XML 35 R24.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Summary of Significant Accounting Policies (Policies) | 9 Months Ended
--- | ---
Sep. 30, 2018
Summary of Significant Accounting Policies [Abstract] |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Standards that were adopted Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, (“ASU 2014-09”) which replaces numerous requirements in U.S. generally accepted accounting principles, including industry-specific requirements, and provides companies with a single comprehensive revenue recognition model for recognizing revenue from contracts with customers. Under the new guidance, an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The two permitted transition methods under the new standard are (1) the full retrospective method, in which case the standard would be applied to each prior reporting period presented, with the cumulative effect of applying the standard recognized at the earliest period presented, or (2) the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. Effective January 1, 2018, we adopted the requirements of ASU 2014-09, Revenue from Contracts with Customers, using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We expect the impact of the adoption of the new standard to be immaterial to our net income on an ongoing basis. The adoption of the new standard did not result in a material difference between the recognition of revenue under ASU 2014-09 and prior accounting standards. For the majority of our net sales, revenue continues to be recognized when products are shipped from our distribution facilities, or when received by our customers, depending upon the terms of the contract. Under the new revenue standard, (1) the return of cores from customers used in our manufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps is estimated and recorded as unreturned customer inventories at the time of sale, and (2) overstock returns are recorded gross of expected recoveries. Adoption of the new standard resulted in the recording of unreturned customer inventories, and an increase in accrued core liabilities and accrued customer returns, with partially offsetting changes in net sales and cost of sales, and no material change to our net income on an ongoing basis. The cumulative effect of the changes made to our consolidated balance sheet as of January 1, 2018 for the adoption of ASU 2014-09 is as follows (in thousands):
|  | Balance at December 31, 2017 |  |  | Adjustments Due to Adoption of ASU 2014-09 |  |  | Balance at January 1, 2018 |
Balance Sheet |  |  |  |  |  |  |  |  |
Unreturned customer inventories |  | $ | — |  |  | $ | 19,950 |  |  | $ | 19,950 |
Accrued customer returns |  |  | 35,916 |  |  |  | 6,670 |  |  |  | 42,586 |
Accrued core liability |  |  | 11,899 |  |  |  | 14,469 |  |  |  | 26,368 |
Retained earnings |  |  | 357,153 |  |  |  | (1,189 | ) |  |  | 355,964 |
The adoption of ASU 2014-09 resulted in the following changes to our consolidated balance sheet as of September 30, 2018 and our consolidated statement of operations for the three months and nine months ended September 30, 2018 (in thousands):
|  | As Reported |  |  | Balances Without Adoption of ASU 2014-09 |  |  | Effect of Change |
Balance Sheet |  |  |  |  |  |  |  |  |
Unreturned customer inventories |  | $ | 21,295 |  |  | $ | — |  |  | $ | 21,295 |
Prepaid expenses and other current assets |  |  | 11,681 |  |  |  | 11,907 |  |  |  | (226 | )
Accrued customer returns |  |  | 53,717 |  |  |  | 45,934 |  |  |  | 7,783 |
Accrued core liability |  |  | 30,002 |  |  |  | 16,165 |  |  |  | 13,837 |
Retained earnings |  |  | 381,503 |  |  |  | 382,054 |  |  |  | (551 | )
|  | Three Months Ended September 30, 2018 |  |  | Nine Months Ended September 30, 2018 |
|  | As Reported |  |  | Balances Without Adoption of ASU 2014-09 |  |  | Effect of Change |  |  | As Reported |  |  | Balances Without Adoption of ASU 2014-09 |  |  | Effect of Change |
Statement of Operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  | $ | 296,619 |  |  | $ | 298,440 |  |  | $ | (1,821 | ) |  | $ | 845,081 |  |  | $ | 844,449 |  |  | $ | 632 |
Cost of sales |  |  | 209,313 |  |  |  | 210,930 |  |  |  | (1,617 | ) |  |  | 603,897 |  |  |  | 604,129 |  |  |  | (232 | )
Earnings from continuing operations operations before taxes |  |  | 26,275 |  |  |  | 26,479 |  |  |  | (204 | ) |  |  | 60,498 |  |  |  | 59,634 |  |  |  | 864 |
Provision for income taxes |  |  | 7,002 |  |  |  | 7,051 |  |  |  | (49 | ) |  |  | 15,801 |  |  |  | 15,575 |  |  |  | 226 |
Net earnings |  |  | 15,749 |  |  |  | 15,904 |  |  |  | (155 | ) |  |  | 39,683 |  |  |  | 39,045 |  |  |  | 638 |
See Note 3 for further information regarding our adoption of ASU 2014-09. The following table provides a brief description of the impact of additional recently adopted accounting pronouncements on our financial statements:
Standard |  | Description |  | Date of adoption |  | Effects on the financial statements or other significant matters
ASU 2016-15, Statement of Cash Flows |  | This standard is intended to reduce diversity in practice and to provide guidance as to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. |  | January 1, 2018 |  | The retrospective adoption of the new standard did not result in any changes in our reporting of cash receipts and cash payments in our consolidated statement of cash flows.
ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost |  | This standard requires employers that present operating income in their consolidated statement of operations to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in other non-operating income (expense). The new standard requires retrospective reclassification of the effects of the new standard on the statement of operations. |  | January 1, 2018 |  | The adoption of the new standard resulted in the reclassification of all components of net periodic pension cost and net periodic postretirement benefit cost, other than the service cost component, in our statement of operations from selling, general and administrated expenses, to other non-operating income (expense). We adopted the new standard retrospectively, and as such, all prior period amounts have been reclassified for comparative purposes.
Standards that are not yet adopted as of September 30, 2018 Leases In February 2016, the FASB issued ASU 2016-02, Leases, (“ASU 2016-02”), which outlines the need to recognize a right-of-use (“ROU”) asset and a lease liability for all leases with a term longer than twelve months. For income statement purposes, the FASB retained the dual model, requiring leases to be classified as either operating or financing. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The new standard is effective for annual reporting periods beginning after December 15, 2018, which for us is January 1, 2019, and interim periods within those annual periods. The new standard will require that we recognize all of our leases, including our current operating leases, on the balance sheet. The new standard requires adoption using a modified retrospective approach and provides a number of optional practical expedients in transition. In July 2018, the FASB issued ASU 2018-11, Targeted Improvements, (“ASU 2018-11”), which provides an alternative modified retrospective transition method. Under this new transition method, a reporting entity would initially apply the new lease requirements at the effective date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Comparative financial information for the prior periods presented would not be restated but instead would continue to be reported under accounting standards in effect in those prior periods. To date, we have taken an inventory of all of our operating leases, which consists primarily of real estate, equipment and auto leases, have reviewed key lease agreements, and have begun a review of contracts for embedded leases. We continue to evaluate lease terms, lease payments and appropriate discount rates to use in calculating the ROU asset and lease liability. We anticipate using the alternative modified retrospective method of adoption permitted pursuant to ASU 2018-11, whereby financial information will not be updated, and the disclosure required under the new standard will not be provided, for dates and periods before January 1, 2019. In addition, we expect to elect the “package of practical expedients,” which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs and permits the use-of-hindsight in determining the lease term. We do not expect that the adoption of this standard will have a material effect on our statement of operations, or our operating cash flows. While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to the recognition of new ROU assets and lease liabilities on our balance sheet for our operating leases, and providing significant new disclosures about our leasing activities. We do not expect a significant change in our leasing activities between now and adoption, and will be continuously assessing the impact of the new standard on our systems, processes and controls through January 1, 2019, our planned adoption date. The following table provides a brief description of additional recently issued accounting pronouncements that have not yet been adopted as of September 30, 2018, and that could have an impact on our financial statements:
Standard |  | Description |  | Date of adoption |  | Effects on the financial statements or other significant matters
ASU 2017-04, Simplifying the Test for Goodwill Impairment |  | This standard is intended to simplify the accounting for goodwill impairment. ASU 2017-04 removes Step 2 of the test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. |  | January 1, 2020, with early adoption permitted |  | The new standard should be applied prospectively. We will consider the new standard when performing our annual impairment test and evaluate when we will adopt the new standard.
ASU 2016-13, Financial Instruments – Credit Losses |  | This standard creates a single model to measure impairment on financial assets, which includes trade account receivables. An estimate of expected credit losses on trade account receivables over their contractual life will be required to be recorded at inception, based on historical information, current conditions, and reasonable and supportable forecasts. |  | January 1, 2020, with early adoption permitted |  | We do not anticipate that the adoption of this standard will have a material impact on manner in which we estimate our allowance for doubtful accounts on trade accounts receivable, or on our consolidated financial statements.

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

X
- Definition Disclosure of accounting policy pertaining to new accounting pronouncements that may impact the entity's financial reporting. Includes, but is not limited to, quantification of the expected or actual impact. + References No definition available. + Details
Name: | us-gaap_NewAccountingPronouncementsPolicyPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration