Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 27, 2019 | Jun. 29, 2018 | |
Entity Registrant Name | WATTS WATER TECHNOLOGIES INC | ||
Entity Central Index Key | 795,403 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2,164,731,408 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Class A | |||
Entity Common Stock, Shares Outstanding | 27,623,445 | ||
Class B | |||
Entity Common Stock, Shares Outstanding | 6,329,290 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Operations | |||
Net Sales | $ 1,564.9 | $ 1,456.7 | $ 1,398.4 |
Cost of goods sold | 908.4 | 854.3 | 832.8 |
GROSS PROFIT | 656.5 | 602.4 | 565.6 |
Selling, general and administrative expenses | 464.7 | 432.3 | 424.1 |
Restructuring | 3.4 | 6.8 | 4.7 |
Goodwill and other long-lived impairment charges | 1 | 0.5 | |
Gain on disposition | (8.7) | ||
OPERATING INCOME | 188.4 | 162.3 | 145 |
Other (income) expense: | |||
Interest income | (0.8) | (1) | (1) |
Interest expense | 16.3 | 19.1 | 22.6 |
Other (income) expense, net | (1.7) | 1.1 | (4.4) |
Total other expense | 13.8 | 19.2 | 17.2 |
INCOME BEFORE INCOME TAXES | 174.6 | 143.1 | 127.8 |
Provision for income taxes | 46.6 | 70 | 43.6 |
NET INCOME | $ 128 | $ 73.1 | $ 84.2 |
BASIC EPS | |||
NET INCOME PER SHARE | $ 3.73 | $ 2.12 | $ 2.45 |
Weighted average number of shares (in shares) | 34.3 | 34.4 | 34.4 |
DILUTED EPS | |||
NET INCOME PER SHARE | $ 3.73 | $ 2.12 | $ 2.44 |
Weighted average number of shares (in shares) | 34.3 | 34.4 | 34.5 |
Dividends declared per share (in dollars per share) | $ 0.82 | $ 0.75 | $ 0.71 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 128 | $ 73.1 | $ 84.2 |
Other comprehensive (loss) income, net of tax: | |||
Foreign currency translation adjustments | (23.7) | 51.1 | (32.4) |
Reversal of foreign currency translation for sale of foreign entity, net of tax | 6.9 | ||
Cash flow hedges | 1.7 | 0.6 | 2.9 |
Other comprehensive (loss) income | (22) | 51.7 | (22.6) |
Comprehensive income | $ 106 | $ 124.8 | $ 61.6 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 204.1 | $ 280.2 |
Trade accounts receivable, less allowance for doubtful accounts of $15.0 million at December 31, 2018 and $14.3 million at December 31, 2017 | 205.5 | 216.1 |
Inventory, Net [Abstract] | ||
Raw materials | 87.4 | 81.8 |
Work in process | 17.3 | 17.5 |
Finished goods | 182.1 | 159.8 |
Total Inventories | 286.8 | 259.1 |
Prepaid expenses and other assets | 24.9 | 26.7 |
Assets held for sale | 1.5 | |
Total Current Assets | 721.3 | 783.6 |
PROPERTY, PLANT AND EQUIPMENT, NET | ||
Property, plant and equipment, at cost | 537.4 | 525.8 |
Accumulated depreciation | (335.5) | (327.3) |
Property, plant and equipment, net | 201.9 | 198.5 |
OTHER ASSETS: | ||
Goodwill | 544.8 | 550.5 |
Intangible assets, net | 165.2 | 185.2 |
Deferred income taxes | 1.6 | 1.6 |
Other, net | 18.9 | 17.1 |
TOTAL ASSETS | 1,653.7 | 1,736.5 |
CURRENT LIABILITIES: | ||
Accounts payable | 127.2 | 123.8 |
Accrued expenses and other liabilities | 130.6 | 125.8 |
Accrued compensation and benefits | 60.9 | 55.3 |
Current portion of long-term debt | 30 | 22.5 |
Total Current Liabilities | 348.7 | 327.4 |
LONG-TERM DEBT, NET OF CURRENT PORTION | 323.4 | 474.6 |
DEFERRED INCOME TAXES | 38.5 | 55.2 |
OTHER NONCURRENT LIABILITIES | 51.8 | 50.3 |
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, $0.10 par value; 5,000,000 shares authorized; no shares issued or outstanding | ||
Additional paid-in capital | 568.3 | 551.8 |
Retained earnings | 440.7 | 372.9 |
Accumulated other comprehensive loss | (121.1) | (99.1) |
Total Stockholders' Equity | 891.3 | 829 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 1,653.7 | 1,736.5 |
Class A | ||
STOCKHOLDERS' EQUITY: | ||
Common Stock | 2.8 | 2.8 |
Class B | ||
STOCKHOLDERS' EQUITY: | ||
Common Stock | $ 0.6 | $ 0.6 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) $ in Millions | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares |
Trade accounts receivable, allowance for doubtful accounts (in dollars) | $ | $ 15 | $ 14.3 |
Preferred Stock, par value (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 |
Preferred Stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Class A | ||
Common Stock, par value (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 |
Common Stock, shares authorized | 80,000,000 | 80,000,000 |
Common Stock, votes per share (Number of votes) | 1 | 1 |
Common Stock, issued shares | 27,646,465 | 27,724,192 |
Common Stock, outstanding shares | 27,646,465 | 27,724,192 |
Class B | ||
Common Stock, par value (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 |
Common Stock, shares authorized | 25,000,000 | 25,000,000 |
Common Stock, votes per share (Number of votes) | 10 | 10 |
Common Stock, issued shares | 6,329,290 | 6,379,290 |
Common Stock, outstanding shares | 6,329,290 | 6,379,290 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Class ACommon Stock | Class BCommon Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at the beginning of the period at Dec. 31, 2015 | $ 2.8 | $ 0.6 | $ 512 | $ 317.7 | $ (128.2) | $ 704.9 |
Balance (in shares) at Dec. 31, 2015 | 28,049,908 | 6,379,290 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 84.2 | 84.2 | ||||
Other comprehensive income (loss) | (22.6) | (22.6) | ||||
Comprehensive income (loss) | 61.6 | |||||
Shares of Class A common stock issued upon the exercise of stock options | 8.2 | 8.2 | ||||
Shares of Class A common stock issued upon the exercise of stock options (in shares) | 217,030 | |||||
Stock-based compensation | 13.4 | 13.4 | ||||
Stock repurchase | (26.8) | (26.8) | ||||
Stock repurchase (in shares) | (501,229) | |||||
Issuance of net shares of restricted Class A common stock | (1.6) | (1.6) | ||||
Issuance of net shares of restricted Class A common stock (in shares) | 53,714 | |||||
Net change in restricted stock units | 1.6 | (0.5) | 1.1 | |||
Net change in restricted stock units (in shares) | 11,590 | |||||
Common stock dividends | (24.5) | (24.5) | ||||
Balance at the end of the period at Dec. 31, 2016 | $ 2.8 | $ 0.6 | 535.2 | 348.5 | (150.8) | 736.3 |
Balance (in shares) at Dec. 31, 2016 | 27,831,013 | 6,379,290 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Change in accounting principle | (0.5) | (0.5) | ||||
Net income (loss) | 73.1 | 73.1 | ||||
Other comprehensive income (loss) | 51.7 | 51.7 | ||||
Comprehensive income (loss) | 124.8 | |||||
Shares of Class A common stock issued upon the exercise of stock options | 1.7 | 1.7 | ||||
Shares of Class A common stock issued upon the exercise of stock options (in shares) | 31,377 | |||||
Stock-based compensation | 13.9 | 13.9 | ||||
Stock repurchase | (18.2) | (18.2) | ||||
Stock repurchase (in shares) | (277,886) | |||||
Issuance of net shares of restricted Class A common stock | (2.4) | (2.4) | ||||
Issuance of net shares of restricted Class A common stock (in shares) | 87,443 | |||||
Net change in restricted stock units | 1 | (1.7) | (0.7) | |||
Net change in restricted stock units (in shares) | 52,245 | |||||
Common stock dividends | (25.9) | (25.9) | ||||
Balance at the end of the period at Dec. 31, 2017 | $ 2.8 | $ 0.6 | 551.8 | 372.9 | (99.1) | 829 |
Balance (in shares) at Dec. 31, 2017 | 27,724,192 | 6,379,290 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Change in accounting principle | (0.7) | (0.7) | ||||
Net income (loss) | 128 | 128 | ||||
Other comprehensive income (loss) | (22) | (22) | ||||
Comprehensive income (loss) | 106 | |||||
Shares of Class B common stock converted to Class A common stock (in shares) | 50,000 | (50,000) | ||||
Shares of Class A common stock issued upon the exercise of stock options | 2.5 | 2.5 | ||||
Shares of Class A common stock issued upon the exercise of stock options (in shares) | 45,939 | |||||
Stock-based compensation | 13.8 | 13.8 | ||||
Stock repurchase | (26) | (26) | ||||
Stock repurchase (in shares) | (340,106) | |||||
Issuance of net shares of restricted Class A common stock | (3.1) | (3.1) | ||||
Issuance of net shares of restricted Class A common stock (in shares) | 115,120 | |||||
Net change in restricted stock units | 0.2 | (2.1) | (1.9) | |||
Net change in restricted stock units (in shares) | 51,320 | |||||
Common stock dividends | (28.3) | (28.3) | ||||
Balance at the end of the period at Dec. 31, 2018 | $ 2.8 | $ 0.6 | $ 568.3 | $ 440.7 | $ (121.1) | $ 891.3 |
Balance (in shares) at Dec. 31, 2018 | 27,646,465 | 6,329,290 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES | |||
Net income | $ 128 | $ 73.1 | $ 84.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 28.9 | 29.7 | 30.4 |
Amortization of intangibles | 19.6 | 22.5 | 20.8 |
Loss on disposal and impairment of intangibles, property, plant and equipment and other | 0.2 | 2.1 | 3.7 |
Gain on disposition | (8.6) | ||
Gain on acquisition | (1.7) | ||
Stock-based compensation | 13.8 | 13.9 | 13.4 |
Deferred income tax | (15.3) | 6.4 | 3.5 |
Changes in operating assets and liabilities, net of effects from business acquisitions and divestures: | |||
Accounts receivable | 6 | (7.5) | (7.1) |
Inventories | (34.5) | (8.4) | 9.8 |
Prepaid expenses and other assets | 0.6 | 14.7 | 4.9 |
Accounts payable, accrued expenses and other liabilities | 22.1 | 9.4 | (15.2) |
Net cash provided by operating activities | 169.4 | 155.9 | 138.1 |
INVESTING ACTIVITIES | |||
Additions to property, plant and equipment | (35.9) | (29.4) | (36) |
Proceeds from the sale of property, plant and equipment | 2.2 | 0.4 | 0.1 |
Net proceeds from the sale of asset, and other | 0.2 | 3.1 | 9.9 |
Purchase of intangible assets | (0.7) | (1.5) | |
Business acquisitions, net of cash acquired | (1.7) | 0.1 | (88) |
Net cash used in investing activities | (35.9) | (27.3) | (114) |
FINANCING ACTIVITIES | |||
Proceeds from long-term borrowings | 50 | 20 | 688.8 |
Payments of long-term debt | (194.5) | (178) | (614.4) |
Payment of capital leases and other | (6.6) | (4.9) | (1.5) |
Proceeds from share transactions under employee stock plans | 2.5 | 1.7 | 8.2 |
Payments to repurchase common stock | (26) | (18.2) | (26.8) |
Debt issuance costs | (2.1) | ||
Dividends | (28.3) | (25.9) | (24.5) |
Net cash (used in) provided by financing activities | (202.9) | (205.3) | 27.7 |
Effect of exchange rate changes on cash and cash equivalents | (6.7) | 18.5 | (9.6) |
DECREASE IN CASH AND CASH EQUIVALENTS | (76.1) | (58.2) | 42.2 |
Cash and cash equivalents at beginning of year | 280.2 | 338.4 | 296.2 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 204.1 | 280.2 | 338.4 |
Acquisition of businesses: | |||
Fair value of assets acquired | 4.1 | 112.6 | |
Cash paid, net of cash acquired | 1.7 | 88 | |
Gain on acquisition | (0.1) | 1.7 | |
Liabilities assumed | 2.4 | 22.9 | |
Issuance of stock under management stock purchase plan | 1.9 | 0.9 | 0.7 |
CASH PAID FOR: | |||
Interest | 19.1 | 18.8 | 20.2 |
Income taxes | $ 55.3 | $ 39.4 | $ 33.5 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Description of Business | |
Description of Business | (1) Description of Business Watts Water Technologies, Inc. (the Company) is a leading supplier of products and solutions that conserve water and manage the flow of fluids and energy into, through and out of buildings in the commercial and residential markets of the Americas, Europe, and Asia-Pacific, Middle East, and Africa (APMEA). For over 140 years, the Company has designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that helps purify and conserve water. |
Accounting Policies
Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies | |
Accounting Policies | (2) Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its majority and wholly owned subsidiaries. Upon consolidation, all intercompany accounts and transactions are eliminated. Cash Equivalents Cash equivalents consist of instruments with remaining maturities of three months or less at the date of purchase and consist primarily of money market funds, for which the carrying amount is a reasonable estimate of fair value. Allowance for Doubtful Accounts The allowance for doubtful accounts is established to represent the Company’s best estimate of the net realizable value of the outstanding accounts receivable. The development of the Company’s allowance for doubtful accounts varies by region but in general is based on a review of past due amounts, historical write‑off experience, as well as aging trends affecting specific accounts and general operational factors affecting all accounts. In addition, factors are developed in certain regions utilizing historical trends of sales and returns and allowances and cash discount activities to derive a reserve for returns and allowances and cash discounts. The Company uniformly considers current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. The Company also aggressively monitors the creditworthiness of the Company’s largest customers and periodically reviews customer credit limits to reduce risk. If circumstances relating to specific customers change or unanticipated changes occur in the general business environment, the Company’s estimates of the recoverability of receivables could be further adjusted. Concentration of Credit The Company sells products to a diversified customer base and, therefore, has no significant concentrations of credit risk. In 2018, 2017, and 2016, no customer accounted for 10% or more of the Company’s total sales or accounts receivable. Inventories Inventories are stated at the lower of cost or market, using the first‑in, first‑out method. Market value is determined by replacement cost or net realizable value. Historical usage is used as the basis for determining the reserve for excess or obsolete inventories. Goodwill and Other Intangible Assets Goodwill is recorded when the consideration paid for acquisitions exceeds the fair value of net tangible and intangible assets acquired. Goodwill and other intangible assets with indefinite useful lives are not amortized, but rather are tested for impairment at least annually or more frequently if events or circumstances indicate that it is “more likely than not” that they might be impaired, such as from a change in business conditions. The Company performs its annual goodwill and indefinite-lived intangible assets impairment assessment in the fourth quarter of each year. Long-Lived Assets Intangible assets with estimable lives and other long‑lived assets are reviewed for indicators of impairment at least quarterly or more frequently if events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is provided on a straight‑line basis over the estimated useful lives of the assets, which range from 10 to 40 years for buildings and improvements and 3 to 15 years for machinery and equipment. Leasehold improvements are depreciated over the lesser of the economic useful life of the asset or the remaining lease term. Taxes, Other than Income Taxes Taxes assessed by governmental authorities on sale transactions are recorded on a net basis and excluded from sales in the Company’s consolidated statements of operations. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes tax benefits when the item in question meets the more–likely–than‑not (greater than 50% likelihood of being sustained upon examination by the taxing authorities) threshold. As of December 31, 2018, the Company had gross unrecognized tax benefits of approximately $10.2 million, approximately $4.5 million of which, if recognized, would affect the effective tax rate. The difference between the amount of unrecognized tax benefits and the amount that would affect the effective tax rate consists of the federal tax benefit of state income tax items and allowable correlative adjustments that are available for certain jurisdictions. A reconciliation of the beginning and ending amount of unrecognized tax is as follows: (in millions) Balance at January 1, 2018 $ 7.7 Increases related to prior year tax positions 2.5 Increases related to current year tax provisions 2.5 Settlements (2.1) Currency movement (0.4) Balance at December 31, 2018 $ 10.2 The Company estimates that it is reasonably possible that the balance of unrecognized tax benefits as of December 31, 2018 may decrease by approximately $0.5 million in the next twelve months, as a result of lapses in statutes of limitations and settlements of open audits. In February 2018, the United States Internal Revenue Service concluded an audit of the Company’s 2015 and 2016 tax years. There were no material adjustments as a result of the audit. The Company conducts business in a variety of locations throughout the world resulting in tax filings in numerous domestic and foreign jurisdictions. The Company is subject to tax examinations regularly as part of the normal course of business. The Company’s major jurisdictions are the U.S., France, Germany, Canada, and the Netherlands. The statute of limitations in the U.S. is subject to tax examination for 2015 and later; France, Germany, Canada and the Netherlands are subject to tax examination for 2012-2014 and later. All other jurisdictions, with few exceptions, are no longer subject to tax examinations in state, local or international jurisdictions for tax years before 2013. The Company accounts for interest and penalties related to uncertain tax positions as a component of income tax expense. Foreign Currency Translation The functional currency for most of the Company’s foreign subsidiaries is their local currency. For non-U.S. subsidiaries that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the average foreign currency exchange rates for the period. Adjustments resulting from the translation of the financial statements of foreign operations into U.S. dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income, a separate component of equity. For subsidiaries where the functional currency of the assets and liabilities differs from the local currency, non-monetary assets and liabilities are translated at the rate of exchange in effect on the date assets were acquired while monetary assets and liabilities are translated at current rates of exchange as of the balance sheet date. Income and expense items are translated at the average foreign currency rates for the period. Translation adjustments of these subsidiaries are included in other (income) expense, net in the consolidated statements of operations. Stock‑Based Compensation The Company records compensation expense in the financial statements for share‑based awards based on the grant date fair value of those awards for restricted stock awards and deferred stock awards. Stock‑based compensation expense for restricted stock awards and deferred stock awards is recognized over the requisite service periods of the awards on a straight‑line basis, which is generally commensurate with the vesting term. The performance stock units offered by the Company to employees are amortized to expense over the vesting period, and based on the Company’s performance relative to the performance goals, may be adjusted. Changes to the estimated shares expected to vest will result in adjustments to the related share-based compensation expense that will be recorded in the period of change. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” and the Company adopted this standard in the first quarter of 2017 with an immaterial change to retained earnings. As part of the adoption of this standard, the Company elected to account for forfeitures as they occur, rather than estimate expected forfeitures over the vesting period of the respective grant. The Company also no longer reclassifies the benefits associated with tax deductions in excess of recognized compensation cost from operating activities to financing activities in the Consolidated Statement of Cash Flows. At December 31, 2018, the Company had one stock‑based compensation plan with total unrecognized compensation costs related to unvested stock‑based compensation arrangements of approximately $17.4 million and a total weighted average remaining term of 1.61 years. For 2018, 2017 and 2016, the Company recognized compensation costs related to stock‑based programs of approximately $13.8 million, $13.9 million and $13.4 million, respectively. For 2018, 2017 and 2016 stock compensation expense, $0.9 million, $0.8 million and $0.9 million, respectively, was recorded in cost of goods sold and $12.9 million, $13.1 million and $12.5 million, respectively, was recorded in selling, general and administrative expenses. For 2017 and 2016, the Company recorded approximately $0.1 million and $0.8 million, respectively, of tax benefits for the compensation expense relating to its stock options. For 2018, 2017 and 2016, the Company recorded approximately $2.8 million, $3.9 million and $2.8 million, respectively, of tax benefit for its other stock‑based plans. For 2018, 2017 and 2016, the recognition of total stock‑based compensation expense impacted both basic and diluted net income per common share by $0.32, $0.28 and $0.29, respectively. Net Income Per Common Share Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding. The calculation of diluted net income per share assumes the conversion of all dilutive securities. Net income and the number of shares used to compute net income per share, basic and assuming full dilution, are reconciled below: Year Ended December 31, 2018 2017 2016 Per Per Per Net Share Net Share Net Share Income Shares Amount Income Shares Amount Income Shares Amount (Amounts in millions, except per share information) Basic EPS $ 128.0 34.3 $ 3.73 $ 73.1 34.4 $ 2.12 $ 84.2 34.4 $ 2.45 Dilutive securities, principally common stock options — — — — — — — 0.1 (0.01) Diluted EPS $ 128.0 34.3 $ 3.73 $ 73.1 34.4 $ 2.12 $ 84.2 34.5 $ 2.44 The computation of diluted net income per share for the year ended December 31, 2016 excludes the effect of the potential exercise of options to purchase approximately 0.1 million shares because the exercise price of the option was greater than the average market price of the Class A common stock and the effect would have been anti‑dilutive. Financial Instruments In the normal course of business, the Company manages risks associated with commodity prices, foreign exchange rates and interest rates through a variety of strategies, including the use of hedging transactions, executed in accordance with the Company’s policies. The Company’s hedging transactions include, but are not limited to, the use of various derivative financial and commodity instruments. As a matter of policy, the Company does not use derivative instruments unless there is an underlying exposure. Any change in value of the derivative instruments would be substantially offset by an opposite change in the value of the underlying hedged items. The Company does not use derivative instruments for trading or speculative purposes. Derivative instruments may be designated and accounted for as either a hedge of a recognized asset or liability (fair value hedge) or a hedge of a forecasted transaction (cash flow hedge). For a fair value hedge, both the effective and ineffective portions of the change in fair value of the derivative instrument, along with an adjustment to the carrying amount of the hedged item for fair value changes attributable to the hedged risk, are recognized in earnings. For a cash flow hedge, changes in the fair value of the derivative instrument that are highly effective are deferred in accumulated other comprehensive income or loss until the underlying hedged item is recognized in earnings. The Company has two interest rate swaps designated as cash flow hedges as of December 31, 2018 and 2017. The Company also has foreign exchange hedges designated as cash flow hedges as of December 31, 2018. Refer to Note 17 for further details. If a fair value or cash flow hedge were to cease to qualify for hedge accounting or be terminated, it would continue to be carried on the balance sheet at fair value until settled, but hedge accounting would be discontinued prospectively. If a forecasted transaction were no longer probable of occurring, amounts previously deferred in accumulated other comprehensive income would be recognized immediately in earnings. On occasion, the Company may enter into a derivative instrument that does not qualify for hedge accounting because it is entered into to offset changes in the fair value of an underlying transaction which is required to be recognized in earnings (natural hedge). These instruments are reflected in the Consolidated Balance Sheets at fair value with changes in fair value recognized in earnings. Portions of the Company’s outstanding debt are exposed to interest rate risks. The Company monitors its interest rate exposures on an ongoing basis to maximize the overall effectiveness of its interest rates. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The Company has certain financial assets and liabilities that are measured at fair value on a recurring basis and certain nonfinancial assets and liabilities that may be measured at fair value on a nonrecurring basis. The fair value disclosures of these assets and liabilities are based on a three‑level hierarchy, which is defined as follows: Level 1 Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities subject to this hierarchy are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Refer to Note 17 for further details. Shipping and Handling Shipping and handling costs included in selling, general and administrative expense amounted to $56.3 million, $52.1 million and $47.9 million for the years ended December 31, 2018, 2017 and 2016, respectively. Research and Development Research and development costs included in selling, general, and administrative expense amounted to $34.5 million, $29.0 million and $26.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. Revenue Recognition The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company’s revenue for product sales is recognized on a point in time model, at the point control transfers to the customer, which is generally when products are shipped from the Company’s manufacturing or distribution facilities or when delivered to the customer’s named location. Sales tax, value-added tax, or other taxes collected concurrent with revenue producing activities are excluded from revenue. Freight costs billed to customers for shipping and handling activities are included in revenue with the related cost included in selling, general and administrative expenses. See Note 4 for further disclosures and detail regarding revenue recognition. Basis of Presentation Certain amounts in the 2017 and 2016 consolidated financial statements have been reclassified to permit comparison with the 2018 presentation, includ ing from adoption of recent accounting standards. These reclassifications had no effect on reported results of operations or stockholders' equity. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recently Adopted Accounting Standards In February 2018, the FASB issued ASU 2018-02 “Income Statement-Reporting Comprehensive Income.” ASU 2018-02 provides guidance on the reclassification of certain tax effects from the 2017 Tax Cuts and Jobs Act (“2017 Tax Act”) from accumulated other comprehensive income. Current generally accepted accounting principles requires deferred tax liabilities and deferred tax assets to be adjusted for the effect of a change in tax laws or tax rates, with that effect included in income from operations in the period of enactment. This included the income tax effects of items in accumulated other comprehensive income. This guidance allows a reclassification from accumulated other comprehensive income to retained earnings for the tax effects on items in accumulated other comprehensive income related to the change in tax rates from the 2017 Tax Act. This standard is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. Early adoption of this standard is permitted. The Company adopted this standard in the first quarter of 2018, and it did not have a material impact on the Company’s financial statements. On January 1, 2018, the Company adopted the accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard” or “ASU 2014-09”) to all contracts using the modified retrospective method. The adoption of ASU 2014-09 was not material to the Company and as such, there was no cumulative effect upon the January 1, 2018 adoption date. As the impact of the new revenue standard is not material to the Company, there is no pro-forma disclosure presented for the year ended December 31, 2018. The Company expects the impact of the adoption of the new standard to be immaterial to the Company’s financial statements on an ongoing basis. See “Revenue Recognition” within this Note 2 and Note 4 of Notes to Consolidated Financial Statements in this Annual Report Form 10-K for further details. In October 2016, the FASB issued ASU 2016-16 “Intra-Entity Transfers of Assets Other than Inventory.” ASU 2016-16 provides guidance on the timing of recognition of tax consequences of an intra-entity transfer of an asset other than inventory. The Company adopted the provision of this ASU during the first quarter of 2018, using the modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the quarter. The adoption of this guidance did not have a material impact on the Company’s financial statements. Accounting Standards Updates In August 2018, the FASB issued ASU 2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)-Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance requires an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. The Company is currently evaluating the impact of this guidance on the Company’s financial statements, and does not expect the adoption of this guidance to have a material impact on the Company’s financial statements. In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820)-Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements under Topic 820. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. The Company is currently evaluating the impact of this guidance on the Company’s disclosures; however, this guidance does not impact the Company’s financial statements. In August 2017, the FASB issued ASU 2017-12 “Derivatives and Hedging (Topic 815)-Targeted Improvements to Accounting for Hedging Activities.” ASU 2017-12 amends the hedge accounting guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in the financial statements. This guidance permits hedge accounting for risk components in hedging relationships that involve nonfinancial risk, reduces complexity in hedging for fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedging ineffectiveness, and simplifies certain hedge effectiveness assessment requirements. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. The Company is currently evaluating the impact of this guidance, including transition elections and required disclosures, on its financial statements, and does not expect the adoption of this guidance to have a material impact on the Company’s financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016‑02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term for both finance and operating leases with a term longer than twelve months. Topic 842 was subsequently amended by ASU 2018-01, “Land Easement Practical Expedient for Transition to Topic 842,” ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU 2018-11 “Targeted Improvements.” ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018 and all interim periods thereafter. Early adoption is permitted for all entities. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The Company may choose to use either 1) the effective date of the standard or 2) the beginning of the earliest comparable period presented in the financial statements as the date of initial application. The Company adopted the new standard on January 1, 2019 and used the effective date of the standard as the date of the Company’s initial application. By electing this approach, the financial information and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients throughout the transition. The Company elected the “package of practical expedients,” which permits the Company to not reassess under the new standard the Company’s prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements, the latter not being applicable to the Company. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize right-of-use assets or lease liabilities, and this includes not recognizing right-of-use assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient not to separate lease and non-lease components for all of the Company’s leases. The Company completed its analysis of the impacts of the new lease standard, and has designed the necessary changes to its existing processes and configured all system requirements that are required to implement this new standard. The Company has a variety of categories of lease arrangements, including real estate, automobiles, manufacturing equipment, facility equipment, office equipment and certain service arrangements. The Company has reviewed its leasing arrangements in order to evaluate the impact of this standard on the Company’s financial statements, and expects to record a right-of-use asset in the range of $25-40 million and a lease liability in the range of $25-40 million related to the recognition, on a discounted basis, of the Company’s minimum commitments under non-cancelable operating leases on its consolidated balance sheets in the first quarter of 2019. The Company currently does not expect ASC 842 to have a material effect on either its consolidated statement of operations or its consolidated statement of cash flow. |
Restructuring and Other Charges
Restructuring and Other Charges, Net | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Other Charges, Net | |
Restructuring and Other Charges, Net | (3) Restructuring and Other Charges, Net The Company’s Board of Directors approves all major restructuring programs that may involve the discontinuance of significant product lines or the shutdown of significant facilities. From time to time, the Company takes additional restructuring actions, including involuntary terminations that are not part of a major program. The Company accounts for these costs in the period that the liability is incurred. These costs are included in restructuring charges in the Company’s consolidated statements of operations. A summary of the pre‑tax cost by restructuring program is as follows: Year Ended December 31, 2018 2017 2016 (in millions) Restructuring costs: 2015 Actions $ — $ 2.4 $ 2.1 Other Actions 3.4 4.4 2.6 Total restructuring charges $ 3.4 $ 6.8 $ 4.7 The Company recorded pre‑tax restructuring in its business segments as follows: Year Ended December 31, 2018 2017 2016 (in millions) Americas $ — $ 3.1 $ 1.6 Europe 3.4 3.3 3.4 APMEA — 0.4 0.2 Corporate — — (0.5) Total $ 3.4 $ 6.8 $ 4.7 Other Actions The Company periodically initiates other actions which are not part of a major program. Total “Other Actions” pre-tax restructuring expense was $3 .4 million for the year ended December 31, 2018. Included in “Other Actions” are European restructuring activities initiated in 2018 and 2017, as well as certain other minor initiatives, for which the Company incurred restructuring expenses or adjusted prior restructuring reserves in the year ended December 31, 2018. In the third quarter of 2018, management initiated restructuring actions primarily associated with the European headquarters as well as cost savings initiatives at certain European manufacturing facilities. These actions included reductions in force and other related costs within the Company’s Europe segment. The pre-tax charges for the year ended December 31, 2018 were approximately $4.0 million and primarily included severance benefits. The total restructuring charges associated with the program are estimated to be approximately $5.0 million with costs expected to be fully incurred within the year ending December 31, 2019. The restructuring reserve associated with these actions is approximately $2.2 million as of December 31, 2018, and primarily relates to severance benefits. In the fourth quarter of 2017, management initiated certain restructuring actions related to reductions in force within the Company’s Europe segment. The restructuring activities primarily included severance benefits. The total pre-tax charges associated with the Europe restructuring activities were initially expected to be approximately $4.1 million with costs being fully incurred in 2017. The company reduced its total pre-tax charges for the program to approximately $3.4 million as of September 30, 2018, primarily related to reduced severance costs. The restructuring reserve associated with these actions is approximately $0.2 million as of December 31, 2018, and relates to severance benefits. In the fourth quarter of 2015, management initiated certain restructuring actions and strategic initiatives with respect to the Company’s Europe segment in response to the ongoing economic challenges in Europe and additional product rationalization. The restructuring actions included severance benefits and limited costs relating to asset write-offs, professional fees and relocation. The total pre-tax charge for the Europe 2015 restructuring initiatives was $7.7 million. The following table summarizes total expected, incurred and remaining pre-tax restructuring costs for the Europe 2015 restructuring actions: Facility Legal and Exit Severance consultancy and other Total (in millions) Costs incurred—2015 $ 6.6 $ — $ 0.3 $ 6.9 Costs incurred—2016 1.3 0.5 — 1.8 Adjustments to restructuring costs—2017 (1.0) — — (1.0) Total restructuring costs $ 6.9 $ 0.5 $ 0.3 $ 7.7 Details of the Company’s Europe 2015 restructuring reserve activity for the year ended December 31, 2018 are as follows: Legal and Facility exit Severance Consultancy and other Total (in millions) Balance at December 31, 2015 $ 6.4 $ — $ — $ 6.4 Net pre-tax restructuring charges 1.3 0.5 — 1.8 Utilization and foreign currency impact (2.9) (0.5) — (3.4) Balance at December 31, 2016 $ 4.8 $ — $ — $ 4.8 Net pre-tax restructuring charges (1.0) — — (1.0) Utilization and foreign currency impact (2.8) — — (2.8) Balance at December 31, 2017 $ 1.0 $ — $ — $ 1.0 Net pre-tax restructuring adjustments — — — — Utilization and foreign currency impact (0.9) — — (0.9) Balance at December 31, 2018 $ 0.1 $ — $ — $ 0.1 2015 Actions in the Americas and APMEA In 2015, the Board of Directors of the Company approved a transformation program relating to the Company’s Americas and APMEA businesses, which primarily involved the exit of low-margin, non-core product lines, and enhancing global sourcing capabilities (“phase one”). The Company eliminated approximately $165 million of the combined Americas and APMEA net sales primarily within the Company’s do-it-yourself (DIY) distribution channel. As part of the exit of non-core product lines, the Company entered into an agreement to sell an operating subsidiary in China that was dedicated exclusively to the manufacturing of products being discontinued. The sale was finalized in the second quarter of 2016, and the Company recognized a pre-tax gain of $8.7 million and received proceeds from the sale of $8.4 million. The second phase of the program involved the consolidation of manufacturing facilities and distribution center network optimization, including reducing the square footage of the Company’s Americas facilities, which together with phase one, reduced the Americas net operating footprint by approximately 30%. This phase of the program was designed to improve the utilization of the Company’s remaining facilities, better leverage its cost structure, reduce working capital, and improve execution of customer delivery requirements. As of December 31, 2017, the second phase was complete. On a combined basis, the total pre-tax cost for the Company’s transformation program related to its Americas and APMEA businesses was $59.8 million, including restructuring costs of $18.1 million, goodwill and intangible asset impairments of $13.5 million and other transformation and deployment costs of approximately $28.2 million. The other transformation and deployment costs included consulting and project management fees, inventory write-offs, and other associated costs. All costs associated with the Americas and APMEA transformation program were incurred as of December 31, 2017. The following table summarizes by type, the total incurred pre-tax restructuring costs for the Company’s transformation program related to its Americas and APMEA businesses (phase one and phase two combined): Facility Legal and Asset exit Severance consultancy write-downs and other Total (in millions) Costs incurred—2015 $ 8.5 $ 0.7 $ 1.6 $ 2.8 $ 13.6 Costs incurred—2016 (1.5) 0.2 2.9 0.5 2.1 Costs incurred—2017 — — 2.2 0.2 2.4 Total restructuring costs $ 7.0 $ 0.9 $ 6.7 $ 3.5 $ 18.1 Details of the restructuring reserve activity for the Company’s Americas and APMEA 2015 transformation program for the year ended December 31, 2018 are as follows: Facility Legal and Asset exit Severance consultancy write-downs and other Total (in millions) Balance at December 31, 2015 $ 5.0 $ 0.4 $ — $ 1.0 $ 6.4 Net pre-tax restructuring charges (1.5) 0.2 2.9 0.5 2.1 Utilization and foreign currency impact (2.3) (0.6) (2.9) (1.5) (7.3) Balance at December 31, 2016 $ 1.2 $ — $ — $ — $ 1.2 Net pre-tax restructuring charges — — 2.2 0.2 2.4 Utilization and foreign currency impact (1.0) — (2.2) (0.2) (3.4) Balance at December 31, 2017 $ 0.2 $ — $ — $ — $ 0.2 Net pre-tax restructuring charges — — — — — Utilization and foreign currency impact (0.2) — — — (0.2) Balance at December 31, 2018 $ — $ — $ — $ — $ — |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition | |
Revenue Recognition | ( 4) Revenue Recognition The Company is a leading supplier of products that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial and residential markets. The Company has designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that helps purify and conserve water. The Company distributes products through four primary distribution channels: wholesale, original equipment manufacturers (OEMs), specialty, and do-it-yourself (DIY). The Company operates in three geographic segments: Americas, Europe, and APMEA. Each of these segments sells similar products, which are comprised of the following principal product lines: · Residential & commercial flow control products—includes products typically sold into plumbing and hot water applications such as backflow preventers, water pressure regulators, temperature and pressure relief valves, and thermostatic mixing valves. · HVAC & gas products—includes commercial high - efficiency boilers, water heaters and heating solutions, hydronic and electric heating systems for under ‑ floor radiant applications, custom heat and hot water solutions, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications. HVAC is an acronym for heating, ventilation and air conditioning. · Drainage & water re ‑ use products—includes drainage products and engineered rain water harvesting solutions for commercial, industrial, marine and residential applications. · Water quality products—includes point ‑ of ‑ use and point ‑ of ‑ entry water filtration, conditioning and scale prevention systems for both commercial and residential applications. The following table disaggregates revenue, which is presented as net sales in the financial statements, for each reportable segment, by distribution channel and principal product line: Year ended December 31, 2018 (in millions) Distribution Channel Americas Europe APMEA Consolidated Wholesale $ 578.8 $ 314.2 $ 59.9 $ 952.9 OEM 79.0 150.0 1.4 230.4 Specialty 312.1 — 4.5 316.6 DIY 62.2 2.8 — 65.0 Total $ 1,032.1 $ 467.0 $ 65.8 $ 1,564.9 Year ended December 31, 2018 (in millions) Principal Product Line Americas Europe APMEA Consolidated Residential & Commercial Flow Control $ 582.0 $ 176.2 $ 46.2 $ 804.4 HVAC and Gas Products 289.2 201.6 16.2 507.0 Drainage and Water Re-use Products 73.1 87.8 2.2 163.1 Water Quality Products 87.8 1.4 1.2 90.4 Total $ 1,032.1 $ 467.0 $ 65.8 $ 1,564.9 The Company generally considers customer purchase orders, which in some cases are governed by master sales agreements, to represent the contract with a customer. The Company’s contracts with customers are generally for products only and typically do not include other performance obligations such as professional services, extended warranties, or other material rights. In situations where sales are to a distributor, the Company has concluded that its contracts are with the distributor as the Company holds a contract bearing enforceable rights and obligations only with the distributor. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 not to assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment from the Company’s manufacturing site or distribution center, or delivery to the customer’s named location. In certain circumstances, revenue from shipments to retail customers is recognized only when the product is consumed by the customer, as based on the terms of the arrangement, transfer of control is not satisfied until that point in time. In determining whether control has transferred, the Company considers if there is a present right to payment, physical possession and legal title, along with risks and rewards of ownership having transferred to the customer. In certain circumstances, the Company manufactures customized product without alternative use for its customers. However, as these arrangements do not entitle the Company to a right to payment of cost plus a profit for work completed, the Company has concluded that control transfers at the point in time and not over time. Occasionally, the Company receives orders for products to be delivered over multiple dates that may extend across reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. As scheduled delivery dates are within one year, under the optional exemption provided by ASC 606-10-50-14, revenues allocated to future shipments of partially completed contracts are not disclosed. The Company generally provides an assurance warranty that its products will substantially conform to the published specification. The Company’s liability is limited to either a credit equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial. The Company does not consider activities related to such warranty, if any, to be a separate performance obligation. For certain of its products, the Company will separately sell extended warranty and service policies to its customers. The Company considers the sale of the extended warranty a separate performance obligation. These policies typically are for periods ranging from one to three years. Payments received are deferred and recognized over the policy period. For all periods presented, the revenue recognized and the revenue deferred under these policies is not material to the consolidated financial statements. The timing of revenue recognition, billings and cash collections from the Company’s contracts with customers can vary based on the payment terms and conditions in the customer contracts. In some cases, customers will partially prepay for their goods; in other cases, after appropriate credit evaluations, payment is due in arrears. In addition, there are constraints which cause variability in the ultimate consideration to be recognized. These constraints typically include early payment discounts, volume rebates, rights of return, cooperative advertising, and market development funds. The Company includes these constraints in the estimated transaction price when there is a basis to reasonably estimate the amount of variable consideration. These estimates are based on historical experience, anticipated future performance and the Company’s best judgment at the time. When the timing of the Company’s recognition of revenue is different from the timing of payments made by the customer, the Company recognizes either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance). Contracts with payment in arrears are recognized as receivables. The opening and closing balances of the Company’s contract assets and contract liabilities are as follows: Contract Contract Contract Assets Liabilities - Current Liabilities - Noncurrent (in millions) Balance - January 1, 2018 $ 0.6 $ 11.3 $ 2.1 Change in period 1.1 0.2 0.3 Balance - April 1, 2018 $ 1.7 $ 11.5 $ 2.4 Change in period (0.3) 0.1 0.3 Balance - July 1, 2018 $ 1.4 $ 11.6 $ 2.7 Change in period 0.4 (0.4) — Balance - September 30, 2018 $ 1.8 $ 11.2 $ 2.7 Change in period (0.8) 0.1 — Balance - December 31, 2018 $ 1.0 $ 11.3 $ 2.7 The amount of revenue recognized during the year ended December 31, 2018 that was included in the opening contract liability balance was $11.3 million. This revenue consists primarily of revenue recognized for shipments of product which had been prepaid as well as the amortization of extended warranty and service policy revenue. The Company did not recognize any material revenue from obligations satisfied in prior periods. The change in Contract Liabilities is not material for the year ended December 31, 2018. There were no impairment losses related to Contract Assets for the year ended December 31, 2018. The Company incurs costs to obtain and fulfill a contract; however, the Company has elected the practical expedient under ASC 340-40-24-4 to recognize all incremental costs to obtain a contract as an expense when incurred if the amortization period is one year or less. The Company has elected to treat shipping and handling activities performed after the customer has obtained control of the related goods as a fulfillment cost and the related cost is accrued for in conjunction with the recording of revenue for the goods. |
Sale of Business
Sale of Business | 12 Months Ended |
Dec. 31, 2018 | |
Sale of Business. | |
Sale of Business | (5) Sale of Business Gain on Sale of China Operating Subsidiary On September 22, 2015, the Company signed an agreement to sell an operating subsidiary in China that was dedicated to the production of non-core products. The sale was finalized in the second quarter of 2016, and the Company received proceeds of $8.4 million from the sale as of the fourth quarter of 2016. The Company recognized a pre-tax gain of $8.7 million, which includes a non-cash accumulated currency translation adjustment of $7.3 million. The net after-tax gain was approximately $8.3 million. |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2018 | |
Business Acquisitions | |
Business Acquisitions | (6) Business Acquisitions PVI Industries, LLC On November 2, 2016, the Company acquired 100% of the shares of PVI Riverside Holdings, Inc., the parent company of PVI Industries, LLC (“PVI”). The aggregate purchase price, including the final working capital adjustment, was approximately $79.1 million. PVI is a leading manufacturer of commercial stainless steel water heating equipment, focused on the high capacity market in North America and is based in Fort Worth, Texas. PVI’s water heater product offering complements AERCO’s boiler products, allowing the Company to address customers’ heating and hot water requirements. The results for PVI are included in the Company’s Americas segment. The Company accounted for the transaction as a purchased business combination and the acquisition was funded partially with available cash and partially from borrowings under the Company’s Credit Agreement. During the second quarter of 2017, the Company finalized the purchase price allocation for the PVI purchase. The acquisition resulted in the recognition of $41.1 million in goodwill and $31.0 million in intangible assets. The intangible assets acquired consist of customer relationships valued at $17.6 million with estimated lives of 15 years, developed technology valued at $10.2 million with estimated lives of 10 years, and the trade name valued at $3.2 million with an estimated life of 20 years. The goodwill is attributable to the workforce of PVI and the strategic platform adjacency that will allow Watts to extend its product offerings as a result of the acquisition. Approximately $6.9 million of the goodwill is deductible for tax purposes. |
Goodwill & Intangibles
Goodwill & Intangibles | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangibles | |
Goodwill & Intangibles | (7) Goodwill & Intangibles Goodwill The Company performs its annual goodwill impairment testing for each reporting unit as of fiscal October month end or earlier if there is a triggering event or circumstance that indicates an impairment loss may have occurred. As of the October 28, 2018 testing date, the Company had $544.3 million of goodwill on its balance sheet. In 2018, the Company had eight reporting units. One of these reporting units, Water Quality, had no goodwill. The Company performed a qualitative analysis for each of the seven remaining reporting units, which include Blücher, Dormont, US Drains, Europe, Residential and Commercial, Heating and Hot Water Solutions (“HHWS”) and APMEA. As a result of the qualitative analyses, the Company determined that the fair values of the reporting units were more likely than not greater than the carrying amounts. In 2018, the Company did not need to proceed beyond the qualitative analysis, and no goodwill impairments were recorded. In the fourth quarter of 2017, the Company performed a quantitative impairment analysis for the HHWS reporting unit in connection with the annual strategic plan and due to underperformance to budget, primarily caused by continuing softness in the condensing boiler market, weakness in the Company’s tankless water heater products and competitive pricing pressure. The Company estimated the fair value of the reporting unit using a weighted calculation of the income approach and the market approach. The income approach calculated the present value of expected future cash flows. The guideline public company method (market approach) calculated the estimated fair values based on valuation multiples derived from stock prices and enterprise values of publicly traded companies that are comparable to the reporting unit. The estimated fair value of the reporting unit exceeded the carrying value in 2017 and therefore, no impairment was recorded. The changes in the carrying amount of goodwill by geographic segment are as follows: December 31, 2018 Gross Balance Accumulated Impairment Losses Net Goodwill Acquired Foreign Balance During Currency Balance Balance Impairment Balance January 1, the Translation December 31, January 1, Loss During December 31, December 31, 2018 Period (1) and Other 2018 2018 the Period 2018 2018 (in millions) Americas $ 437.4 1.5 (0.8) 438.1 $ (24.5) — (24.5) 413.6 Europe 249.3 — (5.6) 243.7 (129.7) — (129.7) 114.0 APMEA 30.9 — (0.8) 30.1 (12.9) — (12.9) 17.2 Total $ 717.6 1.5 (7.2) 711.9 $ (167.1) — (167.1) 544.8 (1) Americas goodwill additions during 2018 relate to immaterial acquisitions. December 31, 2017 Gross Balance Accumulated Impairment Losses Net Goodwill Acquired Foreign Balance During Currency Balance Balance Impairment Balance January 1, the Translation December 31, January 1, Loss During December 31, December 31, 2017 Period and Other 2017 2017 the Period 2017 2017 (in millions) Americas $ 434.7 2.0 0.7 437.4 $ (24.5) — (24.5) 412.9 Europe 234.9 — 14.4 249.3 (129.7) — (129.7) 119.6 APMEA 30.2 — 0.7 30.9 (12.9) — (12.9) 18.0 Total $ 699.8 2.0 15.8 717.6 $ (167.1) — (167.1) 550.5 Long-Lived Assets Indefinite‑lived intangibles are tested for impairment at least annually or more frequently if events or circumstances, such as a change in business conditions, indicate that it is “more likely than not” that an intangible asset might be impaired. The Company performs its annual indefinite‑lived intangibles impairment assessment in the fourth quarter of each year. For the 2018, 2017 and 2016 impairment assessments, the Company performed quantitative assessments for all indefinite‑lived intangible assets. The methodology employed was the relief from royalty method, a subset of the income approach. Based on the results of the assessment, the Company did not recognize an impairment on any indefinite-lived intangibles in 2018 or 2017. In 2016, Company recognized non‑cash pre‑tax impairment charges of approximately $0.4 million related to a trade name in the Europe segment. Intangible assets with estimable lives and other long‑lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of intangible assets with estimable lives and other long‑lived assets is measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted pre-tax cash flows expected to be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the related estimated fair value. Estimated fair value is based on either discounted future pre-tax operating cash flows or appraised values, depending on the nature of the asset. The Company determines the discount rate for this analysis based on the weighted average cost of capital using the market and guideline public companies for the related businesses and does not allocate interest charges to the asset or asset group being measured. Judgment is required to estimate future operating cash flows. In the fourth quarter of 2017, the Company recognized a $1.0 million impairment charge in the Americas segment for a technology asset as a change in market expectations indicated the carrying amount of this asset was no longer recoverable. In 2016, the Company recognized a $0.1 million impairment charge on long-lived assets. Intangible assets include the following: December 31, 2018 December 31, 2017 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount (in millions) Patents $ 16.1 $ (15.8) $ 0.3 $ 16.1 $ (15.4) $ 0.7 Customer relationships 232.9 (146.9) 86.0 233.2 (133.5) 99.7 Technology 54.6 (27.3) 27.3 53.9 (23.1) 30.8 Trade names 26.1 (11.5) 14.6 25.5 (9.7) 15.8 Other 4.3 (3.5) 0.8 6.9 (6.0) 0.9 Total amortizable intangibles 334.0 (205.0) 129.0 335.6 (187.7) 147.9 Indefinite-lived intangible assets 36.2 — 36.2 37.3 — 37.3 $ 370.2 $ (205.0) $ 165.2 $ 372.9 $ (187.7) $ 185.2 Aggregate amortization expense for amortized intangible assets for 2018, 2017 and 2016 was $19.6 million, $22.5 million and $20.8 million, respectively. Additionally, future amortization expense on amortizable intangible assets is expected to be $17.2 million for 2019, $16.2 million for 2020, $14.6 million for 2021, $13.5 million for 2022, and $11.6 million for 2023. Amortization expense is provided on a straight‑line basis over the estimated useful lives of the intangible assets. The weighted‑average remaining life of total amortizable intangible assets is 12.1 years. Patents, customer relationships, technology, trade names and other amortizable intangibles have weighted‑average remaining lives of 3.3 years, 11.0 years, 7.2 years, 13.7 years and 19.1 years, respectively. Indefinite‑lived intangible assets primarily include trade names and trademarks. |
Inventories, net
Inventories, net | 12 Months Ended |
Dec. 31, 2018 | |
Inventories, net | |
Inventories, net | (8) Inventories, net Inventories consist of the following: December 31, 2018 2017 (in millions) Raw materials $ 87.4 $ 81.8 Work-in-process 17.3 17.5 Finished goods 182.1 159.8 $ 286.8 $ 259.1 Raw materials, work‑in‑process and finished goods are net of valuation reserves of $27.4 million and $28.2 million as of December 31, 2018 and 2017, respectively. Finished goods of $17.4 million and $17.5 million as of December 31, 2018 and 2017, respectively, were consigned. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | (9) Property, Plant and Equipment Property, plant and equipment consist of the following: December 31, 2018 2017 (in millions) Land $ 14.1 $ 14.5 Buildings and improvements 165.7 164.6 Machinery and equipment 342.2 336.9 Construction in progress 15.4 9.8 537.4 525.8 Accumulated depreciation (335.5) (327.3) $ 201.9 $ 198.5 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | (10) Income Taxes The significant components of the Company’s deferred income tax liabilities and assets are as follows: December 31, 2018 2017 (in millions) Deferred income tax liabilities: Excess tax over book depreciation $ 16.2 $ 13.5 Intangibles 33.8 37.1 Goodwill 17.4 16.3 Foreign earnings 5.1 14.6 Other 3.2 5.7 Total deferred tax liabilities 75.7 87.2 Deferred income tax assets: Accrued expenses 16.0 17.8 Capital loss carry forward — 0.3 Foreign tax credits 33.5 22.0 Net operating loss carry forward 6.1 6.5 Inventory reserves 6.0 5.8 Other 7.1 9.9 Total deferred tax assets 68.7 62.3 Less: valuation allowance (29.9) (28.7) Net deferred tax assets 38.8 33.6 Net deferred tax liabilities $ (36.9) $ (53.6) The provision for income taxes is based on the following pre‑tax income: Year Ended December 31, 2018 2017 2016 (in millions) Domestic $ 103.2 $ $ 64.8 Foreign 71.4 63.0 $ 174.6 $ 143.1 $ 127.8 The provision for income taxes consists of the following: Year Ended December 31, 2018 2017 2016 (in millions) Current tax expense: Federal $ 24.7 $ 42.1 $ 18.3 Foreign 29.0 17.3 17.2 State 7.7 4.2 3.9 61.4 63.6 39.4 Deferred tax expense (benefit): Federal (3.2) 4.0 3.6 Foreign (7.7) 8.5 0.6 State (1.9) 5.9 — (12.8) 18.4 4.2 Deferred tax remeasurement of the 2017 Tax Act (2.0) (12.0) — $ 46.6 $ 70.0 $ 43.6 The 2017 Tax Cuts and Jobs Act (“2017 Tax Act”) was enacted on December 22, 2017 and has resulted in significant changes to the U.S. corporate income tax system. These changes included lowering the U.S. Corporate income tax rate from 35% to 21% and the elimination or reduction of certain domestic deductions and credits. The 2017 Tax Act also transitioned international taxation from a worldwide system to a modified territorial system creating new taxes on certain foreign-sourced earnings and certain related party payments, which are referred to as the Global Intangible Low-taxed Income Tax and the Annual Anti-Base Erosion Tax, respectively. The 2017 Tax Act also imposed a one-time mandatory deemed repatriation tax (“Toll Tax”) on foreign subsidiaries’ previously untaxed accumulated foreign earnings. Due to the timing of the enactment and the complexity involved applying the provisions of the 2017 Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its December 31, 2017 financial statements. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Adjustments made to the provisional amounts allowed under SAB 118 were identified and recorded as discrete adjustments as described in the following paragraphs. Changes in tax rates and tax laws are accounted for in the period of enactment. Therefore, the Company recorded a provisional tax expense of $25.1 million related to the 2017 Tax Act, as of December 31, 2017. This amount also included an immaterial benefit to the Company’s 2017 current year tax expense. During the year ended December 31, 2018, the Company finalized the impact of the 2017 Tax Act and recorded a benefit of $3.7 million, reducing the net impact to $21.4 million. Included in the 2018 adjustment was a $10.6 million benefit related to the determination of our foreign tax credits and partial release of a related valuation allowance, partially offset by additional Toll Tax of $10.2 million. Toll Tax The 2017 Tax Act imposed a one-time Toll Tax requiring the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and cash equivalents and 8% on the remaining earnings. For the year ended December 31, 2017, the Company recorded a provisional amount of $23.3 million related to the Toll Tax. As of December 31, 2018, the Company recorded tax expense based on final guidance on the 2017 Tax Act of $10.2 million, resulting in a total Toll Tax charge of $33.5 million which is being paid over eight years starting in 2018 and will not accrue interest. Deferred Tax Remeasurement As the Company’s deferred tax liabilities exceeded the balance of the Company’s deferred tax assets, for the year ended December 31, 2017 the Company recorded a provisional amount of tax benefit of $12 million, and as of December 31, 2018 the Company recorded a final tax benefit of $2 million, for a net $14 million benefit, reflecting the decrease in the U.S. Corporate income tax rate. Tax on Foreign Earnings As a result of the 2017 Tax Act, the Company can repatriate its cumulative undistributed foreign earning back to the U.S. with minimal U.S. income tax consequences other than the one-time Toll Tax. The Company recorded a provisional amount of deferred tax expense of $14.6 million, and as of December 31, 2018 the Company recorded a final tax benefit of $2 million, for a net deferred tax expense of $12.6 million for the future repatriation of foreign earnings. Actual income taxes reported are different than what would have been computed by applying the federal statutory tax rate to income before income taxes. The reasons for these differences are as follows: Year Ended December 31, 2018 2017 2016 (in millions) Computed expected federal income expense $ 36.6 $ 50.1 $ 44.7 State income taxes, net of federal tax benefit 5.3 2.7 2.2 Foreign tax rate differential 2.7 (6.7) (6.7) Impact of the 2017 Tax Act (3.7) 25.1 — Unrecognized tax benefits 3.2 — — Other, net 2.5 (1.2) 3.4 $ 46.6 $ 70.0 $ 43.6 At December 31, 2018, the Company had foreign net operating loss carry forwards of $24.6 million for income tax purposes before considering valuation allowances; $24.6 million of the losses can be carried forward indefinitely. The net operating losses consist of $24.6 million related to Austrian operations. At December 31, 2018, all U.S. capital loss carry forwards were utilized or expired. At December 31, 2018 and December 31, 2017, the Company had foreign tax credit carry forwards of $33.5 million and $22.0 million, respectively, for income tax purposes before considering valuation allowances. The foreign tax credit carryforwards expire in 2027 and 2028. At December 31, 2018 and December 31, 2017, the Company had valuation allowances of $29.9 million and $28.7 million, respectively. At December 31, 2018, $23.8 million related to foreign tax credits and $6.1 million related to Austrian net operating losses. At December 31, 2017, $0.3 million related to U.S. capital losses, $22.0 million related to foreign tax credits and $6.4 million related to Austrian net operating losses. Management believes that the ability of the Company to use such foreign tax credits and losses within the applicable carry forward period does not rise to the level of the more likely than not threshold. The Company does not have a valuation allowance on other deferred tax assets, as management believes that it is more likely than not that the Company will recover the net deferred tax assets. Management believes it is more likely than not that the future reversals of the deferred tax liabilities, together with forecasted income, will be sufficient to fully recover the deferred tax assets. After December 31, 2017 the Company considered all of its foreign earnings to be permanently reinvested outside of the U.S. and has no plans to repatriate these foreign earnings to the U.S. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses and Other Liabilities | |
Accrued Expenses and Other Liabilities | (11) Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following: December 31, 2018 2017 (in millions) Commissions and sales incentives payable $ 46.3 $ 40.1 Product liability and workers’ compensation 22.3 24.5 Other 54.6 57.6 Income taxes payable 7.4 3.6 $ 130.6 $ 125.8 |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
Dec. 31, 2018 | |
Financing Arrangements | |
Financing Arrangements | (12) Financing Arrangements The Company’s debt consists of the following: December 31, 2018 2017 (in millions) 5.05% notes due June 2020 $ 75.0 75.0 Term Loan due February 2021 255.0 277.5 Line of Credit due February 2021 25.0 147.0 Total debt outstanding 355.0 499.5 Less debt issuance costs (deduction from debt liability) (1.6) (2.4) Less current maturities (30.0) (22.5) Total long-term debt $ 323.4 $ 474.6 Principal payments during each of the next five years and thereafter are due as follows (in millions): 2019—$30.0; 2020—$105.0; 2021—$220.0; and 2022 and thereafter - $0. On February 12, 2016, the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, certain subsidiaries of the Company who become borrowers under the Credit Agreement, JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender and Letter of Credit Issuer, and the other lenders referred to therein. The Credit Agreement provides for a $500 million, five‑year, senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a sublimit of up to $100 million in letters of credit. As of December 31, 2018, the Company had $25.0 million drawn on the line of credit. The Credit Agreement also provides for a $300 million, five‑year, term loan facility (the “Term Loan Facility”) available to the Company in a single draw, of which the entire $300 million had been drawn in February 2016. The Company had $255.0 million of borrowings outstanding on the term loan as of December 31, 2018. Borrowings outstanding under the Revolving Credit Facility bear interest at a fluctuating rate per annum equal to an applicable percentage defined as (i) in the case of Eurocurrency rate loans, the ICE Benchmark Administration LIBOR rate plus an applicable percentage, ranging from 0.975% to 1.45%, determined by reference to the Company’s consolidated leverage ratio, or (ii) in the case of base rate loans and swing line loans, the highest of (a) the federal funds rate plus 0.5%, (b) the rate of interest in effect for such day as announced by JPMorgan Chase Bank, N.A. as its “prime rate,” and (c) the ICE Benchmark Administration LIBOR rate plus 1.0%, plus an applicable percentage, ranging from 0.00% to 0.45%, determined by reference to the Company’s consolidated leverage ratio. Borrowings outstanding under the Term Loan Facility will bear interest at a fluctuating rate per annum equal to an applicable percentage defined as the ICE Benchmark Administration LIBOR rate plus an applicable percentage, ranging from 1.125% to 1.75%, determined by reference to the Company’s consolidated leverage ratio. The interest rates as of December 31, 2018 on the Revolving Credit Facility and on the Term Loan Facility were 3.50% and 3.86%, respectively. The loan under the Term Loan Facility amortizes as follows: 0% per annum during the first year, 7.5% in the second and third years, 10% in the fourth and fifth years, and the remaining unpaid balance paid in full on the maturity date. Payments when due are made ratably each year in quarterly installments. The Company paid quarterly installments of $22.5 million during 2018. In addition to paying interest under the Credit Agreement, the Company is also required to pay certain fees in connection with the credit facility, including, but not limited to, an unused facility fee and letter of credit fees. The Credit Agreement matures on February 12, 2021, subject to extension under certain circumstances and subject to the terms of the Credit Agreement. The Company may repay loans outstanding under the Credit Agreement from time to time without premium or penalty, other than customary breakage costs, if any, and subject to the terms of the Credit Agreement. Once repaid, amounts borrowed under the Term Loan Facility may not be borrowed again. The Company maintains letters of credit that guarantee its performance or payment to third parties in accordance with specified terms and conditions. Amounts outstanding were $25.8 million as of December 31, 2018 and $25.7 million as of December 31, 2017. The Company’s letters of credit are primarily associated with insurance coverage. The Company’s letters of credit generally expire within one year of issuance and are drawn down against the Revolving Credit Facility. These instruments may exist or expire without being drawn down. Therefore, they do not necessarily represent future cash flow obligations. As of December 31, 2018, the Company had $449.2 million of unused and available credit under the Credit Agreement and $25.8 million of stand-by letters of credit outstanding on the Credit Agreement. As of December 31, 2018, the Company was in compliance with all covenants related to the Credit Agreement. On June 18, 2010, the Company entered into a note purchase agreement with certain institutional investors (the 2010 Note Purchase Agreement). Pursuant to the 2010 Note Purchase Agreement, the Company issued senior notes of $75.0 million in principal, due June 18, 2020. The Company pays interest on the outstanding balance of the Notes at the rate of 5.05% per annum, payable semi-annually on June 18 th and December 18 th until the principal on the Notes shall become due and payable. The Company may, at its option, upon notice, and subject to the terms of the 2010 Note Purchase Agreement, prepay at any time all or part of the Notes in an amount not less than $1.0 million by paying the principal amount plus a make-whole amount, which is dependent upon the yield of respective U.S. Treasury securities. The 2010 Note Purchase Agreement includes operational and financial covenants, with which the Company is required to comply, including, among others, maintenance of certain financial ratios and restrictions on additional indebtedness, liens and dispositions. As of December 31, 2018, the Company was in compliance with all covenants related to the 2010 Note Purchase Agreement. |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2018 | |
Common Stock. | |
Common Stock | (13) Common Stock The Class A common stock and Class B common stock have equal dividend and liquidation rights. Each share of the Company’s Class A common stock is entitled to one vote on all matters submitted to stockholders and each share of Class B common stock is entitled to ten votes on all such matters. Shares of Class B common stock are convertible into shares of Class A common stock on a one‑to‑one basis at the option of the holder. As of December 31, 2018, the Company had reserved a total of 2,581,389 shares of Class A common stock for issuance under its stock‑based compensation plans and 6,329,290 shares for conversion of Class B common stock to Class A common stock. On July 27, 2015, the Company’s Board of Directors authorized the repurchase of up to $100 million of the Company’s Class A common stock from time to time on the open market or in privately negotiated transactions. In connection with this stock repurchase program, the Company entered into a Rule 10b5-1 plan, which permits shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The repurchase program may be suspended or discontinued at any time, subject to the terms of the Rule 10b5-1 plan the Company entered into with respect to the repurchase program. As of December 31, 2018, there was approximately $11.8 million remaining authorized for share repurchases under this program. The following table summarizes the cost and the number of shares of Class A common stock repurchased under the July 27, 2015 programs for the years ended December 31, 2018 and 2017: Year Ended December 31, 2018 2017 Number of shares Cost of shares Number of shares Cost of shares repurchased repurchased repurchased repurchased (amounts in millions, except share amount) Stock repurchase programs: July 27, 2015 340,106 26.0 277,886 18.2 Total 340,106 $ 26.0 277,886 $ 18.2 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | (14) Stock‑Based Compensation As of December 31, 2018, the Company maintains one stock incentive plan, the Second Amended and Restated 2004 Stock Incentive Plan (the “2004 Stock Incentive Plan”). At December 31, 2018, 1,232,137 shares of Class A common stock were authorized for future grants of new equity awards under this plan. The Company grants shares of restricted stock and deferred stock awards to key employees and stock awards to non‑employee members of the Company’s Board of Directors under the 2004 Stock Incentive Plan. Stock awards to non‑employee members of the Company’s Board of Directors vest immediately. Employees’ restricted stock awards and deferred stock awards typically vest over a three‑year period at the rate of one‑third per year. The restricted stock awards and deferred stock awards are amortized to expense on a straight-line basis over the vesting period. The Company also grants performance stock units to key employees under the 2004 Stock Incentive Plan. Performance stock units cliff vest at the end of a performance period set by the Compensation Committee of the Board of Directors at the time of grant. Upon vesting, the number of shares of the Company’s Class A common stock awarded to each performance stock unit recipient will be determined based on the Company’s performance relative to certain performance goals set at the time the performance stock units were granted. The recipient of a performance stock unit award may earn from zero shares to twice the number of target shares awarded to such recipient. The performance stock units are amortized to expense over the vesting period, and based on the Company’s performance relative to the performance goals, may be adjusted. Changes to the estimated shares expected to vest will result in adjustments to the related share-based compensation expense that will be recorded in the period of change. If the performance goals are not met, no awards are earned and previously recognized compensation expense is reversed. The Company granted performance stock units in 2018, 2017 and 2016. The performance goals for the performance stock units are based on the compound annual growth rate of the Company’s revenue over the three-year performance period and the Company’s return on invested capital (“ROIC”) for the third year of the performance period. Beginning in 2015, the Company stopped granting stock options as part of its annual equity awards to employees. Previously under the 2004 Stock Incentive Plan, key employees were granted nonqualified stock options to purchase the Company’s Class A common stock. Options typically became exercisable over a four-year period at the rate of 25% per year and expire ten years after the grant date. However, most options granted in 2014 become exercisable over a three-year period at a rate of one-third per year. Options granted under the plan may have exercise prices of not less than 100% of the fair market value of the Class A common stock on the date of grant. The Company’s practice was to grant all options at fair market value on the grant date. Upon exercise of options, the Company issues shares of Class A common stock. The Company also has a Management Stock Purchase Plan that allows for the granting of restricted stock units (RSUs) to key employees. On an annual basis, key employees may elect to receive a portion of their annual incentive compensation in RSUs instead of cash. Participating employees may use up to 50% of their annual incentive bonus to purchase RSUs for a purchase price equal to 80% of the fair market value of the Company’s Class A common stock as of the date of grant. RSUs vest either annually over a three-year period from the grant date or upon the third anniversary of the grant date. Receipt of the shares underlying RSUs is deferred for a minimum of three years, or such greater number of years as is chosen by the employee, from the date of grant. An aggregate of 2,000,000 shares of Class A common stock may be issued under the Management Stock Purchase Plan. At December 31, 2018, 750,421 shares of Class A common stock were authorized for future grants under the Company’s Management Stock Purchase Plan. 2004 Stock Incentive Plan The following is a summary of unvested restricted stock and deferred stock awards activity and related information: Year Ended December 31, 2018 2017 2016 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value (Shares in thousands) Unvested at beginning of year 217 $ 57.31 $ $ Granted 153 80.52 Cancelled/Forfeitures (126) 59.52 Vested (28) 66.24 Unvested at end of year 216 $ 71.28 $ $ The total fair value of shares vested during 2018, 2017 and 2016 was $10.2 million, $7.7 million and $7.9 million, respectively. At December 31, 2018, total unrecognized compensation cost related to unvested restricted stock and deferred stock awards was approximately $10.0 million with a total weighted average remaining term of 1.70 years. For 2018, 2017 and 2016, the Company recognized compensation costs of $7.6 million, $6.9 million and $7.6 million, respectively. The aggregate intrinsic value of restricted stock and deferred shares granted and outstanding approximated $13.9 million representing the total pre‑tax intrinsic value based on the Company’s closing Class A common stock price of $64.53 as of December 31, 2018. The following is a summary of unvested performance stock award activity and related information: Year Ended December 31, 2018 2017 2016 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value (Shares in thousands) Unvested at beginning of year 273 $ 58.23 267 $ 56.96 201 $ 57.98 Granted 96 81.51 98 60.45 107 55.27 Cancelled/Forfeitures (80) 58.96 (38) 57.12 (41) 57.56 Vested (40) 63.43 (54) 56.81 — — Unvested at end of year 249 $ 66.15 273 $ 58.23 267 $ 56.96 The total fair value of shares vested during 2018 and 2017 was $5.8 million and $3.5 million, respectively. For 2016, no performance stock awards vested. At December 31, 2018, total unrecognized compensation cost related to unvested performance stock awards was approximately $6.6 million with a total weighted average remaining term of 1.51 years. For 2018, 2017 and 2016, the Company recognized compensation costs of $5.2 million, $4.8 million and $4.0 million, respectively. The aggregate intrinsic value of performance shares granted and outstanding approximated $16.1 million representing the total pre-tax intrinsic value based on the Company’s closing Class A common stock price of $64.53 as of December 31, 2018. The following is a summary of stock option activity and related information: Year Ended December 31, 2018 2017 2016 Weighted Weighted Weighted Weighted Average Average Average Average Exercise Intrinsic Exercise Exercise Options Price Value Options Price Options Price (Options in thousands) Outstanding at beginning of year 95 $ 54.91 130 $ 54.46 362 $ 48.46 Granted — — — — — — Cancelled/Forfeitures — — (3) 55.81 (43) 52.93 Exercised (46) 54.55 (32) 53.19 (189) 43.31 Outstanding at end of year 49 $ 55.25 $ 9.28 95 $ 54.91 130 $ 54.46 Exercisable at end of year 49 $ 55.25 $ 9.28 93 $ 54.85 82 $ 53.38 As of December 31, 2018, all stock options that had been granted under the 2004 Stock Incentive plan had vested. For 2018 the Company did not recognize any compensation costs for options. For 2017 and 2016, the Company recognized compensation cost for options of $0.5 million and $1.1 million, respectively. As of December 31, 2018, there was no unrecognized compensation cost related to unvested options. As of December 31, 2018, the aggregate intrinsic value of exercisable options was approximately $0.5 million, representing the total pre‑tax intrinsic value, based on the Company’s closing Class A common stock price of $64.53 as of December 31, 2018, which would have been received by the option holders had all option holders exercised their options as of that date. The total intrinsic value of options exercised for 2018, 2017 and 2016 was approximately $1.2 million, $0.5 million and $3.5 million, respectively. The following table summarizes information about options outstanding at December 31, 2018: Options Outstanding Options Exercisable Weighted Average Weighted Average Weighted Average Number Remaining Contractual Exercise Number Exercise Range of Exercise Prices Outstanding Life (years) Price Exercisable Price (Options in thousands) $29.05-$54.76 17,933 3.47 $ 50.64 17,933 $ 50.64 $57.47–$57.47 22,372 4.81 57.47 22,372 57.47 $57.95–$60.10 8,446 5.01 59.17 8,446 59.17 48,751 4.35 $ 55.25 48,751 $ 55.25 Management Stock Purchase Plan Total unrecognized compensation cost related to unvested RSUs was approximately $0.8 million at December 31, 2018 with a total weighted average remaining term of 1.21 years. For 2018, 2017 and 2016, the Company recognized compensation cost of $1.0 million, $1.0 million and $0.7 million, respectively. Dividends declared for RSUs, that are paid to individuals, that remain unpaid at December 31, 2018 total approximately $0.1 million. A summary of the Company’s RSU activity and related information is shown in the following table: Year Ended December 31, 2018 2017 2016 Weighted Weighted Weighted Weighted Average Average Average Average Purchase Intrinsic Purchase Purchase RSUs Price Value RSUs Price RSUs Price (RSU’s in thousands) Outstanding at beginning of year 174 $ 39.68 148 $ 36.37 101 $ 36.14 Granted 36 61.84 47 49.92 89 35.41 Cancelled/Forfeitures (10) 48.82 (3) 41.55 (28) 32.25 Settled (46) 37.34 (18) 39.09 (14) 36.91 Outstanding at end of year 154 $ 45.02 19.51 $ 174 $ 39.68 148 $ 36.37 Vested at end of year 66 $ 38.17 26.36 $ 57 $ 36.26 28 $ 37.78 As of December 31, 2018, the aggregate intrinsic values of outstanding and vested RSUs were approximately $3.0 million and $1.7 million, respectively, representing the total pre‑tax intrinsic value, based on the Company’s closing Class A common stock price of $64.53 as of December 31, 2018, which would have been received by the RSUs holders had all RSUs settled as of that date. The total intrinsic value of RSUs settled for 2018, 2017 and 2016 was approximately $1.8 million, $0.4 million and $1.5 million, respectively. Upon settlement of RSUs, the Company issues shares of Class A common stock. The following table summarizes information about RSUs outstanding at December 31, 2018: RSUs Outstanding RSUs Vested Weighted Average Weighted Average Number Purchase Number Purchase Range of Purchase Prices Outstanding Price Vested Price (RSUs in thousands) $35.41-$40.27 80 $ 35.47 54 $ 35.50 $49.92-$61.84 74 55.37 12 49.92 154 $ 45.02 66 $ 38.17 The fair value of each share issued under the Management Stock Purchase Plan is estimated on the date of grant, using the Black‑Scholes‑Merton Model, based on the following weighted average assumptions: Year Ended December 31, 2018 2017 2016 Expected life (years) 3.0 3.0 Expected stock price volatility 24.1 % 25.0 % % Expected dividend yield 1.0 % 1.2 % % Risk-free interest rate 2.4 % 1.5 % % The risk‑free interest rate is based upon the U.S. Treasury yield curve at the time of grant for the respective expected life of the RSUs. The expected life (estimated period of time outstanding) of RSUs and volatility were calculated using historical data. The expected dividend yield of stock is the Company’s best estimate of the expected future dividend yield. The above assumptions were used to determine the weighted average grant‑date fair value of RSUs granted of $21.80, $16.84 and $18.15 during 2018, 2017 and 2016, respectively. The Company distributed dividends of $0.82 per share for 2018, $0.75 per share for 2017 and $0.71 per share for 2016 on the Company’s Class A common stock and Class B common stock. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefit Plans | |
Employee Benefit Plans | (15) Employee Benefit Plans The Company’s domestic employees are eligible to participate in the Company’s 401(k) savings plan. Since January 1, 2012, the Company has provided a base contribution of 2% of an employee’s salary, regardless of whether the employee participates in the plan. Further, the Company matches the contribution of up to 100% of the first 4% of an employee’s contribution. The Company’s match contributions for the years ended December 31, 2018, 2017 and 2016, were $6.1 million, $5.0 million and $5.4 million, respectively. Charges for Europe pension plans approximated $3.9 million, $4.1 million and $4.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. These costs relate to plans administered by certain European subsidiaries, with benefits calculated according to government requirements and paid out to employees upon retirement or change of employment. |
Contingencies and Environmental
Contingencies and Environmental Remediation | 12 Months Ended |
Dec. 31, 2018 | |
Contingencies and Environmental Remediation | |
Contingencies and Environmental Remediation | (16) Contingencies and Environmental Remediation Accrual and Disclosure Policy The Company is a defendant in numerous legal matters arising from its ordinary course of operations, including those involving product liability, environmental matters, and commercial disputes. The Company reviews its lawsuits and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for matters when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company does not establish accruals for such matters when the Company does not believe both that it is probable that a loss has been incurred and that the amount of the loss can be reasonably estimated. The Company’s assessment of whether a loss is probable is based on its assessment of the ultimate outcome of the matter following all appeals. Under the FASB issued ASC 450 “Contingencies”, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight”. Thus, references to the upper end of the range of reasonably possible loss for cases in which the Company is able to estimate a range of reasonably possible loss mean the upper end of the range of loss for cases for which the Company believes the risk of loss is more than slight. There may continue to be exposure to loss in excess of any amount accrued. When it is possible to estimate the reasonably possible loss or range of loss above the amount accrued for the matters disclosed, that estimate is aggregated and disclosed. The Company records legal costs associated with its legal contingencies as incurred, except for legal costs associated with product liability claims which are included in the actuarial estimates used in determining the product liability accrual. As of December 31, 2018, the Company estimates that the aggregate amount of reasonably possible loss in excess of the amount accrued for its legal contingencies is approximately $5.3 million pre‑tax. With respect to the estimate of reasonably possible loss, management has estimated the reasonably possible loss based on (i) the amount of money damages claimed, where applicable, (ii) the allegations and factual development to date, (iii) available defenses based on the allegations, and/or (iv) other potentially liable parties. This estimate is based upon currently available information and is subject to significant judgment and a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimate will change from time to time, and actual results may vary significantly from the current estimate. In the event of an unfavorable outcome in one or more of the matters, the ultimate liability may be in excess of amounts currently accrued, if any, and may be material to the Company’s operating results or cash flows for a particular quarterly or annual period. However, based on information currently known to it, management believes that the ultimate outcome of all matters, as they are resolved over time, is not likely to have a material adverse effect on the financial condition of the Company, though the outcome could be material to the Company’s operating results for any particular period depending, in part, upon the operating results for such period. Product Liability The Company is subject to a variety of potential liabilities in connection with product liability cases. The Company maintains a high self-insured retention limit within its product liability and general liability coverage, which the Company believes to be generally in accordance with industry practices. For product liability cases in the U.S., management establishes its product liability accrual, which includes legal costs associated with accrued claims. For its most significant volume of liability matters, the Company utilizes third‑party actuarial valuations which incorporate historical trend factors and the Company’s specific claims experience derived from loss reports provided by third‑party claims administrators. The product liability accrual is established after considering any applicable insurance coverage. Changes in the nature of product liability claims or the actual settlement amounts could affect the adequacy of the estimates and require changes to the provisions. Because the liability is an estimate, the ultimate liability may be more or less than reported. Environmental Remediation The Company has been named as a potentially responsible party with respect to a limited number of identified contaminated sites. The levels of contamination vary significantly from site to site as do the related levels of remediation efforts. Environmental liabilities are recorded based on the most probable cost, if known, or on the estimated minimum cost of remediation. Accruals are not discounted to their present value, unless the amount and timing of expenditures are fixed and reliably determinable. The Company accrues estimated environmental liabilities based on assumptions, which are subject to a number of factors and uncertainties. Circumstances that can affect the reliability and precision of these estimates include identification of additional sites, environmental regulations, level of clean‑up required, technologies available, number and financial condition of other contributors to remediation and the time period over which remediation may occur. The Company recognizes changes in estimates as new remediation requirements are defined or as new information becomes available. Chemetco, Inc. Superfund Site, Hartford, Illinois In August 2017, Watts Regulator Co. (a wholly-owned subsidiary of the Company) received a “Notice of Environmental Liability” from the Chemetco Site Group (“Group”) alleging that it is a potentially responsible party for the Chemetco, Inc. Superfund Site in Hartford, Illinois (the Site) because it arranged for the disposal or treatment of hazardous substances that were contained in materials sent to the Site and that resulted in the release or threat of release of hazardous substances at the Site. As of August 2017, 162 companies were members of the Group. The letter offered Watts Regulator Co. the opportunity to join the Group and participate in the Remedial Investigation and Feasibility Study (“RI/FS”) at the Site. Watts Regulator Co. joined the Group in September 2017 and was added in March 2018 as a signatory, together with 43 other new Group members, to the Administrative Settlement Agreement and Order on Consent with the United States Environmental Protection Agency (“USEPA”) governing completion of the RI/FS. Based on information currently known to it, management believes that Watts Regulator Co.’s share of the costs of the RI/FS is not likely to have a material adverse effect on the financial condition of the Company, or have a material adverse effect on the Company’s operating results for any particular period. In February 2018, the Group commenced suit in the United States District Court for the Southern District of Illinois seeking response costs from other potentially responsible parties for the Site. The Group has identified more than 2,000 additional potentially responsible parties to date. The Company is unable to estimate a range of reasonably possible loss for the above matter in which damages have not been specified because: (i) the RI/FS has not been completed to determine what remediation plan will be implemented and the costs of such plan; (ii) the total number of potentially responsible parties who may or may not agree to fund or perform any remediation has not yet been determined; (iii) the share contribution for potentially responsible parties to any remediation has not been determined; and (iv) the number of years required to complete the RI/FS and implement a remediation plan acceptable to USEPA is uncertain. Asbestos Litigation The Company is defending approximately 300 lawsuits in different jurisdictions, alleging injury or death as a result of exposure to asbestos. The complaints in these cases typically name a large number of defendants and do not identify any particular Company products as a source of asbestos exposure. To date, discovery has failed to yield evidence of substantial exposure to any Company products and no judgments have been entered against the Company. Other Litigation Other lawsuits and proceedings or claims, arising from the ordinary course of operations, are also pending or threatened against the Company. |
Financial Instruments
Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Financial Instruments | |
Financial Instruments | (17) Financial Instruments Fair Value The carrying amounts of cash and cash equivalents, trade receivables and trade payables approximate fair value because of the short maturity of these financial instruments. The fair value of the Company’s 5.05% senior notes due 2020 is based on quoted market prices of similar notes (level 2). The fair value of the Company’s borrowings outstanding under the Credit Agreement, and the Company’s variable rate debt approximates its carrying value. The carrying amount and the estimated fair market value of the Company’s long-term debt, including the current portion, are as follows: December 31, 2018 2017 (in millions) Carrying amount $ 355.0 $ 499.5 Estimated fair value $ 355.4 $ 501.1 Financial Instruments The Company measures certain financial assets and liabilities at fair value on a recurring basis, including deferred compensation plan assets and related liabilities, redeemable financial instruments, and derivatives. The fair values of these certain financial assets and liabilities were determined using the following inputs at December 31, 2018 and December 31, 2017: Fair Value Measurement at December 31, 2018 Using: Quoted Prices in Active Significant Other Significant Markets for Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in millions) Assets Plan asset for deferred compensation(1) $ 2.6 $ 2.6 $ — $ — Interest rate swaps (1) $ 6.5 $ — $ 6.5 $ — Total assets $ 9.1 $ 2.6 $ 6.5 $ — Liabilities Plan liability for deferred compensation(2) $ 2.6 $ 2.6 $ — $ — Redeemable financial instrument(3) $ 2.8 $ — $ — $ 2.8 Total liabilities $ 5.4 $ 2.6 $ — $ 2.8 Fair Value Measurements at December 31, 2017 Using: Quoted Prices in Active Significant Other Significant Markets for Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in millions) Assets Plan asset for deferred compensation(1) $ 3.2 $ 3.2 $ — $ — Interest rate swaps (1) $ 5.6 $ — $ 5.6 $ — Total assets $ 8.8 $ 3.2 $ 5.6 $ — Liabilities Plan liability for deferred compensation(2) $ 3.2 $ 3.2 $ — $ — Redeemable financial instrument(3) 2.9 — — 2.9 Total liabilities $ 6.1 $ 3.2 $ — $ 2.9 (1) Included on the Company’s consolidated balance sheet in other assets (other, net). (2) Included on the Company’s consolidated balance sheet in accrued compensation and benefits. (3) Included on the Company’s consolidated balance sheet in other current liabilities and relates to a mandatorily redeemable equity instrument as part of the Apex acquisition in 2015. The table below provides a summary of the changes in fair value of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period December 31, 2017 to December 31, 2018. Total realized and unrealized Balance (gains) losses included in: Balance December 31, Net earnings Comprehensive December 31, 2017 Settlements Purchases adjustments income 2018 (in millions) Redeemable financial instrument $ 2.9 — $ — — $ (0.1) $ 2.8 On November 30, 2015, the Company acquired 80% of the outstanding shares of Apex Valves Limited (“Apex”). The aggregate purchase price was approximately $20.4 million and the Company recorded a long-term liability of $5.5 million as the estimate of the acquisition date fair value on the contractual call option to purchase the remaining 20% within three years of closing. The Company acquired an additional 10% ownership in the first quarter of 2017 for approximately $2.9 million and now owns 90% of Apex outstanding shares. The remaining liability is classified as Level 3 under the fair value hierarchy as it is based on the commitment to purchase the remaining 10% of Apex shares within the next year, which is not observable in the market. On November 30, 2018, the Company executed an agreement to extend the exercise of the contractual call option into the first quarter of 2019. Cash equivalents consist of instruments with remaining maturities of three months or less at the date of purchase and consist primarily of money market funds, for which the carrying amount is a reasonable estimate of fair value. The Company uses financial instruments from time to time to enhance its ability to manage risk, including foreign currency and commodity pricing exposures, which exist as part of its ongoing business operations. The use of derivatives exposes the Company to counterparty credit risk for nonperformance and to market risk related to changes in currency exchange rates and commodity prices. The Company manages its exposure to counterparty credit risk through diversification of counterparties. The Company’s counterparties in derivative transactions are substantial commercial banks with significant experience using such derivative instruments. The impact of market risk on the fair value and cash flows of the Company’s derivative instruments is monitored and the Company restricts the use of derivative financial instruments to hedging activities. The Company does not enter into contracts for trading purposes nor does the Company enter into any contracts for speculative purposes. The use of derivative instruments is approved by senior management under written guidelines. Interest Rate Swaps For each facility under the Credit Agreement, the Company can choose either an Adjusted LIBOR or Alternative Base Rate (“ABR”). Upon intended election of Adjusted LIBOR as the interest rate, the Term Loan has quarterly interest payments that began in May 2016, quarterly principal repayments that commenced on March 31, 2017, with a balloon payment of principal on maturity date. The Revolving Credit Facility has quarterly interest payments. Accordingly, the Company’s earnings and cash flows are exposed to interest rate risk from changes in Adjusted LIBOR. In order to manage the Company’s exposure to changes in cash flows attributable to fluctuations in LIBOR-indexed interest payments related to the Company’s floating rate debt, the Company entered into two interest rate swaps. For each interest rate swap, the Company receives the three-month USD-LIBOR subject to a 0% floor, and pays a fixed rate of 1.31375% on a notional amount of $225.0 million. The swaps mature on February 12, 2021. The Company formally documents the hedge relationships at hedge inception to ensure that its interest rate swaps qualify for hedge accounting. On a quarterly basis, the Company assesses whether the interest rate swaps are highly effective in offsetting changes in the cash flow of the hedged item. The Company does not hold or issue interest rate swaps for trading purposes. The swaps are designated as cash flow hedges. For the years ended December 31, 2018 and 2017, a net of tax gain of $0.7 million and $0.6 million, respectively, was recorded in Accumulated Other Comprehensive Income to recognize the effective portion of the fair value of interest rate swaps that qualify as a cash flow hedge. Designated Foreign Currency Hedges The Company’s foreign subsidiaries transact most business, including certain intercompany transactions, in foreign currencies. Such transactions are principally purchases or sales of materials. The Company has exposure to a number of foreign currencies, including the Canadian Dollar, the euro, and the Chinese Yuan. Beginning in the first quarter of 2018, the Company has used a layering methodology, whereby at the end of each quarter, the Company enters into forward exchange contracts which hedge approximately 70% of the forecasted intercompany purchase transactions between one of the Company’s Canadian and U.S. operating subsidiaries for the next twelve months. As of December 31, 2018, all designated foreign exchange hedge contracts were cash flow hedges under ASC 815, Derivatives and Hedging ("ASC 815"). The Company records the effective portion of the designated foreign currency hedge contracts in other comprehensive income until inventory turns and is sold to a third-party. Once the third-party transaction associated with the hedged forecasted transaction occurs, the effective portion of any related gain or loss on the designated foreign currency hedge will be reclassified into earnings. In the event the notional amount of the derivatives exceeds the forecasted intercompany purchases for a given month, the excess hedge position will be attributed to the following month’s forecasted purchases. However, if the following month’s forecasted purchases cannot absorb the excess hedge position from the current month, the effective portion of the hedge recorded in other comprehensive income will be reclassified to earnings. The fair value of the Company’s designated foreign hedge contracts outstanding as of December 31, 2018 was $0.3 million. For the year ended December 31, 2018 , the amount expected to be reclassified into earnings from other comprehensive income in the next twelve months is not material to the financial statements. Non-Designated Cash Flow Hedge The Company’s foreign subsidiaries transact most business, including certain intercompany transactions, in foreign currencies. Such transactions are principally purchases or sales of materials and are denominated in European currencies or the U.S. or Canadian dollar. The Company uses foreign currency forward exchange contracts from time to time to manage the risk related to intercompany loans, intercompany purchases that occur during the course of a year, and certain open foreign currency denominated commitments to sell products to third parties. The Company entered into one forward contract in the fourth quarter of 2016 and one forward contract in the first quarter of 2017 to manage the foreign currency rate exposure in 2016 and 2017. These forward contracts were entered into to manage the foreign currency rate exposure between the Hong Kong Dollar and the euro regarding two intercompany loans. These forward contracts were marked-to-market with changes in the fair value recorded to earnings. The Company recognized a loss of $2.9 million related to forward exchange contracts in 2017. These forward contracts were not renewed in September 2017 as the intercompany loans for which the Company was hedging the foreign currency rate exposure were settled. Leases The Company leases certain manufacturing facilities, sales offices, warehouses, automobiles, and equipment. Generally, the leases carry renewal provisions and require the Company to pay maintenance costs. Future minimum lease payments under capital leases and non‑cancelable operating leases as of December 31, 2018 are as follows: Capital Leases Operating Leases (in millions) 2019 $ 1.8 $ 10.7 2020 1.6 8.7 2021 0.7 5.6 2022 0.3 3.4 2023 0.1 2.4 Thereafter — 4.9 Total $ 4.5 $ 35.7 Less amount representing interest (at rates ranging from 1.8% to 5.9%) 0.2 Present value of net minimum capital lease payments 4.3 Less current installments of obligations under capital leases 1.6 Obligations under capital leases, excluding current installments $ 2.7 Carrying amounts of assets under capital lease include: December 31, 2018 2017 (in millions) Buildings $ 14.6 $ 15.3 Machinery and equipment 3.6 1.7 18.2 17.0 Less accumulated depreciation (7.8) (6.8) $ 10.4 $ 10.2 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Segment Information | (18) Segment Information The Company operates in three geographic segments: Americas, Europe, and APMEA. Each of these segments sells similar products and has separate financial results that are reviewed by the Company’s chief operating decision‑maker. Each segment earns revenue and income almost exclusively from the sale of the Company’s products. The Company sells its products into various end markets around the world with sales by region based upon location of the entity recording the sale. See Note 4 for further detail on the product lines sold into by region. All intercompany sales transactions have been eliminated. The accounting policies for each segment are the same as those described in Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The following is a summary of the Company’s significant accounts and balances by segment, reconciled to its consolidated totals: Year Ended December 31, 2018 2017 2016 (in millions) Net Sales Americas $ 1,032.1 $ 951.9 $ 900.9 Europe 467.0 440.3 431.3 APMEA 65.8 64.5 66.2 Consolidated net sales $ 1,564.9 $ 1,456.7 $ 1,398.4 Operating income Americas $ 171.1 $ 146.8 $ 127.1 Europe 49.8 47.6 40.0 APMEA 7.2 4.7 15.1 Subtotal reportable segments 228.1 199.1 182.2 Corporate(*) (39.7) (36.8) (37.2) Consolidated operating income 188.4 162.3 145.0 Interest income (0.8) (1.0) (1.0) Interest expense 16.3 19.1 22.6 Other (income) expense, net (1.7) 1.1 (4.4) Income before income taxes $ 174.6 $ 143.1 $ 127.8 Capital Expenditures Americas $ 21.5 $ 20.7 $ 25.7 Europe 12.7 8.0 8.9 APMEA 1.7 0.7 1.4 Consolidated capital expenditures $ 35.9 $ 29.4 $ 36.0 Depreciation and Amortization Americas $ 29.1 $ 30.8 $ 28.8 Europe 16.7 18.6 19.3 APMEA 2.7 2.8 3.1 Consolidated depreciation and amortization $ 48.5 $ 52.2 $ 51.2 Identifiable assets (at end of period) Americas $ 1,028.1 $ 1,069.2 $ 1,054.7 Europe 510.2 524.0 577.3 APMEA 115.4 143.3 131.2 Consolidated identifiable assets $ 1,653.7 $ 1,736.5 $ 1,763.2 Property, plant and equipment, net (at end of year) Americas $ 115.0 $ 109.3 $ 106.2 Europe 80.0 82.1 75.6 APMEA 6.9 7.1 7.9 Consolidated property, plant and equipment, net $ 201.9 $ 198.5 $ 189.7 * Corporate expenses are primarily for administrative compensation expense, compliance costs, professional fees, including corporate-related legal and audit expenses, shareholder services and benefit administration costs. ** Included in APMEA’s operating income for 2016 is $8.7 million gain related to the sale of an operating subsidiary in China. Refer to Note 5 “Sale of Business” for further discussion. The following includes U.S. net sales and U.S. property, plant and equipment of the Company’s Americas segment: December 31, 2018 2017 2016 (in millions) U.S. net sales $ 964.2 $ $ U.S. property, plant and equipment, net (at end of year) $ 111.0 $ $ The following includes intersegment sales for Americas, Europe and APMEA: December 31, 2018 2017 2016 (in millions) Intersegment Sales Americas $ 12.7 $ 12.1 $ 12.0 Europe 14.2 14.6 12.3 APMEA 88.4 69.7 76.7 Intersegment sales $ 115.3 $ 96.4 $ 101.0 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | (19) Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consists of the following: Accumulated Foreign Other Currency Cash Flow Comprehensive Translation Hedges (1) Loss (in millions) Balance December 31, 2017 $ (102.6) $ 3.5 $ (99.1) Change in period 9.7 2.8 12.5 Balance April 1, 2018 $ (92.9) $ 6.3 $ (86.6) Change in period (26.6) 1.0 (25.6) Balance July 1, 2018 $ (119.5) $ 7.3 $ (112.2) Change in period 2.5 (0.1) 2.4 Balance September 30, 2018 $ (117.0) $ 7.2 $ (109.8) Change in period (9.3) (2.0) (11.3) Balance December 31, 2018 $ (126.3) $ 5.2 $ (121.1) Balance December 31, 2016 $ (153.7) $ 2.9 $ (150.8) Change in period 7.9 0.1 8.0 Balance April 02, 2017 $ (145.8) $ 3.0 $ (142.8) Change in period 21.5 (0.7) 20.8 Balance July 02, 2017 $ (124.3) $ 2.3 $ (122.0) Change in period 15.4 0.1 15.5 Balance October 01, 2017 $ (108.9) $ 2.4 $ (106.5) Change in period 6.3 1.1 7.4 Balance December 31, 2017 $ (102.6) $ 3.5 $ (99.1) (1) Cash flow hedges include interest rate swaps and designated foreign currency hedges. See Note 17 for further details. |
Quarterly Financial Information
Quarterly Financial Information (unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information (unaudited) | |
Quarterly Financial Information (unaudited) | (20) Quarterly Financial Information (unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter (in millions, except per share information) Year ended December 31, 2018 Net sales $ 378.5 $ 407.9 $ 390.9 $ 387.6 Gross profit 156.7 169.4 164.5 165.9 Net income 28.2 36.0 31.5 32.3 Per common share: Basic Net income 0.82 1.05 0.92 0.94 Diluted Net income 0.82 1.05 0.92 0.94 Dividends declared per common share 0.19 0.21 0.21 0.21 Year ended December 31, 2017 Net sales $ 347.2 $ 378.5 $ 364.7 $ 366.3 Gross profit 143.8 156.7 152.7 149.2 Net income (loss) 21.7 27.2 26.5 (2.3) Per common share: Basic Net income (loss) 0.63 0.79 0.77 (0.07) Diluted Net income (loss) 0.63 0.79 0.77 (0.07) Dividends declared per common share 0.18 0.19 0.19 0.19 Note: Four quarters may not sum to full year due to rounding. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events | |
Subsequent Events | (21) Subsequent Events On February 6, 2019, the Company declared a quarterly dividend of twenty-one cents ($0.21) per share on each outstanding share of Class A common stock and Class B common stock payable on March 15, 2019 to stockholders of record on March 1, 2019. On February 6, 2019, the Board of Directors authorized a stock repurchase program of up to $150 million of the Company’s Class A common stock to be purchased from time to time on the open market or in privately negotiated transactions. The timing and number of shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. |
Schedule II-Valuation and Quali
Schedule II-Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2018 | |
Schedule II-Valuation and Qualifying Accounts | |
Schedule II-Valuation and Qualifying Accounts | Watts Water Technologies, Inc. and Subsidiaries Schedule II—Valuation and Qualifying Accounts (Amounts in millions) Balance At Additions Foreign Balance At Beginning of Charged To Exchange End of Period Expense Impact Deductions Period Year Ended December 31, 2016 Allowance for doubtful accounts $ 10.1 $ 5.5 0.5 (1.9) $ 14.2 Reserve for excess and obsolete inventories $ 29.1 $ 7.0 0.6 (10.6) $ 26.1 Year Ended December 31, 2017 Allowance for doubtful accounts $ 14.2 $ 3.7 0.4 (4.0) $ 14.3 Reserve for excess and obsolete inventories $ 26.1 $ 7.3 1.5 (9.5) $ 25.4 Year Ended December 31, 2018 Allowance for doubtful accounts $ 14.3 $ 3.3 (0.2) (2.4) $ 15.0 Reserve for excess and obsolete inventories $ 25.4 $ 7.7 (0.7) (8.0) $ 24.4 |
Accounting Policies (Policies)
Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its majority and wholly owned subsidiaries. Upon consolidation, all intercompany accounts and transactions are eliminated. |
Cash Equivalents | Cash Equivalents Cash equivalents consist of instruments with remaining maturities of three months or less at the date of purchase and consist primarily of money market funds, for which the carrying amount is a reasonable estimate of fair value. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The allowance for doubtful accounts is established to represent the Company’s best estimate of the net realizable value of the outstanding accounts receivable. The development of the Company’s allowance for doubtful accounts varies by region but in general is based on a review of past due amounts, historical write‑off experience, as well as aging trends affecting specific accounts and general operational factors affecting all accounts. In addition, factors are developed in certain regions utilizing historical trends of sales and returns and allowances and cash discount activities to derive a reserve for returns and allowances and cash discounts. The Company uniformly considers current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. The Company also aggressively monitors the creditworthiness of the Company’s largest customers and periodically reviews customer credit limits to reduce risk. If circumstances relating to specific customers change or unanticipated changes occur in the general business environment, the Company’s estimates of the recoverability of receivables could be further adjusted. |
Concentration of Credit | Concentration of Credit The Company sells products to a diversified customer base and, therefore, has no significant concentrations of credit risk. In 2018, 2017, and 2016, no customer accounted for 10% or more of the Company’s total sales or accounts receivable. |
Inventories | Inventories Inventories are stated at the lower of cost or market, using the first‑in, first‑out method. Market value is determined by replacement cost or net realizable value. Historical usage is used as the basis for determining the reserve for excess or obsolete inventories. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill is recorded when the consideration paid for acquisitions exceeds the fair value of net tangible and intangible assets acquired. Goodwill and other intangible assets with indefinite useful lives are not amortized, but rather are tested for impairment at least annually or more frequently if events or circumstances indicate that it is “more likely than not” that they might be impaired, such as from a change in business conditions. The Company performs its annual goodwill and indefinite-lived intangible assets impairment assessment in the fourth quarter of each year. |
Long-Lived Assets | Long-Lived Assets Intangible assets with estimable lives and other long‑lived assets are reviewed for indicators of impairment at least quarterly or more frequently if events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is provided on a straight‑line basis over the estimated useful lives of the assets, which range from 10 to 40 years for buildings and improvements and 3 to 15 years for machinery and equipment. Leasehold improvements are depreciated over the lesser of the economic useful life of the asset or the remaining lease term. |
Taxes, Other than Income Taxes | Taxes, Other than Income Taxes Taxes assessed by governmental authorities on sale transactions are recorded on a net basis and excluded from sales in the Company’s consolidated statements of operations. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes tax benefits when the item in question meets the more–likely–than‑not (greater than 50% likelihood of being sustained upon examination by the taxing authorities) threshold. As of December 31, 2018, the Company had gross unrecognized tax benefits of approximately $10.2 million, approximately $4.5 million of which, if recognized, would affect the effective tax rate. The difference between the amount of unrecognized tax benefits and the amount that would affect the effective tax rate consists of the federal tax benefit of state income tax items and allowable correlative adjustments that are available for certain jurisdictions. A reconciliation of the beginning and ending amount of unrecognized tax is as follows: (in millions) Balance at January 1, 2018 $ 7.7 Increases related to prior year tax positions 2.5 Increases related to current year tax provisions 2.5 Settlements (2.1) Currency movement (0.4) Balance at December 31, 2018 $ 10.2 The Company estimates that it is reasonably possible that the balance of unrecognized tax benefits as of December 31, 2018 may decrease by approximately $0.5 million in the next twelve months, as a result of lapses in statutes of limitations and settlements of open audits. In February 2018, the United States Internal Revenue Service concluded an audit of the Company’s 2015 and 2016 tax years. There were no material adjustments as a result of the audit. The Company conducts business in a variety of locations throughout the world resulting in tax filings in numerous domestic and foreign jurisdictions. The Company is subject to tax examinations regularly as part of the normal course of business. The Company’s major jurisdictions are the U.S., France, Germany, Canada, and the Netherlands. The statute of limitations in the U.S. is subject to tax examination for 2015 and later; France, Germany, Canada and the Netherlands are subject to tax examination for 2012-2014 and later. All other jurisdictions, with few exceptions, are no longer subject to tax examinations in state, local or international jurisdictions for tax years before 2013. The Company accounts for interest and penalties related to uncertain tax positions as a component of income tax expense. |
Foreign Currency Translation | Foreign Currency Translation The functional currency for most of the Company’s foreign subsidiaries is their local currency. For non-U.S. subsidiaries that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the average foreign currency exchange rates for the period. Adjustments resulting from the translation of the financial statements of foreign operations into U.S. dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income, a separate component of equity. For subsidiaries where the functional currency of the assets and liabilities differs from the local currency, non-monetary assets and liabilities are translated at the rate of exchange in effect on the date assets were acquired while monetary assets and liabilities are translated at current rates of exchange as of the balance sheet date. Income and expense items are translated at the average foreign currency rates for the period. Translation adjustments of these subsidiaries are included in other (income) expense, net in the consolidated statements of operations. |
Stock-Based Compensation | Stock‑Based Compensation The Company records compensation expense in the financial statements for share‑based awards based on the grant date fair value of those awards for restricted stock awards and deferred stock awards. Stock‑based compensation expense for restricted stock awards and deferred stock awards is recognized over the requisite service periods of the awards on a straight‑line basis, which is generally commensurate with the vesting term. The performance stock units offered by the Company to employees are amortized to expense over the vesting period, and based on the Company’s performance relative to the performance goals, may be adjusted. Changes to the estimated shares expected to vest will result in adjustments to the related share-based compensation expense that will be recorded in the period of change. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” and the Company adopted this standard in the first quarter of 2017 with an immaterial change to retained earnings. As part of the adoption of this standard, the Company elected to account for forfeitures as they occur, rather than estimate expected forfeitures over the vesting period of the respective grant. The Company also no longer reclassifies the benefits associated with tax deductions in excess of recognized compensation cost from operating activities to financing activities in the Consolidated Statement of Cash Flows. At December 31, 2018, the Company had one stock‑based compensation plan with total unrecognized compensation costs related to unvested stock‑based compensation arrangements of approximately $17.4 million and a total weighted average remaining term of 1.61 years. For 2018, 2017 and 2016, the Company recognized compensation costs related to stock‑based programs of approximately $13.8 million, $13.9 million and $13.4 million, respectively. For 2018, 2017 and 2016 stock compensation expense, $0.9 million, $0.8 million and $0.9 million, respectively, was recorded in cost of goods sold and $12.9 million, $13.1 million and $12.5 million, respectively, was recorded in selling, general and administrative expenses. For 2017 and 2016, the Company recorded approximately $0.1 million and $0.8 million, respectively, of tax benefits for the compensation expense relating to its stock options. For 2018, 2017 and 2016, the Company recorded approximately $2.8 million, $3.9 million and $2.8 million, respectively, of tax benefit for its other stock‑based plans. For 2018, 2017 and 2016, the recognition of total stock‑based compensation expense impacted both basic and diluted net income per common share by $0.32, $0.28 and $0.29, respectively. |
Net Income Per Common Share | Net Income Per Common Share Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding. The calculation of diluted net income per share assumes the conversion of all dilutive securities. Net income and the number of shares used to compute net income per share, basic and assuming full dilution, are reconciled below: Year Ended December 31, 2018 2017 2016 Per Per Per Net Share Net Share Net Share Income Shares Amount Income Shares Amount Income Shares Amount (Amounts in millions, except per share information) Basic EPS $ 128.0 34.3 $ 3.73 $ 73.1 34.4 $ 2.12 $ 84.2 34.4 $ 2.45 Dilutive securities, principally common stock options — — — — — — — 0.1 (0.01) Diluted EPS $ 128.0 34.3 $ 3.73 $ 73.1 34.4 $ 2.12 $ 84.2 34.5 $ 2.44 The computation of diluted net income per share for the year ended December 31, 2016 excludes the effect of the potential exercise of options to purchase approximately 0.1 million shares because the exercise price of the option was greater than the average market price of the Class A common stock and the effect would have been anti‑dilutive. |
Financial Instruments | Financial Instruments In the normal course of business, the Company manages risks associated with commodity prices, foreign exchange rates and interest rates through a variety of strategies, including the use of hedging transactions, executed in accordance with the Company’s policies. The Company’s hedging transactions include, but are not limited to, the use of various derivative financial and commodity instruments. As a matter of policy, the Company does not use derivative instruments unless there is an underlying exposure. Any change in value of the derivative instruments would be substantially offset by an opposite change in the value of the underlying hedged items. The Company does not use derivative instruments for trading or speculative purposes. Derivative instruments may be designated and accounted for as either a hedge of a recognized asset or liability (fair value hedge) or a hedge of a forecasted transaction (cash flow hedge). For a fair value hedge, both the effective and ineffective portions of the change in fair value of the derivative instrument, along with an adjustment to the carrying amount of the hedged item for fair value changes attributable to the hedged risk, are recognized in earnings. For a cash flow hedge, changes in the fair value of the derivative instrument that are highly effective are deferred in accumulated other comprehensive income or loss until the underlying hedged item is recognized in earnings. The Company has two interest rate swaps designated as cash flow hedges as of December 31, 2018 and 2017. The Company also has foreign exchange hedges designated as cash flow hedges as of December 31, 2018. Refer to Note 17 for further details. If a fair value or cash flow hedge were to cease to qualify for hedge accounting or be terminated, it would continue to be carried on the balance sheet at fair value until settled, but hedge accounting would be discontinued prospectively. If a forecasted transaction were no longer probable of occurring, amounts previously deferred in accumulated other comprehensive income would be recognized immediately in earnings. On occasion, the Company may enter into a derivative instrument that does not qualify for hedge accounting because it is entered into to offset changes in the fair value of an underlying transaction which is required to be recognized in earnings (natural hedge). These instruments are reflected in the Consolidated Balance Sheets at fair value with changes in fair value recognized in earnings. Portions of the Company’s outstanding debt are exposed to interest rate risks. The Company monitors its interest rate exposures on an ongoing basis to maximize the overall effectiveness of its interest rates. |
Fair value Measurements | Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The Company has certain financial assets and liabilities that are measured at fair value on a recurring basis and certain nonfinancial assets and liabilities that may be measured at fair value on a nonrecurring basis. The fair value disclosures of these assets and liabilities are based on a three‑level hierarchy, which is defined as follows: Level 1 Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities subject to this hierarchy are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Refer to Note 17 for further details. |
Shipping and Handling | Shipping and Handling Shipping and handling costs included in selling, general and administrative expense amounted to $56.3 million, $52.1 million and $47.9 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Research and Development | Research and Development Research and development costs included in selling, general, and administrative expense amounted to $34.5 million, $29.0 million and $26.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company’s revenue for product sales is recognized on a point in time model, at the point control transfers to the customer, which is generally when products are shipped from the Company’s manufacturing or distribution facilities or when delivered to the customer’s named location. Sales tax, value-added tax, or other taxes collected concurrent with revenue producing activities are excluded from revenue. Freight costs billed to customers for shipping and handling activities are included in revenue with the related cost included in selling, general and administrative expenses. See Note 4 for further disclosures and detail regarding revenue recognition. |
Basis of Presentation | Basis of Presentation Certain amounts in the 2017 and 2016 consolidated financial statements have been reclassified to permit comparison with the 2018 presentation, includ ing from adoption of recent accounting standards. These reclassifications had no effect on reported results of operations or stockholders' equity. |
Estimates | Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
New Accounting Standards | Recently Adopted Accounting Standards In February 2018, the FASB issued ASU 2018-02 “Income Statement-Reporting Comprehensive Income.” ASU 2018-02 provides guidance on the reclassification of certain tax effects from the 2017 Tax Cuts and Jobs Act (“2017 Tax Act”) from accumulated other comprehensive income. Current generally accepted accounting principles requires deferred tax liabilities and deferred tax assets to be adjusted for the effect of a change in tax laws or tax rates, with that effect included in income from operations in the period of enactment. This included the income tax effects of items in accumulated other comprehensive income. This guidance allows a reclassification from accumulated other comprehensive income to retained earnings for the tax effects on items in accumulated other comprehensive income related to the change in tax rates from the 2017 Tax Act. This standard is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. Early adoption of this standard is permitted. The Company adopted this standard in the first quarter of 2018, and it did not have a material impact on the Company’s financial statements. On January 1, 2018, the Company adopted the accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard” or “ASU 2014-09”) to all contracts using the modified retrospective method. The adoption of ASU 2014-09 was not material to the Company and as such, there was no cumulative effect upon the January 1, 2018 adoption date. As the impact of the new revenue standard is not material to the Company, there is no pro-forma disclosure presented for the year ended December 31, 2018. The Company expects the impact of the adoption of the new standard to be immaterial to the Company’s financial statements on an ongoing basis. See “Revenue Recognition” within this Note 2 and Note 4 of Notes to Consolidated Financial Statements in this Annual Report Form 10-K for further details. In October 2016, the FASB issued ASU 2016-16 “Intra-Entity Transfers of Assets Other than Inventory.” ASU 2016-16 provides guidance on the timing of recognition of tax consequences of an intra-entity transfer of an asset other than inventory. The Company adopted the provision of this ASU during the first quarter of 2018, using the modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the quarter. The adoption of this guidance did not have a material impact on the Company’s financial statements. Accounting Standards Updates In August 2018, the FASB issued ASU 2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)-Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance requires an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. The Company is currently evaluating the impact of this guidance on the Company’s financial statements, and does not expect the adoption of this guidance to have a material impact on the Company’s financial statements. In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820)-Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements under Topic 820. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. The Company is currently evaluating the impact of this guidance on the Company’s disclosures; however, this guidance does not impact the Company’s financial statements. In August 2017, the FASB issued ASU 2017-12 “Derivatives and Hedging (Topic 815)-Targeted Improvements to Accounting for Hedging Activities.” ASU 2017-12 amends the hedge accounting guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in the financial statements. This guidance permits hedge accounting for risk components in hedging relationships that involve nonfinancial risk, reduces complexity in hedging for fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedging ineffectiveness, and simplifies certain hedge effectiveness assessment requirements. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. The Company is currently evaluating the impact of this guidance, including transition elections and required disclosures, on its financial statements, and does not expect the adoption of this guidance to have a material impact on the Company’s financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016‑02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term for both finance and operating leases with a term longer than twelve months. Topic 842 was subsequently amended by ASU 2018-01, “Land Easement Practical Expedient for Transition to Topic 842,” ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU 2018-11 “Targeted Improvements.” ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018 and all interim periods thereafter. Early adoption is permitted for all entities. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The Company may choose to use either 1) the effective date of the standard or 2) the beginning of the earliest comparable period presented in the financial statements as the date of initial application. The Company adopted the new standard on January 1, 2019 and used the effective date of the standard as the date of the Company’s initial application. By electing this approach, the financial information and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients throughout the transition. The Company elected the “package of practical expedients,” which permits the Company to not reassess under the new standard the Company’s prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements, the latter not being applicable to the Company. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize right-of-use assets or lease liabilities, and this includes not recognizing right-of-use assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient not to separate lease and non-lease components for all of the Company’s leases. The Company completed its analysis of the impacts of the new lease standard, and has designed the necessary changes to its existing processes and configured all system requirements that are required to implement this new standard. The Company has a variety of categories of lease arrangements, including real estate, automobiles, manufacturing equipment, facility equipment, office equipment and certain service arrangements. The Company has reviewed its leasing arrangements in order to evaluate the impact of this standard on the Company’s financial statements, and expects to record a right-of-use asset in the range of $25-40 million and a lease liability in the range of $25-40 million related to the recognition, on a discounted basis, of the Company’s minimum commitments under non-cancelable operating leases on its consolidated balance sheets in the first quarter of 2019. The Company currently does not expect ASC 842 to have a material effect on either its consolidated statement of operations or its consolidated statement of cash flow. |
Accounting Policies (Tables)
Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | (in millions) Balance at January 1, 2018 $ 7.7 Increases related to prior year tax positions 2.5 Increases related to current year tax provisions 2.5 Settlements (2.1) Currency movement (0.4) Balance at December 31, 2018 $ 10.2 |
Summary of reconciliation of the calculation of earnings per share | Year Ended December 31, 2018 2017 2016 Per Per Per Net Share Net Share Net Share Income Shares Amount Income Shares Amount Income Shares Amount (Amounts in millions, except per share information) Basic EPS $ 128.0 34.3 $ 3.73 $ 73.1 34.4 $ 2.12 $ 84.2 34.4 $ 2.45 Dilutive securities, principally common stock options — — — — — — — 0.1 (0.01) Diluted EPS $ 128.0 34.3 $ 3.73 $ 73.1 34.4 $ 2.12 $ 84.2 34.5 $ 2.44 |
Restructuring and Other Charg_2
Restructuring and Other Charges, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring | |
Summary of the pre-tax cost by restructuring programs | Year Ended December 31, 2018 2017 2016 (in millions) Restructuring costs: 2015 Actions $ — $ 2.4 $ 2.1 Other Actions 3.4 4.4 2.6 Total restructuring charges $ 3.4 $ 6.8 $ 4.7 |
Summary of recorded pre-tax restructuring costs by business segment | Year Ended December 31, 2018 2017 2016 (in millions) Americas $ — $ 3.1 $ 1.6 Europe 3.4 3.3 3.4 APMEA — 0.4 0.2 Corporate — — (0.5) Total $ 3.4 $ 6.8 $ 4.7 |
2015 Actions | Americas and APMEA | |
Restructuring | |
Summary of total expected, incurred and remaining pre-tax restructuring costs | Facility Legal and Asset exit Severance consultancy write-downs and other Total (in millions) Costs incurred—2015 $ 8.5 $ 0.7 $ 1.6 $ 2.8 $ 13.6 Costs incurred—2016 (1.5) 0.2 2.9 0.5 2.1 Costs incurred—2017 — — 2.2 0.2 2.4 Total restructuring costs $ 7.0 $ 0.9 $ 6.7 $ 3.5 $ 18.1 |
Summary of restructuring reserve activity | Details of the restructuring reserve activity for the Company’s Americas and APMEA 2015 transformation program for the year ended December 31, 2018 are as follows: Facility Legal and Asset exit Severance consultancy write-downs and other Total (in millions) Balance at December 31, 2015 $ 5.0 $ 0.4 $ — $ 1.0 $ 6.4 Net pre-tax restructuring charges (1.5) 0.2 2.9 0.5 2.1 Utilization and foreign currency impact (2.3) (0.6) (2.9) (1.5) (7.3) Balance at December 31, 2016 $ 1.2 $ — $ — $ — $ 1.2 Net pre-tax restructuring charges — — 2.2 0.2 2.4 Utilization and foreign currency impact (1.0) — (2.2) (0.2) (3.4) Balance at December 31, 2017 $ 0.2 $ — $ — $ — $ 0.2 Net pre-tax restructuring charges — — — — — Utilization and foreign currency impact (0.2) — — — (0.2) Balance at December 31, 2018 $ — $ — $ — $ — $ — |
Other Actions | |
Restructuring | |
Summary of total expected, incurred and remaining pre-tax restructuring costs | Facility Legal and Exit Severance consultancy and other Total (in millions) Costs incurred—2015 $ 6.6 $ — $ 0.3 $ 6.9 Costs incurred—2016 1.3 0.5 — 1.8 Adjustments to restructuring costs—2017 (1.0) — — (1.0) Total restructuring costs $ 6.9 $ 0.5 $ 0.3 $ 7.7 |
Summary of restructuring reserve activity | Legal and Facility exit Severance Consultancy and other Total (in millions) Balance at December 31, 2015 $ 6.4 $ — $ — $ 6.4 Net pre-tax restructuring charges 1.3 0.5 — 1.8 Utilization and foreign currency impact (2.9) (0.5) — (3.4) Balance at December 31, 2016 $ 4.8 $ — $ — $ 4.8 Net pre-tax restructuring charges (1.0) — — (1.0) Utilization and foreign currency impact (2.8) — — (2.8) Balance at December 31, 2017 $ 1.0 $ — $ — $ 1.0 Net pre-tax restructuring adjustments — — — — Utilization and foreign currency impact (0.9) — — (0.9) Balance at December 31, 2018 $ 0.1 $ — $ — $ 0.1 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition | |
Schedule of disaggregation of revenue | Year ended December 31, 2018 (in millions) Distribution Channel Americas Europe APMEA Consolidated Wholesale $ 578.8 $ 314.2 $ 59.9 $ 952.9 OEM 79.0 150.0 1.4 230.4 Specialty 312.1 — 4.5 316.6 DIY 62.2 2.8 — 65.0 Total $ 1,032.1 $ 467.0 $ 65.8 $ 1,564.9 Year ended December 31, 2018 (in millions) Principal Product Line Americas Europe APMEA Consolidated Residential & Commercial Flow Control $ 582.0 $ 176.2 $ 46.2 $ 804.4 HVAC and Gas Products 289.2 201.6 16.2 507.0 Drainage and Water Re-use Products 73.1 87.8 2.2 163.1 Water Quality Products 87.8 1.4 1.2 90.4 Total $ 1,032.1 $ 467.0 $ 65.8 $ 1,564.9 |
Schedule of contract assets and contract liabilities | Contract Contract Contract Assets Liabilities - Current Liabilities - Noncurrent (in millions) Balance - January 1, 2018 $ 0.6 $ 11.3 $ 2.1 Change in period 1.1 0.2 0.3 Balance - April 1, 2018 $ 1.7 $ 11.5 $ 2.4 Change in period (0.3) 0.1 0.3 Balance - July 1, 2018 $ 1.4 $ 11.6 $ 2.7 Change in period 0.4 (0.4) — Balance - September 30, 2018 $ 1.8 $ 11.2 $ 2.7 Change in period (0.8) 0.1 — Balance - December 31, 2018 $ 1.0 $ 11.3 $ 2.7 |
Goodwill & Intangibles (Tables)
Goodwill & Intangibles (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangibles | |
Changes in the carrying amount of goodwill by geographic segment | December 31, 2018 Gross Balance Accumulated Impairment Losses Net Goodwill Acquired Foreign Balance During Currency Balance Balance Impairment Balance January 1, the Translation December 31, January 1, Loss During December 31, December 31, 2018 Period (1) and Other 2018 2018 the Period 2018 2018 (in millions) Americas $ 437.4 1.5 (0.8) 438.1 $ (24.5) — (24.5) 413.6 Europe 249.3 — (5.6) 243.7 (129.7) — (129.7) 114.0 APMEA 30.9 — (0.8) 30.1 (12.9) — (12.9) 17.2 Total $ 717.6 1.5 (7.2) 711.9 $ (167.1) — (167.1) 544.8 (1) Americas goodwill additions during 2018 relate to immaterial acquisitions. December 31, 2017 Gross Balance Accumulated Impairment Losses Net Goodwill Acquired Foreign Balance During Currency Balance Balance Impairment Balance January 1, the Translation December 31, January 1, Loss During December 31, December 31, 2017 Period and Other 2017 2017 the Period 2017 2017 (in millions) Americas $ 434.7 2.0 0.7 437.4 $ (24.5) — (24.5) 412.9 Europe 234.9 — 14.4 249.3 (129.7) — (129.7) 119.6 APMEA 30.2 — 0.7 30.9 (12.9) — (12.9) 18.0 Total $ 699.8 2.0 15.8 717.6 $ (167.1) — (167.1) 550.5 |
Schedule of Intangible assets | December 31, 2018 December 31, 2017 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount (in millions) Patents $ 16.1 $ (15.8) $ 0.3 $ 16.1 $ (15.4) $ 0.7 Customer relationships 232.9 (146.9) 86.0 233.2 (133.5) 99.7 Technology 54.6 (27.3) 27.3 53.9 (23.1) 30.8 Trade names 26.1 (11.5) 14.6 25.5 (9.7) 15.8 Other 4.3 (3.5) 0.8 6.9 (6.0) 0.9 Total amortizable intangibles 334.0 (205.0) 129.0 335.6 (187.7) 147.9 Indefinite-lived intangible assets 36.2 — 36.2 37.3 — 37.3 $ 370.2 $ (205.0) $ 165.2 $ 372.9 $ (187.7) $ 185.2 |
Inventories, net (Tables)
Inventories, net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventories, net | |
Schedule of inventories | December 31, 2018 2017 (in millions) Raw materials $ 87.4 $ 81.8 Work-in-process 17.3 17.5 Finished goods 182.1 159.8 $ 286.8 $ 259.1 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment | |
Schedule of Property, plant and equipment | December 31, 2018 2017 (in millions) Land $ 14.1 $ 14.5 Buildings and improvements 165.7 164.6 Machinery and equipment 342.2 336.9 Construction in progress 15.4 9.8 537.4 525.8 Accumulated depreciation (335.5) (327.3) $ 201.9 $ 198.5 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of significant components of the Company's deferred income tax liabilities and assets | December 31, 2018 2017 (in millions) Deferred income tax liabilities: Excess tax over book depreciation $ 16.2 $ 13.5 Intangibles 33.8 37.1 Goodwill 17.4 16.3 Foreign earnings 5.1 14.6 Other 3.2 5.7 Total deferred tax liabilities 75.7 87.2 Deferred income tax assets: Accrued expenses 16.0 17.8 Capital loss carry forward — 0.3 Foreign tax credits 33.5 22.0 Net operating loss carry forward 6.1 6.5 Inventory reserves 6.0 5.8 Other 7.1 9.9 Total deferred tax assets 68.7 62.3 Less: valuation allowance (29.9) (28.7) Net deferred tax assets 38.8 33.6 Net deferred tax liabilities $ (36.9) $ (53.6) |
Schedule of pre-tax income upon which provision for income taxes from continuing operations is based | Year Ended December 31, 2018 2017 2016 (in millions) Domestic $ 103.2 $ $ 64.8 Foreign 71.4 63.0 $ 174.6 $ 143.1 $ 127.8 |
Schedule of provision for income taxes from continuing operations | Year Ended December 31, 2018 2017 2016 (in millions) Current tax expense: Federal $ 24.7 $ 42.1 $ 18.3 Foreign 29.0 17.3 17.2 State 7.7 4.2 3.9 61.4 63.6 39.4 Deferred tax expense (benefit): Federal (3.2) 4.0 3.6 Foreign (7.7) 8.5 0.6 State (1.9) 5.9 — (12.8) 18.4 4.2 Deferred tax remeasurement of the 2017 Tax Act (2.0) (12.0) — $ 46.6 $ 70.0 $ 43.6 |
Reconciliation of federal statutory taxes to actual income taxes reported from continuing operations | Year Ended December 31, 2018 2017 2016 (in millions) Computed expected federal income expense $ 36.6 $ 50.1 $ 44.7 State income taxes, net of federal tax benefit 5.3 2.7 2.2 Foreign tax rate differential 2.7 (6.7) (6.7) Impact of the 2017 Tax Act (3.7) 25.1 — Unrecognized tax benefits 3.2 — — Other, net 2.5 (1.2) 3.4 $ 46.6 $ 70.0 $ 43.6 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses and Other Liabilities | |
Schedule of accrued expenses and other liabilities | December 31, 2018 2017 (in millions) Commissions and sales incentives payable $ 46.3 $ 40.1 Product liability and workers’ compensation 22.3 24.5 Other 54.6 57.6 Income taxes payable 7.4 3.6 $ 130.6 $ 125.8 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financing Arrangements | |
Schedule of long-term debt | December 31, 2018 2017 (in millions) 5.05% notes due June 2020 $ 75.0 75.0 Term Loan due February 2021 255.0 277.5 Line of Credit due February 2021 25.0 147.0 Total debt outstanding 355.0 499.5 Less debt issuance costs (deduction from debt liability) (1.6) (2.4) Less current maturities (30.0) (22.5) Total long-term debt $ 323.4 $ 474.6 |
Common Stock (Tables)
Common Stock (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Common Stock. | |
Summary of the cost and number of Class A common stock repurchased | Year Ended December 31, 2018 2017 Number of shares Cost of shares Number of shares Cost of shares repurchased repurchased repurchased repurchased (amounts in millions, except share amount) Stock repurchase programs: July 27, 2015 340,106 26.0 277,886 18.2 Total 340,106 $ 26.0 277,886 $ 18.2 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of nonvested restricted stock and deferred shares activity and related information | Year Ended December 31, 2018 2017 2016 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value (Shares in thousands) Unvested at beginning of year 217 $ 57.31 $ $ Granted 153 80.52 Cancelled/Forfeitures (126) 59.52 Vested (28) 66.24 Unvested at end of year 216 $ 71.28 $ $ |
Schedule of stock-based compensation fair value assumptions | Year Ended December 31, 2018 2017 2016 Expected life (years) 3.0 3.0 Expected stock price volatility 24.1 % 25.0 % % Expected dividend yield 1.0 % 1.2 % % Risk-free interest rate 2.4 % 1.5 % % |
Schedule of stock option activity and related information | Year Ended December 31, 2018 2017 2016 Weighted Weighted Weighted Weighted Average Average Average Average Exercise Intrinsic Exercise Exercise Options Price Value Options Price Options Price (Options in thousands) Outstanding at beginning of year 95 $ 54.91 130 $ 54.46 362 $ 48.46 Granted — — — — — — Cancelled/Forfeitures — — (3) 55.81 (43) 52.93 Exercised (46) 54.55 (32) 53.19 (189) 43.31 Outstanding at end of year 49 $ 55.25 $ 9.28 95 $ 54.91 130 $ 54.46 Exercisable at end of year 49 $ 55.25 $ 9.28 93 $ 54.85 82 $ 53.38 |
Schedule of information about options outstanding | The following table summarizes information about options outstanding at December 31, 2018: Options Outstanding Options Exercisable Weighted Average Weighted Average Weighted Average Number Remaining Contractual Exercise Number Exercise Range of Exercise Prices Outstanding Life (years) Price Exercisable Price (Options in thousands) $29.05-$54.76 17,933 3.47 $ 50.64 17,933 $ 50.64 $57.47–$57.47 22,372 4.81 57.47 22,372 57.47 $57.95–$60.10 8,446 5.01 59.17 8,446 59.17 48,751 4.35 $ 55.25 48,751 $ 55.25 |
Schedule of the Company's RSU activity and related information | Year Ended December 31, 2018 2017 2016 Weighted Weighted Weighted Weighted Average Average Average Average Purchase Intrinsic Purchase Purchase RSUs Price Value RSUs Price RSUs Price (RSU’s in thousands) Outstanding at beginning of year 174 $ 39.68 148 $ 36.37 101 $ 36.14 Granted 36 61.84 47 49.92 89 35.41 Cancelled/Forfeitures (10) 48.82 (3) 41.55 (28) 32.25 Settled (46) 37.34 (18) 39.09 (14) 36.91 Outstanding at end of year 154 $ 45.02 19.51 $ 174 $ 39.68 148 $ 36.37 Vested at end of year 66 $ 38.17 26.36 $ 57 $ 36.26 28 $ 37.78 |
Restricted stock and deferred shares | |
Schedule of information about RSUs outstanding | The following table summarizes information about RSUs outstanding at December 31, 2018: RSUs Outstanding RSUs Vested Weighted Average Weighted Average Number Purchase Number Purchase Range of Purchase Prices Outstanding Price Vested Price (RSUs in thousands) $35.41-$40.27 80 $ 35.47 54 $ 35.50 $49.92-$61.84 74 55.37 12 49.92 154 $ 45.02 66 $ 38.17 |
Performance stock units | |
Schedule of unvested performance shares activity and related information | Year Ended December 31, 2018 2017 2016 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value (Shares in thousands) Unvested at beginning of year 273 $ 58.23 267 $ 56.96 201 $ 57.98 Granted 96 81.51 98 60.45 107 55.27 Cancelled/Forfeitures (80) 58.96 (38) 57.12 (41) 57.56 Vested (40) 63.43 (54) 56.81 — — Unvested at end of year 249 $ 66.15 273 $ 58.23 267 $ 56.96 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financial Instruments | |
Schedule of carrying amount and estimated fair market value of the company's long-term debt, including current portion | December 31, 2018 2017 (in millions) Carrying amount $ 355.0 $ 499.5 Estimated fair value $ 355.4 $ 501.1 |
Schedule of fair value of financial assets and liabilities | Fair Value Measurement at December 31, 2018 Using: Quoted Prices in Active Significant Other Significant Markets for Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in millions) Assets Plan asset for deferred compensation(1) $ 2.6 $ 2.6 $ — $ — Interest rate swaps (1) $ 6.5 $ — $ 6.5 $ — Total assets $ 9.1 $ 2.6 $ 6.5 $ — Liabilities Plan liability for deferred compensation(2) $ 2.6 $ 2.6 $ — $ — Redeemable financial instrument(3) $ 2.8 $ — $ — $ 2.8 Total liabilities $ 5.4 $ 2.6 $ — $ 2.8 Fair Value Measurements at December 31, 2017 Using: Quoted Prices in Active Significant Other Significant Markets for Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in millions) Assets Plan asset for deferred compensation(1) $ 3.2 $ 3.2 $ — $ — Interest rate swaps (1) $ 5.6 $ — $ 5.6 $ — Total assets $ 8.8 $ 3.2 $ 5.6 $ — Liabilities Plan liability for deferred compensation(2) $ 3.2 $ 3.2 $ — $ — Redeemable financial instrument(3) 2.9 — — 2.9 Total liabilities $ 6.1 $ 3.2 $ — $ 2.9 (1) Included on the Company’s consolidated balance sheet in other assets (other, net). (2) Included on the Company’s consolidated balance sheet in accrued compensation and benefits. (3) Included on the Company’s consolidated balance sheet in other current liabilities and relates to a mandatorily redeemable equity instrument as part of the Apex acquisition in 2015. |
Summary of the changes in fair value of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) | Total realized and unrealized Balance (gains) losses included in: Balance December 31, Net earnings Comprehensive December 31, 2017 Settlements Purchases adjustments income 2018 (in millions) Redeemable financial instrument $ 2.9 — $ — — $ (0.1) $ 2.8 |
Schedule of future minimum lease payments under capital leases and non-cancelable operating leases | Future minimum lease payments under capital leases and non‑cancelable operating leases as of December 31, 2018 are as follows: Capital Leases Operating Leases (in millions) 2019 $ 1.8 $ 10.7 2020 1.6 8.7 2021 0.7 5.6 2022 0.3 3.4 2023 0.1 2.4 Thereafter — 4.9 Total $ 4.5 $ 35.7 Less amount representing interest (at rates ranging from 1.8% to 5.9%) 0.2 Present value of net minimum capital lease payments 4.3 Less current installments of obligations under capital leases 1.6 Obligations under capital leases, excluding current installments $ 2.7 |
Schedule of carrying amounts of assets under capital lease | December 31, 2018 2017 (in millions) Buildings $ 14.6 $ 15.3 Machinery and equipment 3.6 1.7 18.2 17.0 Less accumulated depreciation (7.8) (6.8) $ 10.4 $ 10.2 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Summary of the Company's significant accounts and balances by segment, reconciled to the consolidated totals | Year Ended December 31, 2018 2017 2016 (in millions) Net Sales Americas $ 1,032.1 $ 951.9 $ 900.9 Europe 467.0 440.3 431.3 APMEA 65.8 64.5 66.2 Consolidated net sales $ 1,564.9 $ 1,456.7 $ 1,398.4 Operating income Americas $ 171.1 $ 146.8 $ 127.1 Europe 49.8 47.6 40.0 APMEA 7.2 4.7 15.1 Subtotal reportable segments 228.1 199.1 182.2 Corporate(*) (39.7) (36.8) (37.2) Consolidated operating income 188.4 162.3 145.0 Interest income (0.8) (1.0) (1.0) Interest expense 16.3 19.1 22.6 Other (income) expense, net (1.7) 1.1 (4.4) Income before income taxes $ 174.6 $ 143.1 $ 127.8 Capital Expenditures Americas $ 21.5 $ 20.7 $ 25.7 Europe 12.7 8.0 8.9 APMEA 1.7 0.7 1.4 Consolidated capital expenditures $ 35.9 $ 29.4 $ 36.0 Depreciation and Amortization Americas $ 29.1 $ 30.8 $ 28.8 Europe 16.7 18.6 19.3 APMEA 2.7 2.8 3.1 Consolidated depreciation and amortization $ 48.5 $ 52.2 $ 51.2 Identifiable assets (at end of period) Americas $ 1,028.1 $ 1,069.2 $ 1,054.7 Europe 510.2 524.0 577.3 APMEA 115.4 143.3 131.2 Consolidated identifiable assets $ 1,653.7 $ 1,736.5 $ 1,763.2 Property, plant and equipment, net (at end of year) Americas $ 115.0 $ 109.3 $ 106.2 Europe 80.0 82.1 75.6 APMEA 6.9 7.1 7.9 Consolidated property, plant and equipment, net $ 201.9 $ 198.5 $ 189.7 * Corporate expenses are primarily for administrative compensation expense, compliance costs, professional fees, including corporate-related legal and audit expenses, shareholder services and benefit administration costs. ** Included in APMEA’s operating income for 2016 is $8.7 million gain related to the sale of an operating subsidiary in China. Refer to Note 5 “Sale of Business” for further discussion. |
Schedule of U.S. net sales of the Company's Americas segment | December 31, 2018 2017 2016 (in millions) U.S. net sales $ 964.2 $ $ U.S. property, plant and equipment, net (at end of year) $ 111.0 $ $ |
Schedule of intersegment sales for Americas, EMEA and Asia-Pacific | December 31, 2018 2017 2016 (in millions) Intersegment Sales Americas $ 12.7 $ 12.1 $ 12.0 Europe 14.2 14.6 12.3 APMEA 88.4 69.7 76.7 Intersegment sales $ 115.3 $ 96.4 $ 101.0 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated Other Comprehensive Loss | |
Schedule of amounts recognized in accumulated other comprehensive income (loss) | Accumulated Foreign Other Currency Cash Flow Comprehensive Translation Hedges (1) Loss (in millions) Balance December 31, 2017 $ (102.6) $ 3.5 $ (99.1) Change in period 9.7 2.8 12.5 Balance April 1, 2018 $ (92.9) $ 6.3 $ (86.6) Change in period (26.6) 1.0 (25.6) Balance July 1, 2018 $ (119.5) $ 7.3 $ (112.2) Change in period 2.5 (0.1) 2.4 Balance September 30, 2018 $ (117.0) $ 7.2 $ (109.8) Change in period (9.3) (2.0) (11.3) Balance December 31, 2018 $ (126.3) $ 5.2 $ (121.1) Balance December 31, 2016 $ (153.7) $ 2.9 $ (150.8) Change in period 7.9 0.1 8.0 Balance April 02, 2017 $ (145.8) $ 3.0 $ (142.8) Change in period 21.5 (0.7) 20.8 Balance July 02, 2017 $ (124.3) $ 2.3 $ (122.0) Change in period 15.4 0.1 15.5 Balance October 01, 2017 $ (108.9) $ 2.4 $ (106.5) Change in period 6.3 1.1 7.4 Balance December 31, 2017 $ (102.6) $ 3.5 $ (99.1) (1) Cash flow hedges include interest rate swaps and designated foreign currency hedges. See Note 17 for further details. |
Quarterly Financial Informati_2
Quarterly Financial Information (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information (unaudited) | |
Schedule of Quarterly Financial Information | First Second Third Fourth Quarter Quarter Quarter Quarter (in millions, except per share information) Year ended December 31, 2018 Net sales $ 378.5 $ 407.9 $ 390.9 $ 387.6 Gross profit 156.7 169.4 164.5 165.9 Net income 28.2 36.0 31.5 32.3 Per common share: Basic Net income 0.82 1.05 0.92 0.94 Diluted Net income 0.82 1.05 0.92 0.94 Dividends declared per common share 0.19 0.21 0.21 0.21 Year ended December 31, 2017 Net sales $ 347.2 $ 378.5 $ 364.7 $ 366.3 Gross profit 143.8 156.7 152.7 149.2 Net income (loss) 21.7 27.2 26.5 (2.3) Per common share: Basic Net income (loss) 0.63 0.79 0.77 (0.07) Diluted Net income (loss) 0.63 0.79 0.77 (0.07) Dividends declared per common share 0.18 0.19 0.19 0.19 Note: Four quarters may not sum to full year due to rounding. |
Description of Business (Detail
Description of Business (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Minimum | |
Length of time the business has been in operation | 140 years |
Accounting Policies - Income ta
Accounting Policies - Income tax (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2018 | |
Income Taxes | ||
Gross unrecognized tax benefits | $ 7.7 | $ 10.2 |
Amount of unrecognized tax benefits which, if recognized, would affect the effective tax rate | 4.5 | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ||
Balance at the beginning of the period | 7.7 | |
Increases related to prior year tax positions | 2.5 | |
Increases related to current year tax positions | 2.5 | |
Settlements | (2.1) | |
Currency movement | (0.4) | |
Balance at the end of the period | $ 10.2 | |
Decrease in unrecognized tax benefits, that is reasonably possible | $ 0.5 | |
Buildings and improvements | Minimum | ||
Property, plant and equipment | ||
Estimated useful lives of the assets | 10 years | |
Buildings and improvements | Maximum | ||
Property, plant and equipment | ||
Estimated useful lives of the assets | 40 years | |
Machinery and equipment | Minimum | ||
Property, plant and equipment | ||
Estimated useful lives of the assets | 3 years | |
Machinery and equipment | Maximum | ||
Property, plant and equipment | ||
Estimated useful lives of the assets | 15 years |
Accounting Policies - Stock Bas
Accounting Policies - Stock Based Compensation (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||||||
Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2018USD ($)item | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2016USD ($)$ / shares | |
Stock-based compensation | |||||||
Number of stock-based compensation plans | item | 1 | ||||||
Total unrecognized compensation costs related to unvested stock-based compensation arrangements | $ 17.4 | $ 17.4 | $ 17.4 | $ 17.4 | $ 17.4 | ||
Total weighted average remaining term of unrecognized compensation costs | 1 year 7 months 10 days | ||||||
Compensation cost recognized | 13.8 | $ 13.9 | $ 13.4 | ||||
Number of Reportable Segments | 3 | 3 | |||||
Impact on both basic and diluted net income per common share for recognition of total stock-based compensation expense (in dollars per share) | $ / shares | $ 0.32 | $ 0.28 | $ 0.29 | ||||
Cost of goods sold. | |||||||
Stock-based compensation | |||||||
Compensation cost recognized | 0.9 | $ 0.8 | $ 0.9 | ||||
Selling, general and administrative expenses | |||||||
Stock-based compensation | |||||||
Compensation cost recognized | 12.9 | 13.1 | 12.5 | ||||
Stock options | |||||||
Stock-based compensation | |||||||
Tax benefit recorded for the compensation expense | 0.1 | 0.8 | |||||
Other Stock-based Plans | |||||||
Stock-based compensation | |||||||
Tax benefit recorded for the compensation expense | $ 2.8 | $ 3.9 | $ 2.8 |
Accounting Policies - Net Incom
Accounting Policies - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net (loss) income | |||||||||||
Net (loss) income | $ 32.3 | $ 31.5 | $ 36 | $ 28.2 | $ (2.3) | $ 26.5 | $ 27.2 | $ 21.7 | $ 128 | $ 73.1 | $ 84.2 |
Net (loss) income | $ 128 | $ 73.1 | $ 84.2 | ||||||||
Shares (in shares) | 34.3 | 34.4 | 34.4 | ||||||||
Dilutive securities, principally common stock options (in shares) | 0.1 | ||||||||||
Shares (in shares) | 34.3 | 34.4 | 34.5 | ||||||||
Per Share Amount | |||||||||||
Per Share Amount (in dollars per share) | $ 0.94 | $ 0.92 | $ 1.05 | $ 0.82 | $ (0.07) | $ 0.77 | $ 0.79 | $ 0.63 | $ 3.73 | $ 2.12 | $ 2.45 |
Dilutive securities, principally common stock options (in dollars per share) | (0.01) | ||||||||||
Per Share Amount (in dollars per share) | $ 0.94 | $ 0.92 | $ 1.05 | $ 0.82 | $ (0.07) | $ 0.77 | $ 0.79 | $ 0.63 | $ 3.73 | $ 2.12 | $ 2.44 |
Securities not included in the computation of diluted EPS | |||||||||||
Options to purchase shares of Class A common stock, anti-dilutive | 0.1 | ||||||||||
Shipping and Handling Costs | |||||||||||
Shipping, Handling and Transportation Costs | $ 56.3 | $ 52.1 | $ 47.9 | ||||||||
Research and Development Expense. | |||||||||||
Research and Development Expense | $ 34.5 | $ 29 | $ 26.5 |
Accounting Policies - Financial
Accounting Policies - Financial Instruments (Details) - item | Dec. 31, 2018 | Dec. 31, 2017 |
Cash Flow Hedging | Designated | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Number of swaps | 2 | 2 |
Accounting Policies - Other (De
Accounting Policies - Other (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Shipping and Handling | |||
Shipping and handling costs included in selling, general and administrative expense | $ 56.3 | $ 52.1 | $ 47.9 |
Research and Development | |||
Research and development costs included in selling, general, and administrative expense | $ 34.5 | $ 29 | $ 26.5 |
Accounting Policies - Recently
Accounting Policies - Recently Adopted Accounting Standards (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements | |||
Non-current deferred tax asset | $ 1.6 | $ 1.6 | |
Noncurrent deferred tax liability | 38.5 | 55.2 | |
Long-term Debt | 355 | 499.5 | |
Unamortized debt issuance costs | $ 1.6 | $ 2.4 | |
Accounting Standards Update 2016-02 | Forecast | Minimum | |||
New Accounting Pronouncements | |||
Right-of-use asset | $ 25 | ||
Operating lease liability | 25 | ||
Accounting Standards Update 2016-02 | Forecast | Maximum | |||
New Accounting Pronouncements | |||
Right-of-use asset | 40 | ||
Operating lease liability | $ 40 |
Restructuring and Other Charg_3
Restructuring and Other Charges, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||
Jul. 03, 2016 | Dec. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | |
Restructuring | ||||||||
Costs incurred | $ 3.4 | $ 6.8 | $ 4.7 | |||||
Pre-tax restructuring charges, net | 3.4 | 6.8 | 4.7 | |||||
Gain on sale of manufacturing facility | 8.6 | |||||||
Restructuring reserve | ||||||||
Costs incurred | 3.4 | 6.8 | 4.7 | |||||
Corporate | ||||||||
Restructuring | ||||||||
Pre-tax restructuring charges, net | (0.5) | |||||||
Americas | ||||||||
Restructuring | ||||||||
Pre-tax restructuring charges, net | $ 3.1 | 1.6 | ||||||
Reduction of area of space (as a percent) | 30.00% | |||||||
Europe | ||||||||
Restructuring | ||||||||
Pre-tax restructuring charges, net | 3.4 | $ 3.3 | 3.4 | |||||
APMEA | ||||||||
Restructuring | ||||||||
Pre-tax restructuring charges, net | 0.4 | 0.2 | ||||||
2015 Actions | ||||||||
Restructuring | ||||||||
Pre-tax restructuring charges, net | 2.4 | 2.1 | ||||||
2015 Actions | Europe | ||||||||
Restructuring | ||||||||
Restructuring reserve | $ 6.4 | 1 | 4.8 | 6.4 | $ 6.4 | $ 0.1 | $ 1 | |
Costs incurred | (1) | 1.8 | 6.9 | |||||
Net pre-tax restructuring adjustments | (1) | |||||||
Pre-tax restructuring charges, net | 7.7 | 7.7 | ||||||
Restructuring reserve | ||||||||
Balance at the beginning of the period | 1 | 4.8 | 6.4 | |||||
Costs incurred | (1) | 1.8 | 6.9 | |||||
Utilization and foreign currency impact | (0.9) | (2.8) | (3.4) | |||||
Balance at the end of the period | 6.4 | 0.1 | 1 | 4.8 | 6.4 | |||
2015 Actions | Europe | Severance | ||||||||
Restructuring | ||||||||
Restructuring reserve | 6.4 | 1 | 4.8 | 6.4 | 6.4 | 0.1 | 1 | |
Costs incurred | (1) | 1.3 | 6.6 | |||||
Net pre-tax restructuring adjustments | (1) | |||||||
Pre-tax restructuring charges, net | 6.9 | |||||||
Restructuring reserve | ||||||||
Balance at the beginning of the period | 1 | 4.8 | 6.4 | |||||
Costs incurred | (1) | 1.3 | 6.6 | |||||
Utilization and foreign currency impact | (0.9) | (2.8) | (2.9) | |||||
Balance at the end of the period | 6.4 | 0.1 | 1 | 4.8 | 6.4 | |||
2015 Actions | Europe | Legal and consultancy | ||||||||
Restructuring | ||||||||
Costs incurred | 0.5 | |||||||
Pre-tax restructuring charges, net | 0.5 | |||||||
Restructuring reserve | ||||||||
Costs incurred | 0.5 | |||||||
Utilization and foreign currency impact | (0.5) | |||||||
2015 Actions | Europe | Facility exit and other | ||||||||
Restructuring | ||||||||
Costs incurred | 0.3 | |||||||
Pre-tax restructuring charges, net | 0.3 | |||||||
Restructuring reserve | ||||||||
Costs incurred | 0.3 | |||||||
2015 Actions | Americas and APMEA | ||||||||
Restructuring | ||||||||
Pre-tax program to date restructuring and other charges incurred | 18.1 | |||||||
Restructuring reserve | 6.4 | 0.2 | 1.2 | 6.4 | 6.4 | 0.2 | ||
Costs incurred | 2.4 | 2.1 | 13.6 | |||||
Elimination of net sales | 165 | |||||||
Goodwill and intangible asset impairment charges | 13.5 | |||||||
Other transformation and deployment costs | 28.2 | |||||||
Gain on disposition, before tax | $ 8.7 | |||||||
Proceeds from disposition | $ 8.4 | |||||||
Restructuring reserve | ||||||||
Balance at the beginning of the period | 0.2 | 1.2 | 6.4 | |||||
Costs incurred | 2.4 | 2.1 | 13.6 | |||||
Utilization and foreign currency impact | (0.2) | (3.4) | (7.3) | |||||
Balance at the end of the period | 6.4 | 0.2 | 1.2 | 6.4 | ||||
2015 Actions | Americas and APMEA | Minimum | ||||||||
Restructuring | ||||||||
Expected pre-tax program to date restructuring and other charges incurred | 59.8 | |||||||
2015 Actions | Americas and APMEA | Severance | ||||||||
Restructuring | ||||||||
Pre-tax program to date restructuring and other charges incurred | 7 | |||||||
Restructuring reserve | 5 | 0.2 | 1.2 | 5 | 5 | 0.2 | ||
Costs incurred | 8.5 | |||||||
Net pre-tax restructuring adjustments | (1.5) | |||||||
Restructuring reserve | ||||||||
Balance at the beginning of the period | 0.2 | 1.2 | 5 | |||||
Costs incurred | 8.5 | |||||||
Utilization and foreign currency impact | (0.2) | (1) | (2.3) | |||||
Balance at the end of the period | 5 | 0.2 | 1.2 | 5 | ||||
2015 Actions | Americas and APMEA | Legal and consultancy | ||||||||
Restructuring | ||||||||
Pre-tax program to date restructuring and other charges incurred | 0.9 | |||||||
Restructuring reserve | 0.4 | 0.4 | 0.4 | |||||
Costs incurred | 0.2 | 0.7 | ||||||
Restructuring reserve | ||||||||
Balance at the beginning of the period | 0.4 | |||||||
Costs incurred | 0.2 | 0.7 | ||||||
Utilization and foreign currency impact | (0.6) | |||||||
Balance at the end of the period | 0.4 | 0.4 | ||||||
2015 Actions | Americas and APMEA | Asset write-downs | ||||||||
Restructuring | ||||||||
Pre-tax program to date restructuring and other charges incurred | 6.7 | |||||||
Costs incurred | 2.2 | 2.9 | 1.6 | |||||
Restructuring reserve | ||||||||
Costs incurred | 2.2 | 2.9 | 1.6 | |||||
Utilization and foreign currency impact | (2.2) | (2.9) | ||||||
2015 Actions | Americas and APMEA | Facility exit and other | ||||||||
Restructuring | ||||||||
Pre-tax program to date restructuring and other charges incurred | 3.5 | |||||||
Restructuring reserve | 1 | 1 | 1 | |||||
Costs incurred | 0.2 | 0.5 | 2.8 | |||||
Restructuring reserve | ||||||||
Balance at the beginning of the period | 1 | |||||||
Costs incurred | 0.2 | 0.5 | 2.8 | |||||
Utilization and foreign currency impact | (0.2) | (1.5) | ||||||
Balance at the end of the period | $ 1 | $ 1 | ||||||
2018 Actions | Europe | ||||||||
Restructuring | ||||||||
Pre-tax program to date restructuring and other charges incurred | 4 | |||||||
Total expected restructuring costs | 5 | |||||||
Restructuring reserve | 2.2 | 2.2 | ||||||
Restructuring reserve | ||||||||
Balance at the end of the period | 2.2 | |||||||
Other Actions | ||||||||
Restructuring | ||||||||
Pre-tax restructuring charges, net | 3.4 | $ 4.4 | $ 2.6 | |||||
Other Actions | Europe | ||||||||
Restructuring | ||||||||
Total expected restructuring costs | 3.4 | $ 4.1 | ||||||
Restructuring reserve | 0.2 | $ 0.2 | ||||||
Restructuring reserve | ||||||||
Balance at the end of the period | $ 0.2 |
Restructuring and Other Charg_4
Restructuring and Other Charges, Net - Pre-tax Restructuring (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring | |||||||||||||
Total restructuring and other charges, net | $ 3.4 | $ 6.8 | $ 4.7 | ||||||||||
Pre-tax restructuring charges, net | 3.4 | 6.8 | 4.7 | ||||||||||
Net Sales | $ 387.6 | $ 390.9 | $ 407.9 | $ 378.5 | $ 366.3 | $ 364.7 | $ 378.5 | $ 347.2 | 1,564.9 | 1,456.7 | 1,398.4 | ||
Corporate | |||||||||||||
Restructuring | |||||||||||||
Pre-tax restructuring charges, net | (0.5) | ||||||||||||
Europe | |||||||||||||
Restructuring | |||||||||||||
Pre-tax restructuring charges, net | 3.4 | 3.3 | 3.4 | ||||||||||
Americas | |||||||||||||
Restructuring | |||||||||||||
Pre-tax restructuring charges, net | $ 3.1 | 1.6 | |||||||||||
Reduction of area of space (as a percent) | 30.00% | ||||||||||||
2015 Actions | |||||||||||||
Restructuring | |||||||||||||
Pre-tax restructuring charges, net | $ 2.4 | 2.1 | |||||||||||
2015 Actions | Europe | |||||||||||||
Restructuring | |||||||||||||
Net pre-tax restructuring adjustments | (1) | ||||||||||||
Total restructuring and other charges, net | (1) | 1.8 | $ 6.9 | ||||||||||
Pre-tax restructuring charges, net | $ 7.7 | 7.7 | |||||||||||
Other Actions | |||||||||||||
Restructuring | |||||||||||||
Pre-tax restructuring charges, net | 3.4 | 4.4 | $ 2.6 | ||||||||||
Other Actions | Europe | |||||||||||||
Restructuring | |||||||||||||
Total expected restructuring costs | $ 3.4 | $ 4.1 | $ 3.4 | $ 4.1 |
Restructuring and Other Charg_5
Restructuring and Other Charges, Net (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | $ 3.4 | $ 6.8 | $ 4.7 | |
Restructuring reserve | ||||
Costs incurred | 3.4 | 6.8 | 4.7 | |
2015 Actions | Europe | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | (1) | 1.8 | $ 6.9 | |
Restructuring reserve | ||||
Balance at the beginning of the period | 1 | 4.8 | 6.4 | |
Costs incurred | (1) | 1.8 | 6.9 | |
Net pre-tax restructuring adjustments | (1) | |||
Utilization and foreign currency impact | (0.9) | (2.8) | (3.4) | |
Balance at the end of the period | 0.1 | 1 | 4.8 | 6.4 |
2015 Actions | Europe | Severance | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | (1) | 1.3 | 6.6 | |
Restructuring reserve | ||||
Balance at the beginning of the period | 1 | 4.8 | 6.4 | |
Costs incurred | (1) | 1.3 | 6.6 | |
Net pre-tax restructuring adjustments | (1) | |||
Utilization and foreign currency impact | (0.9) | (2.8) | (2.9) | |
Balance at the end of the period | 0.1 | 1 | 4.8 | 6.4 |
2015 Actions | Europe | Legal and consultancy | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | 0.5 | |||
Restructuring reserve | ||||
Costs incurred | 0.5 | |||
Utilization and foreign currency impact | (0.5) | |||
2015 Actions | Europe | Facility exit and other | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | 0.3 | |||
Restructuring reserve | ||||
Costs incurred | 0.3 | |||
2015 Actions | Americas and APMEA | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | 2.4 | 2.1 | 13.6 | |
Incurred to Date | 18.1 | |||
Restructuring reserve | ||||
Balance at the beginning of the period | 0.2 | 1.2 | 6.4 | |
Costs incurred | 2.4 | 2.1 | 13.6 | |
Utilization and foreign currency impact | (0.2) | (3.4) | (7.3) | |
Balance at the end of the period | 0.2 | 1.2 | 6.4 | |
2015 Actions | Americas and APMEA | Severance | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | 8.5 | |||
Incurred to Date | 7 | |||
Restructuring reserve | ||||
Balance at the beginning of the period | 0.2 | 1.2 | 5 | |
Costs incurred | 8.5 | |||
Net pre-tax restructuring adjustments | (1.5) | |||
Utilization and foreign currency impact | (0.2) | (1) | (2.3) | |
Balance at the end of the period | 0.2 | 1.2 | 5 | |
2015 Actions | Americas and APMEA | Legal and consultancy | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | 0.2 | 0.7 | ||
Incurred to Date | 0.9 | |||
Restructuring reserve | ||||
Balance at the beginning of the period | 0.4 | |||
Costs incurred | 0.2 | 0.7 | ||
Utilization and foreign currency impact | (0.6) | |||
Balance at the end of the period | 0.4 | |||
2015 Actions | Americas and APMEA | Asset write-downs | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | 2.2 | 2.9 | 1.6 | |
Incurred to Date | 6.7 | |||
Restructuring reserve | ||||
Costs incurred | 2.2 | 2.9 | 1.6 | |
Utilization and foreign currency impact | (2.2) | (2.9) | ||
2015 Actions | Americas and APMEA | Facility exit and other | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Costs incurred | 0.2 | 0.5 | 2.8 | |
Incurred to Date | 3.5 | |||
Restructuring reserve | ||||
Balance at the beginning of the period | 1 | |||
Costs incurred | 0.2 | 0.5 | 2.8 | |
Utilization and foreign currency impact | (0.2) | $ (1.5) | ||
Balance at the end of the period | $ 1 | |||
Other Actions | Europe | ||||
Summary of total expected, incurred and remaining pre-tax costs | ||||
Total expected restructuring costs | 3.4 | $ 4.1 | ||
Restructuring reserve | ||||
Balance at the end of the period | $ 0.2 |
Restructuring and Other Charg_6
Restructuring and Other Charges, Net - Expected, incurred and remaining pre-tax restructuring costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring reserve | |||
Costs incurred | $ 3.4 | $ 6.8 | $ 4.7 |
Summary of total expected, incurred and remaining pre-tax costs | |||
Costs incurred | $ 3.4 | $ 6.8 | $ 4.7 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jul. 01, 2018USD ($) | Apr. 01, 2018USD ($) | Dec. 31, 2017USD ($) | Oct. 01, 2017USD ($) | Jul. 02, 2017USD ($) | Apr. 02, 2017USD ($) | Dec. 31, 2018segment | Dec. 31, 2018item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Disaggregation of Revenue | |||||||||||||
Number of distribution channels | item | 4 | ||||||||||||
Number of geographic segments | 3 | 3 | |||||||||||
Revenue | $ 387.6 | $ 390.9 | $ 407.9 | $ 378.5 | $ 366.3 | $ 364.7 | $ 378.5 | $ 347.2 | $ 1,564.9 | $ 1,456.7 | $ 1,398.4 | ||
Wholesale | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 952.9 | ||||||||||||
OEM | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 230.4 | ||||||||||||
Specialty | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 316.6 | ||||||||||||
DIY | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 65 | ||||||||||||
Residential & commercial flow control | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 804.4 | ||||||||||||
HVAC & gas | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 507 | ||||||||||||
Drainage & water re-use | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 163.1 | ||||||||||||
Water quality | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 90.4 | ||||||||||||
Americas | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 1,032.1 | 951.9 | 900.9 | ||||||||||
Americas | Wholesale | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 578.8 | ||||||||||||
Americas | OEM | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 79 | ||||||||||||
Americas | Specialty | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 312.1 | ||||||||||||
Americas | DIY | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 62.2 | ||||||||||||
Americas | Residential & commercial flow control | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 582 | ||||||||||||
Americas | HVAC & gas | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 289.2 | ||||||||||||
Americas | Drainage & water re-use | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 73.1 | ||||||||||||
Americas | Water quality | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 87.8 | ||||||||||||
Europe | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 467 | 440.3 | 431.3 | ||||||||||
Europe | Wholesale | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 314.2 | ||||||||||||
Europe | OEM | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 150 | ||||||||||||
Europe | DIY | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 2.8 | ||||||||||||
Europe | Residential & commercial flow control | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 176.2 | ||||||||||||
Europe | HVAC & gas | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 201.6 | ||||||||||||
Europe | Drainage & water re-use | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 87.8 | ||||||||||||
Europe | Water quality | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 1.4 | ||||||||||||
APMEA | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 65.8 | $ 64.5 | $ 66.2 | ||||||||||
APMEA | Wholesale | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 59.9 | ||||||||||||
APMEA | OEM | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 1.4 | ||||||||||||
APMEA | Specialty | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 4.5 | ||||||||||||
APMEA | Residential & commercial flow control | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 46.2 | ||||||||||||
APMEA | HVAC & gas | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 16.2 | ||||||||||||
APMEA | Drainage & water re-use | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | 2.2 | ||||||||||||
APMEA | Water quality | |||||||||||||
Disaggregation of Revenue | |||||||||||||
Revenue | $ 1.2 |
Revenue Recognition - Performan
Revenue Recognition - Performance obligation (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | 12 Months Ended |
Dec. 31, 2018 | |
Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue recognition performance period | 1 year |
Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue recognition performance period | 3 years |
Revenue Recognition - Contract
Revenue Recognition - Contract Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2018 | Jan. 01, 2018 | |
Contract with Customer, Asset | ||||||
Contract Assets | $ 1 | $ 1.8 | $ 1.4 | $ 1.7 | $ 1 | $ 0.6 |
Change in period | (0.8) | 0.4 | (0.3) | 1.1 | ||
Contract Liabilities | ||||||
Contract Liabilities - Current | 11.3 | 11.2 | 11.6 | 11.5 | 11.3 | 11.3 |
Increase (decrease) - Current Liabilities | 0.1 | (0.4) | 0.1 | 0.2 | ||
Current Liabilities - Noncurrent | $ 2.7 | $ 2.7 | 2.7 | 2.4 | $ 2.7 | $ 2.1 |
Increase (decrease) - Noncurrent Liabilities | $ 0.3 | $ 0.3 | ||||
Revenue practical expedient, financial component | true | |||||
Revenue recognized, contract liability | $ 11.3 | |||||
Impairment loss related to Contract Assets | $ 0 | |||||
Revenue practical expedient, incremental cost of obtaining contract | true |
Sale of Business (Details)
Sale of Business (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2016 | |
Discontinued Operations | ||
Pre-tax gain on sale of business | $ 8.7 | |
After-tax gain on sale of business | $ 8.6 | |
Sale of business | China Operating Subsidiary | ||
Discontinued Operations | ||
Proceeds from disposition | $ 8.4 | |
Pre-tax gain on sale of business | 8.7 | |
Non-cash accumulated currency translation adjustment | 7.3 | |
After-tax gain on sale of business | $ 8.3 |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ in Millions | Nov. 02, 2016 | Nov. 30, 2015 | Apr. 02, 2017 | Dec. 31, 2018 | Oct. 28, 2018 | Dec. 31, 2017 |
Acquisition | ||||||
Estimated useful lives | 12 years 1 month 6 days | |||||
Goodwill resulted through acquisition | $ 544.8 | $ 544.3 | $ 550.5 | |||
Redeemable financial instrument | ||||||
Acquisition | ||||||
Liability recorded at acquisition date fair value | $ 2.8 | $ 2.9 | ||||
Customer relationships | ||||||
Acquisition | ||||||
Estimated useful lives | 11 years | |||||
Technology | ||||||
Acquisition | ||||||
Estimated useful lives | 7 years 2 months 12 days | |||||
Trade name | ||||||
Acquisition | ||||||
Estimated useful lives | 13 years 8 months 12 days | |||||
PVI Riverside Holdings, Inc Member | ||||||
Acquisition | ||||||
Outstanding shares acquired (as a percent) | 100.00% | |||||
Purchase price | $ 79.1 | |||||
Goodwill resulted through acquisition | 41.1 | |||||
Purchase price allocated to intangible assets | 31 | |||||
Goodwill deductible for tax purposes | $ 6.9 | |||||
PVI Riverside Holdings, Inc Member | Customer relationships | ||||||
Acquisition | ||||||
Estimated useful lives | 15 years | |||||
Purchase price allocated to intangible assets | $ 17.6 | |||||
PVI Riverside Holdings, Inc Member | Technology | ||||||
Acquisition | ||||||
Estimated useful lives | 10 years | |||||
Purchase price allocated to intangible assets | $ 10.2 | |||||
PVI Riverside Holdings, Inc Member | Trade name | ||||||
Acquisition | ||||||
Estimated useful lives | 20 years | |||||
Purchase price allocated to intangible assets | $ 3.2 | |||||
Apex | ||||||
Acquisition | ||||||
Outstanding shares acquired (as a percent) | 80.00% | 10.00% | ||||
Purchase price | $ 20.4 | $ 2.9 | ||||
Aggregate ownership percentage | 90.00% | |||||
Shares remaining to be acquired (as a percent) | 20.00% | 10.00% | ||||
Apex | Redeemable financial instrument | ||||||
Acquisition | ||||||
Liability recorded at acquisition date fair value | $ 5.5 |
Goodwill and Intangibles - Good
Goodwill and Intangibles - Goodwill (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2018USD ($)segment | Dec. 31, 2018USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Oct. 28, 2018USD ($) | |
Gross Balance | |||||
Balance at the beginning of the period | $ 717.6 | $ 699.8 | |||
Acquired During the Period | 1.5 | 2 | |||
Foreign Currency Translation and Other | (7.2) | 15.8 | |||
Balance at the end of the period | 711.9 | 717.6 | |||
Accumulated Impairment Losses | |||||
Balance at the beginning of the period | (167.1) | (167.1) | |||
Balance at the end of the period | (167.1) | (167.1) | |||
Goodwill impairment charges | 0 | 0 | |||
Net Goodwill | $ 544.8 | $ 544.8 | 544.8 | 550.5 | $ 544.3 |
Number of reporting units | item | 8 | ||||
Number of geographic segments | 3 | 3 | |||
Goodwill impairment charges | 0 | 0 | |||
Americas | |||||
Gross Balance | |||||
Balance at the beginning of the period | 437.4 | 434.7 | |||
Acquired During the Period | 2 | ||||
Foreign Currency Translation and Other | 0.7 | ||||
Balance at the end of the period | 437.4 | ||||
Accumulated Impairment Losses | |||||
Balance at the beginning of the period | (24.5) | (24.5) | |||
Balance at the end of the period | (24.5) | ||||
Net Goodwill | 412.9 | ||||
Europe | |||||
Gross Balance | |||||
Balance at the beginning of the period | 249.3 | 234.9 | |||
Foreign Currency Translation and Other | 14.4 | ||||
Balance at the end of the period | 249.3 | ||||
Accumulated Impairment Losses | |||||
Balance at the beginning of the period | (129.7) | (129.7) | |||
Balance at the end of the period | (129.7) | ||||
Net Goodwill | 119.6 | ||||
Americas | |||||
Gross Balance | |||||
Balance at the beginning of the period | 437.4 | ||||
Acquired During the Period | 1.5 | ||||
Foreign Currency Translation and Other | (0.8) | ||||
Balance at the end of the period | 438.1 | 437.4 | |||
Accumulated Impairment Losses | |||||
Balance at the beginning of the period | (24.5) | ||||
Balance at the end of the period | (24.5) | (24.5) | |||
Net Goodwill | $ 413.6 | $ 413.6 | 413.6 | ||
Europe | |||||
Gross Balance | |||||
Balance at the beginning of the period | 249.3 | ||||
Foreign Currency Translation and Other | (5.6) | ||||
Balance at the end of the period | 243.7 | 249.3 | |||
Accumulated Impairment Losses | |||||
Balance at the beginning of the period | (129.7) | ||||
Balance at the end of the period | (129.7) | (129.7) | |||
Net Goodwill | 114 | 114 | 114 | ||
APMEA | |||||
Gross Balance | |||||
Balance at the beginning of the period | 30.9 | 30.2 | |||
Foreign Currency Translation and Other | (0.8) | 0.7 | |||
Balance at the end of the period | 30.1 | 30.9 | |||
Accumulated Impairment Losses | |||||
Balance at the beginning of the period | (12.9) | (12.9) | |||
Balance at the end of the period | (12.9) | (12.9) | |||
Net Goodwill | 17.2 | 17.2 | 17.2 | $ 18 | |
Water quality | |||||
Accumulated Impairment Losses | |||||
Net Goodwill | $ 0 | $ 0 | $ 0 |
Goodwill and Intangibles - Inta
Goodwill and Intangibles - Intangibles (Details) - USD ($) $ in Millions | Nov. 02, 2016 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible assets subject to amortization | |||||
Gross Carrying Amount | $ 335.6 | $ 334 | $ 335.6 | ||
Accumulated Amortization | (187.7) | (205) | (187.7) | ||
Net Carrying Amount | 147.9 | 129 | 147.9 | ||
Indefinite-lived intangible assets | |||||
Indefinite-lived intangible assets | 37.3 | 36.2 | 37.3 | ||
Intangible assets | |||||
Gross Carrying Amount | 372.9 | 370.2 | 372.9 | ||
Net Carrying Amount | 185.2 | $ 165.2 | 185.2 | ||
Finite-lived intangible asset impairment | $ 0.1 | ||||
Estimated useful lives | 12 years 1 month 6 days | ||||
Aggregate amortization expense for amortized intangible assets | $ 19.6 | 22.5 | 20.8 | ||
Amortization expense | |||||
2,019 | 17.2 | ||||
2,020 | 16.2 | ||||
2,021 | 14.6 | ||||
2,022 | 13.5 | ||||
2,023 | 11.6 | ||||
Patents | |||||
Intangible assets subject to amortization | |||||
Gross Carrying Amount | 16.1 | 16.1 | 16.1 | ||
Accumulated Amortization | (15.4) | (15.8) | (15.4) | ||
Net Carrying Amount | 0.7 | $ 0.3 | 0.7 | ||
Intangible assets | |||||
Estimated useful lives | 3 years 3 months 18 days | ||||
Customer relationships | |||||
Intangible assets subject to amortization | |||||
Gross Carrying Amount | 233.2 | $ 232.9 | 233.2 | ||
Accumulated Amortization | (133.5) | (146.9) | (133.5) | ||
Net Carrying Amount | 99.7 | $ 86 | 99.7 | ||
Intangible assets | |||||
Estimated useful lives | 11 years | ||||
Technology | |||||
Intangible assets subject to amortization | |||||
Gross Carrying Amount | 53.9 | $ 54.6 | 53.9 | ||
Accumulated Amortization | (23.1) | (27.3) | (23.1) | ||
Net Carrying Amount | 30.8 | $ 27.3 | 30.8 | ||
Intangible assets | |||||
Estimated useful lives | 7 years 2 months 12 days | ||||
Trade name | |||||
Intangible assets subject to amortization | |||||
Gross Carrying Amount | 25.5 | $ 26.1 | 25.5 | ||
Accumulated Amortization | (9.7) | (11.5) | (9.7) | ||
Net Carrying Amount | 15.8 | $ 14.6 | 15.8 | ||
Intangible assets | |||||
Estimated useful lives | 13 years 8 months 12 days | ||||
Other | |||||
Intangible assets subject to amortization | |||||
Gross Carrying Amount | 6.9 | $ 4.3 | 6.9 | ||
Accumulated Amortization | (6) | (3.5) | (6) | ||
Net Carrying Amount | 0.9 | $ 0.8 | $ 0.9 | ||
Intangible assets | |||||
Estimated useful lives | 19 years 1 month 6 days | ||||
Americas | Technology | |||||
Intangible assets | |||||
Finite-lived intangible asset impairment | $ 1 | ||||
Europe | |||||
Intangible assets | |||||
Indefinite-lived intangible asset impairment | $ 0.4 | ||||
PVI Riverside Holdings, Inc Member | Customer relationships | |||||
Intangible assets | |||||
Estimated useful lives | 15 years | ||||
PVI Riverside Holdings, Inc Member | Technology | |||||
Intangible assets | |||||
Estimated useful lives | 10 years | ||||
PVI Riverside Holdings, Inc Member | Trade name | |||||
Intangible assets | |||||
Estimated useful lives | 20 years |
Goodwill and Intangibles - Acqu
Goodwill and Intangibles - Acquisitions (Details) - USD ($) $ in Millions | Nov. 02, 2016 | Dec. 31, 2018 | Oct. 28, 2018 | Dec. 31, 2017 |
Business Combination, Description [Abstract] | ||||
Goodwill | $ 544.8 | $ 544.3 | $ 550.5 | |
PVI Riverside Holdings, Inc Member | ||||
Business Combination, Description [Abstract] | ||||
Outstanding shares acquired (as a percent) | 100.00% | |||
Purchase price | $ 79.1 | |||
Goodwill | 41.1 | |||
Purchase price allocated to intangible assets | $ 31 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Inventories | ||
Raw materials | $ 87.4 | $ 81.8 |
Work in process | 17.3 | 17.5 |
Finished goods | 182.1 | 159.8 |
Total Inventories | 286.8 | 259.1 |
Valuation reserves | 27.4 | 28.2 |
Finished goods consigned | $ 17.4 | $ 17.5 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Property, plant and equipment | |||
Property, plant and equipment, at cost | $ 537.4 | $ 525.8 | |
Accumulated depreciation | (335.5) | (327.3) | |
Property, plant and equipment, net | 201.9 | 198.5 | $ 189.7 |
Land | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | 14.1 | 14.5 | |
Buildings and improvements | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | 165.7 | 164.6 | |
Machinery and equipment | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | 342.2 | 336.9 | |
Construction in progress | |||
Property, plant and equipment | |||
Property, plant and equipment, at cost | $ 15.4 | $ 9.8 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred income tax liabilities: | |||
Excess tax over book depreciation | $ 16.2 | $ 13.5 | |
Intangibles | 33.8 | 37.1 | |
Goodwill | 17.4 | 16.3 | |
Foreign earnings | 5.1 | 14.6 | |
Other | 3.2 | 5.7 | |
Total deferred tax liabilities | 75.7 | 87.2 | |
Deferred income tax assets: | |||
Accrued expenses | 16 | 17.8 | |
Capital loss carry forward | 0.3 | ||
Foreign tax credits | 33.5 | 22 | |
Net operating loss carry forward | 6.1 | 6.5 | |
Inventory reserves | 6 | 5.8 | |
Other | 7.1 | 9.9 | |
Total deferred tax assets | 68.7 | 62.3 | |
Less: valuation allowance | (29.9) | (28.7) | |
Net deferred tax assets | 38.8 | 33.6 | |
Net deferred tax liabilities | (36.9) | (53.6) | |
Pre-tax income, basis for the provision for income taxes from continuing operations | |||
Domestic | 103.2 | 80.3 | $ 64.8 |
Foreign | 71.4 | 62.8 | 63 |
INCOME BEFORE INCOME TAXES | 174.6 | 143.1 | 127.8 |
Current tax expense: | |||
Federal | 24.7 | 42.1 | 18.3 |
Foreign | 29 | 17.3 | 17.2 |
State | 7.7 | 4.2 | 3.9 |
Total | 61.4 | 63.6 | 39.4 |
Deferred tax expense (benefit): | |||
Federal | (3.2) | 4 | 3.6 |
Foreign | (7.7) | 8.5 | 0.6 |
State | (1.9) | 5.9 | |
Total | (12.8) | 18.4 | 4.2 |
Deferred tax remeasurement of the 2017 Tax Act | (2) | (12) | |
Provision for income taxes from continuing operations | $ 46.6 | $ 70 | 43.6 |
U.S. Corporate income tax rate | 21.00% | 35.00% | |
Provisional tax expense, 2017 Tax Act | $ 25.1 | ||
Income tax expense (benefit), 2017 Tax Act | $ 3.7 | ||
Net impact on finalization of provisional tax expense, 2017 Tax Act | 21.4 | ||
Net impact on finalization of foreign tax credits and partial release of related valuation allowance, 2017 Tax Act | $ 10.6 | ||
Tax rate on accumulated foreign subsidiary earnings not previously subject to U.S. income tax (as a percent) | 15.50% | ||
Tax rate on remaining foreign subsidiary earnings (as a percent) | 8.00% | ||
Provisional liability on accumulated foreign subsidiary earnings | 23.3 | ||
Toll tax expense, 2017 Tax Act | $ 10.2 | ||
Payment period on toll tax liability | 8 years | ||
Change in US tax rate | $ 14 | ||
Provisional amount of deferred tax expense on future repatriation of foreign earnings other than toll taxes | 14.6 | ||
Amount of net deferred tax expense on future repatriation of foreign earnings other than toll taxes | 12.6 | ||
Final deferred tax benefit on future repatriation of foreign earnings other than toll taxes | 2 | ||
Reconciliation of federal statutory taxes to actual income taxes reported from continuing operations | |||
Computed expected federal income expense | 36.6 | 50.1 | 44.7 |
State income taxes, net of federal tax benefit | 5.3 | 2.7 | 2.2 |
Foreign tax rate differential | 2.7 | (6.7) | (6.7) |
Impact of the 2017 Tax Act | (3.7) | 25.1 | |
Change in valuation allowance | 3.2 | ||
Other, net | 2.5 | (1.2) | 3.4 |
Provision for income taxes | $ 46.6 | $ 70 | $ 43.6 |
Income Taxes - Operating loss c
Income Taxes - Operating loss carry forwards (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Net operating loss carry forwards | ||
Net operating loss carry forward | $ 6.1 | $ 6.5 |
Valuation allowance | 29.9 | 28.7 |
Foreign | ||
Net operating loss carry forwards | ||
Operating loss carryforward | 24.6 | |
Net operating loss carry forwards for indefinite period | 24.6 | |
Tax credit carryforward | 33.5 | $ 22 |
Austrian Operations | ||
Net operating loss carry forwards | ||
Operating loss carryforward | $ 24.6 |
Income Taxes - Valuation allowa
Income Taxes - Valuation allowance (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Valuation allowance | ||
Valuation allowance | $ 29.9 | $ 28.7 |
Foreign Tax Credits | ||
Valuation allowance | ||
Valuation allowance | 23.8 | 22 |
U.S. | Capital Losses | ||
Valuation allowance | ||
Valuation allowance | 0.3 | |
Austrian Operations | Operating Losses | ||
Valuation allowance | ||
Valuation allowance | $ 6.1 | $ 6.4 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Expenses and Other Liabilities | ||
Commissions and sales incentives payable | $ 46.3 | $ 40.1 |
Product liability and workers' compensation | 22.3 | 24.5 |
Other | 54.6 | 57.6 |
Income taxes payable | 7.4 | 3.6 |
Accrued expenses and other liabilities | $ 130.6 | $ 125.8 |
Financing Arrangements - Long-t
Financing Arrangements - Long-term debt (Details) - USD ($) $ in Millions | Jun. 18, 2010 | Dec. 31, 2018 | Dec. 31, 2017 |
Financing Arrangements | |||
Total debt | $ 355 | $ 499.5 | |
Less debt issuance costs (deduction from liability) | (1.6) | (2.4) | |
Less current maturities | (30) | (22.5) | |
Total long-term debt | 323.4 | 474.6 | |
Principal payments during each of the next five years and thereafter | |||
2,019 | 30 | ||
2,020 | 105 | ||
2,021 | 220 | ||
2,022 | 0 | ||
Thereafter | 0 | ||
Letters of credit outstanding | $ 25.8 | 25.7 | |
5.05% Senior notes due 2020 | |||
Financing Arrangements | |||
Interest rate (as a percent) | 5.05% | ||
Total debt | $ 75 | 75 | |
Amount drawn | $ 75 | ||
5.05% Senior notes due 2020 | Minimum | |||
Financing Arrangements | |||
Optional amount that the Company may prepay | 1 | ||
Term Loan due February 2021 | |||
Financing Arrangements | |||
Total debt | 255 | 277.5 | |
Line of Credit matures February 2021 | |||
Financing Arrangements | |||
Total debt | $ 25 | $ 147 | |
Letters of credit | |||
Financing Arrangements | |||
Term of letters of credit from the date of issuance | 1 year |
Financing Arrangements - Credit
Financing Arrangements - Credit Agreement (Details) - USD ($) $ in Millions | Feb. 12, 2016 | Jun. 18, 2010 | Feb. 29, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Credit Agreement | |||||
Borrowings outstanding | $ 355 | $ 499.5 | |||
Stand-by letters of credit outstanding | 25.8 | 25.7 | |||
Term Loan due February 2021 | |||||
Credit Agreement | |||||
Borrowings outstanding | $ 255 | 277.5 | |||
Letters of credit | |||||
Credit Agreement | |||||
Term of debt | 1 year | ||||
5.05% Senior notes due 2020 | |||||
Credit Agreement | |||||
Amount drawn | $ 75 | ||||
Borrowings outstanding | $ 75 | $ 75 | |||
Interest rate (as a percent) | 5.05% | ||||
Credit Agreement | |||||
Credit Agreement | |||||
Term of debt | 5 years | ||||
Sublimit on letters of credit | $ 100 | ||||
Unused and available credit under the credit agreement | $ 449.2 | ||||
Stand-by letters of credit outstanding | $ 25.8 | ||||
Eurocurrency rate loans | LIBOR | Minimum | |||||
Credit Agreement | |||||
Interest rate added to base rate (as a percent) | 0.975% | ||||
Eurocurrency rate loans | LIBOR | Maximum | |||||
Credit Agreement | |||||
Interest rate added to base rate (as a percent) | 1.45% | ||||
Base rate loans and swing line loans | LIBOR | |||||
Credit Agreement | |||||
Interest rate added to base rate (as a percent) | 1.00% | ||||
Base rate loans and swing line loans | LIBOR | Minimum | |||||
Credit Agreement | |||||
Interest rate added to base rate (as a percent) | 0.00% | ||||
Base rate loans and swing line loans | LIBOR | Maximum | |||||
Credit Agreement | |||||
Interest rate added to base rate (as a percent) | 0.45% | ||||
Base rate loans and swing line loans | Federal funds | |||||
Credit Agreement | |||||
Interest rate added to base rate (as a percent) | 0.50% | ||||
Senior unsecured revolving credit facility | |||||
Credit Agreement | |||||
Borrowing capacity | $ 500 | ||||
Amount drawn | $ 25 | ||||
Interest rate on revolving credit facility (as a percent) | 3.50% | ||||
Term loan facility | Term Loan due February 2021 | |||||
Credit Agreement | |||||
Term of debt | 5 years | ||||
Face amount | $ 300 | ||||
Interest rate on term loan facility (as a percent) | 3.86% | ||||
First year (as a percent) | 0.00% | ||||
Second and third years (as a percent) | 7.50% | ||||
Fourth and fifth years (as a percent) | 10.00% | ||||
Amount drawn | $ 300 | ||||
Required payment | $ 22.5 | ||||
Term loan facility | LIBOR | Minimum | Term Loan due February 2021 | |||||
Credit Agreement | |||||
Interest rate added to base rate (as a percent) | 1.125% | ||||
Term loan facility | LIBOR | Maximum | Term Loan due February 2021 | |||||
Credit Agreement | |||||
Interest rate added to base rate (as a percent) | 1.75% |
Common Stock (Details)
Common Stock (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares | Jul. 27, 2015USD ($) | |
Common Stock | |||
Common Stock conversion ratio, at the option of the holder | 1 | ||
Class A | |||
Common Stock | |||
Common Stock, votes per share (Number of votes) | 1 | 1 | |
Shares of Common Stock reserved for issuance under stock-based compensation plans | shares | 2,581,389 | ||
Value of shares of the entity's Class A common stock authorized to be repurchased | $ | $ 100 | ||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ | $ 11.8 | ||
Number of shares repurchased | shares | 340,106 | 277,886 | |
Cost of shares of Class A common stock repurchased | $ | $ 26 | $ 18.2 | |
Class A | July 27, 2015 | |||
Common Stock | |||
Number of shares repurchased | shares | 340,106 | 277,886 | |
Cost of shares of Class A common stock repurchased | $ | $ 26 | $ 18.2 | |
Class B | |||
Common Stock | |||
Common Stock, votes per share (Number of votes) | 10 | 10 | |
Shares of Common Stock reserved for conversion | shares | 6,329,290 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2018USD ($)item$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015$ / sharesshares | Dec. 31, 2014 | |
Stock-based compensation | |||||
Total unrecognized compensation cost related to the unvested awards | $ | $ 17.4 | ||||
Total weighted average remaining term of unrecognized compensation costs | 1 year 7 months 10 days | ||||
Compensation cost recognized | $ | $ 13.8 | $ 13.9 | $ 13.4 | ||
Class A | |||||
Stock-based compensation | |||||
Shares available for future grants of new equity awards | shares | 1,232,137 | ||||
Performance stock units | |||||
Stock-based compensation | |||||
Granted (in shares) | shares | 96,000 | 98,000 | 107,000 | ||
Total unrecognized compensation cost related to the unvested awards | $ | $ 6.6 | ||||
Total weighted average remaining term of unrecognized compensation costs | 1 year 6 months 4 days | ||||
Compensation cost recognized | $ | $ 5.2 | $ 4.8 | $ 4 | ||
Fair value assumptions | |||||
Weighted average grant-date fair value (in dollars per share) | $ 81.51 | $ 60.45 | $ 55.27 | ||
Performance stock units | Class A | |||||
Weighted Average Intrinsic Value | |||||
Company's closing Common Stock price (in dollars per share) | $ 64.53 | ||||
Previous Stock Incentive Plan 2004 | |||||
Stock-based compensation | |||||
Vesting period | 4 years | 3 years | |||
Percentage of stock options becoming exercisable | 25.00% | 33.30% | |||
Expiration period (years) | 10 years | ||||
Minimum exercise price as percentage of fair market value of common stock on grant date | 100.00% | ||||
Second Amended and Restated 2004 Stock Incentive Plan | |||||
Stock-based compensation | |||||
Number of stock incentive plans | item | 1 | ||||
Second Amended and Restated 2004 Stock Incentive Plan | Stock options | |||||
Stock-based compensation | |||||
Total unrecognized compensation cost related to the unvested awards | $ | $ 0 | ||||
Compensation cost recognized | $ | $ 0.5 | $ 1.1 | |||
Summary of stock option activity and related information | |||||
Outstanding at beginning of year (in shares) | shares | 95,000 | 130,000 | 362,000 | ||
Cancelled/Forfeitures (in shares) | shares | (3,000) | (43,000) | |||
Exercised (in shares) | shares | (46,000) | (32,000) | (189,000) | ||
Outstanding at end of year (in shares) | shares | 49,000 | 95,000 | 130,000 | 362,000 | |
Exercisable at end of year (in shares) | shares | 49,000 | 93,000 | 82,000 | ||
Weighted Average Exercise Price | |||||
Outstanding at beginning of year (in dollars per share) | $ 54.91 | $ 54.46 | $ 48.46 | ||
Cancelled/Forfeitures (in dollars per share) | 55.81 | 52.93 | |||
Exercised (in dollars per share) | 54.55 | 53.19 | 43.31 | ||
Outstanding at end of year (in dollars per share) | 55.25 | 54.91 | 54.46 | $ 48.46 | |
Exercisable at end of year (in dollars per share) | 55.25 | $ 54.85 | $ 53.38 | ||
Weighted Average Intrinsic Value | |||||
Outstanding at end of year (in dollars per share) | 9.28 | ||||
Exercisable at end of year (in dollars per share) | $ 9.28 | ||||
Aggregate intrinsic values of exercisable options (in dollars) | $ | $ 0.5 | ||||
Total intrinsic value of options exercised | $ | $ 0.5 | $ 3.5 | |||
Second Amended and Restated 2004 Stock Incentive Plan | Stock options | Class A | |||||
Weighted Average Intrinsic Value | |||||
Company's closing Common Stock price (in dollars per share) | $ 64.53 | ||||
Management Stock Purchase Plan | |||||
Stock-based compensation | |||||
Percentage of annual incentive bonus that may be used to purchase RSU's | 50.00% | ||||
Purchase price as percentage of fair market value of common stock on grant date | 80.00% | ||||
Management Stock Purchase Plan | Class A | |||||
Stock-based compensation | |||||
Shares authorized | shares | 2,000,000 | ||||
Shares available for future grants of new equity awards | shares | 750,421 | ||||
Management Stock Purchase Plan | Restricted stock | Class A | |||||
Weighted Average Intrinsic Value | |||||
Company's closing Common Stock price (in dollars per share) | $ 64.53 | ||||
Management Stock Purchase Plan | Restricted stock units (RSUs) | |||||
Stock-based compensation | |||||
Granted (in shares) | shares | 36,000 | 47,000 | 89,000 | ||
Total unrecognized compensation cost related to the unvested awards | $ | $ 0.8 | ||||
Total weighted average remaining term of unrecognized compensation costs | 1 year 2 months 16 days | ||||
Compensation cost recognized | $ | $ 1 | $ 1 | $ 0.7 | ||
Fair value assumptions | |||||
Expected life (years) | 3 years | 3 years | 3 years | ||
Expected stock price volatility (as a percent) | 24.10% | 25.00% | 24.80% | ||
Expected dividend yield (as a percent) | 1.00% | 1.20% | 1.30% | ||
Risk-free interest rate (as a percent) | 2.40% | 1.50% | 0.90% | ||
Weighted average grant-date fair value (in dollars per share) | $ 21.80 | $ 16.84 | $ 18.15 | ||
Management Stock Purchase Plan | Restricted stock units (RSUs) | Minimum | |||||
Stock-based compensation | |||||
Vesting period | 3 years |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options outstanding (Details) - Stock options shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Options Outstanding | |
Number Outstanding (in shares) | shares | 48,751 |
Weighted Average Remaining Contractual Life | 4 years 4 months 6 days |
Weighted Average Exercise Price (in dollars per share) | $ 55.25 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 48,751 |
Weighted Average Exercise Price (in dollars per share) | $ 55.25 |
$29.05–$37.41 | |
Information about options outstanding | |
Low end of exercise price range (in dollars per share) | 29.05 |
High end of exercise price range (in dollars per share) | $ 54.76 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 17,933 |
Weighted Average Remaining Contractual Life | 3 years 5 months 19 days |
Weighted Average Exercise Price (in dollars per share) | $ 50.64 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 17,933 |
Weighted Average Exercise Price (in dollars per share) | $ 50.64 |
$54.76–$54.76 | |
Information about options outstanding | |
Low end of exercise price range (in dollars per share) | 57.47 |
High end of exercise price range (in dollars per share) | $ 57.47 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 22,372 |
Weighted Average Remaining Contractual Life | 4 years 9 months 22 days |
Weighted Average Exercise Price (in dollars per share) | $ 57.47 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 22,372 |
Weighted Average Exercise Price (in dollars per share) | $ 57.47 |
$57.47–$60.10 | |
Information about options outstanding | |
Low end of exercise price range (in dollars per share) | 57.95 |
High end of exercise price range (in dollars per share) | $ 60.10 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 8,446 |
Weighted Average Remaining Contractual Life | 5 years 4 days |
Weighted Average Exercise Price (in dollars per share) | $ 59.17 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 8,446 |
Weighted Average Exercise Price (in dollars per share) | $ 59.17 |
Stock-Based Compensation - Unve
Stock-Based Compensation - Unvested restricted stock and deferred shares activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other Disclosures | ||||
Total unrecognized compensation cost related to the unvested awards | $ 17.4 | |||
Total weighted average remaining term of unvested awards | 1 year 7 months 10 days | |||
Compensation cost recognized | $ 13.8 | $ 13.9 | $ 13.4 | |
Performance stock units | ||||
Summary of unvested restricted stock and deferred shares activity and related information | ||||
Unvested at beginning of year (in shares) | 273 | 267 | 201 | |
Granted (in shares) | 96 | 98 | 107 | |
Cancelled/Forfeitures (in shares) | (80) | (38) | (41) | |
Vested (in shares) | (40) | (54) | ||
Unvested at end of year (in shares) | 249 | 273 | 267 | 201 |
Weighted Average Grant Date Fair Value | ||||
Unvested at beginning of period (in dollars per share) | $ 58.23 | $ 56.96 | $ 57.98 | |
Granted (in dollars per share) | 81.51 | 60.45 | 55.27 | |
Cancelled/Forfeitures (in dollars per share) | 58.96 | 57.12 | 57.56 | |
Vested (in dollars per share) | 63.43 | 56.81 | ||
Unvested at end of period (in dollars per share) | $ 66.15 | $ 58.23 | $ 56.96 | $ 57.98 |
Other Disclosures | ||||
Total fair value of shares vested | $ 5.8 | $ 3.5 | $ 0 | $ 0 |
Total unrecognized compensation cost related to the unvested awards | $ 6.6 | |||
Total weighted average remaining term of unvested awards | 1 year 6 months 4 days | |||
Compensation cost recognized | $ 5.2 | $ 4.8 | $ 4 | |
Aggregate intrinsic value of outstanding awards | $ 16.1 | |||
Performance stock units | Class A | ||||
Other Disclosures | ||||
Company's closing Common Stock price (in dollars per share) | $ 64.53 | |||
Second Amended and Restated 2004 Stock Incentive Plan | Restricted stock and deferred shares | ||||
Summary of unvested restricted stock and deferred shares activity and related information | ||||
Unvested at beginning of year (in shares) | 217 | 210 | 244 | |
Granted (in shares) | 153 | 139 | 140 | |
Cancelled/Forfeitures (in shares) | (126) | (9) | (42) | |
Vested (in shares) | (28) | (123) | (132) | |
Unvested at end of year (in shares) | 216 | 217 | 210 | 244 |
Weighted Average Grant Date Fair Value | ||||
Unvested at beginning of period (in dollars per share) | $ 57.31 | $ 53.79 | $ 52.61 | |
Granted (in dollars per share) | 80.52 | 60.88 | 56.33 | |
Cancelled/Forfeitures (in dollars per share) | 59.52 | 55.55 | 54.43 | |
Vested (in dollars per share) | 66.24 | 55.35 | 53.10 | |
Unvested at end of period (in dollars per share) | $ 71.28 | $ 57.31 | $ 53.79 | $ 52.61 |
Other Disclosures | ||||
Total fair value of shares vested | $ 10.2 | $ 7.7 | $ 7.9 | |
Total unrecognized compensation cost related to the unvested awards | $ 10 | |||
Total weighted average remaining term of unvested awards | 1 year 8 months 12 days | |||
Compensation cost recognized | $ 7.6 | $ 6.9 | $ 7.6 | |
Aggregate intrinsic value of outstanding awards | $ 13.9 | |||
Second Amended and Restated 2004 Stock Incentive Plan | Restricted stock and deferred shares | Class A | ||||
Other Disclosures | ||||
Company's closing Common Stock price (in dollars per share) | $ 64.53 | |||
Management Stock Purchase Plan | Restricted stock | Class A | ||||
Other Disclosures | ||||
Company's closing Common Stock price (in dollars per share) | $ 64.53 | |||
Management Stock Purchase Plan | Restricted stock units (RSUs) | ||||
Summary of unvested restricted stock and deferred shares activity and related information | ||||
Granted (in shares) | 36 | 47 | 89 | |
Cancelled/Forfeitures (in shares) | (10) | (3) | (28) | |
Weighted Average Grant Date Fair Value | ||||
Granted (in dollars per share) | $ 21.80 | $ 16.84 | $ 18.15 | |
Other Disclosures | ||||
Total unrecognized compensation cost related to the unvested awards | $ 0.8 | |||
Total weighted average remaining term of unvested awards | 1 year 2 months 16 days | |||
Compensation cost recognized | $ 1 | $ 1 | $ 0.7 | |
Aggregate intrinsic value of outstanding awards | 3 | |||
Dividend declared and unpaid | $ 0.1 |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU activity (Details) - Management Stock Purchase Plan - Restricted stock units (RSUs) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
RSU activity and related information | |||
Outstanding at beginning of period (in shares) | 174 | 148 | 101 |
Granted (in shares) | 36 | 47 | 89 |
Cancelled/Forfeitures (in shares) | (10) | (3) | (28) |
Settled (in shares) | (46) | (18) | (14) |
Outstanding at end of period (in shares) | 154 | 174 | 148 |
Vested at end of period (in shares) | 66 | 57 | 28 |
Weighted Average Purchase Price | |||
Outstanding at beginning of period (in dollars per share) | $ 39.68 | $ 36.37 | $ 36.14 |
Granted (in dollars per share) | 61.84 | 49.92 | 35.41 |
Cancelled/Forfeitures (in dollars per share) | 48.82 | 41.55 | 32.25 |
Settled (in dollars per share) | 37.34 | 39.09 | 36.91 |
Outstanding at end of period (in dollars per share) | 45.02 | 39.68 | 36.37 |
Vested at end of period (in dollars per share) | 38.17 | $ 36.26 | $ 37.78 |
Weighted Average Intrinsic Value | |||
Outstanding at end of period (in dollars per share) | 19.51 | ||
Vested at end of period (in dollars per share) | $ 26.36 | ||
Aggregate intrinsic value of outstanding awards | $ 3 | ||
Aggregate intrinsic value of awards vested | 1.7 | ||
Total intrinsic value of awards settled | $ 1.8 | $ 0.4 | $ 1.5 |
Stock-Based Compensation - RSUs
Stock-Based Compensation - RSUs Outstanding (Details) - $ / shares shares in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair value assumptions | ||||||||||||
Dividends distributed on the company's Common Stock (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.18 | $ 0.82 | $ 0.75 | $ 0.71 | |
Class A | ||||||||||||
Fair value assumptions | ||||||||||||
Dividends distributed on the company's Common Stock (in dollars per share) | 0.82 | 0.75 | 0.71 | |||||||||
Class B | ||||||||||||
Fair value assumptions | ||||||||||||
Dividends distributed on the company's Common Stock (in dollars per share) | $ 0.82 | $ 0.75 | $ 0.71 | |||||||||
Management Stock Purchase Plan | Restricted stock units (RSUs) | ||||||||||||
RSUs Outstanding | ||||||||||||
Number Outstanding (in shares) | 154 | 174 | 154 | 174 | 148 | 101 | ||||||
Weighted Average Purchase Price (in dollars per share) | $ 45.02 | $ 39.68 | $ 45.02 | $ 39.68 | $ 36.37 | $ 36.14 | ||||||
RSUs Vested | ||||||||||||
Number Vested (in shares) | 66 | 57 | 66 | 57 | 28 | |||||||
Weighted Average Purchase Price (in dollars per share) | $ 38.17 | $ 36.26 | $ 38.17 | $ 36.26 | $ 37.78 | |||||||
Fair value assumptions | ||||||||||||
Expected life (years) | 3 years | 3 years | 3 years | |||||||||
Expected stock price volatility (as a percent) | 24.10% | 25.00% | 24.80% | |||||||||
Expected dividend yield (as a percent) | 1.00% | 1.20% | 1.30% | |||||||||
Risk-free interest rate (as a percent) | 2.40% | 1.50% | 0.90% | |||||||||
Weighted average grant-date fair value (in dollars per share) | $ 21.80 | $ 16.84 | $ 18.15 | |||||||||
$35.41-$40.27 | Management Stock Purchase Plan | Restricted stock units (RSUs) | ||||||||||||
Information about RSUs outstanding | ||||||||||||
Low end of purchase price range (in dollars per share) | 35.41 | |||||||||||
High end of purchase price range (in dollars per share) | $ 40.27 | |||||||||||
RSUs Outstanding | ||||||||||||
Number Outstanding (in shares) | 80 | 80 | ||||||||||
Weighted Average Purchase Price (in dollars per share) | $ 35.47 | $ 35.47 | ||||||||||
RSUs Vested | ||||||||||||
Number Vested (in shares) | 54 | 54 | ||||||||||
Weighted Average Purchase Price (in dollars per share) | $ 35.50 | $ 35.50 | ||||||||||
$49.92-$61.84 | Management Stock Purchase Plan | Restricted stock units (RSUs) | ||||||||||||
Information about RSUs outstanding | ||||||||||||
Low end of purchase price range (in dollars per share) | 49.92 | |||||||||||
High end of purchase price range (in dollars per share) | $ 61.84 | |||||||||||
RSUs Outstanding | ||||||||||||
Number Outstanding (in shares) | 74 | 74 | ||||||||||
Weighted Average Purchase Price (in dollars per share) | $ 55.37 | $ 55.37 | ||||||||||
RSUs Vested | ||||||||||||
Number Vested (in shares) | 12 | 12 | ||||||||||
Weighted Average Purchase Price (in dollars per share) | $ 49.92 | $ 49.92 |
Employee Benefit Plans - 401K C
Employee Benefit Plans - 401K Contribution and Supplemental Compensation agreement (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Benefit Plans | |||
Base contribution as a percentage of employee gross pay (as a percent) | 2.00% | ||
Employer maximum match of an employee's contributions of first 4% of eligible compensation (as a percent) | 100.00% | ||
Percentage of eligible compensation, matched 100% by employer | 4.00% | ||
Company's matching contributions under certain 401(k) savings plans | $ 6.1 | $ 5 | $ 5.4 |
Foreign pension plans | |||
Employee Benefit Plans | |||
Charges for pension plans | $ 3.9 | $ 4.1 | $ 4.5 |
Contingencies and Environment_2
Contingencies and Environmental Remediation (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2018item | Dec. 31, 2018USD ($)item | Aug. 31, 2017item | |
Maximum | |||
Litigation contingencies | |||
Possible loss | $ | $ 5.3 | ||
Chemetco Superfund Site [Member] | |||
Litigation contingencies | |||
Number of companies included in group for environmental liability notice | 162 | ||
Number of companies joining group for environmental liability notice | 43 | ||
Number of potentially responsible parties for environmental liability | 2,000 | ||
Asbestos Litigation | |||
Litigation contingencies | |||
Number of lawsuits the entity is defending in different jurisdictions | 300 |
Financial Instrument - Fair Val
Financial Instrument - Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term debt | ||
Carrying amount | $ 355 | $ 499.5 |
Estimated fair value | $ 355.4 | $ 501.1 |
5.05% Senior notes due 2020 | ||
Senior notes | ||
Interest rate (as a percent) | 5.05% |
Financial Instruments - Fair Va
Financial Instruments - Fair Value on a Recurring Basis (Details) - Fair value measured on a recurring basis - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Plan assets for deferred compensation | $ 2.6 | $ 3.2 |
Total assets | 9.1 | 8.8 |
Liabilities | ||
Plan liabilities for deferred compensation | 2.6 | 3.2 |
Contingent consideration | 2.9 | |
Redeemable financial instrument | 2.8 | |
Total liabilities | 5.4 | 6.1 |
Interest Rate Swaps | ||
Assets | ||
Derivative outstanding | 6.5 | 5.6 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Plan assets for deferred compensation | 2.6 | 3.2 |
Total assets | 2.6 | 3.2 |
Liabilities | ||
Plan liabilities for deferred compensation | 2.6 | 3.2 |
Total liabilities | 2.6 | 3.2 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Total assets | 6.5 | 5.6 |
Significant Other Observable Inputs (Level 2) | Interest Rate Swaps | ||
Assets | ||
Derivative outstanding | 6.5 | 5.6 |
Significant Unobservable Inputs (Level 3) | ||
Liabilities | ||
Contingent consideration | 2.9 | |
Redeemable financial instrument | 2.8 | |
Total liabilities | $ 2.8 | $ 2.9 |
Financial Instruments - Change
Financial Instruments - Change in Fair value (Details) - USD ($) $ in Millions | Nov. 30, 2015 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2018 | Nov. 30, 2015 |
Apex | |||||
Reconciliation of changes in fair value of all financial assets and liabilities | |||||
Shares remaining to be acquired (as a percent) | 10.00% | 20.00% | |||
Call option term | 3 years | ||||
Outstanding shares acquired (as a percent) | 10.00% | 80.00% | |||
Purchase price | $ 20.4 | $ 2.9 | |||
Aggregate ownership percentage | 90.00% | ||||
Redeemable financial instrument | |||||
Reconciliation of changes in fair value of all financial assets and liabilities | |||||
Balance at the beginning of the period | $ 2.9 | ||||
Total realized and unrealized (gains) losses included in Comprehensive income | (0.1) | ||||
Balance at the ending of the period | 2.8 | ||||
Liability recorded at acquisition date fair value | $ 2.9 | $ 2.8 | |||
Redeemable financial instrument | Apex | |||||
Reconciliation of changes in fair value of all financial assets and liabilities | |||||
Balance at the ending of the period | 5.5 | ||||
Liability recorded at acquisition date fair value | $ 5.5 | $ 5.5 |
Financial Instruments - Interes
Financial Instruments - Interest Rate Swaps and Non-Designated Cash Flow Hedge (Details) $ in Millions | Feb. 12, 2016USD ($)item | Feb. 29, 2016USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Derivative instruments | ||||
Percentage of projected intercompany purchases hedged by forward exchange contracts | 70.00% | |||
Period of projected intercompany purchase transactions | 12 months | |||
Term loan facility | Term Loan due February 2021 | ||||
Interest Rate Swaps | ||||
Face amount | $ 300 | |||
Amount drawn | $ 300 | |||
Senior unsecured revolving credit facility | ||||
Interest Rate Swaps | ||||
Amount drawn | $ 25 | |||
Borrowing capacity | $ 500 | |||
Forward exchange contracts | Non designated | Cash Flow Hedging | ||||
Amount of Gain or (Loss) Recognized in Income on Derivatives | ||||
Gain (loss) from derivatives recorded in statement of operations | $ (2.9) | |||
Forward exchange contracts | Designated | Cash Flow Hedging | ||||
Derivative instruments | ||||
Fair value of derivative asset | 0.3 | |||
Interest Rate Swaps | ||||
Interest Rate Swaps | ||||
Gain (loss) recognized in Accumulated Other Comprehensive Loss, effective portion | $ 0.7 | $ 0.6 | ||
Interest Rate Swaps | Designated | Cash Flow Hedging | ||||
Interest Rate Swaps | ||||
Number of derivative contracts entered | item | 2 | |||
Derivative fixed interest rate | 1.31375% | |||
Derivative notional amount | $ 225 | |||
Interest Rate Swaps | Designated | Cash Flow Hedging | LIBOR | ||||
Interest Rate Swaps | ||||
Derivative, floor interest rate | 0.00% |
Financial Instruments - Leases
Financial Instruments - Leases (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Future minimum lease payments under capital leases | |
2,019 | $ 1.8 |
2,020 | 1.6 |
2,021 | 0.7 |
2,022 | 0.3 |
2,023 | 0.1 |
Total | 4.5 |
Less amount representing interest (at rates ranging from 4.3% to 7.0%) | 0.2 |
Present value of net minimum capital lease payments | 4.3 |
Less current installments of obligations under capital leases | 1.6 |
Obligations under capital leases, excluding current installments | 2.7 |
Future minimum lease payments under operating leases | |
2,018 | 10.7 |
2,019 | 8.7 |
2,020 | 5.6 |
2,021 | 3.4 |
2,022 | 2.4 |
Thereafter | 4.9 |
Total | $ 35.7 |
Minimum | |
Capital Leases | |
Interest rate for capital leases (as a percent) | 1.80% |
Maximum | |
Capital Leases | |
Interest rate for capital leases (as a percent) | 5.90% |
Financial Instruments - Carryin
Financial Instruments - Carrying amount of assets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Carrying amounts of assets under capital lease | ||
Gross assets under capital lease | $ 18.2 | $ 17 |
Less accumulated depreciation | (7.8) | (6.8) |
Net assets under capital lease | 10.4 | 10.2 |
Buildings | ||
Carrying amounts of assets under capital lease | ||
Gross assets under capital lease | 14.6 | 15.3 |
Machinery and equipment | ||
Carrying amounts of assets under capital lease | ||
Gross assets under capital lease | $ 3.6 | $ 1.7 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jul. 01, 2018USD ($) | Apr. 01, 2018USD ($) | Dec. 31, 2017USD ($) | Oct. 01, 2017USD ($) | Jul. 02, 2017USD ($) | Apr. 02, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2018USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Segment information | |||||||||||||
Number of geographic segments | 3 | 3 | |||||||||||
Revenue | $ 387.6 | $ 390.9 | $ 407.9 | $ 378.5 | $ 366.3 | $ 364.7 | $ 378.5 | $ 347.2 | $ 1,564.9 | $ 1,456.7 | $ 1,398.4 | ||
Consolidated operating income (loss) | 188.4 | 162.3 | 145 | ||||||||||
Interest income | (0.8) | (1) | (1) | ||||||||||
Interest expense | 16.3 | 19.1 | 22.6 | ||||||||||
Other (income) expense, net | (1.7) | 1.1 | (4.4) | ||||||||||
INCOME BEFORE INCOME TAXES | 174.6 | 143.1 | 127.8 | ||||||||||
Capital Expenditures | 35.9 | 29.4 | 36 | ||||||||||
Depreciation and Amortization | 48.5 | 52.2 | 51.2 | ||||||||||
Identifiable assets (at end of period) | 1,653.7 | 1,736.5 | $ 1,653.7 | $ 1,653.7 | 1,653.7 | 1,736.5 | 1,763.2 | ||||||
Property, plant and equipment, net (at end of period) | 201.9 | 198.5 | 201.9 | 201.9 | 201.9 | 198.5 | 189.7 | ||||||
Goodwill impairment charge | 0 | 0 | |||||||||||
Gain on disposition | 8.7 | ||||||||||||
Residential & commercial flow control | |||||||||||||
Segment information | |||||||||||||
Revenue | 804.4 | ||||||||||||
HVAC & gas | |||||||||||||
Segment information | |||||||||||||
Revenue | 507 | ||||||||||||
Drainage & water re-use | |||||||||||||
Segment information | |||||||||||||
Revenue | 163.1 | ||||||||||||
Water quality | |||||||||||||
Segment information | |||||||||||||
Revenue | 90.4 | ||||||||||||
Reportable segments | |||||||||||||
Segment information | |||||||||||||
Consolidated operating income (loss) | 228.1 | 199.1 | 182.2 | ||||||||||
Corporate | |||||||||||||
Segment information | |||||||||||||
Consolidated operating income (loss) | (39.7) | (36.8) | (37.2) | ||||||||||
Intersegment sales | |||||||||||||
Segment information | |||||||||||||
Revenue | 115.3 | 96.4 | 101 | ||||||||||
Americas | |||||||||||||
Segment information | |||||||||||||
Revenue | 1,032.1 | 951.9 | 900.9 | ||||||||||
Capital Expenditures | 21.5 | 20.7 | 25.7 | ||||||||||
Depreciation and Amortization | 29.1 | 30.8 | 28.8 | ||||||||||
Identifiable assets (at end of period) | 1,028.1 | 1,069.2 | 1,028.1 | 1,028.1 | 1,028.1 | 1,069.2 | 1,054.7 | ||||||
Property, plant and equipment, net (at end of period) | 115 | 109.3 | 115 | 115 | 115 | 109.3 | 106.2 | ||||||
Americas | Residential & commercial flow control | |||||||||||||
Segment information | |||||||||||||
Revenue | 582 | ||||||||||||
Americas | HVAC & gas | |||||||||||||
Segment information | |||||||||||||
Revenue | 289.2 | ||||||||||||
Americas | Drainage & water re-use | |||||||||||||
Segment information | |||||||||||||
Revenue | 73.1 | ||||||||||||
Americas | Water quality | |||||||||||||
Segment information | |||||||||||||
Revenue | 87.8 | ||||||||||||
Americas | U.S. | |||||||||||||
Segment information | |||||||||||||
Revenue | 964.2 | 886.2 | 839.2 | ||||||||||
Property, plant and equipment, net (at end of period) | 111 | 105.1 | 111 | 111 | 111 | 105.1 | 102.5 | ||||||
Americas | Reportable segments | |||||||||||||
Segment information | |||||||||||||
Consolidated operating income (loss) | 171.1 | 146.8 | 127.1 | ||||||||||
Americas | Intersegment sales | |||||||||||||
Segment information | |||||||||||||
Revenue | 12.7 | 12.1 | 12 | ||||||||||
Europe | |||||||||||||
Segment information | |||||||||||||
Revenue | 467 | 440.3 | 431.3 | ||||||||||
Capital Expenditures | 12.7 | 8 | 8.9 | ||||||||||
Depreciation and Amortization | 16.7 | 18.6 | 19.3 | ||||||||||
Identifiable assets (at end of period) | 510.2 | 524 | 510.2 | 510.2 | 510.2 | 524 | 577.3 | ||||||
Property, plant and equipment, net (at end of period) | 80 | 82.1 | 80 | 80 | 80 | 82.1 | 75.6 | ||||||
Europe | Residential & commercial flow control | |||||||||||||
Segment information | |||||||||||||
Revenue | 176.2 | ||||||||||||
Europe | HVAC & gas | |||||||||||||
Segment information | |||||||||||||
Revenue | 201.6 | ||||||||||||
Europe | Drainage & water re-use | |||||||||||||
Segment information | |||||||||||||
Revenue | 87.8 | ||||||||||||
Europe | Water quality | |||||||||||||
Segment information | |||||||||||||
Revenue | 1.4 | ||||||||||||
Europe | Reportable segments | |||||||||||||
Segment information | |||||||||||||
Consolidated operating income (loss) | 49.8 | 47.6 | 40 | ||||||||||
Europe | Intersegment sales | |||||||||||||
Segment information | |||||||||||||
Revenue | 14.2 | 14.6 | 12.3 | ||||||||||
APMEA | |||||||||||||
Segment information | |||||||||||||
Revenue | 65.8 | 64.5 | 66.2 | ||||||||||
Capital Expenditures | 1.7 | 0.7 | 1.4 | ||||||||||
Depreciation and Amortization | 2.7 | 2.8 | 3.1 | ||||||||||
Identifiable assets (at end of period) | 115.4 | 143.3 | 115.4 | 115.4 | 115.4 | 143.3 | 131.2 | ||||||
Property, plant and equipment, net (at end of period) | $ 6.9 | $ 7.1 | $ 6.9 | $ 6.9 | 6.9 | 7.1 | 7.9 | ||||||
Gain on disposition | 8.7 | ||||||||||||
APMEA | Residential & commercial flow control | |||||||||||||
Segment information | |||||||||||||
Revenue | 46.2 | ||||||||||||
APMEA | HVAC & gas | |||||||||||||
Segment information | |||||||||||||
Revenue | 16.2 | ||||||||||||
APMEA | Drainage & water re-use | |||||||||||||
Segment information | |||||||||||||
Revenue | 2.2 | ||||||||||||
APMEA | Water quality | |||||||||||||
Segment information | |||||||||||||
Revenue | 1.2 | ||||||||||||
APMEA | Reportable segments | |||||||||||||
Segment information | |||||||||||||
Consolidated operating income (loss) | 7.2 | 4.7 | 15.1 | ||||||||||
APMEA | Intersegment sales | |||||||||||||
Segment information | |||||||||||||
Revenue | $ 88.4 | $ 69.7 | $ 76.7 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2016 | |
Changes in accumulated other comprehensive income (loss) | |||||||||
Balance at the beginning of the period | $ (99.1) | ||||||||
Reversal of foreign currency translation | $ 6.9 | ||||||||
Balance at the end of the period | $ (121.1) | $ (99.1) | |||||||
Foreign Currency Translation | |||||||||
Changes in accumulated other comprehensive income (loss) | |||||||||
Balance at the beginning of the period | (117) | $ (119.5) | $ (92.9) | (102.6) | (108.9) | $ (124.3) | $ (145.8) | $ (153.7) | |
Change in period | (9.3) | 2.5 | (26.6) | 9.7 | 6.3 | 15.4 | 21.5 | 7.9 | |
Balance at the end of the period | (126.3) | (117) | (119.5) | (92.9) | (102.6) | (108.9) | (124.3) | (145.8) | (153.7) |
Cash Flow Hedges | |||||||||
Changes in accumulated other comprehensive income (loss) | |||||||||
Balance at the beginning of the period | 7.2 | 7.3 | 6.3 | 3.5 | 2.4 | 2.3 | 3 | 2.9 | |
Change in period | (2) | (0.1) | 1 | 2.8 | 1.1 | 0.1 | (0.7) | 0.1 | |
Balance at the end of the period | 5.2 | 7.2 | 7.3 | 6.3 | 3.5 | 2.4 | 2.3 | 3 | 2.9 |
Accumulated Other Comprehensive Income (Loss) | |||||||||
Changes in accumulated other comprehensive income (loss) | |||||||||
Balance at the beginning of the period | (109.8) | (112.2) | (86.6) | (99.1) | (106.5) | (122) | (142.8) | (150.8) | |
Change in period | (11.3) | 2.4 | (25.6) | 12.5 | 7.4 | 15.5 | 20.8 | 8 | |
Balance at the end of the period | $ (121.1) | $ (109.8) | $ (112.2) | $ (86.6) | $ (99.1) | $ (106.5) | $ (122) | $ (142.8) | $ (150.8) |
Quarterly Financial Informati_3
Quarterly Financial Information (unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information (unaudited) | |||||||||||
Revenue | $ 387.6 | $ 390.9 | $ 407.9 | $ 378.5 | $ 366.3 | $ 364.7 | $ 378.5 | $ 347.2 | $ 1,564.9 | $ 1,456.7 | $ 1,398.4 |
Gross profit | 165.9 | 164.5 | 169.4 | 156.7 | 149.2 | 152.7 | 156.7 | 143.8 | 656.5 | 602.4 | 565.6 |
Net income (loss) | $ 32.3 | $ 31.5 | $ 36 | $ 28.2 | $ (2.3) | $ 26.5 | $ 27.2 | $ 21.7 | $ 128 | $ 73.1 | $ 84.2 |
BASIC EPS | |||||||||||
Net income (in dollars per share) | $ 0.94 | $ 0.92 | $ 1.05 | $ 0.82 | $ (0.07) | $ 0.77 | $ 0.79 | $ 0.63 | $ 3.73 | $ 2.12 | $ 2.45 |
DILUTED EPS | |||||||||||
Net income (in dollars per share) | 0.94 | 0.92 | 1.05 | 0.82 | (0.07) | 0.77 | 0.79 | 0.63 | 3.73 | 2.12 | 2.44 |
Dividends declared per common share (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.18 | $ 0.82 | $ 0.75 | $ 0.71 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 06, 2019 | Jul. 27, 2015 |
Class A | ||
Subsequent events | ||
Value of shares of the entity's Class A common stock authorized to be repurchased | $ 100 | |
Subsequent event | Class A | ||
Subsequent events | ||
Quarterly dividend payable (in dollars per share) | $ 0.19 | |
Subsequent event | Class A | Maximum | ||
Subsequent events | ||
Value of shares of the entity's Class A common stock authorized to be repurchased | $ 150 | |
Subsequent event | Class B | ||
Subsequent events | ||
Quarterly dividend payable (in dollars per share) | $ 0.21 |
Schedule II-Valuation and Qua_2
Schedule II-Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for doubtful accounts | |||
Changes in valuation and qualifying accounts | |||
Balance At Beginning of Period | $ 14.3 | $ 14.2 | $ 10.1 |
Additions Charged To Expense | 3.3 | 3.7 | 5.5 |
Additions Charged To Other Accounts | (0.2) | 0.4 | 0.5 |
Deductions | (2.4) | (4) | (1.9) |
Balance At End of Period | 15 | 14.3 | 14.2 |
Reserve for excess and obsolete inventories | |||
Changes in valuation and qualifying accounts | |||
Balance At Beginning of Period | 25.4 | 26.1 | 29.1 |
Additions Charged To Expense | 7.7 | 7.3 | 7 |
Additions Charged To Other Accounts | (0.7) | 1.5 | 0.6 |
Deductions | (8) | (9.5) | (10.6) |
Balance At End of Period | $ 24.4 | $ 25.4 | $ 26.1 |