Company Quick10K Filing
Altra Industrial Motion
Price28.50 EPS1
Shares65 P/E22
MCap1,841 P/FCF10
Net Debt1,454 EBIT109
TEV3,295 TEV/EBIT30
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-06
10-K 2019-12-31 Filed 2020-02-27
10-Q 2019-09-30 Filed 2019-10-28
10-Q 2019-06-30 Filed 2019-07-26
10-Q 2019-03-31 Filed 2019-05-03
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-07
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-02-23
10-Q 2017-09-30 Filed 2017-10-25
10-Q 2017-06-30 Filed 2017-07-27
10-Q 2017-03-31 Filed 2017-05-02
10-K 2016-12-31 Filed 2017-02-27
10-Q 2016-09-30 Filed 2016-10-26
10-Q 2016-06-30 Filed 2016-07-22
10-Q 2016-03-31 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-10-27
10-Q 2015-06-30 Filed 2015-07-24
10-Q 2015-03-31 Filed 2015-05-04
10-K 2014-12-31 Filed 2015-02-26
10-Q 2014-09-30 Filed 2014-10-27
10-Q 2014-06-30 Filed 2014-07-29
10-Q 2014-03-31 Filed 2014-04-29
10-K 2013-12-31 Filed 2014-02-26
10-Q 2013-09-28 Filed 2013-10-29
10-Q 2013-06-29 Filed 2013-07-26
10-Q 2013-03-30 Filed 2013-04-29
10-K 2012-12-31 Filed 2013-02-25
10-Q 2012-09-29 Filed 2012-11-07
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-04-30
10-K 2011-12-31 Filed 2012-02-24
10-Q 2011-10-01 Filed 2011-11-03
10-Q 2011-07-02 Filed 2011-08-09
10-Q 2011-04-02 Filed 2011-05-02
10-K 2010-12-31 Filed 2011-02-28
10-Q 2010-10-02 Filed 2010-11-03
10-Q 2010-07-03 Filed 2010-08-03
10-Q 2010-04-03 Filed 2010-05-05
10-K 2009-12-31 Filed 2010-03-09
8-K 2020-04-30 Earnings, Exhibits
8-K 2020-04-28 Shareholder Vote
8-K 2020-04-14 Other Events
8-K 2020-03-16 Off-BS Arrangement
8-K 2020-02-13 Earnings, Exhibits
8-K 2020-02-10
8-K 2019-10-24 Earnings, Exhibits
8-K 2019-07-25 Earnings, Exhibits
8-K 2019-04-26 Exhibits
8-K 2019-04-24 Shareholder Vote
8-K 2019-02-21 Exhibits
8-K 2019-02-12 Officers
8-K 2018-10-25 Exhibits
8-K 2018-10-01 Enter Agreement, M&A, Off-BS Arrangement, Officers, Amend Bylaw, Other Events, Exhibits
8-K 2018-09-26 Other Events
8-K 2018-09-14 Other Events
8-K 2018-09-07 Other Events, Exhibits
8-K 2018-09-06 Other Events
8-K 2018-09-04 Shareholder Vote, Other Events
8-K 2018-08-23 Other Events, Exhibits
8-K 2018-07-26 Other Events, Exhibits
8-K 2018-04-27 Earnings, Other Events, Exhibits
8-K 2018-04-24 Shareholder Vote
8-K 2018-03-07 Other Events, Exhibits
8-K 2018-03-07 Enter Agreement, Exhibits
8-K 2018-02-21 Earnings, Exhibits
8-K 2018-02-12 Officers

AIMC 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 aimc-ex311_9.htm
EX-31.2 aimc-ex312_6.htm
EX-32.1 aimc-ex321_8.htm
EX-32.2 aimc-ex322_7.htm

Altra Industrial Motion Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
4.43.52.61.80.90.02012201420172020
Assets, Equity
0.50.40.30.10.0-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

aimc-10q_20200331.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2020

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to

Commission File Number: 001-33209

 

ALTRA INDUSTRIAL MOTION CORP.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

61-1478870

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

300 Granite Street, Suite 201, Braintree, MA

 

02184

(Address of principal executive offices)

 

(Zip Code)

 

(781) 917-0600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

AIMC

NASDAQ Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

☐ 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 1, 2020, there were 64,647,128 outstanding shares of the registrant’s common stock, $0.001 par value per share.

 

 


TABLE OF CONTENTS

 

 

 

 

Page #

PART I - FINANCIAL INFORMATION

 

 

Item 1.

 

Financial Statements (unaudited)

 

1

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

Condensed Consolidated Statement of Operations

 

2

 

 

Condensed Consolidated Statements of Comprehensive Income

 

3

 

 

Condensed Consolidated Statements of Cash Flows

 

4

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

5

 

 

Notes to Unaudited Condensed Consolidated Interim Financial Statements

 

6

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

32

Item 4.

 

Controls and Procedures

 

33

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

34

Item 1A.

 

Risk Factors

 

34

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

34

Item 3.

 

Defaults Upon Senior Securities

 

34

Item 4.

 

Mine Safety Disclosures

 

34

Item 5.

 

Other Information

 

35

Item 6.

 

Exhibits

 

35

 

 

 

 

SIGNATURES

 

36

 

 


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Balance Sheets

Amounts in millions, except share amounts

 

 

 

March 31, 2020

 

 

December 31, 2019

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

326.9

 

 

$

167.3

 

Trade receivables, less allowance for credit losses of $5.3 and $5.1 million at

   March 31, 2020 and December 31, 2019, respectively

 

 

242.9

 

 

 

243.2

 

Inventories

 

 

229.4

 

 

 

222.5

 

Income tax receivable

 

 

4.6

 

 

 

5.2

 

Prepaid expenses and other current assets

 

 

32.3

 

 

 

29.1

 

Total current assets

 

 

836.1

 

 

 

667.3

 

Property, plant and equipment, net

 

 

343.4

 

 

 

354.4

 

Goodwill

 

 

1,528.3

 

 

 

1,694.9

 

Intangible assets, net

 

 

1,457.7

 

 

 

1,502.4

 

Deferred income taxes

 

 

1.0

 

 

 

3.0

 

Other non-current assets

 

 

9.5

 

 

 

25.1

 

Operating lease right of use assets

 

 

40.2

 

 

 

36.6

 

Total assets

 

$

4,216.2

 

 

$

4,283.7

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

154.4

 

 

$

154.7

 

Accrued payroll

 

 

49.4

 

 

 

58.3

 

Accruals and other current liabilities

 

 

85.3

 

 

 

82.0

 

Income tax payable

 

 

18.5

 

 

 

13.2

 

Current portion of long-term debt

 

 

17.2

 

 

 

18.0

 

Operating lease liabilities

 

 

12.8

 

 

 

13.5

 

Total current liabilities

 

 

337.6

 

 

 

339.7

 

Long-term debt - less current portion

 

 

1,658.5

 

 

 

1,563.8

 

Deferred income taxes

 

 

357.4

 

 

 

369.1

 

Pension liabilities

 

 

30.1

 

 

 

30.8

 

Long-term taxes payable

 

 

2.7

 

 

 

4.5

 

Other long-term liabilities

 

 

43.8

 

 

 

28.8

 

Operating lease liabilities, net of current portion

 

 

29.0

 

 

 

24.7

 

Commitments and Contingencies (Note 16)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock ($0.001 par value per share, 120,000,000 shares authorized,

   64,564,526 and 64,222,603 shares issued and outstanding at March 31, 2020

   and December 31, 2019, respectively)

 

 

0.1

 

 

 

0.1

 

Additional paid-in capital

 

 

1,698.1

 

 

 

1,696.7

 

Retained earnings

 

 

187.7

 

 

 

315.4

 

Accumulated other comprehensive loss

 

 

(128.8

)

 

 

(89.9

)

Total stockholders’ equity

 

 

1,757.1

 

 

 

1,922.3

 

Total liabilities and stockholders’ equity

 

$

4,216.2

 

 

$

4,283.7

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

1


ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Statements of Operations

Amounts in millions, except per share data

 

 

 

Quarter Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Net sales

 

$

434.2

 

 

$

482.8

 

Cost of sales

 

 

281.2

 

 

 

307.9

 

Gross profit

 

 

153.0

 

 

 

174.9

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

87.1

 

 

 

90.9

 

Impairment of goodwill and intangible asset

 

 

147.5

 

 

 

 

Research and development expenses

 

 

14.8

 

 

 

15.3

 

Restructuring costs

 

 

1.6

 

 

 

2.3

 

 

 

 

251.0

 

 

 

108.5

 

(Loss)/Income from operations

 

 

(98.0

)

 

 

66.4

 

Other non-operating income and expense:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

17.4

 

 

 

19.8

 

Other non-operating (income)/expense, net

 

 

(1.5

)

 

 

1.1

 

 

 

 

15.9

 

 

 

20.9

 

(Loss)/Income before income taxes

 

 

(113.9

)

 

 

45.5

 

Provision for income taxes

 

 

2.7

 

 

 

10.3

 

Net (loss)/income

 

$

(116.6

)

 

$

35.2

 

Weighted average shares, basic

 

 

64.5

 

 

 

64.2

 

Weighted average shares, diluted

 

64.5

 

 

64.4

 

Net (loss)/income per share:

 

 

 

 

 

 

 

 

Basic

 

$

(1.81

)

 

$

0.55

 

Diluted

 

$

(1.81

)

 

$

0.55

 

Cash dividend declared per share

 

$

0.17

 

 

$

0.17

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

2


ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Statements of Comprehensive Income

(Amounts in millions)

 

 

 

Quarter Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Net (Loss)/Income

 

$

(116.6

)

 

$

35.2

 

Other Comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(58.4

)

 

 

(12.5

)

Change in pension liability adjustment

 

 

(0.1

)

 

 

(0.3

)

Change in fair value of derivative financial instruments, net of tax

 

 

19.6

 

 

 

11.5

 

Total other comprehensive loss:

 

 

(38.9

)

 

 

(1.3

)

Comprehensive (loss)/income

 

$

(155.5

)

 

$

33.9

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

3


ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Statements of Cash Flows

(Amounts in millions)

 

 

 

Year to Date Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net (loss)/income

 

$

(116.6

)

 

$

35.2

 

Adjustments to reconcile net income to net operating cash flows:

 

 

 

 

 

 

 

 

Depreciation

 

 

14.6

 

 

 

14.3

 

Amortization of intangible assets

 

 

17.5

 

 

 

17.8

 

Amortization of deferred financing costs

 

 

1.1

 

 

 

1.1

 

Impairment of goodwill and intangible asset

 

 

147.5

 

 

 

 

(Gain)/Loss on foreign currency, net

 

 

(2.0

)

 

 

1.0

 

Loss on disposal, impairment and other

 

 

 

 

 

0.3

 

Stock-based compensation

 

 

3.3

 

 

 

3.5

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade receivables

 

 

(4.7

)

 

 

(22.5

)

Inventories

 

 

(11.8

)

 

 

(10.6

)

Accounts payable, accrued payroll, accruals and current liabilities

 

 

(0.9

)

 

 

(4.9

)

Other current assets and liabilities

 

 

(10.8

)

 

 

18.5

 

Other operating assets and liabilities

 

 

(2.3

)

 

 

(14.4

)

Net cash provided by operating activities

 

 

34.9

 

 

 

39.3

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(8.2

)

 

 

(14.0

)

A&S acquisition purchase price adjustment

 

 

 

 

 

(13.5

)

Proceeds from sale of building

 

 

 

 

 

0.3

 

Proceeds from cross currency interest rate swap settlement

 

 

56.2

 

 

 

 

Net cash provided by (used in) investing activities

 

 

48.0

 

 

 

(27.2

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Payments on Term Loan Facility

 

 

(6.0

)

 

 

(15.0

)

Dividend payments

 

 

(11.3

)

 

 

(11.1

)

Net payments of financing leases, mortgages, and other obligations

 

 

(0.1

)

 

 

(0.2

)

Net (payments)/proceeds from China debt

 

 

(0.6

)

 

 

1.2

 

Shares surrendered for tax withholding

 

 

(1.9

)

 

 

(2.1

)

Additional borrowing under revolver

 

 

100.0

 

 

 

 

Net cash provided by (used in) financing activities

 

 

80.1

 

 

 

(27.2

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(3.4

)

 

 

(1.5

)

Net change in cash and cash equivalents

 

 

159.6

 

 

 

(16.6

)

Cash and cash equivalents at beginning of period

 

 

167.3

 

 

 

169.0

 

Cash and cash equivalents at end of period

 

$

326.9

 

 

$

152.4

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest paid on borrowings

 

$

12.5

 

 

$

11.4

 

Income taxes paid

 

$

9.6

 

 

$

7.9

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

4


ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Statements of Stockholders’ Equity

Amounts in millions

(Unaudited)

 

 

 

Common

Stock

 

 

Shares

 

 

Additional

Paid

in Capital

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Total

 

Balance at January 1, 2020

 

$

0.1

 

 

 

64.2

 

 

$

1,696.7

 

 

$

315.4

 

 

$

(89.9

)

 

$

1,922.3

 

Stock-based compensation and vesting

   of restricted stock, net of withholdings

 

 

 

 

 

0.4

 

 

 

1.4

 

 

 

 

 

 

 

 

 

1.4

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(116.6

)

 

 

 

 

 

(116.6

)

Dividends declared, $0.17 per share

 

 

 

 

 

 

 

 

 

 

 

(11.1

)

 

 

 

 

 

(11.1

)

Change in fair value of derivative financial

   instruments, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19.6

 

 

 

19.6

 

Minimum pension adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

(0.1

)

Cumulative foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(58.4

)

 

 

(58.4

)

Balance at March 31, 2020

 

$

0.1

 

 

 

64.6

 

 

$

1,698.1

 

 

$

187.7

 

 

$

(128.8

)

 

$

1,757.1

 

 

 

 

Common

Stock

 

 

Shares

 

 

Additional

Paid

in Capital

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Total

 

Balance at January 1, 2019

 

$

0.1

 

 

 

64.2

 

 

$

1,687.1

 

 

$

232.6

 

 

$

(71.6

)

 

$

1,848.2

 

Stock-based compensation and vesting

   of restricted stock, net of withholdings

 

 

 

 

 

0.1

 

 

 

1.4

 

 

 

 

 

 

 

 

 

1.4

 

Net income

 

 

 

 

 

 

 

 

 

 

 

35.2

 

 

 

 

 

 

35.2

 

Dividends declared, $0.17 per share

 

 

 

 

 

 

 

 

 

 

 

(11.1

)

 

 

 

 

 

(11.1

)

Change in fair value of derivative financial

   instruments, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.5

 

 

 

11.5

 

Minimum pension adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.3

)

 

 

(0.3

)

Cumulative foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12.5

)

 

 

(12.5

)

Balance at March 31, 2019

 

$

0.1

 

 

 

64.3

 

 

$

1,688.5

 

 

$

256.7

 

 

$

(72.9

)

 

$

1,872.4

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

 

 

5


ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

 

1. Organization and Nature of Operations

Headquartered in Braintree, Massachusetts, Altra Industrial Motion Corp. (the “Company,” “Altra,” “we,” or “our”) is a leading global designer, producer and marketer of a wide range of electro-mechanical power transmission and motion control products. The Company brings together strong brands with production facilities in seventeen countries. Altra’s leading brands include Ameridrives Couplings, Bauer Gear Motor, Bibby Turboflex, Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian Couplings, Huco, Industrial Clutch, Inertia Dynamics, Jacobs Vehicle Systems, Kilian Manufacturing, Kollmorgen, Lamiflex Couplings, Marland Clutch, Matrix, Nuttall Gear, Portescap, Stieber Clutch, Stromag, Svendborg Brakes, TB Wood’s, Thomson, Twiflex, Warner Electric, Warner Linear, and Wichita Clutch.

 

 

2. Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles in the United States, or GAAP. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 27, 2020 (the “2019 Annual Report on Form 10-K”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position and cash flows for the interim periods presented.  The results are not necessarily indicative of future results.  The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

 

 

3. Recent Accounting Standards

Recent Accounting Pronouncements

 

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the use of the current expected credit loss impairment model to estimate credit losses on certain types of financial instruments, including trade receivables. The model requires an estimate of expected credit losses, measured over the contractual life of an asset, that considers information about past events, current conditions and a forecast of future economic conditions. The Company adopted the standard on January 1, 2020. The adoption of the standard did not have a material impact on our consolidated financial statements.

 

As a result of the adoption of ASU 2016-13, the Company has updated its significant accounting policy related to trade account receivables and allowances for credit losses as of March 31, 2020 from what was previously disclosed in our audited financial statements for the year ended December 31, 2019 as follows:

 

All trade account receivables are reported net of allowances for credit losses. The allowances for credit losses represent management’s best estimate of the credit losses expected from our trade account receivables over the life of the underlying assets. Assets with similar risk characteristics are pooled together for determination of their current expected credit losses. We regularly perform detailed reviews of our pooled assets to evaluate the collectability of receivables based on a combination of past, current, and future financial and qualitative factors that may affect customers’ ability to pay. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected.

 

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The amendments in ASU 2018-13 modify the disclosure requirements on fair value measurements. The Company adopted the standard on January 1, 2020. The adoption of the standard did not have a material impact on our consolidated financial statements.

 

6


ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

 

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This ASU provides relief from certain accounting consequences that could result from the global markets anticipated transition away from the use of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The relief provided by this ASU is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The optional amendments are effective as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the effect of the adoption of this standard to the Company.

 

4. Revenue Recognition

 

We sell our products through three primary commercial channels: original equipment manufacturers (OEMs), industrial distributors and direct to end users. Each of our segments sells similar products, which are balanced across end-user industries including, without limitation, energy, food processing, general industrial, material handling, mining, transportation, industrial automation, robotics, medical devices, and turf & garden.

 

As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment from the Company’s manufacturing site or delivery to the customer’s named location. In determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. In certain circumstances, the Company manufactures customized product without alternative use for its customers, which would generally result in the transfer of control over time.  The Company has evaluated the amount of revenue subject to recognition over time and concluded that it is immaterial.

 

The following table disaggregates our revenue for each reportable segment. The Company believes that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

 

 

 

 

Quarter Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

Net Sales:

 

 

 

 

 

 

 

 

Power Transmission Technologies

 

$

216.7

 

 

$

234.9

 

Automation & Specialty

 

 

218.6

 

 

 

249.1

 

Inter-segment eliminations

 

 

(1.1

)

 

 

(1.2

)

Net sales

 

$

434.2

 

 

$

482.8

 

 

Net sales by geographic region based on point of shipment origin are as follows:

 

 

 

Net Sales

 

 

 

Quarter Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

North America (primarily U.S.)

 

$

245.3

 

 

$

273.0

 

Europe excluding Germany

 

 

74.8

 

 

 

81.7

 

Germany

 

 

52.5

 

 

 

62.2

 

Asia and other

 

 

61.6

 

 

 

65.9

 

Total

 

$

434.2

 

 

$

482.8

 

 

The payment terms and conditions in our customer contracts vary. In some cases, customers will partially prepay for their goods; in other cases, after appropriate credit evaluations, payment will be due in arrears. In addition, there are constraints that cause variability in the ultimate consideration to be recognized. These constraints typically include early payment discounts, volume rebates, rights of return, surcharges, and other customer considerations.

 

7


ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

 

A contract asset is created when the Company satisfies a performance obligation by transferring a promised good to the customer. Contract assets may represent conditional or unconditional rights to consideration. A right is conditional, and recorded as a contract asset, if for example the Company must first satisfy another performance obligation in the contract before it is entitled to payment from the customer. Contract assets are transferred to accounts receivable once the right becomes unconditional. A right is unconditional if nothing other than the passage of time is required before payment of that consideration is due. If the Company receives a customer payment prior to satisfying a performance obligation or in excess of estimates of what the Company expects to be entitled to, the payment is recorded as a contract liability. Contracts with payment in arrears are recognized as receivables.

The opening and closing balances of the Company’s contract liability and accounts receivable as of the year to date period ended March 31, 2020 are as follows:

 

 

 

Deferred