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THE CONTENTS OF THIS SAMPLE FILING ARE FICTITIOUS AND ARE INTENDED ONLY TO BE USED TO DEMONSTRATE THE INLINE XBRL VIEWER. INFORMATION IN THIS SAMPLE FILING DOES NOT REPRESENT A LEGAL INTERPRETATION OR A STATEMENT OF SEC POLICY.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

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: 1-0001

INLINE TESTING SAMPLE COMPANY

(Exact name of registrant as specified in its charter)

COLORADO

58-123456

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2999 FLYAWAY PARKWAY, DENVER, CO

80202

(Address of principal executive offices)

(Zip Code)

(720) 123-4567

(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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 x No ¨

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

Large accelerated filer

x

Accelerated filer

¨

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

¨

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

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

Class

Outstanding at September 30, 2016

Common Stock, $1.00 par value per share

135,279,478 Shares

 


THE CONTENTS OF THIS SAMPLE FILING ARE FICTITIOUS AND ARE INTENDED ONLY TO BE USED TO DEMONSTRATE THE INLINE XBRL VIEWER. INFORMATION IN THIS SAMPLE FILING DOES NOT REPRESENT A LEGAL INTERPRETATION OR A STATEMENT OF SEC POLICY.

PART I

Item 1. Financial Statements

INLINE TESTING SAMPLE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

2016

2015

(unaudited)

(in thousands, except share

and per share data)

ASSETS

CURRENT ASSETS

Cash and equivalents

$

288,783

$

362,786

Accounts receivable, less allowance for doubtful accounts (2016 - $30,676; 2015 - $19,180)

1,583,565

1,341,025

Inventories of parts and supplies, at cost

2,548,897

2,342,304

Prepaid expenses and other current assets

344,682

292,003

TOTAL CURRENT ASSETS

4,765,927

4,338,118

Goodwill and other intangibles, less accumulated amortization

1,152,164

448,055

Deferred tax assets

231,814

251,517

Other assets

415,955

578,937

Property, plant and equipment, less allowance for depreciation (2016 - $733,383; 2015 - $683,676)

583,653

509,729

TOTAL ASSETS

$

7,149,513

$

6,126,356

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable

$

1,991,871

$

1,513,710

Current portion of long-term debt

525,506

225,000

Income taxes payable

17,258

3,919

Dividends payable

74,684

68,977

Other current liabilities

499,365

427,269

TOTAL CURRENT LIABILITIES

3,108,684

2,238,875

Long-term debt

225,000

225,000

Pension and other post-retirement benefit liabilities

433,200

515,689

Deferred tax liabilities

81,526

-

Other long-term liabilities

463,246

439,431

EQUITY

Preferred stock, par value--$1 per share

Authorized--9,000,000 shares -- none issued

0

0

Common stock, par value--$1 per share

Authorized--405,000,000 shares

Issued--2016 -- 138,921,478; 2015 -- 139,357,294

138,921

139,357

Retained earnings

3,213,320

3,010,084

Accumulated other comprehensive loss

(523,487

)

(451,343

)

TOTAL PARENT EQUITY

2,828,754

2,698,098

Noncontrolling interests in subsidiaries

9,103

9,263

TOTAL EQUITY

2,837,857

2,707,361

TOTAL LIABILITIES AND EQUITY

$

7,149,513

$

6,126,356

See notes to condensed consolidated financial statements.

2


THE CONTENTS OF THIS SAMPLE FILING ARE FICTITIOUS AND ARE INTENDED ONLY TO BE USED TO DEMONSTRATE THE INLINE XBRL VIEWER. INFORMATION IN THIS SAMPLE FILING DOES NOT REPRESENT A LEGAL INTERPRETATION OR A STATEMENT OF SEC POLICY.

INLINE TESTING SAMPLE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Three Months Ended Sept. 30,

Nine Months Ended Sept. 30,

2016

2015

2016

2015

(unaudited)

(in thousands, except per share data)

Net sales

$

3,316,719

$

3,038,200

$

9,504,038

$

8,905,412

Cost of goods sold

2,325,888

2,159,768

6,689,037

6,324,722

Gross profit

990,831

878,432

2,815,001

2,580,690

Operating expenses:

Selling and administrative expenses

714,561

611,005

1,998,986

1,824,388

Depreciation and amortization

31,698

23,048

88,265

65,996

746,259

634,053

2,087,251

1,890,384

Income before income taxes

244,572

244,379

727,750

690,306

Income taxes

85,600

85,533

254,713

241,607

Net income

$

158,972

$

158,846

$

473,037

$

448,699

Basic net income per share

$

1.02

$

1.01

$

3.11

$

2.83

Diluted net income per share

$

1.01

$

1.00

$

3.09

$

2.80

Dividends declared per share

$

0.48

$

.45

$

1.45

$

1.34

Weighted average shares outstanding

155,855

157,273

152,102

158,551

Dilutive effect of stock options and non-vested restricted stock awards

1,543

1,573

984

1,699

Weighted average shares outstanding - assuming dilution

157,398

158,846

153,086

160,250

Comprehensive income

$

173,085

$

189,488

$

408,899

$

494,108

See notes to condensed consolidated financial statements.

3


THE CONTENTS OF THIS SAMPLE FILING ARE FICTITIOUS AND ARE INTENDED ONLY TO BE USED TO DEMONSTRATE THE INLINE XBRL VIEWER. INFORMATION IN THIS SAMPLE FILING DOES NOT REPRESENT A LEGAL INTERPRETATION OR A STATEMENT OF SEC POLICY.

INLINE TESTING SAMPLE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months

Ended September 30,

2016

2015

(unaudited)

(in thousands)

OPERATING ACTIVITIES:

Net income

$

473,037

$

448,699

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

88,265

65,996

Share-based compensation

8,039

7,288

Excess tax benefits from share-based compensation

(10,818

)

(8,315

)

Other

(45,547

)

(910

)

Changes in operating assets and liabilities

232,755

185,244

NET CASH PROVIDED BY OPERATING ACTIVITIES

745,731

698,002

INVESTING ACTIVITIES:

Purchases of property, plant and equipment

(75,732

)

(64,465

)

Acquisitions and other investing activities

(552,698

)

(490,840

)

NET CASH USED IN INVESTING ACTIVITIES

(628,430

)

(555,305

)

FINANCING ACTIVITIES:

Proceeds from debt

1,885,095

675,000

Payments on debt

(1,791,184

)

(675,000

)

Share-based awards exercised, net of taxes paid

(12,882

)

(3,607

)

Excess tax benefits from share-based compensation

10,818

8,315

Dividends paid

(220,548

)

(212,458

)

Purchase of stock

(64,564

)

(52,927

)

NET CASH USED IN FINANCING ACTIVITIES

(193,265

)

(260,677

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(7,657

)

2,696

NET DECREASE IN CASH AND CASH EQUIVALENTS

(83,621

)

(115,284

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

362,786

489,688

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

288,783

$

374,404

See notes to condensed consolidated financial statements.

4


THE CONTENTS OF THIS SAMPLE FILING ARE FICTITIOUS AND ARE INTENDED ONLY TO BE USED TO DEMONSTRATE THE INLINE XBRL VIEWER. INFORMATION IN THIS SAMPLE FILING DOES NOT REPRESENT A LEGAL INTERPRETATION OR A STATEMENT OF SEC POLICY.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of INLINE TESTING SAMPLE (the "Company") for the year ended December 31, 2015. Accordingly, the unaudited interim condensed consolidated financial statements and related disclosures herein should be read in conjunction with the Company's 2015 Annual Report on Form 10-K.

Financial results for the Company and airlines in general can be seasonal in nature. In many years, the Company's revenues, as well as its operating income and net income, have been better in its second and third fiscal quarters than in its first and fourth fiscal quarters. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers, unemployment levels, corporate travel budgets, and other factors beyond the Company's control. These and other factors, such as the price of jet fuel in some periods, the nature of the Company's fuel hedging program, the periodic volatility of commodities used by the Company for hedging jet fuel, and the requirements related to hedge accounting, have created, and may continue to create, significant volatility in the Company's financial results.

In the opinion of management, all adjustments necessary for a fair presentation of the Company's financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The results of operations for the nine month period ended September 30, 2016 are not necessarily indicative of results for the entire year. The Company has evaluated subsequent events through the date the financial statements covered by this quarterly report were issued.

Note 2 - Segment Information

 

Three Months Ended Sept. 30,

Nine Months Ended Sept. 30,

2016

2015

2016

2015

(in thousands)

(in thousands)

Net sales:

Passenger - Mainline

$

1,814,468

$

1,485,771

$

5,015,174

$

4,310,332

Passenger - Regional

999,278

1,024,969

3,009,979

3,058,921

Cargo

387,411

399,830

1,127,571

1,155,373

Heavy equipment

128,536

135,789

382,476

402,690

Other

(12,974

)

(8,159

)

(31,162

)

(21,904

)

Total net sales

$

3,316,719

$

3,038,200

$

9,504,038

$

8,905,412

Operating profit:

Passenger - Mainline

$

162,149

$

135,583

$

438,832

$

376,368

Passenger - Regional

71,636

85,159

222,644

246,602

Cargo

25,285

26,948

81,949

88,261

Heavy equipment

11,363

12,200

31,767

34,609

Total operating profit

270,433

259,890

775,192

745,840

Interest expense, net

(6,328

)

(4,474

)

(16,412

)

(13,235

)

Other intangible assets amortization

(6,953

)

(3,085

)

(18,438

)

(8,262

)

Other, net

(12,580

)

(7,952

)

(12,592

)

(34,037

)

Income before income taxes

$

244,572

$

244,379

$

727,750

$

690,306

 

Net sales by segment exclude the effect of certain discounts, incentives and freight billed to customers. The line item "Other" represents the net effect of the discounts, incentives and freight billed to customers, which is reported as a component of net sales in the Company's condensed consolidated statements of income and comprehensive income.

Note 3 - Recent Accounting Pronouncements

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and significantly changes the consolidation analysis required. ASU 2015-02 requires management to reevaluate all legal entities under a revised consolidation model to specifically (i) modify the evaluation of whether limited partnership and similar legal entities are variable interest entities (“VIEs”), (ii) eliminate the presumption that a general partner should consolidate a

5


limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (iv) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. ASU 2015-02 is effective for the Company’s interim and annual periods beginning after December 15, 2015. The adoption of ASU 2015-02 did not have a material impact to the Company’s condensed consolidated financial statements for the three months ended March 31, 2016 and will not have a material impact on the annual consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires an entity to recognize a right-of-use asset and a lease liability on the balance sheet for all leases, including operating leases, with a term greater than twelve months. Expanded disclosures with additional qualitative and quantitative information will also be required. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The new standard must be adopted using a modified retrospective transition. The Company is currently evaluating the impact of ASU No. 2016-02 on its condensed consolidated financial statements and related disclosures.

In March 2016, The FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) that changes the accounting for certain aspects of share-based compensation to employees including forfeitures, employer tax withholding, and the financial statement presentation of excess tax benefits or expense. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based compensation. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016 and early adoption is permitted. The Company is currently evaluating the impact of ASU No. 2016-09 on its condensed consolidated financial statements.

THE CONTENTS OF THIS SAMPLE FILING ARE FICTITIOUS AND ARE INTENDED ONLY TO BE USED TO DEMONSTRATE THE INLINE XBRL VIEWER. INFORMATION IN THIS SAMPLE FILING DOES NOT REPRESENT A LEGAL INTERPRETATION OR A STATEMENT OF SEC POLICY.

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.

INLINE TESTING SAMPLE COMPANY

(Registrant)

Date: November 7, 2016

/s/ John Smith

John Smith

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

6