| Background and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
| Mar. 31, 2017 |
| Accounting Policies [Abstract] | |
| Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the Company, its wholly owned subsidiaries, its majority owned subsidiaries, and variable interest entities (“VIEs”) of which the Company is the primary beneficiary. The Company uses the equity method of accounting for equity investments where it exercises significant influence but does not hold a controlling financial interest. Such investments are recorded in Other assets in the Consolidated Balance Sheets and the related equity in earnings from these investments are included in Equity in net loss of unconsolidated affiliates in the Consolidated Statements of Operations. All intercompany balances and transactions have been eliminated in consolidation. |
| Estimates | Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the allowance for doubtful accounts, valuation of inventory, useful lives of property, plant and equipment and amortizing intangible assets, determination of the proper accounting for leases, valuation of equity method investments, goodwill, intangible assets and other long-lived assets for impairment, accounting for stock-based compensation and the ESOP, valuation of the redeemable common stock and redeemable convertible preferred stock, determination of allowances for sales returns, rebates and discounts, determination of the valuation allowance, if any, on deferred tax assets, and reserves for uncertain tax positions. Management’s estimates and assumptions are evaluated on an ongoing basis and are based on historical experience, current conditions and available information. Management believes the accounting estimates are appropriate and reasonably determined; however, due to the inherent uncertainties in making these estimates, actual results could differ from those estimates. |
| Receivables and Allowance for Doubtful Accounts | Receivables and Allowance for Doubtful Accounts - Receivables include trade receivables, refundable income taxes and other miscellaneous receivables, net of an allowance for doubtful accounts. Receivables at March 31, 2017 and 2016 are as follows:
(Amounts in thousands)
2017
2016
Trade receivables
$
160,655
$
158,664
Refundable income taxes
1,468
19,783
Other miscellaneous receivables
6,820
8,436
Receivables
$
168,943
$
186,883
Credit is extended to customers based on an evaluation of their financial condition and collateral is generally not required. The evaluation of the customer’s financial condition is performed to reduce the risk of loss. Accounts receivable are evaluated for collectability based on numerous factors, including the length of time individual receivables are past due, past transaction history with customers, their credit worthiness and the economic environment. This estimate is periodically adjusted when management becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in historical collection patterns. |
| Inventories | Inventories - Inventories are stated at the lower of cost or market value. The Company’s inventories are maintained on the first-in, first-out (“FIFO”) method. Costs include the cost of acquiring materials, including in-bound freight from vendors and freight incurred for the transportation of raw materials, tooling or finished goods between the Company’s manufacturing plants and its distribution centers, direct and indirect labor, factory overhead and certain corporate overhead costs related to the production of inventory. The portion of fixed manufacturing overhead that relates to capacity in excess of our normal capacity is expensed in the period in which it is incurred and is not included in inventory. Market value of inventory is established based on the lower of cost or estimated net realizable value, with consideration given to deterioration, obsolescence, and other factors. The Company periodically evaluates the carrying value of inventories and adjustments are made whenever necessary to reduce the carrying value to net realizable value. |
| Property, Plant and Equipment and Depreciation Method | Property, Plant and Equipment and Depreciation Method - Property, plant and equipment are recorded at cost less accumulated depreciation, with the exception of assets acquired through acquisitions, which are initially recorded at fair value. Equipment acquired under capital lease is recorded at the lower of fair market value or the present value of the future minimum lease payments. Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the related assets or the lease term, if shorter, as follows:
Years
Buildings
40 — 45
Machinery and equipment
3 — 18
Leasehold improvements
Shorter of useful life or life of lease Costs of additions and major improvements are capitalized, whereas maintenance and repairs that do not improve or extend the life of the asset are charged to expense as incurred. When assets are retired or disposed, the cost and related accumulated depreciation are removed from the asset accounts and any resulting gain or loss is reflected in Loss on disposal of assets and costs from exit and disposal activities in our Consolidated Statements of Operations. Construction in progress is also recorded at cost and includes capitalized interest, capitalized payroll costs and related costs such as taxes and other fringe benefits. Interest capitalized was $0.6 million, $0.4 million, and $0.5 million during the fiscal years ended March 31, 2017, 2016, and 2015, respectively. |
| Goodwill | Goodwill - The Company records acquisitions resulting in the consolidation of an enterprise using the acquisition method of accounting. Under this method, the Company records the assets acquired, including intangible assets that can be identified, and liabilities assumed based on their estimated fair values at the date of acquisition. The purchase price in excess of the fair value of the identifiable assets acquired and liabilities assumed is recorded as goodwill. Goodwill is reviewed annually for impairment as of March 31 or whenever events or changes in circumstances indicate the carrying value may be greater than fair value. The goodwill impairment analysis is comprised of two steps. The first step requires the comparison of the fair value of the applicable reporting unit to its respective carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then the Company would record an impairment loss equal to the difference. With respect to this testing, a reporting unit is a component of the Company for which discrete financial information is available and regularly reviewed by management. Implied fair value of goodwill is determined by considering both the income and market approach. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. The fair value estimates are based on assumptions management believes to be reasonable, but are inherently uncertain. For the fiscal 2017, ADS completed a quantitative fair value assessment of the International reporting unit and determined no impairment charge was required. GAAP allows entities testing goodwill for impairment the option of performing a qualitative assessment before calculating the fair value of a reporting unit for the goodwill impairment test. If the qualitative assessment is performed, an entity is no longer required to calculate the fair value of a reporting unit unless the entity determines that, based on that assessment, it is more likely than not that its fair value is less than its carrying amount. ADS completed a quantitative fair value measurement of the Domestic reporting unit in March 31, 2016. The test indicated that the fair value of the Domestic reporting unit exceeded the carrying value, indicating that no impairment existed. ADS applied the qualitative assessment to the Domestic reporting unit for the annual impairment test performed as of March 31, 2017. For the current year test, ADS assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting unit as compared to its March 31, 2016 quantitative fair value measurement. The results of this assessment indicated that it is not more likely than not that the reporting unit fair value is less than the reporting unit carrying value. The Company did not incur any impairment charges for goodwill in the fiscal years ended March 31, 2017, 2016, and 2015. |
| Intangible Assets - Definite-Lived | Intangible Assets — Definite-Lived- Definite-lived intangible assets are amortized using the straight-line method over their estimated useful lives, and are tested for recoverability whenever events or changes in circumstances indicate that carrying amounts of the asset group may not be recoverable. Asset groups are established primarily by determining the lowest level of cash flows available. If the estimated undiscounted future cash flows are less than the carrying amounts of such assets, an impairment loss is recognized to the extent the fair value of the asset less any costs of disposition is less than the carrying amount of the asset. Determining the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions. |
| Intangible Assets - Indefinite-Lived | Intangible Assets — Indefinite-Lived- Indefinite-lived intangible assets are tested for impairment annually as of March 31 or whenever events or changes in circumstances indicate the carrying value may be greater than fair value. Determining the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions. The Company bases its fair value estimates on assumptions it believes to be reasonable, but that are inherently uncertain. To estimate the fair value of these indefinite-lived intangible assets, the Company uses an income approach, which utilizes a market derived rate of return to discount anticipated performance. An impairment loss is recognized when the estimated fair value of the intangible asset is less than the carrying value. GAAP allows entities testing indefinite-lived intangible assets for impairment the option of performing a qualitative assessment before calculating the fair value of the indefinite-lived intangible assets for the impairment test. If the qualitative assessment is performed, an entity is no longer required to calculate the fair value of an indefinite-lived intangible assets unless the entity determines that, based on that assessment, it is more likely than not that its fair value is less than its carrying amount. ADS completed a quantitative fair value measurement of indefinite-lived trademarks in March 31, 2016. The test indicated that the fair value of the indefinite-lived trademarks substantially exceeded the carrying value, indicating that no impairment existed. ADS applied the qualitative assessment to specific trademarks for the annual impairment test performed as of March 31, 2017. For the current year test, ADS assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting unit as compared to its March 31, 2016 quantitative fair value measurement. The results of this assessment indicated that it is not more likely than not that the trademarks fair value is less than the reporting unit carrying value. The Company did not incur any impairment charges for Intangible assets in the fiscal years ended March 31, 2017, 2016, and 2015. |
| Other Assets | Other Assets - Other assets include investments in unconsolidated affiliates accounted for under the equity method, cash surrender value of officer life insurance on key senior management executives, capitalized software development costs, deposits, Central parts, and other miscellaneous assets. The Company capitalizes development costs for internal use software. Capitalization of software development costs begins in the application development stage and ends when the asset is placed into service. The Company amortizes such costs using the straight-line method over estimated useful lives of 2 to 10 years, which is included in General and administrative expense, Selling expense or Cost of goods sold within the Consolidated Statements of Operations depending on the nature of the asset and its intended use. Central parts represent spare production equipment items which are used to replace worn or broken production equipment parts and help reduce the risk of prolonged equipment outages. The cost of Central parts is amortized on a straight line basis over estimated useful lives of 8 to 30 years. The Company evaluates its investments in unconsolidated affiliates for impairment whenever events or changes in circumstances indicate that the carrying amount might not be recoverable, and recognizes an impairment loss when a decline in value below carrying value is determined to be other-than-temporary. Under these circumstances, the Company would adjust the investment down to its estimated fair value, which then becomes its new carrying value. For the fiscal years ended March 31, 2017 and 2016, the Company recorded an impairment charge of $1.3 million and $4.0 million, respectively, related to its investment in the South American Joint Venture. The impairment charge is included in Equity in net loss of unconsolidated affiliates in the Consolidated Statements of Operations. Other assets as of the fiscal years ended March 31 consisted of the following:
(Amounts in thousands)
2017
2016
Investments in unconsolidated affiliates
$
8,986
$
13,188
Cash surrender value of officer life insurance
12,028
10,739
Capitalized software development costs, net
7,980
7,264
Deposits
1,289
1,319
Central parts
1,856
1,040
Other
14,398
11,706
Total other assets
$
46,537
$
45,256
The following table sets forth amortization expense related to Other assets in each of the fiscal years ended March 31:
(Amounts in thousands)
2017
2016
2015
Capitalized software development costs
$
3,372
$
3,872
$
3,550
Central parts
54
362
55
Other
1,689
1,898
1,977 |
| Leases | Leases - Leases are reviewed for capital or operating classification at their inception. The Company uses the lower of the rate implicit in the lease or its incremental borrowing rate in the assessment of lease classification and assumes the initial lease term includes cancellable and renewal periods that are reasonably assured. For leases classified as capital leases at lease inception, the Company records a capital lease asset and lease financing obligation equal to the lesser of the present value of the minimum lease payments or the fair market value of the leased asset. The capital lease asset is recorded in Property, plant and equipment, net and amortized to its expected residual value at the end of the lease term using the straight-line method, and the lease financing obligation is amortized using the effective interest method over the lease term with the rental payments being allocated to principal and interest. For leases classified as operating leases, the Company records rent expense over the lease term using the straight-line method. |
| Foreign Currency Translation | Foreign Currency Translation - Assets and liabilities of foreign subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are translated at a monthly average exchange rate and equity transactions are translated using either the actual exchange rate on the day of the transaction or a monthly average historical exchange rate. For the fiscal years ended March 31, 2017, 2016, and 2015, the Company’s Accumulated other comprehensive loss (“AOCL”) consisted entirely of foreign currency translation gains and losses. |
| Net Sales | Net Sales - The Company sells pipe products and related water management products. ADS ships products to customers predominantly by internal fleet and to a lesser extent by third-party carriers. The Company does not provide any additional revenue generating services after product delivery. Sales, net of sales tax and allowances for returns, rebates and discounts are recognized from product sales when persuasive evidence of an arrangement exists, delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured. ADS recognizes revenue when both persuasive evidence of an arrangement and the price is fixed or determinable. Title to the products and risk of loss generally passes to the customer upon delivery. ADS performs credit check procedures on all new customers, establishes credit limits accordingly, and monitors the creditworthiness of existing customers, which is the basis for concluding that collectability is reasonably assured. |
| Shipping Costs | Shipping Costs - Shipping costs are incurred to physically move raw materials, tooling and products between manufacturing and distribution facilities and from production or distribution facilities to customers. Shipping costs for the fiscal years ended March 31, 2017, 2016, and 2015 were $120.4 million, $120.5 million, and $121.0 million, respectively, and are included in Cost of goods sold. In certain instances, the Company bills shipping costs to customers. Shipping costs billed to customers were $5.5 million, $7.0 million, and $9.3 million during 2017, 2016 and 2015, respectively, and are included in Net sales. |
| Stock-Based Compensation | Stock-Based Compensation - See Note 18. Stock-Based Compensation for information about our stock-based compensation award programs and related accounting policies. The Company has several programs for stock-based payments to employees and directors, including stock options and restricted stock. Stock-based compensation expense is recorded in General and administrative expenses, Selling expenses and Cost of goods sold in the Consolidated Statements of Operations. The Company recognized stock-based compensation expense (benefit) in the following line items on the Consolidated Statements of Operations for the fiscal years ended March 31, 2017, 2016, and 2015:
(Amounts in thousands)
2017
2016
2015
Component of income before income taxes:
Cost of goods sold
$
177
$
(300
)
$
1,100
Selling expenses
177
(500
)
1,500
General and administrative expenses
7,953
(5,068
)
21,647
Total stock-based compensation expense (benefit)
$
8,307
$
(5,868
)
$
24,247
The following table summarizes stock-based compensation expense (benefit) by award type for the fiscal years ended March 31, 2017, 2016, and 2015:
(Amounts in thousands)
2017
2016
2015
Stock-based compensation expense (benefit):
Liability-classified Stock Options
$
4,936
$
(6,784
)
$
21,666
Equity-classified Stock Options
108
—
—
Restricted Stock
1,945
916
1,681
Non-Employee Director
1,318
—
900
Total stock-based compensation expense (benefit)
$
8,307
$
(5,868
)
$
24,247
Stock Options Liability-Classified Options – Prior to fiscal 2017, the Company permitted employees to satisfy their personal tax liability associated with the exercise of the stock options through the net settlement of shares in excess of the minimum tax withholding required by law. In addition, prior to the Company’s initial public offering in fiscal 2015, the Company had periodically repurchased shares resulting from option exercises within six months of the exercise date. As such, the Company accounts for all 2000 Plan and 2013 Plan awards issued prior to fiscal 2017 as liability-classified awards. Liability-classified stock option awards are re-measured at fair value at each relevant reporting date, and the pro-rata vested portion of the award is recognized as a liability. The stock-based compensation liability associated with stock options expected to vest within the next twelve months is recorded in Current portion of liability-classified stock-based awards, with the portion related to those expected to vest beyond twelve months recorded in Other liabilities in the Consolidated Balance Sheets. When stock options are exercised, the liability is reclassified to additional paid in capital at fair value. The proceeds from the exercise are also recorded as additional paid in capital. Compensation expense for stock options is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period of the grant. For liability-classified options, the Company estimates the fair value of stock options using a Black-Scholes option-pricing model at the end of each period. The following table summarizes the assumptions used in estimating the fair value of liability-classified stock options:
2017
2016
2015
Common stock price
$18.70 - $28.17
$18.34 - $33.03
$14.33 - $29.94
Expected stock price volatility
29.6% - 33.0%
31.1% - 39.3%
28.2% - 51.0%
Risk-free interest rate
0.9% - 1.9%
0.5% - 1.5%
0.1% - 1.8%
Weighted-average expected option life (years)
0.5 – 5.1
0.5 – 6.2
0.5 - 7.2
Dividend yield
0.9%
0.9%
0.5%
2000 Plan - The Company’s 2000 stock option plan (“2000 Plan”) provides for the issuance of statutory and non-statutory stock options to management based upon the discretion of the Board of Directors. The plan generally provides for grants with the exercise price equal to fair value on the date of grant, which vest in three equal annual amounts beginning in year five and expire after approximately 10 years from issuance. The Company had approximately 1.1 million shares available for grant under the 2000 Plan as of March 31, 2017. The stock option activity for the fiscal year ended March 31, 2017 is summarized as follows:
(Share amounts in thousands)
Number of Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Term (in years)
Outstanding at beginning of year
515
$
11.82
4.2
Granted
—
—
—
Exercised
(292
)
10.63
—
Forfeited
(28
)
12.50
—
Outstanding at end of year
195
13.31
5.4
Vested at end of year
136
12.26
4.7
Unvested at end of year
59
15.74
7.0
Fair value of options granted during the year
$
—
All outstanding options are expected to vest. The following table summarizes information about the unvested stock option grants as of the fiscal year ended March 31, 2017:
(Share amounts in thousands)
Number of Shares
Weighted Average Grant Date Fair Value
Unvested at beginning of year
76
$
6.76
Granted
—
—
Vested
—
—
Forfeitures
(17
)
6.76
Unvested at end of year
59
$
6.76
As of March 31, 2017, there was a total of $0.3 million of unrecognized compensation expense related to unvested stock option awards under the 2000 plan that will be recognized as an expense as the awards vest over the remaining weighted average service period of 1.3 years. The total fair value of liability-classified options issued under the 2000 Plan that vested during the fiscal year ended March 31, 2015 was $8.1 million. No options vested during the fiscal years ended March 31, 2017 and 2016. The weighted average grant date fair value of stock options granted during the fiscal year ended March 31, 2015 was $6.76. No options were granted during the fiscal years ended March 31, 2017 and 2016. The aggregate intrinsic value for options outstanding and currently exercisable as of March 31, 2017 was $1.7 million and $1.3 million, respectively. The total intrinsic value of options exercised during the fiscal years ended March 31, 2017, 2016, and 2015 were $3.7 million, $3.7 million and $3.4 million, respectively. 2013 Plan - The Company’s 2013 stock option plan (“2013 Plan”) provides for the issuance of non-statutory common stock options to management subject to the Board’s discretion. The plan generally provides for grants with the exercise price equal to fair value on the date of grant. The grants generally vest in five equal annual amounts beginning in year one and expire after approximately 10 years from issuance. Options issued to the Chief Executive Officer vest equally over four years and expire after approximately 10 years from issuance. In May 2014, the Board of Directors approved the increase of shares available for granting under the 2013 plan to 1.4 million shares. The Company had 1.0 million shares available for grant under the 2013 Plan as of March 31, 2017. The liability-classified stock option activity for the fiscal year ended March 31, 2017 is summarized as follows:
(Share amounts in thousands)
Number of Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Term (in years)
Outstanding at beginning of year
1,911
$
13.64
7.4
Issued
—
—
—
Exercised
(66
)
13.64
—
Forfeited
(99
)
13.64
—
Outstanding at end of year
1,746
13.64
6.0
Vested at end of year
1,125
13.64
6.0
Unvested at end of year
621
13.64
6.0
Fair value of options granted during the year
$
—
All outstanding options are expected to vest. The following table summarizes information about the unvested stock option grants as of the fiscal year ended March 31, 2017:
(Share amounts in thousands)
Number of Shares
Weighted Average Grant Date Fair Value
Unvested at beginning of year
1,095
$
6.22
Vested
(375
)
—
Forfeited
(99
)
6.22
Unvested at end of year
621
$
6.22
As of March 31, 2017, there was a total of $3.6 million of unrecognized compensation expense related to unvested stock option awards under the 2013 Plan that will be recognized as an expense as the awards vest over the remaining weighted average service period of 1.1 years. The aggregate intrinsic value for options outstanding and currently exercisable as of March 31, 2017 was $14.4 million and $9.3 million, respectively. The total fair value of options that vested during the fiscal years ended March 31, 2017, 2016, and 2015 were $3.4 million, $3.6 million, and $7.2 million, respectively. The total intrinsic value of options exercised during the fiscal year ended March 31, 2017 was $0.8 million. Equity-Classified Options - The Company accounts for awards under the 2013 Plan granted during the fiscal year ended March 31, 2017 as equity-classified awards as employees are no longer permitted to satisfy their personal tax liability in excess of the minimum statutory withholding. Equity-classified stock option awards are measured based on the grant-date estimated fair value of each award. Compensation expense for stock options is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period of the grant. The Company determines the fair value of the options based on the Black-Scholes option pricing model at the grant date. This methodology requires significant inputs including the price of the Company’s common stock, risk-free interest rate, dividend yield and expiration date. The following table summarizes the assumptions used in estimating the fair value of the equity-classified stock options:
2017
Common stock price
$24.20
Expected stock price volatility
31.5% - 35.6%
Risk-free interest rate
2.0% - 2.2%
Weighted-average expected option life (years)
4.9 – 6.1
Dividend yield
1.0%
The equity-classified stock option activity for the fiscal year ended March 31, 2017 is summarized as follows:
(Share amounts in thousands)
Number of Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Term (in years)
Outstanding at beginning of year
—
—
Granted
514
$
24.20
—
Exercised
—
—
—
Forfeited
—
—
—
Outstanding at end of year
514
24.20
9.0
Vested at end of year
15
24.20
9.0
Unvested at end of year
499
24.20
9.0
Fair value of options granted during the year
$
7.81
All outstanding options are expected to vest except options granted to an executive with a planned retirement. The following table summarizes information about the unvested stock option grants as of the fiscal year ended March 31, 2017:
(Share amounts in thousands)
Number of Shares
Weighted Average Grant Date Fair Value
Unvested at beginning of year
—
—
Granted
514
$
7.81
Vested
(15
)
6.72
Forfeited
—
—
Unvested at end of year
499
$
7.84
As of March 31, 2017, there was a total of $2.6 million of unrecognized compensation expense related to unvested equity-classified stock option awards that will be recognized as an expense as the awards vest over the remaining weighted average service period of 2.9 years. The weighted average grant fair value of stock options granted during the fiscal years ended March 31, 2017, 2016, and 2015 were $7.81, $0.00, and $0.00, respectively. The total fair value of options that vested during the fiscal years ended March 31, 2017, 2016, and 2015 were $0.1 million, less than $0.1 million, and less than $0.1 million, respectively. There were no options exercised during the fiscal years ended March 31, 2017, 2016, and 2015. Restricted Stock On September 16, 2008, the Board of Directors adopted the restricted stock plan, which provides for the issuance of restricted stock awards to certain key employees. The restricted stock generally vest ratably over a five-year period from the original restricted stock grant date, contingent on the employee’s continuous employment by ADS. In certain instances, however, a portion of the grants vested immediately or for accounting purposes were deemed to have vested immediately, including the grants to the Chief Executive Officer, which do not have a substantial risk of forfeiture as a result of different vesting provisions. Under the restricted stock plan, vested shares are considered issued and outstanding. Employees with restricted stock have the right to dividends on the shares awarded (vested and unvested) in addition to voting rights on non-forfeited shares. Prior to the Company’s initial public offering in fiscal 2015, the Company periodically repurchased shares from employees within six months of the shares vesting. As such, for the periods prior to the Company’s initial public offering, the restricted stock awards were accounted for as liability-classified awards. In the periods subsequent to the initial public offering, the Company discontinued repurchasing employee held restricted shares due to the existence of a public market for the shares. Accordingly, upon the initial public offering the Company has modified the restricted stock awards from being accounted for as liability-classified to equity-classified awards and reclassified the carrying amount of the awards of $4.8 million to Paid-in capital in the Consolidated Balance Sheets. The restricted stock has been accounted for as equity-classified awards for the periods subsequent to the initial public offering. The fair value of restricted stock is based on the fair value of the Company’s common stock. Compensation expense is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period of the grant. The Company had approximately 0.2 million shares available for grant under this plan as of March 31, 2017. The information about the unvested restricted stock grants as of March 31, 2017 is as follows:
(Share amounts in thousands)
Number of Shares
Weighted Average Grant Date Fair Value
Unvested at beginning of year
112
$
12.65
Granted
191
24.20
Vested
(49
)
16.15
Forfeited
—
Unvested at end of year
254
$
21.92
The Company expects all restricted stock grants to vest. At March 31, 2017, there was approximately $3.5 million of unrecognized compensation expense related to the restricted stock that will be recognized over the weighted average remaining service period of 2.4 years. During the fiscal year ended March 31, 2017, the weighted average grant date fair value of restricted stock granted was $24.20. No restricted stock was granted during the fiscal years ended March 31, 2016 and 2015. During the fiscal years ended March 31, 2017, 2016, and 2015 the total fair value of restricted stock that vested was $1.2 million, $1.1 million and $1.9 million, respectively. Non-Employee Director Compensation Plan On June 18, 2014, the Company amended its then-existing Stockholders’ Agreement to authorize 0.3 million shares of restricted stock to be granted to non-employee members of its Board of Directors. The shares typically will vest one year from the date of issuance. Under this stock plan, the vested shares granted are considered issued and outstanding. Non-employee directors with this stock have the right to dividends on the shares awarded (vested and unvested) in addition to voting rights. The Company has determined that the restricted stock granted to directors should be accounted for as equity-classified awards. The Company had approximately 0.2 million and 0.2 million shares available for grant under this plan as of March 31, 2017 and 2016. The following table summarizes information about the unvested Non-Employee Director Compensation stock grants as of March 31, 2017 :
2017
(Share amounts in thousands)
Number of Shares
Weighted Average Grant Date Fair Value
Unvested at beginning of year
—
—
Granted
77
$
24.20
Vested
(37
)
24.20
Unvested at end of year
40
$
24.20
As of March 31, 2017, there was approximately $0.5 million of unrecognized compensation expense related to this restricted stock that will be recognized over the weighted average remaining service period of 0.6 years. |
| Advertising | Advertising - The Company expenses advertising costs as incurred. Advertising costs are recorded in Selling expenses in the Consolidated Statements of Operations. The total advertising costs were $3.1 million, $3.2 million, and $2.5 million for the fiscal years ended March 31, 2017, 2016, and 2015, respectively. |
| Self-Insurance | Self-Insurance - The Company is self-insured for short term disability and medical coverage it provides for substantially all eligible employees. The Company is self-insured for medical claims up to the individual and aggregate stop-loss coverage limits. The Company accrues for claims incurred but not reported based on an estimate of future claims related to events that occurred prior to the fiscal year end if it has not met the aggregate stop-loss coverage limit. Amounts expensed totaled $39.5 million, $37.5 million, and $32.0 million for the fiscal years ended March 31, 2017, 2016, and 2015, respectively, of which employees contributed $5.1 million, $4.5 million, and $4.1 million, respectively. ADS is also self-insured for various other general insurance programs to the extent of the applicable deductible limits on the Company’s insurance coverage. These programs include primarily automobile, general liability and employment practices coverage with deductibles ranging from $0.3 million to $0.5 million per occurrence or claim incurred. Amounts expensed during the period, including an estimate for claims incurred but not reported at year end, were $1.8 million, $2.1 million, and $0.6 million, for the years ended March 31, 2017, 2016, and 2015, respectively. ADS is also self-insured for workers’ compensation insurance with stop-loss coverage for claims that exceed $0.3 million per incident up to the respective state statutory limits. Amounts expensed, including an estimate for claims incurred but not reported, were $2.1 million, $3.9 million, and $1.4 million for the fiscal years ended March 31, 2017, 2016, and 2015, respectively. |
| Income Taxes | Income Taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized and represent the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. They are measured using the enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The deferred income tax provision represents the change during the reporting period in the deferred tax assets and deferred tax liabilities. Penalties and interest recorded on income taxes payable are recorded as part of Income tax expense. The Company determines whether an uncertain tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation process, based upon the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. |
| Fair Values | Fair Values - The fair value framework requires the categorization of assets and liabilities into three levels based upon assumptions (inputs) used to price 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: Level 1 — Unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 — Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. Level 3 — Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. ADS’s policy for determining when transfers between levels have occurred is to use the actual date of the event or change in circumstances that caused the transfer. |
| Concentrations of Risk | Concentrations of Risk - The Company has a large, active customer base of approximately twenty thousand customers with two customers, Ferguson Enterprises and HD Supply Waterworks, each representing more than 10% of annual net sales. Such customers accounted for 23.5%, 21.1%, and 20.3% of fiscal year 2017, 2016 and 2015 net sales, respectively. The Company’s customer base is diversified across the range of end markets that it serves. Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of Receivables. The Company provides its products to customers based on an evaluation of the customers’ financial condition, generally without requiring collateral. Exposure to losses on Receivables is principally dependent on each customer’s financial condition. The Company performs ongoing credit evaluations of its customers. The Company monitors the exposure for credit losses and maintains allowances for anticipated losses. Concentrations of credit risk with respect to Receivables are limited due to the large number of customers comprising the Company’s customer base and their dispersion across many different geographies. One customer, Ferguson Enterprises, accounted for approximately 15.7% and 14.0% of Receivables at March 31, 2017 and 2016, respectively. |
| Derivatives | Derivatives - The Company recognizes derivative instruments as either assets or liabilities and measure those instruments at fair value. ADS uses interest rate swaps, commodity options in the form of collars and swaps, and foreign currency forward contracts to manage various exposures to interest rate, commodity price, and exchange rate fluctuations. These instruments do not qualify for hedge accounting treatment and therefore, gains and losses from contract settlements and changes in fair value of the derivative instruments are recognized in Derivative losses (gains) and other expense (income), net in the Consolidated Statements of Operations. The Company’s policy is to present all derivative balances on a gross basis. The Company also has forward purchase agreements in place with certain resin suppliers for virgin polyethylene resin. The agreements specify a fixed amount of virgin resin material to be purchased at a fixed price for a given period of time in quantities the Company will use in the normal course of business, and therefore, are not subject to the guidance provided in Accounting Standards Codification ASC”) 810-15 Consolidation |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements Consolidation — In February 2015, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update to make changes to consolidation guidance to address concerns of stakeholders that current accounting for certain legal entities might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. This update is effective for annual periods beginning on or after December 15, 2015, and interim periods within those years, with early adoption permitted. The Company adopted this standard effective April 1, 2016. The update has had no effect on the consolidated financial statements. Debt Issuance Costs — In April 2015, the FASB issued an accounting standards update that requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. In August 2015, the FASB issued an additional accounting standards update that provided supplemental guidance that the SEC would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. These updates are effective for annual periods beginning after December 15, 2015, and interim periods within those years. Early adoption is permitted for financial statements that have not been previously issued. The Company adopted this standard effective April 1, 2016 on a retrospective basis. See Note 12. Debt for additional information about the impact of the adoption of the updates. Deferred Tax Assets and Liabilities — In November 2015, the FASB issued an accounting standards update which requires entities to classify all deferred tax assets and liabilities, as well as any related valuation allowance, as non-current, rather than separately record the current and non-current portions. This update is effective for annual periods beginning on or after December 15, 2016, and interim periods within those years, with early adoption permitted. The amendments in this update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company adopted this standard on April 1, 2016 on a prospective basis and prior periods have not been adjusted. The impact of the adoption of this standard was a reduction to the net current deferred tax assets balance included in Deferred income taxes and other current assets on the Consolidated Balance Sheets from $11.7 million as of March 31, 2016 to zero as of March 31, 2017, with all deferred tax assets and liabilities as of March 31, 2017 now being classified as non-current. The update had no effect on the Company’s Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Cash Flows and Consolidated Statements of Stockholders’ Equity and Mezzanine Equity. Internal-Use Software – In April 2017 the FASB issued an accounting standards update to provide guidance to customers concerning whether a cloud computing arrangement includes a software license. Under this new standard, 1) if a cloud computing arrangement includes a software license, the software license element of the arrangement should be accounted for in a manner consistent with the acquisition of other software licenses, or 2) if the arrangement does not include a software license, the arrangement should be accounted for as a service contract. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2015, including interim reporting periods. The Company adopted the new standard on April 1, 2016 on a prospective basis. The update did not have a material impact on the consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted Revenue Recognition — In May 2014, the FASB issued an accounting standards update which amends the guidance for revenue recognition. This amendment contains principles that will require an entity to recognize revenue to depict the transfer of goods and services to customers at an amount that an entity expects to be entitled to in exchange for goods or services. The amendment sets forth a new revenue recognition model that requires identifying the contract, identifying the performance obligations and recognizing the revenue upon satisfaction of performance obligations. In August 2015, the FASB issued an additional accounting standards update that deferred the effective date of the new revenue standard for public entities to periods beginning after December 15, 2017, with early adoption permitted but not earlier than the original effective date of periods beginning after December 15, 2016. There have also been various additional accounting standards updates issued by the FASB in 2016 that further amend this new revenue standard. The updated standard permits the use of either the retrospective or cumulative effect transition method. The Company expects to adopt this standard effective April 1, 2018. The Company has not yet selected a transition method and is currently evaluating the impact of this amendment on the consolidated financial statements. Measurement of Inventory — In July 2015, the FASB issued an accounting standards update which requires entities to measure most inventory at the lower of cost and net realizable value, simplifying current guidance under which an entity must measure inventory at the lower of cost or market. The determination of market value, under current guidance, is considered unnecessarily complex as there are several potential outcomes based on its definition as replacement cost, net realizable value, or net realizable value less an approximate normal profit margin. Whereas net realizable value, under the update, is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This update is effective for annual periods beginning on or after December 15, 2016, and interim periods within those years, with early adoption permitted. The Company expects to adopt this standard effective April 1, 2017. The Company does not expect the adoption of this new standard to have a material impact on the consolidated financial statements. Leases — In February 2016, the FASB issued an accounting standards update which amends the guidance for leases. This amendment contains principles that will require an entity to recognize most leases on the balance sheet by recording a right-of-use asset and a lease liability, unless the lease is a short-term lease that has an accounting lease term of twelve months or less. The amendment also contains other changes to the current lease guidance that may result in changes to how entities determine which contractual arrangements qualify as a lease, the accounting for executory costs such as property taxes and insurance, as well as which lease origination costs will be capitalizable. The new standard also requires expanded quantitative and qualitative disclosures. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those years, and early adoption is permitted. The updated standard requires the use of the modified retrospective transition method, whereby the new guidance will be applied at the beginning of the earliest period presented in the financial statements of the period of adoption. The modified retrospective transition approach includes certain practical expedients that entities may elect to apply in transition. The Company expects to adopt this standard effective April 1, 2019. The Company has not yet determined whether to apply any of the available practical expedients. The Company has begun the process of reviewing contracts under the new standard to determine the impact the new standard will have on the consolidated financial statements. The Company is also in process of implementing a new software solution to improve the process of accounting for leases under the current and new standard. Stock-Based Compensation — In March 2016, the FASB issued an accounting standards update which is intended to simplify certain aspects of the accounting for stock-based compensation. The Company will adopt the standard on April 1, 2017. This update contains changes to the accounting for excess tax benefits, whereby excess tax benefits will be recognized in the income statement rather than in additional paid-in capital on the balance sheet. This standard is expected to result in increased volatility to the income tax expense in future periods dependent upon the timing of employee exercises of stock options, the price of the Company's common stock and the vesting of restricted stock awards. Excess tax benefits will now be classified as operating cash flows rather than financing cash flows. The amendment also contains potential changes to the accounting for forfeitures, whereby entities can elect to either continue to apply the current GAAP requirement to estimate forfeitures when determining compensation expense, or to alternatively reverse the compensation expense of forfeited awards when they occur. The Company will account for forfeitures as they occur, which may result in expense volatility based on the timing of forfeitures. In addition, the amendment also modifies the net-share settlement liability classification exception for statutory income tax withholdings, whereby the new guidance allows an employer with a statutory income tax withholding obligation to withhold shares with a fair value up to the maximum statutory tax rate in the employee’s applicable jurisdiction. The Company included this provision in awards issued in fiscal 2017 and modified previously issued awards on April 1, 2017. See the note regarding Subsequent Events for further information on the modification. Measurement of Credit Losses — In June 2016, the FASB issued an accounting standards update which provides amended guidance on the measurement of credit losses on financial instruments, including trade receivables. This accounting standards update requires the use of an impairment model referred to as the current expected credit loss model. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those years, and early adoption is permitted for fiscal years beginning after December 15, 2018. The Company expects to adopt this standard effective April 1, 2020. The Company is currently evaluating the impact of this standard on the consolidated financial statements. Cash Flow Classification — In August 2016, the FASB issued an accounting standards update which provides amended guidance on the classification of certain cash receipts and cash payments in the statement of cash flows, including related to debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance and distributions received from equity method investees. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those years, and early adoption is permitted. This amended guidance must be applied retrospectively to all periods presented, but may be applied prospectively if retrospective application would be impracticable. The Company expects to adopt this standard effective April 1, 2018. The Company is currently evaluating the impact of this standard on the consolidated financial statements. Definition of a Business – In January 2017, the FASB issued an accounting standards update to clarify the definition of a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments provide a more robust framework to use in determining when a set of assets and activities is a business. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company expects to adopt this standard effective April 1, 2018. The Company is currently evaluating the impact of this standard on the consolidated financial statements. Goodwill Impairment – In January 2017, the FASB issued an accounting standards update which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under the standards update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments are effect for annual periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company expects to adopt this standard effective April 1, 2020. The Company is currently evaluating the impact of this standard on the consolidated financial statements. With the exception of pronouncements described above, there have been no new accounting pronouncements that have significance, or potential significance, to our consolidated financial statements. |
