Wesco Aircraft Holdings, Inc. (WAIR)

US Securities and Exchange Commission Washington, D. C. C.
20549 ___________________________________________________________________________ FORM10-K/A (Amendment No. 1)(Mark One)
X annual report submitted under Section 13 or 15 (d)
Securities Trading Act or transition report for the fiscal year ended September 30, 2016 under Section 13 or 15 (d)
Document Number of the 19-34 Securities Trading Act on the transition period from the CSRC001-
35253 WESCO Aircraft Holdings Limited(
The exact name of the registrant specified in the articles of association)Delaware 20-5441563 (
Registration status)(I. R. S.
Employer identification number)
California Valencia Stanford Avenue 24911, 91355 (
Address and postal code of main administrative office)(661)775-7200 (
Registrant phone number, including area code)
Securities registered under section 12th (b)
Title of the act: Exchange class name of registered common stock with face value of $0.
The New York Stock Exchange, registered under section 12th, is 001 per share (g)
The point of the bill is: if the registrant is a well, no one indicates by check mark
Well-known experienced issuers as defined in Rule 405 of the Securities Act.
Yes x no? Indicate by check mark whether the registrant does not need to submit a report under Section 13 or section 15 (d)of the Act.
Whether x indicates whether the registrant (1)
All reports requested in Section 13 or 15 have been submitted (d)
Securities Trading Act of 1934 within the first 12 months (
Or a short period of time required for the registrant to submit such reports), and (2)
This filing requirement has been bound for the last 90 days.
Yes x no check mark indicates whether the registrant has submitted and posted electronically on his company\'s website, if any
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Or a shorter time required for the registrant to submit and publish such documents).
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K is not included here and, to the knowledge of the registrant, will not be included in the final proxy or information statement referenced in Part 2 of this Form 10 --
K or any amendments to this form 10K.
Indicate whether the registrant is a large accelerated filer, accelerated filer, or non-accelerated filer by checking the mark
A smaller reporting company.
See the definition of \"large accelerated declarant\", \"accelerated declarant\" and \"small Reporting Company\" in rule 12b
Article 2 of the Securities Trading Act of 1934.
Large accelerated filer x accelerated filer non
Accelerate the preparation of the newspaper (
Do not check if there are smaller reporting companies)
The smaller reporting company indicates whether the registrant is a shell company by checking the mark (
Defined in Rule 12b-2 of the Act).
Yes, the total market value of votes and non-votes as of March 31, 2016
Voting Ordinary Shares held by non-shareholders
The close as of the day was approximately $956,052,000.
Number of shares of common stock (par value $0. 001 per share)
As at November 21, 2016, the proportion of unpaid registrants was 99,012,965 per cent.
Documents incorporated in the reference section of this annual report on Form10-
K by reference incorporated certain information in the final proxy statement of the registrant of the 2017 annual shareholders\' meeting, the registrant intends to file with the Securities and Exchange Commission within 120 days of the end of the registrant\'s fiscal year on September 30, 2016.
In addition to the final proxy statement section specifically incorporated into this report by reference, the final proxy statement is not considered as part of this annual report on Form10 --K.
Description of catalogue Wesco Aircraft Holdings Limited
Is this amendment submitted?
Forms 10-1 to annual reportK/A (
This \"Amendment \")
Revise its annual report to Form 10-
K for the year ended September 30, 2016, originally submitted to the Securities and Exchange Commission on November 28, 2016 (
\"Original filing \").
Due to administrative errors, the report date of the independent certified public accountants under item 8 of the original record was November 17, 2016, not November 28, 2016.
This amendment is only used to provide the report of the independent CPA firm under item 8 as of November 28, 2016 and the relevant consent of the independent CPA firm, as shown in annex 23. 1.
The amendment also includes the newly certified chief executive officer and chief financial officer under the OHS Act under sections 302nd and 906.
The Oakley Act of 20021, 31. 2 and 32. 1.
This amendment does not modify or otherwise Update any other information in the original document, unless described above.
For convenience, the entire annual report on Form 10
Modified K is re-workingfiled.
The first part of the directory page.
Business project 1a.
Item 1b of risk factors.
Staff comments item 2 not resolved
Property item 3.
Legal proceedings 4.
Part V disclosure of mine safety information.
The market of the registrant\'s common stock, related shareholder matters and the issuer\'s purchase of equity securities Project 6.
Selected Financial Data Items 7.
Management\'s Discussion and Analysis of the financial status and results of operating Project 7.
Quantitative and qualitative disclosure of market risk projects.
Financial statements and supplementary data items 9.
Changes in accounting and financial disclosure project 9a and differences with accountants.
Control and procedures
Other information, item 10, Part 3.
Director, executive and corporate governance project 11.
Details of executive compensation 12.
Secured ownership of certain beneficial owners and management and related shareholder matters.
Related party transactions and independence of directors 14.
Major accounting fees and services
Unless otherwise stated in this annual report, certain definitions, the term \"Wesco Aircraft\" means Wesco Aircraft Holdings Limited, our top-
Level holding company, the term \"Wesco\", \"company\", \"we\" and \"our company\" means the Wesco Aircraft and its subsidiaries, including (1)
Wesko aircraft hardware Industry Co. , Ltd. (
Aircraft hardware)
, This is our main historical domestic operating company and is the only member of Haas Group International LLC that we acquired with Haas Group Corporation(
Now Haas Group Co. , Ltd)
And its direct and indirect subsidiaries (
Overall, Haas)
On February 28, 2014, and (2)
Westco aircraft Europe. (
(Europe)
Our main historical foreign-invested company.
\"Fiscal Year\" refers to the year that is closed or closed.
For example, \"fiscal year 2016\" or \"fiscal year 2016\" means the period from October 1-20, 2015 to September 30.
2 directory and precautions for forwarding
This annual report on Form10
K contains forward-
Look at the instructions (
Including the meaning of the private equity litigation Reform Law of 1995)
About Wesco and other matters.
These statements may discuss objectives, intentions and expectations regarding future plans, trends, events, operational results or financial conditions, or in other ways, based on current management beliefs, and the assumptions made by management and the information currently available. Forward-
Finding statements may be accompanied by words such as \"achievement\", \"goal\", \"expectation\", \"belief\", \"possibility\", \"Drive\", \"estimate\", \"expectation\", etc. forecast \",\" future \",\" growth \",\" improvement \",\" increase \",\" intention \",\" possibility \",\" outlook \",\" plan \",\" possibility \"potential \",\" forecast \",\" project \",\" should \",\" target \",\" will \"or similar words, phrases or expressions. These forward-
Many of these risks and uncertainties are beyond our control.
Therefore, you should not rely too much on this statement.
Factors that may lead to significant differences between actual and forward results
Forward-looking statements include, but are not limited to, the following: general economic and industry conditions;
The status of the credit market;
Changes in military spending;
Unique risks to US equipment and service providersS. government;
Risks associated with our long-term cooperationterm, fixed-
No guaranteed price agreement for future sales;
Risks associated with major customer churn, significant reduction in purchase orders for major customers or delays, reductions or cancellations of major projects on which we rely;
Our ability to compete effectively in the industry;
Ability to manage inventory effectively;
Our suppliers are able to provide us with the products we sell in a timely, sufficient quantity and/or at a reasonable cost;
Ability to maintain an effective information technology system;
Ability to retain key personnel;
Risks related to our international business, including foreign exchange liquidity risks;
Risks associated with our assumptions related to key accounting estimates (
Including goodwill)
Legal proceedings;
Our dependence on third
Express delivery company;
Risk of fuel price;
Build and maintain the ability to have effective internal control over financial reporting;
Our financial performance fluctuates from the period-to-period;
Environmental risks;
Risks related to the handling, transportation and storage of chemical products;
Risks related to the aerospace industry and their regulation;
Risks related to our debt;
Other risks and uncertainties.
The list of the above factors is not exhaustive.
You should carefully consider the above factors and other risks and uncertainties that affect our business, including those described in Part 1a.
\"Risk Factors\" and other documents that we submit to the Securities and Exchange Commission from time to time (SEC). All forward-
Forward-looking statements contained in the annual report on Form10K (
Include the information contained or contained by the reference here)
Based on the information available to us as of the date of this agreement, we have no obligation to publicly update or modify any forward information
Reports can be viewed for new information, future events, or other reasons. ITEM 1.
Business Company Overview we are the world\'s leading distributors and suppliers providing comprehensive supply chain management services to the global aerospace industry based on annual sales.
Our services range from traditional distribution to supplier relationship management, quality assurance, matching, and justice. in-time (JIT)
Delivery and delivery pointof-
Use inventory management.
We supply more than 565,000 in stock. keeping units (SKUs), including C-
Hardware, chemical, electronic components, bearings, tools and machined parts.
In fiscal 2016, hardware sales, including bearings and other products, accounted for 52.
3% of our net sales and 40 of our chemical sales.
6% of our net sales and sales of electronic components are 7.
1% of our net sales.
We serve our customers. 1)long-
Arrangement of contract terms (Contracts)
Including managing JIT contracts that provide comprehensive outsourcing supply chain management services and long-term outsourcing services
Term agreements or LTAs that usually set prices for a particular product, and (2)ad hoc sales.
At February 2014, we acquired 100% of Haas\'s excellent inventory, a chemical supply chain for commercial aerospace, airlines, military, automotive, energy, pharmaceutical and electronics industries
At july2016, we acquired the entire assets of Interfast, Inc. (Interfast), a Toronto-based value-
Added dealers of professional fasteners, fastening systems and production installation tools for the Aerospace and Electronic Markets.
Established in 1953 by the father of our current chairman of the board, we have grown to serve more than 8,000 clients, mainly in the commercial, military and general aviation sectors, including leading OEMs (OEMs)
We support almost all major Western aircraft projects and sell products to airlines
Independent maintenance and maintenance (MRO)providers.
We also serve industrial customers including the automotive, energy, pharmaceutical and electronics industries.
We have 2,724 employees in 57 locations in 17 countries.
The chart below illustrates our net sales composition for the fiscal year 2016 based on our sales data.
For more information on our segment reports, see Note 21 of the notes to the segment I consolidated financial statements, Item 8-on the annual report of Form10-K.
4 catalog our products and services we operate through two reportable parts: North America and the rest of the world.
30 years, 2016 2015 2014 of Income % ofrevenue tax income % ofrevenue North America $1,185,315 80% $1,198,201 80% $1,030,511 76% of world 292,051 20% 299,414 20% 325,366 24% of $1,477,366 100% $1,497,615 100% $1,355,877 100% our products we offer over 565,000 active SKUs, for the year ended September 30, 2016, these products fall under the following product categories (
Thousands of dollars)
: Hardware chemical electronic components bearing and products of network product sales $711,177 $600,124 $105,207 $34,662 $ 26,196% of network product sales 48. 2% 40. 6% 7. 1% 2. 3% 1.
8% supplied product type blind fastener panel fastener bolts and screw clamps Hi lok pins and collar hydraulic fittings insert lock bolts and collar nuts rivet spring valve gasket adhesive sealant and adhesive tape lubricant oil and grease paint industry gas coolant and metal processing fluid cleaning agent and cleaning solvent connector relay switch circuit breaker lighting products wire and cable interconnect accessories fuselage control bearing rod end spherical bearing ball bearing roller bearing bushing precision bearing bracket milling parts gasket stamping parts flip installation tooling hardware sales of welding components c-
Aerospace hardware accounted for 48%, 49% and 62% of our product sales in fiscal 2016, fiscal 2015 and fiscal 2014, respectively.
Fasteners are our largest category of hardware products, including aerospace parts of various height designs designed to connect two or more components (such as rivets) together (
Both blind and real), bolts (
Blind bolts included)
Screws, nuts and washers.
Many of these fasteners are designed for specific aircraft platforms, and other fasteners can be used across multiple platforms.
The materials used to make these fasteners include standard alloys such as aluminum, steel or stainless steel, as well as more advanced materials such as titanium, Inconel and Waspalloy.
In February 28, 2014, we acquired Haas, a supplier of chemical supply chain management services for commercial aerospace, airlines, military, automotive, energy, pharmaceutical and electronics industries.
Chemical sales accounted for 41%, 40% and 26% of our product sales in fiscal 2016, 2015 and 2014, respectively.
Since we have acquired Haas, our chemical products include adhesives;
Sealant and adhesive tape; lubricants; oil and grease;
Paint and paint;
Industrial gas;
Coolant and metal processing fluid;
Cleaning agent and cleaning solvent.
We offer highly reliable interconnect and electronic components
Mechanical products including connectors, relays, switches, circuit breakers, lighting products, wire and cable and interconnect accessories.
We also provide value.
Including mil-added-
Round and rack and panel connectors as well as lighting button switches.
We maintain a large number of connector components in our inventory, which enables us to respond quickly to customer orders.
In addition, our lighting switch assembly operation provides customers with the service of the day, including multi-language engraving function.
5 catalog bearings our products include various standards of resistance
Friction products designed for commercial and military aircraft specifications such as body control bearings, Rod ends, spherical bearings, ball bearings, roller bearings, bushing and precision bearings.
Other products machined parts are designed for specific customers and are designated as unique OEM-specific SKUs.
The machining parts we distribute include laser cutting or stamping brackets, milling parts, gaskets, stamping parts, flip parts and welding assemblies made of various materials
Grade steel or titanium to nickel base alloy.
We stock up the various tools needed to install many of our products, including air and hydraulic tools and drill bit motors, and we also provide factory-authorized maintenance and repair services for these tools.
In addition to selling these tools, we also rent or lease them to our customers.
In addition to the traditional distribution services, our services also create innovative value.
Provide additional services such as quality assurance, kitting and JIT supply chain management to our customers.
Our quality assurance (QA)
Features are a key part of our service delivery, and about 5% of our employees are committed to this area.
We believe we offer an industry.
Leading qafuntion due to our strict workmanship, advanced testing equipment and dedicated QAstaff.
By comparing the total rejection rate of our customers for the products we deliver, our excellent QA performance has been proven to be 0.
12% in fiscal 2016, the rejection rate of products we received from our suppliers was 3.
The fiscal 82% period was 2016.
Our QA department checks the inventory of our purchases to ensure the accuracy and completeness of the documents.
For many of our customers, these checks are carried out within us.
We operate the Laboratory of Precision testing equipment.
We also keep an electronic copy of the inventory-related certification, which can include the manufacturer\'s conformity certificate, test report, Process certification, material distributor certification and raw material factory certification. Our industry-
Leading QA features also allow our JIT customers to reduce the number of people dedicated to QA functions and reduce delays due to rejection of products that are not properly checked.
Kitting includes a whole list of materials or a complete package of \"boats\"
Product set \", which reduces the time it takes for the staff to retrieve the product from the storage location.
The kit can be customized in different configurations and sizes and can contain up to hundreds of different products.
All of our kits and components contain fully certified and traceable products and are complete by US-
The service and equipment department of our center\'s stocking location (CSLs)
Or on our client\'s website.
JIT supply chain management is included in-
The foundation needed-of-
Used on the customer\'s production line.
JIT program is designed to prevent the generation of excess inventory
Improvement of manufacturing efficiency.
Each JIT contract requires us to maintain an effective inventory tracking, analysis and replenishment plan and is designed to provide a high level of inventory availability and inventorytime delivery.
We believe that customers who use our comprehensive JIT supply chain management services are often able to achieve significant benefits, including: reducing inventory levels, reducing excess inventory and obsolescence (E&O)
Part of the reason is that these customers only buy what they need and use their floor space more effectively;
The accuracy of forecasting and planning has been greatly improved
Shorten the delivery time, reduce the cost of acceleration, and reduce the interruption of the production plan;
The quality assurance has been improved, and the rejection rate of customer products has been greatly reduced;
Reduce administrative and overhead costs related to procurement, quality assurance, supplier management and inventory functions.
6 before signing a JIT contract, our customers usually experience downtime for many SKUs, and in some cases the stock value on hand is as high as one year.
As part of our JIT plan, we usually assume the customer\'s existing inventory at the beginning of the contract and immediately reduce their inventory
Related management costs.
Customer inventory is usually assumed on a consignment basis and entered in our database with different customers-
Specific \"virtual warehouse.
\"The software protocol in our IT system requires the system to\" view \"the customer\'s commissioned inventory first when part replenishment is required.
In some cases, we can sell this entrusted inventory to us on the basis of more than 8,000 other active customers around the world, gradually reducing the inventory of customers.
Due to the running out of commissioned stock for each SKU, Our Wesco stock-
The stock of purchased products is then used for replenishment.
Another key advantage of our JIT program is our ability to take advantage of highly scalable and customizable points-of-
Develop efficient supply chain management systems and automatic replenishment solutions for any number of SKUs using the system.
In order to minimize inventory, certain indicators are used to trigger replenishment of products from the place of supply to the place of consumption. Our "Twin-
The Bin system is an example of such an indicator.
A jit program designed around twins
The Bin system uses special
A manufacturing unit consisting of two bins stacked together.
In this system, a transparent plastic bag usually contains 30-
Parts are supplied daily and packed in each box.
The production worker uses all the parts in the bottom bin, then draws a pull-out slider between the two bins, and throws the complete plastic bag of the part from the upper bin into the bottom bin.
The empty top bin indicates the need to start replenishing parts and provide a clear visual management process at the manufacturing layer.
All complementary activities are done by hand
Send the order to the scanner at our stocking location.
In some cases, we also offer additional value to our JIT customers-
Increased services, including implementation of plans for process control and reduction of use;
Support environmental, health and safety compliance (EHS)and reporting;
Assist in the development of waste management strategies.
We sell our products to airlines. OEM-
Affiliate and independent MRO providers on contract and interim basis.
We recently expanded the we in commercial and military aviation Aerospace MRO market of influence especially because we in 2012 acquisition the interfast we in 2014 by introducing we of Wesco e-
We believe that the business sales platform provides us with a cost.
An effective way to further penetrate the MRO market.
In addition, we are targeting domestic and international airlines and maintenance centers, which we believe are playing a bigger role in the MRO market.
Looking ahead, we expect commercial MRO providers to benefit from many of the same trends as those affecting the commercial OEM market, including industry passenger flow and capacity utilization, as well as requirements and fuel costs for maintaining aging aircraft, this could lead to greater utilization of existing aircraft.
The commercial MRO market may also benefit from directives or notices announced by international industry regulators and industry associations.
These directives or notices can facilitate the maintenance required to meet the needs for new and existing aerospace products.
In addition, we expect that demand in the military MRO market will be driven by changes in the overall fleet size and US Navy levelS.
Military operations at home and abroad.
We believe that our presence in this market helps us to mitigate the volatility of sales of new military aircraft by selling to the after-sales market.
Customer contract we sell products to customers according to two arrangements :(1)
Contracts including JIT supply chain management contracts and LTAs, and (2)ad hoc sales.
Contract JIT contract.
A jit contract typically lasts three to five years and is structured to provide product requirements for a specific sku, production line, or facility.
Given our direct contact with JIT customers, the quantity requirements and frequency of purchases under these contracts are highly predictable.
Under the JIT contract, the customer undertakes to purchase the specified product from us at a fixed price or pass
By price, if-and-
We are usually responsible for maintaining high inventory of these products when needed.
JIT contracts generally contain terms that are terminated for the sake of convenience, which generally allow our customers to terminate the contract in a short period of time without a meaningful penalty, provided that we obtain cost compensation for any inventory purchased specifically for our customers or inventory that is not normally sold to other customers.
JIT customers often buy products from us that are not covered in their 7 catalog contracts.
For more information on our JIT supply chain management services, see \"-
Our products and servicesOur Services-
Supply chain management. " LTAs .
Like the JIT contract, LTAs usually runs for three to five years as well.
LTAs is basically a pre-for customers or covering a range-
Identified products in-needed basis.
LTAs allows customers to purchase contract SKUs from us and may require us to keep stock of these products.
Once the LTA is in place, the customer can place an order with us for any product specified in the contract.
LTAs generally contain terms that terminate for convenience, which generally allow our customers to terminate the contract in a short period of time without a meaningful penalty, the premise is that we can reimburse the cost of any inventory specifically purchased for our customers.
LTA customers also regularly purchase products temporarily from us that are not captured under pricing arrangements.
Temporary sales temporary customers buy products from US
The required base is usually supplied from our existing inventory.
Usually, the number of products for temporary orders is less than the number of products ordered under the contract, and it is usually urgent.
Given the breadth and quantity of our inventory, it is not uncommon to buy products temporarily from us when our competitors own inventory proves insufficient.
In an environment where aircraft production is increasing, product shortages may become more common for OEMs, subcontractors, MRO providers and distributors with poor predictive power, and procurement organizations.
According to each of the above sales arrangements, we usually guarantee that the products we sell comply with the drawings and specifications that are valid at the time of delivery in the applicable contract, and we will replace the defective or defect-free
Products that meet the contract for a period of time.
In turn, we expect product manufacturers to compensate us for liability arising from defects or non-defects
Products that meet the requirements
We will not accumulate warranty fees for claims related to defects and non-defects
Qualified products are nominal.
We believe that, given the long backlog, the backlog is not a relevant measure of our business
The term of our contract with the customer.
We sell products to more than 8,000 active customers around the world.
In fiscal 2016, none of our customers accounted for more than 10% of our net sales, and only two accounted for more than 5% of our net sales, each consisting of multiple separate projects.
In fiscal 46%, our top 10 customers accounted for 2016 of net sales.
In fiscal 2016, 75% of our net sales came from major OEMs, such as Airbus, Boeing, BAE Systems, Bell helicopters, Bombardier, Cessna, Embraer, Gulfstream, rocknorthrop Grumman and Raytheon and some of their subcontractors.
In fiscal 15%, government sales accounted for 2016 of our net sales, from various military parts purchasing agencies such as the United States. S.
A Defense Logistics Agency, or a defense contractor purchased on their behalf.
After-Sales of airlines
Of our net sales for fiscal 6%, associated or independent MRO providers accounted for 2016.
The remaining 4% of our net sales is for other distributors.
In fiscal 2016, 59% of our net sales came from customers supporting commercial projects, and 41% of our net sales came from customers supporting military projects.
We are also in Australia, Canada, China, France, Germany, India, Ireland, Israel, Italy, Malaysia, Mexico, Philippines, Poland, Saudi Arabia, Singapore, South Korea, Turkey and the United Kingdom.
More information about our net sales and long term sales
Living assets by geographical region, see Note 21 to Part 1 consolidated financial statements, Item 8-Annual Report on Form10-K.
We purchase our inventory from more than 5,000 suppliers around the world, including precision casting company, Arconic (formerly Alcoa)
PPG industry, Lisi Aerospace, United aerospace manufacturing (CAM)
, TriMas, Esterline, RBC Bearings, Henkel and 3 m.
Precision casting company, fiscal 2016
Arconic offers 12% and 8% of our purchases, respectively.
In order to improve the utilization rate of machines, suppliers usually prefer to deal with large and complex distributors with a relatively small number;
Reduce the cost of finished products storage and related scrapping;
Maintain pricing discipline;
Improve performance at meetingstime-
Deliver the target to the end customer;
Consolidating customer accounts can reduce management and overhead costs associated with sales and marketing, customer service and other functions.
Due to 8 catalogues, the scale of our operations and our long term
Maintain a long-term relationship with many of our suppliers and we are often able to take advantage of a large number
Based on discounts when purchasing inventory.
Given our industry position, financial strength and the philosophy of working with suppliers, we are confident that with the launch of the new product range, we will be able to be their distributor.
Our management analyzes supply, demand, cost and pricing factors to make inventory investment decisions, thanks to our highly customized IT systems, we maintain a close relationship with industry-leading suppliers.
Our deep understanding of the global aerospace industry stems from our long-standing
Long term relationship with major OEMs, subcontractors and suppliers.
In addition, our direct insight into the speed of customer production often enables us to discover industry trends.
In addition, our ability to anticipate demand, share inventory and use information, placing orders with our suppliers before customer requests can provide us with an obvious advantage in this industry, inventory availability is critical for customers who need a particular product to fulfill their own production and delivery commitments.
However, while we have expertise in this area, effective inventory management is an ongoing challenge and we continue to take steps to increase the complexity of our procurement practices, and reduce the negative impact of inventory on our cash flow.
For more information on the impact of inventory on our business, including our cash flow, see Item 1A. "Risk Factors-
Risks related to our business and industry
We may not be able to manage our inventory effectively, which may have a significant adverse impact on our business, financial position and operational results, \"itemi, item 7.
\"Management\'s Discussion and Analysis of Financial Position and operational results --
Other factors that affect our financial performance
Fluctuations in cash flow \"and Article 7.
\"Management\'s Discussion and Analysis of Financial Position and operational results --
Important accounting policies and estimatesInventories.
\"The information technology systems we invest in build integrated, highly customized IT systems that enable our procurement and sales organizations to make smarter decisions, our inventory management system runs in an efficient manner and certain of our customers can make online purchases directly from us.
Our main scalable IT infrastructure is based on IBM and Oracle servers, Oracle enterprise databases, and Oracle JD Edwards enterprise one (JDE)
Enterprise Resource Plan (ERP)system.
Our chemical supply chain management system, tcmIS, is a proprietary system developed using Oracle enterprise databases.
These customized IT systems provide us with the ability to understand the inventory quantity, inventory location and purchase situation of the entire customer base through a single SKU, enabling us to accurately complete 16,000 orders per day, and provide excellent customer service level.
These systems are fully capable of interfacing with external business systems (including Oracle, SAP, Microsoft, etc. ) and we have also developed additional features for JIT delivery and direct wire entry for certain products we sell.
This feature includes identifying signals and actions from manually filling the customer bin
Handheld scanner, min/max data or proprietary signal from customer ERP system.
JDE and tcmIS also support our EDI functionality, which allows our systems to interface with customers and suppliers regardless of technology, data format or connection.
Additional chemistry is also supported by TcmIS-
Specific features such as product labeling and global coordination system compliance.
For our transport logistics and export compliance support, we use TRA/X for precision software.
TRA/X enables us to ship globally while maintaining tracking numbers and rating information for each customer shipment.
In addition, in several of our distribution facilities, we use Minerva\'s AIMS inventory management system to provide the best possible warehouse processes and cycles.
AIMS, tailored to meet our global warehouse operations needs, allows us to provide an extensible warehouse management system that also integrates transaction processing, workin-
Progress and other manufacturing operations.
AIMS interfaces with a variety of material handling equipment, including horizontal and vertical conveyor belts, sorting equipment, pick-up systems, and cranes.
Seasonal our net sales may fluctuate quarterly based on the number of production days in the customer\'s factory, driven by holidays and planned discontinued production, especially the winter vacation in our first fiscal quarter and the summer vacation in the fourth fiscal quarter.
The competition in the industry we operate is fierce and scattered.
We believe that the main competitive factors in our industry include the ability to provide exceptional customer service and support
Delivery time, sufficient stock, competitive price and effective quality assurance plan.
Our competitors include the United States. S.
Foreign companies, including the departments of large companies and some of our suppliers, some of which have more financial resources than we do, therefore, we may be able to adapt to changes in customer needs more quickly than we do.
In 9 catalogues, in addition to facing competition from contract customers from our main competitors, contract customers or potential contract customers can also determine that it is more cost-effective to establish or re-establish contract customersBuild
Housing supply chain management system.
In this case, we may not be able to adequately reduce costs in order to provide competitive prices while maintaining acceptable operating profits.
As of September 30, 2016, we have employed 2,724 employees worldwide, of whom 955 are located at the customer\'s location.
We have 745 employees outside of North America.
We are not a party to a collective bargaining agreement with our employees.
Government agencies around the world, including the United StatesS.
Federal Aviation Administration (FAA)
, Setting standards for aircraft components, including almost all commercial airlines and general aviation products, as well as regulations for the repair and overhaul of aircraft frames and engines.
The specific provisions of different countries vary, although compliance with the FAA requirements generally meets the regulatory requirements of other countries.
In addition, the products we distribute must also be certified by the manufacturer of aircraft and engine original equipment.
If any substantial authorization or approval allowing us to supply the product is revoked or suspended, then the sale of the product in question will be prohibited by law, this will have an adverse impact on our business, our financial position and the results of our operations.
From time to time, FAA or equivalent regulators in other countries propose new regulations or changes to existing regulations, which are often more stringent than existing regulations.
If these proposed regulations are adopted and promulgated, we may incur significant additional costs to achieve compliance, which may have a significant adverse impact on our business, financial position and operational results.
We must also comply with government rules and regulations, including the United States. S.
Foreign Corrupt Practices ActFCPA)
Bribery Act 2010 (Bribery Act)
Regulations on international arms transport (ITAR)
Regulations on export administration (EAR)
Economic sanctions and False Claims Act.
View risk factors-
Risks related to our business and industry
With the provision of equipment and services to the United States, we face unique business risksS.
Government direct and as sub-contractors, this could lead to a decline in profitability of our net sales or supply arrangements with the USS.
The government and-
Our international business requires us to comply with many applicable counter
Corruption and trade control laws and regulations, including the United States. S.
Our non-compliance with these laws and regulations may adversely affect our reputation, our business, our financial position and the results of our operations.
\"Environmental issues we are bound and safe by a wide range of federal, state, local and foreign laws, regulations, rules and regulations related to pollution, environmental protection and human health, and the treatment, transportation, storage, treatment, disposal and remediation of hazardous substances, including potential historical chemical mixtures and other activities
The date we purchased Haas.
Actual or alleged violations of EHS laws or license requirements may result in restrictions or prohibitions on operations, as well as substantive civil or criminal sanctions under some EHS laws, assessment of strict liability and/or joint liability.
In addition, we may bear the cost of investigating and cleaning up our operational or non-operational environmental pollution
Locations, including potential sites related to Historical Chemical mixtures and other activities
The date we purchased the business.
Therefore, we may generate additional costs and expenditures that exceed current expectations to address all known and unknown situations under existing and future EHS laws.
In addition, government, regulatory and social demand for improved product safety and environmental protection levels has led to increased pressure on the chemical industry to exercise more stringent regulatory controls.
Registration, assessment, authorization and restrictions of chemicals in the EU (REACH)
The regulations promulgated in 2009 have been an ongoing source of compliance obligations and restrictions on certain chemicals, REACH-
A similar system has now been adopted in several other countries.
In the United States, the core provisions of the toxic substances Administration Act (TSCA)
The first revision in nearly 40 years was carried out in June 2016.
The more important change is that these amendments require a safety review of existing chemicals and regulatory action to limit any \"high risk\" chemicals identified in the review results.
The amendment to TSCA also requires EPA to establish a new list of existing chemicals, which is expected to result in the identification of certain chemicals that may not be correct 10 the catalogue on the original list, and restrict the use of these chemicals before completing the safety review.
These changes in the company\'s regulatory environment, especially but not limited to the United States, the European Union, Canada and China, may lead to the strengthening of regulatory review, and may adversely affect our ability to provide certain products and supply chain management services to our customers.
These changes may also cause us to assume compliance obligations directly or as part of our restrictions on customer supply chain management services, fines, ongoing monitoring and other future business activities, this may have a significant adverse effect on the company\'s liquidity, financial position and operational results.
We submit annual, quarterly and current reports and other information to SEC.
You can read and copy any documents we submit in the public expansion room on N. 100F Street, SEC. E. Washington, D. C. C. 20549.
You can be in 1-800-SEC-
0330 for further information on public information rooms.
In addition, the SEC maintains an Internet site (www. sec. gov)
It contains reports, agency and information statements and other information about registrants who submit documents electronically to the SEC (including us.
You can also access our report to SEC for free (
For example, our Annual Report on Form10
Our quarterly report on Form10
Q and our Current Report on Form8
K and any changes to these forms)
Through the \"Investor Relations\" section of our website (www. wescoair. com).
We also provide our on our website (1)
Guidelines for corporate governance ,(2)
Business Conduct and Ethics applicable to our directors, executives and employees ,(3)
Whistleblower policy and (4)
Audit, remuneration, nomination and articles of association of the corporate governance committee.
Reports submitted to or provided to the SEC, after being submitted to or provided to the SEC, will be provided as soon as reasonably practicable.
Our website is included in this annual report only as an inactive text reference.
The information found on our website is not part of this report or any other report submitted to or provided to SEC. ITEM 1A.
Risk factors you should carefully consider and read all risks and uncertainties described below, as well as other information contained in this annual report, including our consolidated financial statements and related notes.
The risks described below are not the only ones we face.
The occurrence of any of the following risks or additional risks and uncertainties that we do not currently know or that we currently consider insignificant may have a significant adverse impact on our business, the financial position or outcome of the operation.
This annual report also includes
Forward-looking statements and estimates involving risks and uncertainties.
Our actual results may be very different from the expected results in the future.
The report is looked forward to due to specific factors, including the risks and uncertainties described below.
Risks related to our business and industry we rely directly on the situation of the aerospace industry, which is closely related to the global economic situation, if fluctuations in global financial markets lead to a slowdown in the current economic recovery or a return to the recession, the financial situation and results of our business, operations may be negatively affected.
The demand for the products and services we provide is directly related to the delivery of new aircraft, the use of aircraft and the repair of existing aircraft, and these products and services are affected by the global economic situation.
For example, 2009 of the revenue passenger mileage (RPMs)
The number of commercial aircraft fell due to the global recession.
During the same period, large commercial, regional and commercial aircraft deliveries in the industry declined.
While demand for commercial and regional aircraft has recovered, commercial aircraft orders and deliveries are still well below their previous
The recession peaked, reflecting the deepening of the last recession and the uncertainty of the economic outlook.
The return of the global economic slowdown or recession will have a negative impact on the aerospace industry and may have a negative impact on our business, financial situation and operational results.
Military expenses, including the expenses of the products we sell, all depend on the defense budget, and the reduction of military expenses may have a significant adverse impact on our business, the financial status and results of the operation.
In the year ended September 30, 2016, 41% of our net sales were related to military aircraft.
The military market depends largely on the government\'s budget trends, especially in the United States. S.
Ministry of Defense (DoD)budget.
The future defense budget may be negatively affected by several factors, including but not limited to changes in defense spending policies in the current and future presidential governments and CongressS.
The government\'s budget deficit, spending priorities, and the cost of maintaining the U. S. economy. S.
Military presence and possible political pressure in overseas military operationsS.
Each of the government\'s military spending could lead to a fall in the Defense Department\'s budget. A decline in U. S.
Military expenditures may lead to a reduction in the production of military aircraft, which may have a significant adverse impact on our operations, financial position and operational results.
11 in particular, in the catalogue, military expenditures may be negatively affected by the Budget Control Act of 2011 (
Budget Control Act)
This is through the august201.
The Budget Control Act limits the budget of the United States. S.
Government can be free on the spending including in 490 billion to 2012 dollars of American national defense spending cut about 2021 dollars. S.
In the fiscal year, the government also stipulated that the defense budget would face additional \"segregation\" cuts of up to $500 billion over the same period, exceeding the discretionary spending limit.
Compared with the government\'s fiscal 2014 and 2015, the impact of segregation has decreased in exchange for extending segregation to fiscal 2022 and 2023, following the enactment of the Bipartisan Budget Act in 2013.
Following the promulgation of the bipartisan budget law in november2015 in 2015, the impact of segregation on the government\'s fiscal 2016 and 2017 was further reduced.
It is currently planning to resume segregation in the government\'s fiscal 2018.
We are unable to predict what impact the containment-related cuts will ultimately have on the funding of our supported military programs.
However, such cuts may result in reductions, delays or cancellations of these projects, which may have a significant adverse effect on our business, financial position and operational results.
With the provision of equipment and services to the United States, we face unique business risksS.
Government direct and as sub-contractors, this could lead to a decline in profitability of our net sales or supply arrangements with the USS. government.
Companies engaged in defense supply
Provision of equipment and services to the United StatesS.
Government agencies face business risks specific to the defense industry.
We signed a contract directly with the United States. S.
The government, also a subcontractor for customers who have signed contracts with the United StatesS. government.
So the US governmentS.
The government can unilaterally suspend or prohibit us from receiving new contracts before resolving issues suspected of violating procurement laws or regulations, reducing the value of existing contracts, or auditing our contracts --
Related fees and fees.
Besides, most of our AmericansS.
S. can terminate government contracts and subcontractsS.
Governments or parties, if applicable, at their convenience.
For convenience, the termination clause only provides for us to recover the expenses, settlement expenses and profits incurred or promised in the work completed before termination.
In addition, we are bound by the United States. S.
Government investigations and investigations, including regular audits of the fees we have determined based on government contracts. U. S.
Government agencies regularly audit government contractors to review compliance with contracts, cost structures and applicable laws, regulations and standards, as well as the adequacy and compliance of internal control systems and policies.
Any expenses found to be misclassified or not accurately assigned to a particular contract cannot be reimbursed and, to the extent already reimbursed, must be refunded.
In addition, any defects in our systems and policies can result in deductions, fines and a reduction in future business.
If a government investigation or investigation finds improper or illegal activities, we may be subject to civil or criminal penalties or administrative sanctions, including termination of the contract, fines, confiscation of fees, suspension of payments and suspension or cancellation of business with the United StatesS.
Any government agency may have a significant adverse effect on our reputation, business, financial position and results of operations.
We are also subject to the federal False Claims Act, which provides that if a contractor makes a false or fraudulent payment claim to the government, it will be subject to substantial civil penalties and triple damages
Actions taken under the False Claims Act may be brought by the government or others on behalf of the government (
Then who can share any recovery).
We don\'t guarantee the future sales of the products we sell, when we sign a contract with our customers, we usually take the risk of cost overruns, as well as our business, financial situation, if the product we purchased exceeds the customer\'s requirements, the operating results and operating profit margin may be negatively affected, the cost of the product increases unexpectedly, and we have experienced a high starting point.
The cost of the new contract is increased or our contract is terminated.
Most of our contracts are Long-term. term, fixed-
Price agreement, no guarantee of future sales volume, for the sake of convenience, our customers may terminate the price agreement in a short period of time, usually not subject to meaningful punishment, provided that we obtain cost compensation for any inventory purchased specifically for our customers or inventory that is not normally sold to other customers.
In addition, we purchase inventory based on forecasts of future expected customer needs.
Therefore, if our customers do not place orders as we predict, we may risk overstocking, especially in terms of more limited inventory on the shelves --life.
We also face the risk of not being able to deliver or otherwise recover the unexpected increase in product costs, including the result of rising commodity prices, which may exceed our established prices when we sign a contract, and the set price of the products we offer.
When we are awarded new contracts, especially JIT contracts, we may incur high costs, including wages and overtime costs for hire and training
On-site personnel, at the start-
The final stage of our performance
If the product we buy exceeds the customer\'s requirements and the cost of the product increases unexpectedly, we will experience a high starting point.
The cost of the new contract is increased by 12 catalogue or the termination of our contract, and our business, financial position, operating results and operating profit margin may be negatively affected.
If we lose important customers, important customers actually reduce their purchase orders, or the important items we rely on are delayed, scaled down or canceled, our business, the financial situation and operating results may be adversely affected.
As of September 30, 2016, our ten largest customers accounted for 46% of net sales.
For any reason, including changes in manufacturing or purchasing practices, the purchase of one of our big customers is reduced or lost, resulting in the loss of the customer due to the buyer\'s acquisition of the customer, the buyer does not make full use of the distribution model or use a competitor in-
Customer procurement, business transfer to competitors, recession, failure to provide adequate services to customers or failure to manage the implementation of new customer websites, a decline in production or a strike, it may have a significant adverse effect on our business, financial position and operational results.
As an example of changes that may affect our manufacturing practices, oems such as Boeing and Airbus are currently adding more and more composites to the aircraft they manufacture.
Aircraft using composite materials usually need to use less C-
Aerospace parts than traditional non-aerospace aircraft
Composite material, although the parts used are usually compared to C-
Aerospace parts for non
Aircraft Structure of composite materials
As Boeing, Airbus and other customers become more dependent on composites, they may significantly reduce their purchase orders from us.
As an example of potential business losses due to customers
Procurement, a major OEM is taking an initiative to procure certain OEMs from its tier 1 and tier 2 suppliers-
Specific materials, including fasteners, come directly from the OEM itself, not through dealers like ours.
If the OEM has implemented this initiative extensively, or other OEMs have implemented similar initiatives, then part of our sales to suppliers, as well as our business, financial position and operational results, it may be adversely affected.
We expect our net sales to account for a large part in the early production phase of certain aerospace projects.
In particular, our future growth will depend in part on our sales to various oemand subcontractors.
If the production of any project we support is terminated or delayed, or if our sales to customers associated with these projects are reduced or canceled, our business, the financial position and results of the business may be adversely affected.
In addition, in fiscal 2014, we revised and extended our contract with existing customers for a contract amount of $66.
Compared with fiscal 3 million, net sales to customers decreased by 2015 in fiscal 2014, further reducing by $26.
Compared with fiscal 4 million, the net sales to customers in fiscal 2016 was 2015.
We operate in a highly competitive market, and if we cannot compete effectively, it may have a negative impact on our results.
We operate in a highly competitive global industry and compete with many companies, including the divisions of large companies and certain of our suppliers, some of which may have far more financial resources than we do, so, we may be able to adapt to changes in customer needs faster than we do.
Our competitors include the United States and the United States. S.
The scale ranges from large listed companies to small private holding entities.
We believe that our competitive ability depends on superior customer service and support.
Delivery time, sufficient stock, competitive price and effective quality assurance plan.
In order to remain competitive, we may have to adjust the prices of some of the products and services we sell and continue to invest in our procurement, supply
Chain operations, sales and marketing functions, the cost of which may have a negative impact on the results of our operations.
In addition, we face the competition of contract customers from industry competitors and industry insiders.
Source of supply-
The customer\'s own chain operation.
If any of our contract customers decide to join-
We will be adversely affected by switching the source of the services we provide or to our competitors.
We may not be able to manage our inventory effectively, which may have a significant adverse impact on our business, our financial position, and the results of our operations.
Since many of our suppliers need lead time, we usually order products, especially hardware products, before the expected sales, and the number of such orders may be large.
Depending on industry conditions, lead times typically range from a few weeks to two years, which makes it difficult for us to manage inventory successfully when planning future needs.
In addition, the demand for our products may fluctuate greatly, which will also have a negative impact on our cash 13 catalog flow and inventory management.
For example, we believe that our strategic inventory purchases in fiscal 2014 and 2015, coupled with lower-than-expected demand and lack of discipline in the inventory planning process, have a negative impact on our cash flow.
In addition, we may choose to deal with slow speed.
If we are certain that the market and the economy make it prudent to do so, then move inventory in the future.
For example, during the three months ended September 30, 2015, we determined that the previously purchased inventory related to the specific plan that was subsequently terminated had no other use and that our reserve was $33.
Such inventory is 0 million.
In addition, in the three months ended September 30, 2015, management implemented a new strategy to adopt a long-term
Regular contracts and focused forecast consumption, including changes in our inventory purchasing strategy, holding of short-term inventory, and planned scrapping of long-term inventory.
The new strategy and update of sales activities for fiscal 2015 resulted in changes in sales pass rate, holding period of aging inventory and other estimates used in E & O reserves for our hardware inventory, this increased our E & O stock reserve by $43. 8 million.
If we are unable to manage our inventory effectively, our cash flow may be negatively affected, which may have a significant adverse effect on our business, financial position and operational results.
If the supplier is unable to provide us with the products we sell in a timely, sufficient quantity and/or at a reasonable cost, we may not be able to meet the needs of our customers, this can have a significant adverse effect on our business, financial position and operational results.
Our inventory is mainly from producers and manufacturing companies, and we rely on a large supply of the products we sell.
Our biggest supplier for the year ended September 30, 2016 is precision casting.
In fiscal 2016, 12% of the products we purchased came from precision casting.
8% people buy Arconic (formerly Alcoa).
In addition, our top 10 suppliers accounted for 2016 of our purchases in fiscal 32%.
These manufacturers and producers may encounter capacity constraints, resulting in their inability to provide us with products in a timely manner at sufficient quantity and/or reasonable cost.
Among other factors contributing to the manufacturer\'s capacity constraints include industry or customer demand for machine overcapacity, labor shortages and changes in the flow of raw materials.
Any significant disruption to the supply of these products or the termination of our relationship with any supplier may result in our inability to meet the needs of our customers, this will have a significant adverse impact on our business, financial position and operational results.
Our business is highly dependent on complex information technologies.
The provision and application of IT is an increasingly important aspect of our business.
Among other things, our IT systems must often interact with the IT systems of customers, suppliers and logistics suppliers.
Our future success will depend on our ability to continuously use IT systems that meet customer needs.
Failure or interruption of hardware or software supporting our IT systems, including redundant systems, can seriously damage our ability to provide services to our customers, resulting in economic losses that we may be responsible, and may damage our reputation.
In addition, we are exposed to cyber security risks, including but not limited to malware and unauthorized attempts to access sensitive, confidential or other protected information related to us, our customers or suppliers. A cyber-
Related attacks may cause data loss and interruption or delay in our business (
Especially our tcmIS operating system)
Causing us to bear the cost of the remedy, causing us to suffer the claim and damaging our reputation.
In addition, failure or interruption of our IT systems, communications or utilities may cause us to interrupt or suspend operations, or adversely affect our business.
Our property and business interruption insurance may not be sufficient to compensate us for all losses, results of operational and financial conditions that may have a significant adverse impact on our business due to any system or operational failure or interruption.
Our competitors may own or possibly develop IT systems that allow them to be more cost-effective and better able to meet customer needs than the IT systems we are able to acquire or develop.
Larger competitors may be able to develop perhaps IT systems more economically than we can by spreading costs to a larger revenue base, competitors with more financial resources may be able to access or develop IT systems that we cannot afford.
If we cannot meet the needs of our customers and prevent the interruption of IT systems, we may lose our customers, which may seriously damage our business, and adversely affect our operating results and operating cash flow.
We may not be able to retain people who are critical to our business.
Our success depends, among other things, on our ability to attract, develop and retain highly qualified senior managers and other key personnel.
The competition for key talent is fierce, and our ability to attract and retain key talent depends on many factors, including the universal market conditions and salary treatment provided by companies competing for the same talent.
Failure to hire, develop, and retain these key employees can adversely affect our operations.
14 the risks inherent in the international business of the content table may have a significant adverse impact on our business, financial position and operational results.
Although most of our business is in the United States, we have important international business in Australia, Canada, China, France, Germany, India, Israel, Italy, Mexico, Singapore and the United Kingdom, customers in North America, Latin America, Europe, Asia and the Middle East.