United states

TPI COMPOSITES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Total depreciation for the years ended December 31, 2016, 2015 and 2014 was $12.7 million, $10.6 million and $6.7 million, respectively.

As of December 31, 2016, the cost and accumulated depreciation of property, plant and equipment that the Company is leasing under capital lease arrangements is $23.4 million and $4.4 million, respectively. As of December 31, 2015, the cost and accumulated depreciation of property, plant and equipment that the Company is leasing under capital lease arrangements is $13.8 million and $2.4 million, respectively.

Note 8. Intangible Assets, Net

Carrying values and estimated useful lives of intangible assets as of December 31, 2016, consisted of the following (in thousands):

 

		Estimated Useful Life				Cost				Accumulated Amortization				Net
Patents			13 years			$	2,000			$	(1,885	)		$	115
Trademarks			Indefinite				150				—				150
						$	2,150			$	(1,885	)		$	265

Carrying values and estimated useful lives of intangible assets as of December 31, 2015, consisted of the following (in thousands):

 

		Estimated Useful Life				Cost				Accumulated Amortization				Net
Patents			13 years			$	2,000			$	(1,731	)		$	269
Customer agreements			3 years 9 months				2,328				(2,328	)			—
Trademarks			Indefinite				150				—				150
						$	4,478			$	(4,059	)		$	419

The weighted-average remaining amortization period for the Company’s amortizable intangible assets is approximately 0.7 years and thus the amortizable intangible assets will be fully-amortized by December 31, 2017. During the years ended December 31, 2016, 2015 and 2014, the Company recorded amortization expense of $0.2 million, $0.8 million and $0.8 million, respectively.

Note 9. Other Noncurrent Assets

Other noncurrent assets at December 31 consisted of the following (in thousands):

 

		2016				2015
Restricted cash		$	8,538			$	2,537
Deferred tax assets			5,131				1,661
Land use right			1,648				1,796
Deposits			2,422				486
Other			2				120
Total other noncurrent assets		$	17,741			$	6,600

As of December 31, 2016 and 2015, the Company maintained long-term deposits in interest bearing accounts, related to fully cash-collateralized letters of credit in connection with the facility leases at its Mexico

 

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Table of Contents

TPI COMPOSITES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

locations, totaling $8.1 million and $2.1 million, respectively. The Company has also provided a fully cash-collateralized letter of credit in connection with an equipment lessor in Iowa totaling $0.4 million as of December 31, 2016 and 2015.

As a result of the refinancing of our previous credit facility, in the first quarter of 2017 $8.1 million of long-term deposits in interest bearing accounts, related to fully cash-collateralized letters of credit, were returned to the Company and applied against its letter of credit sub-facility under the Amended Credit Facility.

The land use right was purchased during 2007 and permits the Company to use the land where the Taicang Port, China facility, owned by the Company, is situated. The Company is amortizing the land use right on a straight-line basis over its 50 year life. Amortization of the land use right began upon the opening of the plant in 2008.

Note 10. Accrued Warranty

Warranty accrual at December 31 consisted of the following (in thousands):

 

		2016				2015				2014
Warranty accrual at beginning of year		$	13,596			$	5,916			$	3,748
Accrual during the year			18,886				10,653				3,211
Cost of warranty services provided during the year (1)			(10,808	)			(1,349	)			(548	)
Reduction of reserves			(1,762	)			(1,624	)			(495	)
Warranty accrual at end of year		$	19,912			$	13,596			$	5,916

 

(1)	The 2016 amount includes an 8.0 million Euro ($8.5 million) payment related to the Nordex settlement agreement.