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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|
| |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 2, 2016
|
| |
¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-32253
EnerSys
(Exact name of registrant as specified in its charter)
|
| | |
Delaware | | 23-3058564 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
2366 Bernville Road
Reading, Pennsylvania 19605
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 610-208-1991
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý YES ¨ NO.
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 ý No ¨
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 the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.
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| | | | | | |
Large accelerated filer | | ý | | Accelerated filer | | ¨ |
| | | |
Non-accelerated filer | | ¨ (Do not check if a smaller reporting company) | | Smaller reporting company | | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). ¨ YES ý NO.
Common Stock outstanding at November 4, 2016: 43,430,129 shares
ENERSYS
INDEX – FORM 10-Q
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 4. | | |
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Item 6. | | |
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PART I – | FINANCIAL INFORMATION |
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ITEM 1. | FINANCIAL STATEMENTS |
ENERSYS
Consolidated Condensed Balance Sheets (Unaudited)
(In Thousands, Except Share and Per Share Data)
|
| | | | | | | | |
| | October 2, 2016 | | March 31, 2016 |
Assets | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ | 440,286 |
| | $ | 397,307 |
|
Accounts receivable, net of allowance for doubtful accounts: October 2, 2016 - $13,148; March 31, 2016 - $11,393 | | 462,724 |
| | 490,799 |
|
Inventories, net | | 370,041 |
| | 331,081 |
|
Prepaid and other current assets | | 90,144 |
| | 77,052 |
|
Total current assets | | 1,363,195 |
| | 1,296,239 |
|
Property, plant, and equipment, net | | 347,853 |
| | 357,409 |
|
Goodwill | | 347,727 |
| | 353,547 |
|
Other intangible assets, net | | 161,013 |
| | 159,658 |
|
Deferred taxes | | 32,464 |
| | 33,530 |
|
Other assets | | 12,586 |
| | 14,105 |
|
Total assets | | $ | 2,264,838 |
| | $ | 2,214,488 |
|
Liabilities and Equity | | | | |
Current liabilities: | | | | |
Short-term debt | | $ | 21,731 |
| | $ | 22,144 |
|
Accounts payable | | 210,131 |
| | 228,442 |
|
Accrued expenses | | 224,908 |
| | 200,585 |
|
Total current liabilities | | 456,770 |
| | 451,171 |
|
Long-term debt, net of unamortized debt issuance costs | | 599,415 |
| | 606,221 |
|
Deferred taxes | | 47,369 |
| | 46,008 |
|
Other liabilities | | 82,089 |
| | 86,656 |
|
Total liabilities | | 1,185,643 |
| | 1,190,056 |
|
Commitments and contingencies | |
|
| |
|
|
Redeemable noncontrolling interests | | 3,177 |
| | 5,997 |
|
Equity: | | | | |
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding at October 2, 2016 and at March 31, 2016 | | — |
| | — |
|
Common Stock, $0.01 par value per share, 135,000,000 shares authorized; 54,350,253 shares issued and 43,426,979 shares outstanding at October 2, 2016; 54,112,776 shares issued and 43,189,502 shares outstanding at March 31, 2016 | | 543 |
| | 541 |
|
Additional paid-in capital | | 454,205 |
| | 452,097 |
|
Treasury stock, at cost, 10,923,274 shares held as of October 2, 2016 and as of March 31, 2016 | | (439,800 | ) | | (439,800 | ) |
Retained earnings | | 1,172,283 |
| | 1,097,642 |
|
Accumulated other comprehensive loss | | (116,346 | ) | | (97,349 | ) |
Total EnerSys stockholders’ equity | | 1,070,885 |
| | 1,013,131 |
|
Nonredeemable noncontrolling interests | | 5,133 |
| | 5,304 |
|
Total equity | | 1,076,018 |
| | 1,018,435 |
|
Total liabilities and equity | | $ | 2,264,838 |
| | $ | 2,214,488 |
|
See accompanying notes.
ENERSYS
Consolidated Condensed Statements of Income (Unaudited)
(In Thousands, Except Share and Per Share Data)
|
| | | | | | | | |
| | Quarter ended |
| | October 2, 2016 | | September 27, 2015 |
Net sales | | $ | 576,048 |
| | $ | 569,134 |
|
Cost of goods sold | | 412,094 |
| | 414,195 |
|
Inventory write-off relating to exit activities - See Note 8 | | 2,659 |
| | — |
|
Gross profit | | 161,295 |
| | 154,939 |
|
Operating expenses | | 93,493 |
| | 89,561 |
|
Restructuring and other exit charges - See Note 8 | | 4,893 |
| | 2,629 |
|
Legal proceedings charge | | — |
| | 3,201 |
|
Operating earnings | | 62,909 |
| | 59,548 |
|
Interest expense | | 5,513 |
| | 5,020 |
|
Other (income) expense, net | | (582 | ) | | 736 |
|
Earnings before income taxes | | 57,978 |
| | 53,792 |
|
Income tax expense | | 15,185 |
| | 14,024 |
|
Net earnings | | 42,793 |
| | 39,768 |
|
Net losses attributable to noncontrolling interests | | (2,843 | ) | | (257 | ) |
Net earnings attributable to EnerSys stockholders | | $ | 45,636 |
| | $ | 40,025 |
|
Net earnings per common share attributable to EnerSys stockholders: | | | | |
Basic | | $ | 1.05 |
| | $ | 0.89 |
|
Diluted | | $ | 1.04 |
| | $ | 0.87 |
|
Dividends per common share | | $ | 0.175 |
| | $ | 0.175 |
|
Weighted-average number of common shares outstanding: | | | | |
Basic | | 43,426,955 |
| | 44,944,027 |
|
Diluted | | 43,949,543 |
| | 46,005,399 |
|
See accompanying notes.
ENERSYS
Consolidated Condensed Statements of Income (Unaudited)
(In Thousands, Except Share and Per Share Data)
|
| | | | | | | | |
| | Six months ended |
| | October 2, 2016 | | September 27, 2015 |
Net sales | | $ | 1,176,651 |
| | $ | 1,131,202 |
|
Cost of goods sold | | 846,363 |
| | 825,848 |
|
Inventory write-off relating to exit activities - See Note 8 | | 2,659 |
| | — |
|
Gross profit | | 327,629 |
| | 305,354 |
|
Operating expenses | | 192,498 |
| | 174,069 |
|
Restructuring and other exit charges - See Note 8 | | 6,190 |
| | 3,847 |
|
Legal proceedings charge | | — |
| | 3,201 |
|
Gain on sale of facility | | — |
| | (4,348 | ) |
Operating earnings | | 128,941 |
| | 128,585 |
|
Interest expense | | 11,174 |
| | 11,367 |
|
Other (income) expense, net | | 751 |
| | 1,431 |
|
Earnings before income taxes | | 117,016 |
| | 115,787 |
|
Income tax expense | | 29,604 |
| | 28,085 |
|
Net earnings | | 87,412 |
| | 87,702 |
|
Net losses attributable to noncontrolling interests | | (2,797 | ) | | (710 | ) |
Net earnings attributable to EnerSys stockholders | | $ | 90,209 |
| | $ | 88,412 |
|
Net earnings per common share attributable to EnerSys stockholders: | | | | |
Basic | | $ | 2.08 |
| | $ | 1.98 |
|
Diluted | | $ | 2.06 |
| | $ | 1.91 |
|
Dividends per common share | | $ | 0.35 |
| | $ | 0.35 |
|
Weighted-average number of common shares outstanding: | | | | |
Basic | | 43,348,449 |
| | 44,588,971 |
|
Diluted | | 43,889,678 |
| | 46,380,887 |
|
See accompanying notes.
ENERSYS
Consolidated Condensed Statements of Comprehensive Income (Unaudited)
(In Thousands)
|
| | | | | | | | | | | | | | | | |
| | Quarter ended | | Six months ended |
| | October 2, 2016 | | September 27, 2015 | | October 2, 2016 | | September 27, 2015 |
Net earnings | | $ | 42,793 |
| | $ | 39,768 |
| | $ | 87,412 |
| | $ | 87,702 |
|
Other comprehensive income: | | | | | | | | |
Net unrealized gain (loss) on derivative instruments, net of tax | | 1,758 |
| | (4,444 | ) | | 2,428 |
| | (5,437 | ) |
Pension funded status adjustment, net of tax | | 268 |
| | 315 |
| | 549 |
| | 638 |
|
Foreign currency translation adjustment | | 1,172 |
| | (28,202 | ) | | (22,168 | ) | | (7,655 | ) |
Total other comprehensive (loss) income, net of tax | | 3,198 |
| | (32,331 | ) | | (19,191 | ) | | (12,454 | ) |
Total comprehensive income | | 45,991 |
| | 7,437 |
| | 68,221 |
| | 75,248 |
|
Comprehensive loss attributable to noncontrolling interests | | (2,782 | ) | | (1,048 | ) | | (2,991 | ) | | (1,576 | ) |
Comprehensive income attributable to EnerSys stockholders | | $ | 48,773 |
| | $ | 8,485 |
| | $ | 71,212 |
| | $ | 76,824 |
|
See accompanying notes.
ENERSYS
Consolidated Condensed Statements of Cash Flows (Unaudited)
(In Thousands)
|
| | | | | | | | |
| | Six months ended |
| | October 2, 2016 | | September 27, 2015 |
Cash flows from operating activities | | | | |
Net earnings | | $ | 87,412 |
| | $ | 87,702 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 27,139 |
| | 27,851 |
|
Write-off of assets relating to restructuring and other exit charges | | 3,982 |
| | 328 |
|
Non-cash write-off of property, plant and equipment | | 6,300 |
| | — |
|
Derivatives not designated in hedging relationships: | | | | |
Net losses | | 177 |
| | 294 |
|
Cash (settlements) proceeds | | (866 | ) | | 801 |
|
Provision for doubtful accounts | | 1,919 |
| | 2,369 |
|
Deferred income taxes | | 1,280 |
| | (3,318 | ) |
Non-cash interest expense | | 694 |
| | 2,104 |
|
Stock-based compensation | | 9,857 |
| | 10,338 |
|
Gain on sale of facility | | — |
| | (4,348 | ) |
Gain on disposal of property, plant, and equipment | | (47 | ) | | (13 | ) |
Reversal of legal accrual, net of fees | | — |
| | (799 | ) |
Changes in assets and liabilities: | | | | |
Accounts receivable | | 21,177 |
| | 40,899 |
|
Inventories | | (41,205 | ) | | (4,799 | ) |
Prepaid and other current assets | | (10,994 | ) | | 3,338 |
|
Other assets | | 1,193 |
| | (1,195 | ) |
Accounts payable | | (18,063 | ) | | 2,577 |
|
Accrued expenses | | 20,625 |
| | 8,642 |
|
Other liabilities | | 3,293 |
| | 1,849 |
|
Net cash provided by operating activities | | 113,873 |
| | 174,620 |
|
| | | | |
Cash flows from investing activities | | | | |
Capital expenditures | | (20,713 | ) | | (33,519 | ) |
Purchase of businesses | | (12,392 | ) | | (39,079 | ) |
Proceeds from sale of facility | | — |
| | 9,179 |
|
Proceeds from disposal of property, plant, and equipment | | 194 |
| | 780 |
|
Net cash used in investing activities | | (32,911 | ) | | (62,639 | ) |
| | | | |
Cash flows from financing activities | | | | |
Net (decrease) increase in short-term debt | | (676 | ) | | 5,787 |
|
Proceeds from revolving credit borrowings | | 135,700 |
| | 270,000 |
|
Repayments of revolving credit borrowings | | (135,700 | ) | | (250,000 | ) |
Proceeds from long-term debt | | — |
| | 300,000 |
|
Repayments of Convertible Notes | | — |
| | (172,266 | ) |
Repayments of long-term debt | | (7,500 | ) | | (1,875 | ) |
Debt issuance costs | | — |
| | (4,971 | ) |
Option proceeds | | 5 |
| | 63 |
|
Payment of taxes related to net share settlement of equity awards | | (7,644 | ) | | (15,348 | ) |
Excess tax benefits from exercise of stock options and vesting of equity awards | | — |
| | 3,450 |
|
Purchase of treasury stock | | — |
| | (120,637 | ) |
Prepayment of accelerated stock repurchase | | — |
| | (60,000 | ) |
Dividends paid to stockholders | | (15,200 | ) | | (15,553 | ) |
Other | | (52 | ) | | (45 | ) |
Net cash used in financing activities | | (31,067 | ) | | (61,395 | ) |
Effect of exchange rate changes on cash and cash equivalents | | (6,916 | ) | | 1,058 |
|
Net increase in cash and cash equivalents | | 42,979 |
| | 51,644 |
|
Cash and cash equivalents at beginning of period | | 397,307 |
| | 268,921 |
|
Cash and cash equivalents at end of period | | $ | 440,286 |
| | $ | 320,565 |
|
See accompanying notes.
ENERSYS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
(In Thousands, Except Share and Per Share Data)
1. Basis of Presentation
The accompanying interim unaudited consolidated condensed financial statements of EnerSys (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required for complete financial statements. In the opinion of management, the unaudited consolidated condensed financial statements include all normal recurring adjustments considered necessary for the fair presentation of the financial position, results of operations, and cash flows for the interim periods presented. The financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s 2016 Annual Report on Form 10-K (SEC File No. 001-32253), which was filed on May 31, 2016 (the "2016 Annual Report").
The Company reports interim financial information for 13-week periods, except for the first quarter, which always begins on April 1, and the fourth quarter, which always ends on March 31. The four quarters in fiscal 2017 end on July 3, 2016, October 2, 2016, January 1, 2017, and March 31, 2017, respectively. The four quarters in fiscal 2016 ended on June 28, 2015, September 27, 2015, December 27, 2015, and March 31, 2016, respectively.
The consolidated condensed financial statements include the accounts of the Company and its wholly-owned subsidiaries and any partially owned subsidiaries that the Company has the ability to control. All intercompany transactions and balances have been eliminated in consolidation.
The Company also consolidates certain subsidiaries in which the noncontrolling interest party has within its control the right to require the Company to redeem all or a portion of its interest in the subsidiary. The redeemable noncontrolling interests are reported at their estimated redemption value. Any adjustment to the redemption value impacts retained earnings but does not impact net income or comprehensive income. Noncontrolling interests which are redeemable only upon future events, the occurrence of which is not currently probable, are recorded at carrying value.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” providing guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB voted to delay the effective date for interim and annual reporting periods beginning after December 15, 2017, with early adoption permissible one year earlier. The standard permits the use of either modified retrospective or full retrospective transition methods. The Company has not yet selected a transition method and is currently evaluating the impact, if any, of the adoption of this newly issued guidance on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). This update requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. This update is effective for reporting periods beginning after December 15, 2018, using a modified retrospective approach, with early adoption permitted. The Company is currently assessing the potential impact that the adoption will have on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)”. This update simplifies several aspects related to how share-based payments are accounted for and presented in the financial statements, including the accounting for forfeitures and tax-effects related to share-based payments at settlement, and the classification of excess tax benefits and shares surrendered for tax withholdings in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company early adopted this standard for the quarter ended July 3, 2016. The impact of the adoption of this standard was as follows:
| |
• | approximately $740 of excess tax benefits was recorded through income tax expense for the six months of fiscal 2017 as a discrete item, adopted on a prospective basis; |
| |
• | excess tax benefits were included within operating cash flows adopted on a prospective basis; |
| |
• | cash paid by the Company when directly withholding shares to satisfy an employee's statutory tax obligations continued to be classified as a financing activity; and |
| |
• | no impact on prior periods due to adopting the guidance on a prospective basis. |
The Company has elected to continue its current policy of estimating forfeitures rather than recognizing forfeitures when they occur.
2. Inventories
Inventories, net consist of:
|
| | | | | | | | |
| | October 2, 2016 | | March 31, 2016 |
Raw materials | | $ | 91,435 |
| | $ | 84,198 |
|
Work-in-process | | 108,117 |
| | 104,085 |
|
Finished goods | | 170,489 |
| | 142,798 |
|
Total | | $ | 370,041 |
| | $ | 331,081 |
|
3. Fair Value of Financial Instruments
Recurring Fair Value Measurements
The following tables represent the financial assets and (liabilities) measured at fair value on a recurring basis as of October 2, 2016 and March 31, 2016 and the basis for that measurement:
|
| | | | | | | | | | | | | | | | |
| | Total Fair Value Measurement October 2, 2016
| | Quoted Price in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
Lead forward contracts | | $ | 2,433 |
| | $ | — |
| | $ | 2,433 |
| | $ | — |
|
Foreign currency forward contracts | | 65 |
| | — |
| | 65 |
| | — |
|
Total derivatives | | $ | 2,498 |
| | $ | — |
| | $ | 2,498 |
| | $ | — |
|
|
| | | | | | | | | | | | | | | | |
| | Total Fair Value Measurement March 31, 2016
| | Quoted Price in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
Lead forward contracts | | $ | (499 | ) | | $ | — |
| | $ | (499 | ) | | $ | — |
|
Foreign currency forward contracts | | (988 | ) | | — |
| | (988 | ) | | — |
|
Total derivatives | | $ | (1,487 | ) | | $ | — |
| | $ | (1,487 | ) | | $ | — |
|
The fair values of lead forward contracts are calculated using observable prices for lead as quoted on the London Metal Exchange (“LME”) and, therefore, were classified as Level 2 within the fair value hierarchy, as described in Note 1, Summary of Significant Accounting Policies to the Company's consolidated financial statements included in its 2016 Annual Report.
The fair values for foreign currency forward contracts are based upon current quoted market prices and are classified as Level 2 based on the nature of the underlying market in which these derivatives are traded.
Financial Instruments
The fair values of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate carrying value due to their short maturities.
The fair value of the Company’s short-term debt and borrowings under the 2011 Credit Facility (as defined in Note 9), approximate their respective carrying value, as they are variable rate debt and the terms are comparable to market terms as of the balance sheet dates and are classified as Level 2.
The Company's 5.00% Senior Notes due 2023 (the “Notes”), with an original face value of $300,000, were issued in April 2015. The fair value of these Notes represent the trading values based upon quoted market prices and are classified as Level 2. The Notes were trading at approximately 100% and 96% of face value on October 2, 2016 and March 31, 2016, respectively.
The carrying amounts and estimated fair values of the Company’s derivatives and Notes at October 2, 2016 and March 31, 2016 were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | October 2, 2016 | | | | March 31, 2016 | | |
| | Carrying Amount | | | | Fair Value | | | | Carrying Amount | | | | Fair Value | | |
Financial assets: | | | | | | | | | | | | | | | | |
Derivatives (1) | | $ | 2,498 |
| | | | $ | 2,498 |
| | | | $ | — |
| | | | $ | — |
| | |
Financial liabilities: | | | | | | | | | | | | | | | | |
Notes (2) | | $ | 300,000 |
| | | | $ | 300,000 |
| |
| | $ | 300,000 |
| | | | $ | 288,000 |
| | |
Derivatives (1) | | — |
| | | | — |
| | | | 1,487 |
| | | | 1,487 |
| | |
| |
(1) | Represents lead and foreign currency forward contracts (see Note 4 for asset and liability positions of the lead and foreign currency forward contracts at October 2, 2016 and March 31, 2016). |
| |
(2) | The fair value amount of the Notes at October 2, 2016 and March 31, 2016 represent the trading value of the Notes. |
4. Derivative Financial Instruments
The Company utilizes derivative instruments to reduce its exposure to fluctuations in commodity prices and foreign exchange rates under established procedures and controls. The Company does not enter into derivative contracts for speculative purposes. The Company’s agreements are with creditworthy financial institutions and the Company anticipates performance by counterparties to these contracts and therefore no material loss is expected.
Derivatives in Cash Flow Hedging Relationships
Lead Forward Contracts
The Company enters into lead forward contracts to fix the price for a portion of its lead purchases. Management considers the lead forward contracts to be effective against changes in the cash flows of the underlying lead purchases. The vast majority of such contracts are for a period not extending beyond one year and the notional amounts at October 2, 2016 and March 31, 2016 were 23.1 million pounds and 27.4 million pounds, respectively.
Foreign Currency Forward Contracts
The Company uses foreign currency forward contracts and options to hedge a portion of the Company’s foreign currency exposures for lead as well as other foreign currency exposures so that gains and losses on these contracts offset changes in the underlying foreign currency denominated exposures. The vast majority of such contracts are for a period not extending beyond one year. As of October 2, 2016 and March 31, 2016, the Company had entered into a total of $17,621 and $18,206, respectively, of such contracts.
In the coming twelve months, the Company anticipates that $4,485 of pretax gain relating to lead and foreign currency forward contracts will be reclassified from accumulated other comprehensive income (“AOCI”) as part of cost of goods sold. This amount represents the current net unrealized impact of hedging lead and foreign exchange rates, which will change as market rates change in the future, and will ultimately be realized in the Consolidated Condensed Statement of Income as an offset to the corresponding actual changes in lead costs to be realized in connection with the variable lead cost and foreign exchange rates being hedged.
Derivatives not Designated in Hedging Relationships
Foreign Currency Forward Contracts
The Company also enters into foreign currency forward contracts to economically hedge foreign currency fluctuations on intercompany loans and foreign currency denominated receivables and payables. These are not designated as hedging instruments and changes in fair value of these instruments are recorded directly in the Consolidated Condensed Statements of Income. As of October 2, 2016 and March 31, 2016, the notional amount of these contracts was $16,362 and $11,156, respectively.
Presented below in tabular form is information on the location and amounts of derivative fair values in the Consolidated Condensed Balance Sheets and derivative gains and losses in the Consolidated Condensed Statements of Income:
Fair Value of Derivative Instruments
October 2, 2016 and March 31, 2016
|
| | | | | | | | | | | | | | | | |
| | Derivatives and Hedging Activities Designated as Cash Flow Hedges | | Derivatives and Hedging Activities Not Designated as Hedging Instruments |
| | October 2, 2016 | | March 31, 2016 | | October 2, 2016 | | March 31, 2016 |
Prepaid and other current assets | | | | | | | | |
Lead forward contracts | | $ | 2,433 |
| | $ | — |
| | $ | — |
| | $ | — |
|
Foreign currency forward contracts | | 14 |
| | — |
| | 51 |
| | — |
|
Total assets | | $ | 2,447 |
| | $ | — |
| | $ | 51 |
| | $ | — |
|
Accrued expenses | | | | | | | | |
Lead forward contracts | | $ | — |
| | $ | 499 |
| | $ | — |
| | $ | — |
|
Foreign currency forward contracts | | — |
| | 350 |
| | — |
| | 638 |
|
Total liabilities | | $ | — |
| | $ | 849 |
| | $ | — |
| | $ | 638 |
|
The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the quarter ended October 2, 2016 |
| | | | | | | | | | |
Derivatives Designated as Cash Flow Hedges | | Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) | | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion) |
Lead forward contracts | | $ | 2,807 |
| | Cost of goods sold | | $ | 217 |
|
Foreign currency forward contracts | | 150 |
| | Cost of goods sold | | (46 | ) |
Total | | $ | 2,957 |
| | | | $ | 171 |
|
|
| | | | | |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | | Pretax Gain (Loss) |
Foreign currency forward contracts | Other (income) expense, net | | $ | 125 |
|
Total | | | $ | 125 |
|
The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the quarter ended September 27, 2015 |
| | | | | | | | | | |
Derivatives Designated as Cash Flow Hedges | | Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) | | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion) |
Lead forward contracts | | $ | (4,026 | ) | | Cost of goods sold | | $ | 2,389 |
|
Foreign currency forward contracts | | (513 | ) | | Cost of goods sold | | 124 |
|
Total | | $ | (4,539 | ) | | | | $ | 2,513 |
|
|
| | | | | |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | | Pretax Gain (Loss) |
Foreign currency forward contracts | Other (income) expense, net | | $ | (285 | ) |
Total | | | $ | (285 | ) |
The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the six months ended October 2, 2016
|
| | | | | | | | | | |
Derivatives Designated as Cash Flow Hedges | | Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) | | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion) |
Lead forward contracts | | $ | 4,620 |
| | Cost of goods sold | | $ | 1,276 |
|
Foreign currency forward contracts | | 278 |
| | Cost of goods sold | | (226 | ) |
Total | | $ | 4,898 |
| | | | $ | 1,050 |
|
|
| | | | | |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | | Pretax Gain (Loss) |
Foreign currency forward contracts | Other (income) expense, net | | $ | (177 | ) |
Total | | | $ | (177 | ) |
The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the six months ended September 27, 2015
|
| | | | | | | | | | |
Derivatives Designated as Cash Flow Hedges | | Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) | | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion) |
Lead forward contracts | | $ | (5,115 | ) | | Cost of goods sold | | $ | (3,013 | ) |
Foreign currency forward contracts | | (2,573 | ) | | Cost of goods sold | | 3,951 |
|
Total | | $ | (7,688 | ) | | | | $ | 938 |
|
|
| | | | | |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | | Pretax Gain (Loss) |
Foreign currency forward contracts | Other (income) expense, net | | $ | (294 | ) |
Total | | | $ | (294 | ) |
5. Income Taxes
The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provision for the second quarters of fiscal 2017 and 2016 was based on the estimated effective tax rates applicable for the full years ending March 31, 2017 and March 31, 2016, respectively, after giving effect to items specifically related to the interim periods. The Company’s effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions in which the Company operates and the amount of the Company's consolidated income before taxes.
The consolidated effective income tax rates were 26.2% and 26.1%, respectively, for the second quarters of fiscal 2017 and 2016 and 25.3% and 24.3%, respectively, for the six months of fiscal 2017 and 2016. The rate increase in the second quarter of fiscal 2017 compared to the second quarter of fiscal 2016 is primarily due to the subsequent recognition in fiscal 2016 of a domestic deferred tax asset related to executive compensation and changes in the mix of earnings among tax jurisdictions. The rate increase in the six months of fiscal 2017 compared to the six months of fiscal 2016 is primarily due to the subsequent recognition in fiscal 2016 of a domestic deferred tax asset related to executive compensation and a previously unrecognized tax position related to one of the Company's foreign subsidiaries, and changes in mix of earnings among tax jurisdictions.
Foreign income as a percentage of worldwide income is estimated to be 57% for the six months of fiscal 2017 compared to 57% for the six months of fiscal 2016. The foreign effective income tax rates for the six months of fiscal 2017 and 2016 were 14.5% and 12.4%, respectively. The rate increase compared to the prior year period is primarily due to the subsequent recognition of a previously unrecognized tax position in fiscal 2016 related to one of the Company's foreign subsidiaries, as well as changes in the mix of earnings among tax jurisdictions. Income from the Company's Swiss subsidiary comprised a substantial portion of the Company's overall foreign mix of income and is taxed at an effective income tax rate of approximately 6%.
6. Warranty
The Company provides for estimated product warranty expenses when the related products are sold, with related liabilities included within accrued expenses and other liabilities. As warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties is as follows:
|
| | | | | | | | | | | | | | | | |
| | Quarter ended | | Six months ended |
| | October 2, 2016 | | September 27, 2015 | | October 2, 2016 | | September 27, 2015 |
Balance at beginning of period | | $ | 48,075 |
| | $ | 39,785 |
| | $ | 48,422 |
| | $ | 39,810 |
|
Current period provisions | | 5,611 |
| | 4,698 |
| | 10,847 |
| | 8,583 |
|
Costs incurred | | (5,883 | ) | | (4,147 | ) | | (8,242 | ) | | (8,508 | ) |
Foreign currency translation adjustment | | 309 |
| | (196 | ) | | (2,915 | ) | | 255 |
|
Balance at end of period | | $ | 48,112 |
| | $ | 40,140 |
| | $ | 48,112 |
| | $ | 40,140 |
|
7. Commitments, Contingencies and Litigation
Litigation and Other Legal Matters
In the ordinary course of business, the Company and its subsidiaries are routinely defendants in or parties to many pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. These actions and proceedings are generally based on alleged violations of environmental, anticompetition, employment, contract and other laws. In some of these actions and proceedings, claims for substantial monetary damages are asserted against the Company and its subsidiaries. In the ordinary course of business, the Company and its subsidiaries are also subject to regulatory and governmental examinations, information gathering requests, inquiries, investigations, and threatened legal actions and proceedings. In connection with formal and informal inquiries by federal, state, local and foreign agencies, such subsidiaries receive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their activities.
European Competition Investigations
Certain of the Company’s European subsidiaries have received subpoenas and requests for documents and, in some cases, interviews from, and have had on-site inspections conducted by the competition authorities of Belgium, Germany and the Netherlands relating to conduct and anticompetitive practices of certain industrial battery participants. The Company is responding to inquiries related to these matters. The Company settled the Belgian regulatory proceeding in February 2016 by acknowledging certain anticompetitive practices and conduct and agreeing to pay a fine of $1,962, which was paid in March 2016. As of October 2, 2016 and March 31, 2016, the Company had a reserve balance of $1,923 and $2,038, respectively, in connection with these remaining investigations and other related legal charges. The change in the reserve balance between October 2, 2016 and March 31, 2016 was solely due to foreign currency translation impact. For the German and Dutch regulatory proceedings, the Company does not believe that such an estimate can be made at this time given the current stage of these proceedings. The foregoing estimate of losses is based upon currently available information for these proceedings. However, the precise scope, timing and time period at issue, as well as the final outcome of the investigations, remain uncertain. Accordingly, the Company’s estimate may change from time to time, and actual losses could vary.
Environmental Issues
As a result of its operations, the Company is subject to various federal, state, and local, as well as international environmental laws and regulations and is exposed to the costs and risks of registering, handling, processing, storing, transporting, and disposing of hazardous substances, especially lead and acid. The Company’s operations are also subject to federal, state, local and international occupational safety and health regulations, including laws and regulations relating to exposure to lead in the workplace.
The Company is responsible for certain cleanup obligations at the former Yuasa battery facility in Sumter, South Carolina, that predates its ownership of this facility. This manufacturing facility was closed in 2001 and the Company established a reserve for this facility, which was $1,123 as of October 2, 2016 and March 31, 2016. Based on current information, the Company’s management believes this reserve is adequate to satisfy the Company’s environmental liabilities at this facility. This facility is separate from the Company’s current metal fabrication facility in Sumter.
Lead Contracts
To stabilize its costs, the Company has entered into contracts with financial institutions to fix the price of lead. The vast majority of such contracts are for a period not extending beyond one year. Under these contracts, at October 2, 2016 and March 31, 2016, the Company has hedged the price to purchase approximately 23.1 million pounds and 27.4 million pounds of lead, respectively, for a total purchase price of $19,627 and $21,628, respectively.
Foreign Currency Forward Contracts
The Company quantifies and monitors its global foreign currency exposures. On a selective basis, the Company will enter into foreign currency forward and option contracts to reduce the volatility from currency movements that affect the Company. The vast majority of such contracts are for a period not extending beyond one year. The Company’s largest exposure is from the purchase and conversion of U.S. dollar based lead costs into local currencies in EMEA. Additionally, the Company has currency exposures from intercompany financing and intercompany and third party trade transactions. To hedge these exposures, the Company has entered into a total of $33,983 and $29,362, respectively, of foreign currency forward contracts with financial institutions as of October 2, 2016 and March 31, 2016.
8. Restructuring and Other Exit Charges
During the second quarter of fiscal 2016, the Company announced a restructuring to improve efficiencies primarily related to its motive power assembly and distribution center in Italy and its sales and administration organizations in EMEA. In addition, during the third quarter of fiscal 2016, the Company announced a further restructuring related to its manufacturing operations in Europe. The Company estimates that the total charges for these actions will amount to approximately $6,500, primarily from cash charges for employee severance-related payments and other charges. The Company estimates that these actions will result in the reduction of approximately 120 employees upon completion. In fiscal 2016, the Company recorded restructuring charges of $5,232 and recorded an additional $626 during the six months of fiscal 2017. The Company incurred $2,993 in costs against the accrual in fiscal 2016 and incurred an additional $2,266 against the accrual during the six months of fiscal 2017. As of October 2, 2016, the reserve balance associated with these actions is $563. The Company expects to be committed to an additional $600 of restructuring charges related to these actions during fiscal 2017, and expects to complete the program during fiscal 2017.
During the second quarter of fiscal 2016, the Company announced a restructuring related to improving the efficiency of its manufacturing operations in the Americas. The program, which was completed during the first quarter of fiscal 2017, consisted of closing its Cleveland, Ohio charger manufacturing facility and the transfer of charger production to other Americas manufacturing facilities. The total charges for all actions associated with this program amounted to $2,379, primarily from cash charges for employee severance-related payments and other charges of $1,043, along with a pension curtailment charge of $313 and non-cash charges related to the accelerated depreciation of fixed assets of $1,023. The program resulted in the reduction of approximately 100 employees at its Cleveland facility. In fiscal 2016, the Company recorded restructuring charges of $1,488 including a pension curtailment charge of $313 and non-cash charges of $305 and recorded an additional $174 in cash charges and $718 in non-cash charges during the first quarter of fiscal 2017. The Company incurred $119 in costs against the accrual in fiscal 2016 and incurred an additional $924 against the accrual during the first quarter of fiscal 2017.
During the first and second quarters of fiscal 2017, the Company announced restructuring programs to improve efficiencies primarily related to its motive power production in EMEA. The Company estimates that the total charges for these actions will amount to approximately $4,500, primarily from cash charges for employee severance-related payments and other charges. The Company estimates that these actions will result in the reduction of approximately 45 employees upon completion. During the six months of fiscal 2017, the Company recorded restructuring charges of $1,333 and incurred $61 in costs against the accrual. As of October 2, 2016, the reserve balance associated with these actions is $1,273. The Company expects to be committed to an additional $3,100 in restructuring charges related to this action through fiscal 2018, when it expects to complete this program.
During the first quarter of fiscal 2017, the Company announced a restructuring primarily to complete the transfer of equipment and clean-up of its manufacturing facility located in Jiangdu, the People’s Republic of China, which stopped production during the first quarter of fiscal 2016. The Company estimates that the total cash charges for these actions will amount to approximately $600. During the six months of fiscal 2017, the Company recorded charges of $483 and incurred $483 in costs against the accrual. As of October 2, 2016, the reserve balance associated with these actions is $0. The Company expects to be committed to an additional $100 in charges related to this action through fiscal 2017, when it expects to complete this program.
A roll-forward of the restructuring reserve is as follows:
|
| | | | | | | | | | | | |
| | Employee Severance | | Other | | Total |
Balance as of March 31, 2016 | | $ | 2,964 |
| | $ | 25 |
| | $ | 2,989 |
|
Accrued | | 1,857 |
| | 759 |
| | 2,616 |
|
Costs incurred | | (3,224 | ) | | (510 | ) | | (3,734 | ) |
Foreign currency impact and other | | (34 | ) | | (1 | ) | | (35 | ) |
Balance as of October 2, 2016 | | $ | 1,563 |
| | $ | 273 |
| | $ | 1,836 |
|
Other Exit Charges
During the second quarter of fiscal 2017, the Company recorded exit charges of $5,515 related to the South Africa joint venture, consisting of cash charges of $2,251 primarily relating to severance and non-cash charges of $3,264. Included in the non-cash charges are $2,659 relating to the write-off of inventory which is reported in cost of goods sold. Weakening of the general economic environment in South Africa, exacerbated by limited growth in the mining industry and competitive products flooding the market, have affected the joint venture’s ability to compete effectively in the marketplace and consequently, the Company has initiated an exit plan in consultation with its joint venture partner. The Company expects to be committed to approximately $5,000 of additional exit charges in fiscal 2017.
9. Debt
The following summarizes the Company’s long-term debt as of October 2, 2016 and March 31, 2016:
|
| | | | | | | | | | | | | | | | |
| | October 2, 2016 | | March 31, 2016 |
| | Principal | | Unamortized Issuance Costs | | Principal | | Unamortized Issuance Costs |
5.00% Senior Notes due 2023 | | $ | 300,000 |
| | $ | 4,058 |
| | $ | 300,000 |
| | $ | 4,370 |
|
2011 Credit Facility, due 2018 | | 305,000 |
| | 1,527 |
| | 312,500 |
| | 1,909 |
|
| | $ | 605,000 |
| | $ | 5,585 |
| | $ | 612,500 |
| | $ | 6,279 |
|
Less: Unamortized issuance costs | | 5,585 |
| | | | 6,279 |
| | |
Long-term debt, net of unamortized issuance costs | | $ | 599,415 |
| | | | $ | 606,221 |
| | |
5.00% Senior Notes
The Company's $300,000 5.00% Senior Notes due 2023 bear interest at a rate of 5.00% per annum. Interest is payable semiannually in arrears on April 30 and October 30 of each year, commencing on October 30, 2015. The Notes will mature on April 30, 2023, unless earlier redeemed or repurchased in full. The Notes are unsecured and unsubordinated obligations of the Company. The Notes are fully and unconditionally guaranteed (the “Guarantees”), jointly and severally, by each of its subsidiaries that are guarantors under the 2011 Credit Facility (the “Guarantors”). The Guarantees are unsecured and unsubordinated obligations of the Guarantors.
2011 Credit Facility
The Company is party to a $500,000 senior secured revolving credit facility and a $150,000 senior secured incremental term loan (the “Term Loan”) that matures on September 30, 2018, comprising the “2011 Credit Facility”. The quarterly installments payable on the Term Loan were $1,875 beginning June 30, 2015 and $3,750 beginning June 30, 2016 with a final payment of $108,750 on September 30, 2018. The 2011 Credit Facility may be increased by an aggregate amount of $300,000 in revolving commitments and/or one or more new tranches of term loans, under certain conditions. Both revolving loans and the Term Loan under the 2011 Credit Facility bear interest, at the Company's option, at a rate per annum equal to either (i) the London Interbank Offered Rate (“LIBOR”) plus between 1.25% and 1.75% (currently 1.25% and based on the Company's consolidated net leverage ratio) or (ii) the Base Rate (which is the highest of (a) the Bank of America prime rate, and (b) the Federal Funds Effective Rate) plus between 0.25% and 0.75% (based on the Company’s consolidated net leverage ratio). Obligations under the 2011 Credit Facility are secured by substantially all of the Company’s existing and future acquired assets, including substantially all of the capital stock of the Company’s United States subsidiaries that are guarantors under the credit facility and 65% of the capital stock of certain of the Company’s foreign subsidiaries that are owned by the Company’s United States subsidiaries.
The current portion of the Term Loan of $15,000 is classified as long-term debt as the Company expects to refinance the future quarterly payments with revolver borrowings under its 2011 Credit Facility.
As of October 2, 2016, the Company had $170,000 outstanding in revolver borrowings and $135,000 under its Term Loan borrowings.
Short-Term Debt
As of October 2, 2016 and March 31, 2016, the Company had $21,731 and $22,144, respectively, of short-term borrowings. The weighted-average interest rate on these borrowings was approximately 8% at October 2, 2016 and March 31, 2016.
Letters of Credit
As of October 2, 2016 and March 31, 2016, the Company had $4,070 and $2,693, respectively, of standby letters of credit.
Debt Issuance Costs
Amortization expense, relating to debt issuance costs, included in interest expense was $347 and $341, respectively, during the quarters ended October 2, 2016 and September 27, 2015 and $694 and $774 for the six months ended October 2, 2016 and September 27, 2015, respectively. Debt issuance costs, net of accumulated amortization, totaled $5,585 and $6,279, respectively, at October 2, 2016 and March 31, 2016.
Available Lines of Credit
As of October 2, 2016 and March 31, 2016, the Company had available and undrawn, under all its lines of credit, $473,101 and $472,187, respectively, including $145,026 and $144,112, respectively, of uncommitted lines of credit as of October 2, 2016 and March 31, 2016.
10. Retirement Plans
The following tables present the components of the Company’s net periodic benefit cost related to its defined benefit pension plans:
|
| | | | | | | | | | | | | | | | |
| | United States Plans | | International Plans |
Quarter ended | | Quarter ended |
October 2, 2016 | | September 27, 2015 | | October 2, 2016 | | September 27, 2015 |
Service cost | | $ | 91 |
| | $ | 108 |
| | $ | 223 |
| | $ | 208 |
|
Interest cost | | 170 |
| | 170 |
| | 467 |
| | 486 |
|
Expected return on plan assets | | (204 | ) | | (215 | ) | | (472 | ) | | (576 | ) |
Amortization and deferral | | 132 |
| | 125 |
| | 253 |
| | 319 |
|
Net periodic benefit cost | | $ | 189 |
| | $ | 188 |
| | $ | 471 |
| | $ | 437 |
|
|
| | | | | | | | | | | | | | | | |
| | United States Plans | | International Plans |
Six months ended | | Six months ended |
October 2, 2016 | | September 27, 2015 | | October 2, 2016 | | September 27, 2015 |
Service cost | | $ | 182 |
| | $ | 246 |
| | $ | 446 |
| | $ | 416 |
|
Interest cost | | 340 |
| | 338 |
| | 961 |
| | 971 |
|
Expected return on plan assets | | (408 | ) | | (430 | ) | | (982 | ) | | (1,152 | ) |
Amortization and deferral | | 264 |
| | 259 |
| | 518 |
| | 636 |
|
Net periodic benefit cost | | $ | 378 |
| | $ | 413 |
| | $ | 943 |
| | $ | 871 |
|
11. Stock-Based Compensation
As of October 2, 2016, the Company maintains the Second Amended and Restated EnerSys 2010 Equity Incentive Plan, (“2010 EIP”). The 2010 EIP reserved 3,177,477 shares of common stock for the grant of various classes of nonqualified stock options, restricted stock units, market condition-based share units and other forms of equity-based compensation.
The Company recognized stock-based compensation expense associated with its equity incentive plans of $4,790 for the second quarter of fiscal 2017 and $6,099 for the second quarter of fiscal 2016. Stock-based compensation expense was $9,857 for the six months of fiscal 2017 and $10,338 for the six months of fiscal 2016. The Company recognizes compensation expense using the straight-line method over the vesting period of the awards, except for awards issued to certain retirement-eligible participants, which are expensed on an accelerated basis.
During the six months ended October 2, 2016, the Company granted to non-employee directors 22,401 restricted stock units, pursuant to the 2010 EIP.
During the six months ended October 2, 2016, the Company granted to management and other key employees 242,068 non-qualified stock options and 83,720 market condition-based share units that vest three years from the date of grant, and 235,358 restricted stock units that vest 25% each year over four years from the date of grant.
Common stock activity during the six months ended October 2, 2016 included the vesting of 139,526 restricted stock units and 232,817 market condition-based share units and the exercise of 263 stock options.
As of October 2, 2016, there were 451,668 non-qualified stock options, 621,748 restricted stock units and 447,558 market condition-based share units outstanding.
12. Stockholders’ Equity and Noncontrolling Interests
Common Stock
The following demonstrates the change in the number of shares of common stock outstanding during the six months ended October 2, 2016:
|
| | | |
Shares outstanding as of March 31, 2016 | | 43,189,502 |
|
Shares issued towards equity-based compensation plans, net of equity awards surrendered for option price and taxes | | 237,477 |
|
Shares outstanding as of October 2, 2016 | | 43,426,979 |
|
Treasury Stock
There were no repurchases of treasury stock during the six months ended October 2, 2016, and the Company held 10,923,274 shares as treasury stock at October 2, 2016 and March 31, 2016.
Accumulated Other Comprehensive Income ("AOCI")
The components of AOCI, net of tax, as of October 2, 2016 and March 31, 2016, are as follows:
|
| | | | | | | | | | | | | | | | |
| | March 31, 2016 | | Before Reclassifications | | Amounts Reclassified from AOCI | | October 2, 2016 |
|