12.

SUBSEQUENT EVENTS

Subsequent Events Related to the Bank Term Loans and Senior Notes

In July 2016, the Company obtained consents from the lenders of the Bank Term Loans and Senior Notes. These consents had the effect of extending the time for delivery of our fiscal 2016 audited financial statements to August 31, 2016 and first quarter fiscal 2017 quarterly financial information to October 15, 2016, whereby an event of default was waived as long as those items are delivered within a 15 day grace period after those dates. The fiscal 2016 audited financial statements were delivered within the grace period. In addition, the consents also permitted the Company’s payment of quarterly dividends of $0.06 per share on common shares in each of June and September 2016, as well as the annual dividend of $0.0195 per share to be paid on shares of preferred stock in March 2017.

In October 2016, the Company obtained additional consents from the lenders of the Bank Term Loans and Senior Notes. These consents had the effect of extending the time for delivery of our first quarter fiscal 2017 quarterly financial information to November 30, 2016 and our second quarter fiscal 2017 quarterly financial information to December 31, 2016, whereby an event of default was waived as long as those items are delivered within a 30 day grace period after those dates. In addition, the consents also permitted the Company’s payment of a quarterly dividend of $0.06 per share on common shares in December 2016, as well as the annual dividend of $0.0195 per share to be paid on shares of preferred stock in March 2017.

In December 2016, the Company obtained additional consents from the lenders of the Bank Term Loans and Senior Notes. These consents had the effect of extending the time for delivery of our first quarter fiscal 2017 quarterly financial information to January 31, 2017.

Subsequent Event Related to the ADS Mexicana Revolving Credit Facility

During the period from November 3, 2014 to November 11, 2015, our joint venture, ADS Mexicana, made intercompany revolving loans to ADS, Inc. The maximum aggregate amount of the intercompany loans outstanding at any time was $6.9 million. Since November 11, 2015, there have been no other intercompany loans made, and no balance remains outstanding.

According to the terms of the ADS Mexicana Revolving Credit Facility, ADS Mexicana was not permitted to make such loans, triggering an Event of Default, and ADS Mexicana had an obligation to report such Event of Default. These events together were characterized as a Specified Default. On December 13, 2016, ADS Mexicana obtained a covenant waiver on the ADS Mexicana Revolving Credit Facility for the Specified Default from the lenders.

Subsequent Event Related to Dividends on Common Stock

During the second quarter of fiscal 2017, the Company declared a quarterly cash dividend of $0.06 per share of common stock. The second quarter dividend was payable on September 15, 2016 to stockholders of record at the close of business on September 1, 2016.

During the third quarter of fiscal 2017, the Company declared a quarterly cash dividend of $0.06 per share of common stock. The third quarter dividend was payable on December 15, 2016 to stockholders of record at the close of business on December 1, 2016.

Other Subsequent Events

In the third quarter of fiscal 2017, the Company shortened the remaining useful life of certain assets related to three manufacturing facilities resulting in anticipated accelerated depreciation expense of less than $2 million. One of these facilities closed in the third quarter of fiscal 2017, and ADS committed to a plan to reduce production at the other facilities in the third quarter of fiscal 2017.

In December 2016, a fire destroyed approximately $1.1 million of finished goods inventory at the Company’s South American Joint Venture. The Company’s portion of the loss will be recorded in Equity in net loss of unconsolidated affiliates. While the Company expects that the loss is recoverable through insurance proceeds, the amount of the recovery is not currently determinable. Once the amount of recovery is determinable, the Company’s portion will be recorded in Equity in net loss of unconsolidated affiliates.