Year Ended December 31, | |||||||||||
ICP’s Operating results: | 2016 | 2015 | 2014 | ||||||||
Net sales(a) | $ | 177,401 | $ | 166,905 | $ | 236,486 | |||||
Cost of sales and expenses(b) | (163,837 | ) | (146,098 | ) | (196,551 | ) | |||||
Net income | $ | 13,564 | $ | 20,807 | (c) | $ | 39,935 |
(a) | Includes related party sales to MGPI of $27,675, $38,941, and $36,289 for 2016, 2015, and 2014, respectively. |
(b) | Includes depreciation and amortization of $3,030, $2,634, and $2,847 for 2016, 2015, and 2014, respectively. |
(c) | Includes business interruption insurance proceeds of $4,112 for 2015. |
NOTE 13: | DERIVATIVE INSTRUMENTS |
Year Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Interest costs charged to expense | $ | 1,294 | $ | 534 | $ | 816 | ||||||
Plus: Interest cost capitalized | 198 | 297 | 107 | |||||||||
Total | $ | 1,492 | $ | 831 | $ | 923 |
(1) | (2) | (3) = (1) - (2) | |||||||||||
Gross Amounts of Recognized Assets (Liabilities) | Gross Amounts offset in the Balance Sheet | Net Amounts of Assets (Liabilities) presented in the Balance Sheet | |||||||||||
December 31, 2015: | |||||||||||||
Investment in bonds | $ | 7,000 | $ | 7,000 | $ | 0 | |||||||
Capital lease obligation | $ | (7,000 | ) | $ | (7,000 | ) | $ | 0 |
December 31, | |||||||
2016 | 2015 | ||||||
Identifiable Assets | |||||||
Distillery products | $ | 161,059 | $ | 131,963 | |||
Ingredient solutions | 27,109 | 24,023 | |||||
Corporate | 37,168 | 38,324 | |||||
Total | $ | 225,336 | $ | 194,310 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
ICP (30% interest) | $ | 4,069 | $ | 6,242 | $ | 10,098 | |||||
DMI (50% interest) | (33 | ) | (a) | (140 | ) | 39 | |||||
Total | $ | 4,036 | $ | 6,102 | $ | 10,137 |
(a) | On December 23, 2016, the Company received its portion of the remaining DMI liquidation proceeds totaling $351. Prior to receiving the proceeds, the Company's equity method investment was $384. The difference of $33 was recognized as an equity method investment loss for the year ended December 31, 2016. |
NOTE 17: | ACQUISITION |
Consideration: | |||
Cash | $ | 1,551 | |
Contingent consideration arrangement (included in Other non-current liabilities on the Consolidated Balance Sheets) | 350 | ||
Fair value of total consideration transferred | $ | 1,901 | |
Recognized amounts of identifiable assets acquired: | |||
Inventory | $ | 51 | |
Total identifiable net assets assumed | $ | 51 | |
Goodwill and Brand name (indefinite lived) (included in Other assets on the Consolidated Balance Sheets) (see Note 4) | 1,850 | ||
Total | $ | 1,901 |
NOTE 16: | PROPERTY AND BUSINESS INTERRUPTION INSURANCE CLAIMS AND RECOVERIES |
Year Ended December 31, | |||||||
2015 | 2014 | ||||||
Total insurance recoveries | $ | 460 | $ | 9,375 | |||
Insurance recoveries - interruption of business | $ | 460 | $ | 925 | |||
Less: out-of-pocket expenses related to interruption of business in Cost of Sales | — | 617 | |||||
Net reduction to Cost of sales on the Consolidated Statements of Income | $ | 460 | $ | 308 | |||
Insurance recoveries - property damage | $ | — | $ | 8,450 | |||
Less: Net book value of property loss in insurance recoveries | — | 160 | |||||
Insurance recoveries on the Consolidated Statements of Income | $ | — | $ | 8,290 |
NOTE 12: | SUPPLEMENTAL CASH FLOW INFORMATION |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Non-cash investing and financing activities: | |||||||||||
Purchase of property and equipment in accounts payable | $ | 4,364 | $ | 1,784 | $ | 574 | |||||
Additional cash payment information: | |||||||||||
Interest paid | 1,467 | 818 | 903 | ||||||||
Income tax paid | 16,409 | 9,393 | 146 |
NOTE 8: | COMMITMENTS AND CONTINGENCIES |
Payments due by period | |||||||||||||||||||
Total | Less than 1 year | 1-3 years | 4-5 years | More than 5 years | |||||||||||||||
Long term debt | $ | 2,324 | $ | 358 | $ | 758 | $ | 816 | $ | 392 | |||||||||
Interest on Long term debt | 267 | 80 | 119 | 61 | 7 | ||||||||||||||
Operating leases | 9,700 | 3,397 | 2,936 | 2,374 | 993 | ||||||||||||||
Post-employment benefit plan obligations | 3,948 | 502 | 1,024 | 957 | 1,465 | ||||||||||||||
Purchase commitments | 80,274 | 76,380 | (a) | 3,634 | 260 | — | |||||||||||||
Total | $ | 96,513 | $ | 80,717 | $ | 8,471 | $ | 4,468 | $ | 2,857 |
Years ending December 31, | |||
2017 | $ | 3,397 | |
2018 | 1,611 | ||
2019 | 1,325 | ||
2020 | 1,287 | ||
2021 | 1,087 | ||
Thereafter | 993 | ||
Total | $ | 9,700 |
• | On December 21, 2016, the U.S. Environmental Protection Agency (“EPA”) issued a Notice of Violation to the Company alleging the Company commenced construction of new aging warehouses for whiskey at its facility in Lawrenceburg, Indiana, without first applying for or obtaining a Clean Air Act permit and without adequately demonstrating to the EPA that emissions control equipment did not need to be installed to meet applicable air quality standards. The Company notes that neither EPA nor the State of Indiana have required emission control equipment for aging whiskey warehouses and, to our knowledge, no other distillers in the U.S. have been required to install emissions control equipment in their aging whiskey warehouses. No demand for a penalty has been made in connection with the Notice of Violation, but the Company believes it is probable that a penalty will be assessed. Although it is not possible to reasonably estimate a loss or range of loss at the date of this filing, the Company currently does not expect that the amount of any such penalty or related remedies would have a material adverse effect on the Company’s business, financial condition or results of operations. |
• | A chemical release occurred at the Company's Atchison facility on October 21, 2016, which resulted in emissions venting into the air. The Company reported the event to the EPA, OSHA and Kansas and local authorities on that date, and is cooperating fully to investigate and ensure that all appropriate response actions are taken. The Company has also engaged outside experts to assist the investigation and response. The Company believes it is probable that a fine or penalty may be imposed by one or more regulatory authorities, but it is currently unable to reasonably estimate the amount thereof since the investigations are not complete and can take several months and up to a few years to complete. Private plaintiffs have initiated, and additional private plaintiffs may initiate, legal proceedings for damages resulting from the emission, but the Company is currently unable to reasonably estimate the amount of any such damages that might result. The Company's insurance is expected to provide coverage of any damages to private plaintiffs, subject to a deductible of $250, but certain regulatory fines or penalties may not be covered and there can be no assurance to the amount or timing of possible insurance recoveries if ultimately claimed by the Company. There was no significant damage to the Company's Atchison plant as a result of this incident. No other MGP facilities, including the distillery in Lawrenceburg, Indiana, were affected by this incident. |
• | The TTB performed a federal excise tax audit of the Company’s subsidiaries, MGPI of Indiana, LLC and MGPI Processing, Inc., for the periods January 1, 2012 through July 31, 2015 and January 1, 2013 through July 31, 2015, respectively. TTB informed the Company that it would be assessing a penalty as a result of the audit, and the Company offered a settlement for the penalty. The settlement has been accepted in principle by the TTB and the expensed amount is insignificant to the Company’s financial results. |
NOTE 10: | CONCENTRATIONS |
Year Ending December 31, | Credit Agreement | Long-Term Debt | Total Debt | |||||||||
2017 | $ | — | $ | 358 | $ | 358 | ||||||
2018 | — | 372 | $ | 372 | ||||||||
2019 | — | 386 | $ | 386 | ||||||||
2020 | 34,253 | 400 | $ | 34,653 | ||||||||
2021 | — | 416 | $ | 416 | ||||||||
Thereafter | — | 392 | $ | 392 | ||||||||
Total | $ | 34,253 | $ | 2,324 | $ | 36,577 |
Payments due by period | |||||||||||||||||||
Total | Less than 1 year | 1-3 years | 4-5 years | More than 5 years | |||||||||||||||
Long term debt | $ | 2,324 | $ | 358 | $ | 758 | $ | 816 | $ | 392 | |||||||||
Interest on Long term debt | 267 | 80 | 119 | 61 | 7 | ||||||||||||||
Operating leases | 9,700 | 3,397 | 2,936 | 2,374 | 993 | ||||||||||||||
Post-employment benefit plan obligations | 3,948 | 502 | 1,024 | 957 | 1,465 | ||||||||||||||
Purchase commitments | 80,274 | 76,380 | (a) | 3,634 | 260 | — | |||||||||||||
Total | $ | 96,513 | $ | 80,717 | $ | 8,471 | $ | 4,468 | $ | 2,857 |
NOTE 5: | CORPORATE BORROWINGS AND CAPITAL LEASE OBLIGATIONS |
December 31, | |||||||
2016 | 2015 | ||||||
Credit Agreement - Revolver, 2.45% (variable rate) due 2020 | $ | 16,000 | $ | 23,172 | |||
Credit Agreement - Fixed Asset Sub-Line term loan, 2.86% (variable rate) due 2020 | 5,253 | 6,254 | |||||
Credit Agreement - term loan, 2.86% (variable rate) due 2020 | 13,000 | — | |||||
Secured Promissory Note, 3.71% (variable rate) due 2022 | 2,324 | 2,670 | |||||
Secured Promissory Note, 6.89% (variable rate), due 2016. | — | 36 | |||||
Capital Lease Obligation, 2.61%, due 2017 | — | 1,964 | |||||
Unamortized loan fees(a) | (576 | ) | (636 | ) | |||
Total | 36,001 | 33,460 | |||||
Less current maturities of long term debt | (4,359 | ) | (3,345 | ) | |||
Long-term debt | $ | 31,642 | $ | 30,115 |
(1) | (2) | (3) = (1) - (2) | |||||||||||
Gross Amounts of Recognized Assets (Liabilities) | Gross Amounts offset in the Balance Sheet | Net Amounts of Assets (Liabilities) presented in the Balance Sheet | |||||||||||
December 31, 2015: | |||||||||||||
Investment in bonds | $ | 7,000 | $ | 7,000 | $ | 0 | |||||||
Capital lease obligation | $ | (7,000 | ) | $ | (7,000 | ) | $ | 0 |
Year Ending December 31, | Credit Agreement | Long-Term Debt | Total Debt | |||||||||
2017 | $ | — | $ | 358 | $ | 358 | ||||||
2018 | — | 372 | $ | 372 | ||||||||
2019 | — | 386 | $ | 386 | ||||||||
2020 | 34,253 | 400 | $ | 34,653 | ||||||||
2021 | — | 416 | $ | 416 | ||||||||
Thereafter | — | 392 | $ | 392 | ||||||||
Total | $ | 34,253 | $ | 2,324 | $ | 36,577 |
Year Ended December 31, | |||||||||
2016 | 2015 | ||||||||
USDA grant(a) | $ | 1,434 | $ | 1,949 | |||||
LCD reimbursement(b) | 959 | 1,042 | |||||||
Other reimbursement | 313 | 411 | |||||||
Deferred incentive | 272 | — | |||||||
Total | $ | 2,978 | $ | 3,402 |
(a) | In 2001, the United States Department of Agriculture developed a grant program for the gluten industry (\"USDA grant\") and the Company received nearly $26,000 of grants required to be used for research, marketing, promotional and capital costs related to value added gluten and starch products. |
(b) | In 2012, the Lawrenceburg Conservancy District (\"LCD\") in Greendale, IN agreed to reimburse the Company up to $1,250 of certain capital maintenance costs of a Company owned warehouse structure that is integral to the efficacy of the LCD’s flood control system (\"LCD reimbursement\"). Certain capital maintenance activities were completed prior to December 31, 2012 and the remaining capital maintenance activities were completed during 2014. As of December 31, 2014 the Company had received a total of $1,236 in reimbursements. |
Dividend and Dividend Equivalent Information (per Share and Unit) | ||||||||||||||
Declaration date | Payment date | Declared | Paid | Total payment | ||||||||||
2016 | ||||||||||||||
March 7, 2016 | April 14, 2016 | $ | 0.08 | $ | 0.08 | $ | 1,378 | |||||||
August 1, 2016 | September 8, 2016 | 0.02 | 0.02 | 344 | ||||||||||
October 31, 2016 | December 8, 2016 | 0.02 | 0.02 | 344 | ||||||||||
$ | 0.12 | $ | 0.12 | $ | 2,066 | |||||||||
2015 | ||||||||||||||
March 10, 2015 | April 21, 2015 | $ | 0.06 | $ | 0.06 | $ | 1,087 | |||||||
2014 | ||||||||||||||
February 28, 2014 | April 9, 2014 | $ | 0.05 | $ | 0.05 | $ | 907 |
NOTE 3: | EQUITY METHOD INVESTMENTS |
Year Ended December 31, | |||||||||||
ICP’s Operating results: | 2016 | 2015 | 2014 | ||||||||
Net sales(a) | $ | 177,401 | $ | 166,905 | $ | 236,486 | |||||
Cost of sales and expenses(b) | (163,837 | ) | (146,098 | ) | (196,551 | ) | |||||
Net income | $ | 13,564 | $ | 20,807 | (c) | $ | 39,935 |
(a) | Includes related party sales to MGPI of $27,675, $38,941, and $36,289 for 2016, 2015, and 2014, respectively. |
(b) | Includes depreciation and amortization of $3,030, $2,634, and $2,847 for 2016, 2015, and 2014, respectively. |
(c) | Includes business interruption insurance proceeds of $4,112 for 2015. |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
ICP (30% interest) | $ | 4,069 | $ | 6,242 | $ | 10,098 | |||||
DMI (50% interest) | (33 | ) | (a) | (140 | ) | 39 | |||||
Total | $ | 4,036 | $ | 6,102 | $ | 10,137 |
(a) | On December 23, 2016, the Company received its portion of the remaining DMI liquidation proceeds totaling $351. Prior to receiving the proceeds, the Company's equity method investment was $384. The difference of $33 was recognized as an equity method investment loss for the year ended December 31, 2016. |
December 31, | |||||||
2016 | 2015 | ||||||
ICP (30% interest) (a) | $ | 18,934 | $ | 18,179 | |||
DMI (50% interest) | — | 384 | |||||
Total | $ | 18,934 | $ | 18,563 |
(a) | During 2016, the Company received a $3,300 cash distribution from ICP, which reduced the Company's investment in ICP. |
December 31, | |||||||
2016 | 2015 | ||||||
ICP (30% interest) (a) | $ | 18,934 | $ | 18,179 | |||
DMI (50% interest) | — | 384 | |||||
Total | $ | 18,934 | $ | 18,563 |
(a) | During 2016, the Company received a $3,300 cash distribution from ICP, which reduced the Company's investment in ICP. |
NOTE 4: | GOODWILL AND OTHER INTANGIBLE ASSET |
Balance as of December 31, 2015 | $ | — | |
Goodwill | 1,500 | ||
Brand name (indefinite lived) | 350 | ||
Balance as of December 31, 2016 | $ | 1,850 |
NOTE 6: | INCOME TAXES |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Current: | |||||||||||
Federal | $ | 12,637 | $ | 8,954 | $ | — | |||||
State | 342 | 1,003 | 229 | ||||||||
12,979 | 9,957 | 229 | |||||||||
Deferred: | |||||||||||
Federal | (254 | ) | 3,174 | 5,010 | |||||||
State | 808 | (904 | ) | (2,974 | ) | ||||||
554 | 2,270 | 2,036 | |||||||||
Total | $ | 13,533 | $ | 12,227 | $ | 2,265 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
\"Expected\" provision at federal statutory rate | $ | 15,651 | $ | 13,446 | $ | 9,116 | |||||
State income taxes, net | 1,672 | 1,714 | 709 | ||||||||
Change in valuation allowance | (718 | ) | (2,385 | ) | (7,618 | ) | |||||
Domestic production activity deduction | (1,247 | ) | (1,002 | ) | — | ||||||
Share-based compensation(a) | (1,408 | ) | N/A | N/A | |||||||
Federal and state tax credits | (1,065 | ) | — | — | |||||||
Other | 648 | 454 | 58 | ||||||||
Income tax expense | $ | 13,533 | $ | 12,227 | $ | 2,265 | |||||
Effective tax rate | 30.3 | % | 31.8 | % | 8.7 | % |
(a) | The Company elected to early adopt ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, in the quarter ended September 30, 2016 and, due to a required change in accounting principle, beginning that quarter, all excess tax benefits and deficiencies related to employee stock compensation are recognized within income tax expense in the Consolidated Statements of Income. The Company received a federal tax benefit of $1,408 and a state benefit of $163 for excess tax benefits in 2016 (see Note 9 for additional detail related to the ASU No. 2016-09 adoption). |
December 31, | |||||||
2016 | 2015 | ||||||
Deferred income tax assets: | |||||||
Post-retirement liability | $ | 1,621 | $ | 1,848 | |||
Deferred income | 1,176 | 1,343 | |||||
Share-based compensation | 1,313 | 2,247 | |||||
Capital loss carryforwards | 716 | 1,444 | |||||
State tax credit carryforwards | 3,204 | 2,653 | |||||
State operating loss carryforwards | 1,151 | 2,216 | |||||
Inventories | 2,560 | 1,684 | |||||
Other | 1,381 | 2,224 | |||||
Gross deferred income tax assets | $ | 13,122 | $ | 15,659 | |||
Less: valuation allowance | (726 | ) | (1,444 | ) | |||
Net deferred income tax assets | 12,396 | 14,215 | |||||
Deferred income tax liabilities: | |||||||
Fixed assets | (14,313 | ) | (16,050 | ) | |||
Equity method investments | (969 | ) | — | ||||
Other | (546 | ) | (922 | ) | |||
Gross deferred income tax liabilities | (15,828 | ) | (16,972 | ) | |||
Net deferred income tax liability | $ | (3,432 | ) | $ | (2,757 | ) |
Valuation allowance | ||||
Balance at December 31, 2014 | $ | 3,829 | ||
Reductions | 2,385 | |||
Balance at December 31, 2015 | $ | 1,444 | ||
Reductions | 718 | |||
Balance at December 31, 2016 | $ | 726 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Beginning of year balance | $ | 613 | $ | 613 | $ | 566 | |||||
Additions for tax positions of prior years | 2 | — | 8 | ||||||||
Additions for tax positions of the current year | 21 | — | 39 | ||||||||
Reduction for prior year tax positions | (48 | ) | — | — | |||||||
Reductions for settlements | (545 | ) | |||||||||
End of year balance | $ | 43 | $ | 613 | $ | 613 |
• | Future realization of deferred tax assets is dependent on projected taxable income of the appropriate character from the Company's continuing operations. |
• | Future reversals of existing temporary differences are heavily weighted sources of objectively verifiable positive evidence. |
• | The long carryback and carryforward periods permitted under the tax law are objectively verified positive evidence. |
• | Tax planning strategies can be, depending on their nature, heavily weighted sources of objectively verifiable positive evidence when the strategies are available and can be reasonably executed. Tax planning strategies are actions that are prudent and feasible, considering current operations and strategic plans, which the Company ordinarily might not take, but would take to prevent a tax benefit from expiring unused. Tax planning strategies, if available, may accelerate the recovery of a deferred tax asset so the tax benefit of the deferred tax asset can be carried back. |
• | Projections of future taxable income exclusive of reversing temporary differences are a source of positive evidence when the projections are combined with a history of recent profits and current financial trends and can be reasonably estimated. |
NOTE 1: | NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Buildings and improvements | 20 – 40 years |
Transportation equipment | 5 – 6 years |
Machinery and equipment | 10 – 12 years |
Year Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Interest costs charged to expense | $ | 1,294 | $ | 534 | $ | 816 | ||||||
Plus: Interest cost capitalized | 198 | 297 | 107 | |||||||||
Total | $ | 1,492 | $ | 831 | $ | 923 |
• | Future realization of deferred tax assets is dependent on projected taxable income of the appropriate character from the Company's continuing operations. |
• | Future reversals of existing temporary differences are heavily weighted sources of objectively verifiable positive evidence. |
• | The long carryback and carryforward periods permitted under the tax law are objectively verified positive evidence. |
• | Tax planning strategies can be, depending on their nature, heavily weighted sources of objectively verifiable positive evidence when the strategies are available and can be reasonably executed. Tax planning strategies are actions that are prudent and feasible, considering current operations and strategic plans, which the Company ordinarily might not take, but would take to prevent a tax benefit from expiring unused. Tax planning strategies, if available, may accelerate the recovery of a deferred tax asset so the tax benefit of the deferred tax asset can be carried back. |
• | Projections of future taxable income exclusive of reversing temporary differences are a source of positive evidence when the projections are combined with a history of recent profits and current financial trends and can be reasonably estimated. |
NOTE 9: | EMPLOYEE BENEFIT PLANS |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2015 | (a) | 2014 | 2016 | 2015 | 2014 | ||||||||||||||||
Change in benefit obligation: | |||||||||||||||||||||
Beginning of year | $ | 2,016 | $ | 2,190 | $ | 4,681 | $ | 4,926 | $ | 4,827 | |||||||||||
Service cost | — | — | 36 | 51 | 72 | ||||||||||||||||
Interest cost | 36 | 87 | 142 | 141 | 149 | ||||||||||||||||
Actuarial loss (gain) | (9 | ) | 35 | (297 | ) | 45 | 1,632 | ||||||||||||||
Negative plan amendment benefit | — | — | — | — | (1,183 | ) | |||||||||||||||
Benefits paid | (2,043 | ) | (296 | ) | (456 | ) | (482 | ) | (571 | ) | |||||||||||
Benefit obligation at end of year | $ | — | $ | 2,016 | $ | 4,106 | $ | 4,681 | $ | 4,926 |
Pension Benefit Plans | ||||
December 31, | ||||
2015 | (a) | |||
Fair value of plan assets at beginning of year | $ | 1,300 | ||
Actual return on plan assets | 2 | |||
Employer contributions | 741 | |||
Benefits paid | (2,043 | ) | ||
Fair value of plan assets at end of year | $ | — |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||
Year Ended December 31, | Year Ended December 31, | ||||||
2015 | (a) | 2016 | 2015 | ||||
Discount rate | 3.65% | 3.15% | 3.20% | ||||
Measurement date | December 31, 2015(b) | December 31, 2016 | December 31, 2015 |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
(b) | The measurement date was June 30, 2015 for termination liabilities in 2015. |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||||||||||
Year Ended December 31, | Year Ended December 31, | ||||||||||||||
2015 | (a) | 2014 | 2016 | 2015 | 2014 | ||||||||||
Expected return on Assets | 7.00 | % | 7.00 | % | — | — | — | ||||||||
Discount rate | 3.58 | % | 4.11 | % | 3.20 | % | 2.99 | % | 3.95 / 3.39% | (b) | |||||
Average compensation increase | n/a | n/a | n/a | n/a | n/a |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
(b) | The pension benefit plan was amended effective April 16, 2014 requiring a re-measurement valuation. The discount rate for 2014 was based on measurement dates of December 31, 2013 and April 16, 2014. |
Pension Benefit Plans | Post-Employment Benefit Plan | |||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||
2015 | (a) | 2014 | 2016 | 2015 | 2014 | |||||||||||||||
Service cost | $ | — | $ | — | $ | 36 | $ | 51 | $ | 72 | ||||||||||
Interest cost | 36 | 87 | 142 | 141 | 149 | |||||||||||||||
Expected return on assets | (45 | ) | (104 | ) | — | — | — | |||||||||||||
Amortization of prior service cost | — | — | (338 | ) | (338 | ) | (369 | ) | ||||||||||||
Recognized net actuarial loss | 25 | 21 | 269 | 278 | 18 | |||||||||||||||
Settlement losses | 414 | 50 | — | — | — | |||||||||||||||
Net benefit cost | $ | 430 | $ | 54 | $ | 109 | $ | 132 | $ | (130 | ) |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2015 | (a) | 2014 | 2016 | 2015 | 2014 | ||||||||||||||
Net actuarial (loss) gain | $ | (35 | ) | $ | (92 | ) | $ | 293 | $ | (35 | ) | $ | (1,632 | ) | |||||
Settlement losses | 414 | 50 | — | — | — | ||||||||||||||
Plan amendment and curtailment | — | — | — | — | 1,183 | ||||||||||||||
Recognized net actuarial loss | 25 | 20 | 269 | 278 | 18 | ||||||||||||||
Amortization of prior service cost | — | — | (338 | ) | (338 | ) | (369 | ) | |||||||||||
Recognition of prior service cost due to curtailments | — | — | — | — | (52 | ) | |||||||||||||
Total other comprehensive income (loss), pre-tax | 404 | (22 | ) | 224 | (95 | ) | (852 | ) | |||||||||||
Income tax expense (benefit) | 160 | (155 | ) | 90 | (41 | ) | (6 | ) | |||||||||||
Total other comprehensive income (loss), net of tax | $ | 244 | $ | 133 | $ | 134 | $ | (54 | ) | $ | (846 | ) |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||||||
As of December 31, | As of December 31, | ||||||||||
2015 | (a) | 2016 | 2015 | ||||||||
Accrued expenses | $ | — | $ | (502 | ) | $ | (545 | ) | |||
Accrued retirement benefits | — | (3,604 | ) | (4,136 | ) | ||||||
Net amount recognized | $ | — | $ | (4,106 | ) | $ | (4,681 | ) |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
Post-Employment Benefit Plan | (a) | |||
Actuarial net loss | $ | (184 | ) | |
Net prior service credits | 338 | |||
Net amount recognized | $ | 154 |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
Post-Employment Benefit Plan | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2016 | 2015 | ||||||||||||||||
Group Plan | Lifetime Prescription Cost | Medicare Supplement | Group Plan | Lifetime Prescription Cost | Medicare Supplement | ||||||||||||
Health care cost trend rate | 7.50 | % | 9.00 | % | 5.00 | % | 7.50 | % | 9.00 | % | 5.00 | % | |||||
Ultimate trend rate | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | |||||
Year rate reaches ultimate trend rate | 2023 | 2024 | 2017 | 2024 | 2025 | 2017 |
Post-Employment Benefit Plan | (a) | |||||||
Expected Benefit Payments | Expected Subsidy Receipts | |||||||
2017 | $ | 520 | $ | 18 | ||||
2018 | 522 | 17 | ||||||
2019 | 534 | 15 | ||||||
2020 | 505 | 14 | ||||||
2021 | 479 | 13 | ||||||
2022-2026 | 1,509 | 44 | ||||||
Total | $ | 4,069 | $ | 121 |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
(b) | This expected pay out schedule considers the termination of the pension benefit plan during 2015. |
Year Ended December 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||||||
Outstanding at beginning of year | 4,000 | $ | 10.45 | 10,000 | $ | 9.91 | |||||||
Granted | — | — | — | — | |||||||||
Canceled/Forfeited | — | — | — | — | |||||||||
Exercised | 4,000 | 17.09 | 6,000 | 9.54 | |||||||||
Outstanding at end of year | — | $ | — | 4,000 | $ | 10.45 |
Year Ended December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
Shares | Weighted Average Grant-Date Fair Value | Shares | Weighted Average Grant-Date Fair Value | Shares | Weighted Average Grant-Date Fair Value | |||||||||||||||
Unvested balance at beginning of year | 128,500 | $ | 5.85 | 278,900 | $ | 6.28 | 569,296 | $ | 5.26 | |||||||||||
Granted | — | — | 13,585 | 17.02 | 58,669 | 4.42 | ||||||||||||||
Forfeited | — | — | (30,800 | ) | 6.27 | (206,282 | ) | 4.59 | ||||||||||||
Vested | (128,500 | ) | 5.85 | (133,185 | ) | 7.80 | (142,783 | ) | 3.87 | |||||||||||
Unvested balance at end of year | — | $ | — | 128,500 | $ | 5.85 | 278,900 | $ | 6.28 |
Year Ended December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | |||||||||||||||
Unvested balance at beginning of year | 437,946 | $ | 7.09 | 413,288 | $ | 5.09 | 371,502 | $ | 4.34 | |||||||||||
Granted | 100,892 | 23.15 | 89,702 | 16.63 | 247,463 | 5.83 | ||||||||||||||
Forfeited | (11,352 | ) | 11.55 | (54,506 | ) | 6.15 | (135,104 | ) | 4.60 | |||||||||||
Vested | — | — | (10,538 | ) | 14.88 | (70,573 | ) | 3.22 | ||||||||||||
Unvested balance at end of year | 527,486 | $ | 10.17 | 437,946 | $ | 7.09 | 413,288 | $ | 5.09 |
Buildings and improvements | 20 – 40 years |
Transportation equipment | 5 – 6 years |
Machinery and equipment | 10 – 12 years |
Buildings and improvements | 20 – 40 years |
Transportation equipment | 5 – 6 years |
Machinery and equipment | 10 – 12 years |
December 31, | |||||||
2016 | 2015 | ||||||
Land, buildings and improvements | $ | 67,487 | $ | 56,143 | |||
Transportation equipment | 3,253 | 5,417 | |||||
Machinery and equipment | 164,871 | 152,742 | |||||
Construction in progress | 10,608 | 15,612 | |||||
Property and equipment, at cost | 246,219 | 229,914 | |||||
Less accumulated depreciation and amortization | (153,428 | ) | (146,360 | ) | |||
Property and equipment, net | $ | 92,791 | $ | 83,554 |
NOTE 15: | QUARTERLY FINANCIAL DATA (UNAUDITED) |
Year Ended December 31, 2016(a) (b) | |||||||||||||||
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
Sales | $ | 85,005 | $ | 83,711 | $ | 82,174 | $ | 77,191 | |||||||
Less: excise tax | 3,860 | 3,820 | 1,782 | 356 | |||||||||||
Net sales | 81,145 | 79,891 | 80,392 | 76,835 | |||||||||||
Cost of sales | 63,560 | 64,770 | 64,861 | 59,789 | |||||||||||
Gross profit | 17,585 | 15,121 | 15,531 | 17,046 | |||||||||||
Selling, general and administrative expenses | 6,987 | 6,981 | 6,404 | 6,321 | |||||||||||
Other operating income, net | — | (3,385 | ) | — | — | ||||||||||
Operating income | 10,598 | 11,525 | 9,127 | 10,725 | |||||||||||
Equity in earnings (Note 3) | 1,776 | 664 | 1,079 | 517 | |||||||||||
Interest expense | (314 | ) | (341 | ) | (328 | ) | (311 | ) | |||||||
Income before income taxes | 12,060 | 11,848 | 9,878 | 10,931 | |||||||||||
Income tax expense (Note 6) | 3,775 | 2,316 | 3,570 | 3,872 | |||||||||||
Net income | $ | 8,285 | $ | 9,532 | $ | 6,308 | $ | 7,059 | |||||||
Basic and diluted EPS data | $ | 0.48 | $ | 0.55 | $ | 0.37 | $ | 0.41 | |||||||
Dividends per common share and per unit | $ | 0.02 | $ | 0.02 | $ | — | $ | 0.08 |
(a) | Net income was positively impacted during the third quarter of 2016 by other operating income, net, of $3,385 related to a legal settlement agreement and a gain on sale of long-lived assets and by a lower effective income tax rate related to the implementation of ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting. |
(b) | Quarterly EPS amounts may not add to amounts for the year because quarterly and annual EPS calculations are performed separately. |
Year Ended December 31, 2015(a) (b) | |||||||||||||||
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
Sales | $ | 85,072 | $ | 83,880 | $ | 92,071 | $ | 84,864 | |||||||
Less: excise tax | 3,563 | 3,552 | 6,717 | 4,451 | |||||||||||
Net sales | 81,509 | 80,328 | 85,354 | 80,413 | |||||||||||
Cost of sales | 65,754 | 68,466 | 67,826 | 67,025 | |||||||||||
Gross profit | 15,755 | 11,862 | 17,528 | 13,388 | |||||||||||
Selling, general and administrative expenses | 5,681 | 5,497 | 8,025 | 6,480 | |||||||||||
Operating income | 10,074 | 6,365 | 9,503 | 6,908 | |||||||||||
Equity in earnings (Note 3) | 92 | 1,562 | 3,096 | 1,352 | |||||||||||
Interest expense | (160 | ) | (114 | ) | (129 | ) | (131 | ) | |||||||
Income before income taxes | 10,006 | 7,813 | 12,470 | 8,129 | |||||||||||
Income tax expense (Note 6) | 3,527 | 1,042 | 4,599 | 3,059 | |||||||||||
Net income | $ | 6,479 | $ | 6,771 | $ | 7,871 | $ | 5,070 | |||||||
Basic and diluted EPS data | $ | 0.38 | $ | 0.38 | $ | 0.44 | $ | 0.28 | |||||||
Dividends per common share and per unit | $ | — | $ | — | $ | — | $ | 0.06 |
(a) | Net income was positively impacted during the second quarter of 2015 by $460 as result of an insurance recovery. |
(b) | Net income was positively impacted during the third and fourth quarters of 2015 by $1,908 and $477, respectively, as result of a release of the valuation allowance related to deferred tax assets, |
Details about Accumulated Other Comprehensive Income Components | Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | Affected Line Item in the Consolidated Statements of Income | ||||
Post Employment Benefit Items: | ||||||
Amortization of prior service cost | $ | (338 | ) | (a) | ||
Recognized net actuarial loss | 269 | (a) | ||||
(69 | ) | Total before tax | ||||
90 | Tax expense | |||||
$ | 21 | Net of tax | ||||
Equity Method Investment Adjustment: | ||||||
Accumulated postretirement benefit obligation | $ | 13 | ||||
(6 | ) | Tax benefit | ||||
$ | 7 | Net of tax | ||||
Reclassifications for 2016 | $ | 28 | Total net of tax |
(a) | These accumulated other comprehensive income components are included in the computation of net period post-employment benefit cost. See Note 9 for additional details. |
NOTE 14: | RELATED PARTY TRANSACTIONS |
December 31, | |||||||
2016 | 2015 | ||||||
Employee benefit plans | $ | 820 | $ | 1,027 | |||
Salaries and wages | 5,641 | 6,790 | |||||
Restructuring and severance charges | 124 | 517 | |||||
Property taxes | 824 | 784 | |||||
Other accrued expenses | 1,536 | 1,282 | |||||
Total | $ | 8,945 | $ | 10,400 |
Pension Plan Items | (a) | Post-Employment Benefit Plan Items | Equity Method Investment Translation Adjustment and Post-Employment Benefit Adjustment | Total | ||||||||||||
Balance, December 31, 2013 | $ | (377 | ) | $ | 390 | $ | (17 | ) | $ | (4 | ) | |||||
Other comprehensive income (loss) before reclassifications | 218 | (1,620 | ) | (15 | ) | (1,417 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | (85 | ) | 774 | — | 689 | |||||||||||
Net 2014 other comprehensive income (loss) | 133 | (846 | ) | (15 | ) | (728 | ) | |||||||||
Balance, December 31, 2014 | $ | (244 | ) | $ | (456 | ) | $ | (32 | ) | $ | (732 | ) | ||||
Other comprehensive income (loss) before reclassifications | (355 | ) | 47 | (10 | ) | (318 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | 599 | (101 | ) | 52 | 550 | |||||||||||
Net 2015 other comprehensive income (loss) | 244 | (54 | ) | 42 | 232 | |||||||||||
Balance, December 31, 2015 | $ | — | $ | (510 | ) | $ | 10 | $ | (500 | ) | ||||||
Other comprehensive income (loss) before reclassifications | — | 113 | (14 | ) | 99 | |||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 21 | 7 | 28 | ||||||||||||
Net 2016 other comprehensive income (loss) | — | 134 | (7 | ) | 127 | |||||||||||
Balance, December 31, 2016 | $ | — | $ | (376 | ) | $ | 3 | $ | (373 | ) |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||||||
As of December 31, | As of December 31, | ||||||||||
2015 | (a) | 2016 | 2015 | ||||||||
Accrued expenses | $ | — | $ | (502 | ) | $ | (545 | ) | |||
Accrued retirement benefits | — | (3,604 | ) | (4,136 | ) | ||||||
Net amount recognized | $ | — | $ | (4,106 | ) | $ | (4,681 | ) |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||
Year Ended December 31, | Year Ended December 31, | ||||||
2015 | (a) | 2016 | 2015 | ||||
Discount rate | 3.65% | 3.15% | 3.20% | ||||
Measurement date | December 31, 2015(b) | December 31, 2016 | December 31, 2015 |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
(b) | The measurement date was June 30, 2015 for termination liabilities in 2015. |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||||||||||
Year Ended December 31, | Year Ended December 31, | ||||||||||||||
2015 | (a) | 2014 | 2016 | 2015 | 2014 | ||||||||||
Expected return on Assets | 7.00 | % | 7.00 | % | — | — | — | ||||||||
Discount rate | 3.58 | % | 4.11 | % | 3.20 | % | 2.99 | % | 3.95 / 3.39% | (b) | |||||
Average compensation increase | n/a | n/a | n/a | n/a | n/a |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
(b) | The pension benefit plan was amended effective April 16, 2014 requiring a re-measurement valuation. The discount rate for 2014 was based on measurement dates of December 31, 2013 and April 16, 2014. |
Consideration: | |||
Cash | $ | 1,551 | |
Contingent consideration arrangement (included in Other non-current liabilities on the Consolidated Balance Sheets) | 350 | ||
Fair value of total consideration transferred | $ | 1,901 | |
Recognized amounts of identifiable assets acquired: | |||
Inventory | $ | 51 | |
Total identifiable net assets assumed | $ | 51 | |
Goodwill and Brand name (indefinite lived) (included in Other assets on the Consolidated Balance Sheets) (see Note 4) | 1,850 | ||
Total | $ | 1,901 |
Year Ended December 31, | |||||||
2015 | 2014 | ||||||
Total insurance recoveries | $ | 460 | $ | 9,375 | |||
Insurance recoveries - interruption of business | $ | 460 | $ | 925 | |||
Less: out-of-pocket expenses related to interruption of business in Cost of Sales | — | 617 | |||||
Net reduction to Cost of sales on the Consolidated Statements of Income | $ | 460 | $ | 308 | |||
Insurance recoveries - property damage | $ | — | $ | 8,450 | |||
Less: Net book value of property loss in insurance recoveries | — | 160 | |||||
Insurance recoveries on the Consolidated Statements of Income | $ | — | $ | 8,290 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Non-cash investing and financing activities: | |||||||||||
Purchase of property and equipment in accounts payable | $ | 4,364 | $ | 1,784 | $ | 574 | |||||
Additional cash payment information: | |||||||||||
Interest paid | 1,467 | 818 | 903 | ||||||||
Income tax paid | 16,409 | 9,393 | 146 |
Pension Benefit Plans | ||||
December 31, | ||||
2015 | (a) | |||
Fair value of plan assets at beginning of year | $ | 1,300 | ||
Actual return on plan assets | 2 | |||
Employer contributions | 741 | |||
Benefits paid | (2,043 | ) | ||
Fair value of plan assets at end of year | $ | — |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Current: | |||||||||||
Federal | $ | 12,637 | $ | 8,954 | $ | — | |||||
State | 342 | 1,003 | 229 | ||||||||
12,979 | 9,957 | 229 | |||||||||
Deferred: | |||||||||||
Federal | (254 | ) | 3,174 | 5,010 | |||||||
State | 808 | (904 | ) | (2,974 | ) | ||||||
554 | 2,270 | 2,036 | |||||||||
Total | $ | 13,533 | $ | 12,227 | $ | 2,265 |
December 31, | |||||||
2016 | 2015 | ||||||
Credit Agreement - Revolver, 2.45% (variable rate) due 2020 | $ | 16,000 | $ | 23,172 | |||
Credit Agreement - Fixed Asset Sub-Line term loan, 2.86% (variable rate) due 2020 | 5,253 | 6,254 | |||||
Credit Agreement - term loan, 2.86% (variable rate) due 2020 | 13,000 | — | |||||
Secured Promissory Note, 3.71% (variable rate) due 2022 | 2,324 | 2,670 | |||||
Secured Promissory Note, 6.89% (variable rate), due 2016. | — | 36 | |||||
Capital Lease Obligation, 2.61%, due 2017 | — | 1,964 | |||||
Unamortized loan fees(a) | (576 | ) | (636 | ) | |||
Total | 36,001 | 33,460 | |||||
Less current maturities of long term debt | (4,359 | ) | (3,345 | ) | |||
Long-term debt | $ | 31,642 | $ | 30,115 |
December 31, | |||||||
2016 | 2015 | ||||||
Deferred income tax assets: | |||||||
Post-retirement liability | $ | 1,621 | $ | 1,848 | |||
Deferred income | 1,176 | 1,343 | |||||
Share-based compensation | 1,313 | 2,247 | |||||
Capital loss carryforwards | 716 | 1,444 | |||||
State tax credit carryforwards | 3,204 | 2,653 | |||||
State operating loss carryforwards | 1,151 | 2,216 | |||||
Inventories | 2,560 | 1,684 | |||||
Other | 1,381 | 2,224 | |||||
Gross deferred income tax assets | $ | 13,122 | $ | 15,659 | |||
Less: valuation allowance | (726 | ) | (1,444 | ) | |||
Net deferred income tax assets | 12,396 | 14,215 | |||||
Deferred income tax liabilities: | |||||||
Fixed assets | (14,313 | ) | (16,050 | ) | |||
Equity method investments | (969 | ) | — | ||||
Other | (546 | ) | (922 | ) | |||
Gross deferred income tax liabilities | (15,828 | ) | (16,972 | ) | |||
Net deferred income tax liability | $ | (3,432 | ) | $ | (2,757 | ) |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2015 | (a) | 2014 | 2016 | 2015 | 2014 | ||||||||||||||
Net actuarial (loss) gain | $ | (35 | ) | $ | (92 | ) | $ | 293 | $ | (35 | ) | $ | (1,632 | ) | |||||
Settlement losses | 414 | 50 | — | — | — | ||||||||||||||
Plan amendment and curtailment | — | — | — | — | 1,183 | ||||||||||||||
Recognized net actuarial loss | 25 | 20 | 269 | 278 | 18 | ||||||||||||||
Amortization of prior service cost | — | — | (338 | ) | (338 | ) | (369 | ) | |||||||||||
Recognition of prior service cost due to curtailments | — | — | — | — | (52 | ) | |||||||||||||
Total other comprehensive income (loss), pre-tax | 404 | (22 | ) | 224 | (95 | ) | (852 | ) | |||||||||||
Income tax expense (benefit) | 160 | (155 | ) | 90 | (41 | ) | (6 | ) | |||||||||||
Total other comprehensive income (loss), net of tax | $ | 244 | $ | 133 | $ | 134 | $ | (54 | ) | $ | (846 | ) |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
Pension Benefit Plans | Post-Employment Benefit Plan | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2015 | (a) | 2014 | 2016 | 2015 | 2014 | ||||||||||||||||
Change in benefit obligation: | |||||||||||||||||||||
Beginning of year | $ | 2,016 | $ | 2,190 | $ | 4,681 | $ | 4,926 | $ | 4,827 | |||||||||||
Service cost | — | — | 36 | 51 | 72 | ||||||||||||||||
Interest cost | 36 | 87 | 142 | 141 | 149 | ||||||||||||||||
Actuarial loss (gain) | (9 | ) | 35 | (297 | ) | 45 | 1,632 | ||||||||||||||
Negative plan amendment benefit | — | — | — | — | (1,183 | ) | |||||||||||||||
Benefits paid | (2,043 | ) | (296 | ) | (456 | ) | (482 | ) | (571 | ) | |||||||||||
Benefit obligation at end of year | $ | — | $ | 2,016 | $ | 4,106 | $ | 4,681 | $ | 4,926 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Operations: | |||||||||||
Net income(a) | $ | 31,184 | $ | 26,191 | $ | 23,675 | |||||
Less: Income attributable to participating securities (unvested shares and units) (b) | 954 | 873 | 832 | ||||||||
Net income attributable to common shareholders | $ | 30,230 | $ | 25,318 | $ | 22,843 | |||||
Share information: | |||||||||||
Basic weighted average common shares(c) | 16,643,811 | 17,123,556 | 17,305,866 | ||||||||
Incremental shares from potential dilutive securities (d) | — | — | — | ||||||||
Diluted weighted average common shares | 16,643,811 | 17,123,556 | 17,305,866 | ||||||||
Basic and diluted EPS(e) | $ | 1.82 | $ | 1.48 | $ | 1.32 |
(a) | Net income attributable to all shareholders. |
(b) | Participating securities include 0, 128,500, and 278,900 unvested restricted stock for the years ended December 31, 2016, 2015, and 2014, as well as 527,486, 437,946, and 413,288 RSUs for the years ended December 31, 2016, 2015, and 2014, respectively. Participating securities do not receive an allocation in periods when a loss is experienced. |
(c) | Under the two class method, basic weighted average common shares exclude outstanding unvested participating securities consisting of restricted stock awards of 0, 128,500, and 278,900 for 2016, 2015, and 2014, respectively. |
(d) | Potential dilutive securities have not been included in the EPS computation in a period when a loss is experienced. At December 31, 2016 and 2015, the Company had 0 stock options outstanding and potentially dilutive, respectively. At December 31, 2014, the Company had 4,000 stock options outstanding and potentially dilutive. |
(e) | Basic and diluted weighted average common shares for 2016 and 2015 were affected by the September 1, 2015, purchase of 950,000 shares of common stock in a privately negotiated transaction with F2 SEA, Inc., an affiliate of SEACOR Holdings, Inc., pursuant to a Stock Repurchase Agreement. SEACOR Holdings, Inc. is the 70 percent owner of ICP, the Company's 30 percent equity method investment. |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
\"Expected\" provision at federal statutory rate | $ | 15,651 | $ | 13,446 | $ | 9,116 | |||||
State income taxes, net | 1,672 | 1,714 | 709 | ||||||||
Change in valuation allowance | (718 | ) | (2,385 | ) | (7,618 | ) | |||||
Domestic production activity deduction | (1,247 | ) | (1,002 | ) | — | ||||||
Share-based compensation(a) | (1,408 | ) | N/A | N/A | |||||||
Federal and state tax credits | (1,065 | ) | — | — | |||||||
Other | 648 | 454 | 58 | ||||||||
Income tax expense | $ | 13,533 | $ | 12,227 | $ | 2,265 | |||||
Effective tax rate | 30.3 | % | 31.8 | % | 8.7 | % |
(a) | The Company elected to early adopt ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, in the quarter ended September 30, 2016 and, due to a required change in accounting principle, beginning that quarter, all excess tax benefits and deficiencies related to employee stock compensation are recognized within income tax expense in the Consolidated Statements of Income. The Company received a federal tax benefit of $1,408 and a state benefit of $163 for excess tax benefits in 2016 (see Note 9 for additional detail related to the ASU No. 2016-09 adoption). |
Post-Employment Benefit Plan | (a) | |||||||
Expected Benefit Payments | Expected Subsidy Receipts | |||||||
2017 | $ | 520 | $ | 18 | ||||
2018 | 522 | 17 | ||||||
2019 | 534 | 15 | ||||||
2020 | 505 | 14 | ||||||
2021 | 479 | 13 | ||||||
2022-2026 | 1,509 | 44 | ||||||
Total | $ | 4,069 | $ | 121 |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
(b) | This expected pay out schedule considers the termination of the pension benefit plan during 2015. |
Years ending December 31, | |||
2017 | $ | 3,397 | |
2018 | 1,611 | ||
2019 | 1,325 | ||
2020 | 1,287 | ||
2021 | 1,087 | ||
Thereafter | 993 | ||
Total | $ | 9,700 |
Post-Employment Benefit Plan | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2016 | 2015 | ||||||||||||||||
Group Plan | Lifetime Prescription Cost | Medicare Supplement | Group Plan | Lifetime Prescription Cost | Medicare Supplement | ||||||||||||
Health care cost trend rate | 7.50 | % | 9.00 | % | 5.00 | % | 7.50 | % | 9.00 | % | 5.00 | % | |||||
Ultimate trend rate | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | |||||
Year rate reaches ultimate trend rate | 2023 | 2024 | 2017 | 2024 | 2025 | 2017 |
Balance as of December 31, 2015 | $ | — | |
Goodwill | 1,500 | ||
Brand name (indefinite lived) | 350 | ||
Balance as of December 31, 2016 | $ | 1,850 |
December 31, | |||||||
2016 | 2015 | ||||||
Finished goods | $ | 14,002 | $ | 15,126 | |||
Barreled distillate (bourbon and whiskey) | 50,941 | 28,278 | |||||
Raw materials | 4,274 | 6,675 | |||||
Work in process | 1,933 | 2,364 | |||||
Maintenance materials | 6,231 | 5,371 | |||||
Other | 1,477 | 887 | |||||
Total | $ | 78,858 | $ | 58,701 |
Post-Employment Benefit Plan | (a) | |||
Actuarial net loss | $ | (184 | ) | |
Net prior service credits | 338 | |||
Net amount recognized | $ | 154 |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
Pension Benefit Plans | Post-Employment Benefit Plan | |||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||
2015 | (a) | 2014 | 2016 | 2015 | 2014 | |||||||||||||||
Service cost | $ | — | $ | — | $ | 36 | $ | 51 | $ | 72 | ||||||||||
Interest cost | 36 | 87 | 142 | 141 | 149 | |||||||||||||||
Expected return on assets | (45 | ) | (104 | ) | — | — | — | |||||||||||||
Amortization of prior service cost | — | — | (338 | ) | (338 | ) | (369 | ) | ||||||||||||
Recognized net actuarial loss | 25 | 21 | 269 | 278 | 18 | |||||||||||||||
Settlement losses | 414 | 50 | — | — | — | |||||||||||||||
Net benefit cost | $ | 430 | $ | 54 | $ | 109 | $ | 132 | $ | (130 | ) |
(a) | The Company's pension benefit plans were terminated and paid as of June 2015. |
Year Ended December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
Shares | Weighted Average Grant-Date Fair Value | Shares | Weighted Average Grant-Date Fair Value | Shares | Weighted Average Grant-Date Fair Value | |||||||||||||||
Unvested balance at beginning of year | 128,500 | $ | 5.85 | 278,900 | $ | 6.28 | 569,296 | $ | 5.26 | |||||||||||
Granted | — | — | 13,585 | 17.02 | 58,669 | 4.42 | ||||||||||||||
Forfeited | — | — | (30,800 | ) | 6.27 | (206,282 | ) | 4.59 | ||||||||||||
Vested | (128,500 | ) | 5.85 | (133,185 | ) | 7.80 | (142,783 | ) | 3.87 | |||||||||||
Unvested balance at end of year | — | $ | — | 128,500 | $ | 5.85 | 278,900 | $ | 6.28 |
Year Ended December 31, 2016(a) (b) | |||||||||||||||
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
Sales | $ | 85,005 | $ | 83,711 | $ | 82,174 | $ | 77,191 | |||||||
Less: excise tax | 3,860 | 3,820 | 1,782 | 356 | |||||||||||
Net sales | 81,145 | 79,891 | 80,392 | 76,835 | |||||||||||
Cost of sales | 63,560 | 64,770 | 64,861 | 59,789 | |||||||||||
Gross profit | 17,585 | 15,121 | 15,531 | 17,046 | |||||||||||
Selling, general and administrative expenses | 6,987 | 6,981 | 6,404 | 6,321 | |||||||||||
Other operating income, net | — | (3,385 | ) | — | — | ||||||||||
Operating income | 10,598 | 11,525 | 9,127 | 10,725 | |||||||||||
Equity in earnings (Note 3) | 1,776 | 664 | 1,079 | 517 | |||||||||||
Interest expense | (314 | ) | (341 | ) | (328 | ) | (311 | ) | |||||||
Income before income taxes | 12,060 | 11,848 | 9,878 | 10,931 | |||||||||||
Income tax expense (Note 6) | 3,775 | 2,316 | 3,570 | 3,872 | |||||||||||
Net income | $ | 8,285 | $ | 9,532 | $ | 6,308 | $ | 7,059 | |||||||
Basic and diluted EPS data | $ | 0.48 | $ | 0.55 | $ | 0.37 | $ | 0.41 | |||||||
Dividends per common share and per unit | $ | 0.02 | $ | 0.02 | $ | — | $ | 0.08 |
(a) | Net income was positively impacted during the third quarter of 2016 by other operating income, net, of $3,385 related to a legal settlement agreement and a gain on sale of long-lived assets and by a lower effective income tax rate related to the implementation of ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting. |
(b) | Quarterly EPS amounts may not add to amounts for the year because quarterly and annual EPS calculations are performed separately. |
Year Ended December 31, 2015(a) (b) | |||||||||||||||
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
Sales | $ | 85,072 | $ | 83,880 | $ | 92,071 | $ | 84,864 | |||||||
Less: excise tax | 3,563 | 3,552 | 6,717 | 4,451 | |||||||||||
Net sales | 81,509 | 80,328 | 85,354 | 80,413 | |||||||||||
Cost of sales | 65,754 | 68,466 | 67,826 | 67,025 | |||||||||||
Gross profit | 15,755 | 11,862 | 17,528 | 13,388 | |||||||||||
Selling, general and administrative expenses | 5,681 | 5,497 | 8,025 | 6,480 | |||||||||||
Operating income | 10,074 | 6,365 | 9,503 | 6,908 | |||||||||||
Equity in earnings (Note 3) | 92 | 1,562 | 3,096 | 1,352 | |||||||||||
Interest expense | (160 | ) | (114 | ) | (129 | ) | (131 | ) | |||||||
Income before income taxes | 10,006 | 7,813 | 12,470 | 8,129 | |||||||||||
Income tax expense (Note 6) | 3,527 | 1,042 | 4,599 | 3,059 | |||||||||||
Net income | $ | 6,479 | $ | 6,771 | $ | 7,871 | $ | 5,070 | |||||||
Basic and diluted EPS data | $ | 0.38 | $ | 0.38 | $ | 0.44 | $ | 0.28 | |||||||
Dividends per common share and per unit | $ | — | $ | — | $ | — | $ | 0.06 |
(a) | Net income was positively impacted during the second quarter of 2015 by $460 as result of an insurance recovery. |
(b) | Net income was positively impacted during the third and fourth quarters of 2015 by $1,908 and $477, respectively, as result of a release of the valuation allowance related to deferred tax assets, |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Net sales to customers: | |||||||||||
Distillery products | $ | 265,243 | $ | 270,225 | $ | 256,561 | |||||
Ingredient solutions | 53,020 | 57,379 | 56,842 | ||||||||
Total | $ | 318,263 | $ | 327,604 | $ | 313,403 | |||||
Gross profit: | |||||||||||
Distillery products | 56,836 | 50,662 | 22,332 | ||||||||
Ingredient solutions | 8,447 | 7,871 | 6,099 | ||||||||
Total | $ | 65,283 | $ | 58,533 | $ | 28,431 | |||||
Depreciation and amortization: | |||||||||||
Distillery products | $ | 8,371 | $ | 8,900 | $ | 8,510 | |||||
Ingredient solutions | 1,655 | 2,111 | 2,316 | ||||||||
Corporate | 1,227 | 1,371 | 1,499 | ||||||||
Total | $ | 11,253 | $ | 12,382 | $ | 12,325 | |||||
Income (loss) before income taxes: | |||||||||||
Distillery products | $ | 53,583 | $ | 49,097 | $ | 28,701 | |||||
Ingredient solutions | 5,836 | 5,636 | 3,939 | ||||||||
Corporate | (14,702 | ) | (16,315 | ) | (6,700 | ) | |||||
Total | $ | 44,717 | $ | 38,418 | $ | 25,940 |
December 31, | |||||||
2016 | 2015 | ||||||
Identifiable Assets | |||||||
Distillery products | $ | 161,059 | $ | 131,963 | |||
Ingredient solutions | 27,109 | 24,023 | |||||
Corporate | 37,168 | 38,324 | |||||
Total | $ | 225,336 | $ | 194,310 |
Year Ended December 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||||||
Outstanding at beginning of year | 4,000 | $ | 10.45 | 10,000 | $ | 9.91 | |||||||
Granted | — | — | — | — | |||||||||
Canceled/Forfeited | — | — | — | — | |||||||||
Exercised | 4,000 | 17.09 | 6,000 | 9.54 | |||||||||
Outstanding at end of year | — | $ | — | 4,000 | $ | 10.45 |
Year Ended December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | |||||||||||||||
Unvested balance at beginning of year | 437,946 | $ | 7.09 | 413,288 | $ | 5.09 | 371,502 | $ | 4.34 | |||||||||||
Granted | 100,892 | 23.15 | 89,702 | 16.63 | 247,463 | 5.83 | ||||||||||||||
Forfeited | (11,352 | ) | 11.55 | (54,506 | ) | 6.15 | (135,104 | ) | 4.60 | |||||||||||
Vested | — | — | (10,538 | ) | 14.88 | (70,573 | ) | 3.22 | ||||||||||||
Unvested balance at end of year | 527,486 | $ | 10.17 | 437,946 | $ | 7.09 | 413,288 | $ | 5.09 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Beginning of year balance | $ | 613 | $ | 613 | $ | 566 | |||||
Additions for tax positions of prior years | 2 | — | 8 | ||||||||
Additions for tax positions of the current year | 21 | — | 39 | ||||||||
Reduction for prior year tax positions | (48 | ) | — | — | |||||||
Reductions for settlements | (545 | ) | |||||||||
End of year balance | $ | 43 | $ | 613 | $ | 613 |
NOTE 11: | OPERATING SEGMENTS |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Net sales to customers: | |||||||||||
Distillery products | $ | 265,243 | $ | 270,225 | $ | 256,561 | |||||
Ingredient solutions | 53,020 | 57,379 | 56,842 | ||||||||
Total | $ | 318,263 | $ | 327,604 | $ | 313,403 | |||||
Gross profit: | |||||||||||
Distillery products | 56,836 | 50,662 | 22,332 | ||||||||
Ingredient solutions | 8,447 | 7,871 | 6,099 | ||||||||
Total | $ | 65,283 | $ | 58,533 | $ | 28,431 | |||||
Depreciation and amortization: | |||||||||||
Distillery products | $ | 8,371 | $ | 8,900 | $ | 8,510 | |||||
Ingredient solutions | 1,655 | 2,111 | 2,316 | ||||||||
Corporate | 1,227 | 1,371 | 1,499 | ||||||||
Total | $ | 11,253 | $ | 12,382 | $ | 12,325 | |||||
Income (loss) before income taxes: | |||||||||||
Distillery products | $ | 53,583 | $ | 49,097 | $ | 28,701 | |||||
Ingredient solutions | 5,836 | 5,636 | 3,939 | ||||||||
Corporate | (14,702 | ) | (16,315 | ) | (6,700 | ) | |||||
Total | $ | 44,717 | $ | 38,418 | $ | 25,940 |
December 31, | |||||||
2016 | 2015 | ||||||
Identifiable Assets | |||||||
Distillery products | $ | 161,059 | $ | 131,963 | |||
Ingredient solutions | 27,109 | 24,023 | |||||
Corporate | 37,168 | 38,324 | |||||
Total | $ | 225,336 | $ | 194,310 |
NOTE 7: | EQUITY AND EPS |
Dividend and Dividend Equivalent Information (per Share and Unit) | ||||||||||||||
Declaration date | Payment date | Declared | Paid | Total payment | ||||||||||
2016 | ||||||||||||||
March 7, 2016 | April 14, 2016 | $ | 0.08 | $ | 0.08 | $ | 1,378 | |||||||
August 1, 2016 | September 8, 2016 | 0.02 | 0.02 | 344 | ||||||||||
October 31, 2016 | December 8, 2016 | 0.02 | 0.02 | 344 | ||||||||||
$ | 0.12 | $ | 0.12 | $ | 2,066 | |||||||||
2015 | ||||||||||||||
March 10, 2015 | April 21, 2015 | $ | 0.06 | $ | 0.06 | $ | 1,087 | |||||||
2014 | ||||||||||||||
February 28, 2014 | April 9, 2014 | $ | 0.05 | $ | 0.05 | $ | 907 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Operations: | |||||||||||
Net income(a) | $ | 31,184 | $ | 26,191 | $ | 23,675 | |||||
Less: Income attributable to participating securities (unvested shares and units) (b) | 954 | 873 | 832 | ||||||||
Net income attributable to common shareholders | $ | 30,230 | $ | 25,318 | $ | 22,843 | |||||
Share information: | |||||||||||
Basic weighted average common shares(c) | 16,643,811 | 17,123,556 | 17,305,866 | ||||||||
Incremental shares from potential dilutive securities (d) | — | — | — | ||||||||
Diluted weighted average common shares | 16,643,811 | 17,123,556 | 17,305,866 | ||||||||
Basic and diluted EPS(e) | $ | 1.82 | $ | 1.48 | $ | 1.32 |
(a) | Net income attributable to all shareholders. |
(b) | Participating securities include 0, 128,500, and 278,900 unvested restricted stock for the years ended December 31, 2016, 2015, and 2014, as well as 527,486, 437,946, and 413,288 RSUs for the years ended December 31, 2016, 2015, and 2014, respectively. Participating securities do not receive an allocation in periods when a loss is experienced. |
(c) | Under the two class method, basic weighted average common shares exclude outstanding unvested participating securities consisting of restricted stock awards of 0, 128,500, and 278,900 for 2016, 2015, and 2014, respectively. |
(d) | Potential dilutive securities have not been included in the EPS computation in a period when a loss is experienced. At December 31, 2016 and 2015, the Company had 0 stock options outstanding and potentially dilutive, respectively. At December 31, 2014, the Company had 4,000 stock options outstanding and potentially dilutive. |
(e) | Basic and diluted weighted average common shares for 2016 and 2015 were affected by the September 1, 2015, purchase of 950,000 shares of common stock in a privately negotiated transaction with F2 SEA, Inc., an affiliate of SEACOR Holdings, Inc., pursuant to a Stock Repurchase Agreement. SEACOR Holdings, Inc. is the 70 percent owner of ICP, the Company's 30 percent equity method investment. |
Pension Plan Items | (a) | Post-Employment Benefit Plan Items | Equity Method Investment Translation Adjustment and Post-Employment Benefit Adjustment | Total | ||||||||||||
Balance, December 31, 2013 | $ | (377 | ) | $ | 390 | $ | (17 | ) | $ | (4 | ) | |||||
Other comprehensive income (loss) before reclassifications | 218 | (1,620 | ) | (15 | ) | (1,417 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | (85 | ) | 774 | — | 689 | |||||||||||
Net 2014 other comprehensive income (loss) | 133 | (846 | ) | (15 | ) | (728 | ) | |||||||||
Balance, December 31, 2014 | $ | (244 | ) | $ | (456 | ) | $ | (32 | ) | $ | (732 | ) | ||||
Other comprehensive income (loss) before reclassifications | (355 | ) | 47 | (10 | ) | (318 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | 599 | (101 | ) | 52 | 550 | |||||||||||
Net 2015 other comprehensive income (loss) | 244 | (54 | ) | 42 | 232 | |||||||||||
Balance, December 31, 2015 | $ | — | $ | (510 | ) | $ | 10 | $ | (500 | ) | ||||||
Other comprehensive income (loss) before reclassifications | — | 113 | (14 | ) | 99 | |||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 21 | 7 | 28 | ||||||||||||
Net 2016 other comprehensive income (loss) | — | 134 | (7 | ) | 127 | |||||||||||
Balance, December 31, 2016 | $ | — | $ | (376 | ) | $ | 3 | $ | (373 | ) |
(a) | The Company's pension benefit plans were terminated as of the quarter ended June 2015. |
Details about Accumulated Other Comprehensive Income Components | Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | Affected Line Item in the Consolidated Statements of Income | ||||
Post Employment Benefit Items: | ||||||
Amortization of prior service cost | $ | (338 | ) | (a) | ||
Recognized net actuarial loss | 269 | (a) | ||||
(69 | ) | Total before tax | ||||
90 | Tax expense | |||||
$ | 21 | Net of tax | ||||
Equity Method Investment Adjustment: | ||||||
Accumulated postretirement benefit obligation | $ | 13 | ||||
(6 | ) | Tax benefit | ||||
$ | 7 | Net of tax | ||||
Reclassifications for 2016 | $ | 28 | Total net of tax |
(a) | These accumulated other comprehensive income components are included in the computation of net period post-employment benefit cost. See Note 9 for additional details. |
NOTE 18: | SUBSEQUENT EVENTS |
Valuation allowance | ||||
Balance at December 31, 2014 | $ | 3,829 | ||
Reductions | 2,385 | |||
Balance at December 31, 2015 | $ | 1,444 | ||
Reductions | 718 | |||
Balance at December 31, 2016 | $ | 726 |
NOTE 2: | OTHER BALANCE SHEET CAPTIONS |
December 31, | |||||||
2016 | 2015 | ||||||
Finished goods | $ | 14,002 | $ | 15,126 | |||
Barreled distillate (bourbon and whiskey) | 50,941 | 28,278 | |||||
Raw materials | 4,274 | 6,675 | |||||
Work in process | 1,933 | 2,364 | |||||
Maintenance materials | 6,231 | 5,371 | |||||
Other | 1,477 | 887 | |||||
Total | $ | 78,858 | $ | 58,701 |
December 31, | |||||||
2016 | 2015 | ||||||
Land, buildings and improvements | $ | 67,487 | $ | 56,143 | |||
Transportation equipment | 3,253 | 5,417 | |||||
Machinery and equipment | 164,871 | 152,742 | |||||
Construction in progress | 10,608 | 15,612 | |||||
Property and equipment, at cost | 246,219 | 229,914 | |||||
Less accumulated depreciation and amortization | (153,428 | ) | (146,360 | ) | |||
Property and equipment, net | $ | 92,791 | $ | 83,554 |
December 31, | |||||||
2016 | 2015 | ||||||
Employee benefit plans | $ | 820 | $ | 1,027 | |||
Salaries and wages | 5,641 | 6,790 | |||||
Restructuring and severance charges | 124 | 517 | |||||
Property taxes | 824 | 784 | |||||
Other accrued expenses | 1,536 | 1,282 | |||||
Total | $ | 8,945 | $ | 10,400 |
Year Ended December 31, | |||||||||
2016 | 2015 | ||||||||
USDA grant(a) | $ | 1,434 | $ | 1,949 | |||||
LCD reimbursement(b) | 959 | 1,042 | |||||||
Other reimbursement | 313 | 411 | |||||||
Deferred incentive | 272 | — | |||||||
Total | $ | 2,978 | $ | 3,402 |
(a) | In 2001, the United States Department of Agriculture developed a grant program for the gluten industry (\"USDA grant\") and the Company received nearly $26,000 of grants required to be used for research, marketing, promotional and capital costs related to value added gluten and starch products. |
(b) | In 2012, the Lawrenceburg Conservancy District (\"LCD\") in Greendale, IN agreed to reimburse the Company up to $1,250 of certain capital maintenance costs of a Company owned warehouse structure that is integral to the efficacy of the LCD’s flood control system (\"LCD reimbursement\"). Certain capital maintenance activities were completed prior to December 31, 2012 and the remaining capital maintenance activities were completed during 2014. As of December 31, 2014 the Company had received a total of $1,236 in reimbursements. |