| Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Certain prior year amounts have been reclassified to conform to the fiscal 2019 presentation. Revenue Recognition Effective April 1, 2018, the beginning of fiscal 2019, the Company adopted Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), under the modified retrospective method. The modified retrospective approach recognizes any changes as of the beginning of the year of initial application (i.e., as of April 1, 2018) through retained earnings, with no restatement of comparative periods. See Note 6, Revenue Recognition for the Company's policy for recognizing revenue under ASC 606 as well as the various other disclosures required by ASC 606. Prior to fiscal year 2019, net sales were recorded upon transfer of title and risk of product loss to the customer. Net sales relating to any particular shipment are based upon the amount invoiced for the delivered goods less estimated future rebate payments and sales returns which are based upon historical experience. Revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Other than a standard product warranty, there are no other significant post-shipment obligations. Stock-Based Compensation The Company accounts for stock based compensation in accordance with ASC 718, Accounting for Stock Compensation ("ASC 718"). ASC 718 requires compensation costs related to stock-based payment transactions to be recognized in the financial statements. Generally, compensation cost is measured based on the grant-date fair value of the equity instruments issued. Compensation cost is recognized over the requisite service period, generally as the awards vest. See further discussion of the Company’s equity plans in Note 15 , Stock-Based Compensation. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents. Receivables Receivables are stated net of allowances for doubtful accounts of $3.1 million at March 31, 2019 and $4.4 million at March 31, 2018 . The Company evaluates the collectability of its receivables and establishes the allowance for doubtful accounts based on a combination of specific customer circumstances and historical write-off experience. Credit is extended to customers based upon an evaluation of their financial position. Generally, advance payment is not required. Allowances for doubtful accounts established are recorded within Selling, general and administrative expenses within the consolidated statements of operations. Significant Customers The Company’s largest customer accounted for 8.6% , 9.2% and 9.4% of consolidated net sales for the years ended March 31, 2019 , 2018 and 2017 , respectively. Receivables related to this customer at March 31, 2019 and 2018 were $7.5 million and $8.5 million , respectively. Inventories Inventories are comprised of material, direct labor and manufacturing overhead, and are stated at the lower of cost or market. Market is determined based on estimated net realizable values. The Company’s total inventories valued using the "last-in, first-out" (LIFO) method was 62% and 59% at March 31, 2019 and 2018 , respectively. All remaining inventories are valued using the "first-in, first-out" (FIFO) method. In some cases, the Company has determined a certain portion of inventories are excess or obsolete. In those cases, the Company writes down the value of those inventories to their net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, adjustments to established inventory reserves may be required. The total write-down of inventories charged to expense was $3.1 million , $4.3 million and $6.5 million , during fiscal 2019 , 2018 and 2017 , respectively. Property, Plant and Equipment Property, plant and equipment are initially stated at cost. Depreciation is provided using the straight-line method over 10 to 30 years for buildings and improvements, 5 to 10 years for machinery and equipment and 3 to 5 years for computer hardware and software. Where appropriate, the depreciable lives of certain assets may be adjusted to reflect a change in the use of those assets, or depreciation may be accelerated in the case of an eventual asset disposal. The Company recognized accelerated depreciation of $3.9 million , $2.3 million , and $9.6 million during fiscal 2019 , 2018 , and 2017 , respectively. Accelerated depreciation is recorded within Cost of sales in the consolidated statements of operations. Maintenance and repair costs are expensed as incurred. Goodwill and Intangible Assets Intangible assets consist of acquired trademarks and tradenames, customer relationships (including distribution network) and patents. The customer relationships, patents, and certain tradenames are being amortized using the straight-line method over their estimated useful lives of 7 to 20 years, 3 to 15 years, and 3 to 15 years, respectively. Where appropriate, the lives of certain intangible assets may be adjusted to reflect a change in the use of those assets, or amortization may be accelerated in the case of a known intangible asset discontinuation. Goodwill, trademarks and certain tradenames have indefinite lives and are not amortized. However, the goodwill and intangible assets are tested annually for impairment, and may be tested more frequently if any triggering events occur that would reduce the recoverability of the asset. The Company performs its impairment test by comparing the fair value of a reporting unit, utilizing both an income valuation model (discounted cash flow) and market approach (guideline public company comparables), with its carrying amount. If the carrying amount exceeds the fair value of the reporting unit, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. Impairment of Long-Lived Assets The carrying value of long-lived assets, including amortizable intangible assets and tangible fixed assets, are evaluated for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment of amortizable intangible assets and tangible fixed assets is generally determined by comparing projected undiscounted cash flows to be generated by the asset, or group of assets, to its carrying value. If impairment is identified, a loss is recorded equal to the excess of the asset's net book value over its fair value, and the cost basis is adjusted accordingly. The Company recognized impairment charges in the amount of $0.3 million , $0.8 million and $1.5 million in fiscal 2019 , 2018 , and 2017 , respectively. The impairment was determined utilizing Level 3 inputs within the Fair Value hierarchy, and the Company reviewed and considered input from outside specialists, when appropriate. Actual results could vary from these estimates. Refer to Note 13 , Fair Value Measurements for additional information. Product Warranty The Company offers warranties on the sales of certain of its products and records an accrual for estimated future claims. Such accruals are based upon historical experience and management’s estimate of the level of future claims. The following table presents changes in the Company’s product warranty liability during each of the periods presented (in millions): Year Ended March 31, 2019 Year Ended March 31, 2018 Year Ended March 31, 2017 Balance at beginning of period $ 7.7 $ 6.2 $ 5.5 Acquired obligations — 1.4 0.4 Charged to operations 1.9 4.1 3.2 Claims settled (2.4 ) (4.0 ) (2.9 ) Balance at end of period $ 7.2 $ 7.7 $ 6.2 Income Taxes The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes ("ASC 740") . Deferred income taxes are provided for future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating losses, tax credits and other applicable carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be actually paid or recovered. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of continuing operations in the period that includes the date of enactment. The Company regularly reviews its deferred tax assets for recoverability and provides a valuation allowance against its deferred tax assets if, based upon consideration of all positive and negative evidence, the Company determines that it is more-likely-than-not that a portion or all of the deferred tax assets will ultimately not be realized in future tax periods. Such positive and negative evidence would include review of historical earnings and losses, anticipated future earnings, the time period over which the temporary differences and carryforwards are anticipated to reverse and implementation of feasible, prudent tax planning strategies. The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining the Company’s worldwide provision for income taxes and recording the related deferred tax assets and liabilities. In the ordinary course of the Company’s business, there is inherent uncertainty in quantifying the ultimate tax outcome of all of the numerous transactions and required calculations relating to the Company’s tax positions. Accruals for unrecognized tax benefits are provided for in accordance with the requirements of ASC 740 . An unrecognized tax benefit represents the difference between the recognition of benefits related to uncertain tax positions for income tax reporting purposes and financial reporting purposes. The Company has established a reserve for interest and penalties, as applicable, for uncertain tax positions and it is recorded as a component of the overall income tax provision. The Company is subject to periodic income tax examinations by domestic and foreign income tax authorities. Although the outcome of income tax examinations is always uncertain, the Company believes that it has appropriate support for the positions taken on its income tax returns and has adequately provided for potential income tax assessments. Nonetheless, the amounts ultimately settled relating to issues raised by the taxing authorities may differ materially from the amounts accrued for each year. See Note 17 , Income Taxes for additional information. Per Share Data Basic net income (loss) per share from continuing and discontinued operations attributable to Rexnord common stockholders is computed by dividing net income from continuing operations and loss from discontinued operations attributable to Rexnord common stockholders, respectively, by the corresponding weighted average number of common shares outstanding for the period. Diluted net income (loss) per share from continuing and discontinued operations attributable to Rexnord common stockholders is computed based on the weighted average number of common shares outstanding, increased by the number of incremental shares that would have been outstanding if the potential dilutive shares were issued through the exercise of outstanding stock options to purchase common shares, except when the effect would be anti-dilutive. Additionally, following the issuance of the 5.75% Series A Mandatory Convertible Preferred Stock ("Series A Preferred Stock") in fiscal 2017, the Company’s diluted net income per share is computed using the "if-converted" method. The "if-converted" method is utilized only when such calculation is dilutive to earnings per share using the treasury stock method. Under the "if-converted" method, diluted net income per share is calculated under the assumption that the shares of Series A Preferred Stock have been converted into shares of the Company’s common stock as of the beginning of the respective period, and therefore no dividends are provided to holders of the Series A Preferred Stock. The computation for diluted net income per share for the fiscal years ended March 31, 2019 , 2018 and 2017 excludes 1.0 million, 2.6 million and 4.6 million shares due to their anti-dilutive effects, respectively. Additionally, during the fiscal year ended March 31, 2017, the computation of diluted net income per share does not include shares of preferred stock that are convertible into a weighted average of 5.8 million shares of common stock due to their anti-dilutive effects. The following table presents the basis for income per share computations (in millions, except share amounts, which are in thousands): Years Ended March 31, 2019 March 31, 2018 March 31, 2017 Basic net (loss) income per share attributable to Rexnord common stockholders Numerator: Net income from continuing operations $ 189.0 $ 206.6 $ 91.7 Less: Non-controlling interest income — 0.1 — Less: Dividends on preferred stock 23.2 23.2 7.3 Net income from continuing operations attributable to Rexnord common stockholders $ 165.8 $ 183.3 $ 84.4 Loss from discontinued operations, net of tax $ (154.7 ) $ (130.6 ) $ (17.6 ) Net income attributable to Rexnord common stockholders $ 11.1 $ 52.7 $ 66.8 Denominator: Weighted-average common shares outstanding, basic 104,640 103,889 102,753 Diluted net (loss) income per share attributable to Rexnord common stockholders Numerator: Net income from continuing operations $ 189.0 $ 206.6 $ 91.7 Less: Non-controlling interest income — 0.1 — Less: Dividends on preferred stock (1) — — 7.3 Net income from continuing operations attributable to Rexnord common stockholders $ 189.0 $ 206.5 $ 84.4 Loss from discontinued operations, net of tax $ (154.7 ) $ (130.6 ) $ (17.6 ) Net income attributable to Rexnord common stockholders 11.1 52.7 66.8 Plus: Dividends on preferred stock (1) 23.2 23.2 — Net income attributable to Rexnord common stockholders $ 34.3 $ 75.9 $ 66.8 Denominator: Weighted-average common shares outstanding, basic 104,640 103,889 102,753 Effect of dilutive equity awards 2,710 2,110 2,031 Preferred stock under the "if-converted" method 15,979 15,985 — Weighted-average common shares outstanding, diluted 123,329 121,984 104,784 ____________________ (1) The "if-converted" method was dilutive for the fiscal years ended March 31, 2019 and 2018. Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive loss, net of tax, for the fiscal years ending March 31, 2019 , 2018 and 2017 are as follows (in millions): Interest Rate Derivatives Foreign Currency Translation Pension and Postretirement Plans Total Balance at March 31, 2016 $ (16.9 ) $ (86.5 ) $ (35.6 ) $ (139.0 ) Other comprehensive income (loss) before reclassifications 1.1 (12.8 ) 9.2 (2.5 ) Amounts reclassified from accumulated other comprehensive income (loss) 6.3 — (1.8 ) 4.5 Net current period other comprehensive income (loss) 7.4 (12.8 ) 7.4 2.0 Balance at March 31, 2017 $ (9.5 ) $ (99.3 ) $ (28.2 ) $ (137.0 ) Other comprehensive income before reclassifications — 57.1 1.4 58.5 Amounts reclassified from accumulated other comprehensive income (loss) 5.8 — (1.4 ) 4.4 Net current period other comprehensive income 5.8 57.1 — 62.9 Balance at March 31, 2018 $ (3.7 ) $ (42.2 ) $ (28.2 ) $ (74.1 ) Other comprehensive income before reclassifications — (39.4 ) (8.5 ) (47.9 ) Amounts reclassified from accumulated other comprehensive income (loss) 4.5 21.5 (0.6 ) 25.4 Net current period other comprehensive income (loss) 4.5 (17.9 ) (9.1 ) (22.5 ) Balance at March 31, 2019 $ 0.8 $ (60.1 ) $ (37.3 ) $ (96.6 ) The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the fiscal years ending March 31, 2019 , 2018 and 2017 (in millions): Pension and postretirement plans Year Ending March 31, 2019 Year Ending March 31, 2018 Year Ending March 31, 2017 Income Statement Line Item Amortization of prior service credit $ (1.5 ) $ (1.9 ) $ (1.9 ) Other expense (income), net Lump Sum Settlement 0.6 — — Other expense (income), net Curtailment — (0.3 ) (1.0 ) Other expense (income), net Provision for income taxes 0.3 0.8 1.1 Total, net of income taxes $ (0.6 ) $ (1.4 ) $ (1.8 ) Interest rate derivatives Net realized losses on interest rate derivatives $ 5.7 $ 9.7 $ 10.2 Interest expense, net Benefit for income taxes (1.2 ) (3.9 ) (3.9 ) Total, net of income taxes $ 4.5 $ 5.8 $ 6.3 Foreign Currency Translation Reclassification on sale of business $ 19.7 $ — $ — Loss from discontinued operations, net of tax Reclassification on acquisition of equity method investment 1.8 — — Other expense (income), net Total $ 21.5 $ — $ — Derivative Financial Instruments The Company is exposed to certain financial risks relating to fluctuations in foreign currency exchange rates and interest rates. The Company selectively uses foreign currency forward contracts and interest rate derivatives to manage its foreign currency and interest rate risks. All hedging transactions are authorized and executed pursuant to defined policies and procedures which prohibit the use of financial instruments for speculative purposes. For the derivative instruments designated and qualifying as effective hedging instruments under ASC 815, Accounting for Derivative Instruments and Hedging Activities ("ASC 815"), the changes in the fair value of the effective portion of the instrument are recognized in accumulated other comprehensive loss whereas any changes in the fair value of a derivative instrument that is not designated or does not qualify as an effective hedge are recorded in other non-operating expense. See Note 12 , Derivative Financial Instruments for further information regarding the classification and accounting of such instruments. Financial Instrument Counterparties The Company is exposed to credit losses in the event of non-performance by counterparties to its financial instruments. The Company anticipates, however, that counterparties will be able to fully satisfy their obligations under these instruments. The Company places cash and temporary investments and foreign currency and interest rate swap and cap contracts with various high-quality financial institutions. Although the Company does not obtain collateral or other security to support these financial instruments, it does periodically evaluate the credit-worthiness of each of its counterparties. Foreign Currency Translation Assets and liabilities of subsidiaries operating outside of the United States with a functional currency other than the U.S. dollar are translated into U.S. dollars using exchange rates at the end of the respective period. Revenues and expenses of such entities are translated at average exchange rates in effect during the respective period. Foreign currency translation adjustments are included as a component of accumulated other comprehensive loss. The Company periodically enters into foreign currency forward contracts to mitigate foreign currency volatility on certain intercompany and external cash flows expected to occur. See Note 12, Derivative Financial Instruments for additional information. Currency transaction losses are included in other expense (income), net in the consolidated statements of operations and totaled $1.9 million , $0.2 million and $3.6 million for the years ended March 31, 2019 , 2018 and 2017 , respectively. Advertising Costs Advertising costs are charged to selling, general and administrative expenses on the consolidated statements of operations as incurred and amounted to $11.9 million , $10.7 million , and $9.1 million for the years ended March 31, 2019 , 2018 and 2017 , respectively. Research, Development and Engineering Costs Research, development and engineering costs are charged to selling, general and administrative expenses on the consolidated statements of operations as incurred and for the years ended March 31, 2019 , 2018 and 2017 amounted to the following (in millions): Year Ended March 31, 2019 Year Ended March 31, 2018 Year Ended March 31, 2017 Research and development costs $ 16.3 $ 13.3 $ 10.4 Engineering costs 25.4 22.5 24.6 Total $ 41.7 $ 35.8 $ 35.0 Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and temporary investments, forward currency contracts and trade accounts receivable. Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"), which updates the standard to remove disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant. ASU 2018-14 is effective for the Company in fiscal 2021 on a retroactive basis. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements upon adoption. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which modifies the disclosure requirements in ASC 820, Fair Value Measurement ("ASC 820"). ASU 2018-13 is effective for the Company in fiscal 2020. Amendments related to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty will be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments will be applied retrospectively to all periods presented upon the effective date. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements upon adoption. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"), which gives entities the option to reclassify from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 if effective for the Company's fiscal 2020 and interim periods included therein, and is to be applied either in the period of adoption or on a retrospective basis to each period affected. The Company is currently evaluating the impact of this guidance and has not determined whether it will elect to reclassify stranded amounts; however, the adoption of ASU 2018-02 is not expected to have a material effect on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), which expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. ASU 2017-12 is effective for the beginning of the Company's fiscal 2020, with early adoption permitted, and must be applied prospectively. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements upon adoption. In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost , which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires the service cost component of net periodic benefit cost to be presented in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period with only the service cost component eligible for capitalization in assets. Other components of the net periodic benefit cost are to be stated separately from the line item(s) that includes the service cost and outside of operating income. The Company adopted ASU 2017-07 on April 1, 2018 on a retrospective basis, which resulted in the reclassification of certain amounts from "Cost of sales" and "Selling, general and administrative expenses" to "Other expense (income), net" in the consolidated statements of operations. As a result, prior period amounts impacted have been revised accordingly. The adoption of ASU 2017-07 resulted in the reclassification of $2.5 million and $2.2 million of net periodic benefit credits previously recorded within "Costs of sales" and $0.7 million and zero of net periodic benefit credits previously recorded within "Selling, general and administrative expenses," to "Other income, net" on the consolidated statements of operations for the years ended March 31, 2018 and 2017, respectively. The adoption also resulted in a reclassification of $3.3 million and $2.6 million of actuarial gains on pension and postretirement obligations to "Other income, net" which was previously recorded within "Actuarial (gain) loss on pension and postretirement benefit obligations," on the consolidated statements of operations for the years ended March 31, 2018 and 2017, respectively. In February 2015, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02''), which requires lessees to recognize lease assets and lease liabilities for all leases on the balance sheets. ASU 2016-02 is effective beginning for the Company's fiscal 2020 and interim periods included within. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements , which provides a transition method that allows the initial application of the lease standard at the adoption date using a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this transition method, comparative periods would continue to be reported in accordance with historical ASC 840 lease accounting guidance. The Company plans to adopt this standard using this transition method and will not restate comparative periods. The Company additionally plans to elect the package of practical expedients that allows the Company's determination of whether a lease exists, whether initial direct costs exist, and the determination of lease classification under historical ASC 840 lease guidance to be carried forward in transition to ASC 842, as well as the practical expedient to combine lease and non-lease components for all asset classes. The Company has made a policy election not to capitalize leases with an initial term of 12 months or less. While the assessment of the impact this new standard will have on the consolidated financial statements is ongoing, the Company expects the adoption of the new standard to result in the recording of additional lease assets and liabilities of approximately $65 million to $75 million as of April 1, 2019, and does not expect the cumulative-effect adjustment to the opening balance to be material due to the package of practical expedients elected. The Company does not anticipate that the standard will have a material impact on its consolidated net earnings or statement of cash flows. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 superseded most of the existing revenue recognition guidance. The Company adopted ASU 2014-09 effective April 1, 2018, using the modified retrospective method. The modified retrospective transition method recognizes any changes as of the beginning of the year of initial application (i.e., as of April 1, 2018) through retained earnings, with no restatement of comparative periods. The adoption of ASU 2014-09 did not have a significant impact on the Company’s consolidated results of operations, financial position and cash flows. See more information related to the adoption of ASU 2014-09 within Note 6, Revenue Recognition. |
