0001571049-17-004655.txt : 20170508 0001571049-17-004655.hdr.sgml : 20170508 20170508160617 ACCESSION NUMBER: 0001571049-17-004655 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 61 CONFORMED PERIOD OF REPORT: 20170331 FILED AS OF DATE: 20170508 DATE AS OF CHANGE: 20170508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHIBRO ANIMAL HEALTH CORP CENTRAL INDEX KEY: 0001069899 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 131840497 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36410 FILM NUMBER: 17822233 BUSINESS ADDRESS: STREET 1: GLENPOINTE CENTRE EAST, 3RD FLOOR STREET 2: 300 FRANK W. BURR BLVD., SUITE 21 CITY: TEANECK STATE: NJ ZIP: 07666 BUSINESS PHONE: 201-329-7300 MAIL ADDRESS: STREET 1: GLENPOINTE CENTRE EAST, 3RD FLOOR STREET 2: 300 FRANK W. BURR BLVD., SUITE 21 CITY: TEANECK STATE: NJ ZIP: 07666 FORMER COMPANY: FORMER CONFORMED NAME: PHILIPP BROTHERS CHEMICALS INC DATE OF NAME CHANGE: 19980908 10-Q 1 t1701431-10q.htm FORM 10-Q t1701431-10q - none - 4.463s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 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: 001-36410
Phibro Animal Health Corporation
(Exact name of registrant as specified in its charter)
Delaware
13-1840497
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Glenpointe Centre East, 3rd Floor
300 Frank W. Burr Boulevard, Suite 21
Teaneck, New Jersey
(Address of Principal Executive Offices)
07666-6712
(Zip Code)
(201) 329-7300
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)
Smaller reporting company
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 Exchange Act). Yes ☐ No ☒
As of May 1, 2017, there were 18,753,979 shares of the registrant’s Class A common stock, par value $0.0001 per share, and 20,887,811 shares of the registrant’s Class B common stock, par value $0.0001 per share, outstanding.

PHIBRO ANIMAL HEALTH CORPORATION
TABLE OF CONTENTS
Page
PART I—FINANCIAL INFORMATION
Item 1.
Financial Statements (unaudited)
3
4
5
6
7
18
30
30
PART II—OTHER INFORMATION
31
31
31
31
31
31
31
32
2

PART I—FINANCIAL INFORMATION
Item 1.   Financial Statements
PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
2017
2016
(unaudited)
(in thousands, except per share amounts)
Net sales
$ 189,861 $ 183,461 $ 569,446 $ 562,354
Cost of goods sold
129,241 124,671 384,329 382,895
Gross profit
60,620 58,790 185,117 179,459
Selling, general and administrative expenses
30,646 37,619 110,702 113,809
Operating income
29,974 21,171 74,415 65,650
Interest expense, net
3,929 4,265 11,708 12,051
Foreign currency (gains) losses, net
(403) (2,243) (617) (5,139)
Income before income taxes
26,448 19,149 63,324 58,738
Provision (benefit) for income taxes
2,805 572 14,087 (8,770)
Net income
$ 23,643 $ 18,577 $ 49,237 $ 67,508
Net income per share
basic
$ 0.60 $ 0.47 $ 1.25 $ 1.72
diluted
$ 0.59 $ 0.46 $ 1.23 $ 1.69
Weighted average common shares outstanding
basic
39,512 39,356 39,443 39,203
diluted
40,059 40,000 39,988 39,996
Dividends per share
$ 0.10 $ 0.10 $ 0.30 $ 0.30
The accompanying notes are an integral part of these consolidated financial statements
3

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
2017
2016
(unaudited)
(in thousands)
Net income
$ 23,643 $ 18,577 $ 49,237 $ 67,508
Change in fair value of derivative instruments
758 4,316 1,062 1,322
Foreign currency translation adjustment
4,107 4,935 918 (14,780)
Unrecognized net pension gains (losses)
111 446 11,951 1,338
(Provision) benefit for income taxes
(332) (1,828) (4,976) 487
Other comprehensive income (loss)
4,644 7,869 8,955 (11,633)
Comprehensive income (loss)
$ 28,287 $ 26,446 $ 58,192 $ 55,875
The accompanying notes are an integral part of these consolidated financial statements
4

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
March 31,
2017
June 30,
2016
(unaudited)
(in thousands, except share
and per share amounts)
ASSETS
Cash and cash equivalents
$ 49,310 $ 33,605
Accounts receivable, net
113,130 123,790
Inventories, net
163,831 167,691
Other current assets
21,273 17,745
Total current assets
347,544 342,831
Property, plant and equipment, net
127,235 127,323
Intangibles, net
58,447 60,095
Goodwill
21,121 21,121
Other assets
47,931 56,465
Total assets
$ 602,278 $ 607,835
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt
$ 2,900 $ 2,907
Accounts payable
53,271 60,167
Accrued expenses and other current liabilities
50,126 45,703
Total current liabilities
106,297 108,777
Revolving credit facility
30,000 69,000
Long-term debt
276,565 278,265
Other liabilities
50,005 61,313
Total liabilities
462,867 517,355
Commitments and contingencies (Note 8)
Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 18,737,899 and 18,519,757 shares issued and outstanding at March 31, 2017, and June 30, 2016, respectively; 30,000,000 Class B shares authorized, 20,887,811 shares issued and outstanding at March 31, 2017, and June 30, 2016
4 4
Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, no shares issued and outstanding
Paid-in capital
120,879 118,299
Retained earnings
71,358 33,962
Accumulated other comprehensive income (loss)
(52,830) (61,785)
Total stockholders’ equity
139,411 90,480
Total liabilities and stockholders’ equity
$ 602,278 $ 607,835
The accompanying notes are an integral part of these consolidated financial statements
5

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months
For the Periods Ended March 31
2017
2016
(unaudited)
(in thousands)
OPERATING ACTIVITIES
Net income
$ 49,237 $ 67,508
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization
19,604 16,678
Amortization of debt issuance costs and debt discount
761 734
Acquisition-related cost of goods sold
1,601
Acquisition-related accrued compensation
1,260 1,260
Acquisition-related accrued interest
1,314 1,083
Pension settlement cost
1,702
Deferred income taxes
4,068 (23,117)
Foreign currency (gains) losses, net
(798) (5,635)
Other
546 286
Changes in operating assets and liabilities:
Accounts receivable, net
10,020 (6,556)
Inventories, net
3,871 (19,822)
Other current assets
(2,599) (991)
Other assets
(456) (1,770)
Accounts payable
(6,388) (11,715)
Accrued expenses and other liabilities
2,668 (8,918)
Net cash provided (used) by operating activities
84,810 10,626
INVESTING ACTIVITIES
Capital expenditures
(15,377) (28,648)
Business acquisition
(46,546)
Other, net
(1,791) 142
Net cash provided (used) by investing activities
(17,168) (75,052)
FINANCING ACTIVITIES
Revolving credit facility borrowings
118,500 222,500
Revolving credit facility repayments
(157,500) (143,500)
Payments of long-term debt, capital leases and other
(3,502) (3,198)
Proceeds from common shares issued
2,580 3,965
Dividends paid
(11,841) (11,767)
Net cash provided (used) by financing activities
(51,763) 68,000
Effect of exchange rate changes on cash
(174) (565)
Net increase (decrease) in cash and cash equivalents
15,705 3,009
Cash and cash equivalents at beginning of period
33,605 29,216
Cash and cash equivalents at end of period
$ 49,310 $ 32,225
The accompanying notes are an integral part of these consolidated financial statements
6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
(unaudited)
1.
Description of Business
Phibro Animal Health Corporation (“Phibro” or “PAHC”) and its subsidiaries (collectively, the “Company”) is a diversified global developer, manufacturer and marketer of a broad range of animal health and mineral nutrition products for food animals including poultry, swine, cattle, dairy and aquaculture. The Company is also a manufacturer and marketer of performance products for use in the personal care, automotive, industrial chemical and chemical catalyst industries. Unless otherwise indicated or the context requires otherwise, references in this report to “we,” “our,” “us,” and similar expressions refer to Phibro and its subsidiaries.
The unaudited consolidated financial information for the three and nine months ended March 31, 2017 and 2016, is presented on the same basis as the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 (the “Annual Report”), filed with the Securities and Exchange Commission on August 29, 2016 (File no. 001-36410). In the opinion of management, these financial statements include all adjustments necessary for a fair statement of financial position, results of operations and cash flows for the interim periods, and the adjustments are of a normal and recurring nature. The financial results for any interim period are not necessarily indicative of the results for the full year. The consolidated balance sheet information as of June 30, 2016, was derived from the audited consolidated financial statements, which include the accounts of Phibro and its consolidated subsidiaries, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.
The consolidated financial statements include the accounts of Phibro and its consolidated subsidiaries. The decision whether or not to consolidate an entity requires consideration of majority voting interests, as well as effective control over the entity. Intercompany balances and transactions have been eliminated in the consolidated financial statements.
2.
Summary of Significant Accounting Policies and New Accounting Standards
Our significant accounting policies are described in the notes to the consolidated financial statements included in our Annual Report. As of March 31, 2017, there have been no material changes to any of the significant accounting policies contained therein, except for the application of Accounting Standards Update (“ASU”) 2015-03, Interest—Imputation of Interest (Subtopic 835-30), as of July 1, 2016. Prior periods have been adjusted to reflect the retrospective application of this guidance. For further discussion, see “—New Accounting Standards.”
Revisions of Previously Issued Financial Statements
During the three months ended June 30, 2016, the Company determined that amortization expense related to product-related intangible assets should be recorded in cost of goods sold rather than in selling, general and administrative expense within the consolidated statement of operations. The Company has revised its prior period financial statements, to correct the classification of amortization expense to increase cost of goods sold and reduce gross profit and selling, general and administrative expenses by $1,165 and $3,072 for the three and nine months ended March 31, 2016, respectively. These revisions had no impact on the Company’s previously reported net income (loss) or cash flows. The Company evaluated the impact of the revisions on prior periods, assessing materiality quantitatively and qualitatively, and concluded the errors were not material to any previously issued financial statements.
Net Income per Share and Weighted Average Shares
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period.
   
7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period after giving effect to potential dilutive common shares equivalents resulting from the assumed exercise of stock options. For the three and nine months ended March 31, 2017 and 2016, all common share equivalents were included in the calculation of diluted net income per share.
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
2017
2016
Net income
$ 23,643 $ 18,577 $ 49,237 $ 67,508
Weighted average number of shares – basic
39,512 39,356 39,443 39,203
Dilutive effect of stock options
547 644 545 793
Weighted average number of shares – diluted
40,059 40,000 39,988 39,996
Net income per share
basic
$ 0.60 $ 0.47 $ 1.25 $ 1.72
diluted
$ 0.59 $ 0.46 $ 1.23 $ 1.69
Dividends
We declared and paid quarterly cash dividends of $0.10 per share, totaling $3,959 and $11,841 during the three and nine months ended March 31, 2017, respectively, to holders of our Class A common stock and Class B common stock.
New Accounting Standards
Financial Accounting Standards Board (“FASB”) ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, supersedes the current guidance by establishing a one-step goodwill impairment test. This new guidance requires an entity to compare the fair value of a reporting unit to its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. This ASU is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted for goodwill impairment tests performed after January 1, 2017. We will apply this guidance when performing our next goodwill impairment test. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, amends the current guidance for determining whether a transaction represents the acquisition of a business or assets. This guidance provides updated criteria to make the determination and clarifies the definitions of key terms. This new standard is effective, on a prospective basis, for annual reporting periods beginning after December 15, 2017, and early application is permitted. During the three months ended March 31, 2017, we elected early application of this ASU, and it did not have a material effect on our consolidated financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, provides specific guidance for the classification of certain transactions within the statement of cash flows. The issues addressed by this guidance include, but are not limited to, debt prepayments or debt extinguishment costs, contingent consideration payments made after a business combination and proceeds from the settlement of insurance claims. This ASU is effective for annual reporting periods beginning after December 15, 2017. Early application is permitted, as long as all provisions under the guidance are applied simultaneously. The provisions of this guidance are to be applied using a retrospective transition approach. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2016-02, Leases (Topic 842), supersedes the current lease accounting guidance and requires an entity to recognize assets and liabilities for both financing and operating leases on the balance sheet and requires additional qualitative and quantitative disclosures regarding leasing arrangements. This ASU is effective for annual reporting periods beginning after December 15, 2018. We are evaluating the impact of adoption of this guidance on our consolidated financial statements.
   
8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ASU 2015-11, Inventory (Topic 330), requires entities to measure inventory at the lower of cost and net realizable value (“NRV”). NRV is defined as “the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those years. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) provides guidance regarding the treatment of cloud computing arrangements and if an arrangement includes a software license. We adopted this guidance during the three months ended September 30, 2016, and it had no material impact on our consolidated financial statements.
ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30), requires debt issuance costs to be presented as a reduction of the related liability. These costs were previously included in other assets. Debt issuance costs associated with line-of-credit arrangements may continue to be recognized in other assets. We adopted this guidance during the three months ended September 30, 2016, and applied the guidance retrospectively. Debt issuance costs of  $2,538 as of June 30, 2016, have been presented as a reduction in long-term debt on our consolidated balance sheets.
ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), requires management to assess an entity’s ability to continue as a going concern within one year after the issuance date of the financial statements, and to provide related footnote disclosures in certain circumstances. Management will need to consider relevant conditions that are known and reasonably knowable at the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. Under the new standard, the definition of substantial doubt incorporates a likelihood threshold of “probable” similar to the current use of that term in GAAP for loss contingencies. ASU 2014-15 will be effective for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606), establishes principles for the recognition of revenue from contracts with customers. The underlying principle is to identify the performance obligations of a contract, allocate the revenue to each performance obligation and then to recognize revenue when the company satisfies a specific performance obligation of the contract. ASU 2015-14, Deferral of the Effective Date, amended ASU 2014-09, resulting in a one-year deferral of the effective date. ASU 2016-08, Principal versus Agent Considerations; ASU 2016-10, Identifying Performance Obligations and Licensing; and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients also amended ASU 2014-09. The amendments are effective concurrent with the effective date for ASU 2014-09 for annual periods beginning after December 15, 2017, and interim periods within those years. We are evaluating the impact of adoption of this guidance on our consolidated financial statements.
3.
Statements of Operations—Additional Information
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
2017
2016
Interest expense, net
Term B loan
$ 2,859 $ 2,888 $ 8,630 $ 8,750
Revolving credit facility
642 720 2,328 1,322
Amortization of debt issuance costs and debt discount
253 251 761 734
Acquisition-related accrued interest
459 394 1,314 1,083
Other
37 79 165 335
Interest expense
4,250 4,332 13,198 12,224
Interest (income)
(321) (67) (1,490) (173)
$ 3,929 $ 4,265 $ 11,708 $ 12,051
   
9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
2017
2016
Depreciation and amortization
Depreciation of property, plant and equipment
$ 5,400 $ 4,328 $ 15,083 $ 12,514
Amortization of intangible assets
1,436 1,469 4,398 3,988
Amortization of other assets
6 59 123 176
$ 6,842 $ 5,856 $ 19,604 $ 16,678
The provision (benefit) for income taxes for the three and nine months ended March 31, 2017, included a benefit of  $3,780 due to the reversal of the valuation allowance we previously had recorded against certain foreign deferred tax assets and also included a $1,442 benefit related to the exercise of employee stock options. Based on continued profitability in a foreign subsidiary, we concluded that it was more likely than not that the value of the related deferred tax assets would be realized, and it was no longer necessary to maintain a valuation allowance.
The provision (benefit) for income taxes for the three and nine months ended March 31, 2016, included a benefit of  $2,536 and $21,323, respectively, due to the reversal of the valuation allowance we previously had recorded against domestic deferred tax assets. Based on continued domestic profitability, we concluded that it was more likely than not that the value of domestic deferred tax assets would be realized, and it was no longer necessary to maintain a valuation allowance.
4.
Balance Sheets—Additional Information
As of
March 31,
2017
June 30,
2016
Inventories
Raw materials
$ 60,802 $ 51,369
Work-in-process
9,814 8,074
Finished goods
93,215 108,248
$ 163,831 $ 167,691
Goodwill balances did not change during the nine months ended March 31, 2017.
We evaluate our investments in equity method investees for impairment if circumstances indicate that the fair value of the investment may be impaired. The assets underlying a $4,049 equity investment are currently idled; we have concluded the investment is not currently impaired, based on expected future operating cash flows and/or disposal value.
As of
March 31,
2017
June 30,
2016
Accrued expenses and other current liabilities
Employee related
$ 23,070 $ 21,712
Commissions and rebates
4,730 3,722
Insurance related
1,568 1,780
Professional fees
4,560 3,573
Income and other taxes
3,296 1,910
Deferred consideration on acquisitions
1,250
Other
12,902 11,756
$ 50,126 $ 45,703
   
10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of
March 31,
2017
June 30,
2016
Accumulated other comprehensive income (loss)
Derivative instruments
$ 3,717 $ 2,655
Foreign currency translation adjustment
(40,986) (41,904)
Unrecognized net pension gains (losses)
(19,026) (30,977)
(Provision) benefit for income taxes on derivative instruments
(1,954) (1,548)
(Provision) benefit for incomes taxes on long-term intercompany investments
8,166 8,166
(Provision) benefit for income taxes on pension gains (losses)
(2,747) 1,823
$ (52,830) $ (61,785)
5.
Debt
Revolving Credit Facility and Term B Loan
We have a revolving credit facility (the “Revolver”), where we can borrow up to $200,000, subject to the terms of the agreement, and a term B loan (the “Term B Loan,” and together with the Revolver, the “Credit Facilities”). The Revolver, as amended, has applicable margins equal to 2.50%, 2.75% or 3.00%, in the case of LIBOR loans and 1.50%, 1.75% or 2.00%, in the case of base rate loans; the applicable margins are based on the First Lien Net Leverage Ratio. The Term B Loan has applicable margins equal to 3.00% in the case of LIBOR loans and 2.00% in the case of base rate loans. The LIBOR rate on the Term B Loan is subject to a floor of 1.00%.
The Revolver requires, among other things, the maintenance of a maximum consolidated first lien net debt to consolidated EBITDA leverage ratio, calculated on a trailing four quarter basis, and contains an acceleration clause should an event of default (as defined in the agreement governing the Credit Facilities) occur. As of March 31, 2017, we were in compliance with the covenants of the Credit Facilities.
As of March 31, 2017, we had $30,000 in borrowings under the Revolver and had outstanding letters of credit of  $14,518 leaving $155,482 available for borrowings and letters of credit under the Revolver. We obtain letters of credit in connection with certain regulatory and insurance obligations and other contractual obligations. The tenors of these letters of credit are all one year or less.
The weighted-average interest rates for the Revolver and Term B Loan were 3.39% and 4.00%, respectively, for the nine months ended March 31, 2017.
Long-Term Debt
As of
March 31,
2017
June 30,
2016
Term B Loan due April 2021
$ 282,025 $ 284,200
Capitalized lease obligations
7
282,025 284,207
Unamortized debt issuance costs and debt discount
(2,560) (3,035)
Less: current maturities
(2,900) (2,907)
$ 276,565 $ 278,265
6.
Related Party Transactions
Certain relatives of Jack C. Bendheim provided services to us as employees or consultants and received aggregate compensation and benefits of  $339 and $1,387 during the three and nine months ended March 31, 2017, respectively, and $388 and $1,515 during the three and nine months ended March 31, 2016, respectively. Mr. Bendheim has sole authority to vote shares of our stock owned by BFI Co., LLC, an investment vehicle of the Bendheim family.
   
11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
7.
Employee Benefit Plans
The Company maintains a noncontributory defined benefit pension plan for all domestic nonunion employees employed on or prior to December 31, 2013, who meet certain requirements of age, length of service and hours worked per year. Plan benefits are based upon years of service and average compensation, as defined.
In July 2016, we amended our domestic noncontributory defined benefit pension plan to eliminate credit for future service and compensation increases, effective as of September 30, 2016. The amendment resulted in a curtailment of the pension plan. During the three months ended September 30, 2016, we recorded a pension curtailment gain of $6,822 in other comprehensive income and an offsetting reduction in the liability for pension benefits included in other liabilities. We also modified the 401(k) retirement savings plan, effective October 1, 2016, to include, for all domestic employees, a non-elective Company contribution of 3% of compensation and an additional discretionary contribution of up to 4% of compensation, depending on the employee’s age and years of service.
Separately, we offered a lump sum settlement option to certain pension plan participants. During the three months ended December 31, 2016, we recognized a partial settlement of the pension plan with respect to the lump sum settlement, which resulted in a charge to the consolidated statement of operations of  $1,702, which we recorded as a component of selling, general and administrative expenses.
Net periodic pension expense was:
Three Months
Nine months
For the Periods Ended March 31
2017
2016
2017
2016
Service cost – benefits earned during the period
$ $ 735 $ 845 $ 2,204
Interest cost on benefit obligation
498 723 1,546 2,170
Expected return on plan assets
(834) (794) (2,540) (2,382)
Amortization of net actuarial (gain) loss and prior service
costs
111 446 563 1,338
Settlement cost
1,702
Net periodic pension expense
$ (225) $ 1,110 $ 2,116 $ 3,330
8.
Commitments and Contingencies
Environmental
Our operations and properties are subject to extensive federal, state, local and foreign laws and regulations, including those governing pollution; protection of the environment; the use, management, and release of hazardous materials, substances and wastes; air emissions; greenhouse gas emissions; water use, supply and discharges; the investigation and remediation of contamination; the manufacture, distribution, and sale of regulated materials, including pesticides; the importing, exporting and transportation of products; and the health and safety of our employees (collectively, “Environmental Laws”). As such, the nature of our current and former operations exposes us to the risk of claims with respect to such matters, including fines, penalties, and remediation obligations that may be imposed by regulatory authorities. Under certain circumstances, we might be required to curtail operations until a particular problem is remedied. Known costs and expenses under Environmental Laws incidental to ongoing operations, including the cost of litigation proceedings relating to environmental matters, are included within operating results. Potential costs and expenses may also be incurred in connection with the repair or upgrade of facilities to meet existing or new requirements under Environmental Laws or to investigate or remediate potential or actual contamination and from time to time we establish reserves for such contemplated investigation and remediation costs. In many instances, the ultimate costs under Environmental Laws and the time period during which such costs are likely to be incurred are difficult to predict.
   
12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
While we believe that our operations are currently in material compliance with Environmental Laws, we have, from time to time, received notices of violation from governmental authorities, and have been involved in civil or criminal action for such violations. Additionally, at various sites, our subsidiaries are engaged in continuing investigation, remediation and/or monitoring efforts to address contamination associated with historic operations of the sites. We devote considerable resources to complying with Environmental Laws and managing environmental liabilities. We have developed programs to identify requirements under, and maintain compliance with, Environmental Laws; however, we cannot predict with certainty the effect of increased and more stringent regulation on our operations, future capital expenditure requirements, or the cost of compliance.
The nature of our current and former operations exposes us to the risk of claims with respect to environmental matters, and we cannot assure we will not incur material costs and liabilities in connection with such claims. Based upon our experience to date, we believe that the future cost of compliance with existing Environmental Laws, and liabilities for known environmental claims pursuant to such Environmental Laws, will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.
The United States Environmental Protection Agency (the “EPA”) is investigating and planning for the remediation of offsite contaminated groundwater that has migrated from the Omega Chemical Corporation Superfund Site (“Omega Chemical Site”), which is upgradient of a facility in Santa Fe Springs, California, operated by our subsidiary Phibro-Tech, Inc. (“Phibro-Tech”). The EPA has named Phibro-Tech and certain other subsidiaries of PAHC as potentially responsible parties (“PRPs”) due to groundwater contamination from Phibro-Tech’s Santa Fe Springs facility that has allegedly commingled with contaminated groundwater from the Omega Chemical Site. In September 2012, the EPA notified approximately 140 PRPs, including Phibro-Tech and the other subsidiaries, that they have been identified as potentially responsible for remedial action for the groundwater plume affected by the Omega Chemical Site and for EPA oversight and response costs. Phibro-Tech contends that groundwater contamination at its site is due to historical operations that pre-date Phibro-Tech and/or contaminated groundwater that has migrated from upgradient properties. In addition, a successor to a prior owner of the Phibro-Tech site has asserted that PAHC and Phibro-Tech are obligated to provide indemnification for its potential liability and defense costs relating to the groundwater plume affected by the Omega Chemical Site. Phibro-Tech has vigorously contested this position and has asserted that the successor to the prior owner is required to indemnify Phibro-Tech for its potential liability and defense costs. Furthermore, a nearby property owner has filed a complaint in the Superior Court of the State of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for alleged contamination of groundwater underneath its property, and a group of companies that sent chemicals to the Omega Chemical Site for processing and recycling has filed a complaint under CERCLA, RCRA and the common law public nuisance doctrine in the United States District Court for the Central District of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for contribution toward past and future costs associated with the investigation and remediation of the groundwater plume affected by the Omega Chemical Site. Due to the ongoing nature of the EPA’s investigation and Phibro-Tech’s dispute with the prior owner’s successor, at this time we cannot predict with any degree of certainty what, if any, liability Phibro-Tech or the other subsidiaries may ultimately have for investigation, remediation and the EPA oversight and response costs associated with the affected groundwater plume.
Based upon information available, to the extent such costs can be estimated with reasonable certainty, we estimated the cost for further investigation and remediation of identified soil and groundwater problems at operating sites, closed sites and third-party sites, and closure costs for closed sites, to be $7,205 and $7,024 at March 31, 2017, and June 30, 2016, respectively, which is included in current and long-term liabilities on the consolidated balance sheets. However, future events, such as new information, changes in existing Environmental Laws or their interpretation, and more vigorous enforcement policies of regulatory agencies, may give rise to additional expenditures or liabilities that could be material. For all purposes of the
   
13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
discussion under this caption and elsewhere in this report, it should be noted that we take and have taken the position that neither PAHC nor any of our subsidiaries is liable for environmental or other claims made against one or more of our other subsidiaries or for which any of such other subsidiaries may ultimately be responsible.
Claims and Litigation
During the three months ended March 31, 2017, we recorded a $7,500 gain in selling, general and administrative expenses resulting from a payment to us by an insurance carrier. The payment reflected the settlement of our claims against the carrier under our liability insurance policies, which arose from damages incurred in fiscal year 2010 by certain customers resulting from the use of one of our animal health products. We previously paid our customers for the damages and recognized the cost in the consolidated statement of operations prior to fiscal year 2017.
PAHC and its subsidiaries are party to a number of claims and lawsuits arising out of the normal course of business including product liability, payment disputes and governmental regulation. Certain of these actions seek damages in various amounts. In many cases, such claims are covered by insurance. We believe that none of the claims or pending lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, cash flows or liquidity.
9.
Derivatives
We monitor our exposure to foreign currency exchange rates and use derivatives (currency option contracts) to manage certain of these risks. These derivatives generally have an expiration/maturity of two years or less and are intended to hedge cash flows related to the purchase of inventory. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). We record the portion of the changes in the value of the derivative, related to a hedged asset or liability (the effective portion), in accumulated other comprehensive income (loss). As the hedged item is sold, we recognize the gain or loss recorded in accumulated other comprehensive income (loss) to the consolidated statements of operations on the same line where the hedged item is charged when released/sold. We immediately recognize in the consolidated statements of operations in the same line as the hedged item, the portion of the changes in fair value of derivatives used as cash flow hedges that is not offset by changes in the expected cash flows related to a recognized asset or liability (the ineffective portion).
We routinely assess whether the derivatives used to hedge transactions are effective. If we determine that a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.
We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see “—Fair Value Measurements.”
The following table details the Company’s outstanding derivatives that are designated and effective as cash flow hedges as of March 31, 2017:
Instrument
Hedge
Notional
Amount at
March 31,
2017
Fair value as of
March 31,
2017
June 30,
2016
Options
Brazilian Real calls​
R$58,500
$ 3,717 $ 3,027
Options
Brazilian Real puts​
R$58,500
$ $ (372)
The fair values at March 31, 2017, are unrealized and will fluctuate based on future exchange rates until the derivative contracts mature. Other comprehensive income (loss) for the three and nine months ended March 31, 2017, included $758 and $1,062, respectively, of net unrecognized gains related to these contracts. Accumulated other comprehensive income (loss) at March 31, 2017, included $3,717 of net unrecognized gains on derivative instruments; we estimate that $1,082 of those gains will be recognized in
   
14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
earnings within the next twelve months. At June 30, 2016, realized losses of $1,528 related to matured contracts were recorded as a component of inventory and subsequently recognized in cost of goods sold during the six months ended December 31, 2016. At March 31, 2017, realized gains of  $580 related to matured contracts were recorded as a component of inventory. We anticipate the gains will be recognized as an offset to cost of goods sold within the next twelve months. We recognize gains (losses) related to these derivative instruments as a component of cost of goods sold at the time the hedged item is sold.
10.
Fair Value Measurements
Fair value is defined as the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—
Significant observable inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.
Level 3—
Unobservable inputs for which there is little or no market data available, and that are significant to the overall fair value measurement, are employed that require the reporting entity to develop its own assumptions.
In assessing the fair value of financial instruments at March 31, 2017, and June 30, 2016, we used a variety of methods and assumptions that were based on estimates of market conditions and risks existing at the time.
Current Assets and Liabilities
We consider the carrying amounts of current assets and current liabilities to be representative of their fair value because of the current nature of these items.
Letters of Credit
We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. The carrying values of these letters of credit are considered to be representative of their fair values because of the nature of the instruments. The tenors of these letters of credit are all one year or less.
Long Term Debt
We record the Term B Loan and the Revolver at book value in our consolidated financial statements. We believe the carrying value of the Term B Loan is approximately equal to the fair value, which is based on quoted broker prices that are Level 2 inputs. We believe the carrying value of the Revolver is approximately equal to the fair value due to the variable nature of the instrument.
Deferred Consideration on Acquisitions
We estimated the fair value of the deferred contingent consideration on acquisitions using the income approach, based on the Company’s current sales forecast related to the acquired business.
   
15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Derivatives
We determine the fair value of derivative instruments based upon pricing models using observable market inputs for these types of financial instruments, such as spot and forward currency translation rates.
As of
March 31, 2017
June 30, 2016
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Derivatives asset
$  — $ 3,717 $ $  — $ 2,655 $
Deferred contingent consideration on
acquisitions
$ $ $ (7,989) $ $ $ (6,745)
The table below provides a summary of the changes in the fair value of Level 3 liabilities:
Balance, June 30, 2016
$ (6,745)
Acquisition-related accrued interest
(1,314)
Payment
70
Balance, March 31, 2017
$ (7,989)
11.
Business Segments
The Animal Health segment manufactures and markets a broad range of products for food animals, including poultry, swine, cattle, dairy and aquaculture. The business includes net sales of medicated feed additives and other related products, nutritional specialty products and vaccines. The Mineral Nutrition segment manufactures and markets a broad range of trace mineral products for food animals. The Performance Products segment manufactures and markets a variety of products for use in the personal care, automotive, industrial chemical and chemical catalyst industries.
We evaluate performance and allocate resources based on the Animal Health, Mineral Nutrition and Performance Products segments. Certain of our costs and assets are not directly attributable to these segments and such costs are referred to as Corporate. We do not allocate such items to the principal segments because they are not used to evaluate their operating results or financial position.
We evaluate performance of our segments based on Adjusted EBITDA. We define Adjusted EBITDA as income before income taxes plus (a) interest expense, net, (b) depreciation and amortization, (c) (income) loss from, and disposal of, discontinued operations, (d) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency gains and losses and loss on extinguishment of debt, and (e) certain items that we consider to be unusual, non-operational or non-recurring.
The accounting policies of our segments are the same as those described in the summary of significant accounting policies included herein.
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
2017
2016
Net sales
MFAs and other
$ 76,354 $ 82,445 $ 237,248 $ 253,535
Nutritional Specialties
27,613 22,792 83,164 69,384
Vaccines
17,009 13,091 48,738 37,047
Animal Health
120,976 118,328 369,150 359,966
Mineral Nutrition
57,169 53,029 165,460 166,351
Performance Products
11,716 12,104 34,836 36,037
Total segments
$ 189,861 $ 183,461 $ 569,446 $ 562,354
   
16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
2017
2016
Depreciation and amortization
Animal Health
$ 5,311 $ 4,246 $ 15,220 $ 11,951
Mineral Nutrition
611 656 1,695 1,876
Performance Products
255 196 708 584
Total segments
$ 6,177 $ 5,098 $ 17,623 $ 14,411
Adjusted EBITDA
Animal Health
$ 31,806 $ 32,151 $ 99,034 $ 95,978
Mineral Nutrition
4,343 4,012 13,072 11,361
Performance Products
446 490 1,448 568
Total segments
$ 36,595 $ 36,653 $ 113,554 $ 107,907
Reconciliation of income before income taxes to Adjusted EBITDA
Income before income taxes
$ 26,448 $ 19,149 $ 63,324 $ 58,738
Interest expense, net
3,929 4,265 11,708 12,051
Depreciation and amortization – Total segments
6,177 5,098 17,623 14,411
Depreciation and amortization – Corporate
665 758 1,981 2,267
Corporate costs
6,859 6,987 22,799 22,100
Acquisition-related cost of goods sold
1,601 1,601
Acquisition-related accrued compensation
420 420 1,260 1,260
Acquisition-related transaction costs
618 1,274 618
Pension settlement cost
1,702
Gain on insurance settlement
(7,500) (7,500)
Foreign currency (gains) losses, net
(403) (2,243) (617) (5,139)
Adjusted EBITDA – Total segments
$ 36,595 $ 36,653 $ 113,554 $ 107,907
As of
March 31,
2017
June 30,
2016
Identifiable assets
Animal Health
$ 435,881 $ 444,751
Mineral Nutrition
57,112 57,939
Performance Products
21,068 21,557
Total segments
514,061 524,247
Corporate
88,217 83,588
Total
$ 602,278 $ 607,835
The Animal Health segment includes all goodwill of the Company. The Animal Health segment includes advances to and investment in an equity method investee of  $4,049 and $4,076 as of March 31, 2017, and June 30, 2016, respectively. The Performance Products segment includes an investment in an equity method investee of  $484 and $504 as of March 31, 2017, and June 30, 2016, respectively. Corporate assets include cash and cash equivalents, certain debt issuance costs related to the Credit Facilities, income tax related assets and certain other assets.
   
17

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided to assist readers in understanding our performance and summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and cash flows as of and for the periods presented below. This MD&A should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Our future results could differ materially from our historical performance or our future expectations as a result of various factors, such as those discussed in “Forward-Looking Statements” and “Risk Factors.”
Overview of our business
Phibro Animal Health Corporation is a diversified global developer, manufacturer and marketer of a broad range of animal health and mineral nutrition products for food animals including poultry, swine, cattle, dairy and aquaculture. We also are a manufacturer and marketer of performance products for use in the personal care, automotive, industrial chemical and chemical catalyst industries.
Trends and uncertainties
Our business depends heavily on a healthy and growing livestock industry. Some in the public perceive risks to human health related to the consumption of food derived from animals that utilize certain of our products, including certain of our medicated feed additives products. In particular, there is increased focus, primarily in the United States, on the use of medically important antibacterials, as defined by the FDA. Medically important antibacterials include classes that are prescribed in animal and human health and are listed in the Appendix of the FDA-CVM Guidance for Industry (GFI) #152. Our products that contain virginiamycin, oxytetracycline or neomycin have previously been classified by the FDA as medically important antibacterials. This may lead to a decline in the demand for and production of food products derived from animals that utilize our products and, in turn, demand for our products. Livestock producers may experience decreased demand for their products or reputational harm as a result of evolving consumer views of nutrition and health-related concerns, animal rights, and other concerns. Any reputational harm to the livestock industry may also extend to companies in related industries, including us. In addition, campaigns by interest groups, activists and others with respect to perceived risks associated with the use of our products in animals, including position statements by livestock producers and their customers based on non-use of certain medicated products in livestock production, whether or not scientifically-supported, could affect public perceptions and reduce the use of our products. Those adverse consumer views related to the use of one or more of our products in animals could have a material adverse effect on our financial condition and results of operations.
Our sales in the United States of products classified by the FDA as medically important antibacterials were approximately $27 million for the twelve months ended March 31, 2017, a decrease of $10 million compared with the twelve months ended June 30, 2016.
Our business is subject to product registration and authorization regulations. Changes in these regulations could have a material impact on our business. In April 2016, the FDA began initial steps to withdraw approval of Mecadox (carbadox), due to concerns that certain residues from the product may persist in tissues for longer than previously determined. This initial action by the FDA does not prohibit the sale or use of Mecadox in the United States. Mecadox has been approved and sold in the United States for more than 40 years and is a widely used treatment for controlling bacterial diseases including Salmonella and swine dysentery. Mecadox is not used in human medicine and the class of drug is not considered a medically important antibacterial. The approved Mecadox label requires a 42-day withdrawal period pre-harvesting, and to date we have not seen any hazardous residues of carbadox being detected from pig meat treated in accordance with the approved label. We have complete confidence in the safety of Mecadox. In response to FDA inquiries several years ago, we began rigorous new studies of the continued safety of the product when used in accordance with the label. Our studies were completed in July 2016, and we submitted our data, analyses and information to the FDA that we believe support the continued safe use of
18

Mecadox. As of March 31, 2017, we await the response of the FDA as the timing of their response to our submission is not subject to a predetermined deadline. Should we be unable to successfully defend the safety of the product, the loss of Mecadox sales would have a negative impact on the results of our operations.
Our sales of Mecadox in the United States were approximately $14 million for the twelve months ended March 31, 2017, a decrease of $1 million compared with the twelve months ended June 30, 2016, as a result of normal variation in customer order patterns.
Analysis of the consolidated statements of operations
Summary Results of Operations
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
Change
2017
2016
Change
(in thousands, except per share amounts and percentages)
Net sales
$ 189,861 $ 183,461 $ 6,400
3%
$ 569,446 $ 562,354 $ 7,092
1%
Gross profit
60,620 58,790 1,830
3%
185,117 179,459 5,658
3%
Selling, general and administrative expenses
30,646 37,619 (6,973)
(19)%
110,702 113,809 (3,107)
(3)%
Operating income
29,974 21,171 8,803
42%
74,415 65,650 8,765
13%
Interest expense, net
3,929 4,265 (336)
(8)%
11,708 12,051 (343)
(3)%
Foreign currency (gains) losses, net
(403) (2,243) 1,840
*
(617) (5,139) 4,522
*
Income before income
taxes
26,448 19,149 7,299
38%
63,324 58,738 4,586
8%
Provision (benefit) for income taxes
2,805 572 2,233
390%
14,087 (8,770) 22,857
*
Net income
$ 23,643 $ 18,577 $ 5,066
27%
$ 49,237 $ 67,508 $ (18,271)
(27)%
Net income per share
basic
$ 0.60 $ 0.47 $ 0.13 $ 1.25 $ 1.72 $ (0.47)
diluted
$ 0.59 $ 0.46 $ 0.13 $ 1.23 $ 1.69 $ (0.46)
Weighted average number of shares outstanding
basic
39,512 39,356 39,443 39,203
diluted
40,059 40,000 39,988 39,996
Ratio to net sales
Gross profit
31.9% 32.0% 32.5% 31.9%
Selling, general and administrative expenses
16.1% 20.5% 19.4% 20.2%
Operating income
15.8% 11.5% 13.1% 11.7%
Income before income
taxes
13.9% 10.4% 11.1% 10.4%
Net income
12.5% 10.1% 8.6% 12.0%
Effective tax rate
10.6% 3.0% 22.2% (14.9)%
Certain amounts and percentages may reflect rounding adjustments.
*
Calculation not meaningful
Net sales, Adjusted EBITDA and reconciliation of GAAP net income to Adjusted EBITDA
We report net sales and Adjusted EBITDA by segment to understand the operating performance of each segment. This enables us to monitor changes in net sales, costs and other actionable operating metrics at the segment level. See “—General description of non-GAAP financial measures” for descriptions of EBITDA and Adjusted EBITDA.
19

Segment net sales and Adjusted EBITDA:
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
Change
2017
2016
Change
(in thousands, except percentages)
Net sales
MFAs and other
$ 76,354 $ 82,445 $ (6,091)
(7)%
$ 237,248 $ 253,535 $ (16,287)
(6)%
Nutritional specialties
27,613 22,792 4,821
21%
83,164 69,384 13,780
20%
Vaccines
17,009 13,091 3,918
30%
48,738 37,047 11,691
32%
Animal Health
120,976 118,328 2,648
2%
369,150 359,966 9,184
3%
Mineral Nutrition
57,169 53,029 4,140
8%
165,460 166,351 (891)
(1)%
Performance Products
11,716 12,104 (388)
(3)%
34,836 36,037 (1,201)
(3)%
Total
$ 189,861 $ 183,461 $ 6,400
3%
$ 569,446 $ 562,354 $ 7,092
1%
Adjusted EBITDA
Animal Health
$ 31,806 $ 32,151 $ (345)
(1)%
$ 99,034 $ 95,978 $ 3,056
3%
Mineral Nutrition
4,343 4,012 331
8%
13,072 11,361 1,711
15%
Performance Products
446 490 (44)
(9)%
1,448 568 880
155%
Corporate
(6,859) (6,987) 128
*
(22,799) (22,100) (699)
*
Total
$ 29,736 $ 29,666 $ 70
0%
$ 90,755 $ 85,807 $ 4,948
6%
Adjusted EBITDA ratio to segment net sales
Animal Health
26.3% 27.2% 26.8% 26.7%
Mineral Nutrition
7.6% 7.6% 7.9% 6.8%
Performance Products
3.8% 4.0% 4.2% 1.6%
Corporate(1)
(3.6)% (3.8)% (4.0)% (3.9)%
Total(1)
15.7% 16.2% 15.9% 15.3%
(1)
Reflects ratio to total net sales
*
Calculation not meaningful
The table below sets forth a reconciliation of net income, as reported under GAAP, to Adjusted EBITDA:
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
Change
2017
2016
Change
(in thousands, except percentages)
Net income
$ 23,643 $ 18,577 $ 5,066
27%
$ 49,237 $ 67,508 $ (18,271)
(27)%
Interest expense, net
3,929 4,265 (336)
(8)%
11,708 12,051 (343)
(3)%
Provision (benefit) for income
taxes
2,805 572 2,233
390%
14,087 (8,770) 22,857
*
Depreciation and amortization
6,842 5,856 986
17%
19,604 16,678 2,926
18%
EBITDA
37,219 29,270 7,949
27%
94,636 87,467 7,169
8%
Acquisition-related cost of goods sold
1,601 (1,601)
*
1,601 (1,601)
*
Acquisition-related accrued compensation
420 420
0%
1,260 1,260
0%
Acquisition-related transaction costs
618 (618)
*
1,274 618 656
106%
Pension settlement expense
*
1,702 1,702
*
Gain on insurance settlement
(7,500) (7,500)
*
(7,500) (7,500)
*
Foreign currency (gains) losses,
net
(403) (2,243) 1,840
*
(617) (5,139) 4,522
*
Adjusted EBITDA
$ 29,736 $ 29,666 $ 70
0%
$ 90,755 $ 85,807 $ 4,948
6%
Amounts and percentages may reflect rounding adjustments.
*
Calculation not meaningful
20

Comparison of the three months ended March 31, 2017 and 2016
Net sales
Net sales of $189.9 million for the three months ended March 31, 2017, increased $6.4 million, or 3%, as compared to the three months ended March 31, 2016. Animal Health and Mineral Nutrition grew $2.6 million and $4.1 million, respectively, while Performance Products declined $0.4 million.
Animal Health
Net sales of $121.0 million for the three months ended March 31, 2017, grew $2.6 million, or 2%. The growth was primarily due to volume increases in the nutritional specialty and vaccine product groups within the segment. Nutritional specialty products grew $4.8 million, or 21%, primarily due to volume growth of our products for the U.S. poultry and dairy industries. Vaccines grew $3.9 million, or 30%, primarily due to volume growth of our products for the poultry and swine industries. Medicated feed additives (“MFAs”) and other declined $6.1 million, or 7%, primarily due to volume declines. Domestic net sales of MFAs and other declined $4.3 million, primarily due to reduced volumes of medically important antibacterials. International net sales declined $1.8 million, primarily due to economic conditions in Brazil.
Mineral Nutrition
Net sales of $57.2 million increased $4.1 million, or 8%, for the three months ended March 31, 2017. The increased revenue was due to increased volumes and higher average selling prices resulting from underlying raw material commodity price increases.
Performance Products
Net sales of $11.7 million decreased $0.4 million, or 3%, for the three months ended March 31, 2017, due to lower average selling prices of personal care ingredients and copper-based products and lower volumes of copper-based products. Higher volumes of personal care ingredients partially offset the declines.
Gross profit
Gross profit of $60.6 million for the three months ended March 31, 2017, increased $1.8 million, or 3%, as compared to the three months ended March 31, 2016. Gross profit decreased to 31.9% of net sales for the three months ended March 31, 2017, as compared to 32.0% for the three months ended March 31, 2016. The three months ended March 31, 2016, included $1.6 million of acquisition-related cost of goods sold. Depreciation expense included in cost of goods sold increased $1.0 million due to recent capital expenditures. Excluding the effects of the acquisition-related cost of goods sold and increased depreciation, Animal Health gross profit increased $1.2 million due to volume growth in nutritional specialty and vaccine products, as well as lower unit costs from improved operating efficiencies. Mineral Nutrition gross profit increased $0.3 million due to volume growth and higher average selling prices, partially offset by higher raw material costs. Performance Products gross profit decreased $0.3 million due lower average selling prices of personal care ingredients and copper-based products, partially offset by higher volumes of personal care ingredients.
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A”) of $30.6 million for the three months ended March 31, 2017, decreased $7.0 million, or 19%, as compared to the three months ended March 31, 2016. During the three months ended March 31, 2017, we recorded a $7.5 million gain in SG&A resulting from a payment to us by an insurance carrier. The payment reflected the settlement of our claims against the carrier under our liability insurance policies, which arose from damages incurred in fiscal year 2010 by certain customers resulting from the use of one of our animal health products. We previously paid our customers for the damages and recognized the cost in the consolidated statement of operations prior to fiscal year 2017. SG&A for the three months ended March 31, 2016, included $0.6 million of acquisition-related transaction costs. Without the effects of the gain on the insurance settlement and the acquisition-related transaction costs, SG&A increased $1.1 million, or 3%. Animal Health accounted for $1.6 million of the increase, driven by timing of spending.
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Interest expense, net
Interest expense, net of $3.9 million for the three months ended March 31, 2017, decreased $0.3 million, or 8%, as compared to the three months ended March 31, 2016. Interest income increased $0.3 million from interest on deposits in foreign jurisdictions. Interest expense decreased $0.1 million due to decreased borrowings under our Revolver, compared to the three months ended March 31, 2016.
Foreign currency (gains) losses, net
Foreign currency (gains) losses, net for the three months ended March 31, 2017, amounted to net gains of $0.4 million, as compared to $2.2 million in net gains for the three months ended March 31, 2016. Foreign currency gains in the three months ended March 31, 2017, were primarily due to the movement of the Brazilian, Argentinian and Mexican currencies relative to the U.S. dollar. Foreign currency gains and losses primarily arise from intercompany balances.
Provision (benefit) for income taxes
The provision for income taxes was $2.8 million for the three months ended March 31, 2017, as compared to $0.6 million for the three months ended March 31, 2016. The effective income tax rates for these periods were 10.6% and 3.0%, respectively. During the three months ended March 31, 2017, we concluded it was more likely than not that the value of deferred tax assets related to a foreign subsidiary would be realized, and it was no longer necessary to maintain a valuation allowance. The provision for income taxes for the three months ended March 31, 2017, included a $3.8 million benefit from the valuation allowance release and also included a $1.4 million benefit related to the exercise of employee stock options. Without the benefit of the valuation allowance release and the benefit related to employee stock options, the effective income tax rate was 30.4% for the three months ended March 31, 2017. The provision for income taxes for the three months ended March 31, 2016, included a $2.5 million benefit from the release of a domestic valuation allowance and a $2.1 million benefit related to previously unrecognized tax benefits. Without these benefits, the effective income tax rate was 27.2% for the three months ended March 31, 2016.
Our future effective income tax rate may fluctuate due to various factors, including the relative amounts of income earned in different taxing jurisdictions, changes in statutory tax rates, potential strategies to reduce our overall income tax expense, discrete items, the benefit of employee stock option exercises and certain non-deductible items.
Net income
Net income of $23.6 million for the three months ended March 31, 2017, increased $5.1 million, as compared to net income of $18.6 million for the three months ended March 31, 2016. The increase was a result of the factors described above, including the $7.5 million gain on insurance settlement.
Adjusted EBITDA
Adjusted EBITDA of $29.7 million for the three months ended March 31, 2017, increased $0.1 million, or less than 1%, as compared to the three months ended March 31, 2016. Animal Health Adjusted EBITDA decreased $0.3 million, or 1%, due to increased SG&A, partially offset by sales growth and increased gross profit. Mineral Nutrition increased $0.3 million, or 8%, due to improved operating margins from volume growth and from higher average selling prices, partially offset by higher raw material costs. Performance Products decreased less than $0.1 million, as lower average selling prices were offset by higher volumes. Corporate expenses decreased $0.1 million due to lower compensation costs and lower professional fees.
Comparison of the nine months ended March 31, 2017 and 2016
Net sales
Net sales of $569.4 million for the nine months ended March 31, 2017, increased $7.1 million, or 1%, as compared to the nine months ended March 31, 2016. Animal Health grew $9.2 million, while Mineral Nutrition and Performance Products declined $0.9 million and $1.2 million, respectively.
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Animal Health
Net sales of $369.2 million for the nine months ended March 31, 2017, grew $9.2 million, or 3%. The growth was primarily due to volume increases in the nutritional specialty and vaccine product groups within the segment. Nutritional specialty products grew $13.8 million, or 20%, primarily due to volume growth of our products for the U.S. poultry and dairy industries. Vaccines grew $11.7 million, or 32%, primarily due to volume growth of our products for the poultry and swine industries. The vaccine sales growth included products acquired from MVP Laboratories, Inc. in January 2016. MFAs and other declined $16.3 million, or 6%, primarily due to volume declines. International net sales declined $10.0 million due to economic conditions in Brazil, partially offset by growth in other regions. Domestic net sales of MFAs and other declined $6.3 million as reduced volumes of medically important antibacterials were partially offset by growth in other products.
Mineral Nutrition
Net sales of $165.5 million decreased $0.9 million, or 1%, for the nine months ended March 31, 2017. The reduced revenue was primarily due to lower average selling prices resulting from underlying raw material commodity price declines. Volumes were approximately level with the prior year.
Performance Products
Net sales of $34.8 million decreased $1.2 million, or 3%, for the nine months ended March 31, 2017, due to lower average selling prices of personal care ingredients and lower volumes of copper-based products and chemical catalyst products. Higher volumes of personal care ingredients partially offset the declines.
Gross profit
Gross profit of $185.1 million for the nine months ended March 31, 2017, increased $5.7 million, or 3%, as compared to the nine months ended March 31, 2016. Gross profit increased to 32.5% of net sales for the nine months ended March 31, 2017, as compared to 31.9% for the nine months ended March 31, 2016. The three months ended March 31, 2016, included $1.6 million of acquisition-related cost of goods sold. Depreciation and amortization expense included in cost of goods sold increased $3.5 million due to recent capital expenditures and the MVP acquisition. Excluding the effects of the acquisition-related cost of goods sold and increased depreciation and amortization, Animal Health gross profit increased $5.5 million due to volume growth in nutritional specialty and vaccine products, as well as lower unit costs from improved operating efficiencies. Mineral Nutrition gross profit increased $1.6 million due to lower raw material costs, partially offset by lower average selling prices. Performance Products gross profit increased $0.5 million due to higher volumes of personal care ingredients and lower product costs of copper-based products, partially offset by lower average selling prices of personal care ingredients.
Selling, general and administrative expenses
SG&A of $110.7 million for the nine months ended March 31, 2017, decreased $3.1 million, or 3%, as compared to the nine months ended March 31, 2016. During the nine months ended March 31, 2017, we recorded a $7.5 million gain in SG&A resulting from a payment to us by an insurance carrier. The payment reflected the settlement of our claims against the carrier under our liability insurance policies, which arose from damages incurred in fiscal year 2010 by certain customers resulting from the use of one of our animal health products. We previously paid our customers for the damages and recognized the cost in the consolidated statement of operations prior to fiscal year 2017. SG&A for the nine months ended March 31, 2017, also included $1.7 million in costs relating to the partial settlement of the pension plan and $1.3 million in acquisition-related transaction costs for professional fees and other items in the evaluation and negotiation of an unsuccessful acquisition. SG&A for the nine months ended March 31, 2016, included $0.6 million in acquisition-related transaction costs. Without the gain on the insurance settlement, the pension settlement costs and the acquisition-related costs, SG&A increased $2.0 million, or 2%, for the nine months.
Animal Health accounted for $2.1 million of the increase, driven by increased sales force and development costs. Mineral Nutrition decreased $0.3 million due to one-time costs in the prior year.
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Performance Products decreased $0.2 million due to lower environmental costs. Corporate increased $0.4 million primarily due to increased business development costs.
Interest expense, net
Interest expense, net of $11.7 million for the nine months ended March 31, 2017, decreased less than $0.3 million, or 3%, as compared to the nine months ended March 31, 2016. Interest income increased $1.3 million from interest on deposits in foreign jurisdictions. Interest expense increased $0.8 million due to increased borrowings under our Revolver, compared to the nine months ended March 31, 2016, and increased acquisition-related accrued interest.
Foreign currency (gains) losses, net
Foreign currency (gains) losses, net for the nine months ended March 31, 2017, amounted to net gains of $0.6 million, as compared to $5.1 million in net gains for the nine months ended March 31, 2016. Foreign currency gains in the nine months ended March 31, 2017, were primarily due to the movement of the Brazilian, Turkish and Mexican currencies relative to the U.S. dollar. Foreign currency gains and losses primarily arise from intercompany balances.
Provision (benefit) for income taxes
The provision for income taxes was $14.1 million for the nine months ended March 31, 2017, as compared to an income tax benefit of $8.8 million for the nine months ended March 31, 2016. The effective income tax rates for these periods were 22.2% and (14.9)%, respectively. The provision for income taxes for the nine months ended March 31, 2017, included a $3.8 million benefit from the valuation allowance release and also included a $1.4 million benefit related to the exercise of employee stock options. Without the benefit of the valuation allowance release and the benefit related to employee stock options, the effective income tax rate was 30.5% for the nine months ended March 31, 2017. The benefit for income taxes for the nine months ended March 31, 2016, included a $21.3 million benefit from the release of a domestic valuation allowance and a $3.7 million benefit related to previously unrecognized tax benefits. Without these benefits, the effective income tax rate was 27.6% for the nine months ended March 31, 2016.
Our future effective income tax rate may fluctuate due to various factors, including the relative amounts of income earned in different taxing jurisdictions, changes in statutory tax rates, potential strategies to reduce our overall income tax expense, discrete items, the benefit of employee stock option exercises and certain non-deductible items.
Net income
Net income of $49.2 million for the nine months ended March 31, 2017, decreased $18.3 million, as compared to net income of $67.5 million for the nine months ended March 31, 2016. The decrease was a result of the factors described above, including a $21.3 million income tax benefit in the prior year period, an unfavorable change of $4.5 million in foreign currency (gains) losses, net, and the favorable $7.5 million gain on insurance settlement.
Adjusted EBITDA
Adjusted EBITDA of $90.8 million for the nine months ended March 31, 2017, increased $4.9 million, or 6%, as compared to the nine months ended March 31, 2016. Animal Health Adjusted EBITDA increased $3.1 million, or 3%, due to sales growth and increased gross profit, partially offset by increased SG&A. Mineral Nutrition Adjusted EBITDA increased $1.7 million, or 15%, due to improved operating margins from lower raw material costs, partially offset by lower average selling prices. Performance Products Adjusted EBITDA increased $0.9 million, due to higher volumes and lower product costs, partially offset by lower average selling prices. Corporate expenses increased $0.7 million due to increased compensation and benefit costs and business development costs.
Pension Plan and Retirement Savings Plan Changes
In July 2016, we amended our domestic noncontributory defined benefit pension plan to eliminate credit for future service and compensation increases, effective as of September 30, 2016. The amendment
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resulted in a curtailment of the pension plan. During the three months ended September 30, 2016, we recorded a pension curtailment gain of $6.8 million in other comprehensive income and an offsetting reduction in the liability for pension benefits included in other liabilities. We also modified the 401(k) retirement savings plan effective October 1, 2016, to include, for all domestic employees, a non-elective Company contribution of 3% of compensation and an additional discretionary contribution of up to 4% of compensation, depending on the employee’s age and years of service.
Separately, we offered a lump sum settlement option to certain pension plan participants. During the three months ended December 31, 2016, we recognized a partial settlement of the pension plan with respect to the lump sum settlement, which resulted in a charge to the consolidated statement of operations of  $1.7 million, which we recorded as a component of SG&A.
Analysis of financial condition, liquidity and capital resources
Net increase (decrease) in cash and cash equivalents was:
Nine Months
For the Periods Ended March 31
2017
2016
Change
(in thousands)
Cash provided by/(used in):
Operating activities
$ 84,810 $ 10,626 $ 74,184
Investing activities
(17,168) (75,052) 57,884
Financing activities
(51,763) 68,000 (119,763)
Effect of exchange-rate changes on cash and cash equivalents
(174) (565) 391
Net increase/(decrease) in cash and cash
equivalents
$ 15,705 $ 3,009 $ 12,696
Net cash provided (used) by operating activities was comprised of:
Nine Months
For the Periods Ended March 31
2017
2016
Change
(in thousands)
EBITDA
$ 94,636 $ 87,467 $ 7,169
Adjustments
Acquisition-related cost of goods sold
1,601 (1,601)
Acquisition-related accrued compensation
1,260 1,260
Acquisition-related transaction costs
1,274 618 656
Pension settlement cost
1,702 1,702
Gain on insurance settlement
(7,500) (7,500)
Foreign currency (gains) losses, net
(617) (5,139) 4,522
Interest paid
(10,722) (10,352) (370)
Income taxes paid
(10,315) (13,865) 3,550
Changes in operating assets and liabilities and other items
8,866 (50,346) 59,212
Cash provided by gain on insurance settlement
7,500 7,500
Cash used for acquisition-related transaction costs
(1,274) (618) (656)
Net cash provided (used) by operating activities
$ 84,810 $ 10,626 $ 74,184
Certain amounts may reflect rounding adjustments.
Operating activities
Net cash provided by operating activities was $84.8 million for the nine months ended March 31, 2017, primarily attributable to operating income of $74.4 million and increases in changes in operating
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assets and liabilities of $8.9 million. Accounts receivable provided $10.0 million of cash due to timing of sales and collections. Decreased inventories provided $3.9 million of cash due to timing of purchases and reduced production. Accounts payable and accrued expenses used $2.3 million of cash primarily due to timing of purchases, payments for annual incentive compensation and retirement plan funding.
Investing activities
Net cash used in investing activities was $17.2 million for the nine months ended March 31, 2017. Capital expenditures were $15.4 million as we continued to invest in our existing asset base and for capacity expansion and productivity improvements. Other investing activities used $1.8 million of cash.
Financing activities
Net cash used by financing activities was $51.8 million for the nine months ended March 31, 2017. Net repayments on our Revolver used $39.0 million. We paid $11.8 million in dividends to holders of our Class A and Class B common stock. We paid $3.5 million in scheduled debt and other requirements. The issuance of common shares related to the exercise of stock options provided $2.6 million.
Liquidity and capital resources
We believe our cash on hand and our financing arrangements, including the availability of borrowings under the Revolver, will be sufficient to support our future cash needs. Our operating plan projects adequate liquidity throughout the year. However, we can provide no assurance that our liquidity and capital resources will be adequate for future funding requirements. We believe we will be able to comply with the terms of the covenants under the Revolver based on our operating plan. In the event of adverse operating results and/or violation of covenants under the facilities, there can be no assurance we would be able to obtain waivers or amendments. Other risks to our meeting future funding requirements include global economic conditions and macroeconomic, business and financial disruptions that could arise. There can be no assurance that the challenging economic environment or an economic downturn would not impact our liquidity or our ability to obtain future financing. In addition, our debt covenants may restrict our ability to invest.
Certain relevant measures of our liquidity and capital resources were:
As of
March 31,
2017
June 30,
2016
Change
(in thousands, except ratios)
Cash and cash equivalents
$ 49,310 $ 33,605 $ 15,705
Working capital
194,837 203,356 (8,519)
Ratio of current assets to current liabilities
2.88:1 2.92:1
We define working capital as total current assets (excluding cash and cash equivalents) less total current liabilities (excluding current portion of long-term debt). We calculate the ratio of current assets to current liabilities based on this definition.
At March 31, 2017, our cash and cash equivalents included $49.0 million held by our international subsidiaries. There are no restrictions on cash distributions to PAHC from our international subsidiaries.
At March 31, 2017, we had $30.0 million in outstanding borrowings under the Revolver. We had outstanding letters of credit and other commitments of  $14.5 million, leaving $155.5 million available for borrowings and letters of credit.
We currently intend to pay quarterly dividends of $0.10 per share, representing $15.8 million annually on our Class A and Class B common stock, subject to approval from the Board of Directors. We declared and paid a cash dividend of $0.10 per share on Class A common stock and Class B common stock during the three months ended March 31, 2017. On May 8, 2017, our Board of Directors declared a cash dividend of  $0.10 per share on each share of our Class A and Class B common stock outstanding on the record date of May 31, 2017, payable on June 22, 2017.
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Contractual obligations
As of March 31, 2017, there were no material changes in payments due under contractual obligations from those disclosed in the Annual Report.
Off-balance sheet arrangements
We do not currently use off-balance sheet arrangements for the purpose of credit enhancement, hedging transactions, investment or other financial purposes.
In the ordinary course of business, we may indemnify our counterparties against certain liabilities that may arise. These indemnifications typically pertain to environmental matters. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to reimburse the loss. These indemnifications generally are subject to certain restrictions and limitations.
General description of non-GAAP financial measures
Adjusted EBITDA
Adjusted EBITDA is an alternative view of performance used by management as our primary operating measure, and we believe that investors’ understanding of our performance is enhanced by disclosing this performance measure. We report Adjusted EBITDA to portray the results of our operations prior to considering certain income statement elements. We have defined EBITDA as net income (loss) plus (i) interest expense, net, (ii) provision (benefit) for income taxes or less benefit for income taxes, and (iii) depreciation and amortization. We have defined Adjusted EBITDA as EBITDA plus (a) (income) loss from, and disposal of, discontinued operations, (b) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency gains and losses and loss on extinguishment of debt, and (c) certain items that we consider to be unusual, non-operational or non-recurring. The most directly comparable GAAP measure to EBITDA and Adjusted EBITDA is net income (loss). The Adjusted EBITDA measure is not, and should not be viewed as, a substitute for GAAP reported net income (loss).
The Adjusted EBITDA measure is an important internal measurement for us. We measure our overall performance on this basis in conjunction with other performance metrics. The following are examples of how our Adjusted EBITDA measure is utilized:

senior management receives a monthly analysis of our operating results that is prepared on an Adjusted EBITDA basis;

our annual budgets are prepared on an Adjusted EBITDA basis; and

other goal setting and performance measurements are prepared on an Adjusted EBITDA basis.
Despite the importance of this measure to management in goal setting and performance measurement, Adjusted EBITDA is a non-GAAP financial measure that has no standardized meaning prescribed by GAAP and, therefore, has limits in its usefulness to investors. Because of its non-standardized definition, Adjusted EBITDA, unlike GAAP net income, may not be comparable to the calculation of similar measures of other companies. Adjusted EBITDA is presented to permit investors to more fully understand how management assesses performance.
We also recognize that, as an internal measure of performance, the Adjusted EBITDA measure has limitations, and we do not restrict our performance management process solely to this metric. A limitation of the Adjusted EBITDA measure is that it provides a view of our operations without including all events during a period, such as the depreciation of property, plant and equipment or amortization of purchased intangibles, and does not provide a comparable view of our performance to other companies.
Certain significant items
Adjusted EBITDA is calculated prior to considering certain items. We evaluate such items on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual or non-operational nature. Unusual, in this context, may represent items that are not part of our ongoing
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business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis. We consider foreign currency gains and losses to be non-operational because they arise principally from intercompany transactions and are largely non-cash in nature.
New accounting standards
For discussion of new accounting standards, see “Notes to Consolidated Financial Statements— Summary of Significant Accounting Policies and New Accounting Standards.”
Critical Accounting Policies
Critical accounting policies are those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Not all of these significant accounting policies require management to make difficult, subjective or complex judgments or estimates. However, management is required to make certain estimates and assumptions during the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Significant estimates include depreciation and amortization periods of long-lived and intangible assets, recoverability of long-lived and intangible assets and goodwill, realizability of deferred income tax and value-added tax assets, legal and environmental matters and actuarial assumptions related to our pension plans. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period they are determined to be necessary. Actual results could differ from those estimates. Our significant accounting policies are described in the notes to the consolidated financial statements included in the Annual Report. Except as described below, as of March 31, 2017, there have been no material changes to any of the critical accounting policies contained therein.
We applied Accounting Standards Update (“ASU”) 2015-03, Interest—Imputation of Interest (Subtopic 835-30), effective July 1, 2016. All prior periods have been adjusted to reflect the retrospective application of this guidance, which requires that certain debt issuance costs be classified as a reduction of the related liability. Debt issuance costs were previously classified as an asset.
Forward-Looking Statements
This report contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “believe,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. Examples of such risks and uncertainties include:

perceived adverse effects on human health linked to the consumption of food derived from animals that utilize our products could cause a decline in the sales of those products;

restrictions on the use of antibacterials in food-producing animals may become more prevalent;

a material portion of our sales and gross profits are generated by antibacterials and other related products;
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competition in each of our markets from a number of large and small companies, some of which have greater financial, research and development, production and other resources than we have;

the impact of current and future laws and regulatory changes;

outbreaks of animal diseases could significantly reduce demand for our products;

our ability to successfully implement several of our strategic initiatives;

the effect of weather conditions and the availability of natural resources;

the continuing trend toward consolidation of certain customer groups as well as the emergence of large buying groups;

our ability to control costs and expenses;

any unforeseen material loss or casualty;

exposure relating to rising costs and reduced customer income;

competition deriving from advances in veterinary medical practices and animal health technologies;

unanticipated safety or efficacy concerns;

our dependence on suppliers having current regulatory approvals;

our raw materials are subject to price fluctuations and their availability can be limited;

natural and man-made disasters, including but not limited to fire, snow and ice storms, flood, hail, hurricanes and earthquakes;

terrorist attacks, particularly attacks on or within markets in which we operate;

our reliance on the continued operation of our manufacturing facilities and application of our intellectual property;

adverse U.S. and international economic market conditions, including currency fluctuations;

the risks of product liability claims, legal proceedings and general litigation expenses;

our dependence on our Israeli and Brazilian operations;

our substantial level of indebtedness and related debt-service obligations;

restrictions imposed by covenants in our debt agreements;

the risk of work stoppages; and

other factors as described in “Risk Factors” in Item 1A. of the Annual Report.
While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any
29

forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.
Item 3.   Quantitative and Qualitative Disclosures about Market Risk
In the normal course of operations, we are exposed to market risks arising from adverse changes in interest rates, foreign currency exchange rates and commodity prices. As a result, future earnings, cash flows and fair values of assets and liabilities are subject to uncertainty. We use, from time to time, foreign currency contracts as a means of hedging exposure to foreign currency risks. We also utilize, on a limited basis, certain commodity derivatives, primarily on copper used in manufacturing processes, to hedge the cost of anticipated purchase or supply requirements. We do not utilize derivative instruments for trading or speculative purposes. We do not hedge our exposure to market risks in a manner that completely eliminates the effects of changing market conditions on earnings, cash flows and fair values. We monitor the financial stability and credit standing of our major counterparties.
For financial market risks related to changes in interest rates, foreign currency exchange rates and commodity prices, reference is made to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Qualitative and Quantitative Disclosures about Market Risk” section in the Annual Report and to the notes to the consolidated financial statements included therein. There were no material changes in the Company’s financial market risks from the risks disclosed in the Annual Report.
Item 4.   Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation as of March 31, 2017, our Chief Executive Officer and Chief Financial Officer each concluded that, as of the end of such period, our disclosure controls and procedures were not effective because of material weaknesses in our internal control over financial reporting, as described in Management’s Report on Internal Control Over Financial Reporting in “Item 9A. Controls and Procedures” in the Annual Report on Form 10-K for the year ended June 30, 2016.
Management’s Remediation Plan
Management has begun implementing changes to our internal control over financial reporting to remediate the material weaknesses that existed as of June 30, 2016. Our remediation plan includes (i) designing and implementing additional formal accounting policies and procedures and (ii) restricting access to key financial systems and records to appropriate users to ensure that appropriate segregation of duties is maintained. Recent actions taken to address material weaknesses include the design and implementation of certain formal accounting policies and procedures, as well as restricting certain access to users of key financial systems and records. We will continue to build on the progress we have made in our remediation plan. We cannot determine when our remediation plan will be fully completed, and we cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the three months ended March 31, 2017, that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1.
Legal Proceedings
Information required by this Item is incorporated herein by reference to “Notes to the Consolidated Financial Statements—Commitments and Contingencies” in Part I, Item 1, of this Quarterly Report on Form 10-Q.
Item 1A.
Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in the “Risk Factors” section in the Annual Report, which could materially affect our business, financial condition or future results.
There were no material changes in the Company’s risk factors from the risks disclosed in the Annual Report.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
None.
Item 5.
Other Information
None.
Item 6.
Exhibits
Exhibit 31.1 Chief Executive Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 302
Exhibit 31.2 Chief Financial Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 302
Exhibit 32.1 Chief Executive Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 906
Exhibit 32.2 Chief Financial Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 906
Exhibit 101.INS* XBRL Instance Document
Exhibit 101.SCH* XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB* XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document
*
Furnished with this Quarterly Report. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933 and are deemed not filed for purposes of section 18 of the Exchange Act.
31

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Phibro Animal Health Corporation
May 8, 2017 By:
/s/ Jack C. Bendheim
Jack C. Bendheim
President and Chief Executive Officer
May 8, 2017 By:
/s/ Richard G. Johnson
Richard G. Johnson
Chief Financial Officer
32

EX-31.1 2 t1701431_ex31-1.htm EXHIBIT 31.1 t1701431-10q_DIV_06-ex31-1 - none - 2.015s
EXHIBIT 31.1​
CERTIFICATIONS
I, Jack C. Bendheim, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Phibro Animal Health Corporation;
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 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 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.
Dated: May 8, 2017
/s/ Jack C. Bendheim
Jack C. Bendheim
Chairman, President and Chief Executive Officer

EX-31.2 3 t1701431_ex31-2.htm EXHIBIT 31.2 t1701431-10q_DIV_07-ex31-2 - none - 1.885s
EXHIBIT 31.2​
CERTIFICATIONS
I, Richard G. Johnson, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Phibro Animal Health Corporation;
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 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 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.
Dated: May 8, 2017
/s/ Richard G. Johnson
Richard G. Johnson
Chief Financial Officer

EX-32.1 4 t1701431_ex32-1.htm EXHIBIT 32.1 t1701431-10q_DIV_08-ex32-1 - none - 1.656s
EXHIBIT 32.1​
CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer.
Dated: May 8, 2017
/s/ Jack C. Bendheim
Jack C. Bendheim
Chairman, President and Chief Executive Officer

EX-32.2 5 t1701431_ex32-2.htm EXHIBIT 32.2 t1701431-10q_DIV_09-ex32-2 - none - 1.695s
EXHIBIT 32.2​
CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer.
Dated: May 8, 2017
/s/ Richard G. Johnson
Richard G. Johnson
Chief Financial Officer

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text-decoration-style: initial; text-decoration-color: initial;">1.&#160;&#160;&#160;&#160;&#160;Description of Business</div> <div style="line-height: 0pt; widows: 2; text-transform: none; font-style: normal; text-indent: 0px; margin: 0pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; clear: both; font-size: 0pt; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; padding: 0pt;">&#160;</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Phibro Animal Health Corporation (&#8220;Phibro&#8221; or &#8220;PAHC&#8221;) and its subsidiaries (collectively, the &#8220;Company&#8221;) is a diversified global developer, manufacturer and marketer of a broad range of animal health and mineral nutrition products for food animals including poultry, swine, cattle, dairy and aquaculture. The Company is also a manufacturer and marketer of performance products for use in the personal care, automotive, industrial chemical and chemical catalyst industries. Unless otherwise indicated or the context requires otherwise, references in this report to &#8220;we,&#8221; &#8220;our,&#8221; &#8220;us,&#8221; and similar expressions refer to Phibro and its subsidiaries.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The unaudited consolidated financial information for the three and nine months ended March&#160;31, 2017 and 2016, is presented on the same basis as the financial statements included in the Company&#8217;s Annual Report on Form 10-K for the fiscal year ended June&#160;30, 2016 (the &#8220;Annual Report&#8221;), filed with the Securities and Exchange Commission on August&#160;29, 2016 (File no. 001-36410). In the opinion of management, these financial statements include all adjustments necessary for a fair statement of financial position, results of operations and cash flows for the interim periods, and the adjustments are of a normal and recurring nature. The financial results for any interim period are not necessarily indicative of the results for the full year. The consolidated balance sheet information as of June&#160;30, 2016, was derived from the audited consolidated financial statements, which include the accounts of Phibro and its consolidated subsidiaries, but does not include all disclosures required by accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The consolidated financial statements include the accounts of Phibro and its consolidated subsidiaries. The decision whether or not to consolidate an entity requires consideration of majority voting interests, as well as effective control over the entity. 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As of March&#160;31, 2017, there have been no material changes to any of the significant accounting policies contained therein, except for the application of Accounting Standards Update (&#8220;ASU&#8221;) 2015-03,&#160;<font style="font-style: italic;">Interest&#8212;Imputation of Interest (Subtopic 835-30)</font>, as of July&#160;1, 2016. Prior periods have been adjusted to reflect the retrospective application of this guidance. For further discussion, see &#8220;&#8212;New Accounting Standards.&#8221;</div> <div style="line-height: 11pt; widows: 2; text-transform: none; font-style: italic; margin-top: 12pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Revisions of Previously Issued Financial Statements</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">During the three months ended June&#160;30, 2016, the Company determined that amortization expense related to product-related intangible assets should be recorded in cost of goods sold rather than in selling, general and administrative expense within the consolidated statement of operations. 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This new standard is effective, on a prospective basis, for annual reporting periods beginning after December&#160;15, 2017, and early application is permitted. During the three months ended March&#160;31, 2017, we elected early application of this ASU, and it did not have a material effect on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 5.02pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2016-15,&#160;<font style="font-style: italic;">Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments</font>, provides specific guidance for the classification of certain transactions within the statement of cash flows. The issues addressed by this guidance include, but are not limited to, debt prepayments or debt extinguishment costs, contingent consideration payments made after a business combination and proceeds from the settlement of insurance claims. This ASU is effective for annual reporting periods beginning after December&#160;15, 2017. Early application is permitted, as long as all provisions under the guidance are applied simultaneously. The provisions of this guidance are to be applied using a retrospective transition approach. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 5.01pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2016-02,&#160;<font style="font-style: italic;">Leases (Topic 842)</font>, supersedes the current lease accounting guidance and requires an entity to recognize assets and liabilities for both financing and operating leases on the balance sheet and requires additional qualitative and quantitative disclosures regarding leasing arrangements. This ASU is effective for annual reporting periods beginning after December&#160;15, 2018. We are evaluating the impact of adoption of this guidance on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2015-11, Inventory (Topic 330), requires entities to measure inventory at the lower of cost and net realizable value (&#8220;NRV&#8221;). NRV is defined as &#8220;the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.&#8221; The guidance is effective for annual periods beginning after December&#160;15, 2016, and interim periods within those years. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2015-05,&#160;<font style="font-style: italic;">Intangibles&#8212;Goodwill and Other&#8212;Internal-Use Software (Subtopic 350-40)</font>&#160;provides guidance regarding the treatment of cloud computing arrangements and if an arrangement includes a software license. We adopted this guidance during the three months ended September&#160;30, 2016, and it had no material impact on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2015-03,&#160;<font style="font-style: italic;">Interest&#8212;Imputation of Interest (Subtopic 835-30)</font>, requires debt issuance costs to be presented as a reduction of the related liability. These costs were previously included in other assets. Debt issuance costs associated with line-of-credit arrangements may continue to be recognized in other assets. We adopted this guidance during the three months ended September&#160;30, 2016, and applied the guidance retrospectively. Debt issuance costs of&#8201; $2,538 as of June&#160;30, 2016, have been presented as a reduction in long-term debt on our consolidated balance sheets.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2014-15,&#160;<font style="font-style: italic;">Disclosure of Uncertainties about an Entity&#8217;s Ability to Continue as a Going Concern (Subtopic 205-40)</font>, requires management to assess an entity&#8217;s ability to continue as a going concern within one year after the issuance date of the financial statements, and to provide related footnote disclosures in certain circumstances. Management will need to consider relevant conditions that are known and reasonably knowable at the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. Under the new standard, the definition of substantial doubt incorporates a likelihood threshold of&#8201;&#8201;&#8221;probable&#8221; similar to the current use of that term in GAAP for loss contingencies. ASU 2014-15 will be effective for annual periods ending after December&#160;15, 2016, and for annual periods and interim periods thereafter. 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Bendheim provided services to us as employees or consultants and received aggregate compensation and benefits of&#8201; $339 and $1,387 during the three and nine months ended March&#160;31, 2017, respectively, and $388 and $1,515 during the three and nine months ended March&#160;31, 2016, respectively. 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white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Environmental</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Our operations and properties are subject to extensive federal, state, local and foreign laws and regulations, including those governing pollution; protection of the environment; the use, management, and release of hazardous materials, substances and wastes; air emissions; greenhouse gas emissions; water use, supply and discharges; the investigation and remediation of contamination; the manufacture, distribution, and sale of regulated materials, including pesticides; the importing, exporting and transportation of products; and the health and safety of our employees (collectively, &#8220;Environmental Laws&#8221;). As such, the nature of our current and former operations exposes us to the risk of claims with respect to such matters, including fines, penalties, and remediation obligations that may be imposed by regulatory authorities. Under certain circumstances, we might be required to curtail operations until a particular problem is remedied. Known costs and expenses under Environmental Laws incidental to ongoing operations, including the cost of litigation proceedings relating to environmental matters, are included within operating results. Potential costs and expenses may also be incurred in connection with the repair or upgrade of facilities to meet existing or new requirements under Environmental Laws or to investigate or remediate potential or actual contamination and from time to time we establish reserves for such contemplated investigation and remediation costs. In many instances, the ultimate costs under Environmental Laws and the time period during which such costs are likely to be incurred are difficult to predict.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">While we believe that our operations are currently in material compliance with Environmental Laws, we have, from time to time, received notices of violation from governmental authorities, and have been involved in civil or criminal action for such violations. Additionally, at various sites, our subsidiaries are engaged in continuing investigation, remediation and/or monitoring efforts to address contamination associated with historic operations of the sites. We devote considerable resources to complying with Environmental Laws and managing environmental liabilities. We have developed programs to identify requirements under, and maintain compliance with, Environmental Laws; however, we cannot predict with certainty the effect of increased and more stringent regulation on our operations, future capital expenditure requirements, or the cost of compliance.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The nature of our current and former operations exposes us to the risk of claims with respect to environmental matters, and we cannot assure we will not incur material costs and liabilities in connection with such claims. Based upon our experience to date, we believe that the future cost of compliance with existing Environmental Laws, and liabilities for known environmental claims pursuant to such Environmental Laws, will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The United States Environmental Protection Agency (the &#8220;EPA&#8221;) is investigating and planning for the remediation of offsite contaminated groundwater that has migrated from the Omega Chemical Corporation Superfund Site (&#8220;Omega Chemical Site&#8221;), which is upgradient of a facility in Santa Fe Springs, California, operated by our subsidiary Phibro-Tech, Inc. (&#8220;Phibro-Tech&#8221;). The EPA has named Phibro-Tech and certain other subsidiaries of PAHC as potentially responsible parties (&#8220;PRPs&#8221;) due to groundwater contamination from Phibro-Tech&#8217;s Santa Fe Springs facility that has allegedly commingled with contaminated groundwater from the Omega Chemical Site. In September&#160;2012, the EPA notified approximately 140 PRPs, including Phibro-Tech and the other subsidiaries, that they have been identified as potentially responsible for remedial action for the groundwater plume affected by the Omega Chemical Site and for EPA oversight and response costs. Phibro-Tech contends that groundwater contamination at its site is due to historical operations that pre-date Phibro-Tech and/or contaminated groundwater that has migrated from upgradient properties. In addition, a successor to a prior owner of the Phibro-Tech site has asserted that PAHC and Phibro-Tech are obligated to provide indemnification for its potential liability and defense costs relating to the groundwater plume affected by the Omega Chemical Site. Phibro-Tech has vigorously contested this position and has asserted that the successor to the prior owner is required to indemnify Phibro-Tech for its potential liability and defense costs. Furthermore, a nearby property owner has filed a complaint in the Superior Court of the State of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for alleged contamination of groundwater underneath its property, and a group of companies that sent chemicals to the Omega Chemical Site for processing and recycling has filed a complaint under CERCLA, RCRA and the common law public nuisance doctrine in the United States District Court for the Central District of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for contribution toward past and future costs associated with the investigation and remediation of the groundwater plume affected by the Omega Chemical Site. Due to the ongoing nature of the EPA&#8217;s investigation and Phibro-Tech&#8217;s dispute with the prior owner&#8217;s successor, at this time we cannot predict with any degree of certainty what, if any, liability Phibro-Tech or the other subsidiaries may ultimately have for investigation, remediation and the EPA oversight and response costs associated with the affected groundwater plume.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Based upon information available, to the extent such costs can be estimated with reasonable certainty, we estimated the cost for further investigation and remediation of identified soil and groundwater problems at operating sites, closed sites and third-party sites, and closure costs for closed sites, to be $7,205 and $7,024 at March&#160;31, 2017, and June&#160;30, 2016, respectively, which is included in current and long-term liabilities on the consolidated balance sheets. However, future events, such as new information, changes in existing Environmental Laws or their interpretation, and more vigorous enforcement policies of regulatory agencies, may give rise to additional expenditures or liabilities that could be material. For all purposes of the discussion under this caption and elsewhere in this report, it should be noted that we take and have taken the position that neither PAHC nor any of our subsidiaries is liable for environmental or other claims made against one or more of our other subsidiaries or for which any of such other subsidiaries may ultimately be responsible.</div> <div style="line-height: 11pt; widows: 2; text-transform: none; font-style: italic; margin-top: 12pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Claims and Litigation</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">During the three months ended March&#160;31, 2017, we recorded a $7,500 gain in selling, general and administrative expenses resulting from a payment to us by an insurance carrier. The payment reflected the settlement of our claims against the carrier under our liability insurance policies, which arose from damages incurred in fiscal year 2010 by certain customers resulting from the use of one of our animal health products. We previously paid our customers for the damages and recognized the cost in the consolidated statement of operations prior to fiscal year 2017.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">PAHC and its subsidiaries are party to a number of claims and lawsuits arising out of the normal course of business including product liability, payment disputes and governmental regulation. Certain of these actions seek damages in various amounts. In many cases, such claims are covered by insurance. We believe that none of the claims or pending lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, cash flows or liquidity.</div> </div> <div> <div style="text-align: left; line-height: 11pt; widows: 2; text-transform: none; font-style: normal; margin-top: 0pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; margin-bottom: 0pt; float: left; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: bold; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">9.&#160;&#160;&#160;&#160;&#160;Derivatives</div> <div style="line-height: 0pt; widows: 2; text-transform: none; font-style: normal; text-indent: 0px; margin: 0pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; clear: both; font-size: 0pt; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; padding: 0pt;">&#160;</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">We monitor our exposure to foreign currency exchange rates and use derivatives (currency option contracts) to manage certain of these risks. These derivatives generally have an expiration/maturity of two years or less and are intended to hedge cash flows related to the purchase of inventory. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). We record the portion of the changes in the value of the derivative, related to a hedged asset or liability (the effective portion), in accumulated other comprehensive income (loss). As the hedged item is sold, we recognize the gain or loss recorded in accumulated other comprehensive income (loss) to the consolidated statements of operations on the same line where the hedged item is charged when released/sold. We immediately recognize in the consolidated statements of operations in the same line as the hedged item, the portion of the changes in fair value of derivatives used as cash flow hedges that is not offset by changes in the expected cash flows related to a recognized asset or liability (the ineffective portion).</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">We routinely assess whether the derivatives used to hedge transactions are effective. If we determine that a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see &#8220;&#8212;Fair Value Measurements.&#8221;</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The following table details the Company&#8217;s outstanding derivatives that are designated and effective as cash flow hedges as of March&#160;31, 2017:</div> <table style="widows: 2; text-transform: none; margin-top: 8pt; text-indent: 0px; width: 376pt; border-collapse: collapse; font-family: 'times new roman', times, serif; orphans: 2; letter-spacing: normal; height: 63.5pt; margin-left: 40pt; word-spacing: 0px; -webkit-text-stroke-width: 0px; 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padding: 0pt;">&#160;</td> <td style="width: 6pt; padding: 0pt;">&#160;</td> <td style="padding-bottom: 1pt; padding-left: 0pt; width: 80.51pt; padding-right: 0.5pt; padding-top: 3pt;"> <div style="text-align: right; white-space: nowrap;">Brazilian Real puts&#160;</div> </td> <td style="width: 6pt; padding: 0pt;">&#160;</td> <td style="width: 6pt; padding: 0pt;">&#160;</td> <td style="text-align: center; padding-bottom: 1pt; padding-left: 0pt; width: 40.41pt; padding-right: 0pt; padding-top: 3pt;"> <div style="text-align: center;">R$58,500</div> </td> <td style="width: 6pt; padding: 0pt;">&#160;</td> <td style="width: 6pt; padding: 0pt;">&#160;</td> <td style="padding-bottom: 0pt; padding-left: 3.395pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#160;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 3pt;">$</td> <td style="min-width: 17.25pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; 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margin-top: 14.2pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The fair values at March&#160;31, 2017, are unrealized and will fluctuate based on future exchange rates until the derivative contracts mature. Other comprehensive income (loss) for the three and nine months ended March&#160;31, 2017, included $758 and $1,062, respectively, of net unrecognized gains related to these contracts. Accumulated other comprehensive income (loss) at March&#160;31, 2017, included $3,717 of net unrecognized gains on derivative instruments; we estimate that $1,082 of those gains will be recognized in earnings within the next twelve months. At June&#160;30, 2016, realized losses of&#8201;$1,528 related to matured contracts were recorded as a component of inventory and subsequently recognized in cost of goods sold during the six months ended December&#160;31, 2016. At March&#160;31, 2017, realized gains of&#8201; $580 related to matured contracts were recorded as a component of inventory. We anticipate the gains will be recognized as an offset to cost of goods sold within the next twelve months. We recognize gains (losses) related to these derivative instruments as a component of cost of goods sold at the time the hedged item is sold.</div> </div> <div> <div style="text-align: left; line-height: 11pt; widows: 2; text-transform: none; font-style: normal; margin-top: 0pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; margin-bottom: 0pt; float: left; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: bold; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">10.&#160;&#160;&#160;&#160;Fair Value Measurements</div> <div style="line-height: 0pt; widows: 2; text-transform: none; font-style: normal; text-indent: 0px; margin: 0pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; clear: both; font-size: 0pt; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; padding: 0pt;">&#160;</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Fair value is defined as the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs based on a company&#8217;s own assumptions about market participant assumptions developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; margin-left: 40pt; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Level 1&#8212;Quoted prices in active markets for identical assets or liabilities.</div> <div style="text-align: left; line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6.6pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: nowrap; orphans: 2; margin-bottom: 0pt; float: left; letter-spacing: normal; color: #000000; margin-left: 40pt; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Level 2&#8212;</div> <div style="text-align: left; line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6.6pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; margin-bottom: 0pt; float: left; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Significant observable inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.</div> <div style="line-height: 0pt; widows: 2; text-transform: none; font-style: normal; text-indent: 0px; margin: 0pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; clear: both; font-size: 0pt; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; padding: 0pt;">&#160;</div> <div style="text-align: left; line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6.6pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: nowrap; orphans: 2; margin-bottom: 0pt; float: left; letter-spacing: normal; color: #000000; margin-left: 40pt; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Level 3&#8212;</div> <div style="text-align: left; line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6.6pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; margin-bottom: 0pt; float: left; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Unobservable inputs for which there is little or no market data available, and that are significant to the overall fair value measurement, are employed that require the reporting entity to develop its own assumptions.</div> <div style="line-height: 0pt; widows: 2; text-transform: none; font-style: normal; text-indent: 0px; margin: 0pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; clear: both; font-size: 0pt; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; padding: 0pt;">&#160;</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In assessing the fair value of financial instruments at March&#160;31, 2017, and June&#160;30, 2016, we used a variety of methods and assumptions that were based on estimates of market conditions and risks existing at the time.</div> <div style="line-height: 11pt; widows: 2; text-transform: none; font-style: italic; margin-top: 12pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Current Assets and Liabilities</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">We consider the carrying amounts of current assets and current liabilities to be representative of their fair value because of the current nature of these items.</div> <div style="line-height: 11pt; widows: 2; text-transform: none; font-style: italic; margin-top: 12pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Letters of Credit</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. 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The tenors of these letters of credit are all one year or less.</div> <div style="line-height: 11pt; widows: 2; text-transform: none; font-style: italic; margin-top: 12pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Long Term Debt</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">We record the Term B Loan and the Revolver at book value in our consolidated financial statements. 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text-decoration-style: initial; text-decoration-color: initial;">We estimated the fair value of the deferred contingent consideration on acquisitions using the income approach, based on the Company&#8217;s current sales forecast related to the acquired business.</div> <div style="line-height: 11pt; widows: 2; text-transform: none; font-style: italic; margin-top: 12pt; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Derivatives</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; 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This new standard is effective, on a prospective basis, for annual reporting periods beginning after December&#160;15, 2017, and early application is permitted. During the three months ended March&#160;31, 2017, we elected early application of this ASU, and it did not have a material effect on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 5.02pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2016-15,&#160;<font style="font-style: italic;">Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments</font>, provides specific guidance for the classification of certain transactions within the statement of cash flows. 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We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 5.01pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2016-02,&#160;<font style="font-style: italic;">Leases (Topic 842)</font>, supersedes the current lease accounting guidance and requires an entity to recognize assets and liabilities for both financing and operating leases on the balance sheet and requires additional qualitative and quantitative disclosures regarding leasing arrangements. 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We adopted this guidance during the three months ended September&#160;30, 2016, and it had no material impact on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2015-03,&#160;<font style="font-style: italic;">Interest&#8212;Imputation of Interest (Subtopic 835-30)</font>, requires debt issuance costs to be presented as a reduction of the related liability. These costs were previously included in other assets. Debt issuance costs associated with line-of-credit arrangements may continue to be recognized in other assets. We adopted this guidance during the three months ended September&#160;30, 2016, and applied the guidance retrospectively. Debt issuance costs of&#8201; $2,538 as of June&#160;30, 2016, have been presented as a reduction in long-term debt on our consolidated balance sheets.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2014-15,&#160;<font style="font-style: italic;">Disclosure of Uncertainties about an Entity&#8217;s Ability to Continue as a Going Concern (Subtopic 205-40)</font>, requires management to assess an entity&#8217;s ability to continue as a going concern within one year after the issuance date of the financial statements, and to provide related footnote disclosures in certain circumstances. Management will need to consider relevant conditions that are known and reasonably knowable at the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. Under the new standard, the definition of substantial doubt incorporates a likelihood threshold of&#8201;&#8201;&#8221;probable&#8221; similar to the current use of that term in GAAP for loss contingencies. ASU 2014-15 will be effective for annual periods ending after December&#160;15, 2016, and for annual periods and interim periods thereafter. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">ASU 2014-09,&#160;<font style="font-style: italic;">Revenue from Contracts with Customers (Topic 606)</font>, establishes principles for the recognition of revenue from contracts with customers. The underlying principle is to identify the performance obligations of a contract, allocate the revenue to each performance obligation and then to recognize revenue when the company satisfies a specific performance obligation of the contract. ASU 2015-14,&#160;<font style="font-style: italic;">Deferral of the Effective Date</font>, amended ASU 2014-09, resulting in a one-year deferral of the effective date. ASU 2016-08,&#160;<font style="font-style: italic;">Principal versus Agent Considerations</font>; ASU 2016-10,&#160;<font style="font-style: italic;">Identifying Performance Obligations and Licensing</font>; and ASU 2016-12,&#160;<font style="font-style: italic;">Narrow-Scope Improvements and Practical Expedients</font>&#160;also amended ASU 2014-09<font style="font-style: italic;">.&#160;</font>The amendments are effective concurrent with the effective date for ASU 2014-09 for annual periods beginning after December&#160;15, 2017, and interim periods within those years. We are evaluating the impact of adoption of this guidance on our consolidated financial statements.</div> </div> <div> <table style="widows: 2; text-transform: none; font-style: normal; margin-top: 8pt; text-indent: 0px; width: 456pt; border-collapse: collapse; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; height: 121.5pt; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> <tr style="text-align: center; line-height: 8pt; text-transform: none; font-style: normal; font-family: 'times new roman', times, serif; white-space: nowrap; color: #000000; font-size: 8pt; vertical-align: bottom; font-weight: bold; font-variant-ligatures: normal; font-variant-caps: normal;"> <td style="border-bottom: #ffffff 1px solid; text-align: left; padding-bottom: 0.5pt; padding-left: 0pt; width: 246pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; padding-bottom: 2pt; padding-left: 0pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;" colspan="10"> <div style="text-align: center; white-space: nowrap;">Three Months</div> </td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; padding-bottom: 2pt; padding-left: 0pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;" colspan="10"> <div style="text-align: center; white-space: nowrap;">Nine Months</div> </td> <td style="border-bottom: #ffffff 1px solid; width: 0pt; padding: 0pt;">&#8203;</td> </tr> <tr style="text-align: center; line-height: 8pt; text-transform: none; font-style: normal; font-family: 'times new roman', times, serif; white-space: nowrap; color: #000000; font-size: 8pt; vertical-align: bottom; font-weight: bold; font-variant-ligatures: normal; font-variant-caps: normal;"> <td style="text-align: left; padding-bottom: 2pt; padding-left: 0pt; width: 246pt; padding-right: 0pt; padding-top: 2.75pt;"> <div style="white-space: nowrap;"><font style="border-bottom: #000000 1px solid; padding-bottom: 1pt; padding-right: 1pt;">For the Periods Ended March&#160;31</font></div> </td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;" colspan="4"> <div style="text-align: center; white-space: nowrap;"><font style="border-bottom: #000000 1px solid; padding-bottom: 1pt; padding-left: 12pt; padding-right: 12pt;">2017</font></div> </td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;" colspan="4"> <div style="text-align: center; white-space: nowrap;"><font style="border-bottom: #000000 1px solid; padding-bottom: 1pt; padding-left: 12pt; padding-right: 12pt;">2016</font></div> </td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;" colspan="4"> <div style="text-align: center; white-space: nowrap;"><font style="border-bottom: #000000 1px solid; padding-bottom: 1pt; padding-left: 12pt; padding-right: 12pt;">2017</font></div> </td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #ffffff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;" colspan="4"> <div style="text-align: center; white-space: nowrap;"><font style="border-bottom: #000000 1px solid; padding-bottom: 1pt; padding-left: 14pt; padding-right: 14pt;">2016</font></div> </td> <td style="border-bottom: #ffffff 1px solid; width: 0pt; padding: 0pt;">&#8203;</td> </tr> <tr style="text-align: right; line-height: 10pt; text-transform: none; background-color: #cceeff; font-style: normal; font-family: 'times new roman', times, serif; white-space: nowrap; color: #000000; font-size: 10pt; vertical-align: bottom; font-weight: normal; font-variant-ligatures: normal; font-variant-caps: normal;"> <td style="text-align: left; padding-bottom: 2.75pt; padding-left: 0pt; width: 246pt; padding-right: 0pt; padding-top: 2.75pt;"> <div style="white-space: nowrap;">Net income</div> </td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #000000 3px double; min-width: 3.75pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;">$</td> <td style="border-bottom: #000000 3px double; min-width: 21pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.75pt;">23,643</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #000000 3px double; min-width: 3.75pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;">$</td> <td style="border-bottom: #000000 3px double; min-width: 21pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.75pt;">18,577</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #000000 3px double; min-width: 3.75pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;">$</td> <td style="border-bottom: #000000 3px double; min-width: 21pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.75pt;">49,237</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 6.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #000000 3px double; min-width: 3.75pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;">$</td> <td style="border-bottom: #000000 3px double; min-width: 21pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.75pt;">67,508</td> <td style="padding-bottom: 0pt; padding-left: 6.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 0pt; padding: 0pt;">&#8203;</td> </tr> <tr style="text-align: right; line-height: 10pt; text-transform: none; font-style: normal; font-family: 'times new roman', times, serif; white-space: nowrap; color: #000000; font-size: 10pt; vertical-align: bottom; font-weight: normal; font-variant-ligatures: normal; font-variant-caps: normal;"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0pt; width: 246pt; padding-right: 0pt; padding-top: 2.25pt;"> <div style="white-space: nowrap;">Weighted average number of shares&#8201;&#8211;&#8201;basic</div> </td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.25pt;">&#8203;</td> <td style="min-width: 21pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.25pt;">39,512</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.25pt;">&#8203;</td> <td style="min-width: 21pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.25pt;">39,356</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.25pt;">&#8203;</td> <td style="min-width: 21pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.25pt;">39,443</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 6.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.25pt;">&#8203;</td> <td style="min-width: 21pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.25pt;">39,203</td> <td style="padding-bottom: 0pt; padding-left: 6.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 0pt; padding: 0pt;">&#8203;</td> </tr> <tr style="text-align: right; line-height: 10pt; text-transform: none; background-color: #cceeff; font-style: normal; font-family: 'times new roman', times, serif; white-space: nowrap; color: #000000; font-size: 10pt; vertical-align: bottom; font-weight: normal; font-variant-ligatures: normal; font-variant-caps: normal;"> <td style="border-bottom: #cceeff 1px solid; text-align: left; padding-bottom: 2pt; padding-left: 0pt; width: 246pt; padding-right: 0pt; padding-top: 3pt;"> <div style="white-space: nowrap;">Dilutive effect of stock options</div> </td> <td style="border-bottom: #cceeff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; min-width: 3.75pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 3pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; min-width: 21pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 3pt;">547</td> <td style="border-bottom: #cceeff 1px solid; padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; min-width: 3.75pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 3pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; min-width: 21pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 3pt;">644</td> <td style="border-bottom: #cceeff 1px solid; padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; min-width: 3.75pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 3pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; min-width: 21pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 3pt;">545</td> <td style="border-bottom: #cceeff 1px solid; padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; width: 6pt; padding: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; padding-bottom: 0pt; padding-left: 6.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; min-width: 3.75pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; padding-top: 3pt;">&#8203;</td> <td style="border-bottom: #000000 1px solid; min-width: 21pt; text-align: right; padding-bottom: 2pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 3pt;">793</td> <td style="border-bottom: #cceeff 1px solid; padding-bottom: 0pt; padding-left: 6.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="border-bottom: #cceeff 1px solid; width: 0pt; padding: 0pt;">&#8203;</td> </tr> <tr style="text-align: right; line-height: 10pt; text-transform: none; font-style: normal; font-family: 'times new roman', times, serif; white-space: nowrap; color: #000000; font-size: 10pt; vertical-align: bottom; font-weight: normal; font-variant-ligatures: normal; font-variant-caps: normal;"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0pt; width: 246pt; padding-right: 0pt; padding-top: 2.75pt;"> <div style="white-space: nowrap;">Weighted average number of shares&#8201;&#8211;&#8201;diluted</div> </td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;">&#8203;</td> <td style="min-width: 21pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.75pt;">40,059</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;">&#8203;</td> <td style="min-width: 21pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.75pt;">40,000</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;">&#8203;</td> <td style="min-width: 21pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.75pt;">39,988</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 6.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="min-width: 3.75pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; padding-top: 2.75pt;">&#8203;</td> <td style="min-width: 21pt; text-align: right; padding-bottom: 1pt; padding-left: 0pt; padding-right: 0pt; white-space: nowrap; padding-top: 2.75pt;">39,996</td> <td style="padding-bottom: 0pt; padding-left: 6.145pt; width: 0pt; padding-right: 0pt; padding-top: 0pt;">&#8203;</td> <td style="width: 0pt; padding: 0pt;">&#8203;</td> </tr> <tr style="text-align: right; line-height: 10pt; text-transform: none; background-color: #cceeff; font-style: normal; font-family: 'times new roman', times, serif; white-space: nowrap; color: #000000; font-size: 10pt; vertical-align: bottom; font-weight: normal; font-variant-ligatures: normal; font-variant-caps: normal;"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0pt; width: 246pt; padding-right: 0pt; padding-top: 3pt;">Net income per share</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="width: 6pt; padding: 0pt;">&#8203;</td> <td style="padding-bottom: 0pt; padding-left: 3.145pt; width: 0pt; 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Document and Entity Information - shares
9 Months Ended
Mar. 31, 2017
May 01, 2017
Entity Registrant Name PHIBRO ANIMAL HEALTH CORP  
Entity Central Index Key 0001069899  
Trading Symbol pahc  
Current Fiscal Year End Date --06-30  
Entity Filer Category Accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2017  
Amendment Flag false  
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q3  
Class A common stock    
Entity Common Stock, Shares Outstanding   18,753,979
Class B common stock    
Entity Common Stock, Shares Outstanding   20,887,811
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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Income Statement [Abstract]        
Net sales $ 189,861 $ 183,461 $ 569,446 $ 562,354
Cost of goods sold 129,241 124,671 384,329 382,895
Gross profit 60,620 58,790 185,117 179,459
Selling, general and administrative expenses 30,646 37,619 110,702 113,809
Operating income 29,974 21,171 74,415 65,650
Interest expense, net 3,929 4,265 11,708 12,051
Foreign currency (gains) losses, net (403) (2,243) (617) (5,139)
Income before income taxes 26,448 19,149 63,324 58,738
Provision (benefit) for income taxes 2,805 572 14,087 (8,770)
Net income $ 23,643 $ 18,577 $ 49,237 $ 67,508
Net income per share        
basic (in dollars per share) $ 0.60 $ 0.47 $ 1.25 $ 1.72
diluted (in dollars per share) $ 0.59 $ 0.46 $ 1.23 $ 1.69
Weighted average common shares outstanding        
basic (in shares) 39,512 39,356 39,443 39,203
diluted (in shares) 40,059 40,000 39,988 39,996
Dividends per share (in dollars per share) $ 0.10 $ 0.10 $ 0.30 $ 0.30
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Statement of Comprehensive Income [Abstract]        
Net income $ 23,643 $ 18,577 $ 49,237 $ 67,508
Change in fair value of derivative instruments 758 4,316 1,062 1,322
Foreign currency translation adjustment 4,107 4,935 918 (14,780)
Unrecognized net pension gains (losses) 111 446 11,951 1,338
(Provision) benefit for income taxes (332) (1,828) (4,976) 487
Other comprehensive income (loss) 4,644 7,869 8,955 (11,633)
Comprehensive income (loss) $ 28,287 $ 26,446 $ 58,192 $ 55,875
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CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2017
Jun. 30, 2016
ASSETS    
Cash and cash equivalents $ 49,310 $ 33,605
Accounts receivable, net 113,130 123,790
Inventories, net 163,831 167,691
Other current assets 21,273 17,745
Total current assets 347,544 342,831
Property, plant and equipment, net 127,235 127,323
Intangibles, net 58,447 60,095
Goodwill 21,121 21,121
Other assets 47,931 56,465
Total assets 602,278 607,835
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current portion of long-term debt 2,900 2,907
Accounts payable 53,271 60,167
Accrued expenses and other current liabilities 50,126 45,703
Total current liabilities 106,297 108,777
Revolving credit facility 30,000 69,000
Long-term debt 276,565 278,265
Other liabilities 50,005 61,313
Total liabilities 462,867 517,355
Commitments and contingencies (Note 8)
Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 18,737,899 and 18,519,757 shares issued and outstanding at March 31, 2017, and June 30, 2016, respectively; 30,000,000 Class B shares authorized, 20,887,811 shares issued and outstanding at March 31, 2017, and June 30, 2016 4 4
Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, no shares issued and outstanding
Paid-in capital 120,879 118,299
Retained earnings 71,358 33,962
Accumulated other comprehensive income (loss) (52,830) (61,785)
Total stockholders' equity 139,411 90,480
Total liabilities and stockholders' equity $ 602,278 $ 607,835
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CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares
Mar. 31, 2017
Jun. 30, 2016
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized 16,000,000 16,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Class A common stock    
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized 300,000,000 300,000,000
Common stock, shares issued 18,737,899 18,519,757
Common stock, shares outstanding 18,737,899 18,519,757
Class B common stock    
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized 30,000,000 30,000,000
Common stock, shares issued 20,887,811 20,887,811
Common stock, shares outstanding 20,887,811 20,887,811
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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
OPERATING ACTIVITIES    
Net income $ 49,237 $ 67,508
Adjustments to reconcile net income to net cash provided (used) by operating activities:    
Depreciation and amortization 19,604 16,678
Amortization of debt issuance costs and debt discount 761 734
Acquisition-related cost of goods sold   1,601
Acquisition-related accrued compensation 1,260 1,260
Acquisition-related accrued interest 1,314 1,083
Pension settlement cost 1,702  
Deferred income taxes 4,068 (23,117)
Foreign currency (gains) losses, net (798) (5,635)
Other 546 286
Changes in operating assets and liabilities:    
Accounts receivable, net 10,020 (6,556)
Inventories, net 3,871 (19,822)
Other current assets (2,599) (991)
Other assets (456) (1,770)
Accounts payable (6,388) (11,715)
Accrued expenses and other liabilities 2,668 (8,918)
Net cash provided (used) by operating activities 84,810 10,626
INVESTING ACTIVITIES    
Capital expenditures (15,377) (28,648)
Business acquisition   (46,546)
Other, net (1,791) 142
Net cash provided (used) by investing activities (17,168) (75,052)
FINANCING ACTIVITIES    
Revolving credit facility borrowings 118,500 222,500
Revolving credit facility repayments (157,500) (143,500)
Payments of long-term debt, capital leases and other (3,502) (3,198)
Proceeds from common shares issued 2,580 3,965
Dividends paid (11,841) (11,767)
Net cash provided (used) by financing activities (51,763) 68,000
Effect of exchange rate changes on cash (174) (565)
Net increase (decrease) in cash and cash equivalents 15,705 3,009
Cash and cash equivalents at beginning of period 33,605 29,216
Cash and cash equivalents at end of period $ 49,310 $ 32,225
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.7.0.1
Description of Business
9 Months Ended
Mar. 31, 2017
Description Of Business [Abstract]  
Description of Business
1.     Description of Business
 
Phibro Animal Health Corporation (“Phibro” or “PAHC”) and its subsidiaries (collectively, the “Company”) is a diversified global developer, manufacturer and marketer of a broad range of animal health and mineral nutrition products for food animals including poultry, swine, cattle, dairy and aquaculture. The Company is also a manufacturer and marketer of performance products for use in the personal care, automotive, industrial chemical and chemical catalyst industries. Unless otherwise indicated or the context requires otherwise, references in this report to “we,” “our,” “us,” and similar expressions refer to Phibro and its subsidiaries.
The unaudited consolidated financial information for the three and nine months ended March 31, 2017 and 2016, is presented on the same basis as the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 (the “Annual Report”), filed with the Securities and Exchange Commission on August 29, 2016 (File no. 001-36410). In the opinion of management, these financial statements include all adjustments necessary for a fair statement of financial position, results of operations and cash flows for the interim periods, and the adjustments are of a normal and recurring nature. The financial results for any interim period are not necessarily indicative of the results for the full year. The consolidated balance sheet information as of June 30, 2016, was derived from the audited consolidated financial statements, which include the accounts of Phibro and its consolidated subsidiaries, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.
The consolidated financial statements include the accounts of Phibro and its consolidated subsidiaries. The decision whether or not to consolidate an entity requires consideration of majority voting interests, as well as effective control over the entity. Intercompany balances and transactions have been eliminated in the consolidated financial statements.
XML 19 R8.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies and New Accounting Standards
9 Months Ended
Mar. 31, 2017
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies and New Accounting Standards
2.     Summary of Significant Accounting Policies and New Accounting Standards
 
Our significant accounting policies are described in the notes to the consolidated financial statements included in our Annual Report. As of March 31, 2017, there have been no material changes to any of the significant accounting policies contained therein, except for the application of Accounting Standards Update (“ASU”) 2015-03, Interest—Imputation of Interest (Subtopic 835-30), as of July 1, 2016. Prior periods have been adjusted to reflect the retrospective application of this guidance. For further discussion, see “—New Accounting Standards.”
Revisions of Previously Issued Financial Statements
During the three months ended June 30, 2016, the Company determined that amortization expense related to product-related intangible assets should be recorded in cost of goods sold rather than in selling, general and administrative expense within the consolidated statement of operations. The Company has revised its prior period financial statements, to correct the classification of amortization expense to increase cost of goods sold and reduce gross profit and selling, general and administrative expenses by $1,165 and $3,072 for the three and nine months ended March 31, 2016, respectively. These revisions had no impact on the Company’s previously reported net income (loss) or cash flows. The Company evaluated the impact of the revisions on prior periods, assessing materiality quantitatively and qualitatively, and concluded the errors were not material to any previously issued financial statements.
Net Income per Share and Weighted Average Shares
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period.
Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period after giving effect to potential dilutive common shares equivalents resulting from the assumed exercise of stock options. For the three and nine months ended March 31, 2017 and 2016, all common share equivalents were included in the calculation of diluted net income per share.
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Net income
      $ 23,643         $ 18,577         $ 49,237         $ 67,508    
Weighted average number of shares – basic
        39,512           39,356           39,443           39,203    
Dilutive effect of stock options
        547           644           545           793    
Weighted average number of shares – diluted
        40,059           40,000           39,988           39,996    
Net income per share                                                  
basic
      $ 0.60         $ 0.47         $ 1.25         $ 1.72    
diluted
      $ 0.59         $ 0.46         $ 1.23         $ 1.69    
Dividends
We declared and paid quarterly cash dividends of $0.10 per share, totaling $3,959 and $11,841 during the three and nine months ended March 31, 2017, respectively, to holders of our Class A common stock and Class B common stock.
New Accounting Standards
Financial Accounting Standards Board (“FASB”) ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, supersedes the current guidance by establishing a one-step goodwill impairment test. This new guidance requires an entity to compare the fair value of a reporting unit to its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. This ASU is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted for goodwill impairment tests performed after January 1, 2017. We will apply this guidance when performing our next goodwill impairment test. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, amends the current guidance for determining whether a transaction represents the acquisition of a business or assets. This guidance provides updated criteria to make the determination and clarifies the definitions of key terms. This new standard is effective, on a prospective basis, for annual reporting periods beginning after December 15, 2017, and early application is permitted. During the three months ended March 31, 2017, we elected early application of this ASU, and it did not have a material effect on our consolidated financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, provides specific guidance for the classification of certain transactions within the statement of cash flows. The issues addressed by this guidance include, but are not limited to, debt prepayments or debt extinguishment costs, contingent consideration payments made after a business combination and proceeds from the settlement of insurance claims. This ASU is effective for annual reporting periods beginning after December 15, 2017. Early application is permitted, as long as all provisions under the guidance are applied simultaneously. The provisions of this guidance are to be applied using a retrospective transition approach. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2016-02, Leases (Topic 842), supersedes the current lease accounting guidance and requires an entity to recognize assets and liabilities for both financing and operating leases on the balance sheet and requires additional qualitative and quantitative disclosures regarding leasing arrangements. This ASU is effective for annual reporting periods beginning after December 15, 2018. We are evaluating the impact of adoption of this guidance on our consolidated financial statements.
ASU 2015-11, Inventory (Topic 330), requires entities to measure inventory at the lower of cost and net realizable value (“NRV”). NRV is defined as “the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those years. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) provides guidance regarding the treatment of cloud computing arrangements and if an arrangement includes a software license. We adopted this guidance during the three months ended September 30, 2016, and it had no material impact on our consolidated financial statements.
ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30), requires debt issuance costs to be presented as a reduction of the related liability. These costs were previously included in other assets. Debt issuance costs associated with line-of-credit arrangements may continue to be recognized in other assets. We adopted this guidance during the three months ended September 30, 2016, and applied the guidance retrospectively. Debt issuance costs of  $2,538 as of June 30, 2016, have been presented as a reduction in long-term debt on our consolidated balance sheets.
ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), requires management to assess an entity’s ability to continue as a going concern within one year after the issuance date of the financial statements, and to provide related footnote disclosures in certain circumstances. Management will need to consider relevant conditions that are known and reasonably knowable at the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. Under the new standard, the definition of substantial doubt incorporates a likelihood threshold of  ”probable” similar to the current use of that term in GAAP for loss contingencies. ASU 2014-15 will be effective for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606), establishes principles for the recognition of revenue from contracts with customers. The underlying principle is to identify the performance obligations of a contract, allocate the revenue to each performance obligation and then to recognize revenue when the company satisfies a specific performance obligation of the contract. ASU 2015-14, Deferral of the Effective Date, amended ASU 2014-09, resulting in a one-year deferral of the effective date. ASU 2016-08, Principal versus Agent Considerations; ASU 2016-10, Identifying Performance Obligations and Licensing; and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients also amended ASU 2014-09The amendments are effective concurrent with the effective date for ASU 2014-09 for annual periods beginning after December 15, 2017, and interim periods within those years. We are evaluating the impact of adoption of this guidance on our consolidated financial statements.
XML 20 R9.htm IDEA: XBRL DOCUMENT v3.7.0.1
Statements of Operations-Additional Information
9 Months Ended
Mar. 31, 2017
Supplemental Income Statement Elements [Abstract]  
Statements of Operations-Additional Information
3.      Statements of Operations—Additional Information
 
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Interest expense, net                                                  
Term B loan
      $ 2,859         $ 2,888         $ 8,630         $ 8,750    
Revolving credit facility
        642           720           2,328           1,322    
Amortization of debt issuance costs and debt discount
        253           251           761           734    
Acquisition-related accrued interest
        459           394           1,314           1,083    
Other
        37           79           165           335    
Interest expense
        4,250           4,332           13,198           12,224    
Interest (income)
        (321)           (67)           (1,490)           (173)    
        $ 3,929         $ 4,265         $ 11,708         $ 12,051    
 
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Depreciation and amortization                                                  
Depreciation of property, plant and equipment
      $ 5,400         $ 4,328         $ 15,083         $ 12,514    
Amortization of intangible assets
        1,436           1,469           4,398           3,988    
Amortization of other assets
        6           59           123           176    
        $ 6,842         $ 5,856         $ 19,604         $ 16,678    
 
The provision (benefit) for income taxes for the three and nine months ended March 31, 2017, included a benefit of  $3,780 due to the reversal of the valuation allowance we previously had recorded against certain foreign deferred tax assets and also included a $1,442 benefit related to the exercise of employee stock options. Based on continued profitability in a foreign subsidiary, we concluded that it was more likely than not that the value of the related deferred tax assets would be realized, and it was no longer necessary to maintain a valuation allowance.
The provision (benefit) for income taxes for the three and nine months ended March 31, 2016, included a benefit of  $2,536 and $21,323, respectively, due to the reversal of the valuation allowance we previously had recorded against domestic deferred tax assets. Based on continued domestic profitability, we concluded that it was more likely than not that the value of domestic deferred tax assets would be realized, and it was no longer necessary to maintain a valuation allowance.
XML 21 R10.htm IDEA: XBRL DOCUMENT v3.7.0.1
Balance Sheets-Additional Information
9 Months Ended
Mar. 31, 2017
Balance Sheets Additional Information [Abstract]  
Balance Sheets-Additional Information
4.      Balance Sheets—Additional Information
 
As of
   
March 31,
2017
   
June 30,
2016
 
Inventories      
Raw materials
      $ 60,802         $ 51,369    
Work-in-process
        9,814           8,074    
Finished goods
        93,215           108,248    
        $ 163,831         $ 167,691    
 
Goodwill balances did not change during the nine months ended March 31, 2017.
We evaluate our investments in equity method investees for impairment if circumstances indicate that the fair value of the investment may be impaired. The assets underlying a $4,049 equity investment are currently idled; we have concluded the investment is not currently impaired, based on expected future operating cash flows and/or disposal value.
As of
   
March 31,
2017
   
June 30,
2016
 
Accrued expenses and other current liabilities      
Employee related
      $ 23,070         $ 21,712    
Commissions and rebates
        4,730           3,722    
Insurance related
        1,568           1,780    
Professional fees
        4,560           3,573    
Income and other taxes
        3,296           1,910    
Deferred consideration on acquisitions
                  1,250    
Other
        12,902           11,756    
        $ 50,126         $ 45,703    
 
As of
   
March 31, 
2017
   
June 30,
2016
 
Accumulated other comprehensive income (loss)                          
Derivative instruments
      $ 3,717         $ 2,655    
Foreign currency translation adjustment
        (40,986)           (41,904)    
Unrecognized net pension gains (losses)
        (19,026)           (30,977)    
(Provision) benefit for income taxes on derivative instruments
        (1,954)           (1,548)    
(Provision) benefit for incomes taxes on long-term intercompany investments
        8,166           8,166    
(Provision) benefit for income taxes on pension gains (losses)
        (2,747)           1,823    
        $ (52,830)         $ (61,785)    
 
XML 22 R11.htm IDEA: XBRL DOCUMENT v3.7.0.1
Debt
9 Months Ended
Mar. 31, 2017
Debt Disclosure [Abstract]  
Debt
5.      Debt
 
Revolving Credit Facility and Term B Loan
We have a revolving credit facility (the “Revolver”), where we can borrow up to $200,000, subject to the terms of the agreement, and a term B loan (the “Term B Loan,” and together with the Revolver, the “Credit Facilities”). The Revolver, as amended, has applicable margins equal to 2.50%, 2.75% or 3.00%, in the case of LIBOR loans and 1.50%, 1.75% or 2.00%, in the case of base rate loans; the applicable margins are based on the First Lien Net Leverage Ratio. The Term B Loan has applicable margins equal to 3.00% in the case of LIBOR loans and 2.00% in the case of base rate loans. The LIBOR rate on the Term B Loan is subject to a floor of 1.00%.
The Revolver requires, among other things, the maintenance of a maximum consolidated first lien net debt to consolidated EBITDA leverage ratio, calculated on a trailing four quarter basis, and contains an acceleration clause should an event of default (as defined in the agreement governing the Credit Facilities) occur. As of March 31, 2017, we were in compliance with the covenants of the Credit Facilities.
As of March 31, 2017, we had $30,000 in borrowings under the Revolver and had outstanding letters of credit of  $14,518 leaving $155,482 available for borrowings and letters of credit under the Revolver. We obtain letters of credit in connection with certain regulatory and insurance obligations and other contractual obligations. The tenors of these letters of credit are all one year or less.
The weighted-average interest rates for the Revolver and Term B Loan were 3.39% and 4.00%, respectively, for the nine months ended March 31, 2017.
Long-Term Debt
As of
   
March 31,
2017
   
June 30,
2016
 
Term B Loan due April 2021
      $ 282,025         $ 284,200    
Capitalized lease obligations
                  7    
          282,025           284,207    
Unamortized debt issuance costs and debt discount
        (2,560)           (3,035)    
Less: current maturities
        (2,900)           (2,907)    
        $ 276,565         $ 278,265    
 
XML 23 R12.htm IDEA: XBRL DOCUMENT v3.7.0.1
Related Party Transactions
9 Months Ended
Mar. 31, 2017
Related Party Transactions [Abstract]  
Related Party Transactions
6.      Related Party Transactions
 
Certain relatives of Jack C. Bendheim provided services to us as employees or consultants and received aggregate compensation and benefits of  $339 and $1,387 during the three and nine months ended March 31, 2017, respectively, and $388 and $1,515 during the three and nine months ended March 31, 2016, respectively. Mr. Bendheim has sole authority to vote shares of our stock owned by BFI Co., LLC, an investment vehicle of the Bendheim family.
XML 24 R13.htm IDEA: XBRL DOCUMENT v3.7.0.1
Employee Benefit Plans
9 Months Ended
Mar. 31, 2017
Compensation and Retirement Disclosure [Abstract]  
Employee Benefit Plans
7.      Employee Benefit Plans
 
The Company maintains a noncontributory defined benefit pension plan for all domestic nonunion employees employed on or prior to December 31, 2013, who meet certain requirements of age, length of service and hours worked per year. Plan benefits are based upon years of service and average compensation, as defined.
In July 2016, we amended our domestic noncontributory defined benefit pension plan to eliminate credit for future service and compensation increases, effective as of September 30, 2016. The amendment resulted in a curtailment of the pension plan. During the three months ended September 30, 2016, we recorded a pension curtailment gain of $6,822 in other comprehensive income and an offsetting reduction in the liability for pension benefits included in other liabilities. We also modified the 401(k) retirement savings plan, effective October 1, 2016, to include, for all domestic employees, a non-elective Company contribution of 3% of compensation and an additional discretionary contribution of up to 4% of compensation, depending on the employee’s age and years of service.
Separately, we offered a lump sum settlement option to certain pension plan participants. During the three months ended December 31, 2016, we recognized a partial settlement of the pension plan with respect to the lump sum settlement, which resulted in a charge to the consolidated statement of operations of  $1,702, which we recorded as a component of selling, general and administrative expenses.
Net periodic pension expense was:
     
Three Months
   
Nine months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Service cost – benefits earned during the period
      $         $ 735         $ 845         $ 2,204    
Interest cost on benefit obligation
        498           723           1,546           2,170    
Expected return on plan assets
        (834)           (794)           (2,540)           (2,382)    
Amortization of net actuarial (gain) loss and prior service 
costs
        111           446           563           1,338    
Settlement cost
                            1,702              
Net periodic pension expense
      $ (225)         $ 1,110         $ 2,116         $ 3,330    
 
XML 25 R14.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies
9 Months Ended
Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
8.     Commitments and Contingencies
 
Environmental
Our operations and properties are subject to extensive federal, state, local and foreign laws and regulations, including those governing pollution; protection of the environment; the use, management, and release of hazardous materials, substances and wastes; air emissions; greenhouse gas emissions; water use, supply and discharges; the investigation and remediation of contamination; the manufacture, distribution, and sale of regulated materials, including pesticides; the importing, exporting and transportation of products; and the health and safety of our employees (collectively, “Environmental Laws”). As such, the nature of our current and former operations exposes us to the risk of claims with respect to such matters, including fines, penalties, and remediation obligations that may be imposed by regulatory authorities. Under certain circumstances, we might be required to curtail operations until a particular problem is remedied. Known costs and expenses under Environmental Laws incidental to ongoing operations, including the cost of litigation proceedings relating to environmental matters, are included within operating results. Potential costs and expenses may also be incurred in connection with the repair or upgrade of facilities to meet existing or new requirements under Environmental Laws or to investigate or remediate potential or actual contamination and from time to time we establish reserves for such contemplated investigation and remediation costs. In many instances, the ultimate costs under Environmental Laws and the time period during which such costs are likely to be incurred are difficult to predict.
While we believe that our operations are currently in material compliance with Environmental Laws, we have, from time to time, received notices of violation from governmental authorities, and have been involved in civil or criminal action for such violations. Additionally, at various sites, our subsidiaries are engaged in continuing investigation, remediation and/or monitoring efforts to address contamination associated with historic operations of the sites. We devote considerable resources to complying with Environmental Laws and managing environmental liabilities. We have developed programs to identify requirements under, and maintain compliance with, Environmental Laws; however, we cannot predict with certainty the effect of increased and more stringent regulation on our operations, future capital expenditure requirements, or the cost of compliance.
The nature of our current and former operations exposes us to the risk of claims with respect to environmental matters, and we cannot assure we will not incur material costs and liabilities in connection with such claims. Based upon our experience to date, we believe that the future cost of compliance with existing Environmental Laws, and liabilities for known environmental claims pursuant to such Environmental Laws, will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.
The United States Environmental Protection Agency (the “EPA”) is investigating and planning for the remediation of offsite contaminated groundwater that has migrated from the Omega Chemical Corporation Superfund Site (“Omega Chemical Site”), which is upgradient of a facility in Santa Fe Springs, California, operated by our subsidiary Phibro-Tech, Inc. (“Phibro-Tech”). The EPA has named Phibro-Tech and certain other subsidiaries of PAHC as potentially responsible parties (“PRPs”) due to groundwater contamination from Phibro-Tech’s Santa Fe Springs facility that has allegedly commingled with contaminated groundwater from the Omega Chemical Site. In September 2012, the EPA notified approximately 140 PRPs, including Phibro-Tech and the other subsidiaries, that they have been identified as potentially responsible for remedial action for the groundwater plume affected by the Omega Chemical Site and for EPA oversight and response costs. Phibro-Tech contends that groundwater contamination at its site is due to historical operations that pre-date Phibro-Tech and/or contaminated groundwater that has migrated from upgradient properties. In addition, a successor to a prior owner of the Phibro-Tech site has asserted that PAHC and Phibro-Tech are obligated to provide indemnification for its potential liability and defense costs relating to the groundwater plume affected by the Omega Chemical Site. Phibro-Tech has vigorously contested this position and has asserted that the successor to the prior owner is required to indemnify Phibro-Tech for its potential liability and defense costs. Furthermore, a nearby property owner has filed a complaint in the Superior Court of the State of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for alleged contamination of groundwater underneath its property, and a group of companies that sent chemicals to the Omega Chemical Site for processing and recycling has filed a complaint under CERCLA, RCRA and the common law public nuisance doctrine in the United States District Court for the Central District of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for contribution toward past and future costs associated with the investigation and remediation of the groundwater plume affected by the Omega Chemical Site. Due to the ongoing nature of the EPA’s investigation and Phibro-Tech’s dispute with the prior owner’s successor, at this time we cannot predict with any degree of certainty what, if any, liability Phibro-Tech or the other subsidiaries may ultimately have for investigation, remediation and the EPA oversight and response costs associated with the affected groundwater plume.
Based upon information available, to the extent such costs can be estimated with reasonable certainty, we estimated the cost for further investigation and remediation of identified soil and groundwater problems at operating sites, closed sites and third-party sites, and closure costs for closed sites, to be $7,205 and $7,024 at March 31, 2017, and June 30, 2016, respectively, which is included in current and long-term liabilities on the consolidated balance sheets. However, future events, such as new information, changes in existing Environmental Laws or their interpretation, and more vigorous enforcement policies of regulatory agencies, may give rise to additional expenditures or liabilities that could be material. For all purposes of the discussion under this caption and elsewhere in this report, it should be noted that we take and have taken the position that neither PAHC nor any of our subsidiaries is liable for environmental or other claims made against one or more of our other subsidiaries or for which any of such other subsidiaries may ultimately be responsible.
Claims and Litigation
During the three months ended March 31, 2017, we recorded a $7,500 gain in selling, general and administrative expenses resulting from a payment to us by an insurance carrier. The payment reflected the settlement of our claims against the carrier under our liability insurance policies, which arose from damages incurred in fiscal year 2010 by certain customers resulting from the use of one of our animal health products. We previously paid our customers for the damages and recognized the cost in the consolidated statement of operations prior to fiscal year 2017.
PAHC and its subsidiaries are party to a number of claims and lawsuits arising out of the normal course of business including product liability, payment disputes and governmental regulation. Certain of these actions seek damages in various amounts. In many cases, such claims are covered by insurance. We believe that none of the claims or pending lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, cash flows or liquidity.
XML 26 R15.htm IDEA: XBRL DOCUMENT v3.7.0.1
Derivatives
9 Months Ended
Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives
9.     Derivatives
 
We monitor our exposure to foreign currency exchange rates and use derivatives (currency option contracts) to manage certain of these risks. These derivatives generally have an expiration/maturity of two years or less and are intended to hedge cash flows related to the purchase of inventory. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). We record the portion of the changes in the value of the derivative, related to a hedged asset or liability (the effective portion), in accumulated other comprehensive income (loss). As the hedged item is sold, we recognize the gain or loss recorded in accumulated other comprehensive income (loss) to the consolidated statements of operations on the same line where the hedged item is charged when released/sold. We immediately recognize in the consolidated statements of operations in the same line as the hedged item, the portion of the changes in fair value of derivatives used as cash flow hedges that is not offset by changes in the expected cash flows related to a recognized asset or liability (the ineffective portion).
We routinely assess whether the derivatives used to hedge transactions are effective. If we determine that a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.
We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see “—Fair Value Measurements.”
The following table details the Company’s outstanding derivatives that are designated and effective as cash flow hedges as of March 31, 2017:
Instrument
   
Hedge
   
Notional 
Amount at 
March 31, 
2017
   
Fair value as of
 
 
March 31, 
2017
   
June 30, 
2016
 
Options
   
Brazilian Real calls 
   
R$58,500
      $ 3,717         $ 3,027    
Options
   
Brazilian Real puts 
   
R$58,500
      $         $ (372)    
The fair values at March 31, 2017, are unrealized and will fluctuate based on future exchange rates until the derivative contracts mature. Other comprehensive income (loss) for the three and nine months ended March 31, 2017, included $758 and $1,062, respectively, of net unrecognized gains related to these contracts. Accumulated other comprehensive income (loss) at March 31, 2017, included $3,717 of net unrecognized gains on derivative instruments; we estimate that $1,082 of those gains will be recognized in earnings within the next twelve months. At June 30, 2016, realized losses of $1,528 related to matured contracts were recorded as a component of inventory and subsequently recognized in cost of goods sold during the six months ended December 31, 2016. At March 31, 2017, realized gains of  $580 related to matured contracts were recorded as a component of inventory. We anticipate the gains will be recognized as an offset to cost of goods sold within the next twelve months. We recognize gains (losses) related to these derivative instruments as a component of cost of goods sold at the time the hedged item is sold.
XML 27 R16.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements
9 Months Ended
Mar. 31, 2017
Fair Value Disclosures [Abstract]  
Fair Value Measurements
10.    Fair Value Measurements
 
Fair value is defined as the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—
Significant observable inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.
 
Level 3—
Unobservable inputs for which there is little or no market data available, and that are significant to the overall fair value measurement, are employed that require the reporting entity to develop its own assumptions.
 
In assessing the fair value of financial instruments at March 31, 2017, and June 30, 2016, we used a variety of methods and assumptions that were based on estimates of market conditions and risks existing at the time.
Current Assets and Liabilities
We consider the carrying amounts of current assets and current liabilities to be representative of their fair value because of the current nature of these items.
Letters of Credit
We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. The carrying values of these letters of credit are considered to be representative of their fair values because of the nature of the instruments. The tenors of these letters of credit are all one year or less.
Long Term Debt
We record the Term B Loan and the Revolver at book value in our consolidated financial statements. We believe the carrying value of the Term B Loan is approximately equal to the fair value, which is based on quoted broker prices that are Level 2 inputs. We believe the carrying value of the Revolver is approximately equal to the fair value due to the variable nature of the instrument.
Deferred Consideration on Acquisitions
We estimated the fair value of the deferred contingent consideration on acquisitions using the income approach, based on the Company’s current sales forecast related to the acquired business.
Derivatives
We determine the fair value of derivative instruments based upon pricing models using observable market inputs for these types of financial instruments, such as spot and forward currency translation rates.
As of
   
March 31, 2017
   
June 30, 2016
 
     
Level 1
   
Level 2
   
Level 3
   
Level 1
   
Level 2
   
Level 3
 
Derivatives asset
      $  —         $ 3,717         $         $  —         $ 2,655         $    
Deferred contingent consideration on 
acquisitions
      $         $         $ (7,989)         $         $         $ (6,745)    
The table below provides a summary of the changes in the fair value of Level 3 liabilities:
 
Balance, June 30, 2016
      $ (6,745)    
 
Acquisition-related accrued interest
        (1,314)    
 
Payment
        70    
 
Balance, March 31, 2017
      $ (7,989)    
 
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.7.0.1
Business Segments
9 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Business Segments
11.    Business Segments
 
The Animal Health segment manufactures and markets a broad range of products for food animals, including poultry, swine, cattle, dairy and aquaculture. The business includes net sales of medicated feed additives and other related products, nutritional specialty products and vaccines. The Mineral Nutrition segment manufactures and markets a broad range of trace mineral products for food animals. The Performance Products segment manufactures and markets a variety of products for use in the personal care, automotive, industrial chemical and chemical catalyst industries.
We evaluate performance and allocate resources based on the Animal Health, Mineral Nutrition and Performance Products segments. Certain of our costs and assets are not directly attributable to these segments and such costs are referred to as Corporate. We do not allocate such items to the principal segments because they are not used to evaluate their operating results or financial position.
We evaluate performance of our segments based on Adjusted EBITDA. We define Adjusted EBITDA as income before income taxes plus (a) interest expense, net, (b) depreciation and amortization, (c) (income) loss from, and disposal of, discontinued operations, (d) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency gains and losses and loss on extinguishment of debt, and (e) certain items that we consider to be unusual, non-operational or non-recurring.
The accounting policies of our segments are the same as those described in the summary of significant accounting policies included herein.
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Net sales                                                  
MFAs and other
      $ 76,354         $ 82,445         $ 237,248         $ 253,535    
Nutritional Specialties
        27,613           22,792           83,164           69,384    
Vaccines
        17,009           13,091           48,738           37,047    
Animal Health
        120,976           118,328           369,150           359,966    
Mineral Nutrition
        57,169           53,029           165,460           166,351    
Performance Products
        11,716           12,104           34,836           36,037    
Total segments
      $ 189,861         $ 183,461         $ 569,446         $ 562,354    
 
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Depreciation and amortization                                                  
Animal Health
      $ 5,311         $ 4,246         $ 15,220         $ 11,951    
Mineral Nutrition
        611           656           1,695           1,876    
Performance Products
        255           196           708           584    
Total segments
      $ 6,177         $ 5,098         $ 17,623         $ 14,411    
Adjusted EBITDA                                                  
Animal Health
      $ 31,806         $ 32,151         $ 99,034         $ 95,978    
Mineral Nutrition
        4,343           4,012           13,072           11,361    
Performance Products
        446           490           1,448           568    
Total segments
      $ 36,595         $ 36,653         $ 113,554         $ 107,907    
Reconciliation of income before income taxes to Adjusted EBITDA
                                       
Income before income taxes
      $ 26,448         $ 19,149         $ 63,324         $ 58,738    
Interest expense, net
        3,929           4,265           11,708           12,051    
Depreciation and amortization – Total segments
        6,177           5,098           17,623           14,411    
Depreciation and amortization – Corporate
        665           758           1,981           2,267    
Corporate costs
        6,859           6,987           22,799           22,100    
Acquisition-related cost of goods sold
                  1,601                     1,601    
Acquisition-related accrued compensation
        420           420           1,260           1,260    
Acquisition-related transaction costs
                  618           1,274           618    
Pension settlement cost
                            1,702              
Gain on insurance settlement
        (7,500)                     (7,500)              
Foreign currency (gains) losses, net
        (403)           (2,243)           (617)           (5,139)    
Adjusted EBITDA – Total segments
      $ 36,595         $ 36,653         $ 113,554         $ 107,907    
 
As of
   
March 31,
2017
   
June 30,
2016
 
Identifiable assets                          
Animal Health
      $ 435,881         $ 444,751    
Mineral Nutrition
        57,112           57,939    
Performance Products
        21,068           21,557    
Total segments
        514,061           524,247    
Corporate
        88,217           83,588    
Total
      $ 602,278         $ 607,835    
 
The Animal Health segment includes all goodwill of the Company. The Animal Health segment includes advances to and investment in an equity method investee of  $4,049 and $4,076 as of March 31, 2017, and June 30, 2016, respectively. The Performance Products segment includes an investment in an equity method investee of  $484 and $504 as of March 31, 2017, and June 30, 2016, respectively. Corporate assets include cash and cash equivalents, certain debt issuance costs related to the Credit Facilities, income tax related assets and certain other assets.
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies and New Accounting Standards (Policies)
9 Months Ended
Mar. 31, 2017
Accounting Policies [Abstract]  
Revisions of previously issued financial statements
Revisions of Previously Issued Financial Statements
During the three months ended June 30, 2016, the Company determined that amortization expense related to product-related intangible assets should be recorded in cost of goods sold rather than in selling, general and administrative expense within the consolidated statement of operations. The Company has revised its prior period financial statements, to correct the classification of amortization expense to increase cost of goods sold and reduce gross profit and selling, general and administrative expenses by $1,165 and $3,072 for the three and nine months ended March 31, 2016, respectively. These revisions had no impact on the Company’s previously reported net income (loss) or cash flows. The Company evaluated the impact of the revisions on prior periods, assessing materiality quantitatively and qualitatively, and concluded the errors were not material to any previously issued financial statements.
Net Income per Share and Weighted Average Shares
Net Income per Share and Weighted Average Shares
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period.
Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period after giving effect to potential dilutive common shares equivalents resulting from the assumed exercise of stock options. For the three and nine months ended March 31, 2017 and 2016, all common share equivalents were included in the calculation of diluted net income per share.
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Net income
      $ 23,643         $ 18,577         $ 49,237         $ 67,508    
Weighted average number of shares – basic
        39,512           39,356           39,443           39,203    
Dilutive effect of stock options
        547           644           545           793    
Weighted average number of shares – diluted
        40,059           40,000           39,988           39,996    
Net income per share                                                  
basic
      $ 0.60         $ 0.47         $ 1.25         $ 1.72    
diluted
      $ 0.59         $ 0.46         $ 1.23         $ 1.69    
Dividends
Dividends
We declared and paid quarterly cash dividends of $0.10 per share, totaling $3,959 and $11,841 during the three and nine months ended March 31, 2017, respectively, to holders of our Class A common stock and Class B common stock.
New Accounting Standards
New Accounting Standards
Financial Accounting Standards Board (“FASB”) ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, supersedes the current guidance by establishing a one-step goodwill impairment test. This new guidance requires an entity to compare the fair value of a reporting unit to its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. This ASU is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted for goodwill impairment tests performed after January 1, 2017. We will apply this guidance when performing our next goodwill impairment test. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, amends the current guidance for determining whether a transaction represents the acquisition of a business or assets. This guidance provides updated criteria to make the determination and clarifies the definitions of key terms. This new standard is effective, on a prospective basis, for annual reporting periods beginning after December 15, 2017, and early application is permitted. During the three months ended March 31, 2017, we elected early application of this ASU, and it did not have a material effect on our consolidated financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, provides specific guidance for the classification of certain transactions within the statement of cash flows. The issues addressed by this guidance include, but are not limited to, debt prepayments or debt extinguishment costs, contingent consideration payments made after a business combination and proceeds from the settlement of insurance claims. This ASU is effective for annual reporting periods beginning after December 15, 2017. Early application is permitted, as long as all provisions under the guidance are applied simultaneously. The provisions of this guidance are to be applied using a retrospective transition approach. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2016-02, Leases (Topic 842), supersedes the current lease accounting guidance and requires an entity to recognize assets and liabilities for both financing and operating leases on the balance sheet and requires additional qualitative and quantitative disclosures regarding leasing arrangements. This ASU is effective for annual reporting periods beginning after December 15, 2018. We are evaluating the impact of adoption of this guidance on our consolidated financial statements.
ASU 2015-11, Inventory (Topic 330), requires entities to measure inventory at the lower of cost and net realizable value (“NRV”). NRV is defined as “the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those years. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) provides guidance regarding the treatment of cloud computing arrangements and if an arrangement includes a software license. We adopted this guidance during the three months ended September 30, 2016, and it had no material impact on our consolidated financial statements.
ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30), requires debt issuance costs to be presented as a reduction of the related liability. These costs were previously included in other assets. Debt issuance costs associated with line-of-credit arrangements may continue to be recognized in other assets. We adopted this guidance during the three months ended September 30, 2016, and applied the guidance retrospectively. Debt issuance costs of  $2,538 as of June 30, 2016, have been presented as a reduction in long-term debt on our consolidated balance sheets.
ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), requires management to assess an entity’s ability to continue as a going concern within one year after the issuance date of the financial statements, and to provide related footnote disclosures in certain circumstances. Management will need to consider relevant conditions that are known and reasonably knowable at the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. Under the new standard, the definition of substantial doubt incorporates a likelihood threshold of  ”probable” similar to the current use of that term in GAAP for loss contingencies. ASU 2014-15 will be effective for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606), establishes principles for the recognition of revenue from contracts with customers. The underlying principle is to identify the performance obligations of a contract, allocate the revenue to each performance obligation and then to recognize revenue when the company satisfies a specific performance obligation of the contract. ASU 2015-14, Deferral of the Effective Date, amended ASU 2014-09, resulting in a one-year deferral of the effective date. ASU 2016-08, Principal versus Agent Considerations; ASU 2016-10, Identifying Performance Obligations and Licensing; and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients also amended ASU 2014-09The amendments are effective concurrent with the effective date for ASU 2014-09 for annual periods beginning after December 15, 2017, and interim periods within those years. We are evaluating the impact of adoption of this guidance on our consolidated financial statements.
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies and New Accounting Standards (Tables)
9 Months Ended
Mar. 31, 2017
Accounting Policies [Abstract]  
Schedule of Net Income per Share and Weighted Average Shares
Three Months
Nine Months
For the Periods Ended March 31
2017
2016
2017
2016
Net income
$ 23,643 $ 18,577 $ 49,237 $ 67,508
Weighted average number of shares – basic
39,512 39,356 39,443 39,203
Dilutive effect of stock options
547 644 545 793
Weighted average number of shares – diluted
40,059 40,000 39,988 39,996
Net income per share
basic
$ 0.60 $ 0.47 $ 1.25 $ 1.72
diluted
$ 0.59 $ 0.46 $ 1.23 $ 1.69
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.7.0.1
Statements of Operations-Additional Information (Tables)
9 Months Ended
Mar. 31, 2017
Supplemental Income Statement Elements [Abstract]  
Schedule of additional information of statements of operations
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Interest expense, net                                                  
Term B loan
      $ 2,859         $ 2,888         $ 8,630         $ 8,750    
Revolving credit facility
        642           720           2,328           1,322    
Amortization of debt issuance costs and debt discount
        253           251           761           734    
Acquisition-related accrued interest
        459           394           1,314           1,083    
Other
        37           79           165           335    
Interest expense
        4,250           4,332           13,198           12,224    
Interest (income)
        (321)           (67)           (1,490)           (173)    
        $ 3,929         $ 4,265         $ 11,708         $ 12,051    
 
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Depreciation and amortization                                                  
Depreciation of property, plant and equipment
      $ 5,400         $ 4,328         $ 15,083         $ 12,514    
Amortization of intangible assets
        1,436           1,469           4,398           3,988    
Amortization of other assets
        6           59           123           176    
        $ 6,842         $ 5,856         $ 19,604         $ 16,678    
 
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.7.0.1
Balance Sheets-Additional Information (Tables)
9 Months Ended
Mar. 31, 2017
Balance Sheets Additional Information [Abstract]  
Schedule of additional information of balance sheets
As of
   
March 31,
2017
   
June 30,
2016
 
Inventories      
Raw materials
      $ 60,802         $ 51,369    
Work-in-process
        9,814           8,074    
Finished goods
        93,215           108,248    
        $ 163,831         $ 167,691    
 
As of
   
March 31,
2017
   
June 30,
2016
 
Accrued expenses and other current liabilities      
Employee related
      $ 23,070         $ 21,712    
Commissions and rebates
        4,730           3,722    
Insurance related
        1,568           1,780    
Professional fees
        4,560           3,573    
Income and other taxes
        3,296           1,910    
Deferred consideration on acquisitions
                  1,250    
Other
        12,902           11,756    
        $ 50,126         $ 45,703    
 
As of
   
March 31, 
2017
   
June 30,
2016
 
Accumulated other comprehensive income (loss)                          
Derivative instruments
      $ 3,717         $ 2,655    
Foreign currency translation adjustment
        (40,986)           (41,904)    
Unrecognized net pension gains (losses)
        (19,026)           (30,977)    
(Provision) benefit for income taxes on derivative instruments
        (1,954)           (1,548)    
(Provision) benefit for incomes taxes on long-term intercompany investments
        8,166           8,166    
(Provision) benefit for income taxes on pension gains (losses)
        (2,747)           1,823    
        $ (52,830)         $ (61,785)    
 
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.7.0.1
Debt (Tables)
9 Months Ended
Mar. 31, 2017
Debt Disclosure [Abstract]  
Schedule of long term debt
As of
   
March 31,
2017
   
June 30,
2016
 
Term B Loan due April 2021
      $ 282,025         $ 284,200    
Capitalized lease obligations
                  7    
          282,025           284,207    
Unamortized debt issuance costs and debt discount
        (2,560)           (3,035)    
Less: current maturities
        (2,900)           (2,907)    
        $ 276,565         $ 278,265    
 
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.7.0.1
Employee Benefit Plans (Tables)
9 Months Ended
Mar. 31, 2017
Compensation and Retirement Disclosure [Abstract]  
Schedule of net periodic pension expense
     
Three Months
   
Nine months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Service cost – benefits earned during the period
      $         $ 735         $ 845         $ 2,204    
Interest cost on benefit obligation
        498           723           1,546           2,170    
Expected return on plan assets
        (834)           (794)           (2,540)           (2,382)    
Amortization of net actuarial (gain) loss and prior service 
costs
        111           446           563           1,338    
Settlement cost
                            1,702              
Net periodic pension expense
      $ (225)         $ 1,110         $ 2,116         $ 3,330    
 
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.7.0.1
Derivatives (Tables)
9 Months Ended
Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of significant outstanding derivatives employed to manage market risk and designated as cash flow hedges
Instrument
   
Hedge
   
Notional 
Amount at 
March 31, 
2017
   
Fair value as of
 
 
March 31, 
2017
   
June 30, 
2016
 
Options
   
Brazilian Real calls 
   
R$58,500
      $ 3,717         $ 3,027    
Options
   
Brazilian Real puts 
   
R$58,500
      $         $ (372)    
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements (Tables)
9 Months Ended
Mar. 31, 2017
Fair Value Disclosures [Abstract]  
Schedule of fair value derivatives, assets and liabilities
As of
March 31, 2017
June 30, 2016
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Derivatives asset
$  — $ 3,717 $ $  — $ 2,655 $
Deferred contingent consideration on 
acquisitions
$ $ $ (7,989) $ $ $ (6,745)
 
Schedule of changes in the fair value of Level 3 assets
 
Balance, June 30, 2016
      $ (6,745)    
 
Acquisition-related accrued interest
        (1,314)    
 
Payment
        70    
 
Balance, March 31, 2017
      $ (7,989)    
 
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.7.0.1
Business Segments (Tables)
9 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Schedule of information regarding reportable segments
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Net sales                                                  
MFAs and other
      $ 76,354         $ 82,445         $ 237,248         $ 253,535    
Nutritional Specialties
        27,613           22,792           83,164           69,384    
Vaccines
        17,009           13,091           48,738           37,047    
Animal Health
        120,976           118,328           369,150           359,966    
Mineral Nutrition
        57,169           53,029           165,460           166,351    
Performance Products
        11,716           12,104           34,836           36,037    
Total segments
      $ 189,861         $ 183,461         $ 569,446         $ 562,354    
 
     
Three Months
   
Nine Months
 
For the Periods Ended March 31
   
2017
   
2016
   
2017
   
2016
 
Depreciation and amortization                                                  
Animal Health
      $ 5,311         $ 4,246         $ 15,220         $ 11,951    
Mineral Nutrition
        611           656           1,695           1,876    
Performance Products
        255           196           708           584    
Total segments
      $ 6,177         $ 5,098         $ 17,623         $ 14,411    
Adjusted EBITDA                                                  
Animal Health
      $ 31,806         $ 32,151         $ 99,034         $ 95,978    
Mineral Nutrition
        4,343           4,012           13,072           11,361    
Performance Products
        446           490           1,448           568    
Total segments
      $ 36,595         $ 36,653         $ 113,554         $ 107,907    
Reconciliation of income before income taxes to Adjusted EBITDA
                                       
Income before income taxes
      $ 26,448         $ 19,149         $ 63,324         $ 58,738    
Interest expense, net
        3,929           4,265           11,708           12,051    
Depreciation and amortization – Total segments
        6,177           5,098           17,623           14,411    
Depreciation and amortization – Corporate
        665           758           1,981           2,267    
Corporate costs
        6,859           6,987           22,799           22,100    
Acquisition-related cost of goods sold
                  1,601                     1,601    
Acquisition-related accrued compensation
        420           420           1,260           1,260    
Acquisition-related transaction costs
                  618           1,274           618    
Pension settlement cost
                            1,702              
Gain on insurance settlement
        (7,500)                     (7,500)              
Foreign currency (gains) losses, net
        (403)           (2,243)           (617)           (5,139)    
Adjusted EBITDA – Total segments
      $ 36,595         $ 36,653         $ 113,554         $ 107,907    
 
As of
   
March 31,
2017
   
June 30,
2016
 
Identifiable assets                          
Animal Health
      $ 435,881         $ 444,751    
Mineral Nutrition
        57,112           57,939    
Performance Products
        21,068           21,557    
Total segments
        514,061           524,247    
Corporate
        88,217           83,588    
Total
      $ 602,278         $ 607,835    
 
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies and New Accounting Standards (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Accounting Policies [Abstract]        
Net income $ 23,643 $ 18,577 $ 49,237 $ 67,508
Weighted average number of shares - basic (in shares) 39,512 39,356 39,443 39,203
Dilutive effect of stock options 547 644 545 793
Weighted average number of shares - diluted (in shares) 40,059 40,000 39,988 39,996
Net income per share        
basic (in dollars per share) $ 0.60 $ 0.47 $ 1.25 $ 1.72
diluted (in dollars per share) $ 0.59 $ 0.46 $ 1.23 $ 1.69
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies and New Accounting Standards (Details Textuals) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Jun. 30, 2016
Accounting Policies [Abstract]          
Revised amortization expense intangible assets   $ 1,165   $ 3,072  
Cash dividends per share amount (in dollars per share) $ 0.10   $ 0.10    
Cash dividends $ 3,959   $ 11,841    
Debt issuance costs         $ 2,538
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.7.0.1
Statements of Operations-Additional Information (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Interest expense, net        
Amortization of debt issuance costs and debt discount $ 253 $ 251 $ 761 $ 734
Acquisition-related accrued interest 459 394 1,314 1,083
Other 37 79 165 335
Interest expense 4,250 4,332 13,198 12,224
Interest (income) (321) (67) (1,490) (173)
Interest expense, net 3,929 4,265 11,708 12,051
Depreciation and amortization        
Depreciation of property, plant and equipment 5,400 4,328 15,083 12,514
Amortization of intangible assets 1,436 1,469 4,398 3,988
Amortization of other assets 6 59 123 176
Depreciation and amortization 6,842 5,856 19,604 16,678
Term B Loans        
Interest expense, net        
Interest expense, net 2,859 2,888 8,630 8,750
Revolving credit facility        
Interest expense, net        
Interest expense, net $ 642 $ 720 $ 2,328 $ 1,322
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.7.0.1
Statements of Operations-Additional Information (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Foreign deferred tax assets        
Valuation Allowance [Line Items]        
Deferred income taxes valuation allowance $ (3,780)   $ (3,780)  
Employee stock options        
Valuation Allowance [Line Items]        
Stock option windfall tax benefit $ 1,442   $ 1,442  
Domestic deferred tax assets        
Valuation Allowance [Line Items]        
Deferred income taxes valuation allowance   $ (2,536)   $ (21,323)
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.7.0.1
Balance Sheets-Additional Information (Details) - USD ($)
$ in Thousands
Mar. 31, 2017
Jun. 30, 2016
Inventories    
Raw materials $ 60,802 $ 51,369
Work-in-process 9,814 8,074
Finished goods 93,215 108,248
Inventory, net $ 163,831 $ 167,691
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.7.0.1
Balance Sheets-Additional Information (Details 1) - USD ($)
$ in Thousands
Mar. 31, 2017
Jun. 30, 2016
Accrued expenses and other current liabilities    
Employee related $ 23,070 $ 21,712
Commissions and rebates 4,730 3,722
Insurance related 1,568 1,780
Professional fees 4,560 3,573
Income and other taxes 3,296 1,910
Deferred consideration on acquisitions   1,250
Other 12,902 11,756
Accrued expenses and other current liabilities, total 50,126 45,703
Accumulated other comprehensive income (loss)    
Derivative instruments 3,717 2,655
Foreign currency translation adjustment (40,986) (41,904)
Unrecognized net pension gains (losses) (19,026) (30,977)
(Provision) benefit for income taxes on derivative instruments (1,954) (1,548)
(Provision) benefit for incomes taxes on long-term intercompany investments 8,166 8,166
(Provision) benefit for income taxes on pension gains (losses) (2,747) 1,823
Accumulated other comprehensive income (loss) $ (52,830) $ (61,785)
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.7.0.1
Balance Sheets-Additional Information (Detail Textuals)
$ in Thousands
Mar. 31, 2017
USD ($)
Balance Sheets Additional Information [Abstract]  
Equity method investments $ 4,049
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.7.0.1
Debt - Summary of long-term debt (Details) - USD ($)
$ in Thousands
Mar. 31, 2017
Jun. 30, 2016
Debt Instrument [Line Items]    
Long-term debt including current maturities $ 282,025 $ 284,207
Unamortized debt issuance costs and debt discount (2,560) (3,035)
Less: current maturities (2,900) (2,907)
Long-term debt 276,565 278,265
Term B loan due April 2021    
Debt Instrument [Line Items]    
Long-term debt including current maturities 282,025 284,200
Capitalized lease obligations    
Debt Instrument [Line Items]    
Long-term debt including current maturities $ 7
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.7.0.1
Debt (Detail Textuals) - USD ($)
$ in Thousands
9 Months Ended
Mar. 31, 2017
Jun. 30, 2016
Debt Instrument [Line Items]    
Outstanding borrowings $ 30,000 $ 69,000
Revolving credit facility    
Debt Instrument [Line Items]    
Maximum borrowing capacity $ 200,000  
Weighted-average interest rates 3.39%  
Term B Loans    
Debt Instrument [Line Items]    
Weighted-average interest rates 4.00%  
Term B Loans | LIBOR    
Debt Instrument [Line Items]    
Applicable interest rates 3.00%  
Applicable floor rates 1.00%  
Term B Loans | Base Rate    
Debt Instrument [Line Items]    
Applicable interest rates 2.00%  
Term B Loans And Revolving Credit Facility    
Debt Instrument [Line Items]    
Maximum borrowing capacity $ 30,000  
Outstanding borrowings 14,518  
Aggregate available credit facilities $ 155,482  
Term B Loans And Revolving Credit Facility | LIBOR    
Debt Instrument [Line Items]    
Interest rate, description 2.50%, 2.75% or 3.00%  
Term B Loans And Revolving Credit Facility | Base Rate    
Debt Instrument [Line Items]    
Interest rate, description 1.50%, 1.75% or 2.00%  
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.7.0.1
Related Party Transactions (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Relatives of Jack C. Bendheim | Compensation and benefit for services provided        
Related Party Transaction [Line Items]        
Aggregate compensation and benefits $ 339 $ 388 $ 1,387 $ 1,515
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.7.0.1
Employee Benefit Plans - Net periodic pension expense (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Compensation and Retirement Disclosure [Abstract]          
Service cost - benefits earned during the period     $ 735 $ 845 $ 2,204
Interest cost on benefit obligation $ 498   723 1,546 2,170
Expected return on plan assets (834)   (794) (2,540) (2,382)
Amortization of net actuarial (gain) loss and prior service costs 111   446 563 1,338
Settlement cost   $ 1,702   1,702  
Net periodic pension expense $ (225)   $ 1,110 $ 2,116 $ 3,330
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.7.0.1
Employee Benefit Plans (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Mar. 31, 2017
Defined Benefit Plan Disclosure [Line Items]      
Settlement cost $ 1,702   $ 1,702
401(k) retirement savings plan      
Defined Benefit Plan Disclosure [Line Items]      
Contribution percentage     3.00%
Maximum additional discretionary contribution percentage     4.00%
Domestic noncontributory defined benefit pension plan      
Defined Benefit Plan Disclosure [Line Items]      
Pension curtailment gain   $ 6,822  
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies (Detail Textuals)
$ in Thousands
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2012
PRPs
Mar. 31, 2017
USD ($)
Mar. 31, 2017
USD ($)
Jun. 30, 2016
USD ($)
Commitments And Contingencies [Line Items]        
Number of potentially responsible parties | PRPs 140      
Insurance settlement        
Commitments And Contingencies [Line Items]        
Contingent gain   $ 7,500    
Current and long-term liabilities        
Commitments And Contingencies [Line Items]        
Accrual for environmental loss contingencies payments     $ 7,205 $ 7,024
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.7.0.1
Derivatives (Details) - Options - Cash flow hedges
BRL in Thousands, $ in Thousands
Mar. 31, 2017
USD ($)
Mar. 31, 2017
BRL
Jun. 30, 2016
USD ($)
Brazilian Real calls      
Derivative [Line Items]      
Notional amount | BRL   BRL 58,500  
Fair value | $ $ 3,717   $ 3,027
Brazilian Real puts      
Derivative [Line Items]      
Notional amount | BRL   BRL 58,500  
Fair value | $   $ (372)
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.7.0.1
Derivatives (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2017
Mar. 31, 2017
Jun. 30, 2016
Derivative [Line Items]      
Unrecognized losses on derivative instruments recorded in earnings within the next twelve months $ 1,082 $ 1,082  
Options | Cash flow hedges      
Derivative [Line Items]      
Other comprehensive income (loss), unrealized gains (losses) on derivatives $ 758 1,062  
Options | Cash flow hedges | Cost of goods sold      
Derivative [Line Items]      
Realized losses on hedging derivatives recognized in cost of goods sold   580 $ 1,528
Options | Cash flow hedges | Other comprehensive income (loss)      
Derivative [Line Items]      
Unrecognized gains (losses) on derivative instruments   $ 3,717  
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements (Details) - Fair values - USD ($)
$ in Thousands
Mar. 31, 2017
Jun. 30, 2016
Level 1    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Derivatives asset
Deferred contingent consideration on acquisitions
Level 2    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Derivatives asset 3,717 2,655
Deferred contingent consideration on acquisitions
Level 3    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Derivatives asset
Deferred contingent consideration on acquisitions $ (7,989) $ (6,745)
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements (Details 1) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Business Combination Contingent Consideration Liability [Roll Forward]        
Acquisition-related accrued interest $ (459) $ (394) $ (1,314) $ (1,083)
Fair values | Level 3        
Business Combination Contingent Consideration Liability [Roll Forward]        
Balance, June 30, 2016     (6,745)  
Acquisition-related accrued interest     (1,314)  
Payment     70  
Balance, March 31, 2017 $ (7,989)   $ (7,989)  
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.7.0.1
Business Segments (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
Mar. 31, 2017
Mar. 31, 2016
Jun. 30, 2016
Segment Reporting Information [Line Items]            
Net sales $ 189,861   $ 183,461 $ 569,446 $ 562,354  
Depreciation and amortization 6,842   5,856 19,604 16,678  
Adjusted EBITDA - Total segments 36,595   36,653 113,554 107,907  
Reconciliation of income before income taxes to Adjusted EBITDA            
Income before income taxes 26,448   19,149 63,324 58,738  
Interest expense, net 3,929   4,265 11,708 12,051  
Depreciation and amortization 6,842   5,856 19,604 16,678  
Acquisition-related accrued compensation 420   420 1,260 1,260  
Pension settlement cost   $ 1,702   1,702    
Foreign currency (gains) losses, net (403)   (2,243) (617) (5,139)  
Adjusted EBITDA - Total segments 36,595   36,653 113,554 107,907  
Identifiable assets 602,278     602,278   $ 607,835
Operating Segments            
Segment Reporting Information [Line Items]            
Net sales 189,861   183,461 569,446 562,354  
Depreciation and amortization 6,177   5,098 17,623 14,411  
Adjusted EBITDA - Total segments 36,595   36,653 113,554 107,907  
Reconciliation of income before income taxes to Adjusted EBITDA            
Income before income taxes 26,448   19,149 63,324 58,738  
Interest expense, net 3,929   4,265 11,708 12,051  
Depreciation and amortization 6,177   5,098 17,623 14,411  
Acquisition-related cost of goods sold   1,601 1,601  
Acquisition-related accrued compensation 420   420 1,260 1,260  
Acquisition-related transaction costs   618 1,274 618  
Pension settlement cost   1,702  
Gain on insurance settlement (7,500)   (7,500)  
Foreign currency (gains) losses, net (403)   (2,243) (617) (5,139)  
Adjusted EBITDA - Total segments 36,595   36,653 113,554 107,907  
Identifiable assets 514,061     514,061   524,247
Operating Segments | Animal Health            
Segment Reporting Information [Line Items]            
Net sales 120,976   118,328 369,150 359,966  
Depreciation and amortization 5,311   4,246 15,220 11,951  
Adjusted EBITDA - Total segments 31,806   32,151 99,034 95,978  
Reconciliation of income before income taxes to Adjusted EBITDA            
Depreciation and amortization 5,311   4,246 15,220 11,951  
Adjusted EBITDA - Total segments 31,806   32,151 99,034 95,978  
Identifiable assets 435,881     435,881   444,751
Operating Segments | Mineral Nutrition            
Segment Reporting Information [Line Items]            
Net sales 57,169   53,029 165,460 166,351  
Depreciation and amortization 611   656 1,695 1,876  
Adjusted EBITDA - Total segments 4,343   4,012 13,072 11,361  
Reconciliation of income before income taxes to Adjusted EBITDA            
Depreciation and amortization 611   656 1,695 1,876  
Adjusted EBITDA - Total segments 4,343   4,012 13,072 11,361  
Identifiable assets 57,112     57,112   57,939
Operating Segments | Performance Products            
Segment Reporting Information [Line Items]            
Net sales 11,716   12,104 34,836 36,037  
Depreciation and amortization 255   196 708 584  
Adjusted EBITDA - Total segments 446   490 1,448 568  
Reconciliation of income before income taxes to Adjusted EBITDA            
Depreciation and amortization 255   196 708 584  
Adjusted EBITDA - Total segments 446   490 1,448 568  
Identifiable assets 21,068     21,068   21,557
Operating Segments | MFAs and other | Animal Health            
Segment Reporting Information [Line Items]            
Net sales 76,354   82,445 237,248 253,535  
Operating Segments | Nutritional specialties | Animal Health            
Segment Reporting Information [Line Items]            
Net sales 27,613   22,792 83,164 69,384  
Operating Segments | Vaccines | Animal Health            
Segment Reporting Information [Line Items]            
Net sales 17,009   13,091 48,738 37,047  
Corporate            
Segment Reporting Information [Line Items]            
Depreciation and amortization 665   758 1,981 2,267  
Adjusted EBITDA - Total segments 6,859   6,987 22,799 22,100  
Reconciliation of income before income taxes to Adjusted EBITDA            
Depreciation and amortization 665   758 1,981 2,267  
Adjusted EBITDA - Total segments 6,859   $ 6,987 22,799 $ 22,100  
Identifiable assets $ 88,217     $ 88,217   $ 83,588
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.7.0.1
Business Segments (Detail Textuals) - USD ($)
$ in Thousands
Mar. 31, 2017
Jun. 30, 2016
Segment Reporting Information [Line Items]    
Equity method investments $ 4,049  
Animal Health    
Segment Reporting Information [Line Items]    
Equity method investments 4,049 $ 4,076
Performance Products    
Segment Reporting Information [Line Items]    
Equity method investments $ 484 $ 504
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