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FORM 10-K
|
ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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CSW INDUSTRIALS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
|
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47-2266942
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(state or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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|
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5420 Lyndon B. Johnson Freeway, Suite 500, Dallas, Texas
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75240
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(Address of principal executive offices)
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(zip code)
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Title of each class
|
|
Name of each exchange on which registered
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Common Stock, par value $0.01 per share
|
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Nasdaq Stock Market LLC
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Securities registered pursuant to section 12(g) of the Act: None
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Large accelerated filer
¨
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Accelerated filer
ý
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Non-accelerated filer
¨
(Do not check if smaller reporting company)
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Smaller reporting company
¨
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Emerging growth company
¨
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PART I
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ITEM 1:
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ITEM 1A:
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ITEM 1B:
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ITEM 2:
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ITEM 3:
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ITEM 4:
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PART II
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ITEM 5:
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ITEM 6:
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ITEM 7:
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ITEM 7A:
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ITEM 8:
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ITEM 9:
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ITEM 9A:
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PART III
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ITEM 10:
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ITEM 11:
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ITEM 12:
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ITEM 13:
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ITEM 14:
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PART IV
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ITEM 15:
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EX-10.9
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EX-21.1
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EX-23.1
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EX-31.1
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EX-31.2
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EX-32.1
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EX-32.2
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EX-101 XBRL Instance Document
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EX-101 XBRL Taxonomy Extension Schema
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EX-101 XBRL Taxonomy Extension Calculation Linkbase Document
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EX-101 XBRL Taxonomy Extension Definition Linkbase Document
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EX-101 XBRL Taxonomy Extension Label Linkbase Document
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EX-101 XBRL Taxonomy Extension Presentation Linkbase Document
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Product Types
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Brand Names
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Specialty Mechanical Products
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• condensate switches, traps and pans
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• Airtec
®
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• line set covers
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• Clean Check
®
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• condensate removal pumps and equipment mounting brackets
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• EZ Trap
®
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• air diffusers for use by professional air conditioning contractors
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• Fortress
®
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• tamper resistant locking refrigerant caps
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• Goliath
®
Pans
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• ductless mini-split systems installation support tools
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• G-O-N
®
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• drain waste and vent systems mechanical products
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• Hubsett
™
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• decorative roof drain downspout nozzles
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• Magic Vent
®
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• wire pulling head tools
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• Mighty Bracket
™
|
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• Novent
®
|
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• Safe-T-Switch
®
|
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• Slim Duct
™
|
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• SureSeal
®
|
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• Titan
™
Pans
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• Wire Grabber
™
|
|
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Fire and Smoke Protection Products
|
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• fire-rated and smoke-rated opening protective systems
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• Smoke Guard
®
|
|
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Architecturally-Specified Building Products
|
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• expansion joint covers
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• Balco
®
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• fire barriers
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• DuraFlex
™
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• specialty silicone seals
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• Greco
™
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• stair nosings
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• llumiTread
™
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• partition closure systems
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• MetaBlock
™
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• entrance mats and grids
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• MetaFlex
™
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• photoluminescent egress markings and signage
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• MetaGrate
™
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• trench and access covers
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• MetaMat
™
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• architectural grating
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• Michael Rizza™
|
•
engineered railing
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• UltraGrid
™
|
|
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Storage, Filtration and Application Equipment
|
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• lubrication application and management systems
|
• Air Sentry
®
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• storage and filtration devices
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• Guardian
®
|
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• Oil Safe
®
|
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• Whitmore Rail
™
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Product Types
|
Brand Names
|
• high performance coatings designed to increase the reliability, performance
|
• Bio Fireshield
™
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and lifespan of industrial equipment
|
• Deacon
®
|
• engineered specialty thread sealants designed to seal and secure metal
|
• KATS
®
Coatings
|
• specialty sealants for high temperature applications
|
• Metacaulk
®
|
• solvent cements and fire stop caulks
|
• Railplex
®
|
|
• RectorSeal No. 5
®
|
|
• Stratholiner
™
|
|
• T Plus 2
®
|
|
• Tru-Blu
™
|
Product Types
|
Brand Names
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• railroad track lubricants, conditioners and positive friction consumables
|
• AC Leak Freeze
®
|
• oil field anti-seize products for drilling and conveyance piping
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• BioRail
®
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• open gear specialty lubricants for heavy equipment
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• Decathlon
™
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• specialty lubricants for various industrial applications
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• Envirolube
®
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• water well treatment products and services
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• Gearmate
®
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• chemical sealants to stop air-conditioning refrigerant leaks
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• KOPR-KOTE
®
|
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• Medallion
™
|
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• Paragon
™
|
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• Rail Armor
®
|
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• Run-N-Seal
®
|
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• Sterilene
™
|
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• Surtac
®
|
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• TOR Armor
®
|
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• Unicid
™
|
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• Well-Guard
®
|
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• Whitcam
®
|
•
|
weak economic conditions, especially in our key end markets, including the energy industry, could reduce demand for our products, impacting our revenues and margins;
|
•
|
as a result of volatility in commodity prices, we may encounter difficulty in achieving sustained market acceptance of past or future price increases, which could have a material adverse effect on our financial position, results of operations and cash flows;
|
•
|
under difficult market conditions, there can be no assurance that access to credit or the capital markets would be available or sufficient, and in such a case, we may not be able to successfully obtain additional financing on reasonable terms, or at all; and
|
•
|
market conditions could result in our key customers experiencing financial difficulties and/or electing to limit spending, which in turn could result in decreased sales and earnings for us.
|
•
|
any acquired business, technology, service or product could under-perform relative to our expectations and the price that we paid for it, or not achieve cost savings or other synergies in accordance with our anticipated timetable;
|
•
|
we may incur or assume significant debt in connection with our acquisitions, which would increase our leverage and interest expense, thereby reducing funds available to us for purposes such as working capital, capital expenditures, research and development and other general corporate purposes;
|
•
|
pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period to period;
|
•
|
the process of integrating acquired operations may create operating difficulties and may require significant financial and managerial resources that would otherwise be available for existing operations;
|
•
|
we could experience difficulty in integrating financial and other controls and systems;
|
•
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we may lose key employees or customers of the acquired company;
|
•
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we may assume liabilities that are unknown or for which our indemnification rights are insufficient, or known or contingent liabilities may be greater than anticipated; and
|
•
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conforming the acquired company’s standards, process, procedures and controls, including accounting systems and controls, with our operations could cause internal control deficiencies related to our internal control over financial reporting or exposure to regulatory sanctions resulting from the acquired company’s activities.
|
•
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our business strategy;
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•
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future levels of revenues, operating margins, income from operations, net income or earnings per share;
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•
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anticipated levels of demand for our products and services;
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•
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future levels of research and development, capital, environmental or maintenance expenditures;
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•
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our beliefs regarding the timing and effects on our business of health and safety, tax, environmental or other legislation, rules and regulations;
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•
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the success or timing of completion of ongoing or anticipated capital, restructuring or maintenance projects;
|
•
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expectations regarding the acquisition or divestiture of assets and businesses;
|
•
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our ability to obtain appropriate insurance and indemnities;
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•
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the potential effects of judicial or other proceedings, including tax audits, on our business, financial condition, results of operations and cash flows;
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•
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the anticipated effects of actions of third parties such as competitors, or federal, foreign, state or local regulatory authorities, or plaintiffs in litigation;
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•
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the expected impact of accounting pronouncements;
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•
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the expected benefits of being a standalone publicly-traded company; and
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•
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the other factors listed above under “Risk Factors.”
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Location
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Use
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Segment
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Square Footage
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Owned/Leased
|
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Acworth, Georgia
|
|
Manufacturing
|
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Coatings, Sealants & Adhesives
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25,000
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|
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Owned
|
Boise, Idaho
|
|
Manufacturing, Office and R&D
|
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Industrial Products
|
|
40,800
|
|
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Leased
|
Fall River, Massachusetts
|
|
Manufacturing
|
|
All
|
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140,200
|
|
|
Leased
|
Houston, Texas
|
|
Manufacturing and Office
|
|
All
|
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253,900
|
|
|
Owned
|
Longview, Texas
|
|
Manufacturing
|
|
Coatings, Sealants & Adhesives
|
|
53,200
|
|
|
Owned
|
Oklahoma City, Oklahoma
|
|
Manufacturing
|
|
Industrial Products
|
|
30,600
|
|
|
Owned
|
Rockwall, Texas
|
|
Manufacturing, Office, R&D and Warehouse
|
|
All
|
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227,600
|
|
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Owned
|
Wichita, Kansas
|
|
Manufacturing
|
|
Industrial Products
|
|
42,800
|
|
|
Owned
|
Windsor, Ontario, Canada
|
|
Manufacturing, Office and R&D
|
|
Industrial Products
|
|
42,000
|
|
|
Leased
|
|
|
High
|
|
Low
|
||||
Fiscal year ended March 31, 2016:
|
|
|
|
|
||||
Second quarter (September 16, 2015 – September 30, 2015)
|
|
$
|
38.00
|
|
|
$
|
23.20
|
|
Third quarter (October 1, 2015 – December 31, 2015)
|
|
$
|
39.96
|
|
|
$
|
30.25
|
|
Fourth quarter (January 1, 2016 – March 31, 2016)
|
|
$
|
37.75
|
|
|
$
|
27.84
|
|
Fiscal year ended March 31, 2017:
|
|
|
|
|
||||
First quarter (April 1, 2016 – June 30, 2016)
|
|
$
|
35.96
|
|
|
$
|
30.03
|
|
Second quarter (July 1, 2016 – September 30, 2016)
|
|
$
|
34.86
|
|
|
$
|
30.76
|
|
Third quarter (October 1, 2016 – December 31, 2016)
|
|
$
|
39.25
|
|
|
$
|
29.25
|
|
Fourth quarter (January 1, 2017 – March 31, 2017)
|
|
$
|
41.85
|
|
|
$
|
34.59
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Number of Shares (or Approximate Dollar Value) That May Yet Be Purchased Under the Program (a)
|
||||||
|
|
|
|
|
|
|
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(in millions)
|
||||||
January 1 - 31
|
|
206
|
|
(b)
|
$
|
37.10
|
|
|
—
|
|
|
$
|
35.0
|
|
February 1 - 28
|
|
573
|
|
(b)
|
37.10
|
|
|
—
|
|
|
35.0
|
|
||
March 1 - 31
|
|
280
|
|
(b)
|
36.27
|
|
|
—
|
|
|
35.0
|
|
||
|
|
1,059
|
|
|
|
|
—
|
|
|
|
|
|
Fiscal Years Ended March 31,
|
||||||||||||||||||
(Amounts in thousands, except per share data)
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
RESULTS OF OPERATIONS
|
|
(a)
|
|
(b) (c)
|
|
(c)
|
|
(c)
|
|
(c)
|
||||||||||
Revenues, net
|
|
$
|
327,084
|
|
|
$
|
319,831
|
|
|
$
|
261,834
|
|
|
$
|
231,713
|
|
|
$
|
199,094
|
|
Gross profit
|
|
133,837
|
|
|
147,864
|
|
|
126,425
|
|
|
112,086
|
|
|
94,582
|
|
|||||
Operating expenses
|
|
(111,356
|
)
|
|
(100,378
|
)
|
|
(82,391
|
)
|
|
(74,173
|
)
|
|
(62,335
|
)
|
|||||
Operating income
|
|
22,481
|
|
|
47,486
|
|
|
44,034
|
|
|
37,913
|
|
|
32,247
|
|
|||||
Interest income (expense), net
|
|
(2,695
|
)
|
|
(3,035
|
)
|
|
(611
|
)
|
|
(131
|
)
|
|
74
|
|
|||||
Provision for income taxes
|
|
(10,473
|
)
|
|
(18,754
|
)
|
|
(15,223
|
)
|
|
(12,794
|
)
|
|
(10,707
|
)
|
|||||
Net income
|
|
11,071
|
|
|
25,471
|
|
|
29,705
|
|
|
24,732
|
|
|
22,513
|
|
|||||
Net income per diluted share
|
|
0.70
|
|
|
1.62
|
|
|
1.90
|
|
|
1.58
|
|
|
1.44
|
|
|||||
FINANCIAL CONDITION
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
|
$
|
108,547
|
|
|
$
|
123,958
|
|
|
$
|
93,774
|
|
|
$
|
90,884
|
|
|
$
|
77,196
|
|
Total assets
|
|
397,664
|
|
|
392,260
|
|
|
286,521
|
|
|
277,820
|
|
|
236,521
|
|
|||||
Total debt
|
|
73,207
|
|
|
89,682
|
|
|
26,704
|
|
|
45,097
|
|
|
23,348
|
|
|||||
Retirement obligations and other liabilities
|
|
14,844
|
|
|
13,566
|
|
|
30,255
|
|
|
12,233
|
|
|
12,070
|
|
|||||
Total equity
|
|
272,438
|
|
|
258,010
|
|
|
204,601
|
|
|
196,186
|
|
|
176,522
|
|
(a)
|
Results of operations in the fiscal year ended
March 31, 2017
included costs of
$12.8 million
resulting from restructuring and realignment initiatives, resulting in a reduction of after tax net earnings of
$6.6 million
.
|
(b)
|
Results of operations in the fiscal year ended
March 31, 2016
included costs of
$8.0 million
resulting from restructuring and realignment initiatives, resulting in a reduction of after tax net earnings of
$5.2 million
.
|
(c)
|
We began operations on September 30, 2015 as a result of the Share Distribution discussed in Note 1 to our consolidated financial statements included in Item 8 of this Annual Report. The financial position, results of operations and cash flows for periods prior to September 30, 2015 represent the combined financial information of our wholly-owned subsidiaries contributed to us as a result of the Share Distribution. The financial statements for periods prior to the Share Distribution may not include all of the expenses that would have been incurred had our wholly-owned subsidiaries been operating as separate publicly-traded (“standalone”) companies during those periods and may not reflect the consolidated results of operations, financial position, and cash flows as a standalone company during all periods presented.
|
Acquisition
|
|
Effective Date
|
|
Segment
|
Greco
|
|
February 28, 2017
|
|
Industrial Products
|
Leak Freeze
|
|
December 16, 2015
|
|
Specialty Chemicals
|
Deacon
|
|
October 1, 2015
|
|
Coatings, Sealants & Adhesives
|
Strathmore
|
|
April 2, 2015
|
|
Coatings, Sealants & Adhesives
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
(amounts in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues, net
|
|
$
|
327,084
|
|
|
$
|
319,831
|
|
|
$
|
261,834
|
|
|
|
Fiscal Years Ended March 31,
|
|||||||
(amounts in thousands, except percentages)
|
|
2017
|
|
2016
|
|
2015
|
|||
Gross profit
|
|
133,837
|
|
|
147,864
|
|
|
126,425
|
|
Gross profit margin
|
|
40.9
|
%
|
|
46.2
|
%
|
|
48.3
|
%
|
|
|
Fiscal Years Ended March 31,
|
|||||||
(amounts in thousands, except percentages)
|
|
2017
|
|
2016
|
|
2015
|
|||
Selling, general and administrative expense
|
|
111,356
|
|
|
100,378
|
|
|
82,391
|
|
Selling, general and administrative expense as a % of sales
|
|
34.0
|
%
|
|
31.4
|
%
|
|
31.5
|
%
|
|
|
Fiscal Years Ended March 31,
|
|||||||
(amounts in thousands, except percentages)
|
|
2017
|
|
2016
|
|
2015
|
|||
Operating income
|
|
22,481
|
|
|
47,486
|
|
|
44,034
|
|
Operating margin
|
|
6.9
|
%
|
|
14.8
|
%
|
|
16.8
|
%
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
(amounts in thousands, except percentages)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues, net
|
|
$
|
158,654
|
|
|
$
|
138,594
|
|
|
$
|
118,422
|
|
Operating income
|
|
32,893
|
|
|
31,075
|
|
|
19,711
|
|
|||
Operating margin
|
|
20.7
|
%
|
|
22.4
|
%
|
|
16.6
|
%
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
(amounts in thousands, except percentages)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues, net
|
|
$
|
96,869
|
|
|
$
|
106,035
|
|
|
$
|
52,119
|
|
Operating income
|
|
851
|
|
|
10,911
|
|
|
11,420
|
|
|||
Operating margin
|
|
0.9
|
%
|
|
10.3
|
%
|
|
21.9
|
%
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
(amounts in thousands, except percentages)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues, net
|
|
$
|
71,469
|
|
|
$
|
74,930
|
|
|
$
|
89,738
|
|
Operating income
|
|
2,012
|
|
|
12,490
|
|
|
13,016
|
|
|||
Operating margin
|
|
2.8
|
%
|
|
16.7
|
%
|
|
14.5
|
%
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(amounts in thousands)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
39,036
|
|
|
$
|
41,530
|
|
|
$
|
35,468
|
|
Net cash used in investing activities
|
|
(25,968
|
)
|
|
(110,221
|
)
|
|
(2,625
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
(15,318
|
)
|
|
74,694
|
|
|
(26,893
|
)
|
|
|
Payments due by Period (1)
|
||||||||||||||||||
|
|
< 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
> 5 Years
|
|
Total
|
||||||||||
Long-term debt obligations, principal (2)
|
|
$
|
561
|
|
|
$
|
1,122
|
|
|
$
|
61,747
|
|
|
$
|
9,777
|
|
|
$
|
73,207
|
|
Long-term debt obligations, interest (2)
|
|
2,307
|
|
|
4,532
|
|
|
2,289
|
|
|
4,157
|
|
|
13,285
|
|
|||||
Operating lease obligations (3)
|
|
2,929
|
|
|
5,214
|
|
|
3,552
|
|
|
4,136
|
|
|
15,831
|
|
|||||
Purchase obligations (4)
|
|
24,420
|
|
|
3,054
|
|
|
—
|
|
|
—
|
|
|
27,474
|
|
|||||
Other long-term liabilities (5)
|
|
258
|
|
|
7,210
|
|
|
—
|
|
|
—
|
|
|
7,468
|
|
|||||
Total (6)
|
|
$
|
30,475
|
|
|
$
|
21,132
|
|
|
$
|
67,588
|
|
|
$
|
18,070
|
|
|
$
|
137,265
|
|
(1)
|
The less than one year category represents the fiscal year ended March 31, 2018, the 1-3 years category represents fiscal years ending March 31, 2019 and 2020, the 3-5 years category represents fiscal years ending March 31, 2021 and 2022 and the greater than five years category represents fiscal years ending March 31, 2023 and thereafter.
|
(2)
|
Amounts include principal and interest cash payments through the maturity of the outstanding debt obligations. See Note 7 to our consolidated financial statements included in Item 8 of this Annual Report.
|
(3)
|
Sales taxes, value added taxes and goods and services taxes included as part of recurring lease payments are excluded from the amounts shown above.
|
(4)
|
Purchase obligations include agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty.
|
(5)
|
Amounts primarily include deferred and contingent consideration payable due to acquisitions and future payments under outstanding deferred compensation awards. The liability for retirement benefits payable related to our defined benefit pension plans is excluded from the contractual obligations table as it does not represent expected liquidity requirements.
|
(6)
|
Operating lease and purchase obligations denominated in foreign currencies are projected based on the exchange rate in effect on
March 31, 2017
. Excludes amounts that have been eliminated in our consolidated financial statements.
|
•
|
Discount rates are estimated using high quality corporate bond yields with a duration matching the expected benefit payments. The discount rate is obtained from a universe of Aa-rated non-callable bonds across the full maturity spectrum to establish a weighted average discount rate. Our discount rate assumptions are impacted by changes in general economic and market conditions that affect interest rates on long-term high-quality debt securities, as well as the duration of our plans’ liabilities.
|
•
|
The expected rates of return on plan assets are derived from reviews of asset allocation strategies, expected future experience for trust asset returns, risks and other factors adjusted for our specific investment strategy. These rates are impacted by changes in general market conditions, but because they are long-term in nature, short-term market changes do not significantly impact the rates. Changes to our target asset allocation also impact these rates.
|
|
|
March 31,
|
||||||
(Amounts in thousands, except per share amounts)
|
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
23,146
|
|
|
$
|
25,987
|
|
Bank time deposits
|
|
1,776
|
|
|
13,278
|
|
||
Accounts receivable, net
|
|
63,782
|
|
|
52,637
|
|
||
Inventories, net
|
|
50,401
|
|
|
51,634
|
|
||
Prepaid expenses and other current assets
|
|
7,178
|
|
|
11,985
|
|
||
Total current assets
|
|
146,283
|
|
|
155,521
|
|
||
Property, plant and equipment, net
|
|
63,897
|
|
|
64,357
|
|
||
Goodwill
|
|
80,863
|
|
|
67,757
|
|
||
Intangible assets, net
|
|
90,610
|
|
|
88,727
|
|
||
Other assets
|
|
16,011
|
|
|
15,898
|
|
||
Total assets
|
|
$
|
397,664
|
|
|
$
|
392,260
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
14,419
|
|
|
$
|
9,912
|
|
Accrued and other current liabilities
|
|
22,756
|
|
|
21,090
|
|
||
Current portion of long-term debt
|
|
561
|
|
|
561
|
|
||
Total current liabilities
|
|
37,736
|
|
|
31,563
|
|
||
Long-term debt
|
|
72,646
|
|
|
89,121
|
|
||
Retirement benefits payable
|
|
1,464
|
|
|
1,746
|
|
||
Other liabilities
|
|
13,380
|
|
|
11,820
|
|
||
Total liabilities
|
|
125,226
|
|
|
134,250
|
|
||
Equity:
|
|
|
|
|
||||
Common shares, $0.01 par value
|
|
157
|
|
|
156
|
|
||
Shares authorized - 50,000
|
|
|
|
|
||||
Shares issued - 15,846 and 15,659, respectively
|
|
|
|
|
||||
Preferred shares, $0.01 par value
|
|
—
|
|
|
—
|
|
||
Shares authorized - 10,000
|
|
|
|
|
||||
Shares issued - 0
|
|
|
|
|
||||
Additional paid-in capital
|
|
38,701
|
|
|
31,597
|
|
||
Treasury shares, at cost
|
|
(1,011
|
)
|
|
—
|
|
||
Retained earnings
|
|
245,026
|
|
|
233,955
|
|
||
Accumulated other comprehensive loss
|
|
(10,435
|
)
|
|
(7,698
|
)
|
||
Total equity
|
|
272,438
|
|
|
258,010
|
|
||
Total liabilities and equity
|
|
$
|
397,664
|
|
|
$
|
392,260
|
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
(Amounts in thousands, except per share amounts)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues, net
|
|
$
|
327,084
|
|
|
$
|
319,831
|
|
|
$
|
261,834
|
|
Cost of revenues
|
|
(193,247
|
)
|
|
(171,967
|
)
|
|
(135,409
|
)
|
|||
Gross profit
|
|
133,837
|
|
|
147,864
|
|
|
126,425
|
|
|||
Selling, general and administrative expense
|
|
(107,241
|
)
|
|
(100,378
|
)
|
|
(81,681
|
)
|
|||
Impairment loss
|
|
(4,115
|
)
|
|
—
|
|
|
(710
|
)
|
|||
Operating income
|
|
22,481
|
|
|
47,486
|
|
|
44,034
|
|
|||
Interest expense, net
|
|
(2,695
|
)
|
|
(3,035
|
)
|
|
(611
|
)
|
|||
Other (expense) income, net
|
|
1,758
|
|
|
(226
|
)
|
|
1,505
|
|
|||
Income before income taxes
|
|
21,544
|
|
|
44,225
|
|
|
44,928
|
|
|||
Provision for income taxes
|
|
(10,473
|
)
|
|
(18,754
|
)
|
|
(15,223
|
)
|
|||
Net income
|
|
$
|
11,071
|
|
|
$
|
25,471
|
|
|
$
|
29,705
|
|
|
|
|
|
|
|
|
||||||
Net earnings per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.70
|
|
|
$
|
1.63
|
|
|
$
|
1.91
|
|
Diluted
|
|
0.70
|
|
|
1.62
|
|
|
1.90
|
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
(Amounts in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
|
$
|
11,071
|
|
|
$
|
25,471
|
|
|
$
|
29,705
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
(2,884
|
)
|
|
(1,371
|
)
|
|
(5,277
|
)
|
|||
Cash flow hedging activity, net of taxes of $(441), $8 and $649, respectively
|
|
819
|
|
|
(15
|
)
|
|
(1,206
|
)
|
|||
Pension and other post retirement effects, net of taxes of $311, $(2,145) and $3,396, respectively
|
|
(672
|
)
|
|
3,981
|
|
|
(6,307
|
)
|
|||
Other comprehensive income (loss)
|
|
(2,737
|
)
|
|
2,595
|
|
|
(12,790
|
)
|
|||
Comprehensive income
|
|
$
|
8,334
|
|
|
$
|
28,066
|
|
|
$
|
16,915
|
|
(Amounts in thousands)
|
|
Common Stock
|
|
Treasury Shares
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Net Investment of Capital Southwest
|
|
Accumulated Other Comprehensive Income
|
|
Total Equity
|
||||||||||||||
Balance at April 1, 2014
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
187,373
|
|
|
$
|
6,316
|
|
|
$
|
2,497
|
|
|
$
|
196,186
|
|
Net Income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,705
|
|
|
—
|
|
|
—
|
|
|
29,705
|
|
|||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,294
|
)
|
|
—
|
|
|
—
|
|
|
(8,294
|
)
|
|||||||
Repurchases of common shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(206
|
)
|
|
—
|
|
|
(206
|
)
|
|||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,790
|
)
|
|
(12,790
|
)
|
|||||||
Balance at March 31, 2015
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
208,784
|
|
|
$
|
6,110
|
|
|
$
|
(10,293
|
)
|
|
$
|
204,601
|
|
Share-based and other executive compensation
|
|
—
|
|
|
—
|
|
|
2,231
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,231
|
|
|||||||
Stock activity under stock plans
|
|
—
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|||||||
Tax benefit associated with share-based compensation
|
|
—
|
|
|
—
|
|
|
212
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
212
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,471
|
|
|
—
|
|
|
—
|
|
|
25,471
|
|
|||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
|||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,595
|
|
|
2,595
|
|
|||||||
Contributions from Capital Southwest
|
|
156
|
|
|
—
|
|
|
29,058
|
|
|
—
|
|
|
(6,110
|
)
|
|
—
|
|
|
23,104
|
|
|||||||
Balance at March 31, 2016
|
|
$
|
156
|
|
|
$
|
—
|
|
|
$
|
31,597
|
|
|
$
|
233,955
|
|
|
$
|
—
|
|
|
$
|
(7,698
|
)
|
|
$
|
258,010
|
|
Share-based and other executive compensation
|
|
—
|
|
|
—
|
|
|
4,641
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,641
|
|
|||||||
Stock activity under stock plans
|
|
1
|
|
|
(1,011
|
)
|
|
2,169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,159
|
|
|||||||
Tax benefit associated with share-based compensation
|
|
—
|
|
|
—
|
|
|
294
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
294
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,071
|
|
|
—
|
|
|
—
|
|
|
11,071
|
|
|||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,737
|
)
|
|
(2,737
|
)
|
|||||||
Balance at March 31, 2017
|
|
$
|
157
|
|
|
$
|
(1,011
|
)
|
|
$
|
38,701
|
|
|
$
|
245,026
|
|
|
$
|
—
|
|
|
$
|
(10,435
|
)
|
|
$
|
272,438
|
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
(Amounts in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
11,071
|
|
|
$
|
25,471
|
|
|
$
|
29,705
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation
|
|
7,857
|
|
|
7,032
|
|
|
5,922
|
|
|||
Amortization of intangible and other assets
|
|
7,939
|
|
|
7,129
|
|
|
4,593
|
|
|||
Provision for inventory reserves
|
|
1,644
|
|
|
—
|
|
|
—
|
|
|||
Provision for doubtful accounts
|
|
178
|
|
|
(282
|
)
|
|
1,515
|
|
|||
Share-based and other executive compensation
|
|
4,641
|
|
|
2,231
|
|
|
—
|
|
|||
Acquisition-related non-cash gain
|
|
(376
|
)
|
|
(1,950
|
)
|
|
—
|
|
|||
Net loss (gain) on disposals of property, plant and equipment
|
|
221
|
|
|
60
|
|
|
(1,627
|
)
|
|||
Pension plan curtailment benefit
|
|
—
|
|
|
(8,020
|
)
|
|
—
|
|
|||
Net pension expense (benefit)
|
|
(1,092
|
)
|
|
3,506
|
|
|
3,392
|
|
|||
Impairment of assets
|
|
4,115
|
|
|
—
|
|
|
710
|
|
|||
Net deferred taxes
|
|
528
|
|
|
7,262
|
|
|
(7,887
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
(5,762
|
)
|
|
2,522
|
|
|
(37
|
)
|
|||
Inventories, net
|
|
(36
|
)
|
|
5,056
|
|
|
(6,655
|
)
|
|||
Prepaid expenses and other current assets
|
|
1,132
|
|
|
(4,945
|
)
|
|
4,351
|
|
|||
Other assets
|
|
(115
|
)
|
|
(3,275
|
)
|
|
109
|
|
|||
Accounts payable and other current liabilities
|
|
4,706
|
|
|
910
|
|
|
1,086
|
|
|||
Retirement benefits payable and other liabilities
|
|
2,385
|
|
|
(1,177
|
)
|
|
291
|
|
|||
Net cash provided by operating activities
|
|
39,036
|
|
|
41,530
|
|
|
35,468
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(9,369
|
)
|
|
(11,053
|
)
|
|
(8,672
|
)
|
|||
Proceeds from sale of assets held for investment
|
|
349
|
|
|
—
|
|
|
3,494
|
|
|||
Proceeds from sale of assets
|
|
263
|
|
|
46
|
|
|
6,393
|
|
|||
Net change in bank time deposits
|
|
10,968
|
|
|
(1,978
|
)
|
|
3,353
|
|
|||
Cash paid for acquisitions, net of cash acquired
|
|
(28,179
|
)
|
|
(97,236
|
)
|
|
(7,193
|
)
|
|||
Net cash used by investing activities
|
|
(25,968
|
)
|
|
(110,221
|
)
|
|
(2,625
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Borrowings on lines of credit
|
|
30,000
|
|
|
179,040
|
|
|
12,229
|
|
|||
Repayments on lines of credit
|
|
(46,476
|
)
|
|
(116,061
|
)
|
|
(30,622
|
)
|
|||
Payments of deferred loan costs
|
|
—
|
|
|
(1,081
|
)
|
|
—
|
|
|||
Purchase of treasury shares
|
|
(1,011
|
)
|
|
—
|
|
|
(206
|
)
|
|||
Cash contribution from Capital Southwest
|
|
—
|
|
|
13,000
|
|
|
—
|
|
|||
Proceeds from stock option activity
|
|
2,169
|
|
|
96
|
|
|
—
|
|
|||
Dividends paid to Capital Southwest
|
|
—
|
|
|
(300
|
)
|
|
(8,294
|
)
|
|||
Net cash (used) provided by financing activities
|
|
(15,318
|
)
|
|
74,694
|
|
|
(26,893
|
)
|
|||
Effect of exchange rate changes on cash and equivalents
|
|
(591
|
)
|
|
(464
|
)
|
|
(913
|
)
|
|||
Net change in cash and cash equivalents
|
|
(2,841
|
)
|
|
5,539
|
|
|
5,037
|
|
|||
Cash and cash equivalents, beginning of period
|
|
25,987
|
|
|
20,448
|
|
|
15,411
|
|
|||
Cash and cash equivalents, end of period
|
|
$
|
23,146
|
|
|
$
|
25,987
|
|
|
$
|
20,448
|
|
Supplemental non-cash disclosure:
|
|
|
|
|
|
|
||||||
Cash paid during the year for interest
|
|
$
|
2,623
|
|
|
$
|
3,074
|
|
|
$
|
1,053
|
|
Cash paid during the year for income taxes
|
|
9,793
|
|
|
18,298
|
|
|
16,721
|
|
|||
Pension plan assets contributed by Capital Southwest
|
|
—
|
|
|
10,357
|
|
|
—
|
|
|
|
Severance/
Retention |
|
Asset
Write-down (a) |
|
Other (b)
|
|
Total
|
||||||||
For the year ended March 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
|
$
|
568
|
|
|
$
|
—
|
|
|
$
|
667
|
|
|
$
|
1,235
|
|
Selling, general and administrative expense
|
|
451
|
|
|
2,800
|
|
|
175
|
|
|
3,426
|
|
||||
Total
|
|
$
|
1,019
|
|
|
$
|
2,800
|
|
|
$
|
842
|
|
|
$
|
4,661
|
|
Total Expected Restructuring Charges (c):
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
|
$
|
594
|
|
|
$
|
—
|
|
|
$
|
962
|
|
|
$
|
1,556
|
|
Selling, general and administrative expense
|
|
451
|
|
|
2,800
|
|
|
175
|
|
|
3,426
|
|
||||
Total
|
|
$
|
1,045
|
|
|
$
|
2,800
|
|
|
$
|
1,137
|
|
|
$
|
4,982
|
|
(a)
|
The initiation of the restructuring program related to our Coatings, Sealants & Sealants segment triggered an analysis of our intangible assets recorded upon our acquisition of Strathmore. As a result of this analysis, we recorded an impairment of our Strathmore trademark.
|
(b)
|
Other consists of moving costs related to relocation of manufacturing activities, consulting fees for production and efficiency support, recruiting fees to increase staff in locations where production is being relocated and duplicate and inefficient labor incurred during the transition and relocation. These charges will be expensed as incurred.
|
(c)
|
Total expected restructuring charges represent management’s best estimate to date. As the execution of the program is still in process, the amount and nature of actual restructuring charges incurred could vary from total expected charges.
|
•
|
Timing and amount of revenue recognition;
|
•
|
Deferred taxes and tax reserves;
|
•
|
Pension benefits; and
|
•
|
Valuation of goodwill and indefinite-lived intangible assets.
|
Land improvements
|
5
|
to
|
40 years
|
Buildings and improvements
|
7
|
to
|
40 years
|
Plant, office and lab equipment
|
5
|
to
|
10 years
|
•
|
Discount rates are estimated using high quality corporate bond yields with a duration matching the expected benefit payments. The discount rate is obtained from a universe of Aa-rated non-callable bonds across the full maturity spectrum to establish a weighted average discount rate. Our discount rate assumptions are impacted by changes in general economic and market conditions that affect interest rates on long-term high-quality debt securities, as well as the duration of our plans’ liabilities.
|
•
|
The expected rates of return on plan assets are derived from reviews of asset allocation strategies, expected future experience for trust asset returns, risks and other factors adjusted for our specific investment strategy. These rates are impacted by changes in general market conditions, but because they are long-term in nature, short-term market changes do not significantly impact the rates. Changes to our target asset allocation also impact these rates.
|
•
|
Industrial Products includes specialty mechanical products, fire and smoke protection products, architecturally-specified building products and storage, filtration and application equipment for use with our specialty chemicals and other products for general industrial application.
|
•
|
Coatings, Sealants & Adhesives is comprised of coatings and penetrants, pipe thread sealants, firestopping sealants and caulks and adhesives/solvent cements.
|
•
|
Specialty Chemicals includes lubricants and greases, drilling compounds, anti-seize compounds, chemical formulations and degreasers and cleaners.
|
Accounts receivable
|
$
|
4,902
|
|
Inventory
|
8,447
|
|
|
Property, plant and equipment
|
3,761
|
|
|
Intangible assets
|
37,650
|
|
|
Other, net
|
2,941
|
|
|
Current liabilities
|
(4,297
|
)
|
|
Net tangible and intangible assets
|
53,404
|
|
|
Goodwill
|
17,395
|
|
|
Purchase price
|
$
|
70,799
|
|
|
|
Industrial Products
|
|
Coatings, Sealants and Adhesives
|
|
Specialty Chemicals
|
|
Total
|
||||||||
Balance at April 1, 2015
|
|
$
|
36,323
|
|
|
$
|
920
|
|
|
$
|
3,402
|
|
|
40,645
|
|
|
Acquisition of Strathmore
|
|
—
|
|
|
17,395
|
|
|
—
|
|
|
17,395
|
|
||||
Acquisition of Deacon
|
|
—
|
|
|
4,105
|
|
|
—
|
|
|
4,105
|
|
||||
Acquisition of Leak Freeze
|
|
—
|
|
|
—
|
|
|
5,741
|
|
|
5,741
|
|
||||
Currency translation
|
|
(129
|
)
|
|
—
|
|
|
—
|
|
|
(129
|
)
|
||||
Balance at March 31, 2016
|
|
$
|
36,194
|
|
|
$
|
22,420
|
|
|
$
|
9,143
|
|
|
$
|
67,757
|
|
Acquisition of Greco
|
|
13,619
|
|
|
—
|
|
|
—
|
|
|
13,619
|
|
||||
Currency translation
|
|
(513
|
)
|
|
—
|
|
|
—
|
|
|
(513
|
)
|
||||
Balance at March 31, 2017
|
|
$
|
49,300
|
|
|
$
|
22,420
|
|
|
$
|
9,143
|
|
|
$
|
80,863
|
|
|
|
|
|
March 31, 2017
|
|
March 31, 2016
|
||||||||||||
|
|
Wtd Avg Life (Years)
|
|
Ending Gross Amount
|
|
Accumulated Amortization
|
|
Ending Gross Amount
|
|
Accumulated Amortization
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Patents (a)
|
|
12
|
|
$
|
9,576
|
|
|
$
|
(4,779
|
)
|
|
$
|
14,458
|
|
|
$
|
(8,600
|
)
|
Customer lists and amortized trademarks
|
|
12
|
|
81,121
|
|
|
(22,935
|
)
|
|
71,475
|
|
|
(17,080
|
)
|
||||
Non-compete agreements
|
|
5
|
|
1,819
|
|
|
(334
|
)
|
|
1,310
|
|
|
(405
|
)
|
||||
Other
|
|
12
|
|
4,849
|
|
|
(828
|
)
|
|
3,769
|
|
|
(354
|
)
|
||||
|
|
|
|
$
|
97,365
|
|
|
$
|
(28,876
|
)
|
|
$
|
91,012
|
|
|
$
|
(26,439
|
)
|
Trade names and trademarks not being amortized: (b)
|
|
|
|
$
|
22,121
|
|
|
$
|
—
|
|
|
$
|
24,154
|
|
|
$
|
—
|
|
(a)
|
During the fiscal years ended
March 31, 2017
and
2016
, we wrote off
$4.0 million
and
$2.9 million
of intangible assets that were fully amortized.
|
(b)
|
During the fiscal year ended
March 31, 2017
, we recognized a
$2.8 million
non-cash impairment charge related to the Strathmore trademark, which is included in the Coatings, Sealants and Adhesives segment.
|
2018
|
|
$
|
8,098
|
|
2019
|
|
7,250
|
|
|
2020
|
|
7,007
|
|
|
2021
|
|
6,784
|
|
|
2022
|
|
6,335
|
|
•
|
Each Capital Southwest stock option was converted into both a Capital Southwest stock option and a CSWI stock option, with adjustments made to the exercise prices and number of shares subject to each option in order to preserve the aggregate intrinsic value of the original Capital Southwest stock option as measured immediately before and immediately after the Share Distribution, subject to rounding. The adjusted Capital Southwest stock options and CSWI stock options were subject to substantially the same terms, vesting conditions, post-termination exercise rules and other restrictions that applied to the original Capital Southwest stock options immediately before the Share Distribution. Options generally expire
10 years
from the date of grant and generally vest on or after the first anniversary of the date of grant in
five
annual installments. The fair value of stock options is determined using the Black-Scholes pricing model and such fair value is expensed on a straight-line basis over the requisite service period.
|
•
|
The Capital Southwest restricted stock awards remained outstanding and the awardees additionally received
one
share of CSWI restricted stock for each share of Capital Southwest restricted stock held, which shares are subject to substantially the same terms, vesting conditions and other restrictions applicable to the Capital Southwest restricted stock award immediately before the Share Distribution. Restricted Stock awards generally have full voting and dividend rights, but are restricted with regard to sale or transfer. Unless otherwise specified in the award agreement, the restrictions do not expire for a minimum of
one year
and a maximum of
five years
and are subject to forfeiture during the restriction period. Typically, restricted share grants have staggered vesting periods over
one
to
five years
from the grant date. The fair value of restricted stock is based on the closing price of common stock on the date of grant and such fair value is expensed on a straight-line basis over the requisite service period.
|
|
|
Fiscal Year Ended March 31, 2017
|
||||||||||
|
|
Stock Options
|
|
Restricted Stock
|
|
Total
|
||||||
Share-based compensation expense
|
|
$
|
473
|
|
|
$
|
2,341
|
|
|
$
|
2,814
|
|
Related income tax benefit
|
|
(166
|
)
|
|
(819
|
)
|
|
(985
|
)
|
|||
Net share-based compensation expense
|
|
$
|
307
|
|
|
$
|
1,522
|
|
|
$
|
1,829
|
|
|
|
Fiscal Year Ended March 31, 2016
|
||||||||||
|
|
Stock Options
|
|
Restricted Stock
|
|
Total
|
||||||
Share-based compensation expense
|
|
$
|
206
|
|
|
$
|
750
|
|
|
$
|
956
|
|
Related income tax benefit
|
|
(72
|
)
|
|
(263
|
)
|
|
(335
|
)
|
|||
Net share-based compensation expense
|
|
$
|
134
|
|
|
$
|
487
|
|
|
$
|
621
|
|
|
|
Fiscal Year Ended March 31, 2017
|
|||||||||||
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|
Remaining Contractual Life (Years)
|
|
Aggregate Intrinsic Value (in Millions)
|
|||||
Outstanding at April 1, 2016
|
|
362,513
|
|
|
$
|
24.53
|
|
|
|
|
|
||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
|
(85,981
|
)
|
|
25.23
|
|
|
|
|
|
|||
Canceled
|
|
(24,897
|
)
|
|
23.11
|
|
|
|
|
|
|||
Outstanding at March 31, 2017
|
|
251,635
|
|
|
$
|
24.44
|
|
|
6.9
|
|
$
|
3.1
|
|
Exercisable at March 31, 2017
|
|
170,412
|
|
|
$
|
24.12
|
|
|
6.7
|
|
$
|
2.1
|
|
|
|
Fiscal Year Ended March 31, 2016
|
|||||||||||
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|
Remaining Contractual Life (Years)
|
|
Aggregate Intrinsic Value (in Millions)
|
|||||
Outstanding at April 1, 2015
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Granted
|
|
368,487
|
|
|
24.40
|
|
|
|
|
|
|||
Exercised
|
|
(5,974
|
)
|
|
16.11
|
|
|
|
|
|
|||
Canceled
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding at March 31, 2016
|
|
362,513
|
|
|
$
|
24.53
|
|
|
8.0
|
|
$
|
2.7
|
|
Exercisable at March 31, 2016
|
|
131,161
|
|
|
$
|
23.67
|
|
|
7.5
|
|
$
|
1.1
|
|
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at April 1, 2016
|
|
181,977
|
|
|
$
|
23.72
|
|
Granted
|
|
140,426
|
|
|
28.92
|
|
|
Vested
|
|
(87,643
|
)
|
|
20.74
|
|
|
Canceled
|
|
(25,271
|
)
|
|
28.98
|
|
|
Outstanding at March 31, 2017
|
|
209,489
|
|
|
$
|
28.20
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Accounts receivable trade
|
|
$
|
63,297
|
|
|
$
|
53,423
|
|
Other receivables
|
|
1,998
|
|
|
422
|
|
||
|
|
65,295
|
|
|
53,845
|
|
||
Less: Allowance for doubtful accounts
|
|
(1,513
|
)
|
|
(1,208
|
)
|
||
Accounts receivable, net
|
|
$
|
63,782
|
|
|
$
|
52,637
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Raw materials and supplies
|
|
$
|
21,717
|
|
|
$
|
26,019
|
|
Work in process
|
|
6,272
|
|
|
5,432
|
|
||
Finished goods
|
|
29,538
|
|
|
26,087
|
|
||
Total inventories
|
|
57,527
|
|
|
57,538
|
|
||
Less: LIFO reserve
|
|
(5,295
|
)
|
|
(5,302
|
)
|
||
Less: Obsolescence reserve
|
|
(1,831
|
)
|
|
(602
|
)
|
||
Inventories, net
|
|
$
|
50,401
|
|
|
$
|
51,634
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Land and improvements
|
|
$
|
4,734
|
|
|
$
|
4,739
|
|
Buildings and improvements
|
|
48,189
|
|
|
46,004
|
|
||
Plant, office and laboratory equipment
|
|
64,944
|
|
|
65,732
|
|
||
Construction in progress
|
|
3,347
|
|
|
6,917
|
|
||
|
|
121,214
|
|
|
123,392
|
|
||
Less: Accumulated depreciation
|
|
(57,317
|
)
|
|
(59,035
|
)
|
||
Property, plant and equipment, net
|
|
$
|
63,897
|
|
|
$
|
64,357
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Property held for investment (a)
|
|
$
|
9,208
|
|
|
$
|
9,290
|
|
Retirement assets in excess of benefit obligations
|
|
2,954
|
|
|
2,063
|
|
||
Other
|
|
3,849
|
|
|
4,545
|
|
||
Other assets
|
|
$
|
16,011
|
|
|
$
|
15,898
|
|
(a)
|
As of
March 31, 2017
and
2016
,
$6.2 million
and
$6.2 million
in assets were held for sale, respectively, in the "Other" segment.
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Compensation and related benefits
|
|
$
|
12,128
|
|
|
$
|
12,502
|
|
Rebates and marketing agreements
|
|
2,726
|
|
|
1,976
|
|
||
Non-income taxes
|
|
817
|
|
|
1,378
|
|
||
Income taxes payable
|
|
106
|
|
|
939
|
|
||
Other accrued expenses
|
|
6,979
|
|
|
4,295
|
|
||
Accrued and other current liabilities
|
|
$
|
22,756
|
|
|
$
|
21,090
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Contingent consideration
|
|
$
|
6,390
|
|
|
$
|
5,854
|
|
Deferred income taxes
|
|
3,090
|
|
|
2,516
|
|
||
Other
|
|
3,900
|
|
|
3,450
|
|
||
Other liabilities
|
|
$
|
13,380
|
|
|
$
|
11,820
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Revolving Credit Facility, interest rate of 2.23% and 2.18%, respectively
|
|
$
|
60,625
|
|
|
$
|
76,539
|
|
Whitmore term loan, interest rate of 2.98% and 2.43%, respectively
|
|
12,582
|
|
|
13,143
|
|
||
Total debt
|
|
73,207
|
|
|
89,682
|
|
||
Less: Current portion
|
|
(561
|
)
|
|
(561
|
)
|
||
Long-term debt
|
|
$
|
72,646
|
|
|
$
|
89,121
|
|
2018
|
|
$
|
561
|
|
2019
|
|
561
|
|
|
2020
|
|
561
|
|
|
2021
|
|
61,186
|
|
|
2022
|
|
561
|
|
|
Thereafter
|
|
9,777
|
|
|
Total
|
|
$
|
73,207
|
|
2018
|
|
$
|
2,929
|
|
2019
|
|
2,729
|
|
|
2020
|
|
2,485
|
|
|
2021
|
|
2,257
|
|
|
2022
|
|
1,295
|
|
|
Thereafter
|
|
4,136
|
|
|
Total
|
|
$
|
15,831
|
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income for basic and diluted earnings per share
|
|
$
|
11,071
|
|
|
$
|
25,471
|
|
|
$
|
29,705
|
|
Weighted average shares:
|
|
|
|
|
|
|
||||||
Common stock
|
|
15,555
|
|
|
15,443
|
|
|
15,441
|
|
|||
Participating securities
|
|
218
|
|
|
182
|
|
|
142
|
|
|||
Denominator for basic earnings per common share
|
|
15,773
|
|
|
15,625
|
|
|
15,583
|
|
|||
Potentially dilutive securities (a)
|
|
66
|
|
|
50
|
|
|
41
|
|
|||
Denominator for diluted earnings per common share
|
|
15,839
|
|
|
15,675
|
|
|
15,624
|
|
|||
|
|
|
|
|
|
|
||||||
Net earnings per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.70
|
|
|
$
|
1.63
|
|
|
$
|
1.91
|
|
Diluted
|
|
0.70
|
|
|
1.62
|
|
|
1.90
|
|
(a)
|
No
shares were excluded as being anti-dilutive for the fiscal years ended
March 31, 2017
or
2016
. We have excluded
29,877
shares for the fiscal year ended
March 31, 2015
as their effect would have been anti-dilutive.
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Current derivative liabilities
|
|
$
|
199
|
|
|
$
|
511
|
|
Non-current derivative liabilities
|
|
420
|
|
|
1,366
|
|
|
|
Strathmore
|
|
Deacon
|
|
SureSeal
|
|
Total
|
||||||||
Balance at April 1, 2015
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.1
|
|
|
$
|
5.1
|
|
Acquisition of Strathmore
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
||||
Acquisition of Deacon
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
||||
Change due to accretion
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
||||
Change in estimate
|
|
(2.0
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(2.1
|
)
|
||||
Balance at March 31, 2016
|
|
—
|
|
|
0.4
|
|
|
5.5
|
|
|
5.9
|
|
||||
Change due to accretion
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
0.7
|
|
||||
Change in estimate
|
|
—
|
|
|
(0.4
|
)
|
|
0.2
|
|
|
(0.2
|
)
|
||||
Balance at March 31, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
|
$
|
6.4
|
|
|
|
Year ended March 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Assumptions used to determine benefit obligations:
|
|
|
|
|
|
|
|||
Discount rate
|
|
4.23
|
%
|
|
4.50
|
%
|
|
4.25
|
%
|
Rate of compensation increases
|
|
(a)
|
|
|
(a)
|
|
|
5.00
|
%
|
Assumptions used to determine net pension expense:
|
|
|
|
|
|
|
|||
Discount rate
|
|
4.50
|
%
|
|
4.25
|
%
|
|
5.00
|
%
|
Expected return on plan assets
|
|
6.19
|
%
|
|
7.00
|
%
|
|
7.00
|
%
|
Rate of compensation increases
|
|
(a)
|
|
|
(a)
|
|
|
5.00
|
%
|
(a)
|
Rate of compensation increase is no longer relevant to the Qualified Plan or Restoration Plan due to freezing benefit accruals. The rate of compensation increase on the Canadian Plan is
3.0%
.
|
|
|
For the year ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Service cost – benefits earned during the year
|
|
$
|
94
|
|
|
$
|
2,069
|
|
|
$
|
3,105
|
|
Interest cost on projected benefit obligation
|
|
2,637
|
|
|
2,739
|
|
|
2,579
|
|
|||
Expected return on assets
|
|
(3,723
|
)
|
|
(3,226
|
)
|
|
(2,406
|
)
|
|||
Net amortization and deferral
|
|
6
|
|
|
9
|
|
|
121
|
|
|||
Curtailment benefit
|
|
—
|
|
|
(8,020
|
)
|
|
—
|
|
|||
Net pension (benefit) expense
|
|
$
|
(986
|
)
|
|
$
|
(6,429
|
)
|
|
$
|
3,399
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Benefit obligation at beginning of year
|
|
$
|
60,561
|
|
|
$
|
65,631
|
|
Service cost
|
|
94
|
|
|
2,069
|
|
||
Interest cost
|
|
2,637
|
|
|
2,739
|
|
||
Actuarial loss
|
|
(2,091
|
)
|
|
(2,285
|
)
|
||
Benefits paid
|
|
(2,514
|
)
|
|
(1,416
|
)
|
||
Curtailment impact
|
|
—
|
|
|
(14,793
|
)
|
||
Impact of Share Distribution (a)
|
|
—
|
|
|
8,616
|
|
||
Other adjustment (b)
|
|
2,815
|
|
|
—
|
|
||
Currency translation impact
|
|
(68
|
)
|
|
—
|
|
||
Benefit obligation at end of year
|
|
$
|
61,434
|
|
|
$
|
60,561
|
|
Accumulated benefit obligation
|
|
$
|
61,132
|
|
|
$
|
60,561
|
|
(a)
|
Additional obligations that were included relate to employees who transferred from Capital Southwest to CSWI upon completion of the Share Distribution.
|
(b)
|
Reflects amounts associated with the plan assets and obligations of the Canadian Plan that were previously omitted from aggregate pension disclosures due to immateriality..
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
60,878
|
|
|
$
|
43,087
|
|
Actual return on plan assets
|
|
1,523
|
|
|
578
|
|
||
Benefits paid
|
|
(2,420
|
)
|
|
(1,410
|
)
|
||
Company contributions
|
|
83
|
|
|
—
|
|
||
Impact of Share Distribution (a)
|
|
—
|
|
|
18,623
|
|
||
Other adjustment (b)
|
|
2,263
|
|
|
—
|
|
||
Currency translation impact
|
|
(56
|
)
|
|
—
|
|
||
Fair value of plan assets at end of year
|
|
$
|
62,271
|
|
|
$
|
60,878
|
|
(a)
|
Assets previously held by Capital Southwest were contributed to CSWI in conjunction with the Share Distribution.
|
(b)
|
Reflects amounts associated with the plan assets and obligations of the Canadian Plan that were previously omitted from aggregate pension disclosures due to immateriality.
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Plan assets at fair value
|
|
$
|
62,271
|
|
|
$
|
60,878
|
|
Benefit obligation
|
|
(61,434
|
)
|
|
(60,561
|
)
|
||
Funded status
|
|
$
|
837
|
|
|
$
|
317
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Noncurrent assets
|
|
$
|
2,955
|
|
|
$
|
2,063
|
|
Current liabilities
|
|
(654
|
)
|
|
—
|
|
||
Noncurrent liabilities
|
|
(1,464
|
)
|
|
(1,746
|
)
|
||
Funded status
|
|
$
|
837
|
|
|
$
|
317
|
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Accumulated other comprehensive loss at beginning of year
|
|
$
|
(1,229
|
)
|
|
$
|
(5,210
|
)
|
Amortization of net loss
|
|
17
|
|
|
20
|
|
||
Amortization of prior service credit
|
|
3
|
|
|
(21
|
)
|
||
Curtailment impact
|
|
—
|
|
|
5,213
|
|
||
Impact of Share Distribution (a)
|
|
—
|
|
|
(467
|
)
|
||
Net loss arising during the year
|
|
(63
|
)
|
|
(764
|
)
|
||
Other adjustment (b)
|
|
(644
|
)
|
|
—
|
|
||
Currency translation impact
|
|
15
|
|
|
—
|
|
||
Accumulated other comprehensive loss at end of year
|
|
$
|
(1,901
|
)
|
|
$
|
(1,229
|
)
|
(a)
|
Deferred losses attributable to obligations related to employees who transferred from Capital Southwest to CSWI upon completion of the Share Distribution.
|
(b)
|
To recognize an adjustment, net of tax, to accumulated other comprehensive loss associated with the Canadian Plan.
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net prior service cost
|
|
$
|
45
|
|
|
$
|
—
|
|
Net loss
|
|
(1,946
|
)
|
|
(1,229
|
)
|
||
Accumulated other comprehensive loss
|
|
$
|
(1,901
|
)
|
|
$
|
(1,229
|
)
|
|
|
As of March 31,
|
||||
Asset category
|
|
2017
|
|
2016
|
||
Equity securities
|
|
17
|
%
|
|
35
|
%
|
Fixed income securities
|
|
78
|
%
|
|
59
|
%
|
Other
|
|
4
|
%
|
|
2
|
%
|
Cash and cash equivalents
|
|
1
|
%
|
|
4
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
|
As of March 31, 2017
|
|
As of March 31, 2016
|
||||||||||||||||||||||||||||
|
|
|
|
Hierarchical Levels
|
|
|
|
Hierarchical Levels
|
||||||||||||||||||||||||
Asset category
|
|
Total
|
|
I
|
|
II
|
|
III
|
|
Total
|
|
I
|
|
II
|
|
III
|
||||||||||||||||
Equity securities (a)
|
|
$
|
10,850
|
|
|
$
|
333
|
|
|
$
|
10,517
|
|
|
$
|
—
|
|
|
$
|
21,183
|
|
|
$
|
2,455
|
|
|
$
|
18,728
|
|
|
$
|
—
|
|
Fixed income securities (b)
|
|
48,312
|
|
|
—
|
|
|
48,312
|
|
|
—
|
|
|
35,719
|
|
|
3,979
|
|
|
31,740
|
|
|
—
|
|
||||||||
Other (c)
|
|
2,760
|
|
|
493
|
|
|
2,267
|
|
|
—
|
|
|
1,474
|
|
|
935
|
|
|
539
|
|
|
—
|
|
||||||||
Cash and cash equivalents
|
|
349
|
|
|
349
|
|
|
—
|
|
|
—
|
|
|
2,502
|
|
|
2,502
|
|
|
—
|
|
|
—
|
|
||||||||
Total
|
|
$
|
62,271
|
|
|
$
|
1,175
|
|
|
$
|
61,096
|
|
|
$
|
—
|
|
|
$
|
60,878
|
|
|
$
|
9,871
|
|
|
$
|
51,007
|
|
|
$
|
—
|
|
(a)
|
This category includes investment in equity securities of large, medium and small companies and equity investments in foreign companies. Mutual funds included in this category are valued using the net asset value per unit as of the valuation date. These investments include shares of Capital Southwest common stock. As of
March 31, 2017
and
2016
, Capital Southwest common stock represented
0%
and
1.2%
, respectively, of the fair value of the plan assets and CSWI common stock represented
0%
and
1.9%
, respectively, of the fair value of the plan assets.
|
(b)
|
This category includes investments in investment grade fixed income instruments, primarily U.S. government obligations.
|
(c)
|
This category includes investments in commodity linked and real estate funds within the U.S. and investments in funds that invest in a combination of U.S. and Non-U.S. equity and Canadian fixed income securities.
|
2018
|
|
$
|
2.5
|
|
2019
|
|
2.7
|
|
|
2020
|
|
2.9
|
|
|
2021
|
|
3.1
|
|
|
2022
|
|
3.3
|
|
|
Thereafter
|
|
17.9
|
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
U.S. Federal
|
|
$
|
18,910
|
|
|
$
|
40,981
|
|
|
$
|
39,511
|
|
Foreign
|
|
2,634
|
|
|
3,244
|
|
|
5,417
|
|
|||
Income before income taxes
|
|
$
|
21,544
|
|
|
$
|
44,225
|
|
|
$
|
44,928
|
|
|
|
Current
|
|
Deferred
|
|
Total
|
||||||
Fiscal year ended March 31, 2017:
|
|
|
|
|
|
|
||||||
U.S. Federal
|
|
$
|
5,686
|
|
|
$
|
2,469
|
|
|
$
|
8,155
|
|
State and local
|
|
1,481
|
|
|
317
|
|
|
1,798
|
|
|||
Foreign
|
|
1,201
|
|
|
(681
|
)
|
|
520
|
|
|||
Provision for income taxes
|
|
$
|
8,368
|
|
|
$
|
2,105
|
|
|
$
|
10,473
|
|
Fiscal year ended March 31, 2016:
|
|
|
|
|
|
|
||||||
U.S. Federal
|
|
$
|
9,210
|
|
|
$
|
7,573
|
|
|
$
|
16,783
|
|
State and local
|
|
1,368
|
|
|
(136
|
)
|
|
1,232
|
|
|||
Foreign
|
|
914
|
|
|
(175
|
)
|
|
739
|
|
|||
Provision for income taxes
|
|
$
|
11,492
|
|
|
$
|
7,262
|
|
|
$
|
18,754
|
|
Fiscal year ended March 31, 2015:
|
|
|
|
|
|
|
||||||
U.S. Federal
|
|
$
|
14,920
|
|
|
$
|
(1,848
|
)
|
|
$
|
13,072
|
|
State and local
|
|
933
|
|
|
3
|
|
|
936
|
|
|||
Foreign
|
|
1,637
|
|
|
(422
|
)
|
|
1,215
|
|
|||
Provision for income taxes
|
|
$
|
17,490
|
|
|
$
|
(2,267
|
)
|
|
$
|
15,223
|
|
|
|
Fiscal Years Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Computed tax expense at statutory rate
|
|
7,540
|
|
|
15,479
|
|
|
15,727
|
|
|||
Increase (reduction) in income taxes resulting from:
|
|
|
|
|
|
|
||||||
FIN 48 liability
|
|
1,593
|
|
|
1,277
|
|
|
—
|
|
|||
State and local income taxes, net of federal benefits
|
|
1,319
|
|
|
1,055
|
|
|
569
|
|
|||
Permanent differences
|
|
687
|
|
|
1,399
|
|
|
529
|
|
|||
Domestic production activity deduction
|
|
(545
|
)
|
|
(420
|
)
|
|
(817
|
)
|
|||
Foreign rate differential
|
|
(457
|
)
|
|
(642
|
)
|
|
(75
|
)
|
|||
Difference in U.S. rate
|
|
—
|
|
|
(107
|
)
|
|
(45
|
)
|
|||
Other, net
|
|
336
|
|
|
713
|
|
|
(665
|
)
|
|||
Provision for income taxes
|
|
$
|
10,473
|
|
|
$
|
18,754
|
|
|
$
|
15,223
|
|
|
|
As of March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Pension and other employee benefits
|
|
$
|
3,289
|
|
|
$
|
38
|
|
Accrued compensation
|
|
2,621
|
|
|
1,712
|
|
||
Inventory reserves
|
|
1,876
|
|
|
2,319
|
|
||
Net operating loss carryforwards
|
|
565
|
|
|
160
|
|
||
Accrued expenses
|
|
2
|
|
|
370
|
|
||
Other
|
|
1,485
|
|
|
2,289
|
|
||
Deferred tax assets
|
|
9,838
|
|
|
6,888
|
|
||
Valuation allowance
|
|
(107
|
)
|
|
(107
|
)
|
||
Deferred tax assets, net of valuation allowance
|
|
9,731
|
|
|
6,781
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Property, plant and equipment
|
|
(6,719
|
)
|
|
(5,819
|
)
|
||
Goodwill and intangible assets
|
|
(5,313
|
)
|
|
(2,567
|
)
|
||
Deferred gain
|
|
(783
|
)
|
|
(716
|
)
|
||
Other
|
|
(6
|
)
|
|
(195
|
)
|
||
Deferred tax liabilities
|
|
(12,821
|
)
|
|
(9,297
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(3,090
|
)
|
|
$
|
(2,516
|
)
|
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Balance at beginning of year
|
|
$
|
900
|
|
|
$
|
—
|
|
Increases related to prior year tax positions
|
|
916
|
|
|
900
|
|
||
Increases related to current year tax positions
|
|
730
|
|
|
—
|
|
||
Settlement
|
|
(521
|
)
|
|
—
|
|
||
Balance at end of year
|
|
$
|
2,025
|
|
|
$
|
900
|
|
|
|
Fiscal Years Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Currency translation adjustments:
|
|
|
|
|
||||
Balance at beginning of period
|
|
$
|
(5,248
|
)
|
|
$
|
(3,877
|
)
|
Adjustments for foreign currency translation
|
|
(2,884
|
)
|
|
(1,371
|
)
|
||
Balance at end of period
|
|
$
|
(8,132
|
)
|
|
$
|
(5,248
|
)
|
Interest rate swaps:
|
|
|
|
|
||||
Balance at beginning of period
|
|
$
|
(1,221
|
)
|
|
$
|
(1,206
|
)
|
Unrealized gains (losses), net of taxes of $(261) and $219, respectively (a)
|
|
485
|
|
|
(407
|
)
|
||
Reclassification of losses included in interest expense, net of taxes of $(180) and $(211), respectively
|
|
334
|
|
|
392
|
|
||
Other comprehensive income (loss)
|
|
819
|
|
|
(15
|
)
|
||
Balance at end of period
|
|
$
|
(402
|
)
|
|
$
|
(1,221
|
)
|
Defined benefit plans:
|
|
|
|
|
||||
Balance at beginning of period
|
|
$
|
(1,229
|
)
|
|
$
|
(5,210
|
)
|
Amortization of net prior service benefit, net of taxes of $(2) and $11,
respectively (b) |
|
3
|
|
|
(21
|
)
|
||
Amortization of net loss, net of taxes of $(7) and $(11), respectively (b)
|
|
17
|
|
|
20
|
|
||
Net loss arising during the year, net of tax of $42 and $411,
respectively |
|
(63
|
)
|
|
(764
|
)
|
||
Impact of Share Distribution, net of tax of $0 and $251, respectively
|
|
—
|
|
|
(467
|
)
|
||
Curtailment, net of taxes of $0 and $(2,807), respectively
|
|
—
|
|
|
5,213
|
|
||
Other adjustment, net of taxes of $276 and $0, respectively (c)
|
|
(644
|
)
|
|
—
|
|
||
Currency translation impact
|
|
15
|
|
|
—
|
|
||
Other comprehensive (loss) income
|
|
(672
|
)
|
|
3,981
|
|
||
Balance at end of period
|
|
$
|
(1,901
|
)
|
|
$
|
(1,229
|
)
|
(a)
|
Unrealized gains (losses) are reclassified to earnings as underlying cash interest payments are made. We expect to recognize a loss of
$0.3 million
, net of deferred taxes, over the next twelve months related to designated cash flow hedges based on their fair values at
March 31, 2017
.
|
(b)
|
Amortization of prior service costs and actuarial losses out of accumulated other comprehensive loss are included in the computation of net periodic pension expenses. See Note 12 for additional information.
|
(c)
|
To recognize an adjustment, net of tax, to accumulated other comprehensive income associated with the Canadian Plan.
|
•
|
Industrial Products;
|
•
|
Coatings, Sealants & Adhesives; and
|
•
|
Specialty Chemicals.
|
Year ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Industrial Products
|
|
Coatings, Sealants and Adhesives
|
|
Specialty Chemicals
|
|
Subtotal – Reportable Segments
|
|
Eliminations and Other
|
|
Total
|
||||||||||||
Revenues, net
|
|
$
|
158,654
|
|
|
$
|
96,869
|
|
|
$
|
71,469
|
|
|
$
|
326,992
|
|
|
$
|
92
|
|
|
$
|
327,084
|
|
Operating income
|
|
32,893
|
|
|
851
|
|
|
2,012
|
|
|
35,756
|
|
|
(13,275
|
)
|
|
22,481
|
|
||||||
Depreciation and amortization
|
|
6,963
|
|
|
3,647
|
|
|
4,812
|
|
|
15,422
|
|
|
374
|
|
|
15,796
|
|
Year ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Industrial Products
|
|
Coatings, Sealants and Adhesives
|
|
Specialty Chemicals
|
|
Subtotal – Reportable Segments
|
|
Eliminations and Other
|
|
Total
|
||||||||||||
Revenues, net
|
|
$
|
138,594
|
|
|
$
|
106,035
|
|
|
$
|
74,930
|
|
|
$
|
319,559
|
|
|
$
|
272
|
|
|
$
|
319,831
|
|
Operating income
|
|
31,075
|
|
|
10,911
|
|
|
12,490
|
|
|
54,476
|
|
|
(6,990
|
)
|
|
47,486
|
|
||||||
Depreciation and amortization
|
|
6,530
|
|
|
3,819
|
|
|
3,744
|
|
|
14,093
|
|
|
68
|
|
|
14,161
|
|
Year ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Industrial Products
|
|
Coatings, Sealants and Adhesives
|
|
Specialty Chemicals
|
|
Subtotal – Reportable Segments
|
|
Eliminations and Other
|
|
Total
|
||||||||||||
Revenues, net
|
|
$
|
118,422
|
|
|
$
|
52,119
|
|
|
$
|
89,738
|
|
|
$
|
260,279
|
|
|
$
|
1,555
|
|
|
$
|
261,834
|
|
Operating income
|
|
19,711
|
|
|
11,420
|
|
|
13,016
|
|
|
44,147
|
|
|
(113
|
)
|
|
44,034
|
|
||||||
Depreciation and amortization
|
|
6,108
|
|
|
1,117
|
|
|
3,290
|
|
|
10,515
|
|
|
—
|
|
|
10,515
|
|
Total Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Industrial Products
|
|
Coatings, Sealants and Adhesives
|
|
Specialty Chemicals
|
|
Subtotal – Reportable Segments
|
|
Eliminations and Other
|
|
Total
|
||||||||||||
March 31, 2017
|
|
$
|
171,147
|
|
|
$
|
110,724
|
|
|
$
|
96,510
|
|
|
$
|
378,381
|
|
|
$
|
19,283
|
|
|
$
|
397,664
|
|
March 31, 2016
|
|
154,583
|
|
|
128,886
|
|
|
97,539
|
|
|
381,008
|
|
|
11,252
|
|
|
392,260
|
|
||||||
March 31, 2015
|
|
137,148
|
|
|
42,010
|
|
|
95,389
|
|
|
274,547
|
|
|
11,974
|
|
|
286,521
|
|
|
|
For the Years Ended March 31,
|
|||||||||||||||||||
|
|
2017
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
||||||
U.S.
|
|
$
|
279,281
|
|
|
85.4
|
%
|
|
$
|
257,941
|
|
|
80.6
|
%
|
|
$
|
197,944
|
|
|
75.6
|
%
|
Non-U.S. (a)
|
|
47,803
|
|
|
14.6
|
%
|
|
61,890
|
|
|
19.4
|
%
|
|
63,890
|
|
|
24.4
|
%
|
|||
Revenues, net
|
|
$
|
327,084
|
|
|
100.0
|
%
|
|
$
|
319,831
|
|
|
100.0
|
%
|
|
$
|
261,834
|
|
|
100.0
|
%
|
(a)
|
No individual country within this group represents 10% or more of consolidated totals for any period presented.
|
|
|
As of March 31,
|
|||||||||||||||||||
|
|
2017
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
||||||
U.S.
|
|
$
|
223,855
|
|
|
89.1
|
%
|
|
$
|
220,878
|
|
|
94.4
|
%
|
|
$
|
134,117
|
|
|
90.3
|
%
|
Non-U.S.
|
|
27,526
|
|
|
10.9
|
%
|
|
12,990
|
|
|
5.6
|
%
|
|
14,457
|
|
|
9.7
|
%
|
|||
Long-lived assets (a)
|
|
$
|
251,381
|
|
|
100.0
|
%
|
|
$
|
233,868
|
|
|
100.0
|
%
|
|
$
|
148,574
|
|
|
100.0
|
%
|
(a)
|
Long-lived assets consists primarily of property, plant and equipment, intangible assets, goodwill and other assets, net of deferred taxes.
|
|
|
Fiscal Year ended March 31, 2017
|
||||||||||||||
Quarter
|
|
4th
|
|
3rd
|
|
2nd
|
|
1st
|
||||||||
Revenues, net
|
|
$
|
87.4
|
|
|
$
|
75.5
|
|
|
$
|
80.1
|
|
|
$
|
84.1
|
|
Gross profit
|
|
31.0
|
|
|
28.9
|
|
|
35.7
|
|
|
38.2
|
|
||||
Income before income taxes
|
|
4.0
|
|
|
3.3
|
|
|
7.0
|
|
|
7.2
|
|
||||
Net income
|
|
2.8
|
|
|
0.4
|
|
|
3.8
|
|
|
4.1
|
|
||||
Net earnings per common share (a)(b):
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.17
|
|
|
$
|
0.03
|
|
|
$
|
0.24
|
|
|
$
|
0.26
|
|
Diluted
|
|
0.17
|
|
|
0.03
|
|
|
0.24
|
|
|
0.26
|
|
|
|
Fiscal Year ended March 31, 2016
|
||||||||||||||
Quarter
|
|
4th
|
|
3rd
|
|
2nd
|
|
1st
|
||||||||
Revenues, net
|
|
$
|
76.3
|
|
|
$
|
70.9
|
|
|
$
|
83.7
|
|
|
$
|
88.9
|
|
Gross profit
|
|
34.6
|
|
|
32.1
|
|
|
40.8
|
|
|
40.4
|
|
||||
Income before income taxes
|
|
6.0
|
|
|
4.8
|
|
|
19.8
|
|
|
13.6
|
|
||||
Net income
|
|
1.8
|
|
|
2.0
|
|
|
13.0
|
|
|
8.7
|
|
||||
Net earnings per common share (a)(b):
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.12
|
|
|
$
|
0.13
|
|
|
$
|
0.83
|
|
|
$
|
0.56
|
|
Diluted
|
|
0.12
|
|
|
0.13
|
|
|
0.83
|
|
|
0.55
|
|
(a)
|
Net earnings per common share is computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in weighted average quarterly shares outstanding.
|
(b)
|
On September 30, 2015,
15.6 million
CSWI common shares were distributed to Capital Southwest shareholders in connection with the Share Distribution. For comparative purposes, and to provide a more meaningful calculation for weighted average shares, this amount was assumed to be outstanding throughout all periods presented up to and including September 30, 2015 in the calculation of basic weighted average shares. In addition, for the dilutive weighted average share calculations, the dilutive securities outstanding at September 30, 2015 were also assumed to be outstanding throughout all periods presented up to and including September 30, 2015.
|
(1)
Consolidated Financial Statements
|
|
CSW Industrials, Inc. Consolidated Financial Statements:
|
|
For each of the three years in the period ended March 31, 2017:
|
|
(2)
Financial Statement Schedules
|
|
None.
|
|
(3)
Exhibits
|
|
Date: June 14, 2017
|
|
|
CSW INDUSTRIALS, INC.
|
|||
|
|
|
||||
|
|
|
By:
|
|
|
/s/ Joseph B. Armes
|
|
|
|
|
|
|
Joseph B. Armes
|
|
|
|
|
|
|
Chairman and Chief Executive Officer
|
Name
|
|
Title
|
Date
|
|
|
|
|
/s/ Joseph B. Armes
|
|
Chief Executive Officer
|
June 14, 2017
|
Joseph B. Armes
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Greggory W. Branning
|
|
Chief Financial Officer
|
June 14, 2017
|
Greggory W. Branning
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
/s/ Michael R. Gambrell
|
|
Director
|
June 14, 2017
|
Michael R. Gambrell
|
|
|
|
|
|
|
|
/s/ Terry L. Johnston
|
|
Director
|
June 14, 2017
|
Terry L. Johnston
|
|
|
|
|
|
|
|
/s/ Linda A. Livingstone
|
|
Director
|
June 14, 2017
|
Linda A. Livingstone, Ph.D.
|
|
|
|
|
|
|
|
/s/ William F. Quinn
|
|
Director
|
June 14, 2017
|
William F. Quinn
|
|
|
|
|
|
|
|
/s/ Robert M. Swartz
|
|
Director
|
June 14, 2017
|
Robert M. Swartz
|
|
|
|
|
|
|
|
/s/ J. Kent Sweezey
|
|
Director
|
June 14, 2017
|
J. Kent Sweezey
|
|
|
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
2.1
|
Distribution Agreement (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form 10, filed on September 9, 2015)
|
2.2
|
Asset Purchase Agreement by and among Strathmore Holdings, LLC, Strathmore Products, Inc., Strathmore Products of Longview, LLC, Strathmore Products of Houston, LLC, SP Waller, LLC, Eric T. Burr and William M. Udovich and the Whitmore Manufacturing Company, effective as of April 1, 2015 (incorporated by reference to Exhibit 2.2 to the Company’s Registration Statement on Form 10, filed on July 21, 2015)
|
3.1
|
Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10, filed on September 9, 2015)
|
3.2
|
Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 10, filed on September 9, 2015)
|
10.1
|
Tax Matters Agreement dated as of September 8, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form 10, filed on September 9, 2015)
|
10.2
|
Amended and Restated Employment Matters Agreement, dated as of September 14, 2015, by and between Capital Southwest Corporation and CSW Industrials, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed on November 16, 2015)
|
10.3
|
Credit Agreement, dated as of December 11, 2015, among CSW Industrials, Inc., CSW Industrials Holdings, Inc. and The Whitmore Manufacturing Company and the lenders identified therein. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on December 17, 2015)
|
10.4
|
Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.5 to Amendment No. 3 to the Company’s Registration Statement on Form 10, filed on August 28, 2015)
|
10.5
|
Amended and Restated CSW Industrials, Inc. 2015 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on December 12, 2016) +
|
10.6
|
Employment agreement by and between CSW Industrials, Inc. and Joseph Armes, dated October 1, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.7
|
Form of Employee Restricted Stock Award Agreement (time vesting) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.8
|
Form of Employee Restricted Stock Award Agreement (performance vesting) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.9*
|
Form of Employee Performance Share Award Agreement +
|
10.10
|
Form of Non-Employee Director Restricted Stock Award (time vesting) (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.11
|
Form of Incentive Stock Option Right Award Agreement (replacement award agreement) (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.12
|
Form of Non-Qualified Stock Option Right Award Agreement (replacement award agreement) (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.13
|
Form of Restricted Share Award Agreement (replacement award agreement) (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.14
|
Form of Non-Qualified Stock Option Right Award Agreement (executive compensation plan – replacement award agreement) (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.15
|
Form of Restricted Share Award Agreement (executive compensation plan – replacement award agreement) (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q, filed on February 16, 2016) +
|
10.16
|
Consulting Agreement between CSW Industrials, Inc. and GamCo, LLC (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K, filed on June 8, 2016) +
|
10.17
|
CSW Industrials, Inc. Executive Change in Control and Severance Benefit Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 12, 2016) +
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
10.18
|
Agreement dated July 17, 2016 by and among CSW Industrials, Inc, and the entities and natural persons listed thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 18, 2016)
|
10.19
|
Employment Release Agreement between CSW Industrials, Inc. and Kelly Tacke (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 15, 2016) +
|
21.1*
|
List of subsidiaries of the Company
|
23.1*
|
Consent of Grant Thornton LLP
|
31.1*
|
Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1**
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2**
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith
|
**
|
Furnished herewith
|
+
|
Management contracts and compensatory plans required to be filed as exhibits to this Annual Report on Form 10-K.
|
Date of Grant:
|
__________________
|
Name of Participant:
|
___________________
|
Target Number of Performance Shares:
|
___________________
|
Performance Period:
|
The period beginning on _____ and ending on _______.
|
(a)
|
The Performance Shares awarded hereby are contingently awarded, and the Participant’s vesting in all, or any portion, of the Performance Shares and the issuance of the equivalent number of Common Shares pursuant to
Section 3
below, are dependent on the achievement of the Management Objectives set forth in
Exhibit A
to this Award Agreement and the Participant remaining an employee of the Company or one of its Subsidiaries until the last day of the Performance Period. Subject to
Section 2(c)
below, in the event of the Participant’s termination of service from the Company and all Subsidiaries prior to the last day of the Performance Period, the Performance Shares awarded pursuant to this Award Agreement shall be forfeited and cancelled on the date of such termination of service. The Common Shares, if any, that are issued pursuant to this Award Agreement following the end of a Performance Period are subject to the Company’s “Recoupment of Incentive Compensation” policy.
|
(b)
|
Any portion of the Performance Shares that does not vest on the last day of the Performance Period as provided in
Section 2(a)
above or
Section 2(c)
below, will be forfeited and cancelled on the last day of the Performance Period.
|
(c)
|
Notwithstanding anything contained in this Award Agreement to the contrary, the Performance Shares awarded pursuant to this Award Agreement shall automatically vest as provided in
Exhibit A
hereto and become issuable as provided in
Section 3
below upon the occurrence of any of the following events: (i) a Change in Control, (ii) the Participant’s termination of service from the Company and all Subsidiaries due to his or her Disability or (iii) the Participant’s termination of service from the Company and all Subsidiaries due to his or her death. Additionally, notwithstanding anything contained in this Award Agreement to the contrary, the forfeiture and cancellation of the Performance Shares awarded pursuant to this Award Agreement are subject to the terms and provisions of the Company’s Executive Change in Control and Severance Benefit Plan, dated December 9, 2016, as it may be amended from time to time. “
Disability
” means the Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuo us period of not less than twelve (12) months.
|
Name of Subsidiary
|
Jurisdiction of Incorporation
|
Percentage Ownership
|
CSW Industrials Holdings, Inc.
|
Delaware
|
100%
|
Balco, Inc.
|
Kansas
|
100%
|
CapStar Holdings Corporation
|
Nevada
|
100%
|
Greco Aluminum Railings, Ltd.
|
UK
|
100%
|
Greco Aluminum Railings (U.S.A.) Inc.
|
Delaware
|
100%
|
Greco Railings Holdings, LLC
|
Delaware
|
100%
|
Jet-Lube of Canada Ltd.
|
Canada
|
100%
|
Jet-Lube UK, Ltd.
|
UK
|
100%
|
Jet-Lube, LLC
|
Delaware
|
100%
|
RectorSeal Australia Proprietary Limited
|
Australia
|
100%
|
Smoke Guard California, Inc.
|
Nevada
|
100%
|
Smoke Guard, Inc.
|
Nevada
|
100%
|
Strathmore Acworth Property, LLC
|
Delaware
|
100%
|
Strathmore Cutten Road Property, LLC
|
Texas
|
100%
|
Strathmore Employee Holdings, LLC
|
Delaware
|
100%
|
Strathmore Holdings, LLC
|
Delaware
|
100%
|
Strathmore Longview Property, LLC
|
Delaware
|
100%
|
Strathmore Properties Holdings, LLC
|
Delaware
|
100%
|
RectorSeal, LLC
|
Delaware
|
100%
|
Whitmore Manufacturing, LLC
|
Delaware
|
100%
|
Whitmore Europe Limited
|
UK
|
100%
|
Whitmore UK Holdings, Ltd.
|
UK
|
100%
|
Whitmore’s Field Services, LLC
|
Texas
|
100%
|
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ended March 31, 2017 of CSW Industrials, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Joseph B. Armes
|
Joseph B. Armes
|
Chief Executive Officer
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ended March 31, 2017 of CSW Industrials, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Greggory W. Branning
|
Greggory W. Branning
|
Chief Financial Officer
|
(Principal Financial Officer)
|
|
/s/ Joseph B. Armes
|
Joseph B. Armes
|
Chief Executive Officer
|
(Principal Executive Officer)
|
|
/s/ Greggory W. Branning
|
Greggory W. Branning
|
Chief Financial Officer
|
(Principal Financial Officer)
|