NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
(In Thousands, Except Share and Per Share Data)
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended
October 1, 2017
are not necessarily indicative of the results that may be expected for the fiscal year ended March 31, 2018.
The consolidated condensed balance sheet at March 31, 2017 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
The financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s
2017 Annual Report
on Form 10-K (SEC File No. 001-32253), which was filed on May 30, 2017 (the “
2017 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 2018 end on July 2, 2017, October 1, 2017, December 31, 2017, and March 31, 2018, respectively. The four quarters in fiscal 2017 ended on July 3, 2016, October 2, 2016, January 1, 2017, and March 31, 2017, 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.
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 substantially completed an impact assessment of the potential changes from adopting ASU 2014-09. The impact assessment included a review of customer arrangements across all of its global business units and an in-depth analysis of its global revenue processes and accounting policies to identify potential areas where change may be needed to comply with ASC 606. The Company has not selected a transition method and is currently evaluating the impact the adoption of the standard will have on its financial condition, results of operations and cash flows.
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 annual 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 October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740)”: Intra-Entity Transfers of Assets Other than Inventory. ASU 2016-16 requires that an entity recognize the income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs. This update is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company early adopted the standard on a modified retrospective basis during the first quarter of
fiscal 2018
through a cumulative-effect adjustment directly to retained earnings of
$137
, as of the beginning of the period of adoption.
In March 2017, the FASB issued ASU No. 2017-07,“Compensation—Retirement Benefits (Topic 715)” which requires an entity to report the service cost component of pension and other postretirement benefit costs in the same line item as other compensation costs. The other components of net (benefit) cost will be required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. This standard is effective for interim and annual reporting periods beginning after December 15, 2017 with early adoption permitted. The Company is currently assessing the potential impact that the adoption will have on its consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815)”: Targeted Improvements to Accounting for Hedging Activities, which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item.
The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted in any interim period or fiscal year before the effective date. The Company is currently assessing the potential impact that the adoption will have on its consolidated financial statements.
2. Inventories
Inventories, net consist of:
|
|
|
|
|
|
|
|
|
|
|
|
October 1, 2017
|
|
March 31, 2017
|
Raw materials
|
|
$
|
96,587
|
|
|
$
|
85,604
|
|
Work-in-process
|
|
138,812
|
|
|
107,177
|
|
Finished goods
|
|
187,109
|
|
|
167,913
|
|
Total
|
|
$
|
422,508
|
|
|
$
|
360,694
|
|
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 1, 2017
and
March 31, 2017
, and the basis for that measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fair Value
Measurement
October 1, 2017
|
|
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Lead forward contracts
|
|
$
|
3,356
|
|
|
$
|
—
|
|
|
$
|
3,356
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
(303
|
)
|
|
—
|
|
|
(303
|
)
|
|
—
|
|
Total derivatives
|
|
$
|
3,053
|
|
|
$
|
—
|
|
|
$
|
3,053
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fair Value
Measurement
March 31, 2017
|
|
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Lead forward contracts
|
|
$
|
1,163
|
|
|
$
|
—
|
|
|
$
|
1,163
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
(313
|
)
|
|
—
|
|
|
(313
|
)
|
|
—
|
|
Total derivatives
|
|
$
|
850
|
|
|
$
|
—
|
|
|
$
|
850
|
|
|
$
|
—
|
|
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
2017 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 approximate carrying value due to their short maturities.
The fair value of the Company’s short-term debt and borrowings under the new 2017 Credit Facility and the previous 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
104%
and
101%
of face value on
October 1, 2017
and
March 31, 2017
, respectively.
The carrying amounts and estimated fair values of the Company’s derivatives and Notes at
October 1, 2017
and
March 31, 2017
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 1, 2017
|
|
|
|
March 31, 2017
|
|
|
|
|
Carrying
Amount
|
|
|
|
Fair Value
|
|
|
|
Carrying
Amount
|
|
|
|
Fair Value
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
(1)
|
|
$
|
3,356
|
|
|
|
|
$
|
3,356
|
|
|
|
|
$
|
1,163
|
|
|
|
|
$
|
1,163
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
(2)
|
|
$
|
300,000
|
|
|
|
|
$
|
312,000
|
|
|
|
|
$
|
300,000
|
|
|
|
|
$
|
303,000
|
|
|
|
Derivatives
(1)
|
|
303
|
|
|
|
|
303
|
|
|
|
|
313
|
|
|
|
|
313
|
|
|
|
|
|
(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 1, 2017
and
March 31, 2017
).
|
|
|
(2)
|
The fair value amount of the Notes at
October 1, 2017
and
March 31, 2017
represent the trading value of the instruments.
|
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. At
October 1, 2017
and
March 31, 2017
, the Company has hedged the price to purchase approximately
50.1 million
pounds and
45.0 million
pounds of lead, respectively, for a total purchase price of
$53,235
and
$46,550
, 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 1, 2017
and
March 31, 2017
, the Company had entered into a total of
$45,116
and
$30,751
, respectively, of such contracts.
In the coming twelve months, the Company anticipates that
$4,102
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 1, 2017
and
March 31, 2017
, the notional amount of these contracts was
$14,740
and
$13,560
, 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 1, 2017
and
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives and Hedging Activities Designated as Cash Flow Hedges
|
|
Derivatives and Hedging Activities Not Designated as Hedging Instruments
|
|
|
October 1, 2017
|
|
March 31, 2017
|
|
October 1, 2017
|
|
March 31, 2017
|
Prepaid and other current assets
|
|
|
|
|
|
|
|
|
Lead forward contracts
|
|
$
|
3,356
|
|
|
$
|
1,163
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
Total assets
|
|
$
|
3,356
|
|
|
$
|
1,174
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued expenses
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
$
|
278
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
324
|
|
Total liabilities
|
|
$
|
278
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
324
|
|
The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the quarter ended
October 1, 2017
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
3,896
|
|
|
Cost of goods sold
|
|
$
|
(1,892
|
)
|
Foreign currency forward contracts
|
|
(1,029
|
)
|
|
Cost of goods sold
|
|
(1,067
|
)
|
Total
|
|
$
|
2,867
|
|
|
|
|
$
|
(2,959
|
)
|
|
|
|
|
|
|
|
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
|
|
$
|
(36
|
)
|
Total
|
|
|
$
|
(36
|
)
|
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
six months
ended
October 1, 2017
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
3,082
|
|
|
Cost of goods sold
|
|
$
|
(89
|
)
|
Foreign currency forward contracts
|
|
(3,088
|
)
|
|
Cost of goods sold
|
|
(903
|
)
|
Total
|
|
$
|
(6
|
)
|
|
|
|
$
|
(992
|
)
|
|
|
|
|
|
|
|
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
|
|
$
|
12
|
|
Total
|
|
|
$
|
12
|
|
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
|
)
|
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 2018
and
2017
was based on the estimated effective tax rates applicable for the full years ending
March 31, 2018
and
March 31, 2017
, 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 for the
second
quarters of
fiscal 2018
and
2017
were
21.7%
and
26.2%
, respectively, and for the
six months
of
fiscal 2018
and
2017
were
21.2%
and
25.3%
, respectively. The rate decrease in the
second
quarter and
six months
of
fiscal 2018
compared to the comparable prior year periods of
fiscal 2017
is primarily due to changes in the mix of earnings among tax jurisdictions.
Foreign income as a percentage of worldwide income is estimated to be
63%
for
fiscal 2018
compared to
57%
for
fiscal 2017
. The foreign effective income tax rates for the
six months
of
fiscal 2018
and
2017
were
11.2%
and
14.5%
, respectively. The rate decrease compared to the prior year period is primarily due to 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 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
Balance at beginning of period
|
|
$
|
46,677
|
|
|
$
|
48,075
|
|
|
$
|
46,116
|
|
|
$
|
48,422
|
|
Current period provisions
|
|
3,717
|
|
|
5,611
|
|
|
6,808
|
|
|
10,847
|
|
Costs incurred
|
|
(3,841
|
)
|
|
(5,883
|
)
|
|
(7,037
|
)
|
|
(8,242
|
)
|
Foreign currency translation adjustment
|
|
560
|
|
|
309
|
|
|
1,226
|
|
|
(2,915
|
)
|
Balance at end of period
|
|
$
|
47,113
|
|
|
$
|
48,112
|
|
|
$
|
47,113
|
|
|
$
|
48,112
|
|
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 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, the Company and its 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 had 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 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 1, 2017
and
March 31, 2017
, the Company had a reserve balance of
$2,022
and
$1,830
, respectively, relating to the Belgian regulatory proceeding. The change in the reserve balance between
October 1, 2017
and
March 31, 2017
was solely due to foreign currency translation impact.
In June 2017, the Company settled a portion of its previously disclosed proceeding involving the German competition authority relating to conduct involving the Company's motive power battery business and agreed to pay a fine of
$14,811
, which was paid on July 11, 2017. As of
October 1, 2017
and March 31, 2017, the Company had a reserve balance of
$0
and $
13,463
, respectively, relating to this matter. Also in June 2017, the German competition authority issued a fining decision related to the Company's reserve power battery business, which constitutes the remaining portion of the previously disclosed German proceeding. The Company is appealing this decision, including payment of the proposed fine of
$11,415
, and believes that the reserve power matter does not, based on current facts and circumstances known to management, require an accrual. The Company is not required to escrow any portion of this fine during the appeal process.
In July 2017, the Company settled the Dutch regulatory proceeding and agreed to pay a fine of
$11,229
, which was paid on August 11, 2017. As of
October 1, 2017
and March 31, 2017, the Company had a reserve balance of
$0
and
$10,258
, respectively, relating to the Dutch regulatory proceeding.
As of
October 1, 2017
and
March 31, 2017
, the Company had a total reserve balance of
$2,022
and
$25,551
, respectively, in connection with these investigations and other related legal matters, included in accrued expenses on the Consolidated Condensed Balance Sheets. 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 or customer claims, 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
$1,117
and
$1,123
as of
October 1, 2017
and
March 31, 2017
. 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 and Foreign Currency Forward Contracts
To stabilize its lead costs and reduce volatility from currency movements, the Company enters into contracts with financial institutions. The vast majority of such contracts are for a period not extending beyond one year. Please refer to Note 4 - Derivative Financial Instruments for more details.
8. Restructuring Plans
During fiscal 2016, the Company announced restructurings 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, 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
$6,600
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
130
employees upon completion. In fiscal 2016, the Company recorded restructuring charges of
$5,232
and recorded an additional
$1,251
during fiscal 2017. The Company incurred
$2,993
in costs against the accrual in fiscal 2016 and incurred an additional
$3,037
against the accrual during fiscal 2017. During the
six months
of
fiscal 2018
, the Company recorded restructuring charges of
$85
and incurred
$348
against the accrual. As of
October 1, 2017
, the reserve balance associated with these actions is
$154
. The Company expects no further restructuring charges related to these actions and expects to complete the program during fiscal 2018.
During 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 fiscal 2017, the Company recorded restructuring charges of
$3,104
and incurred
$749
in costs against the accrual. During the
six months
of
fiscal 2018
, the Company recorded restructuring charges of
$1,243
and incurred
$1,350
against the accrual. As of
October 1, 2017
, the reserve balance associated with these actions is
$2,380
. The Company expects to be committed to an additional
$155
in restructuring charges related to this action in 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 fiscal 2016. This program was completed during the first quarter of fiscal 2018. The total cash charges for these actions amounted to
$779
. During fiscal 2017, the Company recorded charges of
$779
and incurred
$648
in costs against the accrual. During the
six months
of
fiscal 2018
, the Company recorded charges of
$0
and incurred
$129
in costs against the accrual.
During fiscal 2018, the Company announced restructuring programs to improve efficiencies primarily related to supply chain and general operations in EMEA. The Company estimates that the total charges for these actions will amount to approximately
$2,800
, 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
25
employees upon completion. During the
six months
of fiscal 2018, the Company recorded restructuring charges of
$996
and incurred
$781
in costs against the accrual. As of October 1, 2017, the reserve balance associated with these actions is
$215
. The Company expects to be committed to an additional
$1,800
in restructuring charges related to this action in fiscal 2018, when it expects to complete this program.
During the second quarter of fiscal 2018, the Company completed the sale of its Cleveland, Ohio facility and recorded a non-cash loss on the sale of the building of
$210
and other cash charges of
$75
. The Cleveland facility ceased charger production in fiscal 2017.
A roll-forward of the restructuring reserve is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
Severance
|
|
Other
|
|
Total
|
Balance as of March 31, 2017
|
|
$
|
2,668
|
|
|
$
|
144
|
|
|
$
|
2,812
|
|
Accrued
|
|
2,172
|
|
|
227
|
|
|
2,399
|
|
Costs incurred
|
|
(2,310
|
)
|
|
(373
|
)
|
|
(2,683
|
)
|
Foreign currency impact
|
|
219
|
|
|
2
|
|
|
221
|
|
Balance as of October 1, 2017
|
|
$
|
2,749
|
|
|
$
|
—
|
|
|
$
|
2,749
|
|
9. Debt
The following summarizes the Company’s long-term debt as of
October 1, 2017
and
March 31, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 1, 2017
|
|
March 31, 2017
|
|
|
Principal
|
|
Unamortized Issuance Costs
|
|
Principal
|
|
Unamortized Issuance Costs
|
5.00% Senior Notes due 2023
|
|
$
|
300,000
|
|
|
$
|
3,434
|
|
|
$
|
300,000
|
|
|
$
|
3,746
|
|
2017 Credit Facility, due 2022
|
|
435,200
|
|
|
3,159
|
|
|
—
|
|
|
—
|
|
2011 Credit Facility, due 2018
|
|
—
|
|
|
—
|
|
|
292,500
|
|
|
1,145
|
|
|
|
$
|
735,200
|
|
|
$
|
6,593
|
|
|
$
|
592,500
|
|
|
$
|
4,891
|
|
Less: Unamortized issuance costs
|
|
6,593
|
|
|
|
|
4,891
|
|
|
|
Long-term debt, net of unamortized issuance costs
|
|
$
|
728,607
|
|
|
|
|
$
|
587,609
|
|
|
|
5.00% Senior Notes
The Company's
$300,000
Notes 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 certain of its subsidiaries that are guarantors (the “Guarantors”) under the 2011 Credit Facility and its successor, the 2017 Credit Facility. The Guarantees are unsecured and unsubordinated obligations of the Guarantors.
2017 Credit Facility
On August 4, 2017, the Company entered into a new credit facility (“2017 Credit Facility”). The 2017 Credit Facility matures on September 30, 2022 and comprises a
$600,000
senior secured revolving credit facility (“2017 Revolver”) and a
$150,000
senior secured term loan (“2017 Term Loan”). The Company's previous credit facility (“2011 Credit Facility”) comprised a
$500,000
senior secured revolving credit facility (“2011 Revolver”) and a
$150,000
senior secured incremental term loan (the “2011 Term Loan”) with a maturity date of September 30, 2018. On August 4, 2017, the outstanding balance on the 2011 Revolver and the 2011 Term Loan of
$240,000
and
$123,750
, respectively, was repaid utilizing borrowings from the 2017 Credit Facility.
As of
October 1, 2017
, the Company had
$285,200
outstanding on the 2017 Revolver and
$150,000
under the 2017 Term Loan.
The quarterly installments payable on the 2017 Term Loan are
$1,875
beginning December 31, 2018,
$2,813
beginning December 31, 2019 and
$3,750
beginning December 31, 2020 with a final payment of
$105,000
on September 30, 2022. The 2017 Credit Facility may be increased by an aggregate amount of
$325,000
in revolving commitments and/or one or more new tranches of term loans, under certain conditions. Both the 2017 Revolver and the 2017 Term Loan 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
2.00%
(currently
1.25%
and based on the Company's consolidated net leverage ratio) or (ii) the Base Rate (which equals, for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate plus
0.50%
, (b) Bank of America “Prime Rate” and (c) the Eurocurrency Base Rate plus
1%
; provided that, if the Base Rate shall be less than zero, such rate shall be deemed zero). Obligations under the 2017 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 2017 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.
Short-Term Debt
As of
October 1, 2017
and
March 31, 2017
, the Company had
$12,978
and
$18,359
, respectively, of short-term borrowings. The weighted-average interest rate on these borrowings was approximately
8%
and
7%
at
October 1, 2017
and
March 31, 2017
, respectively.
Letters of Credit
As of
October 1, 2017
and
March 31, 2017
, the Company had
$3,255
and
$2,189
, respectively, of standby letters of credit.
Debt Issuance Costs
In connection with the refinancing, the Company incurred
$2,677
in debt issuance costs and wrote off
$301
relating to the 2011 Credit Facility. Amortization expense, relating to debt issuance costs, included in interest expense was
$327
and
$347
, for the quarters ended
October 1, 2017
and
October 2, 2016
and
$674
and
$694
for the
six months
ended
October 1, 2017
and
October 2, 2016
. Debt issuance costs, net of accumulated amortization, totaled
$6,593
and $
4,891
, respectively, at
October 1, 2017
and
March 31, 2017
.
Available Lines of Credit
As of
October 1, 2017
and
March 31, 2017
, the Company had available and undrawn, under all its lines of credit,
$465,703
and
$475,947
, respectively, including
$152,628
and
$142,872
, respectively, of uncommitted lines of credit as of
October 1, 2017
and
March 31, 2017
.
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 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
Service cost
|
|
$
|
—
|
|
|
$
|
91
|
|
|
$
|
256
|
|
|
$
|
223
|
|
Interest cost
|
|
167
|
|
|
170
|
|
|
444
|
|
|
467
|
|
Expected return on plan assets
|
|
(120
|
)
|
|
(204
|
)
|
|
(557
|
)
|
|
(472
|
)
|
Amortization and deferral
|
|
80
|
|
|
132
|
|
|
360
|
|
|
253
|
|
Net periodic benefit cost
|
|
$
|
127
|
|
|
$
|
189
|
|
|
$
|
503
|
|
|
$
|
471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States Plans
|
|
International Plans
|
Six months ended
|
|
Six months ended
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
Service cost
|
|
$
|
—
|
|
|
$
|
182
|
|
|
$
|
499
|
|
|
$
|
446
|
|
Interest cost
|
|
334
|
|
|
340
|
|
|
876
|
|
|
961
|
|
Expected return on plan assets
|
|
(240
|
)
|
|
(408
|
)
|
|
(1,105
|
)
|
|
(982
|
)
|
Amortization and deferral
|
|
159
|
|
|
264
|
|
|
711
|
|
|
518
|
|
Net periodic benefit cost
|
|
$
|
253
|
|
|
$
|
378
|
|
|
$
|
981
|
|
|
$
|
943
|
|
11. Stock-Based Compensation
As of
October 1, 2017
, the Company maintains the 2017 Equity Incentive Plan, (“2017 EIP”). The 2017 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
$4,293
for the
second
quarter of
fiscal 2018
and
$4,790
for the
second
quarter of
fiscal 2017
. Stock-based compensation expense was
$9,523
for the
six months
of
fiscal 2018
and
$9,857
for the
six months
of
fiscal 2017
. The Company recognizes compensation expense using the straight-line method over the vesting period of the awards.
During the
six months
of
fiscal 2018
, the Company granted to non-employee directors
30,366
restricted stock units, pursuant to the 2017 EIP.
During the
six months
of
fiscal 2018
, the Company granted to management and other key employees
169,703
non-qualified stock options and
60,008
market condition-based share units that vest
three
years from the date of grant, and
160,313
restricted stock units that vest
25%
each year over
four
years from the date of grant.
Common stock activity during the
six months
of
fiscal 2018
included the vesting of
148,567
restricted stock units and
142,426
market condition-based share units and the exercise of
56,744
stock options.
As of
October 1, 2017
, there were
557,313
non-qualified stock options,
640,792
restricted stock units and
353,726
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 1, 2017
:
|
|
|
|
|
Shares outstanding as of March 31, 2017
|
|
43,447,536
|
|
Purchase of treasury stock
|
|
(1,540,093
|
)
|
Shares issued towards equity-based compensation plans, net of equity awards surrendered for option price and taxes
|
|
217,260
|
|
Shares outstanding as of October 1, 2017
|
|
42,124,703
|
|
Accelerated Share Repurchase
During the
second
quarter of
fiscal 2018
, the Company entered into an accelerated share repurchase agreement (“ASR”) with a major financial institution to repurchase up to
$100,000
of its common stock. The Company prepaid
$100,000
and received an initial delivery of
1,278,976
shares with a fair market value of approximately
$80,000
. The ASR is accounted for as a treasury stock repurchase, reducing the weighted average number of basic and diluted shares outstanding by the
1,278,976
shares initially received, and as a forward contract indexed to the Company's own common shares to reflect the future settlement provisions. Because the maximum repurchase will be
$100,000
, as of
October 1, 2017
,
$20,000
representing the difference between the fair value of shares delivered and the maximum notional amount of
$100,000
, is accounted for as an equity instrument and is included in additional paid-in capital. The ASR is not accounted for as a derivative instrument.
Additional shares may be delivered to the Company on or before January 5, 2018 (scheduled settlement date), subject to the provisions of the ASR. The total number of shares to be repurchased will be determined on final settlement, with any additional shares reacquired being based generally on the volume-weighted average price of the Company's ordinary shares, minus a discount, during the repurchase period.
Treasury Stock
During the
six months
ended
October 1, 2017
, the Company also acquired
261,117
shares for
$21,191
through open market purchases.
At
October 1, 2017
and
March 31, 2017
, the Company held
12,463,367
and
10,923,274
shares as treasury stock, respectively.
Accumulated Other Comprehensive Income (
“
AOCI
”
)
The components of AOCI, net of tax, as of
October 1, 2017
and
March 31, 2017
, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
Before Reclassifications
|
|
Amounts Reclassified from AOCI
|
|
October 1, 2017
|
Pension funded status adjustment
|
|
$
|
(25,555
|
)
|
|
$
|
—
|
|
|
$
|
665
|
|
|
$
|
(24,890
|
)
|
Net unrealized gain (loss) on derivative instruments
|
|
1,975
|
|
|
(9
|
)
|
|
625
|
|
|
2,591
|
|
Foreign currency translation adjustment
|
|
(129,244
|
)
|
|
72,817
|
|
|
—
|
|
|
(56,427
|
)
|
Accumulated other comprehensive (loss) income
|
|
$
|
(152,824
|
)
|
|
$
|
72,808
|
|
|
$
|
1,290
|
|
|
$
|
(78,726
|
)
|
The following table presents reclassifications from AOCI during the
second
quarter ended
October 1, 2017
:
|
|
|
|
|
|
|
|
Components of AOCI
|
|
Amounts Reclassified from AOCI
|
|
Location of (Gain) Loss Recognized on Income Statement
|
Derivatives in cash flow hedging relationships:
|
|
|
|
|
Net loss on cash flow hedging derivative instruments
|
|
$
|
2,959
|
|
|
Cost of goods sold
|
Tax benefit
|
|
(1,095
|
)
|
|
|
Net loss on derivative instruments, net of tax
|
|
$
|
1,864
|
|
|
|
|
|
|
|
|
Defined benefit pension costs:
|
|
|
|
|
Prior service costs and deferrals
|
|
$
|
440
|
|
|
Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 10
|
Tax benefit
|
|
(102
|
)
|
|
|
Net periodic benefit cost, net of tax
|
|
$
|
338
|
|
|
|
The following table presents reclassifications from AOCI during the
second
quarter ended
October 2, 2016
:
|
|
|
|
|
|
|
|
Components of AOCI
|
|
Amounts Reclassified from AOCI
|
|
Location of (Gain) Loss Recognized on Income Statement
|
Derivatives in cash flow hedging relationships:
|
|
|
|
|
Net gain on cash flow hedging derivative instruments
|
|
$
|
(171
|
)
|
|
Cost of goods sold
|
Tax expense
|
|
63
|
|
|
|
Net gain on derivative instruments, net of tax
|
|
$
|
(108
|
)
|
|
|
|
|
|
|
|
Defined benefit pension costs:
|
|
|
|
|
Prior service costs and deferrals
|
|
$
|
385
|
|
|
Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 10
|
Tax benefit
|
|
(117
|
)
|
|
|
Net periodic benefit cost, net of tax
|
|
$
|
268
|
|
|
|
The following table presents reclassifications from AOCI during the
six months
ended
October 1, 2017
:
|
|
|
|
|
|
|
|
Components of AOCI
|
|
Amounts Reclassified from AOCI
|
|
Location of (Gain) Loss Recognized on Income Statement
|
Derivatives in cash flow hedging relationships:
|
|
|
|
|
Net loss on cash flow hedging derivative instruments
|
|
$
|
992
|
|
|
Cost of goods sold
|
Tax benefit
|
|
(367
|
)
|
|
|
Net loss on derivative instruments, net of tax
|
|
$
|
625
|
|
|
|
|
|
|
|
|
Defined benefit pension costs:
|
|
|
|
|
Prior service costs and deferrals
|
|
$
|
870
|
|
|
Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 10
|
Tax benefit
|
|
(205
|
)
|
|
|
Net periodic benefit cost, net of tax
|
|
$
|
665
|
|
|
|
The following table presents reclassifications from AOCI during the
six months
ended
October 2, 2016
:
|
|
|
|
|
|
|
|
Components of AOCI
|
|
Amounts Reclassified from AOCI
|
|
Location of (Gain) Loss Recognized on Income Statement
|
Derivatives in cash flow hedging relationships:
|
|
|
|
|
Net gain on cash flow hedging derivative instruments
|
|
$
|
(1,050
|
)
|
|
Cost of goods sold
|
Tax expense
|
|
387
|
|
|
|
Net gain on derivative instruments, net of tax
|
|
$
|
(663
|
)
|
|
|
|
|
|
|
|
Defined benefit pension costs:
|
|
|
|
|
Prior service costs and deferrals
|
|
$
|
782
|
|
|
Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 10
|
Tax benefit
|
|
(233
|
)
|
|
|
Net periodic benefit cost, net of tax
|
|
$
|
549
|
|
|
|
The following demonstrates the change in equity attributable to EnerSys stockholders and nonredeemable noncontrolling interests during the
six months
ended
October 1, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to EnerSys Stockholders
|
|
Nonredeemable Noncontrolling Interests
|
|
Total Equity
|
Balance as of March 31, 2017
|
|
$
|
1,103,456
|
|
|
$
|
4,913
|
|
|
$
|
1,108,369
|
|
Total comprehensive income:
|
|
|
|
|
|
|
Net earnings
|
|
91,423
|
|
|
50
|
|
|
91,473
|
|
Net unrealized gain on derivative instruments, net of tax
|
|
616
|
|
|
—
|
|
|
616
|
|
Pension funded status adjustment, net of tax
|
|
665
|
|
|
—
|
|
|
665
|
|
Foreign currency translation adjustment
|
|
72,817
|
|
|
31
|
|
|
72,848
|
|
Total other comprehensive gain, net of tax
|
|
74,098
|
|
|
31
|
|
|
74,129
|
|
Total comprehensive income
|
|
165,521
|
|
|
81
|
|
|
165,602
|
|
Other changes in equity:
|
|
|
|
|
|
|
Purchase of treasury stock including ASR
|
|
(121,191
|
)
|
|
—
|
|
|
(121,191
|
)
|
Cash dividends - common stock ($0.35 per share)
|
|
(14,967
|
)
|
|
—
|
|
|
(14,967
|
)
|
Other, including activity related to equity awards
|
|
2,228
|
|
|
—
|
|
|
2,228
|
|
Balance as of October 1, 2017
|
|
$
|
1,135,047
|
|
|
$
|
4,994
|
|
|
$
|
1,140,041
|
|
13. Earnings Per Share
The following table sets forth the reconciliation from basic to diluted weighted-average number of common shares outstanding and the calculations of net earnings per common share attributable to EnerSys stockholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Six months ended
|
|
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
Net earnings attributable to EnerSys stockholders
|
|
$
|
43,222
|
|
|
$
|
45,636
|
|
|
$
|
91,423
|
|
|
$
|
90,209
|
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
42,938,131
|
|
|
43,426,955
|
|
|
43,194,107
|
|
|
43,348,449
|
|
Dilutive effect of:
|
|
|
|
|
|
|
|
|
Common shares from exercise and lapse of equity awards, net of shares assumed reacquired
|
|
389,230
|
|
|
522,588
|
|
|
551,111
|
|
|
541,229
|
|
Diluted weighted-average number of common shares outstanding
|
|
43,327,361
|
|
|
43,949,543
|
|
|
43,745,218
|
|
|
43,889,678
|
|
Basic earnings per common share attributable to EnerSys stockholders
|
|
$
|
1.01
|
|
|
$
|
1.05
|
|
|
$
|
2.12
|
|
|
$
|
2.08
|
|
Diluted earnings per common share attributable to EnerSys stockholders
|
|
$
|
1.00
|
|
|
$
|
1.04
|
|
|
$
|
2.09
|
|
|
$
|
2.06
|
|
Anti-dilutive equity awards not included in diluted weighted-average common shares
|
|
283,674
|
|
|
245,199
|
|
|
257,243
|
|
|
317,578
|
|
14. Business Segments
The Company has
three
reportable business segments based on geographic regions, defined as follows:
|
|
•
|
Americas
, which includes North and South America, with segment headquarters in Reading, Pennsylvania, USA;
|
|
|
•
|
EMEA
, which includes Europe, the Middle East and Africa, with segment headquarters in Zug, Switzerland; and
|
|
|
•
|
Asia
, which includes Asia, Australia and Oceania, with segment headquarters in Singapore.
|
Summarized financial information related to the Company's reportable segments for the
second
quarter and
six months
ended
October 1, 2017
and
October 2, 2016
is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Six months ended
|
|
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
Net sales by segment to unaffiliated customers
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
341,504
|
|
|
$
|
324,824
|
|
|
$
|
696,107
|
|
|
$
|
654,544
|
|
EMEA
|
|
197,856
|
|
|
180,566
|
|
|
396,933
|
|
|
377,696
|
|
Asia
|
|
77,929
|
|
|
70,658
|
|
|
146,874
|
|
|
144,411
|
|
Total net sales
|
|
$
|
617,289
|
|
|
$
|
576,048
|
|
|
$
|
1,239,914
|
|
|
$
|
1,176,651
|
|
Net sales by product line
|
|
|
|
|
|
|
|
|
Reserve power
|
|
$
|
292,238
|
|
|
$
|
277,449
|
|
|
$
|
597,415
|
|
|
$
|
573,490
|
|
Motive power
|
|
325,051
|
|
|
298,599
|
|
|
642,499
|
|
|
603,161
|
|
Total net sales
|
|
$
|
617,289
|
|
|
$
|
576,048
|
|
|
$
|
1,239,914
|
|
|
$
|
1,176,651
|
|
Intersegment sales
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
8,979
|
|
|
$
|
6,981
|
|
|
$
|
16,216
|
|
|
$
|
12,985
|
|
EMEA
|
|
38,563
|
|
|
21,937
|
|
|
67,380
|
|
|
44,100
|
|
Asia
|
|
5,178
|
|
|
8,088
|
|
|
10,311
|
|
|
11,785
|
|
Total intersegment sales
(1)
|
|
$
|
52,720
|
|
|
$
|
37,006
|
|
|
$
|
93,907
|
|
|
$
|
68,870
|
|
Operating earnings by segment
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
44,029
|
|
|
$
|
49,890
|
|
|
$
|
97,690
|
|
|
$
|
93,200
|
|
EMEA
|
|
17,555
|
|
|
16,997
|
|
|
31,094
|
|
|
36,833
|
|
Asia
|
|
4,182
|
|
|
3,574
|
|
|
7,426
|
|
|
7,757
|
|
Restructuring charges - Americas
|
|
(285
|
)
|
|
—
|
|
|
(285
|
)
|
|
(892
|
)
|
Inventory write-off relating to exit activities - EMEA
|
|
—
|
|
|
(2,659
|
)
|
|
—
|
|
|
(2,659
|
)
|
Restructuring charges - EMEA
|
|
(1,491
|
)
|
|
(4,547
|
)
|
|
(2,324
|
)
|
|
(4,816
|
)
|
Restructuring charges - Asia
|
|
—
|
|
|
(346
|
)
|
|
—
|
|
|
(482
|
)
|
Total operating earnings
(2)
|
|
$
|
63,990
|
|
|
$
|
62,909
|
|
|
$
|
133,601
|
|
|
$
|
128,941
|
|
(1
)
Intersegment sales are presented on a cost-plus basis, which takes into consideration the effect of transfer prices between legal entities.
(2
)
The Company does not allocate interest expense or other (income) expense to the reportable segments.
15. Subsequent Events
On November 2, 2017, the Board of Directors approved a quarterly cash dividend of
$0.175
per share of common stock to be paid on December 29, 2017, to stockholders of record as of December 15, 2017.
On November 8, 2017, the Company also announced the establishment of a new
$100,000
stock repurchase authorization, with no expiration
date. This authorization is in addition to the existing stock repurchase programs.