UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, ~~2015~~2016


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission file number 1-7201

AVX Corporation No Kyocera 300dpi

(Exact name of registrant as specified in its charter)


Delaware		33-0379007
(State or other jurisdiction of incorporation or organization)		(IRS Employer ID No.)

1 AVX Boulevard Fountain Inn, South Carolina		29644
(Address of ~~principle~~principal executive offices)		(Zip Code)

(864) 967-2150
(Registrant's phone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐		Accelerated filer	☒
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.



Class		Outstanding at February ~~3, 2016~~7, 2017
Common Stock, par value $0.01 per share		~~167,569,084~~167,768,090

AVX Corporation and Subsidiaries

Consolidated Balance Sheets (unaudited)

(in thousands, except per share data)



	As of		As of		As of		As of
	March 31, 2015		December 31, 2015		March 31, 2016		December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	381,605	$	425,635	$	454,208	$	480,895
Short-term investments in securities		461,901		489,757		494,594		624,641
Accounts receivable - trade, net		186,615		151,772		162,453		175,251
Accounts receivable - affiliates		2,377		904		6,219		7,590
Inventories		535,912		490,293		484,268		463,330
Income taxes receivable		67,504		64,937		51,400		29,608
Deferred income taxes		76,963		-
Prepaid and other		31,675		32,073		33,749		32,013
Total current assets		1,744,552		1,655,371		1,686,891		1,813,328
Long-term investments in securities		150,029		85,691		85,577		-
Property and equipment, net		199,842		210,102		217,998		224,169
Goodwill		213,051		213,051		213,051		213,051
Intangible assets, net		62,587		58,812		57,554		54,962
Deferred income taxes - non-current		79,276		124,194
Deferred income taxes						130,786		124,552
Other assets		9,678		6,343		17,962		17,377
Total Assets	$	2,459,015	$	2,353,564	$	2,409,819	$	2,447,439
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade	$	35,290	$	30,025	$	42,150	$	36,176
Accounts payable - affiliates		40,753		29,921		36,018		41,100
Income taxes payable		4,450		7,132		3,772		6,850
Deferred income taxes		424		-
Accrued payroll and benefits		38,952		33,063		32,408		32,911
Accrued expenses		146,440		59,742		65,954		96,479
Total current liabilities		266,309		159,883		180,302		213,516
Pensions		22,520		18,262		20,585		13,526
Deferred income taxes - non-current		5,770		6,092
Deferred income taxes						7,142		10
Other liabilities		32,453		26,493		24,684		30,650
Total Liabilities		327,052		210,730		232,713		257,702
Commitments and contingencies (Note 7)
Stockholders' Equity:
Preferred stock, par value $.01 per share:
Authorized, 20,000 shares; None issued and outstanding		-		-		-		-
Common stock, par value $.01 per share:
Authorized, 300,000 shares; issued, 176,368 shares; outstanding, 168,190 and 167,569 shares at March 31, 2015 and December 31, 2015, respectively		1,764		1,764
Authorized, 300,000 shares; issued, 176,368 shares; outstanding, 167,492 and 167,605 shares at March 31, 2016 and December 31, 2016, respectively						1,764		1,764
Additional paid-in capital		352,996		353,940		354,186		356,289
Retained earnings		1,948,476		1,964,443		1,979,512		2,017,885
Accumulated other comprehensive income (loss)		(66,665)		(64,237)
Accumulated other comprehensive loss						(44,368)		(73,422)
Treasury stock, at cost:
8,178 and 8,799 shares at March 31, 2015 and December 31, 2015, respectively		(104,608)		(113,076)
8,876 and 8,763 shares at March 31, 2016 and December 31, 2016, respectively						(113,988)		(112,779)
Total Stockholders' Equity		2,131,963		2,142,834		2,177,106		2,189,737
Total Liabilities and Stockholders' Equity	$	2,459,015	$	2,353,564	$	2,409,819	$	2,447,439

AVXAVX Corporation and Subsidiaries

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)



	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				December 31,				December 31,
	2014		2015		2014		2015		2015		2016		2015		2016
Net sales	$	321,687	$	287,047	$	1,037,681	$	891,924	$	287,047	$	340,799	$	891,924	$	983,083
Cost of sales		243,010		221,004		786,054		676,930		221,004		261,408		676,930		772,030
Gross profit		78,677		66,043		251,627		214,994		66,043		79,391		214,994		211,053
Selling, general and administrative expenses		28,290		31,216		85,548		87,596		31,216		28,450		87,596		88,974
Litigation settlements and charges		-		37,500		-		43,650
Legal and environmental charges										37,500		-		43,650		3,600
Profit (loss) from operations		50,387		(2,673)		166,079		83,748		(2,673)		50,941		83,748		118,479
Other income:
Other income (loss):
Interest income		1,129		1,249		3,373		3,528		1,249		1,952		3,528		5,298
Other, net		1,196		832		227		1,563		832		(547)		1,563		3,901
Income (loss) before income taxes		52,712		(592)		169,679		88,839		(592)		52,346		88,839		127,678
Provision (benefit) for income taxes		13,759		(5,966)		45,334		19,969
Provision for (benefit from) income taxes										(5,966)		16,827		19,969		35,750
Net income	$	38,953	$	5,374	$	124,345	$	68,870	$	5,374	$	35,519	$	68,870	$	91,928

Income per share:
Basic	$	0.23	$	0.03	$	0.74	$	0.41	$	0.03	$	0.21	$	0.41	$	0.55
Diluted	$	0.23	$	0.03	$	0.74	$	0.41	$	0.03	$	0.21	$	0.41	$	0.55

Dividends declared (per share)	$	0.105	$	0.105	$	0.295	$	0.315	$	0.105	$	0.110	$	0.315	$	0.325
Weighted average common shares outstanding:
Basic		168,164		167,655		168,117		167,883		167,655		167,418		167,883		167,399
Diluted		168,442		167,833		168,375		168,083		167,833		167,856		168,083		167,664



	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				December 31,				December 31,
	2014		2015		2014		2015		2015		2016		2015		2016
Net income	$	38,953	$	5,374	$	124,345	$	68,870	$	5,374	$	35,519	$	68,870	$	91,928
Other comprehensive income (loss), net of income taxes
Foreign currency translation adjustment		(12,227)		(7,213)		(40,593)		3,033		(7,213)		(28,157)		3,033		(26,363)
Foreign currency cash flow hedges adjustment		(397)		(159)		(1,289)		(334)		(159)		(2,453)		(334)		(1,926)
Pension liability adjustment		55		(47)		239		(271)		(47)		16		(271)		(765)
Other comprehensive income (loss), net of income taxes		(12,569)		(7,419)		(41,643)		2,428		(7,419)		(30,594)		2,428		(29,054)
Comprehensive income (loss)	$	26,384	$	(2,045)	$	82,702	$	71,298	$	(2,045)	$	4,925	$	71,298	$	62,874



	Nine Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2015		2016
Operating Activities:
Net income	$	124,345	$	68,870	$	68,870	$	91,928
Adjustment to reconcile net income to net cash from operating activities:
Depreciation and amortization		31,090		28,641		28,641		30,752
Stock-based compensation expense		1,208		982		982		1,839
Deferred income taxes		6,094		15,573		15,573		(4,225)
Loss on disposal of property and equipment		-		424
(Gain) loss on disposal of property and equipment						424		(2,014)
Changes in operating assets and liabilities:
Accounts receivable		24,762		36,259		36,259		(14,506)
Inventories		2,280		46,145		46,145		14,974
Accounts payable and accrued expenses		107,651		(100,584)		(100,584)		33,497
Income taxes payable		8,191		2,861		2,861		(23,473)
Other assets		(12,692)		17,264		17,264		10,979
Other liabilities		(128,570)		(13,751)		(13,751)		20,529
Net cash provided by operating activities		164,359		102,684		102,684		160,280

Investing Activities:
Purchases of property and equipment		(19,134)		(33,843)		(33,843)		(45,589)
Purchases of investment securities		(909,356)		(598,947)		(598,947)		(1,001,900)
Redemptions of investment securities		685,027		634,872		634,872		956,754
Proceeds from property & equipment dispositions		52		450		450		11,266
Net cash provided by (used in) investing activities		(243,411)		2,532		2,532		(79,469)

Financing Activities:
Dividends paid		(49,584)		(52,903)		(52,903)		(53,554)
Purchase of treasury stock		(4,335)		(9,272)		(9,272)		(4,833)
Proceeds from exercise of stock options		5,282		766		766		5,938
Excess tax benefit from stock-based payment arrangements						-		367
Net cash used in financing activities		(48,637)		(61,409)		(61,409)		(52,082)

Effect of exchange rate on cash		(2,412)		223		223		(2,042)

Increase (decrease) in cash and cash equivalents		(130,101)		44,030
Increase in cash and cash equivalents						44,030		26,687

Cash and cash equivalents at beginning of period		460,674		381,605		381,605		454,208

Cash and cash equivalents at end of period	$	330,573	$	425,635	$	425,635	$	480,895

The consolidated financial statements of AVX Corporation and its subsidiaries (“AVX” or the “Company”) include all accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in the opinion of management, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for the fair statement of the consolidated balance sheets, operating results, comprehensive income (loss), and cash flows for the periods presented. Operating results for the three and nine month periods ended December 31, ~~2015~~2016 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, ~~2016~~2017 due to changes in economic conditions and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015.~~ 2016.

We have identified the accounting policies and estimates that are critical to our business operations and understanding our results of operations. Those policies and estimates can be found in Note 1, “Summary of Significant Accounting ~~Policies”,~~Policies,” of the Notes to Consolidated Financial Statements and in “Critical Accounting Policies and ~~Estimates”,~~Estimates,” in “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015.~~2016. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015.~~2016. During the three and nine month periods ended December 31, ~~2015,~~2016, there were no significant changes to any critical accounting policies or to the methodology used in determining estimates, including those related to investment securities, revenue recognition, inventories, goodwill, intangible assets, property and equipment, income taxes, and ~~contingencies, except for the early adoption of FASB ASU 2015-17, “Income Taxes”, explained below in “New Accounting Standards”.~~ contingencies.

In April 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-08, which changes the criteria for determining which disposals are required to be presented as discontinued operations. The changes require a disposal of a component of an entity or a group of components of an entity to be reported in discontinued operations if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results when any of the following occurs: (i) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale, (ii) the component of an entity or group of components of an entity is disposed of by sale, or (iii) the component of an entity or group of components of an entity is disposed of other than by sale. The amendments apply on a prospective basis to disposals of components of an entity that occur within annual periods beginning on or after December 15, 2014 and interim periods within those years, with early adoption permitted. The implementation of the amended accounting guidance on January 1, 2015 did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This guidance modifies the financial reporting of revenue and how an entity will determine the measurement of revenue and timing of when it is recognized. The guidance provides for a five-step approach in applying the standard: 1) identifying the contract with the customer, 2) identifying separate performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to separate performance obligations, and 5) recognizing the revenue when the performance obligation has been satisfied. The new guidance requires enhanced disclosures for the nature, amount, timing, and uncertainty of revenue that is being recognized. The guidance is effective for public companies for interim and annual reporting periods beginning after December 15, 2017. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. Early adoption is permitted. Management is currently evaluating the impact of this guidance on our consolidated financial statements.

In ~~November 2015, the~~February 2016, FASB issued ASU ~~2015-17, “Income Taxes.~~2016-2, “Leases.” This guidance ~~simplifies~~changes the ~~presentation~~inclusion of ~~deferred income taxes which have previously been split between current and noncurrent deferred tax~~certain right-of-use assets and ~~liabilities. Accordingly,~~ the ~~recording and presentation of deferred income taxes are required~~associated lease liabilities to be ~~presented as noncurrent~~included in a ~~classified~~ statement of financial position. The classification criteria maintains the distinction between finance leases and operating leases. Regarding financial leases, lessees are required to 1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position, 2) recognize interest on the lease liability separate from the amortization of the right-of-use asset in the statement of comprehensive income, and 3) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. Regarding operating leases, lessees are required to 1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position, 2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis, and 3) classify all cash payments within operating activities in the statement of cash flows. This guidance is effective for public companies for interim and annual reporting periods beginning after December 15, ~~2016.~~2018. Early adoption is ~~permitted and management has elected to adopt~~permitted. Management is currently evaluating the impact of this guidance ~~prospectively beginning with~~on our consolidated financial statements.

In March 2016, the ~~interim reporting period ending December 31, 2015.~~FASB issued ASU 2016-09, “Compensation — Stock Compensation.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the ~~Balance Sheet as~~statement of ~~March 31, 2015 would have been a decrease in current deferred income tax assets~~cash flows and forfeitures. The guidance is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. Management is currently evaluating the impact of $76,963 and an increase in non-current deferred income tax assets of $76,963 as well as a decrease of current deferred income tax liabilities of $424 and an increase of non-current deferred income tax liabilities of $424.

this guidance on our consolidated financial statements.

We have reviewed other newly issued accounting pronouncements and concluded that they are either not applicable to our business or that no material effect is expected on our consolidated financial statements as a result of future adoption.

2. Earnings Per Share:

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the dilutive effect of potential common stock equivalents during the period. Stock options are the only common stock equivalents currently used in our calculation and are computed using the treasury stock method.

The table below represents the basic and diluted earnings per share and sets forth the weighted average number of shares of common stock outstanding and the dilutive effect of potential common stock equivalents:



	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				December 31,				December 31,
	2014		2015		2014		2015		2015		2016		2015		2016
Net income	$	38,953	$	5,374	$	124,345	$	68,870	$	5,374	$	35,519	$	68,870	$	91,928
Computation of Basic EPS:
Weighted Average Shares Outstanding used in Computing Basic EPS		168,164		167,655		168,117		167,883		167,655		167,418		167,883		167,399
Basic earnings per share	$	0.23	$	0.03	$	0.74	$	0.41	$	0.03	$	0.21	$	0.41	$	0.55
Computation of Diluted EPS:
Weighted Average Shares Outstanding used in Computing Basic EPS		168,164		167,655		168,117		167,883		167,655		167,418		167,883		167,399
Effect of stock options		278		178		258		200		178		438		200		265
Weighted Average Shares used in Computing Diluted EPS (1)		168,442		167,833		168,375		168,083		167,833		167,856		168,083		167,664
Diluted earnings per share	$	0.23	$	0.03	$	0.74	$	0.41	$	0.03	$	0.21	$	0.41	$	0.55

(1) Common stock equivalents not included in the computation of diluted earnings per share because the impact would have been antidilutive were ~~1,750~~2,725 shares and ~~2,725~~776 shares for the three months ended December 31, ~~2014~~2015 and ~~2015,~~2016, respectively, ~~and 2,321~~ and 2,548 shares and 1,580 shares for the nine monthsended December 31, ~~2014~~2015 and ~~2015,~~2016, respectively.

Charges related to allowances for doubtful accounts are charged to selling, general and administrative expenses. Charges related to stock rotation, ship from stock and debit, sales returns, and sales discounts are reported as deductions from revenue.

Three Months Ended

Nine Months Ended

December 31,

December 31,

2014

2015

2014

2015
Allowances for doubtful accounts:

Beginning Balance
$
579

$
732

$
410

$
659
Charges

-

-

185

81
Applications

1

(343)

(15)

(351)
Ending Balance
$
580

$
389

$
580

$
389



	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2015		2016		2015		2016
Allowances for doubtful accounts:
Beginning Balance	$	732	$	1,160	$	659	$	423
Charges		-		45		81		782
Applications		(343)		-		(351)		-
Ending Balance	$	389	$	1,205	$	389	$	1,205


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				December 31,				December 31,
	2014		2015		2014		2015		2015		2016		2015		2016
Sales returns and discounts:
Beginning Balance	$	6,554	$	6,430	$	6,356	$	6,186	$	6,430	$	6,138	$	6,186	$	6,681
Charges		5,970		7,305		15,396		17,903		7,305		4,698		17,903		12,079
Applications		(5,582)		(6,958)		(14,748)		(17,341)		(6,958)		(3,388)		(17,341)		(11,307)
Translation and other		(121)		(20)		(183)		9		(20)		(52)		9		(57)
Ending Balance	$	6,821	$	6,757	$	6,821	$	6,757	$	6,757	$	7,396	$	6,757	$	7,396

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs)

used to value the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

During the three and nine month periods ended December 31, ~~2014~~2015 and ~~2015,~~2016, there have been no transfers of assets or liabilities between levels within the fair value hierarchy.

Based on

Quoted prices

Other

in active

observable

Unobservable

Fair Value at

markets

inputs

inputs

March 31, 2015

(Level 1)

(Level 2)

(Level 3)
Assets measured at fair value on a recurring basis:

Assets held in the non-qualified deferred
compensation program(1)
$
8,636

$
8,636

$
-

$
-
Foreign currency derivatives(2)

1,279

-

1,279

-
Total
$
9,915

$
8,636

$
1,279

$
-



			Based on
			Quoted
			prices		Other
			in active		observable		Unobservable
	Fair Value at		markets		inputs		inputs
	March 31, 2016		(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
Assets held in the non-qualified deferred compensation program(1)	$	4,961	$	3,710	$	1,251	$	-
Foreign currency derivatives(2)		1,409		-		1,409		-
Total	$	6,370	$	3,710	$	2,660	$	-


											Based on
			Based on								Quoted
			Quoted prices		Other						prices		Other
			in active		observable		Unobservable				in active		observable		Unobservable
	Fair Value at		markets		inputs		inputs		Fair Value at		markets		inputs		inputs
	March 31, 2015		(Level 1)		(Level 2)		(Level 3)		March 31, 2016		(Level 1)		(Level 2)		(Level 3)
Liabilities measured at fair value on a recurring basis:
Obligation related to assets held in the non-qualified deferred compensation program(1)	$	8,636	$	8,636	$	-	$	-	$	4,961	$	3,710	$	1,251	$	-
Foreign currency derivatives(2)		1,170		-		1,170		-		1,350		-		1,350		-
Total	$	9,806	$	8,636	$	1,170	$	-	$	6,311	$	3,710	$	2,601	$	-


												Based on
				Based on								Quoted
				Quoted prices		Other						prices		Other
				in active		observable		Unobservable				in active		observable		Unobservable
		Fair Value at		markets		inputs		inputs		Fair Value at		markets		inputs		inputs
		December 31, 2015		(Level 1)		(Level 2)		(Level 3)		December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:	Assets measured at fair value on a recurring basis:
Assets held in the non-qualified deferred compensation program(1)	Assets held in the non-qualified deferred compensation program(1)	$	5,351	$	3,883	$	1,468	$	-	$	5,862	$	4,370	$	1,492	$	-
Foreign currency derivatives(2)	Foreign currency derivatives(2)		877		-		877		-		1,946		-		1,946		-
Total	Total	$	6,228	$	3,883	$	2,345	$	-	$	7,808	$	4,370	$	3,438	$	-


												Based on
				Based on							Quoted
			Quoted prices			Other					prices		Other
				in active		observable		Unobservable				in active		observable		Unobservable
	Fair Value at			markets	inputs		inputs		Fair Value at			markets	inputs		inputs
	December 31, 2015		(Level 1)		(Level 2)		(Level 3)		December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Liabilities measured at fair value on a recurring basis:
Obligation related to assets held in the non-qualified deferred compensation program(1)	$	5,351	$	3,883		1,468	$	-	$	5,862	$	4,370	$	1,492	$	-
Foreign currency derivatives(2)		1,018		-		1,018		-		4,073		-		4,073		-
Total	$	6,369	$	3,883	$	2,486	$	-	$	9,935	$	4,370	$	5,565	$	-

(1) The market value of the assets held in the trust for the non-qualified deferred compensation program is included as an asset and as a liability as the trust’s assets are both assets of the Company and also a liability as they are available to general creditors in certain circumstances.

(2) Foreign currency derivatives in the form of forward contracts are included in prepaid and other and accrued expenses in the consolidated balance sheets. Unrealized gains and losses on derivatives classified as cash flow hedges are recorded in other comprehensive income (loss). Realized gains and losses on derivatives classified as cash flow hedges are recorded in the consolidated statement of operations as revenues and costs of sales, and gains and losses on derivatives not designated as cash flow hedges are recorded in other income.

The following describes valuation techniques used to appropriately value our assets held in the non-qualified deferred compensation plan and derivatives.

Assets valued using Level 1 and Level 2 inputs in the table above represent assets from our non-qualified deferred compensation program. The funds ~~held by~~in the non-qualified deferred compensation program are valued based on the number of shares in the funds using a price per share traded in an active market.

Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. If the cost of an investment exceeds its fair value, among other factors, we evaluate general market conditions, the duration and extent to which the fair value is less than cost, and whether or not we expect to recover the security's entire amortized cost basis. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established.

We primarily use forward contracts, with maturities generally less than four months, designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions related to purchase commitments and sales, denominated in various currencies. We also use derivatives not designated as hedging instruments to hedge foreign currency balance sheet exposures. These derivatives are used to offset currency changes in the fair value of the hedged assets and liabilities. Fair values for all of our derivative financial instruments are valued by adjusting the market spot rate by forward points, based on the date of the contract. The spot rates and forward points used are an average rate from an actively traded market. At March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, all of our forward contracts are valued using Level 2 measurements.

At March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, we classified investments in debt securities and time deposits as held-to-maturity securities.

Our long-term and short-term investment securities are accounted for as held-to-maturity securities and are carried at amortized cost. We have the ability and intent to hold these investments until maturity. All income generated from the held-to-maturity securities investments isare recorded as interest income.

Investments in held-to-maturity securities, recorded at amortized cost, were as follows:


	March 31, 2015								March 31, 2016
			Gross		Gross						Gross		Gross
			Unrealized		Unrealized		Estimated				Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Short-term investments:
Commercial paper	$	34,493	$	-	$	(13)	$	34,480
Corporate bonds		2,517		-		-		2,517
Time deposits		424,891		227		-		425,118	$	494,594	$	296	$	-	$	494,890
Long-term investments:
Corporate bonds		150,029		51		(53)		150,027		85,577		39		(28)		85,588
	$	611,930	$	278	$	(66)	$	612,142	$	580,171	$	335	$	(28)	$	580,478



	December 31, 2015								December 31, 2016
			Gross		Gross						Gross		Gross
			Unrealized		Unrealized		Estimated				Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Short-term investments:
Corporate bonds									$	10,233	$	-	$	(7)	$	10,226
Time deposits	$	489,757	$	261	$	-	$	490,018		614,408		274		-		614,682
Long-term investments:
Corporate bonds		85,691		-		(266)		85,425
	$	575,448	$	261	$	(266)	$	575,443	$	624,641	$	274	$	(7)	$	624,908

The amortized cost and estimated fair value of held-to-maturity investments at December 31, ~~2015,~~2016, by contractual maturity, are shown below. The estimated fair value of these investments are based on valuation inputs that include benchmark yields, reported trades, broker and dealer quotes, issuer spreads, two-sided markets, benchmark securities bids, offers, and reference data, which are Level 2 inputs in the fair value hierarchy. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.

We have been identified by the United States Environmental Protection Agency (“EPA”), state governmental agencies or other private parties as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) or equivalent state or local laws for clean-up and response costs associated with certain sites at which remediation is required with respect to prior contamination. Because CERCLA or such state statutes authorize joint and several liability, the EPA or state regulatory authorities could seek to recover all clean-up costs from any one of the PRPs at a site despite the involvement of other PRPs. At certain sites, financially responsible PRPs other than AVX also are, or have been, involved in site investigation and clean-up activities. We believe that liability resulting from these sites will be apportioned between AVX and other PRPs.

To resolve our liability at the sites at which we have been named a PRP, we have entered into various administrative orders and consent decrees with federal and state regulatory agencies governing the timing and nature of investigation and remediation. As is customary, the orders and decrees regarding sites where the PRPs are not themselves implementing the chosen remedy contain provisions allowing the EPA to reopen the agreement and seek additional amounts from settling PRPs in the event that certain contingencies occur, such as the discovery of significant new information about site conditions.

On October 10, 2012, the EPA, the United States, and the Commonwealth of Massachusetts and AVX announced that they had reached a financial settlement with respect to the EPA’s ongoing clean-up of the New Bedford Harbor in the Commonwealth of Massachusetts (the “harbor”). That agreement is contained in a Supplemental Consent Decree that modifies certain provisions of prior agreements related to clean-up of the harbor, including elimination of the governments’ right to invoke certain reopener provisions in the future. Under the terms of the settlement, AVX was obligated to pay $366,250, plus interest computed from August 1, 2012, in three installments over a two-year period for use by the EPA and the Commonwealth to complete the clean-up of the harbor. On May 26, 2015, we prepaid the third and final settlement installment of $122,083, plus interest of $1,106.

On June 3, 2010, AVX entered into an agreement with the EPA and the City of New Bedford, pursuant to which AVX is required to perform environmental remediation at a site referred to as the “Aerovox Site” (the “Site”), located in New Bedford, Massachusetts. AVX has substantially completed its obligations pursuant to such agreement with the EPA and the City of New Bedford with respect to the satisfaction of AVX’s federal law requirements. Agreements with the state regulatory authorities have yet to be concluded but are likely to include additional groundwater and soil remediation. We have a remaining accrual of ~~$11,024~~$15,083 at December 31, ~~2015,~~2016, including a $3,600 charge recorded in the quarter ended June 30, 2016, representing our estimate of the potential liability related to the remaining performance of environmental remediation actions at the Site using certain assumptions regarding the plan of remediation. Since additional sampling and analysis may cause the state regulatory authority, the Massachusetts Department of Environmental Protection, to require a more extensive and costly plan of remediation, until all parties agree and remediation is complete, we cannot be certain there will be no additional cost relating to the Site.

We had total reserves of approximately ~~$138,146~~$16,809 and ~~$15,602~~$19,720 at March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, respectively, related to various environmental matters, including the ~~various matters and specific sites~~site discussed above. These reserves are classified in the Consolidated Balance Sheets as ~~$127,246~~$7,409 and ~~$4,702~~$4,226 in accrued expenses at March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, respectively, and ~~$10,900~~$9,400 and $15,494 in other non-current liabilities at ~~both~~ March 31, ~~2015~~2016 and December 31, ~~2015.~~2016, respectively. The amounts recorded for these identified contingent liabilities are based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional legal and technical information that becomes available. Also, uncertainties about the status of laws, regulations, regulatory actions, technology, and information related to individual sites make it difficult to develop an estimate of the reasonably possible aggregate environmental remediation exposure. Accordingly, these costs could differ from our current estimates.

~~Effective September 30, 2015 a Settlement Agreement and Mutual Release (“Settlement Agreement”) was entered into with the City of New Bedford in settlement of the following two cases:~~ ~~DaRosa v. City of New Bedford~~ ~~and~~ ~~City of New Bedford, et al v. AVX Corporation~~ both arising from contamination at certain sites in the City of New Bedford. In accordance with the Settlement Agreement, AVX paid the sum of $6,500 to the City of New Bedford in October 2015. This Settlement Agreement releases AVX from any future actions by the City of New Bedford related to these cases or sites.

On ~~November 4, 2015,~~April 19, 2016, the Canadian Ministry of the Environment and Climate Change (the “MoE”) issued a ~~draft order~~Director’s Order naming AVX Corporation, as well as others, as responsible parties with respect to a location in Hamilton, Ontario that was the site of operations of Aerovox Canada, a former subsidiary of Aerovox Corporation, a predecessor of AVX. This Director’s Order follows a draft order issued on November 4, 2015. AVX has taken the position that any liability of Aerovox Canada for such site under the laws of Canada cannot be imposed on AVX. At present, it is unclear whether the MoE ~~will issue a final order against AVX, whether it~~ will seek to enforce such Canadian order against AVX, and whether, in the event it does so, AVX will have any liability under applicable law. AVX intends to contest any such course of action that may be taken by the MoE.

We also operate ~~or have operated in the past,~~ on other sites that may have potential future environmental issues as a result of activities at sites during AVX’s long history of manufacturing operations or prior to the start of operations by AVX. Even though we may have rights of indemnity for such environmental ~~issues~~matters at certain sites, regulatory agencies in those jurisdictions may require us to address such issues. Once it becomes probable that we will incur costs in connection with remediation of a site and such costs can be reasonably estimated, we establish reserves or adjust our reserves for our projected share of these costs. A separate account receivable is recorded for any indemnified costs. Our environmental reserves are not discounted and do not reflect any possible future insurance recoveries, which are not expected to be significant, but do reflect a reasonable estimate of cost sharing at ~~multiple party~~multiple-party sites or indemnification of our liability by a third party.

plaintiff in the first phase of a segmented trial and found damages to Greatbatch in the amount of $37,500. AVX is reviewing ~~the~~this initial verdict, ~~and~~ consulting with its legal advisors on what action AVX may take in ~~response.~~response, and continuing to litigate the rest of the case.

On September 2, 2014, a subsidiary of AVX, American Technical Ceramics (“ATC”), was named as a defendant in a patent infringement case filed in the United States District Court offor the District of Delaware captioned Presidio Components, Inc. v. American Technical Ceramics Corp. This case ~~alleges~~alleged that certain products of ATC’s infringe on a Presidio patent. On April 18, 2016, the jury returned a verdict in favor of the plaintiff and found damages to Presidio in the amount of $2,168. On August 17, 2016, the court issued a permanent injunction prohibiting ATC from manufacturing or selling the related product after November 16, 2016 and awarded Presidio damages related to ATC’s sale of such products from February 21, 2016 through November 16, 2016. Subsequently, on October 21, 2016, the Federal Circuit Court granted AVX’s request for a stay of the permanent injunction whereby AVX ~~believes it~~may continue to sell the disputed product until March 17, 2017 to anyone who was a customer prior to June 17, 2016. Any sales subsequent to November 16, 2016 pursuant to the stay of the permanent injunction are subject to court mandated intellectual property damages for each product sold. AVX is taking an estimated reserve for damages on all pre- and post-verdict sales of product subject to that litigation in the event that the verdict withstands future challenges. AVX has ~~meritorious defenses and intends to vigorously defend~~appealed the ~~case.~~verdict.

~~As of December 31, 2015, we~~We had total reserves of ~~$39,250 with respect~~$39,668 and $67,800 as of March 31, 2016 and December 31, 2016, respectively, related to the two intellectual property cases discussed above. The amounts recorded are based on estimated outcomes. Amounts recorded are reviewed periodically and adjusted to reflect additional information that becomes available. Accordingly, these costs could differ from our current estimates.

During the quarter ended September 30, 2014, AVX was named as a co-defendant in a series of cases filed in the United States and in the Canadian provinces of Quebec, Ontario and British Columbia alleging violations of United States, Canadian, and state antitrust laws asserting that AVX and numerous other companies ~~are~~were participants in alleged price-fixing in the capacitor market. The cases in the United States were consolidated into the Northern District of California on October 2, 2014. During the quarter ended December 31, 2014, additional Canadian cases were filed in the provinces of Quebec, Ontario, British Columbia, Saskatchewan and ~~Manitoba.~~ ~~In addition, in the quarter ended September 30, 2015, AVX was named as a co-defendant in two cases filed in the United States alleging violations of United States antitrust laws asserting that AVX~~Manitoba and ~~numerous other companies were participants in alleged price-fixing in the resistor market.~~ ~~These~~these cases are at the initial stages. AVX believes it has meritorious defenses and intends to vigorously defend the cases.

We are ~~also~~ involved in other disputes, warranty claims, and ~~other~~ legal proceedings arising in the normal course of business.

While we cannot predict the outcome of these ~~agreements, remediation efforts,~~other disputes and proceedings, management believes, based upon a review with legal counsel, that none of these proceedings will have a material impact ~~above the current reserves~~ on our financial position, results of operations, comprehensive income (loss), or cash flows.However, we cannot be certain of the eventual outcome, and any adverse result in these or other matters that may arise from time to time, may harm our financial position, results of operations, comprehensive income (loss), or cash flows.

Comprehensive income (loss) represents changes in equity during a period except those resulting from investments by and distributions to shareholders. The specific components include net income, pension liability and other post-retirement benefit adjustments, deferred gains and losses resulting from foreign currency translation adjustments and unrealized gains and losses on qualified foreign currency cash flow hedges.

Amounts reclassified out of accumulated other comprehensive income (loss) into net income include those that pertain to the Company’s pension and postretirement benefit plans and realized gains and losses on derivative instruments designated as cash flow hedges. Please see Note 10 for additional information related to the amortization of prior service cost and the recognized actuarial losses, which amounts are reclassified from accumulated other comprehensive income (loss) into net income and are included in selling, general and administrative expenses in the statement of operations during the three and nine month periods ended December 31, ~~2014~~2015 and ~~2015.~~2016. Please see Note 11 for additional information related to realized gains and losses on derivative instruments reclassified from accumulated other comprehensive income (loss) into net income during the three and nine month periods ended December 31, ~~2014~~2015 and ~~2015.~~2016.

Our operating segments are based on the types of products from which we generate revenues. We ~~have~~ are organized into a product line organization with five main product groups and three reportable segments: Passive Components, KED Resale, and Interconnect. The product groups of Ceramic, Advanced, and Tantalum have been aggregated into the Passive Components reportable segment in accordance with the SEC’s aggregation criteria and quantitative thresholds. The aggregation criteria consist of similar economic characteristics, products and services, production processes, customer classes, and distribution channels. The Passive Components segment consists primarily of surface mount and leaded ceramic capacitors, RF thick and thin film components, surface mount and leaded tantalum capacitors, surface mount and leaded film capacitors, ceramic and film power capacitors, super capacitors, EMI filters (bolt in and surface mount), thick and thin film packages of multiple passive integrated components, varistors, thermistors, inductors, and resistive products manufactured by AVX or ~~supplied~~purchased from other manufacturers for resale. The Interconnect segment consists primarily of automotive, telecom, and memory connectors manufactured by ~~AVX.~~or for AVX Interconnect. The KED Resale segment consists primarily of ceramic capacitors, frequency control devices, SAW devices, sensor products, RF modules, actuators, acoustic devices, and connectors produced by Kyocera and resold by AVX. The Interconnect segment consists primarily of automotive, telecom, and memory connectors manufactured or supplied by AVX Interconnect and KCP Resale connector products. Sales and operating results from these reportable segments are shown in the tables below. In addition, we have a corporate administration group consisting of finance, legal, EHS, and administrative ~~activities and a separate research and development group.~~activities.

We evaluate performance of our segments based upon sales and operating profit. There are no intersegment revenues. We allocate the costs of shared resources between segments based on each segment’s usage of the shared resources. Cash, accounts receivable, investments in securities, and certain other assets, which are centrally managed, are not readily allocable to operating segments.


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				December 31,				December 31,
Sales Revenue:	2014		2015		2014		2015		2015		2016		2015		2016
Ceramic Components	$	48,289	$	45,617	$	155,283	$	130,495	$	45,617	$	49,235	$	130,495	$	145,907
Tantalum Components		82,876		75,344		272,810		234,905		75,344		78,113		234,905		234,245
Advanced Components		88,668		75,155		270,223		248,681		75,155		103,686		248,681		275,975
Total Passive Components		219,833		196,116		698,316		614,081		196,116		231,034		614,081		656,127
AVX Interconnect										26,656		28,128		83,270		87,785
KCP Resale Connectors										5,211		7,780		17,622		22,362
KDP and KCD Resale		52,761		59,064		176,093		176,951		59,064		73,857		176,951		216,809
KCP Interconnect Resale		16,958		5,211		58,127		17,622
Total KED Resale		69,719		64,275		234,220		194,573		64,275		81,637		194,573		239,171
AVX Interconnect		32,135		26,656		105,145		83,270
Total Revenue	$	321,687	$	287,047	$	1,037,681	$	891,924	$	287,047	$	340,799	$	891,924	$	983,083


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				December 31,				December 31,
	2014		2015		2014		2015		2015		2016		2015		2016
Operating profit (loss):
Operating profit:
Passive Components	$	51,574	$	43,625	$	165,244	$	145,766	$	43,625	$	61,497	$	145,766	$	148,557
Interconnect										4,215		3,929		15,125		13,672
KED Resale		6,053		4,264		16,695		13,396		4,264		3,777		13,396		13,376
Interconnect		6,334		4,215		22,558		15,125
Corporate activities		(13,574)		(54,777)		(38,418)		(90,539)		(54,777)		(18,262)		(90,539)		(57,126)
Total	$	50,387	$	(2,673)	$	166,079	$	83,748	$	(2,673)	$	50,941	$	83,748	$	118,479

The following geographic data is based upon net sales generated by operations located within particular geographic areas. Substantially all of the sales in the Americas region were generated in the United States.


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				December 31,				December 31,
	2014		2015		2014		2015		2015		2016		2015		2016
Net sales:
Americas	$	95,801	$	84,522	$	302,192	$	266,317	$	84,522	$	101,668	$	266,317	$	287,470
Europe		92,281		81,752		298,072		253,179		81,752		85,339		253,179		261,018
Asia		133,605		120,773		437,417		372,428		120,773		153,792		372,428		434,595
Total	$	321,687	$	287,047	$	1,037,681	$	891,924	$	287,047	$	340,799	$	891,924	$	983,083

Net periodic pension cost for our defined benefit plans consisted of the following for the three and nine months ended December 31, ~~2014~~2015 and ~~2015:~~2016:


	U.S. Plans				International Plans				U.S. Plans				International Plans
	Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
	December 31,				December 31,				December 31,				December 31,
	2014		2015		2014		2015		2015		2016		2015		2016
Service cost	$	49	$	49	$	237	$	244	$	49	$	42	$	244	$	218
Interest cost		397		385		1,662		1,358		385		364		1,358		1,089
Expected return on plan assets		(552)		(528)		(1,948)		(1,651)		(528)		(445)		(1,651)		(1,377)
Recognized actuarial loss		201		396		466		541		396		456		541		294
Net periodic pension cost	$	95	$	302	$	417	$	492	$	302	$	417	$	492	$	224

Based on current actuarial computations, during the nine months ended December 31, ~~2015,~~2016, we made contributions of ~~$5,556~~$5,122 to the international plans. We expect to make additional contributions of approximately ~~$1,850~~$1,600 to the international plans over the remainder of fiscal ~~2016. Based on current actuarial computations, we~~2017. We made ~~a contribution of $793~~$3,001 in contributions to the U.S. plans during the nine months ended December 31, ~~2015.~~2016. We do not anticipate making any ~~additional~~ contributions to the U.S. plans during the remainder of the fiscal year.

We are exposed to foreign currency exchange rate fluctuations in the normal course of business. We use derivative instruments (forward contracts) to hedge certain foreign currency exposures as part of our risk management strategy. The objective is to offset gains and losses resulting from these exposures with gains and losses on the forward contracts used to hedge them, thereby reducing volatility of earnings or protecting fair values of assets and liabilities. We do not enter into any trading or speculative positions with regard to derivative instruments.

We primarily use forward contracts, with maturities less than four months, designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions related to purchase commitments and sales, denominated in various currencies. These derivative instruments are designated and qualify as cash flow hedges.

The effectiveness of the cash flow hedges is determined by comparing the cumulative change in the fair value of the hedge contract with the cumulative change in the fair value of the hedged transaction, both of which are based on forward rates. The effective portion of the gain or loss on these cash flow hedges is initially recorded in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. Once the hedged transaction is recognized, the gain or loss is recognized in our statement of operations. At March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, respectively, the following forward contracts were entered into to hedge against the volatility of foreign currency exchange rates for certain forecasted sales and purchases.

March 31, 2015

Fair Value of Derivative Instruments

Asset Derivatives

Liability Derivatives

Balance

Balance

Sheet
Fair

Sheet
Fair

Caption
Value

Caption
Value

Foreign exchange contracts
Prepaid and other
$
1,090

Accrued expenses
$
864


	March 31, 2016
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	1,125	Accrued expenses	$	869

December 31, 2015

Fair Value of Derivative Instruments

Asset Derivatives

Liability Derivatives

Balance

Balance

Sheet
Fair

Sheet
Fair

Caption
Value

Caption
Value

Foreign exchange contracts
Prepaid and other
$
675

Accrued expenses
$
885



	December 31, 2016
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	1,737	Accrued expenses	$	3,922

For these derivatives designated as hedging instruments, during the three and nine months ended December 31, ~~2015,~~2016, net pre-tax gains (losses) of ~~$(140)~~$ (3,002) and ~~$(282)~~$(2,972), respectively, were recognized in other comprehensive income (loss). In addition, during the three and nine months ended December 31, ~~2015,~~2016, net pre-tax gains (losses) of ~~$(483)~~$ (1,258) and ~~$(1,036)~~$ (2,084), respectively, were reclassified from accumulated other comprehensive income ~~(loss)~~ into cost of sales (for hedging purchases), and net pretax gains of ~~$581~~$1,507 and ~~$1,219,~~$ 1,331, respectively, were reclassified from accumulated other comprehensive income ~~(loss)~~ into sales (for hedging sales) in the accompanying statement of operations.

Derivatives not designated as cash flow hedging instruments consist primarily of forwards used to hedge foreign currency balance sheet exposures. These hedging instruments are used to offset foreign currency changes in the fair values of the underlying assets and liabilities. The gains and losses on these foreign currency forward contracts are recognized in other income in the same period as the remeasurement gains and losses of the related foreign currency denominated assets and liabilities and thus naturally offset these gains and losses. At March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, we had the following forward contracts that were entered into to hedge against these exposures.

December 31, 2015

Fair Value of Derivative Instruments

Asset Derivatives

Liability Derivatives

Balance

Balance

Sheet

Fair

Sheet
Fair

Caption

Value

Caption
Value

Foreign exchange contracts
Prepaid and other

$
202

Accrued expenses
$
133



	December 31, 2016
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	209	Accrued expenses	$	151

For these derivatives not designated as cash flow hedging instruments during the three and nine months ended December 31, ~~2015,~~2016, gains (losses) of $~~(853)~~$(9) and ~~$ (1,361),~~431, respectively, inon hedging contracts were recognized in other income, along with the approximately ~~$(944)~~$671 and ~~$(681)~~$(1,686) in exchange gains (losses) that were recognized in other income in the accompanying statement of operations.

At March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, we had outstanding foreign exchange contracts with notional amounts totaling ~~$205,911~~$204,372 and ~~$209,065,~~$230,425, respectively, denominated primarily in ~~euros,~~Euros, Czech ~~korunas,~~Korunas, British ~~pounds,~~Pounds, and Japanese ~~yen.~~Yen.

~~On January 26, 2016 (following the Company’s issuance of its quarterly earnings release), in the~~ ~~case filed in the United States District Court for the District of Delaware captioned~~ ~~Greatbatch, Inc. v AVX Corporation,~~ the jury returned a verdict in favor of the plaintiff and found damages to Greatbatch in the amount of $37,500. AVX is reviewing the verdict and consulting with its legal advisors on what action AVX may take in response. See Note 7 for additional information with regard to this case.

On February ~~3, 2016,~~8, 2017, the Board of Directors of the Company declared a ~~$0.105~~$0.11 dividend per share of common stock with respect to the quarter ended December 31, ~~2015.~~2016. The dividend will be paid to stockholders of record on February ~~19, 2016~~24, 2017 and will be disbursed on March ~~4, 2016.~~

This Quarterly Report on Form 10-Q contains “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position made in this Quarterly Report on Form 10-Q are forward-looking. The forward-looking information may include, among other information, statements concerning our outlook for fiscal year ~~2016,~~2017, overall volume and pricing trends, cost reduction and acquisition strategies and their anticipated results, and expectations for research and development and capital expenditures. There may also be other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Forward-looking statements reflect management’s expectations and are inherently uncertain. ~~The~~Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that such forward-looking ~~information~~statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements. Because these forward-looking statements ~~in this report are subject to~~involve risks and uncertainties, actual results could differ materially from those expressed or implied by the forward-looking statements for a variety of reasons, including ~~those~~without limitation, changes in the global economy or the economy of any locality in which we conduct business; changes in general industry and market conditions or regional growth or declines; loss of business from increased competition; higher raw material costs or raw material shortages; changes in consumer and customer preferences for end products; customer losses; changes in regulatory conditions; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; market acceptance of our new products; possible adverse results of pending or future litigation or infringement claims; our ability to protect our intellectual property rights; negative impacts of environmental investigations or other governmental investigations and associated litigation; tax assessments by governmental authorities and changes in our effective tax rate; dependence on and relationships with customers and suppliers; and other risks and uncertainties discussed in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015 and other reports that we file with the SEC, that could cause actual results to differ materially from those expressed in or implied by the information or statements herein.~~2016. Forward-looking statements should be read in context with, and with the understanding of, the various other disclosures concerning the Company and its business made elsewhere in this quarterly report as well as other public reports filed by the Company with the SEC. You should not place undue reliance on any forward-looking statements as a prediction of actual results or developments.

Any forward-looking statements by the Company are intended to speak only as of the date thereof. We do not intend to update or revise any forward-looking statement contained in this quarterly report to reflect new events or circumstances unless and to the extent required by applicable law. All forward-looking statements contained in this quarterly report constitute “forward-looking statements” within the meaning of Section 21E of the United States Securities Exchange Act of 1934 and, to the extent it may be applicable by way of incorporation of statements contained in this quarterly report by reference or otherwise, Section 27A of the United States Securities Act of 1933, each of which establishes a safe-harbor from private actions for forward-looking statements as defined in those statutes.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based upon our unaudited Consolidated Financial Statements and Notes thereto contained in this Form 10-Q, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, ~~and~~ liabilities, ~~and~~ the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. On an ongoing basis, management evaluates its estimates and judgments, including those related to investment securities, revenue recognition, inventories, property and equipment, goodwill, intangible assets, income taxes, and contingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.

We have identified the accounting policies and estimates that are critical to our business operations and understanding the Company’s results of operations. Those policies and estimates can be found in Note 1, “Summary of Significant Accounting ~~Policies”,~~Policies,” of the Notes to Consolidated Financial Statements and in “Critical Accounting Policies and ~~Estimates”,~~Estimates,” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015~~2016 and in Note 1, “Critical Accounting Policies and ~~Estimates”,~~Estimates,” in the Notes to Consolidated Financial Statements in this Form 10-Q. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015.~~2016. During the three and nine month periods ended December 31, ~~2015,~~2016, there were no significant changes to any critical accounting policies, judgments involved in applying those policies, or the methodology used in determining estimates with respect to those related to investment securities, revenue recognition, inventories, goodwill, intangible assets, property and equipment, income taxes, and contingencies except the early adoption of FASB ASU 2015-17 “Income Taxes” as noted in Note 1, “Basis of Presentation: New Accounting Standards”, in the Notes to the Consolidated Financial Statements Consolidated in this 10-Q for the three and nine month periods ended December 31, 2015.

AVX is a leading worldwide manufacturer and supplier of a broad line of passive electronic components. Virtually all types of electronic devices use our passive component products to store, filter, or regulate electric energy. We also manufacture and supply high-quality electronic connectors and interconnect systems for use in electronic products.

We have manufacturing, sales, and distribution facilities located throughout the world, which are divided into three main geographic regions: the Americas, Asia, and Europe. AVX is organized into five main product groups with three reportable segments: Passive Components, Interconnect, and KED ~~Resale, and Interconnect.~~Resale. The Passive Components segment consists primarily of surface mount and leaded ceramic capacitors, RF thick and thin film components, surface mount and leaded tantalum capacitors, surface mount and leaded film capacitors, ceramic and film power capacitors, super capacitors, EMI filters (bolt in and surface mount), thick and thin film packages of multiple passive integrated components, varistors, thermistors, inductors, and resistive products manufactured by AVXor ~~supplied~~purchased from other manufacturers for resale. The Interconnect segment consists primarily of automotive, telecom, and memory connectors manufactured by or for AVX. The KED Resale segment consists primarily of ceramic capacitors, frequency control devices, SAW devices, sensor products, RF modules, actuators, acoustic devices, and connectors produced by Kyocera and resold by AVX. ~~The Interconnect segment consists primarily of automotive, telecom, and memory connectors manufactured or supplied by AVX.~~

Our customers are multi-national original equipment manufacturers, or OEMs, independent electronic component distributors, and electronic manufacturing service providers, or EMSs. We market our products through our own direct sales force and independent manufacturers’ representatives, based upon market characteristics and demands. We coordinate our sales, marketing, and manufacturing organizations by strategic customer account and globally by region.

We sell our products to customers in a broad array of industries, such as telecommunications, information technology hardware, automotive electronics, medical devices and instrumentation, industrial instrumentation, transportation, energy harvesting, defense and aerospace electronic systems, and consumer electronics.

Results of Operations - Three Months Ended December 31, ~~2014~~2015 and ~~2015~~2016

Our net income for the quarter ended December 31, ~~2015~~2016 was $5.4$35.5 million,, or ~~$0.03~~$0.21 per share, compared to ~~$39.0~~$5.4 million, or ~~$0.23~~$0.03 per share, for the quarter ended December 31, ~~2014.~~ 2015.

Net sales in the three months ended December 31, ~~2015 decreased $34.6~~2016 increased $53.8 million or ~~10.8%~~18.7%, to ~~$287.0~~$340.8 million compared to ~~$321.7~~$287.0 million in the three months ended December 31, ~~2014. This decrease is partially~~2015. The increase in revenue was attributable to higher volumes across all of our product groups, Ceramic Components, Interconnect, and KED Resale products, resulting from improved global market conditions reflective of higher overall demand, primarily in the cellular telecommunications, consumer, and automotive markets. In addition, sales were favorably impacted by $1.7 million as a result of ~~the unfavorable impact~~currency exchange due to ~~currency, as~~ the strength of the ~~U.S. dollar~~Japanese Yen against the ~~Japanese yen and the euro unfavorably impacted reported sales across all product lines~~U.S. Dollar, partially offset by ~~$10.0 million~~weaker European currencies, when compared to the same period last year. The decrease in revenue was also attributable to lower overall volumes in our Passive Components resulting from generally weaker global market conditions reflecting lower overall demand, and our focus on the sale of value added passive components with better margin opportunities and lower sales volumes rather than higher volume commodity components when compared to the same period last year. We also experienced increases in our KDP and KCD Resale product markets that we serve, primarily attributable to higher sales in the telecommunications and cellular device markets. Our KCP Resale Interconnect products saw decreases primarily due to Kyocera’s decision to market Kyocera manufactured connector products in Asia using Kyocera’s sales force rather than having AVX resell such products in Asia effective April 1, 2015.

~~The table below represents product group revenues~~Profit from operations for the ~~quarters~~three month period ended December 31, ~~2014 and 2015.~~

2016 includes charges of $12.9 million related to previously disclosed intellectual property damages awards resulting from litigation with respect to a patent infringement case filed in the United States District Court for the District of Delaware by Presidio Components, Inc. (“Presidio”). Net sales for the three month period ended December 31, 2016 includes $12.5 million from increased sales prices related to the affected products which have the effect of partially offsetting the effect of the intellectual property damages awards.

~~Passive Component sales decreased $23.7 million, or 10.8% to $196.1 million in~~Profit from operations for the three ~~months~~month period ended December 31, 2015 ~~from $219.8 million during the same quarter last year as~~reflects a result of the unfavorable impact due to currency, in addition to lower demand reflecting generally weaker global economic conditions, as customers were cautious in taking on inventory and actively managed their inventory levels in the current quarter. When compared to the same quarter last year, the sales decrease in Passive Components, primarily Tantalum and Ceramic products, were impacted by our focus on the sale of value added and higher capacitance passive components with better margin opportunities and lower sales volumes rather than higher volume commodity components in addition to the unfavorable impact on reported sales due to the strength of the U.S. dollar.

KDP and KCD Resale sales increased $6.3 million, or 11.9%, to $59.1 million in the three months ended December 31, 2015 compared to $52.8 million during the same quarter last year. When compared to the same quarter last year, this increase is primarily a result of higher demand from our telecommunications and cellular device customers in the current quarter.

Total Interconnect product sales, including AVX Interconnect and KCP Interconnect Resale connectors, decreased $17.2 million, or 35.1%, to $31.9 million in the three months ended December 31, 2015 compared to $49.1 million during the same quarter last year. This decrease is primarily attributable to the reduction in the sales of our KCP Resale products due to Kyocera’s decision to market Kyocera manufactured connector products in Asia using Kyocera’s sales force rather than having AVX resell such products in Asia, effective April 1, 2015. Sales in our Asian region for the quarter ended December 31, 2014 included $11.6 million of sales of KCP Resale products. The AVX Interconnect sales decrease is attributable to the unfavorable effect the stronger U.S. dollar had on reported sales when compared to the same quarter last year since a significant portion of such sales are denominated in euros. This currency impact was partially offset by improved volume to our automotive customers.

Geographically, compared to the same period last year, sales decreased in all regions, primarily reflecting lower demand in the consumer, telecommunications and industrial electronics markets in addition to the effect of the weakness of the euro and Japanese yen compared to the U.S. dollar. Sales in the Asian, American and European markets represented 42.1%, ~~29.4%~~ ~~and 28.5% of total sales, respectively, for the quarter ended December 31, 2015. This compares to 41.5%,~~ ~~29.8%~~ ~~and 28.7% of total sales for the Asian, American, and European regions in the same period last year, respectively.~~

Our sales to independent electronic distributor customers represented 45.1% of total sales for the three months ended December 31, 2015, compared to 45.8% for the three months ended December 31, 2014. Overall, distributor activity decreased when compared to the same quarter last year reflective of the distributors’ customer demand and inventory positions maintained by distributors as our distribution customers managed their inventory risk during the quarter and were cautious in taking on additional inventory in light of global economic uncertainty. Our sales to our distributor customers involve specific ship and debit and stock rotation programs for which sales allowances are recorded as reductions in sales. Such allowance charges were $7.3 million, or 5.6% of gross sales to distributor customers for the three months ended December 31, 2015, and $8.4 million, or 5.7% of gross sales to distributor customers, for the three months ended December 31, 2014 reflective of the overall decline in revenue. Applications under such programs for the quarters ended December 31, 2015 and 2014 were approximately $8.5 million and $8.4 million, respectively.

Gross profit in the three months ended December 31, 2015 was 23.0% of sales, or $66.0 million, compared to a gross profit margin of 24.5%, or $78.7 million, in the three months ended December 31, 2014. This overall decrease in dollars and percentage is primarily attributable to our lower sales and lower selling prices reflective of the weaker demand in the global marketplace. The impact of lower selling prices was partially offset by our focus on the sale ~~of value added and higher capacitance passive components with better margin opportunities~~ and our emphasis on spending controls and cost reductions. During the current quarter, costs were favorably impacted by approximately $14.1 million when compared to the same quarter last year due to the strength of the U.S. dollar against certain foreign currencies.

Selling, general and administrative expenses in the three months ended December 31, 2015 were $31.2 million, or 10.9% of net sales, compared to $28.3 million, or 8.8% of net sales, in the three months ended December 31, 2014. The increase in these expenses is primarily due to higher legal expenses.

~~During the quarter ended December 31, 2015, we recorded litigation charges~~charge of $37.5 million related to litigation with respect to ~~certain~~an intellectual property ~~disputes.~~ dispute. On January 26, 2016, in a patent infringement case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. vv. AVX Corporation(“Greatbatch”), the jury returned a verdict in favor of the plaintiff and found damages to the plaintiff in the amount of $37.5 million.~~AVX is reviewing the verdict and consulting with its legal advisors on what action AVX may take in response.~~

Income (loss) from operations was $(2.7) million in the three months ended December 31, 2015 compared to $50.4 million in the three months ended December 31, 2014. This decrease was a result of the factors described above.

Our tax benefit for the three months ended December 31, 2015 was $6.0 million compared to tax expense of $13.8 million for the three month period ended December 31, 2014. The decrease in income taxes is principally due to the tax benefit of $12.1 million related to the litigation charges incurred during the three months ended December 31, 2015 in addition to the release of certain reserves for uncertain tax positions and other discrete income tax items of $3.6 million for the quarter ended December 31, 2015.

~~As a result of the factors discussed above, net income for the three month period ended December 31, 2015 was $5.4 million compared to $39.0 million for the same three month period last year.~~

~~Our net income for the nine months ended December 31, 2015 was~~ ~~$68.9 million, or $0.~~41 ~~per share, compared to $124.3 million, or $0.74 per share, for the nine months ended December 31, 2014.~~

Net sales in the nine months ended December 31, 2015 decreased $145.8 million or 14.0%, to $891.9 million compared to $1,037.7 million in the nine months ended December 31, 2014. This decrease is partially a result of the unfavorable impact due to currency, as the strength of the U.S. dollar against the Japanese yen and the euro unfavorably impacted sales across all product lines by $49.9 million when compared to the same nine month period last year. In addition, the decrease in revenue was attributable to lower sales volumes in our Passive Components resulting from generally weaker global market conditions reflecting lower overall demand and our focus on the sale of value added and higher capacitance passive components with better margin opportunities and lower sales volumes rather than higher volume commodity components. We also experienced increases in our KDP and KCD Resale product markets that we serve, primarily attributable to higher sales in the telecommunications and cellular device markets. Our KCP Resale Interconnect products saw decreases due to Kyocera’s decision to market Kyocera manufactured connector products in Asia using Kyocera’s sales force rather than having AVX resell such products in Asia effective April 1, 2015.

The table below represents product group revenues for the ~~nine months~~quarters ended December 31, ~~2014~~2015 and ~~2015.~~

Passive ~~Component~~Components sales ~~decreased~~ ~~$84.2~~increased $34.9 million, or 17.8%, ~~or 12.1%~~ to ~~$614.1~~$231.0 million in the ~~nine~~three months ended December 31, ~~2015 from $698.3~~2016 compared to sales of $196.1 million during the same ~~nine month period~~quarter last ~~year partially~~year. The sales increase in Passive Components product sales was driven by increased volume for our Ceramic Components as a result of ~~the unfavorable impact due to currency, as the U.S. dollar strengthened against the euro and Japanese yen. In addition we experienced lower demand reflecting generally weaker~~improved global ~~economic~~market conditions, ~~as customers were risk averse to adding inventory~~primarily in the ~~nine month period ended December 31, 2015. The sales decreases~~cellular telecommunications, consumer, and automotive markets in ~~Passive Components are due~~addition to ~~lower demand and lower sales resulting from~~ our focus on the sale of higher value ~~added and higher~~ capacitance ~~passive components with better margin opportunities and lower~~components. The sales ~~volumes rather than higher volume commodity components. In addition, we experienced an unfavorable currency impact on reported~~increase in our Advanced Components was primarily attributable to the increased sales of certain advanced ceramic capacitors, including $12.5 million from increased sales prices, resulting from increased demand by customers in light of the intellectual property litigation discussed above as customers sought to purchase product prior to the March 17, 2017 injunction. The increase in sales of our ~~Passive~~Tantalum Components ~~resulting from~~is primarily driven by increased demand in the ~~strength of the U.S. dollar when compared to the same nine month period last year.~~cellular telecommunications and consumer markets.

Total Interconnect product sales, including AVX Interconnect manufactured and KCP Resale connectors, increased $4.0 million, or 12.7%, to $35.9 million in the three months ended December 31, 2016 compared to $31.9 million during the same period last year. This increase is attributable to increased demand in the U.S. and European automotive and industrial markets.

KDP and KCD Resale sales increased ~~$0.9~~$14.8 million, or ~~0.5%~~25.0%, to ~~$177.0~~$73.9 million in the ~~nine~~three months ended December 31, ~~2015~~2016 compared to ~~$176.1~~$59.1 million during the same ~~nine month~~ period last year. This ~~slight~~ increase is primarily a result of higher demand from our ~~telecommunications and~~ cellular device customers in ~~the current nine month period which was partially offset by the unfavorable effect the stronger U.S. dollar had~~addition to a favorable currency impact on reported ~~sales~~revenues when compared to the same ~~nine month period last year.~~

Total Interconnect product sales, including AVX Interconnect and KCP Interconnect Resale connectors, decreased $62.4 million, or 38.2%, to $100.9 million in the nine months ended December 31, 2015 compared to $163.3 million during the same nine month period last year. This decrease is primarily attributable to the reduction in the sales of our KCP Resale products due to Kyocera’s decision to market Kyocera manufactured connector products in Asia using Kyocera’s sales force rather than having AVX resell such products in Asia, effective April 1, 2015. Sales in our Asian region for the nine months ended December 31, 2014 included $40.9 million of sales of KCP Resale products compared to sales of $1.1 million for the nine month period ended December 31, 2015. The AVX Interconnect sales decrease is also attributable to conservative customer inventory management, partially offset by improved sales to our automotive customers, in the current nine month period and the unfavorable effect the stronger U.S. dollar had on reported sales when compared to the same nine month period last year ~~since a significant portion of such sales are denominated in euros.~~as the Japanese Yen strenghthened against the U.S. Dollar.

Geographically, compared to the same ~~nine month~~ period last year, sales ~~decreased~~increased in all regions, primarily reflecting ~~lower~~higher demand resulting from steadily improving global market conditions in the ~~computer, industrial and telecommunications~~ electronics ~~markets as a result of generally weaker global economic conditions in addition to weakness of the euro and Japanese yen compared to the U.S. dollar.~~market. Sales in the Asian, American and European markets represented ~~41.8%~~45.1%, ~~29.9~~% 29.8% and ~~28.3%~~25.0% of total sales, respectively, for the ~~nine months~~quarter ended December 31, ~~2015.~~2016. This compares to ~~42.2%~~42.1%, ~~29.1%~~29.4% and ~~28.7%~~28.5% of total sales for the Asian, American, and European regions in the same ~~nine month~~ period last year, respectively.

Our sales to independent electronic distributor customers represented ~~45.4%~~43.7% of total sales for the ~~nine~~three months ended December 31, ~~2015,~~2016, compared to ~~46.5%~~45.1% for the ~~nine~~three months ended December 31, ~~2014.~~2015. Overall, distributor ~~activity decreased~~sales increased when compared to the same period last ~~year.~~year as distributors increased order activity and inventory intake during the quarter. This ~~decrease~~increase is reflective of the distributors’ customer demand, a more balanced inventory pipeline and inventory positions maintained by distributors as our distribution customers managed their inventory risk during this nine month period and were cautious about taking on additional inventory in light of global economic uncertainty.steadily improving market conditions. Our sales to ~~our~~ distributor customers involve specific ship and debit and stock rotation programs for which sales allowances are recorded as reductions in sales. Such allowance charges were $5.4 million, or 3.6% of gross sales to distributor customers for the three months ended December 31, 2016, and $7.3 million, or 5.6% of gross sales to distributor customers, for the three months ended December 31, 2015 reflecting a tighter pricing environment resulting from increased demand. Applications under such programs for the quarters ended December 31, 2016 and 2015 were approximately $6.6 million and $8.5 million, respectively. This decrease in applications is primarily due to a recent system implementation at one of our major distribution customers.

Gross profit in the three months ended December 31, 2016 was 23.3% of sales, or $79.4 million, compared to a gross profit margin of 23.0%, or $66.0 million, in the three months ended December 31, 2015. This overall increase in dollars and percent is primarily attributable to an improved product mix as a result of our focus on the sale of better margin value added capacitance components in addition to the increased sales of certain advanced ceramic capacitors related to the intellectual property damages award discussed above. We also continue to focus on manufacturing cost reductions and process improvements to reduce our manufacturing costs. Charges of $12.9 million related to the intellectual property damages award for the three month period ended December 31, 2016 were almost fully offset by $12.5 million from increased sales prices for those capacitors. Costs due to currency movement were favorably impacted by $5.1 million when comparing the three month periods ended December 31, 2016 and December 31, 2015 primarily due to weaker European currencies against the U.S. Dollar.

Selling, general and administrative expenses in the three months ended December 31, 2016 were $28.5 million, or 8.3% of net sales, compared to $31.2 million, or 10.9% of net sales, in the three months ended December 31, 2015. The overall decrease in these expenses is primarily due to lower litigation costs partially offset by higher selling expenses resulting from the increase in sales when compared to the same period last year.

Income from operations was $50.9 million in the three months ended December 31, 2016 compared to a loss of $2.7 million in the three months ended December 31, 2015. This increase was a result of the factors described above.

Other income, net was $1.4 million for the three months ended December 31, 2016 compared to $2.1 million for the three months ended December 31, 2015. This decrease was primarily due to foreign exchange losses resulting from significant currency fluctuations during the current quarter.

Our tax expense for the three months ended December 31, 2016 was $16.8 million compared to a tax benefit of $6.0 million for the three months ended December 31, 2015. The increase in tax expense is primarily due to the tax benefit of $12.1 million related to the litigation charges incurred during the three months ended December 31, 2015.

As a result of the factors discussed above, net income for the three months ended December 31, 2016 was $35.5 million compared to $5.4 million for the three months ended December 31, 2015.

Our net income for the nine months ended December 31, 2016 was $91.9 million, or $0.55 per share, compared to $68.9 million, or $0.41 per share, for the nine months ended December 31, 2015.

Net sales in the nine months ended December 31, 2016 increased $91.2 million or 10.2%, to $983.1 million compared to $891.9 million in the nine months ended December 31, 2015. The increase in revenue was attributable to higher volumes in our Ceramic Components and KED Resale products resulting from improved global market conditions reflecting higher overall demand, primarily in the cellular telecommunications, consumer and automotive markets. In addition, this increase is partially a result of the currency fluctuations throughout the year resulting from the annoucement of the vote on the Referendum of the United Kingdom’s (U.K.) Membership of the European Union (E.U.) (referred to as “Brexit”) as well as the impact of other geopolitical issues which have resulted in a stronger Japanese Yen against the U.S. Dollar and weaker European currencies against the U.S. Dollar. The net impact of currency movement against the U.S. Dollar was a favorable impact on sales across all product lines by $6.3 million when compared to the same nine month period last year.

Profit from operations for the nine month period ended December 31, 2016 includes charges of $28.1 million related to a previously disclosed intellectual property damages award resulting from litigation with respect to the Presidio patent infringement case discussed above. Profit from operations for the nine month period ended December 31, 2016 also reflects a charge of $3.6 million related to estimated environmental remediation costs resulting from legacy environmental issues at an inactive property. Net sales for the nine month period ended December 31, 2016 includes $15.3 million from increased sales prices related to the affected products which have the effect of partially offsetting the effect of the intellectual property damages awards.

Profit from operations was further impacted by the accrual of estimated environmental remediation costs and the settlement of certain litigation during the nine months ended December 31, 2015, including charges of $43.7 million, of which $37.5 million relates to previously mentioned amounts awarded in the Greatbatch patent infringement case, discussed above, and $6.2 million related to the settlement of certain litigation involving legacy environmental issues.

The table below represents product group revenues for the nine months ended December 31, 2015 and 2016.

Passive Components sales increased $42.0 million, or 6.8% to $656.1 million in the nine months ended December 31, 2016 compared to sales of $614.1 million during the same nine months last year. The increase in Passive Components product sales was driven by increased volume for our Ceramic Components primarily in the cellular telecommunications, consumer and automotive markets as a result of improved global market conditions and our focus on the sale of higher value capacitance components, in addition to a favorable currency impact on reported revenues when compared to the same period last year. This increase was partially offset by a slightly lower volume of sales in our Tantalum Components from lower volumes in the computer, medical, industrial and telecom markets. Increased sales in our Advanced Components products were primarily due to increased sales of certain advanced ceramic capacitors resulting from increased demand by customers in light of the intellectual property litigation discussed above as customers sought to purchase product prior to the March 17, 2017 injunction.

Total Interconnect product sales, including AVX Interconnect manufactured and KCP Resale connectors, increased $9.3 million, or 9.2%, to $110.2 million in the nine months ended December 31, 2016 compared to $100.9 million during the same period last year. This increase is primarily attributable to increased demand in the U.S. and European automotive markets.

KDP and KCD Resale sales increased $39.8 million, or 22.5%, to $216.8 million in the nine months ended December 31, 2016 compared to $177.0 million during the same period last year. This increase is primarily a result of higher demand from our cellular device customers in addition to a favorable currency impact on reported revenues when compared to the same period last year.

Geographically, compared to the same period last year, sales increased in all regions, primarily reflecting higher demand resulting from steadily improving global market conditions in the electronics market and a favorable currency impact due to the strength of the Japanese Yen compared to the U.S. Dollar. Sales in the Asian, American and European markets represented 44.2%, 29.2% and 26.6% of total sales, respectively, for the nine months ended December 31, 2016. This compares to 41.8%, 29.9% and 28.3% of total sales for the Asian, American, and European regions in the same period last year, respectively.

Our sales to independent electronic distributor customers represented 45.1% of total sales for the nine months ended December 31, 2016, compared to 45.4% for the nine months ended December 31, 2015. Overall, distributor sales activity increased when compared to the same period last year as distributors increased order activity and inventories. This increase is reflective of the distributors’ customer demand, a more balanced inventory pipeline and steadily improving market conditions. Our sales to distributor customers involve specific ship and debit and stock rotation programs for which sales allowances are recorded as reductions in sales. Such allowance charges were $19.6 million, or 4.4% of gross sales to distributor customers, for the nine months ended December 31, 2016, and $22.2 million, or 5.5% of gross sales to distributor customers, for the nine months ended December 31, 2015, ~~and $27.4 million, or 4.1% of gross sales to distributor customers, for the nine month period ended December 31, 2014 reflective of the overall decline in revenue.~~reflecting a tighter pricing environment resulting from increased demand. Applications under such programs for the nine months ended December 31, ~~2015~~2016 and ~~2014~~2015 were approximately $16.4 million and $23.6 million, ~~and $26.5 million,~~ respectively. This decrease in applications is due primarily to a recent system implementation at one of our major distribution customers.

Gross profit in the nine months ended December 31, ~~2015~~2016 was ~~24.1%~~21.5% of sales, or ~~$215.0~~$211.1 million, compared to a gross profit margin of ~~24.2%~~24.1%, or ~~$251.6~~$215.0 million, in the nine months ended December 31, ~~2014.~~2015. This overall decrease in dollars and percent is primarily attributable to ~~our lower~~increases to estimated intellectual property damages awards costs related to the ongoing litigation discussed above. The negative impact of the intellectual property damages awards costs were partially offset by increased sales ~~volume and lower selling prices~~of certain advanced ceramic capacitors related to the intellectual property damages award in addition to an improved product mix reflective of ~~weaker demand in~~our focus on the ~~global marketplace.~~sale of higher margin value added capacitance components, as well as our continued focus on manufacturing cost reductions and process improvements. The impact of ~~lower selling prices~~the $28.1 million intellectual property damages award costs in the nine month period ended December 31, 2016 was partially offset by $15.3 million from increased sales prices related to the affected products. The net result was a negative impact on our ~~focus on the sales~~ ~~of value added and higher capacitance passive components~~ ~~with better~~gross profit margin ~~opportunities, as well as lower manufacturing and overhead costs due to improved cost control and manufacturing efficiencies.~~percentage by approximately 3%. During the ~~current~~ nine ~~month period,~~months ended December 31, 2016, costs ~~due to currency movement of the U.S. dollar against certain foreign currencies~~ were ~~favorably~~unfavorably impacted by approximately ~~$58.3~~$9.3 million when compared to the same period last ~~year.~~year due to the movement of the Japanese Yen and various European currencies against the U.S. Dollar, primarily in reaction to Brexit and other geopolitical actions.

Selling, general and administrative expenses in the nine months ended December 31, ~~2015~~2016 were $89.0 million, or 9.1% of net sales, compared to $87.6 million, or 9.8% of net sales, ~~compared to $85.5 million, or 8.2% of net sales,~~ in the nine ~~month period~~months ended December 31, ~~2014.~~2015. The overall increase in these expenses is primarily due to higher ~~legal and consulting fees partially offset by lower~~ selling expenses ~~as a result of lower~~resulting from the increase in sales when compared to the same ~~nine month~~ period last ~~year.~~year, partially offset by lower litigation costs.

During the nine months ended December 31, ~~2015,~~2016, we recorded ~~litigation and settlement charges of $43.7~~a $3.6 million charge related to ~~the settlement of certain litigation involving~~estimated environmental remediation costs resulting from legacy environmental issues and developments in litigation with respect to certain intellectual property disputes. Effective September 30, 2015, a Settlement Agreement and Mutual Release (“Settlement Agreement”) was entered into with the City of New Bedford in settlement of the following two cases: ~~DaRosa v. City of New Bedford~~ ~~and~~ ~~City of New Bedford, et al v. AVX Corporation~~ ~~both arising from contamination~~ at ~~certain sites in the City of New Bedford. In accordance with the Settlement Agreement, AVX paid the sum of $6.5 million to the City of New Bedford in October 2015. Additionally,~~ an inactive property.

Income from operations was $118.5 million in the nine months ended December 31, 2016 compared to $83.7 million in the nine months ended December 31, ~~2015 compared to $166.1 million in the nine months ended December 31, 2014.~~2015. This ~~decrease~~increase was a result of the factors described above.

Other income, net was $9.2 million for the nine months ended December 31, 2016 compared to $5.1 million for the same period last year. This increase was primarily due to foreign exchange gains resulting from significant currency fluctuations during the period in addition to a gain on the sale of an idle facility of $1.6 million.

Our effective tax rate for the nine ~~month period~~months ended December 31, ~~2015~~2016 was ~~22.5%~~28.0% compared to ~~26.7%~~22.5% for the nine months ended December 31, 2015. The increase in the effective tax rate is principally due to the higher tax benefit related to litigation settlements and awards during the nine month period ended December 31, 2014. Our effective tax rate was 25.6% excluding the release of certain reserves for uncertain tax positions and other discrete income tax items of $2.8 million for the nine month period ended December 31, 2015 compared to an effective tax rate of 28.6% for the nine month periods ending December 31, 2014 excluding the release of certain reserves for uncertain tax positions and other discrete income tax items of $3.2 million for the nine month period ended December 31, 2014. In addition, the effective tax rate for the nine month period ended December 31, 2015 reflects the $15.7 million tax benefit related to the litigation settlements and charges discussed above.2015.

As a result of the factors discussed above, net income for the nine month period ended December 31, ~~2015~~2016 was $~~68.9~~$91.9 million compared to ~~$124.3~~$68.9 million for the same nine month period last year.

With uncertain global geopolitical and economic conditions, it is difficult to quantify expectations for the remainder of fiscal ~~2016.~~2017. Near-term results for us will depend on the impact of the overall global geopolitical and economic conditions and their impact on telecommunications, information technology hardware, automotive, consumer electronics, and other electronic markets. Looking ahead, visibility is low and forecasting is a challenge in this uncertain and volatile market. We expect to see typical pricing pressure in the markets we serve due to competitive activity. In response to anticipated market conditions, we expect to continue to focus on cost management and product line rationalization to maximize earnings potential. We also continue to focus on process improvements and enhanced production capabilities in conjunction with our focus on the sales of value-added ~~and higher capacitance passive~~ electronic components to support today’s advanced electronic devices. If current global geopolitical and economic conditions worsen, the overall impact on our customers as well as end user demand for electronic products could have a significant adverse impact on our near-term results.

Although there is uncertainty in the near-term market as a result of the current global geopolitical and economic conditions, we continue to see opportunities for long-term growth and profitability improvement due to: (a) a projected increase in the long-term worldwide demand for more sophisticated electronic devices, which require ~~more advanced and higher capacitance passive~~ electronic components such as the ones we sell, (b) cost reductions and improvements in our production processes, and (c) opportunities for growth in our Advanced Component and Interconnect product lines due to advances in component design and our production capabilities. We have fostered our financial health and the strength of our balance sheet putting us in a good position to react to changes in the marketplace as they occur. We remain confident that our strategies will enable our continued long-term success.

On December 26, 2016, Kyocera provided notice to AVX pursuant to the Products Supply and Distribution Agreement of its intent, effective January 1, 2018, to market its manufactured products globally using Kyocera’s sales force rather than continuing to have AVX resell such products in the Americas, Europe, and Asia. Sales of Kyocera resale products were $239.2 million and related operating profit was $13.4 million for the nine month period ended December 31, 2016. Sales of Kyocera resale products were $261.8 million and related operating profit was $16.7 million for the fiscal year ended March 31, 2016. AVX cannot currently predict what transition costs and expenses, if any, it will incur as a result of this notice nor can it determine whether such change will have an adverse impact on its relationships with any customers. At present, Kyocera continues to distribute AVX products in Japan.

AVX has reviewed and continues to monitor the impact of Brexit. Beyond the immediate impact to currencies around the world, the announcement and resulting effects of Brexit on AVX and its operations are difficult to predict as future trade agreements and other related issues are resolved. During the early part of the year, the announcement of Brexit caused significant volatility in global stock markets and currency exchange rates that resulted in the weakening of the U.S. Dollar against certain foreign currencies, primarily the Japanese Yen, in which we conduct business. Our international sales are denominated in both the U.S. Dollar and currencies other than U.S. Dollars. A fluctuation of currency exchange rates may expose us to gains and losses on non-U.S. currency transactions. In addition, we translate sales and other results denominated in foreign currencies into U.S. Dollars for our financial statements. Our reported international sales and earnings could be negatively impacted during periods of foreign currency fluctuation compared to the U.S. Dollar.

Liquidity needs arise primarily from working capital requirements, dividend payments, capital expenditures, and acquisitions. Historically, we have satisfied our liquidity requirements through funds from operations and investment income from cash, cash equivalents, and investments in securities. As of December 31, ~~2015,~~2016, we had a current ratio of ~~10.4~~8.5 to 1, ~~approximately $1~~ b~~illion~~$1,105.5 million of cash, cash equivalents, and short-term and long-term investments in securities, ~~$2,142.8~~$2,189.7 million of stockholders’ equity, and no debt.

Net cash provided by operating activities was ~~$102.7~~$160.3 million in the nine months ended December 31, ~~2015~~2016 compared to ~~$164.4~~$102.7 million of cash provided by operating activities in the nine months ended December 31, ~~2014. The decrease~~2015. In addition to normal changes in working capital, the increase in operating cash flow compared to the same period last year was primarily a result of a final payment of $122.1 million made on May 26, 2015, related to a financial settlement with respect to the EPA’s ongoing clean-up of the New Bedford Harbor ~~environmental matters discussed below and other changes~~ in ~~working capital.~~the Commonwealth of Massachusetts.

Purchases of property and equipment were $45.6 million in the nine month period ended December 31, 2016 and $33.8 million in the nine month period ended December 31, ~~2015 and $19.1 in the nine month period ended December 31, 2014.~~ 2015. Expenditures in the ~~nine months ended December 31, 2015 were~~current year are primarily made in connection with the strategic investments in our corporate headquarters and plant expansion ~~activities in the Czech Republic, Mexico and Greenville, South Carolina.~~activities. We expect to incur ~~a total~~capital expenditures of approximately ~~$45 to $50~~$15.0 million in ~~capital expenditures in~~the remainder of fiscal ~~2016.~~2017. The actual amount of capital expenditures will depend upon the outlook for end-market demand and timing of capital projects. Proceeds from property, plant and equipment dispositions are primarily due to the sale of an idle manufacturing facility in China.

The majority of our funding is internally generated through operations and investment income from cash, cash equivalents, and investments in securities. Since March 31, ~~2015,~~2016, there have been no material changes in our contractual obligations or commitments for the acquisition or construction of plant and equipment or future minimum lease commitments under noncancellable operating leases. Based on our financial condition as of December 31, ~~2015,~~2016, we believe that cash on hand, cash expected to be generated from operating activities and investment income from cash, cash equivalents, and investments in securities will be sufficient to satisfy our anticipated financing needs for working capital, capital expenditures, environmental clean-up costs, pension plan funding, research, development and engineering expenses, acquisitions of businesses, and any dividend payments or stock repurchases to be made during the next twelve months. Changes in demand may have an impact on our future cash requirements; however, changes in those requirements are mitigated by our ability to adjust manufacturing capabilities to meet increases or decreases in customer demand. We do not anticipate any significant changes in our ability to generate capital or meet our liquidity needs in the foreseeable future.

From time to time we enter into delivery contracts with selected suppliers for certain precious metals used in our production processes. The delivery contracts represent routine purchase orders for delivery within three months and payment is due upon receipt. As of December 31, ~~2015,~~2016, we did not have any significant delivery contracts outstanding.

WeIn addition to the items described below, we are involved in other disputes, warranty claims, and legal proceedings arising in the normal course of business. While we cannot predict the outcome of these ~~agreements, remediation efforts, disputes and~~ proceedings, ~~management believes,~~we believe, based upon aour review with legal counsel, that none of these proceedings will have a material impact ~~above the current reserves~~ on our financial position, results of operations, comprehensive income (loss), or cash flows.

~~On October 10, 2012, the EPA, the United States, and the Commonwealth of Massachusetts and AVX announced that they had reached a financial settlement with respect to the EPA’s ongoing clean-up~~ However, we cannot be certain of the ~~New Bedford Harbor~~eventual outcome and any adverse result in ~~the Commonwealth~~these or other matters that may arise from time to time may harm our financial position, results of Massachusetts (the “harbor”). That agreement is contained in a Supplemental Consent Decree that modifies certain provisions of prior agreements related to clean-up of the harbor, including elimination of the governments’ right to invoke certain reopener provisions in the future. Under the terms of the settlement, AVX was obligated to pay $366.3 million, plus interest computed from August 1, 2012, in three installments over a two-year period for use by the EPA and the Commonwealth to complete the clean-up of the harbor. On May 26, 2015, we prepaid the third and final settlement installment of $122.1 million, plus interest of $1.1 million.operations, comprehensive income (loss), or cash flows.

On June 3, 2010, AVX entered into an agreement with the EPA and the City of New Bedford, pursuant to which AVX is required to perform environmental remediation at a site referred to as the “Aerovox Site” (the “Site”), located in New Bedford, Massachusetts. AVX has substantially completed its obligations pursuant to such agreement with the EPA and the City of New Bedford with respect to the satisfaction of AVX’s federal law requirements. Agreements with the state regulatory authorities have yet to be concluded but are likely to include additional groundwater and soil remediation. We have a remaining accrual of ~~$11.0~~$15.1 million at December 31, ~~2015,~~2016, including a $3.6 million charge recorded in the quarter ended June 30, 2016, representing our estimate of the potential liability related to the remaining performance of environmental remediation actions at the Site using certain assumptions regarding the plan of remediation. Since additional sampling and analysis may cause the state regulatory authority, the Massachusetts Department of Environmental Protection, to require a more extensive and costly plan of remediation, until all parties agree and remediation is complete, we cannot be certain there will be no additional cost relating to the Site.

We had total reserves of approximately ~~$138.1~~$16.8 million and ~~$15.6~~$19.7 million at March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, respectively, related to various environmental matters, including the ~~various matters and specific sites~~site discussed above. These reserves are classified in the Consolidated Balance Sheets as ~~$127.2~~$7.4 million and ~~$4.7~~$4.2 million in accrued expenses at March 31, ~~2015~~2016 and December 31, ~~2015,~~2016, respectively, and ~~$10.9~~$9.4 million and $15.5 million in other non-current liabilities at ~~both~~ March 31, ~~2015~~2016 and December 31, ~~2015.~~2016, respectively. The amounts recorded for these identified contingent liabilities are based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional legal and technical information that becomes available. Also, uncertainties about the status of laws, regulations, regulatory actions, technology, and information related to individual sites make it difficult to develop an estimate of the reasonably possible aggregate environmental remediation exposure. Accordingly, these costs could differ from our current estimates.

~~Effective September 30, 2015 a Settlement Agreement and Mutual Release (“Settlement Agreement”) was entered into with the City of New Bedford in settlement of the following two cases:~~ ~~DaRosa v. City of New Bedford~~ ~~and~~ ~~City of New Bedford, et al v. AVX Corporation~~ both arising from contamination at certain sites in the City of New Bedford. In accordance with the Settlement Agreement, AVX paid the sum of $6.5 million to the City of New Bedford in October 2015. This Settlement Agreement releases AVX from any future actions by the City of New Bedford related to these cases or sites.

We also operate ~~or have operated in the past,~~ on other sites that may have potential future environmental issues as a result of activities at sites during AVX’s long history of manufacturing operations or prior to the start of operations by AVX. Even though we may have rights of indemnity for such environmental matters at certain sites, regulatory agencies in those jurisdictions may require us to address such issues. Once it becomes probable that we will incur costs in connection with remediation of a site and such costs can be reasonably estimated, we establish reserves or adjust our reserves for our projected share of these costs. A separate account receivable is recorded for any indemnified costs. Our environmental reserves are not discounted and do not reflect any possible future insurance recoveries, which are not expected to be significant, but do reflect a reasonable estimate of cost sharing at ~~multiple party~~multiple-party sites or indemnification of our liability by a third party.

~~Additional information related to environmental issues can be found in~~ ~~Note 7, “Commitments and Contingencies”, of the Company’s Notes to~~ ~~Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.~~

On April 25, 2013, AVX was named as a defendant in a patent infringement case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. vv. AVX Corporation. This case alleged that certain AVX products infringe on one or more of ~~nine~~six Greatbatch patents. On January 26, 2016, ~~(following the Company’s issuance of its quarterly earnings release),~~ the jury returned a verdict in favor of the plaintiff in the first phase of a segmented trial and found damages to Greatbatch in the amount of $37.5 million. AVX is reviewing ~~the~~this initial verdict, ~~and~~ consulting with its legal advisors on what action AVX may take in ~~response.~~response, and continuing to litigate the rest of the case.

On September 2, 2014, a subsidiary of AVX, American Technical Ceramics (“ATC”), was named as a defendant in a patent infringement case filed in the United States District Court offor the District of Delaware captioned Presidio Components, Inc. v. American Technical Ceramics Corp. This case ~~alleges~~alleged that certain products of ATC’s infringe on a Presidio patent. On April 18, 2016, the jury returned a verdict in favor of the plaintiff and found damages to Presidio in the amount of $2.2 million. On August 17, 2016, the court issued a permanent injunction prohibiting ATC from manufacturing or selling the related product after November 16, 2016 and awarded Presidio damages related to ATC’s sale of such products from February 21, 2016 through November 16, 2016. Subsequently, on October 21, 2016, the Federal Circuit Court granted AVX’s request for a stay of the permanent injunction whereby AVX ~~believes it~~may continue to sell the disputed product until March 17, 2017 to anyone who was a customer prior to June 17, 2016. Any sales subsequent to November 16, 2016 pursuant to the stay of the permanent injunction are subject to court mandated intellectual property damages for each product sold. AVX is taking an estimated reserve for damages on all pre- and post-verdict sales of product subject to that litigation in the event that the verdict withstands future challenges. AVX has ~~meritorious defenses and intends to vigorously defend~~appealed the ~~case.~~verdict.

~~As of December 31, 2015, we~~We had total reserves of ~~$39.3~~$39.7 million ~~with respect~~and $67.8 million as of March 31, 2016 and December 31, 2016, respectively, related to the two intellectual property cases discussed above. The amounts recorded are based on estimated outcomes. Amounts recorded are reviewed periodically and adjusted to reflect additional information that becomes available. Accordingly, these costs could differ from our current estimates.

Saskatchewan and ~~Manitoba.~~ ~~In addition, in the quarter ended September 30, 2015, AVX was named as a co-defendant in two cases filed in the United States alleging violations of United States antitrust laws asserting that AVX~~Manitoba and ~~numerous other companies were participants in alleged price-fixing in the resistor market.~~ ~~These~~these cases are at the initial stages. AVX believes it has meritorious defenses and intends to vigorously defend the cases.

Information related to new Statement of Financial Accounting Standards and Financial Accounting Standards Board Staff Positions that we have recently adopted or are currently reviewing can be found in Note 1, “Summary of Significant Accounting ~~Policies”,~~Policies,” of the Notes to Consolidated Financial Statements and in “Critical Accounting Policies and Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015,~~2016, as well as in Note 1, “Critical Accounting Policies and ~~Estimates”,~~Estimates,” in the Notes to the Consolidated Financial Statements in this Form 10-Q. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015.~~2016.

Our sales are denominated in various foreign currencies in addition to the U.S. ~~dollar.~~Dollar. Certain manufacturing and operating costs denominated in local currencies are incurred in Europe, Asia, Mexico, and Central and South America. Additionally, purchases of resale products from Kyocera may be denominated in ~~Japanese yen.~~Yen. As a result, fluctuations in currency exchange rates affect our operating results and cash flow. In order to minimize the effect of movements in currency exchange rates, we periodically enter into forward exchange contracts to hedge external and intercompany foreign currency transactions. We do not hold or issue derivative financial instruments for speculative purposes. Accordingly, we have hedging commitments to cover a portion of our exchange risk on purchases, operating expenses, and sales. There have been no material net changes in our exposure to foreign currency exchange rate as reflected in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015.~~2016. See Note 11 of our Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for further discussion of derivative financial instruments.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered in this report, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

In addition, there were no changes in our internal control over financial reporting during the third quarter of fiscal ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Please refer to ~~Part I Item 3, “Legal Proceedings”, in~~ ~~our Annual Report on Form 10-K for the fiscal year ended March 31, 2015. In addition, s~~ee Note 7, “Commitments and ~~Contingencies”,~~Contingencies,” in our Notes to Consolidated Financial Statements in Part I, Item 1 to this Form 10-Q for a discussion of our involvement in certain environmental and other pending legal proceedings.

Please refer to Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015~~2016 for information regarding factors that could affect our results of operations, financial condition, and liquidity. For an update of risk factors relating to our potential environmental liabilities as described under the caption “Changes in our environmental liability and compliance obligations may adversely impact our operations” in the Risk Factors section on our Annual Report on Form 10-K, see Note 7, “Commitments and ~~Contingencies”,~~Contingencies,” in our Notes to Consolidated Financial Statements in Part I, Item 1 to this Form 10-Q.

On October 17, 2007, the Board of Directors of the Company authorized the repurchase of 5,000,000 shares of our ~~purchases of~~ common stock ~~during~~from time to time in the ~~quarter.~~open market. The repurchased shares are held as treasury stock and are available for general corporate purposes. We did not make any repurchases in the quarter ended December 31, 2016.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, and the undersigned also has signed this report in his capacity as the registrant’s ~~Chief Financial Officer~~Vice President of Corporate Finance (Principal ~~Financial~~Accounting Officer).


		Page
PART I:	Financial Information:

ITEM 1.	Financial Statements (unaudited):
	Consolidated Balance Sheets as of March 31, ~~2015~~2016 and December 31, ~~2015~~2016	3
	Consolidated Statements of Operations for the three and nine months ended December 31, ~~2014~~2015 and ~~201~~20165	4
	Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, ~~2014~~2015 and ~~2015~~2016	5
	Consolidated Statements of Cash Flows for the nine months ended December 31, ~~2014~~2015 and ~~2015~~2016	6
	Notes to Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	29
ITEM 4.	Controls and Procedures	29

PART II:	Other Information:

ITEM 1.	Legal Proceedings	2930
ITEM 1A.	Risk Factors	2930
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
ITEM 6.	Exhibits	30
Signature		31


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				December 31,				December 31,
	2014		2015		2014		2015		2015		2016		2015		2016
Stock rotation and ship from stock and debit:
Beginning Balance	$	18,104	$	16,171	$	17,138	$	16,378	$	16,171	$	18,803	$	16,378	$	14,314
Charges		8,377		7,309		27,428		22,157		7,309		5,362		22,157		19,649
Applications		(8,385)		(8,511)		(26,470)		(23,566)		(8,511)		(6,600)		(23,566)		(16,398)
Ending Balance	$	18,096	$	14,969	$	18,096	$	14,969	$	14,969	$	17,565	$	14,969	$	17,565


	March 31, 2015		December 31, 2015		March 31, 2016		December 31, 2016
Finished goods	$	102,212	$	80,113	$	85,617	$	78,374
Work in process		106,627		99,443		101,436		102,303
Raw materials and supplies		327,073		310,737		297,215		282,653
	$	535,912	$	490,293	$	484,268	$	463,330


	As of		As of		As of		As of
	March 31, 2015		December 31, 2015		March 31, 2016		December 31, 2016
Assets:
Passive Components	$	742,543	$	711,472	$	618,642	$	573,775
Interconnect						49,646		48,211
KED Resale		39,900		25,146		30,179		29,325
Interconnect		46,111		48,043
Cash, A/R, and investments in securities		1,182,527		1,153,759		1,203,051		1,288,377
Goodwill - Passive components		202,774		202,774		202,774		202,774
Goodwill - Interconnect		10,277		10,277		10,277		10,277
Corporate activities		234,883		202,093		295,250		294,700
Total	$	2,459,015	$	2,353,564	$	2,409,819	$	2,447,439


				Total number of	Maximum number
				shares purchased	of shares that may
	Total number			as part of publicly	yet be purchased
	of shares	Average price		announced plans	under the plans or
Period	purchased	paid per share		or programs (1)	programs (1)
10/01/15 - 10/31/15	46,900	$	13.51	46,900	3,723,369
11/01/15 - 11/30/15	190,801		13.35	190,801	3,532,568
12/01/15 - 12/31/15	32,000		13.32	32,000	3,500,568
Total	269,701	$	13.37	269,701	3,500,568



	Held-to-Maturity				Held-to-Maturity
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	489,757	$	490,018	$	624,641	$	624,908
Due after one year through five years		85,691		85,425		-		-
Total	$	575,448	$	575,443	$	624,641	$	624,908


	Three Months Ended
(in thousands)	December 31,
Sales Revenue	2014		2015
Ceramic Components	$	48,289	$	45,617
Tantalum Components		82,876		75,344
Advanced Components		88,668		75,155
Total Passive Components		219,833		196,116
KDP and KCD Resale		52,761		59,064
KCP Interconnect Resale		16,958		5,211
Total KED Resale		69,719		64,275
AVX Interconnect		32,135		26,656
Total Revenue	$	321,687	$	287,047


ITEM 6.	EXHIBITS
10.1 31.1	Technology Disclosure Agreement, effective as of October 7, 2016, between the Company and Kyocera Corporation. Certification of John Sarvis, ~~President and~~Chairman, Chief Executive Officer and President, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated February ~~5, 2016.~~9, 2017.
31.2	Certification of Kurt P. Cummings, Executive Vice President, Chief Financial Officer and Treasurer, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated February ~~5, 2016.~~9, 2017.
32.1	Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - John Sarvis and Kurt P. Cummings.
101	The following financial information from our Quarterly Report on Form 10-Q for the quarter ended December 31, ~~2015,~~2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operation, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements.



AVX Corporation

By:	/s/ ~~Kurt P. Cummings~~Michael E. Hufnagel


	~~Kurt P. Cummings~~Michael E. Hufnagel
	Vice President of Corporate Finance
	~~Chief Financial Officer,~~
	~~Treasurer and Secretary~~