Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 11, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
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 | 165,384,097 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 164.7 | $ 251.6 |
Accounts receivable - net of allowance for doubtful accounts of $0.5 and $0.4, respectively | 202.8 | 195 |
Inventories | 155.8 | 141.4 |
Other current assets | 26.6 | 28.8 |
Total Current Assets | 549.9 | 616.8 |
Property, plant and equipment, net | 454.6 | 479.7 |
Intangible assets, net | 1,265.5 | 1,334.8 |
Goodwill | 1,941 | 1,941 |
Other non-current assets | 28.3 | 36.1 |
TOTAL ASSETS | 4,239.3 | 4,408.4 |
Current Liabilities | ||
Accounts payable | 134.6 | 126.2 |
Product warranty liability | 28 | 24.9 |
Current portion of long-term debt | 11.9 | 24.5 |
Deferred revenue | 24.3 | 22.9 |
Other current liabilities | 136.9 | 106.1 |
Total Current Liabilities | 335.7 | 304.6 |
Product warranty liability | 42.1 | 53.4 |
Deferred revenue | 61 | 56.4 |
Long-term debt | 2,148.8 | 2,352.7 |
Deferred income taxes | 281.8 | 204.6 |
Other non-current liabilities | 253.2 | 248.1 |
TOTAL LIABILITIES | 3,122.6 | 3,219.8 |
Commitments and contingencies (see NOTE N) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding | ||
Paid in capital | 1,707.1 | 1,690.2 |
Accumulated deficit | (535.7) | (444.5) |
Accumulated other comprehensive loss, net of tax | (56.4) | (58.8) |
TOTAL STOCKHOLDERS' EQUITY | 1,116.7 | 1,188.6 |
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | 4,239.3 | 4,408.4 |
Voting Common Stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock | $ 1.7 | $ 1.7 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Allowance for doubtful accounts receivables | $ 0.5 | $ 0.4 |
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 | 165,643,283 | 171,157,004 |
Common stock, shares outstanding | 165,643,283 | 171,157,004 |
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 | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net sales | $ 434.3 | $ 493 | $ 1,371.3 | $ 1,507.6 |
Cost of sales | 229.6 | 256.9 | 724.8 | 796 |
Gross profit | 204.7 | 236.1 | 646.5 | 711.6 |
Selling, general and administrative expenses | 80 | 86.6 | 240.4 | 235.6 |
Engineering - research and development | 20.7 | 23.6 | 64.3 | 69 |
Environmental remediation | 14 | 14 | ||
Loss associated with impairment of long-lived assets | 1.3 | |||
Operating income | 104 | 111.9 | 341.8 | 391.7 |
Interest income | 0.2 | 0.1 | 0.6 | 0.5 |
Interest expense | (22.4) | (33.8) | (84.7) | (94.2) |
Expenses related to long-term debt refinancing | (11.6) | (0.2) | (11.6) | (25.3) |
Other income (expense), net | 0.8 | (4.2) | 0.5 | (3.6) |
Income before income taxes | 71 | 73.8 | 246.6 | 269.1 |
Income tax expense | (26.4) | (27.3) | (92.9) | (99.8) |
Net income | $ 44.6 | $ 46.5 | $ 153.7 | $ 169.3 |
Basic earnings per share attributable to common stockholders | $ 0.27 | $ 0.27 | $ 0.91 | $ 0.95 |
Diluted earnings per share attributable to common stockholders | 0.27 | 0.27 | 0.91 | 0.95 |
Dividends declared per common share | $ 0.15 | $ 0.15 | $ 0.45 | $ 0.45 |
Comprehensive income, net of tax | $ 45.5 | $ 43.6 | $ 156.1 | $ 155.4 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 153.7 | $ 169.3 |
Add (deduct) items included in net income not using (providing) cash: | ||
Deferred income taxes | 80.3 | 91.5 |
Amortization of intangible assets | 69.4 | 72.9 |
Depreciation of property, plant and equipment | 62.8 | 65.8 |
Expenses related to long-term debt refinancing | 11 | 25.3 |
Excess tax benefit from stock-based compensation | (2.1) | (8.2) |
Unrealized loss on derivatives | 9.9 | 17.5 |
Stock-based compensation | 6.4 | 7.2 |
Amortization of deferred financing costs | 5.4 | 5.7 |
Loss associated with impairment of long-lived assets | 1.3 | |
Other | 1.8 | 2.5 |
Changes in assets and liabilities: | ||
Accounts receivable | (5.9) | (19.3) |
Inventories | (11.6) | (16) |
Accounts payable | 8 | (10.5) |
Other assets and liabilities | 26.5 | 0.1 |
Net cash provided by operating activities | 415.6 | 405.1 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions of long-lived assets | (36.7) | (30.1) |
Investments in technology-related initiatives | (1) | (1.9) |
Proceeds from disposal of assets | 0.2 | 0.2 |
Net cash used for investing activities | (37.5) | (31.8) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments on long-term debt | (1,212.2) | (110.2) |
Issuance of long-term debt | 1,000 | 470 |
Debt financing fees | (19.4) | (7.7) |
Repurchase and redemption of long-term debt | (491.2) | |
Repurchases of common stock | (169) | (296.3) |
Dividend payments | (75.9) | (80) |
Proceeds from exercise of stock options | 8.9 | 22.5 |
Excess tax benefit from stock-based compensation | 2.1 | 8.2 |
Taxes paid related to net share settlement of equity awards | (0.3) | (0.5) |
Net cash used for financing activities | (465.8) | (485.2) |
Effect of exchange rate changes on cash | 0.8 | (2.7) |
Net decrease in cash and cash equivalents | (86.9) | (114.6) |
Cash and cash equivalents at beginning of period | 251.6 | 263 |
Cash and cash equivalents at end of period | 164.7 | 148.4 |
Supplemental disclosures: | ||
Interest paid | 63.6 | 75.4 |
Income taxes paid | $ 10 | $ 5 |
OVERVIEW
OVERVIEW | 9 Months Ended |
Sep. 30, 2016 | |
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 (“Old GM”) 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”. The Company has approximately 2,700 employees and 13 different transmission product lines. Although approximately 81% of revenues were generated in North America in 2015, the Company has a global presence by serving customers in Europe, Asia, South America and Africa. The Company serves customers through a network of approximately 1,400 independent distributor and dealer locations worldwide. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements 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, 2015 as filed with the Securities and Exchange Commission (“SEC”) on February 19, 2016. The Company revised its condensed consolidated statement of cash flows for the prior period due to changes in how foreign currency exchange rate movements on cash were calculated. The revision resulted in a decrease to the “Effect of exchange rate changes on cash” with a corresponding increase to “Net cash provided by operating activities” for the nine months ended September 30, 2015. Management believes the revision is immaterial to the condensed consolidated financial statements. Certain other immaterial reclassifications have been made in the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications had no impact on previously reported net income, total stockholders’ equity or cash. The interim period financial results for the three and nine 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, 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 liabilities, environmental liabilities, 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 August 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative accounting guidance on the presentation and classification of certain cash receipts and cash payments on the statement of cash flows. The guidance specifically addresses cash flow issues with the objective of reducing the diversity in practice. The guidance will be effective for the Company in fiscal year 2018, but early adoption is permitted. Management is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In March 2016, the FASB issued authoritative accounting guidance on share-based payment awards to employees. The guidance involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for the Company in fiscal year 2017, but early adoption is permitted. Management is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In February 2016, the FASB issued authoritative accounting guidance on lease accounting. The guidance requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases not considered short-term leases. Short-term leases are leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. The new guidance also introduces new disclosure requirements for leasing arrangements. The guidance will be effective for the Company in fiscal year 2019, but early adoption is permitted. Management is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In January 2016, the FASB issued authoritative accounting guidance on the classification of equity securities with readily determinable fair values into different categories (e.g. trading or available-for-sale) and the requirement for equity securities to be measured at fair value with changes in fair value recognized in net income. The guidance will be effective prospectively for the Company in fiscal year 2018 and early adoption is limited to certain provisions. Upon adoption, a cumulative-effect adjustment to retained earnings in the statement of financial position will be reclassified to beginning retained earnings in the year of adoption. Management is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In July 2015, the FASB issued authoritative accounting guidance to simplify the measurement of inventory. The guidance requires that inventory be measured at the lower of cost and net realizable value. When evidence exists that the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs. Inventory measured using last-in, first-out and the retail inventory method are not impacted by the new guidance. The guidance will be effective for the Company in fiscal year 2017, but early adoption is permitted. 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 became effective prospectively for the Company as of January 1, 2016. The adoption of this guidance did not have an effect on the Company’s condensed consolidated financial statements. 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 disclosures regarding the nature, timing, amount and uncertainty of revenue that is recognized. The guidance allows either full or modified retrospective adoption. The guidance will be effective for the Company for the annual and interim periods beginning January 1, 2018, but early adoption is permitted. Management is currently evaluating the impact this guidance will have on the Company’s revenue sources including assessing the impact of both methods of adoption on the Company’s consolidated financial statements. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2016 | |
INVENTORIES | NOTE C. INVENTORIES Inventories consisted of the following components (dollars in millions): September 30, 2016 December 31, 2015 Purchased parts and raw materials $ 71.1 $ 69.5 Work in progress 7.1 5.1 Service parts 47.6 45.8 Finished goods 30.0 21.0 Total inventories $ 155.8 $ 141.4 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 J, “Other Current Liabilities” for more information. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE D. GOODWILL AND OTHER INTANGIBLE ASSETS As of September 30, 2016 and December 31, 2015, 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): September 30, 2016 December 31, 2015 Intangible assets, gross Accumulated amortization Intangible assets, net Intangible assets, gross Accumulated amortization Intangible assets, net Other intangible assets: Trade name $ 790.0 $ — $ 790.0 $ 790.0 $ — $ 790.0 Customer relationships — defense 62.3 (33.8 ) 28.5 62.3 (31.3 ) 31.0 Customer relationships — commercial 831.8 (513.9 ) 317.9 831.8 (477.3 ) 354.5 Proprietary technology 476.3 (348.7 ) 127.6 476.3 (320.1 ) 156.2 Non-compete agreement 17.3 (15.8 ) 1.5 17.3 (14.6 ) 2.7 Patented technology — defense 28.2 (28.2 ) — 28.2 (27.9 ) 0.3 Tooling rights 4.5 (4.5 ) — 4.5 (4.4 ) 0.1 Total $ 2,210.4 $ (944.9 ) $ 1,265.5 $ 2,210.4 $ (875.6 ) $ 1,334.8 As of September 30, 2016 and December 31, 2015, the net carrying value of our Goodwill and other intangibles was $3,206.5 million and $3,275.8 million, respectively. The Company performs its annual goodwill and intangible assets impairment analysis on October 31 of every year. Events or circumstances that could unfavorably impact the key assumptions in the impairment test include lower net sales, the Company’s inability to execute on marketing programs and/or delay in the introduction of new products, lower gross margins or failure to obtain forecasted cost reductions, or a higher discount rate as a result of market conditions. Amortization expense related to other intangible assets for the next five years and thereafter is as follows (dollars in millions): 2017 2018 2019 2020 2021 Thereafter Amortization expense $ 89.7 $ 87.2 $ 85.7 $ 49.9 $ 44.7 $ 95.2 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2016 | |
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 September 30, 2016 and December 31, 2015, 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 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 commodity swaps 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. The interest rate swaps consist of floating-for-fixed rate contracts, reducing the impact of changes in LIBOR on the effective rate of our variable interest rate debt instrument. 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 swaps, 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 September 30, 2016 and December 31, 2015 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) TOTAL September 30, 2016 December 31, 2015 September 30, 2016 December 31, 2015 September 30, 2016 December 31, 2015 Cash equivalents $ 41.2 $ 100.0 $ — $ — $ 41.2 $ 100.0 Available-for-sale securities 2.8 2.9 — — 2.8 2.9 Rabbi trust assets 5.4 4.8 — — 5.4 4.8 Deferred compensation obligation (5.4 ) (4.8 ) — — (5.4 ) (4.8 ) Derivative assets — — 0.3 — 0.3 — Derivative liabilities — — (40.3 ) (30.1 ) (40.3 ) (30.1 ) Total $ 44.0 $ 102.9 $ (40.0 ) $ (30.1 ) $ 4.0 $ 72.8 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2016 | |
DEBT | NOTE F. DEBT Long-term debt and maturities are as follows (dollars in millions): September 30, 2016 December 31, 2015 Long-term debt: Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 $ — $ 2,402.8 Senior Secured Credit Facility Term B-3 Loan, variable, due 2022 1,190.6 — Senior Notes, fixed 5.0%, due 2024 1,000.0 — Less: current maturities of long-term debt 11.9 24.5 deferred financing costs, net 29.9 25.6 Total long-term debt, net $ 2,148.8 $ 2,352.7 As of September 30, 2016, the Company had $2,190.6 million of indebtedness associated with Allison Transmission, Inc.’s (“ATI”), the Company’s wholly-owned subsidiary, Senior Secured Credit Facility Term B-3 Loan due 2022 (previously due 2019 and as refinanced in September 2016, the “Term B-3 Loan”, and together with the revolving credit facility, defined as the “Senior Secured Credit Facility”), and ATI’s 5.0% Senior Notes due September 2024 (“5.0% Senior Notes”). The fair value of the Company’s long-term debt obligations as of September 30, 2016 was $2,224.0 million. The fair value is based on quoted Level 2 market prices of the Company’s debt as of September 30, 2016. 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. Senior Secured Credit Facility In September 2016, ATI entered into an amendment with the term loan lenders under its Senior Secured Credit Facility to reduce the existing Term B-3 Loan commitments by $1,200.0 million and the revolving credit facility commitments by $15.0 million. The amendment also reduced the Term B-3 Loan minimum LIBOR from 1.00% to 0.75%, extended the maturity of the existing Term B-3 Loan from 2019 to September 2022, and extended the revolving credit facility termination date from 2019 to September 2021. With the exception of the items noted above, the terms of the extended Term B-3 Loan and revolving credit facility are materially the same as the terms of the existing Term B-3 Loan and revolving credit facility. As a result of the amendment to the Senior Secured Credit Facility, the Company expensed $11.0 million of prior deferred financing fees and recorded $7.4 million as new deferred financing fees in the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Balance Sheets, respectively. 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-3 Loan, as of September 30, 2016, is either (a) 2.50% over the LIBOR (which may not be less than 0.75%) or (b) 1.50% over the greater of the prime lending rate as quoted by the administrative agent or the federal funds effective rate published by the Federal Reserve Bank of New York plus 0.5%, provided that neither is below 1.75%. As of September 30, 2016, the Company elected to pay the lowest all-in rate of LIBOR (which may not be less than 0.75%) plus the applicable margin, or 3.25%, on the Term B-3 Loan. The Senior Secured Credit Facility requires minimum quarterly principal payments on the 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. The minimum required quarterly principal payment on the Term B-3 Loan is $3.0 million and remains through its maturity date of September 2022. As of September 30, 2016, 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 is due upon maturity. The Senior Secured Credit Facility also provides a revolving credit facility. As of September 30, 2016, the Company had $447.4 million available under the revolving credit facility, net of $2.6 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. In addition, there is an annual commitment fee, based on the Company’s total leverage ratio, on 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 September 2021. The revolving 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. As of September 30, 2016, 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 1.56x ratio. Additionally, within the terms of the Senior Secured Credit Facility, a senior secured leverage ratio at or below 4.00x 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. These reductions would remain in effect as long as the Company achieves a total leverage ratio at or below the related threshold. As of September 30, 2016, the total leverage ratio was 3.09x. 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 September 30, 2016, the Company is in compliance with all covenants under the Senior Secured Credit Facility. 5.0% Senior Notes In September 2016, ATI completed an offering of $1,000.0 million of the 5.0% Senior Notes. The 5.0% Senior Notes were offered in a private placement exempt from registration under the Securities Act of 1933, as amended. The proceeds from the offering, together with cash on hand, were used to repay $1,200.0 million of the Term B-3 Loan plus accrued and unpaid interest and related transaction expenses. As a result of the offering, the Company recorded approximately $12.8 million as deferred financing fees in the Condensed Consolidated Balance Sheets. ATI may from time to time seek to retire the 5.0% Senior Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, contractual redemptions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Prior to October 1, 2019, ATI may redeem up to 40% of the 5.0% Senior Notes by paying a price equal to 100% of the principal amount being redeemed plus the applicable “make-whole” premium. At any time on or after October 1, 2019, ATI may redeem some or all of the 5.0% Senior Notes at specified redemption prices in the governing indenture. The 5.0% Senior Notes are unsecured and will be guaranteed by each of ATI’s domestic subsidiaries that is a borrower under or guarantees the Senior Secured Credit Facility and will be unconditionally guaranteed, jointly and severally, by any of ATI’s future domestic subsidiaries that are borrowers under or guarantee the Senior Secured Credit Facility. None of ATI’s domestic subsidiaries currently guarantee its obligations under the Senior Secured Credit Facility, and therefore none of the ATI’s domestic subsidiaries currently guarantee the 5.0% Senior Notes. The indenture governing the 5.0% Senior Notes contains negative covenants restricting or limiting the Company’s ability to, among other things: incur or guarantee additional indebtedness, incur liens, pay dividends on, redeem or repurchase the Company’s capital stock, make certain investments, permit payment or dividend restrictions on certain of the Company’s subsidiaries, sell assets, engage in certain transactions with affiliates, and consolidate or merge or sell all or substantially all of the Company’s assets. |
DERIVATIVES
DERIVATIVES | 9 Months Ended |
Sep. 30, 2016 | |
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 swaps and commodity swaps, when appropriate. 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 September 30, 2016 and December 31, 2015 is as follows (dollars in millions): September 30, 2016 December 31, 2015 Notional Amount Fair Value Notional Amount Fair Value 3.44% Interest Rate Swap L, Aug 2016 – Aug 2019* $ 75.0 $ (4.7 ) $ 75.0 $ (3.6 ) 3.43% Interest Rate Swap M, Aug 2016 – Aug 2019* 100.0 (6.2 ) 100.0 (4.8 ) 3.37% Interest Rate Swap N, Aug 2016 – Aug 2019* 75.0 (4.5 ) 75.0 (3.5 ) 3.19% Interest Rate Swap O, Aug 2016 – Aug 2019* 75.0 (4.2 ) 75.0 (3.1 ) 3.08% Interest Rate Swap P, Aug 2016 – Aug 2019* 75.0 (3.9 ) 75.0 (2.8 ) 2.99% Interest Rate Swap Q, Aug 2016 – Aug 2019* 50.0 (2.5 ) 50.0 (1.7 ) 2.98% Interest Rate Swap R, Aug 2016 – Aug 2019* 50.0 (2.5 ) 50.0 (1.7 ) 2.73% Interest Rate Swap S, Aug 2016 – Aug 2019* 50.0 (2.1 ) 50.0 (1.4 ) 2.74% Interest Rate Swap T, Aug 2016 – Aug 2019* 75.0 (3.2 ) 75.0 (2.1 ) 2.66% Interest Rate Swap U, Aug 2016 – Aug 2019* 50.0 (2.0 ) 50.0 (1.2 ) 2.60% Interest Rate Swap V, Aug 2016 – Aug 2019* 50.0 (1.9 ) 50.0 (1.2 ) 2.40% Interest Rate Swap W, Aug 2016 – Aug 2019* 25.0 (0.8 ) 25.0 (0.5 ) 2.25% Interest Rate Swap X, Aug 2016 – Aug 2019* 50.0 (1.5 ) 50.0 (0.8 ) * includes LIBOR floor of 1.00% $ 800.0 $ (40.0 ) $ 800.0 $ (28.4 ) Commodity The Company’s business is subject to commodity price risk, primarily with component suppliers. As a result, the Company enters into various commodity swaps 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 swaps, 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 September 30, 2016 and December 31, 2015 (dollars in millions): September 30, 2016 December 31, 2015 Notional Amount Quantity Fair Value Notional Amount Quantity Fair Value Aluminum $ 8.9 5,200 metric tons $ (0.1 ) $ 13.7 8,150 metric tons $ (1.7 ) Natural Gas $ 0.7 230,000 MMBtu 0.0 $ 0.2 70,000 MMBtu — $ (0.1 ) $ (1.7 ) The following tabular disclosures further describe the Company’s derivative instruments and their impact on the financial condition of the Company (dollars in millions): September 30, 2016 December 31, 2015 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives not designated as hedging instruments Other current and non-current assets $ 0.3 Commodity swaps Other current and non-current liabilities (0.3 ) Other current and non-current liabilities $ (1.7 ) Interest rate swaps Other current and non-current liabilities (40.0 ) Other current and non-current liabilities (28.4 ) Total derivatives not designated as hedging instruments $ (40.0 ) $ (30.1 ) 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 September 30, 2016, the amounts recorded to Other current and non-current assets for commodity swaps were $0.2 million and $0.1 million, respectively. The amounts recorded to Other current and non-current liabilities for commodity swaps were ($0.3) million and ($0.0) million, respectively. The amounts recorded to Other current and non-current liabilities for interest rate swaps were ($14.1) million and ($25.9) million, respectively. As of December 31, 2015, the amounts recorded to Other current and non-current liabilities for commodity swaps were ($1.1) million and ($0.6) million, respectively. The amounts recorded to Other current and non-current liabilities for interest rate swaps were ($3.9) million and ($24.5) million, respectively. 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 Nine months ended 2016 2015 2016 2015 Location of impact on results of operations Interest Expense $ 3.3 $ (10.0 ) $ (11.6 ) $ (17.2 ) |
PRODUCT WARRANTY LIABILITIES
PRODUCT WARRANTY LIABILITIES | 9 Months Ended |
Sep. 30, 2016 | |
PRODUCT WARRANTY LIABILITIES | NOTE H. PRODUCT WARRANTY LIABILITIES As of September 30, 2016, the current and non-current product warranty liabilities were $28.0 million and $42.1 million, respectively. As of September 30, 2015, the current and non-current product warranty liabilities were $25.0 million and $56.9 million, respectively. Product warranty liability activities consist of the following (dollars in millions): Three months ended Nine months ended 2016 2015 2016 2015 Beginning balance $ 70.4 $ 73.7 $ 78.3 $ 83.6 Payments (7.2 ) (7.7 ) (26.4 ) (24.0 ) Increase in liability (warranty issued during period) 3.9 5.0 12.3 16.2 Net adjustments to liability 3.0 10.8 5.6 5.8 Accretion (for predecessor liabilities) — 0.1 0.3 0.3 Ending balance $ 70.1 $ 81.9 $ 70.1 $ 81.9 During the third quarter of 2015, the Company recorded approximately $10.8 million of net adjustments to the product warranty liabilities as a result of specific field action programs. |
DEFERRED REVENUE
DEFERRED REVENUE | 9 Months Ended |
Sep. 30, 2016 | |
DEFERRED REVENUE | NOTE I. DEFERRED REVENUE As of September 30, 2016, the current and non-current deferred revenue for Extended Transmission Coverage (“ETC”) were $24.3 million and $61.0 million, respectively. As of September 30, 2015, the current and non-current deferred revenue for ETC were $22.5 million and $54.0 million, respectively. Deferred revenue for ETC activity (dollars in millions): Three months ended Nine months ended 2016 2015 2016 2015 Beginning balance $ 84.3 $ 74.7 $ 79.3 $ 69.0 Increases 6.8 7.2 23.1 23.7 Revenue earned (5.8 ) (5.4 ) (17.1 ) (16.2 ) Ending balance $ 85.3 $ 76.5 $ 85.3 $ 76.5 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2016 | |
OTHER CURRENT LIABILITIES | NOTE J. OTHER CURRENT LIABILITIES Other current liabilities consist of the following (dollars in millions): As of September 30, 2016 As of December 31, 2015 Payroll and related costs $ 35.8 $ 31.5 Sales allowances 29.5 24.3 Taxes payable 16.1 12.6 Derivative liabilities 14.4 5.0 Vendor buyback obligation 13.1 12.1 Defense price reduction reserve 9.2 8.7 Accrued interest payable 4.5 0.6 Other liabilities 14.3 11.3 Total $ 136.9 $ 106.1 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2016 | |
EMPLOYEE BENEFIT PLANS | NOTE K. EMPLOYEE BENEFIT PLANS Components of net periodic benefit cost consist of the following (dollars in millions): Pension Plans Post-retirement Benefits Three months ended Three months ended 2016 2015 2016 2015 Net periodic benefit cost: Service cost $ 3.1 $ 3.6 $ 0.6 $ 0.5 Interest cost 1.6 1.3 1.7 1.3 Expected return on assets (1.6 ) (2.1 ) — — Prior service cost 0.0 0.0 (0.9 ) (0.9 ) Loss (gain) 0.1 (0.1 ) — — Net periodic benefit cost $ 3.2 $ 2.7 $ 1.4 $ 0.9 Pension Plans Post-retirement Benefits Nine months ended Nine months ended 2016 2015 2016 2015 Net periodic benefit cost: Service cost $ 9.3 $ 10.8 $ 1.6 $ 1.7 Interest cost 4.6 3.9 5.0 4.0 Expected return on assets (5.0 ) (6.3 ) — — Prior service cost 0.1 0.0 (2.7 ) (2.7 ) Gain (0.2 ) (0.1 ) — — Net periodic benefit cost $ 8.8 $ 8.3 $ 3.9 $ 3.0 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES | NOTE L. INCOME TAXES For the three and nine months ended September 30, 2016, the Company recorded total tax expense of $26.4 million and $92.9 million, respectively. The effective tax rate for the three and nine months ended September 30, 2016 was 37.2% and 37.7%, respectively. For the three and nine months ended September 30, 2015, the Company recorded total tax expense of $27.3 million and $99.8 million, respectively. The effective tax rate for the three and nine months ended September 30, 2015 was 37.0% and 37.1%, 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 for unrecognized tax benefits related to a 2010 Research & Development Credit as of September 30, 2016 and December 31, 2015. 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. The Company’s returns 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 | 9 Months Ended |
Sep. 30, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | NOTE M. 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 June 30, 2015 $ (3.8 ) $ (18.1 ) $ (28.6 ) $ (50.5 ) Other comprehensive loss before reclassifications (0.2 ) — (2.1 ) (2.3 ) Amounts reclassified from AOCL — (0.9 ) — (0.9 ) Income tax 0.0 0.3 — 0.3 Net current period other comprehensive loss $ (0.2 ) $ (0.6 ) $ (2.1 ) $ (2.9 ) AOCL as of September 30, 2015 $ (4.0 ) $ (18.7 ) $ (30.7 ) $ (53.4 ) AOCL as of June 30, 2016 $ (5.8 ) $ (21.2 ) $ (30.3 ) $ (57.3 ) Other comprehensive (loss) income before reclassifications (0.1 ) — 1.5 1.4 Amounts reclassified from AOCL — (0.9 ) — (0.9 ) Income tax 0.1 0.3 — 0.4 Net current period other comprehensive (loss) income $ (0.0 ) $ (0.6 ) $ 1.5 $ 0.9 AOCL as of September 30, 2016 $ (5.8 ) $ (21.8 ) $ (28.8 ) $ (56.4 ) Nine months ended Available-for- Defined Foreign Total AOCL as of December 31, 2014 $ (0.9 ) $ (17.0 ) $ (21.6 ) $ (39.5 ) Other comprehensive loss before reclassifications (4.9 ) — (9.1 ) (14.0 ) Amounts reclassified from AOCL — (2.7 ) — (2.7 ) Income tax 1.8 1.0 — 2.8 Net current period other comprehensive loss $ (3.1 ) $ (1.7 ) $ (9.1 ) $ (13.9 ) AOCL as of September 30, 2015 $ (4.0 ) $ (18.7 ) $ (30.7 ) $ (53.4 ) AOCL as of December 31, 2015 $ (5.7 ) $ (20.0 ) $ (33.1 ) $ (58.8 ) Other comprehensive (loss) income before reclassifications (0.1 ) — 4.3 4.2 Amounts reclassified from AOCL — (2.8 ) — (2.8 ) Income tax 0.0 1.0 — 1.0 Net current period other comprehensive (loss) income $ (0.1 ) $ (1.8 ) $ 4.3 $ 2.4 AOCL as of September 30, 2016 $ (5.8 ) $ (21.8 ) $ (28.8 ) $ (56.4 ) Amounts reclassified from AOCL Affected line item in the Condensed Statements of Comprehensive Income AOCL Components Three months ended September 30, 2016 Three months ended September 30, 2015 Amortization of defined benefit pension items: Prior service cost $ 0.8 $ 0.8 Cost of sales 0.1 0.1 Selling, general and administrative 0.0 0.0 Engineering – research and development Actuarial loss 0.0 — Cost of sales Total reclassifications, before tax $ 0.9 0.9 Income before income taxes Income tax (0.3 ) (0.3 ) Tax expense Total reclassifications $ 0.6 $ 0.6 Net of tax Amounts reclassified from AOCL Affected line item in the Condensed Consolidated Statements of Comprehensive Income AOCL Components Nine months ended September 30, 2016 Nine months ended September 30, 2015 Amortization of defined benefit pension items: Prior service cost $ 2.4 $ 2.4 Cost of sales 0.2 0.3 Selling, general and administrative 0.0 0.0 Engineering – research and development Actuarial loss 0.2 — Cost of sales Total reclassifications, before tax $ 2.8 2.7 Income before income taxes Income tax (1.0 ) (1.0 ) Tax expense Total reclassifications $ 1.8 $ 1.7 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 K for additional details. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | NOTE N. COMMITMENTS AND CONTINGENCIES Environmental Matters In accordance with the asset purchase agreement with Old GM, General Motors Company (“GM”), as successor to Old GM’s obligations, performed remediation activities relating to historical soil and groundwater contamination at the Company’s Indianapolis, Indiana manufacturing facilities (the “Corrective Action”) under a voluntary corrective action agreement with the U.S. Environmental Protection Agency (“EPA”). Pursuant to the asset purchase agreement, once the EPA issued a final decision on GM’s remediation plan for the Corrective Action, the Company would assume all responsibility for operating, monitoring and maintaining the Corrective Action. During the third quarter of 2015, the Company recorded approximately $14.0 million for the estimated undiscounted environmental liabilities related to the Corrective Action, to be paid out over the next 30 years, including approximately $0.5 million recorded to Other current liabilities and approximately $13.5 million to Other non-current liabilities. The Company expects to fund the expenditures for these activities from operating cash flow. During the first quarter of 2016, the EPA issued a final decision, and the Company assumed all responsibility for the Corrective Action. The Company entered into an administrative order of consent with the EPA that requires the Company to provide financial assurance to complete the operation, monitoring and maintenance in the event the Company fails to do so. This financial assurance can take a variety of forms including, but not limited to, meeting certain financial metrics, providing a letter of credit, or securing a bond or an insurance policy. The amount and method by which the Company will be required to provide financial assurance is expected to be determined in the fourth quarter of 2016. 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. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS PER SHARE | NOTE O. 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 the three months and nine months ended September 30, 2016, 0.6 million outstanding stock options were not included in the diluted EPS calculation because they were anti-dilutive. For the three months and nine months ended September 30, 2015, 0.7 million outstanding stock options were not included in the diluted EPS calculation 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 Nine months ended 2016 2015 2016 2015 Net income $ 44.6 $ 46.5 $ 153.7 $ 169.3 Weighted average shares of common stock outstanding 166.9 174.0 168.8 177.5 Dilutive effect stock-based awards 1.0 1.0 1.0 1.5 Diluted weighted average shares of common stock outstanding 167.9 175.0 169.8 179.0 Basic earnings per share attributable to common stockholders $ 0.27 $ 0.27 $ 0.91 $ 0.95 Diluted earnings per share attributable to common stockholders $ 0.27 $ 0.27 $ 0.91 $ 0.95 |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Sep. 30, 2016 | |
COMMON STOCK | NOTE P. 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 purchases 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. The Company retires all shares purchased under the repurchase program. During the three and nine months ended September 30, 2016, the Company repurchased approximately $76.7 million and $169.0 million of its common stock under the repurchase program, respectively. |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements 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, 2015 as filed with the Securities and Exchange Commission (“SEC”) on February 19, 2016. The Company revised its condensed consolidated statement of cash flows for the prior period due to changes in how foreign currency exchange rate movements on cash were calculated. The revision resulted in a decrease to the “Effect of exchange rate changes on cash” with a corresponding increase to “Net cash provided by operating activities” for the nine months ended September 30, 2015. Management believes the revision is immaterial to the condensed consolidated financial statements. Certain other immaterial reclassifications have been made in the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications had no impact on previously reported net income, total stockholders’ equity or cash. The interim period financial results for the three and nine 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, 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 liabilities, environmental liabilities, 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 August 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative accounting guidance on the presentation and classification of certain cash receipts and cash payments on the statement of cash flows. The guidance specifically addresses cash flow issues with the objective of reducing the diversity in practice. The guidance will be effective for the Company in fiscal year 2018, but early adoption is permitted. Management is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In March 2016, the FASB issued authoritative accounting guidance on share-based payment awards to employees. The guidance involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for the Company in fiscal year 2017, but early adoption is permitted. Management is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In February 2016, the FASB issued authoritative accounting guidance on lease accounting. The guidance requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases not considered short-term leases. Short-term leases are leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. The new guidance also introduces new disclosure requirements for leasing arrangements. The guidance will be effective for the Company in fiscal year 2019, but early adoption is permitted. Management is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In January 2016, the FASB issued authoritative accounting guidance on the classification of equity securities with readily determinable fair values into different categories (e.g. trading or available-for-sale) and the requirement for equity securities to be measured at fair value with changes in fair value recognized in net income. The guidance will be effective prospectively for the Company in fiscal year 2018 and early adoption is limited to certain provisions. Upon adoption, a cumulative-effect adjustment to retained earnings in the statement of financial position will be reclassified to beginning retained earnings in the year of adoption. Management is currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In July 2015, the FASB issued authoritative accounting guidance to simplify the measurement of inventory. The guidance requires that inventory be measured at the lower of cost and net realizable value. When evidence exists that the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs. Inventory measured using last-in, first-out and the retail inventory method are not impacted by the new guidance. The guidance will be effective for the Company in fiscal year 2017, but early adoption is permitted. 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 became effective prospectively for the Company as of January 1, 2016. The adoption of this guidance did not have an effect on the Company’s condensed consolidated financial statements. 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 disclosures regarding the nature, timing, amount and uncertainty of revenue that is recognized. The guidance allows either full or modified retrospective adoption. The guidance will be effective for the Company for the annual and interim periods beginning January 1, 2018, but early adoption is permitted. Management is currently evaluating the impact this guidance will have on the Company’s revenue sources including assessing the impact of both methods of adoption on the Company’s consolidated financial statements. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Components of Inventories | Inventories consisted of the following components (dollars in millions): September 30, 2016 December 31, 2015 Purchased parts and raw materials $ 71.1 $ 69.5 Work in progress 7.1 5.1 Service parts 47.6 45.8 Finished goods 30.0 21.0 Total inventories $ 155.8 $ 141.4 |
GOODWILL AND OTHER INTANGIBLE24
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Other Intangible Assets | The following presents a summary of other intangible assets (dollars in millions): September 30, 2016 December 31, 2015 Intangible assets, gross Accumulated amortization Intangible assets, net Intangible assets, gross Accumulated amortization Intangible assets, net Other intangible assets: Trade name $ 790.0 $ — $ 790.0 $ 790.0 $ — $ 790.0 Customer relationships — defense 62.3 (33.8 ) 28.5 62.3 (31.3 ) 31.0 Customer relationships — commercial 831.8 (513.9 ) 317.9 831.8 (477.3 ) 354.5 Proprietary technology 476.3 (348.7 ) 127.6 476.3 (320.1 ) 156.2 Non-compete agreement 17.3 (15.8 ) 1.5 17.3 (14.6 ) 2.7 Patented technology — defense 28.2 (28.2 ) — 28.2 (27.9 ) 0.3 Tooling rights 4.5 (4.5 ) — 4.5 (4.4 ) 0.1 Total $ 2,210.4 $ (944.9 ) $ 1,265.5 $ 2,210.4 $ (875.6 ) $ 1,334.8 |
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 as follows (dollars in millions): 2017 2018 2019 2020 2021 Thereafter Amortization expense $ 89.7 $ 87.2 $ 85.7 $ 49.9 $ 44.7 $ 95.2 |
FAIR VALUE OF FINANCIAL INSTR25
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 September 30, 2016 and December 31, 2015 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) TOTAL September 30, 2016 December 31, 2015 September 30, 2016 December 31, 2015 September 30, 2016 December 31, 2015 Cash equivalents $ 41.2 $ 100.0 $ — $ — $ 41.2 $ 100.0 Available-for-sale securities 2.8 2.9 — — 2.8 2.9 Rabbi trust assets 5.4 4.8 — — 5.4 4.8 Deferred compensation obligation (5.4 ) (4.8 ) — — (5.4 ) (4.8 ) Derivative assets — — 0.3 — 0.3 — Derivative liabilities — — (40.3 ) (30.1 ) (40.3 ) (30.1 ) Total $ 44.0 $ 102.9 $ (40.0 ) $ (30.1 ) $ 4.0 $ 72.8 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Long-Term Debt and Maturities | Long-term debt and maturities are as follows (dollars in millions): September 30, 2016 December 31, 2015 Long-term debt: Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 $ — $ 2,402.8 Senior Secured Credit Facility Term B-3 Loan, variable, due 2022 1,190.6 — Senior Notes, fixed 5.0%, due 2024 1,000.0 — Less: current maturities of long-term debt 11.9 24.5 deferred financing costs, net 29.9 25.6 Total long-term debt, net $ 2,148.8 $ 2,352.7 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Company's Interest Rate Derivatives | A summary of the Company’s interest rate derivatives as of September 30, 2016 and December 31, 2015 is as follows (dollars in millions): September 30, 2016 December 31, 2015 Notional Amount Fair Value Notional Amount Fair Value 3.44% Interest Rate Swap L, Aug 2016 – Aug 2019* $ 75.0 $ (4.7 ) $ 75.0 $ (3.6 ) 3.43% Interest Rate Swap M, Aug 2016 – Aug 2019* 100.0 (6.2 ) 100.0 (4.8 ) 3.37% Interest Rate Swap N, Aug 2016 – Aug 2019* 75.0 (4.5 ) 75.0 (3.5 ) 3.19% Interest Rate Swap O, Aug 2016 – Aug 2019* 75.0 (4.2 ) 75.0 (3.1 ) 3.08% Interest Rate Swap P, Aug 2016 – Aug 2019* 75.0 (3.9 ) 75.0 (2.8 ) 2.99% Interest Rate Swap Q, Aug 2016 – Aug 2019* 50.0 (2.5 ) 50.0 (1.7 ) 2.98% Interest Rate Swap R, Aug 2016 – Aug 2019* 50.0 (2.5 ) 50.0 (1.7 ) 2.73% Interest Rate Swap S, Aug 2016 – Aug 2019* 50.0 (2.1 ) 50.0 (1.4 ) 2.74% Interest Rate Swap T, Aug 2016 – Aug 2019* 75.0 (3.2 ) 75.0 (2.1 ) 2.66% Interest Rate Swap U, Aug 2016 – Aug 2019* 50.0 (2.0 ) 50.0 (1.2 ) 2.60% Interest Rate Swap V, Aug 2016 – Aug 2019* 50.0 (1.9 ) 50.0 (1.2 ) 2.40% Interest Rate Swap W, Aug 2016 – Aug 2019* 25.0 (0.8 ) 25.0 (0.5 ) 2.25% Interest Rate Swap X, Aug 2016 – Aug 2019* 50.0 (1.5 ) 50.0 (0.8 ) * includes LIBOR floor of 1.00% $ 800.0 $ (40.0 ) $ 800.0 $ (28.4 ) |
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): September 30, 2016 December 31, 2015 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives not designated as hedging instruments Other current and non-current assets $ 0.3 Commodity swaps Other current and non-current liabilities (0.3 ) Other current and non-current liabilities $ (1.7 ) Interest rate swaps Other current and non-current liabilities (40.0 ) Other current and non-current liabilities (28.4 ) Total derivatives not designated as hedging instruments $ (40.0 ) $ (30.1 ) |
Interest Rate Derivative Instruments and their Impact on the Results of Operations | 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 Nine months ended 2016 2015 2016 2015 Location of impact on results of operations Interest Expense $ 3.3 $ (10.0 ) $ (11.6 ) $ (17.2 ) |
Commodity Swaps | |
Notional Amount and Fair Value of Derivatives | The following table summarizes the outstanding commodity swaps as of September 30, 2016 and December 31, 2015 (dollars in millions): September 30, 2016 December 31, 2015 Notional Amount Quantity Fair Value Notional Amount Quantity Fair Value Aluminum $ 8.9 5,200 metric tons $ (0.1 ) $ 13.7 8,150 metric tons $ (1.7 ) Natural Gas $ 0.7 230,000 MMBtu 0.0 $ 0.2 70,000 MMBtu — $ (0.1 ) $ (1.7 ) |
PRODUCT WARRANTY LIABILITIES (T
PRODUCT WARRANTY LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Product Warranty Liability Activities | Product warranty liability activities consist of the following (dollars in millions): Three months ended Nine months ended 2016 2015 2016 2015 Beginning balance $ 70.4 $ 73.7 $ 78.3 $ 83.6 Payments (7.2 ) (7.7 ) (26.4 ) (24.0 ) Increase in liability (warranty issued during period) 3.9 5.0 12.3 16.2 Net adjustments to liability 3.0 10.8 5.6 5.8 Accretion (for predecessor liabilities) — 0.1 0.3 0.3 Ending balance $ 70.1 $ 81.9 $ 70.1 $ 81.9 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Revenue for Extended Transmission Coverage Activity | Deferred revenue for ETC activity (dollars in millions): Three months ended Nine months ended 2016 2015 2016 2015 Beginning balance $ 84.3 $ 74.7 $ 79.3 $ 69.0 Increases 6.8 7.2 23.1 23.7 Revenue earned (5.8 ) (5.4 ) (17.1 ) (16.2 ) Ending balance $ 85.3 $ 76.5 $ 85.3 $ 76.5 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Other Current Liabilities | Other current liabilities consist of the following (dollars in millions): As of September 30, 2016 As of December 31, 2015 Payroll and related costs $ 35.8 $ 31.5 Sales allowances 29.5 24.3 Taxes payable 16.1 12.6 Derivative liabilities 14.4 5.0 Vendor buyback obligation 13.1 12.1 Defense price reduction reserve 9.2 8.7 Accrued interest payable 4.5 0.6 Other liabilities 14.3 11.3 Total $ 136.9 $ 106.1 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 Three months ended 2016 2015 2016 2015 Net periodic benefit cost: Service cost $ 3.1 $ 3.6 $ 0.6 $ 0.5 Interest cost 1.6 1.3 1.7 1.3 Expected return on assets (1.6 ) (2.1 ) — — Prior service cost 0.0 0.0 (0.9 ) (0.9 ) Loss (gain) 0.1 (0.1 ) — — Net periodic benefit cost $ 3.2 $ 2.7 $ 1.4 $ 0.9 Pension Plans Post-retirement Benefits Nine months ended Nine months ended 2016 2015 2016 2015 Net periodic benefit cost: Service cost $ 9.3 $ 10.8 $ 1.6 $ 1.7 Interest cost 4.6 3.9 5.0 4.0 Expected return on assets (5.0 ) (6.3 ) — — Prior service cost 0.1 0.0 (2.7 ) (2.7 ) Gain (0.2 ) (0.1 ) — — Net periodic benefit cost $ 8.8 $ 8.3 $ 3.9 $ 3.0 |
ACCUMULATED OTHER COMPREHENSI32
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 June 30, 2015 $ (3.8 ) $ (18.1 ) $ (28.6 ) $ (50.5 ) Other comprehensive loss before reclassifications (0.2 ) — (2.1 ) (2.3 ) Amounts reclassified from AOCL — (0.9 ) — (0.9 ) Income tax 0.0 0.3 — 0.3 Net current period other comprehensive loss $ (0.2 ) $ (0.6 ) $ (2.1 ) $ (2.9 ) AOCL as of September 30, 2015 $ (4.0 ) $ (18.7 ) $ (30.7 ) $ (53.4 ) AOCL as of June 30, 2016 $ (5.8 ) $ (21.2 ) $ (30.3 ) $ (57.3 ) Other comprehensive (loss) income before reclassifications (0.1 ) — 1.5 1.4 Amounts reclassified from AOCL — (0.9 ) — (0.9 ) Income tax 0.1 0.3 — 0.4 Net current period other comprehensive (loss) income $ (0.0 ) $ (0.6 ) $ 1.5 $ 0.9 AOCL as of September 30, 2016 $ (5.8 ) $ (21.8 ) $ (28.8 ) $ (56.4 ) Nine months ended Available-for- Defined Foreign Total AOCL as of December 31, 2014 $ (0.9 ) $ (17.0 ) $ (21.6 ) $ (39.5 ) Other comprehensive loss before reclassifications (4.9 ) — (9.1 ) (14.0 ) Amounts reclassified from AOCL — (2.7 ) — (2.7 ) Income tax 1.8 1.0 — 2.8 Net current period other comprehensive loss $ (3.1 ) $ (1.7 ) $ (9.1 ) $ (13.9 ) AOCL as of September 30, 2015 $ (4.0 ) $ (18.7 ) $ (30.7 ) $ (53.4 ) AOCL as of December 31, 2015 $ (5.7 ) $ (20.0 ) $ (33.1 ) $ (58.8 ) Other comprehensive (loss) income before reclassifications (0.1 ) — 4.3 4.2 Amounts reclassified from AOCL — (2.8 ) — (2.8 ) Income tax 0.0 1.0 — 1.0 Net current period other comprehensive (loss) income $ (0.1 ) $ (1.8 ) $ 4.3 $ 2.4 AOCL as of September 30, 2016 $ (5.8 ) $ (21.8 ) $ (28.8 ) $ (56.4 ) Amounts reclassified from AOCL Affected line item in the Condensed Statements of Comprehensive Income AOCL Components Three months ended September 30, 2016 Three months ended September 30, 2015 Amortization of defined benefit pension items: Prior service cost $ 0.8 $ 0.8 Cost of sales 0.1 0.1 Selling, general and administrative 0.0 0.0 Engineering – research and development Actuarial loss 0.0 — Cost of sales Total reclassifications, before tax $ 0.9 0.9 Income before income taxes Income tax (0.3 ) (0.3 ) Tax expense Total reclassifications $ 0.6 $ 0.6 Net of tax Amounts reclassified from AOCL Affected line item in the Condensed Consolidated Statements of Comprehensive Income AOCL Components Nine months ended September 30, 2016 Nine months ended September 30, 2015 Amortization of defined benefit pension items: Prior service cost $ 2.4 $ 2.4 Cost of sales 0.2 0.3 Selling, general and administrative 0.0 0.0 Engineering – research and development Actuarial loss 0.2 — Cost of sales Total reclassifications, before tax $ 2.8 2.7 Income before income taxes Income tax (1.0 ) (1.0 ) Tax expense Total reclassifications $ 1.8 $ 1.7 Net of tax |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 Nine months ended 2016 2015 2016 2015 Net income $ 44.6 $ 46.5 $ 153.7 $ 169.3 Weighted average shares of common stock outstanding 166.9 174.0 168.8 177.5 Dilutive effect stock-based awards 1.0 1.0 1.0 1.5 Diluted weighted average shares of common stock outstanding 167.9 175.0 169.8 179.0 Basic earnings per share attributable to common stockholders $ 0.27 $ 0.27 $ 0.91 $ 0.95 Diluted earnings per share attributable to common stockholders $ 0.27 $ 0.27 $ 0.91 $ 0.95 |
Overview - Additional Informati
Overview - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2016EmployeeCustomerProduct | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |
Transmission product lines | Product | 13 |
Worldwide independent distributor and dealer locations | Customer | 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 | 81.00% |
Components of Inventories (Deta
Components of Inventories (Detail) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Purchased parts and raw materials | $ 71.1 | $ 69.5 |
Work in progress | 7.1 | 5.1 |
Service parts | 47.6 | 45.8 |
Finished goods | 30 | 21 |
Total inventories | $ 155.8 | $ 141.4 |
Goodwill and Other Intangible36
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Goodwill [Line Items] | ||
Goodwill | $ 1,941 | $ 1,941 |
Net carrying value of Goodwill and other intangible assets | $ 3,206.5 | $ 3,275.8 |
Summary of Goodwill and Other I
Summary of Goodwill and Other Intangible Assets (Detail) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Trade name | $ 790 | $ 790 |
Intangible assets, gross | 2,210.4 | 2,210.4 |
Accumulated amortization | (944.9) | (875.6) |
Intangible assets, net | 1,265.5 | 1,334.8 |
Customer relationships - defense | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 62.3 | 62.3 |
Accumulated amortization | (33.8) | (31.3) |
Intangible assets, net | 28.5 | 31 |
Customer relationships - commercial | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 831.8 | 831.8 |
Accumulated amortization | (513.9) | (477.3) |
Intangible assets, net | 317.9 | 354.5 |
Proprietary technology | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 476.3 | 476.3 |
Accumulated amortization | (348.7) | (320.1) |
Intangible assets, net | 127.6 | 156.2 |
Non-compete agreement | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 17.3 | 17.3 |
Accumulated amortization | (15.8) | (14.6) |
Intangible assets, net | 1.5 | 2.7 |
Patented technology - defense | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 28.2 | 28.2 |
Accumulated amortization | (28.2) | (27.9) |
Intangible assets, net | 0.3 | |
Tooling rights | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 4.5 | 4.5 |
Accumulated amortization | $ (4.5) | (4.4) |
Intangible assets, net | $ 0.1 |
Expected Amortization Expense R
Expected Amortization Expense Related to Other Intangible Assets (Detail) $ in Millions | Sep. 30, 2016USD ($) |
Finite-Lived Intangible Assets | |
2,017 | $ 89.7 |
2,018 | 87.2 |
2,019 | 85.7 |
2,020 | 49.9 |
2,021 | 44.7 |
Thereafter | $ 95.2 |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities (Detail) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 41.2 | $ 100 |
Available-for-sale securities | 2.8 | 2.9 |
Rabbi trust assets | 5.4 | 4.8 |
Deferred compensation obligation | (5.4) | (4.8) |
Derivative assets | 0.3 | |
Derivative liabilities | (40.3) | (30.1) |
Total | 4 | 72.8 |
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 | 41.2 | 100 |
Available-for-sale securities | 2.8 | 2.9 |
Rabbi trust assets | 5.4 | 4.8 |
Deferred compensation obligation | (5.4) | (4.8) |
Total | 44 | 102.9 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0.3 | |
Derivative liabilities | (40.3) | (30.1) |
Total | $ (40) | $ (30.1) |
Long Term Debt and Maturities (
Long Term Debt and Maturities (Detail) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 2,190.6 | |
Less: current maturities of long-term debt | 11.9 | $ 24.5 |
Less: deferred financing costs, net | 29.9 | 25.6 |
Total long-term debt, net | 2,148.8 | 2,352.7 |
Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 1,000 | $ 2,402.8 |
Less: deferred financing costs, net | 12.8 | |
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 1,190.6 | |
Less: deferred financing costs, net | 7.4 | |
5.0% Senior Notes due 2024 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 1,000 |
Long Term Debt and Maturities41
Long Term Debt and Maturities (Parenthetical) (Detail) | 9 Months Ended |
Sep. 30, 2016 | |
Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 | |
Debt Instrument [Line Items] | |
Debt instrument, due date | 2,019 |
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 | |
Debt Instrument [Line Items] | |
Debt instrument, due date | 2,022 |
5.0% Senior Notes due 2024 | |
Debt Instrument [Line Items] | |
Debt instrument, due date | 2,024 |
Debt instrument, stated interest rate | 5.00% |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||||||
Total long-term debt | $ 2,190.6 | $ 2,190.6 | $ 2,190.6 | |||
Fair value of long-term debt obligations | 2,224 | 2,224 | 2,224 | |||
Amortization of deferred financing costs | 5.4 | $ 5.7 | ||||
Deferred financing costs, net | $ 29.9 | $ 29.9 | $ 29.9 | $ 25.6 | ||
Total leverage ratio | 309.00% | 309.00% | 309.00% | |||
Repurchase and redemption of long-term debt | $ 491.2 | |||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Revolving credit facility commitment reduction | $ 15 | $ 15 | $ 15 | |||
Maturity date of revolving credit borrowings | 2021-09 | 2021-09 | ||||
Available revolving credit facility | $ 447.4 | 447.4 | $ 447.4 | |||
Letters of Credit | $ 2.6 | $ 2.6 | $ 2.6 | |||
Required senior secured leverage ratio | 550.00% | 550.00% | 550.00% | |||
Achieved senior secured leverage ratio | 156.00% | 156.00% | 156.00% | |||
Minimum senior secured leverage ratio | 400.00% | 400.00% | 400.00% | |||
Total leverage ratio for applicable margin reduction | 4.00% | 4.00% | 4.00% | |||
Basis point reduction to applicable margin, resulting from total leverage ratio below minimum | 0.25% | |||||
Total leverage ratio for commitment fee reduction | 350.00% | 350.00% | 350.00% | |||
Basis point reduction to commitment fee, resulting from total leverage ratio below minimum | 0.125% | |||||
5.0% Senior Notes due 2024 | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument maturity month and year | 2024-09 | |||||
Debt instrument, interest rate, stated percentage | 5.00% | 5.00% | 5.00% | |||
Total long-term debt | $ 1,000 | $ 1,000 | $ 1,000 | |||
Debt instrument redemption redeemable prior date | Oct. 1, 2019 | |||||
Debt Instrument, redemption price, percentage | 100.00% | |||||
5.0% Senior Notes due 2024 | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, redemption Price, percentage of principal amount redeemed | 40.00% | |||||
Senior Secured Credit Facility Term B-3 Loan, variable, due 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Total long-term debt | 1,000 | $ 1,000 | 1,000 | $ 2,402.8 | ||
Long-term debt reduction | 1,200 | |||||
Amortization of deferred financing costs | 11 | |||||
Deferred financing costs, net | 12.8 | 12.8 | $ 12.8 | |||
Repurchase and redemption of long-term debt | $ 1,200 | |||||
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument maturity month and year | 2022-09 | 2022-09 | ||||
Total long-term debt | $ 1,190.6 | 1,190.6 | $ 1,190.6 | |||
Deferred financing costs, net | $ 7.4 | $ 7.4 | $ 7.4 | |||
Debt instrument effective interest rate | 3.25% | 3.25% | 3.25% | |||
Principal payments on term loans | $ 3 | |||||
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Applicable margin over base rate | 0.75% | 1.00% | 2.50% | |||
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 | LIBOR | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, LIBOR floor rate | 0.75% | 0.75% | 0.75% | |||
Debt instrument, floor rate | 1.75% | |||||
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 | greater of the prime lending rate or federal funds | ||||||
Debt Instrument [Line Items] | ||||||
Applicable margin over base rate | 0.50% | |||||
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 | greater of the prime lending rate or federal funds | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Applicable margin over base rate | 1.50% | |||||
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 | greater of the prime lending rate or federal funds | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, floor rate | 1.75% |
Summary of Company's Interest R
Summary of Company's Interest Rate Derivatives (Detail) - Derivatives not designated as hedging instruments - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | |
Derivatives, Fair Value [Line Items] | |||
Notional Amount | $ 800,000,000 | $ 800,000,000 | |
Fair Value | (40,000,000) | (28,400,000) | |
Interest Rate Swap L | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (4,700,000) | (3,600,000) |
Interest Rate Swap M | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 100,000,000 | 100,000,000 |
Fair Value | [1] | (6,200,000) | (4,800,000) |
Interest Rate Swap N | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (4,500,000) | (3,500,000) |
Interest Rate Swap O | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (4,200,000) | (3,100,000) |
Interest Rate Swap P | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (3,900,000) | (2,800,000) |
Interest Rate Swap Q | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (2,500,000) | (1,700,000) |
Interest Rate Swap R | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (2,500,000) | (1,700,000) |
Interest Rate Swap S | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (2,100,000) | (1,400,000) |
Interest Rate Swap T | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 75,000,000 | 75,000,000 |
Fair Value | [1] | (3,200,000) | (2,100,000) |
Interest Rate Swap U | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (2,000,000) | (1,200,000) |
Interest Rate Swap V | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | (1,900,000) | (1,200,000) |
Interest Rate Swap W | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 25,000,000 | 25,000,000 |
Fair Value | [1] | (800,000) | (500,000) |
Interest Rate Swap X | |||
Derivatives, Fair Value [Line Items] | |||
Notional Amount | [1] | 50,000,000 | 50,000,000 |
Fair Value | [1] | $ (1,500,000) | $ (800,000) |
[1] | includes LIBOR floor of 1.00% |
Summary of Company's Interest44
Summary of Company's Interest Rate Derivatives (Parenthetical) (Detail) - Derivatives not designated as hedging instruments | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
LIBOR | ||
Derivatives, Fair Value [Line Items] | ||
LIBOR floor | 1.00% | 1.00% |
Interest Rate Swap L | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.44% | 3.44% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap M | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.43% | 3.43% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap N | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.37% | 3.37% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap O | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.19% | 3.19% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap P | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 3.08% | 3.08% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap Q | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.99% | 2.99% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap R | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.98% | 2.98% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap S | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.73% | 2.73% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap T | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.74% | 2.74% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap U | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.66% | 2.66% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap V | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.60% | 2.60% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap W | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.40% | 2.40% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 | |
Interest Rate Swap X | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Fixed Interest Rate | 2.25% | 2.25% |
Derivative, Maturity Date, Range Start | 2016-08 | |
Derivative, Maturity Date, Range End | 2019-08 |
Summary of Outstanding Commodit
Summary of Outstanding Commodity Swaps (Detail) - Derivatives not designated as hedging instruments | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016USD ($)MMBTUt | Dec. 31, 2015USD ($)MMBTUt | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Notional Amount | $ 800,000,000 | $ 800,000,000 |
Fair value | 40,000,000 | 30,100,000 |
Commodity Swaps | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Fair value | (100,000) | (1,700,000) |
Commodity Swaps | Aluminum | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Notional Amount | $ 8,900,000 | $ 13,700,000 |
Quantity | t | 5,200 | 8,150 |
Fair value | $ (100,000) | $ (1,700,000) |
Commodity Swaps | Natural Gas | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Notional Amount | $ 700,000 | $ 200,000 |
Quantity | MMBTU | 230,000 | 70,000 |
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 | Sep. 30, 2016 | Dec. 31, 2015 |
Derivative [Line Items] | ||
Total derivatives not designated as hedging instruments | $ (40) | $ (30.1) |
Commodity Swaps | ||
Derivative [Line Items] | ||
Total derivatives not designated as hedging instruments | 0.1 | 1.7 |
Commodity Swaps | Other current and non-current assets | ||
Derivative [Line Items] | ||
Derivative Assets, Fair Value | 0.3 | |
Commodity Swaps | Other current and non-current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value | (0.3) | (1.7) |
Interest rate contracts | Other current and non-current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value | $ (40) | $ (28.4) |
Derivatives - Additional Inform
Derivatives - Additional Information (Detail) - Derivatives not designated as hedging instruments - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Commodity Swaps | Other current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value | $ (0.3) | $ (1.1) |
Commodity Swaps | Other non-current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value | 0 | (0.6) |
Commodity Swaps | Other current assets | ||
Derivative [Line Items] | ||
Derivative Assets, Fair Value | 0.2 | |
Commodity Swaps | Other non-current assets | ||
Derivative [Line Items] | ||
Derivative Assets, Fair Value | 0.1 | |
Interest rate contracts | Other current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value | (14.1) | (3.9) |
Interest rate contracts | Other non-current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value | $ (25.9) | $ (24.5) |
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 | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative [Line Items] | ||||
Unrealized gain (loss)on derivatives | $ (9.9) | $ (17.5) | ||
Derivatives not designated as hedging instruments | Interest rate contracts | Interest Expense | ||||
Derivative [Line Items] | ||||
Unrealized gain (loss)on derivatives | $ 3.3 | $ (10) | $ (11.6) | $ (17.2) |
Product Warranty Liabilities -
Product Warranty Liabilities - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | |
Guarantor Obligations [Line Items] | |||
Product warranty liability, current | $ 25 | $ 28 | $ 24.9 |
Product warranty liability, non-current | 56.9 | $ 42.1 | $ 53.4 |
Adjustments to product warranty liabilities | $ 10.8 |
Product Warranty Liability Acti
Product Warranty Liability Activities (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Guarantor Obligations [Line Items] | ||||
Beginning balance | $ 70.4 | $ 73.7 | $ 78.3 | $ 83.6 |
Payments | (7.2) | (7.7) | (26.4) | (24) |
Increase in liability (warranty issued during period) | 3.9 | 5 | 12.3 | 16.2 |
Net adjustments to liability | 3 | 10.8 | 5.6 | 5.8 |
Accretion (for Predecessor liabilities) | 0.1 | 0.3 | 0.3 | |
Ending balance | $ 70.1 | $ 81.9 | $ 70.1 | $ 81.9 |
Deferred Revenue - Additional I
Deferred Revenue - Additional Information (Detail) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Deferred Revenue Arrangement [Line Items] | |||
Deferred revenue current liabilities | $ 24.3 | $ 22.9 | |
Deferred revenue non-current liabilities | 61 | $ 56.4 | |
Extended Transmission Coverage | |||
Deferred Revenue Arrangement [Line Items] | |||
Deferred revenue current liabilities | 24.3 | $ 22.5 | |
Deferred revenue non-current liabilities | $ 61 | $ 54 |
Deferred Revenue for ETC Activi
Deferred Revenue for ETC Activity (Detail) - Extended Transmission Coverage - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Deferred Revenue Arrangement [Line Items] | ||||
Beginning balance | $ 84.3 | $ 74.7 | $ 79.3 | $ 69 |
Increases | 6.8 | 7.2 | 23.1 | 23.7 |
Revenue earned | (5.8) | (5.4) | (17.1) | (16.2) |
Ending balance | $ 85.3 | $ 76.5 | $ 85.3 | $ 76.5 |
Other Current Liabilities (Deta
Other Current Liabilities (Detail) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Other Current Liabilities [Line Items] | ||
Payroll and related costs | $ 35.8 | $ 31.5 |
Sales allowances | 29.5 | 24.3 |
Taxes payable | 16.1 | 12.6 |
Derivative liabilities | 14.4 | 5 |
Vendor buyback obligation | 13.1 | 12.1 |
Defense price reduction reserve | 9.2 | 8.7 |
Accrued interest payable | 4.5 | 0.6 |
Other liabilities | 14.3 | 11.3 |
Total | $ 136.9 | $ 106.1 |
Employee Benefit Plans (Detail)
Employee Benefit Plans (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Pension Plans | ||||
Schedule of Employee Benefit Plans [Line Items] | ||||
Service cost | $ 3.1 | $ 3.6 | $ 9.3 | $ 10.8 |
Interest cost | 1.6 | 1.3 | 4.6 | 3.9 |
Expected return on assets | (1.6) | (2.1) | (5) | (6.3) |
Prior service cost | 0 | 0 | 0.1 | 0 |
Loss (gain) | 0.1 | (0.1) | (0.2) | (0.1) |
Net periodic benefit cost | 3.2 | 2.7 | 8.8 | 8.3 |
Post-retirement Benefits | ||||
Schedule of Employee Benefit Plans [Line Items] | ||||
Service cost | 0.6 | 0.5 | 1.6 | 1.7 |
Interest cost | 1.7 | 1.3 | 5 | 4 |
Prior service cost | (0.9) | (0.9) | (2.7) | (2.7) |
Net periodic benefit cost | $ 1.4 | $ 0.9 | $ 3.9 | $ 3 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Taxes [Line Items] | ||||
Income tax expense | $ 26.4 | $ 27.3 | $ 92.9 | $ 99.8 |
Effective tax rate | 37.20% | 37.00% | 37.70% | 37.10% |
Income tax examination statute of limitations period | 3 years |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | $ 1,188.6 | |||
Other comprehensive (loss) income before reclassifications | $ 1.4 | $ (2.3) | 4.2 | $ (14) |
Amounts reclassified from AOCL | (0.9) | (0.9) | (2.8) | (2.7) |
Income tax | 0.4 | 0.3 | 1 | 2.8 |
Net current period other comprehensive (loss) income | 0.9 | (2.9) | 2.4 | (13.9) |
Total AOCL | 1,116.7 | 1,116.7 | ||
Accumulated Net Unrealized Investment Gain (Loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | (5.8) | (3.8) | (5.7) | (0.9) |
Other comprehensive (loss) income before reclassifications | (0.1) | (0.2) | (0.1) | (4.9) |
Income tax | 0.1 | 0 | 0 | 1.8 |
Net current period other comprehensive (loss) income | 0 | (0.2) | (0.1) | (3.1) |
Total AOCL | (5.8) | (4) | (5.8) | (4) |
Accumulated Defined Benefit Plans Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | (21.2) | (18.1) | (20) | (17) |
Amounts reclassified from AOCL | (0.9) | (0.9) | (2.8) | (2.7) |
Income tax | 0.3 | 0.3 | 1 | 1 |
Net current period other comprehensive (loss) income | (0.6) | (0.6) | (1.8) | (1.7) |
Total AOCL | (21.8) | (18.7) | (21.8) | (18.7) |
Accumulated Translation Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | (30.3) | (28.6) | (33.1) | (21.6) |
Other comprehensive (loss) income before reclassifications | 1.5 | (2.1) | 4.3 | (9.1) |
Net current period other comprehensive (loss) income | 1.5 | (2.1) | 4.3 | (9.1) |
Total AOCL | (28.8) | (30.7) | (28.8) | (30.7) |
Accumulated other comprehensive (loss) income | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance of AOCL | (57.3) | (50.5) | (58.8) | (39.5) |
Total AOCL | $ (56.4) | $ (53.4) | $ (56.4) | $ (53.4) |
Amounts Reclassified from AOCI
Amounts Reclassified from AOCI (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Income before income taxes | $ 71 | $ 73.8 | $ 246.6 | $ 269.1 |
Income tax | (26.4) | (27.3) | (92.9) | (99.8) |
Total reclassifications | 44.6 | 46.5 | 153.7 | 169.3 |
Selling, general and administrative expenses | 80 | 86.6 | 240.4 | 235.6 |
Engineering - research and development | 20.7 | 23.6 | 64.3 | 69 |
Reclassified from AOCL | Prior service cost | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of sales | 0.8 | 0.8 | 2.4 | 2.4 |
Selling, general and administrative expenses | 0.1 | 0.1 | 0.2 | 0.3 |
Engineering - research and development | 0 | 0 | 0 | 0 |
Reclassified from AOCL | Actuarial loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of sales | 0 | 0.2 | ||
Reclassified from AOCL | Accumulated Defined Benefit Plans Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Income before income taxes | 0.9 | 0.9 | 2.8 | 2.7 |
Income tax | (0.3) | (0.3) | (1) | (1) |
Total reclassifications | $ 0.6 | $ 0.6 | $ 1.8 | $ 1.7 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Commitments and Contingencies Disclosure [Line Items] | |
Estimated undiscounted environmental liability | $ 14 |
Environmental liabilities, non-current | $ 13.5 |
Estimated undiscounted environmental liabilities payment period | 30 years |
Environmental liabilities, current | $ 0.5 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive stock options not included in the diluted EPS computation | 0.6 | 0.7 | 0.6 | 0.7 |
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 | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Computation of Earnings Per Share [Line Items] | ||||
Net income | $ 44.6 | $ 46.5 | $ 153.7 | $ 169.3 |
Weighted average shares of common stock outstanding | 166.9 | 174 | 168.8 | 177.5 |
Dilutive effect stock-based awards | 1 | 1 | 1 | 1.5 |
Diluted weighted average shares of common stock outstanding | 167.9 | 175 | 169.8 | 179 |
Basic earnings per share attributable to common stockholders | $ 0.27 | $ 0.27 | $ 0.91 | $ 0.95 |
Diluted earnings per share attributable to common stockholders | $ 0.27 | $ 0.27 | $ 0.91 | $ 0.95 |
Common Stock - Additional Infor
Common Stock - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Oct. 30, 2014 | |
Common Stock Disclosure [Line Items] | |||
Common stock, repurchases authorized | $ 500,000,000 | ||
Common stock, repurchased and retired during the period | $ 76,700,000 | $ 169,000,000 |