Document
false--03-31Q320180001289308Large Accelerated FilerENS12662000130320000.010.011350000001350000005437081054590184P1Y00.01100000010000000000P3YP3YP4Y12463367 0001289308 2017-04-01 2017-12-31 0001289308 2018-02-02 0001289308 2017-12-31 0001289308 2017-03-31 0001289308 2017-10-02 2017-12-31 0001289308 2016-10-03 2017-01-01 0001289308 2016-04-01 2017-01-01 0001289308 ens:TwoThousandAndSeventeenCreditFacilityMember 2017-04-01 2017-12-31 0001289308 ens:TwoThousandAndElevenCreditFacilityMember 2017-04-01 2017-12-31 0001289308 2016-03-31 0001289308 ens:TwoThousandAndSeventeenCreditFacilityMember 2016-04-01 2017-01-01 0001289308 ens:TwoThousandAndElevenCreditFacilityMember 2016-04-01 2017-01-01 0001289308 2017-01-01 0001289308 2016-04-01 2016-07-03 0001289308 us-gaap:FairValueInputsLevel2Member us-gaap:ForwardContractsMember 2017-03-31 0001289308 us-gaap:ForwardContractsMember 2017-03-31 0001289308 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeForwardMember 2017-03-31 0001289308 us-gaap:ForeignExchangeForwardMember 2017-03-31 0001289308 us-gaap:FairValueInputsLevel2Member 2017-03-31 0001289308 ens:SeniorUnsecuredFivePointZeroPercentageConvertibleNotesDueTwoThousandAndTwentyEightMember 2017-12-31 0001289308 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignExchangeForwardMember 2017-12-31 0001289308 us-gaap:FairValueInputsLevel2Member 2017-12-31 0001289308 us-gaap:ForwardContractsMember 2017-12-31 0001289308 us-gaap:FairValueInputsLevel2Member us-gaap:ForwardContractsMember 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember 2017-12-31 0001289308 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2017-12-31 0001289308 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2017-03-31 0001289308 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2017-03-31 0001289308 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember ens:OtherIncomeExpenseMember 2016-10-03 2017-01-01 0001289308 us-gaap:NondesignatedMember 2016-10-03 2017-01-01 0001289308 us-gaap:NondesignatedMember 2016-04-01 2017-01-01 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember ens:OtherIncomeExpenseMember 2016-04-01 2017-01-01 0001289308 us-gaap:NondesignatedMember 2017-04-01 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember ens:OtherIncomeExpenseMember 2017-04-01 2017-12-31 0001289308 us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2016-10-03 2017-01-01 0001289308 us-gaap:DesignatedAsHedgingInstrumentMember 2016-10-03 2017-01-01 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-10-03 2017-01-01 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2016-10-03 2017-01-01 0001289308 us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-10-03 2017-01-01 0001289308 us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0001289308 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-03-31 0001289308 us-gaap:NondesignatedMember 2017-03-31 0001289308 ens:PrepaidAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2017-12-31 0001289308 us-gaap:AccruedLiabilitiesMember us-gaap:NondesignatedMember 2017-03-31 0001289308 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2017-12-31 0001289308 us-gaap:AccruedLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0001289308 us-gaap:NondesignatedMember 2017-12-31 0001289308 ens:PrepaidAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-03-31 0001289308 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0001289308 us-gaap:AccruedLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-03-31 0001289308 ens:PrepaidAndOtherCurrentAssetsMember us-gaap:ForwardContractsMember us-gaap:NondesignatedMember 2017-03-31 0001289308 ens:PrepaidAndOtherCurrentAssetsMember us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0001289308 ens:PrepaidAndOtherCurrentAssetsMember us-gaap:ForwardContractsMember us-gaap:NondesignatedMember 2017-12-31 0001289308 ens:PrepaidAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0001289308 ens:PrepaidAndOtherCurrentAssetsMember us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-03-31 0001289308 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2017-03-31 0001289308 ens:PrepaidAndOtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2017-03-31 0001289308 us-gaap:DesignatedAsHedgingInstrumentMember 2017-03-31 0001289308 us-gaap:AccruedLiabilitiesMember us-gaap:NondesignatedMember 2017-12-31 0001289308 us-gaap:NondesignatedMember 2017-10-02 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember ens:OtherIncomeExpenseMember 2017-10-02 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2017-03-31 0001289308 us-gaap:CostOfSalesMember 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2017-12-31 0001289308 us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2016-04-01 2017-01-01 0001289308 us-gaap:DesignatedAsHedgingInstrumentMember 2016-04-01 2017-01-01 0001289308 us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-04-01 2017-01-01 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-04-01 2017-01-01 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2016-04-01 2017-01-01 0001289308 us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-10-02 2017-12-31 0001289308 us-gaap:DesignatedAsHedgingInstrumentMember 2017-10-02 2017-12-31 0001289308 us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2017-10-02 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2017-10-02 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-10-02 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-04-01 2017-12-31 0001289308 us-gaap:DesignatedAsHedgingInstrumentMember 2017-04-01 2017-12-31 0001289308 us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2017-04-01 2017-12-31 0001289308 us-gaap:ForwardContractsMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-04-01 2017-12-31 0001289308 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2017-04-01 2017-12-31 0001289308 us-gaap:ForwardContractsMember us-gaap:MaximumMember 2017-04-01 2017-12-31 0001289308 us-gaap:ScenarioForecastMember 2017-04-01 2018-03-31 0001289308 2017-10-01 0001289308 2016-10-02 0001289308 ens:BelgiumAntiCompetitionProceedingMember 2017-03-31 0001289308 ens:GermanyAnticompetitionProceedingsMember 2017-12-31 0001289308 ens:GermanyAnticompetitionProceedingsMember 2017-06-01 2017-06-30 0001289308 ens:DutchAntiCompetitionProceedingsMember 2017-03-31 0001289308 2016-04-01 2017-03-31 0001289308 ens:DutchAntiCompetitionProceedingsMember 2017-07-01 2017-07-31 0001289308 ens:BelgiumAntiCompetitionProceedingMember 2016-02-01 2016-02-29 0001289308 ens:GermanyAnticompetitionProceedingsMember 2017-03-31 0001289308 ens:DutchAntiCompetitionProceedingsMember 2017-12-31 0001289308 ens:BelgiumAntiCompetitionProceedingMember 2017-12-31 0001289308 ens:RestructuringsRelatedToImprovingEfficienciesofGeneralOperationsintheAmericasMember us-gaap:AmericasMember 2017-12-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyOfManufacturingOperationsInEmeaMember us-gaap:EMEAMember 2015-04-01 2016-03-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyOfManufacturingOperationsInEmeaMember us-gaap:EMEAMember 2017-04-01 2017-12-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyRelatedtoMotivePowerAssemblyandDistributionCenterMember us-gaap:EMEAMember 2016-04-01 2017-03-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyRelatedtoMotivePowerAssemblyandDistributionCenterMember us-gaap:EMEAMember 2017-04-01 2017-12-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyRelatedtoMotivePowerAssemblyandDistributionCenterMember us-gaap:EMEAMember 2017-12-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyOfManufacturingOperationsInEmeaMember us-gaap:EmployeeSeveranceMember us-gaap:EMEAMember 2017-10-02 2017-12-31 0001289308 ens:RestructuringsRelatedToManufacturingFacilityinJiangduMember us-gaap:AsiaMember 2016-04-01 2017-03-31 0001289308 ens:RestructuringsRelatedToManufacturingFacilityinJiangduMember us-gaap:AsiaMember 2017-04-01 2017-12-31 0001289308 us-gaap:FacilityClosingMember 2017-10-02 2017-12-31 0001289308 ens:RestructuringsRelatedToManufacturingFacilityinJiangduMember ens:CashChargesMember us-gaap:AsiaMember 2017-04-01 2017-07-02 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyRelatedToSupplyChainAndGeneralOperationsMember us-gaap:EMEAMember 2017-04-01 2017-12-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyRelatedToSupplyChainAndGeneralOperationsMember us-gaap:EMEAMember 2017-12-31 0001289308 ens:RestructuringsRelatedToImprovingEfficienciesofGeneralOperationsintheAmericasMember us-gaap:AmericasMember 2017-04-01 2017-12-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyOfManufacturingOperationsInEmeaMember us-gaap:EMEAMember 2016-04-01 2017-03-31 0001289308 ens:RestructuringsRelatedToImprovingEfficiencyOfManufacturingOperationsInEmeaMember us-gaap:EMEAMember 2017-10-02 2017-12-31 0001289308 us-gaap:OtherRestructuringMember 2017-04-01 2017-12-31 0001289308 us-gaap:OtherRestructuringMember 2017-12-31 0001289308 us-gaap:EmployeeSeveranceMember 2017-12-31 0001289308 us-gaap:OtherRestructuringMember 2017-03-31 0001289308 us-gaap:EmployeeSeveranceMember 2017-04-01 2017-12-31 0001289308 us-gaap:EmployeeSeveranceMember 2017-03-31 0001289308 us-gaap:SecuredDebtMember ens:IncrementalCommitmentAgreementMember ens:TwoThousandAndSeventeenCreditFacilityMember 2017-12-31 0001289308 ens:SeniorUnsecuredFivePointZeroPercentageConvertibleNotesDueTwoThousandAndTwentyEightMember 2017-03-31 0001289308 us-gaap:SecuredDebtMember ens:IncrementalCommitmentAgreementMember ens:TwoThousandAndSeventeenCreditFacilityMember 2017-03-31 0001289308 us-gaap:SecuredDebtMember ens:IncrementalCommitmentAgreementMember ens:TwoThousandAndElevenCreditFacilityMember 2017-03-31 0001289308 us-gaap:SecuredDebtMember ens:IncrementalCommitmentAgreementMember ens:TwoThousandAndElevenCreditFacilityMember 2017-12-31 0001289308 ens:TwoThousandAndElevenCreditFacilityMember us-gaap:SecuredDebtMember 2017-08-04 0001289308 ens:DebtInstrumentQuarterlyInstallmentsBeginningDecember312018ThroughDecember302019Member 2017-08-04 2017-08-04 0001289308 us-gaap:ConvertibleNotesPayableMember 2017-12-31 0001289308 us-gaap:ConvertibleNotesPayableMember 2017-03-31 0001289308 ens:SeniorUnsecuredFivePointZeroPercentageConvertibleNotesDueTwoThousandAndTwentyEightMember 2015-04-23 0001289308 us-gaap:RevolvingCreditFacilityMember ens:TwoThousandAndSeventeenCreditFacilityMember 2017-12-31 0001289308 2017-08-04 0001289308 ens:DebtInstrumentQuarterlyInstallmentsBeginningDecember312019ThroughDecember302020Member 2017-08-04 2017-08-04 0001289308 us-gaap:RevolvingCreditFacilityMember ens:TwoThousandAndElevenCreditFacilityMember 2017-08-03 0001289308 ens:TwoThousandAndSeventeenCreditFacilityMember us-gaap:SecuredDebtMember 2017-08-04 0001289308 2017-08-04 2017-08-04 0001289308 ens:A2017RevolverAnd2017TermLoanMember us-gaap:LondonInterbankOfferedRateLIBORMember 2017-08-04 2017-08-04 0001289308 ens:DebtInstrumentFinalInstallmentsPayableOnSeptember302022Member 2017-08-04 2017-08-04 0001289308 us-gaap:RevolvingCreditFacilityMember ens:TwoThousandAndElevenCreditFacilityMember 2017-08-04 0001289308 ens:TwoThousandAndElevenCreditFacilityMember us-gaap:SecuredDebtMember 2017-08-03 0001289308 ens:A2017RevolverAnd2017TermLoanMember us-gaap:MinimumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2017-08-04 2017-08-04 0001289308 us-gaap:RevolvingCreditFacilityMember ens:TwoThousandAndSeventeenCreditFacilityMember 2017-08-04 0001289308 ens:TwoThousandAndSeventeenCreditFacilityMember us-gaap:SecuredDebtMember 2017-12-31 0001289308 ens:A2017RevolverAnd2017TermLoanMember us-gaap:EurodollarMember 2017-08-04 2017-08-04 0001289308 ens:A2017RevolverAnd2017TermLoanMember us-gaap:MaximumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2017-08-04 2017-08-04 0001289308 ens:DebtInstrumentQuarterlyInstallmentsBeginningDecember312020ThroughSeptember292022Member 2017-08-04 2017-08-04 0001289308 ens:A2017RevolverAnd2017TermLoanMember us-gaap:FederalFundsEffectiveSwapRateMember 2017-08-04 2017-08-04 0001289308 us-gaap:ForeignPensionPlansDefinedBenefitMember 2017-04-01 2017-12-31 0001289308 us-gaap:ForeignPensionPlansDefinedBenefitMember 2016-04-01 2017-01-01 0001289308 us-gaap:UnitedStatesPensionPlansOfUSEntityDefinedBenefitMember 2016-04-01 2017-01-01 0001289308 us-gaap:UnitedStatesPensionPlansOfUSEntityDefinedBenefitMember 2017-04-01 2017-12-31 0001289308 us-gaap:ForeignPensionPlansDefinedBenefitMember 2016-10-03 2017-01-01 0001289308 us-gaap:UnitedStatesPensionPlansOfUSEntityDefinedBenefitMember 2017-10-02 2017-12-31 0001289308 us-gaap:ForeignPensionPlansDefinedBenefitMember 2017-10-02 2017-12-31 0001289308 us-gaap:UnitedStatesPensionPlansOfUSEntityDefinedBenefitMember 2016-10-03 2017-01-01 0001289308 ens:NonqualifiedStockOptionsMember 2017-12-31 0001289308 ens:NonqualifiedStockOptionsMember us-gaap:ManagementMember 2017-04-01 2017-12-31 0001289308 us-gaap:RestrictedStockUnitsRSUMember 2017-04-01 2017-12-31 0001289308 us-gaap:RestrictedStockUnitsRSUMember us-gaap:ManagementMember 2017-04-01 2017-12-31 0001289308 us-gaap:RestrictedStockUnitsRSUMember 2017-12-31 0001289308 us-gaap:PerformanceSharesMember 2017-04-01 2017-12-31 0001289308 us-gaap:PerformanceSharesMember 2017-12-31 0001289308 us-gaap:RestrictedStockUnitsRSUMember ens:NonemployeeDirectorsMember 2017-04-01 2017-12-31 0001289308 us-gaap:PerformanceSharesMember us-gaap:ManagementMember 2017-04-01 2017-12-31 0001289308 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-10-02 2017-12-31 0001289308 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2017-10-02 2017-12-31 0001289308 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-10-02 2017-12-31 0001289308 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-03-31 0001289308 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-31 0001289308 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-04-01 2017-12-31 0001289308 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2017-03-31 0001289308 us-gaap:AccumulatedTranslationAdjustmentMember 2017-04-01 2017-12-31 0001289308 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0001289308 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-04-01 2017-12-31 0001289308 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2017-04-01 2017-12-31 0001289308 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-12-31 0001289308 us-gaap:AccumulatedTranslationAdjustmentMember 2017-03-31 0001289308 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-03-31 0001289308 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2017-12-31 0001289308 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2016-04-01 2017-01-01 0001289308 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2016-04-01 2017-01-01 0001289308 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2016-04-01 2017-01-01 0001289308 ens:AcceleratedShareRepurchaseAgreementMember 2017-10-02 2017-12-31 0001289308 ens:OpenMarketPurchaseMember 2017-04-01 2017-12-31 0001289308 ens:AcceleratedShareRepurchaseAgreementMember 2017-12-31 0001289308 ens:AcceleratedShareRepurchaseAgreementMember 2017-04-01 2017-12-31 0001289308 ens:AcceleratedShareRepurchaseAgreementMember us-gaap:SubsequentEventMember 2018-01-09 2018-01-09 0001289308 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2017-04-01 2017-12-31 0001289308 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-04-01 2017-12-31 0001289308 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2016-10-03 2017-01-01 0001289308 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2016-10-03 2017-01-01 0001289308 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2016-10-03 2017-01-01 0001289308 us-gaap:ParentMember 2017-12-31 0001289308 us-gaap:ParentMember 2017-04-01 2017-12-31 0001289308 ens:RedeemableNoncontrollingInterestMember 2017-04-01 2017-12-31 0001289308 ens:RedeemableNoncontrollingInterestMember 2017-03-31 0001289308 us-gaap:ParentMember 2017-03-31 0001289308 ens:NonredeemableNoncontrollingInterestMember 2017-04-01 2017-12-31 0001289308 ens:NonredeemableNoncontrollingInterestMember 2017-12-31 0001289308 ens:NonredeemableNoncontrollingInterestMember 2017-03-31 0001289308 ens:RedeemableNoncontrollingInterestMember 2017-12-31 0001289308 us-gaap:EuropeMember 2017-04-01 2017-12-31 0001289308 us-gaap:EuropeMember 2017-10-02 2017-12-31 0001289308 us-gaap:AmericasMember 2017-04-01 2017-12-31 0001289308 us-gaap:AsiaMember 2016-10-03 2017-01-01 0001289308 us-gaap:AmericasMember 2016-04-01 2017-01-01 0001289308 us-gaap:AmericasMember 2016-10-03 2017-01-01 0001289308 us-gaap:AsiaMember 2016-04-01 2017-01-01 0001289308 ens:ReservePowerMember 2016-04-01 2017-01-01 0001289308 us-gaap:EuropeMember 2016-10-03 2017-01-01 0001289308 us-gaap:AsiaMember 2017-04-01 2017-12-31 0001289308 ens:MotivePowerMember 2017-04-01 2017-12-31 0001289308 ens:MotivePowerMember 2016-04-01 2017-01-01 0001289308 ens:ReservePowerMember 2017-04-01 2017-12-31 0001289308 ens:ReservePowerMember 2017-10-02 2017-12-31 0001289308 us-gaap:AsiaMember 2017-10-02 2017-12-31 0001289308 us-gaap:AmericasMember 2017-10-02 2017-12-31 0001289308 us-gaap:EuropeMember 2016-04-01 2017-01-01 0001289308 ens:ReservePowerMember 2016-10-03 2017-01-01 0001289308 ens:MotivePowerMember 2017-10-02 2017-12-31 0001289308 ens:MotivePowerMember 2016-10-03 2017-01-01 0001289308 ens:AcceleratedShareRepurchaseAgreementMember us-gaap:SubsequentEventMember 2018-01-01 2018-01-09 0001289308 ens:AcceleratedShareRepurchaseAgreementMember us-gaap:SubsequentEventMember 2018-01-09 0001289308 us-gaap:SubsequentEventMember 2018-02-07 2018-02-07 iso4217:USD xbrli:shares xbrli:shares xbrli:pure iso4217:USD ens:Employee utreg:lb ens:segment
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
FORM 10-Q
 
 
 
 

(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2017
 
¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     
Commission File Number: 001-32253 
 
 
 
 EnerSys
(Exact name of registrant as specified in its charter) 
 
 
 
Delaware
 
23-3058564
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)

2366 Bernville Road

Reading, Pennsylvania 19605

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 610-208-1991 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  YES    ¨  NO.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 Securities Exchange Act of 1934. 

Large accelerated filer
 
ý
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨ (Do not check if a smaller reporting company)
  
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.   ¨


1

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    ¨  YES    ý  NO.

Common Stock outstanding at February 2, 2018: 41,910,079 shares

2

ENERSYS
INDEX – FORM 10-Q
 
 
 
 
Page
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
Item 3.
 
 
 
 
Item 4.
 
 
 
 
 
 
 
Item 1.
 
 
 
 
Item 1A.
 
 
 
 
Item 2.
 
 
 
 
Item 4.
 
 
 
 
Item 6.
 
 

 

3
Table of Contents

PART I –
FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS

ENERSYS
Consolidated Condensed Balance Sheets (Unaudited)
(In Thousands, Except Share and Per Share Data) 
 
 
December 31, 2017
 
March 31, 2017
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
571,322

 
$
500,329

Accounts receivable, net of allowance for doubtful accounts: December 31, 2017 - $13,032; March 31, 2017 - $12,662
 
494,934

 
486,646

Inventories, net
 
421,970

 
360,694

Prepaid and other current assets
 
73,588

 
71,246

Total current assets
 
1,561,814

 
1,418,915

Property, plant, and equipment, net
 
374,736

 
348,549

Goodwill
 
348,878

 
328,657

Other intangible assets, net
 
149,368

 
153,960

Deferred taxes
 
34,730

 
31,587

Other assets
 
12,476

 
11,361

Total assets
 
$
2,482,002

 
$
2,293,029

Liabilities and Equity
 
 
 
 
Current liabilities:
 
 
 
 
Short-term debt
 
$
16,842

 
$
18,359

Accounts payable
 
227,294

 
222,493

Accrued expenses
 
206,032

 
226,579

Total current liabilities
 
450,168

 
467,431

Long-term debt, net of unamortized debt issuance costs
 
689,021

 
587,609

Deferred taxes
 
39,670

 
45,923

Other liabilities
 
177,169

 
83,697

Total liabilities
 
1,356,028

 
1,184,660

Commitments and contingencies
 


 


Equity:
 
 
 
 
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding at December 31, 2017 and at March 31, 2017
 
—

 
—

Common Stock, $0.01 par value per share, 135,000,000 shares authorized; 54,590,184 shares issued and 42,126,817 shares outstanding at December 31, 2017; 54,370,810 shares issued and 43,447,536 shares outstanding at March 31, 2017
 
546

 
544

Additional paid-in capital
 
452,248

 
464,092

Treasury stock, at cost, 12,463,367 shares held as of December 31, 2017; 10,923,274 shares held as of March 31, 2017
 
(540,991
)
 
(439,800
)
Retained earnings
 
1,274,038

 
1,231,444

Accumulated other comprehensive loss
 
(65,017
)
 
(152,824
)
Total EnerSys stockholders’ equity
 
1,120,824

 
1,103,456

Nonredeemable noncontrolling interests
 
5,150

 
4,913

Total equity
 
1,125,974

 
1,108,369

Total liabilities and equity
 
$
2,482,002

 
$
2,293,029

See accompanying notes.

4
Table of Contents
ENERSYS
Consolidated Condensed Statements of Income (Unaudited)
(In Thousands, Except Share and Per Share Data)

 
 
Quarter ended
 
 
December 31, 2017
 
January 1, 2017
Net sales
 
$
658,935

 
$
563,697

Cost of goods sold
 
491,970

 
408,315

Inventory adjustment relating to exit activities
 
—

 
(502
)
Gross profit
 
166,965

 
155,884

Operating expenses
 
96,717

 
85,014

Restructuring charges and other exit charges (credits)
 
1,808

 
(1,153
)
Legal proceedings charge
 
—

 
17,000

Operating earnings
 
68,440

 
55,023

Interest expense
 
6,469

 
5,646

Other (income) expense, net
 
(557
)
 
(1,247
)
Earnings before income taxes
 
62,528

 
50,624

Income tax expense
 
88,307

 
13,529

Net (loss) earnings
 
(25,779
)
 
37,095

Net earnings attributable to noncontrolling interests
 
68

 
860

Net (loss) earnings attributable to EnerSys stockholders
 
$
(25,847
)
 
$
36,235

Net (loss) earnings per common share attributable to EnerSys stockholders:
 
 
 
 
Basic
 
$
(0.61
)
 
$
0.83

Diluted
 
$
(0.61
)
 
$
0.82

Dividends per common share
 
$
0.175

 
$
0.175

Weighted-average number of common shares outstanding:
 
 
 
 
Basic
 
42,125,745

 
43,429,525

Diluted
 
42,125,745

 
44,049,674

See accompanying notes.

5
Table of Contents
ENERSYS
Consolidated Condensed Statements of Income (Unaudited)
(In Thousands, Except Share and Per Share Data)

 
 
Nine months ended
 
 
December 31, 2017
 
January 1, 2017
Net sales
 
$
1,898,849

 
$
1,740,348

Cost of goods sold
 
1,408,913

 
1,254,678

Inventory adjustment relating to exit activities
 
—

 
2,157

Gross profit
 
489,936

 
483,513

Operating expenses
 
283,478

 
277,512

Restructuring charges
 
4,417

 
5,037

Legal proceedings charge
 
—

 
17,000

Operating earnings
 
202,041

 
183,964

Interest expense
 
18,712

 
16,820

Other (income) expense, net
 
4,736

 
(496
)
Earnings before income taxes
 
178,593

 
167,640

Income tax expense
 
112,899

 
43,133

Net earnings
 
65,694

 
124,507

Net earnings (losses) attributable to noncontrolling interests
 
118

 
(1,937
)
Net earnings attributable to EnerSys stockholders
 
$
65,576

 
$
126,444

Net earnings per common share attributable to EnerSys stockholders:
 
 
 
 
Basic
 
$
1.53

 
$
2.92

Diluted
 
$
1.51

 
$
2.88

Dividends per common share
 
$
0.525

 
$
0.525

Weighted-average number of common shares outstanding:
 
 
 
 
Basic
 
42,837,986

 
43,375,474

Diluted
 
43,345,926

 
43,943,010

See accompanying notes.

6
Table of Contents
ENERSYS
Consolidated Condensed Statements of Comprehensive Income (Unaudited)
(In Thousands)

 
 
Quarter ended
 
Nine months ended
 
 
December 31, 2017
 
January 1, 2017
 
December 31, 2017
 
January 1, 2017
Net (loss) earnings
 
$
(25,779
)
 
$
37,095

 
$
65,694

 
$
124,507

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Net unrealized (loss) gain on derivative instruments, net of tax
 
(587
)
 
(2,017
)
 
29

 
411

Pension funded status adjustment, net of tax
 
331

 
198

 
996

 
747

Foreign currency translation adjustment
 
14,053

 
(52,754
)
 
86,901

 
(74,922
)
Total other comprehensive gain (loss), net of tax
 
13,797

 
(54,573
)
 
87,926

 
(73,764
)
Total comprehensive (loss) income
 
(11,982
)
 
(17,478
)
 
153,620

 
50,743

Comprehensive income (loss) attributable to noncontrolling interests
 
156

 
648

 
237

 
(2,343
)
Comprehensive (loss) income attributable to EnerSys stockholders
 
$
(12,138
)
 
$
(18,126
)
 
$
153,383

 
$
53,086

See accompanying notes.


7
Table of Contents
ENERSYS
Consolidated Condensed Statements of Cash Flows (Unaudited)
(In Thousands)

 
 
Nine months ended
 
 
December 31, 2017
 
January 1, 2017
Cash flows from operating activities
 
 
 
 
Net earnings
 
$
65,694

 
$
124,507

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
40,320

 
40,468

Write-off of assets relating to restructuring charges
 
210

 
1,435

Non-cash write-off of property, plant and equipment
 
—

 
6,300

Derivatives not designated in hedging relationships:
 
 
 
 
Net (gains) losses
 
(105
)
 
202

Cash settlements
 
(234
)
 
(646
)
Provision for doubtful accounts
 
775

 
1,952

Deferred income taxes
 
(7,228
)
 
(683
)
Non-cash interest expense
 
1,289

 
1,041

Stock-based compensation
 
14,773

 
14,556

Loss (gain) on disposal of property, plant, and equipment
 
69

 
(10
)
Legal proceedings accrual
 
—

 
17,000

Changes in assets and liabilities, net of effects of acquisitions:
 
 
 
 
Accounts receivable
 
12,987

 
22,843

Inventories
 
(44,389
)
 
(55,888
)
Prepaid and other current assets
 
(1,241
)
 
(11,545
)
Other assets
 
(1,142
)
 
857

Accounts payable
 
(10,619
)
 
(14,701
)
Accrued expenses
 
(30,485
)
 
13,856

Other liabilities
 
89,228

 
5,163

Net cash provided by operating activities
 
129,902

 
166,707

 
 
 
 
 
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(43,086
)
 
(36,008
)
Purchase of businesses
 
(2,964
)
 
(12,392
)
Proceeds from disposal of property, plant, and equipment
 
395

 
568

Net cash used in investing activities
 
(45,655
)
 
(47,832
)
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
Net (payments) borrowings on short-term debt
 
(1,376
)
 
13,639

Proceeds from 2017 Revolver borrowings
 
356,750

 
—

Proceeds from 2011 Revolver borrowings
 
147,050

 
191,300

Repayments of 2017 Revolver borrowings
 
(111,450
)
 
—

Repayments of 2011 Revolver borrowings
 
(312,050
)
 
(186,750
)
Proceeds from 2017 Term Loan
 
150,000

 
—

Repayments of 2011 Term Loan
 
(127,500
)
 
(11,250
)
Debt issuance costs
 
(2,677
)
 
—

Option proceeds
 
758

 
5

Payment of taxes related to net share settlement of equity awards
 
(7,477
)
 
(7,668
)
Purchase of treasury stock
 
(121,191
)
 
—

Dividends paid to stockholders
 
(22,339
)
 
(22,800
)
Other
 
(19
)
 
(77
)
Net cash used in financing activities
 
(51,521
)
 
(23,601
)
Effect of exchange rate changes on cash and cash equivalents
 
38,267

 
(25,432
)
Net increase in cash and cash equivalents
 
70,993

 
69,842

Cash and cash equivalents at beginning of period
 
500,329

 
397,307

Cash and cash equivalents at end of period
 
$
571,322

 
$
467,149

See accompanying notes.

8
Table of Contents

ENERSYS
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, unless otherwise disclosed. Operating results for the three and nine-month periods ended December 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending 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 this guidance. The Company plans to apply the modified retrospective transition method. The Company assembled an implementation work team to assess and document the accounting conclusions for the adoption of ASU 2014-09. Based on this analysis, the Company does not believe the adoption of the ASU will have a material impact to the consolidated financial statements. The Company continues to assess the potential impact on accounting policies, internal control processes and related disclosures required under the new guidance.

In February 2016, the FASB issued ASU No. 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 No. 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

9
Table of Contents

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 No. 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:
 
 
December 31, 2017
 
March 31, 2017
Raw materials
 
$
96,666

 
$
85,604

Work-in-process
 
138,540

 
107,177

Finished goods
 
186,764

 
167,913

Total
 
$
421,970

 
$
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 December 31, 2017 and March 31, 2017, and the basis for that measurement:
 
 
 
Total Fair Value Measurement December 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
 
$
47

 
$
—

 
$
47

 
$
—

Foreign currency forward contracts
 
(266
)
 
—

 
(266
)
 
—

Total derivatives
 
$
(219
)
 
$
—

 
$
(219
)
 
$
—

 
 
 
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 (each 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.


10
Table of Contents

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 December 31, 2017 and March 31, 2017, respectively.

The carrying amounts and estimated fair values of the Company’s derivatives and Notes at December 31, 2017 and March 31, 2017 were as follows:

 
 
December 31, 2017
 
 
 
March 31, 2017
 
 
 
 
Carrying
Amount
 
 
 
Fair Value
 
 
 
Carrying
Amount
 
 
 
Fair Value
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives (1)
 
$
47

 
  
 
$
47

 
  
 
$
1,163

 
  
 
$
1,163

 
  
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Notes (2)
 
$
300,000

 
 
 
$
313,500

 

 
$
300,000

 
 
 
$
303,000

 
 
Derivatives (1)
 
266

 
  
 
266

 
  
 
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 December 31, 2017 and March 31, 2017).
(2)
The fair value amount of the Notes at December 31, 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 December 31, 2017 and March 31, 2017, the Company has hedged the price to purchase approximately 54.0 million pounds and 45.0 million pounds of lead, respectively, for a total purchase price of $60,849 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 December 31, 2017 and March 31, 2017, the Company had entered into a total of $52,801 and $30,751, respectively, of such contracts.

In the coming twelve months, the Company anticipates that $3,133 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 Statements 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 December 31, 2017 and March 31, 2017, the notional amount of these contracts was $24,132 and $13,560, respectively.


11
Table of Contents

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
December 31, 2017 and March 31, 2017
 
 
 
Derivatives and Hedging Activities Designated as Cash Flow Hedges
 
Derivatives and Hedging Activities Not Designated as Hedging Instruments
 
 
December 31, 2017
 
March 31, 2017
 
December 31, 2017
 
March 31, 2017
Prepaid and other current assets
 
 
 
 
 
 
 
 
Lead forward contracts
 
$
47

 
$
1,163

 
$
—

 
$
—

Foreign currency forward contracts
 
—

 
11

 
14

 
—

Total assets
 
$
47

 
$
1,174

 
$
14

 
$
—

Accrued expenses
 
 
 
 
 
 
 
 
Foreign currency forward contracts
 
$
280

 
$
—

 
$
—

 
$
324

Total liabilities
 
$
280

 
$
—

 
$
—

 
$
324




The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the quarter ended December 31, 2017
Derivatives Designated as Cash Flow Hedges
 
Pretax Gain (Loss) Recognized in AOCI on Derivatives (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
 
$
(396
)
 
Cost of goods sold
 
$
2,266

Foreign currency forward contracts
 
(87
)
 
Cost of goods sold
 
(1,811
)
Total
 
$
(483
)
 
 
 
$
455

Derivatives Not Designated as Hedging Instruments
Location of Gain (Loss) Recognized in Income on Derivatives
 
Pretax Gain (Loss)
Foreign currency forward contracts
Other (income) expense, net
 
$
93

Total
 
 
$
93



The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the quarter ended January 1, 2017
Derivatives Designated as Cash Flow Hedges
 
Pretax Gain (Loss) Recognized in AOCI on Derivatives (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
 
$
(2,362
)
 
Cost of goods sold
 
$
1,524

Foreign currency forward contracts
 
595

 
Cost of goods sold
 
(93
)
Total
 
$
(1,767
)
 
 
 
$
1,431

Derivatives Not Designated as Hedging Instruments
Location of Gain (Loss) Recognized in Income on Derivatives
 
Pretax Gain (Loss)
Foreign currency forward contracts
Other (income) expense, net
 
$
(25
)
Total
 
 
$
(25
)


12
Table of Contents


The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the nine months ended December 31, 2017

Derivatives Designated as Cash Flow Hedges
 
Pretax Gain (Loss) Recognized in AOCI on Derivatives (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
 
$
2,686

 
Cost of goods sold
 
$
2,177

Foreign currency forward contracts
 
(3,175
)
 
Cost of goods sold
 
(2,714
)
Total
 
$
(489
)
 
 
 
$
(537
)
Derivatives Not Designated as Hedging Instruments
Location of Gain (Loss) Recognized in Income on Derivatives
 
Pretax Gain (Loss)
Foreign currency forward contracts
Other (income) expense, net
 
$
105

Total
 
 
$
105


The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the nine months ended January 1, 2017

Derivatives Designated as Cash Flow Hedges
 
Pretax Gain (Loss) Recognized in AOCI on Derivatives (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
 
$
2,258

 
Cost of goods sold
 
$
2,800

Foreign currency forward contracts
 
873

 
Cost of goods sold
 
(319
)
Total
 
$
3,131

 
 
 
$
2,481


Derivatives Not Designated as Hedging Instruments
Location of Gain (Loss) Recognized in Income on Derivatives
 
Pretax Gain (Loss)
Foreign currency forward contracts
Other (income) expense, net
 
$
(202
)
Total
 
 
$
(202
)



5. Income Taxes

The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provision for the third 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, change in tax laws and the amount of the Company's consolidated income before taxes.

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. Among the significant changes resulting from the law, the Tax Act reduces the U.S. federal income tax rate from 35% to 21% effective January 1, 2018, and requires companies to pay a one-time transition tax on unrepatriated cumulative non-U.S. earnings of foreign subsidiaries and creates new taxes on certain foreign sourced earnings. In accordance with ASC 740, “Income Taxes,” the Company is required to record the effects of tax law changes in the period enacted. The rate change is administratively effective at the beginning of the Company's fiscal year, using a blended rate for the annual period. As a result, the Company's blended U.S. statutory tax rate for fiscal 2018 is 31.5%.

As of December 31, 2017, the Company has not completed its accounting for the tax effects of enactment of the Tax Act; however, in certain cases, as described below, the Company made a reasonable estimate of the effects on its existing deferred tax balances and the one-time transition tax. The Company's results for the three and nine months ended December 31, 2017, contain estimates of the impact of the Tax Act as permitted by Staff Accounting Bulletin 118 “SAB 118” issued by the Securities and Exchange Commission on December 22, 2017. These amounts are considered provisional and may be affected by future guidance if and when issued.

As a result of the Tax Act, the third quarter fiscal 2018 financial statements include a provisional net tax expense of $77,347 which is comprised of the following:


13
Table of Contents

Foreign tax effects: The one-time transition tax is based on the Company's total post-1986 earnings and profits (E&P) that was previously deferred from U.S. income taxes. The Company recorded a provisional amount for a one-time transition tax liability for its foreign subsidiaries, resulting in an increase in income tax expense of $94,000. The estimated transition tax of $94,000 is recorded under current income tax payable and non-current income tax payable, at $7,520 and $86,480, respectively, and is payable over eight years. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes both the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations.

Deferred tax assets and liabilities: The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the Company is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or give rise to new deferred tax amounts. The provisional amount recorded, related to the remeasurement of the Company's deferred tax balance was a tax benefit of $14,706.

Finally, the Company recorded a provisional tax benefit of $1,947 related to the reduction of the fiscal 2018 federal tax rate to 31.5%.

In all cases, the Company may adjust these provisional amounts which could potentially affect the measurement and impact on tax expense as the Company refines its calculations within a reasonable period not to exceed one year from the enactment date.

The consolidated effective income tax rates for the third quarters of fiscal 2018 and 2017 were 141.2% and 26.7%, respectively, and for the nine months of fiscal 2018 and 2017 were 63.2% and 25.7%, respectively. The rate increase in the third quarter and nine months of fiscal 2018 compared to the comparable prior year periods of fiscal 2017 is primarily due to the impact of the Tax Act in the third quarter of fiscal 2018, offset by the German regulatory proceedings charge of $17,000 (with no associated tax benefit) recorded in the third quarter of fiscal 2017 and changes in the mix of earnings among tax jurisdictions.

Foreign income as a percentage of worldwide income is estimated to be 64% for fiscal 2018 compared to 60% for fiscal 2017. The foreign effective income tax rates for the nine months of fiscal 2018 and 2017 were 11.4% and 15.9%, respectively. The rate decrease compared to the prior year period is primarily due to the German regulatory proceedings charge of $17,000 (with no associated tax benefit) recorded in the third quarter of fiscal 2017 and 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 ultimately differ from amounts provided. An analysis of changes in the liability for product warranties is as follows:

 
 
Quarter ended
 
Nine months ended
 
 
December 31, 2017
 
January 1, 2017
 
December 31, 2017
 
January 1, 2017
Balance at beginning of period
 
$
47,113

 
$
48,112

 
$
46,116

 
$
48,422

Current period provisions
 
6,204

 
4,085

 
13,012

 
14,932

Costs incurred
 
(3,843
)
 
(4,250
)
 
(10,880
)
 
(12,492
)
Foreign currency translation adjustment
 
23

 
(1,720
)
 
1,249

 
(4,635
)
Balance at end of period
 
$
49,497

 
$
46,227

 
$
49,497

 
$
46,227




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

14
Table of Contents

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 December 31, 2017 and March 31, 2017, the Company had a reserve balance of $2,058 and $1,830, respectively, relating to certain ancillary matters associated with the Belgian regulatory proceeding. The change in the reserve balance between December 31, 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 in July 2017. As of December 31, 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 in August 2017. As of December 31, 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 December 31, 2017 and March 31, 2017, the Company had a total reserve balance of $2,058 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 December 31, 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 program was completed during the third quarter of fiscal 2018. Total charges for this program were $6,568 primarily for cash expenses of $6,161 for employee severance-related payments of approximately 130 employees and other charges of $407. 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 nine months of fiscal 2018, the Company recorded restructuring charges of $85 and incurred $499 against the accrual.

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 $4,700, 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

15
Table of Contents

in costs against the accrual. During the nine months of fiscal 2018, the Company recorded restructuring charges of $1,610 and incurred $1,725 against the accrual. As of December 31, 2017, the reserve balance associated with these actions is $2,406. The Company does not expect to be committed to additional restructuring charges related to this action, which is expected to be completed in fiscal 2019.

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 nine 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 $3,400, 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 50 employees upon completion. During the nine months of fiscal 2018, the Company recorded restructuring charges of $1,477 and incurred $1,069 in costs against the accrual. As of December 31, 2017, the reserve balance associated with these actions is $406. The Company expects to be committed to an additional $1,900 in restructuring charges related to this action, which it expects to complete in fiscal 2019.

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.

During fiscal 2018, the Company announced a restructuring program to improve efficiencies of its general operations in the Americas. The Company estimates that the total charges for these actions will amount to approximately $1,000, from cash charges for employee severance-related payments to approximately 60 salaried employees. During the nine months of fiscal 2018, the Company recorded restructuring charges of $960 and incurred $386 in costs against the accrual. As of December 31, 2017, the reserve balance associated with this action is $574. The Company expects to complete this action in fiscal 2019.

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
 
3,890

 
317

 
4,207

Costs incurred
 
(3,421
)
 
(462
)
 
(3,883
)
Foreign currency impact
 
249

 
1

 
250

Balance as of December 31, 2017
 
$
3,386

 
$
—

 
$
3,386



16
Table of Contents

9. Debt

The following summarizes the Company’s long-term debt as of December 31, 2017 and March 31, 2017:
 
 
 
December 31, 2017
 
March 31, 2017
 
 
Principal
 
Unamortized Issuance Costs
 
Principal
 
Unamortized Issuance Costs
5.00% Senior Notes due 2023
 
$
300,000

 
$
3,278

 
$
300,000

 
$
3,746

2017 Credit Facility, due 2022
 
395,300

 
3,001

 
—

 
—

2011 Credit Facility, due 2018
 
—

 
—

 
292,500

 
1,145

 
 
$
695,300

 
$
6,279

 
$
592,500

 
$
4,891

Less: Unamortized issuance costs
 
6,279

 
 
 
4,891

 
 
Long-term debt, net of unamortized issuance costs
 
$
689,021

 
 
 
$
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 December 31, 2017, the Company had $245,300 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.

The current portion of the 2017 Term Loan of $1,875 is classified as long-term debt as the Company expects to refinance the future quarterly payments with revolver borrowings under its 2017 Credit Facility.

Short-Term Debt

As of December 31, 2017 and March 31, 2017, the Company had $16,842 and $18,359, respectively, of short-term borrowings. The weighted-average interest rate on these borrowings was approximately 8% and 7% at December 31, 2017 and March 31, 2017, respectively.

Letters of Credit

As of December 31, 2017 and March 31, 2017, the Company had $3,074 and $2,189, respectively, of standby letters of credit.


17
Table of Contents

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 $314 and $347, respectively, for the quarters ended December 31, 2017 and January 1, 2017 and $988 and $1,041, respectively, for the nine months ended December 31, 2017 and January 1, 2017. Debt issuance costs, net of accumulated amortization, totaled $6,279 and $4,891, respectively, at December 31, 2017 and March 31, 2017.

Available Lines of Credit

As of December 31, 2017 and March 31, 2017, the Company had available and undrawn, under all its lines of credit, $503,807 and $475,947, respectively, including $150,832 and $142,872, respectively, of uncommitted lines of credit as of December 31, 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
December 31, 2017
 
January 1, 2017
 
December 31, 2017
 
January 1, 2017
Service cost
 
$
—

 
$
96

 
$
257

 
$
212

Interest cost
 
159

 
158

 
449

 
441

Expected return on plan assets
 
(132
)
 
(204
)
 
(565
)
 
(442
)
Amortization and deferral
 
69

 
76

 
365

 
238

Net periodic benefit cost
 
$
96

 
$
126

 
$
506

 
$
449


 
 
United States Plans
 
International Plans
Nine months ended
 
Nine months ended
December 31, 2017
 
January 1, 2017
 
December 31, 2017
 
January 1, 2017
Service cost
 
$
—

 
$
278

 
$
756

 
$
658

Interest cost
 
493

 
498

 
1,325

 
1,402

Expected return on plan assets
 
(372
)
 
(612
)
 
(1,670
)
 
(1,424
)
Amortization and deferral
 
228

 
340

 
1,076

 
756

Net periodic benefit cost
 
$
349

 
$
504

 
$
1,487

 
$
1,392



11. Stock-Based Compensation

As of December 31, 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 $5,250 for the third quarter of fiscal 2018 and $4,699 for the third quarter of fiscal 2017. Stock-based compensation expense was $14,773 for the nine months of fiscal 2018 and $14,556 for the nine months of fiscal 2017. The Company recognizes compensation expense using the straight-line method over the vesting period of the awards.

During the nine months of fiscal 2018, the Company granted to non-employee directors 32,551 restricted stock units, pursuant to the 2017 EIP.

During the nine 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 nine months of fiscal 2018 included the vesting of 149,458 restricted stock units and 142,426 market condition-based share units and the exercise of 58,595 stock options.

As of December 31, 2017, there were 549,192 non-qualified stock options, 635,712 restricted stock units and 349,078 market condition-based share units outstanding.


18