10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2016

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-35253

WESCO AIRCRAFT HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	20-5441563
(State of Incorporation)	(I.R.S. Employer Identification Number)

24911 Avenue Stanford

Valencia, CA 91355

(Address of Principal Executive Offices and Zip Code)

(661) 775-7200

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.  Yes x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x

The number of shares of common stock (par value $0.001 per share) of the registrant outstanding as of January 31, 2017 was 99,526,120.

INDEX

PART I		Page
FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements:	3
	Consolidated Balance Sheets as of December 31, 2016 and September 30, 2016	3
	Consolidated Statements of Earnings and Comprehensive Income for the three months ended December 31, 2016 and 2015	4
	Consolidated Statements of Cash Flows for three months ended December 31, 2016 and 2015	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5	Other Information	26
Item 6.	Exhibits	27
SIGNATURES		28

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PART 1 — FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

Wesco Aircraft Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

	December 31, 2016			September 30, 2016
Assets
Current assets
Cash and cash equivalents	$	51,192		$	77,061
Accounts receivable, net of allowance for doubtful accounts of $4,285 and $3,846 at December 31, 2016 and September 30, 2016, respectively	247,288			249,195
Inventories	751,703			713,470
Prepaid expenses and other current assets	12,806			10,203
Income taxes receivable	7,132			1,460
Total current assets	1,070,121			1,051,389
Property and equipment, net	49,650			50,525
Deferred line-of-credit financing costs, net	3,623			1,120
Goodwill	576,729			579,865
Intangible assets, net	189,097			194,114
Deferred tax assets, non-current	56,391			58,171
Other assets	12,434			13,394
Total assets	$	1,958,045		$	1,948,578
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	173,116		$	181,700
Accrued expenses and other current liabilities	32,287			26,424
Income taxes payable	7,358			6,782
Capital lease obligations-current portion	1,319			1,471
Short-term borrowings and current portion of long-term debt	40,000			—
Total current liabilities	254,080			216,377
Capital lease obligations, less current portion	1,531			1,710
Long-term debt, less current portion	803,179			834,279
Deferred tax liabilities, non-current	4,011			4,092
Other liabilities	5,512			9,205
Total liabilities	1,068,313			1,065,663
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, 99,526,120 and 98,614,908 shares issued and outstanding at December 31, 2016 and September 30, 2016, respectively	100			99
Additional paid-in capital	432,261			427,295
Accumulated other comprehensive loss	(90,818		)	(79,561		)
Retained earnings	548,189			535,082
Total stockholders’ equity	889,732			882,915
	$	1,958,045		$	1,948,578

See the accompanying notes to the consolidated financial statements

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Wesco Aircraft Holdings, Inc. and Subsidiaries

Consolidated Statements of Earnings and Comprehensive Income

(In thousands, except share data)

(Unaudited)

	Three Months Ended   December 31,
	2016			2015
Net sales	$	339,371		$	359,843
Cost of sales	249,914			263,214
Gross profit	89,457			96,629
Selling, general and administrative expenses	63,201			59,545
Income from operations	26,256			37,084
Interest expense, net	(11,073		)	(8,997		)
Other income, net	288			901
Income before provision for income taxes	15,471			28,988
Provision for income taxes	(2,364		)	(8,379		)
Net income	13,107			20,609
Other comprehensive loss, net	(11,257		)	(6,297		)
Comprehensive income	$	1,850		$	14,312
Net income per share:
Basic	$	0.13		$	0.21
Diluted	$	0.13		$	0.21
Weighted average shares outstanding:
Basic	98,319,926			97,217,924
Diluted	98,821,794			97,939,423

See the accompanying notes to the consolidated financial statements

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Wesco Aircraft Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended   December 31,
	2016			2015
Cash flows from operating activities
Net income	$	13,107		$	20,609
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,729			6,997
Deferred financing costs	3,202			828
Bad debt and sales return reserve	458			374
Stock-based compensation expense	2,690			2,194
Excess tax benefit related to stock-based incentive plans	—			(84		)
Deferred income taxes	491			1,731
Other non-cash items	(1,139		)	(979		)
Changes in assets and liabilities:
Accounts receivable	(2,159		)	14,205
Inventories	(42,169		)	(24,500		)
Prepaid expenses and other assets	(1,993		)	(8,114		)
Income taxes receivable	(5,674		)	49
Accounts payable	(8,334		)	16,311
Accrued expenses and other liabilities	6,008			(8,523		)
Income taxes payable	697			(10,434		)
Net cash (used in) provided by operating activities	(28,086		)	10,664
Cash flows from investing activities
Purchase of property and equipment	(1,316		)	(1,162		)
Net cash used in investing activities	(1,316		)	(1,162		)
Cash flows from financing activities
Proceeds from short-term borrowings	25,000			—
Repayment of short-term borrowings	(5,000		)	—
Repayment of long-term debt	(6,344		)	(5,000		)
Financing fees	(10,462		)	—
Repayment of capital lease obligations	(330		)	(722		)
Excess tax benefit related to stock-based incentive plans	—			84
Proceeds from issuance of common stock	2,277			150
Net cash provided by (used in) financing activities	5,141			(5,488		)
Effect of foreign currency exchange rate on cash and cash equivalents	(1,608		)	(1,225		)
Net (decrease) increase in cash and cash equivalents	(25,869		)	2,789
Cash and cash equivalents, beginning of period	77,061			82,866
Cash and cash equivalents, end of period	$	51,192		$	85,655

See the accompanying notes to the consolidated financial statements

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1. 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 filed with the SEC on November 28, 2016, as amended by Amendment No. 1 to Annual Report on Form 10-K/A filed with the SEC on December 14, 2016 (collectively, the “2016 Form 10-K”).

Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation.

Deferred Financing Costs

Debt issuance costs incurred in connection with the issuance of our long-term debt are capitalized and amortized to interest expense over the term of the debt using the straight-line method, which approximates the effective interest method. The unamortized amount is presented as a reduction of long-term debt on the balance sheet.

Debt issuance costs incurred in connection with our revolving line-of-credit (LOC) agreement are capitalized and amortized to interest expense over the term of the LOC agreement using the straight-line method. The unamortized amount is presented as a non-current asset on the balance sheet.

Note 2. 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 2016-07, 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 the Company in fiscal year 2018, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

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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 the Company in fiscal year 2020 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 the Company in fiscal year 2019, 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 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 the Company in fiscal year 2018, and interim periods therein. 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 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 the Company in fiscal year 2018, 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 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 inAugust 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 as 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 for the Company is fiscal year 2019, including interim reporting periods within that reporting period. Early adoption is permitted for fiscal year 2018, 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.

7

Adopted Accounting Standards

Effective October 1, 2016, we elected to early adopt 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. The primary impacts of adoption are (1) the recognition of excess tax benefits in our provision for income tax instead of paid-in capital and (2) the presentation of excess tax benefits in the statement of cash flows as cash provided by operating activities instead of cash provided by financing activities. The first requirement is required to be applied prospectively. For the three months ended December 31, 2016, we recorded $1.2 million of excess tax benefits as a reduction to our provision for income tax. For the second requirement, we elected to adopt this update prospectively. For the three months ended December 31, 2016, we presented the $1.2 million in our consolidated statements of cash flows as cash provided by operating activities.

ASU 2016-09 also addresses cash flow statement presentation. Since we have historically presented cash flows related to employee taxes paid for withheld shares as a financing activity, ASU 2016-09 had no impact on our consolidated statements of cash flows. As permitted by ASU 2019-09, we have elected to continue to estimate forfeitures to determine the amount of compensation cost to be recognized in each period.

Effective October 1, 2016, we adopted, on a prospective basis, ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which 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. As of December 31, 2016, we did not have any provisional amounts outstanding from prior acquisitions. Therefore, the adoption of ASU 2015-16 did not have any impact on our consolidated financial statements.

Effective October 1, 2016, we adopted 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. As of December 31, 2016 and September 30, 2016, we had $3.6 million and $1.1 million, respectively, of deferred financing costs related to our revolving line-of-credit facility.

Effective October 1, 2016, we adopted ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost. ASU 2015-03 requires that we change the presentation of debt issuance costs on our consolidated balance sheets. Effective October 1, 2016, our unamortized debt financing costs are presented as a reduction of long-term debt instead of being presented as an asset on our consolidated balance sheet. As required by ASU 2015-03, we reclassified $7.6 million of deferred debt financing costs from non-current assets to reduce our $841.9 million long-term debt as of September 30, 2016. As of December 31, 2016, deferred debt financing costs of $12.4 million is presented as a reduction of our long-term debt. See Note 6 for further information.

Effective October 1, 2016, we adopted, on a prospective basis, 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. The adoption of ASU 2014-12 did not have any impact on our consolidated financial statements.

Note 3. Inventory

Our inventory is comprised solely of finished goods. During the three months ended December 31, 2016 and 2015, we recorded a charge to cost of sales of $2.2 million and $2.0 million, respectively, to write down excess inventory to its net realizable value.

Note 4. Goodwill

During the three months ended December 31, 2016, goodwill declined $3.1 million as a result of the strengthening of the U.S. dollar compared to the British pound.

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Goodwill consists of the following (in thousands):

	North America			Rest of World			Total
Goodwill as of September 30, 2016, gross	$	779,647		$	63,989		$	843,636
Accumulated impairment	(263,771		)	—			(263,771		)
Goodwill as of September 30, 2016, net	515,876			63,989			579,865
Changes during the period:
Foreign currency translation	—			(3,136		)	(3,136		)
Goodwill as of December 31, 2016, gross	779,647			60,853			840,500
Accumulated impairment	(263,771		)	—			(263,771		)
Goodwill as of December 31, 2016, net	$	515,876		$	60,853		$	576,729

Note 5. 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 these objectives, we primarily use interest rate swaps as part of our 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 $412.5 million as of December 31, 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 6 below; see Note 6 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 (loss) ("AOCI") and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended December 31, 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 three months ended December 31, 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 AOCI related to derivatives and the related deferred tax are reclassified to interest expense as interest payments are made on our variable-rate debt. As of December 31, 2016, we expected to reclassify approximately $1.2 million from accumulated other comprehensive loss and the related deferred tax to earnings as an increase to interest expense over the next 12 months.

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Non-Designated Derivatives

On October 3 and October 5, 2016, we entered into two foreign currency forward contracts to partially reduce our exposure to foreign currency fluctuations for a subsidiary's net monetary assets, which are denominated in a foreign currency. The derivatives are not designated as a hedging instrument. The change in their 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. Both foreign currency forward contracts expired on December 28, 2016. We did not have foreign currency forward contracts as of December 31 and September 30, 2016.

The following table summarizes the notional principal amounts at December 31 and September 30, 2016 of our outstanding derivative instruments discussed above (in thousands).

	Derivative Notional
	December 31, 2016		September 30, 2016
Instruments designated as accounting hedges:
Interest rate contracts	$	412,500	$	425,000

The following table provides the location and fair value amounts of our financial instruments, which are reported in our consolidated balance sheets as of December 31 and September 30, 2016 (in thousands).

		Fair Value
	Balance Sheet Locations	December 31, 2016		September 30, 2016
Instruments designated as accounting hedges:
Interest rate contracts	Accrued expenses and other current liabilities	$	1,156	$	1,057
	Other liabilities	1,968		5,615

The following table provides the losses of our cash flow hedging instruments (net of income tax benefit), which were transferred from AOCI to interest expense on our consolidated statement of comprehensive income during the three months ended December 31, 2016 and 2015 (in thousands).

	Location in Consolidated Statement of Comprehensive Income	Three Months Ended   December 31,
Cash Flow Hedge		2016		2015
Interest rate contracts	Interest expense, net	$	252	$	352

The following table provides the effective portion of the amount of gain recognized in other comprehensive income (net of income taxes) for the three months ended December 31, 2016 and 2015 (in thousands).

	Three Months Ended   December 31,
Cash Flow Hedge	2016		2015
Interest rate contracts	$	2,182	$	1,240

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The following table provides a summary of changes to our AOCI related to our cash flow hedging instruments (net of income taxes) during the three months ended December 31, 2016 (in thousands).

AOCI - Unrealized Gain (Loss) on Hedging Instruments	Three Months Ended December 31, 2016
Balance at beginning of period	$	(4,206	)
Change in fair value of hedging instruments	1,930
Amounts reclassified to earnings	252
Net current period other comprehensive income	2,182
Balance at end of period	$	(2,024	)

The following table provides the pretax effect of our derivative instruments not designated as hedging instruments on our consolidated statements of earnings and comprehensive income for the three months ended December 31, 2016 and 2015 (in thousands).

	Location in Consolidated Statement of Comprehensive Income	Three Months Ended   December 31,
Instruments Not Designated As Hedging Instruments
		2016			2015
Foreign currency forward contracts	Other income (loss), net	$	(2,595	)	$	(490	)

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 (as defined below). The principal amounts and fair values of the debt instruments were as follows (in thousands):

	December 31, 2016				September 30, 2016
	Principal Amount		Fair Value		Principal Amount		Fair Value
Term loan A facility	$	395,000	$	393,815	$	401,344	$	401,344
Term loan B facility	440,562		432,632		440,562		435,716
Total long-term debt	$	835,562	$	826,447	$	841,906	$	837,060

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:

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.

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),

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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 three months ended December 31, 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 December 31 and September 30, 2016 (in thousands).

December 31, 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	$	1,156	—	$	1,156	—
	Other liabilities	1,968		—	1,968		—

September 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	$	1,057	—	$	1,057	—
	Other liabilities	5,615		—	5,615		—

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.

Note 6. Long-Term Debt

Long-term debt consists of the following (in thousands):

	December 31, 2016									September 30, 2016
	Principal  Amount			Deferred Financing Costs			Carrying Amount			Principal  Amount		Deferred Financing Costs			Carrying Amount
Term loan A facility	$	395,000		$	(7,308	)	$	387,692		$	401,344	$	(2,247	)	$	399,097
Term loan B facility	440,562			(5,075		)	435,487			440,562		(5,380		)	435,182
Less: current portion	(20,000		)	—			(20,000		)	—		—			—
Non-current portion	$	815,562		$	(12,383	)	$	803,179		$	841,906	$	(7,627	)	$	834,279

On October 4, 2016, we entered into the Fourth Amendment (the Amendment) to our credit agreement, dated as of December 7, 2012, by and among the Company, Wesco Aircraft Hardware (the Borrower) and the lenders and agents party thereto (as amended prior to the Amendment, the Existing Credit Agreement; the Existing Credit Agreement, as amended by the Amendment, the Credit Agreement). The Amendment modified the Existing Credit Agreement to replace the Borrower’s existing revolving facility with a new revolving facility in an aggregate principal amount of $180.0 million and the Borrower’s existing senior secured term loan A facility with a new senior secured term loan A facility in an aggregate principal amount of $400.0 million (the "term loan A facility").

The Credit Agreement provides for (1) a $400.0 million term loan A facility, (2) a $180.0 million 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 B facility, together with the term loan A facility and the revolving facility, as the "Credit Facilities."

As of December 31, 2016, our outstanding indebtedness under our Credit Facilities was $855.6 million, which consisted of (1) $395.0 million of indebtedness under the term loan A facility, (2) $20.0 million of indebtedness under the revolving

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facility, and (3) $440.6 million of indebtedness under the term loan B facility. As of December 31, 2016, $160.0 million was available for borrowing under the revolving facility, of which we could borrow up to $60.0 million without breaching any covenants contained in the agreements governing our indebtedness.

In connection with the Amendment, we borrowed $25.0 million under the revolving facility. During the three months ended December 31, 2016, we made our required quarterly payment of $5.0 million and a voluntary prepayment of $1.3 million on our term loan A facility and a voluntary prepayment of $5.0 million on our borrowings under the revolving facility.

The interest rate for the term loan A facility is based on our Consolidated Total Leverage Ratio (as defined in the Credit Agreement) as determined in the most recently delivered financial statements, with the respective margins ranging from 2.00% to 2.75% for Eurocurrency loans and 1.00% to 1.75% 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 $400.0 million with the balance due on the earlier of (i) 90 days before the maturity of the term loan B facility, and (ii) October 4, 2021. As of December 31, 2016, the interest rate for borrowings under the term loan A facility was 3.27%, which approximated the effective interest rate.

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 December 31, 2016, the interest rate for borrowings under the term loan B facility was 3.5%, which approximated the effective interest rate. In July 2015, we entered into interest rate swap agreements relating to this indebtedness, which are described in greater detail in Note 5 above.

The interest rate for the revolving facility is based on our Consolidated Total Leverage Ratio (as defined in the Credit Agreement) as determined in the most recently delivered financial statements, with the respective margins ranging from 2.00% to 2.75% for Eurocurrency loans and 1.00% to 1.75% for ABR loans. The revolving facility expires on the earlier of (i) 90 days before the maturity of the term loan B facility, and (ii) October 4, 2021. As of December 31, 2016, the interest rate for borrowings under the revolving facility was 3.27%.

The Amendment also (1) removed the Consolidated Net Interest Coverage Ratio (as defined in the Existing Credit Agreement) financial covenant and (2) modified the Consolidated Total Leverage Ratio (as defined in the Credit Agreement) levels in the financial covenant to a maximum of 4.50 for the quarters ended September 30, 2016 and December 31, 2016, with step-downs to 4.25 for the quarters ending March 31, 2017 and June 30, 2017, 4.00 for the quarters ending September 30, 2017 and December 31, 2017, 3.75 for the quarters ending March 31, 2018 and June 30, 2018 and 3.50 for the quarter ending September 30, 2018 and thereafter.

The Amendment also provided for additional changes, including (1) permitting the corporate consolidation of Wesco’s operations in the United Kingdom, (2) expanding Wesco’s ability to enter into receivables financings, (3) increasing the maximum amount permitted to be incurred under a Cash-Capped Incremental Facility (as defined in the Credit Agreement) from $100 million to $150 million and (4) providing increased flexibility for future restructurings.

As a result of the amendment, we incurred $10.5 million in fees that were capitalized, $7.2 million of which was related to the term loan A facility and $3.3 million of which was related to the revolving facility. Of the $3.4 million of the unamortized deferred financing costs related to the Existing Credit Agreement, $2.3 million was written off as debt extinguishment loss in the three months ended December 31, 2016, which was included in interest expense for the period. The remaining unamortized deferred financing costs related to the Existing Credit Agreement were added to the $10.5 million of deferred financing costs related to the Amendment and will be amortized over the remaining life of the term loan A and the revolving facility. The following table summarizes the total deferred financing costs for term loan A facility and the revolving facility as of October 4, 2016.

	Term Loan A Facility			Revolving Facility			Total
Deferred financing costs as of September 30, 2016	$	2,247		$	1,120		$	3,367
Write off for the Amendment	(1,769		)	(553		)	(2,322		)
Deferred financing costs for the Amendment	7,215			3,247			10,462
Deferred financing costs as of October 4, 2016	$	7,693		$	3,814		$	11,507

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

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the assets of our guarantor subsidiaries, including capital stock of the subsidiaries (in each case, subject to certain exceptions).

As referred to above, our borrowings under the Credit Facilities are subject to a financial covenant based upon our Consolidated Total Leverage Ratio (as defined in the Credit Agreement) with the maximum ratio currently set at 4.50, which will step down to 4.25 next quarter and will step down gradually during future quarters to 3.50 for the quarter ending September 30, 2018 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 December 31, 2016, we were in compliance with all of the foregoing covenants, and our Consolidated Total Leverage Ratio was 4.19.

As of December 31, 2016, our subsidiary, Wesco Aircraft Europe, Ltd, has available a £7.0 million ($8.6 million based on the December 31, 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 December 31, 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.

Note 7. Comprehensive Income

Comprehensive income, which is net of income taxes, consists of the following (in thousands):

	Three Months Ended   December 31,
	2016			2015
Net income	$	13,107		$	20,609
Foreign currency translation loss	(13,439		)	(7,537		)
Unrealized gain on cash flow hedging instruments	2,182			1,240
Total comprehensive income	$	1,850		$	14,312

Note 8. 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 months ended December 31, 2016 and 2015 (dollars in thousands except share data):

	Three Months Ended   December 31,
	2016		2015
Net income	$	13,107	$	20,609
Basic weighted average shares outstanding	98,319,926		97,217,924
Dilutive effect of stock options and restricted stock awards/units	501,868		721,499
Dilutive weighted average shares outstanding	98,821,794		97,939,423
Basic net income per share	$	0.13	$	0.21
Diluted net income per share	$	0.13	$	0.21

 For the three months ended December 31, 2016 and 2015, respectively, 1,972,928 and 2,978,026 shares of common stock equivalents were not included in the diluted calculation due to their anti-dilutive effect. 

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Note 9. 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):

	Three Months Ended December 31, 2016									Three Months Ended December 31, 2015
	North America			Rest of World			Consolidated			North America			Rest of World			Consolidated
Net sales	$	270,469		$	68,902		$	339,371		$	286,960		$	72,883		$	359,843
Income from operations	17,286			8,970			26,256			29,056			8,028			37,084
Interest expense, net	(10,115		)	(958		)	(11,073		)	(7,799		)	(1,198		)	(8,997		)
Provision for income taxes	(548		)	(1,816		)	(2,364		)	(6,412		)	(1,967		)	(8,379		)
Capital expenditures	1,064			252			1,316			1,056			106			1,162
Depreciation and amortization	5,950			779			6,729			5,953			1,044			6,997

	As of December 31, 2016						As of December 31, 2015
	North America		Rest of World		Consolidated		North America		Rest of World		Consolidated
Total assets	$	1,682,480	$	275,565	$	1,958,045	$	1,699,656	$	320,760	$	2,020,416

Note 10.  Income Taxes

	Three Months Ended   December 31,
(dollars in thousands)	2016			2015
Provision for income taxes	$	2,364		$	8,379
Effective tax rate	15.3		%	28.9		%

For the three months ended December 31, 2016, our effective tax rate decreased 13.6 percentage points primarily due to the adoption of ASU 2016-09, which resulted in a decrease of our effective tax rate by 7.9 percentage points, and the release of a valuation allowance on a net operating loss carryforward of a foreign subsidiary, which resulted in a decrease of our effective tax rate by 5.1 percentage points.

Note 11. 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.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with our consolidated interim financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q.

The statements in this discussion regarding industry trends, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on November 28, 2016, as amended by Amendment No. 1 to Annual Report on Form 10-K/A filed with the SEC on December 14, 2016 (collectively, the “2016 Form 10-K”) and “—Cautionary Note Regarding Forward-Looking Statements” below.  Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Unless otherwise noted in this Quarterly Report on Form 10-Q, the term “Wesco Aircraft” means Wesco Aircraft Holdings, Inc., our top-level holding company, and the terms “Wesco,” “the Company,” “we,” “us,” “our” and “our company” mean Wesco Aircraft and its subsidiaries.  References to “fiscal year” mean the year ending or ended September 30. For example, “fiscal year 2017” or “fiscal 2017” means the period from October 1, 2016 to September 30, 2017.

Executive Overview

We are the world’s leading distributor and provider of comprehensive supply chain management services to the global aerospace industry, based on annual sales. Our services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, just-in-time (“JIT”) delivery and point-of-use inventory management. We supply over 565,000 active stock-keeping units (“SKUs”), including C-class hardware, chemicals, electronic components, bearings, tools and machined parts. We serve our customers under both (1) long-term contractual arrangements (“Contracts”), which include JIT contracts that govern the provision of comprehensive outsourced supply chain management services and long-term agreements ("LTAs"), that typically set prices for specific products, and (2) ad hoc sales.

Founded in 1953 by the father of our current Chairman of the Board of Directors, Wesco has grown to serve over 8,000 customers, which are primarily in the commercial, military and general aviation sectors, including the leading original equipment manufacturers (“OEMs”) and their subcontractors, through which we support nearly all major Western aircraft programs. We also service industrial customers, which include customers in the automotive, energy, pharmaceutical and electronics sectors.

Industry Trends Affecting Our Business

We rely on demand for new commercial and military aircraft for a significant portion of our sales. Commercial aircraft demand is driven by many factors, including the global economy, industry passenger volumes and capacity utilization, airline profitability, introduction of new models and the lifecycle of current fleets. Demand for business jets is closely correlated to regional economic conditions and corporate profits, but also influenced by new models and changes in ownership dynamics. Military aircraft demand is primarily driven by government spending, the timing of orders and evolving U.S. Department of Defense strategies and policies.

 Aftermarket demand is affected by many of the same trends as those in OEM channels, as well as requirements to maintain aging aircraft and the cost of fuel, which can lead to greater utilization of existing planes. Demand in the military aftermarket is further driven by changes in overall fleet size and the level of U.S. military operational activity domestically and overseas.

 Supply chain service providers and distributors have been aided by these trends along with an increase in outsourcing activities, as OEMs and their suppliers focus on reducing their capital commitments and operating costs.

Commercial Aerospace Market

Over the past three years, major airlines have ordered new aircraft at a robust pace, aided by strong profits and increasing passenger volumes. At the same time, volatile fuel prices have led to greater demand for fuel-efficient models and new engine options for existing aircraft designs. The rise of emerging markets has added to the growth in overall demand at a stronger pace than seen historically. More recently, several airlines have slowed the pace of orders with large commercial

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OEMs in response to rapidly changing macroeconomic conditions. In spite of this development, large commercial OEMs have indicated that they continue to expect a high level of deliveries, primarily due to their unprecedented level of backlogs.Business aviation has lagged the larger commercial market, reflecting a deeper downturn in the last recession and an uncertain economic outlook. Overall business aviation production levels remain well below their pre-recession peak, though newer models have seen a greater acceptance in the marketplace than older and previously owned aircraft.

Military Aerospace Market

 Military build-rates have declined for the past few years (and they may continue to decline going forward), which has negatively affected this portion of our business. We believe the diversity of the military aircraft programs we support can help mitigate the impact of new program delays, changes or cancellations. In particular, we believe the services we provide the Joint Strike Fighter program will benefit our future business as production for that program increases. Increased sales for other established aircraft programs that directly benefit from such changes also help moderate build-rate declines.

Other Factors Affecting Our Financial Results

Fluctuations in Revenue

 There are many factors, such as changes in customer aircraft build rates, customer plant shut downs, variation in customer working days, changes in selling prices, the amount of new customers’ consigned inventory and increases or decreases in customer inventory levels, that can cause fluctuations in our financial results from quarter-to-quarter. To normalize for short-term fluctuations, we tend to look at our performance over several quarters or years of activity rather than discrete short-term periods. As such, it can be difficult to determine longer-term trends in our business based on quarterly comparisons. Ad hoc business tends to vary based on the amount of disruption in the market due to changes in aircraft build rates, new aircraft introduction, customer or site consolidations, and other factors. Fluctuations in our ad hoc business tend to be partially offset by our contract business as most of our ad hoc revenue comes from our contract customers.

 We will continue our strategy of seeking to expand our relationships with existing ad hoc customers by transitioning them to Contracts, as well as expanding relationships with our existing Contract customers to include additional customer sites, additional SKUs and additional levels of service. New Contract customers and expansion of existing Contract customers to additional sites and SKUs sometimes leads to a corresponding decrease in ad hoc sales as a portion of the SKUs sold under Contracts were previously sold to the same customer as ad hoc sales. We believe this strategy serves to mitigate some of the fluctuations in our net sales. Our sales to Contract customers may fail to meet our expectations for a variety of reasons, in particular if industry build rates are lower than expected or, for certain newer JIT customers, if their consigned inventory, which must be exhausted before corresponding products are purchased directly from us, is greater than we expected.

 If any of our customers are acquired or controlled by a company that elects not to utilize our services, or attempt to implement in-sourcing initiatives, it could have a negative effect on our strategy to mitigate fluctuations in our net sales. Additionally, although we derive a significant portion of our net sales from the building of new commercial and military aircraft, we have not typically experienced extreme fluctuations in our net sales when sales for an individual aircraft program decrease, which we believe is attributable to our diverse base of customers and programs.

Fluctuations in Margins

 Our gross margins are impacted by changes in product mix. Generally, our hardware products have higher gross profit margins than chemicals and electronic components.

 We also believe that our strategy of growing our Contract sales and converting ad hoc customers into Contract customers could negatively affect our gross profit margins, as gross profit margins tend to be higher on ad hoc sales than they are on Contract-related sales. However, we believe any potential adverse impact on our gross profit margins is outweighed by the benefits of a more stable long-term revenue stream attributable to Contract customers. 

Our Contracts generally provide for fixed prices, which can expose us to risks if prices we pay to our suppliers rise due to increased raw material or other costs. However, we believe our expansive product offerings and inventories, our ad hoc sales and, where possible, our longer-term agreements with suppliers have enabled us to mitigate this risk.

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Fluctuations in Cash Flow

We believe our cash flows may be affected by fluctuations in our inventory that can occur over time. When we are awarded new programs, we generally increase our inventory to prepare for expected sales related to the new programs, which often take time to materialize, and to achieve minimum stock requirements, if any. As a result, if certain programs for which we have procured inventory are delayed or if certain newer JIT customers’ consigned inventory is larger than we expected, we may experience a more sustained inventory increase.

Inventory fluctuations may also be attributable to general industry trends. Factors that may contribute to fluctuations in inventory levels in the future could include (1) strategic purchases (a) to take advantage of favorable pricing, (b) made in anticipation of the expected industry growth cycle, (c) to support new customer Contracts or (d) to acquire high-volume products that are typically difficult to obtain in sufficient quantities; (2) changes in supplier lead times and the timing of inventory deliveries; (3) purchases made in anticipation of future growth (particularly growth in our MRO business); and (4) purchases made in connection with the expansion of existing Contracts. While effective inventory management is an ongoing challenge, we continue to take steps to enhance the sophistication of our procurement practices to mitigate the negative impact of inventory buildups on our cash flow.

Our accounts receivable balance as a percentage of net sales may fluctuate from quarter-to-quarter. These fluctuations are primarily driven by changes, from quarter to quarter, in the timing of sales and the current average days’ sales outstanding. The completion of customer Contracts with accelerated payment terms can also contribute to these quarter-to-quarter fluctuations. Similarly, our accounts payable may fluctuate from quarter to quarter, which is primarily driven by the timing of purchases or payments made to our suppliers.

Segment Presentation

 We conduct our business through two reportable segments: North America and Rest of World. We evaluate segment performance based on segment income or loss 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. 

Key Components of Our Results of Operations

 The following is a discussion of the key line items included in our financial statements for the periods presented below under the heading “Results of Operations.” These are the measures that management utilizes to assess our results of operations, anticipate future trends and evaluate risks in our business.

Net Sales

 Our net sales include sales of hardware, chemicals, electronic components, bearings, tools and machined parts, and eliminate all intercompany sales. We also provide certain services to our customers, including quality assurance, kitting, JIT delivery and point-of-use inventory management. However, these services are provided by us contemporaneously with the delivery of the product, and as such, once the product is delivered, we do not have a post-delivery obligation to provide services to the customer. Accordingly, the price of such services is generally included in the price of the products delivered to the customer, and revenue is recognized upon delivery of the product, at which point, we have satisfied our obligations to the customer. We do not account for these services as a separate element, as the services generally do not have stand-alone value and cannot be separated from the product element of the arrangement.

 We serve our customers under both Contracts, which include JIT contracts and LTAs, and ad hoc sales. Under JIT contracts, customers typically commit to purchase specified products from us at a fixed price, on an if-and-when needed basis, and we are responsible for maintaining high levels of stock availability of those products. LTAs are typically negotiated price lists for customers or individual customer sites that cover a range of pre-determined products, purchased on an as-needed basis. Ad hoc customers purchase products from us on an as-needed basis and are generally supplied out of our existing inventory. In addition, Contract customers often purchase products that are not captured under their Contract on an ad hoc basis.

Income from Operations

Income from operations is the result of subtracting the cost of sales and selling, general and administrative expenses from net sales, and is used primarily to evaluate our performance and profitability.

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 The principal component of our cost of sales is product cost, which was 93.5% of our total cost of sales for the three months ended December 31, 2016 and 93.0% for the three months ended December 31, 2015. The remaining components are freight and expediting fees, import duties, tooling repair charges, supplies and contract labor costs, which collectively were 6.5% and 7.0% of our total cost of sales for the three months ended December 31, 2016 and 2015, respectively.

 Product cost is determined by the current weighted average cost of each inventory item, except for chemical parts for which the first-in, first-out method is used, and includes charges, if any, to write down excess and obsolete ("E&O") inventory. The charge to write down E&O inventory is calculated by comparing our forecasted demand for each part to the quantity we currently have on-hand. We review inventory for excess quantities and obsolescence quarterly. For a description of our E&O reserve policy, see Part II, Item 7.  “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Inventory” in the 2016 Form 10-K. During the three months ended December 31, 2016 and 2015, we recorded a charge of $2.2 million and $2.0 million, respectively, to cost of sales to write down E&O inventory to its net realizable value.

 The principal components of our selling, general and administrative expenses are salaries, wages, benefits and bonuses paid to our employees; stock-based compensation; commissions paid to outside sales representatives; travel and other business expenses; training and recruitment costs; marketing, advertising and promotional event costs; rent; bad debt expense; professional services fees (including legal, audit and tax); and ordinary day-to-day business expenses. Depreciation and amortization expense is also included in selling, general and administrative expenses, and consists primarily of scheduled depreciation for leasehold improvements, machinery and equipment, vehicles, computers, software and furniture and fixtures. Depreciation and amortization also includes intangible asset amortization expense.

Other Expenses

Interest Expense, Net.  Interest expense, net consists of the interest we pay on our long-term debt, fees on our revolving facility (as defined below under “—Liquidity and Capital Resources—Credit Facilities—Senior Secured Credit Facilities”) and our line-of-credit and deferred financing costs, net of interest income.

Other Income, Net.  Other income, net is primarily comprised of foreign currency exchange gain net of foreign currency exchange loss associated with transactions denominated in currencies other than the respective functional currency of the reporting subsidiary, partially offset by the gain or loss on foreign currency forward contracts.

Critical Accounting Policies and Estimates

 The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. We evaluate our estimates and judgments on an on-going basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what we anticipate, and different assumptions or estimates about the future could change our reported results. For a description of our critical accounting policies and estimates, see Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the 2016 Form 10-K.

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Results of Operations

	Three Months Ended   December 31,
(In thousands)	2016			2015
Consolidated result of operations:
Net sales:
North America	$	270,469		$	286,960
Rest of World	68,902			72,883
Total net sales	$	339,371		$	359,843
Income from operations:
North America	$	17,286		$	29,056
Rest of World	8,970			8,028
Total Income from operations	26,256			37,084
Interest expense, net	(11,073		)	(8,997		)
Other income, net	288			901
Income before provision for income taxes	15,471			28,988
Provision for income taxes	(2,364		)	(8,379		)
Net income	$	13,107		$	20,609

	Three Months Ended   December 31,
(As a % of total net sales; numbers have been rounded)	2016		2015
Income from operations by segment:
North America	6.4	%	10.1	%
Rest of World	13.0	%	11.0	%
Consolidated:
Income from operations	7.7	%	10.3	%
Interest expense, net	(3.3	)	(2.5	)
Other income, net	0.2		0.3
Income before provision for income taxes	4.6		8.1
Provision for income taxes	(0.7	)	(2.4	)
Net income	3.9	%	5.7	%

Three months endedDecember 31, 2016 compared with three months ended December 31, 2015

Net Sales

 Consolidated net sales decreased $20.5 million, or 5.7%, to $339.4 million for the three months ended December 31, 2016, compared with $359.8 million for the same period in the prior year. Foreign currency translation impacts reduced sales by $13.6 million. Excluding foreign currency translation impacts, net sales for the three months ended December 31, 2016 decreased $6.9 million compared to the three months ended December 31, 2015. The $6.9 million decrease was primarily due to a decrease in ad hoc sales of $8.7 million partially offset by an increase in contract sales of $1.8 million. The decline in ad hoc revenue was primarily due to production schedule changes as the timing of December holidays this year resulted in more customer production shut downs than in the prior year. This reduction in customer production days affected both ad hoc and contract revenue; however, other increases in contract sales, related both to increases in contract volume and new contracts, more than offset this impact. Ad hoc and Contract sales as a percentage of net sales represented 24% and 76%, respectively, for the three months ended December 31, 2016 as compared to 26% and 74%, respectively, for the same period in the prior year.

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Net sales for our North America segment decreased $16.5 million, or 5.7%, to $270.5 million for the three months ended December 31, 2016, compared with $287.0 million for the same period in the prior year. The $16.5 million decrease was primarily due to a decrease in ad hoc sales of $13.0 million and a decrease in Contract sales of $3.5 million, primarily due to customer production schedule changes.

Net sales for our Rest of World segment decreased $4.0 million, or 5.5%, to $68.9 million for the three months ended December 31, 2016, compared with $72.9 million for the same period in the prior year. Foreign currency translation impacts reduced sales by $13.6 million. Excluding foreign currency translation impacts, net sales for the three months ended December 31, 2016 increased $9.6 million compared to the three months ended December 31, 2015. The $9.6 million increase was due primarily to ad hoc sales growth of $4.2 million and Contract sales growth of $5.4 million that was primarily due to increased production and expanded content.

Income from Operations

 Consolidated income from operations decreased $10.8 million or 29.2%, to $26.3 million for the three months ended December 31, 2016, compared with $37.1 million for the same period in the prior year. Income from operations as a percentage of net sales was 7.7% for the three months ended December 31, 2016, compared to 10.3% for the three months ended December 31, 2015. The $10.8 million decrease in income from operations was comprised of a decrease in gross profit of $7.1 million and an increase in SG&A expenses of $3.7 million. The $7.1 million decrease in gross profit was largely due to a $4.4 million foreign currency translation impact. The remaining $2.7 million decrease in gross profit was primarily driven by a decrease in sales on a constant currency basis and to a lesser extent by lower gross margins caused by changes in sales mix. The increase in SG&A expenses was $6.3 million after adjusting for the $2.6 million impact of foreign currency translation, and was largely driven by increases in payroll and other people related costs of $5.0 million, IT related costs of $1.4 million, and non-cash stock based compensation of $0.5 million. The increase in payroll and other people costs was due in part to increased staffing for new business. These increases were partially offset by a $1.1 million decrease in professional fees.

Income from operations for our North America segment decreased $11.8 million or 40.5%, to $17.3 million, compared with $29.1 million for the same period in the prior year. Income from operations as a percentage of net sales was 6.4% for the three months ended December 31, 2016, compared to 10.1% for the same period in the prior year, a decrease of 3.7 percentage points. The decrease in income from operations was comprised of a decrease in gross profit of $6.8 million and an increase in SG&A expenses of $5.0 million. The decrease in gross profit was largely driven by decreased net sales and a decrease in gross margins caused by changes in sales mix. The increase in SG&A expenses was largely driven by increases in payroll and other people related costs of $4.0 million, IT related costs of $1.4 million, and non-cash stock-based compensation of $0.5 million. These increases were partially offset by a $1.2 million decrease in professional fees.

 Income from operations for our Rest of World segment increased $1.0 million, or 11.7%, to $9.0 million, compared with $8.0 million for the same period in the prior year. Income from operations as a percentage of net sales was 13.0% for the three months ended December 31, 2016, compared to 11.0% for the same period in the prior year, an increase of 2.0 percentage points. The increase in income from operations is comprised of a $1.3 million decrease in SG&A expenses partially offset by a $0.3 million decrease in gross profit. Adjusted for $2.6 million of positive impact of foreign currency translation, SG&A expenses increased by $1.3 million largely driven by increases in payroll costs of $1.0 million. Adjusted for $4.4 million of negative impact of foreign currency translation, gross profit increased by $4.1 million primarily driven by the increase in net sales on a constant currency basis and changes in sales mix.

Interest Expense, Net

 Interest expense, net was $11.1 million for the three months ended December 31, 2016, compared with $9.0 million for the same period in the prior year. The increase was primarily due to $2.3 million of deferred financing costs written off in the three months ended December 31, 2016 as debt extinguishment loss related to the Existing Credit Agreement (as defined and described in Note 6 of Notes to the Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q).

Other Income, Net

Other income, net was $0.3 million for the three months ended December 31, 2016, compared with other income, net of $0.9 million for the same period in the prior year. The $0.6 milliondecrease in other income was primarily related to lower net foreign currency exchange gains associated with transactions denominated in currencies other than the respective functional currency of the reporting subsidiary.

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Provision for Income Taxes

The provision for income taxes for the three months ended December 31, 2016 was $2.4 million, compared with $8.4 million for the same period in the prior year. The reduction in provision for income taxes compared to the same period of the prior year is due to a combination of lower pre-tax income and a lower effective tax rate. Our effective tax rate was 15.3% and 28.9% for the three months ended December 31, 2016 and 2015, respectively. For the three months ended December 31, 2016, our effective tax rate decreased primarily due to the adoption of ASU 2016-09, which resulted in a decrease of our effective tax rate by 7.9 percentage points, and the release of a valuation allowance on a net operating loss carryforward of a foreign subsidiary, which resulted in a decrease of our effective tax rate by 5.1 percentage points.

Net Income

Net income decreased $7.5 million, or 36.4%, for the three months ended December 31, 2016 to $13.1 million, compared with $20.6 million for the same period in the prior year. Net income as a percentage of net sales was 3.9% for the three months ended December 31, 2016, compared to 5.7% for the same period in the prior year. Net income per diluted share was $0.13 and $0.21 for the three months ended December 31, 2016 and 2015, respectively. This decrease in net income was primarily driven by a decrease in operating income, partially offset by a decrease in provision for income taxes, as discussed above.

Liquidity and Capital Resources

Overview

 Our primary sources of liquidity are cash flow from operations and available borrowings under our revolving facility. We have historically funded our operations, debt payments, capital expenditures and discretionary funding needs from our cash from operations. We had total available cash and cash equivalents of $51.2 million and $77.1 million as of December 31, 2016 and September 30, 2016, respectively, of which $34.6 million, or 67.6%, and $53.3 million, or 69.2%, was held by our foreign subsidiaries as of December 31, 2016 and September 30, 2016, respectively. None of our cash and cash equivalents consisted of restricted cash and cash equivalents as of December 31, 2016 or September 30, 2016. All of our foreign cash and cash equivalents are readily convertible into U.S. dollars or other foreign currencies. Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S. and it is our current intention to permanently reinvest our foreign cash and cash equivalents outside of the U.S. If we were to repatriate foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation. Our primary uses of cash are for:

• 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.

Generally, cash provided by operating activities has been adequate to fund our operations. Due to fluctuations in our cash flows and the growth in our operations, it may be necessary from time to time in the future to borrow under our revolving facility to meet cash demands. We anticipate that cash provided by operating activities, cash and cash equivalents and borrowing capacity under our revolving facility will be sufficient to meet our cash requirements for the next twelve months. For additional information about our revolving facility, see "—Credit Facilities—Senior Secured Credit Facilities" below. As of December 31, 2016, we did not have any material capital expenditure commitments.

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Cash Flows

Our cash and cash equivalents decreased by $25.9 million during the three months ended December 31, 2016. The decrease was primarily due to cash used in operations.

A summary of our operating, investing and financing activities are shown in the following table (in thousands):

	Three Months Ended December 31,
Consolidated statements of cash flows data:	2016			2015
Net cash (used in) provided by operating activities	$	(28,086	)	$	10,664
Net cash used in investing activities	(1,316		)	(1,162		)
Net cash provided by (used in) financing activities	5,141			(5,488		)

Operating Activities

Our cash flows from operations fluctuates based on the level of profitability during the period as well as the timing of investments in inventory, collections of cash from our customers, payments of cash to our suppliers, and other changes in working capital accounts such as changes in our prepaid expenses and accrued liabilities or the timing of our tax payments.

Our operating activities used $28.1 million of cash in the three months ended December 31, 2016. The primary use of cash was a $42.2 million increase in inventory due chiefly to required stocking levels on new contracts being implemented. Our primary source of operating cash flow is cash received from customers. During the three months ended December 31, 2016, operating cash flows from net income adjusted for non-cash expenses was $25.5 million. The remaining use of cash for operations included an increase in accounts receivable of $2.2 million, a decrease in accounts payable of $8.3 million, and a $0.9 million net increase in other working capital accounts. We expect to continue investing in inventory in the near term to support new business wins.

Investing Activities

Our business is not capital intensive and capital expenditures are normally limited and relate primarily to computer hardware and software and warehouse equipment. Our purchases of property and equipment may vary from period to period due to the timing of the expansion of our business and the investment requirements to provide us with technology that allows us to better serve our customers. During the three months ended December 31, 2016, $1.3 million was used for the purchase of property and equipment. During the three months ended December 31, 2015, $1.2 million was used primarily for the purchase of property and equipment.

Financing Activities

Net cash provided by our financing activities totaled $5.1 million in the three months ended December 31, 2016. In connection with the Fourth Amendment to our Credit Agreement discussed below, we borrowed $25.0 million on the revolving facility (as defined below) and paid $10.5 million in fees. During the quarter, we voluntarily repaid $5.0 million of the revolving facility borrowings and made our scheduled quarterly principal payments of $5.0 million and a voluntary prepayment of $1.3 million on the term loan A facility (as defined below). We also repaid $0.3 million in capital lease obligations and received proceeds from the issuance of common stock in connection with stock option exercises of $2.3 million. We expect to borrow and to repay borrowings under the revolving facility to reflect the quarterly fluctuations in operating cash flow and to fund our temporary investment in inventory for new business.

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Credit Facilities

Senior Secured Credit Facilities

On October 4, 2016, we entered into the Fourth Amendment (the Amendment) to our credit agreement, dated as of December 7, 2012, by and among the Company, Wesco Aircraft Hardware (the Borrower) and the lenders and agents party thereto (as amended prior to the Amendment, the Existing Credit Agreement; the Existing Credit Agreement, as amended by the Amendment, the Credit Agreement). The Amendment modified the Existing Credit Agreement to replace the Borrower’s existing revolving facility with a new revolving facility in an aggregate principal amount of $180.0 million (the "revolving facility") and the Borrower’s existing senior secured term loan A facility with a new senior secured term loan A facility in an aggregate principal amount of $400.0 million (the term loan A facility). See Note 6 of the Notes to the Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q for a summary of the Amendment and our Credit Agreement.

The Credit Agreement also provides for a $525.0 million senior secured term loan B facility (the "term loan B facility"), which was not impacted by the Amendment. We refer to the term loan B facility, together with the term loan A facility and the revolving facility, as the "Credit Facilities."

As of December 31, 2016, our outstanding indebtedness under the Credit Facilities was $855.6 million, which consisted of (1) $395.0 million of indebtedness under the term loan A facility, and (2) $20.0 million of indebtedness under the revolving facility, and (3) $440.6 million of indebtedness under the term loan B facility. As of December 31, 2016, $160.0 million was available for borrowing under the revolving facility, of which we could borrow up to $60.0 million without breaching any covenants contained in the agreements governing our indebtedness.

Our borrowings under the Credit Facilities are subject to a financial covenant based upon our Consolidated Total Leverage Ratio (as defined in the Credit Agreement),with the maximum ratio currently set at 4.50, which will step down to 4.25 next quarter and will step down gradually during future quarters to 3.50 for the quarter ending September 30, 2018 and thereafter. Although our sales, earnings and cash outlook meets the projected requirements for these covenants by a narrow margin, ongoing analysis of forecast projections will be utilized to assess when and if actions are necessary, including potentially seeking an appropriate covenant waiver or amendment. 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 December 31, 2016, we were in compliance with all of the foregoing covenants, and our Consolidated Total Leverage Ratio was 4.19.

UK Line of Credit

As of December 31, 2016, our subsidiary, Wesco Aircraft Europe, Ltd, has available a £7.0 million ($8.6 million based on the December 31, 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 December 31, 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.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements. 

Recent Accounting Pronouncements

See Note 2 of the Notes to the Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of recent accounting pronouncements.

Cautionary Note Regarding Forward-Looking Statements

 This Quarterly Report on Form 10-Q contains forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning Wesco and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of management, as well as assumptions made by, and information currently available to, management. Forward-looking

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statements may be accompanied by words such as “achieve,” “aim,” “anticipate,” “believe,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “grow,” “improve,” “increase,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control. Therefore, you should not place undue reliance on such statements.

 Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following: general economic and industry conditions; conditions in the credit markets; changes in military spending; risks unique to suppliers of equipment and services to the U.S. government; risks associated with our long-term, fixed-price agreements that have no guarantee of future sales volumes; risks associated with the loss of significant customers, a material reduction in purchase orders by significant customers or the delay, scaling back or elimination of significant programs on which we rely; our ability to effectively compete in our industry; our ability to effectively manage our inventory; our suppliers’ ability to provide us with the products we sell in a timely manner, in adequate quantities and/or at a reasonable cost; our ability to maintain effective information technology systems; our ability to retain key personnel; risks associated with our international operations, including exposure to foreign currency movements; risks associated with assumptions we make in connection with our critical accounting estimates (including goodwill) and legal proceedings; our dependence on third-party package delivery companies; fuel price risks; fluctuations in our financial results from period-to-period; environmental risks; risks related to the handling, transportation and storage of chemical products; risks related to the aerospace industry and the regulation thereof; risks related to our indebtedness; and other risks and uncertainties.

 The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect our business, including those described under Part I, Item 1A. “Risk Factors” in the 2016 Form 10-K and the other documents we file from time to time with the SEC, including this Quarterly Report on Form 10-Q. All forward-looking statements included in this Quarterly Report on Form 10-Q (including information included or incorporated by reference herein) are based upon information available to us as of the date hereof, and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.

For a description of our exposure to market risks, see Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risks” in the 2016 Form 10-K. There have been no material changes to our market risks since September 30, 2016, except as already disclosed in the 2016 Form 10-K under the sub-heading "Interest Rate Risk" regarding the Amendment to our Existing Credit Agreement on October 4, 2016.   

ITEM 4.  CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

 There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS.

 We are involved in various legal matters that arise in the ordinary course of our business. We believe that the ultimate outcome of such matters will not have a material adverse effect on our business financial condition or results of operations.  However, there can be no assurance that such actions will not be material or adversely affect our business, financial condition or results of operations.

ITEM 1A.RISK FACTORS.

There have been no material changes to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of the 2016 Form 10-K.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.OTHER INFORMATION.

On February 6, 2017, Wesco Aircraft Hardware Corp., a wholly owned subsidiary of the Company, entered into a severance agreement with Todd Renehan, our Executive Vice President and Chief Commercial Officer. The severance agreement replaces and supersedes the terms of Mr. Renehan’s prior employment agreement, which was entered into in connection with our acquisition of the Haas Group, and standardizes Mr. Renehan’s severance terms with our other named executive officers. The severance agreement provides that, upon the termination of Mr. Renehan’s employment without cause or his resignation of employment for good reason (each a “Qualifying Termination”), Mr. Renehan will be entitled to, subject to his signing and not revoking a general release of claims, (i) severance payments equal to one times his annual base salary; (ii) a pro-rated bonus for the year of termination (based on actual performance for the fiscal year); (iii) continued use of his Company-owned or leased automobile, and reimbursement of operating and maintenance expenses, for six months following his termination; and (iv) monthly payments of an amount equal to the COBRA premium required to continue group medical, dental and vision coverage for 12 months following his termination. If a Qualifying Termination occurs within two years after a change in control of the Company, the severance agreement provides that Mr. Renehan will be entitled to, in lieu of the amounts above, (i) severance payments equal to two times the sum of his annual base salary plus target annual bonus amount; (ii) continued use of his Company-owned or leased automobile, and reimbursement of operating and maintenance expenses, for six months following his termination; and (iii) monthly payments of an amount equal to the COBRA premium required to continue group medical, dental and vision coverage for 24 months following his termination. In addition, if a Qualifying Termination occurs within two years after a change in control of the Company, the severance agreement provides that all of Mr. Renehan’s unvested equity or equity-based awards will fully vest, provided that, unless a provision more favorable to Mr. Renehan is included in the applicable award agreement, any such awards that are subject to performance-based vesting conditions will only be payable subject to the attainment of the performance measures for the applicable performance period as provided under the terms of the applicable award agreement.

This summary of the severance agreement does not purport to be a complete description and is qualified in its entirety by reference to the full text of the severance agreement, which is filed as Exhibit 10.2 hereto and incorporated herein by reference.

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ITEM 6.EXHIBITS.

(a) Exhibits

Exhibit Number	Description
10.1	Fourth Amendment to Credit Agreement by and among Wesco Aircraft Holdings, Inc., Wesco Aircraft Hardware Corp., the other subsidiaries party thereto, Barclays Bank PLC, as administrative agent and collateral agent, and the lenders party thereto, dated as of October 4, 2016 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated October 4, 2016 (File No. 001-35253))
10.2	Executive Severance Agreement between Todd Renehan and Wesco Aircraft Hardware Corp., dated February 6, 2017 (filed herewith)
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 (furnished 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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: February 7, 2017	WESCO AIRCRAFT HOLDINGS, INC.
	By:	/s/ David J. Castagnola
		Name: David J. Castagnola
		Title: President and Chief Executive Officer
		(Principal Executive Officer)
Date: February 7, 2017	By:	/s/ Richard J. Weller
		Name: Richard J. Weller
		Title: Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

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EX-10.2

Exhibit 10.2

EXECUTIVE SEVERANCE AGREEMENT

This Executive Severance Agreement (“Agreement”) is made effective as of February 6, 2017 (“Effective Date”), by and between Wesco Aircraft Hardware Corp., a California corporation (the “Company”), and Todd Renehan (“Executive”). For purposes of this Agreement (other than Section 1(g) below), the “Company” shall mean the Company and its subsidiaries.

WHEREAS, Executive is a key employee of the Company and the Company and Executive desire to set forth herein the terms and conditions of Executive's compensation in the event of a termination of Executive's employment under certain circumstances; and

WHEREAS, especially in the event of a Change in Control (as defined below), Executive may be vulnerable to dismissal without regard to the quality of Executive's service, and the Company believes that it is in the best interest of the Company to enter into this Agreement in order to ensure fair treatment of Executive and to reduce the distractions and other adverse effects upon such Executive's performance which are inherent in the event of such a Change in Control.

The parties agree as follows:

1.    Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

(a)    “Affiliate” means with respect to any person or entity, any other person or entity that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person or entity. For purposes of this definition, "control", when used with respect to any person or entity, means the power to direct the management and policies of such person or entity, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

(b)    “Base Amount” means the greater of Executive’s annual base salary (i) at the rate in effect on the day prior to the date of Executive’s Qualifying Termination, (ii) at the highest rate in effect at any time during the ninety (90) day period prior to Executive’s Qualifying Termination, or (iii) at the highest level in effect at any time during the ninety (90) day period prior to a Change in Control, and in any case shall include all amounts of such base salary that are deferred under any qualified and non-qualified employee benefit plans of the Company or under any other agreement or arrangement.

(c)    “Board” shall mean the Board of Directors of the Parent.

(d)    “Bonus Amount” means the greater of Executive’s target annual bonus amount (i) as in effect at the time of Executive’s Qualifying Termination, (ii) at the highest level in effect at any time during the ninety (90) day period prior to Executive’s Qualifying Termination, or (iii) at the highest level in effect at any time during the ninety (90) day period prior to a Change in Control.

(e)    “Carlyle” means collectively, (i) The Carlyle Group L.P. and/or each or any of its Affiliates, (ii) any investment fund managed or advised by the Carlyle Group L.P. or any of its Affiliates and

US-DOCS\78557680.1

(iii) any “group” (as such term is used in Section 13(d) of the Exchange Act (as defined below) that includes any person or entity described in the foregoing clauses (i) or (ii).

(f)    “Cause” shall mean any of the following: (i) Executive’s failure in any material respect to carry out or comply with any lawful and reasonable directive of the Board or Executive’s direct supervisor; (ii) Executive’s willful misconduct, gross negligence or breach of fiduciary duty with respect to the Company or any of its affiliates that, in each case or in the aggregate, results in material harm to the Company or any of its affiliates; (iii) Executive’s conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; (iv) Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s (or any of its affiliate’s) premises or while performing Executive’s duties and responsibilities; or (v) Executive’s commission of an act of fraud, embezzlement or misappropriation against the Company or any of its affiliates. Notwithstanding the foregoing, in the event of any circumstance described in clause (i) of the foregoing sentence, the Company may not terminate Executive’s employment for Cause unless, to the extent such failure can be fully cured, the Company has provided Executive with at least thirty (30) days’ notice of such failure and Executive has not remedied the failure within the 30-day period.

(g)    “Change in Control” shall mean and includes each of the following:

(i)    A transaction or series of transactions (other than an offering of the Parent’s common stock to the general public through a registration statement filed with the Securities and Exchange Commission) occurring after the Effective Date whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than the Parent, any of its subsidiaries, an employee benefit plan maintained by the Parent or any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Parent) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Parent possessing more than 50% of the total combined voting power of the Parent’s securities outstanding immediately after such transaction; or

(ii)    The consummation by the Parent (whether directly involving the Parent or indirectly involving the Parent through one or more intermediaries) after the Effective Date of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Parent’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

(A)    Which results in the Parent’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Parent or the person that, as a result of the transaction, controls, directly or indirectly, the Parent or owns, directly or indirectly, all or substantially all of the Parent’s assets or otherwise succeeds to the business of the Parent (the Parent or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

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US-DOCS\78557680.1

(B)    After which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this Section 1(g)(ii)(B) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Parent prior to the consummation of the transaction.

Notwithstanding the foregoing, (i) no transaction, event or occurrence shall constitute a Change in Control for purposes of this Agreement if, immediately following such transaction, event or occurrence, Carlyle or any Stockholder Agreement Party owns at least 50% of the combined voting power of the Parent or the Successor Entity, as applicable, and (ii) no transaction, event or occurrence shall constitute a Change in Control for purposes of this Agreement, unless such transaction, event or occurrence also constitutes a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5).

(h)    “Code” shall mean the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other interpretive guidance thereunder.

(i)    “Good Reason” shall mean the occurrence of any of the following events or conditions without Executive’s written consent:

(i)    a material diminution in Executive’s authority, duties or responsibilities, other than as a result of a Change in Control where Executive remains in a position with the Company or its successor (or any other entity that owns substantially all of the Company’s business after such sale) that is substantially equivalent in duties, rank, reporting structure and authority with Executive’s position prior to such sale, solely as such duties, rank, reporting structure and authority relate to the Company’s business;

(ii)    a material diminution in Executive’s base salary or target annual bonus level;

(iii)    a material change in the geographic location at which Executive must perform his or her duties, which shall not include a relocation of Executive’s principal place of employment to any location within a fifty (50) mile radius of the location from which Executive served the Company immediately prior to the relocation; or

(iv)    the failure of the Company to obtain an agreement from any successor to the Company or the Parent to assume and agree to perform this Agreement, as contemplated in Section 12(a) of this Agreement.

Executive must provide written notice to the Company of the occurrence of any of the foregoing events or conditions within ninety (90) days of the occurrence of such event or the date upon which Executive reasonably became aware that such an event or condition had occurred. The Company or any successor or affiliate shall have a period of thirty (30) days to cure such event or condition after receipt of written notice of such event from Executive. Any voluntary termination for “Good Reason” following such thirty (30) day cure period must occur no later than the date that is six (6) months following the date notice was provided by Executive. Executive’s voluntary Separation from Service by reason of resignation from employment with the Company for Good Reason shall be treated as involuntary.

(j)    “Parent” means Wesco Aircraft Holdings, Inc. a Delaware corporation, or its successor.

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(k)    “Permanent Disability” means at any time the Company or any of its affiliates sponsors a long-term disability plan for the Company’s employees, “disability” as defined in such long-term disability plan for the purpose of determining a participant’s eligibility for benefits, provided, however, if the long-term disability plan contains multiple definitions of disability, “Permanent Disability” shall refer to that definition of disability which, if Executive qualified for such disability benefits, would provide coverage for the longest period of time. The determination of whether Executive has a Permanent Disability shall be made by the person or persons required to make disability determinations under the long-term disability plan. At any time the Company does not sponsor a long-term disability plan for its employees, Permanent Disability shall mean Executive’s inability to perform, with or without reasonable accommodation, the essential functions of his position hereunder for a total of three months during any six-month period as a result of incapacity due to mental or physical illness as determined by a physician selected by the Company or its insurers and acceptable to Executive or Executive’s legal representative, with such agreement as to acceptability not to be unreasonably withheld or delayed.

(l)    “Qualifying Termination” means (i) a termination by Executive of Executive’s

employment with the Company for Good Reason or (ii) a termination by the Company of Executive’s employment with the Company without Cause. Neither a termination of Executive's employment due to Permanent Disability nor a termination of Executive's employment due to death shall constitute a Qualifying Termination.

(m)    “Separation from Service”means a “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto.

(n)    “Stockholder Agreement Party” means any person or entity that is a party to that certain Amended and Restated Stockholders Agreement of Parent, dated as of July 27, 2011, and any Affiliate of any such person or entity.

2.    Term. The initial term of this Agreement (the “Initial Term”) shall be for a period beginning on the Effective Date and ending on the three-year anniversary of the Effective Date. On the three-year anniversary of the Effective Date and each successive anniversary of the Effective Date, the term of this Agreement shall automatically be extended for an additional one-year period (“Extension Terms” and, collectively with the Initial Term, the “Term”) unless the Company gives Executive a written notice of non-extension no later than ninety (90) days prior to the then-applicable anniversary of the Effective Date. Upon the occurrence of a Change in Control, the Term shall automatically be extended until the two-year anniversary of the date on which the Change in Control occurs, provided that if Executive incurs a Qualifying Termination during the Term of this Agreement, the Term shall be further automatically extended for such additional period as necessary to provide that each party’s rights and obligations are fully satisfied hereunder.

3.    Severance.

(a)    Severance Upon Qualifying Termination. If Executive has a Qualifying Termination that does not occur within 2 years following a Change in Control, then subject to the requirements of this Section 3, the Executive’s continued compliance with Sections 4, 5 and 6 and the terms of Section 7, Executive shall be entitled to receive, in lieu of any severance payments or other severance benefits to which Executive may otherwise be entitled under any other agreement with or plan, policy or arrangement of the Company, the following payments and benefits:

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(i)    The Company shall pay to Executive his or her fully earned but unpaid base salary, when due, through the date of Executive’s Qualifying Termination at the rate then in effect, plus all other benefits, if any, under any Company group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other Company group benefit plan to which Executive may be entitled pursuant to the terms of such plans or agreements;

(ii)    Subject to Section 3(d) and Section 7, Executive shall be entitled to receive severance pay in an amount equal to one times the Base Amount, payable in equal monthly installments following the effective date of such Qualifying Termination in accordance with the Company’s regular payroll practices;

(iii)     Subject to Section 3(d) and Section 7, the Company shall pay to Executive a pro-rated portion (based on the number of days Executive was employed by the Company during the fiscal year in which the Qualifying Termination pursuant to this Section 3(a) occurs) of the Bonus Amount that Executive would have earned had Executive remained employed through the end of the fiscal year in which the Qualifying Termination occurs, based on the Company’s actual performance for such year and paid at the same time annual bonuses are generally paid to the Company’s executives;

(iv)    Subject to Section 3(d) and Section 7, Executive shall be entitled to continued use for a period of six (6) months following Executive’s Qualifying Termination of Executive’s Company-owned or leased automobile and to continued reimbursement of operating and maintenance expenses, if applicable, in each case only to the extent and in the same manner as such benefits were provided (i) as of immediately prior to Executive’s Qualifying Termination, or (ii) at any time during the ninety (90) day period prior to Executive’s Qualifying Termination; and

(v)    Subject to Section 3(d) and Section 7, Executive shall be entitled to receive payment in an amount equal to the amount of the premiums Executive would be required to pay to continue Executive’s and Executive’s covered dependents’ medical, dental and vision coverage in effect on the date of Executive’s Qualifying Termination under the Company’s group healthcare plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), which amount shall be based on the premium for the first month of COBRA coverage and shall be paid on the Company’s first regular pay date of each calendar month during the period commencing on Executive’s Qualifying Termination and ending 12 months after the Executive’s Qualifying Termination.

(b)    Severance Upon Qualifying Termination Occurring Within Two Years Following a Change in Control. If Executive has a Qualifying Termination that occurs within two years following a Change in Control, then subject to the requirements of this Section 3, the Executive’s continued compliance with Sections 4, 5 and 6 and the terms of Section 7, Executive shall be entitled to receive, in lieu of any severance payments or other severance benefits to which Executive may otherwise be entitled under any other agreement with or plan, policy or arrangement of the Company, the following payments and benefits:

(i)    The Company shall pay to Executive his or her fully earned but unpaid base salary, when due, through the date of Executive’s Qualifying Termination at the rate then in effect, plus all other benefits, if any, under any Company group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other Company group benefit plan to which Executive may be entitled pursuant to the terms of such plans or agreements;

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(ii)    Subject to Section 3(d) and Section 7, Executive shall be entitled to receive severance pay in an amount equal to two times the sum of the Base Amount and the Bonus Amount, payable in a single lump sum as soon as practicable after the date of Executive’s Qualifying Termination;

(iii)    Subject to Section 3(d) and Section 7, Executive shall be entitled to continued use for a period of six (6) months following Executive’s Qualifying Termination of Executive’s Company-owned or leased automobile and to continued reimbursement of operating and maintenance expenses, if applicable, in each case only to the extent and in the same manner as such benefits were provided (i) as of immediately prior to Executive’s Qualifying Termination, (ii) at any time during the ninety (90) day period prior to Executive’s Qualifying Termination, or (iii) to the greatest extent in effect at any time during the ninety (90) day period prior to a Change in Control; and

(iv)    Subject to Section 3(d) and Section 7, Executive shall be entitled to

receive payment in an amount equal to the amount of the premiums Executive would be required to pay to continue Executive’s and Executive’s covered dependents’ medical, dental and vision coverage in effect on the date of Executive’s Qualifying Termination under the Company’s group healthcare plans pursuant to COBRA, which amount shall be based on the premium for the first month of COBRA coverage and shall be paid on the Company’s first regular pay date of each calendar month during the period commencing on Executive’s Qualifying Termination and ending 24 months after the Executive’s Qualifying Termination; and

(v)    Subject to Section 3(d) and Section 7, all unvested equity or equity-based awards granted under any equity compensation plans of the Parent shall immediately become 100% vested, provided that, unless a provision more favorable to Executive is included in an applicable award agreement, any such awards that are subject to performance-based vesting conditions shall only be payable subject to the attainment of the performance measures for the applicable performance period as provided under the terms of the applicable award agreement.

(c)    Other Terminations. Upon Executive’s termination of employment for any reason other than as set forth in Section 3(a) and Section 3(b), the Company shall not have any other or further obligations to Executive under this Agreement (including any financial obligations) except that Executive shall be entitled to receive (i) Executive’s fully earned but unpaid base salary, through the date of termination at the rate then in effect and (ii) all other amounts or benefits to which Executive is entitled under any compensation, retirement or benefit plan or practice of the Company at the time of termination in accordance with the terms of such plans or practices, including, without limitation, any continuation of benefits required by COBRA or applicable law. The foregoing shall be in addition to, and not in lieu of, any and all other rights and remedies which may be available to the Company under the circumstances, whether at law or in equity.

(d)    Release. As a condition to Executive’s receipt of any amounts set forth in Section 3(a) or Section 3(b) above, Executive shall execute and not revoke a general release of all claims in favor of the Company (the “Release”) in the form substantially similar to the form attached hereto as Exhibit A (and any statutorily prescribed revocation period applicable to such Release shall have expired) within the sixty (60) day period following the date of Executive’s Qualifying Termination.

(e)    Exclusive Remedy; Other Arrangements. Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided herein, all of Executive’s rights to salary, severance, benefits, bonuses and other amounts (if any) accruing after the termination of Executive’s employment shall

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cease upon such termination. In addition, the severance payments provided for in Section 3(a) and 3(b) above are intended to be paid in lieu of any severance payments Executive may otherwise be entitled to receive under any other plan, program, policy or agreement with the Company or any of its affiliates (collectively, “Other Arrangements”). Therefore, in the event Executive becomes entitled to receive the severance payments and benefits provided under Section 3(a) or 3(b) of this Agreement, he or she shall receive the amounts provided under that section of this Agreement and shall not be entitled to receive any severance payments or severance benefits pursuant to any Other Arrangements. In addition, to the extent the Executive is a party to any employment agreement, offer letter or other agreement or arrangement with the Company or any of its affiliates, in each case that was entered into prior to the date of this Agreement, and that provides for the payment or provision of severance pay or severance benefits upon an involuntary termination or a resignation of employment for good reason (or term of similar meaning) (such agreement a “Prior Agreement”), the Executive hereby agrees that the severance pay and severance benefit provisions of such Prior Agreement shall be and hereby are superseded by this Agreement and from and after the date of this Agreement, such severance pay and severance benefit provisions of the Prior Agreement shall be and are null and void and of no further force or effect. For the avoidance of doubt, except as may otherwise be agreed in writing between the Executive and the Company or one of its affiliates after the date of this Agreement, it is intended that the other terms and conditions of any Prior Agreement that do not provide for severance pay or severance benefits, including any non-competition, non-solicitation, non-disparagement, confidentiality, assignment of inventions covenants and other similar covenants contained therein, shall remain in effect in accordance with their terms (and shall not be limited by the provisions of any similar covenants set forth herein) for the periods set forth in the Prior Agreement. This Agreement shall not impact or reduce Executive’s rights, if any, to receive under any Other Arrangements reimbursement for, or direct payment to the carrier for, premium costs under COBRA (or any similar medical, dental or vision benefit continuation rights or payments).

(f)    No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for in this Section 3 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 3 be reduced by any compensation earned by Executive as the result of employment by another employer or self-employment or by retirement benefits; provided, however, that loans, advances or other amounts owed by Executive to the Company may be offset by the Company against amounts payable to Executive under this Section 3.

(g)    Return of the Company’s Property. If Executive’s employment is terminated for any reason, the Company shall have the right, at its option, to require Executive to vacate his or her offices prior to or on the effective date of termination and to cease all activities on the Company’s behalf. Upon the termination of his or her employment in any manner, as a condition to Executive’s receipt of any post-termination benefits described in this Agreement, Executive shall immediately surrender to the Company all lists, books and records of, or in connection with, the Company’s business, and all other property belonging to the Company, it being distinctly understood that all such lists, books and records, and other documents, are the property of the Company. Executive shall deliver to the Company a signed statement certifying compliance with this Section 3(g) prior to the receipt of any post-termination benefits described in this Agreement.

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(h)    Parachute Payments.

                   (i)     It is the objective of this Agreement to maximize Executive’s Net After-Tax Benefit (as defined herein) if payments or benefits provided under this Agreement are subject to excise tax under Section 4999 of the Code. Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including the payments and benefits under Section 3(a) and Section 3(b) hereof, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the cash severance payments shall first be reduced, and the non-cash severance payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments shall be subject to the Excise Tax, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

(ii)     The Total Payments shall be reduced by the Company in the following order: (i) reduction of any cash severance payments otherwise payable to Executive that are exempt from Section 409A of the Code, (ii) reduction of any other cash payments or benefits otherwise payable to Executive that are exempt from Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting or payments with respect to any equity award with respect to the Parent’s common stock that is exempt from Section 409A of the Code, (iii) reduction of any other payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting and payments with respect to any equity award with respect to the Parent’s common stock that are exempt from Section 409A of the Code, and (iv) reduction of any payments attributable to the acceleration of vesting or payments with respect to any other equity award with respect to the Parent’s common stock that are exempt from Section 409A of the Code.

(iii)    All determinations regarding the application of this Section 3(h) shall be made by an accounting firm with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax selected by the Company (“Independent Advisors”). For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of the Independent Advisors, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses incurred in any later audit) shall be borne by the Company.

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(iv)    In the event it is later determined that a greater reduction in the Total Payments should have been made to implement the objective and intent of this Section 3(h), the excess amount shall be returned immediately by Executive to the Company, plus interest at a rate equal to 120% of the semi-annual applicable federal rate as in effect at the time of the Change in Control.

(i)    Withholding. All compensation and benefits to Executive hereunder shall be reduced by all federal, state, local and other withholdings and similar taxes and payments required by applicable law.

4.Restrictive Covenants.

(a)The Executive recognizes and agrees that in order to assure that the Executive devotes all of the Executive’s professional time and energy to the operations of the Company while employed by the Company, and that during and after such employment in order to adequately protect the Company’s investment in its proprietary information and trade secrets and to protect such information and secrets and all other confidential information from disclosures to competitors and to protect the Company from unfair competition, certain restrictive covenants as set forth below, are necessary, reasonable and desirable. The Executive understands and agrees that the restrictions imposed in these covenants represent a fair balance of the Company’s rights to protect its business and the Executive’s right to pursue employment.

(b)During the period of the Executive’s service with the Company and for a period of 2 years thereafter, the Executive will not, directly or indirectly, (I) solicit for employment or employ (or attempt to solicit for employment or employ), for the Executive or on behalf of any sole proprietorship, partnership, corporation, limited liability company or business or any other person (other than the Company or any of its subsidiaries or Affiliates), any employee of the Company or any of its subsidiaries or Affiliates or any person who was such an employee during the one-year period preceding the date of such solicitation, employment or attempted solicitation or employment, or (II) encourage any such employee to leave his or her employment with the Company or any of its Subsidiaries or Affiliates.

(c)In the event the terms of this Section 4 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to apply only for the maximum period of time for which it may be enforceable, in the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

5.Non-disclosure of Proprietary Information

(a)Except in connection with the faithful performance of the Executive’s duties or pursuant to Section 5(b), the Executive shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for his benefit or the benefit of any person, firm, corporation or other entity any confidential or proprietary information or trade secrets of or relating to the Company or any of its subsidiaries or Affiliates (including, without limitation, intellectual property in the form of patents, trademarks and copyrights and applications therefor, ideas, inventions,

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works, discoveries, improvements, information, documents, formulae, practices, processes, methods, developments, source code, modifications, technology, techniques, data, programs, other know-how or materials, owned, developed or possessed by the Company or any of its subsidiaries or Affiliates, whether in tangible or intangible form, information with respect to the Company’s or its subsidiaries’ or Affiliates’ operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, prospects and compensation paid to employees or other terms of employment), or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such confidential or proprietary information or trade secrets. The parties hereby stipulate and agree that as between them the foregoing matters are important, material and confidential proprietary information and trade secrets and affect the successful conduct of the businesses of the Company and its subsidiaries and Affiliates (and any successors or assignees thereof).

(b)The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest practicable notice thereof, shall, as much in advance of the return date as practicable, make available to the Company and its counsel the documents and other information sought and shall reasonably assist such counsel at the Company’s expense in resisting or otherwise responding to such process.

(c)Nothing in this Agreement shall prohibit the Executive from (i) disclosing information and documents when required by law, subpoena or court order (subject to the requirements of Section 5(b) above), (ii) disclosing information and documents to his professional adviser(s), (iii) disclosing the post-employment restrictions in this Agreement in confidence to any potential new employer, or (iv) disclosing information that has been or is hereafter disclosed and made public through no act or omission of the Executive in violation of this Agreement, any other confidentiality obligation or duty owed to the Company or any act or omission of any person which to the knowledge of the Executive has any legally binding confidentiality obligation or duty to the Company, or is otherwise ascertainable from public or trade sources or otherwise generally known in the trade.

6.Non-Disparagement. Each party to this Agreement (which, in the case of the Company, shall mean its officers and the members of the Board) agrees, during the period of Executive’s service with the Company and thereafter, to refrain from Disparaging (as defined below) the other party and its Affiliates, including, in the case of the Company, any of its services, technologies or practices, or any of its directors, officers, agents, representatives or stockholders, either orally or in writing. Nothing in this paragraph shall preclude any party from making truthful statements that are reasonably necessary to comply with applicable law, regulation or legal process, or to defend or enforce a party’s rights under this Agreement. For purposes of this Agreement, “Disparaging” means making remarks, comments or statements, whether written or oral, that impugn the character, integrity, reputation or abilities of the person being disparaged.

7.Condition to Severance Obligations. The Company shall be entitled to cease all severance payments and benefits to Executive in the event of Executive’s breach any of the provisions of Sections 4, 5, 6 or 8 or of any other non-competition, non-solicitation, non-disparagement, confidentiality, or assignment

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of inventions covenants contained in any other agreement between Executive and the Company, which other covenants are hereby incorporated by reference into this Agreement.

8.Inventions. All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of the Company and its subsidiaries and Affiliates, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that Executive may discover, invent or originate during the period of his service with the Company, either alone or with others and whether or not during working hours or by the use of the facilities of the Company (“Inventions”), shall be the exclusive property of the Company. Executive shall promptly disclose all Inventions to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem reasonably necessary to protect or perfect its rights therein, and shall assist the Company, upon reasonable request and at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein. Executive hereby appoints the Company as Executive’s attorney-in‑fact to execute on Executive’s behalf any assignments or other documents reasonably deemed necessary by the Company to protect or perfect its rights to any Inventions.

9.Injunctive Relief. It is recognized and acknowledged by Executive that a breach of the covenants contained in Sections 4, 5, 6 and 8 will cause irreparable damage to Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, Executive agrees that in the event of a breach of any of the covenants contained in Sections 4, 5, 6 and 8, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief without the requirement to post bond.

10.Agreement to Arbitrate. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be settled solely and exclusively by binding arbitration in Los Angeles, California. Such arbitration shall be conducted in accordance with the then prevailing JAMS Streamlined Arbitration Rules & Procedures, with the following exceptions if in conflict: (a) one arbitrator shall be chosen by JAMS; (b) each party to the arbitration will pay its pro rata share of the expenses and fees of the arbitrator, together with other expenses of the arbitration incurred or approved by the arbitrator; and (c) arbitration may proceed in the absence of any party if written notice (pursuant to the JAMS’ rules and regulations) of the proceedings has been given to such party. Each party shall bear its own attorneys’ fees and expenses. The parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this subsection shall be construed as precluding the bringing an action for injunctive relief pursuant to any applicable Other Arrangement.

11.At-Will Employment Relationship. Except as may be expressly provided in an applicable Other Arrangement, Executive’s employment with the Company is at-will and not for any specified period and may be terminated at any time, with or without Cause or advance notice, by either Executive or the Company. Any change to the at-will employment relationship must be by specific, written agreement signed

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by Executive and an authorized representative of the Company. Nothing in this Agreement is intended to or should be construed to contradict, modify or alter this at-will relationship.

12.General Provisions.

(a)    Successors and Assigns. The rights of the Company under this Agreement may, without the consent of Executive, be assigned by the Company, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. The failure of any such successor to so assume this Agreement shall constitute a material breach of this Agreement by the Company.  As used in this Agreement, the “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement. This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

(b)    Severability. In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

(c)    Interpretation; Construction. The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing the Company, but Executive has participated in the negotiation of its terms. Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Either party’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement. For the avoidance of doubt, nothing in this Agreement shall be construed to limit the Company’s right to reduce or eliminate any perquisites (including the use of a Company-owned or leased automobile) that may be provided to the Executive at any time.

(d)    Governing Law and Venue. This Agreement will be governed by and construed in accordance with the laws of the United States and the State of California applicable to contracts made and to be performed wholly within such State, and without regard to the conflicts of laws principles thereof. Any suit brought hereon shall be brought in the state or federal courts sitting in Los Angeles, California, the parties hereby waiving any claim or defense that such forum is not convenient or proper. Each party hereby

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agrees that any such court shall have in personam jurisdiction over it and consents to service of process in any manner authorized by California law.

(e)    Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to Executive at the address set forth below and to the Company at its principal place of business, or such other address as either party may specify in writing.

(f)    Survival. Sections 1 (“Definitions”), 3 (“Severance”), 4 (“Restrictive Covenants”), 5 (“Non-Disclosure of Proprietary Information”), 6 (“Non-Disparagement”), 7 (“Condition to Severance Obligations”), 8 (“Inventions”), 9 (“Injunctive Relief”), 10 (“Agreement to Arbitrate”) and 12 (“General Provisions”) of this Agreement shall survive termination of Executive’s employment with the Company.

(g)    Entire Agreement. This Agreement and any covenants and agreements incorporated herein by reference as set forth in Section 7 together constitute the entire agreement between the parties in respect of the subject matter contained herein and therein and supersede all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral, provided, however, that for the avoidance of doubt, all Other Arrangements (as such Other Arrangements may be amended, modified or terminated from time to time) shall remain in effect in accordance with their terms, subject to Section 3(e) hereof. This Agreement may be amended or modified only with the written consent of Executive and an authorized representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

(h)    Code Section 409A.

(i)    The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.

(ii)    Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is considered nonqualified deferred compensation under Section 409A and is designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”) and, except as provided below, any such compensation or benefits shall not be paid, or, in the case of installments, shall not commence payment, until the sixtieth (60th) day following Executive’s Separation from Service (the “First Payment Date”). Any installment payments that would have been made to Executive during the sixty (60) day period immediately following Executive’s

13

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Separation from Service but for the preceding sentence shall be paid to Executive on the First Payment Date and the remaining payments shall be made as provided in this Agreement.

(iii)    Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service with the Company or (ii) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.

(iv)    Executive’s right to receive any installment payments under this Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.

(v)    To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Executive shall be paid to Executive no later than December 31 of the year following the year in which the expense was incurred; provided, that Executive submits Executive’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year and the amount of in-kind benefits provided in one year shall not affect the amount eligible for reimbursement or in-kind benefits to be provided in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Executive’s right to reimbursement or in-kind benefits under this Agreement will not be subject to liquidation or exchange for another benefit.

                  (i)    Administration. This Agreement shall be interpreted and administered by the Board or a committee thereof to which the Board may delegate such function (the “Committee”). The Board or the Committee shall have the exclusive power, subject to and within the limitations of the express provisions of this Agreement, to interpret this Agreement and to make factual findings and determinations and take such action in connection with the Agreement as it, in its sole discretion, deems appropriate. The Board’s or the Committee's determination shall be binding and conclusive on all parties, and the Board or the Committee shall not be liable for any action or determination made in good faith with respect to this Agreement.

(j)    Source of Funds. Amounts payable to Executive under this Agreement shall be from the general funds of the Company. Executive's rights to unpaid amounts under this Agreement shall be solely those of an unsecured creditor of the Company.

(k)    Consultation with Legal and Financial Advisors.By executing this Agreement, Executive acknowledges that this Agreement confers significant legal rights, and may also involve the waiver of rights under other agreements; that the Company has encouraged Executive to consult with Executive’s personal legal and financial advisors; and that Executive has had adequate time to consult with Executive’s advisors before executing this Agreement.

14

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(l)    Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

(Signature Page Follows)

15

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THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

	WESCO AIRCRAFT HARDWARE CORP.
Dated: February 6, 2017	By:     /s/ John Holland Name:     John Holland                 Title:     Executive Vice President and Chief Legal Officer
	EXECUTIVE
Dated: February 6, 2017	/s/ Todd Renehan
		Address:

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EXHIBIT A

GENERAL RELEASE OF CLAIMS

[The language in this Release may change based on legal developments and evolving best practices; this form is provided as an example of what will be included in the final Release document.]

This General Release of Claims (“Release”) is entered into as of this _____ day of ________, ____, between Todd Renehan (“Executive”), and Wesco Aircraft Hardware Corporation, Inc., a California corporation (the “Company”) (collectively referred to herein as the “Parties”).

WHEREAS, Executive and the Company are parties to that certain Executive Severance Agreement dated as of __________, 2017 (the “Agreement”);

WHEREAS, the Parties agree that Executive is entitled to certain severance benefits under the Agreement, subject to Executive’s execution of this Release; and

WHEREAS, the Company and Executive now wish to fully and finally to resolve all matters between them.

NOW, THEREFORE, in consideration of, and subject to, the severance benefits payable to Executive pursuant to the Agreement, the adequacy of which is hereby acknowledged by Executive, and which Executive acknowledges that he or she would not otherwise be entitled to receive, Executive and the Company hereby agree as follows:

1.    General Release of Claims by Executive.

(a)    Executive, on behalf of himself or herself and his or her executors, heirs, administrators, representatives and assigns, hereby agrees to release and forever discharge the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, creditors, agents and representatives, and the employee benefit plans in which Executive is or has been a participant by virtue of his or her employment with or service to the Company (collectively, the “Company Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, “Claims”), which Executive has or may have had against such entities based on any events or circumstances arising or occurring on or prior to the date hereof, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever Executive’s employment by or service to the Company or the termination thereof, including any and all claims arising under federal, state, or local laws relating to employment, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability

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in tort, and claims of any kind that may be brought in any court or administrative agency including, without limitation, claims under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000, etseq.; the Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 etseq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 etseq.; the Civil Rights Act of 1866, and the Civil Rights Act of 1991; 42 U.S.C. Section 1981, etseq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. Section 621, etseq. (the “ADEA”); the Equal Pay Act, as amended, 29 U.S.C. Section 206(d); regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60, etseq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 etseq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 etseq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 etseq.; and any similar state or local law.

Notwithstanding the generality of the foregoing, Executive does not release the following:

(i)    Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law;

(ii)    Claims for workers’ compensation insurance benefits under the terms of any worker’s compensation insurance policy or fund of the Company;

(iii)    Claims pursuant to the terms and conditions of the federal law known as COBRA;

(iv)    Claims for indemnity under the bylaws of the Company or its affiliates, as provided for by law or under any applicable insurance policy with respect to Executive’s liability as an employee, director or officer of the Company pursuant to which Executive is covered as of the effective date of Executive’s termination of employment with the Company and its subsidiaries;

(v)    Claims based on any right Executive may have to enforce the Company’s executory obligations under the Agreement;

(vi)    Claims Executive may have to vested or earned compensation and benefits; and

(vii)    Any rights that cannot be released as a matter of applicable law, but only to the extent such rights may not be released under such applicable law.

(b)    Executive acknowledges that this Release was presented to him or her on the date indicated above and that Executive is entitled to have [twenty-one (21)/forty-five (45)] days’ time in which to consider it. Executive further acknowledges that the Company has advised him or her that he or she is waiving his or her rights under the ADEA, and that Executive should consult with an attorney of his or her choice before signing this Release, and Executive has had sufficient time to consider the terms of this Release. Executive represents and acknowledges that if Executive executes this Release before [twenty-one (21)/forty-five (45)] days have elapsed, Executive does so knowingly, voluntarily, and upon the advice and with the approval of Executive’s legal counsel (if any), and that Executive voluntarily waives any remaining consideration period.

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(c)     Executive understands that after executing this Release, Executive has the right to revoke it within seven (7) days after his or her execution of it. Executive understands that this Release will not become effective and enforceable unless the seven (7) day revocation period passes and Executive does not revoke the Release in writing. Executive understands that this Release may not be revoked after the seven (7) day revocation period has passed. Executive also understands that any revocation of this Release must be made in writing and delivered to the Company at its principal place of business within the seven (7) day period.

(d)     Executive understands that this Release shall become effective, irrevocable, and binding upon Executive on the eighth (8th) day after his or her execution of it, so long as Executive has not revoked it within the time period and in the manner specified in clause (c) above. Executive further understands that Executive will not be given any severance benefits under the Agreement unless this Release is effective on or before the date that is sixty (60) days following the date of Executive’s termination of employment.

2.    No Assignment. Executive represents and warrants to the Company Releasees that there has been no assignment or other transfer of any interest in any Claim that Executive may have against the Company Releasees. Executive agrees to indemnify and hold harmless the Company Releasees from any liability, claims, demands, damages, costs, expenses and attorneys’ fees incurred as a result of any such assignment or transfer from Executive.

3.    Severability. In the event any provision of this Release is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

4.    Interpretation; Construction. The headings set forth in this Release are for convenience only and shall not be used in interpreting this Agreement. This Release has been drafted by legal counsel representing the Company, but Executive has participated in the negotiation of its terms. Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Release and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Release. Either party’s failure to enforce any provision of this Release shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Release.

5.    Governing Law and Venue. This Release will be governed by and construed in accordance with the laws of the United States of America and the State of California applicable to contracts made and to be performed wholly within such State, and without regard to the conflicts of laws principles thereof. Any suit brought hereon shall be brought in the state or federal courts sitting in Los Angeles, California, the Parties hereby waiving any claim or defense that such forum is not convenient or proper. Each party hereby

19

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agrees that any such court shall have in personam jurisdiction over it and consents to service of process in any manner authorized by California law.

6.    Entire Agreement. This Release and the Agreement constitute the entire agreement of the Parties in respect of the subject matter contained herein and therein and supersede all prior or simultaneous representations, discussions, negotiations and agreements, whether written or oral. This Release may be amended or modified only with the written consent of Executive and an authorized representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

7.    Counterparts. This Release may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

(Signature Page Follows)

20

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IN WITNESS WHEREOF, and intending to be legally bound, the Parties have executed the foregoing Release as of the date first written above.

EXECUTIVE	WESCO AIRCRAFT HARDWARE CORP.
	By:
Print Name:	Print Name:
	Title:

US-DOCS\78557680.1

EX-31.1

Exhibit 31.1

MANAGEMENT CERTIFICATION

I, David J. Castagnola, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Wesco Aircraft Holdings, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	February 7, 2017
/s/ David J. Castagnola
Name: David J. Castagnola
Title: President and Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

MANAGEMENT CERTIFICATION

I, Richard J. Weller, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Wesco Aircraft Holdings, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	February 7, 2017
/s/ Richard J. Weller
Name: Richard J. Weller
Title: Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Wesco Aircraft Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, David J. Castagnola, President and Chief Executive Officer of the Company, and Richard J. Weller, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350 as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	February 7, 2017
/s/ David J. Castagnola
Name: David J. Castagnola
Title: President and Chief Executive Officer
(Principal Executive Officer)
Dated:	February 7, 2017
/s/ Richard J. Weller
Name: Richard J. Weller
Title: Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2016	Jan. 31, 2017
Document and Entity Information
Entity Registrant Name	Wesco Aircraft Holdings, Inc
Entity Central Index Key	0001378718
Document Type	10-Q
Document Period End Date	Dec. 31, 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		99,526,120
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Current assets
Cash and cash equivalents	$ 51,192	$ 77,061
Accounts receivable, net of allowance for doubtful accounts of $4,285 and $3,846 at December 31, 2016 and September 30, 2016, respectively	247,288	249,195
Inventories	751,703	713,470
Prepaid expenses and other current assets	12,806	10,203
Income taxes receivable	7,132	1,460
Total current assets	1,070,121	1,051,389
Property and equipment, net	49,650	50,525
Deferred line-of-credit financing costs, net	3,623	1,120
Goodwill	576,729	579,865
Intangible assets, net	189,097	194,114
Deferred tax assets, non-current	56,391	58,171
Other assets	12,434	13,394
Total assets	1,958,045	1,948,578
Current liabilities
Accounts payable	173,116	181,700
Accrued expenses and other current liabilities	32,287	26,424
Income taxes payable	7,358	6,782
Capital lease obligations-current portion	1,319	1,471
Short-term borrowings and current portion of long-term debt	40,000	0
Total current liabilities	254,080	216,377
Capital lease obligations, less current portion	1,531	1,710
Long-term debt, less current portion	803,179	834,279
Deferred tax liabilities, non-current	4,011	4,092
Other liabilities	5,512	9,205
Total liabilities	1,068,313	1,065,663
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.001 par value per share: 50,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.001 par value, 950,000,000 shares authorized, 99,526,120 and 98,614,908 shares issued and outstanding at December 31, 2016 and September 30, 2016, respectively	100	99
Additional paid-in capital	432,261	427,295
Accumulated other comprehensive loss	(90,818)	(79,561)
Retained earnings	548,189	535,082
Total stockholders’ equity	889,732	882,915
Total liabilities and stockholders’ equity	$ 1,958,045	$ 1,948,578

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 4,285	$ 3,846
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)	99,526,120	98,614,908
Common stock, shares outstanding (in shares)	99,526,120	98,614,908

XML

Consolidated Statements of Earnings and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Income Statement [Abstract]
Net sales	$ 339,371	$ 359,843
Cost of sales	249,914	263,214
Gross profit	89,457	96,629
Selling, general and administrative expenses	63,201	59,545
Income from operations	26,256	37,084
Interest expense, net	(11,073)	(8,997)
Other income, net	288	901
Income before provision for income taxes	15,471	28,988
Provision for income taxes	(2,364)	(8,379)
Net income	13,107	20,609
Other comprehensive loss, net	(11,257)	(6,297)
Comprehensive income	$ 1,850	$ 14,312
Net income per share:
Basic (in dollars per share)	$ 0.13	$ 0.21
Diluted (in dollars per share)	$ 0.13	$ 0.21
Weighted average shares outstanding:
Basic (in shares)	98,319,926	97,217,924
Diluted (in shares)	98,821,794	97,939,423

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities
Net income	$ 13,107	$ 20,609
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,729	6,997
Deferred financing costs	3,202	828
Bad debt and sales return reserve	458	374
Stock-based compensation expense	2,690	2,194
Excess tax benefit related to stock-based incentive plans	0	(84)
Deferred income taxes	491	1,731
Other non-cash items	(1,139)	(979)
Changes in assets and liabilities:
Accounts receivable	(2,159)	14,205
Inventories	(42,169)	(24,500)
Prepaid expenses and other assets	(1,993)	(8,114)
Income taxes receivable	(5,674)	49
Accounts payable	(8,334)	16,311
Accrued expenses and other liabilities	6,008	(8,523)
Income taxes payable	697	(10,434)
Net cash (used in) provided by operating activities	(28,086)	10,664
Cash flows from investing activities
Purchase of property and equipment	(1,316)	(1,162)
Net cash used in investing activities	(1,316)	(1,162)
Cash flows from financing activities
Proceeds from short-term borrowings	25,000	0
Repayment of short-term borrowings	(5,000)	0
Repayment of long-term debt	(6,344)	(5,000)
Financing fees	(10,462)	0
Repayment of capital lease obligations	(330)	(722)
Excess tax benefit related to stock-based incentive plans	0	84
Proceeds from issuance of common stock	2,277	150
Net cash provided by (used in) financing activities	5,141	(5,488)
Effect of foreign currency exchange rate on cash and cash equivalents	(1,608)	(1,225)
Net (decrease) increase in cash and cash equivalents	(25,869)	2,789
Cash and cash equivalents, beginning of period	77,061	82,866
Cash and cash equivalents, end of period	$ 51,192	$ 85,655

XML

Basis of Presentation and Significant Accounting Policies

3 Months Ended

Dec. 31, 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 filed with the SEC on November 28, 2016, as amended by Amendment No. 1 to Annual Report on Form 10-K/A filed with the SEC on December 14, 2016 (collectively, the “2016 Form 10-K”).

Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation.

Deferred Financing Costs

Debt issuance costs incurred in connection with the issuance of our long-term debt are capitalized and amortized to interest expense over the term of the debt using the straight-line method, which approximates the effective interest method. The unamortized amount is presented as a reduction of long-term debt on the balance sheet.

Debt issuance costs incurred in connection with our revolving line-of-credit (LOC) agreement are capitalized and amortized to interest expense over the term of the LOC agreement using the straight-line method. The unamortized amount is presented as a non-current asset on the balance sheet.

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Recent Accounting Pronouncements

3 Months Ended

Dec. 31, 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 2016-07, 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 the Company in fiscal year 2018, 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 the Company in fiscal year 2020 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 the Company in fiscal year 2019, 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 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 the Company in fiscal year 2018, and interim periods therein. 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 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 the Company in fiscal year 2018, 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 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 inAugust 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 as 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 for the Company is fiscal year 2019, including interim reporting periods within that reporting period. Early adoption is permitted for fiscal year 2018, 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 October 1, 2016, we elected to early adopt 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. The primary impacts of adoption are (1) the recognition of excess tax benefits in our provision for income tax instead of paid-in capital and (2) the presentation of excess tax benefits in the statement of cash flows as cash provided by operating activities instead of cash provided by financing activities. The first requirement is required to be applied prospectively. For the three months ended December 31, 2016, we recorded $1.2 million of excess tax benefits as a reduction to our provision for income tax. For the second requirement, we elected to adopt this update prospectively. For the three months ended December 31, 2016, we presented the $1.2 million in our consolidated statements of cash flows as cash provided by operating activities.

ASU 2016-09 also addresses cash flow statement presentation. Since we have historically presented cash flows related to employee taxes paid for withheld shares as a financing activity, ASU 2016-09 had no impact on our consolidated statements of cash flows. As permitted by ASU 2019-09, we have elected to continue to estimate forfeitures to determine the amount of compensation cost to be recognized in each period.

Effective October 1, 2016, we adopted, on a prospective basis, ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which 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. As of December 31, 2016, we did not have any provisional amounts outstanding from prior acquisitions. Therefore, the adoption of ASU 2015-16 did not have any impact on our consolidated financial statements.

Effective October 1, 2016, we adopted 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. As of December 31, 2016 and September 30, 2016, we had $3.6 million and $1.1 million, respectively, of deferred financing costs related to our revolving line-of-credit facility.

Effective October 1, 2016, we adopted ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost. ASU 2015-03 requires that we change the presentation of debt issuance costs on our consolidated balance sheets. Effective October 1, 2016, our unamortized debt financing costs are presented as a reduction of long-term debt instead of being presented as an asset on our consolidated balance sheet. As required by ASU 2015-03, we reclassified $7.6 million of deferred debt financing costs from non-current assets to reduce our $841.9 million long-term debt as of September 30, 2016. As of December 31, 2016, deferred debt financing costs of $12.4 million is presented as a reduction of our long-term debt. See Note 6 for further information.

Effective October 1, 2016, we adopted, on a prospective basis, 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. The adoption of ASU 2014-12 did not have any impact on our consolidated financial statements.

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Inventory

3 Months Ended

Dec. 31, 2016

Inventory Disclosure [Abstract]

Inventory

Inventory

Our inventory is comprised solely of finished goods. During the three months ended December 31, 2016 and 2015, we recorded a charge to cost of sales of $2.2 million and $2.0 million, respectively, to write down excess inventory to its net realizable value.

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Goodwill

3 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

During the three months ended December 31, 2016, goodwill declined $3.1 million as a result of the strengthening of the U.S. dollar compared to the British pound.

Goodwill consists of the following (in thousands):

	North America			Rest of World			Total
Goodwill as of September 30, 2016, gross	$	779,647		$	63,989		$	843,636
Accumulated impairment	(263,771		)	—			(263,771		)
Goodwill as of September 30, 2016, net	515,876			63,989			579,865
Changes during the period:
Foreign currency translation	—			(3,136		)	(3,136		)
Goodwill as of December 31, 2016, gross	779,647			60,853			840,500
Accumulated impairment	(263,771		)	—			(263,771		)
Goodwill as of December 31, 2016, net	$	515,876		$	60,853		$	576,729

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Fair Value of Financial Instruments

3 Months Ended

Dec. 31, 2016

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 these objectives, we primarily use interest rate swaps as part of our 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 $412.5 million as of December 31, 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 6 below; see Note 6 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 (loss) ("AOCI") and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended December 31, 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 three months ended December 31, 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 AOCI related to derivatives and the related deferred tax are reclassified to interest expense as interest payments are made on our variable-rate debt. As of December 31, 2016, we expected to reclassify approximately $1.2 million from accumulated other comprehensive loss and the related deferred tax to earnings as an increase to interest expense over the next 12 months.

Non-Designated Derivatives

On October 3 and October 5, 2016, we entered into two foreign currency forward contracts to partially reduce our exposure to foreign currency fluctuations for a subsidiary's net monetary assets, which are denominated in a foreign currency. The derivatives are not designated as a hedging instrument. The change in their 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. Both foreign currency forward contracts expired on December 28, 2016. We did not have foreign currency forward contracts as of December 31 and September 30, 2016.

The following table summarizes the notional principal amounts at December 31 and September 30, 2016 of our outstanding derivative instruments discussed above (in thousands).

	Derivative Notional
	December 31, 2016		September 30, 2016
Instruments designated as accounting hedges:
Interest rate contracts	$	412,500	$	425,000

The following table provides the location and fair value amounts of our financial instruments, which are reported in our consolidated balance sheets as of December 31 and September 30, 2016 (in thousands).

		Fair Value
	Balance Sheet Locations	December 31, 2016		September 30, 2016
Instruments designated as accounting hedges:
Interest rate contracts	Accrued expenses and other current liabilities	$	1,156	$	1,057
	Other liabilities	1,968		5,615

The following table provides the losses of our cash flow hedging instruments (net of income tax benefit), which were transferred from AOCI to interest expense on our consolidated statement of comprehensive income during the three months ended December 31, 2016 and 2015 (in thousands).

	Location in Consolidated Statement of Comprehensive Income	Three Months Ended   December 31,
Cash Flow Hedge		2016		2015
Interest rate contracts	Interest expense, net	$	252	$	352

The following table provides the effective portion of the amount of gain recognized in other comprehensive income (net of income taxes) for the three months ended December 31, 2016 and 2015 (in thousands).

	Three Months Ended   December 31,
Cash Flow Hedge	2016		2015
Interest rate contracts	$	2,182	$	1,240

The following table provides a summary of changes to our AOCI related to our cash flow hedging instruments (net of income taxes) during the three months ended December 31, 2016 (in thousands).

AOCI - Unrealized Gain (Loss) on Hedging Instruments	Three Months Ended December 31, 2016
Balance at beginning of period	$	(4,206	)
Change in fair value of hedging instruments	1,930
Amounts reclassified to earnings	252
Net current period other comprehensive income	2,182
Balance at end of period	$	(2,024	)

The following table provides the pretax effect of our derivative instruments not designated as hedging instruments on our consolidated statements of earnings and comprehensive income for the three months ended December 31, 2016 and 2015 (in thousands).

	Location in Consolidated Statement of Comprehensive Income	Three Months Ended   December 31,
Instruments Not Designated As Hedging Instruments
		2016			2015
Foreign currency forward contracts	Other income (loss), net	$	(2,595	)	$	(490	)

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 (as defined below). The principal amounts and fair values of the debt instruments were as follows (in thousands):

	December 31, 2016				September 30, 2016
	Principal Amount		Fair Value		Principal Amount		Fair Value
Term loan A facility	$	395,000	$	393,815	$	401,344	$	401,344
Term loan B facility	440,562		432,632		440,562		435,716
Total long-term debt	$	835,562	$	826,447	$	841,906	$	837,060

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:

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.

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 three months ended December 31, 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 December 31 and September 30, 2016 (in thousands).

December 31, 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	$	1,156	—	$	1,156	—
	Other liabilities	1,968		—	1,968		—

September 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	$	1,057	—	$	1,057	—
	Other liabilities	5,615		—	5,615		—

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.

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Long-Term Debt

3 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consists of the following (in thousands):

	December 31, 2016									September 30, 2016
	Principal  Amount			Deferred Financing Costs			Carrying Amount			Principal  Amount		Deferred Financing Costs			Carrying Amount
Term loan A facility	$	395,000		$	(7,308	)	$	387,692		$	401,344	$	(2,247	)	$	399,097
Term loan B facility	440,562			(5,075		)	435,487			440,562		(5,380		)	435,182
Less: current portion	(20,000		)	—			(20,000		)	—		—			—
Non-current portion	$	815,562		$	(12,383	)	$	803,179		$	841,906	$	(7,627	)	$	834,279

On October 4, 2016, we entered into the Fourth Amendment (the Amendment) to our credit agreement, dated as of December 7, 2012, by and among the Company, Wesco Aircraft Hardware (the Borrower) and the lenders and agents party thereto (as amended prior to the Amendment, the Existing Credit Agreement; the Existing Credit Agreement, as amended by the Amendment, the Credit Agreement). The Amendment modified the Existing Credit Agreement to replace the Borrower’s existing revolving facility with a new revolving facility in an aggregate principal amount of $180.0 million and the Borrower’s existing senior secured term loan A facility with a new senior secured term loan A facility in an aggregate principal amount of $400.0 million (the "term loan A facility").

The Credit Agreement provides for (1) a $400.0 million term loan A facility, (2) a $180.0 million 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 B facility, together with the term loan A facility and the revolving facility, as the "Credit Facilities."

As of December 31, 2016, our outstanding indebtedness under our Credit Facilities was $855.6 million, which consisted of (1) $395.0 million of indebtedness under the term loan A facility, (2) $20.0 million of indebtedness under the revolving facility, and (3) $440.6 million of indebtedness under the term loan B facility. As of December 31, 2016, $160.0 million was available for borrowing under the revolving facility, of which we could borrow up to $60.0 million without breaching any covenants contained in the agreements governing our indebtedness.

In connection with the Amendment, we borrowed $25.0 million under the revolving facility. During the three months ended December 31, 2016, we made our required quarterly payment of $5.0 million and a voluntary prepayment of $1.3 million on our term loan A facility and a voluntary prepayment of $5.0 million on our borrowings under the revolving facility.

The interest rate for the term loan A facility is based on our Consolidated Total Leverage Ratio (as defined in the Credit Agreement) as determined in the most recently delivered financial statements, with the respective margins ranging from 2.00% to 2.75% for Eurocurrency loans and 1.00% to 1.75% 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 $400.0 million with the balance due on the earlier of (i) 90 days before the maturity of the term loan B facility, and (ii) October 4, 2021. As of December 31, 2016, the interest rate for borrowings under the term loan A facility was 3.27%, which approximated the effective interest rate.

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 December 31, 2016, the interest rate for borrowings under the term loan B facility was 3.5%, which approximated the effective interest rate. In July 2015, we entered into interest rate swap agreements relating to this indebtedness, which are described in greater detail in Note 5 above.

The interest rate for the revolving facility is based on our Consolidated Total Leverage Ratio (as defined in the Credit Agreement) as determined in the most recently delivered financial statements, with the respective margins ranging from 2.00% to 2.75% for Eurocurrency loans and 1.00% to 1.75% for ABR loans. The revolving facility expires on the earlier of (i) 90 days before the maturity of the term loan B facility, and (ii) October 4, 2021. As of December 31, 2016, the interest rate for borrowings under the revolving facility was 3.27%.

The Amendment also (1) removed the Consolidated Net Interest Coverage Ratio (as defined in the Existing Credit Agreement) financial covenant and (2) modified the Consolidated Total Leverage Ratio (as defined in the Credit Agreement) levels in the financial covenant to a maximum of 4.50 for the quarters ended September 30, 2016 and December 31, 2016, with step-downs to 4.25 for the quarters ending March 31, 2017 and June 30, 2017, 4.00 for the quarters ending September 30, 2017 and December 31, 2017, 3.75 for the quarters ending March 31, 2018 and June 30, 2018 and 3.50 for the quarter ending September 30, 2018 and thereafter.

The Amendment also provided for additional changes, including (1) permitting the corporate consolidation of Wesco’s operations in the United Kingdom, (2) expanding Wesco’s ability to enter into receivables financings, (3) increasing the maximum amount permitted to be incurred under a Cash-Capped Incremental Facility (as defined in the Credit Agreement) from $100 million to $150 million and (4) providing increased flexibility for future restructurings.

As a result of the amendment, we incurred $10.5 million in fees that were capitalized, $7.2 million of which was related to the term loan A facility and $3.3 million of which was related to the revolving facility. Of the $3.4 million of the unamortized deferred financing costs related to the Existing Credit Agreement, $2.3 million was written off as debt extinguishment loss in the three months ended December 31, 2016, which was included in interest expense for the period. The remaining unamortized deferred financing costs related to the Existing Credit Agreement were added to the $10.5 million of deferred financing costs related to the Amendment and will be amortized over the remaining life of the term loan A and the revolving facility. The following table summarizes the total deferred financing costs for term loan A facility and the revolving facility as of October 4, 2016.

	Term Loan A Facility			Revolving Facility			Total
Deferred financing costs as of September 30, 2016	$	2,247		$	1,120		$	3,367
Write off for the Amendment	(1,769		)	(553		)	(2,322		)
Deferred financing costs for the Amendment	7,215			3,247			10,462
Deferred financing costs as of October 4, 2016	$	7,693		$	3,814		$	11,507

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).

As referred to above, our borrowings under the Credit Facilities are subject to a financial covenant based upon our Consolidated Total Leverage Ratio (as defined in the Credit Agreement) with the maximum ratio currently set at 4.50, which will step down to 4.25 next quarter and will step down gradually during future quarters to 3.50 for the quarter ending September 30, 2018 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 December 31, 2016, we were in compliance with all of the foregoing covenants, and our Consolidated Total Leverage Ratio was 4.19.

As of December 31, 2016, our subsidiary, Wesco Aircraft Europe, Ltd, has available a £7.0 million ($8.6 million based on the December 31, 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 December 31, 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.

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Comprehensive Income

3 Months Ended

Dec. 31, 2016

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Comprehensive Income

Comprehensive Income

Comprehensive income, which is net of income taxes, consists of the following (in thousands):

	Three Months Ended   December 31,
	2016			2015
Net income	$	13,107		$	20,609
Foreign currency translation loss	(13,439		)	(7,537		)
Unrealized gain on cash flow hedging instruments	2,182			1,240
Total comprehensive income	$	1,850		$	14,312

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Net Income Per Share

3 Months Ended

Dec. 31, 2016

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 months ended December 31, 2016 and 2015 (dollars in thousands except share data):

	Three Months Ended   December 31,
	2016		2015
Net income	$	13,107	$	20,609
Basic weighted average shares outstanding	98,319,926		97,217,924
Dilutive effect of stock options and restricted stock awards/units	501,868		721,499
Dilutive weighted average shares outstanding	98,821,794		97,939,423
Basic net income per share	$	0.13	$	0.21
Diluted net income per share	$	0.13	$	0.21

 For the three months ended December 31, 2016 and 2015, respectively, 1,972,928 and 2,978,026 shares of common stock equivalents were not included in the diluted calculation due to their anti-dilutive effect.

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Segment Reporting

3 Months Ended

Dec. 31, 2016

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):

	Three Months Ended December 31, 2016									Three Months Ended December 31, 2015
	North America			Rest of World			Consolidated			North America			Rest of World			Consolidated
Net sales	$	270,469		$	68,902		$	339,371		$	286,960		$	72,883		$	359,843
Income from operations	17,286			8,970			26,256			29,056			8,028			37,084
Interest expense, net	(10,115		)	(958		)	(11,073		)	(7,799		)	(1,198		)	(8,997		)
Provision for income taxes	(548		)	(1,816		)	(2,364		)	(6,412		)	(1,967		)	(8,379		)
Capital expenditures	1,064			252			1,316			1,056			106			1,162
Depreciation and amortization	5,950			779			6,729			5,953			1,044			6,997

	As of December 31, 2016						As of December 31, 2015
	North America		Rest of World		Consolidated		North America		Rest of World		Consolidated
Total assets	$	1,682,480	$	275,565	$	1,958,045	$	1,699,656	$	320,760	$	2,020,416

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Income Taxes

3 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	Three Months Ended   December 31,
(dollars in thousands)	2016			2015
Provision for income taxes	$	2,364		$	8,379
Effective tax rate	15.3		%	28.9		%

For the three months ended December 31, 2016, our effective tax rate decreased 13.6 percentage points primarily due to the adoption of ASU 2016-09, which resulted in a decrease of our effective tax rate by 7.9 percentage points, and the release of a valuation allowance on a net operating loss carryforward of a foreign subsidiary, which resulted in a decrease of our effective tax rate by 5.1 percentage points.

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Commitments and Contingencies

3 Months Ended

Dec. 31, 2016

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.

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Basis of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2016

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.

Deferred Financing Costs

Deferred Financing Costs

Debt issuance costs incurred in connection with the issuance of our long-term debt are capitalized and amortized to interest expense over the term of the debt using the straight-line method, which approximates the effective interest method. The unamortized amount is presented as a reduction of long-term debt on the balance sheet.

Debt issuance costs incurred in connection with our revolving line-of-credit (LOC) agreement are capitalized and amortized to interest expense over the term of the LOC agreement using the straight-line method. The unamortized amount is presented as a non-current asset on the balance sheet.

New Accounting Standards Issued

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 the Company in fiscal year 2018, 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 the Company in fiscal year 2020 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 the Company in fiscal year 2019, 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 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 the Company in fiscal year 2018, and interim periods therein. 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 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 the Company in fiscal year 2018, 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 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 inAugust 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 as 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 for the Company is fiscal year 2019, including interim reporting periods within that reporting period. Early adoption is permitted for fiscal year 2018, 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 October 1, 2016, we elected to early adopt 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. The primary impacts of adoption are (1) the recognition of excess tax benefits in our provision for income tax instead of paid-in capital and (2) the presentation of excess tax benefits in the statement of cash flows as cash provided by operating activities instead of cash provided by financing activities. The first requirement is required to be applied prospectively. For the three months ended December 31, 2016, we recorded $1.2 million of excess tax benefits as a reduction to our provision for income tax. For the second requirement, we elected to adopt this update prospectively. For the three months ended December 31, 2016, we presented the $1.2 million in our consolidated statements of cash flows as cash provided by operating activities.

ASU 2016-09 also addresses cash flow statement presentation. Since we have historically presented cash flows related to employee taxes paid for withheld shares as a financing activity, ASU 2016-09 had no impact on our consolidated statements of cash flows. As permitted by ASU 2019-09, we have elected to continue to estimate forfeitures to determine the amount of compensation cost to be recognized in each period.

Effective October 1, 2016, we adopted, on a prospective basis, ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which 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. As of December 31, 2016, we did not have any provisional amounts outstanding from prior acquisitions. Therefore, the adoption of ASU 2015-16 did not have any impact on our consolidated financial statements.

Effective October 1, 2016, we adopted 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. As of December 31, 2016 and September 30, 2016, we had $3.6 million and $1.1 million, respectively, of deferred financing costs related to our revolving line-of-credit facility.

Effective October 1, 2016, we adopted ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost. ASU 2015-03 requires that we change the presentation of debt issuance costs on our consolidated balance sheets. Effective October 1, 2016, our unamortized debt financing costs are presented as a reduction of long-term debt instead of being presented as an asset on our consolidated balance sheet. As required by ASU 2015-03, we reclassified $7.6 million of deferred debt financing costs from non-current assets to reduce our $841.9 million long-term debt as of September 30, 2016. As of December 31, 2016, deferred debt financing costs of $12.4 million is presented as a reduction of our long-term debt. See Note 6 for further information.

Effective October 1, 2016, we adopted, on a prospective basis, 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. The adoption of ASU 2014-12 did not have any impact on our consolidated financial statements.

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Goodwill (Tables)

3 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

Goodwill consists of the following (in thousands):

	North America			Rest of World			Total
Goodwill as of September 30, 2016, gross	$	779,647		$	63,989		$	843,636
Accumulated impairment	(263,771		)	—			(263,771		)
Goodwill as of September 30, 2016, net	515,876			63,989			579,865
Changes during the period:
Foreign currency translation	—			(3,136		)	(3,136		)
Goodwill as of December 31, 2016, gross	779,647			60,853			840,500
Accumulated impairment	(263,771		)	—			(263,771		)
Goodwill as of December 31, 2016, net	$	515,876		$	60,853		$	576,729

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Schedule of derivative instruments

The following table summarizes the notional principal amounts at December 31 and September 30, 2016 of our outstanding derivative instruments discussed above (in thousands).

	Derivative Notional
	December 31, 2016		September 30, 2016
Instruments designated as accounting hedges:
Interest rate contracts	$	412,500	$	425,000

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 December 31 and September 30, 2016 (in thousands).

		Fair Value
	Balance Sheet Locations	December 31, 2016		September 30, 2016
Instruments designated as accounting hedges:
Interest rate contracts	Accrued expenses and other current liabilities	$	1,156	$	1,057
	Other liabilities	1,968		5,615

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 interest expense on our consolidated statement of comprehensive income during the three months ended December 31, 2016 and 2015 (in thousands).

	Location in Consolidated Statement of Comprehensive Income	Three Months Ended   December 31,
Cash Flow Hedge		2016		2015
Interest rate contracts	Interest expense, net	$	252	$	352

The following table provides the effective portion of the amount of gain recognized in other comprehensive income (net of income taxes) for the three months ended December 31, 2016 and 2015 (in thousands).

	Three Months Ended   December 31,
Cash Flow Hedge	2016		2015
Interest rate contracts	$	2,182	$	1,240

The following table provides the pretax effect of our derivative instruments not designated as hedging instruments on our consolidated statements of earnings and comprehensive income for the three months ended December 31, 2016 and 2015 (in thousands).

	Location in Consolidated Statement of Comprehensive Income	Three Months Ended   December 31,
Instruments Not Designated As Hedging Instruments
		2016			2015
Foreign currency forward contracts	Other income (loss), net	$	(2,595	)	$	(490	)

Schedule of accumulated other comprehensive income (loss)

The following table provides a summary of changes to our AOCI related to our cash flow hedging instruments (net of income taxes) during the three months ended December 31, 2016 (in thousands).

AOCI - Unrealized Gain (Loss) on Hedging Instruments	Three Months Ended December 31, 2016
Balance at beginning of period	$	(4,206	)
Change in fair value of hedging instruments	1,930
Amounts reclassified to earnings	252
Net current period other comprehensive income	2,182
Balance at end of period	$	(2,024	)

Schedule of carrying values and estimated fair values of debt instruments

The principal amounts and fair values of the debt instruments were as follows (in thousands):

	December 31, 2016				September 30, 2016
	Principal Amount		Fair Value		Principal Amount		Fair Value
Term loan A facility	$	395,000	$	393,815	$	401,344	$	401,344
Term loan B facility	440,562		432,632		440,562		435,716
Total long-term debt	$	835,562	$	826,447	$	841,906	$	837,060

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 December 31 and September 30, 2016 (in thousands).

December 31, 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	$	1,156	—	$	1,156	—
	Other liabilities	1,968		—	1,968		—

September 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	$	1,057	—	$	1,057	—
	Other liabilities	5,615		—	5,615		—

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Long-Term Debt (Tables)

3 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Schedule of debt

Long-term debt consists of the following (in thousands):

	December 31, 2016									September 30, 2016
	Principal  Amount			Deferred Financing Costs			Carrying Amount			Principal  Amount		Deferred Financing Costs			Carrying Amount
Term loan A facility	$	395,000		$	(7,308	)	$	387,692		$	401,344	$	(2,247	)	$	399,097
Term loan B facility	440,562			(5,075		)	435,487			440,562		(5,380		)	435,182
Less: current portion	(20,000		)	—			(20,000		)	—		—			—
Non-current portion	$	815,562		$	(12,383	)	$	803,179		$	841,906	$	(7,627	)	$	834,279

Total deferred financing costs

The following table summarizes the total deferred financing costs for term loan A facility and the revolving facility as of October 4, 2016.

	Term Loan A Facility			Revolving Facility			Total
Deferred financing costs as of September 30, 2016	$	2,247		$	1,120		$	3,367
Write off for the Amendment	(1,769		)	(553		)	(2,322		)
Deferred financing costs for the Amendment	7,215			3,247			10,462
Deferred financing costs as of October 4, 2016	$	7,693		$	3,814		$	11,507

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Comprehensive Income (Tables)

3 Months Ended

Dec. 31, 2016

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):

	Three Months Ended   December 31,
	2016			2015
Net income	$	13,107		$	20,609
Foreign currency translation loss	(13,439		)	(7,537		)
Unrealized gain on cash flow hedging instruments	2,182			1,240
Total comprehensive income	$	1,850		$	14,312

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Net Income Per Share (Tables)

3 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Schedule of net income per share

The following table provides our basic and diluted net income per share for the three months ended December 31, 2016 and 2015 (dollars in thousands except share data):

	Three Months Ended   December 31,
	2016		2015
Net income	$	13,107	$	20,609
Basic weighted average shares outstanding	98,319,926		97,217,924
Dilutive effect of stock options and restricted stock awards/units	501,868		721,499
Dilutive weighted average shares outstanding	98,821,794		97,939,423
Basic net income per share	$	0.13	$	0.21
Diluted net income per share	$	0.13	$	0.21

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Segment Reporting (Tables)

3 Months Ended

Dec. 31, 2016

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):

	Three Months Ended December 31, 2016									Three Months Ended December 31, 2015
	North America			Rest of World			Consolidated			North America			Rest of World			Consolidated
Net sales	$	270,469		$	68,902		$	339,371		$	286,960		$	72,883		$	359,843
Income from operations	17,286			8,970			26,256			29,056			8,028			37,084
Interest expense, net	(10,115		)	(958		)	(11,073		)	(7,799		)	(1,198		)	(8,997		)
Provision for income taxes	(548		)	(1,816		)	(2,364		)	(6,412		)	(1,967		)	(8,379		)
Capital expenditures	1,064			252			1,316			1,056			106			1,162
Depreciation and amortization	5,950			779			6,729			5,953			1,044			6,997

	As of December 31, 2016						As of December 31, 2015
	North America		Rest of World		Consolidated		North America		Rest of World		Consolidated
Total assets	$	1,682,480	$	275,565	$	1,958,045	$	1,699,656	$	320,760	$	2,020,416

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Income Taxes (Tables)

3 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Schedule of components of income tax expense (benefit)

	Three Months Ended   December 31,
(dollars in thousands)	2016			2015
Provision for income taxes	$	2,364		$	8,379
Effective tax rate	15.3		%	28.9		%

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Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Oct. 04, 2016	Sep. 30, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Effective income tax rate reconciliation, share-based compensation, excess tax benefit, amount	$ 1,200
Deferred finance costs, net		$ 11,507	$ 3,367
Carrying Amount			841,900
Other noncurrent assets | Accounting Standards Update 2015-03
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net			(7,600)
Long-term debt | Accounting Standards Update 2015-03
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net	(12,400)		7,600
Line of credit | Accounting Standards Update 2015-15
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net	3,600		$ 1,100
New accounting pronouncement, early adoption, effect | Accounting Standards Update 2016-09, Statutory tax withholding component
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net cash provided by (used in) operating activities	$ 1,200

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Inventory (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Inventory write-down	$ 2.2	$ 2.0

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Goodwill - Additional Information (Details) $ in Millions	3 Months Ended
	Dec. 31, 2016 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, period increase (decrease)	$ (3.1)

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Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Sep. 30, 2016
Goodwill [Roll Forward]
Goodwill, gross, beginning balance	$ 843,636
Accumulated impairment	(263,771)	$ (263,771)
Goodwill, net, beginning balance	579,865
Foreign currency translation	(3,136)
Goodwill, gross, ending balance	840,500
Goodwill, net, ending balance	576,729
North America
Goodwill [Roll Forward]
Goodwill, gross, beginning balance	779,647
Accumulated impairment	(263,771)	(263,771)
Goodwill, net, beginning balance	515,876
Foreign currency translation	0
Goodwill, gross, ending balance	779,647
Goodwill, net, ending balance	515,876
Rest of World
Goodwill [Roll Forward]
Goodwill, gross, beginning balance	63,989
Accumulated impairment	0	$ 0
Goodwill, net, beginning balance	63,989
Foreign currency translation	(3,136)
Goodwill, gross, ending balance	60,853
Goodwill, net, ending balance	$ 60,853

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Fair Value of Financial Instruments - Cash Flow Hedges of Interest Rate Risk (Details) - Cash flow hedging	3 Months Ended
	Dec. 31, 2016 USD ($)	Jul. 31, 2015 interest_rate_swap_agreement
Interest rate swap
Derivative [Line Items]
Derivative instrument, gain (loss) reclassification from AOCI to income	$ 1,200,000
Interest rate swap one
Derivative [Line Items]
Derivative, fixed interest rate (as a percent)	1.21%
Interest rate swap two
Derivative [Line Items]
Derivative, fixed interest rate (as a percent)	2.2625%
Designated as hedging instrument | Interest rate swap
Derivative [Line Items]
Number of interest rate derivatives held | interest_rate_swap_agreement		2
Designated as hedging instrument | Interest rate swap one
Derivative [Line Items]
Derivative, notional amount	$ 412,500,000
Designated as hedging instrument | Interest rate swap two
Derivative [Line Items]
Derivative, notional amount	$ 375,000,000

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Fair Value of Financial Instruments - Non-Designated Derivatives (Details) - USD ($)	Dec. 31, 2016	Sep. 30, 2016
Designated as hedging instrument | Interest rate contract
Derivative [Line Items]
Derivative, notional amount	$ 412,500,000	$ 425,000,000

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Fair Value of Financial Instruments - Location and Fair Value Amounts of Financial Instruments (Details) - Designated as hedging instrument - Interest rate contract - Cash flow hedging - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Accrued expenses and other current liabilities
Derivative [Line Items]
Derivative liability, fair value, gross liability	$ 1,156	$ 1,057
Other liabilities
Derivative [Line Items]
Derivative liability, fair value, gross liability	$ 1,968	$ 5,615

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Fair Value of Financial Instruments - Losses of Cash Flow Hedge Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Interest expense, net | Interest rate contract | Cash flow hedging
Derivative [Line Items]
Interest rate contracts loss reclassified from accumulated OCI into income	$ 252	$ 352

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Fair Value of Financial Instruments - Effective Portion of Gain Recognized In OCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Interest rate contract | Cash flow hedging
Derivative [Line Items]
Loss on interest rate contacts	$ 2,182	$ 1,240

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Fair Value of Financial Instruments - Changes in AOCI (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2016 USD ($)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	$ 882,915
Balance at end of period	889,732
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	(4,206)
Change in fair value of hedging instruments	1,930
Amounts reclassified to earnings	252
Net current period other comprehensive income	2,182
Balance at end of period	$ (2,024)

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Fair Value of Financial Instruments - Pretax Effect of Derivative Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Not designated as hedging instrument | Foreign exchange contract | Other income
Fair value of financial instruments
Gain (loss) on foreign exchange contract, net, pretax	$ (2,595)	$ (490)

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Fair Value of Financial Instruments - Other Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Fair value of financial instruments
Principal Amount	$ 855,600
Level 2 | Carrying reported amount fair value disclosure
Fair value of financial instruments
Principal Amount	835,562	$ 841,906
Level 2 | Estimate of fair value measurement
Fair value of financial instruments
Fair Value	826,447	837,060
Term loan due December 2017
Fair value of financial instruments
Principal Amount	395,000
Term loan due December 2017 | Level 2 | Carrying reported amount fair value disclosure
Fair value of financial instruments
Principal Amount	395,000	401,344
Term loan due December 2017 | Level 2 | Estimate of fair value measurement
Fair value of financial instruments
Fair Value	393,815	401,344
Term loan due February 2021
Fair value of financial instruments
Principal Amount	440,600
Term loan due February 2021 | Level 2 | Carrying reported amount fair value disclosure
Fair value of financial instruments
Principal Amount	440,562	440,562
Term loan due February 2021 | Level 2 | Estimate of fair value measurement
Fair value of financial instruments
Fair Value	$ 432,632	$ 435,716

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Fair Value of Financial Instruments - Fair Value Measurement (Details) - Designated as hedging instrument - Interest rate contract - Fair value, measurements, recurring - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Accrued expenses and other current liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 1,156	$ 1,057
Accrued expenses and other current liabilities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	1,156	1,057
Other liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	1,968	5,615
Other liabilities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 1,968	$ 5,615

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Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Debt Instrument [Line Items]
Principal Amount	$ 855,600
Deferred Financing Costs	(12,383)	$ (7,627)
Carrying Amount		841,900
Less: current portion	(20,000)	0
Long-term debt, less current portion, gross	815,562	841,906
Long-term debt, less current portion, net	803,179	834,279
Term loan due December 2017 | Term loan
Debt Instrument [Line Items]
Principal Amount	395,000	401,344
Deferred Financing Costs	(7,308)	(2,247)
Carrying Amount	387,692	399,097
Term loan due February 2021 | Term loan
Debt Instrument [Line Items]
Principal Amount	440,562	440,562
Deferred Financing Costs	(5,075)	(5,380)
Carrying Amount	$ 435,487	$ 435,182

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Long-Term Debt - Deferred Financing Costs (Details) - USD ($) $ in Thousands	Oct. 04, 2016	Sep. 30, 2016
Debt Instrument [Line Items]
Deferred finance costs, net	$ 11,507	$ 3,367
Write off of deferred debt issuance cost	(2,322)
Term loan due December 2017
Debt Instrument [Line Items]
Deferred finance costs, net	7,693	2,247
Write off of deferred debt issuance cost	(1,769)
Revolving credit facility
Debt Instrument [Line Items]
Deferred finance costs, net	3,814	$ 1,120
Write off of deferred debt issuance cost	(553)
Amendment and Restatement of Credit Agreement
Debt Instrument [Line Items]
Deferred finance costs, net	10,462
Amendment and Restatement of Credit Agreement | Term loan due December 2017
Debt Instrument [Line Items]
Deferred finance costs, net	7,215
Amendment and Restatement of Credit Agreement | Revolving credit facility
Debt Instrument [Line Items]
Deferred finance costs, net	$ 3,247

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Long-Term Debt Long-Term Debt - Additional Information (Details)		3 Months Ended
	Oct. 04, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 GBP (£)	Dec. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)
Debt Instrument [Line Items]
Principal Amount		$ 855,600,000
Carrying amount					$ 841,900,000
Covenant terms, net debt to EBITDA ratio, thereafter		3.5	3.5
Write off of deferred debt issuance cost	$ 2,322,000
Amendment and Restatement of Credit Agreement
Debt Instrument [Line Items]
Debt issuance costs		$ 10,500,000
Debt instrument, net debt to EBITDA ratio		4.19	4.19
Existing Credit Agreement
Debt Instrument [Line Items]
Debt issuance costs		$ 3,400,000
Write off of deferred debt issuance cost		$ 2,300,000
Maximum | Amendment and Restatement of Credit Agreement
Debt Instrument [Line Items]
Covenant terms net, debt to EBITDA ratio		4.50	4.50		4.50
Convenant terms, net debt to EBITDA ratio, quarter ending March 31, 2017		4.25	4.25
Covenant terms, net debt to EBITDA ratio, quarter ending September 30, 2017		4.00	4.00
Covenant terms, net debt to EBITDA ratio, quarter ending March 31, 2018		3.75	3.75
Covenant terms, net debt to EBITDA ratio, thereafter		3.50	3.50
Revolving credit facility
Debt Instrument [Line Items]
Line of credit facility, current borrowing capacity		$ 60,000,000.0
Principal Amount		20,000,000
Revolving line of credit		180,000,000.0
Line of credit facility, remaining borrowing capacity		160,000,000
Voluntary prepayment of debt		$ 5,000,000
Interest rate at end of period (as a percent)		3.27%	3.27%
Write off of deferred debt issuance cost	553,000
Revolving credit facility | Amendment and Restatement of Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, current borrowing capacity	180,000,000
Borrowings drawn from line of credit		$ 25,000,000
Debt issuance costs		$ 3,300,000
Revolving credit facility | Maximum | Eurocurrency
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		2.75%
Revolving credit facility | Maximum | Alternate base rate
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		1.75%
Revolving credit facility | Minimum | Eurocurrency
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		2.00%
Revolving credit facility | Minimum | Alternate base rate
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		1.00%
Term loan due December 2017
Debt Instrument [Line Items]
Principal amount		$ 400,000,000.0
Principal Amount		395,000,000
Voluntary prepayment of debt		$ 1,300,000
Debt instrument, quarterly periodic payment principal percentage, year one (as a percent)		1.25%	1.25%
Write off of deferred debt issuance cost	1,769,000
Term loan due December 2017 | Amendment and Restatement of Credit Agreement
Debt Instrument [Line Items]
Principal amount	$ 400,000,000.0
Debt issuance costs		$ 7,200,000
Term loan due December 2017 | Maximum | Eurocurrency
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		2.75%
Term loan due December 2017 | Maximum | Alternate base rate
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		1.75%
Term loan due December 2017 | Maximum | Amendment and Restatement of Credit Agreement
Debt Instrument [Line Items]
Covenant terms, net debt to EBITDA ratio, quarter ending December 31, 2017		4.00	4.00
Covenant terms, net debt to EBITDA ratio, quarter ending June 30, 2018		3.75	3.75
Covenant terms, net debt to EBITDA ratio, quarter ending September 30, 2018		3.50	3.50
Term loan due December 2017 | Minimum | Eurocurrency
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		2.00%
Term loan due December 2017 | Minimum | Alternate base rate
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		1.00%
Term loan due February 2021
Debt Instrument [Line Items]
Principal amount		$ 525,000,000.0
Principal Amount		$ 440,600,000
Interest rate at end of period (as a percent)		3.50%	3.50%
Debt instrument, quarterly periodic payment principal percentage (as a percent)		0.25%	0.25%
Term loan due February 2021 | Eurocurrency
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		2.50%
Term loan due February 2021 | Alternate base rate
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		1.50%
Term loan due February 2021 | Maximum | Amendment and Restatement of Credit Agreement
Debt Instrument [Line Items]
Covenant terms, net debt to EBITDA ratio, quarter ending June 30, 2017		4.25	4.25
Term loan due February 2021 | Minimum | Eurocurrency
Debt Instrument [Line Items]
Debt instrument, variable interest rate (as a percent)		0.75%
Term loan due February 2021 | Minimum | Alternate base rate
Debt Instrument [Line Items]
Debt instrument, variable interest rate (as a percent)		1.75%
Foreign line of credit | Wesco Aircraft Europe Limited
Debt Instrument [Line Items]
Line of credit facility, current borrowing capacity | £			£ 7,000,000
Revolving line of credit		$ 8,600,000	£ 7,000,000.0
Foreign line of credit | Base rate | Wesco Aircraft Europe Limited
Debt Instrument [Line Items]
Applicable margin rate (as a percent)		1.65%
Cash-capped incremental facility | Amendment and Restatement of Credit Agreement
Debt Instrument [Line Items]
Revolving line of credit		$ 150,000,000		$ 100,000,000

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Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Net income	$ 13,107	$ 20,609
Foreign currency translation loss	(13,439)	(7,537)
Unrealized gain on cash flow hedging instruments	2,182	1,240
Comprehensive income	$ 1,850	$ 14,312

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Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share [Abstract]
Net income	$ 13,107	$ 20,609
Basic weighted average shares outstanding (in shares)	98,319,926	97,217,924
Dilutive effect of stock options and restricted stock awards/units (in shares)	501,868	721,499
Dilutive weighted average shares outstanding (in shares)	98,821,794	97,939,423
Basic net income per share (in dollars per share)	$ 0.13	$ 0.21
Diluted net income per share (in dollars per share)	$ 0.13	$ 0.21
Common stock equivalents not included in diluted calculation due to anti-dilutive effect (in shares)	1,972,928	2,978,026

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Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Sep. 30, 2016
Segment Reporting [Line Items]
Net sales	$ 339,371	$ 359,843
Income from operations	26,256	37,084
Interest expense, net	(11,073)	(8,997)
Provision for income taxes	(2,364)	(8,379)
Capital expenditures	1,316	1,162
Depreciation and amortization	6,729	6,997
Total assets	1,958,045	2,020,416	$ 1,948,578
North America
Segment Reporting [Line Items]
Net sales	270,469	286,960
Income from operations	17,286	29,056
Interest expense, net	(10,115)	(7,799)
Provision for income taxes	(548)	(6,412)
Capital expenditures	1,064	1,056
Depreciation and amortization	5,950	5,953
Total assets	1,682,480	1,699,656
Rest of World
Segment Reporting [Line Items]
Net sales	68,902	72,883
Income from operations	8,970	8,028
Interest expense, net	(958)	(1,198)
Provision for income taxes	(1,816)	(1,967)
Capital expenditures	252	106
Depreciation and amortization	779	1,044
Total assets	$ 275,565	$ 320,760

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 2,364	$ 8,379
Effective tax rate	15.30%	28.90%
Effective income tax rate reconciliation, share-based compensation, excess tax benefit, percent	1360.00%
Effective income tax rate reconciliation, other adjustments, percent	7.90%
Effective income tax rate reconciliation, tax contingency, foreign, percent	5.10%