þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
New York
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11-1362020
|
(State or other jurisdiction of incorporation or organization)
|
(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:
|
None
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Large Accelerated Filer
o
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Accelerated Filer
þ
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Non-Accelerated Filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page No.
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||
PART I.
|
||
Item 1.
|
Business
|
3
|
Item 1A.
|
Risk Factors
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13
|
Item 1B.
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Unresolved Staff Comments
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20
|
Item 2.
|
Properties
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21
|
Item 3.
|
Legal Proceedings
|
22
|
Item 4.
|
{Reserved}
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23
|
PART II.
|
||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and
|
|
Issuer Purchases of Equity Securities
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23
|
|
Item 6.
|
Selected Financial Data
|
25
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition
|
|
and Results of Operations
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27
|
|
Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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45
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Item 8.
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Financial Statements and Supplementary Data
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46
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting
|
|
and Financial Disclosure
|
95
|
|
Item 9A.
|
Controls and Procedures
|
95
|
Item 9B.
|
Other Information
|
96
|
PART III.
|
||
Item 10.
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Directors, Executive Officers and Corporate Governance
|
96
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Item 11.
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Executive Compensation
|
96
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related
|
|
Stockholder Matters
|
96
|
|
Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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96
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Item 14.
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Principal Accounting Fees and Services
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96
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PART IV.
|
||
Item 15.
|
Exhibits, Financial Statement Schedules
|
97
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Signatures
|
98
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ITEM 1.
|
BUSINESS
|
|
·
|
Maintain Our Strong Competitive Position in the Engine Management and Temperature Control Businesses.
We are one of the leading independent manufacturers 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 imported automobiles, and our reputation for outstanding customer service.
|
|
·
|
providing our customers with broad lines of high quality engine management and temperature control products, supported by the highest level of customer service and reliability;
|
|
·
|
continuing to maximize our production and distribution efficiencies;
|
|
·
|
continuing to improve our cost position through increased global sourcing and increased manufacturing in low cost countries; and
|
|
·
|
focusing further on our engineering development efforts including a renewed focus on bringing more product manufacturing in house.
|
|
·
|
Provide Superior Customer Service, 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, 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 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
.
|
|
·
|
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 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;
|
|
·
|
maintaining and improving our cost effectiveness and competitive responsiveness to better serve our customer base, including sourcing certain products from low cost countries such as those in Asia;
|
|
·
|
enhancing company-wide programs geared toward manufacturing and distribution efficiency; and
|
|
·
|
focusing on company-wide overhead and operating expense cost reduction programs, such as closing excess facilities and consolidating redundant functions.
|
|
·
|
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, and expand our product lines through potential acquisitions.
|
·
|
growth in number of vehicles on the road;
|
·
|
increase in average vehicle age;
|
·
|
change in total miles driven per year;
|
·
|
new and modified environmental regulations;
|
·
|
increase in pricing of new cars;
|
·
|
new car quality and related warranties; and
|
·
|
change in average fuel prices.
|
Year Ended
December 31,
|
||||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
Amount
|
% of Total
|
Amount
|
% of Total
|
Amount
|
% of Total
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Engine Management:
|
||||||||||||||||||||||||
Ignition, Emission and Fuel
System Parts
|
$ | 478,578 | 59.0 | % | $ | 420,083 | 57.2 | % | $ | 447,194 | 57.7 | % | ||||||||||||
Wires and Cables
|
98,755 | 12.2 | % | 86,352 | 11.7 | % | 90,464 | 11.6 | % | |||||||||||||||
Total Engine Management
|
577,333 | 71.2 | % | 506,435 | 68.9 | % | 537,658 | 69.3 | % | |||||||||||||||
Temperature Control:
|
||||||||||||||||||||||||
Compressors
|
104,733 | 12.9 | % | 89,125 | 12.1 | % | 83,765 | 10.8 | % | |||||||||||||||
Other Climate Control Parts
|
117,353 | 14.5 | % | 107,604 | 14.7 | % | 110,406 | 14.3 | % | |||||||||||||||
Total Temperature Control
|
222,086 | 27.4 | % | 196,729 | 26.8 | % | 194,171 | 25.1 | % | |||||||||||||||
Europe:
|
||||||||||||||||||||||||
Engine Management Parts
|
— | — | % | 25,572 | 3.4 | % | 37,878 | 4.9 | % | |||||||||||||||
Temperature Control Parts
|
— | — | % | 1,174 | 0.2 | % | 2,249 | 0.3 | % | |||||||||||||||
Total Europe
|
— | — | % | 26,746 | 3.6 | % | 40,127 | 5.2 | % | |||||||||||||||
All Other
|
11,491 | 1.4 | % | 5,514 | 0.7 | % | 3,285 | 0.4 | % | |||||||||||||||
Total
|
$ | 810,910 | 100 | % | $ | 735,424 | 100 | % | $ | 775,241 | 100 | % |
Year Ended
December 31,
|
||||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
Operating
Profit
(Loss)
|
Identifiable
Assets
|
Operating
Profit
(Loss)
|
Identifiable
Assets
|
Operating
Profit
(Loss)
|
Identifiable
Assets
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Engine Management
|
$ | 43,410 | $ | 323,162 | $ | 26,927 | $ | 310,142 | $ | (26,925 | ) | $ | 346,888 | |||||||||||
Temperature Control
|
13,096 | 92,732 | 6,855 | 79,066 | 2,335 | 112,259 | ||||||||||||||||||
Europe
|
— | — | (7,016 | ) | — | 2,101 | 20,462 | |||||||||||||||||
All Other
|
(9,713 | ) | 76,907 | (9,135 | ) | 95,251 | 5,652 | 95,418 | ||||||||||||||||
Total
|
$ | 46,793 | $ | 492,801 | $ | 17,631 | $ | 484,459 | $ | (16,837 | ) | $ | 575,027 |
Year Ended
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
United States
|
$ | 723,628 | $ | 635,977 | $ | 650,498 | ||||||
Canada
|
51,515 | 48,896 | 51,886 | |||||||||
Europe
|
8,296 | 29,984 | 44,205 | |||||||||
Other International
|
27,471 | 20,567 | 28,652 | |||||||||
Total
|
$ | 810,910 | $ | 735,424 | $ | 775,241 |
Year Ended
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
United States
|
$ | 81,485 | $ | 85,083 | $ | 89,528 | ||||||
Europe
|
2,314 | 2,102 | 5,714 | |||||||||
Canada
|
1,782 | 1,892 | 3,540 | |||||||||
Other International
|
1,168 | 1,626 | 605 | |||||||||
Total
|
$ | 86,749 | $ | 90,703 | $ | 99,387 |
·
|
a value-added, knowledgeable sales force;
|
·
|
extensive product coverage;
|
·
|
sophisticated parts cataloguing systems;
|
·
|
inventory levels sufficient to meet the rapid delivery requirements of customers; and
|
·
|
breadth of manufacturing capabilities.
|
ITEM 1A.
|
RISK FACTORS
|
|
·
|
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.
|
|
·
|
increase our vulnerability to general adverse economic and industry conditions;
|
|
·
|
limit our ability to obtain additional financing or borrow additional funds;
|
|
·
|
limit our ability to pay future dividends;
|
|
·
|
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
|
|
·
|
require that a substantial portion of our cash flow from operations be used for the payment of interest on our indebtedness instead of funding working capital, capital expenditures, acquisitions or other general corporate purposes; and
|
|
·
|
increase the amount of interest expense that we must pay because some of our borrowings are at variable interest rates, which, as interest rates increase, would result in a higher interest expense.
|
|
·
|
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.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS.
|
ITEM 2.
|
PROPERTIES
|
Location
|
State or
Country
|
Principal Business Activity
|
Approx.
Square
Feet
|
Owned or
Expiration
Date
of Lease
|
||||
Engine Management
|
||||||||
Orlando
|
FL
|
Manufacturing (Ignition)
|
50,640
|
2017
|
||||
Mishawaka
|
IN
|
Manufacturing
|
153,070
|
Owned
|
||||
Edwardsville
|
KS
|
Distribution (Wire)
|
363,450
|
Owned
|
||||
Independence
|
KS
|
Manufacturing
|
337,400
|
Owned
|
||||
Long Island City
|
NY
|
Administration
|
74,755
|
2018
|
||||
Greenville
|
SC
|
Manufacturing (Ignition)
|
184,500
|
Owned
|
||||
Disputanta
|
VA
|
Distribution (Ignition)
|
411,000
|
Owned
|
||||
Reynosa
|
Mexico
|
Manufacturing (Wire)
|
100,000
|
2014
|
||||
Reynosa
|
Mexico
|
Manufacturing (Ignition)
|
153,000
|
2013
|
||||
Temperature Control
|
||||||||
Lewisville
|
TX
|
Administration and Distribution
|
415,000
|
2016
|
||||
Grapevine
|
TX
|
Manufacturing
|
180,000
|
Owned
|
||||
St. Thomas
|
Canada
|
Manufacturing
|
40,000
|
Owned
|
||||
Reynosa
|
Mexico
|
Remanufacturing (Compressors)
|
81,967
|
2013
|
||||
Europe
|
||||||||
Bialystok
|
Poland
|
Manufacturing (Ignition)
|
31,000
|
2014
|
||||
Other
|
||||||||
Mississauga
|
Canada
|
Administration and Distribution (Ignition, Wire, Temperature Control)
|
128,400
|
2016
|
||||
Irving
|
TX
|
Training Center
|
13,400
|
2013
|
||||
Available For Sale
|
||||||||
Nottingham
|
|
England
|
|
Vacant Land
|
|
|
Owned
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
{RESERVED}
|
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, 2010
|
||||||||||||
First Quarter
|
$ | 11.26 | $ | 7.00 | $ | 0.05 | ||||||
Second Quarter
|
11.70 | 7.03 | 0.05 | |||||||||
Third Quarter
|
10.73 | 7.38 | 0.05 | |||||||||
Fourth Quarter
|
14.25 | 10.06 | 0.05 | |||||||||
Fiscal Year ended December 31, 2009
|
||||||||||||
First Quarter
|
$ | 4.29 | $ | 1.36 | $ | — | ||||||
Second Quarter
|
8.62 | 2.50 | — | |||||||||
Third Quarter
|
15.71 | 8.12 | — | |||||||||
Fourth Quarter
|
15.70 | 8.33 | — |
SMP
|
S&P 500
|
S&P 1500 Auto
Parts &
Equipment
Index
|
||||||||||
2005
|
100 | 100 | 100 | |||||||||
2006
|
168 | 116 | 105 | |||||||||
2007
|
95 | 122 | 127 | |||||||||
2008
|
43 | 77 | 60 | |||||||||
2009
|
106 | 97 | 93 | |||||||||
2010
|
174 | 112 | 146 |
ITEM 6.
|
SELECTED FINANCIAL DATA
|
Year Ended
December 31,
|
||||||||||||||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Net sales
|
$ | 810,910 | $ | 735,424 | $ | 775,241 | $ | 790,185 | $ | 812,024 | ||||||||||
Gross profit
|
207,606 | 177,224 | 184,156 | 202,275 | 205,221 | |||||||||||||||
Goodwill and intangible asset impairment charges (1) (2)
|
— | — | (39,387 | ) | — | — | ||||||||||||||
Operating income (loss) (3)
|
46,793 | 17,631 | (16,837 | ) | 24,208 | 33,685 | ||||||||||||||
Earnings (loss) from continuing operations
|
24,700 | 5,906 | (21,098 | ) | 5,431 | 9,163 | ||||||||||||||
Earnings (loss) from discontinued operation, net of tax
|
(2,740 | ) | (2,423 | ) | (1,796 | ) | (3,156 | ) | 248 | |||||||||||
Net earnings (loss) (4)
|
21,960 | 3,483 | (22,894 | ) | 2,275 | 9,411 | ||||||||||||||
Per Share Data:
|
||||||||||||||||||||
Earnings (loss) from continuing operations:
|
||||||||||||||||||||
Basic
|
$ | 1.10 | $ | 0.31 | $ | (1.14 | ) | $ | 0.29 | $ | 0.50 | |||||||||
Diluted
|
1.09 | 0.31 | (1.14 | ) | 0.29 | 0.50 | ||||||||||||||
Earnings (loss) per common share:
|
||||||||||||||||||||
Basic
|
0.97 | 0.18 | (1.24 | ) | 0.12 | 0.51 | ||||||||||||||
Diluted
|
0.97 | 0.18 | (1.24 | ) | 0.12 | 0.51 | ||||||||||||||
Cash dividends per common share
|
0.20 | — | 0.36 | 0.36 | 0.36 | |||||||||||||||
Other Data:
|
||||||||||||||||||||
Depreciation and amortization
|
$ | 13,574 | $ | 14,354 | $ | 14,700 | $ | 15,181 | $ | 15,486 | ||||||||||
Capital expenditures
|
10,806 | 7,174 | 10,500 | 13,995 | 10,080 | |||||||||||||||
Dividends
|
4,508 | — | 6,653 | 6,683 | 6,579 | |||||||||||||||
Balance Sheet Data (at period end):
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 12,135 | $ | 10,618 | $ | 6,608 | $ | 13,261 | $ | 22,348 | ||||||||||
Working capital
|
169,875 | 159,591 | 104,599 | 183,074 | 183,313 | |||||||||||||||
Total assets
|
492,801 | 484,459 | 575,027 | 678,092 | 640,092 | |||||||||||||||
Total debt
|
65,596 | 76,405 | 194,157 | 255,311 | 238,320 | |||||||||||||||
Long-term debt (excluding current portion)
|
307 | 17,908 | 273 | 90,534 | 97,979 | |||||||||||||||
Stockholders’ equity
|
209,883 | 193,878 | 163,545 | 188,364 | 190,699 |
|
(1)
|
Goodwill is tested for impairment at the reporting unit level at least annually, and whenever events or changes in circumstances indicate that goodwill might be impaired. Our annual impairment test of goodwill as of December 31, 2008 indicated that the carrying amounts of certain of our reporting units exceeded the corresponding fair values. As a result, we recorded a non-cash goodwill impairment charge to operations of $38.5 million during the fourth quarter of 2008 related to the Engine Management Segment for goodwill acquired with our Dana acquisition.
|
|
(2)
|
During 2008, we implemented a plan to transition products sold under the Neihoff name to our BWD name and discontinue the Neihoff brand name. As such, we recognized an impairment charge for the total Neihoff trademark value of $0.9 million.
|
|
(3)
|
During the year ended December 31, 2010, we identified an immaterial correction related to our
classification in the consolidated statements of operations of
gains/losses on the sale of long-lived assets.
We determined that in accounting for such gains/losses, although there is no effect on net income (loss) or on income (loss) from continuing operations, we did not properly classify such amounts within operating income, as required by
paragraph 360-10-45-5 of the FASB Accounting Standards Codification. As such, we corrected the consolidated statements of operations for each of the years ended December 31, 2009, 2008, 2007 and 2006. See Note 1 and 15 of the notes to the consolidated financial statements for additional information.
|
|
(4)
|
We recorded an after tax gain (charge) of $(2.7) million, $(2.4) million, $(1.8) million, $(3.2) million, and $0.2 million as earnings (loss) from discontinued operation to account for legal expenses and potential costs associated with our asbestos-related liability for the years ended December 31, 2010, 2009, 2008, 2007, and 2006, respectively. Such costs were also separately disclosed in the Operating Activity section of the Consolidated Statements of Cash Flows for those same years.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
·
|
Maintain Our Strong Competitive Position in the Engine Management and Temperature Control Businesses.
We are one of the leading independent manufacturers 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 imported automobiles, and our reputation for outstanding customer service.
|
|
·
|
providing our customers with broad lines of high quality engine management and temperature control products, supported by the highest level of customer service and reliability;
|
|
·
|
continuing to maximize our production and distribution efficiencies;
|
|
·
|
continuing to improve our cost position through increased global sourcing and increased manufacturing in low cost countries; and
|
|
·
|
focusing further on our engineering development efforts including a renewed focus on bringing more product manufacturing in house.
|
|
·
|
Provide Superior Customer Service, 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, 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 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
.
|
|
·
|
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 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;
|
|
·
|
maintaining and improving our cost effectiveness and competitive responsiveness to better serve our customer base, including sourcing certain products from low cost countries such as those in Asia;
|
|
·
|
enhancing company-wide programs geared toward manufacturing and distribution efficiency; and
|
|
·
|
focusing on company-wide overhead and operating expense cost reduction programs, such as closing excess facilities and consolidating redundant functions.
|
|
·
|
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, and expand our product lines through potential acquisitions.
|
Year Ended
December 31,
|
Engine
Management
|
Temperature
Control
|
Europe
|
Other
|
Total
|
|||||||||||||||
2010
|
||||||||||||||||||||
Net sales
|
$ | 577,333 | $ | 222,086 | $ | — | $ | 11,491 | $ | 810,910 | ||||||||||
Gross margins
|
144,090 | 51,293 | — | 12,223 | 207,606 | |||||||||||||||
Gross margin percentage
|
25.0 | % | 23.1 | % | — | — | 25.6 | % | ||||||||||||
2009
|
||||||||||||||||||||
Net sales
|
$ | 506,435 | $ | 196,729 | $ | 26,746 | $ | 5,514 | $ | 735,424 | ||||||||||
Gross margins
|
122,838 | 38,677 | 6,997 | 8,712 | 177,224 | |||||||||||||||
Gross margin percentage
|
24.3 | % | 19.7 | % | 26.2 | % | — | 24.1 | % |
Year Ended
December 31,
|
Engine
Management
|
Temperature
Control
|
Europe
|
Other
|
Total
|
|||||||||||||||
2009
|
||||||||||||||||||||
Net sales
|
$ | 506,435 | $ | 196,729 | $ | 26,746 | $ | 5,514 | $ | 735,424 | ||||||||||
Gross margins
|
122,838 | 38,677 | 6,997 | 8,712 | 177,224 | |||||||||||||||
Gross margin percentage
|
24.3 | % | 19.7 | % | 26.2 | % | — | 24.1 | % | |||||||||||
2008
|
||||||||||||||||||||
Net sales
|
$ | 537,658 | $ | 194,171 | $ | 40,127 | $ | 3,285 | $ | 775,241 | ||||||||||
Gross margins
|
122,260 | 37,406 | 11,412 | 13,078 | 184,156 | |||||||||||||||
Gross margin percentage
|
22.7 | % | 19.3 | % | 28.4 | % | — | 23.8 | % |
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2008
|
$ | 12,751 | $ | 2,956 | $ | 15,707 | ||||||
Restructuring and integration costs:
|
||||||||||||
Amounts provided for during 2009
|
3,686 | 3,700 | 7,386 | |||||||||
Non-cash usage, including asset write-downs
|
— | (3,003 | ) | (3,003 | ) | |||||||
Liabilities related to assets sold
|
(12 | ) | — | (12 | ) | |||||||
Cash payments
|
(7,651 | ) | (1,682 | ) | (9,333 | ) | ||||||
Exit activity liability at December 31, 2009
|
$ | 8,774 | $ | 1,971 | $ | 10,745 | ||||||
Amounts provided for during 2010
|
1,824 | 1,678 | 3,502 | |||||||||
Non-cash usage, including asset write-downs
|
— | (181 | ) | (181 | ) | |||||||
Cash payments
|
(4,378 | ) | (1,033 | ) | (5,411 | ) | ||||||
Exit activity liability at December 31, 2010
|
$ | 6,220 | $ | 2,435 | $ | 8,655 |
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
|||||||||||||
Exit activity liability at December 31, 2008
|
$ | 3,736 | $ | 1,000 | $ | 3,295 | $ | 8,031 | ||||||||
Restructuring costs:
|
||||||||||||||||
Amounts provided for during 2009
|
(202 | ) | 327 | — | 125 | |||||||||||
Cash payments
|
(2,139 | ) | (942 | ) | (1,873 | ) | (4,954 | ) | ||||||||
Exit activity liability at December 31, 2009
|
$ | 1,395 | $ | 385 | $ | 1,422 | $ | 3,202 | ||||||||
Restructuring costs:
|
||||||||||||||||
Amounts provided for during 2010
|
— | — | — | — | ||||||||||||
Cash payments
|
(425 | ) | (64 | ) | (507 | ) | (996 | ) | ||||||||
Exit activity liability at December 31, 2010
|
$ | 970 | $ | 321 | $ | 915 | $ | 2,206 |
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2008
|
$ | 1,117 | $ | 727 | $ | 1,844 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2009
|
2,187 | 2,863 | 5,050 | |||||||||
Non-cash usage, including asset write-downs
|
— | (3,003 | ) | (3,003 | ) | |||||||
Liabilities related to assets sold
|
(12 | ) | — | (12 | ) | |||||||
Cash payments
|
(1,945 | ) | (587 | ) | (2,532 | ) | ||||||
Exit activity liability at December 31, 2009
|
$ | 1,347 | $ | — | $ | 1,347 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2010
|
1,815 | 1,509 | 3,324 | |||||||||
Non-cash usage, including asset write-downs
|
— | (181 | ) | (181 | ) | |||||||
Cash payments
|
(2,309 | ) | (642 | ) | (2,951 | ) | ||||||
Exit activity liability at December 31, 2010
|
$ | 853 | $ | 686 | $ | 1,539 |
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2008
|
$ | — | $ | — | $ | — | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2009
|
803 | 415 | 1,218 | |||||||||
Cash payments
|
(271 | ) | (415 | ) | (686 | ) | ||||||
Exit activity liability at December 31, 2009
|
$ | 532 | $ | — | $ | 532 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2010
|
— | 131 | 131 | |||||||||
Cash payments
|
(532 | ) | (131 | ) | (663 | ) | ||||||
Exit activity liability at December 31, 2010
|
$ | — | $ | — | $ | — |
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2008
|
$ | 3,603 | $ | 2,229 | $ | 5,832 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2009
|
571 | 422 | 993 | |||||||||
Cash payments
|
(481 | ) | (680 | ) | (1,161 | ) | ||||||
Exit activity liability at December 31, 2009
|
$ | 3,693 | $ | 1,971 | $ | 5,664 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2010
|
9 | 38 | 47 | |||||||||
Cash payments
|
(541 | ) | (260 | ) | (801 | ) | ||||||
Exit activity liability at December 31, 2010
|
$ | 3,161 | $ | 1,749 | $ | 4,910 |
Engine
Management
|
Temperature
Control
|
European
|
Other
|
Total
|
||||||||||||||||
Exit activity liability at December 31, 2008
|
$ | 7,363 | $ | — | $ | 15 | $ | 298 | $ | 7,676 | ||||||||||
Integration costs:
|
||||||||||||||||||||
Amounts provided for during 2009
|
5,622 | 474 | 1,165 | — | 7,261 | |||||||||||||||
Non-cash usage, including asset
write-downs
|
(1,987 | ) | — | (1,016 | ) | — | (3,003 | ) | ||||||||||||
Liabilities related to assets sold
|
— | — | (12 | ) | — | (12 | ) | |||||||||||||
Cash payments
|
(3,981 | ) | (110 | ) | (152 | ) | (136 | ) | (4,379 | ) | ||||||||||
Exit activity liability at December 31, 2009
|
$ | 7,017 | $ | 364 | $ | — | $ | 162 | $ | 7,543 | ||||||||||
Integration costs:
|
||||||||||||||||||||
Amounts provided for during 2010
|
1,931 | 1,571 | — | — | 3,502 | |||||||||||||||
Non-cash usage, including asset
write-downs
|
(99 | ) | (82 | ) | — | — | (181 | ) | ||||||||||||
Cash payments
|
(3,269 | ) | (984 | ) | — | (162 | ) | (4,415 | ) | |||||||||||
Exit activity liability at December 31, 2010
|
$ | 5,580 | $ | 869 | $ | — | $ | — | $ | 6,449 |
(in thousands)
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016-
2020
|
Total
|
|||||||||||||||||||||
Principal payments of long term debt
|
$ | 12,300 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 12,300 | ||||||||||||||
Lease obligations
|
7,567 | 7,404 | 6,448 | 5,333 | 4,938 | 5,738 | 37,428 | |||||||||||||||||||||
Postretirement benefits
|
1,153 | 1,184 | 1,232 | 1,289 | 6,952 | 7,581 | 19,391 | |||||||||||||||||||||
Severance payments related to restructuring and integration
|
2,219 | 811 | 704 | 514 | 316 | 3,592 | 8,156 | |||||||||||||||||||||
Total commitments
|
$ | 23,239 | $ | 9,399 | $ | 8,384 | $ | 7,136 | $ | 12,206 | $ | 16,911 | $ | 77,275 |
Page No.
|
|
Management’s Report on Internal Control Over Financial Reporting
|
47
|
Report of Independent Registered Public Accounting Firm—Internal Control Over Financial Reporting
|
48
|
Reports of Independent Registered Public Accounting Firms—Consolidated Financial Statements
|
49
|
Consolidated Statements of Operations for the years ended December 31, 2010, 2009, and 2008
|
51
|
Consolidated Balance Sheets as of December 31, 2010 and 2009
|
52
|
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009, and 2008
|
53
|
Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income (Loss) for the years ended December 31, 2010, 2009, and 2008
|
54
|
Notes to Consolidated Financial Statements
|
55
|
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(Dollars in thousands,
except share and per share data)
|
||||||||||||
Net
sales
|
$ | 810,910 | $ | 735,424 | $ | 775,241 | ||||||
Cost of sales
|
603,304 | 558,200 | 591,085 | |||||||||
Gross profit
|
207,606 | 177,224 | 184,156 | |||||||||
Selling, general and administrative expenses
|
159,433 | 146,642 | 166,199 | |||||||||
Goodwill and intangible asset impairment charge
|
— | — | 39,387 | |||||||||
Restructuring and integration expenses
|
3,502 | 7,386 | 16,858 | |||||||||
Other income (expense), net
|
2,122 | (5,565 | ) | 21,451 | ||||||||
Operating income (loss)
|
46,793 | 17,631 | (16,837 | ) | ||||||||
Other non-operating income, net (Note 15)
|
425 | 3,584 | 1,219 | |||||||||
Interest expense
|
7,127 | 9,215 | 13,585 | |||||||||
Earnings (loss) from continuing operations before taxes
|
40,091 | 12,000 | (29,203 | ) | ||||||||
Provision for (benefit from) income taxes
|
15,391 | 6,094 | (8,105 | ) | ||||||||
Earnings (loss) from continuing operations
|
24,700 | 5,906 | (21,098 | ) | ||||||||
Loss from discontinued operation, net of income tax benefit of $1,826, $1,615 and $1,198
|
(2,740 | ) | (2,423 | ) | (1,796 | ) | ||||||
Net earnings (loss)
|
$ | 21,960 | $ | 3,483 | $ | (22,894 | ) | |||||
Net earnings (loss) per common share – Basic:
|
||||||||||||
Earnings (loss) from continuing operations
|
$ | 1.10 | $ | 0.31 | $ | (1.14 | ) | |||||
Discontinued operation
|
(0.13 | ) | (0.13 | ) | (0.10 | ) | ||||||
Net earnings (loss) per common share – Basic
|
$ | 0.97 | $ | 0.18 | $ | (1.24 | ) | |||||
Net earnings (loss) per common share – Diluted:
|
||||||||||||
Earnings (loss) from continuing operations
|
$ | 1.09 | $ | 0.31 | $ | (1.14 | ) | |||||
Discontinued operation
|
(0.12 | ) | (0.13 | ) | (0.10 | ) | ||||||
Net earnings (loss) per common share – Diluted
|
$ | 0.97 | $ | 0.18 | $ | (1.24 | ) | |||||
Average number of common shares
|
22,556,858 | 19,340,672 | 18,500,229 | |||||||||
Average number of common shares and dilutive common shares
|
22,634,062 | 19,388,771 | 18,531,148 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
(Dollars in thousands,
except share data)
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 12,135 | $ | 10,618 | ||||
Accounts receivable, less allowances for discounts and doubtful accounts of $6,779 and $6,962 in 2010 and 2009, respectively
|
104,986 | 124,823 | ||||||
Inventories, net
|
241,158 | 199,752 | ||||||
Deferred income taxes
|
18,135 | 18,129 | ||||||
Assets held for sale
|
216 | 1,405 | ||||||
Prepaid expenses and other current assets
|
8,076 | 9,487 | ||||||
Total current assets
|
384,706 | 364,214 | ||||||
Property, plant and equipment, net
|
60,666 | 61,478 | ||||||
Goodwill
|
1,437 | 1,437 | ||||||
Other intangibles, net
|
11,050 | 12,368 | ||||||
Deferred incomes taxes
|
21,347 | 29,542 | ||||||
Other assets
|
13,595 | 15,420 | ||||||
Total assets
|
$ | 492,801 | $ | 484,459 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Notes payable
|
$ | 52,887 | $ | 58,430 | ||||
Current portion of long-term debt
|
12,402 | 67 | ||||||
Accounts payable
|
49,919 | 54,381 | ||||||
Sundry payables and accrued expenses
|
29,280 | 24,114 | ||||||
Accrued customer returns
|
23,207 | 20,442 | ||||||
Accrued rebates
|
23,668 | 25,276 | ||||||
Payroll and commissions
|
23,468 | 21,913 | ||||||
Total current liabilities
|
214,831 | 204,623 | ||||||
Long-term debt
|
307 | 12,569 | ||||||
Debt to related parties
|
─
|
5,339 | ||||||
Accrued postretirement benefits
|
21,044 | 19,355 | ||||||
Other accrued liabilities
|
21,944 | 23,821 | ||||||
Accrued asbestos liabilities
|
24,792 | 24,874 | ||||||
Total liabilities
|
282,918 | 290,581 | ||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity: | ||||||||
Common Stock - par value $2.00 per share:
|
||||||||
Authorized 30,000,000 shares, issued 23,936,036 shares in 2010 and 2009 | 47,872 | 47,872 | ||||||
Capital in excess of par value
|
77,471 | 77,238 | ||||||
Retained earnings
|
97,535 | 80,083 | ||||||
Accumulated other comprehensive income
|
716 | 5,475 | ||||||
Treasury stock - at cost (1,276,044 and 1,562,649 shares in 2010 and 2009, respectively)
|
(13,711 | ) | (16,790 | ) | ||||
Total stockholders’ equity
|
209,883 | 193,878 | ||||||
Total liabilities and stockholders’ equity
|
$ | 492,801 | $ | 484,459 |
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net earnings (loss)
|
$ | 21,960 | $ | 3,483 | $ | (22,894 | ) | |||||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
13,574 | 14,354 | 14,700 | |||||||||
Increase to allowance for doubtful accounts
|
502 | 946 | 1,874 | |||||||||
Increase to inventory reserves
|
7,403 | 6,410 | 3,747 | |||||||||
Loss from sale of European distribution business
|
79 | 6,608 | — | |||||||||
Gain on sale of buildings
|
(1,048 | ) | (1,048 | ) | (21,845 | ) | ||||||
Loss on defeasance of mortgage loan
|
— | — | 1,444 | |||||||||
Gain on repurchase of convertible debentures
|
— | (40 | ) | (3,981 | ) | |||||||
Gain on sale of investment
|
— | (2,336 | ) | — | ||||||||
Loss (gain) on disposal of property, plant and equipment
|
(1,153 | ) | 25 | 930 | ||||||||
Loss on impairment of assets
|
— | — | 39,696 | |||||||||
Equity loss (income) from joint ventures
|
(97 | ) | (274 | ) | 319 | |||||||
Employee stock ownership plan allocation
|
1,633 | 341 | 1,595 | |||||||||
Stock-based compensation
|
1,494 | 914 | 880 | |||||||||
Decrease (increase) in deferred income taxes
|
8,541 | (2,335 | ) | (3,894 | ) | |||||||
Decrease in unrecognized tax benefit
|
(1,084 | ) | — | — | ||||||||
Increase (decrease) in tax valuation allowance
|
(353 | ) | 2,748 | 232 | ||||||||
Loss on discontinued operations, net of tax
|
2,740 | 2,423 | 1,796 | |||||||||
Change in assets and liabilities:
|
||||||||||||
Decrease in accounts receivable
|
19,336 | 40,870 | 28,170 | |||||||||
Decrease (increase) in inventories
|
(47,952 | ) | 29,830 | 18,240 | ||||||||
Decrease (increase) in prepaid expenses and other current assets
|
(702 | ) | 3,341 | (2,223 | ) | |||||||
Increase (decrease) in accounts payable
|
(1,542 | ) | (12,952 | ) | 5,341 | |||||||
Increase (decrease) in sundry payables and accrued expenses
|
7,975 | 13,703 | (11,121 | ) | ||||||||
Net changes in other assets and liabilities
|
(3,228 | ) | (4,715 | ) | (5,870 | ) | ||||||
Net cash provided by operating activities
|
28,078 | 102,296 | 47,136 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Proceeds from the sale of property, plant and equipment
|
11 | 73 | 73 | |||||||||
Net cash received from the sale of buildings
|
2,559 | — | 37,341 | |||||||||
Net proceeds from sale of European distribution business
|
— | 824 | — | |||||||||
Capital expenditures
|
(10,806 | ) | (7,174 | ) | (10,500 | ) | ||||||
Divestiture of joint ventures
|
2,372 | 4,000 | — | |||||||||
Proceeds from sale of preferred stock investment
|
— | 3,896 | — | |||||||||
Acquisitions of businesses and assets
|
(2,024 | ) | (12,770 | ) | (4,850 | ) | ||||||
Net cash provided by (used in) investing activities
|
(7,888 | ) | (11,151 | ) | 22,064 | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Net borrowings (repayments) under line-of-credit agreements
|
(5,543 | ) | (88,467 | ) | (8,907 | ) | ||||||
Issuance of common stock
|
— | 27,509 | — | |||||||||
Defeasance of mortgage loan
|
— | — | (7,755 | ) | ||||||||
Repurchase of convertible debentures
|
— | (433 | ) | (40,867 | ) | |||||||
Principal payments of long-term debt and capital lease obligations
|
(5,421 | ) | (32,172 | ) | (574 | ) | ||||||
Issuance of unsecured promissory notes
|
— | 5,339 | — | |||||||||
Increase (decrease) in overdraft balances
|
(2,920 | ) | 56 | (1,413 | ) | |||||||
Proceeds from exercise of employee stock options
|
52 | 456 | — | |||||||||
Excess tax benefits related to the exercise of employee stock grants
|
97 | (49 | ) | — | ||||||||
Adjustment to costs related to issuance of common stock
|
36 | — | — | |||||||||
Payments of debt issuance costs
|
(1,206 | ) | (3,716 | ) | (2,203 | ) | ||||||
Dividends paid
|
(4,508 | ) | — | (6,653 | ) | |||||||
Net cash used in financing activities
|
(19,413 | ) | (91,477 | ) | (68,372 | ) | ||||||
Effect of exchange rate changes on cash
|
740 | 4,342 | (7,481 | ) | ||||||||
Net (decrease) increase in cash and cash equivalents
|
1,517 | 4,010 | (6,653 | ) | ||||||||
CASH AND CASH EQUIVALENTS at beginning of year
|
10,618 | 6,608 | 13,261 | |||||||||
CASH AND CASH EQUIVALENTS at end of year
|
$ | 12,135 | $ | 10,618 | $ | 6,608 | ||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$ | 5,387 | $ | 10,416 | $ | 14,349 | ||||||
Income taxes
|
$ | 2,173 | $ | 2,245 | $ | 3,880 |
Common
Stock
|
Capital in
Excess of
Par Value
|
Retained
Earnings
|
Accumulated Other
Comprehensive
Income (Loss)
|
Treasury
Stock
|
Total
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2007
|
$ | 40,972 | $ | 59,220 | $ | 106,147 | $ | 5,546 | $ | (23,521 | ) | $ | 188,364 | |||||||||||
Comprehensive Loss:
|
||||||||||||||||||||||||
Net loss
|
(22,894 | ) | (22,894 | ) | ||||||||||||||||||||
Foreign currency translation adjustment
|
(8,973 | ) | (8,973 | ) | ||||||||||||||||||||
Pension and retiree medical
Adjustment, net of tax
|
11,226 | 11,226 | ||||||||||||||||||||||
Total comprehensive loss
|
(20,641 | ) | ||||||||||||||||||||||
Cash dividends paid
($0.36 per share)
|
(6,653 | ) | (6 ,653 | ) | ||||||||||||||||||||
Stock-based compensation
|
169 | 711 | 880 | |||||||||||||||||||||
Employee Stock Ownership Plan
|
(548 | ) | 2,143 | 1,595 | ||||||||||||||||||||
BALANCE AT DECEMBER 31, 2008
|
40,972 | 58,841 | 76,600 | 7,799 | (20,667 | ) | 163,545 | |||||||||||||||||
Comprehensive Income:
|
||||||||||||||||||||||||
Net income
|
3,483 | 3,483 | ||||||||||||||||||||||
Foreign currency translation adjustment
|
1,209 | 1,209 | ||||||||||||||||||||||
Pension and retiree medical
Adjustment, net of tax
|
(3,533 | ) | (3,533 | ) | ||||||||||||||||||||
Total comprehensive income
|
1,159 | |||||||||||||||||||||||
Issuance of common stock, net of offering
costs
|
6,900 | 20,609 | 27,509 | |||||||||||||||||||||
Stock-based compensation and related
tax benefits
|
(615 | ) | 1,464 | 849 | ||||||||||||||||||||
Stock options and related tax benefits
|
87 | 388 | 475 | |||||||||||||||||||||
Employee Stock Ownership Plan
|
(1,684 | ) | 2,025 | 341 | ||||||||||||||||||||
BALANCE AT DECEMBER 31, 2009
|
47,872 | 77,238 | 80,083 | 5,475 | (16,790 | ) | 193,878 | |||||||||||||||||
Comprehensive Income:
|
||||||||||||||||||||||||
Net income
|
21,960 | 21,960 | ||||||||||||||||||||||
Foreign currency translation adjustment
|
775 | 775 | ||||||||||||||||||||||
Pension and retiree medical
Adjustment, net of tax
|
(5,534 | ) | (5,534 | ) | ||||||||||||||||||||
Total comprehensive income
|
17,201 | |||||||||||||||||||||||
Cash dividends paid
($0.20 per share)
|
(4,508 | ) | (4,508 | ) | ||||||||||||||||||||
Adjustment to costs related to issuance of
common stock
|
36 | 36 | ||||||||||||||||||||||
Stock-based compensation and related
tax benefits
|
440 | 1,149 | 1,589 | |||||||||||||||||||||
Stock options and related tax benefits
|
6 | 48 | 54 | |||||||||||||||||||||
Employee Stock Ownership Plan
|
(249 | ) | 1,882 | 1,633 | ||||||||||||||||||||
BALANCE AT DECEMBER 31, 2010
|
$ | 47,872 | $ | 77,471 | $ | 97,535 | $ | 716 | $ | (13,711 | ) | $ | 209,883 |
1.
|
Summary of Significant Accounting Policies
|
Estimated Life
|
|
Buildings and improvements
|
25 to 33-1/2 years
|
Building refurbishments
|
10 years
|
Machinery and equipment
|
7 to 12 years
|
Tools, dies and auxiliary equipment
|
3 to 8 years
|
Furniture and fixtures
|
3 to 12 years
|
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
Weighted average common shares outstanding – Basic
|
22,557 | 19,341 | 18,500 | |||||||||
Plus incremental shares from assumed conversions:
|
||||||||||||
Dilutive effect of restricted stock
|
77 | 48 | 31 | |||||||||
Dilutive effect of stock options
|
— | — | — | |||||||||
Weighted average common shares outstanding – Diluted
|
22,634 | 19,389 | 18,531 |
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
Stock options and restricted shares
|
449 | 504 | 640 | |||||||||
6.75% Convertible debentures
|
— | 668 | 2,423 | |||||||||
15% Convertible debentures
|
820 | 539 | — |
2.
|
Restructuring and Integration Costs
|
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2008
|
$ | 12,751 | $ | 2,956 | $ | 15,707 | ||||||
Restructuring and integration costs:
|
||||||||||||
Amounts provided for during 2009
|
3,686 | 3,700 | 7,386 | |||||||||
Non-cash usage, including asset write-downs
|
— | (3,003 | ) | (3,003 | ) | |||||||
Liabilities related to assets sold
|
(12 | ) | — | (12 | ) | |||||||
Cash payments
|
(7,651 | ) | (1,682 | ) | (9,333 | ) | ||||||
Exit activity liability at December 31, 2009
|
$ | 8,774 | $ | 1,971 | $ | 10,745 | ||||||
Amounts provided for during 2010
|
1,824 | 1,678 | 3,502 | |||||||||
Non-cash usage, including asset write-downs
|
— | (181 | ) | (181 | ) | |||||||
Cash payments
|
(4,378 | ) | (1,033 | ) | (5,411 | ) | ||||||
Exit activity liability at
December 31
, 2010
|
$ | 6,220 | $ | 2,435 | $ | 8,655 |
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
|||||||||||||
Exit activity liability at December 31, 2008
|
$ | 3,736 | $ | 1,000 | $ | 3,295 | $ | 8,031 | ||||||||
Restructuring costs:
|
||||||||||||||||
Amounts provided for during 2009
|
(202 | ) | 327 | — | 125 | |||||||||||
Cash payments
|
(2,139 | ) | (942 | ) | (1,873 | ) | (4,954 | ) | ||||||||
Exit activity liability at December 31, 2009
|
$ | 1,395 | $ | 385 | $ | 1,422 | $ | 3,202 | ||||||||
Restructuring costs:
|
||||||||||||||||
Amounts provided for during 2010
|
— | — | — | — | ||||||||||||
Cash payments
|
(425 | ) | (64 | ) | (507 | ) | (996 | ) | ||||||||
Exit activity liability at
December 31
, 2010
|
$ | 970 | $ | 321 | $ | 915 | $ | 2,206 |
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2008
|
$ | 1,117 | $ | 727 | $ | 1,844 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2009
|
2,187 | 2,863 | 5,050 | |||||||||
Non-cash usage, including asset write-downs
|
— | (3,003 | ) | (3,003 | ) | |||||||
Liabilities related to assets sold
|
(12 | ) | — | (12 | ) | |||||||
Cash payments
|
(1,945 | ) | (587 | ) | (2,532 | ) | ||||||
Exit activity liability at
December 31
, 2009
|
$ | 1,347 | $ | — | $ | 1,347 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2010
|
1,815 | 1,509 | 3,324 | |||||||||
Non-cash usage, including asset write-downs
|
— | (181 | ) | (181 | ) | |||||||
Cash payments
|
(2,309 | ) | (642 | ) | (2,951 | ) | ||||||
Exit activity liability at
December 31
, 2010
|
$ | 853 | $ | 686 | $ | 1,539 |
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2008
|
$ | — | $ | — | $ | — | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2009
|
803 | 415 | 1,218 | |||||||||
Cash payments
|
(271 | ) | (415 | ) | (686 | ) | ||||||
Exit activity liability at December 31, 2009
|
$ | 532 | $ | — | $ | 532 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2010
|
— | 131 | 131 | |||||||||
Cash payments
|
(532 | ) | (131 | ) | (663 | ) | ||||||
Exit activity liability at
December 31
, 2010
|
$ | — | $ | — | $ | — |
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
||||||||||
Exit activity liability at December 31, 2008
|
$ | 3,603 | $ | 2,229 | $ | 5,832 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2009
|
571 | 422 | 993 | |||||||||
Cash payments
|
(481 | ) | (680 | ) | (1,161 | ) | ||||||
Exit activity liability at
December 31
, 2009
|
$ | 3,693 | $ | 1,971 | $ | 5,664 | ||||||
Integration costs:
|
||||||||||||
Amounts provided for during 2010
|
9 | 38 | 47 | |||||||||
Cash payments
|
(541 | ) | (260 | ) | (801 | ) | ||||||
Exit activity liability at
December 31
, 2010
|
$ | 3,161 | $ | 1,749 | $ | 4,910 |
Engine
Management
|
Temperature
Control
|
European
|
Other
|
Total
|
||||||||||||||||
Exit activity liability at December 31, 2008
|
$ | 7,363 | $ | — | $ | 15 | $ | 298 | $ | 7,676 | ||||||||||
Integration costs:
|
||||||||||||||||||||
Amounts provided for during 2009
|
5,622 | 474 | 1,165 | — | 7,261 | |||||||||||||||
Non-cash usage, including asset write-downs
|
(1,987 | ) | — | (1,016 | ) | — | (3,003 | ) | ||||||||||||
Liabilities related to assets sold
|
— | — | (12 | ) | — | (12 | ) | |||||||||||||
Cash payments
|
(3,981 | ) | (110 | ) | (152 | ) | (136 | ) | (4,379 | ) | ||||||||||
Exit activity liability at December 31, 2009
|
$ | 7,017 | $ | 364 | $ | — | $ | 162 | $ | 7,543 | ||||||||||
Integration costs:
|
||||||||||||||||||||
Amounts provided for during 2010
|
1,931 | 1,571 | — | — | 3,502 | |||||||||||||||
Non-cash usage, including asset write-downs
|
(99 | ) | (82 | ) | — | — | (181 | ) | ||||||||||||
Cash payments
|
(3,269 | ) | (984 | ) | — | (162 | ) | (4,415 | ) | |||||||||||
Exit activity liability at
December 31
, 2010
|
$ | 5,580 | $ | 869 | $ | — | $ | — | $ | 6,449 |
3.
|
Sale of Receivables
|
4.
|
Sale of European Distribution Business
|
5.
|
Sale of Long Island City, New York Property
|
6.
|
Inventories
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In thousands)
|
||||||||
Finished goods, net
|
$ | 162,885 | $ | 130,054 | ||||
Work in process, net
|
5,672 | 4,472 | ||||||
Raw materials, net
|
72,601 | 65,226 | ||||||
Total inventories, net
|
$ | 241,158 | $ | 199,752 |
7.
|
Property, Plant and Equipment
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In thousands)
|
||||||||
Land, buildings and improvements
|
$ | 39,773 | $ | 38,772 | ||||
Machinery and equipment
|
121,681 | 118,238 | ||||||
Tools, dies and auxiliary equipment
|
29,277 | 27,268 | ||||||
Furniture and fixtures
|
22,324 | 25,122 | ||||||
Leasehold improvements
|
5,011 | 5,590 | ||||||
Construction in progress
|
4,747 | 6,759 | ||||||
222,813 | 221,749 | |||||||
Less accumulated depreciation
|
162,147 | 160,271 | ||||||
Total property, plant and equipment, net
|
$ | 60,666 | $ | 61,478 |
8.
|
Goodwill and other Intangible Assets
|
Engine
Management
|
||||
Balance as of December 31, 2008
|
||||
Goodwill
|
39,588 | |||
Accumulated impairment losses
|
(38,488 | ) | ||
1,100 | ||||
Activity in 2009
|
||||
Acquisition of core sensor business
|
150 | |||
Acquisition of wire and cable business
|
187 | |||
Balance as of December 31, 2009
|
||||
Goodwill
|
39,925 | |||
Accumulated impairment losses
|
(38,488 | ) | ||
$ | 1,437 | |||
No Activity in 2010
|
||||
Balance as of December 31, 2010
|
||||
Goodwill
|
39,925 | |||
Accumulated impairment losses
|
(38,488 | ) | ||
$ | 1,437 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In thousands)
|
||||||||
Customer relationships
|
$ | 11,100 | $ | 11,100 | ||||
Trademarks and trade names
|
5,500 | 5,500 | ||||||
Patents and supply contracts
|
723 | 54 | ||||||
17,323 | 16,654 | |||||||
Less accumulated amortization (1)
|
(7,398 | ) | (6,148 | ) | ||||
Net
|
$ | 9,925 | $ | 10,506 |
|
(1)
|
Applies to all intangible assets, except for the Dana acquisition related trademarks and trade names.
|
9.
|
Other Assets
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In thousands)
|
||||||||
Equity in joint ventures
|
$ | 435 | $ | 555 | ||||
Deferred financing costs, net
|
4,922 | 5,647 | ||||||
Long term receivables
|
1,679 | 3,191 | ||||||
Other
|
6,559 | 6,027 | ||||||
Total other assets, net
|
$ | 13,595 | $ | 15,420 |
Year Ended December 31,
|
||||||||||||
Aggregated Financial Information
|
2010
|
2009
|
2008
|
|||||||||
(In thousands)
|
||||||||||||
Net sales
|
$ | — | $ | — | $ | 8,641 | ||||||
Costs and expenses
|
— | — | 10,206 | |||||||||
Net earnings (loss)
|
$ | — | $ | — | $ | (1,565 | ) |
As of December 31,
|
||||||||
Selected Financial Information
|
2010
|
2009
|
||||||
(In thousands)
|
||||||||
Current assets
|
$ | 750 | $ | 2,206 | ||||
Non-current assets
|
540 | 486 | ||||||
Current liabilities
|
420 | 1,581 | ||||||
Non-current liabilities
|
— | — |
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
Net sales
|
$ | 3,427 | $ | 3,139 | $ | 3,299 | ||||||
Costs and expenses
|
2,990 | 2,725 | 3,255 | |||||||||
Net earnings (loss)
|
$ | 437 | $ | 414 | $ | 44 |
10.
|
Credit Facilities and Long-Term Debt
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In thousands)
|
||||||||
Revolving credit facilities (1)
|
$ | 52,887 | $ | 58,430 | ||||
15% convertible subordinated debentures
|
12,300 | 12,300 | ||||||
15% unsecured promissory notes (2)
|
— | 5,339 | ||||||
Other
|
409 | 336 | ||||||
Total debt
|
$ | 65,596 | $ | 76,405 | ||||
Current maturities of long-term debt
|
$ | 65,289 | $ | 58,497 | ||||
Long-term debt
|
307 | 17,908 | ||||||
Total debt
|
$ | 65,596 | $ | 76,405 |
(1)
|
At December 31, 2009 consists of the revolving credit facility and the Canadian line of credit. In May 2010, we converted the existing Canadian line of credit into a revolving credit facility.
|
(2)
|
Due to certain directors and executive officers and to the trustees of our Supplemental Executive Retirement Plan on behalf of the plan participants. The 15% unsecured promissory notes were repaid in full in July 2010 with funds from the revolving credit facility.
|
(Amounts in thousands)
|
||||
2011
|
$ | 1,598 | ||
2012
|
1,477 | |||
2013
|
1,477 | |||
2014
|
370 | |||
2015 and beyond
|
— | |||
Total amortization
|
$ | 4,922 |
11.
|
Stockholders’ Equity
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In thousands)
|
||||||||
Foreign currency translation adjustments
|
$ | 4,590 | $ | 3,815 | ||||
Unrecognized postretirement benefit costs (credit)
|
(3,874 | ) | 1,660 | |||||
Total accumulated other comprehensive income
|
$ | 716 | $ | 5,475 |
12.
|
Stock-Based Compensation Plans
|
Weighted
|
Weighted Average
|
|||||||||||
Average
|
Remaining
|
|||||||||||
Exercise
|
Contractual
|
|||||||||||
Shares
|
Price
|
Term (Years)
|
||||||||||
Outstanding at December 31, 2008
|
515,823 | $ | 13.40 | 4.1 | ||||||||
Expired
|
(61,071 | ) | $ | 14.31 | — | |||||||
Exercised
|
(36,100 | ) | $ | 12.64 | — | |||||||
Forfeited, Other
|
(40,557 | ) | $ | 13.97 | 3.6 | |||||||
Outstanding at December 31, 2009
|
378,095 | $ | 13.26 | 3.7 | ||||||||
Expired
|
(52,671 | ) | $ | 14.33 | — | |||||||
Exercised
|
(4,500 | ) | $ | 11.43 | — | |||||||
Forfeited, Other
|
(8,900 | ) | $ | 12.75 | 5.5 | |||||||
Outstanding at December 31, 2010
|
312,024 | $ | 13.12 | 3.2 | ||||||||
Options exercisable at December 31, 2010
|
312,024 | $ | 13.12 | 3.2 |
Shares
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||||||
Balance at December 31, 2008
|
280,775 | $ | 6.88 | |||||
Granted
|
111,675 | $ | 13.78 | |||||
Vested
|
(55,950 | ) | $ | 7.26 | ||||
Forfeited
|
(48,075 | ) | $ | 7.36 | ||||
Balance at December 31, 2009
|
288,425 | $ | 9.40 | |||||
Granted
|
173,025 | $ | 10.75 | |||||
Vested
|
(64,375 | ) | $ | 6.78 | ||||
Forfeited
|
(32,275 | ) | $ | 7.48 | ||||
Balance at December 31, 2010
|
364,800 | $ | 10.68 |
13.
|
Retirement Benefit Plans
|
U.S. Defined
Contribution
|
European Defined
Contribution
|
|||||||
Year ended December 31,
|
||||||||
2010
|
$ | 3,523 | $ | — | ||||
2009
|
3,444 | 311 | ||||||
2008
|
4,181 | 324 |
Defined Benefit Retirement Plans
|
||||||||||||||||
U.S. Plans
|
European Plans
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Change in benefit obligation
:
|
||||||||||||||||
Benefit obligation at beginning of year
|
$ | 2,765 | $ | 1,797 | $ | — | $ | 2,275 | ||||||||
Service cost
|
79 | 89 | — | — | ||||||||||||
Interest cost
|
133 | 146 | — | 154 | ||||||||||||
Benefits paid
|
— | — | — | (85 | ) | |||||||||||
Actuarial loss (gain)
|
(304 | ) | 733 | — | 707 | |||||||||||
Translation adjustment
|
— | — | — | 289 | ||||||||||||
Liabilities related to assets sold
|
— | — | — | (3,340 | ) | |||||||||||
Benefit obligation at end of year
|
$ | 2,673 | $ | 2,765 | $ | — | $ | — | ||||||||
Change in plan assets
:
|
||||||||||||||||
Fair value of plan assets at beginning of year
|
— | — | $ | — | $ | 2,021 | ||||||||||
Employer contributions
|
— | — | — | 86 | ||||||||||||
Actual return on plan assets
|
— | — | — | 319 | ||||||||||||
Benefits paid
|
— | — | — | (85 | ) | |||||||||||
Translation adjustment
|
— | — | — | 268 | ||||||||||||
Assets sold
|
— | — | — | (2,609 | ) | |||||||||||
Fair value of plan assets at end of year
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Funded (unfunded) status of the plans
|
$ | (2,673 | ) | $ | (2,765 | ) | $ | — | $ | — | ||||||
Amounts recognized in the balance sheet
|
||||||||||||||||
Accrued postretirement benefit liabilities
|
$ | 2,673 | $ | 2,765 | $ | — | $ | — | ||||||||
Accumulated other comprehensive loss (pre-tax) related to:
|
||||||||||||||||
Unrecognized net actuarial losses
|
500 | 829 | — | — | ||||||||||||
Unrecognized prior service cost (credit)
|
249 | 359 | — | — |
Incurred but
Not Recognized
|
Reclassification
Adjustment for Prior
Period Amounts
Recognized
|
|||||||
Actuarial gains (losses)
|
||||||||
SERP defined benefit plan
|
$ | (182 | ) | $ | 15 | |||
Prior service (cost) credit
|
||||||||
SERP defined benefit plan
|
— | 66 | ||||||
$ | (182 | ) | $ | 81 |
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
U.S. defined benefit retirement plans:
|
||||||||||||
Service cost
|
$ | 79 | $ | 89 | $ | 91 | ||||||
Interest cost
|
133 | 146 | 236 | |||||||||
Amortization of prior service cost
|
110 | 110 | 110 | |||||||||
Amortization of unrecognized loss
|
25 | 96 | 30 | |||||||||
Net periodic benefit cost
|
$ | 347 | $ | 441 | $ | 467 | ||||||
European defined benefit retirement plans
(1)
:
|
||||||||||||
Service cost
|
$ | — | $ | — | $ | — | ||||||
Interest cost
|
— | 154 | 137 | |||||||||
Amortization of net actuarial loss
|
— | 110 | 84 | |||||||||
Expected return on plan assets
|
— | (141 | ) | (186 | ) | |||||||
Net periodic benefit cost
|
$ | — | $ | 123 | $ | 35 | ||||||
Total net periodic benefit costs
|
$ | 347 | $ | 564 | $ | 502 |
|
(1)
|
European defined benefit plan balances for 2009 represent other comprehensive income and net period benefit cost activity for the eleven months prior to the sale of our European distribution business. The remaining unrecognized net actuarial loss of $2.5 million included in other comprehensive income at the date of the sale was recognized and included in the $6.6 million loss on the sale of the business.
|
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Discount rates
|
5.35 | % | 5.75 | % | 5.75 | % | ||||||
Salary increase
|
4.00 | % | 4.00 | % | 4.00 | % |
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Discount rates
|
— | 5.50 | % | 6.70 | % | |||||||
Expected long-term rates of return on assets
|
— | 6.75 | % | 7.50 | % | |||||||
Inflation
|
— | 3.00 | % | 3.00 | % |
U.S. Plans
|
European Plans
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Projected benefit obligation
|
$ | 2,673 | $ | 2,765 | $ | — | $ | — | ||||||||
Accumulated benefit obligation
|
2,122 | 1,862 | — | — | ||||||||||||
Fair value of plan assets
|
— | — | — | — |
U.S. Plan
Benefits
|
||||
2011
|
$ | — | ||
2012
|
— | |||
2013
|
— | |||
2014
|
— | |||
2015
|
5,621 | |||
Years 2016 – 2020
|
— |
14.
|
Postretirement Medical Benefits
|
Defined Benefit Retirement Plans
|
||||||||||||||||
U.S. Plans
|
Canadian Plans
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Change in Benefit Obligation
:
|
||||||||||||||||
Benefit obligation at beginning of year
|
$ | 19,355 | $ | 18,742 | $ | 911 | $ | 634 | ||||||||
Service cost
|
179 | 196 | 13 | 8 | ||||||||||||
Interest cost
|
1,156 | 1,068 | 50 | 50 | ||||||||||||
Benefits paid
|
(795 | ) | (997 | ) | (26 | ) | (26 | ) | ||||||||
Actuarial loss (gain)
|
2,274 | 346 | (219 | ) | 144 | |||||||||||
Translation adjustment
|
— | — | 45 | 101 | ||||||||||||
Benefit obligation at end of year
|
$ | 22,169 | $ | 19,355 | $ | 774 | $ | 911 | ||||||||
Funded (unfunded) status of the plans
|
$ | (22,169 | ) | $ | (19,355 | ) | $ | (774 | ) | $ | (911 | ) | ||||
Amounts recognized in the balance sheet
|
||||||||||||||||
Accrued postretirement benefit liabilities
|
$ | 22,169 | $ | 19,355 | $ | 774 | $ | 911 | ||||||||
Accumulated other comprehensive (income) loss (pre-tax) related to:
|
||||||||||||||||
Unrecognized net actuarial losses (gains)
|
14,548 | 13,622 | (461 | ) | (249 | ) | ||||||||||
Unrecognized prior service cost (credit)
|
(8,064 | ) | (17,076 | ) | (177 | ) | (186 | ) | ||||||||
Unrecognized net transition obligation (asset)
|
— | — | 17 | 20 |
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
U.S. postretirement plans:
|
||||||||||||
Service cost
|
$ | 179 | $ | 196 | $ | 525 | ||||||
Interest cost
|
1,156 | 1,068 | 1,640 | |||||||||
Amortization of prior service cost
|
(9,012 | ) | (9,253 | ) | (6,586 | ) | ||||||
Amortization of unrecognized loss
|
1,348 | 1,312 | 1,432 | |||||||||
Net periodic benefit cost
|
$ | (6,329 | ) | $ | (6,677 | ) | $ | (2,989 | ) | |||
Canadian postretirement plans:
|
||||||||||||
Service cost
|
$ | 13 | $ | 8 | $ | 10 | ||||||
Interest cost
|
50 | 50 | 41 | |||||||||
Amortization of transition obligation
|
4 | 4 | 4 | |||||||||
Amortization of prior service cost
|
(18 | ) | (17 | ) | (15 | ) | ||||||
Amortization of net actuarial loss
|
(13 | ) | (29 | ) | (15 | ) | ||||||
Net periodic benefit cost
|
$ | 36 | $ | 16 | $ | 25 | ||||||
Total net periodic benefit costs
|
$ | (6,293 | ) | $ | (6,661 | ) | $ | (2,964 | ) |
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Discount rate
|
5.35 | % | 5.75 | % | 5.75 | % |
2011
|
$ | 1,153 | ||
2012
|
1,184 | |||
2013
|
1,232 | |||
2014
|
1,289 | |||
2015
|
1,331 | |||
Years 2016 – 2020
|
$ | 7,581 |
1-Percentage-
Point Increase
|
1-Percentage-
Point Decrease
|
|||||||
Effect on total of service and interest cost components
|
$ | 11 | $ | (9 | ) | |||
Effect on postretirement benefit obligation
|
$ | 155 | $ | (132 | ) |
15.
|
Other Non -Operating Income, Net
|
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
Interest and dividend income
|
$ | 296 | $ | 400 | $ | 20 | ||||||
Gain on repurchase of convertible debentures
|
— | 40 | 3,847 | |||||||||
Income (loss) from joint ventures
|
97 | 274 | (319 | ) | ||||||||
Loss on mortgage defeasance
|
— | — | (1,444 | ) | ||||||||
Gain on sale of preferred stock
|
— | 2,336 | — | |||||||||
Gain (loss) on foreign exchange
|
(60 | ) | 292 | (1,280 | ) | |||||||
Other income – net
|
92 | 242 | 395 | |||||||||
Total other non-operating income, net
|
$ | 425 | $ | 3,584 | $ | 1,219 |
16.
|
Income Taxes
|
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Current:
|
||||||||||||
Domestic
|
$ | (7 | ) | $ | 102 | $ | 442 | |||||
Foreign
|
1,528 | 334 | 1,997 | |||||||||
Total Current
|
1,521 | 436 | 2,439 | |||||||||
Deferred:
|
||||||||||||
Domestic
|
13,873 | 5,534 | (10,492 | ) | ||||||||
Foreign
|
(3 | ) | 124 | (52 | ) | |||||||
Total Deferred
|
13,870 | 5,658 | (10,544 | ) | ||||||||
Total income tax provision
|
$ | 15,391 | $ | 6,094 | $ | (8,105 | ) |
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
U.S. federal income tax rate of 35%
|
$ | 14,032 | $ | 4,200 | $ | (10,221 | ) | |||||
Increase (decrease) in tax rate resulting from:
|
||||||||||||
State and local income taxes, net of federal income tax benefit
|
2,050 | (17 | ) | (1,421 | ) | |||||||
Non-deductible compensation
|
— | — | 1,830 | |||||||||
Non-deductible portion of goodwill impairment charge
|
— | — | 551 | |||||||||
Sale of European distribution business
|
— | (2,680 | ) | — | ||||||||
Other non-deductible items, net
|
639 | 128 | 986 | |||||||||
Income (benefit) taxes attributable to foreign income
|
107 | 1,715 | (62 | ) | ||||||||
Change in unrecognized tax benefits
|
(1,084 | ) | — | — | ||||||||
Change in valuation allowance
|
(353 | ) | 2,748 | 232 | ||||||||
Provision (benefit) for income taxes
|
$ | 15,391 | $ | 6,094 | $ | (8,105 | ) |
December 31,
|
||||||||
2010
|
2009
|
|||||||
Deferred tax assets:
|
||||||||
Inventories
|
$ | 15,602 | $ | 14,329 | ||||
Allowance for customer returns
|
8,313 | 7,535 | ||||||
Postretirement benefits
|
9,129 | 8,208 | ||||||
Allowance for doubtful accounts
|
2,769 | 2,858 | ||||||
Accrued salaries and benefits
|
9,022 | 8,492 | ||||||
Net operating loss
|
2,162 | 11,221 | ||||||
Capital loss
|
6,903 | 6,923 | ||||||
Tax credit carry forwards
|
8,327 | 7,959 | ||||||
Goodwill
|
704 | 1,918 | ||||||
Deferred gain on building sale
|
3,010 | 3,438 | ||||||
Accrued asbestos liabilities
|
10,261 | 10,479 | ||||||
Other
|
3,499 | 3,174 | ||||||
79,701 | 86,534 | |||||||
Valuation allowance (1)
|
(29,468 | ) | (29,821 | ) | ||||
Total deferred tax assets
|
$ | 50,233 | $ | 56,713 | ||||
December 31,
|
||||||||
2010 | 2009 | |||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
$ | 10,528 | $ | 8,746 | ||||
Promotional costs
|
223 | 267 | ||||||
Other
|
— | 29 | ||||||
Total deferred tax liabilities
|
$ | 10,751 | $ | 9,042 | ||||
Net deferred tax assets
|
$ | 39,482 | $ | 47,671 |
(1)
|
Current net deferred tax assets are $18.1 million for 2010 and 2009. Non-current net deferred tax assets are $21.3 million and $29.5 million for 2010 and 2009, respectively. The tax valuation allowance was allocated to the current deferred tax assets in the amounts of $13.6 million and $11.3 million in 2010 and 2009, respectively. The long term tax deferred assets had a valuation allowance of $15.9 million and $18.5 million in 2010 and 2009, respectively.
|
Balance at January 1, 2010
|
$ | 2,300 | ||
Increase based on tax positions taken in the current year
|
— | |||
Decrease based on tax positions taken in the current year
|
(1,084 | ) | ||
Balance at December 31, 2010
|
$ | 1,216 |
17.
|
Industry Segment and Geographic Data
|
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Net Sales:
|
||||||||||||
Engine Management
|
$ | 577,333 | $ | 506,435 | $ | 537,658 | ||||||
Temperature Control
|
222,086 | 196,729 | 194,171 | |||||||||
Europe
|
— | 26,746 | 40,127 | |||||||||
Other
|
11,491 | 5,514 | 3,285 | |||||||||
Total
|
$ | 810,910 | $ | 735,424 | $ | 775,241 | ||||||
Intersegment Sales
:
|
||||||||||||
Engine Management
|
$ | 19,720 | $ | 22,445 | $ | 27,113 | ||||||
Temperature Control
|
4,567 | 3,752 | 3,371 | |||||||||
Europe
|
— | 287 | 284 | |||||||||
Other
|
(24,287 | ) | (26,484 | ) | (30,768 | ) | ||||||
Total
|
$ | — | $ | — | $ | — | ||||||
Depreciation and amortization
:
|
||||||||||||
Engine Management
|
$ | 10,378 | $ | 10,268 | $ | 9,747 | ||||||
Temperature Control
|
2,073 | 2,409 | 2,824 | |||||||||
Europe
|
— | 500 | 680 | |||||||||
Other
|
1,123 | 1,177 | 1,449 | |||||||||
Total
|
$ | 13,574 | $ | 14,354 | $ | 14,700 | ||||||
Operating profit (loss)
:
|
||||||||||||
Engine Management
|
$ | 43,410 | $ | 26,927 | $ | (26,925 | ) | |||||
Temperature Control
|
13,096 | 6,855 | 2,335 | |||||||||
Europe
|
— | (7,016 | ) | 2,101 | ||||||||
Other
|
(9,713 | ) | (9,135 | ) | 5,652 | |||||||
Total
|
$ | 46,793 | $ | 17,631 | $ | (16,837 | ) | |||||
Investment in equity affiliates:
|
||||||||||||
Engine Management
|
$ | — | $ | — | $ | — | ||||||
Temperature Control
|
— | — | — | |||||||||
Europe
|
— | — | — | |||||||||
Other
|
435 | 555 | 254 | |||||||||
Total
|
$ | 435 | $ | 555 | $ | 254 |
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Capital expenditures
:
|
||||||||||||
Engine Management
|
$ | 8,376 | $ | 6,207 | $ | 7,453 | ||||||
Temperature Control
|
2,336 | 432 | 1,837 | |||||||||
Europe
|
535 | 1,187 | ||||||||||
Other
|
94 | — | 23 | |||||||||
Total
|
$ | 10,806 | $ | 7,174 | $ | 10,500 | ||||||
Total assets
:
|
||||||||||||
Engine Management
|
$ | 323,162 | $ | 310,141 | $ | 346,888 | ||||||
Temperature Control
|
92,732 | 79,066 | 112,259 | |||||||||
Europe
|
— | — | 20,462 | |||||||||
Other
|
76,907 | 95,252 | 95,418 | |||||||||
Total
|
$ | 492,801 | $ | 484,459 | $ | 575,027 |
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Operating income (loss)
|
$ | 46,793 | $ | 17,631 | $ | (16,837 | ) | |||||
Other non-operating income
|
425 | 3,584 | 1,219 | |||||||||
Interest expense
|
7,127 | 9,215 | 13,585 | |||||||||
Earnings (loss) from continuing operations before taxes
|
40,091 | 12,000 | (29,203 | ) | ||||||||
Income tax expense (benefit)
|
15,391 | 6,094 | (8,105 | ) | ||||||||
Earnings (loss) from continuing operations
|
24,700 | 5,906 | (21,098 | ) | ||||||||
Discontinued operation, net of tax
|
(2,740 | ) | (2,423 | ) | (1,796 | ) | ||||||
Net earnings (loss)
|
$ | 21,960 | $ | 3,483 | $ | (22,894 | ) |
Revenues
|
||||||||||||
Year Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
United States
|
$ | 723,628 | $ | 635,977 | $ | 650,498 | ||||||
Canada
|
51,515 | 48,896 | 51,886 | |||||||||
Europe
|
8,296 | 29,984 | 44,205 | |||||||||
Other Foreign
|
27,471 | 20,567 | 28,652 | |||||||||
Total
|
$ | 810,910 | $ | 735,424 | $ | 775,241 |
Long Lived Assets
|
||||||||||||
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
United States
|
$ | 81,485 | $ | 85,083 | $ | 89,528 | ||||||
Europe
|
2,314 | 2,102 | 5,714 | |||||||||
Canada
|
1,782 | 1,892 | 3,540 | |||||||||
Other Foreign
|
1,168 | 1,626 | 605 | |||||||||
Total
|
$ | 86,749 | $ | 90,703 | $ | 99,387 |
December 31, 2010
|
December 31, 2009
|
|||||||||||||||
Carrying
Amount
|
Fair Value
|
Carrying
Amount
|
Fair Value
|
|||||||||||||
Cash and cash equivalents
|
$ | 12,135 | $ | 12,135 | $ | 10,618 | $ | 10,618 | ||||||||
Deferred compensation
|
5,978 | 5,978 | 5,319 | 5,319 | ||||||||||||
Short term borrowings
|
65,289 | 65,289 | 58,497 | 58,497 | ||||||||||||
Long-term debt
|
307 | 307 | 17,908 | 17,908 |
Total
|
Real Estate
|
Other
|
||||||||||
2010
|
$ | 10,038 | $ | 7,949 | $ | 2,089 | ||||||
2009
|
9,767 | 7,739 | 2,028 | |||||||||
2008
|
9,835 | 7,344 | 2,491 |
2011
|
$ | 7,567 | ||
2012
|
7,404 | |||
2013
|
6,448 | |||
2014
|
5,333 | |||
2015
|
4,938 | |||
Thereafter
|
5,738 | |||
Total
|
$ | 37,428 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In thousands)
|
||||||||
Balance, beginning of period
|
$ | 10,476 | $ | 10,162 | ||||
Liabilities accrued for current year sales
|
52,862 | 46,517 | ||||||
Settlements of warranty claims
|
(51,185 | ) | (46,203 | ) | ||||
Balance, end of period
|
$ | 12,153 | $ | 10,476 |
2010 Quarter Ended
|
||||||||||||||||
Dec. 31
|
Sept. 30
|
June 30
|
Mar. 31
|
|||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Net sales
|
$ | 172,971 | $ | 227,540 | $ | 231,048 | $ | 179,351 | ||||||||
Gross profit
|
45,385 | 60,014 | 58,389 | 43,818 | ||||||||||||
Earnings from continuing operations
|
2,675 | 11,097 | 8,061 | 2,867 | ||||||||||||
Loss from discontinued operation, net of taxes
|
(431 | ) | (1,441 | ) | (372 | ) | (496 | ) | ||||||||
Net earnings
|
$ | 2,244 | $ | 9,656 | $ | 7,689 | $ | 2,371 | ||||||||
Net earnings from continuing operations per common share:
|
||||||||||||||||
Basic
|
$ | 0.12 | $ | 0.49 | $ | 0.36 | $ | 0.13 | ||||||||
Diluted
|
$ | 0.12 | $ | 0.48 | $ | 0.35 | $ | 0.13 | ||||||||
Net earnings per common share:
|
||||||||||||||||
Basic
|
$ | 0.10 | $ | 0.43 | $ | 0.34 | $ | 0.11 | ||||||||
Diluted
|
$ | 0.10 | $ | 0.42 | $ | 0.34 | $ | 0.11 |
2009 Quarter Ended
|
||||||||||||||||
Dec. 31
|
Sept. 30
|
June 30
|
Mar. 31
|
|||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Net sales
|
$ | 160,127 | $ | 205,577 | $ | 197,498 | $ | 172,222 | ||||||||
Gross profit
|
40,122 | 49,803 | 46,406 | 40,893 | ||||||||||||
Earnings (loss) from continuing operations
(1)
|
(5,243 | ) | 4,724 | 5,638 | 787 | |||||||||||
Loss from discontinued operation, net of
taxes
|
(202 | ) | (1,639 | ) | (322 | ) | (260 | ) | ||||||||
Net earnings (loss)
|
$ | (5,445 | ) | $ | 3,085 | $ | 5,316 | $ | 527 | |||||||
Net earnings (loss) from continuing operations per common share:
|
||||||||||||||||
Basic
|
$ | (0.25 | ) | $ | 0.25 | $ | 0.30 | $ | 0.04 | |||||||
Diluted
|
$ | (0.25 | ) | $ | 0.25 | $ | 0.30 | $ | 0.04 | |||||||
Net earnings (loss) per common share:
|
||||||||||||||||
Basic
|
$ | (0.26 | ) | $ | 0.16 | $ | 0.28 | $ | 0.03 | |||||||
Diluted
|
$ | (0.26 | ) | $ | 0.16 | $ | 0.28 | $ | 0.03 |
(1)
|
Includes a pre-tax loss of $6.6 million from the sale of our European distribution business which was sold in November 2009.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
(a)
|
(1)
|
The Index to Consolidated Financial Statements of the Registrant under Item 8 of this Report is incorporated herein by reference as the list of Financial Statements required as part of this Report.
|
|
(2)
|
The following financial schedule and related report for the years 2010, 2009 and 2008 is submitted herewith:
|
(3)
|
Exhibits.
|
STANDARD MOTOR PRODUCTS, INC.
|
|
(Registrant)
|
|
/s/ Lawrence I. Sills
|
|
Lawrence I. Sills
|
|
Chairman, Chief Executive Officer and Director
|
|
/s/ James J. Burke
|
|
James J. Burke
|
|
Vice President, Finance and Chief Financial Officer
|
March 9, 2011
|
/s/
|
Lawrence I. Sills
|
|
Lawrence I. Sills
|
|||
Chairman, Chief Executive Officer and Director
|
|||
(Principal Executive Officer)
|
|||
March 9, 2011
|
/s/
|
James J. Burke
|
|
James J. Burke
|
|||
Vice President, Finance and Chief Financial Officer
|
|||
(Principal Financial and Accounting Officer)
|
March 9, 2011
|
/s/
|
Robert M. Gerrity
|
|
Robert M. Gerrity, Director
|
|||
March 9, 2011
|
/s/
|
Pamela Forbes Lieberman
|
|
Pamela Forbes Lieberman, Director
|
|||
March 9, 2011
|
/s/
|
Arthur S. Sills
|
|
Arthur S. Sills, Director
|
|||
March 9, 2011
|
/s/
|
Peter J. Sills
|
|
Peter J. Sills, Director
|
|||
March 9, 2011
|
/s/
|
Frederick D. Sturdivant
|
|
Frederick D. Sturdivant, Director
|
|||
March 9, 2011
|
/s/
|
William H. Turner
|
|
William H. Turner, Director
|
|||
March 9, 2011
|
/s/
|
Richard S. Ward
|
|
Richard S. Ward, Director
|
|||
March 9, 2011
|
/s/
|
Roger M. Widmann
|
|
Roger M. Widmann, Director
|
Exhibit
|
|
Number
|
|
3.1
|
Restated By-Laws, dated May 23, 1996, filed as an Exhibit of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996.
|
3.2
|
Restated Certificate of Incorporation, dated July 31, 1990, filed as an Exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 1990.
|
3.3
|
Certificate of Amendment of the Certificate of Incorporation, dated February 15, 1996, filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
|
10.1
|
Amended and Restated Employee Stock Ownership Plan and Trust, dated January 1, 2011.
|
10.2
|
1996 Independent Outside Directors Stock Option Plan of Standard Motors Products, Inc. (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996).
|
10.3
|
1994 Omnibus Stock Option Plan of Standard Motor Products, Inc., as amended and restated, (incorporated by reference to the Company’s Registration Statement on Form S-8 (Registration No. 333-59524), filed on April 25, 2001).
|
10.4
|
2006 Omnibus Incentive Plan of Standard Motor Products, Inc. (incorporated by reference to the Company’s Registration Statement on Form S-8 (Registration No. 333-134239), filed on May 18, 2006).
|
10.5
|
2004 Omnibus Stock Option Plan of Standard Motor Products, Inc. and 2004 Independent Directors’ Stock Option Plan of Standard Motor Products, Inc. (incorporated by reference to the Company’s Registration Statement on Form S-8 (Registration No. 333-134239), filed on June 7, 2005).
|
10.6
|
Supplemental Compensation Plan effective October 1, 2001 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001).
|
10.7
|
Severance Compensation Agreement, dated December 12, 2001, between Standard Motor Products, Inc. and John Gethin (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001).
|
10.8
|
Severance Compensation Agreement, dated December 12, 2001, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001).
|
10.9
|
Credit Agreement, dated as of December 29, 2005, among SMP Motor Products, Ltd., as Borrower, (incorporated by reference to the Company’s Current Report on Form 8-K filed on January 3, 2006).
|
10.10
|
Amendment to the Standard Motor Products, Inc. Supplemental Compensation Plan, effective December 1, 2006 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006).
|
Exhibit
|
|
Number
|
|
10.11
|
Retention Bonus and Insurance Agreement, dated December 26, 2006, between Standard Motor Products, Inc. and John Gethin (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006).
|
10.12
|
Retention Bonus and Insurance Agreement dated December 26, 2006, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006).
|
10.13
|
Purchase and Sale Agreement, dated December 21, 2007, between Standard Motors Products, Inc. and EXII Northern Boulevard Acquisition LLC (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007).
|
10.14
|
Lease Agreement, dated March 12, 2008, between Standard Motors Products, Inc. and 37-18 Northern Boulevard LLC (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007).
|
10.15
|
First Amendment Agreement dated as of March 20, 2007, among SMP Motor Products, Ltd., as borrower and the other credit parties thereto, and GE Canada Finance Holding Company, as lender and agent, and the other lenders thereto (incorporated by reference to the Company’s Form 8-K filed March 21, 2007).
|
10.16
|
Second Amendment Agreement dated as of May 1, 2007, among SMP Motor Products, Ltd., as borrower and the other credit parties thereto, and GE Canada Finance Holding Company, as lender and agent, and the other lenders thereto. (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009).
|
10.17
|
Amendment No. 3 to Credit Agreement dated as of December 18, 2008, among SMP Motor Products, Ltd., as borrower and the other credit parties thereto, and GE Canada Finance Holding Company, as lender and agent, and the other lenders thereto (incorporated by reference to the Company’s Form 8-K filed December 22, 2008).
|
10.18
|
Amendment to Severance Compensation Agreement, dated as of December 15, 2008, between Standard Motor Products, lnc. and John Gethin. (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009).
|
10.19
|
Amendment to Severance Compensation Agreement, dated as of December 15, 2008, between Standard Motor Products, Inc. and James Burke. (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009).
|
10.20
|
Amended and Restated Supplemental Executive Retirement Plan, dated as of December 31, 2010.
|
10.21
|
Indenture, dated as of May 6, 2009, between Standard Motor Products, Inc and HSBC Bank USA, N.A., as trustee. (incorporated by reference to the Company’s Annual Report on Form l0-K for the year ended December 31, 2009).
|
10.22
|
Amendment No. 4 to Credit Agreement, dated as of June 26, 2009, among SMP Motor Products, Ltd., as borrower and the other credit parties thereto, and GE Canada Finance Holding Company, as lender and agent, and the other lenders thereto (incorporated by reference to the Company’s Form 8-K filed June 29, 2009).
|
10.23
|
Amendment No. 5 to Credit Agreement, dated as of May 20, 2010, among SMP Motor Products, Ltd., as borrower and the other credit parties thereto, and GE Canada Finance Holding Company, as lender and agent, and the other lenders thereto (incorporated by reference to the Company’s Form 8-K filed May 20, 2010).
|
10.24
|
Third Amended and Restated Credit Agreement dated as of November 2, 2010, among Standard Motor Products, Inc., as borrower and the other credit parties thereto, and General Electric Capital Corp., as agent and lender, Bank of America, N.A. and Wells Fargo Capital Finance, LLC, as lenders and co-syndication agents, JPMorgan Chase Bank, N.A., as lender and as documentation agent, and the other lenders thereto (incorporated by reference to the Company’s Form 8-K filed November 12, 2010).
|
10.25
|
Amendment No. 6 to Credit Agreement, dated as of November 10, 2010, among SMP Motor Products, Ltd., as borrower and the other credit parties thereto, and GE Canada Finance Holding Company, as lender and agent, and the other lenders thereto (incorporated by reference to the Company’s Form 8-K filed November 12, 2010).
|
10.26
|
Amendment to Severance Compensation Agreement, dated as of March 8, 2011, between Standard Motor Products, Inc. and John Gethin.
|
10.27
|
Amendment to Severance Compensation Agreement, dated as of March 8, 2011, between Standard Motor Products, Inc. and James Burke.
|
Exhibit
|
|
Number
|
|
21
|
List of Subsidiaries of Standard Motor Products, Inc.
|
23.1
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
|
23.2
|
Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm.
|
24
|
Power of Attorney (see signature page to Annual Report on Form 10-K).
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
Additions
|
||||||||||||||||||||
Balance at
|
Charged to
|
|||||||||||||||||||
beginning
|
costs and
|
Balance at
|
||||||||||||||||||
Description
|
of year
|
expenses
|
Other
|
Deductions
|
end of year
|
|||||||||||||||
Year ended December 31, 2010:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 5,363,000 | $ | 502,000 | $ | — | $ | 443,000 | $ | 5,422,000 | ||||||||||
Allowance for discounts
|
1,599,000 | 12,659,000 | — | 12,901,000 | 1,357,000 | |||||||||||||||
$ | 6,962,000 | $ | 13,161,000 | $ | $ | 13,344,000 | $ | 6,779,000 | ||||||||||||
Allowance for sales returns
|
$ | 20,442,000 | $ | 89,211,000 | $ | — | $ | 86,446,000 | $ | 23,207,000 | ||||||||||
Allowance for inventory valuation
|
$ | 36,313,000 | $ | 7,403,000 | $ | — | $ | 5,139,000 | $ | 38,577,000 | ||||||||||
Year ended December 31, 2009:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 8,048,000 | $ | 946,000 | $ | (344,000 | )(2) | $ | 3,287,000 | $ | 5,363,000 | |||||||||
Allowance for discounts
|
1,973,000 | 13,374,000 | — | 13,748,000 | 1,599,000 | |||||||||||||||
$ | 10,021,000 | $ | 14,320,000 | $ | (344,000 | )(2) | $ | 17,035,000 | $ | 6,962,000 | ||||||||||
Allowance for sales returns
|
$ | 19,664,000 | $ | 84,892,000 | $ | (118,000 | )(2) | $ | 83,996,000 | $ | 20,442,000 | |||||||||
Allowance for inventory valuation
|
$ | 33,729,000 | $ | 6,410,000 | $ | (1,316,000 | )(2) | $ | 2,510,000 | $ | 36,313,000 | |||||||||
Year ended December 31, 2008:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 6,620,000 | $ | 1,874,000 | $ | (78,000 | )(1) | $ | 368,000 | $ | 8,048,000 | |||||||||
Allowance for discounts
|
2,344,000 | 10,979,000 | — | 11,350,000 | 1,973,000 | |||||||||||||||
$ | 8,964,000 | $ | 12,853,000 | $ | (78,000 | )(1) | $ | 11,718,000 | $ | 10,021,000 | ||||||||||
Allowance for sales returns
|
$ | 23,149,000 | $ | 81,488,000 | $ | — | $ | 84,973,000 | $ | 19,664,000 | ||||||||||
Allowance for inventory valuation
|
$ | 36,747,000 | $ | 3,747,000 | $ | — | $ | 6,765,000 | $ | 33,729,000 |
Page
|
||
ARTICLE ONE
|
DEFINITIONS
|
1
|
ARTICLE TWO
|
PURPOSE
|
12
|
ARTICLE THREE
|
PARTICIPANTS
|
13
|
ARTICLE FOUR
|
COMPANY CONTRIBUTIONS
|
14
|
ARTICLE FIVE
|
EMPLOYEE CONTRIBUTIONS
|
16
|
ARTICLE SIX
|
ALLOCATION OF CONTRIBUTIONS AND FORFEITURES
|
17
|
ARTICLE SEVEN
|
TERMINATION OF EMPLOYMENT
|
27
|
ARTICLE EIGHT
|
MANNER OF PAYMENT
|
31
|
ARTICLE NINE
|
ADMINISTRATION
|
44
|
ARTICLE TEN
|
CLAIM PROCEDURES
|
48
|
ARTICLE ELEVEN
|
TRUSTEES’ POWERS AND DUTIES
|
50
|
ARTICLE TWELVE
|
TOP HEAVY RULES
|
59
|
ARTICLE THIRTEEN
|
MISCELLANEOUS
|
68
|
ARTICLE FOURTEEN
|
AMENDMENT AND TERMINATION
|
70
|
ARTICLE FIFTEEN
|
REPURCHASE OF COMPANY SECURITIES
|
72
|
APPENDIX I
|
SPECIAL PROVISIONS APPLICABLE TO EMPLOYEES OF THE GUARANTEED PARTS/SORENSEN DIVISION OF WICKES MANUFACTURING COMPANY
|
Years of Vesting Service
|
% of Non-forfeitable Account
|
|||
Less than 2
|
0%
|
|||
2
|
20%
|
|||
3
|
40%
|
|||
4
|
60%
|
|||
5
|
80%
|
|||
6
|
100%
|
Years of Service
|
Minimum Vesting Percentage
|
|||
Less than 2
|
0
|
|||
2
|
20
|
|||
3
|
40
|
|||
4
|
60
|
|||
5
|
80
|
|||
6 or more
|
100
|
STANDARD MOTOR PRODUCTS, INC.
|
|||
By:
|
|||
Title:
|
|||
TRUSTEES
|
|||
Carmine J. Broccole, Trustee
|
|||
James J. Burke, Trustee
|
|||
Sanford Kay, Trustee
|
|||
Robert H. Martin, Trustee
|
|||
Thomas Tesoro, Trustee
|
|
1.
|
For the purposes of determining a Transferred Employee’s vesting under the ESOP, and for purposes of determining any Hour of Service requirement with respect to eligibility for allocations for a Plan Year, all service from each such Transferred Employee’s last date of hire with Wickes Manufacturing Company, Inc. shall be recognized.
|
|
2.
|
Each Transferred Employee who was an employee of Wickes Manufacturing Company, Inc. on June 30, 1989 shall be eligible to participate in the ESOP on January 1, 1990. Each other Transferred Employee (those Transferred Employees hired after June 30, 1989) shall be subject to the Plan’s eligibility requirements as stated in Article Two of the Plan taking into account for this purpose his service from his late date of hire with Wickes Manufacturing Company, Inc.
|
|
3.
|
For the purpose of determining the 1990 ESOP allocation for those Transferred Employees who became Participants in the ESOP on January 1, 1990, only Compensation earned from October 26, 1989 shall be taken into consideration.
|
|
4.
|
Unless otherwise expressly provided to the contract, defined terms used in this Appendix I shall have their same meaning as in the Plan.
|
Page
|
||
SECTION I.
|
PREAMBLE
|
2
|
SECTION II.
|
DEFINITIONS
|
3
|
SECTION III.
|
ELIGIBILITY AND PARTICIPATION
|
8
|
SECTION IV.
|
DEFERRAL ELECTIONS
|
9
|
SECTION V.
|
TIME AND MANNER OF PAYMENTS
|
11
|
SECTION VI.
|
DEFERRED COMPENSATION ACCOUNTS
|
14
|
SECTION VII.
|
ADMINISTRATION
|
15
|
SECTION VIII.
|
BENEFIT CLAIM PROCEDURES
|
17
|
SECTION IX.
|
MISCELLANEOUS
|
19
|
APPENDIX I
|
SCHEDULE OF PARTICIPANTS
|
STANDARD MOTOR PRODUCTS, INC.
|
|||
By:
|
|
||
Title:
|
|
||
Date:
|
|
|
|
Attest
|
|
“b.
|
‘Change in Control of the Corporation’ shall be deemed to occur if any of the following circumstances shall occur:
|
(i)
|
the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Corporation to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (“Act”)) other than the Permitted Holders; or
|
(ii)
|
any person or group, other than the Permitted Holders, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Act, except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50 percent of the total voting power of the voting stock of the Corporation, including by way of merger, consolidation or otherwise.
|
|
For the purposes of this Section 1b, “Permitted Holders” shall mean, as of the date of determination: (A) any and all of Larry Sills, his spouse, his parents, his siblings and their spouses, and descendants of them (whether natural or adopted) (collectively, the “Sills Group”); and (B) any trust established and maintained primarily for the benefit of any member of the Sills Group and any entity controlled by any member of the Sills Group.”
|
STANDARD MOTOR PRODUCTS, INC.
|
|||
|
By:
|
||
Name: Carmine J. Broccole
|
|||
Title: Secretary
|
|||
John Gethin
|
|
“b.
|
‘Change in Control of the Corporation’ shall be deemed to occur if any of the following circumstances shall occur:
|
(i)
|
the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Corporation to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (“Act”)) other than the Permitted Holders; or
|
(ii)
|
any person or group, other than the Permitted Holders, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Act, except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50 percent of the total voting power of the voting stock of the Corporation, including by way of merger, consolidation or otherwise.
|
|
For the purposes of this Section 1b, “Permitted Holders” shall mean, as of the date of determination: (A) any and all of Larry Sills, his spouse, his parents, his siblings and their spouses, and descendants of them (whether natural or adopted) (collectively, the “Sills Group”); and (B) any trust established and maintained primarily for the benefit of any member of the Sills Group and any entity controlled by any member of the Sills Group.”
|
STANDARD MOTOR PRODUCTS, INC.
|
|||
|
By:
|
||
Name: Carmine J. Broccole | |||
Title: Secretary
|
|||
James J. Burke
|
Percent | ||
State or
|
of Voting
|
|
|
Country of
|
Securities
|
Name
|
Incorporation
|
Owned
|
SMP Motor Products Limited
|
Canada
|
100
|
Motortronics, Inc.
|
New York
|
100
|
Stanric, Inc.
|
Delaware
|
100
|
Mardevco Credit Corp.
|
New York
|
100
|
Standard Motor Products (Hong Kong) Limited
|
Hong Kong
|
100
|
Industrial & Automotive Associates, Inc.
|
California
|
100
|
Standard Motor Products de Mexico,
|
||
S. de R.L. de C.V.
(1
)
|
Mexico
|
100
|
SMP Engine Management,
|
||
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
|
(1) Standard Motor Products, Inc. owns 49,999 shares and Motortronics, Inc. owns 1 share of these companies.
|
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/ Lawrence I. Sills
|
||
Lawrence I. Sills
|
||
Chief Executive Officer
|
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
|
||
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/ Lawrence I. Sills
|
|
Lawrence I. Sills
|
|
Chief Executive Officer
|
|
March 9, 2011
|
|
(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
|
|
Chief Financial Officer
|
|
March 9, 2011
|