.40 “Plan Year” means the calendar year.

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2.41 “Prior Plans” means the Company’s (a) 2004 Omnibus Stock Option Plan of Standard Motors Products, Inc., (b) the 1994 Omnibus Stock Option Plan of Standard Motor Products, Inc., (c) the 2004 Standard Motor Products, Inc. Independent Directors Stock Option Plan and (d) the 1996 Standard Motor Products, Inc. Independent Directors’ Stock Option Plan.

2.42 “Restricted Stock” means an Award granted to a Participant pursuant to Article 8.

2.43 “Restricted Stock Unit” means an Award granted to a Participant pursuant to Article 8, except no Shares are actually awarded to the Participant on the Grant date.

2.44 “Share” means a share of common stock of the Company, $2.00par value per share.

2.45 “Stock Appreciation Right” or “SAR” means an Award, designated as an SAR, pursuant to the terms of Article 7 herein.

2.46 “Subsidiary” means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.

2.47 “Third Party Service Provider” means any consultant, agent, advisor, or independent contractor who renders services to the Company, a Subsidiary, or an Affiliate that (a) are not in connection with the offer and sale of the Company’s securities in a capital raising transaction, and (b) do not directly or indirectly promote or maintain a market for the Company’s securities.

Article 3. Administration

3.1          General. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested individuals.

3.2          Authority of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Award Agreement or other agreement or document ancillary to or in connection with this Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in Award Agreements, granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any ambiguous provision of the Plan or any Award Agreement, and, subject to Article 18, adopting modifications and amendments to this Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate.

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3.3          Delegation. The Committee may delegate to one or more of its members or to one or more officers of the Company, and/or its Subsidiaries and Affiliates or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as can the Committee: (a) designate Employees to be recipients of Awards and (b) determine the size of any such Awards; provided, however, (i) the Committee shall not delegate such responsibilities to any such officer for Awards granted to an Employee who is considered an Insider; (ii) the resolution providing such authorization sets forth the total number of Awards such officer(s) may grant; and (iii) the officer(s) shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.

Article 4. Shares Subject to this Plan and Maximum Awards

4.1          Number of Shares Available for Awards.

(a) Subject to adjustment as provided in Section 4.4, the maximum number of Shares available for issuance to Participants under this Plan on or after the Effective Date shall be One Million Nine Hundred Thousand (1,900,000) (the “Share Authorization”).

(b) The maximum number of Shares of the Share Authorization that may be issued pursuant to ISOs under this Plan shall be One Million Nine Hundred Thousand (1,900,000) Shares.

(c) The maximum number of Shares of the Share Authorization that may be issued to Nonemployee Directors shall be one hundred fifty thousand (150,000)Shares, and no Nonemployee Director may receive Awards subject to more than five thousand (5,000) Shares in any Plan Year.

4.2          Share Usage. Shares covered by an Award shall only be counted as used to the extent they are actually issued. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Moreover, if the Option Price of any Option granted under this Plan or the tax withholding requirements with respect to any Award granted under this Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), or if an SAR is exercised, only the number of Shares issued, net of the Shares tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for delivery under this Plan. The Shares available for issuance under this Plan may be authorized and unissued Shares or treasury Shares.

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4.3          Annual Award Limits. Unless and until the Committee determines that an Award to a Covered Employee shall not be designed to qualify as Performance-Based Compensation, the following limits (each an “Annual Award Limit” and, collectively, “Annual Award Limits”), as adjusted pursuant to Sections 4.4 and/or 18.2, shall apply to grants of such Awards under this Plan:

(a) Options: The maximum aggregate number of Shares subject to Options granted in any one Plan Year to any one Participant shall be twenty-five thousand (25,000).

(b) SARs: The maximum number of Shares subject to Stock Appreciation Rights granted in any one Plan Year to any one Participant shall be twenty-five thousand (25,000).

(c) Restricted Stock or Restricted Stock Units: The maximum aggregate grant with respect to Awards of Restricted Stock or Restricted Stock Units in any one Plan Year to any one Participant shall be ten thousand (10,000).

(d) Performance Units or Performance Shares: The maximum aggregate Award of Performance Units or Performance Shares that a Participant may receive in any one Plan Year shall be ten thousand (10,000)Shares, or equal to the value of ten thousand (10,000) Shares, determined as of the date of vesting or payout, as applicable.

(e) Cash-Based Awards: The maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one Participant in any one Plan Year may not exceed the greater of two hundred fifty thousanddollars($250,000) or the value of twenty-five thousand (25,000) Shares, determined as of the date of vesting or payout, as applicable.

(f) Other Stock-Based Awards. The maximum aggregate grant with respect to Other Stock-Based Awards pursuant to Section 10.2 in any one Plan Year to any one Participant shall be twenty-five thousand (25,000)Shares.

4.4          Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure, number of outstanding Shares or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits, and other value determinations applicable to outstanding Awards.

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The Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under this Plan to reflect or related to such changes or distributions and to modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance Periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.

Subject to the provisions of Article 18 and notwithstanding anything else herein to the contrary, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate (including, but not limited to, a conversion of equity awards into Awards under this Plan in a manner consistent with paragraph 53 of FASB Interpretation No. 44), subject to compliance with the rules under Code Sections 422 and 424, as and where applicable.

Article 5. Eligibility and Participation

5.1          Eligibility. Individuals eligible to participate in this Plan include all Employees, Directors, and Third Party Service Providers.

5.2          Actual Participation. Subject to the provisions of this Plan, the Committee may, from time to time, select from all eligible individuals, those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award.

Article 6. Stock Options

6.1          Grant of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion; provided that ISOs may be granted only to eligible Employees of the Company or of any parent or subsidiary corporation (as permitted under Code Sections 422 and 424).

6.2          Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.

6.3          Option Price. The Option Price for each grant of an Option under this Plan shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price must be at least equal to one hundred percent (100%) of the FMV of the Shares as determined on the Grant Date.

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6.4          Term of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the day before the tenth (10^th) anniversary date of its grant. Notwithstanding the foregoing, for Nonqualified Stock Options granted to Participants outside the United States, the Committee has the authority to grant Nonqualified Stock Options that have a term greater than ten (10) years.

6.5          Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restric-tions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.

6.6          Payment. Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price (provided that except as otherwise determined by the Committee, the Shares that are tendered must have been held by the Participant for at least six (6) months (or such other period, if any, as the Committee may permit) prior to their tender to satisfy the Option Price if acquired under this Plan or any other compensation plan maintained by the Company or have been purchased on the open market); (c) by a cashless (broker-assisted) exercise; (d) by a combination of (a), (b) and/or (c); or (e) any other method approved or accepted by the Committee in its sole discretion.

Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).

Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.

6.7          Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.

6.8          Termination of Employment.Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

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6.9          Notification of Disqualifying Disposition. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten (10) days thereof.

Article 7. Stock Appreciation Rights

7.1          Grant of SARs. Subject to the terms and conditions of this Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee.

Subject to the terms and conditions of this Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of this Plan, in determining the terms and conditions pertaining to such SARs.

The Grant Price for each grant of an SAR shall be determined by the Committee and shall be specified in the Award Agreement; provided, however, the Grant Price on the Grant Date must be at least equal to one hundred percent (100%) of the FMV of the Shares as determined on the Grant Date.

7.2          SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, and such other provisions as the Committee shall determine.

7.3          Term of SAR. The term of an SAR granted under this Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10^th) anniversary date of its grant. Notwithstanding the foregoing, for SARs granted to Participants outside the United States, the Committee has the authority to grant SARs that have a term greater than ten (10) years.

7.4          Exercise of SARs. SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes.

7.5          Settlement of SARs. Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

(a) The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by

(b) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon SAR exercise may be in cash, Shares, or any combination thereof, or in any other manner approved by the Committee in its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.

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7.6          Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

7.7          Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of an SAR granted pursuant to this Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received upon exercise of an SAR for a specified period of time.

Article 8. Restricted Stock and Restricted Stock Units

8.1          Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted Stock Units shall be similar to Restricted Stock except that no Shares are actually awarded to the Participant on the Grant Date.

8.2          Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.

8.3          Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to this Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.

To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion shall determine.

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8.4          Certificate Legend. In addition to any legends placed on certificates pursuant to Section 8.3, each certificate representing Shares of Restricted Stock granted pursuant to this Plan may bear a legend such as the following or as otherwise determined by the Committee in its sole discretion:

“The sale or transfer of Shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Standard Motor Products, Inc. 2006Omnibus Incentive Plan, and in the associated Award Agreement. A copy of this Plan and such Award Agreement may be obtained from Standard Motor Products, Inc.”

8.5          Voting Rights. Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.

8.6          Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

8.7          Section 83(b) Election. The Committee may provide in an Award Agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Code Section 83(b). If a Participant makes an election pursuant to Code Section 83(b) concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.

Article 9. Performance Units/Performance Shares

9.1          Grant of Performance Units/Performance Shares. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall determine.

9.2          Value of Performance Units/Performance Shares. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the Grant Date. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Units/Performance Shares that will be paid out to the Participant.

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9.3          Earning of Performance Units/Performance Shares. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

9.4          Form and Timing of Payment of Performance Units/Performance Shares. Payment of earned Performance Units/Performance Shares shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units/Performance Shares in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares at the close of the applicable Performance Period, or as soon as practicable after the end of the Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.

9.5          Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Performance Units and/or Performance Shares following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Units or Performance Shares issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

Article 10. Cash-Based Awards and Other Stock-Based Awards

10.1       Grant of Cash-Based Awards. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine.

10.2       Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

10.3        Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee. The Committee may establish performance goals in its discretion. If the Committee exercises its discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met.

10.4        Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or Shares as the Committee determines.

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10.5        Termination of Employment. The Committee shall determine the extent to which the Participant shall have the right to receive Cash-Based Awards or Other Stock-Based Awards following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, such provisions may be included in an agreement entered into with each Participant, but need not be uniform among all Awards of Cash-Based Awards orOther Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

Article 11. Transferability of Awards

11.1        Transferability. Except as provided in Section 11.2 below, during a Participant’s lifetime, his or her Awards shall be exercisable only by the Participant. Awards shall not be transferable other than by will or the laws of descent and distribution; no Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind; and any purported transfer in violation hereof shall be null and void. The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or Shares deliverable in the event of, or following, the Participant’s death, may be provided.

11.2        Committee Action. The Committee may, in its discretion, determine that notwithstanding Section 11.1, any or all Awards (other than ISOs) shall be transferable to and exercisable by such transferees, and subject to such terms and conditions, as the Committee may deem appropriate; provided, however, no Award may be transferred for value (as defined in the General Instructions to Form S-8).

Article 12. Performance Measures

12.1       Performance Measures. The performance goals upon which the payment or vesting of an Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measures:

(a) Net earnings or net income (before or after taxes);

(b) Earnings per share (basic or diluted);

(c) Net sales or revenue growth;

(d) Net operating profit;

(e) Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);

(f) Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);

(g) Earnings before or after taxes, interest, depreciation, and/or amortization;

(h) Gross or operating margins;

(i) Productivity ratios;

(j) Share price (including, but not limited to, growth measures and total shareholder return);

(k) Expense targets;

(l) Margins;

(m) Operating efficiency;

(n) Market share;

(o) Customer satisfaction;

(p) Working capital targets; and

(q) Economic value added or EVA^® (net operating profit after tax minus the sum of capital multiplied by the cost of capital).

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Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary, and/or Affiliate as a whole or any business unit of the Company, Subsidiary, and/or Affiliate or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure (j) above as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Article 12.

12.2        Evaluation of Performance. The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year, (f) acquisitions or divestitures, and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.

12.3        Adjustment of Performance-Based Compensation. Awards that are intended to qualify as Performance-Based Compensation may not be adjusted upward. The Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.

12.4        Committee Discretion. In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in Section 12.1.

Article 13. Nonemployee Director Awards

The Board or Committee shall determine all Awards to Nonemployee Directors. The terms and conditions of any grant to any such Nonemployee Director shall be set forth in an Award Agreement.

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Article 14. Dividend Equivalents

Any Participant selected by the Committee may be granted dividend equivalents based on the dividends declared on Shares that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Committee. Such dividend equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Committee.

Article 15. Beneficiary Designation

Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s death shall be paid to or exercised by the Participant’s executor, administrator, or legal representative.

Article 16. Rights of Participants

16.1        Employment. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries, to terminate any Participant’s employment or service on the Board or to the Company at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his employment or service as a Director or Third Party Service Providerfor any specified period of time.

Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Articles 3 and 19, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

16.2        Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

16.3        Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

Article 17. Change of Control

17.1        Change of Control of the Company. Notwithstanding any other provision of this Plan to the contrary, the provisions of this Article 17 shall apply in the event of a Change of Control, unless otherwise determined by the Committee in connection with the grant of an Award as reflected in the applicable Award Agreement.

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Upon a Change of Control, except to the extent that another Award meeting the requirements of Section 17.2 (a “Replacement Award”) is provided to the Participant to replace such Award (the “Replaced Award”), all then-outstanding Stock Options and Stock Appreciation Rights shall immediately become fully vested and exercisable, and all other then-outstanding Awards whose exercisability depends merely on the satisfaction of a service obligation by a Participant to the Company, Subsidiary, or Affiliate shall vest in full and be free of restrictions related to the vesting of such Awards. The treatment of any other Awards shall be as determined by the Committee in connection with the grant thereof, as reflected in the applicable Award Agreement.

Except to the extent that a Replacement Award is provided to the Participant, the Committee may, in its sole discretion,  determine that any or all outstanding Awards granted under the Plan, whether or not exercisable, will be canceled and terminated and that in connection with such cancellation and termination the holder of such Award may receive for each Share of Common Stock subject to such Awards a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such cash payment) equal to the difference, if any, between the consideration received by shareholders of the Company in respect of a Share of Common Stock in connection with such transaction and the purchase price per share, if any, under the Award multiplied by the number of Shares of Common Stock subject to such Award; provided that if such product is zero or less or to the extent that the Award is not then exercisable, the Awards will be canceled and terminated without payment therefore.

17.2       Replacement Awards. An Award shall meet the conditions of this Section 17.2 (and hence qualify as a Replacement Award) if: (i) it has a value at least equal to the value of the Replaced Award as determined by the Committee in its sole discretion; (ii) it relates to publicly traded equity securities of the Company or its successor in the Change of Control or another entity that is affiliated with the Company or its successor following the Change of Control; and (iii) its other terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change of Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Section 17.2 are satisfied shall be made by the Committee, as constituted immediately before the Change of Control, in its sole discretion.

17.3        Termination of Employment. Upon a termination of employment or termination of directorship of a Participant occurring in connection with or during the period of two (2) years after such Change of Control, other than for Cause, (i) all Replacement Awards held by the Participant shall become fully vested and (if applicable) exercisable and free of restrictions, and (ii) all Stock Options and Stock Appreciation Rights held by the Participant immediately before the termination of employment or termination of directorship that the Participant held as of the date of the Change of Control or that constitute Replacement Awards shall remain exercisable for not less than one (1) year following such termination or until the expiration of the stated term of such Stock Option or SAR, whichever period is shorter; provided, that if the applicable Award Agreement provides for a longer period of exercisability, that provision shall control.

Article 18. Amendment, Modification, Suspension, and Termination

18.1        Amendment, Modification, Suspension, and Termination. Subject to Section 18.3, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company’s shareholders and except as provided in Section 4.4, Options or SARs issued under this Plan will not be repriced, repurchased (including cash buyout), replaced, or regranted through cancellation, or by lowering the Option Price of a previously granted Option or the Grant Price of a previously granted SAR, and no material amendment of this Plan shall be made without shareholder approval if shareholder approval is required by law, regulation, or stock exchange rule.

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18.2        Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.

18.3        Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary (other than Section 18.4), no termination, amendment, suspension, or modification of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award.

18.4        Amendment to Conform to Law.  Notwithstanding any other provision of this Plan to the contrary, the Board of Directors may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 18.4 to any Award granted under the Plan without further consideration or action.

Article 19. Withholding

19.1        Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.

19.2        Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax withholding that could be imposed on the transaction. All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

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Article 20. Successors

All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

Article 21. General Provisions

21.1       Forfeiture Events.           

(a) The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for cause, termination of the Participant’s provision of services to the Company, Affiliate, and/or Subsidiary, violation of material Company, Affiliate, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

(b) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve (12) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.

21.2        Legend. The certificates for Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

21.3        Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

21.4        Severability.In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

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21.5        Requirements of Law.The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

21.6        Delivery of Title.The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:

(a) Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

(b) Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

21.7        Inability to Obtain Authority.The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

21.8        Investment Representations.The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.

21.9        Employees Based Outside of the United States. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Employees, Directors, or Third Party Service Providers, the Committee, in its sole discretion, shall have the power and authority to:

(a) Determine which Affiliates and Subsidiaries shall be covered by this Plan;

(b) Determine which Employees and/or Directors or Third Party Service Providers outside the United States are eligible to participate in this Plan;

(c) Modify the terms and conditions of any Award granted to Employees and/or Directors or Third Party Service Providers outside the United States to comply with applicable foreign laws;

(d) Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 21.9 by the Committee shall be attached to this Plan document as appendices; and

22

(e) Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.

Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.

21.10     Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

21.11     Unfunded Plan.Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries, and/or its Affiliates may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To the extent that any individual acquires a right to receive payments from the Company, its Subsidiaries, and/or its Affiliates under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.

21.12     No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

21.13     Retirement and Welfare Plans. Neither Awards made under this Plan nor Shares or cash paid pursuant to such Awards, except pursuant to Covered Employee Annual Incentive Awards, may be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s or any Subsidiary’s or Affiliate’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit.

21.14     Deferred Compensation. No deferral of compensation (as defined under Code Section 409A or guidance thereto) is intended under this Plan. Notwithstanding this intent, if any Award would be considered deferred compensation as defined under Code Section 409A and if this Plan fails to meet the requirements of Code Section 409A with respect to such Award, then such Award shall be null and void. However, the Committee may permit deferrals of compensation pursuant to the terms of a Participant’s Award Agreement, a separate plan or a subplan which meets the requirements of Code Section 409A and any related guidance. Additionally, to the extent any Award is subject to Code Section 409A, notwithstanding any provision herein to the contrary, the Plan does not permit the acceleration or delay of the time or schedule of any distribution related to such Award, except as permitted by Code Section 409A, the regulations thereunder, and/or the Secretary of the United States Treasury.

23

21.15     Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

21.16     No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action which such entity deems to be necessary or appropriate.

21.17     Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients of an Award under this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of New York, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.

24

EX-21

EXHIBIT 21

SUBSIDIARIES OF STANDARD MOTOR PRODUCTS, INC.

Name	State or Country of Incorporation	Percent of Voting Securities   Owned
Motortronics, Inc.	New York	100
SMP Automotive de Mexico, S.A. de C.V.(1)	Mexico	100
SMP Engine Management de Mexico, S. de R.L. de C.V.(1)	Mexico	100
SMP Four Seasons de Mexico, S. de R.L. de C.V.(1)	Mexico	100
SMP Motor Products Limited	Canada	100
SMP Poland sp. z o.o.(2)	Poland	100
Standard Motor Products de Mexico, S. de R.L. de C.V.(1)	Mexico	100
Standard Motor Products (Hong Kong) Limited	Hong Kong	100

All of the subsidiaries are included in the consolidated financial statements of Standard Motor Products, Inc.

⁽¹⁾ Standard Motor Products, Inc. owns approximately 99% and Motortronics, Inc. owns approximately 1% of these companies.

⁽²⁾ SMP Poland sp. z o.o. is a wholly-owned subsidiary of Standard Motor Products (Hong Kong) Limited.

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Standard Motor Products, Inc. and Subsidiaries:

We consent to the incorporation by reference in the registration statements (No. 333‑211461, No. 333-174330, and No. 333-134239) on Form S-8 of Standard Motor Products, Inc. and subsidiaries of our reports dated February 22, 2018 , with respect to the consolidated balance sheets of Standard Motor Products, Inc. and subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts, (collectively, the “consolidated financial statements”) and the effectiveness of internal control over financial reporting as of December 31, 2017, which reports appear in the December 31, 2017 annual report on Form 10‑K of Standard Motor Products, Inc. and subsidiaries.

/s/ KPMG LLP

New York, New York

February 22, 2018

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Eric P. Sills, certify that:

1. I have reviewed this annual report on Form 10-K of Standard Motor Products, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) 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: February 22, 2018

/s/ Eric P. Sills

Eric P. Sills

Chief Executive Officer, President and Director

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James J. Burke, certify that:

1. I have reviewed this annual report on Form 10-K of Standard Motor Products, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) 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: February 22, 2018

/s/ James J. Burke

James J. Burke

Executive Vice President Finance and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Standard Motor Products, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eric P. Sills, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Eric P. Sills

Eric P. Sills

Chief Executive Officer, President and Director

February 22, 2018

*A signed original of this written statement required by Section 906 has been provided to Standard Motor Products, Inc. and will be retained by Standard Motor Products, Inc. and furnished to the Securities and Exchange Commission on its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Standard Motor Products, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James J. Burke, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ James J. Burke

James J. Burke

Executive Vice President Finance and Chief Financial Officer

February 22, 2018

*A signed original of this written statement required by Section 906 has been provided to Standard Motor Products, Inc. and will be retained by Standard Motor Products, Inc. and furnished to the Securities and Exchange Commission on its staff upon request.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Feb. 16, 2018	Jun. 30, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	STANDARD MOTOR PRODUCTS INC
Entity Central Index Key	0000093389
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,064,087,671
Entity Common Stock, Shares Outstanding		22,477,480
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Net sales	[1]	$ 1,116,143	$ 1,058,482	$ 971,975
Cost of sales		789,487	735,995	690,987
Gross profit		326,656	322,487	280,988
Selling, general and administrative expenses		223,584	221,658	206,287
Restructuring and integration expense (income)		6,173	3,957	(134)
Other income, net		1,275	1,195	1,025
Operating income		98,174	98,067	75,860
Other non-operating income (expense), net		597	2,059	(220)
Interest expense		2,329	1,556	1,537
Earnings from continuing operations before taxes		96,442	98,570	74,103
Provision for income taxes		52,812	36,158	25,983
Earnings from continuing operations		43,630	62,412	48,120
Loss from discontinued operations, net of income tax benefit of $3,769, $1,322 and $1,401		(5,654)	(1,982)	(2,102)
Net earnings		$ 37,976	$ 60,430	$ 46,018
Net earnings per common share - Basic:
Earnings from continuing operations (in dollars per share)		$ 1.92	$ 2.75	$ 2.11
Discontinued operations (in dollars per share)		(0.25)	(0.09)	(0.09)
Net earnings per common share - Basic (in dollars per share)		1.67	2.66	2.02
Net earnings per common share - Diluted:
Earnings from continuing operations (in dollars per share)		1.88	2.70	2.08
Discontinued operations (in dollars per share)		(0.24)	(0.08)	(0.09)
Net earnings per common share - Diluted (in dollars per share)		1.64	2.62	1.99
Dividend declared per share (in dollars per share)		$ 0.76	$ 0.68	$ 0.60
Average number of common shares (in shares)		22,726,491	22,722,517	22,811,862
Average number of common shares and dilutive common shares (in shares)		23,198,392	23,082,578	23,142,394

[1] Segment and product line net sales include intersegment sales in our Engine Management and Temperature Control segments.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Income tax benefit	$ 3,769	$ 1,322	$ 1,401

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net earnings	$ 37,976	$ 60,430	$ 46,018
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	7,027	(5,294)	(5,739)
Amortization of:
Prior service benefit	0	(54)	(112)
Unrecognized (gain) loss	(661)	763	2,261
Unrecognized actuarial gains	481	542	462
Plan settlement	0	0	654
Foreign currency exchange rate changes	0	3	(23)
Income tax related to pension and postretirement plans	72	(514)	(1,325)
Pension and post retirement plans, net of tax	(108)	740	1,917
Total other comprehensive income (loss), net of tax	6,919	(4,554)	(3,822)
Comprehensive income	$ 44,895	$ 55,876	$ 42,196

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
CURRENT ASSETS:
Cash and cash equivalents	$ 17,323	$ 19,796
Accounts receivable, less allowances for discounts and doubtful accounts of $4,967 and $4,425 in 2017 and 2016, respectively	140,057	134,630
Inventories	326,411	312,477
Prepaid expenses and other current assets	12,300	7,318
Total current assets	496,091	474,221
Property, plant and equipment, net	89,103	78,499
Goodwill	67,413	67,231
Other intangibles, net	56,261	64,056
Deferred incomes taxes	32,420	51,127
Other assets	46,279	33,563
Total assets	787,567	768,697
CURRENT LIABILITIES:
Notes payable	57,000	54,812
Current portion of other debt	4,699	43
Accounts payable	77,990	83,878
Sundry payables and accrued expenses	51,911	45,147
Accrued customer returns	35,916	40,176
Accrued rebates	35,346	29,127
Payroll and commissions	23,035	30,658
Total current liabilities	285,897	283,841
Long-term debt	79	120
Other accrued liabilities	14,561	12,380
Accrued asbestos liabilities	33,376	31,328
Total liabilities	333,913	327,669
Commitments and contingencies
Stockholders' equity:
Common Stock - par value $2.00 per share: Authorized 30,000,000 shares, issued 23,936,036 shares	47,872	47,872
Capital in excess of par value	100,057	96,850
Retained earnings	357,153	336,464
Accumulated other comprehensive income	(4,109)	(11,028)
Treasury stock - at cost (1,424,025 shares and 1,101,487 shares in 2017 and 2016, respectively)	(47,319)	(29,130)
Total stockholders' equity	453,654	441,028
Total liabilities and stockholders' equity	$ 787,567	$ 768,697

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
CURRENT ASSETS:
Accounts receivable, allowances for discounts and doubtful accounts	$ 4,967	$ 4,425
Stockholders' equity:
Common stock, par value (in dollars per share)	$ 2.00	$ 2.00
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	23,936,036	23,936,036
Treasury stock - at cost (in shares)	1,424,025	1,101,487

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings		$ 37,976	$ 60,430	$ 46,018
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		23,916	20,457	17,637
Amortization of deferred financing cost		343	346	635
Increase to allowance for doubtful accounts		972	210	3,371
Increase to inventory reserves		3,300	5,371	1,864
Amortization of deferred gain on sale of buildings		(1,048)	(1,048)	(1,048)
Equity (income) loss from joint ventures	[1]	602	(2,029)	(976)
Employee Stock Ownership Plan allocation		2,159	2,021	2,208
Stock-based compensation		7,638	6,127	5,379
Excess tax benefits related to exercise of employee stock grants		0	(849)	(1,254)
(Increase) decrease in deferred income taxes		19,059	(691)	(1,494)
Increase (decrease) in tax valuation allowance		(128)	65	87
Loss on discontinued operations, net of tax		5,654	1,982	2,102
Change in assets and liabilities:
Increase in accounts receivable		(5,100)	(8,826)	(1,996)
Increase in inventories		(13,901)	(20,155)	(12,503)
(Increase) decrease in prepaid expenses and other current assets		(4,869)	3,475	367
Increase (decrease) in accounts payable		(7,186)	7,345	1,882
Increase (decrease) in sundry payables and accrued expenses		(6,015)	20,990	1,874
Net changes in other assets and liabilities		1,245	2,584	1,018
Net cash provided by operating activities		64,617	97,805	65,171
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of and investments in businesses		(6,808)	(67,289)	0
Capital expenditures		(24,442)	(20,921)	(18,047)
Other investing activities		22	192	36
Net cash used in investing activities		(31,228)	(88,018)	(18,011)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line-of-credit agreements		2,188	7,384	(9,131)
Net borrowings (payments) of other debt and capital lease obligations		4,065	89	(170)
Purchase of treasury stock		(24,376)	(377)	(19,623)
Increase (decrease) in overdraft balances		(534)	(254)	851
Payments of debt issuance costs		0	0	(748)
Proceeds from exercise of employee stock options		0	0	109
Excess tax benefits related to the exercise of employee stock grants		0	849	1,254
Dividends paid		(17,287)	(15,447)	(13,697)
Net cash used in financing activities		(35,944)	(7,756)	(41,155)
Effect of exchange rate changes on cash		82	(1,035)	(933)
Net increase (decrease) in cash and cash equivalents		(2,473)	996	5,072
CASH AND CASH EQUIVALENTS at beginning of year		19,796	18,800	13,728
CASH AND CASH EQUIVALENTS at end of year		17,323	19,796	18,800
Cash paid during the year for:
Interest		1,944	1,207	901
Income taxes		34,543	32,505	27,513
Noncash investing activity:
Accrual for final contribution of acquired investment		$ 5,740	$ 0	$ 0

[1] Year ended December 31, 2017 includes a noncash impairment charge of approximately $1.8 million related to our minority interest investment in Orange Electronic Co., Ltd. (See Note 8 for additional information).

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Capital In Excess of Par Value [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2014	$ 47,872	$ 91,411	$ 259,160	$ (2,652)	$ (21,638)	$ 374,153
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	0	0	46,018	0	0	46,018
Other comprehensive income (loss), net of tax	0	0	0	(3,822)	0	(3,822)
Cash dividends paid	0	0	(13,697)	0	0	(13,697)
Purchase of treasury stock	0	0	0	0	(19,623)	(19,623)
Stock-based compensation and related tax benefits	0	833	0	0	5,700	6,533
Stock options exercised and related tax benefits	0	2	0	0	207	209
Employee Stock Ownership Plan	0	1,001	0	0	1,207	2,208
Balance at Dec. 31, 2015	47,872	93,247	291,481	(6,474)	(34,147)	391,979
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	0	0	60,430	0	0	60,430
Other comprehensive income (loss), net of tax	0	0	0	(4,554)	0	(4,554)
Cash dividends paid	0	0	(15,447)	0	0	(15,447)
Purchase of treasury stock	0	0	0	0	(377)	(377)
Stock-based compensation and related tax benefits	0	3,148	0	0	3,828	6,976
Employee Stock Ownership Plan	0	455	0	0	1,566	2,021
Balance at Dec. 31, 2016	47,872	96,850	336,464	(11,028)	(29,130)	441,028
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	0	0	37,976	0	0	37,976
Other comprehensive income (loss), net of tax	0	0	0	6,919	0	6,919
Cash dividends paid	0	0	(17,287)	0	0	(17,287)
Purchase of treasury stock	0	0	0	0	(24,779)	(24,779)
Stock-based compensation and related tax benefits	0	2,193	0	0	5,445	7,638
Employee Stock Ownership Plan	0	1,014	0	0	1,145	2,159
Balance at Dec. 31, 2017	$ 47,872	$ 100,057	$ 357,153	$ (4,109)	$ (47,319)	$ 453,654

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) [Abstract]
Cash dividends paid (in dollars per share)	$ 0.76	$ 0.68	$ 0.60

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Principles of Consolidation

Standard Motor Products, Inc. and subsidiaries (referred to hereinafter in these notes to the consolidated financial statements as “we,” “us,” “our” or the “Company”) is engaged in the manufacture and distribution of replacement parts for motor vehicles in the automotive aftermarket industry with a complementary focus on heavy duty, industrial equipment and the original equipment service market. The consolidated financial statements include our accounts and all domestic and international companies in which we have more than a 50% equity ownership.  Our investments in unconsolidated affiliates are accounted for on the equity method, as we do not have a controlling financial interest but have the ability to exercise significant influence.  All significant inter-company items have been eliminated.

Use of Estimates

In conformity with generally accepted accounting principles, we have made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Some of the more significant estimates include allowances for doubtful accounts, cash discounts, valuation of inventory, valuation of long-lived assets, goodwill and other intangible assets, depreciation and amortization of long-lived assets, product liability exposures, other postretirement benefits, asbestos, environmental and litigation matters, valuation of deferred tax assets, share based compensation and sales returns and other allowances.  We can give no assurances that actual results will not differ from those estimates.  Although we do not believe that there is a reasonable likelihood that there will be a material change in the future estimate or in the assumptions that we use in calculating the estimate, unforeseen changes in the industry, or business could materially impact the estimate and may have a material adverse effect on our business, financial condition and results of operations.

Reclassification

Certain prior period amounts in the accompanying consolidated financial statements and related notes have been reclassified to conform to the 2017 presentation.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Allowance for Doubtful Accounts and Cash Discounts

We do not generally require collateral for our trade accounts receivable.  Accounts receivable have been reduced by an allowance for amounts that may become uncollectible in the future.  These allowances are established based on a combination of write-off history, aging analysis, and specific account evaluations.   When a receivable balance is known to be uncollectible, it is written off against the allowance for doubtful accounts.  Cash discounts are provided based on an overall average experience rate applied to qualifying accounts receivable balances.

Inventories

Inventories are valued at the lower of cost and net realizable value.  Cost is determined on the first-in first-out basis.  Where appropriate, standard cost systems are utilized for purposes of determining cost; the standards are adjusted as necessary to ensure they approximate actual costs.  Estimates of lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation of the inventory.

We also evaluate inventories on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand.  For inventory deemed to be obsolete, we provide a reserve on the full value of the inventory.  Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates our estimate of future demand.  Future projected demand requires management judgment and is based upon (a) our review of historical trends and (b) our estimate of projected customer specific buying patterns and trends in the industry and markets in which we do business.  Using rolling twelve month historical information, we estimate future demand on a continuous basis.  As such, the historical volatility of such estimates has been minimal.  We maintain provisions for inventory reserves of $41.5 million and $47.9 million as of December 31, 2017 and 2016, respectively.

We utilize cores (used parts) in our remanufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps.  The production of air conditioning compressors, diesel injectors, and diesel pumps involves the rebuilding of used cores, which we acquire either in outright purchases from used parts brokers, or from returns pursuant to an exchange program with customers.  Under such exchange programs, we reduce our inventory, through a charge to cost of sales, when we sell a finished good compressor, diesel injector, or diesel pump and put back to inventory the used core exchanged at standard cost through a credit to cost of sales when it is actually received from the customer.

Property, Plant and Equipment

These assets are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows:

	Estimated Life
Buildings	25 to 33-1/2 years
Building improvements	10 to 25 years
Machinery and equipment	5 to 12 years
Tools, dies and auxiliary equipment	3 to 8 years
Furniture and fixtures	3 to 12 years

Leasehold improvements are depreciated over the shorter of the estimated useful life or the term of the lease.  Costs related to maintenance and repairs which do not prolong the assets useful lives are expensed as incurred.  We assess our property, plant and equipment to be held and used for impairment when indicators are present that the carrying value may not be recoverable.

Valuation of Long-Lived and Intangible Assets and Goodwill

At acquisition, we estimate and record the fair value of purchased intangible assets, which primarily consists of customer relationships, trademarks and trade names, patents and non-compete agreements.  The fair values of these intangible assets are estimated based on our assessment.  Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.  Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment.  Intangible assets determined to have definite lives are amortized over their remaining useful lives.

We assess the impairment of long‑lived assets, identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  With respect to goodwill and identifiable intangible assets having indefinite lives, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value is below its carrying amount.  Factors we consider important, which could trigger an impairment review, include the following: (a) significant underperformance relative to expected historical or projected future operating results; (b) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (c) significant negative industry or economic trends. We review the fair values using the discounted cash flows method and market multiples.

When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is not required.  If we are unable to reach this conclusion, then we would perform the two-step impairment test.  Initially, the fair value of the reporting unit is compared to its carrying amount.  To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit; we are required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired.  In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize a charge for impairment to the extent the carrying value exceeds the implied fair value.  The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.  In addition, identifiable intangible assets having indefinite lives are reviewed for impairment on an annual basis using a methodology consistent with that used to evaluate goodwill.

Intangible assets having definite lives and other long-lived assets are reviewed for impairment whenever events such as product discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable.  In reviewing for impairment, we compare the carrying value of such assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets fair value and their carrying value.

There are inherent assumptions and estimates used in developing future cash flows requiring our judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and long‑lived asset impairment including projecting revenues, interest rates, tax rates and the cost of capital.  Many of the factors used in assessing fair value are outside our control and it is reasonably likely that assumptions and estimates will change in future periods.  These changes can result in future impairments.  In the event our planning assumptions were modified resulting in impairment to our assets, we would be required to include an expense in our statement of operations, which could materially impact our business, financial condition and results of operations.

New Customer Acquisition Costs

New customer acquisition costs refer to arrangements pursuant to which we incur change-over costs to induce a new customer to switch from a competitor’s brand.  In addition, change-over costs include the costs related to removing the new customer’s inventory and replacing it with our inventory commonly referred to as a stocklift. New customer acquisition costs are recorded as a reduction to revenue when incurred.

Foreign Currency Translation

Assets and liabilities of our foreign operations are translated into U.S. dollars at year-end exchange rates.  Income statement accounts are translated using the average exchange rates prevailing during the year.  The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) and remains there until the underlying foreign operation is liquidated or substantially disposed of.  Foreign currency transaction gains or losses are recorded in the statement of operations under the caption “other non-operating income (expense), net.”

Revenue Recognition

We derive our revenue primarily from sales of replacement parts for motor vehicles from both our Engine Management and Temperature Control Segments.  We recognize revenues when products are shipped and title has been transferred to a customer, the sales price is fixed and determinable, and collection is reasonably assured.  For certain of our sales of remanufactured products, we also charge our customers a deposit for the return of a used core component which we can use in our future remanufacturing activities.  Such deposit is not recognized as revenue but rather carried as a core liability.  The liability is extinguished when a core is actually returned to us.  We estimate and record provisions for cash discounts, quantity rebates, sales returns and warranties in the period the sale is recorded, based upon our prior experience and current trends.  Significant management judgments and estimates must be made and used in estimating sales returns and allowances relating to revenue recognized in any accounting period.

Selling, General and Administration Expenses

Selling, general and administration expenses include shipping costs and advertising, which are expensed as incurred.  Shipping and handling charges, as well as freight to customers, are included in distribution expenses as part of selling, general and administration expenses.

Deferred Financing Costs

Deferred financing costs represent costs incurred in conjunction with our debt financing activities.  Deferred financing costs related to our revolving credit facility are capitalized and amortized over the life of the related financing arrangement.  If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired and are recorded in the statement of operations under the caption other non-operating income (expense), net.

Post-Retirement Medical Benefits

The determination of postretirement plan obligations and their associated expenses requires the use of actuarial valuations to estimate participant plan benefits employees earn while working as well as the present value of those benefits.  Inherent in these valuations are financial assumptions including the eligibility criteria of participants and discount rates at which liabilities can be settled.  Management reviews these assumptions annually with its actuarial advisors.  The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions, or longer or shorter life spans of participants.  We recognize the underfunded or overfunded status of a postretirement plan as an asset or liability and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income, which is a component of stockholders’ equity.

Share-Based Compensation

We measure and recognize compensation expense for all share-based payment awards made to employees and directors based on estimated fair values on the grant date.  The value of the portion of the award that is ultimately expected to vest is recognized as an expense on a straight-line basis over the requisite service periods in our consolidated statements of operations.  Forfeitures are estimated at the time of grant based on historical trends in order to estimate the amount of share-based awards that will ultimately vest.  We monitor actual forfeitures for any subsequent adjustment to forfeiture rates.

Accounting for Income Taxes

Income taxes are calculated using the asset and liability method.  Deferred tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as measured by the current enacted tax rates.

We maintain valuation allowances when it is more likely than not that all or a portion of a deferred asset will not be realized.  The valuation allowance is intended to provide for the uncertainty regarding the ultimate utilization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  In determining whether a valuation allowance is warranted, we consider all positive and negative evidence and all sources of taxable income such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies to estimate if sufficient future taxable income will be generated to realize the deferred tax asset.  The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable.  In the event that actual results differ from these estimates, or we adjust these estimates in future periods for current trends or expected changes in our estimating assumptions, we may need to modify the level of valuation allowance which could materially impact our business, financial condition and results of operations.

The valuation allowance of $0.4 million as of December 31, 2017 is intended to provide for the uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  Based on these considerations, we believe it is more likely than not that we will realize the benefit of the net deferred tax asset of $32.4 million as of December 31, 2017, which is net of the remaining valuation allowance.

Tax benefits are recognized for an uncertain tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority.  For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority.  The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available.  Such adjustments are recognized entirely in the period in which they are identified.  The effective tax rate includes the net impact of changes in the liability for uncertain tax positions.  As of December 31, 2017, we do not believe there is a need to establish a liability for uncertain tax positions.

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which included a broad range of tax reform affecting businesses, including the reduction of the federal corporate tax rate from 35% to 21%, changes in the deductibility of certain business expenses, and the manner in which international operations are taxed in the U.S.  For a discussion of the impact of the Act on our consolidated financial statements, see Note 16, “Income Taxes,” of the notes to our consolidated financial statements.

Net Earnings per Common Share

We present two calculations of earnings per common share.  “Basic” earnings per common share equals net income divided by weighted average common shares outstanding during the period. “Diluted” earnings per common share equals net income divided by the sum of weighted average common shares outstanding during the period plus potentially dilutive common shares.  Potentially dilutive common shares that are anti-dilutive are excluded from net earnings per common share.  The following is a reconciliation of the shares used in calculating basic and dilutive net earnings per common share.

	2017		2016		2015
	(In thousands)
Weighted average common shares outstanding – Basic		22,726		22,723		22,812
Plus incremental shares from assumed conversions:
Dilutive effect of restricted shares and performance shares		472		360		330
Weighted average common shares outstanding – Diluted		23,198		23,083		23,142

The average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or because they were excluded under the treasury method.

	2017		2016		2015
	(In thousands)
Restricted and performance shares		248		304		307

Environmental Reserves

We are subject to various U.S. Federal and state and local environmental laws and regulations and are involved in certain environmental remediation efforts.  We estimate and accrue our liabilities resulting from such matters based upon a variety of factors including the assessments of environmental engineers and consultants who provide estimates of potential liabilities and remediation costs.  Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years.  Potential recoveries from insurers or other third parties of environmental remediation liabilities are recognized independently from the recorded liability, and any asset related to the recovery will be recognized only when the realization of the claim for recovery is deemed probable.

Asbestos Litigation

In evaluating our potential asbestos-related liability, we use an actuarial study that is prepared by a leading actuarial firm with expertise in assessing asbestos-related liabilities.  We evaluate the estimate of the range of undiscounted liability to determine which amount to accrue.  Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required.  Legal costs are expensed as incurred.

Loss Contingencies

We have loss contingencies, for such matters as legal claims and legal proceedings.  Establishing loss reserves for these matters requires estimates, judgment of risk exposure and ultimate liability.  We record provisions when the liability is considered probable and reasonably estimable.  Significant judgment is required for both the determination of probability and the determination as to whether an exposure can be reasonably estimated.  We maintain an ongoing monitoring and identification process to assess how the activities are progressing against the accrued estimated costs.  As additional information becomes available, we reassess our potential liability related to these matters.  Adjustments to the liabilities are recorded in the statement of operations in the period when additional information becomes available.  Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

Product Warranty and Overstock Returns

Many of our products carry a warranty ranging from a 90-day limited warranty to a lifetime limited warranty, which generally covers defects in materials or workmanship and failure to meet industry published specifications and/or the result of installation error.  In addition to warranty returns, we also permit our customers to return new, undamaged products to us within customer-specific limits (which are generally limited to a specified percentage of their annual purchases from us) in the event that they have overstocked their inventories. We accrue for product warranties and overstock returns as a percentage of sales at the time products are sold, based upon estimates established using historical information on the nature, frequency and average cost of claims.  Revision to the accrual is made when necessary, based upon changes in these factors.  We regularly study trends of such claims.

Trade Receivables

In compliance with accounting standards, sales of accounts receivable are reflected as a reduction of accounts receivable in the consolidated balance sheet at the time of sale and any related expense is included in selling, general and administrative expenses in our consolidated statements of operations.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments and accounts receivable.  We place our cash investments with high quality financial institutions and limit the amount of credit exposure to any one institution.  Although we are directly affected by developments in the vehicle parts industry, management does not believe significant credit risk exists.

With respect to accounts receivable, such receivables are primarily from warehouse distributors and major retailers in the automotive aftermarket industry located in the U.S.  We perform ongoing credit evaluations of our customers’ financial conditions.  Our five largest individual customers accounted for approximately 70% of our consolidated net sales in 2017 and 2016, and approximately 68% of our consolidated net sales in 2015.  During 2017, O’Reilly Automotive, Inc., Advance Auto Parts, Inc., NAPA Auto Parts, and AutoZone, Inc. accounted for 21%, 17%, 16% and 10% of our consolidated net sales, respectively.  Net sales from each of the customers were reported in both our Engine Management and Temperature Control Segments.  The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them, could have a materially adverse impact on our business, financial condition and results of operations.

Substantially all of the cash and cash equivalents, including foreign cash balances, at December 31, 2017 and 2016 were uninsured.  Foreign cash balances at December 31, 2017 and 2016 were $13.1 million and $16.5 million, respectively.

Recently Issued Accounting Pronouncements

Standards not yet adopted as of December 31, 2017

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”), which replaces numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single comprehensive revenue recognition model for recognizing revenue from contracts with customers. Under the new guidance, an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application.  In July 2015, the FASB approved ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date which defers by one year the mandatory effective date of its revenue recognition standard.  The new standard is effective for annual reporting periods beginning after December 15, 2017.

Effective January 1, 2018, we will adopt the requirements of Topic 606 using the modified retrospective method.  Upon adoption, we will recognize the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings.  Using the modified retrospective method of adoption, the comparative information for periods prior to 2018 will not be restated and instead will continue to be reported under the accounting standards in effect for those periods.

We anticipate that the adoption of the new standard will not result in a material difference between the recognition of revenue under Topic 606 and prior accounting standards.  For the majority of our net sales, revenue will continue to be recognized when products are shipped from our distribution facilities, or when received by our customers, depending upon the terms of the contract.  Under the new revenue standard, (1) the return of cores from customers used in our manufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps will be estimated and recorded to inventory at the time of sale instead of upon receipt of the returned cores, and (2) overstock returns will be recorded gross of expected recoveries.  Adoption of the new standard will result in an increase in inventory and accrued customer returns, and offsetting changes in net sales and cost of sales, with no material change to our net income on an ongoing basis.  In addition, to meet the disaggregation disclosure requirements under Topic 606, we anticipate our disclosure of revenue disaggregation will be by major product group, geographic area and major sales channels.

The following table provides a brief description of the additional recent accounting pronouncements that could have an impact on our financial statements:

Standard	Description	Date of adoption	Effects on the financial statements or other significant matters
Standards that are not yet adopted as of December 31, 2017
ASU 2016-02, Leases	This standard outlines the need to recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease).  For income statement purposes, the FASB retained the dual model, requiring leases to be classified as either operating or financing.  Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern.	January 1, 2019, with early adoption permitted	The new standard must be adopted utilizing a modified retrospective transition, and provides for certain expedients.  The new standard will require that we recognize all of our leases, including our current operating leases, on the balance sheet.  To date, we have taken an inventory of all of our operating leases, which consist primarily of real estate and auto leases, and are currently evaluating the appropriate discount rates to use in calculating the right to use asset.  We will be continuously assessing the impact of the new standard and the impact on our systems and processes through January 1, 2019, our planned date of adoption.
ASU 2016-15, Statement of Cash Flows	This standard is intended to reduce diversity in practice and to provide guidance as to how certain cash receipts and cash payments are presented and classified in the statement of cash flows.	January 1, 2018, with early adoption permitted	The new standard requires application using a retrospective transition method.  We do not anticipate that the adoption of this standard will have a material effect on our consolidated financial statements.
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This standard is intended to simplify the accounting for goodwill impairment.  ASU 2017-04 removes Step 2 of the test, which requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.	January 1, 2020, with early adoption permitted	The new standard should be applied prospectively.  We will consider the new standard when performing our annual impairment test and evaluate when we will adopt the new standard.

ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost This standard requires employers that present operating income in their consolidated statement of operations to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs).  The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in other non-operating income (expense).  The new standard requires retrospective reclassification of the effects of the new standard on the statement of operations. January 1, 2018, with early adopted permitted The new standard will require that we retrospectively reclassify all components of net periodic pension cost and net periodic postretirement benefit cost, other than the service cost component, in our statement of operations from selling, general and administrated expenses, as presently reported, to other non-operating income (expense).

Standards that were adopted

ASU 2015-17, Balance Sheet Classification of Deferred Taxes	This standard requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The new guidance requires entities to offset all deferred tax assets and liabilities (and valuation allowances) for each tax-paying jurisdiction within each tax-paying component.  The net deferred tax must be presented as a single noncurrent amount.	January 1, 2017	The adoption of the new standard resulted in the reclassification of deferred tax assets previously reported as current deferred tax assets to noncurrent deferred tax assets in our consolidated balance sheets.  We adopted the new standard retrospectively, and as such, all prior period current deferred tax assets in our consolidated balance sheets have also been reclassified to noncurrent deferred tax assets for comparative purposes.
ASU 2015-11, Simplifying the Measurement of Inventory	This standard changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value for entities that measure inventory using first-in, first-out or average cost.  In addition, this standard eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximate normal profit margin when measuring inventory.	January 1, 2017	The prospective adoption of the new standard did not have a material effect on our consolidated financial statements.

ASU 2016-09, Improvements to Employee Share-Based Payment Accounting This standard requires (1) that the tax effects related to share-based payments at settlement (or expiration) be recorded through the tax provision (benefit) in the income statement rather than in equity as permitted under prior guidance under certain circumstances; (2) that all tax-related cash flows resulting from share-based payments be reported as operating activities on the statement of cash flows, a change from the requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities; and (3) that when computing diluted earnings per share, the effect of “windfall” tax benefits be excluded from the hypothetical proceeds used to calculate the repurchase of shares under the treasury stock method. January 1, 2017 We adopted the new standard prospectively.  The adoption of the new standard did not have a material effect on our consolidated financial statements for the year ended December 31, 2017.

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Business Acquisitions and Investments

12 Months Ended

Dec. 31, 2017

Business Acquisitions and Investments [Abstract]

Business Acquisitions and Investments

2. Business Acquisitions and Investments

2017 Equity Investment

Foshan FGD SMP Automotive Compressor Co., Ltd.

In November 2017, we formed a 50/50 joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd. (“FGD”), a China-based manufacturer of air conditioning compressors for the automotive aftermarket and the Chinese OE market.  We acquired our 50% interest in the joint venture for approximately $12.5 million.  We determined that due to a lack of a voting majority, and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting.

2016 Business Acquisitions

General Cable Corporation North American Automotive Ignition Wire Business Acquisition

In May 2016, we acquired the North American automotive ignition wire business of General Cable Corporation for approximately $67.5 million.  The acquisition was paid for in cash funded by our revolving credit facility with JPMorgan Chase, as agent.  The acquisition includes the purchase of certain assets and the assumption of certain liabilities of General Cable Corporation’s (and certain of its affiliates) automotive ignition wire business in North America as well as 100% of the equity interests of a General Cable subsidiary in Nogales, Mexico.

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed, based on their fair values (in thousands):

Purchase Price				$	67,451
Assets acquired and liabilities assumed:
Receivables	$	3,130
Inventory		12,567
Other current and noncurrent assets (1)		334
Property, plant and equipment, net		2,660
Intangible assets		42,440
Goodwill		12,746
Current liabilities		(6,426	)
Net assets acquired				$	67,451

(1) Other current and noncurrent assets includes $0.2 million of cash acquired.

Intangible assets acquired of $42.4 million consists of customer relationships of $39.4 million that will be amortized on a straight-line basis over the estimated useful life of 15 years; a non-compete agreement of $2.2 million that will be amortized on a straight-line basis over the estimated useful life of 5 years; and a supply agreement of $0.8 million that will be amortized on a straight-line basis over the estimated useful life of 1 year.  Goodwill of $12.7 million was allocated to the Engine Management Segment and is deductible for income tax purposes.  The goodwill reflects relationships, business specific knowledge and the replacement cost of an assembled workforce associated with personal reputations, as well as the value of expected synergies.

Incremental net sales from the acquisition included in our consolidated statements of operations were $38.4 million for the year ended December 31, 2017.

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Restructuring and Integration Expense (Income)

12 Months Ended

Dec. 31, 2017

Restructuring and Integration Expense (Income) [Abstract]

Restructuring and Integration Expense (Income)

3. Restructuring and Integration Expense (Income)

The aggregated liabilities included in “sundry payables and accrued expenses” and “other accrued liabilities” in the consolidated balance sheet relating to the restructuring and integration activities as of and for the years ended December 31, 2017 and 2016, consisted of the following (in thousands):

	Workforce Reduction			Other Exit Costs			Total
Exit activity liability at December 31, 2015	$	270		$	591		$	861
Restructuring and integration costs:
Amounts provided for during 2016		2,934			1,023			3,957
Cash payments		(392	)		(1,154	)		(1,546	)
Reclassification to ongoing accrued liabilities (1)		(236	)		(460	)		(696	)
Exit activity liability at December 31, 2016	$	2,576		$	—		$	2,576
Restructuring and integration costs:
Amounts provided for during 2017		2,220			3,953			6,173
Cash payments		(1,979	)		(3,702	)		(5,681	)
Foreign currency exchange rate changes and other		37			(251	)		(214	)
Exit activity liability at December 31, 2017	$	2,854		$	—		$	2,854

(1) Applies to liabilities associated with the prior year restructuring and integration programs which relate primarily to employee severance and other retiree benefit enhancements to be paid through 2020 and environmental clean-up costs at our Long Island City, New York location in connection with the closure of our manufacturing operations at the site.  These amounts were reclassified out of the restructuring and integration liability and into ongoing accrued liabilities as of December 31, 2016.

Restructuring Costs

Plant Rationalization Program

In February 2016, in connection with our ongoing efforts to improve operating efficiencies and reduce costs, we finalized our intention to implement a plant rationalization initiative.  As part of the plant rationalization, certain production activities will be relocated from our Grapevine, Texas manufacturing facility to facilities in Greenville, South Carolina and Reynosa, Mexico, certain service functions will be relocated from Grapevine, Texas to our administrative offices in Lewisville, Texas, and our Grapevine, Texas facility will be closed.  As of December 31, 2017, all of our Grapevine, Texas production activities have been relocated to facilities in Greenville, South Carolina and Reynosa, Mexico.  In addition, as part of the program, certain production activities were relocated from our Greenville, South Carolina manufacturing facility to our manufacturing facility in Bialystok, Poland.  Restructuring and integration expenses expected to be incurred throughout the program of approximately $5.8 million consists of employee severance and relocation of certain machinery and equipment.  Through December 31, 2017, total restructuring and integration expenses related to the program of $5.6 million were recognized.  As of December 31, 2017, the plant rationalization program is substantially completed.

Activity, by segment, for the year ended December 31, 2017 and 2016 related to our plant rationalization program consisted of the following (in thousands):

	Engine Management			Temperature Control			Other		Total
Exit activity liability at December 31, 2015	$	—		$	—		$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2016		844			2,361			—		3,205
Cash payments		(833	)		(318	)		—		(1,151	)
Exit activity liability at December 31, 2016	$	11		$	2,043		$	—	$	2,054
Restructuring and integration costs:
Amounts provided for during 2017		631			1,774			—		2,405
Cash payments		(642	)		(2,341	)		—		(2,983	)
Exit activity liability at December 31, 2017	$	—		$	1,476		$	—	$	1,476

Orlando Plant Rationalization Program

In January 2017, to further our ongoing efforts to improve operating efficiencies and reduce costs, we finalized our intention to implement a plant rationalization initiative at our Orlando, Florida facility.  As part of the plant rationalization, we will relocate production activities from our Orlando, Florida manufacturing facility to Independence, Kansas, and close our Orlando, Florida facility.  In addition, certain production activities will be relocated from our Independence, Kansas manufacturing facility to our manufacturing facility in Reynosa, Mexico.  Restructuring and integration expenses expected to be incurred throughout the program of approximately $2.9 million consists of employee severance and relocation of certain machinery and equipment.  Through December 31, 2017, total restructuring and integration expenses related to the program of $1.8 million were recognized.  We anticipate that the Orlando plant rationalization will be completed by the second half of 2018.

Activity, by segment, for the year ended December 31, 2017 related to our Orlando plant rationalization program consisted of the following (in thousands):

	Engine Management			Temperature Control		Other		Total
Exit activity liability at December 31, 2016	$	—		$	—	$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2017		1,758			—		—		1,758
Cash payments		(772	)		—		—		(772	)
Exit activity liability at December 31, 2017	$	986		$	—	$	—	$	986

Integration Costs

Wire and Cable Relocation

In connection with our acquisition of the North American automotive ignition wire business of General Cable Corporation in May 2016, we incurred certain integration expenses, including costs incurred in connection with the consolidation of the General Cable Corporation Altoona, Pennsylvania wire distribution center into our existing wire distribution center in Edwardsville, Kansas and the relocation of certain machinery and equipment.  In October 2016, we further announced our plan to relocate all production from the acquired Nogales, Mexico wire set assembly operation to our existing wire assembly facility in Reynosa, Mexico and to close the Nogales, Mexico plant.  Integration expenses expected to be incurred related to the closure of the Nogales, Mexico plant include employee severance and the relocation of certain machinery and equipment.  Total integration expenses of $4.1 million are expected to be incurred related to the wire and cable relocation program.  Through December 31, 2017, integration expenses related to the program of $2.5 million were recognized.  We anticipate that the wire and cable relocation program will be completed by the second half of 2018.

Activity, by segment, for the year ended December 31, 2017 and 2016 related to our wire and cable relocation program consisted of the following (in thousands):

	Engine Management			Temperature Control		Other		Total
Exit activity liability at December 31, 2015	$	—		$	—	$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2016		714			—		—		714
Cash payments		(192	)		—		—		(192	)
Exit activity liability at December 31, 2016	$	522		$	—	$	—	$	522
Restructuring and integration costs:
Amounts provided for during 2017		1,759	)		—		—		1,759
Cash payments		(1,926	)		—		—		(1,926	)
Foreign currency exchange rate changes		37			—		—		37
Exit activity liability at December 31, 2017	$	392		$	—	$	—	$	392

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Sale of Receivables

12 Months Ended

Dec. 31, 2017

Sale of Receivables [Abstract]

Sale of Receivables

4. Sale of Receivables

From time to time, we sell undivided interests in certain of our receivables to financial institutions.  We enter these agreements at our discretion when we determine that the cost of factoring is less than the cost of servicing our receivables with existing debt.  Under the terms of the agreements, we retain no rights or interest, have no obligations with respect to the sold receivables, and do not service the receivables after the sale.  As such, these transactions are being accounted for as a sale.

Pursuant to these agreements, we sold $780.5 million and $759.2 million of receivables for the years ended December 31, 2017 and 2016, respectively.  A charge in the amount of $22.6 million, $19.3 million and $14.3 million related to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015, respectively.  If we do not enter into these arrangements or if any of the financial institutions with which we enter into these arrangements were to experience financial difficulties or otherwise terminate these arrangements, our financial condition, results of operations and cash flows could be materially and adversely affected by delays or failures to collect future trade accounts receivable.

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Inventories

12 Months Ended

Dec. 31, 2017

Inventories [Abstract]

Inventories

5. Inventories

	December 31,
	2017		2016
	(In thousands)
Finished goods	$	209,800	$	203,700
Work-in-process		7,536		6,823
Raw materials		109,075		101,954
Total inventories	$	326,411	$	312,477

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

6. Property, Plant and Equipment

	December 31,
	2017		2016
	(In thousands)
Land, buildings and improvements	$	46,930	$	46,447
Machinery and equipment		132,467		128,650
Tools, dies and auxiliary equipment		45,769		44,683
Furniture and fixtures		28,352		27,482
Leasehold improvements		10,348		8,369
Construction-in-progress		16,318		14,419
Total property, plant and equipment		280,184		270,050
Less accumulated depreciation		191,081		191,551
Total property, plant and equipment, net	$	89,103	$	78,499

Depreciation expense was $15.4 million in 2017, $12.8 million in 2016 and $12.1 million 2015.

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

7. Goodwill and Other Intangible Assets

Goodwill

We assess the impairment of long‑lived and identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  With respect to goodwill, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value of a reporting unit is below its carrying amount.  We completed our annual impairment test of goodwill as of December 31, 2017.

When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is not required.  If we are unable to reach this conclusion, then we would perform the two-step impairment test.  We elected to bypass the qualitative assessment and have decided to perform the two-step impairment test for goodwill at both the Engine Management and Temperature Control reporting units at December 31, 2017.  The first step of the impairment analysis consists of a comparison of the fair value of the reporting units with their respective carrying amounts, including goodwill.  If the fair value of the reporting unit exceeds the carrying amount of the reporting unit, step two of the impairment analysis is not required.  The fair values of the Engine Management and Temperature Control reporting units were determined based upon the Income Approach, which estimates the fair value based on future discounted cash flows, and the Market Approach, which estimates the fair value based on market prices of comparable companies.  We base our fair value estimates on projected financial information which we believe to be reasonable.  We also considered our total market capitalization as of December 31, 2017.  Our December 31, 2017 annual goodwill impairment analysis did not result in an impairment charge as it was determined that the fair values of our Engine Management and Temperature Control reporting units were in excess of their carrying amounts.  While the fair values exceed the carrying amounts at the present time and we do not believe that impairments are probable, the performance of the business and brands require continued improvement in future periods to sustain their carrying values.

Changes in the carrying values of goodwill by operating segment during the years ended December 31, 2017 and 2016 are as follows (in thousands):

	Engine Management			Temperature Control		Total
Balance as of December 31, 2015:
Goodwill	$	79,099		$	14,270	$	93,369
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	40,611		$	14,270	$	54,881
Activity in 2016
Acquisition of the North American automotive ignition wire business of General Cable Corporation.	$	12,746		$	—	$	12,746
Foreign currency exchange rate change		(396	)		—		(396	)
Balance as of December 31, 2016:
Goodwill		91,449			14,270		105,719
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	52,961		$	14,270	$	67,231
Activity in 2017
Foreign currency exchange rate change		182			—		182
Balance as of December 31, 2017:
Goodwill		91,631			14,270		105,901
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	53,143		$	14,270	$	67,413

Acquired Intangible Assets

Acquired identifiable intangible assets as of December 31, 2017 and 2016 consist of:

	December 31,
	2017			2016
	(In thousands)
Customer relationships	$	87,290		$	87,070
Trademarks and trade names		6,800			6,800
Non-compete agreements		3,193			3,189
Patents		723			723
Supply agreements		800			800
Leaseholds		160			160
Total acquired intangible assets		98,966			98,742
Less accumulated amortization (1)		(43,853	)		(35,830	)
Net acquired intangible assets	$	55,113		$	62,912

(1) Applies to all intangible assets, except for related trademarks and trade names totaling $5.2 million, which have indefinite useful lives and, as such, are not being amortized.

Total amortization expense for acquired intangible assets was $8 million for the year ended December 31, 2017, $7.1 million for the year ended December 31, 2016, and $4.9 million for the year ended December 31, 2015.  Based on the current estimated useful lives assigned to our intangible assets, amortization expense is estimated to be $7.6 million for 2018, $6.3 million in 2019, $5.9 million in 2020, $4.6 million in 2021 and $25.5 million in the aggregate for the years 2022 through 2031.

Other Intangible Assets

Other intangible assets include computer software.  Computer software as of December 31, 2017 and 2016 totaled $17.2 million and $16.7 million.  Total accumulated computer software amortization as of December 31, 2017 and 2016 was $16.1 million and $15.6 million, respectively.  Computer software is amortized over its estimated useful life of 3 to 10 years.  Amortization expense for computer software was $0.5 million, $0.6 million and $0.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.

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Other Assets

12 Months Ended

Dec. 31, 2017

Other Assets [Abstract]

Other Assets

8. Other Assets

	December 31,
	2017		2016
	(In thousands)
Equity in joint ventures	$	31,184	$	19,924
Deferred compensation		13,612		10,763
Long term receivables		—		1,061
Deferred financing costs, net		630		973
Other		853		842
Total other assets, net	$	46,279	$	33,563

Deferred compensation consists of assets held in a nonqualified defined contribution pension plan as of December 31, 2017 and 2016, respectively.

Equity Method Investments

In November 2017, we formed a 50/50 joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd. (“FGD”), a China-based manufacturer of air conditioning compressors for the automotive aftermarket and the Chinese OE market.  We acquired our 50% interest in the joint venture for approximately $12.5 million.  We determined that due to a lack of a voting majority, and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting.  Purchases from FGD from the date of acquisition through December 31, 2017 were not significant.

In April 2014, we formed a 50/50 joint venture with Gwo Yng Enterprise Co., Ltd. (“Gwo Yng”), a China-based manufacturer of air conditioner accumulators, filter driers, hose assemblies and switches for the automotive aftermarket and OEM/OES markets.  We acquired our 50% interest in the joint venture for $14 million.  We determined that due to a lack of a voting majority and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting.  During the years ended December 31, 2017 and 2016, we made purchases from Gwo Yng of approximately $15.1 million and $15.4 million, respectively.

In January 2013, we acquired an approximate 25% minority interest in Orange Electronic Co., Ltd. (“Orange”) for $6.3 million.  Orange is a manufacturer of tire pressure monitoring system sensors and is located in Taiwan.  As of December 31, 2017, our minority interest in Orange of 19.4% is accounted for using the equity method of accounting as we have the ability to exercise significant influence.  During the fourth quarter of 2017, after a review of the recent financial performance and near term prospects for Orange, we determined that the decline in quoted market prices below the carrying amount of our investment in Orange is other than temporary and, as such, recognized a noncash impairment charge of approximately $1.8 million in the quarter.  The impairment charge has been reported in our Engine Management Segment and is included in other non-operating income (expense), net in our consolidated statements of operations.  Purchases from Orange during the years ended December 31, 2017 and 2016 were approximately $4.3 million and $5 million, respectively.

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Credit Facilities and Long-Term Debt

12 Months Ended

Dec. 31, 2017

Credit Facilities and Long-Term Debt [Abstract]

Credit Facilities and Long-Term Debt

9. Credit Facilities and Long-Term Debt

Total debt outstanding is summarized as follows:

	December 31,
	2017		2016
	(In thousands)
Revolving credit facilities	$	57,000	$	54,812
Other (1)		4,778		163
Total debt	$	61,778	$	54,975
Current maturities of debt	$	61,699	$	54,855
Long-term debt		79		120
Total debt	$	61,778	$	54,975

(1) Other includes borrowings under our Polish overdraft facility of Zloty 16.2 million (approximately $4.7 million).

Maturities of long-term debt are not material for the year ended December 31, 2018 and beyond.

Revolving Credit Facility

In October 2015, we entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as agent, and a syndicate of lenders for a senior secured revolving credit facility with a line of credit of up to $250 million (with an additional $50 million accordion feature) and a maturity date in October 2020.  The line of credit under the agreement also allows for a $10 million line of credit to Canada as part of the $250 million available for borrowing.  Direct borrowings under the credit agreement bear interest at LIBOR plus a margin ranging from 1.25% to 1.75% based on our borrowing availability, or floating at the alternate base rate plus a margin ranging from 0.25% to 0.75% based on our borrowing availability, at our option.  The credit agreement is guaranteed by certain of our subsidiaries and secured by certain of our assets.

Borrowings under the credit agreement are secured by substantially all of our assets, including accounts receivable, inventory and certain fixed assets, and those of certain of our subsidiaries.  Availability under the credit agreement is based on a formula of eligible accounts receivable, eligible inventory, eligible equipment and eligible fixed assets.  After taking into account outstanding borrowings under the credit agreement, there was an additional $142.9 million available for us to borrow pursuant to the formula at December 31, 2017.  Outstanding borrowings under the credit agreement, which are classified as current liabilities, were $57 million and $54.8 million at December 31, 2017 and 2016, respectively.  Borrowings under the credit agreement have been classified as current liabilities based upon the accounting rules and certain provisions in the agreement.

At December 31, 2017, the weighted average interest rate on our credit agreement was 2.7%, which consisted of $57 million in direct borrowings.  At December 31, 2016, the weighted average interest rate on our credit agreement was 2.3%, which consisted of $45 million in direct borrowings at 2% and an alternative base rate loan of $9.8 million at 4%.   Our average daily alternative base rate loan balance was $3.8 million and $2.6 million during 2017 and 2016, respectively.

At any time that our borrowing availability is less than the greater of either (a) $25 million, or 10% of the commitments if fixed assets are not included in the borrowing base, or (b) $31.25 million, or 12.5% of the commitments if fixed assets are included in the borrowing base, the terms of the credit agreement provide for, among other provisions, a financial covenant requiring us, on a consolidated basis, to maintain a fixed charge coverage ratio of 1:1 at the end of each fiscal quarter (rolling four quarters).  As of December 31, 2017, we were not subject to these covenants.  The credit agreement permits us to pay cash dividends of $20 million and make stock repurchases of $20 million in any fiscal year subject to a minimum availability of $25 million.  Provided specific conditions are met, the credit agreement also permits acquisitions, permissible debt financing, capital expenditures, and cash dividend payments and stock repurchases of greater than $20 million.

Polish Overdraft Facility

In December 2017, our Polish subsidiary, SMP Poland sp.z.o.o., entered into an overdraft facility with HSBC Bank Polska S.A. (“HSBC Poland”) for Zloty 30 million (approximately $8.2 million).  The facility expires on December 2018.  Borrowings under the overdraft facility will bear interest at a rate equal to WIBOR + 0.75% and are guaranteed by Standard Motor Products, Inc., the ultimate parent company.  At December 31, 2017, borrowings under the overdraft facility were Zloty 16.2 million (approximately $4.7 million).

Deferred Financing Costs

We had deferred financing costs of approximately $1 million and $1.3 million as of December 31, 2017 and 2016, respectively.  Deferred financing costs as of December 31, 2017 are related to our revolving credit facility.

Scheduled amortization for future years, assuming no prepayments of principal is as follows:

(In thousands)
2018	$	343
2019		343
2020		287
Total amortization	$	973

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Stockholders' Equity

12 Months Ended

Dec. 31, 2017

Stockholders' Equity [Abstract]

Stockholders' Equity

10. Stockholders’ Equity

We have authority to issue 500,000 shares of preferred stock, $20 par value, and our Board of Directors is vested with the authority to establish and designate any series of preferred, to fix the number of shares therein and the variations in relative rights as between each series.  In December 1995, our Board of Directors established a new series of preferred shares designated as Series A Participating Preferred Stock. The number of shares constituting the Series A Preferred Stock is 30,000.  The Series A Preferred Stock is designed to participate in dividends, ranks senior to our common stock as to dividends and liquidation rights and has voting rights.  Each share of the Series A Preferred Stock shall entitle the holder to one thousand votes on all matters submitted to a vote of the stockholders of the Company.  No such shares were outstanding at December 31, 2017 and 2016.

In February 2015, our Board of Directors authorized the purchase of up to $10 million of our common stock under a stock repurchase program.  In July 2015, our Board of Directors authorized the purchase of up to an additional $10 million of our common stock under another stock repurchase program.  Under these programs, during the year ended December 31, 2015, we repurchased 551,791 shares of our common stock at a total cost of $19.6 million.  As of December 31, 2015, there was approximately $0.4 million available for future stock repurchases under the programs.  In January 2016, we repurchased an additional 10,135 shares of our common stock under the programs at a total cost of $0.4 million, thereby completing the 2015 Board of Directors authorizations.   Our Board of Directors did not authorize a stock repurchase program in 2016.

In February 2017, our Board of Directors authorized the purchase of up to $20 million of our common stock under a stock repurchase program.  In November 2017, our Board of Directors authorized the purchase of up to an additional $10 million of our common stock under another stock repurchase program.  Under these programs, during the year ended December 31, 2017, we repurchased 539,760 shares of our common stock at a total cost of $24.8 million.  As of December 31, 2017, there was approximately $5.2 million available for future stock repurchases under the programs.  During the period from January 1, 2018 through February 16, 2018, we repurchased an additional 35,756 shares of our common stock under the programs at a total cost of $1.7 million, thereby leaving approximately $3.5 million available for future stock purchases under the program.

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2017

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

11. Accumulated Other Comprehensive Income

Changes in Accumulated Other Comprehensive Income by Component

	Foreign Currency Translation Adjustments			Unrecognized Postretirement Benefit Costs (Credit)			Total
	(In thousands)
Balance at December 31, 2015	$	(5,958	)	$	(516	)	$	(6,474	)
Other comprehensive income before reclassifications		(5,294	)		332			(4,962	)
Amounts reclassified from accumulated other comprehensive income		—			408			408
Other comprehensive income, net		(5,294	)		740			(4,554	)
Balance at December 31, 2016	$	(11,252	)	$	224		$	(11,028	)
Other comprehensive income before reclassifications		7,027			289			7,316
Amounts reclassified from accumulated other comprehensive income		—			(397	)		(397	)
Other comprehensive income, net		7,027			(108	)		6,919
Balance at December 31, 2017	$	(4,225	)	$	116		$	(4,109	)

Reclassifications Out of Accumulated Other Comprehensive Income and into the Consolidated Statements of Operations

	Year Ended December 31,
Details About Accumulated Other Comprehensive Income Components	2017			2016
Amortization of postretirement benefit plans:	(In thousands)
Prior service benefit (1)	$	—		$	(54	)
Unrecognized (gain) loss (1)		(661	)		763
Total before income tax		(661	)		709
Income tax expense		264			(301	)
Total reclassifications for the period	$	(397	)	$	408

(1) These accumulated other comprehensive income components are included in the computation of net periodic postretirement benefit costs, which are included in selling, general and administrative expenses in our consolidated statements of operations (see Note 14 for additional information).

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Stock-Based Compensation Plans

12 Months Ended

Dec. 31, 2017

Stock-Based Compensation Plans [Abstract]

Stock-Based Compensation Plans

12. Stock-Based Compensation Plans

Our stock-based compensation program is a broad-based program designed to attract and retain employees while also aligning employees’ interests with the interests of our shareholders.  In addition, members of our Board of Directors participate in our stock-based compensation program in connection with their service on our board.  In May 2016, our Board of Directors and Shareholders approved the 2016 Omnibus Incentive Plan.  The 2016 Omnibus Incentive Plan supersedes the 2006 Omnibus Incentive Plan, which terminated in May 2016.  The 2016 Omnibus Incentive Plan is the only remaining plan available to provide stock-based incentive compensation to our employees, directors and other eligible persons.

Under the 2016 Omnibus Incentive Plan, which terminates in May 2026, we are authorized to issue, among other things, shares of restricted and performance-based stock to eligible employees and restricted stock to directors of up to 1,100,000 shares.  Shares issued under the plan that are cancelled, forfeited or expire by their terms are eligible to be granted again under the 2016 Omnibus Incentive Plan.  Awards previously granted under the 2006 Omnibus Incentive Plan are not affected by the plan’s termination, while shares not yet granted under the plan are not available for future issuance.

We account for our stock-based compensation plans in accordance with the provisions of FASB ASC 718, Stock Compensation, which requires that a company measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.  The service period is the period of time that the grantee must provide services to us before the stock-based compensation is fully vested.

Stock-based compensation expense under our existing plans was $7.1 million ($3.2 million, net of tax), $5.7 million ($3.6 million, net of tax), and $5 million ($3.2 million, net of tax) for the years ended December 31, 2017, 2016 and 2015, respectively.

Restricted Stock and Performance Share Grants

We currently grant shares of restricted stock to eligible employees and our independent directors and performance-based stock to eligible employees.  Selected executives and other key personnel are granted performance awards whose vesting is contingent upon meeting various performance measures with a retention feature.  Performance-based shares are subject to a three year measuring period and the achievement of performance targets and, depending upon the achievement of such performance targets, they may become vested on the third anniversary of the date of grant.  Each period we evaluate the probability of achieving the applicable targets and we adjust our accrual accordingly.  Restricted shares granted to employees become fully vested upon the third anniversary of the date of grant; and for selected key executives certain additional restricted share grants vest 25% upon the attainment of age 60, 25% upon the attainment of age 63 and become fully vested upon the attainment of age 65.  Restricted shares granted to directors become fully vested upon the first anniversary of the date of grant.  Commencing with the 2015 grants, restricted and performance shares issued to certain key executives and directors are subject to a one or two year holding period upon the lapse of the three year vesting period.

Prior to the time a restricted share becomes fully vested or a performance share is issued, the awardees cannot transfer, pledge, hypothecate or encumber such shares.  Prior to the time a restricted share is fully vested, the awardees have all other rights of a stockholder, including the right to vote (but not receive dividends during the vesting period).  Prior to the time a performance share is issued, the awardees shall have no rights as a stockholder.  All shares and rights are subject to forfeiture if certain employment conditions are not met.

Under the 2016 Omnibus Incentive Plan, 1,100,000 shares are authorized to be issued.  At December 31, 2017, under the plan, there were an aggregate of (a) 418,000 shares of restricted and performance-based stock grants issued, net of forfeitures, and (b) 682,000 shares of common stock available for future grants.  For the year ended December 31, 2017, 207,975 restricted and performance-based shares were granted (152,975 restricted shares and 55,000 performance-based shares).

In determining the grant date fair value, the stock price on the date of grant, as quoted on the New York Stock Exchange, was reduced by the present value of dividends expected to be paid on the shares issued and outstanding during the requisite service period, discounted at a risk-free interest rate.  The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the restriction or vesting period at the grant date. In addition, a further discount for the lack of marketability reduced the fair value of grants issued to certain key executives and directors subject to the one or two year post vesting holding period.  Assumptions used in calculating the discount for the lack of marketability include an estimate of stock volatility, risk-free interest rate, and a dividend yield.

The fair value of the shares at the date of grant is amortized to expense ratably over the vesting period.  Forfeitures on restricted stock grants are estimated at 5% for employees and 0% for executives and directors, respectively, based on evaluation of historical and expected future turnover.

As related to restricted and performance stock shares, we recorded compensation expense of $7.1 million ($3.2 million, net of tax), $5.7 million ($3.6 million, net of tax) and $5 million ($3.2 million, net of tax), for the years ended December 31, 2017, 2016 and 2015, respectively.  The unamortized compensation expense related to our restricted and performance-based shares was $16.6 million and $15.6 million at December 31, 2017 and 2016, respectively and is expected to be recognized over a weighted average period of 4.8 years and 0.3 years for employees and directors, respectively, as of December 31, 2017 and over a weighted average period of 5.7 years and 0.3 years for employees and directors, respectively, as of December 31, 2016.

Our restricted and performance-based share activity was as follows for the years ended December 31, 2017 and 2016:

	Shares			Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2015		758,550		$	27.19
Granted		212,500			42.93
Vested		(138,427	)		31.55
Forfeited		(9,775	)		31.79
Balance at December 31, 2016		822,848			30.46
Granted		207,975			42.79
Vested		(169,615	)		31.26
Forfeited		(7,250	)		37.24
Balance at December 31, 2017		853,958		$	33.25

The weighted-average grant date fair value of restricted and performance-based shares outstanding as of December 31, 2017, 2016 and 2015 was $28.4 million (or $33.25 per share), $25.1 million (or $30.46 per share), and $20.6 million (or $27.19 per share), respectively.

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Retirement Benefit Plans

12 Months Ended

Dec. 31, 2017

Retirement Benefit Plans [Abstract]

Retirement Benefit Plans

13. Retirement Benefit Plans

Defined Contribution Plans

We maintain various defined contribution plans, which include profit sharing and provide retirement benefits for substantially all of our employees. Matching obligations, in connection with the plans which are funded in cash and typically contributed to the plans in March of the following year, are as follows (in thousands):

	U.S. Defined Contribution
Year ended December 31,
2017	$	9,980
2016		8,625
2015		8,445

We maintain a defined contribution Supplemental Executive Retirement Plan for key employees.  Under the plan, these employees may elect to defer a portion of their compensation and, in addition, we may at our discretion make contributions to the plan on behalf of the employees.  In March 2016, contributions of $0.3 million were made related to calendar year 2015.  In March 2017, contributions of $0.3 million were made related to calendar year 2016.  We have recorded an obligation of $0.6 million for 2017.

We also have an Employee Stock Ownership Plan and Trust (“ESOP”) for employees who are not covered by a collective bargaining agreement.  In connection therewith, we maintain an employee benefits trust to which we contribute shares of treasury stock.  We are authorized to instruct the trustees to distribute such shares toward the satisfaction of our future obligations under the plan. The shares held in trust are not considered outstanding for purposes of calculating earnings per share until they are committed to be released. The trustees will vote the shares in accordance with its fiduciary duties.  During 2017, we contributed to the trust an additional 43,300 shares from our treasury and released 43,300 shares from the trust leaving 200 shares remaining in the trust as of December 31, 2017.  The provision for expense in connection with the ESOP was approximately $2.2 million in 2017, $2 million in 2016 and $2.2 million in 2015.

Defined Benefit Pension Plan

We maintain a defined benefit unfunded Supplemental Executive Retirement Plan (“SERP”).  The SERP, as amended, is a defined benefit plan pursuant to which we will pay supplemental pension benefits to certain key employees upon the attainment of a contractual participant’s payment date based upon the employees’ years of service and compensation.  There was no benefit obligation outstanding related to the SERP as of December 31, 2017 and 2016.

We recorded no expense related to the plan during the years ended December 31, 2017 and December 31, 2016.  Net periodic benefit cost of $2.5 million was recorded related to the plan for the year ended December 31, 2015.

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Postretirement Medical Benefits

12 Months Ended

Dec. 31, 2017

Postretirement Medical Benefits [Abstract]

Postretirement Medical Benefits

14. Postretirement Medical Benefits

We provided, and continue to provide, certain medical and dental care benefits to eligible retired U.S. and Canadian employees. Under the U.S. plan, for non-union employees, a Health Reimbursement Account (“HRA”) was established beginning January 1, 2009 for each qualified U.S. retiree.  Annually, and through the year ended December 31, 2016, a fixed amount was credited into the HRA to cover both medical and dental costs for all current and future eligible retirees.  Under the Canadian plan, retiree medical and dental benefits were funded using insurance contracts.  Premiums under the insurance contracts were funded on a pay-as-you-go basis.  The postretirement medical plans to substantially all eligible U.S. and Canadian employees terminated on December 31, 2016.  For U.S. plan participants, balances in the HRA accounts at December 31, 2016 will remain available for use until December 31, 2018.  Any remaining balance at December 31, 2018 will be forfeited.  Postretirement medical and dental benefits to eligible employees will continue to be provided to the 24 former union employees in the U.S.

The benefit obligation, funded status, and amounts recognized in the consolidated financial statements for our postretirement medical benefit plans as of and for the years ended December 31, 2017 and 2016, were as follows (in thousands):

	Postretirement Benefit Plans
	U.S. Plan						Canadian Plan
	2017			2016			2017		2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,574		$	2,928		$	—	$	74
Service cost		—			—			—		—
Interest cost		8			11			—		2
Benefits paid		(429	)		(831	)		—		(17	)
Actuarial gain		(481	)		(534	)		—		(9	)
Translation adjustment & other		—			—			—		(50	)
Benefit obligation at end of year	$	672		$	1,574		$	—	$	—
(Unfunded) status of the plans	$	(672	)	$	(1,574	)	$	—	$	—

	Postretirement Benefit Plan
	U.S. Plan
	2017			2016
Amounts recognized in the balance sheet:
Accrued postretirement benefit liabilities	$	672		$	1,574
Accumulated other comprehensive (income) loss (pre-tax) related to:
Unrecognized net actuarial losses (gains)		(194	)		(374	)
Unrecognized prior service cost (credit)		—			—

The estimated net gain that is expected to be amortized from accumulated other comprehensive income into postretirement medical benefits cost during 2018 is not material.

Net periodic benefit cost related to our plans includes the following components (in thousands):

	December 31,
U.S. postretirement plan:	2017			2016			2015
Service cost	$	—		$	—		$	—
Interest cost		8			11			24
Actuarial net (gain) loss		(661	)		809			1,548
Net periodic benefit cost (credit)	$	(653	)	$	820		$	1,572
Canadian postretirement plan:
Service cost	$	—		$	—		$	—
Interest cost		—			2			3
Amortization of prior service cost		—			(54	)		(112	)
Actuarial net gain		—			(46	)		(22	)
Net periodic benefit cost (credit)	$	—		$	(98	)	$	(131	)
Total net periodic benefit cost (credit)	$	(653	)	$	722		$	1,441

Actuarial assumptions used to determine costs and benefit obligations related to our U.S. postretirement plan are as follows:

	December 31,
	2017			2016			2015
Discount rate		0.0	%		0.0	%		0.0	%

Actuarial assumptions used to determine costs and benefit obligations related to our Canadian postretirement plan are as follows:

	December 31,
	2017		2016			2015
Discount rates		N/A		3.00	%		3.00	%
Current medical cost trend rate		N/A		N/A			5.71	%
Ultimate medical cost trend rate		N/A		N/A			5	%
Year trend rate declines to ultimate		N/A		N/A			2017

The Company’s discount rates are determined by considering current yield curves representing high quality, long-term fixed income instruments.  We set our discount rate for the U.S. plan based on a review of the Citigroup Pension Discount Curve and the duration of expected payments in the plan. We set our discount rate for the Canadian plan based upon similar benchmarks in Canada.

The following benefit payments which reflect expected future service, as appropriate, are expected to be paid (in thousands):

2018	$	440
2019		42
2020		38
2021		33
2022		29
Years 2023 – 2027		91

A one-percentage-point change in assumed health care cost trend rates would not have a material impact on our plans for 2018.

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Other Non-Operating Income (Expense), Net

12 Months Ended

Dec. 31, 2017

Other Non-Operating Income (Expense), Net [Abstract]

Other Non-Operating Income (Expense), Net

15. Other Non-Operating Income (Expense), Net

The components of other non-operating income (expense), net are as follows:

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Interest and dividend income	$	91		$	153		$	151
Equity income (loss) from joint ventures (1)		(602	)		2,029			976
Gain (loss) on foreign exchange		950			(276	)		(719	)
Write-off of deferred financing costs		—			—			(773	)
Other non-operating income, net		158			153			145
Total other non-operating income (expense), net	$	597		$	2,059		$	(220	)

(1) Year ended December 31, 2017 includes a noncash impairment charge of approximately $1.8 million related to our minority interest investment in Orange Electronic Co., Ltd.  (See Note 8 for additional information).

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Income Taxes

12 Months Ended

Dec. 31, 2017

Income Taxes [Abstract]

Income Taxes

16. Income Taxes

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which included a broad range of tax reform affecting businesses, including the reduction of the federal corporate tax rate from 35% to 21%, changes in the deductibility of certain business expenses, and the manner in which international operations are taxed in the U.S.  Although the majority of the changes resulting from the Act are effective beginning in 2018, U.S. GAAP requires that certain impacts of the Act be recognized in the income tax provision in the period of enactment.  In connection with the enactment of the Act, our income tax provision for the fourth quarter of 2017 included an increase of $17.5 million, reflecting an increase of $16.1 million for the remeasurement of our net deferred tax assets and an increase in tax of $1.4 million due to the deemed repatriation of earnings of our foreign subsidiaries.

As related to the deemed repatriation of earnings of foreign subsidiaries, the Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries.  As a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued are now subject to U.S. tax.  In accordance with the guidelines provided in the Act, we have aggregated the estimated untaxed foreign earnings and profits, and utilized participating exemption deductions and available foreign tax credits in deriving the $1.4 million repatriation tax, which will be payable currently.  Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest most or all of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts.

Although we believe that the impact of the Act has been properly reflected in the fourth quarter of 2017, there may be further adjustments in the coming quarters as the relevant authorities provide further guidance on the impacts of the Act. The following includes the impact of the Act on the year ended December 2017 disclosures.

The income tax provision (benefit) consists of the following (in thousands):

	Year Ended December 31,
	2017		2016			2015
Current:
Domestic	$	30,742	$	33,156		$	22,943
Foreign		3,139		3,628			4,324
Total current		33,881		36,784			27,267
Deferred:
Domestic		18,833		(387	)		(1,210	)
Foreign		98		(239	)		(74	)
Total deferred		18,931		(626	)		(1,284	)
Total income tax provision	$	52,812	$	36,158		$	25,983

Reconciliations between taxes at the U.S. Federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes are as follows (in thousands):

	Year Ended December 31,
	2017			2016			2015
U.S. Federal income tax rate of 35%	$	33,755		$	34,500		$	25,936
Increase (decrease) in tax rate resulting from:
State and local income taxes, net of federal income tax benefit		3,138			2,944			1,857
Income tax (tax benefits) attributable to foreign income		(149	)		(887	)		(1,705	)
Other non-deductible items, net		(1,319	)		(464	)		(192	)
Impact of Tax Cuts and Jobs Act		17,515			—			—
Change in valuation allowance		(128	)		65			87
Provision for income taxes	$	52,812		$	36,158		$	25,983

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the accompanying consolidated balance sheets (in thousands):

	December 31,
	2017			2016
Deferred tax assets:
Inventories	$	11,498		$	18,323
Allowance for customer returns		8,678			15,092
Postretirement benefits		170			607
Allowance for doubtful accounts		1,181			1,589
Accrued salaries and benefits		8,500			11,482
Capital loss		154			234
Tax credit carryforwards		272			420
Deferred gain on building sale		55			489
Accrued asbestos liabilities		8,886			12,638
		39,394			60,874
Valuation allowance		(377	)		(505	)
Total deferred tax assets		39,017			60,369
Deferred tax liabilities:
Depreciation		5,495			7,410
Other		1,102			1,832
Total deferred tax liabilities		6,597			9,242
Net deferred tax assets	$	32,420		$	51,127

In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some portion or the entire deferred tax asset will be realized.  Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforwards can be utilized.  We consider the level of historical taxable income, scheduled reversal of temporary differences, carryback and carryforward periods, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted.  We also consider cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings. Assumptions regarding future taxable income require significant judgment. Our assumptions are consistent with estimates and plans used to manage our business.

The valuation allowance of $0.4 million as of December 31, 2017 is intended to provide for uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  Based on these considerations, we believe it is more likely than not that we would realize the benefit of the net deferred tax asset of $32.4 million as of December 31, 2017, which is net of the remaining valuation allowance.

At December 31, 2017, we have foreign tax credit carryforwards of approximately $0.3 million that will expire in varying amounts by 2020.

In accordance with generally accepted accounting practices, we recognize in our financial statements only those tax positions that meet the more-likely-than-not recognition threshold.  We establish tax reserves for uncertain tax positions that do not meet this threshold.  During the years ended December 31, 2017, 2016 and 2015 we did not establish a liability for uncertain tax provisions.

We are subject to taxation in the U.S. and various state, local and foreign jurisdictions.  As of December 31, 2017, the Company is no longer subject to U.S. Federal tax examinations for years before 2014.  We remain subject to examination by state and local tax authorities for tax years 2013 through 2016.  Foreign jurisdictions have statutes of limitations generally ranging from 2 to 6 years.  Years still open to examination by foreign tax authorities in major jurisdictions include Canada (2013 onward), Hong Kong (2012 onward), Mexico (2013 onward) and Poland (2012 onward).  We do not presently anticipate that our unrecognized tax benefits will significantly increase or decrease over the next 12 months; however, actual developments in this area could differ from those currently expected.

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Industry Segment and Geographic Data

12 Months Ended

Dec. 31, 2017

Industry Segment and Geographic Data [Abstract]

Industry Segment and Geographic Data

17. Industry Segment and Geographic Data

We have two major reportable operating segments, each of which focuses on a specific line of replacement parts.  Our Engine Management Segment manufactures and remanufactures ignition and emission parts, ignition wires, battery cables, fuel system parts and sensors for vehicle systems.  Our Temperature Control Segment manufactures and remanufactures air conditioning compressors, air conditioning and heating parts, engine cooling system parts, power window accessories and windshield washer system parts.

The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1).  The following tables contain financial information for each reportable segment (in thousands):

	Year Ended December 31,
	2017			2016			2015
Net sales (a):
Engine Management	$	829,413		$	765,539		$	698,021
Temperature Control		279,127			283,740			264,478
Other		7,603			9,203			9,476
Total net sales	$	1,116,143		$	1,058,482		$	971,975
Intersegment sales (a):
Engine Management	$	24,995		$	22,268		$	20,178
Temperature Control		7,334			7,293			6,542
Other		(32,329	)		(29,561	)		(26,720	)
Total intersegment sales	$	—		$	—		$	—
Product Line Net Sales (a):
Engine Management
Ignition, Emission and Fuel System Parts	$	657,287		$	616,523		$	598,161
Wire and Cable		172,126			149,016			99,860
Total Engine Management		829,413			765,539			698,021
Temperature Control
Compressors		148,377			148,623			127,861
Other Climate Control Parts		130,750			135,117			136,617
Total Temperature Control		279,127			283,740			264,478
All Other		7,603			9,203			9,476
Total Net Sales	$	1,116,143		$	1,058,482		$	971,975
Depreciation and Amortization:
Engine Management	$	17,981		$	15,008		$	12,256
Temperature Control		4,373			4,287			4,329
Other		1,562			1,162			1,052
Total depreciation and amortization	$	23,916		$	20,457		$	17,637
Operating income (loss):
Engine Management	$	97,403		$	101,529		$	88,007
Temperature Control		19,609			17,563			6,382
Other		(18,838	)		(21,025	)		(18,529	)
Total operating income	$	98,174		$	98,067		$	75,860
Investment in equity affiliates:
Engine Management	$	4,162		$	6,221		$	6,430
Temperature Control		27,022			13,703			14,192
Other		—			—			—
Total investment in equity affiliates	$	31,184		$	19,924		$	20,622
Capital expenditures:
Engine Management	$	17,750		$	14,202		$	13,038
Temperature Control		5,151			3,652			3,027
Other		1,541			3,067			1,982
Total capital expenditures	$	24,442		$	20,921		$	18,047

Total assets:
Engine Management	$	527,200	$	506,625	$	413,102
Temperature Control		177,006		171,136		177,201
Other		83,361		90,936		90,761
Total assets	$	787,567	$	768,697	$	681,064

a) Segment and product line net sales include intersegment sales in our Engine Management and Temperature Control segments.

Other consists of items pertaining to our corporate headquarters function, as well as our Canadian business unit that does not meet the criteria of a reportable operating segment.

Reconciliation of segment operating income to net earnings:

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Operating income	$	98,174		$	98,067		$	75,860
Other non-operating income (expense)		597			2,059			(220	)
Interest expense		2,329			1,556			1,537
Earnings from continuing operations before taxes		96,442			98,570			74,103
Income tax expense		52,812			36,158			25,983
Earnings from continuing operations		43,630			62,412			48,120
Discontinued operations, net of tax		(5,654	)		(1,982	)		(2,102	)
Net earnings	$	37,976		$	60,430		$	46,018

	Year Ended December 31,
	2017		2016		2015
Revenues:	(In thousands)
United States	$	996,433	$	952,019	$	881,206
Canada		56,575		53,324		48,072
Mexico		24,521		24,429		14,707
Europe		14,088		14,703		16,305
Other foreign		24,526		14,007		11,685
Total revenues	$	1,116,143	$	1,058,482	$	971,975

		December 31,
		2017		2016		2015
Long-lived assets:	(In thousands)
United States		$	202,875	$	204,592	$	155,438
Canada			2,017		1,344		1,190
Mexico			4,449		3,877		1,012
Europe			18,530		13,612		12,324
Other foreign			31,185		19,924		20,622
Total long-lived assets		$	259,056	$	243,349	$	190,586

Revenues are attributed to countries based upon the location of the customer.  Long-lived assets are attributed to countries based upon the location of the assets.

Our five largest individual customers accounted for approximately 70% of our consolidated net sales in 2017 and 2016, and approximately 68% of our consolidated net sales in 2015.  During 2017, O’Reilly Automotive, Inc., Advance Auto Parts, Inc., NAPA Auto Parts, and AutoZone, Inc. accounted for 21%, 17%, 16% and 10% of our consolidated net sales, respectively.  Net sales from each of the customers were reported in both our Engine Management and Temperature Control Segments.

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2017

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

18. Fair Value of Financial Instruments

The carrying value of our financial instruments consisting of cash and cash equivalents, deferred compensation, and short term borrowings approximate their fair value.  In each instance, fair value is determined after considering Level 1 inputs under the three-level fair value hierarchy.  For fair value purposes, the carrying value of cash and cash equivalents approximates fair value due to the short maturity of those investments.  The fair value of the assets held by the deferred compensation plan are based on the quoted market prices of the underlying funds which are held in registered investment companies. The carrying value of our revolving credit facilities, classified as short term borrowings, equals fair market value because the interest rate reflects current market rates.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies [Abstract]

Commitments and Contingencies

19. Commitments and Contingencies

Total rent expense for the three years ended December 31, 2017 was as follows (in thousands):

	Total		Real Estate		Other
2017	$	11,954	$	8,983	$	2,971
2016		10,171		7,550		2,621
2015		9,756		7,218		2,538

At December 31, 2017, we are obligated to make minimum rental payments through 2024, under operating leases, which are as follows (in thousands):

2018	$	9,485
2019		8,078
2020		6,990
2021		6,355
2022		5,364
Thereafter		3,932
Total	$	40,204

Warranties

We generally warrant our products against certain manufacturing and other defects.  These product warranties are provided for specific periods of time depending on the nature of the product.  As of December 31, 2017 and 2016, we have accrued $20.9 million and $24.1 million, respectively, for estimated product warranty claims included in accrued customer returns.  The accrued product warranty costs are based primarily on historical experience of actual warranty claims.  Warranty expense for each of the years 2017, 2016 and 2015 were $94.4 million, $99.1 million and $94.6 million, respectively.

The following table provides the changes in our product warranties:

	December 31,
	2017			2016
	(In thousands)
Balance, beginning of period	$	24,072		$	23,395
Liabilities accrued for current year sales		94,367			99,092
Settlements of warranty claims		(97,510	)		(98,415	)
Balance, end of period	$	20,929		$	24,072

Letters of Credit

At December 31, 2017, we had outstanding letters of credit with certain vendors aggregating approximately $5.3 million.  These letters of credit are being maintained as security for reimbursements to insurance companies and as security to the landlord of our administrative offices in Long Island City, New York.  The contract amount of the letters of credit is a reasonable estimate of their value as the value for each is fixed over the life of the commitment.

Change of Control Arrangements

We entered into a change in control arrangement with one key officer. In the event of a change of control (as defined in the agreement), the executive will receive severance payments and certain other benefits as provided in his agreement.

Asbestos

In 1986, we acquired a brake business, which we subsequently sold in March 1998 and which is accounted for as a discontinued operation. When we originally acquired this brake business, we assumed future liabilities relating to any alleged exposure to asbestos-containing products manufactured by the seller of the acquired brake business. In accordance with the related purchase agreement, we agreed to assume the liabilities for all new claims filed on or after September 2001. Our ultimate exposure will depend upon the number of claims filed against us on or after September 2001 and the amounts paid for indemnity and defense thereof.  At December 31, 2017, approximately 1,530 cases were outstanding for which we may be responsible for any related liabilities.  Since inception in September 2001 through December 31, 2017, the amounts paid for settled claims are approximately $23.8 million.

In evaluating our potential asbestos-related liability, we have considered various factors including, among other things, an actuarial study of the asbestos related liabilities performed by an independent actuarial firm, our settlement amounts and whether there are any co-defendants, the jurisdiction in which lawsuits are filed, and the status and results of settlement discussions.  As is our accounting policy, we consider the advice of actuarial consultants with experience in assessing asbestos-related liabilities to estimate our potential claim liability.  The methodology used to project asbestos-related liabilities and costs in our actuarial study considered: (1) historical data available from publicly available studies; (2) an analysis of our recent claims history to estimate likely filing rates into the future; (3) an analysis of our currently pending claims; and (4) an analysis of our settlements to date in order to develop average settlement values.

The most recent actuarial study was performed as of August 31, 2017.  The updated study has estimated an undiscounted liability for settlement payments, excluding legal costs and any potential recovery from insurance carriers, ranging from $35.2 million to $54 million for the period through 2060.  The change from the prior year study was a $4.2 million increase for the low end of the range and a $6.3 million increase for the high end of the range.  The increase in the estimated undiscounted liability from the prior year study at both the low end and high end of the range reflects our actual experience over the prior twelve months, our historical data and certain assumptions with respect to events that may occur in the future.  Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range of settlement payments was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required.  Based upon the results of the August 31, 2017 actuarial study, in September 2017 we increased our asbestos liability to $35.2 million, the low end of the range, and recorded an incremental pre-tax provision of $6 million in earnings (loss) from discontinued operations in the accompanying statement of operations.  Future legal costs, which are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations, are estimated, according to the updated study, to range from $44.3 million to $79.6 million for the period through 2060.

We plan to perform an annual actuarial evaluation during the third quarter of each year for the foreseeable future. Given the uncertainties associated with projecting such matters into the future and other factors outside our control, we can give no assurance that additional provisions will not be required. We will continue to monitor the circumstances surrounding these potential liabilities in determining whether additional provisions may be necessary.  At the present time, however, we do not believe that any additional provisions would be reasonably likely to have a material adverse effect on our liquidity or consolidated financial position.

Other Litigation

We are currently involved in various other legal claims and legal proceedings (some of which may involve substantial amounts), including claims related to commercial disputes, product liability, employment, and environmental.  Although these legal claims and legal proceedings are subject to inherent uncertainties, based on our understanding and evaluation of the relevant facts and circumstances, we believe that the ultimate outcome of these matters will not, either individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations.  We may at any time determine that settling any of these matters is in our best interests, which settlement may include substantial payments.  Although we cannot currently predict the specific amount of any liability that may ultimately arise with respect to any of these matters, we will record provisions when the liability is considered probable and reasonably estimable.  Significant judgment is required in both the determination of probability and the determination as to whether an exposure can be reasonably estimated.  As additional information becomes available, we reassess our potential liability related to these matters. Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Data (Unaudited) [Abstract]

Quarterly Financial Data (Unaudited)

20. Quarterly Financial Data (Unaudited)

	2017 Quarter Ended
	Dec. 31			Sept. 30			June 30			Mar. 31
	(In thousands, except per share amounts)
Net sales	$	239,978		$	281,058		$	312,729		$	282,378
Gross profit		69,345			82,535			90,666			84,110
Earnings (loss) from continuing operations		(8,106	)		17,108			18,261			16,367
Loss from discontinued operations, net of taxes		(541	)		(3,983	)		(497	)		(633	)
Net earnings (loss)	$	(8,647	)	$	13,125		$	17,764		$	15,734

Net earnings (loss) from continuing operations per common share:
Basic	$	(0.36	)	$	0.75	$	0.80	$	0.72
Diluted	$	(0.36	)	$	0.74	$	0.78	$	0.70
Net earnings (loss) per common share:
Basic	$	(0.38	)	$	0.58	$	0.78	$	0.69
Diluted	$	(0.38	)	$	0.57	$	0.76	$	0.67

	2016 Quarter Ended
	Dec. 31			Sept. 30			June 30			Mar. 31
	(In thousands, except per share amounts)
Net sales	$	229,799		$	300,795		$	288,977		$	238,911
Gross profit		66,771			95,644			87,076			72,996
Earnings from continuing operations		8,839			21,055			19,862			12,656
Loss from discontinued operations, net of taxes		(487	)		(425	)		(618	)		(452	)
Net earnings	$	8,352		$	20,630		$	19,244		$	12,204
Net earnings from continuing operations per common share:

Basic	$	0.39	$	0.93	$	0.87	$	0.56
Diluted	$	0.38	$	0.91	$	0.86	$	0.55
Net earnings per common share:
Basic	$	0.37	$	0.91	$	0.85	$	0.54
Diluted	$	0.36	$	0.89	$	0.84	$	0.53

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Schedule II Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2017

Schedule II - Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

Schedule II ‑ Valuation and Qualifying Accounts

Years ended December 31, 2017, 2016 and 2015

			Additions
Description	Balance at beginning of year		Charged to costs and expenses			Other		Deductions		Balance at end of year
Year ended December 31, 2017:
Allowance for doubtful accounts	$	3,353,000	$	970,000		$	—	$	499,000	$	3,824,000
Allowance for discounts		1,072,000		10,664,000			—		10,593,000		1,143,000
	$	4,425,000	$	11,634,000		$	—	$	11,092,000	$	4,967,000
Allowance for sales returns	$	40,176,000	$	137,416,000		$	—	$	141,676,000	$	35,916,000
Year ended December 31, 2016:
Allowance for doubtful accounts	$	3,201,000	$	949,000		$	—	$	797,000	$	3,353,000
Allowance for discounts		1,045,000		10,039,000			—		10,012,000		1,072,000
	$	4,246,000	$	10,988,000		$	—	$	10,809,000	$	4,425,000
Allowance for sales returns	$	38,812,000	$	138,407,000		$	—	$	137,043,000	$	40,176,000
Year ended December 31, 2015:
Allowance for doubtful accounts	$	4,894,000	$	3,371,000	(1)	$	—	$	5,064,000	$	3,201,000
Allowance for discounts		1,475,000		9,872,000			—		10,302,000		1,045,000
	$	6,369,000	$	13,243,000		$	—	$	15,366,000	$	4,246,000
Allowance for sales returns	$	30,621,000	$	133,355,000		$	—	$	125,164,000	$	38,812,000

(1) Includes a net $3,514,000 charge relating to one of our customers that filed a petition for bankruptcy in January 2016.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

Standard Motor Products, Inc. and subsidiaries (referred to hereinafter in these notes to the consolidated financial statements as “we,” “us,” “our” or the “Company”) is engaged in the manufacture and distribution of replacement parts for motor vehicles in the automotive aftermarket industry with a complementary focus on heavy duty, industrial equipment and the original equipment service market. The consolidated financial statements include our accounts and all domestic and international companies in which we have more than a 50% equity ownership.  Our investments in unconsolidated affiliates are accounted for on the equity method, as we do not have a controlling financial interest but have the ability to exercise significant influence.  All significant inter-company items have been eliminated.

Use of Estimates

Use of Estimates

In conformity with generally accepted accounting principles, we have made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Some of the more significant estimates include allowances for doubtful accounts, cash discounts, valuation of inventory, valuation of long-lived assets, goodwill and other intangible assets, depreciation and amortization of long-lived assets, product liability exposures, other postretirement benefits, asbestos, environmental and litigation matters, valuation of deferred tax assets, share based compensation and sales returns and other allowances.  We can give no assurances that actual results will not differ from those estimates.  Although we do not believe that there is a reasonable likelihood that there will be a material change in the future estimate or in the assumptions that we use in calculating the estimate, unforeseen changes in the industry, or business could materially impact the estimate and may have a material adverse effect on our business, financial condition and results of operations.

Reclassification

Reclassification

Certain prior period amounts in the accompanying consolidated financial statements and related notes have been reclassified to conform to the 2017 presentation.

Cash and Cash Equivalents

Cash and Cash Equivalents

We consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Allowance for Doubtful Accounts and Cash Discounts

Allowance for Doubtful Accounts and Cash Discounts

We do not generally require collateral for our trade accounts receivable.  Accounts receivable have been reduced by an allowance for amounts that may become uncollectible in the future.  These allowances are established based on a combination of write-off history, aging analysis, and specific account evaluations.   When a receivable balance is known to be uncollectible, it is written off against the allowance for doubtful accounts.  Cash discounts are provided based on an overall average experience rate applied to qualifying accounts receivable balances.

Inventories

Inventories

Inventories are valued at the lower of cost and net realizable value.  Cost is determined on the first-in first-out basis.  Where appropriate, standard cost systems are utilized for purposes of determining cost; the standards are adjusted as necessary to ensure they approximate actual costs.  Estimates of lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation of the inventory.

We also evaluate inventories on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand.  For inventory deemed to be obsolete, we provide a reserve on the full value of the inventory.  Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates our estimate of future demand.  Future projected demand requires management judgment and is based upon (a) our review of historical trends and (b) our estimate of projected customer specific buying patterns and trends in the industry and markets in which we do business.  Using rolling twelve month historical information, we estimate future demand on a continuous basis.  As such, the historical volatility of such estimates has been minimal.  We maintain provisions for inventory reserves of $41.5 million and $47.9 million as of December 31, 2017 and 2016, respectively.

We utilize cores (used parts) in our remanufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps.  The production of air conditioning compressors, diesel injectors, and diesel pumps involves the rebuilding of used cores, which we acquire either in outright purchases from used parts brokers, or from returns pursuant to an exchange program with customers.  Under such exchange programs, we reduce our inventory, through a charge to cost of sales, when we sell a finished good compressor, diesel injector, or diesel pump and put back to inventory the used core exchanged at standard cost through a credit to cost of sales when it is actually received from the customer.

Property, Plant and Equipment

Property, Plant and Equipment

These assets are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows:

	Estimated Life
Buildings	25 to 33-1/2 years
Building improvements	10 to 25 years
Machinery and equipment	5 to 12 years
Tools, dies and auxiliary equipment	3 to 8 years
Furniture and fixtures	3 to 12 years

Leasehold improvements are depreciated over the shorter of the estimated useful life or the term of the lease.  Costs related to maintenance and repairs which do not prolong the assets useful lives are expensed as incurred.  We assess our property, plant and equipment to be held and used for impairment when indicators are present that the carrying value may not be recoverable.

Valuation of Long-Lived Assets, Intangible Assets and Goodwill

Valuation of Long-Lived and Intangible Assets and Goodwill

At acquisition, we estimate and record the fair value of purchased intangible assets, which primarily consists of customer relationships, trademarks and trade names, patents and non-compete agreements.  The fair values of these intangible assets are estimated based on our assessment.  Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.  Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment.  Intangible assets determined to have definite lives are amortized over their remaining useful lives.

We assess the impairment of long‑lived assets, identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  With respect to goodwill and identifiable intangible assets having indefinite lives, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value is below its carrying amount.  Factors we consider important, which could trigger an impairment review, include the following: (a) significant underperformance relative to expected historical or projected future operating results; (b) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (c) significant negative industry or economic trends. We review the fair values using the discounted cash flows method and market multiples.

When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is not required.  If we are unable to reach this conclusion, then we would perform the two-step impairment test.  Initially, the fair value of the reporting unit is compared to its carrying amount.  To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit; we are required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired.  In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize a charge for impairment to the extent the carrying value exceeds the implied fair value.  The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.  In addition, identifiable intangible assets having indefinite lives are reviewed for impairment on an annual basis using a methodology consistent with that used to evaluate goodwill.

Intangible assets having definite lives and other long-lived assets are reviewed for impairment whenever events such as product discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable.  In reviewing for impairment, we compare the carrying value of such assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets fair value and their carrying value.

There are inherent assumptions and estimates used in developing future cash flows requiring our judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and long‑lived asset impairment including projecting revenues, interest rates, tax rates and the cost of capital.  Many of the factors used in assessing fair value are outside our control and it is reasonably likely that assumptions and estimates will change in future periods.  These changes can result in future impairments.  In the event our planning assumptions were modified resulting in impairment to our assets, we would be required to include an expense in our statement of operations, which could materially impact our business, financial condition and results of operations.

New Customer Acquisition Costs

New Customer Acquisition Costs

New customer acquisition costs refer to arrangements pursuant to which we incur change-over costs to induce a new customer to switch from a competitor’s brand.  In addition, change-over costs include the costs related to removing the new customer’s inventory and replacing it with our inventory commonly referred to as a stocklift. New customer acquisition costs are recorded as a reduction to revenue when incurred.

Foreign Currency Translation

Foreign Currency Translation

Assets and liabilities of our foreign operations are translated into U.S. dollars at year-end exchange rates.  Income statement accounts are translated using the average exchange rates prevailing during the year.  The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) and remains there until the underlying foreign operation is liquidated or substantially disposed of.  Foreign currency transaction gains or losses are recorded in the statement of operations under the caption “other non-operating income (expense), net.”

Revenue Recognition

Revenue Recognition

We derive our revenue primarily from sales of replacement parts for motor vehicles from both our Engine Management and Temperature Control Segments.  We recognize revenues when products are shipped and title has been transferred to a customer, the sales price is fixed and determinable, and collection is reasonably assured.  For certain of our sales of remanufactured products, we also charge our customers a deposit for the return of a used core component which we can use in our future remanufacturing activities.  Such deposit is not recognized as revenue but rather carried as a core liability.  The liability is extinguished when a core is actually returned to us.  We estimate and record provisions for cash discounts, quantity rebates, sales returns and warranties in the period the sale is recorded, based upon our prior experience and current trends.  Significant management judgments and estimates must be made and used in estimating sales returns and allowances relating to revenue recognized in any accounting period.

Selling, General and Administration Expenses

Selling, General and Administration Expenses

Selling, general and administration expenses include shipping costs and advertising, which are expensed as incurred.  Shipping and handling charges, as well as freight to customers, are included in distribution expenses as part of selling, general and administration expenses.

Deferred Financing Costs

Deferred Financing Costs

Deferred financing costs represent costs incurred in conjunction with our debt financing activities.  Deferred financing costs related to our revolving credit facility are capitalized and amortized over the life of the related financing arrangement.  If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired and are recorded in the statement of operations under the caption other non-operating income (expense), net.

Post-Retirement Medical Benefits

Post-Retirement Medical Benefits

The determination of postretirement plan obligations and their associated expenses requires the use of actuarial valuations to estimate participant plan benefits employees earn while working as well as the present value of those benefits.  Inherent in these valuations are financial assumptions including the eligibility criteria of participants and discount rates at which liabilities can be settled.  Management reviews these assumptions annually with its actuarial advisors.  The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions, or longer or shorter life spans of participants.  We recognize the underfunded or overfunded status of a postretirement plan as an asset or liability and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income, which is a component of stockholders’ equity.

Share-Based Compensation

Share-Based Compensation

We measure and recognize compensation expense for all share-based payment awards made to employees and directors based on estimated fair values on the grant date.  The value of the portion of the award that is ultimately expected to vest is recognized as an expense on a straight-line basis over the requisite service periods in our consolidated statements of operations.  Forfeitures are estimated at the time of grant based on historical trends in order to estimate the amount of share-based awards that will ultimately vest.  We monitor actual forfeitures for any subsequent adjustment to forfeiture rates.

Accounting for Income Taxes

Accounting for Income Taxes

Income taxes are calculated using the asset and liability method.  Deferred tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as measured by the current enacted tax rates.

We maintain valuation allowances when it is more likely than not that all or a portion of a deferred asset will not be realized.  The valuation allowance is intended to provide for the uncertainty regarding the ultimate utilization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  In determining whether a valuation allowance is warranted, we consider all positive and negative evidence and all sources of taxable income such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies to estimate if sufficient future taxable income will be generated to realize the deferred tax asset.  The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable.  In the event that actual results differ from these estimates, or we adjust these estimates in future periods for current trends or expected changes in our estimating assumptions, we may need to modify the level of valuation allowance which could materially impact our business, financial condition and results of operations.

The valuation allowance of $0.4 million as of December 31, 2017 is intended to provide for the uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.  Based on these considerations, we believe it is more likely than not that we will realize the benefit of the net deferred tax asset of $32.4 million as of December 31, 2017, which is net of the remaining valuation allowance.

Tax benefits are recognized for an uncertain tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority.  For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority.  The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available.  Such adjustments are recognized entirely in the period in which they are identified.  The effective tax rate includes the net impact of changes in the liability for uncertain tax positions.  As of December 31, 2017, we do not believe there is a need to establish a liability for uncertain tax positions.

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which included a broad range of tax reform affecting businesses, including the reduction of the federal corporate tax rate from 35% to 21%, changes in the deductibility of certain business expenses, and the manner in which international operations are taxed in the U.S.  For a discussion of the impact of the Act on our consolidated financial statements, see Note 16, “Income Taxes,” of the notes to our consolidated financial statements.

Net Earnings per Common Share

Net Earnings per Common Share

We present two calculations of earnings per common share.  “Basic” earnings per common share equals net income divided by weighted average common shares outstanding during the period. “Diluted” earnings per common share equals net income divided by the sum of weighted average common shares outstanding during the period plus potentially dilutive common shares.  Potentially dilutive common shares that are anti-dilutive are excluded from net earnings per common share.  The following is a reconciliation of the shares used in calculating basic and dilutive net earnings per common share.

	2017		2016		2015
	(In thousands)
Weighted average common shares outstanding – Basic		22,726		22,723		22,812
Plus incremental shares from assumed conversions:
Dilutive effect of restricted shares and performance shares		472		360		330
Weighted average common shares outstanding – Diluted		23,198		23,083		23,142

The average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or because they were excluded under the treasury method.

	2017		2016		2015
	(In thousands)
Restricted and performance shares		248		304		307

Environmental Reserves

Environmental Reserves

We are subject to various U.S. Federal and state and local environmental laws and regulations and are involved in certain environmental remediation efforts.  We estimate and accrue our liabilities resulting from such matters based upon a variety of factors including the assessments of environmental engineers and consultants who provide estimates of potential liabilities and remediation costs.  Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years.  Potential recoveries from insurers or other third parties of environmental remediation liabilities are recognized independently from the recorded liability, and any asset related to the recovery will be recognized only when the realization of the claim for recovery is deemed probable.

Asbestos Litigation

Asbestos Litigation

In evaluating our potential asbestos-related liability, we use an actuarial study that is prepared by a leading actuarial firm with expertise in assessing asbestos-related liabilities.  We evaluate the estimate of the range of undiscounted liability to determine which amount to accrue.  Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required.  Legal costs are expensed as incurred.

Loss Contingencies

Loss Contingencies

We have loss contingencies, for such matters as legal claims and legal proceedings.  Establishing loss reserves for these matters requires estimates, judgment of risk exposure and ultimate liability.  We record provisions when the liability is considered probable and reasonably estimable.  Significant judgment is required for both the determination of probability and the determination as to whether an exposure can be reasonably estimated.  We maintain an ongoing monitoring and identification process to assess how the activities are progressing against the accrued estimated costs.  As additional information becomes available, we reassess our potential liability related to these matters.  Adjustments to the liabilities are recorded in the statement of operations in the period when additional information becomes available.  Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

Product Warranty and Overstock Returns

Product Warranty and Overstock Returns

Many of our products carry a warranty ranging from a 90-day limited warranty to a lifetime limited warranty, which generally covers defects in materials or workmanship and failure to meet industry published specifications and/or the result of installation error.  In addition to warranty returns, we also permit our customers to return new, undamaged products to us within customer-specific limits (which are generally limited to a specified percentage of their annual purchases from us) in the event that they have overstocked their inventories. We accrue for product warranties and overstock returns as a percentage of sales at the time products are sold, based upon estimates established using historical information on the nature, frequency and average cost of claims.  Revision to the accrual is made when necessary, based upon changes in these factors.  We regularly study trends of such claims.

Trade Receivables

Trade Receivables

In compliance with accounting standards, sales of accounts receivable are reflected as a reduction of accounts receivable in the consolidated balance sheet at the time of sale and any related expense is included in selling, general and administrative expenses in our consolidated statements of operations.

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments and accounts receivable.  We place our cash investments with high quality financial institutions and limit the amount of credit exposure to any one institution.  Although we are directly affected by developments in the vehicle parts industry, management does not believe significant credit risk exists.

With respect to accounts receivable, such receivables are primarily from warehouse distributors and major retailers in the automotive aftermarket industry located in the U.S.  We perform ongoing credit evaluations of our customers’ financial conditions.  Our five largest individual customers accounted for approximately 70% of our consolidated net sales in 2017 and 2016, and approximately 68% of our consolidated net sales in 2015.  During 2017, O’Reilly Automotive, Inc., Advance Auto Parts, Inc., NAPA Auto Parts, and AutoZone, Inc. accounted for 21%, 17%, 16% and 10% of our consolidated net sales, respectively.  Net sales from each of the customers were reported in both our Engine Management and Temperature Control Segments.  The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them, could have a materially adverse impact on our business, financial condition and results of operations.

Substantially all of the cash and cash equivalents, including foreign cash balances, at December 31, 2017 and 2016 were uninsured.  Foreign cash balances at December 31, 2017 and 2016 were $13.1 million and $16.5 million, respectively.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Standards not yet adopted as of December 31, 2017

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”), which replaces numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single comprehensive revenue recognition model for recognizing revenue from contracts with customers. Under the new guidance, an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application.  In July 2015, the FASB approved ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date which defers by one year the mandatory effective date of its revenue recognition standard.  The new standard is effective for annual reporting periods beginning after December 15, 2017.

Effective January 1, 2018, we will adopt the requirements of Topic 606 using the modified retrospective method.  Upon adoption, we will recognize the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings.  Using the modified retrospective method of adoption, the comparative information for periods prior to 2018 will not be restated and instead will continue to be reported under the accounting standards in effect for those periods.

We anticipate that the adoption of the new standard will not result in a material difference between the recognition of revenue under Topic 606 and prior accounting standards.  For the majority of our net sales, revenue will continue to be recognized when products are shipped from our distribution facilities, or when received by our customers, depending upon the terms of the contract.  Under the new revenue standard, (1) the return of cores from customers used in our manufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps will be estimated and recorded to inventory at the time of sale instead of upon receipt of the returned cores, and (2) overstock returns will be recorded gross of expected recoveries.  Adoption of the new standard will result in an increase in inventory and accrued customer returns, and offsetting changes in net sales and cost of sales, with no material change to our net income on an ongoing basis.  In addition, to meet the disaggregation disclosure requirements under Topic 606, we anticipate our disclosure of revenue disaggregation will be by major product group, geographic area and major sales channels.

The following table provides a brief description of the additional recent accounting pronouncements that could have an impact on our financial statements:

Standard	Description	Date of adoption	Effects on the financial statements or other significant matters
Standards that are not yet adopted as of December 31, 2017
ASU 2016-02, Leases	This standard outlines the need to recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease).  For income statement purposes, the FASB retained the dual model, requiring leases to be classified as either operating or financing.  Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern.	January 1, 2019, with early adoption permitted	The new standard must be adopted utilizing a modified retrospective transition, and provides for certain expedients.  The new standard will require that we recognize all of our leases, including our current operating leases, on the balance sheet.  To date, we have taken an inventory of all of our operating leases, which consist primarily of real estate and auto leases, and are currently evaluating the appropriate discount rates to use in calculating the right to use asset.  We will be continuously assessing the impact of the new standard and the impact on our systems and processes through January 1, 2019, our planned date of adoption.
ASU 2016-15, Statement of Cash Flows	This standard is intended to reduce diversity in practice and to provide guidance as to how certain cash receipts and cash payments are presented and classified in the statement of cash flows.	January 1, 2018, with early adoption permitted	The new standard requires application using a retrospective transition method.  We do not anticipate that the adoption of this standard will have a material effect on our consolidated financial statements.
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This standard is intended to simplify the accounting for goodwill impairment.  ASU 2017-04 removes Step 2 of the test, which requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.	January 1, 2020, with early adoption permitted	The new standard should be applied prospectively.  We will consider the new standard when performing our annual impairment test and evaluate when we will adopt the new standard.

ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost This standard requires employers that present operating income in their consolidated statement of operations to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs).  The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in other non-operating income (expense).  The new standard requires retrospective reclassification of the effects of the new standard on the statement of operations. January 1, 2018, with early adopted permitted The new standard will require that we retrospectively reclassify all components of net periodic pension cost and net periodic postretirement benefit cost, other than the service cost component, in our statement of operations from selling, general and administrated expenses, as presently reported, to other non-operating income (expense).

Standards that were adopted

ASU 2015-17, Balance Sheet Classification of Deferred Taxes	This standard requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The new guidance requires entities to offset all deferred tax assets and liabilities (and valuation allowances) for each tax-paying jurisdiction within each tax-paying component.  The net deferred tax must be presented as a single noncurrent amount.	January 1, 2017	The adoption of the new standard resulted in the reclassification of deferred tax assets previously reported as current deferred tax assets to noncurrent deferred tax assets in our consolidated balance sheets.  We adopted the new standard retrospectively, and as such, all prior period current deferred tax assets in our consolidated balance sheets have also been reclassified to noncurrent deferred tax assets for comparative purposes.
ASU 2015-11, Simplifying the Measurement of Inventory	This standard changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value for entities that measure inventory using first-in, first-out or average cost.  In addition, this standard eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximate normal profit margin when measuring inventory.	January 1, 2017	The prospective adoption of the new standard did not have a material effect on our consolidated financial statements.

ASU 2016-09, Improvements to Employee Share-Based Payment Accounting This standard requires (1) that the tax effects related to share-based payments at settlement (or expiration) be recorded through the tax provision (benefit) in the income statement rather than in equity as permitted under prior guidance under certain circumstances; (2) that all tax-related cash flows resulting from share-based payments be reported as operating activities on the statement of cash flows, a change from the requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities; and (3) that when computing diluted earnings per share, the effect of “windfall” tax benefits be excluded from the hypothetical proceeds used to calculate the repurchase of shares under the treasury stock method. January 1, 2017 We adopted the new standard prospectively.  The adoption of the new standard did not have a material effect on our consolidated financial statements for the year ended December 31, 2017.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies [Abstract]

Estimated Useful Lives of Property, Plant and Equipment

These assets are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows:

	Estimated Life
Buildings	25 to 33-1/2 years
Building improvements	10 to 25 years
Machinery and equipment	5 to 12 years
Tools, dies and auxiliary equipment	3 to 8 years
Furniture and fixtures	3 to 12 years

Reconciliation of Shares Used in Calculating Basic and Dilutive Net Earnings per Common Share

The following is a reconciliation of the shares used in calculating basic and dilutive net earnings per common share.

	2017		2016		2015
	(In thousands)
Weighted average common shares outstanding – Basic		22,726		22,723		22,812
Plus incremental shares from assumed conversions:
Dilutive effect of restricted shares and performance shares		472		360		330
Weighted average common shares outstanding – Diluted		23,198		23,083		23,142

Antidilutive Securities Excluded from Computation of Earnings Per Share

The average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or because they were excluded under the treasury method.

	2017		2016		2015
	(In thousands)
Restricted and performance shares		248		304		307

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Business Acquisitions and Investments (Tables)

12 Months Ended

Dec. 31, 2017

Business Acquisitions and Investments [Abstract]

Allocation of Purchase Price to the Assets Acquired and Liabilities Assumed

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed, based on their fair values (in thousands):

Purchase Price				$	67,451
Assets acquired and liabilities assumed:
Receivables	$	3,130
Inventory		12,567
Other current and noncurrent assets (1)		334
Property, plant and equipment, net		2,660
Intangible assets		42,440
Goodwill		12,746
Current liabilities		(6,426	)
Net assets acquired				$	67,451

(1) Other current and noncurrent assets includes $0.2 million of cash acquired.

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Restructuring and Integration Expense (Income) (Tables)

12 Months Ended

Dec. 31, 2017

Restructuring Cost and Reserve [Line Items]

Restructuring and Integration Expense (Income)

The aggregated liabilities included in “sundry payables and accrued expenses” and “other accrued liabilities” in the consolidated balance sheet relating to the restructuring and integration activities as of and for the years ended December 31, 2017 and 2016, consisted of the following (in thousands):

	Workforce Reduction			Other Exit Costs			Total
Exit activity liability at December 31, 2015	$	270		$	591		$	861
Restructuring and integration costs:
Amounts provided for during 2016		2,934			1,023			3,957
Cash payments		(392	)		(1,154	)		(1,546	)
Reclassification to ongoing accrued liabilities (1)		(236	)		(460	)		(696	)
Exit activity liability at December 31, 2016	$	2,576		$	—		$	2,576
Restructuring and integration costs:
Amounts provided for during 2017		2,220			3,953			6,173
Cash payments		(1,979	)		(3,702	)		(5,681	)
Foreign currency exchange rate changes and other		37			(251	)		(214	)
Exit activity liability at December 31, 2017	$	2,854		$	—		$	2,854

(1) Applies to liabilities associated with the prior year restructuring and integration programs which relate primarily to employee severance and other retiree benefit enhancements to be paid through 2020 and environmental clean-up costs at our Long Island City, New York location in connection with the closure of our manufacturing operations at the site.  These amounts were reclassified out of the restructuring and integration liability and into ongoing accrued liabilities as of December 31, 2016.

Plant Rationalization Program [Member]

Restructuring Cost and Reserve [Line Items]

Restructuring and Integration Expense (Income)

Activity, by segment, for the year ended December 31, 2017 and 2016 related to our plant rationalization program consisted of the following (in thousands):

	Engine Management			Temperature Control			Other		Total
Exit activity liability at December 31, 2015	$	—		$	—		$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2016		844			2,361			—		3,205
Cash payments		(833	)		(318	)		—		(1,151	)
Exit activity liability at December 31, 2016	$	11		$	2,043		$	—	$	2,054
Restructuring and integration costs:
Amounts provided for during 2017		631			1,774			—		2,405
Cash payments		(642	)		(2,341	)		—		(2,983	)
Exit activity liability at December 31, 2017	$	—		$	1,476		$	—	$	1,476

Orlando Plant Rationalization Program [Member]

Restructuring Cost and Reserve [Line Items]

Restructuring and Integration Expense (Income)

Activity, by segment, for the year ended December 31, 2017 related to our Orlando plant rationalization program consisted of the following (in thousands):

	Engine Management			Temperature Control		Other		Total
Exit activity liability at December 31, 2016	$	—		$	—	$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2017		1,758			—		—		1,758
Cash payments		(772	)		—		—		(772	)
Exit activity liability at December 31, 2017	$	986		$	—	$	—	$	986

Wire and Cable Relocation [Member]

Restructuring Cost and Reserve [Line Items]

Restructuring and Integration Expense (Income)

Activity, by segment, for the year ended December 31, 2017 and 2016 related to our wire and cable relocation program consisted of the following (in thousands):

	Engine Management			Temperature Control		Other		Total
Exit activity liability at December 31, 2015	$	—		$	—	$	—	$	—
Restructuring and integration costs:
Amounts provided for during 2016		714			—		—		714
Cash payments		(192	)		—		—		(192	)
Exit activity liability at December 31, 2016	$	522		$	—	$	—	$	522
Restructuring and integration costs:
Amounts provided for during 2017		1,759	)		—		—		1,759
Cash payments		(1,926	)		—		—		(1,926	)
Foreign currency exchange rate changes		37			—		—		37
Exit activity liability at December 31, 2017	$	392		$	—	$	—	$	392

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Inventories (Tables)

12 Months Ended

Dec. 31, 2017

Inventories [Abstract]

Inventories

	December 31,
	2017		2016
	(In thousands)
Finished goods	$	209,800	$	203,700
Work-in-process		7,536		6,823
Raw materials		109,075		101,954
Total inventories	$	326,411	$	312,477

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

	December 31,
	2017		2016
	(In thousands)
Land, buildings and improvements	$	46,930	$	46,447
Machinery and equipment		132,467		128,650
Tools, dies and auxiliary equipment		45,769		44,683
Furniture and fixtures		28,352		27,482
Leasehold improvements		10,348		8,369
Construction-in-progress		16,318		14,419
Total property, plant and equipment		280,184		270,050
Less accumulated depreciation		191,081		191,551
Total property, plant and equipment, net	$	89,103	$	78,499

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2017

Goodwill and Other Intangible Assets [Abstract]

Carrying Value of Goodwill by Operating Segment

Changes in the carrying values of goodwill by operating segment during the years ended December 31, 2017 and 2016 are as follows (in thousands):

	Engine Management			Temperature Control		Total
Balance as of December 31, 2015:
Goodwill	$	79,099		$	14,270	$	93,369
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	40,611		$	14,270	$	54,881
Activity in 2016
Acquisition of the North American automotive ignition wire business of General Cable Corporation.	$	12,746		$	—	$	12,746
Foreign currency exchange rate change		(396	)		—		(396	)
Balance as of December 31, 2016:
Goodwill		91,449			14,270		105,719
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	52,961		$	14,270	$	67,231
Activity in 2017
Foreign currency exchange rate change		182			—		182
Balance as of December 31, 2017:
Goodwill		91,631			14,270		105,901
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	53,143		$	14,270	$	67,413

Acquired Identifiable Intangible Assets

Acquired identifiable intangible assets as of December 31, 2017 and 2016 consist of:

	December 31,
	2017			2016
	(In thousands)
Customer relationships	$	87,290		$	87,070
Trademarks and trade names		6,800			6,800
Non-compete agreements		3,193			3,189
Patents		723			723
Supply agreements		800			800
Leaseholds		160			160
Total acquired intangible assets		98,966			98,742
Less accumulated amortization (1)		(43,853	)		(35,830	)
Net acquired intangible assets	$	55,113		$	62,912

(1) Applies to all intangible assets, except for related trademarks and trade names totaling $5.2 million, which have indefinite useful lives and, as such, are not being amortized.

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Other Assets (Tables)

12 Months Ended

Dec. 31, 2017

Other Assets [Abstract]

Other Assets

	December 31,
	2017		2016
	(In thousands)
Equity in joint ventures	$	31,184	$	19,924
Deferred compensation		13,612		10,763
Long term receivables		—		1,061
Deferred financing costs, net		630		973
Other		853		842
Total other assets, net	$	46,279	$	33,563

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Credit Facilities and Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2017

Credit Facilities and Long-Term Debt [Abstract]

Summary of Total Debt Outstanding

Total debt outstanding is summarized as follows:

	December 31,
	2017		2016
	(In thousands)
Revolving credit facilities	$	57,000	$	54,812
Other (1)		4,778		163
Total debt	$	61,778	$	54,975
Current maturities of debt	$	61,699	$	54,855
Long-term debt		79		120
Total debt	$	61,778	$	54,975

(1) Other includes borrowings under our Polish overdraft facility of Zloty 16.2 million (approximately $4.7 million).

Scheduled Amortization of Deferred Financing Cost for Future Years

Scheduled amortization for future years, assuming no prepayments of principal is as follows:

(In thousands)
2018	$	343
2019		343
2020		287
Total amortization	$	973

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2017

Accumulated Other Comprehensive Income [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income

Changes in Accumulated Other Comprehensive Income by Component

	Foreign Currency Translation Adjustments			Unrecognized Postretirement Benefit Costs (Credit)			Total
	(In thousands)
Balance at December 31, 2015	$	(5,958	)	$	(516	)	$	(6,474	)
Other comprehensive income before reclassifications		(5,294	)		332			(4,962	)
Amounts reclassified from accumulated other comprehensive income		—			408			408
Other comprehensive income, net		(5,294	)		740			(4,554	)
Balance at December 31, 2016	$	(11,252	)	$	224		$	(11,028	)
Other comprehensive income before reclassifications		7,027			289			7,316
Amounts reclassified from accumulated other comprehensive income		—			(397	)		(397	)
Other comprehensive income, net		7,027			(108	)		6,919
Balance at December 31, 2017	$	(4,225	)	$	116		$	(4,109	)

Reclassifications out of Accumulated Other Comprehensive Income

Reclassifications Out of Accumulated Other Comprehensive Income and into the Consolidated Statements of Operations

	Year Ended December 31,
Details About Accumulated Other Comprehensive Income Components	2017			2016
Amortization of postretirement benefit plans:	(In thousands)
Prior service benefit (1)	$	—		$	(54	)
Unrecognized (gain) loss (1)		(661	)		763
Total before income tax		(661	)		709
Income tax expense		264			(301	)
Total reclassifications for the period	$	(397	)	$	408

(1) These accumulated other comprehensive income components are included in the computation of net periodic postretirement benefit costs, which are included in selling, general and administrative expenses in our consolidated statements of operations (see Note 14 for additional information).

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Stock-Based Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2017

Stock-Based Compensation Plans [Abstract]

Restricted and Performance-Based Share Activity

Our restricted and performance-based share activity was as follows for the years ended December 31, 2017 and 2016:

	Shares			Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2015		758,550		$	27.19
Granted		212,500			42.93
Vested		(138,427	)		31.55
Forfeited		(9,775	)		31.79
Balance at December 31, 2016		822,848			30.46
Granted		207,975			42.79
Vested		(169,615	)		31.26
Forfeited		(7,250	)		37.24
Balance at December 31, 2017		853,958		$	33.25

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Retirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2017

Retirement Benefit Plans [Abstract]

Defined Contribution Plan Matching Obligations

Matching obligations, in connection with the plans which are funded in cash and typically contributed to the plans in March of the following year, are as follows (in thousands):

	U.S. Defined Contribution
Year ended December 31,
2017	$	9,980
2016		8,625
2015		8,445

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Postretirement Medical Benefits (Tables)

12 Months Ended

Dec. 31, 2017

Postretirement Medical Benefits [Abstract]

Components of Net Periodic Benefit Cost for Postretirement Benefit Plans

Net periodic benefit cost related to our plans includes the following components (in thousands):

	December 31,
U.S. postretirement plan:	2017			2016			2015
Service cost	$	—		$	—		$	—
Interest cost		8			11			24
Actuarial net (gain) loss		(661	)		809			1,548
Net periodic benefit cost (credit)	$	(653	)	$	820		$	1,572
Canadian postretirement plan:
Service cost	$	—		$	—		$	—
Interest cost		—			2			3
Amortization of prior service cost		—			(54	)		(112	)
Actuarial net gain		—			(46	)		(22	)
Net periodic benefit cost (credit)	$	—		$	(98	)	$	(131	)
Total net periodic benefit cost (credit)	$	(653	)	$	722		$	1,441

CANADA [Member]

Defined Benefit Plan Disclosure [Line Items]

Actuarial Assumptions Used to Determine Costs and Benefit Obligations

Actuarial assumptions used to determine costs and benefit obligations related to our Canadian postretirement plan are as follows:

	December 31,
	2017		2016			2015
Discount rates		N/A		3.00	%		3.00	%
Current medical cost trend rate		N/A		N/A			5.71	%
Ultimate medical cost trend rate		N/A		N/A			5	%
Year trend rate declines to ultimate		N/A		N/A			2017

Postretirement Benefit Plans [Member]

Defined Benefit Plan Disclosure [Line Items]

Funded (Unfunded) Status

The benefit obligation, funded status, and amounts recognized in the consolidated financial statements for our postretirement medical benefit plans as of and for the years ended December 31, 2017 and 2016, were as follows (in thousands):

	Postretirement Benefit Plans
	U.S. Plan						Canadian Plan
	2017			2016			2017		2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,574		$	2,928		$	—	$	74
Service cost		—			—			—		—
Interest cost		8			11			—		2
Benefits paid		(429	)		(831	)		—		(17	)
Actuarial gain		(481	)		(534	)		—		(9	)
Translation adjustment & other		—			—			—		(50	)
Benefit obligation at end of year	$	672		$	1,574		$	—	$	—
(Unfunded) status of the plans	$	(672	)	$	(1,574	)	$	—	$	—

Amounts Recognized in Balance Sheet

	Postretirement Benefit Plan
	U.S. Plan
	2017			2016
Amounts recognized in the balance sheet:
Accrued postretirement benefit liabilities	$	672		$	1,574
Accumulated other comprehensive (income) loss (pre-tax) related to:
Unrecognized net actuarial losses (gains)		(194	)		(374	)
Unrecognized prior service cost (credit)		—			—

Actuarial Assumptions Used to Determine Costs and Benefit Obligations

Actuarial assumptions used to determine costs and benefit obligations related to our U.S. postretirement plan are as follows:

	December 31,
	2017			2016			2015
Discount rate		0.0	%		0.0	%		0.0	%

Expected Future Benefit Payments

The following benefit payments which reflect expected future service, as appropriate, are expected to be paid (in thousands):

2018	$	440
2019		42
2020		38
2021		33
2022		29
Years 2023 – 2027		91

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Other Non-Operating Income (Expense), Net (Tables)

12 Months Ended

Dec. 31, 2017

Other Non-Operating Income (Expense), Net [Abstract]

Components of Other Non-Operating Income

The components of other non-operating income (expense), net are as follows:

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Interest and dividend income	$	91		$	153		$	151
Equity income (loss) from joint ventures (1)		(602	)		2,029			976
Gain (loss) on foreign exchange		950			(276	)		(719	)
Write-off of deferred financing costs		—			—			(773	)
Other non-operating income, net		158			153			145
Total other non-operating income (expense), net	$	597		$	2,059		$	(220	)

(1) Year ended December 31, 2017 includes a noncash impairment charge of approximately $1.8 million related to our minority interest investment in Orange Electronic Co., Ltd.  (See Note 8 for additional information).

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Taxes [Abstract]

Income Tax Provision (Benefit)

The income tax provision (benefit) consists of the following (in thousands):

	Year Ended December 31,
	2017		2016			2015
Current:
Domestic	$	30,742	$	33,156		$	22,943
Foreign		3,139		3,628			4,324
Total current		33,881		36,784			27,267
Deferred:
Domestic		18,833		(387	)		(1,210	)
Foreign		98		(239	)		(74	)
Total deferred		18,931		(626	)		(1,284	)
Total income tax provision	$	52,812	$	36,158		$	25,983

Effective Income Tax Rate Reconciliation

Reconciliations between taxes at the U.S. Federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes are as follows (in thousands):

	Year Ended December 31,
	2017			2016			2015
U.S. Federal income tax rate of 35%	$	33,755		$	34,500		$	25,936
Increase (decrease) in tax rate resulting from:
State and local income taxes, net of federal income tax benefit		3,138			2,944			1,857
Income tax (tax benefits) attributable to foreign income		(149	)		(887	)		(1,705	)
Other non-deductible items, net		(1,319	)		(464	)		(192	)
Impact of Tax Cuts and Jobs Act		17,515			—			—
Change in valuation allowance		(128	)		65			87
Provision for income taxes	$	52,812		$	36,158		$	25,983

Components of Net Deferred Tax Assets and Liabilities

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the accompanying consolidated balance sheets (in thousands):

	December 31,
	2017			2016
Deferred tax assets:
Inventories	$	11,498		$	18,323
Allowance for customer returns		8,678			15,092
Postretirement benefits		170			607
Allowance for doubtful accounts		1,181			1,589
Accrued salaries and benefits		8,500			11,482
Capital loss		154			234
Tax credit carryforwards		272			420
Deferred gain on building sale		55			489
Accrued asbestos liabilities		8,886			12,638
		39,394			60,874
Valuation allowance		(377	)		(505	)
Total deferred tax assets		39,017			60,369
Deferred tax liabilities:
Depreciation		5,495			7,410
Other		1,102			1,832
Total deferred tax liabilities		6,597			9,242
Net deferred tax assets	$	32,420		$	51,127

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Industry Segment and Geographic Data (Tables)

12 Months Ended

Dec. 31, 2017

Industry Segment and Geographic Data [Abstract]

Sales and Operating Income by Operating Segments

The following tables contain financial information for each reportable segment (in thousands):

	Year Ended December 31,
	2017			2016			2015
Net sales (a):
Engine Management	$	829,413		$	765,539		$	698,021
Temperature Control		279,127			283,740			264,478
Other		7,603			9,203			9,476
Total net sales	$	1,116,143		$	1,058,482		$	971,975
Intersegment sales (a):
Engine Management	$	24,995		$	22,268		$	20,178
Temperature Control		7,334			7,293			6,542
Other		(32,329	)		(29,561	)		(26,720	)
Total intersegment sales	$	—		$	—		$	—
Product Line Net Sales (a):
Engine Management
Ignition, Emission and Fuel System Parts	$	657,287		$	616,523		$	598,161
Wire and Cable		172,126			149,016			99,860
Total Engine Management		829,413			765,539			698,021
Temperature Control
Compressors		148,377			148,623			127,861
Other Climate Control Parts		130,750			135,117			136,617
Total Temperature Control		279,127			283,740			264,478
All Other		7,603			9,203			9,476
Total Net Sales	$	1,116,143		$	1,058,482		$	971,975
Depreciation and Amortization:
Engine Management	$	17,981		$	15,008		$	12,256
Temperature Control		4,373			4,287			4,329
Other		1,562			1,162			1,052
Total depreciation and amortization	$	23,916		$	20,457		$	17,637
Operating income (loss):
Engine Management	$	97,403		$	101,529		$	88,007
Temperature Control		19,609			17,563			6,382
Other		(18,838	)		(21,025	)		(18,529	)
Total operating income	$	98,174		$	98,067		$	75,860
Investment in equity affiliates:
Engine Management	$	4,162		$	6,221		$	6,430
Temperature Control		27,022			13,703			14,192
Other		—			—			—
Total investment in equity affiliates	$	31,184		$	19,924		$	20,622
Capital expenditures:
Engine Management	$	17,750		$	14,202		$	13,038
Temperature Control		5,151			3,652			3,027
Other		1,541			3,067			1,982
Total capital expenditures	$	24,442		$	20,921		$	18,047

Total assets:
Engine Management	$	527,200	$	506,625	$	413,102
Temperature Control		177,006		171,136		177,201
Other		83,361		90,936		90,761
Total assets	$	787,567	$	768,697	$	681,064

a) Segment and product line net sales include intersegment sales in our Engine Management and Temperature Control segments.

Reconciliation of Segment Operating Income to Net Earnings

Reconciliation of segment operating income to net earnings:

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Operating income	$	98,174		$	98,067		$	75,860
Other non-operating income (expense)		597			2,059			(220	)
Interest expense		2,329			1,556			1,537
Earnings from continuing operations before taxes		96,442			98,570			74,103
Income tax expense		52,812			36,158			25,983
Earnings from continuing operations		43,630			62,412			48,120
Discontinued operations, net of tax		(5,654	)		(1,982	)		(2,102	)
Net earnings	$	37,976		$	60,430		$	46,018

Revenue and Long-lived Assets by Geographical Areas

	Year Ended December 31,
	2017		2016		2015
Revenues:	(In thousands)
United States	$	996,433	$	952,019	$	881,206
Canada		56,575		53,324		48,072
Mexico		24,521		24,429		14,707
Europe		14,088		14,703		16,305
Other foreign		24,526		14,007		11,685
Total revenues	$	1,116,143	$	1,058,482	$	971,975

		December 31,
		2017		2016		2015
Long-lived assets:	(In thousands)
United States		$	202,875	$	204,592	$	155,438
Canada			2,017		1,344		1,190
Mexico			4,449		3,877		1,012
Europe			18,530		13,612		12,324
Other foreign			31,185		19,924		20,622
Total long-lived assets		$	259,056	$	243,349	$	190,586

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies [Abstract]

Rent Expense

Total rent expense for the three years ended December 31, 2017 was as follows (in thousands):

	Total		Real Estate		Other
2017	$	11,954	$	8,983	$	2,971
2016		10,171		7,550		2,621
2015		9,756		7,218		2,538

Minimum Rental Payments under Operating Leases

At December 31, 2017, we are obligated to make minimum rental payments through 2024, under operating leases, which are as follows (in thousands):

2018	$	9,485
2019		8,078
2020		6,990
2021		6,355
2022		5,364
Thereafter		3,932
Total	$	40,204

Changes in Product Warranties

The following table provides the changes in our product warranties:

	December 31,
	2017			2016
	(In thousands)
Balance, beginning of period	$	24,072		$	23,395
Liabilities accrued for current year sales		94,367			99,092
Settlements of warranty claims		(97,510	)		(98,415	)
Balance, end of period	$	20,929		$	24,072

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Data (Unaudited) [Abstract]

Quarterly Financial Information

	2017 Quarter Ended
	Dec. 31			Sept. 30			June 30			Mar. 31
	(In thousands, except per share amounts)
Net sales	$	239,978		$	281,058		$	312,729		$	282,378
Gross profit		69,345			82,535			90,666			84,110
Earnings (loss) from continuing operations		(8,106	)		17,108			18,261			16,367
Loss from discontinued operations, net of taxes		(541	)		(3,983	)		(497	)		(633	)
Net earnings (loss)	$	(8,647	)	$	13,125		$	17,764		$	15,734

Net earnings (loss) from continuing operations per common share:
Basic	$	(0.36	)	$	0.75	$	0.80	$	0.72
Diluted	$	(0.36	)	$	0.74	$	0.78	$	0.70
Net earnings (loss) per common share:
Basic	$	(0.38	)	$	0.58	$	0.78	$	0.69
Diluted	$	(0.38	)	$	0.57	$	0.76	$	0.67

	2016 Quarter Ended
	Dec. 31			Sept. 30			June 30			Mar. 31
	(In thousands, except per share amounts)
Net sales	$	229,799		$	300,795		$	288,977		$	238,911
Gross profit		66,771			95,644			87,076			72,996
Earnings from continuing operations		8,839			21,055			19,862			12,656
Loss from discontinued operations, net of taxes		(487	)		(425	)		(618	)		(452	)
Net earnings	$	8,352		$	20,630		$	19,244		$	12,204
Net earnings from continuing operations per common share:

Basic	$	0.39	$	0.93	$	0.87	$	0.56
Diluted	$	0.38	$	0.91	$	0.86	$	0.55
Net earnings per common share:
Basic	$	0.37	$	0.91	$	0.85	$	0.54
Diluted	$	0.36	$	0.89	$	0.84	$	0.53

XML

Summary of Significant Accounting Policies (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017 USD ($) Customer shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 shares
Summary of Significant Accounting Policies [Abstract]
Equity ownership in entities included in consolidated financial statements, minimum		50.00%
Inventory reserve | $		$ 41,500	$ 47,900
Property, Plant and Equipment [Line Items]
Valuation allowance | $		377	505
Net deferred tax asset | $		$ 32,420	$ 51,127
Income Tax Disclosure [Line Items]
U.S. Federal income tax rate		35.00%
Reconciliation of the shares used in calculating basic and dilutive net earnings per common share [Abstract]
Weighted average common shares outstanding - Basic (in shares) | shares		22,726,491	22,722,517	22,811,862
Plus incremental shares from assumed conversions [Abstract]
Dilutive effect of restricted shares and performance shares (in shares) | shares		472,000	360,000	330,000
Weighted average common shares outstanding - Diluted (in shares) | shares		23,198,392	23,082,578	23,142,394
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Minimum product warranty period		90 days
Concentration Risk [Line Items]
Foreign cash balance | $		$ 13,100	$ 16,500
Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Number of largest individual customers | Customer		5
Plan [Member]
Income Tax Disclosure [Line Items]
U.S. Federal income tax rate	21.00%
Buildings [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		25 years
Buildings [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		33 years 6 months
Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		10 years
Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		25 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		5 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		12 years
Tools, Dies and Auxiliary Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		3 years
Tools, Dies and Auxiliary Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		8 years
Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		3 years
Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life		12 years
Net Sales [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		70.00%	70.00%	68.00%
Net Sales [Member] | Customer Concentration Risk [Member] | O' Reilly Automotive, Inc. [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		21.00%
Net Sales [Member] | Customer Concentration Risk [Member] | Advance Auto Parts, Inc. [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		17.00%
Net Sales [Member] | Customer Concentration Risk [Member] | NAPA Auto Parts [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		16.00%
Net Sales [Member] | Customer Concentration Risk [Member] | AutoZone, Inc [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		10.00%
Restricted and Performance Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares) | shares		248,000	304,000	307,000

XML

Business Acquisitions and Investments, General Cable Corporation Acquisitions (Details) - USD ($) $ in Thousands		1 Months Ended	12 Months Ended
		May 31, 2016	Dec. 31, 2017	Nov. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Equity in joint ventures			$ 31,184		$ 19,924	$ 20,622
Assets acquired and liabilities assumed [Abstract]
Goodwill			67,413		$ 67,231	$ 54,881
General Cable Corporation [Member]
Business Acquisition [Line Items]
Percentage of equity interest acquired		100.00%
Allocation of purchase price to the assets acquired and liabilities assumed [Abstract]
Purchase Price		$ 67,451
Assets acquired and liabilities assumed [Abstract]
Receivables		3,130
Inventory		12,567
Other current and noncurrent assets	[1]	334
Property, plant and equipment, net		2,660
Intangible assets		42,440
Goodwill		12,746
Current liabilities		(6,426)
Net assets acquired		67,451
Cash acquired		200
Incremental net sales from acquisition			$ 38,400
General Cable Corporation [Member] | Customer Relationships [Member]
Assets acquired and liabilities assumed [Abstract]
Intangible assets acquired in business acquisition		$ 39,400
Estimated useful life of intangible assets		15 years
General Cable Corporation [Member] | Non-Compete Agreements [Member]
Assets acquired and liabilities assumed [Abstract]
Intangible assets acquired in business acquisition		$ 2,200
Estimated useful life of intangible assets		5 years
General Cable Corporation [Member] | Supply Agreement [Member]
Assets acquired and liabilities assumed [Abstract]
Intangible assets acquired in business acquisition		$ 800
Estimated useful life of intangible assets		1 year
Foshan Guangdong Automotive Air Conditioning Co., Ltd [Member]
Business Acquisition [Line Items]
Percentage of equity interest acquired				50.00%
Equity in joint ventures				$ 12,500

[1] Other current and noncurrent assets includes $0.2 million of cash acquired.

XML

Restructuring and Integration Expense (Income) (Details) - USD ($) $ in Thousands		12 Months Ended		20 Months Ended	23 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2017
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		$ 2,576	$ 861
Restructuring and integration costs [Abstract]
Amounts provided for during the period		6,173	3,957
Cash payments		(5,681)	(1,546)
Reclassification to ongoing accrued liabilities	[1]		(696)
Foreign currency exchange rate changes and other		(214)
Exit activity liability, end of period		2,854	2,576	$ 2,854	$ 2,854
Plant Rationalization Program [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		2,054	0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		2,405	3,205		5,600
Cash payments		(2,983)	(1,151)
Exit activity liability, end of period		1,476	2,054	1,476	1,476
Restructuring and related cost, Expected cost [Abstract]
Restructuring and integration expenses expected to be incurred		5,800		5,800	5,800
Orlando Plant Rationalization Program [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		1,758
Cash payments		(772)
Exit activity liability, end of period		986	0	986	986
Restructuring and related cost, Expected cost [Abstract]
Restructuring and integration expenses expected to be incurred		2,900		2,900	2,900
Wire and Cable Relocation [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		522	0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		1,759	714	2,500
Cash payments		(1,926)	(192)
Foreign currency exchange rate changes and other		37
Exit activity liability, end of period		392	522	392	392
Restructuring and related cost, Expected cost [Abstract]
Restructuring and integration expenses expected to be incurred		4,100		4,100	4,100
Workforce Reduction [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		2,576	270
Restructuring and integration costs [Abstract]
Amounts provided for during the period		2,220	2,934
Cash payments		(1,979)	(392)
Reclassification to ongoing accrued liabilities	[1]		(236)
Foreign currency exchange rate changes and other		37
Exit activity liability, end of period		2,854	2,576	2,854	2,854
Other Exit Costs [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		0	591
Restructuring and integration costs [Abstract]
Amounts provided for during the period		3,953	1,023
Cash payments		(3,702)	(1,154)
Reclassification to ongoing accrued liabilities	[1]		(460)
Foreign currency exchange rate changes and other		(251)
Exit activity liability, end of period		0	0	0	0
Engine Management [Member] | Plant Rationalization Program [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		11	0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		631	844
Cash payments		(642)	(833)
Exit activity liability, end of period		0	11	0	0
Engine Management [Member] | Orlando Plant Rationalization Program [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		1,758
Cash payments		(772)
Exit activity liability, end of period		986	0	986	986
Engine Management [Member] | Wire and Cable Relocation [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		522	0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		1,759	714
Cash payments		(1,926)	(192)
Foreign currency exchange rate changes and other		37
Exit activity liability, end of period		392	522	392	392
Temperature Control [Member] | Plant Rationalization Program [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		2,043	0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		1,774	2,361
Cash payments		(2,341)	(318)
Exit activity liability, end of period		1,476	2,043	1,476	1,476
Temperature Control [Member] | Orlando Plant Rationalization Program [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		0
Cash payments		0
Exit activity liability, end of period		0	0	0	0
Temperature Control [Member] | Wire and Cable Relocation [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		0	0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		0	0
Cash payments		0	0
Foreign currency exchange rate changes and other		0
Exit activity liability, end of period		0	0	0	0
Other [Member] | Plant Rationalization Program [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		0	0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		0	0
Cash payments		0	0
Exit activity liability, end of period		0	0	0	0
Other [Member] | Orlando Plant Rationalization Program [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		0
Cash payments		0
Exit activity liability, end of period		0	0	0	0
Other [Member] | Wire and Cable Relocation [Member]
Restructuring and integration activities [Roll Forward]
Exit activity liability, beginning of period		0	0
Restructuring and integration costs [Abstract]
Amounts provided for during the period		0	0
Cash payments		0	0
Foreign currency exchange rate changes and other		0
Exit activity liability, end of period		$ 0	$ 0	$ 0	$ 0

[1] Applies to liabilities associated with the prior year restructuring and integration programs which relate primarily to employee severance and other retiree benefit enhancements to be paid through 2020 and environmental clean-up costs at our Long Island City, New York location in connection with the closure of our manufacturing operations at the site. These amounts were reclassified out of the restructuring and integration liability and into ongoing accrued liabilities as of December 31, 2016.

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Sale of Receivables (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Sale of Receivables [Abstract]
Sale of receivables to financial institutions	$ 780.5	$ 759.2
Charge related to sale of receivables	$ 22.6	$ 19.3	$ 14.3

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Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Inventories [Abstract]
Finished goods	$ 209,800	$ 203,700
Work-in-process	7,536	6,823
Raw materials	109,075	101,954
Total inventories	$ 326,411	$ 312,477

XML

Property, Plant and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, plant and equipment [Abstract]
Total property, plant and equipment	$ 280,184	$ 270,050
Less accumulated depreciation	191,081	191,551
Total property, plant and equipment, net	89,103	78,499
Depreciation expense	15,400	12,800	$ 12,100
Land, Buildings and Improvements [Member]
Property, plant and equipment [Abstract]
Total property, plant and equipment	46,930	46,447
Machinery and Equipment [Member]
Property, plant and equipment [Abstract]
Total property, plant and equipment	132,467	128,650
Tools, Dies and Auxiliary Equipment [Member]
Property, plant and equipment [Abstract]
Total property, plant and equipment	45,769	44,683
Furniture and Fixtures [Member]
Property, plant and equipment [Abstract]
Total property, plant and equipment	28,352	27,482
Leasehold Improvements [Member]
Property, plant and equipment [Abstract]
Total property, plant and equipment	10,348	8,369
Construction-in-Progress [Member]
Property, plant and equipment [Abstract]
Total property, plant and equipment	$ 16,318	$ 14,419

XML

Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands		1 Months Ended	12 Months Ended
		May 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Goodwill by operating segment [Abstract]
Goodwill gross, beginning balance			$ 105,719	$ 93,369
Goodwill accumulated impairment losses, Beginning balance			(38,488)	(38,488)
Goodwill net, beginning balance			67,231	54,881
Goodwill foreign currency exchange rate change			182	(396)
Goodwill gross, ending balance			105,901	105,719	$ 93,369
Goodwill accumulated impairment losses, Ending balance			(38,488)	(38,488)	(38,488)
Goodwill net, ending balance			67,413	67,231	54,881
Acquired Indefinite-lived Intangible Assets [Line Items]
Total acquired intangible assets			98,966	98,742
Less accumulated amortization	[1]		(43,853)	(35,830)
Net acquired intangible assets			55,113	62,912
Amortization of acquired intangible assets [Abstract]
Amortization expense			8,000	7,100	4,900
Estimated amortization expense in year 2018			7,600
Estimated amortization expense in year 2019			6,300
Estimated amortization expense in year 2020			5,900
Estimated amortization expense in year 2020			4,600
Estimated amortization expense in years 2022 through 2031			25,500
General Cable Corporation [Member]
Goodwill by operating segment [Abstract]
Goodwill acquired during period				12,746
Goodwill net, ending balance		$ 12,746
Engine Management [Member]
Goodwill by operating segment [Abstract]
Goodwill gross, beginning balance			91,449	79,099
Goodwill accumulated impairment losses, Beginning balance			(38,488)	(38,488)
Goodwill net, beginning balance			52,961	40,611
Goodwill foreign currency exchange rate change			182	(396)
Goodwill gross, ending balance			91,631	91,449	79,099
Goodwill accumulated impairment losses, Ending balance			(38,488)	(38,488)	(38,488)
Goodwill net, ending balance			53,143	52,961	40,611
Engine Management [Member] | General Cable Corporation [Member]
Goodwill by operating segment [Abstract]
Goodwill acquired during period				12,746
Temperature Control [Member]
Goodwill by operating segment [Abstract]
Goodwill gross, beginning balance			14,270	14,270
Goodwill accumulated impairment losses, Beginning balance			0	0
Goodwill net, beginning balance			14,270	14,270
Goodwill foreign currency exchange rate change			0	0
Goodwill gross, ending balance			14,270	14,270	14,270
Goodwill accumulated impairment losses, Ending balance			0	0	0
Goodwill net, ending balance			14,270	14,270	14,270
Temperature Control [Member] | General Cable Corporation [Member]
Goodwill by operating segment [Abstract]
Goodwill acquired during period				0
Customer Relationships [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Total acquired intangible assets			87,290	87,070
Customer Relationships [Member] | General Cable Corporation [Member]
Other Intangible Assets [Abstract]
Estimated useful life of intangible assets		15 years
Trademarks and Trade Names [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Total acquired intangible assets			6,800	6,800
Intangible assets acquired [Abstract]
Amount of acquired indefinite-lived intangible assets			5,200
Non-Compete Agreements [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Total acquired intangible assets			3,193	3,189
Non-Compete Agreements [Member] | General Cable Corporation [Member]
Other Intangible Assets [Abstract]
Estimated useful life of intangible assets		5 years
Patents [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Total acquired intangible assets			723	723
Supply Agreement [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Total acquired intangible assets			800	800
Supply Agreement [Member] | General Cable Corporation [Member]
Other Intangible Assets [Abstract]
Estimated useful life of intangible assets		1 year
Leaseholds [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Total acquired intangible assets			160	160
Computer Software [Member]
Other Intangible Assets [Abstract]
Other intangible assets			17,200	16,700
Accumulated computer software amortization			(16,100)	(15,600)
Amortization of computer software			$ 500	$ 600	$ 600
Computer Software [Member] | Minimum [Member]
Other Intangible Assets [Abstract]
Estimated useful life of intangible assets			3 years
Computer Software [Member] | Maximum [Member]
Other Intangible Assets [Abstract]
Estimated useful life of intangible assets			10 years

[1] Applies to all intangible assets, except for trademarks and trade names totaling $5.2 million, which have indefinite useful lives and, as such, are not being amortized.

XML

Other Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Nov. 30, 2017	Dec. 31, 2015	Apr. 30, 2014	Jan. 31, 2013
Other Assets [Abstract]
Equity in joint ventures	$ 31,184	$ 31,184	$ 19,924		$ 20,622
Deferred compensation	13,612	13,612	10,763
Long term receivables	0	0	1,061
Deferred financing costs, net	630	630	973
Other	853	853	842
Total other assets, net	46,279	46,279	33,563
Schedule of Equity Method Investments [Line Items]
Equity in joint ventures	$ 31,184	31,184	19,924		$ 20,622
Foshan Guangdong Automotive Air Conditioning Co., Ltd [Member]
Other Assets [Abstract]
Equity in joint ventures				$ 12,500
Schedule of Equity Method Investments [Line Items]
Percentage of equity interest acquired				50.00%
Equity in joint ventures				$ 12,500
Gwo Yng Enterprise Co., Ltd. [Member]
Other Assets [Abstract]
Equity in joint ventures						$ 14,000
Schedule of Equity Method Investments [Line Items]
Percentage of equity interest acquired						50.00%
Equity in joint ventures						$ 14,000
Purchases from equity method investment		$ 15,100	15,400
Orange Electronic Co., Ltd [Member]
Other Assets [Abstract]
Equity in joint ventures							$ 6,300
Schedule of Equity Method Investments [Line Items]
Percentage of equity interest acquired	19.40%	19.40%					25.00%
Equity in joint ventures							$ 6,300
Impairment charge	$ 1,800
Purchases from equity method investment		$ 4,300	$ 5,000

XML

Credit Facilities and Long-Term Debt, Total Debt Outstanding (Details) PLN in Thousands, $ in Thousands		Dec. 31, 2017 USD ($)	Dec. 31, 2017 PLN	Dec. 31, 2016 USD ($)
Credit Facilities and Long-Term Debt [Abstract]
Revolving credit facilities		$ 57,000		$ 54,812
Other	[1]	4,778		163
Total debt		61,778		54,975
Current maturities of debt		61,699		54,855
Long-term debt		79		$ 120
Overdraft facility		$ 4,700	PLN 16,200

[1] Other includes borrowings under our Polish overdraft facility of Zloty 16.2 million (approximately $4.7 million).

XML

Credit Facilities and Long-Term Debt, Revolving Credit Facility (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fixed Assets Included in Borrowing Base [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Borrowing base	$ 25,000
Borrowing base percentage	10.00%
Fixed Assets Not Included in Borrowing Base [Member]
Line of Credit Facility [Line Items]
Borrowing base	$ 31,250
Borrowing base percentage	12.50%
JPMorgan Chase Bank Credit Facility [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 250,000
Line of credit facility, additional borrowing capacity	$ 50,000
Maturity date	Oct. 31, 2020
Additional available borrowing capacity	$ 142,900
Weighted average interest rate	2.70%	2.30%
JPMorgan Chase Bank Credit Facility [Member] | LIBOR [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Margin on variable rate	1.25%
JPMorgan Chase Bank Credit Facility [Member] | LIBOR [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Margin on variable rate	1.75%
JPMorgan Chase Bank Credit Facility [Member] | Alternate Base Rate [Member]
Line of Credit Facility [Line Items]
Outstanding borrowings under credit facility		$ 9,800
Weighted average interest rate		4.00%
Average daily loan balance outstanding	$ 3,800	$ 2,600
JPMorgan Chase Bank Credit Facility [Member] | Alternate Base Rate [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Margin on variable rate	0.25%
JPMorgan Chase Bank Credit Facility [Member] | Alternate Base Rate [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Margin on variable rate	0.75%
JPMorgan Chase Bank Credit Facility [Member] | Direct Borrowings [Member]
Line of Credit Facility [Line Items]
Outstanding borrowings under credit facility	$ 57,000	$ 45,000
Weighted average interest rate		2.00%
Line of Credit [Member]
Line of Credit Facility [Line Items]
Coverage ratio	1
Line of Credit [Member] | Pay Cash Dividend [Member]
Line of Credit Facility [Line Items]
Agreement permissions	$ 20,000
Line of Credit [Member] | Stock Repurchase [Member]
Line of Credit Facility [Line Items]
Agreement permissions	20,000
Line of Credit [Member] | Stock Repurchase [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Borrowing base	25,000
Line of Credit [Member] | Cash Dividend And Stock Repurchases [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Agreement permissions	20,000
Line of Credit [Member] | CANADA [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 10,000

XML

Credit Facilities and Long-Term Debt, Polish Overdraft Facility (Details) - 12 months ended Dec. 31, 2017 PLN in Thousands, $ in Thousands	USD ($)	PLN
Line of Credit Facility [Line Items]
Overdraft facility	$ 4,700	PLN 16,200
HSBC Bank Polaska S.A [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 8,200	30,000
Overdraft facility expiration date	Dec. 31, 2018
Overdraft facility	$ 4,700	PLN 16,200
HSBC Bank Polaska S.A [Member] | 1M WIBOR [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.75%

XML

Credit Facilities and Long-Term Debt, Deferred Financing Costs (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Amortization for Future Years [Abstract]
2018	$ 343
2019	343
2020	287
Total amortization	973
Deferred financing costs	$ 1,000	$ 1,300

XML

Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	2 Months Ended	12 Months Ended
	Jan. 31, 2016	Feb. 16, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Nov. 30, 2017	Feb. 28, 2017	Jul. 31, 2015	Feb. 28, 2015
Class of Stock [Line Items]
Stock repurchased during period			$ (24,779)	$ (377)	$ (19,623)
Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)			500,000
Preferred stock, par value (in dollars per share)			$ 20
Preferred stock, shares outstanding (in shares)			0	0
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)			30,000
Preferred stock, voting rights			Each share of the Series A Preferred Stock shall entitle the holder to one thousand votes
Stock Repurchase Program 2015 [Member]
Class of Stock [Line Items]
Stock repurchase program, authorized amount								$ 10,000	$ 10,000
Stock repurchased during period (in shares)	(10,135)				(551,791)
Stock repurchased during period	$ (400)				$ (19,600)
Stock repurchase program, remaining authorized amount					$ 400
Stock Repurchase Program 2017 [Member]
Class of Stock [Line Items]
Stock repurchase program, authorized amount						$ 10,000	$ 20,000
Stock repurchased during period (in shares)			(539,760)
Stock repurchased during period			$ (24,800)
Stock repurchase program, remaining authorized amount			$ 5,200
Stock Repurchase Program 2018 [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Stock repurchased during period (in shares)		(35,756)
Stock repurchased during period		$ (1,700)
Stock repurchase program, remaining authorized amount		$ 3,500

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Changes in accumulated other comprehensive income [Roll Forward]
Balance	$ 441,028	$ 391,979	$ 374,153
Other comprehensive income before reclassifications	7,316	(4,962)
Amounts reclassified from accumulated other comprehensive income	(397)	408
Total other comprehensive income (loss), net of tax	6,919	(4,554)	(3,822)
Balance	453,654	441,028	391,979
Accumulated Other Comprehensive Income (Loss) [Member]
Changes in accumulated other comprehensive income [Roll Forward]
Balance	(11,028)	(6,474)	(2,652)
Total other comprehensive income (loss), net of tax	6,919	(4,554)	(3,822)
Balance	(4,109)	(11,028)	(6,474)
Foreign Currency Translation Adjustments [Member]
Changes in accumulated other comprehensive income [Roll Forward]
Balance	(11,252)	(5,958)
Other comprehensive income before reclassifications	7,027	(5,294)
Amounts reclassified from accumulated other comprehensive income	0	0
Total other comprehensive income (loss), net of tax	7,027	(5,294)
Balance	(4,225)	(11,252)	(5,958)
Unrecognized Postretirement Benefit Costs (Credit) [Member]
Changes in accumulated other comprehensive income [Roll Forward]
Balance	224	(516)
Other comprehensive income before reclassifications	289	332
Amounts reclassified from accumulated other comprehensive income	(397)	408
Total other comprehensive income (loss), net of tax	(108)	740
Balance	$ 116	$ 224	$ (516)

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Accumulated Other Comprehensive Income, Reclassified (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Amortization of postretirement benefit plans [Abstract]
Prior service benefit		$ 0	$ (54)	$ (112)
Unrecognized (gain) loss		(661)	763	2,261
Income tax expense		72	(514)	$ (1,325)
Total reclassifications for the period		(397)	408
Reclassification out of Accumulated Other Comprehensive Income [Member]
Amortization of postretirement benefit plans [Abstract]
Prior service benefit	[1]	0	(54)
Unrecognized (gain) loss	[1]	(661)	763
Total before income tax		(661)	709
Income tax expense		264	(301)
Total reclassifications for the period		$ (397)	$ 408

[1] These accumulated other comprehensive income components are included in the computation of net periodic postretirement benefit costs, which are included in selling, general and administrative expenses in our consolidated statements of operations (see Note 14 for additional information).

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Stock-Based Compensation Plans (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Plan $ / shares shares	Dec. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense | $	$ 7,638	$ 6,127	$ 5,379
Performance-Based Shares [Member]
Restricted and Performance Stock Grants [Abstract]
Measuring period for performance-based shares	3 years
Award vesting rights	Selected executives and other key personnel are granted performance awards whose vesting is contingent upon meeting various performance measures with a retention feature. Performance-based shares are subject to a three year measuring period and the achievement of performance targets and, depending upon the achievement of such performance targets, they may become vested on the third anniversary of the date of grant.
Restricted Shares [Member]
Restricted and Performance Stock Grants [Abstract]
Award vesting rights	Restricted shares granted to employees become fully vested upon the third anniversary of the date of grant; and for selected key executives certain additional restricted share grants vest 25% upon the attainment of age 60, 25% upon the attainment of age 63 and become fully vested upon the attainment of age 65. Restricted shares granted to directors become fully vested upon the first anniversary of the date of grant. Commencing with the 2015 grants, restricted and performance shares issued to certain key executives and directors are subject to a one or two year holding period upon the lapse of the three year vesting period.
Restricted Shares [Member] | Age 60 [Member]
Restricted and Performance Stock Grants [Abstract]
Vesting percentage	25.00%
Restricted Shares [Member] | Age 63 [Member]
Restricted and Performance Stock Grants [Abstract]
Vesting percentage	25.00%
Restricted Shares [Member] | Age 65 [Member]
Restricted and Performance Stock Grants [Abstract]
Vesting percentage	100.00%
Restricted and Performance-Based Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense | $	$ 7,100	5,700	5,000
Stock-based compensation expense, net of tax | $	3,200	3,600	$ 3,200
Unamortized compensation expense | $	$ 16,600	$ 15,600
Restricted and performance-based stock, shares [Roll Forward]
Beginning of period (in shares)	822,848	758,550
Granted (in shares)	207,975	212,500
Vested (in shares)	(169,615)	(138,427)
Forfeited (in shares)	(7,250)	(9,775)
End of period (in shares)	853,958	822,848	758,550
Restricted and performance-based stock, weighted average grant date fair value per share [Roll Forward]
Beginning of period (in dollars per share) | $ / shares	$ 30.46	$ 27.19
Granted (in dollars per share) | $ / shares	42.79	42.93
Vested (in dollars per share) | $ / shares	31.26	31.55
Forfeited (in dollars per share) | $ / shares	37.24	31.79
End of period (in dollars per share) | $ / shares	$ 33.25	$ 30.46	$ 27.19
Weighted-average grant date fair value | $	$ 28,400	$ 25,100	$ 20,600
Restricted and Performance-Based Shares [Member] | Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of recognition for unrecognized compensation expense	4 years 9 months 18 days	5 years 8 months 12 days
Restricted and Performance Stock Grants [Abstract]
Estimated forfeitures	5.00%
Restricted and Performance-Based Shares [Member] | Executives [Member]
Restricted and Performance Stock Grants [Abstract]
Estimated forfeitures	0.00%
Restricted and Performance-Based Shares [Member] | Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of recognition for unrecognized compensation expense	3 months 18 days	3 months 18 days
Restricted and Performance Stock Grants [Abstract]
Estimated forfeitures	0.00%
Restricted and Performance-Based Shares [Member] | Executives and Directors [Member]
Restricted and Performance Stock Grants [Abstract]
Expiration of vesting period	3 years
Restricted and Performance-Based Shares [Member] | Executives and Directors [Member] | Minimum [Member]
Restricted and Performance Stock Grants [Abstract]
Holding period for restricted and performance shares issued	1 year
Post vesting holding period for restricted and performance shares issued	1 year
Restricted and Performance-Based Shares [Member] | Executives and Directors [Member] | Maximum [Member]
Restricted and Performance Stock Grants [Abstract]
Holding period for restricted and performance shares issued	2 years
Post vesting holding period for restricted and performance shares issued	2 years
2016 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based compensation plans | Plan	1
Shares authorized for issuance (in shares)	1,100,000
2016 Omnibus Incentive Plan [Member] | Performance-Based Shares [Member]
Restricted and performance-based stock, shares [Roll Forward]
Granted (in shares)	55,000
2016 Omnibus Incentive Plan [Member] | Restricted Shares [Member]
Restricted and performance-based stock, shares [Roll Forward]
Granted (in shares)	152,975
2016 Omnibus Incentive Plan [Member] | Restricted and Performance-Based Shares [Member]
Restricted and Performance Stock Grants [Abstract]
Restricted and performance-based stock grants issued, net of forfeitures (in shares)	418,000
Common stock available for future grants (in shares)	682,000

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Retirement Benefit Plans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Contribution Plans [Abstract]
U.S defined contribution	$ 9,980	$ 8,625	$ 8,445
Matching Obligations in Connection with Plans Which are Funded in Cash and Typically Contributed to Plans [Abstract]
Employer contributions during the period	600	300	300
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Provision for expense in connection with ESOP	2,200	2,000	2,200
SERP Defined Benefit Plan [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Benefit obligation outstanding	0	0
Net periodic benefit cost	$ 0	$ 0	$ 2,500
Employee Stock Ownership Plan and Trust (ESOP) [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Additional shares contributed to ESOP (in shares)	43,300
Shares released from trust (in shares)	43,300
Total remaining balance of shares in the ESOP (in shares)	200

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Postretirement Medical Benefits (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Employee		Dec. 31, 2016 USD ($)		Dec. 31, 2015 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Number of former union employees not covered under plan | Employee	24
Postretirement Benefits [Member]
Amounts recognized in the balance sheet [Abstract]
Accrued postretirement benefit liabilities	$ 672		$ 1,574
Accumulated other comprehensive (income) loss (pre-tax) related to [Abstract]
Unrecognized net actuarial losses (gains)	(194)		(374)
Unrecognized prior service cost (credit)	0		0
Net Periodic benefit costs related to retirement plans [Abstract]
Net periodic benefit cost (credit)	(653)		722		$ 1,441
Summary of expected future benefit payments [Abstract]
2018	440
2019	42
2020	38
2021	33
2022	29
Years 2023 - 2027	91
Postretirement Benefits [Member] | United States [Member]
Change in benefit obligation [Roll Forward]
Benefit obligation at beginning of year	1,574		2,928
Service cost	0		0		0
Interest cost	8		11		24
Benefits paid	(429)		(831)
Actuarial gain	(481)		(534)
Translation adjustment & Other	0		0
Benefit obligation at end of year	672		1,574		2,928
(Unfunded) status of the plans	(672)		(1,574)
Net Periodic benefit costs related to retirement plans [Abstract]
Service cost	0		0		0
Interest cost	8		11		24
Actuarial net (gain) loss	(661)		809		1,548
Net periodic benefit cost (credit)	$ (653)		$ 820		$ 1,572
Actuarial assumptions used to determine costs and benefit obligations related to postretirement plan [Abstract]
Discount rate	0.00%		0.00%		0.00%
Postretirement Benefits [Member] | CANADA [Member]
Change in benefit obligation [Roll Forward]
Benefit obligation at beginning of year	$ 0		$ 74
Service cost	0		0		$ 0
Interest cost	0		2		3
Benefits paid	0		(17)
Actuarial gain	0		(9)
Translation adjustment & Other	0		(50)
Benefit obligation at end of year	0		0		74
(Unfunded) status of the plans	0		0
Net Periodic benefit costs related to retirement plans [Abstract]
Service cost	0		0		0
Interest cost	0		2		3
Amortization of prior service cost	0		(54)		(112)
Actuarial net (gain) loss	0		(46)		(22)
Net periodic benefit cost (credit)	$ 0		$ (98)		$ (131)
Actuarial assumptions used to determine costs and benefit obligations related to postretirement plan [Abstract]
Discount rate		[1]	3.00%		3.00%
Current medical cost trend rate		[1]		[1]	5.71%
Ultimate medical cost trend rate		[1]		[1]	5.00%
Year trend rate declines to ultimate		[1]		[1]	2017

[1] N/A

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Other Non-Operating Income (Expense), Net (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
		Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Other Non-Operating Income (Expense), Net [Abstract]
Interest and dividend income			$ 91	$ 153	$ 151
Equity income (loss) from joint ventures	[1]		(602)	2,029	976
Gain (loss) on foreign exchange			950	(276)	(719)
Write off of deferred financing costs			0	0	(773)
Other non-operating income, net			158	153	145
Total other non-operating income (expense), net			$ 597	$ 2,059	$ (220)
Orange Electronic Co., Ltd [Member]
Schedule of Equity Method Investments [Line Items]
Impairment charges		$ 1,800

[1] Year ended December 31, 2017 includes a noncash impairment charge of approximately $1.8 million related to our minority interest investment in Orange Electronic Co., Ltd. (See Note 8 for additional information).

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current [Abstract]
Domestic			$ 30,742	$ 33,156	$ 22,943
Foreign			3,139	3,628	4,324
Total current			33,881	36,784	27,267
Deferred [Abstract]
Domestic			18,833	(387)	(1,210)
Foreign			98	(239)	(74)
Total deferred			18,931	(626)	(1,284)
Total income tax provision			52,812	36,158	25,983
Reconciliations Between Taxes at the U.S. Federal Income Tax Rate and Taxes at our Effective Income Tax Rate on Earnings [Abstract]
U.S. Federal income tax rate of 35%			33,755	34,500	25,936
Increase (decrease) in tax rate resulting from [Abstract]
State and local income taxes, net of federal income tax benefit			3,138	2,944	1,857
Income tax (tax benefits) attributable to foreign income			(149)	(887)	(1,705)
Other non-deductible items, net			(1,319)	(464)	(192)
Impact of Tax Cuts and Jobs Act			17,515	0	0
Change in valuation allowance			(128)	65	87
Total income tax provision			$ 52,812	36,158	25,983
U.S. Federal income tax rate			35.00%
Change in tax rate, Deferred tax asset, Existing Income Tax Expense	$ 16,100
Transition tax for accumulated foreign earnings, Provisional income tax expense	1,400
Deferred tax assets [Abstract]
Inventories	11,498		$ 11,498	18,323
Allowance for customer returns	8,678		8,678	15,092
Postretirement benefits	170		170	607
Allowance for doubtful accounts	1,181		1,181	1,589
Accrued salaries and benefits	8,500		8,500	11,482
Capital loss	154		154	234
Tax credit carryforwards	272		272	420
Deferred gain on building sale	55		55	489
Accrued asbestos liabilities	8,886		8,886	12,638
Deferred tax assets, gross	39,394		39,394	60,874
Valuation allowance	(377)		(377)	(505)
Total deferred tax assets	39,017		39,017	60,369
Deferred tax liabilities [Abstract]
Depreciation	5,495		5,495	7,410
Other	1,102		1,102	1,832
Total deferred tax liabilities	6,597		6,597	9,242
Net deferred tax assets	32,420		32,420	51,127
Valuation allowance, remaining amount	400		400
Income Tax Contingency [Abstract]
Recognized uncertain tax positions	0		0	$ 0	$ 0
Plan [Member]
Increase (decrease) in tax rate resulting from [Abstract]
U.S. Federal income tax rate		21.00%
Foreign Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	32,400		$ 32,400
Operating Loss Carryforwards, Expiration Dates			Dec. 31, 2020
Tax credit carryforward	$ 300		$ 300
Foreign Tax Authority [Member] | Minimum [Member]
Income Tax Contingency [Abstract]
Period for statutes of limitations			2 years
Foreign Tax Authority [Member] | Maximum [Member]
Income Tax Contingency [Abstract]
Period for statutes of limitations			6 years
Canada Tax Authority [Member]
Income Tax Contingency [Abstract]
Open Tax Years			2013
Hong Kong Tax Authority [Member]
Income Tax Contingency [Abstract]
Open Tax Years			2012
Mexican Tax Authority [Member]
Income Tax Contingency [Abstract]
Open Tax Years			2013
Poland Tax Authority [Member]
Income Tax Contingency [Abstract]
Open Tax Years			2012

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Industry Segment and Geographic Data (Details) $ in Thousands		3 Months Ended								12 Months Ended
		Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2017 USD ($) Customer Segment		Dec. 31, 2016 USD ($)		Dec. 31, 2015 USD ($)
Segment Reporting Information [Line Items]
Number of reportable operating segments | Segment										2
Financial information for reportable segment [Abstract]
Net sales		$ 239,978	$ 281,058	$ 312,729	$ 282,378	$ 229,799	$ 300,795	$ 288,977	$ 238,911	$ 1,116,143	[1]	$ 1,058,482	[1]	$ 971,975	[1]
Depreciation and amortization										23,916		20,457		17,637
Operating income (loss)										98,174		98,067		75,860
Investment in equity affiliates		31,184				19,924				31,184		19,924		20,622
Capital expenditures										24,442		20,921		18,047
Total assets		787,567				768,697				787,567		768,697		681,064
Reconciliation of segment operating income to net earnings [Abstract]
Operating income										98,174		98,067		75,860
Other non-operating income (expense)										597		2,059		(220)
Interest expense										2,329		1,556		1,537
Earnings from continuing operations before taxes										96,442		98,570		74,103
Income tax expense										52,812		36,158		25,983
Earnings from continuing operations		(8,106)	17,108	18,261	16,367	8,839	21,055	19,862	12,656	43,630		62,412		48,120
Discontinued operations, net of tax		(541)	(3,983)	(497)	(633)	(487)	(425)	(618)	(452)	(5,654)		(1,982)		(2,102)
Net earnings		(8,647)	13,125	17,764	15,734	8,352	20,630	19,244	12,204	37,976		60,430		46,018
Revenues [Abstract]
Revenues		239,978	$ 281,058	$ 312,729	$ 282,378	229,799	$ 300,795	$ 288,977	$ 238,911	1,116,143	[1]	1,058,482	[1]	971,975	[1]
Long-lived assets [Abstract]
Long-lived assets		259,056				243,349				$ 259,056		$ 243,349		$ 190,586
Customer Concentration Risk [Member]
Long-lived assets [Abstract]
Number of largest individual customers | Customer										5
Net Sales [Member] | Customer Concentration Risk [Member]
Long-lived assets [Abstract]
Concentration risk, percentage										70.00%		70.00%		68.00%
Net Sales [Member] | Customer Concentration Risk [Member] | O' Reilly Automotive, Inc. [Member]
Long-lived assets [Abstract]
Concentration risk, percentage										21.00%
Net Sales [Member] | Customer Concentration Risk [Member] | Advance Auto Parts, Inc. [Member]
Long-lived assets [Abstract]
Concentration risk, percentage										17.00%
Net Sales [Member] | Customer Concentration Risk [Member] | NAPA Auto Parts [Member]
Long-lived assets [Abstract]
Concentration risk, percentage										16.00%
Net Sales [Member] | Customer Concentration Risk [Member] | AutoZone, Inc [Member]
Long-lived assets [Abstract]
Concentration risk, percentage										10.00%
United States [Member]
Financial information for reportable segment [Abstract]
Net sales										$ 996,433		$ 952,019		$ 881,206
Revenues [Abstract]
Revenues										996,433		952,019		881,206
Long-lived assets [Abstract]
Long-lived assets		202,875				204,592				202,875		204,592		155,438
Canada [Member]
Financial information for reportable segment [Abstract]
Net sales										56,575		53,324		48,072
Revenues [Abstract]
Revenues										56,575		53,324		48,072
Long-lived assets [Abstract]
Long-lived assets		2,017				1,344				2,017		1,344		1,190
Mexico [Member]
Financial information for reportable segment [Abstract]
Net sales										24,521		24,429		14,707
Revenues [Abstract]
Revenues										24,521		24,429		14,707
Long-lived assets [Abstract]
Long-lived assets		4,449				3,877				4,449		3,877		1,012
Europe [Member]
Financial information for reportable segment [Abstract]
Net sales										14,088		14,703		16,305
Revenues [Abstract]
Revenues										14,088		14,703		16,305
Long-lived assets [Abstract]
Long-lived assets		18,530				13,612				18,530		13,612		12,324
Other Foreign [Member]
Financial information for reportable segment [Abstract]
Net sales										24,526		14,007		11,685
Revenues [Abstract]
Revenues										24,526		14,007		11,685
Long-lived assets [Abstract]
Long-lived assets		31,185				19,924				31,185		19,924		20,622
Intersegment Eliminations [Member]
Financial information for reportable segment [Abstract]
Net sales										0		0		0
Revenues [Abstract]
Revenues										0		0		0
Engine Management [Member] | Reportable Segments [Member]
Financial information for reportable segment [Abstract]
Net sales	[1]									829,413		765,539		698,021
Depreciation and amortization										17,981		15,008		12,256
Operating income (loss)										97,403		101,529		88,007
Investment in equity affiliates		4,162				6,221				4,162		6,221		6,430
Capital expenditures										17,750		14,202		13,038
Total assets		527,200				506,625				527,200		506,625		413,102
Reconciliation of segment operating income to net earnings [Abstract]
Operating income										97,403		101,529		88,007
Revenues [Abstract]
Revenues	[1]									829,413		765,539		698,021
Engine Management [Member] | Intersegment Eliminations [Member]
Financial information for reportable segment [Abstract]
Net sales										24,995		22,268		20,178
Revenues [Abstract]
Revenues										24,995		22,268		20,178
Engine Management [Member] | Ignition, Emission and Fuel System Parts [Member] | Reportable Segments [Member]
Financial information for reportable segment [Abstract]
Net sales	[1]									657,287		616,523		598,161
Revenues [Abstract]
Revenues	[1]									657,287		616,523		598,161
Engine Management [Member] | Wire and Cable [Member] | Reportable Segments [Member]
Financial information for reportable segment [Abstract]
Net sales	[1]									172,126		149,016		99,860
Revenues [Abstract]
Revenues	[1]									172,126		149,016		99,860
Temperature Control [Member] | Reportable Segments [Member]
Financial information for reportable segment [Abstract]
Net sales	[1]									279,127		283,740		264,478
Depreciation and amortization										4,373		4,287		4,329
Operating income (loss)										19,609		17,563		6,382
Investment in equity affiliates		27,022				13,703				27,022		13,703		14,192
Capital expenditures										5,151		3,652		3,027
Total assets		177,006				171,136				177,006		171,136		177,201
Reconciliation of segment operating income to net earnings [Abstract]
Operating income										19,609		17,563		6,382
Revenues [Abstract]
Revenues	[1]									279,127		283,740		264,478
Temperature Control [Member] | Intersegment Eliminations [Member]
Financial information for reportable segment [Abstract]
Net sales										7,334		7,293		6,542
Revenues [Abstract]
Revenues										7,334		7,293		6,542
Temperature Control [Member] | Compressors [Member] | Reportable Segments [Member]
Financial information for reportable segment [Abstract]
Net sales	[1]									148,377		148,623		127,861
Revenues [Abstract]
Revenues	[1]									148,377		148,623		127,861
Temperature Control [Member] | Other Climate Control Parts [Member] | Reportable Segments [Member]
Financial information for reportable segment [Abstract]
Net sales	[1]									130,750		135,117		136,617
Revenues [Abstract]
Revenues	[1]									130,750		135,117		136,617
Other [Member]
Financial information for reportable segment [Abstract]
Net sales	[1]									7,603		9,203		9,476
Depreciation and amortization										1,562		1,162		1,052
Operating income (loss)										(18,838)		(21,025)		(18,529)
Investment in equity affiliates		0				0				0		0		0
Capital expenditures										1,541		3,067		1,982
Total assets		$ 83,361				$ 90,936				83,361		90,936		90,761
Reconciliation of segment operating income to net earnings [Abstract]
Operating income										(18,838)		(21,025)		(18,529)
Revenues [Abstract]
Revenues	[1]									7,603		9,203		9,476
Other [Member] | Intersegment Eliminations [Member]
Financial information for reportable segment [Abstract]
Net sales										(32,329)		(29,561)		(26,720)
Revenues [Abstract]
Revenues										$ (32,329)		$ (29,561)		$ (26,720)

[1] Segment and product line net sales include intersegment sales in our Engine Management and Temperature Control segments.

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Commitments and Contingencies (Details) $ in Thousands	12 Months Ended			196 Months Ended
	Dec. 31, 2017 USD ($) Officer Claim	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2017 USD ($) Claim
Loss Contingencies [Line Items]
Total rent expense	$ 11,954	$ 10,171	$ 9,756
Future minimum rental payments under operating leases [Abstract]
2018	9,485			$ 9,485
2019	8,078			8,078
2020	6,990			6,990
2021	6,355			6,355
2022	5,364			5,364
Thereafter	3,932			3,932
Total	40,204			40,204
Warranty expense	94,400	99,100	94,600
Changes in product warranties [Roll forward]
Balance, beginning of period	24,072	23,395
Liabilities accrued for current year sales	94,367	99,092
Settlements of warranty claims	(97,510)	(98,415)
Balance, end of period	$ 20,929	24,072	23,395	20,929
Number of key officers | Officer	1
Financial Standby Letter of Credit [Member]
Changes in product warranties [Roll forward]
Outstanding letters of credit with certain vendors	$ 5,300			$ 5,300
Real Estate [Member]
Loss Contingencies [Line Items]
Total rent expense	8,983	7,550	7,218
Other [Member]
Loss Contingencies [Line Items]
Total rent expense	$ 2,971	$ 2,621	$ 2,538
Asbestos [Member]
Changes in product warranties [Roll forward]
Pending claims, approximate number | Claim	1,530			1,530
Payment for settled claims				$ 23,800
Increase for low end of range	$ 4,200
Increase for high end of range	6,300
Asbestos [Member] | Minimum [Member]
Changes in product warranties [Roll forward]
Range of possible loss	35,200			35,200
Asbestos [Member] | Maximum [Member]
Changes in product warranties [Roll forward]
Range of possible loss	54,000			54,000
Asbestos [Member] | Discontinued Operations [Member]
Changes in product warranties [Roll forward]
Incremental pre-tax provision	6,000
Asbestos [Member] | Discontinued Operations [Member] | Minimum [Member]
Changes in product warranties [Roll forward]
Range of possible loss	44,300			44,300
Asbestos [Member] | Discontinued Operations [Member] | Maximum [Member]
Changes in product warranties [Roll forward]
Range of possible loss	$ 79,600			$ 79,600

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Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017		Dec. 31, 2016		Dec. 31, 2015
Selected quarterly financial information [Abstract]
Net sales	$ 239,978	$ 281,058	$ 312,729	$ 282,378	$ 229,799	$ 300,795	$ 288,977	$ 238,911	$ 1,116,143	[1]	$ 1,058,482	[1]	$ 971,975	[1]
Gross profit	69,345	82,535	90,666	84,110	66,771	95,644	87,076	72,996	326,656		322,487		280,988
Earnings (loss) from continuing operations	(8,106)	17,108	18,261	16,367	8,839	21,055	19,862	12,656	43,630		62,412		48,120
Loss from discontinued operations, net of taxes	(541)	(3,983)	(497)	(633)	(487)	(425)	(618)	(452)	(5,654)		(1,982)		(2,102)
Net earnings	$ (8,647)	$ 13,125	$ 17,764	$ 15,734	$ 8,352	$ 20,630	$ 19,244	$ 12,204	$ 37,976		$ 60,430		$ 46,018
Net earnings (loss) from continuing operations per common share [Abstract]
Basic (in dollars per share)	$ (0.36)	$ 0.75	$ 0.80	$ 0.72	$ 0.39	$ 0.93	$ 0.87	$ 0.56	$ 1.92		$ 2.75		$ 2.11
Diluted (in dollars per share)	(0.36)	0.74	0.78	0.70	0.38	0.91	0.86	0.55	1.88		2.70		2.08
Net earnings (loss) per common share [Abstract]
Basic (in dollars per share)	(0.38)	0.58	0.78	0.69	0.37	0.91	0.85	0.54	1.67		2.66		2.02
Diluted (in dollars per share)	$ (0.38)	$ 0.57	$ 0.76	$ 0.67	$ 0.36	$ 0.89	$ 0.84	$ 0.53	$ 1.64		$ 2.62		$ 1.99

[1] Segment and product line net sales include intersegment sales in our Engine Management and Temperature Control segments.

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Schedule II Valuation and Qualifying Accounts (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Valuation and Qualifying Accounts [Roll Forward]
Balance at beginning of year	$ 4,425,000	$ 4,246,000	$ 6,369,000
Charged to costs and expenses	11,634,000	10,988,000	13,243,000
Other	0	0	0
Deductions	11,092,000	10,809,000	15,366,000
Balance at end of year	4,967,000	4,425,000	4,246,000
Allowance for doubtful accounts receivable, pre-tax charge		3,514,000
Allowance for Doubtful Accounts [Member]
Valuation and Qualifying Accounts [Roll Forward]
Balance at beginning of year	3,353,000	3,201,000	4,894,000
Charged to costs and expenses	970,000	949,000	3,371,000	[1]
Other	0	0	0
Deductions	499,000	797,000	5,064,000
Balance at end of year	3,824,000	3,353,000	3,201,000
Allowance for Discounts [Member]
Valuation and Qualifying Accounts [Roll Forward]
Balance at beginning of year	1,072,000	1,045,000	1,475,000
Charged to costs and expenses	10,664,000	10,039,000	9,872,000
Other	0	0	0
Deductions	10,593,000	10,012,000	10,302,000
Balance at end of year	1,143,000	1,072,000	1,045,000
Allowance for Sales Returns [Member]
Valuation and Qualifying Accounts [Roll Forward]
Balance at beginning of year	40,176,000	38,812,000	30,621,000
Charged to costs and expenses	137,416,000	138,407,000	133,355,000
Other	0	0	0
Deductions	141,676,000	137,043,000	125,164,000
Balance at end of year	$ 35,916,000	$ 40,176,000	$ 38,812,000

[1] Includes a net $3,514,000 charge relating to one of our customers that filed a petition for bankruptcy in January 2016.