Company Quick10K Filing
AVX
Price15.59 EPS1
Shares169 P/E11
MCap2,641 P/FCF28
Net Debt-425 EBIT278
TEV2,217 TEV/EBIT8
TTM 2019-09-30, in MM, except price, ratios
10-Q 2019-12-31 Filed 2020-02-05
10-Q 2019-09-30 Filed 2019-11-06
10-Q 2019-06-30 Filed 2019-08-06
10-K 2019-03-31 Filed 2019-05-17
10-Q 2018-12-31 Filed 2019-02-07
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-06
10-K 2018-03-31 Filed 2018-05-18
10-Q 2017-12-31 Filed 2018-02-08
10-Q 2017-09-30 Filed 2017-11-03
10-Q 2017-06-30 Filed 2017-08-07
10-K 2017-03-31 Filed 2017-05-19
10-Q 2016-12-31 Filed 2017-02-09
10-Q 2016-09-30 Filed 2016-11-07
10-Q 2016-06-30 Filed 2016-08-04
10-K 2016-03-31 Filed 2016-05-20
10-Q 2015-12-31 Filed 2016-02-05
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-05
10-K 2015-03-31 Filed 2015-05-20
10-Q 2014-12-31 Filed 2015-02-05
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-06
10-K 2014-03-31 Filed 2014-05-21
10-Q 2013-12-31 Filed 2014-02-07
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-08-05
10-K 2013-03-31 Filed 2013-05-22
10-Q 2012-12-31 Filed 2013-02-07
10-Q 2012-09-30 Filed 2012-11-07
10-Q 2012-06-30 Filed 2012-08-09
10-K 2012-03-31 Filed 2012-05-24
10-Q 2011-12-31 Filed 2012-02-08
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-08
10-K 2011-03-31 Filed 2011-05-20
10-Q 2010-12-31 Filed 2011-02-08
10-Q 2010-09-30 Filed 2010-11-04
10-Q 2010-06-30 Filed 2010-08-06
10-K 2010-03-31 Filed 2010-05-20
10-Q 2009-12-31 Filed 2010-02-05
8-K 2020-03-30
8-K 2020-03-12
8-K 2020-02-21
8-K 2020-02-21
8-K 2020-01-23
8-K 2019-11-27
8-K 2019-10-28
8-K 2019-07-26
8-K 2019-07-24
8-K 2019-04-22
8-K 2019-02-06
8-K 2019-01-28
8-K 2019-01-24
8-K 2019-01-08
8-K 2018-12-20
8-K 2018-10-24
8-K 2018-10-17
8-K 2018-07-25
8-K 2018-07-18
8-K 2018-05-24
8-K 2018-05-01
8-K 2018-04-30
8-K 2018-04-25
8-K 2018-03-30
8-K 2018-02-07
8-K 2018-01-31
8-K 2017-12-31
8-K 2017-12-29

AVX 10Q Quarterly Report

Item 1.     Financial Statements (Unaudited)
EX-31.1 ex_169231.htm
EX-31.2 ex_169232.htm
EX-32.1 ex_169233.htm

AVX Earnings 2019-12-31

Balance SheetIncome StatementCash Flow
2.92.31.71.20.60.02012201420172020
Assets, Equity
0.50.40.30.10.0-0.12012201420172020
Rev, G Profit, Net Income
0.10.0-0.0-0.1-0.1-0.22012201420172020
Ops, Inv, Fin

avx20191231_10q.htm
0000859163 AVX Corp false --03-31 Q3 2020 0 11,664 4 The market value of the assets held in the trust for the non-qualified deferred compensation program is included as an asset and as a liability as the trust’s assets are both assets of the Company and also a liability as they are available to general creditors in certain circumstances. Common stock equivalents not included in the computation of diluted earnings per share because the impact would have been anti-dilutive were 0 shares for the three month periods ended December 31, 2018 and 2019, and 8 shares and 2 shares for the nine months ended December 31, 2018 and 2019, respectively. Foreign currency derivatives in the form of forward contracts are included in prepaid and other assets or accrued expenses in the consolidated balance sheets. Unrealized gains and losses on derivatives designated as cash flow hedges are recorded in other comprehensive income (loss). Realized gains and losses on derivatives designated as cash flow hedges and gains and losses on derivatives not designated as hedges are recorded in other income. 0.01 0.01 20,000 20,000 0 0 0 0 0.01 0.01 300,000 300,000 176,369 176,369 168,826 169,171 7,543 7,197 0.115 0.345 0.115 0.345 00008591632019-04-012019-12-31 xbrli:shares 00008591632020-01-31 thunderdome:item iso4217:USD 00008591632019-03-31 00008591632019-12-31 00008591632018-10-012018-12-31 00008591632019-10-012019-12-31 00008591632018-04-012018-12-31 iso4217:USDxbrli:shares 0000859163us-gaap:CommonStockMember2018-09-30 0000859163us-gaap:TreasuryStockMember2018-09-30 0000859163us-gaap:AdditionalPaidInCapitalMember2018-09-30 0000859163us-gaap:RetainedEarningsMember2018-09-30 0000859163us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-09-30 00008591632018-09-30 0000859163us-gaap:CommonStockMember2018-10-012018-12-31 0000859163us-gaap:TreasuryStockMember2018-10-012018-12-31 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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, DC 20549

 

FORM 10-Q

 

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2019

 

or

 

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

 

Commission file number 1-7201

AVX Corporation

(Exact name of registrant as specified in its charter)

 

Delaware

 

33-0379007

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer ID No.)

 

 

 

1 AVX Boulevard Fountain Inn, South Carolina

 

29644

(Address of principal executive offices)

 

(Zip Code)

 

(864) 967-2150

(Registrant's phone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value per share

AVX

New York Stock Exchange 

 

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. Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒   No ☐

 

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

 

 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at January 31, 2020

Common Stock, par value $0.01 per share

 

169,180,825

 

 

 

 

 

AVX Corporation and Subsidiaries

Table of Contents

 

 

 

 

 

 

Page

PART I:

Financial Information:

 

 

 

 

ITEM 1.

Financial Statements (unaudited):

3

 

Consolidated Balance Sheets as of March 31, 2019 and December 31, 2019

3

 

Consolidated Statements of Operations for the three and nine months ended December 31, 2018 and 2019

4

 

Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, 2018 and 2019 

5

 

Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 31, 2018 and 2019

6

 

Consolidated Statements of Cash Flows for the nine months ended December 31, 2018 and 2019

7

 

Notes to Consolidated Financial Statements

8

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

30

ITEM 4.

Controls and Procedures

30

 

 

 

PART II:

Other Information:

30

 

 

 

ITEM 1.

Legal Proceedings

30

ITEM 1A.

Risk Factors

31

ITEM 6.

Exhibits

31

Signature

 

32

 

 

 

 

 

PART I:     FINANCIAL INFORMATION

 

ITEM 1.     FINANCIAL STATEMENTS (Unaudited)

 

AVX Corporation and Subsidiaries

Consolidated Balance Sheets (unaudited)

(in thousands, except per share data)

 

   

As of

   

As of

 
   

March 31, 2019

   

December 31, 2019

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 378,456     $ 362,788  

Short-term investments in securities

    434,754       390,170  

Accounts receivable - trade, net

    256,991       202,476  

Accounts receivable - affiliates

    500       432  

Inventories, net

    631,688       674,697  

Income taxes receivable

    4,788       25,897  

Prepaid and other

    76,550       69,689  

Total current assets

    1,783,727       1,726,149  

Property and equipment, net

    455,757       498,571  

Goodwill

    316,675       324,395  

Intangible assets, net

    118,944       111,238  

Deferred income taxes

    75,938       86,518  

Other assets

    62,237       88,849  

Total Assets

  $ 2,813,278     $ 2,835,720  

Liabilities and Stockholders' Equity

               

Current liabilities:

               

Accounts payable - trade

  $ 95,498     $ 63,686  

Accounts payable - affiliates

    1,133       818  

Income taxes payable

    24,993       17,646  

Accrued payroll and benefits

    55,068       49,914  

Accrued expenses

    136,493       120,854  

Total current liabilities

    313,185       252,918  

Income taxes payable

    47,588       41,963  

Pensions

    9,543       10,024  

Deferred income taxes

    14,235       12,029  

Other liabilities

    44,547       58,168  

Total Liabilities

    429,098       375,102  
                 

Stockholders' Equity:

               

Preferred stock, par value $.01 per share:

               

Authorized, 20,000 shares; None issued and outstanding

    -       -  

Common stock, par value $.01 per share:

               

Authorized, 300,000 shares; issued, 176,369 shares; outstanding, 168,826 and 169,171 shares at March 31, 2019 and December 31, 2019, respectively

    1,764       1,764  

Additional paid-in capital

    362,498       361,208  

Retained earnings

    2,156,584       2,234,274  

Accumulated other comprehensive loss

    (39,494 )     (43,968 )

Treasury stock, at cost:

               

7,543 and 7,197 shares at March 31, 2019 and December 31, 2019, respectively

    (97,172 )     (92,660 )

Total Stockholders' Equity

    2,384,180       2,460,618  

Total Liabilities and Stockholders' Equity

  $ 2,813,278     $ 2,835,720  

 

 

See accompanying notes to consolidated financial statements.

 

3

 

 

AVX Corporation and Subsidiaries

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 31,

   

December 31,

 
   

2018

   

2019

   

2018

   

2019

 
                                 

Net sales

  $ 442,395     $ 344,441     $ 1,352,839     $ 1,123,496  

Cost of sales

    316,241       266,687       991,876       865,558  

Gross profit

    126,154       77,754       360,963       257,938  

Selling, general and administrative expenses

    42,187       41,885       123,341       125,910  

Legal and environmental charges

    (5,589 )     -       (5,589 )     -  

Profit from operations

    89,556       35,869       243,211       132,028  

Other income (loss):

                               

Interest income

    4,621       3,577       12,159       12,631  

Other, net

    (3,616 )     7,974       (5,107 )     7,042  

Income before income taxes

    90,561       47,420       250,263       151,701  

Provision (benefit) for income taxes

    16,264       (472 )     47,934       15,676  

Net income

  $ 74,297     $ 47,892     $ 202,329     $ 136,025  
                                 

Income per share:

                               

Basic

  $ 0.44     $ 0.28     $ 1.20     $ 0.80  

Diluted

  $ 0.44     $ 0.28     $ 1.20     $ 0.80  
                                 

Dividends declared (per share)

  $ 0.115     $ 0.115     $ 0.345     $ 0.345  

Weighted average common shares outstanding:

                               

Basic

    168,795       169,125       168,679       169,079  

Diluted

    169,314       169,467       169,247       169,371  

 

 

See accompanying notes to consolidated financial statements.

 

4

 

 

AVX Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(in thousands)

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 31,

   

December 31,

 
   

2018

   

2019

   

2018

   

2019

 

Net income

  $ 74,297     $ 47,892     $ 202,329     $ 136,025  

Other comprehensive income (loss), net of income taxes

                               

Foreign currency translation adjustment

    (18,639 )     7,740       (59,070 )     (5,301 )

Foreign currency cash flow hedges adjustment

    (36 )     (29 )     153       (100 )

Pension liability adjustment

    (246 )     153       2,600       927  

Other comprehensive income (loss), net of income taxes

    (18,921 )     7,864       (56,317 )     (4,474 )

Comprehensive income

  $ 55,376     $ 55,756     $ 146,012     $ 131,551  

 

 

See accompanying notes to consolidated financial statements.

 

5

 

 

AVX Corporation and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Unaudited)

(in thousands, except per share data)

 

                                           

Accumulated

         
   

Common Stock

           

Additional

           

Other

         
   

Number

           

Treasury

   

Paid-In

   

Retained

   

Comprehensive

         
   

Of Shares

   

Amount

   

Stock

   

Capital

   

Earnings

   

Income (Loss)

   

Total

 

Balance at September 30, 2018

    168,795     $ 1,764     $ (97,576 )   $ 360,076     $ 2,051,628     $ (16,139 )   $ 2,299,753  

Net income

    -       -       -       -       74,297       -       74,297  

Other comprehensive income (loss), net of income taxes

    -       -       -       -       -       (18,921 )     (18,921 )

Dividends of $0.115 per share

    -       -       -       -       (19,411 )     -       (19,411 )

Stock-based compensation expense

    -       -       -       1,249       -       -       1,249  

Stock option activity

    -       -       7       (2 )     -       -       5  

Tax benefit on stock option exercises

    -       -       -       1       -       -       1  

Payment of tax withholding for vested restricted stock units

    -       -       -       -       -       -       -  

Balance at December 31, 2018

    168,795     $ 1,764     $ (97,569 )   $ 361,324     $ 2,106,514     $ (35,060 )   $ 2,336,973  
                                                         

Balance at March 31, 2018

    168,434     $ 1,764     $ (102,122 )   $ 360,077     $ 1,962,467     $ 21,257     $ 2,243,443  

Net income

    -       -       -       -       202,329       -       202,329  

Other comprehensive income (loss), net of income taxes

    -       -       -       -       -       (56,317 )     (56,317 )

Dividends of $0.345 per share

    -       -       -       -       (58,282 )     -       (58,282 )

Stock-based compensation expense

    -       -       -       3,098       -       -       3,098  

Stock option activity

    361       -       5,364       56       -       -       5,420  

Tax benefit on stock option exercises

    -       -       -       414       -       -       414  

Payment of tax withholding for vested restricted stock units

    -       -       -       (2,321 )     -       -       (2,321 )

Treasury stock purchased

    -       -       (811 )     -       -       -       (811 )

Balance at December 31, 2018

    168,795     $ 1,764     $ (97,569 )   $ 361,324     $ 2,106,514     $ (35,060 )   $ 2,336,973  
                                                         

Balance at September 30, 2019

    169,095     $ 1,764     $ (93,710 )   $ 360,303     $ 2,205,828     $ (51,832 )   $ 2,422,353  
Net income     -       -       -       -       47,892       -       47,892  
Other comprehensive income (loss), net of income taxes     -       -       -       -       -       7,864       7,864  
Dividends of $0.115 per share     -       -       -       -       (19,446 )     -       (19,446 )

Stock-based compensation expense

    -       -       -       789       -       -       789  
Stock option activity     76       -       1,050       49       -       -       1,099  

Tax benefit on stock option exercises

    -       -       -       120       -       -       120  

Payment of tax withholding for vested restricted stock units

    -       -       -       (53 )     -       -       (53 )

Balance at December 31, 2019

    169,171     $ 1,764     $ (92,660 )   $ 361,208     $ 2,234,274     $ (43,968 )   $ 2,460,618  
                                                         

Balance at March 31, 2019

    168,826     $ 1,764     $ (97,172 )   $ 362,498     $ 2,156,584     $ (39,494 )   $ 2,384,180  
Net income     -       -       -       -       136,025       -       136,025  
Other comprehensive income (loss), net of income taxes     -       -       -       -       -       (4,474 )     (4,474 )
Dividends of $0.345 per share     -       -       -       -       (58,335 )     -       (58,335 )

Stock-based compensation expense

    -       -       -       2,440       -       -       2,440  
Stock option activity     345       -       4,512       61       -       -       4,573  

Tax benefit on stock option exercises

    -       -       -       313       -       -       313  

Payment of tax withholding for vested restricted stock units

    -       -       -       (4,104 )     -       -       (4,104 )

Balance at December 31, 2019

    169,171     $ 1,764     $ (92,660 )   $ 361,208     $ 2,234,274     $ (43,968 )   $ 2,460,618  

 

 

See accompanying notes to consolidated financial statements. 

 

6

 

 

AVX Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

 (in thousands)

 

   

Nine Months Ended

 
   

December 31,

 
   

2018

   

2019

 

Operating Activities:

               

Net income

  $ 202,329     $ 136,025  

Adjustment to reconcile net income to net cash from operating activities:

               

Depreciation and amortization

    65,109       71,815  

Stock-based compensation expense

    3,098       2,440  

Deferred income taxes

    7,321       (11,990 )

Loss (gain) on disposal of property and equipment

    278       (433 )

Loss from equity-method investments

    107       703  

Changes in operating assets and liabilities, excluding acquisitions:

               

Accounts receivable

    29,791       55,529  

Inventories

    (87,461 )     (43,785 )

Accounts payable and accrued expenses

    (4,474 )     (68,138 )

Income taxes payable

    (33,345 )     (42,520 )

Other assets

    (30,271 )     (31,796 )

Other liabilities

    44,515       46,908  

Net cash provided by operating activities

    196,997       114,758  
                 

Investing Activities:

               

Purchases of property and equipment

    (94,083 )     (102,062 )

Purchase of business, net of cash and debt acquired

    (12,317 )     (9,907 )

Purchases of investment securities

    (1,102,776 )     (1,123,023 )

Redemptions of investment securities

    881,372       1,167,425  

Other investing activities

    (950 )     1,956  

Net cash used in investing activities

    (328,754 )     (65,611 )
                 

Financing Activities:

               

Dividends paid

    (58,196 )     (58,335 )

Net change of equity awards

    3,515       781  

Purchase of treasury stock

    (811 )     -  

Principle payments of debt

    (1,893 )     -  

Payments of tax withholdings for vested restricted stock units

    (790 )     (1,381 )

Net cash used in financing activities

    (58,175 )     (58,935 )
                 

Effect of exchange rate on cash

    (3,265 )     (303 )
                 

Decrease in cash and cash equivalents

    (193,197 )     (10,091 )
                 

Cash, cash equivalents, and restricted cash at beginning of period

    547,415       400,625  

Cash, cash equivalents, and restricted cash at end of period

  $ 354,218     $ 390,534  

Reconciliation of cash, cash equivalents, and restricted cash to the Balance Sheet

               

Cash and cash equivalents

    354,218       362,788  

Restricted cash

    -       27,746  

Total cash, cash equivalents, and restricted cash to the Balance Sheet

  $ 354,218     $ 390,534  

 

See accompanying notes to consolidated financial statements.

 

7

 

 

AVX Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (Unaudited)

(in thousands, except per share data)

 

 

 

1. Basis of Presentation:

 

The consolidated financial statements of AVX Corporation and its subsidiaries (“AVX” or the “Company”) include all accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. The Company has prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in the opinion of management, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for the fair statement of the consolidated balance sheets, operating results, comprehensive income, statements of stockholders’ equity and cash flows for the periods presented. Operating results for the three and nine month periods ended December 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2020 due to changes in economic conditions and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted in accordance with the rules and regulations of the SEC for interim financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

 

Summary of Significant Accounting Policies

 

We have identified the accounting policies and estimates that are critical to our business operations and understanding our results of operations. Those policies and estimates can be found in Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements and in “Critical Accounting Policies and Estimates,” in “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, 2019. During the three and nine month periods ended December 31, 2019, there were no significant changes to any critical accounting policies or to the methodology used in determining estimates including those related to investment securities, inventories, goodwill, intangible assets, property and equipment, and contingencies.

 

During the nine month period ended December 31, 2019, goodwill increased by $7,720 due to the purchase of Chengdu OK New Energy ("COKNE") partially offset by foreign currency translation. 

 

Reclassifications

 

Certain amounts in the prior year consolidated financial statements have been reclassified to the current year presentation. The impact of the reclassifications made to prior year amounts is not material and did not affect net income.

 

Relevant New Accounting Standards

 

In 2016, the FASB issued ASU 2016-02, “Leases”. This guidance changes the requirements for inclusion of certain right-of-use assets and the associated liabilities to be included in a statement of financial position. The Company adopted this guidance effective April 1, 2019, using the modified retrospective method and utilized the optional transition method under which the Company will continue to apply the legacy guidance in Accounting Standards Codification (“ASC”) 840, including its disclosure requirements, in the comparative period presented. In addition, the Company elected the package of practical expedients permitted under the transition guidance which permits the following: a) carrying forward the historical lease classification, b) not separating lease components from non-lease components within the Company’s facility lease contracts, c) not presenting comparative periods but rather recording a cumulative catch-up during fiscal 2020, and d) electing, by asset class, not to record on the balance sheet a lease whose term is twelve months or less including reasonably certain renewal options. As a result of the adoption of ASU 2016-02 for the fiscal year beginning April 1, 2019, the Company recorded initial operating lease right-of-use assets of $18,351 and related operating lease liabilities of $18,053. Right-of-use assets are included in “Other assets” on the Company’s Balance Sheet as of December 31, 2019. Lease liabilities are classified as current and non-current, and are included in “Accrued expenses” and “Other liabilities”, respectively, on the Company’s Balance Sheet as of December 31, 2019. Please refer to Note 2 for additional information.

 

8

 

 

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurements of Credit Losses on Financial Instruments.” This standard requires the measurement and recognition of expected credit losses held at amortized cost. This new standard replaces the use of forward-looking information to estimate credit losses and requires credit losses for available for sale debt securities to be recorded through an allowance for credit losses rather than a reduction in the amortized cost basis. This update is effective for public companies for annual reporting periods beginning after December 15, 2019. Management has performed a preliminary assessment of the potential impact of the adoption of ASU 2016-13, and believes that the financial impact would not be material. The adoption of the standard will result in additional disclosure requirements, and updating of our policies and procedures. The Company intends to adopt the standard utilizing the modified retrospective approach, effective April 1, 2020.

 

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging.” The standard aims to align the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results for cash flow and fair value hedge accounting with risk management activities. The guidance is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. Additionally, in October 2018, the FASB issued ASU 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes”, which permits use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815. This update is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. For entities that had not yet adopted ASU 2017-12, the concurrent adoption of ASU 2018-16 is required. The Company concurrently adopted ASU 2017-12 and ASU 2018-16 effective April 1, 2019. The adoption of these standards has not had a material impact on our consolidated financial statements.

 

In February 2018, the FASB issued ASU 2018-02, "Income Statement - Reporting Comprehensive Income." This standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and early adoption is permitted. The Company adopted ASU 2018-02 effective April 1, 2019 and elected to not reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The adoption of this standard has not had a material impact on our consolidated financial statements.

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This standard removes, adds and modifies certain disclosure requirements in the existing framework. ASU 2018-13 removes the following disclosure requirements: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and (ii) the entity’s valuation processes for Level 3 fair value measurements. ASU 2018-13 adds the following disclosure requirements: (i) provide information about the measurement uncertainty of Level 3 fair value measurements as of the reporting date rather than a point in the future, (ii) disclose changes in unrealized gains and losses related to Level 3 measurements for the period included in other comprehensive income, and (iii) disclose for Level 3 measurements the range and weighted average of the significant unobservable inputs and the way it is calculated. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company does not expect this ASU to have a material impact on our consolidated financial statements and disclosures. 

 

In August 2018, the FASB issued ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General.” This standard removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. The standard is effective for fiscal years beginning after December 15, 2020, and early adoption is permitted. The amendments in ASU 2018-14 would need to be applied on a retrospective basis. Management is currently assessing the impact ASU 2018-14 will have on our disclosures.

 

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” This guidance reduces the complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This update is effective for public companies for annual reporting periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company early adopted this standard effective April 1, 2019, utilizing the prospective approach to all implementation costs incurred after the date of adoption. The adoption of ASU 2018-15 has not had a material impact on our consolidated financial statements.

 

In December 2019, the FASB issued ASU 2019-12, "Income Taxes: Simplifying the Accounting for Income Taxes." This guidance removes certain exceptions to the general principles of ASC 740 in order to reduce the cost and complexity of its application. This guidance is effective for annual reporting periods beginning after December 15, 2020, including interim periods within those fiscal years, with certain amendments applied on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, and others prospectively. Early adoption of this guidance is permitted, including the adoption in any interim period for public companies for which financial statements have not yet been issued. Management is currently assessing the impact ASU 2019-12 will have on our consolidated financial statements and disclosures.

 

We have reviewed other newly issued accounting pronouncements and concluded that they are either not applicable to our business or that no material effect is expected on our consolidated financial statements as a result of future adoption.

 

9

 

 

 

2. Leases:

 

As discussed in Note 1, the Company adopted the new leasing standard using the modified retrospective approach with an effective date of April 1, 2019. Prior year financial statements were not recast under the new standard and, therefore, those amounts are not presented below. We elected the package of transition provisions available for expired or existing contracts, which allowed us to carry forward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.

 

The Company’s operating leases consist of automobiles, machinery and equipment, and real estate, including office, storage and parking spaces. The duration of these leases range from 1 to 15 years. The Company has no financing lease arrangements. For leases with terms greater than 12 months, the Company recorded the related right-of-use asset and lease liability at the present value of lease payments over the term. Leases with a term 12 months or less at inception are not recorded on our Consolidated Balance Sheet and are expensed on a straight-line basis over the lease term in our Consolidated Statement of Operations. Some of our leases contain variable rental escalation clauses which are recognized when incurred. Additionally, some of our leases contain renewal options and/or termination options that are factored into the determination of lease payments and lease terms when it is reasonably certain that the Company will exercise these options. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For leases beginning in fiscal year 2020 and later, we account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components (e.g., common area maintenance costs).

 

When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. Our incremental borrowing rate is based on a credit-adjusted risk-free rate at commencement date, which best approximates a secured rate over a similar term of lease.

 

The following table presents our lease balances:

 

 

Classification on the Balance Sheet

 

As of December 31, 2019

 

Assets

         

Operating lease assets

Other assets

  $ 20,525  
           

Liabilities

         

Current

         

Operating

Accrued expenses

  $ 5,769  

Noncurrent

         

Operating

Other liabilities

    14,592  

Total lease liabilities

    $ 20,361  

 

 

The following table presents our lease costs for operating leases:

 

   

Three months ended

   

Nine months ended

 
   

December 31, 2019

   

December 31, 2019

 

Operating lease cost

  $ 1,384     $ 3,969  

Short-term lease cost

    75       784  

Variable lease cost

    444       1,333  

Total lease cost

  $ 1,903     $ 6,086  

 

The Company paid $2,019 and $6,110 for its operating leases in the three and nine months ended December 31, 2019, respectively which are included in operating cash flows on the consolidated statement of cash flows. The weighted-average remaining lease term for the Company’s operating leases is 4.6 years and the weighted-average discount rate is 3.25% as of December 31, 2019.

 

10

 

 

The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities on the balance sheet as of December 31, 2019:

 

Fiscal Year Ending

       

2020

  $ 1,624  

2021

    6,957  

2022

    5,475  

2023

    2,765  

2024

    1,592  

Thereafter

    3,625  

Total operating lease payments

  $ 22,038  

Less imputed interest

    1,677  

Total operating lease liabilities

  $ 20,361  

 

As of April 1, 2019, the Company had the following future minimum lease payments under non-cancelable leases prior to the adoption of the new lease standard:

 

Fiscal Year Ending

       

2020

  $ 6,642  

2021

    4,742  

2022

    3,218  

2023

    2,372  

2024

    445  

Thereafter

    1,856  

Total operating lease payments

  $ 19,275  

 

 

3. Earnings per Share:

 

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the dilutive effect of potential common stock equivalents during the period. Stock options and unvested service-based RSU awards make up the common stock equivalents and are computed using the treasury stock method.

 

The table below represents the basic and diluted earnings per share and sets forth the weighted average number of shares of common stock outstanding and potential common stock equivalents for the three and nine month periods ending December 31, 2018 and 2019.

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 31,

   

December 31,

 
   

2018

   

2019

   

2018

   

2019

 

Net income

  $ 74,297     $ 47,892     $ 202,329     $ 136,025  

Computation of Basic EPS:

                               

Weighted Average Shares Outstanding used in Computing Basic EPS

    168,795       169,125       168,679       169,079  

Basic earnings per share

  $ 0.44     $ 0.28     $ 1.20     $ 0.80  

Computation of Diluted EPS:

                               

Weighted Average Shares Outstanding used in Computing Basic EPS

    168,795       169,125       168,679       169,079  

Effect of stock awards

    519       342       568       292  

Weighted Average Shares used in Computing Diluted EPS (1)

    169,314       169,467       169,247       169,371  

Diluted earnings per share

  $ 0.44     $ 0.28     $ 1.20     $ 0.80  

 

 

(1)

Common stock equivalents not included in the computation of diluted earnings per share because the impact would have been anti-dilutive were 0 shares for the three month periods ended December 31, 2018 and 2019, and 8 shares and 2 shares for the nine months ended December 31, 2018 and 2019, respectively.

 

11

 

 

 

4. Trade Accounts Receivable and Contract Liabilities:

 

   

March 31, 2019

   

December 31, 2019

 

Gross Accounts Receivable - trade

  $ 273,053     $ 220,289  

Less:

               

Allowances for doubtful accounts

    1,276       1,946  

Stock rotation and ship from stock and debt

    14,140       15,498  

Sales returns and discounts

    646       369  

Total allowances

    16,062       17,813  

Accounts Receivable - trade, net

  $ 256,991     $ 202,476  

 

Charges related to allowances for doubtful accounts are charged to selling, general and administrative expenses. Charges related to stock rotation, ship from stock and debit, sales returns, and sales discounts are reported as deductions from revenue. Please refer to Note 10, "Segment and Geographic Information," for disaggregated revenue information.

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 31,

   

December 31,

 
   

2018

   

2019

   

2018

   

2019

 

Allowances for doubtful accounts:

                               

Beginning balance

  $ 1,327     $ 1,670     $ 1,893     $ 1,276  

Charges

    -       355       81       927  

Applications

    (153 )     (83 )     (800 )     (253 )

Translation, acquisition and other

    14       4       14       (4 )

Ending balance

  $ 1,188     $ 1,946     $ 1,188     $ 1,946  

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 31,

   

December 31,

 
   

2018

   

2019

   

2018

   

2019

 

Stock rotation and ship stock and debit:

                               

Beginning balance

  $ 10,201     $ 14,756     $ 15,989     $ 14,140  

Charges

    6,658       6,169       20,122       16,757  

Applications

    (6,338 )     (5,427 )     (19,264 )     (15,399 )

Stock rotation reclassified to liability

    -       -       (6,326 )     -  

Ending balance

  $ 10,521     $ 15,498     $ 10,521     $ 15,498  

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 31,

   

December 31,

 
   

2018

   

2019

   

2018

   

2019

 

Sales returns and discounts:

                               

Beginning balance

  $ 338     $ 947     $ 6,875     $ 646  

Charges

    173       1,336       2,233       4,830  

Applications

    (114 )     (1,914 )     (2,548 )     (5,107 )

Sales returns reclassified to liability

    -       -       (6,157 )     -  

Translation, acquisition and other

    -       -       (6 )     -  

Ending balance

  $ 397     $ 369     $ 397     $ 369  

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 31,

   

December 31,

 
   

2018

   

2019

   

2018

   

2019

 
                                 

Contract liabilities:

                               

Beginning balance

  $ 14,822     $ 14,691     $ -     $ 15,753  

Increase due to adoption of ASC 606

    -       -       12,483       -