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TPI COMPOSITES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

stockholders that own (directly or indirectly) 5% or more of the stock of a corporation, or arising from a new issuance of stock by a corporation. If an ownership change occurs, Section 382 generally imposes an annual limitation on the use of pre-ownership change net operating losses to offset taxable income earned after the ownership change. The annual limitation is equal to the product of the applicable long-term tax exempt rate and the value of the company’s stock immediately before the ownership change. This annual limitation may be adjusted to reflect any unused annual limitation for prior years and certain recognized built-in gains and losses for the year. In addition, Section 383 generally limits the amount of tax liability in any post-ownership change year that can be reduced by pre-ownership change tax credit carryforwards. At the end of 2008, the Company had an “ownership change” and the pre-ownership change net operating losses existing at the date of change of $25.6 million are subject to an annual limitation of $4.3 million. As of December 31, 2015, the remaining pre-ownership change net operating losses of approximately $20.5 million are no longer limited. Certain of these net operating losses may be at risk of limitation in the event of a future ownership change.

The Company’s policy regarding uncertain tax positions is to recognize potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2015, the Company has not identified any uncertain tax positions.

The Company operates in and files income tax returns in various jurisdictions in China, Mexico, Turkey and the U.S., which are subject to examination by tax authorities. With few exceptions, the Company is no longer subject to income tax examinations for years before 2010.

Note 19. Concentration of Customers

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

 

		2015								2014								2013
Customer		Revenues				% of Total				Revenues				% of Total				Revenues				% of Total
Customer 1		$	312,495				53.3	%		$	234,795				73.2	%		$	196,141				91.2	%
Customer 2			91,903				15.7				42,956				13.4				8,825				4.1
Customer 3			63,024				10.8				26,427				8.2				—				—
Customer 4			60,544				10.3				13,501				4.2				—				—
Other			57,886				9.9				3,068				1.0				10,088				4.7
Total		$	585,852				100.0	%		$	320,747				100.0	%		$	215,054				100.0	%

Trade accounts receivable from certain customers in excess of 10 percent of total consolidated Company trade accounts receivable at December 31 are as follows:

 

		2015				2014
Customer			% of Total				% of Total
Customer 1			26.5%				33.2%
Customer 2			24.4%				43.9%
Customer 3			14.9%				15.8%
Customer 5			27.9%				0.0%

 

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TPI COMPOSITES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Note 20. Segment Reporting

FASB ASC Topic 280, Segment Reporting , establishes standards for the manner in which companies report financial information about operating segments, products, services, geographic areas and major customers. In managing the Company’s business, management focuses on growing its revenues and earnings in select geographic areas serving primarily the wind energy market. The Company has operations in the United States, China, Turkey and Mexico. The Company’s operating segments are defined geographically as the United States, Asia, EMEA (Europe, the Middle East and Africa) and Mexico. Financial results are aggregated into four reportable segments based on quantitative thresholds. All of the Company’s segments operate in their local currency except for the Mexico and Asia segments, which both include a U.S. parent company.

The following tables set forth certain information regarding each of the Company’s segments for the years ended December 31 (in thousands):

 

		2015				2014				2013
Revenues by Segment:
U.S.		$	149,614			$	145,691			$	160,600
Asia			206,779				79,325				37,045
EMEA			131,547				67,006				17,409
Mexico			97,912				28,725				—
Total Revenues		$	585,852			$	320,747			$	215,054
Revenues by Geographic Location (1):
United States		$	149,614			$	145,691			$	160,600
China			206,779				79,325				37,045
Turkey			131,547				67,006				17,409
Mexico			97,912				28,725				—
Total Revenues		$	585,852			$	320,747			$	215,054
Depreciation and amortization:
U.S.		$	3,477			$	3,342			$	3,333
Asia			4,181				1,899				1,380
EMEA			2,225				1,683				537
Mexico			1,533				517				—
Total depreciation and amortization		$	11,416			$	7,441			$	5,250
Capital Expenditures
U.S.		$	5,379			$	808			$	737
Asia			15,632				8,903				1,119
EMEA			2,453				4,789				3,187
Mexico			2,897				4,424				2,022
Total capital expenditures		$	26,361			$	18,924			$	7,065
Income (loss) from operations:
U.S.		$	(13,405	)		$	(1,199	)		$	8,381
Asia			34,998				14,771				3,807
EMEA			(1,505	)			(1,528	)			(8,619	)
Mexico			7,531				(6,567	)			(2,870	)
Total income from operations		$	27,619			$	5,477			$	699

 

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