ADVANCED ENERGY INDUSTRIES, INC. Certain statements set forth below under this caption constitute forward-looking statements. See "Special Note Regarding Forward-Looking Statements" in this Annual Report on Form 10-K for additional factors relating to such statements and see "Risk Factors" in Item 1A for a discussion of certain risks applicable to our business, financial condition and results of operations.
This section of this Form 10-K discusses and compares the results of operations
for 2019 and 2018. The discussion and analysis comparing the results of
operations for 2017 to 2018 are not included in this Form 10-K and can be found
within Part II, Item 7, Management's Discussion and Analysis for Financial
Condition and Results of Operations in our 2018 Form 10-K for the fiscal year
ended
Overview
We design, manufacture, sell, and support power conversion products that transform power into various usable forms. Our highly-engineered, mission-critical, precision power conversion, measurement and control solutions enable innovative complex semiconductor manufacturing processes, power medical equipment, control industrial manufacturing processes, provide high efficiency power to data center equipment and deliver efficient and reliable power to communication infrastructure and to a wide range of industrial equipment. Our network of global service support centers provides a recurring revenue opportunity as we offer repair services, conversions, upgrades, and refurbishments and used equipment to companies using our products.
Driven by continuing technology migration and changing customer demands, the markets we serve are constantly changing in terms of advancement in applications, core technology and competitive pressures. New products we design for capital equipment manufacturers typically have a lifespan of five to ten years. Our success and future growth depend on our products being designed into our customers' new generations of equipment as they develop new technologies and applications. We work with these original equipment manufacturers early in their design cycles to modify, enhance and upgrade our products or design new products that meet the requirements of their new systems. The design win process is highly competitive, and we may win or lose new designs for our existing customers' or new customers' next generations of equipment. If existing or new customers do not choose our products as a result of the development, evaluation and qualification efforts related to the design win process, our market share may be reduced, our potential revenues related to the lifespan of our customers' products, which can be 5-10 years, may not be realized, and our business, financial condition and results of operations may be materially and adversely impacted.
CRITICAL ACCOUNTING ESTIMATES
The preparation of Consolidated Financial Statements and related disclosures in
conformity with accounting principles generally accepted in
Defined Benefit Pension Plans
Accounting for pension plans requires that we make assumptions that involve considerable judgment which are significant inputs in the actuarial models that measure our net pension obligations and ultimately impact our earnings. These include the discount rate, long-term expected rate of return on assets, compensation trends, inflation considerations,
36
Table of Contents
health care cost trends and other assumptions, as well as determining the fair value of assets in our funded plans. Specifically, the discount rates, as well as the expected rates of return on assets and plan asset fair value determination, are important assumptions used in determining the plans' funded status and annual net periodic pension and benefit costs. We evaluate these critical assumptions at least annually on a plan and country-specific basis. We also, with the help of actuaries, periodically evaluate other assumptions involving demographic factors, such as retirement age, mortality and turnover, and update them to reflect our experience and expectations for the future. The Company believes the accounting estimates related to our pension plans are critical accounting estimates because they are highly susceptible to change from period to period based on the performance of plan assets, actuarial valuations, market conditions and contracted benefit changes. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our net pension and postretirement benefit obligations and related expense.
Revenue Recognition
We recognize revenue when we have satisfied our performance obligations which typically occurs when control of the products or completion of services have been transferred to our customers. The transaction price is based upon the standalone selling price. In most transactions, we have no obligations to our customers after the date products are shipped, other than pursuant to warranty obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Shipping and handling fees, if any, are recognized as revenue. The related shipping and handling costs are recognized in cost of sales. Support services include warranty and non-warranty repair services, upgrades, and refurbishments on the products we sell. Repairs that are covered under our standard warranty do not generate revenue.
We maintain a credit approval process and we make significant judgments in connection with assessing our customers' ability to pay. Despite this assessment, from time to time, our customers are unable to meet their payment obligations. We continuously monitor our customers' credit worthiness and use our judgment in establishing a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. While such credit losses have historically been within our expectations and the provisions established, a significant change in the liquidity or financial position of our customers could have a material adverse impact on the collectability of accounts receivable and our future operating results. Additionally, if our credit loss rates prove to be greater than we currently estimate, we record additional reserves for doubtful accounts.
Business Combinations
We record the assets acquired and liabilities assumed in a business combination at their acquisition date fair values. Fair values of assets acquired, and liabilities assumed are based upon available information and may involve engaging an independent third party to perform an appraisal. Estimating fair values can be complex and subject to significant business judgment. We must also identify and include in the allocation all acquired tangible and intangible assets that meet certain criteria, including assets that were not previously recorded by the acquired entity. The estimates most commonly involve property, plant and equipment and intangible assets, including those with indefinite lives. The estimates also include the fair value of contracts including commodity purchase and sale agreements, storage contracts, and transportation contracts. The excess of the purchase price over the net fair value of acquired assets and assumed liabilities is recorded as goodwill, which is not amortized but instead is evaluated for impairment at least annually. Pursuant to GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business combination.
Inventory
We value our inventory at the lower of cost (first-in, first-out method) or net realizable value. We regularly review inventory quantities on hand and record a provision to write-down excess and obsolete inventory to its estimated net realizable value, if less than cost, based primarily on our estimated forecast of product demand. Our industry is subject to technological change, new product developments, and changes in end-user demand for our products which can fluctuate significantly. Any significant changes in end-user demand, technology or new product developments could have a significant impact on the value of our inventory and our reported operating results.
37
Table of Contents
Warranty Costs
We offer warranty coverage for a majority of our products for periods typically ranging from 12 to 24 months after shipment. We provided warranties on our inverter products for five to ten years and also provided the option to purchase additional warranty coverage up to 20 years. Our standard inverter product warranty expense is reported within discontinued operations. We estimate the anticipated costs of repairing our products under such warranties based on the historical costs of the repairs. The assumptions we use to estimate warranty accruals are reevaluated periodically, in light of actual experience, and when appropriate, the accruals are adjusted. Should product failure rates differ from our estimates, actual costs could vary significantly from our expectations. See Note 4. Disposed and Discontinued Operations in Part II, Item 8 "Financial Statements and Supplementary Data" for more information on our discontinued operations and Note 15. Warranties in Part II, Item 8 "Financial Statements and Supplementary Data" for more information.
Contingencies and Legal Reserves
Contingencies and legal reserves are recorded, when probable, using our best
estimate of loss. Estimates of loss, when required, are made based on an
evaluation of the range of loss related to such matters and where the amount and
range can be reasonably estimated. Any such matters are generally resolved over
future periods and only when one or more future events occur or fail to occur.
Following our initial determination, we regularly reassess and revise the
potential liability related to any pending matters as new information becomes
available. We disclose pending loss contingencies when the loss is deemed
reasonably possible, which requires significant judgment. As a result of the
inherent uncertainty of these matters, the ultimate conclusion and actual cost
of settlement may materially differ from our estimates. We did not record any
significant contingencies or legal reserves during the years ended
We evaluate the carrying value of our goodwill for impairment at least annually
or when an interim triggering event occurs that would indicate that impairment
may have taken place. Our annual impairment test was performed as of
The annual impairment test of goodwill may be performed using an assessment of qualitative factors if it is considered more likely than not that goodwill is not impaired. If this qualitative assessment indicates that it is more likely than not that goodwill is impaired, then the next step of impairment testing compares the fair value of a reporting unit to its carrying value. If fair value exceeds carrying value, the we conclude that no goodwill impairment has occurred. Conversely, if carrying value exceeds fair value, we recognize am impairment loss.
We evaluate definite-lived intangible assets and other long-lived assets whenever there is an indicator of impairment. When we determine that the carrying value of intangibles or other long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we use the projected undiscounted cash flow method to determine whether an impairment exists, and then measure the impairment using discounted cash flows . If our expectations of future results and cash flows are significantly diminished, intangible assets, long-lived assets, and goodwill may be impaired and the resulting charge to operations may be material. Changes in these estimates could result in significant revisions to the carrying value of these assets and may result in material charges to our results of operations.
Income Taxes
We are subject to income taxes in
38
Table of Contents
for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We calculate tax expense consistent with intraperiod tax allocation methodology resulting in an allocation of current year tax expense/benefit between continuing operations and discontinued operations. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We adjust these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results. The provision for income taxes includes the effects of any reserves that we believe are appropriate, as well as the related net interest and penalties. For more details see Note. 5 Income Taxes in Part II, Item 8 "Financial Statements and Supplementary Data."
On
Business Environment and Trends
Advanced Energy operates in a single segment structure for power electronics
conversion products. The acquisition of Artesyn's
The demand environment in each of our markets is impacted by various market trends, customer buying patterns, design wins, macro-economic and other factors. In the fourth quarter of 2019 we saw strengthening demand in semiconductor and datacenter computing markets and weakening demand in our telecom networking market. See below for a further discussion of our market trends.
In the beginning of the first quarter of 2020, we began to see an impact of
COVID-19 on our operations particularly in
SEMICONDUCTOR MARKET
Growth in the semiconductor market is driven by growing integrated circuits (IC) content across many industries, increased demand for processing and storage in advanced applications such as artificial intelligence or autonomous vehicles, and the rapid adoption of advanced mobile connectivity solutions such as 5G, enhancing existing and enabling new wireless applications. To address the long-term growing demand for semiconductor devices, the industry continues to invest in production capacities for advanced logic devices at the 14nm technology node and beyond, the latest memory devices including 3D-NAND, DRAM and new emerging memories such as MRAM, and back-end test and advanced wafer-level packaging. The industry's transition to advanced technology nodes in logic and
39
Table of Contents
DRAM and to increased layers in 3D memory devices is requiring an increased
number of etch and deposition process tools and higher content of our advanced
power solutions per tool. As etching and deposition face new challenges such as
increasing aspect ratios in advanced 3D devices, more advanced radio frequency
(RF) and direct current (DC) technologies are needed, and we are meeting these
challenges by providing a broader range of more complex RF and DC power
solutions. Beyond etch and deposition processes, the growing complexity at the
advanced nodes also drive a higher number of other processes across the fab,
including inspection, metrology, thermal, ion implantation, and semiconductor
test, where Advanced Energy is actively participating as a critical technology
provider. In addition, our global support services group offers comprehensive
local repair service, upgrade and retrofit offerings to extend the useable life
of our customers' capital equipment for additional technology generations. The
acquisition of Artesyn's
Starting in the second half of 2018 and continuing into the first half of 2019, the semiconductor industry went through a period of weakening equipment investment as a result of slowing growth in end market demand for semiconductor devices, ongoing digestion of equipment capacity, and consumption of existing inventory. In the second half of 2019, demand from the semiconductor equipment markets improved from the first half of 2019 as a result of increased investments in advanced logic and foundry equipment and by increased investment by Chinese fabricators, which drove higher demand for our products. Based on limited visibility, we expect demand from the Semiconductor Equipment markets will continue to improve in 2020. However, it is difficult to determine when or if overall market investment in semiconductor capital equipment will return to first half 2018 levels.
INDUSTRIAL & MEDICAL MARKETS
Customers in the Industrial & Medical markets incorporate our industrial advanced power, embedded power and measurement products into a wide variety of equipment used in applications such as advanced material fabrication, medical devices, analytical instrumentation, test and measurement equipment, robotics, motor drives and connected light-emitting diodes.
OEM customers design equipment utilizing our process power technologies in a variety of industrial applications including glass coating, glass manufacturing, flat panel displays, photovoltaics solar cell manufacturing, and similar thin film manufacturing, including data storage and decorative, hard and optical coatings. These applications employ similar technologies to those used in the semiconductor market to deposit films on non-semiconductor substrates. Our strategy around these applications is to leverage our thin film deposition technologies into an expanded set of new materials and applications in adjacent markets.
Advanced Energy serves Industrial & Medical markets with mission-critical power components that deliver high reliability, precise, low noise or differentiated power to the equipment they serve. Examples of products sold into Industrial & Medical markets include high voltage products for analytical instrumentation, medical equipment, low voltage power supplies used in applications for medical devices, test and measurement, medical lasers, scientific instrumentation and industrial equipment, and power control modules and thermal instrumentation products for material fabrication, processing and treatment. Our gas monitoring products serve multiple applications in the energy market, air quality monitoring and automobile emission monitoring and testing. Our strategy in the Industrial & Medical markets is to grow and expand our addressable market both organically through our global distribution channels and through acquisitions of products and technologies that are complimentary and adjacent to our core power conversion applications.
In 2019 we saw weakening demand for our thin film industrial products driven by
macro weakness offset by improvements in medical and other embedded power
products and the addition of
40
Table of Contents
DATA CENTER COMPUTING MARKETS
Following the acquisition of Artesyn's
TELECOM & NETWORKING MARKETS
The acquisition of Artesyn's
Results of Continuing Operations
The analysis presented below is organized to provide the information we believe will facilitate an understanding of our historical performance and relevant trends going forward, and should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, in Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
The following table sets forth, for the periods indicated, certain data derived from our Consolidated Statements of Operations (in thousands):
Year Ended December 31,
2019 2018
Sales $ 788,948 $ 718,892
Gross profit 315,652 365,607
Operating expenses 261,264 194,054
Operating income from continuing operations 54,388 171,553
Other income (expense), net 12,806 823
Income from continuing operations before income taxes 67,194 172,376
Provision for income taxes 10,699 25,227
Income from continuing operations, net of income taxes
41
Table of Contents
The following table sets forth, for the periods indicated, the percentage of
sales represented by certain items reflected in our Consolidated Statements of
Operations:
Year Ended December 31,
2019 2018
Sales 100.0 % 100.0 %
Gross profit 40.0 50.9
Operating expenses 33.1 27.0
Operating income from continuing operations 6.9 23.9
Other income (expense), net 1.6 0.1
Income from continuing operations before income taxes 8.5 24.0
Provision for income taxes 1.4 3.5
Income from continuing operations, net of income taxes 7.2 % 20.5 %
SALES, NET
The following tables summarize annual sales and percentages of sales, by product line, for each of the years ended 2019 and 2018 (in thousands):
Years Ended December 31, Change 2019 v. 2018
2019 2018 Dollar Percent
Semiconductor Equipment $ 403,018 $ 533,770 $ (130,752) (24.5) %
Industrial & Medical 245,992 185,122 60,870 32.9
Data Center Computing 91,438 - 91,438 -
Telecom & Networking 48,500 - 48,500 -
Total $ 788,948 $ 718,892 $ 70,056 9.7 %
Years Ended December 31,
2019 2018
Semiconductor Equipment 51.1 % 74.2 %
Industrial & Medical 31.2 25.8
Data Center Computing 11.6 -
Telecom & Networking 6.1 -
Total 100.0 % 100.0 %
OPERATING EXPENSE
The following table summarizes our operating expense as a percentage of sales
for the years ended
Years Ended December 31,
2019 2018
Research and development $ 101,503 12.9 % $ 76,008 10.6 %
Selling, general, and administrative 142,555 18.1 108,033 15.0
Amortization of intangible assets 12,168 1.5 5,774 0.8
Restructuring charges 5,038 0.6 4,239 0.6
Total operating expenses $ 261,264 33.1 % $ 194,054 27.0 %
42
Table of Contents
2019 Results Compared To 2018
SALES
Total sales for the year ended
In 2019, sales to the semiconductor equipment market decreased 24.5% to
Sales to the industrial & medical markets increased 32.9% to
Sales in the data center computing market were
Sales in the telecom and networking market were
Sales to Applied Materials Inc. and Lam Research Corp., our two largest
customers, decreased
Backlog
Our backlog was
GROSS PROFIT
Gross profit decreased
43
Table of Contents
OPERATING EXPENSE
Research and Development
We perform research and development of products to develop new or emerging applications, technological advances to provide higher performance, lower cost, or other attributes that we may expect to advance our customers' products. We believe that continued development of technological applications, as well as enhancements to existing products and related software to support customer requirements, are critical for us to compete in the markets we serve. Accordingly, we devote significant personnel and financial resources to the development of new products and the enhancement of existing products, and we expect these investments to continue.
Research and development expenses in 2019 increased
Selling, General and Administrative
Our selling expenses support domestic and international sales and marketing activities that include personnel, trade shows, advertising, third-party sales representative commissions, and other selling and marketing activities. Our general and administrative expenses support our worldwide corporate, legal, tax, financial, governance, administrative, information systems, and human resource functions in addition to our general management, including acquisition-related activities.
Selling, general and administrative ("SG&A") expenses increased
Amortization of Intangibles
Amortization expense increased
Restructuring
In connection with the restructuring actions management previously put in place
to optimize our manufacturing footprint to lower-cost regions, and improvements
in operating efficiencies and synergies related to our recent acquisitions
including Artesyn, during 2019, we recognized
44
Table of Contents
Other Income (Expense), net
Other income (expense), net consists primarily of interest income and expense,
foreign exchange gains and losses, gains and losses on sales of fixed assets,
and other miscellaneous items. Other income (expense), net was
Provision for Income Taxes
In 2019, we recorded income tax expense for our continuing operations of
Discontinued Operations
In
The effect of our sales of the remaining extended inverter warranties to our customers continues to be reflected in deferred revenue in our Consolidated Balance Sheets. Deferred revenue for extended inverter warranties and the associated costs of warranty service will be reflected in Sales and Cost of goods sold, respectively, from continuing operations in future periods in our Consolidated Statement of Operations, as the deferred revenue is earned and the associated services are rendered. Extended warranties related to the inverter product line are no longer offered.
In
Income (loss) from discontinued operations, net of income taxes (in thousands):
Years Ended December 31,
2019 2018
Sales $ - $ -
Cost of sales (901) (88)
Total operating expense 1,022 96
Operating income (loss) from discontinued operations (121) (8)
Other income (expense) 10,895 (24)
Income (loss) from discontinued operations before income taxes 10,774 (32)
Provision (benefit) for income taxes 2,294 6
Income (loss) from discontinued operations, net of income taxes
45
Table of Contents
Non-GAAP Results
Management uses non-GAAP operating income and non-GAAP EPS to evaluate business
performance without the impacts of certain non-cash charges and other charges
which are not part of our usual operations. We use these non-GAAP measures to
assess performance against business objectives, make business decisions,
including developing budgets and forecasting future periods. In addition,
management's incentive plans include these non-GAAP measures as criteria for
achievements. These non-GAAP measures are not in accordance with
The non-GAAP results presented below exclude the impact of non-cash related charges, such as stock-based compensation and amortization of intangible assets. In addition, they exclude discontinued operations and other non-recurring items such as acquisition-related costs and restructuring expenses, as they are not indicative of future performance. The tax effect of our non-GAAP adjustments represents the anticipated annual tax rate applied to each non-GAAP adjustment after consideration of their respective book and tax treatments and effect of adoption of the Tax Act.
Reconciliation of Non-GAAP measure - operating expenses and operating income from continuing operations, excluding certain items (in thousands)
Years Ended December 31,
2019 2018
Gross profit from continuing operations, as reported $ 315,652 $ 365,607
Adjustments to gross profit:
Stock-based compensation 525 742
Facility expansion and relocation costs 3,891 1,328
Acquisition-related costs 8,290 569
Non-GAAP gross profit 328,358 368,246
Non-GAAP gross margin 41.6% 51.2%
Operating expenses from continuing operations, as reported 261,264 194,054
Adjustments:
Amortization of intangible assets (12,168) (5,774) Stock-based compensation (6,803) (8,961) Acquisition-related costs (12,002) (1,726) Facility expansion and relocation costs (948) (518) Restructuring charges (5,038) (4,239) Non-GAAP operating expenses 224,305 172,836 Non-GAAP operating income$ 104,053 $ 195,410 Non-GAAP operating margin 13.2% 27.2% 46 Table of Contents
Reconciliation of Non-GAAP measure - income from continuing operations, excluding certain items
Years Ended December 31,
2019 2018
Income from continuing operations, less non-controlling interest, net of income taxes
$ 56,461 $ 147,063
Adjustments:
Amortization of intangible assets 12,168 5,774 Acquisition-related costs 20,263 2,295 Facility expansion and relocation costs 4,838 1,846 Restructuring charges 5,038 4,239 Tax Cuts and Jobs Act Impact - 5,703 Central inverter services business sale (13,737) - Tax effect of non-GAAP adjustments 3,206 (2,344)
Non-GAAP income, net of income taxes, excluding stock-based compensation
88,237 164,576
Stock-based compensation, net of taxes 5,627 7,421
Non-GAAP income, net of income taxes $ 93,864 $ 171,997
Non-GAAP diluted earnings per share $ 2.44 $ 4.37
Impact of Inflation
In recent years, inflation has not had a significant impact on our operations. However, we continuously monitor operating price increases, particularly in connection with the supply of component parts used in our manufacturing process. To the extent permitted by competition, we pass increased costs on to our customers by increasing sales prices over time. Sales price increases, however, were not significant in any of the years presented herein.
Liquidity and Capital Resources
LIQUIDITY
We believe that adequate liquidity and cash generation is important to the execution of our strategic initiatives. Our ability to fund our operations, acquisitions, capital expenditures, and product development efforts may depend on our ability to generate cash from operating activities which is subject to future operating performance, as well as general economic, financial, competitive, legislative, regulatory, and other conditions, some of which may be beyond our control. Our primary sources of liquidity are our available cash, investments and, cash generated from current operations.
At
At
Credit Facility
In connection with the acquisition of Artesyn's
47
Table of Contents
facility ("Revolving Facility"). Both the Term Loan Facility and Revolving
Facility mature on
In connection with the entry into the Credit Agreement, the Company terminated
its then-existing Loan Agreement, as amended (the "Loan Agreement"), which
previously provided a revolving line of credit of up to
Share Repurchase
On
CASH FLOWS
A summary of our cash provided by and used in operating, investing, and financing activities is as follows (in thousands):
Years Ended December 31,
2019 2018
Net cash provided by (used in) operating activities from continuing operations
$ 47,899 $ 151,427
Net cash provided by (used in) operating activities from discontinued operations
493 (156)
Net cash provided by (used in) operating activities 48,392 151,271
Net cash provided by (used in) investing activities from continuing operations
(393,847) (113,592)
Net cash provided by (used in) financing activities from continuing operations
338,840 (97,134)
EFFECT OF CURRENCY TRANSLATION ON CASH (1,496) (1,030)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (8,111) (60,485)
CASH AND CASH EQUIVALENTS, beginning of period 354,552 415,037
CASH AND CASH EQUIVALENTS, end of period 346,441 354,552
Less cash and cash equivalents from discontinued operations - 5,251
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of
period $ 346,441 $ 349,301
2019 Compared To 2018
Net cash provided by operating activities
Net cash provided by operating activities in 2019 was
Net cash provided by operating activities in the fourth quarter and full year of
2019 was impacted by net payments due to acquisition related activities and
assumed liabilities of approximately
48
Table of Contents
Net cash used in investing activities
Net cash used in investing activities in 2019 was
Net cash used in financing activities
Net cash provided by financing activities in 2019 was
Off-Balance Sheet Arrangements
As of
Contractual Obligations
The following table sets forth our future payments due under contractual
obligations as of
More
Less than than 5
Total 1 year 1-3 years 3-5 years years
Debt obligations(1) $ 341,250 $ 17,500 35,000 288,750 -
Interest payments associated
with debt obligations(1) 36,555 8,532 15,726 12,297 -
Operating lease
obligations(2) 152,778 22,727 33,275 20,387 76,389
Purchase obligations(3) 192,981 192,803 178 - -
Income tax obligations(4) 11,724 1,117 2,234 4,884 3,489Pension funding commitment(5) 173,830 6,113 12,712 20,203 134,802 Total
$ 909,118 $ 248,792 $ 99,125 $ 346,521 $ 214,680
(1) Our debt obligations consist of principal and interest repayments due on our
Credit Facility based on current interest rates.
Amounts represent the minimum contractual cash commitments, including the
(2) effects of fixed rental escalation clauses and deferred rent, exclusive of
certain contingent rents that are not determinable for future periods.
(3) Our purchase obligations consist of purchase commitments with various
manufacturing suppliers to ensure the availability of components.
Income tax obligations are a result of the Tax Act and include a transition
(4) tax on unremitted foreign earnings and profits, of which we have elected to
pay the estimated amount over an eight-year period.
(5) Our pension funding commitments represent the amounts that we are required to
pay to fund our pension plans.
Recent Accounting Pronouncements
From time to time, the
49
Table of Contents
of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our Consolidated Financial Statements upon adoption.
To understand the impact of recently issued guidance, whether adopted or to be adopted, please review the information provided in Note 1. Operations and Summary of Significant Accounting Policies and Estimates in Part II, Item 8 "Financial Statements and Supplementary Data."
© Edgar Online, source
