SEC Company Response from LYDALL — May 20, 2005
LYDALL INC /DE/ (CIK 0000060977)
Date: May 20, 2005 · CIK: 0000060977 · Accession: 0001193125-05-112079
AI Filing Summary & Sentiment
Letter
Via EDGAR and Overnight Delivery Division of Corporation Finance United States Securities and Exchange Commission Lydall, Inc. Form 10-K for the fiscal year ended December 31, 2004 Filed March 16, 2005 File No. 1-07665
Dear Mr. Ohsiek:
This letter is furnished in response to your letter, dated April 21, 2005, providing comments on the above-captioned filing. For your convenience, we have reproduced below the text of the comments set forth in your April 21 letter, immediately after which we have provided our response.
SEC Comment No. 1 – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; Consolidated Results of Operations; Restructuring Activities; Page 10
Detailed discussions of restructuring charges are required in MD&A. MD&A currently describes certain aspects of your restructuring efforts; however, more detailed discussion should be provided in future annual and interim filings. Specifically, the expected effects on future earnings and cash flows resulting from the manufacturing consolidation plan should be quantified and disclosed, along with the initial period in which those effects are expected to be realized. This includes whether the cost savings are expected to be offset by anticipated increases in other expenses or reduced revenues. This discussion should clearly identify the income statement line items to be impacted. In later periods if actual savings anticipated by the consolidation plan are not achieved as expected or are achieved in periods other than as expected, MD&A should discuss that outcome, its reasons, and its likely effects on future operating results and liquidity. Refer to the disclosure guidance set forth in SAB Topic 5.P.4. Please revise in future filings.
Company Response
The Company, in response to the Commission’s comments above, has expanded its discussion of the restructuring activity related to the consolidation of its domestic automotive operations in its
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 2
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005, filed with the Commission on May 10, 2005 on Page 16 and will endeavor to provide additional expanded discussion in future filings, to the extent practical. The Company has specifically disclosed and quantified the restructuring cost accounted for in accordance with Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit and Disposal Activity,” related to the consolidation of its domestic automotive operations on earnings and cash flows through the period ended March 31, 2005, the future timing and amount of remaining restructuring costs to be incurred and the line items impacted in the Consolidated Statements of Operations. Additionally, the Company included a discussion of the operational benefits that have occurred and a statement that, although beneficial to the operation of the business, the restructuring has not translated into improved operating margins to-date, primarily due to the reallocation of costs to other operational efforts, higher than planned costs incurred to expand operations and production lines at the other automotive facilities and higher costs to integrate processes at the other domestic facilities that were realigned during this consolidation process. The Company further commented that although the restructuring activities, as well as the effects of lean manufacturing and other cost saving initiatives unrelated to the restructuring, are anticipated to lead to improvement in gross margin and operating income, the timing and extent of the impact on future earnings and cash flows specific to these efforts are not quantifiable at this time.
SEC Comment No. 2 – Filtration/Separation; Page 12
Where you describe two or more business reasons that contributed to a material change in a financial statement line item between periods, please quantify the extent to which each change contributed to the overall change in that line item, if practical. For example, where you provide a list of the contributing and offsetting factors to your increase in Filtration/Separation Segment net sales in fiscal year 2004, quantification of individual impacts should be provided. See Item 303(A) of Regulation S-K and Financial Reporting Codification 501.04. Please revise in future filings.
Company Response
The Company, in future filings, when describing two or more business reasons that contributed to a material change in a financial statement line item between comparative periods, will quantify the extent to which each change contributed to the overall change in a line item, when practical. In preparing the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005, the Company made a more focused effort to address the quantification of material impacts to financial statement and segment line items in all respects.
SEC Comment No. 3 – Liquidity and Capital Resources; Contractual Obligations; Page 15
Please revise your contractual obligations table in future filings to include estimated interest payments on your debt and planned funding of pension and other postretirement benefit obligations. Because the table is aimed at increasing transparency of cash flow, we believe interest payments should be included in the table. If you choose not to include these payments, a
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 3
footnote to the table should clearly identify the excluded item and provide any additional information that is material to an understanding of your cash requirements. See Section IV.A and footnote 46 to the Commission’s MD&A Guidance issued December 19, 2003 available at www.sec.gov.
Company Response
The Company will include, in its contractual obligations table, planned funding of pension obligations and estimated interest payments on debt in future filings, beginning with its Annual Report on Form 10-K for the fiscal year ending December 31, 2005. The Company disclosed its planned pension funding for 2005 in the Liquidity and Capital Resources section of its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 on Page 18. As interest payments on debt are not significant on a quarterly basis, the Company will begin including these estimated payments in its contractual obligations table in its Annual Report on Form 10-K for the fiscal year ending December 31, 2005. Additionally, the Company will footnote the estimated amounts of interest payments on debt to indicate that, as the Company’s debt payments and interest rates for a substantial portion of the Company’s outstanding debt are not fixed, actual payments may vary significantly from those included in the table depending on future debt levels, interest rate fluctuations, timing of debt repayments and sources of funding utilized.
SEC Comment No. 4 – Item 9A. Controls and Procedures; Page 19
In future filings, please revise your disclosure regarding changes to internal controls over financial reporting to identify “any changes,” not just “significant” changes, which have materially affected, or are reasonably likely to materially affect, your internal controls over financial reporting. See Item 308(c) of Regulation S-K. Also confirm to us supplementally that there were no changes in your internal controls over financial reporting.
Company Response
The Company will revise the disclosure under Item 9A. Controls and Procedures in its future Annual Reports on Form 10-K and under Item 4. Controls and Procedures in its future Quarterly Reports on Form 10-Q, as requested, and has made the requested change in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 on Page 20. Additionally, the Company hereby confirms that there were no changes in internal controls over financial reporting during the fourth quarter ended December 31, 2004 that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
SEC Comment No. 5 – Item 15. Exhibits, Financial Statement Schedules; Financial Statements; Consolidated Statements of Cash Flows; Page F-5
In future filings, please remove the subtotal captioned “total adjustments”. The only subtotal that should be included within the operating section of the statements of cash flows is the subtotal for net cash provided by or used in operating activities.
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 4
Company Response
The Company will remove the referenced subtotal caption on the Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Cash Flows in its future filings with the Commission. This change was made in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 on Page 5.
SEC Comment No. 6 – Consolidated Statements of Changes in Stockholders’ Equity; Page F-6
In future filings, please include a column that reconciles the changes in the number of shares of common stock issued between years. See paragraph 10 of APB 12.
Company Response
The Company will include a column on the Consolidated Statements of Changes in Stockholders’ Equity that reconciles the changes in the number of shares of common stock issued between years in future filings of its Annual Report on Form 10-K, beginning with the Annual Report on Form 10-K for the fiscal year ending December 31, 2005.
SEC Comment No. 7 – Notes to Consolidated Financial Statements; Note 1. Significant Accounting Policies; General
Pursuant to EITF 00-10, in future filings please disclose in the footnotes your policy for classifying shipping and handling costs in the statements of operations. If shipping and handling costs are not classified in cost of sales, please disclose the amount of these costs and the line item(s) that include them.
Company Response
The Company will disclose in the Notes to Consolidated Financial Statements its accounting policy for classifying shipping and handling costs in its Statement of Operations in future filings of its Annual Report on Form 10-K beginning with the Annual Report on Form 10-K for the fiscal year ending December 31, 2005. To provide interested parties with this information as currently as possible, this accounting policy was disclosed in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 on Page 6, and will be included in subsequent filed Quarterly Reports on Form 10-Q during 2005, as follows:
“Shipping and handling costs consist primarily of costs incurred to deliver products to customers and internal costs related to preparing products for shipment and are recorded in cost of sales.”
While reviewing the Company’s disclosure with respect to the classification of shipping and handling costs, as required pursuant to Emerging Issues Task Force Issue No. 00-10, “Accounting for Shipping and Handling Fees and Costs” (EITF 00-10), the Company identified some inconsistent treatment within its operations of amounts charged to customers for shipping
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 5
costs. Although costs incurred for shipping and handling are recorded in cost of sales throughout the Company’s operations, certain operations within the Company have been recording amounts billed to customers for shipping costs as an offset to the corresponding cost incurred by the Company recorded in cost of sales. EITF 00-10 specifies that amounts billed to a customer in a sale transaction represent revenues earned for the goods provided and should be classified as revenue. The impact of this misclassification by these operations for the year ended December 31, 2004 was less than ½ of 1 percent of both consolidated net sales and cost of sales and does not impact income from continuing operations or net income on a consolidated basis. The Company does not consider this to be material to the amounts previously reported in its Consolidated Statements of Operations. Therefore, the Company will reclassify the amounts previously disclosed in comparative periods and adjust the current period disclosure beginning with its Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2005.
SEC Comment No. 8 – Pre-Production Design and Development Costs; Page F-7
In future filings, please revise your disclosure to clarify how the terms of your long-term supply arrangements support your capitalization of pre-production design and development/tooling costs under EITF 99-5. Please also disclose the aggregate amount of: 1) assets recognized pursuant to agreements that provide for contractual reimbursement of pre-production design and development costs; 2) assets recognized for molds, dies and other tools that you own; and 3) assets recognized for molds, dies and other tools that you do not own. Refer to paragraph 6 of EITF 99-5. Show us supplementally how the revised disclosures will read.
Company Response
The Company will augment its current disclosure in future filings to clarify how the terms of its long-term supply arrangements support capitalization of pre-production design and development costs (“tooling” costs) under Emerging Issues Task Force Issue No. 99-5, “Accounting for Pre-Production Costs Related to Long-Term Supply Arrangements” (EITF 99-5). Additionally, it will clarify the disclosures regarding the aggregate amounts of assets recognized, as required under EITF 99-5 to fully identify the specific assets recognized and related amounts. The net book value of Company owned tooling was $0.3 million as of December 31, 2004 and 2003 and the Company does not consider this to be material on a consolidated basis under the requirements of EITF 99-5. The Company will include a statement to that effect in its future filings. Assets recognized pursuant to tooling sales arrangements that provide for contractual reimbursement of tooling costs, net of progress payments, amounted to $7.3 million and $7.5 million as of December 31, 2004 and 2003, respectively. Such amounts have been classified as “Inventories, net of progress billings.” Amounts classified as “Prepaid expenses and other current assets, net” and “Other assets, net” as of December 31, 2004 and 2003 of $0.9 million and $1.1 million, respectively and $1.5 million and $2.1 million, respectively, were assets recognized related to customer owned tooling, which represent amounts due to the Company under contractual reimbursement arrangements.
To provide interested parties with this expanded information as currently as possible, this expanded accounting policy was disclosed in the Company’s Quarterly Report on Form 10-Q for
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 6
the quarterly period ended March 31, 2005 beginning on page 6, and will be included in subsequent filed Quarterly Reports on Form 10-Q during 2005. Additionally, the 2004 disclosure, updated with the expanded information, has been provided below in response to the Commission’s request to review how the planned disclosure will read in the Company’s subsequently filed Annual Reports on Form 10-K:
Pre-production design and development costs – The Company enters into contractual agreements with certain customers to design and develop molds, dies and tools (collectively, “tooling”). The Company accounts for these pre-production design and development costs pursuant to Emerging Issues Task Force Issue No. 99-5, “Accounting for Pre-Production Costs Related to Long-Term Supply Arrangements” (EITF 99-5). The majority of all tooling contracts are executed u
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Response Letter
Lydall, Inc.
Telephone 860 646-1233
One Colonial Road
Facsimile 860 646-4917
P.O. Box 151
Facsimile 860 646-8847
Manchester, CT 06045-0151
www.lydall.com
May 20, 2005
Via EDGAR and Overnight Delivery
Mr. George F. Ohsiek, Jr., Branch Chief
Division of Corporation Finance
United States Securities and Exchange Commission
450 Fifth
Street, N.W.
Washington, D.C. 20549
Re:
Lydall, Inc.
Form 10-K for the fiscal year ended December 31, 2004
Filed March 16, 2005
File No. 1-07665
Dear Mr. Ohsiek:
This letter is furnished in response to your letter, dated April 21, 2005, providing
comments on the above-captioned filing. For your convenience, we have reproduced below the text of the comments set forth in your April 21 letter, immediately after which we have provided our response.
SEC Comment No. 1 – Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations; Consolidated Results of Operations; Restructuring Activities; Page 10
Detailed discussions of restructuring charges are required in MD&A. MD&A currently describes certain aspects of your restructuring efforts; however, more detailed
discussion should be provided in future annual and interim filings. Specifically, the expected effects on future earnings and cash flows resulting from the manufacturing consolidation plan should be quantified and disclosed, along with the initial
period in which those effects are expected to be realized. This includes whether the cost savings are expected to be offset by anticipated increases in other expenses or reduced revenues. This discussion should clearly identify the income statement
line items to be impacted. In later periods if actual savings anticipated by the consolidation plan are not achieved as expected or are achieved in periods other than as expected, MD&A should discuss that outcome, its reasons, and its likely
effects on future operating results and liquidity. Refer to the disclosure guidance set forth in SAB Topic 5.P.4. Please revise in future filings.
Company Response
The Company, in response to the Commission’s comments above, has expanded its discussion of the restructuring activity related to the consolidation of its domestic automotive operations in its
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 2
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005, filed with the Commission on May 10, 2005 on Page 16 and will endeavor to provide additional
expanded discussion in future filings, to the extent practical. The Company has specifically disclosed and quantified the restructuring cost accounted for in accordance with Statement of Financial Accounting Standards No. 146, “Accounting for
Costs Associated with Exit and Disposal Activity,” related to the consolidation of its domestic automotive operations on earnings and cash flows through the period ended March 31, 2005, the future timing and amount of remaining restructuring
costs to be incurred and the line items impacted in the Consolidated Statements of Operations. Additionally, the Company included a discussion of the operational benefits that have occurred and a statement that, although beneficial to the operation
of the business, the restructuring has not translated into improved operating margins to-date, primarily due to the reallocation of costs to other operational efforts, higher than planned costs incurred to expand operations and production lines at
the other automotive facilities and higher costs to integrate processes at the other domestic facilities that were realigned during this consolidation process. The Company further commented that although the restructuring activities, as well as the
effects of lean manufacturing and other cost saving initiatives unrelated to the restructuring, are anticipated to lead to improvement in gross margin and operating income, the timing and extent of the impact on future earnings and cash flows
specific to these efforts are not quantifiable at this time.
SEC Comment
No. 2 – Filtration/Separation; Page 12
Where you describe two or
more business reasons that contributed to a material change in a financial statement line item between periods, please quantify the extent to which each change contributed to the overall change in that line item, if practical. For example, where you
provide a list of the contributing and offsetting factors to your increase in Filtration/Separation Segment net sales in fiscal year 2004, quantification of individual impacts should be provided. See Item 303(A) of Regulation S-K and Financial
Reporting Codification 501.04. Please revise in future filings.
Company
Response
The Company, in future filings, when describing two or more
business reasons that contributed to a material change in a financial statement line item between comparative periods, will quantify the extent to which each change contributed to the overall change in a line item, when practical. In preparing the
Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005, the Company made a more focused effort to address the quantification of material impacts to financial statement and segment line items in all respects.
SEC Comment No. 3 – Liquidity and Capital Resources; Contractual
Obligations; Page 15
Please revise your contractual obligations table
in future filings to include estimated interest payments on your debt and planned funding of pension and other postretirement benefit obligations. Because the table is aimed at increasing transparency of cash flow, we believe interest payments
should be included in the table. If you choose not to include these payments, a
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 3
footnote to the table should clearly identify the excluded item and provide any additional information that is material to an understanding of your cash requirements. See
Section IV.A and footnote 46 to the Commission’s MD&A Guidance issued December 19, 2003 available at www.sec.gov.
Company Response
The Company will include, in its contractual obligations table, planned funding of pension obligations and estimated interest payments on debt in future filings, beginning with its Annual Report on Form 10-K for the
fiscal year ending December 31, 2005. The Company disclosed its planned pension funding for 2005 in the Liquidity and Capital Resources section of its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 on Page 18. As
interest payments on debt are not significant on a quarterly basis, the Company will begin including these estimated payments in its contractual obligations table in its Annual Report on Form 10-K for the fiscal year ending December 31, 2005.
Additionally, the Company will footnote the estimated amounts of interest payments on debt to indicate that, as the Company’s debt payments and interest rates for a substantial portion of the Company’s outstanding debt are not fixed,
actual payments may vary significantly from those included in the table depending on future debt levels, interest rate fluctuations, timing of debt repayments and sources of funding utilized.
SEC Comment No. 4 – Item 9A. Controls and Procedures; Page 19
In future filings, please revise your disclosure regarding changes to internal controls
over financial reporting to identify “any changes,” not just “significant” changes, which have materially affected, or are reasonably likely to materially affect, your internal controls over financial reporting. See Item 308(c)
of Regulation S-K. Also confirm to us supplementally that there were no changes in your internal controls over financial reporting.
Company Response
The Company will revise the disclosure under Item 9A. Controls and Procedures in its future Annual Reports on Form 10-K and under Item 4. Controls and Procedures in its future Quarterly Reports on Form 10-Q, as
requested, and has made the requested change in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 on Page 20. Additionally, the Company hereby confirms that there were no changes in internal controls over financial
reporting during the fourth quarter ended December 31, 2004 that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
SEC Comment No. 5 – Item 15. Exhibits, Financial Statement Schedules; Financial
Statements; Consolidated Statements of Cash Flows; Page F-5
In future
filings, please remove the subtotal captioned “total adjustments”. The only subtotal that should be included within the operating section of the statements of cash flows is the subtotal for net cash provided by or used in operating
activities.
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 4
Company Response
The Company will remove the referenced subtotal caption on the Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Cash Flows in its future filings with the Commission. This change was made
in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 on Page 5.
SEC Comment No. 6 – Consolidated Statements of Changes in Stockholders’ Equity; Page F-6
In future filings, please include a column that reconciles the changes in the number of shares of common stock issued between years. See paragraph 10 of APB 12.
Company Response
The Company will include a column on the Consolidated Statements of Changes in
Stockholders’ Equity that reconciles the changes in the number of shares of common stock issued between years in future filings of its Annual Report on Form 10-K, beginning with the Annual Report on Form 10-K for the fiscal year ending December
31, 2005.
SEC Comment No. 7 – Notes to Consolidated Financial
Statements; Note 1. Significant Accounting Policies; General
Pursuant
to EITF 00-10, in future filings please disclose in the footnotes your policy for classifying shipping and handling costs in the statements of operations. If shipping and handling costs are not classified in cost of sales, please disclose the amount
of these costs and the line item(s) that include them.
Company
Response
The Company will disclose in the Notes to Consolidated
Financial Statements its accounting policy for classifying shipping and handling costs in its Statement of Operations in future filings of its Annual Report on Form 10-K beginning with the Annual Report on Form 10-K for the fiscal year ending
December 31, 2005. To provide interested parties with this information as currently as possible, this accounting policy was disclosed in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 on Page 6, and
will be included in subsequent filed Quarterly Reports on Form 10-Q during 2005, as follows:
“Shipping and handling costs consist primarily of costs incurred to deliver products to customers and internal costs related to preparing products for shipment and are recorded in cost of sales.”
While reviewing the Company’s disclosure with respect to the classification of
shipping and handling costs, as required pursuant to Emerging Issues Task Force Issue No. 00-10, “Accounting for Shipping and Handling Fees and Costs” (EITF 00-10), the Company identified some inconsistent treatment within its operations
of amounts charged to customers for shipping
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 5
costs. Although costs incurred for shipping and handling are recorded in cost of sales throughout the Company’s operations, certain operations within the Company
have been recording amounts billed to customers for shipping costs as an offset to the corresponding cost incurred by the Company recorded in cost of sales. EITF 00-10 specifies that amounts billed to a customer in a sale transaction represent
revenues earned for the goods provided and should be classified as revenue. The impact of this misclassification by these operations for the year ended December 31, 2004 was less than ½ of 1 percent of both consolidated net sales and cost of
sales and does not impact income from continuing operations or net income on a consolidated basis. The Company does not consider this to be material to the amounts previously reported in its Consolidated Statements of Operations. Therefore, the
Company will reclassify the amounts previously disclosed in comparative periods and adjust the current period disclosure beginning with its Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2005.
SEC Comment No. 8 – Pre-Production Design and Development Costs; Page F-7
In future filings, please revise your disclosure to clarify how the terms
of your long-term supply arrangements support your capitalization of pre-production design and development/tooling costs under EITF 99-5. Please also disclose the aggregate amount of: 1) assets recognized pursuant to agreements that provide for
contractual reimbursement of pre-production design and development costs; 2) assets recognized for molds, dies and other tools that you own; and 3) assets recognized for molds, dies and other tools that you do not own. Refer to paragraph 6 of EITF
99-5. Show us supplementally how the revised disclosures will read.
Company Response
The Company will augment its current
disclosure in future filings to clarify how the terms of its long-term supply arrangements support capitalization of pre-production design and development costs (“tooling” costs) under Emerging Issues Task Force Issue No. 99-5,
“Accounting for Pre-Production Costs Related to Long-Term Supply Arrangements” (EITF 99-5). Additionally, it will clarify the disclosures regarding the aggregate amounts of assets recognized, as required under EITF 99-5 to fully identify
the specific assets recognized and related amounts. The net book value of Company owned tooling was $0.3 million as of December 31, 2004 and 2003 and the Company does not consider this to be material on a consolidated basis under the requirements of
EITF 99-5. The Company will include a statement to that effect in its future filings. Assets recognized pursuant to tooling sales arrangements that provide for contractual reimbursement of tooling costs, net of progress payments, amounted to $7.3
million and $7.5 million as of December 31, 2004 and 2003, respectively. Such amounts have been classified as “Inventories, net of progress billings.” Amounts classified as “Prepaid expenses and other current assets, net” and
“Other assets, net” as of December 31, 2004 and 2003 of $0.9 million and $1.1 million, respectively and $1.5 million and $2.1 million, respectively, were assets recognized related to customer owned tooling, which represent amounts due to
the Company under contractual reimbursement arrangements.
To provide
interested parties with this expanded information as currently as possible, this expanded accounting policy was disclosed in the Company’s Quarterly Report on Form 10-Q for
Mr. George F. Ohsiek, Jr.
May 20, 2005
Page 6
the quarterly period ended March 31, 2005 beginning on page 6, and will be included in subsequent filed Quarterly Reports on Form 10-Q during 2005. Additionally, the 2004
disclosure, updated with the expanded information, has been provided below in response to the Commission’s request to review how the planned disclosure will read in the Company’s subsequently filed Annual Reports on Form 10-K:
Pre-production design and development costs – The Company enters into
contractual agreements with certain customers to design and develop molds, dies and tools (collectively, “tooling”). The Company accounts for these pre-production design and development costs pursuant to Emerging Issues Task Force Issue
No. 99-5, “Accounting for Pre-Production Costs Related to Long-Term Supply Arrangements” (EITF 99-5). The majority of all tooling contracts are executed u