The accompanying notes are an integral part of these condensed financial statements.
The accompanying notes are an integral part of these condensed financial statements.
The accompanying notes are an integral part of these condensed financial statements.
The accompanying notes are an integral part of these condensed financial statements.
Notes to Unaudited Condensed Financial Statements
(In thousands, except par value and per share data)
Note
1. Business Description
Nature of Operations
ASV Holdings, Inc. (the “Company” or “ASV”) primarily designs, manufactures and markets compact track loaders and skid steer loaders as well as related parts for use primarily in the construction, landscaping, and agricultural industries. The Company’s headquarters and manufacturing facility is located in Grand Rapids, Minnesota. Products are marketed and sold in North America, Australia, New Zealand and Latin America.
Note
2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited financial statements, included herein, have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, the financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and have been consistently applied. These unaudited financial statements should be read in conjunction with the Company’s audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
The unaudited financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of March 31, 2019 and the results of operations for the three months ended March 31, 2019 and 2018. Results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019.
Critical Accounting Policies and Estimates
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require the Company to make estimates, judgments and assumptions that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures and contingencies. The Company evaluates estimates used in preparation of the accompanying financial statements on a continual basis. We describe our significant accounting policies in Note 2, “Summary of Significant Accounting Policies,” of the audited financial statements for the year ended December 31, 2018 included in the Annual Report on Form 10-K.
Recent Accounting Pronouncements
Recent accounting pronouncements are described in Note 11, “Recent Accounting Pronouncements.”
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company determines the allowance based on individual customer review and current economic conditions. The Company reviews its allowance for doubtful accounts at least quarterly. Individual balances exceeding a threshold amount that are over 90 days past due are reviewed individually for collectability. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered.
The balance of the allowance for doubtful accounts was $112 and $109 at March 31, 2019 and December 31, 2018, respectively.
Revenue Recognition
The Company’s revenues result from the sale of goods or services and reflect the consideration to which the Company expects to be entitled. The Company records revenue based on a five-step model in accordance with ASC 606,
Revenue from Contracts with
7
Customers
("ASC 606"). For its cust
omer contracts, the Company identifies the performance obligations (goods or services),
determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue
when (or as) the performance oblig
ation is satisfied. A good or service is transferred when the customer obtains control of that good or
service. The Company principally generates revenue from the sale of equipment and parts to dealers, distributors and Original
Equipment Manufacturer (“OE
M”) customers and recognizes revenue at a point in time when control transfers. The Company
recognizes revenue for each distinct good or service when control of the good or service has transferred to the customer. Transfer of
control is generally determine
d based on the shipping terms of the contract, with most of our sales recognized F.O.B. shipping point,
as that is the time we have a present right to payment, the customer takes possession of the goods, and the customer has the risks and
reward of ownersh
ip. For most of our contracts, the customer takes legal title upon shipment; however, under the terms of our contract
with certain international distributors, title does not transfer until we are paid for the goods. We retain title solely to maintain a
sec
urity interest in the assets and have concluded that such right is protective in nature and that control transfers at the time of
shipment based on the other control indicators. Generally, there is no-post shipment obligation on product sold other than sta
ndard
assurance-type warranty obligations in the normal and ordinary course of business, typically a twelve to eighteen-month warranty
period. Payment terms range from 0-60 days for domestic sales and 0-180 days for international sales.
Provisions for sales program incentives (such as wholesale subsidies, retail subsidies and customer cash), product returns, and discounts and allowances are variable consideration and are accounted for as a reduction of revenue and establishment of a liability (or contra asset receivable as appropriate) using the expected value method. The Company considers historical data in determining its best estimates of variable consideration. These estimates are reviewed regularly for appropriateness, considering also whether the estimates should be constrained in order to avoid a significant reversal of revenue recognition in a future period. Typically, all qualifying machine sales to distributors or dealers provide for program incentives that are accrued at the time of sales. If updated information or actual amounts are different from previous estimates of variable consideration, the revisions are included in the results for the period in which they become known through a cumulative effect adjustment to revenue. In addition, the Company’s contracts with customers generally do not include significant financing components or noncash consideration. The Company expenses incremental costs of obtaining a contract (primarily sales commissions) as selling, general and administrative expense in the Condensed Statements of Operations, because the amortization period would be less than one year.
The Company disaggregates revenue from contracts with customers by geographic location and major customer (see Concentrations of Business and Credit Risk) as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
Accrued Warranties
The Company records accruals for potential warranty claims based on its claim experience. The Company’s products are typically sold with a standard warranty covering defects that arise during a fixed period.
A liability for estimated warranty claims is accrued at the time of sale. The liability is established using historical warranty claim experience for each product sold. Historical claim experience may be adjusted for known design improvements or for the impact of unusual product quality issues. Warranty reserves are reviewed quarterly to ensure critical assumptions are updated for known events that may affect the potential warranty liability.
Litigation Claims
In determining whether liabilities should be recorded for pending litigation claims, the Company must assess the allegations and the likelihood that it will successfully defend itself. When the Company believes it is probable that it will not prevail in a particular matter, it will then record an estimate of the amount of liability based, in part, on advice of outside legal counsel.
Income Taxes
The Company’s provision for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary.
The Company is estimating an annual effective tax rate of 18.3% (excluding discrete items) for the year ending December 31, 2019. Our effective tax rate is affected by recurring items such as state and local taxes, a reduced federal tax rate for foreign derived intangible income and federal research and development credits.
For the three months ended March 31, 2019, the Company did not record an income tax benefit on its pre-tax loss of $(737) pursuant to the authoritative accounting literature prescribed in ASC 740-27-30-30 through 33.
8
For the three months ended March 31, 2018, the Company recorded an income tax benefit of $(81), which consists of a federal and state income tax benefit on its pre-tax loss of $(388).
At March 31, 2019, the Company did not have any uncertain tax positions. The Company records interest and penalties related to uncertain tax positions in the provision for income taxes in the accompanying Statement of Income.
Concentrations of Business and Credit Risk
Caterpillar Inc., an OEM customer, and CEG Distributions PTY Ltd., the Company’s Australian master distributor, accounted for 24% and 26% of the Company’s Net Sales for the three months ended March 31, 2019 and 2018 respectively, as well as 56% of the Company’s Accounts Receivable at March 31, 2019.
Sales by major customer consisted of the following for the three months ended March 31, 2019 and 2018:
|
|
For the Three Months Ended March 31,
|
|
|
For the Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
Percent
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
|
of Total
|
|
|
Amount
|
|
|
of Total
|
|
|
Amount
|
|
Caterpillar
|
|
17%
|
|
|
$
|
4,665
|
|
|
16%
|
|
|
$
|
4,822
|
|
CEG Distributions PTY Ltd.
|
|
7%
|
|
|
|
1,836
|
|
|
10%
|
|
|
|
2,895
|
|
Other
|
|
76%
|
|
|
|
20,837
|
|
|
74%
|
|
|
|
22,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
100%
|
|
|
$
|
27,338
|
|
|
100%
|
|
|
$
|
29,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Any disruptions to these two customer relationships could have adverse effects on the Company’s financial results. The Company manages dealer and OEM concentration risk by evaluating in advance the financial condition and creditworthiness of its dealers and OEM customers. The Company establishes an allowance for doubtful accounts receivable, if needed, based upon expected collectability. Any reserves established for doubtful accounts is re-evaluated on a case-by-case basis when it is believed the payment of specific amounts owed to us is unlikely to occur. The Company has secured a credit insurance policy for certain accounts with a policy limit of liability of not more than $8,600.
Revenue by geographic area consisted of the following for the three months ended March 31, 2019 and 2018:
|
|
For the Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
Percent
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
|
of Total
|
|
|
Amount
|
|
|
of Total
|
|
|
Amount
|
|
United States
|
|
84%
|
|
|
$
|
22,950
|
|
|
79%
|
|
|
$
|
23,627
|
|
Australia
|
|
10%
|
|
|
|
2,633
|
|
|
11%
|
|
|
|
3,361
|
|
Other
|
|
6%
|
|
|
|
1,755
|
|
|
10%
|
|
|
|
2,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
100%
|
|
|
$
|
27,338
|
|
|
100%
|
|
|
$
|
29,870
|
|
Note
3. Inventory
Inventory consisted of the following as of March 31, 2019 and December 31, 2018:
9
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
Raw materials and supplies
|
|
$
|
22,348
|
|
|
$
|
20,897
|
|
Work in process
|
|
|
54
|
|
|
|
36
|
|
Finished equipment and replacement parts
|
|
|
15,567
|
|
|
|
13,122
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37,969
|
|
|
$
|
34,055
|
|
Note 4. Intangible Assets
Intangible assets, net comprised the following as of March 31, 2019:
|
|
Weighted
|
|
|
Gross
|
|
|
|
|
|
|
Net
|
|
|
|
Average Life
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
|
(In Years)
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents and unpatented technology
|
|
|
10
|
|
|
$
|
8,000
|
|
|
$
|
(3,593
|
)
|
|
$
|
4,407
|
|
Tradename and trademarks
|
|
|
25
|
|
|
|
7,000
|
|
|
|
(1,198
|
)
|
|
|
5,802
|
|
Customer relationships
|
|
|
11
|
|
|
|
16,000
|
|
|
|
(6,115
|
)
|
|
|
9,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
$
|
31,000
|
|
|
$
|
(10,906
|
)
|
|
$
|
20,094
|
|
Intangible assets, net comprised the following as of December 31, 2018:
|
|
Weighted
|
|
|
Gross
|
|
|
|
|
|
|
Net
|
|
|
|
Average Life
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
.
|
|
(In Years)
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents and unpatented technology
|
|
|
10
|
|
|
$
|
8,000
|
|
|
$
|
(3,227
|
)
|
|
$
|
4,773
|
|
Tradename and trademarks
|
|
|
25
|
|
|
|
7,000
|
|
|
|
(1,128
|
)
|
|
|
5,872
|
|
Customer relationships
|
|
|
11
|
|
|
|
16,000
|
|
|
|
(5,915
|
)
|
|
|
10,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
$
|
31,000
|
|
|
$
|
(10,270
|
)
|
|
$
|
20,730
|
|
Amortization of other intangible assets for the three months ended March 31, 2019 and 2018 was $637.
Note 5. Accrued Warranties
The following table provides the changes in the Company’s product warranties:
|
|
Three Months Ended March 31,
|
|
|
Three Months Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Product warranty accrual balance, beginning of period
|
|
$
|
1,584
|
|
|
$
|
1,600
|
|
Liabilities accrued for warranties during the period
|
|
|
254
|
|
|
|
292
|
|
Warranty claims paid during the period
|
|
|
(381
|
)
|
|
|
(355
|
)
|
Changes in estimates
|
|
|
32
|
|
|
|
47
|
|
Product warranty accrual balance, end of period
|
|
$
|
1,489
|
|
|
$
|
1,584
|
|
Note 6
. Debt
Loan Facilities
On March 28, 2019, the Company entered into a Second Amendment (the “Second Amendment”) to the Amended and Restated Credit
Agreement with PNC Bank, National Association, as administrative agent (“PNC”). The principal modification to the Amended and
10
Restated Credit Agreement resulting from the S
econd Amendment replaces the maximum leverage ratio requirements for 2019 with a
minimum EBITDA covenant and beginning in March of 2020, removes the minimum EBITDA covenant and reverts to a leverage
ratio requirement of 2.75 to 1.00, which shall step down
to 2.25 to 1.00 by September 30, 2020. In addition, the applicable margin for
each advance under the credit agreement was increased by 50 basis points for the period from March 28, 2019 until the first business
day following receipt by PNC of the Company’s
certificate of compliance with the applicable leverage ratio for the quarter ended
March 31, 2020 and the inventory sub-limit was increased to $18 million.
Revolving Loan Facility with PNC
The Company’s $35,000 revolving loan facility with PNC includes two sub-facilities: (i) a $2,000 letter of credit sub-facility, and (ii) a $3,500 swing loan sub-facility, each of which is fully reserved against availability under the revolving loan facility. The facility matures on December 27, 2022.
The $35,000 revolving loan facility is a secured financing facility under which borrowing availability is limited to existing collateral as defined in the agreement. The maximum amount available is limited to (i) the sum of (a) up to 85% of Eligible Receivables, plus (b) 90% of Eligible Insured Foreign Receivables, plus (c) the lesser of (I) 95% of Eligible CAT Receivables, or $8,600 plus (ii) the lesser of (A) the sum of (I) up to 65% of the value of the Eligible Inventory (other than Eligible Inventory consisting of finished goods machines and service parts that are current), plus (II) 80% of the value of Eligible inventory consisting of finished goods machines, plus (III) 75% of the value of Eligible Inventory consisting of service parts that are current) or, (B) up to 90% of the appraised net orderly liquidation value of Eligible Inventory. Inventory collateral is capped at $18,000 less outstanding letters of credit and any reasonable reserves as established by the bank. At March 31, 2019, the maximum the Company could borrow based on available collateral was capped at $26,640.
At March 31, 2019, the Company had drawn $22,707 under the $35,000 revolving loan facility. The Company can opt to pay interest on the revolving credit facility at either a domestic rate plus a spread, or a LIBOR rate plus a spread. The domestic rate spread is initially fixed at 1.00% for revolving loan advances until delivery of certain reporting documents with respect to fiscal quarter ending March 31, 2018, at which point it ranges from 1.00% to 1.5% depending on the Average Undrawn Availability (as defined in the Amended and Restated Credit Agreement). The LIBOR spread is initially fixed at 2.00% for revolving loan advances until delivery of the same reporting documents, at which point it ranges from 2.00% to 2.5% depending on the Average Undrawn Availability. Funds borrowed under the LIBOR options can set the borrowing rate for periods of one, two, or three months. The weighted average interest rate for the period ended March 31, 2019 was 5.5%. Additionally, the bank assesses a 0.25% unused line fee that is payable quarterly.
Term Loan C with PNC
On December 27, 2017 the Company entered into a $15,000 term loan (“Term Loan C”) facility, with PNC as the administrative agent.
At March 31, 2019, the Company had an outstanding balance of $12,500, less $304 debt issuance costs, for net term loan debt of $12,196. The Company can opt to pay interest on the Term Loan C facility at either a domestic rate plus a spread, or a LIBOR rate plus a spread. For term loan advances the domestic rate spread is fixed at 3.75%, and the LIBOR spread is fixed at 4.75%. Funds borrowed under the LIBOR options can set the borrowing rate for periods of one, two, or three months. The weighted average interest rate for the period ending March 31, 2019 was 7.7%.
The Company is obligated to make quarterly principal payments of $500, which commenced on January 1, 2018. If the term loan is prepaid in full or in part prior to the maturity date, the Company will be required to pay a prepayment penalty. If paid prior to December 27, 2019 the prepayment penalty will be equal to 2.0% of the prepayment. The prepayment penalty percentage reduces to 1% on or after December 27, 2020, and no penalty if on or after the December 27, 2021. There will be no prepayment obligation in the event that the prepayment of the obligation in full is funded in connection with a refinancing for which PNC is the administrative agent. Any unpaid principal is due on maturity, which is December 27, 2022. Interest is payable monthly beginning on January 1, 2018.
Loan Agreements with State Agencies
In October 2017, the Company entered into two loan agreements with the State of Minnesota related to the establishment of a new parts distribution center in Grand Rapids, Minnesota. The first loan agreement is a $300 loan with a ten-year term at an interest rate of 3%, with loan forgiveness if certain criteria is met. The lender will forgive $150 of principal and all accrued interest should the Company attain and maintain agreed upon employment levels on the fifth anniversary date of the loan (and not otherwise be in
11
default) and will forgive the remaining $150 of principal and all accrued interest should the Company attain and maintain employment levels at the tenth anniversary of the loan. Should the Company not attain or maintain the agreed
upon levels of employment, $150 in principal plus accrued interest will be due on the fifth anniversary of the closing date with the remaining balance being due and payable on the due date of the loan. The second loan agreement is a $125 no interest loan
with a seventy-five-month term that includes partial forgiveness if certain criteria are met. The lender will forgive up to $50 of the $125 loan should ASV attain and maintain job creation goals and wage level commitments. The zero-interest loan is to be p
aid back through monthly payments over the term of the loan.
The establishment of the parts distribution center was completed, and loan proceeds disbursed during 2018.
Covenants
The Company’s indebtedness is collateralized by substantially all of the Company’s assets. The facilities contain customary limitations including, but not limited to, limitations on additional indebtedness, acquisitions, and payment of dividends. The Company is also required to comply with certain financial covenants as defined in the Amended and Restated Credit Agreement. The Company is limited to capital expenditures not to exceed $2,000 in any fiscal year. The revolving credit facility and the term loans require the Company to maintain a Minimum Fixed Charge Coverage ratio of not less than 1.20 to 1.0. Additionally, the term loans require, as per the Second Amendment, as described above, the Company attains a minimum EBITDA covenant. The Company was in compliance with all covenants when required to be measured during the quarter ended March 31, 2019.
Note
7. Equity
2017 Equity Incentive Plan
On May 11, 2017, the Company adopted the ASV Holdings, Inc. 2017 Equity Incentive Plan (the “2017 Plan”). The maximum number of shares of common stock reserved for issuance under the 2017 Plan is 1,250 shares. The total number of shares reserved for issuance however, can be adjusted to reflect certain corporate transactions or changes in the Company’s capital structure. The Company’s employees and members of the board of directors who are not the Company’s employees or employees of the Company’s affliliates are eligible to participate in the 2017 Plan. The 2017 Plan is administered by the compensation committee of the Company’s board of directors. The 2017 Plan provides that the committee has the authority to, among other things, select plan participants, determine the type and amount of rewards, determine the award terms, fix all other conditions of any awards, interpret the plan and any plan awards. Under the 2017 Plan, the committee can grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units. The 2017 Plan requires that the exercise price for stock options and stock appreciation rights be not less then fair market value of the Company’s common stock on date of grant.
The Company awarded a total of 100 restricted stock units to directors and employees under the 2017 Plan during the quarter ended March 31, 2019. The restricted stock units are subject to the same conditions as the restricted stock awards except the restricted stock units will not have voting rights and the common stock will not be issued until the vesting criteria are satisfied.
The following table contains information regarding restricted stock units:
|
March 31, 2019
|
|
Outstanding on December 31, 2018
|
|
77
|
|
Units granted during the period
|
|
100
|
|
Vested and issued, net of repurchase for income tax withholding
|
|
(46
|
)
|
Outstanding on March 31, 2019
|
|
131
|
|
On January 10, 2019, the Company granted an aggregate of 60 restricted stock units to employees pursuant to the 2017 Plan. Restricted stock units of 20, 20, and 20 vest in 2020, 2021 and 2022, respectively.
On March 11, 2019, the Company granted 39 restricted stock units to directors pursuant to the 2017 Plan. These stock units immediately vested.
On March 11, 2019, the Company granted an aggregate of 1 restricted stock unit to employees pursuant to the 2017 Plan. This stock unit immediately vested.
The value of the restricted stock is being charged to compensation expense over the vesting period and the Company has elected to account for foreitures as they occur. Compensation expense includes expense related to restricted stock units of $136 and $149 for the quarter ended March 31, 2019 and 2018, respectively. Unrecognized compensation expense related to non-vested restricted stock units will be recognized as follows: $274, $238, and $62 for the remainder of 2019, 2020, and 2021, respectively.
12
Note
8
.
Commitments
and Contingencies
The Company is involved in various legal proceedings, including product liability, general liability, workers’ compensation liability, and employment litigation, which have arisen in the normal course of operations. The Company is insured for product liability, general liability, workers’ compensation, employer’s liability, property damage and other insurable risk required by law or contract, with retained liability or deductibles. The Company has recorded and maintains an estimated liability in the amount of management’s estimate of the Company’s aggregate exposure for such retained liabilities and deductibles. For such retained liabilities and deductibles, the Company determines its exposure based on probable loss estimations, which requires such losses to be both probable and the amount or range of probable loss to be estimable. The Company believes it has made appropriate and adequate reserves and accruals for its current contingencies.
Note 9. Leases
The Company has operating leases for its distribution center, research and development facilities, automobiles, and certain equipment. The leases have remaining lease terms of 1 year to 16 years, some of which include options to extend the leases for up to 6 years.
The distribution center lease agreement includes both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs) which can be accounted for as a single lease component. The Company has not elected the practical expedient to group lease and non-lease components for applicable leases.
Leases may include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion. Renewals to extend the lease terms for the distribution center are included in our Right of Use (“ROU”) operating lease assets and lease liabilities as they are reasonably certain of exercise. The renewal options are evaluated with each lease and when they are reasonably certain of exercise, the renewal period is included in our lease term.
As most of our leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.
Certain operating leases for vehicles contain residual value guarantee provisions which would generally become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value. The aggregate residual value guarantee related to these leases was approximately $29. We believe the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is remote. To the extent our fleet contains vehicles we estimate will settle at a gain, such gains on these vehicles will be recognized when we sell the vehicle.
The components of lease expense were as follows for the quarter ended March 31, 2019:
|
|
|
|
|
Total Operating Lease Cost
|
|
Operating lease cost
|
|
$
|
62.2
|
|
Maturities for all operating lease liabilities are as follows as of March 31, 2019:
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
2019
|
$
|
176
|
|
2020
|
237
|
|
2021
|
222
|
|
2022
|
214
|
|
2023
|
163
|
|
2024 and thereafter
|
160
|
|
Total lease payments
|
$
|
1,172
|
|
Less: Interest
|
|
(138
|
)
|
Present value of lease liabilities
|
$
|
1,034
|
|
The weighted average remaining lease terms and discount rates for all operating lease were as follows as of March 31, 2019:
13
Remaining lease term and discount rate:
|
|
|
|
Weighted average remaining lease term (years)
|
|
|
|
Leased facilities, equipment and vehicles
|
3.64
|
|
|
|
|
|
Weighted average discount rate
|
|
|
|
Leased facilities, equipment and vehicles
|
5.18%
|
|
Supplemental cash flow information related to the Company’s operating leases was as follows for the quarter ended March 31, 2019:
|
Three Month Period
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
Operating cash outflow from operating leases
|
$
|
59
|
|
Note
10. Related Party Transactions
Included in the Company’s Condensed Statements of Operations are sales to Terex of $28 and $31 for the three months ended March 31, 2019 and 2018, respectively. Also included are sales to Manitex of $1 and $0 for the three months ended March 31, 2019 and 2018, respectively. The Company recorded purchases from Terex of $1,542 and $2,182 for the three months ended March 31, 2019 and 2018, respectively, which are primarily for shared freight services. The Company also expensed $300 and $242 under a Terex Cross Marketing Agreement and Terex Services Agreement respectively, for the three-month period ended March 31, 2018.
Receivables from affiliates include $22 due from Terex March 31, 2019, and $30 due from Terex and $3 due from Manitex (total $33) at December 31, 2018.
Payables to affiliates includes $416 due to Terex March 31, 2019, and $1,200 due to Terex at December 31, 2018.
Note
11. Recent Accounting Pronouncements
Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02,
Leases,
which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The original guidance required application on a modified retrospective basis with the earliest period presented. In August 2018, the FASB issued ASU 2018-11,
Targeted Improvements to ASC 842,
which included an option to not restate comparative periods in transition and elect to use the effective date of ASC 842,
Leases,
as the date of initial application of transition, which we elected. As a result of the adoption of ASC 842 on January 1, 2019, the Company recorded both operating lease right-of-use (“ROU”) assets of $1.0 million and lease liabilities of $1.0 million. The adoption of ASC 842 had an immaterial impact on our Condensed Statements of Operations and Condensed Statements of Cash Flows for the three-month period ended March 31, 2019. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard which allowed us to carry forward the historical lease classification.
Additional information and disclosures required by the new standard are contained in Note 9,
Leases.
January 1, 2019, the Company adopted the FASB ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230): Statement of Cash Flows” (“ASU 2016-15”), which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. ASU 2016-15 also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. ASU 2016-15 is effective for fiscal years and interim periods beginning after December 15, 2018, for emerging growth companies. This had no effect on the Company’s financial statements.
January 1, 2019, the Company adopted
the FASB ASU No. 2017-09, “Compensation – Stock Compensation: Scope of Modification Accounting.” This ASU is intended to provide guidance about which changes to the terms or conditions on a share-based payment
14
award require an entity to apply modification accountin
g. This new standard is effective for reporting periods beginning after December 15, 2018, and interim periods within that reporting period, for emerging growth companies, with early adoption permitted.
This had no effect on the Company’s financial stat
ements.