XML 43 R14.htm IDEA: XBRL DOCUMENT
v3.19.1

Fair Value of Financial Instruments | 12 Months Ended
--- | ---
Dec. 31, 2017
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. Depending on the inputs, the Company classifies each fair-value measurement as follows:
• | Level 1 — based on quoted prices in active markets for identical assets or liabilities;
• | Level 2 — based on other significant observable inputs for the assets or liabilities through corroborations with market data at the measurement date; and
• | Level 3 — based on significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.
Financial Instruments Measured at Carrying Value Current Assets Cash and cash equivalents are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments. Debt The Company measures its Wells Fargo revolving credit facility, term loans and the Unsecured Senior Notes at original carrying value adjusted for unpaid waiver fees agreed to be added to principal, including accrued interest, net of unamortized deferred financing costs and fees. The fair value of the revolving credit facility approximates carrying value, as it consists of short-term variable rate loans. The Unsecured Senior Notes were issued on April 29, 2015, and their fair value as of December 31, 2015 approximated their carrying value. The fair-value measurement of these financial liabilities subsequent to December 31, 2015 was defined as Level 3 in the three-level valuation hierarchy, as the inputs to their valuation are not all market observable.
(in thousands) |  | As of December 31, 2017
|  | Carrying Value |  | Fair Value
|  |  | Level 1 |  | Level 2 |  | Level 3
Wells Fargo revolving credit facility |  | $ | 37,055 |  |  | $ | — |  |  | $ | 37,055 |  |  | $ | — |
Unsecured Senior Notes |  | 55,000 |  |  | — |  |  | — |  |  | 50,000 |
(in thousands) |  | As of December 31, 2016
|  | Carrying Value |  | Fair Value
|  |  | Level 1 |  | Level 2 |  | Level 3
Wells Fargo revolving credit facility |  | $ | 12,774 |  |  | $ | — |  |  | $ | 12,774 |  |  | $ | — |
Unsecured Senior Notes |  | 55,000 |  |  | — |  |  | — |  |  | 49,800 |
TPG Term Loan |  | 71,400 |  |  | — |  |  | — |  |  | 70,800 |
(in thousands) |  | As of December 31, 2015
|  | Carrying Value |  | Fair Value (Restated)
|  | (Restated) |  | Level 1 |  | Level 2 |  | Level 3
Wells Fargo revolving credit facility |  | $ | 97,299 |  |  | $ | — |  |  | $ | 97,299 |  |  | $ | — |
Unsecured Senior Notes |  | 55,000 |  |  | — |  |  | — |  |  | 55,000 |
(in thousands) |  | As of December 31, 2014
|  | Carrying Value |  | Fair Value (Restated)
|  | (Restated) |  | Level 1 |  | Level 2 |  | Level 3
Wells Fargo revolving credit facility |  | $ | 78,030 |  |  | $ | — |  |  | $ | 78,030 |  |  | $ | — |
Wells Fargo Term Loan |  | 4,028 |  |  | — |  |  | 4,028 |  |  | — |
Other Financial Assets and Liabilities In addition to the methods and assumptions used for the financial instruments discussed above, Accounts receivable, net, Income tax receivables and Accounts payable are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments. Financial Instruments Measured at Fair Value The Company's warrants and the contingent consideration liabilities were measured at fair value based on unobservable inputs and were, thus, considered Level 3 financial instruments in the three-level valuation hierarchy. As of December 31, 2015, the Base and Additional Earn-outs were finalized. The Base and Additional Earn-outs were paid in cash during 2016, as discussed below in Contingent Consideration section.
(in thousands) |  | As of December 31, 2017
|  | Carrying Value |  | Fair Value
|  |  | Level 1 |  | Level 2 |  | Level 3
Weichai warrant liability |  | $ | 24,700 |  |  | $ | — |  |  | $ | — |  |  | $ | 24,700 |
Contingent consideration |  | 12 |  |  | — |  |  | — |  |  | 12 |
(in thousands) |  | As of December 31, 2016
|  | Carrying Value |  | Fair Value
|  |  | Level 1 |  | Level 2 |  | Level 3
Contingent consideration |  | $ | 38 |  |  | $ | — |  |  | $ | — |  |  | $ | 38 |
(in thousands) |  | As of December 31, 2015
|  | Carrying Value |  | Fair Value (Restated)
|  | (Restated) |  | Level 1 |  | Level 2 |  | Level 3
Private placement warranty liability |  | $ | 1,482 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,482 |
Contingent consideration |  | 8,717 |  |  | — |  |  | — |  |  | 8,717 |
(in thousands) |  | As of December 31, 2014
|  | Carrying Value |  | Fair Value (Restated)
|  | (Restated) |  | Level 1 |  | Level 2 |  | Level 3
Private placement warranty liability |  | $ | 11,036 |  |  | $ | — |  |  | $ | — |  |  | $ | 11,036 |
Warrants The following table summarizes changes in the estimated fair value of the Company’s warrant liability:
(in thousands) |  | As of December 31,
|  | 2017 |  | 2016 |  | 2015 |  | 2014
|  |  |  |  |  | (Restated) |  | (Restated)
Balance at beginning of year |  | $ | — |  |  | $ | 1,482 |  |  | $ | 11,036 |  |  | $ | 24,525 |
Exercise of private placement warrants |  | — |  |  | (69 | ) |  | (255 | ) |  | (7,320 | )
Issuance of warrants |  | 20,700 |  |  | — |  |  | — |  |  | — |
Increase (decrease) in value* |  | 4,000 |  |  | (1,413 | ) |  | (9,299 | ) |  | (6,169 | )
Balance at end of year |  | $ | 24,700 |  |  | $ | — |  |  | $ | 1,482 |  |  | $ | 11,036 |
* | Loss (gain) related to the change in fair value of the warrants for each year are presented as “Loss (gain) from change in fair value of warrants” in the Company's Consolidated Statements of Operations.
Weichai Warrant Liability The Company estimated the fair value of the Weichai Warrant financial instrument using a publicly traded stock pricing approach with a Black-Scholes option pricing model and a Monte Carlo simulation. Given the unobservable nature of the inputs to the pricing models, the Weichai Warrant was classified as a Level 3 instrument. The inputs of the Black-Scholes option pricing model were as follows:
Assumptions |  | December 31, 2017
Market value of the Common Stock |  | $7.50
Exercise price |  | varies |
Risk-free interest rate |  | 1.8 | %
Estimated price volatility |  | 95 | %
Contractual term |  | 1.0 year |
Dividend yield |  | — |
The estimated price volatility represents the upper end of the range of implied volatility of publicly traded call options of benchmark companies. Private Placement Warrant Liability As of December 31, 2015 and 2014, the Company estimated the fair value of its Private Placement Warrant liability using the Black-Scholes option pricing model. Given the unobservable nature of the inputs to the pricing model, the Private Placement Warrants were classified as Level 3 instruments. The inputs of the Black-Scholes option pricing model were as follows:
|  | As of December 31,
Assumptions |  | 2015 |  | 2014
Closing price of the Common Stock |  | $18.25 |  | $51.61
Exercise price |  | $13.00 |  | $13.00
Estimated price volatility* |  | 55 | % |  | 55 | %
Contractual term |  | 0.58 years |  |  | 1.33 years |
* Represents the upper end of the range of implied volatility of publicly traded call options of benchmark companies. Contingent Consideration The following table summarizes the change in the estimated fair value of the Company’s contingent consideration, primarily for Powertrain in 2016 and 2015 and for 3PI in 2014.
(in thousands) | For the Year Ended December 31,
| 2017 |  | 2016 |  | 2015 (Restated) |  | 2014 (Restated)
Balance at beginning of year | $ | 38 |  |  | $ | 8,717 |  |  | $ | — |  |  | $ | — |
Initial estimate of contingent consideration liability | — |  |  | — |  |  | 8,740 |  |  | 3,840 |
Increase (decrease) in value reflected in income 1 | — |  |  | (230 | ) |  | (23 | ) |  | (3,840 | )
Payment of contingent consideration 2 | (26 | ) |  | (8,449 | ) |  | — |  | — |  | — |
Balance at end of year | $ | 12 |  |  | $ | 38 |  |  | $ | 8,717 |  |  | $ | — |
Less: Noncurrent portion | — |  |  | 12 |  |  | 442 |  |  | — |
Short-term contingent consideration at end of year | $ | 12 |  |  | $ | 26 |  |  | $ | 8,275 |  |  | $ | — |
1. | Includes $0.1 million of interest on contingent consideration recorded in Interest expense on the Consolidated Statement of Operations.
2. | Includes $0.1 million of cash paid in excess of the initial fair value estimate of contingent consideration at the time of the Powertrain acquisition and presented in “Other, net” within cash flows from operating activities in the Consolidated Statement of Cash Flows.
The Company's original liability for Powertrain's contingent consideration for the Base and Additional Earn-outs associated with the May 2015 acquisition was measured at fair value based on unobservable inputs and it was, therefore, considered a Level 3 financial instrument. The Base and Additional Earn-outs were initially determined using a Monte Carlo simulation model. The Base Earn-out was to be paid upon the achievement of predetermined levels of net sales for 2015, and the Additional Earn-out was defined as the greater of a 5.0% per annum return on the Base Earn-out or the increase in the Company's VWAP Common Stock price, as defined in the APA, from the acquisition date of May 1, 2015 through January 1, 2016. The Powertrain Base and Additional Earn-outs were adjusted to estimated fair value at the end of each quarter in 2015. At December 31, 2015, however, the end of the measurement period, all of the inputs needed to compute the Powertrain Base and Additional Earn-outs were known and determined to be $8.2 million. The Company recognized additional “Contingent consideration” expense in its 2015 Consolidated Statement of Operations for Powertrain as indicated in the table above. This adjustment was due to changes in the original estimated fair value of the Powertrain Base and Additional Earn-outs during 2015. See Note 5. Acquisitions for additional information related to the Powertrain and 3PI acquisitions and information related to other insignificant contingent consideration liabilities noted in the above table.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration