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Standard Motor Products Inc. Reports Operating Results (10-Q)

August 07, 2012 | About:

10qk

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Standard Motor Products Inc. (SMP) filed Quarterly Report for the period ended 2012-06-30.

Standard Motor Products, Inc. has a market cap of $324 million; its shares were traded at around $17.86 with a P/E ratio of 9.5 and P/S ratio of 0.4. The dividend yield of Standard Motor Products, Inc. stocks is 2.6%. Standard Motor Products, Inc. had an annual average earning growth of 12.9% over the past 5 years.

Highlight of Business Operations:

Pursuant to these agreements, we sold $178.2 million and $310.3 million of receivables during the three months and six months ended June 30, 2012, respectively, and $164.7 million and $291.1 million for the comparable periods in 2011. A charge in the amount of $3.9 million and $6.3 million related to the sale of receivables is included in selling, general and administrative expense in our consolidated statements of operations for the three months and six months ended June 30, 2012, respectively, and $2.3 million and $4.1 million for the comparable periods in 2011. If we do not enter into these arrangements or if any of the financial institutions with which we enter into these arrangements were to experience financial difficulties or otherwise terminate these arrangements, our financial condition, results of operations and cash flows could be materially and adversely affected by delays or failures to collect future trade accounts receivable.

Total amortization expense for acquired intangible assets was $1.2 million and $2.1 million for three months and six months ended June 30, 2012, respectively, and $0.4 million and $0.8 million for the comparable periods in 2011. Based on the current estimated useful lives assigned to our acquired intangible assets, amortization expense is estimated to be $2.6 million for the remainder of 2012, $4.7 million in 2013, $4.1 million in 2014 and $20.5 million in the aggregate for the years 2015 through 2028.

We had deferred financing cost of $3.2 million and $3.8 million as of June 30, 2012 and December 31, 2011, respectively. Deferred financing costs are related to our revolving credit facility. Deferred financing costs as of June 30, 2012 are being amortized, assuming no further prepayments of principal, in the amount of $0.6 million in 2012, $1.2 million in 2013, $1.2 million in 2014 and $0.2 million in 2015.

Borrowings under the restated credit agreement are collateralized by substantially all of our assets, including accounts receivable, inventory and fixed assets, and those of certain of our subsidiaries. After taking into account outstanding borrowings under the restated credit agreement, there was an additional $97.4 million available for us to borrow pursuant to the formula at June 30, 2012. Outstanding borrowings under the restated credit agreement (inclusive of the Canadian revolving credit facility described below), which are classified as current liabilities, were $97 million and $73 million at June 30, 2012 and December 31, 2011, respectively. At June 30, 2012, the weighted average interest rate on our restated credit agreement was 1.99%, which consisted of $97 million in direct borrowings. There were no index loans outstanding at June 30, 2012. At December 31, 2011, the weighted average interest rate on our restated credit agreement was 2%, which consisted of $73 million in direct borrowings. There were no index loans outstanding at December 31, 2011. During the six months ended June 30, 2012 our average daily index loan balance was $6 million compared to $5.7 million for the six months ended June 30, 2011 and for the year ended December 31, 2011.

The most recent actuarial study was performed as of August 31, 2011. The updated study has estimated an undiscounted liability for settlement payments, excluding legal costs and any potential recovery from insurance carriers, ranging from $27.5 million to $66.5 million for the period through 2059. The change from the prior year study was a $1.8 million increase for the low end of the range and a $0.4 million decrease for the high end of the range. Based on the information contained in the actuarial study and all other available information considered by us, we concluded that no amount within the range of settlement payments was more likely than any other and, therefore, recorded the low end of the range as the liability associated with future settlement payments through 2059 in our consolidated financial statements. Accordingly, an incremental $1.3 million provision in our discontinued operation was added to the asbestos accrual in September 2011 increasing the reserve to approximately $27.5 million. According to the updated study, legal costs, which are expensed as incurred and reported in earnings (loss) from discontinued operation in the accompanying statement of operations, are estimated to range from $26.2 million to $63 million during the same period.

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