Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 30, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | AOS | |
Entity Registrant Name | SMITH A O CORP | |
Entity Central Index Key | 91,142 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 74,890,632 | |
Common Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 13,129,626 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net sales | $ 625.1 | $ 581.6 | $ 1,897.1 | $ 1,729.2 |
Cost of products sold | 368.4 | 366.3 | 1,147.9 | 1,101.8 |
Gross profit | 256.7 | 215.3 | 749.2 | 627.4 |
Selling, general and administrative expenses | 150.1 | 145.5 | 457.6 | 413.8 |
Interest expense | 1.6 | 1.5 | 6 | 4.3 |
Other income | (2.2) | (1) | (7.6) | (3.5) |
Earnings before income taxes | 107.2 | 69.3 | 293.2 | 212.8 |
Provision for income taxes | 33.6 | 18.7 | 90.1 | 58.2 |
Net Earnings | $ 73.6 | $ 50.6 | $ 203.1 | $ 154.6 |
Net Earnings Per Share of Common Stock | $ 0.83 | $ 0.56 | $ 2.28 | $ 1.71 |
Diluted Net Earnings Per Share of Common Stock | 0.82 | 0.56 | 2.26 | 1.69 |
Dividends Per Share of Common Stock | $ 0.19 | $ 0.15 | $ 0.57 | $ 0.45 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net earnings | $ 73.6 | $ 50.6 | $ 203.1 | $ 154.6 |
Other comprehensive (loss) earnings | ||||
Foreign currency translation adjustments | (17.8) | (1.5) | (28) | (9.2) |
Unrealized net gains on cash flow derivative instruments, less related income tax provision of $(0.4) and $(0.4) in 2015, $(0.4) and $- in 2014 | 0.6 | 0.7 | 0.6 | 0.1 |
Adjustment to pension liability, less related income tax provision of $(1.8) and $(5.7) in 2015 and $(3.3) and $(9.9) in 2014 | 2.7 | 5.2 | 8.9 | 13.7 |
Comprehensive Earnings | $ 59.1 | $ 55 | $ 184.6 | $ 159.2 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Unrealized net gains on cash flow derivative instruments, related income tax provision | $ (0.4) | $ (0.4) | $ (0.4) | |
Adjustment to pension liability, related income tax provision | $ (1.8) | $ (5.7) | $ (3.3) | $ (9.9) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and cash equivalents | $ 282.9 | $ 319.4 |
Marketable securities | 323.5 | 222.5 |
Receivables | 479 | 475.4 |
Inventories | 239 | 208.3 |
Deferred income taxes | 43.1 | 40.5 |
Other current assets | 46.3 | 52.9 |
Total Current Assets | 1,413.8 | 1,319 |
Property, plant and equipment | 855.5 | 815.9 |
Less accumulated depreciation | 416.7 | 388.2 |
Net property, plant and equipment | 438.8 | 427.7 |
Goodwill | 422.5 | 428.8 |
Other intangibles | 295.1 | 308.5 |
Other assets | 30 | 31.3 |
Total Assets | 2,600.2 | 2,515.3 |
Liabilities | ||
Trade payables | 395.8 | 393.8 |
Accrued payroll and benefits | 71.5 | 70.3 |
Accrued liabilities | 100.9 | 85.1 |
Product warranties | 42.8 | 42.3 |
Long-term debt due within one year | 13.1 | 13.7 |
Total Current Liabilities | 624.1 | 605.2 |
Long-term debt | 247.7 | 210.1 |
Pension liabilities | 118.2 | 133.1 |
Other liabilities | 187.8 | 185.6 |
Total Liabilities | 1,177.8 | 1,134 |
Stockholders' Equity | ||
Common Stock,value | 82.2 | 82.1 |
Capital in excess of par value | 613.8 | 600.1 |
Retained earnings | 1,287.7 | 1,135.5 |
Accumulated other comprehensive loss | (290.5) | (272) |
Treasury stock at cost | (336.8) | (230.5) |
Total Stockholders' Equity | 1,422.4 | 1,381.3 |
Total Liabilities and Stockholders' Equity | 2,600.2 | 2,515.3 |
Common Class A | ||
Stockholders' Equity | ||
Common Stock,value | $ 66 | $ 66.1 |
CONDENSED CONSOLIDATED BALANCE6
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Common Stock, par value | $ 1 | $ 1 |
Common Stock, authorized | 120,000,000 | 120,000,000 |
Common Stock, shares issued | 82,154,318 | 82,133,326 |
Common Class A | ||
Common Stock, par value | $ 5 | $ 5 |
Common Stock, authorized | 14,000,000 | 14,000,000 |
Common Stock, shares issued | 13,199,478 | 13,220,470 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating Activities | ||
Net earnings | $ 203.1 | $ 154.6 |
Adjustments to reconcile net earnings to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 47.3 | 44.4 |
Pension expense | 0.1 | 19.8 |
Loss on disposal of assets | 0.3 | 0.2 |
Net changes in operating assets and liabilities, net of acquisitions: | ||
Current assets and liabilities | (14.8) | (53.8) |
Noncurrent assets and liabilities | (3.7) | 0.1 |
Cash Provided by Operating Activities - continuing operations | 232.3 | 165.3 |
Cash Used in Operating Activities - discontinued operations | (1) | (1.5) |
Cash Provided by Operating Activities | 231.3 | 163.8 |
Investing Activities | ||
Capital expenditures | (53.1) | (66) |
Investments in marketable securities | (322.2) | (149.1) |
Net proceeds from sale of marketable securities | 213.8 | 129.7 |
Cash Used in Investing Activities | (161.5) | (85.4) |
Financing Activities | ||
Long-term debt incurred | 39.4 | 64.3 |
Common stock repurchases | (104.3) | (86.6) |
Net proceeds from stock option activity | 9.5 | 4.7 |
Dividends paid | (50.9) | (41) |
Cash Used in Financing Activities | (106.3) | (58.6) |
Net (decrease) increase in cash and cash equivalents | (36.5) | 19.8 |
Cash and cash equivalents - beginning of period | 319.4 | 380.7 |
Cash and Cash Equivalents - End of Period | $ 282.9 | $ 400.5 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required 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. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results expected for the full year. It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K filed with the SEC on February 17, 2015. Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (FASB) amended Accounting Standard Codification (ASC) 835-30, Interest - Imputation of Interest In May 2014, the FASB issued ASC 606-10, Revenue from Contracts with Customers |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2015 | |
Inventories | 2. Inventories The following table presents the components of the Company’s inventory balances: (dollars in millions) September 30, 2015 December 31, 2014 Finished products $ 106.8 $ 100.2 Work in process 13.9 10.7 Raw materials 138.2 121.3 Inventories, at FIFO cost 258.9 232.2 LIFO reserve (19.9 ) (23.9 ) Net inventory $ 239.0 $ 208.3 |
Product Warranties
Product Warranties | 9 Months Ended |
Sep. 30, 2015 | |
Product Warranties | 3 Product Warranties The Company offers warranties on the sales of certain of its products and records an accrual for the estimated future claims. The following table presents the Company’s warranty liability activity. Three Months Ended (dollars in millions) 2015 2014 Balance at July 1, $ 138.3 $ 136.4 Expense 14.9 14.6 Claims settled (14.4 ) (14.8 ) Balance at September 30, $ 138.8 $ 136.2 Nine Months Ended (dollars in millions) 2015 2014 Balance at January 1, $ 136.2 $ 136.6 Expense 47.4 46.9 Claims settled (44.8 ) (47.3 ) Balance at September 30, $ 138.8 $ 136.2 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Long-Term Debt | 4. Long-Term Debt The Company has a $400 million multi-currency revolving credit agreement with eight banks, which expires on December 12, 2017. The facility has an accordion provision which allows it to be increased up to $500 million if certain conditions (including lender approval) are satisfied. Borrowings under bank credit lines and commercial paper borrowings are supported by the $400 million revolving credit agreement. As a result of the long-term nature of this facility, the Company’s commercial paper and credit line borrowings are classified as long-term debt at September 30, 2015. On January 15, 2015, the Company issued $75 million in term notes to an insurance company. Principal payments commence in 2020 and the notes mature in 2030. The notes have an interest rate of 3.52 percent. The proceeds of the notes were used to pay down borrowings under the Company’s revolving credit facility. |
Earnings per Share of Common St
Earnings per Share of Common Stock | 9 Months Ended |
Sep. 30, 2015 | |
Earnings per Share of Common Stock | 5. Earnings per Share of Common Stock The numerator for the calculation of basic and diluted earnings per share is net earnings. The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations: Three Months Ended Nine Months Ended 2015 2014 2015 2014 Denominator for basic earnings per share – weighted average shares 88,698,196 89,945,464 89,088,565 90,559,459 Effect of dilutive stock options and share units 671,378 660,286 695,857 680,671 Denominator for diluted earnings per share 89,369,574 90,605,750 89,784,422 91,240,130 |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Stock Based Compensation | 6. Stock Based Compensation The Company adopted the A. O. Smith Combined Incentive Compensation Plan (the “Plan”) effective January 1, 2007. Stockholders reapproved the Plan on April 16, 2012. The Plan is a continuation of the A. O. Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002. The number of shares available for granting of options, restricted stock or share units under the Plan at September 30, 2015 was 1,994,409. Upon stock option exercise or share unit vesting, shares are issued from treasury stock. Total stock based compensation cost recognized in the three months ended September 30, 2015 and 2014 was $1.0 million and $1.8 million, respectively. Total stock based compensation cost recognized in the nine months ended September 30, 2015 and 2014 was $7.7 million and $9.6 million, respectively. Stock Options The stock options granted in the nine months ended September 30, 2015 and 2014 have three year pro rata vesting from the date of grant. Stock options are issued at exercise prices equal to the fair value of Common Stock on the date of grant. For active employees, all options granted in 2015 and 2014 expire ten years after date of grant. The Company’s stock options are expensed ratably over the three-year vesting period; however, included in the stock option expense for the three and nine months ended September 30, 2015 and 2014 is expense associated with the accelerated vesting of stock option awards for certain employees who either are retirement eligible or become retirement eligible during the vesting period. Stock based compensation cost attributable to stock options in the three months ended September 30, 2015 and 2014 was $0.5 million and $0.8 million, respectively. Stock based compensation expense attributable to stock options in the nine months ended September 30, 2015 and 2014 was $3.5 million and $4.5 million, respectively. Changes in option awards, all of which relate to Common Stock, were as follows for the nine months ended September 30, 2015: Weighted- Nine Months Average Aggregate Outstanding at January 1, 2015 $ 27.50 1,577,003 Granted 61.53 242,495 Exercised 21.89 (365,093 ) Forfeited 34.10 (2,265 ) Outstanding at September 30, 2015 34.54 1,452,140 7 years $ 44.5 Exercisable at September 30, 2015 $ 24.65 905,136 6 years $ 36.7 The weighted-average fair value per option at the date of grant during the nine months ended September 30, 2015 and 2014 using the Black-Scholes option-pricing model was $17.17 and $16.55, respectively. Assumptions were as follows: Nine Months Ended September 30, 2015 2014 Expected life (years) 5.9 6.0 Risk-free interest rate 2.0 % 2.7 % Dividend yield 1.0 % 1.1 % Expected volatility 29.3 % 36.6 % The expected life is based on historical exercise behavior and the projected exercise of unexercised stock options. The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant for the expected life of the option. The actual dividend yield is based on the actual annual dividends divided by the grant date market value of the Company’s Common Stock. The expected volatility is based on the historical volatility of the Company’s Common Stock. Stock Appreciations Rights (SARs) Certain non-U.S.-based employees are granted SARs. Each SAR award grants the employee the right to receive cash equal to the excess of the share price of the Common Stock on the date that a participant exercises such right over the grant date price of the stock. SARs granted in the nine months ended September 30, 2015 have three year pro rata vesting from the date of grant. SARs are issued at exercise prices equal to the fair value of Common Stock on the date of grant and expire ten years from the date of grant. Compensation expense for SARs is remeasured at each reporting period based on the estimated fair value on the date of grant using the Black-Scholes option-pricing model, using assumptions similar to stock option awards. SARs are subsequently remeasured at each interim reporting period based on a revised Black-Scholes value. In the first nine months of 2015, the Company granted 13,115 cash-settled SARs and no SARs were exercisable. Stock based compensation expense attributable to SARS was minimal in the three and nine months ended September 30, 2015. Restricted Stock and Share Units Participants may also be awarded shares of restricted stock or share units under the Plan. The Company granted 76,035 and 110,605 share units under the Plan in the nine months ended September 30, 2015 and 2014, respectively. The share units were valued at $4.7 million and $5.1 million at the dates of issuance in 2015 and 2014, respectively, based on the Company’s stock price at the dates of grant. The Company’s share units are recognized as compensation expense ratably over the three year vesting period; however, included in share unit expense in the three and nine months ended September 30, 2015 and 2014 is expense associated with accelerated vesting of share unit awards for certain employees who either are retirement eligible or will become retirement eligible during the vesting period. Share based compensation expense attributable to share units of $0.5 million and $1.0 million was recognized in the three months ended September 30, 2015 and 2014, respectively. Stock based compensation expense attributable to share units of $4.2 million and $5.1 million was recognized in the nine months ended September 30, 2015 and 2014, respectively. Certain non-U.S.-based employees receive the cash value of vested shares at the vesting date in lieu of shares. A summary of share unit activity under the plan for the nine months ended September 30, 2015 is as follows: Number of Units Weighted-Average Issued and unvested at January 1, 2015 416,289 $ 33.06 Granted 76,035 61.57 Vested (154,748 ) 22.90 Forfeited (1,060 ) 43.77 Issued and unvested at September 30, 2015 336,516 $ 44.15 |
Pensions
Pensions | 9 Months Ended |
Sep. 30, 2015 | |
Pensions | 7. Pensions The following table presents the components of the Company’s net pension expense: (dollars in millions) Three Months Ended Nine Months Ended 2015 2014 2015 2014 Service cost $ 0.5 $ 2.0 $ 1.5 $ 5.9 Interest cost 9.4 11.2 28.2 33.6 Expected return on plan assets (14.3 ) (15.1 ) (43.1 ) (45.3 ) Amortization of unrecognized loss 4.8 8.8 14.3 26.4 Amortization of prior service cost (0.3 ) (0.3 ) (0.8 ) (0.8 ) Defined benefit plan expense $ 0.1 $ 6.6 $ 0.1 $ 19.8 The Company’s pension plan sunset for the majority of its employees on December 31, 2014. The Company did not make a contribution to its U.S. pension plan in 2014. The Company is not required to make a contribution and does not intend to make a voluntary contribution in 2015. |
Operations by Segment
Operations by Segment | 9 Months Ended |
Sep. 30, 2015 | |
Operations by Segment | 8. Operations by Segment The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas, gas tankless and electric water heaters. Both segments primarily manufacture and market in their respective regions of the world. The North America segment also manufactures and globally markets specialty commercial water heating equipment, condensing and non-condensing boilers and water system tanks. The Rest of World segment also manufactures and markets water treatment products and markets air purifier products, primarily in Asia. The Company’s operations by segment are as follows: (dollars in millions) Three Months Ended Nine Months Ended 2015 2014 2015 2014 Net sales North America $ 417.4 $ 392.4 $ 1,289.3 $ 1,191.0 Rest of World 217.1 198.5 634.3 564.9 Inter-segment sales (9.4 ) (9.3 ) (26.5 ) (26.7 ) $ 625.1 $ 581.6 $ 1,897.1 $ 1,729.2 Operating earnings North America $ 90.5 $ 53.0 $ 247.7 $ 171.5 Rest of World 27.4 30.0 84.5 84.3 117.9 83.0 332.2 255.8 Corporate expense 9.1 12.2 33.0 38.7 Interest expense 1.6 1.5 6.0 4.3 Earnings before income taxes 107.2 69.3 293.2 212.8 Provision for income taxes 33.6 18.7 90.1 58.2 Net earnings $ 73.6 $ 50.6 $ 203.1 $ 154.6 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements | 9. Fair Value Measurements ASC 820, Fair Value Measures and Disclosures Assets and liabilities measured at fair value on a recurring basis are as follows: (dollars in millions) Fair Value Measurement Using September 30, December 31, Quoted prices in active markets for identical assets (Level 1) $ 326.2 $ 224.1 Significant other observable inputs (Level 2) (0.3 ) (0.2 ) Total assets measured at fair value $ 325.9 $ 223.9 There were no changes in the Company’s valuation techniques used to measure fair values on a recurring basis during the nine months ended September 30, 2015. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments | 10. Derivative Instruments ASC 815 Derivatives and Hedging The Company designates that all of its hedging instruments are cash flow hedges. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive loss, net of tax, and is reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. The amount by which the cumulative change in the value of the hedge more than offsets the cumulative change in the value of the hedged item (i.e., the ineffective portion) is recorded in earnings, net of tax, in the period the ineffectiveness occurs. The Company utilizes certain derivative instruments to enhance its ability to manage currency as well as raw materials price risk. Derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures. The Company does not enter into contracts for speculative purposes. The contracts are executed with major financial institutions with no credit loss anticipated for failure of the counterparties to perform. Foreign Currency Forward Contracts The Company is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries. The Company utilizes foreign currency forward purchase and sale contracts to manage the volatility associated with foreign currency purchases, sales and certain intercompany transactions in the normal course of business. Currencies for which the Company utilizes foreign currency forward contracts include the British pound, Canadian dollar, Euro and Mexican peso. Gains and losses on these instruments are recorded in accumulated other comprehensive loss, net of tax, until the underlying transaction is recorded in earnings. When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss to the statement of earnings. The assessment of effectiveness for forward contracts is based on changes in the forward rates. These hedges have been determined to be effective. The majority of the amounts in accumulated other comprehensive loss for cash flow hedges is expected to be reclassified into earnings within one year and all of the hedges will be reclassified into earnings no later than December 31, 2016. The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts: (dollars in millions) September 30, 2015 2014 Buy Sell Buy Sell British pound $ — $ 1.1 $ — $ 1.3 Canadian dollar — 64.9 — 85.9 Euro 9.2 1.9 17.0 1.4 Mexican peso 16.9 — 11.5 — Total $ 26.1 $ 67.9 $ 28.5 $ 88.6 Commodity Futures Contracts In addition to entering into supply arrangements in the normal course of business, the Company also enters into futures contracts to fix the cost of certain raw material purchases, principally copper, with the objective of minimizing changes in cost due to market price fluctuations. The hedging strategy for achieving this objective is to purchase commodity futures contracts on the open market of the London Metals Exchange (LME) or over the counter contracts based on the LME. The minimal after-tax loss on the effective portion of the contracts as of September 30, 2015 was recorded in accumulated other comprehensive loss and will be reclassified into cost of products sold in the period in which the underlying transaction is recorded in earnings. The effective portion of the contracts will be reclassified within one year. Commodity hedges outstanding at September 30, 2015 involve a total of approximately 1.4 million pounds of copper. The impact of derivative contracts on the Company’s financial statements is as follows: Fair value of derivatives designated as hedging instruments under ASC 815: (dollars in millions) Balance Sheet Location September 30, December 31, Foreign currency contracts Other current assets $ 5.8 $ 4.6 Accrued liabilities (3.0 ) (3.0 ) Commodities contracts Accrued liabilities (0.3 ) (0.2 ) Total derivatives designated as hedging instruments $ 2.5 $ 1.4 The effect of derivatives designated as hedging instruments on the statement of earnings is as follows: Three Months Ended September 30 (dollars in millions): Derivatives in ASC 815 cash flow hedging relationships Amount of gain Location of Amount of gain Location of Amount of 2015 2014 2015 2014 2015 2014 Foreign currency contracts $ 3.0 $ 1.8 Cost of $ 1.9 $ 0.7 N/A $ — $ — Commodities contracts (0.2 ) — Cost of (0.1 ) — Cost of — — $ 2.8 $ 1.8 $ 1.8 $ 0.7 $ — $ — Nine Months Ended September 30 (dollars in millions): Derivatives in ASC 815 cash flow hedging relationships Amount of gain Location of Amount of gain Location of Amount of 2015 2014 2015 2014 2015 2014 Foreign currency contracts $ 5.7 $ 2.6 Cost of $ 4.6 $ 2.5 N/A $ — $ — Commodities contracts (0.5 ) — Cost of (0.3 ) — Cost of — — $ 5.2 $ 2.6 $ 4.3 $ 2.5 $ — $ — |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | 11. Income Taxes The effective tax rate for the three and nine months ended September 30, 2015 was 31.3 percent and 30.7 percent, respectively. The Company estimates that its annual effective tax rate for the full year of 2015 will be approximately 30.5 percent. The full year effective tax rate in 2014 was 27.5 percent. The higher effective income tax rates in the third quarter and first nine months of 2015 as compared to the full year 2014 were primarily due to a change in geographic earnings mix. The 2014 effective rate was also impacted by a one-time tax benefit associated with a revised domestic manufacturers’ deduction from a prior year resulting in an increased income tax benefit on an amended prior year tax return filed in 2014. As of September 30, 2015, the Company had $1.6 million of unrecognized tax benefits of which $1.2 million would affect its effective tax rate if recognized. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of tax expense. The U.S. federal tax returns for 2013-2014 are subject to audit. The Company is subject to state and local audits for tax years 2000-2014. The Company is also subject to non-U.S. income tax examinations for years 2006-2014. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss by Component | 9 Months Ended |
Sep. 30, 2015 | |
Changes in Accumulated Other Comprehensive Loss by Component | 12. Changes in Accumulated Other Comprehensive Loss by Component Changes to accumulated other comprehensive loss by component are as follows: (dollars in millions) Three Months Ended September 30, 2015 2014 Cumulative foreign currency translation Balance at beginning of period $ (6.9 ) $ 12.2 Other comprehensive (loss) gain before reclassifications (17.8 ) (1.5 ) Balance at end of period (24.7 ) 10.7 Unrealized net gain on cash flow derivatives Balance at beginning of period 0.9 0.4 Other comprehensive loss before reclassifications 1.6 1.1 Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $0.7 and $0.3 in 2015 and 2014, respectively) (1.0 ) (0.4 ) Balance at end of period 1.5 1.1 Pension liability Balance at beginning of period (270.0 ) (271.5 ) Other comprehensive loss before reclassifications — (0.1 ) Amounts reclassified from accumulated other comprehensive loss: (1) 2.7 5.3 Balance at end of period (267.3 ) (266.3 ) Accumulated other comprehensive loss, end of period $ (290.5 ) $ (254.5 ) (1) Actuarial losses $ 4.8 (2) $ 8.8 (2) Prior year service cost (0.3 ) (2) (0.3 ) (2) 4.5 8.5 Tax benefit (1.8 ) (3.2 ) Reclassification net of tax $ 2.7 $ 5.3 (2) Changes to accumulated other comprehensive loss by component are as follows: (dollars in millions) Nine Months Ended 2015 2014 Cumulative foreign currency translation Balance at beginning of period $ 3.3 $ 19.9 Other comprehensive loss before reclassifications (28.0 ) (9.2 ) Balance at end of period (24.7 ) 10.7 Unrealized net gain on cash flow derivatives Balance at beginning of period 0.9 1.0 Other comprehensive gain before reclassifications 3.2 1.6 Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $1.7 and $0.7 in 2015 and 2014, respectively) (2.6 ) (1.5 ) Balance at end of period 1.5 1.1 Pension liability Balance at beginning of period (276.2 ) (280.0 ) Other comprehensive loss before reclassifications 0.7 (2.1 ) Amounts reclassified from accumulated other comprehensive loss: (1) 8.2 15.8 Balance at end of period (267.3 ) (266.3 ) Accumulated other comprehensive loss, end of period $ (290.5 ) $ (254.5 ) (1) Actuarial losses $ 14.3 (2) $ 26.4 (2) Prior year service cost (0.8 ) (2) (0.8 ) (2) 13.5 25.6 Tax benefit (5.3 ) (9.8 ) Reclassification net of tax $ 8.2 $ 15.8 (2) |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (FASB) amended Accounting Standard Codification (ASC) 835-30, Interest - Imputation of Interest In May 2014, the FASB issued ASC 606-10, Revenue from Contracts with Customers |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Inventories | The following table presents the components of the Company’s inventory balances: (dollars in millions) September 30, 2015 December 31, 2014 Finished products $ 106.8 $ 100.2 Work in process 13.9 10.7 Raw materials 138.2 121.3 Inventories, at FIFO cost 258.9 232.2 LIFO reserve (19.9 ) (23.9 ) Net inventory $ 239.0 $ 208.3 |
Product Warranties (Tables)
Product Warranties (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Product Warranty Liability Activity | The following table presents the Company’s warranty liability activity. Three Months Ended (dollars in millions) 2015 2014 Balance at July 1, $ 138.3 $ 136.4 Expense 14.9 14.6 Claims settled (14.4 ) (14.8 ) Balance at September 30, $ 138.8 $ 136.2 Nine Months Ended (dollars in millions) 2015 2014 Balance at January 1, $ 136.2 $ 136.6 Expense 47.4 46.9 Claims settled (44.8 ) (47.3 ) Balance at September 30, $ 138.8 $ 136.2 |
Earnings per Share of Common 23
Earnings per Share of Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Computation of Basic and Diluted Weighted Average Shares Used in EPS Calculations | The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations: Three Months Ended Nine Months Ended 2015 2014 2015 2014 Denominator for basic earnings per share – weighted average shares 88,698,196 89,945,464 89,088,565 90,559,459 Effect of dilutive stock options and share units 671,378 660,286 695,857 680,671 Denominator for diluted earnings per share 89,369,574 90,605,750 89,784,422 91,240,130 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Changes in Option Shares | Changes in option awards, all of which relate to Common Stock, were as follows for the nine months ended September 30, 2015: Weighted- Nine Months Average Aggregate Outstanding at January 1, 2015 $ 27.50 1,577,003 Granted 61.53 242,495 Exercised 21.89 (365,093 ) Forfeited 34.10 (2,265 ) Outstanding at September 30, 2015 34.54 1,452,140 7 years $ 44.5 Exercisable at September 30, 2015 $ 24.65 905,136 6 years $ 36.7 |
Schedule of Weighted Average Fair Value per Option at Date of Grant | The weighted-average fair value per option at the date of grant during the nine months ended September 30, 2015 and 2014 using the Black-Scholes option-pricing model was $17.17 and $16.55, respectively. Assumptions were as follows: Nine Months Ended September 30, 2015 2014 Expected life (years) 5.9 6.0 Risk-free interest rate 2.0 % 2.7 % Dividend yield 1.0 % 1.1 % Expected volatility 29.3 % 36.6 % |
Schedule of Share Unit Activity Under Plan | A summary of share unit activity under the plan for the nine months ended September 30, 2015 is as follows: Number of Units Weighted-Average Issued and unvested at January 1, 2015 416,289 $ 33.06 Granted 76,035 61.57 Vested (154,748 ) 22.90 Forfeited (1,060 ) 43.77 Issued and unvested at September 30, 2015 336,516 $ 44.15 |
Pensions (Tables)
Pensions (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Components of Net Pension Expense | The following table presents the components of the Company’s net pension expense: (dollars in millions) Three Months Ended Nine Months Ended 2015 2014 2015 2014 Service cost $ 0.5 $ 2.0 $ 1.5 $ 5.9 Interest cost 9.4 11.2 28.2 33.6 Expected return on plan assets (14.3 ) (15.1 ) (43.1 ) (45.3 ) Amortization of unrecognized loss 4.8 8.8 14.3 26.4 Amortization of prior service cost (0.3 ) (0.3 ) (0.8 ) (0.8 ) Defined benefit plan expense $ 0.1 $ 6.6 $ 0.1 $ 19.8 |
Operations by Segment (Tables)
Operations by Segment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Operating Earnings | The Company’s operations by segment are as follows: (dollars in millions) Three Months Ended Nine Months Ended 2015 2014 2015 2014 Net sales North America $ 417.4 $ 392.4 $ 1,289.3 $ 1,191.0 Rest of World 217.1 198.5 634.3 564.9 Inter-segment sales (9.4 ) (9.3 ) (26.5 ) (26.7 ) $ 625.1 $ 581.6 $ 1,897.1 $ 1,729.2 Operating earnings North America $ 90.5 $ 53.0 $ 247.7 $ 171.5 Rest of World 27.4 30.0 84.5 84.3 117.9 83.0 332.2 255.8 Corporate expense 9.1 12.2 33.0 38.7 Interest expense 1.6 1.5 6.0 4.3 Earnings before income taxes 107.2 69.3 293.2 212.8 Provision for income taxes 33.6 18.7 90.1 58.2 Net earnings $ 73.6 $ 50.6 $ 203.1 $ 154.6 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis are as follows: (dollars in millions) Fair Value Measurement Using September 30, December 31, Quoted prices in active markets for identical assets (Level 1) $ 326.2 $ 224.1 Significant other observable inputs (Level 2) (0.3 ) (0.2 ) Total assets measured at fair value $ 325.9 $ 223.9 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Effect of Derivatives Designated as Hedging Instruments on Statement of Earnings | The effect of derivatives designated as hedging instruments on the statement of earnings is as follows: Three Months Ended September 30 (dollars in millions): Derivatives in ASC 815 cash flow hedging relationships Amount of gain Location of Amount of gain Location of Amount of 2015 2014 2015 2014 2015 2014 Foreign currency contracts $ 3.0 $ 1.8 Cost of $ 1.9 $ 0.7 N/A $ — $ — Commodities contracts (0.2 ) — Cost of (0.1 ) — Cost of — — $ 2.8 $ 1.8 $ 1.8 $ 0.7 $ — $ — Nine Months Ended September 30 (dollars in millions): Derivatives in ASC 815 cash flow hedging relationships Amount of gain Location of Amount of gain Location of Amount of 2015 2014 2015 2014 2015 2014 Foreign currency contracts $ 5.7 $ 2.6 Cost of $ 4.6 $ 2.5 N/A $ — $ — Commodities contracts (0.5 ) — Cost of (0.3 ) — Cost of — — $ 5.2 $ 2.6 $ 4.3 $ 2.5 $ — $ — |
Designated as Hedging Instrument | |
Schedule of Summary by Currency of Foreign Currency Forward Contracts | The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts: (dollars in millions) September 30, 2015 2014 Buy Sell Buy Sell British pound $ — $ 1.1 $ — $ 1.3 Canadian dollar — 64.9 — 85.9 Euro 9.2 1.9 17.0 1.4 Mexican peso 16.9 — 11.5 — Total $ 26.1 $ 67.9 $ 28.5 $ 88.6 |
Schedule of Impact of Cash Flow Hedges on Company's Financial Statements | The impact of derivative contracts on the Company’s financial statements is as follows: Fair value of derivatives designated as hedging instruments under ASC 815: (dollars in millions) Balance Sheet Location September 30, December 31, Foreign currency contracts Other current assets $ 5.8 $ 4.6 Accrued liabilities (3.0 ) (3.0 ) Commodities contracts Accrued liabilities (0.3 ) (0.2 ) Total derivatives designated as hedging instruments $ 2.5 $ 1.4 |
Changes in Accumulated Other 29
Changes in Accumulated Other Comprehensive Loss by Component (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Changes to Accumulated Other Comprehensive Loss by Component | Changes to accumulated other comprehensive loss by component are as follows: (dollars in millions) Three Months Ended September 30, 2015 2014 Cumulative foreign currency translation Balance at beginning of period $ (6.9 ) $ 12.2 Other comprehensive (loss) gain before reclassifications (17.8 ) (1.5 ) Balance at end of period (24.7 ) 10.7 Unrealized net gain on cash flow derivatives Balance at beginning of period 0.9 0.4 Other comprehensive loss before reclassifications 1.6 1.1 Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $0.7 and $0.3 in 2015 and 2014, respectively) (1.0 ) (0.4 ) Balance at end of period 1.5 1.1 Pension liability Balance at beginning of period (270.0 ) (271.5 ) Other comprehensive loss before reclassifications — (0.1 ) Amounts reclassified from accumulated other comprehensive loss: (1) 2.7 5.3 Balance at end of period (267.3 ) (266.3 ) Accumulated other comprehensive loss, end of period $ (290.5 ) $ (254.5 ) (1) Actuarial losses $ 4.8 (2) $ 8.8 (2) Prior year service cost (0.3 ) (2) (0.3 ) (2) 4.5 8.5 Tax benefit (1.8 ) (3.2 ) Reclassification net of tax $ 2.7 $ 5.3 (2) Changes to accumulated other comprehensive loss by component are as follows: (dollars in millions) Nine Months Ended 2015 2014 Cumulative foreign currency translation Balance at beginning of period $ 3.3 $ 19.9 Other comprehensive loss before reclassifications (28.0 ) (9.2 ) Balance at end of period (24.7 ) 10.7 Unrealized net gain on cash flow derivatives Balance at beginning of period 0.9 1.0 Other comprehensive gain before reclassifications 3.2 1.6 Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $1.7 and $0.7 in 2015 and 2014, respectively) (2.6 ) (1.5 ) Balance at end of period 1.5 1.1 Pension liability Balance at beginning of period (276.2 ) (280.0 ) Other comprehensive loss before reclassifications 0.7 (2.1 ) Amounts reclassified from accumulated other comprehensive loss: (1) 8.2 15.8 Balance at end of period (267.3 ) (266.3 ) Accumulated other comprehensive loss, end of period $ (290.5 ) $ (254.5 ) (1) Actuarial losses $ 14.3 (2) $ 26.4 (2) Prior year service cost (0.8 ) (2) (0.8 ) (2) 13.5 25.6 Tax benefit (5.3 ) (9.8 ) Reclassification net of tax $ 8.2 $ 15.8 (2) |
Schedule of Inventories (Detail
Schedule of Inventories (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Inventories | ||
Finished products | $ 106.8 | $ 100.2 |
Work in process | 13.9 | 10.7 |
Raw materials | 138.2 | 121.3 |
Inventories, at FIFO cost | 258.9 | 232.2 |
LIFO reserve | (19.9) | (23.9) |
Net inventory | $ 239 | $ 208.3 |
Company's Warranty Liability Ac
Company's Warranty Liability Activity (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Product Warranties | ||||
Balance at beginning of year | $ 138.3 | $ 136.4 | $ 136.2 | $ 136.6 |
Expense | 14.9 | 14.6 | 47.4 | 46.9 |
Claims settled | (14.4) | (14.8) | (44.8) | (47.3) |
Balance at end of year | $ 138.8 | $ 136.2 | $ 138.8 | $ 136.2 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) | Jan. 15, 2015USD ($) | Sep. 30, 2015USD ($)lender |
Debt Instrument [Line Items] | ||
Multi-currency revolving credit agreement | $ 400,000,000 | |
Number of banks involved in multi-year multi-currency revolving credit agreement | lender | 8 | |
Revolving credit facility, expiration date | Dec. 12, 2017 | |
Multi-currency revolving credit agreement, maximum amount | $ 500,000,000 | |
Term Notes Issued to Insurance Company | ||
Debt Instrument [Line Items] | ||
Debt instrument, issued | $ 75,000,000 | |
Debt instrument, principle repayment commencement year | 2,020 | |
Debt instrument, interest rate | 3.52% | |
Debt instrument, maturity year | 2,030 |
Schedule of Computation of Basi
Schedule of Computation of Basic and Diluted Weighted-Average Shares Used in Earnings per Share Calculations (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share Of Common Stock | ||||
Denominator for basic earnings per share - weighted average shares | 88,698,196 | 89,945,464 | 89,088,565 | 90,559,459 |
Effect of dilutive stock options and share units | 671,378 | 660,286 | 695,857 | 680,671 |
Denominator for diluted earnings per share | 89,369,574 | 90,605,750 | 89,784,422 | 91,240,130 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock based compensation cost recognized | $ 1 | $ 1.8 | $ 7.7 | $ 9.6 |
Stock option compensation recognized | $ 0.5 | 0.8 | $ 3.5 | $ 4.5 |
Weighted-average fair value per option at the date of grant | $ 17.17 | $ 16.55 | ||
Number of Options, granted | 242,495 | |||
Number of options, exercisable at end of period | 905,136 | 905,136 | ||
Stock based compensation expense attributable to share units | $ 0.5 | $ 1 | $ 4.2 | $ 5.1 |
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 3 years | 3 years | 3 years | 3 years |
Award expiration period | 10 years | 10 years | 10 years | 10 years |
Restricted Stock And Share Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 3 years | 3 years | 3 years | 3 years |
Number of Units - Granted | 76,035 | 110,605 | ||
Value of share units at the dates of issuance | $ 4.7 | $ 5.1 | ||
Stock Appreciation Rights (SARs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 3 years | |||
Award expiration period | 10 years | |||
Number of Options, granted | 13,115 | |||
Number of options, exercisable at end of period | 0 | 0 | ||
A.O. Smith Combined Compensation Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for granting of options, restricted stock or share units | 1,994,409 | 1,994,409 |
Changes in Option Awards All of
Changes in Option Awards All of Which Related to Common Stock (Detail) $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted-Average Per Share Exercise Price, beginning period | $ 27.50 |
Weighted-Average Per Share Exercise Price - Granted | 61.53 |
Weighted-Average Per Share Exercise Price - Exercised | 21.89 |
Weighted- Average Per Share Exercise Price - Forfeited | 34.10 |
Weighted-Average Per Share Exercise Price, ending period | 34.54 |
Weighted-Average Per Share Exercise Price, Exercisable | $ 24.65 |
Number of Options Outstanding, Beginning Balance | shares | 1,577,003 |
Number of Options, granted | shares | 242,495 |
Number of Options, Exercised | shares | (365,093) |
Number of Options, Forfeited | shares | (2,265) |
Number of Options Outstanding, Ending Balance | shares | 1,452,140 |
Number of options, exercisable at end of period | shares | 905,136 |
Average Remaining Contractual Life, Outstanding at End of Period, Years | 7 years |
Average Remaining Contractual Life, Exercisable at End of Period, Years | 6 years |
Aggregate Intrinsic Value, Outstanding at End of Period | $ | $ 44.5 |
Aggregate Intrinsic Value, Exercisable at End of Period | $ | $ 36.7 |
Schedule of Weighted-Average Fa
Schedule of Weighted-Average Fair Value per Option at Date of Grant (Detail) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Stock Based Compensation [Abstract] | ||
Expected life (years) | 5 years 10 months 24 days | 6 years |
Risk-free interest rate | 2.00% | 2.70% |
Dividend yield | 1.00% | 1.10% |
Expected volatility | 29.30% | 36.60% |
Summary of Share Unit Activity
Summary of Share Unit Activity Under Plan (Detail) - Restricted Stock And Share Units - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Units Issued and unvested, Beginning of Period | 416,289 | |
Number of Units - Granted | 76,035 | 110,605 |
Number of Units - Vested | (154,748) | |
Number of Units - Forfeited | (1,060) | |
Number of Units Issued and unvested, End of Period | 336,516 | |
Weighted-Average Grant Date Value, Beginning of Period | $ 33.06 | |
Weighted-Average Grant Date Value - Granted | 61.57 | |
Weighted-Average Grant Date Value - Vested | 22.90 | |
Weighted-Average Grant Date Value - Forfeited | 43.77 | |
Weighted-Average Grant Date Value, End of Period | $ 44.15 |
Components of Company's Net Pen
Components of Company's Net Pension Expense (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Pensions [Abstract] | ||||
Service cost | $ 0.5 | $ 2 | $ 1.5 | $ 5.9 |
Interest cost | 9.4 | 11.2 | 28.2 | 33.6 |
Expected return on plan assets | (14.3) | (15.1) | (43.1) | (45.3) |
Amortization of unrecognized loss | 4.8 | 8.8 | 14.3 | 26.4 |
Amortization of prior service cost | (0.3) | (0.3) | (0.8) | (0.8) |
Defined benefit plan expense | $ 0.1 | $ 6.6 | $ 0.1 | $ 19.8 |
Operations by Segment - Additio
Operations by Segment - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2015Segment | |
Segment Reporting Information [Line Items] | |
Number of reporting segments | 2 |
Schedule of Operating Earnings
Schedule of Operating Earnings (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 625.1 | $ 581.6 | $ 1,897.1 | $ 1,729.2 |
Operating earnings | 117.9 | 83 | 332.2 | 255.8 |
Other income (expense) | 2.2 | 1 | 7.6 | 3.5 |
Interest expense | 1.6 | 1.5 | 6 | 4.3 |
Earnings before income taxes | 107.2 | 69.3 | 293.2 | 212.8 |
Provision for income taxes | 33.6 | 18.7 | 90.1 | 58.2 |
Net earnings | 73.6 | 50.6 | 203.1 | 154.6 |
Inter-segment sales | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (9.4) | (9.3) | (26.5) | (26.7) |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Other income (expense) | 9.1 | 12.2 | 33 | 38.7 |
North America | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 417.4 | 392.4 | 1,289.3 | 1,191 |
Operating earnings | 90.5 | 53 | 247.7 | 171.5 |
Rest of World | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 217.1 | 198.5 | 634.3 | 564.9 |
Operating earnings | $ 27.4 | $ 30 | $ 84.5 | $ 84.3 |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | $ 325.9 | $ 223.9 |
Quoted Prices In Active Markets For Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 326.2 | 224.1 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value on recurring basis | $ (0.3) | $ (0.2) |
Schedule of Summary by Currency
Schedule of Summary by Currency of Foreign Currency Forward Contracts (Detail) - Foreign currency forward contracts - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Buy | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | $ 26,100,000 | $ 28,500,000 |
Buy | Euro | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | 9,200,000 | 17,000,000 |
Buy | Mexican peso | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | 16,900,000 | 11,500,000 |
Sell | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | 67,900,000 | 88,600,000 |
Sell | British pound | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | 1,100,000 | 1,300,000 |
Sell | Canadian dollar | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | 64,900,000 | 85,900,000 |
Sell | Euro | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | $ 1,900,000 | $ 1,400,000 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) - Commodity Futures Contracts lb in Millions | 9 Months Ended |
Sep. 30, 2015lb | |
Trading Activity, Gains and Losses, Net [Line Items] | |
Reclassification period for effective portion of contract, in years | 1 year |
Copper | |
Trading Activity, Gains and Losses, Net [Line Items] | |
Commodity hedges outstanding, total weight of metals | 1.4 |
Impact of Derivative Contracts
Impact of Derivative Contracts on Company's Financial Statements (Detail) - Designated as Hedging Instrument - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, total | $ 2.5 | $ 1.4 |
Foreign Currency Contracts | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, assets | 5.8 | 4.6 |
Foreign Currency Contracts | Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, liabilities | (3) | (3) |
Commodities Contracts | Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, liabilities | $ (0.3) | $ (0.2) |
Effect of Derivatives Designate
Effect of Derivatives Designated as Hedging Instruments on Statement of Earnings (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative [Line Items] | ||||
Amount of gain/(loss) recognized in OCI on derivative (effective portion) | $ 2.8 | $ 1.8 | $ 5.2 | $ 2.6 |
Amount of gain/(loss) reclassified from accumulated OCI into earnings (effective portion) | 1.8 | 0.7 | 4.3 | 2.5 |
Amount of gain/(loss) recognized in earnings on a derivative (ineffective portion) | 0 | 0 | 0 | 0 |
Foreign Currency Contracts | ||||
Derivative [Line Items] | ||||
Amount of gain/(loss) recognized in OCI on derivative (effective portion) | 3 | 1.8 | 5.7 | 2.6 |
Amount of gain/(loss) recognized in earnings on a derivative (ineffective portion) | 0 | 0 | 0 | 0 |
Foreign Currency Contracts | Cost Of Products Sold | ||||
Derivative [Line Items] | ||||
Amount of gain/(loss) reclassified from accumulated OCI into earnings (effective portion) | 1.9 | 0.7 | 4.6 | 2.5 |
Commodities Contracts | ||||
Derivative [Line Items] | ||||
Amount of gain/(loss) recognized in OCI on derivative (effective portion) | (0.2) | (0.5) | ||
Commodities Contracts | Cost Of Products Sold | ||||
Derivative [Line Items] | ||||
Amount of gain/(loss) reclassified from accumulated OCI into earnings (effective portion) | (0.1) | (0.3) | ||
Amount of gain/(loss) recognized in earnings on a derivative (ineffective portion) | $ 0 | $ 0 | $ 0 | $ 0 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Contingency [Line Items] | ||||
Effective tax rate | 31.30% | 30.70% | 27.50% | |
Unrecognized tax benefits | $ 1.6 | $ 1.6 | ||
Unrecognized tax benefits that would affect the effective tax rate, if recognized | $ 1.2 | $ 1.2 | ||
Earliest Tax Year | U.S. federal | ||||
Income Tax Contingency [Line Items] | ||||
Income tax examinations, years under examination | 2,013 | |||
Latest Tax Year | U.S. federal | ||||
Income Tax Contingency [Line Items] | ||||
Income tax examinations, years under examination | 2,014 | |||
State and local | Earliest Tax Year | ||||
Income Tax Contingency [Line Items] | ||||
Income tax examinations, years under examination | 2,000 | |||
State and local | Latest Tax Year | ||||
Income Tax Contingency [Line Items] | ||||
Income tax examinations, years under examination | 2,014 | |||
Non-U.S. | Earliest Tax Year | ||||
Income Tax Contingency [Line Items] | ||||
Income tax examinations, years under examination | 2,006 | |||
Non-U.S. | Latest Tax Year | ||||
Income Tax Contingency [Line Items] | ||||
Income tax examinations, years under examination | 2,014 | |||
Scenario, Forecast | ||||
Income Tax Contingency [Line Items] | ||||
Effective tax rate | 30.50% |
Changes in Accumulated Other 47
Changes in Accumulated Other Comprehensive Loss by Component (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (loss) Beginning Balance | $ (272) | |||||||
Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $0.7 and $0.3 in 2015 and 2014, respectively) | $ 1.8 | $ 0.7 | 4.3 | $ 2.5 | ||||
Accumulated Other Comprehensive Income (loss) Ending Balance | (290.5) | (254.5) | (290.5) | (254.5) | ||||
Pension liability | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (loss) Beginning Balance | (270) | (271.5) | (276.2) | (280) | ||||
Other comprehensive (loss) gain before reclassifications | (0.1) | 0.7 | (2.1) | |||||
Amounts reclassified from accumulated other comprehensive loss: | 2.7 | [1] | 5.3 | [1] | 8.2 | [2] | 15.8 | [2] |
Accumulated Other Comprehensive Income (loss) Ending Balance | (267.3) | (266.3) | (267.3) | (266.3) | ||||
Cumulative foreign currency translation | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (loss) Beginning Balance | (6.9) | 12.2 | 3.3 | 19.9 | ||||
Other comprehensive (loss) gain before reclassifications | (17.8) | (1.5) | (28) | (9.2) | ||||
Accumulated Other Comprehensive Income (loss) Ending Balance | (24.7) | 10.7 | (24.7) | 10.7 | ||||
Unrealized net gain on cash flow derivatives | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Income (loss) Beginning Balance | 0.9 | 0.4 | 0.9 | 1 | ||||
Other comprehensive (loss) gain before reclassifications | 1.6 | 1.1 | 3.2 | 1.6 | ||||
Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $0.7 and $0.3 in 2015 and 2014, respectively) | (1) | (0.4) | (2.6) | (1.5) | ||||
Accumulated Other Comprehensive Income (loss) Ending Balance | $ 1.5 | $ 1.1 | $ 1.5 | $ 1.1 | ||||
[1] | Amortization of pension items: Actuarial losses $ 4.8 (2) $ 8.8 (2) Prior year service cost (0.3 ) (2) (0.3 ) (2) 4.5 8.5 Tax benefit (1.8 ) (3.2 ) Reclassification net of tax $ 2.7 $ 5.3 | |||||||
[2] | Amortization of pension items: Actuarial losses $ 14.3 (2) $ 26.4 (2) Prior year service cost (0.8 ) (2) (0.8 ) (2) 13.5 25.6 Tax benefit (5.3 ) (9.8 ) Reclassification net of tax $ 8.2 $ 15.8 |
Changes in Accumulated Other 48
Changes in Accumulated Other Comprehensive Loss by Component (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Tax benefit | $ 33.6 | $ 18.7 | $ 90.1 | $ 58.2 | |||||
Pension liability | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Reclassification net of tax | (2.7) | [1] | (5.3) | [1] | (8.2) | [2] | (15.8) | [2] | |
Pension liability | Reclassification out of Accumulated Other Comprehensive Income | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Actuarial losses | [3] | 4.8 | 8.8 | 14.3 | 26.4 | ||||
Prior year service cost | [3] | (0.3) | (0.3) | (0.8) | (0.8) | ||||
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, before Tax | 4.5 | 8.5 | 13.5 | 25.6 | |||||
Tax benefit | (1.8) | (3.2) | (5.3) | (9.8) | |||||
Reclassification net of tax | 2.7 | 5.3 | 8.2 | 15.8 | |||||
Unrealized net gain on cash flow derivatives | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Realized losses on derivatives reclassified to cost of products sold, tax effect | $ 0.7 | $ 0.3 | $ 1.7 | $ 0.7 | |||||
[1] | Amortization of pension items: Actuarial losses $ 4.8 (2) $ 8.8 (2) Prior year service cost (0.3 ) (2) (0.3 ) (2) 4.5 8.5 Tax benefit (1.8 ) (3.2 ) Reclassification net of tax $ 2.7 $ 5.3 | ||||||||
[2] | Amortization of pension items: Actuarial losses $ 14.3 (2) $ 26.4 (2) Prior year service cost (0.8 ) (2) (0.8 ) (2) 13.5 25.6 Tax benefit (5.3 ) (9.8 ) Reclassification net of tax $ 8.2 $ 15.8 | ||||||||
[3] | These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 7 - Pensions for additional details |