2017 Q4 Form 10-Q Financial Statement

#000104289317000011 Filed on October 27, 2017

View on sec.gov

Income Statement

Concept 2017 Q4 2017 Q3 2016 Q3
Revenue $108.0M $100.3M $123.6M
YoY Change 1.77% -18.84% -38.61%
Cost Of Revenue $72.36M $63.05M $77.63M
YoY Change -6.99% -18.78% -28.21%
Gross Profit $35.62M $37.30M $46.01M
YoY Change 25.87% -18.93% -50.67%
Gross Profit Margin 32.99% 37.17% 37.21%
Selling, General & Admin $31.10M $27.99M $12.50M
YoY Change 43.32% 123.81% -27.64%
% of Gross Profit 87.32% 75.03% 27.18%
Research & Development $9.600M $10.40M $10.60M
YoY Change -15.04% -1.89% -9.4%
% of Gross Profit 26.95% 27.89% 23.04%
Depreciation & Amortization $8.800M $9.518M $7.592M
YoY Change 0.0% 25.37% -1.4%
% of Gross Profit 24.71% 25.52% 16.5%
Operating Expenses $40.70M $27.99M $12.50M
YoY Change 23.71% 123.81% -27.64%
Operating Profit -$5.107M -$62.05M $22.93M
YoY Change 10.21% -370.55% -64.31%
Interest Expense $600.0K $12.00K $1.000K
YoY Change -45.45% 1100.0% -75.0%
% of Operating Profit 0.0%
Other Income/Expense, Net
YoY Change
Pretax Income -$4.500M -$61.10M $23.88M
YoY Change 25.0% -355.89% -63.04%
Income Tax $400.0K -$31.84M $4.864M
% Of Pretax Income 20.37%
Net Earnings -$71.49M -$29.26M $19.01M
YoY Change -5590.63% -253.89% -62.56%
Net Earnings / Revenue -66.21% -29.16% 15.38%
Basic Earnings Per Share $0.03 -$0.78 $0.51
Diluted Earnings Per Share $0.03 -$0.78 $0.51
COMMON SHARES
Basic Shares Outstanding 37.86M shares 37.53M shares 37.37M shares
Diluted Shares Outstanding 37.53M shares 37.55M shares

Balance Sheet

Concept 2017 Q4 2017 Q3 2016 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $493.2M $473.0M $542.6M
YoY Change 16.46% -12.83% 36.68%
Cash & Equivalents $493.2M $473.0M $542.6M
Short-Term Investments
Other Short-Term Assets $32.65M $25.09M $16.99M
YoY Change -17.94% 47.69% -60.76%
Inventory $291.1M $297.2M $351.1M
Prepaid Expenses
Receivables $191.6M $197.1M $221.6M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $1.009B $992.5M $1.158B
YoY Change -4.56% -14.3% 2.14%
LONG-TERM ASSETS
Property, Plant & Equipment $284.2M $286.6M $290.1M
YoY Change -12.04% -1.23% -0.84%
Goodwill $47.62M $48.51M
YoY Change 38.56%
Intangibles $46.82M $47.49M
YoY Change 23.19%
Long-Term Investments
YoY Change
Other Assets $15.61M $17.17M $11.71M
YoY Change -1.68% 46.61% 0.22%
Total Long-Term Assets $391.3M $445.0M $304.0M
YoY Change -3.32% 46.37% -0.09%
TOTAL ASSETS
Total Short-Term Assets $1.009B $992.5M $1.158B
Total Long-Term Assets $391.3M $445.0M $304.0M
Total Assets $1.400B $1.437B $1.462B
YoY Change -4.22% -1.68% 1.66%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $33.48M $23.86M $23.67M
YoY Change -7.28% 0.81% -47.03%
Accrued Expenses $37.00M $34.80M $30.90M
YoY Change 28.03% 12.62% -16.03%
Deferred Revenue $4.767M
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $99.91M $69.28M $86.78M
YoY Change -1.55% -20.17% -26.49%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00 $0.00
YoY Change
Other Long-Term Liabilities $2.001M
YoY Change
Total Long-Term Liabilities $2.001M $0.00 $0.00
YoY Change
TOTAL LIABILITIES
Total Short-Term Liabilities $99.91M $69.28M $86.78M
Total Long-Term Liabilities $2.001M $0.00 $0.00
Total Liabilities $105.3M $71.47M $89.67M
YoY Change 0.35% -20.29% -26.7%
SHAREHOLDERS EQUITY
Retained Earnings $1.400B $1.472B $1.500B
YoY Change -6.71% -1.87% 6.42%
Common Stock $20.46M $16.78M $3.930M
YoY Change 250.08% 326.87% 928.8%
Preferred Stock
YoY Change
Treasury Stock (at cost) $0.00
YoY Change
Treasury Stock Shares
Shareholders Equity $1.294B $1.366B $1.372B
YoY Change
Total Liabilities & Shareholders Equity $1.400B $1.437B $1.462B
YoY Change -4.22% -1.68% 1.66%

Cashflow Statement

Concept 2017 Q4 2017 Q3 2016 Q3
OPERATING ACTIVITIES
Net Income -$71.49M -$29.26M $19.01M
YoY Change -5590.63% -253.89% -62.56%
Depreciation, Depletion And Amortization $8.800M $9.518M $7.592M
YoY Change 0.0% 25.37% -1.4%
Cash From Operating Activities $33.30M $36.00M $58.60M
YoY Change 33.2% -38.57% 28.23%
INVESTING ACTIVITIES
Capital Expenditures -$8.000M -$6.700M -$5.000M
YoY Change 45.45% 34.0% -9.09%
Acquisitions
YoY Change
Other Investing Activities $2.800M $600.0K $200.0K
YoY Change -102.11% 200.0% 100.0%
Cash From Investing Activities -$5.200M -$6.100M -$4.900M
YoY Change -96.23% 24.49% -10.91%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 100.0K 100.0K 500.0K
YoY Change -92.31% -80.0% -102.38%
NET CHANGE
Cash From Operating Activities 33.30M 36.00M 58.60M
Cash From Investing Activities -5.200M -6.100M -4.900M
Cash From Financing Activities 100.0K 100.0K 500.0K
Net Change In Cash 28.20M 30.00M 54.20M
YoY Change -125.29% -44.65% 182.29%
FREE CASH FLOW
Cash From Operating Activities $33.30M $36.00M $58.60M
Capital Expenditures -$8.000M -$6.700M -$5.000M
Free Cash Flow $41.30M $42.70M $63.60M
YoY Change 35.41% -32.86% 24.22%

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us-gaap Operating Income Loss
OperatingIncomeLoss
117493000 USD
CY2017Q3 us-gaap Operating Income Loss
OperatingIncomeLoss
-62045000 USD
us-gaap Operating Income Loss
OperatingIncomeLoss
-64027000 USD
CY2016Q4 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
18116000 USD
CY2017Q3 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
18702000 USD
CY2016Q4 us-gaap Other Assets Current
OtherAssetsCurrent
39791000 USD
CY2017Q3 us-gaap Other Assets Current
OtherAssetsCurrent
25088000 USD
CY2016Q4 us-gaap Other Assets Noncurrent
OtherAssetsNoncurrent
15880000 USD
CY2017Q3 us-gaap Other Assets Noncurrent
OtherAssetsNoncurrent
17169000 USD
CY2016Q3 us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Before Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentBeforeTax
-8852000 USD
us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Before Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentBeforeTax
-30204000 USD
CY2017Q3 us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Before Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentBeforeTax
13187000 USD
us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Before Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentBeforeTax
27786000 USD
us-gaap Payments For Repurchase Of Common Stock
PaymentsForRepurchaseOfCommonStock
24238000 USD
us-gaap Payments For Repurchase Of Common Stock
PaymentsForRepurchaseOfCommonStock
0 USD
us-gaap Payments To Acquire Businesses Net Of Cash Acquired
PaymentsToAcquireBusinessesNetOfCashAcquired
0 USD
us-gaap Payments To Acquire Businesses Net Of Cash Acquired
PaymentsToAcquireBusinessesNetOfCashAcquired
21289000 USD
us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
20289000 USD
us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
19563000 USD
CY2016Q4 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.01
CY2017Q3 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.01
CY2016Q4 us-gaap Preferred Stock Shares Authorized
PreferredStockSharesAuthorized
10000000 shares
CY2017Q3 us-gaap Preferred Stock Shares Authorized
PreferredStockSharesAuthorized
10000000 shares
CY2016Q4 us-gaap Preferred Stock Shares Issued
PreferredStockSharesIssued
0 shares
CY2017Q3 us-gaap Preferred Stock Shares Issued
PreferredStockSharesIssued
0 shares
CY2016Q4 us-gaap Preferred Stock Value
PreferredStockValue
0 USD
CY2017Q3 us-gaap Preferred Stock Value
PreferredStockValue
0 USD
us-gaap Proceeds From Sale Of Machinery And Equipment
ProceedsFromSaleOfMachineryAndEquipment
281000 USD
us-gaap Proceeds From Sale Of Machinery And Equipment
ProceedsFromSaleOfMachineryAndEquipment
1160000 USD
us-gaap Proceeds From Stock Options Exercised
ProceedsFromStockOptionsExercised
940000 USD
us-gaap Proceeds From Stock Options Exercised
ProceedsFromStockOptionsExercised
455000 USD
CY2016Q4 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
323149000 USD
CY2017Q3 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
286560000 USD
CY2016Q4 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
1500988000 USD
CY2017Q3 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
1471838000 USD
CY2016Q3 us-gaap Revenues
Revenues
123640000 USD
us-gaap Revenues
Revenues
432640000 USD
CY2017Q3 us-gaap Revenues
Revenues
100346000 USD
us-gaap Revenues
Revenues
347498000 USD
CY2016Q3 us-gaap Sales Revenue Goods Net
SalesRevenueGoodsNet
101277000 USD
us-gaap Sales Revenue Goods Net
SalesRevenueGoodsNet
352519000 USD
CY2017Q3 us-gaap Sales Revenue Goods Net
SalesRevenueGoodsNet
75885000 USD
us-gaap Sales Revenue Goods Net
SalesRevenueGoodsNet
269570000 USD
CY2016Q3 us-gaap Sales Revenue Services Net
SalesRevenueServicesNet
22363000 USD
us-gaap Sales Revenue Services Net
SalesRevenueServicesNet
80121000 USD
CY2017Q3 us-gaap Sales Revenue Services Net
SalesRevenueServicesNet
24461000 USD
us-gaap Sales Revenue Services Net
SalesRevenueServicesNet
77928000 USD
CY2016Q3 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
12504000 USD
us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
31487000 USD
CY2017Q3 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
27994000 USD
us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
84981000 USD
us-gaap Share Based Compensation
ShareBasedCompensation
9442000 USD
us-gaap Share Based Compensation
ShareBasedCompensation
10477000 USD
CY2016Q4 us-gaap Stockholders Equity
StockholdersEquity
1356424000 USD
CY2017Q3 us-gaap Stockholders Equity
StockholdersEquity
1365993000 USD
CY2016Q4 us-gaap Unbilled Receivables Not Billable At Balance Sheet Date Amount Expected To Be Collected Within One Year
UnbilledReceivablesNotBillableAtBalanceSheetDateAmountExpectedToBeCollectedWithinOneYear
56800000 USD
CY2017Q3 us-gaap Unbilled Receivables Not Billable At Balance Sheet Date Amount Expected To Be Collected Within One Year
UnbilledReceivablesNotBillableAtBalanceSheetDateAmountExpectedToBeCollectedWithinOneYear
44100000 USD
CY2016Q3 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
183000 shares
us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
137000 shares
CY2017Q3 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
0 shares
us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
0 shares
CY2016Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
37554000 shares
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
37699000 shares
CY2017Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
37528000 shares
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
37527000 shares
CY2016Q3 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
37371000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
37562000 shares
CY2017Q3 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
37528000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
37527000 shares
us-gaap Revenue Recognition Percentage Of Completion Method
RevenueRecognitionPercentageOfCompletionMethod
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;text-indent:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenues recognized under the percentage-of-completion method</font></div><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company uses the percentage-of-completion method on long-term project contracts that have the following characteristics:</font></div><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">the contracts call for products which are designed to customer specifications;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:36px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">the structural designs are unique and require significant engineering and manufacturing efforts generally requiring more than one year in duration;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">the contracts contain specific terms as to milestones, progress billings and delivery dates; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">product requirements cannot be filled directly from the Company&#8217;s standard inventory.</font></div></td></tr></table><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For each project, the Company prepares a detailed analysis of estimated costs, profit margin, completion date and risk factors which include availability of material, production efficiencies and other factors that may impact the project. On a quarterly basis, management reviews the progress of each project, which may result in revisions of previous estimates, including revenue recognition. The Company, using the efforts-expended method, calculates the percentage complete and applies the percentage to determine the revenues earned and the appropriate portion of total estimated costs to be recognized. Losses, if any, are recorded in full in the period they become known. Historically, the Company&#8217;s estimates of total costs and costs to complete have approximated actual costs incurred to complete the project.</font></div><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Under the percentage-of-completion method, billings may not correlate directly to the revenue recognized. Based upon the terms of the specific contract, billings may be in excess of the revenue recognized, in which case the amounts are included in customer prepayments as a liability on the Condensed Consolidated Balance Sheets. Likewise, revenue recognized may exceed customer billings in which case the amounts are reported in trade receivables. Unbilled revenues are expected to be billed and collected within one year. </font></div></div>
us-gaap Revenue Recognition Sales Of Goods
RevenueRecognitionSalesOfGoods
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;text-indent:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenue Recognition</font></div><div style="line-height:120%;padding-top:8px;text-indent:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Product revenues</font></div><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company recognizes product revenues from </font><font style="font-family:inherit;font-size:10pt;">two</font><font style="font-family:inherit;font-size:10pt;"> methods:</font></div><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">product revenues recognized under the percentage-of-completion method; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">product revenues from the sale of products that do not qualify for the percentage-of-completion method.</font></div></td></tr></table></div>
us-gaap Revenue Recognition Sales Of Services
RevenueRecognitionSalesOfServices
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;text-indent:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Service revenues</font></div><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company recognizes service revenues from </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> sources:</font></div><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">technical advisory assistance;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">rental of running tools; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:0px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">rework and reconditioning of customer-owned Dril-Quip products.</font></div></td></tr></table><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company does not install products for its customers, but it does provide technical advisory assistance. At the time of delivery of the product, the customer is not obligated to buy or rent the Company&#8217;s running tools and the Company is not obligated to perform any subsequent services relating to installation. Technical advisory assistance service revenue is recorded at the time the service is rendered. Service revenues associated with the rental of running and installation tools are recorded as earned. Rework and reconditioning service revenues are recorded when the refurbishment process is complete.</font></div><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company normally negotiates contracts for products, including those accounted for under the percentage-of-completion method, and services separately. For all product sales, it is the customer&#8217;s decision as to the timing of the product installation as well as whether Dril-Quip running tools will be purchased or rented. Furthermore, the customer is under no obligation to utilize the Company&#8217;s technical advisory assistance services. The customer may use a third party or their own personnel.</font></div></div>
us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;text-indent:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Use of Estimates</font></div><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Some of the Company&#8217;s more significant estimates are those affected by critical accounting policies for revenue recognition and valuation of inventories, contingent liabilities and fixed assets.</font></div></div>

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