Delaware | 20-5441563 | |
(State of Incorporation) | (I.R.S. Employer Identification Number) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
Page | ||
June 30, 2016 | September 30, 2015 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 65,485 | $ | 82,866 | |||
Accounts receivable, net of allowance for doubtful accounts of $4,955 and $5,892 at June 30, 2016 and September 30, 2015, respectively | 260,648 | 253,348 | |||||
Inventories | 714,188 | 701,535 | |||||
Prepaid expenses and other current assets | 10,031 | 10,004 | |||||
Income taxes receivable | 184 | 187 | |||||
Deferred tax assets, current | 89,269 | 89,401 | |||||
Total current assets | 1,139,805 | 1,137,341 | |||||
Property and equipment, net | 49,246 | 46,976 | |||||
Deferred financing costs, net | 10,231 | 11,248 | |||||
Goodwill | 581,359 | 590,587 | |||||
Intangible assets, net | 198,691 | 215,389 | |||||
Deferred tax assets, non-current | 7,813 | 6,844 | |||||
Other assets | 12,775 | 12,588 | |||||
Total assets | $ | 1,999,920 | $ | 2,020,973 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 169,726 | $ | 149,615 | |||
Accrued expenses and other current liabilities | 34,237 | 38,896 | |||||
Income taxes payable | 10,058 | 21,442 | |||||
Capital lease obligations- current portion | 1,151 | 1,044 | |||||
Total current liabilities | 215,172 | 210,997 | |||||
Capital lease obligations, less current portion | 1,567 | 1,824 | |||||
Long-term debt | 876,906 | 952,906 | |||||
Deferred tax liabilities, non-current | 33,734 | 30,693 | |||||
Other liabilities | 9,651 | 6,980 | |||||
Total liabilities | 1,137,030 | 1,203,400 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Preferred stock, $0.001 par value per share: 50,000,000 shares authorized; no shares issued and outstanding | — | — | |||||
Common stock, $0.001 par value, 950,000,000 shares authorized, 98,606,850 and 97,538,124 shares issued and outstanding at June 30, 2016 and September 30, 2015, respectively | 99 | 98 | |||||
Additional paid-in capital | 425,819 | 412,492 | |||||
Accumulated other comprehensive loss | (74,849 | ) | (38,721 | ) | |||
Retained earnings | 511,821 | 443,704 | |||||
Total stockholders’ equity | 862,890 | 817,573 | |||||
$ | 1,999,920 | $ | 2,020,973 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 375,186 | $ | 368,706 | $ | 1,111,771 | $ | 1,127,962 | |||||||
Cost of sales | 275,945 | 265,351 | 813,564 | 809,597 | |||||||||||
Gross profit | 99,241 | 103,355 | 298,207 | 318,365 | |||||||||||
Selling, general and administrative expenses | 59,197 | 67,178 | 179,708 | 198,580 | |||||||||||
Income from operations | 40,044 | 36,177 | 118,499 | 119,785 | |||||||||||
Interest expense, net | (9,325 | ) | (9,335 | ) | (27,436 | ) | (28,054 | ) | |||||||
Other income (expense), net | 2,657 | (2,402 | ) | 3,960 | (1,363 | ) | |||||||||
Income before provision for income taxes | 33,376 | 24,440 | 95,023 | 90,368 | |||||||||||
Provision for income taxes | (9,360 | ) | (7,961 | ) | (26,906 | ) | (31,113 | ) | |||||||
Net income | 24,016 | 16,479 | 68,117 | 59,255 | |||||||||||
Other comprehensive (loss) income, net | (21,936 | ) | 11,203 | (36,128 | ) | (11,469 | ) | ||||||||
Comprehensive income | $ | 2,080 | $ | 27,682 | $ | 31,989 | $ | 47,786 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.25 | $ | 0.17 | $ | 0.70 | $ | 0.61 | |||||||
Diluted | $ | 0.24 | $ | 0.17 | $ | 0.69 | $ | 0.61 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 97,929,438 | 97,004,276 | 97,511,590 | 96,924,545 | |||||||||||
Diluted | 98,599,215 | 97,964,138 | 98,108,904 | 97,818,380 |
Nine Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 68,117 | $ | 59,255 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation and amortization | 20,843 | 19,815 | |||||
Deferred financing costs | 3,144 | 3,262 | |||||
Bad debt and sales return reserve | 41 | 3,559 | |||||
Inventory reserves | 9,638 | 11,691 | |||||
Stock-based compensation expense | 6,406 | 7,017 | |||||
Excess tax benefit related to stock-based incentive plans | (796 | ) | (290 | ) | |||
Deferred income taxes | 4,240 | 7 | |||||
Income from equity investment | (582 | ) | (424 | ) | |||
Other non-cash items | (3,792 | ) | (3,900 | ) | |||
Changes in assets and liabilities | |||||||
Accounts receivable | (10,466 | ) | 18,694 | ||||
Inventories | (34,891 | ) | (61,920 | ) | |||
Prepaid expenses and other assets | (352 | ) | (299 | ) | |||
Income taxes receivable | 5 | 12,716 | |||||
Accounts payable | 21,466 | 8,338 | |||||
Accrued expenses and other liabilities | (6,098 | ) | (383 | ) | |||
Income taxes payable | (10,330 | ) | 6,715 | ||||
Net cash provided by operating activities | 66,593 | 83,853 | |||||
Cash flows from investing activities | |||||||
Purchase of property and equipment | (11,161 | ) | (4,650 | ) | |||
Proceeds from sales of assets | 2,000 | — | |||||
Acquisition of business, net of cash acquired | — | (250 | ) | ||||
Net cash used in investing activities | (9,161 | ) | (4,900 | ) | |||
Cash flows from financing activities | |||||||
Repayment of long-term debt | (76,000 | ) | (99,750 | ) | |||
Financing fees | (2,126 | ) | — | ||||
Repayment of capital lease obligations | (1,037 | ) | (1,216 | ) | |||
Excess tax benefit related to stock-based incentive plans | 796 | 290 | |||||
Net proceeds from issuance of common stock | 6,126 | 785 | |||||
Net cash used in financing activities | (72,241 | ) | (99,891 | ) | |||
Effect of foreign currency exchange rate on cash and cash equivalents | (2,572 | ) | (1,764 | ) | |||
Net decrease in cash and cash equivalents | (17,381 | ) | (22,702 | ) | |||
Cash and cash equivalents, beginning of period | 82,866 | 104,775 | |||||
Cash and cash equivalents, end of period | $ | 65,485 | $ | 82,073 |
Foreign | ||||||||||||||||||||
September 30, | Additions/ | Cash | Currency | June 30, | ||||||||||||||||
2015 | Adjustments | Payments | Translation | 2016 | ||||||||||||||||
Employee severance | $ | 2,106 | $ | 170 | $ | (2,098 | ) | $ | (14 | ) | $ | 164 | ||||||||
Lease termination costs and other | 2,384 | 126 | (875 | ) | (81 | ) | 1,554 | |||||||||||||
Total | $ | 4,490 | $ | 296 | $ | (2,973 | ) | $ | (95 | ) | $ | 1,718 |
Restructuring | Cash | Foreign | Restructuring | |||||||||||||
Costs Accrued | Payments | Currency | Costs Accrued | |||||||||||||
Since Inception | Year-to-date | Translation | June 30, 2016 | |||||||||||||
North America segment | $ | 2,734 | $ | (2,019 | ) | $ | — | $ | 715 | |||||||
Rest of World segment | 2,052 | (954 | ) | (95 | ) | 1,003 | ||||||||||
Total | $ | 4,786 | $ | (2,973 | ) | $ | (95 | ) | $ | 1,718 |
North America | Rest of World | Total | |||||||||
Goodwill as of September 30, 2015 | $ | 515,876 | $ | 74,711 | $ | 590,587 | |||||
Foreign currency translation | — | (9,228 | ) | (9,228 | ) | ||||||
Goodwill as of June 30, 2016 | $ | 515,876 | $ | 65,483 | $ | 581,359 |
Derivative Notional | |||||||||
June 30, 2016 | September 30, 2015 | ||||||||
Instruments designated as accounting hedges: | |||||||||
Interest rate contracts | $ | 437,500 | $ | 475,000 | |||||
Instruments not designated as accounting hedges: | |||||||||
Foreign exchange contract | $ | 30,000 | — |
Fair Value | |||||||||||
Balance Sheet Locations | June 30, 2016 | September 30, 2015 | |||||||||
Instruments designated as accounting hedges: | |||||||||||
Interest rate contracts | Accrued expenses and other current liabilities | $ | 1,730 | $ | 1,902 | ||||||
Other liabilities | $ | 6,146 | $ | 2,186 | |||||||
Instruments not designated as accounting hedges: | |||||||||||
Foreign exchange contract | Prepaid expenses and other current assets | $ | 1,961 | — |
Location in Consolidated Statement of Comprehensive Income | Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
Cash Flow Hedge | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Interest rate contracts | Interest expense, net | $ | 330 | — | $ | 1,020 | — | |||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||
Cash Flow Hedge | 2016 | 2015 | 2016 | 2015 | ||||||||||
Interest rate contracts | $ | (873 | ) | — | $ | (2,387 | ) | — |
AOCI - Unrealized Gain (Loss) on Hedging Instruments | Three Months Ended June 30, 2016 | Nine Months Ended June 30, 2016 | |||||||
Balance at Beginning of Period | $ | (4,091 | ) | $ | (2,577 | ) | |||
Change in fair value of hedging instruments | (1,202 | ) | (3,407 | ) | |||||
Amounts reclassified to earnings | 329 | 1,020 | |||||||
Net current period other comprehensive income | (873 | ) | (2,387 | ) | |||||
Balance at End of Period | $ | (4,964 | ) | $ | (4,964 | ) |
Location in Consolidated Statement of Comprehensive Income | Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
Instruments Not Designated As Hedging Instruments | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Foreign exchange contract | Other income (loss), net | $ | (523 | ) | — | $ | (2,161 | ) | — | |||||||
June 30, 2016 | September 30, 2015 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
$625.0 million term loan A | $ | 401,344 | $ | 400,742 | $ | 477,344 | $ | 476,150 | |||||||
$525.0 million term loan B | $ | 475,562 | $ | 470,331 | $ | 475,562 | $ | 467,002 |
Level 1: | Quoted prices in active markets for identical assets or liabilities. |
Level 2: | Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. |
Level 3: | Unobservable inputs for the asset or liability. |
June 30, 2016 | Balance Sheet Locations | Total | Level 1 | Level 2 | Level 3 | ||||||||||
Instruments designated as accounting hedges: | |||||||||||||||
Interest rate contracts | Accrued expenses and other current liabilities | $ | 1,730 | — | $ | 1,730 | — | ||||||||
Other liabilities | $ | 6,146 | — | $ | 6,146 | — | |||||||||
Instruments not designated as accounting hedges: | |||||||||||||||
Foreign exchange contract | Prepaid expenses and other current assets | $ | 1,961 | — | $ | 1,961 | — |
September 30, 2015 | Balance Sheet Locations | Total | Level 1 | Level 2 | Level 3 | ||||||||||
Instruments designated as accounting hedges: | |||||||||||||||
Interest rate contracts | Accrued expenses and other current liabilities | $ | 1,902 | — | $ | 1,902 | — | ||||||||
Other liabilities | $ | 2,186 | — | $ | 2,186 | — |
June 30, 2016 | September 30, 2015 | ||||||
$ 625,000 term loan A facility | $ | 401,344 | $ | 477,344 | |||
$ 525,000 term loan B facility | 475,562 | 475,562 | |||||
Long-term debt | $ | 876,906 | $ | 952,906 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 24,016 | $ | 16,479 | $ | 68,117 | $ | 59,255 | |||||||
Foreign currency exchange translation adjustment | (21,063 | ) | 11,203 | (33,741 | ) | (11,469 | ) | ||||||||
Unrealized loss on cash flow hedging instruments | (873 | ) | — | (2,387 | ) | — | |||||||||
Total comprehensive income | $ | 2,080 | $ | 27,682 | $ | 31,989 | $ | 47,786 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 24,016 | $ | 16,479 | $ | 68,117 | $ | 59,255 | |||||||
Basic weighted average shares outstanding | 97,929,438 | 97,004,276 | 97,511,590 | 96,924,545 | |||||||||||
Dilutive effect of stock options and restricted stock awards/units | 669,777 | 959,862 | 597,314 | 893,835 | |||||||||||
Dilutive weighted average shares outstanding | 98,599,215 | 97,964,138 | 98,108,904 | 97,818,380 | |||||||||||
Basic net income per share | $ | 0.25 | $ | 0.17 | $ | 0.70 | $ | 0.61 | |||||||
Diluted net income per share | $ | 0.24 | $ | 0.17 | $ | 0.69 | $ | 0.61 |
Three Months Ended June 30, 2016 | Three Months Ended June 30, 2015 | ||||||||||||||||||||||
North America | Rest of World | Consolidated | North America | Rest of World | Consolidated | ||||||||||||||||||
Net sales | $ | 300,875 | $ | 74,311 | $ | 375,186 | $ | 296,094 | $ | 72,612 | $ | 368,706 | |||||||||||
Income from operations | 29,267 | 10,777 | 40,044 | 29,072 | 7,105 | 36,177 | |||||||||||||||||
Interest expense, net | 8,233 | 1,092 | 9,325 | 8,825 | 510 | 9,335 | |||||||||||||||||
Provision for income taxes | 6,868 | 2,492 | 9,360 | 6,848 | 1,113 | 7,961 | |||||||||||||||||
Total assets | 1,710,012 | 289,908 | 1,999,920 | 2,019,434 | 350,944 | 2,370,378 | |||||||||||||||||
Goodwill | 515,876 | 65,483 | 581,359 | 779,648 | 77,649 | 857,297 | |||||||||||||||||
Capital expenditures | 3,878 | 50 | 3,928 | 1,525 | 213 | 1,738 | |||||||||||||||||
Depreciation and amortization | 5,769 | 1,021 | 6,790 | 5,539 | 1,014 | 6,553 |
Nine Months Ended June 30, 2016 | Nine Months Ended June 30, 2015 | ||||||||||||||||||||||
North America | Rest of World | Consolidated | North America | Rest of World | Consolidated | ||||||||||||||||||
Net sales | $ | 889,816 | $ | 221,955 | $ | 1,111,771 | $ | 899,193 | $ | 228,769 | $ | 1,127,962 | |||||||||||
Income from operations | 86,380 | 32,119 | 118,499 | 99,105 | 20,680 | 119,785 | |||||||||||||||||
Interest expense, net | 24,073 | 3,363 | 27,436 | 25,016 | 3,038 | 28,054 | |||||||||||||||||
Provision for income taxes | 19,897 | 7,009 | 26,906 | 25,304 | 5,809 | 31,113 | |||||||||||||||||
Total assets | 1,710,012 | 289,908 | 1,999,920 | 2,019,434 | 350,944 | 2,370,378 | |||||||||||||||||
Goodwill | 515,876 | 65,483 | 581,359 | 779,648 | 77,649 | 857,297 | |||||||||||||||||
Capital expenditures | 10,616 | 545 | 11,161 | 4,028 | 622 | 4,650 | |||||||||||||||||
Depreciation and amortization | 17,771 | 3,072 | 20,843 | 16,694 | 3,121 | 19,815 |
(dollars in thousands) | Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Provision for income taxes | $ | 9,360 | $ | 7,961 | $ | 26,906 | $ | 31,113 | |||||||
Effective tax rate | 28.0 | % | 32.6 | % | 28.3 | % | 34.4 | % |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
(In thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Consolidated result of operations: | ||||||||||||||||
Net sales: | ||||||||||||||||
North America | $ | 300,875 | $ | 296,094 | $ | 889,816 | $ | 899,193 | ||||||||
Rest of World | 74,311 | 72,612 | 221,955 | 228,769 | ||||||||||||
Total net sales | $ | 375,186 | $ | 368,706 | $ | 1,111,771 | $ | 1,127,962 | ||||||||
Income from operations: | ||||||||||||||||
North America | $ | 29,267 | $ | 29,072 | $ | 86,380 | $ | 99,105 | ||||||||
Rest of World | 10,777 | 7,105 | 32,119 | 20,680 | ||||||||||||
Total Income from operations | 40,044 | 36,177 | 118,499 | 119,785 | ||||||||||||
Interest expense, net | (9,325 | ) | (9,335 | ) | (27,436 | ) | (28,054 | ) | ||||||||
Other income (expense), net | 2,657 | (2,402 | ) | 3,960 | (1,363 | ) | ||||||||||
Income before provision for income taxes | 33,376 | 24,440 | 95,023 | 90,368 | ||||||||||||
Provision for income taxes | (9,360 | ) | (7,961 | ) | (26,906 | ) | (31,113 | ) | ||||||||
Net income | $ | 24,016 | $ | 16,479 | $ | 68,117 | $ | 59,255 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||
(As a % of total net sales; numbers have been rounded) | 2016 | 2015 | 2016 | 2015 | ||||||||
Income from operations by segment: | ||||||||||||
North America | 9.7 | % | 9.8 | % | 9.7 | % | 11.0 | % | ||||
Rest of World | 14.5 | % | 9.8 | % | 14.5 | % | 9.0 | % | ||||
Consolidated: | ||||||||||||
Income from operations | 10.7 | % | 9.8 | % | 10.7 | % | 10.6 | % | ||||
Interest expense, net | (2.5 | ) | (2.5 | ) | (2.5 | ) | (2.5 | ) | ||||
Other income (expense), net | 0.7 | (0.7 | ) | 0.3 | (0.1 | ) | ||||||
Income before provision for income taxes | 8.9 | 6.6 | 8.5 | 8.0 | ||||||||
Provision for income taxes | (2.5 | ) | (2.1 | ) | (2.4 | ) | (2.7 | ) | ||||
Net income | 6.4 | % | 4.5 | % | 6.1 | % | 5.3 | % |
• | operating expenses; |
• | working capital requirements to fund the growth of our business; |
• | capital expenditures that primarily relate to IT equipment and our warehouse operations; |
• | debt service requirements for borrowings under the Credit Facilities (as defined below under “—Credit Facilities—Senior Secured Credit Facilities”); and |
• | strategic acquisitions. |
Nine Months Ended June 30, | ||||||||
Consolidated statements of cash flows data: | 2016 | 2015 | ||||||
Net cash provided by operating activities | $ | 66,593 | $ | 83,853 | ||||
Net cash used in investing activities | (9,161 | ) | (4,900 | ) | ||||
Net cash used in financing activities | (72,241 | ) | (99,891 | ) |
• | Our staff attended a third training session as part of our comprehensive training program to upgrade the skills of our internal audit and accounting personnel. We expect these trainings to occur at least quarterly during the remainder of fiscal 2016 at our corporate headquarters and through videoconferencing for employees located outside of our corporate headquarters. |
• | We have formalized all of our critical accounting and reporting policies, which have been approved by our chief financial officer and made available on our intranet, and we have trained our finance personnel on these policies. |
• | We conducted a thorough assessment of the account reconciliation process implemented in prior quarters in accordance with the formal account reconciliation policy and procedures established at that time. Based on the results of our assessment, which included performing a walk-through of the process and testing on a sample basis, we concluded that the process is designed and operating effectively for the three months ended June 30, 2016. |
• | We have reviewed our control environment and related control activities to identify and implement enhancements and other integration activities to simplify and, where possible, centralize our processes and related controls. |
Exhibit Number | Description | ||
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | ||
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | ||
32.1 | Certification of Periodic Report by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
Date: August 4, 2016 | WESCO AIRCRAFT HOLDINGS, INC. | |
By: | /s/ David J. Castagnola | |
Name: David J. Castagnola | ||
Title: President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: August 4, 2016 | By: | /s/ Richard J. Weller |
Name: Richard J. Weller | ||
Title: Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
Dated: | August 4, 2016 |
/s/ David J. Castagnola | |
Name: David J. Castagnola | |
Title: President and Chief Executive Officer | |
(Principal Executive Officer) |
Dated: | August 4, 2016 |
/s/ Richard J. Weller | |
Name: Richard J. Weller | |
Title: Executive Vice President and Chief Financial Officer | |
(Principal Financial Officer) |
Dated: | August 4, 2016 |
/s/ David J. Castagnola | |
Name: David J. Castagnola | |
Title: President and Chief Executive Officer | |
(Principal Executive Officer) | |
Dated: | August 4, 2016 |
/s/ Richard J. Weller | |
Name: Richard J. Weller | |
Title: Executive Vice President and Chief Financial Officer | |
(Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 28, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | Wesco Aircraft Holdings, Inc | |
Entity Central Index Key | 0001378718 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 98,606,850 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 4,955 | $ 5,892 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 950,000,000 | 950,000,000 |
Common stock, shares issued (in shares) | 98,606,850 | 97,538,124 |
Common stock, shares outstanding (in shares) | 98,606,850 | 97,538,124 |
Consolidated Statements of Earnings and Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Statement [Abstract] | ||||
Net sales | $ 375,186 | $ 368,706 | $ 1,111,771 | $ 1,127,962 |
Cost of sales | 275,945 | 265,351 | 813,564 | 809,597 |
Gross profit | 99,241 | 103,355 | 298,207 | 318,365 |
Selling, general and administrative expenses | 59,197 | 67,178 | 179,708 | 198,580 |
Income from operations | 40,044 | 36,177 | 118,499 | 119,785 |
Interest expense, net | (9,325) | (9,335) | (27,436) | (28,054) |
Other income (expense), net | 2,657 | (2,402) | 3,960 | (1,363) |
Income before provision for income taxes | 33,376 | 24,440 | 95,023 | 90,368 |
Provision for income taxes | (9,360) | (7,961) | (26,906) | (31,113) |
Net income | 24,016 | 16,479 | 68,117 | 59,255 |
Other comprehensive (loss) income, net | (21,936) | 11,203 | (36,128) | (11,469) |
Comprehensive income | $ 2,080 | $ 27,682 | $ 31,989 | $ 47,786 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.25 | $ 0.17 | $ 0.70 | $ 0.61 |
Diluted (in dollars per share) | $ 0.24 | $ 0.17 | $ 0.69 | $ 0.61 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 97,929,438 | 97,004,276 | 97,511,590 | 96,924,545 |
Diluted (in shares) | 98,599,215 | 97,964,138 | 98,108,904 | 97,818,380 |
Basis of Presentation and Significant Accounting Policies |
9 Months Ended |
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Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies The accompanying unaudited consolidated financial statements include the accounts of Wesco Aircraft Holdings, Inc. and its wholly owned subsidiaries (referred to herein as “Wesco” or the “Company”) prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The financial statements presented herein have not been audited by an independent registered public accounting firm, but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for fair presentation of the financial position, results of operations and cash flows for the period. However, these results are not necessarily indicative of results for any other interim period or for the full fiscal year. The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. Actual amounts could differ from these estimates. Certain information and footnote disclosures normally included in financial statements in accordance with GAAP have been omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 filed with the SEC on November 30, 2015. Revision of Statements of Comprehensive Income In fiscal 2015, we revised our presentation of certain personnel costs associated with service contracts to correctly reflect them as cost of sales rather than selling, general and administrative expenses. These personnel costs totaled $6.0 million for the three months ended June 30, 2015, of which $5.3 million and $0.7 million was for North America and Rest of World, respectively. These personnel costs totaled $17.8 million for the nine months ended June 30, 2015, of which $16.2 million and $1.6 million was for North America and Rest of World, respectively. These revisions had no effect on previously reported income from operations, net income or cash flows for the three and nine months ended June 30, 2015. |
Recent Accounting Pronouncements |
9 Months Ended |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations. New Accounting Standards Issued In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods therein. Early application is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting. ASU 2016-07 eliminates the requirement that when an investment subsequently qualifies for use of the equity method as a result of an increase in level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ASU 2016-07 requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and to adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. In addition, ASU 2016-07 requires that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. ASU 2016-07 is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. ASU 2016-02 retains a distinction between finance leases (i.e. capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. ASU 2016-02 also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. A modified retrospective transition approach shall be used when adopting ASU 2016-02, which includes a number of optional practical expedients that entities may elect to apply. ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods therein, with early application permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. ASU 2016-01 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted for certain provisions. We are currently evaluating the impact of ASU 2016-01 related to equity investments and the presentation and disclosure requirements of financial instruments on our consolidated financial statements. In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that entities present all deferred tax assets and liabilities as non-current in a classified balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted for financial statements that have not been previously issued. The adoption of ASU 2015-17 will only impact our consolidated balance sheets. The current portion of deferred tax assets or liabilities will be reclassified into long-term deferred tax assets or liabilities, respectively, and total current assets and total current liabilities will be reduced accordingly. The changes may affect certain financial ratios calculation. As of June 30, 2016, we had current deferred tax assets of $89.3 million and no current deferred tax liabilities. In September 2015, FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. ASU 2015-16 should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued. As of June 30, 2016, we did not have any provisional amounts outstanding from prior acquisitions. In August 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. ASU 2015-15 states entities should present debt issuance costs as an asset, and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We do not anticipate the adoption of ASU 2015-15 will have a significant impact on our consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires an entity to measure inventory at the lower of cost and net realizable value, and eliminates current GAAP options for measuring market value. ASU 2015-11 defines realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-11 can only be applied prospectively. We are currently evaluating the impact of the adoption of ASU 2015-11 on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost. The amendments in ASU 2015-03 are intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in ASU 2015-03. ASU 2105-03 is effective for annual reporting periods beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The adoption of ASU 2015-03 will reduce our non-current assets and non-current debt by the amount of our net deferred financing costs in our consolidated balance sheets but will not impact our consolidated statements of comprehensive income and consolidated statements of cash flow. As of June 30, 2016 and September 30, 2015, our deferred financing costs, net was $10.2 million and $11.2 million, respectively. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which amends ASC Subtopic 205-40 to provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related disclosures. Specifically, ASU 2014-15 (1) provides a definition of the term “substantial doubt,” (2) requires an evaluation every reporting period, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that financial statements are issued. ASU 2014-15 is effective for fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. We do not anticipate the adoption of ASU 2014-15 will have a significant impact on our consolidated financial statements. In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply ASU 2014-12 either prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this ASU as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. We do not anticipate the adoption of ASU 2014-12 will have a significant impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-11 and ASU 2016-12, which FASB issued in August 2015, March 2016, April 2016, May 2016 and May 2016, respectively (collectively the “amended ASU 2014-09”). The amended ASU 2014-09 provides a single comprehensive model for the recognition of revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It requires an entity to recognize revenue when the entity transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amended ASU 2014-09 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) with the customer, (2) identifying the separate performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue when each performance obligation is satisfied. The amended ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date for the amended ASU 2014-09 is for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We are currently evaluating the effect of the adoption of the amended ASU 2014-09 on our consolidated financial statements and the implementation approach to be used. Adopted Accounting Standards Effective January 1, 2016, we early adopted ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. We elected to adopt the amendments prospectively for all arrangements entered into or materially modified after January 1, 2016. The adoption of ASU 2015-05 does not have a significant impact on our consolidated financial statements. We record the qualified cloud-based software license fees as software intangible assets instead of prepaid expenses, and amortize them over the contract length as software amortization expense instead of service expense. Both amortization expense and service expense are included in the selling, general and administrative expense line of our consolidated statement of comprehensive income, resulting in no significant impact on our income from operations, net income or cash flows. |
Restructuring Activities |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Activities | Restructuring Activities In September 2015, we committed to a Global Restructuring Plan (GRP), which involved the immediate elimination of redundant positions and the closure and consolidation of various facilities in order to better align our workforce to the growth areas of our business and to streamline our operations in order to increase efficiency and effectiveness. We anticipate that actions under the GRP will continue through the year ending September 30, 2016. During the nine months ended June 30, 2016, we recorded total expenses of $296 thousand related to the restructuring activities, consisting of $170 thousand of employee severance and related costs and $126 thousand related to the termination of leases and other expenses. Of these amounts, $170 thousand was recorded in North America and $126 thousand in Rest of World. Such expenses were recorded in selling, general and administrative expenses in our consolidated statements of comprehensive income. Our restructuring liabilities were included in the accrued expenses and other current liabilities line of our consolidated balance sheets. The following table summarizes the activities affecting our restructuring liabilities described above during the nine months ended June 30, 2016 (in thousands):
The following table summarizes the total incurred restructuring costs by segment as of June 30, 2016 (in thousands):
The remaining costs to be incurred under the GRP are not expected to differ significantly from the amount accrued as of June 30, 2016. |
Inventory |
9 Months Ended |
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Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Our inventory is comprised solely of finished goods. As of June 30, 2016 and September 30, 2015, our excess and obsolescence (E&O) reserves totaled $257.8 million and $264.1 million, respectively. The $6.3 million decrease during the nine months ended June 30, 2016 represents reserves of $9.6 million charged to cost of sales to provide for additional E&O inventory, which was more than offset by $15.9 million decrease of E&O reserves due to the foreign currency translation and the depletion of E&O inventory. Out of the $15.9 million decrease, $4.2 million was attributable to the strengthening of the U.S. dollar compared to the British pound and $11.7 million was for E&O inventory scrapped. Our ending E&O reserves adjusted our inventory as of June 30, 2016 to reflect the lower of its cost or net realizable value. |
Goodwill |
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Goodwill | Goodwill During the nine months ended June 30, 2016, we recorded a $9.2 million decrease to goodwill as a result of the strengthening of the U.S. dollar compared to the British pound. Goodwill consists of the following (in thousands):
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments Derivative Financial Instruments We use derivative instruments primarily to manage exposures to foreign currency exchange rates and interest rates. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with fluctuations in foreign exchange rates and changes in interest rates. Our derivatives expose us to credit risk to the extent that the counter-parties may be unable to meet the terms of the agreement. We, however, seek to mitigate such risks by limiting our counter-parties to major financial institutions. In addition, the potential risk of loss with any one counter-party resulting from this type of credit risk is monitored. Management does not expect material losses as a result of defaults by counter-parties. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In July 2015, we entered into two interest rate swap agreements, which we designated as cash flow hedges, in order to reduce our exposure to variability in cash flows related to interest payments on a portion of our outstanding debt. The first interest rate swap agreement has an amortizing notional amount, which was $437.5 million as of June 30, 2016, and matures on September 30, 2017, giving us the contractual right to pay a fixed interest rate of 1.21% plus the applicable margin under the term loan B facility (as defined in Note 7 below; see Note 7 for the applicable margin). The second interest rate swap agreement also has an amortizing notional amount, initially $375.0 million, giving us the contractual right to pay a fixed interest rate of 2.2625% plus the applicable margin under the term loan B facility, which is effective on September 29, 2017 and matures on September 30, 2019. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the nine months ended June 30, 2016, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized immediately in earnings. During the nine months ended June 30, 2016, we did not record any hedge ineffectiveness in earnings. No portion of our interest rate swap agreements is excluded from the assessment of hedge effectiveness. Amounts reported in accumulated other comprehensive income (loss) (AOCI) related to derivatives are reclassified to interest expense as interest payments are made on our variable-rate debt. As of June 30, 2016, we expected to reclassify approximately $1.1 million from accumulated other comprehensive loss to earnings as an increase to interest expense over the next 12 months. Non-Designated Derivatives On December 16, 2015, we entered into one foreign currency forward contract to partially reduce our exposure to foreign currency fluctuations for a subsidiary's net monetary assets, which are denominated in a foreign currency. The derivative is not designated as a hedging instrument. The change in its fair value is recognized as periodic gain or loss in the other income (loss), net line of our consolidated statement of earnings and comprehensive income. The following table summarizes the notional principal amounts at June 30, 2016 and September 30, 2015 of our outstanding derivative instruments discussed above (in thousands). We did not have foreign exchange forward contracts as of September 30, 2015.
The following table provides the location and fair value amounts of our financial instruments, which are reported in our consolidated balance sheets as of June 30, 2016 and September 30, 2015 (in thousands). We did not have foreign exchange forward contracts as of September 30, 2015.
The following table provides the losses of our cash flow hedging instruments (net of income tax benefit) which were transferred from AOCI to our consolidated statement of comprehensive income during the three and nine months ended June 30, 2016 (in thousands). We did not have any derivative instruments in the three and nine months ended June 30, 2015.
The following table provides the effective portion of the amount of loss recognized in other comprehensive income (net of income taxes) for the three and nine months ended June 30, 2016 (in thousands). We did not have any derivative instruments in the three and nine months ended June 30, 2015.
The following table provides a summary of changes to our accumulated other comprehensive income (loss) related to our cash flow hedging instruments (net of income taxes) during the three and nine months ended June 30, 2016 (in thousands).
The following table provides the pretax effect of our derivative instruments not designated as hedging instruments on our consolidated earnings and comprehensive income for the three and nine months ended June 30, 2016 (in thousands). We did not have any derivative instruments in the nine months ended June 30, 2015.
Other Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable and payable, accrued expenses and other current liabilities, and a line of credit. The carrying amounts of these instruments approximate fair value because of their short-term maturities. The fair value of the long‑term debt instruments is determined using current applicable rates for similar instruments as of the balance sheet date, a Level 2 measurement. The carrying amounts and fair values of the debt instruments were as follows (in thousands):
Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, we primarily utilize reported market transactions and discounted cash flow analysis. We use a three tier fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. The fair value hierarchy prioritizes the inputs to valuation techniques into three broad levels whereby the highest priority is given to Level 1 inputs and the lowest to Level 3 inputs. The three broad categories are:
The definition of fair value includes the consideration of nonperformance risk. Nonperformance risk refers to the risk that an obligation (either by a counter-party or us) will not be fulfilled. For financial assets traded in an active market (Level 1), the nonperformance risk is included in the market price. For certain other financial assets and liabilities (Level 2 and 3), our fair value calculations have been adjusted accordingly. There were no transfers between the assets and liabilities under Level 1 and Level 2 during the nine months ended June 30, 2016. The following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring basis in our consolidated balance sheets as of June 30, 2016 and September 30, 2015 (in thousands).
We use observable market-based inputs to calculate fair value of our interest rate swap agreements and outstanding debt instruments, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market‑based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3. |
Long-Term Debt |
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Long-Term Debt | Long-Term Debt Long-term debt consists of the following (in thousands):
On March 24, 2016, we entered into the Third Amendment (the “Amendment”) to our credit agreement, dated as of December 7, 2012, by and among the Company, Wesco Aircraft Hardware Corp. and the lenders and agents party thereto (as amended, the “Credit Agreement”). The Amendment (1) reduced the maximum amount permitted to be incurred under a Cash-Capped Incremental Facility (as such term is defined in the Credit Agreement) from $150 million to $100 million, and (2) raised the levels in the Consolidated Total Leverage Ratio (as such ratio is defined in the Credit Agreement) financial covenant set forth in the Credit Agreement to a maximum of 4.50 for the quarters ending March 31, 2016, June 30, 2016 and September 30, 2016, with step-downs to 4.25 for the quarter ending December 31, 2016, 4.00 for the quarter ending March 31, 2017 and 3.75 for the quarter ending June 30, 2017 and thereafter. As a result of the amendment, we incurred $2.1 million in fees that were capitalized and will be amortized over the remaining life of the related debt. The Credit Agreement, as amended, provides for (1) a $625.0 million term loan A facility (the "term loan A facility"), (2) a $200.0 million revolving credit facility (the "revolving facility), and (3) a $525.0 million senior secured term loan B facility (the "term loan B facility"). We refer to the term loan A facility, the term loan B facility and the revolving facility collectively as the Credit Facilities. As of June 30, 2016, our outstanding indebtedness under our Credit Facilities was $876.9 million, which consisted of (1) $401.3 million of indebtedness under the term loan A facility, and (2) $475.6 million of indebtedness under the term loan B facility. As of June 30, 2016, $200.0 million was available for borrowing under the revolving facility, of which we could borrow up to $83.0 million without breaching any covenants contained in the agreements governing our indebtedness. The interest rate for the term loan A facility is based on our Consolidated Total Leverage Ratio as determined in the most recently delivered financial statements, with the respective margins ranging from 1.75% to 2.50% for Eurocurrency loans and 0.75% to 1.50% for alternate base rate (ABR) loans. The term loan A facility amortizes in equal quarterly installments of 1.25% of the original principal amount of $625.0 million for the first year, escalating to quarterly installments of 2.50% of the original principal amount of $625.0 million by the fifth year, with the balance due at maturity on December 7, 2017. As of June 30, 2016, the interest rate for borrowings under the term loan A facility was 2.96%. The interest rate for the term loan B facility has a margin of 2.50% per annum for Eurocurrency loans (subject to a minimum Eurocurrency rate floor of 0.75% per annum) or 1.50% per annum for ABR loans (subject to a minimum ABR floor of 1.75% per annum). The term loan B facility amortizes in equal quarterly installments of 0.25% of the original principal amount of $525.0 million, with the balance due at maturity on February 28, 2021. As of June 30, 2016, the interest rate for borrowings under the term loan B facility was 3.25%. In July 2015, we entered into interest rate swap agreements relating to this indebtedness, which are described in greater detail in Note 6 above. The interest rate for the revolving facility is based on our Consolidated Total Leverage Ratio (as such ratio is defined in the Credit Agreement) as determined in the most recently delivered financial statements, with the respective margins ranging from 1.75% to 2.50% for Eurocurrency loans and 0.75% to 1.50% for ABR loans. The revolving facility expires on December 7, 2017. Our borrowings under the Credit Facilities are guaranteed by us and all of our direct and indirect, wholly-owned, domestic restricted subsidiaries (subject to certain exceptions) and secured by a first lien on substantially all of our assets and the assets of our guarantor subsidiaries, including capital stock of the subsidiaries (in each case, subject to certain exceptions). During the nine months ended June 30, 2016, we made voluntary prepayments totaling $76.0 million on our term loan A facility, which has been applied to future required quarterly payments. Our borrowings under the Credit Facilities are subject to certain financial covenants set forth in the Credit Agreement. As of June 30, 2016, our Consolidated Total Leverage Ratio (as such ratio is defined in the Credit Agreement) cannot exceed 4.50 and our Consolidated Net Interest Coverage Ratio (as such ratio is defined in the Credit Agreement) cannot be less than 2.25. As noted above, our Consolidated Total Leverage Ratio will gradually step-down during future quarters to 3.75 for the quarter ending June 30, 2017 and thereafter. The Credit Agreement also contains customary negative covenants, including restrictions on our and our restricted subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness or enter into transactions with affiliates. As of June 30, 2016, we were in compliance with all of the foregoing covenants, and our Consolidated Total Leverage Ratio was 4.08 and our Consolidated Net Interest Coverage Ratio was 6.19. As of June 30, 2016, our subsidiary, Wesco Aircraft Europe, Ltd, has available a £7.0 million ($9.3 million based on the June 30, 2016 exchange rate) line of credit that automatically renews annually on October 1 (the "UK line of credit"). The UK line of credit bears interest based on the base rate plus an applicable margin of 1.65%. As of June 30, 2016, the full £7.0 million was available for borrowing under the UK line of credit without breaching any covenants contained in the agreements governing our indebtedness. |
Comprehensive Income |
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Comprehensive Income | Comprehensive Income Comprehensive income, which is net of income taxes, consists of the following (in thousands):
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Net Income Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | Net Income Per Share Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income per share includes the dilutive effect of both outstanding stock options and restricted shares, calculated using the treasury stock method. Assumed proceeds from in-the-money awards include windfall tax benefits, net of shortfalls, calculated under the “as-if” method as prescribed by ASC 718, Compensation—Stock Compensation. The following table provides our basic and diluted net income per share for the three and nine months ended June 30, 2016 and 2015 (dollars in thousands except share data):
For the three months ended June 30, 2016 and 2015, respectively, 1,595,791 and 1,310,777 shares of common stock equivalents were not included in the diluted calculation due to their anti-dilutive effect. For the nine months ended June 30, 2016 and 2015, respectively, 2,386,294 and 1,453,789 shares of common stock equivalents were not included in the diluted calculation due to their anti-dilutive effect. |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting We are organized based on geographical location. Our reportable segments are comprised of North America and Rest of World. We evaluate segment performance based primarily on segment income from operations. Each segment reports its results of operations and makes requests for capital expenditures and acquisition funding to our chief operating decision-maker (“CODM”). Our chief executive officer serves as our CODM. The following tables present operating and financial information by business segment (in thousands):
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Income Taxes |
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Income Taxes | Income Taxes
For the three months ended June 30, 2016, our effective tax rate decreased due primarily to a decrease in U.S. pretax income, which is subject to a higher tax rate, and an increase in foreign pretax income, which is subject to a lower tax rate. For the nine months ended June 30, 2016, our effective tax rate decreased due primarily to a decrease in U.S. pretax income, which is subject to a higher tax rate, and an increase in foreign pretax income, which is subject to a lower tax rate; and the settlement of a tax audit, which occurred during the three months ended December 31, 2015 and resulted in a decrease of our effective tax rate by 0.7%. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are involved in various legal matters that arise in the ordinary course of its business. Our management, after consulting with outside legal counsel, believes that the ultimate outcome of such matters will not have a material adverse effect on our business, financial position, results of operations or cash flows. There can be no assurance, however, that such actions will not be material or adversely affect our business, financial position, results of operations or cash flows. |
Basis of Presentation and Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of accounting | The accompanying unaudited consolidated financial statements include the accounts of Wesco Aircraft Holdings, Inc. and its wholly owned subsidiaries (referred to herein as “Wesco” or the “Company”) prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. |
New accounting pronouncements, policy | In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods therein. Early application is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting. ASU 2016-07 eliminates the requirement that when an investment subsequently qualifies for use of the equity method as a result of an increase in level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ASU 2016-07 requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and to adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. In addition, ASU 2016-07 requires that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. ASU 2016-07 is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. ASU 2016-02 retains a distinction between finance leases (i.e. capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. ASU 2016-02 also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. A modified retrospective transition approach shall be used when adopting ASU 2016-02, which includes a number of optional practical expedients that entities may elect to apply. ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods therein, with early application permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. ASU 2016-01 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted for certain provisions. We are currently evaluating the impact of ASU 2016-01 related to equity investments and the presentation and disclosure requirements of financial instruments on our consolidated financial statements. In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that entities present all deferred tax assets and liabilities as non-current in a classified balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted for financial statements that have not been previously issued. The adoption of ASU 2015-17 will only impact our consolidated balance sheets. The current portion of deferred tax assets or liabilities will be reclassified into long-term deferred tax assets or liabilities, respectively, and total current assets and total current liabilities will be reduced accordingly. The changes may affect certain financial ratios calculation. As of June 30, 2016, we had current deferred tax assets of $89.3 million and no current deferred tax liabilities. In September 2015, FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. ASU 2015-16 should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued. As of June 30, 2016, we did not have any provisional amounts outstanding from prior acquisitions. In August 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. ASU 2015-15 states entities should present debt issuance costs as an asset, and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We do not anticipate the adoption of ASU 2015-15 will have a significant impact on our consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires an entity to measure inventory at the lower of cost and net realizable value, and eliminates current GAAP options for measuring market value. ASU 2015-11 defines realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-11 can only be applied prospectively. We are currently evaluating the impact of the adoption of ASU 2015-11 on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost. The amendments in ASU 2015-03 are intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in ASU 2015-03. ASU 2105-03 is effective for annual reporting periods beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The adoption of ASU 2015-03 will reduce our non-current assets and non-current debt by the amount of our net deferred financing costs in our consolidated balance sheets but will not impact our consolidated statements of comprehensive income and consolidated statements of cash flow. As of June 30, 2016 and September 30, 2015, our deferred financing costs, net was $10.2 million and $11.2 million, respectively. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which amends ASC Subtopic 205-40 to provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related disclosures. Specifically, ASU 2014-15 (1) provides a definition of the term “substantial doubt,” (2) requires an evaluation every reporting period, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that financial statements are issued. ASU 2014-15 is effective for fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. We do not anticipate the adoption of ASU 2014-15 will have a significant impact on our consolidated financial statements. In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply ASU 2014-12 either prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this ASU as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. We do not anticipate the adoption of ASU 2014-12 will have a significant impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-11 and ASU 2016-12, which FASB issued in August 2015, March 2016, April 2016, May 2016 and May 2016, respectively (collectively the “amended ASU 2014-09”). The amended ASU 2014-09 provides a single comprehensive model for the recognition of revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It requires an entity to recognize revenue when the entity transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amended ASU 2014-09 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) with the customer, (2) identifying the separate performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue when each performance obligation is satisfied. The amended ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date for the amended ASU 2014-09 is for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We are currently evaluating the effect of the adoption of the amended ASU 2014-09 on our consolidated financial statements and the implementation approach to be used. Adopted Accounting Standards Effective January 1, 2016, we early adopted ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. We elected to adopt the amendments prospectively for all arrangements entered into or materially modified after January 1, 2016. The adoption of ASU 2015-05 does not have a significant impact on our consolidated financial statements. We record the qualified cloud-based software license fees as software intangible assets instead of prepaid expenses, and amortize them over the contract length as software amortization expense instead of service expense. Both amortization expense and service expense are included in the selling, general and administrative expense line of our consolidated statement of comprehensive income, resulting in no significant impact on our income from operations, net income or cash flows. |
Restructuring Activities (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and related costs | The following table summarizes the activities affecting our restructuring liabilities described above during the nine months ended June 30, 2016 (in thousands):
The following table summarizes the total incurred restructuring costs by segment as of June 30, 2016 (in thousands):
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | Goodwill consists of the following (in thousands):
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Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments | The following table summarizes the notional principal amounts at June 30, 2016 and September 30, 2015 of our outstanding derivative instruments discussed above (in thousands). We did not have foreign exchange forward contracts as of September 30, 2015.
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Schedule of derivative instruments in statement of financial position, fair value | The following table provides the location and fair value amounts of our financial instruments, which are reported in our consolidated balance sheets as of June 30, 2016 and September 30, 2015 (in thousands). We did not have foreign exchange forward contracts as of September 30, 2015.
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Derivative instruments, gain (loss) | The following table provides the losses of our cash flow hedging instruments (net of income tax benefit) which were transferred from AOCI to our consolidated statement of comprehensive income during the three and nine months ended June 30, 2016 (in thousands). We did not have any derivative instruments in the three and nine months ended June 30, 2015.
The following table provides the effective portion of the amount of loss recognized in other comprehensive income (net of income taxes) for the three and nine months ended June 30, 2016 (in thousands). We did not have any derivative instruments in the three and nine months ended June 30, 2015.
We did not have any derivative instruments in the nine months ended June 30, 2015.
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Schedule of accumulated other comprehensive income (loss) | The following table provides a summary of changes to our accumulated other comprehensive income (loss) related to our cash flow hedging instruments (net of income taxes) during the three and nine months ended June 30, 2016 (in thousands).
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Schedule of carrying values and estimated fair values of debt instruments | The carrying amounts and fair values of the debt instruments were as follows (in thousands):
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Schedule of fair value, assets and liabilities measured on recurring basis | The following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring basis in our consolidated balance sheets as of June 30, 2016 and September 30, 2015 (in thousands).
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | Long-term debt consists of the following (in thousands):
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Comprehensive Income (Tables) |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of comprehensive income | Comprehensive income, which is net of income taxes, consists of the following (in thousands):
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Net Income Per Share (Tables) |
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Schedule of net income per share | The following table provides our basic and diluted net income per share for the three and nine months ended June 30, 2016 and 2015 (dollars in thousands except share data):
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net sales and other financial information by business segment | The following tables present operating and financial information by business segment (in thousands):
|
Income Taxes Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of income tax expense (benefit) |
|
Basis of Presentation and Significant Accounting Policies (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Jun. 30, 2015 |
Jun. 30, 2015 |
|
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Prior period reclassification adjustment | $ 6.0 | $ 17.8 |
North America [Member] | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Prior period reclassification adjustment | 5.3 | 16.2 |
Rest of World [Member] | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Prior period reclassification adjustment | $ 0.7 | $ 1.6 |
Recent Accounting Pronouncements Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Deferred tax assets, current | $ 89,269 | $ 89,401 |
Deferred finance costs, net | 10,200 | $ 11,200 |
New accounting pronouncement, early adoption, effect [Member] | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Deferred tax assets, current | $ 89,300 |
Restructuring Activities - Additional Information (Details) - Global Restructuring Plan [Member] $ in Thousands |
9 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges | $ 296 |
North America [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges | 170 |
Rest of World [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges | 126 |
Employee severance [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges | 170 |
Contract termination [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges | $ 126 |
Restructuring Activities - Schedule of Restructuring Activities (Details) - Global Restructuring Plan [Member] $ in Thousands |
9 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, September 30, 2015 | $ 4,490 |
Additions/Adjustments | 296 |
Cash Payments | (2,973) |
Foreign Currency Translation | (95) |
Restructuring reserve, June 30, 2016 | 1,718 |
Employee severance [Member] | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, September 30, 2015 | 2,106 |
Additions/Adjustments | 170 |
Cash Payments | (2,098) |
Foreign Currency Translation | (14) |
Restructuring reserve, June 30, 2016 | 164 |
Contract termination [Member] | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, September 30, 2015 | 2,384 |
Additions/Adjustments | 126 |
Cash Payments | (875) |
Foreign Currency Translation | (81) |
Restructuring reserve, June 30, 2016 | $ 1,554 |
Restructuring Activities - Schedule of Expected and Incurred Restructuring Costs (Details) - Global Restructuring Plan [Member] - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Sep. 30, 2015 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Costs Accrued Since Inception | $ 4,786 | |
Cash Payments Year-to-date | $ (2,973) | |
Foreign Currency Translation | (95) | |
Restructuring Costs Accrued June 30, 2016 | 1,718 | 4,490 |
North America [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Costs Accrued Since Inception | 2,734 | |
Cash Payments Year-to-date | (2,019) | |
Foreign Currency Translation | 0 | |
Restructuring Costs Accrued June 30, 2016 | 715 | |
Rest of World [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Costs Accrued Since Inception | $ 2,052 | |
Cash Payments Year-to-date | (954) | |
Foreign Currency Translation | (95) | |
Restructuring Costs Accrued June 30, 2016 | $ 1,003 |
Inventory (Details) - Inventory valuation reserve [Member] - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Sep. 30, 2015 |
|
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Inventory valuation reserves | $ 257.8 | $ 264.1 |
Inventory valuation, period decrease | 6.3 | |
Valuation allowances and reserves, adjustments | 9.6 | |
Valuation allowances and reserves, deductions | 15.9 | |
Valuation allowances and reserves, deductions, foreign currency transaction | 4.2 | |
Valuation allowances and reserves, deduction, write-down | $ 11.7 |
Goodwill - Additional Information (Details) $ in Millions |
9 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, period decrease | $ 9.2 |
Goodwill - Schedule of Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill as of September 30, 2015 | $ 590,587 |
Foreign currency translation | (9,228) |
Goodwill as of June 30, 2016 | 581,359 |
North America [Member] | |
Goodwill [Roll Forward] | |
Goodwill as of September 30, 2015 | 515,876 |
Foreign currency translation | 0 |
Goodwill as of June 30, 2016 | 515,876 |
Rest of World [Member] | |
Goodwill [Roll Forward] | |
Goodwill as of September 30, 2015 | 74,711 |
Foreign currency translation | (9,228) |
Goodwill as of June 30, 2016 | $ 65,483 |
Fair Value of Financial Instruments - Non-Designated Derivatives (Details) |
Jun. 30, 2016
USD ($)
|
Dec. 16, 2015
foreign_currency_forward_contract
|
Sep. 30, 2015
USD ($)
|
---|---|---|---|
Designated as hedging instrument [Member] | Interest rate contract [Member] | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 437,500,000 | $ 475,000,000 | |
Not designated as hedging instrument [Member] | Foreign exchange forward [Member] | |||
Derivative [Line Items] | |||
Number of interest rate derivatives held | foreign_currency_forward_contract | 1 | ||
Not designated as hedging instrument [Member] | Foreign exchange contract [Member] | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 30,000,000 | $ 0 |
Fair Value of Financial Instruments - Location and Fair Value Amounts of Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Designated as hedging instrument [Member] | Interest rate contract [Member] | Cash flow hedging [Member] | Accrued liabilities [Member] | ||
Derivative [Line Items] | ||
Derivative liability, fair value, gross liability | $ 1,730 | $ 1,902 |
Designated as hedging instrument [Member] | Interest rate contract [Member] | Cash flow hedging [Member] | Other liabilities [Member] | ||
Derivative [Line Items] | ||
Derivative liability, fair value, gross liability | 6,146 | 2,186 |
Not designated as hedging instrument [Member] | Foreign exchange contract [Member] | Prepaid expenses and other current assets [Member] | ||
Derivative [Line Items] | ||
Derivative asset, fair value, gross asset | $ 1,961 | $ 0 |
Fair Value of Financial Instruments - Losses of Cash Flow Hedge Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Interest expense [Member] | Interest rate contract [Member] | Cash flow hedging [Member] | ||||
Derivative [Line Items] | ||||
Interest rate contracts loss reclassified from accumulated OCI into income | $ 330 | $ 0 | $ 1,020 | $ 0 |
Fair Value of Financial Instruments - Effective Portion of Gain Recognized In OCI (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Interest rate contract [Member] | Cash flow hedging [Member] | ||||
Derivative [Line Items] | ||||
Loss on interest rate contacts | $ (873) | $ 0 | $ (2,387) | $ 0 |
Fair Value of Financial Instruments - Changes in AOCI (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2016 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at Beginning of Period | $ 817,573 | |
Balance at End of Period | $ 862,890 | 862,890 |
Accumulated net gain (loss) from cash flow hedges attributable to parent [Member] | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at Beginning of Period | (4,091) | (2,577) |
Change in fair value of hedging instruments | (1,202) | (3,407) |
Amounts reclassified to earnings | 329 | 1,020 |
Net current period other comprehensive income | (873) | (2,387) |
Balance at End of Period | $ (4,964) | $ (4,964) |
Fair Value of Financial Instruments - Pretax Effect of Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Not designated as hedging instrument [Member] | Foreign exchange contract [Member] | Other income [Member] | ||||
Fair value of financial instruments | ||||
Gain (loss) on foreign exchange contract, net, pretax | $ (523) | $ 0 | $ (2,161) | $ 0 |
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt | $ 876,906 | $ 952,906 |
Term loan due December 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 401,344 | 477,344 |
Term loan due February 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 475,562 | $ 475,562 |
Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net income | $ 24,016 | $ 16,479 | $ 68,117 | $ 59,255 |
Foreign currency exchange translation adjustment | (21,063) | 11,203 | (33,741) | (11,469) |
Unrealized loss on cash flow hedging instruments | (873) | 0 | (2,387) | 0 |
Comprehensive income | $ 2,080 | $ 27,682 | $ 31,989 | $ 47,786 |
Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 24,016 | $ 16,479 | $ 68,117 | $ 59,255 |
Basic weighted average shares outstanding (in shares) | 97,929,438 | 97,004,276 | 97,511,590 | 96,924,545 |
Dilutive effect of stock options and restricted stock awards/units (in shares) | 669,777 | 959,862 | 597,314 | 893,835 |
Dilutive weighted average shares outstanding (in shares) | 98,599,215 | 97,964,138 | 98,108,904 | 97,818,380 |
Basic net income per share (in dollars per share) | $ 0.25 | $ 0.17 | $ 0.70 | $ 0.61 |
Diluted net income per share (in dollars per share) | $ 0.24 | $ 0.17 | $ 0.69 | $ 0.61 |
Common stock equivalents not included in diluted calculation due to anti-dilutive effect (in shares) | 1,595,791 | 1,310,777 | 2,386,294 | 1,453,789 |
Segment Reporting (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Sep. 30, 2015 |
|
Segment Reporting [Line Items] | |||||
Net sales | $ 375,186 | $ 368,706 | $ 1,111,771 | $ 1,127,962 | |
Income from operations | 40,044 | 36,177 | 118,499 | 119,785 | |
Interest expense, net | 9,325 | 9,335 | 27,436 | 28,054 | |
Provision for income taxes | 9,360 | 7,961 | 26,906 | 31,113 | |
Total assets | 1,999,920 | 2,370,378 | 1,999,920 | 2,370,378 | $ 2,020,973 |
Goodwill | 581,359 | 857,297 | 581,359 | 857,297 | 590,587 |
Capital expenditures | 3,928 | 1,738 | 11,161 | 4,650 | |
Depreciation and amortization | 6,790 | 6,553 | 20,843 | 19,815 | |
North America [Member] | |||||
Segment Reporting [Line Items] | |||||
Net sales | 300,875 | 296,094 | 889,816 | 899,193 | |
Income from operations | 29,267 | 29,072 | 86,380 | 99,105 | |
Interest expense, net | 8,233 | 8,825 | 24,073 | 25,016 | |
Provision for income taxes | 6,868 | 6,848 | 19,897 | 25,304 | |
Total assets | 1,710,012 | 2,019,434 | 1,710,012 | 2,019,434 | |
Goodwill | 515,876 | 779,648 | 515,876 | 779,648 | 515,876 |
Capital expenditures | 3,878 | 1,525 | 10,616 | 4,028 | |
Depreciation and amortization | 5,769 | 5,539 | 17,771 | 16,694 | |
Rest of World [Member] | |||||
Segment Reporting [Line Items] | |||||
Net sales | 74,311 | 72,612 | 221,955 | 228,769 | |
Income from operations | 10,777 | 7,105 | 32,119 | 20,680 | |
Interest expense, net | 1,092 | 510 | 3,363 | 3,038 | |
Provision for income taxes | 2,492 | 1,113 | 7,009 | 5,809 | |
Total assets | 289,908 | 350,944 | 289,908 | 350,944 | |
Goodwill | 65,483 | 77,649 | 65,483 | 77,649 | $ 74,711 |
Capital expenditures | 50 | 213 | 545 | 622 | |
Depreciation and amortization | $ 1,021 | $ 1,014 | $ 3,072 | $ 3,121 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 9,360 | $ 7,961 | $ 26,906 | $ 31,113 |
Effective tax rate (as a percent) | 28.00% | 32.60% | 28.30% | 34.40% |
Effective income tax rate reconciliation, tax settlement (as a percent) | 0.70% |
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