Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 31, 2019 | Jun. 30, 2018 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | SMITH A O CORP | ||
Entity Central Index Key | 91,142 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Trading Symbol | AOS | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Common Class A | |||
Document Information [Line Items] | |||
Entity Public Float | $ 54,612,426 | ||
Entity Common Stock, Shares Outstanding | 26,059,903 | ||
Common Stock | |||
Document Information [Line Items] | |||
Entity Public Float | $ 8,368,308,653 | ||
Entity Common Stock, Shares Outstanding | 141,852,744 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 259.7 | $ 346.6 |
Marketable securities | 385.3 | 473.4 |
Receivables | 647.3 | 592.7 |
Inventories | 304.7 | 297 |
Other current assets | 41.5 | 57.2 |
Total Current Assets | 1,638.5 | 1,766.9 |
Net property, plant and equipment | 540 | 528.9 |
Goodwill | 513 | 516.7 |
Other intangibles | 293.1 | 308.7 |
Other assets | 86.9 | 76.2 |
Total Assets | 3,071.5 | 3,197.4 |
Liabilities | ||
Trade payables | 543.8 | 535 |
Accrued payroll and benefits | 79.4 | 90.8 |
Accrued liabilities | 120.4 | 116 |
Product warranties | 41.7 | 44.5 |
Long-term debt due within one year | 0 | 7.5 |
Total Current Liabilities | 785.3 | 793.8 |
Long-term debt | 221.4 | 402.9 |
Product warranties | 97.7 | 97.9 |
Pension liabilities | 49.4 | 48.1 |
Other liabilities | 200.7 | 209.8 |
Total Liabilities | 1,354.5 | 1,552.5 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Preferred Stock | ||
Common Stock, value | 164.5 | 164.5 |
Capital in excess of par value | 496.7 | 486.5 |
Retained earnings | 2,102.8 | 1,788.7 |
Accumulated other comprehensive loss | (350.8) | (299.5) |
Treasury stock at cost | (827.2) | (626.5) |
Total Stockholders' Equity | 1,717 | 1,644.9 |
Total Liabilities and Stockholders' Equity | 3,071.5 | 3,197.4 |
Common Class A | ||
Stockholders' Equity | ||
Common Stock, value | 131 | 131.2 |
Total Stockholders' Equity | $ 131 | $ 131.2 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Dec. 31, 2018 | Dec. 31, 2017 |
Common Stock, shares issued | 164,516,267 | 164,468,033 |
Common Class A | ||
Common Stock, shares issued | 26,191,327 | 26,239,559 |
CONSOLIDATED STATEMENT OF EARNI
CONSOLIDATED STATEMENT OF EARNINGS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net sales | $ 3,187.9 | $ 2,996.7 | $ 2,685.9 |
Cost of products sold | 1,882.4 | 1,764.3 | 1,571.7 |
Gross profit | 1,305.5 | 1,232.4 | 1,114.2 |
Selling, general and administrative expenses | 753.8 | 722.8 | 662.5 |
Restructuring and impairment expenses | 6.7 | 0 | 0 |
Interest expense | 8.4 | 10.1 | 7.3 |
Other income - net | (21.2) | (21.3) | (18.1) |
Earnings before provision for income taxes | 557.8 | 520.8 | 462.5 |
Provision for income taxes | 113.6 | 224.3 | 136 |
Net Earnings | $ 444.2 | $ 296.5 | $ 326.5 |
Net Earnings Per Share of Common Stock | $ 2.60 | $ 1.72 | $ 1.87 |
Diluted Net Earnings Per Share of Common Stock | $ 2.58 | $ 1.70 | $ 1.85 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net Earnings | $ 444.2 | $ 296.5 | $ 326.5 |
Other comprehensive earnings (loss) | |||
Foreign currency translation adjustments | (38.4) | 52.7 | (39.8) |
Unrealized net gain (loss) on cash flow derivative instruments, less related income tax (provision) benefit of ($0.1) in 2018, $0.7 in 2017 and $0.6 in 2016 | 0.2 | (1.1) | (1) |
Change in pension liability less related income tax benefit (provision) of $4.3 in 2018, $(7.5) in 2017 and $5.7 in 2016 | (13.1) | 12.1 | (9) |
Comprehensive Earnings | $ 392.9 | $ 360.2 | $ 276.7 |
CONSOLIDATED STATEMENT OF COM_2
CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Unrealized net (loss) gain on cash flow derivative instruments, related income tax benefit (provision) | $ 0.1 | $ 0.7 | $ 0.6 |
Change in pension liability, related income tax (provision) benefit | $ 4.3 | $ (7.5) | $ 5.7 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Activities | |||
Net earnings | $ 444.2 | $ 296.5 | $ 326.5 |
Adjustments to reconcile earnings to cash provided by (used in) operating activities: | |||
Depreciation and amortization | 71.9 | 70.1 | 65.1 |
U.S. Tax Reform income tax expense | 0 | 81.8 | 0 |
Stock based compensation expense | 10.1 | 9.9 | 9.4 |
Net changes in operating assets and liabilities, net of acquisitions: | |||
Current assets and liabilities | (40) | (127.8) | 68.5 |
Noncurrent assets and liabilities | (37.3) | (4.1) | (22.9) |
Cash Provided by Operating Activities | 448.9 | 326.4 | 446.6 |
Investing Activities | |||
Acquisitions of businesses | 0 | (43.1) | (90.8) |
Investments in marketable securities | (523.4) | (583.5) | (563.8) |
Proceeds from sales of marketable securities | 595.9 | 562.7 | 435.1 |
Capital expenditures | (85.2) | (94.2) | (80.7) |
Cash Used in Investing Activities | (12.7) | (158.1) | (300.2) |
Financing Activities | |||
Long-term debt (repaid) incurred | (189) | 86.5 | 74.1 |
Common stock repurchases | (202.6) | (139.1) | (135.2) |
Net proceeds (payments) from stock option activity | 0.9 | (0.9) | 5.7 |
Acquisition related contingent payments | (2.3) | (1.7) | 0 |
Dividends paid | (130.1) | (96.9) | (84.2) |
Cash Used in Financing Activities | (523.1) | (152.1) | (139.6) |
Net (decrease) increase in cash and cash equivalents | (86.9) | 16.2 | 6.8 |
Cash and cash equivalents-beginning of year | 346.6 | 330.4 | 323.6 |
Cash and Cash Equivalents-End of Year | $ 259.7 | $ 346.6 | $ 330.4 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Class A | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock |
Balance at Dec. 31, 2015 | $ 131.8 | $ 164.4 | $ 469.3 | $ 1,346.8 | $ (313.4) | $ (360.5) | |
Conversion of Class A Common Stock | (0.2) | 0 | 0.2 | ||||
Foreign currency translation adjustments | $ (39.8) | (39.8) | |||||
Net earnings | 326.5 | 326.5 | |||||
Issuance of share units | (4.6) | ||||||
Unrealized net gain (loss) on cash flow derivative instruments, less related income tax (provision) benefit of ($0.1) in 2018, $0.7 in 2017 and $0.6 in 2016 | (1) | (1) | |||||
Cash dividends on stock | (84.2) | ||||||
Vesting of share units | (2) | 3.4 | |||||
Change in pension liability less related income tax benefit (provision) of $4.3 in 2018, $(7.5) in 2017 and $5.7 in 2016 | (9) | (9) | |||||
Stock based compensation expense | 8.8 | ||||||
Exercises of stock options | 0.3 | 4 | |||||
Stock incentives and directors' compensation | 5.6 | 0.2 | |||||
Shares repurchased | (135.2) | (135.2) | |||||
Balance at Dec. 31, 2016 | 1,511.4 | 131.6 | 164.4 | 477.6 | 1,589.1 | (363.2) | (488.1) |
Conversion of Class A Common Stock | (0.4) | 0.1 | 0.3 | ||||
Foreign currency translation adjustments | 52.7 | 52.7 | |||||
Net earnings | 296.5 | 296.5 | |||||
Issuance of share units | (4.9) | ||||||
Unrealized net gain (loss) on cash flow derivative instruments, less related income tax (provision) benefit of ($0.1) in 2018, $0.7 in 2017 and $0.6 in 2016 | (1.1) | (1.1) | |||||
Cash dividends on stock | (96.9) | ||||||
Vesting of share units | (2.9) | 2.9 | |||||
Change in pension liability less related income tax benefit (provision) of $4.3 in 2018, $(7.5) in 2017 and $5.7 in 2016 | 12.1 | 12.1 | |||||
Stock based compensation expense | 9.2 | ||||||
Exercises of stock options | 1.4 | (2.4) | |||||
Stock incentives and directors' compensation | 5.8 | 0.2 | |||||
Shares repurchased | (139.1) | (139.1) | |||||
Balance at Dec. 31, 2017 | 1,644.9 | 131.2 | 164.5 | 486.5 | 1,788.7 | (299.5) | (626.5) |
Conversion of Class A Common Stock | (0.2) | 0 | 0.2 | ||||
Foreign currency translation adjustments | (38.4) | (38.4) | |||||
Net earnings | 444.2 | 444.2 | |||||
Issuance of share units | (6) | ||||||
Unrealized net gain (loss) on cash flow derivative instruments, less related income tax (provision) benefit of ($0.1) in 2018, $0.7 in 2017 and $0.6 in 2016 | 0.2 | 0.2 | |||||
Cash dividends on stock | (130.1) | ||||||
Vesting of share units | (2.4) | 2.5 | |||||
Change in pension liability less related income tax benefit (provision) of $4.3 in 2018, $(7.5) in 2017 and $5.7 in 2016 | (13.1) | (13.1) | |||||
Stock based compensation expense | 10.1 | ||||||
Exercises of stock options | 1.4 | (0.7) | |||||
Stock incentives and directors' compensation | 6.9 | 0.1 | |||||
Shares repurchased | (202.6) | (202.6) | |||||
Balance at Dec. 31, 2018 | $ 1,717 | $ 131 | $ 164.5 | $ 496.7 | $ 2,102.8 | $ (350.8) | $ (827.2) |
CONSOLIDATED STATEMENT OF STO_2
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Unrealized net (loss) gain on cash flow derivative instruments, related income tax benefit (provision) | $ (0.1) | $ (0.7) | $ (0.6) |
Change in pension liability, related income tax (provision) benefit | 4.3 | (7.5) | 5.7 |
Accumulated Other Comprehensive Loss | |||
Unrealized net (loss) gain on cash flow derivative instruments, related income tax benefit (provision) | (0.1) | 0.7 | 0.6 |
Change in pension liability, related income tax (provision) benefit | $ 4.3 | $ (7.5) | $ 5.7 |
Treasury Stock | |||
Exercise of stock options, shares surrendered as proceeds and to pay taxes | 54,180 | 160,856 | 54,019 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Organization and Significant Accounting Policies | 1. Organization and Significant Accounting Policies Organization. and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The Rest of World segment also manufacturers and markets in-home air purification products in China. Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries after elimination of intercompany transactions. Use of estimates . The preparation of financial statements in conformity with accounting principles generally accepted in the United States (U.S.) requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and notes. Actual results could differ from those estimates. Fair value of financial instruments. The carrying amounts of cash, cash equivalents, marketable securities, receivables, floating rate debt and trade payables approximated fair value as of December 31, 2018 and 2017, due to the short maturities or frequent rate resets of these instruments. As of December 31, 2018 and 2017, the carrying value of term notes with insurance companies was approximately $120.0 million and $127.5 million, respectively, which approximated fair value in both years. The fair value was estimated based on current rates offered for debt with similar maturities. Foreign currency translation . For all subsidiaries outside the U.S., with the exception of its Barbados, Hong Kong and Mexican companies and its non-operating companies in the Netherlands, the Company uses the local currency as the functional currency. For those operations using a functional currency other than the U.S. dollar, assets and liabilities were translated into U.S. dollars at year-end exchange rates, and revenues and expenses were translated at weighted-average exchange rates. The resulting translation adjustments were recorded as a separate component of stockholders’ equity. The Barbados, Hong Kong, Mexican and Netherlands companies use the U.S. dollar as the functional currency. Gains and losses from foreign currency transactions were included in net earnings and were not significant in 2018, 2017, or 2016. Cash and cash equivalents . The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Marketable securities . The Company considers all highly liquid investments with maturities greater than 90 days when purchased to be marketable securities. At December 31, 2018, the Company’s marketable securities consisted of bank time deposits with original maturities ranging from 180 days to 12 months and were primarily located at investment grade rated banks in China. Inventory valuation. . Cost is determined on the last-in, first-out (LIFO) method for a majority of the Company’s domestic inventories, which comprised 64 percent and 59 percent of the Company’s total inventory at December 31, 2018 and 2017, respectively. Inventories of foreign subsidiaries, the remaining domestic inventories and supplies were determined using the first-in, first-out (FIFO) method. Property, plant and equipment. Property, plant and equipment are stated at cost. Depreciation is computed primarily by the straight-line method. The estimated service lives used to compute depreciation are generally 25 to 50 years for buildings, three to 20 years for equipment and three to 15 years for software. Maintenance and repair costs are expensed as incurred. Goodwill and other intangibles. Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment on an annual basis. Separable intangible assets, primarily comprised of customer relationships, that are not deemed to have an indefinite life are amortized on a straight-line basis over their estimated useful lives which range from three to 25 years. Impairment of long-lived and amortizable intangible assets. Property, plant and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. Such analyses necessarily involve significant judgment. Product warranties. The Company’s products carry warranties that generally range from one to ten years and are based on terms that are consistent with the market. The Company records a liability for the expected cost of warranty-related claims at the time of sale. The allocation of the warranty liability between current and long-term is based on expected warranty claims to be paid in the next year as determined by historical product failure rates. The following table presents the Company’s product warranty liability activity in 2018 and 2017: Years ended December 31 (dollars in millions) 2018 2017 Balance at beginning of year $ 141.2 $ 140.9 Expense 40.7 39.7 Claims settled (42.5 ) (39.4 ) Balance at end of year $ 139.4 $ 141.2 Derivative instruments. The Company utilizes certain derivative instruments to enhance its ability to manage currency as well as raw materials price risk. The Company does not enter into contracts for speculative purposes. The fair values of all derivatives are recorded in the consolidated balance sheets. The change in a derivative’s fair value is recorded each period in current earnings or accumulated other comprehensive loss (AOCL), depending on whether the derivative is designated as part of a hedge transaction and if so, the type of hedge transaction. See Note 13, “Derivative Instruments” of the notes to consolidated financial statements for disclosure of the Company’s derivative instruments and hedging activities. Fair Value Measurements. Accounting Standards Codification ( ASC) 820 Fair Value Measurements , among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on the market approach which are prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Assets measured at fair value on a recurring basis are as follows (dollars in millions): Fair Value Measurement Using December 31, 2018 December 31, 2017 Quoted prices in active markets for identical assets (Level 1) $ 385.3 $ 473.4 Significant other observable inputs (Level 2) 7.5 (1.4 ) There were no changes in the valuation techniques used to measure fair values on a recurring basis. Revenue recognition. The Company adopted ASC 606-10 as of January 1, 2018. Substantially all of the Company’s sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of products to the customer at the point in time when title and risk are passed to the customer, which generally occurs upon shipment of the product. See Note 2, “Revenue Recognition” for disclosure of the Company’s revenue recognition activities. Advertising. The majority of advertising costs are charged to operations as incurred and amounted to $132.1 million, $126.9 million and $113.9 million during 2018, 2017 and 2016, respectively. Included in total advertising costs are expenses associated with store displays for water heater, water treatment and air purification products in China that are amortized over 12 to 36 months which totaled $38.7 million, $43.0 million and $37.0 million during 2018, 2017 and 2016, respectively. Research and development. Research and development costs are charged to operations as incurred and amounted to $94.0 million, $86.4 million and $80.1 million during 2018, 2017 and 2016, respectively. Environmental costs. The Company accrues for costs associated with environmental obligations when such costs are probable and reasonably estimable. Costs of estimated future expenditures are not discounted to their present value. Recoveries of environmental costs from other parties are recorded as assets when their receipt is considered probable. The accruals are adjusted as facts and circumstances change. Stock-based compensation. Compensation cost is recognized using the straight-line method over the vesting period of the award and forfeitures are recognized as they occur. In accordance with amended ASC 718, the Company recognized $2.4 million, $11.6 million, and $5.9 million of discrete income tax benefits on settled stock based compensation awards during 2018, 2017, and 2016 respectively. Income taxes. The provision for income taxes is computed using the asset and liability method, in accordance with ASC 740 Income Taxes , under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled and are classified as noncurrent in the consolidated balance sheet. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon settlement. Earnings per share of common stock. The Company is not required to use the two-class method of calculating earnings per share since its Class A Common Stock and Common Stock have equal dividend rights. 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: 2018 2017 2016 Denominator for basic earnings per share - weighted-average shares outstanding 170,589,345 172,666,056 174,712,683 Effect of dilutive stock options, restricted stock and share units 1,604,695 1,939,133 2,112,597 Denominator for diluted earnings per share 172,194,040 174,605,189 176,825,280 On April 11, 2016, the Company’s stockholders approved a proposal to increase the Company’s authorized shares of Common Stock and on September 7, 2016, the Company’s Board of Directors declared a two-for-one stock split of the Company’s Class A Common Stock and Common Stock (including treasury shares) in the form of a 100 percent stock dividend to stockholders of record on September 21, 2016 and payable on October 5, 2016. All references in the financial statements and footnotes to the number of shares outstanding, price per share, per share amounts and stock based compensation data have been recast to reflect the stock split for all periods presented. Reclassifications. Certain amounts from prior years have been reclassified to conform with current year presentation. Recent Accounting Pronouncements In August 2017, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) 815, Derivatives and Hedging (issued under Accounting Standards Update (ASU) 2017-12, “Targeted Improvements to Accounting for Hedging Activities”). Under this amendment, more hedging strategies are eligible for hedge accounting treatment. ASU 2017-12 also amends the presentation and disclosure requirements regarding derivatives and hedging and changes how companies assess effectiveness. The Company adopted the amendment on January 1, 2018 and the adoption of ASU 2017-12 did not have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows. In May 2017, the FASB amended ASC 718, Compensation – Stock Compensation (issued under ASU 2017-09, “Scope of Modification Accounting”). This amendment clarifies when changes to the terms or conditions of share-based payment awards must be accounted for as a modification. Under this amendment, modification accounting must be used if three conditions are met: the fair value changes, the vesting conditions change, or the classification of the award changes due to the changes in terms or conditions. The Company adopted the amendment on January 1, 2018 and the adoption of ASU 2017-09 did not have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows. In March 2017, the FASB amended ASC 715, Compensation – Retirement Benefits (issued under ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”). This amendment changes the way net periodic benefit cost associated with employer-sponsored defined benefit plans is presented in the statement of earnings. Under the amendment, the service cost component of net periodic benefit cost is included in the same lines in the statement of earnings as other employee compensation costs and the other components of net periodic benefit cost must be presented separately outside of income from operations. The Company adopted the amendment on January 1, 2018. As a result of this adoption, for the year ended December 31, 2017 the Company retrospectively reclassified $6.3 million and $4.6 million of non-service cost pension income from cost of products sold and selling, general and administrative expenses, respectively, to other income in the consolidated statement of earnings. The for the year ended December 31, 2016, the Company retrospectively reclassified $5.1 million and $3.6 million of non-service cost pension income from cost of products sold and selling, general and administrative expenses, respectively, to other income in the consolidated statement of earnings. The adoption did not have a material impact on the Company’s consolidated balance sheets, statements of earnings or statements of cash flows. In January 2017, the FASB amended ASC 350, Intangibles – Goodwill and Other (issued under ASU 2017-04, “Simplifying the Test for Goodwill Impairment”). This amendment simplifies the test for goodwill impairment by only requiring an entity to perform an annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount that the carrying amount exceeds the reporting unit’s fair value. Any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendment requires adoption on January 1, 2020. The Company does not expect that the adoption of ASU 2017-04 will have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows. In October 2016, the FASB amended ASC 740, Income Taxes (issued under ASU 2016-16). This amendment requires that the income tax consequences of an intra-entity transfer of an asset other than inventory be recognized when the transfer occurs. The Company adopted this amendment on January 1, 2018 and the adoption of amended ASU 2016-16 did not have a material impact on its consolidated balance sheets, statement of earnings or statements of cash flows. In February 2016, the FASB amended ASC 842, Leases In 2018, the Company completed a comprehensive analysis of its lease population. In May 2014, the FASB issued ASC 606-10, Revenue from Contracts with Customers (issued under ASU 2014-09). ASU 2014-09 replaces all previously existing revenue recognition guidance. The Company adopted ASU 2014-09 on January 1, 2018 using the full retrospective method and therefore applied the standard to all contracts commencing on or after January 1, 2016. The Company recognized a net after-tax reduction to opening retained earnings of $3.9 million as of January 1, 2016 in connection with the adoption of ASU 2014-09. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated balance sheets, statements of earnings or statements of cash flows. See Note 2 “Revenue Recognition” for further discussion. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition Disclosure [Text Block] | 2. Revenue Recognition Substantially all of the Company’s sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of products to the customer at the point in time when title and risk are passed to the customer, which generally occurs upon shipment of the product. Each unit sold is considered an independent, unbundled performance obligation. The Company’s sales arrangements do not include other performance obligations that are material in the context of the contract. The nature, timing and amount of revenue for a respective performance obligation are consistent for each customer. The Company measures the sales transaction price based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Sales and value added taxes are excluded from the measurement of transaction price. The Company’s payment terms for the majority of its customers are 30 to 90 days from shipment. Additionally, certain customers in China pay prior to the shipment of products resulting in a customer deposits liability of $47.0 million and $56.0 million at December 31, 2018 and December 31, 2017, respectively. The Company assesses collectability based on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. The Company’s allowance for doubtful accounts was $6.4 million and $5.3 million at December 31, 2018 and December 31, 2017, respectively. Rebates and incentives are based on pricing agreements and are tied to sales volume. The amount of revenue is reduced for variable consideration related to customer rebates which are calculated using expected values and is based on program specific factors such as expected rebate percentages based on expected volumes. In situations where the customer has the right to return eligible products, the Company reduces revenue for its estimates of expected product returns, which are primarily based on an analysis of historical experience. Changes in such accruals may be required if actual sales volume differs from estimated sales volume or if future returns differ from historical experience. Shipping and handling costs billed to customers are included in net sales and the related costs are included in cost of products sold and are activities performed to fulfill the promise to transfer products. Disaggregation of Net Sales 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 and electric water heaters, boilers and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The Rest of World segment also manufactures and markets in-home air purification products in China. As each segment manufactures and markets products in its respective region of the world, the Company has determined that geography is the primary factor in reporting its sales. The Company further disaggregates its North America segment sales by major product line as each of North America’s major product lines is sold through distinct distribution channels and these product lines may be impacted differently by certain economic factors. Within the Rest of World segment, particularly in China and India, the Company’s major customers purchase across the Company’s product lines, utilizing the same distribution channel regardless of product type. In addition, the impact of economic factors is unlikely to be differentiated by product line in the Rest of World segment. The North America segment major product lines are defined as the following: Water heaters The Company’s water heaters are open water heating systems that heat potable water. Typical applications for water heaters include residences, restaurants, hotels and motels, office buildings, laundries, car washes and small businesses. The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes more than 1,300 independent wholesale plumbing distributors. The Company also sells residential water heaters and related parts through retail and maintenance, repair and operations (MRO) channels. A significant portion of the Company’s water heater sales in the North America segment is derived from the replacement of existing products. Boilers The Company’s boiler sales in the North America segment are derived from a combination of replacement of existing products and new construction. Water treatment products The Company’s water treatment products range from point-of-entry water softeners and whole-home water filtration products to on-the-go filtration bottles and point-of-use carbon and reverse osmosis products. Typical applications for the Company’s water treatment products include residences, restaurants, hotels and offices. A portion of the Company’s sales of water treatment products in the North America segment is comprised of replacement filters. The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America segment sales are further disaggregated by major product line. In addition, the Company’s Rest of World segment sales are disaggregated by China and all other Rest of World. Years ending December 31 (dollars in millions) 2018 2017 2016 North America Water heaters and related parts $ 1,757.0 $ 1,663.0 $ 1,563.2 Boilers and related parts 200.4 183.3 161.6 Water treatment products (1) 87.3 58.5 18.4 Total North America 2,044.7 1,904.8 1,743.2 Rest of World China $ 1,070.4 $ 1,029.4 $ 887.5 All other Rest of World 103.2 86.9 78.1 Total Rest of World 1,173.6 1,116.3 965.6 Inter-segment sales (30.4 ) (24.4 ) (22.9 ) Total Net Sales $ 3,187.9 $ 2,996.7 $ 2,685.9 (1) Includes Hague Quality Water International (Hague) and Aquasana, Inc. (Aquasana) from the date of acquisition of September 5, 2017 and August 8, 2016, respectively. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions | 3. Acquisitions On September 5, 2017, the Company acquired 100 The Company paid an aggregate cash purchase price of $43.1 million, net of $4.1 million of cash acquired. In addition, the Company established a $1.5 million holdback liability to satisfy any potential obligations of the former owners of Hague, should they arise. The Company also agreed to make a contingent payment of up to an additional $2.0 million based on the amount by which products manufactured by or branded Hague increase over the two-year period ending June 30, 2019. In addition, the Company incurred acquisition-related costs of approximately $0.2 million. As of the acquisition date, the Company estimated the fair value of the holdback liability and additional contingent consideration at $1.5 million and $2.0 million, respectively. During 2018, the Company finalized the amount of acquisition date working capital, which resulted in a $1.3 million payment to the former owners of Hague related to the aforementioned holdback. The Company also paid $1.0 million of contingent payments associated with the amount by which sales of products manufactured by Hague increase over the two-year period ending June 30, 2019. As of December 31, 2018, the Company estimated the fair value of the remaining contingent consideration at $1.0 million. The following table summarizes the allocation of fair value of the assets acquired and liabilities assumed at the date of acquisition of Hague for purposes of allocating the purchase price. The $12.8 million of acquired intangible assets was comprised of $ 1.1 11.7 September 5, 2017 (dollars in millions) Current assets, net of cash acquired $ 7.8 Property, plant and equipment 6.9 Intangible assets 12.8 Goodwill 22.2 Total assets acquired 49.7 Current liabilities (5.6 ) Long-term liabilities (1.0 ) Total liabilities assumed (6.6 ) Net assets acquired $ 43.1 Hague’s results of operations have been included in the Company’s consolidated financial statements from September 5, 2017, the date of acquisition. On August 8, 2016, the Company acquired 100 The Company paid an aggregate cash purchase price of $85.1 million, net of $1.9 million of cash acquired. In addition, the Company incurred acquisition-related costs of approximately $1.2 million and recorded a holdback liability to satisfy any potential obligations of the former owners of Aquasana to pay any adjustment to the purchase price. As of the acquisition date, the fair value of the holdback liability was $1.7 million. The Company paid the full holdback liability to the former owners of Aquasana in 2017. The following table summarizes the allocation of fair value of the assets acquired and liabilities assumed at the date of acquisition of Aquasana. The $30.0 million of acquired intangible assets was comprised of $ 21.5 8.3 0.2 August 8, 2016 (dollars in millions) Current assets, net of cash acquired $ 7.3 Property, plant and equipment 2.7 Intangible assets 30.0 Goodwill 60.4 Total assets acquired 100.4 Current liabilities (7.1 ) Long-term liabilities (8.2 ) Total liabilities assumed (15.3 ) Net assets acquired $ 85.1 Aquasana’s results of operations have been included in the Company’s financial statements from August 8, 2016, the date of acquisition. |
Restructuring and Impairment Ex
Restructuring and Impairment Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Impairment Expenses | 4. Restructuring and Impairment Expenses On March 21, 2018, the Company announced a move of manufacturing operations from its Renton, Washington facility to other U.S. facilities. The Company recognized $6.7 million of restructuring and impairment expenses, comprised of $4.0 million of severance and compensation related costs, lease exit costs of $2.1 million and impairment charges related to long-lived assets totaling $0.6 million, as well as a corresponding $1.7 million tax benefit related to the charges. As of December 31, 2018, the consolidation of the Renton facility to other U.S. facilities was complete. There were no restructuring and impairment expenses in 2017 or 2016. The following table presents an analysis of the Company’s restructuring reserve for the twelve months ended December 31, 2018: (dollars in millions) Severance Costs Lease Exit Costs Fixed Assets Impairment Total Balance at January 1, 2018 $ — $ — $ — $ — Restructuring expense recognized 4.0 2.1 0.6 6.7 Cash payments and disposals (3.8 ) (0.8 ) (0.6 ) (5.2 ) Balance at December 31, 2018 $ 0.2 $ 1.3 $ — $ 1.5 |
Statement of Cash Flows
Statement of Cash Flows | 12 Months Ended |
Dec. 31, 2018 | |
Statement of Cash Flows | 5. Statement of Cash Flows Supplemental cash flow information is as follows: Years ended December 31 (dollars in millions) 2018 2017 2016 Net change in current assets and liabilities, net of acquisitions: Receivables $ (54.6 ) $ (75.8 ) $ (15.1 ) Inventories (7.7 ) (37.5 ) (23.4 ) Other current assets 10.0 (9.0 ) (3.2 ) Trade payables 8.8 (5.1 ) 101.5 Accrued liabilities, including payroll and benefits (3.5 ) 12.2 6.0 Income taxes payable (refundable) 7.0 (12.6 ) 2.7 $ (40.0 ) $ (127.8 ) $ 68.5 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventories | 6. Inventories December 31 (dollars in millions) 2018 2017 Finished products $ 137.6 $ 140.4 Work in process 23.3 18.3 Raw materials 174.4 160.5 Inventories, at FIFO cost 335.3 319.2 LIFO reserve (30.6 ) (22.2 ) $ 304.7 $ 297.0 The Company recognized after-tax LIFO (income) expense of $(0.4) million, $(0.3) million and $0.3 million in 2018, 2017 and 2016, respectively. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment | 7. Property, Plant and Equipment December 31 (dollars in millions) 2018 2017 Land $ 11.2 $ 11.2 Buildings 323.3 329.9 Equipment 643.8 608.4 Software 118.5 110.6 1,096.8 1,060.1 Less accumulated depreciation and amortization 556.8 531.2 $ 540.0 $ 528.9 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Other Intangible Assets | 8. Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill during the years ended December 31, 2018 and 2017 consisted of the following: (dollars in millions) North America Rest of World Total Balance at December 31, 2016 $ 432.2 $ 59.3 $ 491.5 Acquisitions 22.2 — 22.2 Currency translation adjustment 2.8 0.2 3.0 Balance at December 31, 2017 457.2 59.5 516.7 Currency translation adjustment (3.3 ) (0.4 ) (3.7 ) Balance at December 31, 2018 $ 453.9 $ 59.1 $ 513.0 The carrying amount of other intangible assets consisted of the following: 2018 2017 December 31 (dollars in millions) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Amortizable intangible assets: Patents $ 3.7 $ (3.3 ) $ 0.4 $ 3.7 $ (2.7 ) $ 1.0 Customer lists 236.8 (108.2 ) 128.6 235.8 (93.3 ) 142.5 Total amortizable intangible assets 240.5 (111.5 ) 129.0 239.5 (96.0 ) 143.5 Indefinite-lived intangible assets: Trade names 164.1 — 164.1 165.2 — 165.2 Total intangible assets $ 404.6 $ (111.5 ) $ 293.1 $ 404.7 $ (96.0 ) $ 308.7 Amortization expenses of other intangible assets of $14.3 million, $13.7 million, and $13.4 million were recorded in 2018, 2017 and 2016, respectively. In the future, excluding the impact of any future acquisitions, the Company expects amortization expense of approximately $14.2 million annually and the intangible assets will be amortized over a weighted average period of 12 years. The Company concluded that no goodwill impairment existed at the time of the annual impairment tests which were performed in the fourth quarters of 2018, 2017 and 2016. No impairments of other intangible assets were recorded in 2018, 2017 and 2016. |
Debt and Lease Commitments
Debt and Lease Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Debt and Lease Commitments | 9. Debt and Lease Commitments December 31 (dollars in millions) 2018 2017 Bank credit lines, average year-end interest rates of 3.4% for 2018 and 2.5% for 2017 $ 17.1 $ 15.9 Revolving credit agreement borrowings, average year-end interest rates of 3.5% for 2018 and 2.5% for 2017 10.0 190.0 Commercial paper, average year-end interest rates of 2.7% for 2018 and 1.7% for 2017 74.3 77.0 Term notes with insurance companies, expiring 2029-2034, average year-end interest rates of 3.3% for 2018 and 3.4% for 2017 120.0 122.7 Canadian term notes with insurance companies, expiring through 2018, average year-end interest rates of 5.3% for 2017 — 4.8 221.4 410.4 Less long-term debt due within one year — 7.5 Long-term debt $ 221.4 $ 402.9 In December 2016, the Company completed a $500 million multi-year multi-currency revolving credit agreement with a group of nine banks, which expires on December 15, 2021. The facility has an accordion provision which allows it to be increased up to $700 million if certain conditions (including lender approval) are satisfied. Borrowings under the Company’s bank credit lines and commercial paper borrowings are supported by the revolving credit agreement. As a result of the long-term nature of this facility, the commercial paper and credit line borrowings are classified as long-term debt at December 31, 2018 and 2017. At its option, the Company either maintains cash balances or pays fees for bank credit and services. On November 28, 2016, the Company issued $45 million in term notes in two tranches to two insurance companies. Principal payments commence in 2023 and 2028 and the notes mature in 2029 2034 2.87 3.10 Scheduled maturities of long-term debt within each of the five years subsequent to December 31, 2018 are as follows: Years ending December 31 (dollars in millions) Amount 2019 $ — 2020 6.8 2021 108.2 2022 6.8 2023 10.0 Future minimum payments under non-cancelable operating leases relating mostly to office, manufacturing and warehouse facilities total $69.1 million and are due as follows: Years ending December 31 (dollars in millions) Amount 2019 $ 14.8 2020 11.4 2021 8.6 2022 7.5 2023 3.5 Thereafter 23.3 Rent expense, including payments under operating leases, was $24.0 million, $23.9 million and $22.4 million in 2018, 2017 and 2016, respectively. Cash interest paid by the Company was $8.6 million, $10.0 million and $7.2 million in 2018, 2017 and 2016, respectively. The Company capitalized interest expense of $0.4 million, $0.7 million and $0.2 million in 2018, 2017 and 2016, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity | 10. Stockholders’ Equity The Company’s authorized capital consists of three million shares of Preferred Stock $1 par value, 27 million shares of Class A Common Stock $5 par value, and 240 million shares of Common Stock $1 par value. The Common Stock has equal dividend rights with Class A Common Stock and is entitled, as a class, to elect one-third of the Board of Directors and has 1/10th vote per share on all other matters. Class A Common Stock is convertible to Common Stock on a one for one basis. There were 48,232 shares during 2018, 73,792 shares during 2017 and 60,045 shares during 2016, of Class A Common Stock converted into Common Stock. Regular dividends paid on the A. O. Smith Corporation Class A Common Stock and Common Stock amounted to $0.76, $0.56 and $0.48 per share in 2018, 2017 and 2016, respectively. In July 2018, the Company’s Board of Directors approved adding 2.5 million The number of shares purchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, as well as working capital requirements, general business conditions and other factors, including alternative investment opportunities. The stock repurchase authorization remains effective until terminated by the Company’s Board of Directors which may occur at any time, subject to the parameters of any Rule 10b5-1 automatic trading plan that the Company may then have in effect. In 2018, the Company repurchased 3,797,800 shares at an average price of $53.34 per share and at a total cost of $202.6 million. As of December 31, 2018, there were 6,075,253 shares remaining on the existing repurchase authorization. In 2017, the Company purchased 2,533,350 shares at a cost of $139.1 million. In 2016, the Company purchased 3,273,109 shares at a cost of $135.2 million. At December 31, 2018, a total of 130,380 and 22,418,066 shares of Class A Common Stock and Common Stock, respectively, were held as treasury stock. At December 31, 2017, a total of 130,380 and 18,914,082 shares of Class A Common Stock and Common Stock, respectively, were held as treasury stock. Accumulated other comprehensive loss is as follows: December 31 (dollars in millions) 2018 2017 Cumulative foreign currency translation adjustments $ (64.9 ) $ (26.5 ) Unrealized net loss on cash flow derivative instruments less related income tax benefit provision of $0.2 in 2018 and $0.6 in 2017 (0.7 ) (0.9 ) Pension liability less related income tax benefit of $180.1 in 2018 and $175.9 in 2017 (285.2 ) (272.1 ) $ (350.8 ) $ (299.5 ) Changes to accumulated other comprehensive loss by component are as follows: Years ended December 31, 2018 2017 Cumulative foreign currency translation Balance at beginning of period $ (26.5 ) $ (79.2 ) Other comprehensive gain (loss) before reclassifications (38.4 ) 52.7 Balance at end of period (64.9 ) (26.5 ) Unrealized net (loss) gain on cash flow derivatives Balance at beginning of period (0.9 ) 0.2 Other comprehensive gain (loss) before reclassifications 0.6 (0.5 ) Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $0.2 and $0.4 in 2018 and 2017, respectively) (1) (0.4 ) (0.6 ) Balance at end of period (0.7 ) (0.9 ) Pension liability Balance at beginning of period (272.1 ) (284.2 ) Other comprehensive (loss) gain before reclassifications (27.0 ) 1.4 Amounts reclassified from accumulated other comprehensive loss (1) 13.9 10.7 Balance at end of period (285.2 ) (272.1 ) Total accumulated other comprehensive loss, end of period $ (350.8 ) $ (299.5 ) (1) Amounts reclassified from accumulated other comprehensive loss: Realized gains on derivatives reclassified to cost of products sold (0.6 ) (1.0 ) Tax provision 0.2 0.4 Reclassification net of tax $ (0.4 ) $ (0.6 ) Amortization of pension items: Actuarial losses $ 19.0 (2) $ 17.9 (2) Prior year service cost (0.5 ) (2) (0.4 ) (2) 18.5 17.5 Tax benefit (4.6 ) (6.8 ) Reclassification net of tax $ 13.9 $ 10.7 (2) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 12 “ Pensions and Other Post-retirement Benefits” for additional details |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Stock Based Compensation | 11. Stock Based Compensation The Company adopted the A. O. Smith Combined Incentive Compensation Plan (the “Plan”) effective January 1, 2007. The Plan was reapproved by stockholders on April 16, 2012. The Plan is a continuation of the A. O. Smith Combined Executive Incentive Compensation Plan which was originally approved by shareholders in 2002. The number of shares available for granting of options or share units at December 31, 2018, was 2,490,644. Upon stock option exercise or share unit vesting, shares are issued from treasury stock. Total stock based compensation expense recognized in 2018, 2017 and 2016 was $10.1 million, $9.9 million and $9.4 million, respectively. Stock options The stock options granted in 2018, 2017 and 2016 have three year pro rata vesting from the dates 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 2018, 2017 and 2016 expire ten years after the date of grant. Stock option compensation expense recognized in 2018, 2017 and 2016 was $4.4 million, $4.7 million and $4.5 million, respectively. Included in the stock option expense recognized in 2018, 2017 and 2016 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. Changes in option shares, all of which are Common Stock, were as follows: Years Ended December 31 2018 2017 2016 Shares Weighted Avg. Exercise Price Shares Weighted Avg. Exercise Price Shares Weighted Avg. Exercise Price Number of shares under options: Outstanding at beginning of year 2,263,126 27.73 2,664,333 21.69 2,653,558 18.03 Granted 373,220 61.62 358,150 50.16 553,370 32.25 Exercised (1) (176,302 ) 22.93 (752,603 ) 16.93 (531,933 ) 14.12 Forfeited (27,355 ) 47.95 (6,754 ) 37.46 (10,662 ) 37.23 Outstanding at end of year (2) 2,432,689 33.05 2,263,126 27.73 2,664,333 21.69 Exercisable at end of year (3) 1,665,184 24.52 1,387,259 20.48 1,602,651 16.12 (1) The total intrinsic value of options exercised in 2018, 2017 and 2016 was $6.8 million, $29.1 million and $13.5 million, respectively. (2) The weighted average remaining contractual life of options outstanding was 7 years at December 31, 2018, December 31, 2017, and December 31, 2016. The aggregate intrinsic value of options outstanding at December 31, 2018 was $33.0 million. (3) The weighted average remaining contractual life of options exercisable was 6 years at December 31, 2018, December 31, 2017 and, December 31, 2016. The aggregate intrinsic value of options exercisable at December 31, 2018 was $31.1 million. Shares Weighted Avg. Exercise Price Nonvested options at beginning of year 875,867 39.21 Granted 373,220 61.62 Vested (454,653 ) 36.26 Forfeited (26,929 ) 47.96 Nonvested options at end of year 767,505 51.55 The weighted-average fair value per option at the date of grant during 2018, 2017 and 2016, using the Black-Scholes option-pricing model, was $ 14.80 13.04 8.03 2018 2017 2016 Expected life (years) 5.7 5.7 5.8 Risk-free interest rate 2.9 % 2.4 % 1.7 % Dividend yield 1.0 % 1.0 % 1.3 % Expected volatility 22.1 % 26.5 % 27.7 % The expected life of options for purposes of these models is based on historical exercise behaviors. The risk free interest rates for purposes of these models are based on the U.S. Treasury yield curve in effect on the date of grant for the respective expected lives of the option. The expected dividend yields for purposes of these models are based on the dividends paid in the preceding four quarters divided by the grant date market value of the Common Stock. The expected volatility for purposes of these models is based on the historical volatility of the Common Stock. Stock Appreciations Rights (SARs) Certain non-U.S.-based employees were granted SARs. Each SAR award grants the employee the right to receive cash equal to the excess of the share price of the Company’s Common Stock on the date that a participant exercises such right over the grant date value of the SAR. SARs granted have three year pro rata vesting from the date of grant. SARs were issued at exercise prices equal to the fair value of the Company’s Common Stock on the date of grant and expire ten years from the date of grant. The fair value and compensation expense for SARs are remeasured at each reporting period using the Black-Scholes option-pricing model, using assumptions similar to stock option awards. No SARs were granted in 2018, 2017 or 2016. As of December 31, 2018, there were 16,170 SARs outstanding and exercisable. In 2017, there were 23,660 SARs outstanding and 15,774 were exercisable. In 2016, there were 24,940 SARs outstanding and 8,320 were exercisable. Stock based compensation expense attributable to SARS was not material in 2018, 2017 and 2016. Restricted stock and share units Participants may also be awarded shares of restricted stock or share units under the Plan. The Company granted 106,581, 107,853 and 160,465 share units under the plan in 2018, 2017 and 2016, respectively. The share units were valued at $6.6 million, $5.4 million and $5.2 million at the date of issuance in 2018, 2017 and 2016, respectively, and will be recognized as compensation expense ratably over the three-year vesting period; however, included in share based compensation is expense associated with the accelerated vesting of share unit awards for certain employees who either are retirement eligible or become retirement eligible during the vesting period. Compensation expense of $5.7 million, $5.2 million and $4.9 million was recognized in 2018, 2017 and 2016, 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 is as follows: Number of Units Weighted-Average Grant Date Value Outstanding at January 1, 2018 433,290 $ 34.96 Granted 106,581 61.70 Vested (145,105 ) 30.79 Forfeited (15,165 ) 43.44 Outstanding at December 31, 2018 379,601 42.93 |
Pension and Other Post-retireme
Pension and Other Post-retirement Benefits | 12 Months Ended |
Dec. 31, 2018 | |
Pension and Other Post-retirement Benefits | 12. Pension and Other Post-retirement Benefits The Company provides retirement benefits for all U.S. employees including benefits for employees of previously owned businesses which were earned up to the date of sale. The Company also has two foreign pension plans, neither of which is material to the Company’s financial position. The Company has a defined contribution plan which matches 100 percent of the first one percent of contributions made by participating employees and matches 50 percent of the next five percent of employee contributions. The Company also has defined contribution plans for certain hourly employees which provide for matching Company contributions. The Company also has a defined benefit plan for salaried employees and its non-union hourly workforce. In 2009, the Company announced U.S. employees hired after January 1, 2010, would not participate in the defined benefit plan, and benefit accruals for the majority of current salaried and hourly employees sunset on December 31, 2014. An additional Company contribution is made to the defined contribution plan in lieu of benefits earned in a defined benefit plan. The Company also has defined benefit and contribution plans for certain union hourly employees. The Company has unfunded defined-benefit post-retirement plans covering certain hourly and salaried employees that provide medical and life insurance benefits from retirement to age 65. Certain hourly employees retiring after January 1, 1996, are subject to a maximum annual benefit and salaried employees hired after December 31, 1993, are not eligible for post-retirement medical benefits. Obligations and Funded Status Pension and Post-Retirement Disclosure Information under ASC 715, Compensation – Retirement Benefits (ASC 715) The following tables present the changes in benefit obligations, plan assets and funded status for domestic pension and post-retirement plans and the components of net periodic benefit costs. Pension Benefits Post-retirement Benefits Years ended December 31 (dollars in millions) 2018 2017 2018 2017 Accumulated benefit obligation (ABO) at December 31 $ 833.0 $ 921.8 N/A N/A Change in projected benefit obligations (PBO) PBO at beginning of year $ (922.7 ) $ (895.8 ) $ (7.6 ) $ (6.6 ) Service cost (2.0 ) (1.8 ) (0.2 ) (0.1 ) Interest cost (28.9 ) (30.0 ) (0.3 ) (0.3 ) Participant contributions — — (0.1 ) (0.1 ) Plan amendments — — — — Actuarial gain (loss) including assumption changes 61.2 (54.3 ) 0.6 (1.1 ) Benefits paid 58.6 59.2 0.6 0.6 PBO at end of year $ (833.8 ) $ (922.7 ) $ (7.0 ) $ (7.6 ) Change in fair value of plan assets Plan assets at beginning of year $ 874.8 $ 787.0 $ — $ — Actual return on plan assets (39.3 ) 116.5 — — Contribution by the company 0.6 30.5 0.5 0.4 Participant contributions — — 0.1 0.1 Benefits paid (58.6 ) (59.2 ) (0.6 ) (0.5 ) Plan assets at end of year $ 777.5 $ 874.8 $ — $ — Funded status $ (56.3 ) $ (47.9 ) $ (7.0 ) $ (7.6 ) Amount recognized in the balance sheet Current liabilities $ (7.1 ) $ (0.5 ) $ (0.5 ) $ (0.3 ) Non-current liabilities (49.2 ) (47.4 ) (6.5 ) (7.3 ) Net pension liability at end of year $ (56.3 )* $ (47.9 )* $ (7.0 ) $ (7.6 ) Amounts recognized in accumulated other comprehensive loss before tax Net actuarial loss (gain) $ 468.9 $ 451.8 $ (1.4 ) $ (0.8 ) Prior service cost — (0.5 ) (2.2 ) (2.6 ) Total recognized in accumulated other comprehensive loss $ 468.9 $ 451.3 $ (3.6 ) $ (3.4 ) * In addition, the Company has a liability for a foreign pension plan of $0.2 million at December 31, 2018 and 2017. Pension Benefits Post-retirement Benefits Years ended December 31 (dollars in millions) 2018 2017 2016 2018 2017 2016 Net periodic benefit cost Service cost $ 2.0 $ 1.8 $ 1.8 $ 0.1 $ 0.1 $ 0.1 Interest cost 28.9 30.0 30.6 0.3 0.3 0.2 Expected return on plan assets (58.1 ) (58.4 ) (55.9 ) — — — Amortization of unrecognized: Net actuarial loss (gain) 19.0 17.9 17.7 — (0.1 ) (0.2 ) Prior service cost (0.5 ) (0.4 ) (1.1 ) (0.4 ) (0.4 ) (0.4 ) Defined-benefit plan income (8.7 ) (9.1 ) (6.9 ) $ — $ (0.1 ) $ (0.3 ) Various U.S. defined contribution plans cost 12.2 12.0 11.6 $ 3.5 $ 2.9 $ 4.7 Other changes in plan assets and projected benefit obligation recognized in other comprehensive loss Net actuarial loss (gain) $ 36.1 $ (3.8 ) $ 29.9 $ (0.6 ) $ 1.1 $ 0.2 Amortization of net actuarial (loss) gain (19.0 ) (17.9 ) (17.7 ) — 0.1 0.2 Prior service cost — — 0.6 — — — Amortization of prior service cost 0.5 0.5 1.1 0.4 0.4 0.4 Total recognized in other comprehensive loss 17.6 (21.2 ) 13.9 (0.2 ) 1.6 0.8 Total recognized in net periodic cost (benefit) and other comprehensive loss $ 8.9 $ (30.3 ) $ 7.0 $ (0.2 ) $ 1.5 $ 0.5 The estimated net actuarial loss and prior service cost for the pension plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2019 are $18.8 million and $(0.5) million, respectively. The estimated net actuarial loss and prior year service cost for the post-retirement benefit plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2019 are $(0.1) million and $(0.4) million, respectively. As permitted under ASC 715, the amortization of any prior service cost was previously determined using a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the plan. The 2018 and 2017 after tax adjustments for additional minimum pension liability resulted in other comprehensive (loss) gain of ($13.1) million and $12.1 million, respectively. Actuarial assumptions used to determine benefit obligations at December 31 are as follows: Pension Benefits Post-retirement Benefits 2018 2017 2018 2017 Discount rate 4.32 % 3.65 % 4.46 % 3.79 % Actuarial assumptions used to determine net periodic benefit cost for the year ended December 31 are as follows: Pension Benefits Post-retirement Benefits Years ended December 31 2018 2017 2016 2018 2017 2016 Discount rate 3.65 % 4.15 % 4.40 % 3.79 % 4.40 % 4.55 % Expected long-term return on plan assets 7.15 % 7.50 % 7.50 % n/a n/a n/a Rate of compensation increase 4.00 % 4.00 % 4.00 % 4.00 % 4.00 % 4.00 % Assumptions In developing the expected long-term rate of return on plan assets assumption, the Company evaluated its pension plan’s target and actual asset allocation and expected long-term rates of return of equity and bond indices. The Company also considered its pension plan’s historical ten-year and 25-year compounded annualized returns of 8.9 percent and 8.5 percent, respectively. Assumed health care cost trend rates Assumed health care cost trend rates as of December 31 are as follows: 2018 2017 Health care cost trend rate assumed for next year 6.00 % 6.50 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.00 % 5.00 % Year that the rate reaches the ultimate trend rate 2021 2021 A one-percentage-point change in the assumed health care cost trend rates would not result in a material impact on the Company’s consolidated financial statements. Plan Assets The Company’s pension plan weighted asset allocations as of December 31 by asset category are as follows: Asset Category 2018 2017 Equity securities 40 % 45 % Debt securities 48 43 Real estate 10 9 Private equity 2 2 Other — 1 100 % 100 % The following tables present the fair value measurement of the Company’s plan assets as of December 31, 2018 and 2017 (dollars in millions): December 31, 2018 Asset Category Total Quoted Prices in Active Markets for Identical Contracts (Level 1) Significant Other Observable Inputs (Level 2) Significant Non- observable Inputs (Level 3) Short-term investments $ 14.4 $ — $ 14.4 $ — Equity securities Common stocks 125.6 125.6 — — Commingled equity funds 104.3 — 104.3 — Fixed income securities U.S. treasury securities 86.0 86.0 — — Other fixed income securities 185.8 — 185.8 — Commingled fixed income funds 92.0 — 92.0 — Other types of investments Mutual funds 73.6 — 73.6 — Real estate funds 80.4 — — 80.4 Private equity 13.2 — — 13.2 Total fair value of plan asset investments $ 775.3 $ 211.6 $ 470.1 $ 93.6 Non-investment plan assets 2.2 Total plan assets $ 777.5 December 31, 2017 Asset Category Total Quoted Prices in Active Markets for Identical Contracts (Level 1) Significant Other Observable Inputs (Level 2) Significant Non- observable Inputs (Level 3) Short-term investments $ 15.8 $ 2.0 $ 13.8 $ — Equity securities Common stocks 220.3 220.3 — — Commingled equity funds 121.5 — 121.5 — Fixed income securities U.S. treasury securities 46.0 46.0 — — Other fixed income securities 219.9 — 219.9 — Commingled fixed income funds 99.8 — 99.8 — Other types of investments Mutual funds 51.8 — 51.8 — Real estate funds 77.8 — — 77.8 Private equity 20.9 — — 20.9 Total fair value of plan asset investments $ 873.8 $ 268.3 $ 506.8 $ 98.7 Non-investment plan assets 1.0 Total plan assets $ 874.8 The short-term investments included in the Company’s plan assets consist of cash and cash equivalents. The fair value of the remaining categories of the Company’s plan assets are valued as follows: equity securities are valued using the closing stock price on a national securities exchange, which reflects the last reported sales price on the last business day of the year; fixed income securities are valued using institutional bond quotes, which are based on various market and industry inputs; mutual funds and real estate funds are valued using the net asset value of the fund, which is based on the fair value of the underlying securities; and private equity investments are valued at the estimated fair value at the previous quarter end, which is based on the proportionate share of the underlying portfolio investments. The following table presents a reconciliation of the fair value measurements using significant unobservable inputs (Level 3) as of December 31, 2018 and 2017 (dollars in millions): Short term investments Real estate funds Private equity Total Balance at December 31, 2016 $ 19.7 $ 74.3 $ 28.0 $ 122.0 Actual return (loss) on plan assets: Relating to assets still held at the reporting date — 3.5 (5.6 ) (2.1 ) Relating to assets sold during the period — — 7.8 7.8 Purchases, sales and settlements (19.7 ) — (9.3 ) (29.0 ) Balance at December 31, 2017 — 77.8 20.9 98.7 Actual return (loss) on plan assets: Relating to assets still held at the reporting date — 2.6 (0.3 ) 2.3 Relating to assets sold during the period — — (0.8 ) (0.8 ) Purchases, sales and settlements — — (6.6 ) (6.6 ) Balance at December 31, 2018 $ — $ 80.4 $ 13.2 $ 93.6 The Company’s investment policies employ an approach whereby a diversified blend of equity and bond investments is used to maximize the long-term return of plan assets for a prudent level of risk. Equity investments are diversified across domestic and non-domestic stocks, as well as growth, value, and small to large capitalizations. Bond investments include corporate and government issues, with short-, mid- and long-term maturities, with a focus on investment grade when purchased. The Company’s target allocation to equity managers is between 30 to 60 percent with the remainder allocated primarily to bonds, real estate, private equity managers and cash. Investment and market risks are measured and monitored on an ongoing basis through regular investment portfolio reviews, annual liability measurements and periodic asset/liability studies. The Company’s actual asset allocations are in line with target allocations. The Company regularly reviews its actual asset allocation and periodically rebalances its investments to the targeted allocation when considered appropriate. There was no Company stock included in plan assets at December 31, 2018. Cash Flows The Company was not required to and did not make any contributions in 2018. Estimated Future Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: Years ending December 31 (dollars in millions) Pension Benefits Post-retirement Benefits 2019 $ 66.4 $ 0.5 2020 68.3 0.5 2021 59.0 0.5 2022 58.3 0.5 2023 57.8 0.5 2024 – 2028 285.1 2.3 |
Derivative instruments
Derivative instruments | 12 Months Ended |
Dec. 31, 2018 | |
Derivative instruments | 13. Derivative instruments ASC 815, Derivatives and Hedging , as amended, requires that all derivative instruments be recorded on the balance sheet at fair value and establishes criteria for designation and effectiveness of the hedging relationships. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as a part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure hedged, as a fair value hedge, a cash flow hedge, or a hedge of a net investment in a foreign operation. The Company utilizes certain derivative instruments to enhance its ability to manage currency exposure 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. Cash Flow Hedges With the exception of its net investment hedges, 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), gains or losses on the derivative instrument are reported as a component of other comprehensive loss, net of tax, and are 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. 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. Principal 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 consolidated 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 following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts: December 31 (dollars in millions) 2018 2017 Buy Sell Buy Sell British pound $ — $ 1.0 $ — $ 1.2 Canadian dollar — — — 48.1 Euro 32.0 — 29.3 — Mexican peso 27.8 — 16.3 — Total $ 59.8 $ 1.0 $ 45.6 $ 49.3 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 steel, with the objective of minimizing changes in cost due to market price fluctuations. The hedging strategy for achieving this objective is to purchase steel futures contracts on the New York Metals Exchange (NYMEX) and copper futures contracts on the open market of the London Metals Exchange (LME) or over the counter contracts based on the LME. With NYMEX, the Company is required to make cash deposits on unrealized losses on steel derivative contracts. The after-tax gains and losses of the contracts as of December 31, 2018 were 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 after-tax gains and losses on the contracts will be reclassified within one year. Commodity hedges outstanding at December 31, 2018 total approximately 15,000 tons of steel. Net Investment Hedges The Company enters into certain foreign currency forward contracts to hedge the exposure to a portion of the Company’s net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For the derivative instruments that are designated and qualify as net investment hedges, gains and losses are reported in other comprehensive loss where they offset gains and losses recorded on the Company’s net investments in its non-U.S. subsidiaries. These hedges are determined to be effective. The Company recognized $7.4 million of after-tax gains associated with hedges of a net investment in non-U.S. subsidiaries in currency translation adjustment in other comprehensive loss in 2018. The contractual amount of the Company’s foreign currency forward contracts that are designated as net investment hedges is $150.0 million as of December 31, 2018. The following tables present the impact of derivative contracts on the Company’s financial statements. Fair value of derivatives designated as hedging instruments under ASC 815: Fair Value December 31 (dollars in millions) Balance Sheet Location 2018 2017 Foreign currency contracts Other current assets $ 3.9 $ 0.2 Other non-current assets 5.1 — Accrued liabilities (0.6 ) (1.8 ) Commodities contracts Other current assets — 0.2 Accrued liabilities (0.9 ) — Total derivatives designated as hedging instruments $ 7.5 $ (1.4 ) The effect of derivative instruments on the consolidated statement of earnings is as follows. Years ended December 31 (dollars in millions) Derivatives in ASC 815 cash flow hedging relationships Amount of gain (loss) recognized in other comprehensive loss on derivative Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings 2018 2017 2018 2017 Foreign currency contracts $ 1.8 $ (1.1 ) Cost of products sold $ 0.3 $ 0.4 Commodities contracts (1.1 ) 0.5 Cost of products sold 0.3 0.6 $ 0.7 $ (0.6 ) $ 0.6 $ 1.0 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | 14. Income Taxes The components of the provision (benefit) for income taxes consisted of the following: Years ended December 31 (dollars in millions) 2018 2017 2016 Current: Federal $ 60.1 $ 148.0 $ 71.6 State 15.6 9.4 14.5 International 38.6 43.8 34.9 Deferred: Federal (1.7 ) 23.5 11.0 State 1.5 5.8 5.2 International (0.5 ) (6.2 ) (1.2 ) $ 113.6 $ 224.3 $ 136.0 The provision for income taxes differs from the U.S. federal statutory rate due to the following items: Years ended December 31 2018 2017 2016 Provision at U.S. federal statutory rate 21.0 % 35.0 % 35.0 % State taxes, net of federal benefit 2.4 1.9 2.8 International income tax rate differential - China (2.3 ) (6.5 ) (6.2 ) International income tax rate differential - other 1.1 0.1 0.3 U.S. manufacturing credit — (1.4 ) (1.5 ) Research tax credits (0.5 ) (0.3 ) (0.3 ) Excess tax benefit on stock compensation (0.4 ) (2.2 ) (1.1 ) Other (0.9 ) 0.8 0.4 20.4 % 27.4 % 29.4 % U.S. Tax Cuts & Jobs Act (U.S. Tax Reform) — 15.7 — 20.4 % 43.1 % 29.4 % U.S. Tax Reform was enacted on December 22, 2017 and significantly changed U.S. corporate income tax laws. Among other things, U.S. Tax Reform reduced the U.S. corporate income tax rate to 21 percent commencing on January 1, 2018, implemented a territorial tax system and levied a one-time mandatory tax on undistributed earnings of foreign subsidiaries of U.S. companies. As a result of U.S. Tax Reform, the Company recorded income tax expense of $81.8 million in the fourth quarter of 2017. The income tax expense resulting from U.S. Tax Reform was included in the provision for income taxes on the Company’s consolidated statement of earnings and consisted of two components: $83.5 million of income tax expense related to the one-time mandatory tax on undistributed foreign earnings and a $1.7 million income tax benefit resulting from the remeasurement of the Company’s U.S. deferred tax assets and liabilities based on the lower U.S. corporate income tax rate. Components of earnings before income taxes were as follows: Years ended December 31 (dollars in millions) 2018 2017 2016 U.S. $ 376.0 $ 329.9 $ 300.9 International 181.8 190.9 161.6 $ 557.8 $ 520.8 $ 462.5 Total income taxes paid by the Company amounted to $116.4 million, $131.1 million, and $117.4 million in 2018, 2017 and 2016, respectively. As of December 31, 2018, the Company has $28.9 million accrued for its estimate of withholding taxes due upon repatriation of undistributed foreign earnings it considers to be not permanently reinvested. As of December 31, 2018, $644.1 million of cash and cash equivalents and marketable securities were held by its foreign subsidiaries. The tax effects of temporary differences of assets and liabilities between income tax and financial reporting are as follows: December 31 (dollars in millions) 2018 2017 Assets Liabilities Assets Liabilities Employee benefits $ 32.5 $ — $ 30.4 $ — Product liability and warranties 42.5 — 43.4 — Inventories — 0.6 — 2.0 Accounts receivable 18.3 — 16.5 — Property, plant and equipment — 36.3 — 31.1 Intangibles — 57.3 — 54.3 Environmental liabilities 2.1 — 2.4 — Undistributed foreign earnings — 28.9 — 38.6 Tax loss and credit carryovers 17.5 — 19.8 — All other 4.0 — 5.5 — Valuation allowance (13.1 ) — (15.0 ) — $ 103.8 $ 123.1 $ 103.0 $ 126.0 Net liability $ 19.3 $ 23.0 The Company believes it is more likely than not that it will realize its deferred tax assets through the reduction of future taxable income. The Company considered historical operating results in determining the probability of the realization of the deferred tax assets. A reconciliation of the beginning and ending amounts of tax loss carryovers, credit carryovers and valuation allowances is as follows: December 31 (dollars in millions) Net Operating Losses and Tax Credits Valuation Allowances 2018 2017 2018 2017 Beginning balance $ 19.8 $ 18.2 $ 15.0 $ 13.1 Additions — 1.6 — 1.9 Reductions (2.3 ) — (1.9 ) — Ending balance $ 17.5 $ 19.8 $ 13.1 $ 15.0 The Company has foreign net operating loss carryovers that expire in 2019 through 2026 and state and local net operating loss carryovers that expire between 2019 and 2035. A reconciliation of the beginning and ending amount of unrecognized benefits is as follows: (Dollars in millions) 2018 2017 Balance at January 1 $ 6.2 $ 4.2 Additions for tax positions of prior years 2.1 2.0 Balance at December 31 $ 8.3 $ 6.2 The amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate is $0.8 million. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense. At December 31, 2018, there was an immaterial amount of interest and penalties accrued. The Company anticipates that there will not be a decrease in the total amount of unrecognized tax benefits in 2019. The Company’s U.S. federal income tax returns and its U.S. state and local income tax returns are subject to audit for the years 2016-2018 and 2001-2018, respectively. The Company is subject to non-U.S. income tax audits for the years 2009-2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | 15. Commitments and Contingencies The Company is a potentially responsible party in judicial and administrative proceedings seeking to clean up sites which have been environmentally impacted. In each case the Company has established reserves, insurance proceeds and/or a potential recovery from third parties. The Company believes any environmental claims will not have a material effect on its financial position or results of operations. The Company is subject to various claims and pending lawsuits for product liability and other matters arising out of the conduct of the Company’s business. With respect to product liability claims, the Company has self-insured a portion of its product liability loss exposure for many years. The Company has established reserves and has insurance coverage, which it believes are adequate to cover incurred claims. For the years ended December 31, 2018 and 2017, the Company had $125 million of product liability insurance for individual losses in excess of $7.5 million. The Company periodically reevaluates its exposure on claims and lawsuits and makes adjustments to its reserves as appropriate. The Company believes, based on current knowledge, consultation with counsel, adequate reserves and insurance coverage that the outcome of such claims and lawsuits will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Operations by Segment
Operations by Segment | 12 Months Ended |
Dec. 31, 2018 | |
Operations by Segment | 16. 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 and electric water heaters, boilers, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. Our Rest of World segment also manufactures and markets in-home air purification products in China. The accounting policies of the reportable segments are the same as those described in the “Summary of Significant Accounting Policies” outlined in Note 1. Segment earnings, defined by the Company as earnings before interest, taxes, general corporate and corporate research and development expenses, were used to measure the performance of the segments. Net Sales Earnings Years ended December 31 (dollars in millions) 2018 2017 2016 2018 2017 2016 North America (1) $ 2,044.7 $ 1,904.8 $ 1,743.2 $ 464.1 $ 428.6 $ 385.9 Rest of World 1,173.6 1,116.3 965.6 149.3 149.3 129.1 Inter-segment (30.4 ) (24.4 ) (22.9 ) — — — Total segments – sales, segment earnings $ 3,187.9 $ 2,996.7 $ 2,685.9 $ 613.4 $ 577.9 $ 515.0 Corporate expenses (47.2 ) (47.0 ) (45.2 ) Interest expense (8.4 ) (10.1 ) (7.3 ) Earnings before income taxes 557.8 520.8 462.5 Provision for income taxes (2) (113.6 ) (224.3 ) (136.0 ) Net earnings $ 444.2 $ 296.5 $ 326.5 (1) In 2018, the Company recognized $6.7 million of restructuring and impairment expenses in connection with the move of manufacturing operations from our Renton, Washington facility to other U.S. facilities. For additional information, see Note 4 “Restructuring and Impairment Expenses.” (2) In 2017, the Company recorded a one-time charge of $81.8 million associated with U.S. Tax Reform, primarily related to the repatriation of undistributed foreign earnings. For additional information, see Note 14 “Income Taxes.” In 2018, sales to the North America segment’s two largest customers were $425.3 million and $355.6 million which represented 13 percent and 11 percent of the Company’s net sales, respectively. In 2017, sales to the North America segment’s two largest customers were $361.4 million and $335.2 million which represented 12 percent and 11 percent of the Company’s net sales, respectively. In 2016, sales to the North America segment’s two largest customers were $311.5 million and $280.8 million which represented 12 percent and 11 percent of the Company’s net sales, respectively. Assets, depreciation and capital expenditures by segment Total Assets ( ) Depreciation and Amortization (Years Ended December 31 ) Capital Expenditures (Years Ended December 31 ) (dollars in millions) 2018 2017 2016 2018 2017 2016 2018 2017 2016 North America $ 1,653.6 $ 1,592.6 $ 1,515.9 $ 45.5 $ 45.1 $ 42.9 $ 45.8 $ 38.5 $ 45.9 Rest of World 721.6 741.4 584.3 25.2 23.8 21.0 32.3 55.2 34.3 Corporate 696.3 863.4 790.8 1.2 1.2 1.2 7.1 0.5 0.5 Total $ 3,071.5 $ 3,197.4 $ 2,891.0 $ 71.9 $ 70.1 $ 65.1 $ 85.2 $ 94.2 $ 80.7 The majority of corporate assets consist of cash, cash equivalents, marketable securities and deferred income taxes. Net sales and long-lived assets by geographic location The following data by geographic area includes net sales based on product shipment destination and long-lived assets based on physical location. Long-lived assets include net property, plant and equipment and other long-term assets. Long-lived Assets Net Sales (dollars in millions) 2018 2017 2016 2018 2017 2016 United States $ 327.3 $ 303.0 $ 292.4 United States $ 1,820.8 $ 1,698.1 $ 1,570.7 China 252.6 250.8 184.3 China 1,071.2 1,034.9 887.1 Canada 3.1 3.2 3.1 Canada 175.0 163.7 138.7 Other Foreign 42.9 47.1 48.4 Other Foreign 120.9 100.0 89.4 Total $ 625.9 $ 604.1 $ 528.2 Total $ 3,187.9 $ 2,996.7 $ 2,685.9 |
Quarterly Results of Operations
Quarterly Results of Operations | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Results of Operations | 17. Quarterly Results of Operations (Unaudited) (dollars in millions, except per share amounts) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2018 2017 2018 2017 2018 2017 2018 2017 Net sales $ 788.0 $ 740.0 $ 833.3 $ 738.2 $ 754.1 $ 749.9 $ 812.5 $ 768.6 Gross profit 321.5 300.9 341.0 304.2 306.0 305.0 337.0 322.3 Net earnings 98.8 87.7 114.5 92.4 104.6 93.7 126.3 22.7 Basic earnings per share 0.58 0.51 0.67 0.53 0.61 0.54 0.75 0.13 Diluted earnings per share 0.57 0.50 0.66 0.53 0.61 0.54 0.74 0.13 Common dividends declared 0.18 0.14 0.18 0.14 0.18 0.14 0.22 0.14 Net earnings per share are computed separately for each period, and therefore, the sum of such quarterly per share amounts may differ from the total for the year. In the first quarter of 2018, the Company recorded $6.7 million of restructuring and impairment expenses associated with a move of manufacturing operations from its Renton, Washington facility to other U.S. facilities. These charges reduced $5.0 million or $0.03 per share. In the fourth quarter of 2017, the Company recorded a one-time charge of $81.8 million associated with U.S. Tax Reform, primarily related to the repatriation of undistributed foreign earnings. These charges reduced earnings per share by $0.47. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2018 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | A. O. SMITH CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Dollars in millions) Years ended December 31, 2018, 2017 and 2016 Description Balance at Beginning of Year Charged to Costs and Expenses Acquisition of Businesses Deductions Balance at End of Year 2018: Valuation allowance for trade and notes receivable $ 5.3 $ 1.5 $ — $ (0.4 ) $ 6.4 Valuation allowance for deferred tax assets 15.0 — — (1.9 ) 13.1 2017: Valuation allowance for trade and notes receivable $ 6.3 $ — $ 0.2 $ (1.2 ) $ 5.3 Valuation allowance for deferred tax assets 13.1 1.9 — — 15.0 2016: Valuation allowance for trade and notes receivable $ 6.0 $ 1.1 $ 0.2 $ (1.0 ) $ 6.3 Valuation allowance for deferred tax assets 11.0 2.1 — — 13.1 |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Organization | Organization. and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The Rest of World segment also manufacturers and markets in-home air purification products in China. |
Consolidation | Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries after elimination of intercompany transactions. |
Use of estimates | Use of estimates . The preparation of financial statements in conformity with accounting principles generally accepted in the United States (U.S.) requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and notes. Actual results could differ from those estimates. |
Fair value of financial instruments | Fair value of financial instruments. The carrying amounts of cash, cash equivalents, marketable securities, receivables, floating rate debt and trade payables approximated fair value as of December 31, 2018 and 2017, due to the short maturities or frequent rate resets of these instruments. As of December 31, 2018 and 2017, the carrying value of term notes with insurance companies was approximately $120.0 million and $127.5 million, respectively, which approximated fair value in both years. The fair value was estimated based on current rates offered for debt with similar maturities. |
Foreign currency translation | Foreign currency translation . For all subsidiaries outside the U.S., with the exception of its Barbados, Hong Kong and Mexican companies and its non-operating companies in the Netherlands, the Company uses the local currency as the functional currency. For those operations using a functional currency other than the U.S. dollar, assets and liabilities were translated into U.S. dollars at year-end exchange rates, and revenues and expenses were translated at weighted-average exchange rates. The resulting translation adjustments were recorded as a separate component of stockholders’ equity. The Barbados, Hong Kong, Mexican and Netherlands companies use the U.S. dollar as the functional currency. Gains and losses from foreign currency transactions were included in net earnings and were not significant in 2018, 2017, or 2016. |
Cash and cash equivalents | Cash and cash equivalents . The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. |
Marketable securities | Marketable securities . The Company considers all highly liquid investments with maturities greater than 90 days when purchased to be marketable securities. At December 31, 2018, the Company’s marketable securities consisted of bank time deposits with original maturities ranging from 180 days to 12 months and were primarily located at investment grade rated banks in China. |
Inventory valuation | Inventory valuation. . Cost is determined on the last-in, first-out (LIFO) method for a majority of the Company’s domestic inventories, which comprised 64 percent and 59 percent of the Company’s total inventory at December 31, 2018 and 2017, respectively. Inventories of foreign subsidiaries, the remaining domestic inventories and supplies were determined using the first-in, first-out (FIFO) method. |
Property, plant and equipment | Property, plant and equipment. Property, plant and equipment are stated at cost. Depreciation is computed primarily by the straight-line method. The estimated service lives used to compute depreciation are generally 25 to 50 years for buildings, three to 20 years for equipment and three to 15 years for software. Maintenance and repair costs are expensed as incurred. |
Goodwill and other intangibles | Goodwill and other intangibles. Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment on an annual basis. Separable intangible assets, primarily comprised of customer relationships, that are not deemed to have an indefinite life are amortized on a straight-line basis over their estimated useful lives which range from three to 25 years. |
Impairment of long-lived and amortizable intangible assets | Impairment of long-lived and amortizable intangible assets. Property, plant and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. Such analyses necessarily involve significant judgment. |
Product warranties | Product warranties. The Company’s products carry warranties that generally range from one to ten years and are based on terms that are consistent with the market. The Company records a liability for the expected cost of warranty-related claims at the time of sale. The allocation of the warranty liability between current and long-term is based on expected warranty claims to be paid in the next year as determined by historical product failure rates. The following table presents the Company’s product warranty liability activity in 2018 and 2017: Years ended December 31 (dollars in millions) 2018 2017 Balance at beginning of year $ 141.2 $ 140.9 Expense 40.7 39.7 Claims settled (42.5 ) (39.4 ) Balance at end of year $ 139.4 $ 141.2 |
Derivative instruments | Derivative instruments. The Company utilizes certain derivative instruments to enhance its ability to manage currency as well as raw materials price risk. The Company does not enter into contracts for speculative purposes. The fair values of all derivatives are recorded in the consolidated balance sheets. The change in a derivative’s fair value is recorded each period in current earnings or accumulated other comprehensive loss (AOCL), depending on whether the derivative is designated as part of a hedge transaction and if so, the type of hedge transaction. See Note 13, “Derivative Instruments” of the notes to consolidated financial statements for disclosure of the Company’s derivative instruments and hedging activities. |
Fair Value Measurements | Fair Value Measurements. Accounting Standards Codification ( ASC) 820 Fair Value Measurements , among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on the market approach which are prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Assets measured at fair value on a recurring basis are as follows (dollars in millions): Fair Value Measurement Using December 31, 2018 December 31, 2017 Quoted prices in active markets for identical assets (Level 1) $ 385.3 $ 473.4 Significant other observable inputs (Level 2) 7.5 (1.4 ) There were no changes in the valuation techniques used to measure fair values on a recurring basis. |
Revenue recognition | Revenue recognition. The Company adopted ASC 606-10 as of January 1, 2018. Substantially all of the Company’s sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of products to the customer at the point in time when title and risk are passed to the customer, which generally occurs upon shipment of the product. See Note 2, “Revenue Recognition” for disclosure of the Company’s revenue recognition activities. |
Advertising | Advertising. The majority of advertising costs are charged to operations as incurred and amounted to $132.1 million, $126.9 million and $113.9 million during 2018, 2017 and 2016, respectively. Included in total advertising costs are expenses associated with store displays for water heater, water treatment and air purification products in China that are amortized over 12 to 36 months which totaled $38.7 million, $43.0 million and $37.0 million during 2018, 2017 and 2016, respectively. |
Research and development | Research and development. Research and development costs are charged to operations as incurred and amounted to $94.0 million, $86.4 million and $80.1 million during 2018, 2017 and 2016, respectively. |
Environmental costs | Environmental costs. The Company accrues for costs associated with environmental obligations when such costs are probable and reasonably estimable. Costs of estimated future expenditures are not discounted to their present value. Recoveries of environmental costs from other parties are recorded as assets when their receipt is considered probable. The accruals are adjusted as facts and circumstances change. |
Stock-based compensation | Stock-based compensation. Compensation cost is recognized using the straight-line method over the vesting period of the award and forfeitures are recognized as they occur. In accordance with amended ASC 718, the Company recognized $2.4 million, $11.6 million, and $5.9 million of discrete income tax benefits on settled stock based compensation awards during 2018, 2017, and 2016 respectively. |
Income taxes | Income taxes. The provision for income taxes is computed using the asset and liability method, in accordance with ASC 740 Income Taxes , under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled and are classified as noncurrent in the consolidated balance sheet. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon settlement. |
Earnings per share of common stock | Earnings per share of common stock. The Company is not required to use the two-class method of calculating earnings per share since its Class A Common Stock and Common Stock have equal dividend rights. 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: 2018 2017 2016 Denominator for basic earnings per share - weighted-average shares outstanding 170,589,345 172,666,056 174,712,683 Effect of dilutive stock options, restricted stock and share units 1,604,695 1,939,133 2,112,597 Denominator for diluted earnings per share 172,194,040 174,605,189 176,825,280 On April 11, 2016, the Company’s stockholders approved a proposal to increase the Company’s authorized shares of Common Stock and on September 7, 2016, the Company’s Board of Directors declared a two-for-one stock split of the Company’s Class A Common Stock and Common Stock (including treasury shares) in the form of a 100 percent stock dividend to stockholders of record on September 21, 2016 and payable on October 5, 2016. All references in the financial statements and footnotes to the number of shares outstanding, price per share, per share amounts and stock based compensation data have been recast to reflect the stock split for all periods presented. |
Reclassifications | Reclassifications. Certain amounts from prior years have been reclassified to conform with current year presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2017, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) 815, Derivatives and Hedging (issued under Accounting Standards Update (ASU) 2017-12, “Targeted Improvements to Accounting for Hedging Activities”). Under this amendment, more hedging strategies are eligible for hedge accounting treatment. ASU 2017-12 also amends the presentation and disclosure requirements regarding derivatives and hedging and changes how companies assess effectiveness. The Company adopted the amendment on January 1, 2018 and the adoption of ASU 2017-12 did not have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows. In May 2017, the FASB amended ASC 718, Compensation – Stock Compensation (issued under ASU 2017-09, “Scope of Modification Accounting”). This amendment clarifies when changes to the terms or conditions of share-based payment awards must be accounted for as a modification. Under this amendment, modification accounting must be used if three conditions are met: the fair value changes, the vesting conditions change, or the classification of the award changes due to the changes in terms or conditions. The Company adopted the amendment on January 1, 2018 and the adoption of ASU 2017-09 did not have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows. In March 2017, the FASB amended ASC 715, Compensation – Retirement Benefits (issued under ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”). This amendment changes the way net periodic benefit cost associated with employer-sponsored defined benefit plans is presented in the statement of earnings. Under the amendment, the service cost component of net periodic benefit cost is included in the same lines in the statement of earnings as other employee compensation costs and the other components of net periodic benefit cost must be presented separately outside of income from operations. The Company adopted the amendment on January 1, 2018. As a result of this adoption, for the year ended December 31, 2017 the Company retrospectively reclassified $6.3 million and $4.6 million of non-service cost pension income from cost of products sold and selling, general and administrative expenses, respectively, to other income in the consolidated statement of earnings. The for the year ended December 31, 2016, the Company retrospectively reclassified $5.1 million and $3.6 million of non-service cost pension income from cost of products sold and selling, general and administrative expenses, respectively, to other income in the consolidated statement of earnings. The adoption did not have a material impact on the Company’s consolidated balance sheets, statements of earnings or statements of cash flows. In January 2017, the FASB amended ASC 350, Intangibles – Goodwill and Other (issued under ASU 2017-04, “Simplifying the Test for Goodwill Impairment”). This amendment simplifies the test for goodwill impairment by only requiring an entity to perform an annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount that the carrying amount exceeds the reporting unit’s fair value. Any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendment requires adoption on January 1, 2020. The Company does not expect that the adoption of ASU 2017-04 will have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows. In October 2016, the FASB amended ASC 740, Income Taxes (issued under ASU 2016-16). This amendment requires that the income tax consequences of an intra-entity transfer of an asset other than inventory be recognized when the transfer occurs. The Company adopted this amendment on January 1, 2018 and the adoption of amended ASU 2016-16 did not have a material impact on its consolidated balance sheets, statement of earnings or statements of cash flows. In February 2016, the FASB amended ASC 842, Leases In 2018, the Company completed a comprehensive analysis of its lease population. In May 2014, the FASB issued ASC 606-10, Revenue from Contracts with Customers (issued under ASU 2014-09). ASU 2014-09 replaces all previously existing revenue recognition guidance. The Company adopted ASU 2014-09 on January 1, 2018 using the full retrospective method and therefore applied the standard to all contracts commencing on or after January 1, 2016. The Company recognized a net after-tax reduction to opening retained earnings of $3.9 million as of January 1, 2016 in connection with the adoption of ASU 2014-09. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated balance sheets, statements of earnings or statements of cash flows. See Note 2 “Revenue Recognition” for further discussion. |
Organization and Significant _3
Organization and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Product Warranty Liability Activity | The following table presents the Company’s product warranty liability activity in 2018 and 2017: Years ended December 31 (dollars in millions) 2018 2017 Balance at beginning of year $ 141.2 $ 140.9 Expense 40.7 39.7 Claims settled (42.5 ) (39.4 ) Balance at end of year $ 139.4 $ 141.2 |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | Assets measured at fair value on a recurring basis are as follows (dollars in millions): Fair Value Measurement Using December 31, 2018 December 31, 2017 Quoted prices in active markets for identical assets (Level 1) $ 385.3 $ 473.4 Significant other observable inputs (Level 2) 7.5 (1.4 ) |
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: 2018 2017 2016 Denominator for basic earnings per share - weighted-average shares outstanding 170,589,345 172,666,056 174,712,683 Effect of dilutive stock options, restricted stock and share units 1,604,695 1,939,133 2,112,597 Denominator for diluted earnings per share 172,194,040 174,605,189 176,825,280 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition [Abstract] | |
Segment Sales Disaggregated by Major Product Line | The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America segment sales are further disaggregated by major product line. In addition, the Company’s Rest of World segment sales are disaggregated by China and all other Rest of World. Years ending December 31 (dollars in millions) 2018 2017 2016 North America Water heaters and related parts $ 1,757.0 $ 1,663.0 $ 1,563.2 Boilers and related parts 200.4 183.3 161.6 Water treatment products (1) 87.3 58.5 18.4 Total North America 2,044.7 1,904.8 1,743.2 Rest of World China $ 1,070.4 $ 1,029.4 $ 887.5 All other Rest of World 103.2 86.9 78.1 Total Rest of World 1,173.6 1,116.3 965.6 Inter-segment sales (30.4 ) (24.4 ) (22.9 ) Total Net Sales $ 3,187.9 $ 2,996.7 $ 2,685.9 (1) Includes Hague Quality Water International (Hague) and Aquasana, Inc. (Aquasana) from the date of acquisition of September 5, 2017 and August 8, 2016, respectively. |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Hague | |
Summary of Preliminary Allocation of Fair Value of Assets Acquired and Liabilities Assumed at Date of Acquisition | The following table summarizes the allocation of fair value of the assets acquired and liabilities assumed at the date of acquisition of Hague for purposes of allocating the purchase price. The $12.8 million of acquired intangible assets was comprised of $ 1.1 11.7 September 5, 2017 (dollars in millions) Current assets, net of cash acquired $ 7.8 Property, plant and equipment 6.9 Intangible assets 12.8 Goodwill 22.2 Total assets acquired 49.7 Current liabilities (5.6 ) Long-term liabilities (1.0 ) Total liabilities assumed (6.6 ) Net assets acquired $ 43.1 |
Aquasana | |
Summary of Preliminary Allocation of Fair Value of Assets Acquired and Liabilities Assumed at Date of Acquisition | The following table summarizes the allocation of fair value of the assets acquired and liabilities assumed at the date of acquisition of Aquasana. The $30.0 million of acquired intangible assets was comprised of $ 21.5 8.3 0.2 August 8, 2016 (dollars in millions) Current assets, net of cash acquired $ 7.3 Property, plant and equipment 2.7 Intangible assets 30.0 Goodwill 60.4 Total assets acquired 100.4 Current liabilities (7.1 ) Long-term liabilities (8.2 ) Total liabilities assumed (15.3 ) Net assets acquired $ 85.1 |
Restructuring and Impairment _2
Restructuring and Impairment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Analysis of Company's Restructuring Reserve | The following table presents an analysis of the Company’s restructuring reserve for the twelve months ended December 31, 2018: (dollars in millions) Severance Costs Lease Exit Costs Fixed Assets Impairment Total Balance at January 1, 2018 $ — $ — $ — $ — Restructuring expense recognized 4.0 2.1 0.6 6.7 Cash payments and disposals (3.8 ) (0.8 ) (0.6 ) (5.2 ) Balance at December 31, 2018 $ 0.2 $ 1.3 $ — $ 1.5 |
Statement of Cash Flows (Tables
Statement of Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information is as follows: Years ended December 31 (dollars in millions) 2018 2017 2016 Net change in current assets and liabilities, net of acquisitions: Receivables $ (54.6 ) $ (75.8 ) $ (15.1 ) Inventories (7.7 ) (37.5 ) (23.4 ) Other current assets 10.0 (9.0 ) (3.2 ) Trade payables 8.8 (5.1 ) 101.5 Accrued liabilities, including payroll and benefits (3.5 ) 12.2 6.0 Income taxes payable (refundable) 7.0 (12.6 ) 2.7 $ (40.0 ) $ (127.8 ) $ 68.5 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Inventories | December 31 (dollars in millions) 2018 2017 Finished products $ 137.6 $ 140.4 Work in process 23.3 18.3 Raw materials 174.4 160.5 Inventories, at FIFO cost 335.3 319.2 LIFO reserve (30.6 ) (22.2 ) $ 304.7 $ 297.0 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Property Plant and Equipment | December 31 (dollars in millions) 2018 2017 Land $ 11.2 $ 11.2 Buildings 323.3 329.9 Equipment 643.8 608.4 Software 118.5 110.6 1,096.8 1,060.1 Less accumulated depreciation and amortization 556.8 531.2 $ 540.0 $ 528.9 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill during the years ended December 31, 2018 and 2017 consisted of the following: (dollars in millions) North America Rest of World Total Balance at December 31, 2016 $ 432.2 $ 59.3 $ 491.5 Acquisitions 22.2 — 22.2 Currency translation adjustment 2.8 0.2 3.0 Balance at December 31, 2017 457.2 59.5 516.7 Currency translation adjustment (3.3 ) (0.4 ) (3.7 ) Balance at December 31, 2018 $ 453.9 $ 59.1 $ 513.0 |
Schedule of Carrying Amount of Other Intangible Assets | The carrying amount of other intangible assets consisted of the following: 2018 2017 December 31 (dollars in millions) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Amortizable intangible assets: Patents $ 3.7 $ (3.3 ) $ 0.4 $ 3.7 $ (2.7 ) $ 1.0 Customer lists 236.8 (108.2 ) 128.6 235.8 (93.3 ) 142.5 Total amortizable intangible assets 240.5 (111.5 ) 129.0 239.5 (96.0 ) 143.5 Indefinite-lived intangible assets: Trade names 164.1 — 164.1 165.2 — 165.2 Total intangible assets $ 404.6 $ (111.5 ) $ 293.1 $ 404.7 $ (96.0 ) $ 308.7 |
Debt and Lease Commitments (Tab
Debt and Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Debt and Lease Commitments | December 31 (dollars in millions) 2018 2017 Bank credit lines, average year-end interest rates of 3.4% for 2018 and 2.5% for 2017 $ 17.1 $ 15.9 Revolving credit agreement borrowings, average year-end interest rates of 3.5% for 2018 and 2.5% for 2017 10.0 190.0 Commercial paper, average year-end interest rates of 2.7% for 2018 and 1.7% for 2017 74.3 77.0 Term notes with insurance companies, expiring 2029-2034, average year-end interest rates of 3.3% for 2018 and 3.4% for 2017 120.0 122.7 Canadian term notes with insurance companies, expiring through 2018, average year-end interest rates of 5.3% for 2017 — 4.8 221.4 410.4 Less long-term debt due within one year — 7.5 Long-term debt $ 221.4 $ 402.9 |
Schedule of Maturities of Long Term Debt | Scheduled maturities of long-term debt within each of the five years subsequent to December 31, 2018 are as follows: Years ending December 31 (dollars in millions) Amount 2019 $ — 2020 6.8 2021 108.2 2022 6.8 2023 10.0 |
Schedule of Future Minimum Payments Under Non Cancelable Operating Leases | Future minimum payments under non-cancelable operating leases relating mostly to office, manufacturing and warehouse facilities total $69.1 million and are due as follows: Years ending December 31 (dollars in millions) Amount 2019 $ 14.8 2020 11.4 2021 8.6 2022 7.5 2023 3.5 Thereafter 23.3 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss is as follows: December 31 (dollars in millions) 2018 2017 Cumulative foreign currency translation adjustments $ (64.9 ) $ (26.5 ) Unrealized net loss on cash flow derivative instruments less related income tax benefit provision of $0.2 in 2018 and $0.6 in 2017 (0.7 ) (0.9 ) Pension liability less related income tax benefit of $180.1 in 2018 and $175.9 in 2017 (285.2 ) (272.1 ) $ (350.8 ) $ (299.5 ) |
Changes in Accumulated Other Comprehensive Loss by Component | Changes to accumulated other comprehensive loss by component are as follows: Years ended December 31, 2018 2017 Cumulative foreign currency translation Balance at beginning of period $ (26.5 ) $ (79.2 ) Other comprehensive gain (loss) before reclassifications (38.4 ) 52.7 Balance at end of period (64.9 ) (26.5 ) Unrealized net (loss) gain on cash flow derivatives Balance at beginning of period (0.9 ) 0.2 Other comprehensive gain (loss) before reclassifications 0.6 (0.5 ) Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $0.2 and $0.4 in 2018 and 2017, respectively) (1) (0.4 ) (0.6 ) Balance at end of period (0.7 ) (0.9 ) Pension liability Balance at beginning of period (272.1 ) (284.2 ) Other comprehensive (loss) gain before reclassifications (27.0 ) 1.4 Amounts reclassified from accumulated other comprehensive loss (1) 13.9 10.7 Balance at end of period (285.2 ) (272.1 ) Total accumulated other comprehensive loss, end of period $ (350.8 ) $ (299.5 ) (1) Amounts reclassified from accumulated other comprehensive loss: Realized gains on derivatives reclassified to cost of products sold (0.6 ) (1.0 ) Tax provision 0.2 0.4 Reclassification net of tax $ (0.4 ) $ (0.6 ) Amortization of pension items: Actuarial losses $ 19.0 (2) $ 17.9 (2) Prior year service cost (0.5 ) (2) (0.4 ) (2) 18.5 17.5 Tax benefit (4.6 ) (6.8 ) Reclassification net of tax $ 13.9 $ 10.7 (2) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 12 “ Pensions and Other Post-retirement Benefits” for additional details |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Changes in Option Shares | Changes in option shares, all of which are Common Stock, were as follows: Years Ended December 31 2018 2017 2016 Shares Weighted Avg. Exercise Price Shares Weighted Avg. Exercise Price Shares Weighted Avg. Exercise Price Number of shares under options: Outstanding at beginning of year 2,263,126 27.73 2,664,333 21.69 2,653,558 18.03 Granted 373,220 61.62 358,150 50.16 553,370 32.25 Exercised (1) (176,302 ) 22.93 (752,603 ) 16.93 (531,933 ) 14.12 Forfeited (27,355 ) 47.95 (6,754 ) 37.46 (10,662 ) 37.23 Outstanding at end of year (2) 2,432,689 33.05 2,263,126 27.73 2,664,333 21.69 Exercisable at end of year (3) 1,665,184 24.52 1,387,259 20.48 1,602,651 16.12 (1) The total intrinsic value of options exercised in 2018, 2017 and 2016 was $6.8 million, $29.1 million and $13.5 million, respectively. (2) The weighted average remaining contractual life of options outstanding was 7 years at December 31, 2018, December 31, 2017, and December 31, 2016. The aggregate intrinsic value of options outstanding at December 31, 2018 was $33.0 million. (3) The weighted average remaining contractual life of options exercisable was 6 years at December 31, 2018, December 31, 2017 and, December 31, 2016. The aggregate intrinsic value of options exercisable at December 31, 2018 was $31.1 million. |
Share-based Compensation, Performance Shares Award Nonvested Activity | Shares Weighted Avg. Exercise Price Nonvested options at beginning of year 875,867 39.21 Granted 373,220 61.62 Vested (454,653 ) 36.26 Forfeited (26,929 ) 47.96 Nonvested options at end of year 767,505 51.55 |
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 2018, 2017 and 2016, using the Black-Scholes option-pricing model, was $ 14.80 13.04 8.03 2018 2017 2016 Expected life (years) 5.7 5.7 5.8 Risk-free interest rate 2.9 % 2.4 % 1.7 % Dividend yield 1.0 % 1.0 % 1.3 % Expected volatility 22.1 % 26.5 % 27.7 % |
Schedule of Share Unit Activity Under Plan | A summary of share unit activity under the plan is as follows: Number of Units Weighted-Average Grant Date Value Outstanding at January 1, 2018 433,290 $ 34.96 Granted 106,581 61.70 Vested (145,105 ) 30.79 Forfeited (15,165 ) 43.44 Outstanding at December 31, 2018 379,601 42.93 |
Pension and Other Post-retire_2
Pension and Other Post-retirement Benefits (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Changes in Benefit Obligation, Plan Assets and Funded Status of Defined Benefit Pension and Post Retirement Benefit Plans | The following tables present the changes in benefit obligations, plan assets and funded status for domestic pension and post-retirement plans and the components of net periodic benefit costs. Pension Benefits Post-retirement Benefits Years ended December 31 (dollars in millions) 2018 2017 2018 2017 Accumulated benefit obligation (ABO) at December 31 $ 833.0 $ 921.8 N/A N/A Change in projected benefit obligations (PBO) PBO at beginning of year $ (922.7 ) $ (895.8 ) $ (7.6 ) $ (6.6 ) Service cost (2.0 ) (1.8 ) (0.2 ) (0.1 ) Interest cost (28.9 ) (30.0 ) (0.3 ) (0.3 ) Participant contributions — — (0.1 ) (0.1 ) Plan amendments — — — — Actuarial gain (loss) including assumption changes 61.2 (54.3 ) 0.6 (1.1 ) Benefits paid 58.6 59.2 0.6 0.6 PBO at end of year $ (833.8 ) $ (922.7 ) $ (7.0 ) $ (7.6 ) Change in fair value of plan assets Plan assets at beginning of year $ 874.8 $ 787.0 $ — $ — Actual return on plan assets (39.3 ) 116.5 — — Contribution by the company 0.6 30.5 0.5 0.4 Participant contributions — — 0.1 0.1 Benefits paid (58.6 ) (59.2 ) (0.6 ) (0.5 ) Plan assets at end of year $ 777.5 $ 874.8 $ — $ — Funded status $ (56.3 ) $ (47.9 ) $ (7.0 ) $ (7.6 ) Amount recognized in the balance sheet Current liabilities $ (7.1 ) $ (0.5 ) $ (0.5 ) $ (0.3 ) Non-current liabilities (49.2 ) (47.4 ) (6.5 ) (7.3 ) Net pension liability at end of year $ (56.3 )* $ (47.9 )* $ (7.0 ) $ (7.6 ) Amounts recognized in accumulated other comprehensive loss before tax Net actuarial loss (gain) $ 468.9 $ 451.8 $ (1.4 ) $ (0.8 ) Prior service cost — (0.5 ) (2.2 ) (2.6 ) Total recognized in accumulated other comprehensive loss $ 468.9 $ 451.3 $ (3.6 ) $ (3.4 ) * In addition, the Company has a liability for a foreign pension plan of $0.2 million at December 31, 2018 and 2017. |
Schedule of Net Periodic Benefit Cost | Pension Benefits Post-retirement Benefits Years ended December 31 (dollars in millions) 2018 2017 2016 2018 2017 2016 Net periodic benefit cost Service cost $ 2.0 $ 1.8 $ 1.8 $ 0.1 $ 0.1 $ 0.1 Interest cost 28.9 30.0 30.6 0.3 0.3 0.2 Expected return on plan assets (58.1 ) (58.4 ) (55.9 ) — — — Amortization of unrecognized: Net actuarial loss (gain) 19.0 17.9 17.7 — (0.1 ) (0.2 ) Prior service cost (0.5 ) (0.4 ) (1.1 ) (0.4 ) (0.4 ) (0.4 ) Defined-benefit plan income (8.7 ) (9.1 ) (6.9 ) $ — $ (0.1 ) $ (0.3 ) Various U.S. defined contribution plans cost 12.2 12.0 11.6 $ 3.5 $ 2.9 $ 4.7 Other changes in plan assets and projected benefit obligation recognized in other comprehensive loss Net actuarial loss (gain) $ 36.1 $ (3.8 ) $ 29.9 $ (0.6 ) $ 1.1 $ 0.2 Amortization of net actuarial (loss) gain (19.0 ) (17.9 ) (17.7 ) — 0.1 0.2 Prior service cost — — 0.6 — — — Amortization of prior service cost 0.5 0.5 1.1 0.4 0.4 0.4 Total recognized in other comprehensive loss 17.6 (21.2 ) 13.9 (0.2 ) 1.6 0.8 Total recognized in net periodic cost (benefit) and other comprehensive loss $ 8.9 $ (30.3 ) $ 7.0 $ (0.2 ) $ 1.5 $ 0.5 |
Schedule of Actuarial Assumptions Used To Determine Benefit Obligations | Actuarial assumptions used to determine benefit obligations at December 31 are as follows: Pension Benefits Post-retirement Benefits 2018 2017 2018 2017 Discount rate 4.32 % 3.65 % 4.46 % 3.79 % |
Schedule of Actuarial Assumptions Used To Determine Net Periodic Benefit Cost | Actuarial assumptions used to determine net periodic benefit cost for the year ended December 31 are as follows: Pension Benefits Post-retirement Benefits Years ended December 31 2018 2017 2016 2018 2017 2016 Discount rate 3.65 % 4.15 % 4.40 % 3.79 % 4.40 % 4.55 % Expected long-term return on plan assets 7.15 % 7.50 % 7.50 % n/a n/a n/a Rate of compensation increase 4.00 % 4.00 % 4.00 % 4.00 % 4.00 % 4.00 % |
Schedule of Health Care Cost Trend Rates | Assumed health care cost trend rates as of December 31 are as follows: 2018 2017 Health care cost trend rate assumed for next year 6.00 % 6.50 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.00 % 5.00 % Year that the rate reaches the ultimate trend rate 2021 2021 |
Schedule of Weighted Asset Allocations by Asset Category | The Company’s pension plan weighted asset allocations as of December 31 by asset category are as follows: Asset Category 2018 2017 Equity securities 40 % 45 % Debt securities 48 43 Real estate 10 9 Private equity 2 2 Other — 1 100 % 100 % |
Schedule of Fair Value Measurement of Plan Assets | The following tables present the fair value measurement of the Company’s plan assets as of December 31, 2018 and 2017 (dollars in millions): December 31, 2018 Asset Category Total Quoted Prices in Active Markets for Identical Contracts (Level 1) Significant Other Observable Inputs (Level 2) Significant Non- observable Inputs (Level 3) Short-term investments $ 14.4 $ — $ 14.4 $ — Equity securities Common stocks 125.6 125.6 — — Commingled equity funds 104.3 — 104.3 — Fixed income securities U.S. treasury securities 86.0 86.0 — — Other fixed income securities 185.8 — 185.8 — Commingled fixed income funds 92.0 — 92.0 — Other types of investments Mutual funds 73.6 — 73.6 — Real estate funds 80.4 — — 80.4 Private equity 13.2 — — 13.2 Total fair value of plan asset investments $ 775.3 $ 211.6 $ 470.1 $ 93.6 Non-investment plan assets 2.2 Total plan assets $ 777.5 December 31, 2017 Asset Category Total Quoted Prices in Active Markets for Identical Contracts (Level 1) Significant Other Observable Inputs (Level 2) Significant Non- observable Inputs (Level 3) Short-term investments $ 15.8 $ 2.0 $ 13.8 $ — Equity securities Common stocks 220.3 220.3 — — Commingled equity funds 121.5 — 121.5 — Fixed income securities U.S. treasury securities 46.0 46.0 — — Other fixed income securities 219.9 — 219.9 — Commingled fixed income funds 99.8 — 99.8 — Other types of investments Mutual funds 51.8 — 51.8 — Real estate funds 77.8 — — 77.8 Private equity 20.9 — — 20.9 Total fair value of plan asset investments $ 873.8 $ 268.3 $ 506.8 $ 98.7 Non-investment plan assets 1.0 Total plan assets $ 874.8 |
Schedule of Reconciliation of Fair Value Measurements Using Significant Unobservable Inputs | The following table presents a reconciliation of the fair value measurements using significant unobservable inputs (Level 3) as of December 31, 2018 and 2017 (dollars in millions): Short term investments Real estate funds Private equity Total Balance at December 31, 2016 $ 19.7 $ 74.3 $ 28.0 $ 122.0 Actual return (loss) on plan assets: Relating to assets still held at the reporting date — 3.5 (5.6 ) (2.1 ) Relating to assets sold during the period — — 7.8 7.8 Purchases, sales and settlements (19.7 ) — (9.3 ) (29.0 ) Balance at December 31, 2017 — 77.8 20.9 98.7 Actual return (loss) on plan assets: Relating to assets still held at the reporting date — 2.6 (0.3 ) 2.3 Relating to assets sold during the period — — (0.8 ) (0.8 ) Purchases, sales and settlements — — (6.6 ) (6.6 ) Balance at December 31, 2018 $ — $ 80.4 $ 13.2 $ 93.6 |
Schedule of Estimated Future Payments | The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: Years ending December 31 (dollars in millions) Pension Benefits Post-retirement Benefits 2019 $ 66.4 $ 0.5 2020 68.3 0.5 2021 59.0 0.5 2022 58.3 0.5 2023 57.8 0.5 2024 – 2028 285.1 2.3 |
Derivative instruments (Tables)
Derivative instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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: December 31 (dollars in millions) 2018 2017 Buy Sell Buy Sell British pound $ — $ 1.0 $ — $ 1.2 Canadian dollar — — — 48.1 Euro 32.0 — 29.3 — Mexican peso 27.8 — 16.3 — Total $ 59.8 $ 1.0 $ 45.6 $ 49.3 |
Schedule of Impact of Cash Flow Hedges on Company's Financial Statements | The following tables present the impact of derivative contracts on the Company’s financial statements. Fair value of derivatives designated as hedging instruments under ASC 815: Fair Value December 31 (dollars in millions) Balance Sheet Location 2018 2017 Foreign currency contracts Other current assets $ 3.9 $ 0.2 Other non-current assets 5.1 — Accrued liabilities (0.6 ) (1.8 ) Commodities contracts Other current assets — 0.2 Accrued liabilities (0.9 ) — Total derivatives designated as hedging instruments $ 7.5 $ (1.4 ) |
Schedule of Effect of Derivatives Instruments on Condensed Consolidated Statement of Earnings | The effect of derivative instruments on the consolidated statement of earnings is as follows. Years ended December 31 (dollars in millions) Derivatives in ASC 815 cash flow hedging relationships Amount of gain (loss) recognized in other comprehensive loss on derivative Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings 2018 2017 2018 2017 Foreign currency contracts $ 1.8 $ (1.1 ) Cost of products sold $ 0.3 $ 0.4 Commodities contracts (1.1 ) 0.5 Cost of products sold 0.3 0.6 $ 0.7 $ (0.6 ) $ 0.6 $ 1.0 |
Designated as Hedging Instrument | |
Schedule of Impact of Cash Flow Hedges on Company's Financial Statements | The effect of derivative instruments on the consolidated statement of earnings is as follows. Years ended December 31 (dollars in millions) Derivatives in ASC 815 cash flow hedging relationships Amount of gain (loss) recognized in other comprehensive loss on derivative Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings 2018 2017 2018 2017 Foreign currency contracts $ 1.8 $ (1.1 ) Cost of products sold $ 0.3 $ 0.4 Commodities contracts (1.1 ) 0.5 Cost of products sold 0.3 0.6 $ 0.7 $ (0.6 ) $ 0.6 $ 1.0 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Components of Provision for Income Taxes | The components of the provision (benefit) for income taxes consisted of the following: Years ended December 31 (dollars in millions) 2018 2017 2016 Current: Federal $ 60.1 $ 148.0 $ 71.6 State 15.6 9.4 14.5 International 38.6 43.8 34.9 Deferred: Federal (1.7 ) 23.5 11.0 State 1.5 5.8 5.2 International (0.5 ) (6.2 ) (1.2 ) $ 113.6 $ 224.3 $ 136.0 |
Difference Between Provision for Income Taxes and U.S. Federal Statutory Rate | The provision for income taxes differs from the U.S. federal statutory rate due to the following items: Years ended December 31 2018 2017 2016 Provision at U.S. federal statutory rate 21.0 % 35.0 % 35.0 % State taxes, net of federal benefit 2.4 1.9 2.8 International income tax rate differential - China (2.3 ) (6.5 ) (6.2 ) International income tax rate differential - other 1.1 0.1 0.3 U.S. manufacturing credit — (1.4 ) (1.5 ) Research tax credits (0.5 ) (0.3 ) (0.3 ) Excess tax benefit on stock compensation (0.4 ) (2.2 ) (1.1 ) Other (0.9 ) 0.8 0.4 20.4 % 27.4 % 29.4 % U.S. Tax Cuts & Jobs Act (U.S. Tax Reform) — 15.7 — 20.4 % 43.1 % 29.4 % |
Components of Earnings Before Income Taxes | Components of earnings before income taxes were as follows: Years ended December 31 (dollars in millions) 2018 2017 2016 U.S. $ 376.0 $ 329.9 $ 300.9 International 181.8 190.9 161.6 $ 557.8 $ 520.8 $ 462.5 |
Tax Effects of Temporary Differences of Assets and Liabilities | The tax effects of temporary differences of assets and liabilities between income tax and financial reporting are as follows: December 31 (dollars in millions) 2018 2017 Assets Liabilities Assets Liabilities Employee benefits $ 32.5 $ — $ 30.4 $ — Product liability and warranties 42.5 — 43.4 — Inventories — 0.6 — 2.0 Accounts receivable 18.3 — 16.5 — Property, plant and equipment — 36.3 — 31.1 Intangibles — 57.3 — 54.3 Environmental liabilities 2.1 — 2.4 — Undistributed foreign earnings — 28.9 — 38.6 Tax loss and credit carryovers 17.5 — 19.8 — All other 4.0 — 5.5 — Valuation allowance (13.1 ) — (15.0 ) — $ 103.8 $ 123.1 $ 103.0 $ 126.0 Net liability $ 19.3 $ 23.0 |
Reconciliation of Tax Loss Carryovers, Credit Carryovers and Valuation Allowances | A reconciliation of the beginning and ending amounts of tax loss carryovers, credit carryovers and valuation allowances is as follows: December 31 (dollars in millions) Net Operating Losses and Tax Credits Valuation Allowances 2018 2017 2018 2017 Beginning balance $ 19.8 $ 18.2 $ 15.0 $ 13.1 Additions — 1.6 — 1.9 Reductions (2.3 ) — (1.9 ) — Ending balance $ 17.5 $ 19.8 $ 13.1 $ 15.0 |
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized benefits is as follows: (Dollars in millions) 2018 2017 Balance at January 1 $ 6.2 $ 4.2 Additions for tax positions of prior years 2.1 2.0 Balance at December 31 $ 8.3 $ 6.2 |
Operations by Segment (Tables)
Operations by Segment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Segment Earnings | Segment earnings, defined by the Company as earnings before interest, taxes, general corporate and corporate research and development expenses, were used to measure the performance of the segments. Net Sales Earnings Years ended December 31 (dollars in millions) 2018 2017 2016 2018 2017 2016 North America (1) $ 2,044.7 $ 1,904.8 $ 1,743.2 $ 464.1 $ 428.6 $ 385.9 Rest of World 1,173.6 1,116.3 965.6 149.3 149.3 129.1 Inter-segment (30.4 ) (24.4 ) (22.9 ) — — — Total segments – sales, segment earnings $ 3,187.9 $ 2,996.7 $ 2,685.9 $ 613.4 $ 577.9 $ 515.0 Corporate expenses (47.2 ) (47.0 ) (45.2 ) Interest expense (8.4 ) (10.1 ) (7.3 ) Earnings before income taxes 557.8 520.8 462.5 Provision for income taxes (2) (113.6 ) (224.3 ) (136.0 ) Net earnings $ 444.2 $ 296.5 $ 326.5 (1) In 2018, the Company recognized $6.7 million of restructuring and impairment expenses in connection with the move of manufacturing operations from our Renton, Washington facility to other U.S. facilities. For additional information, see Note 4 “Restructuring and Impairment Expenses.” (2) In 2017, the Company recorded a one-time charge of $81.8 million associated with U.S. Tax Reform, primarily related to the repatriation of undistributed foreign earnings. For additional information, see Note 14 “Income Taxes.” |
Schedule of Assets, Depreciation And Capital Expenditure By Segment | Assets, depreciation and capital expenditures by segment Total Assets ( ) Depreciation and Amortization (Years Ended December 31 ) Capital Expenditures (Years Ended December 31 ) (dollars in millions) 2018 2017 2016 2018 2017 2016 2018 2017 2016 North America $ 1,653.6 $ 1,592.6 $ 1,515.9 $ 45.5 $ 45.1 $ 42.9 $ 45.8 $ 38.5 $ 45.9 Rest of World 721.6 741.4 584.3 25.2 23.8 21.0 32.3 55.2 34.3 Corporate 696.3 863.4 790.8 1.2 1.2 1.2 7.1 0.5 0.5 Total $ 3,071.5 $ 3,197.4 $ 2,891.0 $ 71.9 $ 70.1 $ 65.1 $ 85.2 $ 94.2 $ 80.7 |
Schedule of Net Sales and Long-Lived Assets by Geographic Location | The following data by geographic area includes net sales based on product shipment destination and long-lived assets based on physical location. Long-lived assets include net property, plant and equipment and other long-term assets. Long-lived Assets Net Sales (dollars in millions) 2018 2017 2016 2018 2017 2016 United States $ 327.3 $ 303.0 $ 292.4 United States $ 1,820.8 $ 1,698.1 $ 1,570.7 China 252.6 250.8 184.3 China 1,071.2 1,034.9 887.1 Canada 3.1 3.2 3.1 Canada 175.0 163.7 138.7 Other Foreign 42.9 47.1 48.4 Other Foreign 120.9 100.0 89.4 Total $ 625.9 $ 604.1 $ 528.2 Total $ 3,187.9 $ 2,996.7 $ 2,685.9 |
Quarterly Results of Operatio_2
Quarterly Results of Operations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Quarterly Results of Operations | (dollars in millions, except per share amounts) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2018 2017 2018 2017 2018 2017 2018 2017 Net sales $ 788.0 $ 740.0 $ 833.3 $ 738.2 $ 754.1 $ 749.9 $ 812.5 $ 768.6 Gross profit 321.5 300.9 341.0 304.2 306.0 305.0 337.0 322.3 Net earnings 98.8 87.7 114.5 92.4 104.6 93.7 126.3 22.7 Basic earnings per share 0.58 0.51 0.67 0.53 0.61 0.54 0.75 0.13 Diluted earnings per share 0.57 0.50 0.66 0.53 0.61 0.54 0.74 0.13 Common dividends declared 0.18 0.14 0.18 0.14 0.18 0.14 0.22 0.14 |
Organization and Significant _4
Organization and Significant Accounting Policies - Additional Information (Detail) $ in Millions | Oct. 05, 2016 | Sep. 07, 2016 | Dec. 31, 2018USD ($)Segment | Dec. 31, 2017USD ($)Segment | Dec. 31, 2016USD ($) | Jan. 01, 2019USD ($) | Jan. 01, 2018USD ($) |
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Number of reporting segments | Segment | 2 | 2 | |||||
Fair value of term notes | $ 120 | $ 127.5 | |||||
Carrying amount of term notes | $ 120 | $ 127.5 | |||||
Percentage of (LIFO) inventory | 64.00% | 59.00% | |||||
Advertising costs charged to operations | $ 132.1 | $ 126.9 | $ 113.9 | ||||
Amortization of total advertising costs | 38.7 | 43 | 37 | ||||
Research and development costs | 94 | 86.4 | 80.1 | ||||
Excess tax deductions recognized as financing cash flows | $ 2.4 | 11.6 | 5.9 | ||||
Minimum percentage of amount likely to be realized upon ultimate settlement to recognize tax benefits | 50.00% | ||||||
Stock split ratio | 2 | 2 | |||||
Percentage of stock dividend to stock holders | 100.00% | ||||||
Dividend payable date | Oct. 5, 2016 | ||||||
Dividend date of record | Sep. 21, 2016 | ||||||
Recognition of right of use assets | $ 55 | ||||||
Subsequent Event [Member] | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Right use of liability | $ 50 | ||||||
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Net after tax reduction to opening retained earnings | $ 3.9 | ||||||
Cost of Products Sold | Accounting Standards Update 2017-07 [Member] | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Reclassified amounts of non-service cost pension income on adoption of amendment | 6.3 | 5.1 | |||||
Selling, General and Administrative Expenses [Member] | Accounting Standards Update 2017-07 [Member] | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Reclassified amounts of non-service cost pension income on adoption of amendment | $ 4.6 | $ 3.6 | |||||
Minimum | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Marketable securities, Maturity period | 180 days | ||||||
Product warranty period | 1 year | ||||||
Amortization of total advertising costs, months | 12 months | ||||||
Minimum | Buildings | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Estimated service lives used to compute depreciation | 25 years | ||||||
Minimum | Equipment | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Estimated service lives used to compute depreciation | 3 years | ||||||
Minimum | Software | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Estimated service lives used to compute depreciation | 3 years | ||||||
Maximum | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Marketable securities, Maturity period | 12 months | ||||||
Product warranty period | 10 years | ||||||
Amortization of total advertising costs, months | 36 months | ||||||
Maximum | Customer Relationships | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Intangible assets estimated useful lives | 25 years | ||||||
Maximum | Buildings | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Estimated service lives used to compute depreciation | 50 years | ||||||
Maximum | Equipment | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Estimated service lives used to compute depreciation | 20 years | ||||||
Maximum | Software | |||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||
Estimated service lives used to compute depreciation | 15 years |
Company's Warranty Liability Ac
Company's Warranty Liability Activity (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Product Warranties | ||
Balance at beginning of year | $ 141.2 | $ 140.9 |
Expense | 40.7 | 39.7 |
Claims settled | (42.5) | (39.4) |
Balance at end of year | $ 139.4 | $ 141.2 |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
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 | $ 385.3 | $ 473.4 |
Significant other observable inputs (Level 2) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value on recurring basis | $ 7.5 | $ (1.4) |
Schedule of Computation of Basi
Schedule of Computation of Basic and Diluted Weighted-Average Shares Used in Earnings per Share Calculations (Detail) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share Of Common Stock | |||
Denominator for basic earnings per share - weighted-average shares outstanding | 170,589,345 | 172,666,056 | 174,712,683 |
Effect of dilutive stock options, restricted stock and share units | 1,604,695 | 1,939,133 | 2,112,597 |
Denominator for diluted earnings per share | 172,194,040 | 174,605,189 | 176,825,280 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Detail) $ in Millions | 12 Months Ended | |
Dec. 31, 2018USD ($)SegmentDistributor | Dec. 31, 2017USD ($)Segment | |
Customer deposits liability | $ 47 | $ 56 |
Allowance for doubtful accounts | $ 6.4 | $ 5.3 |
Number of Reportable Segments | Segment | 2 | 2 |
Water Heaters | North America | ||
Number Of Wholesale Distributors | Distributor | 1,300 |
Segment Sales Disaggregated by
Segment Sales Disaggregated by Major Product Line (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Net sales | $ 812.5 | $ 754.1 | $ 833.3 | $ 788 | $ 768.6 | $ 749.9 | $ 738.2 | $ 740 | $ 3,187.9 | $ 2,996.7 | $ 2,685.9 | |
China | ||||||||||||
Net sales | 1,071.2 | 1,034.9 | 887.1 | |||||||||
Inter-segment | ||||||||||||
Net sales | (30.4) | (24.4) | (22.9) | |||||||||
Inter-segment | Rest of World [Member] | ||||||||||||
Net sales | 2.5 | 2.5 | ||||||||||
Operating Segments [Member] | North America | ||||||||||||
Net sales | 2,044.7 | 1,904.8 | 1,743.2 | |||||||||
Operating Segments [Member] | North America | Water Heaters And Related Parts [Member] | ||||||||||||
Net sales | 1,757 | 1,663 | 1,563.2 | |||||||||
Operating Segments [Member] | North America | Boilers And Related Parts [Member] | ||||||||||||
Net sales | 200.4 | 183.3 | 161.6 | |||||||||
Operating Segments [Member] | North America | Water Treatment Products [Member] | ||||||||||||
Net sales | [1] | 87.3 | 58.5 | 18.4 | ||||||||
Operating Segments [Member] | Rest of World [Member] | ||||||||||||
Net sales | 1,173.6 | 1,116.3 | 965.6 | |||||||||
Operating Segments [Member] | Rest of World [Member] | China | ||||||||||||
Net sales | 1,070.4 | 1,029.4 | 887.5 | |||||||||
Operating Segments [Member] | Rest of World [Member] | All Other Rest Of World [Member] | ||||||||||||
Net sales | $ 103.2 | $ 86.9 | $ 78.1 | |||||||||
[1] | Includes Hague Quality Water International (Hague) and Aquasana, Inc. (Aquasana) from the date of acquisition of September 5, 2017 and August 8, 2016, respectively. |
Segment Sales Disaggregated b_2
Segment Sales Disaggregated by Major Product Line (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment sales | $ 812.5 | $ 754.1 | $ 833.3 | $ 788 | $ 768.6 | $ 749.9 | $ 738.2 | $ 740 | $ 3,187.9 | $ 2,996.7 | $ 2,685.9 |
Intersegment Eliminations [Member] | |||||||||||
Segment sales | $ (30.4) | (24.4) | (22.9) | ||||||||
Rest of World [Member] | Intersegment Eliminations [Member] | |||||||||||
Segment sales | $ 2.5 | $ 2.5 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) - USD ($) $ in Millions | Sep. 05, 2017 | Aug. 08, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||||
Aggregate cash purchase price, net of cash acquired | $ 0 | $ 43.1 | $ 90.8 | ||
Acquired intangible assets, amortization period, in years | 12 years | ||||
Aquasana | |||||
Business Acquisition [Line Items] | |||||
Percentage of ownership interest acquired | 100.00% | ||||
Aggregate cash purchase price, net of cash acquired | $ 85.1 | ||||
Cash acquired from business acquisition | 1.9 | ||||
Contingent consideration and holdback | 1.7 | ||||
Acquisition-related costs | 1.2 | ||||
Acquired intangible assets | 30 | ||||
Aquasana | Trade Names | |||||
Business Acquisition [Line Items] | |||||
Acquired intangible assets, not subject to amortization | 21.5 | ||||
Aquasana | Customer Lists | |||||
Business Acquisition [Line Items] | |||||
Acquired intangible assets, subject to amortization | $ 8.3 | ||||
Acquired intangible assets, amortization period, in years | 10 years | ||||
Aquasana | Patents | |||||
Business Acquisition [Line Items] | |||||
Acquired intangible assets, subject to amortization | $ 0.2 | ||||
Acquired intangible assets, amortization period, in years | 5 years | ||||
Hague | |||||
Business Acquisition [Line Items] | |||||
Percentage of ownership interest acquired | 100.00% | ||||
Aggregate cash purchase price, net of cash acquired | $ 43.1 | ||||
Cash acquired from business acquisition | 4.1 | ||||
Contingent consideration and holdback | $ 1.5 | 2 | |||
Contingent consideration, conditions measurement period | 2 years | ||||
Acquisition-related costs | $ 0.2 | ||||
Acquired intangible assets | 12.8 | ||||
Payment for Contingent Consideration Liability, Financing Activities | $ 1.3 | ||||
Estimated Fair Value Business Combination Contingent Consideration Liability | $ 1 | $ 1 | |||
Hague | Trade Names | |||||
Business Acquisition [Line Items] | |||||
Acquired intangible assets, not subject to amortization | 1.1 | ||||
Hague | Customer Lists | |||||
Business Acquisition [Line Items] | |||||
Acquired intangible assets, subject to amortization | $ 11.7 | ||||
Acquired intangible assets, amortization period, in years | 18 years |
Summary of Preliminary Allocati
Summary of Preliminary Allocation of Fair Value of Assets Acquired and Liabilities Assumed at Date of Acquisition (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 05, 2017 | Dec. 31, 2016 | Aug. 08, 2016 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 513 | $ 516.7 | $ 491.5 | ||
Aquasana | |||||
Business Acquisition [Line Items] | |||||
Current assets, net of cash acquired | $ 7.3 | ||||
Property, plant and equipment | 2.7 | ||||
Intangible assets | 30 | ||||
Goodwill | 60.4 | ||||
Total assets acquired | 100.4 | ||||
Current liabilities | (7.1) | ||||
Long-term liabilities | (8.2) | ||||
Total liabilities assumed | (15.3) | ||||
Net assets acquired | $ 85.1 | ||||
Hague | |||||
Business Acquisition [Line Items] | |||||
Current assets, net of cash acquired | $ 7.8 | ||||
Property, plant and equipment | 6.9 | ||||
Intangible assets | 12.8 | ||||
Goodwill | 22.2 | ||||
Total assets acquired | 49.7 | ||||
Current liabilities | (5.6) | ||||
Long-term liabilities | (1) | ||||
Total liabilities assumed | (6.6) | ||||
Net assets acquired | $ 43.1 |
Restructuring and Impairment _3
Restructuring and Impairment Expenses - Additional Information (Detail) - USD ($) $ in Millions | Mar. 21, 2018 | Mar. 21, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Restructuring Costs and Asset Impairment Charges | $ 6.7 | $ 6.7 | $ 0 | $ 0 | |
Severance Costs | $ 4 | ||||
Lease exit cost | 2.1 | ||||
Impairment of long-lived assets | 0.6 | ||||
Income Tax Expense (Benefit) | $ 113.6 | $ 224.3 | $ 136 | ||
Restructuring and Impairment Charges | |||||
Income Tax Expense (Benefit) | $ 1.7 |
Analysis of Company's Restructu
Analysis of Company's Restructuring Reserve (Detail) - USD ($) $ in Millions | Mar. 21, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Beginning balance | ||||
Restructuring expense recognized | $ 6.7 | 6.7 | $ 0 | $ 0 |
Cash payments and disposals | (5.2) | |||
Ending balance | 1.5 | |||
Severance Costs | ||||
Beginning balance | ||||
Restructuring expense recognized | 4 | |||
Cash payments and disposals | (3.8) | |||
Ending balance | 0.2 | |||
Lease Exit Costs | ||||
Beginning balance | ||||
Restructuring expense recognized | 2.1 | |||
Cash payments and disposals | (0.8) | |||
Ending balance | 1.3 | |||
Fixed Assets Impairment | ||||
Beginning balance | ||||
Restructuring expense recognized | 0.6 | |||
Cash payments and disposals | (0.6) | |||
Ending balance |
Schedule of Supplemental Cash F
Schedule of Supplemental Cash Flow Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net change in current assets and liabilities, net of acquisitions: | |||
Receivables | $ (54.6) | $ (75.8) | $ (15.1) |
Inventories | (7.7) | (37.5) | (23.4) |
Other current assets | 10 | (9) | (3.2) |
Trade payables | 8.8 | (5.1) | 101.5 |
Accrued liabilities, including payroll and benefits | (3.5) | 12.2 | 6 |
Income taxes payable (refundable) | 7 | (12.6) | 2.7 |
Current assets and liabilities | $ (40) | $ (127.8) | $ 68.5 |
Schedule of Inventories (Detail
Schedule of Inventories (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Inventories | ||
Finished products | $ 137.6 | $ 140.4 |
Work in process | 23.3 | 18.3 |
Raw materials | 174.4 | 160.5 |
Inventories, at FIFO cost | 335.3 | 319.2 |
LIFO reserve | (30.6) | (22.2) |
Net inventory | $ 304.7 | $ 297 |
Inventories - Additional Inform
Inventories - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Inventories [Line Items] | |||
After-tax LIFO (income) expense | $ (0.4) | $ (0.3) | $ 0.3 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,096.8 | $ 1,060.1 |
Less accumulated depreciation and amortization | 556.8 | 531.2 |
Net property, plant and equipment | 540 | 528.9 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 11.2 | 11.2 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 323.3 | 329.9 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 643.8 | 608.4 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 118.5 | $ 110.6 |
Schedule of Changes in Carrying
Schedule of Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill [Line Items] | ||
Beginning balance | $ 516.7 | $ 491.5 |
Acquisitions | 22.2 | |
Currency translation adjustment | (3.7) | 3 |
Ending balance | 513 | 516.7 |
North America | ||
Goodwill [Line Items] | ||
Beginning balance | 457.2 | 432.2 |
Acquisitions | 22.2 | |
Currency translation adjustment | (3.3) | 2.8 |
Ending balance | 453.9 | 457.2 |
Rest of World | ||
Goodwill [Line Items] | ||
Beginning balance | 59.5 | 59.3 |
Currency translation adjustment | (0.4) | 0.2 |
Ending balance | $ 59.1 | $ 59.5 |
Schedule of Carrying Amount of
Schedule of Carrying Amount of Other Intangible Assets (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount, Amortizable intangible assets | $ 240.5 | $ 239.5 |
Gross Carrying Amount, Total intangible assets | 404.6 | 404.7 |
Accumulated Amortization, Amortizable intangible assets | (111.5) | (96) |
Net, Amortizable intangible assets | 129 | 143.5 |
Net, Total intangible assets | 293.1 | 308.7 |
Trade Names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization, Amortizable intangible assets | ||
Gross Carrying Amount, indefinite-lived intangible assets | 164.1 | 165.2 |
Net, Indefinite-lived intangible assets | 164.1 | 165.2 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount, Amortizable intangible assets | 3.7 | 3.7 |
Accumulated Amortization, Amortizable intangible assets | (3.3) | (2.7) |
Net, Amortizable intangible assets | 0.4 | 1 |
Customer Lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount, Amortizable intangible assets | 236.8 | 235.8 |
Accumulated Amortization, Amortizable intangible assets | (108.2) | (93.3) |
Net, Amortizable intangible assets | $ 128.6 | $ 142.5 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill And Other Intangibles [Line Items] | |||
Amortization expenses of other intangible assets | $ 14,300,000 | $ 13,700,000 | $ 13,400,000 |
Amortization of intangible assets, weighted average period, years | 12 years | ||
Annual impairment of goodwill | $ 0 | 0 | 0 |
Intangible asset impairment charge | 0 | $ 0 | $ 0 |
Annually | |||
Goodwill And Other Intangibles [Line Items] | |||
Amortization expenses of other intangible assets | $ 14,200,000 |
Debt and Lease Commitments (Det
Debt and Lease Commitments (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Debt | $ 221.4 | $ 410.4 |
Less long-term debt due within one year | 0 | 7.5 |
Long-term debt | 221.4 | 402.9 |
Revolving Credit Agreement Borrowings | ||
Debt Instrument [Line Items] | ||
Debt | 10 | 190 |
Bank Credit Lines | ||
Debt Instrument [Line Items] | ||
Debt | 17.1 | 15.9 |
Commercial Paper | ||
Debt Instrument [Line Items] | ||
Debt | 74.3 | 77 |
Term Notes With Insurance Companies | ||
Debt Instrument [Line Items] | ||
Debt | $ 120 | 122.7 |
Canadian Term Notes With Insurance Companies | ||
Debt Instrument [Line Items] | ||
Debt | $ 4.8 |
Debt and Lease Commitments (Par
Debt and Lease Commitments (Parenthetical) (Detail) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Bank Credit Lines | ||
Debt Instrument [Line Items] | ||
Line of credit facility, average year-end interest rate | 3.40% | 2.50% |
Commercial Paper | ||
Debt Instrument [Line Items] | ||
Line of credit facility, average year-end interest rate | 2.70% | 1.70% |
Term Notes With Insurance Companies | ||
Debt Instrument [Line Items] | ||
Line of credit facility, average year-end interest rate | 3.30% | 3.40% |
Debt instrument maturity | 2,029 | 2,034 |
Canadian Term Notes With Insurance Companies | ||
Debt Instrument [Line Items] | ||
Line of credit facility, average year-end interest rate | 5.30% | |
Debt instrument maturity | 2,018 | |
Revolving Credit Agreement Borrowings | ||
Debt Instrument [Line Items] | ||
Line of credit facility, average year-end interest rate | 3.50% | 2.50% |
Debt and Lease Commitments - Ad
Debt and Lease Commitments - Additional Information (Detail) $ in Millions | Nov. 28, 2016USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | ||||
Multi-currency revolving credit agreement | $ 500 | |||
Number of banks involved in multi-year multi-currency revolving credit agreement | 9 | |||
Revolving credit facility, expiration date | Dec. 15, 2021 | |||
Multi-currency revolving credit agreement, maximum amount | $ 700 | |||
Future minimum payments under non-cancelable operating leases due, total | $ 69.1 | |||
Rent expense, including payments under operating leases | 24 | $ 23.9 | 22.4 | |
Interest paid | 8.6 | 10 | 7.2 | |
Capitalized interest expense | $ 0.4 | $ 0.7 | $ 0.2 | |
Term Notes With Insurance Companies | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, maturity year | 2,029 | 2,034 | ||
November 2016 Term Notes with Insurance Companies | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, issued | $ 45 | |||
Debt instrument, number of tranches | 2 | |||
November 2016 Term Notes with Insurance Companies | Tranche One | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, principle repayment commencement year | 2,023 | |||
Debt instrument, maturity year | 2,029 | |||
Debt instrument, interest rate | 2.87% | |||
November 2016 Term Notes with Insurance Companies | Tranche Two | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, principle repayment commencement year | 2,028 | |||
Debt instrument, maturity year | 2,034 | |||
Debt instrument, interest rate | 3.10% |
Schedule of Maturities of Long
Schedule of Maturities of Long Term Debt (Detail) $ in Millions | Dec. 31, 2018USD ($) |
Debt And Lease Commitments [Abstract] | |
2,019 | |
2,020 | 6.8 |
2,021 | 108.2 |
2,022 | 6.8 |
2,023 | $ 10 |
Schedule of Future Minimum Paym
Schedule of Future Minimum Payments Under Non-Cancelable Operating Leases (Detail) $ in Millions | Dec. 31, 2018USD ($) |
Debt And Lease Commitments [Abstract] | |
2,019 | $ 14.8 |
2,020 | 11.4 |
2,021 | 8.6 |
2,022 | 7.5 |
2,023 | 3.5 |
Thereafter | $ 23.3 |
Stockholders Equity - Additiona
Stockholders Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jul. 31, 2018 | |
Stockholders Equity [Line Items] | ||||
Preferred stock, par value | $ 1 | |||
Common Stock, shares authorized | 240,000,000 | |||
Common stock, par value | $ 1 | |||
Dividends paid | $ 0.76 | $ 0.56 | $ 0.48 | |
Stock repurchase program number of shares authorized to repurchase | 5,000,000 | 2,500,000 | ||
Shares repurchased | 3,797,800 | 2,533,350 | 3,273,109 | |
Shares repurchased, value | $ 202.6 | $ 139.1 | $ 135.2 | |
Remaining authorization stock repurchase | 6,075,253 | |||
Common Class A | ||||
Stockholders Equity [Line Items] | ||||
Common Stock, shares authorized | 27,000,000 | |||
Common stock, par value | $ 5 | |||
Shares converted into Common Stock | 48,232 | 73,792 | 60,045 | |
Treasury stock, number of shares held | 130,380 | 130,380 | ||
Common Stock | ||||
Stockholders Equity [Line Items] | ||||
Treasury stock, number of shares held | 22,418,066 | 18,914,082 |
Schedule of Accumulated Other C
Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Stockholders' Equity [Abstract] | ||
Cumulative foreign currency translation adjustments | $ (64.9) | $ (26.5) |
Unrealized net loss on cash flow derivative instruments less related income tax benefit provision of $0.2 in 2018 and $0.6 in 2017 | (0.7) | (0.9) |
Pension liability less related income tax benefit of $180.1 in 2018 and $175.9 in 2017 | (285.2) | (272.1) |
Accumulated other comprehensive loss | $ (350.8) | $ (299.5) |
Schedule of Accumulated Other_2
Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Unrealized net (loss) gain on cash flow derivative instruments, related income tax benefit (provision) | $ 0.2 | $ 0.6 |
Pension liability, related income tax benefit | $ 180.1 | $ 175.9 |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss by Component (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | $ 1,644.9 | $ 1,511.4 | |
Balance | 1,717 | 1,644.9 | |
Cumulative foreign currency translation | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | (26.5) | (79.2) | |
Other comprehensive gain (loss) before reclassifications | (38.4) | 52.7 | |
Balance | (64.9) | (26.5) | |
Unrealized net gain on cash flow derivatives | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | (0.9) | 0.2 | |
Other comprehensive gain (loss) before reclassifications | 0.6 | (0.5) | |
Realized gains on derivatives reclassified to cost of products sold (net of tax provision of $0.2 and $0.4 in 2018 and 2017, respectively)(1) | [1] | (0.4) | (0.6) |
Balance | (0.7) | (0.9) | |
Pension liability | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | (272.1) | (284.2) | |
Other comprehensive gain (loss) before reclassifications | (27) | 1.4 | |
Amounts reclassified from accumulated other comprehensive loss | [1] | 13.9 | 10.7 |
Balance | (285.2) | (272.1) | |
Accumulated Other Comprehensive Loss | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | (299.5) | (363.2) | |
Balance | $ (350.8) | $ (299.5) | |
[1] | Amounts reclassified from accumulated other comprehensive loss: Realized gains on derivatives reclassified to cost of products sold (0.6 ) (1.0 ) Tax provision 0.2 0.4 Reclassification net of tax $ (0.4 ) $ (0.6 ) Amortization of pension items: Actuarial losses $ 19.0 (2) $ 17.9 (2) Prior year service cost (0.5 )(2) (0.4 )(2) 18.5 17.5 Tax benefit (4.6 ) (6.8 ) Reclassification net of tax $ 13.9 $ 10.7 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Loss by Component (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of products sold | $ (1,882.4) | $ (1,764.3) | $ (1,571.7) | |
Unrealized net gain on cash flow derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Realized gains on derivatives reclassified to cost of products sold, tax provision | 0.2 | 0.4 | ||
Pension liability | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification, before income tax benefit | 18.5 | 17.5 | ||
Tax provision (benefit) | (4.6) | (6.8) | ||
Reclassification net of tax | [1] | 13.9 | 10.7 | |
Actuarial losses | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification, before income tax benefit | [2] | 19 | 17.9 | |
Prior year service cost | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification, before income tax benefit | [2] | (0.5) | (0.4) | |
Reclassification out of Accumulated Other Comprehensive Income | Unrealized net gain on cash flow derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of products sold | (0.6) | (1) | ||
Tax provision (benefit) | 0.2 | 0.4 | ||
Reclassification net of tax | $ (0.4) | $ (0.6) | ||
[1] | Amounts reclassified from accumulated other comprehensive loss: Realized gains on derivatives reclassified to cost of products sold (0.6 ) (1.0 ) Tax provision 0.2 0.4 Reclassification net of tax $ (0.4 ) $ (0.6 ) Amortization of pension items: Actuarial losses $ 19.0 (2) $ 17.9 (2) Prior year service cost (0.5 )(2) (0.4 )(2) 18.5 17.5 Tax benefit (4.6 ) (6.8 ) Reclassification net of tax $ 13.9 $ 10.7 | |||
[2] | These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 12 “ Pensions and Other Post-retirement Benefits” for additional details. |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total stock based compensation cost recognized | $ 10.1 | $ 9.9 | $ 9.4 | |||||
Stock option compensation expense recognized | $ 4.4 | $ 4.7 | $ 4.5 | |||||
Weighted-average fair value per option at the date of grant | $ 14.80 | $ 13.04 | $ 8.03 | |||||
Number of Options, outstanding | 2,432,689 | [1] | 2,263,126 | [1] | 2,664,333 | [1] | 2,653,558 | |
Number of options, exercisable at end of period | [2] | 1,665,184 | 1,387,259 | 1,602,651 | ||||
intrinsic value of options exercised | $ 6.8 | $ 29.1 | $ 13.5 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 7 years | 7 years | 7 years | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | $ 33 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 6 years | 6 years | 6 years | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 31.1 | |||||||
Employee Stock Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 3 years | 3 years | 3 years | |||||
Award expiration period | 10 years | 10 years | 10 years | |||||
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, outstanding | 16,170 | 23,660 | 24,940 | |||||
Number of options, exercisable at end of period | 16,170 | 15,774 | 8,320 | |||||
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 | |||||
Number of Units - Granted | 106,581 | 107,853 | 160,465 | |||||
Value of share units at the date of issuance | $ 6.6 | $ 5.4 | $ 5.2 | |||||
Share based compensation expense attributable to share units | $ 5.7 | $ 5.2 | $ 4.9 | |||||
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 | 2,490,644 | |||||||
[1] | The weighted average remaining contractual life of options outstanding was 7 years at December 31, 2018, December 31, 2017, and December 31, 2016. The aggregate intrinsic value of options outstanding at December 31, 2018 was $33.0 million. | |||||||
[2] | The weighted average remaining contractual life of options exercisable was 6 years at December 31, 2018, December 31, 2017 and, December 31, 2016. The aggregate intrinsic value of options exercisable at December 31, 2018 was $31.1 million. |
Changes in Option Awards All of
Changes in Option Awards All of Which Related to Common Stock (Detail) - $ / shares | 12 Months Ended | |||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Weighted-Avg. Per Share Exercise Price, beginning period | $ 27.73 | [1] | $ 21.69 | [1] | $ 18.03 | |
Weighted-Avg. Per Share Exercise Price - Granted | 61.62 | 50.16 | 32.25 | |||
Weighted-Avg. Per Share Exercise Price - Exercised | [2] | 22.93 | 16.93 | 14.12 | ||
Weighted-Avg. Per Share Exercise Price - Forfeited | 47.95 | 37.46 | 37.23 | |||
Weighted-Avg. Per Share Exercise Price, ending period | [1] | 33.05 | 27.73 | 21.69 | ||
Weighted-Avg. Per Share Exercisable Price, ending period | [3] | $ 24.52 | $ 20.48 | $ 16.12 | ||
Outstanding, Beginning Balance | 2,263,126 | [1] | 2,664,333 | [1] | 2,653,558 | |
Granted | 373,220 | 358,150 | 553,370 | |||
Exercised | [2] | (176,302) | (752,603) | (531,933) | ||
Forfeited | (27,355) | (6,754) | (10,662) | |||
Outstanding, Ending Balance | [1] | 2,432,689 | 2,263,126 | 2,664,333 | ||
Exercisable at End of Period | [3] | 1,665,184 | 1,387,259 | 1,602,651 | ||
[1] | The weighted average remaining contractual life of options outstanding was 7 years at December 31, 2018, December 31, 2017, and December 31, 2016. The aggregate intrinsic value of options outstanding at December 31, 2018 was $33.0 million. | |||||
[2] | The total intrinsic value of options exercised in 2018, 2017 and 2016 was $6.8 million, $29.1 million and $13.5 million, respectively. | |||||
[3] | The weighted average remaining contractual life of options exercisable was 6 years at December 31, 2018, December 31, 2017 and, December 31, 2016. The aggregate intrinsic value of options exercisable at December 31, 2018 was $31.1 million. |
Nonvested Stock Options (Detail
Nonvested Stock Options (Detail) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Nonvested options at beginning of year (Shares) | 875,867 | ||
Granted (Shares) | 373,220 | 358,150 | 553,370 |
Vested (Shares) | (454,653) | ||
Forfeited (Shares) | (26,929) | ||
Nonvested options at end of year (Shares) | 767,505 | 875,867 | |
Nonvested options at beginning of year (Weighted Avg. Exercise Price) | $ 39.21 | ||
Granted (Weighted Avg. Exercise Price) | 14.80 | $ 13.04 | $ 8.03 |
Vested (Weighted Avg. Exercise Price) | 36.26 | ||
Forfeited (Weighted Avg. Exercise Price) | 47.96 | ||
Nonvested options at end of year (Weighted Avg. Exercise Price) | $ 51.55 | $ 39.21 |
Schedule of Weighted-Average Fa
Schedule of Weighted-Average Fair Value per Option at Date of Grant (Detail) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | |
Stock Based Compensation [Abstract] | |||
Expected life (years) | 5 years 8 months 12 days | 5 years 8 months 12 days | 5 years 9 months 18 days |
Risk-free interest rate | 2.90% | 2.40% | 1.70% |
Dividend yield | 1.00% | 1.00% | 1.30% |
Expected volatility | 22.10% | 26.50% | 27.70% |
Summary of Share Unit Activity
Summary of Share Unit Activity Under Plan (Detail) - Restricted Stock And Share Units - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of Units Issued and unvested, Beginning of Period | 433,290 | ||
Number of Units - Granted | 106,581 | 107,853 | 160,465 |
Number of Units - Vested | (145,105) | ||
Number of Units - Forfeited/cancelled | (15,165) | ||
Number of Units Issued and unvested, End of Period | 379,601 | 433,290 | |
Weighted-Average Grant Date Value, Beginning of Period | $ 34.96 | ||
Weighted-Average Grant Date Value - Granted | 61.70 | ||
Weighted-Average Grant Date Value - Vested | 30.79 | ||
Weighted-Average Grant Date Value - Forfeited/cancelled | 43.44 | ||
Weighted-Average Grant Date Value, End of Period | $ 42.93 | $ 34.96 |
Pensions and Other Post-retirem
Pensions and Other Post-retirement Benefits - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Percentage match of the first one percent of contributions made by participating employees | 100.00% | |
Percentage Match Of The Next Five Percent Of Contributions Made By Participating Employees | 50.00% | |
Medical and life insurance maximum participant coverage age, in years | 65 years | |
Other comprehensive gain(loss) as a result of after tax adjustments for additional minimum pension liability | $ 13.1 | $ 12.1 |
Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target allocation to equity managers | 30.00% | |
Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target allocation to equity managers | 60.00% | |
Ten Year Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Number of historical years for which compounded annualized returns is considered | 10 years | |
Compounded annualized return of pension plan | 8.90% | |
Twenty Five Year Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Number of historical years for which compounded annualized returns is considered | 25 years | |
Compounded annualized return of pension plan | 8.50% | |
Pension Plans, Defined Benefit | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Estimated net actuarial gain that will be amortized from accumulated other comprehensive loss into net periodic benefit cost | $ 18.8 | |
Estimated net prior service cost that will be amortized from accumulated other comprehensive loss into net periodic benefit cost | (0.5) | |
Post-Retirement Benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Estimated net actuarial gain that will be amortized from accumulated other comprehensive loss into net periodic benefit cost | (0.1) | |
Estimated net prior service cost that will be amortized from accumulated other comprehensive loss into net periodic benefit cost | $ (0.4) |
Schedule of Changes in Benefit
Schedule of Changes in Benefit Obligations, Plan Assets and Funded Status of Defined Benefit Pension and Post-Retirement Benefit Plans (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Change in projected benefit obligations (PBO) | ||||
Participant contributions | ||||
Plan amendments | ||||
Change in fair value of plan assets | ||||
Plan assets at beginning of year | 873.8 | |||
Actual return on plan assets | ||||
Participant contributions | ||||
Plan assets at end of year | 775.3 | 873.8 | ||
Prior service cost | ||||
Pension Plans, Defined Benefit | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Accumulated benefit obligation (ABO) at December 31 | 921.8 | |||
Change in projected benefit obligations (PBO) | ||||
PBO at beginning of year | (922.7) | (895.8) | ||
Service cost | (2) | (1.8) | (1.8) | |
Interest cost | (28.9) | (30) | (30.6) | |
Actuarial loss including assumption changes | 61.2 | (54.3) | ||
Benefits paid | 58.6 | 59.2 | ||
PBO at end of year | (833.8) | (922.7) | (895.8) | |
Change in fair value of plan assets | ||||
Plan assets at beginning of year | 874.8 | 787 | ||
Actual return on plan assets | (39.3) | 116.5 | ||
Contribution by the company | 0.6 | 30.5 | ||
Benefits paid | (58.6) | (59.2) | ||
Plan assets at end of year | 777.5 | 874.8 | 787 | |
Funded status | (56.3) | (47.9) | ||
Current liabilities | (7.1) | (0.5) | ||
Non-current liabilities | (49.2) | (47.4) | ||
Net pension liability at end of year | [1] | (56.3) | (47.9) | |
Net actuarial loss (gain) | 468.9 | 451.8 | ||
Prior service cost | (0.5) | |||
Total recognized in accumulated other comprehensive loss | 468.9 | 451.3 | ||
Post-Retirement Benefits | ||||
Change in projected benefit obligations (PBO) | ||||
PBO at beginning of year | (7.6) | (6.6) | ||
Service cost | (0.2) | (0.1) | (0.1) | |
Interest cost | (0.3) | (0.3) | (0.2) | |
Participant contributions | (0.1) | (0.1) | ||
Actuarial loss including assumption changes | 0.6 | (1.1) | ||
Benefits paid | 0.6 | 0.6 | ||
PBO at end of year | (7) | (7.6) | $ (6.6) | |
Change in fair value of plan assets | ||||
Contribution by the company | 0.5 | 0.4 | ||
Participant contributions | 0.1 | 0.1 | ||
Benefits paid | (0.6) | (0.5) | ||
Funded status | (7) | (7.6) | ||
Current liabilities | (0.5) | (0.3) | ||
Non-current liabilities | (6.5) | (7.3) | ||
Net pension liability at end of year | (7) | (7.6) | ||
Net actuarial loss (gain) | (1.4) | (0.8) | ||
Prior service cost | (2.2) | (2.6) | ||
Total recognized in accumulated other comprehensive loss | $ (3.6) | $ (3.4) | ||
[1] | In addition, the Company has a liability for a foreign pension plan of $0.2 million at December 31, 2018 and 2017. |
Schedule of Changes in Benefi_2
Schedule of Changes in Benefit Obligations, Plan Assets and Funded Status of Defined Benefit Pension and Post-Retirement Benefit Plans (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Foreign Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Liability on foreign pension plan | $ 0.2 | $ 0.2 |
Components of Company's Net Pen
Components of Company's Net Pension Expense (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pension and Other Postretirement Benefits Disclosure [Line Items] | |||
Expected return on plan assets | |||
Net actuarial loss (gain) | |||
Defined-benefit plan (income) cost | |||
Amortization of net actuarial (loss) gain | |||
Prior service cost | |||
Total recognized in other comprehensive loss | 13.1 | (12.1) | 9 |
Pension Plans, Defined Benefit | |||
Pension and Other Postretirement Benefits Disclosure [Line Items] | |||
Service cost | 2 | 1.8 | 1.8 |
Interest cost | 28.9 | 30 | 30.6 |
Expected return on plan assets | (58.1) | (58.4) | (55.9) |
Net actuarial loss (gain) | 19 | 17.9 | 17.7 |
Prior service cost | (0.5) | (0.4) | (1.1) |
Defined-benefit plan (income) cost | (8.7) | (9.1) | (6.9) |
Various U.S. defined contribution plans cost | 12.2 | 12 | 11.6 |
Defined Benefit Plan And Defined Contribution Plan Periodic Benefit Cost, Total | 3.5 | 2.9 | 4.7 |
Other changes in plan assets and projected benefit obligation recognized in other comprehensive loss Net actuarial (gain) loss | 36.1 | (3.8) | 29.9 |
Amortization of net actuarial (loss) gain | (19) | (17.9) | (17.7) |
Prior service cost | 0.6 | ||
Amortization of prior service cost | 0.5 | 0.5 | 1.1 |
Total recognized in other comprehensive loss | 17.6 | (21.2) | 13.9 |
Total recognized in net periodic (benefit) cost and other comprehensive loss | 8.9 | (30.3) | 7 |
Post-Retirement Benefits | |||
Pension and Other Postretirement Benefits Disclosure [Line Items] | |||
Service cost | 0.2 | 0.1 | 0.1 |
Interest cost | 0.3 | 0.3 | 0.2 |
Net actuarial loss (gain) | (0.1) | (0.2) | |
Prior service cost | (0.4) | (0.4) | (0.4) |
Defined-benefit plan (income) cost | (0.1) | (0.3) | |
Other changes in plan assets and projected benefit obligation recognized in other comprehensive loss Net actuarial (gain) loss | (0.6) | 1.1 | 0.2 |
Amortization of net actuarial (loss) gain | 0.1 | 0.2 | |
Amortization of prior service cost | 0.4 | 0.4 | 0.4 |
Total recognized in other comprehensive loss | (0.2) | 1.6 | 0.8 |
Total recognized in net periodic (benefit) cost and other comprehensive loss | $ (0.2) | $ 1.5 | $ 0.5 |
Actuarial Assumptions Used to D
Actuarial Assumptions Used to Determine Benefit Obligations (Detail) | Dec. 31, 2018 | Dec. 31, 2017 |
Pension Plans, Defined Benefit | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 4.32% | 3.65% |
Post-Retirement Benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 4.46% | 3.79% |
Assumptions Used to Determine N
Assumptions Used to Determine Net Periodic Benefit Cost (Detail) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pension Plans, Defined Benefit | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 3.65% | 4.15% | 4.40% |
Expected long-term return on plan assets | 7.15% | 7.50% | 7.50% |
Rate of compensation increase | 4.00% | 4.00% | 4.00% |
Post-Retirement Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 3.79% | 4.40% | 4.55% |
Rate of compensation increase | 4.00% | 4.00% | 4.00% |
Health Care Cost Trend Rates (D
Health Care Cost Trend Rates (Detail) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Pension And Other Post-Retirement Benefits | ||
Health care cost trend rate assumed for next year | 6.00% | 6.50% |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% |
Year that the rate reaches the ultimate trend rate | 2,021 | 2,021 |
Weighted Asset Allocations by A
Weighted Asset Allocations by Asset Category (Detail) | Dec. 31, 2018 | Dec. 31, 2017 |
Pension And Other Post-Retirement Benefits | ||
Average Assets Allocation | 100.00% | 100.00% |
Equity Securities | ||
Pension And Other Post-Retirement Benefits | ||
Average Assets Allocation | 40.00% | 45.00% |
Debt Securities | ||
Pension And Other Post-Retirement Benefits | ||
Average Assets Allocation | 48.00% | 43.00% |
Real estate | ||
Pension And Other Post-Retirement Benefits | ||
Average Assets Allocation | 10.00% | 9.00% |
Private equity | ||
Pension And Other Post-Retirement Benefits | ||
Average Assets Allocation | 2.00% | 2.00% |
Other | ||
Pension And Other Post-Retirement Benefits | ||
Average Assets Allocation | 0.00% | 1.00% |
Fair Value Measurement of Plan
Fair Value Measurement of Plan Assets (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | $ 775.3 | $ 873.8 | |
Non-investment plan assets | 2.2 | 1 | |
Total plan assets | 777.5 | 874.8 | |
Short-term Investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 14.4 | 15.8 | |
Equity Securities | Commingled Equity Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 104.3 | 121.5 | |
Equity Securities | Common Stock | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 125.6 | 220.3 | |
Fixed Income Securities | Other Fixed Income Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 185.8 | 219.9 | |
Fixed Income Securities | Commingled Fixed Income Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 92 | 99.8 | |
Fixed Income Securities | US Treasury Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 86 | 46 | |
Other Investments | Private equity | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 13.2 | 20.9 | |
Other Investments | Mutual Fund | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 73.6 | 51.8 | |
Other Investments | Real estate funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 80.4 | 77.8 | |
Quoted Prices In Active Markets For Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 211.6 | 268.3 | |
Quoted Prices In Active Markets For Identical Assets (Level 1) | Short-term Investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 2 | ||
Quoted Prices In Active Markets For Identical Assets (Level 1) | Equity Securities | Common Stock | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 125.6 | 220.3 | |
Quoted Prices In Active Markets For Identical Assets (Level 1) | Fixed Income Securities | US Treasury Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 86 | 46 | |
Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 470.1 | 506.8 | |
Significant Other Observable Inputs (Level 2) | Short-term Investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 14.4 | 13.8 | |
Significant Other Observable Inputs (Level 2) | Equity Securities | Commingled Equity Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 104.3 | 121.5 | |
Significant Other Observable Inputs (Level 2) | Fixed Income Securities | Other Fixed Income Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 185.8 | 219.9 | |
Significant Other Observable Inputs (Level 2) | Fixed Income Securities | Commingled Fixed Income Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 92 | 99.8 | |
Significant Other Observable Inputs (Level 2) | Other Investments | Mutual Fund | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 73.6 | 51.8 | |
Significant Non-observable Inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 93.6 | 98.7 | 122 |
Significant Non-observable Inputs (Level 3) | Short-term Investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 19.7 | ||
Significant Non-observable Inputs (Level 3) | Real estate funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 80.4 | 77.8 | $ 74.3 |
Significant Non-observable Inputs (Level 3) | Other Investments | Private equity | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | 13.2 | 20.9 | |
Significant Non-observable Inputs (Level 3) | Other Investments | Real estate funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total fair value of plan asset investments | $ 80.4 | $ 77.8 |
Reconciliation of Fair Value Me
Reconciliation of Fair Value Measurements Using Significant Unobservable Inputs (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets at beginning of year | $ 873.8 | |
Plan assets at end of year | 775.3 | 873.8 |
Significant Non-observable Inputs (Level 3) | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets at beginning of year | 98.7 | 122 |
Relating to assets still held at the reporting date | 2.3 | (2.1) |
Relating to assets sold during the period | (0.8) | 7.8 |
Purchases, sales and settlements | (6.6) | (29) |
Plan assets at end of year | 93.6 | 98.7 |
Short-term Investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets at beginning of year | 15.8 | |
Plan assets at end of year | 14.4 | 15.8 |
Short-term Investments | Significant Non-observable Inputs (Level 3) | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets at beginning of year | 19.7 | |
Purchases, sales and settlements | (19.7) | |
Real estate funds | Significant Non-observable Inputs (Level 3) | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets at beginning of year | 77.8 | 74.3 |
Relating to assets still held at the reporting date | 2.6 | 3.5 |
Plan assets at end of year | 80.4 | 77.8 |
Private equity | Significant Non-observable Inputs (Level 3) | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets at beginning of year | 20.9 | 28 |
Relating to assets still held at the reporting date | (0.3) | (5.6) |
Relating to assets sold during the period | (0.8) | 7.8 |
Purchases, sales and settlements | (6.6) | (9.3) |
Plan assets at end of year | $ 13.2 | $ 20.9 |
Estimated Future Payments (Deta
Estimated Future Payments (Detail) $ in Millions | Dec. 31, 2018USD ($) |
Pension Plans, Defined Benefit | |
Defined Benefit Plan Disclosure [Line Items] | |
2,019 | $ 66.4 |
2,020 | 68.3 |
2,021 | 59 |
2,022 | 58.3 |
2,023 | 57.8 |
2024 - 2028 | 285.1 |
Post-Retirement Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
2,019 | 0.5 |
2,020 | 0.5 |
2,021 | 0.5 |
2,022 | 0.5 |
2,023 | 0.5 |
2024 - 2028 | $ 2.3 |
Schedule of Summary by Currency
Schedule of Summary by Currency of Foreign Currency Forward Contracts (Detail) - Foreign currency forward contracts - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Buy | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | $ 59.8 | $ 45.6 |
Buy | Euro | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | 32 | 29.3 |
Buy | Mexican peso | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | 27.8 | 16.3 |
Sell | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | 1 | 49.3 |
Sell | British pound | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | $ 1 | 1.2 |
Sell | Canadian dollar | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts of foreign currency forward contracts | $ 48.1 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Trading Activity, Gains and Losses, Net [Line Items] | |||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | $ (38.4) | $ 52.7 | $ (39.8) |
Net Investment Hedging [Member] | Non-US [Member] | |||
Trading Activity, Gains and Losses, Net [Line Items] | |||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | 7.4 | ||
Derivative, Notional Amount | $ 150 | ||
Commodity Futures Contracts | |||
Trading Activity, Gains and Losses, Net [Line Items] | |||
Reclassification period for effective portion of contract, in years | 1 year |
Impact of Derivative Contracts
Impact of Derivative Contracts on Company's Financial Statements (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, assets | ||
Fair value of derivative instruments, liabilities | ||
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, total | 7.5 | (1.4) |
Designated as Hedging Instrument | Foreign Currency Contracts | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, assets | 3.9 | 0.2 |
Designated as Hedging Instrument | Foreign Currency Contracts | Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, liabilities | (0.6) | (1.8) |
Designated as Hedging Instrument | Foreign Currency Contracts | Other Noncurrent Assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, assets | 5.1 | |
Designated as Hedging Instrument | Commodities Contracts | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, assets | $ 0.2 | |
Designated as Hedging Instrument | Commodities Contracts | Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, liabilities | $ (0.9) |
Schedule of Effect of Derivativ
Schedule of Effect of Derivatives Instruments on Consolidated Statement of Earnings (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative [Line Items] | ||
Amount of gain (loss) recognized in other comprehensive loss on derivative | $ 0.7 | $ (0.6) |
Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings | 0.6 | 1 |
Foreign Currency Contracts | ||
Derivative [Line Items] | ||
Amount of gain (loss) recognized in other comprehensive loss on derivative | 1.8 | (1.1) |
Foreign Currency Contracts | Cost Of Products Sold | ||
Derivative [Line Items] | ||
Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings | 0.3 | 0.4 |
Commodities Contracts | ||
Derivative [Line Items] | ||
Amount of gain (loss) recognized in other comprehensive loss on derivative | (1.1) | 0.5 |
Commodities Contracts | Cost Of Products Sold | ||
Derivative [Line Items] | ||
Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings | $ 0.3 | $ 0.6 |
Components of Provision for Inc
Components of Provision for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes | |||
Current, Federal | $ 60.1 | $ 148 | $ 71.6 |
Current, State | 15.6 | 9.4 | 14.5 |
Current, International | 38.6 | 43.8 | 34.9 |
Deferred, Federal | (1.7) | 23.5 | 11 |
Deferred, State | 1.5 | 5.8 | 5.2 |
Deferred, International | (0.5) | (6.2) | (1.2) |
Provision for income taxes | $ 113.6 | $ 224.3 | $ 136 |
Difference Between Provision Fo
Difference Between Provision For Income Taxes And U.S. Federal Statutory Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes | |||
Provision at U.S. federal statutory rate | 21.00% | 35.00% | 35.00% |
State taxes, net of federal benefit | 2.40% | 1.90% | 2.80% |
U.S. manufacturing credit | (1.40%) | (1.50%) | |
Research tax credits | (0.50%) | (0.30%) | (0.30%) |
Excess tax benefit on stock compensation | (0.40%) | (2.20%) | (1.10%) |
Other | (0.90%) | 0.80% | 0.40% |
Effective Income Tax Rate Continuing Operations Excluding Change in Tax Rate, Total | 20.40% | 27.40% | 29.40% |
U.S. Tax Cuts & Jobs Act (U.S. Tax Reform) | 15.70% | ||
Effective Income Tax Rate Reconciliation, Percent, Total | 20.40% | 43.10% | 29.40% |
State Administration of Taxation, China | |||
Income Taxes | |||
International income tax rate differential | (2.30%) | (6.50%) | (6.20%) |
Other | |||
Income Taxes | |||
International income tax rate differential | 1.10% | 0.10% | 0.30% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Contingency [Line Items] | |||||
Corporate income tax rate | 21.00% | 35.00% | 35.00% | ||
Provisional Income tax expense | $ 6,700,000 | $ 81,800,000 | $ 0 | $ 81,800,000 | $ 0 |
Income tax expense related to one time mandatory tax | 83,500,000 | ||||
Income tax expense due to tax rate reform | $ 1,700,000 | ||||
Total taxes paid | 116,400,000 | $ 131,100,000 | $ 117,400,000 | ||
Cash and cash equivalents and marketable securities were held by foreign subsidiaries | 644,100,000 | ||||
Unrecognized tax benefits that would affect the effective tax rate, if recognized | 800,000 | ||||
Anticipated decrease in unrecognized tax benefits | $ 0 | ||||
State and local | Earliest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examinations, years under examination | 2,001 | ||||
State and local | Latest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examinations, years under examination | 2,018 | ||||
Non-U.S. | Earliest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examinations, years under examination | 2,009 | ||||
Non-U.S. | Latest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examinations, years under examination | 2,018 | ||||
U.S. federal | Earliest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examinations, years under examination | 2,016 | ||||
U.S. federal | Latest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examinations, years under examination | 2,018 | ||||
Discontinued Operations | |||||
Income Tax Contingency [Line Items] | |||||
Additional income tax accrual | $ 28,900,000 |
Components of Earning Before In
Components of Earning Before Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule of Income Before Income Tax [Line Items] | |||
U.S. | $ 376 | $ 329.9 | $ 300.9 |
International | 181.8 | 190.9 | 161.6 |
Earnings before provision for income taxes | $ 557.8 | $ 520.8 | $ 462.5 |
Tax Effects of Temporary Differ
Tax Effects of Temporary Differences of Assets and Liabilities (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Component Of Net Income Tax Assets And Liabilities [Line Items] | ||
Employee benefits, Assets | $ 32.5 | $ 30.4 |
Product liability and warranties, Assets | 42.5 | 43.4 |
Inventories, Assets | ||
Accounts receivable, Assets | 18.3 | 16.5 |
Property, plant and equipment, Assets | ||
Intangibles, Assets | ||
Environmental, Assets | 2.1 | 2.4 |
Undistributed foreign earnings, Assets | ||
Tax loss and credit carryovers, Assets | 17.5 | 19.8 |
All other, Assets | 4 | 5.5 |
Valuation allowance, Assets | (13.1) | (15) |
Assets | 103.8 | 103 |
Employee benefits, Liabilities | ||
Product liability and warranties, Liabilities | ||
Inventories, Liabilities | 0.6 | 2 |
Accounts receivable, Liabilities | ||
Property, plant and equipment, Liabilities | 36.3 | 31.1 |
Intangibles, Liabilities | 57.3 | 54.3 |
Environmental, Liabilities | ||
Undistributed foreign earnings, Liabilities | 28.9 | 38.6 |
Tax loss and credit carryovers, Liabilities | ||
All other, Liabilities | ||
Valuation allowance, Liabilities | ||
All other, Liabilities | 123.1 | 126 |
Net liability | $ 19.3 | $ 23 |
Reconciliation of Tax Loss Carr
Reconciliation of Tax Loss Carryovers, Credit Carryovers and Valuation Allowances (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes | |||
Net Operating Losses and Tax Credits, Beginning balance | $ 19.8 | $ 18.2 | |
Net Operating Losses and Tax Credits, Additions | 1.6 | ||
Net Operating Losses and Tax Credits, Reductions | (2.3) | ||
Net Operating Losses and Tax Credits, Ending balance | 17.5 | 19.8 | $ 18.2 |
Balance at Beginning of Year | 15 | ||
Valuation Allowances, Additions | |||
Valuation Allowances, Reductions | |||
Balance at End of Year | 13.1 | 15 | |
Valuation Allowance For Deferred Tax Assets | |||
Income Taxes | |||
Balance at Beginning of Year | 15 | 13.1 | |
Valuation Allowances, Additions | 0 | 1.9 | 0 |
Valuation Allowances, Reductions | (1.9) | 0 | 0 |
Balance at End of Year | $ 13.1 | $ 15 | $ 13.1 |
Reconciliation of Unrecognized
Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | ||
Balance at January 1 | $ 6.2 | $ 4.2 |
Additions for tax positions of prior years | 2.1 | 2 |
Balance at December 31 | $ 8.3 | $ 6.2 |
Commitment and Contingencies -
Commitment and Contingencies - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies [Line Items] | ||
Product liability insurance for individual losses in excess of accrual amount | $ 125,000,000 | $ 125,000,000 |
Amounts in excess to be covered by third party insurance | $ 7,500,000 | $ 7,500,000 |
Operations by Segment - Additio
Operations by Segment - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||||||||
Sales to a largest customer | $ 812.5 | $ 754.1 | $ 833.3 | $ 788 | $ 768.6 | $ 749.9 | $ 738.2 | $ 740 | $ 3,187.9 | $ 2,996.7 | $ 2,685.9 |
Restructuring, Settlement and Impairment Provisions | 6.7 | ||||||||||
Effective Income Tax Rate Reconciliation, Repatriation of Foreign Earnings, Amount | 81.8 | ||||||||||
North America | Geographic Concentration Risk | Customer one | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales to a largest customer | 425.3 | 361.4 | 311.5 | ||||||||
North America | Geographic Concentration Risk | Customer Two | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales to a largest customer | $ 355.6 | $ 335.2 | $ 280.8 | ||||||||
North America | Sales Revenue, Goods, Net | Geographic Concentration Risk | Customer one | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Concentration Risk, Percentage | 13.00% | 12.00% | 12.00% | ||||||||
North America | Sales Revenue, Goods, Net | Geographic Concentration Risk | Customer Two | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Concentration Risk, Percentage | 11.00% | 11.00% | 11.00% |
Schedule of Segment Earnings (D
Schedule of Segment Earnings (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||||||||
Net sales | $ 812.5 | $ 754.1 | $ 833.3 | $ 788 | $ 768.6 | $ 749.9 | $ 738.2 | $ 740 | $ 3,187.9 | $ 2,996.7 | $ 2,685.9 |
Segment earnings | 613.4 | 577.9 | 515 | ||||||||
Other income (expense) | 21.2 | 21.3 | 18.1 | ||||||||
Interest expense | (8.4) | (10.1) | (7.3) | ||||||||
Earnings before provision for income taxes | 557.8 | 520.8 | 462.5 | ||||||||
Provision for income taxes | 113.6 | 224.3 | 136 | ||||||||
Earnings from continuing operations | $ 126.3 | $ 104.6 | $ 114.5 | $ 98.8 | $ 22.7 | $ 93.7 | $ 92.4 | $ 87.7 | 444.2 | 296.5 | 326.5 |
Inter-segment | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | (30.4) | (24.4) | (22.9) | ||||||||
Segment earnings | |||||||||||
Corporate | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Other income (expense) | (47.2) | (47) | (45.2) | ||||||||
North America | Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 2,044.7 | 1,904.8 | 1,743.2 | ||||||||
Segment earnings | 464.1 | 428.6 | 385.9 | ||||||||
Rest of World | Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 1,173.6 | 1,116.3 | 965.6 | ||||||||
Segment earnings | $ 149.3 | 149.3 | 129.1 | ||||||||
Rest of World | Inter-segment | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | $ 2.5 | $ 2.5 |
Assets, Depreciation And Capita
Assets, Depreciation And Capital Expenditure By Segment (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Total Assets | $ 3,071.5 | $ 3,197.4 | $ 2,891 |
Depreciation and amortization | 71.9 | 70.1 | 65.1 |
Capital expenditures | 85.2 | 94.2 | 80.7 |
Corporate | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 696.3 | 863.4 | 790.8 |
Depreciation and amortization | 1.2 | 1.2 | 1.2 |
Capital expenditures | 7.1 | 0.5 | 0.5 |
North America | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 1,653.6 | 1,592.6 | 1,515.9 |
Depreciation and amortization | 45.5 | 45.1 | 42.9 |
Capital expenditures | 45.8 | 38.5 | 45.9 |
Rest of World | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 721.6 | 741.4 | 584.3 |
Depreciation and amortization | 25.2 | 23.8 | 21 |
Capital expenditures | $ 32.3 | $ 55.2 | $ 34.3 |
Net Sales and Long-Lived Assets
Net Sales and Long-Lived Assets by Geographic Location (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Long-lived Assets | $ 625.9 | $ 604.1 | $ 625.9 | $ 604.1 | $ 528.2 | ||||||
Net sales | 812.5 | $ 754.1 | $ 833.3 | $ 788 | 768.6 | $ 749.9 | $ 738.2 | $ 740 | 3,187.9 | 2,996.7 | 2,685.9 |
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Long-lived Assets | 327.3 | 303 | 327.3 | 303 | 292.4 | ||||||
Net sales | 1,820.8 | 1,698.1 | 1,570.7 | ||||||||
China | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Long-lived Assets | 252.6 | 250.8 | 252.6 | 250.8 | 184.3 | ||||||
Net sales | 1,071.2 | 1,034.9 | 887.1 | ||||||||
Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Long-lived Assets | 3.1 | 3.2 | 3.1 | 3.2 | 3.1 | ||||||
Net sales | 175 | 163.7 | 138.7 | ||||||||
Other Foreign | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Long-lived Assets | $ 42.9 | $ 47.1 | 42.9 | 47.1 | 48.4 | ||||||
Net sales | $ 120.9 | $ 100 | $ 89.4 |
Quarterly Financial Information
Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information [Line Items] | |||||||||||
Net sales | $ 812.5 | $ 754.1 | $ 833.3 | $ 788 | $ 768.6 | $ 749.9 | $ 738.2 | $ 740 | $ 3,187.9 | $ 2,996.7 | $ 2,685.9 |
Gross profit | 337 | 306 | 341 | 321.5 | 322.3 | 305 | 304.2 | 300.9 | 1,305.5 | 1,232.4 | 1,114.2 |
Net earnings | $ 126.3 | $ 104.6 | $ 114.5 | $ 98.8 | $ 22.7 | $ 93.7 | $ 92.4 | $ 87.7 | $ 444.2 | $ 296.5 | $ 326.5 |
Basic earnings per share | $ 0.75 | $ 0.61 | $ 0.67 | $ 0.58 | $ 0.13 | $ 0.54 | $ 0.53 | $ 0.51 | $ 2.60 | $ 1.72 | $ 1.87 |
Diluted earnings per share | 0.74 | 0.61 | 0.66 | 0.57 | 0.13 | 0.54 | 0.53 | 0.50 | $ 2.58 | $ 1.70 | $ 1.85 |
Common dividends declared | $ 0.22 | $ 0.18 | $ 0.18 | $ 0.18 | $ 0.14 | $ 0.14 | $ 0.14 | $ 0.14 |
Quarterly Results of Operatio_3
Quarterly Results of Operations - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information [Line Items] | |||||
Provisional Income tax expense | $ 6.7 | $ 81.8 | $ 0 | $ 81.8 | $ 0 |
Provisional Income tax expense, reduce earnings per share | $ 0.47 | ||||
Income tax expense, reduce after tax earnings | $ 5 | ||||
Income tax expense, reduce after tax earnings per share | $ 0.03 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Acquisition of Businesses | |||
Deductions | |||
Valuation Allowance For Trade And Notes Receivable | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Year | 5.3 | 6.3 | $ 6 |
Charged to Costs and Expenses | 1.5 | 0 | 1.1 |
Acquisition of Businesses | 0 | 0.2 | 0.2 |
Deductions | (0.4) | (1.2) | (1) |
Balance at End of Year | 6.4 | 5.3 | 6.3 |
Valuation Allowance For Deferred Tax Assets | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Year | 15 | 13.1 | 11 |
Charged to Costs and Expenses | 0 | 1.9 | 2.1 |
Acquisition of Businesses | 0 | 1.9 | 0 |
Deductions | (1.9) | 0 | 0 |
Balance at End of Year | $ 13.1 | $ 15 | $ 13.1 |