UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

 For the quarterly period ended September 30, 2016March 31, 2017

or

 

¨ Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

 

Commission File Number 1-7234

 

 

(443) 367-9600

 

 

 

 

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

 

The number of shares outstanding of the registrant’s common stock as of October 24, 2016April 25, 2017 was as follows:

TABLE OF CONTENTS

GP STRATEGIES CORPORATION AND SUBSIDIARIES

GP STRATEGIES CORPORATION AND SUBSIDIARIES

GP STRATEGIES CORPORATION AND SUBSIDIARIES

GP Strategies Corporation is a global performance improvement solutions provider of training, e-Learning solutions, management consulting and engineering services. References in this report to “GP Strategies,” the “Company,” “we” and “our” are to GP Strategies Corporation and its subsidiaries, collectively.

 

The accompanying condensed consolidated balance sheet as of September 30, 2016March 31, 2017 and the condensed consolidated statements of operations, comprehensive income and cash flows for the ninethree months ended September 30,March 31, 2017 and 2016 and 2015 have not been audited, but have been prepared in conformity with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2015,2016, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.2016. In the opinion of management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation. The results for the 20162017 interim period are not necessarily indicative of results to be expected for the entire year.

 

The condensed consolidated financial statements include the operations of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

 

We have a market concentration of revenue in both the automotive sector and financial services & insurance sector. Revenue from the automotive industry accounted for approximately 22% and 18%20% of our consolidated revenue for the ninethree months ended September 30,March 31, 2017 and 2016, and 2015, respectively. In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 13% and 12% of our consolidated revenue for both of the nine monthsthree-month periods ended September 30, 2016March 31, 2017 and 2015, respectively.2016. As of March 31, 2017, accounts receivable from a single automotive customer totaled $14.5 million, or 14% of our consolidated accounts receivable balance.

Revenue from the financial services & insurance industry accounted for approximately 21%20% and 22% of our consolidated revenue for both the nine-month periodsthree months ended September 30,March 31, 2017 and 2016, and 2015.respectively. In addition, we have a concentration of revenue from a single financial services customer, which accounted for approximately 15%14% and 14%15% of our consolidated revenue for the ninethree months ended September 30,March 31, 2017 and 2016, and 2015, respectively. As of September 30, 2016,March 31, 2017, billed and unbilled accounts receivable from a single financial services customer totaled $26.5$31.8 million, or 19%22%, of our consolidated accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts balances.

No other single customer accounted for more than 10% of our consolidated revenue for the ninethree months ended September 30,March 31, 2017 or 2016 or 2015 or consolidated accounts receivable balance as of September 30, 2016.March 31, 2017.

Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

 

Our dilutive common stock equivalent shares consist of stock options and restricted stock units computed under the treasury stock method, using the average market price during the period. Performance-based restricted stock unit awards are included in the computation of diluted shares based on the probable outcome of the underlying performance conditions being achieved. The following table presents instruments which were not dilutive and were excluded from the computation of diluted EPS in each period, as well as the dilutive common stock equivalent shares which were included in the computation of diluted EPS: 

Below is a summary of the potential maximum contingent consideration we may be required to pay in probability assumptionsconnection with respectcompleted acquisitions as of March 31, 2017 (dollars in thousands):

 

Changes in the carrying amount of goodwill by reportable business segment for the ninethree months ended September 30, 2016March 31, 2017 were as follows (in thousands):

 

 

Intangible assets with finite lives are subject to amortization over their estimated useful lives. The primary assets included in this category and their respective balances were as follows (in thousands):

We recognize compensation expense for stock-based compensation awards issued to employees that are expected to vest. Compensation cost is based on the fair value of awards as of the grant date.

 

The following table summarizes the pre-tax stock-based compensation expense included in reported net income (in thousands): 

 

Pursuant to our 2011 Stock Incentive Plan (the “2011 Plan”), we may grant awards of non-qualified stock options, incentive stock options, restricted stock, stock units, performance shares, performance units and other incentives payable in cash or in shares of our common stock to officers, employees or members of the Board of Directors. As of September 30, 2016,March 31, 2017, we had non-qualified stock options and restricted stock units outstanding under these plans as discussed below.

Non-Qualified Stock Options

 

Summarized information for the Company’s non-qualified stock options is as follows:

 

 

In addition to stock options, we issue restricted stock units to key employees and members of the Board of Directors based on meeting certain service goals.Directors. The stock units vest to the recipients at various dates, up to five years, based on fulfilling service requirements. We recognize the value of the market price of the underlying stock on the date of grant as compensation expense over the requisite service period. Upon vesting, the stock units are settled in shares of our common stock. Summarized share information for our restricted stock units is as follows:

We issue performance-based stock units to certain executives under a long-term incentive program. Under the program, a target level of equity compensation is set for each officer. The total equity compensation is divided into performance-based and time-based restricted stock units. Under the program, the Compensation Committee granted 71,918sets the performance-based restrictedgoals within the first 90 days of each year. Vesting of performance-based stock units ("PSU's") to certain officers of the Company. Vesting of the PSU's(PSU's) is contingent upon the employee's continued employment and the Company's achievement of certain performance goals during a three-year performance period. The performance goals are established by the Compensation Committee and for the 2016-2018a three-year performance period are based on financial targets, including an average annual return on invested capital (“ROIC”("ROIC") and average annual growth in earnings before interest, taxes, depreciation and amortization (adjusted to exclude the effect of acquisitions, dispositions, and certain other nonrecurring or extraordinary items) (“("Adjusted EBITDA”EBITDA"). We recognize compensation expense net of estimated forfeitures, for PSU's on a straight-linestraight line basis over the performance period based on the probable outcome of achievement of the financial targets. At the end of each reporting period, we estimate the number of PSU's expected to vest, based on the probability and extent to which the performance goals will be met, and take into account these estimates when calculating the expense for the period. If the number of shares expected to be earned changes during the performance period, we will make a cumulative adjustment to compensation expense based on the revised number of shares expected to be earned.

Also on March 29, 2016 in conjunction with the grant of PSU's, the Compensation Committee granted a total of 40,679 time-based restricted stock units to the same officers of the Company. Vesting of the time-basedSummarized share information for our performance-based restricted stock units is subject to the employee's continued employment through December 31, 2018.as follows:

Income tax expense was $8.1$2.0 million, or an effective income tax rate of 37.4%32.8%, for the ninethree months ended September 30, 2016March 31, 2017 compared to $7.5$2.2 million, or an effective income tax rate of 37.5%36.7%, for the ninethree months ended September 30, 2015.March 31, 2016. The decrease in the effective income tax rate in 2017 compared to 2016 is primarily due to a change in the mix of taxable income from higher taxing jurisdictions to lower taxing jurisdictions. Income tax expense for the quarterly periods is based on an estimated annual effective tax rate which includes the U.S. federal, state and local, and non-U.S. statutory rates, permanent differences, and other items that may have an impact on income tax expense.

 

Changes in stockholders’ equity during the ninethree months ended September 30, 2016March 31, 2017 were as follows (in thousands):

We have a share repurchase program under which we may repurchase shares of our common stock from time to time in the open market, subject to prevailing business and market conditions and other factors. During the ninethree months ended September 30,March 31, 2017 and 2016, and 2015, we repurchased approximately 340,00070,000 and 255,000181,000 shares, respectively, of our common stock in the open market for a total cost of approximately $8.0$1.7 million and $6.6$4.3 million, respectively. As of September 30, 2016,March 31, 2017, there was approximately $6.1$4.4 million available for future repurchases under the buyback program.

As of September 30, 2016,March 31, 2017, we operated through four reportable business segments: (i) Learning Solutions, (ii) Professional & Technical Services, (iii) Sandy Training & Marketing, and (iv) Performance Readiness Solutions. Each of our reportable segments represents an operating segment under U.S. GAAP. We are organized by operating groups primarily based upon the markets served by each group and/or the services performed. Each operating group consists of business units which are focused on providing specific products and services to certain classes of customers or within targeted markets. Marketing and communications, accounting, finance, legal, human resources, information systems and other administrative services are organized at the corporate level. Business development and sales resources are aligned with operating groups to support existing customer accounts and new customer development.

Further information regarding our business segments is discussed below.

 

 

 

 

We do not allocate the following items to the segments: selling, general & administrative expenses, other income (expense), interest expense, restructuring charges, loss on change in fair value of contingent consideration and income tax expense. Inter-segment revenue is eliminated in consolidation and is not significant.

The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income tax expense (in thousands):

 

 

We are a global performance improvement solutions provider of training, e-Learning solutions, management consulting and engineering services that seeks to improve the effectiveness of organizations by providing services and products that are customized to meet the specific needs of clients. Clients include Fortune 500 companies and governmental and other commercial customers in a variety of industries. We believe we are a global leader in performance improvement, with over four decades of experience in providing solutions to optimize workforce performance.

 

As of September 30, 2016,March 31, 2017, we operated through four reportable business segments: (i) Learning Solutions, (ii) Professional & Technical Services, (iii) Sandy Training & Marketing, and (iv) Performance Readiness Solutions. Each of our reportable segments represents an operating segment under U.S. GAAP. We are organized by operating group primarily based upon the markets served by each group and/or the services performed. Each operating group consists of business units which are focused on providing specific products and services to certain classes of customers or within targeted markets. Marketing and communications, accounting, finance, legal, human resources, information systems and other administrative services are organized at the corporate level. Business development and sales resources are aligned with operating groups to support existing customer accounts and new customer development.

 

Further information regarding our business segments is discussed below.

 

 

 

 

 

Operating income, the components of which are discussed below, increased $1.1$0.8 million or 16.6%13.7% to $8.0$6.6 million for the thirdfirst quarter of 20162017 compared to $6.9$5.8 million for the thirdfirst quarter of 2015.2016. The net increase in operating income is primarily due to restructuring charges of $1.2a $1.5 million incurredincrease in gross profit and a $0.4 million increase in the thirdchange in fair value of contingent consideration, offset by a $1.0 million increase in selling, general and administrative expenses during the first quarter of 2015 that did not recur in 2016.2017.

 

Learning Solutions revenue decreased $0.5$0.2 million or 1.0%0.3% during the thirdfirst quarter of 20162017 compared to the thirdfirst quarter of 2015.2016. The revenue decrease is due to the following:

Professional & Technical Services revenue decreased $5.2$0.5 million or 17.3%2.0% during the thirdfirst quarter of 20162017 compared to the thirdfirst quarter of 2015.2016. The netrevenue decrease in revenue is due to the following:

Sandy Training & Marketing revenue increased $4.5$2.8 million or 20.3%12.7% during the thirdfirst quarter of 20162017 compared to the thirdfirst quarter of 2015.2016. The net increase is primarily due to a $5.6 millionan increase in training services for an automotive client related to a new luxury vehicle launch and a $2.7 million net increase in training services for in-dealership and other training programs for automotive customers. These increases were offset by a $3.8 million decline in magazine publications revenue due to a partial shipment of a publication during the third quarter with the remainder to be shipped in the fourth quarter of 2016, whereas the similar publication for 2015 was fully delivered in the third quarter of 2015.launch.

Performance Readiness Solutions revenue increased $0.3$4.6 million or 1.6%25.2% during the thirdfirst quarter of 20162017 compared to the thirdfirst quarter of 2015.2016. The netrevenue increase is primarily due to a $0.8the following:

 

Learning Solutions gross profit was $9.8$8.8 million or 19.1%17.6% of revenue for the thirdfirst quarter of 20162017 decreased by $0.9 million or 9.8% compared to gross profit of $9.8$9.7 million or 18.9%19.4% of revenue for the thirdfirst quarter of 2015. While2016. The decrease in gross profit was flatis primarily due to a one-time cost reduction of $0.6 million in the first quarter over quarter,of 2016 related to a UK government funded skills training contract which did not recur in 2017. In addition, there was a $0.4 million increase in gross profit attributable to the Jencal acquisition completed in March 2016, offset by a $0.6$0.7 million decrease in gross profit due to unfavorable changes in foreign currency exchange rates.

Professional & Technical Services gross profit of $3.6 million or 14.3% of revenue for the third quarter of 2016 decreased by $1.9 million or 34.9% when compared to gross profit of $5.5$4.6 million or 18.2% of revenue for the thirdfirst quarter of 2015. The decrease in2017 increased by $0.7 million or 18.4% when compared to gross profit isof $3.9 million or 15.0% of revenue for the first quarter of 2016. Despite the net decline in revenue, gross profit increased primarily due to a decrease in overhead costs and indirect labor expense in the overall revenue decrease and a decline in higher margin revenue streams in this segment, largely due to a decline in training and technical services for oil and gas clients and a decline in engineering and technical services.first quarter of 2017.

 

Sandy Training & Marketing gross profit of $3.6$2.9 million or 13.6%11.7% of revenue for the thirdfirst quarter of 20162017 increased by $1.1$0.4 million or 46.5%17.3% when compared to gross profit of $2.5 million or 11.2% of revenue for the thirdfirst quarter of 20152016 due to the organic revenue increases noted above. Gross margin increased due to an increase in higher margin revenue streams during the third quarter of 2016 compared to the third quarter of 2015.

 

Performance Readiness Solutions gross profit of $3.0$3.2 million or 15.9%13.9% of revenue for the thirdfirst quarter of 20162017 increased by $0.4$1.3 million or 16.7%67.2% when compared to gross profit of $2.6$1.9 million or 13.8%10.4% of revenue for the thirdfirst quarter of 2015.2016. The increase in gross profit is primarily due to a decrease in overhead costs$0.6 million increase attributable to acquisitions and the remaining $0.7 million increase is due to cost cutting measures.the organic revenue growth noted above.

 

Selling, general and administrative expenses decreased $0.3increased $1.0 million or 2.1%8.6% from $12.3 million for the third quarter of 2015 to $12.0 million for the thirdfirst quarter of 2016.2016 to $13.0 million for the first quarter of 2017. The decreaseincrease in SG&A expenses is primarily due to a $0.4 million increase in costs relating to our new financial system implementation which we anticipate will go live in 2018, a $0.3 million decreaseincrease in bad debt expense, and a $0.2 million decreasenet increase in amortization expense due to certain intangible assets related to previously completed acquisitions becoming fully amortized. These decreases were offset bylabor, benefits and other expenses, and a $0.2$0.1 million increase in labor and benefits expense.

We recognized lossesa $0.2 million gain on the change in fair value of contingent consideration related to acquisitions during the first quarter of less than $0.12017 compared to a loss of 0.2 million in both the third quartersfirst quarter of 2016 and 2015.2016. Changes in the fair value of contingent consideration obligations result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria.projections. See Note 5 to the Condensed Consolidated Financial Statements for further details regarding the potential contingent consideration payments and the changes in fair value of the related liabilities during the three months ended September 30, 2016.March 31, 2017.

 

Interest expense wasincreased $0.2 million to $0.4 million for the thirdfirst quarter of 2016 compared to $0.32017 from $0.2 million for the thirdfirst quarter of 20152016. The increase in interest expense is due to both an increase in interest rates and consisted primarily of interest on our short-termhigher borrowings and term loan under the Credit Agreement which is disclosed in more detail in Note 8 to the Condensed Consolidated Financial Statements.

 

Other expense was less than $0.1 million for the thirdfirst quarter of 20162017 compared to other expenseincome of $0.6$0.5 million for the thirdfirst quarter of 2015,2016, and consists primarily of income from a joint venture offset by foreign currency gains and losses in both periods. During the three months ended September 30, 2016,March 31, 2017, we had a $0.7$0.3 million net decrease in foreign currency lossesgains and a $0.1 million decrease in income from a joint venture compared to the corresponding period in 2015.2016. Foreign currency gains and losses primarily relate to the effect of exchange rates on intercompany receivables and payables and third party receivables and payables that are denominated in currencies other than the functional currency of our legal entities.subsidiaries.

 

 

Income tax expense was $2.8$2.0 million for the thirdfirst quarter of 20162017 compared to $2.2 million for the thirdfirst quarter of 2015.2016. The effective income tax rate was 36.9%32.8% and 37.2%36.7% for the three months ended September 30,March 31, 2017 and 2016, and 2015, respectively. Income tax expense for the quarterly periods is based on an estimated annual effective tax rate which includes the U.S. federal, state and local, and non-U.S. statutory rates, permanent differences, and other items that may have an impact on income tax expense.

Our working capital was $33.8$56.2 million at September 30, 2016March 31, 2017 compared to $40.3$59.9 million at December 31, 2015.2016. As of September 30, 2016March 31, 2017 we had $44.8$23.5 million of short-term borrowings and $14.4$37.0 million of long-term debt outstanding. We believe that cash generated from operations and borrowings available under our Credit Agreement ($14.771.3 million of available borrowings as of September 30, 2016)March 31, 2017) will be sufficient to fund our working capital and other requirements for at least the next twelve months.

 

As of September 30, 2016,March 31, 2017, the amount of cash and cash equivalents held outside of the U.S. by foreign subsidiaries was $15.6$15.5 million. At the present time, we do not anticipate repatriating these balances to fund domestic operations. We would be required to accrue for and pay taxes in the U.S. in the event we repatriated these funds.

We have a share repurchase program under which we may repurchase shares of our common stock from time to time in the open market, subject to prevailing business and market conditions and other factors. During the ninethree months ended September 30,March 31, 2017 and 2016, and 2015, we repurchased approximately 340,00070,000 and 255,000181,000 shares, respectively, of our common stock in the open market for a total cost of approximately $8.0$1.7 million and $6.6$4.3 million, respectively. As of September 30, 2016,March 31, 2017, there was approximately $6.1$4.4 million available for future repurchases under the buyback program.

We paid $2.6 million inBelow is a summary of the potential maximum contingent consideration in June 2016 for the 2014 acquisition of Effective Companies. In addition, we may be required to pay up to an additional $0.4 millionin connection with completed acquisitions as of contingent considerationMarch 31, 2017 (dollars in the fourth quarter of 2016 for the Jencal Training acquisition and up to an additional maximum $10.0 million of contingent consideration for the Maverick acquisition if certain earnings targets are achieved during the two twelve-month periods following completion of the acquisition which is effective October 1, 2016.thousands):

 

We have a market concentration of revenue in both the automotive sector and financial services & insurance sector. Revenue from the automotive industry accounted for approximately 22% and 18%20% of our consolidated revenue for the ninethree months ended September 30,March 31, 2017 and 2016, and 2015, respectively. In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 13% and 12% of our consolidated revenue for both of the nine monthsthree-month periods ended September 30, 2016March 31, 2017 and 2015, respectively.2016. As of March 31, 2017, accounts receivable from a single automotive customer totaled $14.5 million, or 14% of our consolidated accounts receivable balance.

Revenue from the financial services & insurance industry accounted for approximately 21%20% and 22% of our consolidated revenue for both the nine-month periodsthree months ended September 30,March 31, 2017 and 2016, and 2015.respectively. In addition, we have a concentration of revenue from a single financial services customer, which accounted for approximately 15%14% and 14%15% of our consolidated revenue for the ninethree months ended September 30,March 31, 2017 and 2016, and 2015, respectively. As of September 30, 2016,March 31, 2017, billed and unbilled accounts receivable from a single financial services customer totaled $26.5$31.8 million, or 19%22%, of our consolidated accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts balances. No other single customer accounted for more than 10% of our consolidated revenue for the ninethree months ended September 30,March 31, 2017 or 2016 or 2015 or consolidated accounts receivable balance as of September 30, 2016.March 31, 2017.

 

Our cash and cash equivalents balance decreased $5.3$0.9 million from $21.0$16.3 million as of December 31, 20152016 to $15.7$15.5 million as of September 30, 2016.March 31, 2017. The decrease in cash and cash equivalents during the ninethree months ended September 30, 2016March 31, 2017 resulted from cash provided by operating activities of $11.9$4.1 million, cash used in investing activities of $5.4$4.1 million, cash used in financing activities of $11.2$1.3 million and a negativepositive effect of exchange rates changes on cash of $0.7$0.4 million.

 

Cash provided by operating activities was $11.9$4.1 million for the ninethree months ended September 30, 2016March 31, 2017 compared to $9.5$8.6 million for the same period in 2015.2016. The increasedecrease in cash from operations is primarily due to a net favorableunfavorable change in working capital balances during

 

Cash used in investing activities was $5.4$4.1 million for the ninethree months ended September 30, 2016March 31, 2017 compared to $1.7$2.9 million for the same period in 2015.2016. The increase in cash used is due to $2.2$0.9 million ofincrease in cash net of cash acquired, used to complete the Jencal Training acquisition in March 2016, $1.6 million of cash used for an investment in a new joint venture during the second quarter of 2016,acquisitions and $0.5$0.3 million of software development costs. These cash uses were offset by a $0.6 million declinecosts in fixed asset additions during the nine months ended September 30, 2016 compared to the same period in 2015.first quarter of 2017.

 

Cash used in financing activities was $11.2$1.3 million for the ninethree months ended September 30, 2016March 31, 2017 compared to $8.7$10.3 million for the same period in 2015.2016. The increasedecrease in cash used in financing activities is primarily due a $1.4 million$6.8 increase in share repurchasesshort-term borrowings and a $1.3$2.6 million decrease in proceeds from short-term borrowingscash used for share repurchases during the nine months ended September 30, 2016first quarter of 2017 compared to the same period in 2015.first quarter of 2016.

On September 2, 2014,December 15, 2016, we entered into a FourthFifth Amended and Restated Financing and Security Agreement (the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility up to a maximum principal amount of $65$100 million expiring on OctoberDecember 31, 20182021 and for a term loan in the principal amount of $40 million maturing on October 31, 2017,April 30, 2020, and is secured by substantially all of our assets.

The maximum interest rate on the Credit Agreement is the daily one-month LIBOR market index rate (for borrowings in Dollars and Sterling) or the daily one month EURIBOR (for borrowings in Euros) plus 2.50%. Based on our financial performance, the interest rate can be reduced to a minimum rate of the daily one-month LIBOR market index rate plus 1.25%, with the rate being determined based on our maximum leverage ratio for the preceding four quarters. Each unpaid advance on the revolving loan will bear interest until repaid. The term loan is payable in monthly installments equal to $1.1$1.0 million plus applicable interest, beginning on NovemberJanuary 1, 2014 and ending on October 31, 2017. We may prepay the term loan or the revolving loan, in whole or in part, at any time without premium or penalty, subject to certain conditions. Amounts repaid or prepaid on the term loan may not be reborrowed.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our and our subsidiaries’ (subject to certain exceptions) ability to, among other things, grant liens, make investments, incur indebtedness, merge or consolidate, dispose of assets, make acquisitions. We are also required to maintain compliance with a minimum fixed

charge coverage ratio of 1.5 to 1.0 and a maximum leverage ratio of 2.03.0 to 1.0. As of September 30, 2016,March 31, 2017, our fixed coverage charge ratio was 2.01.9 to 1.0 and our leverage ratio was 1.41.5 to 1.0, all of which were in compliance with the Credit Agreement.

As of September 30, 2016,March 31, 2017, our total long-term debt outstanding under the term loan was $14.4$37.0 million. In addition, there were $44.8$23.5 million of borrowings outstanding and $14.7$71.3 million of available borrowings under the Credit Agreement. For the ninethree months ended September 30, 2016,March 31, 2017, the weighted average interest rate on our borrowings was 2.2%2.5%.

 

 

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward looking statements. Forward–looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We use words such as “expects,” “intends,” “believes,” “may,” “will,” “should,” “could,” “anticipates,” “estimates,” “plans” and similar expressions to indicate forward-looking statements, but their absence does not mean a statement is not forward-looking. Because these forward-looking statements are based upon management’s expectations and assumptions and are subject to risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including, but not limited to, those factors set forth in Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20152016 and those other risks and uncertainties detailed in our periodic reports and registration statements filed with the Securities and Exchange Commission. We caution that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. We cannot predict these new risk factors, nor can we assess the effect, if any, of the new risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ from those expressed or implied by these forward-looking statements.

 

If any one or more of these expectations and assumptions proves incorrect, actual results will likely differ materially from those contemplated by the forward-looking statements. Even if all of the foregoing assumptions and expectations prove correct, actual results may still differ materially from those expressed in the forward-looking statements as a result of factors we may not anticipate or that may be beyond our control. While we cannot assess the future impact that any of these differences could have on our business, financial condition, results of operations and cash flows or the market price of shares of our common stock, the differences could be significant. We do not undertake to update any forward-looking statements made by us, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this report.

 

We maintain a comprehensive set of disclosure controls and procedures (as defined in Rules 13a-15(e) and under the Securities Exchange Act of 1934 (“Exchange Act”)) designed to provide reasonable assurance that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the SEC’s rules and forms. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures are effective in providing reasonable assurance of the achievement of the objectives described above.

 

During the quarter ended September 30, 2016,March 31, 2017, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d—15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

None.