Document Entity Information
Document Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Sep. 30, 2018 | Nov. 16, 2018 | Mar. 31, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | VALVOLINE INC | ||
Entity Central Index Key | 1,674,910 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 188,163,312 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Smaller Reporting Company | false | ||
Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well Known Seasoned Issuer | Yes | ||
Entity Shell Company | false | ||
Public Float | $ 4.4 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net Income (Loss) Attributable to Parent [Abstract] | |||
Sales | $ 2,285 | $ 2,084 | $ 1,929 |
Cost of sales | 1,479 | 1,308 | 1,181 |
Gross profit | 806 | 776 | 748 |
Selling, general and administrative expenses | 430 | 396 | 365 |
Legacy and separation-related expenses, net | 14 | 11 | 6 |
Equity and other income, net | (33) | (25) | (19) |
Operating income | 395 | 394 | 396 |
Net pension and other postretirement plan income | 0 | (138) | (35) |
Net interest and other financing expenses | 63 | 42 | 9 |
Net loss on acquisition | 0 | 0 | 1 |
Income before income taxes | 332 | 490 | 421 |
Income tax expense | 166 | 186 | 148 |
Net income | $ 166 | $ 304 | $ 273 |
NET INCOME PER SHARE | |||
Net income per share, basic (usd per share) | $ 0.84 | $ 1.49 | $ 1.60 |
Net income per share, diluted (usd per share) | $ 0.84 | $ 1.49 | $ 1.60 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||
Weighted average common shares outstanding, basic (in shares) | 197 | 204 | 170 |
Weighted average common shares outstanding, diluted (in shares) | 197 | 204 | 170 |
Dividends paid per common share (usd per share) | $ 0.298 | $ 0.196 | $ 0 |
COMPREHENSIVE INCOME | |||
Net income | $ 166 | $ 304 | $ 273 |
Other comprehensive (loss) income, net of tax | |||
Currency translation adjustments | (10) | 7 | 8 |
Amortization of pension and other postretirement plan prior service credit | (9) | (8) | (1) |
Other comprehensive (loss) income | (19) | (1) | 7 |
Comprehensive income | $ 147 | $ 303 | $ 280 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Current assets | ||
Cash and cash equivalents | $ 96 | $ 201 |
Accounts receivable, net | 409 | 385 |
Inventories, net | 176 | 175 |
Prepaid expenses and other current assets | 44 | 29 |
Total current assets | 725 | 790 |
Noncurrent assets | ||
Property, plant and equipment, net | 420 | 391 |
Goodwill and intangibles, net | 448 | 335 |
Equity method investments | 31 | 30 |
Deferred income taxes | 138 | 281 |
Other noncurrent assets | 92 | 88 |
Total noncurrent assets | 1,129 | 1,125 |
Total assets | 1,854 | 1,915 |
Current liabilities | ||
Short-term debt | 0 | 75 |
Current portion of long-term debt | 30 | 15 |
Trade and other payables | 178 | 192 |
Accrued expenses and other liabilities | 203 | 196 |
Total current liabilities | 411 | 478 |
Noncurrent liabilities | ||
Long-term debt | 1,292 | 1,034 |
Employee benefit obligations | 333 | 342 |
Other noncurrent liabilities | 176 | 178 |
Total noncurrent liabilities | 1,801 | 1,554 |
Commitments and contingencies | ||
Stockholders’ deficit | ||
Preferred stock, no par value, 40 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, par value $0.01 per share, 400 shares authorized, 188 and 203 shares issued and outstanding at September 30, 2018 and 2017, respectively | 2 | 2 |
Paid-in capital | 7 | 5 |
Retained deficit | (399) | (167) |
Accumulated other comprehensive income | 32 | 43 |
Total stockholders’ deficit | (358) | (117) |
Total liabilities and stockholders’ deficit | $ 1,854 | $ 1,915 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Sep. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock authorized (in shares) | 40,000,000 | 40,000,000 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock issued (in shares) | 188,000,000 | 203,000,000 |
Common stock outstanding (in shares) | 188,000,000 | 203,000,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) shares in Millions | Total | Common stock | Paid-in capital | Retained deficit | Accumulated other comprehensive (loss) income | Ashland’s net investment |
Common stock outstanding, beginning balance (in shares) at Sep. 30, 2015 | 0 | |||||
Balance at beginning of period at Sep. 30, 2015 | $ 617,000,000 | $ 0 | $ 0 | $ 0 | $ (61,000,000) | $ 678,000,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 273,000,000 | 273,000,000 | ||||
Net transfers to Ashland | (1,500,000,000) | (1,500,000,000) | ||||
Contribution of net liabilities from Ashland | (439,000,000) | 51,000,000 | (490,000,000) | |||
Issuance of common stock to Ashland and in connection with initial public offering, net of offering costs (in shares) | 205 | |||||
Issuance of common stock to Ashland and in connection with initial public offering, net of offering costs | 712,000,000 | $ 2,000,000 | 710,000,000 | |||
Dividends paid | $ 0 | |||||
Repurchase of common stock (in shares) | 0 | |||||
Repurchase of common stock | $ 0 | |||||
Currency translation adjustments | 8,000,000 | 8,000,000 | ||||
Amortization of pension and other postretirement prior service credits in income | (1,000,000) | (1,000,000) | ||||
Common stock outstanding, ending balance (in shares) at Sep. 30, 2016 | 205 | |||||
Balance at end of period at Sep. 30, 2016 | (330,000,000) | $ 2,000,000 | 710,000,000 | 0 | (3,000,000) | (1,039,000,000) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 304,000,000 | 304,000,000 | ||||
Contribution of net liabilities from Ashland | (10,000,000) | (55,000,000) | 47,000,000 | (2,000,000) | ||
Net transfers from Ashland | 5,000,000 | 5,000,000 | ||||
Distribution of Ashland’s net investment | (710,000,000) | (326,000,000) | 1,036,000,000 | |||
Dividends paid | (40,000,000) | (40,000,000) | ||||
Stock-based compensation | $ 5,000,000 | 5,000,000 | ||||
Repurchase of common stock (in shares) | (2) | (2) | ||||
Repurchase of common stock | $ (50,000,000) | (50,000,000) | ||||
Currency translation adjustments | 7,000,000 | 7,000,000 | ||||
Amortization of pension and other postretirement prior service credits in income | $ (8,000,000) | (8,000,000) | ||||
Common stock outstanding, ending balance (in shares) at Sep. 30, 2017 | 203 | 203 | ||||
Balance at end of period at Sep. 30, 2017 | $ (117,000,000) | $ 2,000,000 | 5,000,000 | (167,000,000) | 43,000,000 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 166,000,000 | 166,000,000 | ||||
Dividends paid | (58,000,000) | (58,000,000) | ||||
Stock-based compensation | $ 9,000,000 | 9,000,000 | ||||
Repurchase of common stock (in shares) | (15) | (15) | ||||
Repurchase of common stock | $ (325,000,000) | (325,000,000) | ||||
Purchase of remaining ownership interest in subsidiary | (14,000,000) | (7,000,000) | (7,000,000) | |||
Reclassification of income tax effects of U.S. tax reform | (8,000,000) | 8,000,000 | ||||
Currency translation adjustments | (10,000,000) | (10,000,000) | ||||
Amortization of pension and other postretirement prior service credits in income | $ (9,000,000) | (9,000,000) | ||||
Common stock outstanding, ending balance (in shares) at Sep. 30, 2018 | 188 | 188 | ||||
Balance at end of period at Sep. 30, 2018 | $ (358,000,000) | $ 2,000,000 | $ 7,000,000 | $ (399,000,000) | $ 32,000,000 | $ 0 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Deficit (Parenthetical) - $ / shares | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividends paid per common share (usd per share) | $ 0.298 | $ 0.196 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Cash flows from operating activities | ||||
Net income | $ 166 | $ 304 | $ 273 | |
Adjustments to reconcile to cash flows from operations | ||||
Depreciation and amortization | 54 | 42 | 38 | |
Debt issuance cost and discount amortization | 3 | 3 | 4 | |
Deferred income taxes | 145 | 117 | 13 | |
Equity income from unconsolidated affiliates, net of distributions | (4) | (4) | 4 | |
Pension contributions | (16) | (412) | (2) | |
Loss (gain) on pension and other postretirement plan remeasurements | 38 | (68) | (42) | |
Stock-based compensation expense | 12 | 9 | 0 | |
Other, net | 1 | 0 | 1 | |
Change in assets and liabilities | ||||
Accounts receivable | [1] | (38) | (22) | (17) |
Inventories | [1] | (4) | (35) | (4) |
Payables and accrued liabilities | [1] | (2) | 0 | 5 |
Other assets and liabilities | [1] | (35) | (64) | 38 |
Total cash provided by (used in) operating activities | 320 | (130) | 311 | |
Cash flows from investing activities | ||||
Additions to property, plant and equipment | (93) | (68) | (66) | |
Acquisitions, net of cash acquired | (125) | (68) | (83) | |
Other investing activities, net | 5 | 1 | 1 | |
Total cash used in investing activities | (213) | (135) | (148) | |
Cash flows from financing activities | ||||
Net transfers from (to) Ashland | 0 | 5 | (1,504) | |
Cash contributions from Ashland | 0 | 0 | 60 | |
Proceeds from initial public offering, net of offering costs of $40 | 0 | 0 | 719 | |
Proceeds from borrowings, net of issuance costs | 304 | 470 | 1,372 | |
Repayments on borrowings | (108) | (90) | (637) | |
Repurchases of common stock | (325) | (50) | 0 | |
Purchase of additional ownership in subsidiary | (15) | 0 | 0 | |
Cash dividends paid | (58) | (40) | 0 | |
Other financing activities | (7) | 0 | 0 | |
Total cash (used in) provided by financing activities | (209) | 295 | 10 | |
Effect of currency exchange rate changes on cash and cash equivalents | (3) | (1) | (1) | |
(Decrease) increase in cash and cash equivalents | (105) | 29 | 172 | |
Cash and cash equivalents - beginning of year | 201 | 172 | 0 | |
Cash and cash equivalents - end of year | 96 | 201 | 172 | |
Supplemental disclosures | ||||
Interest paid | 53 | 35 | 0 | |
Income taxes paid | $ 26 | $ 26 | $ 17 | |
[1] | Excludes changes resulting from operations acquired or sold. |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) $ in Millions | 12 Months Ended |
Sep. 30, 2016USD ($) | |
Statement of Cash Flows [Abstract] | |
Offering costs incurred in initial public offering | $ 40 |
Description of Business and Bas
Description of Business and Basis of Presentation | 12 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Description of Business and Basis of Presentation | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of business Valvoline Inc. (“Valvoline” or the “Company”) is a worldwide marketer and supplier of engine and automotive maintenance products and services. Valvoline is one of the most recognized and respected premium consumer brands in the global automotive lubricant industry, known for its high quality products and superior levels of service. Established in 1866, Valvoline’s heritage spans more than 150 years, during which it has developed powerful name recognition across multiple product and service channels. Valvoline was incorporated in May 2016 as a subsidiary of Ashland Global Holdings Inc. (which together with its predecessors and consolidated subsidiaries is referred to herein as “Ashland”). Prior to this time, Valvoline operated as an unincorporated commercial unit of Ashland. Following a series of restructuring steps prior to the initial public offering (the “IPO”) of Valvoline common stock, the Valvoline business was transferred from Ashland to Valvoline such that the Valvoline business included substantially all of the historical Valvoline business reported by Ashland, as well as certain other legacy Ashland assets and liabilities transferred to Valvoline from Ashland (the “Contribution”). In connection with the IPO on September 28, 2016, 34.5 million shares of Valvoline common stock were sold to investors and Ashland retained 170 million shares representing 83% of the total outstanding shares of Valvoline common stock. On May 12, 2017, Ashland distributed all of its remaining interest in Valvoline to Ashland stockholders (the “Distribution”) through a pro rata dividend on shares of Ashland common stock outstanding at the close of business on the record date of May 5, 2017, which marked the completion of Valvoline’s separation from Ashland. Effective upon the Distribution, Ashland no longer owned any shares of Valvoline common stock, and Valvoline was no longer a controlled and consolidated subsidiary of Ashland. Basis of presentation and consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and U.S. Securities and Exchange Commission (“SEC”) regulations. The financial statements are presented on a consolidated basis for all periods presented and include the accounts of the Company and its majority-owned and controlled subsidiaries. All intercompany transactions and balances within Valvoline have been eliminated in consolidation. Certain prior period amounts have been reclassified in the accompanying consolidated financial statements and notes thereto to conform to the current period presentation. The Contribution of the Valvoline business by Ashland to Valvoline was treated as a reorganization of entities under common Ashland control. As a result, Valvoline retrospectively presented the consolidated financial statements of Valvoline and its subsidiaries for periods presented prior to the completion of the Contribution, which were prepared on a stand-alone basis and derived from Ashland’s consolidated financial statements and accounting records using the historical results of operations, and assets and liabilities attributed to Valvoline’s operations, as well as allocations of expenses from Ashland. The consolidated financial statements for periods presented subsequent to the completion of the Contribution reflect the transfer of various assets and liabilities from Ashland on a carryover basis (historical cost) and the consolidated operations of Valvoline and its majority-owned subsidiaries as a separate, stand-alone entity. All transactions and balances between Valvoline and Ashland have been reported in the consolidated financial statements. For periods prior to the IPO, these transactions were considered to be effectively settled for cash at the time the transactions were recorded. These transactions and net cash transfers to and from Ashland’s centralized cash management system are reflected as a component of Ashland’s net investment in the Consolidated Statements of Stockholders’ Deficit and as a financing activity within the accompanying Consolidated Statements of Cash Flows. Ashland’s net investment represents the cumulative net investment by Ashland in Valvoline through the IPO, including net income through the completion of the IPO and net cash transfers to and from Ashland through Distribution. Valvoline’s retained earnings from the IPO through September 30, 2016 were not material and accordingly, were not separately presented in the Consolidated Statements of Stockholders’ Deficit. Concurrent with the Distribution, Ashland’s net investment in Valvoline was reduced to zero with a corresponding adjustment to Paid-in capital and Retained deficit . Prior to the completion of the IPO, Valvoline utilized centralized functions of Ashland to support its operations, and in return, Ashland allocated certain of its expenses to Valvoline. These costs, together with an allocation of Ashland overhead costs, are included within Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income for the year ended September 30, 2016 and are disclosed in more detail in Note 18. Upon completion of the IPO, Valvoline assumed responsibility for the costs of these functions. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES Valvoline’s significant accounting policies, which conform to U.S. GAAP and are applied on a consistent basis in all years presented, except when otherwise disclosed, are described below. Use of estimates, risks and uncertainties The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent matters. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets (including intangible assets and goodwill), customer incentives, employee benefit obligations and income taxes. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. Cash and cash equivalents All short-term, highly liquid investments having original maturities of three months or less are considered to be cash equivalents. Accounts receivable and allowance for doubtful accounts Valvoline records an allowance for doubtful accounts as a best estimate of the amount of probable credit losses for accounts receivable. Valvoline estimates the allowance for doubtful accounts based on a variety of factors, including the length of time receivables are past due, the financial health of its customers, macroeconomic conditions, past transaction history with the customer and changes in customer payment terms. If the financial condition of its customers deteriorates or other circumstances occur that result in an impairment of customers’ ability to make payments, the Company records additional allowances as needed. The Company writes off uncollectible accounts receivable against the allowance for doubtful accounts when collection efforts have been exhausted and/or any legal action taken by the Company has concluded. Inventories Inventories are primarily carried at the lower of cost or net realizable value using the weighted average cost method. In addition, certain lubricants are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method to provide matching of revenues with current costs. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventories. The Company regularly reviews inventory quantities on hand and the estimated utility of inventory. Excess and obsolete reserves are established when inventory is estimated to not be usable based on forecasted usage, product demand and life cycle, as well as utility. Property, plant and equipment Property, plant and equipment is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the assets. Buildings are depreciated principally over 5 to 25 years and machinery and equipment principally over 5 to 30 years. Property, plant and equipment is relieved of the cost and related accumulated depreciation when assets are disposed of or otherwise retired. Gains or losses on the dispositions of property, plant and equipment are included in the Consolidated Statements of Comprehensive Income and generally reported in Equity and other income, net . Property, plant and equipment carrying values are evaluated for recoverability when impairment indicators are present and are conducted at the lowest identifiable level of cash flows. Such indicators could include, among other factors, operating losses, unused capacity, market value declines and technological obsolescence. Recorded values of asset groups of property, plant and equipment that are not expected to be recovered through undiscounted future net cash flows are written down to current fair value, which generally is determined from estimated discounted future net cash flows (assets held for use) or net realizable value (assets held for sale). Business combinations The financial results of the businesses that Valvoline has acquired are included in the Company’s consolidated financial results from the respective dates of the acquisitions. The Company allocates the purchase consideration to the identifiable assets acquired and liabilities assumed in the business combination based on their acquisition-date fair values. The excess of the purchase consideration over the amounts assigned to the identifiable assets and liabilities is recognized as goodwill. Factors giving rise to goodwill generally include synergies that are anticipated as a result of the business combination, including access to new customers and markets. The fair values of identifiable intangible assets acquired in business combinations are generally determined using an income approach, requiring financial forecasts and estimates as well as market participant assumptions. Goodwill and other intangible assets Valvoline tests goodwill for impairment annually as of July 1 or when events and circumstances indicate an impairment may have occurred. This annual assessment consists of Valvoline determining each reporting unit’s current fair value compared to its current carrying value. Valvoline’s reporting units are Core North America, Quick Lubes, and International. In evaluating goodwill for impairment, Valvoline has the option to first perform a qualitative assessment to determine whether further impairment testing is necessary or to perform a quantitative assessment by comparing the fair value of a reporting unit to its carrying amount, including goodwill. Under the qualitative assessment, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. Qualitative factors include macroeconomic conditions, industry and market conditions, cost factors, and overall financial performance, among others. If under the quantitative assessment, the fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, must be measured under step two of the impairment analysis. In step two of the analysis, an impairment loss will be recorded equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value. Fair values of the reporting units are estimated using a weighted methodology considering the output from both the income and market approaches. The income approach incorporates the use of a discounted cash flow (“DCF”) analysis. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including markets and market shares, sales volumes and prices, costs to produce, tax rates, capital spending, discount rate, weighted average cost of capital, terminal values and working capital changes. Several of these assumptions vary among reporting units. The cash flow forecasts are generally based on approved strategic operating plans. The market approach is performed using the Guideline Public Companies method which is based on earnings multiple data. The Company also performs a reconciliation between market capitalization and the estimate of the aggregate fair value of the reporting units, including consideration of a control premium. Valvoline elected to perform a qualitative assessment during fiscal 2018 and determined that it is not more likely than not that the fair values of Valvoline’s reporting units are less than carrying amounts. Acquired finite-lived intangible assets principally consist of certain trademarks and trade names, reacquired franchise rights and customer relationships. Intangible assets acquired in an asset acquisition are carried at cost, less accumulated amortization. For intangible assets acquired in a business combination, the estimated fair values of the assets acquired are used to establish the carrying value, which is determined generally using an income approach, and the Company employs assumptions developed using the perspective of a market participant. These intangible assets are amortized on a straight-line basis over their estimated useful lives. Valvoline reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable and any not expected to be recovered through undiscounted future net cash flows and assets are written down to current fair value. Equity method investments Investments in companies, including joint ventures, where Valvoline has the ability to exert significant influence, but not control, over operating and financial policies of the investee are accounted for using the equity method of accounting. Judgment regarding the level of influence over each investment includes considering key factors such as the Company’s ownership interest, representation on the board of directors, and participation in policy-making decisions. The Company’s proportionate share of the net income or loss of these companies is included within Equity and other income, net in the Consolidated Statements of Comprehensive Income. The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time and extent to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects, and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified. Pension and other postretirement benefit plans Valvoline sponsors defined benefit pension and other postretirement plans in the U.S and in certain countries outside the U.S. The majority of these plans were transferred to and assumed by the Company in the Contribution of certain of Ashland’s pension and other postretirement benefit obligations and plan assets in late fiscal 2016. Following the Contribution, Valvoline accounts for these obligations as single-employer plans for which Valvoline recognizes the net liabilities and the full amount of any costs or gains. Valvoline also has certain international single-employer pension plans for which the net liabilities and associated costs have been recognized in each period presented herein. Valvoline recognizes the funded status of each applicable plan on the Consolidated Balance Sheets whereby each underfunded plan is recognized as a liability. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation. Changes in the fair value of plan assets and net actuarial gains or losses are recognized upon remeasurement, which is at least annually as of September 30, the measurement date, and whenever a remeasurement is triggered. The remaining components of pension and other postretirement benefits income are recorded ratably on a quarterly basis. The fair value of plan assets represents the current market value of assets held by irrevocable trust funds for the sole benefit of participants, and the benefit obligation is the actuarial present value of the benefits expected to be paid based on estimates. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age and years of service, as well as certain key assumptions that require significant judgment, including, but not limited to, estimates of discount rates, expected return on plan assets, rate of compensation increases, interest rates and mortality rates. Actuarial gains and losses may be related to actual results that differ from assumptions as well as changes in assumptions, which may occur each year. Due to the freeze of U.S. pension benefits effective September 30, 2016, continuing service costs are limited to certain international pension plans, and are reported in the same caption of the Consolidated Statements of Comprehensive Income as the related employee payroll expenses. All components of net periodic benefit income other than service cost are recognized below operating income within Net pension and other postretirement plan income in the Consolidated Statements of Comprehensive Income. Prior to the Contribution in fiscal 2016, Valvoline employees were eligible to participate in pension and other postretirement benefit plans sponsored by Ashland in many of the countries where the Company did business. Valvoline accounted for its participation in Ashland-sponsored pension and other postretirement benefit plans as a participation in a multiemployer plan and recognized its allocated portion of net periodic benefit cost based on Valvoline-specific plan participants. Commitments and contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Legal costs such as outside counsel fees and expenses are charged to expense in the period incurred and are recorded in Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income. Revenue recognition Sales generally are recognized when persuasive evidence of an arrangement exists, products are delivered or services are rendered, the sales price is fixed or determinable and collectability is reasonably assured. Valvoline reports all sales net of tax assessed by qualifying governmental authorities. Certain shipping and handling costs paid by the customer are recorded in sales, while those costs paid by Valvoline are recorded in cost of sales. Shipping and handling costs recorded in sales were $10 million in fiscal 2018 and $16 million in both fiscal 2017 and 2016. Sales rebates and discounts, consisting primarily of promotional rebates and customer pricing discounts, are offered through various programs to customers. Sales are recorded net of these rebates and discounts totaling $357 million , $360 million , and $388 million in the Consolidated Statements of Comprehensive Income for the years ended September 30, 2018, 2017, and 2016, respectively. Provisions for sales rebates and discounts are established and recognized as incurred, generally at the time of the sale, or over the term of the sales contract. Valvoline bases its estimates on historical rates of customer discounts and rebates as well as the specific identification of discounts and rebates expected to be realized. Allowances related to these customer incentive programs are adjusted based on actual experience and adjustments are recorded to earnings in the period changes are known and reasonably estimable. Reserves for these customer programs and incentives were $57 million and $54 million as of September 30, 2018 and 2017, respectively, and are recorded within Accrued expenses and other liabilities in the Consolidated Balance Sheets. Franchise revenue included within sales was $29 million , $28 million , and $25 million during fiscal 2018, 2017, and 2016, respectively. Franchise revenue generally consists of initial franchise fees and royalties. Initial franchise fees are recognized when all material obligations have been substantially performed and the store has opened for business. Franchise royalties are based upon a percentage of monthly sales of the franchisees and are recognized as such sales occur. Expense recognition Cost of sales include material and production costs, as well as the costs of inbound and outbound freight, purchasing and receiving, inspection, warehousing, internal transfers and all other distribution network costs. Selling, general and administrative expenses are expensed as incurred and include sales and marketing costs, research and development costs, advertising, customer support, and administrative costs, including allocated corporate charges from Ashland in the periods prior to the IPO. Advertising costs ( $63 million in fiscal 2018, $61 million in fiscal 2017 and $58 million in fiscal 2016) and research and development costs ( $14 million in fiscal 2018 and $13 million in both fiscal 2017 and 2016) are expensed as incurred. Stock-based compensation Stock-based compensation expense is recognized within Selling, general and administrative expense in the Consolidated Statements of Comprehensive Income and is principally based on the grant date fair value of new or modified awards over the requisite vesting period . The Company’s outstanding stock-based compensation awards are primarily classified as equity, with certain liability-classified awards based on award terms and conditions. Valvoline accounts for forfeitures when they occur. Income taxes Income tax expense is provided based on income before income taxes. Deferred income taxes represent benefits and expenses that will be used to reduce or increase corporate taxes expected to be paid as well as differences between the tax bases and carrying amounts of assets and liabilities that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. As changes in tax laws or rates occur, deferred tax assets and liabilities are adjusted in the period changes are enacted through income tax expense. Valvoline records valuation allowances related to its deferred income tax assets when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. For the periods prior to the Distribution, Valvoline’s operating results are included in Ashland’s consolidated U.S., state, and certain international subsidiaries’ income tax returns. For these periods, the income tax provision in these Consolidated Statements of Comprehensive Income was calculated on a separate return basis as if Valvoline was operating on a stand-alone basis and filed separate tax returns in the jurisdictions in which it operated. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being sustained upon examination by authorities. Interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law and until such time that the related tax benefits are recognized. Interest and penalties were not material to any of the periods presented herein. Derivatives Valvoline’s derivative instruments consist of currency exchange contracts, which are accounted for as either assets or liabilities in the Consolidated Balance Sheets at fair value and the resulting gains or losses are recognized as adjustments to earnings. Valvoline does not currently have any derivative instruments that are designated and qualify as hedging instruments. The Company classifies its cash flows for these transactions as investing activities in the Consolidated Statements of Cash Flows. Fair value measurements Fair value is defined as an exit price, representing an amount that would be received to sell an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance prioritizes the inputs used to measure fair value into the three-tier fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. Certain investments which measure fair value using the net asset value (“NAV”) per share practical expedient are not classified within the fair value hierarchy and are separately disclosed. Valvoline measures its financial assets and financial liabilities at fair value based on one or more of the following three valuation techniques: • Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities • Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost) • Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option pricing and excess earnings models) The Company generally uses a market approach, when practicable, in valuing financial instruments. In certain instances, when observable market data is lacking, the Company uses valuation techniques consistent with the income approach whereby future cash flows are converted to a single discounted amount. The Company uses multiple sources of pricing as well as trading and other market data in its process of reporting fair values. The fair values of accounts receivables and accounts payable approximate their carrying values due to the relatively short-term nature of the instruments. The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement. Currency translation Operations outside the United States are measured primarily using the local currency as the functional currency. Upon consolidation, the results of operations of the subsidiaries and affiliates whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the average exchange rates for the year while assets and liabilities are translated at year-end exchange rates. Adjustments to translate assets and liabilities into U.S. dollars are recorded in the stockholders’ equity section of the Consolidated Balance Sheets as a component of Accumulated other comprehensive income and are included in net earnings only upon sale or substantial liquidation of the underlying non-U.S. subsidiary or affiliated company. Earnings per share Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted-average number of common shares outstanding during the reported period. Diluted EPS is calculated similar to basic EPS, except that the weighted-average number of shares outstanding includes the number of shares that would have been outstanding had potentially dilutive common shares been issued. Potentially dilutive securities include stock appreciation rights and nonvested share-based awards. Nonvested market and performance-based share awards are included in the weighted-average diluted shares outstanding each period if established market or performance criteria have been met at the end of the respective periods. Recent accounting pronouncements The following standards relevant to Valvoline were either issued or adopted in the current year, or are expected to have a meaningful impact on Valvoline in future periods. Recently adopted During fiscal 2018, Valvoline adopted the following: • In July 2015, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to simplify the subsequent measurement of certain inventories by replacing the lower of cost or market test with a lower of cost or net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than LIFO and retail inventory methods. Valvoline adopted this guidance prospectively on October 1, 2017. Valvoline utilizes LIFO to value a significant portion of its inventory. The impact of adoption was not material to the Company’s consolidated financial statements. • In March 2017, the FASB issued accounting guidance that changed how employers who sponsor defined benefit pension and/or postretirement benefit plans present the net periodic benefit cost in the Consolidated Statements of Comprehensive Income. This guidance requires employers to present the service cost component of net periodic benefit cost in the same caption as other employee compensation costs for services rendered during the period. All other components of the net periodic benefit cost are presented separately outside of the operating income caption. Valvoline retrospectively adopted this guidance on October 1, 2017. Accordingly, Net pension and other postretirement plan income has been reclassified to non-operating income for all periods presented within the Consolidated Statements of Comprehensive Income, which reduced previously reported operating income by $138 million and $35 million for the years ended September 30, 2017 and 2016, respectively. • In February 2018, the FASB issued accounting guidance that allows companies to reclassify stranded tax effects resulting from the reduction of the U.S. statutory corporate tax rate enacted in U.S. tax reform legislation in December 2017. The Company adopted this guidance in the fourth quarter of fiscal 2018, which resulted in a reclassification of $8 million of stranded tax effects related to the deferred taxes for unamortized benefit plan credits that increased both Accumulated other comprehensive income and Retained deficit within the Consolidated Balance Sheet and Consolidated Statement of Stockholders’ Deficit. The adoption of this guidance did not have an impact on the Company’s results of operations or cash flows. • In March 2018, the FASB issued accounting guidance that codified SEC staff views on the income tax accounting implications of U.S. tax reform legislation enacted in December 2017. The guidance clarifies the timing of the measurement period, changes in subsequent reporting periods and reporting requirements as a result of the legislation. As further discussed in Note 12, the Company recorded provisional impacts of the legislation in fiscal 2018 and will recognize any changes to these provisional estimates up to one year from the enactment date of the legislation. • In August 2018, the FASB issued accounting guidance that modifies the disclosure requirements with respect to fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Levels 1 and 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. Valvoline early adopted this guidance, which does not have an impact on the Company’s consolidated financial statements, but revises disclosures as reflected in Notes 3 and 13 herein. • In August 2018, the FASB issued accounting guidance that modifies the disclosure requirements with respect to defined benefit pension and other postretirement plans. This guidance removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures, and adds certain disclosure requirements. Valvoline early adopted this guidance, which does not have an impact on the Company’s consolidated financial statements, but revises disclosures as reflected in Note 13 herein. Issued but not yet adopted In May 2014, the FASB issued accounting guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, which supersedes most current revenue recognition guidance. This guidance introduces a five-step model for revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards under current guidance. The Company has substantially completed its assessment of the accounting required under the new revenue recognition guidance and will adopt the new guidance in the first quarter of fiscal 2019. The Company’s revenue is primarily generated from the sale and service delivery of engine and automotive maintenance products to customers, which is not accounted for under industry-specific guidance. Valvoline’s performance obligations generally consist of a single delivery element whereby revenue is recognized at the point in time when ownership, risks and rewards transfer. Revenue transactions recorded under the new guidance are expected to be substantially consistent with the treatment under existing guidance. The Company will adopt the new revenue recognition guidance using the modified retrospective method, which recognizes the cumulative effect of the changes in retained deficit at adoption, but will not retrospectively apply the new guidance to prior periods. The Company expects to adjust retained deficit at adoption primarily related to the timing of certain sales made to distributors for approximately $15 million to $20 million on a pre-tax basis. In addition, the Company expects immaterial impacts to reclassify certain activities in the Consolidated Statements of Comprehensive Income on an ongoing basis following adoption. The Company will expand footnote disclosures under the new revenue guidance beginning in the first quarter of fiscal 2019, including disaggregation of revenue, pro forma impacts of changes to the financial statements in the initial year of adoption, and qualitative disclosures related to the nature and terms of its sales, timing of the transfer of control and judgments used in the application of the five-step model. The Company has also implemented appropriate changes to business processes to support recognition and disclosure under the new guidance. In August 2018, the FASB issued new accounting guidance related to fees paid by a customer in a cloud computing arrangement, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service arrangement with the existing capitalization guidance for implementation costs incurred to develop or obtain internal-use software. Valvoline will early adopt this guidance on a prospective basis on October 1, 2018, and as a result, certain relevant costs related to these arrangements may be capitalized. The adoption of this guidance is not expected to have a material impact on the Company's financial condition, results of operations or cash flows. In February 2016, the FASB issued new accounting guidance related to lease transactions. The primary objective of this guidance is to increase transparency and comparability among organizations by requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and to disclose key information about leasing arrangements. This new guidance is effective for the Company in the first quarter of fiscal 2020 using a modified retrospective approach. The Company has begun planning its assessment and implementation process, including a process to identify all forms of its leases globally, as well as analyzing the practical expedients and evaluating the specific impacts on its consolidated financial statements. While the Company’s evaluation of this guidance is in the early stages, adoption is expected to have a material impact on the Consolidated Balance Sheets as the majority of the Company’s operating leases are expected to be recognized as right of use assets and associated lease liabilities. The Company also anticipates expanded footnote disclosures related to its leases under the new guidance. The FASB issued other accounting guidance during the period that is not currently applicable or expected to have a material impact on Valvoline’s financial statements, and therefore, is not described above. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Valvoline uses applicable guidance for defining fair value, the initial recording and periodic remeasurement of certain assets and liabilities measured at fair value, and related disclosures for instruments measured at fair value. Fair value accounting guidance establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. An instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. Valvoline measures assets and liabilities using inputs from the following three levels of fair value hierarchy: Level 1 - Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 - Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect Valvoline’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which may include Valvoline’s own financial data, such as internally developed pricing models, DCF methodologies, as well as instruments for which the fair value determination requires significant management judgment. The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy as of September 30: (In millions) Fair Value Hierarchy 2018 2017 Cash and cash equivalents Money market funds Level 1 $ 5 $ 11 Time deposits Level 2 22 35 Prepaid expenses and other current assets Currency derivatives Level 2 1 1 Other noncurrent assets Non-qualified trust funds Level 1 25 30 Total assets at fair value $ 53 $ 77 Accrued expenses and other liabilities Currency derivatives Level 2 $ 1 $ 1 Total liabilities at fair value $ 1 $ 1 Money market funds Money market funds trade in an active market and are valued using quoted market prices, which are Level 1 inputs. Time deposits Time deposits are balances held with financial institutions that have maturities of three months or less. Time deposits are held at face value plus accrued interest, which approximates fair value, and are categorized as Level 2. Currency derivatives The Company uses derivatives not designated as hedging instruments consisting of forward contracts to hedge non-U.S. currency denominated balance sheet exposures and exchange one currency for another for a fixed rate on a future date of twelve months or less. The Company had outstanding contracts with notional values of $74 million and $47 million as of September 30, 2018 and 2017, respectively. The fair value of these outstanding contracts are recorded as assets and liabilities on a gross basis measured using readily observable market inputs to estimate the fair value for similar derivative instruments and are classified as Level 2. Valvoline has entered into master netting arrangements to mitigate losses in the event of nonperformance by counterparties that allow settlement on a net basis, the effect of which was not material to the recorded assets and liabilities as of September 30, 2018 or 2017. Gains and losses on these instruments are recognized in Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income as exchange rates change the fair value of these instruments and upon settlement to offset the remeasurement gain or loss on the related foreign currency-denominated exposures in the same period. Gains and losses recognized related to these instruments were not material in any period presented herein. Non-qualified trust funds The Company maintains a non-qualified trust to fund benefit payments for certain of its U.S. non-qualified pension plans. This fund is classified as Level 1 as it primarily consists of highly liquid fixed income U.S. government bonds that trade with sufficient frequency and volume to enable pricing information to be obtained on an ongoing basis. Gains and losses related to these investments are immediately recognized within Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income and were not material in any period presented herein. Long-term debt The Company’s outstanding fixed rate senior notes consist of 5.500% senior unsecured notes due 2024 with an aggregate principal amount of $375 million issued in July 2016 (the “2024 Notes”) and 4.375% senior unsecured notes due 2025 with an aggregate principal amount of $400 million issued in August 2017 (the “2025 Notes” and together with the 2024 Notes, the “Senior Notes”). The fair values of the Senior Notes shown in the table below are based on recent trading values, which are considered Level 2 inputs within the fair value hierarchy. Long-term debt is included in the Consolidated Balance Sheets at carrying value, rather than fair value, and is therefore excluded from the fair value table above. Carrying values shown in the following table are net of unamortized discounts and issuance costs. September 30, 2018 September 30, 2017 (In millions) Fair value Carrying value Unamortized discount and issuance costs Fair value Carrying value Unamortized discount and issuance costs 2024 Notes $ 376 $ 370 $ (5 ) $ 401 $ 370 $ (5 ) 2025 Notes 376 395 (5 ) 408 394 (6 ) Total $ 752 $ 765 $ (10 ) $ 809 $ 764 $ (11 ) Refer to Note 10 for details of other debt instruments that have variable interest rates, and accordingly, their carrying amounts approximate fair value. Pension plan assets Pension plan assets are measured at fair value at least annually on September 30. Refer to Note 13 for disclosures regarding the fair value of plan assets, including classification within the fair value hierarchy. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | ACQUISITIONS AND DIVESTITURES Quick Lubes store acquisitions During fiscal 2018, Valvoline acquired 136 service center stores for an aggregate purchase price of $125 million . These acquisitions included 73 franchise service center stores, 60 former franchise service center stores, and 3 service center stores acquired in single and multi-store transactions. During fiscal 2017, the Company acquired 43 service center stores for an aggregate purchase price of $72 million , of which $4 million was paid in fiscal 2016. These acquisitions included 14 former franchise service center stores and 29 service center stores acquired in single and multi-store transactions. During fiscal 2016, 104 service center stores were acquired for an aggregate purchase price of $79 million . These acquisitions included 42 franchise service center stores, 9 former franchise service center stores and 53 service center stores acquired in single and multi-store transactions. The Company’s acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. Unless otherwise noted, goodwill is generally expected to be deductible for income tax purposes and is primarily attributed to the operational synergies and potential growth expected to result in economic benefits in the respective markets of the acquisitions. A summary follows of the aggregate cash consideration paid and the total assets acquired and liabilities assumed for the years ended September 30: (In millions) 2018 2017 2016 Inventories $ 2 $ 1 $ 1 Other current assets 1 — 1 Property, plant and equipment 2 2 9 Goodwill (a) 58 60 94 Intangible assets Trademarks and trade names (b) 27 1 1 Reacquired franchise rights (a) (c) 26 6 — Customer relationships (d) 9 2 — Other — — 1 Other noncurrent assets — — 3 Trade and other payables — — (11 ) Debt — — (11 ) Other noncurrent liabilities — — (9 ) Net assets acquired $ 125 $ 72 $ 79 (a) Approximately $83 million of the goodwill recognized in fiscal 2016 was not deductible for income tax purposes. In addition, during fiscal 2018, the purchase price allocation for the acquisition of certain former franchise service center stores during fiscal 2017 was adjusted to reduce goodwill and increase reacquired franchise rights by $6 million . (b) Weighted average amortization period of 19 years . (c) Prior to the acquisition of former franchise service center stores, Valvoline licensed the right to operate franchised quick lube service centers, including use of the Company’s trademarks and trade name. In connection with these acquisitions, Valvoline reacquired those rights and recognized separate definite-lived reacquired franchise rights intangible assets, which are being amortized on a straight-line basis over the weighted average remaining term of approximately 8 years . The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. (d) Weighted average amortization period of 13 years . The fair values above are preliminary for up to one year from the date of acquisition as they are subject to measurement period adjustments as new information is obtained about facts and circumstances that existed as of the acquisition date. The Company does not expect any material changes to the preliminary purchase price allocations summarized above for acquisitions completed during the last twelve months. The incremental results of operations of the acquired stores, which were not material to the Company’s consolidated results, have been included in the consolidated financial statements from the date of each acquisition, and accordingly, pro forma disclosure of financial information has not been presented. Below are further details on the significant acquisitions completed in each period presented in the consolidated financial statements herein. Fiscal 2018 acquisitions Henley Bluewater On October 2, 2017, the Company acquired the business assets of 56 former franchise service center stores from Henley Bluewater LLC for $60 million . These stores build on the infrastructure and talent base of the existing Company-owned operations in northern Ohio and add Company-owned locations in Michigan. Of the $60 million , approximately $36 million was allocated to goodwill with the remainder primarily allocated to reacquired franchise rights intangible assets, which are being amortized on a straight-line basis over the weighted average remaining term of approximately seven years. Great Canadian Oil Change On July 13, 2018, Valvoline acquired the business assets of 73 franchise service center stores from Great Canadian Oil Change Ltd. for $53 million . This acquisition expands Valvoline’s Quick Lubes footprint outside of the United States and increases the Quick Lubes system to more than 1,200 company-owned and franchised locations in North America. Of the $53 million , approximately $16 million was allocated to goodwill with $27 million allocated to trade names, $9 million to customer relationships, and the remainder allocated to working capital. The finite-lived intangible assets are being amortized on a straight-line basis over 20 years and 15 years for trade names and customer relationships, respectively. Fiscal 2017 acquisitions Time-It Lube On January 31, 2017, Valvoline acquired the business assets of 28 service center stores from Time-It Lube LLC and Time-It Lube of Texas, LP (collectively, “Time-It Lube”) for $49 million , of which approximately $45 million was allocated to goodwill, and the remainder was allocated to working capital, trade names and customer relationships. This acquisition expanded the presence of Quick Lubes into east Texas and marked its entry into Louisiana. Fiscal 2016 acquisitions Oil Can Henry’s On February 1, 2016, the business assets of 42 franchise service center stores and 47 service center stores were acquired from OCH International, Inc. (“Oil Can Henry’s”) for $62 million . This acquisition complemented the existing Quick Lubes service center store base and expanded its profile within several northwest U.S. markets. Of the $62 million purchase price, $82 million was allocated to goodwill, $11 million to the assumption of debt, and the remainder was allocated to net working capital, property, plant and equipment, trade names, and other noncurrent assets and liabilities. Remaining ownership interest in subsidiary Valvoline historically owned a 70% controlling interest and consolidated the financial results of its subsidiary in Thailand. In December 2017, Valvoline purchased the remaining 30% interest for total consideration of approximately $16 million , making it a wholly-owned subsidiary of the Company. This interest was not material to the current or prior period financial statements for presentation and disclosure as a noncontrolling interest, which was eliminated as a result of this purchase through an adjustment to Paid-in capital and Retained deficit . Dispositions During fiscal 2018, Valvoline completed the liquidation of its Brazilian subsidiary within the International reportable segment and sold two service center stores to a franchisee within the Quick Lubes reportable segment. These transactions resulted in a net gain of $2 million , which was recognized in Equity and other income, net in the Consolidated Statements of Comprehensive Income during the year ended September 30, 2018. |
Equity Method Investments
Equity Method Investments | 12 Months Ended |
Sep. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | EQUITY METHOD INVESTMENTS Valvoline has a strategic relationship with Cummins, Inc. (“Cummins”), a leading supplier of engines and related component products, which includes co-branding products for heavy duty consumers and a 50% interest in joint ventures in India, China, and Argentina. Valvoline also has joint ventures with other partners in Latin America. Valvoline’s investments in these unconsolidated affiliates were $31 million and $30 million as of September 30, 2018 and 2017, respectively. Valvoline’s stockholders’ deficit included $30 million and $28 million of undistributed earnings from affiliates accounted for under the equity method as of September 30, 2018 and 2017 , respectively. Summarized financial information for Valvoline’s equity method investments follows as of and for the years ended September 30: (In millions) 2018 2017 Financial position Current assets $ 116 $ 105 Current liabilities (76 ) (69 ) Working capital 40 36 Noncurrent assets 23 25 Noncurrent liabilities (1 ) (1 ) Stockholders’ equity $ 62 $ 60 (In millions) 2018 2017 2016 Results of operations Sales $ 313 $ 289 $ 255 Income from operations $ 62 $ 53 $ 46 Net income $ 27 $ 25 $ 23 The Company’s transactions with affiliate companies accounted for under the equity method were as follows for the years ended September 30: (In millions) 2018 2017 2016 Equity income (a) $ 14 $ 12 $ 12 Distributions received $ 10 $ 8 $ 16 Royalty income (a) $ 8 $ 7 $ 4 Sales to $ 12 12 $ 12 — $ 10 Purchases from $ 2 $ — $ — (a) Equity and royalty income are recognized in Equity and other income, net in the Consolidated Statements of Comprehensive Income. Valvoline has outstanding receivable balances with affiliates accounted for under the equity method of $6 million and $3 million as of September 30, 2018 and 2017, respectively, included in Accounts receivable, net within the Consolidated Balance Sheets. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Accounts Receivable | ACCOUNTS RECEIVABLE The following summarizes Valvoline’s accounts receivable in the Consolidated Balance Sheets as of September 30: (In millions) 2018 2017 Trade $ 390 $ 362 Other 26 28 Accounts receivable, gross 416 390 Allowance for doubtful accounts (7 ) (5 ) Total accounts receivable, net $ 409 $ 385 Valvoline is party to an agreement to sell certain trade accounts receivable in the form of drafts or bills of exchange to a financial institution. Each draft constitutes an order to pay Valvoline for obligations of the customer arising from the sale of goods. The intention of the arrangement is to decrease the time accounts receivable is outstanding and increase cash flows. During the year ended September 30, 2018, Valvoline sold $129 million of accounts receivable to the financial institution. Prior to the Distribution, Ashland was party to the agreement to sell certain Valvoline trade accounts receivable and remitted payment to Valvoline upon sale. During fiscal 2017 and prior to the Distribution, $40 million of Valvoline accounts receivable were sold to the financial institution and proceeds were remitted to Valvoline. Once Valvoline became party to the arrangement following the Distribution and through the remainder of the year ended September 30, 2017, $50 million of accounts receivable were sold to the financial institution, for a total of $90 million in fiscal 2017. |
Inventories
Inventories | 12 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Inventories are primarily carried at the lower of cost or net realizable value using the weighted average cost method. In addition, certain lubricants with a replacement cost of $89 million at September 30, 2018 and $83 million at September 30, 2017 are valued at the lower of cost or market using the LIFO method. The following summarizes Valvoline’s inventories in the Consolidated Balance Sheets as of September 30: (In millions) 2018 2017 Finished products $ 189 $ 180 Raw materials, supplies and work in process 30 31 Reserve for LIFO cost valuation (40 ) (33 ) Excess and obsolete inventory reserves (3 ) (3 ) Total inventories, net $ 176 $ 175 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | PROPERTY, PLANT AND EQUIPMENT The following table summarizes the various components of property, plant and equipment within the Consolidated Balance Sheets as of September 30: (In millions) 2018 2017 Land $ 51 $ 51 Buildings (a) 292 286 Machinery and equipment 442 442 Construction in progress 62 44 Total property, plant and equipment 847 823 Accumulated depreciation (b) (427 ) (432 ) Net property, plant and equipment $ 420 $ 391 (a) Includes $22 million and $28 million of assets under capitalized leases as of September 30, 2018 and September 30, 2017 respectively. (b) Includes $4 million and $4 million for assets under capitalized leases as of September 30, 2018 and September 30, 2017 , respectively. Non-cash accruals included in total property, plant and equipment totaled $13 million and $39 million for the years ended September 30, 2018 and 2017, respectively. The following summarizes property, plant and equipment charges included within the Consolidated Statements of Comprehensive Income. (In millions) 2018 2017 2016 Depreciation (includes capital leases) $ 49 $ 42 $ 38 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 12 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | GOODWILL AND OTHER INTANGIBLES Goodwill The following summarizes the changes in the carrying amount of goodwill for each reportable segment and in total during fiscal 2018 and 2017 : (In millions) Core North America Quick Lubes International Total Balance at September 30, 2016 $ 89 $ 135 $ 40 $ 264 Acquisitions (a) — 66 — 66 Balance at September 30, 2017 89 201 40 330 Acquisitions (b) — 52 — 52 Dispositions (c) — (1 ) — (1 ) Balance at September 30, 2018 $ 89 $ 252 $ 40 $ 381 (a) Activity associated with the acquisition of Time-It Lube and 15 additional service center stores. Refer to Note 4 for details regarding the acquisitions. (b) Activity associated with the acquisitions of Great Canadian Oil Change, Henley Bluewater, seven additional service center stores, and adjustments related to prior year acquisitions. Refer to Note 4 for further details. (c) Activity associated with the derecognition of goodwill as a result of the sale and disposition of two quick lube service center stores. Refer to Note 4 for details regarding the disposition. Other intangible assets Valvoline’s purchased intangible assets were specifically identified when acquired, have finite lives, and are reported in Goodwill and intangibles, net on the Consolidated Balance Sheets. The following summarizes the gross carrying amounts and accumulated amortization of the Company’s intangible assets as of September 30: (In millions) 2018 2017 Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Definite-lived intangible assets Trademarks and trade names $ 29 $ (2 ) $ 27 $ 2 $ (1 ) $ 1 Reacquired franchise rights 32 (4 ) 28 — — — Customer relationships 14 (3 ) 11 5 (2 ) 3 Other intangible assets 1 — 1 1 — 1 Total definite-lived intangible assets $ 76 $ (9 ) $ 67 $ 8 $ (3 ) $ 5 The table that follows summarizes amortization expense (actual and estimated) for intangible assets, assuming no additional amortizable intangible assets, for the years ended September 30: Actual Estimated (In millions) 2018 2019 2020 2021 2022 2023 Amortization expense $ 6 $ 7 $ 7 $ 7 $ 6 $ 6 |
Debt
Debt | 12 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The following table summarizes Valvoline’s short-term borrowings and long-term debt as of September 30: (In millions) 2018 2017 2025 Notes $ 400 $ 400 2024 Notes 375 $ 375 Term Loans 270 285 Revolver 147 — Trade Receivables Facility 140 75 Other (a) (10 ) (11 ) Total debt $ 1,322 $ 1,124 Short-term debt — 75 Current portion of long-term debt 30 15 Long-term debt $ 1,292 $ 1,034 (a) As of September 30, 2018, other includes $11 million of debt issuance costs and discounts and $1 million of debt primarily acquired through acquisitions. As of September 30, 2017, other included $13 million of debt issuance costs and discounts and $2 million of debt acquired through acquisitions. Senior Notes During August 2017, Valvoline completed the issuance of 4.375% senior unsecured notes due 2025 with an aggregate principal amount of $400 million . The net proceeds from the offering of the 2025 Notes were $394 million (after deducting initial purchasers’ discounts and debt issuance costs), which were used to make a voluntary contribution to the Company’s qualified U.S. pension plan. During July 2016, Valvoline completed the issuance of 5.500% senior unsecured notes due 2024 with an aggregate principal amount of $375 million . The net proceeds from the offering of the 2024 Notes were $370 million (after deducting initial purchasers’ discounts and debt issuance costs), which were transferred to Valvoline’s former parent, Ashland. The Senior Notes are subject to customary events of default for similar debt securities, which if triggered may accelerate the payment of principal, premium, if any, and accrued but unpaid interest on the notes. Such events of default include non-payment of principal and interest, non-performance of covenants and obligations, default on other material debt, and bankruptcy or insolvency. If a change of control repurchase event occurs, Valvoline, may be required to offer to purchase the Senior Notes from the holders thereof. The Senior Notes are not otherwise required to be repaid prior to maturity, although they may be redeemed at the option of Valvoline at any time prior to their maturity in the manner specified in the governing indentures. The Senior Notes are guaranteed by each of Valvoline’s subsidiaries that guarantee obligations under the existing senior credit facility described below. Valvoline completed registered exchange offers for the Senior Notes in December 2017, for which no additional proceeds were received. Senior Credit Agreement The 2016 Senior Credit Agreement provides for an aggregate principal amount of $1,325 million in senior secured credit facilities (“2016 Credit Facilities”), comprised of (i) a five -year $875 million term loan facility (“Term Loans”), and (ii) a five -year $450 million revolving credit facility (including a $100 million letter of credit sublimit) (“Revolver”). As of September 30, 2018 and 2017, the Term Loans had outstanding principal balances of $ 270 million and $ 285 million , respectively. As of September 30, 2018, there was $ 147 million outstanding under the Revolver, and there was no amount outstanding as of September 30, 2017. During the year ended September 30, 2018, Valvoline borrowed $ 204 million and made payments of $ 57 million on the Revolver. As of September 30, 2018, the total borrowing capacity remaining under the Revolver was $ 293 million due to a reduction of $ 10 million for letters of credit outstanding. The outstanding principal balance of the Term Loans is required to be repaid in quarterly installments of approximately $8 million for each of fiscal 2019 and 2020, $15 million for fiscal 2021, with the balance due at maturity. At Valvoline’s option, amounts outstanding under the 2016 Senior Credit Agreement bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate fluctuates between LIBOR plus 1.500% per annum and LIBOR plus 2.500% per annum (or between the alternate base rate plus 0.500% per annum and the alternate base rate plus 1.500% annum), based upon Valvoline’s corporate credit ratings or the consolidated first lien net leverage ratio (as defined in the 2016 Senior Credit Agreement). The 2016 Credit Facilities are guaranteed by Valvoline’s existing and future subsidiaries (other than certain immaterial subsidiaries, joint ventures, special purpose financing subsidiaries, regulated subsidiaries, non-U.S. subsidiaries and certain other subsidiaries), and are secured by a first-priority security interest in substantially all the personal property assets and certain real property assets of Valvoline and the guarantors, including all or a portion of the equity interests of certain of Valvoline’s domestic subsidiaries and first-tier non-U.S. subsidiaries. The 2016 Credit Facilities may be prepaid at any time without premium. The 2016 Senior Credit Agreement contains usual and customary representations and warranties and usual and customary affirmative and negative covenants, including limitations on liens, additional indebtedness, investments, restricted payments, asset sales, mergers, affiliate transactions and other customary limitations, as well as financial covenants (including maintenance of a maximum consolidated net leverage ratio and a minimum consolidated interest coverage ratio). As of the end of any fiscal quarter, the maximum consolidated net leverage ratio and minimum consolidated interest coverage ratio permitted under the 2016 Senior Credit Agreement are 4.5 and 3.0 , respectively. As of September 30, 2018, Valvoline was in compliance with all covenants under the 2016 Senior Credit Agreement. Trade Receivables Facility On November 29 2016, Valvoline entered into a $125 million , one -year revolving trade receivables securitization facility (“Trade Receivables Facility”) with certain financial institutions. On November 20, 2017, the Company amended the Trade Receivables Facility to extend the maturity date to November 19, 2020 and increase the maximum funding under the facility to $175 million based on the availability of eligible receivables and other customary factors and conditions. Under the Trade Receivables Facility, Valvoline sells and/or transfers a majority of its U.S. trade receivables to a wholly-owned, bankruptcy-remote subsidiary as they are originated, and advances by the lenders to that subsidiary (in the form of cash or letters of credit) are secured by those trade receivables. The assets of this financing subsidiary are restricted as collateral for the payment of its obligations under the Trade Receivables Facility, and its assets and credit are not available to satisfy the debts and obligations owed to the creditors of the Company. The Company includes the assets, liabilities and results of operations of this financing subsidiary in its consolidated financial statements. During the first fiscal quarter of 2017, Valvoline borrowed $75 million under the Trade Receivables Facility and used the net proceeds to repay an equal amount of the Term Loans. During the year ended September 30, 2018, Valvoline made payments of $36 million and borrowed $101 million under the Trade Receivables Facility, using the proceeds to supplement the Company’s daily cash needs. The Company accounts for the Trade Receivables Facility as secured borrowings. Based upon the maturity dates in place in each respective period, as of September 30, 2018, the $140 million balance outstanding was classified as Long-term debt and the $75 million balance at September 30, 2017 was classified as Short-term debt in the Consolidated Balance Sheets. Based on the availability of eligible receivables, the total borrowing capacity remaining under the Trade Receivables Facility as of September 30, 2018 was approximately $35 million . The financing subsidiary owned $275 million and $247 million of outstanding accounts receivable as of September 30, 2018 and 2017, respectively, and these amounts are included in Accounts receivable, net in the Company’s Consolidated Balance Sheets. The financing subsidiary pays customary fees to the lenders, and advances by a lender under the Trade Receivables Facility accrue interest for which the weighted average interest rates were 2.8% and 1.8% for the years ended September 30, 2018 and 2017, respectively. The Trade Receivables Facility contains various customary affirmative and negative covenants and default and termination provisions, which provide for acceleration of amounts owed under the Trade Receivables Facility in circumstances including, but not limited to, the failure to pay interest or other amounts when due, defaults on certain other indebtedness, certain insolvency events, and breach of representation. Long-term debt maturities The future maturities of debt outstanding as of September 30, 2018, excluding debt issuance costs and discounts, are as follows: (In millions) Years ending September 30 2019 $ 30 2020 30 2021 497 2022 — 2023 — Thereafter 776 Total $ 1,333 |
Lease Commitments
Lease Commitments | 12 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Lease Commitments | LEASE COMMITMENTS Valvoline conducts certain of its sales, support, manufacturing and distribution operations using leased facilities, and also operates certain equipment and vehicles under leases, the initial lease terms of which vary in length. Many of the leases contain renewal options and escalation clauses that are not material to the consolidated financial statements. Capitalized and financing lease obligations are primarily included in Other noncurrent liabilities with related assets in Property, plant and equipment, net within the Consolidated Balance Sheets. Future minimum lease payments for noncancelable operating and capital leases and financing obligations as of September 30, 2018 for the following fiscal years ended September 30 are: (In millions) Operating leases (a) Capital leases and financing obligations 2019 $ 28 $ 6 2020 23 6 2021 21 6 2022 18 6 2023 16 6 Thereafter 64 50 Total future minimum lease payments $ 170 80 Imputed interest (33 ) Present value of minimum lease payments $ 47 (a) Minimum payments have not been reduced by minimum sublease rental income of approximately $4 million due under future noncancelable subleases. The composition of net rent expense for all operating leases, including leases of property and equipment, was as follows for the years ended September 30: (In millions) 2018 2017 2016 Minimum rentals $ 25 $ 18 $ 15 Contingent rentals 2 2 2 Sublease rental income (2 ) (1 ) (1 ) Net rent expense $ 25 $ 19 $ 16 |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The following table presents pre-tax income and the principal components of the reconciliation between the effective tax rate and the U.S. federal statutory income tax rate in effect for the years ended September 30: (In millions) 2018 2017 2016 Income before income taxes United States $ 282 $ 433 $ 382 Non-U.S. 50 57 39 Total income before income taxes $ 332 $ 490 $ 421 U.S. statutory tax rate 24.5 % 35.0 % 35.0 % Income taxes computed at U.S. statutory tax rate $ 81 $ 171 $ 147 Increase (decrease) in amount computed resulting from: Unrecognized tax benefits — 2 3 State taxes, net of federal benefit 14 17 16 International rate differential — (7 ) (5 ) Permanent items (3 ) (8 ) (11 ) Remeasurement of net deferred taxes 73 — — Deemed repatriation 4 — — Tax Matters Agreement activity (2 ) 10 — Other (1 ) 1 (2 ) Income tax expense $ 166 $ 186 $ 148 Effective tax rate 50.0 % 38.0 % 35.2 % Tax reform legislation On December 22, 2017, the President of the United States signed into law tax reform legislation (the “Act”), which generally became effective January 1, 2018. The Act includes a number of provisions, including lowering the federal corporate income tax rate from a maximum of 35% to 21% and changing or limiting certain tax deductions. While the Company expects this rate reduction will ultimately benefit Valvoline, the Act also includes provisions that are expected to offset some of the benefit of the rate reduction, including the repeal of the deduction for domestic production activities and the expansion of the limitation on the deduction of certain executive compensation. In addition, the Act alters the landscape of taxation of non-U.S. operations and provides immediate deductions for certain new investments, among other provisions. Based on the effective date of the rate reduction in the Act, the Company’s federal corporate statutory income tax rate was a blended rate of 24.5% for fiscal 2018, declining to 21% for fiscal 2019 and beyond. During the year ended September 30, 2018, enactment of the Act resulted in the following provisional impacts: • The remeasurement of net deferred tax assets resulted in a net $67 million increase in income tax expense primarily related to the lower enacted corporate tax rate; • Income tax expense increased by $4 million related to the deemed repatriation tax on undistributed non-U.S. earnings and profits and $2 million for withholding taxes due to the Company’s change in indefinite reinvestment assertion regarding its undistributed earnings; and • The remeasurement of net indemnity liabilities associated with the Tax Matters Agreement increased pre-tax expense by $7 million and generated a $3 million tax benefit primarily related to the reduced federal benefit of state tax deductions, which drove increases in the higher expected utilization of tax attributes payable to Ashland. The estimated impacts of the Act recorded during the year ended September 30, 2018 are provisional, and management will continue to assess the impact and record adjustments through the income tax provision up to one year from the enactment date as amounts are known and reasonably estimable. Accordingly, the impact of the Act may differ from the Company’s provisional estimates due to and among other factors, information currently not available, changes in interpretations and the issuance of additional guidance, as well as changes in assumptions the Company has currently made, including actions the Company may take in future periods as a result of the Act. The Company also reclassified $8 million from accumulated other comprehensive income to retained deficit related to the stranded tax effects resulting from the change in the federal corporate tax rate during fiscal 2018 as further detailed in Notes 2 and 17. Many states have enacted state specific tax reform and legislation in response to the Act. In general, these impacts are not material to the Company’s financial statements. Valvoline is incorporated in Kentucky, which enacted income tax reform on April 13, 2018. The provisions of Kentucky tax reform generally become effective in fiscal 2019 and include a number of provisions, notably lowering the corporate income tax rate from a maximum of 6% to 5%. While the Company expects these changes will ultimately benefit Valvoline, during the year ended September 30, 2018, the enactment of Kentucky tax reform resulted in the following impacts: • The remeasurement of net deferred tax assets at the lower enacted Kentucky corporate tax rate resulted in a net $4 million increase in income tax expense; and • The remeasurement of the net indemnity liabilities associated with the Tax Matters Agreement increased pre-tax income by $4 million and generated $4 million of income tax expense primarily related to the lower expected utilization of tax attributes payable to Ashland. The Company will continue to monitor enacted state legislation and make relevant updates to estimates when warranted. Components of income tax expense Income tax expense consisted of the following for the years ended September 30: (In millions) 2018 2017 2016 Current Federal (a) $ (2 ) $ 47 $ 99 State 6 8 24 Non-U.S. 17 14 12 21 69 135 Deferred Federal 136 106 14 State 9 12 2 Non-U.S. — (1 ) (3 ) 145 117 13 Income tax expense $ 166 $ 186 $ 148 (a) Benefit from favorable settlement with tax authorities in fiscal 2018. Deferred income taxes are provided for income and expense items recognized in different years for tax and financial reporting purposes. Deferred taxes A summary of the deferred tax assets and liabilities included in the Consolidated Balance Sheets follows as of September 30: (In millions) 2018 2017 Deferred tax assets Federal net operating loss carryforwards $ — $ 96 Non-U.S. net operating loss carryforwards (a) 2 1 State net operating loss carryforwards (b) 19 28 Employee benefit obligations 86 132 Compensation accruals 21 29 Credit carryforwards (c) 36 13 Other 9 13 Valuation allowances (d) (7 ) (8 ) Net deferred tax assets 166 304 Deferred tax liabilities Goodwill and other intangibles 3 3 Property, plant and equipment 23 17 Undistributed earnings 2 3 Total deferred tax liabilities 28 23 Total net deferred tax assets $ 138 $ 281 (a) Gross non-U.S. net operating loss carryforwards of $7 million expire in fiscal years 2020 to 2033, with $5 million that has no expiration. (b) Apportioned gross net operating loss carryforwards of $481 million expire in fiscal years 2019 through 2037. (c) Credit carryforwards consist primarily of non-U.S. tax credits that generally expire in the fiscal years 2025 through 2037. (d) Valuation allowances primarily relate to certain state and non-U.S. net operating loss carryforwards and certain other deferred tax assets that are not expected to be realized or realizable. As a result of the Act and Kentucky tax reform, the Company revalued its net deferred tax assets, which resulted in a reduction in the value of approximately $71 million primarily related to the reduction in the federal and Kentucky corporate income tax rates that was recorded as additional deferred income tax expense in the Company’s Consolidated Statements of Comprehensive Income for the year ended September 30, 2018 as noted above. Undistributed earnings The Act implements a new territorial tax system that imposes a one-time transition tax, or deemed repatriation, on undistributed earnings of certain non-U.S. subsidiaries that is based in part on the amount of these earnings held in cash and other specified assets. The mandatory deemed repatriation resulted in a $23 million gross liability, but allows for the realization of $19 million of previously unrecognized foreign tax credits related to taxes previously paid in relevant local jurisdictions. The net result was $4 million of income tax expense which was recognized during the year ended September 30, 2018. Prior to the Act, the Company had not provided for U.S. income taxes on undistributed earnings and other outside basis differences of its non-U.S. subsidiaries as it was the Company’s intention for these tax basis differences to remain indefinitely reinvested based on access to sufficient liquidity within the United States, as well as plans for use and investment outside of the United States. As these tax basis differences were subject to the deemed repatriation tax, the Company reevaluated its assertion and no longer intends to indefinitely reinvest the Company’s non-U.S. current and undistributed earnings. As a result, Valvoline recorded $2 million for estimated incremental withholding taxes during fiscal 2018 and began to account for certain of its non-U.S. subsidiaries as being immediately subject to tax, while certain other outside basis differences restricted by regulations, operational or investing needs for non-U.S. subsidiaries remain indefinitely reinvested. If these earnings were to be repatriated in the future, the Company may be subject to additional income and withholding taxes, which are not practicable to estimate. Tax Matters Agreement The Tax Matters Agreement was entered into on September 22, 2016 between Ashland and Valvoline (the “Tax Matters Agreement”) and generally provides that Valvoline is required to indemnify Ashland for the following items: • Taxes of Valvoline for all taxable periods that begin on or after the day after the date of the Distribution; • Taxes of Valvoline for the period between the IPO and Distribution that are not attributable to Ashland Group Returns (as defined below); • Taxes for the pre-IPO period that arise on audit or examination and are directly attributable to the Valvoline business; • Certain U.S. federal, state or local taxes for the pre-IPO period of Ashland and/or its subsidiaries for that period that arise on audit or examination and are directly attributable to neither the Valvoline business nor the Ashland chemicals business; • Certain tax attributes inherited from Ashland as the result of the Contribution from Ashland; and • Transaction Taxes (as defined below) that are allocated to Valvoline under the Tax Matters Agreement. For taxable periods that begin on or after the day after the date of Distribution, Valvoline has not been included in Ashland’s consolidated U.S. and state income tax returns, nor in income tax returns of certain Ashland international subsidiaries (collectively, the “Ashland Group Returns”). Following the Distribution, Valvoline files tax returns that include only Valvoline and/or its subsidiaries, as appropriate, and accordingly, Valvoline is not required to make tax sharing payments to Ashland for these taxable periods. Valvoline has joint and several liability with Ashland to the U.S. Internal Revenue Service (“IRS”) for the consolidated U.S. federal income taxes of the Ashland consolidated group for the taxable periods in which Valvoline was part of the Ashland Group Returns. Valvoline will have joint control with Ashland, over any audit or examination related to taxes for which Valvoline is required to indemnify Ashland. For the periods prior to the Distribution, Valvoline was included in the Ashland Group Returns. Under the Tax Matters Agreement, Ashland generally made all necessary tax payments to the relevant tax authorities with respect to Ashland Group Returns, and Valvoline made tax sharing payments to Ashland, inclusive of tax attributes utilized. The amount of the tax sharing payments were generally determined as if Valvoline and each of its relevant subsidiaries included in the Ashland Group Returns filed their own consolidated, combined or separate tax returns for the period from the IPO to the Distribution that include only Valvoline and/or its relevant subsidiaries, as the case may be. During fiscal 2017, Valvoline made $48 million in net tax-sharing payments to Ashland for the period prior to the Distribution. During fiscal 2018, Valvoline recognized $8 million of pre-tax expense in Legacy and separation-related expenses, net withi n the Consolidated Statements of Comprehensive Income for the estimated adjustments in net amounts due to Ashland primarily as a result of Ashland’s lower than expected utilization of Valvoline tax attributes in Ashland Group Returns, tax reform legislation that reduced statutory rates, as well as the settlement of fiscal 2012 and 2013 federal examinations that resulted in increases in Valvoline’s expected utilization of tax attributes. Valvoline recognized an income tax benefit of $5 million during fiscal 2018 related to these changes. In fiscal 2017, Valvoline recognized a $16 million pre-tax benefit in Legacy and separation-related expenses, net for a reduction in amounts due to Ashland under the Tax Matters Agreement as a result of Ashland’s estimated utilization of Valvoline tax attributes in the Ashland Group Returns. This pre-tax benefit was offset by income tax expense of $16 million . Total liabilities related to obligations owed to Ashland under the Tax Matters Agreement are primarily recorded in Other noncurrent liabilities in the Consolidated Balance Sheets and were $66 million and $62 million as of September 30, 2018 and 2017, respectively. The Tax Matters Agreement also provides that Valvoline indemnify Ashland for any taxes (and reasonable expenses) resulting from the failure of the Distribution to qualify for non-recognition of gain and loss or certain reorganization transactions related to the Contribution or the Distribution to qualify for their intended tax treatment (“Transaction Taxes”), where the taxes result from (1) breaches of covenants (including covenants containing the restrictions described below that are designed to preserve the tax-free nature of the Distribution), (2) the application of certain provisions of U.S. federal income tax law to the Distribution with respect to acquisitions of Valvoline’s common stock, or (3) any other actions that Valvoline knows or reasonably should expect would give rise to such taxes. The Tax Matters Agreement also requires Valvoline to indemnify Ashland for a portion of certain other Transaction Taxes allocated to Valvoline based on Valvoline’s market capitalization relative to the market capitalization of Ashland. The Tax Matters Agreement imposes certain restrictions on Valvoline and its subsidiaries (including restrictions on share issuances or repurchases, business combinations, sales of assets and similar transactions) that are designed to preserve the tax-free nature of the Distribution. These restrictions apply for the two-year period following the Distribution. Valvoline may be able to engage in an otherwise restricted action if Valvoline obtains an appropriate opinion from counsel or ruling from the IRS. Unrecognized tax benefits The aggregate changes in the balance of gross unrecognized tax benefits were as follows for the years ended September 30: (In millions) 2018 2017 2016 Gross unrecognized tax benefits as of October 1 $ 10 $ 8 $ 5 Increases related to tax positions from prior years 2 — 2 Increases related to tax positions taken during the current year 1 2 1 Settlements with tax authorities (2 ) — — Lapses of statutes of limitation (1 ) — — Gross unrecognized tax benefits as of September 30 (a) $ 10 $ 10 $ 8 (a) As of September 30, 2018 and 2017, the Company had accruals of $1 million for interest and penalties related to unrecognized tax benefits. Unrecognized tax benefits of $10 million as of September 30, 2018 and 2017 would favorably impact the effective income tax rate if recognized. Together with Ashland, the Company resolved IRS examinations in fiscal 2018 for the 2012 and 2013 tax years, and accordingly, U.S. federal tax years remain open from fiscal 2014 forward. With certain exceptions, years beginning on or after fiscal 2006 remain open to examination by certain U.S. state and non-U.S. taxing authorities. Because Valvoline is routinely under examination by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next twelve months. An estimate of the amount or range of such change cannot be made at this time. However, the Company does not expect the change, if any, to have a material effect on the Company’s consolidated financial statements within the next twelve months. Given the indemnification of Ashland and the years remaining open to examination, the majority of the Company’s liability for unrecognized tax benefits as of September 30, 2018 and 2017 is included in the Tax Matters Agreement obligation to Ashland summarized above within Other noncurrent liabilities in the Consolidated Balance Sheets. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Sep. 30, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS Pension and other postretirement plans The majority of U.S. pension plans have been closed to new participants since January 1, 2011 and effective September 30, 2016, the accrual of pension benefits for participants were frozen. In addition, most international pension plans are closed to new participants while those that remain open relate to areas where local laws require plans to operate within the applicable country. Valvoline also sponsors healthcare and life insurance plans for certain qualifying retired or disabled employees. These other postretirement benefit plans were amended to reduce retiree life and medical benefits effective October 1, 2016 and January 1, 2017, respectively. These plans have limited the annual per capita costs to an amount equivalent to base year per capita costs, plus annual increases of up to 1.5% per year for costs incurred. As a result, health care cost trend rates do not have a significant impact on the Company’s future obligations for these plans. The assumed pre-65 health care cost trend rate as of September 30, 2018 was 7.5% and continues to be reduced to 4.5% in 2037 and thereafter. Components of net periodic benefit income The following table summarizes the components of pension and other postretirement plans net periodic benefit income and the assumptions used in this determination for the years ended September 30: (In millions) Pension benefits Other postretirement benefits 2018 2017 2016 2018 2017 2016 Net periodic benefit income Service cost $ 2 $ 2 $ 3 $ — $ — $ — Interest cost 75 86 11 2 1 — Expected return on plan assets (103 ) (145 ) (17 ) — — — Amortization of prior service credit (a) — — — (12 ) (12 ) (1 ) Actuarial loss (gain) 38 (63 ) (42 ) — (5 ) — Pre-separation allocation from Ashland (b) — — 21 — — — Net periodic benefit costs (income) $ 12 $ (120 ) $ (24 ) $ (10 ) $ (16 ) $ (1 ) Weighted-average plan assumptions (c) Discount rate for service cost (d) 2.94 % 2.15 % 4.10 % 4.05 % 2.95 % 4.25 % Discount rate for interest cost (d) 3.23 % 2.84 % 3.23 % 3.11 % 2.64 % 2.92 % Rate of compensation increase 3.05 % 2.99 % 3.23 % — — — Expected long-term rate of return on plan assets 5.17 % 6.56 % 6.77 % — — — (a) Other postretirement plan amendments noted above resulted in negative plan amendments that are amortized within this caption during all periods presented. (b) The pre-Contribution allocation from Ashland in fiscal 2016 until the transfer of plans to Valvoline at September 1, 2016 consist of service cost of $7 million , non-service income of $10 million , and actuarial losses of $24 million . (c) The plan assumptions are a blended weighted-average rate for Valvoline’s U.S. and non-U.S. plans. The 2016 assumptions reflect a combination of a full year of Valvoline stand-alone plans and one month for the plans transferred to Valvoline on September 1, 2016. The U.S. pension plans represented approximately 97% of the total pension projected benefit obligation as of September 30, 2018. Other postretirement benefit plans consist of U.S. and Canada, with the U.S. plan representing approximately 75% of the total other postretirement projected benefit obligation as of September 30, 2018. Non-U.S. plans use assumptions generally consistent with those of U.S. plans. (d) Weighted-average discount rates reflect the adoption of the full yield curve approach in fiscal 2016. The following table summarizes the amortization of prior service credit recognized in accumulated other comprehensive loss: Pension benefits Other postretirement benefits (In millions) 2018 2017 2018 2017 Amortization of prior service credit recognized in accumulated other comprehensive income $ — $ — $ 12 $ 12 Net periodic benefit costs (income) 12 (120 ) (10 ) (16 ) Total amount recognized in net periodic benefit cost (income) and accumulated other comprehensive income $ 12 $ (120 ) $ 2 $ (4 ) Obligations and funded status The following table summarizes the changes in benefit obligations and the fair value of plan assets, as well as key assumptions used to determine the benefit obligations, and the amounts recognized in the Consolidated Balance Sheets as of September 30, 2018 and 2017 for the Company’s pension and other postretirement benefit plans: (In millions) Pension benefits Other postretirement benefits 2018 2017 2018 2017 Change in benefit obligations Benefit obligations as of October 1 $ 2,381 $ 3,138 $ 57 $ 73 Service cost 2 2 — — Interest cost 75 86 2 1 Participant contributions — — — 3 Benefits paid (146 ) (210 ) (7 ) (16 ) Actuarial gain (95 ) (60 ) — (5 ) Currency exchange rate changes (3 ) 4 (1 ) 1 Transfers in 9 6 — — Settlements (136 ) (585 ) — — Benefit obligations as of September 30 $ 2,087 $ 2,381 $ 51 $ 57 Change in plan assets Fair value of plan assets as of October 1 $ 2,081 $ 2,307 $ — $ — Actual return on plan assets (30 ) 148 — — Employer contributions 16 412 7 13 Participant contributions — — — 3 Benefits paid (146 ) (210 ) (7 ) (16 ) Currency exchange rate changes (3 ) 3 — — Settlements (136 ) (585 ) — — Transfers in 10 6 — — Fair value of plan assets as of September 30 $ 1,792 $ 2,081 $ — $ — Unfunded status of the plans as of September 30 $ 295 $ 300 $ 51 $ 57 Amounts recognized in the Consolidated Balance Sheets Current benefit liabilities $ 10 $ 11 $ 6 $ 8 Noncurrent benefit liabilities 285 289 45 49 Net amount recognized $ 295 $ 300 $ 51 $ 57 Amounts recognized in accumulated other comprehensive income (loss) Prior service cost (credit) $ 2 $ 2 $ (56 ) $ (68 ) Weighted-average plan assumptions Discount rate 4.28 % 3.76 % 4.08 % 3.48 % Rate of compensation increase 3.10 % 3.13 % — — Valvoline recognizes the change in the fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for a remeasurement. Such gains and losses are reported within Net pension and other postretirement plan income in the Consolidated Statements of Comprehensive Income and were a loss of $38 million and a gain of $68 million for the years ended September 30, 2018 and 2017, respectively. The fiscal 2018 loss was primarily attributed to lower than expected return on plan assets, which was partially offset by the benefit obligation actuarial gain for increases in discount rates and reduced mortality improvements. The fiscal 2017 gain was primarily attributed to the higher than expected return on assets and the benefit obligation actuarial gain for increases in discount rates and reduced mortality improvements. The fiscal 2017 gain also included the effect of the other postretirement benefit plan amendment to reduce retiree medical benefits that resulted in a remeasurement gain of $8 million during the first fiscal quarter of 2017. Pension settlement program During 2018, Valvoline offered the option of receiving a lump sum payment to certain participants with vested qualified U.S. pension plan retirement benefits in lieu of receiving monthly annuity payments. Approximately 2,600 participants elected to receive the settlement, and lump sum payments were made from plan assets to these participants in September 2018 for approximately $134 million . The benefit obligation settled approximated payments to plan participants and did not generate a material settlement adjustment during fiscal 2018. Pension annuity program On August 29, 2017, Valvoline used pension assets to purchase a non-participating annuity contract from an insurer that will pay and administer future pension benefits for approximately 6,000 participants within the qualified U.S. pension plan. Valvoline transferred approximately $585 million of the outstanding pension benefit obligation in exchange for pension trust assets that approximated the liability. The annuity purchase transaction did not generate a material settlement adjustment during fiscal 2017. The insurer unconditionally and irrevocably guaranteed the full payment of benefits to plan participants associated with the annuity purchase and benefit payments are in the same form that was in effect under the plan. The insurer also assumed all investment risk associated with the pension assets that were delivered as annuity contract premiums. Accumulated benefit obligation The accumulated benefit obligation for all pension plans was $2.1 billion as of September 30, 2018 and $2.4 billion as of September 30, 2017 . Information for pension plans with a benefit obligation in excess of the fair value of plan assets follows for the Company’s plans as of September 30: (In millions) 2018 2017 Benefit obligation Plan assets Benefit obligation Plan assets Plans with projected benefit obligation in excess of plan assets $ 2,045 $ 1,749 $ 2,381 $ 2,081 Plans with accumulated benefit obligation in excess of plan assets $ 2,034 $ 1,741 $ 2,368 $ 2,072 Plan assets The following table summarizes the various investment categories that the pension plan assets are invested in and the applicable fair value hierarchy as described in Note 3 that the financial instruments are classified within these investment categories as of September 30, 2018 : Total fair value Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Assets measured at NAV (In millions) Level 1 Level 2 Level 3 Cash and cash equivalents $ 100 $ 100 $ — $ — $ — U.S. government securities and futures (a) 74 (3 ) 77 — — Other government securities 92 1 91 — — Corporate debt instruments 1,056 661 395 — — Insurance contracts 4 — — 4 — Private equity and hedge funds 60 — — — 60 Common collective trusts 406 — — — 406 Total assets at fair value $ 1,792 $ 759 $ 563 $ 4 $ 466 (a) Level 1 investments are in a liability position as of September 30, 2018 and represent exchange-traded futures contracts that are used to manage the interest rate risk in the plan asset portfolio. The following table summarizes the various investment categories that the pension plan assets are invested in and the applicable fair value hierarchy that the financial instruments are classified within these investment categories as of September 30, 2017 : Total fair value Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Assets measured at NAV (In millions) Level 1 Level 2 Level 3 Cash and cash equivalents $ 13 $ 13 $ — $ — $ — U.S. government securities and futures 339 207 132 — — Other government securities 86 — 86 — — Corporate debt instruments 1,197 934 263 — — International equity 16 — 16 — — Private equity and hedge funds 414 — — — 414 Other investments 16 — — 16 — Total assets at fair value $ 2,081 $ 1,154 $ 497 $ 16 $ 414 Cash and cash equivalents The carrying value of cash and cash equivalents approximates fair value. Government securities Government securities that trade in an active market are valued using quoted market prices, which are Level 1 inputs. Other government securities are valued based on Level 2 inputs, which include yields available on comparable securities of issuers with similar credit ratings. Treasury futures are used to manage interest rate risk and are valued at the closing price reported on the exchange market for exchange-traded futures, which is a Level 1 input. Corporate debt instruments Corporate debt instruments that trade in an active market are valued using quoted market prices, which are Level 1 inputs. Other corporate debt instruments are valued based on Level 2 inputs, which includes quoted market prices in inactive markets and observable market quotations for similar bonds. Insurance contracts Insurance contracts are arrangements with insurance companies that guarantee the payment of the pension entitlements and are valued based on Level 3 inputs, which are neither quoted prices nor observable inputs for pricing. Insurance contracts are valued at cash surrender value, which approximates fair value. International equity International equity includes investments in equity securities generally traded in inactive markets, which include Level 2 inputs. Private equity and hedge funds Private equity and hedge funds primarily represent alternative investments not traded on an active market which are valued at the NAV per share determined by the manager of the fund based on the fair value of the underlying net assets owned by the fund divided by the number of shares or units outstanding. Common collective trusts Common collective trusts are comprised of a diversified portfolio of investments across various asset classes, including U.S. and international equities, fixed-income securities, commodities and currencies. The collective trust funds are valued using a NAV provided by the manager of each fund, which is based on the underlying net assets owned by the fund, divided by the number of shares outstanding. The following table provides a reconciliation of the beginning and ending balances for Level 3 plan assets: (In millions) Total Level 3 assets Balance at September 30, 2016 $ 23 Actual return on assets held at end of year (7 ) Balance at September 30, 2017 $ 16 Purchases 3 Sales (8 ) Actual return on assets held at end of year 1 Actual return on assets sold during year (8 ) Balance at September 30, 2018 $ 4 Level 3 assets that were liquidated during fiscal 2018 and represented real estate investments that were valued using DCF and unobservable inputs, including future rentals, expenses and residual values from a market participant view of the highest and best use of the real estate. The following table summarizes investments for which fair value is measured using the NAV per share practical expedient as of September 30, 2018: (In millions) Fair value Unfunded commitments Redemption frequency (if currently eligible) Redemption notice period Long/short hedge funds $ 38 $ — None (a) None (a) Relative value hedge funds 11 — None (b) None (b) Multi-strategy hedge funds 2 — None (b) None (b) Event driven hedge funds 1 — None (b) None (b) Common collective trusts 386 — Daily Up to 3 days 12 Monthly 5 days 8 — N/A (c) N/A (c) Private equity 8 6 None (d) None (d) $ 466 $ 6 (a) These hedge funds are in the process of liquidation and approximately 88% will be liquidated over the next year. (b) These hedge funds are in the process of liquidation and the timing of such is unknown. (c) These assets are held in Australia and are investments in funds that include a diversified portfolio across various asset classes. The time period for redemption of these assets is not determinable. (d) These private equity instruments are estimated to be liquidated over the next 1 to 5 years. Investments and strategy In developing an investment strategy for its defined benefit plans, Valvoline considered the following factors: the nature of the plans’ liabilities, the allocation of liabilities between active, deferred and retired plan participants, the funded status of the plans, the applicable investment horizon, the respective size of the plans and historical and expected investment returns. Valvoline’s U.S. pension plan assets are managed by outside investment managers, which are monitored against investment return benchmarks and Valvoline’s established investment strategy. Investment managers are selected based on an analysis of, among other things, their investment process, historical investment results, frequency of management turnover, cost structure and assets under management. Assets are periodically reallocated between investment managers to maintain an appropriate asset mix and diversification of investments and to optimize returns. The current target asset allocation for the U.S. plan is 75% fixed securities and 25% equity-based securities. Fixed income securities primarily include long duration high grade corporate debt obligations. Equity-based securities include both traditional equities as well as a mix of non-traditional assets such as hedge and commingled funds and private equity. Investment managers may employ a limited use of futures or other derivatives to manage risk within the portfolio through efficient exposure to markets. Valvoline’s investment strategy and management practices relative to plan assets of non-U.S. plans generally are consistent with those for U.S. plans, except in those countries where the investment of plan assets is dictated by applicable regulations. The weighted-average asset allocations for Valvoline’s U.S. and non-U.S. plans by asset category follow as of September 30: Target 2018 2017 Plan assets allocation Equity securities 15-25% 23 % 20 % Debt securities 65-85% 76 % 78 % Other 0-20% 1 % 2 % Total 100 % 100 % The basis for determining the expected long-term rate of return is a combination of future return assumptions for the various asset classes in Valvoline’s investment portfolio based on active management, historical analysis of previous returns, market indices, and a projection of inflation, net of plan expenses. Funding and benefit payments Valvoline contributed $16 million and $412 million to its pension plans during fiscal 2018 and 2017, respectively. The 2017 contributions include $394 million of discretionary contributions made to the U.S. qualified pension plan funded by the proceeds received from the 2025 Notes described in Note 10. Valvoline does not plan to contribute to the U.S. qualified pension plan in fiscal 2019, but expects to contribute approximately $13 million to its U.S. non-qualified and non-U.S. pension plans. The following benefit payments, which reflect future service expectations, are projected to be paid in each of the next five years and five years thereafter in aggregate: (In millions) Pension benefits Other postretirement benefits 2019 $ 142 $ 6 2020 142 5 2021 143 4 2022 142 4 2023 141 3 Thereafter 695 15 Total $ 1,405 $ 37 Other plans Defined contribution and other defined benefit plans Valvoline’s savings plan provides matching contributions subject to a maximum percentage. Expense associated with this plan was $14 million in both fiscal 2018 and 2017. In fiscal 2016, qualifying Valvoline employees were eligible to participate in Ashland’s savings plan, and Valvoline’s allocated expense was $11 million . Valvoline also sponsors various other benefit plans, some of which are required by local laws within the certain countries. Total current and noncurrent liabilities associated with these plans were $1 million and $3 million , respectively, as of September 30, 2018, and $1 million and $4 million , respectively, as of September 30, 2017. Multiemployer pension plans Valvoline participates in two multiemployer pension plans that provide pension benefits to certain union-represented employees under the terms of collective bargaining agreements. Valvoline assumed responsibility for contributions to these plans in connection with the separation from Ashland. Contributions to these plans were not material for fiscal 2018, 2017 or 2016. In April 2018, Valvoline received a demand for payment of a partial withdrawal liability assessment of approximately $30 million related to the sale of a business by Ashland in fiscal 2011 and the associated reduction in contributions and the number of employees covered by one of the multiemployer pension plans. The Company is vigorously contesting the assessment and the calculation method utilized in its determination and received information in October 2018 indicating the multiemployer plan may accept approximately $10 million to settle this liability. The Company is evaluating the potential settlement options and submitted a formal arbitration request on October 31, 2018. The Company’s current best estimate of cost associated with this assessment is not material to the consolidated financial statements as of and for the periods ended September 30, 2018. |
Litigation, Claims and Continge
Litigation, Claims and Contingencies | 12 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation, Claims and Contingencies | LITIGATION, CLAIMS AND CONTINGENCIES From time to time, Valvoline is party to lawsuits, claims and other legal proceedings that arise in the ordinary course of business. The Company establishes liabilities for the outcome of such matters where losses are determined to be probable and reasonably estimable. Where appropriate, the Company has recorded liabilities with respect to these matters, which were immaterial for the periods presented as reflected in the consolidated financial statements herein. There are certain claims and legal proceedings pending where loss is not determined to be probable or reasonably estimable, and therefore, accruals have not been made. In addition, Valvoline discloses matters for which management believes a material loss is at least reasonably possible. In all instances, management has assessed each matter based on current information available and made a judgment concerning its potential outcome, giving due consideration to the amount and nature of the claim and the probability of success. As disclosed herein, the Company believes it has established adequate accruals for liabilities that are probable and reasonably estimable. Although the ultimate resolution of these matters cannot be predicted with certainty and there can be no assurances that the actual amounts required to satisfy liabilities from these matters will not exceed the amounts reflected in the consolidated financial statements, based on information available at this time, it is the opinion of management that such pending claims or proceedings will not have a material adverse effect on its consolidated financial statements. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 12 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation Plans | STOCK-BASED COMPENSATION PLANS Valvoline has approved incentive plans that authorize 11 million shares to be issued, with approximately 7 million remaining available for issuance as of September 30, 2018. The Valvoline incentive plans authorize the grant of stock options, stock appreciation rights (“SARs”), restricted stock, performance shares and other nonvested stock awards. The Company’s principal stock incentive plan, the 2016 Valvoline Inc. Incentive Plan, uses a fungible share pool in which all awards other than stock options and SARs reduce the plan’s authorized shares on a 4.5 -to-1 ratio. The Compensation Committee of the Board of Directors administers the Valvoline incentive plans and has the authority to determine the individuals to whom awards will be made, the amount of those awards and other terms and conditions of the awards. Prior to the Distribution, share-based awards for key Valvoline employees and directors were principally settled in Ashland common stock and granted through participation in Ashland’s stock incentive plans. In periods preceding the Distribution, stock-based compensation expense was allocated to Valvoline based on the awards and terms previously granted. In connection with the Distribution on May 12, 2017, outstanding Ashland share-based awards held by Valvoline employees and directors were converted to equivalent share-based awards of Valvoline based on an exchange ratio of Ashland’s fair market value prior to the Distribution in relation to Valvoline’s fair market value post-Distribution. This conversion modified the number of awards outstanding, as well as certain terms and conditions of the original grants relative to performance and market measures. The conversion was treated as a modification for accounting purposes, and accordingly, Valvoline estimated its pre- and post-modification fair value, which resulted in an increase in the incremental fair value of the awards that was not material and is being expensed ratably over the remaining vesting period for each award. T he following is a summary of stock-based compensation expense recognized by the Company during the years ended September 30: (In millions) 2018 2017 (b) Stock appreciation rights $ 2 $ 3 Nonvested stock awards 9 5 Performance awards 1 2 Total stock-based compensation expense, pre-tax (a) 12 10 Tax benefit (3 ) (4 ) Total stock-based compensation expense, net of tax $ 9 $ 6 (a) Includes approximately $1 million in each period presented related to certain awards that are cash-settled and liability-classified; therefore, fair value is remeasured at the end of each reporting period until settlement. (b) Stock-based compensation expense in fiscal 2017 includes $4 million that was allocated from Ashland prior to Distribution. Stock Appreciation Rights SARs were granted to certain Valvoline employees to provide award holders with the ability to profit from the appreciation in value of a set number of shares of common stock over a period of time by exercising their award and receiving the sum of the increase in shares. SARs were granted at a price equal to the fair market value of the stock on the date of grant and typically vest and become exercisable over a period of one to three years. Unexercised SARs lapse ten years after the grant date. The following table summarizes the activity relative to SARs for the year ended September 30, 2018 : Number of shares (in thousands) Weighted average exercise price per share Weighted average remaining term (in years) Aggregate intrinsic value (in millions) SARs outstanding as of September 30, 2017 1,824 $ 17.48 7.1 years $ 11 Granted 228 $ 23.08 Exercised (205 ) $ 13.64 $ 2 Forfeited (49 ) $ 20.50 SARs outstanding as of September 30, 2018 1,798 $ 18.54 6.7 years $ 6 SARs exercisable as of September 30, 2018 1,207 $ 17.14 5.8 years $ 5 As of September 30, 2018 , there was $1 million of total unrecognized compensation cost related to SARs, which is expected to be recognized over a weighted average period of 1.7 years. Stock-based compensation expense for SARs was computed using the Black-Scholes option-pricing model to estimate the grant date fair value of new or modified awards with the following key assumptions: 2018 2017 Weighted average grant date fair value per share $ 5.56 $ 7.44 Assumptions (weighted average) Risk-free interest rate (a) 2.2 % 1.7 % Expected dividend yield 0.9 % 0.9 % Expected volatility (b) 23.3 % 22.8 % Expected term (in years) (c) 5.88 7.45 (a) Based on the U.S. Treasury yield curve in effect at the time of grant or modification for the expected term of the award. The range of risk-free interest rates used for SARs converted at Distribution in fiscal 2017 was 1.1% to 1.9% . (b) Due to the lack of historical data for Valvoline, expected volatility is based on the average of peer companies’ historical daily equity volatilities with look-back periods commensurate with the expected term. The range of expected volatility used for SARs converted at Distribution in fiscal 2017 was 21.5% to 24.4% . (c) Due to the lack of historical data for Valvoline, the expected term is based on the mid-point between the vesting date and the end of the contractual term. Nonvested stock awards Nonvested stock awards in the form of Restricted Stock Awards (“RSAs”) and Restricted Stock Units (“RSUs”) were granted to certain Valvoline employees and directors. These awards were granted at a price equal to the fair market value of the underlying common stock on the grant date, generally vest over a one to three -year period, and are subject to forfeiture upon termination of service before the vesting period ends. These awards were primarily granted as RSUs that settle in shares upon vesting, while RSAs result in share issuance at grant, which entitle award holders to voting rights that are restricted until vesting. Dividends on nonvested stock awards granted are in the form of additional units or shares of nonvested stock awards, which are subject to vesting and forfeiture provisions. The following table summarizes nonvested share activity for the year ended September 30, 2018 : Number of shares (in thousands) Weighted average grant date fair value per share Unvested shares as of September 30, 2017 1,275 $ 22.71 Granted 359 $ 23.17 Vested (254 ) $ 22.73 Forfeited (102 ) $ 22.66 Unvested shares as of September 30, 2018 1,278 $ 23.07 The total grant date fair value of shares vested was $6 million and less than $1 million for the years ended September 30, 2018 and 2017, respectively. The weighted average grant date fair value per share for new and modified nonvested stock awards in fiscal 2017 was $22.82 . As of September 30, 2018 , there wa s $9 million of total unrecognized compensation costs related to nonvested stock awards, which is expected to be recognized over a weighted average period of 2.6 years. The aggregate intrinsic value of nonvested stock awards as of September 30, 2018 is $27 million . Performance awards Performance shares/units were awarded to certain key Valvoline employees that are tied to overall financial performance relative to the financial performance of selected industry peer groups and/or internal targets. Awards are granted annually, with each award typically covering a three -year performance and vesting period. Each performance share/unit is convertible to one share of common stock, and the actual number of shares issuable upon vesting is determined based upon actual performance compared to market and financial performance targets. Nonvested performance shares/units generally do not entitle employees to vote or to receive any dividends thereon. The following table summarizes performance award activity for the year ended September 30, 2018 : Number of shares (in thousands) Weighted average grant date fair value per share Unvested shares as of September 30, 2017 182 $ 23.20 Granted 164 $ 23.82 Forfeited (19 ) $ 17.93 Unvested shares as of September 30, 2018 327 $ 22.64 As of September 30, 2018 , there was $1 million of unrecognized compensation costs related to nonvested performance share awards, which is expected to be recognized over a weighted average period of approximately 1.8 years. The aggregate intrinsic value of the nonvested stock awards as of September 30, 2018 is $7 million . The weighted average grant date fair value per share for performance shares/units awards modified in fiscal 2017 was $18.44 . With regard to the performance conditions, the fair value of new or modified awards is equal to the grant date fair market value of Valvoline’s common stock, and compensation cost is recognized over the requisite service period when it is probable that the performance condition will be satisfied. For market conditions, compensation cost is recognized regardless of whether the conditions are satisfied and based on the grant date fair value of new or modified awards using a Monte Carlo simulation valuation model using the following key assumptions: 2018 2017 Assumptions (weighted average) Risk-free interest rates (a) 1.7 % 1.2 % Expected dividend yield 1.0 % 1.0 % Expected volatility (b) 24.2 % 21.0 % Expected term (in years) 3.0 1.9 (a) Based on the U.S. Treasury yield curve in effect at the time of grant or modification for the expected term of the award. The range of risk-free interest rates used for performance awards was 1.6% to 1.8% in fiscal 2018 and 0.9% to 1.5% in fiscal 2017 for awards converted at Distribution. (b) Due to the lack of historical data for Valvoline, expected volatility is based on the average of peer companies’ historical volatilities with look-back periods commensurate with the expected term. The range of expected volatility used for performance awards converted at Distribution in fiscal 2017 was 18.9% to 22.4% . |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE The following is the summary of basic and diluted EPS for the years ended September 30: (In millions except per share data) 2018 2017 2016 Numerator Net income $ 166 $ 304 $ 273 Denominator Weighted average shares common shares outstanding (a) 197 204 170 Effect of potentially dilutive securities (b) — — — Weighted average diluted shares outstanding 197 204 170 Earnings per share Basic $ 0.84 $ 1.49 $ 1.60 Diluted $ 0.84 $ 1.49 $ 1.60 (a) The weighted average common shares outstanding for the year ended September 30, 2016 is based on the 170 million shares issued to Ashland in the Contribution. (b) During the year ended September 30, 2017, share-based awards that were previously denominated in Ashland common stock were converted to Valvoline common stock at the Distribution. As presented in the table, there was not a significant dilutive impact in the years ended September 30, 2018 and 2017 from potential common shares. |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Deficit | STOCKHOLDERS’ DEFICIT Stockholder dividends Since the first fiscal quarter of 2017, the Company has issued a quarterly cash dividend. The Company’s dividend activity was as follows during the years ended September 30: (In millions except per share amounts) 2018 2017 2016 Cash outlay $ 58 $ 40 $ — Dividend per share $ 0.298 $ 0.196 $ — Share repurchases During fiscal 2017, Valvoline’s Board of Directors authorized the repurchase of $150 million of the Company’s common stock for which the shares were repurchased during fiscal 2017 and 2018. In January 2018, the Board authorized the repurchase of up to $300 million of the Company’s common stock through September 30, 2020. As of September 30, 2018 , the remaining amount available for repurchase was $75 million . Upon repurchase, shares were retired and recorded as a reduction in Common stock for par value with the price paid in excess of par value recorded as an increase in Retained deficit . The following table summarizes the Company’s share repurchase activity during the years ended September 30: (In millions) 2018 2017 2016 Total cost $ 325 $ 50 $ — Shares repurchased 15 2 — Accumulated other comprehensive income Changes in accumulated other comprehensive income by component for the years ended September 30, 2017 and 2018 were as follows: (In millions) Unamortized benefit plan credits Currency translation adjustments Total Balance as of September 30, 2016 $ 52 $ (55 ) $ (3 ) Fiscal 2017 activity, net of tax (8 ) 54 46 Balance as of September 30, 2017 44 (1 ) 43 Fiscal 2018 activity, net of tax (1 ) (10 ) (11 ) Balance as of September 30, 2018 $ 43 $ (11 ) $ 32 Amounts reclassified from accumulated other comprehensive income for the years ended September 30 were as follows: (in millions) 2018 2017 Amortization of pension and other postretirement plan prior service credit (a) $ (12 ) $ (12 ) Loss on liquidation of subsidiary (b) 1 — Tax effect of reclassifications 2 4 Net of tax (9 ) (8 ) Reclassification of income tax effects of U.S. tax reform (c) 8 — Total amounts reclassified, net of tax $ (1 ) $ (8 ) (a) Amortization of unrecognized prior service credits included in net periodic benefit income for pension and other postretirement plans was reported in Net pension and other postretirement plan income within the Consolidated Statements of Comprehensive Income. (b) Represents the realization of cumulative translation adjustments in Equity and other income, net within the Consolidated Statements of Comprehensive Income as a result of the liquidation of the Company’s Brazilian subsidiary. (c) Represents the reclassification of stranded income tax effects of U.S. tax reform to Retained deficit in the Consolidated Balance Sheet. The Company generally releases the income tax effects from accumulated other comprehensive income as benefit plan credits are amortized into earnings. Separation from Ashland On May 12, 2017, Ashland completed the Distribution of all 170 million shares of Valvoline common stock as a pro rata dividend on shares of Ashland common stock outstanding at the close of business on the record date of May 5, 2017. Based on the shares of Ashland common stock outstanding on the record date, each share of Ashland common stock received 2.745338 shares of Valvoline common stock in the Distribution. Concurrent with the Distribution, Ashland’s net investment in Valvoline was reduced to zero with a corresponding adjustment to Paid-in capital and Retained deficit . Refer to Note 1 for additional information regarding the separation from Ashland. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS Ashland Transactions Separation from Ashland Immediately prior to the Distribution, Ashland owned 170 million shares of Valvoline common stock, which represented approximately 83% of the outstanding shares of Valvoline common stock. Effective upon the Distribution, Ashland no longer held any shares of Valvoline common stock. Refer to Note 1 for further information on the separation from Ashland. Also refer to Note 15 for information regarding the conversion of share-based awards from Ashland to Valvoline at Distribution. Related party payables Valvoline had total net obligations due to Ashland of $79 million and $74 million as of September 30, 2018 and 2017, respectively, which were primarily recorded in Other noncurrent liabilities in the Consolidated Balance Sheets. These liabilities generally relate to net obligations due to Ashland under the Tax Matters Agreement as well as reimbursements payable to Ashland for certain other contractual obligations, including those that are intended to transfer to Valvoline as part of the Distribution and those related to transition services. Refer to Note 12 for additional details regarding the Tax Matters Agreement and related obligations. Transition Services Agreements Valvoline also entered into a Transition Services Agreement (“TSA”) and Reverse Transition Services Agreement (“RTSA”) as well as certain other arrangements in connection with the separation from Ashland, which provide for certain continued corporate support services provided by Valvoline and Ashland to one another following the IPO. In connection with the IPO, Valvoline began to set up its own corporate functions, and pursuant to the TSA, Ashland provided various corporate support services for Valvoline, including certain accounting, human resources, information technology, office and building, risk, security, tax and treasury services. Pursuant to the RTSA, Valvoline provided Ashland with various corporate support services, including certain human resources, information technology, office and building, security and tax services, as well as certain regulatory compliance services required during the period in which Valvoline remained a majority-owned subsidiary of Ashland. In general, these agreements began following the completion of the IPO and cover a period not expected to exceed 24 months . The charges associated with these services were not material during the years ended September 30, 2018, 2017 and 2016, and the costs are consistent with expenses that Ashland had historically allocated or Valvoline incurred with respect to such services, plus a mark-up of five percent. Corporate allocations Prior to the completion of the IPO in fiscal 2016, Valvoline utilized centralized functions of Ashland to support its operations, and in return, Ashland allocated certain of its expenses to Valvoline. Such expenses represent costs related, but not limited to, treasury, legal, accounting, insurance, information technology, payroll administration, human resources, incentive plans and other services. These costs, together with an allocation of Ashland overhead costs, were $79 million for the year ended September 30, 2016 and were included within Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income. Where it was possible to specifically attribute such expenses to activities of Valvoline, amounts were charged or credited directly to Valvoline without allocation or apportionment. Allocation of all other such expenses was based on a reasonable reflection of the utilization of service provided or benefits received by Valvoline during the periods presented on a consistent basis, such as headcount, square footage, tangible assets or sales. Valvoline’s management considers the methods used in allocating expenses to be reasonable estimates. Upon completion of the IPO, Valvoline assumed responsibility for the costs of these functions as noted above. The following table summarizes the centralized and administrative support costs that were allocated to Valvoline from Ashland for the year ended September 30, 2016: (In millions) Information technology $ 20 Financial and accounting 12 Building services 11 Legal and environmental 6 Human resources 5 Shared services 2 Stock-based compensation 11 Other general and administrative 12 Total $ 79 Cash management and treasury For periods prior to the IPO in fiscal 2016, Valvoline participated in Ashland’s centralized treasury and cash management processes. Accordingly, the cash and cash equivalents were held by Ashland at the corporate level and were not attributed to Valvoline. Transactions in periods prior to the IPO were considered to be effectively settled for cash at the time the transactions were recorded. These transactions and net cash transfers to and from Ashland’s centralized cash management system are reflected as a component of Ashland’s net investment on the Consolidated Statement of Stockholders’ Deficit and as a financing activity within the accompanying Consolidated Statements of Cash Flows. In the Consolidated Statement of Stockholders’ Deficit, Ashland’s net investment represents the cumulative net investment by Ashland in Valvoline through the IPO, including net cash transfers to and from Ashland through the Distribution. All significant transactions between Valvoline and Ashland have been included in the consolidated financial statements. In the periods preceding the IPO and Distribution, Valvoline also participated in certain of Ashland’s treasury activities related to accounts receivable factoring. Refer to Note 6 for additional information. |
Reportable Segment Information
Reportable Segment Information | 12 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segment Information | REPORTABLE SEGMENT INFORMATION Valvoline manages and reports within the following three segments: • Core North America - sells engine and automotive maintenance products in the United States and Canada to retailers, installers and heavy-duty customers to service vehicles and equipment. • Quick Lubes - services the passenger car and light truck quick lube market in the United States and Canada through company-owned and independent franchised retail quick lube service center stores, as well as Express Care stores where independent operators service vehicles with Valvoline products. • International - sells engine and automotive maintenance products in approximately 140 countries outside of the United States and Canada for the maintenance of consumer and commercial vehicles and equipment. These segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker in assessing segment performance and in allocating the Company’s resources. Sales and operating income are the primary U.S. GAAP measures evaluated in assessing each reportable segment’s financial performance. Intersegment sales are not material, and assets are not allocated and included in the assessment of segment performance; consequently, these items are not disclosed by segment herein. To maintain operating focus on business performance, certain corporate and non-operational items, including adjustments related to legacy businesses that no longer are attributed to Valvoline, are excluded from the segment operating results utilized by the chief operating decision maker in evaluating segment performance and are separately delineated within Unallocated and other to reconcile to total reported Operating income as shown in the table below. Valvoline did not have a single customer that represented 10% of consolidated net sales in fiscal 2016 , 2017 or 2018 . Reportable segment results The following table presents sales, operating income, and depreciation and amortization by reportable segment for the years ended September 30: (In millions) 2018 2017 2016 Sales Core North America $ 1,035 $ 1,004 $ 979 Quick Lubes 660 541 457 International 590 539 493 Consolidated sales $ 2,285 $ 2,084 $ 1,929 Operating income Core North America $ 172 $ 199 $ 212 Quick Lubes 153 130 117 International (a) 84 76 74 Total operating segments 409 405 403 Unallocated and other (b) (14 ) (11 ) (7 ) Consolidated operating income $ 395 $ 394 $ 396 Depreciation and amortization Core North America $ 18 $ 15 $ 16 Quick Lubes 30 22 17 International 6 5 5 Consolidated depreciation and amortization $ 54 $ 42 $ 38 (a) Equity income is included in operating income and is recognized within the International reportable segment. Equity income was $14 million , $12 million and $12 million in fiscal 2018, 2017 and 2016, respectively. Refer to Note 5 for additional details regarding the Company’s equity method investments. (b) Unallocated and other includes Legacy and separation-related expenses, net . The following table summarizes sales by category for each reportable segment for the years ended September 30: Sales by category Core North America Quick Lubes International 2018 2017 2016 2018 2017 2016 2018 2017 2016 Lubricants 85 % 86 % 87 % 85 % 84 % 83 % 89 % 89 % 89 % Antifreeze 8 % 7 % 7 % 1 % 1 % 1 % 5 % 6 % 3 % Filters 3 % 3 % 2 % 8 % 8 % 8 % 3 % 1 % 1 % Chemicals and other 4 % 4 % 4 % 2 % 2 % 2 % 3 % 4 % 7 % Franchise — — — 4 % 5 % 6 % — — — Total 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % Entity-wide disclosures Sales and net property, plant and equipment are attributed to the geographic area or country to which product is delivered and the assets physically reside, respectively. The following table presents sales and net property, plant and equipment by geographic area for Valvoline for the years ended September 30: Sales from external customers Property, plant and equipment, net (In millions) 2018 2017 2016 2018 2017 United States $ 1,652 $ 1,504 $ 1,397 $ 384 $ 352 International 633 580 532 36 39 Total $ 2,285 $ 2,084 $ 1,929 $ 420 $ 391 Sales by geography expressed as a percentage of total consolidated sales were as follows: For the years ended September 30 Sales by geography 2018 2017 2016 North America (a) 74 % 74 % 75 % EMEA (Europe, Middle East and Africa) 8 % 7 % 7 % Asia Pacific 13 % 14 % 14 % Latin America 5 % 5 % 4 % Total 100 % 100 % 100 % (a) Valvoline includes the United States and Canada in its North American region. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Sep. 30, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following table presents quarterly financial information and per share data: First Quarter Second Quarter Third Quarter Fourth Quarter (In millions except per share amounts) 2018 2017 2018 2017 2018 2017 2018 2017 Sales $ 545 $ 489 $ 569 $ 514 $ 577 $ 534 $ 594 $ 547 Gross profit $ 195 $ 185 $ 207 $ 198 $ 201 $ 197 $ 203 $ 196 Operating income (a) $ 88 $ 94 $ 100 $ 100 $ 102 $ 87 $ 105 $ 113 Income before income taxes (a) (b) $ 84 $ 110 $ 94 $ 109 $ 97 $ 94 $ 57 $ 177 Net (loss) income (c) $ (10 ) $ 72 $ 67 $ 71 $ 64 $ 56 $ 45 $ 105 Net (loss) income per common share (d) Basic $ (0.05 ) $ 0.35 $ 0.33 $ 0.35 $ 0.33 $ 0.27 $ 0.23 $ 0.52 Diluted $ (0.05 ) $ 0.35 $ 0.33 $ 0.35 $ 0.33 $ 0.27 $ 0.23 $ 0.52 (a) Operating and pre-tax income included Legacy and separation-related expenses, net of $6 million in the first fiscal quarter of 2017, $6 million in the second fiscal quarter of 2017, $13 million in the third fiscal quarter of 2017, $14 million of income in the fourth fiscal quarter of 2017, $9 million in the first fiscal quarter of 2018, $8 million in the second fiscal quarter of 2018, and $3 million of income in the third fiscal quarter of 2018. (b) Pre-tax income included pension and other postretirement benefit plan remeasurement gains of $8 million and $60 million in the first quarter of fiscal 2017 and the fourth quarter of fiscal 2017, respectively. Pre-tax income in the fourth quarter of fiscal 2018 includes pre-tax pension other postretirement plan remeasurement losses of $38 million . (c) Net (loss) income for fiscal 2018 includes additional income tax expense related to U.S. and Kentucky tax reform enacted during the year of $71 million in the first quarter of fiscal 2018, $2 million in the second fiscal quarter of 2018, $3 million in the third fiscal quarter of 2018, and $2 million in the fourth fiscal quarter of 2018. (d) Net (loss) income per share in each quarter is computed using the weighted average number of shares outstanding during that quarter while net income per share for the full year is computed using the weighted average number of shares outstanding during the year. Thus, the sum of the four quarters’ net (loss) income per share will not necessarily equal the full-year net income per share. |
Guarantor Financial Information
Guarantor Financial Information | 12 Months Ended |
Sep. 30, 2018 | |
Condensed Financial Information Disclosure [Abstract] | |
Guarantor Financial Information | GUARANTOR FINANCIAL INFORMATION The Senior Notes are general unsecured senior obligations of Valvoline Inc. and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by the combined “Guarantor Subsidiaries.” Other subsidiaries (the “Non-Guarantor Subsidiaries”) largely represent the international operations of the Company, which do not guarantee the Senior Notes. Under the terms of the indentures, Valvoline Inc. and the Guarantor Subsidiaries each fully and unconditionally, jointly and severally, guarantee the payment of interest, principal and premium, if any, on each of the notes included in the Senior Notes. Refer to Note 10 for additional information. The Guarantor Subsidiaries are subject to release in certain circumstances, including (i) the sale of all of the capital stock of the subsidiary, (ii) the designation of the subsidiary as an “Unrestricted Subsidiary” under the indenture governing the Senior Notes; or (iii) the release of the subsidiary as a guarantor from the Company’s 2016 Senior Credit Agreement described further in Note 10. In connection with the registered exchange offers for the Senior Notes completed in December 2017, the Company is required to comply with Rule 3-10 of SEC Regulation S-X (“Rule 3-10”), and has therefore included the accompanying condensed consolidating financial statements in accordance with Rule 3-10(f) of SEC Regulation S-X. The following tables should be read in conjunction with the consolidated financial statements herein and present, on a consolidating basis, the condensed statements of comprehensive income; condensed balance sheets; and condensed statements of cash flows for the parent issuer of these Senior Notes, the Guarantor Subsidiaries on a combined basis, the Non-Guarantor Subsidiaries on a combined basis and the eliminations necessary to arrive at the Company’s consolidated results. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. The Company has accounted for its investments in its subsidiaries under the equity method. In connection with the restructuring steps that occurred immediately prior to Valvoline's IPO as described in Note 1, certain subsidiaries were created and contributed to Valvoline which formed a new organizational structure to affect the separation from Ashland, which was completed in May 2017. Activity for the parent issuer, Guarantor Subsidiaries and Non-Guarantor Subsidiaries has been presented herein to reflect the guarantee structure in place at September 30, 2018 for all periods presented based upon the historical activity that occurred within Valvoline's legal structure that existed in each respective period presented. Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,782 $ 558 $ (55 ) $ 2,285 Cost of sales — 1,132 402 (55 ) 1,479 Gross profit — 650 156 — 806 Selling, general and administrative expenses 11 327 92 — 430 Legacy and separation-related expenses, net 8 6 — — 14 Equity and other (income) expenses, net — (50 ) 17 — (33 ) Operating (loss) income (19 ) 367 47 — 395 Net pension and other postretirement plan expense (income) — 1 (1 ) — — Net interest and other financing expenses 53 6 4 — 63 (Loss) income before income taxes (72 ) 360 44 — 332 Income tax expense 14 140 12 — 166 Equity in net income of subsidiaries (252 ) (32 ) — 284 — Net income $ 166 $ 252 $ 32 $ (284 ) $ 166 Total comprehensive income $ 147 $ 234 $ 25 $ (259 ) $ 147 Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2017 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,618 $ 523 $ (57 ) $ 2,084 Cost of sales — 986 379 (57 ) 1,308 Gross profit — 632 144 — 776 Selling, general and administrative expenses 9 296 91 — 396 Legacy and separation-related expenses, net (15 ) 26 — — 11 Equity and other (income) expenses, net — (37 ) 12 — (25 ) Operating income 6 347 41 — 394 Net pension and other postretirement plan income — (134 ) (4 ) — (138 ) Net interest and other financing expenses 36 4 2 — 42 (Loss) income before income taxes (30 ) 477 43 — 490 Income tax (benefit) expense (3 ) 178 11 — 186 Equity in net income of subsidiaries (331 ) (32 ) — 363 — Net income $ 304 $ 331 $ 32 $ (363 ) $ 304 Total comprehensive income $ 303 $ 330 $ 43 $ (373 ) $ 303 Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2016 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,500 $ 476 $ (47 ) $ 1,929 Cost of sales — 895 333 (47 ) 1,181 Gross profit — 605 143 — 748 Selling, general and administrative expenses — 285 80 — 365 Legacy and separation-related expenses, net — 6 — — 6 Equity and other (income) expenses, net — (21 ) 2 — (19 ) Operating income — 335 61 — 396 Net pension and other postretirement plan (income) expense — (43 ) 8 — (35 ) Net interest and other financing expenses 9 — — — 9 Net loss on acquisition — 1 — — 1 (Loss) income before income taxes (9 ) 377 53 — 421 Income tax (benefit) expense (4 ) 143 9 — 148 Equity in net income of subsidiaries (278 ) (44 ) — 322 — Net income $ 273 $ 278 $ 44 $ (322 ) $ 273 Total comprehensive income $ 280 $ 285 $ 53 $ (338 ) $ 280 Condensed Consolidating Balance Sheets As of September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets Cash and cash equivalents $ — $ 20 $ 76 $ — $ 96 Accounts receivable, net — 48 480 (119 ) 409 Inventories, net — 95 81 — 176 Prepaid expenses and other current assets 1 38 5 — 44 Total current assets 1 201 642 (119 ) 725 Noncurrent assets Property, plant and equipment, net — 384 36 — 420 Goodwill and intangibles, net — 396 52 — 448 Equity method investments — 31 — — 31 Investment in subsidiaries 801 509 — (1,310 ) — Deferred income taxes 62 63 13 — 138 Other noncurrent assets 2 85 5 — 92 Total noncurrent assets 865 1,468 106 (1,310 ) 1,129 Total assets $ 866 $ 1,669 $ 748 $ (1,429 ) $ 1,854 Liabilities and Stockholders’ Deficit Current liabilities Current portion of long-term debt $ 30 $ — $ — $ — $ 30 Trade and other payables 3 241 53 (119 ) 178 Accrued expenses and other liabilities 7 168 28 — 203 Total current liabilities 40 409 81 (119 ) 411 Noncurrent liabilities Long-term debt 1,151 1 140 — 1,292 Employee benefit obligations — 317 16 — 333 Other noncurrent liabilities 33 141 2 — 176 Total noncurrent liabilities 1,184 459 158 — 1,801 Commitments and contingencies Stockholders’ (deficit) equity (358 ) 801 509 (1,310 ) (358 ) Total liabilities and stockholders’ deficit/equity $ 866 $ 1,669 $ 748 $ (1,429 ) $ 1,854 Condensed Consolidating Balance Sheets As of September 30, 2017 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets Cash and cash equivalents $ — $ 99 $ 102 $ — $ 201 Accounts receivable, net — 57 389 (61 ) 385 Inventories, net — 94 81 — 175 Prepaid expenses and other current assets — 25 4 — 29 Total current assets — 275 576 (61 ) 790 Noncurrent assets Property, plant and equipment, net — 353 38 — 391 Goodwill and intangibles, net — 333 2 — 335 Equity method investments — 30 — — 30 Investment in subsidiaries 606 447 — (1,053 ) — Deferred income taxes 145 122 14 — 281 Other noncurrent assets 314 80 6 (312 ) 88 Total noncurrent assets 1,065 1,365 60 (1,365 ) 1,125 Total assets $ 1,065 $ 1,640 $ 636 $ (1,426 ) $ 1,915 Liabilities and Stockholders’ Deficit Current liabilities Short-term debt $ — $ — $ 75 $ — $ 75 Current portion of long-term debt 15 — — — 15 Trade and other payables 2 198 53 (61 ) 192 Accrued expenses and other liabilities 103 60 33 — 196 Total current liabilities 120 258 161 (61 ) 478 Noncurrent liabilities Long-term debt 1,032 2 — — 1,034 Employee benefit obligations — 321 21 — 342 Other noncurrent liabilities 30 453 7 (312 ) 178 Total noncurrent liabilities 1,062 776 28 (312 ) 1,554 Commitments and contingencies Stockholders’ (deficit) equity (117 ) 606 447 (1,053 ) (117 ) Total liabilities and stockholders’ deficit/equity $ 1,065 $ 1,640 $ 636 $ (1,426 ) $ 1,915 Condensed Consolidating Statements of Cash Flows For the year ended September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash flows (used in) provided by operating activities $ (57 ) $ 390 $ (13 ) $ — $ 320 Cash flows from investing activities Additions to property, plant and equipment — (88 ) (5 ) — (93 ) Acquisitions, net of cash required — (72 ) (53 ) — (125 ) Other investing activities, net — 5 — — 5 Return of advance from subsidiary 312 — — (312 ) — Cash flows provided by (used in) investing activities 312 (155 ) (58 ) (312 ) (213 ) Cash flows from financing activities Proceeds from borrowings, net of issuance costs 203 — 101 — 304 Repayments on borrowings (72 ) — (36 ) — (108 ) Repurchases of common stock (325 ) — — — (325 ) Purchase of additional ownership in subsidiary — — (15 ) — (15 ) Cash dividends paid (58 ) — — — (58 ) Other financing activities (3 ) (2 ) (2 ) — (7 ) Other intercompany activity, net — (312 ) — 312 — Cash flows (used in) provided by financing activities (255 ) (314 ) 48 312 (209 ) Effect of currency exchange rate changes on cash and cash equivalents — — (3 ) — (3 ) Decrease in cash and cash equivalents — (79 ) (26 ) — (105 ) Cash and cash equivalents - beginning of year — 99 102 — 201 Cash and cash equivalents - end of year $ — $ 20 $ 76 $ — $ 96 Condensed Consolidating Statements of Cash Flows For the year ended September 30, 2017 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash flows provided by (used in) operating activities $ 97 $ (180 ) $ (47 ) $ — $ (130 ) Cash flows from investing activities Additions to property, plant and equipment — (64 ) (4 ) — (68 ) Acquisitions, net of cash required — (68 ) — — (68 ) Other investing activities, net — 1 — — 1 Advance to subsidiary (312 ) — — 312 — Cash flows used in investing activities (312 ) (131 ) (4 ) 312 (135 ) Cash flows from financing activities Net transfers from Ashland 5 — — — 5 Proceeds from borrowings, net of issuance costs 395 — 75 — 470 Repayments on borrowings (90 ) — — — (90 ) Repurchases of common stock (50 ) — — — (50 ) Cash dividends paid (40 ) — — — (40 ) Other intercompany activity, net (5 ) 317 — (312 ) — Cash flows provided by financing activities 215 317 75 (312 ) 295 Effect of currency exchange rate changes on cash and cash equivalents — — (1 ) — (1 ) Increase in cash and cash equivalents — 6 23 — 29 Cash and cash equivalents - beginning of year — 93 79 — 172 Cash and cash equivalents - end of year $ — $ 99 $ 102 $ — $ 201 Condensed Consolidating Statements of Cash Flows For the year ended September 30, 2016 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash flows (used in) provided by operating activities $ (35 ) $ 307 $ 39 $ — $ 311 Cash flows from investing activities Additions to property, plant and equipment — (60 ) (6 ) — (66 ) Acquisitions, net of cash required — (83 ) — — (83 ) Other investing activities, net — 1 — — 1 Cash flows used in investing activities — (142 ) (6 ) — (148 ) Cash flows from financing activities Net transfers to Ashland (1,504 ) — — — (1,504 ) Cash contributions from Ashland 60 — — — 60 Proceeds from initial public offering, net of offering costs 719 — — — 719 Proceeds from borrowings, net of issuance costs 1,372 — — — 1,372 Repayments on borrowings (637 ) — — — (637 ) Other intercompany activity, net 25 (72 ) 47 — — Cash flows provided by (used in) financing activities 35 (72 ) 47 — 10 Effect of currency exchange rate changes on cash and cash equivalents — — (1 ) — (1 ) Increase in cash and cash equivalents — 93 79 — 172 Cash and cash equivalents - beginning of year — — — — — Cash and cash equivalents - end of year $ — $ 93 $ 79 $ — $ 172 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Quick Lubes acquisitions Valvoline acquired 35 service center stores for an aggregate purchase price of approximately $30 million from October 1 through November 19, 2018, which continues the expansion of the Company’s existing Quick Lubes network. These acquisitions included 31 franchise service center stores in Ontario, Canada acquired from Oil Changers Inc. and four former franchise service center stores acquired in single and multi-store transactions. Dividend declared On November 19, 2018, the Company’s Board of Directors approved a quarterly cash dividend of $0.106 per share of common stock. The dividend is payable December 17, 2018 to shareholders of record on November 30, 2018. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Sep. 30, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | VALVOLINE INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS For the years ended September 30, 2018, 2017 and 2016 (In millions) (A) (B) (C) (D) (E) Additions Description Balance at beginning of period Charged to expenses Charged to other accounts Deductions Balance at end of period Allowance for doubtful accounts Year ended September 30, 2018 $ 5 $ 2 $ 1 $ (1 ) $ 7 Year ended September 30, 2017 $ 5 $ 1 $ — $ (1 ) $ 5 Year ended September 30, 2016 $ 4 $ 1 $ — $ — $ 5 Inventory excess and obsolete reserves Year ended September 30, 2018 $ 3 $ — $ — $ — $ 3 Year ended September 30, 2017 $ 2 $ 1 $ — $ — $ 3 Year ended September 30, 2016 $ 2 $ — $ — $ — $ 2 Deferred tax asset valuation allowance Year ended September 30, 2018 $ 8 $ — $ — $ (1 ) $ 7 Year ended September 30, 2017 $ 12 $ — $ — $ (4 ) $ 8 Year ended September 30, 2016 $ 7 $ — $ 5 $ — $ 12 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation and consolidation | Basis of presentation and consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and U.S. Securities and Exchange Commission (“SEC”) regulations. The financial statements are presented on a consolidated basis for all periods presented and include the accounts of the Company and its majority-owned and controlled subsidiaries. All intercompany transactions and balances within Valvoline have been eliminated in consolidation. Certain prior period amounts have been reclassified in the accompanying consolidated financial statements and notes thereto to conform to the current period presentation. The Contribution of the Valvoline business by Ashland to Valvoline was treated as a reorganization of entities under common Ashland control. As a result, Valvoline retrospectively presented the consolidated financial statements of Valvoline and its subsidiaries for periods presented prior to the completion of the Contribution, which were prepared on a stand-alone basis and derived from Ashland’s consolidated financial statements and accounting records using the historical results of operations, and assets and liabilities attributed to Valvoline’s operations, as well as allocations of expenses from Ashland. The consolidated financial statements for periods presented subsequent to the completion of the Contribution reflect the transfer of various assets and liabilities from Ashland on a carryover basis (historical cost) and the consolidated operations of Valvoline and its majority-owned subsidiaries as a separate, stand-alone entity. All transactions and balances between Valvoline and Ashland have been reported in the consolidated financial statements. For periods prior to the IPO, these transactions were considered to be effectively settled for cash at the time the transactions were recorded. These transactions and net cash transfers to and from Ashland’s centralized cash management system are reflected as a component of Ashland’s net investment in the Consolidated Statements of Stockholders’ Deficit and as a financing activity within the accompanying Consolidated Statements of Cash Flows. Ashland’s net investment represents the cumulative net investment by Ashland in Valvoline through the IPO, including net income through the completion of the IPO and net cash transfers to and from Ashland through Distribution. Valvoline’s retained earnings from the IPO through September 30, 2016 were not material and accordingly, were not separately presented in the Consolidated Statements of Stockholders’ Deficit. Concurrent with the Distribution, Ashland’s net investment in Valvoline was reduced to zero with a corresponding adjustment to Paid-in capital and Retained deficit . Prior to the completion of the IPO, Valvoline utilized centralized functions of Ashland to support its operations, and in return, Ashland allocated certain of its expenses to Valvoline. These costs, together with an allocation of Ashland overhead costs, are included within Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income for the year ended September 30, 2016 and are disclosed in more detail in Note 18. Upon completion of the IPO, Valvoline assumed responsibility for the costs of these functions. |
Use of estimates, risks and uncertainties | Use of estimates, risks and uncertainties The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent matters. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets (including intangible assets and goodwill), customer incentives, employee benefit obligations and income taxes. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. |
Cash and cash equivalents | Cash and cash equivalents All short-term, highly liquid investments having original maturities of three months or less are considered to be cash equivalents. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts Valvoline records an allowance for doubtful accounts as a best estimate of the amount of probable credit losses for accounts receivable. Valvoline estimates the allowance for doubtful accounts based on a variety of factors, including the length of time receivables are past due, the financial health of its customers, macroeconomic conditions, past transaction history with the customer and changes in customer payment terms. If the financial condition of its customers deteriorates or other circumstances occur that result in an impairment of customers’ ability to make payments, the Company records additional allowances as needed. The Company writes off uncollectible accounts receivable against the allowance for doubtful accounts when collection efforts have been exhausted and/or any legal action taken by the Company has concluded. |
Inventories | Inventories Inventories are primarily carried at the lower of cost or net realizable value using the weighted average cost method. In addition, certain lubricants are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method to provide matching of revenues with current costs. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventories. The Company regularly reviews inventory quantities on hand and the estimated utility of inventory. Excess and obsolete reserves are established when inventory is estimated to not be usable based on forecasted usage, product demand and life cycle, as well as utility. |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the assets. Buildings are depreciated principally over 5 to 25 years and machinery and equipment principally over 5 to 30 years. Property, plant and equipment is relieved of the cost and related accumulated depreciation when assets are disposed of or otherwise retired. Gains or losses on the dispositions of property, plant and equipment are included in the Consolidated Statements of Comprehensive Income and generally reported in Equity and other income, net . Property, plant and equipment carrying values are evaluated for recoverability when impairment indicators are present and are conducted at the lowest identifiable level of cash flows. Such indicators could include, among other factors, operating losses, unused capacity, market value declines and technological obsolescence. Recorded values of asset groups of property, plant and equipment that are not expected to be recovered through undiscounted future net cash flows are written down to current fair value, which generally is determined from estimated discounted future net cash flows (assets held for use) or net realizable value (assets held for sale). |
Business combinations | Business combinations The financial results of the businesses that Valvoline has acquired are included in the Company’s consolidated financial results from the respective dates of the acquisitions. The Company allocates the purchase consideration to the identifiable assets acquired and liabilities assumed in the business combination based on their acquisition-date fair values. The excess of the purchase consideration over the amounts assigned to the identifiable assets and liabilities is recognized as goodwill. Factors giving rise to goodwill generally include synergies that are anticipated as a result of the business combination, including access to new customers and markets. The fair values of identifiable intangible assets acquired in business combinations are generally determined using an income approach, requiring financial forecasts and estimates as well as market participant assumptions. |
Goodwill and other intangible assets | Goodwill and other intangible assets Valvoline tests goodwill for impairment annually as of July 1 or when events and circumstances indicate an impairment may have occurred. This annual assessment consists of Valvoline determining each reporting unit’s current fair value compared to its current carrying value. Valvoline’s reporting units are Core North America, Quick Lubes, and International. In evaluating goodwill for impairment, Valvoline has the option to first perform a qualitative assessment to determine whether further impairment testing is necessary or to perform a quantitative assessment by comparing the fair value of a reporting unit to its carrying amount, including goodwill. Under the qualitative assessment, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. Qualitative factors include macroeconomic conditions, industry and market conditions, cost factors, and overall financial performance, among others. If under the quantitative assessment, the fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, must be measured under step two of the impairment analysis. In step two of the analysis, an impairment loss will be recorded equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value. Fair values of the reporting units are estimated using a weighted methodology considering the output from both the income and market approaches. The income approach incorporates the use of a discounted cash flow (“DCF”) analysis. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including markets and market shares, sales volumes and prices, costs to produce, tax rates, capital spending, discount rate, weighted average cost of capital, terminal values and working capital changes. Several of these assumptions vary among reporting units. The cash flow forecasts are generally based on approved strategic operating plans. The market approach is performed using the Guideline Public Companies method which is based on earnings multiple data. The Company also performs a reconciliation between market capitalization and the estimate of the aggregate fair value of the reporting units, including consideration of a control premium. Valvoline elected to perform a qualitative assessment during fiscal 2018 and determined that it is not more likely than not that the fair values of Valvoline’s reporting units are less than carrying amounts. Acquired finite-lived intangible assets principally consist of certain trademarks and trade names, reacquired franchise rights and customer relationships. Intangible assets acquired in an asset acquisition are carried at cost, less accumulated amortization. For intangible assets acquired in a business combination, the estimated fair values of the assets acquired are used to establish the carrying value, which is determined generally using an income approach, and the Company employs assumptions developed using the perspective of a market participant. These intangible assets are amortized on a straight-line basis over their estimated useful lives. Valvoline reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable and any not expected to be recovered through undiscounted future net cash flows and assets are written down to current fair value. |
Equity method investments | Equity method investments Investments in companies, including joint ventures, where Valvoline has the ability to exert significant influence, but not control, over operating and financial policies of the investee are accounted for using the equity method of accounting. Judgment regarding the level of influence over each investment includes considering key factors such as the Company’s ownership interest, representation on the board of directors, and participation in policy-making decisions. The Company’s proportionate share of the net income or loss of these companies is included within Equity and other income, net in the Consolidated Statements of Comprehensive Income. The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time and extent to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects, and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified. |
Pension and other postretirement benefit plans | Pension and other postretirement benefit plans Valvoline sponsors defined benefit pension and other postretirement plans in the U.S and in certain countries outside the U.S. The majority of these plans were transferred to and assumed by the Company in the Contribution of certain of Ashland’s pension and other postretirement benefit obligations and plan assets in late fiscal 2016. Following the Contribution, Valvoline accounts for these obligations as single-employer plans for which Valvoline recognizes the net liabilities and the full amount of any costs or gains. Valvoline also has certain international single-employer pension plans for which the net liabilities and associated costs have been recognized in each period presented herein. Valvoline recognizes the funded status of each applicable plan on the Consolidated Balance Sheets whereby each underfunded plan is recognized as a liability. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation. Changes in the fair value of plan assets and net actuarial gains or losses are recognized upon remeasurement, which is at least annually as of September 30, the measurement date, and whenever a remeasurement is triggered. The remaining components of pension and other postretirement benefits income are recorded ratably on a quarterly basis. The fair value of plan assets represents the current market value of assets held by irrevocable trust funds for the sole benefit of participants, and the benefit obligation is the actuarial present value of the benefits expected to be paid based on estimates. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age and years of service, as well as certain key assumptions that require significant judgment, including, but not limited to, estimates of discount rates, expected return on plan assets, rate of compensation increases, interest rates and mortality rates. Actuarial gains and losses may be related to actual results that differ from assumptions as well as changes in assumptions, which may occur each year. Due to the freeze of U.S. pension benefits effective September 30, 2016, continuing service costs are limited to certain international pension plans, and are reported in the same caption of the Consolidated Statements of Comprehensive Income as the related employee payroll expenses. All components of net periodic benefit income other than service cost are recognized below operating income within Net pension and other postretirement plan income in the Consolidated Statements of Comprehensive Income. Prior to the Contribution in fiscal 2016, Valvoline employees were eligible to participate in pension and other postretirement benefit plans sponsored by Ashland in many of the countries where the Company did business. Valvoline accounted for its participation in Ashland-sponsored pension and other postretirement benefit plans as a participation in a multiemployer plan and recognized its allocated portion of net periodic benefit cost based on Valvoline-specific plan participants. |
Commitments and contingencies | Commitments and contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Legal costs such as outside counsel fees and expenses are charged to expense in the period incurred and are recorded in Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income. |
Revenue recognition | Revenue recognition Sales generally are recognized when persuasive evidence of an arrangement exists, products are delivered or services are rendered, the sales price is fixed or determinable and collectability is reasonably assured. Valvoline reports all sales net of tax assessed by qualifying governmental authorities. Certain shipping and handling costs paid by the customer are recorded in sales, while those costs paid by Valvoline are recorded in cost of sales. Shipping and handling costs recorded in sales were $10 million in fiscal 2018 and $16 million in both fiscal 2017 and 2016. Sales rebates and discounts, consisting primarily of promotional rebates and customer pricing discounts, are offered through various programs to customers. Sales are recorded net of these rebates and discounts totaling $357 million , $360 million , and $388 million in the Consolidated Statements of Comprehensive Income for the years ended September 30, 2018, 2017, and 2016, respectively. Provisions for sales rebates and discounts are established and recognized as incurred, generally at the time of the sale, or over the term of the sales contract. Valvoline bases its estimates on historical rates of customer discounts and rebates as well as the specific identification of discounts and rebates expected to be realized. Allowances related to these customer incentive programs are adjusted based on actual experience and adjustments are recorded to earnings in the period changes are known and reasonably estimable. Reserves for these customer programs and incentives were $57 million and $54 million as of September 30, 2018 and 2017, respectively, and are recorded within Accrued expenses and other liabilities in the Consolidated Balance Sheets. Franchise revenue included within sales was $29 million , $28 million , and $25 million during fiscal 2018, 2017, and 2016, respectively. Franchise revenue generally consists of initial franchise fees and royalties. Initial franchise fees are recognized when all material obligations have been substantially performed and the store has opened for business. Franchise royalties are based upon a percentage of monthly sales of the franchisees and are recognized as such sales occur. |
Cost of sales | Cost of sales include material and production costs, as well as the costs of inbound and outbound freight, purchasing and receiving, inspection, warehousing, internal transfers and all other distribution network costs. |
Selling, general and administrative expenses | Selling, general and administrative expenses are expensed as incurred and include sales and marketing costs, research and development costs, advertising, customer support, and administrative costs, including allocated corporate charges from Ashland in the periods prior to the IPO. |
Advertising costs | Advertising costs ( $63 million in fiscal 2018, $61 million in fiscal 2017 and $58 million in fiscal 2016) and research and development costs ( $14 million in fiscal 2018 and $13 million in both fiscal 2017 and 2016) are expensed as incurred. |
Research and development costs | research and development costs ( $14 million in fiscal 2018 and $13 million in both fiscal 2017 and 2016) are expensed as incurred. |
Stock-based compensation | Stock-based compensation Stock-based compensation expense is recognized within Selling, general and administrative expense in the Consolidated Statements of Comprehensive Income and is principally based on the grant date fair value of new or modified awards over the requisite vesting period . The Company’s outstanding stock-based compensation awards are primarily classified as equity, with certain liability-classified awards based on award terms and conditions. Valvoline accounts for forfeitures when they occur. |
Income taxes | Income taxes Income tax expense is provided based on income before income taxes. Deferred income taxes represent benefits and expenses that will be used to reduce or increase corporate taxes expected to be paid as well as differences between the tax bases and carrying amounts of assets and liabilities that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. As changes in tax laws or rates occur, deferred tax assets and liabilities are adjusted in the period changes are enacted through income tax expense. Valvoline records valuation allowances related to its deferred income tax assets when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. For the periods prior to the Distribution, Valvoline’s operating results are included in Ashland’s consolidated U.S., state, and certain international subsidiaries’ income tax returns. For these periods, the income tax provision in these Consolidated Statements of Comprehensive Income was calculated on a separate return basis as if Valvoline was operating on a stand-alone basis and filed separate tax returns in the jurisdictions in which it operated. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being sustained upon examination by authorities. Interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law and until such time that the related tax benefits are recognized. Interest and penalties were not material to any of the periods presented herein. |
Derivatives | Derivatives Valvoline’s derivative instruments consist of currency exchange contracts, which are accounted for as either assets or liabilities in the Consolidated Balance Sheets at fair value and the resulting gains or losses are recognized as adjustments to earnings. Valvoline does not currently have any derivative instruments that are designated and qualify as hedging instruments. The Company classifies its cash flows for these transactions as investing activities in the Consolidated Statements of Cash Flows. |
Fair value measurements | Fair value measurements Fair value is defined as an exit price, representing an amount that would be received to sell an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance prioritizes the inputs used to measure fair value into the three-tier fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. Certain investments which measure fair value using the net asset value (“NAV”) per share practical expedient are not classified within the fair value hierarchy and are separately disclosed. Valvoline measures its financial assets and financial liabilities at fair value based on one or more of the following three valuation techniques: • Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities • Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost) • Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option pricing and excess earnings models) The Company generally uses a market approach, when practicable, in valuing financial instruments. In certain instances, when observable market data is lacking, the Company uses valuation techniques consistent with the income approach whereby future cash flows are converted to a single discounted amount. The Company uses multiple sources of pricing as well as trading and other market data in its process of reporting fair values. The fair values of accounts receivables and accounts payable approximate their carrying values due to the relatively short-term nature of the instruments. The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement. Valvoline uses applicable guidance for defining fair value, the initial recording and periodic remeasurement of certain assets and liabilities measured at fair value, and related disclosures for instruments measured at fair value. Fair value accounting guidance establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. An instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. Valvoline measures assets and liabilities using inputs from the following three levels of fair value hierarchy: Level 1 - Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 - Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect Valvoline’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which may include Valvoline’s own financial data, such as internally developed pricing models, DCF methodologies, as well as instruments for which the fair value determination requires significant management judgment. |
Currency translation | Currency translation Operations outside the United States are measured primarily using the local currency as the functional currency. Upon consolidation, the results of operations of the subsidiaries and affiliates whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the average exchange rates for the year while assets and liabilities are translated at year-end exchange rates. Adjustments to translate assets and liabilities into U.S. dollars are recorded in the stockholders’ equity section of the Consolidated Balance Sheets as a component of Accumulated other comprehensive income and are included in net earnings only upon sale or substantial liquidation of the underlying non-U.S. subsidiary or affiliated company. |
Earnings per share | Earnings per share Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted-average number of common shares outstanding during the reported period. Diluted EPS is calculated similar to basic EPS, except that the weighted-average number of shares outstanding includes the number of shares that would have been outstanding had potentially dilutive common shares been issued. Potentially dilutive securities include stock appreciation rights and nonvested share-based awards. Nonvested market and performance-based share awards are included in the weighted-average diluted shares outstanding each period if established market or performance criteria have been met at the end of the respective periods. |
Recent accounting pronouncements | Recent accounting pronouncements The following standards relevant to Valvoline were either issued or adopted in the current year, or are expected to have a meaningful impact on Valvoline in future periods. Recently adopted During fiscal 2018, Valvoline adopted the following: • In July 2015, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to simplify the subsequent measurement of certain inventories by replacing the lower of cost or market test with a lower of cost or net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than LIFO and retail inventory methods. Valvoline adopted this guidance prospectively on October 1, 2017. Valvoline utilizes LIFO to value a significant portion of its inventory. The impact of adoption was not material to the Company’s consolidated financial statements. • In March 2017, the FASB issued accounting guidance that changed how employers who sponsor defined benefit pension and/or postretirement benefit plans present the net periodic benefit cost in the Consolidated Statements of Comprehensive Income. This guidance requires employers to present the service cost component of net periodic benefit cost in the same caption as other employee compensation costs for services rendered during the period. All other components of the net periodic benefit cost are presented separately outside of the operating income caption. Valvoline retrospectively adopted this guidance on October 1, 2017. Accordingly, Net pension and other postretirement plan income has been reclassified to non-operating income for all periods presented within the Consolidated Statements of Comprehensive Income, which reduced previously reported operating income by $138 million and $35 million for the years ended September 30, 2017 and 2016, respectively. • In February 2018, the FASB issued accounting guidance that allows companies to reclassify stranded tax effects resulting from the reduction of the U.S. statutory corporate tax rate enacted in U.S. tax reform legislation in December 2017. The Company adopted this guidance in the fourth quarter of fiscal 2018, which resulted in a reclassification of $8 million of stranded tax effects related to the deferred taxes for unamortized benefit plan credits that increased both Accumulated other comprehensive income and Retained deficit within the Consolidated Balance Sheet and Consolidated Statement of Stockholders’ Deficit. The adoption of this guidance did not have an impact on the Company’s results of operations or cash flows. • In March 2018, the FASB issued accounting guidance that codified SEC staff views on the income tax accounting implications of U.S. tax reform legislation enacted in December 2017. The guidance clarifies the timing of the measurement period, changes in subsequent reporting periods and reporting requirements as a result of the legislation. As further discussed in Note 12, the Company recorded provisional impacts of the legislation in fiscal 2018 and will recognize any changes to these provisional estimates up to one year from the enactment date of the legislation. • In August 2018, the FASB issued accounting guidance that modifies the disclosure requirements with respect to fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Levels 1 and 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. Valvoline early adopted this guidance, which does not have an impact on the Company’s consolidated financial statements, but revises disclosures as reflected in Notes 3 and 13 herein. • In August 2018, the FASB issued accounting guidance that modifies the disclosure requirements with respect to defined benefit pension and other postretirement plans. This guidance removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures, and adds certain disclosure requirements. Valvoline early adopted this guidance, which does not have an impact on the Company’s consolidated financial statements, but revises disclosures as reflected in Note 13 herein. Issued but not yet adopted In May 2014, the FASB issued accounting guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, which supersedes most current revenue recognition guidance. This guidance introduces a five-step model for revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards under current guidance. The Company has substantially completed its assessment of the accounting required under the new revenue recognition guidance and will adopt the new guidance in the first quarter of fiscal 2019. The Company’s revenue is primarily generated from the sale and service delivery of engine and automotive maintenance products to customers, which is not accounted for under industry-specific guidance. Valvoline’s performance obligations generally consist of a single delivery element whereby revenue is recognized at the point in time when ownership, risks and rewards transfer. Revenue transactions recorded under the new guidance are expected to be substantially consistent with the treatment under existing guidance. The Company will adopt the new revenue recognition guidance using the modified retrospective method, which recognizes the cumulative effect of the changes in retained deficit at adoption, but will not retrospectively apply the new guidance to prior periods. The Company expects to adjust retained deficit at adoption primarily related to the timing of certain sales made to distributors for approximately $15 million to $20 million on a pre-tax basis. In addition, the Company expects immaterial impacts to reclassify certain activities in the Consolidated Statements of Comprehensive Income on an ongoing basis following adoption. The Company will expand footnote disclosures under the new revenue guidance beginning in the first quarter of fiscal 2019, including disaggregation of revenue, pro forma impacts of changes to the financial statements in the initial year of adoption, and qualitative disclosures related to the nature and terms of its sales, timing of the transfer of control and judgments used in the application of the five-step model. The Company has also implemented appropriate changes to business processes to support recognition and disclosure under the new guidance. In August 2018, the FASB issued new accounting guidance related to fees paid by a customer in a cloud computing arrangement, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service arrangement with the existing capitalization guidance for implementation costs incurred to develop or obtain internal-use software. Valvoline will early adopt this guidance on a prospective basis on October 1, 2018, and as a result, certain relevant costs related to these arrangements may be capitalized. The adoption of this guidance is not expected to have a material impact on the Company's financial condition, results of operations or cash flows. In February 2016, the FASB issued new accounting guidance related to lease transactions. The primary objective of this guidance is to increase transparency and comparability among organizations by requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and to disclose key information about leasing arrangements. This new guidance is effective for the Company in the first quarter of fiscal 2020 using a modified retrospective approach. The Company has begun planning its assessment and implementation process, including a process to identify all forms of its leases globally, as well as analyzing the practical expedients and evaluating the specific impacts on its consolidated financial statements. While the Company’s evaluation of this guidance is in the early stages, adoption is expected to have a material impact on the Consolidated Balance Sheets as the majority of the Company’s operating leases are expected to be recognized as right of use assets and associated lease liabilities. The Company also anticipates expanded footnote disclosures related to its leases under the new guidance. The FASB issued other accounting guidance during the period that is not currently applicable or expected to have a material impact on Valvoline’s financial statements, and therefore, is not described above. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities at Fair Value | The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy as of September 30: (In millions) Fair Value Hierarchy 2018 2017 Cash and cash equivalents Money market funds Level 1 $ 5 $ 11 Time deposits Level 2 22 35 Prepaid expenses and other current assets Currency derivatives Level 2 1 1 Other noncurrent assets Non-qualified trust funds Level 1 25 30 Total assets at fair value $ 53 $ 77 Accrued expenses and other liabilities Currency derivatives Level 2 $ 1 $ 1 Total liabilities at fair value $ 1 $ 1 |
Summary of Fair Value of Debt | Carrying values shown in the following table are net of unamortized discounts and issuance costs. September 30, 2018 September 30, 2017 (In millions) Fair value Carrying value Unamortized discount and issuance costs Fair value Carrying value Unamortized discount and issuance costs 2024 Notes $ 376 $ 370 $ (5 ) $ 401 $ 370 $ (5 ) 2025 Notes 376 395 (5 ) 408 394 (6 ) Total $ 752 $ 765 $ (10 ) $ 809 $ 764 $ (11 ) |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Aggregate Cash Consideration and Total Assets Acquired and Liabilities Assumed | A summary follows of the aggregate cash consideration paid and the total assets acquired and liabilities assumed for the years ended September 30: (In millions) 2018 2017 2016 Inventories $ 2 $ 1 $ 1 Other current assets 1 — 1 Property, plant and equipment 2 2 9 Goodwill (a) 58 60 94 Intangible assets Trademarks and trade names (b) 27 1 1 Reacquired franchise rights (a) (c) 26 6 — Customer relationships (d) 9 2 — Other — — 1 Other noncurrent assets — — 3 Trade and other payables — — (11 ) Debt — — (11 ) Other noncurrent liabilities — — (9 ) Net assets acquired $ 125 $ 72 $ 79 (a) Approximately $83 million of the goodwill recognized in fiscal 2016 was not deductible for income tax purposes. In addition, during fiscal 2018, the purchase price allocation for the acquisition of certain former franchise service center stores during fiscal 2017 was adjusted to reduce goodwill and increase reacquired franchise rights by $6 million . (b) Weighted average amortization period of 19 years . (c) Prior to the acquisition of former franchise service center stores, Valvoline licensed the right to operate franchised quick lube service centers, including use of the Company’s trademarks and trade name. In connection with these acquisitions, Valvoline reacquired those rights and recognized separate definite-lived reacquired franchise rights intangible assets, which are being amortized on a straight-line basis over the weighted average remaining term of approximately 8 years . The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. (d) Weighted average amortization period of 13 years . |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summarized Financial Information | Summarized financial information for Valvoline’s equity method investments follows as of and for the years ended September 30: (In millions) 2018 2017 Financial position Current assets $ 116 $ 105 Current liabilities (76 ) (69 ) Working capital 40 36 Noncurrent assets 23 25 Noncurrent liabilities (1 ) (1 ) Stockholders’ equity $ 62 $ 60 (In millions) 2018 2017 2016 Results of operations Sales $ 313 $ 289 $ 255 Income from operations $ 62 $ 53 $ 46 Net income $ 27 $ 25 $ 23 The Company’s transactions with affiliate companies accounted for under the equity method were as follows for the years ended September 30: (In millions) 2018 2017 2016 Equity income (a) $ 14 $ 12 $ 12 Distributions received $ 10 $ 8 $ 16 Royalty income (a) $ 8 $ 7 $ 4 Sales to $ 12 12 $ 12 — $ 10 Purchases from $ 2 $ — $ — (a) Equity and royalty income are recognized in Equity and other income, net in the Consolidated Statements of Comprehensive Income. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Summary of Accounts Receivable | The following summarizes Valvoline’s accounts receivable in the Consolidated Balance Sheets as of September 30: (In millions) 2018 2017 Trade $ 390 $ 362 Other 26 28 Accounts receivable, gross 416 390 Allowance for doubtful accounts (7 ) (5 ) Total accounts receivable, net $ 409 $ 385 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | The following summarizes Valvoline’s inventories in the Consolidated Balance Sheets as of September 30: (In millions) 2018 2017 Finished products $ 189 $ 180 Raw materials, supplies and work in process 30 31 Reserve for LIFO cost valuation (40 ) (33 ) Excess and obsolete inventory reserves (3 ) (3 ) Total inventories, net $ 176 $ 175 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment | The following table summarizes the various components of property, plant and equipment within the Consolidated Balance Sheets as of September 30: (In millions) 2018 2017 Land $ 51 $ 51 Buildings (a) 292 286 Machinery and equipment 442 442 Construction in progress 62 44 Total property, plant and equipment 847 823 Accumulated depreciation (b) (427 ) (432 ) Net property, plant and equipment $ 420 $ 391 (a) Includes $22 million and $28 million of assets under capitalized leases as of September 30, 2018 and September 30, 2017 respectively. (b) Includes $4 million and $4 million for assets under capitalized leases as of September 30, 2018 and September 30, 2017 , respectively. The following summarizes property, plant and equipment charges included within the Consolidated Statements of Comprehensive Income. (In millions) 2018 2017 2016 Depreciation (includes capital leases) $ 49 $ 42 $ 38 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill by Segment | The following summarizes the changes in the carrying amount of goodwill for each reportable segment and in total during fiscal 2018 and 2017 : (In millions) Core North America Quick Lubes International Total Balance at September 30, 2016 $ 89 $ 135 $ 40 $ 264 Acquisitions (a) — 66 — 66 Balance at September 30, 2017 89 201 40 330 Acquisitions (b) — 52 — 52 Dispositions (c) — (1 ) — (1 ) Balance at September 30, 2018 $ 89 $ 252 $ 40 $ 381 (a) Activity associated with the acquisition of Time-It Lube and 15 additional service center stores. Refer to Note 4 for details regarding the acquisitions. (b) Activity associated with the acquisitions of Great Canadian Oil Change, Henley Bluewater, seven additional service center stores, and adjustments related to prior year acquisitions. Refer to Note 4 for further details. (c) Activity associated with the derecognition of goodwill as a result of the sale and disposition of two quick lube service center stores. Refer to Note 4 for details regarding the disposition. |
Summary of Finite-Lived Intangible Assets | The following summarizes the gross carrying amounts and accumulated amortization of the Company’s intangible assets as of September 30: (In millions) 2018 2017 Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Definite-lived intangible assets Trademarks and trade names $ 29 $ (2 ) $ 27 $ 2 $ (1 ) $ 1 Reacquired franchise rights 32 (4 ) 28 — — — Customer relationships 14 (3 ) 11 5 (2 ) 3 Other intangible assets 1 — 1 1 — 1 Total definite-lived intangible assets $ 76 $ (9 ) $ 67 $ 8 $ (3 ) $ 5 |
Schedule of Actual and Estimated Amortization Expense | The table that follows summarizes amortization expense (actual and estimated) for intangible assets, assuming no additional amortizable intangible assets, for the years ended September 30: Actual Estimated (In millions) 2018 2019 2020 2021 2022 2023 Amortization expense $ 6 $ 7 $ 7 $ 7 $ 6 $ 6 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | The following table summarizes Valvoline’s short-term borrowings and long-term debt as of September 30: (In millions) 2018 2017 2025 Notes $ 400 $ 400 2024 Notes 375 $ 375 Term Loans 270 285 Revolver 147 — Trade Receivables Facility 140 75 Other (a) (10 ) (11 ) Total debt $ 1,322 $ 1,124 Short-term debt — 75 Current portion of long-term debt 30 15 Long-term debt $ 1,292 $ 1,034 (a) As of September 30, 2018, other includes $11 million of debt issuance costs and discounts and $1 million of debt primarily acquired through acquisitions. As of September 30, 2017, other included $13 million of debt issuance costs and discounts and $2 million of debt acquired through acquisitions. |
Schedule of Maturities of Long-term Debt | The future maturities of debt outstanding as of September 30, 2018, excluding debt issuance costs and discounts, are as follows: (In millions) Years ending September 30 2019 $ 30 2020 30 2021 497 2022 — 2023 — Thereafter 776 Total $ 1,333 |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | Future minimum lease payments for noncancelable operating and capital leases and financing obligations as of September 30, 2018 for the following fiscal years ended September 30 are: (In millions) Operating leases (a) Capital leases and financing obligations 2019 $ 28 $ 6 2020 23 6 2021 21 6 2022 18 6 2023 16 6 Thereafter 64 50 Total future minimum lease payments $ 170 80 Imputed interest (33 ) Present value of minimum lease payments $ 47 (a) Minimum payments have not been reduced by minimum sublease rental income of approximately $4 million due under future noncancelable subleases. |
Schedule of Future Minimum Lease Payments for Operating, Capital and Other Financing Obligations | Future minimum lease payments for noncancelable operating and capital leases and financing obligations as of September 30, 2018 for the following fiscal years ended September 30 are: (In millions) Operating leases (a) Capital leases and financing obligations 2019 $ 28 $ 6 2020 23 6 2021 21 6 2022 18 6 2023 16 6 Thereafter 64 50 Total future minimum lease payments $ 170 80 Imputed interest (33 ) Present value of minimum lease payments $ 47 (a) Minimum payments have not been reduced by minimum sublease rental income of approximately $4 million due under future noncancelable subleases. |
Schedule of Rent Expense | The composition of net rent expense for all operating leases, including leases of property and equipment, was as follows for the years ended September 30: (In millions) 2018 2017 2016 Minimum rentals $ 25 $ 18 $ 15 Contingent rentals 2 2 2 Sublease rental income (2 ) (1 ) (1 ) Net rent expense $ 25 $ 19 $ 16 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense consisted of the following for the years ended September 30: (In millions) 2018 2017 2016 Current Federal (a) $ (2 ) $ 47 $ 99 State 6 8 24 Non-U.S. 17 14 12 21 69 135 Deferred Federal 136 106 14 State 9 12 2 Non-U.S. — (1 ) (3 ) 145 117 13 Income tax expense $ 166 $ 186 $ 148 (a) Benefit from favorable settlement with tax authorities in fiscal 2018. |
Schedule and Reconciliation of the Statutory Federal Income Tax | The following table presents pre-tax income and the principal components of the reconciliation between the effective tax rate and the U.S. federal statutory income tax rate in effect for the years ended September 30: (In millions) 2018 2017 2016 Income before income taxes United States $ 282 $ 433 $ 382 Non-U.S. 50 57 39 Total income before income taxes $ 332 $ 490 $ 421 U.S. statutory tax rate 24.5 % 35.0 % 35.0 % Income taxes computed at U.S. statutory tax rate $ 81 $ 171 $ 147 Increase (decrease) in amount computed resulting from: Unrecognized tax benefits — 2 3 State taxes, net of federal benefit 14 17 16 International rate differential — (7 ) (5 ) Permanent items (3 ) (8 ) (11 ) Remeasurement of net deferred taxes 73 — — Deemed repatriation 4 — — Tax Matters Agreement activity (2 ) 10 — Other (1 ) 1 (2 ) Income tax expense $ 166 $ 186 $ 148 Effective tax rate 50.0 % 38.0 % 35.2 % |
Components of Income Before Income Taxes | The following table presents pre-tax income and the principal components of the reconciliation between the effective tax rate and the U.S. federal statutory income tax rate in effect for the years ended September 30: (In millions) 2018 2017 2016 Income before income taxes United States $ 282 $ 433 $ 382 Non-U.S. 50 57 39 Total income before income taxes $ 332 $ 490 $ 421 U.S. statutory tax rate 24.5 % 35.0 % 35.0 % Income taxes computed at U.S. statutory tax rate $ 81 $ 171 $ 147 Increase (decrease) in amount computed resulting from: Unrecognized tax benefits — 2 3 State taxes, net of federal benefit 14 17 16 International rate differential — (7 ) (5 ) Permanent items (3 ) (8 ) (11 ) Remeasurement of net deferred taxes 73 — — Deemed repatriation 4 — — Tax Matters Agreement activity (2 ) 10 — Other (1 ) 1 (2 ) Income tax expense $ 166 $ 186 $ 148 Effective tax rate 50.0 % 38.0 % 35.2 % |
Schedule of Deferred Tax Assets and Liabilities | A summary of the deferred tax assets and liabilities included in the Consolidated Balance Sheets follows as of September 30: (In millions) 2018 2017 Deferred tax assets Federal net operating loss carryforwards $ — $ 96 Non-U.S. net operating loss carryforwards (a) 2 1 State net operating loss carryforwards (b) 19 28 Employee benefit obligations 86 132 Compensation accruals 21 29 Credit carryforwards (c) 36 13 Other 9 13 Valuation allowances (d) (7 ) (8 ) Net deferred tax assets 166 304 Deferred tax liabilities Goodwill and other intangibles 3 3 Property, plant and equipment 23 17 Undistributed earnings 2 3 Total deferred tax liabilities 28 23 Total net deferred tax assets $ 138 $ 281 (a) Gross non-U.S. net operating loss carryforwards of $7 million expire in fiscal years 2020 to 2033, with $5 million that has no expiration. (b) Apportioned gross net operating loss carryforwards of $481 million expire in fiscal years 2019 through 2037. (c) Credit carryforwards consist primarily of non-U.S. tax credits that generally expire in the fiscal years 2025 through 2037. (d) Valuation allowances primarily relate to certain state and non-U.S. net operating loss carryforwards and certain other deferred tax assets that are not expected to be realized or realizable. |
Schedule of Gross Unrecognized Tax Benefits | The aggregate changes in the balance of gross unrecognized tax benefits were as follows for the years ended September 30: (In millions) 2018 2017 2016 Gross unrecognized tax benefits as of October 1 $ 10 $ 8 $ 5 Increases related to tax positions from prior years 2 — 2 Increases related to tax positions taken during the current year 1 2 1 Settlements with tax authorities (2 ) — — Lapses of statutes of limitation (1 ) — — Gross unrecognized tax benefits as of September 30 (a) $ 10 $ 10 $ 8 (a) As of September 30, 2018 and 2017, the Company had accruals of $1 million for interest and penalties related to unrecognized tax benefits. |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Retirement Benefits [Abstract] | |
Summary of the Components of Benefit Costs (Income) | The following table summarizes the components of pension and other postretirement plans net periodic benefit income and the assumptions used in this determination for the years ended September 30: (In millions) Pension benefits Other postretirement benefits 2018 2017 2016 2018 2017 2016 Net periodic benefit income Service cost $ 2 $ 2 $ 3 $ — $ — $ — Interest cost 75 86 11 2 1 — Expected return on plan assets (103 ) (145 ) (17 ) — — — Amortization of prior service credit (a) — — — (12 ) (12 ) (1 ) Actuarial loss (gain) 38 (63 ) (42 ) — (5 ) — Pre-separation allocation from Ashland (b) — — 21 — — — Net periodic benefit costs (income) $ 12 $ (120 ) $ (24 ) $ (10 ) $ (16 ) $ (1 ) Weighted-average plan assumptions (c) Discount rate for service cost (d) 2.94 % 2.15 % 4.10 % 4.05 % 2.95 % 4.25 % Discount rate for interest cost (d) 3.23 % 2.84 % 3.23 % 3.11 % 2.64 % 2.92 % Rate of compensation increase 3.05 % 2.99 % 3.23 % — — — Expected long-term rate of return on plan assets 5.17 % 6.56 % 6.77 % — — — (a) Other postretirement plan amendments noted above resulted in negative plan amendments that are amortized within this caption during all periods presented. (b) The pre-Contribution allocation from Ashland in fiscal 2016 until the transfer of plans to Valvoline at September 1, 2016 consist of service cost of $7 million , non-service income of $10 million , and actuarial losses of $24 million . (c) The plan assumptions are a blended weighted-average rate for Valvoline’s U.S. and non-U.S. plans. The 2016 assumptions reflect a combination of a full year of Valvoline stand-alone plans and one month for the plans transferred to Valvoline on September 1, 2016. The U.S. pension plans represented approximately 97% of the total pension projected benefit obligation as of September 30, 2018. Other postretirement benefit plans consist of U.S. and Canada, with the U.S. plan representing approximately 75% of the total other postretirement projected benefit obligation as of September 30, 2018. Non-U.S. plans use assumptions generally consistent with those of U.S. plans. (d) Weighted-average discount rates reflect the adoption of the full yield curve approach in fiscal 2016. |
Schedule of Amortization of Prior Service Cost (Credit) Recognized in AOCI | The following table summarizes the amortization of prior service credit recognized in accumulated other comprehensive loss: Pension benefits Other postretirement benefits (In millions) 2018 2017 2018 2017 Amortization of prior service credit recognized in accumulated other comprehensive income $ — $ — $ 12 $ 12 Net periodic benefit costs (income) 12 (120 ) (10 ) (16 ) Total amount recognized in net periodic benefit cost (income) and accumulated other comprehensive income $ 12 $ (120 ) $ 2 $ (4 ) |
Schedule of Changes in Projected Benefit Obligations | The following table summarizes the changes in benefit obligations and the fair value of plan assets, as well as key assumptions used to determine the benefit obligations, and the amounts recognized in the Consolidated Balance Sheets as of September 30, 2018 and 2017 for the Company’s pension and other postretirement benefit plans: (In millions) Pension benefits Other postretirement benefits 2018 2017 2018 2017 Change in benefit obligations Benefit obligations as of October 1 $ 2,381 $ 3,138 $ 57 $ 73 Service cost 2 2 — — Interest cost 75 86 2 1 Participant contributions — — — 3 Benefits paid (146 ) (210 ) (7 ) (16 ) Actuarial gain (95 ) (60 ) — (5 ) Currency exchange rate changes (3 ) 4 (1 ) 1 Transfers in 9 6 — — Settlements (136 ) (585 ) — — Benefit obligations as of September 30 $ 2,087 $ 2,381 $ 51 $ 57 Change in plan assets Fair value of plan assets as of October 1 $ 2,081 $ 2,307 $ — $ — Actual return on plan assets (30 ) 148 — — Employer contributions 16 412 7 13 Participant contributions — — — 3 Benefits paid (146 ) (210 ) (7 ) (16 ) Currency exchange rate changes (3 ) 3 — — Settlements (136 ) (585 ) — — Transfers in 10 6 — — Fair value of plan assets as of September 30 $ 1,792 $ 2,081 $ — $ — Unfunded status of the plans as of September 30 $ 295 $ 300 $ 51 $ 57 Amounts recognized in the Consolidated Balance Sheets Current benefit liabilities $ 10 $ 11 $ 6 $ 8 Noncurrent benefit liabilities 285 289 45 49 Net amount recognized $ 295 $ 300 $ 51 $ 57 Amounts recognized in accumulated other comprehensive income (loss) Prior service cost (credit) $ 2 $ 2 $ (56 ) $ (68 ) Weighted-average plan assumptions Discount rate 4.28 % 3.76 % 4.08 % 3.48 % Rate of compensation increase 3.10 % 3.13 % — — |
Schedule of Pension Plans with a Benefit Obligation in Excess of Plan Assets | Information for pension plans with a benefit obligation in excess of the fair value of plan assets follows for the Company’s plans as of September 30: (In millions) 2018 2017 Benefit obligation Plan assets Benefit obligation Plan assets Plans with projected benefit obligation in excess of plan assets $ 2,045 $ 1,749 $ 2,381 $ 2,081 Plans with accumulated benefit obligation in excess of plan assets $ 2,034 $ 1,741 $ 2,368 $ 2,072 |
Schedule of Weighted-Average Asset Allocations And Plan Asset Allocations | The weighted-average asset allocations for Valvoline’s U.S. and non-U.S. plans by asset category follow as of September 30: Target 2018 2017 Plan assets allocation Equity securities 15-25% 23 % 20 % Debt securities 65-85% 76 % 78 % Other 0-20% 1 % 2 % Total 100 % 100 % The following table summarizes the various investment categories that the pension plan assets are invested in and the applicable fair value hierarchy as described in Note 3 that the financial instruments are classified within these investment categories as of September 30, 2018 : Total fair value Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Assets measured at NAV (In millions) Level 1 Level 2 Level 3 Cash and cash equivalents $ 100 $ 100 $ — $ — $ — U.S. government securities and futures (a) 74 (3 ) 77 — — Other government securities 92 1 91 — — Corporate debt instruments 1,056 661 395 — — Insurance contracts 4 — — 4 — Private equity and hedge funds 60 — — — 60 Common collective trusts 406 — — — 406 Total assets at fair value $ 1,792 $ 759 $ 563 $ 4 $ 466 (a) Level 1 investments are in a liability position as of September 30, 2018 and represent exchange-traded futures contracts that are used to manage the interest rate risk in the plan asset portfolio. The following table summarizes the various investment categories that the pension plan assets are invested in and the applicable fair value hierarchy that the financial instruments are classified within these investment categories as of September 30, 2017 : Total fair value Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Assets measured at NAV (In millions) Level 1 Level 2 Level 3 Cash and cash equivalents $ 13 $ 13 $ — $ — $ — U.S. government securities and futures 339 207 132 — — Other government securities 86 — 86 — — Corporate debt instruments 1,197 934 263 — — International equity 16 — 16 — — Private equity and hedge funds 414 — — — 414 Other investments 16 — — 16 — Total assets at fair value $ 2,081 $ 1,154 $ 497 $ 16 $ 414 |
Schedule of Reconciliation of Level 3 Assets | The following table provides a reconciliation of the beginning and ending balances for Level 3 plan assets: (In millions) Total Level 3 assets Balance at September 30, 2016 $ 23 Actual return on assets held at end of year (7 ) Balance at September 30, 2017 $ 16 Purchases 3 Sales (8 ) Actual return on assets held at end of year 1 Actual return on assets sold during year (8 ) Balance at September 30, 2018 $ 4 |
Schedule of Investments Measured at Fair Value Using NAV Per Share | The following table summarizes investments for which fair value is measured using the NAV per share practical expedient as of September 30, 2018: (In millions) Fair value Unfunded commitments Redemption frequency (if currently eligible) Redemption notice period Long/short hedge funds $ 38 $ — None (a) None (a) Relative value hedge funds 11 — None (b) None (b) Multi-strategy hedge funds 2 — None (b) None (b) Event driven hedge funds 1 — None (b) None (b) Common collective trusts 386 — Daily Up to 3 days 12 Monthly 5 days 8 — N/A (c) N/A (c) Private equity 8 6 None (d) None (d) $ 466 $ 6 (a) These hedge funds are in the process of liquidation and approximately 88% will be liquidated over the next year. (b) These hedge funds are in the process of liquidation and the timing of such is unknown. (c) These assets are held in Australia and are investments in funds that include a diversified portfolio across various asset classes. The time period for redemption of these assets is not determinable. (d) These private equity instruments are estimated to be liquidated over the next 1 to 5 years. |
Schedule of Expected Benefit Payments | The following benefit payments, which reflect future service expectations, are projected to be paid in each of the next five years and five years thereafter in aggregate: (In millions) Pension benefits Other postretirement benefits 2019 $ 142 $ 6 2020 142 5 2021 143 4 2022 142 4 2023 141 3 Thereafter 695 15 Total $ 1,405 $ 37 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock-based Compensation Expense | T he following is a summary of stock-based compensation expense recognized by the Company during the years ended September 30: (In millions) 2018 2017 (b) Stock appreciation rights $ 2 $ 3 Nonvested stock awards 9 5 Performance awards 1 2 Total stock-based compensation expense, pre-tax (a) 12 10 Tax benefit (3 ) (4 ) Total stock-based compensation expense, net of tax $ 9 $ 6 (a) Includes approximately $1 million in each period presented related to certain awards that are cash-settled and liability-classified; therefore, fair value is remeasured at the end of each reporting period until settlement. (b) Stock-based compensation expense in fiscal 2017 includes $4 million that was allocated from Ashland prior to Distribution. |
Summary of Stock Appreciation Rights Activity | The following table summarizes the activity relative to SARs for the year ended September 30, 2018 : Number of shares (in thousands) Weighted average exercise price per share Weighted average remaining term (in years) Aggregate intrinsic value (in millions) SARs outstanding as of September 30, 2017 1,824 $ 17.48 7.1 years $ 11 Granted 228 $ 23.08 Exercised (205 ) $ 13.64 $ 2 Forfeited (49 ) $ 20.50 SARs outstanding as of September 30, 2018 1,798 $ 18.54 6.7 years $ 6 SARs exercisable as of September 30, 2018 1,207 $ 17.14 5.8 years $ 5 |
Summary of Fair Value Assumptions Utilized in Determining Value of Awards | Stock-based compensation expense for SARs was computed using the Black-Scholes option-pricing model to estimate the grant date fair value of new or modified awards with the following key assumptions: 2018 2017 Weighted average grant date fair value per share $ 5.56 $ 7.44 Assumptions (weighted average) Risk-free interest rate (a) 2.2 % 1.7 % Expected dividend yield 0.9 % 0.9 % Expected volatility (b) 23.3 % 22.8 % Expected term (in years) (c) 5.88 7.45 (a) Based on the U.S. Treasury yield curve in effect at the time of grant or modification for the expected term of the award. The range of risk-free interest rates used for SARs converted at Distribution in fiscal 2017 was 1.1% to 1.9% . (b) Due to the lack of historical data for Valvoline, expected volatility is based on the average of peer companies’ historical daily equity volatilities with look-back periods commensurate with the expected term. The range of expected volatility used for SARs converted at Distribution in fiscal 2017 was 21.5% to 24.4% . (c) Due to the lack of historical data for Valvoline, the expected term is based on the mid-point between the vesting date and the end of the contractual term. |
Summary of Nonvested Stock Award Activity | The following table summarizes nonvested share activity for the year ended September 30, 2018 : Number of shares (in thousands) Weighted average grant date fair value per share Unvested shares as of September 30, 2017 1,275 $ 22.71 Granted 359 $ 23.17 Vested (254 ) $ 22.73 Forfeited (102 ) $ 22.66 Unvested shares as of September 30, 2018 1,278 $ 23.07 |
Summary of Performance Share Activity | The following table summarizes performance award activity for the year ended September 30, 2018 : Number of shares (in thousands) Weighted average grant date fair value per share Unvested shares as of September 30, 2017 182 $ 23.20 Granted 164 $ 23.82 Forfeited (19 ) $ 17.93 Unvested shares as of September 30, 2018 327 $ 22.64 |
Summary of Fair Value Assumptions Utilized in Monte Carlo Model to Determine Value of Awards | For market conditions, compensation cost is recognized regardless of whether the conditions are satisfied and based on the grant date fair value of new or modified awards using a Monte Carlo simulation valuation model using the following key assumptions: 2018 2017 Assumptions (weighted average) Risk-free interest rates (a) 1.7 % 1.2 % Expected dividend yield 1.0 % 1.0 % Expected volatility (b) 24.2 % 21.0 % Expected term (in years) 3.0 1.9 (a) Based on the U.S. Treasury yield curve in effect at the time of grant or modification for the expected term of the award. The range of risk-free interest rates used for performance awards was 1.6% to 1.8% in fiscal 2018 and 0.9% to 1.5% in fiscal 2017 for awards converted at Distribution. (b) Due to the lack of historical data for Valvoline, expected volatility is based on the average of peer companies’ historical volatilities with look-back periods commensurate with the expected term. The range of expected volatility used for performance awards converted at Distribution in fiscal 2017 was 18.9% to 22.4% . |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following is the summary of basic and diluted EPS for the years ended September 30: (In millions except per share data) 2018 2017 2016 Numerator Net income $ 166 $ 304 $ 273 Denominator Weighted average shares common shares outstanding (a) 197 204 170 Effect of potentially dilutive securities (b) — — — Weighted average diluted shares outstanding 197 204 170 Earnings per share Basic $ 0.84 $ 1.49 $ 1.60 Diluted $ 0.84 $ 1.49 $ 1.60 (a) The weighted average common shares outstanding for the year ended September 30, 2016 is based on the 170 million shares issued to Ashland in the Contribution. (b) During the year ended September 30, 2017, share-based awards that were previously denominated in Ashland common stock were converted to Valvoline common stock at the Distribution. As presented in the table, there was not a significant dilutive impact in the years ended September 30, 2018 and 2017 from potential common shares. |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of Dividend Activity | The Company’s dividend activity was as follows during the years ended September 30: (In millions except per share amounts) 2018 2017 2016 Cash outlay $ 58 $ 40 $ — Dividend per share $ 0.298 $ 0.196 $ — |
Schedule of Share Repurchases | The following table summarizes the Company’s share repurchase activity during the years ended September 30: (In millions) 2018 2017 2016 Total cost $ 325 $ 50 $ — Shares repurchased 15 2 — |
Components of Other Comprehensive Income | Changes in accumulated other comprehensive income by component for the years ended September 30, 2017 and 2018 were as follows: (In millions) Unamortized benefit plan credits Currency translation adjustments Total Balance as of September 30, 2016 $ 52 $ (55 ) $ (3 ) Fiscal 2017 activity, net of tax (8 ) 54 46 Balance as of September 30, 2017 44 (1 ) 43 Fiscal 2018 activity, net of tax (1 ) (10 ) (11 ) Balance as of September 30, 2018 $ 43 $ (11 ) $ 32 |
Schedule of Amounts Reclassified from Accumulated Other Comprehensive Income | Amounts reclassified from accumulated other comprehensive income for the years ended September 30 were as follows: (in millions) 2018 2017 Amortization of pension and other postretirement plan prior service credit (a) $ (12 ) $ (12 ) Loss on liquidation of subsidiary (b) 1 — Tax effect of reclassifications 2 4 Net of tax (9 ) (8 ) Reclassification of income tax effects of U.S. tax reform (c) 8 — Total amounts reclassified, net of tax $ (1 ) $ (8 ) (a) Amortization of unrecognized prior service credits included in net periodic benefit income for pension and other postretirement plans was reported in Net pension and other postretirement plan income within the Consolidated Statements of Comprehensive Income. (b) Represents the realization of cumulative translation adjustments in Equity and other income, net within the Consolidated Statements of Comprehensive Income as a result of the liquidation of the Company’s Brazilian subsidiary. (c) Represents the reclassification of stranded income tax effects of U.S. tax reform to Retained deficit in the Consolidated Balance Sheet. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Summary of Allocated Centralized and Administrative Support Costs | The following table summarizes the centralized and administrative support costs that were allocated to Valvoline from Ashland for the year ended September 30, 2016: (In millions) Information technology $ 20 Financial and accounting 12 Building services 11 Legal and environmental 6 Human resources 5 Shared services 2 Stock-based compensation 11 Other general and administrative 12 Total $ 79 |
Reportable Segment Information
Reportable Segment Information (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segment Information | The following table presents sales, operating income, and depreciation and amortization by reportable segment for the years ended September 30: (In millions) 2018 2017 2016 Sales Core North America $ 1,035 $ 1,004 $ 979 Quick Lubes 660 541 457 International 590 539 493 Consolidated sales $ 2,285 $ 2,084 $ 1,929 Operating income Core North America $ 172 $ 199 $ 212 Quick Lubes 153 130 117 International (a) 84 76 74 Total operating segments 409 405 403 Unallocated and other (b) (14 ) (11 ) (7 ) Consolidated operating income $ 395 $ 394 $ 396 Depreciation and amortization Core North America $ 18 $ 15 $ 16 Quick Lubes 30 22 17 International 6 5 5 Consolidated depreciation and amortization $ 54 $ 42 $ 38 (a) Equity income is included in operating income and is recognized within the International reportable segment. Equity income was $14 million , $12 million and $12 million in fiscal 2018, 2017 and 2016, respectively. Refer to Note 5 for additional details regarding the Company’s equity method investments. (b) Unallocated and other includes Legacy and separation-related expenses, net . |
Sales by Product Category | The following table summarizes sales by category for each reportable segment for the years ended September 30: Sales by category Core North America Quick Lubes International 2018 2017 2016 2018 2017 2016 2018 2017 2016 Lubricants 85 % 86 % 87 % 85 % 84 % 83 % 89 % 89 % 89 % Antifreeze 8 % 7 % 7 % 1 % 1 % 1 % 5 % 6 % 3 % Filters 3 % 3 % 2 % 8 % 8 % 8 % 3 % 1 % 1 % Chemicals and other 4 % 4 % 4 % 2 % 2 % 2 % 3 % 4 % 7 % Franchise — — — 4 % 5 % 6 % — — — Total 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % |
Entity-Wide Disclosures | The following table presents sales and net property, plant and equipment by geographic area for Valvoline for the years ended September 30: Sales from external customers Property, plant and equipment, net (In millions) 2018 2017 2016 2018 2017 United States $ 1,652 $ 1,504 $ 1,397 $ 384 $ 352 International 633 580 532 36 39 Total $ 2,285 $ 2,084 $ 1,929 $ 420 $ 391 Sales by geography expressed as a percentage of total consolidated sales were as follows: For the years ended September 30 Sales by geography 2018 2017 2016 North America (a) 74 % 74 % 75 % EMEA (Europe, Middle East and Africa) 8 % 7 % 7 % Asia Pacific 13 % 14 % 14 % Latin America 5 % 5 % 4 % Total 100 % 100 % 100 % (a) Valvoline includes the United States and Canada in its North American region. |
Quarterly Financial Informati_2
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information | The following table presents quarterly financial information and per share data: First Quarter Second Quarter Third Quarter Fourth Quarter (In millions except per share amounts) 2018 2017 2018 2017 2018 2017 2018 2017 Sales $ 545 $ 489 $ 569 $ 514 $ 577 $ 534 $ 594 $ 547 Gross profit $ 195 $ 185 $ 207 $ 198 $ 201 $ 197 $ 203 $ 196 Operating income (a) $ 88 $ 94 $ 100 $ 100 $ 102 $ 87 $ 105 $ 113 Income before income taxes (a) (b) $ 84 $ 110 $ 94 $ 109 $ 97 $ 94 $ 57 $ 177 Net (loss) income (c) $ (10 ) $ 72 $ 67 $ 71 $ 64 $ 56 $ 45 $ 105 Net (loss) income per common share (d) Basic $ (0.05 ) $ 0.35 $ 0.33 $ 0.35 $ 0.33 $ 0.27 $ 0.23 $ 0.52 Diluted $ (0.05 ) $ 0.35 $ 0.33 $ 0.35 $ 0.33 $ 0.27 $ 0.23 $ 0.52 (a) Operating and pre-tax income included Legacy and separation-related expenses, net of $6 million in the first fiscal quarter of 2017, $6 million in the second fiscal quarter of 2017, $13 million in the third fiscal quarter of 2017, $14 million of income in the fourth fiscal quarter of 2017, $9 million in the first fiscal quarter of 2018, $8 million in the second fiscal quarter of 2018, and $3 million of income in the third fiscal quarter of 2018. (b) Pre-tax income included pension and other postretirement benefit plan remeasurement gains of $8 million and $60 million in the first quarter of fiscal 2017 and the fourth quarter of fiscal 2017, respectively. Pre-tax income in the fourth quarter of fiscal 2018 includes pre-tax pension other postretirement plan remeasurement losses of $38 million . (c) Net (loss) income for fiscal 2018 includes additional income tax expense related to U.S. and Kentucky tax reform enacted during the year of $71 million in the first quarter of fiscal 2018, $2 million in the second fiscal quarter of 2018, $3 million in the third fiscal quarter of 2018, and $2 million in the fourth fiscal quarter of 2018. (d) Net (loss) income per share in each quarter is computed using the weighted average number of shares outstanding during that quarter while net income per share for the full year is computed using the weighted average number of shares outstanding during the year. Thus, the sum of the four quarters’ net (loss) income per share will not necessarily equal the full-year net income per share. |
Guarantor Financial Informati_2
Guarantor Financial Information (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Consolidating Statements of Comprehensive Income | Activity for the parent issuer, Guarantor Subsidiaries and Non-Guarantor Subsidiaries has been presented herein to reflect the guarantee structure in place at September 30, 2018 for all periods presented based upon the historical activity that occurred within Valvoline's legal structure that existed in each respective period presented. Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,782 $ 558 $ (55 ) $ 2,285 Cost of sales — 1,132 402 (55 ) 1,479 Gross profit — 650 156 — 806 Selling, general and administrative expenses 11 327 92 — 430 Legacy and separation-related expenses, net 8 6 — — 14 Equity and other (income) expenses, net — (50 ) 17 — (33 ) Operating (loss) income (19 ) 367 47 — 395 Net pension and other postretirement plan expense (income) — 1 (1 ) — — Net interest and other financing expenses 53 6 4 — 63 (Loss) income before income taxes (72 ) 360 44 — 332 Income tax expense 14 140 12 — 166 Equity in net income of subsidiaries (252 ) (32 ) — 284 — Net income $ 166 $ 252 $ 32 $ (284 ) $ 166 Total comprehensive income $ 147 $ 234 $ 25 $ (259 ) $ 147 Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2017 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,618 $ 523 $ (57 ) $ 2,084 Cost of sales — 986 379 (57 ) 1,308 Gross profit — 632 144 — 776 Selling, general and administrative expenses 9 296 91 — 396 Legacy and separation-related expenses, net (15 ) 26 — — 11 Equity and other (income) expenses, net — (37 ) 12 — (25 ) Operating income 6 347 41 — 394 Net pension and other postretirement plan income — (134 ) (4 ) — (138 ) Net interest and other financing expenses 36 4 2 — 42 (Loss) income before income taxes (30 ) 477 43 — 490 Income tax (benefit) expense (3 ) 178 11 — 186 Equity in net income of subsidiaries (331 ) (32 ) — 363 — Net income $ 304 $ 331 $ 32 $ (363 ) $ 304 Total comprehensive income $ 303 $ 330 $ 43 $ (373 ) $ 303 Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2016 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,500 $ 476 $ (47 ) $ 1,929 Cost of sales — 895 333 (47 ) 1,181 Gross profit — 605 143 — 748 Selling, general and administrative expenses — 285 80 — 365 Legacy and separation-related expenses, net — 6 — — 6 Equity and other (income) expenses, net — (21 ) 2 — (19 ) Operating income — 335 61 — 396 Net pension and other postretirement plan (income) expense — (43 ) 8 — (35 ) Net interest and other financing expenses 9 — — — 9 Net loss on acquisition — 1 — — 1 (Loss) income before income taxes (9 ) 377 53 — 421 Income tax (benefit) expense (4 ) 143 9 — 148 Equity in net income of subsidiaries (278 ) (44 ) — 322 — Net income $ 273 $ 278 $ 44 $ (322 ) $ 273 Total comprehensive income $ 280 $ 285 $ 53 $ (338 ) $ 280 Condensed Consolidating Balance Sheets As of September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets Cash and cash equivalents $ — $ 20 $ 76 $ — $ 96 Accounts receivable, net — 48 480 (119 ) 409 Inventories, net — 95 81 — 176 Prepaid expenses and other current assets 1 38 5 — 44 Total current assets 1 201 642 (119 ) 725 Noncurrent assets Property, plant and equipment, net — 384 36 — 420 Goodwill and intangibles, net — 396 52 — 448 Equity method investments — 31 — — 31 Investment in subsidiaries 801 509 — (1,310 ) — Deferred income taxes 62 63 13 — 138 Other noncurrent assets 2 85 5 — 92 Total noncurrent assets 865 1,468 106 (1,310 ) 1,129 Total assets $ 866 $ 1,669 $ 748 $ (1,429 ) $ 1,854 Liabilities and Stockholders’ Deficit Current liabilities Current portion of long-term debt $ 30 $ — $ — $ — $ 30 Trade and other payables 3 241 53 (119 ) 178 Accrued expenses and other liabilities 7 168 28 — 203 Total current liabilities 40 409 81 (119 ) 411 Noncurrent liabilities Long-term debt 1,151 1 140 — 1,292 Employee benefit obligations — 317 16 — 333 Other noncurrent liabilities 33 141 2 — 176 Total noncurrent liabilities 1,184 459 158 — 1,801 Commitments and contingencies Stockholders’ (deficit) equity (358 ) 801 509 (1,310 ) (358 ) Total liabilities and stockholders’ deficit/equity $ 866 $ 1,669 $ 748 $ (1,429 ) $ 1,854 |
Condensed Consolidating Income Statement | Activity for the parent issuer, Guarantor Subsidiaries and Non-Guarantor Subsidiaries has been presented herein to reflect the guarantee structure in place at September 30, 2018 for all periods presented based upon the historical activity that occurred within Valvoline's legal structure that existed in each respective period presented. Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,782 $ 558 $ (55 ) $ 2,285 Cost of sales — 1,132 402 (55 ) 1,479 Gross profit — 650 156 — 806 Selling, general and administrative expenses 11 327 92 — 430 Legacy and separation-related expenses, net 8 6 — — 14 Equity and other (income) expenses, net — (50 ) 17 — (33 ) Operating (loss) income (19 ) 367 47 — 395 Net pension and other postretirement plan expense (income) — 1 (1 ) — — Net interest and other financing expenses 53 6 4 — 63 (Loss) income before income taxes (72 ) 360 44 — 332 Income tax expense 14 140 12 — 166 Equity in net income of subsidiaries (252 ) (32 ) — 284 — Net income $ 166 $ 252 $ 32 $ (284 ) $ 166 Total comprehensive income $ 147 $ 234 $ 25 $ (259 ) $ 147 Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2017 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,618 $ 523 $ (57 ) $ 2,084 Cost of sales — 986 379 (57 ) 1,308 Gross profit — 632 144 — 776 Selling, general and administrative expenses 9 296 91 — 396 Legacy and separation-related expenses, net (15 ) 26 — — 11 Equity and other (income) expenses, net — (37 ) 12 — (25 ) Operating income 6 347 41 — 394 Net pension and other postretirement plan income — (134 ) (4 ) — (138 ) Net interest and other financing expenses 36 4 2 — 42 (Loss) income before income taxes (30 ) 477 43 — 490 Income tax (benefit) expense (3 ) 178 11 — 186 Equity in net income of subsidiaries (331 ) (32 ) — 363 — Net income $ 304 $ 331 $ 32 $ (363 ) $ 304 Total comprehensive income $ 303 $ 330 $ 43 $ (373 ) $ 303 Condensed Consolidating Statements of Comprehensive Income For the year ended September 30, 2016 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Sales $ — $ 1,500 $ 476 $ (47 ) $ 1,929 Cost of sales — 895 333 (47 ) 1,181 Gross profit — 605 143 — 748 Selling, general and administrative expenses — 285 80 — 365 Legacy and separation-related expenses, net — 6 — — 6 Equity and other (income) expenses, net — (21 ) 2 — (19 ) Operating income — 335 61 — 396 Net pension and other postretirement plan (income) expense — (43 ) 8 — (35 ) Net interest and other financing expenses 9 — — — 9 Net loss on acquisition — 1 — — 1 (Loss) income before income taxes (9 ) 377 53 — 421 Income tax (benefit) expense (4 ) 143 9 — 148 Equity in net income of subsidiaries (278 ) (44 ) — 322 — Net income $ 273 $ 278 $ 44 $ (322 ) $ 273 Total comprehensive income $ 280 $ 285 $ 53 $ (338 ) $ 280 Condensed Consolidating Balance Sheets As of September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets Cash and cash equivalents $ — $ 20 $ 76 $ — $ 96 Accounts receivable, net — 48 480 (119 ) 409 Inventories, net — 95 81 — 176 Prepaid expenses and other current assets 1 38 5 — 44 Total current assets 1 201 642 (119 ) 725 Noncurrent assets Property, plant and equipment, net — 384 36 — 420 Goodwill and intangibles, net — 396 52 — 448 Equity method investments — 31 — — 31 Investment in subsidiaries 801 509 — (1,310 ) — Deferred income taxes 62 63 13 — 138 Other noncurrent assets 2 85 5 — 92 Total noncurrent assets 865 1,468 106 (1,310 ) 1,129 Total assets $ 866 $ 1,669 $ 748 $ (1,429 ) $ 1,854 Liabilities and Stockholders’ Deficit Current liabilities Current portion of long-term debt $ 30 $ — $ — $ — $ 30 Trade and other payables 3 241 53 (119 ) 178 Accrued expenses and other liabilities 7 168 28 — 203 Total current liabilities 40 409 81 (119 ) 411 Noncurrent liabilities Long-term debt 1,151 1 140 — 1,292 Employee benefit obligations — 317 16 — 333 Other noncurrent liabilities 33 141 2 — 176 Total noncurrent liabilities 1,184 459 158 — 1,801 Commitments and contingencies Stockholders’ (deficit) equity (358 ) 801 509 (1,310 ) (358 ) Total liabilities and stockholders’ deficit/equity $ 866 $ 1,669 $ 748 $ (1,429 ) $ 1,854 |
Condensed Consolidating Balance Sheets | Condensed Consolidating Balance Sheets As of September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets Cash and cash equivalents $ — $ 20 $ 76 $ — $ 96 Accounts receivable, net — 48 480 (119 ) 409 Inventories, net — 95 81 — 176 Prepaid expenses and other current assets 1 38 5 — 44 Total current assets 1 201 642 (119 ) 725 Noncurrent assets Property, plant and equipment, net — 384 36 — 420 Goodwill and intangibles, net — 396 52 — 448 Equity method investments — 31 — — 31 Investment in subsidiaries 801 509 — (1,310 ) — Deferred income taxes 62 63 13 — 138 Other noncurrent assets 2 85 5 — 92 Total noncurrent assets 865 1,468 106 (1,310 ) 1,129 Total assets $ 866 $ 1,669 $ 748 $ (1,429 ) $ 1,854 Liabilities and Stockholders’ Deficit Current liabilities Current portion of long-term debt $ 30 $ — $ — $ — $ 30 Trade and other payables 3 241 53 (119 ) 178 Accrued expenses and other liabilities 7 168 28 — 203 Total current liabilities 40 409 81 (119 ) 411 Noncurrent liabilities Long-term debt 1,151 1 140 — 1,292 Employee benefit obligations — 317 16 — 333 Other noncurrent liabilities 33 141 2 — 176 Total noncurrent liabilities 1,184 459 158 — 1,801 Commitments and contingencies Stockholders’ (deficit) equity (358 ) 801 509 (1,310 ) (358 ) Total liabilities and stockholders’ deficit/equity $ 866 $ 1,669 $ 748 $ (1,429 ) $ 1,854 Condensed Consolidating Balance Sheets As of September 30, 2017 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets Cash and cash equivalents $ — $ 99 $ 102 $ — $ 201 Accounts receivable, net — 57 389 (61 ) 385 Inventories, net — 94 81 — 175 Prepaid expenses and other current assets — 25 4 — 29 Total current assets — 275 576 (61 ) 790 Noncurrent assets Property, plant and equipment, net — 353 38 — 391 Goodwill and intangibles, net — 333 2 — 335 Equity method investments — 30 — — 30 Investment in subsidiaries 606 447 — (1,053 ) — Deferred income taxes 145 122 14 — 281 Other noncurrent assets 314 80 6 (312 ) 88 Total noncurrent assets 1,065 1,365 60 (1,365 ) 1,125 Total assets $ 1,065 $ 1,640 $ 636 $ (1,426 ) $ 1,915 Liabilities and Stockholders’ Deficit Current liabilities Short-term debt $ — $ — $ 75 $ — $ 75 Current portion of long-term debt 15 — — — 15 Trade and other payables 2 198 53 (61 ) 192 Accrued expenses and other liabilities 103 60 33 — 196 Total current liabilities 120 258 161 (61 ) 478 Noncurrent liabilities Long-term debt 1,032 2 — — 1,034 Employee benefit obligations — 321 21 — 342 Other noncurrent liabilities 30 453 7 (312 ) 178 Total noncurrent liabilities 1,062 776 28 (312 ) 1,554 Commitments and contingencies Stockholders’ (deficit) equity (117 ) 606 447 (1,053 ) (117 ) Total liabilities and stockholders’ deficit/equity $ 1,065 $ 1,640 $ 636 $ (1,426 ) $ 1,915 |
Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statements of Cash Flows For the year ended September 30, 2018 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash flows (used in) provided by operating activities $ (57 ) $ 390 $ (13 ) $ — $ 320 Cash flows from investing activities Additions to property, plant and equipment — (88 ) (5 ) — (93 ) Acquisitions, net of cash required — (72 ) (53 ) — (125 ) Other investing activities, net — 5 — — 5 Return of advance from subsidiary 312 — — (312 ) — Cash flows provided by (used in) investing activities 312 (155 ) (58 ) (312 ) (213 ) Cash flows from financing activities Proceeds from borrowings, net of issuance costs 203 — 101 — 304 Repayments on borrowings (72 ) — (36 ) — (108 ) Repurchases of common stock (325 ) — — — (325 ) Purchase of additional ownership in subsidiary — — (15 ) — (15 ) Cash dividends paid (58 ) — — — (58 ) Other financing activities (3 ) (2 ) (2 ) — (7 ) Other intercompany activity, net — (312 ) — 312 — Cash flows (used in) provided by financing activities (255 ) (314 ) 48 312 (209 ) Effect of currency exchange rate changes on cash and cash equivalents — — (3 ) — (3 ) Decrease in cash and cash equivalents — (79 ) (26 ) — (105 ) Cash and cash equivalents - beginning of year — 99 102 — 201 Cash and cash equivalents - end of year $ — $ 20 $ 76 $ — $ 96 Condensed Consolidating Statements of Cash Flows For the year ended September 30, 2017 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash flows provided by (used in) operating activities $ 97 $ (180 ) $ (47 ) $ — $ (130 ) Cash flows from investing activities Additions to property, plant and equipment — (64 ) (4 ) — (68 ) Acquisitions, net of cash required — (68 ) — — (68 ) Other investing activities, net — 1 — — 1 Advance to subsidiary (312 ) — — 312 — Cash flows used in investing activities (312 ) (131 ) (4 ) 312 (135 ) Cash flows from financing activities Net transfers from Ashland 5 — — — 5 Proceeds from borrowings, net of issuance costs 395 — 75 — 470 Repayments on borrowings (90 ) — — — (90 ) Repurchases of common stock (50 ) — — — (50 ) Cash dividends paid (40 ) — — — (40 ) Other intercompany activity, net (5 ) 317 — (312 ) — Cash flows provided by financing activities 215 317 75 (312 ) 295 Effect of currency exchange rate changes on cash and cash equivalents — — (1 ) — (1 ) Increase in cash and cash equivalents — 6 23 — 29 Cash and cash equivalents - beginning of year — 93 79 — 172 Cash and cash equivalents - end of year $ — $ 99 $ 102 $ — $ 201 Condensed Consolidating Statements of Cash Flows For the year ended September 30, 2016 (In millions) Valvoline Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash flows (used in) provided by operating activities $ (35 ) $ 307 $ 39 $ — $ 311 Cash flows from investing activities Additions to property, plant and equipment — (60 ) (6 ) — (66 ) Acquisitions, net of cash required — (83 ) — — (83 ) Other investing activities, net — 1 — — 1 Cash flows used in investing activities — (142 ) (6 ) — (148 ) Cash flows from financing activities Net transfers to Ashland (1,504 ) — — — (1,504 ) Cash contributions from Ashland 60 — — — 60 Proceeds from initial public offering, net of offering costs 719 — — — 719 Proceeds from borrowings, net of issuance costs 1,372 — — — 1,372 Repayments on borrowings (637 ) — — — (637 ) Other intercompany activity, net 25 (72 ) 47 — — Cash flows provided by (used in) financing activities 35 (72 ) 47 — 10 Effect of currency exchange rate changes on cash and cash equivalents — — (1 ) — (1 ) Increase in cash and cash equivalents — 93 79 — 172 Cash and cash equivalents - beginning of year — — — — — Cash and cash equivalents - end of year $ — $ 93 $ 79 $ — $ 172 |
Description of Business and B_2
Description of Business and Basis of Presentation (Details) - USD ($) shares in Millions | Sep. 28, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Related Party Transaction [Line Items] | |||||
Common stock outstanding (in shares) | 188 | 203 | |||
Stockholders’ (deficit) equity | $ (358,000,000) | $ (117,000,000) | $ (330,000,000) | $ 617,000,000 | |
Ashland’s net investment | |||||
Related Party Transaction [Line Items] | |||||
Stockholders’ (deficit) equity | $ 0 | $ 0 | $ (1,039,000,000) | $ 678,000,000 | |
IPO | |||||
Related Party Transaction [Line Items] | |||||
Shares issued in connection with IPO (shares) | 34.5 | ||||
Majority Shareholder | |||||
Related Party Transaction [Line Items] | |||||
Ashland ownership percentage | 83.00% | ||||
Ashland | Majority Shareholder | |||||
Related Party Transaction [Line Items] | |||||
Common stock outstanding (in shares) | 170 |
Significant Accounting Polici_3
Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||||||||||||
Shipping and handling costs recorded in sales | $ 10 | $ 16 | $ 16 | |||||||||
Sales rebates and discounts | 357 | 360 | 388 | |||||||||
Reserves for customer programs and incentives | $ 57 | $ 54 | 57 | 54 | ||||||||
Revenues | 594 | $ 577 | $ 569 | $ 545 | 547 | $ 534 | $ 514 | $ 489 | 2,285 | 2,084 | 1,929 | |
Advertising costs | 63 | 61 | 58 | |||||||||
Research and development costs | 14 | 13 | 13 | |||||||||
Reduction of operating income as a result of adopting new accounting guidance | (105) | $ (102) | $ (100) | $ (88) | (113) | $ (87) | $ (100) | $ (94) | (395) | (394) | (396) | |
Reduction in retained earnings from adoption of new accounting guidance | 399 | $ 167 | 399 | 167 | ||||||||
Accounting Standards Update 2017-07 | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Reduction of operating income as a result of adopting new accounting guidance | 138 | 35 | ||||||||||
Accounting Standards Update 2018-02 | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Reduction in retained earnings from adoption of new accounting guidance | $ 8 | 8 | ||||||||||
Franchise | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Revenues | $ 29 | $ 28 | $ 25 | |||||||||
Minimum | Buildings | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Estimated useful life of property, plant and equipment | P5Y | |||||||||||
Minimum | Machinery and equipment | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Estimated useful life of property, plant and equipment | P5Y | |||||||||||
Maximum | Buildings | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Estimated useful life of property, plant and equipment | P25Y | |||||||||||
Maximum | Machinery and equipment | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Estimated useful life of property, plant and equipment | P30Y | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Minimum | Accounting Standards Update 2014-09 | Scenario, Forecast | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Reduction in retained earnings from adoption of new accounting guidance | $ 15 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Maximum | Accounting Standards Update 2014-09 | Scenario, Forecast | ||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||
Reduction in retained earnings from adoption of new accounting guidance | $ 20 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities at Fair Value (Details) - Recurring - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Other noncurrent assets | ||
Total assets at fair value | $ 53 | $ 77 |
Accrued expenses and other liabilities | ||
Total liabilities at fair value | 1 | 1 |
Level 1 | ||
Other noncurrent assets | ||
Non-qualified trust funds | 25 | 30 |
Level 2 | ||
Prepaid expenses and other current assets | ||
Currency derivatives | 1 | 1 |
Accrued expenses and other liabilities | ||
Currency derivatives | 1 | 1 |
Money market funds | Level 1 | ||
Cash and cash equivalents | ||
Cash and cash equivalents | 5 | 11 |
Time deposits | Level 2 | ||
Cash and cash equivalents | ||
Cash and cash equivalents | $ 22 | $ 35 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Aug. 31, 2017 | Jul. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Length of time to be considered time deposit | 3 months | |||
Expiration period | 12 months | |||
Senior Notes | 2024 Notes | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Interest rate of debt | 5.50% | |||
Aggregate principal amount | $ 375,000,000 | |||
Senior Notes | 2025 Notes | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Interest rate of debt | 4.375% | |||
Aggregate principal amount | $ 400,000,000 | |||
Foreign Exchange Contract | Not Designated as Hedging Instrument | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Outstanding derivative contracts notional value | $ 74,000,000 | $ 47,000,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Debt (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Unamortized discount and issuance costs | $ 11 | $ 13 |
Level 2 | Fair value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt fair value | 752 | 809 |
Level 2 | Fair value | Senior Notes | 2024 Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt fair value | 376 | 401 |
Level 2 | Fair value | Senior Notes | 2025 Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt fair value | 376 | 408 |
Level 2 | Carrying value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt fair value | 765 | 764 |
Unamortized discount and issuance costs | (10) | (11) |
Level 2 | Carrying value | Senior Notes | 2024 Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt fair value | 370 | 370 |
Unamortized discount and issuance costs | (5) | (5) |
Level 2 | Carrying value | Senior Notes | 2025 Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt fair value | 395 | 394 |
Unamortized discount and issuance costs | $ (5) | $ (6) |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Narrative (Details) $ in Millions | Jul. 13, 2018USD ($)company-owned_and_franchised_locationsfranchise_service_center_stores | Oct. 02, 2017USD ($)franchise | Jan. 31, 2017USD ($)service_center_store | Feb. 01, 2016USD ($)service_center_storefranchise_service_center_stores | Dec. 31, 2017USD ($) | Sep. 30, 2018USD ($)service_center_storefranchise_service_center_stores | Sep. 30, 2017USD ($)service_center_storefranchise_service_center_stores | Sep. 30, 2016USD ($)service_center_storefranchise_service_center_stores | Nov. 30, 2017 |
Business Acquisition [Line Items] | |||||||||
Number of service center stores | service_center_store | 136 | 43 | 104 | ||||||
Purchase price | $ 125 | $ 72 | $ 79 | ||||||
Number of franchise service center stores acquired | franchise_service_center_stores | 73 | 14 | 42 | ||||||
Number of former franchise service center stores acquired | franchise_service_center_stores | 60 | 9 | |||||||
Number of service center stores acquired in single and multi-store transactions | service_center_store | 3 | 29 | 53 | ||||||
Payments for business acquisition | $ 4 | ||||||||
Goodwill | $ 381 | $ 330 | 264 | ||||||
Quick Lubes | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of service center stores | service_center_store | 7 | 15 | |||||||
Goodwill | $ 252 | $ 201 | $ 135 | ||||||
Quick Lubes | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of service center stores sold to franchisee | service_center_store | 2 | ||||||||
Gain on sale | $ 2 | ||||||||
THAILAND | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity method ownership percentage | 70.00% | ||||||||
Additional ownership percentage of joint venture, purchased | 30.00% | ||||||||
Consideration paid to acquire additional interest in subsidiary | $ 16 | ||||||||
Customer relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average useful life | 13 years | ||||||||
Henley Bluewater, LLC | |||||||||
Business Acquisition [Line Items] | |||||||||
Purchase price | $ 60 | ||||||||
Number of former franchise service center stores acquired | franchise | 56 | ||||||||
Goodwill | $ 36 | ||||||||
Weighted average useful life | 7 years | ||||||||
Great Canadian Oil Change | |||||||||
Business Acquisition [Line Items] | |||||||||
Purchase price | $ 53 | ||||||||
Number of franchise service center stores acquired | franchise_service_center_stores | 73 | ||||||||
Goodwill | $ 16 | ||||||||
Number of company-owned and franchised locations in North America | company-owned_and_franchised_locations | 1,200 | ||||||||
Great Canadian Oil Change | Trade Names | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average useful life | 20 years | ||||||||
Increase in intangible assets as a result of adjustment | $ 27 | ||||||||
Great Canadian Oil Change | Customer relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average useful life | 15 years | ||||||||
Increase in intangible assets as a result of adjustment | $ 9 | ||||||||
Time-It Lube | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of service center stores | service_center_store | 28 | ||||||||
Purchase price | $ 49 | ||||||||
Goodwill | $ 45 | ||||||||
Oil Can Henry's International, Inc. | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of service center stores | service_center_store | 47 | ||||||||
Purchase price | $ 62 | ||||||||
Number of franchise service center stores acquired | franchise_service_center_stores | 42 | ||||||||
Goodwill | $ 82 | ||||||||
Assumption of debt in business acquisition | $ 11 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures - Schedule of Aggregate Cash Consideration and Total Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Business Acquisition [Line Items] | |||
Inventories | $ 2 | $ 1 | $ 1 |
Other current assets | 1 | 0 | 1 |
Property, plant and equipment | 2 | 2 | 9 |
Goodwill | 58 | 60 | 94 |
Other noncurrent assets | 0 | 0 | 3 |
Trade and other payables | 0 | 0 | (11) |
Debt | 0 | 0 | (11) |
Other noncurrent liabilities | 0 | 0 | (9) |
Net assets acquired | 125 | 72 | 79 |
Goodwill not expected to be deductible for tax purposes | 83 | ||
Trademarks and trade names | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 27 | 1 | 1 |
Weighted average useful life | 19 years | ||
Reacquired franchise rights | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 26 | 6 | 0 |
Purchase accounting adjustment, increase in finite lived intangible assets | 6 | ||
Weighted average useful life | 8 years | ||
Customer relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 9 | 2 | 0 |
Weighted average useful life | 13 years | ||
Other intangible assets | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 0 | $ 0 | $ 1 |
Equity Method Investments - Nar
Equity Method Investments - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 31 | $ 30 |
Undistributed earnings from affiliates | 30 | 28 |
Outstanding receivable balances with affiliates | $ 6 | $ 3 |
Corporate Joint Venture | Cummins | ||
Schedule of Equity Method Investments [Line Items] | ||
Interest in joint ventures (in percent) | 50.00% |
Equity Method Investments - Sum
Equity Method Investments - Summarized Financial Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Financial position | |||
Current assets | $ 116 | $ 105 | |
Current liabilities | (76) | (69) | |
Working capital | 40 | 36 | |
Noncurrent assets | 23 | 25 | |
Noncurrent liabilities | (1) | (1) | |
Stockholders’ equity | 62 | 60 | |
Results of operations | |||
Sales | 313 | 289 | $ 255 |
Income from operations | 62 | 53 | 46 |
Net income | 27 | 25 | 23 |
Amounts recorded by Valvoline | |||
Equity income | 14 | 12 | 12 |
Distributions received | 10 | 8 | 16 |
Royalty income | 8 | 7 | 4 |
Sales to | 12 | 12 | 10 |
Purchases from | $ 2 | $ 0 | $ 0 |
Accounts Receivable - Summary (
Accounts Receivable - Summary (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Receivables [Abstract] | ||
Trade | $ 390 | $ 362 |
Other | 26 | 28 |
Accounts receivable, gross | 416 | 390 |
Allowance for doubtful accounts | (7) | (5) |
Total accounts receivable, net | $ 409 | $ 385 |
Accounts Receivable - Narrative
Accounts Receivable - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable sold to financial institutions | $ 129 | $ 50 |
Ashland | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable sold to financial institutions | 40 | |
Aggregate accounts receivable sold by Ashland to financial institutions | $ 90 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Inventory, Net [Abstract] | ||
Finished products | $ 189 | $ 180 |
Raw materials, supplies and work in process | 30 | 31 |
Reserve for LIFO cost valuation | (40) | (33) |
Excess and obsolete inventory reserves | (3) | (3) |
Inventories | 176 | 175 |
Lubricants | ||
Inventory [Line Items] | ||
Replacement cost | $ 89 | $ 83 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | $ 847 | $ 823 | |
Accumulated depreciation | (427) | (432) | |
Net property, plant and equipment | 420 | 391 | |
Non-cash accruals | 13 | 39 | |
Depreciation (includes capital leases) | 49 | 42 | $ 38 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | 51 | 51 | |
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | 292 | 286 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | 442 | 442 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | 62 | 44 | |
Assets Held under Capital Leases | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | 22 | 28 | |
Accumulated depreciation | $ (4) | $ (4) |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles - Summary of Goodwill (Details) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018USD ($)service_center_store | Sep. 30, 2017USD ($)service_center_store | Sep. 30, 2016USD ($)service_center_store | |
Goodwill [Line Items] | |||
Number of service center stores | service_center_store | 136 | 43 | 104 |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 330 | $ 264 | |
Acquisitions | 52 | 66 | |
Dispositions | (1) | ||
Goodwill, ending balance | 381 | 330 | $ 264 |
Core North America | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 89 | 89 | |
Acquisitions | 0 | 0 | |
Dispositions | 0 | ||
Goodwill, ending balance | $ 89 | $ 89 | 89 |
Quick Lubes | |||
Goodwill [Line Items] | |||
Number of service center stores | service_center_store | 7 | 15 | |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 201 | $ 135 | |
Acquisitions | 52 | 66 | |
Dispositions | (1) | ||
Goodwill, ending balance | $ 252 | 201 | 135 |
Quick Lubes | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||
Goodwill [Line Items] | |||
Number of quick lube service center stores sold | service_center_store | 2 | ||
International | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 40 | 40 | |
Acquisitions | 0 | 0 | |
Dispositions | 0 | ||
Goodwill, ending balance | $ 40 | $ 40 | $ 40 |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 76 | $ 8 |
Accumulated amortization | (9) | (3) |
Net carrying amount | 67 | 5 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 29 | 2 |
Accumulated amortization | (2) | (1) |
Net carrying amount | 27 | 1 |
Reacquired franchise rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 32 | 0 |
Accumulated amortization | (4) | 0 |
Net carrying amount | 28 | 0 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 14 | 5 |
Accumulated amortization | (3) | (2) |
Net carrying amount | 11 | 3 |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 1 | 1 |
Accumulated amortization | 0 | 0 |
Net carrying amount | $ 1 | $ 1 |
Goodwill and Other Intangible_4
Goodwill and Other Intangibles - Actual and Estimated Amortization Expense (Details) $ in Millions | 12 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization expense | $ 6 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2,019 | 7 |
2,020 | 7 |
2,021 | 7 |
2,022 | 6 |
2,023 | $ 6 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Debt Instrument [Line Items] | ||
Debt gross | $ 1,333 | |
Short-term debt | 0 | $ 75 |
Other | (10) | (11) |
Total debt | 1,322 | 1,124 |
Current portion of long-term debt | 30 | 15 |
Long-term debt | 1,292 | 1,034 |
Debt issuance cost discounts | 11 | 13 |
Debt acquired through acquisitions | 1 | 2 |
2025 Notes | Senior Notes | ||
Debt Instrument [Line Items] | ||
Debt gross | 400 | 400 |
2024 Notes | Senior Notes | ||
Debt Instrument [Line Items] | ||
Debt gross | $ 375 | 375 |
Trade Receivables Facility | Line of Credit | Secured Debt | ||
Debt Instrument [Line Items] | ||
Short-term debt | $ 75 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2017USD ($) | Aug. 31, 2017USD ($) | Jul. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Aug. 02, 2018USD ($) | Nov. 20, 2017USD ($) | Nov. 30, 2016USD ($) | |
Debt Instrument [Line Items] | ||||||||||
Proceeds from borrowings, net of issuance costs | $ 304,000,000 | $ 470,000,000 | $ 1,372,000,000 | |||||||
Amount outstanding | 1,333,000,000 | |||||||||
Quarterly installments due in fiscal 2019 | 30,000,000 | |||||||||
Quarterly installments due in fiscal 2020 | 30,000,000 | |||||||||
Quarterly installments due in fiscal 2021 | 497,000,000 | |||||||||
Repayments on borrowings | 108,000,000 | 90,000,000 | $ 637,000,000 | |||||||
Outstanding balance of short-term debt | 0 | 75,000,000 | ||||||||
Revolver | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Borrowings from revolving facility | 204,000,000 | |||||||||
Repayments towards revolving facility | 57,000,000 | |||||||||
Remaining borrowing capacity | 293,000,000 | |||||||||
Letter of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Letters of credit outstanding | $ 10,000,000 | |||||||||
IPO | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from initial public offering used to repay outstanding debt | $ 0 | |||||||||
Line of Credit | Revolver | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Outstanding amount under revolver | 147,000,000 | 0 | ||||||||
2025 Notes | Senior Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate of debt | 4.375% | |||||||||
Aggregate principal amount | $ 400,000,000 | |||||||||
Proceeds from borrowings, net of issuance costs | $ 394,000,000 | |||||||||
Amount outstanding | 400,000,000 | 400,000,000 | ||||||||
2024 Notes | Senior Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate of debt | 5.50% | |||||||||
Aggregate principal amount | $ 375,000,000 | |||||||||
Proceeds from borrowings, net of issuance costs | $ 370,000,000 | |||||||||
Amount outstanding | 375,000,000 | 375,000,000 | ||||||||
2016 Credit Facilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount of line of credit | $ 1,325,000,000 | |||||||||
Maximum consolidated leverage ratio | 4.5 | |||||||||
Minimum consolidated interest coverage ratio | 3 | |||||||||
2016 Credit Facilities | Minimum | London Interbank Offered Rate (LIBOR) | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, basis spread on variable rate | 1.50% | |||||||||
2016 Credit Facilities | Minimum | Base Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, basis spread on variable rate | 0.50% | |||||||||
2016 Credit Facilities | Maximum | London Interbank Offered Rate (LIBOR) | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, basis spread on variable rate | 2.50% | |||||||||
2016 Credit Facilities | Maximum | Base Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, basis spread on variable rate | 1.50% | |||||||||
2016 Credit Facilities | Line of Credit | Revolver | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount of line of credit | $ 450,000,000 | |||||||||
Term of debt | 5 years | |||||||||
2016 Credit Facilities | Line of Credit | Letter of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount of line of credit | $ 100,000,000 | |||||||||
Term Loans | Line of Credit | Secured Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount of line of credit | $ 875,000,000 | |||||||||
Term of debt | 5 years | |||||||||
Amount outstanding | $ 270,000,000 | 285,000,000 | ||||||||
Quarterly installments due in fiscal 2019 | 8,000,000 | |||||||||
Quarterly installments due in fiscal 2020 | 8,000,000 | |||||||||
Quarterly installments due in fiscal 2021 | $ 15,000,000 | |||||||||
Trade Receivables Facility | Secured Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount of line of credit | $ 175,000,000 | $ 125,000,000 | ||||||||
Term of debt | 1 year | |||||||||
Trade Receivables Facility | Line of Credit | Secured Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from borrowings, net of issuance costs | $ 75,000,000 | |||||||||
Outstanding balance of short-term debt | 75,000,000 | |||||||||
Trade Receivables Facility | Line of Credit | Secured Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from borrowings, net of issuance costs | $ 101,000,000 | |||||||||
Outstanding amount under revolver | 140,000,000 | |||||||||
Repayments on borrowings | 36,000,000 | |||||||||
Outstanding balance of short-term debt | $ 75,000,000 | |||||||||
Remaining borrowing capacity | $ 35,000,000 | |||||||||
Weighted-average interest rate | 2.80% | 1.80% | ||||||||
Trade Receivables Facility | Line of Credit | Secured Debt | Financing Subsidiary | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Accounts receivable pledged as collateral | $ 275,000,000 | $ 247,000,000 |
Debt Debt - Schedule of Maturit
Debt Debt - Schedule of Maturities of Long-Term Debt (Details) $ in Millions | Sep. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
2,019 | $ 30 |
2,020 | 30 |
2,021 | 497 |
2,022 | 0 |
2,023 | 0 |
Thereafter | 776 |
Total | $ 1,333 |
Lease Commitments - Future Mini
Lease Commitments - Future Minimum Rental Payments (Details) $ in Millions | Sep. 30, 2018USD ($) |
Operating leases | |
2,019 | $ 28 |
2,020 | 23 |
2,021 | 21 |
2,022 | 18 |
2,023 | 16 |
Thereafter | 64 |
Total future minimum lease payments | 170 |
Capital leases and financing obligations | |
2,018 | 6 |
2,019 | 6 |
2,020 | 6 |
2,021 | 6 |
2,022 | 6 |
Thereafter | 50 |
Total future minimum lease payments | 80 |
Imputed interest | (33) |
Present value of minimum lease payments | 47 |
Minimum sublease rentals due under noncancelable subleases | $ 4 |
Lease Commitments - Rental Expe
Lease Commitments - Rental Expense Under Operating Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Leases [Abstract] | |||
Minimum rentals | $ 25 | $ 18 | $ 15 |
Contingent rentals | 2 | 2 | 2 |
Sublease rental income | (2) | (1) | (1) |
Rental expense under operating leases | $ 25 | $ 19 | $ 16 |
Income Taxes - Components of In
Income Taxes - Components of Income Before Income Taxes and Reconciliation of Statutory Federal Income Tax (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income before income taxes | |||||||||||
United States | $ 282 | $ 433 | $ 382 | ||||||||
Non-U.S. | 50 | 57 | 39 | ||||||||
Income before income taxes | $ 57 | $ 97 | $ 94 | $ 84 | $ 177 | $ 94 | $ 109 | $ 110 | $ 332 | $ 490 | $ 421 |
U.S. statutory tax rate | 24.50% | 35.00% | 35.00% | ||||||||
Income taxes computed at U.S. statutory tax rate | $ 81 | $ 171 | $ 147 | ||||||||
Increase (decrease) in amount computed resulting from: | |||||||||||
Unrecognized tax benefits | 0 | 2 | 3 | ||||||||
State taxes, net of federal benefit | 14 | 17 | 16 | ||||||||
International rate differential | 0 | (7) | (5) | ||||||||
Permanent items | (3) | (8) | (11) | ||||||||
Remeasurement of net deferred taxes | 73 | 0 | 0 | ||||||||
Deemed repatriation | 4 | 0 | 0 | ||||||||
Tax Matters Agreement activity | (2) | 10 | 0 | ||||||||
Other | (1) | 1 | (2) | ||||||||
Income tax expense | $ 2 | $ 3 | $ 2 | $ 71 | $ 166 | $ 186 | $ 148 | ||||
Effective tax rate | 50.00% | 38.00% | 35.20% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Contingency [Line Items] | |||||||
Federal corporate statutory income tax blended rate | 24.50% | 35.00% | 35.00% | ||||
Increase in income tax resulting from U.S. tax reform legislation | $ 71 | ||||||
Repatriation tax on unremitted non-U.S. earnings | 4 | ||||||
Estimated incremental withholding taxes | $ 2 | 2 | $ 3 | ||||
Income tax expense (benefit) | 2 | $ 3 | $ 2 | $ 71 | 166 | 186 | $ 148 |
Gross liability resulting from mandatory deemed repatriation | 23 | 23 | |||||
Previously unrecognized foreign tax credits | 19 | ||||||
Amount of unrecognized tax benefit, if recognized, would affect the tax rate | 10 | 10 | 10 | ||||
KENTUCKY | |||||||
Income Tax Contingency [Line Items] | |||||||
Income tax expense (benefit) | 4 | ||||||
Ashland | Tax Matters Agreement | Affiliated Entity | |||||||
Income Tax Contingency [Line Items] | |||||||
Increase (decrease) in due to affiliates recognized in selling, general and administrative expense | 7 | (16) | |||||
Tax benefit primarily related to higher expected utilization of tax attributes payable | 3 | ||||||
Income tax expense (benefit) | (5) | 16 | |||||
Net tax-sharing payments | 48 | ||||||
Due to (from) related party | $ (66) | (66) | $ (62) | ||||
Ashland | Tax Matters Agreement | Affiliated Entity | Legacy And Separation-Related Expenses, Net | |||||||
Income Tax Contingency [Line Items] | |||||||
Increase (decrease) in due to affiliates recognized in selling, general and administrative expense | 8 | ||||||
Ashland | Tax Matters Agreement | Affiliated Entity | KENTUCKY | |||||||
Income Tax Contingency [Line Items] | |||||||
Increase (decrease) in due to affiliates recognized in selling, general and administrative expense | 4 | ||||||
Income tax expense (benefit) | 4 | ||||||
Domestic Tax Authority | |||||||
Income Tax Contingency [Line Items] | |||||||
Increase in income tax resulting from U.S. tax reform legislation | 67 | ||||||
Accumulated other comprehensive (loss) income | |||||||
Income Tax Contingency [Line Items] | |||||||
Reclassification of income tax effects of U.S. tax reform | $ 8 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Current | |||||||
Federal | $ (2) | $ 47 | $ 99 | ||||
State | 6 | 8 | 24 | ||||
Non-U.S. | 17 | 14 | 12 | ||||
Current income tax expense | 21 | 69 | 135 | ||||
Deferred | |||||||
Federal | 136 | 106 | 14 | ||||
State | 9 | 12 | 2 | ||||
Non-U.S. | 0 | (1) | (3) | ||||
Deferred income tax expense | 145 | 117 | 13 | ||||
Income tax expense | $ 2 | $ 3 | $ 2 | $ 71 | $ 166 | $ 186 | $ 148 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Deferred tax assets | ||
Federal net operating loss carryforwards | $ 0 | $ 96 |
Non-U.S. net operating loss carryforwards | 2 | 1 |
State net operating loss carryforwards | 19 | 28 |
Employee benefit obligations | 86 | 132 |
Compensation accruals | 21 | 29 |
Credit carryforwards | 36 | 13 |
Other | 9 | 13 |
Valuation allowances | (7) | (8) |
Net deferred tax assets | 166 | 304 |
Deferred tax liabilities | ||
Goodwill and other intangibles | 3 | 3 |
Property, plant and equipment | 23 | 17 |
Undistributed earnings | 2 | 3 |
Total deferred tax liabilities | 28 | 23 |
Total net deferred tax assets | 138 | $ 281 |
Foreign Tax Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 5 | |
Expiration Years 2020 Through 2033 | Foreign Tax Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 7 | |
Expiration Years 2019 Through 2037 | State and Local Jurisdiction | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 481 |
Income Taxes - Schedule of Gros
Income Taxes - Schedule of Gross Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits, beginning of period | $ 10 | $ 8 | $ 5 |
Increases related to tax positions from prior years | 2 | 0 | 2 |
Increases related to tax positions taken during the current year | 1 | 2 | 1 |
Settlements with tax authorities | (2) | 0 | 0 |
Lapses of statutes of limitation | (1) | 0 | 0 |
Unrecognized tax benefits, end of period | 10 | 10 | $ 8 |
Accrual for tax interest and penalties | $ 1 | $ 1 |
Employee Benefit Plans - Narrat
Employee Benefit Plans - Narrative (Details) | Aug. 29, 2017USD ($)participant | Sep. 30, 2018USD ($)multiemployer_planparticipant | Dec. 31, 2016USD ($) | Sep. 30, 2018USD ($)multiemployer_plan | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Oct. 31, 2018USD ($) | Apr. 30, 2018USD ($) |
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Remeasurement gain (loss) | $ 8,000,000 | $ (38,000,000) | $ 68,000,000 | $ 42,000,000 | ||||
Contribution plan expense | $ 14,000,000 | 14,000,000 | 11,000,000 | |||||
Number of multiemployer plans | multiemployer_plan | 2 | 2 | ||||||
Estimated partial withdrawal liability | $ 30,000,000 | |||||||
Subsequent Event | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Potential settlement amount | $ 10,000,000 | |||||||
Domestic Plan | Fixed securities | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Target asset allocations | 75.00% | 75.00% | ||||||
Domestic Plan | Equity securities | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Target asset allocations | 25.00% | 25.00% | ||||||
Pension benefits | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Remeasurement gain (loss) | $ 95,000,000 | 60,000,000 | ||||||
Accumulated benefit obligations | $ 2,087,000,000 | 2,087,000,000 | 2,381,000,000 | 3,138,000,000 | ||||
Employer contributions | 16,000,000 | 412,000,000 | ||||||
Pension benefits | Qualified Plan | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Number of participants electing to receive lump sum payment settlement | participant | 2,600 | |||||||
Lump sum payments | $ 134,000,000 | |||||||
Number of participants | participant | 6,000 | |||||||
Outstanding benefit obligation transfered in exchange for pension trust assets | $ 585,000,000 | |||||||
Pension benefits | UNITED STATES | Qualified Plan | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Employer contributions | 394,000,000 | |||||||
Expected future contribution | 0 | 0 | ||||||
Pension benefits | UNITED STATES | Nonqualified Plan | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Expected future contribution | $ 13,000,000 | $ 13,000,000 | ||||||
Other postretirement benefits | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Annual base year per capita costs, basis spread, up to | 1.50% | |||||||
Assumed pre-65 health care cost trend rate | 7.50% | 7.50% | ||||||
Ultimate pre-65 health care cost trend rate | 4.50% | 4.50% | ||||||
Remeasurement gain (loss) | $ 0 | 5,000,000 | ||||||
Accumulated benefit obligations | $ 51,000,000 | 51,000,000 | 57,000,000 | $ 73,000,000 | ||||
Employer contributions | 7,000,000 | 13,000,000 | ||||||
Other various benefit plans | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Current postemployment benefits liability | 1,000,000 | 1,000,000 | 1,000,000 | |||||
Noncurrent postemployment benefits liability | $ 3,000,000 | $ 3,000,000 | $ 4,000,000 |
Employee Benefit Plans - Pensio
Employee Benefit Plans - Pension and Other Postretirement Benefit Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Ashland | |||
Weighted-average plan assumptions | |||
Non-service income | $ 10 | ||
Ashland | Ashland | |||
Net periodic benefit income | |||
Service cost | 7 | ||
Actuarial loss (gain) | 24 | ||
Pension benefits | |||
Net periodic benefit income | |||
Service cost | $ 2 | $ 2 | 3 |
Interest cost | 75 | 86 | 11 |
Expected return on plan assets | (103) | (145) | (17) |
Amortization of prior service credit | 0 | 0 | 0 |
Actuarial loss (gain) | 38 | (63) | (42) |
Pre-separation allocation from Ashland | 0 | 0 | 21 |
Net periodic benefit (income) costs | $ 12 | $ (120) | $ (24) |
Weighted-average plan assumptions | |||
Discount rate for service cost | 2.94% | 2.15% | 4.10% |
Discount rate for interest cost | 3.23% | 2.84% | 3.23% |
Rate of compensation increase | 3.05% | 2.99% | 3.23% |
Expected long-term rate of return on plan assets | 5.17% | 6.56% | 6.77% |
Pension benefits | UNITED STATES | Geographic Concentration Risk | Net Periodic Benefit Obligation | |||
Weighted-average plan assumptions | |||
Concentration risk | 97.00% | ||
Other postretirement benefits | |||
Net periodic benefit income | |||
Service cost | $ 0 | $ 0 | $ 0 |
Interest cost | 2 | 1 | 0 |
Expected return on plan assets | 0 | 0 | 0 |
Amortization of prior service credit | (12) | (12) | (1) |
Actuarial loss (gain) | 0 | (5) | 0 |
Pre-separation allocation from Ashland | 0 | 0 | 0 |
Net periodic benefit (income) costs | $ (10) | $ (16) | $ (1) |
Weighted-average plan assumptions | |||
Discount rate for service cost | 4.05% | 2.95% | 4.25% |
Discount rate for interest cost | 3.11% | 2.64% | 2.92% |
Rate of compensation increase | 0.00% | 0.00% | 0.00% |
Expected long-term rate of return on plan assets | 0.00% | 0.00% | 0.00% |
Other postretirement benefits | UNITED STATES | Geographic Concentration Risk | Net Periodic Benefit Obligation | |||
Weighted-average plan assumptions | |||
Concentration risk | 75.00% |
Employee Benefit Plans - Schedu
Employee Benefit Plans - Schedule of Amortization of Prior Service Cost (Credit) Recognized in AOCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Pension benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Amortization of prior service credit recognized in accumulated other comprehensive income | $ 0 | $ 0 | |
Net periodic benefit costs (income) | 12 | (120) | $ (24) |
Total amount recognized in net periodic benefit cost (income) and accumulated other comprehensive income | 12 | (120) | |
Other postretirement benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Amortization of prior service credit recognized in accumulated other comprehensive income | 12 | 12 | |
Net periodic benefit costs (income) | (10) | (16) | $ (1) |
Total amount recognized in net periodic benefit cost (income) and accumulated other comprehensive income | $ 2 | $ (4) |
Employee Benefit Plans - Sche_2
Employee Benefit Plans - Schedule of Change in Benefit Obligations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Change in benefit obligations | ||||
Actuarial gain | $ (8) | $ 38 | $ (68) | $ (42) |
Amounts recognized in the Consolidated Balance Sheets | ||||
Noncurrent benefit liabilities | 333 | 342 | ||
Pension benefits | ||||
Change in benefit obligations | ||||
Benefit obligations at beginning of period | 3,138 | 2,381 | 3,138 | |
Service cost | 2 | 2 | 3 | |
Interest cost | 75 | 86 | 11 | |
Participant contributions | 0 | 0 | ||
Benefits paid | (146) | (210) | ||
Actuarial gain | (95) | (60) | ||
Currency exchange rate changes | (3) | 4 | ||
Transfers in | 9 | 6 | ||
Settlements | (136) | (585) | ||
Benefit obligations at end of period | 2,087 | 2,381 | 3,138 | |
Change in plan assets | ||||
Fair value of plan assets at beginning of period | 2,307 | 2,081 | 2,307 | |
Actual return on plan assets | (30) | 148 | ||
Employer contributions | 16 | 412 | ||
Participant contributions | 0 | 0 | ||
Benefits paid | (146) | (210) | ||
Currency exchange rate changes | (3) | 3 | ||
Settlements | (136) | (585) | ||
Transfers in | 10 | 6 | ||
Fair value of plan assets at end of period | 1,792 | 2,081 | 2,307 | |
Unfunded status of the plans as of September 30 | 295 | 300 | ||
Amounts recognized in the Consolidated Balance Sheets | ||||
Current benefit liabilities | 10 | 11 | ||
Noncurrent benefit liabilities | 285 | 289 | ||
Net amount recognized | 295 | 300 | ||
Amounts recognized in accumulated other comprehensive income (loss) | ||||
Prior service cost (credit) | $ 2 | $ 2 | ||
Weighted-average plan assumptions | ||||
Discount rate | 4.28% | 3.76% | ||
Rate of compensation increase | 3.10% | 3.13% | ||
Other postretirement benefits | ||||
Change in benefit obligations | ||||
Benefit obligations at beginning of period | 73 | $ 57 | $ 73 | |
Service cost | 0 | 0 | 0 | |
Interest cost | 2 | 1 | 0 | |
Participant contributions | 0 | 3 | ||
Benefits paid | (7) | (16) | ||
Actuarial gain | 0 | (5) | ||
Currency exchange rate changes | (1) | 1 | ||
Transfers in | 0 | 0 | ||
Settlements | 0 | 0 | ||
Benefit obligations at end of period | 51 | 57 | 73 | |
Change in plan assets | ||||
Fair value of plan assets at beginning of period | $ 0 | 0 | 0 | |
Actual return on plan assets | 0 | 0 | ||
Employer contributions | 7 | 13 | ||
Participant contributions | 0 | 3 | ||
Benefits paid | (7) | (16) | ||
Currency exchange rate changes | 0 | 0 | ||
Settlements | 0 | 0 | ||
Transfers in | 0 | 0 | ||
Fair value of plan assets at end of period | 0 | 0 | $ 0 | |
Unfunded status of the plans as of September 30 | 51 | 57 | ||
Amounts recognized in the Consolidated Balance Sheets | ||||
Current benefit liabilities | 6 | 8 | ||
Noncurrent benefit liabilities | 45 | 49 | ||
Net amount recognized | 51 | 57 | ||
Amounts recognized in accumulated other comprehensive income (loss) | ||||
Prior service cost (credit) | $ (56) | $ (68) | ||
Weighted-average plan assumptions | ||||
Discount rate | 4.08% | 3.48% | ||
Rate of compensation increase | 0.00% | 0.00% |
Employee Benefit Plans - Sche_3
Employee Benefit Plans - Schedule of Pension Plans with a Benefit Obligation in Excess of Plan Assets (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Plans with projected benefit obligation in excess of plan assets | ||
Plans with projected benefit obligation in excess of plan assets, benefit obligation | $ 2,045 | $ 2,381 |
Plans with projected benefit obligation in excess of plan assets, plan assets | 1,749 | 2,081 |
Plans with accumulated benefit obligation in excess of plan assets | ||
Plans with accumulated benefit obligation in excess of plan assets, benefit obligation | 2,034 | 2,368 |
Plans with accumulated benefit obligation in excess of plan assets, plan assets | $ 1,741 | $ 2,072 |
Employee Benefit Plans - Sche_4
Employee Benefit Plans - Schedule of Fair Values of Plan Assets by Investment Category (Details) - Pension benefits - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 |
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 1,792 | $ 2,081 | $ 2,307 |
Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 759 | 1,154 | |
Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 563 | 497 | |
Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 4 | 16 | $ 23 |
Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 466 | 414 | |
Cash and cash equivalents | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 100 | 13 | |
Cash and cash equivalents | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 100 | 13 | |
Cash and cash equivalents | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Cash and cash equivalents | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Cash and cash equivalents | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. government securities and futures | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 74 | 339 | |
U.S. government securities and futures | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | (3) | 207 | |
U.S. government securities and futures | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 77 | 132 | |
U.S. government securities and futures | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. government securities and futures | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Other government securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 92 | 86 | |
Other government securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 1 | 0 | |
Other government securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 91 | 86 | |
Other government securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Other government securities | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Corporate debt instruments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 1,056 | 1,197 | |
Corporate debt instruments | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 661 | 934 | |
Corporate debt instruments | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 395 | 263 | |
Corporate debt instruments | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Corporate debt instruments | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Insurance contracts | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 4 | ||
Insurance contracts | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Insurance contracts | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Insurance contracts | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 4 | ||
Insurance contracts | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
International equity | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 16 | ||
International equity | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
International equity | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 16 | ||
International equity | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
International equity | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Private equity and hedge funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 60 | 414 | |
Private equity and hedge funds | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Private equity and hedge funds | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Private equity and hedge funds | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Private equity and hedge funds | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 60 | 414 | |
Common collective trusts | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 406 | ||
Common collective trusts | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Common collective trusts | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Common collective trusts | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Common collective trusts | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 406 | ||
Other investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 16 | ||
Other investments | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Other investments | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Other investments | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 16 | ||
Other investments | Assets measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 0 |
Employee Benefit Plans - Sche_5
Employee Benefit Plans - Schedule of Level 3 Investments (Details) - Pension benefits - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward] | ||
Fair value of plan assets at beginning of period | $ 2,081 | $ 2,307 |
Actual return on assets held at end of year | (30) | 148 |
Fair value of plan assets at end of period | 1,792 | 2,081 |
Level 3 | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward] | ||
Fair value of plan assets at beginning of period | 16 | 23 |
Actual return on assets held at end of year | (7) | |
Purchases | 3 | |
Sales | (8) | |
Actual return on assets held at end of year | 1 | |
Actual return on assets sold during year | (8) | |
Fair value of plan assets at end of period | $ 4 | $ 16 |
Employee Benefit Plans - Sche_6
Employee Benefit Plans - Schedule of Investments Measured at Fair Value Using NAV Per Share (Details) $ in Millions | 12 Months Ended |
Sep. 30, 2018USD ($) | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | $ 466 |
Unfunded commitments | $ 6 |
Percentage of hedge funds to be liquidated over the next year | 88.00% |
Minimum | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Period in which private equity investments are estimated to be liquidated | 1 year |
Maximum | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Period in which private equity investments are estimated to be liquidated | 5 years |
Long/short hedge funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | $ 38 |
Unfunded commitments | 0 |
Relative value hedge funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | 11 |
Unfunded commitments | 0 |
Multi-strategy hedge funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | 2 |
Unfunded commitments | 0 |
Event driven hedge funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | 1 |
Unfunded commitments | 0 |
Common collective trusts, daily redemption | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | 386 |
Unfunded commitments | $ 0 |
Redemption notice period | 3 days |
Common collective trusts, monthly redemption | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | $ 12 |
Redemption notice period | 5 days |
Common collective trusts | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | $ 8 |
Private equity | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair value | 8 |
Unfunded commitments | $ 6 |
Employee Benefit Plans - Sche_7
Employee Benefit Plans - Schedule of Weighted-Average Asset Allocations (Details) | Sep. 30, 2018 | Sep. 30, 2017 |
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted average asset allocation (as a percent) | 100.00% | 100.00% |
Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted average asset allocation (as a percent) | 23.00% | 20.00% |
Debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted average asset allocation (as a percent) | 76.00% | 78.00% |
Other | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted average asset allocation (as a percent) | 1.00% | 2.00% |
Minimum | Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations | 15.00% | |
Minimum | Debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations | 65.00% | |
Minimum | Other | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations | 0.00% | |
Maximum | Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations | 25.00% | |
Maximum | Debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations | 85.00% | |
Maximum | Other | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations | 20.00% |
Employee Benefit Plans - Sche_8
Employee Benefit Plans - Schedule of Future Benefit Payments (Details) $ in Millions | Sep. 30, 2018USD ($) |
Pension benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
2,019 | $ 142 |
2,020 | 142 |
2,021 | 143 |
2,022 | 142 |
2,023 | 141 |
Thereafter | 695 |
Total | 1,405 |
Other postretirement benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
2,019 | 6 |
2,020 | 5 |
2,021 | 4 |
2,022 | 4 |
2,023 | 3 |
Thereafter | 15 |
Total | $ 37 |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plans - Narrative (Details) $ / shares in Units, $ in Millions | 12 Months Ended | |
Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / shares | |
Stock appreciation rights | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unexercised SARs lapsing period | 10 years | |
Unrecognized compensation costs | $ 1 | |
Unrecognized compensation costs weighted average period related to nonvested awards | 1 year 7 months 25 days | |
Stock appreciation rights | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 1 year | |
Stock appreciation rights | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Nonvested stock awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation costs | $ 9 | |
Unrecognized compensation costs weighted average period related to nonvested awards | 2 years 6 months 20 days | |
Grant date fair values of shares vested | $ 6 | $ 1 |
Aggregate intrinsic value | $ 27 | |
Granted, weighted average grant date fair value (in usd per share) | $ / shares | $ 23.17 | $ 22.82 |
Nonvested stock awards | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 1 year | |
Nonvested stock awards | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Performance awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Unrecognized compensation costs | $ 1 | |
Unrecognized compensation costs weighted average period related to nonvested awards | 1 year 9 months | |
Aggregate intrinsic value | $ 7 | |
Granted, weighted average grant date fair value (in usd per share) | $ / shares | $ 23.82 | $ 18.44 |
Valvoline Inc. Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized under the plan (in shares) | shares | 11,000,000 | |
Number of shares remaining under the plan (in shares) | shares | 7,000,000 | |
Reduction of authorized shares, conversion ratio | 4.5 |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plans - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense, pre-tax | $ 12 | $ 10 |
Tax benefit | (3) | (4) |
Total stock-based compensation expense, net of tax | 9 | 6 |
Cash Settled - Liability Classified | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense, pre-tax | 1 | 1 |
Stock appreciation rights | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense, pre-tax | 2 | 3 |
Nonvested stock awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense, pre-tax | 9 | 5 |
Performance awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense, pre-tax | $ 1 | 2 |
Affiliated Entity | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense, pre-tax | $ 4 |
Stock-Based Compensation Plan_4
Stock-Based Compensation Plans - Summary of Fair Value Assumptions Used for Share Based Awards (Details) - $ / shares | May 12, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Stock appreciation rights | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average fair value per share (USD per share) | $ 5.56 | $ 7.44 | |
Risk-free interest rate | 2.20% | 1.70% | |
Expected dividend yield | 0.90% | 0.90% | |
Expected volatility | 23.30% | 22.80% | |
Expected term | 5 years 10 months 17 days | 7 years 5 months 12 days | |
Minimum risk free interest rate | 1.10% | ||
Maximum risk free interest rate | 1.90% | ||
Minimum expected volatility rate | 21.50% | ||
Maximum expected volatility rate | 24.40% | ||
Performance awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 1.70% | 1.20% | |
Expected dividend yield | 1.00% | 1.00% | |
Expected volatility | 24.20% | 21.00% | |
Expected term | 3 years | 1 year 10 months 25 days | |
Minimum risk free interest rate | 1.60% | 0.90% | |
Maximum risk free interest rate | 1.80% | 1.50% | |
Minimum expected volatility rate | 18.90% | ||
Maximum expected volatility rate | 22.40% |
Stock-Based Compensation Plan_5
Stock-Based Compensation Plans - Schedule of SARs Activity (Details) - Stock appreciation rights - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
SARs outstanding at beginning of period (in shares) | 1,824 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 228 | |
Exercised (in shares) | (205) | |
Forfeited (in shares) | (49) | |
SARs outstanding at end of period (in shares) | 1,798 | 1,824 |
SARs exercisable at end of period (in shares) | 1,207 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
SARs outstanding at beginning of period, weighted average exercise price per share (USD per share) | $ 17.48 | |
Granted, weighted average exercise price per share (USD per share) | 23.08 | |
Exercised, weighted average exercise price per share (USD per share) | 13.64 | |
Forfeited, weighted average exercise price per share (USD per share) | 20.50 | |
SARs outstanding at end of period, weighted average exercise price per share (USD per share) | 18.54 | $ 17.48 |
SARs exercisable at end of period, weighted average exercise price per share (USD per share) | $ 17.14 | |
Outstanding, weighted average remaining term | 6 years 8 months 12 days | 7 years 1 month 6 days |
Exercisable, weighted average remaining term | 5 years 9 months 18 days | |
Outstanding, aggregate intrinsic value | $ 6 | $ 11 |
Exercised, aggregate intrinsic value | 2 | |
Exercisable, aggregate intrinsic value | $ 5 |
Stock-Based Compensation Plan_6
Stock-Based Compensation Plans - Schedule of Nonvested Stock Award Activity (Details) - Nonvested stock awards - $ / shares shares in Thousands | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Unvested shares, beginning balance (in shares) | 1,275 | |
Granted (in shares) | 359 | |
Vested (in shares) | (254) | |
Forfeitures (in shares) | (102) | |
Unvested shares, ending balance (in shares) | 1,278 | 1,275 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | ||
Unvested shares beginning balance, weighted average grant date fair value (usd per share) | $ 22.71 | |
Granted, weighted average grant date fair value (in usd per share) | 23.17 | $ 22.82 |
Vested, weighted average grant date fair value (in usd per share) | 22.73 | |
Forfeitures, weighted average grant date fair value (in usd per share) | 22.66 | |
Unvested shares ending balance, weighted average grant date fair value (usd per share) | $ 23.07 | $ 22.71 |
Stock-Based Compensation Plan_7
Stock-Based Compensation Plans - Schedule of Performance Award Activity (Details) - Performance awards - $ / shares shares in Thousands | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Unvested shares, beginning balance (in shares) | 182 | |
Granted (in shares) | 164 | |
Forfeited (in shares) | (19) | |
Unvested shares, ending balance (in shares) | 327 | 182 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | ||
Unvested shares beginning balance, weighted average grant date fair value (usd per share) | $ 23.20 | |
Granted, weighted average grant date fair value (in usd per share) | 23.82 | $ 18.44 |
Forfeited, weighted average grant date fair value (in usd per share) | 17.93 | |
Unvested shares ending balance, weighted average grant date fair value (usd per share) | $ 22.64 | $ 23.20 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator | |||||||||||
Net income | $ 45 | $ 64 | $ 67 | $ (10) | $ 105 | $ 56 | $ 71 | $ 72 | $ 166 | $ 304 | $ 273 |
Denominator | |||||||||||
Weighted-average shares used to compute basic EPS (in shares) | 197 | 204 | 170 | ||||||||
Effect of dilutive securities (in shares) | 0 | 0 | 0 | ||||||||
Weighted-average shares used to compute diluted EPS (in shares) | 197 | 204 | 170 | ||||||||
Earnings per share | |||||||||||
Earnings per share, basic (usd per share) | $ 0.23 | $ 0.33 | $ 0.33 | $ (0.05) | $ 0.52 | $ 0.27 | $ 0.35 | $ 0.35 | $ 0.84 | $ 1.49 | $ 1.60 |
Earnings per share, diluted (usd per share) | $ 0.23 | $ 0.33 | $ 0.33 | $ (0.05) | $ 0.52 | $ 0.27 | $ 0.35 | $ 0.35 | $ 0.84 | $ 1.49 | $ 1.60 |
Ashland | Majority Shareholder | |||||||||||
Denominator | |||||||||||
Weighted-average shares used to compute diluted EPS (in shares) | 170 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Dividend Activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Equity [Abstract] | |||
Cash outlay | $ 58 | $ 40 | $ 0 |
Dividend per share (usd per share) | $ 0.298 | $ 0.196 | $ 0 |
Stockholders' Deficit - Sched_2
Stockholders' Deficit - Schedule of Share Repurchases (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Equity [Abstract] | |||
Total cost | $ 325 | $ 50 | $ 0 |
Shares repurchased (in shares) | 15 | 2 | 0 |
Stockholders' Deficit - Narrati
Stockholders' Deficit - Narrative (Details) shares in Millions | May 12, 2017shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017shares | Sep. 30, 2016shares | Jan. 31, 2018USD ($) | Apr. 24, 2017USD ($) |
Class of Stock [Line Items] | ||||||
Distribution of shares of common stock on a pro rata dividend on shares of Ashland Common stock outstanding (in shares) | shares | 197 | 204 | 170 | |||
Affiliated Entity | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued per share of Ashland common stock owned | 2.745338 | |||||
Ashland | Affiliated Entity | ||||||
Class of Stock [Line Items] | ||||||
Distribution of shares of common stock on a pro rata dividend on shares of Ashland Common stock outstanding (in shares) | shares | 170 | 170 | ||||
Common stock | ||||||
Class of Stock [Line Items] | ||||||
Authorized shares for repurchase | $ | $ 300,000,000 | $ 150,000,000 | ||||
Remaining authorized repurchase amount | $ | $ 75,000,000 |
Stockholders' Deficit - Other C
Stockholders' Deficit - Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ (117) | $ (330) |
Fiscal year activity | (11) | 46 |
Balance at end of period | (358) | (117) |
Unamortized benefit plan credits | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 44 | 52 |
Fiscal year activity | (1) | (8) |
Balance at end of period | 43 | 44 |
Currency translation adjustments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (1) | (55) |
Fiscal year activity | (10) | 54 |
Balance at end of period | (11) | (1) |
Total | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 43 | (3) |
Balance at end of period | $ 32 | $ 43 |
Stockholders' Deficit - Sched_3
Stockholders' Deficit - Schedule of Reclassifications From Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Amortization of pension and other postretirement plan prior service credit | $ 38 | $ (60) | $ (8) | $ 0 | $ (138) | $ (35) | |||||
Loss on liquidation of subsidiary | (33) | (25) | (19) | ||||||||
Income tax expense (benefit) | 2 | $ 3 | $ 2 | $ 71 | 166 | 186 | 148 | ||||
Net of tax | 45 | $ 64 | $ 67 | $ (10) | 105 | $ 56 | $ 71 | $ 72 | 166 | 304 | $ 273 |
Reclassification of income tax effects of U.S. tax reform | (399) | (167) | (399) | (167) | |||||||
Total amounts reclassified, net of tax | (11) | 46 | |||||||||
Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Amortization of pension and other postretirement plan prior service credit | (12) | (12) | |||||||||
Loss on liquidation of subsidiary | 1 | 0 | |||||||||
Income tax expense (benefit) | 2 | 4 | |||||||||
Net of tax | (9) | (8) | |||||||||
Reclassification of income tax effects of U.S. tax reform | $ 8 | $ 0 | 8 | 0 | |||||||
Total amounts reclassified, net of tax | $ (1) | $ (8) |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 28, 2016 | |
Related Party Transaction [Line Items] | ||||
Number of shares owned by investor (in shares) | 188 | 203 | ||
Period covered by related party agreeemnt | 24 months | |||
Mark-up on services rendered under related party agreement | 5.00% | |||
General corporate expenses | $ 79 | |||
Majority Shareholder | ||||
Related Party Transaction [Line Items] | ||||
Ashland ownership percentage | 83.00% | |||
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
General corporate expenses | $ 79 | |||
Affiliated Entity | Tax Matters Agreement | Other Long-Term Liabilities | ||||
Related Party Transaction [Line Items] | ||||
Due to (from) related party | $ 79 | $ 74 | ||
Ashland | Majority Shareholder | ||||
Related Party Transaction [Line Items] | ||||
Number of shares owned by investor (in shares) | 170 | |||
Ashland | Affiliated Entity | Tax Matters Agreement | ||||
Related Party Transaction [Line Items] | ||||
Due to (from) related party | $ 66 | $ 62 |
Related Party Transactions - As
Related Party Transactions - Ashland Costs Allocated (Details) $ in Millions | 12 Months Ended |
Sep. 30, 2016USD ($) | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | $ 79 |
Affiliated Entity | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | 79 |
Affiliated Entity | Information technology | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | 20 |
Affiliated Entity | Financial and accounting | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | 12 |
Affiliated Entity | Building services | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | 11 |
Affiliated Entity | Legal and environmental | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | 6 |
Affiliated Entity | Human resources | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | 5 |
Affiliated Entity | Shared services | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | 2 |
Affiliated Entity | Stock-based compensation | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | 11 |
Affiliated Entity | Other general and administrative | |
Related Party Transaction [Line Items] | |
Centralized and administrative support costs | $ 12 |
Reportable Segment Informatio_2
Reportable Segment Information - Narrative (Details) | 12 Months Ended | |
Sep. 30, 2018segment | Sep. 30, 2017country | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 3 | |
International | ||
Segment Reporting Information [Line Items] | ||
Number of countries where our products are sold | country | 140 |
Reportable Segment Informatio_3
Reportable Segment Information - Financial Information by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | |||||||||||
Sales | $ 594 | $ 577 | $ 569 | $ 545 | $ 547 | $ 534 | $ 514 | $ 489 | $ 2,285 | $ 2,084 | $ 1,929 |
Operating income | $ 105 | $ 102 | $ 100 | $ 88 | $ 113 | $ 87 | $ 100 | $ 94 | 395 | 394 | 396 |
Depreciation and amortization | 54 | 42 | 38 | ||||||||
Equity income | 14 | 12 | 12 | ||||||||
Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Operating income | 409 | 405 | 403 | ||||||||
Operating Segments | Core North America | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 1,035 | 1,004 | 979 | ||||||||
Operating income | 172 | 199 | 212 | ||||||||
Depreciation and amortization | 18 | 15 | 16 | ||||||||
Operating Segments | Quick Lubes | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 660 | 541 | 457 | ||||||||
Operating income | 153 | 130 | 117 | ||||||||
Depreciation and amortization | 30 | 22 | 17 | ||||||||
Operating Segments | International | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 590 | 539 | 493 | ||||||||
Operating income | 84 | 76 | 74 | ||||||||
Depreciation and amortization | 6 | 5 | 5 | ||||||||
Unallocated and Other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Operating income | $ (14) | $ (11) | $ (7) |
Reportable Segment Informatio_4
Reportable Segment Information - Sales by Product (Details) - Sales Revenue, Net - Product Concentration Risk | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Core North America | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 100.00% | 100.00% | 100.00% |
Quick Lubes | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 100.00% | 100.00% | 100.00% |
International | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 100.00% | 100.00% | 100.00% |
Lubricants | Core North America | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 85.00% | 86.00% | 87.00% |
Lubricants | Quick Lubes | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 85.00% | 84.00% | 83.00% |
Lubricants | International | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 89.00% | 89.00% | 89.00% |
Antifreeze | Core North America | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 8.00% | 7.00% | 7.00% |
Antifreeze | Quick Lubes | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 1.00% | 1.00% | 1.00% |
Antifreeze | International | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 5.00% | 6.00% | 3.00% |
Filters | Core North America | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 3.00% | 3.00% | 2.00% |
Filters | Quick Lubes | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 8.00% | 8.00% | 8.00% |
Filters | International | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 3.00% | 1.00% | 1.00% |
Chemicals and other | Core North America | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 4.00% | 4.00% | 4.00% |
Chemicals and other | Quick Lubes | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 2.00% | 2.00% | 2.00% |
Chemicals and other | International | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 3.00% | 4.00% | 7.00% |
Franchise | Core North America | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 0.00% | 0.00% | 0.00% |
Franchise | Quick Lubes | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 4.00% | 5.00% | 6.00% |
Franchise | International | |||
Revenue from External Customer [Line Items] | |||
Concentration risk | 0.00% | 0.00% | 0.00% |
Reportable Segment Informatio_5
Reportable Segment Information - Sales and Property, Plant and Equipment by Geographical Area (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | |||||||||||
Sales | $ 594 | $ 577 | $ 569 | $ 545 | $ 547 | $ 534 | $ 514 | $ 489 | $ 2,285 | $ 2,084 | $ 1,929 |
Property, plant and equipment - net | 420 | 391 | 420 | 391 | |||||||
UNITED STATES | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 1,652 | 1,504 | 1,397 | ||||||||
Property, plant and equipment - net | 384 | 352 | 384 | 352 | |||||||
International | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 633 | 580 | $ 532 | ||||||||
Property, plant and equipment - net | $ 36 | $ 39 | $ 36 | $ 39 |
Reportable Segment Informatio_6
Reportable Segment Information - Sales by Geography as a Percentage of Consolidated Sales (Details) - Geographic Concentration Risk - Sales Revenue, Net | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | |||
Concentration risk | 100.00% | 100.00% | 100.00% |
North America | |||
Segment Reporting Information [Line Items] | |||
Concentration risk | 74.00% | 74.00% | 75.00% |
EMEA (Europe, Middle East and Africa) | |||
Segment Reporting Information [Line Items] | |||
Concentration risk | 8.00% | 7.00% | 7.00% |
Asia Pacific | |||
Segment Reporting Information [Line Items] | |||
Concentration risk | 13.00% | 14.00% | 14.00% |
Latin America | |||
Segment Reporting Information [Line Items] | |||
Concentration risk | 5.00% | 5.00% | 4.00% |
Quarterly Financial Informati_3
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Quarterly Financial Information [Line Items] | |||||||||||
Sales | $ 594 | $ 577 | $ 569 | $ 545 | $ 547 | $ 534 | $ 514 | $ 489 | $ 2,285 | $ 2,084 | $ 1,929 |
Gross profit | 203 | 201 | 207 | 195 | 196 | 197 | 198 | 185 | 806 | 776 | 748 |
Operating income (loss) | 105 | 102 | 100 | 88 | 113 | 87 | 100 | 94 | 395 | 394 | 396 |
Income before income taxes | 57 | 97 | 94 | 84 | 177 | 94 | 109 | 110 | 332 | 490 | 421 |
Net income | $ 45 | $ 64 | $ 67 | $ (10) | $ 105 | $ 56 | $ 71 | $ 72 | $ 166 | $ 304 | $ 273 |
Net (loss) income per common share, basic (usd per share) | $ 0.23 | $ 0.33 | $ 0.33 | $ (0.05) | $ 0.52 | $ 0.27 | $ 0.35 | $ 0.35 | $ 0.84 | $ 1.49 | $ 1.60 |
Net (loss) income per common share, diluted (usd per share) | $ 0.23 | $ 0.33 | $ 0.33 | $ (0.05) | $ 0.52 | $ 0.27 | $ 0.35 | $ 0.35 | $ 0.84 | $ 1.49 | $ 1.60 |
Pension and other postretirement benefit plan remeasurement gains (losses) | $ (38) | $ 60 | $ 8 | $ 0 | $ 138 | $ 35 | |||||
Income tax expense | $ 2 | $ 3 | $ 2 | $ 71 | $ 166 | $ 186 | $ 148 | ||||
Legacy And Separation-Related Expenses, Net | |||||||||||
Quarterly Financial Information [Line Items] | |||||||||||
Operating income (loss) | $ 3 | $ (8) | $ (9) | $ (14) | $ (13) | $ (6) | $ (6) |
Guarantor Financial Informati_3
Guarantor Financial Information - Condensed Consolidating Statements of Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net Income (Loss) Attributable to Parent [Abstract] | |||||||||||
Sales | $ 594 | $ 577 | $ 569 | $ 545 | $ 547 | $ 534 | $ 514 | $ 489 | $ 2,285 | $ 2,084 | $ 1,929 |
Cost of sales | 1,479 | 1,308 | 1,181 | ||||||||
Gross profit | 203 | 201 | 207 | 195 | 196 | 197 | 198 | 185 | 806 | 776 | 748 |
Selling, general and administrative expenses | 430 | 396 | 365 | ||||||||
Legacy and separation-related expenses, net | 14 | 11 | 6 | ||||||||
Equity and other income, net | (33) | (25) | (19) | ||||||||
Operating income | 105 | 102 | 100 | 88 | 113 | 87 | 100 | 94 | 395 | 394 | 396 |
Net pension and other postretirement plan expense (income) | 0 | (138) | (35) | ||||||||
Net interest and other financing expenses | 63 | 42 | 9 | ||||||||
Net loss on acquisition | 0 | 0 | 1 | ||||||||
Income before income taxes | 332 | 490 | 421 | ||||||||
Income tax expense | 2 | 3 | 2 | 71 | 166 | 186 | 148 | ||||
Equity in net income of subsidiaries | 0 | 0 | 0 | ||||||||
Net income | $ 45 | $ 64 | $ 67 | $ (10) | $ 105 | $ 56 | $ 71 | $ 72 | 166 | 304 | 273 |
Total comprehensive income | 147 | 303 | 280 | ||||||||
Eliminations | |||||||||||
Net Income (Loss) Attributable to Parent [Abstract] | |||||||||||
Sales | (55) | (57) | (47) | ||||||||
Cost of sales | (55) | (57) | (47) | ||||||||
Gross profit | 0 | 0 | 0 | ||||||||
Selling, general and administrative expenses | 0 | 0 | 0 | ||||||||
Legacy and separation-related expenses, net | 0 | 0 | 0 | ||||||||
Equity and other income, net | 0 | 0 | 0 | ||||||||
Operating income | 0 | 0 | 0 | ||||||||
Net pension and other postretirement plan expense (income) | 0 | 0 | 0 | ||||||||
Net interest and other financing expenses | 0 | 0 | 0 | ||||||||
Net loss on acquisition | 0 | ||||||||||
Income before income taxes | 0 | 0 | 0 | ||||||||
Income tax expense | 0 | 0 | 0 | ||||||||
Equity in net income of subsidiaries | 284 | 363 | 322 | ||||||||
Net income | (284) | (363) | (322) | ||||||||
Total comprehensive income | (259) | (373) | (338) | ||||||||
Valvoline Inc. (Parent Issuer) | Reportable Legal Entities | |||||||||||
Net Income (Loss) Attributable to Parent [Abstract] | |||||||||||
Sales | 0 | 0 | 0 | ||||||||
Cost of sales | 0 | 0 | 0 | ||||||||
Gross profit | 0 | 0 | 0 | ||||||||
Selling, general and administrative expenses | 11 | 9 | 0 | ||||||||
Legacy and separation-related expenses, net | 8 | (15) | 0 | ||||||||
Equity and other income, net | 0 | 0 | 0 | ||||||||
Operating income | (19) | 6 | 0 | ||||||||
Net pension and other postretirement plan expense (income) | 0 | 0 | 0 | ||||||||
Net interest and other financing expenses | 53 | 36 | 9 | ||||||||
Net loss on acquisition | 0 | ||||||||||
Income before income taxes | (72) | (30) | (9) | ||||||||
Income tax expense | 14 | (3) | (4) | ||||||||
Equity in net income of subsidiaries | (252) | (331) | (278) | ||||||||
Net income | 166 | 304 | 273 | ||||||||
Total comprehensive income | 147 | 303 | 280 | ||||||||
Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||
Net Income (Loss) Attributable to Parent [Abstract] | |||||||||||
Sales | 1,782 | 1,618 | 1,500 | ||||||||
Cost of sales | 1,132 | 986 | 895 | ||||||||
Gross profit | 650 | 632 | 605 | ||||||||
Selling, general and administrative expenses | 327 | 296 | 285 | ||||||||
Legacy and separation-related expenses, net | 6 | 26 | 6 | ||||||||
Equity and other income, net | (50) | (37) | (21) | ||||||||
Operating income | 367 | 347 | 335 | ||||||||
Net pension and other postretirement plan expense (income) | 1 | (134) | (43) | ||||||||
Net interest and other financing expenses | 6 | 4 | 0 | ||||||||
Net loss on acquisition | 1 | ||||||||||
Income before income taxes | 360 | 477 | 377 | ||||||||
Income tax expense | 140 | 178 | 143 | ||||||||
Equity in net income of subsidiaries | (32) | (32) | (44) | ||||||||
Net income | 252 | 331 | 278 | ||||||||
Total comprehensive income | 234 | 330 | 285 | ||||||||
Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||
Net Income (Loss) Attributable to Parent [Abstract] | |||||||||||
Sales | 558 | 523 | 476 | ||||||||
Cost of sales | 402 | 379 | 333 | ||||||||
Gross profit | 156 | 144 | 143 | ||||||||
Selling, general and administrative expenses | 92 | 91 | 80 | ||||||||
Legacy and separation-related expenses, net | 0 | 0 | 0 | ||||||||
Equity and other income, net | 17 | 12 | 2 | ||||||||
Operating income | 47 | 41 | 61 | ||||||||
Net pension and other postretirement plan expense (income) | (1) | (4) | 8 | ||||||||
Net interest and other financing expenses | 4 | 2 | 0 | ||||||||
Net loss on acquisition | 0 | ||||||||||
Income before income taxes | 44 | 43 | 53 | ||||||||
Income tax expense | 12 | 11 | 9 | ||||||||
Equity in net income of subsidiaries | 0 | 0 | 0 | ||||||||
Net income | 32 | 32 | 44 | ||||||||
Total comprehensive income | $ 25 | $ 43 | $ 53 |
Guarantor Financial Informati_4
Guarantor Financial Information - Condensed Consolidating Balance Sheets (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Current assets | ||||
Cash and cash equivalents | $ 96 | $ 201 | $ 172 | $ 0 |
Accounts receivable, net | 409 | 385 | ||
Inventories, net | 176 | 175 | ||
Prepaid expenses and other current assets | 44 | 29 | ||
Total current assets | 725 | 790 | ||
Noncurrent assets | ||||
Property, plant and equipment, net | 420 | 391 | ||
Goodwill and intangibles, net | 448 | 335 | ||
Equity method investments | 31 | 30 | ||
Investment in subsidiaries | 0 | 0 | ||
Deferred income taxes | 138 | 281 | ||
Other noncurrent assets | 92 | 88 | ||
Total noncurrent assets | 1,129 | 1,125 | ||
Total assets | 1,854 | 1,915 | ||
Current liabilities | ||||
Short-term debt | 0 | 75 | ||
Current portion of long-term debt | 30 | 15 | ||
Trade and other payables | 178 | 192 | ||
Accrued expenses and other liabilities | 203 | 196 | ||
Total current liabilities | 411 | 478 | ||
Noncurrent liabilities | ||||
Long-term debt | 1,292 | 1,034 | ||
Employee benefit obligations | 333 | 342 | ||
Other noncurrent liabilities | 176 | 178 | ||
Total noncurrent liabilities | 1,801 | 1,554 | ||
Commitments and contingencies | ||||
Stockholders’ (deficit) equity | (358) | (117) | (330) | 617 |
Total liabilities and stockholders’ deficit | 1,854 | 1,915 | ||
Eliminations | ||||
Current assets | ||||
Cash and cash equivalents | 0 | 0 | 0 | 0 |
Accounts receivable, net | (119) | (61) | ||
Inventories, net | 0 | 0 | ||
Prepaid expenses and other current assets | 0 | 0 | ||
Total current assets | (119) | (61) | ||
Noncurrent assets | ||||
Property, plant and equipment, net | 0 | 0 | ||
Goodwill and intangibles, net | 0 | 0 | ||
Equity method investments | 0 | 0 | ||
Investment in subsidiaries | (1,310) | (1,053) | ||
Deferred income taxes | 0 | 0 | ||
Other noncurrent assets | 0 | (312) | ||
Total noncurrent assets | (1,310) | (1,365) | ||
Total assets | (1,429) | (1,426) | ||
Current liabilities | ||||
Short-term debt | 0 | |||
Current portion of long-term debt | 0 | 0 | ||
Trade and other payables | (119) | (61) | ||
Accrued expenses and other liabilities | 0 | 0 | ||
Total current liabilities | (119) | (61) | ||
Noncurrent liabilities | ||||
Long-term debt | 0 | 0 | ||
Employee benefit obligations | 0 | 0 | ||
Other noncurrent liabilities | 0 | (312) | ||
Total noncurrent liabilities | 0 | (312) | ||
Commitments and contingencies | ||||
Stockholders’ (deficit) equity | (1,310) | (1,053) | ||
Total liabilities and stockholders’ deficit | (1,429) | (1,426) | ||
Valvoline Inc. (Parent Issuer) | Reportable Legal Entities | ||||
Current assets | ||||
Cash and cash equivalents | 0 | 0 | 0 | 0 |
Accounts receivable, net | 0 | 0 | ||
Inventories, net | 0 | 0 | ||
Prepaid expenses and other current assets | 1 | 0 | ||
Total current assets | 1 | 0 | ||
Noncurrent assets | ||||
Property, plant and equipment, net | 0 | 0 | ||
Goodwill and intangibles, net | 0 | 0 | ||
Equity method investments | 0 | 0 | ||
Investment in subsidiaries | 801 | 606 | ||
Deferred income taxes | 62 | 145 | ||
Other noncurrent assets | 2 | 314 | ||
Total noncurrent assets | 865 | 1,065 | ||
Total assets | 866 | 1,065 | ||
Current liabilities | ||||
Short-term debt | 0 | |||
Current portion of long-term debt | 30 | 15 | ||
Trade and other payables | 3 | 2 | ||
Accrued expenses and other liabilities | 7 | 103 | ||
Total current liabilities | 40 | 120 | ||
Noncurrent liabilities | ||||
Long-term debt | 1,151 | 1,032 | ||
Employee benefit obligations | 0 | 0 | ||
Other noncurrent liabilities | 33 | 30 | ||
Total noncurrent liabilities | 1,184 | 1,062 | ||
Commitments and contingencies | ||||
Stockholders’ (deficit) equity | (358) | (117) | ||
Total liabilities and stockholders’ deficit | 866 | 1,065 | ||
Guarantor Subsidiaries | Reportable Legal Entities | ||||
Current assets | ||||
Cash and cash equivalents | 20 | 99 | 93 | 0 |
Accounts receivable, net | 48 | 57 | ||
Inventories, net | 95 | 94 | ||
Prepaid expenses and other current assets | 38 | 25 | ||
Total current assets | 201 | 275 | ||
Noncurrent assets | ||||
Property, plant and equipment, net | 384 | 353 | ||
Goodwill and intangibles, net | 396 | 333 | ||
Equity method investments | 31 | 30 | ||
Investment in subsidiaries | 509 | 447 | ||
Deferred income taxes | 63 | 122 | ||
Other noncurrent assets | 85 | 80 | ||
Total noncurrent assets | 1,468 | 1,365 | ||
Total assets | 1,669 | 1,640 | ||
Current liabilities | ||||
Short-term debt | 0 | |||
Current portion of long-term debt | 0 | 0 | ||
Trade and other payables | 241 | 198 | ||
Accrued expenses and other liabilities | 168 | 60 | ||
Total current liabilities | 409 | 258 | ||
Noncurrent liabilities | ||||
Long-term debt | 1 | 2 | ||
Employee benefit obligations | 317 | 321 | ||
Other noncurrent liabilities | 141 | 453 | ||
Total noncurrent liabilities | 459 | 776 | ||
Commitments and contingencies | ||||
Stockholders’ (deficit) equity | 801 | 606 | ||
Total liabilities and stockholders’ deficit | 1,669 | 1,640 | ||
Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
Current assets | ||||
Cash and cash equivalents | 76 | 102 | $ 79 | $ 0 |
Accounts receivable, net | 480 | 389 | ||
Inventories, net | 81 | 81 | ||
Prepaid expenses and other current assets | 5 | 4 | ||
Total current assets | 642 | 576 | ||
Noncurrent assets | ||||
Property, plant and equipment, net | 36 | 38 | ||
Goodwill and intangibles, net | 52 | 2 | ||
Equity method investments | 0 | 0 | ||
Investment in subsidiaries | 0 | 0 | ||
Deferred income taxes | 13 | 14 | ||
Other noncurrent assets | 5 | 6 | ||
Total noncurrent assets | 106 | 60 | ||
Total assets | 748 | 636 | ||
Current liabilities | ||||
Short-term debt | 75 | |||
Current portion of long-term debt | 0 | 0 | ||
Trade and other payables | 53 | 53 | ||
Accrued expenses and other liabilities | 28 | 33 | ||
Total current liabilities | 81 | 161 | ||
Noncurrent liabilities | ||||
Long-term debt | 140 | 0 | ||
Employee benefit obligations | 16 | 21 | ||
Other noncurrent liabilities | 2 | 7 | ||
Total noncurrent liabilities | 158 | 28 | ||
Commitments and contingencies | ||||
Stockholders’ (deficit) equity | 509 | 447 | ||
Total liabilities and stockholders’ deficit | $ 748 | $ 636 |
Guarantor Financial Informati_5
Guarantor Financial Information - Condensed Consolidating Statements of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Cash Flow Statements, Captions [Line Items] | |||
Cash flows (used in) provided by operating activities | $ 320 | $ (130) | $ 311 |
Cash flows from investing activities | |||
Additions to property, plant and equipment | (93) | (68) | (66) |
Acquisitions, net of cash acquired | (125) | (68) | (83) |
Other investing activities, net | 5 | 1 | 1 |
Return of advance from subsidiary | 0 | 0 | |
Total cash used in investing activities | (213) | (135) | (148) |
Cash flows from financing activities | |||
Net transfers from (to) Ashland | 0 | 5 | (1,504) |
Cash contributions from Ashland | 0 | 0 | 60 |
Proceeds from initial public offering, net of offering costs of $40 | 0 | 0 | 719 |
Proceeds from borrowings, net of issuance costs | 304 | 470 | 1,372 |
Repayments on borrowings | (108) | (90) | (637) |
Repurchases of common stock | (325) | (50) | 0 |
Purchase of additional ownership in subsidiary | (15) | ||
Cash dividends paid | (58) | (40) | 0 |
Other financing activities | (7) | 0 | 0 |
Other intercompany activity, net | 0 | 0 | 0 |
Total cash (used in) provided by financing activities | (209) | 295 | 10 |
Effect of currency exchange rate changes on cash and cash equivalents | (3) | (1) | (1) |
(Decrease) increase in cash and cash equivalents | (105) | 29 | 172 |
Cash and cash equivalents - beginning of year | 201 | 172 | 0 |
Cash and cash equivalents - end of year | 96 | 201 | 172 |
Reportable Legal Entities | Valvoline Inc. (Parent Issuer) | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Cash flows (used in) provided by operating activities | (57) | 97 | (35) |
Cash flows from investing activities | |||
Additions to property, plant and equipment | 0 | 0 | 0 |
Acquisitions, net of cash acquired | 0 | 0 | 0 |
Other investing activities, net | 0 | 0 | 0 |
Return of advance from subsidiary | 312 | (312) | |
Total cash used in investing activities | 312 | (312) | 0 |
Cash flows from financing activities | |||
Net transfers from (to) Ashland | 5 | (1,504) | |
Cash contributions from Ashland | 60 | ||
Proceeds from initial public offering, net of offering costs of $40 | 719 | ||
Proceeds from borrowings, net of issuance costs | 203 | 395 | 1,372 |
Repayments on borrowings | (72) | (90) | (637) |
Repurchases of common stock | (325) | (50) | |
Purchase of additional ownership in subsidiary | 0 | ||
Cash dividends paid | (58) | (40) | |
Other financing activities | (3) | ||
Other intercompany activity, net | 0 | (5) | 25 |
Total cash (used in) provided by financing activities | (255) | 215 | 35 |
Effect of currency exchange rate changes on cash and cash equivalents | 0 | 0 | 0 |
(Decrease) increase in cash and cash equivalents | 0 | 0 | 0 |
Cash and cash equivalents - beginning of year | 0 | 0 | 0 |
Cash and cash equivalents - end of year | 0 | 0 | 0 |
Reportable Legal Entities | Guarantor Subsidiaries | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Cash flows (used in) provided by operating activities | 390 | (180) | 307 |
Cash flows from investing activities | |||
Additions to property, plant and equipment | (88) | (64) | (60) |
Acquisitions, net of cash acquired | (72) | (68) | (83) |
Other investing activities, net | 5 | 1 | 1 |
Return of advance from subsidiary | 0 | 0 | |
Total cash used in investing activities | (155) | (131) | (142) |
Cash flows from financing activities | |||
Net transfers from (to) Ashland | 0 | 0 | |
Cash contributions from Ashland | 0 | ||
Proceeds from initial public offering, net of offering costs of $40 | 0 | ||
Proceeds from borrowings, net of issuance costs | 0 | 0 | 0 |
Repayments on borrowings | 0 | 0 | 0 |
Repurchases of common stock | 0 | 0 | |
Purchase of additional ownership in subsidiary | 0 | ||
Cash dividends paid | 0 | 0 | |
Other financing activities | (2) | ||
Other intercompany activity, net | (312) | 317 | (72) |
Total cash (used in) provided by financing activities | (314) | 317 | (72) |
Effect of currency exchange rate changes on cash and cash equivalents | 0 | 0 | 0 |
(Decrease) increase in cash and cash equivalents | (79) | 6 | 93 |
Cash and cash equivalents - beginning of year | 99 | 93 | 0 |
Cash and cash equivalents - end of year | 20 | 99 | 93 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Cash flows (used in) provided by operating activities | (13) | (47) | 39 |
Cash flows from investing activities | |||
Additions to property, plant and equipment | (5) | (4) | (6) |
Acquisitions, net of cash acquired | (53) | 0 | 0 |
Other investing activities, net | 0 | 0 | 0 |
Return of advance from subsidiary | 0 | 0 | |
Total cash used in investing activities | (58) | (4) | (6) |
Cash flows from financing activities | |||
Net transfers from (to) Ashland | 0 | 0 | |
Cash contributions from Ashland | 0 | ||
Proceeds from initial public offering, net of offering costs of $40 | 0 | ||
Proceeds from borrowings, net of issuance costs | 101 | 75 | 0 |
Repayments on borrowings | (36) | 0 | 0 |
Repurchases of common stock | 0 | 0 | |
Purchase of additional ownership in subsidiary | (15) | ||
Cash dividends paid | 0 | 0 | |
Other financing activities | (2) | ||
Other intercompany activity, net | 0 | 0 | 47 |
Total cash (used in) provided by financing activities | 48 | 75 | 47 |
Effect of currency exchange rate changes on cash and cash equivalents | (3) | (1) | (1) |
(Decrease) increase in cash and cash equivalents | (26) | 23 | 79 |
Cash and cash equivalents - beginning of year | 102 | 79 | 0 |
Cash and cash equivalents - end of year | 76 | 102 | 79 |
Eliminations | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
Cash flows (used in) provided by operating activities | 0 | 0 | 0 |
Cash flows from investing activities | |||
Additions to property, plant and equipment | 0 | 0 | 0 |
Acquisitions, net of cash acquired | 0 | 0 | 0 |
Other investing activities, net | 0 | 0 | 0 |
Return of advance from subsidiary | (312) | 312 | |
Total cash used in investing activities | (312) | 312 | 0 |
Cash flows from financing activities | |||
Net transfers from (to) Ashland | 0 | 0 | |
Cash contributions from Ashland | 0 | ||
Proceeds from initial public offering, net of offering costs of $40 | 0 | ||
Proceeds from borrowings, net of issuance costs | 0 | 0 | 0 |
Repayments on borrowings | 0 | 0 | 0 |
Repurchases of common stock | 0 | 0 | |
Purchase of additional ownership in subsidiary | 0 | ||
Cash dividends paid | 0 | 0 | |
Other financing activities | 0 | ||
Other intercompany activity, net | 312 | (312) | 0 |
Total cash (used in) provided by financing activities | 312 | (312) | 0 |
Effect of currency exchange rate changes on cash and cash equivalents | 0 | 0 | 0 |
(Decrease) increase in cash and cash equivalents | 0 | 0 | 0 |
Cash and cash equivalents - beginning of year | 0 | 0 | 0 |
Cash and cash equivalents - end of year | $ 0 | $ 0 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Millions | Nov. 19, 2018$ / shares | Nov. 19, 2018USD ($)franchise_service_center_storesfranchise_center_stores | Sep. 30, 2018USD ($)franchise_service_center_stores$ / shares | Sep. 30, 2017USD ($)franchise_service_center_stores$ / shares | Sep. 30, 2016USD ($)franchise_service_center_stores$ / shares |
Subsequent Event [Line Items] | |||||
Purchase price | $ | $ 125 | $ 72 | $ 79 | ||
Number of franchise service center stores acquired | 73 | 14 | 42 | ||
Number of former franchise service center stores acquired | 60 | 9 | |||
Dividend per common share (usd per share) | $ / shares | $ 0.298 | $ 0.196 | $ 0 | ||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividend per common share (usd per share) | $ / shares | $ 0.106 | ||||
Subsequent Event | Oil Changers, Inc. | |||||
Subsequent Event [Line Items] | |||||
Aggregate number of service center stores acquired | 35 | ||||
Purchase price | $ | $ 30 | ||||
Number of franchise service center stores acquired | 31 | ||||
Number of former franchise service center stores acquired | franchise_center_stores | 4 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Allowance for doubtful accounts | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | $ 5 | $ 5 | $ 4 |
Charged to expenses | 2 | 1 | 1 |
Charged to other accounts | 1 | 0 | 0 |
Deductions | (1) | (1) | 0 |
Balance at end of period | 7 | 5 | 5 |
Inventory excess and obsolete reserves | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | 3 | 2 | 2 |
Charged to expenses | 0 | 1 | 0 |
Charged to other accounts | 0 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance at end of period | 3 | 3 | 2 |
Deferred tax asset valuation allowance | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | 8 | 12 | 7 |
Charged to expenses | 0 | 0 | 0 |
Charged to other accounts | 0 | 0 | 5 |
Deductions | (1) | (4) | 0 |
Balance at end of period | $ 7 | $ 8 | $ 12 |