Document and Entity Information - shares |
3 Months Ended | |
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Apr. 01, 2018 |
Apr. 29, 2018 |
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Entity Registrant Name | WATTS WATER TECHNOLOGIES INC | |
Entity Central Index Key | 0000795403 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 01, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Class A | ||
Entity Common Stock, Shares Outstanding | 27,819,548 | |
Class B | ||
Entity Common Stock, Shares Outstanding | 6,329,290 |
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
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Apr. 01, 2018 |
Apr. 02, 2017 |
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Consolidated Statements of Operations | ||
Net Sales | $ 378.5 | $ 347.2 |
Cost of goods sold | 221.8 | 203.4 |
GROSS PROFIT | 156.7 | 143.8 |
Selling, general and administrative expenses | 112.8 | 107.6 |
Restructuring | 0.5 | |
OPERATING INCOME | 43.9 | 35.7 |
Other (income) expense: | ||
Interest income | (0.4) | (0.2) |
Interest expense | 4.3 | 4.8 |
Other expense, net | 0.7 | 0.3 |
Total other expense | 4.6 | 4.9 |
INCOME BEFORE INCOME TAXES | 39.3 | 30.8 |
Provision for income taxes | 11.1 | 9.1 |
NET INCOME | $ 28.2 | $ 21.7 |
BASIC EPS | ||
NET INCOME PER SHARE | $ 0.82 | $ 0.63 |
Weighted average number of shares (in shares) | 34.3 | 34.4 |
DILUTED EPS | ||
NET INCOME PER SHARE | $ 0.82 | $ 0.63 |
Weighted average number of shares (in shares) | 34.4 | 34.5 |
Dividends declared per share (in dollars per share) | $ 0.19 | $ 0.18 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
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Apr. 01, 2018 |
Apr. 02, 2017 |
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Consolidated Statements of Comprehensive Income | ||
Net income | $ 28.2 | $ 21.7 |
Other comprehensive income, net of tax: | ||
Foreign currency translation adjustments | 9.7 | 7.9 |
Cash flow hedges | 2.8 | 0.1 |
Other comprehensive income | 12.5 | 8.0 |
Comprehensive income | $ 40.7 | $ 29.7 |
Basis of Presentation |
3 Months Ended |
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Apr. 01, 2018 | |
Basis of Presentation | |
Basis of Presentation | WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the Watts Water Technologies, Inc. (the Company) Consolidated Balance Sheet as of April 1, 2018, the Consolidated Statements of Operations for the first quarters ended April 1, 2018 and April 2, 2017, the Consolidated Statements of Comprehensive Income for the first quarters ended April 1, 2018 and April 2, 2017, and the Consolidated Statements of Cash Flows for the first quarters ended April 1, 2018 and April 2, 2017.
The consolidated balance sheet at December 31, 2017 has been derived from the audited consolidated financial statements at that date. The accounting policies followed by the Company are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The financial statements included in this report should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2017. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2018.
The Company operates on a 52-week fiscal year ending on December 31. Any quarterly data contained in this Quarterly Report on Form 10-Q generally reflect the results of operations for a 13-week period.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Accounting Policies |
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Apr. 01, 2018 | |
Accounting Policies | |
Accounting Policies | 2. Accounting Policies
The significant accounting policies used in preparation of these consolidated financial statements for the three months ended April 1, 2018 are consistent with those discussed in Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, with the exception of the Company’s change in its Revenue Recognition accounting policy resulting from the adoption of ASC 606 described herein.
Revenue Recognition
On January 1, 2018, the Company adopted the accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard” or “ASU 2014-09”) to all contracts using the modified retrospective method. The adoption of ASU 2014-09 was not material to the Company and as such, there was no cumulative effect upon the January 1, 2018 adoption date. As the impact of the new revenue standard is not material to the Company, there is no pro-forma disclosure presented as of and for the quarter ended April 1, 2018. The Company expects the impact of the adoption of the new standard to be immaterial to the Company’s financial statements on an ongoing basis.
The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.
The Company’s revenue for product sales is recognized on a point in time model, at the point control transfers to the customer, which is generally when products are shipped from the Company’s manufacturing or distribution facilities or when delivered to the customer’s named location. Sales tax, value-added tax, or other taxes collected concurrent with revenue producing activities are excluded from revenue. Freight costs billed to customers for shipping and handling activities are included in revenue with the related cost included in selling, general and administrative expenses. See Note 3 for further disclosures and detail regarding revenue recognition.
Other Recently Adopted Accounting Standards
In February 2018, the FASB issued ASU 2018-02 “Income Statement-Reporting Comprehensive Income.” ASU 2018-02 provides guidance on the reclassification of certain tax effects from the Tax Cuts and Jobs Act from accumulated other comprehensive income. Current generally accepted accounting principles requires deferred tax liabilities and deferred tax assets to be adjusted for the effect of a change in tax laws or tax rates, with that effect included in income from operations in the period of enactment. This included the income tax effects of items in accumulated other comprehensive income. This guidance allows a reclassification from accumulated other comprehensive income to retained earnings for the tax effects on items in accumulated other comprehensive income related to the change in tax rates from the Tax Cuts and Jobs Act. This standard is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. Early adoption of this standard is permitted. The Company adopted this standard in the first quarter of 2018, and it did not have a material impact on the Company’s financial statements.
In October 2016, the FASB issued ASU 2016-16 “Intra-Entity Transfers of Assets Other than Inventory.” ASU 2016-16 provides guidance on the timing of recognition of tax consequences of an intra-entity transfer of an asset other than inventory. The Company adopted the provision of this ASU during the first quarter of 2018, using the modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the quarter. The adoption of this guidance did not have a material impact on the Company’s financial statements.
Accounting Standards Updates
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016‑02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term for both finance and operating leases. ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018 and all interim periods thereafter. Early adoption is permitted for all entities. The Company plans to adopt this standard effective January 1, 2019, using the modified retrospective approach. The Company has begun evaluating the new lease standard, including the review and implementation of the necessary changes to its existing processes and systems that will be required to implement this new standard. The Company has a variety of categories of lease arrangements, including real estate, automobiles, manufacturing equipment, facility equipment, office equipment and certain service arrangements. The Company is currently reviewing its leasing arrangements in order to evaluate the impact of this standard on the Company’s financial statements. The Company does not expect a significant change in its leasing activity between now and adoption. The Company is unable to quantify the impact of adoption at this time, however the Company expects the primary impact to its consolidated financial position upon adoption will be the recognition, on a discounted basis, of its minimum commitments under non-cancelable operating leases on its consolidated balance sheets resulting in the recording of right-of-use assets and lease obligations. The Company currently does not expect ASC 842 to have a material effect on either its consolidated statement of operations or consolidated statement of cash flow.
Shipping and Handling
Shipping and handling costs included in selling, general and administrative expenses amounted to $13.2 million and $12.8 million for the first quarters of 2018 and 2017, respectively.
Research and Development
Research and development costs included in selling, general and administrative expenses amounted to $8.5 million and $7.1 million for the first quarters of 2018 and 2017, respectively. |
Revenue Recognition |
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Revenue Recognition | 3. Revenue Recognition
The Company is a leading supplier of products that manage and conserve the flow of fluids and energy into, through and out of buildings in the residential and commercial markets of the Americas, Europe, and Asia‑Pacific, Middle East, and Africa (“APMEA”). For over 140 years, the Company has designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that helps purify and conserve water.
The Company distributes products through four primary distribution channels: wholesale, original equipment manufacturers (OEMs), specialty, and do-it-yourself (DIY). The Company operates in three geographic segments: Americas, Europe, and APMEA. Each of these segments sells similar products, which are comprised of the following principal product lines:
The following table disaggregates our revenue for each reportable segment, by distribution channel and principal product line. The Company believes that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, and cash flows are affected by economic factors:
The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to represent the contract with a customer. The Company’s contracts with customers are generally for products only and typically do not include other performance obligations such as professional services, extended warranties, or other material rights. In situations where sales are to a distributor, the Company has concluded that its contracts are with the distributor as the Company holds a contract bearing enforceable rights and obligations only with the distributor. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on their relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment from the Company’s manufacturing site or distribution center, or delivery to the customer’s named location. In certain circumstances, revenue from shipments to retail customers is recognized only when the product is consumed by the customer, as based on the terms of the arrangement, transfer of control is not satisfied until that point in time. In determining whether control has transferred, the Company considers if there is a present right to payment, physical possession and legal title, along with risks and rewards of ownership having transferred to the customer. In certain circumstances, the Company manufactures customized product without alternative use for its customers. However, as these arrangements do not entitle the Company a right to payment of cost plus a profit for work completed, the Company has concluded that revenue recognition at the point in time control transfers is appropriate and not over time recognition.
At times, the Company receives orders for products to be delivered over multiple dates that may extend across reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. As scheduled delivery dates are within one year, under the optional exemption provided by ASC 606-10-50-14 revenues allocated to future shipments of partially completed contracts are not disclosed.
The Company generally provides an assurance warranty that its products will substantially conform to the published specification. The Company’s liability is limited to either a credit equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial. The Company does not consider activities related to such warranty, if any, to be a separate performance obligation. For certain of its products, the Company will separately sell extended warranty and service policies to its customers. The Company considers the sale of the extended warranty a separate performance obligation. These policies typically are for periods ranging from one to three years. Payments received are deferred and recognized over the policy period. For all periods presented, the revenue recognized and the revenue deferred for under these policies is not material to the consolidated financial statements.
The timing of revenue recognition, billings and cash collections from the Company’s contracts with customers can vary based on the payment terms and conditions in the customer contracts. In some cases, customers will partially prepay for their goods; in other cases, after appropriate credit evaluations, payment is due in arrears. In addition, there are constraints which cause variability in the ultimate consideration to be recognized. These constraints typically include early payment discounts, volume rebates, rights of return, cooperative advertising, and market development funds. The Company includes these constraints in the estimated transaction price when there is a basis to reasonably estimate the amount of variable consideration. These estimates are based on historical experience, anticipated future performance and the Company’s best judgment at the time. When the timing of the Company’s recognition of revenue is different from the timing of payments made by the customer, the Company recognizes either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance). Contracts with payment in arrears are recognized as receivables. The opening and closing balances of the Company’s contract assets and contract liabilities are as follows:
The amount of revenue recognized in the period that was included in the opening contract liability was $2.9 million. This revenue consists primarily of revenue recognized for shipments of product which had been prepaid as well as the amortization of extended warranty and service policy revenue. The Company did not recognize any material revenue from obligations satisfied in prior periods. The change in Contract Liabilities is not material for the first quarter of 2018.There were no impairment losses related to Contract Assets for the quarter ended April 1, 2018.
The Company incurs costs to obtain and fulfill a contract; however, the Company has elected the practical expedient under ASC 340-40-24-4 to recognize all incremental costs to obtain a contract as an expense when incurred if the amortization period is one year or less. The Company has elected to treat shipping and handling activities performed after the customer has obtained control of the related goods as a fulfillment cost and the related cost is accrued for in conjunction with the recording of revenue for the goods. |
Income Taxes |
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Income Taxes | |
Income Taxes | 4. Income Taxes
The 2017 Tax Cuts and Jobs Act (“2017 Tax Act”) was enacted on December 22, 2017 and has resulted in significant changes to the U.S. corporate income tax system. These changes include (1) lowering the U.S. corporate income tax rate from 35% to 21%, (2) implementing a base erosion and anti-abuse tax, (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (4) a new provision designed to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries, which allows for the possibility of utilizing foreign tax credits to offset the tax liability (subject to limitations), (5) a lower effective U.S. tax rate on certain revenues from sources outside the U.S., and (6) a one-time mandatory deemed repatriation tax (“Toll Tax”) on foreign subsidiaries’ previously untaxed accumulated foreign earnings.
In the period ended December 31, 2017, the Company recorded a provisional tax expense of $25.1 million related to the 2017 Tax Act, which included a $23.3 million charge for the Toll Tax. For the quarter ended April 1, 2018, the Company has not recorded any additional provisional expense or benefit related to the 2017 Tax Act.
In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. These provisional amounts may be impacted by further analysis and future clarification and guidance regarding available tax accounting methods and elections, earnings and profits computations, foreign tax credit computations, and state tax conformity to federal tax changes. When the Company refines these provisional amounts, any adjustments will be recorded in the period completed. The final analysis may be different from the Company’s current provisional amounts, which could materially affect the Company’s tax obligations and effective tax rate in the period or periods in which the adjustments are made.
As of April 1, 2018, the amounts recorded for the 2017 Tax Act remain provisional for the Toll Tax, the remeasurement of deferred taxes, and gross foreign tax credit carryforwards and related valuation allowances to offset foreign tax credit carryforwards. Further, the Company has not yet determined its policy election with respect to whether to record deferred taxes for basis differences expected to reverse as a result of the GILTI provisions in future periods or use the period cost method.
Due to the complexity of the new GILTI tax rules, the Company has included an estimate of the current GILTI impact in the Company’s tax provision for 2018. The Company’s GILTI estimate may be revised in future periods as we obtain additional data, and as the IRS issues new guidance on implementing the law changes. |
Goodwill & Intangibles |
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Goodwill & Intangibles | 5. Goodwill & Intangibles
The Company operates in three geographic segments: Americas, Europe, and APMEA. The changes in the carrying amount of goodwill by geographic segment are as follows:
(1)Americas goodwill additions during the first quarter of 2018 relate to an immaterial acquisition.
Intangible assets include the following:
Aggregate amortization expense for amortized intangible assets for the first quarters of 2018 and 2017 was $5.6 million and $5.5 million, respectively. |
Financial Instruments and Derivative Instruments |
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Financial Instruments and Derivative Instruments | 6. Financial Instruments and Derivative Instruments
Fair Value
The carrying amounts of cash and cash equivalents, trade receivables and trade payables approximate fair value because of the short maturity of these financial instruments.
The fair value of the Company’s 5.05% senior notes due 2020 is based on quoted market prices of similar notes (level 2). The fair value of the Company’s borrowings outstanding under the Credit Agreement and the Company’s variable rate debt approximates its carrying value. The carrying amount and the estimated fair market value of the Company’s long-term debt, including the current portion, are as follows:
Financial Instruments
The Company measures certain financial assets and liabilities at fair value on a recurring basis, including deferred compensation plan assets and related liabilities, redeemable financial instruments, and derivatives. The fair values of these certain financial assets and liabilities were determined using the following inputs at April 1, 2018 and December 31, 2017:
(1)Included on the Company’s consolidated balance sheet in other assets (other, net).
(2) Included on the Company’s consolidated balance sheet in prepaid expenses and other current assets.
(3)Included on the Company’s consolidated balance sheet in accrued compensation and benefits.
(4)Included on the Company’s consolidated balance sheet in other current liabilities and relates to a mandatorily redeemable equity instrument as part of the Apex Valves Limited (“Apex”) acquisition in 2015.
The table below provides a summary of the changes in fair value of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period December 31, 2017 to April 1, 2018.
In connection with the acquisition of Apex, a liability of $5.5 million was recognized on November 30, 2015 as the estimate of the acquisition date fair value of the mandatorily redeemable equity instrument. The Company acquired an additional 10% ownership in the first quarter of 2017 for approximately $2.9 million and now owns 90% of Apex outstanding shares. The remaining liability is classified as Level 3 under the fair value hierarchy as it is based on the commitment to purchase the remaining 10% of Apex shares within the next year, which is not observable in the market.
Cash equivalents consist of instruments with remaining maturities of three months or less at the date of purchase and consist primarily of money market funds, for which the carrying amount is a reasonable estimate of fair value.
The Company uses financial instruments from time to time to enhance its ability to manage risk, including foreign currency and commodity pricing exposures, which exist as part of its ongoing business operations. The use of derivatives exposes the Company to counterparty credit risk for nonperformance and to market risk related to changes in currency exchange rates and commodity prices. The Company manages its exposure to counterparty credit risk through diversification of counterparties. The Company’s counterparties in derivative transactions are substantial commercial banks with significant experience using such derivative instruments. The impact of market risk on the fair value and cash flows of the Company’s derivative instruments is monitored and the Company restricts the use of derivative financial instruments to hedging activities. The Company does not enter into contracts for trading purposes nor does the Company enter into any contracts for speculative purposes. The use of derivative instruments is approved by senior management under written guidelines.
Interest Rate Swaps
On February 12, 2016, the Company entered into a Credit Agreement (the “Credit Agreement”) pursuant to which it received a funding commitment under a Term Loan of $300 million, of which the entire $300 million has been drawn on, and a Revolving Commitment (“Revolver”) of $500 million, of which $102.0 million had been drawn as of April 1, 2018. Both facilities mature on February 12, 2021. For each facility, the Company can choose either an Adjusted LIBOR or Alternative Base Rate (“ABR”). Upon intended election of Adjusted LIBOR as the interest rate, the Term Loan has quarterly interest payments that began in May 2016, quarterly principal repayments that commenced on March 31, 2017, with a balloon payment of principal on maturity date. The Revolver has quarterly interest payments. Accordingly, the Company’s earnings and cash flows are exposed to interest rate risk from changes in Adjusted LIBOR. In order to manage the Company’s exposure to changes in cash flows attributable to fluctuations in LIBOR-indexed interest payments related to the Company’s floating rate debt, the Company entered into two interest rate swaps. For each interest rate swap, the Company receives the three-month USD-LIBOR subject to a 0% floor, and pays a fixed rate of 1.31375% on a notional amount of $225.0 million. The swaps mature on February 12, 2021. The Company formally documents the hedge relationships at hedge inception to ensure that its interest rate swaps qualify for hedge accounting. On a quarterly basis, the Company assesses whether the interest rate swaps are highly effective in offsetting changes in the cash flow of the hedged item. The Company does not hold or issue interest rate swaps for trading purposes. The swaps are designated as cash flow hedges. For the three months ended April 1, 2018 and April 2, 2017, gains of $1.9 million and $0.2 million, respectively, were recorded in Accumulated Other Comprehensive Income to recognize the effective portion of the fair value of interest rate swaps that qualify as a cash flow hedge.
Designated Foreign Currency Hedges
The Company’s foreign subsidiaries transact most business, including certain intercompany transactions in foreign currencies. Such transactions are principally purchases or sales of materials. The Company has exposure to a number of foreign currencies, including the Canadian Dollar, the euro, and the Chinese Yuan. Beginning in the first quarter of 2018, the Company has used a layering methodology, whereby at the end of each quarter, the Company enters into forward exchange contracts which hedge approximately 70% of the forecasted intercompany purchase transactions between one of the Company’s Canadian and U.S. operating subsidiaries for the next twelve months. As of April 1, 2018, all designated foreign exchange hedge contracts were cash flow hedges under ASC 815, Derivatives and Hedging ("ASC 815"). The Company records the effective portion of the designated foreign currency hedge contracts in other comprehensive income until inventory turns and is sold to a third-party. Once the third-party transaction occurs associated with the hedged forecasted transaction, the effective portion of any related gain or loss on the designated foreign currency hedge will be reclassified into earnings. In the event the notional amount of the derivatives exceeds the forecasted intercompany purchases for a given month, the excess hedge position will be attributed to the following month’s forecasted purchases. However, if the following month’s forecasted purchases cannot absorb the excess hedge position from the current month, the effective portion of the hedge recorded in other comprehensive income will be reclassified to earnings. The Company had designated foreign hedge contracts outstanding as of April 1, 2018 of $0.2 million. At April 1, 2018, the amount expected to be reclassified into earnings from other comprehensive income in the next twelve months is not material to the financial statements. |
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Earnings per Share and Stock Repurchase Program | 7. Earnings per Share and Stock Repurchase Program
The following tables set forth the reconciliation of the calculation of earnings per share:
There were no options to purchase Class A common stock outstanding as of the first quarter of 2018 that would have been anti-dilutive. Options to purchase 0.1 million shares of Class A common stock were outstanding during the first quarter of 2017 but were not included in the computation of diluted EPS because to do so would be anti-dilutive.
On July 27, 2015, the Company’s Board of Directors authorized the repurchase of up to $100 million of the Company’s Class A common stock from time to time on the open market or in privately negotiated transactions. In connection with this stock repurchase program, the Company entered into a Rule 10b5-1 plan, which permits shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The repurchase program may be suspended or discontinued at any time, subject to the terms of the Rule 10b5-1 plan the Company entered into with respect to the repurchase program. As of April 1, 2018, there was approximately $31.6 million remaining authorized for share repurchases under this program.
The following table summarizes the cost and the number of shares of Class A common stock repurchased under the July 27, 2015 program during the quarters ended April 1, 2018 and April 2, 2017:
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Stock-Based Compensation | 8. Stock‑Based Compensation
The Company maintains one stock incentive plan, the Second Amended and Restated 2004 Stock Incentive Plan (the “2004 Stock Incentive Plan”). The Company grants shares of restricted stock and deferred shares to key employees and stock awards to non‑employee members of the Company’s Board of Directors under the 2004 Stock Incentive Plan. Stock awards to non‑employee members of the Company’s Board of Directors vest immediately. Employees’ restricted stock awards and deferred shares typically vest over a three‑year period at the rate of one‑third per year. The restricted stock awards and deferred shares are amortized to expense on a straight-line basis over the vesting period. The Company issued 105,902 and 115,408 shares of restricted stock awards and deferred shares during the first three months of 2018 and 2017, respectively.
The Company also grants performance stock units to key employees under the 2004 Stock Incentive Plan. Performance stock units cliff vest at the end of a three-year performance period set by the Compensation Committee of the Board of Directors at the time of grant. Upon vesting, the number of shares of the Company’s Class A common stock awarded to each performance stock unit recipient will be determined based on the Company’s performance relative to certain performance goals set at the time the performance stock units were granted. The recipient of a performance stock unit award may earn from zero shares to twice the number of target shares awarded to such recipient. The performance stock units are amortized to expense over the vesting period, and based on the Company’s performance relative to the performance goals, may be adjusted. Changes to the estimated shares expected to vest will result in adjustments to the related share-based compensation expense that will be recorded in the period of change. If the performance goals are not met, no awards are earned and previously recognized compensation expense is reversed. The Company granted 94,215 and 98,812 of annual awards for performance stock units during the first three months of 2018 and 2017, respectively. The performance goals for the performance stock units are based on the compound annual growth rate of the Company’s revenue over the three-year performance period and the Company’s return on invested capital (“ROIC”) for the third year of the performance period.
The Company also has a Management Stock Purchase Plan that allows for the granting of restricted stock units (RSUs) to key employees. On an annual basis, key employees may elect to receive a portion of their annual incentive compensation in RSUs instead of cash. Participating employees may use up to 50% of their annual incentive bonus to purchase RSUs for a purchase price equal to 80% of the fair market value of the Company’s Class A common stock as of the date of grant. Upon vesting, each RSU is converted into one share of Class A common stock. RSUs vest either annually over a three-year period from the grant date or upon the third anniversary of the grant date. Receipt of the shares underlying RSUs is deferred for a minimum of three years, or such greater number of years as is chosen by the employee, from the date of grant. An aggregate of 2,000,000 shares of Class A common stock may be issued under the Management Stock Purchase Plan. The company granted 36,208 RSU’s and 47,222 RSU’s during the first three months of 2018 and 2017, respectively.
The fair value of each RSU issued under the Management Stock Purchase Plan is estimated on the date of grant, using the Black‑Scholes‑Merton Model, based on the following weighted average assumptions:
The risk‑free interest rate is based upon the U.S. Treasury yield curve at the time of grant for the respective expected life of the RSUs. The expected life (estimated period of time outstanding) of RSUs and volatility were calculated using historical data. The expected dividend yield of stock is the Company’s best estimate of the expected future dividend yield.
The above assumptions were used to determine the weighted average grant‑date fair value of RSUs granted of $21.80 and $16.84 in 2018 and 2017, respectively.
A more detailed description of each of these plans can be found in Note 13 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
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Segment Information | 9. Segment Information
The Company operates in three geographic segments: Americas, Europe, and APMEA. Each of these segments sells similar products and has separate financial results that are reviewed by the Company’s chief operating decision‑maker. Each segment earns revenue and income almost exclusively from the sale of its products. The Company sells its products into various end markets around the world, with sales by region based upon location of the entity recording the sale. Products are sold into four product categories: 1) residential & commercial flow control products, 2) HVAC & gas products, 3) drainage & water re-use products, and 4) water quality products. The Americas sells products across all four product categories, Europe primarily sells residential & commercial flow products, HVAC & gas products and drainage products, and APMEA primarily sells residential & commercial flow products and HVAC & gas products. All intercompany sales transactions have been eliminated. The accounting policies for each segment are the same as those described in Note 2, and in Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
The following is a summary of the Company’s significant accounts and balances by segment, reconciled to its consolidated totals:
* Corporate expenses are primarily for administrative compensation expense, compliance costs, professional fees, including corporate-related legal and audit expenses, shareholder services and benefit administration costs.
The above operating segments are presented on a basis consistent with the presentation included in the Company’s December 31, 2017 consolidated financial statements included in its Annual Report on Form 10-K.
The U.S. property, plant and equipment of the Company’s Americas segment was $106.2 million and $102.8 million at April 1, 2018 and April 2, 2017, respectively.
The following includes U.S. net sales of the Company’s Americas segment:
The following includes intersegment sales for Americas, Europe and APMEA:
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Accumulated Other Comprehensive Loss | 10. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of the following:
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Debt | 11. Debt
On February 12, 2016, the Company entered into the Credit Agreement among the Company, certain subsidiaries of the Company who become borrowers under the Credit Agreement, JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender and Letter of Credit Issuer, and the other lenders referred to therein. The Credit Agreement provides for a $500 million, five‑year, senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a sublimit of up to $100 million in letters of credit. As of April 1, 2018, the Company had drawn $102.0 million on this line of credit. The Credit Agreement also provides for a $300 million, five‑year, term loan facility (the “Term Loan Facility”) available to the Company in a single draw, of which the entire $300 million had been drawn in February 2016. The Company had $271.9 million of borrowings outstanding on the Term Loan Facility as of April 1, 2018 and $294.4 million outstanding as of April 2, 2017. Borrowings outstanding under the Revolving Credit Facility bear interest at a fluctuating rate per annum equal to an applicable percentage defined as (i) in the case of Eurocurrency rate loans, the ICE Benchmark Administration LIBOR rate plus an applicable percentage, ranging from 0.975% to 1.45%, determined by reference to the Company’s consolidated leverage ratio, or (ii) in the case of base rate loans and swing line loans, the highest of (a) the federal funds rate plus 0.5%, (b) the rate of interest in effect for such day as announced by JPMorgan Chase Bank, N.A. as its “prime rate,” and (c) the ICE Benchmark Administration LIBOR rate plus 1.0%, plus an applicable percentage, ranging from 0.00% to 0.45%, determined by reference to the Company’s consolidated leverage ratio. Borrowings outstanding under the Term Loan Facility will bear interest at a fluctuating rate per annum equal to an applicable percentage defined as the ICE Benchmark Administration LIBOR rate plus an applicable percentage, ranging from 1.125% to 1.75%, determined by reference to the Company’s consolidated leverage ratio. The interest rates as of April 1, 2018 on the Revolving Credit Facility and on the Term Loan Facility were 3.08% and 3.55%, respectively.
The loan under the Term Loan Facility amortizes as follows: 0% per annum during the first year, 7.5% in the second and third years, 10% in the fourth and fifth years, and the remaining unpaid balance paid in full on the maturity date. Payments when due are made ratably each year in quarterly installments. The Company paid a quarterly installment of $5.6 million during the first quarter of 2018. In addition to paying interest under the Credit Agreement, the Company is also required to pay certain fees in connection with the Revolving Credit Facility, including, but not limited to, an unused facility fee and letter of credit fees. The Credit Agreement matures on February 12, 2021, subject to extension under certain circumstances and subject to the terms of the Credit Agreement. The Company may repay loans outstanding under the Credit Agreement from time to time without premium or penalty, other than customary breakage costs, if any, and subject to the terms of the Credit Agreement. Once repaid, amounts borrowed under the Term Loan Facility may not be borrowed again.
The Company maintains letters of credit that guarantee its performance or payment to third parties in accordance with specified terms and conditions. Amounts outstanding were approximately $25.7 million as of April 1, 2018 and $25.6 million as of April 2, 2017. The Company’s letters of credit are primarily associated with insurance coverage. The Company’s letters of credit generally expire within one year of issuance and are drawn down against the Revolving Credit Facility. These instruments may exist or expire without being drawn down. Therefore, they do not necessarily represent future cash flow obligations.
As of April 1, 2018, the Company had $372.3 million of unused and available credit under the Revolving Credit Facility and was in compliance with all covenants related to the Credit Agreement.
The Company is a party to a note agreement as further detailed in Note 11 of the Notes to Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2017. This note agreement requires the Company to maintain a fixed charge coverage ratio of consolidated EBITDA plus consolidated rent expense during the period to consolidated fixed charges. Consolidated fixed charges are the sum of consolidated interest expense for the period and consolidated rent expense. As of April 1, 2018, the Company was in compliance with all covenants regarding this note agreement. |
Contingencies and Environmental Remediation |
3 Months Ended |
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Apr. 01, 2018 | |
Contingencies and Environmental Remediation | |
Contingencies and Environmental Remediation | 12. Contingencies and Environmental Remediation
The Company is a defendant in numerous legal matters arising from its ordinary course of operations, including those involving product liability, environmental matters, and commercial disputes.
Other than the items described below, significant commitments and contingencies at April 1, 2018 are consistent with those discussed in Note 15 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
As of April 1, 2018, the Company estimates that the aggregate amount of reasonably possible loss in excess of the amount accrued for its legal contingencies is approximately $6.0 million pre‑tax. With respect to the estimate of reasonably possible loss, management has estimated the upper end of the range of reasonably possible loss based on (i) the amount of money damages claimed, where applicable, (ii) the allegations and factual development to date, (iii) available defenses based on the allegations, and/or (iv) other potentially liable parties. This estimate is based upon currently available information and is subject to significant judgment and a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimate will change from time to time, and actual results may vary significantly from the current estimate. In the event of an unfavorable outcome in one or more of the matters, the ultimate liability may be in excess of amounts currently accrued, if any, and may be material to the Company’s operating results or cash flows for a particular quarterly or annual period. However, based on information currently known to it, management believes that the ultimate outcome of all matters, as they are resolved over time, is not likely to have a material adverse effect on the financial condition of the Company, though the outcome could be material to the Company’s operating results for any particular period depending, in part, upon the operating results for such period.
Chemetco, Inc. Superfund Site, Hartford, Illinois
In August 2017, Watts Regulator Co. received a “Notice of Environmental Liability” from the Chemetco Site Group (“Group”) alleging that it is a potentially responsible party for the Chemetco, Inc. Superfund Site in Hartford, Illinois (the Site) because it arranged for the disposal or treatment of hazardous substances that were contained in materials sent to the Site and that resulted in the release or threat of release of hazardous substances at the Site. As of August 2017, 162 companies were members of the Group. The letter offered Watts Regulator Co. the opportunity to join the Group and participate in the Remedial Investigation and Feasibility Study (“RI/FS”) at the Site. Watts Regulator Co. joined the Group in September 2017 and was added in March 2018 as a signatory, together with 43 other new Group members, to the Administrative Settlement Agreement and Order on Consent with the United States Environmental Protection Agency (“USEPA”) governing completion of the RI/FS. Based on information currently known to it, management believes that Watts Regulator Co.’s share of the costs of the RI/FS is not likely to have a material adverse effect on the financial condition of the Company, or have a material adverse effect on the Company’s operating results for any particular period. In February 2018, the Group commenced suit in the United States District Court for the Southern District of Illinois seeking response costs from other potentially responsible parties for the Site. The Group has identified more than 2,000 additional potentially responsible parties to date. The Company is unable to estimate a range of reasonably possible loss for the above matter in which damages have not been specified because: (i) the RI/FS has not been completed to determine what remediation plan will be implemented and the costs of such plan; (ii) the total number of potentially responsible parties who may or may not agree to fund or perform any remediation has not yet been determined; (iii) the share contribution for potentially responsible parties to any remediation has not been determined; and (iv) the number of years required to complete the RI/FS and implement a remediation plan acceptable to USEPA is uncertain. |
Subsequent Events |
3 Months Ended |
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Apr. 01, 2018 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events
On May 7, 2018, the Company declared a quarterly dividend of twenty-one cents ($0.21) per share on each outstanding share of Class A common stock and Class B common stock payable on June 15, 2018 to stockholders of record on June 1, 2018. |
Accounting Policies (Policies) |
3 Months Ended |
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Apr. 01, 2018 | |
Accounting Policies | |
Estimates | Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition
On January 1, 2018, the Company adopted the accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard” or “ASU 2014-09”) to all contracts using the modified retrospective method. The adoption of ASU 2014-09 was not material to the Company and as such, there was no cumulative effect upon the January 1, 2018 adoption date. As the impact of the new revenue standard is not material to the Company, there is no pro-forma disclosure presented as of and for the quarter ended April 1, 2018. The Company expects the impact of the adoption of the new standard to be immaterial to the Company’s financial statements on an ongoing basis.
The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.
The Company’s revenue for product sales is recognized on a point in time model, at the point control transfers to the customer, which is generally when products are shipped from the Company’s manufacturing or distribution facilities or when delivered to the customer’s named location. Sales tax, value-added tax, or other taxes collected concurrent with revenue producing activities are excluded from revenue. Freight costs billed to customers for shipping and handling activities are included in revenue with the related cost included in selling, general and administrative expenses. See Note 3 for further disclosures and detail regarding revenue recognition. |
New Accounting Standards | Other Recently Adopted Accounting Standards
In February 2018, the FASB issued ASU 2018-02 “Income Statement-Reporting Comprehensive Income.” ASU 2018-02 provides guidance on the reclassification of certain tax effects from the Tax Cuts and Jobs Act from accumulated other comprehensive income. Current generally accepted accounting principles requires deferred tax liabilities and deferred tax assets to be adjusted for the effect of a change in tax laws or tax rates, with that effect included in income from operations in the period of enactment. This included the income tax effects of items in accumulated other comprehensive income. This guidance allows a reclassification from accumulated other comprehensive income to retained earnings for the tax effects on items in accumulated other comprehensive income related to the change in tax rates from the Tax Cuts and Jobs Act. This standard is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. Early adoption of this standard is permitted. The Company adopted this standard in the first quarter of 2018, and it did not have a material impact on the Company’s financial statements.
In October 2016, the FASB issued ASU 2016-16 “Intra-Entity Transfers of Assets Other than Inventory.” ASU 2016-16 provides guidance on the timing of recognition of tax consequences of an intra-entity transfer of an asset other than inventory. The Company adopted the provision of this ASU during the first quarter of 2018, using the modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the quarter. The adoption of this guidance did not have a material impact on the Company’s financial statements.
Accounting Standards Updates
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016‑02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term for both finance and operating leases. ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018 and all interim periods thereafter. Early adoption is permitted for all entities. The Company plans to adopt this standard effective January 1, 2019, using the modified retrospective approach. The Company has begun evaluating the new lease standard, including the review and implementation of the necessary changes to its existing processes and systems that will be required to implement this new standard. The Company has a variety of categories of lease arrangements, including real estate, automobiles, manufacturing equipment, facility equipment, office equipment and certain service arrangements. The Company is currently reviewing its leasing arrangements in order to evaluate the impact of this standard on the Company’s financial statements. The Company does not expect a significant change in its leasing activity between now and adoption. The Company is unable to quantify the impact of adoption at this time, however the Company expects the primary impact to its consolidated financial position upon adoption will be the recognition, on a discounted basis, of its minimum commitments under non-cancelable operating leases on its consolidated balance sheets resulting in the recording of right-of-use assets and lease obligations. The Company currently does not expect ASC 842 to have a material effect on either its consolidated statement of operations or consolidated statement of cash flow. |
Shipping and Handling | Shipping and Handling
Shipping and handling costs included in selling, general and administrative expenses amounted to $13.2 million and $12.8 million for the first quarters of 2018 and 2017, respectively. |
Research and Development | Research and Development
Research and development costs included in selling, general and administrative expenses amounted to $8.5 million and $7.1 million for the first quarters of 2018 and 2017, respectively. |
Revenue Recognition (Tables) |
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Schedule of disaggregation of revenue |
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Schedule of contract assets and contract liabilities |
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Goodwill & Intangibles (Tables) |
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Changes in the carrying amount of goodwill by geographic segment |
(1)Americas goodwill additions during the first quarter of 2018 relate to an immaterial acquisition.
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Schedule of Intangible assets |
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Financial Instruments and Derivative Instruments (Tables) |
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Schedule of carrying amount and estimated fair market value of the company's long-term debt, including current portion |
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Schedule of fair value of financial assets and liabilities |
(1)Included on the Company’s consolidated balance sheet in other assets (other, net).
(2) Included on the Company’s consolidated balance sheet in prepaid expenses and other current assets.
(3)Included on the Company’s consolidated balance sheet in accrued compensation and benefits.
(4)Included on the Company’s consolidated balance sheet in other current liabilities and relates to a mandatorily redeemable equity instrument as part of the Apex Valves Limited (“Apex”) acquisition in 2015. |
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Summary of the changes in fair value of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) |
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Earnings per Share and Stock Repurchase Program (Tables) |
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Summary of reconciliation of the calculation of earnings per share |
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Summary of the cost and number of Class A common stock repurchased |
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Stock-Based Compensation (Tables) |
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Schedule of stock-based compensation fair value assumptions |
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Segment Information (Tables) |
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Segment Information | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Company's significant accounts and balances by segment, reconciled to the consolidated totals |
* Corporate expenses are primarily for administrative compensation expense, compliance costs, professional fees, including corporate-related legal and audit expenses, shareholder services and benefit administration costs. |
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Schedule of U.S. net sales of the Company's Americas segment |
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Schedule of intersegment sales for Americas, EMEA and Asia-Pacific |
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Accumulated Other Comprehensive Loss (Tables) |
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Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of amounts recognized in accumulated other comprehensive income (loss) |
Cash flow hedges include interest rate swaps and designated foreign currency hedges. See Note 6 for further details. |
Basis of Presentation (Details) |
3 Months Ended |
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Apr. 01, 2018 | |
Basis of Presentation | |
Length of fiscal year | 365 days |
Length of fiscal quarter | 91 days |
Accounting Policies - Other (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Apr. 01, 2018 |
Apr. 02, 2017 |
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Shipping and Handling | ||
Shipping and handling costs included in selling, general and administrative expense | $ 13.2 | $ 12.8 |
Research and Development | ||
Research and development costs included in selling, general, and administrative expense | $ 8.5 | $ 7.1 |
Revenue Recognition - Contract Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Apr. 01, 2018 |
Jan. 01, 2018 |
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Contract Assets | ||
Contract Assets | $ 1.7 | $ 0.6 |
Increase - Assets | 1.1 | |
Contract Liabilities | ||
Contract Liabilities - Current | 11.5 | 11.3 |
Increase - Current Liabilities | 0.2 | |
Current Liabilities - Noncurrent | 2.4 | $ 2.1 |
Increase - Noncurrent Liabilities | 0.3 | |
Impairment loss related to Contract Assets | $ 0.0 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Apr. 01, 2018 |
Dec. 31, 2017 |
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Provision for income taxes from continuing operations | ||
U.S. Corporate income tax rate | 21.00% | 35.00% |
Provisional tax expense, 2017 Tax Act | $ 25.1 | |
Provisional liability on accumulated foreign subsidiary earnings | $ 23.3 |
Financial Instruments and Derivative Instruments - Fair Value (Details) - USD ($) $ in Millions |
Apr. 01, 2018 |
Dec. 31, 2017 |
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Long-term debt | ||
Carrying amount | $ 448.9 | $ 499.5 |
Estimated fair value | $ 449.9 | $ 501.1 |
5.05% Senior notes due 2020 | ||
Senior notes | ||
Interest rate (as a percent) | 5.05% |
Financial Instruments and Derivative Instruments - Change in Fair value (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
Apr. 01, 2018 |
Nov. 30, 2015 |
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Apex | ||||
Reconciliation of changes in fair value of all financial assets and liabilities | ||||
Shares remaining to be acquired | 10.00% | |||
Outstanding shares acquired (as a percent) | 10.00% | |||
Purchase price | $ 2.9 | |||
Aggregate ownership percentage | 90.00% | |||
Redeemable financial instrument | ||||
Reconciliation of changes in fair value of all financial assets and liabilities | ||||
Balance at the beginning of the period | $ 2.9 | |||
Total realized and unrealized (gains) losses included in Comprehensive income | 0.1 | |||
Balance at the ending of the period | 3.0 | |||
Liability recorded at acquisition date fair value | $ 2.9 | $ 3.0 | ||
Redeemable financial instrument | Apex | ||||
Reconciliation of changes in fair value of all financial assets and liabilities | ||||
Liability recorded at acquisition date fair value | $ 5.5 |
Financial Instruments and Derivative Instruments - Interest Rate Swaps (Details) $ in Millions |
3 Months Ended | ||
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Feb. 12, 2016
USD ($)
item
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Apr. 01, 2018
USD ($)
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Apr. 02, 2017
USD ($)
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Foreign Currency Hedges | |||
Percent of forecasted intercompany purchase transactions hedged with foreign subsidiaries | 70.00% | ||
Term loan facility | Term Loan due February 2021 | |||
Interest Rate Swaps | |||
Face amount | $ 300.0 | ||
Amount drawn | $ 300.0 | ||
Senior unsecured revolving credit facility | |||
Interest Rate Swaps | |||
Amount drawn | 102.0 | ||
Borrowing capacity | $ 500.0 | ||
Interest Rate Swaps | Designated | Cash Flow Hedging | |||
Interest Rate Swaps | |||
Number of derivative contracts entered | item | 2 | ||
Derivative fixed interest rate | 1.31375% | ||
Derivative notional amount | $ 225.0 | ||
Gain (loss) recognized in Accumulated Other Comprehensive Loss, effective portion | $ 1.9 | $ 0.2 | |
LIBOR | Interest Rate Swaps | Designated | Cash Flow Hedging | |||
Interest Rate Swaps | |||
Derivative, floor interest rate | 0.00% |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
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Changes in accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | $ (99.1) | |
Balance at the end of the period | (86.6) | |
Foreign Currency Translation | ||
Changes in accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | (102.6) | $ (153.7) |
Change in period | 9.7 | 7.9 |
Balance at the end of the period | (92.9) | (145.8) |
Cash Flow Hedges | ||
Changes in accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | 3.5 | 2.9 |
Change in period | 2.8 | 0.1 |
Balance at the end of the period | 6.3 | 3.0 |
Accumulated Other Comprehensive Income (Loss) | ||
Changes in accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | (99.1) | (150.8) |
Change in period | 12.5 | 8.0 |
Balance at the end of the period | $ (86.6) | $ (142.8) |
Debt - Long-term debt (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2018 |
Dec. 31, 2017 |
Apr. 02, 2017 |
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Financing Arrangements | |||
Less current maturities | $ (22.5) | $ (22.5) | |
Total long-term debt | 424.1 | $ 474.6 | |
Principal payments during each of the next five years and thereafter | |||
Letters of credit outstanding | $ 25.7 | $ 25.6 | |
5.05% Senior notes due 2020 | |||
Financing Arrangements | |||
Interest rate (as a percent) | 5.05% | ||
Letters of credit | |||
Financing Arrangements | |||
Term of letters of credit from the date of issuance | 1 year |
Contingencies and Environmental Remediation (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 01, 2018
USD ($)
item
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Aug. 31, 2017
item
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Litigation contingencies | ||
Possible loss | $ | $ 6.0 | |
CWV | ||
Litigation contingencies | ||
Number of companies included in group for environmental liability notice | 162 | |
Number of companies joining group for environmental liability notice | 43 | |
Number of potentially responsible parties for environmental liability | 2,000 |
Subsequent Events (Details) - Subsequent event |
May 07, 2018
$ / shares
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Class A | |
Subsequent events | |
Quarterly dividend payable (in dollars per share) | $ 0.21 |
Class B | |
Subsequent events | |
Quarterly dividend payable (in dollars per share) | $ 0.21 |