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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Dec. 31, 2015
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
| a. | Basis of Consolidation
The consolidated financial statements reflect the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany profits, transactions and balances have been eliminated in consolidation.
| b. | Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that directly affect the amounts reported in its consolidated financial statements and accompanying notes. Actual results could differ from these estimates.
| c. | Revenue Recognition
The Company recognizes revenue from the sale of its products when the customer has made a fixed commitment to purchase a product for a fixed or determinable price, collection is reasonably assured under the Company’s normal billing and credit terms and ownership and all risk of loss has been transferred to the buyer, which is normally upon shipment to or pick up by the customer. Revenues on certain contracts are recorded on a percentage of completion method, measured by either actual labor incurred to the estimated total labor or actual total cost incurred to the total estimated costs for each project. Revenues exclude all taxes collected from the customer. Shipping and handling fees are included in Net Sales and the associated costs included in Cost of Sales in the Consolidated Statements of Operations.
| d. | Used Trailer Trade Commitments and Residual Value Guarantees
The Company has commitments with certain customers to accept used trailers on trade for new trailer purchases. These commitments arise in the normal course of business related to future new trailer orders at the time a new trailer order is placed by the customer. The Company acquired used trailers on trade of approximately $12.8 million, $26.8 million and $26.2 million in 2015, 2014 and 2013, respectively. As of December 31, 2015 and 2014, the Company had approximately $2.1 million and $10.0 million, respectively, of outstanding trade commitments. On occasion, the amount of the trade allowance provided for in the used trailer commitments, or cost, may exceed the net realizable value of the underlying used trailer. In these instances, the Company’s policy is to recognize the loss related to these commitments at the time the new trailer revenue is recognized. Net realizable value of used trailers is measured considering market sales data for comparable types of trailers. The net realizable value of the used trailers subject to the remaining outstanding trade commitments was estimated by the Company to be approximately $2.2 million and $10.0 million as of December 31, 2015 and 2014, respectively.
| e. | Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with a maturity of three months or less at the time of purchase.
| f. | Accounts Receivable
Accounts receivable are shown net of allowance for doubtful accounts and primarily include trade receivables. The Company records and maintains a provision for doubtful accounts for customers based upon a variety of factors including the Company’s historical collection experience, the length of time the account has been outstanding and the financial condition of the customer. If the circumstances related to specific customers were to change, the Company’s estimates with respect to the collectability of the related accounts could be further adjusted. The Company’s policy is to write-off receivables when they are determined to be uncollectible. Provisions to the allowance for doubtful accounts are charged to both General and Administrative Expenses and Selling Expenses in the Consolidated Statements of Operations. The following table presents the changes in the allowance for doubtful accounts (in thousands):
|  | Years Ended December 31, |
|  | 2015 |  | 2014 |  | 2013 |
Balance at beginning of year |  | $ | 1,047 |  | $ | 2,058 |  | $ | 858 |
Provision |  |  | 210 |  |  | 178 |  |  | 908 |
Write-offs, net of recoveries |  |  | (301) |  |  | (1,189) |  |  | 292 |
Balance at end of year |  | $ | 956 |  | $ | 1,047 |  | $ | 2,058 |
| g. | Inventories
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) method, or market. The cost of manufactured inventory includes raw material, labor and overhead. Inventories consist of the following (in thousands):
|  | December 31, |
|  | 2015 |  | 2014 |
Raw materials and components |  | $ | 65,790 |  | $ | 63,847 |
Work in progress |  |  | 18,201 |  |  | 23,145 |
Finished goods |  |  | 67,260 |  |  | 68,923 |
Aftermarket parts |  |  | 8,714 |  |  | 8,446 |
Used trailers |  |  | 7,017 |  |  | 12,783 |
|  | $ | 166,982 |  | $ | 177,144 |
| h. | Prepaid Expenses and Other
Prepaid expenses and other as of December 31, 2015 and 2014 were $8.4 million and $10.2 million, respectively. Prepaid expenses and other primarily includes items such as insurance premiums, maintenance agreements and other receivables. Insurance premiums and maintenance agreements are charged to expense over the contractual life, which is generally one year or less. Other receivables primarily consist of costs in excess of billings on contracts for which the Company recognizes revenue on a percentage of completion basis.
| i. | Property, Plant and Equipment
Property, plant and equipment are recorded at cost, net of accumulated depreciation. Maintenance and repairs are charged to expense as incurred, while expenditures that extend the useful life of an asset are capitalized. Depreciation is recorded using the straight-line method over the estimated useful lives of the depreciable assets. The estimated useful lives are up to 33 years for buildings and building improvements and range from three to ten years for machinery and equipment. Depreciation expense, which is recorded in Cost of Sales and General and Administrative Expenses in the Consolidated Statements of Operations, as appropriate, on property, plant and equipment was $16.2 million, $16.5 million and $15.7 million in 2015, 2014 and 2013, respectively, and includes amortization of assets recorded in connection with the Company’s capital lease agreements. As of December 31, 2015 and 2014, the assets related to the Company’s capital lease agreements are recorded within Property, Plant and Equipment in the Consolidated Balance Sheet for the amount of $5.0 million and $10.2 million, respectively, net of accumulated depreciation of $2.6 million and $3.5 million, respectively. Property, plant and equipment consist of the following (in thousands):
|  | December 31, |
|  | 2015 |  | 2014 |
Land |  | $ | 22,978 |  | $ | 25,982 |
Buildings and building improvements |  |  | 114,216 |  |  | 115,856 |
Machinery and equipment |  |  | 220,814 |  |  | 210,488 |
Construction in progress |  |  | 13,741 |  |  | 10,518 |
|  | $ | 371,749 |  | $ | 362,844 |
Less: accumulated depreciation |  |  | (231,311) |  |  | (219,952) |
|  | $ | 140,438 |  | $ | 142,892 |
| j. | Intangible Assets
As of December 31, 2015, the balances of intangible assets, other than goodwill, were as follows (in thousands):
|  | Weighted Average Amortization Period |  | Gross Intangible Assets |  | Accumulated Amortization |  | Net Intangible Assets |
Tradenames and trademarks |  | 20 years |  | $ | 37,894 |  | $ | (9,970) |  | $ | 27,924 |
Customer relationships |  | 10 years |  |  | 151,634 |  |  | (76,340) |  |  | 75,294 |
Technology |  | 12 years |  |  | 16,517 |  |  | (5,119) |  |  | 11,398 |
Total |  | 12 years |  | $ | 206,045 |  | $ | (91,429) |  | $ | 114,616 |
As of December 31, 2014, the balances of intangible assets, other than goodwill, were as follows (in thousands):
|  | Weighted Average Amortization Period |  | Gross Intangible Assets |  | Accumulated Amortization |  | Net Intangible Assets |
Tradenames and trademarks |  | 20 years |  | $ | 39,222 |  | $ | (8,252) |  | $ | 30,970 |
Customer relationships |  | 10 years |  |  | 151,839 |  |  | (58,534) |  |  | 93,305 |
Technology |  | 12 years |  |  | 16,517 |  |  | (3,692) |  |  | 12,825 |
Total |  | 12 years |  | $ | 207,578 |  | $ | (70,478) |  | $ | 137,100 |
Intangible asset amortization expense was $21.3 million, $21.9 million and $21.8 million for 2015, 2014 and 2013, respectively. Annual intangible asset amortization expense for the next 5 fiscal years is estimated to be $20.0 million in 2016; $16.9 million in 2017; $15.4 million in 2018; $14.5 million in 2019 and $13.7 million in 2020. Additionally, during the fourth quarter of 2015 the Company’s Diversified Products reporting unit recognized a $1.1 million impairment of intangible assets as specific tradenames of this reporting unit were consolidated. As a result, a full impairment of the related assets was recorded within Other Operating Expenses in the Company’s Consolidated Statements of Operations.
| k. | Goodwill
The changes in the carrying amounts of goodwill, all of which are included in the Company’s Diversified Products segment as of December 31, 2015, except for approximately $9.9 million allocated to the Company’s Retail segment, for the years ended December 31, 2015 and 2014 were as follows (in thousands):
Balance as of December 31, 2013 |  | $ | 149,967 |
Goodwill disposed |  |  | (500) |
Effects of foreign currency |  |  | 136 |
Balance as of December 31, 2014 |  | $ | 149,603 |
Effects of foreign currency |  |  | 115 |
Balance as of December 31, 2015 |  | $ | 149,718 |
Goodwill represents the excess purchase price over fair value of the net assets acquired. The Company reviews goodwill for impairment, at the reporting unit level, annually on October 1 and whenever events or changes in circumstances indicate its carrying value may not be recoverable. In accordance with ASC 350, Intangibles – Goodwill and Other, goodwill is reviewed for impairment utilizing either a qualitative assessment or a two-step quantitative process. The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In assessing the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances and how these may impact a reporting unit's fair value or carrying amount involve significant judgments and assumptions. The judgments and assumptions include the identification of macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and Company specific events and making the assessment on whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. For reporting units in which the Company performs the two-step quantitative analysis, the first step compares the carrying value, including goodwill, of each reporting unit with its estimated fair value. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is greater than the fair value, this suggests that an impairment may exist and a second step is required in which the implied fair value of goodwill is calculated as the excess of the fair value of the reporting unit over the fair values assigned to its assets and liabilities. If this implied fair value is less than the carrying value, the difference is recognized as an impairment loss charged to the reporting unit. In assessing goodwill using this quantitative approach, the Company establishes fair value for the purpose of impairment testing by averaging the fair value using an income and market approach. The income approach employs a discounted cash flow model incorporating similar pricing concepts used to calculate fair value in an acquisition due diligence process and a discount rate that takes into account the Company’s estimated average cost of capital. The market approach employs market multiples based on comparable publicly traded companies in similar industries as the reporting unit. Estimates of fair value are established using current and forward multiples adjusted for size and performance of the reporting unit relative to peer companies. For 2015 and 2013, the Company completed its goodwill impairment testing during the fourth quarter using the qualitative approach. For 2014, the Company completed its testing using the quantitative assessment. Based on the testing performed in each of these years, the Company believes it is more likely than not that the fair value of its reporting units are greater than their carrying amount. As such, no impairment of goodwill was recognized in 2015, 2014 or 2013. Furthermore, in 2014, the Company’s Retail reporting unit recognized a partial disposal of goodwill in the amount of $0.5 million resulting from the transitioning of three Retail branch locations to independent dealer facilities during the second quarter of 2014.
| l. | Other Assets
The Company capitalizes the cost of computer software developed or obtained for internal use. Capitalized software is amortized using the straight-line method over three to seven years. As of December 31, 2015 and 2014, the Company had software costs, net of amortization, of $2.7 million and $2.2 million, respectively. Amortization expense for 2015, 2014 and 2013 was $0.6 million, $0.5 million and $0.7 million, respectively.
| m. | Long-Lived Assets
Long-lived assets, consisting primarily of intangible assets and property, plant and equipment, are reviewed for impairment whenever facts and circumstances indicate that the carrying amount may not be recoverable. Specifically, this process involves comparing an asset’s carrying value to the estimated undiscounted future cash flows the asset is expected to generate over its remaining life. If this process were to result in the conclusion that the carrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations. Fair value is determined based upon discounted cash flows or appraisals as appropriate.
| n. | Other Accrued Liabilities
The following table presents the major components of Other Accrued Liabilities (in thousands):
|  | December 31, |
|  | 2015 |  | 2014 |
Payroll and related taxes |  | $ | 34,427 |  | $ | 30,362 |
Warranty |  |  | 19,709 |  |  | 15,462 |
Customer Deposits |  |  | 14,877 |  |  | 21,680 |
Accrued taxes |  |  | 8,075 |  |  | 8,371 |
Self-insurance |  |  | 7,677 |  |  | 7,494 |
All other |  |  | 8,277 |  |  | 5,321 |
|  | $ | 93,042 |  | $ | 88,690 |
The following table presents the changes in the product warranty accrual included in Other Accrued Liabilities (in thousands):
|  | 2015 |  | 2014 |
Balance as of January 1 |  | $ | 15,462 |  | $ | 14,719 |
Provision for warranties issued in current year |  |  | 9,714 |  |  | 7,058 |
Recovery of pre-existing warranties |  |  | (409) |  |  | (296) |
Payments |  |  | (5,058) |  |  | (6,019) |
Balance as of December 31 |  | $ | 19,709 |  | $ | 15,462 |
The Company offers a limited warranty for its products with a coverage period that ranges between one and five years, except that the coverage period for DuraPlate® trailer panels is ten years. The Company passes through component manufacturers’ warranties to our customers. The Company’s policy is to accrue the estimated cost of warranty coverage at the time of the sale. The following table presents the changes in the self-insurance accrual included in Other Accrued Liabilities (in thousands):
|  | Self-Insurance |
|  | Accrual |
Balance as of January 1, 2014 |  | $ | 9,399 |
Expense |  |  | 34,662 |
Payments |  |  | (36,567) |
Balance as of December 31, 2014 |  | $ | 7,494 |
Expense |  |  | 40,023 |
Payments |  |  | (39,840) |
Balance as of December 31, 2015 |  | $ | 7,677 |
The Company is self-insured up to specified limits for medical and workers’ compensation coverage. The self-insurance reserves have been recorded to reflect the undiscounted estimated liabilities, including claims incurred but not reported, as well as catastrophic claims as appropriate.
| o. | Income Taxes
The Company determines its provision or benefit for income taxes under the asset and liability method. The asset and liability method measures the expected tax impact at current enacted rates of future taxable income or deductions resulting from differences in the tax and financial reporting basis of assets and liabilities reflected in the Consolidated Balance Sheets. Future tax benefits of tax losses and credit carryforwards are recognized as deferred tax assets. Deferred tax assets are reduced by a valuation allowance to the extent management determines that it is more-likely-than-not the Company would not realize the value of these assets. The Company accounts for income tax contingencies by prescribing a “more-likely-than-not” recognition threshold that a tax position is required to meet before being recognized in the financial statements.
| p. | Concentration of Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, cash equivalents and customer receivables. We place our cash and cash equivalents with high quality financial institutions. Generally, we do not require collateral or other security to support customer receivables.
| q. | Research and Development
Research and development expenses are charged to earnings as incurred and were $4.8 million, $1.7 million and $2.5 million in 2015, 2014 and 2013, respectively.
| r. | Reclassification of Prior Year Presentation
Certain prior year amounts were reclassified for consistency with the current period presentation. These reclassifications did not materially impact the consolidated financial statements.
| s. | New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of 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 ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Furthermore, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), which deferred the effective date of ASU No. 2014-09 for public business entities to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The effective date for the Company will be the first quarter of fiscal year 2018 using one of two retrospective application methods. The Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its financial statements and related disclosures and have not yet decided on a transition method. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and provide related footnote disclosures. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The standard allows for either a full retrospective or modified retrospective transition method. The Company does not expect this standard to have a material impact on the Company’s financial statements upon adoption. In April 2015, the FASB issued ASU No. 2015-03, Imputation of Interest. Also, in August 2015, the FASB issued ASU No. 2015-15, Imputation of Interest, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Agreements These ASUs simplify the presentation of debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by these ASUs. The guidance provided in ASU No. 2015-03 did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements, therefore, ASU No. 2015-15 provided authoritative guidance permitting an entity to defer and present debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. These ASUs are effective for annual and interim reporting periods beginning after December 15, 2015. The standard requires a retrospective approach where the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The standard also requires compliance with applicable disclosures for a change in an accounting principle. The Company does not expect these standards to have a material impact on the Company’s consolidated financial statements upon adoption. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This ASU, which applies to inventory that is measured using any method other than the last-in, first-out (LIFO) or retail inventory method, requires that entities measure inventory at the lower of cost or net realizable value. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and should be applied on a prospective basis. The Company is currently assessing the potential impact of adopting this guidance, but does not, at this time, anticipate a material impact to its consolidated results of operations, financial position, or cash flows. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This amendment changes how deferred taxes are recognized by eliminating the requirement of presenting deferred tax liabilities and assets as current and noncurrent on the balance sheet. Instead, the requirement will be to classify all deferred tax liabilities and assets as noncurrent. ASU 2015-17 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, with earlier adoption permitted. ASU 2015-17 can be adopted either prospectively or retrospectively to all periods presented. The Company currently plans on adopting ASU 2015-17 prospectively during fiscal year 2016. Upon adoption of ASU 2015-17, deferred income taxes classified as current assets and liabilities will be presented as non-current items.

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