Cover
Cover - shares | 9 Months Ended | |
Sep. 26, 2020 | Oct. 27, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 26, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-19406 | |
Entity Registrant Name | Zebra Technologies Corporation | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 36-2675536 | |
Entity Address, Address Line One | 3 Overlook Point | |
Entity Address, City or Town | Lincolnshire | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60069 | |
City Area Code | 847 | |
Local Phone Number | 634-6700 | |
Title of 12(b) Security | Class A Common Stock, par value $.01 per share | |
Trading Symbol | ZBRA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 53,316,406 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000877212 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 26, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 39 | $ 30 |
Accounts receivable, net of allowances for doubtful accounts of $2 million as of September 26, 2020 and December 31, 2019 | 535 | 613 |
Inventories, net | 484 | 474 |
Income tax receivable | 59 | 32 |
Prepaid expenses and other current assets | 75 | 46 |
Total Current assets | 1,192 | 1,195 |
Property, plant and equipment, net | 265 | 259 |
Right-of-use lease assets | 113 | 107 |
Goodwill | 2,998 | 2,622 |
Other intangibles, net | 427 | 275 |
Deferred income taxes | 84 | 127 |
Other long-term assets | 166 | 126 |
Total Assets | 5,245 | 4,711 |
Current liabilities: | ||
Current portion of long-term debt | 481 | 197 |
Accounts payable | 546 | 552 |
Accrued liabilities | 443 | 379 |
Deferred revenue | 286 | 238 |
Income taxes payable | 9 | 38 |
Total Current liabilities | 1,765 | 1,404 |
Long-term debt | 1,086 | 1,080 |
Long-term lease liabilities | 110 | 100 |
Long-term deferred revenue | 248 | 221 |
Other long-term liabilities | 105 | 67 |
Total Liabilities | 3,314 | 2,872 |
Stockholders’ Equity: | ||
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued | 0 | 0 |
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares | 1 | 1 |
Additional paid-in capital | 372 | 339 |
Treasury stock at cost, 18,853,395 and 18,148,925 shares as of September 26, 2020 and December 31, 2019, respectively | (917) | (689) |
Retained earnings | 2,537 | 2,232 |
Accumulated other comprehensive loss | (62) | (44) |
Total Stockholders’ Equity | 1,931 | 1,839 |
Total Liabilities and Stockholders’ Equity | 5,245 | 4,711 |
Allowance for doubtful accounts | $ 2 | $ 2 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 26, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2 | $ 2 |
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 72,151,857 | 72,151,857 |
Treasury stock, shares (in shares) | 18,853,395 | 18,148,925 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Net sales: | ||||
Total Net sales | $ 1,132 | $ 1,130 | $ 3,140 | $ 3,293 |
Cost of sales: | ||||
Total Cost of sales | 639 | 595 | 1,755 | 1,737 |
Gross profit | 493 | 535 | 1,385 | 1,556 |
Operating expenses: | ||||
Selling and marketing | 119 | 124 | 350 | 373 |
Research and development | 113 | 110 | 316 | 329 |
General and administrative | 71 | 78 | 219 | 244 |
Amortization of intangible assets | 20 | 26 | 52 | 84 |
Acquisition and integration costs | 19 | 12 | 21 | 20 |
Exit and restructuring costs | 1 | 0 | 7 | 2 |
Total Operating expenses | 343 | 350 | 965 | 1,052 |
Operating income | 150 | 185 | 420 | 504 |
Other expenses: | ||||
Foreign exchange (loss) gain | (3) | 2 | (15) | (2) |
Interest expense, net | (10) | (28) | (69) | (85) |
Other, net | 1 | 0 | 8 | 2 |
Total Other expenses, net | (12) | (26) | (76) | (85) |
Income before income tax | 138 | 159 | 344 | 419 |
Income tax expense | 22 | 23 | 39 | 44 |
Net income | $ 116 | $ 136 | $ 305 | $ 375 |
Basic earnings per share (USD per share) | $ 2.18 | $ 2.52 | $ 5.70 | $ 6.95 |
Diluted earnings per share (USD per share) | $ 2.16 | $ 2.50 | $ 5.65 | $ 6.87 |
Tangible products | ||||
Net sales: | ||||
Total Net sales | $ 972 | $ 981 | $ 2,684 | $ 2,868 |
Cost of sales: | ||||
Total Cost of sales | 543 | 497 | 1,480 | 1,456 |
Services and software | ||||
Net sales: | ||||
Total Net sales | 160 | 149 | 456 | 425 |
Cost of sales: | ||||
Total Cost of sales | $ 96 | $ 98 | $ 275 | $ 281 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 116 | $ 136 | $ 305 | $ 375 |
Other comprehensive income (loss), net of tax: | ||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | (8) | 15 | (14) | 7 |
Changes in unrealized gains and losses on forward interest rate swap hedging transactions | 0 | (1) | 0 | 0 |
Foreign currency translation adjustment | 4 | (5) | (4) | (3) |
Comprehensive income | $ 112 | $ 145 | $ 287 | $ 379 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at Dec. 31, 2018 | 53,871,184 | |||||
Beginning balance at Dec. 31, 2018 | $ 1,335 | $ 1 | $ 294 | $ (613) | $ 1,688 | $ (35) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuances of treasury shares related to share based-compensation plans, net of forfeitures (in shares) | 110,382 | |||||
Issuances of treasury shares related to share-based compensation plans, net of forfeitures | 4 | 1 | 3 | |||
Shares withheld to fund withholding tax obligations related to share-based compensation plans (in shares) | (5,829) | |||||
Shares withheld to fund withholding tax obligations related to share-based compensation plans | (1) | (1) | ||||
Share-based compensation | 10 | 10 | ||||
Net income | 115 | 115 | ||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | 4 | 4 | ||||
Ending balance (in shares) at Mar. 30, 2019 | 53,975,737 | |||||
Ending balance at Mar. 30, 2019 | 1,467 | $ 1 | 305 | (611) | 1,803 | (31) |
Beginning balance (in shares) at Dec. 31, 2018 | 53,871,184 | |||||
Beginning balance at Dec. 31, 2018 | 1,335 | $ 1 | 294 | (613) | 1,688 | (35) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 375 | |||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | 7 | |||||
Changes in unrealized gains and losses on forward interest rate swap hedging transactions (net of income taxes) | 0 | |||||
Foreign currency translation adjustment | (3) | |||||
Ending balance (in shares) at Sep. 28, 2019 | 54,047,118 | |||||
Ending balance at Sep. 28, 2019 | 1,694 | $ 1 | 324 | (663) | 2,063 | (31) |
Beginning balance (in shares) at Mar. 30, 2019 | 53,975,737 | |||||
Beginning balance at Mar. 30, 2019 | 1,467 | $ 1 | 305 | (611) | 1,803 | (31) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuances of treasury shares related to share based-compensation plans, net of forfeitures (in shares) | 345,067 | |||||
Issuances of treasury shares related to share-based compensation plans, net of forfeitures | 4 | (5) | 9 | |||
Shares withheld to fund withholding tax obligations related to share-based compensation plans (in shares) | (212,975) | |||||
Shares withheld to fund withholding tax obligations related to share-based compensation plans | (41) | (41) | ||||
Share-based compensation | 14 | 14 | ||||
Net income | 124 | 124 | ||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | (12) | (12) | ||||
Changes in unrealized gains and losses on forward interest rate swap hedging transactions (net of income taxes) | 1 | 1 | ||||
Foreign currency translation adjustment | 2 | 2 | ||||
Ending balance (in shares) at Jun. 29, 2019 | 54,107,829 | |||||
Ending balance at Jun. 29, 2019 | 1,559 | $ 1 | 314 | (643) | 1,927 | (40) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuances of treasury shares related to share based-compensation plans, net of forfeitures (in shares) | 44,215 | |||||
Issuances of treasury shares related to share-based compensation plans, net of forfeitures | (1) | (2) | 1 | |||
Shares withheld to fund withholding tax obligations related to share-based compensation plans (in shares) | (3,864) | |||||
Shares withheld to fund withholding tax obligations related to share-based compensation plans | (1) | (1) | ||||
Share-based compensation | 12 | 12 | ||||
Repurchase of common stock (in shares) | (101,062) | |||||
Repurchases of common stock | (20) | (20) | ||||
Net income | 136 | 136 | ||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | 15 | 15 | ||||
Changes in unrealized gains and losses on forward interest rate swap hedging transactions (net of income taxes) | (1) | (1) | ||||
Foreign currency translation adjustment | (5) | (5) | ||||
Ending balance (in shares) at Sep. 28, 2019 | 54,047,118 | |||||
Ending balance at Sep. 28, 2019 | 1,694 | $ 1 | 324 | (663) | 2,063 | (31) |
Beginning balance (in shares) at Dec. 31, 2019 | 54,002,932 | |||||
Beginning balance at Dec. 31, 2019 | 1,839 | $ 1 | 339 | (689) | 2,232 | (44) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuances of treasury shares related to share based-compensation plans, net of forfeitures (in shares) | 15,792 | |||||
Shares withheld to fund withholding tax obligations related to share-based compensation plans (in shares) | (4,361) | |||||
Shares withheld to fund withholding tax obligations related to share-based compensation plans | (1) | (1) | ||||
Share-based compensation | 7 | 7 | ||||
Repurchase of common stock (in shares) | (948,740) | |||||
Repurchases of common stock | (200) | (200) | ||||
Net income | 89 | 89 | ||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | 2 | 2 | ||||
Foreign currency translation adjustment | (9) | (9) | ||||
Ending balance (in shares) at Mar. 28, 2020 | 53,065,623 | |||||
Ending balance at Mar. 28, 2020 | 1,727 | $ 1 | 346 | (890) | 2,321 | (51) |
Beginning balance (in shares) at Dec. 31, 2019 | 54,002,932 | |||||
Beginning balance at Dec. 31, 2019 | 1,839 | $ 1 | 339 | (689) | 2,232 | (44) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 305 | |||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | (14) | |||||
Changes in unrealized gains and losses on forward interest rate swap hedging transactions (net of income taxes) | 0 | |||||
Foreign currency translation adjustment | (4) | |||||
Ending balance (in shares) at Sep. 26, 2020 | 53,298,462 | |||||
Ending balance at Sep. 26, 2020 | 1,931 | $ 1 | 372 | (917) | 2,537 | (62) |
Beginning balance (in shares) at Mar. 28, 2020 | 53,065,623 | |||||
Beginning balance at Mar. 28, 2020 | 1,727 | $ 1 | 346 | (890) | 2,321 | (51) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuances of treasury shares related to share based-compensation plans, net of forfeitures (in shares) | 399,634 | |||||
Issuances of treasury shares related to share-based compensation plans, net of forfeitures | 4 | (9) | 13 | |||
Shares withheld to fund withholding tax obligations related to share-based compensation plans (in shares) | (142,206) | |||||
Shares withheld to fund withholding tax obligations related to share-based compensation plans | (34) | (34) | ||||
Share-based compensation | 13 | 13 | ||||
Net income | 100 | 100 | ||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | (8) | (8) | ||||
Foreign currency translation adjustment | 1 | 1 | ||||
Ending balance (in shares) at Jun. 27, 2020 | 53,323,051 | |||||
Ending balance at Jun. 27, 2020 | 1,803 | $ 1 | 350 | (911) | 2,421 | (58) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuances of treasury shares related to share based-compensation plans, net of forfeitures (in shares) | (22,960) | |||||
Issuances of treasury shares related to share-based compensation plans, net of forfeitures | 3 | 9 | (6) | |||
Shares withheld to fund withholding tax obligations related to share-based compensation plans (in shares) | (1,629) | |||||
Share-based compensation | 13 | 13 | ||||
Net income | 116 | 116 | ||||
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) | (8) | (8) | ||||
Changes in unrealized gains and losses on forward interest rate swap hedging transactions (net of income taxes) | 0 | |||||
Foreign currency translation adjustment | 4 | 4 | ||||
Ending balance (in shares) at Sep. 26, 2020 | 53,298,462 | |||||
Ending balance at Sep. 26, 2020 | $ 1,931 | $ 1 | $ 372 | $ (917) | $ 2,537 | $ (62) |
CONSOLDATED STATEMENTS OF CASH
CONSOLDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 305 | $ 375 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 103 | 139 |
Amortization of debt issuance costs and discounts | 2 | 6 |
Share-based compensation | 33 | 36 |
Deferred income taxes | (2) | 0 |
Unrealized loss on forward interest rate swaps | 37 | 28 |
Other, net | (5) | (4) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 96 | (73) |
Inventories, net | (7) | 65 |
Other assets | 3 | (20) |
Accounts payable | (7) | (51) |
Accrued liabilities | (40) | (62) |
Deferred revenue | 58 | 43 |
Income taxes | (58) | (58) |
Other operating activities | 13 | (4) |
Net cash provided by operating activities | 531 | 420 |
Cash flows from investing activities: | ||
Acquisition of businesses, net of cash acquired | (548) | (255) |
Purchases of property, plant and equipment | (49) | (44) |
Proceeds from sale of long-term investments | 6 | 10 |
Purchases of long-term investments | (32) | (21) |
Net cash used in investing activities | (623) | (310) |
Cash flows from financing activities: | ||
Payment of debt issuance costs and discounts | (1) | (5) |
Payments of long-term debt | (103) | (661) |
Proceeds from issuance of long-term debt | 389 | 593 |
Payments of debt extinguishment costs | 0 | (1) |
Payments for repurchases of common stock | (200) | (20) |
Net payments related to share-based compensation plans | (28) | (36) |
Change in unremitted cash collections from servicing factored receivables | 73 | 8 |
Other financing activities | 1 | 2 |
Net cash provided by (used in) financing activities | 131 | (120) |
Effect of exchange rate changes on cash and cash equivalents, including restricted cash | (1) | (1) |
Net increase (decrease) in cash and cash equivalents, including restricted cash | 38 | (11) |
Cash and cash equivalents, including restricted cash, at beginning of period | 30 | 44 |
Cash and cash equivalents, including restricted cash, at end of period | 68 | 33 |
Less restricted cash, included in Prepaid expenses and other current assets | (29) | 0 |
Cash and cash equivalents | 39 | 33 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid | 100 | 102 |
Interest paid | $ 28 | $ 49 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 26, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Zebra Technologies Corporation and its subsidiaries (“Zebra” or the “Company”) is a global leader providing innovative Enterprise Asset Intelligence solutions in the automatic identification and data capture solutions industry. We design, manufacture, and sell a broad range of products that capture and move data. We also provide a full range of services, including maintenance, technical support, repair, and managed services, including cloud-based subscriptions and solutions. End-users of our products and services include those in retail and e-commerce, transportation and logistics, manufacturing, healthcare, hospitality, warehouse and distribution, energy and utilities, and education industries around the world. We provide our products and services globally through a direct sales force and an extensive network of channel partners. Management prepared these unaudited interim consolidated financial statements according to the rules and regulations of the Securities and Exchange Commission for interim financial information and notes. As permitted under Article 10 of Regulation S-X and the instructions of Form 10-Q, these consolidated financial statements do not include all the information and notes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements, although management believes that the disclosures made are adequate to make the information not misleading. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. In the opinion of the Company, these interim financial statements include all adjustments (of a normal, recurring nature) necessary to fairly present its Consolidated Balance Sheet as of September 26, 2020, the Consolidated Statements of Operations, Comprehensive Income, and Stockholders’ Equity for the three and nine months ended September 26, 2020 and September 28, 2019, and the Consolidated Statements of Cash Flows for the nine months ended September 26, 2020 and September 28, 2019. These results, however, are not necessarily indicative of the results expected for the full fiscal year ending December 31, 2020. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 26, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Recently Adopted Accounting Pronouncements On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. With respect to the Company’s financial assets, including trade receivables and contract assets, a cumulative effect transition approach was applied. In order to determine the transition impact of ASU 2016-13, the Company considered historical loss experience, the short duration of its trade receivables and durations of other financial assets, and expectations of the future economic environment. The adoption of ASU 2016-13 did not have a significant impact to the Company’s financial statements upon transition or for the nine months ended September 26, 2020. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). Subject to meeting certain criteria, ASU 2020-04 provides optional expedients and exceptions to applying contract modification accounting under existing generally accepted accounting principles, for contracts that are modified to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) by the end of 2021. Some of the Company’s contracts with respect to its borrowings and interest rate swap contracts already contain comparable alternative reference rates that would automatically take effect upon the phasing out of LIBOR, while for others, the Company anticipates negotiating comparable replacement rates with its counterparties. At this stage of its contract assessment, the Company does not expect ASU 2020-04 to have a material impact to its financial statements. |
Revenues
Revenues | 9 Months Ended |
Sep. 26, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues The Company recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. We recognize revenue arising from performance obligations outlined in contracts with our customers that are satisfied at a point in time and over time. Substantially all revenue for tangible products is recognized at a point in time, whereby revenue for services and software is predominantly recognized over time. Disaggregation of Revenue The following table presents our Net sales disaggregated by category for each of our segments, Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”), for the three and nine months ended September 26, 2020 and September 28, 2019 (in millions): Three Months Ended September 26, 2020 September 28, 2019 Segment Tangible Products Services and Software Total Tangible Products Services and Software Total AIT $ 314 $ 32 $ 346 $ 337 $ 36 $ 373 EVM 658 130 788 644 113 757 Corporate, eliminations (1) — (2) (2) — — — Total $ 972 $ 160 $ 1,132 $ 981 $ 149 $ 1,130 Nine Months Ended September 26, 2020 September 28, 2019 Segment Tangible Products Services and Software Total Tangible Products Services and Software Total AIT $ 898 $ 94 $ 992 $ 1,001 $ 99 $ 1,100 EVM 1,786 364 2,150 1,867 326 2,193 Corporate, eliminations (1) — (2) (2) — — — Total $ 2,684 $ 456 $ 3,140 $ 2,868 $ 425 $ 3,293 (1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments. In addition, refer to Note 16, Segment Information & Geographic Data for Net sales to customers by geographic region. Performance Obligations The Company’s remaining performance obligations primarily relate to repair and support services, as well as solutions offerings. The aggregated transaction price allocated to remaining performance obligations for these types of arrangements with an original term exceeding one year was $874 million and $724 million, inclusive of deferred revenue, as of September 26, 2020 and December 31, 2019, respectively. On average, remaining performance obligations as of September 26, 2020 and December 31, 2019 are expected to be recognized over a period of approximately two years. Contract Balances Progress on satisfying performance obligations under contracts with customers is recorded on the Consolidated Balance Sheets in Accounts receivable, net for billed revenues. Progress on satisfying performance obligations under contracts with customers related to unbilled revenues (“contract assets”) is reflected on the Consolidated Balance Sheets as Prepaid expenses and other current assets for revenues expected to be billed within the next 12 months, and Other long-term assets for revenues expected to be billed thereafter. The total contract asset balances were $13 million and $8 million as of September 26, 2020 and December 31, 2019, respectively. These contract assets result from timing differences between the billing and delivery schedules of products, services and software, as well as the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. Contract assets are evaluated for impairment and no impairment losses have been recognized during the three and nine months ended September 26, 2020 and September 28, 2019. |
Inventories
Inventories | 9 Months Ended |
Sep. 26, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of Inventories, net are as follows (in millions): September 26, December 31, Raw material $ 120 $ 128 Work in process 4 4 Finished goods 360 342 Total Inventories, net $ 484 $ 474 |
Acquisition
Acquisition | 9 Months Ended |
Sep. 26, 2020 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On September 1, 2020, the Company acquired all of the equity interests in Reflexis Systems, Inc. (“Reflexis”), a provider of task and workforce management, execution, and communication solutions for customers in the retail, food service, hospitality, and banking industries. Through its acquisition of Reflexis, the Company intends to enhance its solution offerings to customers in those industries by combining Reflexis’ platform with its existing software solutions. The Reflexis acquisition was accounted for under the acquisition method of accounting for business combinations. The Company’s cash purchase consideration was $548 million, net of Reflexis’ cash on-hand. In connection with its acquisition of Reflexis, and in exchange for the cancellation of unvested Reflexis stock options, the Company granted replacement share-based compensation awards to certain Reflexis employees in the form of Zebra incentive stock options. A total of 38,228 replacement incentive stock options were granted, with a weighted average acquisition-date fair value per option of $230. The total fair value of approximately $9 million is primarily attributable to service to be rendered subsequent to acquisition and will be expensed over the remaining service period. As of the acquisition date, the weighted average future service period associated with the replacement options was 1.7 years, and the weighted average remaining contractual life was 7.7 years. The Company incurred approximately $19 million of acquisition-related costs during the third quarter of 2020, which primarily consisted of payments to settle certain existing Reflexis share-based compensation awards whose vesting was accelerated at the discretion of Reflexis contemporaneously with the acquisition. Those payments, as well as $5 million of other acquisition-related costs primarily related to third-party transaction and advisory fees, are included within Acquisition and integration costs on the Consolidated Statements of Operations. The acquisition of Reflexis was funded, in part, by the issuance of a new term loan (the “2020 Term Loan”) in the amount of $200 million. The acquisition of Reflexis was otherwise funded using the Company’s cash on hand and borrowing under the Company’s existing Revolving Credit Facility. See additional details related to the Company’s debt arrangements in Note 10, Long-Term Debt. The Company utilized estimated fair values as of September 1, 2020 to allocate the total purchase consideration to the identifiable assets acquired and liabilities assumed. The fair value of the net assets acquired was based on a number of estimates and assumptions, as well as customary valuation procedures and techniques, primarily income-based methodologies such as the excess earnings method for technology and patent intangible assets, as well as exit cost methodologies for liabilities such as deferred revenues. While we believe these estimates provide a reasonable basis to record the net assets acquired, the purchase price allocation is considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. The primary fair value estimates considered preliminary include intangible assets and income tax-related items. The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions): Identifiable intangible assets $ 204 Accounts receivable 20 Property, plant and equipment 10 Other assets acquired 17 Deferred revenue (16) Deferred tax liabilities (49) Other liabilities assumed (14) Net assets acquired $ 172 Goodwill on acquisition 376 Total purchase consideration $ 548 |
Investments
Investments | 9 Months Ended |
Sep. 26, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments The carrying value of the Company’s investments was $80 million and $45 million as of September 26, 2020 and December 31, 2019, respectively, which are included in Other long-term assets on the Consolidated Balances Sheets. During the nine months ended September 26, 2020, the Company paid $32 million for the purchases of long-term investments, which primarily related to the acquisition of additional shares in an existing investment in the second quarter of 2020. In connection with this additional investment in the second quarter of 2020, the Company identified an observable price change that resulted in a $7 million gain on its existing investment. During the nine months ended September 26, 2020, the Company also received cash proceeds of $6 million related to the sale of a long-term investment. Net gains and losses related to the Company’s investments are included within Other, net on the Consolidated Statements of Operations. During the three and nine months ended September 26, 2020, the Company recognized net investment gains of $1 million and $8 million, respectively. During the three and nine months ended September 28, 2019, the Company recognized net investment gains of $0 million and $3 million, respectively. |
Exit and Restructuring Costs
Exit and Restructuring Costs | 9 Months Ended |
Sep. 26, 2020 | |
Restructuring and Related Activities [Abstract] | |
Exit and Restructuring Costs | Exit and Restructuring Costs In the fourth quarter of 2019, the Company committed to certain organizational changes designed to generate operational efficiencies (collectively referred to as the “2019 Productivity Plan”). The organizational design changes under the 2019 Productivity Plan have principally occurred within the North America and Europe, Middle East, and Africa (“EMEA”) regions, relate primarily to employee severance and related benefits, and are expected to be substantially completed by the end of 2020. Exit and restructuring charges for the 2019 Productivity Plan were $1 million and $7 million during the three and nine months ended September 26, 2020, respectively, and $15 million cumulatively through the quarter ended September 26, 2020. Estimated remaining costs to be incurred in the fourth quarter of 2020 under the 2019 Productivity Plan are expected to be up to $3 million. As of September 26, 2020, the Company’s total remaining obligations under its exit and restructuring programs were $4 million, which are expected to be mostly settled within the next year and are reflected within Accrued liabilities on the Consolidated Balance Sheets. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 26, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial assets and liabilities are measured using inputs from three levels of the fair value hierarchy in accordance with Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements . Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels: • Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (e.g. U.S. Treasuries and money market funds). • Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. • Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value. The Company’s financial assets and liabilities carried at fair value as of September 26, 2020, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Money market investments related to the deferred compensation plan $ 26 $ — $ — $ 26 Total Assets at fair value $ 26 $ — $ — $ 26 Liabilities: Foreign exchange contracts (1) $ — $ 14 $ — $ 14 Forward interest rate swap contracts (2) — 50 — 50 Liabilities related to the deferred compensation plan 26 — — 26 Total Liabilities at fair value $ 26 $ 64 $ — $ 90 The Company’s financial assets and liabilities carried at fair value as of December 31, 2019, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts (1) $ — $ 3 $ — $ 3 Money market investments related to the deferred compensation plan 24 — — 24 Total Assets at fair value $ 24 $ 3 $ — $ 27 Liabilities: Forward interest rate swap contracts (2) $ — $ 13 $ — $ 13 Liabilities related to the deferred compensation plan 24 — — 24 Total Liabilities at fair value $ 24 $ 13 $ — $ 37 (1) The fair value of the foreign exchange contracts is calculated as follows: a. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points. b. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1). |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 26, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC Topic 815, Derivatives and Hedging (“ASC 815”). The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes. In accordance with ASC 815, the Company recognizes derivative instruments as either assets or liabilities on the Consolidated Balance Sheets and measures them at fair value. The following table presents the fair value of its derivative instruments (in millions): (Liability) Asset Fair Values as of Balance Sheet Classification September 26, December 31, Derivative instruments designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ — $ 3 Foreign exchange contracts Accrued liabilities (14) — Total derivative instruments designated as hedges $ (14) $ 3 Derivative instruments not designated as hedges: Forward interest rate swaps Accrued liabilities (17) (5) Forward interest rate swaps Other long-term liabilities (33) (8) Total derivative instruments not designated as hedges $ (50) $ (13) Total net derivative liability $ (64) $ (10) The following table presents the losses from changes in fair values of derivatives that are not designated as hedges (in millions): Losses Recognized in Income Three Months Ended Nine Months Ended Statements of Operations Classification September 26, September 28, September 26, September 28, Derivative instruments not designated as hedges: Foreign exchange contracts Foreign exchange (loss) gain $ (1) $ (1) $ (9) $ (4) Forward interest rate swaps Interest expense, net (4) (4) (46) (27) Total losses recognized in income $ (5) $ (5) $ (55) $ (31) Activities related to derivative instruments are reflected within Net cash provided by operating activities on the Consolidated Statements of Cash Flows. Credit and Market Risk Management Financial instruments, including derivatives, expose the Company to counterparty credit risk of nonperformance and to market risk related to currency exchange rate and interest rate fluctuations. The Company manages its exposure to counterparty credit risk by establishing minimum credit standards, diversifying its counterparties, and monitoring its concentrations of credit. The Company’s counterparties are commercial banks with expertise in derivative financial instruments. The Company evaluates the impact of market risk on the fair value and cash flows of its derivative and other financial instruments by considering reasonably possible changes in interest rates and currency exchange rates. The Company continually monitors the creditworthiness of the customers to which it grants credit terms in the normal course of business. The terms and conditions of the Company’s credit policies are designed to mitigate concentrations of credit risk. The Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. We present the assets and liabilities of our derivative financial instruments, for which we have net settlement agreements in place, on a net basis on the Consolidated Balance Sheets. If the derivative financial instruments had been presented gross on the Consolidated Balance Sheets, the asset and liability positions each would have been increased by $3 million as of September 26, 2020 and December 31, 2019. Foreign Currency Exchange Risk Management The Company conducts business on a multinational basis in a variety of foreign currencies. Exposure to market risk for changes in foreign currency exchange rates arises primarily from Euro-denominated external revenues, cross-border financing activities between subsidiaries, and foreign currency denominated monetary assets and liabilities. The Company manages its objective of preserving the economic value of non-functional currency denominated cash flows by initially hedging transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign exchange forward and option contracts, as deemed appropriate. The Company manages the exchange rate risk of anticipated Euro-denominated sales using forward contracts, which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated other comprehensive income (loss) (“AOCI”) on the Consolidated Balance Sheets until the contract is settled and the hedged sale is realized. The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations. Realized amounts reclassified to Net sales were $8 million of losses and $10 million of gains for the three months ended September 26, 2020 and September 28, 2019, respectively. For the nine months ended September 26, 2020 and September 28, 2019, realized gains were $6 million and $32 million, respectively. As of September 26, 2020 and December 31, 2019, the notional amounts of the Company’s foreign exchange cash flow hedges were €543 million and €564 million, respectively. The Company has reviewed its cash flow hedges for effectiveness and determined that they are highly effective. The Company uses forward contracts, which are not designated as hedging instruments, to manage its exposures related to net assets denominated in foreign currencies. These forward contracts typically mature within one month after execution. Monetary gains and losses on these forward contracts are recorded in income and are generally offset by the transaction gains and losses related to their net asset positions. The notional values and the net fair value of these outstanding contracts are as follows (in millions): September 26, December 31, Notional balance of outstanding contracts: British Pound/U.S. Dollar £ 11 £ 14 Euro/U.S. Dollar € 24 € 36 Canadian Dollar/U.S. Dollar $ 1 $ 1 Australian Dollar/U.S. Dollar A$ 4 A$ 42 Japanese Yen/U.S. Dollar ¥ 233 ¥ 264 Singapore Dollar/U.S. Dollar S$ 14 S$ 19 Mexican Peso/U.S. Dollar Mex$ 114 Mex$ 115 Chinese Yuan/U.S. Dollar ¥ 46 ¥ — South African Rand/U.S. Dollar R 46 R 42 Net fair value of assets of outstanding contracts $ — $ — The Company’s use of non-designated forward contracts to manage Euro currency exposure is limited, as Euro-denominated borrowings under the Revolving Credit Facility naturally hedge part of such risk. See Note 10, Long-Term Debt for further discussion of Euro-denominated borrowings. Interest Rate Risk Management The Company’s debt consists of borrowings under term loans (“Term Loan A” and the “2020 Term Loan”), Revolving Credit Facility and Receivables Financing Facilities, which bear interest at variable rates plus applicable margins. As a result, the Company is exposed to market risk associated with the variable interest rate payments on these borrowings. See Note 10, Long-Term Debt for further details about these borrowings. The Company manages its exposure to changes in interest rates by utilizing interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating-rate debt, based on current and projected market conditions. In December 2017, the Company entered into a long-term forward interest rate swap agreement with a notional amount of $800 million to lock into a fixed LIBOR interest rate base for its debt facilities, subject to monthly interest payments. Under the terms of the agreement, $800 million in variable-rate debt will be swapped for a fixed interest rate with net settlement terms starting in December 2018 and ending in December 2022. During the third quarter of 2019, the Company entered into additional long-term forward interest rate swap agreements with a total notional amount of $800 million, containing net settlement terms starting in December 2022 and ending in August 2024. The additional interest rate swap agreements effectively extend the risk management initiative of the Company to coincide with the maturities of Term Loan A and the Revolving Credit Facility. These interest rate swaps are not designated as hedges and changes in fair value are recognized immediately as Interest expense, net on the Consolidated Statements of Operations. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 26, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The following table shows the carrying value of the Company’s debt (in millions): September 26, December 31, Term Loan A $ 917 $ 917 Revolving Credit Facility 194 103 Receivables Financing Facilities 264 266 2020 Term Loan 200 — Total debt $ 1,575 $ 1,286 Less: Debt issuance costs (5) (6) Less: Unamortized discounts (3) (3) Less: Current portion of debt (481) (197) Total long-term debt $ 1,086 $ 1,080 As of September 26, 2020, the future maturities of debt, excluding debt discounts and issuance costs, were as follows (in millions): 2020 $ 78 2021 416 2022 56 2023 81 2024 944 Total future debt maturities $ 1,575 All borrowings as of September 26, 2020 were denominated in U.S. Dollars, except for €72 million under the Revolving Credit Facility that was borrowed in Euros. The estimated fair value of the Company’s debt approximated $1.6 billion and $1.3 billion as of September 26, 2020 and December 31, 2019, respectively. These fair value amounts, developed based on inputs classified as Level 2 within the fair value hierarchy, represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and do not represent the settlement value of these liabilities to the Company. The fair value of the debt will continue to vary each period based on a number of factors, including fluctuations in market interest rates as well as changes to the Company’s credit ratings. 2020 Term Loan In September 2020, the Company entered into a new term loan (“2020 Term Loan”) with a principal of $200 million, with the proceeds used to partly fund the acquisition of Reflexis. Principal on the 2020 Term Loan is due to be repaid in quarterly installments starting in December 2020, with the majority of principal due upon the August 31, 2021 maturity date. The Company may make prepayments against the 2020 Term Loan, in whole or in part, without premium or penalty. The Company would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of September 26, 2020, the 2020 Term Loan interest rate was 2.25%. Interest payments are made monthly and are subject to a variable rate plus an applicable margin. Costs associated with issuing the 2020 Term Loan were approximately $1 million, which were capitalized and will be amortized over the term of the loan. Uncommitted Short-Term Credit Facility The Company also entered into an uncommitted short-term credit facility (“Uncommitted Facility”) in August 2020. The Uncommitted Facility matures on August 26, 2021 and allows for borrowings of up to $20 million. Each borrowing must be repaid within 90 days, or earlier if the facility matures beforehand, and bears interest at a variable rate plus an applicable margin. Along with the Company’s Revolving Credit Facility, the Uncommitted Facility is available for working capital and other general business purposes. As of September 26, 2020, the Company had no outstanding borrowings under the Uncommitted Facility. Long-Term Credit Facilities In addition to the 2020 Term Loan, the Company’s long-term credit facilities consist of Term Loan A and the Revolving Credit Facility, both of which have a maturity of August 9, 2024. The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in June 2021 and the majority due upon maturity. The Company may make prepayments against Term Loan A, in whole or in part, without premium or penalty. The Company would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of September 26, 2020, the Term Loan A interest rate was 1.40%. Interest payments are made monthly and are subject to variable rates plus an applicable margin. The Revolving Credit Facility is available for working capital and other general business purposes, including letters of credit. As of September 26, 2020, the Company had letters of credit totaling $4 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1 billion to $996 million. As of September 26, 2020, the Revolving Credit Facility had an average interest rate of 1.34%. Interest payments are made monthly and are subject to variable rates plus an applicable margin. All remaining principal is due upon maturity. During the third quarter of 2019, the Company entered into its second amendment to the Amended and Restated Credit Agreement (“Amendment No. 2”). Amendment No. 2 increased the Company’s borrowing under Term Loan A from $608 million to $1 billion and increased the Company’s borrowing capacity under the Revolving Credit Facility from $800 million to $1 billion. Amendment No. 2 also extended the maturities of Term Loan A and the Revolving Credit Facility to August 9, 2024. Additionally, in conjunction with entering into Amendment No. 2, a payment of $445 million was made to fully pay off the Company’s Term Loan B. The refinancing of the Company’s long-term credit facilities during the third quarter of 2019 resulted in non-cash accelerated amortization of debt discount and debt issuance costs of $4 million and one-time charges of $3 million, which included certain third party fees and the accelerated amortization of losses on terminated interest rate swaps released from AOCI. These items are included in Interest Expense, net on the Consolidated Statements of Operations. Additionally, issuance costs of $6 million incurred related to this debt refinancing were capitalized and will be amortized over the remaining term of Term Loan A and the Revolving Credit Facility. Receivables Financing Facilities The Company has two Receivables Financing Facilities with financial institutions carrying total borrowing limits of up to $280 million. As collateral, the Company pledges perfected first-priority security interests in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under its Receivables Financing Facilities as secured borrowings. The Company’s first Receivables Financing Facility, which was originally entered into in December 2017 and was amended in May 2019, allows for borrowings of up to $180 million and will mature on March 29, 2021. The Company’s second Receivable Financing Facility, which was entered into in May 2019 and was amended in May 2020, allows for borrowings of up to $100 million and will mature on May 17, 2021. As of September 26, 2020, the Company’s Consolidated Balance Sheets included $494 million of receivables that were pledged under the two Receivables Financing Facilities. As of September 26, 2020, $264 million had been borrowed, all of which was classified as current. Borrowings under the Receivables Financing Facilities bear interest at a variable rate plus an applicable margin. As of September 26, 2020, the Receivables Financing Facilities had an average interest rate of 1.04%. Interest is paid on these borrowings on a monthly basis. Each of the Company’s borrowing arrangements described above include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. The Company uses interest rate swaps to manage the interest rate risk associated with its debt. See Note 9 , Derivative Instruments for further information. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 26, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Warranties The following table is a summary of the Company’s accrued warranty obligations, which are included in Accrued liabilities on the Consolidated Balance Sheets (in millions): Nine Months Ended September 26, September 28, Balance at the beginning of the period $ 21 $ 22 Warranty expense 22 18 Warranties fulfilled (20) (18) Balance at the end of the period $ 23 $ 22 Contingencies |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 26, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates for the three and nine months ended September 26, 2020 were 15.9% and 11.3%, respectively. The variances from the 21% federal statutory rate was attributable to the benefits of lower tax rates on foreign earnings and U.S. tax credits. These benefits were partially offset by the impacts of foreign earnings and deemed royalties taxed in the U.S. The Company’s effective tax rate also benefited from certain discrete items, primarily related to share-based compensation. The Company’s effective tax rates for the three and nine months ended September 28, 2019 were 14.5% and 10.5%, respectively. The variances from the 2019 federal statutory rate of 21% were each attributable to the benefits of lower tax rates on foreign earnings and U.S. tax credits. These benefits were partially offset by the impacts of foreign earnings and deemed royalties taxed in the U.S. The Company’s effective tax rate also benefited from certain discrete items, primarily related to share-based compensation. On March 27, 2020, the President of the United States signed into tax law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The Company does not believe any of the provisions will materially impact its 2020 effective tax rate. Management continues to monitor developments and guidance on the CARES Act and other coronavirus tax relief throughout the world for potential impacts. The Company earns a significant amount of its operating income outside of the U.S. Pre-tax earnings outside the U.S. are primarily generated in the United Kingdom, Singapore, and Luxembourg, with statutory rates of 19%, 17%, and 25%, respectively. The Company has received an incentivized tax rate by the Singapore Economic Development Board, which reduces the income tax rate to 10.5% from the statutory rate of 17%, and is effective for calendar years 2019 to 2023. The Company has committed to making additional investments in Singapore over the period 2019 to 2022. However, should the Company not make these investments in accordance with the agreement, any incentive benefit would have to be repaid to the Singapore tax authorities. The Company is not permanently reinvested with respect to its U.S. directly-owned foreign subsidiaries. For periods after 2017, the Company is subject to U.S. income tax on substantially all foreign earnings under the Global Intangible Low-Taxed Income provisions of the Tax Cuts and Jobs Act (the “Act”) enacted in December 2017, while any remaining foreign earnings are eligible for a dividends received deduction under the Act. As a result, future repatriations of earnings will no longer be subject to U.S. income tax but may be subject to currency gains or losses. Additionally, gains and losses on any future taxable dispositions of U.S.-owned foreign affiliates continue to be subject to U.S. tax. Management evaluates all jurisdictions based on historical pre-tax earnings and taxable income to determine the need for valuation allowances on a quarterly basis. Based on this analysis, a valuation allowance has been recorded for any jurisdictions where, in the Company’s judgment, tax benefits are not expected to be realized. Uncertain Tax Positions The Company is currently undergoing U.S. federal income tax audits for tax years 2017 and 2018. The U.S. federal income tax audit for tax year 2016 concluded during the third quarter of 2020 and did not have a material impact to the financial statements. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 26, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic net earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock method and, in periods of income, reflects the additional shares that would be outstanding if dilutive stock options were exercised for common shares during the period. Earnings per share (in millions, except share data): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Basic: Net income $ 116 $ 136 $ 305 $ 375 Weighted-average shares outstanding 53,300,036 54,085,500 53,460,891 53,999,044 Basic earnings per share $ 2.18 $ 2.52 $ 5.70 $ 6.95 Diluted: Net income $ 116 $ 136 $ 305 $ 375 Weighted-average shares outstanding 53,300,036 54,085,500 53,460,891 53,999,044 Dilutive shares 416,270 552,323 486,895 611,047 Diluted weighted-average shares outstanding 53,716,306 54,637,823 53,947,786 54,610,091 Diluted earnings per share $ 2.16 $ 2.50 $ 5.65 $ 6.87 Anti-dilutive options to purchase common shares are excluded from diluted earnings per share calculations. There were 74,588 and 92,014 shares that were anti-dilutive for the three months ended September 26, 2020 and September 28, 2019, respectively. There were 105,219 and 53,356 shares that were anti-dilutive for the nine months ended September 26, 2020 and September 28, 2019, respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 26, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Stockholders’ equity includes certain items classified as AOCI, including: • Unrealized (loss) gain on anticipated sales hedging transactions relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 9, Derivative Instruments for more details. • Unrealized loss on forward interest rate swaps hedging transactions relates to certain interest rate swaps that the Company previously entered into as part of its strategy to mitigate interest rate risk exposure associated with its variable rate debt. These particular interest rate swaps, which were designated as cash flow hedges, were terminated prior to 2019, with remaining losses being reclassified out of AOCI through the third quarter of 2019. Pre-tax losses were reclassified into Interest expense, net on the Consolidated Statements of Operations. • Foreign currency translation adjustments relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company is required to translate the subsidiary functional currency financial statements to U.S. Dollars using a combination of historical, period end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of AOCI. The components of AOCI for the nine months ended September 26, 2020 and September 28, 2019 are as follows (in millions): Unrealized (loss) gain on sales hedging Unrealized gain (loss) on forward interest rate swaps Foreign currency translation adjustments Total Balance at December 31, 2018 $ 12 $ — $ (47) $ (35) Other comprehensive income (loss) before reclassifications 41 — (3) 38 Amounts reclassified from AOCI (1) (32) 2 — (30) Tax effect (2) (2) — (4) Other comprehensive income (loss), net of tax 7 — (3) 4 Balance at September 28, 2019 $ 19 $ — $ (50) $ (31) Balance at December 31, 2019 $ 2 $ — $ (46) $ (44) Other comprehensive loss before reclassifications (11) — (4) (15) Amounts reclassified from AOCI (1) (6) — — (6) Tax effect 3 — — 3 Other comprehensive loss, net of tax (14) — (4) (18) Balance at September 26, 2020 $ (12) $ — $ (50) $ (62) (1) See Note 9, Derivative Instruments |
Accounts Receivable Factoring
Accounts Receivable Factoring | 9 Months Ended |
Sep. 26, 2020 | |
Transfers and Servicing [Abstract] | |
Accounts Receivable Factoring | Accounts Receivable Factoring The Company has multiple Receivables Factoring arrangements, pursuant to which certain receivables are sold to banks without recourse in exchange for cash. Transactions under the Receivables Factoring arrangements are accounted for as sales under ASC 860, Transfers and Servicing of Financial Assets , with the sold receivables removed from the Company’s balance sheet. Under these Receivables Factoring arrangements, the Company does not maintain any beneficial interest in the receivables sold. The banks’ purchase of eligible receivables is subject to a maximum amount of uncollected receivables. The Company services the receivables on behalf of the banks, but otherwise maintains no significant continuing involvement with respect to the receivables. Sale proceeds that are representative of the fair value of factored receivables, less a factoring fee, are reflected in Net cash provided by operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Net cash provided by financing activities on the Consolidated Statements of Cash Flows. In May 2020, the Company entered into a new Receivables Factoring arrangement with a bank, which allows for the factoring of up to €150 million of uncollected receivables originated from the EMEA and Asia-Pacific regions. The Company is required to maintain a portion of sales proceeds as deposits in a restricted cash account that is released to the Company as it satisfies its obligations as servicer of sold receivables, which totaled $29 million as of September 26, 2020 and is classified within Prepaid expenses and other current assets on the Consolidated Balance Sheets. The Company’s other active Receivable Factoring arrangements, which were entered into prior to 2020, also allow for the factoring of up to $125 million of uncollected receivables originated from the EMEA region. During the nine months ended September 26, 2020 and September 28, 2019, the Company received cash proceeds of $857 million and $248 million, respectively, from the sales of accounts receivables under its factoring arrangements. As of September 26, 2020 and December 31, 2019, there were a total of $92 million and $60 million, respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets. As servicer of sold receivables, the Company had $106 million and $33 million of obligations that were not yet remitted to banks as of September 26, 2020 and December 31, 2019, respectively. These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Net cash provided by (used in) financing activities on the Consolidated Statements of Cash Flows. Fees incurred in connection with these arrangements were not significant. |
Segment Information & Geographi
Segment Information & Geographic Data | 9 Months Ended |
Sep. 26, 2020 | |
Segment Reporting [Abstract] | |
Segment Information & Geographic Data | Segment Information & Geographic Data The Company’s operations consist of two reportable segments: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”). The reportable segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources among the Company’s segments. The CODM reviews adjusted operating income to assess segment profitability. To the extent applicable, segment operating income excludes purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, and product sourcing diversification costs. Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below. Financial information by segment is presented as follows (in millions): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Net sales: AIT $ 346 $ 373 $ 992 $ 1,100 EVM 788 757 2,150 2,193 Total segment Net sales 1,134 1,130 3,142 3,293 Corporate, eliminations (1) (2) — (2) — Total Net sales $ 1,132 $ 1,130 $ 3,140 $ 3,293 Operating income: AIT (2) $ 79 $ 93 $ 216 $ 269 EVM (2) 120 133 301 347 Total segment operating income 199 226 517 616 Corporate, eliminations (1) (49) (41) (97) (112) Total Operating income $ 150 $ 185 $ 420 $ 504 (1) To the extent applicable, amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, and product sourcing diversification costs. (2) AIT and EVM segment operating income includes depreciation and share-based compensation expense. The amounts of depreciation and share-based compensation expense attributable to AIT and EVM are proportionate to each segment’s Net sales. Information regarding the Company’s operations by geographic area is contained in the following table. Net sales amounts are attributed to geographic area based on customer location. We manage our business based on regions rather than by individual countries. Geographic data for Net sales is as follows (in millions): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, North America $ 629 $ 591 $ 1,650 $ 1,641 EMEA 340 346 1,034 1,082 Asia-Pacific 115 133 322 399 Latin America 48 60 134 171 Total Net sales $ 1,132 $ 1,130 $ 3,140 $ 3,293 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 26, 2020 | |
Accounting Policies [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. With respect to the Company’s financial assets, including trade receivables and contract assets, a cumulative effect transition approach was applied. In order to determine the transition impact of ASU 2016-13, the Company considered historical loss experience, the short duration of its trade receivables and durations of other financial assets, and expectations of the future economic environment. The adoption of ASU 2016-13 did not have a significant impact to the Company’s financial statements upon transition or for the nine months ended September 26, 2020. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). Subject to meeting certain criteria, ASU 2020-04 provides optional expedients and exceptions to applying contract modification accounting under existing generally accepted accounting principles, for contracts that are modified to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) by the end of 2021. Some of the Company’s contracts with respect to its borrowings and interest rate swap contracts already contain comparable alternative reference rates that would automatically take effect upon the phasing out of LIBOR, while for others, the Company anticipates negotiating comparable replacement rates with its counterparties. At this stage of its contract assessment, the Company does not expect ASU 2020-04 to have a material impact to its financial statements. |
Revenue | Revenues The Company recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. We recognize revenue arising from performance obligations outlined in contracts with our customers that are satisfied at a point in time and over time. Substantially all revenue for tangible products is recognized at a point in time, whereby revenue for services and software is predominantly recognized over time. Contract Balances Progress on satisfying performance obligations under contracts with customers is recorded on the Consolidated Balance Sheets in Accounts receivable, net for billed revenues. Progress on satisfying performance obligations under contracts with customers related to unbilled revenues (“contract assets”) is reflected on the Consolidated Balance Sheets as Prepaid expenses and other current assets for revenues expected to be billed within the next 12 months, and Other long-term assets for revenues expected to be billed thereafter. The total contract asset balances were $13 million and $8 million as of September 26, 2020 and December 31, 2019, respectively. These contract assets result from timing differences between the billing and delivery schedules of products, services and software, as well as the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. Contract assets are evaluated for impairment and no impairment losses have been recognized during the three and nine months ended September 26, 2020 and September 28, 2019. |
Fair Value Measurements | Fair Value Measurements Financial assets and liabilities are measured using inputs from three levels of the fair value hierarchy in accordance with Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements . Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels: • Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (e.g. U.S. Treasuries and money market funds). • Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. • Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value. |
Derivative Instruments | Derivative Instruments In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC Topic 815, Derivatives and Hedging (“ASC 815”). The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes. |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue By Product Category And Segment | The following table presents our Net sales disaggregated by category for each of our segments, Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”), for the three and nine months ended September 26, 2020 and September 28, 2019 (in millions): Three Months Ended September 26, 2020 September 28, 2019 Segment Tangible Products Services and Software Total Tangible Products Services and Software Total AIT $ 314 $ 32 $ 346 $ 337 $ 36 $ 373 EVM 658 130 788 644 113 757 Corporate, eliminations (1) — (2) (2) — — — Total $ 972 $ 160 $ 1,132 $ 981 $ 149 $ 1,130 Nine Months Ended September 26, 2020 September 28, 2019 Segment Tangible Products Services and Software Total Tangible Products Services and Software Total AIT $ 898 $ 94 $ 992 $ 1,001 $ 99 $ 1,100 EVM 1,786 364 2,150 1,867 326 2,193 Corporate, eliminations (1) — (2) (2) — — — Total $ 2,684 $ 456 $ 3,140 $ 2,868 $ 425 $ 3,293 (1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Components of Inventories, Net | The components of Inventories, net are as follows (in millions): September 26, December 31, Raw material $ 120 $ 128 Work in process 4 4 Finished goods 360 342 Total Inventories, net $ 484 $ 474 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Business Combinations [Abstract] | |
Schedule of Preliminary and Final Purchase Price Allocation to Assets Acquired and Liabilities Assumed | The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions): Identifiable intangible assets $ 204 Accounts receivable 20 Property, plant and equipment 10 Other assets acquired 17 Deferred revenue (16) Deferred tax liabilities (49) Other liabilities assumed (14) Net assets acquired $ 172 Goodwill on acquisition 376 Total purchase consideration $ 548 |
Schedule of Indefinite-lived Intangible Assets Acquired as Part of Business Combination | The preliminary purchase price allocation to identifiable intangible assets acquired was: Fair Value (in millions) Useful Life (in years) Technology and patents $ 160 8 Customer and other relationships 43 2 Trade names 1 2 Total identifiable intangible assets $ 204 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Carried at Fair Value | The Company’s financial assets and liabilities carried at fair value as of September 26, 2020, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Money market investments related to the deferred compensation plan $ 26 $ — $ — $ 26 Total Assets at fair value $ 26 $ — $ — $ 26 Liabilities: Foreign exchange contracts (1) $ — $ 14 $ — $ 14 Forward interest rate swap contracts (2) — 50 — 50 Liabilities related to the deferred compensation plan 26 — — 26 Total Liabilities at fair value $ 26 $ 64 $ — $ 90 The Company’s financial assets and liabilities carried at fair value as of December 31, 2019, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts (1) $ — $ 3 $ — $ 3 Money market investments related to the deferred compensation plan 24 — — 24 Total Assets at fair value $ 24 $ 3 $ — $ 27 Liabilities: Forward interest rate swap contracts (2) $ — $ 13 $ — $ 13 Liabilities related to the deferred compensation plan 24 — — 24 Total Liabilities at fair value $ 24 $ 13 $ — $ 37 (1) The fair value of the foreign exchange contracts is calculated as follows: a. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points. b. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1). |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Assets and Liabilities | The following table presents the fair value of its derivative instruments (in millions): (Liability) Asset Fair Values as of Balance Sheet Classification September 26, December 31, Derivative instruments designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ — $ 3 Foreign exchange contracts Accrued liabilities (14) — Total derivative instruments designated as hedges $ (14) $ 3 Derivative instruments not designated as hedges: Forward interest rate swaps Accrued liabilities (17) (5) Forward interest rate swaps Other long-term liabilities (33) (8) Total derivative instruments not designated as hedges $ (50) $ (13) Total net derivative liability $ (64) $ (10) |
Schedule of Gains (Losses) from Changes in Fair Values of Derivatives | The following table presents the losses from changes in fair values of derivatives that are not designated as hedges (in millions): Losses Recognized in Income Three Months Ended Nine Months Ended Statements of Operations Classification September 26, September 28, September 26, September 28, Derivative instruments not designated as hedges: Foreign exchange contracts Foreign exchange (loss) gain $ (1) $ (1) $ (9) $ (4) Forward interest rate swaps Interest expense, net (4) (4) (46) (27) Total losses recognized in income $ (5) $ (5) $ (55) $ (31) |
Schedule of Notional Values and Net Fair Value of Forward Contracts | The notional values and the net fair value of these outstanding contracts are as follows (in millions): September 26, December 31, Notional balance of outstanding contracts: British Pound/U.S. Dollar £ 11 £ 14 Euro/U.S. Dollar € 24 € 36 Canadian Dollar/U.S. Dollar $ 1 $ 1 Australian Dollar/U.S. Dollar A$ 4 A$ 42 Japanese Yen/U.S. Dollar ¥ 233 ¥ 264 Singapore Dollar/U.S. Dollar S$ 14 S$ 19 Mexican Peso/U.S. Dollar Mex$ 114 Mex$ 115 Chinese Yuan/U.S. Dollar ¥ 46 ¥ — South African Rand/U.S. Dollar R 46 R 42 Net fair value of assets of outstanding contracts $ — $ — |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Carrying Value of Long-term Debt | The following table shows the carrying value of the Company’s debt (in millions): September 26, December 31, Term Loan A $ 917 $ 917 Revolving Credit Facility 194 103 Receivables Financing Facilities 264 266 2020 Term Loan 200 — Total debt $ 1,575 $ 1,286 Less: Debt issuance costs (5) (6) Less: Unamortized discounts (3) (3) Less: Current portion of debt (481) (197) Total long-term debt $ 1,086 $ 1,080 |
Schedule of Future Maturities of Long-term Debt | As of September 26, 2020, the future maturities of debt, excluding debt discounts and issuance costs, were as follows (in millions): 2020 $ 78 2021 416 2022 56 2023 81 2024 944 Total future debt maturities $ 1,575 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Accrued Warranty Obligation | The following table is a summary of the Company’s accrued warranty obligations, which are included in Accrued liabilities on the Consolidated Balance Sheets (in millions): Nine Months Ended September 26, September 28, Balance at the beginning of the period $ 21 $ 22 Warranty expense 22 18 Warranties fulfilled (20) (18) Balance at the end of the period $ 23 $ 22 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Earnings per Share | Earnings per share (in millions, except share data): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Basic: Net income $ 116 $ 136 $ 305 $ 375 Weighted-average shares outstanding 53,300,036 54,085,500 53,460,891 53,999,044 Basic earnings per share $ 2.18 $ 2.52 $ 5.70 $ 6.95 Diluted: Net income $ 116 $ 136 $ 305 $ 375 Weighted-average shares outstanding 53,300,036 54,085,500 53,460,891 53,999,044 Dilutive shares 416,270 552,323 486,895 611,047 Diluted weighted-average shares outstanding 53,716,306 54,637,823 53,947,786 54,610,091 Diluted earnings per share $ 2.16 $ 2.50 $ 5.65 $ 6.87 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Loss (AOCI) | The components of AOCI for the nine months ended September 26, 2020 and September 28, 2019 are as follows (in millions): Unrealized (loss) gain on sales hedging Unrealized gain (loss) on forward interest rate swaps Foreign currency translation adjustments Total Balance at December 31, 2018 $ 12 $ — $ (47) $ (35) Other comprehensive income (loss) before reclassifications 41 — (3) 38 Amounts reclassified from AOCI (1) (32) 2 — (30) Tax effect (2) (2) — (4) Other comprehensive income (loss), net of tax 7 — (3) 4 Balance at September 28, 2019 $ 19 $ — $ (50) $ (31) Balance at December 31, 2019 $ 2 $ — $ (46) $ (44) Other comprehensive loss before reclassifications (11) — (4) (15) Amounts reclassified from AOCI (1) (6) — — (6) Tax effect 3 — — 3 Other comprehensive loss, net of tax (14) — (4) (18) Balance at September 26, 2020 $ (12) $ — $ (50) $ (62) (1) See Note 9, Derivative Instruments |
Segment Information & Geograp_2
Segment Information & Geographic Data (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Segment Reporting [Abstract] | |
Financial Information by Segments | Financial information by segment is presented as follows (in millions): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Net sales: AIT $ 346 $ 373 $ 992 $ 1,100 EVM 788 757 2,150 2,193 Total segment Net sales 1,134 1,130 3,142 3,293 Corporate, eliminations (1) (2) — (2) — Total Net sales $ 1,132 $ 1,130 $ 3,140 $ 3,293 Operating income: AIT (2) $ 79 $ 93 $ 216 $ 269 EVM (2) 120 133 301 347 Total segment operating income 199 226 517 616 Corporate, eliminations (1) (49) (41) (97) (112) Total Operating income $ 150 $ 185 $ 420 $ 504 (1) To the extent applicable, amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, and product sourcing diversification costs. (2) AIT and EVM segment operating income includes depreciation and share-based compensation expense. The amounts of depreciation and share-based compensation expense attributable to AIT and EVM are proportionate to each segment’s Net sales. |
Net Sales to Customers by Geographic Region | Geographic data for Net sales is as follows (in millions): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, North America $ 629 $ 591 $ 1,650 $ 1,641 EMEA 340 346 1,034 1,082 Asia-Pacific 115 133 322 399 Latin America 48 60 134 171 Total Net sales $ 1,132 $ 1,130 $ 3,140 $ 3,293 |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue By Product Category And Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | $ 1,132 | $ 1,130 | $ 3,140 | $ 3,293 |
Tangible Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 972 | 981 | 2,684 | 2,868 |
Services and Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 160 | 149 | 456 | 425 |
AIT | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 346 | 373 | 992 | 1,100 |
AIT | Tangible Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 314 | 337 | 898 | 1,001 |
AIT | Services and Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 32 | 36 | 94 | 99 |
EVM | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 788 | 757 | 2,150 | 2,193 |
EVM | Tangible Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 658 | 644 | 1,786 | 1,867 |
EVM | Services and Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 130 | 113 | 364 | 326 |
Corporate eliminations | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | (2) | 0 | (2) | 0 |
Corporate eliminations | Tangible Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 0 | 0 | 0 | 0 |
Corporate eliminations | Services and Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | $ (2) | $ 0 | $ (2) | $ 0 |
Revenues - Remaining Performanc
Revenues - Remaining Performance Obligation (Details) - USD ($) $ in Millions | Sep. 26, 2020 | Dec. 31, 2019 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | ||
Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligation | $ 724 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation, expected recognition period | 2 years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-09-27 | ||
Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligation | $ 874 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation, expected recognition period | 2 years |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | Dec. 31, 2019 | |
Revenue From Contract With Customer, Assets And Liabilities [Line Items] | |||||
Deferred revenue balances | $ 534 | $ 534 | $ 459 | ||
Revenue recognized that was included in contract liability | 47 | $ 41 | 204 | $ 168 | |
Prepaid expenses and other current assets | |||||
Revenue From Contract With Customer, Assets And Liabilities [Line Items] | |||||
Contract assets recorded in prepaids and other current assets | $ 13 | $ 13 | $ 8 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 26, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 120 | $ 128 |
Work in process | 4 | 4 |
Finished goods | 360 | 342 |
Total Inventories, net | $ 484 | $ 474 |
Acquisition - Additional Inform
Acquisition - Additional Information (Details) - USD ($) | Sep. 01, 2020 | Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||||||
Acquisition of business, net of cash acquired | $ 548,000,000 | $ 255,000,000 | ||||
Acquisition and integration costs | $ 19,000,000 | $ 12,000,000 | 21,000,000 | $ 20,000,000 | ||
Goodwill | 2,998,000,000 | 2,998,000,000 | $ 2,622,000,000 | |||
Reflexis Systems, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition of business, net of cash acquired | $ 548,000,000 | |||||
Granted (in shares) | 38,228 | |||||
Weighted average acquisition-date fair value per option | $ 230 | |||||
Fair value of options granted | $ 9,000,000 | |||||
Future service period | 1 year 8 months 12 days | |||||
Weighted-average remaining contractual term - outstanding | 7 years 8 months 12 days | |||||
Acquisition and integration costs | 19,000,000 | |||||
Other acquisition costs | 5,000,000 | |||||
Goodwill | $ 376,000,000 | |||||
Reflexis Systems, Inc. | EVM | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | 376,000,000 | 376,000,000 | ||||
Reflexis Systems, Inc. | 2020 Term Loan | Loans Payable | ||||||
Business Acquisition [Line Items] | ||||||
Proceeds from debt issuance | $ 200,000,000 | $ 200,000,000 |
Acquisition - Schedule of Preli
Acquisition - Schedule of Preliminary Purchase Price Allocation to Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 01, 2020 | Sep. 26, 2020 | Dec. 31, 2019 |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill on acquisition | $ 2,998 | $ 2,622 | |
Reflexis Systems, Inc. | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Identifiable intangible assets | $ 204 | ||
Accounts receivable | 20 | ||
Property, plant and equipment | 10 | ||
Other assets acquired | 17 | ||
Deferred revenue | (16) | ||
Deferred tax liabilities | (49) | ||
Other liabilities assumed | (14) | ||
Net assets acquired | 172 | ||
Goodwill on acquisition | 376 | ||
Total purchase consideration | $ 548 |
The Preliminary Purchase Price
The Preliminary Purchase Price Allocation to Identifiable Intangible Assets Acquired (Details) - Reflexis Systems, Inc. $ in Millions | Sep. 01, 2020USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value (in millions) | $ 204 |
Technology and patents | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value (in millions) | $ 160 |
Useful Life (in years) | 8 years |
Customer and other relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value (in millions) | $ 43 |
Useful Life (in years) | 2 years |
Trade names | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value (in millions) | $ 1 |
Useful Life (in years) | 2 years |
Investments (Details)
Investments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 26, 2020 | Jun. 27, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | ||||||
Equity securities held | $ 80 | $ 80 | $ 45 | |||
Purchases of long-term investments | 32 | $ 21 | ||||
Unrealized gain (loss) on equity securities | $ 7 | |||||
Proceeds from sale of long-term investments | 6 | 10 | ||||
Investment gain | $ 1 | $ 0 | $ 8 | $ 3 |
Exit and Restructuring Costs (D
Exit and Restructuring Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Exit and restructuring costs | $ 1 | $ 0 | $ 7 | $ 2 |
Estimated remaining costs | 4 | 4 | ||
2019 Productivity Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Exit and restructuring costs | 1 | 7 | ||
Exit and restructuring charges - cumulative | 15 | 15 | ||
Estimated remaining costs | $ 3 | $ 3 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Recurring - USD ($) $ in Millions | Sep. 26, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | $ 26 | $ 27 |
Liabilities related to the deferred compensation plan | 26 | 24 |
Total Liabilities at fair value | 90 | 37 |
Money market investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market investments related to the deferred compensation plan | 26 | 24 |
Foreign exchange contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 14 | |
Total Assets at fair value | 3 | |
Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 50 | 13 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 26 | 24 |
Liabilities related to the deferred compensation plan | 26 | 24 |
Total Liabilities at fair value | 26 | 24 |
Level 1 | Money market investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market investments related to the deferred compensation plan | 26 | 24 |
Level 1 | Foreign exchange contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | |
Total Assets at fair value | 0 | |
Level 1 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 3 |
Liabilities related to the deferred compensation plan | 0 | 0 |
Total Liabilities at fair value | 64 | 13 |
Level 2 | Money market investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market investments related to the deferred compensation plan | 0 | 0 |
Level 2 | Foreign exchange contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 14 | |
Total Assets at fair value | 3 | |
Level 2 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 50 | 13 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 0 |
Liabilities related to the deferred compensation plan | 0 | 0 |
Total Liabilities at fair value | 0 | 0 |
Level 3 | Money market investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market investments related to the deferred compensation plan | 0 | 0 |
Level 3 | Foreign exchange contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | |
Total Assets at fair value | 0 | |
Level 3 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | $ 0 | $ 0 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 26, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||
Total net derivative liability | $ (64) | $ (10) |
Derivative instruments designated as hedges | ||
Derivative [Line Items] | ||
Total net derivative liability | (14) | 3 |
Derivative instruments designated as hedges | Foreign exchange contracts | Prepaid expenses and other current assets | ||
Derivative [Line Items] | ||
Total Assets at fair value | 0 | 3 |
Derivative instruments designated as hedges | Foreign exchange contracts | Accrued liabilities | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (14) | 0 |
Derivative instruments not designated as hedges | ||
Derivative [Line Items] | ||
Total net derivative liability | (50) | (13) |
Derivative instruments not designated as hedges | Forward interest rate swaps | Accrued liabilities | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (17) | (5) |
Derivative instruments not designated as hedges | Forward interest rate swaps | Other long-term liabilities | ||
Derivative [Line Items] | ||
Derivative liability, fair value | $ (33) | $ (8) |
Derivative Instruments - (Loss)
Derivative Instruments - (Loss) Gain Recognized In Income (Details) - Derivative instruments not designated as hedges - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total losses recognized in income | $ (5) | $ (5) | $ (55) | $ (31) |
Foreign exchange contracts | Foreign exchange (loss) gain | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total losses recognized in income | (1) | (1) | (9) | (4) |
Forward interest rate swaps | Interest expense, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total losses recognized in income | $ (4) | $ (4) | $ (46) | $ (27) |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) € in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 26, 2020USD ($) | Sep. 28, 2019USD ($) | Sep. 26, 2020USD ($) | Sep. 28, 2019USD ($) | Sep. 26, 2020EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2017USD ($) | |
Net Sales | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Net sales of losses | $ (8,000,000) | |||||||
Net sales of gain | $ 10,000,000 | $ 6,000,000 | $ 32,000,000 | |||||
Foreign exchange contracts | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Derivative, increase in asset (liability) positions | $ 3,000,000 | $ 3,000,000 | $ 3,000,000 | |||||
Foreign exchange forward | Derivative instruments designated as hedges | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Maturity period | 12 months | |||||||
Derivative, notional amount | € | € 543 | € 564 | ||||||
Foreign exchange forward | Derivative instruments not designated as hedges | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Maturity period | 1 month | |||||||
Forward interest rate swaps | Derivative instruments designated as hedges | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Derivative, notional amount | $ 800,000,000 | $ 800,000,000 | $ 800,000,000 |
Derivative Instruments - Notion
Derivative Instruments - Notional Values and Net Fair Value of Outstanding Contracts (Details) - Foreign Exchange Forward € in Millions, ¥ in Millions, ¥ in Millions, £ in Millions, R in Millions, $ in Millions, $ in Millions, $ in Millions, $ in Millions, $ in Millions | Sep. 26, 2020GBP (£) | Sep. 26, 2020EUR (€) | Sep. 26, 2020CAD ($) | Sep. 26, 2020AUD ($) | Sep. 26, 2020JPY (¥) | Sep. 26, 2020SGD ($) | Sep. 26, 2020MXN ($) | Sep. 26, 2020CNY (¥) | Sep. 26, 2020ZAR (R) | Sep. 26, 2020USD ($) | Dec. 31, 2019GBP (£) | Dec. 31, 2019EUR (€) | Dec. 31, 2019CAD ($) | Dec. 31, 2019AUD ($) | Dec. 31, 2019JPY (¥) | Dec. 31, 2019SGD ($) | Dec. 31, 2019MXN ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019ZAR (R) | Dec. 31, 2019USD ($) |
Derivative [Line Items] | ||||||||||||||||||||
Notional balance of outstanding contracts | £ 11 | € 24 | $ 1 | $ 4 | ¥ 233 | $ 14 | $ 114 | ¥ 46 | R 46 | £ 14 | € 36 | $ 1 | $ 42 | ¥ 264 | $ 19 | $ 115 | ¥ 0 | R 42 | ||
Net fair value of assets of outstanding contracts | $ 0 | $ 0 |
Long-Term Debt - Summary of Car
Long-Term Debt - Summary of Carrying Value of Debt (Details) € in Millions, $ in Millions | Sep. 26, 2020USD ($) | Sep. 26, 2020EUR (€) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | |||
Total future debt maturities | $ 1,575 | $ 1,286 | |
Less: Debt issuance costs | (5) | (6) | |
Less: Unamortized discounts | (3) | (3) | |
Less: Current portion of debt | (481) | (197) | |
Total long-term debt | 1,086 | 1,080 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Total future debt maturities | 194 | € 72 | 103 |
2020 Term Loan | |||
Debt Instrument [Line Items] | |||
Less: Debt issuance costs | (1) | ||
Term Loan | Term Loan A | |||
Debt Instrument [Line Items] | |||
Total future debt maturities | 917 | 917 | |
Term Loan | 2020 Term Loan | |||
Debt Instrument [Line Items] | |||
Total future debt maturities | 200 | 0 | |
Secured Debt | Receivables Financing Facilities | |||
Debt Instrument [Line Items] | |||
Total future debt maturities | $ 264 | $ 266 |
Long-Term Debt - Future Maturit
Long-Term Debt - Future Maturities of Long-Term Debt (Details) $ in Millions | Sep. 26, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 78 |
2021 | 416 |
2022 | 56 |
2023 | 81 |
2024 | 944 |
Total future debt maturities | $ 1,575 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) € in Millions, $ in Millions | Sep. 26, 2020USD ($) | Sep. 26, 2020EUR (€) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | |||
Debt principal | $ 1,575 | $ 1,286 | |
Long-term debt, fair value | 1,600 | 1,300 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Debt principal | $ 194 | € 72 | $ 103 |
Long-Term Debt - 2020 Term Loan
Long-Term Debt - 2020 Term Loan (Details) € in Millions | 9 Months Ended | ||||
Sep. 26, 2020USD ($) | Sep. 26, 2020EUR (€) | Sep. 25, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 29, 2019USD ($) | |
Debt Instrument [Line Items] | |||||
Total future debt maturities | $ 1,575,000,000 | $ 1,286,000,000 | |||
Debt issuance costs, net | 5,000,000 | 6,000,000 | |||
Uncommitted Short Term Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility maximum borrowing capacity | $ 20,000,000 | ||||
Borrowing repaid | 90 days | ||||
Outstanding borrowings | $ 0 | ||||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Total future debt maturities | 194,000,000 | € 72 | 103,000,000 | ||
Letters of credit | $ 4,000,000 | ||||
2020 Term Loan | |||||
Debt Instrument [Line Items] | |||||
Term loan interest rate | 2.25% | 2.25% | |||
Debt issuance costs, net | $ 1,000,000 | ||||
2020 Term Loan | Loans Payable | |||||
Debt Instrument [Line Items] | |||||
Total future debt maturities | 200,000,000 | $ 0 | |||
2020 Term Loan | Reflexis Systems, Inc. | Loans Payable | |||||
Debt Instrument [Line Items] | |||||
Proceeds from debt issuance | $ 200,000,000 | ||||
Amended and Restated Credit Agreement | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility maximum borrowing capacity | $ 1,000,000,000 | $ 800,000,000 | |||
Funds available for other borrowing | $ 996,000,000 |
Long-Term Debt - Long Term Cred
Long-Term Debt - Long Term Credit Facilities (Details) - USD ($) | 3 Months Ended | |||
Sep. 28, 2019 | Sep. 26, 2020 | Sep. 25, 2020 | Jun. 29, 2019 | |
Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Letters of credit | $ 4,000,000 | |||
Average interest rate | 1.34% | |||
Revolving Credit Facility | Term Loan A | ||||
Line of Credit Facility [Line Items] | ||||
Revolving credit facility maximum borrowing capacity | $ 1,000,000,000 | |||
Revolving Credit Facility | Amended and Restated Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Funds available for other borrowing | $ 996,000,000 | |||
Revolving credit facility maximum borrowing capacity | $ 1,000,000,000 | $ 800,000,000 | ||
Debt issuance costs | 4,000,000 | |||
Gain (loss) on contract termination | 3,000,000 | |||
Payments of debt restructuring costs | 6,000,000 | |||
Loans Payable | Term Loan A | ||||
Line of Credit Facility [Line Items] | ||||
Percentage bearing variable interest, percentage rate | 1.40% | |||
Revolving credit facility maximum borrowing capacity | $ 608,000,000 | |||
Extinguishment of debt | $ 445,000,000 |
Long-Term Debt - Receivable Fin
Long-Term Debt - Receivable Financing Facility (Details) - Secured Debt | Sep. 26, 2020USD ($)facility | May 31, 2020USD ($) | May 31, 2019USD ($) |
Receivables Financing Facilities | |||
Line of Credit Facility [Line Items] | |||
Number of receivable financing facilities | facility | 2 | ||
Total borrowing limits | $ 280,000,000 | ||
Accounts receivable pledged | 494,000,000 | ||
Line of credit, current | $ 264,000,000 | ||
Average interest rate | 1.04% | ||
Receivables Financing Facility, due 2021 | |||
Line of Credit Facility [Line Items] | |||
Total borrowing limits | $ 100,000,000 | $ 180,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at the beginning of the period | $ 21 | $ 22 |
Warranty expense | 22 | 18 |
Warranties fulfilled | (20) | (18) |
Balance at the end of the period | $ 23 | $ 22 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Income Tax Contingency [Line Items] | ||||
Effective tax rates | 15.90% | 14.50% | 11.30% | 10.50% |
Singapore | ||||
Income Tax Contingency [Line Items] | ||||
Statutory tax rate | 10.50% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Basic: | ||||||||
Net income | $ 116 | $ 100 | $ 89 | $ 136 | $ 124 | $ 115 | $ 305 | $ 375 |
Weighted-average shares outstanding (in shares) | 53,300,036 | 54,085,500 | 53,460,891 | 53,999,044 | ||||
Basic earnings per share (USD per share) | $ 2.18 | $ 2.52 | $ 5.70 | $ 6.95 | ||||
Diluted: | ||||||||
Net income | $ 116 | $ 100 | $ 89 | $ 136 | $ 124 | $ 115 | $ 305 | $ 375 |
Weighted-average shares outstanding (in shares) | 53,300,036 | 54,085,500 | 53,460,891 | 53,999,044 | ||||
Dilutive shares (in shares) | 416,270 | 552,323 | 486,895 | 611,047 | ||||
Diluted weighted-average shares outstanding (in shares) | 53,716,306 | 54,637,823 | 53,947,786 | 54,610,091 | ||||
Diluted earnings per share (USD per share) | $ 2.16 | $ 2.50 | $ 5.65 | $ 6.87 | ||||
Anti-dilutive options to purchase common shares excluded from diluted earnings per share calculations (in shares) | 74,588 | 92,014 | 105,219 | 53,356 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | $ 1,839 | $ 1,335 |
Other comprehensive income (loss) before reclassifications | (15) | 38 |
Amounts reclassified from AOCI | (6) | (30) |
Tax effect | 3 | (4) |
Other comprehensive income (loss), net of tax | (18) | 4 |
Ending balance | 1,931 | 1,694 |
Unrealized (loss) gain on sales hedging | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | 2 | 12 |
Other comprehensive income (loss) before reclassifications | (11) | 41 |
Amounts reclassified from AOCI | (6) | (32) |
Tax effect | 3 | (2) |
Other comprehensive income (loss), net of tax | (14) | 7 |
Ending balance | (12) | 19 |
Unrealized gain (loss) on forward interest rate swaps | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | 0 | 0 |
Other comprehensive income (loss) before reclassifications | 0 | 0 |
Amounts reclassified from AOCI | 0 | 2 |
Tax effect | 0 | (2) |
Other comprehensive income (loss), net of tax | 0 | 0 |
Ending balance | 0 | 0 |
Foreign currency translation adjustments | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | (46) | (47) |
Other comprehensive income (loss) before reclassifications | (4) | (3) |
Amounts reclassified from AOCI | 0 | 0 |
Tax effect | 0 | 0 |
Other comprehensive income (loss), net of tax | (4) | (3) |
Ending balance | (50) | (50) |
Total | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | (44) | (35) |
Ending balance | $ (62) | $ (31) |
Accounts Receivable Factoring (
Accounts Receivable Factoring (Details) € in Millions, $ in Millions | 9 Months Ended | |||
Sep. 26, 2020USD ($) | Sep. 28, 2019USD ($) | May 31, 2020EUR (€) | Dec. 31, 2019USD ($) | |
Transfer of Financial Assets Accounted for as Sales [Line Items] | ||||
Maximum uncollected receivables available | $ 125 | € 150 | ||
Sale of account receivables | 857 | $ 248 | ||
Accounts receivables sold | 92 | $ 60 | ||
Cash collections not yet remitted to banks | 106 | $ 33 | ||
Prepaid expenses and other current assets | ||||
Transfer of Financial Assets Accounted for as Sales [Line Items] | ||||
Deposits | $ 29 |
Segment Information & Geograp_3
Segment Information & Geographic Data (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020USD ($) | Sep. 28, 2019USD ($) | Sep. 26, 2020USD ($)segment | Sep. 28, 2019USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Total Net sales | $ 1,132 | $ 1,130 | $ 3,140 | $ 3,293 |
Total Operating income | 150 | 185 | 420 | 504 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 1,134 | 1,130 | 3,142 | 3,293 |
Total Operating income | 199 | 226 | 517 | 616 |
Corporate, eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | (2) | 0 | (2) | 0 |
Total Operating income | (49) | (41) | (97) | (112) |
AIT | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 346 | 373 | 992 | 1,100 |
AIT | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 346 | 373 | 992 | 1,100 |
Total Operating income | 79 | 93 | 216 | 269 |
EVM | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 788 | 757 | 2,150 | 2,193 |
Total Operating income | $ 120 | $ 133 | $ 301 | $ 347 |
Segment Information & Geograp_4
Segment Information & Geographic Data - Geographic Data for Net Sales (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Segment Reporting Information [Line Items] | ||||
Total Net sales | $ 1,132 | $ 1,130 | $ 3,140 | $ 3,293 |
North America | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 629 | 591 | 1,650 | 1,641 |
EMEA | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 340 | 346 | 1,034 | 1,082 |
Asia-Pacific | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 115 | 133 | 322 | 399 |
Latin America | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | $ 48 | $ 60 | $ 134 | $ 171 |