Price | 15.59 | EPS | 1 | |
Shares | 169 | P/E | 11 | |
MCap | 2,641 | P/FCF | 28 | |
Net Debt | -425 | EBIT | 278 | |
TEV | 2,217 | TEV/EBIT | 8 | 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 |
Item 1.     Financial Statements (Unaudited) |
EX-31.1 | ex_169231.htm |
EX-31.2 | ex_169232.htm |
EX-32.1 | ex_169233.htm |
Balance Sheet | Income Statement | Cash Flow |
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Assets, Equity
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Rev, G Profit, Net Income
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Ops, Inv, Fin
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
| | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
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
AVX Corporation
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
| (IRS Employer ID No.) |
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(Address of principal executive offices) |
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(Registrant's phone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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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.
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).
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.
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| Accelerated filer | ☐ |
Non-accelerated filer | ☐ |
| Smaller reporting company | |
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| 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
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 |
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AVX Corporation and Subsidiaries
Table of Contents
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PART I: |
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ITEM 1. | 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 |
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| 6 | |
| Consolidated Statements of Cash Flows for the nine months ended December 31, 2018 and 2019 | 7 |
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ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 |
ITEM 3. | 30 | |
ITEM 4. | 30 | |
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PART II: | 30 | |
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ITEM 1. | 30 | |
ITEM 1A. | 31 | |
ITEM 6. | 31 | |
| 32 |
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 | $ | $ | ||||||
Short-term investments in securities | ||||||||
Accounts receivable - trade, net | ||||||||
Accounts receivable - affiliates | ||||||||
Inventories, net | ||||||||
Income taxes receivable | ||||||||
Prepaid and other | ||||||||
Total current assets | ||||||||
Property and equipment, net | ||||||||
Goodwill | ||||||||
Intangible assets, net | ||||||||
Deferred income taxes | ||||||||
Other assets | ||||||||
Total Assets | $ | $ | ||||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable - trade | $ | $ | ||||||
Accounts payable - affiliates | ||||||||
Income taxes payable | ||||||||
Accrued payroll and benefits | ||||||||
Accrued expenses | ||||||||
Total current liabilities | ||||||||
Income taxes payable | ||||||||
Pensions | ||||||||
Deferred income taxes | ||||||||
Other liabilities | ||||||||
Total Liabilities | ||||||||
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 | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Treasury stock, at cost: | ||||||||
7,543 and 7,197 shares at March 31, 2019 and December 31, 2019, respectively | ( | ) | ( | ) | ||||
Total Stockholders' Equity | ||||||||
Total Liabilities and Stockholders' Equity | $ | $ |
See accompanying notes to consolidated financial statements.
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 | $ | $ | $ | $ | ||||||||||||
Cost of sales | ||||||||||||||||
Gross profit | ||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||
Legal and environmental charges | ( | ) | ( | ) | ||||||||||||
Profit from operations | ||||||||||||||||
Other income (loss): | ||||||||||||||||
Interest income | ||||||||||||||||
Other, net | ( | ) | ( | ) | ||||||||||||
Income before income taxes | ||||||||||||||||
Provision (benefit) for income taxes | ( | ) | ||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Income per share: | ||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||
Diluted | $ | $ | $ | $ | ||||||||||||
Dividends declared (per share) | $ | $ | $ | $ | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | ||||||||||||||||
Diluted |
See accompanying notes to consolidated financial statements.
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 | $ | $ | $ | $ | ||||||||||||
Other comprehensive income (loss), net of income taxes | ||||||||||||||||
Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||
Foreign currency cash flow hedges adjustment | ( | ) | ( | ) | ( | ) | ||||||||||
Pension liability adjustment | ( | ) | ||||||||||||||
Other comprehensive income (loss), net of income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
Comprehensive income | $ | $ | $ | $ |
See accompanying notes to consolidated financial statements.
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 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||
Other comprehensive income (loss), net of income taxes | - | ( | ) | ( | ) | |||||||||||||||||||||||
Dividends of $0.115 per share | - | ( | ) | ( | ) | |||||||||||||||||||||||
Stock-based compensation expense | - | |||||||||||||||||||||||||||
Stock option activity | ( | ) | ||||||||||||||||||||||||||
Tax benefit on stock option exercises | - | |||||||||||||||||||||||||||
Payment of tax withholding for vested restricted stock units | - | |||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Balance at March 31, 2018 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||
Other comprehensive income (loss), net of income taxes | - | ( | ) | ( | ) | |||||||||||||||||||||||
Dividends of $0.345 per share | - | ( | ) | ( | ) | |||||||||||||||||||||||
Stock-based compensation expense | - | |||||||||||||||||||||||||||
Stock option activity | ||||||||||||||||||||||||||||
Tax benefit on stock option exercises | - | |||||||||||||||||||||||||||
Payment of tax withholding for vested restricted stock units | - | ( | ) | ( | ) | |||||||||||||||||||||||
Treasury stock purchased | ( | ) | ( | ) | ||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Balance at September 30, 2019 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||
Other comprehensive income (loss), net of income taxes | - | |||||||||||||||||||||||||||
Dividends of $0.115 per share | - | ( | ) | ( | ) | |||||||||||||||||||||||
Stock-based compensation expense | - | |||||||||||||||||||||||||||
Stock option activity | ||||||||||||||||||||||||||||
Tax benefit on stock option exercises | - | |||||||||||||||||||||||||||
Payment of tax withholding for vested restricted stock units | - | ( | ) | ( | ) | |||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Balance at March 31, 2019 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||
Other comprehensive income (loss), net of income taxes | - | ( | ) | ( | ) | |||||||||||||||||||||||
Dividends of $0.345 per share | - | ( | ) | ( | ) | |||||||||||||||||||||||
Stock-based compensation expense | - | |||||||||||||||||||||||||||
Stock option activity | ||||||||||||||||||||||||||||
Tax benefit on stock option exercises | - | |||||||||||||||||||||||||||
Payment of tax withholding for vested restricted stock units | - | ( | ) | ( | ) | |||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
See accompanying notes to consolidated financial statements.
AVX Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Nine Months Ended | ||||||||
December 31, | ||||||||
2018 | 2019 | |||||||
Operating Activities: | ||||||||
Net income | $ | $ | ||||||
Adjustment to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | ||||||||
Stock-based compensation expense | ||||||||
Deferred income taxes | ( | ) | ||||||
Loss (gain) on disposal of property and equipment | ( | ) | ||||||
Loss from equity-method investments | ||||||||
Changes in operating assets and liabilities, excluding acquisitions: | ||||||||
Accounts receivable | ||||||||
Inventories | ( | ) | ( | ) | ||||
Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
Income taxes payable | ( | ) | ( | ) | ||||
Other assets | ( | ) | ( | ) | ||||
Other liabilities | ||||||||
Net cash provided by operating activities | ||||||||
Investing Activities: | ||||||||
Purchases of property and equipment | ( | ) | ( | ) | ||||
Purchase of business, net of cash and debt acquired | ( | ) | ( | ) | ||||
Purchases of investment securities | ( | ) | ( | ) | ||||
Redemptions of investment securities | ||||||||
Other investing activities | ( | ) | ||||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Financing Activities: | ||||||||
Dividends paid | ( | ) | ( | ) | ||||
Net change of equity awards | ||||||||
Purchase of treasury stock | ( | ) | ||||||
Principle payments of debt | ( | ) | ||||||
Payments of tax withholdings for vested restricted stock units | ( | ) | ( | ) | ||||
Net cash used in financing activities | ( | ) | ( | ) | ||||
Effect of exchange rate on cash | ( | ) | ( | ) | ||||
Decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash, cash equivalents, and restricted cash at beginning of period | ||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | ||||||
Reconciliation of cash, cash equivalents, and restricted cash to the Balance Sheet | ||||||||
Cash and cash equivalents | ||||||||
Restricted cash | ||||||||
Total cash, cash equivalents, and restricted cash to the Balance Sheet | $ | $ |
See accompanying notes to consolidated financial statements.
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 $
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 $
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.
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
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 | $ | |||
Liabilities | |||||
Current | |||||
Operating | Accrued expenses | $ | |||
Noncurrent | |||||
Operating | Other liabilities | ||||
Total lease liabilities | $ |
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 | $ | $ | ||||||
Short-term lease cost | ||||||||
Variable lease cost | ||||||||
Total lease cost | $ | $ |
The Company paid $
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 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total operating lease payments | $ | |||
Less imputed interest | ||||
Total operating lease liabilities | $ |
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 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total operating lease payments | $ |
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 | $ | $ | $ | $ | ||||||||||||
Computation of Basic EPS: | ||||||||||||||||
Weighted Average Shares Outstanding used in Computing Basic EPS | ||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||||||
Computation of Diluted EPS: | ||||||||||||||||
Weighted Average Shares Outstanding used in Computing Basic EPS | ||||||||||||||||
Effect of stock awards | ||||||||||||||||
Weighted Average Shares used in Computing Diluted EPS (1) | ||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ |
| (1) | Common stock equivalents not included in the computation of diluted earnings per share because the impact would have been anti-dilutive were |
4. Trade Accounts Receivable and Contract Liabilities:
March 31, 2019 | December 31, 2019 | |||||||
Gross Accounts Receivable - trade | $ | $ | ||||||
Less: | ||||||||
Allowances for doubtful accounts | ||||||||
Stock rotation and ship from stock and debt | ||||||||
Sales returns and discounts | ||||||||
Total allowances | ||||||||
Accounts Receivable - trade, net | $ | $ |
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 | $ | $ | $ | $ | ||||||||||||
Charges | ||||||||||||||||
Applications | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Translation, acquisition and other | ( | ) | ||||||||||||||
Ending balance | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2018 | 2019 | 2018 | 2019 | |||||||||||||
Stock rotation and ship stock and debit: | ||||||||||||||||
Beginning balance | $ | $ | $ | $ | ||||||||||||
Charges | ||||||||||||||||
Applications | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Stock rotation reclassified to liability | ( | ) | ||||||||||||||
Ending balance | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2018 | 2019 | 2018 | 2019 | |||||||||||||
Sales returns and discounts: | ||||||||||||||||
Beginning balance | $ | $ | $ | $ | ||||||||||||
Charges | ||||||||||||||||
Applications | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Sales returns reclassified to liability | ( | ) | ||||||||||||||
Translation, acquisition and other | ( | ) | ||||||||||||||
Ending balance | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2018 | 2019 | 2018 | 2019 | |||||||||||||
Contract liabilities: | ||||||||||||||||
Beginning balance | $ | $ | $ | $ | ||||||||||||
Increase due to adoption of ASC 606 |