☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New York
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11-1362020
|
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
|
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37-18 Northern Blvd., Long Island City, N.Y.
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11101
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
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(718) 392-0200
|
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Securities registered pursuant to Section 12(b) of the Act:
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||
Title of each class
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Name of each exchange on which registered
|
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Common Stock, par value $2.00 per share
|
New York Stock Exchange
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|
Securities registered pursuant to Section 12(g) of the Act:
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None
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Large Accelerated Filer
☑
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Accelerated Filer
☐
|
|
Non-Accelerated Filer
☐
(Do not check if a smaller reporting company)
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Smaller reporting company
☐
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Emerging growth company
☐
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PART I.
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Page No.
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|
Item 1.
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3
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Item 1A.
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13
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Item 1B.
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20
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Item 2.
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21
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Item 3.
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22
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Item 4.
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22
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PART II.
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||
Item 5.
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22
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Item 6.
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25
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Item 7.
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27
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Item 7A.
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46
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Item 8.
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47
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Item 9.
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92
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Item 9A.
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92
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Item 9B.
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93
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PART III.
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||
Item 10.
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93
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Item 11.
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93
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Item 12.
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93
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Item 13.
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93
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Item 14.
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93
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PART IV.
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||
Item 15.
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94
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98
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· |
Maintain Our Strong Competitive Position in the Engine Management and Temperature Control Businesses.
We are a leading independent manufacturer and distributor serving North America and other geographic areas in our core businesses of Engine Management and
Temperature Control. We believe that our success is attributable to our emphasis on product quality, the breadth and depth of our product lines for both domestic and import vehicles, and our reputation for outstanding value-added services.
|
· |
providing our customers with full-line coverage of high quality engine management and temperature control products, supported by the highest level of value-added services;
|
· |
continuing to maximize our production, supply chain and distribution efficiencies;
|
· |
continuing to improve our cost position through increased global sourcing, increased manufacturing at our low-cost plants, and strategic transactions with manufacturers in low-cost regions; and
|
· |
focusing on our engineering development efforts including a focus on bringing more product manufacturing in house.
|
· |
Provide Superior Value-Added Services, Product Availability and Technical Support.
Our goal is to increase sales to existing and new customers by leveraging our skills in rapidly filling orders, maintaining high levels of product availability, offering a product portfolio that provides comprehensive coverage for all vehicle applications, providing insightful customer category management, and providing technical support in a cost‑effective manner. In addition, our category management and technically skilled sales force professionals provide product selection, assortment and application support to our customers.
|
· |
Expand Our Product Lines.
We intend to increase our sales by continuing to develop internally, or through acquisitions, the range of Engine Management and Temperature Control products that we offer to our customers. We are committed to investing the resources necessary to maintain and expand our technical capability to manufacture multiple product lines that incorporate the latest technologies
, including product lines relating to safety, advanced driver assistance and collision avoidance systems
.
|
· |
Broaden Our Customer Base.
Our goal is to increase our customer base by (a) continuing to leverage our manufacturing capabilities to secure additional original equipment business globally with automotive, industrial, marine, military and heavy duty vehicle and equipment manufacturers and their service part operations as well as our existing customer base including traditional warehouse distributors, large retailers, other manufacturers and export customers, and (b) supporting the service part operations of vehicle and equipment manufacturers with value-added services and product support for the life of the part.
|
· |
Improve Operating Efficiency and Cost Position.
Our management places significant emphasis on improving our financial performance by achieving operating efficiencies and improving asset utilization, while maintaining product quality and high customer order fill rates. We intend to continue to improve our operating efficiency and cost position by:
|
· |
increasing cost‑effective vertical integration in key product lines through internal development;
|
· |
focusing on integrated supply chain management, customer collaboration and vendor managed inventory initiatives;
|
· |
evaluating additional opportunities to relocate manufacturing to our low-cost plants;
|
· |
maintaining and improving our cost effectiveness and competitive responsiveness to better serve our customer base, including sourcing certain materials and products from low cost regions such as those in Asia without compromising product quality;
|
· |
enhancing company‑wide programs geared toward manufacturing and distribution efficiency; and
|
· |
focusing on company‑wide overhead and operating expense cost reduction programs.
|
· |
Cash Utilization.
We intend to apply any excess cash flow from operations and the management of working capital primarily to reduce our outstanding indebtedness, pay dividends to our shareholders, repurchase shares of our common stock, expand our product lines and grow revenues through acquisitions.
|
· |
growth in number of vehicles on the road;
|
· |
increase in average vehicle age;
|
· |
change in total miles driven per year;
|
· |
new or modified environmental and vehicle safety regulations, including fuel-efficiency and emissions reduction standards;
|
· |
increase in pricing of new cars;
|
· |
economic and financial market conditions;
|
· |
new car quality and related warranties;
|
· |
changes in automotive technologies;
|
· |
change in vehicle scrap rates; and
|
· |
change in average fuel prices.
|
Year Ended
December 31,
|
||||||||||||||||||||||||
2017
|
2016
|
2015
|
||||||||||||||||||||||
Amount
|
% of Total
|
Amount
|
% of Total
|
Amount
|
% of Total
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Engine Management:
|
||||||||||||||||||||||||
Ignition, Emission and Fuel System Parts
|
$
|
657,287
|
58.9
|
%
|
$
|
616,523
|
58.2
|
%
|
$
|
598,161
|
61.6
|
%
|
||||||||||||
Wires and Cables
|
172,126
|
15.4
|
%
|
149,016
|
14.1
|
%
|
99,860
|
10.3
|
%
|
|||||||||||||||
Total Engine Management
|
829,413
|
74.3
|
%
|
765,539
|
72.3
|
%
|
698,021
|
71.9
|
%
|
|||||||||||||||
Temperature Control:
|
||||||||||||||||||||||||
Compressors
|
148,377
|
13.3
|
%
|
148,623
|
14
|
%
|
127,861
|
13.2
|
%
|
|||||||||||||||
Other Climate Control Parts
|
130,750
|
11.7
|
%
|
135,117
|
12.8
|
%
|
136,617
|
14.1
|
%
|
|||||||||||||||
Total Temperature Control
|
279,127
|
25.0
|
%
|
283,740
|
26.8
|
%
|
264,478
|
27.3
|
%
|
|||||||||||||||
All Other
|
7,603
|
0.7
|
%
|
9,203
|
0.9
|
%
|
9,476
|
0.8
|
%
|
|||||||||||||||
Total
|
$
|
1,116,143
|
100
|
%
|
$
|
1,058,482
|
100
|
%
|
$
|
971,975
|
100
|
%
|
Year Ended
December 31,
|
||||||||||||||||||||||||
2017
|
2016
|
2015
|
||||||||||||||||||||||
Operating
Income
(Loss)
|
Identifiable
Assets
|
Operating
Income
(Loss)
|
Identifiable
Assets
|
Operating
Income
(Loss)
|
Identifiable
Assets
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Engine Management
|
$
|
97,403
|
$
|
527,200
|
$
|
101,529
|
$
|
506,625
|
$
|
88,007
|
$
|
413,102
|
||||||||||||
Temperature Control
|
19,609
|
177,006
|
17,563
|
171,136
|
6,382
|
177,201
|
||||||||||||||||||
All Other
|
(18,838
|
)
|
83,361
|
(21,025
|
)
|
90,936
|
(18,529
|
)
|
90,761
|
|||||||||||||||
Total
|
$
|
98,174
|
$
|
787,567
|
$
|
98,067
|
$
|
768,697
|
$
|
75,860
|
$
|
681,064
|
Year Ended
December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
(In thousands)
|
||||||||||||
United States
|
$
|
996,433
|
$
|
952,019
|
$
|
881,206
|
||||||
Canada
|
56,575
|
53,324
|
48,072
|
|||||||||
Mexico | 24,521 | 24,429 | 14,707 | |||||||||
Europe
|
14,088
|
14,703
|
16,305
|
|||||||||
Other foreign
|
24,526
|
14,007
|
11,685
|
|||||||||
Total
|
$
|
1,116,143
|
$
|
1,058,482
|
$
|
971,975
|
Year Ended
December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
(In thousands)
|
||||||||||||
United States
|
$
|
202,875
|
$
|
204,592
|
$
|
155,438
|
||||||
Canada
|
2,017
|
1,344
|
1,190
|
|||||||||
Mexico | 4,449 | 3,877 | 1,012 | |||||||||
Europe
|
18,530
|
13,612
|
12,324
|
|||||||||
Other foreign
|
31,185
|
19,924
|
20,622
|
|||||||||
Total
|
$
|
259,056
|
$
|
243,349
|
$
|
190,586
|
· |
a value‑added, knowledgeable sales force;
|
· |
extensive product coverage in conjunction with market leading brands;
|
· |
rigorous product qualification standards to ensure that our parts meet or exceed exacting performance specifications;
|
· |
sophisticated parts cataloguing systems, including catalogues available online through our website and our mobile application;
|
· |
inventory levels and logistical systems sufficient to meet the rapid delivery requirements of customers;
|
· |
breadth of manufacturing capabilities; and
|
· |
award-winning marketing programs and sales support and technical training.
|
· |
respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive aftermarket products and services;
|
· |
engage in more extensive research and development;
|
· |
sell products at a lower price than we do;
|
· |
undertake more extensive marketing campaigns; and
|
· |
make more attractive offers to existing and potential customers and strategic partners.
|
· |
general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control;
|
· |
the ability of our customers to pay timely the amounts we have billed; and
|
· |
our ability to factor receivables under customer draft programs.
|
· |
deferring, reducing or eliminating future cash dividends;
|
· |
reducing or delaying capital expenditures or restructuring activities;
|
· |
reducing or delaying research and development efforts;
|
· |
selling assets;
|
· |
deferring or refraining from pursuing certain strategic initiatives and acquisitions;
|
· |
refinancing our indebtedness; and
|
· |
seeking additional funding.
|
Location
|
State or
Country
|
Principal Business Activity
|
Approx.
Square
Feet
|
Owned or
Expiration
Date
of Lease
|
||||
Engine Management
|
||||||||
Orlando
|
FL
|
Manufacturing
|
50,600
|
2019
|
||||
Ft. Lauderdale
|
FL
|
Distribution
|
23,300
|
Owned
|
||||
Ft. Lauderdale
|
FL
|
Distribution
|
30,000
|
Owned
|
||||
Mishawaka
|
IN
|
Manufacturing
|
153,100
|
Owned
|
||||
Edwardsville
|
KS
|
Distribution
|
363,500
|
Owned
|
||||
Independence
|
KS
|
Manufacturing
|
337,400
|
Owned
|
||||
Long Island City
|
NY
|
Administration
|
75,800
|
2023
|
||||
Greenville
|
SC
|
Manufacturing
|
184,500
|
Owned
|
||||
Disputanta
|
VA
|
Distribution
|
411,000
|
Owned
|
||||
Nogales
|
Mexico
|
Manufacturing
|
67,200
|
2019
|
||||
Reynosa
|
Mexico
|
Manufacturing
|
175,000
|
2024
|
||||
Reynosa
|
Mexico
|
Manufacturing
|
153,000
|
2018
|
||||
Bialystok
|
Poland
|
Manufacturing
|
108,400
|
2022
|
||||
Temperature Control
|
||||||||
Lewisville
|
TX
|
Administration and Distribution
|
415,000
|
2024
|
||||
Grapevine (a)
|
TX
|
Manufacturing
|
180,000
|
Owned
|
||||
St. Thomas
|
Canada
|
Manufacturing
|
40,000
|
Owned
|
||||
Reynosa
|
Mexico
|
Manufacturing
|
82,000
|
2019
|
||||
Reynosa
|
Mexico
|
Manufacturing
|
118,000
|
2021
|
||||
Other
|
||||||||
Mississauga
|
Canada
|
Administration and Distribution
|
128,400
|
2023
|
||||
Irving
|
TX
|
Training Center
|
13,400
|
2021
|
ITEM 5. |
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
High
|
Low
|
Dividend
|
||||||||||
Fiscal Year ended December 31, 2017:
|
||||||||||||
First Quarter
|
$
|
54.36
|
$
|
46.23
|
$
|
0.19
|
||||||
Second Quarter
|
53.82
|
46.93
|
0.19
|
|||||||||
Third Quarter
|
54.73
|
43.29
|
0.19
|
|||||||||
Fourth Quarter
|
49.66
|
40.56
|
0.19
|
|||||||||
Fiscal Year ended December 31, 2016:
|
||||||||||||
First Quarter
|
$
|
38.30
|
$
|
26.69
|
$
|
0.17
|
||||||
Second Quarter
|
39.79
|
32.66
|
0.17
|
|||||||||
Third Quarter
|
48.00
|
39.15
|
0.17
|
|||||||||
Fourth Quarter
|
55.37
|
45.84
|
0.17
|
Period
|
Total Number of
Shares Purchased
(1)
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (2)
|
Maximum Number (or
Approximate Dollar
Value) of Shares that
may yet be Purchased
Under the Plans or
Programs (2)
|
||||||||||||
October 1-31, 2017
|
—
|
$
|
—
|
—
|
$
|
10,000,045
|
||||||||||
November 1-30, 2017
|
19,300
|
43.87
|
19,300
|
9,153,395
|
||||||||||||
December 1-31, 2017
|
88,519
|
44.42
|
88,519
|
5,221,477
|
||||||||||||
Total
|
107,819
|
$
|
44.32
|
107,819
|
$
|
5,221,477
|
(1) |
All shares were purchased through the publicly announced stock repurchase programs in open market transactions.
|
(2) |
In February 2017, our Board of Directors authorized the purchase of up to $20 million of our common stock under a stock repurchase program. In November 2017, our Board of Directors authorized the purchase of up to an additional $10 million of our common stock under another stock repurchase program. Stock will be purchased from time to time, in the open market or through private transactions, as market conditions warrant. Under these programs, during the three months and twelve months ended December 31, 2017, we repurchased 107,819 shares and 539,760 shares of our common stock, respectively, at a total cost of $4.8 million and $24.8 million, respectively. As of December 31, 2017, there was approximately $5.2 million available for future stock repurchases under the programs. During the period from January 1, 2018 through February 16, 2018, we repurchased an additional 35,756 shares of our common stock under the programs at a total cost of $1.7 million, thereby leaving approximately $3.5 million available for future stock purchases under the programs.
|
SMP
|
S&P 500
|
S&P 1500 Auto
Parts &
Equipment
Index
|
||||||||||
2012
|
100
|
100
|
100
|
|||||||||
2013
|
168
|
132
|
165
|
|||||||||
2014
|
176
|
151
|
171
|
|||||||||
2015
|
179
|
153
|
160
|
|||||||||
2016
|
255
|
171
|
168
|
|||||||||
2017
|
218
|
208
|
222
|
Year Ended
December 31,
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Net sales
|
$
|
1,116,143
|
$
|
1,058,482
|
$
|
971,975
|
$
|
980,392
|
$
|
983,704
|
||||||||||
Gross profit
|
326,656
|
322,487
|
280,988
|
289,630
|
290,454
|
|||||||||||||||
Litigation charge (1)
|
—
|
—
|
—
|
10,650
|
—
|
|||||||||||||||
Operating income
|
98,174
|
98,067
|
75,860
|
85,338
|
86,863
|
|||||||||||||||
Earnings from continuing operations (2)
|
43,630
|
62,412
|
48,120
|
52,899
|
53,043
|
|||||||||||||||
Loss from discontinued operations, net of tax
|
(5,654
|
)
|
(1,982
|
)
|
(2,102
|
)
|
(9,870
|
)
|
(1,593
|
)
|
||||||||||
Net earnings (3)
|
37,976
|
60,430
|
46,018
|
43,029
|
51,450
|
|||||||||||||||
Per Share Data:
|
||||||||||||||||||||
Earnings from continuing operations (2):
|
||||||||||||||||||||
Basic
|
$
|
1.92
|
$
|
2.75
|
$
|
2.11
|
$
|
2.31
|
$
|
2.31
|
||||||||||
Diluted
|
1.88
|
2.70
|
2.08
|
2.28
|
2.28
|
|||||||||||||||
Earnings per common share (2) (3):
|
||||||||||||||||||||
Basic
|
1.67
|
2.66
|
2.02
|
1.88
|
2.24
|
|||||||||||||||
Diluted
|
1.64
|
2.62
|
1.99
|
1.85
|
2.21
|
|||||||||||||||
Cash dividends per common share
|
0.76
|
0.68
|
0.60
|
0.52
|
0.44
|
|||||||||||||||
Other Data:
|
||||||||||||||||||||
Depreciation and amortization
|
$
|
23,916
|
$
|
20,457
|
$
|
17,637
|
$
|
17,295
|
$
|
17,595
|
||||||||||
Capital expenditures
|
24,442
|
20,921
|
18,047
|
13,904
|
11,410
|
|||||||||||||||
Dividends
|
17,287
|
15,447
|
13,697
|
11,905
|
10,107
|
|||||||||||||||
Cash Flows Provided By (Used In):
|
||||||||||||||||||||
Operating activities
|
$
|
64,617
|
$
|
97,805
|
$
|
65,171
|
$
|
46,987
|
$
|
57,616
|
||||||||||
Investing activities
|
(31,228
|
)
|
(88,018
|
)
|
(18,011
|
)
|
(51,200
|
)
|
(24,762
|
)
|
||||||||||
Financing activities
|
(35,944
|
)
|
(7,756
|
)
|
(41,155
|
)
|
15,316
|
(39,295
|
)
|
|||||||||||
Balance Sheet Data (at period end):
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
17,323
|
$
|
19,796
|
$
|
18,800
|
$
|
13,728
|
$
|
5,559
|
||||||||||
Working capital
|
210,194
|
190,380
|
195,198
|
178,670
|
190,128
|
|||||||||||||||
Total assets
|
787,567
|
768,697
|
681,064
|
673,551
|
615,523
|
|||||||||||||||
Total debt
|
61,778
|
54,975
|
47,505
|
56,816
|
21,481
|
|||||||||||||||
Long‑term debt (excluding current portion)
|
79
|
120
|
62
|
83
|
16
|
|||||||||||||||
Stockholders’ equity
|
453,654
|
441,028
|
391,979
|
374,153
|
349,432
|
(1) |
During 2014, we recorded a $10.6 million litigation charge in connection with a settlement agreement in a legal proceeding with a third party. The settlement amount was funded from cash on hand and available credit under our revolving credit facility.
|
(2) |
During 2017, we recorded an increase of $17.5 million to the provision for income taxes resulting from the remeasurement of our deferred tax assets, and the tax on deemed repatriated earnings of our foreign subsidiaries as a result of the enactment of the Tax Cuts and Jobs Act.
|
(3) |
We recorded an after tax charge of $5.7 million, $2 million, $2.1 million, $9.9 million, and $1.6 million as loss from discontinued operations to account for legal expenses and potential costs associated with our asbestos‑related liability for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively. Such costs were also separately disclosed in the operating activity section of the consolidated statements of cash flows for those same years.
|
· |
Maintain Our Strong Competitive Position in the Engine Management and Temperature Control Businesses.
We are a leading independent manufacturer and distributor serving North America and other geographic areas in our core businesses of Engine Management and
Temperature Control. We believe that our success is attributable to our emphasis on product quality, the breadth and depth of our product lines for both domestic and import vehicles, and our reputation for outstanding value-added services.
|
· |
providing our customers with full-line coverage of high quality engine management and temperature control products, supported by the highest level of value-added services;
|
· |
continuing to maximize our production, supply chain and distribution efficiencies;
|
· |
continuing to improve our cost position through increased global sourcing, increased manufacturing at our low-cost plants, and strategic transactions with manufacturers in low-cost regions; and
|
· |
focusing on our engineering development efforts including a focus on bringing more product manufacturing in house.
|
· |
Provide Superior Value-Added Services, Product Availability and Technical Support.
Our goal is to increase sales to existing and new customers by leveraging our skills in rapidly filling orders, maintaining high levels of product availability, offering a product portfolio that provides comprehensive coverage for all vehicle applications, providing insightful customer category management, and providing technical support in a cost‑effective manner. In addition, our category management and technically skilled sales force professionals provide product selection, assortment and application support to our customers.
|
· |
Expand Our Product Lines.
We intend to increase our sales by continuing to develop internally, or through potential acquisitions, the range of Engine Management and Temperature Control products that we offer to our customers. We are committed to investing the resources necessary to maintain and expand our technical capability to manufacture multiple product lines that incorporate the latest technologies
, including product lines relating to safety, advanced driver assistance and collision avoidance systems
.
|
· |
Broaden Our Customer Base.
Our goal is to increase our customer base by (a) continuing to leverage our manufacturing capabilities to secure additional original equipment business globally with automotive, industrial, marine, military and heavy duty vehicle and equipment manufacturers and their service part operations as well as our existing customer base including traditional warehouse distributors, large retailers, other manufacturers and export customers, and (b) supporting the service part operations of vehicle and equipment manufacturers with value added services and product support for the life of the part.
|
· |
Improve Operating Efficiency and Cost Position.
Our management places significant emphasis on improving our financial performance by achieving operating efficiencies and improving asset utilization, while maintaining product quality and high customer order fill rates. We intend to continue to improve our operating efficiency and cost position by:
|
· |
increasing cost‑effective vertical integration in key product lines through internal development;
|
· |
focusing on integrated supply chain management, customer collaboration and vendor managed inventory initiatives;
|
· |
evaluating additional opportunities to relocate manufacturing to our low-cost plants;
|
· |
maintaining and improving our cost effectiveness and competitive responsiveness to better serve our customer base, including sourcing certain materials and products from low cost regions such as those in Asia without compromising product quality;
|
· |
enhancing company‑wide programs geared toward manufacturing and distribution efficiency; and
|
· |
focusing on company‑wide overhead and operating expense cost reduction programs.
|
· |
Cash Utilization.
We intend to apply any excess cash flow from operations and the management of working capital primarily to reduce our outstanding indebtedness, pay dividends to our shareholders, repurchase shares of our common stock, expand our product lines and grow revenues through potential acquisitions.
|
· |
growth in number of vehicles on the road;
|
· |
increase in average vehicle age;
|
· |
change in total miles driven per year;
|
· |
new or modified environmental and vehicle safety regulations, including fuel-efficiency and emissions reduction standards;
|
· |
increase in pricing of new cars;
|
· |
economic and financial market conditions;
|
· |
new car quality and related warranties;
|
· |
changes in automotive technologies;
|
· |
change in vehicle scrap rates; and
|
· |
change in average fuel prices.
|
Year Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Engine Management:
|
||||||||
Ignition, Emission and Fuel System Parts
|
$
|
657,287
|
$
|
616,523
|
||||
Wire and Cable
|
172,126
|
149,016
|
||||||
Total Engine Management
|
829,413
|
765,539
|
||||||
Temperature Control:
|
||||||||
Compressors
|
148,377
|
148,623
|
||||||
Other Climate Control Parts
|
130,750
|
135,117
|
||||||
Total Temperature Control
|
279,127
|
283,740
|
||||||
All Other
|
7,603
|
9,203
|
||||||
Total
|
$
|
1,116,143
|
$
|
1,058,482
|
Year Ended
December 31,
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
||||||||||||
2017
|
||||||||||||||||
Net sales (a)
|
$
|
829,413
|
$
|
279,127
|
$
|
7,603
|
$
|
1,116,143
|
||||||||
Gross margins
|
243,791
|
73,254
|
9,611
|
326,656
|
||||||||||||
Gross margin percentage
|
29.4
|
%
|
26.2
|
%
|
—
|
%
|
29.3
|
%
|
||||||||
2016
|
||||||||||||||||
Net sales (a)
|
$
|
765,539
|
$
|
283,740
|
$
|
9,203
|
$
|
1,058,482
|
||||||||
Gross margins
|
239,710
|
72,547
|
10,230
|
322,487
|
||||||||||||
Gross margin percentage
|
31.3
|
%
|
25.6
|
%
|
—
|
%
|
30.5
|
%
|
(a) |
Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.
|
Year Ended December 31,
|
||||||||
2016
|
2015
|
|||||||
Engine Management:
|
||||||||
Ignition, Emission and Fuel System Parts
|
$
|
616,523
|
$
|
598,161
|
||||
Wire and Cable
|
149,016
|
99,860
|
||||||
Total Engine Management
|
765,539
|
698,021
|
||||||
Temperature Control:
|
||||||||
Compressors
|
148,623
|
127,861
|
||||||
Other Climate Control Parts
|
135,117
|
136,617
|
||||||
Total Temperature Control
|
283,740
|
264,478
|
||||||
All Other
|
9,203
|
9,476
|
||||||
Total
|
$
|
1,058,482
|
$
|
971,975
|
Year Ended
December 31,
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
||||||||||||
2016
|
||||||||||||||||
Net sales
|
$
|
765,539
|
$
|
283,740
|
$
|
9,203
|
$
|
1,058,482
|
||||||||
Gross margins
|
239,710
|
72,547
|
10,230
|
322,487
|
||||||||||||
Gross margin percentage
|
31.3
|
%
|
25.6
|
%
|
—
|
%
|
30.5
|
%
|
||||||||
2015
|
||||||||||||||||
Net sales
|
$
|
698,021
|
$
|
264,478
|
$
|
9,476
|
$
|
971,975
|
||||||||
Gross margins
|
212,021
|
57,977
|
10,990
|
280,988
|
||||||||||||
Gross margin percentage
|
30.4
|
%
|
21.9
|
%
|
—
|
%
|
28.9
|
%
|
Forecast
|
Amounts Incurred Through
December 31, 2017
|
|||||||
(In thousands)
|
||||||||
Restructuring and integration expense
|
$
|
5,800
|
$
|
5,610
|
||||
Capital expenditures
|
3,900
|
3,900
|
||||||
Temporary incremental operating expense
|
3,100
|
3,082
|
||||||
Total
|
$
|
12,800
|
$
|
12,592
|
Forecast
|
Amounts Incurred Through
December 31, 2017
|
|||||||
(In thousands)
|
||||||||
Restructuring and integration expense
|
$
|
4,100
|
$
|
2,473
|
||||
Capital expenditures
|
700
|
550
|
||||||
Temporary incremental operating expense
|
5,900
|
4,189
|
||||||
Total
|
$
|
10,700
|
$
|
7,212
|
Forecast
|
Amounts Incurred Through
December 31, 2017
|
|||||||
(In thousands)
|
||||||||
Restructuring and integration expense
|
$
|
2,900
|
$
|
1,758
|
||||
Capital expenditures
|
800
|
530
|
||||||
Temporary incremental operating expense
|
300
|
158
|
||||||
Total
|
$
|
4,000
|
$
|
2,446
|
(In thousands)
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023-
2026
|
Total
|
|||||||||||||||||||||
Lease obligations
|
$
|
9,485
|
$
|
8,078
|
$
|
6,990
|
$
|
6,355
|
$
|
5,364
|
$
|
3,932
|
$
|
40,204
|
||||||||||||||
Postretirement
|
440
|
42
|
38
|
33
|
29
|
91
|
673
|
|||||||||||||||||||||
Severance payments related to restructuring and integration
|
2,413
|
209
|
163
|
56
|
13
|
—
|
2,854
|
|||||||||||||||||||||
Total commitments
|
$
|
12,338
|
$
|
8,329
|
$
|
7,191
|
$
|
6,444
|
$
|
5,406
|
$
|
4,023
|
$
|
43,731
|
(a) |
Indebtedness under our revolving credit facilities is not included in the table above as it is reported as a current liability in our consolidated balance sheets. As of December 31, 2017, amounts outstanding under our revolving credit facilities were $57 million.
|
(b) |
We anticipate total aggregate future severance payments of approximately $2.9 million related to the plant rationalization program, the wire and cable relocation program and the Orlando plant rationalization program. All programs are expected to be completed by the second half of 2018.
|
Page No.
|
|
Management’s Report on Internal Control over Financial Reporting
|
48
|
Report of Independent Registered Public Accounting Firm—Internal Control Over Financial Reporting
|
49
|
Report of Independent Registered Public Accounting Firm—Consolidated Financial Statements
|
51
|
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015
|
52
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015
|
53
|
Consolidated Balance Sheets as of December 31, 2017 and 2016
|
54
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
|
55
|
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015
|
56
|
Notes to Consolidated Financial Statements
|
57
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
(Dollars in thousands,
except share and per share data)
|
||||||||||||
Net sales
|
$
|
1,116,143
|
$
|
1,058,482
|
$
|
971,975
|
||||||
Cost of sales
|
789,487
|
735,995
|
690,987
|
|||||||||
Gross profit
|
326,656
|
322,487
|
280,988
|
|||||||||
Selling, general and administrative expenses
|
223,584
|
221,658
|
206,287
|
|||||||||
Restructuring and integration expense (income)
|
6,173
|
3,957
|
(134
|
)
|
||||||||
Other income, net
|
1,275
|
1,195
|
1,025
|
|||||||||
Operating income
|
98,174
|
98,067
|
75,860
|
|||||||||
Other non-operating income (expense), net
|
597
|
2,059
|
(220
|
)
|
||||||||
Interest expense
|
2,329
|
1,556
|
1,537
|
|||||||||
Earnings from continuing operations before taxes
|
96,442
|
98,570
|
74,103
|
|||||||||
Provision for income taxes
|
52,812
|
36,158
|
25,983
|
|||||||||
Earnings from continuing operations
|
43,630
|
62,412
|
48,120
|
|||||||||
Loss from discontinued operations, net of income tax benefit of $3,769, $1,322 and $1,401
|
(5,654
|
)
|
(1,982
|
)
|
(2,102
|
)
|
||||||
Net earnings
|
$
|
37,976
|
$
|
60,430
|
$
|
46,018
|
||||||
Net earnings per common share – Basic:
|
||||||||||||
Earnings from continuing operations
|
$
|
1.92
|
$
|
2.75
|
$
|
2.11
|
||||||
Discontinued operations
|
(0.25
|
)
|
(0.09
|
)
|
(0.09
|
)
|
||||||
Net earnings per common share – Basic
|
$
|
1.67
|
$
|
2.66
|
$
|
2.02
|
||||||
Net earnings per common share – Diluted:
|
||||||||||||
Earnings from continuing operations
|
$
|
1.88
|
$
|
2.70
|
$
|
2.08
|
||||||
Discontinued operations
|
(0.24
|
)
|
(0.08
|
)
|
(0.09
|
)
|
||||||
Net earnings per common share – Diluted
|
$
|
1.64
|
$
|
2.62
|
$
|
1.99
|
||||||
Dividends declared per share
|
$
|
0.76
|
$
|
0.68
|
$
|
0.60
|
||||||
Average number of common shares
|
22,726,491
|
22,722,517
|
22,811,862
|
|||||||||
Average number of common shares and dilutive common shares
|
23,198,392
|
23,082,578
|
23,142,394
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
(In thousands)
|
||||||||||||
Net earnings
|
$
|
37,976
|
$
|
60,430
|
$
|
46,018
|
||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Foreign currency translation adjustments
|
7,027
|
(5,294
|
)
|
(5,739
|
)
|
|||||||
Pension and postretirement plans:
|
||||||||||||
Amortization of:
|
||||||||||||
Prior service benefit
|
—
|
(54
|
)
|
(112
|
)
|
|||||||
Unrecognized (gain)
loss
|
(661
|
)
|
763
|
2,261
|
||||||||
Unrecognized actuarial gains
|
481
|
542
|
462
|
|||||||||
Plan settlement
|
—
|
—
|
654
|
|||||||||
Foreign currency exchange rate changes
|
—
|
3
|
(23
|
)
|
||||||||
Income tax related to pension and postretirement plans
|
72
|
(514
|
)
|
(1,325
|
)
|
|||||||
Pension and postretirement plans, net of tax
|
(108
|
)
|
740
|
1,917
|
||||||||
Total other comprehensive income (loss), net of tax
|
6,919
|
(4,554
|
)
|
(3,822
|
)
|
|||||||
Comprehensive income
|
$
|
44,895
|
$
|
55,876
|
$
|
42,196
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
(Dollars in thousands,
except share data)
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
17,323
|
$
|
19,796
|
||||
Accounts receivable, less allowances for discounts and doubtful accounts of $4,967 and $4,425 in 2017 and 2016, respectively
|
140,057
|
134,630
|
||||||
Inventories
|
326,411
|
312,477
|
||||||
Prepaid expenses and other current assets
|
12,300
|
7,318
|
||||||
Total current assets
|
496,091
|
474,221
|
||||||
Property, plant and equipment, net
|
89,103
|
78,499
|
||||||
Goodwill
|
67,413
|
67,231
|
||||||
Other intangibles, net
|
56,261
|
64,056
|
||||||
Deferred incomes taxes
|
32,420
|
51,127
|
||||||
Other assets
|
46,279
|
33,563
|
||||||
Total assets
|
$
|
787,567
|
$
|
768,697
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Notes payable
|
$
|
57,000
|
$
|
54,812
|
||||
Current portion of other debt
|
4,699
|
43
|
||||||
Accounts payable
|
77,990
|
83,878
|
||||||
Sundry payables and accrued expenses
|
51,911
|
45,147
|
||||||
Accrued customer returns
|
35,916
|
40,176
|
||||||
Accrued rebates
|
35,346
|
29,127
|
||||||
Payroll and commissions
|
23,035
|
30,658
|
||||||
Total current liabilities
|
285,897
|
283,841
|
||||||
Long-term debt
|
79
|
120
|
||||||
Other accrued liabilities
|
14,561
|
12,380
|
||||||
Accrued asbestos liabilities
|
33,376
|
31,328
|
||||||
Total liabilities
|
333,913
|
327,669
|
||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity:
|
||||||||
Common Stock - par value $2.00 per share:
|
||||||||
Authorized 30,000,000 shares, issued 23,936,036 shares
|
47,872
|
47,872
|
||||||
Capital in excess of par value
|
100,057
|
96,850
|
||||||
Retained earnings
|
357,153
|
336,464
|
||||||
Accumulated other comprehensive income
|
(4,109
|
)
|
(11,028
|
)
|
||||
Treasury stock - at cost (1,424,025 shares and 1,101,487 shares in 2017 and 2016, respectively)
|
(47,319
|
)
|
(29,130
|
)
|
||||
Total stockholders’ equity
|
453,654
|
441,028
|
||||||
Total liabilities and stockholders’ equity
|
$
|
787,567
|
$
|
768,697
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
(In thousands)
|
||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net earnings
|
$
|
37,976
|
$
|
60,430
|
$
|
46,018
|
||||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
23,916
|
20,457
|
17,637
|
|||||||||
Amortization of deferred financing cost
|
343
|
346
|
635
|
|||||||||
Increase to allowance for doubtful accounts
|
972
|
210
|
3,371
|
|||||||||
Increase to inventory reserves
|
3,300
|
5,371
|
1,864
|
|||||||||
Amortization of deferred gain on sale of buildings
|
(1,048
|
)
|
(1,048
|
)
|
(1,048
|
)
|
||||||
Equity (income) loss from joint ventures
|
602
|
(2,029
|
)
|
(976
|
)
|
|||||||
Employee Stock Ownership Plan allocation
|
2,159
|
2,021
|
2,208
|
|||||||||
Stock-based compensation
|
7,638
|
6,127
|
5,379
|
|||||||||
Excess tax benefits related to exercise of employee stock grants
|
—
|
(849
|
)
|
(1,254
|
)
|
|||||||
(Increase) decrease in deferred income taxes
|
19,059
|
(691
|
)
|
(1,494
|
)
|
|||||||
Increase (decrease) in tax valuation allowance
|
(128
|
)
|
65
|
87
|
||||||||
Loss on discontinued operations, net of tax
|
5,654
|
1,982
|
2,102
|
|||||||||
Change in assets and liabilities:
|
||||||||||||
Increase in accounts receivable
|
(5,100
|
)
|
(8,826
|
)
|
(1,996
|
)
|
||||||
Increase in inventories
|
(13,901
|
)
|
(20,155
|
)
|
(12,503
|
)
|
||||||
(Increase) decrease in prepaid expenses and other current assets
|
(4,869
|
)
|
3,475
|
367
|
||||||||
Increase (decrease) in accounts payable
|
(7,186
|
)
|
7,345
|
1,882
|
||||||||
Increase (decrease) in sundry payables and accrued expenses
|
(6,015
|
)
|
20,990
|
1,874
|
||||||||
Net changes in other assets and liabilities
|
1,245
|
2,584
|
1,018
|
|||||||||
Net cash provided by operating activities
|
64,617
|
97,805
|
65,171
|
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Acquisitions of and investments in businesses
|
(6,808
|
)
|
(67,289
|
)
|
—
|
|||||||
Capital expenditures
|
(24,442
|
)
|
(20,921
|
)
|
(18,047
|
)
|
||||||
Other investing activities
|
22
|
192
|
36
|
|||||||||
Net cash used in investing activities
|
(31,228
|
)
|
(88,018
|
)
|
(18,011
|
)
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net borrowings (repayments) under line-of-credit agreements
|
2,188
|
7,384
|
(9,131
|
)
|
||||||||
Net borrowings (payments) of other debt and capital lease obligations
|
4,065
|
89
|
(170
|
)
|
||||||||
Purchase of treasury stock
|
(24,376
|
)
|
(377
|
)
|
(19,623
|
)
|
||||||
Increase (decrease) in overdraft balances
|
(534
|
)
|
(254
|
)
|
851
|
|||||||
Payments of debt issuance costs
|
—
|
—
|
(748
|
)
|
||||||||
Proceeds from exercise of employee stock options
|
—
|
—
|
109
|
|||||||||
Excess tax benefits related to the exercise of employee stock grants
|
—
|
849
|
1,254
|
|||||||||
Dividends paid
|
(17,287
|
)
|
(15,447
|
)
|
(13,697
|
)
|
||||||
Net cash used in financing activities
|
(35,944
|
)
|
(7,756
|
)
|
(41,155
|
)
|
||||||
Effect of exchange rate changes on cash
|
82
|
(1,035
|
)
|
(933
|
)
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
(2,473
|
)
|
996
|
5,072
|
||||||||
CASH AND CASH EQUIVALENTS at beginning of year
|
19,796
|
18,800
|
13,728
|
|||||||||
CASH AND CASH EQUIVALENTS at end of year
|
$
|
17,323
|
$
|
19,796
|
$
|
18,800
|
||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
1,944
|
$
|
1,207
|
$
|
901
|
||||||
Income taxes
|
$
|
34,543
|
$
|
32,505
|
$
|
27,513
|
||||||
Noncash investing activity:
|
||||||||||||
Accrual for final contribution of acquired investment
|
$
|
5,740
|
$
|
—
|
$
|
—
|
Common
Stock
|
Capital in
Excess of
Par Value
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Treasury
Stock
|
Total
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2014
|
$
|
47,872
|
$
|
91,411
|
$
|
259,160
|
$
|
(2,652
|
)
|
$
|
(21,638
|
)
|
$
|
374,153
|
||||||||||
Net earnings
|
—
|
—
|
46,018
|
—
|
—
|
46,018
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
(3,822
|
)
|
—
|
(3,822
|
)
|
||||||||||||||||
Cash dividends paid ($0.60 per share)
|
—
|
—
|
(13,697
|
)
|
—
|
—
|
(13,697
|
)
|
||||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
—
|
(19,623
|
)
|
(19,623
|
)
|
||||||||||||||||
Stock-based compensation and related tax benefits
|
—
|
833
|
—
|
—
|
5,700
|
6,533
|
||||||||||||||||||
Stock options exercised and related tax benefits
|
—
|
2
|
—
|
—
|
207
|
209
|
||||||||||||||||||
Employee Stock Ownership Plan
|
—
|
1,001
|
—
|
—
|
1,207
|
2,208
|
||||||||||||||||||
BALANCE AT DECEMBER 31, 2015
|
47,872
|
93,247
|
291,481
|
(6,474
|
)
|
(34,147
|
)
|
391,979
|
||||||||||||||||
Net earnings
|
—
|
—
|
60,430
|
—
|
—
|
60,430
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
(4,554
|
)
|
—
|
(4,554
|
)
|
||||||||||||||||
Cash dividends paid ($0.68 per share)
|
—
|
—
|
(15,447
|
)
|
—
|
—
|
(15,447
|
)
|
||||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
—
|
(377
|
)
|
(377
|
)
|
||||||||||||||||
Stock-based compensation and related tax benefits
|
—
|
3,148
|
—
|
—
|
3,828
|
6,976
|
||||||||||||||||||
Employee Stock Ownership Plan
|
—
|
455
|
—
|
—
|
1,566
|
2,021
|
||||||||||||||||||
BALANCE AT DECEMBER 31, 2016
|
47,872
|
96,850
|
336,464
|
(11,028
|
)
|
(29,130
|
)
|
441,028
|
||||||||||||||||
Net earnings
|
—
|
—
|
37,976
|
—
|
—
|
37,976
|
||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
—
|
—
|
6,919
|
—
|
6,919
|
||||||||||||||||||
Cash dividends paid ($0.76 per share)
|
—
|
—
|
(17,287
|
)
|
—
|
—
|
(17,287
|
)
|
||||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
—
|
(24,779
|
)
|
(24,779
|
)
|
||||||||||||||||
Stock-based compensation
|
—
|
2,193
|
—
|
—
|
5,445
|
7,638
|
||||||||||||||||||
Employee Stock Ownership Plan
|
—
|
1,014
|
—
|
—
|
1,145
|
2,159
|
||||||||||||||||||
BALANCE AT DECEMBER 31, 2017
|
$
|
47,872
|
$
|
100,057
|
$
|
357,153
|
$
|
(4,109
|
)
|
$
|
(47,319
|
)
|
$
|
453,654
|
1. |
Summary of Significant Accounting Policies
|
Estimated Life
|
|
Buildings
|
25 to 33-1/2 years
|
Building improvements
|
10 to 25 years
|
Machinery and equipment
|
5 to 12 years
|
Tools, dies and auxiliary equipment
|
3 to 8 years
|
Furniture and fixtures
|
3 to 12 years
|
2017
|
2016
|
2015
|
||||||||||
(In thousands)
|
||||||||||||
Weighted average common shares outstanding – Basic
|
22,726
|
22,723
|
22,812
|
|||||||||
Plus incremental shares from assumed conversions:
|
||||||||||||
Dilutive effect of restricted shares and performance shares
|
472
|
360
|
330
|
|||||||||
Weighted average common shares outstanding – Diluted
|
23,198
|
23,083
|
23,142
|
2017
|
2016
|
2015
|
||||||||||
(In thousands)
|
||||||||||||
Restricted and performance shares
|
248
|
304
|
307
|
Standard
|
Description
|
Date of
adoption
|
Effects on the financial
statements or other
significant matters
|
Standards that were adopted
|
|||
ASU
2015-17,
Balance Sheet Classification of Deferred Taxes
|
This standard requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The new guidance requires entities to offset all deferred tax assets and liabilities (and valuation allowances) for each tax-paying jurisdiction within each tax-paying component. The net deferred tax must be presented as a single noncurrent amount.
|
January 1, 2017
|
The adoption of the new standard resulted in the reclassification of deferred tax assets previously reported as current deferred tax assets to noncurrent deferred tax assets in our consolidated balance sheets. We adopted the new standard retrospectively, and as such, all prior period current deferred tax assets in our consolidated balance sheets have also been reclassified to noncurrent deferred tax assets for comparative purposes.
|
|||
ASU 2015-11,
Simplifying the Measurement of Inventory
|
This standard changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value for entities that measure inventory using first-in, first-out or average cost. In addition, this standard eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximate normal profit margin when measuring inventory.
|
January 1, 2017
|
The prospective adoption of the new standard did not have a material effect on our consolidated financial statements.
|
Standard
|
Description
|
Date of
adoption
|
Effects on the financial
statements or other
significant matters
|
Standards that were adopted
|
|||
ASU 2016-09,
Improvements to Employee Share-Based Payment Accounting
|
This standard requires (1) that the tax effects related to share-based payments at settlement (or expiration) be recorded through the tax provision (benefit) in the income statement rather than in equity as permitted under prior guidance under certain circumstances; (2) that all tax-related cash flows resulting from share-based payments be reported as operating activities on the statement of cash flows, a change from the requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities; and (3) that when computing diluted earnings per share, the effect of “windfall” tax benefits be excluded from the hypothetical proceeds used to calculate the repurchase of shares under the treasury stock method.
|
January 1, 2017
|
We adopted the new standard prospectively. The adoption of the new standard did not have a material effect on our consolidated financial statements for the year ended December 31, 2017.
|
2. |
Business Acquisitions and Investments
|
Purchase Price
|
$
|
67,451
|
||||||
Assets acquired and liabilities assumed:
|
||||||||
Receivables
|
$
|
3,130
|
||||||
Inventory
|
12,567
|
|||||||
Other current and noncurrent assets (1)
|
334
|
|||||||
Property, plant and equipment, net
|
2,660
|
|||||||
Intangible assets
|
42,440
|
|||||||
Goodwill
|
12,746
|
|||||||
Current liabilities
|
(6,426
|
)
|
||||||
Net assets acquired
|
$
|
67,451
|
(1) |
Other current and noncurrent assets includes $0.2 million of cash acquired.
|
3. |
Restructuring and Integration Expense (Income)
|
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2015
|
$
|
270
|
$
|
591
|
$
|
861
|
||||||
Restructuring and integration costs:
|
||||||||||||
Amounts provided for during 2016
|
2,934
|
1,023
|
3,957
|
|||||||||
Cash payments
|
(392
|
)
|
(1,154
|
)
|
(1,546
|
)
|
||||||
Reclassification to ongoing accrued liabilities (1)
|
(236
|
)
|
(460
|
)
|
(696
|
)
|
||||||
Exit activity liability at December 31, 2016
|
$
|
2,576
|
$
|
—
|
$
|
2,576
|
||||||
Restructuring and integration costs:
|
||||||||||||
Amounts provided for during 2017
|
2,220
|
3,953
|
6,173
|
|||||||||
Cash payments
|
(1,979
|
)
|
(3,702
|
)
|
(5,681
|
)
|
||||||
Foreign currency exchange rate changes and other
|
37
|
(251
|
)
|
(214
|
)
|
|||||||
Exit activity liability at December 31, 2017
|
$
|
2,854
|
$
|
—
|
$
|
2,854
|
(1) |
Applies to liabilities associated with the prior year restructuring and integration programs which relate primarily to employee severance and other retiree benefit enhancements to be paid through 2020 and environmental clean-up costs at our Long Island City, New York location in connection with the closure of our manufacturing operations at the site. These amounts were reclassified out of the restructuring and integration liability and into ongoing accrued liabilities as of December 31, 2016.
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
|||||||||||||
Exit activity liability at December 31, 2015
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Restructuring and integration costs:
|
||||||||||||||||
Amounts provided for during 2016
|
844
|
2,361
|
—
|
3,205
|
||||||||||||
Cash payments
|
(833
|
)
|
(318
|
)
|
—
|
(1,151
|
)
|
|||||||||
Exit activity liability at December 31, 2016
|
$
|
11
|
$
|
2,043
|
$
|
—
|
$
|
2,054
|
||||||||
Restructuring and integration costs:
|
||||||||||||||||
Amounts provided for during 2017
|
631
|
1,774
|
—
|
2,405
|
||||||||||||
Cash payments
|
(642
|
)
|
(2,341
|
)
|
—
|
(2,983
|
)
|
|||||||||
Exit activity liability at December 31, 2017
|
$
|
—
|
$
|
1,476
|
$
|
—
|
$
|
1,476
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
|||||||||||||
Exit activity liability at December 31, 2016
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Restructuring and integration costs:
|
||||||||||||||||
Amounts provided for during 2017
|
1,758
|
—
|
—
|
1,758
|
||||||||||||
Cash payments
|
(772
|
)
|
—
|
—
|
(772
|
)
|
||||||||||
Exit activity liability at December 31, 2017
|
$
|
986
|
$
|
—
|
$
|
—
|
$
|
986
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
|||||||||||||
Exit activity liability at December 31, 2015
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Restructuring and integration costs:
|
||||||||||||||||
Amounts provided for during 2016
|
714
|
—
|
—
|
714
|
||||||||||||
Cash payments
|
(192
|
)
|
—
|
—
|
(192
|
)
|
||||||||||
Exit activity liability at December 31, 2016
|
$
|
522
|
$
|
—
|
$
|
—
|
$
|
522
|
||||||||
Restructuring and integration costs: | ||||||||||||||||
Amounts provided for during 2017
|
1,759
|
|
—
|
—
|
1,759
|
|||||||||||
Cash payments
|
(1,926
|
) |
—
|
—
|
(1,926
|
)
|
||||||||||
Foreign currency exchange rate changes
|
37
|
—
|
—
|
37
|
||||||||||||
Exit activity liability at December 31, 2017
|
$
|
392
|
$
|
—
|
$
|
—
|
$
|
392
|
4. |
Sale of Receivables
|
5. |
Inventories
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
(In thousands)
|
||||||||
Finished goods
|
$
|
209,800
|
$
|
203,700
|
||||
Work-in-process
|
7,536
|
6,823
|
||||||
Raw materials
|
109,075
|
101,954
|
||||||
Total inventories
|
$
|
326,411
|
$
|
312,477
|
6. |
Property, Plant and Equipment
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
(In thousands)
|
||||||||
Land, buildings and improvements
|
$
|
46,930
|
$
|
46,447
|
||||
Machinery and equipment
|
132,467
|
128,650
|
||||||
Tools, dies and auxiliary equipment
|
45,769
|
44,683
|
||||||
Furniture and fixtures
|
28,352
|
27,482
|
||||||
Leasehold improvements
|
10,348
|
8,369
|
||||||
Construction-in-progress
|
16,318
|
14,419
|
||||||
Total property, plant and equipment
|
280,184
|
270,050
|
||||||
Less accumulated depreciation
|
191,081
|
191,551
|
||||||
Total property, plant and equipment, net
|
$
|
89,103
|
$
|
78,499
|
7. |
Goodwill and Other Intangible Assets
|
Engine
Management
|
Temperature
Control
|
Total
|
||||||||||
Balance as of December 31, 2015:
|
||||||||||||
Goodwill
|
$
|
79,099
|
$
|
14,270
|
$
|
93,369
|
||||||
Accumulated impairment losses
|
(38,488
|
)
|
—
|
(38,488
|
)
|
|||||||
$
|
40,611
|
$
|
14,270
|
$
|
54,881
|
|||||||
Activity in 2016
|
||||||||||||
Acquisition of the North American automotive ignition wire business of General Cable Corporation.
|
$
|
12,746
|
$
|
—
|
$
|
12,746
|
||||||
Foreign currency exchange rate change
|
(396
|
)
|
—
|
(396
|
)
|
|||||||
Balance as of December 31, 2016:
|
||||||||||||
Goodwill
|
91,449
|
14,270
|
105,719
|
|||||||||
Accumulated impairment losses
|
(38,488
|
)
|
—
|
(38,488
|
)
|
|||||||
$
|
52,961
|
$
|
14,270
|
$
|
67,231
|
|||||||
Activity in 2017
|
||||||||||||
Foreign currency exchange rate change
|
182
|
—
|
182
|
|||||||||
Balance as of December 31, 2017:
|
||||||||||||
Goodwill
|
91,631
|
14,270
|
105,901
|
|||||||||
Accumulated impairment losses
|
(38,488
|
)
|
—
|
(38,488
|
)
|
|||||||
$
|
53,143
|
$
|
14,270
|
$
|
67,413
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
(In thousands)
|
||||||||
Customer relationships
|
$
|
87,290
|
$
|
87,070
|
||||
Trademarks and trade names
|
6,800
|
6,800
|
||||||
Non-compete agreements
|
3,193
|
3,189
|
||||||
Patents
|
723
|
723
|
||||||
Supply agreements
|
800
|
800
|
||||||
Leaseholds
|
160
|
160
|
||||||
Total acquired intangible assets
|
98,966
|
98,742
|
||||||
Less accumulated amortization (1)
|
(43,853
|
)
|
(35,830
|
)
|
||||
Net acquired intangible assets
|
$
|
55,113
|
$
|
62,912
|
(1) |
Applies to all intangible assets, except for related trademarks and trade names totaling $5.2 million, which have indefinite useful lives and, as such, are not being amortized.
|
8. |
Other Assets
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
(In thousands)
|
||||||||
Equity in joint ventures
|
$
|
31,184
|
$
|
19,924
|
||||
Deferred compensation
|
13,612
|
10,763
|
||||||
Long term receivables
|
—
|
1,061
|
||||||
Deferred financing costs, net
|
630
|
973
|
||||||
Other
|
853
|
842
|
||||||
Total other assets, net
|
$
|
46,279
|
$
|
33,563
|
9. |
Credit Facilities and Long-Term Debt
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
(In thousands)
|
||||||||
Revolving credit facilities
|
$
|
57,000
|
$
|
54,812
|
||||
Other (1)
|
4,778
|
163
|
||||||
Total debt
|
$
|
61,778
|
$
|
54,975
|
||||
Current maturities of debt
|
$
|
61,699
|
$
|
54,855
|
||||
Long-term debt
|
79
|
120
|
||||||
Total debt
|
$
|
61,778
|
$
|
54,975
|
(1) |
Other includes borrowings under our Polish overdraft facility of Zloty 16.2 million (approximately $4.7 million).
|
(In thousands)
|
||||
2018
|
$
|
343
|
||
2019
|
343
|
|||
2020
|
287
|
|||
Total amortization
|
$
|
973
|
10. |
Stockholders’ Equity
|
11. |
Accumulated Other Comprehensive Income
|
Foreign
Currency
Translation
Adjustments
|
Unrecognized
Postretirement
Benefit Costs
(Credit)
|
Total
|
||||||||||
(In thousands)
|
||||||||||||
Balance at December 31, 2015
|
$
|
(5,958
|
)
|
$
|
(516
|
)
|
$
|
(6,474
|
)
|
|||
Other comprehensive income before reclassifications
|
(5,294
|
)
|
332
|
(4,962
|
)
|
|||||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
408
|
408
|
|||||||||
Other comprehensive income, net
|
(5,294
|
)
|
740
|
(4,554
|
)
|
|||||||
Balance at December 31, 2016
|
$
|
(11,252
|
)
|
$
|
224
|
$
|
(11,028
|
)
|
||||
Other comprehensive income before reclassifications
|
7,027
|
289
|
7,316
|
|||||||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
(397
|
)
|
(397
|
)
|
|||||||
Other comprehensive income, net
|
7,027
|
(108
|
)
|
6,919
|
||||||||
Balance at December 31, 2017
|
$
|
(4,225
|
)
|
$
|
116
|
$
|
(4,109
|
)
|
Year Ended December 31,
|
||||||||
Details About Accumulated Other Comprehensive Income Components
|
2017
|
2016
|
||||||
Amortization of postretirement benefit plans:
|
(In thousands)
|
|||||||
Prior service benefit (1)
|
$
|
—
|
$
|
(54
|
)
|
|||
Unrecognized (gain) loss (1)
|
(661
|
)
|
763
|
|||||
Total before income tax
|
(661
|
)
|
709
|
|||||
Income tax expense
|
264
|
(301
|
)
|
|||||
Total reclassifications for the period
|
$
|
(397
|
)
|
$
|
408
|
(1) |
These accumulated other comprehensive income components are included in the computation of net periodic postretirement benefit costs, which are included in selling, general and administrative expenses in our consolidated statements of operations (see Note 14 for additional information).
|
12. |
Stock-Based Compensation Plans
|
Shares
|
Weighted Average
Grant Date Fair
Value per Share
|
|||||||
Balance at December 31, 2015
|
758,550
|
$
|
27.19
|
|||||
Granted
|
212,500
|
42.93
|
||||||
Vested
|
(138,427
|
)
|
31.55
|
|||||
Forfeited
|
(9,775
|
)
|
31.79
|
|||||
Balance at December 31, 2016
|
822,848
|
30.46
|
||||||
Granted
|
207,975
|
42.79
|
||||||
Vested
|
(169,615
|
)
|
31.26
|
|||||
Forfeited
|
(7,250
|
)
|
37.24
|
|||||
Balance at December 31, 2017
|
853,958
|
$
|
33.25
|
13. |
Retirement Benefit Plans
|
U.S. Defined
Contribution
|
||||
Year ended December 31,
|
||||
2017
|
$
|
9,980
|
||
2016
|
8,625
|
|||
2015
|
8,445
|
14. |
Postretirement Medical Benefits
|
Postretirement Benefit Plans
|
||||||||||||||||
U.S. Plan
|
Canadian Plan
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Change in benefit obligation:
|
||||||||||||||||
Benefit obligation at beginning of year
|
$
|
1,574
|
$
|
2,928
|
$
|
—
|
$
|
74
|
||||||||
Service cost
|
—
|
—
|
—
|
—
|
||||||||||||
Interest cost
|
8
|
11
|
—
|
2
|
||||||||||||
Benefits paid
|
(429
|
)
|
(831
|
)
|
—
|
(17
|
)
|
|||||||||
Actuarial gain
|
(481
|
)
|
(534
|
)
|
—
|
(9
|
)
|
|||||||||
Translation adjustment & other
|
—
|
—
|
—
|
(50
|
)
|
|||||||||||
Benefit obligation at end of year
|
$
|
672
|
$
|
1,574
|
$
|
—
|
$
|
—
|
||||||||
(Unfunded) status of the plans
|
$
|
(672
|
)
|
$
|
(1,574
|
)
|
$
|
—
|
$
|
—
|
Postretirement Benefit Plan
|
||||||||
U.S. Plan
|
||||||||
2017
|
2016
|
|||||||
Amounts recognized in the balance sheet:
|
||||||||
Accrued postretirement benefit liabilities
|
$
|
672
|
$
|
1,574
|
||||
Accumulated other comprehensive (income) loss (pre-tax) related to:
|
||||||||
Unrecognized net actuarial losses (gains)
|
(194
|
)
|
(374
|
)
|
||||
Unrecognized prior service cost (credit)
|
—
|
—
|
December 31,
|
||||||||||||
U.S. postretirement plan:
|
2017
|
2016
|
2015
|
|||||||||
Service cost
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Interest cost
|
8
|
11
|
24
|
|||||||||
Actuarial net (gain) loss
|
(661
|
)
|
809
|
1,548
|
||||||||
Net periodic benefit cost (credit)
|
$
|
(653
|
)
|
$
|
820
|
$
|
1,572
|
|||||
Canadian postretirement plan:
|
||||||||||||
Service cost
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Interest cost
|
—
|
2
|
3
|
|||||||||
Amortization of prior service cost
|
—
|
(54
|
)
|
(112
|
)
|
|||||||
Actuarial net gain
|
—
|
(46
|
)
|
(22
|
)
|
|||||||
Net periodic benefit cost (credit)
|
$
|
—
|
$
|
(98
|
)
|
$
|
(131
|
)
|
||||
Total net periodic benefit cost (credit)
|
$
|
(653
|
) |
$
|
722
|
$
|
1,441
|
December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Discount rate
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Discount rates
|
N/A
|
3.00
|
%
|
3.00
|
%
|
|||||||
Current medical cost trend rate
|
N/A
|
N/A
|
5.71
|
%
|
||||||||
Ultimate medical cost trend rate
|
N/A
|
N/A
|
5
|
%
|
||||||||
Year trend rate declines to ultimate
|
N/A
|
N/A
|
2017
|
2018
|
$
|
440
|
||
2019
|
42
|
|||
2020
|
38
|
|||
2021
|
33
|
|||
2022
|
29
|
|||
Years 2023 – 2027
|
91
|
15. |
Other Non-Operating Income (Expense), Net
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
(In thousands)
|
||||||||||||
Interest and dividend income
|
$
|
91
|
$
|
153
|
$
|
151
|
||||||
Equity income (loss) from joint ventures (1)
|
(602
|
)
|
2,029
|
976
|
||||||||
Gain (loss) on foreign exchange
|
950
|
(276
|
)
|
(719
|
)
|
|||||||
Write-off of deferred financing costs
|
—
|
—
|
(773
|
)
|
||||||||
Other non-operating income, net
|
158
|
153
|
145
|
|||||||||
Total other non-operating income (expense), net
|
$
|
597
|
$
|
2,059
|
$
|
(220
|
)
|
(1) |
Year ended December 31, 2017 includes a noncash impairment charge of approximately $1.8 million related to our minority interest investment in Orange Electronic Co., Ltd. (See Note 8 for additional information).
|
16. |
Income Taxes
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Current:
|
||||||||||||
Domestic
|
$
|
30,742
|
$
|
33,156
|
$
|
22,943
|
||||||
Foreign
|
3,139
|
3,628
|
4,324
|
|||||||||
Total current
|
33,881
|
36,784
|
27,267
|
|||||||||
Deferred:
|
||||||||||||
Domestic
|
18,833
|
(387
|
)
|
(1,210
|
)
|
|||||||
Foreign
|
98
|
(239
|
)
|
(74
|
)
|
|||||||
Total deferred
|
18,931
|
(626
|
)
|
(1,284
|
)
|
|||||||
Total income tax provision
|
$
|
52,812
|
$
|
36,158
|
$
|
25,983
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
U.S. Federal income tax rate of 35%
|
$
|
33,755
|
$
|
34,500
|
$
|
25,936
|
||||||
Increase (decrease) in tax rate resulting from:
|
||||||||||||
State and local income taxes, net of federal income tax benefit
|
3,138
|
2,944
|
1,857
|
|||||||||
Income tax (tax benefits) attributable to foreign income
|
(149
|
)
|
(887
|
)
|
(1,705
|
)
|
||||||
Other non-deductible items, net
|
(1,319
|
)
|
(464
|
)
|
(192
|
)
|
||||||
Impact of Tax Cuts and Jobs Act
|
17,515
|
—
|
—
|
|||||||||
Change in valuation allowance
|
(128
|
)
|
65
|
87
|
||||||||
Provision for income taxes
|
$
|
52,812
|
$
|
36,158
|
$
|
25,983
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
Deferred tax assets:
|
||||||||
Inventories
|
$
|
11,498
|
$
|
18,323
|
||||
Allowance for customer returns
|
8,678
|
15,092
|
||||||
Postretirement benefits
|
170
|
607
|
||||||
Allowance for doubtful accounts
|
1,181
|
1,589
|
||||||
Accrued salaries and benefits
|
8,500
|
11,482
|
||||||
Capital loss
|
154
|
234
|
||||||
Tax credit carryforwards
|
272
|
420
|
||||||
Deferred gain on building sale
|
55
|
489
|
||||||
Accrued asbestos liabilities
|
8,886
|
12,638
|
||||||
39,394
|
60,874
|
|||||||
Valuation allowance
|
(377
|
)
|
(505
|
)
|
||||
Total deferred tax assets
|
39,017
|
60,369
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
5,495
|
7,410
|
||||||
Other
|
1,102
|
1,832
|
||||||
Total deferred tax liabilities
|
6,597
|
9,242
|
||||||
Net deferred tax assets
|
$
|
32,420
|
$
|
51,127
|
17. |
Industry Segment and Geographic Data
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Net sales (a):
|
||||||||||||
Engine Management
|
$
|
829,413
|
$
|
765,539
|
$
|
698,021
|
||||||
Temperature Control
|
279,127
|
283,740
|
264,478
|
|||||||||
Other
|
7,603
|
9,203
|
9,476
|
|||||||||
Total net sales
|
$
|
1,116,143
|
$
|
1,058,482
|
$
|
971,975
|
||||||
Intersegment sales (a)
:
|
||||||||||||
Engine Management
|
$
|
24,995
|
$
|
22,268
|
$
|
20,178
|
||||||
Temperature Control
|
7,334
|
7,293
|
6,542
|
|||||||||
Other
|
(32,329
|
)
|
(29,561
|
)
|
(26,720
|
)
|
||||||
Total intersegment sales
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Product Line Net Sales (a)
:
|
||||||||||||
Engine Management
|
||||||||||||
Ignition, Emission and Fuel System Parts
|
$
|
657,287
|
$
|
616,523
|
$
|
598,161
|
||||||
Wire and Cable
|
172,126
|
149,016
|
99,860
|
|||||||||
Total Engine Management
|
829,413
|
765,539
|
698,021
|
|||||||||
Temperature Control
|
||||||||||||
Compressors
|
148,377
|
148,623
|
127,861
|
|||||||||
Other Climate Control Parts
|
130,750
|
135,117
|
136,617
|
|||||||||
Total Temperature Control
|
279,127
|
283,740
|
264,478
|
|||||||||
All Other
|
7,603
|
9,203
|
9,476
|
|||||||||
Total Net Sales
|
$
|
1,116,143
|
$
|
1,058,482
|
$
|
971,975
|
||||||
Depreciation and Amortization:
|
||||||||||||
Engine Management
|
$
|
17,981
|
$
|
15,008
|
$
|
12,256
|
||||||
Temperature Control
|
4,373
|
4,287
|
4,329
|
|||||||||
Other
|
1,562
|
1,162
|
1,052
|
|||||||||
Total depreciation and amortization
|
$
|
23,916
|
$
|
20,457
|
$
|
17,637
|
||||||
Operating income (loss)
:
|
||||||||||||
Engine Management
|
$
|
97,403
|
$
|
101,529
|
$
|
88,007
|
||||||
Temperature Control
|
19,609
|
17,563
|
6,382
|
|||||||||
Other
|
(18,838
|
)
|
(21,025
|
)
|
(18,529
|
)
|
||||||
Total operating income
|
$
|
98,174
|
$
|
98,067
|
$
|
75,860
|
||||||
Investment in equity affiliates:
|
||||||||||||
Engine Management
|
$
|
4,162
|
$
|
6,221
|
$
|
6,430
|
||||||
Temperature Control
|
27,022
|
13,703
|
14,192
|
|||||||||
Other
|
—
|
—
|
—
|
|||||||||
Total investment in equity affiliates
|
$
|
31,184
|
$
|
19,924
|
$
|
20,622
|
||||||
Capital expenditures
:
|
||||||||||||
Engine Management
|
$
|
17,750
|
$
|
14,202
|
$
|
13,038
|
||||||
Temperature Control
|
5,151
|
3,652
|
3,027
|
|||||||||
Other
|
1,541
|
3,067
|
1,982
|
|||||||||
Total capital expenditures
|
$
|
24,442
|
$
|
20,921
|
$
|
18,047
|
Total assets
:
|
||||||||||||
Engine Management
|
$
|
527,200
|
$
|
506,625
|
$
|
413,102
|
||||||
Temperature Control
|
177,006
|
171,136
|
177,201
|
|||||||||
Other
|
83,361
|
90,936
|
90,761
|
|||||||||
Total assets
|
$
|
787,567
|
$
|
768,697
|
$
|
681,064
|
a) |
Segment and product line net sales include intersegment sales in our Engine Management and Temperature Control segments.
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
(In thousands)
|
||||||||||||
Operating income
|
$
|
98,174
|
$
|
98,067
|
$
|
75,860
|
||||||
Other non-operating income (expense)
|
597
|
2,059
|
(220
|
)
|
||||||||
Interest expense
|
2,329
|
1,556
|
1,537
|
|||||||||
Earnings from continuing operations before taxes
|
96,442
|
98,570
|
74,103
|
|||||||||
Income tax expense
|
52,812
|
36,158
|
25,983
|
|||||||||
Earnings from continuing operations
|
43,630
|
62,412
|
48,120
|
|||||||||
Discontinued operations, net of tax
|
(5,654
|
)
|
(1,982
|
)
|
(2,102
|
)
|
||||||
Net earnings
|
$
|
37,976
|
$
|
60,430
|
$
|
46,018
|
Year Ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Revenues
:
|
(In thousands)
|
|||||||||||
United States
|
$
|
996,433
|
$
|
952,019
|
$
|
881,206
|
||||||
Canada
|
56,575
|
53,324
|
48,072
|
|||||||||
Mexico | 24,521 | 24,429 | 14,707 | |||||||||
Europe
|
14,088
|
14,703
|
16,305
|
|||||||||
Other foreign
|
24,526
|
14,007
|
11,685
|
|||||||||
Total revenues
|
$
|
1,116,143
|
$
|
1,058,482
|
$
|
971,975
|
December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Long-lived assets
:
|
(In thousands)
|
|||||||||||
United States
|
$
|
202,875
|
$
|
204,592
|
$
|
155,438
|
||||||
Canada
|
2,017
|
1,344
|
1,190
|
|||||||||
Mexico | 4,449 | 3,877 | 1,012 | |||||||||
Europe
|
18,530
|
13,612
|
12,324
|
|||||||||
Other foreign
|
31,185
|
19,924
|
20,622
|
|||||||||
Total long-lived assets
|
$
|
259,056
|
$
|
243,349
|
$
|
190,586
|
18. |
Fair Value of Financial Instruments
|
19. |
Commitments and Contingencies
|
Total
|
Real Estate
|
Other
|
||||||||||
2017
|
$
|
11,954
|
$
|
8,983
|
$
|
2,971
|
||||||
2016
|
10,171
|
7,550
|
2,621
|
|||||||||
2015
|
9,756
|
7,218
|
2,538
|
2018
|
$
|
9,485
|
||
2019
|
8,078
|
|||
2020
|
6,990
|
|||
2021
|
6,355
|
|||
2022
|
5,364
|
|||
Thereafter
|
3,932
|
|||
Total
|
$
|
40,204
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
(In thousands)
|
||||||||
Balance, beginning of period
|
$
|
24,072
|
$
|
23,395
|
||||
Liabilities accrued for current year sales
|
94,367
|
99,092
|
||||||
Settlements of warranty claims
|
(97,510
|
)
|
(98,415
|
)
|
||||
Balance, end of period
|
$
|
20,929
|
$
|
24,072
|
20. |
Quarterly Financial Data (Unaudited)
|
2017 Quarter Ended
|
||||||||||||||||
Dec. 31
|
Sept. 30
|
June 30
|
Mar. 31
|
|||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Net sales
|
$
|
239,978
|
$
|
281,058
|
$
|
312,729
|
$
|
282,378
|
||||||||
Gross profit
|
69,345
|
82,535
|
90,666
|
84,110
|
||||||||||||
Earnings (loss) from continuing operations
|
(8,106
|
)
|
17,108
|
18,261
|
16,367
|
|||||||||||
Loss from discontinued operations, net of taxes
|
(541
|
)
|
(3,983
|
)
|
(497
|
)
|
(633
|
)
|
||||||||
Net earnings (loss)
|
$
|
(8,647
|
)
|
$
|
13,125
|
$
|
17,764
|
$
|
15,734
|
|||||||
Net earnings (loss) from continuing operations per common share:
|
||||||||||||||||
Basic
|
$
|
(0.36
|
)
|
$
|
0.75
|
$
|
0.80
|
$
|
0.72
|
|||||||
Diluted
|
$
|
(0.36
|
)
|
$
|
0.74
|
$
|
0.78
|
$
|
0.70
|
|||||||
Net earnings (loss) per common share:
|
||||||||||||||||
Basic
|
$
|
(0.38
|
)
|
$
|
0.58
|
$
|
0.78
|
$
|
0.69
|
|||||||
Diluted
|
$
|
(0.38
|
)
|
$
|
0.57
|
$
|
0.76
|
$
|
0.67
|
2016 Quarter Ended
|
||||||||||||||||
Dec. 31
|
Sept. 30
|
June 30
|
Mar. 31
|
|||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Net sales
|
$
|
229,799
|
$
|
300,795
|
$
|
288,977
|
$
|
238,911
|
||||||||
Gross profit
|
66,771
|
95,644
|
87,076
|
72,996
|
||||||||||||
Earnings from continuing operations
|
8,839
|
21,055
|
19,862
|
12,656
|
||||||||||||
Loss from discontinued operations, net of taxes
|
(487
|
)
|
(425
|
)
|
(618
|
)
|
(452
|
)
|
||||||||
Net earnings
|
$
|
8,352
|
$
|
20,630
|
$
|
19,244
|
$
|
12,204
|
||||||||
Net earnings from continuing operations per common share:
|
Basic
|
$
|
0.39
|
$
|
0.93
|
$
|
0.87
|
$
|
0.56
|
||||||||
Diluted
|
$
|
0.38
|
$
|
0.91
|
$
|
0.86
|
$
|
0.55
|
||||||||
Net earnings per common share:
|
||||||||||||||||
Basic
|
$
|
0.37
|
$
|
0.91
|
$
|
0.85
|
$
|
0.54
|
||||||||
Diluted
|
$
|
0.36
|
$
|
0.89
|
$
|
0.84
|
$
|
0.53
|
(a)
|
Evaluation of Disclosure Controls and Procedures
.
|
(b)
|
Management’s Report on Internal Control Over Financial Reporting
.
|
(c)
|
Attestation Report of Independent Registered Public Accounting Firm
.
|
(d)
|
Changes in Internal Control Over Financial Reporting
.
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
(a) | (1) | The Index to Consolidated Financial Statements of the Registrant under Item 8 of this Report is incorporated herein by reference as the list of Financial Statements required as part of this Report. |
(2) |
The following financial schedule and related report for the years 2017, 2016 and 2015 is submitted herewith:
|
(3) |
Exhibits.
|
Exhibit
Number
|
|
10.11
|
|
10.12
|
|
10.13
|
|
10.14
|
|
21
|
|
23
|
|
24
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
101.INS**
|
XBRL Instance Document
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
**
|
In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to the Original Filing shall be deemed to be “furnished” and not “filed.”
|
STANDARD MOTOR PRODUCTS, INC.
|
|
(Registrant)
|
|
/s/ Eric P. Sills
|
|
Eric P. Sills
|
|
Chief Executive Officer, President and Director
|
|
/s/ James J. Burke
|
|
James J. Burke
|
|
Executive Vice President Finance,
|
|
Chief Financial Officer
|
February 22, 2018
|
/s/
|
Eric P. Sills
|
Eric P. Sills
|
||
Chief Executive Officer, President and Director
|
||
(Principal Executive Officer)
|
||
February 22, 2018
|
/s/
|
James J. Burke
|
James J. Burke
|
||
Executive Vice President Finance and Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
February 22, 2018
|
/s/ Lawrence I. Sills
|
|
Lawrence I. Sills, Director
|
||
February 22, 2018
|
/s/ John P. Gethin
|
|
John P. Gethin, Director
|
||
February 22, 2018
|
/s/ Pamela Forbes Lieberman
|
|
Pamela Forbes Lieberman, Director
|
||
February 22, 2018
|
/s/ Patrick S. McClymont
|
|
Patrick S. McClymont, Director
|
||
February 22, 2018
|
/s/ Joseph W. McDonnell
|
|
Joseph W. McDonnell, Director
|
||
February 22, 2018
|
/s/ Alisa C. Norris
|
|
Alisa C. Norris, Director
|
||
February 22, 2018
|
/s/ Frederick D. Sturdivant
|
|
Frederick D. Sturdivant, Director
|
||
February 22, 2018
|
/s/ William H. Turner
|
|
William H. Turner, Director
|
||
February 22, 2018
|
/s/ Richard S. Ward
|
|
Richard S. Ward, Director
|
||
February 22, 2018
|
/s/ Roger M. Widmann
|
|
Roger M. Widmann, Director
|
Additions
|
||||||||||||||||||||
Description
|
Balance at
beginning
of year
|
Charged to
costs and
expenses
|
Other
|
Deductions
|
Balance at
end of year
|
|||||||||||||||
Year ended December 31, 2017:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$
|
3,353,000
|
$
|
970,000
|
$
|
—
|
$
|
499,000
|
$
|
3,824,000
|
||||||||||
Allowance for discounts
|
1,072,000
|
10,664,000
|
—
|
10,593,000
|
1,143,000
|
|||||||||||||||
$
|
4,425,000
|
$
|
11,634,000
|
$
|
—
|
$
|
11,092,000
|
$
|
4,967,000
|
|||||||||||
Allowance for sales returns
|
$
|
40,176,000
|
$
|
137,416,000
|
$
|
—
|
$
|
141,676,000
|
$
|
35,916,000
|
||||||||||
Year ended December 31, 2016:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$
|
3,201,000
|
$
|
949,000
|
$
|
—
|
$
|
797,000
|
$
|
3,353,000
|
||||||||||
Allowance for discounts
|
1,045,000
|
10,039,000
|
—
|
10,012,000
|
1,072,000
|
|||||||||||||||
$
|
4,246,000
|
$
|
10,988,000
|
$
|
—
|
$
|
10,809,000
|
$
|
4,425,000
|
|||||||||||
Allowance for sales returns
|
$
|
38,812,000
|
$
|
138,407,000
|
$
|
—
|
$
|
137,043,000
|
$
|
40,176,000
|
||||||||||
Year ended December 31, 2015:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$
|
4,894,000
|
$
|
3,371,000
|
(1)
|
$
|
—
|
$
|
5,064,000
|
$
|
3,201,000
|
|||||||||
Allowance for discounts
|
1,475,000
|
9,872,000
|
—
|
10,302,000
|
1,045,000
|
|||||||||||||||
$
|
6,369,000
|
$
|
13,243,000
|
$
|
—
|
$
|
15,366,000
|
$
|
4,246,000
|
|||||||||||
Allowance for sales returns
|
$
|
30,621,000
|
$
|
133,355,000
|
$
|
—
|
$
|
125,164,000
|
$
|
38,812,000
|
(1) |
Includes a net $3,514,000 charge relating to one of our customers that filed a petition for bankruptcy in January 2016.
|
/s/ Lawrence I. Sills
|
||
Lawrence I. Sills,
|
||
President
|
/s/ Mark S. Chanko
|
||
Mark S. Chanko,
|
||
Secretary
|
1. |
The name of the Corporation is Standard Motor Products, Inc.
|
2. |
The Certificate of Incorporation of the Corporation was filed by the Department of State on December 30, 1926. The Restated Certificate of Incorporation of the Corporation under Section 807 of the BCL was filed at the Department of State on August 1, 1990.
|
3. |
The Certificate of Incorporation of the Corporation is hereby amended by the addition of a provision stating the number, designation, relative rights, preferences and limitations of the Corporation's Series A Participating Preferred Stock, par value $20.00 per share, as authorized and fixed by the Corporation's Board of Directors at a meeting duly called and held on the 17
th
day of January, 1996 in accordance with Article Fourth of the Corporation's Certificate of Incorporation, as follows:
|
/s/ Lawrence I. Sills
|
||
Lawrence I. Sills
|
||
President; Chief Operating Officer
|
/s/ Sanford Kay
|
||
Sanford Kay
|
||
Secretary
|
2.1
|
“Affiliate”
shall mean any corporation or other entity (including, but not limited to, a partnership or a limited liability company), that is affiliated with the Company through stock or equity ownership or otherwise, and is designated as an Affiliate for purposes of this Plan by the Committee.
|
2.2
|
“Annual Award Limit”
or
“Annual Award Limits”
have the meaning set forth in Section 4.3.
|
2.3
|
“Award”
means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards,
or Other Stock-Based Awards, in each case subject to the terms of this Plan.
|
2.4
|
“Award Agreement”
means either (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.
|
2.5
|
“Beneficial Owner”
or
“Beneficial Ownership”
shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
|
2.6
|
“Board”
or
“Board of Directors”
means the Board of Directors of the Company.
|
2.7
|
“Cash-Based Award”
means an Award, denominated in cash, granted to a Participant as described in Article 10.
|
2.8
|
“Cause”
means, unless otherwise specified in an Award Agreement or in an applicable employment agreement between the Company and a Participant, with respect to any Participant, as determined by the Committee in its sole discretion:
|
(a)
|
Willful failure to substantially perform his or her duties as an Employee (for reasons other than physical or mental illness) or Director after reasonable notice to the Participant of that failure;
|
(b)
|
Misconduct that materially injures the Company or any Subsidiary or Affiliate;
|
(c)
|
Conviction of, or entering into a plea of nolo contendere to, a felony; or
|
(d)
|
Breach of any written covenant or agreement with the Company or any Subsidiary or Affiliate.
|
2.9
|
“Change of Control”
means any of the following events:
|
(a)
|
The acquisition by any Person of Beneficial Ownership of twenty percent (20%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of Directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this Section 2.9, the following acquisitions shall not constitute a Change of Control: (i) any acquisition by a Person who on the Effective Date is the Beneficial Owner of twenty percent (20%) or more of the Outstanding Company Voting Securities, (ii) any acquisition directly from the Company, including without limitation, a public offering of securities, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, or (v) any acquisition by any corporation pursuant to a transaction which complies with subparagraphs (i), (ii), and (iii) of Section 2.9(c); provided, however, the acquisition by any Person of Beneficial Ownership of twenty percent (20%) or more of the combined voting power shall not constitute a Change in Control if Standard Motor Products, Inc. maintains a Beneficial Ownership of more than fifty percent (50%) of the then-outstanding voting securities of the Company entitled to vote generally in the election of Directors
;
|
(b)
|
Individuals who constitute the Board as of the Effective Date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a Director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election or removal of the Directors of the Company or other actual or threatened solicitation of proxies of consents by or on behalf of a Person other than the Board;
|
(c)
|
Consummation of a reorganization, merger, or consolidation to which the Company is a party or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case unless, following such Business Combination: (i) all or substantially all of the individuals and entities who were the Beneficial Owners of Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Successor Entity”) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Voting Securities; and (ii) no Person (excluding any Successor Entity or any employee benefit plan, or related trust, of the Company or such Successor Entity) beneficially owns, directly or indirectly, twenty percent (20%) or more of the combined voting power of the then outstanding voting securities of the Successor Entity, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the Successor Entity were members of the Incumbent Board (including individuals deemed to be members of the Incumbent Board by reason of the proviso to paragraph (b) of this Section 2.9) at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
|
(d)
|
Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
|
2.10
|
“Code”
means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.
|
2.11
|
“Committee”
means the Compensation and Management Development Committee of the Board or a subcommittee thereof, or any other committee designated by the Board to administer this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board. If the Committee does not exist or cannot function for any reason, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.
|
2.12
|
“Company”
means Standard Motor Products, Inc., a New York corporation, and any successor thereto as provided in Article 20 herein.
|
2.13
|
“Covered Employee”
means any salaried
Employee who is or may become a “Covered Employee,” as defined in Code Section 162(m), and who is designated, either as an individual Employee or class of Employees, by the Committee within the shorter of (i) ninety (90) days after the beginning of the Performance Period, or (ii) twenty-five percent (25%) of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such applicable Performance Period.
|
2.14
|
“Director”
means any individual who is a member of the Board of Directors of the Company.
|
2.15
|
“Effective Date”
has the meaning set forth in Section 1.1.
|
2.16
|
“Employee”
means any individual performing services for the Company, an Affiliate, or a Subsidiary and designated as an employee of the Company, its Affiliates, and/or its Subsidiaries on the payroll records thereof. An Employee shall not include any individual during any period he or she is classified or treated by the Company, Affiliate, and/or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other than the Company, Affiliate, and/or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company, Affiliate, and/or Subsidiary during such period.
|
2.17
|
“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
|
2.18
|
“Fair Market Value”
or
“FMV”
means a price that is based on the opening, closing, actual, high, low, or average selling prices of a Share reported on the New York Stock Exchange (“NYSE”) or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Unless the Committee determines otherwise, Fair Market Value shall be deemed to be equal to the average between the reported high and low selling price of a Share on the most recent date on which Shares were publicly traded. In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate. Such definition(s) of FMV shall be specified in each Award Agreement and may differ depending on whether FMV is in reference to the grant, exercise, vesting, settlement, or payout of an Award.
|
2.19
|
“Full Value Award”
means an Award other than in the form of an ISO, NQSO, or SAR, and which is settled by the issuance of Shares.
|
2.20
|
“Grant Date”
means the date an Award is granted to a Participant pursuant to the Plan.
|
2.21
|
“Grant Price”
means the price established at the time of grant of an SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.
|
2.22
|
“Incentive Stock Option”
or
“ISO”
means an Option to purchase Shares granted under Article 6 to an Employee and that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422, or any successor provision.
|
2.23
|
“Insider”
shall mean an individual who is, on the relevant date, an officer, or Director of the Company, or a more than ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.
|
2.24
|
“Net Income”
means the consolidated net income before taxes for the Plan Year, as reported in the Company’s annual report to shareholders or as otherwise reported to shareholders.
|
2.25
|
“Nonemployee Director”
means a Director who is not an Employee
.
|
2.26
|
“Nonemployee Director Award”
means any NQSO, SAR, or Full Value Award granted, whether singly, in combination, or in tandem, to a Participant who is a Nonemployee Director pursuant to such applicable terms, conditions, and limitations as the Board or Committee may establish in accordance with this Plan.
|
2.27
|
“Nonqualified Stock Option”
or
“NQSO”
means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.
|
2.28
|
“Option”
means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.
|
2.29
|
“Option Price”
means the price at which a Share may be purchased by a Participant pursuant to an Option.
|
2.30
|
“Other Stock-Based Award”
means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.
|
2.31
|
“Participant”
means any eligible individual as set forth in Article 5 to whom an Award is granted.
|
2.32
|
“Performance-Based Compensation”
means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) for certain performance-based compensation paid to Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall be construed to mean that an Award which does not satisfy the requirements for performance-based compensation under Code Section 162(m) does not constitute performance-based compensation for other purposes, including Code Section 409A.
|
2.33
|
“Performance Measures”
means measures as described in Article 12 on which the performance goals are based and which are approved by the Company’s shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation.
|
2.34
|
“Performance Period”
means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.
|
2.35
|
“Performance Share”
means an Award under Article 9 herein and subject to the terms of this Plan, denominated in Shares, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved.
|
2.36
|
“Performance Unit”
means an Award under Article 9 herein and subject to the terms of this Plan, denominated in units, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved.
|
2.37
|
“Period of Restriction”
means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.
|
2.38
|
“Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
|
2.39
|
“Plan”
means the Standard Motor Products, Inc. 2006
Omnibus Incentive Plan.
|
2.40
|
“Plan Year”
means the calendar year.
|
2.41
|
“Prior Plans”
means the Company’s (a) 2004 Omnibus Stock Option Plan of Standard Motors Products, Inc., (b) the 1994 Omnibus Stock Option Plan of Standard Motor Products, Inc., (c) the 2004 Standard Motor Products, Inc. Independent Directors Stock Option Plan and (d) the 1996 Standard Motor Products, Inc. Independent Directors’ Stock Option Plan.
|
2.42
|
“Restricted Stock
” means an Award granted to a Participant pursuant to Article 8.
|
2.43
|
“Restricted Stock Unit”
means an Award granted to a Participant pursuant to Article 8, except no Shares are actually awarded to the Participant on the Grant date.
|
2.44
|
“Share”
means a share of common stock of the Company, $2.00
par value per share.
|
2.45
|
“Stock Appreciation Right”
or “
SAR
” means an Award, designated as an SAR, pursuant to the terms of Article 7 herein.
|
2.46
|
“Subsidiary”
means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.
|
2.47
|
“Third Party Service Provider”
means any consultant, agent, advisor, or independent contractor who renders services to the Company, a Subsidiary, or an Affiliate that (a) are not in connection with the offer and sale of the Company’s securities in a capital raising transaction, and (b) do not directly or indirectly promote or maintain a market for the Company’s securities.
|
(a)
|
Subject to adjustment as provided in Section 4.4, the maximum number of Shares available for issuance to Participants under this Plan on or after the Effective Date shall be One Million Nine Hundred Thousand (1,900,000) (the “Share Authorization”).
|
(b)
|
The maximum number of Shares of the Share Authorization that may be issued pursuant to ISOs under this Plan shall be One Million Nine Hundred Thousand (1,900,000) Shares.
|
(c)
|
The maximum number of Shares of the Share Authorization that may be issued to Nonemployee Directors shall be one hundred fifty thousand (150,000)
Shares, and no Nonemployee Director may receive Awards subject to more than five thousand (5,000) Shares in any Plan Year.
|
(a)
|
Options
: The maximum aggregate number of Shares subject to Options granted in any one Plan Year to any one Participant shall be twenty-five thousand (25,000).
|
(b)
|
SARs
: The maximum number of Shares subject to Stock Appreciation Rights granted in any one Plan Year to any one Participant shall be twenty-five thousand (25,000).
|
(c)
|
Restricted Stock or Restricted Stock Units
: The maximum aggregate grant with respect to Awards of Restricted Stock or Restricted Stock Units in any one Plan Year to any one Participant shall be ten thousand (10,000).
|
(d)
|
Performance Units or Performance Shares
: The maximum aggregate Award of Performance Units or Performance Shares that a Participant may receive in any one Plan Year shall be ten thousand (10,000)
Shares, or equal to the value of ten thousand (10,000) Shares, determined as of the date of vesting or payout, as applicable.
|
(e)
|
Cash-Based Awards
: The maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one Participant in any one Plan Year may not exceed the greater of two hundred fifty thousand
dollars
($250,000) or the value of twenty-five thousand (25,000) Shares, determined as of the date of vesting or payout, as applicable.
|
(f)
|
Other Stock-Based Awards.
The maximum aggregate grant with respect to Other Stock-Based Awards pursuant to Section 10.2 in any one Plan Year to any one Participant shall be twenty-five thousand (25,000)
Shares.
|
(a)
|
The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by
|
(b)
|
The number of Shares with respect to which the SAR is exercised.
|
(a)
|
Net earnings or net income (before or after taxes);
|
(b)
|
Earnings per share (basic or diluted);
|
(c)
|
Net sales or revenue growth;
|
(d)
|
Net operating profit;
|
(e)
|
Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);
|
(f)
|
Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);
|
(g)
|
Earnings before or after taxes, interest, depreciation, and/or amortization;
|
(h)
|
Gross or operating margins;
|
(i)
|
Productivity ratios;
|
(j)
|
Share price (including, but not limited to, growth measures and total shareholder return);
|
(k)
|
Expense targets;
|
(l)
|
Margins;
|
(m)
|
Operating efficiency;
|
(n)
|
Market share;
|
(o)
|
Customer satisfaction;
|
(p)
|
Working capital targets; and
|
(q)
|
Economic value added or EVA
®
(net operating profit after tax minus the sum of capital multiplied by the cost of capital).
|
(a)
|
The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for cause, termination of the Participant’s provision of services to the Company, Affiliate, and/or Subsidiary, violation of material Company, Affiliate, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.
|
(b)
|
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve (12) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.
|
(a)
|
Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and
|
(b)
|
Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.
|
(a)
|
Determine which Affiliates and Subsidiaries shall be covered by this Plan;
|
(b)
|
Determine which Employees and/or Directors or Third Party Service Providers outside the United States are eligible to participate in this Plan;
|
(c)
|
Modify the terms and conditions of any Award granted to Employees and/or Directors or Third Party Service Providers outside the United States to comply with applicable foreign laws;
|
(d)
|
Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 21.9 by the Committee shall be attached to this Plan document as appendices; and
|
(e)
|
Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.
|
Name
|
State or
Country of
Incorporation
|
Percent
of Voting
Securities
Owned
|
||
Motortronics, Inc.
|
New York
|
100
|
||
SMP Automotive de Mexico, S.A. de C.V.
(1)
|
Mexico
|
100
|
||
SMP Engine Management de Mexico, S. de R.L. de C.V.
(1)
|
Mexico
|
100
|
||
SMP Four Seasons de Mexico, S. de R.L. de C.V.
(1)
|
Mexico
|
100
|
||
SMP Motor Products Limited
|
Canada
|
100
|
||
SMP Poland sp. z o.o.
(2)
|
Poland
|
100
|
||
Standard Motor Products de Mexico, S. de R.L. de C.V.
(1)
|
Mexico
|
100
|
||
Standard Motor Products (Hong Kong) Limited
|
Hong Kong
|
100
|
(1) |
Standard Motor Products, Inc. owns approximately 99% and Motortronics, Inc. owns approximately 1% of these companies.
|
(2) |
SMP Poland sp. z o.o. is a wholly-owned subsidiary of Standard Motor Products (Hong Kong) Limited.
|
1.
|
I have reviewed this annual report on Form 10-K of Standard Motor Products, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Eric P. Sills
|
Eric P. Sills
|
|
|
Chief Executive Officer, President and Director
|
1.
|
I have reviewed this annual report on Form 10-K of Standard Motor Products, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ James J. Burke
|
|
James J. Burke
|
|
Executive Vice President Finance and Chief Financial Officer
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/ Eric P. Sills
|
Eric P. Sills
|
Chief Executive Officer, President and Director
|
February 22, 2018
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/ James J. Burke
|
James J. Burke
|
Executive Vice President Finance and Chief Financial Officer
|
February 22, 2018
|