Company Quick10K Filing
Quick10K
Stoneridge
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$31.17 29 $894
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-08-05 Officers
8-K 2019-07-31 Earnings, Regulation FD, Exhibits
8-K 2019-06-05 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2019-06-04 Regulation FD, Exhibits
8-K 2019-05-14 Shareholder Vote
8-K 2019-05-07 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-05-01 Earnings, Regulation FD, Exhibits
8-K 2019-04-22 Officers
8-K 2019-04-01 Enter Agreement, M&A, Exhibits
8-K 2019-03-01 Officers, Exhibits
8-K 2019-02-27 Earnings, Regulation FD, Exhibits
8-K 2019-01-16 Earnings, Regulation FD, Exhibits
8-K 2019-01-10 Exit Costs, Other Events, Exhibits
8-K 2019-01-02 Other Events, Exhibits
8-K 2018-12-06 Other Events, Exhibits
8-K 2018-11-09 Exit Costs
8-K 2018-08-01 Earnings, Regulation FD, Exhibits
8-K 2018-05-15 Enter Agreement, Shareholder Vote, Exhibits
8-K 2018-02-28 Earnings, Regulation FD, Exhibits
8-K 2018-01-15 Earnings, Regulation FD, Exhibits
GNTX Gentex 6,620
DORM Dorman Products 2,309
ADNT Adient 1,867
VNE Veoneer 1,289
AXL American Axle & Manufacturing Holdings 703
TOWR Tower International 638
LDL Lydall 340
SUP Superior Industries International 67
SORL Sorl Auto Parts 63
UFAB Unique Fabricating 26
SRI 2019-06-30
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 sri-20190630ex31138e15c.htm
EX-31.2 sri-20190630ex312605694.htm
EX-32.1 sri-20190630ex32192d1cb.htm
EX-32.2 sri-20190630ex3228f82f8.htm

Stoneridge Earnings 2019-06-30

SRI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

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Table of Contents

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 quarter ended June 30, 2019

Commission file number: 001-13337

STONERIDGE INC

(Exact name of registrant as specified in its charter)

Ohio

34-1598949

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

39675 MacKenzie Drive, Suite 400, Novi, Michigan

48377

(Address of principal executive offices)

(Zip Code)

(248) 489-9300

Registrant’s telephone number, including area code

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

Common Shares, without par value SRI New York Stock Exchange

Title of each class Trading symbol(s) Name of each exchange on which registered

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, a smaller reporting company, or an emerging growth company. See definition 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 checkmark 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 Act). Yes No

The number of Common Shares, without par value, outstanding as of July 25, 2019 was 27,381,333.

1

Table of Contents

STONERIDGE, INC. AND SUBSIDIARIES

INDEX

 

Page

PART I–FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018

4

Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2019 and 2018

5

Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, 2019 and 2018

6

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2019 and 2018

7

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2019 and 2018

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

Item 2.

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

31

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

43

Item 4.

Controls and Procedures

43

PART II–OTHER INFORMATION

44

Item 1.

Legal Proceedings

44

Item 1A.

Risk Factors

44

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

44

Item 3.

Defaults Upon Senior Securities

44

Item 4.

Mine Safety Disclosures

45

Item 5.

Other Information

45

Item 6.

Exhibits

46

Signatures

47

2

Table of Contents

Forward-Looking Statements

Portions of this report on Form 10-Q contain “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this report and may include statements regarding the intent, belief or current expectations of the Company, with respect to, among other things, our (i) future product and facility expansion, (ii) acquisition strategy, (iii) investments and new product development, (iv) growth opportunities related to awarded business and (v) operational expectations. Forward-looking statements may be identified by the words “will,” “may,” “should,” “designed to,” “believes,” “plans,” “projects,” “intends,” “expects,” “estimates,” “anticipates,” “continue,” and similar words and expressions. The forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among other factors:

the reduced purchases, loss or bankruptcy of a major customer or supplier;
the costs and timing of business realignment, facility closures or similar actions;
a significant change in automotive, commercial, off-highway, motorcycle or agricultural vehicle production;
competitive market conditions and resulting effects on sales and pricing;
the impact on changes in foreign currency exchange rates on sales, costs and results, particularly the Argentinian peso, Brazilian real, Chinese renminbi, euro, Mexican peso and Swedish krona;
our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions;
customer acceptance of new products;
our ability to successfully launch/produce products for awarded business;
adverse changes in laws, government regulations or market conditions, including tariffs, affecting our products or our customers’ products;
our ability to protect our intellectual property and successfully defend against assertions made against us;
liabilities arising from warranty claims, product recall or field actions, product liability and legal proceedings to which we are or may become a party, or the impact of product recall or field actions on our customers;
labor disruptions at our facilities or at any of our significant customers or suppliers;
the ability of our suppliers to supply us with parts and components at competitive prices on a timely basis, including the impact of potential tariffs and trade considerations on their operations and output;
the amount of our indebtedness and the restrictive covenants contained in the agreements governing our indebtedness, including our revolving credit facility;
capital availability or costs, including changes in interest rates or market perceptions;
the failure to achieve the successful integration of any acquired company or business;
risks related to a failure of our information technology systems and networks, and risks associated with current and emerging technology threats and damage from computer viruses, unauthorized access, cyber-attack and other similar disruptions; and
those items described in Part I, Item IA (“Risk Factors”) of the Company’s 2018 Form 10-K.

In addition, the forward-looking statements contained herein represent our estimates only as of the date of this filing and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements or otherwise.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

STONERIDGE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

(in thousands)

    

2019

    

2018

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

51,503

$

81,092

Accounts receivable, less reserves of $1,592 and $1,243, respectively

151,687

139,076

Inventories, net

100,751

79,278

Prepaid expenses and other current assets

32,148

20,731

Total current assets

336,089

320,177

Long-term assets:

Property, plant and equipment, net

116,954

112,213

Intangible assets, net

58,890

62,032

Goodwill

36,377

36,717

Operating lease right-of-use asset

18,970

-

Investments and other long-term assets, net

28,767

28,380

Total long-term assets

259,958

239,342

Total assets

$

596,047

$

559,519

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of debt

$

869

$

1,533

Accounts payable

100,659

87,894

Accrued expenses and other current liabilities

61,987

57,880

Total current liabilities

163,515

147,307

Long-term liabilities:

Revolving credit facility

103,500

96,000

Long-term debt, net

732

983

Deferred income taxes

15,042

14,895

Operating lease long-term liability

14,565

-

Other long-term liabilities

17,194

17,068

Total long-term liabilities

151,033

128,946

Shareholders' equity:

Preferred Shares, without par value, 5,000 shares authorized, none issued

-

-

Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 27,367 and 28,488 shares outstanding at June 30, 2019 and December 31, 2018, respectively, with no stated value

-

-

Additional paid-in capital

223,831

231,647

Common Shares held in treasury, 1,599 and 478 shares at June 30, 2019 and December 31, 2018, respectively, at cost

(50,689)

(8,880)

Retained earnings

195,672

146,251

Accumulated other comprehensive loss

(87,315)

(85,752)

Total shareholders' equity

281,499

283,266

Total liabilities and shareholders' equity

$

596,047

$

559,519

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

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STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended

Six months ended

June 30,

June 30,

(in thousands, except per share data)

2019

    

2018

2019

    

2018

Net sales

$

222,241

$

220,602

$

440,538

$

446,532

Costs and expenses:

Cost of goods sold

165,414

153,184

322,858

311,145

Selling, general and administrative

27,522

35,256

63,110

72,517

Gain on disposal of non-core products, net

(33,921)

-

(33,599)

-

Design and development

14,040

12,981

27,284

26,842

Operating income

49,186

19,181

60,885

36,028

Interest expense, net

1,001

1,170

2,004

2,524

Equity in earnings of investee

(548)

(665)

(912)

(1,186)

Other income, net

(97)

(264)

(529)

(863)

Income before income taxes

48,830

18,940

60,322

35,553

Provision for income taxes

9,066

3,820

10,901

7,053

Net income

$

39,764

$

15,120

$

49,421

$

28,500

Earnings per share:

Basic

$

1.43

$

0.53

$

1.75

$

1.01

Diluted

$

1.41

$

0.52

$

1.72

$

0.99

Weighted-average shares outstanding:

Basic

27,887

28,449

28,208

28,349

Diluted

28,294

28,978

28,716

28,907

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

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STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three months ended

Six months ended

June 30,

June 30,

(in thousands)

2019

2018

2019

2018

Net income

$

39,764

$

15,120

$

49,421

$

28,500

Other comprehensive (loss) income, net of tax:

Foreign currency translation

2,311

(17,421)

(1,493)

(13,527)

Unrealized (loss) gain on derivatives (1)

(112)

(159)

(70)

636

Other comprehensive (loss) income, net of tax

2,199

(17,580)

(1,563)

(12,891)

Comprehensive income (loss)

$

41,963

$

(2,460)

$

47,858

$

15,609

(1)Net of tax benefit of $(30) and $(41) for the three months ended June 30, 2019 and 2018, respectively. Net of tax expense (benefit) of $(19) and $171 for the six months ended June 30, 2019 and 2018, respectively.

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

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STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six months ended June 30,  (in thousands)

    

2019

    

2018

    

OPERATING ACTIVITIES:

Net income

$

49,421

$

28,500

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Depreciation

11,819

11,535

Amortization, including accretion and write-off of deferred financing costs

3,464

3,503

Deferred income taxes

3,804

1,765

Earnings of equity method investee

(912)

(1,186)

Gain on sale of fixed assets

(26)

(18)

Share-based compensation expense

3,594

2,838

Tax benefit related to share-based compensation expense

(752)

(879)

Gain on disposal of non-core products, net

(33,599)

-

Change in fair value of earn-out contingent consideration

921

1,417

Changes in operating assets and liabilities, net of effect of business combination:

Accounts receivable, net

(13,440)

(11,594)

Inventories, net

(21,798)

(10,610)

Prepaid expenses and other assets

(9,678)

(8,417)

Accounts payable

13,604

8,678

Accrued expenses and other liabilities

242

3,379

Net cash provided by operating activities

6,664

28,911

INVESTING ACTIVITIES:

Capital expenditures

(17,479)

(16,845)

Proceeds from sale of fixed assets

49

41

Insurance proceeds for fixed assets

-

1,403

Proceeds from disposal of non-core products

34,386

-

Investment in venture capital fund

(1,200)

-

Net cash provided by (used for) investing activities

15,756

(15,401)

FINANCING ACTIVITIES:

Revolving credit facility borrowings

55,000

26,500

Revolving credit facility payments

(47,500)

(37,500)

Proceeds from issuance of debt

55

273

Repayments of debt

(999)

(2,459)

Earn-out consideration cash payment

(3,394)

-

Other financing costs

(873)

-

Common Share repurchase program

(50,000)

-

Repurchase of Common Shares to satisfy employee tax withholding

(3,209)

(4,242)

Net cash used for financing activities

(50,920)

(17,428)

Effect of exchange rate changes on cash and cash equivalents

(1,089)

(3,120)

Net change in cash and cash equivalents

(29,589)

(7,038)

Cash and cash equivalents at beginning of period

81,092

66,003

Cash and cash equivalents at end of period

$

51,503

$

58,965

Supplemental disclosure of cash flow information:

Cash paid for interest

$

2,198

$

2,679

Cash paid for income taxes, net

$

7,100

$

7,967

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

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STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

Number of 

Accumulated

 

Common 

Number of

Additional

Common

other

Total

Shares

 treasury

paid-in

Shares held 

Retained

comprehensive

shareholders'

(in thousands)

    

outstanding

    

shares

    

capital

    

in treasury

    

earnings

    

loss

    

equity

BALANCE DECEMBER 31, 2017

 

28,180

 

786

 

$

228,486

 

$

(7,118)

 

$

92,264

 

$

(69,560)

 

$

244,072

Net income

 

 

 

 

 

13,380

 

 

13,380

Unrealized gain on derivatives, net

 

 

 

 

 

 

795

 

795

Currency translation adjustments

 

 

 

 

 

 

3,894

 

3,894

Issuance of Common Shares

 

446

 

(446)

 

 

 

 

 

Repurchased Common Shares for treasury

 

(136)

 

136

 

 

(1,387)

 

 

 

(1,387)

Share-based compensation

(925)

(925)

Cumulative effect of an accounting change

 

 

 

 

 

(212)

 

 

(212)

BALANCE MARCH 31, 2018

28,490

476

$

227,561

$

(8,505)

$

105,432

$

(64,871)

$

259,617

BALANCE , MARCH 31, 2018

 

28,490

 

476

 

$

227,561

 

$

(8,505)

 

$

105,432

 

$

(64,871)

 

$

259,617

Net income

 

 

 

 

 

15,120

 

 

15,120

Unrealized gain on derivatives, net

 

 

 

 

 

 

(159)

 

(159)

Currency translation adjustments

 

 

 

 

 

 

(17,421)

 

(17,421)

Issuance of Common Shares

 

11

 

(11)

 

 

 

 

 

Repurchased Common Shares for treasury

 

(18)

 

18

 

 

(406)

 

 

 

(406)

Tax benefit from share based compensation transactions

 

 

 

 

 

 

 

Share-based compensation

1,295

1,295

BALANCE JUNE 30, 2018

28,483

483

$

228,856

$

(8,911)

$

120,552

$

(82,451)

$

258,046

BALANCE DECEMBER 31, 2018

 

28,488

 

478

 

$

231,647

 

$

(8,880)

 

$

146,251

 

$

(85,752)

 

$

283,266

Net income

 

 

 

 

 

9,657

 

 

9,657

Unrealized gain on derivatives, net

 

 

 

 

 

 

42

 

42

Currency translation adjustments

 

 

 

 

 

 

(3,804)

 

(3,804)

Issuance of Common Shares

 

305

 

(305)

 

 

 

 

 

Repurchased Common Shares for treasury

 

(98)

 

98

 

 

(1,883)

 

 

 

(1,883)

Share-based compensation

480

480

BALANCE MARCH 31, 2019

 

28,695

 

271

$

232,127

$

(10,763)

$

155,908

$

(89,514)

$

287,758

BALANCE MARCH 31, 2019

 

28,695

 

271

 

$

232,127

 

$

(10,763)

 

$

155,908

 

$

(89,514)

 

$

287,758

Net income

 

 

 

 

 

39,764

 

 

39,764

Unrealized gain on derivatives, net

 

 

 

 

 

 

(112)

 

(112)

Currency translation adjustments

 

 

 

 

 

 

2,311

 

2,311

Issuance of Common Shares

 

31

 

(31)

 

 

 

 

 

Repurchased Common Shares for treasury

 

(9)

 

9

 

 

74

 

 

 

74

Common Share repurchase program

 

(1,350)

 

1,350

 

(10,000)

 

(40,000)

 

 

 

(50,000)

Share-based compensation

1,704

1,704

BALANCE JUNE 30, 2019

 

27,367

 

1,599

$

223,831

$

(50,689)

$

195,672

$

(87,315)

$

281,499

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

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Table of Contents

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by Stoneridge, Inc. (the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s 2018 Form 10K.

The Company’s investment in Minda Stoneridge Instruments Ltd. (“MSIL”) for the three and six months ended June 30, 2019 and 2018 has been determined to be an unconsolidated entity, and therefore is accounted for under the equity method of accounting based on the Company’s 49% ownership in MSIL.

(2) Recently Issued Accounting Standards

Recently Adopted Accounting Standards

In January 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This guidance gives entities the option to reclassify to retained earnings the tax effects resulting from the enactment of Tax Cuts and Jobs Act related to items in accumulated other comprehensive income (“AOCI”) that the FASB refers to as having been stranded in AOCI. The new guidance was effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company adopted this standard on January 1, 2019, which did not have a material impact on its condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which requires that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than twelve months, with the result being the recognition of a right of use asset and a lease liability. The new standard was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company adopted this standard as of January 1, 2019 using the modified retrospective approach and elected the transition option to use the effective date January 1, 2019, as the date of initial application. The Company did not adjust its comparative period financial statements for effects of the ASU 2016-02, or make the new required lease disclosures for periods before the effective date. The Company recognized its cumulative effect transition adjustment as of the effective date. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard. The impact of the adoption resulted in the recognition of right-of-use (“ROU”) assets and lease liabilities on the condensed consolidated balance sheet of $20,618 and $20,856, respectively, as of January 1, 2019. The standard did not have a material impact on the Company’s condensed consolidated results of operations and cash flows upon adoption.

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Table of Contents

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Accounting Standards Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments”, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. ASU 2016-13 is effective for public business entities for annual periods beginning after December 15, 2019, and early adoption is permitted for annual periods beginning after December 15, 2018. The Company is currently evaluating the impact of its pending adoption of ASU 2016-13 on the consolidated financial statements. The Company will adopt this standard as of January 1, 2020 and it is not expected to have a material impact on its condensed consolidated financial statements.

(3) Revenue

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products and services, which is usually when the parts are shipped or delivered to the customer’s premises. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. Incidental items that are not significant in the context of the contract are recognized as expense. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold. Customer returns only occur if products do not meet the specifications of the contract and are not connected to any repurchase obligations of the Company.

The Company does not have any financing components or significant payment terms as payment occurs shortly after the point of sale. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. Amounts billed to customers related to shipping and handling costs are included in net sales in the condensed consolidated statements of operations. Shipping and handling costs associated with outbound freight after control over a product is transferred to the customer are accounted for as a fulfillment cost and are included in cost of sales.

Revenue by Reportable Segment

Control Devices. Our Control Devices segment designs and manufactures products that monitor, measure or activate specific functions within a vehicle. This segment includes product lines such as sensors, actuators, valves and switches. We sell these products principally to the automotive market in the North American, European, and Asia Pacific regions. To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets in our North America and European regions. Our customers included in these markets primarily consist of original equipment manufacturers (“OEM”) and companies supplying components directly to the OEMs (“Tier 1 supplier”).

Electronics. Our Electronics segment designs and manufactures electronic instrument clusters, electronic control units, driver information systems, camera-based vision systems, monitors and related products. These products are sold principally to the commercial vehicle market primarily through our OEM and aftermarket channels in the North American and European regions, and to a lesser extent, the Asia Pacific region. The camera-based vision systems, monitors and related products are sold principally to the off-highway vehicle market in the North American and European regions.

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Table of Contents

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

PST. Our PST segment primarily serves the South American region and specializes in the design, manufacture and sale of in-vehicle audio and video devices, electronic vehicle security alarms, convenience accessories, vehicle tracking devices and monitoring services primarily for the automotive and motorcycle markets. PST sells its products through the aftermarket distribution channel, to factory authorized dealer installers, also referred to as original equipment services, direct to OEMs and through mass merchandisers. In addition, monitoring services and tracking devices are sold directly to corporate and individual consumers.

The following tables disaggregate our revenue by reportable segment and geographical location(1) for the periods ended June 30, 2019 and 2018:

Control Devices

Electronics

PST

Consolidated

Three months ended June 30

    

2019

    

2018

    

2019

    

2018

    

2019

    

2018

    

2019

    

2018

Net Sales:

  

  

  

  

  

  

  

  

North America

$

98,066

$

98,564

$

25,227

$

22,321

$

-

$

-

$

123,293

$

120,885

South America

 

-

 

-

 

-

 

-

 

16,614

 

20,333

 

16,614

 

20,333

Europe

 

5,456

 

3,669

 

64,798

 

67,411

 

-

 

-

 

70,254

 

71,080

Asia Pacific

 

10,545

 

7,723

 

1,535

 

581

 

-

 

-

 

12,080

 

8,304

Total net sales

$

114,067

$

109,956

$

91,560

$

90,313

$

16,614

$

20,333

$

222,241

$