☑ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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
|
Large Accelerated Filer ☑
|
Accelerated Filer ☐
|
Non-Accelerated Filer ☐
|
Smaller reporting company ☐
|
Emerging growth company ☐
|
PART I.
|
Page No.
|
|
Item 1.
|
3
|
|
Item 1A.
|
12
|
|
Item 1B.
|
19
|
|
Item 2.
|
20
|
|
Item 3.
|
21
|
|
Item 4.
|
21
|
|
PART II.
|
||
Item 5.
|
21
|
|
|
||
Item 6.
|
24
|
|
Item 7.
|
26
|
|
Item 7A.
|
44
|
|
Item 8.
|
45
|
|
Item 9.
|
92
|
|
|
||
Item 9A.
|
92
|
|
Item 9B.
|
93
|
|
PART III.
|
||
Item 10.
|
93
|
|
Item 11.
|
93
|
|
Item 12.
|
93 | |
|
||
Item 13.
|
93
|
|
Item 14.
|
93
|
|
PART IV.
|
||
Item 15.
|
94
|
|
98
|
· |
the number of vehicles on the road;
|
· |
the average age of vehicles on the road; and
|
· |
the total number of miles driven per year.
|
· |
Maintain Our Strong Competitive Position in our 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 and Temperature 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.
|
· |
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 and Product Availability. 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 and offering a product portfolio that provides comprehensive coverage for all vehicle
applications. In addition, our marketing support provides insightful customer category management, technical support and award-winning programs, and our technically skilled sales personnel provide our customers with product
selection, assortment and application support, and technical training on diagnosing and repairing vehicles equipped with complex systems related to our products.
|
· |
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 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)
leveraging our manufacturing capabilities to secure additional business globally with original equipment vehicle and equipment manufacturers and their service part operations, as well as our existing customer base of large retailers,
program distribution groups, warehouse distributors, 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.
|
· |
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, expand our product lines by investing in new tooling and equipment, grow revenues through potential acquisitions
and repurchase shares of our common stock.
|
Engine
Management
Products
|
|
Temperature
Control
Products
|
Engine
Management
|
· |
Automotive aftermarket retailers, such as O’Reilly
Automotive, Inc. (“O’Reilly”), Advance Auto Parts, Inc. (operating under the trade names Advance Auto Parts, Autopart International, Carquest and Worldpac) (“Advance”), AutoZone, Inc. (“AutoZone”), and Canadian Tire Corporation,
Limited.
|
· |
Automotive aftermarket distributors, including warehouse
distributors and program distribution groups, such as Genuine Parts Co. and National Automotive Parts Association (“NAPA”), 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, and Icahn Automotive Group
LLC (doing business as Pep Boys, Auto Plus, AAMCO and Precision Tune Auto Care).
|
· |
Original equipment
manufacturers and original equipment service part operations, such as General Motors Co., FCA US LLC (formerly known as Chrysler Group LLC), Ford Motor Co., Woodward, Inc. and Red Dot Corporation.
|
· |
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, sales support and technical training.
|
· |
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.
|
· |
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.
|
· |
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.
|
Location
|
State or
Country
|
Principal Business Activity
|
Approx.
Square
Feet
|
Owned or
Expiration
Date
of Lease
|
||||
Engine Management
|
||||||||
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
|
||||
Reynosa
|
Mexico
|
Manufacturing
|
175,000
|
2025
|
||||
Reynosa
|
Mexico
|
Manufacturing
|
153,000
|
2023
|
||||
Bialystok
|
Poland
|
Manufacturing
|
108,400
|
2022
|
||||
Temperature Control
|
||||||||
Lewisville
|
TX
|
Administration and Distribution
|
415,000
|
2024
|
||||
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
|
82,400
|
2023
|
||||
Irving
|
TX
|
Training Center
|
13,400
|
2021
|
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, 2018
|
118,509
|
$
|
45.30
|
118,509
|
$
|
10,738,270
|
||||||||||
November 1-30, 2018
|
—
|
—
|
—
|
10,738,270
|
||||||||||||
December 1-31, 2018
|
—
|
—
|
—
|
10,738,270
|
||||||||||||
Total
|
118,509
|
$
|
45.30
|
118,509
|
$
|
10,738,270
|
(1) |
All shares were purchased through the publicly announced stock repurchase programs in open market transactions.
|
(2) |
During 2017, our Board of Directors authorized the purchase of up to $30 million of our common stock under stock repurchase programs. Under these programs, during the
years ended December 31, 2017 and December 31, 2018, we repurchased 539,760 and 112,307 shares of our common stock, respectively, at a total cost of $24.8 million and $5.2 million, respectively, thereby completing the 2017 Board of
Directors’ authorizations.
|
SMP
|
S&P 500
|
S&P 1500 Auto
Parts &
Equipment
Index
|
||||||||||
2013
|
100
|
100
|
100
|
|||||||||
2014
|
105
|
114
|
104
|
|||||||||
2015
|
106
|
115
|
97
|
|||||||||
2016
|
152
|
129
|
102
|
|||||||||
2017
|
130
|
157
|
134
|
|||||||||
2018
|
143
|
150
|
92
|
Year Ended
December 31,
|
||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Net sales
|
$
|
1,092,051
|
$
|
1,116,143
|
$
|
1,058,482
|
$
|
971,975
|
$
|
980,392
|
||||||||||
Gross profit
|
312,787
|
326,656
|
322,487
|
280,988
|
289,630
|
|||||||||||||||
Litigation charge (1)
|
—
|
—
|
—
|
—
|
10,650
|
|||||||||||||||
Operating income (2)
|
81,268
|
97,521
|
98,789
|
79,764
|
85,062
|
|||||||||||||||
Earnings from continuing operations (3)
|
56,854
|
43,630
|
62,412
|
48,120
|
52,899
|
|||||||||||||||
Loss from discontinued operations, net of income tax benefit
|
(13,851
|
)
|
(5,654
|
)
|
(1,982
|
)
|
(2,102
|
)
|
(9,870
|
)
|
||||||||||
Net earnings (3) (4)
|
43,003
|
37,976
|
60,430
|
46,018
|
43,029
|
|||||||||||||||
Per Share Data:
|
||||||||||||||||||||
Earnings from continuing operations (3):
|
||||||||||||||||||||
Basic
|
$
|
2.53
|
$
|
1.92
|
$
|
2.75
|
$
|
2.11
|
$
|
2.31
|
||||||||||
Diluted
|
2.48
|
1.88
|
2.70
|
2.08
|
2.28
|
|||||||||||||||
Earnings per common share (3) (4):
|
||||||||||||||||||||
Basic
|
1.91
|
1.67
|
2.66
|
2.02
|
1.88
|
|||||||||||||||
Diluted
|
1.88
|
1.64
|
2.62
|
1.99
|
1.85
|
|||||||||||||||
Cash dividends per common share
|
0.84
|
0.76
|
0.68
|
0.60
|
0.52
|
|||||||||||||||
Other Data:
|
||||||||||||||||||||
Depreciation and amortization
|
$
|
24,104
|
$
|
23,916
|
$
|
20,457
|
$
|
17,637
|
$
|
17,295
|
||||||||||
Capital expenditures
|
20,141
|
24,442
|
20,921
|
18,047
|
13,904
|
|||||||||||||||
Dividends
|
18,854
|
17,287
|
15,447
|
13,697
|
11,905
|
|||||||||||||||
Cash Flows Provided By (Used In):
|
||||||||||||||||||||
Operating activities
|
$
|
70,258
|
$
|
64,617
|
$
|
97,805
|
$
|
65,171
|
$
|
46,987
|
||||||||||
Investing activities
|
(29,886
|
)
|
(31,228
|
)
|
(88,018
|
)
|
(18,011
|
)
|
(51,200
|
)
|
||||||||||
Financing activities
|
(46,121
|
)
|
(35,944
|
)
|
(7,756
|
)
|
(41,155
|
)
|
15,316
|
|||||||||||
Balance Sheet Data (at period end):
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
11,138
|
$
|
17,323
|
$
|
19,796
|
$
|
18,800
|
$
|
13,728
|
||||||||||
Working capital
|
233,638
|
210,194
|
190,380
|
195,198
|
178,670
|
|||||||||||||||
Total assets
|
843,132
|
787,567
|
768,697
|
681,064
|
673,551
|
|||||||||||||||
Total debt
|
49,219
|
61,778
|
54,975
|
47,505
|
56,816
|
|||||||||||||||
Long‑term debt (excluding current portion)
|
153
|
79
|
120
|
62
|
83
|
|||||||||||||||
Stockholders’ equity
|
467,201
|
453,654
|
441,028
|
391,979
|
374,153
|
(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) |
On January 1, 2018, we adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Pursuant to the adoption, net
periodic benefit cost (credit) for the years ended December 31, 2017, 2016, 2015 and 2014 has been reclassified from selling, general and administrative expenses to other non-operating income (expense), net. See Note 1, “Summary of
Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Item 8 of this Report for additional information.
|
(3) |
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.
|
(4) |
We recorded an after tax charge of $13.9 million, $5.7 million, $2 million, $2.1 million, and $9.9 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, 2018, 2017, 2016, 2015 and 2014, respectively. Such costs were
also separately disclosed in the operating activity section of the consolidated statements of cash flows for those same years.
|
· |
Maintain Our Strong Competitive Position in our 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 and Temperature 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.
|
· |
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 and Product Availability. 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 and offering a product portfolio that provides comprehensive coverage for all vehicle
applications. In addition, our marketing support provides insightful customer category management, technical support and award-winning programs, and our technically skilled sales personnel provide our customers with product
selection, assortment and application support, and technical training on diagnosing and repairing vehicles equipped with complex systems related to our products.
|
· |
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 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)
leveraging our manufacturing capabilities to secure additional business globally with original equipment vehicle and equipment manufacturers and their service part operations, as well as our existing customer base of large retailers,
program distribution groups, warehouse distributors, 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.
|
· |
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, expand our product lines by investing in new tooling and equipment, grow revenues through potential acquisitions
and repurchase shares of our common stock.
|
· |
the number of vehicles on the road;
|
· |
the average age of vehicles on the road; and
|
· |
the total number of miles driven per year.
|
Year Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Engine Management:
|
||||||||
Ignition, Emission Control, Fuel & Safety Related System Products
|
$
|
648,270
|
$
|
657,287
|
||||
Wire and Cable
|
155,217
|
172,126
|
||||||
Total
Engine Management
|
803,487
|
829,413
|
||||||
Temperature Control:
|
||||||||
Compressors
|
148,416
|
148,377
|
||||||
Other Climate Control Parts
|
130,040
|
130,750
|
||||||
Total Temperature Control
|
278,456
|
279,127
|
||||||
All Other
|
10,108
|
7,603
|
||||||
Total
|
$
|
1,092,051
|
$
|
1,116,143
|
Year Ended
December 31,
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
||||||||||||
2018
|
||||||||||||||||
Net sales (a)
|
$
|
803,487
|
$
|
278,456
|
$
|
10,108
|
$
|
1,092,051
|
||||||||
Gross margins
|
229,949
|
70,561
|
12,277
|
312,787
|
||||||||||||
Gross margin percentage
|
28.6
|
%
|
25.3
|
%
|
—
|
%
|
28.6
|
%
|
||||||||
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
|
%
|
(a) |
Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.
|
Year Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Engine Management:
|
||||||||
Ignition, Emission Control, Fuel & Safety Related System Products
|
$
|
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
|
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.
|
(In thousands)
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024-
2028
|
Total
|
|||||||||||||||||||||
Lease obligations
|
$
|
8,483
|
$
|
7,382
|
$
|
6,753
|
$
|
5,763
|
$
|
5,278
|
$
|
10,590
|
$
|
44,249
|
||||||||||||||
Postretirement
|
39
|
36
|
32
|
29
|
25
|
76
|
237
|
|||||||||||||||||||||
Severance payments related to restructuring and integration
|
420
|
233
|
82
|
7
|
—
|
—
|
742
|
|||||||||||||||||||||
Total commitments
|
$
|
8,942
|
$
|
7,651
|
$
|
6,867
|
$
|
5,799
|
$
|
5,303
|
$
|
10,666
|
$
|
45,228
|
(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, 2018, amounts outstanding under our revolving credit facilities were $43.7 million.
|
(b) |
We anticipate total aggregate future severance payments of approximately $0.7 million related to the plant rationalization program and the Orlando plant rationalization
program. All programs are substantially completed as of December 31, 2018.
|
(c) |
Effective January 1, 2019, upon the adoption of ASU 2016-02, Leases, lease
obligations will be recorded as a liability on our consolidated balance sheet.
|
Page No.
|
|
Management’s Report on Internal Control over Financial Reporting
|
46
|
Report of Independent Registered Public Accounting Firm—Internal Control Over Financial Reporting
|
47
|
Report of Independent Registered Public Accounting Firm—Consolidated Financial Statements
|
49
|
Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016
|
50
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016
|
51
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
52
|
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
|
53
|
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2018,
2017 and 2016
|
54
|
Notes to Consolidated Financial Statements
|
55
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
(Dollars in thousands,
except share and per share data)
|
||||||||||||
Net sales
|
$
|
1,092,051
|
$
|
1,116,143
|
$
|
1,058,482
|
||||||
Cost of sales
|
779,264
|
789,487
|
735,995
|
|||||||||
Gross profit
|
312,787
|
326,656
|
322,487
|
|||||||||
Selling, general and administrative expenses
|
231,336
|
224,237
|
220,936
|
|||||||||
Restructuring and integration expenses
|
4,510
|
6,173
|
3,957
|
|||||||||
Other income, net
|
4,327
|
1,275
|
1,195
|
|||||||||
Operating income
|
81,268
|
97,521
|
98,789
|
|||||||||
Other non-operating income (expense), net
|
(411
|
)
|
1,250
|
1,337
|
||||||||
Interest expense
|
4,026
|
2,329
|
1,556
|
|||||||||
Earnings from continuing operations before taxes
|
76,831
|
96,442
|
98,570
|
|||||||||
Provision for income taxes
|
19,977
|
52,812
|
36,158
|
|||||||||
Earnings from continuing operations
|
56,854
|
43,630
|
62,412
|
|||||||||
Loss from discontinued operations, net of income tax benefit of $4,866, $3,769 and $1,322
|
(13,851
|
)
|
(5,654
|
)
|
(1,982
|
)
|
||||||
Net earnings
|
$
|
43,003
|
$
|
37,976
|
$
|
60,430
|
||||||
Net earnings per common share – Basic:
|
||||||||||||
Earnings from continuing operations
|
$
|
2.53
|
$
|
1.92
|
$
|
2.75
|
||||||
Discontinued operations
|
(0.62
|
)
|
(0.25
|
)
|
(0.09
|
)
|
||||||
Net earnings per common share – Basic
|
$
|
1.91
|
$
|
1.67
|
$
|
2.66
|
||||||
Net earnings per common share – Diluted:
|
||||||||||||
Earnings from continuing operations
|
$
|
2.48
|
$
|
1.88
|
$
|
2.70
|
||||||
Discontinued operations
|
(0.60
|
)
|
(0.24
|
)
|
(0.08
|
)
|
||||||
Net earnings per common share – Diluted
|
$
|
1.88
|
$
|
1.64
|
$
|
2.62
|
||||||
Dividends declared per share
|
$
|
0.84
|
$
|
0.76
|
$
|
0.68
|
||||||
Average number of common shares
|
22,456,480
|
22,726,491
|
22,722,517
|
|||||||||
Average number of common shares and dilutive common shares
|
22,931,723
|
23,198,392
|
23,082,578
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
(In thousands)
|
||||||||||||
Net earnings
|
$
|
43,003
|
$
|
37,976
|
$
|
60,430
|
||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Foreign currency translation adjustments
|
(5,473
|
)
|
7,027
|
(5,294
|
)
|
|||||||
Pension and postretirement plans:
|
||||||||||||
Amortization of:
|
||||||||||||
Prior service benefit
|
—
|
—
|
(54
|
)
|
||||||||
Unrecognized (gain) loss
|
(268
|
)
|
(661
|
)
|
763
|
|||||||
Unrecognized actuarial gains
|
247
|
481
|
542
|
|||||||||
Foreign currency exchange rate changes
|
—
|
—
|
3
|
|||||||||
Income tax related to pension and postretirement plans
|
9
|
72
|
(514
|
)
|
||||||||
Pension and postretirement plans, net of tax
|
(12
|
)
|
(108
|
)
|
740
|
|||||||
Total other comprehensive income (loss), net of tax
|
(5,485
|
)
|
6,919
|
(4,554
|
)
|
|||||||
Comprehensive income
|
$
|
37,518
|
$
|
44,895
|
$
|
55,876
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
(Dollars in thousands,
except share data)
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
11,138
|
$
|
17,323
|
||||
Accounts receivable, less allowances for discounts and doubtful accounts of $5,687 and $4,967 in
2018 and 2017, respectively
|
157,535
|
140,057
|
||||||
Inventories
|
349,811
|
326,411
|
||||||
Unreturned customer inventories
|
20,484
|
—
|
||||||
Prepaid expenses and other current assets
|
7,256
|
12,300
|
||||||
Total current assets
|
546,224
|
496,091
|
||||||
Property, plant and equipment, net
|
90,754
|
89,103
|
||||||
Goodwill
|
67,321
|
67,413
|
||||||
Other intangibles, net
|
48,411
|
56,261
|
||||||
Deferred incomes taxes
|
42,334
|
32,420
|
||||||
Investments in unconsolidated affiliates
|
32,469
|
31,184
|
||||||
Other assets
|
15,619
|
15,095
|
||||||
Total assets
|
$
|
843,132
|
$
|
787,567
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Notes payable
|
$
|
43,689
|
$
|
57,000
|
||||
Current portion of other debt
|
5,377
|
4,699
|
||||||
Accounts payable
|
94,357
|
77,990
|
||||||
Sundry payables and accrued expenses
|
31,033
|
40,012
|
||||||
Accrued customer returns
|
57,433
|
35,916
|
||||||
Accrued core liability
|
31,263
|
11,899
|
||||||
Accrued rebates
|
28,870
|
35,346
|
||||||
Payroll and commissions
|
20,564
|
23,035
|
||||||
Total current liabilities
|
312,586
|
285,897
|
||||||
Long-term debt
|
153
|
79
|
||||||
Other accrued liabilities
|
18,075
|
14,561
|
||||||
Accrued asbestos liabilities
|
45,117
|
33,376
|
||||||
Total liabilities
|
375,931
|
333,913
|
||||||
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
|
102,470
|
100,057
|
||||||
Retained earnings
|
380,113
|
357,153
|
||||||
Accumulated other comprehensive income
|
(9,594
|
)
|
(4,109
|
)
|
||||
Treasury stock - at cost (1,503,284 shares and 1,424,025 shares in 2018 and 2017,
respectively)
|
(53,660
|
)
|
(47,319
|
)
|
||||
Total stockholders’ equity
|
467,201
|
453,654
|
||||||
Total liabilities and stockholders’ equity
|
$
|
843,132
|
$
|
787,567
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
(In thousands)
|
||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net earnings
|
$
|
43,003
|
$
|
37,976
|
$
|
60,430
|
||||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
24,104
|
23,916
|
20,457
|
|||||||||
Amortization of deferred financing cost
|
333
|
343
|
346
|
|||||||||
Increase to allowance for doubtful accounts
|
330
|
972
|
210
|
|||||||||
Increase to inventory reserves
|
3,978
|
3,300
|
5,371
|
|||||||||
Amortization of deferred gain on sale of buildings
|
(218
|
)
|
(1,048
|
)
|
(1,048
|
)
|
||||||
Gain on sale of property, plant and equipment
|
(3,997
|
)
|
(15
|
)
|
(7
|
)
|
||||||
Equity (income) loss from joint ventures
|
768
|
602
|
(2,029
|
)
|
||||||||
Employee Stock Ownership Plan allocation
|
2,557
|
2,159
|
2,021
|
|||||||||
Stock-based compensation
|
7,998
|
7,638
|
6,127
|
|||||||||
Excess tax benefits related to exercise of employee stock grants
|
—
|
—
|
(849
|
)
|
||||||||
(Increase) decrease in deferred income taxes
|
(10,046
|
)
|
19,059
|
(691
|
)
|
|||||||
Increase (decrease) in tax valuation allowance
|
22
|
(128
|
)
|
65
|
||||||||
Loss on discontinued operations, net of tax
|
13,851
|
5,654
|
1,982
|
|||||||||
Change in assets and liabilities:
|
||||||||||||
Increase in accounts receivable
|
(13,699
|
)
|
(5,100
|
)
|
(8,826
|
)
|
||||||
Increase in inventories
|
(30,199
|
)
|
(13,901
|
)
|
(20,155
|
)
|
||||||
(Increase) decrease in prepaid expenses and other current assets
|
4,926
|
(4,869
|
)
|
3,475
|
||||||||
Increase (decrease) in accounts payable
|
16,894
|
(7,186
|
)
|
7,345
|
||||||||
Increase (decrease) in sundry payables and accrued expenses
|
8,407
|
(6,015
|
)
|
20,990
|
||||||||
Net changes in other assets and liabilities
|
1,246
|
1,260
|
2,591
|
|||||||||
Net cash provided by operating activities
|
70,258
|
64,617
|
97,805
|
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Acquisitions of and investments in businesses
|
(9,852
|
)
|
(6,808
|
)
|
(67,289
|
)
|
||||||
Capital expenditures
|
(20,141
|
)
|
(24,442
|
)
|
(20,921
|
)
|
||||||
Other investing activities
|
107
|
22
|
192
|
|||||||||
Net cash used in investing activities
|
(29,886
|
)
|
(31,228
|
)
|
(88,018
|
)
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net borrowings (repayments) under line-of-credit agreements
|
(13,311
|
)
|
2,188
|
7,384
|
||||||||
Net borrowings of other debt and capital lease obligations
|
1,115
|
4,065
|
89
|
|||||||||
Purchase of treasury stock
|
(14,886
|
)
|
(24,376
|
)
|
(377
|
)
|
||||||
Increase (decrease) in overdraft balances
|
275
|
(534
|
)
|
(254
|
)
|
|||||||
Payments of debt issuance costs
|
(460
|
)
|
—
|
—
|
||||||||
Excess tax benefits related to the exercise of employee stock grants
|
— |
—
|
849 | |||||||||
Dividends paid
|
(18,854
|
)
|
(17,287
|
)
|
(15,447
|
)
|
||||||
Net cash used in financing activities
|
(46,121
|
)
|
(35,944
|
)
|
(7,756
|
)
|
||||||
Effect of exchange rate changes on cash
|
(436
|
)
|
82
|
(1,035
|
)
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
(6,185
|
)
|
(2,473
|
)
|
996
|
|||||||
CASH AND CASH EQUIVALENTS at beginning of year
|
17,323
|
19,796
|
18,800
|
|||||||||
CASH AND CASH EQUIVALENTS at end of year
|
$
|
11,138
|
$
|
17,323
|
$
|
19,796
|
||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
3,738
|
$
|
1,944
|
$
|
1,207
|
||||||
Income taxes
|
$
|
15,353
|
$
|
34,543
|
$
|
32,505
|
||||||
Noncash investing activity:
|
||||||||||||
Accrual for final contribution of acquired investment
|
$
|
—
|
$
|
5,740
|
$
|
—
|
||||||
Receivable related to net proceeds from sale of Grapevine, Texas facility
|
$
|
4,801
|
$
|
—
|
$
|
—
|
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Common
Stock
|
Capital in
Excess of
Par Value
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Treasury
Stock
|
Total
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
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
|
||||||||||||||||
Cumulative effect adjustment (Note 1)
|
—
|
—
|
(1,189
|
)
|
—
|
—
|
(1,189
|
)
|
||||||||||||||||
Net earnings
|
—
|
—
|
43,003
|
—
|
—
|
43,003
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
(5,485
|
)
|
—
|
(5,485
|
)
|
||||||||||||||||
Cash dividends paid ($0.84 per share)
|
—
|
—
|
(18,854
|
)
|
—
|
—
|
(18,854
|
)
|
||||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
—
|
(14,483
|
)
|
(14,483
|
)
|
||||||||||||||||
Stock-based compensation
|
—
|
1,648
|
—
|
—
|
6,350
|
7,998
|
||||||||||||||||||
Employee Stock Ownership Plan
|
—
|
765
|
—
|
—
|
1,792
|
2,557
|
||||||||||||||||||
BALANCE AT DECEMBER 31, 2018
|
$
|
47,872
|
$
|
102,470
|
$
|
380,113
|
$
|
(9,594
|
)
|
$
|
(53,660
|
)
|
$
|
467,201
|
1. |
Summary of Significant Accounting Policies
|
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
|
Balance at
December 31,
2017
|
Adjustments
Due to
Adoption of
ASU 2014-09
|
Balance at
January 1,
2018
|
||||||||||
Balance Sheet
|
||||||||||||
Unreturned customer inventories
|
$
|
—
|
$
|
19,950
|
$
|
19,950
|
||||||
Accrued customer returns
|
35,916
|
6,670
|
42,586
|
|||||||||
Accrued core liability
|
11,899
|
14,469
|
26,368
|
|||||||||
Retained earnings
|
357,153
|
(1,189
|
)
|
355,964
|
As Reported
|
Balances
Without
Adoption of
ASU 2014-09
|
Effect of
Change
|
||||||||||
Balance Sheet
|
||||||||||||
Unreturned customer inventories
|
$
|
20,484
|
$
|
—
|
$
|
20,484
|
||||||
Prepaid expenses and other current assets
|
7,256
|
7,274
|
(18
|
)
|
||||||||
Accrued customer returns
|
57,433
|
51,068
|
6,365
|
|||||||||
Accrued core liability
|
31,263
|
16,025
|
15,238
|
|||||||||
Retained earnings
|
380,113
|
381,250
|
(1,137
|
)
|
||||||||
Statement of Operations
|
||||||||||||
Net sales
|
$
|
1,092,051
|
$
|
1,092,820
|
$
|
(769
|
)
|
|||||
Cost of sales
|
779,264
|
780,103
|
(839
|
)
|
||||||||
Earnings from continuing operations before taxes
|
76,831
|
76,761
|
70
|
|||||||||
Provision for income taxes
|
19,977
|
19,959
|
18
|
|||||||||
Net earnings
|
43,003
|
42,951
|
52
|
Standard
|
Description
|
Date of adoption
|
Effects on the financial
statements or other significant
matters
|
|||
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
|
The retrospective adoption of the new standard did not result in any changes in our reporting of cash receipts and cash payments in our
consolidated statement of cash flows.
|
|||
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
|
The adoption of the new standard resulted in the reclassification of 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 administrative expenses, to other non-operating income (expense). We adopted the new standard
retrospectively, and as such, all prior period amounts have been reclassified for comparative purposes.
|
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
|
|||
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 2016-13, Financial Instruments –
Credit Losses
|
This standard creates a single model to measure impairment on financial assets, which includes trade account receivables. An estimate of
expected credit losses on trade account receivables over their contractual life will be required to be recorded at inception, based on historical information, current conditions, and reasonable and supportable forecasts.
|
January 1, 2020, with early adoption permitted
|
We do not anticipate that the adoption of this standard will have a material impact on the manner in which we estimate our allowance for
doubtful accounts on trade accounts receivable, or on our consolidated financial statements.
|
2.
|
Net Sales
|
Year Ended December 31, 2018 (a)
|
Engine
Management
|
Temperature
Control
|
Other (c)
|
Total
|
||||||||||||
Geographic Area:
|
||||||||||||||||
United States
|
$
|
712,732
|
$
|
261,628
|
$
|
—
|
$
|
974,360
|
||||||||
Canada
|
33,350
|
13,877
|
10,108
|
57,335
|
||||||||||||
Mexico
|
22,833
|
817
|
—
|
23,650
|
||||||||||||
Europe
|
12,948
|
630
|
—
|
13,578
|
||||||||||||
Other foreign
|
21,624
|
1,504
|
—
|
23,128
|
||||||||||||
Total
|
$
|
803,487
|
$
|
278,456
|
$
|
10,108
|
$
|
1,092,051
|
||||||||
Major Product Group:
|
||||||||||||||||
Ignition, emission control, fuel and safety related system products
|
$
|
648,270
|
$
|
—
|
$
|
5,829
|
$
|
654,099
|
||||||||
Wire and cable
|
155,217
|
—
|
454
|
155,671
|
||||||||||||
Compressors
|
—
|
148,416
|
1,853
|
150,269
|
||||||||||||
Other climate control parts
|
—
|
130,040
|
1,972
|
132,012
|
||||||||||||
Total
|
$
|
803,487
|
$
|
278,456
|
$
|
10,108
|
$
|
1,092,051
|
||||||||
Major Sales Channel:
|
||||||||||||||||
Aftermarket
|
$
|
684,242
|
$
|
246,112
|
$
|
10,108
|
$
|
940,462
|
||||||||
OE/OES
|
97,205
|
30,275
|
—
|
127,480
|
||||||||||||
Export
|
22,040
|
2,069
|
—
|
24,109
|
||||||||||||
Total
|
$
|
803,487
|
$
|
278,456
|
$
|
10,108
|
$
|
1,092,051
|
Year Ended December 31, 2017 (a)(b)
|
Engine
Management
|
Temperature
Control
|
Other (c)
|
Total
|
||||||||||||
Geographic Area:
|
||||||||||||||||
United States
|
$
|
737,108
|
$
|
263,895
|
$
|
—
|
$
|
1,001,003
|
||||||||
Canada
|
32,197
|
12,205
|
7,603
|
52,005
|
||||||||||||
Mexico
|
23,683
|
838
|
—
|
24,521
|
||||||||||||
Europe
|
13,342
|
746
|
—
|
14,088
|
||||||||||||
Other foreign
|
23,083
|
1,443
|
—
|
24,526
|
||||||||||||
Total
|
$
|
829,413
|
$
|
279,127
|
$
|
7,603
|
$
|
1,116,143
|
||||||||
Major Product Group:
|
||||||||||||||||
Ignition, emission control, fuel and safety related system products
|
$
|
657,287
|
$
|
—
|
$
|
4,403
|
$
|
661,690
|
||||||||
Wire and cable
|
172,126
|
—
|
650
|
172,776
|
||||||||||||
Compressors
|
—
|
148,377
|
1,233
|
149,610
|
||||||||||||
Other climate control parts
|
—
|
130,750
|
1,317
|
132,067
|
||||||||||||
Total
|
$
|
829,413
|
$
|
279,127
|
$
|
7,603
|
$
|
1,116,143
|
||||||||
Major Sales Channel:
|
||||||||||||||||
Aftermarket
|
$
|
701,308
|
$
|
246,097
|
$
|
7,603
|
$
|
955,008
|
||||||||
OE/OES
|
106,173
|
30,268
|
—
|
136,441
|
||||||||||||
Export
|
21,932
|
2,762
|
—
|
24,694
|
||||||||||||
Total
|
$
|
829,413
|
$
|
279,127
|
$
|
7,603
|
$
|
1,116,143
|
Year Ended December 31, 2016 (a)(b)
|
Engine
Management
|
Temperature
Control
|
Other (c)
|
Total
|
||||||||||||
Geographic Area:
|
||||||||||||||||
United States
|
$
|
685,898
|
$
|
266,121
|
$
|
—
|
$
|
952,019
|
||||||||
Canada
|
31,627
|
12,494
|
9,203
|
53,324
|
||||||||||||
Mexico
|
23,049
|
1,380
|
—
|
24,429
|
||||||||||||
Europe
|
13,767
|
936
|
—
|
14,703
|
||||||||||||
Other foreign
|
11,198
|
2,809
|
—
|
14,007
|
||||||||||||
Total
|
$
|
765,539
|
$
|
283,740
|
$
|
9,203
|
$
|
1,058,482
|
||||||||
Major Product Group:
|
||||||||||||||||
Ignition, emission control, fuel and safety related system products
|
$
|
616,523
|
$
|
—
|
$
|
5,551
|
$
|
622,074
|
||||||||
Wire and cable
|
149,016
|
—
|
524
|
149,540
|
||||||||||||
Compressors
|
—
|
148,623
|
1,184
|
149,807
|
||||||||||||
Other climate control parts
|
—
|
135,117
|
1,944
|
137,061
|
||||||||||||
Total
|
$
|
765,539
|
$
|
283,740
|
$
|
9,203
|
$
|
1,058,482
|
||||||||
Major Sales Channel:
|
||||||||||||||||
Aftermarket
|
$
|
658,668
|
$
|
247,287
|
$
|
9,203
|
$
|
915,158
|
||||||||
OE/OES
|
84,921
|
34,047
|
—
|
118,968
|
||||||||||||
Export
|
21,950
|
2,406
|
—
|
24,356
|
||||||||||||
Total
|
$
|
765,539
|
$
|
283,740
|
$
|
9,203
|
$
|
1,058,482
|
(a) |
Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.
|
(b) |
Amounts have not been restated and are reported under accounting standards in effect in the period presented as we adopted ASU 2014-09, Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method.
|
(c) |
Other consists of the elimination of intersegment sales from our Engine Management and Temperature Control segments as well as sales from our Canadian business unit
that does not meet the criteria of a reportable operating segment.
|
3. |
Business Acquisitions and Investments
|
4. |
Sale of Grapevine, Texas Property
|
5. |
Restructuring and Integration Expense
|
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
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
|
||||||
Restructuring and integration costs:
|
||||||||||||
Amounts provided for during 2018 (1)
|
9
|
4,501
|
4,510
|
|||||||||
Non-cash usage, including asset write-downs
|
—
|
(181
|
)
|
(181
|
)
|
|||||||
Cash payments
|
(2,148
|
)
|
(3,036
|
)
|
(5,184
|
)
|
||||||
Reclassification of environmental liability (1)
|
—
|
(1,284
|
)
|
(1,284
|
)
|
|||||||
Foreign currency exchange rate changes
|
27
|
—
|
27
|
|||||||||
Exit activity liability at December 31, 2018
|
$
|
742
|
$
|
—
|
$
|
742
|
(1) |
Included in restructuring and integration costs in 2018 is a $1.3 million increase in environmental cleanup costs related to remediation in connection with the
prior closure of our manufacturing operations at our Long Island City, New York location. Due to the anticipated move from ongoing remediation to monitoring at the site in 2019, an estimate was made in the fourth quarter of
2018 of the costs related to ongoing monitoring and shutdown, resulting in the increase in anticipated costs. The environmental liability has been reclassed to accrued liabilities as of December 31, 2018.
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
|||||||||||||
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
|
||||||||
Restructuring and integration costs:
|
||||||||||||||||
Amounts provided for during 2018
|
—
|
353
|
—
|
353
|
||||||||||||
Cash payments
|
—
|
(1,525
|
)
|
—
|
(1,525
|
)
|
||||||||||
Exit activity liability at December 31, 2018
|
$
|
—
|
$
|
304
|
$
|
—
|
$
|
304
|
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
|
||||||||
Restructuring and integration costs:
|
||||||||||||||||
Amounts provided for during 2018
|
1,479
|
—
|
—
|
1,479
|
||||||||||||
Non-cash usage, including asset writedowns
|
(12
|
)
|
—
|
—
|
(12
|
)
|
||||||||||
Cash payments
|
(2,015
|
)
|
—
|
—
|
(2,015
|
)
|
||||||||||
Exit activity liability at December 31, 2018
|
$
|
438
|
$
|
—
|
$
|
—
|
$
|
438
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
|||||||||||||
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
|
||||||||
Restructuring and integration costs:
|
||||||||||||||||
Amounts provided for during 2018
|
1,394
|
—
|
—
|
1,394
|
||||||||||||
Non-cash usage, including asset write-downs
|
(169
|
)
|
—
|
—
|
(169 | ) | ||||||||||
Cash payments
|
(1,644
|
)
|
—
|
—
|
(1,644
|
)
|
||||||||||
Foreign currency exchange rate changes
|
27
|
—
|
—
|
27
|
||||||||||||
Exit activity liability at December 31, 2018
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
6. |
Sale of Receivables
|
7. |
Inventories
|
December 31,
2018
|
December 31,
2017
|
|||||||
(In thousands)
|
||||||||
Finished goods
|
$
|
226,802
|
$
|
209,800
|
||||
Work-in-process
|
10,527
|
7,536
|
||||||
Raw materials
|
112,482
|
109,075
|
||||||
Subtotal
|
349,811
|
326,411
|
||||||
Unreturned customer inventories (1)
|
20,484
|
—
|
||||||
Total inventories
|
$
|
370,295
|
$
|
326,411
|
(1) |
The adoption of ASU 2014-09 using the modified retrospective method resulted in the recording of unreturned customer inventories commencing on January 1, 2018, see
Note 1, “Summary of Significant Accounting Policies” for additional information.
|
8. |
Property, Plant and Equipment
|
December 31,
|
||||||||
2018
|
|
|
2017
|
|||||
(In thousands)
|
||||||||
Land, buildings and improvements
|
$
|
40,126
|
$
|
46,930
|
||||
Machinery and equipment
|
136,526
|
132,467
|
||||||
Tools, dies and auxiliary equipment
|
49,365
|
45,769
|
||||||
Furniture and fixtures
|
29,169
|
28,352
|
||||||
Leasehold improvements
|
11,386
|
10,348
|
||||||
Construction-in-progress
|
10,317
|
16,318
|
||||||
Total property, plant and equipment
|
276,889
|
280,184
|
||||||
Less accumulated depreciation
|
186,135
|
191,081
|
||||||
Total property, plant and equipment, net
|
$
|
90,754
|
$
|
89,103
|
9. |
Goodwill and Other Intangible Assets
|
Engine
Management
|
Temperature
Control
|
Total
|
||||||||||
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
|
|||||||
Activity in 2018
|
||||||||||||
Foreign currency exchange rate change
|
(92
|
)
|
—
|
(92
|
)
|
|||||||
Balance as of December 31, 2018:
|
||||||||||||
Goodwill
|
91,539
|
14,270
|
105,809
|
|||||||||
Accumulated impairment losses
|
(38,488
|
)
|
—
|
(38,488
|
)
|
|||||||
$
|
53,051
|
$
|
14,270
|
$
|
67,321
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
(In thousands)
|
||||||||
Customer relationships
|
$
|
87,195
|
$
|
87,290
|
||||
Trademarks and trade names
|
6,800
|
6,800
|
||||||
Non-compete agreements
|
3,193
|
3,193
|
||||||
Patents
|
723
|
723
|
||||||
Supply agreements
|
800
|
800
|
||||||
Leaseholds
|
160
|
160
|
||||||
Total acquired intangible assets
|
98,871
|
98,966
|
||||||
Less accumulated amortization (1)
|
(51,391
|
)
|
(43,853
|
)
|
||||
Net acquired intangible assets
|
$
|
47,480
|
$
|
55,113
|
(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.
|
10. |
Investments in Unconsolidated Affiliates
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
(In thousands)
|
||||||||
Foshan GWOYNG SMP Vehicle Climate Control & Cooling Products Co. Ltd.
|
$
|
17,764
|
$
|
14,406
|
||||
Foshan FGD SMP Automotive Compressor Co. Ltd
|
12,547
|
12,616
|
||||||
Orange Electronic Co. Ltd
|
2,158
|
4,162
|
||||||
Total
|
$
|
32,469
|
$
|
31,184
|
11. |
Other Assets
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
(In thousands)
|
||||||||
Deferred compensation
|
$
|
14,020
|
$
|
13,612
|
||||
Deferred financing costs, net
|
876
|
630
|
||||||
Other
|
723
|
853
|
||||||
Total other assets, net
|
$
|
15,619
|
$
|
15,095
|
12. |
Credit Facilities and Long-Term Debt
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
(In thousands)
|
||||||||
Revolving credit facilities
|
$
|
43,689
|
$
|
57,000
|
||||
Other (1)
|
5,530
|
4,778
|
||||||
Total debt
|
$
|
49,219
|
$
|
61,778
|
||||
Current maturities of debt
|
$
|
49,066
|
$
|
61,699
|
||||
Long-term debt
|
153
|
79
|
||||||
Total debt
|
$
|
49,219
|
$
|
61,778
|
(1) |
Other includes borrowings under our Polish overdraft facility of Zloty 19.9 million (approximately $5.3 million) and Zloty 16.2 million (approximately $4.7 million)
as of December 31, 2018 and 2017, respectively.
|
(In thousands)
|
||||
2019
|
$
|
223
|
||
2020
|
224
|
|||
2021
|
223
|
|||
2022
|
224
|
|||
2023
|
205
|
|||
Total amortization
|
$
|
1,099
|
13. |
Stockholders’ Equity
|
14. |
Accumulated Other Comprehensive Income
|
Foreign
Currency
Translation
Adjustments
|
Unrecognized
Postretirement
Benefit Costs
(Credit)
|
Total
|
||||||||||
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
|
)
|
||||
Other comprehensive income before reclassifications
|
(5,473
|
)
|
149
|
(5,324
|
)
|
|||||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
(161
|
)
|
(161
|
)
|
|||||||
Other comprehensive income, net
|
(5,473
|
)
|
(12
|
)
|
(5,485
|
)
|
||||||
Balance at December 31, 2018
|
$
|
(9,698
|
)
|
$
|
104
|
$
|
(9,594
|
)
|
Year Ended December 31,
|
||||||||
Details About Accumulated Other Comprehensive Income Components
|
2018
|
2017
|
||||||
Amortization of postretirement benefit plans:
|
||||||||
Prior service benefit (1)
|
$
|
—
|
$
|
—
|
||||
Unrecognized (gain) loss (1)
|
(268
|
)
|
(661
|
)
|
||||
Total before income tax
|
(268
|
)
|
(661
|
)
|
||||
Income tax expense
|
107
|
264
|
||||||
Total reclassifications for the period
|
$
|
(161
|
)
|
$
|
(397
|
)
|
(1) |
These accumulated other comprehensive income components are included in the computation of net periodic postretirement benefit costs, which are included in other
non-operating income (expense), net in our consolidated statements of operations (see Note 17 for additional information).
|
15. |
Stock-Based Compensation Plans
|
Shares
|
Weighted Average
Grant Date Fair
Value per Share
|
|||||||
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
|
|||||
Granted
|
198,004
|
39.36
|
||||||
Vested
|
(169,896
|
)
|
39.92
|
|||||
Forfeited
|
(12,025
|
)
|
42.40
|
|||||
Balance at December 31, 2018
|
870,041
|
$
|
34.59
|
16. |
Retirement Benefit Plans
|
U.S. Defined
Contribution
|
||||
Year ended December 31,
|
||||
2018
|
$
|
8,928
|
||
2017
|
9,153
|
|||
2016
|
8,625
|
17. |
Postretirement Medical Benefits
|
Postretirement
|
||||||||
Benefit Plan
|
||||||||
U.S. Plan
|
||||||||
2018
|
2017
|
|||||||
Change in benefit obligation:
|
||||||||
Benefit obligation at beginning of year
|
$
|
672
|
$
|
1,574
|
||||
Service cost
|
—
|
—
|
||||||
Interest cost
|
6
|
8
|
||||||
Benefits paid
|
(201
|
)
|
(429
|
)
|
||||
Actuarial gain
|
(247
|
)
|
(481
|
)
|
||||
Benefit obligation at end of year
|
$
|
230
|
$
|
672
|
||||
(Unfunded) status of the plan
|
$
|
(230
|
)
|
$
|
(672
|
)
|
|
Postretirement
|
|||||||
Benefit Plan
|
||||||||
U.S. Plan
|
||||||||
2018
|
2017
|
|||||||
Amounts recognized in the balance sheet:
|
||||||||
Accrued postretirement benefit liabilities
|
$
|
230
|
$
|
672
|
||||
Accumulated other comprehensive (income) loss (pre-tax) related to:
|
||||||||
Unrecognized net actuarial losses (gains)
|
(173
|
)
|
(194
|
)
|
December 31,
|
||||||||||||
U.S. postretirement plan:
|
2018
|
2017 (1)
|
2016 (1)
|
|||||||||
Service cost
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Interest cost
|
6
|
8
|
11
|
|||||||||
Actuarial net (gain) loss
|
(268
|
)
|
(661
|
)
|
809
|
|||||||
Net periodic benefit cost (credit)
|
$
|
(262
|
)
|
$
|
(653
|
)
|
$
|
820
|
||||
Canadian postretirement plan:
|
||||||||||||
Service cost
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Interest cost
|
—
|
—
|
2
|
|||||||||
Amortization of prior service cost
|
—
|
—
|
(54
|
)
|
||||||||
Actuarial net gain
|
—
|
—
|
(46
|
)
|
||||||||
Net periodic benefit cost (credit)
|
$
|
—
|
$
|
—
|
$
|
(98
|
)
|
|||||
Total net periodic benefit cost (credit)
|
$
|
(262
|
)
|
$
|
(653
|
)
|
$
|
722
|
(1)
|
Net periodic benefit cost (credit) has been reclassified from selling, general and administrative expenses to other non-operating income (expense), net on our
consolidated statement of operations upon adoption of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost, see Note 1, “Summary of Significant Accounting Policies” for additional information.
|
2019
|
$
|
39
|
||
2020
|
36
|
|||
2021
|
32
|
|||
2022
|
29
|
|||
2023
|
25
|
|||
Years 2024 – 2028
|
76
|
18. |
Other Non-Operating Income (Expense), Net
|
Year Ended December 31,
|
||||||||||||
2018
|
2017 (2)
|
2016 (2)
|
||||||||||
(In thousands)
|
||||||||||||
Interest and dividend income
|
$
|
80
|
$
|
91
|
$
|
153
|
||||||
Equity income (loss) from joint ventures (1)
|
(768
|
)
|
(602
|
)
|
2,029
|
|||||||
Gain (loss) on foreign exchange
|
(120
|
)
|
950
|
(276
|
)
|
|||||||
Postretirement plan net periodic benefit credit (cost)
|
262
|
653
|
(722
|
)
|
||||||||
Other non-operating income, net
|
135
|
158
|
153
|
|||||||||
Total other non-operating income (expense), net
|
$
|
(411
|
)
|
$
|
1,250
|
$
|
1,337
|
(1) |
Year ended December 31, 2018 and 2017 includes a noncash impairment charge of approximately $1.7 million and $1.8 million, respectively, related to our minority
interest investment in Orange Electronic Co., Ltd. (See Note 10, “Investments in Unconsolidated Affiliates” for additional information).
|
(2) |
Net periodic benefit credit (cost) has been reclassified from selling, general and administrative expenses to other non-operating income (expense), net on our
consolidated statement of operations upon adoption of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost, see Note 1, “Summary of Significant Accounting Policies” for additional information.
|
19. |
Income Taxes
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Current:
|
||||||||||||
Domestic
|
$
|
26,821
|
$
|
30,742
|
$
|
33,156
|
||||||
Foreign
|
3,180
|
3,139
|
3,628
|
|||||||||
Total current
|
30,001
|
33,881
|
36,784
|
|||||||||
Deferred:
|
||||||||||||
Domestic
|
(10,132
|
)
|
18,833
|
(387
|
)
|
|||||||
Foreign
|
108
|
98
|
(239
|
)
|
||||||||
Total deferred
|
(10,024
|
)
|
18,931
|
(626
|
)
|
|||||||
Total income tax provision
|
$
|
19,977
|
$
|
52,812
|
$
|
36,158
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
U.S. Federal income tax rate of 21% in 2018, 35% in 2017 and 35% in 2016
|
$
|
16,135
|
$
|
33,755
|
$
|
34,500
|
||||||
Increase (decrease) in tax rate resulting from:
|
||||||||||||
State and local income taxes, net of federal income tax benefit
|
2,781
|
3,138
|
2,944
|
|||||||||
Income tax (tax benefits) attributable to foreign income
|
1,598
|
(149
|
)
|
(887
|
)
|
|||||||
Other non-deductible items, net
|
(559
|
)
|
(1,319
|
)
|
(464
|
)
|
||||||
Impact of Tax Cuts and Jobs Act
|
—
|
17,515
|
—
|
|||||||||
Change in valuation allowance
|
22
|
(128
|
)
|
65
|
||||||||
Provision for income taxes
|
$
|
19,977
|
$
|
52,812
|
$
|
36,158
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Deferred tax assets:
|
||||||||
Inventories
|
$
|
12,798
|
$
|
11,498
|
||||
Allowance for customer returns
|
16,836
|
8,678
|
||||||
Postretirement benefits
|
58
|
170
|
||||||
Allowance for doubtful accounts
|
1,371
|
1,181
|
||||||
Accrued salaries and benefits
|
9,147
|
8,500
|
||||||
Capital loss
|
—
|
154
|
||||||
Tax credit carryforwards
|
272
|
272
|
||||||
Deferred gain on building sale
|
—
|
55
|
||||||
Accrued asbestos liabilities
|
11,872
|
8,886
|
||||||
Other
|
127
|
—
|
||||||
52,481
|
39,394
|
|||||||
Valuation allowance
|
(399
|
)
|
(377
|
)
|
||||
Total deferred tax assets
|
52,082
|
39,017
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
7,755
|
5,495
|
||||||
Other
|
1,993
|
1,102
|
||||||
Total deferred tax liabilities
|
9,748
|
6,597
|
||||||
Net deferred tax assets
|
$
|
42,334
|
$
|
32,420
|
20. |
Fair Value Measurements
|
21. |
Earnings Per Share
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Basic Net Earnings Per Common Share:
|
||||||||||||
Earnings from continuing operations
|
$
|
56,854
|
$
|
43,630
|
$
|
62,412
|
||||||
Loss from discontinued operations
|
(13,851
|
)
|
(5,654
|
)
|
(1,982
|
)
|
||||||
Net earnings available to common stockholders
|
$
|
43,003
|
$
|
37,976
|
$
|
60,430
|
||||||
Weighted average common shares outstanding
|
22,456
|
22,726
|
22,723
|
|||||||||
Earnings from continuing operations per common share
|
$
|
2.53
|
$
|
1.92
|
$
|
2.75
|
||||||
Loss from discontinued operations per common share
|
(0.62
|
)
|
(0.25
|
)
|
(0.09
|
)
|
||||||
Basic net earnings per common share
|
$
|
1.91
|
$
|
1.67
|
$
|
2.66
|
||||||
Diluted Net Earnings Per Common Share:
|
||||||||||||
Earnings from continuing operations
|
$
|
56,854
|
$
|
43,630
|
$
|
62,412
|
||||||
Loss from discontinued operations
|
(13,851
|
)
|
(5,654
|
)
|
(1,982
|
)
|
||||||
Net earnings available to common stockholders
|
$
|
43,003
|
$
|
37,976
|
$
|
60,430
|
||||||
Weighted average common shares outstanding
|
22,456
|
22,726
|
22,723
|
|||||||||
Plus incremental shares from assumed conversions:
|
||||||||||||
Dilutive effect of restricted stock and performance-based stock
|
476
|
472
|
360
|
|||||||||
Weighted average common shares outstanding – Diluted
|
22,932
|
23,198
|
23,083
|
|||||||||
Earnings from continuing operations per common share
|
$
|
2.48
|
$
|
1.88
|
$
|
2.70
|
||||||
Loss from discontinued operations per common share
|
(0.60
|
)
|
(0.24
|
)
|
(0.08
|
)
|
||||||
Diluted net earnings per common share
|
$
|
1.88
|
$
|
1.64
|
$
|
2.62
|
2018
|
2017
|
2016
|
||||||||||
Restricted and performance shares
|
249
|
248
|
304
|
22. |
Industry Segment and Geographic Data
|
Year Ended December 31,
|
||||||||||||
2018
|
2017 (b)
|
2016 (b)
|
||||||||||
Net sales (a):
|
||||||||||||
Engine Management
|
$
|
803,487
|
$
|
829,413
|
$
|
765,539
|
||||||
Temperature Control
|
278,456
|
279,127
|
283,740
|
|||||||||
Other
|
10,108
|
7,603
|
9,203
|
|||||||||
Total net sales
|
$
|
1,092,051
|
$
|
1,116,143
|
$
|
1,058,482
|
||||||
Intersegment
sales (a):
|
||||||||||||
Engine Management
|
$
|
23,367
|
$
|
24,995
|
$
|
22,268
|
||||||
Temperature Control
|
8,160
|
7,334
|
7,293
|
|||||||||
Other
|
(31,527
|
)
|
(32,329
|
)
|
(29,561
|
)
|
||||||
Total intersegment sales
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Depreciation and Amortization:
|
||||||||||||
Engine Management
|
$
|
17,858
|
$
|
17,981
|
$
|
15,008
|
||||||
Temperature Control
|
4,704
|
4,373
|
4,287
|
|||||||||
Other
|
1,542
|
1,562
|
1,162
|
|||||||||
Total depreciation and amortization
|
$
|
24,104
|
$
|
23,916
|
$
|
20,457
|
||||||
Operating
income (loss):
|
||||||||||||
Engine Management
|
$
|
84,844
|
$
|
97,403
|
$
|
101,529
|
||||||
Temperature Control
|
14,586
|
19,609
|
17,563
|
|||||||||
Other
|
(18,162
|
)
|
(19,491
|
)
|
(20,303
|
)
|
||||||
Total operating income
|
$
|
81,268
|
$
|
97,521
|
$
|
98,789
|
||||||
Investment in unconsolidated affiliates:
|
||||||||||||
Engine Management
|
$
|
2,158
|
$
|
4,162
|
$
|
6,221
|
||||||
Temperature Control
|
30,311
|
27,022
|
13,703
|
|||||||||
Other
|
—
|
—
|
—
|
|||||||||
Total investment in unconsolidated affiliates
|
$
|
32,469
|
$
|
31,184
|
$
|
19,924
|
||||||
Capital
expenditures:
|
||||||||||||
Engine Management
|
$
|
11,435
|
$
|
17,750
|
$
|
14,202
|
||||||
Temperature Control
|
7,245
|
5,151
|
3,652
|
|||||||||
Other
|
1,461
|
1,541
|
3,067
|
|||||||||
Total capital expenditures
|
$
|
20,141
|
$
|
24,442
|
$
|
20,921
|
||||||
Total
assets:
|
||||||||||||
Engine Management
|
$
|
553,480
|
$ |
527,200
|
$ |
506,625
|
||||||
Temperature Control
|
205,039
|
177,006
|
171,136
|
|||||||||
Other
|
84,613
|
83,361
|
90,936
|
|||||||||
Total assets
|
$
|
843,132
|
$ |
787,567
|
$ |
768,697
|
(a) |
Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.
|
(b) |
Net sales and intersegment sales for 2017 and 2016 have not been restated and are reported under accounting standards in effect in the period presented, as we
adopted ASU 2014-09, Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method.
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
(In thousands)
|
||||||||||||
Operating income
|
$
|
81,268
|
$
|
97,521
|
$
|
98,789
|
||||||
Other non-operating income (expense), net
|
(411
|
)
|
1,250
|
1,337
|
||||||||
Interest expense
|
4,026
|
2,329
|
1,556
|
|||||||||
Earnings from continuing operations before taxes
|
76,831
|
96,442
|
98,570
|
|||||||||
Income tax expense
|
19,977
|
52,812
|
36,158
|
|||||||||
Earnings from continuing operations
|
56,854
|
43,630
|
62,412
|
|||||||||
Discontinued operations, net of tax
|
(13,851
|
)
|
(5,654
|
)
|
(1,982
|
)
|
||||||
Net earnings
|
$
|
43,003
|
$
|
37,976
|
$
|
60,430
|
Year Ended December 31,
|
||||||||||||
2018
|
2017 (b)
|
2016 (b)
|
||||||||||
Revenues
(a):
|
(In thousands)
|
|||||||||||
United States
|
$
|
974,360
|
$
|
1,001,003
|
$
|
952,019
|
||||||
Canada
|
57,335
|
52,005
|
53,324
|
|||||||||
Mexico
|
23,650
|
24,521
|
24,429
|
|||||||||
Europe
|
13,578
|
14,088
|
14,703
|
|||||||||
Other foreign
|
23,128
|
24,526
|
14,007
|
|||||||||
Total revenues
|
$
|
1,092,051
|
$
|
1,116,143
|
$
|
1,058,482
|
||||||
December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Long-lived
assets (c):
|
(In thousands)
|
|||||||||||
United States
|
$
|
198,494
|
$
|
202,875
|
$
|
204,592
|
||||||
Canada
|
2,718
|
2,017
|
1,344
|
|||||||||
Mexico
|
4,012
|
4,449
|
3,877
|
|||||||||
Europe
|
16,880
|
18,530
|
13,612
|
|||||||||
Other foreign
|
32,470
|
31,185
|
19,924
|
|||||||||
Total long-lived assets
|
$
|
254,574
|
$
|
259,056
|
$
|
243,349
|
(a) |
Revenues are attributed to countries based upon the location of the customer.
|
(b) |
Revenues for 2017 and 2016 have not been restated and are reported under accounting standards in effect in the period presented, as we adopted ASU 2014-09, Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method.
|
(c) |
Long-lived assets are attributed to countries based upon the location of the assets.
|
23. |
Commitments and Contingencies
|
Total
|
Real Estate
|
Other
|
||||||||||
2018
|
$
|
12,605
|
$
|
9,272
|
$
|
3,333
|
||||||
2017
|
11,954
|
8,983
|
2,971
|
|||||||||
2016
|
10,171
|
7,550
|
2,621
|
2019
|
$
|
8,483
|
||
2020
|
7,382
|
|||
2021
|
6,753
|
|||
2022
|
5,763
|
|||
2023
|
5,278
|
|||
Thereafter
|
10,590
|
|||
Total
|
$
|
44,249
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
(In thousands)
|
||||||||
Balance, beginning of period
|
$
|
20,929
|
$
|
24,072
|
||||
Liabilities accrued for current year sales
|
85,850
|
94,367
|
||||||
Settlements of warranty claims
|
(87,143
|
)
|
(97,510
|
)
|
||||
Balance, end of period
|
$
|
19,636
|
$
|
20,929
|
24. |
Quarterly Financial Data (Unaudited)
|
2018 Quarter Ended
|
||||||||||||||||
Dec. 31
|
Sept. 30
|
June 30
|
Mar. 31
|
|||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Net sales
|
$
|
246,970
|
$
|
296,619
|
$
|
286,636
|
$
|
261,826
|
||||||||
Gross profit
|
71,603
|
87,306
|
81,289
|
72,589
|
||||||||||||
Earnings from continuing operations
|
12,157
|
19,273
|
16,827
|
8,597
|
||||||||||||
Loss from discontinued operations, net of taxes
|
(8,837
|
)
|
(3,524
|
)
|
(882
|
)
|
(608
|
)
|
||||||||
Net earnings
|
$
|
3,320
|
$
|
15,749
|
$
|
15,945
|
$
|
7,989
|
Basic
|
$
|
0.54
|
$
|
0.86
|
$
|
0.75
|
$
|
0.38
|
||||||||
Diluted
|
$
|
0.53
|
$
|
0.84
|
$
|
0.73
|
$
|
0.37
|
||||||||
Net earnings per common share:
|
||||||||||||||||
Basic
|
$
|
0.15
|
$
|
0.70
|
$
|
0.71
|
$
|
0.36
|
||||||||
Diluted
|
$
|
0.14
|
$
|
0.69
|
$
|
0.69
|
$
|
0.35
|
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
|
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
|
(a)
|
Evaluation of Disclosure Controls and Procedures.
|
(b)
|
Management’s Report on Internal Control Over Financial Reporting.
|
(c)
|
Attestation Report of Independent Registered Public Accounting Firm.
|
(d)
|
Changes in Internal Control Over Financial Reporting.
|
ITEM 12.
|
(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 2018, 2017 and 2016 is submitted herewith:
|
(3) |
Exhibits.
|
Exhibit
Number |
|
3.1
|
|
3.2
|
|
3.3
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
|
10.7
|
|
10.8
|
|
10.9
|
Exhibit
Number |
|
10.10
|
|
10.11
|
|
10.12
|
|
10.13
|
|
10.14
|
|
10.15
|
|
21
|
|
23
|
|
24
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
101.INS**
|
XBRL Instance Document
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
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
|
|
Chief Operating Officer and
|
|
Chief Financial Officer
|
February 20, 2019
|
/s/ Eric P. Sills
|
Eric P. Sills
|
|
Chief Executive Officer, President and Director
|
|
(Principal Executive Officer)
|
|
February 20, 2019
|
/s/ James J. Burke
|
James J. Burke
|
|
Chief Operating Officer and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
February 20, 2019
|
/s/ Lawrence I. Sills
|
Lawrence I. Sills, Director
|
|
February 20, 2019
|
/s/ John P. Gethin
|
John P. Gethin, Director
|
|
February 20, 2019
|
/s/ Pamela Forbes Lieberman
|
Pamela Forbes Lieberman, Director
|
|
February 20, 2019
|
/s/ Patrick S. McClymont
|
Patrick S. McClymont, Director
|
|
February 20, 2019
|
/s/ Joseph W. McDonnell
|
Joseph W. McDonnell, Director
|
|
February 20, 2019
|
/s/ Alisa C. Norris
|
Alisa C. Norris, Director
|
|
February 20, 2019
|
/s/ Frederick D. Sturdivant
|
Frederick D. Sturdivant, Director
|
|
February 20, 2019
|
/s/ William H. Turner
|
William H. Turner, Director
|
|
February 20, 2019
|
/s/ Richard S. Ward
|
Richard S. Ward, Director
|
|
February 20, 2019
|
/s/ Roger M. Widmann
|
Roger M. Widmann, Director
|
Additions
|
||||||||||||||||||||
Description
|
Balance at
beginning |
Charged to
costs and |
Other
|
Deductions
|
Balance at
end of year |
|||||||||||||||
Year ended
December 31, 2018:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$
|
3,824,000
|
$
|
325,000
|
$
|
—
|
$
|
(339,000
|
)
|
$
|
4,488,000
|
|||||||||
Allowance for discounts
|
1,143,000
|
10,359,000
|
—
|
10,303,000
|
1,199,000
|
|||||||||||||||
$
|
4,967,000
|
$
|
10,684,000
|
$
|
—
|
$
|
9,964,000
|
$
|
5,687,000
|
|||||||||||
Allowance for sales returns
|
$
|
35,916,000
|
$
|
132,390,000
|
$
|
6,670,000
|
(1)
|
$
|
117,543,000
|
$
|
57,433,000
|
|||||||||
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
|
(1) |
The other addition to the allowance for sales returns represents the cumulative effect of the changes made to our consolidated balance sheet as of January 1, 2018
for the adoption of ASU 2014-09, Revenue from Contracts with Customers. For information related to our adoption of ASU 2014-09 see
Note 1 “Summary of Significant Accounting Policies” of the Notes to our Consolidated Financial Statements in Item 8 of this Report.
|