NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
In this Annual Report on Form 10-K, we use the terms “Advanced Energy”, “the Company”, “we”, “us” or “our” to refer to Advanced Energy Industries, Inc. and its subsidiaries.
|
|
NOTE 1.
|
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
|
We design, manufacture, sell and support power conversion and control products that transform power into various usable forms. Our products enable manufacturing processes that use thin film and plasma enhanced chemical and physical processing for various products, industrial electro-thermal applications for material and chemical processes, precision power for analytical instrumentation, as well as grid-tied power conversion. We also supply thermal instrumentation products for advanced temperature control in these markets. Our network of global service support centers provides local repair and field service capability in key regions. As of December 31, 2015, we discontinued our Inverter production, engineering, and sales product line. As such, all Inverter revenues, costs, assets and liabilities are reported in Discontinued Operations for all periods presented herein and we currently report as a single unit. See
Note 3. Discontinued Operations
for more information.
Principles of Consolidation
— Our Consolidated Financial Statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Our Consolidated Financial Statements are stated in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Use of Estimates in the Preparation of the Consolidated Financial Statements
— The preparation of our Consolidated Financial Statements in conformity with U.S. GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We believe that the significant estimates, assumptions, and judgments when accounting for items and matters such as allowances for doubtful accounts, excess and obsolete inventory, warranty reserves, acquisitions, asset valuations, asset life, depreciation, amortization, recoverability of assets, impairments, deferred revenue, stock option and restricted stock grants, taxes, and other provisions are reasonable, based upon information available at the time they are made. Actual results may differ from these estimates, making it possible that a change in these estimates could occur in the near term.
Foreign Currency Translation
— The functional currency of our foreign subsidiaries is their local currency, with the exception of our manufacturing facility in Shenzhen, The People's Republic of China (“PRC”) where the United States dollar is the functional currency. Assets and liabilities of foreign subsidiaries are translated to United States dollars at period-end exchange rates, and our Consolidated Statements of Operations and Cash Flows are translated at average exchange rates during the period. Resulting translation adjustments are recorded as a component of accumulated other comprehensive income.
Transactions denominated in currencies other than the local currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in foreign currency transaction gains and losses which are reflected as unrealized (based on period end translation) or realized (upon settlement of the transactions) in other income, net in our Consolidated Statements of Operations.
Fair Value of Financial Instruments
— We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount of cash and cash equivalents, marketable securities, accounts receivable, other current assets, accounts payable, accrued liabilities, and other current liabilities in our Consolidated Financial Statements approximates fair value because of the short-term nature of the instruments.
Cash and Cash Equivalents
— We consider all amounts on deposit with financial institutions and highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are highly liquid investments that consist primarily of short-term money market instruments and demand deposits with insignificant interest rate risk and original maturities of three months or less at the time of purchase.
Sometimes we invest excess cash in money market funds not insured by the Federal Deposit Insurance Corporation. We believe that the investments in money market funds are on deposit with credit-worthy financial institutions and that the funds are highly liquid. The investments in money market funds are reported at fair value, with interest income recorded in earnings and are included in “Cash and cash equivalents.” The fair values of our investments in money market funds are based on the quoted market prices.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
As of
December 31, 2016
we have
$1.3 million
of cash included in cash and cash equivalents that is restricted from immediate withdrawal. Of this amount,
$0.7 million
is a refund from a European tax authority, restricted until the tax authority completes its audit procedures,
$0.1 million
is restricted for Taiwan Customs Clearance transactions as a guarantee of Customs Duty, adjusted annually based on projected customs clearance transactions, and
$0.5 million
is collateral for the US purchasing card program, restricted for the duration of the card program.
Marketable Securities
— All of our investments in marketable securities are classified as available-for-sale at the respective balance sheet dates. Marketable securities classified as available-for-sale are recorded at fair value based upon quoted market prices, and any temporary difference between the cost and fair value of the investment is presented as a separate component of accumulated other comprehensive income (loss). We recognize gains and losses on the date our investments mature or are sold and record these gains and losses in other income, net. The specific identification method is used to determine the gains and losses on investments in marketable securities.
Concentrations of Credit Risk —
Financial instruments, which potentially subject us to credit risk, include cash and cash equivalents, marketable securities, and trade accounts receivable. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of high quality and sound financial condition. Our investments are in low-risk instruments and we limit our credit exposure in any one institution or type of investment instrument based upon criteria including creditworthiness.
At
December 31, 2016
, our accounts receivable from Applied Materials and Lam Research were
$31.1 million
, or
41.1%
and
$14.3 million
, or
18.9%
of our total accounts receivable, respectively. At
December 31, 2015
, our accounts receivable from Applied Materials and Lam Research were
$17.1 million
, or
31.2%
and
$7.3 million
, or
13.3%
of our total accounts receivable, respectively. No other customer balance exceeded
10%
of our total accounts receivable balance at
December 31, 2016
or
December 31, 2015
. We have established an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information.
Accounts Receivable and Allowance for Doubtful Accounts —
Accounts receivable are recorded at net realizable value. We maintain a credit approval process and we make significant judgments in connection with assessing our customers’ ability to pay at the time of shipment. Despite this assessment, from time to time, our customers are unable to meet their payment obligations. We continuously monitor our customers’ credit worthiness and use our judgment in establishing a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. While such credit losses have historically been within our expectations and the provisions established, there is no assurance that we will continue to experience the same credit loss rates that we have in the past. A significant change in the liquidity or financial position of our customers could have a material adverse impact on the collectability of accounts receivable and our future operating results.
Changes in allowance for doubtful accounts are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Balances at beginning of period
|
|
$
|
8,739
|
|
|
$
|
1,052
|
|
|
$
|
1,390
|
|
Additions - charged to expense
|
|
1,332
|
|
|
7,837
|
|
|
332
|
|
Deductions - write-offs, net of recoveries
|
|
(8,128
|
)
|
|
(150
|
)
|
|
(670
|
)
|
Balances at end of period
|
|
$
|
1,943
|
|
|
$
|
8,739
|
|
|
$
|
1,052
|
|
Inventories
— Inventories include costs of materials, direct labor, manufacturing overhead, in-bound freight, and duty. Inventories are valued at the lower of cost (first-in, first-out method) or market and are presented net of reserves for excess and obsolete inventory.
We regularly review inventory quantities on hand and record a provision to write-down excess and obsolete inventory to its estimated net realizable value, if less than cost, based primarily on historical usage and our estimated forecast of product demand. Demand for our products can fluctuate significantly. A significant decrease in demand could result in an increase in the charges for excess inventory quantities on hand.
In addition, our industry is subject to technological change, new product development, and product technological obsolescence that could result in an increase in the amount of obsolete inventory quantities on hand. Therefore, any significant unanticipated changes in demand or technological developments could have a significant impact on the value of our inventory and our reported operating results.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
Property and Equipment
— Property and equipment is stated at cost or estimated fair value if acquired in a business combination. Depreciation is computed over the estimated useful lives using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings,
20
to
40
years; machinery, equipment, furniture and fixtures and vehicles,
three
to
10
years; and computer and communication equipment,
three
years.
Amortization of leasehold improvements and leased equipment is calculated using the straight-line method over the lease term or the estimated useful life of the assets, whichever period is shorter. Leasehold additions and improvements are capitalized, while maintenance and repairs are expensed as incurred.
When depreciable assets are retired, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any related gains or losses are included in other income, net, in our Consolidated Statements of Operations.
Intangible Assets, Goodwill and Other Long-Lived Assets
— As a result of our acquisitions, we identified and recorded intangible assets and goodwill. Intangible assets are valued based on estimates of future cash flows and amortized over their estimated useful lives. Goodwill is subject to annual impairment testing, as well as testing upon the occurrence of any event that indicates a potential impairment. Intangible assets and other long-lived assets are subject to an impairment test if there is an indicator of impairment. The carrying value and ultimate realization of these assets is dependent upon our estimates of future earnings and benefits that we expect to generate from their use. If our expectations of future results and cash flows are significantly diminished, intangible assets and goodwill may be impaired and the resulting charge to operations may be material. When we determine that the carrying value of intangibles or other long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we use the projected undiscounted cash flow method to determine whether an impairment exists, and then measure the impairment using discounted cash flows.
The estimation of useful lives and expected cash flows requires us to make significant judgments regarding future periods that are subject to some factors outside of our control. Changes in these estimates can result in significant revisions to our carrying value of these assets and may result in material charges to our results of operations.
The annual impairment test for goodwill can be performed using an assessment of qualitative factors in determining if it is more likely than not that goodwill is impaired. If this assessment indicates that it is more likely than not that goodwill is impaired, the next step of impairment testing compares the fair value of a reporting unit to its carrying value. Goodwill would be impaired if the resulting implied fair value of goodwill was less than the recorded carrying value of the goodwill.
Revenue Recognition
— We recognize revenue from product sales upon transfer of title and risk of loss to our customers provided that there is evidence of an arrangement, the sales price is fixed or determinable, and the collection of the related receivable is reasonably assured. In most transactions, we have no obligations to our customers after the date products are shipped, other than pursuant to warranty obligations. Shipping and handling fees billed to customers, if any, are recognized as revenue. The related shipping and handling costs are recognized in cost of sales.
We maintain a worldwide support organization in eight countries, including the United States, the PRC, Japan, Korea, Taiwan, Canada, Germany, and Great Britain. Support services include warranty and non-warranty repair services, upgrades, and refurbishments on the products we sell. Repairs that are covered under our standard warranty do not generate revenue.
As part of our ongoing service business, we also provide our customers with extended warranty and preventive maintenance service contract options on the products we sell. Any up-front fees received for extended warranties or maintenance plans are deferred and recognized ratably over the service periods, as defined in the agreements. We deferred revenue related to service contracts and extended warranties totaling
$40.8 million
as of
December 31, 2016
and
$45.7 million
as of
December 31, 2015
.
Based on the credit worthiness of certain customers, we may require payment prior to the manufacture or shipment of products purchased by these customers. Cash payments received prior to shipment are recorded as customer deposits, a current liability, and then recognized as revenue when appropriate based upon the revenue recognition criteria discussed earlier in this section. As of
December 31, 2016
and
December 31, 2015
the total amount of customer deposits was
$5.8 million
and
$3.2 million
, respectively. We do not offer price protection to customers, or allow returns, unless covered by our normal policy for repair of defective products.
Research and Development Expenses
— Costs incurred to advance, test or otherwise modify our proprietary technology or develop new technologies are considered research and development costs and are expensed when incurred. These costs are primarily comprised of costs associated with the operation of our laboratories and research facilities, including internal labor, materials, and overhead.
Warranty Costs
— We provide for the estimated costs to fulfill customer warranty obligations upon the recognition of the related revenue. We offer warranty coverage for a majority of our Precision Power products for periods typically ranging from
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
12 to 24 months after shipment. We warranted our inverter products for five to ten years and provided the option to purchase additional warranty coverage up to 20 years. The warranty expense accrued related to our standard inverter product warranties is now considered part of our discontinued operations and is recorded as such on our Consolidated Balance Sheets. See
Note 3. Discontinued Operations
for more information. See
Note 12.
Warranties
for more information on our warranties from continuing operations. We estimate the anticipated costs of repairing our products under such warranties based on the historical costs of the repairs. The assumptions we use to estimate warranty accruals are reevaluated periodically, in light of actual experience, and when appropriate, the accruals are adjusted. Should product failure rates differ from our estimates, actual costs could vary significantly from our expectations.
Stock-Based Compensation
— Accounting for stock-based compensation requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. We have estimated the fair value of all stock options and awards on the date of grant using the Black-Scholes-Merton pricing model, which is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee option exercise behaviors, risk free interest rates and expected dividends. We also estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from our estimates. Our expected volatility assumption is based on the historical daily closing price of our stock over a period equivalent to the expected life of the options. Our 2012-2014 Long-term Incentive Plan included a cash settlement option for awards of restricted stock units.
Income Taxes
— We follow the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for future tax consequences. A deferred tax asset or liability is computed for both the expected future impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry-forwards. Tax rate changes are reflected in the period such changes are enacted.
We assess the recoverability of our net deferred tax assets and the need for a valuation allowance on a quarterly basis. Our assessment includes a number of factors including historical results and taxable income projections for each jurisdiction. The ultimate realization of deferred income tax assets is dependent on the generation of taxable income in appropriate jurisdictions during the periods in which those temporary differences are deductible. We consider the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in determining the amount of the valuation allowance. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, we determine if we will realize the benefits of these deductible differences.
Accounting for income taxes requires a two-step approach to recognize and measure uncertain tax positions. In general, we are subject to regular examination of our income tax returns by the Internal Revenue Service and other tax authorities. The first step is to evaluate the tax position for recognition by determining, if based on the technical merits, it is more likely than not that the position will be sustained upon audit, including resolutions of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity.
Commitments and Contingencies
— From time to time we are involved in disputes and legal actions arising in the normal course of our business. While we currently believe that the amount of any ultimate loss would not be material to our financial position, the outcome of these actions is inherently difficult to predict. In the event of an adverse outcome, the ultimate loss could have a material adverse effect on our financial position or reported results of operations in a particular period. An unfavorable decision, particularly in patent litigation, could require material changes in production processes and products or result in our inability to ship products or components found to have violated third-party patent rights. We accrue loss contingencies when it is probable that a loss has occurred or will occur and the amount of the loss can be reasonably estimated. Our estimates of probability of losses are subjective, involve significant judgment and uncertainties, and are based on the best information we have at any given point in time. Resolution of these uncertainties in a manner inconsistent with our expectations could have a significant impact on our results of operations and financial condition.
NEW ACCOUNTING STANDARDS
From time to time, the Financial Accounting Standards Board ("FASB") or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”).
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" and has subsequently issued several supplemental and/or clarifying ASUs (collectively known as "ASC 606"). ASC 606 implements a five step model for how
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
an entity should recognize revenue in order 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. This guidance will be effective for fiscal periods beginning after December 15, 2017 and for the interim periods within that year. Early application is permitted only as of annual reporting periods (including reporting periods within those periods) beginning after December 16, 2016. Advanced Energy has established a cross-functional implementation team to analyze its current portfolio of customer contracts. The implementation team is also responsible for identifying and implementing changes to existing business processes, controls, and systems in order to support revenue recognition and disclosure under the new standard. The standard permits the use of either the retrospective or cumulative effect transition method. Our team is continuing to evaluate the impact that the adoption will have on our Consolidated Financial Statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing reporting.
In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes," to simplify financial reporting and more closely conform U.S. GAAP to International Financial Reporting Standards (“IFRS”). Under this guidance, Advanced Energy has classified all deferred tax assets and liabilities by taxing jurisdiction, along with any related valuation allowances, as either a single non-current asset or liability on the balance sheet. This guidance is effective for fiscal years - and interim periods within those fiscal years - beginning after December 15, 2016. Early adoption was permitted. We adopted ASU 2015-17 during the fourth quarter of fiscal year 2016, and retrospectively applied it to our deferred tax assets and liabilities as of December 31, 2015.
The following table reflects the impact of retrospectively applying this guidance to the Consolidated Balance Sheet deferred tax assets and liabilities as of December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
As previously reported
|
|
Adjustment
|
|
As recast
|
|
|
|
|
|
|
|
Current deferred income tax assets
|
|
$
|
6,004
|
|
|
$
|
(6,004
|
)
|
|
—
|
|
Current assets of discontinued operations
|
|
41,902
|
|
|
(14,294
|
)
|
|
27,608
|
|
Total current assets
|
|
342,775
|
|
|
(20,298
|
)
|
|
322,477
|
|
Non-current deferred income tax assets
|
|
30,398
|
|
|
5,819
|
|
|
36,217
|
|
Non-current assets of discontinued operations
|
1,271
|
|
|
14,294
|
|
|
15,565
|
|
Total assets
|
|
462,688
|
|
|
(185
|
)
|
|
462,503
|
|
|
|
|
|
|
|
|
Deposits and other
|
|
3,319
|
|
|
(114
|
)
|
|
3,205
|
|
Total current liabilities
|
|
104,084
|
|
|
(114
|
)
|
|
103,970
|
|
Non-current deferred income tax liabilities
|
|
1,181
|
|
|
(71
|
)
|
|
1,110
|
|
Total liabilities
|
|
199,108
|
|
|
(185
|
)
|
|
198,923
|
|
Total liabilities and stockholders' equity
|
|
462,688
|
|
|
(185
|
)
|
|
462,503
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
35,107
|
|
|
—
|
|
|
35,107
|
|
In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, and classification on the statement of cash flows. ASU 2016-09 was effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption was permitted. We adopted ASU 2016-09 during the fourth quarter of 2016. Under this guidance, Advanced Energy classifies the excess tax benefits from stock-based compensation arrangements as a discrete item within income tax expense, rather than recognizing such excess income tax benefits in additional paid-in capital. As required by ASU 2016-09, Advanced Energy applied this classification guidance as of January 1, 2016.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The following table shows the impact of retrospectively applying this guidance to the Condensed Consolidated Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016
|
|
|
As previously reported
|
|
Adjustment
|
|
As recast
|
Statement of Earnings:
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
89,449
|
|
|
—
|
|
|
$
|
89,449
|
|
Provision for income taxes
|
|
12,937
|
|
|
(623
|
)
|
|
12,314
|
|
Income from continuing operations
|
|
$
|
76,512
|
|
|
$
|
623
|
|
|
$
|
77,135
|
|
Income from discontinued operations, net of income taxes
|
6,661
|
|
|
—
|
|
|
6,661
|
|
Net income
|
|
$
|
83,173
|
|
|
$
|
623
|
|
|
$
|
83,796
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
Continuing operations:
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
1.93
|
|
|
$
|
—
|
|
|
$
|
1.94
|
|
Diluted earnings per share
|
|
$
|
1.91
|
|
|
$
|
—
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
|
Net income:
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
2.09
|
|
|
$
|
—
|
|
|
$
|
2.11
|
|
Diluted earnings per share
|
|
$
|
2.08
|
|
|
$
|
—
|
|
|
$
|
2.09
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
Basic
|
|
39,723
|
|
|
—
|
|
|
39,723
|
|
Diluted
|
|
40,015
|
|
|
—
|
|
|
40,015
|
|
Also under ASU 2016-09,
exce
ss income tax benefits from stock-based compensation arrangements are classified as cash flow from operations, rather than as cash flow from financing activities. Advanced Energy has elected to apply the presentation of excess tax benefits using the retrospective transition method. The following tables show the impact of retrospectively applying this guidance to the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016 and to the Consolidated Statements of Cash Flows for the twelve months ended 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016
|
|
|
As previously reported
|
|
Adjustment
|
|
As recast
|
Statement of Cash Flows:
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
77,504
|
|
|
$
|
623
|
|
|
$
|
78,127
|
|
Net cash provided by investing activities
|
|
1,892
|
|
|
—
|
|
|
1,892
|
|
Net cash provided by financing activities
|
|
2,349
|
|
|
(623
|
)
|
|
1,726
|
|
Effect of currency translation on cash
|
|
(550
|
)
|
|
—
|
|
|
(550
|
)
|
Increase in cash and cash equivalents
|
|
$
|
81,195
|
|
|
—
|
|
|
$
|
81,195
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2015
|
|
|
As previously reported
|
|
Adjustment
|
|
As recast
|
Statement of Cash Flows:
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
104,808
|
|
|
$
|
(99
|
)
|
|
$
|
104,709
|
|
Net cash used in investing activities
|
|
(13,265
|
)
|
|
—
|
|
|
(13,265
|
)
|
Net cash used in financing activities
|
|
(45,641
|
)
|
|
99
|
|
|
(45,542
|
)
|
Effect of currency translation on cash
|
|
(1,467
|
)
|
|
—
|
|
|
(1,467
|
)
|
Increase in cash and cash equivalents
|
|
$
|
44,435
|
|
|
—
|
|
|
$
|
44,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2014
|
|
|
As previously reported
|
|
Adjustment
|
|
As recast
|
Statement of Cash Flows:
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
75,586
|
|
|
$
|
1,576
|
|
|
$
|
77,162
|
|
Net cash used in investing activities
|
|
(54,996
|
)
|
|
—
|
|
|
(54,996
|
)
|
Net cash used in financing activities
|
|
(32,480
|
)
|
|
(1,576
|
)
|
|
(34,056
|
)
|
Effect of currency translation on cash
|
|
(950
|
)
|
|
—
|
|
|
(950
|
)
|
Decrease in cash and cash equivalents
|
|
$
|
(12,840
|
)
|
|
—
|
|
|
$
|
(12,840
|
)
|
Advanced Energy has elected to continue to estimate the number of stock-based awards expected to vest, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within the year of adoption. Early adoption is permitted. Advanced Energy is currently assessing and has not yet determined the impact ASU 2016-02 may have on its Consolidated Financial Statements.
|
|
NOTE 2.
|
BUSINESS ACQUISITIONS
|
Power Control Module
On January 27, 2014, we acquired the intellectual property related to AEG Power Solutions' Power Control Modules ("PCM"). PCM is comprised of the Thyro-Family of products and accessories and serves numerous power control applications in different industries ranging from materials thermal processing through chemical processing, glass manufacturing and numerous other general industrial power applications. This acquisition is expected to broaden our product offerings and will be added to our precision power portfolio. We paid total consideration of
$31.5 million
including contingent consideration, of which
$15.0 million
is included in Intangibles,
$16.4 million
in Goodwill, and
$0.1 million
in Property, plant, and equipment. Included in Goodwill is
$1.4 million
of contingent consideration that was paid in the first quarter of 2015. All assets and liabilities are recorded in the functional currency of the entity and are subject to changes due to translation at each balance sheet date. The goodwill associated with the acquisition is the result of expected synergies and expansion of our product offerings into new markets.
HiTek Power Group
On April 12, 2014, Advanced Energy acquired all outstanding common stock of HiTek Power Group ("HiTek"), a privately-held provider of high voltage power solutions. Based in the United Kingdom, HiTek offers a comprehensive portfolio of high voltage and custom built power conversion products, ranging from 100V to 500kV, designed to meet the demanding requirements of OEMs worldwide. These products target applications including semiconductor wafer processing and metrology, scientific instrumentation, mass spectrometry, industrial printing, and analytical x-ray systems for industrial and analytical applications. HiTek's unique product architecture, encapsulation technology and control algorithms, combined with deep knowledge of its customer-specific applications, have made it a leading provider of critical, high-end, high voltage power solutions. We acquired HiTek to expand our product offerings in our precision power portfolio.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The components of the fair value of the total consideration transferred for the HiTek acquisition are as follows:
|
|
|
|
|
Cash paid to owners
|
$
|
3,525
|
|
Cash acquired
|
(6,889
|
)
|
Total fair value of consideration received
|
$
|
(3,364
|
)
|
The following table summarizes estimated fair values of the assets acquired and liabilities assumed as of
April 12, 2014
:
|
|
|
|
|
Accounts receivable
|
$
|
2,867
|
|
Inventories
|
4,980
|
|
Other current assets
|
415
|
|
Property and equipment
|
1,291
|
|
Deferred taxes on intangible values
|
2,020
|
|
Current liabilities
|
(3,836
|
)
|
Long-term liabilities
|
(22,725
|
)
|
Total tangible assets, net
|
(14,988
|
)
|
|
|
Amortizable intangible assets:
|
|
Tradename
|
336
|
|
Technology
|
4,029
|
|
Customer relationships
|
8,225
|
|
Total amortizable intangible assets
|
12,590
|
|
Total identifiable net assets
|
(2,398
|
)
|
Gain on bargain purchase
|
(966
|
)
|
Total fair value of consideration received
|
$
|
(3,364
|
)
|
A summary of the intangible assets acquired, amortization method and estimated useful lives as of
April 12, 2014
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
Amortization Method
|
|
Useful Life in Years
|
Technology
|
|
$
|
4,029
|
|
|
Straight-line
|
|
10
|
Tradename
|
|
336
|
|
|
Straight-line
|
|
2.5
|
Customer relationships
|
|
8,225
|
|
|
Straight-line
|
|
15
|
|
|
$
|
12,590
|
|
|
|
|
|
All assets and liabilities are recorded in the functional currency of the entity and are subject to changes due to translation at each balance sheet date.
UltraVolt, Inc.
On
August 4, 2014
, Advanced Energy acquired all outstanding common stock of UltraVolt, Inc. ("UltraVolt"), a privately-held provider of high voltage power solutions. Based in Ronkonkoma, New York, UltraVolt offers a comprehensive portfolio of high voltage power supplies and modules ranging from benchtop and rack mount systems to microsize printed circuit board mount modules. Its standard DC-to-DC product line consists of over 1,500 models, which can be combined with accessories and options to create thousands of product configurations. Serving over 100 markets, UltraVolt's fixed-frequency, high-voltage topology provides wide input and output operating ranges while retaining excellent stability and efficiencies. We acquired UltraVolt to expand our high voltage product offerings in our precision power portfolio.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The components of the fair value of the total consideration transferred for the UltraVolt acquisition are as follows:
|
|
|
|
|
Purchase price
|
$
|
30,200
|
|
Net working capital adjustment
|
1,073
|
|
Total fair value of consideration transferred
|
$
|
31,273
|
|
The following table summarizes estimated fair values of the assets acquired and liabilities assumed as of
August 4, 2014
:
|
|
|
|
|
Cash
|
$
|
758
|
|
Accounts receivable
|
1,694
|
|
Inventories
|
2,599
|
|
Other current assets
|
264
|
|
Property and equipment
|
424
|
|
Long-term assets
|
711
|
|
Deferred taxes on intangible values
|
(2,087
|
)
|
Current liabilities
|
(1,053
|
)
|
Total tangible assets, net
|
3,310
|
|
|
|
Amortizable intangible assets:
|
|
Technology
|
2,100
|
|
Tradename
|
200
|
|
Customer relationships
|
8,600
|
|
Total amortizable intangible assets
|
10,900
|
|
Total identifiable net assets
|
14,210
|
|
Goodwill
|
17,063
|
|
Total fair value of consideration transferred
|
$
|
31,273
|
|
A summary of the intangible assets acquired, amortization method and estimated useful lives as of
August 4, 2014
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
Amortization Method
|
|
Useful Life in Years
|
Technology
|
|
$
|
2,100
|
|
|
Straight-line
|
|
10
|
Tradename
|
|
200
|
|
|
Straight-line
|
|
2.5
|
Customer relationships
|
|
8,600
|
|
|
Straight-line
|
|
12
|
|
|
$
|
10,900
|
|
|
|
|
|
The goodwill associated with the acquisition is the result of expected synergies and expansion of the technology into additional markets that we already serve.
|
|
NOTE 3.
|
DISCONTINUED OPERATIONS
|
In December 2015, we completed the wind down of engineering, manufacturing and sales of our solar inverter product line (the "inverter business"). Accordingly, the results of our inverter business has been reflected as “Income (loss) from discontinued operations, net of income taxes” on our Condensed Consolidated Statements of Operations for all periods presented herein.
The effect of our sales of extended inverter warranties to our customers continues to be reflected in deferred revenue in our Condensed Consolidated Balance Sheets. Deferred revenue for extended inverter warranties and the associated costs of warranty service will be reflected in Sales and Cost of goods sold, respectively, from continuing operations in future periods in our Consolidated Statement of Operations, as the deferred revenue is earned and the associated services are rendered. Extended warranties related to the inverter product line are no longer offered.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The significant items included in "Income (loss) from discontinued operations, net of income taxes" are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Sales
|
$
|
—
|
|
|
$
|
95,856
|
|
|
$
|
215,763
|
|
Cost of sales
|
154
|
|
|
139,045
|
|
|
209,795
|
|
Total operating (income) expenses (including restructuring)
|
(3,894
|
)
|
|
232,262
|
|
|
51,637
|
|
Operating income (loss) from discontinued operations
|
3,740
|
|
|
(275,451
|
)
|
|
(45,669
|
)
|
Other income (expense)
|
2,636
|
|
|
(55
|
)
|
|
(658
|
)
|
Income (loss) from discontinued operations before income taxes
|
6,376
|
|
|
(275,506
|
)
|
|
(46,327
|
)
|
Benefit for income taxes
|
(4,130
|
)
|
|
(33,538
|
)
|
|
(23,814
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
$
|
10,506
|
|
|
$
|
(241,968
|
)
|
|
$
|
(22,513
|
)
|
Assets and Liabilities of discontinued operations within the Consolidated Balance Sheets are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2016
|
|
2015
|
Cash and cash equivalents
|
|
$
|
7,564
|
|
|
$
|
11,277
|
|
Accounts and other receivables, net
|
|
1,670
|
|
|
16,331
|
|
Inventories
|
|
167
|
|
|
—
|
|
Current assets of discontinued operations
|
|
$
|
9,401
|
|
|
$
|
27,608
|
|
|
|
|
|
|
Intangibles and other assets, net
|
|
70
|
|
|
1,189
|
|
Deferred income tax assets
|
|
15,560
|
|
|
14,376
|
|
Non-current assets of discontinued operations
|
|
$
|
15,630
|
|
|
$
|
15,565
|
|
|
|
|
|
|
Accounts payable and other accrued expenses
|
|
3,684
|
|
|
19,261
|
|
Accrued warranty
|
|
9,254
|
|
|
11,852
|
|
Accrued restructuring
|
|
481
|
|
|
5,368
|
|
Current liabilities of discontinued operations
|
|
$
|
13,419
|
|
|
$
|
36,481
|
|
|
|
|
|
|
Accrued warranty
|
|
20,976
|
|
|
27,124
|
|
Other liabilities
|
|
181
|
|
|
178
|
|
Non-current liabilities of discontinued operations
|
|
$
|
21,157
|
|
|
$
|
27,302
|
|
The geographic distribution of pretax income from continuing operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Domestic
|
|
$
|
13,776
|
|
|
$
|
13,237
|
|
|
$
|
16,735
|
|
Foreign
|
|
114,300
|
|
|
92,205
|
|
|
69,270
|
|
|
|
$
|
128,076
|
|
|
$
|
105,442
|
|
|
$
|
86,005
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The provision for income taxes from continuing operations is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Current:
|
|
|
|
|
|
|
Federal
|
|
$
|
3,187
|
|
|
$
|
5,823
|
|
|
$
|
6,436
|
|
State
|
|
351
|
|
|
335
|
|
|
481
|
|
Foreign
|
|
3,081
|
|
|
5,950
|
|
|
4,312
|
|
Total current provision
|
|
$
|
6,619
|
|
|
$
|
12,108
|
|
|
$
|
11,229
|
|
Deferred:
|
|
|
|
|
|
|
Federal
|
|
$
|
3,110
|
|
|
$
|
569
|
|
|
$
|
832
|
|
State
|
|
1,564
|
|
|
870
|
|
|
587
|
|
Foreign
|
|
(165
|
)
|
|
8,413
|
|
|
3,862
|
|
Total deferred provision
|
|
4,509
|
|
|
9,852
|
|
|
5,281
|
|
Total provision for income taxes
|
|
$
|
11,128
|
|
|
$
|
21,960
|
|
|
$
|
16,510
|
|
The Company's effective income tax rate is lower than the 35% U.S. statutory tax rate primarily because of benefits from lower-taxed global operations. The following reconciles our effective tax rate on income from continuing operations to the federal statutory rate of 35%:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Income taxes per federal statutory rate
|
|
$
|
44,826
|
|
|
$
|
37,498
|
|
|
$
|
29,786
|
|
State income taxes, net of federal deduction
|
|
963
|
|
|
1,204
|
|
|
135
|
|
Change in valuation allowance
|
|
(85
|
)
|
|
6,503
|
|
|
12
|
|
Stock based compensation
|
|
1,117
|
|
|
(166
|
)
|
|
(112
|
)
|
Executive compensation
|
|
103
|
|
|
—
|
|
|
751
|
|
Domestic production activity benefit
|
|
(144
|
)
|
|
—
|
|
|
(124
|
)
|
Tax effect of foreign operations
|
|
(31,651
|
)
|
|
(22,495
|
)
|
|
(12,081
|
)
|
Tax credits
|
|
(4,495
|
)
|
|
(969
|
)
|
|
(2,208
|
)
|
Other permanent items, net
|
|
494
|
|
|
385
|
|
|
351
|
|
|
|
$
|
11,128
|
|
|
$
|
21,960
|
|
|
$
|
16,510
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to be reversed. Significant deferred tax assets and liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
Deferred tax assets
|
|
|
|
|
Stock based compensation
|
|
$
|
2,281
|
|
|
$
|
3,716
|
|
Net operating loss and tax credit carryforwards
|
|
36,145
|
|
|
49,374
|
|
Pension obligation
|
|
2,338
|
|
|
3,662
|
|
Excess and obsolete inventory
|
|
3,031
|
|
|
3,692
|
|
Deferred revenue
|
|
11,998
|
|
|
12,423
|
|
Vacation accrual
|
|
932
|
|
|
750
|
|
Restructuring
|
|
75
|
|
|
83
|
|
Bad debt reserve
|
|
121
|
|
|
114
|
|
Employee bonuses and commissions
|
|
1,908
|
|
|
1,191
|
|
Unrealized gain/loss
|
|
733
|
|
|
1,506
|
|
Warranty reserve
|
|
63
|
|
|
91
|
|
Other
|
|
1,700
|
|
|
899
|
|
Deferred tax assets
|
|
61,325
|
|
|
77,501
|
|
Less: Valuation allowance
|
|
(26,120
|
)
|
|
(37,208
|
)
|
Net deferred tax assets
|
|
35,205
|
|
|
40,293
|
|
Deferred tax liabilities
|
|
|
|
|
Depreciation and amortization
|
|
2,266
|
|
|
3,875
|
|
Foreign other
|
|
1,538
|
|
|
1,050
|
|
Other
|
|
212
|
|
|
260
|
|
Deferred tax liabilities
|
|
4,016
|
|
|
5,185
|
|
Net deferred tax assets
|
|
$
|
31,189
|
|
|
$
|
35,108
|
|
As of December 31, 2016, the Company has recorded a valuation allowance on its U.S. domestic deferred tax assets of approximately
$2.0 million
related to state net operating losses. The remaining valuation allowance on deferred tax assets approximates
$24.1 million
and relates to foreign losses that are both operating and capital in nature. The foreign operating losses are attributable to Germany, the UK, Japan, and India. During 2016, the Company reduced the valuation allowance on the Japan losses by
$0.9 million
reflecting the improved operating results of the Japan operations and the anticipated realization of a portion of such losses. As of December 31, 2016, with respect to the foreign losses other than Japan, there is not sufficient positive evidence to conclude that such losses will be recognized. The foreign capital losses are attributable to the UK and may carry forward to offset future capital gains only. The Company has determined that the future utilization of these capital losses is not more likely than not.
As of December 31, 2016, the Company had federal, foreign, and state tax loss carryforwards of approximately
$25.5 million
,
$90.1 million
, and
$86.9 million
, respectively. The federal and state tax loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue Code and applicable state laws. The US federal tax losses will expire from 2028 to 2035. The US state losses will expire from 2018 to 2036. The foreign tax losses consist of approximately
$63.2 million
of German losses,
$19.1 million
of UK losses,
$4.2 million
of Japan losses, and
$3.5 million
of India losses. As noted above, the German, UK, and India losses are subject to full valuation allowances. The Japan losses are subject to a partial valuation allowance. The Germany, UK, and India losses have no expiration date and the Japan losses will begin to expire in 2021.
As of December 31, 2016, the Company has not provided for deferred income taxes on approximately
$398.0 million
of undistributed foreign earnings. These earnings are considered indefinitely invested in operations outside of the U.S. as the Company intends to utilize these amounts to fund future expansion of its foreign operations. If these earnings were distributed
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
to the U.S. in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, the Company would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable.
We account for uncertain tax positions by applying a minimum recognition threshold to tax positions before recognizing these positions in the financial statements. The reconciliation of our total gross unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Balance at beginning of period
|
|
$
|
10,049
|
|
|
$
|
8,001
|
|
|
$
|
5,523
|
|
Additions based on tax positions taken during a prior period
|
|
104
|
|
|
433
|
|
|
136
|
|
Additions based on tax positions taken during the current period
|
|
2,318
|
|
|
3,413
|
|
|
3,757
|
|
Reductions related to a lapse of applicable statute of limitations
|
|
(1,070
|
)
|
|
(1,798
|
)
|
|
(1,415
|
)
|
Balance at end of period
|
|
$
|
11,401
|
|
|
$
|
10,049
|
|
|
$
|
8,001
|
|
The full
$11.4 million
of unrecognized tax benefits, if recognized, will impact the Company’s effective tax rate. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. We had an immaterial amount of accrued interest and penalties at December 31, 2016 and 2015. We do not anticipate a material change to the amount of unrecognized tax positions within the next 12 months.
During the fourth quarter of 2016, the Company settled the 2010-2012 U.S. federal income tax examination resulting in the recognition of a net tax benefit of
$2.4 million
. Further, the IRS settlement resulted in the expiration of the statute of limitations for the same period resulting in the recognition of
$1.2 million
associated with previously unrecognized tax benefits. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2013.
|
|
NOTE 5.
|
EARNINGS PER SHARE
|
Basic earnings per share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding (using the if-converted and treasury stock methods), if our outstanding stock options and restricted stock units had been converted to common shares, and if such assumed conversion is dilutive.
The following is a reconciliation of the weighted-average shares outstanding used in the calculation of basic and diluted earnings per share for the years ended
December 31, 2016
,
2015
, and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Income from continuing operations, net of income taxes
|
|
$
|
116,948
|
|
|
$
|
83,482
|
|
|
$
|
69,495
|
|
|
|
|
|
|
|
|
Basic weighted-average common shares outstanding
|
|
39,720
|
|
|
40,746
|
|
|
40,420
|
|
Assumed exercise of dilutive stock options and restricted stock units
|
|
311
|
|
|
331
|
|
|
614
|
|
Diluted weighted-average common shares outstanding
|
|
40,031
|
|
|
41,077
|
|
|
41,034
|
|
Continuing operations:
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
2.94
|
|
|
$
|
2.05
|
|
|
$
|
1.72
|
|
Diluted earnings per share
|
|
$
|
2.92
|
|
|
$
|
2.03
|
|
|
$
|
1.69
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The following stock options and restricted units were excluded in the computation of diluted earnings per share because they were anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Stock options
|
|
—
|
|
|
155
|
|
|
91
|
|
Restricted stock units
|
|
1
|
|
|
1
|
|
|
—
|
|
Stock Buyback
In May 2014, our Board of Directors authorized a program to repurchase up to
$25.0 million
of our stock over a twelve-month period. Under this program, during the
twelve months
ended December 31, 2014, we repurchased and retired
1.4 million
shares of our common stock for a total of
$25.0 million
. We completed the share repurchase program in the second quarter of 2014.
In September 2015 our Board of Directors authorized a program to repurchase up to
$150.0 million
of our stock over a thirty-month period. As of February 20, 2017, we have $100 million remaining available for the repurchase of shares. In November 2015 we entered into an accelerated stock repurchase arrangement with Morgan Stanley & Co. LLC (the “Counterparty”) pursuant to a Fixed Dollar Accelerated Share Repurchase Transaction (the “ASR Agreement”) to purchase
$50.0 million
of shares of our common stock in the open market. In accordance with the ASR Agreement, we paid
$50.0 million
at the beginning of the contract and received an initial delivery of
1.4 million
shares of our common stock. In April 2016, we received a final delivery of
0.3 million
shares of our common stock. A total of
1.7 million
shares of our common stock was repurchased under the ASR Agreement at an average price of
$28.99
per share. We retired the shares repurchased under the ASR Agreement and have therefore recognized the
$50.0 million
share repurchase as a reduction to Stockholders Equity.
All shares repurchased were executed in the open market and no shares were repurchased from related parties. Repurchased shares were retired and assumed the status of authorized and unissued shares.
|
|
NOTE 6.
|
MARKETABLE SECURITIES AND ASSETS MEASURED AT FAIR VALUE
|
Our investments with original maturities of more than three months at time of purchase and that are intended to be held for no more than 12 months, are considered marketable securities available for sale.
Our marketable securities consist of commercial paper and certificates of deposit as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2015
|
|
Cost
|
|
Fair Value
|
|
Cost
|
|
Fair Value
|
Commercial paper
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,989
|
|
|
$
|
4,995
|
|
Certificates of deposit
|
4,735
|
|
|
4,737
|
|
|
7,008
|
|
|
6,991
|
|
Total marketable securities
|
$
|
4,735
|
|
|
$
|
4,737
|
|
|
$
|
11,997
|
|
|
$
|
11,986
|
|
The maturities of our marketable securities available for sale as of
December 31, 2016
are as follows:
|
|
|
|
|
|
|
|
|
|
Earliest
|
|
|
|
Latest
|
Certificates of deposit
|
|
4/10/2017
|
|
to
|
|
10/25/2017
|
The value and liquidity of the marketable securities we hold are affected by market conditions, as well as the ability of the issuers of such securities to make principal and interest payments when due, and the functioning of the markets in which these securities are traded. As of
December 31, 2016
, we do not believe any of the underlying issuers of our marketable securities are at risk of default.
The following tables present information about our marketable securities measured at fair value, on a recurring basis, as of
December 31, 2016
and
December 31, 2015
. The tables indicate the fair value hierarchy of the valuation techniques utilized to determine fair value. We did not have any financial liabilities measured at fair value, on a recurring basis, as of
December 31, 2016
or
December 31, 2015
.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Certificates of deposit
|
$
|
—
|
|
|
$
|
4,737
|
|
|
$
|
—
|
|
|
$
|
4,737
|
|
Total marketable securities
|
$
|
—
|
|
|
$
|
4,737
|
|
|
$
|
—
|
|
|
$
|
4,737
|
|
|
|
December 31, 2015
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Commercial paper
|
$
|
—
|
|
|
$
|
4,995
|
|
|
$
|
—
|
|
|
$
|
4,995
|
|
Certificates of deposit
|
—
|
|
|
6,991
|
|
|
—
|
|
|
6,991
|
|
Total marketable securities
|
$
|
—
|
|
|
$
|
11,986
|
|
|
$
|
—
|
|
|
$
|
11,986
|
|
There were no transfers in or out of Level 1, 2, or 3 fair value measurements during the year ended
December 31, 2016
.
|
|
NOTE 7.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
We are impacted by changes in foreign currency exchange rates. We manage these risks through the use of derivative financial instruments, primarily forward contracts with banks. During the
years ended
December 31, 2016
,
2015
, and
2014
we entered into foreign currency exchange forward contracts to manage the exchange rate risk associated with intercompany debt denominated in nonfunctional currencies. These derivative instruments are not designated as hedges; however, they do offset the fluctuations of our intercompany debt due to foreign exchange rate changes. These forward contracts are typically for one month periods. We did not have any currency exchange rate contracts outstanding as of
December 31, 2016
. At
December 31, 2015
and
2014
we had outstanding Euro forward contracts.
The notional amount of foreign currency exchange contracts at
December 31, 2015
and
2014
was
$37.2 million
, and
$14.9 million
, respectively, and the fair value of these contracts was not significant at
December 31, 2015
and
2014
.
During the years ended
December 31, 2016
,
2015
, and
2014
, the gains and losses recorded related to the foreign currency exchange contracts are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Foreign currency (loss) gain from foreign currency exchange contracts
|
|
$
|
(569
|
)
|
|
$
|
1,857
|
|
|
$
|
104
|
|
These gains and losses were offset by corresponding gains and losses on the related intercompany debt and both are included as a component of other income, net, in our Consolidated Statements of Operations.
Our inventories are valued at the lower of cost or market and computed on a first-in, first-out (FIFO) basis. Components of inventories, net of reserves, are as follows:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
2015
|
Parts and raw materials
|
$
|
43,278
|
|
|
$
|
40,578
|
|
Work in process
|
5,292
|
|
|
5,643
|
|
Finished goods
|
7,200
|
|
|
6,352
|
|
|
$
|
55,770
|
|
|
$
|
52,573
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
|
|
NOTE 9.
|
PROPERTY AND EQUIPMENT, NET
|
Property and equipment, net is comprised of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
2015
|
Buildings and land
|
$
|
1,581
|
|
|
$
|
1,623
|
|
Machinery and equipment
|
32,743
|
|
|
30,479
|
|
Computer and communication equipment
|
24,637
|
|
|
19,744
|
|
Furniture and fixtures
|
1,267
|
|
|
1,319
|
|
Vehicles
|
357
|
|
|
215
|
|
Leasehold improvements
|
15,546
|
|
|
15,173
|
|
Construction in process
|
644
|
|
|
15
|
|
|
76,775
|
|
|
68,568
|
|
Less: Accumulated depreciation
|
(63,438
|
)
|
|
(58,923
|
)
|
Total property and equipment, net
|
$
|
13,337
|
|
|
$
|
9,645
|
|
Depreciation expense recorded in continuing operations and included in selling, general and administrative expense is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Depreciation expense
|
|
$
|
3,646
|
|
|
$
|
4,464
|
|
|
$
|
5,463
|
|
The following summarizes the changes in goodwill during the years ended
December 31, 2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
Additions
|
|
Effect of Changes in Exchange Rates
|
|
December 31, 2016
|
Goodwill
|
$
|
42,729
|
|
|
$
|
—
|
|
|
$
|
(604
|
)
|
|
$
|
42,125
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014
|
|
Additions
|
|
Effect of Changes in Exchange Rates
|
|
December 31, 2015
|
Goodwill
|
$
|
43,875
|
|
|
$
|
453
|
|
|
$
|
(1,599
|
)
|
|
$
|
42,729
|
|
Additions during 2015 represent the difference between the purchase price paid and the values assigned to identifiable assets acquired and liabilities assumed in purchase accounting, as described in
Note 2. Business Acquisitions.
|
|
NOTE 11.
|
INTANGIBLE ASSETS
|
Intangible assets consisted of the following as of
December 31, 2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
Gross Carrying Amount
|
|
Effect of Changes in Exchange Rates
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted-Average Useful Life in Years
|
Technology-based
|
|
$
|
14,130
|
|
|
$
|
(2,081
|
)
|
|
$
|
(4,079
|
)
|
|
$
|
7,970
|
|
|
10
|
Customer relationships
|
|
31,276
|
|
|
(3,962
|
)
|
|
(8,157
|
)
|
|
19,157
|
|
|
12
|
Trademarks and other
|
|
2,892
|
|
|
(439
|
)
|
|
(1,509
|
)
|
|
944
|
|
|
10
|
Total intangible assets
|
|
$
|
48,298
|
|
|
$
|
(6,482
|
)
|
|
$
|
(13,745
|
)
|
|
$
|
28,071
|
|
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
Gross Carrying Amount
|
|
Effect of Changes in Exchange Rates
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted-Average Useful Life in Years
|
Technology-based
|
|
$
|
14,130
|
|
|
$
|
(1,535
|
)
|
|
$
|
(2,828
|
)
|
|
$
|
9,767
|
|
|
10
|
Customer relationships
|
|
31,276
|
|
|
(2,805
|
)
|
|
(5,550
|
)
|
|
22,921
|
|
|
12
|
Trademarks and other
|
|
2,892
|
|
|
(247
|
)
|
|
(1,192
|
)
|
|
1,453
|
|
|
10
|
Total intangible assets
|
|
$
|
48,298
|
|
|
$
|
(4,587
|
)
|
|
$
|
(9,570
|
)
|
|
$
|
34,141
|
|
|
|
Amortization expense related to intangible assets is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Amortization expense
|
|
$
|
4,167
|
|
|
$
|
4,368
|
|
|
$
|
4,998
|
|
Estimated amortization expense related to intangibles is as follows:
|
|
|
|
|
|
Year Ending December 31,
|
|
|
2017
|
|
$
|
3,785
|
|
2018
|
|
3,773
|
|
2019
|
|
3,756
|
|
2020
|
|
3,146
|
|
2021
|
|
3,051
|
|
Thereafter
|
|
10,560
|
|
|
|
$
|
28,071
|
|
Provisions of our sales agreements include customary product warranties, ranging from
12
months to
24
months following installation. The estimated cost of our warranty obligation is recorded when revenue is recognized and is based upon our historical experience by product, configuration and geographic region.
Our estimated warranty obligation is included in Other accrued expenses in our Consolidated Balance Sheet. Changes in our product warranty obligation are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Balances at beginning of period
|
|
$
|
1,633
|
|
|
$
|
1,612
|
|
|
$
|
3,187
|
|
Warranty liabilities acquired
|
|
—
|
|
|
—
|
|
|
260
|
|
Increases to accruals related to sales during the period
|
|
1,802
|
|
|
1,071
|
|
|
788
|
|
Warranty expenditures
|
|
(1,058
|
)
|
|
(1,040
|
)
|
|
(2,618
|
)
|
Effect of changes in currency exchange rates
|
|
(48
|
)
|
|
(10
|
)
|
|
(5
|
)
|
Balances at end of period
|
|
$
|
2,329
|
|
|
$
|
1,633
|
|
|
$
|
1,612
|
|
|
|
NOTE 13.
|
STOCK-BASED COMPENSATION
|
As of
December 31, 2016
, we had two active stock-based incentive compensation plans; the 2008 Omnibus Incentive Plan and the Employee Stock Purchase Plan (“ESPP”). All new equity compensation grants are issued under these two plans; however, outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans. At
December 31, 2016
, there were
3.1 million
shares reserved and
2.2 million
shares available for future grant under our stock-based incentive plans.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
2
008 OMNIBUS INCENTIVE PLAN
— The 2008 Omnibus Incentive Plan (the “Plan”) provides officers, directors, key employees, and other persons an opportunity to acquire or increase a direct proprietary interest in our operations and future success. Our Board of Directors currently administers the Plan, and makes all decisions concerning which officers, directors, employees, and other persons are granted awards, how many to grant to each recipient, when awards are granted, how the Plan should be interpreted, whether to amend or terminate the Plan, and whether to delegate administration of the Plan to a committee. In May 2010, our shareholders approved an increase from 3,500,000 to 7,500,000 shares authorized for issuance under the Plan. The Plan provides for the grant of stock options, stock appreciation rights, restricted stock, stock units (including deferred stock units), unrestricted stock, and dividend equivalent rights. Any of the awards may be made as performance incentives to reward attainment of annual or long-term performance goals in accordance with the terms of the Plan. Stock options granted under the Plan may be non-qualified stock options or incentive stock options except that stock options granted to outside directors, consultants, or advisers providing services to us shall in all cases be non-qualified stock options. Included in the Plan is our 2012-2014 Long Term Incentive Plan ("2012-2014 LTI Plan") and our 2015 Long Term Incentive Plan ("2015 LTI Plan"). The Plan will terminate on May 7, 2018 unless the administrator terminates the Plan earlier. As of
December 31, 2016
,
1,929,478
shares of common stock were available for grant under the Plan.
Stock-based Compensation Expense
We recognize stock-based compensation expense based on the fair value of the awards issued and the functional area of the employee receiving the award. Stock-based compensation for the three
years ended
December 31,
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Stock-based compensation expense
|
|
$
|
6,332
|
|
|
$
|
2,810
|
|
|
$
|
3,712
|
|
Our stock-based compensation expense is based on the value of the portion of share-based payment awards that are ultimately expected to vest, assuming estimated forfeitures at the time of grant. Estimated forfeiture rates for our stock-based compensation expense applicable to options and RSUs was approximately
18%
for the years ended
December 31, 2016
and
2015
, and
17%
for the year ended
December 31, 2014
.
Stock Options
Stock option awards are generally granted with an exercise price equal to the market price of our stock at the date of grant and with either a three or four-year vesting schedule and a term of 10 years, except as noted below.
Under our 2012-2014 LTI Plan, we made grants of performance based options during the first quarter of 2012, which vested in the first quarters of 2013, 2014, and 2015 based on the Company's achievement of return on net assets targets established by our Board of Directors at the beginning of 2012. Under our 2015 LTI Plan, we made grants of time-based options during the first quarter of 2015, which will vest annually over a three-year period. The fair value of options granted during the years ended
December 31, 2016
,
2015
and
2014
was estimated on the date of grant using the Black-Scholes-Merton option-pricing model using the following assumptions by grant year:
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
Fair value assumptions - stock options:
|
|
|
|
|
|
|
Expected term (years)
|
|
n/a
|
|
4.3 years
|
|
5.3 years
|
Estimated volatility
|
|
n/a
|
|
43%
|
|
53%
|
Estimated dividend yield
|
|
n/a
|
|
—%
|
|
—%
|
Risk-free interest rate
|
|
n/a
|
|
1.1% - 1.4%
|
|
1.7% - 1.9%
|
The risk free interest rate is based on the five-year U.S. Treasury Bill at the time of the grant. Historically, company information is the primary basis for selection of the expected dividend yield. The expected term is based on historical experience. Expected volatility is based on historical volatility of our common stock using daily stock price observations.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The weighted-average fair value of options issued and total intrinsic value of options exercised were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
Weighted-average grant date fair value of options
|
|
n/a
|
|
$
|
9.50
|
|
|
$
|
10.80
|
|
Total intrinsic value of options exercised
|
|
$
|
2,815
|
|
|
$
|
5,203
|
|
|
$
|
13,657
|
|
Changes in outstanding time based stock options during the year ended
December 31, 2016
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Shares
|
|
Weighted-Average Exercise Price
|
Options outstanding at beginning of period
|
|
543
|
|
|
$
|
18.06
|
|
|
642
|
|
|
$
|
14.18
|
|
|
1,573
|
|
|
$
|
13.29
|
|
Options granted
|
|
—
|
|
|
—
|
|
|
171
|
|
|
26.26
|
|
|
57
|
|
|
18.77
|
|
Options exercised
|
|
(138
|
)
|
|
15.47
|
|
|
(229
|
)
|
|
13.95
|
|
|
(910
|
)
|
|
13.01
|
|
Options forfeited
|
|
(12
|
)
|
|
26.32
|
|
|
(38
|
)
|
|
14.55
|
|
|
(76
|
)
|
|
12.93
|
|
Options expired
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
16.25
|
|
|
(2
|
)
|
|
21.97
|
|
Options outstanding at end of period
|
|
393
|
|
|
$
|
18.71
|
|
|
543
|
|
|
$
|
18.06
|
|
|
642
|
|
|
$
|
14.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options vested during the year
|
|
11
|
|
|
|
|
304
|
|
|
|
|
180
|
|
|
|
Changes in outstanding performance based stock options during the year ended
December 31, 2016
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Shares
|
|
Weighted-Average Exercise Price
|
Options outstanding at beginning of period
|
|
99
|
|
|
$
|
11.87
|
|
|
380
|
|
|
11.87
|
|
|
1,239
|
|
|
13.38
|
|
Options granted
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
26.52
|
|
Options exercised
|
|
(18
|
)
|
|
13.78
|
|
|
(137
|
)
|
|
11.33
|
|
|
(408
|
)
|
|
14.67
|
|
Options forfeited
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(384
|
)
|
|
15.73
|
|
Options expired
|
|
—
|
|
|
—
|
|
|
(144
|
)
|
|
12.38
|
|
|
(118
|
)
|
|
11.76
|
|
Options outstanding at end of period
|
|
81
|
|
|
$
|
11.44
|
|
|
$
|
99
|
|
|
11.87
|
|
|
$
|
380
|
|
|
11.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options vested during the year
|
|
—
|
|
|
|
|
64
|
|
|
|
|
364
|
|
|
|
During each of the three years ended
December 31, 2016
,
2015
and
2014
, the value of shares withheld for taxes from both time-based and performance based option exercises totaled
$1.1 million
,
$1.0 million
, and
$1.6 million
, respectively.
As of
December 31, 2016
, there was $
0.5 million
of total unrecognized compensation cost related to stock options granted and outstanding, net of expected forfeitures related to non-vested options, which is expected to be recognized through
May 6, 2018
, with a weighted-average remaining vesting period of
1.1 years
. Information about our stock options that are outstanding, options that we expect to vest and options that are exercisable at
December 31, 2016
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Expected to Vest:
|
|
Number
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
Options outstanding
|
|
474
|
|
|
$
|
17.47
|
|
|
5.7 years
|
|
$
|
17,673
|
|
Options expected to vest
|
|
466
|
|
|
17.33
|
|
|
5.6 years
|
|
17,438
|
|
Options exercisable
|
|
358
|
|
|
15.00
|
|
|
4.9 years
|
|
14,214
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The following table summarizes information about the stock options outstanding at
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
Range of Exercise Prices
|
|
Number Outstanding
|
|
Weighted-Average Remaining Contractual Life
|
|
Weighted-Average Exercise Price
|
|
Number Exercisable
|
|
Weighted-Average Exercise Price
|
$7.69 to $9.51
|
|
35
|
|
|
3.5 years
|
|
$
|
8.88
|
|
|
35
|
|
|
$
|
8.88
|
|
$11.02 to $11.02
|
|
79
|
|
|
5.0 years
|
|
11.02
|
|
|
79
|
|
|
11.02
|
|
$11.21 to $13.85
|
|
65
|
|
|
3.3 years
|
|
12.92
|
|
|
65
|
|
|
12.92
|
|
$14.02 to $14.52
|
|
62
|
|
|
3.9 years
|
|
14.39
|
|
|
62
|
|
|
14.39
|
|
$15.65 to $15.65
|
|
16
|
|
|
3.1 years
|
|
15.65
|
|
|
16
|
|
|
15.65
|
|
$16.25 to $16.25
|
|
16
|
|
|
3.3 years
|
|
16.25
|
|
|
16
|
|
|
16.25
|
|
$18.77 to $18.77
|
|
56
|
|
|
7.8 years
|
|
18.77
|
|
|
38
|
|
|
18.77
|
|
$24.31 to $24.31
|
|
5
|
|
|
8.4 years
|
|
24.31
|
|
|
2
|
|
|
24.31
|
|
$25.28 to $25.28
|
|
2
|
|
|
7.3 years
|
|
25.28
|
|
|
2
|
|
|
25.28
|
|
$26.32 to $26.32
|
|
138
|
|
|
8.1 years
|
|
26.32
|
|
|
43
|
|
|
26.32
|
|
|
|
474
|
|
|
5.7 years
|
|
$
|
17.47
|
|
|
358
|
|
|
$
|
15.00
|
|
Restricted Stock Units
The fair value of our Restricted Stock Units ("RSUs") is determined based upon the closing fair market value of our common stock on the grant date. Changes in the unvested time based restricted stock units during the year ended
December 31, 2016
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
Balance at beginning of period
|
|
174
|
|
|
$
|
26.04
|
|
|
115
|
|
|
$
|
15.20
|
|
|
230
|
|
|
$
|
13.99
|
|
RSUs granted
|
|
145
|
|
|
32.17
|
|
|
159
|
|
|
26.82
|
|
|
86
|
|
|
20.36
|
|
RSUs vested
|
|
(97
|
)
|
|
25.79
|
|
|
(86
|
)
|
|
15.06
|
|
|
(163
|
)
|
|
16.54
|
|
RSUs forfeited
|
|
(11
|
)
|
|
28.23
|
|
|
(14
|
)
|
|
13.48
|
|
|
(38
|
)
|
|
13.85
|
|
Balance at end of period
|
|
211
|
|
|
$
|
30.24
|
|
|
174
|
|
|
$
|
26.04
|
|
|
115
|
|
|
$
|
15.20
|
|
Changes in the unvested performance based restricted stock units during the year ended
December 31, 2016
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
Balance at beginning of period
|
|
60
|
|
|
$
|
26.26
|
|
|
242
|
|
|
$
|
13.86
|
|
|
1,344
|
|
|
$
|
11.42
|
|
RSUs granted
|
|
152
|
|
|
28.65
|
|
|
62
|
|
|
26.27
|
|
|
59
|
|
|
26.53
|
|
RSUs vested
|
|
(60
|
)
|
|
26.26
|
|
|
(75
|
)
|
|
13.81
|
|
|
—
|
|
|
—
|
|
RSUs settled in cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(418
|
)
|
|
12.29
|
|
RSUs forfeited
|
|
(9
|
)
|
|
28.43
|
|
|
(169
|
)
|
|
14.25
|
|
|
(743
|
)
|
|
13.14
|
|
Balance at end of period
|
|
143
|
|
|
$
|
28.66
|
|
|
60
|
|
|
$
|
26.26
|
|
|
242
|
|
|
$
|
13.86
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The weighted-average fair value of RSUs issued and total fair value of RSUs converted to shares were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
Weighted-average grant date fair value of RSUs
|
|
$
|
29.60
|
|
|
$
|
26.66
|
|
|
$
|
22.87
|
|
Total fair value of RSUs converted to shares
|
|
$
|
4,988
|
|
|
$
|
3,782
|
|
|
$
|
5,439
|
|
As of
December 31, 2016
, there was $
5.0 million
of total unrecognized compensation cost, net of expected forfeitures related to non-vested RSUs granted, which is expected to be recognized through fiscal
December 1, 2019
, with a weighted-average remaining vesting period of
1.4 years
.
Employee Stock Purchase Plan
The ESPP, a stockholder-approved plan, provides for the issuance of rights to purchase up to 1,000,000 shares of common stock. In May 2010, shareholders approved an increase from 500,000 to 1,000,000 shares authorized for sale under our ESPP. Employees below the Vice President level are eligible to participate in the ESPP if employed by us for at least 20 hours per week during at least five months per calendar year. Participating employees may contribute up to the lesser of 15% of their eligible earnings or $5,000 during each plan period. Currently, the plan period is six months. The purchase price of common stock purchased under the ESPP is currently equal to the lower of: 1) 85% of the fair market value of our common stock on the commencement date of each plan period or 2) 85% of the fair market value of our common shares on each plan period purchase date. At
December 31, 2016
,
316,141
shares remained available for future issuance under the ESPP.
Purchase rights granted under the ESPP are valued using the Black-Scholes-Merton model. As of
December 31, 2016
, there was
$0.1 million
of total unrecognized compensation cost related to the ESPP that is expected to be recognized over a remaining period of five months. Total compensation expense was $
0.2 million
for the years ended
December 31, 2016
and
2015
, and
$0.4 million
for the year ended
December 31, 2014
.
The fair value of each purchase right granted under the ESPP was estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
Risk-free interest rates
|
|
0.49% - 0.60%
|
|
|
0.07% - 0.42%
|
|
|
0.06% - 0.08%
|
|
Expected dividend yield rates
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected term
|
|
0.5 years
|
|
|
0.5 years
|
|
|
0.5 years
|
|
Expected volatility
|
|
28.2
|
%
|
|
27.8
|
%
|
|
52.0
|
%
|
The risk free interest rate is based on the six month U.S. Treasury Bill at the time of the grant. Historical company information is the primary basis for selection of the expected dividend yield. The expected term is based on historical experience. Expected volatility is based on historical volatility of our common shares using daily stock price observations.
|
|
NOTE 14.
|
RETIREMENT PLANS
|
Defined contribution plans
We have a 401(k) profit sharing and retirement savings plan covering substantially all full-time U.S. employees. Participants may defer up to the maximum amount allowed as determined by law. Participants are immediately vested in their contributions. Profit sharing contributions to the plan, which are discretionary, are approved by the Board of Directors. Vesting in the profit sharing contribution account is based on years of service, with most participants fully vested after four years of credited service.
For the years ended
December 31, 2016
,
2015
, and
2014
our contribution for participants in our 401(k) plan was 50% matching on contributions by employees up to 6% of the employee’s compensation.
During the years ended
December 31, 2016
,
2015
, and
2014
we recognized total defined contribution plan costs of $
1.2 million
, $
0.7 million
, and $
0.6 million
, respectively.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
Defined benefit plans
In connection with the HiTek acquisition discussed in Note 2. Business Acquisitions, we acquired the HiTek Power Limited Pension Scheme ("the HiTek Plan"). The HiTek Plan has been closed to new participants since April1, 2002 and to additional accruals since April 5, 2005. In order to measure the expense and related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses and estimated future inflation rates. These assumptions are based on historical experience as well as facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits. The net amount of pension liability recorded as of
December 31, 2016
and
December 31, 2015
was
$18.8 million
and
$17.8 million
, respectively, and is included in Other long-term liabilities in our Consolidated Balance Sheets. Anticipated payments to pensioners covered by the HiTek Plan are expected to be between
$0.9 million
and
$1.2 million
for each of the next ten years. We are committed to make annual fixed payments of
$0.8 million
into the Hitek plan through April 30, 2024, and then
$1.7 million
from May 1, 2024 through November 30, 2033.
The following table sets forth the components of net periodic pension cost for the year ended
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
Interest cost
|
$
|
993
|
|
|
$
|
1,093
|
|
|
1,061
|
|
|
Expected return on plan assets
|
(527
|
)
|
|
(562
|
)
|
|
(532
|
)
|
|
Amortization of actuarial gains and losses
|
264
|
|
|
373
|
|
|
—
|
|
|
Net periodic pension cost
|
$
|
730
|
|
|
$
|
904
|
|
|
529
|
|
|
Assumptions used in the determination of the net periodic pension cost are:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Discount Rate
|
2.75
|
%
|
|
3.9
|
%
|
|
3.6
|
%
|
Expected long-term return on plan assets
|
4.7
|
%
|
|
4.3
|
%
|
|
4.0
|
%
|
The status of the HiTek Plan as reflected in "Other long-term liabilities" on our Consolidated Balance Sheets is summarized as follows:
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
Projected benefit obligation, beginning of year
|
$
|
31,466
|
|
|
$
|
34,475
|
|
Interest cost
|
993
|
|
|
1,093
|
|
Actuarial (gain) loss
|
5,377
|
|
|
(1,435
|
)
|
Benefits paid
|
(1,186
|
)
|
|
(825
|
)
|
Translation adjustment
|
(5,540
|
)
|
|
(1,842
|
)
|
Projected benefit obligation, end of year
|
$
|
31,110
|
|
|
$
|
31,466
|
|
|
|
|
|
Plan assets, beginning of year
|
$
|
13,677
|
|
|
$
|
14,339
|
|
Actual return on plan assets
|
527
|
|
|
562
|
|
Contributions
|
802
|
|
|
958
|
|
Benefits paid
|
(1,186
|
)
|
|
(825
|
)
|
Actuarial (gain)
|
620
|
|
|
(583
|
)
|
Translation adjustment
|
(2,166
|
)
|
|
(774
|
)
|
Plan assets, end of year
|
$
|
12,274
|
|
|
$
|
13,677
|
|
|
|
|
|
Funded status of plan
|
$
|
(18,836
|
)
|
|
$
|
(17,789
|
)
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The fair value of the Company's qualified pension plan assets by category for the years ended
December 31,
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Multi-Asset Fund
|
$
|
—
|
|
|
$
|
3,989
|
|
|
$
|
—
|
|
|
$
|
3,989
|
|
Diversified Growth Fund
|
—
|
|
|
4,259
|
|
|
—
|
|
|
4,259
|
|
Index-Linked Gilts
|
—
|
|
|
1,915
|
|
|
—
|
|
|
1,915
|
|
Corporate Bonds
|
—
|
|
|
2,013
|
|
|
—
|
|
|
2,013
|
|
Cash
|
98
|
|
|
—
|
|
|
—
|
|
|
98
|
|
Total
|
$
|
98
|
|
|
$
|
12,176
|
|
|
$
|
—
|
|
|
$
|
12,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Multi-Asset Fund
|
$
|
—
|
|
|
$
|
4,460
|
|
|
$
|
—
|
|
|
$
|
4,460
|
|
Diversified Growth Fund
|
—
|
|
|
4,767
|
|
|
—
|
|
|
4,767
|
|
Index-Linked Gilts
|
—
|
|
|
2,113
|
|
|
—
|
|
|
2,113
|
|
Corporate Bonds
|
—
|
|
|
2,100
|
|
|
—
|
|
|
2,100
|
|
Cash
|
237
|
|
|
—
|
|
|
—
|
|
|
237
|
|
Total
|
$
|
237
|
|
|
$
|
13,440
|
|
|
$
|
—
|
|
|
$
|
13,677
|
|
At
December 31, 2016
the HiTek Plan assets of
$12.3 million
were invested in four separate funds including a multi-asset fund (
32.5%
), a diversified growth fund (
34.7%
), an Investment grade long term bond fund (
16.4%
) and an index-linked gilt fund (
15.6%
). The asset and growth funds aim to generate an ‘equity-like’ return over an economic cycle with significantly reduced volatility relative to equity markets and have scope to use a diverse range of asset classes, including equities, bonds, cash and alternatives, e.g. property, infrastructure, high yield bonds, floating rate debt, private, equity, hedge funds and currency. The bond fund and gilt fund are invested in index-linked gilts and corporate bonds. These investments are intended to provide a degree of protection against changes in the value of the HiTek Plan's liabilities related to changes in long-term expectations for interest rates and inflation expectations.
|
|
NOTE 15.
|
COMMITMENTS AND CONTINGENCIES
|
Disputes and Legal Actions
We are involved in disputes and legal actions arising in the normal course of our business. While we currently believe that the amount of any ultimate loss would not be material to our financial position, the outcome of these actions is inherently difficult to predict. In the event of an adverse outcome, the ultimate loss could have a material adverse effect on our financial position or reported results of operations. An unfavorable decision in patent litigation also could require material changes in production processes and products or result in our inability to ship products or components found to have violated third-party patent rights. We accrue loss contingencies in connection with our commitments and contingencies, including litigation, when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated.
Operating Leases
We have various operating leases for automobiles, equipment, and office and production facilities. Rent expense under operating leases was approximately $
6.4 million
in
2016
, $
5.3 million
in
2015
, and $
5.7 million
in
2014
.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
The future minimum rental payments required under non-cancelable operating leases as of
December 31, 2016
are as follows:
|
|
|
|
|
2017
|
$
|
5,396
|
|
2018
|
4,602
|
|
2019
|
4,657
|
|
2020
|
4,541
|
|
2021
|
3,248
|
|
Thereafter
|
2,533
|
|
|
$
|
24,977
|
|
|
|
NOTE 16.
|
RESTRUCTURING COSTS
|
During the period, we did not have any restructuring expense related to our continuing operations and we were not under a restructuring plan in 2016.
In June 2015, we committed to a restructuring plan in relation to the wind-down of our Inverter operations. Charges related to this plan that have an effect on continuing operations include strategic headcount reductions, streamlining operational processes and condensing administrative functions to improve efficiencies. This plan was completed in the fourth quarter of 2015. Total cumulative costs through December 31, 2015 were
$0.3 million
. We did not incur additional costs related to this plan in 2016.
In April 2014, we committed to a restructuring plan to take advantage of additional cost savings opportunities in connection with our acquisitions and realignment to a single organizational structure based on product line. The plan called for consolidating certain facilities and rebranding of products to allow us to use our resources more efficiently. This plan was completed in the fourth quarter of 2014. Total cumulative costs through December 31, 2015 were
$1.9 million
. We did not incur additional costs related to this plan in 2016.
|
|
NOTE 17.
|
RELATED PARTY TRANSACTIONS
|
Members of our Board of Directors hold various executive positions and serve as directors at other companies, including companies that are our customers. During the years ended
December 31, 2016
,
2015
, and
2014
, we engaged in the following transactions with companies related to members of our Board of Directors, as described below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Sales to related parties
|
$
|
616
|
|
|
$
|
706
|
|
|
$
|
321
|
|
Number of related party customers
|
2
|
|
|
3
|
|
|
4
|
|
Purchases from related parties
|
$
|
43
|
|
|
$
|
40
|
|
|
$
|
—
|
|
Number of related party vendors
|
1
|
|
|
2
|
|
|
—
|
|
Our accounts receivable balance from related party customers with outstanding balances as of
December 31, 2016
and
December 31, 2015
is as follows:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2015
|
Accounts receivable from related parties
|
$
|
—
|
|
|
$
|
83
|
|
Number of related party customers
|
—
|
|
|
1
|
|
We did not have any outstanding accounts payable with our related parties as of
December 31, 2016
or
December 31, 2015
.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
|
|
NOTE 18.
|
GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION
|
We have operations in the United States, Europe and Asia. Our disclosure related to sales and long-lived assets by geographic area and information relating to major customers are presented below. Sales attributed to individual countries are based on customer location.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Sales to external customers:
|
|
|
United States
|
|
$
|
327,397
|
|
|
67.7
|
%
|
|
$
|
268,257
|
|
|
64.7
|
%
|
|
$
|
230,843
|
|
|
62.8
|
%
|
Canada
|
|
161
|
|
|
—
|
%
|
|
195
|
|
|
—
|
%
|
|
347
|
|
|
0.1
|
%
|
North America
|
|
327,558
|
|
|
67.7
|
%
|
|
268,452
|
|
|
64.7
|
%
|
|
231,190
|
|
|
62.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
People's Republic of China
|
|
16,207
|
|
|
3.4
|
%
|
|
12,687
|
|
|
3.1
|
%
|
|
12,903
|
|
|
3.5
|
%
|
Other Asian countries
|
|
77,638
|
|
|
16.1
|
%
|
|
61,839
|
|
|
15.0
|
%
|
|
56,938
|
|
|
15.5
|
%
|
Asia
|
|
93,845
|
|
|
19.5
|
%
|
|
74,526
|
|
|
18.0
|
%
|
|
69,841
|
|
|
19.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
48,589
|
|
|
10.0
|
%
|
|
46,719
|
|
|
11.3
|
%
|
|
43,343
|
|
|
11.8
|
%
|
United Kingdom
|
|
13,712
|
|
|
2.8
|
%
|
|
25,100
|
|
|
6.0
|
%
|
|
22,670
|
|
|
6.2
|
%
|
Other European countries
|
|
—
|
|
|
—
|
%
|
|
14
|
|
|
—
|
%
|
|
289
|
|
|
—
|
%
|
Europe
|
|
62,301
|
|
|
12.8
|
%
|
|
71,833
|
|
|
17.3
|
%
|
|
66,302
|
|
|
18.0
|
%
|
Total sales
|
|
$
|
483,704
|
|
|
100.0
|
%
|
|
$
|
414,811
|
|
|
100.0
|
%
|
|
$
|
367,333
|
|
|
100.0
|
%
|
Sales to Applied Materials Inc., our largest customer, were $
170.2 million
or
35.2%
of total sales for
2016
, $
123.5 million
, or
29.8%
of total sales, for
2015
and
$109.3 million
, or
29.8%
of total sales for
2014
. Sales to Lam Research were $
100.3 million
or
20.7%
of total sales for
2016
, $
84.2 million
, or
20.3%
of total sales, for
2015
and
$73.0 million
, or
19.9%
of total sales for
2014
. Our sales to Applied Materials and Lam Research include precision power products used in semiconductor processing and solar, flat panel display, and architectural glass applications. No other customer accounted for
10%
or more of our sales during these periods.
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2016
|
|
2015
|
*Long lived assets:
|
|
|
United States
|
|
$
|
33,652
|
|
|
$
|
31,556
|
|
Asia
|
|
3,596
|
|
|
3,134
|
|
Europe
|
|
46,285
|
|
|
51,825
|
|
|
|
$
|
83,533
|
|
|
$
|
86,515
|
|
|
|
|
*
|
Long-lived assets include property and equipment, goodwill and other intangible assets.
|
On September 9, 2016, Advanced Energy Industries, Inc., along with three of its wholly-owned subsidiaries, AE Solar Energy, Inc., Sekidenko, Inc., and UltraVolt, Inc. terminated its Credit Agreement with Wells Fargo Bank, National Association ("Wells Fargo") which provided for a secured revolving credit facility of up to
$50.0 million
(the "Credit Facility"), subject to a borrowing base calculation as discussed in our Annual Report on Form 10-K for the year ended December 31, 2015. Management determined that the Credit Facility was no longer needed and therefore is not cost beneficial to the Company.
Expense relating to interest, unused line of credit fees and amortization of debt issuance costs included in our income from continuing operations is as follows:
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Credit facility costs
|
|
346
|
|
|
456
|
|
|
367
|
|
|
|
NOTE 20.
|
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
|
The following tables present unaudited quarterly results for each of the eight quarters in the period ended
December 31, 2016
, in thousands. We believe that all necessary adjustments have been included in the amounts stated below to present fairly such quarterly information. Due to the volatility of the industries in which our customers operate, the operating results for any quarter are not necessarily indicative of results for any subsequent period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
Sales
|
|
$
|
135,343
|
|
|
$
|
126,552
|
|
|
$
|
118,765
|
|
|
$
|
103,044
|
|
Gross Profit
|
|
$
|
71,518
|
|
|
$
|
66,123
|
|
|
$
|
62,046
|
|
|
$
|
53,460
|
|
Operating income
|
|
$
|
38,546
|
|
|
$
|
34,361
|
|
|
$
|
30,329
|
|
|
$
|
23,621
|
|
Income from continuing operations, net of income taxes
|
|
$
|
40,436
|
|
|
$
|
29,038
|
|
|
$
|
27,254
|
|
|
$
|
20,220
|
|
Income from discontinued operations, net of income taxes
|
|
$
|
3,845
|
|
|
$
|
1,323
|
|
|
$
|
3,277
|
|
|
$
|
2,061
|
|
Net income
|
|
$
|
44,281
|
|
|
$
|
30,361
|
|
|
$
|
30,531
|
|
|
$
|
22,281
|
|
Earnings per Share:
|
|
|
|
|
|
|
|
|
Continuing Operations:
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
1.02
|
|
|
$
|
0.73
|
|
|
$
|
0.69
|
|
|
$
|
0.51
|
|
Diluted earnings per share
|
|
$
|
1.01
|
|
|
$
|
0.73
|
|
|
$
|
0.68
|
|
|
$
|
0.50
|
|
Discontinued Operations:
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.10
|
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
$
|
0.05
|
|
Diluted earnings per share
|
|
$
|
0.10
|
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
$
|
0.05
|
|
Net Income:
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
1.12
|
|
|
$
|
0.77
|
|
|
$
|
0.77
|
|
|
$
|
0.56
|
|
Diluted earnings per share
|
|
$
|
1.11
|
|
|
$
|
0.76
|
|
|
$
|
0.76
|
|
|
$
|
0.56
|
|
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
December 31, 2015
|
|
September 30, 2015
|
|
June 30, 2015
|
|
March 31, 2015
|
Sales
|
|
$
|
86,891
|
|
|
$
|
109,756
|
|
|
$
|
108,654
|
|
|
$
|
109,510
|
|
Gross Profit
|
|
$
|
42,684
|
|
|
$
|
58,538
|
|
|
$
|
56,549
|
|
|
$
|
59,099
|
|
Restructuring
|
|
$
|
(117
|
)
|
|
$
|
317
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Operating income
|
|
$
|
16,173
|
|
|
$
|
30,168
|
|
|
$
|
28,779
|
|
|
$
|
31,536
|
|
Income from continuing operations, net of income taxes
|
|
$
|
11,490
|
|
|
$
|
23,313
|
|
|
$
|
23,024
|
|
|
$
|
25,655
|
|
Income (loss) from discontinued operations, net of income taxes
|
|
$
|
24,775
|
|
|
$
|
(6,881
|
)
|
|
$
|
(255,483
|
)
|
|
$
|
(4,379
|
)
|
Net income (loss)
|
|
$
|
36,265
|
|
|
$
|
16,432
|
|
|
$
|
(232,459
|
)
|
|
$
|
21,276
|
|
Earnings per Share:
|
|
|
|
|
|
|
|
|
Continuing Operations:
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.29
|
|
|
$
|
0.57
|
|
|
$
|
0.56
|
|
|
$
|
0.63
|
|
Diluted earnings per share
|
|
$
|
0.28
|
|
|
$
|
0.56
|
|
|
$
|
0.56
|
|
|
$
|
0.62
|
|
Discontinued Operations:
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
0.62
|
|
|
$
|
(0.17
|
)
|
|
$
|
(6.24
|
)
|
|
$
|
(0.11
|
)
|
Diluted earnings (loss) per share
|
|
$
|
0.61
|
|
|
$
|
(0.17
|
)
|
|
$
|
(6.24
|
)
|
|
$
|
(0.11
|
)
|
Net Income (loss):
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
0.90
|
|
|
$
|
0.40
|
|
|
$
|
(5.68
|
)
|
|
$
|
0.52
|
|
Diluted earnings (loss) per share
|
|
$
|
0.89
|
|
|
$
|
0.40
|
|
|
$
|
(5.68
|
)
|
|
$
|
0.52
|
|