Component: (Network and Table) | |
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Network | 020 - Disclosure - Accounting Policies, by Policy (Policies) (http://www.aegion.com/role/AccountingPoliciesByPolicy) |
Table | Statement [Table] |
Reporting Entity [Axis] | 0000353020 (http://www.sec.gov/CIK) |
Scenario [Axis] | Scenario, Unspecified [Domain] |
Statement [Line Items] | Period [Axis] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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2012-01-01 - 2012-12-31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation, Policy [Policy Text Block] | Principles
of Consolidation
The
consolidated financial statements include the accounts of the
Company, its wholly-owned subsidiaries and majority-owned
subsidiaries in which the Company is deemed to be the primary
beneficiary. All significant intercompany transactions and
balances have been eliminated. Additionally, certain prior
year amounts have been reclassified to conform to the current
year presentation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates, Policy [Policy Text Block] | Accounting
Estimates
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign
Currency Translation
For
the Company’s international subsidiaries, the local
currency is generally the functional currency. Assets and
liabilities of these subsidiaries are translated into U.S.
dollars using rates in effect at the balance sheet date while
revenues and expenses are translated into U.S. dollars using
average exchange rates. The cumulative translation adjustment
resulting from changes in exchange rates are included in the
consolidated balance sheets as a component of accumulated
other comprehensive income (loss) in total
stockholders’ equity. Net foreign exchange transaction
gains (losses) are included in other income (expense) in the
consolidated statements of operations.
The
Company’s accumulated other comprehensive income is
comprised of three main components (i) currency translation,
(ii) derivatives and (iii) gains and losses associated with
the Company’s defined benefit plan in the United
Kingdom. The significant majority of the activity during any
given period is related to the currency translation
adjustment.
As
of December 31, 2012 and 2011, respectively, the Company
had $16.3 million and $6.9 million related to currency
translation adjustments, $(0.8) million and $(0.6) million
related to derivative transactions and $(0.2) million and
$(0.4) million related to pension activity in accumulated
other comprehensive income (loss). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and Development Expense, Policy [Policy Text Block] | Research
and Development
The
Company expenses research and development costs as incurred.
Research and development costs of $1.8 million, $2.2 million
and $2.7 million for the years ended December 31, 2012, 2011
and 2010, respectively, are included in operating expenses in
the accompanying consolidated statements of income. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax, Policy [Policy Text Block] | Taxation
The
Company provides for estimated income taxes payable or
refundable on current year income tax returns as well as the
estimated future tax effects attributable to temporary
differences and carryforwards, based upon enacted tax laws
and tax rates, and in accordance with FASB ASC 740, Income
Taxes (“FASB ASC 740”). FASB ASC 740 also
requires that a valuation allowance be recorded against any
deferred tax assets that are not likely to be realized in the
future. Refer to Note 8 for additional information regarding
taxes on income. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Equity-Based
Compensation
The
Company records expense for equity-based compensation awards,
including restricted shares of common stock, performance
awards, stock options and stock units based on the fair value
recognition provisions contained in FASB ASC 718, Compensation
– Stock Compensation (“FASB ASC
718”). The Company records the expense using a
straight-line basis over the vesting period of the award.
Fair value of stock option awards is determined using an
option pricing model. Assumptions regarding volatility,
expected term, dividend yield and risk-free rate are required
for valuation of stock option awards. Volatility and expected
term assumptions are based on the Company’s historical
experience. The risk-free rate is based on a U.S. Treasury
note with a maturity similar to the option award’s
expected term. Fair value of restricted stock, restricted
stock unit and deferred stock unit awards is determined using
the Company’s closing stock price on the award date.
The shares of restricted stock and restricted stock units
that are awarded are subject to performance and/or service
restrictions. The Company makes forfeiture rate assumptions
in connection with the valuation of restricted stock and
restricted stock unit awards that could be different than
actual experience. During 2012, the Company introduced
three-year performance based stock unit awards for a number
of its key employees. These awards are subject to
performance and service restrictions. The awards contain
financial targets for each year in the three-year performance
period as well as cumulative totals. These awards have a
threshold, target and maximum amount of shares that can be
awarded based on the Company’s financial results for
each year and cumulative three- year period. These awards are
subject to both a quantitative and qualitative review by the
Compensation Committee of the Board of Directors. The awards
allow an employee to earn back a portion of the shares that
were unearned in a prior year, if cumulative performance
targets are met. Discussion of the Company’s
application of FASB ASC 718 is described in Note 7. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition, Policy [Policy Text Block] | Revenues
Revenues
include construction, engineering and installation revenues
that are recognized using the percentage-of-completion method
of accounting in the ratio of costs incurred to estimated
final costs. Contract costs include all direct material and
labor costs and those indirect costs related to contract
performance, such as indirect labor, supplies, tools and
equipment costs. Since the financial reporting of these
contracts depends on estimates, which are assessed
continually during the term of these contracts, recognized
revenues and profit are subject to revisions as the contract
progresses to completion. Revisions in profit estimates are
reflected in the period in which the facts that give rise to
the revision become known; if material, the effects of any
changes in estimates are disclosed in the notes to the
consolidated financial statements and in the
Management’s Discussion and Analysis section of this
report. When estimates indicate that a loss will be incurred
on a contract, a provision for the expected loss is recorded
in the period in which the loss becomes evident. At December
31, 2012, 2011 and 2010, the Company had provided $0.6
million, $0.9 million and $0.8 million, respectively, for
expected losses on contracts. Revenues from change orders,
extra work and variations in the scope of work are recognized
when it is probable that they will result in additional
contract revenue and when the amount can be reliably
estimated. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share, Policy [Policy Text Block] | Earnings
per Share
Earnings
per share have been calculated using the following share
information:
The
Company excluded 223,536, 189,202 and 265,268 stock options
in 2012, 2011 and 2010, respectively, from the diluted
earnings per share calculations for the Company’s
common stock because they were anti-dilutive as their
exercise prices were greater than the average market price of
common shares for each period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Construction Contractors, Operating Cycle, Policy [Policy Text Block] | Classification
of Current Assets and Current Liabilities
The
Company includes in current assets and current liabilities
certain amounts realizable and payable under construction
contracts that may extend beyond one year. The construction
periods on projects undertaken by the Company generally range
from less than one month to 24 months. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash,
Cash Equivalents and Restricted Cash
The
Company classifies highly liquid investments with original
maturities of 90 days or less as cash equivalents. Recorded
book values are reasonable estimates of fair value for cash
and cash equivalents. Restricted cash consists of payments
from certain customers placed in escrow in lieu of retention
in case of potential issues regarding future job performance
by the Company or advance customer payments and compensating
balances for bank undertakings in Europe. Restricted cash is
similar to retainage and is therefore classified as a current
asset, consistent with the Company’s policy on
retainage. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, Policy [Policy Text Block] | Inventories
Inventories
are stated at the lower of cost (first-in, first-out) or
market. Actual cost is used to value raw materials and
supplies. Standard cost, which approximates actual cost, is
used to value work-in-process, finished goods and
construction materials. Standard cost includes direct labor,
raw materials and manufacturing overhead based on normal
capacity. For certain businesses within our Energy and Mining
segment, the Company uses actual costs or average costs for
all classes of inventory. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade and Other Accounts Receivable, Policy [Policy Text Block] | Retainage
Many
of the contracts under which the Company performs work
contain retainage provisions. Retainage refers to that
portion of revenue earned by the Company but held for payment
by the customer pending satisfactory completion of the
project. The Company generally invoices its customers
periodically as work is completed. Under ordinary
circumstances, collection from municipalities is made within
60 to 90 days of billing. In most cases, 5% to 15% of the
contract value is withheld by the municipal owner pending
satisfactory completion of the project. Collections from
other customers are generally made within 30 to 45 days of
billing. Unless reserved, the Company believes
that all amounts retained by customers under such provisions
are fully collectible. Retainage on active contracts is
classified as a current asset regardless of the term of the
contract. Retainage is generally collected within one year of
the completion of a contract, although collection can extend
beyond one year from time to time. As
of December 31, 2012, retainage receivables aged greater than
365 days approximated 9% of the total retainage balance and
collectibility was assessed as described in the allowance for
doubtful accounts section below. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy | Allowance for Doubtful Accounts Management makes estimates of the uncollectibility of accounts receivable and retainage. The Company records an allowance based on specific accounts to reduce receivables, including retainage, to the amount that is expected to be collected. The specific allowances are reevaluated and adjusted as additional information is received. After all reasonable attempts to collect the receivable or retainage have been explored, the account is written off against the allowance. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Long-Lived
Assets
Property,
plant and equipment and other identified intangibles
(primarily customer relationships, patents and acquired
technologies, trademarks, licenses, contract backlog and
non-compete agreements) are recorded at cost and, except for
goodwill and certain trademarks, are depreciated or amortized
on a straight-line basis over their estimated useful lives.
Changes in circumstances such as technological advances,
changes to the Company’s business model or changes in
the Company’s capital strategy can result in the actual
useful lives differing from the Company’s estimates. If
the Company determines that the useful life of its property,
plant and equipment or its identified intangible assets
should be changed, the Company would depreciate or amortize
the net book value in excess of the salvage value over its
revised remaining useful life, thereby increasing or
decreasing depreciation or amortization expense.
Long-lived
assets, including property, plant and equipment and other
intangibles, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Such impairment tests are
based on a comparison of undiscounted cash flows to the
recorded value of the asset. The estimate of cash flow is
based upon, among other things, assumptions about expected
future operating performance. The Company’s estimates
of undiscounted cash flow may differ from actual cash flow
due to, among other things, technological changes, economic
conditions, changes to its business model or changes in its
operating performance. If the sum of the undiscounted cash
flows (excluding interest) is less than the carrying value,
the Company recognizes an impairment loss, measured as the
amount by which the carrying value exceeds the fair value of
the asset. The Company did not identify any long-lived assets
of its continuing operations as being impaired during 2012,
2011 or 2010. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill
Under
FASB ASC 350, Intangibles
–
Goodwill
and Other (“FASB ASC 350”), the Company
assesses recoverability of goodwill on an annual basis or
when events or changes in circumstances indicate that the
carrying amount of goodwill may not be recoverable. The
annual assessment was last completed as of October 1, 2012.
See Note 4 for additional information regarding goodwill by
operating segment. Factors that could potentially trigger an
interim impairment review include (but are not limited
to):
In
accordance with the provisions of FASB ASC 350, the Company
determined the fair value of its reporting units at the
annual impairment assessment date and compared such fair
value to the carrying value of those reporting units to
determine if there was any indication of goodwill impairment.
The Company’s reporting units for purposes of assessing
goodwill are North American Water and Wastewater, European
Water and Wastewater, Asia-Pacific Water and Wastewater,
United Pipeline Systems, Bayou, Corrpro, CRTS, Fyfe NA, Fyfe
LA and Fyfe Asia.
Fair
value of reporting units is determined using a combination of
two valuation methods: a market approach and an income
approach with each method given equal weight in determining
the fair value assigned to each reporting unit. Absent an
indication of fair value from a potential buyer or similar
specific transaction, the Company believes the use of these
two methods provides a reasonable estimate of a reporting
unit’s fair value. Assumptions common to both methods
are operating plans and economic projections, which are used
to project future revenues, earnings and after tax cash flows
for each reporting unit. These assumptions are applied
consistently for both methods.
The
market approach estimates fair value by first determining
EBITDA multiples for comparable publicly-traded companies
with similar characteristics of the reporting unit. The
EBITDA multiples for comparable companies is based upon
current enterprise value. The enterprise value is based upon
current market capitalization and includes a control premium.
Management believes this approach is appropriate because it
provides a fair value estimate using multiples from entities
with operations and economic characteristics comparable to
the Company’s reporting units.
The
income approach is based on projected future (debt-free) cash
flows that are discounted to present value using factors that
consider timing and risk of future cash flows. Management
believes this approach is appropriate because it provides a
fair value estimate based upon the reporting unit’s
expected long-term operating cash flow performance.
Discounted cash flow projections are based on financial
forecasts developed from operating plans and economic
projections, growth rates, estimates of future expected
changes in operating margins, terminal value growth rates,
future capital expenditures and changes in working capital
requirements.
Estimates
of discounted cash flows may differ from actual cash flows
due to, among other things, changes in economic conditions,
changes to business models, changes in the Company’s
weighted average cost of capital or changes in operating
performance. An impairment charge will be recognized to the
extent that the implied fair value of a reporting unit is
less than the related carrying value.
Significant
assumptions used in the Company’s October 2012 goodwill
review included: (i) compounding annual growth rates
generally ranging from 3% to 15%; (ii) sustained or slightly
increased gross margins; (iii) peer group EBITDA multiples;
(iv) terminal values for each reporting unit using a
long-term growth rate of 1% to 3.5%; and (v) discount rates
ranging from 13.0% to 17.5%. If actual results differ from
estimates used in these calculations, the Company could incur
future impairment charges. For purposes of the goodwill
review, the Company has ten reporting units. During the
assessment of its ten reporting units’ fair values in
relation to their respective carrying values, five had a fair
value in excess of 35% of their carrying value and five were
within 15% percent of their carrying value. The total value
of goodwill recorded at the impairment testing date for the
latter five was $139.0 million. Included in these five was
Fyfe NA, Fyfe LA and Fyfe Asia, all of which were acquired
within thirteen months of the goodwill test date.
Accordingly, it is expected that their fair values would
approximate their carrying values. In addition, the
Company’s European Water and Wastewater’s fair
value exceeded its carrying value by just 2.6%. Due to the
recent macroeconomic issues throughout Europe, the fair value
of this reporting unit decreased $17.2 million, or 17.4%,
from the prior year analysis. As with all of its reporting
units, the Company continuously monitors potential trigger
events that may cause an interim impairment valuation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments, Policy [Policy Text Block] | Investments
in Affiliated Companies
The
Company holds one-half of the equity interests in Insituform
Rohrsanierungstechniken GmbH
(“Insituform-Germany”), through its indirect
subsidiary, Insituform Technologies Limited (UK). The
Company, through its subsidiary, Insituform Technologies
Netherlands BV, owns a forty-nine percent (49%) equity
interest in WCU Corrosion Technologies Pte. Ltd. The Company,
through its subsidiary, Bayou, owns a forty-nine percent
(49%) equity interest in Bayou Coating. Starting in January
2014, and solely during the month of January in each calendar
year thereafter, the Company’s equity partner in Bayou
Coating, the Stupp Brothers, Inc.
(“Stupp”), has the option to acquire (i) the
assets of Bayou Coating at their book value as of the end of
the prior fiscal year, or (ii) the equity interest of Bayou
in Bayou Coating at forty-nine percent (49%) of the value of
Bayou Coating, as
of the end of the prior fiscal year, with such book value to
be determined on the basis of Bayou Coating’s federal
information tax return for such fiscal year. At
this point, the Company does not have any indication of
Stupp’s intent to exercise the call
option.
Investments
in entities in which the Company does not have control or is
not the primary beneficiary of a variable interest entity,
and for which the Company has 20% to 50% ownership and has
the ability to exert significant influence are accounted for
by the equity method. At December 31, 2012 and 2011, the
investments in affiliated companies on the Company’s
consolidated balance sheet were $19.2 million and $19.3
million, respectively.
Net
income presented below for 2012 includes Bayou
Coating’s forty-one percent (41%) interest in Bayou
Delta, which is eliminated for purposes of determining the
Company’s equity in earnings of affiliated companies
because Bayou Delta is consolidated in the Company’s
financial statements as a result of its additional ownership
through another subsidiary. The Company’s equity in
earnings of affiliated companies for all periods presented
below include acquisition-related depreciation and
amortization expense and are net of income taxes associated
with these earnings. Financial data for these investments in
affiliated companies at December 31, 2012 and 2011 and for
each of the years in the three-year period ended December 31,
2012 are summarized in the following tables below (in
thousands):
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation, Variable Interest Entity, Policy [Policy Text Block] | Investments
in Variable Interest Entities
The
Company evaluates all transactions and relationships with
variable interest entities (“VIE”) to determine
whether the Company is the primary beneficiary of the
entities in accordance with FASB ASC 810, Consolidation
(“FASB
ASC 810”).
The
Company’s overall methodology for evaluating
transactions and relationships under the VIE requirements
includes the following two steps:
In
performing the first step, the significant factors and
judgments that the Company considers in making the
determination as to whether an entity is a VIE
include:
If
the Company identifies a VIE based on the above
considerations, it then performs the second step and
evaluates whether it is the primary beneficiary of the VIE by
considering the following significant factors and
judgments:
Based
on its evaluation of the above factors and judgments, as of
December 31, 2012, the Company consolidated any VIEs in which
it was the primary beneficiary. Also, as of December 31,
2012, the Company had significant interests in certain VIEs
primarily through its joint venture arrangements for which
the Company was not the primary beneficiary. During 2012, the
Company acquired interests in certain VIE’s in
connection with the purchase of Fyfe LA and Fyfe Asia. For
each of these VIE’s, the Company determined that it is
the primary beneficiary of the entity. Additionally, due to
the Company’s purchase of the remaining equity
interests of its joint venture in India, the Company no
longer maintains a variable interest in the entity as it is
now a wholly-owned subsidiary. There have been no changes in
the status of the Company’s remaining VIE’s or
primary beneficiary designations.
Financial
data for the consolidated variable interest entities at
December 31, 2012 and 2011 and for each of the years in the
three-year period ended December 31, 2012 are summarized in
the following tables (in thousands):
The
Company’s non-consolidated variable interest entities
are accounted for under the equity method of accounting and
discussed further in the “Investments in Affiliated
Companies” section of this Note 2. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of New Accounting Pronouncements Not yet Adopted [Text Block] | Newly
Adopted Accounting Pronouncements
ASU
No. 2011-04 generally provides a uniform framework for
fair value measurements and related disclosures between GAAP
and International Financial Reporting Standards
(“IFRS”). Additional disclosure requirements in
the update include: (1) for Level 3 fair value
measurements, quantitative information about unobservable
inputs used, a description of the valuation processes used by
the entity, and a qualitative discussion about the
sensitivity of the measurements to changes in the
unobservable inputs; (2) for an entity’s use of a
nonfinancial asset that is different from the asset’s
highest and best use, the reason for the difference;
(3) for financial instruments not measured at fair value
but for which disclosure of fair value is required, the fair
value hierarchy level in which the fair value measurements
were determined; and (4) the disclosure of all transfers
between Level 1 and Level 2 of the fair value hierarchy. ASU
2011-04 was effective for interim and annual periods
beginning on or after December 15, 2011. The adoption of
this update did not have a material impact on the Company in
2012.
ASU
No. 2011-05 amends existing guidance by allowing only
two options for presenting the components of net income and
other comprehensive income: (1) in a single continuous
financial statement (statement of comprehensive income), or
(2) in two separate but consecutive financial statements
(consisting of an income statement followed by a separate
statement of other comprehensive income). Also, items that
are reclassified from other comprehensive income to net
income must be presented on the face of the financial
statements; however, this portion of the guidance has been
deferred. ASU No. 2011-05 requires retrospective
application, and was effective for fiscal years, and interim
periods within those years, beginning after December 15,
2011. The Company adopted this update on January 1, 2012 and
added a separate statement of comprehensive income, but the
adoption did not have an impact on the Company’s
results of operations.
ASU
No. 2011-08, which updates the guidance in ASC Topic 350,
Intangibles
– Goodwill & Other, affects all entities
that have goodwill reported in their financial statements.
The amendments in ASU 2011-08 permit an entity to first
assess qualitative factors to determine whether it is more
likely than not that the fair value of a reporting unit is
less than the carrying amount as a basis for determining
whether it is necessary to perform the two-step goodwill
impairment test described in ASC Topic 350. The
more-likely-than-not threshold is defined as having a
likelihood of more than 50 percent. If, after assessing the
totality of events or circumstances, an entity determines
that it is more likely than not that the fair value of a
reporting unit is less than its carrying amount, then
performing the two-step impairment test is necessary. Under
the amendments in this update, an entity is no longer
permitted to carry forward its detailed calculation of a
reporting unit’s fair value from a prior year as
previously permitted under ASC Topic 350. This guidance
became effective for interim and annual goodwill impairment
tests performed for fiscal year 2012 with early adoption
permitted. The Company adopted this update as of January 1,
2012 and the adoption of this update did not have a material
impact on the Company. |