10-K/A

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

Amendment No. 1

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2017

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to

Commission file number 0-21513

DXP Enterprises, Inc.

(Exact name of registrant as specified in its charter)

Texas		76-0509661
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
7272 Pinemont, Houston, Texas	77040	(713) 996-4700
(Address of principal executive offices)	(Zip Code)	(Registrant's telephone number,  including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.01 Par Value	NASDAQ
(Title of Class)	(Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

[X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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

Large accelerated filer [ ]Accelerated filer [X]Non-accelerated filer [ ] (Do not check if a smaller reporting company)Smaller reporting company [ ]Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

Aggregate market value of the registrant's Common Stock held by non-affiliates of registrant as of June 30, 2017: $536,658,521

Number of shares of registrant's Common Stock outstanding as of March 21, 2018: 17,358,186.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the annual meeting of shareholders to be held in 2018 are incorporated by reference into Part III hereof.

1

EXPLANATORY NOTE

This Amendment No. 1 to the Annual Report on Form 10-K of DXP Enterprises, Inc., (the "Company") for the year ended December 31, 2017 is filed solely to correct an error of a missing signature on the Report of the Company's Independent Registered Public Accounting Firm under Item 8 of the Form 10-K and to correct an error regarding the date of the Report in the accompanying Exhibit 23.1 Consent of Independent Registered Public Accounting Firm to the Form 10-K.

As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the certifications by our principal executive officer and principal financial officer, filed as Exhibits 31.1, 31.2, 32.1, and 32.2, respectively, have been revised, re-executed and re-filed as of the date of this Amendment No. 1 to the Annual Report on Form 10-K.

2

ITEM 8.Financial Statements and Supplementary Data

TABLE OF CONTENTS
	Page
Reports of Independent Registered Public Accounting Firms	4
Consolidated Balance Sheets	9
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)	10
Consolidated Statements of Equity	11
Consolidated Statements of Cash Flows	13
Notes to Consolidated Financial Statements	14

3

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

DXP Enterprises, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of DXP Enterprises, Inc. and subsidiaries (the "Company") as of December 31, 2017, the related consolidated statements of income (loss) and comprehensive income (loss), equity and cash flows for the year ended December 31, 2017, and the related notes(collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2017, and the consolidated results of its operations and its cash flows for the year ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 28, 2018 expressed an adverse opinion on the Company's internal control over financial reporting due to material weaknesses.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Moss Adams LLP

Houston, TX

March 28, 2018

We have served as the Company's auditor since 2017.

4

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

DXP Enterprises, Inc.

We have audited the accompanying consolidated balance sheet of DXP Enterprises, Inc. and subsidiaries (collectively, the "Company") as of December 31, 2016, and the related consolidated statements of income (loss) and comprehensive income (loss), shareholders' equity and cash flows for the year ended December 31, 2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of DXP Enterprises, Inc. and subsidiaries as of December 31, 2016, and the results of their operations and their cash flows for the year ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Our report dated March 31, 2017 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

/s/ Hein & Associates LLP

Houston, Texas

March 31, 2017

5

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

DXP Enterprises, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of DXP Enterprises, Inc. (a Texas corporation) and subsidiaries (the "Company") as of December 31, 2015 (not represented herein), and the related consolidated statements of income (loss) and comprehensive income (loss), shareholders' equity, and cash flows for the year then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of DXP Enterprises, Inc. and subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for the year ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Houston, Texas

February 29, 2016

6

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

DXP Enterprises, Inc.

Opinion on Internal Control over Financial Reporting

We have audited DXP Enterprises, Inc. and subsidiaries' (the "Company") internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated balance sheet of DXP Enterprises, Inc. and subsidiaries as of December 31, 2017, the related consolidated statements of income (loss) and comprehensive income (loss), equity and cash flows for the year ended December 31, 2017, and the related notes (collectively referred to as the "consolidatedfinancial statements") and our report dated March 28, 2018 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting included in Item 9A. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management's assessment in Item 9A:

Ineffective control environment and monitoring to support the financial reporting process.

The Company's control environment did not sufficiently promote effective internal control over financial reporting; specifically, the following factors relating to the control environment:

The Company did not maintain effective management review controls over the monitoring and review of certain accounts, thus we were not able properly conclude these account reconciliations and analyses were performed at an appropriate level of detail.

The Company did not effectively design, document nor monitor (review, evaluate and assess) the key internal control activities that provide the accounting information contained in the Company's financial statements.

7

Ineffective Information Technology General Controls ("ITGC").

The Company did not maintain effective ITGC, which are required to support automated controls and information technology ("IT") functionality; therefore, automated controls and IT functionality were deemed ineffective for the same period under audit.

We considered the material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the Company's consolidated financial statements as of and for the year ended December 31, 2017, and our opinion on such consolidated financial statements was not affected.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Moss Adams LLP

Houston, TX

March 28, 2018

8

DXP ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	December 31, 2017			December 31, 2016
ASSETS
Current assets:
Cash	$	22,047		$	1,590
Restricted Cash		3,532			-
Trade accounts receivable, net of allowances for doubtful accounts of $9,015 in 2017 and $8,160 in 2016		167,272			148,919
Inventories		91,413			83,699
Costs and estimated profits in excess of billings on
uncompleted  contracts		26,915			18,421
Prepaid expenses and other current assets		5,296			2,138
Federal income taxes recoverable		1,440			2,558
Total current assets		317,915			257,325
Property and equipment, net		53,337			60,807
Goodwill		187,591			187,591
Other intangible assets, net of accumulated amortization of $84,624 in 2017 and $70,027 in 2016		78,525			94,831
Other long-term assets		1,715			1,498
Total assets	$	639,083		$	602,052
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	3,381		$	51,354
Trade accounts payable		80,303			78,698
Accrued wages and benefits		18,483			16,962
Customer advances		2,189			2,441
Billings in excess of costs and estimated profits on uncompleted contracts		4,249			2,813
Other current liabilities		16,220			14,391
Total current liabilities		124,825			166,659
Long-term debt, less current maturities and unamortized debt issuance costs		238,643			173,331
Deferred income taxes		7,069			9,513
Total long-term liabilities		245,712			182,844
Commitments and Contingencies (Note 15)
Equity:
Series A preferred stock, 1/10th vote per share; $1.00 par value; liquidation preference of $100 per share ($112 at December 31, 2017 and 2016); 1,000,000 shares authorized; 1,122 shares issued and outstanding		1			1
Series B convertible preferred stock, 1/10th vote per share; $1.00  par value; $100 stated value; liquidation preference of $100 per  share ($1,500 at December 31, 2017 and 2016); 1,000,000 shares authorized; 15,000 shares issued and outstanding		15			15
Common stock, $0.01 par value, 100,000,000 shares authorized;  17,315,573  in 2017 and 17,197,380  in 2016 shares issued		174			173
Additional paid-in capital		153,087			152,313
Retained earnings		134,193			117,395
Accumulated other comprehensive loss		(19,491	)		(18,274	)
Total DXP Enterprises, Inc. equity		267,979			251,623
Noncontrolling interest		567			926
Total equity		268,546			252,549
Total liabilities and equity	$	639,083		$	602,052

The accompanying notes are an integral part of these consolidated financial statements.

9

DXP ENTERPRISES, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME (LOSS)

AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share amounts)

	Years Ended December 31,
	2017			2016			2015
Sales	$	1,006,782		$	962,092		$	1,247,043
Cost of sales		735,201			697,290			895,057
Gross profit		271,581			264,802			351,986
Selling, general and  administrative expense		238,091			245,470			303,819
Impairment expense		-			-			68,735
B27 settlement		-			-			7,348
Operating income (loss)		33,490			19,332			(27,916	)
Other expense (income), net		(456	)		(5,906	)		72
Interest expense		17,054			15,564			10,932
Income (loss) before income taxes		16,892			9,674			(38,920	)
Provision for income taxes		363			2,523			150
Net income (loss)		16,529			7,151			(39,070	)
Net loss attributable to noncontrolling interest		(359	)		(551	)		(534	)
Net income (loss) attributable to DXP Enterprises, Inc.		16,888			7,702			(38,536	)
Preferred stock dividend		90			90			90
Net income (loss) attributable to  common shareholders	$	16,798		$	7,612		$	(38,626	)
Net income (loss)	$	16,529		$	7,151		$	(39,070	)
Cumulative translation adjustment,  net of income taxes		(1,217	)		(7,658	)		(4,916	)
Comprehensive income (loss)	$	15,312		$	(507	)	$	(43,986	)
Basic earnings (loss) per share	$	0.97		$	0.51		$	(2.68	)
Weighted average common  shares outstanding		17,400			15,042			14,423
Diluted earnings (loss) per share	$	0.93		$	0.49		$	(2.68	)
Weighted average common shares  and common equivalent  shares outstanding		18,240			15,882			14,423

The accompanying notes are an integral part of these consolidated financial statements.

10

DXP ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

Years Ended December 31, 2017, 2016 and 2015

(in thousands, except share amounts)

	Series A Preferred Stock		Series B Preferred Stock		Common Stock		Paid-In Capital		Retained Earnings		Treasury Stock			Non- Control Interest		Accum. Other Comp. Income			Total Equity
BALANCES AT  January 1, 2015	$	1	$	15	$	146	$	115,605	$	148,409	$	(15,524	)	$	-	$	(5,700	)	$	242,952

Dividends paid		-		-		-		-			(90	)		-			-			-			(90	)
Compensation expense for restricted stock		-		-		-		2,973			-			-			-			-			2,973
Tax related items for share based awards		-		-		-		(815	)		-			-			-			-			(815	)
Issuance of 148,769 treasury shares in connection with an acquisition		-		-		-		(4,825	)		-			9,223			-			-			4,398
Acquisition of 191,420 shares of treasury stock		-		-		-		-			-			(8,908	)		-			-			(8,908	)
Issuance of 57,401 treasury shares upon vesting of restricted stock		-		-		-		(2,632	)		-			2,632			-			-			-
Noncontrolling interest holder contributions, net of tax benefits		-		-		-		-			-			-			2,346			-			2,346
Cumulative translation adjustment		-		-		-		-			-			-			-			(4,916	)		(4,916	)
Net loss		-		-		-		-			(38,536	)		-			(534	)		-			(39,070	)
BALANCES AT  DECEMBER 31, 2015	$	1	$	15	$	146	$	110,306		$	109,783		$	(12,577	)	$	1,812		$	(10,616	)	$	198,870

Dividends paid	-	-	-	-		(90	)	-	-		-		(90	)
Compensation expense for restricted stock	-	-	-	3,580		-		-	-		-		3,580
Tax related items for share based awards	-	-	-	(858	)	-		-	-		-		(858	)
Issuance of 2,722,858 shares of Common stock	-	-	27	51,862		-		-	-		-		51,889
Issuance of 264,297 treasury shares	-	-	-	(12,577	)	-		12,577	-		-		-
Noncontrolling interest holder contributions, net of tax benefits	-	-	-	-		-		-	(335	)	-		(335	)
Cumulative translation adjustment	-	-	-	-		-		-	-		(7,658	)	(7,658	)
Net income (loss)	-	-	-	-		7,702		-	(551	)	-		7,151

11

BALANCES AT  DECEMBER 31, 2016	$	1	$	15	$	173	$	152,313		$	117,395		$	-	$	926		$	(18,274	)	$	252,549
Dividends paid		-		-		-		-			(90	)		-		-			-			(90	)
Compensation expense  for restricted stock		-		-		-		1,708			-			-		-			-			1,708
Tax related items for share based awards		-		-		-		(933	)		-			-		-			-			(933	)
Issuance of shares of  Common stock		-		-		1		(1	)		-			-		-			-			-
Cumulative translation adjustment		-		-		-		-			-			-		-			(1,217	)		(1,217	)
Net income (loss)		-		-		-		-			16,888			-		(359	)		-			16,529
BALANCES AT  DECEMBER 31, 2017	$	1	$	15	$	174	$	153,087		$	134,193		$	-	$	567		$	(19,491	)	$	268,546

The accompanying notes are an integral part of these consolidated financial statements.

12

DXP ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years Ended December 31,
	2017			2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) attributable to DXP Enterprises, Inc.	$	16,888		$	7,702		$	(38,536	)
Less net loss attributable to noncontrolling interest		(359	)		(551	)		(534	)
Net income (loss)		16,529			7,151			(39,070	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		10,520			11,933			12,622
Amortization of intangible assets		17,266			18,061			20,621
Impairment of goodwill		-			-			68,735
Bad debt expense		3,416			180			2,014
Amortization of debt issuance costs		1,548			1,856			1,211
Write off of debt issuance costs		578			-			-
Gain on sale of subsidiary		-			(5,635	)		-
Stock compensation expense		1,708			3,580			2,973
Tax  loss related to vesting of restricted stock		-			619			-
Deferred income taxes		(3,827	)		2,687			(9,024	)
Changes in operating assets and liabilities, net of  assets and liabilities acquired in business acquisitions:
Trade accounts receivable		(20,539	)		12,080			71,261
Costs and estimated profits in excess of billings on uncompleted contracts		(8,419	)		3,457			(2,047	)
Inventories		(7,544	)		5,453			12,724
Prepaid expenses and other assets		(3,287	)		620			159
Accounts payable and accrued expenses		3,189			(8,595	)		(42,862	)
Billings in excess of costs & estimated profits on uncompleted contracts		1,406			(5,203	)		(513	)
Net cash provided by operating activities		12,544			48,244			98,804
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(2,811	)		(4,868	)		(13,992	)
Proceeds from the sale of fixed assets		-			1,206			-
Proceeds from sale of subsidiary		-			31,476			-
Acquisitions of businesses, net of cash acquired (1)		-			-			(15,501	)
Net cash provided by (used in) investing activities		(2,811	)		27,814			(29,493	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt		728,822			517,689			393,551
Principal payments on revolving line of credit and other long-term  debt		(702,402	)		(643,568	)		(453,480	)
Debt issuance costs		(11,208	)		(801	)		(543	)
Noncontrolling interest holder contributions (distributions), net of tax benefits		-			(335	)		2,346
Preferred dividends paid		(90	)		(90	)		(90	)
Purchase of treasury stock		-			-			(8,908	)
Proceeds from issuance of common shares, net		-			51,889			-
Payment for employee taxes withheld from stock awards		(934	)		(238	)		(815	)
Tax (loss)  related to vesting of restricted stock		-			(619	)		-
Net  cash provided by (used in) financing activities		14,188			(76,073	)		(67,939	)
EFFECT OF FOREIGN CURRENCY ON CASH		68			(88	)		274
(DECREASE) INCREASE IN CASH		23,989			(103	)		1,646
CASH AT BEGINNING OF YEAR		1,590			1,693			47
CASH AT END OF YEAR	$	25,579		$	1,590		$	1,693
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for Interest	$	15,205		$	13,708		$	9,721
Cash paid for Income Taxes	$	714		$	4,780		$	13,792

(1) Purchases of businesses in 2015 exclude $4.4 million in common stock issued in connection with an acquisition.

The accompanying notes are an integral part of these consolidated financial statements

13

DXP ENTERPRISES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - THE COMPANY

DXP Enterprises, Inc. together with its subsidiaries (collectively "DXP," "Company," "us," "we," or "our") was incorporated in Texas on July 26, 1996. DXP Enterprises, Inc. and its subsidiaries are engaged in the business of distributing maintenance, repair and operating (MRO) products, and service to energy and industrial customers. Additionally, DXP provides integrated, custom pump skid packages, pump remanufacturing and manufactures branded private label pumps to energy and industrial customers. The Company is organized into three business segments: Service Centers ("SC"), Supply Chain Services ("SCS") and Innovative Pumping Solutions ("IPS"). See Note 18 for discussion of the business segments.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES

Basis of Presentation

The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its variable interest entity ("VIE").

DXP is the primary beneficiary of a VIE in which DXP owns 47.5% of the equity. DXP consolidates the financial statements of the VIE with the financial statements of DXP. As of December 31, 2017, the total assets of the VIE were approximately $5.2 million including approximately $4.5 million of fixed assets. DXP is the primary customer of the VIE. Consolidation of the VIE increased cost of sales by approximately $0.6 million and $1.3 million for the twelve months ended December 31, 2017 and 2016, respectively. The Company recognized a related income tax benefit of $0.2 million and $0.3 million related to the VIE for the years ended December 31, 2017 and 2016, respectively.  At December 31, 2017, the owners of the 52.5% of the equity not owned by DXP included employees of DXP.

All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation; none affected net income.

Foreign Currency

The financial statements of the Company's Canadian subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss). Gains and losses on transactions denominated in foreign currency are reported in consolidated statements of income (loss).

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company's presentation of cash includes cash equivalents. Cash equivalents are defined as short-term investments with maturity dates of 90 days or less at time of purchase. The Company places its cash and cash equivalents with institutions with high credit quality. However, at certain times, such cash and cash equivalents may be in excess of Federal Deposit Insurance Corporation ("FDIC") insurance limits. The Company has not historically experienced any losses when in excess of these limits.

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Receivables and Credit Risk

Trade receivables consist primarily of uncollateralized customer obligations due under normal trade terms, which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and customers may not pay within stated trade terms.

The Company has trade receivables from a diversified customer base located primarily in the Rocky Mountain, Northeastern, Midwestern, Southeastern and Southwestern regions of the United States, and Canada. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers' financial positions and monitors accounts on a regular basis. Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically (as circumstances warrant) based upon management's best estimate of the collectability of such accounts. The Company writes off uncollectible trade accounts receivable when the accounts are determined to be uncollectible. No customer represents more than 10% of consolidated sales.

Changes in this allowance for 2017, 2016 and 2015 were as follows (in thousands):

	Years Ended December 31,
	2017			2016			2015
Balance at beginning of year	$	8,160		$	9,364		$	8,713
Charged to costs and expenses		3,367			180			2,014
Charged to other accounts		22	3		(17	)2		1,255	2
Deductions		(2,534	)1		(1,367	)1		(2,618	)1
Balance at end of year	$	9,015		$	8,160		$	9,364

(1) Uncollectible accounts written off, net of recoveries

(2) Includes allowance for doubtful accounts from acquisitions and divestiture

(3) Primarily due to translation adjustments

Fair Value of Financial Instruments

The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. US GAAP establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. US GAAP prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

See Note 4 for further information regarding the Company's financial instruments.

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Inventories

Inventories consist principally of finished goods and are priced at net realizable value, cost being determined using the first-in, first-out ("FIFO") method. Provisions are provided against inventories for estimated obsolescence based upon the aging of the inventories and market trends and are applied as a reduction in cost of associated inventory.

Property and Equipment

Property and equipment are carried on the basis of cost. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives. Maintenance and repairs of depreciable assets are charged against earnings as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and gains or losses are credited or charged to earnings.

The principal estimated useful lives used in determining depreciation are as follows:

Buildings	20-39 years
Building improvements	10-20 years
Furniture, fixtures and equipment	3-20 years
Leasehold improvements	Shorter of estimated useful life or related lease term

Impairment of Goodwill and Other Intangible Assets

The Company tests goodwill and other indefinite lived intangible assets for impairment on an annual basis in the fourth quarter and when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assigns the carrying value of these intangible assets to its "reporting units" and applies the test for goodwill at the reporting unit level. A reporting unit is defined as an operating segment or one level below a segment (a "component") if the component is a business and discrete information is prepared and reviewed regularly by segment management.

The Company's goodwill impairment assessment first permits evaluating qualitative factors to determine if a reporting unit's carrying value would more likely than not exceed its fair value. If the Company concludes, based on the qualitative assessment, that a reporting unit's carrying value would more likely than not exceed its fair value, the Company would perform a two-step quantitative test for that reporting unit. When a quantitative assessment is performed, the first step is to identify a potential impairment, and the second step measures the amount of the impairment loss, if any. Goodwill is deemed to be impaired if the carrying amount of a reporting unit's goodwill exceeds its estimated fair value. During the third and fourth quarter of 2015, DXP performed interim impairment tests using a quantitative approach and recognized goodwill impairments of $57.8 million and $9.8 million, respectively. No impairment of goodwill was required in 2017 and 2016.

Impairment of Long-Lived Assets, Excluding Goodwill

The Company tests long-lived assets or asset groups for recoverability on an annual basis and when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. No impairment of long-lived assets excluding goodwill, was required in 2017, 2016 and 2015.

Share-based Compensation

The Company uses restricted stock for share-based compensation programs. The Company measures compensation cost with respect to equity instruments granted as stock-based payments to employees based upon the estimated fair value of the equity instruments at the date of the grant. The cost as measured is recognized as expense over the period which an employee is required to provide services in exchange for the award.

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Revenue Recognition

For binding agreements to fabricate tangible assets to customer specifications, the Company recognizes revenues using the percentage of completion method. Under this method, revenues are recognized as costs are incurred and include estimated profits calculated on the basis of the relationship between costs incurred and total estimated costs at completion. If at any time expected costs exceed the value of the contract, the loss is recognized immediately. Revenues of approximately $40.6 million, $31.5 million, and $47.5 million were recognized on contracts in process for the years ended December 31, 2017, 2016, and 2015, respectively. The typical time span of these contracts is approximately one to two years.

For other sales, the Company recognizes revenues when an agreement is in place, the price is fixed, title for product passes to the customer or services have been provided and collectability is reasonably assured, which is generally upon delivery to the customer. Revenues are recorded net of sales taxes.

The Company reserves for potential customer returns based upon the historical level of returns.

Shipping and Handling Costs

The Company classifies shipping and handling charges billed to customers as sales. Shipping and handling charges paid to others are classified as a component of cost of sales.

Self-insured Insurance and Medical Claims

We generally retain up to $100,000 of risk for each claim for workers compensation, general liability, automobile and property loss. We accrue for the estimated loss on the self-insured portion of these claims. The accrual is adjusted quarterly based upon reported claims information. The actual cost could deviate from the recorded estimate.

We generally retain up to $175,000 of risk on each medical claim for our employees and their dependents with the exception of less than 0.05% of employees where a higher risk is retained. We accrue for the estimated outstanding balance of unpaid medical claims for our employees and their dependents. The accrual is adjusted monthly based on recent claims experience. The actual claims could deviate from recent claims experience and be materially different from the reserve.

The accrual for these claims at December 31, 2017 and 2016 was approximately $2.7 million and $3.1 million, respectively.

Purchase Accounting

DXP estimates the fair value of assets, including property, machinery and equipment and their related useful lives and salvage values, intangibles and liabilities when allocating the purchase price of an acquisition. The fair value estimates are developed using the best information available.

Cost of Sales and Selling, General and Administrative Expense

Cost of sales includes product and product related costs, inbound freight charges, internal transfer costs and depreciation. Selling, general and administrative expense includes purchasing and receiving costs, inspection costs, warehousing costs, depreciation and amortization.

Debt Issuance Cost Amortization

Fees paid to DXP's lenders to secure a firm commitment on a term loan and revolving line of credit are presented as a direct deduction from the carrying amount of the debt liability. For the term loan, fees paid by DXP are amortized over the life of the loan as additional interest. Fees paid to secure a firm commitment from our lender on a revolving line of credit are amortized on a straight-line basis over the entire term of the arrangement. The total unamortized debt issuance costs reported on the consolidated balance sheets as of December 31, 2017 and 2016 was $10.1 million and $1.0 million, respectively. In connection with the extinguishment of the previously existing credit facility we recorded a $0.6 million write-off of debt issuance costs, which was included in interest expense during the third quarter of 2017.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and income tax bases of assets and liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. Valuation allowances are established to reduce deferred income tax assets to the amounts expected to be realized under a more likely than not criterion.

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Accounting for Uncertainty in Income Taxes

A position taken or expected to be taken in a tax return is recognized in the financial statements when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U. S. federal, state and local tax examination by tax authorities for years prior to 2012. The Company's policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income, foreign currency translation adjustments and unrealized gains and losses on certain investments in debt and equity securities. The Company's other comprehensive (loss) income is comprised of changes in the market value of an investment with quoted market prices in an active market for identical instruments and translation adjustments from translating foreign subsidiaries to the reporting currency.  Comprehensive income for the year ended December 31, 2016 was reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors which accumulated during 2013, 2014 and 2015 due to the Company improperly recognizing an $8.6 million deferred tax asset on unrealized foreign currency losses not expected to be realized within one year. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2016 and 2015.

Out-of-Period Items

Deferred tax liabilities related to intangibles for customer relationships acquired in Canada during 2012 and 2013 were reduced by $2.2 million during the fourth quarter of 2017 to correct the tax rate used to establish the deferred tax liabilities at the dates of acquisition. The Company evaluated the misstatement of each period since these acquisitions were completed and concluded the effects were immaterial.

During the first quarter of 2015, we identified a $2.5 million ($1.6 million net of tax) overstatement of an accrual at December 31, 2014, which overstated 2014 selling, general and administrative expense. We recorded an out-of-period adjustment to correct this overstatement in the quarter ended March 31, 2015. During the fourth quarter of 2015, we realized $1.5 million of net tax benefits related to events which occurred in earlier years. These out-of-period items reduced the 2015 net loss by $3.1 million and 2015 basic and diluted net loss per share by $0.21. We assessed the materiality of this overstatement and concluded the overstatement was not material to the results of operations or financial condition for the year ended December 31, 2015.

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

Standards Effective in 2017 or Earlier

Accounting Changes and Error Corrections. In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-03 ("ASU 2017-03"), Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. This update adds language to the SEC Staff Guidance in relation to ASU 2014-09, ASU 2016-02, and ASU 2016-13. This ASU 2017-03 provides the SEC Staff view that a registrant should consider additional quantitative and qualitative disclosures related to the previously mentioned ASUs in connection with the status and impact of their adoption. This guidance, which was effective immediately, did not have a material impact on our Condensed Consolidated Financial Statements.

Compensation – Stock Compensation. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update aims to simplify aspects of accounting for share-based payment award transactions, including (a) income tax consequences, (b) classification of awards as either equity or liabilities, and (c) classification on the statement of cash flows. This pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2016 and interim periods within those annual periods.  The Company adopted the ASU January 1, 2017 and it had the following impact on the Company's Condensed Consolidated Financial Statements:

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Topic	Method of Adoption	Impact on Consolidated Financial Statements
Recognize all excess tax benefits and tax deficiencies as income tax benefit or expense	Prospective	The Company recognized $0.1 million of excess tax benefit in income taxes for the year ended December 31, 2017, decreasing the effective tax rate for the year.
Excess tax benefits and deficiencies on the statement of cash flows are classified as an operating activity	Prospective	The Company recognized $0.1 million of excess tax benefit for the year ended December 31, 2017 as an operating activity.  Prior to the adoption of the ASU 2016-09, the excess tax expense for the year ended December 31, 2016 of $0.6 million was recognized as a financing activity. The excess tax expense for the year ended December 31, 2015 was zero.
Employee taxes paid when an employer withholds shares for tax-withholding purposes on the statement of cash flows are classified as financing activity	Retrospective	The Company reclassified $0.2 million and $0.8 million of employee taxes paid from cash flows from operating activities to cash flows from financing activities on the Consolidated Statements of Cash Flows for the years ended December 31, 2016 and December 31, 2015.
Accounting for forfeitures and tax withholding elections	Prospective	The Company has not changed its accounting policy for forfeitures.  There is no significant impact on Consolidated Financial Statements.

Income Taxes. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. The update requires entities to present deferred tax assets and liabilities as noncurrent in a classified balance sheet. The update simplifies the current guidance, which requires entities to separately present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. This pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within.  The Company adopted this ASU January 1, 2017 and reclassified $9.5 million of current deferred income tax assets from current assets to non-current deferred income tax liabilities on the Condensed Consolidated Balance Sheet as of December 31, 2016.

Inventory. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory. The amendments in ASU 2015-11 clarify the subsequent measurement of inventory requiring an entity to subsequently measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. This ASU applies only to inventory that is measured using the first-in, first-out (FIFO) or average cost method. Subsequent measurement is unchanged for inventory measured using last-in, first-out (LIFO) or the retail inventory method. The amendments in ASU 2015-11 should be applied prospectively and are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.  The Company adopted this ASU January 1, 2017 and it did not have a material impact on the Company's Condensed Consolidated Financial Statements.

Statement of Cash Flows. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230), Classification of Restricted Cash. The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amounts should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in ASU 2016-18 should be applied retrospectively and are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company early adopted this ASU September 30, 2017 and classified $3.5 million of cash to restricted cash on the Condensed Consolidated Balance Sheet as of December 31, 2017. This cash deposit was required as collateral for letters of credit outstanding under our previously existing credit facility.

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Standards Effective in 2018 or Later

Compensation - Stock Compensation.  In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 with early adoption permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company is currently assessing the impact, if any, that this ASU will have upon adoption.

Intangibles-Goodwill and Other. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.  This ASU is to simplify how an entity is required to test goodwill for impairment. The effective date of the amendment to the standard is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company early adopted this ASU December 31, 2017. The Company's annual tests of goodwill for impairment, including qualitative assessments of all of its reporting units goodwill, determined a quantitative impairment test was not necessary.

Business Combinations. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The effective date of this ASU is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements.

Statement of Cash Flows. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of the amendment to the standard is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU is not expected to have a material impact on the Company's ConsolidatedFinancial Statements.

Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU 2016-13: Financial Instruments – Credit Losses, which replaces the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses.  The update is intended to provide financial statement users with more useful information about expected credit losses.  The amended guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.  We are currently evaluating the effect, if any, that the guidance will have on the Company's Consolidated Financial Statements and related disclosures.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The update requires organizations that lease assets ("lessees") to recognize the assets and liabilities for the rights and obligations created by leases with terms of more than 12 months. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee remains dependent on its classification as a finance or operating lease. The criteria for determining whether a lease is a finance or operating lease has not been significantly changed by this ASU. The ASU also requires additional disclosure of the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. This pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact that this standard will have on its Consolidated Financial Statements.

Financial Instruments. In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities. This change to the financial instrument model primarily affects the accounting for equity investments, financial liabilities under fair value options and the presentation and disclosure requirements for financial instruments. The effective date for the standard is for fiscal years and interim periods within those years beginning after December 15, 2017. Certain provisions of the new guidance can be adopted early. The Company is evaluating the impact of this ASU.

Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides guidance on revenue recognition. The core principal of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance requires entities to apply a five-step method to (1) identify the contract(s) with customers, (2) identify the performance obligation(s) in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligation(s) in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. This pronouncement, as amended by ASU 2015-14, is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017.

The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes and financial statement disclosures. We have engaged third party consultants to assist us in assessing our contracts with customers, processes and controls required to address the impact that ASU No. 2014-09 will have on our business. The Company has elected the modified retrospective method and will adopt the new revenue guidance effective January 1, 2018, with an expected immaterial impact to the opening retained earnings.

The analysis of contracts with customers under the new revenue recognition standard was consistent with the Company's current revenue recognition model, whereby revenue is recognized primarily on the date products are shipped to the customer. The ASU also requires expanded qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, significant judgments and accounting policy.

Based on our overall assessment performed to date, the adoption of the new standard is not expected to have an ongoing material impact on the Company's Consolidated Financial Statements.

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NOTE 4 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Authoritative guidance for financial assets and liabilities measured on a recurring basis applies to all financial assets and financial liabilities that are being measured and reported on a fair value basis. Fair value, as defined in the authoritative guidance, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

During the third and fourth quarters of 2015, in connection with interim tests for impairment, DXP recorded impairment charges of $57.8 million and $9.8 million, respectively, in order to reflect the implied fair values of goodwill, which is a non-recurring fair value adjustment. The fair values of goodwill used in the impairment calculations were estimated based on discounted estimated future cash flows with the discount rates of 10.0% to 11.5%. The measurements utilized to determine the implied fair value of goodwill represent significant unobservable inputs (Level 3) in accordance with the fair value hierarchy.

NOTE 5 - INVENTORIES

The carrying values of inventories were as follows (in thousands):

	December 31, 2017		December 31, 2016
Finished goods	$	79,820	$	74,269
Work in process		11,593		9,430
Inventories	$	91,413	$	83,699

NOTE 6 – COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS

Costs and estimated profits in excess of billings on uncompleted contracts arise in the consolidated balance sheets when revenues have been recognized but the amounts cannot be billed under the terms of the contracts. Such amounts are recoverable from customers upon various measures of performance, including achievement of certain milestones, completion of specified units, or completion of a contract.

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Costs and estimated profits on uncompleted contracts and related amounts billed for 2017 and 2016 were as follows (in thousands):

	December 31,
	2017		2016
Costs incurred on uncompleted contracts	$	37,899	$	25,214
Estimated earnings, thereon		2,665		6,274
Total		40,564		31,488
Less: billings to date		17,881		15,864
Net	$	22,683	$	15,624

Such amounts were included in the accompanying Consolidated Balance Sheets for 2017 and 2016 under the following captions (in thousands):

	December 31,
	2017			2016
Costs and estimated profits in excess of billings on uncompleted contracts	$	26,915		$	18,421
Billings in excess of costs and estimated profits on uncompleted contracts		(4,249	)		(2,813	)
Translation Adjustment		17			16
Net	$	22,683		$	15,624

NOTE 7 - PROPERTY AND EQUIPMENT

The carrying values of property and equipment were as follows (in thousands):

	December 31, 2017			December 31, 2016
Land	$	2,346		$	2,346
Buildings and leasehold improvements		16,724			16,259
Furniture, fixtures and equipment		94,475			94,784
Less – Accumulated depreciation		(60,208	)		(52,582	)
Total Property and Equipment	$	53,337		$	60,807

Depreciation expense was $10.5 million, $11.9 million, and $12.6 million for the years ended December 31, 2017, 2016, and 2015, respectively. Capital expenditures by segment are included in Note 18.

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NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2017 (in thousands):

	Goodwill		Other Intangible Assets			Total
Balances as of December 31, 2016	$	187,591	$	94,831		$	282,422
Translation adjustment		-		960			960
Amortization		-		(17,266	)		(17,266	)
Balances as of December 31, 2017	$	187,591	$	78,525		$	266,116

The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2016 (in thousands):

	Goodwill			Other Intangible Assets			Total
Balances as of December 31, 2015	$	197,362		$	112,297		$	309,659
Sale of subsidiary		(9,620	)		-			(9,620	)
Purchase accounting adjustment		(151	)		-			(151	)
Translation adjustment		-			595			595
Amortization		-			(18,061	)		(18,061	)
Balances as of December 31, 2016	$	187,591		$	94,831		$	282,422

The following table presents goodwill balance by reportable segment as of December 31, 2017 and 2016 (in thousands):

	As of December 31,
	2017		2016
Service Centers	$	154,473	$	154,473
Innovative Pumping Solutions		15,980		15,980
Supply Chain Services		17,138		17,138
Total	$	187,591	$	187,591

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During the third quarter of 2015, the price of DXP's common stock and the price of crude oil declined over 40% and over 20%, respectively. This decline in oil prices reduced spending by our customers and reduced our revenue expectations. This sustained decline in crude oil prices, reduced capital spending by customers and reduced revenue expectations were determined to be a triggering event during the third quarter of 2015. This triggering event required us to perform testing for possible goodwill impairment in two of our reporting units, and our step one testing indicated there was an impairment in the B27 IPS and B27 SC reporting units. No triggering event was identified in our other reporting units during the third quarter. ASC 350 step two of the goodwill impairment testing for the reporting units was performed preliminarily during the third quarter of 2015. Our preliminary analysis concluded that $48.0 million of our B27 IPS reporting unit's goodwill and $9.8 million of our B27 SC reporting unit's goodwill was impaired. The remaining goodwill for the B27 IPS and B27 SC reporting units at September 30, 2015 was $4.9 million and $10.3 million, respectively. The September 30, 2015 ASC 350 step two testing was completed in the fourth quarter of 2015 without any adjustment to the amount recorded in the third quarter of 2015. Fair value was based on expected future cash flow using Level 3 inputs under Account Standards Codification 820 Fair Value Measurements ("ASC 820"). The cash flows are those expected to be generated by market participants, discounted at a rate of return market participants would expect. Approximately 60% of the goodwill associated with the B27 acquisition is not deductible for tax purposes. Accordingly, the financial statement tax benefit is calculated for only 40% of the goodwill impairment. The pretax impairment impacted DXP's effective tax rate for 2015. For the year ended December 31, 2014, accumulated impairment for the B27 IPS and B27 SC reporting units was $95.1 million and $10.2 million, respectively. After recording the third quarter impairment loss, accumulated impairment expenses for the B27 IPS and B27 SC reporting units were $143.1 million and $20.0 million, respectively, at September 30, 2015.

DXP recorded $1.1 million of impairment expense in the third quarter of 2015 to write off an acquired intangible asset related to an ITT Goulds distribution agreement, which was terminated by ITT Goulds during 2015. The remaining intangible asset value of vendor distribution agreements for the year ended December 31, 2015 was zero. None of the impairment is expected to be deductible for tax purposes.

During the fourth quarter of 2015, the price of DXP's common stock and the price of crude oil declined over 16% and over 18%, respectively. This decline in oil prices reduced spending by our customers during the fourth quarter and resulted in fourth quarter actual earnings for the B27 IPS and B27 SC reporting units declining significantly from the forecasts used in the impairment analysis at the end of the third quarter of 2015. The declines in forecasted earnings for these two reporting units were determined to be a triggering event during the fourth quarter of 2015. This triggering event required us to perform testing for possible goodwill impairment in these two reporting units, and our step one testing indicated there may be an impairment in the B27 IPS and B27 SC reporting units. No triggering event was identified in our other reporting units during the fourth quarter. ASC 350 step two of the goodwill impairment testing for the reporting units was performed during the fourth quarter of 2015. Our analysis concluded that $4.9 million of our B27 IPS reporting unit's goodwill and $5.0 million of our B27 SC reporting unit's goodwill was impaired. Fair value was based on expected future cash flow using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by market participants, discounted at a rate of return market participants would expect. The remaining goodwill for the B27 IPS and B27 SC reporting units at December 31, 2015 was zero and $5.3 million, respectively. Approximately 60% of the goodwill associated with the B27 acquisition is not deductible for tax purposes. Accordingly, the financial statement tax benefit is calculated for only 40% of the goodwill impairment. The pretax impairment impacted DXP's effective tax rate for 2015. After recording the fourth quarter impairment loss, accumulated impairment for the B27 IPS and B27 SC reporting units were $148.0 million and $25.0 million, respectively, for the year ended December 31, 2015. As none of the Company's other reporting units recorded impairment losses in 2015, accumulated impairment for these units remained at $12.3 million.

The impairment losses during the year ended December 31, 2015 are included in the "impairment expense" line item on the consolidated statements of income (loss).

The following table presents a summary of amortizable other intangible assets (in thousands):

	As of December 31, 2017							As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Carrying Amount, net		Gross Carrying Amount		Accumulated Amortization			Carrying Amount, net
Customer relationships	$	162,200	$	(83,806	)	$	78,394	$	163,022	$	(68,446	)	$	94,576
Non-compete agreements		949		(818	)		131		1,836		(1,581	)		255
Total	$	163,149	$	(84,624	)	$	78,525	$	164,858	$	(70,027	)	$	94,831

Gross carrying amounts as well as accumulated amortization are partially affected by the fluctuation of foreign currency rates. Other intangible assets are amortized according to estimated economic benefits over their estimated useful lives.

Customer relationships are amortized over their estimated useful lives. Amortization expense is recognized according to estimated economic benefits and was $17.3 million, $18.1 million, and $20.6 million for the years ended December 31, 2017, 2016, and 2015, respectively.  The estimated future annual amortization of intangible assets for each of the next five years and thereafter are as follows (in thousands):

2018	$	15,615
2019		14,170
2020		10,292
2021		8,911
2022		7,264
Thereafter		22,273
Total	$	78,525

The weighted average remaining estimated life for customer relationships and non-compete agreements are 8.3 years and 1.8 years, respectively.

24

NOTE 9 – LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

	December 31,
	2017			2016
ABL Revolver	$	-		$	-
Term Loan B		249,375			-
Line of credit		-			147,600
Term loan		-			74,500
Promissory note payable in monthly installments at 2.9% through January 2021, collateralized by equipment		2,722			3,577
Less unamortized debt issuance costs		(10,073	)		(992	)
Total Debt		242,024			224,685
Less: Current maturities		(3,381	)		(51,354	)
Total Long-term Debt	$	238,643		$	173,331

ABL Facility

On August 29, 2017, DXP  entered into a five year, $85 million Asset Based Loan and Security Agreement (the "ABL Credit Agreement").  The ABL Credit Agreement provides for asset-based revolving loans in an aggregate principal amount of up to $85.0 million (the "ABL Loans"). The ABL Loans may be increased, in increments of $10.0 million, up to an aggregate of $50.0 million. The facility will mature on August 29, 2022. Interest accrues on outstanding borrowings at a rate equal to LIBOR or CDOR plus a margin ranging from 1.25% to 1.75% per annum, or at an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.25% to 0.75% per annum, in each case, based upon the average daily excess availability under the facility for the most recently completed calendar quarter. Fees ranging from 0.25% to 0.375% per annum are payable on the portion of the facility not in use at any given time. The interest rate for the ABL facility was 2.9% at December 31, 2017. The unused line fee was 0.375% at December 31, 2017.

The obligations of the Borrowers are guaranteed by the Company and its direct and indirect material wholly-owned subsidiaries other than certain excluded subsidiaries.

The ABL Credit Agreement contains a financial covenant restricting the Company from allowing its Fixed Charge Coverage Ratio be less than 1.00 to 1.00 during a compliance period, which is triggered when the availability under ABL facility falls below a threshold set forth in the ABL Credit Agreement. As of December 31, 2017, the Company's consolidated Fixed Charge Coverage Ratio was 3.67 to 1.00.

The ABL Loan is secured by substantially all of the assets of the Company.

Senior Secured Term Loan B:

On August 29, 2017, DXP entered into a six year Senior Secured Term Loan B (the "Term Loan") with an original principal amount of $250 million which amortizes in equal quarterly installments of 0.25% with the balance payable in August 2023, when the facility matures.  Subject to securing additional lender commitments, the Term Loan allows for incremental increases in facility size up to an aggregate of $30 million, in minimum increments of $10 million, plus an additional amount such that DXP's Secured Leverage Ratio (as defined under the Term Loan) would not exceed 3.60 to 1.00. We are required to repay the Term Loan in connection with certain asset sales and insurance proceeds, certain debt proceeds and 50% of excess cash flow, reducing to 25%, if our total leverage ratio is no more than 3.00 to 1.00 and 0%, if our total leverage ratio is no more than 2.50 to 1.00. In addition, the Term Loan contains a number of customary restrictive covenants. The interest rate for the Term Loan was 7.1 % as of December 31, 2017.

The Term Loan requires that the company's Secured Leverage Ratio, defined as the ratio, as of the last day of any fiscal quarter of consolidated secured debt (net of restricted cash, not to exceed $30 million) as of such day to EBITDA, beginning with the fiscal quarter ending December 31, 2017, is either equal to or less than as indicated in the table below:

Fiscal Quarter	Secured Leverage Ratio
December 31, 2017	5.75:1.00
March 31, 2018	5.75:1.00
June 30, 2018	5.50:1.00
September 30, 2018	5.50:1.00
December 31, 2018	5.25:1.00
March 31, 2019	5.25:1.00
June 30, 2019	5.00:1.00
September 30, 2019	5.00:1.00
December 31, 2019	4.75:1.00
March 31, 2020	4.75:1.00
June 30, 2020 and each Fiscal Quarter thereafter	4.50:1.00

25

As of December 31, 2017, the Company's consolidated Secured Leverage Ratio was 3.59 to 1.00.

The Term Loan is guaranteed by each of the Company's direct and indirect material wholly owned subsidiaries, other than any of the Company's Canadian subsidiaries and certain other excluded subsidiaries.

The Term Loan is secured by substantially all of the assets of the Company.

Extinguishment of Previously Existing Credit Facility

As set forth above, on August 29, 2017, the Company terminated its previously existing credit agreement and facility and replaced it with the Term Loan and the ABL Credit Agreement. The terminated facility was under the Amended and Restated Credit Agreement, dated as of January 2, 2014, by and among the Company, as borrower, and Wells Fargo Bank, National Association, as issuing lender and administrative agent for other lenders (the "OriginalCredit Agreement"). This Original Credit Agreement was subsequently amended five times by the First Amendment to Restated Credit Agreement dated as of August 6, 2015, Second Amendment to Restated Credit Agreement dated as of September 30, 2015, Third Amendment to Restated Credit Agreement dated as of May 12, 2016, Fourth Amendment to Restated Credit Agreement dated as of August 15, 2016, and Fifth Amendment to Amended and Restated Credit Agreement dated as of November 28, 2016. A description of the material terms of these terminated agreements can be found in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2017.  In connection with the extinguishment of the previously existing Credit Facility we recorded a $0.6 million write-off of debt issuance costs, which was included in interest expense during the third quarter of 2017.

As of December 31, 2017, the maturities of long-term debt for the next five years and thereafter were as follows (in thousands):

2018	$	3,381
2019		3,405
2020		3,436
2021		2,500
2022		2,500
Thereafter		236,875
Total	$	252,097

26

NOTE 10 - INCOME TAXES

The components of income before income taxes were as follows (in thousands):

	Years Ended December 31,
	2017		2016			2015
Domestic	$	13,183	$	11,079		$	(42,179	)
Foreign		3,709		(1,405	)		3,259
Total income before taxes	$	16,892	$	9,674		$	(38,920	)

The provision for income taxes consisted of the following (in thousands):

	Years Ended December 31,
	2017			2016			2015
Current -
Federal	$	1,400		$	(902	)	$	5,182
State		698			136			1,499
Foreign		2,092			602			2,493
		4,190			(164	)		9,174
Deferred -
Federal		686			4,174			(7,090	)
State		(464	)		120			-
Foreign		(4,049	)		(1,607	)		(1,934	)
		(3,827	)		2,687			(9,024	)
	$	363		$	2,523		$	150

The difference between income taxes computed at the federal statutory income tax rate (35%) and the provision for income taxes is as follows (in thousands):

	Years Ended December 31,
	2017			2016			2015
Income taxes computed at federal statutory rate	$	5,912		$	3,386		$	(13,622	)
State income taxes, net of federal benefit		152			166			974
Non-tax deductible impairment expense computed at federal statutory rate		-			-			15,765
Foreign adjustment		255			140			689
Meals and entertainment		422			361			620
Gain on sale of Vertex		-			(1,971	)		-
Domestic Production Activity Deduction		(98	)		-			(1,143	)
Research and development tax credit		(641	)		(886	)		(1,730	)
Foreign tax credit		-			(383	)		(921	)
Valuation Allowance		(791	)		-			-
Tax Reform Deferred Tax Remeasurement		(1,294	)		-			-
Canadian Acquisition Deferred Tax Liability True Up		(2,180	)		-			-
Foreign rate difference		(297	)		112			(261	)
Other		(1,077	)		1,598			(221	)
	$	363		$	2,523		$	150

27

Deferred tax liabilities and assets were comprised of the following (in thousands):

	December 31,
	2017			2016
Deferred tax assets:
Goodwill	$	2,668		$	4,029
Allowance for doubtful accounts		1,707			2,469
Inventories		2,365			3,944
Accruals		(61	)		97
Research and development credit carryforward		1,115			886
Foreign Tax Credit Carryforward		64			64
Charitable Contribution Carryforward		559			138
Net operating loss carryforward		136			760
Capital loss carryforward		12,225			18,903
Deferred Compensation		475			1,881
Other Accruals		266			-
Other		65			107
Total deferred tax assets		21,584			33,278
Less valuation allowance		(12,220	)		(19,633	)
Total deferred tax asset, net of valuation Deferred tax liabilities :		9,364			13,645
Intangibles		(8,695	)		(10,042	)
Property and equipment		(6,860	)		(12,762	)
Unremitted foreign earnings		(354	)		(354	)
Cumulative translation adjustment		(67	)		-
Other		(457	)		-
Net deferred tax liability	$	(7,069	)	$	(9,513	)

28

At December 31, 2017, the Company had $51.4 million of capital loss carryforward, which will expire in 2021. The Company has recorded a valuation allowance for nearly all of this carryforward amount.  The valuation allowance represents a provision for uncertainty as to the realization of the tax benefits of these carryforwards and the deferred tax assets that may not be realized.

On December 22, 2017, the Tax Cuts and Jobs Act ("The Act") was enacted into law.  The majority of the provisions signed into law in 2017 do not take effect until January 1, 2018.  The Act is a comprehensive tax reform legislation that contains significant changes to corporate taxation.  Provisions on the enacted law include a permanent reduction of the corporate income tax rate from 35% to 21%, imposing a mandatory one-time tax on un-repatriated accumulated earnings of foreign subsidiaries, a partial limitation on the deductibility of business interest expense, a limitation on net operating losses to 80% of taxable income each year, a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a partial territorial system (along with rules that create a new U.S. minimum tax on earnings of foreign subsidiaries), and other related provisions to maintain the U.S. tax base.
In accordance with SAB 118 issued by the Securities and Exchange Commission on December 22, 2017, companies are allowed a one year measurement period to complete the accounting related to The Act. Specifically, SAB 118 permits companies to record a provisional amount which can be remeasured during the measurement period due to obtaining, preparing, or analyzing additional information about facts and circumstances that existed as of the enacted date.  As a result, we remeasured our net deferred income tax liabilities by a provisional $1.3 million benefit and a corresponding provisional decrease in the net deferred tax liability as of December 31, 2017.  We are still in the process of analyzing The Act's impact as permitted under SAB 118. The largest impact to the Company being the remeasurement of deferred taxes due to the U.S. statutory tax rate change. The mandatory repatriation and resulting toll charge on accumulated foreign earnings and profits has limited impact on the Company as unremitted earnings from non-US jurisdictions is minimal.  The Company is provisional in its approach and assertion that there is no financial statement impact as of December 31, 2017.

 Deferred tax liabilities related to intangibles for customer relationships acquired in Canada during 2012 and 2013 were reduced by $2.2 million during the fourth quarter of 2017 to correct the tax rate used to establish the deferred tax liabilities at the dates of acquisition. The Company evaluated the misstatement of each period since these acquisitions were completed and concluded the effects were immaterial.

Total deferred tax assets at December 31, 2016 were reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors of $1.3 million, $2.7 million and $4.6 million which were recorded during 2013, 2014 and 2015, respectively, due to the Company improperly recognizing a deferred tax asset related to cumulative translation adjustment losses.  The Company evaluated the misstatement of each period and concluded the effects were immaterial.  Therefore, the Company decided to correct the accumulated $8.6 million error in the fourth quarter of 2016. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2017, 2016 and 2015.

29

NOTE 11 - SHARE-BASED COMPENSATION

Restricted Stock

Under the restricted stock plans approved by our shareholders, directors, consultants and employees may be awarded shares of DXP's common stock. The shares of restricted stock granted to employees and that are outstanding as of December 31, 2017 vest in accordance with one of the following vesting schedules: 100% one year after date of grant; 33.3% each year for three years after date of grant; 20% each year for five years after date of grant; or 10% each year for ten years after date of grant. The shares of restricted stock granted to non-employee directors of DXP vest one year after the grant date. The fair value of restricted stock awards is measured based upon the closing prices of DXP's common stock on the grant dates and is recognized as compensation expense over the vesting period of the awards. Once restricted stock vests, new shares of the Company's stock are issued.  At December 31, 2017, 401,223 shares were available for future grant.

Changes in restricted stock for the twelve months ended December 31, 2017 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2016		143,380		$	26.76
Granted		18,672		$	34.07
Forfeited		(298	)	$	59.60
Vested		(83,853	)	$	24.92
Non-vested at December 31, 2017		77,901		$	30.36

Changes in restricted stock for the twelve months ended December 31, 2016 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2015		137,507		$	54.58
Granted		108,553		$	17.07
Forfeited		(39,000	)	$	65.41
Vested		(63,680	)	$	46.65
Non-vested at December 31, 2016		143,380		$	26.76

Changes in restricted stock for the twelve months ended December 31, 2015 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2014		179,942		$	52.71
Granted		35,821		$	40.95
Forfeited		(20,855	)	$	41.34
Vested		(57,401	)	$	44.99
Non-vested at December 31, 2015		137,507		$	54.58

Compensation expense, associated with restricted stock, recognized in the years ended December 31, 2017, 2016 and 2015 was $1.7 million, $2.0 million, and $3.0 million, respectively. Related income tax benefits recognized in earnings in the years ended December 31, 2017, 2016 and 2015 were approximately $0.7 million, $0.8 million and $1.2 million, respectively. Unrecognized compensation expense under the DXP Enterprises, Inc. 2016 Omnibus Incentive Plan at December 31, 2017, December 31, 2016 and December 31, 2015 was $1.6 million, $2.7 million and $4.9 million, respectively. As of December 31, 2017, the weighted average period over which the unrecognized compensation expense is expected to be recognized is 15.2 months.

30

NOTE 12 - EARNINGS PER SHARE DATA

Basic earnings per share is computed based on weighted average shares outstanding and excludes dilutive securities. Diluted earnings per share is computed including the impacts of all potentially dilutive securities. For the year ended December 31, 2015, we excluded the potential dilution of convertible preferred stock, which could be converted into 840,000 shares because they would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):

	December 31,
	2017			2016			2015
Basic:
Weighted average shares outstanding		17,400			15,042			14,423
Net income (loss) attributable to DXP Enterprises, Inc.	$	16,888		$	7,702		$	(38,536	)
Convertible preferred stock dividend		(90	)		(90	)		(90	)
Net income (loss)  attributable to common shareholders	$	16,798		$	7,612		$	(38,626	)
Per share amount	$	0.97		$	0.51		$	(2.68	)
Diluted:
Weighted average shares outstanding		17,400			15,042			14,423
Assumed conversion of convertible  preferred stock		840			840			-
Total dilutive shares		18,240			15,882			14,423
Net income (loss) attributable to  common shareholders	$	16,798		$	7,612		$	(38,626	)
Convertible preferred stock dividend		90			90			-
Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share	$	16,888		$	7,702		$	(38,626	)
Per share amount	$	0.93		$	0.49		$	(2.68	)

Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the period and excludes dilutive securities. Diluted earnings per share reflects the potential dilution that could occur if the preferred stock was converted into common stock. Restricted stock is considered a participating security and is included in the computation of basic earnings per share as if vested. Because holders of Preferred Stock do not participate in losses, the loss was not allocated to Preferred Stock for fiscal year 2015. The Preferred Stock is convertible into 840,000 shares of common stock.  

31

NOTE 13 – CAPITAL STOCK

The Company has Series A and Series B preferred stock of 1,122 shares and 15,000 shares outstanding as of year-end 2017, 2016 and 2015, respectively. The preferred stock did not have any activity during 2017, 2016 and 2015. The activity related to outstanding common stock and common stock held in treasury was as follows:

		December 31,
	2017			2016		2015
Common Stock:		Quantity (in thousands)
Balance, beginning of period	17,197		14,390		14,375
Issuance of shares for compensation net of withholding	119		84		15
Issuance of common stock related to equity distribution agreements	-		2,723		-
Balance, end of period	17,316			17,197		14,390

		December 31,
	2017			2016			2015
Treasury Shares:		Quantity (in thousands)
Balance, beginning of period	-		264		280
Issuance of treasury shares for acquisition	-		-		(149)
Purchase of treasury shares	-		-		191
Issuance of treasury shares upon vesting of restricted shares net of withholding	-		(264)		(58)
Balance, end of period	-		-			264

32

NOTE 14 - BUSINESS ACQUISITIONS

All of the Company's acquisitions have been accounted for using the purchase method of accounting. Revenues and expenses of the acquired businesses have been included in the accompanying consolidated financial statements beginning on their respective dates of acquisition. The allocation of purchase price to the acquired assets and liabilities is based on estimates of fair market value and may be revised if and when additional information the Company is awaiting concerning certain asset and liability valuations is obtained, provided that such information is received no later than one year after the date of acquisition. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. It specifically includes the expected synergies and other benefits that we believe will result from combining the operations of our acquisitions with the operations of DXP and any intangible assets that do not qualify for separate recognition such as the assembled workforce.

On April 1, 2015, the Company completed the acquisition of all of the equity interests of Tool Supply, Inc. ("TSI") to expand DXP's cutting tools offering in the Northwest region of the United States. DXP paid approximately $5.0 million for TSI, which was borrowed under the Company's credit facility in effect at the date of acquisition. Estimated goodwill of $2.9 million and intangible assets of $2.0 were recognized for this acquisition. All of the estimated goodwill is included in the Service Centers segment. None of the estimated goodwill or intangible assets are expected to be tax deductible.

On September 1, 2015, the Company completed the acquisition of all of the equity interests of Cortech Engineering, LLC ("Cortech") to expand DXP's rotating equipment offering to the Western seaboard. DXP paid approximately $14.9 million for Cortech. The purchase was financed with borrowings under the Company's credit facility in effect at the date of acquisition, as well as by issuing $4.4 million (148.8 thousand shares) of DXP common stock. Estimated intangible assets of $5.2 were recognized for this acquisition. In the first quarter of 2016, DXP adjusted the deferred tax liability associated with the acquisition by $151 thousand, which resulted in an adjusted goodwill balance of $8.7 million. All of the estimated goodwill is included in the Service Centers segment. Approximately $4.5 million of the goodwill and intangible assets are not deductible for tax purposes.

The value assigned to the non-compete agreements and customer relationships for business acquisitions were determined by discounting the estimated cash flows associated with non-compete agreements and customer relationships as of the date the acquisition was consummated. The estimated cash flows were based on estimated revenues net of operating expenses and net of capital charges for assets that contribute to the projected cash flow from these assets. The projected revenues and operating expenses were estimated based on management estimates. Net capital charges for assets that contribute to projected cash flow were based on the estimated fair value of those assets.

For the twelve months ended December 31, 2016, businesses acquired during 2015 contributed sales of $25.2 million and earnings (loss) before taxes of approximately $(0.3) million.

The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2017 and 2016, assuming the divestiture of a business completed in 2016 were consummated as of  January 1, 2016 are as follows (in millions, except per share amounts):

	Years Ended December 31,
	2017		2016
Net sales	$	1,006.8	$	939.4
Net income attributable to DXP Enterprises, Inc.	$	16.9	$	5.5
Per share data
Basic earnings	$	0.97	$	0.36
Diluted earnings	$	0.93	$	0.35

The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2016 and 2015, assuming the acquisition of businesses completed in 2015 and divestiture of a business completed in 2016 (previously discussed in Item 1, Business) was consummated as of January 1, 2015 are as follows (in millions, except per share amounts.

	Years Ended December 31,
	2016		2015
Net sales	$	939.4	$	1,228.9
Net income (loss) attributable to DXP Enterprises, Inc.	$	5.5	$	(40.7	)
Per share data
Basic earnings (loss)	$	0.36	$	(2.83	)
Diluted earnings (loss)	$	0.35	$	(2.83	)

33

NOTE 15 - COMMITMENTS AND CONTINGENCIES

The Company leases equipment, automobiles and office facilities under various operating leases. The future minimum rental commitments as of December 31, 2017, for non-cancelable leases are as follows (in thousands):

2018	$	19,419
2019		15,002
2020		11,492
2021		9,435
2022		6,637
Thereafter		3,441

Rental expense for operating leases was $27.7 million, $27.6 million and $32.7 million for the years ended December 31, 2017, 2016 and 2015, respectively.

From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. While DXP is unable to predict the outcome of these lawsuits, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on DXP's consolidated financial position, cash flows, or results of operations.

NOTE 16 - EMPLOYEE BENEFIT PLANS

The Company offers a 401(k) plan which is eligible to substantially all employees in the United States. For the year ended December 31, 2015 as well as the first quarter of 2016, the Company elected to match employee contributions at a rate of 50 percent of up to 4 percent of salary deferral. The Company contributed $0.2 million, $0.4 million, and $2.6 million to the 401(k) plan in the years ended December 31, 2017, 2016, and 2015, respectively.  In 2016 the Company suspended indefinitely the employee match program. The Company contributed $0.4 million in the first quarter of 2016 to the 401(k) plan.  No other contributions were made during the remainder of 2016.  The Company reinstated the employee match program in October 2017 contributing $0.2 million to the 401(k) plan for 2017.

NOTE 17 - OTHER COMPREHENSIVE INCOME

Other comprehensive income generally represents all changes in shareholders' equity during the period, except those resulting from investments by, or distributions to, shareholders.

During 2012 and 2013, the Company acquired four entities that operate in Canada. These Canadian entities maintain financial data in Canadian dollars. Upon consolidation, the Company translates the financial data from these foreign subsidiaries into U.S. dollars and records cumulative translation adjustments in other comprehensive income. The Company recorded $(1.2) million, $(7.7) million and ($4.9) million in translation adjustments, net of tax, in other comprehensive income during the years ended December 31, 2017, 2016 and 2015, respectively. Comprehensive income for the year ended December 31, 2016 was reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors which accumulated during 2013, 2014 and 2015 due to the Company improperly recognizing an $8.6 million deferred tax asset on unrealized foreign currency losses not expected to be realized within one year. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2016 and 2015.

NOTE 18 – SEGMENT AND GEOGRAPHICAL REPORTING

The Company's reportable business segments are: Service Centers, Innovative Pumping Solutions and Supply Chain Services. The Service Centers segment is engaged in providing maintenance, MRO products and equipment, including logistics capabilities, to industrial customers. The Service Centers segment provides a wide range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, fastener, industrial supply, safety products and safety services categories. The Innovative Pumping Solutions segment fabricates and assembles custom-made pump packages, remanufactures pumps and manufactures branded private label pumps. The Supply Chain Services segment manages all or part of a customer's MRO products supply chain, including warehouse and inventory management.

The high degree of integration of the Company's operations necessitates the use of a substantial number of allocations and apportionments in the determination of business segment information. Sales are shown net of intersegment eliminations.

34

Business Segmented Financial Information

The following table sets out financial information relating the Company's segments (in thousands):

Years Ended December 31,	Service Centers			Innovative Pumping Solutions			Supply Chain Services		Total
2017
Sales	$	641,275		$	204,030		$	161,477	$	1,006,782
Operating income for reportable segments, excluding amortization		63,250			11,423			15,451		90,124
Identifiable assets at year end		385,744			172,538			59,942		618,224
Capital expenditures		1,076			1,488			82		2,646
Depreciation		5,162			4,198			103		9,463
Amortization		8,989			7,194			1,083		17,266
Interest expense		9,712			5,352			1,990		17,054
2016
Sales	$	621,007		$	187,124		$	153,961	$	962,092
Operating income for reportable segments, excluding impairment expense		47,634			9,867			15,449		72,950
Identifiable assets at year end		370,261			175,198			44,796		590,255
Capital expenditures		447			3,827			129		4,403
Proceeds from sale of fixed assets		(1,038	)		(168	)		-		(1,206	)
Depreciation		6,520			3,834			126		10,480
Amortization		9,152			7,826			1,083		18,061
Interest expense		9,290			4,422			1,852		15,564
2015
Sales	$	826,588		$	254,829		$	165,626	$	1,247,043
Operating income for reportable segments, excluding impairment expense		78,170			21,584			14,213		113,967
Identifiable assets at year end		451,333			159,365			50,012		660,710
Capital expenditures		3,185			8,383			604		12,172
Depreciation		7,734			2,930			227		10,891
Amortization		10,334			8,406			1,881		20,621
Interest expense		2,967			6,881			1,084		10,932
Impairment expense by segment		15,842			52,893			-		68,735

35

	Years Ended December 31,
	2017			2016			2015
Operating income for reportable segments,    excluding impairment expense	$	90,124		$	72,950		$	113,967
Adjustments for:
B27 settlement		-			-			7,348
Impairment expense		-			-			68,735
Amortization of intangibles		17,266			18,061			20,621
Corporate and other expense, net		39,368			35,557			45,179
Total operating income (loss)		33,490			19,332			(27,916	)
Interest expense		17,054			15,564			10,932
Other expenses (income), net		(456	)		(5,906	)		72
Income (loss) before income taxes	$	16,892		$	9,674		$	(38,920	)

The Company had capital expenditures at Corporate of $0.2 million, $0.5 million, and $1.8 million for the years ended December 31, 2017, 2016, and 2015, respectively. The Company had identifiable assets at Corporate of $19.4 million, $18.3 million, and $23.3 million as of December 31, 2017, 2016, and 2015, respectively. Corporate depreciation was $1.8 million, $1.4 million, and $1.7 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Geographical Information

Revenues are presented in geographic area based on location of the facility shipping products or providing services. Long-lived assets are based on physical locations and are comprised of the net book value of property.

The Company's revenues and property and equipment by geographical location are as follows (in thousands):

	Years Ended December 31,
	2017		2016		2015
Revenues
United States	$	902,636	$	873,926	$	1,119,210
Canada		104,146		88,166		127,833
Total	$	1,006,782	$	962,092	$	1,247,043

	As of December 31,
	2017		2016
Property and Equipment, net
United States	$	42,683	$	48,635
Canada		10,654		12,172
Total	$	53,337	$	60,807

36

NOTE 19 - QUARTERLY FINANCIAL INFORMATION (unaudited)

Summarized quarterly financial information for the years ended December 31, 2017, 2016 and 2015 is as follows (in millions, except per share data):

	First			Second		Third			Fourth
	Quarter			Quarter		Quarter			Quarter
2017
Sales	$	238.5		$	250.7	$	251.9		$	265.7
Gross profit		64.5			68.9		67.0			71.2
Net income (loss)		3.1			4.1		3.0			6.6
Net income (loss) attributable to DXP Enterprises, Inc.		3.0			4.0		2.9			6.6
Earnings (loss) per share - basic	$	0.18		$	0.24	$	0.17		$	0.38
Earnings (loss) per share - diluted	$	0.17		$	0.23	$	0.16		$	0.37
2016
Sales	$	253.6		$	256.2	$	230.0		$	222.3
Gross profit		68.8			71.6		63.8			60.6
Net income (loss)		(5.2	)		5.1		0.1			7.1
Net income (loss) attributable to DXP Enterprises, Inc.		(5.1	)		5.1		0.2			7.4
Earnings (loss) per share - basic	$	(0.36	)	$	0.36	$	0.02		$	0.44
Earnings (loss) per share - diluted	$	(0.36	)	$	0.34	$	0.02		$	0.42
2015
Sales	$	341.6		$	323.7	$	303.1		$	278.6
Gross profit		98.1			91.3		85.7			76.9
Impairment expense		-			-		58.9			9.8
Net income (loss)		9.7			7.2		(52.7	)		(3.2	)
Net income (loss) attributable to DXP Enterprises, Inc.		9.7			7.2		(52.4	)		(3.0	)
Earnings (loss) per share - basic	$	0.67		$	0.50	$	(3.64	)	$	(0.20	)

The sum of the individual quarterly earnings per share amounts may not agree with year-to-date earnings per share as each quarter's computation is based on the weighted average number of shares outstanding during the quarter, the weighted average stock price during the quarter and the dilutive effects of the stock options and restricted stock in each quarter.

37

NOTE 20 – RELATED PARTIES

The Board uses policies and procedures, to be applied by the Audit Committee of the Board, for review, approval or ratification of any transactions with related persons. Those policies and procedures will apply to any proposed transactions in which DXP is a participant, the amount involved exceeds $120,000 and any director, executive officer or significant shareholder or any immediate family member of such a person has a direct or material indirect interest. Any related party transaction will be reviewed by the Audit Committee of the Board of Directors to determine, among other things, the benefits of any transaction to DXP, the availability of other sources of comparable products or services and whether the terms of the proposed transaction are comparable to those provided to unrelated third parties.

For the year ended December 31, 2017, the Company paid approximately $1.4 million in lease expenses to entities controlled by the Company's Chief Executive Officer, David Little, $1.2 million in lease expenses to an entity in which a retired senior vice president holds a minority interest, and $0.3 million in lease expenses to an entity in which a retired senior vice president holds an interest, and the children of David Little hold a majority interest. The Company employs six people who work for David Little, and Mr. Little reimbursed the Company for the cost. Total cost to Mr. Little for the year ended December 31, 2017 for payroll, related payroll expenses, vehicles, fuel and supplies was $0.4 million. The Company employs two sons and two sons-in-laws of executives. Total wages and other compensation for 2017 was approximately $1.3 million for the four employees.

NOTE 21 – SUBSEQUENT EVENTS

On January 1, 2018, the Company completed the acquisition of Application Specialties, Inc. ("ASI"), a distributor of cutting tools, abrasives, coolants and machine shop supplies. DXP paid approximately $11.5 million for ASI. The purchase was financed with $10.6 million of cash on hand as well as issuing $0.9 million of DXP common stock.

38

ITEM 15. Exhibits, Financial Statement Schedules.

(a) Documents included in this Report:

1.	Financial Statements – See Part II, Item 8 of this Report.
2.	Financial Statement Schedules - All other schedules have been omitted since the required information is not applicable or significant or is included in the Consolidated Financial Statements or notes thereto.
3.	Exhibits:

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Commission.

Exhibit No.	Description
3.1	Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the Commission on August 20, 1998).
3.2	Bylaws, as amended on July 27, 2011.
4.1	Form of Common Stock certificate (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the Commission on August 20, 1998).
4.2	See Exhibit 3.1 for provisions of the Company's Restated Articles of Incorporation, as amended, defining the rights of security holders.
4.3	See Exhibit 3.2 for provisions of the Company's Bylaws defining the rights of security holders.
4.4	Form of Senior Debt Indenture of DXP Enterprises, Inc. (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-3 (Reg. No. 333-166582), filed with the Commission on May 6, 2010).
4.5	Form of Subordinated Debt Indenture of DXP Enterprises, Inc. (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-3 (Reg. No. 333-166582), filed with the SEC on May 6, 2010).
+10.1	Employment Agreement dated effective as of January 1, 2004, between DXP Enterprises, Inc. and David R.  Little (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K (File No. 000-21513:04663259) for the fiscal year ended December 31, 2003, filed with the Commission on March 11, 2004).
+10.2	Employment Agreement dated effective as of June 1, 2004, between DXP Enterprises, Inc. and Mac McConnell (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 000-21513:04783822) for the quarterly period ended March 31, 2004, filed with the Commission on May 6, 2004).
+10.3	DXP Enterprises, Inc. 2005 Restricted Stock Plan (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K (File No. 000-21513:06677037) for the fiscal year ended December 31, 2005, (filed with the Commission on March 10, 2006).
+10.4	Amendment Number One to Employment Agreement dated effective as of January 1, 2004, between DXP Enterprises, Inc. and David R. Little (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 000-21513:06979954), filed with the Commission on July 26, 2006).
+10.5	Amendment No. One to DXP Enterprises, Inc. 2005 Restricted Stock Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (File No. 000-21513:06979954), filed with the Commission on July 26, 2006).

10.6	Amendment Number Two to Employment Agreement dated effective January 1, 2004 between DXP Enterprises, Inc. and David R. Little (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 000-21513:09846339) filed with the Commission on May 22, 2009).
10.7	Amendment Number One to Employment Agreement dated effective June 1, 2004 between DXP Enterprises, Inc. and Mac McConnell (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 000-21513:11823072) filed with the Commission on May 9, 2011).
10.8	Amendment Two to David Little Equity Incentive Program effective May 1, 2013 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 000-21513:11823072) filed with the Commission on May 3, 2013).
10.9	Purchase Agreement, dated as of December 9, 2013, whereby DXP Enterprises, Inc. agreed to acquire all of the equity securities and units of B27, LLC (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8K filed with the Commission on December 10, 2013).
10.10	DXP Enterprises, Inc. 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.6 to Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016 (File No. 000-21513:161832364) filed with the Commission on August 15, 2016).
10.11	Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.7 to Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016 (File No. 000-21513:161832364) filed with the Commission on August 15, 2016).
10.12	Term Loan and Security Agreement Dated as of August 29, 2017 by and among DXP Enterprises, Inc., Borrower and the Other Persons Party hereto from time to time, as Guarantors, and Goldman Sachs Bank USA, as Administrative Agent and Certain Financial Institutions, as Lenders (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (File No. 000-21513:171191516) filed with the Commission on November 9, 2017).
10.13	Loan and Security Agreement Dated as of August 29, 2017 by and among DXP Enterprises, Inc., Pump-PMI, LLC, PMI Operating Company, LTD., PMI Investment, LLC, Integrated Flow Solutions, LLC, DXP Holdings, Inc., Best Holding, LLC, Best Equipment Service & Sales Company, LLC, B27 Holdings Corp., B27, LLC, B27 Resources, Inc. and Pumpworks 610, LLC as US Borrowers, DXP Canada Enterprises, LTD., Industrial Paramedic Services, LTD., HSE Integrated LTD., and National Process Equipment Inc., as Canadian Borrowers and the Other Persons Party hereto from time to time, as Guarantors, and Bank of America, N.A., as agent and Certain Financial Institutions as Lenders, Bank of America, N.A. as Sole Lead Arranger and Sole Bookrunner and BMO Capital Markets Corp., as Documentation Agent (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (File No. 000-21513:171191516) filed with the Commission on November 9, 2017).

39

16.1	Letter of Grant Thornton LLP to the SEC dated May 24, 2016 (incorporated by reference to Exhibit 16.1 to Registrant's current report on Form 8-K (File No. 000-21513:161671171) filed with the Commission on May 24, 2016).
16.2	Letter of Hein & Associates LLP to the SEC dated November 17, 2017 (incorporated by reference to Exhibit 16.1 to Registrant's current report on Form 8-K (File No. 000-21513:171210595) filed with the Commission on November 17, 2017).

21.1	Subsidiaries of the Company.
*23.1	Consent of Moss Adams LLP, Independent Registered Public Accounting Firm.
*23.2	Consent of Hein and Associates LLP, Independent Registered Public Accounting Firm.
*23.3	Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm.
*31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as amended.

*31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, as amended.
*32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.
*32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.
101	Interactive Data Files

Exhibits designated by the symbol * are filed with this Report. All exhibits not so designated are incorporated by reference to a prior filing with the Commission as indicated.

+ Indicates a management contract or compensation plan or arrangement.

The Company undertakes to furnish to any shareholder so requesting a copy of any of the exhibits to this Report on upon payment to the Company of the reasonable costs incurred by the Company in furnishing any such exhibit.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DXP ENTERPRISES, INC. (Registrant)

By: /s/DAVID R. LITTLE

David R. Little

Chairman of the Board,

President and Chief Executive Officer

Dated: May 23, 2018

40

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 333-134606, 333-123698, 333-92875, 333-92877 and 333-213226, and Forms S-3 No. 333-134603, 333-188907, and 333-213227)of our reports dated March 28, 2018, relating to the consolidated financial statements of DXP Enterprises, Inc. and the effectiveness of internal control over financial reporting of DXP Enterprises, Inc. (which report expresses an adverse opinion), appearing in this Annual Report (Form 10-K/A Amendment No. 1) for the year ended December 31, 2017.

/s/ Moss Adams LLP

Houston, Texas

May 23, 2018

EX-23.2

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements of DXP Enterprises, Inc. on Form S-8 (Nos. 333-134606, 333-123698, 333-92875, 333-92877 and 333-213226) and on Form S-3 (Nos. 333-134603, 333-188907, and 333-213227) of our report dated March 31, 2017 relating to the consolidated financial statements appearing in this Annual Report on Form 10-K/A Amendment No. 1 for the year ended December 31, 2017.

/s/ Hein & Associates LLP

Houston, Texas

May 23, 2018

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, David R. Little, certify that:

1. I have reviewed this annual report on Form 10-K of DXP Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 23, 2018

/s/ David R. Little

David R. Little

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Kent Yee, certify that:

1. I have reviewed this annual report on Form 10-K of DXP Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 23, 2018

/s/ Kent Yee

Kent Yee

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.

Pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, as amended, the undersigned officer of DXP Enterprises, Inc. (the "Company") hereby certifies that the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 23, 2018

/s/David R. Little

David R. Little

President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended

Pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, as amended, the undersigned officer of DXP Enterprises, Inc. (the "Company") hereby certifies that the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 23, 2018

/s/Kent Yee

Kent Yee

Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-23.3

Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

We have issued our report dated February 29, 2016 with respect to the consolidated financial statements of DXP Enterprises, Inc. as of December 31, 2015 and for the year then ended, included in this Annual Report of DXP Enterprises, Inc. on Form 10-K for the year ended December 31, 2017. We consent to the incorporation by reference of said report in the Registration Statements of DXP Enterprises, Inc. on Forms S-3 (File No. 333-134603, File No. 333-188907 and File No. 333-213227) and on Forms S-8 (File No. 333-134606, File No. 333-123698, File No. 333-92875, File No. 333-92877 and File No. 333-213226).

/s/ GRANT THORNTON LLP

Houston, Texas

May 23, 2018

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Mar. 21, 2018	Jun. 30, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	DXP ENTERPRISES INC
Entity Central Index Key	0001020710
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 536,658,521
Entity Common Stock, Shares Outstanding		17,358,186
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash	$ 22,047	$ 1,590
Restricted Cash	3,532	0
Trade accounts receivable, net of allowances for doubtful accounts of $9,015 in 2017 and $8,160 in 2016	167,272	148,919
Inventories	91,413	83,699
Costs and estimated profits in excess of billings on uncompleted contracts	26,915	18,421
Prepaid expenses and other current assets	5,296	2,138
Federal income taxes recoverable	1,440	2,558
Total current assets	317,915	257,325
Property and equipment, net	53,337	60,807
Goodwill	187,591	187,591
Other intangible assets, net of accumulated amortization of $84,624 in 2017 and $70,027 in 2016	78,525	94,831
Other long-term assets	1,715	1,498
Total assets	639,083	602,052
Current liabilities:
Current maturities of long-term debt	3,381	51,354
Trade accounts payable	80,303	78,698
Accrued wages and benefits	18,483	16,962
Customer advances	2,189	2,441
Billings in excess of costs and estimated profits on uncompleted contracts	4,249	2,813
Other current liabilities	16,220	14,391
Total current liabilities	124,825	166,659
Long-term debt, less current maturities and unamortized debt issuance costs	238,643	173,331
Deferred income taxes	7,069	9,513
Total long-term liabilities	245,712	182,844
Commitments and contingencies (Note 15)
Equity:
Common stock, $0.01 par value, 100,000,000 shares authorized; 17,315,573 in 2017 and 17,197,380 in 2016 shares issued	174	173
Additional paid-in capital	153,087	152,313
Retained earnings	134,193	117,395
Accumulated other comprehensive loss	(19,491)	(18,274)
Total DXP Enterprises, Inc. equity	267,979	251,623
Noncontrolling interest	567	926
Total equity	268,546	252,549
Total liabilities and equity	639,083	602,052
Series A Preferred Stock [Member]
Equity:
Preferred stock	1	1
Total equity	1	1
Series B Convertible Preferred Stock [Member]
Equity:
Preferred stock	$ 15	$ 15

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Trade accounts receivable, allowances for doubtful accounts	$ 9,015	$ 8,160
Other intangible assets, accumulated amortization	$ 84,624	$ 70,027
Equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, issued (in shares)	17,315,573	17,197,380
Common stock shares outstanding (in shares)	17,315,573	17,197,380
Series A Preferred Stock [Member]
Equity:
Preferred stock, voting rights	1/10th vote per share	1/10th vote per share
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, stated value (in dollars per share)	112	112
Preferred stock, liquidation preference (in dollars per share)	$ 100	$ 100
Preferred stock, authorized (in shares)	1,000,000	1,000,000
Preferred stock, issued (in shares)	1,122	1,122
Preferred stock, outstanding (in shares)	1,122	1,122
Series B Convertible Preferred Stock [Member]
Equity:
Preferred stock, voting rights	1/10th vote per share	1/10th vote per share
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, stated value (in dollars per share)	100	100
Preferred stock, liquidation preference (in dollars per share)	$ 1,500	$ 1,500
Preferred stock, authorized (in shares)	1,000,000	1,000,000
Preferred stock, issued (in shares)	15,000	15,000
Preferred stock, outstanding (in shares)	15,000	15,000

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CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) [Abstract]
Sales	$ 1,006,782	$ 962,092	$ 1,247,043
Cost of sales	735,201	697,290	895,057
Gross profit	271,581	264,802	351,986
Selling, general and administrative expense	238,091	245,470	303,819
Impairment expense	0	0	68,735
B27 settlement	0	0	7,348
Operating income (loss)	33,490	19,332	(27,916)
Other expense (income), net	(456)	(5,906)	72
Interest expense	17,054	15,564	10,932
Income (loss) before income taxes	16,892	9,674	(38,920)
Provision for income taxes	363	2,523	150
Net income (loss)	16,529	7,151	(39,070)
Net loss attributable to noncontrolling interest	(359)	(551)	(534)
Net income (loss) attributable to DXP Enterprises, Inc.	16,888	7,702	(38,536)
Preferred stock dividend	90	90	90
Net income (loss) attributable to common shareholders	16,798	7,612	(38,626)
Net income (loss)	16,529	7,151	(39,070)
Cumulative translation adjustment, net of income taxes	(1,217)	(7,658)	(4,916)
Comprehensive income (loss)	$ 15,312	$ (507)	$ (43,986)
Basic earnings (loss) per share (in dollars per share)	$ 0.97	$ 0.51	$ (2.68)
Weighted average common shares outstanding (in shares)	17,400	15,042	14,423
Diluted earnings (loss) per share (in dollars per share)	$ 0.93	$ 0.49	$ (2.68)
Weighted average common shares and common equivalent shares outstanding (in shares)	18,240	15,882	14,423

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CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Series A Preferred Stock [Member]	Series B Preferred Stock [Member]	Common Stock [Member]	Paid-In Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Non-Control Interest [Member]	Accum. Other Comp. Income [Member]	Total
BALANCES at Dec. 31, 2014	$ 1	$ 15	$ 146	$ 115,605	$ 148,409	$ (15,524)	$ 0	$ (5,700)	$ 242,952
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends paid	0	0	0	0	(90)	0	0	0	(90)
Compensation expense for restricted stock	0	0	0	2,973	0	0	0	0	2,973
Tax related items for share based awards	0	0	0	(815)	0	0	0	0	(815)
Issuance of 148,769 treasury shares in connection with an acquisition	0	0	0	(4,825)	0	9,223	0	0	4,398
Acquisition of 191,420 shares of treasury stock	0	0	0	0	0	(8,908)	0	0	(8,908)
Issuance of treasury shares upon vesting of restricted stock	0	0	0	(2,632)	0	2,632	0	0	0
Noncontrolling interest holder contributions, net of tax benefits	0	0	0	0	0	0	2,346	0	2,346
Cumulative translation adjustment	0	0	0	0	0	0	0	(4,916)	(4,916)
Net income (loss)	0	0	0	0	(38,536)	0	(534)	0	(39,070)
BALANCES at Dec. 31, 2015	1	15	146	110,306	109,783	(12,577)	1,812	(10,616)	198,870
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends paid	0	0	0	0	(90)	0	0	0	(90)
Compensation expense for restricted stock	0	0	0	3,580	0	0	0	0	3,580
Tax related items for share based awards	0	0	0	(858)	0	0	0	0	(858)
Issuance of shares of Common stock	0	0	27	51,862	0	0	0	0	51,889
Issuance of treasury shares upon vesting of restricted stock	0	0	0	(12,577)	0	12,577	0	0	0
Noncontrolling interest holder contributions, net of tax benefits	0	0	0	0	0	0	(335)	0	(335)
Cumulative translation adjustment	0	0	0	0	0	0	0	(7,658)	(7,658)
Net income (loss)	0	0	0	0	7,702	0	(551)	0	7,151
BALANCES at Dec. 31, 2016	1	15	173	152,313	117,395	0	926	(18,274)	252,549
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends paid	0	0	0	0	(90)	0	0	0	(90)
Compensation expense for restricted stock	0	0	0	1,708	0	0	0	0	1,708
Tax related items for share based awards	0	0	0	(933)	0	0	0	0	(933)
Issuance of shares of Common stock	0	0	1	(1)	0	0	0	0	0
Cumulative translation adjustment	0	0	0	0	0	0	0	(1,217)	(1,217)
Net income (loss)	0	0	0	0	16,888	0	(359)	0	16,529
BALANCES at Dec. 31, 2017	$ 1	$ 15	$ 174	$ 153,087	$ 134,193	$ 0	$ 567	$ (19,491)	$ 268,546

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CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical)	12 Months Ended
	Dec. 31, 2016 shares
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock (in shares)	2,722,858
Issuance of treasury shares for vesting of restricted stock (in shares)	264,297

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) attributable to DXP Enterprises, Inc.	$ 16,888	$ 7,702	$ (38,536)
Less net loss attributable to non-controlling interest	(359)	(551)	(534)
Net income (loss)	16,529	7,151	(39,070)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	10,520	11,933	12,622
Amortization of intangible assets	17,266	18,061	20,621
Impairment of goodwill	0	0	68,735
Bad debt expense	3,416	180	2,014
Amortization of debt issuance costs	1,548	1,856	1,211
Write off of debt issuance costs	578	0	0
Gain on sale of subsidiary	0	(5,635)	0
Stock compensation expense	1,708	3,580	2,973
Tax loss related to vesting of restricted stock	0	619	0
Deferred income taxes	(3,827)	2,687	(9,024)
Changes in operating assets and liabilities, net of assets and liabilities acquired in business acquisitions:
Trade accounts receivable	(20,539)	12,080	71,261
Costs and estimated profits in excess of billings on uncompleted contracts	(8,419)	3,457	(2,047)
Inventories	(7,544)	5,453	12,724
Prepaid expenses and other assets	(3,287)	620	159
Trade accounts payable and accrued expenses	3,189	(8,595)	(42,862)
Billings in excess of costs & estimated profits on uncompleted contracts	1,406	(5,203)	(513)
Net cash provided by operating activities	12,544	48,244	98,804
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(2,811)	(4,868)	(13,992)
Proceeds from the sale of fixed assets	0	1,206	0
Proceeds from sale of subsidiary	0	31,476	0
Acquisitions of businesses, net of cash acquired	0	0	(15,501)	[1]
Net cash provided by (used in) investing activities	(2,811)	27,814	(29,493)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt	728,822	517,689	393,551
Principal payments on revolving line of credit and other long-term debt	(702,402)	(643,568)	(453,480)
Debt issuance costs	(11,208)	(801)	(543)
Noncontrolling interest holder contributions, net of tax benefits			2,346
Noncontrolling interest holder distributions, net of tax benefits	0	(335)
Preferred dividends paid	(90)	(90)	(90)
Purchase of treasury stock	0	0	(8,908)
Proceeds from issuance of common shares, net	0	51,889	0
Payment for employee taxes withheld from stock awards	(934)	(238)	(815)
Tax (loss) related to vesting of restricted stock	0	(619)	0
Net cash provided by (used in) financing activities	14,188	(76,073)	(67,939)
EFFECT OF FOREIGN CURRENCY ON CASH	68	(88)	274
(DECREASE) INCREASE IN CASH	23,989	(103)	1,646
CASH AT BEGINNING OF YEAR	1,590	1,693	47
CASH AT END OF YEAR	25,579	1,590	1,693
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for Interest	15,205	13,708	9,721
Cash paid for Income Taxes	$ 714	$ 4,780	$ 13,792

[1] Purchases of businesses in 2015 exclude $4.4 million in common stock issued in connection with an acquisition.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($)
CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract]
Stock issued in connection with acquisitions	$ 4.4

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THE COMPANY

12 Months Ended

Dec. 31, 2017

THE COMPANY [Abstract]

THE COMPANY

NOTE 1 - THE COMPANY

DXP Enterprises, Inc. together with its subsidiaries (collectively “DXP,” “Company,” “us,” “we,” or “our”) was incorporated in Texas on July 26, 1996. DXP Enterprises, Inc. and its subsidiaries are engaged in the business of distributing maintenance, repair and operating (MRO) products, and service to energy and industrial customers. Additionally, DXP provides integrated, custom pump skid packages, pump remanufacturing and manufactures branded private label pumps to energy and industrial customers. The Company is organized into three business segments: Service Centers (“SC”), Supply Chain Services (“SCS”) and Innovative Pumping Solutions (“IPS”). See Note 18 for discussion of the business segments.

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES

12 Months Ended

Dec. 31, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES

Basis of Presentation

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its variable interest entity (“VIE”).

DXP is the primary beneficiary of a VIE in which DXP owns 47.5% of the equity. DXP consolidates the financial statements of the VIE with the financial statements of DXP. As of December 31, 2017, the total assets of the VIE were approximately $5.2 million including approximately $4.5 million of fixed assets. DXP is the primary customer of the VIE. Consolidation of the VIE increased cost of sales by approximately $0.6 million and $1.3 million for the twelve months ended December 31, 2017 and 2016, respectively. The Company recognized a related income tax benefit of $0.2 million and $0.3 million related to the VIE for the years ended December 31, 2017 and 2016, respectively.  At December 31, 2017, the owners of the 52.5% of the equity not owned by DXP included employees of DXP.

All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation; none affected net income.

Foreign Currency

The financial statements of the Company’s Canadian subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss). Gains and losses on transactions denominated in foreign currency are reported in consolidated statements of income (loss).

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company’s presentation of cash includes cash equivalents. Cash equivalents are defined as short-term investments with maturity dates of 90 days or less at time of purchase. The Company places its cash and cash equivalents with institutions with high credit quality. However, at certain times, such cash and cash equivalents may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not historically experienced any losses when in excess of these limits.

Receivables and Credit Risk

Trade receivables consist primarily of uncollateralized customer obligations due under normal trade terms, which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and customers may not pay within stated trade terms.

The Company has trade receivables from a diversified customer base located primarily in the Rocky Mountain, Northeastern, Midwestern, Southeastern and Southwestern regions of the United States, and Canada. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers' financial positions and monitors accounts on a regular basis. Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically (as circumstances warrant) based upon management’s best estimate of the collectability of such accounts. The Company writes off uncollectible trade accounts receivable when the accounts are determined to be uncollectible. No customer represents more than 10% of consolidated sales.

Changes in this allowance for 2017, 2016 and 2015 were as follows (in thousands):

	Years Ended December 31,
	2017			2016			2015
Balance at beginning of year	$	8,160		$	9,364		$	8,713
Charged to costs and expenses		3,367			180			2,014
Charged to other accounts		22	3		(17	)2		1,255	2
Deductions		(2,534	)1		(1,367	)1		(2,618	)1
Balance at end of year	$	9,015		$	8,160		$	9,364

(1) Uncollectible accounts written off, net of recoveries

(2) Includes allowance for doubtful accounts from acquisitions and divestiture

(3) Primarily due to translation adjustments

Fair Value of Financial Instruments

The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. US GAAP establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. US GAAP prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

See Note 4 for further information regarding the Company’s financial instruments.

Inventories

Inventories consist principally of finished goods and are priced at net realizable value, cost being determined using the first-in, first-out (“FIFO”) method. Provisions are provided against inventories for estimated obsolescence based upon the aging of the inventories and market trends and are applied as a reduction in cost of associated inventory.

Property and Equipment

Property and equipment are carried on the basis of cost. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives. Maintenance and repairs of depreciable assets are charged against earnings as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and gains or losses are credited or charged to earnings.

The principal estimated useful lives used in determining depreciation are as follows:

Buildings	20-39 years
Building improvements	10-20 years
Furniture, fixtures and equipment	3-20 years
Leasehold improvements	Shorter of estimated useful life or related lease term

Impairment of Goodwill and Other Intangible Assets

The Company tests goodwill and other indefinite lived intangible assets for impairment on an annual basis in the fourth quarter and when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assigns the carrying value of these intangible assets to its "reporting units" and applies the test for goodwill at the reporting unit level. A reporting unit is defined as an operating segment or one level below a segment (a "component") if the component is a business and discrete information is prepared and reviewed regularly by segment management.

The Company’s goodwill impairment assessment first permits evaluating qualitative factors to determine if a reporting unit's carrying value would more likely than not exceed its fair value. If the Company concludes, based on the qualitative assessment, that a reporting unit's carrying value would more likely than not exceed its fair value, the Company would perform a two-step quantitative test for that reporting unit. When a quantitative assessment is performed, the first step is to identify a potential impairment, and the second step measures the amount of the impairment loss, if any. Goodwill is deemed to be impaired if the carrying amount of a reporting unit’s goodwill exceeds its estimated fair value. During the third and fourth quarter of 2015, DXP performed interim impairment tests using a quantitative approach and recognized goodwill impairments of $57.8 million and $9.8 million, respectively. No impairment of goodwill was required in 2017 and 2016.

Impairment of Long-Lived Assets, Excluding Goodwill

The Company tests long-lived assets or asset groups for recoverability on an annual basis and when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. No impairment of long-lived assets excluding goodwill, was required in 2017, 2016 and 2015.

Share-based Compensation

The Company uses restricted stock for share-based compensation programs. The Company measures compensation cost with respect to equity instruments granted as stock-based payments to employees based upon the estimated fair value of the equity instruments at the date of the grant. The cost as measured is recognized as expense over the period which an employee is required to provide services in exchange for the award.

Revenue Recognition

For binding agreements to fabricate tangible assets to customer specifications, the Company recognizes revenues using the percentage of completion method. Under this method, revenues are recognized as costs are incurred and include estimated profits calculated on the basis of the relationship between costs incurred and total estimated costs at completion. If at any time expected costs exceed the value of the contract, the loss is recognized immediately. Revenues of approximately $40.6 million, $31.5 million, and $47.5 million were recognized on contracts in process for the years ended December 31, 2017, 2016, and 2015, respectively. The typical time span of these contracts is approximately one to two years.

For other sales, the Company recognizes revenues when an agreement is in place, the price is fixed, title for product passes to the customer or services have been provided and collectability is reasonably assured, which is generally upon delivery to the customer. Revenues are recorded net of sales taxes.

The Company reserves for potential customer returns based upon the historical level of returns.

Shipping and Handling Costs

The Company classifies shipping and handling charges billed to customers as sales. Shipping and handling charges paid to others are classified as a component of cost of sales.

Self-insured Insurance and Medical Claims

We generally retain up to $100,000 of risk for each claim for workers compensation, general liability, automobile and property loss. We accrue for the estimated loss on the self-insured portion of these claims. The accrual is adjusted quarterly based upon reported claims information. The actual cost could deviate from the recorded estimate.

We generally retain up to $175,000 of risk on each medical claim for our employees and their dependents with the exception of less than 0.05% of employees where a higher risk is retained. We accrue for the estimated outstanding balance of unpaid medical claims for our employees and their dependents. The accrual is adjusted monthly based on recent claims experience. The actual claims could deviate from recent claims experience and be materially different from the reserve.

The accrual for these claims at December 31, 2017 and 2016 was approximately $2.7 million and $3.1 million, respectively.

Purchase Accounting

DXP estimates the fair value of assets, including property, machinery and equipment and their related useful lives and salvage values, intangibles and liabilities when allocating the purchase price of an acquisition. The fair value estimates are developed using the best information available.

Cost of Sales and Selling, General and Administrative Expense

Cost of sales includes product and product related costs, inbound freight charges, internal transfer costs and depreciation. Selling, general and administrative expense includes purchasing and receiving costs, inspection costs, warehousing costs, depreciation and amortization.

Debt Issuance Cost Amortization

Fees paid to DXP’s lenders to secure a firm commitment on a term loan and revolving line of credit are presented as a direct deduction from the carrying amount of the debt liability. For the term loan, fees paid by DXP are amortized over the life of the loan as additional interest. Fees paid to secure a firm commitment from our lender on a revolving line of credit are amortized on a straight-line basis over the entire term of the arrangement. The total unamortized debt issuance costs reported on the consolidated balance sheets as of December 31, 2017 and 2016 was $10.1 million and $1.0 million, respectively. In connection with the extinguishment of the previously existing credit facility we recorded a $0.6 million write-off of debt issuance costs, which was included in interest expense during the third quarter of 2017.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and income tax bases of assets and liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. Valuation allowances are established to reduce deferred income tax assets to the amounts expected to be realized under a more likely than not criterion.

Accounting for Uncertainty in Income Taxes

A position taken or expected to be taken in a tax return is recognized in the financial statements when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U. S. federal, state and local tax examination by tax authorities for years prior to 2012. The Company's policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income, foreign currency translation adjustments and unrealized gains and losses on certain investments in debt and equity securities. The Company’s other comprehensive (loss) income is comprised of changes in the market value of an investment with quoted market prices in an active market for identical instruments and translation adjustments from translating foreign subsidiaries to the reporting currency.  Comprehensive income for the year ended December 31, 2016 was reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors which accumulated during 2013, 2014 and 2015 due to the Company improperly recognizing an $8.6 million deferred tax asset on unrealized foreign currency losses not expected to be realized within one year. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2016 and 2015.

Out-of-Period Items

Deferred tax liabilities related to intangibles for customer relationships acquired in Canada during 2012 and 2013 were reduced by $2.2 million during the fourth quarter of 2017 to correct the tax rate used to establish the deferred tax liabilities at the dates of acquisition. The Company evaluated the misstatement of each period since these acquisitions were completed and concluded the effects were immaterial.

During the first quarter of 2015, we identified a $2.5 million ($1.6 million net of tax) overstatement of an accrual at December 31, 2014, which overstated 2014 selling, general and administrative expense. We recorded an out-of-period adjustment to correct this overstatement in the quarter ended March 31, 2015. During the fourth quarter of 2015, we realized $1.5 million of net tax benefits related to events which occurred in earlier years. These out-of-period items reduced the 2015 net loss by $3.1 million and 2015 basic and diluted net loss per share by $0.21. We assessed the materiality of this overstatement and concluded the overstatement was not material to the results of operations or financial condition for the year ended December 31, 2015.

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RECENT ACCOUNTING PRONOUNCEMENTS

12 Months Ended

Dec. 31, 2017

RECENT ACCOUNTING PRONOUNCEMENTS [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

Standards Effective in 2017 or Earlier

Accounting Changes and Error Corrections. In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2017-03 ("ASU 2017-03"), Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. This update adds language to the SEC Staff Guidance in relation to ASU 2014-09, ASU 2016-02, and ASU 2016-13. This ASU 2017-03 provides the SEC Staff view that a registrant should consider additional quantitative and qualitative disclosures related to the previously mentioned ASUs in connection with the status and impact of their adoption. This guidance, which was effective immediately, did not have a material impact on our Condensed Consolidated Financial Statements.

Compensation – Stock Compensation. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update aims to simplify aspects of accounting for share-based payment award transactions, including (a) income tax consequences, (b) classification of awards as either equity or liabilities, and (c) classification on the statement of cash flows. This pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2016 and interim periods within those annual periods.  The Company adopted the ASU January 1, 2017 and it had the following impact on the Company’s Condensed Consolidated Financial Statements:

Topic	Method of Adoption	Impact on Consolidated Financial Statements
Recognize all excess tax benefits and tax deficiencies as income tax benefit or expense	Prospective	The Company recognized $0.1 million of excess tax benefit in income taxes for the year ended December 31, 2017, decreasing the effective tax rate for the year.
Excess tax benefits and deficiencies on the statement of cash flows are classified as an operating activity	Prospective	The Company recognized $0.1 million of excess tax benefit for the year ended December 31, 2017 as an operating activity.  Prior to the adoption of the ASU 2016-09, the excess tax expense for the year ended December 31, 2016 of $0.6 million was recognized as a financing activity. The excess tax expense for the year ended December 31, 2015 was zero.
Employee taxes paid when an employer withholds shares for tax-withholding purposes on the statement of cash flows are classified as financing activity	Retrospective	The Company reclassified $0.2 million and $0.8 million of employee taxes paid from cash flows from operating activities to cash flows from financing activities on the Consolidated Statements of Cash Flows for the years ended December 31, 2016 and December 31, 2015.
Accounting for forfeitures and tax withholding elections	Prospective	The Company has not changed its accounting policy for forfeitures.  There is no significant impact on Consolidated Financial Statements.

Income Taxes. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. The update requires entities to present deferred tax assets and liabilities as noncurrent in a classified balance sheet. The update simplifies the current guidance, which requires entities to separately present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. This pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within.  The Company adopted this ASU January 1, 2017 and reclassified $9.5 million of current deferred income tax assets from current assets to non-current deferred income tax liabilities on the Condensed Consolidated Balance Sheet as of December 31, 2016.

Inventory. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory. The amendments in ASU 2015-11 clarify the subsequent measurement of inventory requiring an entity to subsequently measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. This ASU applies only to inventory that is measured using the first-in, first-out (FIFO) or average cost method. Subsequent measurement is unchanged for inventory measured using last-in, first-out (LIFO) or the retail inventory method. The amendments in ASU 2015-11 should be applied prospectively and are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.  The Company adopted this ASU January 1, 2017 and it did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Statement of Cash Flows. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230), Classification of Restricted Cash. The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amounts should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in ASU 2016-18 should be applied retrospectively and are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company early adopted this ASU September 30, 2017 and classified $3.5 million of cash to restricted cash on the Condensed Consolidated Balance Sheet as of December 31, 2017. This cash deposit was required as collateral for letters of credit outstanding under our previously existing credit facility.

Standards Effective in 2018 or Later

Compensation - Stock Compensation.  In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 with early adoption permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company is currently assessing the impact, if any, that this ASU will have upon adoption.

Intangibles-Goodwill and Other. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.  This ASU is to simplify how an entity is required to test goodwill for impairment. The effective date of the amendment to the standard is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company early adopted this ASU December 31, 2017. The Company’s annual tests of goodwill for impairment, including qualitative assessments of all of its reporting units goodwill, determined a quantitative impairment test was not necessary.

Business Combinations. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The effective date of this ASU is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements.

Statement of Cash Flows. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of the amendment to the standard is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU is not expected to have a material impact on the Company's ConsolidatedFinancial Statements.

Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU 2016-13: Financial Instruments – Credit Losses, which replaces the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses.  The update is intended to provide financial statement users with more useful information about expected credit losses.  The amended guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.  We are currently evaluating the effect, if any, that the guidance will have on the Company’s Consolidated Financial Statements and related disclosures.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The update requires organizations that lease assets (“lessees”) to recognize the assets and liabilities for the rights and obligations created by leases with terms of more than 12 months. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee remains dependent on its classification as a finance or operating lease. The criteria for determining whether a lease is a finance or operating lease has not been significantly changed by this ASU. The ASU also requires additional disclosure of the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. This pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact that this standard will have on its Consolidated Financial Statements.

Financial Instruments. In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities. This change to the financial instrument model primarily affects the accounting for equity investments, financial liabilities under fair value options and the presentation and disclosure requirements for financial instruments. The effective date for the standard is for fiscal years and interim periods within those years beginning after December 15, 2017. Certain provisions of the new guidance can be adopted early. The Company is evaluating the impact of this ASU.

Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides guidance on revenue recognition. The core principal of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance requires entities to apply a five-step method to (1) identify the contract(s) with customers, (2) identify the performance obligation(s) in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligation(s) in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. This pronouncement, as amended by ASU 2015-14, is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017.

The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes and financial statement disclosures. We have engaged third party consultants to assist us in assessing our contracts with customers, processes and controls required to address the impact that ASU No. 2014-09 will have on our business. The Company has elected the modified retrospective method and will adopt the new revenue guidance effective January 1, 2018, with an expected immaterial impact to the opening retained earnings.

The analysis of contracts with customers under the new revenue recognition standard was consistent with the Company’s current revenue recognition model, whereby revenue is recognized primarily on the date products are shipped to the customer. The ASU also requires expanded qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, significant judgments and accounting policy.

Based on our overall assessment performed to date, the adoption of the new standard is not expected to have an ongoing material impact on the Company’s Consolidated Financial Statements.

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FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

12 Months Ended

Dec. 31, 2017

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES [Abstract]

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

NOTE 4 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Authoritative guidance for financial assets and liabilities measured on a recurring basis applies to all financial assets and financial liabilities that are being measured and reported on a fair value basis. Fair value, as defined in the authoritative guidance, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

During the third and fourth quarters of 2015, in connection with interim tests for impairment, DXP recorded impairment charges of $57.8 million and $9.8 million, respectively, in order to reflect the implied fair values of goodwill, which is a non-recurring fair value adjustment. The fair values of goodwill used in the impairment calculations were estimated based on discounted estimated future cash flows with the discount rates of 10.0% to 11.5%. The measurements utilized to determine the implied fair value of goodwill represent significant unobservable inputs (Level 3) in accordance with the fair value hierarchy.

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INVENTORIES

12 Months Ended

Dec. 31, 2017

INVENTORIES [Abstract]

INVENTORIES

NOTE 5 - INVENTORIES

The carrying values of inventories were as follows (in thousands):

	December 31, 2017		December 31, 2016
Finished goods	$	79,820	$	74,269
Work in process		11,593		9,430
Inventories	$	91,413	$	83,699

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COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS

12 Months Ended

Dec. 31, 2017

COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS [Abstract]

COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS

NOTE 6 – COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS

Costs and estimated profits in excess of billings on uncompleted contracts arise in the consolidated balance sheets when revenues have been recognized but the amounts cannot be billed under the terms of the contracts. Such amounts are recoverable from customers upon various measures of performance, including achievement of certain milestones, completion of specified units, or completion of a contract.

Costs and estimated profits on uncompleted contracts and related amounts billed for 2017 and 2016 were as follows (in thousands):

	December 31,
	2017		2016
Costs incurred on uncompleted contracts	$	37,899	$	25,214
Estimated earnings, thereon		2,665		6,274
Total		40,564		31,488
Less: billings to date		17,881		15,864
Net	$	22,683	$	15,624

Such amounts were included in the accompanying Consolidated Balance Sheets for 2017 and 2016 under the following captions (in thousands):

	December 31,
	2017			2016
Costs and estimated profits in excess of billings on uncompleted contracts	$	26,915		$	18,421
Billings in excess of costs and estimated profits on uncompleted contracts		(4,249	)		(2,813	)
Translation Adjustment		17			16
Net	$	22,683		$	15,624

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2017

PROPERTY AND EQUIPMENT [Abstract]

PROPERTY AND EQUIPMENT

NOTE 7 - PROPERTY AND EQUIPMENT

The carrying values of property and equipment were as follows (in thousands):

	December 31, 2017			December 31, 2016
Land	$	2,346		$	2,346
Buildings and leasehold improvements		16,724			16,259
Furniture, fixtures and equipment		94,475			94,784
Less – Accumulated depreciation		(60,208	)		(52,582	)
Total Property and Equipment	$	53,337		$	60,807

Depreciation expense was $10.5 million, $11.9 million, and $12.6 million for the years ended December 31, 2017, 2016, and 2015, respectively. Capital expenditures by segment are included in Note 18.

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GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2017

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2017 (in thousands):

	Goodwill		Other Intangible Assets			Total
Balances as of December 31, 2016	$	187,591	$	94,831		$	282,422
Translation adjustment		-		960			960
Amortization		-		(17,266	)		(17,266	)
Balances as of December 31, 2017	$	187,591	$	78,525		$	266,116

The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2016 (in thousands):

	Goodwill			Other Intangible Assets			Total
Balances as of December 31, 2015	$	197,362		$	112,297		$	309,659
Sale of subsidiary		(9,620	)		-			(9,620	)
Purchase accounting adjustment		(151	)		-			(151	)
Translation adjustment		-			595			595
Amortization		-			(18,061	)		(18,061	)
Balances as of December 31, 2016	$	187,591		$	94,831		$	282,422

The following table presents goodwill balance by reportable segment as of December 31, 2017 and 2016 (in thousands):

	As of December 31,
	2017		2016
Service Centers	$	154,473	$	154,473
Innovative Pumping Solutions		15,980		15,980
Supply Chain Services		17,138		17,138
Total	$	187,591	$	187,591

During the third quarter of 2015, the price of DXP’s common stock and the price of crude oil declined over 40% and over 20%, respectively. This decline in oil prices reduced spending by our customers and reduced our revenue expectations. This sustained decline in crude oil prices, reduced capital spending by customers and reduced revenue expectations were determined to be a triggering event during the third quarter of 2015. This triggering event required us to perform testing for possible goodwill impairment in two of our reporting units, and our step one testing indicated there was an impairment in the B27 IPS and B27 SC reporting units. No triggering event was identified in our other reporting units during the third quarter. ASC 350 step two of the goodwill impairment testing for the reporting units was performed preliminarily during the third quarter of 2015. Our preliminary analysis concluded that $48.0 million of our B27 IPS reporting unit’s goodwill and $9.8 million of our B27 SC reporting unit’s goodwill was impaired. The remaining goodwill for the B27 IPS and B27 SC reporting units at September 30, 2015 was $4.9 million and $10.3 million, respectively. The September 30, 2015 ASC 350 step two testing was completed in the fourth quarter of 2015 without any adjustment to the amount recorded in the third quarter of 2015. Fair value was based on expected future cash flow using Level 3 inputs under Account Standards Codification 820 Fair Value Measurements (“ASC 820”). The cash flows are those expected to be generated by market participants, discounted at a rate of return market participants would expect. Approximately 60% of the goodwill associated with the B27 acquisition is not deductible for tax purposes. Accordingly, the financial statement tax benefit is calculated for only 40% of the goodwill impairment. The pretax impairment impacted DXP’s effective tax rate for 2015. For the year ended December 31, 2014, accumulated impairment for the B27 IPS and B27 SC reporting units was $95.1 million and $10.2 million, respectively. After recording the third quarter impairment loss, accumulated impairment expenses for the B27 IPS and B27 SC reporting units were $143.1 million and $20.0 million, respectively, at September 30, 2015.

DXP recorded $1.1 million of impairment expense in the third quarter of 2015 to write off an acquired intangible asset related to an ITT Goulds distribution agreement, which was terminated by ITT Goulds during 2015. The remaining intangible asset value of vendor distribution agreements for the year ended December 31, 2015 was zero. None of the impairment is expected to be deductible for tax purposes.

During the fourth quarter of 2015, the price of DXP’s common stock and the price of crude oil declined over 16% and over 18%, respectively. This decline in oil prices reduced spending by our customers during the fourth quarter and resulted in fourth quarter actual earnings for the B27 IPS and B27 SC reporting units declining significantly from the forecasts used in the impairment analysis at the end of the third quarter of 2015. The declines in forecasted earnings for these two reporting units were determined to be a triggering event during the fourth quarter of 2015. This triggering event required us to perform testing for possible goodwill impairment in these two reporting units, and our step one testing indicated there may be an impairment in the B27 IPS and B27 SC reporting units. No triggering event was identified in our other reporting units during the fourth quarter. ASC 350 step two of the goodwill impairment testing for the reporting units was performed during the fourth quarter of 2015. Our analysis concluded that $4.9 million of our B27 IPS reporting unit’s goodwill and $5.0 million of our B27 SC reporting unit’s goodwill was impaired. Fair value was based on expected future cash flow using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by market participants, discounted at a rate of return market participants would expect. The remaining goodwill for the B27 IPS and B27 SC reporting units at December 31, 2015 was zero and $5.3 million, respectively. Approximately 60% of the goodwill associated with the B27 acquisition is not deductible for tax purposes. Accordingly, the financial statement tax benefit is calculated for only 40% of the goodwill impairment. The pretax impairment impacted DXP’s effective tax rate for 2015. After recording the fourth quarter impairment loss, accumulated impairment for the B27 IPS and B27 SC reporting units were $148.0 million and $25.0 million, respectively, for the year ended December 31, 2015. As none of the Company’s other reporting units recorded impairment losses in 2015, accumulated impairment for these units remained at $12.3 million.

The impairment losses during the year ended December 31, 2015 are included in the “impairment expense” line item on the consolidated statements of income (loss).

The following table presents a summary of amortizable other intangible assets (in thousands):

	As of December 31, 2017							As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Carrying Amount, net		Gross Carrying Amount		Accumulated Amortization			Carrying Amount, net
Customer relationships	$	162,200	$	(83,806	)	$	78,394	$	163,022	$	(68,446	)	$	94,576
Non-compete agreements		949		(818	)		131		1,836		(1,581	)		255
Total	$	163,149	$	(84,624	)	$	78,525	$	164,858	$	(70,027	)	$	94,831

Gross carrying amounts as well as accumulated amortization are partially affected by the fluctuation of foreign currency rates. Other intangible assets are amortized according to estimated economic benefits over their estimated useful lives.

Customer relationships are amortized over their estimated useful lives. Amortization expense is recognized according to estimated economic benefits and was $17.3 million, $18.1 million, and $20.6 million for the years ended December 31, 2017, 2016, and 2015, respectively.  The estimated future annual amortization of intangible assets for each of the next five years and thereafter are as follows (in thousands):

2018	$	15,615
2019		14,170
2020		10,292
2021		8,911
2022		7,264
Thereafter		22,273
Total	$	78,525

The weighted average remaining estimated life for customer relationships and non-compete agreements are 8.3 years and 1.8 years, respectively.

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LONG-TERM DEBT

12 Months Ended

Dec. 31, 2017

LONG-TERM DEBT [Abstract]

LONG-TERM DEBT

NOTE 9 – LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

	December 31,
	2017			2016
ABL Revolver	$	-		$	-
Term Loan B		249,375			-
Line of credit		-			147,600
Term loan		-			74,500
Promissory note payable in monthly installments at 2.9% through January 2021, collateralized by equipment		2,722			3,577
Less unamortized debt issuance costs		(10,073	)		(992	)
Total Debt		242,024			224,685
Less: Current maturities		(3,381	)		(51,354	)
Total Long-term Debt	$	238,643		$	173,331

ABL Facility

On August 29, 2017, DXP  entered into a five year, $85 million Asset Based Loan and Security Agreement (the “ABL Credit Agreement”).  The ABL Credit Agreement provides for asset-based revolving loans in an aggregate principal amount of up to $85.0 million (the “ABL Loans”). The ABL Loans may be increased, in increments of $10.0 million, up to an aggregate of $50.0 million. The facility will mature on August 29, 2022. Interest accrues on outstanding borrowings at a rate equal to LIBOR or CDOR plus a margin ranging from 1.25% to 1.75% per annum, or at an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.25% to 0.75% per annum, in each case, based upon the average daily excess availability under the facility for the most recently completed calendar quarter. Fees ranging from 0.25% to 0.375% per annum are payable on the portion of the facility not in use at any given time. The interest rate for the ABL facility was 2.9% at December 31, 2017. The unused line fee was 0.375% at December 31, 2017.

The obligations of the Borrowers are guaranteed by the Company and its direct and indirect material wholly-owned subsidiaries other than certain excluded subsidiaries.

The ABL Credit Agreement contains a financial covenant restricting the Company from allowing its Fixed Charge Coverage Ratio be less than 1.00 to 1.00 during a compliance period, which is triggered when the availability under ABL facility falls below a threshold set forth in the ABL Credit Agreement. As of December 31, 2017, the Company's consolidated Fixed Charge Coverage Ratio was 3.67 to 1.00.

The ABL Loan is secured by substantially all of the assets of the Company.

Senior Secured Term Loan B:

On August 29, 2017, DXP entered into a six year Senior Secured Term Loan B (the “Term Loan”) with an original principal amount of $250 million which amortizes in equal quarterly installments of 0.25% with the balance payable in August 2023, when the facility matures.  Subject to securing additional lender commitments, the Term Loan allows for incremental increases in facility size up to an aggregate of $30 million, in minimum increments of $10 million, plus an additional amount such that DXP’s Secured Leverage Ratio (as defined under the Term Loan) would not exceed 3.60 to 1.00. We are required to repay the Term Loan in connection with certain asset sales and insurance proceeds, certain debt proceeds and 50% of excess cash flow, reducing to 25%, if our total leverage ratio is no more than 3.00 to 1.00 and 0%, if our total leverage ratio is no more than 2.50 to 1.00. In addition, the Term Loan contains a number of customary restrictive covenants. The interest rate for the Term Loan was 7.1 % as of December 31, 2017.

The Term Loan requires that the company’s Secured Leverage Ratio, defined as the ratio, as of the last day of any fiscal quarter of consolidated secured debt (net of restricted cash, not to exceed $30 million) as of such day to EBITDA, beginning with the fiscal quarter ending December 31, 2017, is either equal to or less than as indicated in the table below:

Fiscal Quarter	Secured Leverage Ratio
December 31, 2017	5.75:1.00
March 31, 2018	5.75:1.00
June 30, 2018	5.50:1.00
September 30, 2018	5.50:1.00
December 31, 2018	5.25:1.00
March 31, 2019	5.25:1.00
June 30, 2019	5.00:1.00
September 30, 2019	5.00:1.00
December 31, 2019	4.75:1.00
March 31, 2020	4.75:1.00
June 30, 2020 and each Fiscal Quarter thereafter	4.50:1.00

As of December 31, 2017, the Company's consolidated Secured Leverage Ratio was 3.59 to 1.00.

The Term Loan is guaranteed by each of the Company’s direct and indirect material wholly owned subsidiaries, other than any of the Company’s Canadian subsidiaries and certain other excluded subsidiaries.

The Term Loan is secured by substantially all of the assets of the Company.

Extinguishment of Previously Existing Credit Facility

As set forth above, on August 29, 2017, the Company terminated its previously existing credit agreement and facility and replaced it with the Term Loan and the ABL Credit Agreement. The terminated facility was under the Amended and Restated Credit Agreement, dated as of January 2, 2014, by and among the Company, as borrower, and Wells Fargo Bank, National Association, as issuing lender and administrative agent for other lenders (the “OriginalCredit Agreement”). This Original Credit Agreement was subsequently amended five times by the First Amendment to Restated Credit Agreement dated as of August 6, 2015, Second Amendment to Restated Credit Agreement dated as of September 30, 2015, Third Amendment to Restated Credit Agreement dated as of May 12, 2016, Fourth Amendment to Restated Credit Agreement dated as of August 15, 2016, and Fifth Amendment to Amended and Restated Credit Agreement dated as of November 28, 2016. A description of the material terms of these terminated agreements can be found in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2017.  In connection with the extinguishment of the previously existing Credit Facility we recorded a $0.6 million write-off of debt issuance costs, which was included in interest expense during the third quarter of 2017.

As of December 31, 2017, the maturities of long-term debt for the next five years and thereafter were as follows (in thousands):

2018	$	3,381
2019		3,405
2020		3,436
2021		2,500
2022		2,500
Thereafter		236,875
Total	$	252,097

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INCOME TAXES

12 Months Ended

Dec. 31, 2017

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 10 - INCOME TAXES

The components of income before income taxes were as follows (in thousands):

	Years Ended December 31,
	2017		2016			2015
Domestic	$	13,183	$	11,079		$	(42,179	)
Foreign		3,709		(1,405	)		3,259
Total income before taxes	$	16,892	$	9,674		$	(38,920	)

The provision for income taxes consisted of the following (in thousands):

	Years Ended December 31,
	2017			2016			2015
Current -
Federal	$	1,400		$	(902	)	$	5,182
State		698			136			1,499
Foreign		2,092			602			2,493
		4,190			(164	)		9,174
Deferred -
Federal		686			4,174			(7,090	)
State		(464	)		120			-
Foreign		(4,049	)		(1,607	)		(1,934	)
		(3,827	)		2,687			(9,024	)
	$	363		$	2,523		$	150

The difference between income taxes computed at the federal statutory income tax rate (35%) and the provision for income taxes is as follows (in thousands):

	Years Ended December 31,
	2017			2016			2015
Income taxes computed at federal statutory rate	$	5,912		$	3,386		$	(13,622	)
State income taxes, net of federal benefit		152			166			974
Non-tax deductible impairment expense computed at federal statutory rate		-			-			15,765
Foreign adjustment		255			140			689
Meals and entertainment		422			361			620
Gain on sale of Vertex		-			(1,971	)		-
Domestic Production Activity Deduction		(98	)		-			(1,143	)
Research and development tax credit		(641	)		(886	)		(1,730	)
Foreign tax credit		-			(383	)		(921	)
Valuation Allowance		(791	)		-			-
Tax Reform Deferred Tax Remeasurement		(1,294	)		-			-
Canadian Acquisition Deferred Tax Liability True Up		(2,180	)		-			-
Foreign rate difference		(297	)		112			(261	)
Other		(1,077	)		1,598			(221	)
	$	363		$	2,523		$	150

Deferred tax liabilities and assets were comprised of the following (in thousands):

	December 31,
	2017			2016
Deferred tax assets:
Goodwill	$	2,668		$	4,029
Allowance for doubtful accounts		1,707			2,469
Inventories		2,365			3,944
Accruals		(61	)		97
Research and development credit carryforward		1,115			886
Foreign Tax Credit Carryforward		64			64
Charitable Contribution Carryforward		559			138
Net operating loss carryforward		136			760
Capital loss carryforward		12,225			18,903
Deferred Compensation		475			1,881
Other Accruals		266			-
Other		65			107
Total deferred tax assets		21,584			33,278
Less valuation allowance		(12,220	)		(19,633	)
Total deferred tax asset, net of valuation Deferred tax liabilities :		9,364			13,645
Intangibles		(8,695	)		(10,042	)
Property and equipment		(6,860	)		(12,762	)
Unremitted foreign earnings		(354	)		(354	)
Cumulative translation adjustment		(67	)		-
Other		(457	)		-
Net deferred tax liability	$	(7,069	)	$	(9,513	)

At December 31, 2017, the Company had $51.4 million of capital loss carryforward, which will expire in 2021. The Company has recorded a valuation allowance for nearly all of this carryforward amount.  The valuation allowance represents a provision for uncertainty as to the realization of the tax benefits of these carryforwards and the deferred tax assets that may not be realized.

On December 22, 2017, the Tax Cuts and Jobs Act (“The Act”) was enacted into law.  The majority of the provisions signed into law in 2017 do not take effect until January 1, 2018.  The Act is a comprehensive tax reform legislation that contains significant changes to corporate taxation.  Provisions on the enacted law include a permanent reduction of the corporate income tax rate from 35% to 21%, imposing a mandatory one-time tax on un-repatriated accumulated earnings of foreign subsidiaries, a partial limitation on the deductibility of business interest expense, a limitation on net operating losses to 80% of taxable income each year, a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a partial territorial system (along with rules that create a new U.S. minimum tax on earnings of foreign subsidiaries), and other related provisions to maintain the U.S. tax base.

In accordance with SAB 118 issued by the Securities and Exchange Commission on December 22, 2017, companies are allowed a one year measurement period to complete the accounting related to The Act. Specifically, SAB 118 permits companies to record a provisional amount which can be remeasured during the measurement period due to obtaining, preparing, or analyzing additional information about facts and circumstances that existed as of the enacted date.  As a result, we remeasured our net deferred income tax liabilities by a provisional $1.3 million benefit and a corresponding provisional decrease in the net deferred tax liability as of December 31, 2017.  We are still in the process of analyzing The Act's impact as permitted under SAB 118. The largest impact to the Company being the remeasurement of deferred taxes due to the U.S. statutory tax rate change. The mandatory repatriation and resulting toll charge on accumulated foreign earnings and profits has limited impact on the Company as unremitted earnings from non-US jurisdictions is minimal.  The Company is provisional in its approach and assertion that there is no financial statement impact as of December 31, 2017.

Deferred tax liabilities related to intangibles for customer relationships acquired in Canada during 2012 and 2013 were reduced by $2.2 million during the fourth quarter of 2017 to correct the tax rate used to establish the deferred tax liabilities at the dates of acquisition. The Company evaluated the misstatement of each period since these acquisitions were completed and concluded the effects were immaterial.

Total deferred tax assets at December 31, 2016 were reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors of $1.3 million, $2.7 million and $4.6 million which were recorded during 2013, 2014 and 2015, respectively, due to the Company improperly recognizing a deferred tax asset related to cumulative translation adjustment losses.  The Company evaluated the misstatement of each period and concluded the effects were immaterial.  Therefore, the Company decided to correct the accumulated $8.6 million error in the fourth quarter of 2016. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2017, 2016 and 2015.

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SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2017

SHARE-BASED COMPENSATION [Abstract]

SHARE-BASED COMPENSATION

NOTE 11 - SHARE-BASED COMPENSATION

Restricted Stock

Under the restricted stock plans approved by our shareholders, directors, consultants and employees may be awarded shares of DXP’s common stock. The shares of restricted stock granted to employees and that are outstanding as of December 31, 2017 vest in accordance with one of the following vesting schedules: 100% one year after date of grant; 33.3% each year for three years after date of grant; 20% each year for five years after date of grant; or 10% each year for ten years after date of grant. The shares of restricted stock granted to non-employee directors of DXP vest one year after the grant date. The fair value of restricted stock awards is measured based upon the closing prices of DXP’s common stock on the grant dates and is recognized as compensation expense over the vesting period of the awards. Once restricted stock vests, new shares of the Company’s stock are issued.  At December 31, 2017, 401,223 shares were available for future grant.

Changes in restricted stock for the twelve months ended December 31, 2017 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2016		143,380		$	26.76
Granted		18,672		$	34.07
Forfeited		(298	)	$	59.60
Vested		(83,853	)	$	24.92
Non-vested at December 31, 2017		77,901		$	30.36

Changes in restricted stock for the twelve months ended December 31, 2016 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2015		137,507		$	54.58
Granted		108,553		$	17.07
Forfeited		(39,000	)	$	65.41
Vested		(63,680	)	$	46.65
Non-vested at December 31, 2016		143,380		$	26.76

Changes in restricted stock for the twelve months ended December 31, 2015 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2014		179,942		$	52.71
Granted		35,821		$	40.95
Forfeited		(20,855	)	$	41.34
Vested		(57,401	)	$	44.99
Non-vested at December 31, 2015		137,507		$	54.58

Compensation expense, associated with restricted stock, recognized in the years ended December 31, 2017, 2016 and 2015 was $1.7 million, $2.0 million, and $3.0 million, respectively. Related income tax benefits recognized in earnings in the years ended December 31, 2017, 2016 and 2015 were approximately $0.7 million, $0.8 million and $1.2 million, respectively. Unrecognized compensation expense under the DXP Enterprises, Inc. 2016 Omnibus Incentive Plan at December 31, 2017, December 31, 2016 and December 31, 2015 was $1.6 million, $2.7 million and $4.9 million, respectively. As of December 31, 2017, the weighted average period over which the unrecognized compensation expense is expected to be recognized is 15.2 months.

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EARNINGS PER SHARE DATA

12 Months Ended

Dec. 31, 2017

EARNINGS PER SHARE DATA [Abstract]

EARNINGS PER SHARE DATA

NOTE 12 - EARNINGS PER SHARE DATA

Basic earnings per share is computed based on weighted average shares outstanding and excludes dilutive securities. Diluted earnings per share is computed including the impacts of all potentially dilutive securities. For the year ended December 31, 2015, we excluded the potential dilution of convertible preferred stock, which could be converted into 840,000 shares because they would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):

	December 31,
	2017			2016			2015
Basic:
Weighted average shares outstanding		17,400			15,042			14,423
Net income (loss) attributable to DXP Enterprises, Inc.	$	16,888		$	7,702		$	(38,536	)
Convertible preferred stock dividend		(90	)		(90	)		(90	)
Net income (loss)  attributable to common shareholders	$	16,798		$	7,612		$	(38,626	)
Per share amount	$	0.97		$	0.51		$	(2.68	)
Diluted:
Weighted average shares outstanding		17,400			15,042			14,423
Assumed conversion of convertible preferred stock		840			840			-
Total dilutive shares		18,240			15,882			14,423
Net income (loss) attributable to common shareholders	$	16,798		$	7,612		$	(38,626	)
Convertible preferred stock dividend		90			90			-
Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share	$	16,888		$	7,702		$	(38,626	)
Per share amount	$	0.93		$	0.49		$	(2.68	)

Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the period and excludes dilutive securities. Diluted earnings per share reflects the potential dilution that could occur if the preferred stock was converted into common stock. Restricted stock is considered a participating security and is included in the computation of basic earnings per share as if vested. Because holders of Preferred Stock do not participate in losses, the loss was not allocated to Preferred Stock for fiscal year 2015. The Preferred Stock is convertible into 840,000 shares of common stock.

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CAPITAL STOCK

12 Months Ended

Dec. 31, 2017

CAPITAL STOCK [Abstract]

CAPITAL STOCK

NOTE 13 – CAPITAL STOCK

The Company has Series A and Series B preferred stock of 1,122 shares and 15,000 shares outstanding as of year-end 2017, 2016 and 2015, respectively. The preferred stock did not have any activity during 2017, 2016 and 2015. The activity related to outstanding common stock and common stock held in treasury was as follows:

	December 31,
	2017		2016		2015
Common Stock:	Quantity (in thousands)
Balance, beginning of period		17,197		14,390		14,375
Issuance of shares for compensation net of withholding		119		84		15
Issuance of common stock related to equity distribution agreements		-		2,723		-
Balance, end of period		17,316		17,197		14,390

	December 31,
	2017		2016			2015
Treasury Shares:	Quantity (in thousands)
Balance, beginning of period		-		264			280
Issuance of treasury shares for acquisition		-		-			(149	)
Purchase of treasury shares		-		-			191
Issuance of treasury shares upon vesting of restricted shares net of withholding		-		(264	)		(58	)
Balance, end of period		-		-			264

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BUSINESS ACQUISITIONS

12 Months Ended

Dec. 31, 2017

BUSINESS ACQUISITIONS [Abstract]

BUSINESS ACQUISITIONS

NOTE 14 - BUSINESS ACQUISITIONS

All of the Company’s acquisitions have been accounted for using the purchase method of accounting. Revenues and expenses of the acquired businesses have been included in the accompanying consolidated financial statements beginning on their respective dates of acquisition. The allocation of purchase price to the acquired assets and liabilities is based on estimates of fair market value and may be revised if and when additional information the Company is awaiting concerning certain asset and liability valuations is obtained, provided that such information is received no later than one year after the date of acquisition. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. It specifically includes the expected synergies and other benefits that we believe will result from combining the operations of our acquisitions with the operations of DXP and any intangible assets that do not qualify for separate recognition such as the assembled workforce.

On April 1, 2015, the Company completed the acquisition of all of the equity interests of Tool Supply, Inc. (“TSI”) to expand DXP’s cutting tools offering in the Northwest region of the United States. DXP paid approximately $5.0 million for TSI, which was borrowed under the Company’s credit facility in effect at the date of acquisition. Estimated goodwill of $2.9 million and intangible assets of $2.0 were recognized for this acquisition. All of the estimated goodwill is included in the Service Centers segment. None of the estimated goodwill or intangible assets are expected to be tax deductible.

On September 1, 2015, the Company completed the acquisition of all of the equity interests of Cortech Engineering, LLC (“Cortech”) to expand DXP’s rotating equipment offering to the Western seaboard. DXP paid approximately $14.9 million for Cortech. The purchase was financed with borrowings under the Company’s credit facility in effect at the date of acquisition, as well as by issuing $4.4 million (148.8 thousand shares) of DXP common stock. Estimated intangible assets of $5.2 were recognized for this acquisition. In the first quarter of 2016, DXP adjusted the deferred tax liability associated with the acquisition by $151 thousand, which resulted in an adjusted goodwill balance of $8.7 million. All of the estimated goodwill is included in the Service Centers segment. Approximately $4.5 million of the goodwill and intangible assets are not deductible for tax purposes.

The value assigned to the non-compete agreements and customer relationships for business acquisitions were determined by discounting the estimated cash flows associated with non-compete agreements and customer relationships as of the date the acquisition was consummated. The estimated cash flows were based on estimated revenues net of operating expenses and net of capital charges for assets that contribute to the projected cash flow from these assets. The projected revenues and operating expenses were estimated based on management estimates. Net capital charges for assets that contribute to projected cash flow were based on the estimated fair value of those assets.

For the twelve months ended December 31, 2016, businesses acquired during 2015 contributed sales of $25.2 million and earnings (loss) before taxes of approximately $(0.3) million.

The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2017 and 2016, assuming the divestiture of a business completed in 2016 were consummated as of  January 1, 2016 are as follows (in millions, except per share amounts):

	Years Ended December 31,
	2017		2016
Net sales	$	1,006.8	$	939.4
Net income attributable to DXP Enterprises, Inc.	$	16.9	$	5.5
Per share data
Basic earnings	$	0.97	$	0.36
Diluted earnings	$	0.93	$	0.35

The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2016 and 2015, assuming the acquisition of businesses completed in 2015 and divestiture of a business completed in 2016 (previously discussed in Item 1, Business) was consummated as of January 1, 2015 are as follows (in millions, except per share amounts.

	Years Ended December 31,
	2016		2015
Net sales	$	939.4	$	1,228.9
Net income (loss) attributable to DXP Enterprises, Inc.	$	5.5	$	(40.7	)
Per share data
Basic earnings (loss)	$	0.36	$	(2.83	)
Diluted earnings (loss)	$	0.35	$	(2.83	)

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15 - COMMITMENTS AND CONTINGENCIES

The Company leases equipment, automobiles and office facilities under various operating leases. The future minimum rental commitments as of December 31, 2017, for non-cancelable leases are as follows (in thousands):

2018	$	19,419
2019		15,002
2020		11,492
2021		9,435
2022		6,637
Thereafter		3,441

Rental expense for operating leases was $27.7 million, $27.6 million and $32.7 million for the years ended December 31, 2017, 2016 and 2015, respectively.

From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. While DXP is unable to predict the outcome of these lawsuits, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on DXP’s consolidated financial position, cash flows, or results of operations.

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EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2017

EMPLOYEE BENEFIT PLANS [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 16 - EMPLOYEE BENEFIT PLANS

The Company offers a 401(k) plan which is eligible to substantially all employees in the United States. For the year ended December 31, 2015 as well as the first quarter of 2016, the Company elected to match employee contributions at a rate of 50 percent of up to 4 percent of salary deferral. The Company contributed $0.2 million, $0.4 million, and $2.6 million to the 401(k) plan in the years ended December 31, 2017, 2016, and 2015, respectively.  In 2016 the Company suspended indefinitely the employee match program. The Company contributed $0.4 million in the first quarter of 2016 to the 401(k) plan.  No other contributions were made during the remainder of 2016.  The Company reinstated the employee match program in October 2017 contributing $0.2 million to the 401(k) plan for 2017.

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OTHER COMPREHENSIVE INCOME

12 Months Ended

Dec. 31, 2017

OTHER COMPREHENSIVE INCOME [Abstract]

OTHER COMPREHENSIVE INCOME

NOTE 17 - OTHER COMPREHENSIVE INCOME

Other comprehensive income generally represents all changes in shareholders’ equity during the period, except those resulting from investments by, or distributions to, shareholders.

During 2012 and 2013, the Company acquired four entities that operate in Canada. These Canadian entities maintain financial data in Canadian dollars. Upon consolidation, the Company translates the financial data from these foreign subsidiaries into U.S. dollars and records cumulative translation adjustments in other comprehensive income. The Company recorded $(1.2) million, $(7.7) million and ($4.9) million in translation adjustments, net of tax, in other comprehensive income during the years ended December 31, 2017, 2016 and 2015, respectively. Comprehensive income for the year ended December 31, 2016 was reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors which accumulated during 2013, 2014 and 2015 due to the Company improperly recognizing an $8.6 million deferred tax asset on unrealized foreign currency losses not expected to be realized within one year. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2016 and 2015.

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SEGMENT AND GEOGRAPHICAL REPORTING

12 Months Ended

Dec. 31, 2017

SEGMENT AND GEOGRAPHICAL REPORTING [Abstract]

SEGMENT AND GEOGRAPHICAL REPORTING

NOTE 18 – SEGMENT AND GEOGRAPHICAL REPORTING

The Company’s reportable business segments are: Service Centers, Innovative Pumping Solutions and Supply Chain Services. The Service Centers segment is engaged in providing maintenance, MRO products and equipment, including logistics capabilities, to industrial customers. The Service Centers segment provides a wide range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, fastener, industrial supply, safety products and safety services categories. The Innovative Pumping Solutions segment fabricates and assembles custom-made pump packages, remanufactures pumps and manufactures branded private label pumps. The Supply Chain Services segment manages all or part of a customer's MRO products supply chain, including warehouse and inventory management.

The high degree of integration of the Company’s operations necessitates the use of a substantial number of allocations and apportionments in the determination of business segment information. Sales are shown net of intersegment eliminations.

Business Segmented Financial Information

The following table sets out financial information relating the Company’s segments (in thousands):

Years Ended December 31,	Service Centers		Innovative Pumping Solutions		Supply Chain Services		Total
2017
Sales	$	641,275	$	204,030	$	161,477	$	1,006,782
Operating income for reportable segments, excluding amortization		63,250		11,423		15,451		90,124
Identifiable assets at year end		385,744		172,538		59,942		618,224
Capital expenditures		1,076		1,488		82		2,646
Depreciation		5,162		4,198		103		9,463
Amortization		8,989		7,194		1,083		17,266
Interest expense		9,712		5,352		1,990		17,054

2016
Sales	$	621,007		$	187,124		$	153,961	$	962,092
Operating income for reportable segments, excluding impairment expense		47,634			9,867			15,449		72,950
Identifiable assets at year end		370,261			175,198			44,796		590,255
Capital expenditures		447			3,827			129		4,403
Proceeds from sale of fixed assets		(1,038	)		(168	)		-		(1,206	)
Depreciation		6,520			3,834			126		10,480
Amortization		9,152			7,826			1,083		18,061
Interest expense		9,290			4,422			1,852		15,564

2015
Sales	$	826,588	$	254,829	$	165,626	$	1,247,043
Operating income for reportable segments, excluding impairment expense		78,170		21,584		14,213		113,967
Identifiable assets at year end		451,333		159,365		50,012		660,710
Capital expenditures		3,185		8,383		604		12,172
Depreciation		7,734		2,930		227		10,891
Amortization		10,334		8,406		1,881		20,621
Interest expense		2,967		6,881		1,084		10,932
Impairment expense by segment		15,842		52,893		-		68,735

	Years Ended December 31,
	2017			2016			2015
Operating income for reportable segments, excluding impairment expense	$	90,124		$	72,950		$	113,967
Adjustments for:
B27 settlement		-			-			7,348
Impairment expense		-			-			68,735
Amortization of intangibles		17,266			18,061			20,621
Corporate and other expense, net		39,368			35,557			45,179
Total operating income (loss)		33,490			19,332			(27,916	)
Interest expense		17,054			15,564			10,932
Other expenses (income), net		(456	)		(5,906	)		72
Income (loss) before income taxes	$	16,892		$	9,674		$	(38,920	)

The Company had capital expenditures at Corporate of $0.2 million, $0.5 million, and $1.8 million for the years ended December 31, 2017, 2016, and 2015, respectively. The Company had identifiable assets at Corporate of $19.4 million, $18.3 million, and $23.3 million as of December 31, 2017, 2016, and 2015, respectively. Corporate depreciation was $1.8 million, $1.4 million, and $1.7 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Geographical Information

Revenues are presented in geographic area based on location of the facility shipping products or providing services. Long-lived assets are based on physical locations and are comprised of the net book value of property.

The Company’s revenues and property and equipment by geographical location are as follows (in thousands):

	Years Ended December 31,
	2017		2016		2015
Revenues
United States	$	902,636	$	873,926	$	1,119,210
Canada		104,146		88,166		127,833
Total	$	1,006,782	$	962,092	$	1,247,043

	As of December 31,
	2017		2016
Property and Equipment, net
United States	$	42,683	$	48,635
Canada		10,654		12,172
Total	$	53,337	$	60,807

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QUARTERLY FINANCIAL INFORMATION (Unaudited)

12 Months Ended

Dec. 31, 2017

QUARTERLY FINANCIAL INFORMATION (Unaudited) [Abstract]

QUARTERLY FINANCIAL INFORMATION (Unaudited)

NOTE 19 - QUARTERLY FINANCIAL INFORMATION (unaudited)

Summarized quarterly financial information for the years ended December 31, 2017, 2016 and 2015 is as follows (in millions, except per share data):

	First Quarter			Second Quarter		Third Quarter			Fourth Quarter
2017
Sales	$	238.5		$	250.7	$	251.9		$	265.7
Gross profit		64.5			68.9		67.0			71.2
Net income (loss)		3.1			4.1		3.0			6.6
Net income (loss) attributable to DXP Enterprises, Inc.		3.0			4.0		2.9			6.6
Earnings (loss) per share - basic	$	0.18		$	0.24	$	0.17		$	0.38
Earnings (loss) per share - diluted	$	0.17		$	0.23	$	0.16		$	0.37
2016
Sales	$	253.6		$	256.2	$	230.0		$	222.3
Gross profit		68.8			71.6		63.8			60.6
Net income (loss)		(5.2	)		5.1		0.1			7.1
Net income (loss) attributable to DXP Enterprises, Inc.		(5.1	)		5.1		0.2			7.4
Earnings (loss) per share - basic	$	(0.36	)	$	0.36	$	0.02		$	0.44
Earnings (loss) per share - diluted	$	(0.36	)	$	0.34	$	0.02		$	0.42
2015
Sales	$	341.6		$	323.7	$	303.1		$	278.6
Gross profit		98.1			91.3		85.7			76.9
Impairment expense		-			-		58.9			9.8
Net income (loss)		9.7			7.2		(52.7	)		(3.2	)
Net income (loss) attributable to DXP Enterprises, Inc.		9.7			7.2		(52.4	)		(3.0	)
Earnings (loss) per share - basic	$	0.67		$	0.50	$	(3.64	)	$	(0.20	)

The sum of the individual quarterly earnings per share amounts may not agree with year-to-date earnings per share as each quarter’s computation is based on the weighted average number of shares outstanding during the quarter, the weighted average stock price during the quarter and the dilutive effects of the stock options and restricted stock in each quarter.

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RELATED PARTIES

12 Months Ended

Dec. 31, 2017

RELATED PARTIES [Abstract]

RELATED PARTIES

NOTE 20 – RELATED PARTIES

The Board uses policies and procedures, to be applied by the Audit Committee of the Board, for review, approval or ratification of any transactions with related persons. Those policies and procedures will apply to any proposed transactions in which DXP is a participant, the amount involved exceeds $120,000 and any director, executive officer or significant shareholder or any immediate family member of such a person has a direct or material indirect interest. Any related party transaction will be reviewed by the Audit Committee of the Board of Directors to determine, among other things, the benefits of any transaction to DXP, the availability of other sources of comparable products or services and whether the terms of the proposed transaction are comparable to those provided to unrelated third parties.

For the year ended December 31, 2017, the Company paid approximately $1.4 million in lease expenses to entities controlled by the Company’s Chief Executive Officer, David Little, $1.2 million in lease expenses to an entity in which a retired senior vice president holds a minority interest, and $0.3 million in lease expenses to an entity in which a retired senior vice president holds an interest, and the children of David Little hold a majority interest. The Company employs six people who work for David Little, and Mr. Little reimbursed the Company for the cost. Total cost to Mr. Little for the year ended December 31, 2017 for payroll, related payroll expenses, vehicles, fuel and supplies was $0.4 million. The Company employs two sons and two sons-in-laws of executives. Total wages and other compensation for 2017 was approximately $1.3 million for the four employees.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2017

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 21 – SUBSEQUENT EVENTS

On January 1, 2018, the Company completed the acquisition of Application Specialties, Inc. (“ASI”), a distributor of cutting tools, abrasives, coolants and machine shop supplies. DXP paid approximately $11.5 million for ASI. The purchase was financed with $10.6 million of cash on hand as well as issuing $0.9 million of DXP common stock.

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES (Policies)

12 Months Ended

Dec. 31, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES [Abstract]

Basis of Presentation

Basis of Presentation

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its variable interest entity (“VIE”).

DXP is the primary beneficiary of a VIE in which DXP owns 47.5% of the equity. DXP consolidates the financial statements of the VIE with the financial statements of DXP. As of December 31, 2017, the total assets of the VIE were approximately $5.2 million including approximately $4.5 million of fixed assets. DXP is the primary customer of the VIE. Consolidation of the VIE increased cost of sales by approximately $0.6 million and $1.3 million for the twelve months ended December 31, 2017 and 2016, respectively. The Company recognized a related income tax benefit of $0.2 million and $0.3 million related to the VIE for the years ended December 31, 2017 and 2016, respectively.  At December 31, 2017, the owners of the 52.5% of the equity not owned by DXP included employees of DXP.

All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation; none affected net income.

Foreign Currency

Foreign Currency

The financial statements of the Company’s Canadian subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss). Gains and losses on transactions denominated in foreign currency are reported in consolidated statements of income (loss).

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company’s presentation of cash includes cash equivalents. Cash equivalents are defined as short-term investments with maturity dates of 90 days or less at time of purchase. The Company places its cash and cash equivalents with institutions with high credit quality. However, at certain times, such cash and cash equivalents may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not historically experienced any losses when in excess of these limits.

Receivables and Credit Risk

Receivables and Credit Risk

Trade receivables consist primarily of uncollateralized customer obligations due under normal trade terms, which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and customers may not pay within stated trade terms.

The Company has trade receivables from a diversified customer base located primarily in the Rocky Mountain, Northeastern, Midwestern, Southeastern and Southwestern regions of the United States, and Canada. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers' financial positions and monitors accounts on a regular basis. Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically (as circumstances warrant) based upon management’s best estimate of the collectability of such accounts. The Company writes off uncollectible trade accounts receivable when the accounts are determined to be uncollectible. No customer represents more than 10% of consolidated sales.

Changes in this allowance for 2017, 2016 and 2015 were as follows (in thousands):

	Years Ended December 31,
	2017			2016			2015
Balance at beginning of year	$	8,160		$	9,364		$	8,713
Charged to costs and expenses		3,367			180			2,014
Charged to other accounts		22	3		(17	)2		1,255	2
Deductions		(2,534	)1		(1,367	)1		(2,618	)1
Balance at end of year	$	9,015		$	8,160		$	9,364

(1) Uncollectible accounts written off, net of recoveries

(2) Includes allowance for doubtful accounts from acquisitions and divestiture

(3) Primarily due to translation adjustments

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. US GAAP establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. US GAAP prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

See Note 4 for further information regarding the Company’s financial instruments.

Inventories

Inventories

Inventories consist principally of finished goods and are priced at net realizable value, cost being determined using the first-in, first-out (“FIFO”) method. Provisions are provided against inventories for estimated obsolescence based upon the aging of the inventories and market trends and are applied as a reduction in cost of associated inventory.

Property and Equipment

Property and Equipment

Property and equipment are carried on the basis of cost. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives. Maintenance and repairs of depreciable assets are charged against earnings as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and gains or losses are credited or charged to earnings.

The principal estimated useful lives used in determining depreciation are as follows:

Buildings	20-39 years
Building improvements	10-20 years
Furniture, fixtures and equipment	3-20 years
Leasehold improvements	Shorter of estimated useful life or related lease term

Impairment of Goodwill and Other Intangible Assets

Impairment of Goodwill and Other Intangible Assets

The Company tests goodwill and other indefinite lived intangible assets for impairment on an annual basis in the fourth quarter and when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assigns the carrying value of these intangible assets to its "reporting units" and applies the test for goodwill at the reporting unit level. A reporting unit is defined as an operating segment or one level below a segment (a "component") if the component is a business and discrete information is prepared and reviewed regularly by segment management.

The Company’s goodwill impairment assessment first permits evaluating qualitative factors to determine if a reporting unit's carrying value would more likely than not exceed its fair value. If the Company concludes, based on the qualitative assessment, that a reporting unit's carrying value would more likely than not exceed its fair value, the Company would perform a two-step quantitative test for that reporting unit. When a quantitative assessment is performed, the first step is to identify a potential impairment, and the second step measures the amount of the impairment loss, if any. Goodwill is deemed to be impaired if the carrying amount of a reporting unit’s goodwill exceeds its estimated fair value. During the third and fourth quarter of 2015, DXP performed interim impairment tests using a quantitative approach and recognized goodwill impairments of $57.8 million and $9.8 million, respectively. No impairment of goodwill was required in 2017 and 2016.

Impairment of Long-Lived Assets, Excluding Goodwill

Impairment of Long-Lived Assets, Excluding Goodwill

The Company tests long-lived assets or asset groups for recoverability on an annual basis and when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. No impairment of long-lived assets excluding goodwill, was required in 2017, 2016 and 2015.

Share-based Compensation

Share-based Compensation

The Company uses restricted stock for share-based compensation programs. The Company measures compensation cost with respect to equity instruments granted as stock-based payments to employees based upon the estimated fair value of the equity instruments at the date of the grant. The cost as measured is recognized as expense over the period which an employee is required to provide services in exchange for the award.

Revenue Recognition

Revenue Recognition

For binding agreements to fabricate tangible assets to customer specifications, the Company recognizes revenues using the percentage of completion method. Under this method, revenues are recognized as costs are incurred and include estimated profits calculated on the basis of the relationship between costs incurred and total estimated costs at completion. If at any time expected costs exceed the value of the contract, the loss is recognized immediately. Revenues of approximately $40.6 million, $31.5 million, and $47.5 million were recognized on contracts in process for the years ended December 31, 2017, 2016, and 2015, respectively. The typical time span of these contracts is approximately one to two years.

For other sales, the Company recognizes revenues when an agreement is in place, the price is fixed, title for product passes to the customer or services have been provided and collectability is reasonably assured, which is generally upon delivery to the customer. Revenues are recorded net of sales taxes.

The Company reserves for potential customer returns based upon the historical level of returns.

Shipping and Handling Costs

Shipping and Handling Costs

The Company classifies shipping and handling charges billed to customers as sales. Shipping and handling charges paid to others are classified as a component of cost of sales.

Self-insured Insurance and Medical Claims

Self-insured Insurance and Medical Claims

We generally retain up to $100,000 of risk for each claim for workers compensation, general liability, automobile and property loss. We accrue for the estimated loss on the self-insured portion of these claims. The accrual is adjusted quarterly based upon reported claims information. The actual cost could deviate from the recorded estimate.

We generally retain up to $175,000 of risk on each medical claim for our employees and their dependents with the exception of less than 0.05% of employees where a higher risk is retained. We accrue for the estimated outstanding balance of unpaid medical claims for our employees and their dependents. The accrual is adjusted monthly based on recent claims experience. The actual claims could deviate from recent claims experience and be materially different from the reserve.

The accrual for these claims at December 31, 2017 and 2016 was approximately $2.7 million and $3.1 million, respectively.

Purchase Accounting

Purchase Accounting

DXP estimates the fair value of assets, including property, machinery and equipment and their related useful lives and salvage values, intangibles and liabilities when allocating the purchase price of an acquisition. The fair value estimates are developed using the best information available.

Cost of Sales and Selling, General and Administrative Expense

Cost of Sales and Selling, General and Administrative Expense

Cost of sales includes product and product related costs, inbound freight charges, internal transfer costs and depreciation. Selling, general and administrative expense includes purchasing and receiving costs, inspection costs, warehousing costs, depreciation and amortization.

Debt Issuance Cost Amortization

Debt Issuance Cost Amortization

Fees paid to DXP’s lenders to secure a firm commitment on a term loan and revolving line of credit are presented as a direct deduction from the carrying amount of the debt liability. For the term loan, fees paid by DXP are amortized over the life of the loan as additional interest. Fees paid to secure a firm commitment from our lender on a revolving line of credit are amortized on a straight-line basis over the entire term of the arrangement. The total unamortized debt issuance costs reported on the consolidated balance sheets as of December 31, 2017 and 2016 was $10.1 million and $1.0 million, respectively. In connection with the extinguishment of the previously existing credit facility we recorded a $0.6 million write-off of debt issuance costs, which was included in interest expense during the third quarter of 2017.

Income Taxes

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and income tax bases of assets and liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. Valuation allowances are established to reduce deferred income tax assets to the amounts expected to be realized under a more likely than not criterion.

Accounting for Uncertainty in Income Taxes

Accounting for Uncertainty in Income Taxes

A position taken or expected to be taken in a tax return is recognized in the financial statements when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U. S. federal, state and local tax examination by tax authorities for years prior to 2012. The Company's policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income, foreign currency translation adjustments and unrealized gains and losses on certain investments in debt and equity securities. The Company’s other comprehensive (loss) income is comprised of changes in the market value of an investment with quoted market prices in an active market for identical instruments and translation adjustments from translating foreign subsidiaries to the reporting currency.  Comprehensive income for the year ended December 31, 2016 was reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors which accumulated during 2013, 2014 and 2015 due to the Company improperly recognizing an $8.6 million deferred tax asset on unrealized foreign currency losses not expected to be realized within one year. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2016 and 2015.

Out-of-Period Items

Out-of-Period Items

Deferred tax liabilities related to intangibles for customer relationships acquired in Canada during 2012 and 2013 were reduced by $2.2 million during the fourth quarter of 2017 to correct the tax rate used to establish the deferred tax liabilities at the dates of acquisition. The Company evaluated the misstatement of each period since these acquisitions were completed and concluded the effects were immaterial.

During the first quarter of 2015, we identified a $2.5 million ($1.6 million net of tax) overstatement of an accrual at December 31, 2014, which overstated 2014 selling, general and administrative expense. We recorded an out-of-period adjustment to correct this overstatement in the quarter ended March 31, 2015. During the fourth quarter of 2015, we realized $1.5 million of net tax benefits related to events which occurred in earlier years. These out-of-period items reduced the 2015 net loss by $3.1 million and 2015 basic and diluted net loss per share by $0.21. We assessed the materiality of this overstatement and concluded the overstatement was not material to the results of operations or financial condition for the year ended December 31, 2015.

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES (Tables)

12 Months Ended

Dec. 31, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES [Abstract]

Schedule of Changes in Allowance

Changes in this allowance for 2017, 2016 and 2015 were as follows (in thousands):

	Years Ended December 31,
	2017			2016			2015
Balance at beginning of year	$	8,160		$	9,364		$	8,713
Charged to costs and expenses		3,367			180			2,014
Charged to other accounts		22	3		(17	)2		1,255	2
Deductions		(2,534	)1		(1,367	)1		(2,618	)1
Balance at end of year	$	9,015		$	8,160		$	9,364

(1) Uncollectible accounts written off, net of recoveries

(2) Includes allowance for doubtful accounts from acquisitions and divestiture

(3) Primarily due to translation adjustments

Principal Estimated Useful Lives Used in Determining Depreciation

The principal estimated useful lives used in determining depreciation are as follows:

Buildings	20-39 years
Building improvements	10-20 years
Furniture, fixtures and equipment	3-20 years
Leasehold improvements	Shorter of estimated useful life or related lease term

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INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2017

INVENTORIES [Abstract]

Carrying Values of Inventories

The carrying values of inventories were as follows (in thousands):

	December 31, 2017		December 31, 2016
Finished goods	$	79,820	$	74,269
Work in process		11,593		9,430
Inventories	$	91,413	$	83,699

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COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS (Tables)

12 Months Ended

Dec. 31, 2017

COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS [Abstract]

Costs and Estimated Profits on Uncompleted Contracts

Costs and estimated profits on uncompleted contracts and related amounts billed for 2017 and 2016 were as follows (in thousands):

	December 31,
	2017		2016
Costs incurred on uncompleted contracts	$	37,899	$	25,214
Estimated earnings, thereon		2,665		6,274
Total		40,564		31,488
Less: billings to date		17,881		15,864
Net	$	22,683	$	15,624

Schedule of Costs and Estimated Earnings on Uncompleted Contracts Included in Balance Sheet

Such amounts were included in the accompanying Consolidated Balance Sheets for 2017 and 2016 under the following captions (in thousands):

	December 31,
	2017			2016
Costs and estimated profits in excess of billings on uncompleted contracts	$	26,915		$	18,421
Billings in excess of costs and estimated profits on uncompleted contracts		(4,249	)		(2,813	)
Translation Adjustment		17			16
Net	$	22,683		$	15,624

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PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2017

PROPERTY AND EQUIPMENT [Abstract]

Property and Equipment

The carrying values of property and equipment were as follows (in thousands):

	December 31, 2017			December 31, 2016
Land	$	2,346		$	2,346
Buildings and leasehold improvements		16,724			16,259
Furniture, fixtures and equipment		94,475			94,784
Less – Accumulated depreciation		(60,208	)		(52,582	)
Total Property and Equipment	$	53,337		$	60,807

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2017

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

Goodwill and Other Intangible Assets

The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2017 (in thousands):

	Goodwill		Other Intangible Assets			Total
Balances as of December 31, 2016	$	187,591	$	94,831		$	282,422
Translation adjustment		-		960			960
Amortization		-		(17,266	)		(17,266	)
Balances as of December 31, 2017	$	187,591	$	78,525		$	266,116

The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2016 (in thousands):

	Goodwill			Other Intangible Assets			Total
Balances as of December 31, 2015	$	197,362		$	112,297		$	309,659
Sale of subsidiary		(9,620	)		-			(9,620	)
Purchase accounting adjustment		(151	)		-			(151	)
Translation adjustment		-			595			595
Amortization		-			(18,061	)		(18,061	)
Balances as of December 31, 2016	$	187,591		$	94,831		$	282,422

Goodwill Balance by Reportable Segment

The following table presents goodwill balance by reportable segment as of December 31, 2017 and 2016 (in thousands):

	As of December 31,
	2017		2016
Service Centers	$	154,473	$	154,473
Innovative Pumping Solutions		15,980		15,980
Supply Chain Services		17,138		17,138
Total	$	187,591	$	187,591

Amortizable Other Intangible Assets

The following table presents a summary of amortizable other intangible assets (in thousands):

	As of December 31, 2017							As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Carrying Amount, net		Gross Carrying Amount		Accumulated Amortization			Carrying Amount, net
Customer relationships	$	162,200	$	(83,806	)	$	78,394	$	163,022	$	(68,446	)	$	94,576
Non-compete agreements		949		(818	)		131		1,836		(1,581	)		255
Total	$	163,149	$	(84,624	)	$	78,525	$	164,858	$	(70,027	)	$	94,831

Estimated Future Annual Amortization of Intangible Assets

The estimated future annual amortization of intangible assets for each of the next five years and thereafter are as follows (in thousands):

2018	$	15,615
2019		14,170
2020		10,292
2021		8,911
2022		7,264
Thereafter		22,273
Total	$	78,525

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LONG-TERM DEBT (Tables)

12 Months Ended

Dec. 31, 2017

LONG-TERM DEBT [Abstract]

Long Term Debt

Long-term debt consisted of the following (in thousands):

	December 31,
	2017			2016
ABL Revolver	$	-		$	-
Term Loan B		249,375			-
Line of credit		-			147,600
Term loan		-			74,500
Promissory note payable in monthly installments at 2.9% through January 2021, collateralized by equipment		2,722			3,577
Less unamortized debt issuance costs		(10,073	)		(992	)
Total Debt		242,024			224,685
Less: Current maturities		(3,381	)		(51,354	)
Total Long-term Debt	$	238,643		$	173,331

Computation of Secured Leverage Ratio to EBITDA

The Term Loan requires that the company’s Secured Leverage Ratio, defined as the ratio, as of the last day of any fiscal quarter of consolidated secured debt (net of restricted cash, not to exceed $30 million) as of such day to EBITDA, beginning with the fiscal quarter ending December 31, 2017, is either equal to or less than as indicated in the table below:

Fiscal Quarter	Secured Leverage Ratio
December 31, 2017	5.75:1.00
March 31, 2018	5.75:1.00
June 30, 2018	5.50:1.00
September 30, 2018	5.50:1.00
December 31, 2018	5.25:1.00
March 31, 2019	5.25:1.00
June 30, 2019	5.00:1.00
September 30, 2019	5.00:1.00
December 31, 2019	4.75:1.00
March 31, 2020	4.75:1.00
June 30, 2020 and each Fiscal Quarter thereafter	4.50:1.00

Maturities of Long-Term Debt

As of December 31, 2017, the maturities of long-term debt for the next five years and thereafter were as follows (in thousands):

2018	$	3,381
2019		3,405
2020		3,436
2021		2,500
2022		2,500
Thereafter		236,875
Total	$	252,097

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

INCOME TAXES [Abstract]

Income Before Income Taxes

The components of income before income taxes were as follows (in thousands):

	Years Ended December 31,
	2017		2016			2015
Domestic	$	13,183	$	11,079		$	(42,179	)
Foreign		3,709		(1,405	)		3,259
Total income before taxes	$	16,892	$	9,674		$	(38,920	)

Provision for Income Taxes

The provision for income taxes consisted of the following (in thousands):

	Years Ended December 31,
	2017			2016			2015
Current -
Federal	$	1,400		$	(902	)	$	5,182
State		698			136			1,499
Foreign		2,092			602			2,493
		4,190			(164	)		9,174
Deferred -
Federal		686			4,174			(7,090	)
State		(464	)		120			-
Foreign		(4,049	)		(1,607	)		(1,934	)
		(3,827	)		2,687			(9,024	)
	$	363		$	2,523		$	150

Difference between Income Taxes Computed at the Federal Statutory Income Tax Rate and the Provision for Income Taxes

The difference between income taxes computed at the federal statutory income tax rate (35%) and the provision for income taxes is as follows (in thousands):

	Years Ended December 31,
	2017			2016			2015
Income taxes computed at federal statutory rate	$	5,912		$	3,386		$	(13,622	)
State income taxes, net of federal benefit		152			166			974
Non-tax deductible impairment expense computed at federal statutory rate		-			-			15,765
Foreign adjustment		255			140			689
Meals and entertainment		422			361			620
Gain on sale of Vertex		-			(1,971	)		-
Domestic Production Activity Deduction		(98	)		-			(1,143	)
Research and development tax credit		(641	)		(886	)		(1,730	)
Foreign tax credit		-			(383	)		(921	)
Valuation Allowance		(791	)		-			-
Tax Reform Deferred Tax Remeasurement		(1,294	)		-			-
Canadian Acquisition Deferred Tax Liability True Up		(2,180	)		-			-
Foreign rate difference		(297	)		112			(261	)
Other		(1,077	)		1,598			(221	)
	$	363		$	2,523		$	150

Deferred Tax Liabilities and Assets

Deferred tax liabilities and assets were comprised of the following (in thousands):

	December 31,
	2017			2016
Deferred tax assets:
Goodwill	$	2,668		$	4,029
Allowance for doubtful accounts		1,707			2,469
Inventories		2,365			3,944
Accruals		(61	)		97
Research and development credit carryforward		1,115			886
Foreign Tax Credit Carryforward		64			64
Charitable Contribution Carryforward		559			138
Net operating loss carryforward		136			760
Capital loss carryforward		12,225			18,903
Deferred Compensation		475			1,881
Other Accruals		266			-
Other		65			107
Total deferred tax assets		21,584			33,278
Less valuation allowance		(12,220	)		(19,633	)
Total deferred tax asset, net of valuation Deferred tax liabilities :		9,364			13,645
Intangibles		(8,695	)		(10,042	)
Property and equipment		(6,860	)		(12,762	)
Unremitted foreign earnings		(354	)		(354	)
Cumulative translation adjustment		(67	)		-
Other		(457	)		-
Net deferred tax liability	$	(7,069	)	$	(9,513	)

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SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2017

SHARE-BASED COMPENSATION [Abstract]

Changes in Restricted Stock

Changes in restricted stock for the twelve months ended December 31, 2017 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2016		143,380		$	26.76
Granted		18,672		$	34.07
Forfeited		(298	)	$	59.60
Vested		(83,853	)	$	24.92
Non-vested at December 31, 2017		77,901		$	30.36

Changes in restricted stock for the twelve months ended December 31, 2016 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2015		137,507		$	54.58
Granted		108,553		$	17.07
Forfeited		(39,000	)	$	65.41
Vested		(63,680	)	$	46.65
Non-vested at December 31, 2016		143,380		$	26.76

Changes in restricted stock for the twelve months ended December 31, 2015 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2014		179,942		$	52.71
Granted		35,821		$	40.95
Forfeited		(20,855	)	$	41.34
Vested		(57,401	)	$	44.99
Non-vested at December 31, 2015		137,507		$	54.58

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EARNINGS PER SHARE DATA (Tables)

12 Months Ended

Dec. 31, 2017

EARNINGS PER SHARE DATA [Abstract]

Computation of Basic and Diluted Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):

	December 31,
	2017			2016			2015
Basic:
Weighted average shares outstanding		17,400			15,042			14,423
Net income (loss) attributable to DXP Enterprises, Inc.	$	16,888		$	7,702		$	(38,536	)
Convertible preferred stock dividend		(90	)		(90	)		(90	)
Net income (loss)  attributable to common shareholders	$	16,798		$	7,612		$	(38,626	)
Per share amount	$	0.97		$	0.51		$	(2.68	)
Diluted:
Weighted average shares outstanding		17,400			15,042			14,423
Assumed conversion of convertible preferred stock		840			840			-
Total dilutive shares		18,240			15,882			14,423
Net income (loss) attributable to common shareholders	$	16,798		$	7,612		$	(38,626	)
Convertible preferred stock dividend		90			90			-
Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share	$	16,888		$	7,702		$	(38,626	)
Per share amount	$	0.93		$	0.49		$	(2.68	)

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CAPITAL STOCK (Tables)

12 Months Ended

Dec. 31, 2017

CAPITAL STOCK [Abstract]

Activity of Outstanding Common Stock

	December 31,
	2017		2016		2015
Common Stock:	Quantity (in thousands)
Balance, beginning of period		17,197		14,390		14,375
Issuance of shares for compensation net of withholding		119		84		15
Issuance of common stock related to equity distribution agreements		-		2,723		-
Balance, end of period		17,316		17,197		14,390

Activity of Common Stock Held in Treasury

	December 31,
	2017		2016			2015
Treasury Shares:	Quantity (in thousands)
Balance, beginning of period		-		264			280
Issuance of treasury shares for acquisition		-		-			(149	)
Purchase of treasury shares		-		-			191
Issuance of treasury shares upon vesting of restricted shares net of withholding		-		(264	)		(58	)
Balance, end of period		-		-			264

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BUSINESS ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2017

BUSINESS ACQUISITIONS [Abstract]

Pro Forma Unaudited Results of Operations

The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2017 and 2016, assuming the divestiture of a business completed in 2016 were consummated as of  January 1, 2016 are as follows (in millions, except per share amounts):

	Years Ended December 31,
	2017		2016
Net sales	$	1,006.8	$	939.4
Net income attributable to DXP Enterprises, Inc.	$	16.9	$	5.5
Per share data
Basic earnings	$	0.97	$	0.36
Diluted earnings	$	0.93	$	0.35

The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2016 and 2015, assuming the acquisition of businesses completed in 2015 and divestiture of a business completed in 2016 (previously discussed in Item 1, Business) was consummated as of January 1, 2015 are as follows (in millions, except per share amounts.

	Years Ended December 31,
	2016		2015
Net sales	$	939.4	$	1,228.9
Net income (loss) attributable to DXP Enterprises, Inc.	$	5.5	$	(40.7	)
Per share data
Basic earnings (loss)	$	0.36	$	(2.83	)
Diluted earnings (loss)	$	0.35	$	(2.83	)

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENCIES [Abstract]

Future Minimum Rental Commitments for Non-cancelable Leases

The Company leases equipment, automobiles and office facilities under various operating leases. The future minimum rental commitments as of December 31, 2017, for non-cancelable leases are as follows (in thousands):

2018	$	19,419
2019		15,002
2020		11,492
2021		9,435
2022		6,637
Thereafter		3,441

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SEGMENT AND GEOGRAPHICAL REPORTING (Tables)

12 Months Ended

Dec. 31, 2017

SEGMENT AND GEOGRAPHICAL REPORTING [Abstract]

Segment Reporting Financial Information

The following table sets out financial information relating the Company’s segments (in thousands):

Years Ended December 31,	Service Centers		Innovative Pumping Solutions		Supply Chain Services		Total
2017
Sales	$	641,275	$	204,030	$	161,477	$	1,006,782
Operating income for reportable segments, excluding amortization		63,250		11,423		15,451		90,124
Identifiable assets at year end		385,744		172,538		59,942		618,224
Capital expenditures		1,076		1,488		82		2,646
Depreciation		5,162		4,198		103		9,463
Amortization		8,989		7,194		1,083		17,266
Interest expense		9,712		5,352		1,990		17,054

2016
Sales	$	621,007		$	187,124		$	153,961	$	962,092
Operating income for reportable segments, excluding impairment expense		47,634			9,867			15,449		72,950
Identifiable assets at year end		370,261			175,198			44,796		590,255
Capital expenditures		447			3,827			129		4,403
Proceeds from sale of fixed assets		(1,038	)		(168	)		-		(1,206	)
Depreciation		6,520			3,834			126		10,480
Amortization		9,152			7,826			1,083		18,061
Interest expense		9,290			4,422			1,852		15,564

2015
Sales	$	826,588	$	254,829	$	165,626	$	1,247,043
Operating income for reportable segments, excluding impairment expense		78,170		21,584		14,213		113,967
Identifiable assets at year end		451,333		159,365		50,012		660,710
Capital expenditures		3,185		8,383		604		12,172
Depreciation		7,734		2,930		227		10,891
Amortization		10,334		8,406		1,881		20,621
Interest expense		2,967		6,881		1,084		10,932
Impairment expense by segment		15,842		52,893		-		68,735

Reconciliation of Operating Income for Reportable Segments to Consolidated Income before Taxes

	Years Ended December 31,
	2017			2016			2015
Operating income for reportable segments, excluding impairment expense	$	90,124		$	72,950		$	113,967
Adjustments for:
B27 settlement		-			-			7,348
Impairment expense		-			-			68,735
Amortization of intangibles		17,266			18,061			20,621
Corporate and other expense, net		39,368			35,557			45,179
Total operating income (loss)		33,490			19,332			(27,916	)
Interest expense		17,054			15,564			10,932
Other expenses (income), net		(456	)		(5,906	)		72
Income (loss) before income taxes	$	16,892		$	9,674		$	(38,920	)

Schedule of Revenue by Geographic Area

The Company’s revenues and property and equipment by geographical location are as follows (in thousands):

	Years Ended December 31,
	2017		2016		2015
Revenues
United States	$	902,636	$	873,926	$	1,119,210
Canada		104,146		88,166		127,833
Total	$	1,006,782	$	962,092	$	1,247,043

Schedule of Property and Equipment by Geographical Areas

	As of December 31,
	2017		2016
Property and Equipment, net
United States	$	42,683	$	48,635
Canada		10,654		12,172
Total	$	53,337	$	60,807

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QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

QUARTERLY FINANCIAL INFORMATION (Unaudited) [Abstract]

Summarized Quarterly Financial Information

Summarized quarterly financial information for the years ended December 31, 2017, 2016 and 2015 is as follows (in millions, except per share data):

	First Quarter			Second Quarter		Third Quarter			Fourth Quarter
2017
Sales	$	238.5		$	250.7	$	251.9		$	265.7
Gross profit		64.5			68.9		67.0			71.2
Net income (loss)		3.1			4.1		3.0			6.6
Net income (loss) attributable to DXP Enterprises, Inc.		3.0			4.0		2.9			6.6
Earnings (loss) per share - basic	$	0.18		$	0.24	$	0.17		$	0.38
Earnings (loss) per share - diluted	$	0.17		$	0.23	$	0.16		$	0.37
2016
Sales	$	253.6		$	256.2	$	230.0		$	222.3
Gross profit		68.8			71.6		63.8			60.6
Net income (loss)		(5.2	)		5.1		0.1			7.1
Net income (loss) attributable to DXP Enterprises, Inc.		(5.1	)		5.1		0.2			7.4
Earnings (loss) per share - basic	$	(0.36	)	$	0.36	$	0.02		$	0.44
Earnings (loss) per share - diluted	$	(0.36	)	$	0.34	$	0.02		$	0.42
2015
Sales	$	341.6		$	323.7	$	303.1		$	278.6
Gross profit		98.1			91.3		85.7			76.9
Impairment expense		-			-		58.9			9.8
Net income (loss)		9.7			7.2		(52.7	)		(3.2	)
Net income (loss) attributable to DXP Enterprises, Inc.		9.7			7.2		(52.4	)		(3.0	)
Earnings (loss) per share - basic	$	0.67		$	0.50	$	(3.64	)	$	(0.20	)

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THE COMPANY (Details)	12 Months Ended
	Dec. 31, 2017 Segment
THE COMPANY [Abstract]
Number of segments	3

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Basis of Presentation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Risks and Uncertainties [Abstract]
Ownership percentage in VIE	47.50%
Assets of VIE	$ 5.2
Increase cost of sales from consolidation of the VIE	0.6	$ 1.3
Income tax benefit of VIE	$ (0.2)	$ (0.3)
Employees [Member]
Risks and Uncertainties [Abstract]
Ownership percentage in VIE	52.50%
Fixed Assets [Member]
Risks and Uncertainties [Abstract]
Assets of VIE	$ 4.5

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Receivables and Credit Risk (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2017		Dec. 31, 2016		Dec. 31, 2015
Changes in allowance [Roll Forward]
Balance at beginning of year		$ 8,160		$ 9,364		$ 8,713
Charged to cost and expenses		3,367		180		2,014
Charged to other accounts		22	[1]	(17)	[2]	1,255	[2]
Deductions	[3]	(2,534)		(1,367)		(2,618)
Balance at end of year		$ 9,015		$ 8,160		$ 9,364

[1] Primarily due to translation adjustments.

[2] Includes allowance for doubtful accounts from acquisitions and divestiture

[3] Uncollectible accounts written off, net of recoveries

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2017
Buildings [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	20 years
Buildings [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	39 years
Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	10 years
Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	20 years
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	20 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	Shorter of estimated useful life or related lease term

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Impairment of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended				12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Goodwill [Line Items]
Impairment of goodwill	$ 9.8	$ 58.9	$ 0.0	$ 0.0
Goodwill [Member]
Goodwill [Line Items]
Impairment of goodwill	$ 9.8	$ 57.8			$ 0.0	$ 0.0	$ 0.0

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Revenue Recognition (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenue Recognition [Abstract]
Revenues recognized on contracts in process	$ 40.6	$ 31.5	$ 47.5
Minimum [Member]
Deferred Revenue Arrangement [Line Items]
Service revenue contract term	1 year
Maximum [Member]
Deferred Revenue Arrangement [Line Items]
Service revenue contract term	2 years

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Self-insured Insurance and Medical Claims (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reinsurance Retention Policy [Line Items]
Accrual for claims	$ 2,700,000	$ 3,100,000
Self-insured Insurance [Member] | Maximum [Member]
Reinsurance Retention Policy [Line Items]
Amount retained, per claim	100,000
Medical Claims [Member] | Maximum [Member]
Reinsurance Retention Policy [Line Items]
Amount retained, per claim	$ 175,000
Retention percentage of employee higher risk claims	0.05%

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Debt Issuance Cost Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Debt Issuance Cost Amortization [Abstract]
Total unamortized debt issuance costs	$ 10,073		$ 10,073	$ 992
Write off of debt issuance costs	$ 600	$ 600	$ 578	$ 0	$ 0

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Deferred tax asset on unrealized foreign currency losses		$ 8.6
Restatement Adjustment [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Comprehensive income - deferred tax assets change in amount	$ (8.6)	$ 4.6	$ 2.7	$ 1.3

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SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Out-of-Period Items (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Out-of-Period Items [Abstract]
Canadian acquisition deferred tax liability true up	$ (2,180)												$ (2,180)	$ 0	$ 0
Selling, general and administrative expenses													238,091	245,470	303,819
Income tax (benefit)													363	2,523	150
Net income (loss)	$ 6,600	$ 3,000	$ 4,100	$ 3,100	$ 7,100	$ 100	$ 5,100	$ (5,200)	$ (3,200)	$ (52,700)	$ 7,200	$ 9,700	$ 16,529	$ 7,151	$ (39,070)
Basic earnings (loss) per share (in dollars per share)	$ 0.38	$ 0.17	$ 0.24	$ 0.18	$ 0.44	$ 0.02	$ 0.36	$ (0.36)	$ (0.20)	$ (3.64)	$ 0.50	$ 0.67	$ 0.97	$ 0.51	$ (2.68)
Diluted earnings (loss) per share (in dollars per share)	$ 0.37	$ 0.16	$ 0.23	$ 0.17	$ 0.42	$ 0.02	$ 0.34	$ (0.36)					$ 0.93	$ 0.49	$ (2.68)
Overstatement of Accrual at December 31, 2014 [Member]
Out-of-Period Items [Abstract]
Selling, general and administrative expenses												$ 2,500
Out-of-period adjustment, net of tax												$ 1,600
Income tax (benefit)									$ (1,500)
Net income (loss)															$ 3,100
Basic earnings (loss) per share (in dollars per share)															$ (0.21)
Diluted earnings (loss) per share (in dollars per share)															$ (0.21)

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RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income tax (benefit)	$ 363	$ 2,523	$ 150
Income tax benefit recognized as an operating activity	0	(619)	0
Income tax expense recognized as a financing activity	0	(619)	0
Non-current deferred income tax liabilities	7,069	9,513
Cash classified to restricted cash	3,532	0
ASU 2016-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income tax (benefit)	(100)		0
Income tax benefit recognized as an operating activity	100
Income tax expense recognized as a financing activity	600	200	$ 800
ASU 2015-17 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Non-current deferred income tax liabilities		$ 9,513
ASU 2016-18 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cash classified to restricted cash	$ 3,500

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FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment expense	$ 9.8	$ 58.9	$ 0.0	$ 0.0
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment expense	$ 9.8	$ 57.8
Level 3 [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated future cash flows, discount rate		10.00%
Level 3 [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated future cash flows, discount rate		11.50%

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INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
INVENTORIES [Abstract]
Finished goods	$ 79,820	$ 74,269
Work in process	11,593	9,430
Inventories	$ 91,413	$ 83,699

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COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Schedule of costs and estimated earnings on uncompleted contracts [Abstract]
Costs incurred on uncompleted contracts	$ 37,899	$ 25,214
Estimated earnings, thereon	2,665	6,274
Total	40,564	31,488
Less: billings to date	17,881	15,864
Net	22,683	15,624
Schedule of Costs and Estimated Earnings on Uncompleted Contracts Included in Condensed Consolidated Balance Sheets [Abstract]
Costs and estimated profits in excess of billings on uncompleted contracts	26,915	18,421
Billings in excess of costs and estimated profits on uncompleted contracts	(4,249)	(2,813)
Translation adjustment	17	16
Net	$ 22,683	$ 15,624

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PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Less - Accumulated depreciation	$ (60,208)	$ (52,582)
Total property and equipment	53,337	60,807
Depreciation expense	10,520	11,933	$ 12,622
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,346	2,346
Buildings and Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	16,724	16,259
Furniture, Fixtures and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 94,475	$ 94,784

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GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended				12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Goodwill and Intangible Asset Impairment [Abstract]
Percentage of decrease in common stock	16.00%	40.00%					16.00%
Percentage on decrease in price of crude oil	18.00%	20.00%					18.00%
Accumulated impairment of goodwill	$ 12,300						$ 12,300
Impairment expense of write off an acquired intangible asset		$ 1,100
Remaining intangible asset value of vendor distribution agreements	0						0
Goodwill impairment loss	9,800	58,900	$ 0	$ 0
Goodwill [Roll Forward]
Balance at beginning of period					$ 187,591	$ 197,362
Sale of subsidiary						(9,620)
Purchase accounting adjustment						(151)
Translation adjustment					0	0
Balance at end of period	197,362				187,591	187,591	197,362
Other Intangibles Assets [Roll Forward]
Balance at beginning of period					94,831	112,297
Sale of subsidiary						0
Purchase price adjustment						0
Translation adjustment					960	595
Amortization					(17,266)	(18,061)	(20,621)
Balance at end of period	112,297				78,525	94,831	112,297
Total Goodwill and Intangible Assets [Roll Forward]
Balance at beginning of period					282,422	309,659
Sale of subsidiary						(9,620)
Purchase price adjustment						(151)
Translation adjustment					960	595
Amortization					(17,266)	(18,061)	(20,621)
Balance at end of period	309,659				266,116	282,422	$ 309,659
B27, LLC [Member]
Goodwill and Intangible Asset Impairment [Abstract]
Percentage of goodwill not deductible for tax purpose							60.00%
Percentage Goodwill impairment							40.00%
Service Centers [Member]
Goodwill [Roll Forward]
Balance at beginning of period					154,473
Balance at end of period					154,473	154,473
Service Centers [Member] | B27, LLC [Member]
Goodwill and Intangible Asset Impairment [Abstract]
Accumulated impairment of goodwill	25,000	20,000					$ 25,000	$ 10,200
Goodwill impairment loss	5,000	9,800
Goodwill [Roll Forward]
Balance at beginning of period	10,300					5,300
Balance at end of period	5,300	10,300					5,300
Innovative Pumping Solutions [Member]
Goodwill [Roll Forward]
Balance at beginning of period					15,980
Balance at end of period					$ 15,980	15,980
Innovative Pumping Solutions [Member] | B27, LLC [Member]
Goodwill and Intangible Asset Impairment [Abstract]
Accumulated impairment of goodwill	148,000	143,100					148,000	$ 95,100
Goodwill impairment loss	4,900	48,000
Goodwill [Roll Forward]
Balance at beginning of period	4,900					$ 0
Balance at end of period	$ 0	$ 4,900					$ 0

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GOODWILL AND OTHER INTANGIBLE ASSETS, Goodwill Balance by Reportable Segment (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Goodwill [Line Items]
Goodwill	$ 187,591	$ 187,591	$ 197,362
Service Centers [Member]
Goodwill [Line Items]
Goodwill	154,473	154,473
Innovative Pumping Solutions [Member]
Goodwill [Line Items]
Goodwill	15,980	15,980
Supply Chain Services [Member]
Goodwill [Line Items]
Goodwill	$ 17,138	$ 17,138

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GOODWILL AND OTHER INTANGIBLE ASSETS, Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 163,149	$ 164,858
Accumulated amortization	(84,624)	(70,027)
Carrying amount, net	78,525	94,831	$ 112,297
Amortization expense	17,266	18,061	$ 20,621
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	162,200	163,022
Accumulated amortization	(83,806)	(68,446)
Carrying amount, net	78,394	94,576
Non-Compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	949	1,836
Accumulated amortization	(818)	(1,581)
Carrying amount, net	$ 131	$ 255

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GOODWILL AND OTHER INTANGIBLE ASSETS, Estimated Future Annual Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
The estimated future annual amortization of intangible assets for each of the next five years and thereafter [Abstract]
2018	$ 15,615
2019	14,170
2020	10,292
2021	8,911
2022	7,264
Thereafter	22,273
Carrying amount, net	78,525	$ 94,831	$ 112,297
Customer Relationships [Member]
The estimated future annual amortization of intangible assets for each of the next five years and thereafter [Abstract]
Carrying amount, net	$ 78,394	94,576
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining estimated life	8 years 3 months 18 days
Non-Compete Agreements [Member]
The estimated future annual amortization of intangible assets for each of the next five years and thereafter [Abstract]
Carrying amount, net	$ 131	$ 255
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining estimated life	1 year 9 months 18 days

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LONG-TERM DEBT (Details) $ in Thousands		3 Months Ended		12 Months Ended
	Aug. 29, 2017 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Borrowings [Abstract]
Less unamortized debt issuance costs		$ (10,073)		$ (10,073)	$ (992)
Total Debt		242,024		242,024	224,685
Less: Current maturities		(3,381)		(3,381)	(51,354)
Total Long-term Debt		238,643		238,643	173,331
Secured Leverage Ratio [Abstract]
Write off of debt issuance costs		600	$ 600	578	0	$ 0
Maturities of Long-term Debt [Abstract]
2018		3,381		3,381
2019		3,405		3,405
2020		3,436		3,436
2021		2,500		2,500
2022		2,500		2,500
Thereafter		236,875		236,875
Total		252,097		252,097
ABL Revolver [Member]
Borrowings [Abstract]
Total Debt		$ 0		$ 0	0
Debt instrument term				5 years
Debt instrument face amount	$ 85,000
Maturity date				Aug. 29, 2022
Incremental increase in term loan	50,000
Interest rate		2.90%		2.90%
Fixed charge coverage ratio		3.67		3.67
ABL Revolver [Member] | Minimum [Member]
Borrowings [Abstract]
Incremental increase in term loan	$ 10,000
Commitment fee	0.25%
ABL Revolver [Member] | Maximum [Member]
Borrowings [Abstract]
Commitment fee	0.375%
ABL Revolver [Member] | LIBOR [Member] | Minimum [Member]
Borrowings [Abstract]
Basis spread on base rate	1.25%
ABL Revolver [Member] | LIBOR [Member] | Maximum [Member]
Borrowings [Abstract]
Basis spread on base rate	1.75%
ABL Revolver [Member] | CDOR [Member] | Minimum [Member]
Borrowings [Abstract]
Basis spread on base rate	1.25%
ABL Revolver [Member] | CDOR [Member] | Maximum [Member]
Borrowings [Abstract]
Basis spread on base rate	1.75%
ABL Revolver [Member] | Prime rate [Member] | Minimum [Member]
Borrowings [Abstract]
Basis spread on base rate	0.25%
ABL Revolver [Member] | Prime rate [Member] | Maximum [Member]
Borrowings [Abstract]
Basis spread on base rate	0.75%
ABL Revolver [Member] | Base Rate [Member] | CANADA | Minimum [Member]
Borrowings [Abstract]
Basis spread on base rate	0.25%
ABL Revolver [Member] | Base Rate [Member] | CANADA | Maximum [Member]
Borrowings [Abstract]
Basis spread on base rate	0.75%
Term Loan B [Member]
Borrowings [Abstract]
Total Debt		$ 249,375		$ 249,375	0
Debt instrument term				6 years
Debt instrument face amount	$ 250,000
Amortization in quarterly installments	0.25%
Maturity date				Aug. 31, 2023
Incremental increase in term loan	$ 30,000
Percentage of excess cash flow	50.00%
Reduction in percentage of excess cash flow, condition one	25.00%
Debt instrument leverage ratio, condition one	3.00
Reduction in percentage of excess cash flow, condition two	0.00%
Debt instrument leverage ratio, condition two	2.50
Interest rate		7.10%		7.10%
Secured Leverage Ratio [Abstract]
December 31, 2017		5.75%		5.75%
March 31, 2018		5.75%		5.75%
June 30, 2018		5.50%		5.50%
September 30, 2018		5.50%		5.50%
December 31, 2018		5.25%		5.25%
March 31, 2019		5.25%		5.25%
June 30, 2019		5.00%		5.00%
September 30, 2019		5.00%		5.00%
December 31, 2019		4.75%		4.75%
March 31, 2020		4.75%		4.75%
June 30, 2020 and each Fiscal Quarter thereafter		4.50%		4.50%
Secured Leverage Ratio	3.59%
Term Loan B [Member] | Minimum [Member]
Borrowings [Abstract]
Incremental increase in term loan	$ 10,000
Term Loan B [Member] | Maximum [Member]
Borrowings [Abstract]
Debt instrument secured leverage ratio	3.60
Fixed charge coverage ratio	1.00
Secured debt covenant amount net of restricted cash		$ 30,000		$ 30,000
Line of Credit [Member]
Borrowings [Abstract]
Total Debt		0		0	147,600
Term Loan [Member]
Borrowings [Abstract]
Total Debt		0		0	74,500
Promissory Note Payable [Member]
Borrowings [Abstract]
Total Debt		$ 2,722		$ 2,722	$ 3,577
Interest rate		2.90%		2.90%

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INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Components of income before income taxes [Abstract]
Domestic				$ 13,183	$ 11,079	$ (42,179)
Foreign				3,709	(1,405)	3,259
Income (loss) before income taxes				16,892	9,674	(38,920)
Current [Abstract]
Federal				1,400	(902)	5,182
State				698	136	1,499
Foreign				2,092	602	2,493
Total current				4,190	(164)	9,174
Deferred [Abstract]
Federal				686	4,174	(7,090)
State				(464)	120	0
Foreign				(4,049)	(1,607)	(1,934)
Total Deferred				(3,827)	2,687	(9,024)
Total				$ 363	2,523	150
Federal statutory income tax rate				35.00%
The difference between income taxes computed at the federal statutory income tax rate and the provision for income taxes [Abstract]
Income taxes computed at federal statutory rate				$ 5,912	3,386	(13,622)
State income taxes, net of federal benefit				152	166	974
Non-tax deductible impairment expense computed at federal statutory rate				0	0	15,765
Foreign adjustment				255	140	689
Meals and entertainment				422	361	620
Gain on sale of Vertex				0	(1,971)	0
Domestic production activity deduction				(98)	0	(1,143)
Research and development tax credit				(641)	(886)	(1,730)
Foreign tax credit				0	(383)	(921)
Valuation allowance				(791)	0	0
Tax reform deferred tax remeasurement				(1,294)	0	0
Canadian acquisition deferred tax liability true up	$ (2,180)			(2,180)	0	0
Foreign rate difference				(297)	112	(261)
Other				(1,077)	1,598	(221)
Total				363	2,523	150
Deferred tax assets [Abstract]
Goodwill	2,668	$ 4,029		2,668	4,029
Allowance for doubtful accounts	1,707	2,469		1,707	2,469
Inventories	2,365	3,944		2,365	3,944
Accruals	(61)	97		(61)	97
Research and development credit carryforward	1,115	886		1,115	886
Foreign Tax Credit Carryforward	64	64		64	64
Charitable Contribution Carryforward	559	138		559	138
Net operating loss carryforward	136	760		136	760
Capital loss carryforward	12,225	18,903		12,225	18,903
Deferred Compensation	475	1,881		475	1,881
Other Accruals	266	0		266	0
Other	65	107		65	107
Total deferred tax assets	21,584	33,278		21,584	33,278
Less valuation allowance	(12,220)	(19,633)		(12,220)	(19,633)
Total deferred tax asset, net of valuation Deferred tax liabilities	9,364	13,645		9,364	13,645
Intangibles	(8,695)	(10,042)		(8,695)	(10,042)
Property and equipment	(6,860)	(12,762)		(6,860)	(12,762)
Unremitted foreign earnings	(354)	(354)		(354)	(354)
Cumulative translation adjustment	(67)	0		(67)	0
Other	(457)	0		(457)	0
Net deferred tax liability	(7,069)	(9,513)		(7,069)	$ (9,513)
Capital Loss Carryforward [Member]
Tax Credit Carryforward [Line Items]
Capital loss carryforward	$ 51,400			$ 51,400
Plan [Member]
Deferred [Abstract]
Federal statutory income tax rate			21.00%
Restatement Adjustment [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Comprehensive income - deferred tax assets change in amount		$ (8,600)				$ 4,600	$ 2,700	$ 1,300

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SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentages of vesting for one year	100.00%
Percentages of vesting for three years	33.30%
Percentages of vesting for five years	20.00%
Percentages of vesting for ten years	10.00%
Award vesting period	1 year
Number of shares available for future grants (in shares)	401,223
Restricted Stock [Roll Forward]
Non-vested, beginning balance (in shares)	143,380	137,507	179,942
Granted (in shares)	18,672	108,553	35,821
Forfeited (in shares)	(298)	(39,000)	(20,855)
Vested (in shares)	(83,853)	(63,680)	(57,401)
Nonvested, ending balance (in shares)	77,901	143,380	137,507
Weighted Average Grant Price [Roll Forward]
Non vested, beginning balance (in dollars per share)	$ 26.76	$ 54.58	$ 52.71
Granted (in dollars per share)	34.07	17.07	40.95
Forfeited (in dollars per share)	59.60	65.41	41.34
Vested (in dollars per share)	24.92	46.65	44.99
Nonvested, ending balance (in dollars per share)	$ 30.36	$ 26.76	$ 54.58
Stock compensation expense	$ 1.7	$ 2.0	$ 3.0
Related income tax benefit recognized	0.7	0.8	1.2
2016 Omnibus Incentive Plan [Member]
Weighted Average Grant Price [Roll Forward]
Unrecognized compensation expense	$ 1.6	$ 2.7	$ 4.9
Compensation cost not yet recognized, period for recognition	15 months 6 days

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EARNINGS PER SHARE DATA (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Basic [Abstract]
Weighted average shares outstanding (in shares)													17,400	15,042	14,423
Net income (loss) attributable to DXP Enterprises, Inc.	$ 6,600	$ 2,900	$ 4,000	$ 3,000	$ 7,400	$ 200	$ 5,100	$ (5,100)	$ (3,000)	$ (52,400)	$ 7,200	$ 9,700	$ 16,888	$ 7,702	$ (38,536)
Convertible preferred stock dividend													(90)	(90)	(90)
Net income (loss) attributable to common shareholders													$ 16,798	$ 7,612	$ (38,626)
Per share amount (in dollars per share)	$ 0.38	$ 0.17	$ 0.24	$ 0.18	$ 0.44	$ 0.02	$ 0.36	$ (0.36)	$ (0.20)	$ (3.64)	$ 0.50	$ 0.67	$ 0.97	$ 0.51	$ (2.68)
Diluted [Abstract]
Weighted average shares outstanding (in shares)													17,400	15,042	14,423
Assumed conversion of convertible preferred stock (in shares)													840	840	0
Total dilutive shares (in shares)													18,240	15,882	14,423
Net income (loss) attributable to common shareholders													$ 16,798	$ 7,612	$ (38,626)
Convertible preferred stock dividend													90	90	0
Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share													$ 16,888	$ 7,702	$ (38,626)
Per share amount (in dollars per share)	$ 0.37	$ 0.16	$ 0.23	$ 0.17	$ 0.42	$ 0.02	$ 0.34	$ (0.36)					$ 0.93	$ 0.49	$ (2.68)
Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from earnings per share calculation (in shares)													840

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CAPITAL STOCK (Details) - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Common Stock [Roll Forward]
Balance, beginning of period (in shares)	17,197,380
Balance, end of period (in shares)	17,315,573	17,197,380
Treasury Shares [Roll Forward]
Issuance of treasury shares for acquisition (in shares)			148,769
Purchase of treasury shares (in shares)			191,420
Issuance of treasury shares upon vesting of restricted shares net of withholding (in shares)		264,297	57,401
Common Stock [Member]
Common Stock [Roll Forward]
Balance, beginning of period (in shares)	17,197,000	14,390,000	14,375,000
Issuance of shares for compensation net of withholding (in shares)	119,000	84,000	15,000
Issuance of common stock related to equity distribution agreements (in shares)	0	2,723,000	0
Balance, end of period (in shares)	17,316,000	17,197,000	14,390,000
Treasury Stock [Member]
Treasury Shares [Roll Forward]
Balance, beginning of period (in shares)	0	264,000	280,000
Issuance of treasury shares for acquisition (in shares)	0	0	(149,000)
Purchase of treasury shares (in shares)	0	0	191,000
Issuance of treasury shares upon vesting of restricted shares net of withholding (in shares)	0	(264,000)	(58,000)
Balance, end of period (in shares)	0	0	264,000
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, outstanding (in shares)	1,122	1,122
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, outstanding (in shares)	15,000	15,000

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BUSINESS ACQUISITIONS (Details) - USD ($) $ in Thousands			3 Months Ended	12 Months Ended
	Sep. 01, 2015	Apr. 01, 2015	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2015	Apr. 02, 2015
Business Acquisition [Line Items]
Goodwill acquired				$ 187,591	$ 187,591	$ 197,362
Goodwill adjustment				(151)
Business Acquired during 2015 [Member]
Business Acquisition [Line Items]
Sales from business acquisitions				25,200
Earnings (loss) before taxes and impairment from business acquisitions				$ (300)
Tool Supply, Inc. [Member]
Business Acquisition [Line Items]
Purchase price		$ 5,000
Intangible assets acquired							$ 2,000
Goodwill acquired							$ 2,900
Cortech Engineering, LLC [Member]
Business Acquisition [Line Items]
Purchase price	$ 14,900
Purchase price financed under common stock issued	$ 4,400
Number of shares issued on acquisition (in shares)	148,800
Intangible assets acquired	$ 5,200
Goodwill acquired			$ 8,700
Goodwill adjustment			$ 151
Nontax deductible goodwill or intangible assets	$ 4,500

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BUSINESS ACQUISITIONS, Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Pro Forma Information [Abstract]
Net sales	$ 1,006.8	$ 939.4
Net income (loss) attributable to DXP Enterprises, Inc.	$ 16.9	$ 5.5
Per share data [Abstract]
Basic earnings (loss) (in dollars per share)	$ 0.97	$ 0.36
Diluted earnings (loss) (in dollars per share)	$ 0.93	$ 0.35
Units Acquired In 2015 and 2016 [Member]
Pro Forma Information [Abstract]
Net sales		$ 939.4	$ 1,228.9
Net income (loss) attributable to DXP Enterprises, Inc.		$ 5.5	$ (40.7)
Per share data [Abstract]
Basic earnings (loss) (in dollars per share)		$ 0.36	$ (2.83)
Diluted earnings (loss) (in dollars per share)		$ 0.35	$ (2.83)

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Future minimum rental commitments for non-cancelable leases [Abstract]
2018	$ 19,419
2019	15,002
2020	11,492
2021	9,435
2022	6,637
Thereafter	3,441
Rental expense for operating leases	$ 27,700	$ 27,600	$ 32,700

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EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Dec. 31, 2017	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
EMPLOYEE BENEFIT PLANS [Abstract]
Company match to employee contributions		50.00%			50.00%
Percentage of deferred salary which is matched		4.00%			4.00%
Company contribution to the 401(K) plan	$ 0.2	$ 0.4	$ 0.2	$ 0.4	$ 2.6

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OTHER COMPREHENSIVE INCOME (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2016 USD ($)	Dec. 31, 2017 USD ($) Company	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
OTHER COMPREHENSIVE INCOME [Abstract]
Number of companies acquired | Company		4
Cumulative translation adjustment		$ (1,217)	$ (7,658)	$ (4,916)
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Deferred tax asset on unrealized foreign currency losses				8,600
Restatement Adjustment [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Comprehensive income - deferred tax assets change in amount	$ (8,600)			$ 4,600	$ 2,700	$ 1,300

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SEGMENT AND GEOGRAPHICAL REPORTING, Business Segmented Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Sales	$ 265,700	$ 251,900	$ 250,700	$ 238,500	$ 222,300	$ 230,000	$ 256,200	$ 253,600	$ 278,600	$ 303,100	$ 323,700	$ 341,600	$ 1,006,782	$ 962,092	$ 1,247,043
Operating income for reportable segments, excluding amortization													90,124	72,950	113,967
Identifiable assets at year end	618,224				590,255				660,710				618,224	590,255	660,710
Capital expenditures													2,646	4,403	12,172
Proceeds from sale of fixed assets													0	(1,206)	0
Depreciation													9,463	10,480	10,891
Amortization													17,266	18,061	20,621
Interest expense													17,054	15,564	10,932
Impairment of goodwill and other intangible assets													0	0	68,735
Reportable Segment [Member] | Service Centers [Member]
Segment Reporting Information [Line Items]
Sales													641,275	621,007	826,588
Operating income for reportable segments, excluding amortization													63,250	47,634	78,170
Identifiable assets at year end	385,744				370,261				451,333				385,744	370,261	451,333
Capital expenditures													1,076	447	3,185
Proceeds from sale of fixed assets														(1,038)
Depreciation													5,162	6,520	7,734
Amortization													8,989	9,152	10,334
Interest expense													9,712	9,290	2,967
Impairment of goodwill and other intangible assets															15,842
Reportable Segment [Member] | Innovative Pumping Solutions [Member]
Segment Reporting Information [Line Items]
Sales													204,030	187,124	254,829
Operating income for reportable segments, excluding amortization													11,423	9,867	21,584
Identifiable assets at year end	172,538				175,198				159,365				172,538	175,198	159,365
Capital expenditures													1,488	3,827	8,383
Proceeds from sale of fixed assets														(168)
Depreciation													4,198	3,834	2,930
Amortization													7,194	7,826	8,406
Interest expense													5,352	4,422	6,881
Impairment of goodwill and other intangible assets															52,893
Reportable Segment [Member] | Supply Chain Services [Member]
Segment Reporting Information [Line Items]
Sales													161,477	153,961	165,626
Operating income for reportable segments, excluding amortization													15,451	15,449	14,213
Identifiable assets at year end	$ 59,942				$ 44,796				$ 50,012				59,942	44,796	50,012
Capital expenditures													82	129	604
Proceeds from sale of fixed assets														0
Depreciation													103	126	227
Amortization													1,083	1,083	1,881
Interest expense													$ 1,990	$ 1,852	1,084
Impairment of goodwill and other intangible assets															$ 0

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SEGMENT AND GEOGRAPHICAL REPORTING, Adjustments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Adjustment for [Abstract]
B27 settlement	$ 0	$ 0	$ 7,348
Impairment expense	0	0	68,735
Amortization of intangibles	17,266	18,061	20,621
Total operating income (loss)	33,490	19,332	(27,916)
Interest expense	17,054	15,564	10,932
Other income, net	(456)	(5,906)	72
Income (loss) before income taxes	16,892	9,674	(38,920)
Identifiable assets at year end	639,083	602,052
Depreciation	10,520	11,933	12,622
Corporate [Member]
Adjustment for [Abstract]
Capital expenditures	200	500	1,800
Identifiable assets at year end	19,400	18,300	23,300
Depreciation	1,800	1,400	1,700
Reportable Segment [Member]
Segment Reporting Information [Line Items]
Operating income for reportable segments, excluding impairment expense	90,124	72,950	113,967
Segment Reconciling Items [Member]
Adjustment for [Abstract]
B27 settlement	0	0	7,348
Impairment expense	0	0	68,735
Amortization of intangibles	17,266	18,061	20,621
Corporate and other expense, net	$ 39,368	$ 35,557	$ 45,179

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SEGMENT AND GEOGRAPHICAL REPORTING, Geographical Information (Details) - USD ($) $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Revenues	$ 265,700	$ 251,900	$ 250,700	$ 238,500	$ 222,300	$ 230,000	$ 256,200	$ 253,600	$ 278,600	$ 303,100	$ 323,700	$ 341,600	$ 1,006,782	$ 962,092	$ 1,247,043
Property and equipment, net	53,337				60,807								53,337	60,807
Reportable Geographical Components [Member] | United States [Member]
Segment Reporting Information [Line Items]
Revenues													902,636	873,926	1,119,210
Property and equipment, net	42,683				48,635								42,683	48,635
Reportable Geographical Components [Member] | Canada [Member]
Segment Reporting Information [Line Items]
Revenues													104,146	88,166	$ 127,833
Property and equipment, net	$ 10,654				$ 12,172								$ 10,654	$ 12,172

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QUARTERLY FINANCIAL INFORMATION (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Information [Line Items]
Sales	$ 265,700	$ 251,900	$ 250,700	$ 238,500	$ 222,300	$ 230,000	$ 256,200	$ 253,600	$ 278,600	$ 303,100	$ 323,700	$ 341,600	$ 1,006,782	$ 962,092	$ 1,247,043
Gross profit	71,200	67,000	68,900	64,500	60,600	63,800	71,600	68,800	76,900	85,700	91,300	98,100	271,581	264,802	351,986
Impairment expense									9,800	58,900	0	0
Net income (loss)	6,600	3,000	4,100	3,100	7,100	100	5,100	(5,200)	(3,200)	(52,700)	7,200	9,700	16,529	7,151	(39,070)
Net income (loss) attributable to DXP Enterprises, Inc.	$ 6,600	$ 2,900	$ 4,000	$ 3,000	$ 7,400	$ 200	$ 5,100	$ (5,100)	$ (3,000)	$ (52,400)	$ 7,200	$ 9,700	$ 16,888	$ 7,702	$ (38,536)
Earnings (loss) per share - basic (in dollars per share)	$ 0.38	$ 0.17	$ 0.24	$ 0.18	$ 0.44	$ 0.02	$ 0.36	$ (0.36)	$ (0.20)	$ (3.64)	$ 0.50	$ 0.67	$ 0.97	$ 0.51	$ (2.68)
Earnings (loss) per share - diluted (in dollars per share)	$ 0.37	$ 0.16	$ 0.23	$ 0.17	$ 0.42	$ 0.02	$ 0.34	$ (0.36)					$ 0.93	$ 0.49	$ (2.68)

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RELATED PARTIES (Details)	12 Months Ended
	Dec. 31, 2017 USD ($) Employee
Minimum [Member]
Related Party Transaction [Line Items]
Transaction amount	$ 120,000
Chairman of the Board, President and Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Lease expenses	$ 1,400,000
Number of related party employees | Employee	6
Payroll, related payroll expenses, vehicles, fuel and supplies	$ 400,000
Senior Vice President [Member]
Related Party Transaction [Line Items]
Lease expenses	1,200,000
Children of Chairman of the Board, President and Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Lease expenses	$ 300,000
Sons of Executives [Member]
Related Party Transaction [Line Items]
Number of related party employees | Employee	2
Sons-in-laws of Executives [Member]
Related Party Transaction [Line Items]
Number of related party employees | Employee	2
Sons and Sons in Law of Executives [Member]
Related Party Transaction [Line Items]
Number of related party employees | Employee	4
Wages and other compensation	$ 1,300,000

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SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - Application Specialties, Inc. [Member] $ in Thousands	Jan. 01, 2018 USD ($)
Subsequent Event [Line Items]
Purchase price	$ 11,500
Purchase price financed in cash	10,600
Purchase price financed under common stock issued	$ 900