4 unchanged sentences
Three Months Ended
+Added: Six Months Ended
Cost of goods sold
6 unchanged sentences
Interest income
−Removed: Other expense, net
+Added: Other (expense) income, net
Total other expense, net
−Removed: Earnings before income taxes
−Removed: Income tax expense
+Added: (Loss) earnings before income taxes
+Added: Income tax (benefit) expense
Earnings per share:
8 unchanged sentences
Three Months Ended
+Added: Six Months Ended
Other comprehensive earnings (loss):
46 unchanged sentences
(In thousands of dollars)
−Removed: Three Months Ended
+Added: Six Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES:
17 unchanged sentences
Capital expenditures
+Added: Payments for acquisitions, net of cash acquired
Net cash used in investing activities
4 unchanged sentences
Dividends paid
+Added: Payments of contingent consideration
Taxes paid on behalf of equity award participants
13 unchanged sentences
(in thousands of dollars)
−Removed: The following summarizes the changes in total equity for the three months ended March 31, 2021:
+Added: The following summarizes the changes in total equity for the three and six months ended June 30, 2021:
Comprehensive
7 unchanged sentences
Balances at March 31, 2021
+Added: Changes in fair market value of derivatives, net of tax
+Added: Changes in unrealized pension cost, net of tax
+Added: Cumulative translation adjustment, net of tax
+Added: Cash dividends of $ 0.04 per share
+Added: Issued shares on vesting of restricted stock units
+Added: Stock compensation
+Added: Balances at June 30, 2021
See notes to unaudited condensed consolidated financial statements.
2 unchanged sentences
(in thousands of dollars)
−Removed: The following summarizes the changes in total equity for the three months ended March 31, 2020:
+Added: The following summarizes the changes in total equity for the three and six months ended June 30, 2020:
Comprehensive
8 unchanged sentences
Balances at March 31, 2020
+Added: Changes in fair market value of derivatives, net of tax
+Added: Changes in unrealized pension cost, net of tax
+Added: Cumulative translation adjustment, net of tax
+Added: Cash dividends of $ 0.04 per share
+Added: Acquired 122,000 shares of treasury stock
+Added: Issued shares on vesting of restricted stock units
+Added: Stock compensation
+Added: Balances at June 30, 2020
See notes to unaudited condensed consolidated financial statements.
1 unchanged sentence
(in thousands except for share and per share data)
−Removed: March 31, 2021
−Removed: NOTE 1 — Basis of Presentation
+Added: June 30, 2021
+Added: NOTE 1 — Basis of Presentation and Summary of Significant Accounting Policies
The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS”, "we", "our", "us" or the "Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.
7 unchanged sentences
The reclassifications had no impact on previously reported net earnings.
+Added: There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
+Added: Accounting Pronouncements Recently Adopted
+Added: In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes , as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes.
+Added: ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences.
+Added: ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of U.S.
+Added: The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted.
+Added: We adopted this ASU on January 1, 2021 and it did not have a material impact on our financial statements.
+Added: Recently Issued Accounting Pronouncements
+Added: In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848):
+Added: Facilitation of the Effects of Reference Rate Reform on Financial Reporting ”, which provides temporary optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as it relates to our LIBOR indexed instruments.
+Added: ASU 2020-04 provides optional expedients and exceptions for applying U.S.
+Added: GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
+Added: ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022, and an entity may elect to apply ASU 2020-04 for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.
+Added: We are currently evaluating the impact of the transition from LIBOR to an alternative reference interest rate in our financial instruments including the potential election of certain practical expedients.
+Added: Our LIBOR based revolving credit facility includes a provision for the determination of a successor LIBOR rate, and we are still evaluating the impact to potential future hedging activities.
NOTE 2 – Revenue Recognition
−Removed: The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
+Added: The core principle of Accounting Standard Codification (“ASC”) 606 Revenue from Contracts with Customers is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The guidance provides a five-step process to achieve that core principle:
5 unchanged sentences
We recognize revenue when the performance obligations specified in our contracts have been satisfied, after considering the impact of variable consideration and other factors that may affect the transaction price.
−Removed: Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery based on shipping terms stipulated in the contract.
+Added: Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery or shipment based on shipping terms stipulated in the contract.
We usually expect payment within 30 to 90 days from the shipping date, depending on our terms with the customer.
−Removed: None of our contracts as of March 31, 2021 contained a significant financing component.
+Added: None of our contracts as of June 30, 2021 contained a significant financing component.
Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities.
5 unchanged sentences
Three Months Ended
−Removed: March 31, 2021
−Removed: March 31, 2020
+Added: Six Months Ended
+Added: June 30, 2021
+Added: June 30, 2020
+Added: June 30, 2021
+Added: June 30, 2020
Transportation
3 unchanged sentences
SSI is a manufacturer of high-quality thermistors and temperature sensor assemblies serving original equipment manufacturers (“OEMs”) for applications that require precision and reliability in the medical, industrial and defense markets.
−Removed: SSI has complementary capabilities with our existing temperature sensing platform and the acquisition expands our presence in the medical end market.
+Added: SSI has complementary capabilities with our existing temperature sensing platform and the acquisition expands our presence in the medical and industrial end markets.
It also provides high quality ceramic processing capabilities and valuable customer partnerships that expands our temperature sensing product portfolio and builds on our strategy to focus on innovative products that sense, connect and move.
The purchase price, which includes assumed changes in working capital, of $ 10,309 has been allocated to the fair values of assets and liabilities acquired as of December 30, 2020.
−Removed: The allocation of the purchase price continues to be preliminary pending the completion of the valuation of intangible assets and finalization of management's estimates, which are expected to occur in the second quarter.
−Removed: The information included below represents our current estimate of the purchase price allocation.
+Added: The allocation of the purchase price continues to be preliminary pending the completion of the final net working capital adjustment, which is expected to occur in the third quarter.
+Added: The information included below represents our current estimate of the purchase price allocation and is not expected to materially change.
The following table summarizes the consideration paid and the fair values of the assets acquired, and the liabilities assumed as of the date of acquisition of SSI:
14 unchanged sentences
All contingent consideration is payable in cash and is based on success factors related to the integration process as well as upon the achievement of a revenue performance target through the year ending December 31, 2022, with the possibility of prorated interim payments.
−Removed: The Company recorded $ 2,000 as the acquisition date fair value of the contingent consideration based on an estimate of the
−Removed: probability of achieving the performance targets.
+Added: The Company recorded $ 2,000 as the acquisition date fair value of the contingent consideration based on an estimate of the probability of achieving the performance targets.
This represents the maximum amount of contingent consideration payable by the Company.
This amount is also reflected as an addition to the purchase price and will be evaluated quarterly.
−Removed: As of March 31, 2021, $ 150 of the contingent consideration became due based on revenue targets achieved and will be paid out in the second quarter.
−Removed: As of March 31, 2021, and December 31, 2020, $ 950 and $ 800 were recorded in accrued expenses and other liabilities and $ 1,050 and $ 1,200 in other long-term obligations, in each case, respectively.
+Added: Refer to Note 17 for further information on contingent consideration.
The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:
1 unchanged sentence
Technology and other intangibles
−Removed: The amounts and assumptions included above remain estimates that may be adjusted by the Company once purchase accounting is complete.
NOTE 4 – Accounts Receivable, net
17 unchanged sentences
Property, plant and equipment, net
−Removed: Depreciation expense for the three months ended
−Removed: March 31, 2021
−Removed: Depreciation expense for the three months ended
−Removed: March 31, 2020
+Added: Depreciation expense for the six months ended June 30, 2021 and June 30, 2020 was $ 8,795 and $ 8,580 , respectively.
NOTE 7 – Retirement Plans
Pension Plans
−Removed: Net pension expense for our domestic and foreign plans included in other expense, net in the Condensed Consolidated Statement of Earnings is as follows:
+Added: Net pension expense for our domestic and foreign plans included in other expense, net in the Condensed Consolidated Statements of Earnings is as follows:
Three Months Ended
+Added: Six Months Ended
Net pension expense
7 unchanged sentences
Amortization of loss
+Added: Settlement charges
Total expense, net
Expected return on plan assets is net of expected investment expenses and certain administrative expenses.
+Added: Domestic Pension Plans
+Added: Foreign Pension Plans
+Added: Six Months Ended
+Added: Six Months Ended
+Added: Interest cost
+Added: Expected return on plan assets (1)
+Added: Amortization of loss
+Added: Settlement charges
+Added: Total expense, net
+Added: Expected return on plan assets is net of expected investment expenses and certain administrative expenses.
In February 2020, the CTS Board of Directors authorized management to explore termination of the U.S.-based pension plan ("Plan"), subject to certain conditions.
−Removed: On June 1, 2020, we entered the Fifth Amendment to the Plan whereby we set an effective termination date for the Plan of July 31, 2020.
−Removed: In February 2021, we received a determination letter from the Internal Revenue Service that allows us to proceed with the termination process for the Plan.
−Removed: In connection with the termination, the Plan has offered a window extending from March 29, 2021 through May 7, 2021 to certain eligible participants to elect lump sum payments.
−Removed: The distribution date is June 1, 2021.
−Removed: The completion of the Plan termination process, including the final purchase of annuities, is expected to occur in the second half of 2021.
−Removed: Upon settlement of the pension liability, we will reclassify the related pension losses, currently recorded in accumulated other comprehensive loss, to the Condensed Consolidated Statements of Earnings.
−Removed: As of March 31, 2021, we had gross unrecognized losses related to the Plan of $ 123,238 in accumulated other comprehensive loss that are expected to be recognized in the income statement in 2021.
−Removed: Since the amount of the settlement depends on a number of factors determined as of the liquidation date, including lump sum payout estimates, the annuity pricing interest rate environment and asset performance, we are currently unable to determine the ultimate cost of the settlement.
−Removed: However, we estimate non-cash settlement charges of approximately $ 10,000 to $ 20,000 will be
−Removed: recognized in the second quarter of 2021 with the remaining amount of the gross accumulated other comprehensive loss balance to be recognized upon final settlement.
−Removed: We do not expect any cash contributions from the Company to the Plan as a result of this termination because Plan assets significantly exceed estimated liabilities.
+Added: On June 1, 2020, we entered into the Fifth Amendment to the Plan whereby we set an effective termination date for the Plan of July 31, 2020.
+Added: In February 2021, we received a determination letter from the Internal Revenue Service that allowed us to proceed with the termination process for the Plan.
+Added: During the second quarter of 2021, the Company offered the option of receiving a lump sum payment to eligible participants with vested qualified Plan benefits in lieu of receiving monthly annuity payments.
+Added: Approximately 365 participants elected to receive the settlement, and lump sum payments of approximately $ 35,594 were made from Plan assets to these participants in June 2021.
+Added: As required under US GAAP, t he Company recognizes a settlement gain or loss when the aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the service and interest cost components of the net periodic pension cost.
+Added: The amount of settlement gain or loss recognized is the pro rata amount of the existing unrealized gain or loss immediately prior to the settlement.
+Added: In general, both the projected benefit obligation and fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss.
+Added: Upon the partial settlement of the pension liability due to the lump sum offering the Company recognized a non-cash and non-operating settlement charge of $ 20,063 related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's Condensed Consolidated Statements of Earnings.
+Added: Upon final settlement of the pension liability with the purchase of annuities, expected to occur in the third quarter, we will reclassify the remaining related unrecognized pension losses, currently recorded in accumulated other comprehensive loss, to the Condensed Consolidated Statements of Earnings.
+Added: Since the final amount of the settlement depends on a number of factors determined as of the liquidation date, including the annuity pricing interest rate environment and asset performance, the unrecognized losses value may fluctuate from June 30, 2021.
+Added: As of June 30, 2021, we had gross unrecognized pension losses related to the Plan of $ 101,125 .
+Added: We do not expect any cash contributions from the Company to the Plan as a result of this termination as Plan assets continue to significantly exceed estimated liabilities.
Other Post-retirement Benefit Plan
1 unchanged sentence
Three Months Ended
+Added: Six Months Ended
Interest cost
4 unchanged sentences
Other intangible assets, net consist of the following components:
−Removed: March 31, 2021
+Added: June 30, 2021
Customer lists/relationships
3 unchanged sentences
Amortization expense for the three months ended
−Removed: March 31, 2021
+Added: June 30, 2021
+Added: Amortization expense for the six months ended
+Added: June 30, 2021
December 31, 2020
4 unchanged sentences
Amortization expense for the three months ended
−Removed: March 31, 2020
−Removed: Remaining amortization expense for other intangible assets as of March 31, 2021 is as follows:
+Added: June 30, 2020
+Added: Amortization expense for the six months ended
+Added: June 30, 2020
+Added: Remaining amortization expense for other intangible assets as of June 30, 2021 is as follows:
Total amortization expense
2 unchanged sentences
Decrease from purchase accounting adjustments
−Removed: Goodwill as of March 31, 2021
+Added: Increase due to acquisition
+Added: Goodwill as of June 30, 2021
+Added: In addition to the purchase accounting adjustments from the SSI transaction, goodwill increased due to an acquisition completed during the second quarter.
+Added: The purchase price was approximately $ 510 , with $ 255 paid in the second quarter of 2021 and an additional $ 255 to be paid in the second quarter of 2022.
+Added: We expect small adjustments to the purchase price allocation to be completed in the third quarter.
NOTE 9 – Costs Associated with Exit and Restructuring Activities
−Removed: Restructuring charges are reported as a separate line within operating earnings in the Condensed Consolidated Statement of Earnings.
+Added: Restructuring charges are reported as a separate line within operating earnings in the Condensed Consolidated Statements of Earnings.
Total restructuring charges are as follows:
Three Months Ended
−Removed: March 31, 2021
−Removed: March 31, 2020
+Added: June 30, 2021
+Added: June 30, 2020
Restructuring charges
+Added: Six Months Ended
+Added: June 30, 2021
+Added: June 30, 2020
+Added: Restructuring charges
September 2020 Plan
1 unchanged sentence
This plan includes transitioning certain administrative functions to a shared service center, realignment of manufacturing locations, and certain other efficiency improvement actions.
−Removed: The restructuring cost of the September 2020 Plan is estimated to be in the range of $ 4,600 and $ 6,000 , including workforce reduction charges, building and equipment relocation charges and other contract and asset-related costs.
+Added: The restructuring cost of the September 2020 Plan is estimated to be in the range of $ 4,600 to $ 6,000 , including workforce reduction charges, building and equipment relocation charges and other contract and asset-related costs.
In addition to these charges, we expect an additional $ 4,000 to $ 5,100 of other costs to be incurred related to initiatives that would not qualify as restructuring charges.
These costs would include certain employee overlap and training costs as well as additional capital expenditures.
−Removed: Restructuring charges under the September 2020 Plan were $( 17 ) during the three months ended March 31, 2021, consisting of $ 36 of workforce reduction costs and $( 53 ) of other contract termination and facility closure costs.
−Removed: The total restructuring liability related to the September 2020 Plan was $ 130 at March 31, 2021 and $ 512 at December 31, 2020.
+Added: Restructuring charges under the September 2020 Plan were $( 10 ) during the three months ended June 30, 2021, consisting of $( 10 ) in workforce reduction adjustments.
+Added: Restructuring charges for the six months ended June 30, 2021 were $( 27 ), consisting of $ 26 in workforce reduction costs and $( 53 ) of other contract termination and facility closure cost true ups.
+Added: The total restructuring liability related to the September 2020 Plan was $ 38 at June 30, 2021 and $ 512 at December 31, 2020.
June 2016 Plan
3 unchanged sentences
These restructuring actions were completed as of March 31, 2021.
−Removed: Restructuring charges under the June 2016 Plan were $( 3 ) and $( 32 ) during the three months ended March 31, 2021 and March 31, 2020, respectively.
−Removed: The total restructuring liability related to the June 2016 Plan was $ 0 at March 31, 2021 and $ 3 at December 31, 2020.
April 2014 Plan
In April 2014, we announced plans to restructure our operations and consolidate our Canadian operations into other existing facilities as part of our overall plan to simplify our business model and rationalize our global footprint (the “April 2014 Plan”).
−Removed: These restructuring actions were substantially completed during 2015.
−Removed: There were no restructuring charges incurred under the April 2014 Plan during the three months ended March 31, 2021 and March 31, 2020, respectively.
−Removed: The total restructuring liability related to the April 2014 Plan was $ 847 at March 31, 2021 and $ 839 at December 31, 2020.
−Removed: The remaining liability is expected to be settled in the second quarter of 2021.
+Added: These restructuring actions were substantially completed during 2015 and the remaining liability was settled in the second quarter of 2021.
Other Restructuring Activities
From time to time we undertake other restructuring activities that are not part of a formal plan.
−Removed: During the three months ended March 31, 2021 and March 31, 2020, we incurred restructuring charges of $ 101 and $ 272 , respectively, primarily related to workforce reduction costs.
−Removed: The total restructuring liability associated with these actions was $ 83 at March 31, 2021 and $ 9 at December 31, 2020.
−Removed: The following table displays the restructuring liability activity included in accrued expenses and other liabilities for all plans for the three months ended March 31, 2021:
+Added: Charges associated with these restructuring activities primarily relate to workforce reduction costs.
+Added: During the three and six months ended June 30, 2021 we incurred restructuring charges of $ 161 and $ 262 , respectively.
+Added: During the three and six months ended June 30, 2020, we incurred restructuring charges of $ 135 and $ 407 , respectively.
+Added: The total restructuring liability associated with these actions was $ 163 at June 30, 2021 and $ 9 at December 31, 2020.
+Added: The following table displays the restructuring liability activity included in accrued expenses and other liabilities for all plans for the six months ended June 30, 2021:
Restructuring liability at January 1, 2021
1 unchanged sentence
Other activity ( 1)
−Removed: Restructuring liability at March 31, 2021
+Added: Restructuring liability at June 30, 2021
Other activity includes the effects of currency translation, non-cash asset write-downs and other charges that do not flow through restructuring expense.
−Removed: NOTE 10 – Accrued Expense and Other Liabilities
+Added: NOTE 10 – Accrued Expenses and Other Liabilities
The components of accrued expenses and other liabilities are as follows:
30 unchanged sentences
Our accrued liabilities and disclosures will be adjusted accordingly if additional information becomes available in the future.
−Removed: NOTE 12 — Leases
−Removed: We lease certain land, buildings and equipment under non-cancellable operating leases used in our operations.
−Removed: Operating lease assets represent our right to use an underlying asset for the lease term.
−Removed: Operating lease liabilities represent the present value of lease payments over the lease term, discounted using an estimate of our secured incremental borrowing rate because none of our leases contain a rate implicit in the lease arrangement.
−Removed: Components of lease expense for the three months ended March 31, 2021 were as follows:
−Removed: Three Months Ended
−Removed: Operating lease cost
−Removed: Short-term lease cost
−Removed: Total lease cost
−Removed: Supplemental cash flow information related to leases was as follows:
−Removed: Three Months Ended
−Removed: Cash paid for amounts included in the measurement of lease
−Removed: Leased assets obtained in exchange for new operating lease
−Removed: Supplemental balance sheet information related to leases was as follows:
−Removed: Balance Sheet Classification:
−Removed: Operating lease obligations
−Removed: Long-term operating lease obligations
−Removed: Total lease liabilities
−Removed: Weighted-average remaining lease terms (years)
−Removed: Weighted-average discount rate
−Removed: Remaining maturity of our existing lease liabilities as of March 31, 2021 is as follows:
−Removed: Present value of lease liabilities
−Removed: Operating lease payments include $ 3,822 of payments related to options to extend lease terms that are reasonably expected to be exercised.
NOTE 12 - Debt
6 unchanged sentences
Commitment fee percentage per annum
−Removed: On February 12, 2019, we entered an amended and restated five-year Credit Agreement with a group of banks (the "Credit Agreement") to extend the term of the facility.
+Added: On February 12, 2019, we entered into an amended and restated five-year Credit Agreement with a group of banks (the "Credit Agreement") to extend the term of the facility.
The Credit Agreement provides for a revolving credit facility of $ 300,000 , which may be increased by $ 150,000 at the request of the Company, subject to the administrative agent's approval.
5 unchanged sentences
Failure to comply with these covenants could reduce the borrowing availability under the revolving credit facility.
−Removed: We were compliant with all debt covenants at March 31, 2021.
+Added: We were compliant with all debt covenants at June 30, 2021.
The Credit Agreement requires that we deliver quarterly financial statements, annual financial statements, auditor certifications, and compliance certificates within a specified number of days after the end of a quarter and year.
7 unchanged sentences
engage in certain transactions with our subsidiaries and affiliates;
−Removed: and make stock
−Removed: repurchases and dividend payments.
+Added: and make stock repurchases and dividend payments.
Interest rates on the credit facility fluctuate based upon the LIBOR and the Company’s quarterly total leverage ratio.
We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt.
−Removed: Amortization expense for three months ended March 31, 2021 and March 31, 2020 was approximately $ 42 and $ 42 , respectively.
−Removed: These costs are included in interest expense in our Condensed Consolidated Statement of Earnings.
+Added: Amortization expense for the three and six months ended June 30, 2021 and 2020 was approximately $ 42 and $ 42 and $ 84 and $ 84 , respectively.
+Added: These costs are included in interest expense in our Condensed Consolidated Statements of Earnings.
We use interest rate swaps to convert the revolving credit facility's variable rate of interest into a fixed rate on a portion of the debt as described more fully in Note 13 "Derivative Financial Instruments".
6 unchanged sentences
The effective portion of derivative gains and losses are recorded in accumulated other comprehensive (loss) income until the hedged transaction affects earnings upon settlement, at which time they are reclassified to cost of goods sold or net sales.
−Removed: If it is probable that an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to other expense, net.
+Added: If it is probable that
+Added: an anticipated hedged transaction will not occur by the end of the originally specified time period , we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to o ther expense , net .
We assess hedge effectiveness qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default.
−Removed: No recognition of ineffectiveness was recorded in our Condensed Consolidated Statements of Earnings for the three months ended March 31, 2021.
+Added: No recognition of ineffectiveness was recorded in our Condensed Consolidated Statements of Earnings for the three and six months ended June 30, 2021.
Foreign Currency Hedges
2 unchanged sentences
We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future.
−Removed: At March 31, 2021, we had a net unrealized gain of $ 670 in accumulated other comprehensive (loss) income, of which $ 668 is expected to be reclassified to earnings within the next 12 months.
−Removed: At March 31, 2020, we had a net unrealized loss of $ 2,076 in accumulated other comprehensive (loss) income.
−Removed: The notional amount of foreign currency forward contracts outstanding was $ 16,445 at March 31, 2021.
+Added: At June 30, 2021, we had a net unrealized gain of $ 811 in accumulated other comprehensive (loss) income, of which $ 808 is expected to be reclassified to earnings within the next 12 months.
+Added: At June 30, 2020, we had a net unrealized loss of $ 1,247 in accumulated other comprehensive (loss) income.
+Added: The notional amount of foreign currency forward contracts outstanding was $ 11,430 at June 30, 2021.
Interest Rate Swaps
We use interest rate swaps to convert a portion of our revolving credit facility’s outstanding balance from a variable rate of interest to a fixed rate.
−Removed: As of March 31, 2021, we have agreements to fix interest rates on $ 50,000 of long-term debt through February 2024.
+Added: As of June 30, 2021, we have agreements to fix interest rates on $ 50,000 of long-term debt through February 2024.
The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled.
1 unchanged sentence
The estimated net amount of the existing losses that are reported in accumulated other comprehensive (loss) income that are expected to be reclassified into earnings within the next twelve months is approximately $ 523 .
−Removed: The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of March 31, 2021, are shown in the following table:
−Removed: Interest rate swaps reported in accrued liabilities
+Added: The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of June 30, 2021, are shown in the following table:
+Added: Interest rate swaps reported in accrued expenses and other liabilities
Interest rate swaps reported in other long-term obligations
1 unchanged sentence
The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20 ( Balance Sheet, Offsetting ).
−Removed: On a gross basis, there were foreign currency derivative assets of $ 856 and foreign currency derivative liabilities of $ 0 at March 31, 2021.
+Added: On a gross basis, there were foreign currency derivative assets of $ 1,023 and foreign currency derivative liabilities of $ 0 at June 30, 2021 .
The effect of derivative instruments on the Condensed Consolidated Statements of Earnings is as follows:
Three Months Ended
+Added: Six Months Ended
Foreign Exchange Contracts:
2 unchanged sentences
Selling, general and administrative expense
−Removed: Total gain reclassified from AOCI to earnings
−Removed: Gain (loss) recognized in other expense for hedge ineffectiveness
−Removed: Total derivative gain on foreign exchange contracts recognized in earnings
+Added: Total gain (loss) reclassified from AOCI to earnings
+Added: Gain recognized in other expense for hedge ineffectiveness
+Added: Total derivative gain (loss) on foreign exchange contracts recognized in earnings
Interest Rate Swaps:
−Removed: (Expense) benefit recorded in Interest expense
−Removed: Total gains on derivatives
+Added: (Expense) recorded in Interest expense
+Added: Total gains (losses) on derivatives
NOTE 14 – Accumulated Other Comprehensive (Loss) Income
11 unchanged sentences
Changes in exchange rates between the functional currency and the currency in which a transaction is denominated are foreign exchange transaction gains or losses.
−Removed: Transaction losses for the three months ended March 31, 2021 and March 31, 2020 were $ 1,330 and $ 1,271 , respectively, which have been included in other (expense) income in the Condensed Consolidated Statements of Earnings.
−Removed: The components of accumulated other comprehensive (loss) income for the three months ended March 31, 2021 are as follows:
+Added: Transaction losses for the three and six months ended June 30, 2021 were $ 928 and $( 401 ), respectively, and transaction losses for the three and six months ended June 30, 2020 were $ 892 and $( 379 ), respectively, which have been included in other (expense) income in the Condensed Consolidated Statements of Earnings.
+Added: The components of accumulated other comprehensive (loss) income for the three months ended June 30, 2021 are as follows:
Changes in fair market value of derivatives:
4 unchanged sentences
Total accumulated other comprehensive (loss) income
−Removed: The components of accumulated other comprehensive (loss) income for the three months ended March 31, 2020, are as follows:
+Added: The components of accumulated other comprehensive (loss) income for the three months ended June 30, 2020, are as follows:
Changes in fair market value of derivatives:
3 unchanged sentences
Cumulative translation adjustment:
+Added: Total accumulated other comprehensive (loss) income
+Added: The components of accumulated other comprehensive (loss) income for the six months ended June 30, 2021, are as follows:
+Added: Changes in fair market value of derivatives:
+Added: Income tax (expense) benefit
+Added: Changes in unrealized pension cost:
Income tax benefit (expense)
+Added: Cumulative translation adjustment:
Total accumulated other comprehensive (loss) income
+Added: The components of accumulated other comprehensive (loss) income for the six months ended June 30, 2020, are as follows:
+Added: Changes in fair market value of derivatives:
+Added: Income tax (expense) benefit
+Added: Changes in unrealized pension cost:
+Added: Income tax benefit (expense)
+Added: Cumulative translation adjustment:
+Added: Income tax benefit
+Added: Total accumulated other comprehensive (loss) income
NOTE 15 – Shareholders’ Equity
9 unchanged sentences
Treasury stock
−Removed: On February 7, 2019, the Board of Directors authorized a stock repurchase program with a maximum dollar limit of $ 25,000 in stock repurchases.
−Removed: During the three months ended March 31, 2021, no shares of common stock were repurchased.
−Removed: During the three months ended March 31, 2020, 220,731 shares of common stock were repurchased for $ 5,304 .
+Added: On May 13, 2021, the Board of Directors approved a new share repurchase program that authorizes the Company to repurchase up to $ 50,000 of the Company’s common stock.
+Added: The repurchase program has no set expiration date and replaces the repurchase program approved by the Board of Directors on February 7, 2019.
+Added: During the six months ended June 30, 2021, no shares of common stock were repurchased.
+Added: During the six months ended June 30, 2020, 342,731 shares of common stock were repurchased for $ 8,080 .
Approximately $ 50,000 is available for future purchases.
A roll-forward of common shares outstanding is as follows:
−Removed: Three months ended
+Added: Six Months Ended
Balance at the beginning of the year
2 unchanged sentences
Certain potentially dilutive restricted stock units are excluded from diluted earnings per share because they are anti-dilutive.
−Removed: The number of outstanding awards that were anti-dilutive for the three months ended March 31, 2021 and March 31, 2020 were 35,167 and 38,839 , respectively.
+Added: The number of outstanding awards that were anti-dilutive for the three months ended June 30, 2021 and 2020 were 93 and 84,720 , respectively.
+Added: The number of outstanding awards that were anti-dilutive for the six months ended June 30, 2021 and 2020 were 46,810 and 61,780 , respectively.
NOTE 16 - Stock-Based Compensation
−Removed: At March 31, 2021, we had five active stock-based compensation plans:
+Added: At June 30, 2021, we had five active stock-based compensation plans:
the Non-Employee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”), the 2014 Performance and Incentive Compensation Plan (“2014 Plan”), and the 2018 Equity and Incentive Compensation Plan ("2018 Plan").
3 unchanged sentences
Three Months Ended
+Added: Six Months Ended
Service-based RSUs
3 unchanged sentences
The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized:
−Removed: March 31, 2021
+Added: June 30, 2021
+Added: Period (years)
Service-based RSUs
1 unchanged sentence
We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.
−Removed: The following table summarizes the status of these plans as of March 31, 2021:
+Added: The following table summarizes the status of these plans as of June 30, 2021:
Awards originally available
−Removed: Maximum potential RSU and cash settled
−Removed: awards outstanding
Maximum potential awards outstanding
2 unchanged sentences
Service-Based Restricted Stock Units
−Removed: The following table summarizes the service-based RSU activity for the three months ended March 31, 2021:
+Added: The following table summarizes the service-based RSU activity for the six months ended June 30, 2021:
Outstanding at December 31, 2020
Vested and released
−Removed: Outstanding at March 31, 2021
−Removed: Releasable at March 31, 2021
+Added: Outstanding at June 30, 2021
+Added: Releasable at June 30, 2021
Performance and Market-Based Restricted Stock Units
−Removed: The following table summarizes the performance and market-based RSU activity for the three months ended March 31, 2021:
+Added: The following table summarizes the performance and market-based RSU activity for the six months ended June 30, 2021:
Outstanding at December 31, 2020
Attained by performance
−Removed: Outstanding at March 31, 2021
−Removed: Releasable at March 31, 2021
−Removed: The following table summarizes each grant of performance awards outstanding at March 31, 2021:
−Removed: Vesting Dependency
−Removed: to be Granted
−Removed: 2019 - 2021 Performance RSUs
−Removed: February 7, 2019
−Removed: 35% RTSR, 35% sales growth,
−Removed: 30% operating cash flow
−Removed: 2019 Supplemental Performance RSUs
−Removed: February 7, 2019
−Removed: Succession Planning Targets
−Removed: 2020 - 2022 QTI Performance RSUs
−Removed: September 24, 2019
−Removed: 50% EBITDA growth,
−Removed: 50% Sales growth
−Removed: 2020 - 2022 Performance RSUs
−Removed: February 6, 2020
−Removed: 25% RTSR, 40% sales growth,
−Removed: 35% operating cash flow
−Removed: 2021 - 2023 Performance RSUs
−Removed: February 11, 2021
−Removed: 25% RTSR, 40% sales growth,
−Removed: 35% operating cash flow
−Removed: Focus 2025 Performance RSUs
−Removed: April 23, 2020
−Removed: Cumulative revenues of $750
−Removed: million over a trailing
−Removed: four-quarter period
+Added: Outstanding at June 30, 2021
+Added: Releasable at June 30, 2021
Cash-Settled Restricted Stock Units
3 unchanged sentences
Cash-Settled RSUs are classified as liabilities and are remeasured at each reporting date until settled.
−Removed: At March 31, 2021 and December 31, 2020 we had 29,824 and 30,009 cash-settled RSUs outstanding, respectively.
−Removed: At March 31, 2021 and December 31, 2020, liabilities of $ 177 and $ 396 , respectively, were included in accrued expenses and other liabilities on our Condensed Consolidated Balance Sheets.
+Added: At June 30, 2021 and December 31, 2020 we had 32,085 and 30,009 cash-settled RSUs outstanding, respectively.
+Added: At June 30, 2021 and December 31, 2020, liabilities of $ 261 and $ 396 , respectively, were included in accrued expenses and other liabilities on our Condensed Consolidated Balance Sheets.
NOTE 17 — Fair Value Measurements
−Removed: The table below summarizes our financial liabilities that were measured at fair value on a recurring basis at March 31, 2021:
+Added: The table below summarizes our financial liabilities that were measured at fair value on a recurring basis at June 30, 2021:
+Added: (Liability) Asset
Interest rate swaps
2 unchanged sentences
The table below summarizes the financial assets that were measured at fair value on a recurring basis as of December 31, 2020:
+Added: (Liability) Asset
Interest rate swaps
9 unchanged sentences
Refer to Note 3 for further discussion on contingent consideration.
+Added: A roll-forward of the contingent consideration is as follows:
+Added: Consideration
+Added: Balance at December 31, 2020
+Added: Settled in cash
+Added: Reclassified to payable in accrued expenses and other liabilities
+Added: Balance at June 30, 2021
+Added: Less current portion in accrued expenses and other liabilities
+Added: Total long-term portion in other long-term obligations
Our long-term debt consists of debt outstanding under the revolving credit facility which is recorded at its carrying value.
2 unchanged sentences
NOTE 18 — Income Taxes
−Removed: The effective tax rates for the three months ended March 31, 2021 and March 31, 2020 are as follows:
+Added: The effective tax rates for the three and six months ended June 30, 2021 and 2020 are as follows:
Three Months Ended
+Added: Six Months Ended
Effective tax rate
−Removed: Our effective income tax rate was 18.9 % and 36.4 % in the first quarters of 2021 and 2020, respectively.
−Removed: This decrease is primarily attributed to the change in the mix of earnings by jurisdiction and the establishment of valuation allowance on certain tax credits in the first quarter of 2020.
−Removed: The first quarter 2021 tax rate was lower than the U.S.
−Removed: statutory federal tax rate primarily due to foreign earnings that are taxed at lower rates and tax benefits recorded upon vesting of restricted stock units.
−Removed: The first quarter 2020 tax rate was higher than the U.S.
−Removed: statutory federal tax rate primarily due to the establishment of valuation allowances on certain tax credits and a one-time tax expense resulting from a company restructuring.
−Removed: NOTE 20 — Recent Accounting Pronouncements
−Removed: Accounting Pronouncements Recently Adopted
−Removed: 2019-12 "Simplifying the Accounting for Income Taxes"
−Removed: In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes , as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes.
−Removed: ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences.
−Removed: ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of U.S.
−Removed: The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted.
−Removed: We adopted this ASU on January 1, 2021 and it did not have a material impact on our financial statements.
−Removed: Recently Issued Accounting Pronouncements
−Removed: 2020-04 "Reference Rate Reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting"
−Removed: In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting ”, which provides temporary optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as it relates to our LIBOR indexed instruments.
−Removed: ASU 2020-04 provides optional expedients and exceptions for applying U.S.
−Removed: GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
−Removed: ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022, and an entity may elect to apply ASU 2020-04 for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.
−Removed: We are currently evaluating the impact of the transition from LIBOR to an alternative reference interest rate in our financial instruments including the potential election of certain practical expedients.
−Removed: Our LIBOR based revolving credit facility includes a provision for the determination of a successor LIBOR rate, and we are still evaluating the impact to potential future hedging activities.
+Added: Our effective income tax rate was 245.6 % and 17.6 % in the second quarters of 2021 and 2020, respectively.
+Added: This increase is primarily attributed to a one-time settlement expense related to lump sum payments made for the CTS Corporation U.S.
+Added: pension plan.
+Added: The second quarter 2021 tax rate was higher than the U.S.
+Added: statutory federal tax rate for the same reason noted above.
+Added: The second quarter 2020 tax rate was lower than the U.S.
+Added: statutory federal tax rate due to foreign earnings that are taxed at lower rates and a reduction in reserves related to uncertain tax positions.
+Added: Our effective income tax rate was 9.3 % and 27.1 % in the first half of 2021 and 2020, respectively.
+Added: This decrease is primarily attributed to the change in mix of earnings by jurisdiction, a one-time settlement expense related to lump sum payments made for the CTS Corporation U.S.
+Added: pension plan, and tax benefits recorded upon vesting of restricted stock units.
+Added: The tax rate in the first half of 2021 was lower than the U.S.
+Added: statutory federal tax rate for the same reason noted above.
+Added: The tax rate in the first half of 2020 was higher than the U.S.
+Added: statutory federal tax rate primarily due to the establishment of valuation allowances on certain U.S.
+Added: tax credits and the Company’s decision to no longer reinvest the earnings of its Taiwan subsidiary offset by a reduction in reserves related to uncertain tax positions.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.