ENS 10-K Fiscal year ended March 31, 2017

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(1)	For this purpose only, “non-affiliates” excludes directors and executive officers.

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•	general cyclical patterns of the industries in which our customers operate;

•	the extent to which we cannot control our fixed and variable costs;

•	the raw materials in our products may experience significant fluctuations in market price and availability;

•	certain raw materials constitute hazardous materials that may give rise to costly environmental and safety claims;

•	legislation regarding the restriction of the use of certain hazardous substances in our products;

•	risks involved in our operations such as disruption of markets, changes in import and export laws, environmental regulations, currency restrictions and local currency exchange rate fluctuations;

•	our ability to maintain relationships with customers, including raising our selling prices to our customers when our product costs increase;

•	the extent to which we are able to efficiently utilize our global manufacturing facilities and optimize our capacity;

•	general economic conditions in the markets in which we operate;

•	competitiveness of the battery markets and other energy solutions for industrial applications throughout the world;

•	our timely development of competitive new products and product enhancements in a changing environment and the acceptance of such products and product enhancements by customers;

•	our ability to adequately protect our proprietary intellectual property, technology and brand names;

•	litigation and regulatory proceedings to which we might be subject;

•	our expectations concerning indemnification obligations;

•	changes in our market share in the geographic business segments where we operate;

•	our ability to implement our cost reduction initiatives successfully and improve our profitability;

•	quality problems associated with our products;

•	our ability to implement business strategies, including our acquisition strategy, manufacturing expansion and restructuring plans;

•	our acquisition strategy may not be successful in locating advantageous targets;

•	our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames;

•	potential goodwill impairment charges, future impairment charges and fluctuations in the fair values of reporting units or of assets in the event projected financial results are not achieved within expected time frames;

•	our debt and debt service requirements which may restrict our operational and financial flexibility, as well as imposing unfavorable interest and financing costs;

•	our ability to maintain our existing credit facilities or obtain satisfactory new credit facilities;

•	adverse changes in our short- and long-term debt levels under our credit facilities;

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•	our exposure to fluctuations in interest rates on our variable-rate debt;

•	our ability to attract and retain qualified management and personnel;

•	our ability to maintain good relations with labor unions;

•	credit risk associated with our customers, including risk of insolvency and bankruptcy;

•	our ability to successfully recover in the event of a disaster affecting our infrastructure;

•	terrorist acts or acts of war, could cause damage or disruption to our operations, our suppliers, channels to market or customers, or could cause costs to increase, or create political or economic instability; and

•	the operation, capacity and security of our information systems and infrastructure.

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•	Americas , which includes North and South America, with our segment headquarters in Reading, Pennsylvania, U.S.A.;

•	EMEA , which includes Europe, the Middle East and Africa, with our segment headquarters in Zug, Switzerland; and

•	Asia , which includes Asia, Australia and Oceania, with our segment headquarters in Singapore.

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Reserve power products are used for backup power for the continuous operation of critical applications in telecommunications systems, uninterruptible power systems, or “UPS” applications for computer and computer-controlled systems, and other specialty power applications, including medical and security systems, premium starting, lighting and ignition applications, in switchgear, electrical control systems used in electric utilities, large-scale energy storage, energy pipelines, in commercial aircraft, satellites, military aircraft, submarines, ships and tactical vehicles. Reserve power products also include thermally managed cabinets and enclosures for electronic equipment and batteries.

•	Motive power products are used to provide power for electric industrial forklifts used in manufacturing, warehousing and other material handling applications as well as mining equipment, diesel locomotive starting and other rail equipment.

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•	Update and upgrade our digital core;

•	Implement Lean initiatives to further substantial productivity gains; and

•	Invest in productivity and capacity automation.

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•	the design and development of new products;

•	optimizing and expanding our existing product offering;

•	waste and scrap reduction;

•	production efficiency and utilization;

•	capacity expansion without additional facilities; and

•	quality attribute maximization.

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•	increase our vulnerability to adverse general economic and industry conditions, including interest rate fluctuations, because a portion of our borrowings bear, and will continue to bear, interest at floating rates;

•	require us to dedicate a substantial portion of our cash flow from operations to debt service payments, which would reduce the availability of our cash to fund working capital, capital expenditures or other general corporate purposes, including acquisitions;

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•	limit our flexibility in planning for, or reacting to, changes in our business and industry;

•	restrict our ability to introduce new products or new technologies or exploit business opportunities;

•	place us at a disadvantage compared with competitors that have proportionately less debt;

•	limit our ability to borrow additional funds in the future, if we need them, due to financial and restrictive covenants in our debt agreements; and

•	have a material adverse effect on us if we fail to comply with the financial and restrictive covenants in our debt agreements.

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(1)

The Company's Board of Directors has authorized the Company to repurchase up to such number of shares as shall equal the dilutive effects of any equity-based award granted during such fiscal year under the Second Amended and Restated 2010 Equity Incentive Plan and the number of shares exercised through stock option awards during such fiscal year. This repurchase program was exhausted for fiscal 2017 .

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•	Americas , which includes North and South America, with our segment headquarters in Reading, Pennsylvania, U.S.A.;

•	EMEA , which includes Europe, the Middle East and Africa, with our segment headquarters in Zug, Switzerland; and

•	Asia , which includes Asia, Australia and Oceania, with our segment headquarters in Singapore.

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•	global economic conditions and general cyclical patterns of the industries in which our customers operate;

•	changes in our selling prices and, in periods when our product costs increase, our ability to raise our selling prices to pass such cost increases through to our customers;

•	the extent to which we are able to efficiently utilize our global manufacturing facilities and optimize our capacity;

•	the extent to which we can control our fixed and variable costs, including those for our raw materials, manufacturing, distribution and operating activities;

•	changes in our level of debt and changes in the variable interest rates under our credit facilities; and

•	the size and number of acquisitions and our ability to achieve their intended benefits.

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Reserve power products are used for backup power for the continuous operation of critical applications in telecommunications systems, uninterruptible power systems, or “UPS” applications for computer and computer-controlled systems, and other specialty power applications, including medical and security systems, premium starting, lighting and ignition applications, in switchgear, electrical control systems used in electric utilities, large-scale energy storage, energy pipelines, in commercial aircraft, satellites, military aircraft, submarines, ships and tactical vehicles. Reserve power products also include thermally managed cabinets and enclosures for electronic equipment and batteries.

•	Motive power products are used to provide power for electric industrial forklifts used in manufacturing, warehousing and other material handling applications as well as mining equipment, diesel locomotive starting and other rail equipment.

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•	interpretation of contractual rights and obligations;

•	the status of government regulatory initiatives, interpretations and investigations;

•	the status of settlement negotiations;

•	prior experience with similar types of claims;

•	whether there is available insurance coverage; and

•	advice of outside counsel.

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(1)	The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales.

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(1)	The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales.

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(1)

We have included EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP) because our lenders use them as a key measures of our performance. EBITDA is defined as earnings before interest expense, income tax expense, depreciation and amortization. EBITDA is not a measure of financial performance under GAAP and should not be considered an alternative to net earnings or any other measure of performance under GAAP or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Our calculation of EBITDA may be different from the calculations used by other companies, and therefore comparability may be limited. Certain financial covenants in our 2011 Credit Facility are based on EBITDA, subject to adjustments, which are shown above. Continued availability of credit under our 2011 Credit Facility is critical to our ability to meet our business plans. We believe that an understanding of the key terms of our credit agreement is important to an investor’s understanding of our financial condition and liquidity risks. Failure to comply with our financial covenants, unless waived by our lenders, would mean we could not borrow any further amounts under our revolving credit facility and would give our lenders the right to demand immediate repayment of all outstanding revolving credit loans. We would be unable to continue our operations at current levels if we lost the liquidity provided under our credit agreements. Depreciation and amortization in this table excludes the amortization of deferred financing fees, which is included in interest expense.

(2)

The $46.8 million adjustment to EBITDA in fiscal 2017 primarily related to $19.2 million of non-cash stock compensation, $1.4 million of non-cash restructuring and other exit charges and $24.1 million of impairment of goodwill, indefinite-lived intangibles, fixed assets and ERP system related charges, $2.0 million relating to minority partners' share of joint venture losses and $0.1 million of acquisition expenses. The $60.5 million adjustment to EBITDA in fiscal 2016 primarily related to $19.6 million of non-cash stock compensation, $3.8 million of non-cash restructuring and other exit charges and $36.3 million of impairment of goodwill, indefinite-lived intangibles and fixed assets and $0.7 million of acquisition expenses.

(3)

Debt includes capital lease obligations and letters of credit and is net of U.S. cash and cash equivalents and a portion of European cash investments, as defined in the 2011 Credit Facility. In fiscal 2017 , the amounts deducted in the calculation of net debt were U.S. cash and cash equivalents and foreign cash investments of $150 million, respectively, and in fiscal 2016 , $148 million, respectively.

(4)	These ratios are included to show compliance with the leverage ratios set forth in our credit facilities. We show both our current ratios and the maximum ratio permitted or minimum ratio required under our 2011 Credit Facility.

(5)	As defined in the 2011 Credit Facility, for fiscal 2017 interest expense used in the consolidated interest coverage ratio excludes non-cash interest of $1.4 million. For fiscal 2016 , interest expense used in the consolidated interest coverage ratio excludes non-cash interest of $2.8 million.

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(1)	Based on the fiscal year lead requirements for the period then ended.

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Description of Business

EnerSys (the “Company”) and its predecessor companies have been manufacturers of industrial batteries for over 125 years. EnerSys is a global leader in stored energy solutions for industrial applications. The Company manufactures, markets and distributes industrial batteries and related products such as chargers, outdoor cabinet enclosures, power equipment and battery accessories, and provides related after-market and customer-support services for its products.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and any partially owned subsidiaries that the Company has the ability to control. Control generally equates to ownership percentage, whereby investments that are more than 50 % owned are generally consolidated, investments in affiliates of 50 % or less but greater than 20 % are generally accounted for using the equity method, and investments in affiliates of 20 % or less are accounted for using the cost method. All intercompany transactions and balances have been eliminated in consolidation.

The Company also consolidates certain subsidiaries in which the noncontrolling interest party has within its control the right to require the Company to redeem all or a portion of its interest in the subsidiary. The redeemable noncontrolling interests are reported at their estimated redemption value, and the amount presented in temporary equity is not less than the initial amount reported in temporary equity. Any adjustment to the redemption value impacts retained earnings but does not impact net income or comprehensive income. In fiscal 2017, the Company deconsolidated its joint venture in South Africa and the impact of this deconsolidation is reflected in the Consolidated Statements of Income. As a result, the Company has no redeemable noncontrolling interest on its Consolidated Balance Sheet as of March 31, 2017.

Foreign Currency Translation

Results of foreign operations of subsidiaries, whose functional currency is the local currency, are translated into U.S. dollars using average exchange rates during the periods. The assets and liabilities are translated into U.S. dollars using exchange rates as of the balance sheet dates. Gains or losses resulting from translating the foreign currency financial statements are accumulated as a separate component of accumulated other comprehensive income (“AOCI”) in EnerSys’ stockholders’ equity and noncontrolling interests.

Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the functional currency of the applicable subsidiary are included in the Consolidated Statements of Income, within “Other (income) expense, net”, in the year in which the change occurs.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete. This occurs when risk and title transfers, collectibility is reasonably assured and pricing is fixed or determinable. Shipment terms are either shipping point or destination and do not differ significantly between the Company’s business segments. Accordingly, revenue is recognized when risk and title are transferred to the customer. Amounts invoiced to customers for shipping and handling are classified as revenue. Taxes on revenue producing transactions are not included in net sales.

The Company recognizes revenue from the service of its products when the respective services are performed.

Accruals are made at the time of sale for sales returns and other allowances based on the Company’s historical experience.

Freight Expense

Amounts billed to customers for outbound freight costs are classified as sales in the Consolidated Statements of Income. Costs incurred by the Company for outbound freight costs to customers, inbound and transfer freight are classified in cost of goods

sold.

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Warranties

The Company’s products are warranted for a period ranging from one to twenty years for reserve power batteries and for a period ranging from one to seven years for motive power batteries. The Company provides for estimated product warranty expenses when the related products are sold. The assessment of the adequacy of the reserve includes a review of open claims and historical experience.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less when purchased.

Concentration of Credit Risk

Financial instruments that subject the Company to potential concentration of credit risk consist principally of short-term cash investments and trade accounts receivable. The Company invests its cash with various financial institutions and in various investment instruments limiting the amount of credit exposure to any one financial institution or entity. The Company has bank deposits that exceed federally insured limits. In addition, certain cash investments may be made in U.S. and foreign government bonds, or other highly rated investments guaranteed by the U.S. or foreign governments. Concentration of credit risk with respect to trade receivables is limited by a large, diversified customer base and its geographic dispersion. The Company performs ongoing credit evaluations of its customers’ financial condition and requires collateral, such as letters of credit, in certain circumstances.

Accounts Receivable

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The allowance is based on management’s estimate of uncollectible accounts, analysis of historical data and trends, as well as reviews of all relevant factors concerning the financial capability of its customers. Accounts receivable are considered to be past due based on when payments are received compared to the customer’s credit terms. Accounts are written off when management determines the account is uncollectible.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. The cost of inventory consists of material, labor, and associated overhead.

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost and include expenditures that substantially increase the useful lives of the assets. Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows: 10 to 33 years for buildings and improvements and 3 to 15 years for machinery and equipment.

Maintenance and repairs are expensed as incurred. Interest on capital projects is capitalized during the construction period.

Business Combinations

The purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. The results of operations of the acquired business are included in the Company’s operating results from the date of acquisition.

Goodwill and Other Intangible Assets

Goodwill and indefinite-lived trademarks are tested for impairment at least annually and whenever events or circumstances occur indicating that a possible impairment may have been incurred. Goodwill is tested for impairment by determining the fair value of the Company’s reporting units. These estimated fair values are based on financial projections, certain cash flow measures, and market capitalization.

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The Company estimates the fair value of its reporting units using a weighting of fair values derived from both the income approach and the market approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit. The weighting of the fair value derived from the market approach ranges from 0% to 50% depending on the level of comparability of these publicly-traded companies to the reporting unit.

In order to assess the reasonableness of the calculated fair values of its reporting units, the Company also compares the sum of the reporting units' fair values to its market capitalization and calculates an implied control premium (the excess of the sum of the reporting units' fair values over the market capitalization). The Company evaluates the control premium by comparing it to control premiums of recent comparable market transactions.

In fiscal 2016, in accordance with guidance under ASC 350, the Company conducted the goodwill impairment test using the two-step process. In the first step, the Company compares the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, the Company must perform the second step of the impairment test to measure the amount of impairment loss, if any. In the second step, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.

In fiscal 2017, as discussed in more detail under New Accounting Pronouncements, the Company early adopted ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment”, which simplified the measurement of goodwill impairment by removing the second step of the goodwill impairment test that requires a hypothetical purchase price allocation.

The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

The indefinite-lived trademarks are tested for impairment by comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excess carrying value over the amount of fair value is recognized as impairment. Any impairment would be recognized in full in the reporting period in which it has been identified.

Finite-lived assets such as customer relationships, patents, and non-compete agreements are amortized over their estimated useful lives, generally over periods ranging from 3 to 20 years. The Company reviews the carrying values of these assets for possible impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on undiscounted estimated cash flows expected to result from its use and eventual disposition. The Company continually evaluates the reasonableness of the useful lives of these assets.

Impairment of Long-Lived Assets

The Company reviews the carrying values of its long-lived assets to be held and used for possible impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable, based on undiscounted estimated cash flows expected to result from its use and eventual disposition. The factors considered by the Company in performing this assessment include current operating results, trends and other economic factors. In assessing the recoverability of the carrying value of a long-lived asset, the Company must make assumptions regarding future cash flows and other factors. If these estimates or the related assumptions change in the future, the Company may be required to record an impairment loss for these assets.

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Environmental Expenditures

The Company records a loss and establishes a reserve for environmental remediation liabilities when it is probable that an asset has been impaired or a liability exists and the amount of the liability can be reasonably estimated. Reasonable estimates involve judgments made by management after considering a broad range of information including notifications, demands or settlements that have been received from a regulatory authority or private party, estimates performed by independent engineering companies and outside counsel, available facts existing and proposed technology, the identification of other potentially responsible parties, their ability to contribute and prior experience. These judgments are reviewed quarterly as more information is received and the amounts reserved are updated as necessary. However, the reserves may materially differ from ultimate actual liabilities if the loss contingency is difficult to estimate or if management’s judgments turn out to be inaccurate. If management believes no best estimate exists, the minimum probable loss is accrued.

Derivative Financial Instruments

The Company utilizes derivative instruments to mitigate volatility related to interest rates, lead prices and foreign currency exposures. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company recognizes derivatives as either assets or liabilities in the accompanying Consolidated Balance Sheets and measures those instruments at fair value. Changes in the fair value of those instruments are reported in AOCI if they qualify for hedge accounting or in earnings if they do not qualify for hedge accounting. Derivatives qualify for hedge accounting if they are designated as hedge instruments and if the hedge is highly effective in achieving offsetting changes in the fair value or cash flows of the asset or liability hedged. Effectiveness is measured on a regular basis using statistical analysis and by comparing the overall changes in the expected cash flows on the lead and foreign currency forward contracts with the changes in the expected all-in cash outflow required for the lead and foreign currency purchases. This analysis is performed on the initial purchases quarterly that cover the quantities hedged. Accordingly, gains and losses from changes in derivative fair value of effective hedges are deferred and reported in AOCI until the underlying transaction affects earnings.

The Company has commodity, foreign exchange and interest rate hedging authorization from the Board of Directors and has established a hedging and risk management program that includes the management of market and counterparty risk. Key risk control activities designed to ensure compliance with the risk management program include, but are not limited to, credit review and approval, validation of transactions and market prices, verification of risk and transaction limits, portfolio stress tests, sensitivity analyses and frequent portfolio reporting, including open positions, determinations of fair value and other risk management metrics.

Market risk is the potential loss the Company and its subsidiaries may incur as a result of price changes associated with a particular financial or commodity instrument. The Company utilizes forward contracts, options, and swaps as part of its risk management strategies, to minimize unanticipated fluctuations in earnings caused by changes in commodity prices, interest rates and/or foreign currency exchange rates. All derivatives are recognized on the balance sheet at their fair value, unless they qualify for the Normal Purchase Normal Sale exemption.

Credit risk is the potential loss the Company may incur due to the counterparty’s non-performance. The Company is exposed to credit risk from interest rate, foreign currency and commodity derivatives with financial institutions. The Company has credit policies to manage their credit risk, including the use of an established credit approval process, monitoring of the counterparty positions and the use of master netting agreements.

The Company has elected to offset net derivative positions under master netting arrangements. The Company does not have any positions involving cash collateral (payables or receivables) under a master netting arrangement as of March 31, 2017 and 2016 .

The Company does not have any credit-related contingent features associated with its derivative instruments.

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Fair Value of Financial Instruments

The Company groups its recurring, non-recurring and disclosure-only fair value measurements into the following levels when making fair value measurement disclosures:

Level 1		Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2		Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.
Level 3		Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The Company and its subsidiaries use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.

Lead contracts, foreign currency contracts and interest rate contracts generally use an income approach to measure the fair value of these contracts, utilizing readily observable inputs, such as forward interest rates (e.g., London Interbank Offered Rate—“LIBOR”) and forward foreign currency exchange rates (e.g., GBP and euro) and commodity prices (e.g., London Metals Exchange), as well as inputs that may not be observable, such as credit valuation adjustments. When observable inputs are used to measure all or most of the value of a contract, the contract is classified as Level 2. Over-the-counter (OTC) contracts are valued using quotes obtained from an exchange, binding and non-binding broker quotes. Furthermore, the Company obtains independent quotes from the market to validate the forward price curves. OTC contracts include forwards, swaps and options. To the extent possible, fair value measurements utilize various inputs that include quoted prices for similar contracts or market-corroborated inputs.

When unobservable inputs are significant to the fair value measurement, the asset or liability is classified as Level 3. Additionally, Level 2 fair value measurements include adjustments for credit risk based on the Company’s own creditworthiness (for net liabilities) and its counterparties’ creditworthiness (for net assets). The Company assumes that observable market prices include sufficient adjustments for liquidity and modeling risks. The Company did not have any fair value measurements that transferred between Level 2 and Level 3 as well as Level 1 and Level 2.

Income Taxes

The Company accounts for income taxes using the asset and liability approach, which requires deferred tax assets and liabilities be recognized using enacted tax rates to measure the effect of temporary differences between book and tax bases on recorded assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets, if it is more likely than not some portion or all of the deferred tax assets will not be realized. The need to establish valuation allowances against deferred tax assets is assessed quarterly. The primary factors used to assess the likelihood of realization are forecasts of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets.

The Company has not recorded United States income or foreign withholding taxes related to undistributed earnings of foreign subsidiaries because the Company currently plans to keep these amounts indefinitely invested overseas.

The Company recognizes tax related interest and penalties in income tax expense in its Consolidated Statement of Income.

With respect to accounting for uncertainty in income taxes, the Company evaluates tax positions to determine whether the benefits of tax positions are more likely than not of being sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement. For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit. If the more likely than not

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threshold is not met in the period for which a tax position is taken, the Company may subsequently recognize the benefit of that tax position if the tax matter is effectively settled, the statute of limitations expires, or if the more likely than not threshold is met in a subsequent period.

Deferred Financing Fees

Debt issuance costs that are incurred by the Company in connection with the issuance of debt are deferred and amortized to interest expense over the life of the underlying indebtedness, adjusted to reflect any early repayments.

Stock-Based Compensation Plans

The Company measures the cost of employee services received in exchange for the award of an equity instrument based on the grant-date fair value of the award, with such cost recognized over the applicable vesting period.

Market condition-based awards

The Company grants two types of market condition-based awards - market share units and performance market share units.

The fair value of the market share units is estimated at the date of grant using a binomial lattice model with the following assumptions: a risk-free interest rate, dividend yield, time to maturity and expected volatility. These units vest and are settled in common stock on the third anniversary of the date of grant. Market share units are converted into between zero and two shares of common stock for each unit granted at the end of a three-year performance cycle. The conversion ratio is calculated by dividing the average closing share price of the Company’s common stock during the ninety calendar days immediately preceding the vesting date by the average closing share price of the Company’s common stock during the ninety calendar days immediately preceding the grant date, with the resulting quotient capped at two . This quotient is then multiplied by the number of market share units granted to yield the number of shares of common stock to be delivered on the vesting date.

The fair value of the performance market share units is estimated at the date of grant using a Monte Carlo Simulation. A participant may earn between 0% to 200% of the number of performance market share units granted, based on the total shareholder return (the“TSR”) of the Company's common stock over a three-year period. The awards will cliff vest on the third anniversary of the grant date. The TSR is calculated by dividing the sixty or ninety calendar day average price at end of the period (as applicable) and the reinvested dividends thereon by such sixty or ninety calendar day average price at start of the period. The maximum number of awards earned is capped at 200% of the target award. Additionally, no payout will be awarded in the event that the TSR at the vesting date reflects less than a 25% return from the average price at the grant date. Performance market share units are similar to the market share units except that the targets are more difficult to achieve and may be tied to the TSR of a defined peer group.

The Company recognizes compensation expense using the straight-line method over the life of the market share units and performance market share units except for those issued to certain retirement-eligible participants, which are expensed on an accelerated basis. The Company estimates forfeitures rather than recognizing them when they occur.

Restricted Stock Units

The fair value of restricted stock units is based on the closing market price of the Company’s common stock on the date of grant. These awards generally vest, and are settled in common stock, at 25 % per year, over a four year period from the date of grant. The Company recognizes compensation expense using the straight-line method over the life of the restricted stock units.

Stock Options

The fair value of the options granted is estimated at the date of grant using the Black-Scholes option-pricing model utilizing assumptions based on historical data and current market data. The assumptions include expected term of the options, risk-free interest rate, expected volatility, and dividend yield. The expected term represents the expected amount of time that options granted are expected to be outstanding, based on historical and forecasted exercise behavior. The risk-free rate is based on the rate at the grant date of zero-coupon U.S. Treasury Notes with a term equal to the expected term of the option. Expected volatility is estimated using historical volatility rates based on historical weekly price changes over a term equal to the expected term of the options. The Company’s dividend yield is based on historical data. The Company recognizes compensation expense using the straight-line method over the vesting period of the options except for those issued to certain retirement-eligible participants, which are expensed on an accelerated basis.

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Earnings Per Share

Basic earnings per common share (“EPS”) are computed by dividing net earnings attributable to EnerSys stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. At March 31, 2017 , 2016 and 2015 , the Company had outstanding stock options, restricted stock units, market share units and performance market share units, which could potentially dilute basic earnings per share in the future. The Convertible Notes (as defined in Note 8), prior to their extinguishment on July 17, 2015, had a dilutive impact on the EPS for the fiscal years of 2016 and 2015.

Segment Reporting

A segment for reporting purposes is based on the financial performance measures that are regularly reviewed by the chief operating decision maker to assess segment performance and to make decisions about a public entity’s allocation of resources. Based on this guidance, the Company reports its segment results based upon the three geographical regions of operations.

•	Americas , which includes North and South America, with segment headquarters in Reading, Pennsylvania, U.S.A.,

•	EMEA , which includes Europe, the Middle East and Africa, with segment headquarters in Zug, Switzerland, and

•	Asia , which includes Asia, Australia and Oceania, with segment headquarters in Singapore.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” providing guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB voted to delay the effective date for interim and annual reporting periods beginning after December 15, 2017, with early adoption permissible one year earlier. The standard permits the use of either modified retrospective or full retrospective transition methods. The Company has developed an implementation plan, which is currently in the assessment phase. The Company has not selected a transition method and is currently evaluating the impact that adoption of the standard will have on the financial condition, results of operations and cash flows.

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory (Topic 330).” This update requires inventory to be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. This update will be effective for the Company for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The amendments in this update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. This update will not have a material impact on the Company's consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805).” The amendments in this update require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this update are effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted this standard in fiscal 2017 and this update did not have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). This update requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The new standard requires lessors to account for leases using an approach that is substantially equivalent to

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existing guidance for sales-type leases, direct financing leases and operating leases. This update is effective for reporting periods beginning after December 15, 2018, using a modified retrospective approach, with early adoption permitted. The Company is currently assessing the potential impact that the adoption will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)”. This update simplifies several aspects related to how share-based payments are accounted for and presented in the financial statements, including the accounting for forfeitures and tax-effects related to share-based payments at settlement, and the classification of excess tax benefits and shares surrendered for tax withholdings in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company early adopted this standard as of April 1, 2016. The impact of the adoption of this standard was as follows:

•	approximately $1,316 of excess tax benefits was recorded through income tax expense for fiscal 2017 , adopted on a prospective basis;

•	excess tax benefits were included within operating cash flows adopted on a prospective basis;

•	cash paid by the Company when directly withholding shares to satisfy an employee's statutory tax obligations continued to be classified as a financing activity; and

•	no impact on prior periods due to adopting the guidance on a prospective basis.

The Company has elected to continue its current policy of estimating forfeitures rather than recognizing forfeitures when they occur.

In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Accounting for


Goodwill Impairment”, which eliminated Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. This update is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis.

Consistent with the Company's accounting policy of performing the annual goodwill impairment test on the first day of the fourth quarter of a fiscal year, the Company conducted the annual goodwill impairment test on January 2, 2017 and was able to early adopt ASU 2017-04. For more details, see Note 5 to the Consolidated Financial Statements.

Use of Estimates

There were no major acquisitions in fiscal 2017.

In fiscal 2016, the Company completed the acquisition of ICS Industries Pty. Ltd. (ICS), headquartered in Melbourne, Australia, for $ 34,496 , net of cash acquired. ICS is a leading full line shelter designer and manufacturer with installation and maintenance services serving the telecommunications, utilities, datacenter, natural resources and transport industries operating in Australia and serving customers in the Asia Pacific region. The Company acquired tangible and intangible assets, in connection with the acquisition, including trademarks, technology, customer relationships, non-competition agreements and goodwill. Based on the final valuation, trademarks were valued at $ 1,322 , technology at $ 1,399 , customer relationships at $ 10,211 , non-competition agreements at $ 142 and goodwill was recorded at $ 13,898 . The useful lives of technology were estimated at 10 years , customer relationships were estimated at 11 years and non-competition agreements ranged from 2 - 5 years. Trademarks were considered to be indefinite-lived assets. There was no tax deductible goodwill associated with this acquisition.

There were no acquisitions in fiscal 2015.

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Inventories, net consist of:

		March 31,
		2017				2016
Raw materials		$	85,604			$	84,198
Work-in-process		107,177				104,085
Finished goods		167,913				142,798
Total		$	360,694			$	331,081

Property, plant, and equipment consist of:

		March 31,
		2017				2016
Land, buildings, and improvements		$	251,030			$	249,112
Machinery and equipment		582,105				570,394
Construction in progress		33,418				35,450
		866,553				854,956
Less accumulated depreciation		( 518,004		)		( 497,547		)
Total		$	348,549			$	357,409

Other Intangible Assets

Information regarding the Company’s other intangible assets are as follows:

		March 31,
		2017												2016
		Gross Amount				Accumulated Amortization				Net Amount				Gross Amount				Accumulated Amortization				Net Amount
Indefinite-lived intangible assets:
Trademarks		$	96,849			$	( 953	)		$	95,896			$	98,245			$	( 953	)		$	97,292
Finite-lived intangible assets:
Customer relationships		66,187				( 24,936		)		41,251				65,963				( 18,485		)		47,478
Non-compete		2,846				( 2,701		)		145				2,856				( 2,457		)		399
Technology		22,549				( 7,168		)		15,381				18,494				( 5,423		)		13,071
Trademarks		2,003				( 1,066		)		937				2,004				( 983		)		1,021
Licenses		1,474				( 1,124		)		350				1,487				( 1,090		)		397
Total		$	191,908			$	( 37,948	)		$	153,960			$	189,049			$	( 29,391	)		$	159,658

The Company’s amortization expense related to finite-lived intangible assets was $ 8,557 , $ 8,308 , and $ 7,779 , for the years ended March 31, 2017 , 2016 and 2015 , respectively. The expected amortization expense based on the finite-lived intangible

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assets as of March 31, 2017 , is $ 8,244 in fiscal 2018, $ 8,206 in fiscal 2019, $ 8,063 in fiscal 2020, $ 7,813 in fiscal 2021 and $ 7,622 in fiscal 2022.

Goodwill

The changes in the carrying amount of goodwill by reportable segment are as follows:

		Fiscal year ended March 31, 2017
		Americas				EMEA				Asia				Total
Balance at beginning of year		$	166,197			$	141,392			$	45,958			$	353,547
Reorganization of reporting structure		( 11,628		)		11,628				—				—
Goodwill acquired during the year, including purchase accounting adjustments		1,962				—				( 840		)		1,122
Goodwill impairment charge		( 8,646		)		( 3,570		)		—				( 12,216		)
Foreign currency translation adjustment		( 903		)		( 10,637		)		( 2,256		)		( 13,796		)
Balance at end of year		$	146,982			$	138,813			$	42,862			$	328,657

		Fiscal year ended March 31, 2016
		Americas				EMEA				Asia				Total
Balance at beginning of year		$	190,321			$	146,962			$	32,447			$	369,730
Reorganization of reporting structure		6,712				( 6,712		)		—				—
Goodwill acquired during the year		497				—				13,898				14,395
Goodwill impairment charge		( 29,578		)		( 1,833		)		—				( 31,411		)
Foreign currency translation adjustment		( 1,755		)		2,975				( 387		)		833
Balance at end of year		$	166,197			$	141,392			$	45,958			$	353,547

A reconciliation of goodwill and accumulated goodwill impairment losses, by reportable segment, is as follows:

		March 31, 2017
		Americas				EMEA				Asia				Total
Gross carrying value		$	204,827			$	144,966			$	48,041			$	397,834
Accumulated goodwill impairment charges		( 57,845		)		( 6,153		)		( 5,179		)		( 69,177		)
Net book value		$	146,982			$	138,813			$	42,862			$	328,657

		March 31, 2016
		Americas				EMEA				Asia				Total
Gross carrying value		$	215,396			$	143,975			$	51,137			$	410,508
Accumulated goodwill impairment charges		( 49,199		)		( 2,583		)		( 5,179		)		( 56,961		)
Net book value		$	166,197			$	141,392			$	45,958			$	353,547

Impairment of goodwill, indefinite-lived intangibles and fixed assets

As mentioned in Note 1, Summary of Significant Accounting Policies, the Company early adopted ASU 2017-04, which eliminated Step 2 from the goodwill impairment test. In the fourth quarter of fiscal 2017 , the Company conducted step one of the annual goodwill impairment test which indicated that the fair values of two of its reporting units - Purcell US in the Americas and Purcell EMEA in the EMEA operating segment - were less than their respective carrying values. Based on the guidance in ASU 2017-04, the Company recognized an impairment charge for the amount by which the carrying amount exceeded the reporting unit’s fair value.

The Company recorded a non-cash charge of $ 8,646 and $ 3,570 , related to goodwill impairment in the Americas and EMEA operating segments, respectively, and $ 700 and $ 1,100 related to impairment of indefinite-lived trademarks in the Americas and

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EMEA operating segments, respectively, for an aggregate charge of $ 14,016 , under the caption “Impairment of goodwill, indefinite-lived intangibles and fixed assets” in the Consolidated Statements of Income.

Purcell was acquired in fiscal 2014 during the height of the 4G telecom build-out. After performing to expectation for the first few quarters, its revenue slumped as telecom spending in the U.S. curtailed sharply. In both fiscal 2015 and 2016, lower estimated projected revenue and profitability in the near term caused by reduced levels of capital spending by major customers in the telecommunications industry was a key factor contributing to the impairment charges recorded in those years. In fiscal 2017, the company transferred the European operations of Purcell to its EMEA operating segment, consistent with its geographical management approach. In the U.S., Purcell recently received significant orders, but at lower margins than recent years, resulting in an impairment in 2017. In Europe, Purcell's sales forecasts were reduced as a result of low telecom spending and accordingly recorded an impairment charge as well.

In fiscal 2016, the Company recorded a non-cash charge of $ 31,411 related to goodwill impairment in the Americas and EMEA operating segments, $ 3,420 related to impairment of indefinite-lived trademarks in the Americas and $ 1,421 related to impairment of fixed assets in the EMEA operating segment for an aggregate charge of $ 36,252 .

In fiscal 2015, the Company recorded a non-cash charge of $ 20,371 related to goodwill impairment in the Americas and EMEA operating segments and $ 3,575 related to impairment of indefinite-lived trademarks in the Americas for an aggregate charge of $ 23,946 .

Prepaid and other current assets consist of the following:

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Accrued expenses consist of the following:

The following summarizes the Company’s long-term debt:

		As of March 31,
		2017								2016
		Principal				Unamortized Issuance Costs				Principal				Unamortized Issuance Costs
5.00% Senior Notes due 2023		$	300,000			$	3,746			$	300,000			$	4,370
2011 Credit Facility, due 2018		292,500				1,145				312,500				1,909
		$	592,500			$	4,891			$	612,500			$	6,279
Less: Unamortized issuance costs		4,891								6,279
Less: Current portion		—								—
Long-term debt, net of unamortized issuance costs		$	587,609							$	606,221

5.00% Senior Notes

The Company's $ 300,000 5.00 % Senior Notes due 2023 (the “Notes”) bear interest at a rate of 5.00 % . Interest is payable semiannually in arrears on April 30 and October 30 of each year, commencing on October 30, 2015. The Notes will mature on April 30, 2023, unless earlier redeemed or repurchased in full. The Notes are unsecured and unsubordinated obligations of the Company. The Notes are fully and unconditionally guaranteed (the “Guarantees”), jointly and severally, by each of its subsidiaries that are guarantors under the 2011 Credit Facility (the “Guarantors”). The Guarantees are unsecured and unsubordinated obligations of the Guarantors. The net proceeds from the sale of the Notes were used primarily to repay and retire in full the principal amount of the Company’s senior 3.375 % convertible notes (the “Convertible Notes”), as discussed below, as well as, fund the accelerated share repurchase program discussed in Note 15.

2011 Credit Facility

The Company is party to a $ 500,000 senior secured revolving credit facility and a $ 150,000 senior secured incremental term loan (the “Term Loan”) that matures on September 30, 2018, comprising the “2011 Credit Facility”. The quarterly installments payable on the Term Loan were $ 1,875 beginning June 30, 2015 and $ 3,750 beginning June 30, 2016 with a final payment of $ 108,750 on September 30, 2018. The 2011 Credit Facility may be increased by an aggregate amount of $ 300,000 in revolving commitments and /or one or more new tranches of term loans, under certain conditions. Both the revolving loan and the Term Loan under the 2011 Credit Facility will bear interest, at the Company's option, at a rate per annum equal to either (i) the London Interbank Offered Rate (“LIBOR”) plus between 1.25 % and 1.75 % (currently 1.25 % and based on the Company's

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consolidated net leverage ratio) or (ii) the Base Rate (which is the highest of (a) the Bank of America prime rate, and (b) the Federal Funds Effective Rate) plus between 0.25 % and 0.75 % (based on the Company’s consolidated net leverage ratio). Obligations under the 2011 Credit Facility are secured by substantially all of the Company’s existing and future acquired assets, including substantially all of the capital stock of the Company’s United States subsidiaries that are guarantors under the credit facility, and 65 % of the capital stock of certain of the Company’s foreign subsidiaries that are owned by the Company’s United States subsidiaries.

There are no prepayment penalties on loans under the 2011 Credit Facility. The Company had $ 165,000 revolver borrowings and $ 127,500 Term Loan borrowings outstanding under its 2011 Credit Facility as of March 31, 2017 .

The current portion of the Term Loan of $ 15,000 is classified as long-term debt as the Company expects to refinance the future quarterly payments with revolver borrowings under its 2011 Credit Facility.

Senior Unsecured 3.375% Convertible Notes

The Company's 3.375 % Convertible Notes, with an original face value of $ 172,500 , were issued when the Company’s stock price was trading at $ 30.19 per share. On May 7, 2015, the Company filed a notice of redemption for all of the Convertible Notes with a redemption date of June 8, 2015 at a price equal to $ 1,000.66 per $1,000 original principal amount of Convertible Notes, which is equal to 100% of the accreted principal amount of the Convertible Notes being repurchased plus accrued and unpaid interest. Holders were permitted to convert their Convertible Notes at their option on or before June 5, 2015.

Ninety-nine percent of the Convertible Notes holders exercised their conversion rights on or before June 5, 2015, pursuant to which, on July 17, 2015, the Company paid $ 172,388 , in aggregate, towards the principal balance including accreted interest, cash equivalent of fractional shares issued towards conversion premium and settled the conversion premium by issuing, in the aggregate, 1,889,431 shares of the Company's common stock from its treasury shares, thereby resulting in the extinguishment of all of the Convertible Notes as of that date. There was no impact to the income statement from the extinguishment as the fair value of the total settlement consideration transferred and allocated to the liability component approximated the carrying value of the Convertible Notes. The remaining consideration allocated to the equity component resulted in an adjustment to equity of $ 84,140 .

The amount of interest cost recognized for the amortization of the discount on the liability component of the Convertible Notes was $ 0 , $ 1,330 and $ 8,283 , respectively, for the fiscal years ended March 31, 2017 , 2016 and 2015 .

The Company paid $ 20,781 , $ 15,176 and $ 10,088 , net of interest received, for interest during the fiscal years ended March 31, 2017 , 2016 and 2015 , respectively.

The Company’s financing agreements contain various covenants, which, absent prepayment in full of the indebtedness and other obligations, or the receipt of waivers, would limit the Company’s ability to conduct certain specified business transactions including incurring debt, mergers, consolidations or similar transactions, buying or selling assets out of the ordinary course of business, engaging in sale and leaseback transactions, paying dividends and certain other actions. The Company is in compliance with all such covenants.

Short-Term Debt

As of March 31, 2017 and 2016 , the Company had $ 18,359 and $ 22,144 , respectively, of short-term borrowings from banks. The weighted-average interest rates on these borrowings were approximately 7 % and 8 % for fiscal years ended March 31, 2017 and 2016 , respectively.

Letters of Credit

As of March 31, 2017 and 2016 , the Company had $ 2,189 and $ 2,693 , respectively, of standby letters of credit.

Debt Issuance Costs

Amortization expense, relating to debt issuance costs, included in interest expense was $ 1,388 , $ 1,464 , and $ 1,263 for the fiscal years ended March 31, 2017 , 2016 and 2015 , respectively. Debt issuance costs, net of accumulated amortization, totaled $ 4,891 and $ 6,279 as of March 31, 2017 and 2016 , respectively.

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Available Lines of Credit

The Company’s future minimum lease payments under operating leases that have noncancelable terms in excess of one year as of March 31, 2017 are as follows:

2018		$	24,510
2019		19,724
2020		16,327
2021		12,115
2022		9,559
Thereafter		16,459
Total minimum lease payments		$	98,694

Other liabilities consist of the following:

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Recurring Fair Value Measurements

The following tables represent the financial assets and (liabilities) measured at fair value on a recurring basis as of March 31, 2017 and March 31, 2016 and the basis for that measurement:

		Total Fair Value Measurement March 31, 201 7				Quoted Price in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Lead forward contracts		$	1,163			$	—			$	1,163			$	—
Foreign currency forward contracts		( 313		)		—				( 313		)		—
Total derivatives		$	850			$	—			$	850			$	—

		Total Fair Value Measurement March 31, 201 6				Quoted Price in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Lead forward contracts		$	( 499	)		$	—			$	( 499	)		$	—
Foreign currency forward contracts		( 988		)		—				( 988		)		—
Total derivatives		$	( 1,487	)		$	—			$	( 1,487	)		$	—

The fair values of lead forward contracts are calculated using observable prices for lead as quoted on the London Metal Exchange (“LME”) and, therefore, were classified as Level 2 within the fair value hierarchy as described in Note 1, Summary of Significant Accounting Policies.

The fair values for foreign currency forward contracts are based upon current quoted market prices and are classified as Level 2 based on the nature of the underlying market in which these derivatives are traded.

Financial Instruments

The fair values of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate carrying value due to their short maturities.

The fair value of the Company’s short-term debt and borrowings under the 2011 Credit Facility (as defined in Note 8), approximate their respective carrying value, as they are variable rate debt and the terms are comparable to market terms as of the balance sheet dates and are classified as Level 2.

The Company's Notes, with an original face value of $ 300,000 , were issued in April 2015. The fair value of these Notes represent the trading values based upon quoted market prices and are classified as Level 2. The Notes were trading at approximately 101 % and 96 % of face value on March 31, 2017 and March 31, 2016 , respectively.

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The carrying amounts and estimated fair values of the Company’s derivatives and Notes at March 31, 2017 and 2016 were as follows:

		March 31, 2017												March 31, 2016
		Carrying Amount						Fair Value						Carrying Amount						Fair Value
Financial assets:
Derivatives (1)		$	1,163					$	1,163					$	—					$	—
Financial liabilities:
Notes (2)		300,000						303,000						300,000						288,000
Derivatives (1)		$	313					$	313					$	1,487					$	1,487

(1)	Represents lead and foreign currency forward contracts (see Note 12 for asset and liability positions of the lead and foreign currency forward contracts at March 31, 2017 and March 31, 2016 ).

(2)	The fair value amount of the Notes at March 31, 2017 at March 31, 2016 represents the trading value of the instruments.

Non-recurring fair value measurements

The valuation of goodwill and other intangible assets is based on information and assumptions available to the Company at the time of acquisition, using income and market approaches to determine fair value. The Company tests goodwill and other intangible assets annually for impairment, or when indications of potential impairment exist (see Note 1).

Goodwill is tested for impairment by determining the fair value of the Company’s reporting units. The unobservable inputs used to measure the fair value of the reporting units include projected growth rates, profitability, and the risk factor premium added to the discount rate. The remeasurement of goodwill is classified as a Level 3 fair value assessment due to the significance of unobservable inputs developed using company-specific information.

The inputs used to measure the fair value of other intangible assets were largely unobservable and accordingly were also classified as Level 3. The fair value of trademarks, is based on an estimate of the royalties saved that would have been paid to a third party had the Company not owned the trademark. The fair value of other indefinite-lived intangibles was estimated using the income approach, based on cash flow projections of revenue growth rates, taking into consideration industry and market conditions.

In connection with the annual impairment testing conducted as of January 2, 2017 for fiscal 2017 , indefinite-lived trademarks associated with Purcell US and Purcell EMEA were recorded at fair value on a nonrecurring basis at $ 4,300 and $ 3,900 , respectively, and the remeasurement resulted in an impairment charge of $ 700 and $ 1,100 , respectively. In determining the fair value of these assets, the Company used royalty rates ranging between 1.3 % - 2.5 % based on comparable market rates, and used discount rates ranging between 15.0 % - 17.0 % .

In connection with the annual impairment testing conducted as of December 28, 2015 for fiscal 2016, indefinite-lived trademarks associated with Purcell and Quallion/ABSL US were recorded at fair value on a nonrecurring basis at $ 10,000 and $ 990 , respectively, and the remeasurement resulted in an aggregate impairment charge of $ 3,420 . In determining the fair value of these assets, the Company used royalty rates ranging between 0.5 % - 2.5 % based on comparable market rates, and used discount rates ranging between 16.0 % - 24.0 % .

The Company utilizes derivative instruments to reduce its exposure to fluctuations in commodity prices and foreign exchange rates, under established procedures and controls. The Company does not enter into derivative contracts for speculative purposes. The Company’s agreements are with creditworthy financial institutions and the Company anticipates performance by counterparties to these contracts and therefore no material loss is expected.

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Derivatives in Cash Flow Hedging Relationships

Lead Forward Contracts

The Company enters into lead forward contracts to fix the price for a portion of its lead purchases. Management considers the lead forward contracts to be effective against changes in the cash flows of the underlying lead purchases. The vast majority of such contracts are for a period not extending beyond one year and the notional amounts at March 31, 2017 and 2016 were 45.0 million pounds and 27.4 million pounds, respectively.

Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts and options to hedge a portion of the Company’s foreign currency exposures for lead as well as other foreign currency exposures so that gains and losses on these contracts offset changes in the underlying foreign currency denominated exposures. The vast majority of such contracts are for a period not extending beyond one year . As of March 31, 2017 and 2016 , the Company had entered into a total of $ 30,751 and $ 18,206 , respectively, of such contracts.

In the coming twelve months, the Company anticipates that $ 3,118 of net pretax gain relating to lead and foreign currency forward contracts will be reclassified from AOCI as part of cost of goods sold. This amount represents the current net unrealized impact of hedging lead and foreign exchange rates, which will change as market rates change in the future, and will ultimately be realized in the Consolidated Statement of Income as an offset to the corresponding actual changes in lead costs to be realized in connection with the variable lead cost and foreign exchange rates being hedged.

Derivatives not Designated in Hedging Relationships

Foreign Currency Forward Contracts

The Company also enters into foreign currency forward contracts to economically hedge foreign currency fluctuations on intercompany loans and foreign currency denominated receivables and payables. These are not designated as hedging instruments and changes in fair value of these instruments are recorded directly in the Consolidated Statements of Income. As of March 31, 2017 and 2016 , the notional amount of these contracts was $ 13,560 and $ 11,156 , respectively.

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Presented below in tabular form is information on the location and amounts of derivative fair values in the Consolidated Balance Sheets and derivative gains and losses in the Consolidated Statements of Income:

Fair Value of Derivative Instruments

March 31, 2017 and 2016

		Derivatives and Hedging Activities Designated as Cash Flow Hedges								Derivatives and Hedging Activities Not Designated as Hedging  Instruments
		March 31, 2017				March 31, 2016				March 31, 2017				March 31, 2016
Prepaid and other current assets
Lead forward contracts		$	1,163			$	—			$	—			$	—
Foreign currency forward contracts		11				—				—				—
Total assets		$	1,174			$	—			$	—			$	—
Accrued expenses
Lead forward contracts		$	—			$	499			$	—			$	—
Foreign currency forward contracts		—				350				324				638
Total liabilities		$	—			$	849			$	324			$	638

The Effect of Derivative Instruments on the Consolidated Statements of Income

For the fiscal year ended March 31, 2017

Derivatives Designated as Cash Flow Hedges		Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)				Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)		Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts		$	7,907			Cost of goods sold		$	5,803
Foreign currency forward contracts		845				Cost of goods sold		433
Total		$	8,752					$	6,236

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Pretax Gain (Loss)
Foreign currency forward contracts	Other (income) expense, net	$	( 471	)
Total		$	( 471	)

The Effect of Derivative Instruments on the Consolidated Statements of Income

For the fiscal year ended March 31, 2016

Derivatives Designated as Cash Flow Hedges		Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)				Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)		Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts		$	( 3,361	)		Cost of goods sold		$	( 11,085	)
Foreign currency forward contracts		( 3,023		)		Cost of goods sold		3,941
Total		$	( 6,384	)				$	( 7,144	)

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Pretax Gain (Loss)
Foreign currency forward contracts	Other (income) expense, net	$	( 409	)
Total		$	( 409	)

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The Effect of Derivative Instruments on the Consolidated Statements of Income

For the fiscal year ended March 31, 2015

Derivatives Designated as Cash Flow Hedges		Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)				Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)		Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts		$	( 7,743	)		Cost of goods sold		$	( 4,347	)
Foreign currency forward contracts		8,206				Cost of goods sold		1,386
Total		$	463					$	( 2,961	)

		Fiscal year ended March 31,
		2017				2016				2015
Current income tax expense
Current:
Federal		$	30,362			$	29,082			$	12,299
State		4,855				4,750				3,044
Foreign		17,800				17,034				20,585
Total current income tax expense		53,017				50,866				35,928
Deferred income tax expense (benefit)
Federal		857				( 3,706		)		25,113
State		590				124				1,771
Foreign		8				2,829				5,002
Total deferred income tax expense (benefit)		1,455				( 753		)		31,886
Total income tax expense		$	54,472			$	50,113			$	67,814

Earnings before income taxes consists of the following:

		Fiscal year ended March 31,
		2017				2016				2015
United States		$	80,436			$	64,235			$	76,327
Foreign		132,259				117,702				173,012
Earnings before income taxes		$	212,695			$	181,937			$	249,339

Income taxes paid by the Company for the fiscal years ended March 31, 2017 , 2016 and 2015 were $ 45,332 , $ 44,625 and $ 42,404 , respectively.

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The following table sets forth the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities:

		March 31,
		2017				2016
Deferred tax assets:
Accounts receivable		$	2,419			$	1,450
Inventories		6,521				6,596
Net operating loss carryforwards		46,178				50,094
Accrued expenses		29,783				25,436
Other assets		20,282				22,551
Gross deferred tax assets		105,183				106,127
Less valuation allowance		( 27,053		)		( 25,416		)
Total deferred tax assets		78,130				80,711
Deferred tax liabilities:
Property, plant and equipment		24,319				25,302
Other intangible assets		67,388				65,879
Other liabilities		759				2,008
Total deferred tax liabilities		92,466				93,189
Net deferred tax liabilities		$	( 14,336	)		$	( 12,478	)

The Company has approximately $ 1,797 in United States federal net operating loss carryforwards, all of which are limited by Section 382 of the Internal Revenue Code, with expirations between 2023 and 2027. The Company has approximately $ 151,340 of foreign net operating loss carryforwards, of which $ 110,506 may be carried forward indefinitely and $ 40,834 expire between fiscal 2018 and fiscal 2034. In addition, the Company also had approximately $ 33,263 of state net operating loss carryforwards with expirations between fiscal 2018 and fiscal 2037.

As of March 31, 2017 and 2016 , the federal valuation allowance was $ 1,050 . As of March 31, 2017 and 2016 , the valuation allowance associated with the state tax jurisdictions was $ 705 and $ 656 , respectively. As of March 31, 2017 and 2016 , the valuation allowance associated with certain foreign tax jurisdictions was $ 25,298 and $ 23,710 , respectively. The change includes an increase of $ 2,001 to tax expense primarily related to net operating loss carryforwards generated in the current year that the Company believes are not more likely than not to be realized, and a decrease of $ 413 primarily related to currency fluctuations.

A reconciliation of income taxes at the statutory rate to the income tax provision is as follows:

		Fiscal year ended March 31,
		2017				2016				2015
United States statutory income tax expense (at 35%)		$	74,444			$	63,678			$	87,269
Increase (decrease) resulting from:
State income taxes, net of federal effect		3,677				3,282				3,206
Nondeductible expenses, domestic manufacturing deduction and other		1,993				( 1,407		)		8,128
Legal proceedings charge - European Competition Investigations - See Note 18		7,873				668				—
Goodwill impairment - See Note 5		3,812				6,475				5,194
Effect of foreign operations		( 39,377		)		( 28,845		)		( 37,775		)
Valuation allowance		2,050				6,262				1,792
Income tax expense		$	54,472			$	50,113			$	67,814

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The effective income tax rates for the fiscal years ended March 31, 2017 , 2016 and 2015 were 25.6 % , 27.5 % and 27.2 % , respectively. The effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions in which the Company operates and the amount of its consolidated income before taxes.

In fiscal 2017 , the foreign effective income tax rate on foreign pre-tax income of $ 132,259 was 13.5 % . In fiscal 2016, the foreign effective income tax rate on foreign pre-tax income of $ 117,702 was 16.9 % and in fiscal 2015, the foreign effective income tax rate on foreign pre-tax income of $ 173,012 was 14.8 % . The rate decrease in fiscal 2017 compared to fiscal 2016 is primarily due to changes in the mix of earnings among tax jurisdictions and a decrease in non-deductible goodwill impairment charges compared to fiscal 2016, partially offset by an increase in non-deductible legal proceedings charge relating to the European competition investigation in fiscal 2017 compared to fiscal 2016. The rate increase in fiscal 2016 compared to fiscal 2015 is primarily due to changes in the mix of earnings among tax jurisdictions and an increase in non-deductible goodwill impairment charges compared to fiscal 2015.

Income from the Company's Swiss subsidiary comprised a substantial portion of its overall foreign mix of income for the fiscal years ended March 31, 2017 , 2016 and 2015 and was taxed at approximately 5 % , 7 % and 7 % , respectively.

The Company has not recorded United States income or foreign withholding taxes on approximately $ 960,000 and $ 878,225 of undistributed earnings of foreign subsidiaries for fiscal years 2017 and 2016, respectively, that could be subject to taxation if remitted to the United States because the Company currently plans to keep these amounts indefinitely invested overseas. It is not practical to calculate the income tax expense that would result upon repatriation of these earnings.

Uncertain Tax Positions

The following table summarizes activity of the total amounts of unrecognized tax benefits :

		Fiscal year ended March 31,
		2017				2016				2015
Balance at beginning of year		$	2,375			$	4,112			$	3,743
Increases related to current year tax positions		252				422				3,241
Increases related to prior year tax positions		31				470				9
Decreases related to prior tax positions due to foreign currency translation		( 352		)		—				( 85		)
Decreases related to prior year tax positions settled		( 678		)		( 2,315		)		( 2,695		)
Lapse of statute of limitations		( 178		)		( 314		)		( 101		)
Balance at end of year		$	1,450			$	2,375			$	4,112

All of the balance of unrecognized tax benefits at March 31, 2017 , if recognized, would be included in the Company’s Consolidated Statements of Income and have a favorable impact on both the Company’s net earnings and effective tax rate.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2014.

While the net effect on total unrecognized tax benefits cannot be reasonably estimated, approximately $ 284 is expected to reverse in fiscal 2017 due to expiration of various statute of limitations.

Defined Benefit Plans

The Company provides retirement benefits to substantially all eligible salaried and hourly employees. The Company uses a measurement date of March 31 for its pension plans.

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Net periodic pension cost for fiscal 2017 , 2016 and 2015 , includes the following components:

		United States Plans												International Plans
		Fiscal year ended March 31,												Fiscal year ended March 31,
		2017				2016				2015				2017				2016				2015
Service cost		$	371			$	482			$	400			$	871			$	820			$	767
Interest cost		664				682				673				1,848				1,904				2,546
Expected return on plan assets		( 816		)		( 855		)		( 889		)		( 1,875		)		( 2,247		)		( 2,248		)
Amortization and deferral		453				481				319				978				1,249				688
Curtailment loss		—				313				—				—				—				—
Net periodic benefit cost		$	672			$	1,103			$	503			$	1,822			$	1,726			$	1,753

The following table sets forth a reconciliation of the related benefit obligation, plan assets, and accrued benefit costs related to the pension benefits provided by the Company for those employees covered by defined benefit plans:

		United States Plans								International Plans
		March 31,								March 31,
		2017				2016				2017				2016
Change in projected benefit obligation
Benefit obligation at the beginning of the period		$	17,649			$	18,059			$	69,134			$	72,091
Service cost		371				482				871				820
Interest cost		664				682				1,848				1,904
Benefits paid, inclusive of plan expenses		( 1,057		)		( 912		)		( 1,982		)		( 1,944		)
Plan curtailments and settlements		—				( 120		)		( 17		)		—
Actuarial (gains) losses		( 945		)		( 542		)		11,863				( 4,144		)
Foreign currency translation adjustment		—				—				( 7,239		)		407
Benefit obligation at the end of the period		$	16,682			$	17,649			$	74,478			$	69,134

Change in plan assets
Fair value of plan assets at the beginning of the period		$	11,839			$	12,379			$	32,314			$	34,401
Actual return on plan assets		1,455				( 124		)		6,669				( 591		)
Employer contributions		494				496				1,640				1,504
Benefits paid, inclusive of plan expenses		( 1,057		)		( 912		)		( 1,982		)		( 1,944		)
Plan curtailments and settlements		—				—				( 17		)		—
Foreign currency translation adjustment		—				—				( 4,301		)		( 1,056		)
Fair value of plan assets at the end of the period		$	12,731			$	11,839			$	34,323			$	32,314
Funded status deficit		$	( 3,951	)		$	( 5,810	)		$	( 40,155	)		$	( 36,820	)

		March 31,
		2017				2016
Amounts recognized in the Consolidated Balance Sheets consist of:
Noncurrent assets		$	46			$	—
Accrued expenses		( 1,222		)		( 1,321		)
Other liabilities		( 42,930		)		( 41,309		)
		$	( 44,106	)		$	( 42,630	)

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The following table represents pension components (before tax) and related changes (before tax) recognized in AOCI for the Company’s pension plans for the years ended March 31, 2017 , 2016 and 2015 :

		Fiscal year ended March 31,
		2017				2016				2015
Amounts recorded in AOCI before taxes:
Prior service cost		$	( 377	)		$	( 445	)		$	( 800	)
Net loss		( 28,475		)		( 26,628		)		( 28,734		)
Net amount recognized		$	( 28,852	)		$	( 27,073	)		$	( 29,534	)

		Fiscal year ended March 31,
		2017				2016				2015
Changes in plan assets and benefit obligations:
Net loss (gain) arising during the year		5,485				( 988		)		13,831
Effect of exchange rates on amounts included in AOCI		( 2,275		)		142				( 3,565		)
Amounts recognized as a component of net periodic benefit costs:
Amortization of prior service cost		( 42		)		( 382		)		( 101		)
Amortization or settlement recognition of net loss		( 1,389		)		( 1,661		)		( 906		)
Total recognized in other comprehensive (income) loss		$	1,779			$	( 2,889	)		$	9,259

The amounts included in AOCI as of March 31, 2017 that are expected to be recognized as components of net periodic pension cost during the next twelve months are as follows:

Prior service cost	$	( 42	)
Net loss	( 1,633		)
Net amount expected to be recognized	$	( 1,675	)

The accumulated benefit obligation related to all defined benefit pension plans and information related to unfunded and underfunded defined benefit pension plans at the end of each year are as follows:

		United States Plans								International Plans
		March 31,								March 31,
		2017				2016				2017				2016
All defined benefit plans:
Accumulated benefit obligation		$	16,682			$	17,649			$	70,801			$	65,732
Unfunded defined benefit plans:
Projected benefit obligation		$	—			$	—			$	28,623			$	30,272
Accumulated benefit obligation		—				—				27,220				28,875
Defined benefit plans with a projected benefit obligation in excess of the fair value of plan assets:
Projected benefit obligation		$	16,682			$	17,649			$	73,920			$	69,134
Fair value of plan assets		12,731				11,839				33,719				32,314
Defined benefit plans with an accumulated benefit obligation in excess of the fair value of plan assets:
Projected benefit obligation		$	16,682			$	17,649			$	73,920			$	69,134
Accumulated benefit obligation		16,682				17,649				70,281				65,732
Fair value of plan assets		12,731				11,839				33,719				32,314

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Assumptions

Significant assumptions used to determine the net periodic benefit cost for the U.S. and International plans were as follows:

		United States Plans									International Plans
		Fiscal year ended March 31,									Fiscal year ended March 31,
		2017			2016			2015			2017		2016		2015
Discount rate		3.9	%		3.8	%		4.5	%		1.8-3.7%		1.25-3.4%		3.0-4.6%
Expected return on plan assets		7.0			7.0			7.8			3.3-6.5		3.2-6.5		4.4-7.0
Rate of compensation increase		N/A			N/A			N/A			1.5-4.0		1.5-3.75		2.0-4.0

N/A = not applicable

Significant assumptions used to determine the projected benefit obligations for the U.S. and International plans were as follows:

		United States Plans						International Plans
		March 31,						March 31,
		2017			2016			2017		2016
Discount rate		4.1	%		3.9	%		1.5-3.5%		1.8-3.7%
Rate of compensation increase		N/A			N/A			1.5-4.0		1.5-4.0

N/A = not applicable

The United States plans do not include compensation in the formula for determining the pension benefit as it is based solely on years of service.

The expected long-term rate of return for the Company’s pension plan assets is based upon the target asset allocation and is determined using forward looking assumptions in the context of historical returns and volatilities for each asset class, as well as, correlations among asset classes. The Company evaluates the rate of return assumptions for each of its plans on an annual basis.

Pension Plan Investment Strategy

The Company’s investment policy emphasizes a balanced approach to investing in securities of high quality and ready marketability. Investment flexibility is encouraged so as not to exclude opportunities available through a diversified investment strategy.

Equity investments are maintained within a target range of 40 % - 75 % of the total portfolio market value for the U.S. plans and with a target of approximately 65% for international plans. Investments in debt securities include issues of various maturities, and the average quality rating of bonds should be investment grade with a minimum quality rating of “B” at the time of purchase.

The Company periodically reviews the asset allocation of its portfolio. The proportion committed to equities, debt securities and cash and cash equivalents is a function of the values available in each category and risk considerations. The plan’s overall return will be compared to and expected to meet or exceed established benchmark funds and returns over a three to five year period.

The objectives of the Company’s investment strategies are: (a) the achievement of a reasonable long-term rate of total return consistent with an emphasis on preservation of capital and purchasing power,(b) stability of annual returns through a portfolio that reflects a conservative mix of risk versus return, and (c) reflective of the Company’s willingness to forgo significantly above-average rewards in order to minimize above-average risks. These objectives may not be met each year but should be attained over a reasonable period of time.

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The following table represents the Company's pension plan investments measured at fair value as of March 31, 2017 and 2016 and the basis for that measurement:

		March 31, 2017
		United States Plans																International Plans
		Total Fair Value Measurement				Quoted Price In Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total Fair Value Measurement				Quoted Price In Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Asset category:
Cash and cash equivalents		$	305			$	305			$	—			$	—			$	88			$	88			$	—			$	—
Equity securities
US (a)		8,363				8,363				—				—				—				—				—				—
International (b)		1,050				1,050				—				—				22,727				—				22,727				—
Fixed income (c)		3,013				3,013				—				—				11,508				—				11,508				—
Total		$	12,731			$	12,731			$	—			$	—			$	34,323			$	88			$	34,235			$	—

		March 31, 2016
		United States Plans																International Plans
		Total Fair Value Measurement				Quoted Price In Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total Fair Value Measurement				Quoted Price In Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Asset category:
Cash and cash equivalents		$	928			$	928			$	—			$	—			$	—			$	—			$	—			$	—
Equity securities
US (a)		7,324				7,324				—				—				—				—				—				—
International (b)		1,015				1,015				—				—				21,439				—				21,439				—
Fixed income (c)		2,572				2,572				—				—				10,875				—				10,875				—
Total		$	11,839			$	11,839			$	—			$	—			$	32,314			$	—			$	32,314			$	—

The fair values presented above were determined based on valuation techniques to measure fair value as discussed in Note 1.

(a)	US equities include companies that are well diversified by industry sector and equity style (i.e., growth and value strategies). Active and passive management strategies are employed. Investments are primarily in large capitalization stocks and, to a lesser extent, mid- and small-cap stocks.

(b)	International equities are invested in companies that are traded on exchanges outside the U.S. and are well diversified by industry sector, country and equity style. Active and passive strategies are employed. The vast majority of the investments are made in companies in developed markets with a small percentage in emerging markets.

(c)	Fixed income consists primarily of investment grade bonds from diversified industries.

The Company expects to make cash contributions of approximately $ 2,182 to its pension plans in fiscal 2018.

Estimated future benefit payments under the Company’s pension plans are as follows:

2018	$	2,483
2019	2,560
2020	2,749
2021	3,131
2022	3,324
Years 2023-2027	20,230

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Defined Contribution Plan

Preferred Stock and Common Stock

The Company’s certificate of incorporation authorizes the issuance of up to 1,000,000 shares of preferred stock, par value $ 0.01 per share (“Preferred Stock”). At March 31, 2017 and 2016 , no shares of Preferred Stock were issued or outstanding. The Board of Directors of the Company has the authority to specify the terms of any Preferred Stock at the time of issuance.

The following demonstrates the change in the number of shares of common stock outstanding during fiscal years ended March 31, 2015 , 2016 and 2017 , respectively:

Shares outstanding as of March 31, 2014	46,942,126
Purchase of treasury stock	( 3,274,829	)
Shares issued towards equity-based compensation plans, net of equity awards surrendered for option price and taxes	401,291
Shares outstanding as of March 31, 2015	44,068,588
Purchase of treasury stock	( 3,216,654	)
Shares issued from treasury stock to settle conversion premium on Convertible Notes	1,889,431
Shares issued towards equity-based compensation plans, net of equity awards surrendered for option price and taxes	448,137
Shares outstanding as of March 31, 2016	43,189,502
Shares issued towards equity-based compensation plans, net of equity awards surrendered for option price and taxes	258,034
Shares outstanding as of March 31, 2017	43,447,536

Treasury Stock

There were no repurchases of treasury stock during fiscal 2017 . In fiscal 2016 , the Company purchased 3,216,654 shares of its common stock for $ 178,244 . Of the shares purchased in fiscal 2016 , 2,961,444 were acquired through an accelerated share repurchase program for a total cash investment of $ 166,392 at an average price of $ 56.19 . At March 31, 2017 and 2016 , the Company held 10,923,274 shares as treasury stock.

Treasury Stock Reissuance

In fiscal 2016, the Company settled the conversion premium on the Convertible Notes by issuing 1,889,431 shares from its treasury stock. The reissuance was recorded on a last-in, first-out method, and the difference between the repurchase cost and the fair value at reissuance was recorded as an adjustment to stockholders' equity.

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Accumulated Other Comprehensive Income ("AOCI")

The components of AOCI, net of tax, are as follows:

		Beginning Balance				Before Reclassifications				Amount Reclassified from AOCI				Ending Balance
March 31, 2017
Pension funded status adjustment		$	( 21,861	)		$	( 4,659	)		$	965			$	( 25,555	)
Net unrealized gain (loss) on derivative instruments		388				5,523				( 3,936		)		1,975
Foreign currency translation adjustment		( 75,876		)		( 53,368		)		—				( 129,244		)
Accumulated other comprehensive loss		$	( 97,349	)		$	( 52,504	)		$	( 2,971	)		$	( 152,824	)
March 31, 2016
Pension funded status adjustment		$	( 23,719	)		$	298			$	1,560			$	( 21,861	)
Net unrealized gain (loss) on derivative instruments		( 95		)		( 4,027		)		4,510				388
Foreign currency translation adjustment		( 85,161		)		9,285				—				( 75,876		)
Accumulated other comprehensive loss		$	( 108,975	)		$	5,556			$	6,070			$	( 97,349	)
March 31, 2015
Pension funded status adjustment		$	( 15,207	)		$	( 9,259	)		$	747			$	( 23,719	)
Net unrealized gain (loss) on derivative instruments		( 2,253		)		289				1,869				( 95		)
Foreign currency translation adjustment		85,305				( 170,466		)		—				( 85,161		)
Accumulated other comprehensive (loss) income		$	67,845			$	( 179,436	)		$	2,616			$	( 108,975	)

The following table presents reclassifications from AOCI during the twelve months ended March 31, 2017 :

Components of AOCI		Amounts Reclassified from AOCI				Location of (Gain) Loss Recognized on Income Statement
Derivatives in Cash Flow Hedging Relationships:
Net unrealized gain on derivative instruments		$	( 6,236	)		Cost of goods sold
Tax expense		2,300
Net unrealized gain on derivative instruments, net of tax		$	( 3,936	)
Defined benefit pension costs:
Prior service costs and deferrals		$	1,431			Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 14
Tax benefit		( 466		)
Net periodic benefit cost, net of tax		$	965

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The following table presents reclassifications from AOCI during the twelve months ended March 31, 2016 :

Components of AOCI		Amounts Reclassified from AOCI				Location of (Gain) Loss Recognized on Income Statement
Derivatives in Cash Flow Hedging Relationships:
Net unrealized loss on derivative instruments		$	7,144			Cost of goods sold
Tax benefit		( 2,634		)
Net unrealized loss on derivative instruments, net of tax		$	4,510
Defined benefit pension costs:
Prior service costs and deferrals		$	2,043			Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 14
Tax benefit		( 483		)
Net periodic benefit cost, net of tax		$	1,560

The following table presents reclassifications from AOCI during the twelve months ended March 31, 2015:

Components of AOCI		Amounts Reclassified from AOCI				Location of (Gain) Loss Recognized on Income Statement
Derivatives in Cash Flow Hedging Relationships:
Net unrealized loss on derivative instruments		$	2,961			Cost of goods sold
Tax benefit		( 1,092		)
Net unrealized loss on derivative instruments, net of tax		$	1,869
Defined benefit pension costs:
Prior service costs and deferrals		$	1,007			Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 14
Tax benefit		( 260		)
Net periodic benefit cost, net of tax		$	747

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The following demonstrates the change in redeemable noncontrolling interests during the fiscal years ended March 31, 2015 , 2016 and 2017 , respectively:

As of March 31, 2017 , the Company maintains the Second Amended and Restated EnerSys 2010 Equity Incentive Plan (“2010 EIP”). The 2010 EIP reserved 3,177,477 shares of common stock for the grant of various classes of nonqualified stock options, restricted stock units, market share units and other forms of equity-based compensation. Shares subject to any awards that expire without being exercised or that are forfeited or settled in cash shall again be available for future grants of awards under the 2010 EIP. Shares subject to awards that have been retained by the Company in payment or satisfaction of the exercise price and any applicable tax withholding obligation of an award shall not count against the limit described above.

As of March 31, 2017 , 823,554 shares are available for future grants. The Company’s management equity incentive plans are intended to provide an incentive to employees and non-employee directors of the Company to remain in the service of the Company and to increase their interest in the success of the Company in order to promote the long-term interests of the Company. The plans seek to promote the highest level of performance by providing an economic interest in the long-term performance of the Company. The Company settles employee share-based compensation awards with newly issued shares.

Stock Options

During fiscal 2017 , the Company granted to management and other key employees 242,068 non-qualified options that vest 3 years from the date of grant. Options granted prior to fiscal 2017 , as well as the options granted in fiscal 2017 expire 10 years from the date of grant.

The Company recognized stock-based compensation expense relating to stock options of $ 1,705 with a related tax benefit of $ 457 for fiscal 2017 , $ 1,419 with a related tax benefit of $ 477 for fiscal 2016 and $ 1,470 with a related tax benefit of $ 502 for fiscal 2015.

For purposes of determining the fair value of stock options granted in fiscal 2017 and fiscal 2016 , the Company used a Black-Scholes Model with the following assumptions:

		2017			2016		2015
Risk-free interest rate		1.41	%		1.79	%	1.94	%
Dividend yield		1.22	%		1.02	%	1.00	%
Expected life (years)		6			6		6
Volatility		30.4	%		32.75	%	40.48	%

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The following table summarizes the Company’s stock option activity in the years indicated:

		Number of Options			Weighted- Average Remaining Contract Term (Years)		Weighted- Average Exercise Price					Aggregate Intrinsic Value
Options outstanding as of March 31, 2014		66,173			1.4		$	14.77				$	3,608
Granted		76,512					69.85					—
Exercised		( 39,868	)				14.50					1,819
Options outstanding as of March 31, 2015		102,817			7.0		$	55.86				$	1,291
Granted		127,966					68.40					—
Exercised		( 11,986	)				14.64					639
Expired		( 8,500	)				—					—
Options outstanding as of March 31, 2016		210,297			8.5		$	67.54				$	218
Granted		242,068					57.60			—		—
Exercised		( 263	)				18.25			—		12
Expired		( 434	)				—					—
Options outstanding as of March 31, 2017		451,668			8.4		$	62.29				$	7,520
Options exercisable as of March 31, 2017		98,788			7.2		$	66.55				$	1,224
Options vested and expected to vest, as of March 31, 2017		442,808			8.4		$	62.36				$	7,340

The following table summarizes information regarding stock options outstanding as of March 31, 2017 :

		Options Outstanding
Range of Exercise Prices		Number of Options			Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$15.01-$20.00		5,122			0.2		$	18.34
$55.01-$60.00		242,068			9.1		57.60
$65-01-$69.85		204,478			7.7		68.94
		451,668			8.4		$	62.29

Restricted Stock Units and Market Share Units

In fiscal 2017 , the Company granted to non-employee directors 25,708 deferred restricted stock units at the fair value of $ 69.97 per restricted stock unit at the date of grant. In fiscal 2016 , such grants amounted to 28,970 restricted stock units at the fair value of $ 55.32 per restricted stock unit at the date of grant and in fiscal 2015 , amounted to 14,781 restricted stock units at the fair value of $ 61.16 per restricted stock unit at the date of grant. The awards vest immediately upon the date of grant and are payable in shares of common stock six months after termination of service as a director.

In fiscal 2017 , the Company granted 1,239 restricted stock units and in fiscal 2016 and 2015 , granted 565 and 3,434 restricted stock units, respectively, at various fair values, under deferred compensation plans.

In fiscal 2017 , the Company granted to management and other key employees 237,358 restricted stock units at the fair value of $ 57.60 per restricted stock unit and 83,720 performance market share units at a weighted average fair value of $ 70.79 per unit at the date of grant.

In fiscal 2016 , the Company granted to management and other key employees 120,287 restricted stock units at the fair value of $ 68.40 per restricted stock unit and 212,635 performance market share units at a weighted average fair value of $ 59.94 per market share unit at the date of grant.

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In fiscal 2015 , the Company granted to management and other key employees 118,312 restricted stock units at the fair value of $ 69.83 per restricted stock unit and 152,300 market share units at a weighted average fair value of $ 70.42 per market share unit at the date of grant.

For purposes of determining the fair value of performance market share units granted in fiscal 2017 , fiscal 2016 , and fiscal 2015 , the Company used a Monte Carlo Simulation with the following assumptions:

		2017			2016			2015
Risk-free interest rate		0.94	%		1.00	%		0.87	%
Dividend yield		—	%		—	%		—	%
Expected life (years)		3			3			3
Volatility		31.74	%		25.52	%		30.83	%

A summary of the changes in restricted stock units and market share units awarded to employees and directors that were outstanding under the Company’s equity compensation plans during fiscal 2017 is presented below:

		Restricted Stock Units (RSU)							Performance Market Share Units and Market Share Units (MSU)
		Number of RSU			Weighted- Average Grant Date Fair Value				Number of MSU			Weighted- Average Grant Date Fair Value
Non-vested awards as of March 31, 2016		502,440			$	51.26			548,946			$	64.46
Granted		264,305			56.40				83,720			70.79
Stock dividend		5,943			51.82				4,357			65.41
Performance factor		—			—				45,065			65.03
Vested		( 160,453	)		50.63				( 232,947	)		65.03
Canceled		( 11,960	)		63.02				—			—
Non-vested awards as of March 31, 2017		600,275			$	51.96			449,141			$	65.41

The Company recognized stock-based compensation expense relating to restricted stock units and market share units of $ 17,480 , with a related tax benefit of $ 4,210 for fiscal 2017 , $ 18,184 , with a related tax benefit of $ 4,446 for fiscal 2016 and $ 23,789 , with a related tax benefit of $ 4,790 for fiscal 2015 .

All Award Plans

The following table sets forth the reconciliation from basic to diluted weighted-average number of common shares outstanding and the calculations of net earnings per common share attributable to EnerSys stockholders.

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		Fiscal year ended March 31,
		2017				2016				2015
Net earnings attributable to EnerSys stockholders		$	160,214			$	136,150			$	181,188
Weighted-average number of common shares outstanding:
Basic		43,389,333				44,276,713				45,606,317
Dilutive effect of:
Common shares from exercise and lapse of equity awards, net of shares assumed reacquired		623,210				644,036				879,406
Convertible Notes		—				553,381				1,567,006
Diluted weighted-average number of common shares outstanding		44,012,543				45,474,130				48,052,729
Basic earnings per common share attributable to EnerSys stockholders		$	3.69			$	3.08			$	3.97
Diluted earnings per common share attributable to EnerSys stockholders		$	3.64			$	2.99			$	3.77
Anti-dilutive equity awards not included in diluted weighted-average common shares		1,295				—				—

Litigation and Other Legal Matters

In the ordinary course of business, the Company and its subsidiaries are routinely defendants in or parties to many pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. These actions and proceedings are generally based on alleged violations of environmental, anticompetition, employment, contract and other laws. In some of these actions and proceedings, claims for substantial monetary damages are asserted against the Company and its subsidiaries. In the ordinary course of business, the Company and its subsidiaries are also subject to regulatory and governmental examinations, information gathering requests, inquiries, investigations, and threatened legal actions and proceedings. In connection with formal and informal inquiries by federal, state, local and foreign agencies, such subsidiaries receive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their activities.

European Competition Investigations

Certain of the Company’s European subsidiaries have received subpoenas and requests for documents and, in some cases, interviews from, and have had on-site inspections conducted by the competition authorities of Belgium, Germany and the Netherlands relating to conduct and anticompetitive practices of certain industrial battery participants. The Company is responding to inquiries related to these matters. The Company settled the Belgian regulatory proceeding in February 2016 by acknowledging certain anticompetitive practices and conduct and agreeing to pay a fine of $ 1,962 , which was paid in March 2016. As of March 31, 2017 and March 31, 2016 , the Company had a reserve balance of $ 1,830 and $ 2,038 , respectively, relating to the Belgian regulatory proceeding. The change in the reserve balance between March 31, 2017 and March 31, 2016 was solely due to foreign currency translation impact. As of January 1, 2017, the Company had estimated an aggregate range of possible loss associated with the German regulatory proceeding of $ 17,000 to $ 26,000 and reserved $ 17,000 with respect to the German regulatory proceeding. Based on the continued evolution of facts and its interactions with the German competition authority in regard to this matter, the Company has further refined its estimate for a portion of this proceeding to be $ 13,463 as of March 31, 2017 . The Company does not believe that an estimate can be made at this time given the current stage of the remaining portion of this proceeding. For the Dutch regulatory proceeding, the Company reserved $ 10,258 as of March 31, 2017. As of March 31, 2017 and March 31, 2016 , the Company had a total reserve balance of $ 25,551 and $ 2,038 , respectively, in connection with these remaining investigations and other related legal matters, included in accrued expenses on the Consolidated Balance Sheets. The foregoing estimate of losses is based upon currently available information for these proceedings. However, the precise scope, timing and time period at issue, as well as the final outcome of the investigations or

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customer claims, remain uncertain. Accordingly, the Company’s estimate may change from time to time, and actual losses could vary.

Altergy

In the fourth quarter of fiscal 2014, the Company recorded a $ 58,184 legal proceedings charge in connection with an adverse arbitration result involving disputes between the Company's wholly-owned subsidiary, EnerSys Delaware Inc. (“EDI”), and Altergy Systems (“Altergy”). In accordance with the final term sheet, EDI paid Altergy $ 40,000 in settlement of this award. Altergy paid $ 2,000 to purchase EDI’s entire equity interest in Altergy. Since the full amount of the initial award of $ 58,184 was recorded in fiscal 2014, the Company reversed approximately $ 16,233 , net of professional fees, from this previously recorded legal proceedings charge in fiscal 2015 and $ 799 in fiscal 2016. The Company also included the $ 2,000 received in exchange for its equity interest in Altergy in the Consolidated Statements of Income in Other (income) expense, net in fiscal 2015. The Company had previously written off the carrying value of the investment of $ 5,000 in fiscal 2014.

Environmental Issues

As a result of its operations, the Company is subject to various federal, state and local, as well as international environmental laws and regulations and is exposed to the costs and risks of registering, handling, processing, storing, transporting, and disposing of hazardous substances, especially lead and acid. The Company’s operations are also subject to federal, state, local and international occupational safety and health regulations, including laws and regulations relating to exposure to lead in the workplace.

The Company is responsible for certain cleanup obligations at the former Yuasa battery facility in Sumter, South Carolina that predates its ownership of this facility. This manufacturing facility was closed in 2001 and the Company established a reserve for this facility which was $ 1,123 as of March 31, 2017 and 2016 . Based on current information, the Company’s management believes this reserve is adequate to satisfy the Company’s environmental liabilities at this facility. This facility is separate from the Company’s current metal fabrication facility in Sumter.

Collective Bargaining

At March 31, 2017 , the Company had approximately 9,400 employees. Of these employees, approximately 29 % were covered by collective bargaining agreements. Employees covered by collective bargaining agreements that did not exceed twelve months were approximately 7 % of the total workforce. The average term of these agreements is 2 years , with the longest term being 3 years . The Company considers its employee relations to be good and did not experience any significant labor unrest or disruption of production during fiscal 2017.

Lead Contracts

To stabilize its costs, the Company has entered into contracts with financial institutions to fix the price of lead. The vast majority of such contracts are for a period not extending beyond one year. Under these contracts, at March 31, 2017 and 2016 , the Company has hedged the price to purchase approximately 45.0 million pounds and 27.4 million pounds of lead, respectively, for a total purchase price of $ 46,550 and $ 21,628 , respectively.

Foreign Currency Forward Contracts

The Company quantifies and monitors its global foreign currency exposures. On a selective basis, the Company will enter into foreign currency forward and option contracts to reduce the volatility from currency movements that affect the Company. The vast majority of such contracts are for a period not extending beyond one year. The Company’s largest exposure is from the purchase and conversion of U.S. dollar based lead costs into local currencies in EMEA. Additionally, the Company has currency exposures from intercompany financing and intercompany and third-party trade transactions. To hedge these exposures, the Company has entered into a total of $ 44,311 and $ 29,362 , respectively, of foreign currency forward contracts and options with financial institutions as of March 31, 2017 and 2016 , respectively.

Other

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Restructuring Plans

During fiscal 2013, the Company announced a restructuring related to improving the efficiency of its manufacturing operations in EMEA. This program was completed during the third quarter of fiscal 2016. Total charges for this program were $ 6,895 , primarily for cash expenses of $ 5,496 for employee severance-related payments of approximately 140 employees and non-cash expenses of $ 1,399 associated with the write-off of certain fixed assets and inventory. The Company incurred $ 5,207 of costs against the accrual through fiscal 2015, and incurred $ 271 in costs against the accrual during fiscal 2016.

During fiscal 2014, the Company announced further restructuring programs to improve the efficiency of its manufacturing, sales and engineering operations in EMEA including the restructuring of its manufacturing operations in Bulgaria. The restructuring of the Bulgaria operations was announced during the third quarter of fiscal 2014 and consisted of the transfer of motive power and a portion of reserve power battery manufacturing to the Company's facilities in Western Europe. This program was completed during the fourth quarter of fiscal 2016. Total charges for this program were $ 22,930 primarily for cash expenses of $ 11,996 for employee severance-related payments of approximately 500 employees and other charges and non-cash expenses of $ 10,934 associated with the write-off of certain fixed assets and inventory. The Company recorded restructuring charges of $ 22,115 through fiscal 2015, consisting of non-cash charges of $ 10,934 and cash charges of $ 11,181 and recorded an additional $ 1,229 in cash charges and a favorable accrual adjustment of $ 414 during fiscal 2016. The Company incurred $ 9,737 of costs against the accrual through fiscal 2015, and incurred $ 2,068 in costs against the accrual during fiscal 2016.

During the third quarter of fiscal 2015, the Company announced a restructuring related to its manufacturing facility located in Jiangdu, the People’s Republic of China (“PRC”), pursuant to which the Company completed the transfer of the manufacturing at that location to its other facilities in PRC, as part of the closure of the Jiangdu facility in the first quarter of fiscal 2016. This program was completed during the fourth quarter of fiscal 2016. Total charges for this program were $ 5,291 primarily for cash expenses of $ 4,893 for employee severance-related payments of approximately 300 employees and other charges and non-cash expenses of $ 398 . The Company recorded cash restructuring charges of $ 3,870 during fiscal 2015 and recorded an additional $ 1,023 in cash charges and $ 398 in non-cash charges during fiscal 2016. The Company incurred $ 1,874 of costs against the accrual through fiscal 2015, and incurred $ 2,970 in costs against the accrual during fiscal 2016.

During fiscal 2015, the Company announced a restructuring primarily related to a portion of its sales and engineering organizations in Europe to improve efficiencies. This program was completed during the fourth quarter of fiscal 2016. Total charges for this program were $ 804 for cash expenses for employee severance-related payments of approximately 15 employees. The Company recorded cash restructuring charges of $ 450 during fiscal 2015 and recorded an additional $ 354 during fiscal 2016. The Company incurred $ 193 of costs against the accrual through fiscal 2015, and incurred $ 698 in costs against the accrual during fiscal 2016.

During the first quarter of fiscal 2016, the Company completed a restructuring related to a reduction of two executives associated with one of Americas’ recent acquisitions to improve efficiencies. The Company recorded total severance-related charges of $ 570 , all of which was paid during the first quarter of fiscal 2016, primarily per the terms of a pre-existing employee agreement.

During fiscal 2016, the Company announced restructurings to improve efficiencies primarily related to its motive power assembly and distribution center in Italy and its sales and administration organizations in EMEA. In addition, the Company announced a further restructuring related to its manufacturing operations in Europe. The Company estimates that the total charges for these actions will amount to approximately $ 6,700 , primarily from cash charges for employee severance-related payments and other charges. The Company estimates that these actions will result in the reduction of approximately 135 employees upon completion. In fiscal 2016, the Company recorded restructuring charges of $ 5,232 and recorded an additional $ 1,251 during fiscal 2017. The Company incurred $ 2,993 in costs against the accrual in fiscal 2016 and incurred an additional $ 3,037 against the accrual during fiscal 2017. As of March 31, 2017, the reserve balance associated with these actions is $ 393 . The Company expects to be committed to an additional $ 200 of restructuring charges related to these actions during fiscal 2018, and expects to complete the program during fiscal 2018.

During fiscal 2016, the Company announced a restructuring related to improving the efficiency of its manufacturing operations in the Americas. The program, which was completed during the first quarter of fiscal 2017, consisted of closing its Cleveland, Ohio charger manufacturing facility and the transfer of charger production to other Americas manufacturing facilities. The total charges for all actions associated with this program amounted to $ 2,379 , primarily from cash charges for employee severance-related payments and other charges of $ 1,043 , along with a pension curtailment charge of $ 313 and non-cash charges related to

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the accelerated depreciation of fixed assets of $ 1,023 . The program resulted in the reduction of approximately 100 employees at its Cleveland facility. In fiscal 2016, the Company recorded restructuring charges of $ 1,488 including a pension curtailment charge of $ 313 and non-cash charges of $ 305 and recorded an additional $ 174 in cash charges and $ 718 in non-cash charges during the first quarter of fiscal 2017. The Company incurred $ 119 in costs against the accrual in fiscal 2016 and incurred an additional $ 924 against the accrual during the first quarter of fiscal 2017.

During fiscal 2017 , the Company announced restructuring programs to improve efficiencies primarily related to its motive power production in EMEA. The Company estimates that the total charges for these actions will amount to approximately $ 5,000 , primarily from cash charges for employee severance-related payments and other charges. The Company estimates that these actions will result in the reduction of approximately 45 employees upon completion. During fiscal 2017 , the Company recorded restructuring charges of $ 3,104 and incurred $ 749 in costs against the accrual. As of March 31, 2017 , the reserve balance associated with these actions is $ 2,290 . The Company expects to be committed to an additional $ 1,900 in restructuring charges related to this action in fiscal 2018, when it expects to complete this program.

During fiscal 2017 , the Company announced restructurings primarily to complete the transfer of equipment and clean-up of its manufacturing facility located in Jiangdu, the People’s Republic of China, which stopped production during the first quarter of fiscal 2016 . The Company estimates that the total cash charges for these actions will amount to $ 779 . During fiscal 2017 , the Company recorded charges of $ 779 and incurred $ 648 in costs against the accrual. As of March 31, 2017 , the reserve balance associated with these actions is $ 129 . The Company expects no further charges related to this action in fiscal 2018, when it expects to complete this program.

A roll-forward of the restructuring reserve is as follows:

		Employee Severance				Other				Total
Balance at March 31, 2014		$	7,312			$	1,102			$	8,414
Accrued		6,140				843				6,983
Costs incurred		( 10,378		)		( 803		)		( 11,181		)
Foreign currency impact and other		( 108		)		( 288		)		( 396		)
Balance at March 31, 2015		$	2,966			$	854			$	3,820
Accrued		8,859				419				9,278
Accrual adjustments		—				( 414		)		( 414		)
Costs incurred		( 8,817		)		( 872		)		( 9,689		)
Foreign currency impact and other		( 44		)		38				( 6		)
Balance at March 31, 2016		$	2,964			$	25			$	2,989
Accrued		4,566				742				5,308
Costs incurred		( 4,754		)		( 604		)		( 5,358		)
Foreign currency impact and other		( 108		)		( 19		)		( 127		)
Balance at March 31, 2017		$	2,668			$	144			$	2,812

Other Exit Charges

During fiscal 2017 , the Company recorded additional exit charges of $ 3,292 related to the South Africa joint venture, consisting of cash charges of $ 2,575 primarily relating to severance and non-cash charges of $ 717 . Included in the non-cash charges are $ 2,157 relating to the inventory adjustment which is reported in cost of goods sold, partially offset by a credit of $ 1,099 relating to a change in estimate of contract losses and a $ 341 gain on deconsolidation of the joint venture. Weakening of the general economic environment in South Africa, reflecting the limited growth in the mining industry, affected the joint venture’s ability to compete effectively in the marketplace and consequently, the Company initiated an exit plan in consultation with its joint venture partner in the second quarter of fiscal 2017 . The joint venture is currently under liquidation resulting in a loss of control and deconsolidation of the joint venture. The impact of the deconsolidation has been reflected in the Consolidated Statements of Income and was deemed not material.

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The Company provides for estimated product warranty expenses when the related products are sold, with related liabilities included within accrued expenses and other liabilities. As warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties is as follows:

Other (income) expense, net consists of the following:

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Summarized financial information related to the Company’s reportable segments at March 31, 2017 , 2016 and 2015 and for each of the fiscal years then ended is shown below.

		Fiscal year ended March 31,
		2017				2016				2015
Net sales by segment to unaffiliated customers
Americas		$	1,332,353			$	1,276,027			$	1,322,337
EMEA		763,013				787,402				948,845
Asia		271,783				252,820				234,330
Total net sales		$	2,367,149			$	2,316,249			$	2,505,512
Net sales by product line
Reserve power		$	1,142,327			$	1,109,154			$	1,252,637
Motive power		1,224,822				1,207,095				1,252,875
Total net sales		$	2,367,149			$	2,316,249			$	2,505,512
Intersegment sales
Americas		$	26,039			$	32,984			$	29,987
EMEA		93,150				78,812				69,396
Asia		22,584				23,590				33,786
Total intersegment sales (1)		$	141,773			$	135,386			$	133,169
Operating earnings
Americas		$	191,500			$	182,774			$	162,741
EMEA		76,425				75,666				109,861
Asia		14,994				570				9,928
Inventory adjustment relating to exit activities—EMEA		( 2,157		)		—				—
Restructuring charges—Americas		( 892		)		( 2,058		)		—
Restructuring and other exit charges—EMEA		( 5,487		)		( 9,501		)		( 7,567		)
Restructuring charges—Asia		( 781		)		( 1,419		)		( 3,869		)
Impairment of goodwill and indefinite-lived intangibles—Americas		( 9,346		)		( 32,999		)		( 23,196		)
Impairment of goodwill, indefinite-lived intangibles and fixed assets—EMEA		( 4,670		)		( 3,253		)		( 750		)
Reversal of legal accrual, net of fees—Americas		—				799				16,233
Legal proceedings charge—EMEA		( 23,725		)		( 4,000		)		—
Gain on sale of facility—Asia		—				3,420				—
Total operating earnings (2)		$	235,861			$	209,999			$	263,381
Property, plant and equipment, net
Americas		$	190,169			$	177,720			$	168,274
EMEA		100,042				112,839				114,681
Asia		58,338				66,850				73,899
Total		$	348,549			$	357,409			$	356,854
Capital Expenditures
Americas		$	34,809			$	39,127			$	34,768
EMEA		13,733				12,625				16,215
Asia		1,530				4,128				12,642
Total		$	50,072			$	55,880			$	63,625
Depreciation and Amortization
Americas		$	30,204			$	31,070			$	30,724
EMEA		15,693				16,337				19,664
Asia		8,048				8,587				6,652
Total		$	53,945			$	55,994			$	57,040

(1)	Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer prices between legal entities.

(2)	The Company does not allocate interest expense or other (income) expense, net to the reportable segments.

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The Company reports interim financial information for 13-week periods, except for the first quarter, which always begins on April 1, and the fourth quarter, which always ends on March 31. The four quarters in fiscal 2017 ended on July 3, 2016, October 2, 2016, January 1, 2017, and March 31, 2017, respectively. The four quarters in fiscal 2016 ended on June 28, 2015, September 27, 2015, December 27, 2015, and March 31, 2016, respectively.

		1st Quarter				2nd Quarter				3rd Quarter				4th Quarter				Fiscal Year
Fiscal year ended March 31, 2017
Net sales		$	600,603			$	576,048			$	563,697			$	626,801			$	2,367,149
Gross profit		166,334				161,295				155,884				167,112				650,625
Operating earnings (1)(2)(4)(7)		66,032				62,909				55,023				51,897				235,861
Net earnings		44,619				42,793				37,095				33,716				158,223
Net earnings attributable to EnerSys stockholders		44,573				45,636				36,235				33,770				160,214
Net earnings per common share attributable to EnerSys stockholders—basic		$	1.03			$	1.05			$	0.83			$	0.78			$	3.69
Net earnings per common share attributable to EnerSys stockholders—diluted		$	1.02			$	1.04			$	0.82			$	0.76			$	3.64
Fiscal year ended March 31, 2016
Net sales		$	562,068			$	569,134			$	573,573			$	611,474			$	2,316,249
Gross profit		150,415				154,939				145,882				160,541				611,777
Operating earnings (3)(5)(6)(7)		69,037				59,548				55,461				25,953				209,999
Net earnings		47,934				39,768				38,214				5,908				131,824
Net earnings attributable to EnerSys stockholders		48,387				40,025				38,478				9,260				136,150
Net earnings per common share attributable to EnerSys stockholders—basic		$	1.09			$	0.89			$	0.87			$	0.21			$	3.08
Net earnings per common share attributable to EnerSys stockholders—diluted		$	1.03			$	0.87			$	0.86			$	0.21			$	2.99

(1)	Included in Operating earnings were inventory adjustment relating to exit activities of $ 2,659 and $( 502 ) in the second and third quarters of fiscal 2017 , respectively.

(2)	Included in Operating earnings were restructuring and other exit charges of $ 1,297 , $ 4,893 , $( 1,153 ) and $ 2,123 for the first, second, third and fourth quarters of fiscal 2017 , respectively.

(3)	Included in Operating earnings were restructuring and other exit charges of $ 1,218 , $ 2,629 , $ 3,204 and $ 5,927 for the first, second, third and fourth quarters of fiscal 2016 , respectively.

(4)	Included in Operating earnings for the fourth quarter of fiscal 2017 was a charge relating to the impairment of goodwill, indefinite-lived intangibles for $ 14,016 .

(5)	Included in Operating earnings for the fourth quarter of fiscal 2016 was a charge relating to the impairment of goodwill and other indefinite-lived intangibles for $ 36,252 .

(6)	Included in Operating earnings for the first quarter of fiscal 2016 was a gain on sale of facility of $ 4,348 and in the fourth quarter of fiscal 2016 , charges relating to the same of $ 928 .

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(7)	Included in Operating earnings were legal proceedings charge of $ 17,000 and $ 6,725 for the third and fourth quarters of fiscal 2017 , respectively. Included in Operating earnings for the second quarter of fiscal 2016 was a legal proceedings charge of $ 3,201 .

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On May 4, 2017, the Company announced the payment of a quarterly cash dividend of $ 0.175 per share of common stock to be paid on June 30, 2017 , to stockholders of record as of June 14, 2017 .

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(1)	Primarily the impact of currency changes.

(2)	In fiscal 2017 and 2016,“Other” was primarily the impact of currency changes. In fiscal 2015, “Other” also included the reversal of deferred tax accounts and related valuation allowance upon the sale of certain foreign subsidiaries of the Company.

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(1)	Assumes a 200% payout of market share units and performance market share units.

(2)

Awards of restricted stock units, market share units, performance market share units and deferred stock units and stock units held in both the EnerSys Voluntary Deferred Compensation Plan for Non-Employee Directors and the EnerSys Voluntary Deferred Compensation Plan for Executives were not included in calculating the weighted-average exercise price as they will be settled in shares of common stock for no consideration.

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