# Preformed Line Products Co: Form 10-Q for the period ended Sep 30, 2015

- Company: [Preformed Line Products Co](/companies/plpc.md) (CIK 80035)
- Form: 10-Q
- Filed: 2015-11-09
- Accepted by EDGAR: Nov 9, 2015, 15:55 ET
- Period: 2015-09-30
- Accession: 0001193125-15-371886
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/80035/000119312515371886/d13095d10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/80035/000119312515371886/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2015-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2015-07-01 to 2015-09-30 | $89.0m | us-gaap:SalesRevenueGoodsNet |
| Revenue | 9 months, 2015-01-01 to 2015-09-30 | $262.7m | us-gaap:SalesRevenueGoodsNet |
| Cost of revenue | 3 months, 2015-07-01 to 2015-09-30 | $62.9m | us-gaap:CostOfGoodsSold |
| Cost of revenue | 9 months, 2015-01-01 to 2015-09-30 | $185.3m | us-gaap:CostOfGoodsSold |
| Gross profit | 3 months, 2015-07-01 to 2015-09-30 | $26.2m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2015-01-01 to 2015-09-30 | $77.4m | us-gaap:GrossProfit |
| Operating income | 3 months, 2015-07-01 to 2015-09-30 | $2.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2015-01-01 to 2015-09-30 | $7.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2015-07-01 to 2015-09-30 | $141.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2015-01-01 to 2015-09-30 | $423.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2015-07-01 to 2015-09-30 | $1.9m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2015-01-01 to 2015-09-30 | $2.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2015-07-01 to 2015-09-30 | $206.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2015-01-01 to 2015-09-30 | $3.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2015-07-01 to 2015-09-30 | $0.04 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2015-01-01 to 2015-09-30 | $0.67 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2015-07-01 to 2015-09-30 | $0.04 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2015-01-01 to 2015-09-30 | $0.67 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2015-07-01 to 2015-09-30 | 5,372,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2015-01-01 to 2015-09-30 | 5,397,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2015-01-01 to 2015-09-30 | $7.9m | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 9 months, 2015-01-01 to 2015-09-30 | $6.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2015-01-01 to 2015-09-30 | $3.2m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2015-01-01 to 2015-09-30 | $2.4m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2015-09-30 | $26.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2015-09-30 | $193.5m | us-gaap:AssetsCurrent |
| Total assets | at 2015-09-30 | $331.7m | us-gaap:Assets |
| Current liabilities | at 2015-09-30 | $55.8m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2015-09-30 | $31.7m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2015-09-30 | $104.0k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2015-09-30 | $220.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 54,604 characters.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the readers of our consolidated financial statements better understand our results of operations, financial condition and present business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes included elsewhere in this report.

The MD&A is organized as follows:

- Overview
- Preface
- Results of Operations
- Application of Critical Accounting Policies and Estimates
- Working Capital, Liquidity and Capital Resources
- Recently Adopted Accounting Pronouncements
- New Accounting Standards to be Adopted

OVERVIEW

Preformed Line Products Company (the “Company”, “PLPC”, “we”, “us”, or “our”) was incorporated in Ohio in 1947. We are an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information

(data communication), and other similar industries. Our primary products support, protect, connect, terminate, and secure cables and wires. We also provide solar hardware systems and mounting hardware for a variety of solar power applications. Our goal is to achieve profitable growth as a leader in the research, innovation, development, manufacture, and marketing of technically advanced products and services related to energy, communications and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets. We have 29 sales and manufacturing operations in 17 different countries.

We report our segments in four geographic regions: PLP-USA (including corporate), The Americas (includes operations in North and South America without PLP-USA), EMEA (Europe, Middle East & Africa) and Asia-Pacific in accordance with accounting standards codified in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 280, Segment Reporting. Each segment distributes a full range of our primary products. Our PLP-USA segment is comprised of our U.S. operations manufacturing our traditional products primarily supporting our domestic energy and telecommunications products. Our other three segments, The Americas, EMEA and Asia-Pacific, support our energy, telecommunications, data communication and solar products in each respective geographical region.

The segment managers responsible for each region report directly to the Company’s Chief Executive Officer, who is the chief operating decision maker, and are accountable for the financial results and performance of the entire segment for which they are responsible. The business components within each segment are managed to maximize the results of the entire operating segment and company rather than the results of any individual business component of the segment.

We evaluate segment performance and allocate resources based on several factors primarily based on sales and net income.

PREFACE

Our consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP). Our discussions of the financial results include non-GAAP measures (e.g., foreign currency impact) to provide additional information concerning our financial results and provide information that we believe is useful to the readers of our consolidated financial statements in the assessment of our performance and operating trends.

Our consolidated financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. As foreign currencies weaken against the U.S. dollar, our revenues and costs decrease as the foreign currency-denominated financial statements translate into fewer U.S. dollars. On average, foreign currencies weakened against the U.S. dollar in the third quarter and first nine months of 2015. The fluctuations of foreign currencies during the three and nine months ended September 30, 2015 had an unfavorable impact on net sales of $11.6 million and $26.3 million, respectively, compared to the same periods in 2014. On a reportable segment basis, the favorable (unfavorable) impact of foreign currency on net sales and net income for the three and nine months ended September 30, 2015, was as follows:

| (Thousands of dollars) | Foreign Currency Translation Impact Net Sales Three Months | Nine Months | Net Income Three Months | Nine Months |
| --- | ---: | ---: | ---: | ---: |
| The Americas | $(5,087) | $(11,057) | $(262) | $(363) |
| EMEA | (2,115) | (6,407) | (83) | (249) |
| Asia-Pacific | (4,372) | (8,863) | 1,018 | 1,222 |
| Total | $(11,574) | $(26,327) | $673 | $610 |

The following operating results for the three months ended September 30, 2015 are compared to the same period in 2014. Net sales for the three months ended September 30, 2015 of $89.0 million decreased $13.1 million, or 13%, compared to 2014. Excluding the unfavorable effect of currency translation, net sales decreased 1%. As a percentage of net sales, gross profit decreased to 29.4% from 31.8% in 2014. Gross profit of $26.2 million decreased $6.3 million compared to 2014. Excluding the unfavorable effect of currency translation, gross profit decreased $3.5 million, or 11%, compared to 2014. Costs and expenses of $24.1 million decreased $3.2 million compared to 2014. Excluding the favorable effect of translation, costs and expenses decreased $.1 million compared to 2014. Operating income for the three months ended September 30, 2015 was $2.1 million, a decrease of $3.0 million compared to 2014. Net income for the three months ended September 30, 2015 of $.2 million was a decrease of $2.3 million compared to the net income in 2014. The effect of currency translation increased operating income $.3 million and increased net income $.7 million.

The following operating results for the nine months ended September 30, 2015 are compared to the same period in 2014. For the nine months ended September 30, 2015, net sales of $262.7 million decreased $29.3 million, or 10%, compared to 2014. The fluctuations of foreign currencies during the nine months ended September 30, 2015 had an unfavorable impact on net sales of $26.3 million as compared to 2014. Excluding the unfavorable impact of currency translation, sales decreased 1% compared to 2014. As a percentage of net sales, gross profit was 29.4% and 31.2% for the nine months ended September 30, 2015 and 2014, respectively. Gross profit of $77.4 million decreased $13.7 compared to 2014. Excluding the unfavorable effect of currency translation of $6.5 million, gross profit decreased $7.2 million, or 8% compared to 2014. Costs and expenses of $70.2 million decreased $4.0 million compared to 2014. Excluding the favorable effect of currency translation, costs and expenses increased $2.8 million compared to 2014. Operating income for the nine months ended September 30, 2015 of $7.2 million decreased $9.8 million compared to 2014. Net income for the nine months ended September 30, 2015 of $3.6 million decreased $6.7 million compared to 2014. The favorable effect of currency translation increased operating income $.2 million and net income $.6 million.

While the effect of currency translation was a slight addition to both operating income and net income compared to 2014, there was an incremental $1.7 million and $6.7 million in losses on foreign currency transactions for the three months and nine months ended September 30, 2015, respectively, that negatively impacted the operating results as summarized in the following table:

| (Thousands of dollars) | Foreign Currency Translation Impact Three Months Ended September 30 2015 | 2014 | Nine Months Ended September 30 2015 | 2014 |
| --- | ---: | ---: | ---: | ---: |
| Operating income | $680 | $5,135 | $5,779 | $16,960 |
| Translation loss | (317) | (138) | (196) | 26 |
| Transaction (gain) loss | 4,083 | 2,403 | 7,459 | 794 |
| Operating income excluding currency impact | $4,446 | $7,400 | $13,042 | $17,780 |

The majority of the incremental $1.7 million and $6.7 million losses on foreign currency transactions for the three and nine months ended September 30, 2015, respectively, was attributable to translating into U.S. dollars our foreign currency denominated loans, trade receivables and royalty receivables from foreign subsidiaries.

While the global economy has been challenging in 2015, we believe our business fundamentals are sound and we are strategically well-positioned. We remain focused on managing costs, driving sales and delivering value to our customers. We have continued to invest in the business to improve efficiency, develop new products, increase our capacity and become an even stronger supplier to our customers. We have also strategically consolidated facilities where appropriate with an expectation to leverage our cost structure. We currently have a bank debt to equity ratio of 14.9% and can borrow needed funds at an attractive interest rate under our credit facility.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2015 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2014

The following table sets forth a summary of the Company’s Statement of Consolidated Income and the percentage of net sales for the three months ended September 30, 2015 and 2014. The Company’s past operating results are not necessarily indicative of future operating results.

| (Thousands of dollars) | Three Months Ended September 30 2015 |  | 2014 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $89,046 | 100.0% | $102,100 | 100.0% | $(13,054) | (13)% |
| Cost of products sold | 62,887 | 70.6 | 69,645 | 68.2 | (6,758) | (10) |
| **GROSS PROFIT** | 26,159 | 29.4 | 32,455 | 31.8 | (6,296) | (19) |
| Costs and expenses | 24,073 | 27.0 | 27,320 | 26.8 | (3,247) | (12) |
| **OPERATING INCOME** | 2,086 | 2.3 | 5,135 | 5.0 | (3,049) | (59) |
| Other income (expense) | 55 | 0.1 | 159 | 0.2 | (104) | NM |
| **INCOME BEFORE INCOME TAXES** | 2,141 | 2.4 | 5,294 | 5.2 | (3,153) | (60) |
| Income taxes | 1,935 | 2.2 | 2,739 | 2.7 | (804) | (29) |
| **NET INCOME** | $206 | 0.2% | $2,555 | 2.5% | $(2,349) | (92)% |

NM- Not meaningful.

*Net sales.* For the three months ended September 30, 2015, net sales were $89.0 million, a decrease of $13.0 million, or 13%, from the three months ended September 30, 2014. Excluding the effect of currency translation, net sales decreased $1.4 million, or 1%, as summarized in the following table:

| (Thousands of dollars) Net sales | Three Months Ended September 30 2015 | 2014 | Change | Change Due to Currency Translation | Change Excluding Currency Translation | % change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $33,616 | $38,636 | $(5,020) | $0 | $(5,020) | (13)% |
| The Americas | 18,346 | 22,979 | (4,633) | (5,087) | 454 | 2 |
| EMEA | 12,402 | 17,327 | (4,925) | (2,115) | (2,810) | (16) |
| Asia-Pacific | 24,682 | 23,158 | 1,524 | (4,372) | 5,896 | 25 |
| Consolidated | $89,046 | $102,100 | $(13,054) | $(11,574) | $(1,480) | (1)% |

The decrease in PLP-USA net sales of $5.0 million, or 13%, was primarily due to a volume decrease in domestic energy sales. International net sales for the three months ended September 30, 2015 were unfavorably affected by $11.6 million when local currencies were converted to U.S. dollars. The following discussion of net sales excludes the effect of currency translation. The Americas net sales of $18.3 million increased $.5 million, or 2%, primarily due to a volume increase in transmission sales. EMEA net sales of $12.4 million decreased $2.8 million, or 16%, primarily due to a decrease in transmission projects in the region along with some volume decline in telecommunications sales. In Asia-Pacific, net sales of $24.7 million increased $5.9 million, or 25%, compared to 2014. The increase in net sales was primarily due to a volume increase in solar sales in the region while governments continued to defer the construction of transmission lines in a few locations in the region.

*Gross profit.* Gross profit of $26.2 million for the three months ended September 30, 2015 decreased $6.3 million, or 19%, compared to the three months ended September 30, 2014. Excluding the effect of currency translation, gross profit decreased $3.5 million, or 11%, as summarized in the following table:

| (Thousands of dollars) Gross profit | Three Months Ended September 30 2015 | 2014 | Change | Change Due to Currency Translation | Change Excluding Currency Translation | % change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $12,149 | $14,326 | $(2,177) | $0 | $(2,177) | (15)% |
| The Americas | 5,865 | 5,978 | (113) | (1,770) | 1,657 | 28 |
| EMEA | 4,474 | 5,758 | (1,284) | (703) | (581) | (10) |
| Asia-Pacific | 3,671 | 6,393 | (2,722) | (321) | (2,401) | (38) |
| Consolidated | $26,159 | $32,455 | $(6,296) | $(2,794) | $(3,502) | (11)% |

PLP-USA gross profit of $12.1 million decreased $2.2 million compared to the same period in 2014. PLP-USA’s decrease in gross profit was related to the decrease in sales volume and a shift in sales mix toward products with lower margins for 2015 compared to 2014. International gross profit for the three months ended September 30, 2015 was unfavorably impacted by $2.8 million when local currencies were translated to U.S. dollars. The following discussion of gross profit excludes the effects of currency translation. The Americas gross profit increase of $1.7 million was primarily the result of product margin improvement at one location in the region. The EMEA gross profit decreased $.6 million as a result of a $2.8 million sales decrease partially mitigated by product margin improvement in the region due to a shift in sales mix. Asia-Pacific gross profit decreased $2.4 million as a result of a $2.0 million charge for consolidation of facilities and personnel reductions and a continued shift in sales mix towards lower margins throughout the segment.

*Costs and expenses.* Costs and expenses of $24.1 million for the three months ended September 30, 2015 decreased $3.2 million, or 12%, compared to 2014. Excluding the favorable effect of currency translation, costs and expenses decreased $.1 million, or 1%, as summarized in the following table:

| (Thousands of dollars) Costs and expenses | Three Months Ended September 30 2015 | 2014 | Change | Change Due to Currency Translation | Change Excluding Currency Translation | % change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $10,612 | $10,625 | $(13) | $0 | $(13) | 0% |
| The Americas | 4,514 | 5,783 | (1,269) | (1,396) | 127 | 2 |
| EMEA | 2,935 | 3,535 | (600) | (550) | (50) | (1) |
| Asia-Pacific | 6,012 | 7,377 | (1,365) | (1,161) | (204) | (3) |
| Consolidated | $24,073 | $27,320 | $(3,247) | $(3,107) | $(140) | (1)% |

PLP-USA Costs and expenses were essentially flat as a reduction in personnel costs offset higher net foreign currency exchange losses. The foreign currency exchange losses are primarily related to translating into U.S. dollars PLP-USA’s foreign currency denominated loans, trade receivables and royalty receivables from foreign subsidiaries at the quarter-end exchange rates. International costs and expenses for the three months ended September 30, 2015 were favorably impacted by $3.1 million when local currencies were translated to U.S. dollars. Excluding the favorable impact of currency translation, international Costs and expenses decreased $.1 million. The following discussion of costs and expenses excludes the effect of currency translation. The Americas costs and expenses of $4.5 million had a $.1 million increase due primarily to transactional currency losses. EMEA costs and expenses of $2.9 million had a negligible decrease. Asia-Pacific costs and expenses of $6.0 million decreased $.2 million. This decrease was primarily due to $.8 million in net personnel cost savings from staffing modifications implemented in 2015 and 2014 along with overall tighter expense management. These cost savings were partially offset by an incremental $.6 million of transactional currency losses.

*Other income (expense).* Other income for the three months ended September 30, 2015 decreased $.1 million compared to 2014.

*Income taxes.* Income taxes for the three months ended September 30, 2015 and 2014 were $1.9 million and $2.7 million, respectively, based on pretax income of $2.1 million and $5.3 million, respectively. The effective tax rate for the three months ended September 30, 2015 and 2014 was 90% and 52%, respectively, compared to the U.S. federal statutory rate of 35%. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions, which differ from the U.S. federal statutory income tax rate, and the relative amount of income earned in those jurisdictions. It is also affected by discrete items that may occur in any given period but are not consistent from year to year. In addition to the impact of state and local income taxes, the following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of 35% and our effective tax rate:

1\. $1.3 million, or 62%, increase, resulting from losses in certain jurisdictions where no tax benefit is recognized.

2\. $.2 million, or 9%, decrease, resulting from earnings in jurisdictions with lower tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested.

3\. $.1 million, or 2%, increase, resulting from U.S. permanent items, primarily related to the repatriation of foreign earnings.

2014

1\. $1.6 million, or 29%, increase, resulting from losses in certain jurisdictions where no tax benefit is recognized.

2\. $.2 million, or 3%, decrease, resulting from earnings in jurisdictions with lower tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested.

3\. $.5 million, or 9%, decrease, resulting from U.S. permanent items, primarily related to the repatriation of foreign earnings.

*Net income.* As a result of the preceding items, net income for the three months ended September 30, 2015 was $.2 million, compared to net income of $2.6 million for the three months ended September 30, 2014. Excluding the effect of currency translation, net income decreased $3.0 million as summarized in the following table:

| (Thousands of dollars) Net income (loss) | Three Months Ended September 30 2015 | 2014 | Change | Change Due to Currency Translation | Change Excluding Currency Translation | % change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $638 | $2,992 | $(2,354) | $0 | $(2,354) | (79)% |
| The Americas | 1,009 | (12) | 1,021 | (262) | 1,283 | NM |
| EMEA | 1,106 | 1,708 | (602) | (83) | (519) | (30) |
| Asia-Pacific | (2,547) | (2,133) | (414) | 1,018 | (1,432) | 67 |
| Consolidated | $206 | $2,555 | $(2,349) | $673 | $(3,022) | (118)% |

NM - Not Meaningful

PLP-USA net income decreased $2.4 million compared to 2014 due to a $2.2 million decrease in operating income along with an increase in income taxes of $.2 million. International net loss for the three months ended September 30, 2015 was a change of $.7 million when local currencies were converted to U.S. dollars. The following discussion of net income excludes the effect of currency translation. The Americas net income increased $1.3 million as a result of a $1.5 million increase in operating income partially offset by an increase in income taxes of $.2 million. EMEA net loss was a change of $.5 million as a result of a decrease in operating income of $.5 million with a negligible impact from income taxes. Asia-Pacific net loss increased $1.4 million as a result of an increase of $2.2 million in operating loss partially offset by a decrease in income tax expense of $.8 million.

NINE MONTHS ENDED SEPTEMBER 30, 2015 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2014

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the nine months ended September 30, 2015 and 2014. The Company’s past operating results are not necessarily indicative of future operating results.

| (Thousands of dollars) | Nine Months Ended September 30 2015 |  | 2014 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $262,705 | 100.0% | $292,006 | 100.0% | $(29,301) | (10)% |
| Cost of products sold | 185,342 | 70.6 | 200,906 | 68.8 | (15,564) | (8) |
| **GROSS PROFIT** | 77,363 | 29.4 | 91,100 | 31.2 | (13,737) | (15) |
| Costs and expenses | 70,178 | 26.7 | 74,140 | 25.4 | (3,962) | (5) |
| **OPERATING INCOME** | 7,185 | 2.7 | 16,960 | 5.8 | (9,775) | (58) |
| Other income (expense) | (637) | (0.2) | 77 | 0.0 | (714) | NM |
| **INCOME BEFORE INCOME TAXES** | 6,548 | 2.5 | 17,037 | 5.8 | (10,489) | (62) |
| Income taxes | 2,918 | 1.1 | 6,664 | 2.3 | (3,746) | (56) |
| **NET INCOME** | $3,630 | 1.4% | $10,373 | 3.6% | $(6,743) | (65)% |

NM- Not meaningful.

*Net sales*. For the nine months ended September 30, 2015, net sales were $262.7 million, a decrease of $29.3 million, or 10%, from the nine months ended September 30, 2014. Excluding the unfavorable effect of currency translation, net sales decreased $3.0 million, or 1%, as summarized in the following table:

| (Thousands of dollars) Net sales | Nine Months Ended September 30 2015 | 2014 | Change | Change Due to Currency Translation | Change Excluding Currency Translation | % change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $100,113 | $104,658 | $(4,545) | $0 | $(4,545) | (4)% |
| The Americas | 52,897 | 71,569 | (18,672) | (11,057) | (7,615) | (11) |
| EMEA | 39,408 | 47,050 | (7,642) | (6,407) | (1,235) | (2) |
| Asia-Pacific | 70,287 | 68,729 | 1,558 | (8,863) | 10,421 | 15 |
| Consolidated | $262,705 | $292,006 | $(29,301) | $(26,327) | $(2,974) | (1)% |

PLP-USA net sales of $100.1 million decreased $4.5 million, or 4%. The decrease was primarily due to a net $5.2 million decrease in price/mix predominantly in its domestic energy sales partially offset by a volume increase in its domestic telecommunications sales. International net sales of $162.6 million for the nine months ended September 30, 2015 were unfavorably affected by $26.3 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the unfavorable effect of currency translation. The Americas net sales of $52.9 million decreased $7.6 million, or 11%, primarily due to lower volume in transmission and solar sales. EMEA net sales of $39.4 million decreased $1.2 million, or 2%, primarily due to decreased volume in telecommunications sales. Asia-Pacific net sales of $70.3 million increased $10.4 million, or 15%, compared to the same period in 2014. The increase in net sales was primarily related to a $9.6 million increase in solar sales and $3.7 million growth in transmission volume while slowing economies and government deferral of projects in various locations within the region led to a $2.9 million reduction in distribution sales.

*Gross profit*. Gross profit of $77.4 million for the nine months ended September 30, 2015 decreased $13.7 million, or 15%, compared to the nine months ended September 30, 2014. Excluding the effect of currency translation, gross profit decreased $7.2 million, or 8%, as summarized in the following table:

| (Thousands of dollars) Gross profit | Nine Months Ended September 30 2015 | 2014 | Change | Change Due to Currency Translation | Change Excluding Currency Translation | % change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $36,161 | $37,709 | $(1,548) | $0 | $(1,548) | (4)% |
| The Americas | 14,137 | 18,592 | (4,455) | (3,371) | (1,084) | (6) |
| EMEA | 13,870 | 16,000 | (2,130) | (2,070) | (60) | 0 |
| Asia-Pacific | 13,195 | 18,799 | (5,604) | (1,111) | (4,493) | (24) |
| Consolidated | $77,363 | $91,100 | $(13,737) | $(6,552) | $(7,185) | (8)% |

PLP-USA gross profit of $36.2 million decreased $1.5 million compared to the same period in 2014. PLP-USA’s decrease in gross profit was related to the decrease in sales volume partially offset by an improved sales mix towards higher margin products. International gross profit for the nine months ended September 30, 2015 was unfavorably impacted by $6.5 million when local currencies were translated to U.S. dollars. The following discussion of gross profit changes excludes the effects of currency translation. The Americas gross profit decrease of $1.1 million was primarily the result of a $7.6 million decrease in net sales partially offset by improved product margins in the region. The EMEA gross profit decreased $.1 million as a result of decreased net sales in the region. Asia-Pacific gross profit decreased $4.5 million as the overall sales increase was in lower margin products, along with $1.5 million in costs associated with the consolidation of facilities and personnel reductions net of savings from prior year personnel reductions.

*Costs and expenses*. Costs and expenses of $70.2 million for the nine months ended September 30, 2015 decreased $4.0 million, or 5%, compared to the nine months ended September 30, 2014. Excluding the favorable effect of currency translation, costs and expenses increased 4% as summarized in the following table:

| (Thousands of dollars) Costs and expenses | Nine Months Ended September 30 2015 | 2014 | Change | Change Due to Currency Translation | Change Excluding Currency Translation | % change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $30,919 | $26,801 | $4,118 | $0 | $4,118 | 15% |
| The Americas | 13,307 | 15,136 | (1,829) | (2,891) | 1,062 | 7 |
| EMEA | 9,352 | 11,118 | (1,766) | (1,692) | (74) | (1) |
| Asia-Pacific | 16,600 | 21,085 | (4,485) | (2,171) | (2,314) | (11) |
| Consolidated | $70,178 | $74,140 | $(3,962) | $(6,754) | $2,792 | 4% |

PLP-USA costs and expenses increased $4.1 million primarily due to increased net foreign currency exchange losses of $4.5 million and a decrease in intercompany income of $1.6 million. These increases to costs and expenses were partially mitigated with a reduction in personnel costs and overall tighter expense controls over administrative costs reducing expense by $2.0 million. The foreign currency exchange losses are principally related to translating into U.S. dollars our foreign denominated loans, trade receivables and royalty receivables from our foreign subsidiaries at the September month-end exchange rates. International costs and expenses for the nine months ended September 30, 2015 were favorably impacted by $6.7 million when local currencies were translated to U.S. dollars. The following discussions of costs and expenses exclude the effect of currency translation. The Americas costs and expenses increase of $1.1 million was primarily due to foreign currency exchange losses of $1.8 million, partially offset by the non-recurrence of a $.7 million charge recorded in 2014 for the write-down of a refund of value added tax and the related interest. The foreign currency exchange losses were principally related to intercompany purchases. EMEA costs and expenses decreased $.1 million from tightened expense management. Asia-Pacific costs and expenses decreased $2.3 million primarily due to savings in personnel costs from staffing modifications implemented in 2014 along with overall tighter expense management.

*Other income (expense).* Other expense for the nine months ended September 30, 2015 of $.6 million increased $.7 million compared to 2014. This increase was due to the reversal of a receivable recorded at the opening balance sheet date of a previous acquisition. The receivable represented the indemnification by the prior owner for unrecognized tax benefits. The resolution of a foreign income tax audit resulted in a tax liability for less than the previously recorded accrual. The difference was recorded as a tax benefit in income tax expense and the reduction to the corresponding receivable, after receipt of the indemnified tax related amount, was recognized as other expense.

*Income taxes*. Income taxes for the nine months ended September 30, 2015 and 2014 were $2.9 million and $6.7 million, respectively, based on pretax income of $6.5 million and $17.0 million, respectively. The effective tax rate for the nine months ended September 30, 2015 and 2014 was 45% and 39%, respectively, compared to the U.S. federal statutory rate of 35%. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions, which differ from the U.S. federal statutory income tax rate, and the relative amount of income earned in those jurisdictions. It is also affected by discrete items that may occur in any given period but are not consistent from year to year. In addition to the impact of state and local income taxes, the following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of 35% and our effective tax rate:

2015

1\. $1.8 million, or 28%, increase, resulting from losses in certain jurisdictions where no tax benefit is recognized.

2\. $.6 million, or 9%, decrease, resulting from earnings in jurisdictions with lower tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested.

3\. $.8 million, or 12%, decrease, resulting from a favorable resolution of a foreign audit in our Asia Pacific segment for which a larger tax liability had previously been accrued.

4\. $.2 million, or 3%, increase, resulting from U.S. permanent items, primarily related to the repatriation of foreign earnings.

2014

1\. $1.8 million, or 10%, increase, resulting from losses in certain jurisdictions where no tax benefit is recognized.

2\. $.9 million, or 5%, decrease, resulting from earnings in jurisdictions with lower tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested.

3\. $.2 million, or 1%, decrease, resulting from U.S. permanent items, primarily related to the repatriation of foreign earnings

*Net income.* As a result of the preceding items, net income for the nine months ended September 30, 2015 was $3.6 million, compared to $10.4 million for the nine months ended September 30, 2014. Excluding the favorable effect of currency translation, net income decreased $7.4 million as summarized in the following table:

| (Thousands of dollars) Net income (loss) | Nine Months Ended September 30 2015 | 2014 | Change | Change Due to Currency Translation | Change Excluding Currency Translation | % change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $2,680 | $7,117 | $(4,437) | $0 | $(4,437) | (62)% |
| The Americas | 845 | 2,496 | (1,651) | (363) | (1,288) | (52) |
| EMEA | 3,473 | 3,676 | (203) | (216) | 46 | 1 |
| Asia-Pacific | (3,368) | (2,916) | (452) | 1,222 | (1,674) | 57 |
| Consolidated | $3,630 | $10,373 | $(6,743) | $610 | $(7,353) | (71)% |

27

PLP-USA net income decreased $4.4 million due to a $5.7 million decrease in operating income partially offset by lower income taxes of $1.3 million. International net income for the nine months ended September 30, 2015 increased $.6 million on a consolidated basis when local currencies were converted to U.S. dollars. The following discussion of net income excludes the effect of currency translation. The Americas net income decreased $1.3 million as a result of a $2.2 million decrease in operating income partially offset by a $.2 million increase in other income along with a $.7 million net decrease in income tax expense. EMEA net income had a negligible increase. Asia-Pacific net loss increased $1.7 million. The operating loss increased $2.2 million, and the net tax benefit for the region was $.5 million inclusive of the previously mentioned tax indemnification receivable write off.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our critical accounting policies are consistent with the information set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K for the year ended December 31, 2014 and are, therefore, not presented herein.

WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES

#### Management Assessment of Liquidity

We measure liquidity on the basis of our ability to meet short-term and long-term operating needs, repay debt, fund additional investments, including acquisitions, and make dividend payments to shareholders. Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividends, business acquisitions and access to bank lines of credit.

Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives. In 2015, we used cash of $6.7 million for capital expenditures. We ended the first nine months of 2015 with $26.9 million of cash and cash equivalents. Our cash and cash equivalents are held in various locations throughout the world. We complete comprehensive reviews of our significant customers and their creditworthiness by analyzing financial statements for customers where we have identified a measure of increased risk. We closely monitor payments and developments which may signal possible customer credit issues. We currently have not identified any potential material impact on our liquidity from customer credit issues.

Our financial position remains strong and our current ratio was 3.4 to 1 at September 30, 2015. Total debt at September 30, 2015 was $32.8 million. At September 30, 2015, our unused availability under our line of credit was $15.5 million and our bank debt to equity percentage was 14.9%. The term of our credit facility extends through August 2017 at an interest rate of LIBOR plus 1.125%. The line of credit agreement contains, among other provisions, requirements for maintaining levels of working capital, net worth and profitability. At September 30, 2015 and December 31, 2014, we were in compliance with these covenants.

We expect that our major source of funding for 2015 and beyond will be our operating cash flows, our existing cash and cash equivalents as well as our line of credit agreement. We believe our future operating cash flows will be more than sufficient to cover debt repayments, other contractual obligations, capital expenditures and dividends. In addition, we believe our borrowing capacity provides substantial financial resources, if needed, to supplement funding of capital expenditures and/or acquisitions. We do not believe we would increase our debt to a level that would have a material adverse impact upon results of operations or financial condition.

We earn a significant amount of our operating income outside the United States, which, except for current earnings, is deemed to be indefinitely reinvested in foreign jurisdictions. At September 30, 2015, the majority of our cash and cash equivalents are held outside the U.S. We currently do not intend nor foresee a need to repatriate these funds. We expect domestic cash generated from operations, U.S. cash balances, external borrowings, or some combination of these sources to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends, debt repayment, and capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.

#### Sources and Uses of Cash

Cash decreased $2.8 million for the nine months ended September 30, 2015. Net cash provided by operating activities was $7.9 million. The major investing and financing uses of cash were capital expenditures of $6.7 million, repurchase and issuance of common shares of $3.6 million and dividends of $3.2 million. Currency had a favorable $4.4 million impact on cash and cash equivalents when translating foreign denominated financial statements to U.S. dollars.

Net cash provided by operating activities for the nine months ended September 30, 2015 decreased $13.2 million compared to the nine months ended September 30, 2014. The decrease was primarily a result of a decrease in net income of $6.7 million, a decrease in deferred income taxes of $1.6 million and a decrease in non-cash items of $2.0 million along with an increase in operating assets (net of operating liabilities) of $2.9 million.

Net cash used by investing activities for the nine months ended September 30, 2015 of $8.2 million represents a decrease of $21.9 million when compared to cash used in investing activities in the nine months ended September 30, 2014. The decrease was primarily related to cash expended for the business acquisition of Helix in the first nine months of 2014 of $14.9 million, net of cash acquired, along with a decline in capital expenditures of $7.8 million. Additionally, in 2015 compared to the same period in 2014, there was an increase in restricted cash of $1.6 million and $.8 million generated in proceeds from the sale of property and equipment.

Cash used in financing activities for the nine months ended September 30, 2015 was $6.8 million compared to $14.0 million cash provided from financing activities for the nine months ended September 30, 2014. The decrease of $20.8 million was primarily a result of a decrease in net debt borrowings in 2015 compared to 2014 of $19.4 million along with an incremental $1.4 million for common shares repurchased. This reduction was predominantly related to the Helix acquisition in 2014 and an increase in loan payments in 2015.

GOODWILL IMPAIRMENT TESTING

We perform our annual impairment test for goodwill on October 1st of each year. We perform our annual impairment test for goodwill utilizing a discounted cash flow methodology, market comparables, and an overall market capitalization reasonableness test in computing fair value by reporting unit. We then compare the fair value of the reporting unit with its carrying value to assess if goodwill has been impaired. Based on the assumptions as to growth, discount rates and the weighting used for each respective valuation methodology, results of the valuations could be significantly different. However, we believe that the methodologies and weightings used are reasonable and result in appropriate fair values of the reporting units.

During the third quarter of 2015, our market capitalization dropped below its equity carrying value. This was identified as an interim indicator of impairment. As such, we performed an interim goodwill impairment assessment of our Asia-Pacific reporting unit and one of our reporting units within The Americas segment. The result of this interim assessment was that we passed step one by a margin of 16% and 24%, respectively, for the two reporting units, which compares to a margin of 24% and 39%, respectively, at October 1, 2014. We have goodwill balances of $8.3 million and $4.1 million, respectively, for these reporting units at September 30, 2015. The weighted average cost of capital and long-term growth assumptions used in our assessment were 14.7% and 3%, respectively, for our Asia Pacific reporting unit and 13.5% and 3%, respectively, for the reporting unit within The America’s segment. While it was determined that there was no impairment at September 30, 2015, we will continue to monitor the results of these operations as there is a reasonable possibility of a future impairment charge and significant uncertainties regarding the recoverability of the respective carrying values.

CHARGES RELATED TO RESTRUCTURING ACTIVITIES

During 2015, we reconfigured one of our operations within our Asia Pacific segment by reducing our workforce and manufacturing facilities while outsourcing our production predominantly to our locations with lower cost operations. This was done in response to a slowdown in economic activity in the region as well as continued downward market pressure on prices. We expect total costs related to this reconfiguration to be approximately $2.7 million. Additionally, we initiated reconfiguration in The Americas segment which will be primarily a reduction in personnel and facilities in response to downward market pressure on prices. The total charges for The Americas segment are anticipated to be less than $1 million. Both of these actions are expected to reduce infrastructure and manufacturing costs.

Charges for the three months ended September 30, 2015 totaled $2.1 million including charges for severance ($.7 million), lease termination costs ($1.2 million) and asset disposals ($.2 million) principally in our Asia-Pacific segment ($1.9 million). Severance charges included $.2 million for The Americas segment. The difference between the anticipated total charges and recognized cost for the three months ended September 30, 2015 for The Americas segment will be recorded when facilities are vacated and as certain employees’ services cease. We plan to transfer production activities to our PLP-USA segment over the next six months. The costs recorded for the three months ended September 30, 2015 are included in Cost of products sold ($1.8 million), Research and engineering expense ($.1 million) and Other operating expense ($.2 million).

Charges for the nine months ended September 30, 2015 totaled $2.7 million including charges for severance ($1.3 million), lease termination costs ($1.2 million) and asset disposals ($.2 million) principally in our Asia-Pacific segment ($2.5 million). Severance charges included $.2 million for our Americas segment. These costs are included in Cost of products sold ($2.4 million), Research and engineering expense ($.1 million) and Other operating expense ($.2 million).

The restructuring liability is recorded in Accrued compensation and amounts withheld from employees, Accrued expenses and other liabilities and Other noncurrent liabilities.

RELATED PARTY TRANSACTIONS

In August 2015, we purchased 30,713 Common Shares of the Company from a trust for the benefit of Barbara P. Ruhlman and a foundation of which Barbara P. Ruhlman, Robert G. Ruhlman, Randall M. Ruhlman and Bernard Karr are officers, at a price per share of $35.00. Barbara P. Ruhlman is a member of the Company’s Board of Directors and the mother of Robert G. Ruhlman and grandmother of J. Ryan Ruhlman, both of whom are members of the Board of Directors. Robert G. Ruhlman is Chairman, President and Chief Executive Officer of the Company. The purchase was consummated pursuant to two Shares Purchase Agreements both dated August 11, 2015, one between the Company and the trust and the other between the Company and the foundation. The Audit Committee of the Board of Directors and the Board of Directors approved these transactions.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” or ASU 2014-08. ASU 2014-08 changes the criteria for reporting a discontinued operation. Under the new pronouncement, a disposal of a part of an organization that has a major effect on its operations and financial results is a discontinued operation. We are required to adopt ASU 2014-08 prospectively for all disposals or components of the business classified as held for sale during the fiscal period beginning after December 15, 2014. We adopted the guidance in the first quarter of 2015 and it did not have an effect on our results of operations, financial condition or cash flows.

NEW ACCOUNTING STANDARDS TO BE ADOPTED

In July 2015, the FASB issued Accounting Standards Update 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” The amendments in this Update more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments in this Update are effective for fiscal years beginning after December 15, 2016 and interim periods within fiscal years beginning after December 15, 2017. The amendments in this Update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently evaluating what impact, if any, its adoption will have to the presentation of our consolidated financial statements.

In April 2015, the FASB issued Accounting Standards Update 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Topic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” The amendments in this Update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Earlier application is permitted. Amendments in this Update can be applied retrospectively or prospectively. We are currently not engaged in a cloud computing arrangement; however, we are evaluating what impact, if any, its adoption will have to the presentation of our consolidated financial statements if we enter such an arrangement.

In April 2015, the FASB issued Accounting Standards Update 2015-04, “Compensation – Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets.” For an entity that has a significant event in an interim period that calls for a re-measurement of defined benefit plan assets and obligations, the amendments in this Update provide a practical expedient that permits the entity to re-measure defined benefit plan assets and obligations using the month-end that is closest to the date of the significant event. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Earlier application is permitted. Amendments in this Update should be applied prospectively. We are currently evaluating what impact, if any, its adoption will have to the presentation of our consolidated financial statements.

In January 2015, the FASB issued Accounting Standards Update 2015-01, “Income Statement-Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This Update eliminates from GAAP the concept of extraordinary items. A material event or transaction that an entity considers to be of an unusual nature or of a type that indicates infrequency of occurrence or both shall be reported as a separate component of income from continuing operations. The nature and financial effects of each event or transaction shall be presented as a separate component of income from continuing operations or, alternatively, disclosed in notes to financial statements. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We are currently evaluating what impact, if any, its adoption will have to the presentation of our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15 “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” ASU 2014-15 provides guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The Company is required to adopt ASU 2014-15 prospectively for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. We are currently evaluating what impact, if any, its adoption will have to the presentation of our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” or ASU 2014-09. ASU 2014-09 requires an entity to recognize revenue in a matter that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the amendment provides five steps that an entity should apply when recognizing revenue. The amendment also specifies the accounting of some costs to obtain or fulfill a contract with a customer and expands the disclosure requirements around contracts with customers. An entity can either adopt this amendment retrospectively to each prior reporting period presented or retrospectively with cumulative effect of initially applying the update recognized at the date of initial application. In August 2015, the FASB issued ASU No. 2015-14 deferring the effective date of the amendment to annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. We are currently evaluating what impact, if any, its adoption will have to the presentation of our consolidated financial statements.

FORWARD LOOKING STATEMENTS

Cautionary Statement for “Safe Harbor” Purposes Under The Private Securities Litigation Reform Act of 1995

This Form 10-Q and other documents we file with the Securities and Exchange Commission (“SEC”) contain forward-looking statements regarding the Company’s and management’s beliefs and expectations. As a general matter, forward-looking statements are those focused upon future plans, objectives or performance (as opposed to historical items) and include statements of anticipated events or trends and expectations and beliefs relating to matters not historical in nature. Such forward-looking statements are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Such uncertainties and factors could cause the Company’s actual results to differ materially from those matters expressed in or implied by such forward-looking statements.

The following factors, among others, could affect the Company’s future performance and cause the Company’s actual results to differ materially from those expressed or implied by forward-looking statements made in this report:

- The overall demand for cable anchoring and control hardware for electrical transmission and distribution lines on a worldwide basis, which has a slow growth rate in mature markets such as the United States (U.S.), Canada, Australia and Western Europe and may grow slowly or experience prolonged delay in developing regions despite expanding power needs;
- The potential impact of the global economic condition on the Company’s ongoing profitability and future growth opportunities in our core markets in the U.S. and other foreign countries where the financial situation is expected to be similar going forward;
- Decrease in infrastructure spending globally as a result of worldwide depressed spending;
- The ability of our customers to raise funds needed to build the facilities their customers require;
- Technological developments that affect longer-term trends for communication lines, such as wireless communication;
- The decreasing demand for product supporting copper-based infrastructure due to the introduction of products using new technologies or adoption of new industry standards;
- The Company’s success at continuing to develop proprietary technology and maintaining high quality products and customer service to meet or exceed new industry performance standards and individual customer expectations;
- The Company’s success in strengthening and retaining relationships with the Company’s customers, growing sales at targeted accounts and expanding geographically;
- The extent to which the Company is successful at expanding the Company’s product line or production facilities into new areas or implementing efficiency measures at existing facilities;
- The effects of fluctuation in currency exchange rates upon the Company’s foreign subsidiaries’ operations and reported results from international operations, together with non-currency risks of investing in and conducting significant operations in foreign countries, including those relating to political, social, economic and regulatory factors;
- The Company’s ability to identify, complete, obtain funding for and integrate acquisitions for profitable growth;
- The potential impact of consolidation, deregulation and bankruptcy among the Company’s suppliers, competitors and customers;
- The relative degree of competitive and customer price pressure on the Company’s products;
- The cost, availability and quality of raw materials required for the manufacture of products;
- Strikes and other labor disruptions;
- Changes in significant government regulations affecting environmental compliances;
- The telecommunication market’s continued deployment of Fiber-to-the-Premises; and
- Those factors described under the heading “Risk Factors” on page 12 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed on March 12, 2015.

## Market risk

As filed, 1,625 characters.

The Company operates manufacturing facilities and offices around the world and uses fixed and floating rate debt to finance the Company’s global operations. As a result, the Company is subject to business risks inherent in non-U.S. activities, including political and economic uncertainty, import and export limitations and market risk related to changes in interest rates and foreign currency exchange rates. The Company believes the political and economic risks related to the Company’s international operations are mitigated due to the stability of the countries in which the Company’s largest international operations are located.

As of September 30, 2015, the Company had no foreign currency forward exchange contract outstanding. The Company does not hold derivatives for trading purposes.

The Company’s primary currency rate exposures are related to foreign denominated debt, intercompany debt, forward exchange contracts, foreign denominated receivables and payables and cash and short-term investments. A hypothetical 10% change in currency rates would have a favorable/unfavorable impact on fair values on such instruments of $5.7 million and on income before tax of $3 million.

The Company is exposed to market risk, including changes in interest rates. The Company is subject to interest rate risk on its variable rate revolving credit facilities and term notes, which consisted of borrowings of $32.8 million at September 30, 2015. A 100 basis point increase in the interest rate would have resulted in an increase in interest expense of approximately $.3 million for the nine months ended September 30, 2015.

## Controls and procedures

As filed, 699 characters.

### Evaluation of Disclosure Controls and Procedures

The Company’s Principal Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended, were effective as of September 30, 2015.

### Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f)) during the quarter ended September 30, 2015 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

## Risk factors

As filed, 223 characters.

There were no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission on March 12, 2015.

Filed Nov 9, 2015.
Source: SEC EDGAR, the filing index for accession 0001193125-15-371886. Last ingested by Listed: Nov 6, 2026, 07:10 ET. No prices; not investment advice.