United states

Note 10. Income Taxes

The income tax provision of $2.3 million and the income tax benefit of $0.1 million in the three months ended March 31, 2016 and 2015, respectively, are consistent with the year end tax provision calculations and are primarily due to the operating results in China and Mexico. The United States and Turkey operations have not had a significant change to the full valuation allowances recorded against their net operating loss carryforwards as of year end. No changes in tax law since December 31, 2015 have had a material impact on the Company’s income tax provision.

Note 11. Commitments and Contingencies

Legal Proceedings

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

In August 2015, a former consultant filed an arbitration claim in China that we improperly terminated his consulting agreement and is demanding that we reinstate his agreement. We believe that our termination of his agreement was valid and we intend to vigorously defend this matter.

 

F-14

Table of Contents

TPI COMPOSITES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

 

In March 2015, a complaint was filed against the Company by a former employee alleging that the Company had agreed to make certain cash payments to such employee upon any future sale of the Company. The parties completed court-ordered mediation in December 2015 but were not able to reach a settlement. We continue to deny the substantive allegations of the complaint and we intend to vigorously defend this lawsuit; however, we are currently unable to determine the ultimate outcome of this case.

Note 12. Concentration of Customers

Revenues from certain customers in excess of 10 percent of total consolidated Company revenues (in thousands) for the three months ended March 31 are as follows:

 

		2016								2015
Customer		Revenues				% of Total				Revenues				% of Total
Customer 1		$	96,151				54.6	%		$	50,822				53.2	%
Customer 2			29,941				17.0				4,091				4.3
Customer 3			19,523				11.1				15,336				16.0
Customer 4			18,137				10.3				10,784				11.3
Customer 5			10,141				5.8				14,273				14.9
Other			2,217				1.2				283				0.3
Total		$	176,110				100.0	%		$	95,589				100.0	%

Trade accounts receivable from certain customers in excess of 10 percent of total consolidated Company trade accounts receivable are as follows:

 

		March 31, 2016				December 31, 2015
Customer		% of Total				% of Total
Customer 1			27.3	%			26.5	%
Customer 2			25.3	%			27.9	%
Customer 3			31.2	%			24.4	%
Customer 5			7.6	%			14.9	%