AVX 10-Q Quarterly Report Dec. 31, 2015

AVX CORP

10-Ks and 10-Qs

10-Q	Quarter ended Dec. 31, 2019
10-Q	Quarter ended Sept. 30, 2019
10-Q	Quarter ended June 30, 2019
10-K	Fiscal year ended March 31, 2019
10-Q	Quarter ended Dec. 31, 2018
10-Q	Quarter ended Sept. 30, 2018
10-Q	Quarter ended June 30, 2018
10-K	Fiscal year ended March 31, 2018
10-Q	Quarter ended Dec. 31, 2017
10-Q	Quarter ended Sept. 30, 2017
10-Q	Quarter ended June 30, 2017
10-K	Fiscal year ended March 31, 2017
10-Q	Quarter ended Dec. 31, 2016
10-Q	Quarter ended Sept. 30, 2016
10-Q	Quarter ended June 30, 2016
10-K	Fiscal year ended March 31, 2016
10-Q	Quarter ended Dec. 31, 2015
10-Q	Quarter ended Sept. 30, 2015
10-Q	Quarter ended June 30, 2015
10-K	Fiscal year ended March 31, 2015
10-Q	Quarter ended Dec. 31, 2014
10-Q	Quarter ended Sept. 30, 2014
10-Q	Quarter ended June 30, 2014
10-K	Fiscal year ended March 31, 2014
10-Q	Quarter ended Dec. 31, 2013
10-Q	Quarter ended Sept. 30, 2013
10-Q	Quarter ended June 30, 2013
10-K	Fiscal year ended March 31, 2013
10-Q	Quarter ended Dec. 31, 2012
10-Q	Quarter ended Sept. 30, 2012
10-Q	Quarter ended June 30, 2012
10-K	Fiscal year ended March 31, 2012
10-Q	Quarter ended Dec. 31, 2011
10-Q	Quarter ended Sept. 30, 2011
10-Q	Quarter ended June 30, 2011
10-K	Fiscal year ended March 31, 2011
10-Q	Quarter ended Dec. 31, 2010
10-Q	Quarter ended Sept. 30, 2010
10-Q	Quarter ended June 30, 2010
10-K	Fiscal year ended March 31, 2010
10-Q	Quarter ended Dec. 31, 2009

PROXIES

DEF 14A	Filed on June 4, 2019
DEF 14A	Filed on June 4, 2018
DEF 14A	Filed on June 14, 2017
DEF 14A	Filed on June 8, 2016
DEF 14A	Filed on June 5, 2015
DEF 14A	Filed on June 6, 2014
DEF 14A	Filed on June 7, 2013
DEF 14A	Filed on June 18, 2012
DEF 14A	Filed on June 10, 2011
DEF 14A	Filed on June 9, 2010

10-Q 1 avx-20151231x10q.htm 10-Q Q3 FY16

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31 , 2015


☐	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 1-7201

AVX Corporation No Kyocera 300dpi

(Exact name of registrant as specified in its charter)


Delaware		33-0379007
(State or other jurisdiction of incorporation or organization)		(IRS Employer ID No.)

1 AVX Boulevard Fountain Inn, South Carolina		29644
(Address of principle executive offices)		(Zip Code)

(864) 967-2150
(Registrant's phone 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

☒

☐

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

Yes

☒

☐

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	☐		Accelerated file r	☒
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

☐

☒

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 February 3 , 2016
Common Stock, par value $0.01 per share		16 7, 569,084

AVX Corporation and Subsidiaries

Table of Contents


		Page
PART I:	Financial Information:

ITEM 1.	Financial Statements (unaudited):
	Consolidated Balance Sheets as of March 31, 201 5 and December 31 , 2015	3
	Consolidated Statements of Operations for the three and nine months ended December 31 , 2014 and 201 5	4
	Consolidated Statements of Comprehensive Income for the three and nine months ended December 31 , 2 01 4 and 201 5	5
	Consolidated Statem ents of Cash Flows for the nine months ended December 31 , 201 4 and 201 5	6
	Notes to Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	29
ITEM 4.	Controls and Procedures	29

PART II:	Other Information:

ITEM 1.	Legal Proceedings	29
ITEM 1A.	Risk Factors	29
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
ITEM 6.	Exhibits	30
Signature		31

AVX Corporation and Subsidiaries

Consolidated Balance Sheets (unaudited)

(in thousands, except per share data)



	As of		As of
	March 31, 2015		December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	381,605	$	425,635
Short-term investments in securities		461,901		489,757
Accounts receivable - trade, net		186,615		151,772
Accounts receivable - affiliates		2,377		904
Inventories		535,912		490,293
Income taxes receivable		67,504		64,937
Deferred income taxes		76,963		-
Prepaid and other		31,675		32,073
Total current assets		1,744,552		1,655,371
Long-term investments in securities		150,029		85,691
Property and equipment, net		199,842		210,102
Goodwill		213,051		213,051
Intangible assets, net		62,587		58,812
Deferred income taxes - non-current		79,276		124,194
Other assets		9,678		6,343
Total Assets	$	2,459,015	$	2,353,564
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade	$	35,290	$	30,025
Accounts payable - affiliates		40,753		29,921
Income taxes payable		4,450		7,132
Deferred income taxes		424		-
Accrued payroll and benefits		38,952		33,063
Accrued expenses		146,440		59,742
Total current liabilities		266,309		159,883
Pensions		22,520		18,262
Deferred income taxes - non-current		5,770		6,092
Other liabilities		32,453		26,493
Total Liabilities		327,052		210,730
Commitments and contingencies (Note 7)
Stockholders' Equity:
Preferred stock, par value $.01 per share:
Authorized, 20,000 shares; None issued and outstanding		-		-
Common stock, par value $.01 per share:
Authorized, 300,000 shares; issued, 176,368 shares; outstanding, 168,190 and 167,569 shares at March 31, 2015 and December 31, 2015, respectively		1,764		1,764
Additional paid-in capital		352,996		353,940
Retained earnings		1,948,476		1,964,443
Accumulated other comprehensive income (loss)		(66,665)		(64,237)
Treasury stock, at cost:
8,178 and 8,799 shares at March 31, 2015 and December 31, 2015, respectively		(104,608)		(113,076)
Total Stockholders' Equity		2,131,963		2,142,834
Total Liabilities and Stockholders' Equity	$	2,459,015	$	2,353,564

See accompanying notes to consolidated financial statements .

A VX Corporation and Subsidiaries

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)



	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Net sales	$	321,687	$	287,047	$	1,037,681	$	891,924
Cost of sales		243,010		221,004		786,054		676,930
Gross profit		78,677		66,043		251,627		214,994
Selling, general and administrative expenses		28,290		31,216		85,548		87,596
Litigation settlements and charges		-		37,500		-		43,650
Profit (loss) from operations		50,387		(2,673)		166,079		83,748
Other income:
Interest income		1,129		1,249		3,373		3,528
Other, net		1,196		832		227		1,563
Income (loss) before income taxes		52,712		(592)		169,679		88,839
Provision (benefit) for income taxes		13,759		(5,966)		45,334		19,969
Net income	$	38,953	$	5,374	$	124,345	$	68,870

Income per share:
Basic	$	0.23	$	0.03	$	0.74	$	0.41
Diluted	$	0.23	$	0.03	$	0.74	$	0.41

Dividends declared (per share)	$	0.105	$	0.105	$	0.295	$	0.315
Weighted average common shares outstanding:
Basic		168,164		167,655		168,117		167,883
Diluted		168,442		167,833		168,375		168,083

See accompanying notes to consolidated financial statements .

AV X Corporation and Subsidiaries

Consolidated State ments of Comprehensive Income (Unaudited)

(in thousands)



	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Net income	$	38,953	$	5,374	$	124,345	$	68,870
Other comprehensive income (loss), net of income taxes
Foreign currency translation adjustment		(12,227)		(7,213)		(40,593)		3,033
Foreign currency cash flow hedges adjustment		(397)		(159)		(1,289)		(334)
Pension liability adjustment		55		(47)		239		(271)
Other comprehensive income (loss), net of income taxes		(12,569)		(7,419)		(41,643)		2,428
Comprehensive income (loss)	$	26,384	$	(2,045)	$	82,702	$	71,298

See accompanying notes to consolidated financial statements.

A VX Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)



	Nine Months Ended
	December 31,
	2014		2015
Operating Activities :
Net income	$	124,345	$	68,870
Adjustment to reconcile net income to net cash from operating activities:
Depreciation and amortization		31,090		28,641
Stock-based compensation expense		1,208		982
Deferred income taxes		6,094		15,573
Loss on disposal of property and equipment		-		424
Changes in operating assets and liabilities:
Accounts receivable		24,762		36,259
Inventories		2,280		46,145
Accounts payable and accrued expenses		107,651		(100,584)
Income taxes payable		8,191		2,861
Other assets		(12,692)		17,264
Other liabilities		(128,570)		(13,751)
Net cash provided by operating activities		164,359		102,684

Investing Activities:
Purchases of property and equipment		(19,134)		(33,843)
Purchases of investment securities		(909,356)		(598,947)
Redemptions of investment securities		685,027		634,872
Proceeds from property & equipment dispositions		52		450
Net cash provided by (used in) investing activities		(243,411)		2,532

Financing Activities:
Dividends paid		(49,584)		(52,903)
Purchase of treasury stock		(4,335)		(9,272)
Proceeds from exercise of stock options		5,282		766
Net cash used in financing activities		(48,637)		(61,409)

Effect of exchange rate on cash		(2,412)		223

Increase (decrease) in cash and cash equivalents		(130,101)		44,030

Cash and cash equivalents at beginning of period		460,674		381,605

Cash and cash equivalents at end of period	$	330,573	$	425,635

See accompanying notes to consolidated financial statements.

A VX Corporation and Subsidiaries

Notes to the Consolidated Financial Statements ( Unaudited )

(in thousands, except per share data)

1. Basis of Presentation:

The consolidated financial statements of AVX Corporation and its subsidiaries (“AVX” or the “Company”) include all accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ( “ SEC ” ) for interim financial reporting. These consolidated financial statements are unaudited and, in the opinion of management, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for the fair statement of the consolidated balance sheets, operating results, comprehensive income (loss), and cash flows for the periods presented. Operating results for the three and nine month period s ended December 31 , 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 201 6 due to changes in economic conditions and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 .

Critical Accounting Policies and Estimates:

We have identified the accounting policies and estimates that are critical to our business operations and understanding our results of operations. Those policies and estimates can be found in Note 1, “ Summary of Significant Accounting Policies ” , of the Notes to Consolidated Financial Statements and in “ Critical Accounting Policies and Estimates ” , in “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 . Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 . During the three and nine month period s ended December 31 , 2015 , there were no significant changes to any critical accounting policies or to the methodology used in determining estimates including those related to investment securities, revenue recognition, inventories, goodwill, intangible assets, property and equipment, income taxes, and contingencies , except for the early adoption of FASB ASU 2015-17 , “Income Taxes” , explained below in “New Accounting Standards”.

New Accounting Standards

In April 2014, the Financial Accounting Standards Board ( FASB ) issued ASU 2014-08, which changes the criteria for determining which disposals are required to be presented as discontinued operations. The changes require a disposal of a component of an entity or a group of components of an entity to be reported in discontinued operations if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results when any of the following occurs: (i) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale, (ii) the component of an entity or group of components of an entity is disposed of by sale, or (iii) the component of an entity or group of components of an entity is d isposed of other than by sale. The amendments apply on a prospective basis to disposals of components of an entity that occur within annual periods beginning on or after December 15, 2014 and interim periods within those years, with early adoption permitted. The implementation of the amended accounting guidance on January 1, 2015 did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This guidance modifies the financial reporting of revenue and how an entity will determine the measurement of revenue and timing of when it is recognized. The guidance provides for a five-step approach in applying the standard: 1) identifying the contract with the customer, 2) identifying separate performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to separate performance obligations, and 5) recognizing the revenue when the performance obligation has been satisfied. The new guidance requires enhanced disclosures for the nature, amount, timing, and uncertainty of revenue that is being recognized. The guidance is effective for public companies for interim and annual reporting periods beginning after December 15, 201 7 . Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. Early adoption is permitted. Management is currently evaluating the impact of this guidance on our consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes . ” This guidance simplifies the presentation of deferred income taxes which have previously been split between current and noncurrent deferred tax assets and liabilities. Accordingly, the recording and presentation of deferred income taxes are required to be presented as noncurrent in a classified statement of financial position. The guidance is effective for public companies for interim and annual reporting periods beginning after December 15, 201 6. Early adoption is permitted and management has elected to adopt this guidance prospectively beginning with the interim reporting period ending December 31, 2015 . The impact on the Balance Sheet as of March 31, 2015 would have been a decrease in current deferred income tax assets of $76,963 and an increase in non-current deferred income tax assets of $76,963 as well as a decrease of current deferred income tax liabilities of $ 424 and an increase of non-current deferred income tax liabilities of $424 .

We have reviewed other newly issued accounting pronouncements and concluded that they are either not applicable to our business or that no material effect is expected on our consolidated financial statements as a result of adoption.

2. Earnings Per Share:

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the dilutive effect of potential common stock equivalents during the period. Stock options are the only common stock equivalents currently used in our calculation and are computed using the treasury stock method.

The table below represents the basic and diluted earnings per share and sets forth the weighted average number of shares of common st ock outstanding and potential common stock equivalents:



	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Net income	$	38,953	$	5,374	$	124,345	$	68,870
Computation of Basic EPS:
Weighted Average Shares Outstanding used in Computing Basic EPS		168,164		167,655		168,117		167,883
Basic earnings per share	$	0.23	$	0.03	$	0.74	$	0.41
Computation of Diluted EPS:
Weighted Average Shares Outstanding used in Computing Basic EPS		168,164		167,655		168,117		167,883
Effect of stock options		278		178		258		200
Weighted Average Shares used in Computing Diluted EPS (1)		168,442		167,833		168,375		168,083
Diluted earnings per share	$	0.23	$	0.03	$	0.74	$	0.41

(1) Common stock equivalents not included in the computation of diluted earnings per share because the impact would have been antidilutive were 1,750 shares and 2,725 shares for the three months ended December 31 , 20 14 and 201 5 , respectivel y and 2,321 and 2, 548 for the nine months ended December 31 , 2014 and 2015, respectively.

3. Trade Accounts Receivable:


	March 31, 2015		December 31, 2015
Gross Accounts Receivable - Trade	$	209,838	$	173,887
Less:
Allowances for doubtful accounts		659		389
Stock rotation and ship from stock and debit		16,378		14,969
Sales returns and discounts		6,186		6,757
Total allowances		23,223		22,115
	$	186,615	$	151,772

Charges related to allowances for doubtful accounts are charged to selling, general and administrative expenses. Charges related to stock rotation, ship from stock and debit, sales returns , and sales discounts are reported as deductions from revenue.



	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Allowances for doubtful accounts:
Beginning Balance	$	579	$	732	$	410	$	659
Charges		-		-		185		81
Applications		1		(343)		(15)		(351)
Ending Balance	$	580	$	389	$	580	$	389


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Stock rotation and ship from stock and debit:
Beginning Balance	$	18,104	$	16,171	$	17,138	$	16,378
Charges		8,377		7,309		27,428		22,157
Applications		(8,385)		(8,511)		(26,470)		(23,566)
Ending Balance	$	18,096	$	14,969	$	18,096	$	14,969


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Sales returns and discounts:
Beginning Balance	$	6,554	$	6,430	$	6,356	$	6,186
Charges		5,970		7,305		15,396		17,903
Applications		(5,582)		(6,958)		(14,748)		(17,341)
Translation and other		(121)		(20)		(183)		9
Ending Balance	$	6,821	$	6,757	$	6,821	$	6,757

4. Fair Value:

Fair Value Hierarchy:

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs)

used to value the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1 : Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2 : Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 : Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

During the three and nine month periods ended December 31 , 2014 and 2015, there have been no transfers of assets or liabilities between levels within the fair value hierarchy.



			Based on
			Quoted prices		Other
			in active		observable		Unobservable
	Fair Value at		markets		inputs		inputs
	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
Assets held in the non-qualified deferred compensation program (1)	$	8,636	$	8,636	$	-	$	-
Foreign currency derivatives (2)		1,279		-		1,279		-
Total	$	9,915	$	8,636	$	1,279	$	-


			Based on
			Quoted prices		Other
			in active		observable		Unobservable
	Fair Value at		markets		inputs		inputs
	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Liabilities measured at fair value on a recurring basis:
Obligation related to assets held in the non-qualified deferred compensation program (1)	$	8,636	$	8,636	$	-	$	-
Foreign currency derivatives (2)		1,170		-		1,170		-
Total	$	9,806	$	8,636	$	1,170	$	-


			Based on
			Quoted prices		Other
			in active		observable		Unobservable
	Fair Value at		markets		inputs		inputs
	December 31, 2015		(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
Assets held in the non-qualified deferred compensation program (1)	$	5,351	$	3,883	$	1,468	$	-
Foreign currency derivatives (2)		877		-		877		-
Total	$	6,228	$	3,883	$	2,345	$	-


				Based on
			Quoted prices			Other
				in active		observable		Unobservable
	Fair Value at			markets	inputs		inputs
	December 31, 2015		(Level 1)		(Level 2)		(Level 3)
Liabilities measured at fair value on a recurring basis:
Obligation related to assets held in the non-qualified deferred compensation program (1)	$	5,351	$	3,883		1,468	$	-
Foreign currency derivatives (2)		1,018		-		1,018		-
Total	$	6,369	$	3,883	$	2,486	$	-

(1) The market value of the assets held in the trust for the non-qualified deferred compensation program is included as an asset and as a liability as the trust’s assets are both assets of the Company and also a liability as they are available to general creditors in certain circumstances.

(2) Foreign currency derivatives in the form of forward contracts are included in prepaid and other and accrued expenses in the consolidated balance sheets. Unrealized gains and losses on derivatives classified as cash flow hedges are recorded in other comprehensive income (loss). Realized gains and losses on derivatives classified as cash flow hedges are recorded in the consolidated statement of operations as revenues and costs of sales and gains and losses on derivatives not designated as hedges are recorded in other income.

Valuation Techniques:

The following describes valuation techniques used to appropriately value our assets held in the non-qualified deferred compensation plan and derivatives.

Assets held in the non-qualified deferred compensation plan

Assets valued using Level 1 and Level 2 inputs in the table above represent assets from our non-qualified deferred compensation program. The funds held by the non-qualified deferred compensation program are valued based on the number of shares in the funds using a price per share traded in an active market.

Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. If the cost of an investment exceeds its fair value, among other factors, we evaluate general market conditions, the duration and extent to which the fair value is less than cost, and whether or not we expect to recover the security's entire amortized cost basis. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established.

Derivatives

We primarily use forward contracts, with maturities generally less than four months, designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions related to purchase commitments and sales, denominated in various currencies. We also use derivatives not designated as hedging instruments to hedge foreign currency balance sheet exposures. These derivatives are used to offset currency changes in the fair value of the hedged assets and liabilities. Fair values for all of our derivative financial instruments are valued by adjusting the market spot rate by forward points, based on the date of the contract. The spot rates and forward points used are an average rate from an actively traded market. At March 31, 2015 and December 31 , 2015, all of our forward contracts are valued using Level 2 measurements.

5. Financial Instruments and Investments in Securities:

At March 31, 201 5 and December 31 , 201 5 , we classified investments in debt securities and time deposits as held-to-maturity securities.

Our long-term and short-term investment securities are accounted for as held-to-maturity securities and are carried at amortized cost. We have the ability and intent to hold these investments until maturity. All income generated from the held-to-m aturity securities investments is recorded as interest income.

Investments in held-to-maturity securities, recorded at amortized cost, were as follows:


	March 31, 2015
			Gross		Gross
			Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Short-term investments:
Commercial paper	$	34,493	$	-	$	(13)	$	34,480
Corporate bonds		2,517		-		-		2,517
Time deposits		424,891		227		-		425,118
Long-term investments:
Corporate bonds		150,029		51		(53)		150,027
	$	611,930	$	278	$	(66)	$	612,142



	December 31, 2015
			Gross		Gross
			Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Short-term investments:
Time deposits	$	489,757	$	261	$	-	$	490,018
Long-term investments:
Corporate bonds		85,691		-		(266)		85,425
	$	575,448	$	261	$	(266)	$	575,443

The amortized cost and estimated fair value of held-to-maturity investments at December 31 , 201 5 , by contractual maturity, are shown below. The estimated fair value of these investments are based on valuation inputs that include benchmark yields, reported trades, broker and dealer quotes, issuer spreads, two-sided markets, benchmark securities bids, offers, and reference data, which are Level 2 inputs in the fair value hierarchy. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.



	Held-to-Maturity
	Amortized		Estimated
	Cost		Fair Value
Due in one year or less	$	489,757	$	490,018
Due after one year through five years		85,691		85,425
Total	$	575,448	$	575,443

6. Inventories:


	March 31, 2015		December 31, 2015
Finished goods	$	102,212	$	80,113
Work in process		106,627		99,443
Raw materials and supplies		327,073		310,737
	$	535,912	$	490,293

7 . Commitments and Contingencies:

We have been identified by the United States Environmental Protection Agency (“EPA”), state governmental agencies or other private parties as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) or equivalent state or local laws for clean-up and response costs associated with certain sites at which remediation is required with respect to prior contamination. Because CERCLA or such state statutes authorize joint and several liability, the EPA or state regulatory authorities could seek to recover all clean-up costs from any one of the PRPs at a site despite the involvement of other PRPs. At certain sites, financially responsible PRPs other than AVX also are, or have been, involved in site investigation and clean-up activities. We believe that liability resulting from these sites will be apportioned between AVX and other PRPs.

To resolve our liability at the sites at which we have been named a PRP, we have entered into various administrative orders and consent decrees with federal and state regulatory agencies governing the timing and nature of investigation and remediation. As is customary, the orders and decrees regarding sites where the PRPs are not themselves implementing the chosen remedy contain provisions allowing the EPA to reopen the agreement and seek additional amounts from settling PRPs in the event that certain contingencies occur, such as the discovery of significant new information about site conditions.

On October 10, 2012, the EPA, the United States, and the Commonwealth of Massachusetts and AVX announced that they had reached a financial settlement with respect to the EPA’s ongoing clean-up of the New Bedford Harbor in the Commonwealth of Massachusetts (the “harbor”). That agreement is contained in a Supplemental Consent Decree that modifies certain provisions of prior agreements related to clean-up of the harbor, including elimination of the governments’ right to invoke certain reopener provisions in the future. Under the terms of the settlement, AVX was obligated to pay $ 366,250 , plus interest computed from August 1, 2012, in three installments over a two -year period for use by the EPA and the Commonwealth to complete the clean-up of the harbor . On May 26 , 2015, we prepaid the third and final settlement installment of $ 122,083 , plus interest of $ 1,106 .

O n June 3, 2010, AVX entered into an agreement with the EPA and the City of New Bedford, pursuant to which AVX is required to perform environmental remediation at a site referred to as the “Aerovox Site” (the “Site”), located in New Bedford, Massachusetts. AVX has substantially completed its obligations pursuant to such agreement with the EPA and the City of New Bedford with respect to the satisfaction of AVX’s federal law requirements. Agreements with the state regulatory authorities have yet to be concluded but are likely to include additional groundwater remediation. W e have a remaining accrual of $11, 024 at December 31 , 2015 , represent ing our estimate of the potential liability related to the remaining performance of environmental remediation actions at the Site using certain assumptions regarding the plan of remediation . Since additional sampling and analysis may cause the state regulatory authority, the Massachusetts Department of Environmental Protection, to require a more extensive and costly plan of remediation, until all parties agree and remediation is complete, we cannot be certain there will be no additional cost relating to the Site .

We had total reserves of approximately $13 8 , 14 6 and $ 1 5,602 at March 31, 201 5 and December 31 , 201 5 , respectively, related to the various matters and specific sites discussed above. These reserves are classified in the Consolidated Balance Sheets as $ 127,2 4 6 and $ 4 , 702 in accrued expenses at March 31, 201 5 and December 31 , 2015 , respectively, and $1 0, 900 in other non-current liabilities at both March 31, 201 5 and December 31 , 201 5 . The amount s recorded for iden tified contingent liabilities are based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional legal and technical information that becomes available. Also, uncertainties about the status of laws, regulations, regulatory actions, technology, and information related to individual sites make it difficult to develop an estimate of the reasonably possible aggregate environmental remediation exposure. Accordingly, these costs could differ from our current estimates.

Effective September 30, 2015 a Settlement Agreement and Mutual Release (“Settlement Agreement”) was entered into with the City of New Bedford in settlement of the following two cases: DaRosa v. City of New Bedford and City of New Bedford, et al v. AVX Corporation both arising from contamination at certain sites in the City of New Bedford. In accordance with the Settlement Agreement, AVX paid the sum of $6,5 00 to the City of New Bedford in October 2015. This Settlement Agreement releases AVX from any future actions by the City of New Bedford related to these cases or sites .

On November 4, 2015, the Canadian Ministry of the Environment and Climate Change (the “MoE”) issued a draft order naming AVX Corporation as well as others as responsible parties with respect to a location in Hamilton, Ontario that was the site of operations of Aerovox Canada, a former subsidiary of Aerovox Corporation, a predecessor of AVX. AVX has taken the position that any liability of Aerovox Canada for such site under the laws of Canada cannot be imposed on AVX. At present, it is unclear whether the MoE will issue a final order against AVX, whether it will seek to enforce such Canadian order against AVX, and whether, in the event it does so, AVX will have any liability under applicable law. AVX intends to contest any such course of action that may be taken by the MoE.

We also operate, or have operated in the past, on other sites that may have potential environmental issues as a result of activities at sites during AVX’s long history of manufacturing operations or prior to the start of operations by AVX. Even though we may have rights of indemnity for such environmental issues at certain sites, regulatory agencies in those jurisdictions may require us to address such issues. Once it becomes probable that we will incur costs in connection with remediation of a site and such costs can be reasonably estimated, we establish reserves or adjust our reserves for our projected share of these costs. A separate account receivable is recorded for any indemnified costs. Our environmental reserves are not discounted and do not reflect any possible future insurance recoveries, which are not expected to be significant, but do reflect a reasonable estimate of cost sharing at multiple party sites or indemnification of our liability by a third party.

On April 25, 2013, AVX was named as a defendant in a patent infringement case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. v AVX Corporation . This case allege d that certain AVX products infringe on one or more of nine Greatbatch patents. On January 26, 2016 (following the Company’s issuance of its quarterly earnings release), the jury returned a verdict in favor of the plaintiff and found damages to Greatbatch in the amount of $37,500 . AVX is reviewing the verdict and consulting with its legal advisors on what action AVX may take in response.

On September 2, 2014, a subsidiary of AVX, American Technical Ceramics (“ATC”), was named as a defendant in a patent infringement case filed in the United States District Court of the District of Delaware captioned Presidio Components, Inc. v. American Technical Ceramics Corp. This case alleges that certain products of ATC’s infringe on a Presidio patent. AVX believes it has meritorious defenses and intends to vigorously defend the case.

As of December 31, 2015, we had total reserves of $ 39,250 with respect to the two intellectual property cases discussed above. The amounts recorded are based on estimated outcomes. Amounts recorded are reviewed periodically and adjusted to reflect additional information that becomes available. Accordingly, these costs could differ from our current estimates.

During the quarter ended September 30, 2014, AVX was named as a co-defendant in a series of cases filed in the United States and in the Canadian provinces of Quebec, Ontario and British Columbia alleging violations of United States, Canadian, and state antitrust laws asserting that AVX and numerous other companies are participants in alleged price-fixing in the capacitor market. The cases in the United States were consolidated into the Northern District of California on October 2, 2014. During the quarter ended December 31, 2014, additional Canadian cases were filed in the provinces of Quebec, Ontario , British Columbia, Saskatchewan and Manitoba . In addition, in the quarter ended September 30 , 2015, AVX was named as a co-defendant in two case s filed in the United States alleging violations of United States antitrust laws asserting that AVX and numerous other companies we re participants in alleged price-fixing in the resistor market. These cases are at the initial stages. AVX believes it has meritorious defenses and intends to vigorously defend the case s .

We are also involved in disputes, warranty, and other legal proceedings arising in the normal course of business.

While we cannot predict the outcome of these agreements, remediation efforts, disputes and proceedings, management believes, based upon a review with legal counsel, that none of these proceedings will have a material impact above the current reserves on our financial position, results of operations, comprehensive income (loss), or cash flows.

8 . Comprehensive Income (Loss):

Comprehensive income (loss) represents changes in equity during a period except those resulting from investments by and distributions to shareholders. The specifi c components include net income , pension liability and other post-retirement benefit adjustments, deferred gains and losses resulting from foreign currency translation adjustments and unrealized gains and losses on qualified foreign currency cash flow hedges.

Other comprehensive income (loss) includes the following components:


	Three Months Ended
	December 31,
	2014				2015
	Pre-tax		Net of Tax		Pre-tax		Net of Tax
Foreign currency translation adjustment	$	(12,227)	$	(12,227)	$	(7,213)	$	(7,213)
Foreign currency cash flow hedges adjustment		(490)		(397)		(231)		(159)
Pension liability adjustment		72		55		(62)		(47)
Other comprehensive income (loss)	$	(12,645)	$	(12,569)	$	(7,506)	$	(7,419)


	Nine Months Ended
	December 31,
	2014				2015
	Pre-tax		Net of Tax		Pre-tax		Net of Tax
Foreign currency translation adjustment	$	(40,593)	$	(40,593)	$	3,033	$	3,033
Foreign currency cash flow hedges adjustment		(1,557)		(1,289)		(436)		(334)
Pension liability adjustment		315		239		(358)		(271)
Other comprehensive income (loss)	$	(41,835)		(41,643)	$	2,239	$	2,428

A mounts reclassified out of accumulated other comprehensive income (loss) into net income include those that pertain to the Company ’ s pension plans and realized gains and losses on derivative instruments designated as cash flow hedges . Please see Note 1 0 for additional information related to the amortization of prior service cost and the recognized actuarial losses , which amounts are reclassified from accumulated other comprehensive income (loss) into net income and are included in selling, general and administrative expenses in the s tatement of o perations during the three and nine month period s ended December 31 , 201 4 and 201 5 . Please see Note 1 1 for additional information related to realized gains and losses on derivative instruments reclassified from accumulated other comprehensive income (loss) into net income during the three and nine month period s ended December 31 , 201 4 and 201 5 .

9 . Segment and Geographic Information:

We have three reportable segments: Passive Components, KED Resale, and Interconnect. The Passive Components segment consists primarily of surface mount and leaded ceramic capacitors, RF thick and thin film components, surface mount and leaded tantalum capacitors, surface mount and leaded film capacitors, ceramic and film power capacitors, super capacitors, EMI filters (bolt in and surface mount), thick and thin film packages of multiple passive integrated components, varistors, thermistors, inductors, and resistive products manufactured or supplied by AVX . The KED Resale segment consists primarily of ceramic capacitors, frequency control devices, SAW devices, sensor products, RF modules, actuators, acoustic devices, and connectors produced by Kyocera and resold by AVX. The Interconnect segment consists primarily of automotive, telecom, and memory connectors manufactured or supplied by AVX Interconnect and KCP Resale connector products . Sales and operating results from these reportable segments are shown in the tables below. In addition, we have a corporate administration group consisting of finance and administrative activities and a separate research and development group.

We evaluate performance of our segments based upon sales and operating profit. There are no intersegment revenues. We allocate the costs of shared resources between segments based on each segment ’ s usage of the shared resources. Cash, accounts receivable, investments in securities, and certain other assets, which are centrally managed, are not readily allocable to operating segments.

The tables below present information about reported segments:


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
Sales Revenue:	2014		2015		2014		2015
Ceramic Components	$	48,289	$	45,617	$	155,283	$	130,495
Tantalum Components		82,876		75,344		272,810		234,905
Advanced Components		88,668		75,155		270,223		248,681
Total Passive Components		219,833		196,116		698,316		614,081
KDP and KCD Resale		52,761		59,064		176,093		176,951
KCP Interconnect Resale		16,958		5,211		58,127		17,622
Total KED Resale		69,719		64,275		234,220		194,573
AVX Interconnect		32,135		26,656		105,145		83,270
Total Revenue	$	321,687	$	287,047	$	1,037,681	$	891,924


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Operating profit (loss):
Passive Components	$	51,574	$	43,625	$	165,244	$	145,766
KED Resale		6,053		4,264		16,695		13,396
Interconnect		6,334		4,215		22,558		15,125
Corporate activities		(13,574)		(54,777)		(38,418)		(90,539)
Total	$	50,387	$	(2,673)	$	166,079	$	83,748


	As of		As of
	March 31, 2015		December 31, 2015
Assets:
Passive Components	$	742,543	$	711,472
KED Resale		39,900		25,146
Interconnect		46,111		48,043
Cash, A/R, and investments in securities		1,182,527		1,153,759
Goodwill - Passive components		202,774		202,774
Goodwill - Interconnect		10,277		10,277
Corporate activities		234,883		202,093
Total	$	2,459,015	$	2,353,564

The following geographic data is based upon net sales generated by operations located within particular geographic are as. Substantially all of the sales in the Americas region were generated in the United States.


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Net sales:
Americas	$	95,801	$	84,522	$	302,192	$	266,317
Europe		92,281		81,752		298,072		253,179
Asia		133,605		120,773		437,417		372,428
Total	$	321,687	$	287,047	$	1,037,681	$	891,924

1 0 . Pension Plans:

Net periodic pension cost for our defined benefit plans consisted of the following for the three and nine months ended December 31 , 201 4 and 201 5 :


	U.S. Plans				International Plans
	Three Months Ended				Three Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Service cost	$	49	$	49	$	237	$	244
Interest cost		397		385		1,662		1,358
Expected return on plan assets		(552)		(528)		(1,948)		(1,651)
Recognized actuarial loss		201		396		466		541
Net periodic pension cost	$	95	$	302	$	417	$	492


	U.S. Plans				International Plans
	Nine Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2015		2014		2015
Service cost	$	147	$	148	$	753	$	737
Interest cost		1,191		1,154		5,189		4,116
Expected return on plan assets		(1,657)		(1,585)		(6,079)		(5,004)
Recognized actuarial loss		603		1,188		1,453		1,640
Net periodic pension cost	$	284	$	905	$	1,316	$	1,489

Based on current actuarial computations, during the nine months ended December 31 , 201 5 , we made contributions of $ 5 , 556 to the international plans. We expect to make additional contributions of approximately $ 1,850 to the international plans over the remainder of fiscal 201 6 . Based on current actuarial computations, w e made a contribution of $ 793 to the U.S. plans during the nine months ended December 31 , 2015 . W e do not anticipate making any additional contributions to the U.S. plans during the remainder of the fiscal year.

11 . Derivative Financial Instruments:

We are exposed to foreign currency exchange rate fluctuations in the normal course of business. We use derivative instruments (forward contracts) to hedge certain foreign currency exposures as part of our risk management strategy. The objective is to offset gains and losses resulting from these exposures with gains and losses on the forward contracts used to hedge them, thereby reducing volatility of earnings or protecting fair values of assets and liabilities. We do not enter into any trading or speculative positions with regard to derivative instruments.

We primarily use forward contracts, with maturities less than four months, designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions related to purchase commitments and sales, denominated in various currencies. These derivative instruments are designated and qualify as cash flow hedges.

The effectiveness of the cash flow hedges is determined by comparing the cumulative change in the fair value of the hedge contract with the cumulative change in the fair value of the hedged transaction, both of which are based on forward rates. The effective portion of the gain or loss on these cash flow hedges is initially recorded in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. Once the hedged transaction is recognized, the gain or loss is recognized in our statement of operations. At March 31, 2015 and December 31 , 2015, respectively, the following forward contracts were entered into to hedge against the volatility of foreign currency exchange rates for certain forecasted sales and purchases.


	March 31, 2015
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	1,090	Accrued expenses	$	864



	December 31, 2015
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	675	Accrued expenses	$	885

For these derivatives designated as hedging instruments, during the three and nine months ended December 31 , 2015, net pre-tax ( losses ) of $ (140) and $ ( 282 ) , respectively, were recognized in other comprehensive income (loss). In addition, during the three and nine months ended December 31 , 2015, net pre-tax ( losses ) of $ (483) and $ ( 1,036 ) , respectively, were reclassified from accumulated other comprehensive income (loss) into cost of sales (for hedging purchases), and net pretax gains of $ 581 and $ 1,219 , respectively , were reclassified from accumulated other comprehensive income (loss) into sales (for hedging sales) in the accompanying statement of operations.

Derivatives not designated as cash flow hedging instruments consist primarily of forwards used to hedge foreign currency balance sheet exposures. These hedging instruments are used to offset foreign currency changes in the fair values of the underlying assets and liabilities. The gains and losses on these foreign currency forward contracts are recognized in other income in the same period as the remeasurement gains and losses of the related foreign currency denominated assets and liabilities and thus naturally offset these gains and losses. At March 31, 2015 and December 31 , 2015, we had the following forward contracts that were entered into to hedge against these exposures.


	March 31, 2015
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	189	Accrued expenses	$	306



		December 31, 2015
		Fair Value of Derivative Instruments
		Asset Derivatives			Liability Derivatives
	Balance				Balance
	Sheet		Fair		Sheet	Fair
	Caption		Value		Caption	Value

Foreign exchange contracts	Prepaid and other		$	202	Accrued expenses	$	133

For these derivatives not designated as cash flow hedging instruments during the three and nine months ended December 31 , 2015, gains ( losses ) of $ (853) and $ (1,361 ) , respectively, in hedging contracts were recognized in other income, along with the approximately $ ( 944 ) and $ (681) i n exchange gains (losses) that were recognized in other income in the accompanying statement of operations.

At March 31, 2015 and December 31 , 2015, we had outstanding foreign exchange contracts with notional amounts totaling $ 205,911 and $ 209 , 065 , respectively, denominated primarily in euros, Czech korunas, British pounds, and Japanese yen.

1 2 . Subsequent Events:

On January 26, 2016 (following the Company’s issuance of its quarterly earnings release), in the case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. v AVX Corporation, the jury returned a verdict in favor of the plaintiff and found damages to Greatbatch in the amount of $37,500. AVX is reviewing the verdict and consulting with its legal advisors on what action AVX may take in response. See Note 7 for additional information with regard to this case.

On February 3 , 2016 , the Board of Directors of the Company declared a $0. 1 05 dividend per share of common stock with r espect to the quarter ended December 31 , 201 5 . The dividend will be paid to stockholders of record on February 19, 2016 and will be disbursed on March 4, 2016 .

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position made in this Quarterly Report on Form 10-Q are forward-looking. The forward-looking information may include, among other information, statements concerning our outlook for fiscal year 201 6 , overall volume and pricing trends, cost reduction and acquisition strategies and their anticipated results, and expectations for research and development and capital expenditures. There may also be other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Forward-looking statements reflect management’s expectations and are inherently uncertain. The forward-looking information and statements in this report are subject to risks and uncertainties, including those discussed in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 and other reports that we file with the SEC , that could cause actual results to differ materially from those expressed in or implied by the information or statements herein. Forward-looking statements should be read in context with, and with the understanding of, the various other disclosures concerning the Company and its business made elsewhere in this quarterly report as well as other public reports filed by the Company with the SEC. You should not place undue reliance on any forward-looking statements as a prediction of actual results or developments.

Any forward-looking statements by the Company are intended to speak only as of the date thereof. We do not intend to update or revise any forward-looking statement contained in this quarterly report to reflect new events or circumstances unless and to the extent required by applicable law. All forward-looking statements contained in this quarterly report constitute “forward-looking statements” within the meaning of Section 21E of the United States Securities Exchange Act of 1934 and, to the extent it may be applicable by way of incorporation of statements contained in this quarterly report by reference or otherwise, Section 27A of the United States Securities Act of 1933, each of which establishes a safe-harbor from private actions for forward-looking statements as defined in those statutes.

Critical Accounting Policies and Estimates

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based upon our unaudited Consolidated Financial Statements and Notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. On an ongoing basis, management evaluates its estimates and judgments, including those related to investment securities, revenue recognition, inventories, property and equipment, goodwill, intangible assets, income taxes , and contingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.

We have identified the accounting policies and estimates that are critical to our business operations and understanding the Company’s results of operations. Those policies and estimates can be found in Note 1, “Summary of Significant Accounting Policies”, of the Notes to Consolidated Financial Statements and in “Critical Accounting Policies and Estimates”, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 and in Note 1, “Critical Accounting Policies and Estimates”, in the Notes to Consolidated Financial Statements in this Form 10-Q. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 . During the three and nine month period s ended December 31 , 201 5 , there were no significant changes to any critical accounting policies, judgments involved in applying those policies, or the methodology used in determining estimates with respect to those related to investment securities, revenue recognition, inventories, goodwill, intangible assets, property and equipment, income taxes, and contingencies except the early adoption of FASB ASU 2015-17 “Income Taxes” as noted in Note 1 , “Basis of Presentation: New Accounting Standards”, in the Notes to the Consolidated Financial Statements Consolidated in this 10-Q for the three and nine month periods ended December 31, 2015.

Business Overview

AVX is a leading worldwide manufacturer and supplier of a broad line of passive electronic components. Virtually all types of electronic devices use our passive component products to store, filter, or regulate electric energy. We also manufacture and supply high-quality electronic connectors and interconnect systems for use in electronic products.

We have manufacturing, sales, and distribution facilities located throughout the world, which are divided into three main geographic regions: the Americas, Asia, and Europe. AVX is organized into five main product groups with three reportable segments: Passive Components, KED Resale, and Interconnect. The Passive Components segment consists primarily of surface mount and leaded ceramic capacitors, RF thick and thin film components, surface mount and leaded tantalum capacitors, surface mount and leaded film capacitors, ceramic and film power capacitors, super capacitors, EMI filters (bolt in and surface mount), thick and thin film packages of multiple passive integrated components, varistors, thermistors, inductors, and resistive products manufactured or supplied by AVX . The KED Resale segment consists primarily of ceramic capacitors, frequency control devices, SAW devices, sensor products, RF modules, actuators, acoustic devices, and connectors produced by Kyocera and resold by AVX. The Interconnect segment consists primarily of automotive, telecom, and memory connectors manufactured or supplied by AVX.

Our customers are multi-national original equipment manufacturers, or OEMs, independent electronic component distributors, and electronic manufacturing service providers, or EMSs. We market our products through our own direct sales force and independent manufacturers’ representatives, based upon market characteristics and demands. We coordinate our sales, marketing, and manufacturing organizations by strategic customer account and globally by region.

We sell our products to customers in a broad array of industries, such as telecommunications, information technology hardware, automotive electronics, medical devices and instrumentation, industrial instrumentation, defense and aerospace electronic systems, and consumer electronics.

Results of Operations - Three Months Ended December 31 , 201 4 and 201 5

Our net income for the quarter ended December 31 , 201 5 was $ 5 . 4 million , or $ 0. 03 per share, compared to $ 39.0 million , or $ 0.23 per share, for the quarter ended December 31 , 201 4 .


	Three Months Ended
	December 31,
(in thousands, except per share data)	2014		2015
Net sales	$	321,687	$	287,047
Gross profit		78,677		66,043
Operating income (loss)		50,387		(2,673)
Net income		38,953		5,374
Diluted earnings per share	$	0.23	$	0.03

Net sales in the three months ended December 31 , 2015 decreased $34.6 million or 1 0.8%, to $287.0 million compared to $3 21.7 million in the three months ended December 31 , 2014. This decrease is partially a result of the unfavorable impact due to currency, as the strength of the U.S. dollar against the Japanese yen and the euro unfavorably impacted reported sales across all product lines by $ 10.0 million when compared to the same period last year. The decrease in revenue was also attributable to lower overall volumes in our Passive Components resulting from generally weaker global market conditions reflecting lower overall demand , and our focus on the sale of value added passive components with better margin opportunities and lower sales volumes rather than higher volume commodity components when compared to the same period l ast year. We also experienced in creases in our KDP and KCD Resale product markets that we serve, primarily attributable to higher sales in the telecommunications and cellular device market s . Our KCP Resale Interconnect products saw decreases primarily due to Kyocera’s decision to market Kyocera manufactured connector products in Asia using Kyocera’s sales force rather than having AVX resell such products in Asia effective April 1, 2015.

The table below represents product group revenues for the quarters ended December 31 , 201 4 and 201 5 .


	Three Months Ended
(in thousands)	December 31,
Sales Revenue	2014		2015
Ceramic Components	$	48,289	$	45,617
Tantalum Components		82,876		75,344
Advanced Components		88,668		75,155
Total Passive Components		219,833		196,116
KDP and KCD Resale		52,761		59,064
KCP Interconnect Resale		16,958		5,211
Total KED Resale		69,719		64,275
AVX Interconnect		32,135		26,656
Total Revenue	$	321,687	$	287,047

Passive Component sales decreased $2 3.7 million , or 10.8% to $196.1 million in the three months ended December 31, 2015 from $219.8 million during the same quarter last year as a result of the unfavorable impact due to currency, in addition to lower demand reflecting generally weaker global economic conditions, as customers were cautious in taking on inventory and actively managed their inventory levels in the current quarter. When compared to the same quarter last year, the sales decrease in Passive Components, primarily Tantalum and Ceramic products, were impacted by our focus on the sale of value added and higher capacitance passive components with better margin opportunities and lower sales volumes rather than higher volume commodity components in addition to the unfavorable impact on reported sales due to the strength of the U.S. dollar .

KDP and KCD Resale sales in creased $ 6.3 million, or 1 1.9%, to $59 . 1 million in the three months ended December 31 , 2015 compared to $52.8 million during the same quarter last year. When compared to the same q uarter last year, this in crease is primarily a result of higher demand from our telecommunications and cellular device customers in the current quarter.

Total Interconnect product sales, including AVX Interconnect and KCP Interconnect Resale connectors, decreased $1 7. 2 million, or 35.1%, to $31 . 9 million in the three months ended December 31 , 2015 compared to $4 9. 1 million during the same quarter last year. This decrease is primarily attributable to the reduction in the sales of our KCP Resale products due to Kyocera’s decision to market Kyocera manufactured connector products in Asia using Kyocera’s sales force rather than having AVX resell such products in Asia , effective April 1, 2015. Sales in our Asian region for the quarter ended December 31 , 2014 included $1 1.6 million of sales of KCP Resale products . The AVX Interconnect sales decrease is attributable to the unfavorable effect the stronger U.S. dollar had on reported sales when compared to the same quarter last year since a significant portion of such sales are denominated in euro s . This currency impact was partially offset by improved volume to our automotive customers.

Geographically, compared to the same period last year, sales decreased in all regions, primarily reflecting lower demand in the consumer, telecommunications and industrial electronics markets in addition to the effect of the weakness of the euro and Japanese yen compared to the U.S. dollar. Sales in the Asian, American and European markets represented 42.1%, 29.4% and 28.5% o f total sales, respectively, for the quarter ended December 31, 2015. This compares to 41.5%, 29.8% and 28.7% of total sales for the Asian, American, and European regions in the same period last year, respectively.

Our sales to independent electronic distributor customers represented 45.1% of total sales for the three months ended December 31, 2015, compared to 45.8% for the three months ended December 31, 2014. Overall, distributor activity decreased when compared to the same quarter last year reflective of the distributors’ customer demand and inventory positions maintained by distributors as our distribution customers managed their inventory risk during the quarter and were cautious in taking on addit ional inventory in light of global economic uncertainty . Our sales to our distributor customers involve specific ship and debit and stock rotation programs for which sales allowances are recorded as reductions in sales. Such allowance charges were $7.3 million, or 5.6% of gross sales to distributor customers for the three months ended December 31, 2015, and $8.4 million, or 5.7% of gross sales to distributor customers, for the three months ended December 31, 2014 reflective of the overall decline in revenue. Applications under such programs for the quarters ended December 31, 2015 and 2014 were approximately $8. 5 million and $8. 4 million, respectively.

Gross profit in the three months ended December 31, 2015 was 23.0% of sales, or $66.0 million, compared to a gross profit margin of 24.5%, or $78.7 million, in the three months ended December 31, 2014. This overall decrease in dollars and percentage is primarily attributable to our lower sales and lower selling prices reflective of the weaker demand in the global marketplace . The impact of lower selling prices was partially offset by our focus on the sale of value added and higher capacitance passive components with better margin opportunities and our emphasis on spending controls and cost reductions. During the current quarter, costs were favorably impacted by approximately $14.1 million when compared to the same quarter last year due to the strength of the U.S. dollar against certain foreign currencies.

Selling, general and administrative expenses in the three months ended December 31, 2015 were $31.2 million, or 10.9% of net sales, compared to $28.3 million, or 8.8% of net sales, in the three months ended December 31, 2014. The increase in these expenses is primarily due to higher legal expenses .

During the quarter ended December 31, 2015, we recorded litigation charges of $37.5 million related to litigation with respect to certain intellectual property disputes. On January 26, 2016, in a patent infringement case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. v AVX Corporation , the jury returned a verdict in favor of the plaintiff and found damages to the plaintiff in the amount of $37.5 million. AVX is reviewing the verdict and consulting with its legal advisors on what action AVX may take in response.

Income (loss) from operations was $ (2.7) million in the three months ended December 31 , 2015 compared to $ 50.4 million in the three months ended December 31 , 2014 . This decrease was a result of the factors described above.

Our tax benefit for the three months ended December 31, 2015 was $6.0 million compared to tax expense of $13.8 million for the three month period ended December 31, 2014. The decrease in income tax es is principally due to the tax benefit of $12.1 million related to the litigation charges incurred during the three month s ended December 31, 2015 in addition to the release of certain reserves for uncertain tax positions and other discre te income tax items of $ 3.6 million for the quarter ended December 31, 2015.

As a result of the factors discussed above, net income for the three month period ended December 31 , 2015 was $ 5.4 million compared to $ 39.0 million for the same three month period last year.

Results of Operations - Nine Months Ended December 31 , 201 4 and 201 5

Our net income for the nine months ended December 31 , 201 5 was $68.9 million , or $0. 4 1 per share, compared to $124.3 mill ion , or $0.74 per share, for the nine months ended December 31 , 201 4 .


	Nine Months Ended
	December 31,
	2014		2015
Net sales	$	1,037,681	$	891,924
Gross profit		251,627		214,994
Operating income		166,079		83,748
Net income		124,345		68,870
Diluted earnings per share	$	0.74	$	0.41

Net sales in the nine months ended December 31 , 2015 decreased $1 45.8 million or 1 4.0%, to $891.9 million compared to $ 1,037.7 million in the nine months ended December 31 , 2014. This decrease is partially a result of the unfavorable impact due to currency, as the strength of the U.S. dollar against the Japanese yen and the euro unfavorably impacted sales across all product lines by $ 49 . 9 million when compared to the same nine month period last year. In addition, the decrease in revenue was attributable to lower sales volumes in our Passive Co mponents resulting from generall y weaker global market conditions reflecting lower overall demand and our focus on the sale of value added and higher capacitance passive components with better margin opportunities and lower sales volumes rather than higher volume commodity components . We also experienced in creases in our KDP and KCD Resale product markets that we serve, primarily attributable to higher sales in the telecommunications and cellular device markets. Our KCP Resale Interconnect products saw de c reases due to Kyocera’s decision to market Kyocera manufactured connector products in Asia using Kyocera’s sales force rather than having AVX resell such products in Asia effective April 1, 2015.

The table below represents product group revenues for the nine months ended December 31 , 201 4 and 201 5 .


	Nine Months Ended
(in thousands)	December 31,
Sales Revenue	2014		2015
Ceramic Components	$	155,283	$	130,495
Tantalum Components		272,810		234,905
Advanced Components		270,223		248,681
Total Passive Components		698,316		614,081
KDP and KCD Resale		176,093		176,951
KCP Interconnect Resale		58,127		17,622
Total KED Resale		234,220		194,573
AVX Interconnect		105,145		83,270
Total Revenue	$	1,037,681	$	891,924

Passive Component sales decreased $84.2 million , or 12.1% to $614.1 million in the nine months ended December 31, 2015 from $698.3 million during the same nine month period last year partially as a result of the unfavorable impact due to currency, as the U.S. dollar strengthened against the euro and Japanese yen . In addition we experienced lower demand reflecting generally weaker global economic conditions, as customers were risk averse to adding inventory in the nine month period ended December 31, 2015. The sales decreases in Passive Components are due to lower demand and lower sales resulting from our focus on the sale of value added and higher capacitance passive components with better margin opportunities and lower sales volumes rather than higher volume commodity components . In addition, we experienced an unfavorable currency impact on reported sales of our Passive Components resulting from the strength of the U.S. dollar when compared to the same nine month period last year.

KDP and KCD Resale sales increased $0.9 million , or 0.5%, to $177.0 million in the nine months ended December 31 , 2015 compared to $176.1 million during the same nine month period last year. This slight increase is primarily a result of higher demand from our telecommunications and cellular device customers in the current nine month period which was partially offset by the unfavorable effect the stronger U.S. dollar had on reported sales when compared to the same nine month period last year.

Total Interconnect product sales, including AVX Interconnect and KCP Interconnect Resale connectors, decreased $62.4 million, or 38.2%, to $100.9 million in the nine months ended December 31 , 2015 compared to $163.3 million during the same nine month period last year. This decrease is primarily attributable to the reduction in the sales of our KCP Resale products due to Kyocera’s decision to market Kyocera manufactured connector products in Asia using Kyocera’s sales force rather than having AVX resell such products in Asia, effective April 1, 2015. Sales in our Asian region for the nine months ended December 31 , 2014 included $40.9 million of sales of KCP Resale products compared to sales of $1.1 million for the nine month period ended December 31, 2015. The AVX Interconnect sales decrease is also attributable to conservative customer inventory management, partially offset by improved sales to our automotive customers, in the current nine month period and the unfavorable effect the stronger U.S. dollar had on reported sales when compared to the same nine month period last year since a significant portion of such sales are denominated in euros.

Geographically, compared to the same nine month period last year, sales decreased in all regions, primarily reflecting lower demand in th e computer, industrial and telecommunications electronics markets as a result of generally weaker global economic conditions in addition to weakness of the euro and Japanese yen compared to the U.S. dollar. Sales in the Asian, American and European markets represented 41.8%, 29.9 % and 28.3% o f total sales, respectively, for the nine months ended December 31, 2015. This compares to 42.2%, 29.1% and 28.7% of total sales for the Asian, American, and European regions in the same nine month period last year, respectively.

Our sales to independent electronic distributor customers represented 45.4% of total sales for the nine months ended December 31, 2015, compared to 46.5% for the nine months ended December 31, 2014. Overall, distributor activity decreased when compared to the same period last year. This decrease is reflective of the distributors’ customer demand and inventory positions maintained by distributors as our distribution customers managed their inventory risk during this nine month period and were cautious about taking on additional inventory in light of global economic uncertainty . Our sales to our distributor customers involve specific ship and debit and stock rotation programs for which sales allowances are recorded as reductions in sales. Such allowance charges were $22.2 million, or 5.5% of gross sales to distributor customers for the nine months ended December 31, 2015, and $27.4 million, or 4.1% of gross sales to distributor customers, for the nine month period ended December 31, 2014 reflective of the overall decline in revenue. Applications under such programs for the nine months ended December 31, 2015 and 2014 were approximately $23.6 million and $26.5 million, respectively.

Gross profit in the nine months ended December 31, 2015 was 24.1% of sales, or $215.0 million, compared to a gross profit margin of 24.2%, or $251.6 million, in the nine months ended December 31, 2014. This overall decrease in dollars is primarily attribut able to our lower sales volume and lower selling prices reflective of weaker demand in the global marketplace. The impact of lower selling prices was partially offset by our focus on the sales of value added and higher capacitance passive components with better margin opportunities, as well as lower manufacturing and overhead costs due to improved cost control and manufacturing efficiencies. During the current nine month period, costs due to currency movement of the U.S. dollar against certain foreign currencies were favorably impacted by approximatel y $58.3 million when compared to the same period last year.

Selling, general and administrative expenses in the nine months ended December 31, 2015 were $87.6 million , or 9.8% of net sales, compared to $85.5 million, or 8.2% of net sales, in the nine month period ended December 31, 2014. The overall increase in these expenses is primarily due to higher legal and consulting fees partially offset by lower selling expenses as a result of lower sales when compared to the same nine month period last year.

During the nine months ended December 31, 2015, we recorded litigation and settlement charges of $43.7 million related to the settlement of certain litigation involving legacy environmental issues and developments in litigation with respect to certain intellectual property disputes. Effective September 30, 2015, a Settlement Agreement and Mutual Release (“Settlement Agreement”) was entered into with the City of New Bedford in settlement of the following two cases: DaRosa v. City of New Bedford and City of New Bedford, et al v. AVX Corporation both arising from contamination at certain sites in the City of New Bedford. In accordance with the Settlement Agreement, AVX paid the sum of $6.5 million to the City of New Bedford in October 2015. Additionally, on January 26, 2016, in a patent infringement case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. v AVX Corporation , the jury returned a verdict in favor of the plaintiff and found damages to the plaintiff in the amount of $37.5 million. AVX is reviewing the verdict and consulting with its legal advisors on what action AVX may take in response.

Income from operations was $ 83.7 million in the nine months ended December 31 , 2015 compared to $ 166.1 million in the nine months ended December 31 , 2014 . This decrease was a result of the factors described above.

Our effective tax rate for the nine month period ended December 31, 2015 was 2 2 . 5 % compared to 26.7% for the nine month period ended December 31, 2014. Our effective tax rate was 2 5.6 % excluding the release of certain reserves for uncertain tax positions and other discrete income tax items of $2.8 million for the nine month period ended December 31, 2015 compared to an effective tax rate of 28.6% for the nine month periods ending December 31, 2014 excluding the release of certain reserves for uncertain tax positions and other discrete income tax items of $3.2 million for the nine month period ended December 31, 2014. In addition, the effective tax rate for the nine month period ended December 31, 2015 reflects the $15.7 million tax benefit related to the litigation settlements and charges discussed above.

As a result of the factors discussed above, net income for the nine month period ended December 31 , 2015 was $ 68.9 million compared to $124.3 million for the same nine month period last year.

Outlook

Near-Term:

With uncertain global geopolitical and economic conditions, it is difficult to quantify expectations for the remainder of fiscal 201 6 . Near-term results for us will depend on the impact of the overall global geopolitical and economic conditions and their impact on telecommunications, information technology hardware, automotive, consumer electronics, and other electronic markets. Looking ahead, visibility is low and forecasting is a challenge in this uncertain and volatile market. We expect to see typical pricing pressure in the markets we serve due to competitive activity. In response to anticipated market conditions, we expect to continue to focus on cost management and product line rationalization to maximize earnings potential. We also continue to focus on process improvements and enhanced production capabilities in conjunction with our focus on the sales of value-added and higher capacitance passive electronic components to support today’s advanced electronic devices. If current global geopolitical and economic conditions worsen, the overall impact on our customers as well as end user demand for electronic products could have a significant adverse impact on our near-term results.

Long-Term:

Although there is uncertainty in the near-term market as a result of the current global geopolitical and economic conditions, we continue to see opportunities for long-term growth and profitability improvement due to: (a) a projected increase in the long-term worldwide demand for more sophisticated electronic devices, which require more advanced and higher capacitance passive electronic components such as the ones we sell, (b) cost reductions and improvements in our production processes, and (c) opportunities for growth in our Advanced Component and Interconnect product lines due to advances in component design and our production capabilities. We have fostered our financial health and the strength of our balance sheet putting us in a good position to react to changes in the marketplace as they occur. We remain confident that our strategies will enable our continued long-term success.

Liquidity and Capital Resources

Liquidity needs arise primarily from working capital requirements, dividend payments, capital expenditures, and acquisitions. Historically, we have satisfied our liquidity requirements through funds from operations and investment income from cash, cash equivalents, and investments in securities. As of December 31 , 2015 , we had a current ratio of 1 0.4 to 1, approximately $ 1 b illion of cash, cash equivalents, and short-term and long-term investments in securities, $ 2 , 14 2.8 million of stockholders’ equity, and no debt.

Net cash provided by operating activities was $ 102.7 million in the nine months ended December 31 , 2015 compared to $ 164.4 million of cash provided by operating activities in the nine months ended December 31 , 2014. The decrease in operating cash flow compared to the same period last year was primarily a result a final payment of $122.1 million made on May 26, 2015, related to the New Bedford Harbor environmental matters discussed below and other changes in working capital .

Purchases of property and equipment were $ 33.8 million in the nine month period ended December 31 , 2015 and $1 9.1 in the nine month period ended December 31 , 2014. Expenditures in the nine months ended December 31 , 2015 we re primarily made in connection with the strategic expansion activities in the Czech Republic , Mexico and Greenville , South Carolina . We expect to incur a total of approximately $45 to $50 million in capital expenditures in fiscal 2016. The actual amount of capital expenditures will depend upon the outlook for end-market demand and timing of capital projects.

The majority of our funding is internally generated through operations and investment income from cash, cash equivalents, and investments in securities. Since March 31, 201 5 , there have been no material changes in our contractual obligations or commitments for the acquisition or construction of plant and equipment or future minimum lease commitments under noncancellable operating leases. Based on our financial condition as of December 31 , 2015 , we believe that cash on hand , cash expected to be generated from operating activities and investment income from cash, cash equivalents, and investments in securities will be sufficient to satisfy our anticipated financing needs for working capital, capital expenditures, environmental clean-up costs, pension plan funding, research, development and engineering expenses, acquisitions of businesses, and any dividend payments or stock repurchases to be made during the next twelve months . Changes in demand may have an impact on our future cash requirements; however, changes in those requirements are mitigated by our ability to adjust manufacturing capabilities to meet increases or decreases in customer demand. We do not anticipate any significant changes in our ability to generate capital or meet our liquidity needs in the foreseeable future .

From time to time we enter into delivery contracts with selected suppliers for certain precious metals used in our production processes. The delivery contracts represent routine purchase orders for delivery within three months and payment is due upon receipt. As of December 31 , 2015 , we did not have any significant delivery contracts outstanding.

We are involved in disputes, warranty claims , and legal proceedings arising in the normal course of business. While we cannot predict the outcome of these agreements, remediation efforts, disputes and proceedings, management believes, based upon a review with legal counsel, that none of these proceedings will have a material impact above the current reserves on our financial position, results of operations, comprehensive income (loss), or cash flows.

On October 10, 2012, the EPA, the United States, and the Commonwealth of Massachusetts and AVX announced that they had reached a financial settlement with respect to the EPA’s ongoing clean-up of the New Bedford Harbor in the Commonwealth of Massachusetts (the “harbor”). That agreement is contained in a Supplemental Consent Decree that modifies certain provisions of prior agreements related to clean-up of the harbor, including elimination of the governments’ right to invoke certain reopener provisions in the future. Under the terms of the settlement, AVX was obligated to pay $366.3 million, plus interest computed from August 1, 2012, in three installments over a two-year period for use by the EPA and the Commonwealth to complete the clean-up of the harbor. On May 26, 2015, we prepaid the third and final settlement installment of $122.1 million, plus interest of $1.1 million.

On June 3, 2010, AVX entered into an agreement with the EPA and the City of New Bedford, pursuant to which AVX is required to perform environmental remediation at a site referred to as the “Aerovox Site” (the “Site”), located in New Bedford, Massachusetts. AVX has substantially completed its obligations pursuant to such agreement with the EPA and the City of New Bedford with respect to the satisfaction of AVX’s federal law requirements. Agreements with the state regulatory authorities have yet to be concluded but are likely to include additional groundwater remediation. We have a remaining accrual of $11. 0 million at December 31 , 2015, representing our estimate of the potential liability related to the remaining performance of environmental remediation actions at the Site using certain assumptions regarding the plan of remediation. Since additional sampling and analysis may cause the state regulatory authority, the Massachusetts Department of Environmental Protection, to require a more extensive and costly plan of remediation, until all parties agree and remediation is complete, we cannot be certain there will be no additional cost relating to the Site.

We had total reserves of approximately $138.1 million and $1 5.6 million at March 31, 2015 and December 31 , 2015, respectively, related to the various matters and specific sites discussed above. These reserves are classified in the Consolidated Balance Sheets as $127.2 million and $4. 7 million in accrued expenses at March 31, 2015 and December 31 , 2015, respectively, and $10.9 million in other non-current liabilities at both March 31, 2015 and December 31 , 2015. The amounts recorded for identified contingent liabilities are based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional legal and technical information that becomes available. Also, uncertainties about the status of laws, regulations, regulatory actions, technology, and information related to individual sites make it difficult to develop an estimate of the reasonably possible aggregate environmental remediation exposure. Accordingly, these costs could differ from our current estimates.

Effective September 30, 2015 a Settlement Agreement and Mutual Release (“Settlement Agreement”) was entered into with the City of New Bedford in settlement of the following two cases: DaRosa v. City of New Bedford and City of New Bedford, et al v. AVX Corporation both arising from contamination at certain sites in the City of New Bedford. In accordance with the Settlement Agreement, AVX paid the sum of $6.5 mill ion to the City of New Bedford in October 2015. This Settlement Agreement releases AVX from any future actions by the City of New Bedford related to these cases or sites .

We also operate , or have operated in the past, on other sites that may have potential future environmental issues as a result of activities at sites during AVX’s long history of manufacturing operations or prior to the start of operations by AVX. Even though we may have rights of indemnity for such environmental matters at certain sites, regulatory agencies in those jurisdictions may require us to address such issues. Once it becomes probable that we will incur costs in connection with remediation of a site and such costs can be reasonably estimated, we establish reserves or adjust our reserves for our projected share of these costs. A separate account receivable is recorded for any indemnified costs. Our environmental reserves are not discounted and do not reflect any possible future insurance recoveries, which are not expected to be significant, but do reflect a reasonable estimate of cost sharing at multiple party sites or indemnification of our liability by a third party.

Additional information related to environmental issues can be found in Note 7 , “ Commitments and Contingencies”, of the Company’s Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

On April 25, 2013, AVX was named as a defendant in a patent infringement case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. v AVX Corporation . This case alleged that certain AVX products infringe on one or more of nine Greatbatch patents. On January 26, 2016 (following the Company’s issuance of its quarterly earnings release), the jury returned a verdict in favor of the plaintiff and found damages to Greatbatch in the amount of $37.5 million. AVX is reviewing the verdict and consulting with its legal advisors on what action AVX may take in response.

As of December 31, 2015, we had total reserves of $ 39.3 million with respect to the two intellectual property cases discussed above. The amounts recorded are based on estimated outcomes. Amounts recorded are reviewed periodically and adjusted to reflect additional information that becomes available. Accordingly, these costs could differ from our current estimates.

During the quarter ended September 30, 2014, AVX was named as a co-defendant in a series of cases filed in the United States and in the Canadian provinces of Quebec, Ontario and British Columbia alleging violations of United States, Canadian, and state antitrust laws asserting that AVX and numerous other companies are participants in alleged price-fixing in the capacitor market. The cases in the United States were consolidated into the Northern District of California on October 2, 2014. During the quarter ended December 31, 2014, additional Canadian cases were filed in the provinces of Quebec, Ontario, British Columbia, Saskatchewan and Manitoba. In addition, in the quarter ended September 30 , 2015, AVX w as named as a co-defendant in two case s filed in the United States alleging violations of United States antitrust laws asserting that AV X and numerous other companies we re participants in alleged price-fixing in the resistor market. These cases are at the initial stages. AVX believes it has meritorious defenses and intends to vigorously defend the cases.

New Accounting Standards

Information related to new Statement of Financial Accounting Standards and Financial Accounting Standards Board Staff Positions that we have recently adopted or are currently reviewing can be found in Note 1, “Summary of Significant Accounting Policies”, of the Notes to Consolidated Financial Statements and in “Critical Accounting Policies and Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Annual Report on Form 10-K for the fiscal year ended March 31, 201 5, as well as in Note 1, “Critical Accounting Policies and Estimates”, in the Notes to the Consolidated Financial Statements in this Form 10-Q . Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 .

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our sales are denominated in various foreign currencies in addition to the U.S. dollar. Certain manufacturing and operating costs denominated in local currencies are incurred in Europe, Asia, Mexico, and Central and South America. Additionally, purchases of resale products from Kyocera may be denominated in Japanese y en. As a result, fluctuations in currency exchange rates affect our operating results and cash flow. In order to minimize the effect of movements in currency exchange rates, we periodically enter into forward exchange contracts to hedge external and intercompany foreign currency transactions. We do not hold or issue derivative financial instruments for speculative purposes. Accordingly, we have hedging commitments to cover a portion of our exchange risk on purchases, operating expenses, and sales. There have been no material net changes in our exposure to foreign currency exchange rate as reflected in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 . See Note 1 1 of our Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for further discussion of derivative financial instruments .


ITEM 4.	CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ” ), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered in this report, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclo sed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

In addition, there were no changes in our internal control over financial reporting during the third quarter of fiscal 201 6 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting .


PART II:	OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

Please refer to Part I Item 3, “Legal Proceedings”, in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 . In addition, s ee Note 7 , “Commitments and Contingencies”, in our Notes to Consolidated Financial Statements in Part I, Item 1 to this Form 10-Q for a discussion of our involvement in certain environmental and other pending legal proceedings.

ITEM 1A.

RISK FACTORS

Please refer to Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 5 for information regarding factors that could affect our results of operations, financial condition, and liquidity. For an update of risk factors relating to our potential environmental liabilities as described under the caption “Changes in our environmental liability and compliance obligations may adversely impact our operations” in the Risk Factors section on our Annual Report on Form 10-K , see Note 7 , “Commitments and Contingencies”, in our Notes to Consolidated Financial Statements in Part I, Item 1 to this Form 10-Q .

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table shows our purchases of common stock during the quarter.


				Total number of	Maximum number
				shares purchased	of shares that may
	Total number			as part of publicly	yet be purchased
	of shares	Average price		announced plans	under the plans or
Period	purchased	paid per share		or programs (1)	programs (1)
10/01/15 - 10/31/15	46,900	$	13.51	46,900	3,723,369
11/01/15 - 11/30/15	190,801		13.35	190,801	3,532,568
12/01/15 - 12/31/15	32,000		13.32	32,000	3,500,568
Total	269,701	$	13.37	269,701	3,500,568

(1)

On October 17, 2007, the Board of Directors of the Company authorized the repurchase of up to 5,000,000 shares of our common stock from time to time in the open market. The repurchased shares are held as treasury stock and are available for general corporate purposes.


ITEM 6.	EXHIBITS
31.1	Certification of John Sarvis , President and Chief Executive Officer, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated February 5, 2016 .
31.2	Certification of Kurt P. Cummings, Chief Financial Officer, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated February 5, 2016 .
32.1	Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - John S arvis and Kurt P. Cummings .
101	The following financial information from our Quarterly Report on Form 10-Q for the quarter ended December 31 , 2015 , formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operation, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements.

S ignature

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 unders igned thereunto duly authorized , and the undersigned also has signed this report in his capacity as the registrant’s Chief Financial Officer (Principal Financial Officer).

Date: February 5 , 201 6

AVX Corporation

By:	/s/ Kurt P. Cummings


	Kurt P. Cummings
	Vice President,
	Chief Financial Officer,
	Treasurer and Secretary

TABLE OF CONTENTS

Item 2. Management's Discussion and Analysis Of Financial Condition and Results Of Operations Item 2. Management's Discussion and Analysis Of Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part Ii: Other Information Part Ii:Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 6. Exhibits

AVX 10-Q Quarter ended Dec. 31, 2015