Graham Corporation (GHM) 2015年年度報告「AMEX」.pdf

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1、HIGHER POTENTIALStrategy.Process.Team.2016 Annual ReportABOUT GRAHAM CORPORATIONTEN-YEAR FINANCIAL HIGHLIGHTS$0$30$60$90$120$15020122013201420152016REVENUE(Dollars in millions)$0$3$6$9$12$1520122013201420152016NET INCOME(Dollars in millions)*at March 31$0$20$40$60$80$100$12020122013201420152016BACKL

2、OG*(Dollars in millions)Graham Corporation is a global business that designs,manufactures and sells critical equipment for the energy,defense and chemical/petrochemical industries.Energy markets include oil refining,cogeneration,nuclear and alternative power.For the defense industry,our equipment is

3、 used in nuclear propulsion power systems for the U.S.Navy.Grahams global brand is built upon our world renowned engineering expertise in vacuum and heat transfer technology,responsive and flexible service and unsurpassed quality.We design and manufacture custom engineered ejectors,vacuum pumping sy

4、stems,surface condensers and vacuum systems.We are also a leading nuclear code accredited fabrication and specialty machining company.We supply components used inside reactor vessels and outside containment vessels of nuclear power facilities.Our equipment can also be found in other diverse applicat

5、ions such as metal refining,pulp and paper processing,water heating,refrigeration,desalination,food processing,pharmaceutical,heating,ventilating and air conditioning.Grahams reach spans the globe and its equipment is installed in facilities from North and South America to Europe,Asia,Africa and the

6、 Middle East.Graham routinely posts news and other important information on its website,www.graham-,where additional comprehensive information on Graham Corporation and its subsidiaries can be found.Unless indicated,information on Grahams website is not part of this Annual Report.Fiscal Years Ended

7、March 31Operating PerformanceRevenueGross profitGross profit margin(%)Selling,general and administrativeRestructuring chargeOperating margin(%)Net incomeDiluted earnings per shareWeighted average shares outstanding-dilutedYear-End Financial PositionTotal assetsLong-term debt,including capital lease

8、obligationsCash,cash equivalents and investmentsStockholders equityBook value per shareDividend per shareOther DataWorking capitalDepreciation and amortizationCapital expendituresBacklog at March 31Number of employeesGraham Corporation2FISCAL 2016Dear Fellow Shareholders,These are tough times for co

9、mpanies in the energy industry.But,we believe that in fiscal 2016,Graham demonstrated that it is a stronger,more diverse and better performing company compared with past downturns.The dramatic decline in crude oil prices over the past 18 months precipitated an extraordinary and rapid decline in capi

10、tal investment by our refining and chemical industry customers.Yet,despite a 33%decline in revenue,we remained profitable with$0.61 in earnings per share,generated$18.8 million in cash,maintained investments to support our long-term strategy,and distributed$12.7 million to shareholders.We believe th

11、is achievement was due in large part to actions we have taken to change how we operate in our cyclical energy markets and to develop opportunities in less cyclical markets.We believe that we have created the ability to pursue growth opportunities within a contracted market using our strong balance s

12、heet and operating cash flows.Strategy to Weather Cycles,Capitalize on Strengths and Create Growth OpportunitiesWe made several significant decisions over the last ten years that we believe have helped us get to this position,including:Diversify Revenue Opportunities:We chose to build our market pos

13、itions in the Naval Nuclear Propulsion Program and the utility nuclear power market.As a result,at the end of fiscal 2016,approximately 60%of backlog was for markets or customers we had not served prior to fiscal 2010.We expect this backlog will begin to convert to revenue in fiscal years 2017 and 2

14、018.Establish a Stronger Safety and Productivity Culture:Our operations are safer and our employees are more engaged and attentive to quality,productivity and process improvement,which benefits the entire Graham team while improving our cost structure.e.Invest in our Business:Since fiscal 2009,we in

15、vested about$20 million of capital in physical plant,modern machining tools and welding equipment to significantly improve quality,enhance training,increase productivity and reduce lead times.For example,welding operations comprise approximately 40%of our direct labor content,so we invested in a wel

16、der development and training facility,as well as in modern welding equipment,both of which have greatly enhanced productivity and improved quality.Commit to Greater Employee Engagement and Development:We believe that our most valuable asset is our employees.To increase employee engagement and unlock

17、 their true potential,we initiated several initiatives that included:the Franklin-Covey 4 Disciplines of Execution strategy deployment process,Quick Response Manufacturing processes and SMART goal performance management that links employees to corporate strategies.We believe we are transforming Grah

18、am by leveraging the know-how and capabilities of our talented employees to elevate our performance and customer service.A Strong Value Proposition in Every Market EnvironmentWe have developed strong capabilities to successfully execute high quality,engineered-to-order and build-to-spec process-crit

19、ical equipment.We believe that we drive value that sets Graham apart from our competitors in four major ways:Value-Enhancing Sales and Development Platform:We believe that our customer-facing platform of sales,project estimating and application engineering is exceptional.We have tools and capabiliti

20、es to iterate quickly and comprehensively as we help our customers develop their specifications for the best method of integration of our equipment into their facilities.We believe our early and deep involvement provides us a competitive advantage in the long sales cycle industries we serve.Strong C

21、apabilities to Handle Complex,Custom Orders:There is intense interaction between our project management teams and our customers while product design and quality requirements are finalized after an order is placed.Our order administration,risk management,cost containment,quality and engineering docum

22、entation is valued by the end users,engineering contractors and original equipment manufacturers that serve our end markets,who believe these capabilities are as critical as the equipment itself.OUR STRONG VALUE PROPOSITION$51$43$14$108 MILLION OF CONSOLIDATED BACKLOGCommercialNuclearUtilityTraditio

23、nal MarketsNaval NuclearPropulsionDART RATE(DART:Days Away from Work or with Job Restrictions)01234562012201320142015Industry AverageGraham Corporation3For their ongoing diligence and commitment to our success,I extend my heartfelt gratitude to our employees.For their support and challenging guidanc

24、e,I extend my appreciation to our Directors.Finally,to you,our shareholders,I thank you for your confidence in our growth strategy and your belief in our ability to achieve it.Sincerely,James R.Lines President and Chief Executive OfficerSincerely,James R.Lines President and Chief Executiv Responsive

25、,Flexible Production Environment:We are adept at handling low volume,high mix orders.During production it is not uncommon for customer-driven engineering changes to occur that alter the configuration of what was initially released into production.The markets that we serve demand this flexible operat

26、ing model and we believe we are exceptionally skilled at responding to our customers needs.Robust After-Market Technical Support:Our strong technical services platform provides for engineering and service personnel to go to customer sites to audit the performance of our equipment,provide operator tr

27、aining and troubleshoot performance issues.This is important to our customers as their focus is always on maximizing equipment capabilities.The skill mastery required to support our four value drivers entails several years of training and situational exposure.While we have refined our employee train

28、ing processes and reduced the time to achieve proficiency,experience is still needed to create the caliber of employee essential to our success.As a result,we are reluctant to compromise during temporary cyclical downturns by eliminating the talent we have developed.We also have made investments in

29、personnel and infrastructure ahead of offsetting revenue to support our substantial naval nuclear and commercial nuclear utility backlog.We believe our approach to maintaining talent is vital for long-term revenue growth and stronger earnings when our markets recover.Financial Strength and Flexibili

30、ty Cash,cash equivalents and investments were$65.1 million at fiscal year end,up from$60.3 million a year earlier.During the year,we repurchased$9.4 million of shares in the open market and paid$3.3 million in dividends.We have the financial capacity and capability to distribute cash to our sharehol

31、ders at these levels without affecting our ability to invest for growth.Additionally,reflecting our commitment to shareholder value and confidence in our business,in January 2016,the Board of Directors increased our annual dividend to$0.36 per share,a 13%increase.This was the fourth consecutive year

32、 with a dividend increase.Fiscal 2017 Outlook We are expecting revenue to be approximately$80 million to$95 million in fiscal 2017.We had$96 million in gross bookings,or$84 million net of backlog cancellations,in fiscal 2016.This was down from$136.5 million of net bookings in fiscal 2015 which inclu

33、ded significant,long-lead time naval orders.Noteworthy additions to backlog in fiscal 2016 that support our fiscal 2017 revenue expectation include:$14 million in large orders for North American crude oil refinery revamps$7.5 million in orders for a North American natural gas-based petrochemical cap

34、acity expansion$7.0 million in large orders for Latin American crude oil refinery revamps$3.5 million for a direct contact condenser and vacuum system for a Southeast Asian geothermal power plant$3 million for nuclear utility fuel oil storage tanks$2.5 million for nuclear utility specialty heat exch

35、angersEffecting our StrategyWe believe that a market downturn creates opportunities for us to take actions for long-term value creation.While our end markets are weak,we are executing plans to steepen the slope of our growth trajectory with a market recovery by expanding revenue opportunities within

36、 our existing markets and further diversifying with revenue from markets not currently served.As we explore acquisition opportunities,we are encouraged by the receptiveness of management teams at target companies to engage in discussions regarding potential acquisition by Graham.63%15%10%12%2016 REV

37、ENUE BY GEOGRAPHIC MARKETOtherAsiaUnited StatesMiddle East32%33%19%16%2016 REVENUE BY INDUSTRYOil RefiningChemical and PetrochemicalProcessingOtherPowerGraham Corporation4Stock Exchange Listing NYSE:GHMAnnual MeetingThe 2016 Annual Meeting of Stockholders will be held on Thursday,July 28,2016 at 11:

38、00 a.m.,Eastern Time,at the Companys corporate headquarters:20 Florence Avenue,Batavia,New York 14020.Transfer Agent and Registrar Computershare P.O.Box 30170 College Station,Texas 77842-3170Overnight Delivery Computershare 211 Quality Circle,Suite 210 College Station,Texas 77845U.S.Stockholders:800

39、-288-9541TDD U.S.Hearing Impaired:800-231-5469International Stockholders:201-680-6578TDD International Stockholders:201-680- Relations Investors,stockholders,security analysts and others seeking information about Graham Corporation should contact:Jeffrey F.GlajchVice President-Finance&Administration

40、,Chief Financial Officer and Corporate Secretary Phone:(585)343-2216 Email:jglajchgraham-Deborah K.PawlowskiKei Advisors LLC Phone:(716)843-3908 Email:Karen L.HowardKei Advisors LLC Phone:(716)843-3942 Email:Additional information is available on our website at:www.graham-.Information on the website

41、 is not a part of this Annual Report.Independent Auditors Deloitte 910 Bausch&Lomb Place Rochester,New York 14604 Corporate Counsel Harter Secrest&Emery LLP 1600 Bausch&Lomb Place Rochester,New York 14604 Senior Executive TeamJames R.Lines President and Chief Executive OfficerJeffrey F.Glajch Vice P

42、resident-Finance&Administration,Chief Financial Officer and Corporate SecretaryAlan E.Smith Vice President and General Manager BataviaJennifer R.Condame Corporate Controller and Chief Accounting Officer GRAHAM CORPORATION STOCKHOLDER INFORMATIONJames J.Barber,Ph.D.1,2Employee Benefits Committee Chai

43、r Director Since 2011 Principal,Barber Advisors,LLCAlan Fortier 1,3,4Nominating and Corporate Governance Committee Chair Director Since 2008 President,Fortier&Associates,Inc.James R.LinesPresident and Chief Executive Officer Director Since 2006James J.Malvaso 1,3,4Chairman of the Board Director Sinc

44、e 2003 Retired Senior Advisor,Toyota Material Handling GroupGerard T.Mazurkiewicz 1,2Audit Committee Chair Director Since 2007 Tax Partner,Dopkins&Company,LLPJonathan W.Painter 1,3,4Director Since 2014 President,Chief Executive Officer and Director,Kadant Inc.Lisa M.Schnorr 2,3Compensation Committee

45、 Chair Director Since 2014 Senior Vice President,Corporate Controller,Constellation Brands,Inc.Directors EmeritusJerald D.BidlackDirector from 1985 until 2015Helen H.BerkeleyDirector from 1998 until 20151-Audit Committee2-Employee Benefits Committee3-Compensation Committee4-Nominating and Corporate

46、Governance CommitteeBoard of DirectorsThe following Annual Report on Form 10-K for the year ended March 31,2016was filed with the U.S.Securities and Exchange Commission on June 1,2016THIS PAGE INTENTIONALLY LEFT BLANK UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON,D.C.20549 FORM 10-K(Ma

47、rk One)?ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31,2016 or?TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _ to _.Commission File Number 1-8462 GRAHAM CO

48、RPORATION(Exact name of registrant as specified in its charter)Delaware 16-1194720(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)20 Florence Avenue,Batavia,New York 14020(Address of principal executive offices)(Zip Code)Registrants telephone number,i

49、ncluding area code 585-343-2216 Securities registered pursuant to Section 12(b)of the Act:Title of each class Name of each exchange on which registered Common Stock(Par Value$.10)NYSE Securities registered pursuant to Section 12(g)of the Act:Title of Class Preferred Stock Purchase Rights Indicate by

50、 check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes?No?Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes?No?Indicate by checkmark whether the registrant(1)has filed

51、 all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes?No?Indicate by c

52、heckmark whether the registrant has submitted electronically and posted on its corporate Website,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months(or for such shorter period that the registrant was required to

53、 submit and post such files).Yes?No?Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part I

54、II of this Form 10-K or any amendment to this Form 10-K.?Indicate by checkmark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reporting company.See the definitions of“large accelerated filer,”“accelerated filer,”and“smaller reporting com

55、pany”in Rule 12b-2 of the Exchange Act:Large accelerated filer?Accelerated filer?Non-accelerated filer?(Do not check if a smaller reporting company)Smaller reporting company?Indicate by checkmark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes?No?The aggregate mark

56、et value of the voting stock held by non-affiliates of the registrant as of September 30,2015,the last business day of the registrants most recently completed second fiscal quarter,was$168,783,420.The market value calculation was determined using the closing price of the registrants common stock on

57、September 30,2015,as reported on the NYSE(the exchange on which the registrants common stock is listed).For purposes of the foregoing calculation only,all directors,officers and the Employee Stock Ownership Plan of the registrant have been deemed affiliates.As of May 23,2016,the registrant had outst

58、anding 9,646,981shares of common stock,$.10 par value.DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrants definitive Proxy Statement,to be filed in connection with the registrants 2016 Annual Meeting of Stockholders to be held on July 28,2016,are incorporated by reference into Part III,I

59、tems 10,11,12,13 and 14 of this filing.2 Table of Contents GRAHAM CORPORATION Annual Report on Form 10-K Year Ended March 31,2016 PART I PAGE Item 1 Business.3Item 1A Risk Factors.8Item 1B Unresolved Staff Comments.16Item 2 Properties.16Item 3 Legal Proceedings.16Item 4 Mine Safety Disclosures.16 PA

60、RT II Item 5 Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities.17Item 6 Selected Financial Data.18Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations.19Item 7A Quantitative and Qualitative Disclosures Ab

61、out Market Risk.29Item 8 Financial Statements and Supplementary Data.30Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.60Item 9A Controls and Procedures.60Item 9B Other Information.60 PART III Item 10 Directors,Executive Officers and Corporate Governance.6

62、1Item 11 Executive Compensation.61Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.61Item 13 Certain Relationships and Related Transactions,and Director Independence.61Item 14 Principal Accounting Fees and Services.61 PART IV Item 15 Exhibits,Fin

63、ancial Statement Schedules.62 Note:Portions of the registrants definitive Proxy Statement,to be issued in connection with the registrants 2016 Annual Meeting of Stockholders to be held on July 28,2016,are incorporated by reference into Part III,Items 10,11,12,13 and 14 of this Annual Report on Form

64、10-K.3 PART I(Dollar amounts in thousands except per share data)Item 1.Business Graham Corporation(“we,”“us,”“our”)is a global business that designs,manufactures and sells critical equipment for the energy,defense and chemical/petrochemical industries.Our energy markets include oil refining,cogenera

65、tion,nuclear and alternative power.For the defense industry,our equipment is used in nuclear propulsion power systems for the U.S.Navy.For the chemical and petrochemical industries,our equipment is used in fertilizer,ethylene,methanol and downstream chemical facilities.Grahams global brand is built

66、upon our world-renowned engineering expertise in vacuum and heat transfer technology,responsive and flexible customer service and high quality standards.We design and manufacture custom-engineered ejectors,vacuum pumping systems,surface condensers and vacuum systems.We are also a leading nuclear cod

67、e accredited fabrication and specialty machining company.We supply components used inside reactor vessels and outside containment vessels of nuclear power facilities.Our equipment can also be found in other diverse applications such as metal refining,pulp and paper processing,water heating,refrigera

68、tion,desalination,food processing,pharmaceutical,heating,ventilating and air conditioning.Our corporate headquarters are located in Batavia,New York.We have production facilities co-located with our headquarters in Batavia and also at our wholly-owned subsidiary,Energy Steel&Supply Co.(“Energy Steel

69、”),located in Lapeer,Michigan.We also have a wholly-owned foreign subsidiary,Graham Vacuum and Heat Transfer Technology(Suzhou)Co.,Ltd.(“GVHTT”),located in Suzhou,China.GVHTT provides sales and engineering support for us in the Peoples Republic of China and management oversight throughout Southeast

70、Asia.We were incorporated in Delaware in 1983 and are the successor to Graham Manufacturing Co.,Inc.,which was incorporated in New York in 1936.As of March 31,2016,we had 368 employees.Our stock is traded on the NYSE under the ticker symbol“GHM”.Unless indicated otherwise,dollar figures in this Annu

71、al Report on Form 10-K are reported in thousands.Our Products,Customers and Markets Our products are used in a wide range of industrial process applications,primarily in energy markets,including:?Petroleum Refining?conventional oil refining?oil sands extraction and upgrading?Defense?propulsion syste

72、ms for nuclear-powered aircraft carriers and submarines?Chemical and Petrochemical Processing?fertilizer plants?ethylene,methanol and nitrogen producing plants?plastics,resins and fibers plants?downstream petrochemical plants?coal-to-chemicals plants?gas-to-liquids plants?Power Generation/Alternativ

73、e Energy?nuclear power generation?fossil fuel plants?biomass plants?cogeneration power plants?geothermal power plants?ethanol plants 4?Other?soap manufacturing plants?air conditioning and water heating systems?food processing plants?pharmaceutical plants?liquefied natural gas production facilities O

74、ur principal customers include end users of our products in their manufacturing,refining and power generation processes,large engineering companies that build installations for companies in such industries,and the original equipment manufacturers,who combine our products with their equipment prior t

75、o its sale to end users.Our products are sold by a team of sales engineers we employ directly as well as by independent sales representatives located worldwide.There may be short periods of time,a fiscal year for example,where one customer may make up greater than 10%of our business.However,if this

76、occurs in multiple years,it is usually not the same customer or project over such a multi-year period.Over a business cycle,our domestic sales will generally range between 35%and 60%of total sales.The mix of domestic and international sales can vary from year to year.A breakdown of our net sales by

77、geographic area and product class for our fiscal years ended March 31,2016,2015 and 2014,which we refer to as fiscal 2016,”“fiscal 2015”and“fiscal 2014”,respectively,is contained in Note 13 to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K and

78、such breakdown is incorporated into this Item 1 by reference.We refer to our fiscal year ending March 31,2017 as“fiscal 2017”.Our backlog at March 31,2016 was$107,963,compared with$113,811 at March 31,2015.Our Strengths Our core strengths include:?We have a value-enhancing sales and development plat

79、form.Our customer-facing platform of sales,project estimating and application engineering are competitive advantages.We have tools and capabilities to iterate quickly and comprehensively as customers evaluate how best to integrate our equipment into their facilities.We find our early and deep involv

80、ement adds significant value to the process and is an important competitive differentiator in the long sales cycle industries we serve.Customers need our engineering and fabrication expertise early in project life cycle to understand how best to specify our equipment.?We are renowned for our strong

81、capabilities to handle complex,custom orders.The orders we receive are extremely complex and the order management platforms in our businesses provide a second competitive differentiator for our company.Typically there is intense interaction between our project management teams and the end user or it

82、s engineering firm as product design and quality requirements are finalized after an order is placed.We have built strong capabilities to successfully execute high quality,engineered-to-order and build-to-spec process-critical equipment.In our markets,order administration,risk management,cost contai

83、nment,quality and engineering documentation are as important as the equipment itself.Supplier selection process begins with assessing whether a supplier can manage all aspects of an order.?We maintain a responsive,flexible production environment.The operations platform in our businesses is adept at

84、handling low volume,high mix orders that are highly customized fabrications.Our production environment is much different from a highly engineered standard products business.While equipment within product may look similar,rarely are two alike.Also,during production it is not uncommon for customer-dri

85、ven engineering changes to occur that alter the configuration of what had been initially released into production.The markets that we serve demand this flexible operating model.?We provide robust after-the-sale technical support.Our engineering and service personnel go to customer sites to audit the

86、 performance of our equipment,provide operator training and troubleshoot performance issues.Technical service after a sale is important to our customer as their focus is always on leveraging to maximize equipment capabilities.?We have a highly trained workforce.We maintain a long-tenured,highly skil

87、led and extremely flexible workforce.5?We have a strong balance sheet.We maintain significant cash and investments on hand,and no bank debt,which we believe provides us with the flexibility to pursue our business strategy,including growth by acquisition.?We have a high quality credit facility.Our cr

88、edit facilities provide us with a$30,000 borrowing capacity that is expandable at our option to provide us with up to a total of$55,000 in borrowing capacity.Our Strategy We intend to strategically leverage and deploy our assets,including but not limited to,financial,technical,manufacturing and know

89、-how,in order to capture expanded market share within the geographies and industries we serve,expand revenue opportunities in adjacent and countercyclical markets and continually improve our results of operations in order to:?Generate sustainable earnings growth;?Reduce earnings volatility;?Improve

90、our operating performance;?Generate strong cash flow from operations;?Meet or exceed our customers expectations;?Improve the value we provide to our customers;and?Provide an acceptable return to our shareholders To accomplish our objectives and maintain strategic focus,we believe that we must:?Succe

91、ssfully deploy corporate assets to expand our market share in the industries we currently serve,access and develop a stronger presence in industries where we do not have a historically strong presence,and pursue acquisitions,partnerships and/or other business combinations in order to enter new geogr

92、aphic or industrial markets,new product lines or expand our coverage in existing markets.?Identify organic growth opportunities and consummate acquisitions where we believe the strength of the Graham and Energy Steel brands will provide us with the ability to expand and complement our core businesse

93、s.We intend to extend our existing product lines,move into complementary product lines and expand our global sales presence in order to further broaden our existing markets and reach additional markets.?Expand our market penetration in the domestic nuclear power industry.We also intend to identify a

94、dditional domestic and international opportunities to serve the commercial nuclear power industry.?Expand our market presence in the U.S.Navys Nuclear Propulsion Program.We plan to demonstrate our proficiency by successfully executing the complex Nuclear Propulsion Program orders that are currently

95、in our backlog by controlling both cost and risk,providing high-quality custom fabrication to exacting military quality control requirements and through disciplined project management.We intend to become a preferred supplier of equipment to the U.S.Navys Nuclear Propulsion Program for both surface a

96、nd submarine vessels.?Continue to invest in people and capital equipment to meet the anticipated long-term growth in demand for our products in the oil refining,petrochemical processing and power generation industries,especially in emerging markets.?Continue to deliver the highest quality products a

97、nd solutions that enable our customers to achieve their operating objectives.We believe that our high quality and technical expertise differentiates us from our competitors and allows us to win new orders based on value.6 In order to effectively implement our strategy,we also believe that we must co

98、ntinually invest in and leverage our unique customer value enhancing differentiators,the keys of which are listed below:?Invest in engineering resources and technology in order to advance our vacuum and heat transfer technology market penetration.?Enhance our engineering capacity and capability,espe

99、cially in connection with product design,in order to more quickly respond to existing and future customer demands.?Invest in our manufacturing operations to improve productivity where needed and identify out-sourced capacity to complement our growth strategies.?Accelerate our ability to quickly and

100、efficiently bid on available projects through our ongoing implementation of front-end bid automation and design processes.?Expand our capabilities and penetrate the existing sales channel and customer base in the nuclear market.?Invest in resources to further serve the U.S.Navy in our core competenc

101、y areas of engineering and manufacturing,where our commercial capabilities meet U.S.Navy requirements.?Implement and expand upon our operational efficiencies through ongoing refinement of our flexible manufacturing flow model as well as achievement of other cost efficiencies.?Focus on improving qual

102、ity to eliminate errors and rework,thereby reducing lead time.?Develop a cross-trained,flexible workforce able to adjust to variable product demand by our customers.Competition Our business is highly competitive.The principal bases on which we compete include technology,price,performance,reputation,

103、delivery,and quality.Our competitors listed in alphabetical order by market include:NORTH AMERICA Market Principal Competitors Refining vacuum distillation Croll Reynolds Company,Inc.;Gardner Denver,Inc.;GEA Wiegand GmbH Chemicals/petrochemicals Croll Reynolds Company,Inc.;Gardner Denver,Inc.;Schutt

104、e Koerting Turbomachinery Original Equipment Manufacturer(OEM)refining,petrochemical Ambassador;Donghwa Entec Co.,Ltd.;KEMCO;Oeltechnik GmbH;SPX Heat Transfer Turbomachinery OEM power and power producer Holtec;KEMCO;Maarky Thermal Systems;SPX Heat Transfer;Thermal Engineering International(USA),Inc.

105、Nuclear Consolidated;Dubose;Energy&Process;Joseph Oat;Nova;Nusource;Tioga Navy Nuclear Propulsion Program/Defense DC Fabricators;Joseph Oat;PCC;Triumph Aerospace;Xylem 7 INTERNATIONAL Market Principal Competitors Refining vacuum distillation Edwards,Ltd.;Gardner Denver,Inc.;GEA Wiegand GmbH;Korting

106、Hannover AG Chemicals/petrochemicals Croll Reynolds Company,Inc.;Edwards,Ltd.;Gardner Denver,Inc.;GEA Wiegand GmbH;Korting Hannover AG;Schutte Koerting Turbomachinery OEM refining,petrochemical Chem Process Systems;Donghwa Entec Co.,Ltd.;Hangzhou Turbine Equipment Co.,Ltd.;KEMCO;Mazda(India);Oeltech

107、nik GmbH Turbomachinery OEM power and power producer Chem Process Systems;Holtec;KEMCO;Mazda(India);SPX Heat Transfer;Thermal Engineering International Intellectual Property Our success depends in part on our ability to protect our proprietary technologies.We rely on a combination of patent,copyrigh

108、t,trademark,trade secret laws and contractual confidentiality provisions to establish and protect our proprietary rights.We also depend heavily on the brand recognition of the Graham and Energy Steel names in the marketplace.Availability of Raw Materials Historically,we have not been materially adve

109、rsely impacted by the availability of raw materials.Working Capital Practices Our business does not require us to carry significant amounts of inventory or materials beyond what is needed for work in process.We do not provide rights to return goods,or payment terms to customers that we consider to b

110、e extended in the context of the industries we serve.However,we do provide for warranty claims.Environmental Matters We believe that we are in material compliance with applicable existing environmental laws and regulations.We do not anticipate that our compliance with federal,state and local laws re

111、gulating the discharge of material in the environment or otherwise pertaining to the protection of the environment will have a material adverse effect upon our capital expenditures,earnings or competitive position.Seasonality No material part of our business is seasonal in nature.However,our busines

112、s is highly cyclical in nature as it depends on the willingness of our customers to invest in major capital projects.Research and Development Activities During fiscal 2016,fiscal 2015 and fiscal 2014,we spent$3,746,$3,585 and$3,436,respectively,on research and development activities related both to

113、new products and services and the ongoing improvement of existing products and services.Information Regarding International Sales The sale of our products outside the U.S.accounted for a significant portion of our total revenue during our last three fiscal years.Approximately 37%,36%and 38%of our re

114、venue in fiscal 2016,fiscal 2015 and fiscal 2014,respectively,resulted from foreign sales.Sales in Asia constituted approximately 10%,8%and 11%of our revenue in fiscal 2016,fiscal 2015 and fiscal 2014,respectively.Sales in the Middle East constituted approximately 12%,8%and 4%of our revenue in fisca

115、l 2016,fiscal 2015 and fiscal 2014,respectively.Our foreign sales and operations are subject to numerous risks,as discussed under the heading Risk Factors in Item 1A of Part I and elsewhere in this Annual Report on Form 10-K.8 Employees As of March 31,2016,we had 368 employees.We believe that our re

116、lationship with our employees is good.Available Information We are subject to the informational requirements of the Securities Exchange Act of 1934,as amended.Therefore,we file periodic reports,proxy statements and other information with the Securities and Exchange Commission(“SEC”).The SEC maintain

117、s a website(located at www.sec.gov)that contains reports,proxy statements and other information for registrants that file electronically.Additionally,such reports may be read and copied at the Public Reference Room of the SEC at 100 F Street NE,Washington,D.C.20549.Information regarding the SECs Pub

118、lic Reference Room can be obtained by calling 1-800-SEC-0330.We maintain a website located at www.graham-.On our website,we provide a link to the SECs website that contains the reports,proxy statements and other information we file electronically.We do not provide this information on our website bec

119、ause it is more cost effective for us to provide a link to the SECs website.Copies of all documents we file with the SEC are available in print for any stockholder who makes a request.Such requests should be made to our Corporate Secretary at our corporate headquarters.The other information found on

120、 our website is not part of this or any other report we file with,or furnish to,the SEC.Item 1A.Risk Factors Our business and operations are subject to numerous risks,many of which are described below and elsewhere in this Annual Report on Form 10-K.If any of the events described below or elsewhere

121、in this Annual Report on Form 10-K occur,our business and results of operations could be harmed.Additional risks and uncertainties that are not presently known to us,or which we currently deem to be immaterial,could also harm our business and results of operations.Risks related to our business The i

122、ndustries in which we operate are cyclical,and downturns in such industries may adversely affect our operating results.A substantial portion of our revenue is derived from the sale of our products to companies in the chemical,petrochemical,petroleum refining and power generating industries and to th

123、e U.S.Navy,or to firms that design and construct facilities for these industries.The core industries in which our products are used are highly cyclical and have historically experienced severe downturns.The dramatic decline and the continued volatility in global oil prices has translated into an abr

124、upt contraction in orders in the energy markets and is the most recent example of the cyclical nature of our markets.We believe that over the long-term,demand for our products is expanding in the petrochemical,petroleum refining and power generating industries,however,the current decline and volatil

125、ity in oil prices confirms that cyclical downturns will occur periodically.A sustained deterioration in any of the industries we serve would materially harm our business and operating results because our customers would not likely have the resources necessary to purchase our products,nor would they

126、likely have the need to build additional facilities or improve existing facilities.A cyclical downturn can occur suddenly and result in extremely different financial performance sequentially from quarter to quarter or on an annual comparative basis due to an inability to rapidly adjust costs.The mar

127、kets we serve include the petroleum refining and petrochemical industries.These industries are both highly cyclical in nature and dependent on the price of crude oil and natural gas as well as on the differential between the two prices.As a result,volatility in the prices of oil and natural gas may

128、negatively impact our operating results.The prices of crude oil and natural gas have historically been very volatile,as evidenced by the extreme volatility in oil prices over the past two years.This volatility caused a steep decline in orders from the energy markets over that period.The increased su

129、pply and reduction in price of natural gas in North America has also caused a significant change in the global energy markets in the past few years.During times of significant volatility in the market for crude oil or natural gas,our customers often refrain from placing orders until the market stabi

130、lizes.If our customers refrain from placing orders with us,our revenue would decline and there could be a material adverse effect on our business and results of operations.Despite the near-term current volatility,we believe the global consumption of crude oil and natural gas will increase over the c

131、ourse of the next 20 years and that such increased consumption will result in continual increases in global capacity.Many of our products are purchased in connection with oil refinery construction,revamps and upgrades to expand global capacity.9 The relative costs of oil,natural gas,nuclear power,hy

132、dropower and numerous forms of alternative energy production may have a material adverse impact on our business and operating results.Global and regional energy supply comes from many sources,including oil,natural gas,coal,hydro,nuclear,solar,wind,geothermal and biomass,among others.A cost or supply

133、 shift among these sources could negatively impact our business opportunities going forward and the profitability of those opportunities.A demand shift,where technological advances favor the utilization of one or a few sources of energy may also impact the demand for our products.If demand shifts in

134、 a manner that increases energy utilization outside of our traditional customer base or expertise,our business and financial results could be materially adversely affected.In addition,governmental policy can affect the relative importance of various forms of energy sources.For example,non-fossil bas

135、ed sources may require and often receive government tax incentives to foster investment.If these incentives become more prominent,our business and results of operations could suffer.Our business is highly competitive.If we are unable to successfully implement our business strategy and compete agains

136、t entities with greater resources than us or against competitors who have a relative cost advantage,we risk losing market share to current and future competitors.We encounter intense competition in all of our markets.Some of our present and potential competitors may have substantially greater financ

137、ial,marketing,technical or manufacturing resources.Our competitors may also be able to respond more quickly to new technologies or processes and changes in customer demands and they may be able to devote greater resources towards the development,promotion and sale of their products.Certain of our co

138、mpetitors may also have a cost advantage compared to us and may compete against us based on price.This may affect our ability to secure new business and maintain our level of profitability.In addition,our current and potential competitors may make strategic acquisitions or establish cooperative rela

139、tionships among themselves or with third parties that increase their ability to address the needs of our customers.Moreover,customer buying patterns can change if customers become more price sensitive and accepting of lower cost suppliers.If we cannot compete successfully against current or future c

140、ompetitors,our business will be materially adversely affected.A change in our end use customers,our markets,or a change in the engineering procurement and construction companies serving our markets could harm our business and negatively impact our financial results.Although we have long-term relatio

141、nships with many of our end use customers and with many engineering,procurement and construction companies,the project management requirements,pricing levels and costs to support each customer and customer type are often different.Our customers have historically focused on the quality of the enginee

142、ring and product solutions which we have provided to them.As our markets continue to grow,and new market opportunities expand,we could see a shift in pricing as a result of facing competitors with lower production costs,which may have a material adverse impact on our results of operations and financ

143、ial results.In certain developing geographies,the relative importance of cost versus quality may lead to decisions which look at short-term costs instead of total long-term cost of operations.The loss of,or significant reduction or delay in,purchases by our largest customers could reduce our revenue

144、 and adversely affect our results of operations.A small number of customers has accounted for a substantial portion of our historical net sales.For example,sales to our top ten customers,who can vary each year,accounted for 30%,38%and 32%of consolidated net sales in fiscal 2016,fiscal 2015 and fisca

145、l 2014,respectively.We expect that a limited number of customers will continue to represent a substantial portion of our sales for the foreseeable future.The loss of any of our major customers,a decrease or delay in orders or anticipated spending by such customers or a delay in the production of exi

146、sting orders could materially adversely affect our revenues and results of operations.We may experience customer concentration risk related to strategic growth for U.S.Navy projects Our strategy to increase the penetration of U.S.Navy related opportunities could lead to U.S.Navy related projects bec

147、oming greater than 10%of our total revenue.While these projects are spread across multiple contractors for the U.S.Navy,the end customer for these projects is the same.This concentration of business could add additional risk to Graham should there be a disruption,short or long term,in the funding fo

148、r these projects or our participation in the U.S.Navy Nuclear Propulsion program.A large percentage of our sales occur outside of the U.S.As a result,we are subject to the economic,political,regulatory and other risks of international operations.For fiscal 2016,37%of our revenue was from customers l

149、ocated outside of the U.S.Moreover,we maintain a subsidiary and a sales office in China.We believe that revenue from the sale of our products outside the U.S.will continue to account for a 10 significant portion of our total revenue for the foreseeable future.We intend to continue to expand our inte

150、rnational operations to the extent that suitable opportunities become available.Our foreign operations and sales could be adversely affected as a result of:?nationalization of private enterprises and assets;?political or economic instability in certain countries and regions,such as the ongoing insta

151、bility throughout the Middle East and/or portions of the former Soviet Union;?political relationships between the U.S.and certain countries and regions;?differences in foreign laws,including increased difficulties in protecting intellectual property and uncertainty in enforcement of contract rights;

152、?the possibility that foreign governments may adopt regulations or take other actions that could directly or indirectly harm our business and growth strategy;?credit risks;?currency fluctuations;?tariff and tax increases;?export and import restrictions and restrictive regulations of foreign governme

153、nts;?shipping products during times of crisis or wars;?our failure to comply with U.S.laws regarding doing business in foreign jurisdictions,such as the Foreign Corrupt Practices Act;or?other factors inherent in maintaining foreign operations.Global demand growth could be led by emerging markets,whi

154、ch could result in lower profit margins and increased competition.The increase in global demand could be led by emerging markets.If this is the case,we may face increased competition from lower cost suppliers,which in turn could lead to lower profit margins on our products.Customers in emerging mark

155、ets may also place less emphasis on our high quality and brand name than do customers in the U.S.and certain other industrialized countries where we compete.If we are forced to compete for business with customers that place less emphasis on quality and brand recognition than our current customers,ou

156、r results of operations could be materially adversely affected.Climate change and greenhouse gas regulations may affect our customers investment decisions.Due to concern over the risk of climate change,a number of countries have adopted,or are considering the adoption of,regulatory frameworks to red

157、uce greenhouse gas emissions.These restrictions may affect our customers abilities and willingness to invest in new facilities or to re-invest in current operations.These requirements could impact the cost of our customers products,lengthen project implementation times,and reduce demand for hydrocar

158、bons,as well as shift hydrocarbon demand toward lower-carbon sources.Any of the foregoing could adversely impact the demand for our products,which in turn could have an adverse effect on our business and results of operation.The operations of our Chinese subsidiary may be adversely affected by China

159、s evolving economic,political and social conditions.We conduct our business in China primarily through our wholly-owned Chinese subsidiary.The results of operations and future prospects of our Chinese subsidiary are subject to evolving economic,political and social developments in China.In particula

160、r,the results of operations of our Chinese subsidiary may be adversely affected by,among other things,changes in Chinas political,economic and social conditions,changes in policies of the Chinese government,changes in laws and regulations or in the interpretation of existing laws and regulations,cha

161、nges in foreign exchange regulations,measures that may be introduced to control inflation,such as interest rate increases,and changes in the rates or methods of taxation.In addition,changes in demand could result from increased competition from local Chinese manufacturers who have cost advantages or

162、 who may be preferred suppliers for Chinese end users.Also,Chinese commercial laws,regulations and interpretations applicable to non-Chinese owned market 11 participants,such as us,are continually changing.These laws,regulations and interpretations could impose restrictions on our ownership or opera

163、tions of our interests in China and have a material adverse effect on our business and results of operations.Intellectual property rights are difficult to enforce in China,which could harm our business.Chinese commercial law is relatively undeveloped compared with the commercial law in many of our o

164、ther major markets and limited protection of intellectual property is available in China as a practical matter.Although we take precautions in the operations of our Chinese subsidiary to protect our intellectual property,any local design or manufacture of products that we undertake in China could su

165、bject us to an increased risk that unauthorized parties will be able to copy or otherwise obtain or use our intellectual property,which could harm our business.We may also have limited legal recourse in the event we encounter patent or trademark infringers,which could have a material adverse effect

166、on our business and results of operations.Uncertainties with respect to the Chinese legal system may adversely affect the operations of our Chinese subsidiary.Our Chinese subsidiary is subject to laws and regulations applicable to foreign investment in China.There are uncertainties regarding the int

167、erpretation and enforcement of laws,rules and policies in China.The Chinese legal system is based on written statutes,and prior court decisions have limited precedential value.Because many laws and regulations are relatively new and the Chinese legal system is still evolving,the interpretations of m

168、any laws,regulations and rules are not always uniform.Moreover,the relative inexperience of Chinas judiciary in many cases creates additional uncertainty as to the outcome of any litigation,and the interpretation of statutes and regulations may be subject to government policies reflecting domestic p

169、olitical agendas.Finally,enforcement of existing laws or contracts based on existing law may be uncertain and sporadic.For the preceding reasons,it may be difficult for us to obtain timely or equitable enforcement of laws ostensibly designed to protect companies like ours,which could have a material

170、 adverse effect on our business and results of operations.Changes in U.S.and foreign energy policy regulations could adversely affect our business.Energy policy in the U.S.and in the other countries where we sell our products is evolving rapidly and we anticipate that energy policy will continue to

171、be an important legislative priority in the jurisdictions where we sell our products.It is difficult,if not impossible,to predict the changes in energy policy that could occur,as they may be related to changes in political administration,public policy or other factors.The elimination of,or a change

172、in,any of the current rules and regulations in any of our markets could create a regulatory environment that makes our end users less likely to purchase our products,which could have a material adverse effect on our business.Government subsidies or taxes,which favor or disfavor certain energy source

173、s compared with others,could have a material adverse effect on our business and operating results.Efforts to reduce large U.S.federal budget deficits could result in government cutbacks in defense spending or in reduced incentives to pursue alternative energy projects,resulting in reduced demand for

174、 our products,which could harm our business and results of operations.Our business strategy calls for us to continue to pursue defense-related projects as well as projects for end users in the alternative energy markets in the U.S.In recent years the U.S.federal government has incurred large budget

175、deficits.In the event that U.S.federal government defense spending is reduced or alternative energy related incentives are reduced or eliminated in an effort to reduce federal budget deficits,projects related to defense or alternative energy may become less plentiful.The impact of such reductions co

176、uld have a material adverse effect on our business and results of operations,as well as our growth opportunities.U.S.Navy orders are subject to annual government funding.A disruption in funding could adversely impact our business.One of our growth strategies is to increase our penetration of U.S.Nav

177、y related opportunities.Projects for the U.S.Navy and its contractors generally have a much longer order-to-shipment time period than our commercial orders.The time between the awarding of an order to complete shipment can take three to six years.Annual government funding is required to continue the

178、 production of this equipment.Disruption of government funding,short or long term,could impact the ability for us to continue our production activity on these orders.Since this business is expected to increase as a percentage of our overall business,such a disruption,should it occur,could adversely

179、impact the sales and profitability of our business.Changes in the competitive environment for U.S.Navy procurement could adversely impact our ability to grow this business.As we have expanded our addressable opportunities,this has caused a change in the supply chain for these products.We would expec

180、t continued changes to occur as our customers continue to consider supplier concentration issues and the risk which this may lead to for them.Competitor response to our market penetration is also a concern.In addition,our ability to expand beyond the U.S.Navy to grow with certain NATO customers may

181、further impact the market dynamics.12 Political and regulatory developments could make the utilization and growth of nuclear power as an energy source less desirable,which would harm our business and results of operations.A global event,such as a major earthquake or terrorist activity,may impact the

182、 desirability of operating existing nuclear power plants or building new or replacement nuclear plants facilities.Should public opinion or political pressure result in the closing of existing nuclear facilities or otherwise result in the failure of the nuclear power industry to grow,especially withi

183、n the U.S.,the business,results of operations and growth prospects in the nuclear market could be materially adversely impacted.In addition,the U.S.Nuclear Regulatory Commission,or NRC,performs operational and safety reviews of nuclear facilities in the U.S.It is possible that the NRC could take act

184、ions or impose regulations that adversely affect the demand for our products and services,or otherwise delay or prohibit construction of new nuclear power generation facilities,even temporarily.If any such event were to occur,our business or operations could be materially adversely impacted.Near ter

185、m income statement impact from competitive contracts could adversely affect our operating results.During weaker market periods,we may choose to be more aggressive in pricing certain competitive projects to protect or gain market share or to increase the utilization of our facilities.In these situati

186、ons,it is possible that an incrementally profitable order may be unprofitable from an accounting perspective when including fixed manufacturing costs.In these situations,we are required to recognize the financial loss at time of order acceptance,or as soon as our cost estimates are updated,whichever

187、 occurs first.It is possible we may accumulate losses either on a large project or more than one project such that,in a short time period,for example,a reporting quarter,these losses may have a meaningful impact on the earnings of the period.Our operating results could be adversely affected by custo

188、mer contract cancellations and delays.The value of our backlog as of March 31,2016 was$107,963.Our backlog can be significantly affected by the timing of large orders.The amount of our backlog at March 31,2016 is not necessarily indicative of future backlog levels or the rate at which our backlog wi

189、ll be recognized as sales.Although historically the amount of modifications and terminations of our orders has not been material compared with our total contract volume,customers can,and sometimes do,terminate or modify their orders.This generally occurs more often in times of end market or capital

190、market turmoil.As evidence of this,we had three orders totaling$12,095 cancelled during fiscal 2016 and,including the fourth quarter of fiscal 2015,$17,990 were cancelled during the past five quarters.We cannot predict whether cancellations will occur or accelerate in the future.Although certain of

191、our contracts in backlog may contain provisions allowing for us to assess cancellation charges to our customers to compensate us for costs incurred on cancelled contracts,cancellations of purchase orders or modifications made to existing contracts could substantially and materially reduce our backlo

192、g and,consequently,our future sales and results of operations.Moreover,delay of contract execution by our customers can result in volatility in our operating results.Our current backlog contains a number of large orders from the U.S.Navy project.In addition,we are continuing to pursue business in th

193、ese end markets which offer large multi-year projects which have an added risk profile beyond that of our historic customer base.A delay,long-term extension or cancellation of any of these projects could have a material adverse effect on our business and results of operations.Our exposure to fixed-p

194、rice contracts and the timely completion of such contracts could negatively impact our results of operations.A substantial portion of our sales is derived from fixed-price contracts,which may involve long-term fixed price commitments by us to our customers.While we believe our contract management pr

195、ocesses are strong,we nevertheless could experience difficulties in executing large contracts,including but not limited to,estimating errors,cost overruns,supplier failures and customer disputes.To the extent that any of our fixed-price contracts are delayed,our subcontractors fail to perform,contra

196、ct counterparties successfully assert claims against us,the original cost estimates in these or other contracts prove to be inaccurate or the contracts do not permit us to pass increased costs on to our customers,our profitability may decrease or losses may be incurred which,in turn,could have a mat

197、erial adverse effect on our business and results of operations.Given our size and specialization of our business,if we lose any member of our management team and we experience difficulty in finding a qualified replacement,our business could be harmed.Competition for qualified management and key tech

198、nical and sales personnel in our industry is intense.Moreover,our technology is highly specialized and it may be difficult to replace the loss of any of our key technical and sales personnel.Many of the companies with which we compete for management and key technical and sales personnel have greater

199、 financial and other resources than we do or are located in geographic areas which may be considered by some to be more desirable places to live.If we are not able 13 to retain any of our key management,technical or sales personnel,it could have a material adverse effect on our business and results

200、of operations.During certain high demand periods,there can be a shortage of skilled production workers,especially those with high-end welding capabilities.We could experience difficulty hiring or replacing those individuals,which could adversely affect our business.Our fabrication processes require

201、highly skilled production workers,especially welders.Welding has not been an educational field that has been popular over the past few decades as manufacturing has moved overseas.If we are unable to retain,hire or train an adequate number of individuals with high-end welding capability,this could ad

202、versely impact our ability to achieve our financial objectives.In addition,if demand for highly skilled production workers were to significantly outstrip supply,wages for these skilled workers could dramatically increase in our and related industries and that could affect our financial performance.O

203、ur acquisition strategy may not be successful or may increase business risk.The success of our acquisition strategy will depend,in part,on our ability to identify suitable companies or businesses to purchase and then successfully negotiate and close acquisition transactions.In addition,our success d

204、epends in part on our ability to integrate acquisitions and realize the anticipated benefits from combining the acquisition with our historical business,operations and management.We cannot provide any assurances that we will be able to complete any acquisitions and then successfully integrate the bu

205、siness and operations of those acquisitions without encountering difficulties,including unanticipated costs,difficulty in retaining customers and supplier or other relationships,failure to retain key employees,diversion of our managements attention,failure to integrate information and accounting sys

206、tems or establish and maintain proper internal control over financial reporting.Moreover,as part of the integration process,we must incorporate an acquisitions existing business culture and compensation structure with our existing business.If we are not able to efficiently integrate an acquisitions

207、business and operations into our organization in a timely and efficient manner,or at all,the anticipated benefits of the acquisition may not be realized,or it may take longer to realize these benefits than we currently expect,either of which could have a material adverse effect on our business or re

208、sults of operations.Should a portion of our intangible assets be impaired,results of operations could be materially adversely affected.Our balance sheet includes intangible assets,including goodwill and other separately identifiable intangible assets,primarily as a result of our acquisition of Energ

209、y Steel which make up 15%of the assets of the company.The value of our intangible assets may increase in the future if we complete additional acquisitions as part of our overall business strategy.We are required to review our intangible assets for impairment on an annual basis,or more frequently if

210、certain indicators of permanent impairment arise.Factors that could indicate that our intangible assets are impaired could include,among other things,a decline in our stock price and market capitalization,lower than projected operating results and cash flows,and slower than expected growth rates in

211、our markets.If a portion of our intangible assets becomes impaired as a result of such a review,the impaired portion of such assets would have to be written-off during that period.Such a write-off could have a material adverse effect on our business and results of operations.If we become subject to

212、product liability,warranty or other claims,our results of operations and financial condition could be adversely affected.The manufacture and sale of our products exposes us to potential product liability claims,including those that may arise from failure to meet product specifications,misuse or malf

213、unction of our products,design flaws in our products,or use of our products with systems not manufactured or sold by us.For example,our equipment is installed in facilities that operate dangerous processes and the misapplication,improper installation or failure of our equipment may result in exposur

214、e to potentially hazardous substances,personal injury or property damage.Provisions contained in our contracts with customers that attempt to limit our damages may not be enforceable or may fail to protect us from liability for damages and we may not negotiate such contractual limitations of liabili

215、ty in certain circumstances.Our insurance may not cover all liabilities and our historical experience may not reflect liabilities we may face in the future.Our risk of liability may increase as we manufacture more complex or larger projects.We also may not be able to continue to maintain such insura

216、nce at a reasonable cost or on reasonable terms,or at all.Any material liability not covered by provisions in our contracts or by insurance could have a material adverse effect on our business and financial condition.Furthermore,if a customer suffers damage as a result of an event related to one of

217、our products,even if we are not at fault,they may reduce their business with us.We may also incur significant warranty claims,which are not covered by insurance.In the event a customer ceases doing business with us as a result of a product malfunction or defect,perceived or actual,or if we incur sig

218、nificant warranty costs in the future,there could be a material adverse effect on our business and results of operations.14 If third parties infringe upon our intellectual property or if we were to infringe upon the intellectual property of third parties,we may expend significant resources enforcing

219、 or defending our rights or suffer competitive injury.Our success depends in part on our proprietary technology.We rely on a combination of patent,copyright,trademark,trade secret laws and confidentiality provisions to establish and protect our proprietary rights.If we fail to successfully enforce o

220、ur intellectual property rights,our competitive position could suffer.We may also be required to spend significant resources to monitor and police our intellectual property rights.Similarly,if we were found to have infringed upon the intellectual property rights of others,our competitive position co

221、uld suffer.Furthermore,other companies may develop technologies that are similar or superior to our technologies,duplicate or reverse engineer our technologies or design around our proprietary technologies.Any of the foregoing could have a material adverse effect on our business and results of opera

222、tions.In some instances,litigation may be necessary to enforce our intellectual property rights and protect our proprietary information,or to defend against claims by third parties that our products infringe upon their intellectual property rights.Any litigation or claims brought by or against us,wh

223、ether with or without merit,could result in substantial costs to us and divert the attention of our management,which could materially harm our business and results of operations.In addition,any intellectual property litigation or claims against us could result in the loss or compromise of our intell

224、ectual property and proprietary rights,subject us to significant liabilities,require us to seek licenses on unfavorable terms,prevent us from manufacturing or selling certain products or require us to redesign certain products,any of which could have a material adverse effect on our business and res

225、ults of operations.We are subject to foreign currency fluctuations which may adversely affect our operating results.We are exposed to the risk of currency fluctuations between the U.S.dollar and the currencies of the countries in which we sell our products to the extent that such sales are not based

226、 on U.S.dollars.Currency movements can affect sales in several ways,the foremost being our ability to compete for orders against foreign competitors that base their prices on relatively weaker currencies.Strength of the U.S.dollar compared with the Euro or Asian currencies may put us in a less compe

227、titive position.Business lost due to competition for orders against competitors using a relatively weaker currency cannot be quantified.In addition,cash can be adversely impacted by the conversion of sales made by us in a foreign currency to U.S.dollars.While we may enter into currency exchange rate

228、 hedges from time to time to mitigate these types of fluctuations,we cannot remove all fluctuations or hedge all exposures and our earnings are impacted by changes in currency exchange rates.In addition,if the counter-parties to such exchange contracts do not fulfill their obligations to deliver the

229、 contractual foreign currencies,we could be at risk for fluctuations,if any,required to settle the obligation.Any of the foregoing could adversely affect our business and results of operations.At March 31,2016,we held no forward foreign currency exchange contracts.Security threats and other sophisti

230、cated computer intrusions could harm our information systems,which in turn could harm our business and financial results.We utilize information systems and computer technology throughout our business.We store sensitive data,proprietary information and perform engineering designs and calculations on

231、these systems.Information systems are subject to threats and sophisticated computer crimes,which pose a risk to the stability and security of our business.A failure or breach in security could expose our company as well as our customers and suppliers to risks of misuse of information,compromising co

232、nfidential information and technology,destruction of data,production disruptions and other business risks which could damage our reputation,competitive position and financial results of our operations.In addition,defending ourselves against these threats may increase costs or slow operational effici

233、encies of our business.If any of the foregoing were to occur,it could have a material adverse effect on our business and results of operations.We face potential liability from asbestos exposure and similar claims that could result in substantial costs to us as well as divert attention of our managem

234、ent,which could have a material adverse effect on our business and results of operations.We are a defendant in a number of lawsuits alleging illnesses from exposure to asbestos or asbestos-containing products and seeking unspecified compensatory and punitive damages.We cannot predict with certainty

235、the outcome of these lawsuits or whether we could become subject to any similar,related or additional lawsuits in the future.In addition,because some of our products are used in systems that handle toxic or hazardous substances,any failure or alleged failure of our products in the future could resul

236、t in litigation against us.For example,a claim could be made under various regulations for the adverse consequences of environmental contamination.Any litigation brought against us,whether with or without merit,could result in substantial costs to us as well as divert the attention of our management

237、,which could have a material adverse effect on our business and results of operations.15 Many of our large international customers are nationalized or state-owned businesses.Any failure to comply with the United States Foreign Corrupt Practices Act could adversely impact our competitive position and

238、 subject us to penalties and other adverse consequences,which could harm our business and results of operations.We are subject to the United States Foreign Corrupt Practices Act,which generally prohibits U.S.companies from engaging in bribery or making other prohibited payments to foreign officials

239、for the purpose of obtaining or retaining business.Many foreign companies,including some of our competitors,are not subject to these prohibitions.Corruption,extortion,bribery,pay-offs,theft and other fraudulent practices occur from time-to-time in certain of the jurisdictions in which we may operate

240、 or sell our products.While we strictly prohibit our employees and agents from engaging in such conduct and have established procedures,controls and training to prevent such conduct from occurring,it is possible that our employees or agents will engage in such conduct and that we might be held respo

241、nsible.If our employees or other agents are alleged or are found to have engaged in such practices,we could incur significant costs and suffer severe penalties or other consequences that may have a material adverse effect on our business,financial condition and results of operations.Provisions conta

242、ined in our certificate of incorporation and bylaws could impair or delay stockholders ability to change our management and could discourage takeover transactions that some stockholders might consider to be in their best interests.Provisions of our certificate of incorporation and bylaws could imped

243、e attempts by our stockholders to remove or replace our management and could discourage others from initiating a potential merger,takeover or other change of control transaction,including a potential transaction at a premium over the market price of our common stock,that our stockholders might consi

244、der to be in their best interests.Such provisions include:?We could issue shares of preferred stock with terms adverse to our common stock.Under our certificate of incorporation,our Board of Directors is authorized to issue shares of preferred stock and to determine the rights,preferences and privil

245、eges of such shares without obtaining any further approval from the holders of our common stock.We could issue shares of preferred stock with voting and conversion rights that adversely affect the voting power of the holders of our common stock,or that have the effect of delaying or preventing a cha

246、nge in control of our company.?Only a minority of our directors may be elected in a given year.Our bylaws provide for a classified Board of Directors,with only approximately one-third of our Board elected each year.This provision makes it more difficult to effect a change of control because at least

247、 two annual stockholder meetings are necessary to replace a majority of our directors.?Our bylaws contain advance notice requirements.Our bylaws also provide that any stockholder who wishes to bring business before an annual meeting of our stockholders or to nominate candidates for election as direc

248、tors at an annual meeting of our stockholders must deliver advance notice of their proposals to us before the meeting.Such advance notice provisions may have the effect of making it more difficult to introduce business at stockholder meetings or nominate candidates for election as director.?Our cert

249、ificate of incorporation requires supermajority voting to approve a change of control transaction.Seventy-five percent of our outstanding shares entitled to vote are required to approve any merger,consolidation,sale of all or substantially all of our assets and similar transactions if the other part

250、y to such transaction owns 5%or more of our shares entitled to vote.In addition,a majority of the shares entitled to vote not owned by such 5%or greater stockholder are also required to approve any such transaction.?Amendments to our certificate of incorporation require supermajority voting.Our cert

251、ificate of incorporation contains provisions that make its amendment require the affirmative vote of both 75%of our outstanding shares entitled to vote and a majority of the shares entitled to vote not owned by any person who may hold 50%or more of our shares unless the proposed amendment was previo

252、usly recommended to our stockholders by an affirmative vote of 75%of our Board.This provision makes it more difficult to implement a change to our certificate of incorporation that stockholders might otherwise consider to be in their best interests without approval of our Board.?Amendments to our by

253、laws require supermajority voting.Although our Board of Directors is permitted to amend our bylaws at any time,our stockholders may only amend our bylaws upon the affirmative vote of both 75%of our outstanding shares entitled to vote and a majority of the shares entitled to vote not owned by any per

254、son who owns 50%or more of our shares.This provision makes it more difficult for our stockholders to implement a change they may consider to be in their best interests without approval of our Board.16 Item 1B.Unresolved Staff Comments Not applicable.Item 2.Properties Our corporate headquarters,locat

255、ed at 20 Florence Avenue,Batavia,New York,consists of a 45,000 square foot building.Our manufacturing facilities,also located in Batavia,consist of approximately 33 acres and contain about 260,000 square feet in several buildings,including 206,000 square feet in manufacturing facilities,48,000 squar

256、e feet for warehousing and a 6,000 square-foot building for product research and development.We also lease approximately 15,000 square feet of office space and 45,000 square feet of manufacturing facilities for our subsidiary,Energy Steel,located in Lapeer,Michigan.Additionally,we lease an approxima

257、tely 1,500 square foot U.S.sales office in Houston,Texas and GVHTT leases an approximately 4,900 square foot sales and engineering office in Suzhou,China.We believe that our properties are generally in good condition,are well maintained,and are suitable and adequate to carry on our business.Item 3.L

258、egal Proceedings The information required by this Item 3 is contained in Note 17 to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K and is incorporated herein by reference.Item 4.Mine Safety Disclosures Not applicable.17 PART II(Amounts in thous

259、ands,except per share data)Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the NYSE exchange under the symbol“GHM”.As of May 23,2016,there were 9,646,981 shares of our common stock outstanding that were h

260、eld by approximately 141 stockholders of record.The following table shows the high and low per share prices of our common stock for the periods indicated.High Low Fiscal year 2016?First quarter.$25.25$19.82 Second quarter.20.60 15.71 Third quarter.18.88 15.63 Fourth quarter.20.24 14.39 Fiscal year 2

261、015 First quarter.$34.88?$26.20 Second quarter.35.35 27.99 Third quarter.34.65 26.06 Fourth quarter.28.86 20.58 (1)The historical prices for our common stock prior to May 2,2014 are based on the high and low per share prices on the NYSE MKT exchange,where our common stock was then listed.On such dat

262、e,our common stock began trading on the NYSE.Subject to the rights of any preferred stock we may then have outstanding,the holders of our common stock are entitled to receive dividends as may be declared from time to time by our Board of Directors out of funds legally available for the payment of di

263、vidends.Dividends declared per share by our Board of Directors for the first,second,third and fourth quarters of fiscal 2016 were$.08,$.08,$.08 and$.09,respectively.Dividends declared per share for the first,second,third and fourth quarters of fiscal 2015 were$.04,$.04,$.04 and$.08,respectively.Ther

264、e can be no assurance that we will pay cash dividends in any future period or that the level of cash dividends paid by us will remain constant.Our senior credit facility contains provisions pertaining to the maintenance of a maximum funded debt to earnings before interest expense,income taxes,deprec

265、iation and amortization,or EBITDA,ratio and a minimum level of earnings before interest expense and income taxes to interest ratio as well as restrictions on the payment of dividends to stockholders.The facility limits the payment of dividends to stockholders to 25%of net income if our funded debt t

266、o EBITDA ratio is greater than 2.0 to 1.As of March 31 and May 31,2016 we did not have any funded debt outstanding.More information regarding our senior credit facility can be found in Note 7 to the Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-K.We

267、 maintain a stock repurchase program that permits us to repurchase up to$18,000 of our common stock from time to time,either in the open market or through privately negotiated transactions.Common stock repurchases in the quarter ended March 31,2016 were as follows:Period Total Number of Shares Purch

268、ased Average Price Paid Per Share Approximate Dollar Value ofShares That May Yet Be Purchased Under the Program1/01/2016 1/31/2016.58$15.88$11,2322/01/2016 2/29/2016.153$17.49$8,5593/01/2016 3/31/2016.$8,559Total.211$17.05$8,559 18 Item 6.Selected Financial Data GRAHAM CORPORATION FIVE YEAR SUMMARY

269、OF SELECTED FINANCIAL DATA(Amounts in thousands,except per share data)(for fiscal years ended March 31)?2016 2015 2014 2013 2012 Operations:Net sales.$90,039$135,169$102,218$104,973$103,186 Gross profit.23,255 41,804 31,812 31,822 32,635 Gross profit percentage.25.8%30.9%31.1%30.3%31.6%Net income.6,

270、131 14,735 10,145 11,148 10,553 Cash dividends.3,296 2,026 1,308 899 793 Common stock:Basic earnings from continuing operations per share.$0.61$1.46$1.01$1.11$1.06 Diluted earnings from continuing operations per share.0.61 1.45 1.00 1.11 1.06 Stockholders equity per share.11.34 11.50 10.49 9.30 8.20

271、 Dividends declared per share.0.33 .20 .13 .09 .08 Market price range of common stock High.25.25 35.35 41.94 24.80 26.30 Low.14.39 20.58 22.36 16.20 14.36 Average common shares outstanding diluted.9,983 10,143 10,104 10,051 9,998 Financial data at March 31:Cash and cash equivalents and investments.$

272、65,072$60,271$61,146$51,692$41,688 Working capital.74,807 80,884 70,678 64,330 54,937 Capital expenditures.1,153 5,300 5,263 1,655 3,243 Depreciation.2,201 2,079 1,977 1,851 1,685 Total assets.143,131 154,003 140,971 126,514 114,918 Long-term debt,including capital lease obligations.157 98 136 127 2

273、03 Stockholders equity.109,380 116,551 105,908 92,995 81,620 19 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations(Amounts in thousands,except per share data)Overview We are a global business that designs,manufactures and sells critical equipment for the ener

274、gy,defense and chemical/petrochemical industries.Our energy markets include oil refining,cogeneration,nuclear and alternative power.For the defense industry,our equipment is used in nuclear propulsion power systems for the U.S.Navy.For the chemical and petrochemical industries,our equipment is used

275、in fertilizer,ethylene,methanol and downstream chemical facilities.Grahams global brand is built upon our world-renowned engineering expertise in vacuum and heat transfer technology,responsive and flexible service and high quality standards.We design and manufacture custom-engineered ejectors,vacuum

276、 pumping systems,surface condensers and vacuum systems.We are also a leading nuclear code accredited fabrication and specialty machining company.We supply components used inside reactor vessels and outside containment vessels of nuclear power facilities.Our equipment can also be found in other diver

277、se applications such as metal refining,pulp and paper processing,water heating,refrigeration,desalination,food processing,pharmaceutical,heating,ventilating and air conditioning.Our corporate headquarters are located in Batavia,New York.We have production facilities co-located with our headquarters

278、in Batavia and also at our wholly-owned subsidiary,Energy Steel&Supply Co.(“Energy Steel”),located in Lapeer,Michigan.We also have a wholly-owned foreign subsidiary,Graham Vacuum and Heat Transfer Technology(Suzhou)Co.,Ltd.(“GVHTT”),located in Suzhou,China.GVHTT provides sales and engineering suppor

279、t for us in the Peoples Republic of China and management oversight throughout Southeast Asia.Highlights Highlights for our fiscal year ended March 31,2016,which we refer to as“fiscal 2016”include:?Net income and income per diluted share for fiscal 2016,were$6,131 and$0.61 compared with net income an

280、d income per diluted share of$14,735 and$1.45,respectively,for the fiscal year ended March 31,2015,which we refer to as“fiscal 2015.”Net income and income per diluted share for fiscal 2015 were$15,899 and$1.57 excluding the impact of a nonrecurring restructuring charge.?Net sales for fiscal 2016 wer

281、e$90,039,down 33%compared with$135,169 for fiscal 2015.?Operating cash flow for fiscal 2016 was$18,751,up from$6,279 in fiscal 2015.?Orders received in fiscal 2016 were$83,997,down 38%compared with fiscal 2015,when orders were$136,533,which included a large U.S.Navy order.?Backlog on March 31,2016 w

282、as at$107,963,down 5%from backlog of$113,811 on March 31,2015.?Gross profit and operating margins for fiscal 2016 were 25.8%and 9.4%compared with 30.9%and 16.0%,respectively,for fiscal 2015.Fiscal 2015 operating margin was 17.2%,excluding the impact of nonrecurring restructuring expenses.?In fiscal

283、2016$12,737 was returned to shareholders from a combination of share repurchases and dividends;539 shares were repurchased at a cost of$9,441.Dividends of$3,296 were paid to shareholders in fiscal 2016.No shares were repurchased in fiscal 2015 and dividends of$2,026 were paid in fiscal 2015.?Cash an

284、d cash equivalents and short-term investments at March 31,2016 were$65,072 compared with$60,271 as of March 31,2015,an increase of$4,801.?At fiscal 2016 year end,we had a solid balance sheet that was free of bank debt and which we believe provides us with the financial flexibility to pursue our busi

285、ness strategy.20 Forward-Looking Statements This report and other documents we file with the Securities and Exchange Commission(“SEC”)include“forward-looking statements”within the meaning of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,a

286、s amended.These statements involve known and unknown risks,uncertainties and other factors that may cause actual results to be materially different from any future results implied by the forward-looking statements.Such factors include,but are not limited to,the risks and uncertainties identified by

287、us under the heading Risk Factors in Item 1A of Part I and elsewhere in this Annual Report on Form 10-K.Forward-looking statements may also include,but are not limited to,statements about:?the current and future economic environments affecting us and the markets we serve;?expectations regarding inve

288、stments in new projects by our customers;?sources of revenue and anticipated revenue,including the contribution from anticipated growth;?expectations regarding achievement of revenue and profitability expectations;?plans for future products and services and for enhancements to existing products and

289、services;?our operations in foreign countries;?political instability in regions in which our customers are located;?our ability to affect our growth and acquisition strategy;?our ability to expand nuclear power work into new markets;?our ability to maintain or expand nuclear power work for the U.S.N

290、avy;?our ability to successfully execute our existing contracts;?estimates regarding our liquidity and capital requirements;?timing of conversion of backlog to sales;?our ability to attract or retain customers;?the outcome of any existing or future litigation;and?our ability to increase our producti

291、vity and capacity.Forward-looking statements are usually accompanied by words such as anticipate,believe,estimate,may,might,intend,“interest,”appear,expect,“suggest,”“plan,”“encourage,”“potential”and similar expressions.Actual results could differ materially from historical results or those implied

292、by the forward-looking statements contained in this report.Undue reliance should not be placed on our forward-looking statements.Except as required by law,we undertake no obligation to update or announce any revisions to forward-looking statements contained in this report,whether as a result of new

293、information,future events or otherwise.Current Market Conditions Demand for our products and services to the oil refining and chemical industries depends on capital investment for new capacity,retrofit and debottlenecking projects and for planned or unplanned maintenance activity.Increased volatilit

294、y and significant reduction in global crude oil prices beginning in the second half of calendar 2014 has caused uncertainty in the oil refining and 21 chemical industries.The dramatic reduction and increased volatility in global crude oil prices has caused a significant slowdown in investment by our

295、 oil refining and chemical industry customers.These markets have altered their investment timing over the past year due to this sustained lower price and volatility of crude oil.Capital investment within global refining and chemical industries contracted during fiscal 2016 compared with fiscal 2015

296、and is projected to be down further in fiscal 2017.In the near term,we believe that the catalyst for increased investment would likely be higher or more stable crude oil prices.However,if crude oil prices remain low for a sustained period,we expect increased global energy demand would eventually dri

297、ve additional investment regardless of crude oil prices.Demand for our products and services in the nuclear power utility market is affected by investment in maintenance,repair,life extension and nuclear regulatory mandated investment along with global investment in new capacity.Global investment in

298、 new capacity is affected by regional legislative policy and comparative cost per unit of power output with other energy sources,such as natural gas,oil or alternative energies.Although the nuclear market which we serve is very fragmented,we continue to believe that it provides an important opportun

299、ity for our growth,especially via market share gains.Our naval nuclear propulsion market has demand tied to aircraft carrier and submarine vessel construction schedules of the primary shipyards who service the U.S.Navy.We expect growth in our naval nuclear propulsion business based on our strategic

300、actions to increase our market share and expected demand.Strategic investment and continued concentration of effort on oil refining and chemical markets will have a long-term perspective,notwithstanding the severity of the current downturn in these markets.We believe that long-term demand drivers fo

301、r energy requirements are unchanged and have not been affected by the recent price of crude oil.We believe that such demand,which is driven by population growth and an expanding middle class in emerging markets,requires an increase in global energy capacity and investment.Our strategy is to continue

302、 to leverage our investments and expand our capabilities and execution capacity to grow market share in the oil refining,chemical and nuclear markets,as well as our business with the U.S.Navy.For more information,refer to the heading“Strategy and Outlook”within this Item 7 of this Annual Report on F

303、orm 10-K.We believe the long-term outlook in our key markets supports our strategy to grow our revenue to over$200,000 across the next business cycle in our markets.In the near term,new order levels are expected to remain volatile,resulting in both relatively strong and weak periods.The chart below

304、shows the impact of our diversification strategy.Over 60%of our backlog at the end of fiscal year 2016 is from markets not served in the Fiscal 2007-2009 time frame.$-$20$40$60$80$100$120$140FYE07FYE08FYE09FYE10FYE11FYE12FYE13FYE14FYE15FYE16Backlog Mix Illustrating Impact of Diversification Strategi

305、esBacklog($million)Commercial NuclearNavalBaseConverts within 12 monthsDiversificationstrategy impact 22 Results of Operations For an understanding of the significant factors that influenced our performance,the following discussion should be read in conjunction with our consolidated financial statem

306、ents and the notes to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.The following table summarizes our results of operations for the periods indicated:Year Ended March 31,20162015 2014 Net sales.$90,039$135,169$102,218 Net income.$6,131$14,735

307、$10,145 Diluted income per share.$0.61$1.45$1.00 Total assets.$143,131$154,003$140,971 Fiscal 2016 Compared with Fiscal 2015 Sales for fiscal 2016 were$90,039,down$45,130 or 33%,as compared with sales of$135,169 for fiscal 2015.Domestic sales were$57,027 or 63%of total sales,down from$86,399 or 64%o

308、f total sales in fiscal 2015.Domestic sales decreased$29,372,or 34%,compared with fiscal 2015 across all end markets.International sales accounted for$33,012 or 37%of total sales for fiscal 2016,down from$48,770,or 36%,of total sales in fiscal 2015.International sales decreased$15,758,or 32%,compare

309、d with fiscal 2015.All international markets were weaker,with the largest decreases occurring in Canada,South and Central America and Asia.By market,sales for fiscal 2016 were 32%to the refining industry,the same as in fiscal 2015,33%to the chemical and petrochemical industries,down from 35%in fisca

310、l 2015,16%to the power markets,up from 15%in fiscal 2015,and 19%to defense and other industrial applications,up from 18%in fiscal 2015.Our gross margin for fiscal 2016 was 25.8%compared with 30.9%for fiscal 2015.The reduction in gross margin was driven by(1)lower facility utilization due to the 33%r

311、eduction in sales;(2)a very competitive pricing environment;and(3)costs incurred ahead of revenue for our Navy and nuclear strategies.Gross profit for fiscal 2016 decreased$18,549,or 44%compared with fiscal 2015 due to lower sales volume as well as the items which affected gross margin.Selling,gener

312、al and administrative,or SG&A,expense for fiscal 2016 was$16,565,down 11%or$1,947,compared with$18,512 in fiscal 2015.SG&A as a percentage of sales in fiscal 2016 increased to 18.4%of sales compared with 13.7%of sales in fiscal 2015.The increase as a percent of sales was due to lower sales levels in

313、 fiscal 2016,partly offset by cost reductions.In the prior year,fiscal 2015,we also incurred a pre-tax restructuring charge of$1,718($1,164 after tax)for severance costs related largely to a voluntary early retirement program we offered in the fourth quarter of fiscal 2015 and to certain involuntary

314、 headcount reductions which occurred in the same quarter.The cost reductions in fiscal 2016 SG&A were partly due to this restructuring as well as lower selling,commission and other compensation expenses related to lower sales and earnings.Other income in fiscal 2016 was$1,789.This was due to cancell

315、ation fees received from customers primarily for two orders totaling$7,168 which were cancelled in fiscal 2016.There was no other income in fiscal 2015.Interest income for fiscal 2016 was$261,up from$189 in fiscal 2015.Interest expense for fiscal 2016 was$10 compared with$11 in fiscal 2015.Our effec

316、tive tax rate in fiscal 2016 was 30%compared with an effective tax rate of 32%for fiscal 2015.This decrease in rates was due to the retroactive reinstatement of the R&D tax credit.Net income for fiscal 2016 and income per diluted share was$6,131 and$0.61,respectively.Net income in fiscal 2015 was$14

317、,735 or$1.45 per diluted share,and excluding the impact of the restructuring charge,was$15,899 and$1.57,respectively.Fiscal 2015 Compared with Fiscal 2014 Sales for fiscal 2015 were$135,169,up$32,951 or 32%,as compared with sales of$102,218 for fiscal 2014.Domestic sales were$86,399 or 64%of total s

318、ales,up from$63,850 or 62%of total sales in fiscal 2014.Domestic sales increased$22,549,or 35%,compared with fiscal 2014 driven principally by new capacity investment in the U.S.chemical industry.International sales accounted for$48,770 or 36%of total sales for fiscal 2015,up from$38,368,or 38%,of t

319、otal sales in fiscal 2014.International sales increased$10,402,or 27%,compared with fiscal 2014.By market,sales for fiscal 2015 were 32%to the refining industry,down from 35%in 23 fiscal 2014,35%to the chemical and petrochemical industries,up from 24%in fiscal 2014,15%to the power markets,down from

320、23%in fiscal 2014,and 18%to defense and other industrial applications,the same as in fiscal 2014.Our gross margin for fiscal 2015 was 30.9%compared with 31.1%for fiscal 2014.Leverage from 33%greater revenue in 2015 versus 2014 was muted by lower pricing for certain orders and the extent of subcontra

321、cting that was required due to timing of customer requirements and near-term capacity limitations.Gross profit for fiscal 2015 increased$9,992,or 31%compared with fiscal 2014 due to higher sales volume.Selling,general and administrative,or SG&A,expense for fiscal 2015 was$18,512,up 8%or$1,317,compar

322、ed with$17,195 in fiscal 2014.However,SG&A as a percentage of sales in fiscal 2015 was 13.7%of sales compared with 16.8%of sales in fiscal 2014.We incurred a pre-tax restructuring charge of$1,718($1,164 after tax)for severance costs related largely to a voluntary early retirement program we offered

323、in the fourth quarter of fiscal 2015 and to certain involuntary headcount reductions which occurred in the same quarter.Our reduction in headcount was approximately 10%of our global workforce.Approximately 20%of the headcount reductions occurred in the fourth quarter of fiscal 2015.The remaining hea

324、dcount reductions occurred in the first four months of fiscal 2016.The expected annual savings from these reductions was approximately$3,000,of which$2,000 was realized in fiscal 2016.Interest income for fiscal 2015 was$189,up from$94 in fiscal 2014.Interest expense for fiscal 2015 was$11 compared w

325、ith$1 in fiscal 2014.Our effective tax rate in fiscal 2015 was 32%compared with an effective tax rate of 31%for fiscal 2014.Net income for fiscal 2015 and income per diluted share was$14,735 and$1.45,respectively.Net income,excluding the impact of the restructuring charge,was$15,899 or$1.57 per dilu

326、ted share,up 57%compared with$10,145 and$1.00,respectively,in fiscal 2014.Stockholders Equity The following discussion should be read in conjunction with our consolidated statements of changes in stockholders equity that can be found in Item 8 of Part II of this Annual Report on Form 10-K.The follow

327、ing table shows the balance of stockholders equity on the dates indicated:March 31,2016 March 31,2015 March 31,2014$109,380$116,551$105,908 Fiscal 2016 Compared with Fiscal 2015 Stockholders equity decreased$7,171 or 6%,at March 31,2016 compared with March 31,2015.This decrease was primarily due to

328、our repurchase of 539 shares at a cost of$9,441,partially offset by net income earned in fiscal 2016.See Item 5 of this Annual Report on Form 10-K for more information on our stock repurchase program.On March 31,2016,our net book value per share was$11.34,down 1%over March 31,2015.Fiscal 2015 Compar

329、ed with Fiscal 2014 Stockholders equity increased$10,643 or 10%,at March 31,2015 compared with March 31,2014.This increase was primarily due to our income earned in fiscal 2015.On March 31,2015,our net book value per share was$11.50,up 10%over March 31,2014.24 Liquidity and Capital Resources The fol

330、lowing discussion should be read in conjunction with our consolidated statements of cash flows and consolidated balance sheets appearing in Item 8 of Part II of this Annual Report on Form 10-K:March 31,2016 2015 Cash and investments.$65,072$60,271 Working capital(1).74,807 80,884 Working capital rat

331、io(2).3.7 3.7 Working capital excluding cash and investments.9,735 20,613 (1)Working capital equals current assets minus current liabilities.(2)Working capital ratio equals current assets divided by current liabilities.We use the above ratios to measure our liquidity and overall financial strength.N

332、et cash generated by operating activities for fiscal 2016 was$18,751,compared with$6,279 for fiscal 2015.Cash generated from changes in unbilled revenues,customer deposits,and accounts receivables reversed cash usage in those categories in fiscal 2015.These were partially offset by lower net income,

333、and decreases in accounts payable and accrued compensation.Capital spending in fiscal 2016 was$1,153,compared with$5,300 in fiscal 2015.The fiscal 2015 capital spending included the capital expansion at our Batavia,NY manufacturing facility,which started in the middle of fiscal 2014 and was completed in the middle of fiscal 2015.This expansion was to support our growth strategies in the refining,p