Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended |
Mar. 31, 2015 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | SHERWIN WILLIAMS CO |
Entity Central Index Key | 89800 |
Document Type | 10-Q |
Document Period End Date | 31-Mar-15 |
Amendment Flag | FALSE |
Document Fiscal Year Focus | 2015 |
Document Fiscal Period Focus | Q1 |
Current Fiscal Year End Date | -19 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 93,186,295 |
Statements_of_Consolidated_Inc
Statements of Consolidated Income and Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Net sales | $2,450,284 | $2,366,556 |
Cost of goods sold | 1,317,835 | 1,300,655 |
Gross profit | 1,132,449 | 1,065,901 |
Percent to net sales | 46.20% | 45.00% |
Selling, general and administrative expenses | 929,197 | 884,088 |
Percent to net sales | 37.90% | 37.40% |
Other general income - net | -1,673 | -572 |
Interest expense | 12,351 | 16,394 |
Interest and net investment income | -422 | -589 |
Other (income) expense - net | -245 | 503 |
Income before income taxes | 193,241 | 166,077 |
Income taxes | 61,837 | 50,620 |
Net income | 131,404 | 115,457 |
Net income per common share: | ||
Basic (in dollars per share) | $1.41 | $1.16 |
Diluted (in dollars per share) | $1.38 | $1.14 |
Average shares outstanding - basic (in shares) | 92,740,059 | 98,833,210 |
Average shares and equivalents outstanding - diluted (in shares) | 94,745,129 | 100,858,881 |
Comprehensive income | $75,057 | $107,254 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |||
Current assets: | |||
Cash and cash equivalents | $64,013 | $40,732 | $366,465 |
Accounts receivable, less allowance | 1,234,612 | 1,130,565 | 1,174,116 |
Inventories: | |||
Finished goods | 981,334 | 841,784 | 898,701 |
Work in process and raw materials | 179,916 | 191,743 | 198,082 |
Total net inventory | 1,161,250 | 1,033,527 | 1,096,783 |
Deferred income taxes | 107,869 | 109,087 | 102,473 |
Other current assets | 198,046 | 252,869 | 227,641 |
Total current assets | 2,765,790 | 2,566,780 | 2,967,478 |
Goodwill | 1,149,121 | 1,158,346 | 1,174,758 |
Intangible assets | 277,919 | 289,127 | 312,295 |
Deferred pension assets | 250,463 | 250,144 | 303,067 |
Other assets | 417,525 | 420,625 | 427,233 |
Property, plant and equipment: | |||
Land | 121,626 | 125,691 | 129,457 |
Buildings | 691,541 | 698,202 | 705,034 |
Machinery and equipment | 1,946,261 | 1,952,037 | 1,871,287 |
Construction in progress | 63,419 | 59,330 | 48,946 |
Total gross property, plant and equipment | 2,822,847 | 2,835,260 | 2,754,724 |
Less allowances for depreciation | 1,824,415 | 1,814,230 | 1,750,330 |
Total net property, plant and equipment | 998,432 | 1,021,030 | 1,004,394 |
Total Assets | 5,859,250 | 5,706,052 | 6,189,225 |
Current liabilities: | |||
Short-term borrowings | 1,405,369 | 679,436 | 87,378 |
Accounts payable | 1,174,840 | 1,042,182 | 1,130,338 |
Compensation and taxes withheld | 249,707 | 360,458 | 232,995 |
Accrued taxes | 77,602 | 86,744 | 76,538 |
Current portion of long-term debt | 3,143 | 3,265 | 502,223 |
Other accruals | 468,384 | 508,581 | 423,172 |
Total current liabilities | 3,379,045 | 2,680,666 | 2,452,644 |
Long-term debt | 1,122,741 | 1,122,715 | 1,122,396 |
Postretirement benefits other than pensions | 278,771 | 277,892 | 270,485 |
Other long-term liabilities | 609,521 | 628,309 | 690,661 |
Shareholders’ equity: | |||
Common stock - $1.00 par value 93,186,295, 94,704,173 and 99,651,879 shares outstanding at March 31, 2015, December 31, 2014 and March 31, 2014 respectively | 115,118 | 114,525 | 113,839 |
Preferred stock - convertible, no par value: 21,588 shares outstanding at March 31, 2014 | 0 | 0 | 21,588 |
Unearned ESOP compensation | 0 | 0 | -21,588 |
Other capital | 2,187,144 | 2,079,639 | 1,951,076 |
Retained earnings | 2,493,469 | 2,424,674 | 1,834,417 |
Treasury stock, at cost | -3,798,254 | -3,150,410 | -1,917,046 |
Cumulative other comprehensive loss | -528,305 | -471,958 | -329,247 |
Total shareholders' equity | 469,172 | 996,470 | 1,653,039 |
Total Liabilities and Shareholders’ Equity | $5,859,250 | $5,706,052 | $6,189,225 |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
Statement of Financial Position [Abstract] | |||
Common stock, par value (usd per share) | $1 | $1 | $1 |
Common stock, shares outstanding | 93,186,295 | 94,704,173 | 99,651,879 |
Preferred stock, par value (usd per share) | |||
Preferred stock, shares outstanding | 0 | 0 | 21,588 |
Condensed_Statements_of_Consol
Condensed Statements of Consolidated Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
OPERATING ACTIVITIES | ||
Net income | $131,404 | $115,457 |
Adjustments to reconcile net income to net operating cash: | ||
Depreciation | 42,500 | 41,408 |
Amortization of intangible assets | 6,905 | 7,552 |
Stock-based compensation expense | 18,079 | 15,858 |
Provisions for qualified exit costs | 761 | 2,897 |
Provisions for environmental-related matters | 1,050 | -434 |
Defined benefit pension plans net cost | 1,787 | 1,813 |
Net increase in postretirement liability | -111 | 1,485 |
Other | -2,702 | 2,747 |
Change in working capital accounts - net | -254,221 | -257,041 |
Costs incurred for environmental-related matters | -2,875 | -3,384 |
Costs incurred for qualified exit costs | -1,966 | -529 |
Other | 4,321 | -10,948 |
Net operating cash | -55,068 | -83,119 |
INVESTING ACTIVITIES | ||
Capital expenditures | -42,903 | -29,364 |
Proceeds from sale of assets | 6,677 | 0 |
Increase in other investments | -56 | -15,705 |
Net investing cash | -36,282 | -45,069 |
FINANCING ACTIVITIES | ||
Net increase (decrease) in short-term borrowings | 731,733 | -8,932 |
Payments of long-term debt | -96 | -680 |
Payments of cash dividends | -62,609 | -55,090 |
Proceeds from stock options exercised | 37,494 | 48,657 |
Income tax effect of stock-based compensation exercises and vesting | 52,632 | 39,896 |
Treasury stock purchased | -614,911 | -256,391 |
Other | -33,108 | -21,766 |
Net financing cash | 111,135 | -254,306 |
Effect of exchange rate changes on cash | 3,496 | 4,070 |
Net increase (decrease) in cash and cash equivalents | 23,281 | -378,424 |
Cash and cash equivalents at beginning of year | 40,732 | 744,889 |
Cash and cash equivalents at end of period | 64,013 | 366,465 |
Income taxes paid | 16,044 | 13,028 |
Interest paid | $9,381 | $10,359 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. | |
There have been no significant changes in critical accounting policies since December 31, 2014. Accounting estimates were revised as necessary during the first three months of 2015 based on new information and changes in facts and circumstances. Certain amounts in the 2014 condensed consolidated financial statements have been reclassified to conform to the 2015 presentation. | |
The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors. The final year-end valuation of inventory is based on an annual physical inventory count performed during the fourth quarter. For further information on inventory valuations and other matters, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2014. | |
The consolidated results for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015. |
Impact_of_Recently_Issued_Acco
Impact of Recently Issued Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
Effective January 1, 2015, the Company adopted Accounting Standards Update (ASU) No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects," which allows companies to elect to use the proportional amortization method to account for investments in qualified affordable housing projects if certain conditions are met. Under the proportional amortization method, which replaces the effective yield method, the cost of the investment is amortized in proportion to the tax credits and other tax benefits received to income tax expense. The adoption of ASU No. 2014-01 did not have a material effect on the Company's results of operations, financial condition or liquidity. | |
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, "Revenue Recognition - Revenue from Contracts with Customers," which is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard is effective for interim and annual periods beginning after December 15, 2016, however, the FASB has proposed a one-year deferral. Either full retrospective adoption or modified retrospective adoption is permitted. The Company is in the process of evaluating the impact of the standard. |
Dividends
Dividends | 3 Months Ended |
Mar. 31, 2015 | |
Dividends [Abstract] | |
DIVIDENDS | DIVIDENDS |
Dividends paid on common stock during the first quarter of 2015 and 2014 were $.67 per common share and $.55 per common share, respectively. |
Changes_in_Cumulative_Other_Co
Changes in Cumulative Other Comprehensive Loss | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||||||||||||||
CHANGES IN CUMULATIVE OTHER COMPREHENSIVE LOSS | CHANGES IN CUMULATIVE OTHER COMPREHENSIVE LOSS | |||||||||||||||
The following tables summarize the changes in Cumulative other comprehensive loss for the three months ended March 31, 2015 and 2014: | ||||||||||||||||
(Thousands of dollars) | ||||||||||||||||
Foreign Currency Translation Adjustments | Net Actuarial (Losses) Gains and Prior Service Costs Recognized for Employee Benefit Plans | Unrealized Net Gains (Losses) on Available-for-Sale Securities | Total Cumulative Other Comprehensive Loss | |||||||||||||
Balance at December 31, 2014 | $ | (354,384 | ) | $ | (118,167 | ) | $ | 593 | $ | (471,958 | ) | |||||
Other comprehensive loss before reclassifications(1) | (56,776 | ) | (132 | ) | (56,908 | ) | ||||||||||
Amounts reclassified from other comprehensive (loss) income(2) | 570 | (9 | ) | 561 | ||||||||||||
Net other comprehensive (loss) income | (56,776 | ) | 570 | (141 | ) | (56,347 | ) | |||||||||
Balance at March 31, 2015 | $ | (411,160 | ) | $ | (117,597 | ) | $ | 452 | $ | (528,305 | ) | |||||
(1) Net of taxes of $81 for unrealized net losses on available-for-sale securities. | ||||||||||||||||
(2) Net of taxes of $(206) for net actuarial losses and prior service costs recognized for employee benefit plans and $4 for realized gains on the sale of available-for-sale securities. | ||||||||||||||||
(Thousands of dollars) | ||||||||||||||||
Foreign Currency Translation Adjustments | Net Actuarial Losses and Prior Service Costs Recognized for Employee Benefit Plans | Unrealized Net Gains (Losses) on Available-for-Sale Securities | Total Cumulative Other Comprehensive Loss | |||||||||||||
Balance at December 31, 2013 | $ | (250,942 | ) | $ | (70,611 | ) | $ | 509 | $ | (321,044 | ) | |||||
Other comprehensive loss before reclassifications(3) | (8,055 | ) | (570 | ) | (65 | ) | (8,690 | ) | ||||||||
Amounts reclassified from other comprehensive (loss) income(4) | 504 | (17 | ) | 487 | ||||||||||||
Net other comprehensive (loss) income | (8,055 | ) | (66 | ) | (82 | ) | (8,203 | ) | ||||||||
Balance at March 31, 2014 | $ | (258,997 | ) | $ | (70,677 | ) | $ | 427 | $ | (329,247 | ) | |||||
(3) Net of taxes of $244 for net actuarial losses and prior service costs recognized for employee benefit plans and $41 for unrealized net losses on available-for-sale securities. | ||||||||||||||||
(4) Net of taxes of $(207) for net actuarial losses and prior service costs recognized for employee benefit plans and $11 for realized gains on the sale of available-for-sale securities. |
Product_Warranties
Product Warranties | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Product Warranties Disclosures [Abstract] | ||||||||
PRODUCT WARRANTIES | PRODUCT WARRANTIES | |||||||
Changes in the Company’s accrual for product warranty claims during the first three months of 2015 and 2014, including customer satisfaction settlements, were as follows: | ||||||||
(Thousands of dollars) | ||||||||
2015 | 2014 | |||||||
Balance at January 1 | $ | 27,723 | $ | 26,755 | ||||
Charges to expense | 5,146 | 6,260 | ||||||
Settlements | (6,721 | ) | (7,516 | ) | ||||
Balance at March 31 | $ | 26,148 | $ | 25,499 | ||||
For further details on the Company’s accrual for product warranty claims, see Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. |
Exit_or_Disposal_Activities
Exit or Disposal Activities | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||
EXIT OR DISPOSAL ACTIVITIES | EXIT OR DISPOSAL ACTIVITIES | ||||||||||||||||
Liabilities associated with exit or disposal activities are recognized as incurred in accordance with the Exit or Disposal Cost Obligations Topic of the ASC. Qualified exit costs primarily include post-closure rent expenses, incremental post-closure costs and costs of employee terminations. Adjustments may be made to liabilities accrued for qualified exit costs if information becomes available upon which more accurate amounts can be reasonably estimated. Concurrently, property, plant and equipment is tested for impairment in accordance with the Property, Plant and Equipment Topic of the ASC, and if impairment exists, the carrying value of the related assets is reduced to estimated fair value. Additional impairment may be recorded for subsequent revisions in estimated fair value. | |||||||||||||||||
In the three months ended March 31, 2015, fourteen stores in the Paint Stores Group and one store in the Latin America Coatings Group were closed due to lower demand or redundancy. No provisions were incurred for the 2015 store shutdowns due to the timing of lease cancellations and movement of employees to other locations. | |||||||||||||||||
The following table summarizes the activity and remaining liabilities associated with qualified exit costs at March 31, 2015: | |||||||||||||||||
(Thousands of dollars) | |||||||||||||||||
Exit Plan | Balance at December 31, 2014 | Provisions in Cost of goods sold or SG&A | Actual expenditures charged to accrual | Balance at March 31, 2015 | |||||||||||||
Paint Stores Group stores shutdown in 2014: | |||||||||||||||||
Other qualified exit costs | $ | 280 | $ | 142 | $ | (82 | ) | $ | 340 | ||||||||
Consumer Group facilities shutdown in 2014: | |||||||||||||||||
Severance and related costs | 2,732 | 509 | (643 | ) | 2,598 | ||||||||||||
Other qualified exit costs | 781 | (296 | ) | 485 | |||||||||||||
Global Finishes Group exit of business in 2014: | |||||||||||||||||
Severance and related costs | 104 | (104 | ) | ||||||||||||||
Other qualified exit costs | 1,080 | 110 | (21 | ) | 1,169 | ||||||||||||
Paint Stores Group facility shutdown in 2013: | |||||||||||||||||
Severance and related costs | 654 | (358 | ) | 296 | |||||||||||||
Other qualified exit costs | 1,205 | (98 | ) | 1,107 | |||||||||||||
Global Finishes Group stores shutdown in 2013: | |||||||||||||||||
Severance and related costs | 28 | (25 | ) | 3 | |||||||||||||
Other qualified exit costs | 138 | (57 | ) | 81 | |||||||||||||
Other qualified exit costs for facilities shutdown prior to 2013 | 1,514 | (282 | ) | 1,232 | |||||||||||||
Totals | $ | 8,516 | $ | 761 | $ | (1,966 | ) | $ | 7,311 | ||||||||
For further details on the Company’s exit or disposal activities, see Note 5 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. |
Health_Care_Pension_and_Other_
Health Care, Pension and Other Benefits | 3 Months Ended | |||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||
HEALTH CARE, PENSION AND OTHER BENEFITS | HEALTH CARE, PENSION AND OTHER BENEFITS | |||||||||||||||||||||||
Shown below are the components of the Company’s net periodic benefit cost (credit) for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions: | ||||||||||||||||||||||||
(Thousands of dollars) | Domestic Defined | Foreign Defined | Postretirement | |||||||||||||||||||||
Benefit Pension Plans | Benefit Pension Plans | Benefits Other than | ||||||||||||||||||||||
Pensions | ||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Three Months Ended March 31: | ||||||||||||||||||||||||
Net periodic benefit cost (credit): | ||||||||||||||||||||||||
Service cost | $ | 5,754 | $ | 5,637 | $ | 1,325 | $ | 1,547 | $ | 621 | $ | 609 | ||||||||||||
Interest cost | 6,237 | 6,526 | 2,271 | 2,694 | 2,795 | 3,195 | ||||||||||||||||||
Expected return on assets | (13,024 | ) | (12,666 | ) | (2,431 | ) | (2,740 | ) | ||||||||||||||||
Amortization of: | ||||||||||||||||||||||||
Prior service cost (credit) | 327 | 459 | (1,132 | ) | (126 | ) | ||||||||||||||||||
Actuarial loss | 843 | 485 | 356 | 253 | ||||||||||||||||||||
Net periodic benefit cost (credit) | $ | 137 | $ | (44 | ) | $ | 1,650 | $ | 1,857 | $ | 2,537 | $ | 3,678 | |||||||||||
For further details on the Company’s health care, pension and other benefits, see Note 6 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. |
Other_LongTerm_Liabilities
Other Long-Term Liabilities | 3 Months Ended |
Mar. 31, 2015 | |
Environmental Remediation Obligations [Abstract] | |
OTHER LONG-TERM LIABILITIES | OTHER LONG-TERM LIABILITIES |
The Company initially provides for estimated costs of environmental-related activities relating to its past operations and third party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment. These estimated costs are determined based on currently available facts regarding each site. If the best estimate of costs can only be identified as a range and no specific amount within that range can be determined more likely than any other amount within the range, the minimum of the range is provided. At March 31, 2015, the unaccrued maximum of the estimated range of possible outcomes is $89.4 million higher than the minimum. | |
The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Actual costs incurred may vary from these estimates due to the inherent uncertainties involved including, among others, the number and financial condition of parties involved with respect to any given site, the volumetric contribution which may be attributed to the Company relative to that attributed to other parties, the nature and magnitude of the wastes involved, the various technologies that can be used for remediation and the determination of acceptable remediation with respect to a particular site. | |
Included in Other long-term liabilities at March 31, 2015 and 2014 were accruals for extended environmental-related activities of $112.9 million and $83.3 million, respectively. Estimated costs of current investigation and remediation activities of $16.9 million and $15.4 million are included in Other accruals at March 31, 2015 and 2014, respectively. | |
Two of the Company’s currently and formerly owned manufacturing sites account for the majority of the accrual for environmental-related activities and the unaccrued maximum of the estimated range of possible outcomes at March 31, 2015. At March 31, 2015, $81.9 million, or 63.1 percent of the total accrual, related directly to these two sites. In the aggregate unaccrued maximum of $89.4 million at March 31, 2015, $58.2 million, or 65.1 percent, related to the two manufacturing sites. While environmental investigations and remedial actions are in different stages at these sites, additional investigations, remedial actions and monitoring will likely be required at each site. | |
Management cannot presently estimate the ultimate potential loss contingencies related to these sites or other less significant sites until such time as a substantial portion of the investigation at the sites is completed and remedial action plans are developed. In the event any future loss contingency significantly exceeds the current amount accrued, the recording of the ultimate liability may result in a material impact on net income for the annual or interim period during which the additional costs are accrued. Management does not believe that any potential liability ultimately attributed to the Company for its environmental-related matters will have a material adverse effect on the Company’s financial condition, liquidity, or cash flow due to the extended period of time during which environmental investigation and remediation takes place. An estimate of the potential impact on the Company’s operations cannot be made due to the aforementioned uncertainties. | |
Management expects these contingent environmental-related liabilities to be resolved over an extended period of time. Management is unable to provide a more specific time frame due to the indefinite amount of time to conduct investigation activities at any site, the indefinite amount of time to obtain environmental agency approval, as necessary, with respect to investigation and remediation activities, and the indefinite amount of time necessary to conduct remediation activities. | |
For further details on the Company’s Other long-term liabilities, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2015 | |
Loss Contingency, Information about Litigation Matters [Abstract] | |
LITIGATION | LITIGATION |
In the course of its business, the Company is subject to a variety of claims and lawsuits, including, but not limited to, litigation relating to product liability and warranty, personal injury, environmental, intellectual property, commercial, contractual and antitrust claims that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. These uncertainties will ultimately be resolved when one or more future events occur or fail to occur confirming the incurrence of a liability or the reduction of a liability. In accordance with the Contingencies Topic of the ASC, the Company accrues for these contingencies by a charge to income when it is both probable that one or more future events will occur confirming the fact of a loss and the amount of the loss can be reasonably estimated. In the event that the Company’s loss contingency is ultimately determined to be significantly higher than currently accrued, the recording of the additional liability may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such additional liability is accrued. In those cases where no accrual is recorded because it is not probable that a liability has been incurred and the amount of any such loss cannot be reasonably estimated, any potential liability ultimately determined to be attributable to the Company may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued. In those cases where no accrual is recorded or exposure to loss exists in excess of the amount accrued, the Contingencies Topic of the ASC requires disclosure of the contingency when there is a reasonable possibility that a loss or additional loss may have been incurred. | |
Lead pigment and lead-based paint litigation. The Company’s past operations included the manufacture and sale of lead pigments and lead-based paints. The Company, along with other companies, is and has been a defendant in a number of legal proceedings, including individual personal injury actions, purported class actions, and actions brought by various counties, cities, school districts and other government-related entities, arising from the manufacture and sale of lead pigments and lead-based paints. The plaintiffs’ claims have been based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practice and consumer protection laws, enterprise liability, market share liability, public nuisance, unjust enrichment and other theories. The plaintiffs seek various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others. The Company has also been a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints that seek recovery based upon various legal theories, including the failure to adequately warn of potential exposure to lead during surface preparation when using non-lead-based paint on surfaces previously painted with lead-based paint. The Company believes that the litigation brought to date is without merit or subject to meritorious defenses and is vigorously defending such litigation. The Company has not settled any material lead pigment or lead-based paint litigation. The Company expects that additional lead pigment and lead-based paint litigation may be filed against the Company in the future asserting similar or different legal theories and seeking similar or different types of damages and relief. | |
Notwithstanding the Company’s views on the merits, litigation is inherently subject to many uncertainties, and the Company ultimately may not prevail. Adverse court rulings or determinations of liability, among other factors, could affect the lead pigment and lead-based paint litigation against the Company and encourage an increase in the number and nature of future claims and proceedings. In addition, from time to time, various legislation and administrative regulations have been enacted, promulgated or proposed to impose obligations on present and former manufacturers of lead pigments and lead-based paints respecting asserted health concerns associated with such products or to overturn the effect of court decisions in which the Company and other manufacturers have been successful. | |
Due to the uncertainties involved, management is unable to predict the outcome of the lead pigment and lead-based paint litigation, the number or nature of possible future claims and proceedings or the effect that any legislation and/or administrative regulations may have on the litigation or against the Company. In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or resulting from any such legislation and regulations. The Company has not accrued any amounts for such litigation. With respect to such litigation, including the public nuisance litigation, the Company does not believe that it is probable that a loss has occurred, and it is not possible to estimate the range of potential losses as there is no prior history of a loss of this nature and there is no substantive information upon which an estimate could be based. In addition, any potential liability that may result from any changes to legislation and regulations cannot reasonably be estimated. In the event any significant liability is determined to be attributable to the Company relating to such litigation, the recording of the liability may result in a material impact on net income for the annual or interim period during which such liability is accrued. Additionally, due to the uncertainties associated with the amount of any such liability and/or the nature of any other remedy which may be imposed in such litigation, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition. An estimate of the potential impact on the Company’s results of operations, liquidity or financial condition cannot be made due to the aforementioned uncertainties. | |
Public nuisance claim litigation. The Company and other companies are or were defendants in legal proceedings seeking recovery based on public nuisance liability theories, among other theories, brought by the State of Rhode Island, the City of St. Louis, Missouri, various cities and counties in the State of New Jersey, various cities in the State of Ohio and the State of Ohio, the City of Chicago, Illinois, the City of Milwaukee, Wisconsin and the County of Santa Clara, California and other public entities in the State of California. Except for the Santa Clara County, California proceeding, all of these legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings. | |
The proceedings initiated by the State of Rhode Island included two jury trials. At the conclusion of the second trial, the jury returned a verdict finding that (i) the cumulative presence of lead pigment in paints and coatings on buildings in the State of Rhode Island constitutes a public nuisance, (ii) the Company, along with two other defendants, caused or substantially contributed to the creation of the public nuisance and (iii) the Company and two other defendants should be ordered to abate the public nuisance. The Company and two other defendants appealed and, on July 1, 2008, the Rhode Island Supreme Court, among other determinations, reversed the judgment of abatement with respect to the Company and two other defendants. The Rhode Island Supreme Court’s decision reversed the public nuisance liability judgment against the Company on the basis that the complaint failed to state a public nuisance claim as a matter of law. | |
The Santa Clara County, California proceeding was initiated in March 2000 in the Superior Court of the State of California, County of Santa Clara. In the original complaint, the plaintiffs asserted various claims including fraud and concealment, strict product liability/failure to warn, strict product liability/design defect, negligence, negligent breach of a special duty, public nuisance, private nuisance, and violations of California’s Business and Professions Code. A number of the asserted claims were resolved in favor of the defendants through pre-trial proceedings. The named plaintiffs in the Fourth Amended Complaint, filed on March 16, 2011, are the Counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano and Ventura, the Cities of Oakland and San Diego and the City and County of San Francisco. The Fourth Amended Complaint asserted a sole claim for public nuisance, alleging that the presence of lead pigments for use in paint and coatings in, on and around residences in the plaintiffs’ jurisdictions constitutes a public nuisance. The plaintiffs sought the abatement of the alleged public nuisance that exists within the plaintiffs’ jurisdictions. A trial commenced on July 15, 2013 and ended on August 22, 2013. The court entered final judgment on January 27, 2014, finding in favor of the plaintiffs and against the Company and two other defendants (ConAgra Grocery Products Company and NL Industries, Inc.). The final judgment held the Company jointly and severally liable with the other two defendants to pay $1.15 billion into a fund to abate the public nuisance. The Company strongly disagrees with the judgment. On February 18, 2014, the Company filed a motion for new trial and a motion to vacate the judgment. The court denied these motions on March 24, 2014. On March 28, 2014, the Company filed a notice of appeal to the Sixth District Court of Appeal for the State of California. The filing of the notice of appeal effects an automatic stay of the judgment without the requirement to post a bond. The Company believes that the judgment conflicts with established principles of law and is unsupported by the evidence. The Company has had a favorable history with respect to lead pigment and lead-based paint litigation, particularly other public nuisance litigation, and accordingly, the Company believes that it is not probable that a loss has occurred and it is not possible to estimate the range of potential loss with respect to the case. | |
Litigation seeking damages from alleged personal injury. The Company and other companies are defendants in a number of legal proceedings seeking monetary damages and other relief from alleged personal injuries. These proceedings include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint and claims for damages allegedly incurred by the children’s parents or guardians. These proceedings generally seek compensatory and punitive damages, and seek other relief including medical monitoring costs. These proceedings include purported claims by individuals, groups of individuals and class actions. | |
The plaintiff in Thomas v. Lead Industries Association, et al., initiated an action in state court against the Company, other alleged former lead pigment manufacturers and the Lead Industries Association in September 1999. The claims against the Company and the other defendants included strict liability, negligence, negligent misrepresentation and omissions, fraudulent misrepresentation and omissions, concert of action, civil conspiracy and enterprise liability. Implicit within these claims is the theory of “risk contribution” liability (Wisconsin’s theory which is similar to market share liability, except that liability can be joint and several) due to the plaintiff’s inability to identify the manufacturer of any product that allegedly injured the plaintiff. The case ultimately proceeded to trial and, on November 5, 2007, the jury returned a defense verdict, finding that the plaintiff had ingested white lead carbonate, but was not brain damaged or injured as a result. The plaintiff appealed and, on December 16, 2010, the Wisconsin Court of Appeals affirmed the final judgment in favor of the Company and other defendants. | |
Wisconsin is the only jurisdiction to date to apply a theory of liability with respect to alleged personal injury (i.e., risk contribution/market share liability) that does not require the plaintiff to identify the manufacturer of the product that allegedly injured the plaintiff in the lead pigment and lead-based paint litigation. Although the risk contribution liability theory was applied during the Thomas trial, the constitutionality of this theory as applied to the lead pigment cases has not been judicially determined by the Wisconsin state courts. However, in an unrelated action filed in the United States District Court for the Eastern District of Wisconsin, Gibson v. American Cyanamid, et al., on November 15, 2010, the District Court held that Wisconsin’s risk contribution theory as applied in that case violated the defendants’ right to substantive due process and is unconstitutionally retroactive. The District Court's decision in Gibson v. American Cyanamid, et al., was appealed by the plaintiff to the United States Court of Appeals for the Seventh Circuit. On July 24, 2014, the United States Court of Appeals for the Seventh Circuit reversed the judgment and remanded the case back to the District Court for further proceedings. On January 16, 2015, the defendants filed a petition for certiorari in the United States Supreme Court seeking that Court's review of the Seventh Circuit's decision. Also, in Yasmine Clark v. The Sherwin-Williams Company, et al., the Wisconsin Circuit Court, Milwaukee County, on March 25, 2014, held that the application to a pending case of Section 895.046 of the Wisconsin Statutes (which clarifies the application of the risk contribution theory) is unconstitutional as a violation of the plaintiff’s right to due process of law under the Wisconsin Constitution. On April 8, 2014, defendants filed a petition requesting the Wisconsin Court of Appeal to hear the issue as an interlocutory appeal. On August 21, 2014, the Wisconsin Court of Appeal granted defendants' petition. | |
Insurance coverage litigation. The Company and its liability insurers, including certain underwriters at Lloyd’s of London, initiated legal proceedings against each other to primarily determine, among other things, whether the costs and liabilities associated with the abatement of lead pigment are covered under certain insurance policies issued to the Company. The Company’s action, filed on March 3, 2006 in the Common Pleas Court, Cuyahoga County, Ohio, is currently stayed and inactive. The liability insurers’ action, which was filed on February 23, 2006 in the Supreme Court of the State of New York, County of New York, has been dismissed. An ultimate loss in the insurance coverage litigation would mean that insurance proceeds could be unavailable under the policies at issue to mitigate any ultimate abatement related costs and liabilities. The Company has not recorded any assets related to these insurance policies or otherwise assumed that proceeds from these insurance policies would be received in estimating any contingent liability accrual. Therefore, an ultimate loss in the insurance coverage litigation without a determination of liability against the Company in the lead pigment or lead-based paint litigation will have no impact on the Company’s results of operation, liquidity or financial condition. As previously stated, however, the Company has not accrued any amounts for the lead pigment or lead-based paint litigation and any significant liability ultimately determined to be attributable to the Company relating to such litigation may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued. | |
Litigation related to Consorcio Comex. As previously disclosed, the Company entered into a definitive Stock Purchase Agreement (as subsequently amended and restated, the “Purchase Agreement”), with Avisep, S.A. de C.V. (“Avisep”) and Bevisep, S.A. de C.V. (“Bevisep”) to, among other things, acquire the Mexico business of Consorcio Comex, S.A. de C.V. (the "Acquisition"). Under the terms of the Purchase Agreement, either the Company or Avisep and Bevisep had the right to terminate the Purchase Agreement in the event that the closing of the Acquisition did not occur on or prior to March 31, 2014 and such party was not in material breach of the Purchase Agreement. | |
On April 3, 2014, the Company sent notice to Avisep and Bevisep that the Company was terminating the Purchase Agreement. On April 3, 2014, the Company filed a complaint for declaratory judgment in the Supreme Court of the State of New York, New York County, requesting the court to declare that the Company had used commercially reasonable efforts as required under the Purchase Agreement and has not breached the Purchase Agreement. On August 7, 2014, the case was removed by Avisep and Bevisep to the United States District Court for the Southern District of New York. On April 11, 2014, Avisep and Bevisep initiated an arbitration proceeding against the Company in the International Court of Arbitration contending that the Company breached the Purchase Agreement by terminating the Purchase Agreement and not utilizing commercially reasonable efforts under the Purchase Agreement, which allegedly caused Avisep and Bevisep to incur damages. The Company believes that the claims are without merit and intends to vigorously defend against such claims. | |
Titanium dioxide suppliers antitrust class action lawsuit. The Company is a member of the plaintiff class related to Titanium Dioxide Antitrust Litigation that was initiated in 2010 against certain suppliers alleging various theories of relief arising from purchases of titanium dioxide made from 2003 through 2012. The Court approved a settlement less attorney fees and expense, and the Company timely submitted claims to recover its pro-rata portion of the settlement. There was no specified deadline for the claims administrator to complete the review of all claims submitted. In October 2014, the Company was notified that it would receive a disbursement of settlement funds, and the Company received a pro-rata disbursement net of all fees of approximately $21.4 million. The Company recorded this settlement gain in the fourth quarter of 2014. |
Other
Other | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Other Income and Expenses [Abstract] | ||||||||
OTHER | OTHER | |||||||
Other general income - net | ||||||||
Included in Other general income - net were the following: | ||||||||
(Thousands of dollars) | Three Months Ended | |||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Provisions for environmental matters - net | $ | 1,050 | $ | (434 | ) | |||
Gain on disposition of assets | (2,723 | ) | (138 | ) | ||||
Total | $ | (1,673 | ) | $ | (572 | ) | ||
Provisions for environmental matters - net represent site-specific increases or decreases to environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Environmental-related accruals are not recorded net of insurance proceeds in accordance with the Offsetting Subtopic of the Balance Sheet Topic of the ASC. See Note 8 for further details on the Company’s environmental-related activities. | ||||||||
The gain on disposition of assets represents net realized gains associated with the disposal of fixed assets previously used in the conduct of the primary business of the Company. | ||||||||
Other (income) expense - net | ||||||||
Included in Other (income) expense - net were the following: | ||||||||
(Thousands of dollars) | Three Months Ended | |||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Dividend and royalty income | $ | (1,081 | ) | $ | (1,051 | ) | ||
Net expense from financing activities | 2,967 | 2,922 | ||||||
Foreign currency transaction related losses | 1,138 | 2,858 | ||||||
Other income | (5,497 | ) | (6,306 | ) | ||||
Other expense | 2,228 | 2,080 | ||||||
Total | $ | (245 | ) | $ | 503 | |||
The net expense from financing activities includes the net expense relating to the change in the Company’s financing fees. | ||||||||
Foreign currency transaction related losses represent net realized losses on U.S. dollar-denominated liabilities of foreign subsidiaries and net realized and unrealized losses from foreign currency option and forward contracts. There were no foreign currency option and forward contracts outstanding at March 31, 2015 and 2014. | ||||||||
Other income and Other expense included items of revenue, gains, expenses and losses that were unrelated to the primary business purpose of the Company. There were no other items within the other income or other expense caption that were individually significant. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES |
The effective tax rate was 32.0 percent for the first quarter of 2015 compared to 30.5 percent for the first quarter of 2014. The increase in the effective tax rate was primarily due to the reduction in tax benefits related to federal income tax credits as well as a decrease in miscellaneous discrete tax benefits reflected in the first quarter of 2015 compared to the first quarter of 2014. | |
At December 31, 2014, the Company had $31.6 million in unrecognized tax benefits, the recognition of which would have an effect of $28.2 million on the current provision for income taxes. Included in the balance of unrecognized tax benefits at December 31, 2014, was $4.4 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in unrecognized tax benefits comprised of items related to federal audits of partnership investments, assessed state income tax audits, state settlement negotiations currently in progress and expiring statutes in federal, foreign and state jurisdictions. | |
The Company classifies all income tax related interest and penalties as income tax expense. At December 31, 2014, the Company had accrued $5.7 million for the potential payment of income tax interest and penalties. | |
There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2014 during the first three months of 2015. | |
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The IRS commenced an examination of the Company's U.S. income tax returns for the 2010, 2011 and 2012 tax years in the fourth quarter of 2013. The audits are expected to be completed during 2015. | |
As of March 31, 2015, the Company is subject to non-U.S. income tax examinations for the tax years of 2007 through 2014. In addition, the Company is subject to state and local income tax examinations for the tax years 2004 through 2014. |
Net_Income_Per_Common_Share
Net Income Per Common Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
NET INCOME PER COMMON SHARE | NET INCOME PER COMMON SHARE | |||||||
(Thousands of dollars except per share data) | Three Months Ended | |||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Basic | ||||||||
Average common shares outstanding | 92,740,059 | 98,833,210 | ||||||
Net income | $ | 131,404 | $ | 115,457 | ||||
Less net income allocated to unvested restricted shares | (475 | ) | (523 | ) | ||||
Net income allocated to common shares | $ | 130,929 | $ | 114,934 | ||||
Basic net income per common share | $ | 1.41 | $ | 1.16 | ||||
Diluted | ||||||||
Average common shares outstanding | 92,740,059 | 98,833,210 | ||||||
Stock options and other contingently issuable shares (1) | 2,005,070 | 2,025,671 | ||||||
Average common shares outstanding assuming dilution | 94,745,129 | 100,858,881 | ||||||
Net income | $ | 131,404 | $ | 115,457 | ||||
Less net income allocated to unvested restricted shares | ||||||||
assuming dilution | (467 | ) | (515 | ) | ||||
Net income allocated to common shares assuming | ||||||||
dilution | $ | 130,937 | $ | 114,942 | ||||
Diluted net income per common share | $ | 1.38 | $ | 1.14 | ||||
(1) | Stock options and other contingently issuable shares excluded 12,414 and 2,932 shares due to their anti-dilutive effect for the three months ended March 31, 2015 and 2014, respectively. | |||||||
The Company has two classes of participating securities: common shares and restricted shares, representing 99% and 1% of outstanding shares, respectively. The restricted shares are shares of unvested restricted stock granted under the Company’s restricted stock award program. Time-based restricted shares receive non-forfeitable dividends, while dividends on performance-based restricted shares are deferred and payment is contingent upon the awards vesting. The time-based restricted shares are considered a participating security, therefore, basic and diluted earnings per share are calculated using the two-class method in accordance with the Earnings Per Share Topic of the ASC. |
Reportable_Segment_Information
Reportable Segment Information | 3 Months Ended | |||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||
REPORTABLE SEGMENT INFORMATION | REPORTABLE SEGMENT INFORMATION | |||||||||||||||||||||||
The Company reports segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources in accordance with the Segment Disclosures Topic of the ASC. The Company has determined that it has four reportable operating segments: Paint Stores Group, Consumer Group, Global Finishes Group and Latin America Coatings Group (individually, a "Reportable Segment" and collectively, the “Reportable Segments”). | ||||||||||||||||||||||||
(Thousands of dollars) | Three Months Ended March 31, 2015 | |||||||||||||||||||||||
Paint Stores | Consumer | Global | Latin America | Administrative | Consolidated | |||||||||||||||||||
Group | Group | Finishes | Coatings | Totals | ||||||||||||||||||||
Group | Group | |||||||||||||||||||||||
Net external sales | $ | 1,461,505 | $ | 351,690 | $ | 469,556 | $ | 166,231 | $ | 1,302 | $ | 2,450,284 | ||||||||||||
Intersegment transfers | 607,538 | 1,774 | 10,069 | (619,381 | ) | |||||||||||||||||||
Total net sales and intersegment transfers | $ | 1,461,505 | $ | 959,228 | $ | 471,330 | $ | 176,300 | $ | (618,079 | ) | $ | 2,450,284 | |||||||||||
Segment profit | $ | 176,576 | $ | 55,406 | $ | 38,900 | $ | 9,500 | $ | 280,382 | ||||||||||||||
Interest expense | $ | (12,351 | ) | (12,351 | ) | |||||||||||||||||||
Administrative expenses and other | (74,790 | ) | (74,790 | ) | ||||||||||||||||||||
Income before income taxes | $ | 176,576 | $ | 55,406 | $ | 38,900 | $ | 9,500 | $ | (87,141 | ) | $ | 193,241 | |||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||||||||
Paint Stores | Consumer | Global | Latin America | Administrative | Consolidated | |||||||||||||||||||
Group | Group | Finishes | Coatings | Totals | ||||||||||||||||||||
Group | Group | |||||||||||||||||||||||
Net external sales | $ | 1,360,003 | $ | 325,299 | $ | 497,639 | $ | 182,388 | $ | 1,227 | $ | 2,366,556 | ||||||||||||
Intersegment transfers | 546,562 | 1,413 | 10,122 | (558,097 | ) | |||||||||||||||||||
Total net sales and intersegment transfers | $ | 1,360,003 | $ | 871,861 | $ | 499,052 | $ | 192,510 | $ | (556,870 | ) | $ | 2,366,556 | |||||||||||
Segment profit | $ | 146,265 | $ | 51,088 | $ | 46,477 | $ | 9,987 | $ | 253,817 | ||||||||||||||
Interest expense | $ | (16,394 | ) | (16,394 | ) | |||||||||||||||||||
Administrative expenses and other | (71,346 | ) | (71,346 | ) | ||||||||||||||||||||
Income before income taxes | $ | 146,265 | $ | 51,088 | $ | 46,477 | $ | 9,987 | $ | (87,740 | ) | $ | 166,077 | |||||||||||
In the reportable segment financial information, Segment profit was total net sales and intersegment transfers less operating costs and expenses. Domestic intersegment transfers were accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs. International intersegment transfers were accounted for at values comparable to normal unaffiliated customer sales. The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site. Also included in the Administrative segment was interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters, and other expenses which were not directly associated with the Reportable Segments. The Administrative segment did not include any significant foreign operations. Also included in the Administrative segment was a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s headquarters site, and disposal of idle facilities. Sales of this segment represented external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its primary businesses. Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative segment. | ||||||||||||||||||||||||
Net external sales and segment profit of all consolidated foreign subsidiaries were $456.5 million and $18.3 million, respectively, for the first quarter of 2015, and $529.2 million and $32.6 million, respectively, for the first quarter of 2014. Long-lived assets of these subsidiaries totaled $513.8 million and $621.2 million at March 31, 2015 and March 31, 2014, respectively. Domestic operations accounted for the remaining net external sales, segment profits and long-lived assets. No single geographic area outside the United States was significant relative to consolidated net external sales, income before taxes, or consolidated long-lived assets. | ||||||||||||||||||||||||
Export sales and sales to any individual customer were each less than 10 percent of consolidated sales to unaffiliated customers during all periods presented. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS | |||||||||||||
The Fair Value Measurements and Disclosures Topic of the ASC applies to the Company’s financial and non-financial assets and liabilities. The guidance applies when other standards require or permit the fair value measurement of assets and liabilities. It does not expand the use of fair value measurements. The Company did not have any fair value measurements for its non-financial assets and liabilities during the first quarter. The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy: | ||||||||||||||
(Thousands of dollars) | ||||||||||||||
Quoted Prices | ||||||||||||||
in Active | Significant | |||||||||||||
Fair Value at | Markets for | Significant Other | Unobservable | |||||||||||
March 31, | Identical Assets | Observable Inputs | Inputs | |||||||||||
2015 | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Assets: | ||||||||||||||
Deferred compensation plan asset (1) | $ | 24,027 | $ | 1,132 | $ | 22,895 | ||||||||
Liabilities: | ||||||||||||||
Deferred compensation plan liability (2) | $ | 34,012 | $ | 34,012 | ||||||||||
(1) | The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $23,792. | |||||||||||||
(2) | The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices. |
Debt
Debt | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||
DEBT | DEBT | |||||||||||||||
The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy. | ||||||||||||||||
(Thousands of dollars) | 31-Mar-15 | 31-Mar-14 | ||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||||
Amount | Amount | |||||||||||||||
Publicly traded debt | $ | 1,120,982 | $ | 1,165,804 | $ | 1,620,714 | $ | 1,629,928 | ||||||||
Non-traded debt | 4,902 | 4,655 | 3,905 | 3,683 | ||||||||||||
NonTraded_Investments
Non-Traded Investments | 3 Months Ended |
Mar. 31, 2015 | |
Non-Traded Investments [Abstract] | |
NON-TRADED INVESTMENTS | NON-TRADED INVESTMENTS |
The Company has invested in the U.S. affordable housing and historic renovation real estate markets. These non-traded investments have been identified as variable interest entities. However, because the Company does not have the power to direct the day-to-day operations of the investments and the risk of loss is limited to the amount of contributed capital, the Company is not considered the primary beneficiary. In accordance with the Consolidation Topic of the ASC, the investments are not consolidated. For affordable housing investments entered into prior to the January 1, 2015 adoption of ASU No. 2014-01, the Company uses the effective yield method to determine the carrying value of the investments. Under the effective yield method, the initial cost of the investments is amortized to income tax expense over the period that the tax credits are recognized. For affordable housing investments entered into on or after the January 1, 2015 adoption of ASU No. 2014-01, the Company uses the proportional amortization method. Under the proportional amortization method, the initial cost of the investments is amortized to income tax expense in proportion to the tax credits and other tax benefits received. The carrying amount of the affordable housing and historic renovation investments, included in Other assets, was $223.8 million and $237.7 million at March 31, 2015 and 2014, respectively. The liability for estimated future capital contributions to the investments was $196.8 million and $213.0 million at March 31, 2015 and 2014, respectively. |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting Policy | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. |
Inventory Policy | The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors. The final year-end valuation of inventory is based on an annual physical inventory count performed during the fourth quarter. For further information on inventory valuations and other matters, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2014. |
New Accounting Pronouncements Policy | Effective January 1, 2015, the Company adopted Accounting Standards Update (ASU) No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects," which allows companies to elect to use the proportional amortization method to account for investments in qualified affordable housing projects if certain conditions are met. Under the proportional amortization method, which replaces the effective yield method, the cost of the investment is amortized in proportion to the tax credits and other tax benefits received to income tax expense. The adoption of ASU No. 2014-01 did not have a material effect on the Company's results of operations, financial condition or liquidity. |
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, "Revenue Recognition - Revenue from Contracts with Customers," which is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard is effective for interim and annual periods beginning after December 15, 2016, however, the FASB has proposed a one-year deferral. Either full retrospective adoption or modified retrospective adoption is permitted. The Company is in the process of evaluating the impact of the standard. |
Changes_in_Cumulative_Other_Co1
Changes in Cumulative Other Comprehensive Loss (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||||||||||||||
Changes in Cumulative Other Comprehensive Loss | The following tables summarize the changes in Cumulative other comprehensive loss for the three months ended March 31, 2015 and 2014: | |||||||||||||||
(Thousands of dollars) | ||||||||||||||||
Foreign Currency Translation Adjustments | Net Actuarial (Losses) Gains and Prior Service Costs Recognized for Employee Benefit Plans | Unrealized Net Gains (Losses) on Available-for-Sale Securities | Total Cumulative Other Comprehensive Loss | |||||||||||||
Balance at December 31, 2014 | $ | (354,384 | ) | $ | (118,167 | ) | $ | 593 | $ | (471,958 | ) | |||||
Other comprehensive loss before reclassifications(1) | (56,776 | ) | (132 | ) | (56,908 | ) | ||||||||||
Amounts reclassified from other comprehensive (loss) income(2) | 570 | (9 | ) | 561 | ||||||||||||
Net other comprehensive (loss) income | (56,776 | ) | 570 | (141 | ) | (56,347 | ) | |||||||||
Balance at March 31, 2015 | $ | (411,160 | ) | $ | (117,597 | ) | $ | 452 | $ | (528,305 | ) | |||||
(1) Net of taxes of $81 for unrealized net losses on available-for-sale securities. | ||||||||||||||||
(2) Net of taxes of $(206) for net actuarial losses and prior service costs recognized for employee benefit plans and $4 for realized gains on the sale of available-for-sale securities. | ||||||||||||||||
(Thousands of dollars) | ||||||||||||||||
Foreign Currency Translation Adjustments | Net Actuarial Losses and Prior Service Costs Recognized for Employee Benefit Plans | Unrealized Net Gains (Losses) on Available-for-Sale Securities | Total Cumulative Other Comprehensive Loss | |||||||||||||
Balance at December 31, 2013 | $ | (250,942 | ) | $ | (70,611 | ) | $ | 509 | $ | (321,044 | ) | |||||
Other comprehensive loss before reclassifications(3) | (8,055 | ) | (570 | ) | (65 | ) | (8,690 | ) | ||||||||
Amounts reclassified from other comprehensive (loss) income(4) | 504 | (17 | ) | 487 | ||||||||||||
Net other comprehensive (loss) income | (8,055 | ) | (66 | ) | (82 | ) | (8,203 | ) | ||||||||
Balance at March 31, 2014 | $ | (258,997 | ) | $ | (70,677 | ) | $ | 427 | $ | (329,247 | ) | |||||
(3) Net of taxes of $244 for net actuarial losses and prior service costs recognized for employee benefit plans and $41 for unrealized net losses on available-for-sale securities. | ||||||||||||||||
(4) Net of taxes of $(207) for net actuarial losses and prior service costs recognized for employee benefit plans and $11 for realized gains on the sale of available-for-sale securities. |
Product_Warranties_Tables
Product Warranties (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Product Warranties Disclosures [Abstract] | ||||||||
Company's accrual for product warranty claims | Changes in the Company’s accrual for product warranty claims during the first three months of 2015 and 2014, including customer satisfaction settlements, were as follows: | |||||||
(Thousands of dollars) | ||||||||
2015 | 2014 | |||||||
Balance at January 1 | $ | 27,723 | $ | 26,755 | ||||
Charges to expense | 5,146 | 6,260 | ||||||
Settlements | (6,721 | ) | (7,516 | ) | ||||
Balance at March 31 | $ | 26,148 | $ | 25,499 | ||||
Exit_or_Disposal_Activities_Ta
Exit or Disposal Activities (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||
Summary of activity and remaining liabilities associated with qualified exit costs | The following table summarizes the activity and remaining liabilities associated with qualified exit costs at March 31, 2015: | ||||||||||||||||
(Thousands of dollars) | |||||||||||||||||
Exit Plan | Balance at December 31, 2014 | Provisions in Cost of goods sold or SG&A | Actual expenditures charged to accrual | Balance at March 31, 2015 | |||||||||||||
Paint Stores Group stores shutdown in 2014: | |||||||||||||||||
Other qualified exit costs | $ | 280 | $ | 142 | $ | (82 | ) | $ | 340 | ||||||||
Consumer Group facilities shutdown in 2014: | |||||||||||||||||
Severance and related costs | 2,732 | 509 | (643 | ) | 2,598 | ||||||||||||
Other qualified exit costs | 781 | (296 | ) | 485 | |||||||||||||
Global Finishes Group exit of business in 2014: | |||||||||||||||||
Severance and related costs | 104 | (104 | ) | ||||||||||||||
Other qualified exit costs | 1,080 | 110 | (21 | ) | 1,169 | ||||||||||||
Paint Stores Group facility shutdown in 2013: | |||||||||||||||||
Severance and related costs | 654 | (358 | ) | 296 | |||||||||||||
Other qualified exit costs | 1,205 | (98 | ) | 1,107 | |||||||||||||
Global Finishes Group stores shutdown in 2013: | |||||||||||||||||
Severance and related costs | 28 | (25 | ) | 3 | |||||||||||||
Other qualified exit costs | 138 | (57 | ) | 81 | |||||||||||||
Other qualified exit costs for facilities shutdown prior to 2013 | 1,514 | (282 | ) | 1,232 | |||||||||||||
Totals | $ | 8,516 | $ | 761 | $ | (1,966 | ) | $ | 7,311 | ||||||||
Health_Care_Pension_and_Other_1
Health Care, Pension and Other Benefits (Tables) | 3 Months Ended | |||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||
Components of net periodic benefit costs for pension and other employee benefit plans | Shown below are the components of the Company’s net periodic benefit cost (credit) for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions: | |||||||||||||||||||||||
(Thousands of dollars) | Domestic Defined | Foreign Defined | Postretirement | |||||||||||||||||||||
Benefit Pension Plans | Benefit Pension Plans | Benefits Other than | ||||||||||||||||||||||
Pensions | ||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Three Months Ended March 31: | ||||||||||||||||||||||||
Net periodic benefit cost (credit): | ||||||||||||||||||||||||
Service cost | $ | 5,754 | $ | 5,637 | $ | 1,325 | $ | 1,547 | $ | 621 | $ | 609 | ||||||||||||
Interest cost | 6,237 | 6,526 | 2,271 | 2,694 | 2,795 | 3,195 | ||||||||||||||||||
Expected return on assets | (13,024 | ) | (12,666 | ) | (2,431 | ) | (2,740 | ) | ||||||||||||||||
Amortization of: | ||||||||||||||||||||||||
Prior service cost (credit) | 327 | 459 | (1,132 | ) | (126 | ) | ||||||||||||||||||
Actuarial loss | 843 | 485 | 356 | 253 | ||||||||||||||||||||
Net periodic benefit cost (credit) | $ | 137 | $ | (44 | ) | $ | 1,650 | $ | 1,857 | $ | 2,537 | $ | 3,678 | |||||||||||
Other_Tables
Other (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Other Income and Expenses [Abstract] | ||||||||
Other general expense - net | Included in Other general income - net were the following: | |||||||
(Thousands of dollars) | Three Months Ended | |||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Provisions for environmental matters - net | $ | 1,050 | $ | (434 | ) | |||
Gain on disposition of assets | (2,723 | ) | (138 | ) | ||||
Total | $ | (1,673 | ) | $ | (572 | ) | ||
Other (income) expense - net | Included in Other (income) expense - net were the following: | |||||||
(Thousands of dollars) | Three Months Ended | |||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Dividend and royalty income | $ | (1,081 | ) | $ | (1,051 | ) | ||
Net expense from financing activities | 2,967 | 2,922 | ||||||
Foreign currency transaction related losses | 1,138 | 2,858 | ||||||
Other income | (5,497 | ) | (6,306 | ) | ||||
Other expense | 2,228 | 2,080 | ||||||
Total | $ | (245 | ) | $ | 503 | |||
Net_Income_Per_Common_Share_Ta
Net Income Per Common Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Computation of net income per common share | ||||||||
(Thousands of dollars except per share data) | Three Months Ended | |||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Basic | ||||||||
Average common shares outstanding | 92,740,059 | 98,833,210 | ||||||
Net income | $ | 131,404 | $ | 115,457 | ||||
Less net income allocated to unvested restricted shares | (475 | ) | (523 | ) | ||||
Net income allocated to common shares | $ | 130,929 | $ | 114,934 | ||||
Basic net income per common share | $ | 1.41 | $ | 1.16 | ||||
Diluted | ||||||||
Average common shares outstanding | 92,740,059 | 98,833,210 | ||||||
Stock options and other contingently issuable shares (1) | 2,005,070 | 2,025,671 | ||||||
Average common shares outstanding assuming dilution | 94,745,129 | 100,858,881 | ||||||
Net income | $ | 131,404 | $ | 115,457 | ||||
Less net income allocated to unvested restricted shares | ||||||||
assuming dilution | (467 | ) | (515 | ) | ||||
Net income allocated to common shares assuming | ||||||||
dilution | $ | 130,937 | $ | 114,942 | ||||
Diluted net income per common share | $ | 1.38 | $ | 1.14 | ||||
(1) | Stock options and other contingently issuable shares excluded 12,414 and 2,932 shares due to their anti-dilutive effect for the three months ended March 31, 2015 and 2014, respectively. |
Reportable_Segment_Information1
Reportable Segment Information (Tables) | 3 Months Ended | |||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||
Reportable segment information | ||||||||||||||||||||||||
(Thousands of dollars) | Three Months Ended March 31, 2015 | |||||||||||||||||||||||
Paint Stores | Consumer | Global | Latin America | Administrative | Consolidated | |||||||||||||||||||
Group | Group | Finishes | Coatings | Totals | ||||||||||||||||||||
Group | Group | |||||||||||||||||||||||
Net external sales | $ | 1,461,505 | $ | 351,690 | $ | 469,556 | $ | 166,231 | $ | 1,302 | $ | 2,450,284 | ||||||||||||
Intersegment transfers | 607,538 | 1,774 | 10,069 | (619,381 | ) | |||||||||||||||||||
Total net sales and intersegment transfers | $ | 1,461,505 | $ | 959,228 | $ | 471,330 | $ | 176,300 | $ | (618,079 | ) | $ | 2,450,284 | |||||||||||
Segment profit | $ | 176,576 | $ | 55,406 | $ | 38,900 | $ | 9,500 | $ | 280,382 | ||||||||||||||
Interest expense | $ | (12,351 | ) | (12,351 | ) | |||||||||||||||||||
Administrative expenses and other | (74,790 | ) | (74,790 | ) | ||||||||||||||||||||
Income before income taxes | $ | 176,576 | $ | 55,406 | $ | 38,900 | $ | 9,500 | $ | (87,141 | ) | $ | 193,241 | |||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||||||||
Paint Stores | Consumer | Global | Latin America | Administrative | Consolidated | |||||||||||||||||||
Group | Group | Finishes | Coatings | Totals | ||||||||||||||||||||
Group | Group | |||||||||||||||||||||||
Net external sales | $ | 1,360,003 | $ | 325,299 | $ | 497,639 | $ | 182,388 | $ | 1,227 | $ | 2,366,556 | ||||||||||||
Intersegment transfers | 546,562 | 1,413 | 10,122 | (558,097 | ) | |||||||||||||||||||
Total net sales and intersegment transfers | $ | 1,360,003 | $ | 871,861 | $ | 499,052 | $ | 192,510 | $ | (556,870 | ) | $ | 2,366,556 | |||||||||||
Segment profit | $ | 146,265 | $ | 51,088 | $ | 46,477 | $ | 9,987 | $ | 253,817 | ||||||||||||||
Interest expense | $ | (16,394 | ) | (16,394 | ) | |||||||||||||||||||
Administrative expenses and other | (71,346 | ) | (71,346 | ) | ||||||||||||||||||||
Income before income taxes | $ | 146,265 | $ | 51,088 | $ | 46,477 | $ | 9,987 | $ | (87,740 | ) | $ | 166,077 | |||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||
Financial assets and liabilities measured at fair value on a recurring basis | The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy: | |||||||||||||
(Thousands of dollars) | ||||||||||||||
Quoted Prices | ||||||||||||||
in Active | Significant | |||||||||||||
Fair Value at | Markets for | Significant Other | Unobservable | |||||||||||
March 31, | Identical Assets | Observable Inputs | Inputs | |||||||||||
2015 | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Assets: | ||||||||||||||
Deferred compensation plan asset (1) | $ | 24,027 | $ | 1,132 | $ | 22,895 | ||||||||
Liabilities: | ||||||||||||||
Deferred compensation plan liability (2) | $ | 34,012 | $ | 34,012 | ||||||||||
(1) | The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $23,792. | |||||||||||||
(2) | The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices. |
Debt_Tables
Debt (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||
Carrying amount and fair value of debt | The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy. | |||||||||||||||
(Thousands of dollars) | 31-Mar-15 | 31-Mar-14 | ||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||||
Amount | Amount | |||||||||||||||
Publicly traded debt | $ | 1,120,982 | $ | 1,165,804 | $ | 1,620,714 | $ | 1,629,928 | ||||||||
Non-traded debt | 4,902 | 4,655 | 3,905 | 3,683 | ||||||||||||
Dividends_Details
Dividends (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Dividends [Abstract] | ||
Dividends paid per common share (in dollars per share) | $0.67 | $0.55 |
Changes_in_Cumulative_Other_Co2
Changes in Cumulative Other Comprehensive Loss (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Changes in Net Other Comprehensive (Loss) Income [Roll Forward] | ||||
Beginning balance | ($471,958) | ($321,044) | ||
Other comprehensive income (loss) before reclassifications | -56,908 | [1] | -8,690 | [2] |
Amounts reclassified from other comprehensive income (loss) | 561 | [3] | 487 | [4] |
Net other comprehensive (loss) income | -56,347 | -8,203 | ||
Ending balance | -528,305 | -329,247 | ||
Tax effect for unrealized net gains on available-for-sale securities before reclassifications | 81 | 41 | ||
Tax effect for net actuarial losses and prior service costs recognized for employee benefit plans for amounts reclassified from other comprehensive loss | -206 | -207 | ||
Tax effect for net actuarial losses and prior service costs recognized for employee benefit plans before reclassifications | 244 | |||
Tax effect for realized gains on the sale of available-for-sale securities for amounts reclassified from other comprehensive loss | 4 | 11 | ||
Foreign Currency Translation Adjustments [Member] | ||||
Changes in Net Other Comprehensive (Loss) Income [Roll Forward] | ||||
Beginning balance | -354,384 | -250,942 | ||
Other comprehensive income (loss) before reclassifications | -56,776 | [1] | -8,055 | [2] |
Amounts reclassified from other comprehensive income (loss) | [3] | |||
Net other comprehensive (loss) income | -56,776 | -8,055 | ||
Ending balance | -411,160 | -258,997 | ||
Net Actuarial (Losses) Gains and Prior Service Costs Recognized for Employee Benefit Plans [Member] | ||||
Changes in Net Other Comprehensive (Loss) Income [Roll Forward] | ||||
Beginning balance | -118,167 | -70,611 | ||
Other comprehensive income (loss) before reclassifications | -570 | [2] | ||
Amounts reclassified from other comprehensive income (loss) | 570 | [3] | 504 | [4] |
Net other comprehensive (loss) income | 570 | -66 | ||
Ending balance | -117,597 | -70,677 | ||
Unrealized Net Gains (Losses) on Available-for-Sale Securities [Member] | ||||
Changes in Net Other Comprehensive (Loss) Income [Roll Forward] | ||||
Beginning balance | 593 | 509 | ||
Other comprehensive income (loss) before reclassifications | -132 | [1] | -65 | [2] |
Amounts reclassified from other comprehensive income (loss) | -9 | [3] | -17 | [4] |
Net other comprehensive (loss) income | -141 | -82 | ||
Ending balance | $452 | $427 | ||
[1] | Net of taxes of $81 for unrealized net losses on available-for-sale securities. | |||
[2] | Net of taxes of $244 for net actuarial losses and prior service costs recognized for employee benefit plans and $41 for unrealized net losses on available-for-sale securities. | |||
[3] | Net of taxes of $(206) for net actuarial losses and prior service costs recognized for employee benefit plans and $4 for realized gains on the sale of available-for-sale securities. | |||
[4] | Net of taxes of $(207) for net actuarial losses and prior service costs recognized for employee benefit plans and $11 for realized gains on the sale of available-for-sale securities. |
Product_Warranties_Details
Product Warranties (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Company's accrual for product warranty claims | ||
Balance at January 1 | $27,723 | $26,755 |
Charges to expense | 5,146 | 6,260 |
Settlements | -6,721 | -7,516 |
Balance at March 31 | $26,148 | $25,499 |
Exit_or_Disposal_Activities_De
Exit or Disposal Activities (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | $8,516 | |
Provisions in Cost of goods sold or SG&A | 761 | 2,897 |
Actual expenditures charged to accrual | -1,966 | -529 |
Balance at March 31, 2015 | 7,311 | |
Paint Stores Group [Member] | ||
Exit or Disposal Activities (Textual) [Abstract] | ||
Stores closed | 14 | |
Latin America Coatings Group [Member] | ||
Exit or Disposal Activities (Textual) [Abstract] | ||
Stores closed | 1 | |
Severance and related costs [Member] | Paint Stores Group [Member] | Facilities Shut Down in 2013 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 654 | |
Actual expenditures charged to accrual | -358 | |
Balance at March 31, 2015 | 296 | |
Severance and related costs [Member] | Consumer Group [Member] | Facilities Shutdown in 2014 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 2,732 | |
Provisions in Cost of goods sold or SG&A | 509 | |
Actual expenditures charged to accrual | -643 | |
Balance at March 31, 2015 | 2,598 | |
Severance and related costs [Member] | Global Finishes Group [Member] | Exit of Business in 2014 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 104 | |
Actual expenditures charged to accrual | -104 | |
Severance and related costs [Member] | Global Finishes Group [Member] | Stores Shut Down in 2013 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 28 | |
Actual expenditures charged to accrual | -25 | |
Balance at March 31, 2015 | 3 | |
Other qualified exit costs [Member] | Facilities Shutdown Prior to 2013 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 1,514 | |
Actual expenditures charged to accrual | -282 | |
Balance at March 31, 2015 | 1,232 | |
Other qualified exit costs [Member] | Paint Stores Group [Member] | Stores Shutdown In 2014 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 280 | |
Provisions in Cost of goods sold or SG&A | 142 | |
Actual expenditures charged to accrual | -82 | |
Balance at March 31, 2015 | 340 | |
Other qualified exit costs [Member] | Paint Stores Group [Member] | Facilities Shut Down in 2013 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 1,205 | |
Actual expenditures charged to accrual | -98 | |
Balance at March 31, 2015 | 1,107 | |
Other qualified exit costs [Member] | Consumer Group [Member] | Facilities Shutdown in 2014 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 781 | |
Actual expenditures charged to accrual | -296 | |
Balance at March 31, 2015 | 485 | |
Other qualified exit costs [Member] | Global Finishes Group [Member] | Exit of Business in 2014 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 1,080 | |
Provisions in Cost of goods sold or SG&A | 110 | |
Actual expenditures charged to accrual | -21 | |
Balance at March 31, 2015 | 1,169 | |
Other qualified exit costs [Member] | Global Finishes Group [Member] | Stores Shut Down in 2013 [Member] | ||
Summary of activity and remaining liabilities associated with qualified exit costs | ||
Balance at December 31, 2014 | 138 | |
Actual expenditures charged to accrual | -57 | |
Balance at March 31, 2015 | $81 |
Health_Care_Pension_and_Other_2
Health Care, Pension and Other Benefits (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Domestic Defined Benefit Pension Plans [Member] | ||
Net periodic benefit cost (credit): | ||
Service cost | $5,754 | $5,637 |
Interest cost | 6,237 | 6,526 |
Expected return on assets | -13,024 | -12,666 |
Amortization of: | ||
Prior service cost (credit) | 327 | 459 |
Actuarial loss | 843 | |
Net periodic benefit cost (credit) | 137 | -44 |
Foreign Defined Benefit Pension Plans [Member] | ||
Net periodic benefit cost (credit): | ||
Service cost | 1,325 | 1,547 |
Interest cost | 2,271 | 2,694 |
Expected return on assets | -2,431 | -2,740 |
Amortization of: | ||
Actuarial loss | 485 | 356 |
Net periodic benefit cost (credit) | 1,650 | 1,857 |
Postretirement Benefits Other than Pensions [Member] | ||
Net periodic benefit cost (credit): | ||
Service cost | 621 | 609 |
Interest cost | 2,795 | 3,195 |
Amortization of: | ||
Prior service cost (credit) | -1,132 | -126 |
Actuarial loss | 253 | |
Net periodic benefit cost (credit) | $2,537 | $3,678 |
Other_LongTerm_Liabilities_Det
Other Long-Term Liabilities (Details) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
In Millions, unless otherwise specified | ManufacturingSite | |
Other Long-Term Liabilities (Textual) [Abstract] | ||
Amount by which unaccrued maximum of estimated range exceeds minimum | $89.40 | |
Accruals for extended environmental-related activities | 112.9 | 83.3 |
Estimated costs of current investigation and remediation activities included in other accruals | 16.9 | 15.4 |
Number of manufacturing sites accounting for the majority of the accrual for environmental-related activities | 2 | |
Accruals for environmental-related activities of two sites | 81.9 | |
Percentage of accrual for environmental-related activities related to two sites | 63.10% | |
Amount of unaccrued maximum related to two sites | $58.20 | |
Percentage of aggregate unaccrued maximum related to two sites | 65.10% |
Litigation_Details
Litigation (Details) (USD $) | 0 Months Ended | 3 Months Ended | |
Jul. 01, 2008 | Jan. 27, 2014 | Dec. 31, 2014 | |
defendant | defendant | ||
jury_trial | |||
Trial by Jury, State of Rhode Island [Member] | |||
Loss Contingencies [Line Items] | |||
Number of jury trials | 2 | ||
Number of additional defendants | 2 | ||
Santa Clara County, California Proceeding [Member] | |||
Loss Contingencies [Line Items] | |||
Number of additional defendants | 2 | ||
Amount payable jointly and severally for litigation | $1,150,000,000 | ||
Titanium Dioxide Antitrust Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Settlement gain related to litigation settlement | $21,400,000 |
Other_Details
Other (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
OptionPlan | OptionPlan | |
Contract | Contract | |
Other general income - net | ||
Provisions for environmental matters - net | $1,050 | ($434) |
Gain on disposition of assets | -2,723 | -138 |
Total | -1,673 | -572 |
Other (income) expense - net | ||
Dividend and royalty income | -1,081 | -1,051 |
Net expense from financing activities | 2,967 | 2,922 |
Foreign currency transaction related losses | 1,138 | 2,858 |
Other income | -5,497 | -6,306 |
Other expense | 2,228 | 2,080 |
Total | ($245) | $503 |
Number of foreign currency option outstanding | 0 | 0 |
Number of foreign forward contracts outstanding | 0 | 0 |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate (percent) | 32.00% | 30.50% | |
Unrecognized tax benefits | $31,600,000 | ||
Unrecognized tax benefits adjusted | 28,200,000 | ||
Amount of unrecognized tax benefits where significant change is reasonably possible | 0 | 4,400,000 | |
Accrued income tax interest and penalties | $5,700,000 |
Net_Income_Per_Common_Share_De
Net Income Per Common Share (Details) (USD $) | 3 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
class | ||||
Basic | ||||
Average common shares outstanding | 92,740,059 | 98,833,210 | ||
Net income | $131,404 | $115,457 | ||
Less net income allocated to unvested restricted shares | -475 | -523 | ||
Net income allocated to common shares | 130,929 | 114,934 | ||
Basic net income per common share (in dollars per share) | $1.41 | $1.16 | ||
Diluted | ||||
Average common shares outstanding | 92,740,059 | 98,833,210 | ||
Stock options and other contingently issuable shares | 2,005,070 | [1] | 2,025,671 | [1] |
Average common shares outstanding assuming dilution | 94,745,129 | 100,858,881 | ||
Net income | 131,404 | 115,457 | ||
Less net income allocated to unvested restricted shares assuming dilution | -467 | -515 | ||
Net income allocated to common shares assuming dilution | $130,937 | $114,942 | ||
Diluted net income per common share (in dollars per share) | $1.38 | $1.14 | ||
Average common shares outstanding, anti-dilutive (in shares) | 12,414 | 2,932 | ||
Classes of participating securities | 2 | |||
Percent common shares representing outstanding shares | 99.00% | |||
Percent restricted shares representing outstanding shares | 1.00% | |||
[1] | Stock options and other contingently issuable shares excluded 12,414 and 2,932 shares due to their anti-dilutive effect for the three months ended March 31, 2015 and 2014, respectively. |
Reportable_Segment_Information2
Reportable Segment Information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Reportable segment information | ||
Total net sales and intersegment transfers | $2,450,284 | $2,366,556 |
Segment profit | 280,382 | 253,817 |
Interest expense | -12,351 | -16,394 |
Administrative expenses and other | -74,790 | -71,346 |
Income before income taxes | 193,241 | 166,077 |
Paint Stores Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 1,461,505 | 1,360,003 |
Segment profit | 176,576 | 146,265 |
Income before income taxes | 176,576 | 146,265 |
Consumer Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 959,228 | 871,861 |
Segment profit | 55,406 | 51,088 |
Income before income taxes | 55,406 | 51,088 |
Global Finishes Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 471,330 | 499,052 |
Segment profit | 38,900 | 46,477 |
Income before income taxes | 38,900 | 46,477 |
Latin America Coatings Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 176,300 | 192,510 |
Segment profit | 9,500 | 9,987 |
Income before income taxes | 9,500 | 9,987 |
Administrative [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | -618,079 | -556,870 |
Interest expense | -12,351 | -16,394 |
Administrative expenses and other | -74,790 | -71,346 |
Income before income taxes | -87,141 | -87,740 |
Operating Segments [Member] | Paint Stores Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 1,461,505 | 1,360,003 |
Operating Segments [Member] | Consumer Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 351,690 | 325,299 |
Operating Segments [Member] | Global Finishes Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 469,556 | 497,639 |
Operating Segments [Member] | Latin America Coatings Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 166,231 | 182,388 |
Corporate, Non-Segment [Member] | Administrative [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 1,302 | 1,227 |
Intersegment Transfers [Member] | Consumer Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 607,538 | 546,562 |
Intersegment Transfers [Member] | Global Finishes Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 1,774 | 1,413 |
Intersegment Transfers [Member] | Latin America Coatings Group [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | 10,069 | 10,122 |
Intersegment Eliminations [Member] | Administrative [Member] | ||
Reportable segment information | ||
Total net sales and intersegment transfers | ($619,381) | ($558,097) |
Reportable_Segment_Information3
Reportable Segment Information (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
segment | ||
Segment Reporting Information [Line Items] | ||
Number of operating segments | 4 | |
Reportable Segment Information (Textual) [Abstract] | ||
Net external sales | $2,450,284,000 | $2,366,556,000 |
Segment profit | 280,382,000 | 253,817,000 |
Foreign Countries [Member] | ||
Reportable Segment Information (Textual) [Abstract] | ||
Net external sales | 456,500,000 | 529,200,000 |
Segment profit | 18,300,000 | 32,600,000 |
Long-lived assets | $513,800,000 | $621,200,000 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Mar. 31, 2015 | |
In Thousands, unless otherwise specified | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Assets: | ||
Deferred compensation plan asset | $1,132 | [1] |
Liabilities: | ||
Deferred compensation plan liability | 34,012 | [2] |
Significant Other Observable Inputs (Level 2) [Member] | ||
Assets: | ||
Deferred compensation plan asset | 22,895 | [1] |
Fair Value Measurements (Textual) [Abstract] | ||
Cost basis of the investment funds | 23,792 | |
Estimate of Fair Value Measurement [Member] | ||
Assets: | ||
Deferred compensation plan asset | 24,027 | [1] |
Liabilities: | ||
Deferred compensation plan liability | $34,012 | [2] |
[1] | The deferred compensation plan asset consists of the investment funds maintained for the future payments under the Company’s executive deferred compensation plan, which is structured as a rabbi trust. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $23,792. | |
[2] | The deferred compensation plan liability is the Company’s liability under its executive deferred compensation plan. The liability represents the fair value of the participant shadow accounts, and the value is based on quoted market prices. |
Debt_Details
Debt (Details) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Publicly traded debt [Member] | ||
Financial Instruments | ||
Carrying Amount | $1,120,982 | $1,620,714 |
Fair Value | 1,165,804 | 1,629,928 |
Non-traded debt [Member] | ||
Financial Instruments | ||
Carrying Amount | 4,902 | 3,905 |
Fair Value | $4,655 | $3,683 |
NonTraded_Investments_Details_
Non-Traded Investments (Details Textual) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
In Millions, unless otherwise specified | ||
Non Traded Investments (Textual) [Abstract] | ||
Carrying amount of the investments, included in other assets | $223.80 | $237.70 |
Liability for estimated future capital contributions to the investments | $196.80 | $213 |