1、Wesco Cover file.pdf 1 12/10/15 6:48 PMcov15-19986-7_237760_for email.indd 312/10/15 6:54 PMDear Stockholders,Fiscal 2015 was a year of transition for Wesco Aircraft in many respects.When I joined the company,I already knew Wesco had a strong heritage,a value proposition that customers appreciate,an
2、 excellent reputation for service and an outstanding group of employees.There were also gaps in performance,with a need to drive organic growth,operate with greater efficiency and deliver better results.In a very short period of time,we have addressed these gaps head-on,planning and completing actio
3、ns necessary to build a foundation for change and position our company for the future.In the past two quarters,we have established Wescos vision,goals and culture;substantially completed integration activities and aligned our organization to growth channels;taken action to reduce costs;reassessed pr
4、ocurement practices and inventory management;and initiated Policy Deployment to lead and manage performance across the company.We also assessed our industry and confirmed that Wescos value proposition remains strong in a growing industry.We believe that Wesco is well placed in major segments of our
5、market,with opportunity to improve our position in others.In fiscal 2015,we began transforming Wesco to reflect our strong competitive position and value proposition in expanding markets,with 74 percent of sales in long-term agreements serving the largest aerospace companies in the world and 26 perc
6、ent of sales from continued ad hoc demand supporting all of our important customers.By offering our complete product portfolio as one company to the markets we serve,we believe Wesco is better positioned to grow profitably in the future.Net sales in fiscal 2015 were$1,497.6 million,an increase of 10
7、.5 percent compared to$1,355.9 million in fiscal 2014.The net sales increase was driven primarily by the acquisition of Haas Group in fiscal 2014,partially offset by the conclusion of a large commercial contract and the impact of foreign currency movements.We stabilized sales sequentially in the fou
8、rth quarter of fiscal 2015 and aligned the sales organization around our three market channels of strategic customers,regional sales and MRO.We are already gaining traction under our new strategy,winning and expanding business with a number of major customers across all regions,products and service
9、categories.In the fourth quarter,we analyzed our inventory and began developing a demand management strategy that links sales,inventory procurement and operations planning.These actions are designed to improve efficiencies,material acquisition costs and working capital as we forecast consumption in
10、line with build and refurbishment rates.We also stabilized selling,general and administrative expenses in the fourth quarter by holding costs in check.We substantially completed the integration of Haas and Wesco and created an organization that we believe will better serve our customers,focus our ef
11、forts going to market and enable the company to provide our complete product portfolio and value proposition.During fiscal 2015,we generated robust cash flow,which we used to pay down debt.Cash from operations totaled$141.2 million in fiscal 2015,compared with$53.7 million in fiscal 2014.We utilized
12、 the increased cash to repay approximately$150 million in debt during the year.As we move into fiscal 2016,we are focused on expanding sales prospects with strategic customer accounts through contract renewals,new business and higher production.These customers represent our greatest opportunity to l
13、everage our combined offering and demonstrate Wescos global strategic value proposition.In addition,regional sales activities through our branch network devote resources to support the balance of our important customers,leveraging opportunities to drive ad hoc sales and support LTA contracts.Our MRO
14、 strategy is using a more focused approach to sales in this critical market through dedicated teams.We took aggressive action in the fourth quarter of fiscal 2015 to address our cost structure and improve efficiencies across all functions,while we continue Wescos ongoing commitment to outstanding cu
15、stomer service and delivery performance.At the same time,we are working to drive continuous improvement through our processes,operations and logistics.I want to thank our stockholders,customers and suppliers for their ongoing support of Wesco Aircraft during this period of transition.I also want to
16、express my gratitude to our employees who have worked tirelessly through significant change,and who remain committed to Wescos future success and upholding our reputation for service excellence.Sincerely,David J.Castagnola President and Chief Executive OfcerNovember 30,2015UNITED STATESSECURITIES AN
17、D EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)!ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended September 30,2015orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period
18、from to Commission File No.001-35253WESCO AIRCRAFT HOLDINGS,INC.(Exact Name of Registrant as Specified in Its Charter)Delaware20-5441563(State of Incorporation)(I.R.S.EmployerIdentification Number)24911 Avenue StanfordValencia,California 91355(Address of Principal Executive Offices and Zip Code)(661
19、)775-7200(Registrants Telephone Number,Including Area Code)Securities Registered pursuant to Section 12(b)of the Act:Title of Each ClassName of Each Exchange on Which RegisteredCommon Stock,par value$0.001 per shareNew York Stock ExchangeSecurities Registered pursuant to Section 12(g)of the Act:None
20、Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the SecuritiesAct.Yes!No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of theAct.Yes No!Indicate by check mark whether the registrant(1
21、)has filed all reports required to be filed by Section 13 or 15(d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to filesuch reports),and(2)has been subject to such filing requirements for the past 90 days.Yes!No Indic
22、ate by check mark whether the registrant has submitted electronically and posted on its corporate Website,if any,everyInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months(or shorter period that the registrant was required to
23、submit and post such files).Yes!No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,andwill not be contained,to the best of the registrants knowledge,in definitive proxy or information statements incorporated byreference in Part
24、 III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,or a non-accelerated filer,or asmaller reporting company.See definitions of large accelerated filer,accelerated filer and smaller reporting compan
25、y inRule 12b-2 of the Securities Exchange Act of 1934.Large accelerated filer!Accelerated filer Non-accelerated filer Smaller reporting company(Do not check if asmaller reporting company)Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No!As o
26、f March 31,2015,the aggregate market value of the voting and non-voting common equity held by non-affiliates basedon the closing price as of that day was approximately$1,127,358,000.The number of shares of common stock(par value$0.001 per share)of the registrant outstanding as of November 23,2015,wa
27、s 97,930,525.Documents Incorporated by ReferencePart III of this Annual Report on Form 10-K incorporates by reference certain information from the registrants definitiveproxy statement for the 2016 annual meeting of stockholders,which the registrant intends to file pursuant to Regulation 14A withthe
28、 Securities and Exchange Commission not later than 120 days after the registrants fiscal year end of September 30,2015.Withthe exception of the sections of the definitive proxy statement specifically incorporated herein by reference,the definitive proxystatement is not deemed to be filed as part of
29、this Annual Report on Form 10-K.TABLE OF CONTENTSPagePart IItem 1.Business.5Item 1A.Risk Factors.14Item 1B.Unresolved Staff Comments.30Item 2.Properties.30Item 3.Legal Proceedings.31Item 4.Mine Safety Disclosures.31Part IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Is
30、suerPurchases of Equity Securities.32Item 6.Selected Financial Data.34Item 7.Managements Discussion and Analysis of Financial Condition and Results ofOperations.35Item 7A.Quantitative and Qualitative Disclosures About Market Risk.56Item 8.Financial Statements and Supplementary Data.58Item 9.Changes
31、in and Disagreements with Accountants on Accounting and FinancialDisclosure.98Item 9A.Controls and Procedures.98Item 9B.Other Information.101Part IIIItem 10.Directors,Executive Officers and Corporate Governance.102Item 11.Executive Compensation.102Item 12.Security Ownership of Certain Beneficial Own
32、ers and Management and RelatedStockholder Matters.102Item 13.Certain Relationships and Related Transactions,and Director Independence.102Item 14.Principal Accounting Fees and Services.103Part IVItem 15.Exhibits,Financial Statement Schedules.104Signatures.105Exhibit Index.107CERTAIN DEFINITIONSUnless
33、 otherwise noted in this Annual Report,the term Wesco Aircraft means Wesco AircraftHoldings,Inc.,our top-level holding company,and the terms Wesco,the Company,we,us,our and our Company mean Wesco Aircraft and its subsidiaries,including(1)Wesco AircraftHardware Corp.(Wesco Aircraft Hardware),which is
34、 our primary historical domestic operatingcompany and the sole member of Haas Group International,LLC,which we acquired,along with HaasGroup,Inc.(now Haas Group,LLC)and its direct and indirect subsidiaries(collectively,Haas),onFebruary 28,2014,and(2)Wesco Aircraft Europe,Ltd.(Wesco Aircraft Europe),
35、our primaryhistorical foreign operating company.References to fiscal year mean the year ending or endedSeptember 30.For example,fiscal year 2015 or fiscal 2015 means the period from October 1,2014to September 30,2015.2PART ICAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Fo
36、rm 10-K contains forward-looking statements(including within themeaning of the Private Securities Litigation Reform Act of 1995)concerning Wesco and other matters.These statements may discuss goals,intentions and expectations as to future plans,trends,events,results of operations or financial condit
37、ion,or otherwise,based on current beliefs of management,aswell as assumptions made by,and information currently available to,such management.Forward-looking statements may be accompanied by words such as aim,anticipate,believe,plan,could,would,should,estimate,expect,forecast,future,guidance,intend,m
38、ay,will,possible,potential,predict,project or similar words,phrases or expressions.Theseforward-looking statements are subject to various risks and uncertainties,many of which are outsideour control.Therefore,you should not place undue reliance on such statements.Factors that couldcause actual resul
39、ts to differ materially from those in the forward-looking statements include:general economic and industry conditions;conditions in the credit markets;changes in military spending;risks unique to suppliers of equipment and services to the U.S.government;risks associated with our long-term,fixed-pric
40、e agreements that have no guarantee of futuresales volumes;risks associated with the loss of significant customers,a material reduction in purchase orders bysignificant customers or the delay,scaling back or elimination of significant programs on whichwe rely;our ability to effectively compete in ou
41、r industry;our ability to effectively manage our inventory;our ability to fully integrate the Haas business and realize anticipated benefits of the combinedoperations;risks related to unanticipated costs of integration;our suppliers ability to provide us with the products we sell in a timely manner,
42、in adequatequantities and/or at a reasonable cost;our ability to maintain effective information technology systems;our ability to retain key personnel;risks associated with our international operations,including exposure to foreign currencymovements;risks associated with assumptions we make in conne
43、ction with our critical accounting estimates(including goodwill)and legal proceedings;our dependence on third-party package delivery companies;fuel price risks;our ability to establish and maintain effective internal control over financial reporting;fluctuations in our financial results from period-
44、to-period;environmental risks;3 risks related to the handling,transportation and storage of chemical products;risks related to the aerospace industry and the regulation thereof;risks related to our indebtedness;and other risks and uncertainties.The foregoing list of factors is not exhaustive.You sho
45、uld carefully consider the foregoing factorsand the other risks and uncertainties that affect our business,including those described under Part I,Item 1A.Risk Factors and the other documents we file from time to time with the Securities andExchange Commission.All forward-looking statements included
46、in this Annual Report on Form 10-K(including information included or incorporated by reference herein)are based upon informationavailable to us as of the date hereof,and we undertake no obligation to update or revise publicly anyforward-looking statements,whether as a result of new information,futur
47、e events or otherwise.41DEC201507573833ITEM 1.BUSINESSCompany OverviewWe are one of the worlds largest distributors and providers of comprehensive supply chainmanagement services to the global aerospace industry on an annual sales basis.Our services range fromtraditional distribution to the manageme
48、nt of supplier relationships,quality assurance,kitting,just-in-time(JIT)delivery and point-of-use inventory management.We supply over 575,000 active stock-keeping units(SKUs),including C-class hardware,chemicals,electronic components,bearings,tools andmachined parts.In fiscal 2015,sales of hardware
49、represented 49%of our net sales,sales of chemicalsrepresented 40%of our net sales and sales of electronic components represented 7%of our net sales.We serve our customers under both(1)long-term contractual arrangements(Contracts),which includeJIT contracts,that govern the provision of comprehensive
50、outsourced supply chain managementservices and long-term agreements,or LTAs,that typically set prices for specific products,and(2)adhoc sales.In February 2014,we acquired 100%of the outstanding stock of Haas,a provider ofchemical supply chain management services to the commercial aerospace,airline,m
51、ilitary,automotive,energy,pharmaceutical and electronics sectors.In July 2012,we acquired substantially all of the assetsof Interfast,Inc.(Interfast),a Toronto-based value-added distributor of specialty fasteners,fasteningsystems and production installation tooling for the aerospace,electronics and
52、general industrialmarkets.Founded in 1953 by the father of our current Chairman of the Board of Directors,we have grownto serve over 8,200 customers,which are primarily in the commercial,military and general aviationsectors,including the leading original equipment manufacturers(OEMs)and their subcon
53、tractors,through which we support nearly all major Western aircraft programs.We also service industrialcustomers,which include customers in the automotive,energy,pharmaceutical and electronics sectors.We have approximately 2,670 employees and operate across 88 locations in 20 countries.The following
54、charts illustrate the composition of our fiscal year 2015 net sales based on our sales data.End Use Military39%Commercial61%Sales Mix Airline/MRO7%USGovernment14%OEM andContractors75%Distributors4%Customer TypeAd Hoc26%Contract74%For additional information about our segment reporting,see Note 21 of
55、the Notes to ConsolidatedFinancial Statements in Part II,Item 8 of this Annual Report on Form 10-K.5Our Products and ServicesWe conduct our operations through two reportable segments:North America and Rest of World.The following is a summary of revenues for each of our segments:Year Ended September
56、30,201520142013Revenue%of RevenueRevenue%of RevenueRevenue%of RevenueNorth America.$1,198,20180%$1,030,51176%$713,72579%Rest of World.299,41420%325,36624%187,88321%Total.$1,497,615100%$1,355,877100%$901,608100%Our ProductsWe offer more than 575,000 active SKUs,which fall into the following product c
57、ategories duringthe year ended September 30,2015(dollars in thousands):ElectronicMachined PartsHardwareChemicalsComponentsBearingsand OtherNet product sales.$738,496$591,840$107,918$33,602$25,759%of net product sales.49%40%7%2%2%Types of productsoffered.Blind fasteners Adhesives Connectors Airframe
58、control Brackets Panel fasteners Sealants and Relaysbearings Milled parts Bolts andtapes Switches Rod ends Shimsscrews Lubricants Circuit Spherical bearings Stampings Clamps Oil and greasebreakers Ball bearing rod Turned parts Hi lok pins and Paints and Lightedends Weldedcollarscoatingsproducts Roll
59、er bearingsassemblies Hose Industrial gases Bushings Installationassemblies Coolants andtooling Hydraulicmetalworkingfittingsfluids Inserts Cleaners and Lockbolts andcleaning solventscollars Nuts Rivets Springs Valves WashersHardwareSales of C-class aerospace hardware represented 49%,62%and 83%of ou
60、r fiscal 2015,2014 and2013 product sales,respectively.Fasteners,our largest category of hardware products,include a widerange of highly engineered aerospace parts that are designed to hold together two or morecomponents,such as rivets(both blind and solid),bolts(including blind bolts),screws,nuts an
61、dwashers.Many of these fasteners are designed for use in specific aircraft platforms and others can beused across multiple platforms.Materials used in the manufacture of these fasteners range fromstandard alloys,such as aluminum,steel or stainless steel,to more advanced materials,such astitanium,Inc
62、onel and Waspalloy.ChemicalsOn February 28,2014,we acquired Haas,a provider of chemical supply chain management servicesto the commercial aerospace,airline,military,automotive,energy,pharmaceutical and electronics6sectors.Chemical sales represented 40%,26%and 0%of our fiscal 2015,2014 and 2013 produ
63、ct sales,respectively.As a result of our acquisition of Haas,our chemical product offerings include adhesives;sealants and tapes;lubricants;oil and grease;paints and coatings;industrial gases;coolants andmetalworking fluids;and cleaners and cleaning solvents.Electronic ComponentsWe offer highly reli
64、able interconnect and electro-mechanical products,including connectors,relays,switches,circuit breakers and lighted products.We also offer value-added assembled products includingmil-circular and rack and panel connectors and illuminated push button switches.We maintain largequantities of connector
65、components in inventory,which allows us to respond quickly to customerorders.In addition,our lighted switch assembly operation affords customers same day service,includingengraving capabilities in multiple languages.BearingsOur product offering includes a variety of standard anti-friction products d
66、esigned to bothcommercial and military aircraft specifications,such as airframe control bearings,rod ends,sphericalbearings,ball bearing rod ends,roller bearings and bushings.Machined Parts and OtherMachined parts are designed for a specific customer and are assigned unique OEM-specific SKUs.The mac
67、hined parts we distribute include laser cut or stamped brackets,milled parts,shims,stampings,turned parts and welded assemblies made of materials ranging from high-grade steel or titanium tonickel based alloys.We stock a full range of tools needed for the installation of many of our products,includi
68、ng airand hydraulic tools as well as drill motors,and we also offer factory authorized maintenance and repairservices for these tools.In addition to selling these tools,we also rent or lease these tools to ourcustomers.Our ServicesIn addition to our traditional distribution services,we have develope
69、d innovative value-addedservices,such as quality assurance,kitting and JIT supply chain management for our customers,andalso sell products to airline-affiliated and independent maintenance,repair and overhaul(MRO)providers.Quality AssuranceOur quality assurance(QA)function is a key component of our
70、service offering,with 6%of ouremployees dedicated to this area.We believe we offer an industry-leading QA function as a result ofour rigorous processes,sophisticated testing equipment and dedicated QA staff.Our superior QAperformance is demonstrated by a comparison of our customers aggregate rejecti
71、on rate of theproducts we deliver,which was 0.11%during fiscal 2015,to our rejection rate of the products wereceive from our suppliers,which was 2.94%during fiscal 2015.Our QA department inspects the inventory we purchase to ensure the accuracy and completenessof documentation.For many of our custom
72、ers,these inspections are conducted at our in-houselaboratory,where we operate sophisticated testing equipment.We also maintain an electronic copy ofthe relevant certifications for the inventory,which can include a manufacturer certificate ofconformance,test reports,process certifications,material d
73、istributor certifications and raw material millcertifications.Our industry-leading QA capabilities also allow our JIT customers to reduce the number7of personnel dedicated to the QA function and reduce the delays caused by the rejection of improperlyinspected products.KittingKitting involves the pac
74、kaging of an entire bill of materials or a complete ship-set of products,which reduces the amount of time workers spend retrieving products from storage locations.Kits canbe customized in varying configurations and sizes and can contain up to several hundred differentproducts.All of our kits and com
75、ponents contain fully certified and traceable products and areassembled by our full-service kitting department at our Central Stocking Locations(CSLs),or at ourcustomer sites.JIT Supply Chain ManagementJIT supply chain management involves the delivery of products on an as-needed basis to thepoint-of
76、-use at a customers manufacturing line.JIT programs are designed to prevent excess inventorybuild-up and shortages and improve manufacturing efficiency.Each JIT contract requires us tomaintain an efficient inventory tracking,analysis and replenishment program and is designed to providehigh levels of
77、 stock availability and on-time delivery.We believe customers that utilize ourcomprehensive JIT supply chain management services are frequently able to realize significant benefitsincluding:reduced inventory levels and lower inventory excess and obsolescence(E&O)expense,in partbecause such customers
78、 only purchase what they need,and make more efficient use of theirfloor space;increased accuracy in forecasting and planning,resulting in substantially improved on-timedelivery,reduced expediting costs and fewer disruptions of production schedules;improved quality assurance resulting in a substantia
79、l reduction in customer product rejectionrates;and reduced administrative and overhead costs relating to procurement,QA,supplier managementand stocking functions.Before signing a JIT contract,our customers typically experience outages of many SKUs and,insome cases,have up to a years worth of invento
80、ry on hand.As part of our JIT programs,we generallyassume the customers existing inventory at the onset of the contract,immediately reducing theirinventory on-hand and the associated management costs.Customer inventory is generally assumed on aconsignment basis and is entered in our database in a di
81、stinct customer-specific virtual warehouse.Software protocol in our IT systems requires the system to first look to a customers consignedinventory when parts replenishment is required.In certain cases,we can sell this consigned inventory toour base of over 8,200 other active customers around the wor
82、ld,gradually drawing down the customersinventory.As the consigned inventory for each SKU is exhausted,our stock of Wesco-sourced productreserve is then used for replenishment.Another key strength of our JIT programs is our ability to utilize highly scalable and customizablepoint-of-use systems to de
83、velop an efficient supply chain management system and automatedreplenishment solution for any number of SKUs.In order to minimize inventory on hand,certainindicators are used to trigger the replenishment of product from a supplying location to the location ofconsumption.Our Twin-Bin system is an exa
84、mple of such an indicator.A JIT program designedaround a Twin-Bin system utilizes a specially-manufactured unit composed of two bins stacked on topof one another.In this system,a clear plastic bag,typically containing a 30-day supply of parts,isloaded in each bin.Production workers use all of the pa
85、rts within the bottom bin before drawing apullout slide between the two bins that drops the full plastic bag of parts from the top bin into the8bottom bin.An empty top bin indicates the need to initiate replenishment of the parts and provides aclear visual management process on the manufacturing flo
86、or.All replenishment activity is done viahand-held scanners that transmit orders to our stocking locations.In certain circumstances,we also provide our JIT customers with additional value-added services,including the implementation of process control and usage reduction programs;support forenvironme
87、ntal,health and safety compliance(EHS)and reporting;and assistance with the developmentof waste management strategies.MRO SalesWe sell products to airline-affiliated,OEM-affiliated and independent MRO providers on both aContract and ad hoc basis.We have recently expanded our efforts to increase our
88、presence in both thecommercial and military aerospace MRO markets,particularly as a result of our acquisition of Interfastin 2012,our acquisition of Haas in 2014 and through the introduction of our Wesco e-commerce salesplatform,which we believe provides us with a cost-effective way to further penet
89、rate the MRO market.In addition,we have targeted domestic and international airlines and maintenance centers that webelieve are assuming an expanded role within the MRO market.Going forward,we expect commercial MRO providers to benefit from the same trends as thoseimpacting the commercial OEM market
90、,including increased revenue passenger miles,which in turnshould drive growth in the commercial fleet and greater utilization of existing aircraft.The commercialMRO market may also benefit from directives or notifications announced by international industryregulators and trade associations.Such dire
91、ctives or notifications can serve to bolster requiredmaintenance,and thus the demand for new and existing aerospace products.In addition,the retirementof certain older and less fuel-efficient aircraft models has been deferred as a result of the recentdecrease in global oil prices,which we believe co
92、uld drive growth in the MRO market.Furthermore,we expect demand in the military MRO market to be driven by requirements to maintain aging militaryfleets,changes in the overall fleet size and the level of U.S.military activity overseas.We believe thatour presence in this market helps us mitigate the
93、volatility of new military aircraft sales with sales tothe aftermarket.Customer ContractsWe sell products to our customers under two types of arrangements:(1)Contracts,which includeJIT supply chain management contracts and LTAs,and(2)ad hoc sales.ContractsJIT Contracts.JIT contracts are typically th
94、ree to five years in length and are structured to supplythe product requirement for specific SKUs,production lines or facilities.Given our direct involvementwith JIT customers,volume requirements and purchasing frequency under these contracts is highlypredictable.Under JIT contracts,customers commit
95、 to purchase specified products from us at a fixedprice or a pass-through price,on an if-and-when needed basis,and we are responsible for maintaininghigh levels of stock availability of those products.JIT contracts typically contain termination forconvenience provisions,which generally allow our cus
96、tomers to terminate their contracts on shortnotice without meaningful penalties,provided that we are reimbursed for the cost of any inventoryspecifically procured for the customer.JIT customers often purchase products from us that are notcovered under their contracts on an ad hoc basis.For additiona
97、l information about our JIT supplychain management services,see Our Products and ServicesOur ServicesJIT Supply ChainManagement.LTAs.Like JIT contracts,LTAs also typically run for three to five years.LTAs are essentiallynegotiated price lists for customers or individual customer sites that cover a r
98、ange of pre-determined9products,purchased on an as-needed basis.LTAs generally obligate the customer to buy contractedSKUs from us and may obligate us to maintain stock availability for those products.Once an LTA is inplace,the customer is then able to place individual purchase orders with us for an
99、y of the contractuallyspecified products.LTAs typically contain termination for convenience provisions,which generally allowfor our customers to terminate their contracts on short notice without meaningful penalties,providedthat we are reimbursed for the cost of any inventory specifically procured f
100、or the customer.LTAcustomers also frequently purchase products from us on an ad hoc basis,which are not captured underthe pricing arrangement.Ad Hoc SalesAd hoc customers purchase products from us on an as-needed basis and are generally supplied outof our existing inventory.Typically,ad hoc orders a
101、re for smaller quantities of products than thoseordered under Contracts,and are often urgent in nature.Given our breadth and volume of inventory,it is not uncommon for even our competitors to purchase products from us on an ad hoc basis whentheir own stocks prove to be inadequate.In an environment o
102、f increasing aircraft production,productshortages can become increasingly common for OEMs,subcontractors,MRO providers and distributorswith less sophisticated forecasting abilities and procurement organizations.Under each of the sales arrangements described above we typically warrant that the produc
103、ts wesell conform to the drawings and specifications that are in effect at the time of delivery in theapplicable contract,and that we will replace defective or non-conforming products for a period of timethat varies from contract to contract.The product manufacturer,in turn,typically indemnifies us
104、forliabilities resulting from defective or non-conforming products.We do not accrue for warranty expensesas our claims related to defective and non-conforming products have been nominal.We believe that backlog is not a relevant measure of our business,given the long-term nature ofour Contracts with
105、our customers.CustomersWe sell to over 8,200 active customers worldwide.During fiscal 2015,no single customerrepresented more than 10%of our net sales,and only two customers accounted for over 5%of our netsales,with each consisting of multiple independent programs.Our top 10 customers collectivelyac
106、counted for 44%of our net sales during fiscal 2015.Seventy-five percent of our fiscal 2015 net sales were derived from major OEMs,such as Airbus,Alenia,Boeing,BAE Systems,Bell Helicopter,Bombardier,Cessna,Embraer,Gulfstream,LockheedMartin,Northrop Grumman and Raytheon,and certain of their subcontrac
107、tors.Government salescomprised 14%of our net sales during fiscal 2015 and were derived from various military partsprocurement agencies such as the U.S.Defense Logistics Agency,or from defense contractors buyingon their behalf.Aftermarket sales to airline-affiliated or independent MRO providers made
108、up 7%ofour fiscal 2015 net sales.The remaining 4%of our net sales are to other distributors on an ad hocbasis.During fiscal 2015,61%of our net sales were derived from customers supporting commercialprograms and 39%of our net sales were derived from customers supporting military programs.Ourcustomers
109、 are principally located in the United States,with shipments to customers in the UnitedStates comprising 74%of our net sales during fiscal 2015.We also service international customers inmarkets that include Australia,Canada,China,France,Germany,India,Ireland,Israel,Italy,Malaysia,Mexico,Philippines,
110、Poland,Saudi Arabia,Singapore,South Korea,Turkey and the United Kingdom.For additional information about our net sales and long-lived assets by geographic area,see Note 21 ofthe Notes to Consolidated Financial Statements in Part II,Item 8 of this Annual Report on Form 10-K.10ProcurementWe source our
111、 inventory from over 4,290 suppliers,including Precision Castparts Corp.,AlcoaFastening Systems,PPG,Monogram Aerospace Fasteners,Henkel Corp.,3M,Lisi Aerospace,CassInformation Systems Inc.,Chemtura Corporation and Bristol Industries.During fiscal 2015,PrecisionCastparts Corp.and Alcoa Fastening Syst
112、ems supplied 13%and 9%,respectively,of the products wepurchased.Suppliers typically prefer to deal with a relatively small number of large and sophisticateddistributors in order to improve machine utilization;reduce finished goods inventory and relatedobsolescence costs;maintain pricing discipline;i
113、mprove performance in meeting on-time-deliverytargets to end customers;and consolidate customer accounts,which can reduce administrative andoverhead costs relating to sales and marketing,customer service and other functions.As a result of thescale of our operations and our long-standing relationship
114、s with many of our suppliers,we are oftenable to take advantage of significant volume-based discounts when purchasing inventory.Given ourindustry position,financial strength and philosophy of cooperation with suppliers,we believe we are inan excellent position to become a distributor for new product
115、 lines as they become available.Our management analyzes supply,demand,cost and pricing factors to make inventory investmentdecisions,which are facilitated by our highly customized IT systems,and we maintain closerelationships with the leading suppliers in the industry.Our strong understanding of the
116、 globalaerospace industry is derived from our long-term relationships with major OEMs,subcontractors andsuppliers.In addition,our direct insight into our customers production rates often allows us to detectindustry trends.Furthermore,our ability to forecast demand and place purchase orders with ours
117、uppliers well in advance of our customer requirements can provide us with a distinct advantage in anindustry where inventory availability is critical for customers that need specific products within astipulated timeframe to meet their own production and delivery commitments.However,despite ourexpert
118、ise in this area,effective inventory management is an ongoing challenge,and we continue to takesteps to enhance the sophistication of our procurement practices and mitigate the negative impact ofinventory builds on our cash flow.For additional information about the impact of inventory on ourbusiness
119、,including our cash flows,see Part I,Item 1A.Risk FactorsRisks Related to Our Businessand IndustryWe may be unable to effectively manage our inventory,which could have a materialadverse effect on our business,financial condition and results of operations,Part II,Item 7.Managements Discussion and Ana
120、lysis of Financial Condition and Results of OperationsOther Factors Affecting Our Financial ResultsFluctuations in Cash Flow,and Part II,Item 7.Managements Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies and EstimatesInventories.Information Techno
121、logy SystemsWe have invested to build integrated,highly customized IT systems that enable our purchasing andsales organization to make more informed decisions,our inventory management system to operate inan efficient manner and certain of our customers to make online purchases directly from us.Ourpr
122、imary scalable IT infrastructure is based on IBM and Oracle servers,the Oracle Enterprise databaseand the Oracle JD Edwards EnterpriseOne(JDE),enterprise resource planning(ERP)system.Ourchemical supply chain management system,tcmIS,is a proprietary system,developed using the OracleEnterprise databas
123、e.These customized IT systems provide us visibility into inventory quantities,stocking locations and purchases across our customer base by individual SKU,enabling us to accuratelyfill 16,000 orders per day and provide an exceptional level of customer service.These systems are fullycapable of interfa
124、cing with external business systems,including Oracle,SAP,Microsoft and others,andwe have developed additional functionality for JIT delivery and direct line feed of certain of theproducts we sell.This functionality includes recognition of signals and actions to fill customer bins fromhand-held scann
125、ers,min/max data or proprietary signals from a customers ERP system.JDE andtcmIS also support our EDI functionality,which allows our system to interface with customers and11suppliers,regardless of technology,data format or connectivity.TcmIS also supports additionalchemical-specific functionality,su
126、ch as product labeling and Global Harmonized System compliance.For our shipping logistics and export compliance support,we employ Precision Softwares TRA/X.TRA/X enables us to ship globally while maintaining tracking numbers and rating information for eachcustomer shipment.In addition,at several of
127、our distribution facilities,we use Minervas AIMSinventory management system in order to provide the best possible warehouse flow and cycle times.AIMS is tailored to fit our global warehouse operational needs and allows us to provide an expandablewarehouse management system that can also incorporate
128、transaction processing,work-in-progress andother manufacturing operations.AIMS interfaces with a broad range of material handling equipment,including horizontal and vertical carousels,conveyors,sorting equipment,pick systems and cranes.CompetitionThe industry in which we operate is highly competitiv
129、e and fragmented.We believe the principalcompetitive factors in our industry include the ability to provide superior customer service and support,on-time delivery,sufficient inventory availability,competitive pricing and an effective QA program.Ourcompetitors include both U.S.and foreign companies,i
130、ncluding divisions of larger companies andcertain of our suppliers,some of which have significantly greater financial resources than we do,andtherefore may be able to adapt more quickly to changes in customer requirements than we can.Inaddition to facing competition for Contract customers from our p
131、rimary competitors,Contractcustomers or potential Contract customers may also determine that it is more cost effective to establishor re-establish an in-house supply chain management system.Under these circumstances,we may beunable to sufficiently reduce our costs in order to provide competitive pri
132、cing while also maintainingacceptable operating margins.EmployeesAs of September 30,2015,we employed approximately 2,670 personnel worldwide,865 of whichwere located at customer sites.We have 799 employees located outside of North America.We are nota party to any collective bargaining agreements wit
133、h our employees.Regulatory MattersGovernmental agencies throughout the world,including the U.S.Federal Aviation Administration(the FAA),prescribe standards for aircraft components,including virtually all commercial airline andgeneral aviation products,as well as regulations regarding the repair and
134、overhaul of airframes andengines.Specific regulations vary from country to country,although compliance with FAA requirementsgenerally satisfies regulatory requirements in other countries.In addition,the products we distributemust also be certified by aircraft and engine OEMs.If any of the material a
135、uthorizations or approvalsthat allow us to supply products is revoked or suspended,then the sale of the related products wouldbe prohibited by law,which would have an adverse effect on our business,financial condition andresults of operations.From time to time,the FAA or equivalent regulatory agenci
136、es in other countries propose newregulations or changes to existing regulations,which are usually more stringent than existingregulations.If these proposed regulations are adopted and enacted,we could incur significantadditional costs to achieve compliance,which could have a material adverse effect
137、on our business,financial condition and results of operations.We are also subject to government rules and regulations that include the U.S.Foreign CorruptPractices Act(the FCPA),the Bribery Act 2010(the Bribery Act),the International Traffic in ArmsRegulations(ITAR),the Export Administration Regulat
138、ions(EAR),economic sanctions and the FalseClaims Act.See Risk FactorsRisks Related to Our Business and IndustryWe are subject to unique12business risks as a result of supplying equipment and services to the U.S.government directly and as asubcontractor,which could lead to a reduction in our net sale
139、s from,or the profitability of our supplyarrangements with,the U.S.government and Our international operations require us to complywith numerous applicable anti-corruption and trade control laws and regulations,including those of theU.S.government and various other jurisdictions,and our failure to c
140、omply with these laws andregulations could adversely affect our reputation,business,financial condition and results ofoperations.Environmental MattersWe are subject to extensive federal,state,local and foreign laws,regulations,rules and ordinancesrelating to pollution,protection of the environment a
141、nd human health and safety,and the handling,transportation,storage,treatment,disposal and remediation of hazardous substances,includingpotentially with respect to historical chemical blending and other activities that pre-dated our purchaseof Haas.Actual or alleged violations of EHS laws,or permit r
142、equirements could result in restrictions orprohibitions on operations and substantial civil or criminal sanctions,as well as,under some EHS laws,the assessment of strict liability and/or joint and several liability.Furthermore,we may be liable for the costs of investigating and cleaning up environme
143、ntalcontamination on or from our operations or at off-site locations,including potentially with respect tohistorical chemical blending and other activities that pre-dated our purchase of our businesses.We maytherefore incur additional costs and expenditures beyond those currently anticipated to addr
144、ess all suchknown and unknown situations under existing and future EHS laws.In addition,governmental,regulatory and societal demands for increasing levels of product safetyand environmental protection could result in increased pressure for more stringent regulatory controlwith respect to the chemica
145、l industry.For example,the Hazard Communication Standard promulgatedby the U.S.Occupational Safety and Health Administration is now aligned with the GloballyHarmonized System of Classification and Labeling of Chemicals,which requires our suppliers to makerevisions to labels and safety data sheets.Ch
146、anges in the regulatory environment,particularly,but notlimited to,in the United States,the European Union,Canada and China,could lead to heightenedregulatory scrutiny and could adversely impact our ability to supply certain products and/to providechemical management services to our customers.For in
147、stance,the August 2015 explosion at the port ofTianjin,China,may lead to stricter chemical safety standards in that country.The European UnionsRegistration,Authorization and Restriction of Chemicals(REACH and analogous non-E.U.laws andregulations),or other similar laws and regulations,also could res
148、ult in compliance obligations,fines,ongoing monitoring and other future business activity restrictions,which could have a material adverseeffect on the Companys liquidity,financial position and results of operations.Available InformationWe file annual,quarterly and current reports and other informat
149、ion with the SEC.You may readand copy any documents that we file at the SECs public reference room at 100 F Street,N.E.,Washington,D.C.20549.You may call the SEC at 1-800-SEC-0330 to obtain further information aboutthe public reference room.In addition,the SEC maintains an Internet website(www.sec.g
150、ov)thatcontains reports,proxy and information statements and other information regarding registrants that fileelectronically with the SEC,including us.You may also access,free of charge,our reports filed with theSEC(for example,our Annual Report on Form 10-K,our Quarterly Reports on Form 10-Q and ou
151、rCurrent Reports on Form 8-K and any amendments to those forms)through the Investor Relationsportion of our website().We also make available on our website our(1)CorporateGovernance Guidelines,(2)Code of Business Conduct and Ethics,which applies to our directors,officers and employees,(3)Whistleblow
152、er Policy and(4)the charters of the Audit,Compensation andNominating and Corporate Governance Committees.Reports filed with or furnished to the SEC will beavailable as soon as reasonably practicable after they are filed with or furnished to the SEC.Ourwebsite is included in this Annual Report as an
153、inactive textual reference only.The information foundon our website is not part of this or any other report filed with or furnished to the SEC.13ITEM 1A.RISK FACTORSYou should consider and read carefully all of the risks and uncertainties described below,as well asother information included in this
154、Annual Report,including our consolidated financial statements andrelated notes.The risks described below are not the only ones facing us.The occurrence of any of thefollowing risks or additional risks and uncertainties not presently known to us or that we currently believe tobe immaterial could mate
155、rially and adversely affect our business,financial condition or results of operations.This Annual Report also contains forward-looking statements and estimates that involve risks anduncertainties.Our actual results could differ materially from those anticipated in the forward-lookingstatements as a
156、result of specific factors,including the risks and uncertainties described below.Risks Related to Our Business and IndustryWe are directly dependent upon the condition of the aerospace industry,which is closely tied to globaleconomic conditions,and if the volatility in the global financial markets w
157、ere to result in a slowdown in thecurrent economic recovery or a return to a recession,our business,financial condition and results ofoperations could be negatively impacted.Demand for the products and services we offer are directly tied to the delivery of new aircraft,aircraft utilization,and repai
158、r of existing aircraft,which,in turn,are impacted by global economicconditions.For example 2009,revenue passenger miles(RPMs)on commercial aircraft declined due tothe global recession.During the same period,the industry experienced declines in large commercial,regional and business jet deliveries.Wh
159、ile demand for commercial and regional jets has fully recovered,business jet orders and deliveries have recovered more slowly.A slowdown in the global economy,or areturn to a recession,would negatively impact the aerospace industry,and could negatively impact ourbusiness,financial condition and resu
160、lts of operations.Military spending,including spending on the products we sell,is dependent upon national defense budgets,and a reduction in military spending could have a material adverse effect on our business,financial conditionand results of operations.During the year ended September 30,2015,39%
161、of our net sales were related to military aircraft.The military market is significantly dependent upon government budget trends,particularly the U.S.Department of Defense(DoD)budget.Future DoD budgets could be negatively impacted by severalfactors,including,but not limited to,a change in defense spe
162、nding policy by the current and futurepresidential administrations and Congress,the U.S.governments budget deficits,spending priorities,the cost of sustaining the U.S.military presence in overseas operations and possible political pressureto reduce U.S.Government military spending,each of which coul
163、d cause the DoD budget to decline.Adecline in U.S.military expenditures could result in a reduction in military aircraft production,whichcould have a material adverse effect on our business,financial condition and results of operations.In particular,military spending may be negatively impacted by th
164、e Budget Control Act of 2011(the Budget Control Act),which was passed in August 2011.The Budget Control Act established limitson U.S.government discretionary spending,including a reduction of defense spending by approximately$490 billion between the 2012 and 2021 U.S.government fiscal years,and also
165、 provided that thedefense budget would face sequestration cuts of up to an additional$500 billion during that sameperiod to the extent that discretionary spending limits were exceeded.The impact of sequestration wasreduced with respect to the governments 2014 and 2015 fiscal years,in exchange for ex
166、tendingsequestration into fiscal years 2022 and 2023,following the enactment of the Bipartisan Budget Act of2013 in December 2013.The impact of sequestration was further reduced with respect to thegovernments 2016 and 2017 fiscal years,following the enactment of the Bipartisan Budget Act of 2015in N
167、ovember 2015.Sequestration is currently scheduled to resume in the governments 2018 fiscal year.We are unable to predict the impact the cuts associated with Sequestration will ultimately have on14funding for the military programs which we support.However,such cuts could result in reductions,delays o
168、r cancellations of these programs,which could have a material adverse effect on our business,financial condition and results of operations.We are subject to unique business risks as a result of supplying equipment and services to the U.S.governmentdirectly and as a subcontractor,which could lead to
169、a reduction in our net sales from,or the profitability ofour supply arrangements with,the U.S.government.Companies engaged in supplying defense-related equipment and services to U.S.governmentagencies are subject to business risks specific to the defense industry.We contract directly with the U.S.go
170、vernment and are also a subcontractor to customers contracting with the U.S.government.Accordingly,the U.S.government may unilaterally suspend or prohibit us from receiving new contractspending resolution of alleged violations of procurement laws or regulations,reduce the value of existingcontracts
171、or audit our contract-related costs and fees.In addition,most of our U.S.governmentcontracts and subcontracts can be terminated by the U.S.government or the contracting party,asapplicable,at its convenience.Termination for convenience provisions provide only for our recovery ofcosts incurred or comm
172、itted,settlement expenses and profit on the work completed prior totermination.In addition,we are subject to U.S.government inquiries and investigations,including periodicaudits of costs that we determine are reimbursable under government contracts.U.S.governmentagencies routinely audit government c
173、ontractors to review performance under contracts,cost structureand compliance with applicable laws,regulations,and standards,as well as the adequacy of andcompliance with internal control systems and policies.Any costs found to be misclassified orinaccurately allocated to a specific contract are not
174、 reimbursable,and to the extent already reimbursed,must be refunded.Also,any inadequacies in our systems and policies could result in payments beingwithheld,penalties and reduced future business.We are also subject to the federal False Claims Act,which provides for substantial civil penaltiesand tre
175、ble damages where a contractor presents a false or fraudulent claim to the government forpayment.Actions under the False Claims Act may be brought by the government or by other personson behalf of the government(who may then share in any recovery).We do not have guaranteed future sales of the produc
176、ts we sell and when we enter into Contracts with ourcustomers we generally take the risk of cost overruns,and our business,financial condition,results ofoperations and operating margins may be negatively affected if we purchase more products than ourcustomers require,product costs increase unexpecte
177、dly,we experience high start-up costs on new Contracts orour Contracts are terminated.A majority of our Contracts are long-term,fixed-price agreements with no guarantee of futuresales volumes,and they may be terminated for convenience on short notice by our customers,oftenwithout meaningful penaltie
178、s,provided that we are reimbursed for the cost of any inventory specificallyprocured for the customer.In addition,we purchase inventory based on our forecasts of anticipatedfuture customer demand.As a result,we may take the risk of having excess inventory in the event thatour customers do not place
179、orders consistent with our forecasts,particularly with respect to inventorythat has a more limited shelf-life.We also run the risk of not being able to pass along or otherwiserecover unexpected increases in our product costs,including as a result of commodity price increases,which may increase above
180、 our established prices at the time we entered into the Contract andestablished prices for products we provide.When we are awarded new Contracts,particularly JITcontracts,we may incur high costs,including salary and overtime costs to hire and train on-sitepersonnel,in the start-up phase of our perfo
181、rmance.In the event that we purchase more products thanour customers require,product costs increase unexpectedly,we experience high start-up costs on new15Contracts or our Contracts are terminated,our business,financial condition,results of operations andoperating margins could be negatively affecte
182、d.If we lose significant customers,significant customers materially reduce their purchase orders or significantprograms on which we rely are delayed,scaled back or eliminated,our business,financial condition andresults of operations may be adversely affected.Our top ten customers for the year ended
183、September 30,2015 accounted for 44%of our net sales.A reduction in purchasing by or loss of one of our larger customers for any reason,including changesin manufacturing or procurement practices,loss of a customer as a result of the acquisition of suchcustomer by a purchaser who does not fully utiliz
184、e a distribution model or uses a competitor,in-sourcing by customers,a transfer of business to a competitor,an economic downturn,failure toadequately service our clients,decreased production or a strike,could have a material adverse effect onour business,financial condition and results of operations
185、.As an example of changes in manufacturing practices that could impact us,OEMs such as Boeingand Airbus are currently incorporating an increasing amount of composite materials in the aircraft theymanufacture.Aircraft utilizing composite materials generally require the use of significantly fewerC-cla
186、ss aerospace parts than new aircraft made of more traditional non-composite materials,althoughthe parts used are generally higher priced than C-class aerospace parts used in non-composite aircraftstructures.As Boeing,Airbus and other customers increase their reliance on composite materials,theymay m
187、aterially reduce their purchase orders from us.As an example of the potential loss of business due to customer in-sourcing,a major OEM isundertaking an initiative to cause its first and second tier suppliers to source certain OEM-specificmaterials,including fasteners,directly from the OEM itself,rat
188、her than through distributors such as us.If such initiative is broadly implemented by the OEM,or if other OEMs pursue similar initiatives,aportion of our sales to their suppliers,and consequently our business,financial condition and results ofoperations,could be adversely affected.We expect to deriv
189、e a significant portion of our net sales from certain aerospace programs in theirearly production stages.In particular,our future growth will be dependent,in part,upon our sales tovarious OEMs and subcontractors.If production of any of the programs we support is terminated ordelayed,or if our sales
190、to customers affiliated with these programs are reduced or eliminated,ourbusiness,financial condition and results of operations could be adversely affected.In addition,during fiscal 2014,we modified and extended a contract with an existing customer thatresulted in a$66.3 million reduction in net sal
191、es to the customer during fiscal 2015 compared to fiscal2014.We operate in a highly competitive market and our failure to compete effectively may negatively impact ourresults of operations.We operate in a highly competitive global industry and compete against a number of companies,including division
192、s of larger companies and certain of our suppliers,some of which may havesignificantly greater financial resources than we do,and therefore may be able to adapt more quickly tochanges in customer requirements than we can.Our competitors consist of both U.S.and foreigncompanies and range in size from
193、 divisions of large public corporations to small privately held entities.We believe that our ability to compete depends on superior customer service and support,on-timedelivery,sufficient inventory availability,competitive pricing and effective quality assurance programs.In order to remain competiti
194、ve,we may have to adjust the prices of some of the products and serviceswe sell and continue investing in our procurement,supply-chain management and sales and marketingfunctions,the costs of which could negatively impact our results of operations.16In addition,we face competition for our Contract c
195、ustomers from both competitors in our industryand the in-sourcing of supply-chain management by our customers themselves.If any of our Contractcustomers decides to in-source the services we provide or switch to one of our competitors,we wouldbe adversely affected.We may be unable to effectively mana
196、ge our inventory,which could have a material adverse effect on ourbusiness,financial condition and results of operations.Due to the lead times required by many of our suppliers,we typically order products,particularlyhardware products,in advance of expected sales,and the volume of such orders may be
197、 significant.Lead times generally range from several weeks up to two years,depending on industry conditions,which makes it difficult to successfully manage our inventory as we plan for future demand.In addition,demand for our products can fluctuate significantly,which can also negatively impact our
198、cash flowsand inventory management.For example,we believe that the strategic inventory purchases we madeduring fiscal 2013,2014 and 2015,combined with lower than expected demand and a lack of disciplinearound our inventory planning process,negatively impacted our cash flows.In addition,we may choose
199、to dispose of slow-moving inventory in the future if we determine that the market and economics makeit prudent to do so.For example,in the three months ended September 30,2015,we determined thatinventory previously purchased in connection with a specific program which was subsequentlyterminated,to h
200、ave no alternative use,and we recorded a reserve of$33.0 million for such inventory.In the fourth quarter of 2015,management implemented a new strategy of providing integrated supplychain services more tailored to customer demand through long-term contracts and focused forecastedconsumption,includin
201、g changes to our inventory purchasing strategy,holding inventory for shorterperiods and the planned scrapping of long dated inventory.The new strategy and updates for fiscal2015 sales activities led to changes in the sell through rates,holding period of aged inventory andothers estimates used in the
202、 E&O reserve for our hardware inventory,which increased our E&Oinventory reserves by$43.8 million.If we are unable to effectively manage our inventory,our cash flowsmay be negatively affected,which could have a material adverse effect on our business,financialcondition and results of operations.If s
203、uppliers are unable to supply us with the products we sell in a timely manner,in adequate quantitiesand/or at a reasonable cost,we may be unable to meet the demands of our customers,which could have amaterial adverse effect on our business,financial condition and results of operations.Our inventory
204、is primarily sourced directly from producers and manufacturing firms,and wedepend on the availability of large supplies of the products we sell.Our largest supplier for the yearended September 30,2015 was Precision Castparts Corp.During fiscal 2015,13%of the products wepurchased were from Precision
205、Castparts Corp.and 9%were purchased from Alcoa Fastening Systems.In addition,our ten largest suppliers during fiscal 2015 accounted for 32%of our purchases.Thesemanufacturers and producers may experience capacity constraints that result in their being unable tosupply us with products in a timely man
206、ner,in adequate quantities and/or at a reasonable cost.Contributing factors to manufacturer capacity constraints include,among other things,industry orcustomer demands in excess of machine capacity,labor shortages and changes in raw material flows.Any significant interruption in the supply of these
207、products or termination of our relationship with anyof our suppliers could result in us being unable to meet the demands of our customers,which wouldhave a material adverse effect on our business,financial condition and results of operations.We may be unable to fully integrate the Haas business and
208、may encounter significant unexpected difficulties aswe work to fully integrate the two businesses.On February 28,2014,we completed the Haas acquisition.Prior to the acquisition,Wesco andHaas were independent organizations,each utilizing different systems,controls,processes and17procedures.Following
209、completion of the Haas acquisition,our ability to fully realize the anticipatedbenefits of the acquisition of Haas depends,to a large extent,on our ability to fully integrate the Haasbusiness.The combination of two independent enterprises is a complex,costly and time-consumingprocess.The complexion
210、of the overall integration may result in unanticipated problems,expenses,liabilities,loss of client relationships,expenditure of resources and distraction of management andpersonnel.The difficulties of completing the combination of the operations include:we may not realize any or all of the potentia
211、l benefits of the acquisition of Haas that couldresult from combining the businesses of Wesco and Haas;the acquisition of Haas could have an adverse impact on our relationships with employees,customers and suppliers,and prospective customers or other third parties may delay or declineentering into a
212、greements with us as a result of the acquisition;managements attention may be diverted to integration matters;we may continue to devote significant additional resources to integration;we may not be able to achieve anticipated cost savings and synergies;we may have additional difficulties integrating
213、 financial accounting systems,internal controls andstandards,procedures and policies(including with respect to Sarbanes-Oxley Act compliance);the assumptions both Wesco and Haas have made regarding critical accounting estimates couldbe incorrect;integration of our IT systems;and integration of our t
214、rade compliance function.Our business is highly dependent on complex information technology.The provision and application of IT is an increasingly critical aspect of our business.Among otherthings,our IT systems must frequently interact with those of our customers,suppliers and logisticsproviders.Ou
215、r future success will depend on our continued ability to employ IT systems that meet ourcustomers demands.The failure or disruption of the hardware or software that supports our ITsystems,including redundancy systems,could significantly harm our ability to service our customers andcause economic los
216、ses for which we could be held liable and which could damage our reputation.Our competitors may have or may develop IT systems that permit them to be more cost effectiveand otherwise better situated to meet customer demands than IT systems we are able to acquire ordevelop.Larger competitors may be a
217、ble to develop or license IT systems more cost effectively than wecan by spreading the cost across a larger revenue base,and competitors with greater financial resourcesmay be able to acquire or develop IT systems that we cannot afford.If we fail to meet the demands ofour customers or protect agains
218、t disruptions of our IT systems,we may lose customers,which couldseriously harm our business and adversely affect our operating results and operating cash flow.We may be unable to retain personnel who are key to our operations.Our success,among other things,is dependent on our ability to attract,dev
219、elop and retain highlyqualified senior management and other key personnel.Competition for key personnel is intense,andour ability to attract and retain key personnel is dependent on a number of factors,including prevailingmarket conditions and compensation packages offered by companies competing for
220、 the same talent.The inability to hire,develop and retain these key employees may adversely affect our operations.18There are risks inherent in international operations that could have a material adverse effect on our business,financial condition and results of operations.While the majority of our o
221、perations are based in the United States,we have significantinternational operations,with facilities in Australia,Canada,China,France,Germany,India,Ireland,Israel,Italy,Malaysia,Mexico,Philippines,Poland,Saudi Arabia,Singapore,South Korea,Turkey andthe United Kingdom,and customers throughout North A
222、merica,Latin America,Europe,Asia and theMiddle East.For the years ended September 30,2015 and 2014,34%and 43%,respectively,of our netsales were derived from customers located outside the United States.Our international operations are subject to,without limitation,the following risks:the burden of co
223、mplying with multiple and possibly conflicting laws and any unexpected changesin regulatory requirements;political risks,including risks of loss due to civil disturbances,acts of terrorism,acts of war,guerilla activities and insurrection;unstable economic,financial and market conditions and increase
224、d expenses as a result ofinflation,or higher interest rates;difficulties in enforcement of third-party contractual obligations and collecting receivablesthrough foreign legal systems;difficulties in staffing and managing international operations and the application of foreign laborregulations;differ
225、ing local product preferences and product requirements;and potentially adverse tax consequences from changes in tax laws,requirements relating towithholding taxes on remittances and other payments by subsidiaries and restrictions on ourability to repatriate dividends from our subsidiaries.In additio
226、n,fluctuations in the value of foreign currencies affect the dollar value of our netinvestment in foreign subsidiaries,with these fluctuations being included in a separate component ofstockholders equity.At September 30,2015,we reported a cumulative foreign currency translationadjustment of$36.1 mil
227、lion in stockholders equity as a result of foreign currency translationadjustments,and we may incur additional adjustments in future periods.In addition,operating resultsof foreign subsidiaries are translated into U.S.dollars for purposes of our statements of comprehensiveincome at average monthly e
228、xchange rates.Moreover,to the extent that our net sales are notdenominated in the same currency as our expenses,our net earnings could be materially adverselyaffected.For example,a portion of labor,material and overhead costs for our facilities in the UnitedKingdom,Germany,France and Italy are incur
229、red in British Pounds or Euros,but in certain cases therelated net sales are denominated in U.S.dollars.Changes in the value of the U.S.dollar or othercurrencies could result in material fluctuations in foreign currency translation amounts or the U.S.dollar value of transactions and,as a result,our
230、net earnings could be materially adversely affected.Attimes we engage in hedging transactions to manage or reduce our foreign currency exchange risk,butthese transactions may not be successful and,as a result,our business,financial condition and results ofoperations could be materially adversely aff
231、ected.During fiscal 2015 and 2014,fluctuations in foreigncurrency exchange rates had a negative impact on net sales of$25.4 million and a positive impact onnet sales of$29.6 million,respectively.Our international operations also cause our business to be subject to the U.S.Export Controlregime and si
232、milar regulations in other countries,in particular in the United Kingdom.In the UnitedStates,items of a commercial nature are generally subject to regulatory control by the U.S.Departmentof Commerces Bureau of Industry and Security and its Export Administration Regulations,and the19International Tra
233、ffic in Arms Regulations and other international trade regulations may apply as well.Additionally,we are not permitted to export some of the products we sell.In the future,regulatoryauthorities may require us to obtain export licenses or other export authorizations to export theproducts we sell abro
234、ad,depending upon the nature of items being exported,as well as the country towhich the export is to be made.We cannot assure you that any of our applications for export licensesor other authorizations will be granted or approved.Furthermore,the export license and exportauthorization process is ofte
235、n time-consuming.Violation of export control regulations could subject usto fines and other penalties,such as losing the ability to export for a period of years,which would limitour sales and significantly hinder our attempts to expand our business internationally.Our total assets include substantia
236、l intangible assets,and the write-off of a significant portion of ourintangible assets would negatively affect our financial results.Our total assets reflect substantial intangible assets.At September 30,2015,goodwill andintangible assets,net represented 40%of our total assets.Goodwill represents th
237、e excess of thepurchase price of acquired businesses over the fair value of the assets acquired and liabilities assumedresulting from acquisitions,including the acquisition of our Company by affiliates of The Carlyle Group(Carlyle)and the acquisition of Haas.Intangible assets represent trademarks,ba
238、cklogs,non-competeagreements,technology and customer relationships.On at least an annual basis,we assess whetherthere has been impairment in the value of goodwill and indefinite-lived intangible assets.If our testingidentifies impairment under generally accepted accounting principles in the United S
239、tates(GAAP),theimpairment charge we calculate would result in a charge to income from operations.For example,during the three months ended September 30,2015,we recorded a non-cash goodwill impairment of$263.8 million.Any determination requiring the write-off of a significant portion of goodwill andu
240、namortized identified intangible assets would negatively affect our results of operations and totalcapitalization,which could be material.Our international operations require us to comply with numerous applicable anti-corruption and trade controllaws and regulations,including those of the U.S.govern
241、ment and various other jurisdictions,and our failureto comply with these laws and regulations could adversely affect our reputation,business,financial conditionand results of operations.Doing business on a worldwide basis requires us and our subsidiaries to comply with the laws andregulations of the
242、 U.S.government and various other jurisdictions,and our failure to successfullycomply with these rules and regulations may expose us to liabilities.These laws and regulations applyto companies,individual directors,officers,employees and agents,and may restrict our operations,trade practices,investme
243、nt decisions and partnering activities.In particular,our international operations are subject to U.S.and foreign anti-corruption laws andregulations,such as the FCPA,the Bribery Act and other applicable anti-corruption regimes.Theselaws generally prohibit us from corruptly providing anything of valu
244、e,directly or indirectly,togovernment officials for the purposes of improperly influencing official decisions,improperly obtainingor retaining business,or otherwise obtaining favorable treatment.As part of our business,we may dealwith governments and state-owned business enterprises,the employees an
245、d representatives of whichmay be considered government officials for purposes of the FCPA,the Bribery Act or other applicableanti-corruption laws.Some anti-corruption laws,such as the Bribery Act,also prohibit commercialbribery and the acceptance of bribes,and the FCPA further requires publicly trad
246、ed companies tomaintain adequate record-keeping and internal accounting practices to accurately reflect thetransactions of the company.In addition,some of the international locations in which we operate lacka developed legal system and have elevated levels of corruption,and our industry is highly re
247、gulated,which increases our risk of violating anti-corruption laws.20As an exporter,we must comply with various laws and regulations relating to the export ofproducts,services and technology from the United States and other countries having jurisdiction overour operations.In the U.S.,these laws incl
248、ude,among others,the EAR administered by the U.S.Department of Commerce,Bureau of Industry and Security,the ITAR administered by the U.S.Department of State,Directorate of Defense Trade Controls(DDTC),and trade sanctions,regulationsand embargoes administered by the U.S.Department of the Treasury,Off
249、ice of Foreign Assets Control.These laws and regulations may require us to obtain individual validated licenses from the relevantagency to export,re-export,or transfer commodities,software,technology,or services to certainjurisdictions.Violations of these legal requirements are punishable by crimina
250、l fines and imprisonment,civilpenalties,disgorgement of profits,injunctions,debarment from government contracts,seizure andforfeiture of unlawful attempted exports,and/or denial of export privileges,as well as other remedialmeasures.We have established policies and procedures designed to assist us,o
251、ur personnel and ouragents to comply with applicable U.S.and international laws and regulations.However,there can be noassurance that our policies and procedures will effectively prevent us,our employees and our agentsfrom violating these regulations in every transaction in which we may engage,and v
252、iolations,allegationsor investigations of such violations could materially adversely affect our reputation,business,financialcondition and results of operations.If any of our customers were to become insolvent or experience substantial financial difficulties,our business,financial condition and resu
253、lts of operations may be adversely affected.If any of the customers with whom we do business becomes insolvent or experiences substantialfinancial difficulties we may be unable to timely collect amounts owed to us by such customers and maynot be able to sell the inventory we have purchased for such
254、customers,which could have a materialadverse effect on our business,financial condition and results of operations.Our suppliers or our customers may experience damage to or disruptions at our or their facilities caused bynatural disasters and other factors,which may result in our business,financial
255、condition and results ofoperations being adversely affected.Several of our facilities or those of our suppliers and customers could be subject to a catastrophicloss caused by earthquakes,tornadoes,floods,hurricanes,fire,power loss,telecommunication andinformation systems failure or other similar eve
256、nts.Should insurance be insufficient to recover all suchlosses or should we be unable to reestablish our operations,or if our customers or suppliers were toexperience material disruptions in their operations as a result of such events,our business,financialcondition and results of operations could b
257、e adversely affected.We are dependent on access to and the performance of third-party package delivery companies.Our ability to provide efficient distribution of the products we sell to our customers is an integralcomponent of our overall business strategy.We do not maintain our own delivery network
258、s,and insteadrely on third-party package delivery companies.We cannot assure you that we will always be able toensure access to preferred delivery companies or that these companies will continue to meet our needsor provide reasonable pricing terms.In addition,if the package delivery companies on whi
259、ch we relyexperience delays resulting from inclement weather or other disruptions,we may be unable to maintainproducts in inventory and deliver products to our customers on a timely basis,which may adverselyaffect our business,financial condition and results of operations.21A significant labor dispu
260、te involving us or one or more of our customers or suppliers,or a labor dispute thatotherwise affects our operations,could reduce our net sales and harm our profitability.Labor disputes involving us or one or more of our customers or suppliers could affect ouroperations.If our customers or suppliers
261、 are unable to negotiate new labor agreements and ourcustomers or suppliers plants experience slowdowns or closures as a result,our net sales andprofitability could be negatively impacted.While our employees are not currently unionized,they may attempt to form unions in the future,and the employees
262、of our customers,suppliers and other service providers may be,or may in the futurebe,unionized.We cannot assure you that there will not be any strike,lock out or material labor disputewith respect to our business or those of our customers or suppliers in the future that materially affectsour busines
263、s,financial condition and results of operations.We may be materially adversely affected by high fuel prices.Fluctuations in the global supply of crude oil and the possibility of changes in government policieson the production,transportation and marketing of jet fuel make it impossible to predict the
264、 futureavailability and price of jet fuel.In the event there is an outbreak or escalation of hostilities or otherconflicts or significant disruptions in oil production or delivery in oil-producing areas or elsewhere,there could be reductions in the production or importation of crude oil and signific
265、ant increases in thecost of jet fuel.If there were major reductions in the availability of jet fuel or significant increases in itscost,commercial airlines would face increased operating costs.Due to the competitive nature of theairline industry,airlines are often unable to pass on increases in fuel
266、 prices to customers by increasingfares.As a result,an increase in jet fuel could result in a decrease in net income from either lowermargins or,if airlines increase ticket fares,lower net sales from reduced airline travel.Decreases inairline profitability could decrease the demand for new commercia
267、l aircraft,resulting in delays of orreductions in deliveries of commercial aircraft that utilize the products we sell,and,as a result,ourbusiness,financial condition and results of operations could be materially adversely affected.We have identified material weaknesses in our internal control over f
268、inancial reporting,which could result ina material misstatement to our annual or interim consolidated financial statements that would not beprevented or detected.In connection with the audit of our consolidated financial statements as of and for the year endedSeptember 30,2015,we have concluded that
269、 there are three material weaknesses relating to ourinternal control over financial reporting.The existing material weakness that we initially identified as ofSeptember 30,2014 relates to a lack of a sufficient complement of accounting and financial reportingpersonnel with an appropriate level of ac
270、counting knowledge and experience commensurate with ourfinancial reporting requirements as of September 30,2015.We have concluded this material weaknesswas a direct result of the heightened level of activity associated with the integration of the Haasacquisition,combined with increased attrition att
271、ributable to the integration as well as openings atsenior financial and organizational positions for part of the fiscal year.This material weaknesscontributed to the following two material weaknesses:(i)we did not maintain effective controls overthe preparation and review of account reconciliation;s
272、pecifically,our controls over the reconciliation ofour balance sheet accounts did not operate effectively,and(ii)we did not maintain effective controlsover the integration of policies,practices and controls over the Haas business unit.A material weakness is a deficiency,or a combination of deficienc
273、ies,in internal control overfinancial reporting,such that there is a reasonable possibility that a material misstatement of ourannual or interim financial statements will not be prevented or detected on a timely basis.As a resultof these material weaknesses,management has concluded that our internal
274、 control over financialreporting and disclosure controls and procedures were not effective as of September 30,2015.22As described in Part IIItem 9AControls and Procedures we have begun,and are currently inthe process of,remediating the material weaknesses.However,the measures we have taken and expec
275、tto take to improve our internal controls may not be sufficient to address these issues,and we may needto take additional measures to ensure that our internal controls are effective or to ensure that theidentified material weaknesses will not result in a material misstatement of our annual or interi
276、mconsolidated financial statements.If we fail to establish and maintain adequate internal control over financial reporting,includingany failure to implement remediation measures and enhancements for internal controls,or if weexperience difficulties in their implementation,our business,financial cond
277、ition and operating resultscould be harmed.Further,any material weakness or unsuccessful remediation could affect investorconfidence in the accuracy and completeness of our financial statements.As a result,our ability toobtain additional financing on favorable terms or at all could be materially and
278、 adversely affected,which in turn could materially and adversely affect our business,our strategic alternatives,our financialcondition and the market value of our securities.In addition,perceptions of us among customers,lenders,investors,securities analysts and others could also be adversely affecte
279、d.We can give no assurances that the measures we have taken to date,or any future measures wemay take,will remediate the material weaknesses identified or that any additional material weaknesseswill not arise in the future.In addition,even if we are successful in strengthening our controls andproced
280、ures,those controls and procedures may not be adequate to prevent or identify irregularities orensure the fair and accurate presentation of our financial statements included in our periodic reportsfiled with the SEC.Our financial results may fluctuate from period-to-period,making quarter-to-quarter
281、comparisons of ourbusiness,financial condition and results of operations less reliable indicators of our future performance.There are many factors,such as the cyclical nature of the aerospace industry,fluctuations in our adhoc sales,delays in major aircraft programs,downward pressure on sales prices
282、 and changes in thevolume of our customers orders that could cause our financial results to fluctuate from period-to-period.For example,during the year ended September 30,2015,26%of our net sales were derived from ad hocsales.The prices we charge for ad hoc sales are typically higher than the prices
283、 under our Contract sales.However,ad hoc customers may not continue to purchase the same amount of products from us as theyhave in the past,so we cannot assure you that in any given year we will be able to generate similar netsales from our ad hoc customers as we did in the past.We are also actively
284、 working to transitioncustomers from ad hoc purchases to Contracts,which may also result in a reduction in ad hoc purchases.In addition,our acquisition of Haas has contributed to lower our ad hoc sales as a percentage of netsales.A significant diminution in our ad hoc sales in any given period could
285、 result in fluctuations in ourfinancial results and operating margins.As a result of these factors,we believe that quarter-to-quartercomparisons of our financial results are not necessarily meaningful and that these comparisons cannot berelied upon as indicators of future performance.We will continu
286、e to incur a significant increase in costs as a result of operating as a publicly traded company,and our management will be required to devote substantial time to new compliance requirements and investorneeds.As a publicly traded company,we will continue to incur significant legal,accounting and oth
287、erexpenses.In addition,the Sarbanes-Oxley Act of 2002(the Sarbanes-Oxley Act)and the rules of theSecurities and Exchange Commission(the SEC)and the New York Stock Exchange have imposedvarious requirements on public companies.Our management and other personnel will continue todevote a substantial amo
288、unt of time to these compliance initiatives.Moreover,these rules andregulations will continue to result in increased legal and financial compliance costs and make someactivities more time-consuming and costly.For example,we believe these rules and regulations make it23more difficult and more expensi
289、ve for us to maintain appropriate levels of director and officer liabilityinsurance.We are subject to health,safety and environmental laws and regulations,any violation of which could subjectus to significant liabilities and penalties.We are subject to extensive federal,state,local and foreign laws,
290、regulations,rules and ordinancesrelating to pollution,protection of the environment and human health and safety,and the handling,transportation,storage,treatment,disposal and remediation of hazardous substances,includingpotentially with respect to historical chemical blending and other activities th
291、at pre-dated the purchaseof the Haas business by us.Actual or alleged violations of EHS laws,or permit requirements couldresult in restrictions or prohibitions on operations and substantial civil or criminal sanctions,as well as,under some EHS laws,the assessment of strict liability and/or joint and
292、 several liability.Furthermore,we may be liable for the costs of investigating and cleaning up environmentalcontamination on or from our operations or at off-site locations,including potentially with respect tohistorical chemical blending and other activities that pre-dated the purchase of the Haas
293、business by us.We may therefore incur additional costs and expenditures beyond those currently anticipated to addressall such known and unknown situations under existing and future EHS laws.Governmental,regulatory and societal demands for increasing levels of product safety andenvironmental protecti
294、on could result in increased pressure for more stringent regulatory control withrespect to the chemical industry.For example,the Hazard Communication Standard promulgated bythe U.S.Occupational Safety and Health Administration is now aligned with the Globally HarmonizedSystem of Classification and L
295、abeling of Chemicals,which requires our suppliers to make revisions tolabels and safety data sheets.Changes in the regulatory environment,particularly,but not limited to,inthe United States,the European Union,Canada and China,could lead to heightened regulatoryscrutiny and could adversely impact our
296、 ability to supply certain products to and provide supply chainmanagement services to our customers.For instance,the August 2015 explosion at the port of Tianjin,China,may lead to stricter chemical safety standards in that country.The European UnionsRegistration,Authorization and Restriction of Chem
297、icals and analogous non-European Union laws andregulations,or other similar laws and regulations,also could result in compliance obligations,fines,ongoing monitoring and other future business activity restrictions,which could have a material adverseeffect on our business,financial condition and resu
298、lts of operations.In addition,these concerns could influence public perceptions regarding our operations and ourability to attract and retain customers and employees.Moreover,changes in EHS regulations couldinhibit or interrupt our operations,or require us to modify our facilities or operations.Acco
299、rdingly,environmental or regulatory matters may cause us to incur significant unanticipated losses,costs,capitalexpenditures or liabilities,which could reduce our profitability.Such losses,costs,capital expendituresor liabilities will be subject to evolving regulatory requirements and will depend on
300、 the timing of thepromulgation and enforcement of specific standards which impose requirements on our operations.Asa result,these losses,costs,capital expenditures or liabilities may be more than currently anticipated.Our operations involve risks associated with the handling,transportation,storage a
301、nd disposal of chemicalproducts that may increase our operating costs and reduce our profitability.Our business is subject to hazards inherent in the handling,transportation,storage and disposal ofchemical products.These hazards include:chemical spills,storage tank leaks,discharges or releases oftox
302、ic or hazardous substances or gases and other hazards incident to the handling,transportation,storage and disposal of dangerous chemicals.We are also potentially subject to other hazards,includingnatural disasters and severe weather;explosions and fires;transportation problems,includinginterruptions
303、,spills and leaks;mechanical failures;unscheduled downtimes;labor difficulties;and other24risks.Many potential hazards can cause bodily injury and loss of life,severe damage to or destructionof property and equipment and environmental damage,and may result in suspension of our own or ourcustomers op
304、erations and the imposition of civil or criminal penalties and liabilities.Furthermore,weare subject to present and future claims with respect to our employees when working within our ownoperations or when supplying chemicals to and/or providing chemical management services at ourcustomers operation
305、s,other persons,including potentially our customers and their employees,workerscompensation and other matters.We maintain property,business interruption,products liability and casualty insurance policieswhich we believe are in accordance with customary industry practices,as well as insurance policie
306、scovering other types of risks,including pollution legal liability insurance,but we are not fully insuredagainst all potential hazards and risks incident to our business.Each of these insurance policies issubject to customary exclusions,deductibles and coverage limits,in accordance with industry sta
307、ndardsand practices.As a result of market conditions,premiums and deductibles for certain insurance policiescan increase substantially and,in some instances,certain insurance may become unavailable or availableonly for reduced amounts of coverage.If we were to incur a significant liability for which
308、 we were notfully insured,it could have a material adverse effect on our business,results of operations,financialcondition and liquidity.If the temperature control systems on which we rely fail,certain of the chemical products we sell may becomenon-conforming while in storage or in transit,and as a
309、result,we may be responsible for providingreplacement products to our customers,which could have a material adverse effect on our business,financialcondition and results of operations.Many of the chemical products we sell are sensitive to temperature.Our storage facilities and thevehicles maintained
310、 by the third-party delivery companies on whom we rely utilize sophisticatedtemperature control systems to ensure safe storage and handling of these products.If thesetemperature control systems fail,products that are sensitive to temperature may becomenon-conforming to the customers specifications,a
311、nd we may be responsible for providing replacementproducts,which could have a material adverse effect on our business,financial condition and results ofoperations.Our reputation and/or our business,financial condition and results of operations could be adversely affected ifone of the products we sel
312、l causes an aircraft to crash.We may be exposed to liabilities for personal injury,death or property damage as a result of thefailure of a product we have sold.We typically agree to indemnify our customers against certainliabilities resulting from the products we sell,and any third party indemnifica
313、tion we seek from oursuppliers and our liability insurance may not fully cover our indemnification obligations to customers.We also may not be able to maintain insurance coverage in the future at an acceptable cost.Anyliability for which third-party indemnification is not available that is not cover
314、ed by insurance couldhave a material adverse effect on our business,financial condition and results of operations.In addition,a crash caused by one of the products we have sold could damage our reputation forselling quality products.We believe our customers consider safety and reliability as key cri
315、teria inselecting a provider of aircraft products and believe our reputation for quality assurance is a significantcompetitive strength.If a crash were to be caused by one of the products we sold,or if we were tootherwise fail to maintain a satisfactory record of safety and reliability,our ability t
316、o retain and attractcustomers may be materially adversely affected.25We sell products to a highly regulated industry and our business may be adversely affected if our suppliers orcustomers lose government approvals,if more stringent government regulations are enacted or if industryoversight is incre
317、ased.The aerospace industry is highly regulated in the United States and in other countries.The FAAprescribes standards and other requirements for aircraft components in the U.S.and comparableagencies,such as the European Aviation Safety Agency,the Civil Aviation Administration of China andthe Japan
318、ese Civil Aviation Bureau,regulate these matters in other countries.Our suppliers andcustomers must generally be certified by the FAA,the DoD and similar agencies in foreign countries.Ifany of our suppliers government certifications are revoked,we would be less likely to buy suchsuppliers products,a
319、nd,as a result,would need to locate a suitable alternate supply of such products,which we may be unable to accomplish on commercially reasonable terms or at all.If any of ourcustomers government certifications are revoked,their demand for the products we sell would decline.In each case,our business,
320、financial condition and results of operations may be adversely affected.In addition,if new and more stringent government regulations are adopted or if industry oversightincreases,our suppliers and customers may incur significant expenses to comply with such newregulations or heightened industry over
321、sight.In the case of our suppliers,these expenses may be passedon to us in the form of price increases,which we may be unable to pass along to our customers.In thecase of our customers,these expenses may limit their ability to purchase products from us.In eachcase,our business,financial condition an
322、d results of operations may be adversely affected.We may be unable to successfully consummate or integrate future acquisitions,which could negatively impactour business,financial condition and results of operations.We may consider future acquisitions,some of which could be material to us.Depending u
323、pon theacquisition opportunities available,we may need to raise additional funds through the capital marketsor arrange for additional debt financing in order to consummate such acquisitions.We may be unableto raise the capital required for future acquisitions on satisfactory terms or at all,which co
324、uld adverselyaffect our business,financial condition and results of operations.Our substantial indebtedness could adversely affect our financial health and could harm our ability to react tochanges to our business.As of September 30,2015,our total long-term indebtedness outstanding under our Credit
325、Facilities(as defined in Part II,Item 7,Managements Discussion and Analysis of Financial Condition andResults of OperationsLiquidity and Capital ResourcesCredit FacilitiesSenior Secured CreditFacilities)was$952.9 million,which was 53.8%of our total capitalization.In addition,we may incur substantial
326、 additional indebtedness in the future.Our Credit Facilitiescontain a number of significant qualifications and exceptions that allow us to incur additionalindebtedness,and the indebtedness incurred in compliance with these qualifications and exceptionscould be substantial.If we incur additional debt
327、,the risks associated with our substantial leveragewould increase.Our substantial indebtedness could have important consequences to investors.For example,itcould:increase our vulnerability to general economic downturns and industry conditions;require us to dedicate a substantial portion of our cash
328、flow from operations to payments on ourindebtedness,thereby reducing the availability of our cash flow to fund working capital,capitalexpenditures and other general corporate requirements;26 limit our flexibility in planning for,or reacting to,changes in our business and the industry inwhich we oper
329、ate;place us at a competitive disadvantage compared to competitors that have less debt;and limit,along with the financial and other restrictive covenants contained in the documentsgoverning our indebtedness,among other things,our ability to borrow additional funds,makeinvestments and incur liens.In
330、addition,all of our debt under the Credit Facilities bears interest at floating rates,causing us toenter into interest rate swap derivative instruments to partially offset our exposure to interest ratefluctuations,which result in additional risks.As of September 30,2015,we had a current interest rat
331、ehedge liability and a long-term interest rate hedge liability of$1.9 million and$2.2 million,respectively.If our interest rate hedge was determined ineffective partially or entirely as defined by GAAP,theineffective portion or the entire amount of our interest rate hedge liabilities would adversely
332、 affect ourearnings.Our derivatives also expose us to credit risk to the extent that the counterparties may beunable to meet the terms of the agreement,which could negate the intended protection from ourhedge instruments.See further discussion on our derivative financial instruments in Note 12 of th
333、eNotes to Consolidated Financial Statements in Part II,Item 8 of this Annual Report on Form 10-K.Our level of indebtedness increases the possibility that we may be unable to generate cashsufficient to pay,when due,the principal of,interest on or other amounts due in respect of ourindebtedness.We cannot assure you that our business will generate sufficient cash flow from operationsor that future bo
0731-84720580
sgpjbg002
工作日 9:30 - 18:00
研報
新質生產力
DeepSeek?
低空經濟
大模型
AI Agent
AI Infra
具身智能
自動駕駛
寵物
銀發經濟
人形機器人
企業出海
算力
微短劇
薪酬
白皮書
創新藥
人工智能
AI產業
信息科技
互聯網
消費經濟
汽車交通
電商零售
傳媒娛樂
醫藥健康
投資金融
能源環境
地產建筑
傳統產業
英文報告
其它
最新報告
中英對照
全文搜索
報告精選
PDF上傳翻譯
多格式文檔互轉
入駐&報告售賣
會員權益
機構報告
券商研報
財報庫
專題合集
英文報告
數據圖表
會議報告
其他資源
行業聚焦
芯片產業
熱點概念
全球咨詢智庫
人工智能
500強
新質生產力
會議峰會
新能源汽車
企業年報
互聯網
公司研究
行業綜觀
消費教育
科技通信
醫藥健康
人力資源
投資金融
汽車產業
物流地產
電子商務
傳統產業
傳媒營銷
其它
2025低空經濟/低空產業報告合集（共49套打包）
2025年智算中心/AIDC/AI數據中心研究報告合集（共37套打包）
AI、科技與通信
廣告、傳媒與營銷
消費、零售與支付
HR、文化與旅游
金融、保險與投資
能源、環境與工業
醫療制藥與大健康
物流、地產與建筑
其他行業
AI ? 科技 ? 通信
數字化
金融財經
智能制造
電商傳媒
地產建筑
醫療醫學
能源化工
其他行業
收藏
下載
2025-05-20
AI查數
行業數據
政策法規
商業模式
產業鏈
競爭格局
市場規模
產業概述
其它
2025年
AI讀財報
年報
一季報
半年報
三季報
IPO招股書
社會責任報告
A股
IPO申報
港股
美股&全球
新三板
掃碼登錄
手機快捷登錄
賬號登錄
