5 unchanged sentences
Restricted cash
−Removed: Accounts receivable
−Removed: allowance for credit losses
−Removed: Accounts receivable, net
+Added: Accounts receivable, net of allowances of $2,914 and $2,698
Unbilled revenue
1 unchanged sentence
Total Current Assets
−Removed: Property, Plant, and Equipment, at Cost
−Removed: accumulated depreciation and amortization
−Removed: Property, Plant, and Equipment, at Cost, Net
+Added: Property, Plant, and Equipment, net of accumulated depreciation of $99,366 and $95,309
Intangible Assets, Net (Note 1)
2 unchanged sentences
Current Liabilities:
−Removed: Current maturities of long-term obligations (Note 4)
+Added: Short-term obligations and current maturities of long-term obligations (Note 6)
Accounts payable
22 unchanged sentences
Three Months Ended
+Added: Six Months Ended
(In thousands, except per share amounts)
4 unchanged sentences
Research and development expenses
+Added: Restructuring costs (Note 3)
Operating Income
9 unchanged sentences
The accompanying notes are an integral part of these condensed consolidated financial statements.
−Removed: Condensed Consolidated Statement of Comprehensive (Loss) Income
+Added: Condensed Consolidated Statement of Comprehensive Income
Three Months Ended
+Added: Six Months Ended
(In thousands)
1 unchanged sentence
Foreign currency translation adjustment
−Removed: Pension and other post-retirement liability adjustments, net (net of tax of $20 and $8)
+Added: Pension and other post-retirement liability adjustments, net (net of tax provision of $–, $2, $20 and $10)
Effect of other post-retirement plan settlement
−Removed: Deferred loss on cash flow hedges (net of tax of $119 and $104)
+Added: Deferred loss on cash flow hedges (net of tax benefit of $3, $39, $122 and $143)
Total other comprehensive items
−Removed: Comprehensive (Loss) Income
+Added: Comprehensive Income
Comprehensive Income Attributable to Noncontrolling Interest
−Removed: Comprehensive (Loss) Income Attributable to Kadant
+Added: Comprehensive Income Attributable to Kadant
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statement of Cash Flows
−Removed: Three Months Ended
+Added: Six Months Ended
(In thousands)
8 unchanged sentences
Other items, net
−Removed: Changes in current assets and liabilities, net of effects of acquisition:
+Added: Changes in current assets and liabilities, net of effects of acquisitions:
Accounts receivable
5 unchanged sentences
Investing Activities
−Removed: Acquisition, net of cash acquired
+Added: Acquisitions, net of cash acquired (Note 2)
Purchases of property, plant, and equipment
2 unchanged sentences
Financing Activities
+Added: Repayment of short- and long-term obligations
Proceeds from issuance of long-term obligations
−Removed: Repayment of long-term obligations
Dividends paid
10 unchanged sentences
Condensed Consolidated Statement of Stockholders' Equity
−Removed: Three Months Ended March 28, 2020
+Added: Three Months Ended June 27, 2020
(In thousands, except share and per share amounts)
4 unchanged sentences
Stockholders' Equity
−Removed: Balance at December 28, 2019
+Added: Balance at March 28, 2020
Dividend declared – Common Stock, $0.24 per share
1 unchanged sentence
Other comprehensive items
+Added: Balance at June 27, 2020
+Added: Six Months Ended June 27, 2020
+Added: (In thousands, except share and per share amounts)
+Added: Excess of Par Value
+Added: Retained Earnings
+Added: Comprehensive Items
+Added: Noncontrolling Interest
+Added: Stockholders' Equity
+Added: Balance at December 28, 2019
+Added: Dividends declared – Common Stock, $0.48 per share
+Added: Activity under stock plans
+Added: Other comprehensive items
+Added: Balance at June 27, 2020
+Added: Three Months Ended June 29, 2019
+Added: (In thousands, except share and per share amounts)
+Added: Excess of Par Value
+Added: Retained Earnings
+Added: Comprehensive Items
+Added: Noncontrolling Interest
+Added: Stockholders' Equity
Balance at March 30, 2019
−Removed: Three Months Ended March 30, 2019
+Added: Dividend declared – Common Stock, $0.23 per share
+Added: Activity under stock plans
+Added: Other comprehensive items
+Added: Balance at June 29, 2019
+Added: Six Months Ended June 29, 2019
(In thousands, except share and per share amounts)
7 unchanged sentences
2016-02, Leases
−Removed: Dividend declared – Common Stock, $0.23 per share
+Added: Dividends declared – Common Stock, $0.46 per share
Activity under stock plans
Other comprehensive items
−Removed: Balance at March 30, 2019
+Added: Balance at June 29, 2019
The accompanying notes are an integral part of these condensed consolidated financial statements.
5 unchanged sentences
Its products, technologies, and services play an integral role in enhancing process efficiency, optimizing energy utilization, and maximizing productivity in resource-intensive industries.
−Removed: On March 11, 2020, the World Health Organization designated the novel coronavirus (COVID-19) a global pandemic.
−Removed: The future impact of the COVID-19 pandemic and any resulting economic impact of the pandemic are rapidly evolving and largely unknown.
−Removed: It is possible that the COVID-19 pandemic, the measures taken by the governments throughout the world, and the resulting economic impact may materially and adversely affect the Company’s results of operations, cash flows and financial position.
−Removed: The Company is closely monitoring the impact of COVID-19 on all aspects of its business.
+Added: On March 11, 2020, the World Health Organization designated the novel coronavirus a global pandemic (COVID-19), and a national emergency was subsequently declared by the U.S.
+Added: The pandemic has negatively affected the global economy, disrupted global supply chains, and resulted in significant travel and transport restrictions, which have adversely affected the Company’s bookings and financial results.
+Added: The impact of the COVID-19 pandemic, including the resulting economic impact, continues to evolve and the Company is closely monitoring its impact on all aspects of its business.
Interim Financial Statements
−Removed: The interim condensed consolidated financial statements and related notes presented have been prepared by the Company, are unaudited, and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the Company's financial position at March 28, 2020 and its results of operations, comprehensive (loss) income, cash flows, and stockholders' equity for the three -month periods ended March 28, 2020 and March 30, 2019 .
+Added: The interim condensed consolidated financial statements and related notes presented have been prepared by the Company, are unaudited, and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the Company's financial position at June 27, 2020 , its results of operations, comprehensive income, and stockholders' equity for the three- and six -month periods ended June 27, 2020 and June 29, 2019 , and its cash flows for the six -month periods ended June 27, 2020 and June 29, 2019 .
Interim results are not necessarily indicative of results for a full year or for any other interim period.
The condensed consolidated balance sheet presented as of December 28, 2019 has been derived from the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019 .
−Removed: The condensed consolidated financial statements and related notes are presented as permitted by the SEC rules and regulations for Form 10-Q and do not contain certain information included in the annual consolidated financial statements and related notes of the Company.
+Added: The condensed consolidated financial statements and related notes are presented as permitted by the rules and regulations of the Securities and Exchange Commission (SEC) for Form 10-Q and do not contain certain information included in the annual consolidated financial statements and related notes of the Company.
The condensed consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019 , filed with the SEC.
13 unchanged sentences
Notes 1 and 3 to the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019 describe the significant accounting estimates and policies used in preparation of the consolidated financial statements.
−Removed: There have been no material changes in the Company’s significant accounting policies during the three months ended March 28, 2020 , except that the Company no longer considers its policy with respect to accounting for pension benefits to be a critical accounting policy due to the settlement of its U.S.
+Added: There have been no material changes in the Company’s significant accounting policies during the six months ended June 27, 2020 , except that the Company no longer considers its policy with respect to accounting for pension benefits to be a critical accounting policy due to the settlement of its U.S.
pension plan in December 2019.
Supplemental Cash Flow Information
−Removed: Three Months Ended
+Added: Six Months Ended
(In thousands)
2 unchanged sentences
Non-Cash Investing Activities:
−Removed: Post-closing acquisition adjustment
−Removed: Liabilities assumed of acquired business
+Added: Fair value of assets acquired
+Added: Cash paid for acquired businesses
+Added: Liabilities Assumed of Acquired Businesses
Non-cash additions to property, plant, and equipment
3 unchanged sentences
Restricted Cash
−Removed: The Company's restricted cash serves as collateral for banker's acceptance drafts issued in China and bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business.
+Added: The Company's restricted cash serves as collateral for potential claims in China and bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business.
The majority of the bank guarantees will expire over the next twelve months .
14 unchanged sentences
(In thousands)
−Removed: March 28, 2020
+Added: June 27, 2020
Definite-Lived
9 unchanged sentences
Acquired Intangible Assets
+Added: Gross intangible assets include $ 3,907,000 for acquired intangible assets from acquisitions that occurred in the second quarter of 2020.
+Added: See Note 2 , Acquisitions, for further details.
Intangible assets are initially recorded at fair value at the date of acquisition.
9 unchanged sentences
Accumulated impairment losses
−Removed: 2020 Adjustment
+Added: 2020 Adjustments
+Added: Acquisition (Note 2)
Currency translation
−Removed: Total 2020 adjustment
−Removed: Balance at March 28, 2020
+Added: Total 2020 adjustments
+Added: Balance at June 27, 2020
Gross balance
11 unchanged sentences
Based on these occurrences, the Company concluded that a triggering event had occurred related to the indefinite-lived assets within its material handling reporting unit.
−Removed: As a result, the Company prepared a quantitative impairment analysis (Step 1) for the material handling reporting unit, which indicated that its fair value exceeded its carrying value and the indefinite-lived assets were not impaired.
−Removed: The Company will continue to monitor for impairment indicators throughout 2020 and will conduct an interim period impairment analysis as required.
+Added: As a result, the Company prepared a quantitative impairment analysis (Step 1) for its material handling reporting unit, which indicated that its fair value exceeded its carrying value and the indefinite-lived assets were not impaired.
+Added: In the second quarter of 2020, the Company’s market capitalization and the overall stock market, which are potential impairment indicators, recovered from their decreased levels that existed at the end of the first quarter of 2020.
+Added: No other events that would trigger an impairment analysis were identified during the second quarter of 2020.
+Added: The Company will continue to monitor for impairment indicators throughout the remainder of 2020 and will conduct an interim period impairment analysis as required.
Warranty Obligations
1 unchanged sentence
The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications.
−Removed: The changes in the carrying amount of accrued warranty costs included in other current liabilities in the accompanying condensed consolidated balance sheet are as follows:
−Removed: Three Months Ended
+Added: The Company's liability for warranties is included in other current liabilities in the accompanying condensed consolidated balance sheet.
+Added: The changes in the carrying amount of product warranty obligations are as follows:
+Added: Six Months Ended
(In thousands)
16 unchanged sentences
Three Months Ended
+Added: Six Months Ended
(In thousands)
7 unchanged sentences
Three Months Ended
+Added: Six Months Ended
(In thousands)
16 unchanged sentences
These advance payments will be recognized as revenue when the Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer.
−Removed: The Company recognized revenue of $ 19,708,000 in the first three months of 2020 and $ 19,095,000 in the first three months of 2019 that was included in the contract liabilities balance at the beginning of 2020 and 2019.
+Added: The Company recognized revenue of $ 7,158,000 in the second quarter of 2020 and $ 4,427,000 in the second quarter of 2019 , $ 26,866,000 in the first six months of 2020 , and $ 23,522,000 in the first six months of 2019 that was included in the contract liabilities balance at the beginning of 2020 and 2019 , respectively.
The majority of the Company's contracts for capital equipment have an original expected duration of one year or less.
−Removed: For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining partially unsatisfied
+Added: For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining partially unsatisfied performance obligations as of
Notes to Condensed Consolidated Financial Statements
Nature of Operations and Summary of Significant Accounting Policies (continued)
−Removed: performance obligations as of March 28, 2020 was $ 13,194,000 .
−Removed: The Company will recognize revenue for these performance obligations as they are satisfied, approximately 89 % of which is expected to occur within the next twelve months .
−Removed: Customers in China will often settle their accounts receivable with a banker's acceptance draft, in which case cash settlement will be delayed until the draft matures or is settled prior to maturity.
+Added: June 27, 2020 was $ 9,798,000 .
+Added: The Company will recognize revenue for these performance obligations as they are satisfied, approximately 98 % of which is expected to be recognized within the next twelve months .
+Added: Customers in China will often settle their accounts receivable with banker's acceptance drafts, in which case cash settlement will be delayed until the drafts mature or are settled prior to maturity.
For customers outside of China, final payment for the majority of the Company's products is received in the quarter following the product shipment.
6 unchanged sentences
The Company establishes an allowance for credit losses to reduce accounts receivable to the net amount expected to be collected.
−Removed: The Company exercises judgment in determining its allowance for credit losses, which is based on its historical collection and write-off experience, adjusted for current macroeconomic trends and conditions, credit policies, specific customer collection issues, and accounts receivable aging categories.
+Added: The Company exercises judgment in determining its allowance for credit losses, which is based on its historical collection and write-off experience, adjusted for current macroeconomic trends and conditions, credit policies, specific customer collection issues, and accounts receivable aging.
The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and each customer's current creditworthiness.
3 unchanged sentences
The changes in the allowance for credit losses are as follows:
−Removed: Three Months Ended
+Added: Six Months Ended
(In thousands)
−Removed: March 28, 2020
−Removed: March 30, 2019
+Added: June 27, 2020
+Added: June 29, 2019
Balance at Beginning of Period
7 unchanged sentences
The Company's Chinese subsidiaries may sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date.
−Removed: These drafts, which totaled $ 3,329,000 at March 28, 2020 and $ 5,230,000 at December 28, 2019 , are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date.
+Added: These drafts, which totaled $ 3,224,000 at June 27, 2020 and $ 5,230,000 at December 28, 2019 , are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date.
Recently Adopted Accounting Pronouncements
1 unchanged sentence
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
−Removed: 2016-13, which changes the way entities recognize impairment of financial assets measured at amortized costs, such as accounts receivable, by requiring immediate recognition of estimated credit losses expected to occur over their remaining lives.
+Added: 2016-13, which changes the way entities recognize impairment of financial assets, such as accounts receivable, by requiring immediate recognition of estimated credit losses expected to occur over their remaining lives.
During 2018 and 2019, the FASB issued additional guidance and clarification.
−Removed: The Company adopted this ASU using a modified retrospective method at the beginning of fiscal 2020.
−Removed: The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.
−Removed: See Accounts Receivable and Allowance for Credit Losses in this section for further information on the Company's allowance for credit losses.
+Added: The Company adopted this ASU using a modified retrospective method at the beginning of fiscal 2020 and its adoption did not have a material impact on the condensed consolidated financial statements.
+Added: See Accounts Receivable and Allowance for Credit Losses in this section for information on the Company's allowance for credit losses.
Notes to Condensed Consolidated Financial Statements
5 unchanged sentences
Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date.
−Removed: The guidance in this ASU is applicable to the Company's existing contracts and hedging relationships that reference LIBOR, and may be adopted by the Company prospectively beginning March 12, 2020 through December 31, 2022.
+Added: The guidance in this ASU is applicable to the Company's existing contracts and hedging relationships that reference LIBOR and may be adopted prospectively beginning March 12, 2020 through December 31, 2022.
The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.
2 unchanged sentences
2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance, including the recognition of franchise tax, the treatment of a step up in the tax basis of goodwill, and the timing for recognition of enacted changes in tax laws or rates in the interim period annual effective tax rate computation.
−Removed: This new guidance is effective for the Company in fiscal 2021, with early adoption permitted.
+Added: This new guidance is effective in fiscal 2021, with early adoption permitted.
The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.
+Added: The Company’s acquisitions have been accounted for using the purchase method of accounting and the results of the acquired businesses are included in its condensed consolidated financial statements from the date of acquisition.
+Added: Historically, acquisitions have been made at prices above the fair value of identifiable net assets, resulting in goodwill.
+Added: Acquisition costs are included in selling, general, and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income as incurred.
+Added: The Company recorded acquisition costs of $ 407,000 in the first six months of 2020 and $ 843,000 in the first six months of 2019.
+Added: On June 1, 2020, the Company’s Industrial Processing segment acquired Cogent Industrial Technologies Ltd.
+Added: (Cogent) for approximately $ 6,837,000 , net of cash acquired, subject to a post-closing adjustment.
+Added: The Company funded the acquisition through borrowings under its revolving credit facility.
+Added: Intangible assets acquired totaled $ 3,350,000 and primarily related to customer relationships.
+Added: Cogent, based in British Columbia, Canada, is an industrial automation and controls solution provider that offers expertise in process technology integration, industrial automation and controls, industrial safety, project management, and operational performance management systems.
+Added: In the second quarter of 2020, the Company’s Industrial Processing segment also acquired certain intellectual property from a company in Austria for $ 416,000 , of which $ 229,000 was paid in the second quarter of 2020.
+Added: The Company expects to pay the remaining amount no later than the first quarter of 2022.
+Added: Restructuring Costs
+Added: In the second quarter of 2020, the Company recorded restructuring costs of $ 456,000 for severance associated with headcount reductions of 30 employees within its Flow Control segment.
+Added: The Company also reduced its workforce by 21 employees within its Industrial Processing segment with no associated severance costs.
+Added: These cost-containment measures were taken to reduce future payroll-related overhead and operating costs in response to the slowdown in the global economy, largely driven by COVID-19.
+Added: These headcount reductions affected approximately 2 % of the Company's workforce.
+Added: A summary of the changes in accrued restructuring costs related to the 2020 restructuring plan included in other accrued expenses in the accompanying condensed consolidated balance sheet are as follows:
+Added: (In thousands)
+Added: Currency translation
+Added: Balance at June 27, 2020
+Added: The Company expects to pay the remaining accrued restructuring costs primarily in the third quarter of 2020.
+Added: Notes to Condensed Consolidated Financial Statements
Earnings per Share
1 unchanged sentence
Three Months Ended
+Added: Six Months Ended
(In thousands, except per share amounts)
5 unchanged sentences
Diluted Earnings per Share
−Removed: The effect of outstanding and unvested restricted stock units (RSUs) of the Company's common stock totaling 43,000 shares in the first three months of 2020 and 44,000 shares in the first three months of 2019 was not included in the computation of diluted EPS for the respective periods as the effect would have been antidilutive or, for unvested performance-based RSUs, the performance conditions had not been met as of the end of the reporting periods.
−Removed: Notes to Condensed Consolidated Financial Statements
+Added: The effect of outstanding and unvested restricted stock units (RSUs) of the Company's common stock totaling 36,000 shares in the second quarter of 2020 , 44,000 shares in the second quarter of 2019 , 39,000 shares in the first six months of 2020 , and 44,000 in the first six months of 2019 was not included in the computation of diluted EPS for the respective periods as the effect would have been antidilutive or, for unvested performance-based RSUs, the performance conditions had not been met as of the end of the reporting periods.
Provision for Income Taxes
−Removed: The provision for income taxes was $ 4,559,000 in the first three months of 2020 and $ 3,963,000 in the first three months of 2019 .
−Removed: The effective tax rate of 26 % in the first three months of 2020 was higher than the Company's statutory rate of 21% primarily due to nondeductible expenses, state taxes, the distribution of the Company’s worldwide earnings, and tax expense associated with Global Intangible Low-Taxed Income (GILTI) provisions.
−Removed: This incremental tax expense was offset in part by the reversal of tax reserves associated with uncertain tax positions.
−Removed: The effective tax rate of 26 % in the first three months of 2019 was higher than the Company's statutory tax rate of 21 % primarily due to nondeductible expenses, the distribution of the Company’s worldwide earnings, state taxes, and tax expense associated with GILTI.
−Removed: This incremental tax expense was offset in part by a decrease in tax related to the net excess income tax benefits from stock-based compensation arrangements.
+Added: The provision for income taxes was $ 9,033,000 in the first six months of 2020 and $ 7,091,000 in the first six months of 2019 .
+Added: The effective tax rate of 27 % in the first six months of 2020 was higher than the Company's statutory rate of 21% primarily due to nondeductible expenses, the distribution of worldwide earnings, state taxes, and tax expense associated with Global Intangible Low-Taxed Income (GILTI) provisions.
+Added: These increases in tax expense were offset in part by net excess income tax benefits from stock-based compensation arrangements.
+Added: The effective tax rate of 21 % in the first six months of 2019 was equal to the Company's statutory rate and included a net discrete tax benefit associated with foreign exchange losses and tax costs recognized upon the repatriation of certain previously taxed foreign earnings and a tax benefit related to the net excess income tax benefits from stock-based compensation arrangements.
+Added: These tax benefits were offset by tax expense primarily related to nondeductible expenses, the distribution of worldwide earnings, GILTI, and state taxes.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law and provides a substantial stimulus and assistance package intended to address the impact of the COVID-19 pandemic, including tax relief.
−Removed: The enactment of the CARES Act did not have a material impact on the Company’s provision for income taxes in the first three months of 2020.
−Removed: The Company continues to monitor any effects that may result from the new law.
−Removed: Long-Term Obligations
−Removed: Long-term obligations are as follows:
+Added: The enactment of the CARES Act did not have a material impact on the Company’s provision for income taxes in the first six months of 2020.
+Added: The Company continues to monitor any effects that may result from the CARES Act.
+Added: Short- and Long-Term Obligations
+Added: Short- and long-term obligations are as follows:
(In thousands)
Revolving Credit Facility, due 2023
−Removed: Commercial Real Estate Loan, due 2020 to 2028
+Added: Commercial Real Estate Loan, due 2020 (a)
Senior Promissory Notes, due 2023 to 2028
2 unchanged sentences
Unamortized Debt Issuance Costs
−Removed: Current Maturities of Long-Term Obligations
+Added: Short-term Obligations and Current Maturities of Long-Term Obligations
Long-Term Obligations
−Removed: See Note 8 , Derivatives, for the fair value information related to the Company's long-term obligations.
+Added: Notes to Condensed Consolidated Financial Statements
+Added: Short- and Long-Term Obligations (continued)
+Added: (a) See further details on the repayment of this loan under the header Commercial Real Estate Loan below and Note 14 , Subsequent Event.
+Added: See Note 10 , Derivatives, for the fair value information related to the Company's short- and long-term obligations.
Revolving Credit Facility
−Removed: In 2018, the Company entered into a second amendment (Second Amendment) to its existing amended and restated five-year, unsecured multi-currency revolving credit facility, dated as of March 1, 2017 (as amended, the Credit Agreement).
−Removed: Pursuant to the Second Amendment, the Company has a borrowing capacity of $ 400,000,000 , with an uncommitted unsecured incremental borrowing facility of $ 150,000,000 under its Credit Agreement, with a maturity date of December 14, 2023.
+Added: The Company entered into a five-year, unsecured multi-currency revolving credit facility, dated as of March 1, 2017 (as amended and restated to date, the Credit Agreement).
+Added: Pursuant to the Credit Agreement, the Company has a borrowing capacity of $ 400,000,000 , with an uncommitted, unsecured incremental borrowing facility of $ 150,000,000 , and a maturity date of December 14, 2023.
Interest on borrowings outstanding accrues and is payable in arrears calculated at one of the following rates selected by the Company:
4 unchanged sentences
The applicable margin is determined based upon the ratio of the Company's total debt, net of unrestricted cash up to $ 30,000,000 and certain debt obligations, to earnings before interest, taxes, depreciation, and amortization as defined in the Credit Agreement.
−Removed: The obligations of the Company under the Credit Agreement may be accelerated upon the occurrence of an event of default, which includes customary events of default under such financing arrangements.
+Added: Obligations under the Credit Agreement may be accelerated upon the occurrence of an event of default, which includes customary events of default under such financing arrangements.
In addition, the Credit Agreement contains negative covenants applicable to the Company and its subsidiaries, including financial covenants requiring the Company to maintain a maximum consolidated leverage ratio of 3.75 to 1.00, or for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, 4.00 to 1.00, and limitations on making certain restricted payments (including dividends and stock repurchases).
1 unchanged sentence
In addition, one of the Company’s foreign subsidiaries entered into a separate guarantee agreement limited to certain obligations of two foreign subsidiary borrowers.
−Removed: Notes to Condensed Consolidated Financial Statements
−Removed: Long-Term Obligations (continued)
−Removed: As of March 28, 2020 , the outstanding balance under the Credit Agreement was $ 260,485,000 , and included $ 59,713,000 of euro-denominated borrowings and $ 30,771,000 of Canadian dollar-denominated borrowings.
−Removed: As of March 28, 2020 , the Company had $ 141,467,000 of borrowing capacity available under its Credit Agreement, which was calculated by translating its foreign-denominated borrowings using borrowing date foreign exchange rates.
+Added: As of June 27, 2020 , the outstanding balance under the Credit Agreement was $ 248,743,000 , and included $ 58,905,000 of euro-denominated borrowings and $ 22,838,000 of Canadian dollar-denominated borrowings.
+Added: As of June 27, 2020 , the Company had $ 150,830,000 of borrowing capacity available under the Credit Agreement, which was calculated by translating its foreign-denominated borrowings using borrowing date foreign exchange rates.
See Note 10 , Derivatives, under the heading Interest Rate Swap Agreements , for information relating to the swap agreements used to hedge the Company’s exposure to movements in the three-month USD LIBOR on its U.S.
dollar-denominated debt borrowed under the Credit Agreement.
−Removed: The weighted average interest rate for the outstanding balance under the Credit Agreement was 2.44 % as of March 28, 2020 .
+Added: The weighted average interest rate for the outstanding balance under the Credit Agreement was 1.85 % as of June 27, 2020 .
Commercial Real Estate Loan
−Removed: In 2018, the Company and certain domestic subsidiaries borrowed $ 21,000,000 under a ten-year promissory note (Real Estate Loan), which is repayable in quarterly principal installments of $ 262,500 with the remaining principal balance of $ 10,500,000 due July 6, 2028.
−Removed: Interest accrues and is payable quarterly in arrears at a fixed rate of 4.45 % per annum.
−Removed: Any future voluntary prepayments are subject to a 2 % prepayment fee if paid on or prior to July 6, 2020 and are subject to a 1 % prepayment fee if paid in the twelve months following July 6, 2020.
−Removed: Thereafter, no prepayment fee will be applied to voluntary prepayment by the Company.
−Removed: The Real Estate Loan is secured by real estate and related personal property of the Company and certain of its domestic subsidiaries, pursuant to mortgage and security agreements (Mortgage and Security Agreements).
−Removed: The obligations of the Company under the Real Estate Loan may be accelerated upon the occurrence of an event of default under the Real Estate Loan and the Mortgage and Security Agreements, which includes customary events of default for financings of this type.
−Removed: In addition, a default under the Credit Agreement or any successor credit facility would be an event of default under the Real Estate Loan.
−Removed: The effective interest rate for the Real Estate Loan, including amortization of debt issuance costs, was 4.60 % as of March 28, 2020 .
+Added: In 2018, the Company and certain domestic subsidiaries borrowed $ 21,000,000 under a ten-year promissory note (Real Estate Loan), which was repayable in quarterly principal installments of $ 262,500 with the remaining principal balance of $ 10,500,000 due July 6, 2028.
+Added: Interest accrued and was payable quarterly in arrears at a fixed rate of 4.45 % per annum.
+Added: The effective interest rate for the Real Estate Loan, including amortization of debt issuance costs, was 4.60 % as of June 27, 2020 .
+Added: The Real Estate Loan was secured by real estate and related personal property of the Company and certain of its domestic subsidiaries, pursuant to mortgage and security agreements (Mortgage and Security Agreements).
+Added: Obligations under the Real Estate Loan could have been accelerated upon the occurrence of an event of default under the Real Estate Loan and the Mortgage and Security Agreements, which included customary events of default for financings of this type.
+Added: In addition, a default under the Credit Agreement or any successor credit facility would have been an event of default under the Real Estate Loan.
+Added: On June 18, 2020, the Company delivered a prepayment notice to the lender bank of its intent to prepay the outstanding principal balance on the Real Estate Loan of $ 18,900,000 on July 20, 2020, together with accrued interest and a prepayment fee of 1.00 % of the outstanding principal balance.
+Added: In connection with the prepayment of the Real Estate Loan, the Mortgage and Security Agreements terminated.
+Added: Accordingly, the outstanding balance and the associated unamortized debt issuance costs are included in short-term obligations in the accompanying condensed consolidated balance sheet as of June 27, 2020.
+Added: See Note 14 , Subsequent Event, for further details.
+Added: Notes to Condensed Consolidated Financial Statements
+Added: Short- and Long-Term Obligations (continued)
Senior Promissory Notes
4 unchanged sentences
In accordance with the Note Purchase Agreement, the Company may also issue additional senior promissory notes (together with the Initial Notes, the Senior Promissory Notes) up to an additional $ 115,000,000 until the earlier of December 14, 2021 or the thirtieth day after written notice to terminate the issuance and sale of additional notes pursuant to the Note Purchase Agreement.
−Removed: The Senior Promissory Notes are pari passu with the Company’s indebtedness under the Credit Agreement, and any other senior debt of the Company, subject to certain specified exceptions, and participate in a sharing agreement with respect to the obligations of the Company and its subsidiaries under the Credit Agreement.
+Added: The Senior Promissory Notes are pari passu with the Company’s indebtedness under the Credit Agreement, and any other senior debt, subject to certain specified exceptions, and participate in a sharing agreement with respect to the obligations of the Company and its subsidiaries under the Credit Agreement.
The Senior Promissory Notes are guaranteed by certain of the Company’s domestic subsidiaries.
Debt Compliance
−Removed: As of March 28, 2020 , the Company was in compliance with the covenants related to its debt obligations.
+Added: As of June 27, 2020 , the Company was in compliance with the covenants related to its debt obligations.
Finance Leases
The Company's finance leases primarily relate to contracts for its vehicles.
−Removed: Notes to Condensed Consolidated Financial Statements
−Removed: Long-Term Obligations (continued)
Other Borrowings
2 unchanged sentences
The interest rate on the outstanding obligation is 1.79 % .
−Removed: The secured loan receivable, which is included in other assets in the accompanying condensed consolidated balance sheet, was $ 952,000 at March 28, 2020 .
+Added: The secured loan receivable, which is included in other assets in the accompanying condensed consolidated balance sheet, was $ 1,026,000 at June 27, 2020 .
The lease arrangement provides for a fixed price purchase option, net of the projected loan receivable, of $ 1,493,000 at the end of the lease term in 2022 .
−Removed: If the Company does not exercise the purchase option for the facility, the Company will receive cash from the landlord to settle the loan receivable.
−Removed: As of March 28, 2020 , $ 3,638,000 was outstanding under this obligation.
+Added: If the Company does not exercise the purchase option for the facility, it will receive cash from the landlord to settle the loan receivable.
+Added: As of June 27, 2020 , $ 3,630,000 was outstanding under this obligation.
Stock-Based Compensation
−Removed: The Company recognized stock-based compensation expense of $ 1,639,000 in the first three months of 2020 and $ 1,553,000 in the first three months of 2019 within selling, general, and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income.
+Added: The Company recognized stock-based compensation expense of $ 1,877,000 in the second quarter of 2020 , $ 1,914,000 in the second quarter of 2019 , $ 3,516,000 in the first six months of 2020 , and $ 3,467,000 in the first six months of 2019 within SG&A expenses in the accompanying condensed consolidated statement of income.
The Company recognizes compensation expense for all stock-based awards granted to employees and directors based on the grant date estimate of fair value for those awards.
2 unchanged sentences
For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately vesting portion of the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known.
−Removed: Unrecognized compensation expense related to stock-based compensation totaled approximately $ 9,588,000 at March 28, 2020 , and will be recognized over a weighted average period of 2.1 years.
−Removed: Performance-based RSUs
−Removed: On March 2, 2020, the Company granted to certain of its officers performance-based RSUs, which represented, in aggregate, the right to receive 35,808 shares (the target RSU amount), with an aggregate grant date fair value of $ 3,184,000 .
−Removed: The RSUs are subject to adjustment based on the achievement of the performance measure selected for the 2020 fiscal year, which is a specified target for adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) generated from operations for the 2020 fiscal year.
−Removed: The RSUs are adjusted by comparing the actual adjusted EBITDA for the performance period to the target adjusted EBITDA.
−Removed: Actual adjusted EBITDA between 50 % and 100 % of the target adjusted EBITDA results in an adjustment of 50% to 100% of the RSU amount.
−Removed: Actual adjusted EBITDA between 100% and 115% of the target adjusted EBITDA results in an adjustment using a straight-line linear scale between 100 % and 150 % of the RSU amount.
−Removed: Actual adjusted EBITDA in excess of 115% results in an adjustment capped at 150 % of the RSU amount.
−Removed: If actual adjusted EBITDA is below 50 % of the target adjusted EBITDA for the 2020 fiscal year, these performance-based RSUs will be forfeited.
−Removed: The Company recognizes compensation expense based on the probable number of performance-based RSUs expected to vest.
−Removed: Following the adjustment, the performance-based RSUs will be subject to additional time-based vesting, and will vest in three equal annual installments on March 10 of 2021, 2022, and 2023, provided that the officer is employed by the Company on the applicable vesting dates.
−Removed: Time-based RSUs
−Removed: On March 2, 2020, the Company also granted time-based RSUs representing 33,600 shares to its officers and employees with an aggregate grant date fair value of $ 2,988,000 .
−Removed: These time-based RSUs generally vest in three equal annual installments on March 10 of 2021, 2022, and 2023, provided that a recipient remains employed by the Company on the applicable vesting dates.
+Added: Unrecognized compensation expense related to stock-based compensation totaled approximately $ 8,409,000 at June 27, 2020 and will be recognized over a weighted average period of 1.9 years.
+Added: On May 12, 2020, the Company granted 8,340 RSUs in the aggregate to its then non-employee directors with a grant date fair value of $ 676,000 .
+Added: Half of these RSUs vested on June 1, 2020 and the remaining RSUs will vest ratably on the last day of the third and fourth fiscal quarters of 2020.
Notes to Condensed Consolidated Financial Statements
1 unchanged sentence
The Company includes the service cost component of net periodic benefit cost in operating income and all other components are included in other expense, net in the accompanying condensed consolidated statement of income.
−Removed: In 2018, the Company's board of directors and its compensation committee approved amendments to freeze and terminate the Company's U.S.
+Added: In 2018, the Company's board of directors and its compensation committee approved amendments to freeze and terminate its U.S.
pension plan (Retirement Plan) and its restoration plan (Restoration Plan).
1 unchanged sentence
In the first quarter of 2020, the Company settled its Restoration Plan obligation of $ 2,427,000 by paying a lump sum to its plan participants.
+Added: No benefit costs were incurred related to these plans in 2020.
The components of net periodic benefit cost are as follows:
Three Months Ended
−Removed: March 28, 2020
+Added: June 27, 2020
Three Months Ended
−Removed: March 30, 2019
+Added: June 29, 2019
(In thousands, except percentages)
9 unchanged sentences
Rate of Compensation Increase
−Removed: The Company does not plan to make any other material cash contributions to its other pension and post-retirement plans in 2020.
+Added: Six Months Ended
+Added: June 27, 2020
+Added: Six Months Ended
+Added: June 29, 2019
+Added: (In thousands, except percentages)
+Added: Other Post-Retirement
+Added: Other Post-Retirement
+Added: Interest Cost
+Added: Expected Return on Plan Assets
+Added: Recognized Net Actuarial Loss
+Added: Amortization of Prior Service Cost
+Added: The weighted average assumptions used to determine net periodic benefit cost are as follows:
+Added: Discount Rate
+Added: Expected Long-Term Return on Plan Assets
+Added: Rate of Compensation Increase
+Added: Other than the payment made for the settlement of the Restoration Plan obligations in January 2020, the Company does not plan to make any other material cash contributions to its other pension and post-retirement plans in 2020.
+Added: Notes to Condensed Consolidated Financial Statements
Accumulated Other Comprehensive Items
−Removed: Comprehensive (loss) income combines net income and other comprehensive items, which represent certain amounts that are reported as components of stockholders' equity in the accompanying condensed consolidated balance sheet.
+Added: Comprehensive income combines net income and other comprehensive items, which represent certain amounts that are reported as components of stockholders' equity in the accompanying condensed consolidated balance sheet.
Changes in each component of accumulated other comprehensive items (AOCI), net of tax, are as follows:
6 unchanged sentences
Net current period other comprehensive items
−Removed: Balance at March 28, 2020
−Removed: Notes to Condensed Consolidated Financial Statements
−Removed: Accumulated Other Comprehensive Items (continued)
+Added: Balance at June 27, 2020
Amounts reclassified from AOCI are as follows:
Three Months Ended
+Added: Six Months Ended
(In thousands)
13 unchanged sentences
Cost of revenue
−Removed: Total (expense) income before income taxes
−Removed: Income tax benefit (provision)
+Added: Total expense before income taxes
+Added: Income tax benefit
Provision for income taxes
9 unchanged sentences
In 2015, the Company entered into an interest rate swap agreement (2015 Swap Agreement) with Citizens which had a $ 10,000,000 notional value and expired on March 27, 2020.
−Removed: Under the 2015 Swap Agreement, the Company received three-month USD LIBOR and paid a fixed rate of interest of 1.5 % plus an applicable margin as defined in the Credit Agreement.
−Removed: The interest rate swap agreements have been designated as cash flow hedges and the Company structured its interest rate swap agreements to be 100% effective.
+Added: Under the 2015 Swap
+Added: Notes to Condensed Consolidated Financial Statements
+Added: Derivatives (continued)
+Added: Agreement, the Company received three-month USD LIBOR and paid a fixed rate of interest of 1.5 % plus an applicable margin as defined in the Credit Agreement.
+Added: The interest rate swap agreements have been designated as cash flow hedges and are structured to be 100% effective.
Unrealized gains and losses related to the fair values of the swap agreements were recorded to AOCI, net of tax.
In the event of early termination of the 2018 Swap Agreement, the Company will receive from or pay to the counterparty the fair value of the interest rate swap agreement, and the unrealized gain or loss outstanding will be recognized in earnings.
−Removed: The counterparty to the 2018 Swap Agreement could demand an early termination of that agreement if the Company were to be in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and if the Company were to be unable to cure the default (See Note 4 , Long-Term Obligations).
+Added: The counterparty to the 2018 Swap Agreement could demand an early termination of that agreement if the Company were to be in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and if it were to be unable to cure the default.
+Added: See Note 6 , Short- and Long-Term Obligations, for further details.
Forward Currency-Exchange Contracts
3 unchanged sentences
Deferred gains and losses are recognized in the statement of income in the period in which the underlying transaction occurs.
−Removed: The fair values of forward currency-
−Removed: Notes to Condensed Consolidated Financial Statements
−Removed: Derivatives (continued)
−Removed: exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings.
−Removed: The Company recognized within SG&A expenses in the accompanying condensed consolidated statement of income losses of $ 34,000 in the first three months of 2020 and losses of $ 37,000 in the first three months of 2019 associated with forward currency-exchange contracts that were not designated as hedges.
−Removed: The following table summarizes the fair value of the Company's derivative instruments in the accompanying condensed consolidated balance sheet:
−Removed: March 28, 2020
+Added: The fair values of forward currency-exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings.
+Added: The Company recognized within SG&A expenses in the accompanying condensed consolidated statement of income gains of $ 6,000 in the second quarter of 2020 and $ 5,000 in the second quarter of 2019 , and losses of $ 28,000 in the first six months of 2020 and $ 32,000 in the first six months of 2019 associated with forward currency-exchange contracts that were not designated as hedges.
+Added: The following table summarizes the fair value of derivative instruments in the accompanying condensed consolidated balance sheet:
+Added: June 27, 2020
December 28, 2019
25 unchanged sentences
(b) The total 2020 notional amounts are indicative of the level of the Company's recurring derivative activity.
−Removed: The following table summarizes the activity in AOCI associated with the Company's derivative instruments designated as cash flow hedges as of and for the three months ended March 28, 2020 :
+Added: Notes to Condensed Consolidated Financial Statements
+Added: Derivatives (continued)
+Added: The following table summarizes the activity in AOCI associated with derivative instruments designated as cash flow hedges as of and for the six months ended June 27, 2020 :
(In thousands)
4 unchanged sentences
(Loss) gain recognized in AOCI
−Removed: Unrealized (Loss) Gain, Net of Tax, at March 28, 2020
+Added: Unrealized (Loss) Gain, Net of Tax, at June 27, 2020
(a) See Note 9 , Accumulated Other Comprehensive Items, for the income statement classification.
−Removed: As of March 28, 2020 , the Company expects to reclassify losses of $ 268,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the 2018 Swap Agreement and the maturity dates of the forward currency-exchange contracts.
−Removed: Notes to Condensed Consolidated Financial Statements
+Added: As of June 27, 2020 , the Company expects to reclassify losses of $ 332,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the 2018 Swap Agreement and the maturity dates of the forward currency-exchange contracts.
Fair Value Measurements and Fair Value of Financial Instruments
5 unchanged sentences
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis:
−Removed: Fair Value as of March 28, 2020
+Added: Fair Value as of June 27, 2020
(In thousands)
1 unchanged sentence
Banker's acceptance drafts (a)
−Removed: Forward currency-exchange contract
+Added: Forward currency-exchange contracts
2018 Swap Agreement
9 unchanged sentences
Included in accounts receivable in the accompanying condensed consolidated balance sheet.
−Removed: The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first three months of 2020 .
−Removed: The Company's banker's acceptance drafts are carried at face value which approximates their fair value due to the short-term nature of the negotiable instrument.
−Removed: The fair values of the Company's forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date.
−Removed: The fair values of the Company's interest rate swap agreements are based on LIBOR yield curves at the reporting date.
−Removed: The forward currency-exchange contracts and interest rate swap agreements are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts.
−Removed: Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.
Notes to Condensed Consolidated Financial Statements
Fair Value Measurements and Fair Value of Financial Instruments (continued)
−Removed: The carrying value and fair value of the Company's debt obligations, excluding lease obligations and other borrowings, are as follows:
−Removed: March 28, 2020
+Added: The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first six months of 2020 .
+Added: Banker's acceptance drafts are carried at face value which approximates their fair value due to the short-term nature of the negotiable instrument.
+Added: The fair values of forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date.
+Added: The fair values of interest rate swap agreements are based on LIBOR yield curves at the reporting date.
+Added: The forward currency-exchange contracts and interest rate swap agreements are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts.
+Added: Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.
+Added: The carrying value and fair value of debt obligations, excluding lease obligations and other borrowings, are as follows:
+Added: June 27, 2020
December 28, 2019
8 unchanged sentences
The fair values of the commercial real estate loan and senior promissory notes are primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period ends, which represent Level 2 measurements.
+Added: The fair value of the commercial real estate loan includes a prepayment penalty of $ 189,000 which was paid in connection with the prepayment of the loan in July 2020.
Business Segment Information
1 unchanged sentence
Papermaking Systems, Wood Processing Systems, and Material Handling Systems, and a separate product line, Fiber-based Products.
−Removed: During the first quarter of 2020, the Company realigned its reportable operating segments consistent with the Company's strategic initiatives to grow both organically and through acquisitions.
−Removed: Such growth and diversification have resulted in a change in the internal organization of the Company and how its chief operating decision maker makes operating decisions, assesses the performance of the business, and allocates resources.
+Added: During the first quarter of 2020, the Company changed its reportable operating segments to better align with its strategic initiatives to grow both organically and through acquisitions.
+Added: Such growth and diversification resulted in a change in the internal organization of the Company and how its chief operating decision maker makes operating decisions, assesses the performance of the business, and allocates resources.
Accordingly, the Company's financial results are reported in three new reportable operating segments:
5 unchanged sentences
A description of each segment follows.
−Removed: Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, tissue, food processing, metals, and other industrial sectors.
+Added: Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, tissue, food, metals, and other industrial sectors.
The Company's products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems.
−Removed: Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, paper, wood products and alternative fuel industries, among others.
−Removed: The Company's primary products include stock preparation systems and recycling equipment, debarkers, stranders, chippers, and logging machinery.
−Removed: Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the mining, aggregates, food processing, waste management, and pulp and paper industries, among others.
+Added: Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, wood products and alternative fuel industries, among others.
+Added: The Company's primary products include stock-preparation systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, and logging machinery.
+Added: In addition, the Company provides industrial automation and digitization solutions to process industries.
+Added: Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the aggregates, mining, food, and waste management industries, among others.
The Company's primary products include conveying and vibratory equipment and balers.
In addition, the Company manufactures and sells biodegradable, absorbent granules used as carriers in agricultural applications and for oil and grease absorption.
+Added: Notes to Condensed Consolidated Financial Statements
+Added: Business Segment Information (continued)
The following table presents financial information for the Company's reportable operating segments:
Three Months Ended
+Added: Six Months Ended
(In thousands)
1 unchanged sentence
Material Handling
−Removed: Notes to Condensed Consolidated Financial Statements
−Removed: Business Segment Information (continued)
−Removed: Three Months Ended
−Removed: (In thousands)
Income Before Provision for Income Taxes
−Removed: Industrial Processing
−Removed: Material Handling (a)
−Removed: Corporate (b)
+Added: Flow Control (a)
+Added: Industrial Processing (b)
+Added: Material Handling (c)
+Added: Corporate (d)
Total operating income
−Removed: Interest expense, net (c)
−Removed: Other expense, net (c)
+Added: Interest expense, net (e)
+Added: Other expense, net (e)
Capital Expenditures
1 unchanged sentence
Material Handling
−Removed: (a) Includes $ 4,151,000 of acquisition-related expenses in the three -month period ended March 30, 2019 .
−Removed: Acquisition-related expenses include amortization expense associated with acquired profit in inventory and backlog and acquisition transaction costs.
−Removed: (b) Corporate primarily includes general and administrative expenses.
−Removed: (c) The Company does not allocate interest and other expense, net to its segments.
+Added: (a) Includes restructuring costs of $ 456,000 in the three- and six-month periods ended June 27, 2020 .
+Added: (b) Includes $ 435,000 of acquisition-related expense in the three- and six-month periods ended June 27, 2020 .
+Added: Acquisition-related expenses include amortization expense associated with backlog and acquisition costs.
+Added: (c) Includes $ 1,523,000 in the three-month period ended June 29, 2019 and $ 5,674,000 in the six -month period ended June 29, 2019 of acquisition-related expense.
+Added: Acquisition-related expenses include amortization expense associated with acquired profit in inventory and backlog and acquisition costs.
+Added: (d) Corporate primarily includes general and administrative expenses.
+Added: (e) The Company does not allocate interest and other expense, net to its segments.
Commitments and Contingencies
4 unchanged sentences
Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity dates.
−Removed: The Company had $ 5,307,000 at March 28, 2020 and $ 7,003,000 at December 28, 2019 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates.
+Added: The Company had $ 5,341,000 at June 27, 2020 and $ 7,003,000 at December 28, 2019 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates.
Historically, the banker's acceptance drafts have settled upon maturity without any claim of recourse against the Company.
+Added: Notes to Condensed Consolidated Financial Statements
+Added: Commitments and Contingencies (continued)
From time to time, the Company is subject to various claims and legal proceedings covering a range of matters that arise in the ordinary course of business.
2 unchanged sentences
If the Company were found to be liable for any of the claims or counterclaims against it, the Company would incur a charge against earnings for amounts in excess of legal accruals.
+Added: Subsequent Event
+Added: On June 18, 2020, the Company provided written notice of its intent to prepay the outstanding principal balance of the Real Estate Loan of $ 18,900,000 , together with all accrued interest (Prepayment Amount).
+Added: On July 20, 2020, the Company paid the Prepayment Amount, as well as a prepayment fee of $ 189,000 , or 1.00 % of the outstanding principal balance.
+Added: The Real Estate Loan was secured by certain real estate and related personal property of the Company pursuant to certain Mortgage and Security Agreements, which terminated in connection with the prepayment of the Real Estate Loan.
+Added: To prepay the Real Estate Loan, the Company borrowed $ 19,000,000 under the Credit Agreement.
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.