Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 14, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ALSN | |
Entity Registrant Name | ALLISON TRANSMISSION HOLDINGS INC | |
Entity Central Index Key | 1,411,207 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 176,422,605 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $ 216.8 | $ 263 |
Accounts receivable - net of allowance for doubtful accounts of $0.6 and $0.3, respectively | 228.1 | 207.4 |
Inventories | 155.3 | 143.5 |
Deferred income taxes, net | 97.8 | 119.7 |
Other current assets | 27.5 | 24.4 |
Total Current Assets | 725.5 | 758 |
Property, plant and equipment, net | 485.4 | 514.6 |
Intangible assets, net | 1,463.4 | 1,512 |
Goodwill | 1,941 | 1,941 |
Deferred income taxes, net | 1.3 | 1.3 |
Other non-current assets | 66.4 | 77.3 |
TOTAL ASSETS | 4,683 | 4,804.2 |
Current Liabilities | ||
Accounts payable | 142.4 | 151.7 |
Product warranty liability | 21 | 24 |
Current portion of long-term debt | 22.6 | 17.9 |
Deferred revenue | 21.9 | 20.6 |
Other current liabilities | 113.9 | 131.7 |
Total Current Liabilities | 321.8 | 345.9 |
Product warranty liability | 52.7 | 59.6 |
Deferred revenue | 52.8 | 48.7 |
Long-term debt | 2,392 | 2,502.6 |
Deferred income taxes | 273 | 238.2 |
Other non-current liabilities | 225.1 | 211.4 |
TOTAL LIABILITIES | $ 3,317.4 | $ 3,406.4 |
Commitments and contingencies (see NOTE O) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding | ||
Paid in capital | $ 1,685 | $ 1,651 |
Accumulated deficit | (270.7) | (215.5) |
Accumulated other comprehensive loss, net of tax | (50.5) | (39.5) |
TOTAL STOCKHOLDERS' EQUITY | 1,365.6 | 1,397.8 |
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | 4,683 | 4,804.2 |
Voting Common Stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock | 1.8 | $ 1.8 |
Non-voting Common Stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Allowance for doubtful accounts receivables | $ 0.6 | $ 0.3 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Voting Common Stock | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,880,000,000 | 1,880,000,000 |
Common stock, shares issued | 177,091,171 | 179,488,247 |
Common stock, shares outstanding | 177,091,171 | 179,488,247 |
Non-voting Common Stock | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net sales | $ 511 | $ 536.1 | $ 1,014.6 | $ 1,029.7 |
Cost of sales | 274.7 | 297.6 | 539.1 | 568.7 |
Gross profit | 236.3 | 238.5 | 475.5 | 461 |
Selling, general and administrative expenses | 75.6 | 85.1 | 149 | 168.3 |
Engineering - research and development | 23.2 | 21.2 | 45.4 | 45.7 |
Loss associated with impairment of long-lived assets | 1.3 | |||
Operating income | 137.5 | 132.2 | 279.8 | 247 |
Interest income | 0.2 | 0.2 | 0.4 | 0.4 |
Interest expense | (23.3) | (36.8) | (60.4) | (72.1) |
Premiums and expenses on tender offer and redemption of long-term debt | (25.1) | (25.1) | ||
Other (expense) income, net | (2.2) | (0.9) | 0.6 | (1.3) |
Income before income taxes | 87.1 | 94.7 | 195.3 | 174 |
Income tax expense | (32.7) | (37.5) | (72.5) | (64.7) |
Net income | $ 54.4 | $ 57.2 | $ 122.8 | $ 109.3 |
Basic earnings per share attributable to common stockholders | $ 0.30 | $ 0.32 | $ 0.68 | $ 0.61 |
Diluted earnings per share attributable to common stockholders | 0.30 | 0.31 | 0.68 | 0.59 |
Dividends declared per common share | $ 0.15 | $ 0.12 | $ 0.30 | $ 0.24 |
Comprehensive income, net of tax | $ 55.3 | $ 57 | $ 111.8 | $ 111.2 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 122.8 | $ 109.3 |
Add (deduct) items included in net income not using (providing) cash: | ||
Deferred income taxes | 67.3 | 61.7 |
Amortization of intangible assets | 48.6 | 49.4 |
Depreciation of property, plant and equipment | 43.4 | 47.4 |
Premiums and expenses on tender offer and redemption of long-term debt | 25.1 | |
Excess tax benefit from stock-based compensation | (8) | (7.8) |
Unrealized loss (gain) on derivatives | 6.8 | (8) |
Stock-based compensation | 4.7 | 7.3 |
Amortization of deferred financing costs | 3.8 | 4.3 |
Loss associated with impairment of long-lived assets | 1.3 | |
Other | (0.3) | 0.2 |
Changes in assets and liabilities: | ||
Accounts receivable | (23.2) | (52) |
Inventories | (14.2) | (8.8) |
Accounts payable | (9.1) | 24 |
Other assets and liabilities | (35.3) | 15 |
Net cash provided by operating activities | 233.7 | 242 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions of long-lived assets | (14.9) | (22.7) |
Investments in technology-related initiatives | (3.8) | |
Collateral for interest rate derivatives | 1.7 | |
Proceeds from disposal of assets | 0.2 | 0.1 |
Net cash used for investing activities | (14.7) | (24.7) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repurchases and redemption of long-term debt | (491) | |
Issuance of long-term debt | 470 | |
Repurchases of common stock | (114.7) | (249.8) |
Payments on long-term debt | (104.6) | (8.9) |
Dividend payments | (53.9) | (43.4) |
Proceeds from exercise of stock options | 21.8 | 22.4 |
Excess tax benefit from stock-based compensation | 8 | 7.8 |
Debt financing fees | (7.5) | (1) |
Taxes paid related to net share settlement of equity awards | (0.5) | (0.2) |
Net cash used for financing activities | (272.4) | (273.1) |
Effect of exchange rate changes on cash | 7.2 | (2.2) |
Net decrease in cash and cash equivalents | (46.2) | (58) |
Cash and cash equivalents at beginning of period | 263 | 184.7 |
Cash and cash equivalents at end of period | 216.8 | 126.7 |
Supplemental disclosures: | ||
Interest paid | 53.6 | 68.6 |
Income taxes paid | $ 3.9 | $ 3.1 |
OVERVIEW
OVERVIEW | 6 Months Ended |
Jun. 30, 2015 | |
OVERVIEW | NOTE A. OVERVIEW Overview Allison Transmission Holdings, Inc. and its subsidiaries (“Allison,” the “Company” or “we”) design and manufacture commercial and defense fully-automatic transmissions. The business was founded in 1915 and has been headquartered in Indianapolis, Indiana since inception. Allison was an operating unit of General Motors Corporation from 1929 until 2007, when Allison once again became a stand-alone company. In March 2012, Allison began trading on the New York Stock Exchange under the symbol, “ALSN”. We have approximately 2,700 employees and 13 different transmission product lines. Although approximately 80% of revenues were generated in North America in 2014, we have a global presence by serving customers in Europe, Asia, South America and Africa. We serve customers through an independent network of approximately 1,400 independent distributor and dealer locations worldwide. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements as of and for the three and six months ended June 30, 2015 and 2014 have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for the fair statements of the results for the periods presented. The condensed consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These condensed consolidated financial statements present the financial position, results of comprehensive income and cash flows of the Company. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission (“SEC”) on February 20, 2015. Certain immaterial reclassifications have been made in the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications have no impact on previously reported net income, total stockholders’ equity or cash flows. The interim period financial results for the three and six month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Significant estimates include, but are not limited to, allowance for doubtful accounts, sales allowances, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite life intangibles, long-lived asset impairment tests, useful lives for depreciation and amortization, warranty liability, determination of discount and other assumptions for pension and other postretirement benefit expense, income taxes and deferred tax valuation allowances, derivative valuation, and contingencies. The Company’s accounting policies involve the application of judgments and assumptions made by management that include inherent risks and uncertainties. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Recently Issued Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued authoritative accounting guidance to simplify the presentation of the debt issuance costs. The guidance requires that the debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected. The guidance is effective for public entities for interim and annual reporting periods beginning after December 15, 2015, but can be early-adopted. Management is assessing the potential impact of the adoption of this guidance on the Company’s consolidated financial statements. In August 2014, the FASB issued authoritative accounting guidance on the disclosure of uncertainties about an entity’s ability to continue as a going concern. The guidance requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that financial statements are available to be issued when applicable) and to provide related footnote disclosures. The guidance is effective prospectively for interim and annual reporting periods beginning after December 15, 2016, but can be early-adopted. While the adoption of this guidance is not expected to have an effect on the Company’s consolidated financial statements, it could affect the disclosure applied under these circumstances in the future. In May 2014, the FASB issued authoritative accounting guidance on a company’s accounting for revenue from contracts with customers. The guidance applies to all companies that enter into contracts with customers to transfer goods, services or nonfinancial assets. The guidance requires these companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires improved disclosures regarding the nature, timing, amount and uncertainty of revenue that is recognized. As originally proposed, the guidance was effective prospectively for interim and annual reporting periods beginning after December 15, 2016. On April 1, 2015, the FASB proposed a one-year deferral of the effective date. Under the proposal, the guidance would be effective on a retrospective or modified retrospective basis for public entities for interim and annual reporting periods beginning after December 15, 2017. The proposal also would permit both public and nonpublic entities to adopt the guidance as early as December 15, 2016. Early adoption prior to that date would not be permitted. In July 2015, the FASB proposed deferral was approved. Management is assessing the potential impact of the adoption of this guidance on the Company’s consolidated financial statements. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2015 | |
INVENTORIES | NOTE C. INVENTORIES Inventories consisted of the following components (dollars in millions): June 30, December 31, Purchased parts and raw materials $ 74.0 $ 72.3 Work in progress 6.0 6.1 Service parts 48.0 46.5 Finished goods 27.3 18.6 Total inventories $ 155.3 $ 143.5 Inventory components shipped to third parties, primarily cores, parts to re-manufacturers, and parts to contract manufacturers, which the Company has an obligation to buy back, are included in purchased parts and raw materials, with an offsetting liability in Other current liabilities. See NOTE K, “Other Current Liabilities” for more information. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE D. GOODWILL AND OTHER INTANGIBLE ASSETS As of June 30, 2015 and December 31, 2014, the carrying amount of the Company’s Goodwill was $1,941.0 million. The following presents a summary of other intangible assets (dollars in millions): June 30, 2015 December 31, 2014 Intangible assets, gross Accumulated Intangible Intangible Accumulated Intangible Other intangible assets: Trade name $ 870.0 $ — $ 870.0 $ 870.0 $ — $ 870.0 Customer relationships — defense 62.3 (29.6 ) 32.7 62.3 (27.9 ) 34.4 Customer relationships — commercial 831.8 (452.1 ) 379.7 831.8 (426.9 ) 404.9 Proprietary technology 476.3 (301.0 ) 175.3 476.3 (282.0 ) 194.3 Non-compete agreement 17.3 (13.7 ) 3.6 17.3 (12.8 ) 4.5 Patented technology — defense 28.2 (26.2 ) 2.0 28.2 (24.5 ) 3.7 Tooling rights 4.5 (4.4 ) 0.1 4.5 (4.3 ) 0.2 Patented technology — commercial 260.6 (260.6 ) — 260.6 (260.6 ) — Total $ 2,551.0 $ (1,087.6 ) $ 1,463.4 $ 2,551.0 $ (1,039.0 ) $ 1,512.0 As of June 30, 2015 and December 31, 2014, the net carrying value of our Goodwill and other intangibles was $3,404.4 million and $3,453.0 million, respectively. Amortization expense related to other intangible assets for the next five years and thereafter is expected to be (dollars in millions): 2016 2017 2018 2019 2020 Thereafter Amortization expense $ 92.4 $ 89.7 $ 87.2 $ 85.7 $ 49.9 $ 140.6 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2015 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE E. FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the FASB’s authoritative accounting guidance on fair value measurements, fair value is the price (exit price) that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company primarily applies the market approach for recurring fair value measurements and utilizes the best available information that maximizes the use of observable inputs and minimizes the use of unobservable inputs. The Company is able to classify fair value balances based on the observability of those inputs. The accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy defined by the relevant guidance are as follows: Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and publicly traded bonds. Level 2 — Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes financial instruments that are valued using quoted prices in markets that are not active and those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Level 3 — Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments subject to authoritative accounting guidance and includes, in Level 3, all of those whose fair value is based on significant unobservable inputs. As of June 30, 2015 and December 31, 2014, the Company did not have any Level 3 financial assets or liabilities. The Company’s assets and liabilities that are measured at fair value include cash and cash equivalents, available-for-sale securities, derivative instruments, assets held in a rabbi trust and a deferred compensation obligation. The Company’s cash equivalents consist of short-term U.S. government backed securities. The Company’s available-for-sale securities consist of ordinary shares of Torotrak plc (“Torotrak”) associated with a license and exclusivity agreement with Torotrak. Torotrak’s listed shares are traded on the London Stock Exchange under the ticker symbol “TRK.” The Company’s derivative instruments consist of interest rate swaps, foreign currency forward contracts and commodity swaps. The Company’s assets held in the rabbi trust consist principally of publicly available mutual funds and target date retirement funds. The Company’s deferred compensation obligation is directly related to the fair value of assets held in the rabbi trust. The Company’s valuation techniques used to calculate the fair value of cash and cash equivalents, available-for-sale securities, assets held in the rabbi trust and the deferred compensation obligation represent a market approach in active markets for identical assets that qualify as Level 1 in the fair value hierarchy. The Company’s valuation techniques used to calculate the fair value of derivative instruments represent a market approach with observable inputs that qualify as Level 2 in the fair value hierarchy. The foreign currency contracts consist of forward rate contracts which are intended to hedge exposure of transactions denominated in certain currencies and reduce the impact of currency price volatility on the Company’s financial results. The commodity contracts consist of forward rate contracts which are intended to hedge exposure of transactions involving purchases of component parts and energy to power our facilities, reducing the impact of commodity price volatility on the Company’s financial results. For the fair value measurement of foreign currency derivatives, the Company uses forward foreign exchange rates received from the issuing financial institution. These rates are periodically corroborated by comparing to third-party broker quotes. The foreign currency hedges are accounted for within the authoritative accounting guidance set forth on accounting for derivative instruments and hedging activities and have been recorded at fair value based upon quoted market rates. The fair values are included in Other current and non-current assets and liabilities in the Condensed Consolidated Balance Sheets. The Company generally does not elect to apply hedge accounting for these foreign currency contracts, and as a result, unrealized fair value adjustments and realized gains and losses are recorded in Other expense, net in the Condensed Consolidated Statements of Comprehensive Income during the period of change. For the fair value measurement of commodity derivatives, the Company uses forward prices received from the issuing financial institution. These rates are periodically corroborated by comparing to third-party broker quotes. The commodity derivatives are accounted for within the authoritative accounting guidance set forth on accounting for derivative instruments and hedging activities and have been recorded at fair value based upon quoted market rates. The fair values are included in Other current and non-current assets and liabilities in the Condensed Consolidated Balance Sheets. The Company has either not qualified for or not elected hedge accounting treatment for these commodity contracts, and as a result, unrealized fair value adjustments and realized gains and losses are recorded in Other expense, net in the Condensed Consolidated Statements of Comprehensive Income. For the fair value measurement of interest rate derivatives, the Company uses valuations from the issuing financial institution. The Company corroborates the valuation through the use of third-party valuation services using a standard replacement valuation model. The floating-to-fixed interest rate swaps are based on the London Interbank Offered Rate (“LIBOR”) which is observable at commonly quoted intervals. The fair values are included in other current and non-current assets and liabilities in the Condensed Consolidated Balance Sheets. The Company has not qualified for hedge accounting treatment for the interest rate swaps and, as a result, fair value adjustments are charged directly to Interest expense in the Condensed Consolidated Statements of Comprehensive Income. The following table summarizes the fair value of the Company’s financial assets and (liabilities) as of June 30, 2015 and December 31, 2014 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Significant Other TOTAL June 30, 2015 December 31, June 30, 2015 December 31, June 30, 2015 December 31, Cash equivalents $ 101.0 $ 55.0 $ — $ — $ 101.0 $ 55.0 Available-for-sale securities 3.9 8.6 — — 3.9 8.6 Rabbi trust assets 4.6 2.9 — — 4.6 2.9 Deferred compensation obligation (4.6 ) (2.9 ) — — (4.6 ) (2.9 ) Derivative assets — — 0.0 0.0 0.0 0.0 Derivative liabilities — — (22.6 ) (15.4 ) (22.6 ) (15.4 ) Total $ 104.9 $ 63.6 $ (22.6 ) $ (15.4 ) $ 82.3 $ 48.2 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2015 | |
DEBT | NOTE F. DEBT Long-term debt and maturities are as follows (dollars in millions): June 30, December 31, Long-term debt: Senior Secured Credit Facility Term B-2 Loan, variable, due 2017 $ 189.0 $ 283.6 Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 2,225.6 1,765.6 Senior Notes, fixed 7.125%, due 2019 — 471.3 Total long-term debt $ 2,414.6 $ 2,520.5 Less: current maturities of long-term debt 22.6 17.9 Total long-term debt less current portion $ 2,392.0 $ 2,502.6 As of June 30, 2015, the Company had $189.0 million of indebtedness associated with Allison Transmission, Inc.’s (“ATI”), the Company’s wholly-owned subsidiary, Senior Secured Credit Facility Term B-2 Loan due 2017 (“Term B-2 Loan”) and $2,225.6 million of indebtedness associated with ATI’s Senior Secured Credit Facility Term B-3 Loan due 2019 (“Term B-3 Loan”) (together the Term B-2 Loan, Term B-3 Loan and revolving credit facility defined as the “Senior Secured Credit Facility”). The fair value of the Company’s long-term debt obligations as of June 30, 2015 was $2,417.6 million. The fair value is based on quoted Level 2 market prices of the Company’s debt as of June 30, 2015. It is not expected that the Company would be able to repurchase a significant amount of its debt at these levels. The difference between the fair value and carrying value of the long-term debt is driven primarily by trends in the financial markets. On March 18, 2015, ATI commenced a cash tender offer to purchase its outstanding 7.125% senior cash pay notes due May 2019 (“7.125% Senior Notes”). In connection with the cash tender offer, ATI solicited consents to enter into a supplemental indenture to eliminate substantially all of the restrictive covenants, certain events of default and related provisions contained in the indenture dated as of May 6, 2011 (the “Indenture”) governing the 7.125% Senior Notes. On March 31, 2015, ATI received valid consents from holders with an aggregate principal amount of $420.9 million of the 7.125% Senior Notes. Accordingly, ATI entered into a first supplemental indenture to the Indenture contingent on the execution of an amendment with the term loan lenders under its Senior Secured Credit Facility. On April 7, 2015, ATI entered into an amendment with the term loan lenders under its Senior Secured Credit Facility to add up to an additional $470.0 million of Term B-3 Loan commitments and incur term loans in an aggregate principal amount of $470.0 million. The amendment also, among other things, (i) permits prepayment, repurchase or redemption of Allison’s 7.125% Senior Notes with the proceeds of the financing and (ii) resets the period for which a prepayment premium of 1.00% will apply in the event of a repricing transaction to the six-month anniversary of the closing date of the financing. With the exception of the items noted above, the terms (including maturity and pricing) of the financing are materially the same as the terms of the existing Term B-3 Loan outstanding. As a result of the newly structured Senior Secured Credit Facility, ATI recorded approximately $7.5 million as deferred financing fees in the Condensed Consolidated Balance Sheets. Immediately following the financing, ATI purchased $420.9 million of the tendered 7.125% Senior Notes using the proceeds from the financing in a cash payment equal to $1,042 per $1,000 aggregate principal amount of the 7.125% Senior Notes plus accrued and unpaid interest. Upon the payment, the supplemental indenture to the Indenture became operative. The purchase resulted in a loss (the premium between the purchase price of the notes and the face value of such notes) of $22.7 million including deferred financing fees written off. In May 2015, ATI redeemed the remaining $50.4 million of its outstanding 7.125% Senior Notes, at the redemption price equal to 103.563% of the principal amount plus any accrued and unpaid interest, using the remaining proceeds from the financing and cash on hand, resulting in a loss (the premium between the purchase price of the notes and the face value of such notes) of $2.4 million including deferred financing fees written off. The Senior Secured Credit Facility is collateralized by a lien on substantially all assets of the Company including all of ATI’s capital stock and all of the capital stock or other equity interest held by the Company, ATI and each of the Company’s existing and future U.S. subsidiary guarantors (subject to certain limitations for equity interests of foreign subsidiaries and other exceptions set forth in the terms of the Senior Secured Credit Facility). Interest on the Term B-2 Loan, as of June 30, 2015, is at the Company’s option, either (a) 2.75% over the LIBOR or (b) 1.75% over the greater of the prime lending rate provided by the British Banking Association or the federal funds effective rate published by the Federal Reserve Bank of New York plus 0.50%. Interest on the Term B-3 Loan, as of June 30, 2015, is equal to the LIBOR (which may not be less than 1.00%) plus 2.50% based on the Company’s total leverage ratio. As of June 30, 2015, these rates were approximately 2.94% and 3.50% on the Term B-2 Loan and Term B-3 Loan, respectively, and the weighted average rate on the Senior Secured Credit Facility was approximately 3.46%. The Senior Secured Credit Facility requires minimum quarterly principal payments on the Term B-2 Loan and Term B-3 Loan as well as prepayments from certain net cash proceeds of non-ordinary course asset sales and casualty and condemnation events and from a percentage of excess cash flow, if applicable. Due to voluntary prepayments, the Company has fulfilled all Term B-2 Loan required quarterly payments through its maturity date of 2017. For the three months and six months ended June 30, 2015, the Company made principal payments of $47.2 million and $94.6 million on the Term B-2 loan, respectively, resulting in a total loss of $0.2 million associated with the write off of related deferred debt issuance costs. The minimum required quarterly principal payment on the Term B-3 Loan is $5.6 million and remains through its maturity date of 2019. As of June 30, 2015, there had been no payments required for certain net cash proceeds of non-ordinary course asset sales and casualty and condemnation events. The remaining principal balance on each loan is due upon maturity. The Senior Secured Credit Facility also provides for a revolving credit facility of $465.0 million, net of an allowance for up to $75.0 million in outstanding letters of credit commitments. As of June 30, 2015, the Company had $455.8 million available under the revolving credit facility, net of $9.2 million in letters of credit. Revolving credit borrowings bear interest at a variable base rate plus an applicable margin based on the Company’s total leverage ratio. As of June 30, 2015, this rate would have been approximately 1.63%. In addition, there is an annual commitment fee, based on the Company’s total leverage ratio, which as of June 30, 2015, was equal to 0.25% of the average unused revolving credit borrowings available under the Senior Secured Credit Facility. Revolving credit borrowings are payable at the option of the Company throughout the term of the Senior Secured Credit Facility with the balance due in January 2019. The revolving portion of the Senior Secured Credit Facility requires the Company to maintain a specified maximum total senior secured leverage ratio of 5.50x when revolving loan commitments remain outstanding at the end of a fiscal quarter. In March 2014, however, the revolving lenders holding a majority of the revolving loan commitments permanently waived and agreed that no event of default would result from any non-compliance so long as there were no revolving loans outstanding as of the last day of any fiscal quarter. As of June 30, 2015, the Company had no revolving loans outstanding; however, the Company would have been in compliance with the maximum total senior secured leverage ratio, achieving a 2.88x ratio. Additionally, within the terms of the Senior Secured Credit Facility, a senior secured leverage ratio at or below 3.50x results in the elimination of excess cash flow payments on the Senior Secured Credit Facility for the applicable year. The Senior Secured Credit Facility also provides certain financial incentives based on our total leverage ratio. A total leverage ratio at or below 4.00x results in a 25 basis point reduction to the applicable margin on the revolving credit facility, and a total leverage ratio at or below 3.50x results in a 12.5 basis point reduction to the revolving credit facility commitment fee and an additional 25 basis point reduction to the applicable margin on the revolving credit facility. A total leverage ratio at or below 3.25x results in a 25 basis point reduction to the applicable margin on our Term B-3 Loan. These reductions would remain in effect as long as the Company achieves a total leverage ratio at or below the related threshold. As of June 30, 2015, the total leverage ratio was 2.88x. In addition, the Senior Secured Credit Facility, among other things, includes customary restrictions (subject to certain exceptions) on the Company’s ability to incur certain indebtedness, grant certain liens, make certain investments, declare or pay certain dividends or repurchase shares of the Company’s common stock. As of June 30, 2015, the Company is in compliance with all covenants under the Senior Secured Credit Facility. |
DERIVATIVES
DERIVATIVES | 6 Months Ended |
Jun. 30, 2015 | |
DERIVATIVES | NOTE G. DERIVATIVES The Company is exposed to certain financial risk from volatility in interest rates, foreign exchange rates and commodity prices. The risk is managed through the use of financial derivative instruments including interest rate swaps, foreign currency forward contracts and commodity swaps. The Company’s current derivative instruments are used strictly as an economic hedge and not for speculative purposes. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk. Interest Rate The Company is subject to interest rate risk related to the Senior Secured Credit Facility and enters into interest rate swap contracts that are based on the LIBOR to manage a portion of this exposure. The Company has not elected hedge accounting treatment for these derivatives, and as a result, fair value adjustments are charged directly to Interest expense in the Condensed Consolidated Statements of Comprehensive Income. A summary of the Company’s interest rate derivatives as of June 30, 2015 and December 31, 2014 follows (dollars in millions): June 30, 2015 December 31, 2014 Notional Fair Value Notional Fair Value 3.44% Interest Rate Swap L, Aug 2016 – Aug 2019* $ 75.0 $ (3.0 ) $ 75.0 $ (2.3 ) 3.43% Interest Rate Swap M, Aug 2016 – Aug 2019* 100.0 (3.9 ) 100.0 (3.0 ) 3.37% Interest Rate Swap N, Aug 2016 – Aug 2019* 75.0 (2.8 ) 75.0 (2.1 ) 3.19% Interest Rate Swap O, Aug 2016 – Aug 2019* 75.0 (2.5 ) 75.0 (1.7 ) 3.08% Interest Rate Swap P, Aug 2016 – Aug 2019* 75.0 (2.2 ) 75.0 (1.5 ) 2.99% Interest Rate Swap Q, Aug 2016 – Aug 2019* 50.0 (1.3 ) 50.0 (0.9 ) 2.98% Interest Rate Swap R, Aug 2016 – Aug 2019* 50.0 (1.3 ) 50.0 (0.9 ) 2.73% Interest Rate Swap S, Aug 2016 – Aug 2019* 50.0 (1.0 ) 50.0 (0.5 ) 2.74% Interest Rate Swap T, Aug 2016 – Aug 2019* 75.0 (1.4 ) 75.0 (0.8 ) 2.66% Interest Rate Swap U, Aug 2016 – Aug 2019* 50.0 (0.9 ) 50.0 (0.4 ) 2.60% Interest Rate Swap V, Aug 2016 – Aug 2019* 50.0 (0.8 ) 50.0 (0.3 ) 2.40% Interest Rate Swap W, Aug 2016 – Aug 2019* 25.0 (0.2 ) 25.0 0.0 2.25% Interest Rate Swap X, Aug 2016 – Aug 2019* 50.0 (0.3 ) — — * includes LIBOR floor of 1.00% $ 800.0 $ (21.6 ) $ 750.0 $ (14.4 ) Currency Exchange The Company’s business is subject to foreign exchange rate risk. As a result, the Company enters into various forward rate contracts that qualify as derivatives under the authoritative accounting guidance to manage certain of these exposures. Forward contracts are used to hedge forecasted transactions and known exposure of payables denominated in a foreign currency. The Company generally has not elected to apply hedge accounting under the authoritative accounting guidance and recorded the unrealized fair value adjustments and realized gains and losses associated with these contracts in Other expense, net in the Condensed Consolidated Statements of Comprehensive Income during the period of change. The following table summarizes the outstanding foreign currency forward contracts as of June 30, 2015 and December 31, 2014 (amounts in millions): June 30, 2015 December 31, 2014 Notional Fair Value Notional Fair Value Japanese Yen (JPY) ¥ 600.0 $ 0.0 ¥ 300.0 $ (0.3 ) $ 0.0 $ (0.3 ) Commodity The Company’s business is subject to commodity price risk, primarily with component suppliers. As a result, the Company enters into various commodity swap contracts that qualify as derivatives under the authoritative accounting guidance to manage certain of these exposures. Swap contracts are used to hedge forecasted transactions either of the commodity or of components containing the commodity. The Company has not qualified for hedge accounting treatment for these commodity contracts, and as a result, unrealized fair value adjustments and realized gains and losses associated with these contracts were charged directly to Other expense, net in the Condensed Consolidated Statements of Comprehensive Income during the period of change. The following table summarizes the outstanding commodity swaps as of June 30, 2015 and December 31, 2014 (dollars in millions): June 30, 2015 December 31, 2014 Notional Quantity Fair Value Notional Quantity Fair Value Aluminum $ 8.7 4,650 metric tons $ (1.0 ) $ 11.3 6,200 metric tons $ (0.7 ) Natural Gas N/A N/A — $ 0.2 60,000 MMBtu 0.0 $ (1.0 ) $ (0.7 ) The following tabular disclosures further describe the Company’s derivative instruments and their impact on the financial condition of the Company (dollars in millions): June 30, 2015 December 31, 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives not designated as hedging instruments Foreign currency contracts Other current assets $ 0.0 Other current $ (0.3 ) Commodity contracts Other current and non-current liabilities (1.0 ) Other current and non-current liabilities (0.7 ) Interest rate contracts Other non-current (21.6 ) Other non-current (14.4 ) Total derivatives not designated as hedging instruments $ (22.6 ) $ (15.4 ) The fair values of the derivatives are recorded between Other current and non-current assets and Other current and non-current liabilities as appropriate in the Condensed Consolidated Balance Sheets. As of June 30, 2015, the amounts recorded to Other current and non-current liabilities for commodity contracts were ($0.6) million and ($0.4) million, respectively. As of December 31, 2014, the amounts recorded to Other current and non-current liabilities for commodity contracts were ($0.6) million and ($0.1) million, respectively. The impact on the Company’s Condensed Consolidated Statements of Comprehensive Income related to foreign currency and commodity contracts can be found in NOTE J, and the following tabular disclosure describes the location and impact on the Company’s results of operations related to unrealized gain (loss) on interest rate derivatives (dollars in millions): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Location of impact on results of operations Interest Expense $ 1.1 $ 2.6 $ (7.2 ) $ 6.5 |
PRODUCT WARRANTY LIABILITIES
PRODUCT WARRANTY LIABILITIES | 6 Months Ended |
Jun. 30, 2015 | |
PRODUCT WARRANTY LIABILITIES | NOTE H. PRODUCT WARRANTY LIABILITIES Product warranty liability activities consist of the following (dollars in millions): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Beginning balance $ 77.1 $ 90.4 $ 83.6 $ 90.5 Payments (7.9 ) (10.7 ) (16.3 ) (19.1 ) Increase in liability (warranty issued during period) 5.3 6.5 11.2 12.8 Net adjustments to liability (0.9 ) 0.3 (5.0 ) 2.2 Accretion (for Predecessor liabilities) 0.1 0.2 0.2 0.3 Ending balance $ 73.7 $ 86.7 $ 73.7 $ 86.7 As of June 30, 2015, the current and non-current product warranty liabilities were $21.0 million and $52.7 million, respectively. As of June 30, 2014, the current and non-current product warranty liabilities were $23.2 million and $63.5 million, respectively. |
DEFERRED REVENUE
DEFERRED REVENUE | 6 Months Ended |
Jun. 30, 2015 | |
DEFERRED REVENUE | NOTE I. DEFERRED REVENUE As of June 30, 2015, the current and non-current deferred revenue for Extended Transmission Coverage (“ETC”) were $21.9 million and $52.8 million, respectively. As of June 30, 2014, the current and non-current deferred revenue for ETC were $19.7 million and $47.1 million, respectively. Deferred revenue for ETC activity (dollars in millions): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Beginning balance $ 72.2 $ 63.8 $ 69.0 $ 63.6 Increases 8.3 8.3 16.5 13.8 Revenue earned (5.8 ) (5.3 ) (10.8 ) (10.6 ) Ending balance $ 74.7 $ 66.8 $ 74.7 $ 66.8 Deferred revenue recorded in current liabilities related to unearned net sales for defense contracts as of June 30, 2015 and 2014 was approximately $0.0 million and $2.3 million, respectively. |
OTHER (EXPENSE) INCOME, NET
OTHER (EXPENSE) INCOME, NET | 6 Months Ended |
Jun. 30, 2015 | |
OTHER (EXPENSE) INCOME, NET | NOTE J. OTHER (EXPENSE) INCOME, NET Other (expense) income, net consists of the following (dollars in millions): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (Loss) gain on intercompany foreign exchange $ (1.3 ) $ (1.8 ) $ 0.9 $ (1.8 ) Realized loss on derivative contracts (see NOTE G) (0.4 ) (0.4 ) (0.7 ) (1.0 ) (Loss) gain on foreign exchange (0.2 ) — 0.9 (0.5 ) Unrealized (loss) gain on derivative contracts (see NOTE G) (0.1 ) 1.3 0.2 1.5 Loss on repayments of long-term debt (0.0 ) — (0.2 ) — Grant program income — 0.8 — 1.4 Public offering fees and expenses — (0.8 ) — (1.1 ) Other (0.2 ) — (0.5 ) 0.2 Total $ (2.2 ) $ (0.9 ) $ 0.6 $ (1.3 ) For the three months and six months ended June 30, 2015, the Company recorded a loss of ($1.3) million and a gain of $0.9 million resulting from intercompany financing transactions related to investments in plant assets for the Company’s India facility. |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2015 | |
OTHER CURRENT LIABILITIES | NOTE K. OTHER CURRENT LIABILITIES Other current liabilities consist of the following (dollars in millions): As of As of Payroll and related costs $ 30.9 $ 50.9 Sales allowances 28.1 25.5 Defense price reduction reserve 11.2 16.2 Vendor buyback obligation 11.1 13.2 Taxes payable 10.1 8.5 Stock repurchases obligation 9.4 — Accrued interest payable 0.8 5.2 Derivative liabilities 0.2 0.8 Other accruals 12.1 11.4 Total $ 113.9 $ 131.7 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2015 | |
EMPLOYEE BENEFIT PLANS | NOTE L. EMPLOYEE BENEFIT PLANS Components of net periodic benefit cost consist of the following (dollars in millions): Pension Plans Post-retirement Benefits Three months ended June 30, Three months ended June 30, 2015 2014 2015 2014 Net periodic benefit cost: Service cost $ 3.6 $ 3.3 $ 0.6 $ 0.6 Interest cost 1.3 1.2 1.3 1.4 Expected return on assets (2.1 ) (1.9 ) — — Prior service cost 0.0 0.0 (0.9 ) (0.9 ) Gain (0.0 ) — — (0.2 ) Net periodic benefit cost $ 2.8 $ 2.6 $ 1.0 $ 0.9 Pension Plans Post-retirement Benefits Six months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Net periodic benefit cost: Service cost $ 7.2 $ 6.6 $ 1.2 $ 1.1 Interest cost 2.6 2.5 2.7 2.9 Expected return on assets (4.2 ) (3.8 ) — — Prior service cost 0.0 0.0 (1.8 ) (1.8 ) Gain (0.0 ) — — (0.4 ) Net periodic benefit cost $ 5.6 $ 5.3 $ 2.1 $ 1.8 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2015 | |
INCOME TAXES | NOTE M. INCOME TAXES For the three and six months ended June 30, 2015, the Company recorded total tax expense of $32.7 million and $72.5 million, respectively. The effective tax rate for the three and six months ended June 30, 2015 was 37.5% and 37.1%, respectively. For the three and six months ended June 30, 2014, the Company recorded total tax expense of $37.5 million and $64.7 million, respectively. The effective tax rate for the three and six months ended June 30, 2014 was 39.6% and 37.2%, respectively. The need to establish a valuation allowance against the deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold, in accordance with authoritative accounting guidance. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carry forward periods, experience with tax attributes expiring unused, and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified. The Company has determined, based on the evaluation of both objective and subjective evidence available, that a domestic valuation allowance is not necessary and that it is more likely than not that the deferred tax assets are fully realizable. The Company has reached a sustained period of profitability and believes its objectively measured positive evidence outweighs the negative evidence. The Company continues to provide for a valuation allowance on certain of its foreign deferred tax assets. In accordance with the FASB’s authoritative guidance on accounting for uncertainty in income taxes, the Company has recorded a liability of $2.3 million for unrecognized tax benefits related to a 2010 Research & Development Credit as of June 30, 2015 and December 31, 2014. The accounting guidance prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For the year ended December 31, 2014, the return will remain subject to examination by the various taxing authorities for the duration of the applicable statute of limitations (generally three years from the later of the date of filing or the due date of the return). |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 6 Months Ended |
Jun. 30, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | NOTE N. ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables reconcile changes in Accumulated other comprehensive loss (“AOCL”) by component (net of tax, dollars in millions): Three months ended Available-for- Defined Foreign Total AOCL as of March 31, 2014 $ 1.2 $ (8.6 ) $ (11.5 ) $ (18.9 ) Other comprehensive (loss) income before reclassifications (0.9 ) — 0.9 — Amounts reclassified from AOCL — (0.9 ) — (0.9 ) Income tax 0.3 0.4 — 0.7 Net current period other comprehensive (loss) income $ (0.6 ) $ (0.5 ) $ 0.9 $ (0.2 ) AOCL as of June 30, 2014 $ 0.6 $ (9.1 ) $ (10.6 ) $ (19.1 ) AOCL as of March 31, 2015 $ (3.3 ) $ (17.6 ) $ (30.5 ) $ (51.4 ) Other comprehensive (loss) income before reclassifications (0.9 ) — 1.9 1.0 Amounts reclassified from AOCL — (0.9 ) — (0.9 ) Income tax 0.4 0.4 — 0.8 Net current period other comprehensive (loss) income $ (0.5 ) $ (0.5 ) $ 1.9 $ 0.9 AOCL as of June 30, 2015 $ (3.8 ) $ (18.1 ) $ (28.6 ) $ (50.5 ) Six months ended Available-for- Defined Foreign Total AOCL as of December 31, 2013 $ 1.1 $ (7.9 ) $ (14.2 ) $ (21.0 ) Other comprehensive (loss) income before reclassifications (0.7 ) — 3.6 2.9 Amounts reclassified from AOCL — (2.0 ) — (2.0 ) Income tax 0.2 0.8 — 1.0 Net current period other comprehensive (loss) income $ (0.5 ) $ (1.2 ) $ 3.6 $ 1.9 AOCL as of June 30, 2014 $ 0.6 $ (9.1 ) $ (10.6 ) $ (19.1 ) AOCL as of December 31, 2014 $ (0.9 ) $ (17.0 ) $ (21.6 ) $ (39.5 ) Other comprehensive loss before reclassifications (4.7 ) — (7.0 ) (11.7 ) Amounts reclassified from AOCL — (1.8 ) — (1.8 ) Income tax 1.8 0.7 — 2.5 Net current period other comprehensive loss $ (2.9 ) $ (1.1 ) $ (7.0 ) $ (11.0 ) AOCL as of June 30, 2015 $ (3.8 ) $ (18.1 ) $ (28.6 ) $ (50.5 ) The following tables show the location in the Condensed Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (dollars in millions): Amounts reclassified from AOCL Affected line item in the Condensed Consolidated AOCL Components Three months Three months ended Amortization of defined benefit pension items: Prior service cost $ 0.8 $ 0.8 Cost of sales 0.1 0.0 Selling, general and administrative 0.0 0.0 Engineering – research and development Actuarial loss — 0.1 Cost of sales — 0.0 Selling, general and administrative — 0.0 Engineering – research and development Total reclassifications, before tax $ 0.9 $ 0.9 Income before income taxes Income tax expense (0.4 ) (0.4 ) Tax expense Total reclassifications $ 0.5 $ 0.5 Net of tax Amounts reclassified from AOCL Affected line item in the Condensed Consolidated AOCL Components Six months Six months Amortization of defined benefit pension items: Prior service cost $ 1.6 $ 1.6 Cost of sales 0.2 0.1 Selling, general and administrative 0.0 0.0 Engineering – research and development Actuarial loss — 0.3 Cost of sales — 0.0 Selling, general and administrative — 0.0 Engineering – research and development Total reclassifications, before tax $ 1.8 $ 2.0 Income before income taxes Income tax expense (0.7 ) (0.8 ) Tax expense Total reclassifications $ 1.1 $ 1.2 Net of tax Prior service cost and actuarial loss are included in the computation of the Company’s net periodic benefit cost. Please see NOTE L for additional details. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES | NOTE O. COMMITMENTS AND CONTINGENCIES Claims, Disputes, and Litigation The Company is party to various legal actions and administrative proceedings and subject to various claims arising in the ordinary course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims and workers’ compensation claims. The Company believes that the ultimate liability, if any, in excess of amounts already provided for in the condensed consolidated financial statements or covered by insurance on the disposition of these matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company. |
CERTAIN RELATIONSHIPS AND RELAT
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2015 | |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | NOTE P. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In May 2015, the Company redeemed $100,000 and $450,000 of 7.125% Senior Notes held by Lawrence E. Dewey, our Chairman, President and Chief Executive Officer, and David S. Graziosi, our Executive Vice President, Chief Financial Officer and Treasurer, respectively, at the specified redemption price in the governing indenture equal to 103.563% of the principal amount plus any accrued and unpaid interest. Refer to NOTE F for additional details. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2015 | |
EARNINGS PER SHARE | NOTE Q. EARNINGS PER SHARE The Company presents both basic and diluted earnings per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted EPS is calculated by dividing net income by the weighted average number of common shares and common equivalent shares outstanding during the reporting period that are calculated using the treasury stock method for stock-based awards. The treasury stock method assumes that the Company uses the proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future, compensation cost for future service that the Company has not yet recognized and any tax benefits that would be credited to additional paid-in-capital when the award generates a tax deduction. If there would be a shortfall resulting in a charge to additional paid-in-capital, such an amount would be a reduction of the proceeds to the extent of the gains. The diluted weighted-average common shares outstanding exclude the anti-dilutive effect of certain stock options since such options had an exercise price in excess of the monthly average market value of our common stock. For both the three months and six months ended June 30, 2015, 0.2 million of outstanding stock options were not included in the diluted EPS computation because they were anti-dilutive. The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Net income $ 54.4 $ 57.2 $ 122.8 $ 109.3 Weighted average shares of common stock outstanding 178.5 178.8 179.3 180.5 Dilutive effect stock-based awards 1.1 2.8 1.8 3.2 Diluted weighted average shares of common stock outstanding 179.6 181.6 181.1 183.7 Basic earnings per share attributable to common stockholders $ 0.30 $ 0.32 $ 0.68 $ 0.61 Diluted earnings per share attributable to common stockholders $ 0.30 $ 0.31 $ 0.68 $ 0.59 |
COMMON STOCK
COMMON STOCK | 6 Months Ended |
Jun. 30, 2015 | |
COMMON STOCK | NOTE R. COMMON STOCK The Company’s current stock repurchase program was announced on October 30, 2014. The Board authorized management to repurchase up to $500.0 million of its common stock on the open market or through privately negotiated transactions through December 31, 2016. The timing and amount of stock repurchases are subject to market conditions and corporate needs. This stock repurchase program may be extended, modified, suspended or discontinued at any time at the Company’s discretion. During the three months and six months ended June 30, 2015, the Company repurchased approximately $85.2 million and $124.1 million, respectively, of its common stock under the repurchase program. As a result of timing between the repurchase transactions and the settlement of the repurchases, $79.3 million was settled in cash during the second quarter of 2015. The remaining $9.4 million, or 317,900 shares, was recorded to Other current liabilities in the Condensed Consolidated Balance Sheets for June 30, 2015 and settled the following month. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements as of and for the three and six months ended June 30, 2015 and 2014 have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for the fair statements of the results for the periods presented. The condensed consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These condensed consolidated financial statements present the financial position, results of comprehensive income and cash flows of the Company. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission (“SEC”) on February 20, 2015. Certain immaterial reclassifications have been made in the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications have no impact on previously reported net income, total stockholders’ equity or cash flows. The interim period financial results for the three and six month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Significant estimates include, but are not limited to, allowance for doubtful accounts, sales allowances, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite life intangibles, long-lived asset impairment tests, useful lives for depreciation and amortization, warranty liability, determination of discount and other assumptions for pension and other postretirement benefit expense, income taxes and deferred tax valuation allowances, derivative valuation, and contingencies. The Company’s accounting policies involve the application of judgments and assumptions made by management that include inherent risks and uncertainties. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued authoritative accounting guidance to simplify the presentation of the debt issuance costs. The guidance requires that the debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected. The guidance is effective for public entities for interim and annual reporting periods beginning after December 15, 2015, but can be early-adopted. Management is assessing the potential impact of the adoption of this guidance on the Company’s consolidated financial statements. In August 2014, the FASB issued authoritative accounting guidance on the disclosure of uncertainties about an entity’s ability to continue as a going concern. The guidance requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that financial statements are available to be issued when applicable) and to provide related footnote disclosures. The guidance is effective prospectively for interim and annual reporting periods beginning after December 15, 2016, but can be early-adopted. While the adoption of this guidance is not expected to have an effect on the Company’s consolidated financial statements, it could affect the disclosure applied under these circumstances in the future. In May 2014, the FASB issued authoritative accounting guidance on a company’s accounting for revenue from contracts with customers. The guidance applies to all companies that enter into contracts with customers to transfer goods, services or nonfinancial assets. The guidance requires these companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires improved disclosures regarding the nature, timing, amount and uncertainty of revenue that is recognized. As originally proposed, the guidance was effective prospectively for interim and annual reporting periods beginning after December 15, 2016. On April 1, 2015, the FASB proposed a one-year deferral of the effective date. Under the proposal, the guidance would be effective on a retrospective or modified retrospective basis for public entities for interim and annual reporting periods beginning after December 15, 2017. The proposal also would permit both public and nonpublic entities to adopt the guidance as early as December 15, 2016. Early adoption prior to that date would not be permitted. In July 2015, the FASB proposed deferral was approved. Management is assessing the potential impact of the adoption of this guidance on the Company’s consolidated financial statements. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Components of Inventories | Inventories consisted of the following components (dollars in millions): June 30, December 31, Purchased parts and raw materials $ 74.0 $ 72.3 Work in progress 6.0 6.1 Service parts 48.0 46.5 Finished goods 27.3 18.6 Total inventories $ 155.3 $ 143.5 |
GOODWILL AND OTHER INTANGIBLE26
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Other Intangible Assets | The following presents a summary of other intangible assets (dollars in millions): June 30, 2015 December 31, 2014 Intangible assets, gross Accumulated Intangible Intangible Accumulated Intangible Other intangible assets: Trade name $ 870.0 $ — $ 870.0 $ 870.0 $ — $ 870.0 Customer relationships — defense 62.3 (29.6 ) 32.7 62.3 (27.9 ) 34.4 Customer relationships — commercial 831.8 (452.1 ) 379.7 831.8 (426.9 ) 404.9 Proprietary technology 476.3 (301.0 ) 175.3 476.3 (282.0 ) 194.3 Non-compete agreement 17.3 (13.7 ) 3.6 17.3 (12.8 ) 4.5 Patented technology — defense 28.2 (26.2 ) 2.0 28.2 (24.5 ) 3.7 Tooling rights 4.5 (4.4 ) 0.1 4.5 (4.3 ) 0.2 Patented technology — commercial 260.6 (260.6 ) — 260.6 (260.6 ) — Total $ 2,551.0 $ (1,087.6 ) $ 1,463.4 $ 2,551.0 $ (1,039.0 ) $ 1,512.0 |
Amortization Expense Related to Other Intangible Assets for Next Five Years and Thereafter | Amortization expense related to other intangible assets for the next five years and thereafter is expected to be (dollars in millions): 2016 2017 2018 2019 2020 Thereafter Amortization expense $ 92.4 $ 89.7 $ 87.2 $ 85.7 $ 49.9 $ 140.6 |
FAIR VALUE OF FINANCIAL INSTR27
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Fair Value of Financial Assets and (Liabilities) | The following table summarizes the fair value of the Company’s financial assets and (liabilities) as of June 30, 2015 and December 31, 2014 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Significant Other TOTAL June 30, 2015 December 31, June 30, 2015 December 31, June 30, 2015 December 31, Cash equivalents $ 101.0 $ 55.0 $ — $ — $ 101.0 $ 55.0 Available-for-sale securities 3.9 8.6 — — 3.9 8.6 Rabbi trust assets 4.6 2.9 — — 4.6 2.9 Deferred compensation obligation (4.6 ) (2.9 ) — — (4.6 ) (2.9 ) Derivative assets — — 0.0 0.0 0.0 0.0 Derivative liabilities — — (22.6 ) (15.4 ) (22.6 ) (15.4 ) Total $ 104.9 $ 63.6 $ (22.6 ) $ (15.4 ) $ 82.3 $ 48.2 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Long-Term Debt and Maturities | Long-term debt and maturities are as follows (dollars in millions): June 30, December 31, Long-term debt: Senior Secured Credit Facility Term B-2 Loan, variable, due 2017 $ 189.0 $ 283.6 Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 2,225.6 1,765.6 Senior Notes, fixed 7.125%, due 2019 — 471.3 Total long-term debt $ 2,414.6 $ 2,520.5 Less: current maturities of long-term debt 22.6 17.9 Total long-term debt less current portion $ 2,392.0 $ 2,502.6 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Company's Interest Rate Derivatives | A summary of the Company’s interest rate derivatives as of June 30, 2015 and December 31, 2014 follows (dollars in millions): June 30, 2015 December 31, 2014 Notional Fair Value Notional Fair Value 3.44% Interest Rate Swap L, Aug 2016 – Aug 2019* $ 75.0 $ (3.0 ) $ 75.0 $ (2.3 ) 3.43% Interest Rate Swap M, Aug 2016 – Aug 2019* 100.0 (3.9 ) 100.0 (3.0 ) 3.37% Interest Rate Swap N, Aug 2016 – Aug 2019* 75.0 (2.8 ) 75.0 (2.1 ) 3.19% Interest Rate Swap O, Aug 2016 – Aug 2019* 75.0 (2.5 ) 75.0 (1.7 ) 3.08% Interest Rate Swap P, Aug 2016 – Aug 2019* 75.0 (2.2 ) 75.0 (1.5 ) 2.99% Interest Rate Swap Q, Aug 2016 – Aug 2019* 50.0 (1.3 ) 50.0 (0.9 ) 2.98% Interest Rate Swap R, Aug 2016 – Aug 2019* 50.0 (1.3 ) 50.0 (0.9 ) 2.73% Interest Rate Swap S, Aug 2016 – Aug 2019* 50.0 (1.0 ) 50.0 (0.5 ) 2.74% Interest Rate Swap T, Aug 2016 – Aug 2019* 75.0 (1.4 ) 75.0 (0.8 ) 2.66% Interest Rate Swap U, Aug 2016 – Aug 2019* 50.0 (0.9 ) 50.0 (0.4 ) 2.60% Interest Rate Swap V, Aug 2016 – Aug 2019* 50.0 (0.8 ) 50.0 (0.3 ) 2.40% Interest Rate Swap W, Aug 2016 – Aug 2019* 25.0 (0.2 ) 25.0 0.0 2.25% Interest Rate Swap X, Aug 2016 – Aug 2019* 50.0 (0.3 ) — — * includes LIBOR floor of 1.00% $ 800.0 $ (21.6 ) $ 750.0 $ (14.4 ) |
Derivative Instruments and their Impact on the Financial Condition | The following tabular disclosures further describe the Company’s derivative instruments and their impact on the financial condition of the Company (dollars in millions): June 30, 2015 December 31, 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives not designated as hedging instruments Foreign currency contracts Other current assets $ 0.0 Other current $ (0.3 ) Commodity contracts Other current and non-current liabilities (1.0 ) Other current and non-current liabilities (0.7 ) Interest rate contracts Other non-current (21.6 ) Other non-current (14.4 ) Total derivatives not designated as hedging instruments $ (22.6 ) $ (15.4 ) |
Interest Rate Derivative Instruments and their Impact on the Results of Operations | The impact on the Company’s Condensed Consolidated Statements of Comprehensive Income related to foreign currency and commodity contracts can be found in NOTE J, and the following tabular disclosure describes the location and impact on the Company’s results of operations related to unrealized gain (loss) on interest rate derivatives (dollars in millions): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Location of impact on results of operations Interest Expense $ 1.1 $ 2.6 $ (7.2 ) $ 6.5 |
Foreign Currency Forward Contract | |
Notional Amount and Fair Value of Derivatives | The following table summarizes the outstanding foreign currency forward contracts as of June 30, 2015 and December 31, 2014 (amounts in millions): June 30, 2015 December 31, 2014 Notional Fair Value Notional Fair Value Japanese Yen (JPY) ¥ 600.0 $ 0.0 ¥ 300.0 $ (0.3 ) $ 0.0 $ (0.3 ) |
Commodity contracts | |
Notional Amount and Fair Value of Derivatives | The following table summarizes the outstanding commodity swaps as of June 30, 2015 and December 31, 2014 (dollars in millions): June 30, 2015 December 31, 2014 Notional Quantity Fair Value Notional Quantity Fair Value Aluminum $ 8.7 4,650 metric tons $ (1.0 ) $ 11.3 6,200 metric tons $ (0.7 ) Natural Gas N/A N/A — $ 0.2 60,000 MMBtu 0.0 $ (1.0 ) $ (0.7 ) |
PRODUCT WARRANTY LIABILITIES (T
PRODUCT WARRANTY LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Product Warranty Liability Activities | Product warranty liability activities consist of the following (dollars in millions): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Beginning balance $ 77.1 $ 90.4 $ 83.6 $ 90.5 Payments (7.9 ) (10.7 ) (16.3 ) (19.1 ) Increase in liability (warranty issued during period) 5.3 6.5 11.2 12.8 Net adjustments to liability (0.9 ) 0.3 (5.0 ) 2.2 Accretion (for Predecessor liabilities) 0.1 0.2 0.2 0.3 Ending balance $ 73.7 $ 86.7 $ 73.7 $ 86.7 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Deferred Revenue for Extended Transmission Coverage Activity | Deferred revenue for ETC activity (dollars in millions): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Beginning balance $ 72.2 $ 63.8 $ 69.0 $ 63.6 Increases 8.3 8.3 16.5 13.8 Revenue earned (5.8 ) (5.3 ) (10.8 ) (10.6 ) Ending balance $ 74.7 $ 66.8 $ 74.7 $ 66.8 |
OTHER (EXPENSE) INCOME, NET (Ta
OTHER (EXPENSE) INCOME, NET (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Computation of Other (Expense) Income, Net | Other (expense) income, net consists of the following (dollars in millions): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (Loss) gain on intercompany foreign exchange $ (1.3 ) $ (1.8 ) $ 0.9 $ (1.8 ) Realized loss on derivative contracts (see NOTE G) (0.4 ) (0.4 ) (0.7 ) (1.0 ) (Loss) gain on foreign exchange (0.2 ) — 0.9 (0.5 ) Unrealized (loss) gain on derivative contracts (see NOTE G) (0.1 ) 1.3 0.2 1.5 Loss on repayments of long-term debt (0.0 ) — (0.2 ) — Grant program income — 0.8 — 1.4 Public offering fees and expenses — (0.8 ) — (1.1 ) Other (0.2 ) — (0.5 ) 0.2 Total $ (2.2 ) $ (0.9 ) $ 0.6 $ (1.3 ) |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Other Current Liabilities | Other current liabilities consist of the following (dollars in millions): As of As of Payroll and related costs $ 30.9 $ 50.9 Sales allowances 28.1 25.5 Defense price reduction reserve 11.2 16.2 Vendor buyback obligation 11.1 13.2 Taxes payable 10.1 8.5 Stock repurchases obligation 9.4 — Accrued interest payable 0.8 5.2 Derivative liabilities 0.2 0.8 Other accruals 12.1 11.4 Total $ 113.9 $ 131.7 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Components of Net Periodic Benefit Cost | Components of net periodic benefit cost consist of the following (dollars in millions): Pension Plans Post-retirement Benefits Three months ended June 30, Three months ended June 30, 2015 2014 2015 2014 Net periodic benefit cost: Service cost $ 3.6 $ 3.3 $ 0.6 $ 0.6 Interest cost 1.3 1.2 1.3 1.4 Expected return on assets (2.1 ) (1.9 ) — — Prior service cost 0.0 0.0 (0.9 ) (0.9 ) Gain (0.0 ) — — (0.2 ) Net periodic benefit cost $ 2.8 $ 2.6 $ 1.0 $ 0.9 Pension Plans Post-retirement Benefits Six months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Net periodic benefit cost: Service cost $ 7.2 $ 6.6 $ 1.2 $ 1.1 Interest cost 2.6 2.5 2.7 2.9 Expected return on assets (4.2 ) (3.8 ) — — Prior service cost 0.0 0.0 (1.8 ) (1.8 ) Gain (0.0 ) — — (0.4 ) Net periodic benefit cost $ 5.6 $ 5.3 $ 2.1 $ 1.8 |
ACCUMULATED OTHER COMPREHENSI35
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Changes in Accumulated Other Comprehensive Loss by Component | The following tables reconcile changes in Accumulated other comprehensive loss (“AOCL”) by component (net of tax, dollars in millions): Three months ended Available-for- Defined Foreign Total AOCL as of March 31, 2014 $ 1.2 $ (8.6 ) $ (11.5 ) $ (18.9 ) Other comprehensive (loss) income before reclassifications (0.9 ) — 0.9 — Amounts reclassified from AOCL — (0.9 ) — (0.9 ) Income tax 0.3 0.4 — 0.7 Net current period other comprehensive (loss) income $ (0.6 ) $ (0.5 ) $ 0.9 $ (0.2 ) AOCL as of June 30, 2014 $ 0.6 $ (9.1 ) $ (10.6 ) $ (19.1 ) AOCL as of March 31, 2015 $ (3.3 ) $ (17.6 ) $ (30.5 ) $ (51.4 ) Other comprehensive (loss) income before reclassifications (0.9 ) — 1.9 1.0 Amounts reclassified from AOCL — (0.9 ) — (0.9 ) Income tax 0.4 0.4 — 0.8 Net current period other comprehensive (loss) income $ (0.5 ) $ (0.5 ) $ 1.9 $ 0.9 AOCL as of June 30, 2015 $ (3.8 ) $ (18.1 ) $ (28.6 ) $ (50.5 ) Six months ended Available-for- Defined Foreign Total AOCL as of December 31, 2013 $ 1.1 $ (7.9 ) $ (14.2 ) $ (21.0 ) Other comprehensive (loss) income before reclassifications (0.7 ) — 3.6 2.9 Amounts reclassified from AOCL — (2.0 ) — (2.0 ) Income tax 0.2 0.8 — 1.0 Net current period other comprehensive (loss) income $ (0.5 ) $ (1.2 ) $ 3.6 $ 1.9 AOCL as of June 30, 2014 $ 0.6 $ (9.1 ) $ (10.6 ) $ (19.1 ) AOCL as of December 31, 2014 $ (0.9 ) $ (17.0 ) $ (21.6 ) $ (39.5 ) Other comprehensive loss before reclassifications (4.7 ) — (7.0 ) (11.7 ) Amounts reclassified from AOCL — (1.8 ) — (1.8 ) Income tax 1.8 0.7 — 2.5 Net current period other comprehensive loss $ (2.9 ) $ (1.1 ) $ (7.0 ) $ (11.0 ) AOCL as of June 30, 2015 $ (3.8 ) $ (18.1 ) $ (28.6 ) $ (50.5 ) |
Condensed Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL | The following tables show the location in the Condensed Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (dollars in millions): Amounts reclassified from AOCL Affected line item in the Condensed Consolidated AOCL Components Three months Three months ended Amortization of defined benefit pension items: Prior service cost $ 0.8 $ 0.8 Cost of sales 0.1 0.0 Selling, general and administrative 0.0 0.0 Engineering – research and development Actuarial loss — 0.1 Cost of sales — 0.0 Selling, general and administrative — 0.0 Engineering – research and development Total reclassifications, before tax $ 0.9 $ 0.9 Income before income taxes Income tax expense (0.4 ) (0.4 ) Tax expense Total reclassifications $ 0.5 $ 0.5 Net of tax Amounts reclassified from AOCL Affected line item in the Condensed Consolidated AOCL Components Six months Six months Amortization of defined benefit pension items: Prior service cost $ 1.6 $ 1.6 Cost of sales 0.2 0.1 Selling, general and administrative 0.0 0.0 Engineering – research and development Actuarial loss — 0.3 Cost of sales — 0.0 Selling, general and administrative — 0.0 Engineering – research and development Total reclassifications, before tax $ 1.8 $ 2.0 Income before income taxes Income tax expense (0.7 ) (0.8 ) Tax expense Total reclassifications $ 1.1 $ 1.2 Net of tax |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Reconciliation of Numerators and Denominators Used to Calculate Basic EPS and Diluted EPS | The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Net income $ 54.4 $ 57.2 $ 122.8 $ 109.3 Weighted average shares of common stock outstanding 178.5 178.8 179.3 180.5 Dilutive effect stock-based awards 1.1 2.8 1.8 3.2 Diluted weighted average shares of common stock outstanding 179.6 181.6 181.1 183.7 Basic earnings per share attributable to common stockholders $ 0.30 $ 0.32 $ 0.68 $ 0.61 Diluted earnings per share attributable to common stockholders $ 0.30 $ 0.31 $ 0.68 $ 0.59 |
Overview - Additional Informati
Overview - Additional Information (Detail) - Jun. 30, 2015 | CustomerEmployeeProduct |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |
Transmission product lines | Product | 13 |
Worldwide independent distributor and dealer locations | 1,400 |
Number of employees | Employee | 2,700 |
Sales Revenue, Net | North America | Geographic Concentration Risk | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |
Concentration of risk, percentage | 80.00% |
Components of Inventories (Deta
Components of Inventories (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory [Line Items] | ||
Purchased parts and raw materials | $ 74 | $ 72.3 |
Work in progress | 6 | 6.1 |
Service parts | 48 | 46.5 |
Finished goods | 27.3 | 18.6 |
Total inventories | $ 155.3 | $ 143.5 |
Goodwill and Other Intangible39
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Goodwill [Line Items] | ||
Goodwill | $ 1,941 | $ 1,941 |
Net carrying value of Goodwill and other intangible assets | $ 3,404.4 | $ 3,453 |
Summary of Goodwill and Other I
Summary of Goodwill and Other Intangible Assets (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Trade name | $ 870 | $ 870 |
Intangible assets, gross | 2,551 | 2,551 |
Accumulated amortization | (1,087.6) | (1,039) |
Intangible assets, net | 1,463.4 | 1,512 |
Customer relationships - defense | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 62.3 | 62.3 |
Accumulated amortization | (29.6) | (27.9) |
Intangible assets, net | 32.7 | 34.4 |
Customer relationships - commercial | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 831.8 | 831.8 |
Accumulated amortization | (452.1) | (426.9) |
Intangible assets, net | 379.7 | 404.9 |
Proprietary technology | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 476.3 | 476.3 |
Accumulated amortization | (301) | (282) |
Intangible assets, net | 175.3 | 194.3 |
Non-compete agreement | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 17.3 | 17.3 |
Accumulated amortization | (13.7) | (12.8) |
Intangible assets, net | 3.6 | 4.5 |
Patented technology - defense | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 28.2 | 28.2 |
Accumulated amortization | (26.2) | (24.5) |
Intangible assets, net | 2 | 3.7 |
Tooling rights | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 4.5 | 4.5 |
Accumulated amortization | (4.4) | (4.3) |
Intangible assets, net | 0.1 | 0.2 |
Patented technology - commercial | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 260.6 | 260.6 |
Accumulated amortization | $ (260.6) | $ (260.6) |
Expected Amortization Expense R
Expected Amortization Expense Related to Other Intangible Assets (Detail) $ in Millions | Jun. 30, 2015USD ($) |
Finite-Lived Intangible Assets | |
2,016 | $ 92.4 |
2,017 | 89.7 |
2,018 | 87.2 |
2,019 | 85.7 |
2,020 | 49.9 |
Thereafter | $ 140.6 |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 101 | $ 55 |
Available-for-sale securities | 3.9 | 8.6 |
Rabbi trust assets | 4.6 | 2.9 |
Deferred compensation obligation | (4.6) | (2.9) |
Derivative assets | 0 | 0 |
Derivative liabilities | (22.6) | (15.4) |
Total | 82.3 | 48.2 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 101 | 55 |
Available-for-sale securities | 3.9 | 8.6 |
Rabbi trust assets | 4.6 | 2.9 |
Deferred compensation obligation | (4.6) | (2.9) |
Total | 104.9 | 63.6 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | (22.6) | (15.4) |
Total | $ (22.6) | $ (15.4) |
Long Term Debt and Maturities (
Long Term Debt and Maturities (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 2,414.6 | $ 2,520.5 |
Less: current maturities of long-term debt | 22.6 | 17.9 |
Total long-term debt less current portion | 2,392 | 2,502.6 |
Total long-term debt | 2,414.6 | 2,520.5 |
Senior Secured Credit Facility Term B-2 Loan, variable, due 2017 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 189 | 283.6 |
Total long-term debt | 189 | 283.6 |
Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 2,225.6 | 1,765.6 |
Total long-term debt | $ 2,225.6 | 1,765.6 |
Senior Notes, fixed 7.125%, due 2019 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 471.3 | |
Total long-term debt | $ 471.3 |
Long Term Debt and Maturities44
Long Term Debt and Maturities (Parenthetical) (Detail) - Jun. 30, 2015 | Total |
Senior Secured Credit Facility Term B-2 Loan, variable, due 2017 | |
Debt Instrument [Line Items] | |
Debt instrument, due date | 2,017 |
Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 | |
Debt Instrument [Line Items] | |
Debt instrument, due date | 2,019 |
Senior Notes, fixed 7.125%, due 2019 | |
Debt Instrument [Line Items] | |
Interest rate of Senior Notes | 7.125% |
Debt instrument, due date | 2,019 |
Debt - Additional Information (
Debt - Additional Information (Detail) | Apr. 07, 2015USD ($)$ / Note | May. 31, 2015USD ($) | Apr. 30, 2014 | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) |
Debt Instrument [Line Items] | ||||||||
Total long-term debt | $ 2,414,600,000 | $ 2,414,600,000 | $ 2,520,500,000 | |||||
Fair value of long-term debt obligations | 2,417,600,000 | 2,417,600,000 | ||||||
Aggregate principal amount of senior notes | $ 470,000,000 | |||||||
Line of credit facility amendment terms | The amendment also, among other things, (i) permits prepayment, repurchase or redemption of Allison's 7.125% Senior Notes with the proceeds of the financing and (ii) resets the period for which a prepayment premium of 1.00% will apply in the event of a repricing transaction to the six-month anniversary of the closing date of the financing. | |||||||
Tendered notes consideration per $1000 | $ / Note | 1,042 | |||||||
Loss on offering of debt instrument | $ 22,700,000 | $ 0 | 200,000 | |||||
Debt issuance costs | 7,500,000 | |||||||
Debt Instrument redeemed amount | $ 50,400,000 | |||||||
Percentage of principal amount redeemed | 103.563% | |||||||
Long-term debt repayment | $ 104,600,000 | $ 8,900,000 | ||||||
Total leverage ratio | 288.00% | 288.00% | ||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolving credit borrowings | 465,000,000 | |||||||
Maximum amount of letters of credit commitments available under the revolving credit facility | 75,000,000 | |||||||
Available revolving credit facility | $ 455,800,000 | $ 455,800,000 | ||||||
Letters of Credit | $ 9,200,000 | $ 9,200,000 | ||||||
Revolving credit borrowings, interest rate | 1.63% | 1.63% | ||||||
Line of Credit Facility, commitment fee percentage | 0.25% | |||||||
Maturity date of revolving credit borrowings | 2019-01 | |||||||
Required senior secured leverage ratio | 550.00% | 550.00% | ||||||
Achieved senior secured leverage ratio | 288.00% | 288.00% | ||||||
Minimum senior secured leverage ratio | 350.00% | 350.00% | ||||||
Basis point reduction to applicable margin, resulting from total leverage ratio below minimum | 0.25% | |||||||
Basis point reduction to commitment fee, resulting from total leverage ratio below minimum | 0.125% | |||||||
Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Weighted average rate on the Senior Secured Credit Facility | 3.46% | 3.46% | ||||||
Fixed 7.125% Senior Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Cash tender offer date to acquire outstanding senior notes | Mar. 18, 2015 | |||||||
Aggregate principal amount of senior notes | $ 420,900,000 | |||||||
Loss on offering of debt instrument | $ 2,400,000 | |||||||
Senior Secured Credit Facility Term B-2 Loan, variable, due 2017 | ||||||||
Debt Instrument [Line Items] | ||||||||
Total long-term debt | $ 189,000,000 | $ 189,000,000 | 283,600,000 | |||||
Loss on offering of debt instrument | $ 200,000 | |||||||
Variable interest rate, description | Interest on the Term B-2 Loan, as of June 30, 2015, is at the Company's option, either (a) 2.75% over the LIBOR or (b) 1.75% over the greater of the prime lending rate provided by the British Banking Association or the federal funds effective rate published by the Federal Reserve Bank of New York plus 0.50%. | |||||||
Total interest rate for term loan | 2.94% | 2.94% | ||||||
Debt instrument, due date | 2,017 | |||||||
Long-term debt repayment | $ 47,200,000 | $ 94,600,000 | ||||||
Senior Secured Credit Facility Term B-2 Loan, variable, due 2017 | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Applicable margin over base rate | 2.75% | |||||||
Senior Secured Credit Facility Term B-2 Loan, variable, due 2017 | Prime Rate or Federal Funds Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Applicable margin over base rate | 1.75% | |||||||
Senior Secured Credit Facility Term B-2 Loan, variable, due 2017 | Federal Funds Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Applicable margin over base rate | 0.50% | |||||||
Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 | ||||||||
Debt Instrument [Line Items] | ||||||||
Total long-term debt | $ 2,225,600,000 | $ 2,225,600,000 | $ 1,765,600,000 | |||||
Senior Secured Credit Facility | $ 470,000,000 | |||||||
Variable interest rate, description | Interest on the Term B-3 Loan, as of March 31, 2015, is equal to the LIBOR (which may not be less than 1.00%) plus 2.50% | |||||||
Total interest rate for term loan | 3.50% | 3.50% | ||||||
Principal payments on term loans | $ 5,600,000 | |||||||
Debt instrument, due date | 2,019 | |||||||
Basis point reduction to applicable margin, resulting from total leverage ratio below minimum | 0.25% | |||||||
Total leverage ratio | 325.00% | 325.00% |
Summary of Company's Interest R
Summary of Company's Interest Rate Derivatives (Detail) - Derivatives not designated as hedging instruments - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 | |
Derivatives, Fair Value [Line Items] | |||
Notional Amount | $ 800,000,000 | $ 750,000,000 | |
Fair Value | (21,600,000) | (14,400,000) | |
3.44% Interest Rate Swap L, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (3,000,000) | (2,300,000) |
3.43% Interest Rate Swap M, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 100,000,000 | 100,000,000 |
Fair Value | [1] | (3,900,000) | (3,000,000) |
3.37% Interest Rate Swap N, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (2,800,000) | (2,100,000) |
3.19% Interest Rate Swap O, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (2,500,000) | (1,700,000) |
3.08% Interest Rate Swap P, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (2,200,000) | (1,500,000) |
2.99% Interest Rate Swap Q, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (1,300,000) | (900,000) |
2.98% Interest Rate Swap R, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (1,300,000) | (900,000) |
2.73% Interest Rate Swap S, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (1,000,000) | (500,000) |
2.74% Interest Rate Swap T, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (1,400,000) | (800,000) |
2.66% Interest Rate Swap U, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (900,000) | (400,000) |
2.60% Interest Rate Swap V, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (800,000) | (300,000) |
2.40% Interest Rate Swap W, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 25,000,000 | 25,000,000 |
Fair Value | [1] | (200,000) | $ 0 |
2.25% Interest Rate Swap X, Aug 2016 - Aug 2019 | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | |
Fair Value | [1] | $ (300,000) | |
[1] | includes LIBOR floor of 1.00% |
Summary of Company's Interest47
Summary of Company's Interest Rate Derivatives (Parenthetical) (Detail) - Derivatives not designated as hedging instruments | Jun. 30, 2015 | Dec. 31, 2014 |
LIBOR | ||
Derivatives, Fair Value [Line Items] | ||
LIBOR floor | 1.00% | 1.00% |
3.44% Interest Rate Swap L, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.44% | 3.44% |
3.43% Interest Rate Swap M, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.43% | 3.43% |
3.37% Interest Rate Swap N, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.37% | 3.37% |
3.19% Interest Rate Swap O, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.19% | 3.19% |
3.08% Interest Rate Swap P, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.08% | 3.08% |
2.99% Interest Rate Swap Q, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.99% | 2.99% |
2.98% Interest Rate Swap R, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.98% | 2.98% |
2.73% Interest Rate Swap S, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.73% | 2.73% |
2.74% Interest Rate Swap T, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.74% | 2.74% |
2.66% Interest Rate Swap U, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.66% | 2.66% |
2.60% Interest Rate Swap V, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.60% | 2.60% |
2.40% Interest Rate Swap W, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.40% | 2.40% |
2.25% Interest Rate Swap X, Aug 2016 - Aug 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.25% | 2.25% |
Summary of Outstanding Foreign
Summary of Outstanding Foreign Currency Forward Contracts (Detail) - Derivatives not designated as hedging instruments | Jun. 30, 2015USD ($) | Jun. 30, 2015JPY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2014JPY (¥) |
Derivatives, Fair Value [Line Items] | ||||
Notional Amount | $ 800,000,000 | $ 750,000,000 | ||
Foreign currency contracts | ||||
Derivatives, Fair Value [Line Items] | ||||
Assets Fair Value | 0 | |||
Liabilities Fair Value | (300,000) | |||
Foreign currency contracts | Japanese Yen | ||||
Derivatives, Fair Value [Line Items] | ||||
Assets Fair Value | $ 0 | |||
Liabilities Fair Value | $ (300,000) | |||
Notional Amount | ¥ | ¥ 600,000,000 | ¥ 300,000,000 |
Summary of Outstanding Commodit
Summary of Outstanding Commodity Swaps (Detail) - Derivatives not designated as hedging instruments | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015USD ($)t | Dec. 31, 2014USD ($)MMBTUt | Jun. 30, 2014USD ($) | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Notional Amount | $ 800,000,000 | $ 750,000,000 | |
Fair value | 15,400,000 | $ 22,600,000 | |
Commodity contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Fair value | (1,000,000) | (700,000) | |
Commodity contracts | Aluminum | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Notional Amount | $ 8,700,000 | $ 11,300,000 | |
Quantity | t | 4,650 | 6,200 | |
Fair value | $ (1,000,000) | $ (700,000) | |
Commodity contracts | Natural Gas | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Notional Amount | $ 200,000 | ||
Quantity | MMBTU | 60,000 | ||
Fair value | $ 0 |
Company's Derivative Instrument
Company's Derivative Instruments and their Impact on Financial Condition of Company (Detail) - Derivatives not designated as hedging instruments - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Derivative [Line Items] | |||
Total derivatives not designated as hedging instruments | $ (15.4) | $ (22.6) | |
Foreign currency contracts | Other current assets | |||
Derivative [Line Items] | |||
Derivative Asset, Fair Value | 0 | ||
Foreign currency contracts | Other current liabilities | |||
Derivative [Line Items] | |||
Derivative Liability, Fair Value | (0.3) | ||
Commodity contracts | |||
Derivative [Line Items] | |||
Total derivatives not designated as hedging instruments | $ 1 | 0.7 | |
Commodity contracts | Other current liabilities | |||
Derivative [Line Items] | |||
Derivative Liability, Fair Value | (0.6) | (0.6) | |
Commodity contracts | Other current and non-current liabilities | |||
Derivative [Line Items] | |||
Derivative Liability, Fair Value | (0.7) | (1) | |
Commodity contracts | Other non-current liabilities | |||
Derivative [Line Items] | |||
Derivative Liability, Fair Value | $ (0.4) | (0.1) | |
Interest rate contracts | Other non-current liabilities | |||
Derivative [Line Items] | |||
Derivative Liability, Fair Value | $ (14.4) | $ (21.6) |
Derivatives - Additional Inform
Derivatives - Additional Information (Detail) - Derivatives not designated as hedging instruments - Commodity contracts - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Other current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value | $ (0.6) | $ (0.6) |
Other non-current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value | $ (0.4) | $ (0.1) |
Impact on the Company's Results
Impact on the Company's Results of Operations Related to Unrealized Gain (Loss) on Interest Rate Derivatives (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Derivative [Line Items] | ||||
Unrealized gain (loss)on derivatives | $ (6.8) | $ 8 | ||
Derivatives not designated as hedging instruments | Interest rate contracts | Interest expense | ||||
Derivative [Line Items] | ||||
Unrealized gain (loss)on derivatives | $ 1.1 | $ 2.6 | $ (7.2) | $ 6.5 |
Product Warranty Liability Acti
Product Warranty Liability Activities (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Guarantor Obligations [Line Items] | ||||
Beginning balance | $ 77.1 | $ 90.4 | $ 83.6 | $ 90.5 |
Payments | (7.9) | (10.7) | (16.3) | (19.1) |
Increase in liability (warranty issued during period) | 5.3 | 6.5 | 11.2 | 12.8 |
Net adjustments to liability | (0.9) | 0.3 | (5) | 2.2 |
Accretion (for Predecessor liabilities) | 0.1 | 0.2 | 0.2 | 0.3 |
Ending balance | $ 73.7 | $ 86.7 | $ 73.7 | $ 86.7 |
Product Warranty Liabilities -
Product Warranty Liabilities - Additional Information (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Guarantor Obligations [Line Items] | |||
Product warranty liability, current | $ 21 | $ 24 | $ 23.2 |
Product warranty liability, non-current | $ 52.7 | $ 59.6 | $ 63.5 |
Deferred Revenue - Additional I
Deferred Revenue - Additional Information (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Deferred Revenue [Line Items] | |||
Deferred revenue current liabilities | $ 21.9 | $ 20.6 | |
Deferred revenue non-current liabilities | 52.8 | $ 48.7 | |
Extended Transmission Coverage | |||
Deferred Revenue [Line Items] | |||
Deferred revenue current liabilities | 21.9 | $ 19.7 | |
Deferred revenue non-current liabilities | 52.8 | 47.1 | |
U S Government Contracts | |||
Deferred Revenue [Line Items] | |||
Deferred revenue current liabilities | $ 0 | $ 2.3 |
Deferred Revenue for ETC Activi
Deferred Revenue for ETC Activity (Detail) - Extended Transmission Coverage - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Deferred Revenue [Line Items] | ||||
Beginning balance | $ 72.2 | $ 63.8 | $ 69 | $ 63.6 |
Increases | 8.3 | 8.3 | 16.5 | 13.8 |
Revenue earned | (5.8) | (5.3) | (10.8) | (10.6) |
Ending balance | $ 74.7 | $ 66.8 | $ 74.7 | $ 66.8 |
Other (Expense) Income, Net (De
Other (Expense) Income, Net (Detail) - USD ($) $ in Millions | Apr. 07, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 |
Components of Other Income (Expense) [Line Items] | |||||
(Loss) gain on intercompany foreign exchange | $ (1.3) | $ (1.8) | $ 0.9 | $ (1.8) | |
Realized loss on derivative contracts (see NOTE G) | (0.4) | (0.4) | (0.7) | (1) | |
(Loss) gain on foreign exchange | (0.2) | 0.9 | (0.5) | ||
Unrealized (loss) gain on derivative contracts (see NOTE G) | (0.1) | 1.3 | 0.2 | 1.5 | |
Loss on repayments of long-term debt | $ (22.7) | 0 | (0.2) | ||
Grant program income | 0.8 | 1.4 | |||
Public offering fees and expenses | (0.8) | (1.1) | |||
Other | (0.2) | (0.5) | 0.2 | ||
Total | $ (2.2) | $ (0.9) | $ 0.6 | $ (1.3) |
Other (Expense) Income, Net - A
Other (Expense) Income, Net - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Other Income Expense [Line Items] | ||||
(Loss) gain on intercompany foreign exchange | $ (1.3) | $ (1.8) | $ 0.9 | $ (1.8) |
Other Current Liabilities (Deta
Other Current Liabilities (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Other Current Liabilities [Line Items] | ||
Payroll and related costs | $ 30.9 | $ 50.9 |
Sales allowances | 28.1 | 25.5 |
Defense price reduction reserve | 11.2 | 16.2 |
Vendor buyback obligation | 11.1 | 13.2 |
Taxes payable | 10.1 | 8.5 |
Stock repurchases obligation | 9.4 | |
Accrued interest payable | 0.8 | 5.2 |
Derivative liabilities | 0.2 | 0.8 |
Other accruals | 12.1 | 11.4 |
Total | $ 113.9 | $ 131.7 |
Employee Benefit Plans (Detail)
Employee Benefit Plans (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Pension Plans | ||||
Schedule of Employee Benefit Plans [Line Items] | ||||
Service cost | $ 3.6 | $ 3.3 | $ 7.2 | $ 6.6 |
Interest cost | 1.3 | 1.2 | 2.6 | 2.5 |
Expected return on assets | (2.1) | (1.9) | (4.2) | (3.8) |
Prior service cost | 0 | 0 | 0 | 0 |
Gain | 0 | 0 | ||
Net periodic benefit cost | 2.8 | 2.6 | 5.6 | 5.3 |
Post-retirement Benefits | ||||
Schedule of Employee Benefit Plans [Line Items] | ||||
Service cost | 0.6 | 0.6 | 1.2 | 1.1 |
Interest cost | 1.3 | 1.4 | 2.7 | 2.9 |
Prior service cost | (0.9) | (0.9) | (1.8) | (1.8) |
Gain | (0.2) | (0.4) | ||
Net periodic benefit cost | $ 1 | $ 0.9 | $ 2.1 | $ 1.8 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Income Taxes [Line Items] | |||||
Effective tax rate | 37.50% | 39.60% | 37.10% | 37.20% | |
Income tax expense | $ 32.7 | $ 37.5 | $ 72.5 | $ 64.7 | |
Income tax examination statute of limitations period | 3 years | ||||
Liability for unrecognized tax benefit related to 2010 research and development credit | $ 2.3 | $ 2.3 |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | $ (51.4) | $ (18.9) | $ (39.5) | $ (21) |
Other comprehensive (loss) income before reclassifications | 1 | (11.7) | 2.9 | |
Amounts reclassified from AOCL | (0.9) | (0.9) | (1.8) | (2) |
Income tax | 0.8 | 0.7 | 2.5 | 1 |
Net current period other comprehensive (loss) income | 0.9 | (0.2) | (11) | 1.9 |
Total AOCL | (50.5) | (19.1) | (50.5) | (19.1) |
Accumulated Net Unrealized Investment Gain (Loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | (3.3) | 1.2 | (0.9) | 1.1 |
Other comprehensive (loss) income before reclassifications | (0.9) | (0.9) | (4.7) | (0.7) |
Income tax | 0.4 | 0.3 | 1.8 | 0.2 |
Net current period other comprehensive (loss) income | (0.5) | (0.6) | (2.9) | (0.5) |
Total AOCL | (3.8) | 0.6 | (3.8) | 0.6 |
Accumulated Defined Benefit Plans Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | (17.6) | (8.6) | (17) | (7.9) |
Amounts reclassified from AOCL | (0.9) | (0.9) | (1.8) | (2) |
Income tax | 0.4 | 0.4 | 0.7 | 0.8 |
Net current period other comprehensive (loss) income | (0.5) | (0.5) | (1.1) | (1.2) |
Total AOCL | (18.1) | (9.1) | (18.1) | (9.1) |
Accumulated Translation Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | (30.5) | (11.5) | (21.6) | (14.2) |
Other comprehensive (loss) income before reclassifications | 1.9 | 0.9 | (7) | 3.6 |
Net current period other comprehensive (loss) income | 1.9 | 0.9 | (7) | 3.6 |
Total AOCL | $ (28.6) | $ (10.6) | $ (28.6) | $ (10.6) |
Amounts reclassified from AOCL
Amounts reclassified from AOCL (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of sales | $ (274.7) | $ (297.6) | $ (539.1) | $ (568.7) |
Selling, general and administrative expenses | (75.6) | (85.1) | (149) | (168.3) |
Engineering - research and development | (23.2) | (21.2) | (45.4) | (45.7) |
Income before income taxes | 87.1 | 94.7 | 195.3 | 174 |
Income tax benefit | (32.7) | (37.5) | (72.5) | (64.7) |
Total reclassifications | 54.4 | 57.2 | 122.8 | 109.3 |
Reclassified from AOCL | Prior service cost | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of sales | 0.8 | 0.8 | 1.6 | 1.6 |
Selling, general and administrative expenses | 0.1 | 0 | 0.2 | 0.1 |
Engineering - research and development | 0 | 0 | 0 | 0 |
Reclassified from AOCL | Actuarial loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of sales | 0.1 | 0.3 | ||
Selling, general and administrative expenses | 0 | 0 | ||
Engineering - research and development | 0 | 0 | ||
Reclassified from AOCL | Accumulated Defined Benefit Plans Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Income before income taxes | 0.9 | 0.9 | 1.8 | 2 |
Income tax benefit | (0.4) | (0.4) | (0.7) | (0.8) |
Total reclassifications | $ 0.5 | $ 0.5 | $ 1.1 | $ 1.2 |
Certain Relationships and Rel64
Certain Relationships and Related Party Transactions - Additional Information (Detail) - May. 31, 2015 - USD ($) | Total |
Related Party Transaction [Line Items] | |
Percentage of principal amount redeemed | 103.563% |
Fixed 7.125% Senior Notes | |
Related Party Transaction [Line Items] | |
Senior Notes, stated interest rate | 7.125% |
Lawrence E. Dewey | Fixed 7.125% Senior Notes | |
Related Party Transaction [Line Items] | |
Senior notes held by executive officers | $ 100,000 |
David S. Graziosi | Fixed 7.125% Senior Notes | |
Related Party Transaction [Line Items] | |
Senior notes held by executive officers | $ 450,000 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - Jun. 30, 2015 - shares shares in Millions | Total | Total |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive stock options not included in the diluted EPS computation | 0.2 | 0.2 |
Reconciliation of Numerators an
Reconciliation of Numerators and Denominators Used to Calculate Basic EPS and Diluted EPS (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Computation of Earnings Per Share [Line Items] | ||||
Net income | $ 54.4 | $ 57.2 | $ 122.8 | $ 109.3 |
Weighted average shares of common stock outstanding | 178.5 | 178.8 | 179.3 | 180.5 |
Dilutive effect stock-based awards | 1.1 | 2.8 | 1.8 | 3.2 |
Diluted weighted average shares of common stock outstanding | 179.6 | 181.6 | 181.1 | 183.7 |
Basic earnings per share attributable to common stockholders | $ 0.30 | $ 0.32 | $ 0.68 | $ 0.61 |
Diluted earnings per share attributable to common stockholders | $ 0.30 | $ 0.31 | $ 0.68 | $ 0.59 |
Common Stock - Additional Infor
Common Stock - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | |
Common Stock Disclosure [Line Items] | |||
Common stock, repurchases authorized | $ 500 | $ 500 | |
Common stock, repurchased during the period | 85.2 | 124.1 | |
Repurchase of common stock | 79.3 | 114.7 | $ 249.8 |
Stock repurchases obligation | $ 9.4 | $ 9.4 | |
Shares of common stock repurchased but not settled | 317,900 |