(Mark One) | ||
x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the Quarterly Period Ended September 30, 2015 | ||
or | ||
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the Transition Period from to . |
Delaware (State or other jurisdiction of incorporation or organization) | 47-3574483 (IRS Employer Identification No.) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
September 30, 2015 | December 31, 2014 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 28,130 | $ | 5,720 | ||||
Receivables, net of reserves of approximately $3.1 million and $3.2 million as of September 30, 2015 and December 31, 2014, respectively | 73,440 | 63,840 | ||||||
Inventories | 113,880 | 123,530 | ||||||
Deferred income taxes | 4,840 | 4,840 | ||||||
Prepaid expenses and other current assets | 6,610 | 5,690 | ||||||
Total current assets | 226,900 | 203,620 | ||||||
Property and equipment, net | 46,310 | 55,180 | ||||||
Goodwill | 4,420 | 6,580 | ||||||
Other intangibles, net | 57,820 | 66,510 | ||||||
Other assets | 11,370 | 11,940 | ||||||
Total assets | $ | 346,820 | $ | 343,830 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 14,460 | $ | 460 | ||||
Accounts payable | 74,670 | 81,980 | ||||||
Accrued liabilities | 38,130 | 37,940 | ||||||
Total current liabilities | 127,260 | 120,380 | ||||||
Long-term debt | 189,280 | 300 | ||||||
Deferred income taxes | 7,290 | 8,970 | ||||||
Other long-term liabilities | 19,540 | 25,990 | ||||||
Total liabilities | 343,370 | 155,640 | ||||||
Preferred stock, $0.01 par: Authorized 100,000,000 shares; Issued and outstanding: None | — | — | ||||||
Common stock, $0.01 par: Authorized 400,000,000 shares; Issued and outstanding: 18,128,481 shares at September 30, 2015 and no shares at December 31, 2014 | 180 | — | ||||||
Paid-in capital | 480 | — | ||||||
Parent company investment | — | 180,800 | ||||||
Accumulated deficit | (180 | ) | — | |||||
Accumulated other comprehensive income | 2,970 | 7,390 | ||||||
Total shareholders' equity | 3,450 | 188,190 | ||||||
Total liabilities and shareholders' equity | $ | 346,820 | $ | 343,830 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net sales | $ | 153,340 | $ | 157,860 | $ | 454,240 | $ | 484,210 | ||||||||
Cost of sales | (115,580 | ) | (119,690 | ) | (343,430 | ) | (363,720 | ) | ||||||||
Gross profit | 37,760 | 38,170 | 110,810 | 120,490 | ||||||||||||
Selling, general and administrative expenses | (29,090 | ) | (30,310 | ) | (91,280 | ) | (93,330 | ) | ||||||||
Net gain (loss) on dispositions of property and equipment | (60 | ) | 10 | (1,850 | ) | (60 | ) | |||||||||
Operating profit | 8,610 | 7,870 | 17,680 | 27,100 | ||||||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (4,350 | ) | (150 | ) | (4,590 | ) | (510 | ) | ||||||||
Other expense, net | (1,060 | ) | (810 | ) | (3,030 | ) | (2,290 | ) | ||||||||
Other expense, net | (5,410 | ) | (960 | ) | (7,620 | ) | (2,800 | ) | ||||||||
Income before income tax expense | 3,200 | 6,910 | 10,060 | 24,300 | ||||||||||||
Income tax credit (expense) | 3,150 | (1,700 | ) | (30 | ) | (5,890 | ) | |||||||||
Net income | $ | 6,350 | $ | 5,210 | $ | 10,030 | $ | 18,410 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.35 | $ | 0.29 | $ | 0.55 | $ | 1.02 | ||||||||
Diluted | $ | 0.35 | $ | 0.29 | $ | 0.55 | $ | 1.02 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 18,098,404 | 18,062,027 | 18,073,836 | 18,062,027 | ||||||||||||
Diluted | 18,215,209 | 18,114,032 | 18,160,858 | 18,113,399 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income | $ | 6,350 | $ | 5,210 | $ | 10,030 | $ | 18,410 | ||||||||
Other comprehensive income (net of tax): | ||||||||||||||||
Foreign currency translation | (5,350 | ) | (5,700 | ) | (9,440 | ) | (2,750 | ) | ||||||||
Derivative instruments (Note 8) | (30 | ) | (180 | ) | (210 | ) | 90 | |||||||||
Total other comprehensive loss | (5,380 | ) | (5,880 | ) | (9,650 | ) | (2,660 | ) | ||||||||
Total comprehensive income (loss) | $ | 970 | $ | (670 | ) | $ | 380 | $ | 15,750 |
Nine months ended September 30, | ||||||||
2015 | 2014 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 10,030 | $ | 18,410 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Loss on dispositions of property and equipment | 1,850 | 60 | ||||||
Depreciation | 7,580 | 8,830 | ||||||
Amortization of intangible assets | 5,540 | 5,730 | ||||||
Amortization of original issuance discount and debt issuance costs | 330 | — | ||||||
Deferred and other income taxes | (4,620 | ) | (1,100 | ) | ||||
Non-cash compensation expense | 1,750 | 2,410 | ||||||
Increase in receivables | (16,120 | ) | (20,040 | ) | ||||
Decrease in inventories | 5,330 | 10,370 | ||||||
(Increase) decrease in prepaid expenses and other assets | (1,910 | ) | 380 | |||||
Increase (decrease) in accounts payable and accrued liabilities | 2,860 | (17,570 | ) | |||||
Other, net | 170 | (700 | ) | |||||
Net cash provided by operating activities | 12,790 | 6,780 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (6,400 | ) | (9,450 | ) | ||||
Net proceeds from disposition of property and equipment | 1,770 | 260 | ||||||
Net cash used for investing activities | (4,630 | ) | (9,190 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from borrowings on credit facilities | 100,420 | 134,080 | ||||||
Repayments of borrowings on credit facilities | (95,420 | ) | (133,130 | ) | ||||
Proceeds from Term B Loan, net of issuance costs | 192,920 | — | ||||||
Repayments of borrowings on Term B Loan | (2,500 | ) | — | |||||
Proceeds from ABL Revolving Debt, net of issuance costs | 37,900 | — | ||||||
Repayments of borrowings on ABL Revolving Debt | (30,980 | ) | — | |||||
Net transfers from former parent | 27,630 | 4,700 | ||||||
Cash dividend paid to former parent | (214,500 | ) | — | |||||
Net cash provided by financing activities | 15,470 | 5,650 | ||||||
Effect of exchange rate changes on cash | (1,220 | ) | (480 | ) | ||||
Cash and Cash Equivalents: | ||||||||
Increase for the period | 22,410 | 2,760 | ||||||
At beginning of period | 5,720 | 7,880 | ||||||
At end of period | $ | 28,130 | $ | 10,640 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 3,760 | $ | 460 |
Common Stock | Paid-in Capital | Parent Company Investment | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | |||||||||||||||||||
Balances, December 31, 2014 | $ | — | $ | — | $ | 180,800 | $ | — | $ | 7,390 | $ | 188,190 | ||||||||||||
Net income | — | — | 3,680 | 6,350 | — | 10,030 | ||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | (9,650 | ) | (9,650 | ) | ||||||||||||||||
Issuance of common stock | 180 | — | (180 | ) | — | — | — | |||||||||||||||||
Net transfers from former parent | — | — | 23,670 | — | 5,230 | 28,900 | ||||||||||||||||||
Cash dividend paid to former parent | — | — | (214,500 | ) | — | — | (214,500 | ) | ||||||||||||||||
Non-cash compensation expense | 480 | 480 | ||||||||||||||||||||||
Reclassification of net parent investment to accumulated deficit | — | — | 6,530 | (6,530 | ) | — | — | |||||||||||||||||
Balances, September 30, 2015 | $ | 180 | $ | 480 | $ | — | $ | (180 | ) | $ | 2,970 | $ | 3,450 |
Cequent Americas | Cequent APEA | Total | ||||||||||
(dollars in thousands) | ||||||||||||
Balance, December 31, 2014 | $ | 6,580 | $ | — | $ | 6,580 | ||||||
Foreign currency translation and other | (2,160 | ) | — | (2,160 | ) | |||||||
Balance, September 30, 2015 | $ | 4,420 | $ | — | $ | 4,420 |
As of September 30, 2015 | As of December 31, 2014 | |||||||||||||||
Intangible Category by Useful Life | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||
(dollars in thousands) | ||||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||
Customer relationships, 5 – 12 years | $ | 32,480 | $ | (26,520 | ) | $ | 34,170 | $ | (26,190 | ) | ||||||
Customer relationships, 15 – 25 years | 105,380 | (76,700 | ) | 105,380 | (72,250 | ) | ||||||||||
Total customer relationships | 137,860 | (103,220 | ) | 139,550 | (98,440 | ) | ||||||||||
Technology and other, 3 – 15 years | 14,520 | (14,050 | ) | 14,600 | (13,910 | ) | ||||||||||
Total finite-lived intangible assets | 152,380 | (117,270 | ) | 154,150 | (112,350 | ) | ||||||||||
Trademark/Trade names, indefinite-lived | 22,710 | — | 24,710 | — | ||||||||||||
Total other intangible assets | $ | 175,090 | $ | (117,270 | ) | $ | 178,860 | $ | (112,350 | ) |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Technology and other, included in cost of sales | $ | 40 | $ | 60 | $ | 160 | $ | 190 | ||||||||
Customer relationships, included in selling, general and administrative expenses | 1,780 | 1,860 | 5,380 | 5,540 | ||||||||||||
Total amortization expense | $ | 1,820 | $ | 1,920 | $ | 5,540 | $ | 5,730 |
September 30, 2015 | December 31, 2014 | |||||||
(dollars in thousands) | ||||||||
Finished goods | $ | 80,980 | $ | 89,550 | ||||
Work in process | 6,070 | 6,810 | ||||||
Raw materials | 26,830 | 27,170 | ||||||
Total inventories | $ | 113,880 | $ | 123,530 |
September 30, 2015 | December 31, 2014 | |||||||
(dollars in thousands) | ||||||||
Land and land improvements | $ | — | $ | 290 | ||||
Buildings | 8,060 | 9,250 | ||||||
Machinery and equipment | 96,570 | 118,460 | ||||||
104,630 | 128,000 | |||||||
Less: Accumulated depreciation | 58,320 | 72,820 | ||||||
Property and equipment, net | $ | 46,310 | $ | 55,180 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Depreciation expense, included in cost of sales | $ | 2,100 | $ | 2,420 | $ | 6,360 | $ | 7,320 | ||||||||
Depreciation expense, included in selling, general and administrative expense | 400 | 480 | 1,220 | 1,510 | ||||||||||||
Total depreciation expense | $ | 2,500 | $ | 2,900 | $ | 7,580 | $ | 8,830 |
September 30, 2015 | December 31, 2014 | |||||||
(dollars in thousands) | ||||||||
ABL Facility | $ | 8,500 | $ | — | ||||
Term B Loan | 190,670 | — | ||||||
Bank facilities | 4,280 | 140 | ||||||
Capital leases and other long-term debt | 290 | 620 | ||||||
203,740 | 760 | |||||||
Less: Current maturities, long-term debt | 14,460 | 460 | ||||||
Long-term debt | $ | 189,280 | $ | 300 |
Asset / (Liability) Derivatives | ||||||||||
Balance Sheet Caption | September 30, 2015 | December 31, 2014 | ||||||||
(dollars in thousands) | ||||||||||
Derivatives designated as hedging instruments | ||||||||||
Foreign currency forward contracts | Other assets | $ | 100 | $ | — | |||||
Foreign currency forward contracts | Accrued liabilities | (370 | ) | (150 | ) | |||||
Total derivatives designated as hedging instruments | (270 | ) | (150 | ) | ||||||
Derivatives not designated as hedging instruments | ||||||||||
Foreign currency forward contracts | Other assets | 80 | — | |||||||
Foreign currency forward contracts | Accrued liabilities | (130 | ) | — | ||||||
Total derivatives not designated as hedging instruments | (50 | ) | — | |||||||
Total derivatives | $ | (320 | ) | $ | (150 | ) |
Amount of Loss Recognized in AOCI on Derivatives (Effective Portion, net of tax) | Amount of Income (Loss) Reclassified from AOCI into Earnings | ||||||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||
As of September 30, 2015 | As of December 31, 2014 | Location of Income (Loss) Reclassified from AOCI into Earnings (Effective Portion) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||
Derivatives instruments | |||||||||||||||||||||||||
Foreign currency forward contracts | $ | (280 | ) | $ | (70 | ) | Cost of sales | $ | (610 | ) | $ | 150 | $ | (1,060 | ) | $ | 370 |
Frequency | Asset / (Liability) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||
(dollars in thousands) | ||||||||||||||||||
September 30, 2015 | ||||||||||||||||||
Foreign currency forward contracts | Recurring | $ | (320 | ) | $ | — | $ | (320 | ) | $ | — | |||||||
December 31, 2014 | ||||||||||||||||||
Foreign currency forward contracts | Recurring | $ | (150 | ) | $ | — | $ | (150 | ) | $ | — |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Net Sales | ||||||||||||||||
Cequent Americas | $ | 116,540 | $ | 113,580 | $ | 342,030 | $ | 356,660 | ||||||||
Cequent APEA | 36,800 | 44,280 | 112,210 | 127,550 | ||||||||||||
Total | $ | 153,340 | $ | 157,860 | $ | 454,240 | $ | 484,210 | ||||||||
Operating Profit (Loss) | ||||||||||||||||
Cequent Americas | $ | 10,700 | $ | 8,550 | $ | 24,400 | $ | 31,100 | ||||||||
Cequent APEA | 1,730 | 3,140 | 5,650 | 7,770 | ||||||||||||
Corporate expenses | (3,820 | ) | (3,820 | ) | (12,370 | ) | (11,770 | ) | ||||||||
Total | $ | 8,610 | $ | 7,870 | $ | 17,680 | $ | 27,100 |
• | with respect to each adjusted stock option award covering Horizon common stock, the per-share exercise price for such award was established so that the award would retain immediately after the spin-off, in the aggregate, the same intrinsic value that the original TriMas stock option award had immediately prior to the spin-off (subject to rounding); |
• | with respect to each adjusted stock option, restricted share, and restricted stock unit award covering Horizon common stock, the number of underlying shares of common stock subject to such award was equitably adjusted so that the award would retain immediately after the spin-off, in the aggregate, the same intrinsic value that the award had immediately prior to the spin-off (subject to rounding); |
• | with respect to any continuous employment requirement associated with any equity incentive awards, such requirement will be satisfied after the spin-off by a Horizon employee based on his or her continuous employment with Horizon; |
• | to the extent any original TriMas equity incentive award is subject to accelerated vesting or exercisability in the event of a "change of control," the corresponding post-spin-off Horizon equity incentive awards will generally accelerate in the same manner in the event of a change of control of Horizon; and |
• | Horizon employees who hold TriMas restricted shares prior to the spin-off will receive no Horizon common stock with respect to such restricted shares (other than the Horizon restricted shares described above) in connection with the distribution of Horizon common stock to TriMas stockholders generally. |
August 14, 2015 Grant | ||||
Weighted-average fair value per option | $ | 4.41 | ||
Exercise price | $ | 11.02 | ||
Risk-free interest rate | 1.79 | % | ||
Dividend yield | 0 | % | ||
Expected stock volatility | 39.54 | % | ||
Expected life (years) | 5.85 |
Number of Stock Options | Weighted Average Exercise Price | Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||
Outstanding at June 30, 2015 | 9,299 | $ | 3.69 | ||||||||||
Granted | 154,856 | 11.02 | |||||||||||
Exercised | 6,569 | 0.53 | |||||||||||
Canceled, forfeited | — | — | |||||||||||
Expired | — | — | |||||||||||
Outstanding at September 30, 2015 | 157,586 | $ | 11.02 | 9.8 | $ | 54,457 |
Number of Restricted Shares | Weighted Average Grant Date Fair Value | ||||||
Outstanding at June 30, 2015 | 229,046 | $ | 16.05 | ||||
Granted | 205,922 | 11.02 | |||||
Vested | (2,520 | ) | 7.49 | ||||
Canceled, forfeited | (63,042 | ) | 16.67 | ||||
Outstanding at September 30, 2015 | 369,406 | $ | 13.20 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(dollars in thousands, except for per share amounts) | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income for basic and diluted earnings per share | $ | 6,350 | $ | 5,210 | $ | 10,030 | $ | 18,410 | ||||||||
Denominator: | ||||||||||||||||
Weighted average shares outstanding, basic | 18,098,404 | 18,062,027 | 18,073,836 | 18,062,027 | ||||||||||||
Dilutive effect of stock-based awards | 116,805 | 52,005 | 87,022 | 51,372 | ||||||||||||
Weighted average shares outstanding, diluted | 18,215,209 | 18,114,032 | 18,160,858 | 18,113,399 | ||||||||||||
Basic earnings per share | $ | 0.35 | $ | 0.29 | $ | 0.55 | $ | 1.02 | ||||||||
Diluted earnings per share | $ | 0.35 | $ | 0.29 | $ | 0.55 | $ | 1.02 |
Derivative Instruments | Foreign Currency Translation | Total | ||||||||||
(dollars in thousands) | ||||||||||||
Balance, December 31, 2014 | $ | (70 | ) | $ | 7,460 | $ | 7,390 | |||||
Net transfer from former parent | — | 5,230 | 5,230 | |||||||||
Net unrealized losses arising during the period (a) | (1,570 | ) | (9,440 | ) | (11,010 | ) | ||||||
Less: Net realized losses reclassified to net income (b) | (1,360 | ) | — | (1,360 | ) | |||||||
Net current-period change | (210 | ) | (4,210 | ) | (4,420 | ) | ||||||
Balance, September 30, 2015 | $ | (280 | ) | $ | 3,250 | $ | 2,970 |
Derivative Instruments | Foreign Currency Translation | Total | ||||||||||
(dollars in thousands) | ||||||||||||
Balance, December 31, 2013 | $ | — | $ | 14,700 | $ | 14,700 | ||||||
Net unrealized gains (losses) arising during the period (a) | 440 | (2,750 | ) | (2,310 | ) | |||||||
Less: Net realized gains reclassified to net income (b) | 350 | — | 350 | |||||||||
Net current-period change | 90 | (2,750 | ) | (2,660 | ) | |||||||
Balance, September 30, 2014 | $ | 90 | $ | 11,950 | $ | 12,040 |
• | Closed and moved production from our former Goshen, Indiana manufacturing facility to a new lower-cost facility in Reynosa, Mexico in 2013, relocating approximately 420 positions; |
• | Relocated the supply chain from the Midwestern United States to localized supply near Reynosa; |
• | As a result of the Goshen manufacturing move, relocated the main U.S. distribution facility from Huntington, Indiana to Dallas, Texas; |
• | Closed and consolidated two former facilities in Australia into one newer facility; |
• | Closed and consolidated two former facilities in Brazil into one facility; and |
• | The Company announced plans to close its manufacturing facility in Ciudad Juarez, Mexico along with its distribution warehouse in El Paso, Texas. Manufacturing from these locations will be moved to existing facilities in Reynosa, Mexico. |
Three months ended September 30, | ||||||||||||||
2015 | As a Percentage of Net Sales | 2014 | As a Percentage of Net Sales | |||||||||||
(dollars in thousands) | ||||||||||||||
Net Sales | ||||||||||||||
Cequent Americas | $ | 116,540 | 76.0 | % | $ | 113,580 | 71.9 | % | ||||||
Cequent APEA | 36,800 | 24.0 | % | 44,280 | 28.1 | % | ||||||||
Total | $ | 153,340 | 100.0 | % | $ | 157,860 | 100.0 | % | ||||||
Gross Profit | ||||||||||||||
Cequent Americas | $ | 31,190 | 26.8 | % | $ | 29,370 | 25.9 | % | ||||||
Cequent APEA | 6,570 | 17.9 | % | 8,800 | 19.9 | % | ||||||||
Total | $ | 37,760 | 24.6 | % | $ | 38,170 | 24.2 | % | ||||||
Selling, General and Administrative Expenses | ||||||||||||||
Cequent Americas | $ | 20,430 | 17.5 | % | $ | 20,820 | 18.3 | % | ||||||
Cequent APEA | 4,840 | 13.2 | % | 5,670 | 12.8 | % | ||||||||
Corporate expenses | 3,820 | N/A | 3,820 | N/A | ||||||||||
Total | $ | 29,090 | 19.0 | % | $ | 30,310 | 19.2 | % | ||||||
Net Gain (Loss) on Disposition of Property and Equipment | ||||||||||||||
Cequent Americas | $ | (70 | ) | 0.1 | % | $ | — | — | % | |||||
Cequent APEA | 10 | — | % | 10 | — | % | ||||||||
Total | $ | (60 | ) | — | % | $ | 10 | — | % | |||||
Operating Profit (Loss) | ||||||||||||||
Cequent Americas | $ | 10,700 | 9.2 | % | $ | 8,550 | 7.5 | % | ||||||
Cequent APEA | 1,730 | 4.7 | % | 3,140 | 7.1 | % | ||||||||
Corporate expenses | (3,820 | ) | N/A | (3,820 | ) | N/A | ||||||||
Total | $ | 8,610 | 5.6 | % | $ | 7,870 | 5.0 | % | ||||||
Depreciation and Amortization | ||||||||||||||
Cequent Americas | $ | 2,730 | 2.3 | % | $ | 2,800 | 2.5 | % | ||||||
Cequent APEA | 1,530 | 4.2 | % | 1,950 | 4.4 | % | ||||||||
Corporate expenses | 60 | N/A | 70 | N/A | ||||||||||
Total | $ | 4,320 | 2.8 | % | $ | 4,820 | 3.1 | % |
Nine months ended September 30, | ||||||||||||||
2015 | As a Percentage of Net Sales | 2014 | As a Percentage of Net Sales | |||||||||||
(dollars in thousands) | ||||||||||||||
Net Sales | ||||||||||||||
Cequent Americas | $ | 342,030 | 75.3 | % | $ | 356,660 | 73.7 | % | ||||||
Cequent APEA | 112,210 | 24.7 | % | 127,550 | 26.3 | % | ||||||||
Total | $ | 454,240 | 100.0 | % | $ | 484,210 | 100.0 | % | ||||||
Gross Profit | ||||||||||||||
Cequent Americas | $ | 90,570 | 26.5 | % | $ | 95,520 | 26.8 | % | ||||||
Cequent APEA | 20,240 | 18.0 | % | 24,970 | 19.6 | % | ||||||||
Total | $ | 110,810 | 24.4 | % | $ | 120,490 | 24.9 | % | ||||||
Selling, General and Administrative Expenses | ||||||||||||||
Cequent Americas | $ | 64,370 | 18.8 | % | $ | 64,360 | 18.0 | % | ||||||
Cequent APEA | 14,540 | 13.0 | % | 17,200 | 13.5 | % | ||||||||
Corporate expenses | 12,370 | N/A | 11,770 | N/A | ||||||||||
Total | $ | 91,280 | 20.1 | % | $ | 93,330 | 19.3 | % | ||||||
Net Gain (Loss) on Disposition of Property and Equipment | ||||||||||||||
Cequent Americas | $ | (1,800 | ) | 0.5 | % | $ | (70 | ) | — | % | ||||
Cequent APEA | (50 | ) | — | % | 10 | — | % | |||||||
Total | $ | (1,850 | ) | 0.4 | % | $ | (60 | ) | — | % | ||||
Operating Profit (Loss) | ||||||||||||||
Cequent Americas | $ | 24,400 | 7.1 | % | $ | 31,100 | 8.7 | % | ||||||
Cequent APEA | 5,650 | 5.0 | % | 7,770 | 6.1 | % | ||||||||
Corporate expenses | (12,370 | ) | N/A | (11,770 | ) | N/A | ||||||||
Total | $ | 17,680 | 3.9 | % | $ | 27,100 | 5.6 | % | ||||||
Depreciation and Amortization | ||||||||||||||
Cequent Americas | $ | 8,200 | 2.4 | % | $ | 8,740 | 2.5 | % | ||||||
Cequent APEA | 4,840 | 4.3 | % | 5,750 | 4.5 | % | ||||||||
Corporate expenses | 80 | N/A | 70 | N/A | ||||||||||
Total | $ | 13,120 | 2.9 | % | $ | 14,560 | 3.0 | % |
▪ | our announcement of plans to close our manufacturing facility in Ciudad Juarez along with its distribution warehouse in El Paso, Texas; |
▪ | the impact of foreign currency, as our reported results in U.S. dollars were negatively impacted as a result of the stronger U.S. dollar relative to foreign currencies, particularly in our Cequent APEA reportable segment; |
▪ | more stable demand from aftermarket distributors compared to previous quarters in 2015; and |
▪ | development of our corporate cost structure as an independent public company. |
• | For the nine months ended September 30, 2015, we generated $22.6 million of cash, based on the reported net income of $10.0 million and after considering the effects of non-cash items related to losses on dispositions of property and equipment, depreciation, amortization, stock-based compensation, changes in deferred income taxes, amortization of original issuance discount and debt issuance costs, and other, net. For the nine months ended September 30, 2014, we generated $33.6 million in cash flows based on the reported net income of $18.4 million and after considering the effects of similar non-cash items. |
• | Increases in accounts receivable resulted in a use of cash of approximately $16.1 million and $20.0 million for the nine months ended September 30, 2015 and 2014, respectively. The increase in accounts receivable for the nine months ended September 30, 2015 and 2014 is a result of higher sales activity in the third quarter compared to the fourth quarter due to seasonality. The decrease in cash used from accounts receivable for the nine months ended September 30, 2015 compare to the nine months ended September 30, 2014 is due to improved collections. Days sales outstanding decreased to approximately 44 days at September 30, 2015 compared to 48 days at September 30, 2014. |
• | Decreases in inventory resulted in a cash source of approximately $5.3 million and $10.4 million for the nine months ended September 30, 2015 and 2014, respectively. Inventory levels decreased primarily due to the seasonality of our business. In addition, for the nine months ended September 30, 2014, inventory levels in our Cequent Americas reportable segment declined as the safety stock levels built in preparation for the move from our Goshen, Indiana manufacturing facility to lower cost country facilities were consumed and replenished at lower levels. |
• | Increases in accounts payable and accrued liabilities resulted in a cash source of approximately $2.9 million during the nine months ended September 30, 2015, primarily due to the reclassification of a tax liability and severance recorded during the third quarter related to our facilities closure. Decreases in accounts payable and accrued liabilities resulted in a use of cash of approximately $17.6 million during the nine months ended September 30, 2014, primarily as a result of the timing of payments made to supplier and mix of vendors and related terms. Our days accounts payable increased to approximately 59 days at September 30, 2015 compared to approximately 52 days at September 30, 2014. |
Less: | Add: | |||||||||||||||
Year Ended December 31, 2014 | Nine Months Ended September 30, 2014 | Nine Months Ended September 30, 2015 | Twelve Months Ended September 30, 2015 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Net income | $ | 15,350 | $ | 18,410 | $ | 10,030 | $ | 6,970 | ||||||||
Bank stipulated adjustments: | ||||||||||||||||
Interest expense, net | 720 | 510 | 4,590 | 4,800 | ||||||||||||
Income tax expense (credit) | 5,240 | 5,890 | 30 | (620 | ) | |||||||||||
Depreciation and amortization | 18,930 | 14,560 | 13,120 | 17,490 | ||||||||||||
Non-cash compensation expense(1) | 2,660 | 2,410 | 1,750 | 2,000 | ||||||||||||
Other non-cash expenses or losses | 15,260 | 11,960 | 11,150 | 14,450 | ||||||||||||
Non-recurring expenses or costs(2) | 4,440 | 4,140 | 5,000 | 5,300 | ||||||||||||
Acquisition integration costs(3) | 90 | 90 | — | — | ||||||||||||
Interest-equivalent costs associated with any Specified Vendor Receivables Financing | 870 | 570 | 690 | 990 | ||||||||||||
Consolidated Bank EBITDA, as defined | $ | 63,560 | $ | 58,540 | $ | 46,360 | $ | 51,380 |
September 30, 2015 | |||||
(dollars in thousands) | |||||
Total Consolidated Indebtedness | $ | 185,110 | |||
Consolidated Bank EBITDA, as defined | 51,380 | ||||
Actual leverage ratio | 3.60 | x | |||
Covenant requirement | 5.25 | x |
(1) | Non-cash compensation expenses resulting from the grant of restricted shares of common stock and common stock options. For all the periods through June 30, 2015, these amounts were allocated by former parent company. |
(2) | Non-recurring costs and expenses relating to cost savings projects, including restructuring and severance expenses, not to exceed $5.0 million in any fiscal year and $15 million in aggregate, commencing on or after January 1, 2015. |
(3) | Costs and expenses arising from the integration of any business acquired not to exceed $7.5 million in any fiscal year $20.0 million in the aggregate. |
• | An emerging growth company is exempt from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and financial statements, commonly known as an "auditor discussion and analysis." |
• | An emerging growth company is not required to hold a nonbinding advisory stockholder vote on executive compensation or any golden parachute payments not previously approved by stockholders. |
• | An emerging growth company is not required to comply with the requirement of auditor attestation of management's assessment of internal control over financial reporting, which is required for other public reporting companies by Section 404 of the Sarbanes-Oxley Act. |
• | An emerging growth company is eligible for reduced disclosure obligations regarding executive compensation in its periodic and annual reports, including without limitation exemption from the requirement to provide a compensation discussion and analysis describing compensation practices and procedures. |
• | A company that is an emerging growth company is eligible for reduced financial statement disclosure in registration statements, which must include two years of audited financial statements rather than the three years of audited financial statements that are required for other public reporting companies. |
3.1(b) | Amended and Restated Certificate of Incorporation of Horizon Global Corporation. |
3.2(a) | Amended and Restated By-laws of Horizon Global Corporation. |
10.1(b) | Horizon Global Corporation Executive Retirement Plan effective as of July 1, 2015. |
10.2 | Form of Restricted Stock Units Agreement - Founders Grant - under the 2015 Equity and Incentive Compensation Plan. |
10.3 | Form of Restricted Stock Units Agreement - 2015 Board of Directors - under the 2015 Equity and Incentive Compensation Plan. |
10.4 | Form of Nonqualified Stock Option Agreement - 2015 LTI - under the 2015 Equity and Incentive Compensation Plan. |
10.5 | Form of Nonqualified Stock Option Agreement - Special Award - under the 2015 Equity and Incentive Compensation Plan. |
10.6 | Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2013 Performance Stock Units - 2006 Plan). |
10.7 | Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2013 Performance Stock Units - 2011 Plan). |
10.8 | Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2014 Performance Stock Units - 2011 Plan). |
10.9 | Horizon Global Corporation Executive Severance/Change of Control Policy effective as of July 1, 2015. |
31.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
(a) | Incorporated by reference to the Exhibits filed with our Registration Statement on Form S-1/A filed on June 11, 2015 (Reg. No. 333-203138). | |
(b) | Incorporated by reference to the Exhibits filed with our Quarterly Report on Form 10-Q filed on August 11, 2015 (File No. 001-37427). | |
* Certain exhibits and schedules were omitted in the original filing and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request. |
HORIZON GLOBAL CORPORATION (Registrant) | ||||
/s/ DAVID G. RICE | ||||
Date: | November 10, 2015 | By: | David G. Rice Chief Financial Officer |
3.1(b) | Amended and Restated Certificate of Incorporation of Horizon Global Corporation. |
3.2(a) | Amended and Restated By-laws of Horizon Global Corporation. |
10.1(b) | Horizon Global Corporation Executive Retirement Plan effective as of July 1, 2015. |
10.2 | Form of Restricted Stock Units Agreement - Founders Grant - under the 2015 Equity and Incentive Compensation Plan. |
10.3 | Form of Restricted Stock Units Agreement - 2015 Board of Directors - under the 2015 Equity and Incentive Compensation Plan. |
10.4 | Form of Nonqualified Stock Option Agreement - 2015 LTI - under the 2015 Equity and Incentive Compensation Plan. |
10.5 | Form of Nonqualified Stock Option Agreement - Special Award - under the 2015 Equity and Incentive Compensation Plan. |
10.6 | Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2013 Performance Stock Units - 2006 Plan). |
10.7 | Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2013 Performance Stock Units - 2011 Plan). |
10.8 | Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2014 Performance Stock Units - 2011 Plan). |
10.9 | Horizon Global Corporation Executive Severance/Change of Control Policy effective as of July 1, 2015. |
31.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
(a) | Incorporated by reference to the Exhibits filed with our Registration Statement on Form S-1/A filed on June 11, 2015 (Reg. No. 333-203138). | |
(b) | Incorporated by reference to the Exhibits filed with our Quarterly Report on Form 10-Q filed on August 11, 2015 (File No. 001-37427). | |
* Certain exhibits and schedules were omitted in the original filing and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request. |
(a) | The RSUs covered by this Agreement shall become nonforfeitable and payable to the Grantee pursuant to Section 5 hereof on July 1, 2018, conditioned upon the Grantee’s continuous employment with the Company or a Subsidiary through such date (the period from the Date of Grant until July 1, 2018, the “Vesting Period”). Any RSUs that do not so become nonforfeitable will be forfeited, including, except as provided in Section 4(b) or Section 4(c) below, if the Grantee ceases to be continuously employed by the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuously employed” (or substantially similar terms) means the absence of any interruption or termination of the Grantee’s employment with the Company or a Subsidiary. Continuous employment shall not be considered interrupted or terminated in the case of transfers between locations of the Company and its Subsidiaries. |
(b) | Notwithstanding Section 4(a) above, the RSUs shall become nonforfeitable and payable to the Grantee pursuant to Section 5 hereof upon the occurrence of any of the following events at a time when the RSUs have not been forfeited (to the extent the RSUs have not previously become nonforfeitable) in the following manner: |
(i) | all of the RSUs shall become nonforfeitable and payable to the Grantee if the Grantee should die or become Disabled prior to the end of the Vesting Period while the Grantee is continuously employed by the Company or any of its Subsidiaries; |
(ii) | if the Grantee experiences a termination of employment with the Company or a Subsidiary by reason of a termination by the Company without Cause or a termination by the Grantee for Good Reason that occurs prior to a Change in Control and before the end of the Vesting Period, a pro-rata portion of the RSUs shall become nonforfeitable and payable, with the pro-rata amount calculated by (A) multiplying the total number of RSUs subject to this Agreement by a fraction, (y) the numerator of which is the number of whole calendar months that have elapsed from the Date of Grant to the date of the Grantee’s termination of employment, and (z) the denominator of which is 35, and then (B) subtracting the number of RSUs that have already become nonforfeitable under this Agreement; or |
(iii) | in the event of a Change in Control that occurs prior to the end of the Vesting Period, the RSUs shall become nonforfeitable and payable in accordance with Section 4(c) below. |
(c) | (i) Notwithstanding Section 4(a) above, if at any time before the end of the Vesting Period or forfeiture of the RSUs, and while the Grantee is continuously employed by the Company or a Subsidiary, a Change in Control occurs, then the RSUs will become nonforfeitable and payable to the Grantee in accordance with Section 5 hereof, except to the extent that a Replacement Award is provided to the Grantee in accordance with Section 4(c)(ii) to continue, replace or assume the RSUs covered by this Agreement (the “Replaced Award”). |
(i) | For purposes of this Agreement, a “Replacement Award” means an award (A) of the same type (e.g., time-based restricted stock units) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control, (D) if the Grantee holding the Replaced Award is subject to U.S. federal income tax under the Code, the tax consequences of which to such Grantee under the Code are not less favorable to such Grantee than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Grantee holding the Replaced Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or be exempt from Section 409A |
(ii) | If, after receiving a Replacement Award, the Grantee experiences a termination of employment with the Company or a Subsidiary (or any of their successors) (as applicable, the “Successor”) by reason of a termination by the Successor without Cause or by the Grantee for Good Reason, in each case within a period of two years after the Change in Control and during the remaining vesting period for the Replacement Award, the Replacement Award shall become nonforfeitable and payable with respect to the time-based restricted stock units covered by such Replacement Award upon such termination. |
(iii) | If a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any outstanding RSUs that at the time of the Change in Control are not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code) will be deemed to be nonforfeitable at the time of such Change in Control. |
(b) | For purposes of this Agreement, the following definitions apply: |
(i) | “Good Reason” shall mean (i) a material and permanent diminution in the Grantee’s duties or responsibilities; (ii) a material reduction in the aggregate value of base salary and bonus opportunity provided to the Grantee by the Company; or (iii) a permanent reassignment of the Grantee to another primary office more than 50 miles from the current office location. The Grantee must notify the Company of the Grantee’s intention to invoke termination for Good Reason within 90 days after the Grantee has knowledge of such event and provide the Company 30 days’ opportunity for cure, or such event shall not constitute Good Reason. The Grantee may not invoke termination for Good Reason if Cause exists at the time of such termination. |
(ii) | “Cause” shall mean (i) the Grantee’s conviction of or plea of guilty or nolo contendere to a crime constituting a felony under the laws of the United States or any State thereof or any other jurisdiction in which the Company or its Subsidiaries conduct business; (ii) the Grantee’s willful misconduct in the performance of the Grantee’s duties to the Company or its Subsidiaries and failure to cure such breach within thirty days following written notice thereof from the Company; (iii) the Grantee’s willful failure or refusal to follow directions from the Board (or direct reporting executive) and failure to cure such breach within thirty days following written notice thereof from the Board; or (iv) the Grantee’s breach of fiduciary duty to the Company or its |
(iii) | “Disabled” shall mean (i) the Grantee is unable to engage in any substantial gainful activity due to medically determinable physical or mental impairment expected to result in death or to last for a continuous period of not less than 12 months, or (ii) due to any medically determinable physical or mental impairment expected to result in death or last for a continuous period not less than 12 months, the Grantee has received income replacement benefits for a period of not less than three months under an accident and health plan sponsored by the Company. |
(a) | Payment for the RSUs, after and to the extent they have become nonforfeitable, shall be made in the form of Common Shares. Except as provided in Section 5(b) or 5(c), payment shall be made as soon as administratively practicable following (but no later than thirty (30) days following) the date that the RSUs become nonforfeitable pursuant to Section 4 hereof. |
(b) | If the RSUs become nonforfeitable (i) by reason of the occurrence of a Change in Control as described in Section 4(c), and if the Change in Control does not constitute a “change in control” for purposes of Section 409A(a)(2)(A)(v) of the Code, or (ii) by reason of a termination of the Grantee’s employment, and if such termination does not constitute a “separation from service” for purposes of Section 409A(a)(2)(A)(i) of the Code, then payment for the RSUs will be made upon the earliest of (A) the Grantee’s “separation from service” with the Company and its Subsidiaries (determined in accordance with Section 409A(a)(2)(A)(i) of the Code), (B) the date the RSUs would have become nonforfeitable under Section 4(a) had the Grantee remained in continuous employment, (C) the Grantee’s death, (D) the occurrence of a Change in Control that constitutes a “change in control” for purposes of Section 409A(a)(2)(A)(v) of the Code, or (E) the Grantee’s becoming Disabled. |
(c) | If the RSUs become payable on the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code and the Grantee is a “specified employee” as determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code, then payment for the RSUs shall be made on the earlier of the fifth business day of the seventh month after the date of the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code or the Grantee’s death. |
(d) | Except to the extent provided by Section 409A of the Code and permitted by the Committee, no Common Shares may be issued to the Grantee at a time earlier than otherwise expressly provided in this Agreement. |
(e) | The Company’s obligations to the Grantee with respect to the RSUs will be satisfied in full upon the issuance of Common Shares corresponding to such RSUs. |
(a) | The Grantee shall have no rights of ownership in the Common Shares underlying the RSUs and no right to vote the Common Shares underlying the RSUs until the date on which the Common Shares underlying the RSUs are issued or transferred to the Grantee pursuant to Section 5 above. |
(b) | From and after the Date of Grant and until the earlier of (i) the time when the RSUs become nonforfeitable and are paid in accordance with Section 5 hereof or (ii) the time when the Grantee’s right to receive Common Shares in payment of the RSUs is forfeited in accordance with Section 4 hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Shares generally, the Grantee shall be credited with cash per RSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including vesting, payment and forfeitability) as apply to the RSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the RSUs to which they relate. |
(c) | The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Shares in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement. |
“(f) | Notwithstanding anything herein to the contrary, the Grantee may not sell, transfer or otherwise alienate the Common Shares issued upon vesting of the RSUs within twelve (12) months of the date of issue, unless the Grantee complies in all respects with the licensing and disclosure requirements under the Australian Corporations Act 2001 (Cth).” |
(a) | The RSUs covered by this Agreement shall become nonforfeitable and payable to the Grantee pursuant to Section 5 hereof on May 1, 2016, conditioned upon the Grantee’s continuous service on the Board through such date (the period from the Date of Grant until May 1, 2016, the “Vesting Period”). Any RSUs that do not so become nonforfeitable will be forfeited, including, except as provided in Section 4(b) below, if the Grantee ceases to continuously serve on the Board prior to the end of the Vesting Period. |
(b) | Notwithstanding Section 4(a) above, the RSUs shall become nonforfeitable and payable to the Grantee pursuant to Section 5 hereof if the Grantee should die or become Disabled prior to the end of the Vesting Period while the Grantee is continuously serving on the Board (to the extent the RSU have not previously become nonforfeitable). |
(c) | For purposes of this Agreement, “Disabled” shall mean that the Grantee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. |
(a) | Payment for the RSUs, after and to the extent they have become nonforfeitable, shall be made in the form of Common Shares. Except as provided in Section 5(b), payment shall be made as soon as administratively practicable following (but no later than thirty (30) days following) the date that the RSUs become nonforfeitable pursuant to Section 4 hereof. |
(b) | If the RSUs become payable on the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code and the Grantee is a “specified employee” as determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code, then payment for the RSUs shall be made on the earlier of the first day of the seventh month after the date of the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code or the Grantee’s death. |
(c) | Except to the extent provided by Section 409A of the Code and permitted by the Committee, no Common Shares may be issued to the Grantee at a time earlier than otherwise expressly provided in this Agreement. |
(d) | The Company’s obligations to the Grantee with respect to the RSUs will be satisfied in full upon the issuance of Common Shares corresponding to such RSUs. |
(a) | The Grantee shall have no rights of ownership in the Common Shares underlying the RSUs and no right to vote the Common Shares underlying the RSUs until the date on which the Common Shares underlying the RSUs are issued or transferred to the Grantee pursuant to Section 5 above. |
(b) | From and after the Date of Grant and until the earlier of (i) the time when the RSUs become nonforfeitable and are paid in accordance with Section 5 hereof or (ii) the time when the Grantee’s right to receive Common Shares in payment of the RSUs is forfeited in accordance with Section 4 hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Shares generally, the Grantee shall be credited with cash per RSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including vesting, payment and forfeitability) as apply to the RSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the RSUs to which they relate. |
(c) | The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Shares in the |
▪ | The relative achievement of the Performance Goals (as described on Appendix A to the 2013 TriMas PSU Agreement) applicable to the 2013 TriMas PSU Award, and thus the number of performance stock units that were earned under such 2013 TriMas PSU Award, was determined as of the date of the Spin-Off (rather than at the end of the Performance Period); and |
▪ | The earned portion of the 2013 TriMas PSU Award was then converted into a restricted stock units award covering a number of shares of Horizon common stock to account for the effect of the Spin-Off in a manner intended to retain the same intrinsic value (subject to rounding) immediately after the Spin-Off that the earned portion of the original 2013 TriMas PSU Award had immediately prior to the Spin-Off, as reflected on the Fidelity Investments website at www.netbenefits.fidelity.com and as further described in the Prospectus. |
1. | The 2013 Horizon Replacement RSU Award was converted into a service-based restricted stock units award covering Horizon common stock, which means that the award represents the right to receive a specified number of shares of Horizon common stock and any dividend rights with respect thereto (if applicable) upon the satisfaction of the service-based vesting criteria set forth in this document, but it is no longer subject to the achievement of the Performance Goals. |
2. | References to “Performance Stock Units” (or “Performance Units,” if applicable) or “PSUs” in the 2013 TriMas PSU Agreement are deemed references to “Restricted Stock Units” or “RSUs,” respectively, and references to shares of TriMas common stock will be deemed references to Horizon common stock, as applicable. |
3. | Any references to a “Performance Period,” a “Performance Measurement Period,” “performance conditions,” “performance measures,” “Performance Goals” or “performance goals,” and any modification of the number of shares subject to the award based on the same terms, are deemed no longer applicable with respect to the 2013 TriMas PSU Agreement, and Appendix A to the 2013 TriMas PSU Agreement and any references thereto are deemed deleted in their entirety. For the avoidance of doubt, any references in the 2013 TriMas PSU Agreement regarding the concept of “earning” an award (as distinguished from vesting in an award) will not apply to the 2013 Horizon Replacement RSU Award. |
4. | Instead of vesting on the Settlement Date, your 2013 Horizon Replacement RSU Award will vest in full on March 1, 2016, provided that you continue to be a |
5. | Where the context requires, references in the 2013 TriMas PSU Agreement and TriMas Equity Plan to TriMas or its subsidiaries or affiliates (or their policies or administrative entities) are deemed references to Horizon or its subsidiaries or affiliates (or their policies or administrative entities), as applicable. |
6. | In furtherance of the adjustments described above, Sections II.A.5 through II.A.7 of the 2013 TriMas PSU Agreement are deemed amended as set forth in Appendix A attached to this document. |
Grantee: | [specify Grantee’s name] |
Date of Agreement: | [month and day], 2013 |
Grant Date: | [month and day], 2013 |
Number of Performance Units in Award: | [number of shares](“Target”), subject to addition or subtraction as set forth on Appendix A depending on achievement of performance goals |
Performance Measurement Period: | Beginning on January 1, 2013, and continuing through December 31, 2015 |
Settlement Method: | Earned and vested Performance Units will be settled by delivery of one share of Common Stock for each Performance Unit being settled |
Dated: [month and date], 2013 | By: /s/ Joshua A. Sherbin Name: Joshua A. Sherbin Title: Vice President, General Counsel and Corporate Secretary |
(A) | a measure tied to an earnings per share compounded annual growth rate (“EPS CAGR”); and |
(B) | a measure tied to Cash Generation. |
(A) | EPS CAGR = 75%; and |
(B) | Cash Generation = 25%. |
(A) | “EPS CAGR” means the cumulative average growth rate during the Performance Period of the diluted earnings per share from continuing operations as reported in the Corporation’s Income Statement within the applicable Form 10-Q and Form 10-K, plus or minus special items that may occur from time-to-time that the Administrator believes should adjust the as-reported results for measurement of performance; and |
(B) | “Cash Generation” means the Corporation’s cash flow from operating activities less capital expenditures during the Performance Period, as reported in the Corporation’s Cash Flow Statement with the applicable Form 10-Q and Form 10-K, plus or minus special items that may occur from time-to-time, divided by the Corporation’s three-year income from continuing operations as reported in the Corporation’s Income |
EPS CAGR % | Award Payout (Reflected as % of Performance Units Subject to EPS CAGR) | |
4.0 | 30% | |
6.3 | 40% | |
8.7 | 50% | |
10.4 | 67% | |
12.7 | 83% | |
15.0 | 100% | |
16.1 | 125% | |
17.3 | 150% | |
18.7 | 175% | |
21.2 | 200% | |
24.0 | 250% |
Target (Cash Generation %) | Award Payout (Reflected as % of Performance Units Subject to Cash Generation) | |
30% | 50% | |
37% | 60% | |
44% | 70% | |
51% | 80% | |
58% | 90% | |
65% | 100% | |
70% | 120% | |
75% | 140% | |
80% | 160% | |
85% | 180% | |
90% | 200% |
▪ | The relative achievement of the Performance Goals (as described on Appendix A to the 2013 TriMas PSU Agreement) applicable to the 2013 TriMas PSU Award, and thus the number of performance stock units that were earned under such 2013 TriMas PSU Award, was determined as of the date of the Spin-Off (rather than at the end of the Performance Period); and |
▪ | The earned portion of the 2013 TriMas PSU Award was then converted into a restricted stock units award covering a number of shares of Horizon common stock to account for the effect of the Spin-Off in a manner intended to retain the same intrinsic value (subject to rounding) immediately after the Spin-Off that the earned portion of the original 2013 TriMas PSU Award had immediately prior to the Spin-Off, as reflected on the Fidelity Investments website at www.netbenefits.fidelity.com and as further described in the Prospectus. |
1. | The 2013 Horizon Replacement RSU Award was converted into a service-based restricted stock units award covering Horizon common stock, which means that the award represents the right to receive a specified number of shares of Horizon common stock and any dividend rights with respect thereto (if applicable) upon the satisfaction of the service-based vesting criteria set forth in this document, but it is no longer subject to the achievement of the Performance Goals. |
2. | References to “Performance Stock Units” (or “Performance Units,” if applicable) or “PSUs” in the 2013 TriMas PSU Agreement are deemed references to “Restricted Stock Units” or “RSUs,” respectively, and references to shares of TriMas common stock will be deemed references to Horizon common stock, as applicable. |
3. | Any references to a “Performance Period,” a “Performance Measurement Period,” “performance conditions,” “performance measures,” “Performance Goals” or “performance goals,” and any modification of the number of shares subject to the award based on the same terms, are deemed no longer applicable with respect to the 2013 TriMas PSU Agreement, and Appendix A to the 2013 TriMas PSU Agreement and any references thereto are deemed deleted in their entirety. For the avoidance of doubt, any references in the 2013 TriMas PSU Agreement regarding the concept of “earning” an award (as distinguished from vesting in an award) will not apply to the 2013 Horizon Replacement RSU Award. |
4. | Instead of vesting on the Settlement Date, your 2013 Horizon Replacement RSU Award will vest in full on March 1, 2016, provided that you continue to be a |
5. | Where the context requires, references in the 2013 TriMas PSU Agreement and TriMas Equity Plan to TriMas or its subsidiaries or affiliates (or their policies or administrative entities) are deemed references to Horizon or its subsidiaries or affiliates (or their policies or administrative entities), as applicable. |
6. | In furtherance of the adjustments described above, Sections II.A.5 through II.A.7 of the 2013 TriMas PSU Agreement are deemed amended as set forth in Appendix A attached to this document. |
Grantee: | [specify Grantee’s name] |
Date of Agreement: | [month and day], 2013 |
Grant Date: | [month and day], 2013 |
Number of PSUs in Award: | [number of shares] (“Target”), subject to addition or subtraction as set forth on Appendix A depending on achievement of performance goals |
Performance Period: | Beginning on January 1, 2013, and continuing through December 31, 2015 |
Settlement Method: | Earned and vested PSUs will be settled by delivery of one share of Stock for each PSU being settled |
Dated: [month and date], 2013 | By: /s/ Joshua A. Sherbin Name: Joshua A. Sherbin Title: Vice President, General Counsel and Corporate Secretary |
(A) | a measure tied to an earnings per share compounded annual growth rate (“EPS CAGR”); and |
(B) | a measure tied to Cash Generation. |
(A) | EPS CAGR = 75%; and |
(B) | Cash Generation = 25%. |
(A) | “EPS CAGR” means the cumulative average growth rate during the Performance Period of the diluted earnings per share from continuing operations as reported in the Corporation’s Income Statement within the applicable Form 10-Q and Form 10-K, plus or minus special items that may occur from time-to-time that the Committee believes should adjust the as-reported results for measurement of performance; and |
(B) | “Cash Generation” means the Corporation’s cash flow from operating activities less capital expenditures during the Performance Period, as reported in the Corporation’s Cash Flow Statement with the applicable Form 10-Q and Form 10-K, plus or minus special items that may occur from time-to-time, divided by the Corporation’s three-year income from continuing |
EPS CAGR % | Award Payout (Reflected as % of PSUs Subject to EPS CAGR) | |
4.0 | 30% | |
6.3 | 40% | |
8.7 | 50% | |
10.4 | 67% | |
12.7 | 83% | |
15.0 | 100% | |
16.1 | 125% | |
17.3 | 150% | |
18.7 | 175% | |
21.2 | 200% | |
24.0 | 250% |
Target (Cash Generation %) | Award Payout (Reflected as % of PSUs Subject to Cash Generation) | |
30% | 50% | |
37% | 60% | |
44% | 70% | |
51% | 80% | |
58% | 90% | |
65% | 100% | |
70% | 120% | |
75% | 140% | |
80% | 160% | |
85% | 180% | |
90% | 200% |
▪ | The relative achievement of the Performance Goals (as described on Appendix A to the 2014 TriMas PSU Agreement) applicable to the 2014 TriMas PSU Award, and thus the number of performance stock units that were earned under such 2014 TriMas PSU Award, was determined as of the date of the Spin-Off (rather than at the end of the Performance Period) and was pro-rated based on the percentage of the Performance Period completed as of the date of the Spin-Off; and |
▪ | The earned portion of the 2014 TriMas PSU Award was then converted into a restricted stock units award covering a number of shares of Horizon common stock to account for the effect of the Spin-Off in a manner intended to retain the same intrinsic value (subject to rounding) immediately after the Spin-Off that the earned portion of the original 2014 TriMas PSU Award had immediately prior to the Spin-Off, as reflected on the Fidelity Investments website at www.netbenefits.fidelity.com and as further described in the Prospectus. |
1. | The 2014 Horizon Replacement RSU Award was converted into a service-based restricted stock units award covering Horizon common stock, which means that the award represents the right to receive a specified number of shares of Horizon common stock and any dividend rights with respect thereto (if applicable) upon the satisfaction of the service-based vesting criteria set forth in this document, but it is no longer subject to the achievement of the Performance Goals. |
2. | References to “Performance Stock Units” or “PSUs” in the 2014 TriMas PSU Agreement are deemed references to “Restricted Stock Units” or “RSUs,” respectively, and references to shares of TriMas common stock will be deemed references to Horizon common stock, as applicable. |
3. | Any references to a “Performance Period,” “performance conditions,” “performance measures,” “Performance Goals” or “performance goals,” and any modification of the number of shares subject to the award based on the same, are deemed no longer applicable with respect to the 2014 TriMas PSU Agreement, and Appendix A to the 2014 TriMas PSU Agreement and any references thereto are deemed deleted in their entirety. For the avoidance of doubt, any references in the 2014 TriMas PSU Agreement regarding the concept of “earning” an award (as distinguished from vesting in an award) will not apply to the 2014 Horizon Replacement RSU Award. |
4. | Instead of vesting on the Settlement Date, your 2014 Horizon Replacement RSU Award will vest in full on March 5, 2017, provided that you continue to be a Service Provider through such date. Accordingly, any unvested restricted stock units subject to the 2014 Horizon Replacement RSU Award will be cancelled and forfeited if you terminate as a Service Provider prior to March 5, 2017, except as otherwise provided in this document. |
5. | Where the context requires, references in the 2014 TriMas PSU Agreement and TriMas Equity Plan to TriMas or its subsidiaries or affiliates (or their policies or administrative entities) are deemed references to Horizon or its subsidiaries or affiliates (or their policies or administrative entities), as applicable. |
6. | References in the 2014 TriMas PSU Agreement to Rieke Packaging Systems Limited are deemed references to C P Witter Ltd. |
7. | In furtherance of the adjustments described above, Sections II.A.5 through II.A.7 of the 2014 TriMas PSU Agreement are deemed amended as set forth in Appendix A attached to this document. |
Grantee: | [specify Grantee’s name] |
Date of Agreement: | March 5, 2014 |
Grant Date: | March 5, 2014 |
Number of PSUs in Award: | [number of shares] (“Target”), subject to addition or subtraction as set forth on Appendix A depending on achievement of performance goals |
Performance Period: | Beginning on January 1, 2014, and continuing through December 31, 2016 |
Settlement Method: | Earned and vested PSUs will be settled by delivery of one share of Stock for each PSU being settled |
Dated: March 5, 2014 | By: /s/ Joshua A. Sherbin Name: Joshua A. Sherbin Title: Vice President, General Counsel and Corporate Secretary |
(A) | a measure tied to an earnings per share compounded annual growth rate (“EPS CAGR”); and |
(B) | a measure tied to a three-year average return on invested capital (“ROIC”). |
(A) | EPS CAGR = 75%; and |
(B) | ROIC = 25%. |
(A) | “EPS CAGR” means the cumulative average growth rate during the Performance Period of the diluted earnings per share from continuing operations as reported in the Corporation’s Income Statement within the applicable Form 10-Q and Form 10-K, plus or minus special items that may occur from time-to-time that the Committee believes should adjust the as-reported results for measurement of performance; and |
(B) | “ROIC” means the average of each of the three years in the Performance Period of the Corporation’s operating profit less income taxes paid in cash during the Performance Period divided by the last five-quarter average of debt plus equity plus non-controlling interest minus cash and cash equivalents on hand, all as reported in the Corporation’s Balance Sheet, Income Statement and Cash Flow Statement within the applicable Form 10-Q and Form 10-K, plus or minus special items that may |
EPS CAGR % | Award Payout (Reflected as % of PSUs Subject to EPS CAGR) | |
4.0 | 30% | |
4.8 | 40% | |
5.6 | 50% | |
7.1 | 66.6% | |
8.6 | 83.4% | |
10.0 | 100% | |
11.5 | 125% | |
13.0 | 150% | |
14.5 | 175% | |
17.0 | 200% | |
20.0 | 250% |
Target (ROIC %) | Award Payout (Reflected as % of PSUs Subject to ROIC) | |
12.3% | 30% | |
12.5% | 40% | |
12.7% | 50% | |
13.2% | 66.6% | |
13.8% | 83.4% | |
14.5% | 100% | |
14.9% | 120% | |
15.3% | 140% | |
16.1% | 160% | |
16.9% | 180% | |
17.9% | 200% |
(i) | A material and permanent diminution in Grantee’s duties or responsibilities; |
(ii) | A material reduction in the aggregate value of base salary and bonus opportunity provided to Grantee by the Corporation; or |
(iii) | A permanent reassignment of Grantee to another primary office more than 50 miles from the current office location. |
Department: Legal | |
Date Issued: July 1, 2015 | |
Prepared By: Legal Director | |
Approved By: Compensation Committee of Board of Directors | |
Title: EXECUTIVE SEVERANCE/CHANGE OF CONTROL POLICY (this “Policy”) |
Scope: | This Policy applies to (i) the executive officers of Horizon Global Corporation (“Horizon” or the “Company”) set forth on Exhibit A, as such exhibit may be updated by the Compensation Committee (the “Compensation Committee”) of the Horizon Board of Directors (the “Board”) from time to time and (ii) such other officers or executives as may be determined by the Compensation Committee from time to time (the individuals participating in this Policy from time to time, “Executives”). Each Executive will be designated by the Compensation Committee as a Tier I Participant, Tier II Participant or Tier III Participant upon being included as a participant in this Policy (as applicable, the “Participation Tier”). |
Purpose: | To detail what compensation and benefits, if any, are due to an Executive upon an Executive’s termination of employment with the Company, which for purposes of this Policy shall mean a “separation from service”, as defined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). |
Defined Terms: | Any capitalized term that is used, but not defined, in this Policy shall have the meaning set forth in Section 9 hereof. |
Policy: | Each Executive is an at-will employee whose employment may be terminated by Executive or Horizon at any time for any reason. Upon a termination of employment of an Executive, this Policy shall govern the rights and responsibilities of the Company and Executive. In consideration of Executive’s participation in this Policy, Executive will devote his or her full business time and efforts to the performance of his or her duties and responsibilities for the Company; provided that, this Policy does not preclude Executive from engaging in charitable and community affairs or managing any passive investment (i.e., an investment with respect to which Executive is in no way involved with the management or operation of the entity in which Executive has invested) to the extent that such activities do not conflict with the Executive’s duties; and further provided, that, subject to Section 7 hereof, Executive shall not, without the prior approval of the Board, serve as a director or trustee of any other corporation, association or entity, or own more than five percent of the equity of any publicly traded entity. |
(A) | Payment of an amount equal to the product of (i) the Non-COC Multiplier for Executive’s Participation Tier as set forth on Exhibit A, multiplied by (ii) the sum of (a) Executive’s annual base salary in effect on the date of termination and (b) Executive’s target Short-Term Incentive Plan (as in effect from time to time, the “Short-Term Incentive Plan”) bonus for the full year of termination at the level in effect immediately prior to the date of termination, payable in equal installments in accordance with the Company’s payroll practices as in effect from time to time, commencing on the 60th day following the date of termination and ending on the last payroll date of the Company in the last month of the Non-COC Period applicable to Executive’s Participation Tier set forth on Exhibit A, provided that the first such payment shall include all amounts that would have been paid to Executive in accordance with the Company’s payroll practices if such payments had begun on the date of termination; |
(B) | Payment of all (i) accrued but unpaid base salary through the date of termination and (ii) earned but unused vacation through the date of termination, payable by the next payroll date following termination of employment; |
(C) | Payment of Executive’s Short-Term Incentive Plan bonus payment for the most recently completed bonus term if a bonus has been declared for Executive under the Short-Term Incentive Plan for such year but not paid, payable in accordance with the terms of the Short-Term Incentive Plan; |
(D) | Payment of Executive’s Short-Term Incentive Plan bonus for the year of termination, based on actual performance results for the full year and prorated through Executive’s employment termination date, payable in accordance with the terms of the Short-Term Incentive Plan; |
(E) | Notwithstanding anything set forth in any of the Company’s equity compensation plans or arrangements: |
(F) | If Executive timely elects to continue group health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), and subject to the Company’s COBRA policies, the Company will reimburse Executive for the employer’s portion of premiums for continued group health coverage under COBRA until the earliest of (i) the termination of Executive’s COBRA period; (ii) the expiration of the Non-COC Period applicable to Executive’s Participation Tier set forth on Exhibit A; or (iii) the date on which Executive becomes eligible to receive any medical benefits under any plan or program of any other employer. Executive will be responsible for payment of the COBRA premium and will be reimbursed by the Company for the portion of the premium that the Company would have paid for group health coverage if Executive had continued to be an employee of the Company. If the COBRA period expires before the applicable Non-COC Period has elapsed following Executive’s termination of employment, the Company shall pay Executive a monthly amount equal to the monthly contribution that the Company would have paid for Executive’s coverage under the applicable group health plan of the Company if Executive had continued as an employee of the Company until the earlier of (i) the expiration of the applicable Non-COC period or (ii) the date on which Executive becomes eligible to receive any medical benefits under any plan or program of any other employer; |
(G) | Executive-level outplacement services until the earlier of (i) 12 months following Executive’s termination of employment or (ii) the date on which Executive becomes employed by a subsequent employer; and |
(A) | If the Change of Control is a Section 409A Change of Control, a lump sum payment payable on the 60th day following the date of Executive’s termination, equal to the product of (i) the COC Multiplier for Executive’s Participation Tier as set forth on Exhibit A, multiplied by (ii) the sum of (a) Executive’s annual base salary rate in effect on the date of termination (without regard to any reduction giving rise to Good Reason) and (b) Executive’s Short-Term Incentive Plan target bonus for the full year of termination at the level in effect immediately prior to the date of termination (without regard to any reduction giving rise to Good Reason); |
(B) | If the Change of Control is not a Section 409A Change of Control, an amount equal to the product of (i) the COC Multiplier for Executive’s Participation Tier as set forth on Exhibit A, multiplied by (ii) the sum of (a) Executive’s annual base salary rate in effect on the date of termination (without regard to any reduction giving rise to Good Reason) and (b) Executive’s Short-Term Incentive Plan target bonus for the full year of termination at the level in effect on the date of termination (without regard to any reduction giving rise to Good Reason), payable in equal installments in accordance with the Company’s payroll practices as in effect from time to time, commencing on the 60th day following the date of termination and ending on the last payroll date of the Company in the last month of the COC Period applicable to Executive’s Participation Tier set forth on Exhibit A, provided that the first such payment shall include all amounts that |
(C) | Payment of Executive’s Short-Term Incentive Plan bonus payment for the most recently completed bonus term if a bonus has been earned by Executive under the Short-Term Incentive Plan for such year but not yet paid, payable at the time set forth in the Short-Term Incentive Plan, provided that in no event will the Company be permitted to exercise any negative discretion with respect to the amount of such Short-Term Incentive Plan bonus; |
(D) | Payment of Executive’s Short-Term Incentive Plan bonus for the year of termination, based on actual performance results for the full year and prorated through Executive’s employment termination date, payable in accordance with the terms of the Short-Term Incentive Plan, provided that in no event will the Company be permitted to exercise any negative discretion with respect to the amount of such Short-Term Incentive Plan bonus (the “Prorated Bonus); |
(E) | Any unvested equity awards Executive may have received under any equity compensation plans or arrangements sponsored by the Company, its successor or any of their respective subsidiaries or affiliates (including any equity awards that were originally received pursuant to the 2002 Plan, 2006 Plan, or 2011 Plan that were adjusted and converted to equity awards with respect to common stock of the Company as a result of the Spinoff) shall immediately vest, or for stock options become exercisable, upon the termination of Executive’s employment and otherwise be subject to the terms consistent with such plan or arrangement, including the time for payment of such award; provided, however, that any awards subject to vesting upon the attainment of performance goals shall become vested in an amount equal to (1) the total number of shares that would be issued at the end of the performance period based on target performance in accordance with the terms of the governing arrangements under which such performance-based awards were granted, less (2) the number of shares that had already become vested as of the date of such termination in respect of such award, but in no event may negative discretion be exercised with respect to any such performance awards; |
(F) | If Executive timely elects to continue group health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), and subject to the Company’s COBRA policies, the Company will reimburse Executive for the employer’s portion of premiums for continued group health coverage under COBRA until the earliest of (i) the termination of Executive’s COBRA period; (ii) the expiration of the COC Period applicable to Executive’s Participation Tier set forth on Exhibit A; or (iii) the date on which Executive becomes eligible to receive any medical benefits under any plan or program of any other employer. Executive will be responsible for payment of the COBRA premium and will be reimbursed by the Company for the portion of the premium that the Company would have paid for group health coverage if Executive had continued to be an employee of the Company. If the COBRA period expires before the applicable COC Period has elapsed following Executive’s termination of employment, the Company shall pay Executive a monthly amount equal to the monthly contribution that the Company would have paid for Executive’s coverage under the applicable group health plan of the Company if Executive had continued as an employee of the Company until the earlier of (i) the expiration of the applicable COC period or (ii) the date on which Executive becomes eligible to receive any medical benefits under any plan or program of any other employer; |
(G) | Executive level outplacement services until the earlier of (i) 12 months following Executive’s termination of employment or (ii) the date on which Executive is employed by a subsequent employer; and |
(H) | Except for the benefits stated in this Section 2, Executive’s participation in all benefit plans, programs and arrangements of the Company shall cease as of the date of Executive’s termination |
(A) | Acceptance of participation in this Policy and performance relative to this Policy are not in violation of any restrictions or covenants under the terms of any other agreements to which Executive is a party. |
(B) | Executive acknowledges and recognizes the highly competitive nature of the business of the Company and accordingly agrees that, in consideration of this Policy, the rights conferred hereunder, and any payment hereunder, while Executive is employed by the Company and for the duration of the Non-Compete Term, Executive shall not engage, either directly or indirectly, as a principal for Executive’s own account or jointly with others, or as a stockholder in any corporation or joint stock association, or as a partner or member of a general or limited liability entity, or as an employee, officer, director, agent, consultant or in any other advisory capacity in any business other than the Company or its subsidiaries which designs, develops, manufactures, distributes, sells or markets the type of products or services sold, distributed or provided by the Company or its subsidiaries during the one-year period prior to the date of employment termination (the “Business”); provided that nothing herein shall prevent Executive from owning, directly or indirectly, not more than five percent of the outstanding shares of, or any other equity interest in, any entity engaged in the Business and listed or traded on a national securities exchanges or in an over-the-counter securities market. |
(C) | During the Non-Compete Term, Executive shall not (i) directly or indirectly employ or solicit, or receive or accept the performance of services by, any active employee of the Company or any of its subsidiaries who is employed primarily in connection with the Business, except in connection with general, non-targeted recruitment |
(D) | Executive shall not at any time (whether during or after his employment with the Company) disclose or use for Executive’s own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries, any trade secrets, information, data, or other confidential information of the Company, including but not limited to, information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans or the business and affairs of the Company generally, or of any subsidiary of the Company, unless required to do so by applicable law or court order, subpoena or decree or otherwise required by law, with reasonable evidence of such determination promptly provided to the Company. The preceding sentence of this paragraph (D) shall not apply to information which is not unique to the Company or which is generally known to the industry or the public other than as a result of Executive’s breach of this covenant. Executive agrees that upon termination of employment with the Company for any reason, Executive will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies of these materials, in any way relating to the business of the Company and its subsidiaries, except that Executive may retain personal notes, notebooks and diaries. Executive further agrees that Executive will not retain or use for Executive’s account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of the Company or its subsidiaries. |
(E) | Although Executive and the Company consider the restrictions contained in this Policy to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Policy is an unenforceable restriction against Executive, the provisions of this Policy shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any tribunal of competent jurisdiction finds that any restriction contained in this Policy is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. |
(F) | Notwithstanding any provision herein to the contrary, the Company will have no obligation to make any payments or provide any benefits under this Policy that are not otherwise required to be paid or provided to Executive pursuant to applicable law unless (i) within 60 days following the date of termination of Executive’s employment, Executive executes and delivers to the Company a waiver and release agreement in the form approved by the Company from time to time (the “Release”) and (ii) any applicable revocation period has expired during such 60-day period without Executive revoking such Release. |
(G) | Upon Executive’s termination of employment, or at any other time as requested by the Company, Executive will be required to surrender to the Company all |
(A) | Payments Not Compensation |
(B) | Code Section 409A |
(C) | Payment Process and Taxation Requirements |
(D) | Notices |
(E) | Severability; Legal Fees |
(F) | ERISA Provisions |
(G) | Dispute Resolution Governing Law |
(H) | Amendments and Termination |
(I) | Code Section 162(m) |
(J) | Effective Date |
(A) | “Affiliate” shall mean any corporation, partnership, joint venture or other entity, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Company as determined by the Compensation Committee or the Board, as applicable, in its discretion. |
(C) | A “Change of Control” shall be deemed to have occurred upon the first of the following events to occur: |
(D) | “COC Multiplier” means the multiplier set forth on Exhibit A that applies to the Executive’s Participation Tier in respect of a termination of Executive’s employment under Section 2 of this Policy. |
(E) | “COC Period” means the period of time that begins on the date of Executive’s termination of employment and equals the number of months set forth on Exhibit A that applies to the Executive’s Participation Tier in respect of a termination of Executive’s employment under Section 2 of this Policy. |
(F) | “Disability” means (i) the Executive is unable to engage in any substantial activity due to medically determinable physical or mental impairment expected to result in death or to last for a continuous period of not less than 12 months, or (ii) if due to any medically determinable physical or mental impairment expected to result in death or last for a continuous period not less than 12 months, Executive has received income replacement benefits for a period of not less than three months under a accident and health plan sponsored by the Company. |
(I) | “Non-COC Multiplier” means the multiplier set forth on Exhibit A that applies to the Executive’s Participation Tier in respect of a termination of Executive’s employment under Section 1 of this Policy. |
(J) | “Non-COC Period” means the period of time that begins on the date of Executive’s termination of employment and equals the number of months set forth on Exhibit A that applies to the Executive’s Participation Tier in respect of a termination of Executive’s employment under Section 1 of this Policy. |
(K) | “Non-Compete Term” shall mean (i) the Non-COC Period if the Executive is terminated in a manner that gives rise to severance benefits under Section 1, (ii) the COC Period if the Executive is terminated in a manner that gives rise to severance benefits under Section 2 and (iii) 24 months following the termination of Executive’s employment with the Company if the Executive’s employment has terminated in any other manner. |
(L) | A “Qualifying Termination” shall be defined for purposes of this Policy as a termination of Executive’s employment with the Company for any reason other than: |
(M) | A “Section 409A Change of Control” means a “change in the ownership of the corporation,” a “change in effective control of the corporation” or a “change in the ownership of a substantial portion of the assets of the corporation,” within the meaning of Section 409A(a)(2)(A)(v) of the Code. |
(N) | “Spinoff” means the distribution of 100% of the TriMas Corporation’s interest in Horizon Global Corporation to shareholders of TriMas Corporation common stock. |
(a) | General Rules. The Code may place significant tax burdens on Executive and the Company if the total payments made to Executive due to a Change of Control exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for the Company, by continuing Executive’s employment with the Company after the effective date of this Policy, Executive will be agreeing that the present value of Executive’s Total Payments will not exceed an amount equal to Executive’s Cap. |
(b) | Special Definitions. For purposes of this Section, the following specialized terms will have the following meanings: |
(1) | “Base Period Income”. “Base Period Income” is an amount equal to Executive’s “annualized includable compensation” for the “base period” as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder. Generally, Executive’s “annualized includable compensation” is the average of Executive’s annual taxable income from the Company for the “base period,” which is the five calendar years prior to the year in which the Change of Control occurs. These concepts are complicated and technical and all of the rules set forth in the applicable regulations apply for purposes of this Agreement. |
(2) | “Cap” or “280G Cap”. “Cap” or “280G Cap” shall mean an amount equal to 2.99 times Executive’s “Base Period Income.” This is the maximum amount which Executive may receive without becoming subject to the excise tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G of the Code. |
(3) | “Total Payments”. The “Total Payments” include any “payments in the nature of compensation” (as defined in Section 280G of the Code and the regulations adopted thereunder), made pursuant to this Policy or otherwise, to or for Executive’s benefit, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. |
(c) | Calculating the Cap and Adjusting Payments. If the Company believes that these rules will result in a reduction of the payments to which Executive is entitled under this Agreement, it will so notify Executive as soon as possible. The Company will then, at its expense, retain a “Consultant” (which shall be a law firm, a certified public accounting firm, and/or a firm of recognized executive compensation consultants) to provide an opinion or opinions concerning whether Executive’s Total Payments exceed the 280G Cap discussed above. The Company will select the Consultant. At a minimum, the opinions required by this Section must set forth the amount of Executive’s Base Period Income, the present value of the Total Payments and the amount and present value of any excess parachute payments. If the opinions state that there would be an excess parachute payment, Executive’s payments under this Policy will be reduced to the Cap. In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, |
(d) | Effect of Repeal. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section shall be of no further force or effect. |
(1) | the specific reasons for the denial; |
(2) | reference to specific provisions of the Policy upon which the denial is based; |
(3) | a description of any additional material or information necessary for the Executive to perfect his or her claim, along with an explanation of why such material or information is necessary; and |
(4) | an explanation of claim review procedures under the Policy and the time limits applicable to such procedures. |
(1) | An Executive whose claim for benefits has been wholly or partially denied by the mediator may request arbitration of such denial. The request for arbitration must be in written or electronic form, and delivered to the Plan Administrator within 60 days following the denial of the claim by the mediator. |
(2) | The Executive may, at all stages of review, be represented by counsel, legal or otherwise, of his or her choice, provided that the fees and expenses of the Executive’s counsel shall be borne by the Executive. |
(3) | The Plan Administrator’s decision with respect to any such review shall be delivered electronically or in writing to the Executive no later than 60 days following receipt by the Plan Administrator of the Executive’s request, unless special circumstances, such as the need to hold a hearing, require an extension of time for processing. If an extension is needed, the Plan Administrator shall, before the end of the initial review period, give the Executive written notice of the special circumstances requiring the extension and the date by which he or she expects a decision will be rendered. In any event, the Plan Administrator must provide the Executive with written or electronic notification of the decision on review no later than 120 days after receipt of the Executive’s request. |
Tier I Participants | Tier II Participants | Tier III Participants |
Mark Zeffiro | David Rice Jay Goldbaum | John Aleva Maria Duey |
Participation Tier | Non-COC Multiplier | Non-COC Period | COC Multiplier | COC Period |
I | 2 | 24 months | 3 | 36 months |
II | 1 | 12 months | 2 | 24 months |
III | 1 | 12 months | 1 | 12 months |
1. | I have reviewed this quarterly report on Form 10-Q of Horizon Global Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ A. MARK ZEFFIRO | |
A. Mark Zeffiro Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Horizon Global Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ DAVID G. RICE | |
David G. Rice Chief Financial Officer |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ A. MARK ZEFFIRO | |
A. Mark Zeffiro Chief Executive Officer |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ DAVID G. RICE | |
David G. Rice Chief Financial Officer |
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Property and Equipment, Net - Property and Equipment Table (Details) - USD ($) $ in Thousands |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 104,630 | $ 128,000 |
Less: Accumulated depreciation | 58,320 | 72,820 |
Property and equipment, net | 46,310 | 55,180 |
Land and Land Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 0 | 290 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 8,060 | 9,250 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 96,570 | $ 118,460 |
Equity Awards - Restricted Shares Narrative (Details) - Restricted Shares [Member] - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Aug. 31, 2015 |
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 205,922 | 205,922 | |||
Unrecognized compensation cost | $ 3.1 | $ 3.1 | |||
Weighted-average period for recognition of the unrecognized unvested restricted shares-based compensation expense | 2 years 2 months 12 days | ||||
Restricted shares-based compensation expense | $ 0.4 | $ 0.8 | $ 1.7 | $ 2.4 | |
Vest on May 1, 2016 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 32,180 | ||||
Vest on March 5, 2017 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 20,884 | ||||
Vest on July 1, 2018 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 152,858 |
Derivative Instruments - Designated as hedging, Financial Performance Narrative (Details) - Designated as Hedging Instrument [Member] $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2015
USD ($)
| |
Derivative Instruments, Gain (Loss) [Line Items] | |
Gain (Loss) Reclassification from AOCI into Earnings, Estimate of Time to Transfer | 12 months |
Cost of Sales [Member] | Foreign Exchange Contract [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Amount of gain (loss) expected to be reclassified from AOCI into Earnings | $ 0.2 |
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