UNIVAR INC., 10-K filed on 2/21/2019
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2018
Feb. 12, 2019
Jun. 29, 2018
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Trading Symbol UNVR    
Entity Registrant Name Univar Inc.    
Entity Central Index Key 0001494319    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer Yes    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Filer Category Large Accelerated Filer    
Entity Common Stock, Shares Outstanding   141,732,317  
Entity Public Float     $ 3.4
v3.10.0.1
Consolidated Statements of Operations - USD ($)
shares in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Income Statement [Abstract]      
Net sales $ 8,632,500,000 $ 8,253,700,000 $ 8,073,700,000
Cost of goods sold (exclusive of depreciation) 6,732,400,000 6,448,200,000 6,346,600,000
Operating expenses:      
Outbound freight and handling 328,300,000 292,000,000 286,600,000
Warehousing, selling and administrative 931,400,000 919,700,000 893,100,000
Other operating expenses, net 73,500,000 55,400,000 37,200,000
Depreciation 125,200,000 135,000,000 152,300,000
Amortization 54,300,000 65,400,000 85,600,000
Impairment charges 0 0 133,900,000
Total operating expenses 1,512,700,000 1,467,500,000 1,588,700,000
Operating income 387,400,000 338,000,000 138,400,000
Other (expense) income:      
Interest income 3,200,000 4,000,000 3,900,000
Interest expense (135,600,000) (152,000,000) (163,800,000)
Loss on extinguishment of debt (100,000) (3,800,000) 0
Other expense, net (32,700,000) (17,400,000) (58,100,000)
Total other expense (165,200,000) (169,200,000) (218,000,000)
Income (loss) before income taxes 222,200,000 168,800,000 (79,600,000)
Income tax expense (benefit) 49,900,000 49,000,000 (11,200,000)
Net income (loss) $ 172,300,000 $ 119,800,000 $ (68,400,000)
Income (loss) per common share:      
Basic (usd per share) $ 1.22 $ 0.85 $ (0.50)
Diluted (usd per share) $ 1.21 $ 0.85 $ (0.50)
Weighted average common shares outstanding:      
Basic (in shares) 141.2 140.2 137.8
Diluted (in shares) 142.2 141.4 137.8
v3.10.0.1
Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement of Comprehensive Income [Abstract]      
Net income (loss) $ 172.3 $ 119.8 $ (68.4)
Other comprehensive income (loss), net of tax:      
Impact due to adoption of ASU 2017-12 [1] 0.5 0.0 0.0
Foreign currency translation (97.0) 107.1 36.3
Pension and other postretirement benefits adjustment 0.1 (2.4) (1.8)
Derivative financial instruments 1.7 6.7 0.0
Total other comprehensive (loss) income, net of tax (94.7) 111.4 34.5
Comprehensive income (loss) $ 77.6 $ 231.2 $ (33.9)
[1] Adjusted due to the adoption of Accounting Standards Update (“ASU”) 2017-12 “Targeted Improvements to Accounting for Hedging Activities” on January 1, 2018. Refer to “Note 2: Significant accounting policies” for more information.
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 121.6 $ 467.0
Trade accounts receivable, net 1,094.7 1,062.4
Inventories 803.3 839.5
Prepaid expenses and other current assets 169.1 149.6
Total current assets 2,188.7 2,518.5
Property, plant and equipment, net 955.8 1,003.0
Goodwill 1,780.7 1,818.4
Intangible assets, net 238.1 287.7
Deferred tax assets 24.8 22.8
Other assets 84.3 82.3
Total assets 5,272.4 5,732.7
Current liabilities:    
Short-term financing 8.1 13.4
Trade accounts payable 925.4 941.7
Current portion of long-term debt 21.7 62.0
Accrued compensation 93.6 100.7
Other accrued expenses 285.8 301.6
Total current liabilities 1,334.6 1,419.4
Long-term debt 2,350.4 2,820.0
Pension and other postretirement benefit liabilities 254.4 257.1
Deferred tax liabilities 42.9 35.4
Other long-term liabilities 98.4 110.7
Total liabilities 4,080.7 4,642.6
Stockholders’ equity:    
Preferred stock, 200.0 million shares authorized at $0.01 par value with no shares issued or outstanding as of December 31, 2018 and 2017 0.0 0.0
Common stock, 2.0 billion shares authorized at $0.01 par value with 141.7 million and 141.1 million shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively 1.4 1.4
Additional paid-in capital 2,325.0 2,301.3
Accumulated deficit (761.5) (934.1)
Accumulated other comprehensive loss (373.2) (278.5)
Total stockholders’ equity 1,191.7 1,090.1
Total liabilities and stockholders’ equity $ 5,272.4 $ 5,732.7
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2018
Dec. 31, 2017
Statement of Financial Position [Abstract]    
Preferred stock, shares authorized (in shares) 200,000,000 200,000,000
Preferred stock, par value (usd per share) $ 0.01 $ 0.01
Preferred stock, share issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, shares authorized (in shares) 2,000,000,000.0 2,000,000,000.0
Common stock, par value (usd per share) $ 0.01 $ 0.01
Common stock, shares issued (in shares) 141,700,000 141,100,000
Common stock, shares outstanding (in shares) 141,700,000 141,100,000
v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Operating activities:      
Net income (loss) $ 172.3 $ 119.8 $ (68.4)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization 179.5 200.4 237.9
Impairment charges 0.0 0.0 133.9
Amortization of deferred financing fees and debt discount 7.6 7.9 7.9
Amortization of pension cost (credits) from accumulated other comprehensive loss 2.7 (0.2) (4.5)
Loss on extinguishment of debt 0.1 3.8 0.0
Loss (gain) on sale of property, plant and equipment and other assets 2.0 (11.3) (0.7)
Deferred income taxes 2.8 11.7 (31.6)
Stock-based compensation expense 20.7 19.7 10.4
Other 0.7 (0.7) (0.2)
Changes in operating assets and liabilities:      
Trade accounts receivable, net (62.1) (58.5) 70.2
Inventories 14.4 (47.7) 42.0
Prepaid expenses and other current assets (19.3) (8.7) 40.1
Trade accounts payable 9.3 53.6 12.0
Pensions and other postretirement benefit liabilities (15.4) (51.8) 26.9
Other, net (25.4) 44.6 (25.9)
Net cash provided by operating activities 289.9 282.6 450.0
Investing activities:      
Purchases of property, plant and equipment (94.6) (82.7) (90.1)
Proceeds from sale of property, plant and equipment and other assets 14.5 29.2 9.4
Purchases of businesses, net of cash acquired (18.6) (24.4) (53.6)
Other (0.3) (1.2) (1.7)
Net cash used by investing activities (99.0) (79.1) (136.0)
Financing activities:      
Proceeds from the issuance of long-term debt 41.7 4,477.8 0.0
Payments on long-term debt and capital lease obligations (561.9) (4,585.7) (178.2)
Short-term financing, net 0.5 (22.2) (4.6)
Financing fees paid (1.1) (7.7) 0.0
Taxes paid related to net share settlements of stock-based compensation awards (4.1) (8.5) 0.0
Stock option exercises 5.9 36.5 16.9
Contingent consideration payments (0.4) (3.7) (0.4)
Other 1.1 1.1 (0.2)
Net cash used by financing activities (518.3) (112.4) (166.5)
Effect of exchange rate changes on cash and cash equivalents (18.0) 39.5 0.8
Net (decrease) increase in cash and cash equivalents (345.4) 130.6 148.3
Cash and cash equivalents at beginning of period 467.0 336.4 188.1
Cash and cash equivalents at end of period 121.6 467.0 336.4
Cash paid during the period for:      
Income taxes 65.0 29.9 14.9
Interest, net of capitalized interest 128.2 140.2 148.9
Non-cash activities:      
Additions of property, plant and equipment included in trade accounts payable and other accrued expenses 14.6 7.4 11.5
Additions of property, plant and equipment under a capital lease obligation $ 23.6 $ 19.9 $ 29.6
v3.10.0.1
Consolidated Statements of Changes in Stockholders' Equity - USD ($)
$ in Millions
Total
Common stock
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income (loss)
Beginning balance at Dec. 31, 2015 $ 816.7 $ 1.4 $ 2,224.7 $ (985.0) $ (424.4)
Beginning balance, shares (in shares) at Dec. 31, 2015   138,000,000      
Increase (Decrease) in Stockholders' Equity          
Net loss (68.4)     (68.4)  
Foreign currency translation adjustment, net of tax 36.3       36.3
Pension and other postretirement benefits adjustment, net of tax (1.8)       (1.8)
Derivative financial instruments, net of tax 0.0        
Stock option exercises 16.9   16.9    
Stock option exercises (in shares)   800,000      
Stock-based compensation 10.4   10.4    
Stock-based compensation (in shares)   0      
Other (0.2)   (0.2)    
Ending balance at Dec. 31, 2016 809.9 $ 1.4 2,251.8 (1,053.4) (389.9)
Ending balance, shares (in shares) at Dec. 31, 2016   138,800,000      
Increase (Decrease) in Stockholders' Equity          
Net loss 119.8     119.8  
Foreign currency translation adjustment, net of tax 107.1       107.1
Pension and other postretirement benefits adjustment, net of tax (2.4)       (2.4)
Derivative financial instruments, net of tax 6.7       6.7
Restricted stock units vested 0.0        
Shares Paid for Tax Withholding for Share Based Compensation   300,000      
Adjustments Related to Tax Withholding for Share-based Compensation 8.5   8.5    
Restricted stock units vested (in shares)   800,000      
Stock option exercises 36.5   36.5    
Stock option exercises (in shares)   1,800,000      
Employee stock purchase plan [1] 1.1   1.1    
Stock-based compensation 19.7   19.7    
Ending balance at Dec. 31, 2017 $ 1,090.1 $ 1.4 2,301.3 (934.1) (278.5)
Ending balance, shares (in shares) at Dec. 31, 2017 141,100,000 141,100,000      
Increase (Decrease) in Stockholders' Equity          
Impact due to adoption of ASU, net of tax [2] $ 0.2   0.7 (0.5)  
Net loss 172.3     172.3  
Foreign currency translation adjustment, net of tax (97.0)       (97.0)
Pension and other postretirement benefits adjustment, net of tax 0.1       0.1
Derivative financial instruments, net of tax 1.7       1.7
Restricted stock units vested 0.0        
Shares Paid for Tax Withholding for Share Based Compensation   100,000      
Adjustments Related to Tax Withholding for Share-based Compensation 4.1   4.1    
Restricted stock units vested (in shares)   400,000      
Stock option exercises $ 5.9   5.9    
Stock option exercises (in shares) 282,170 300,000      
Employee stock purchase plan $ 1.1   1.1    
Stock-based compensation 20.7   20.7    
Ending balance at Dec. 31, 2018 $ 1,191.7 $ 1.4 2,325.0 (761.5) (373.2)
Ending balance, shares (in shares) at Dec. 31, 2018 141,700,000 141,700,000      
Increase (Decrease) in Stockholders' Equity          
Adjustments to Additional Paid in Capital, Other $ 0.1   0.1    
Impact due to adoption of ASU, net of tax [3] $ 0.8   $ 0.0 $ 0.3 $ 0.5
[1] During November 2016, our Board of Directors approved the Univar Employee Stock Purchase Plan, or ESPP, authorizing the issuances of up to 2.0 million shares of the Company's common stock effective January 1, 2017. The total number of shares issued under the plan for the first two offering periods from January through December 2017 was 39,418 shares.
[2] Adjusted due to the adoption of ASU 2016-09 “Improvement to Employee Share-Based Payment Accounting” on January 1, 2017.
[3] (3)Adjusted due to the adoption of ASU 2014-09 “Revenue from Contracts with Customers” and ASU 2017-12 “Targeted Improvements to Accounting for Hedging Activities” on January 1, 2018. Refer to “Note 2: Significant accounting policies” for more information.
v3.10.0.1
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement of Stockholders' Equity [Abstract]      
Impact due to adoption of ASU, net of tax $ 0.3 $ 0.2  
Foreign currency translation adjustments tax 2.4 (2.1) $ 23.9
Pension and postretirement benefits adjustment tax 0.1 0.6 1.5
Derivative financial instruments tax $ 0.4 $ (4.3) $ (2.1)
Common stock, par value (usd per share) $ 0.01 $ 0.01 $ 0.01
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Authorized for issuance under ESPP (in shares) 9,900,000    
ESPP      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Issued under the plan (in shares)   39,418  
v3.10.0.1
Nature of operations
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of operations
Headquartered in Downers Grove, Illinois, Univar Inc. (“Company” or “Univar”) is a leading global chemical and ingredients distributor and provider of specialty services. The Company’s operations are structured into four operating segments that represent the geographic areas under which the Company manages its business:
Univar USA (“USA”)
Univar Canada (“Canada”)
Univar Europe, the Middle East and Africa (“EMEA”)
Rest of the World (“Rest of World”)
Rest of World includes certain developing businesses in Latin America (including Brazil and Mexico) and the Asia-Pacific region.
v3.10.0.1
Significant accounting policies
12 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Significant accounting policies
Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Unless otherwise indicated, all financial data presented in these consolidated financial statements are expressed in US dollars.
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are consolidated if the Company has a controlling financial interest, which may exist based on ownership of a majority of the voting interest, or based on the Company’s determination that it is the primary beneficiary of a variable interest entity (“VIE”). The Company did not have any material interests in VIEs during the years presented in these consolidated financial statements. All intercompany balances and transactions are eliminated in consolidation.
Use of estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions affecting the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ materially from these estimates.
Recently issued and adopted accounting pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606). On January 1, 2018, the Company adopted the new Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard”) to all contracts using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
In August 2017, the FASB issued ASU 2017-12 “Derivatives and Hedging” (Topic 815) - “Targeted Improvements to Accounting for Hedging Activities.” The ASU better aligns hedge accounting with the Company’s risk management activities, simplifies the application of hedge accounting, and improves transparency as to the scope and results of hedging programs. The Company early adopted the new pronouncement effective January 1, 2018, using the modified retrospective approach by recognizing the cumulative effect of initially applying the new pronouncement as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
The cumulative effect of the changes made to the January 1, 2018 consolidated balance sheet for the adoption of ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) and ASU 2017-12 “Derivatives and Hedging” (Topic 815) - “Targeted Improvements to Accounting for Hedging Activities” is as follows:
(in millions)
 
Balance at December 31, 2017
 
Adjustments due to ASU 2014-09
 
Adjustments due to ASU 2017-12
 
Balance at January 1, 2018
Assets
 
 
 
 
 
 
 
 
Trade accounts receivable, net
 
$
1,062.4

 
$
41.3

 
$

 
$
1,103.7

Inventories
 
839.5

 
(2.1
)
 

 
837.4

Prepaid expenses and other current assets
 
149.6

 
1.8

 

 
151.4

Liabilities
 
 
 
 
 
 
 
 
Trade accounts payable
 
$
941.7

 
$
7.0

 
$

 
$
948.7

Other accrued expenses
 
301.6

 
33.2

 

 
334.8

Equity
 
 
 
 
 
 
 
 
Accumulated deficit
 
$
(934.1
)
 
$
0.8

 
$
(0.5
)
 
$
(933.8
)
Accumulated other comprehensive loss
 
(278.5
)
 

 
0.5

 
(278.0
)
The following tables summarize the impact of adopting the new revenue standard upon the Company’s consolidated balance sheet and statement of operations as of and for the year ended December 31, 2018:
 
 
Year ended December 31, 2018
(in millions)
 
As reported
 
Balances without adoption of ASC 606
 
Effect of change higher/(lower)
Net sales
 
$
8,632.5

 
$
8,626.4

 
$
6.1

Cost of goods sold (exclusive of depreciation)
 
6,732.4

 
6,726.7

 
5.7

 
 
 
 
 
 
 
Income tax expense
 
$
49.9

 
$
49.8

 
$
0.1

Net income
 
172.3

 
172.0

 
0.3

 
 
December 31, 2018
(in millions)
 
As reported
 
Balances without adoption of ASC 606
 
Effect of change higher/(lower)
Assets
 
 
 
 
 
 
Trade accounts receivable, net
 
$
1,094.7

 
$
1,047.8

 
$
46.9

Inventories
 
803.3

 
814.4

 
(11.1
)
Prepaid expenses and other current assets
 
169.1

 
163.9

 
5.2

Liabilities
 
 
 
 
 
 
Trade accounts payable
 
$
925.4

 
$
919.2

 
$
6.2

Other accrued expenses
 
285.8

 
252.1

 
33.7

Equity
 
 
 
 
 
 
Accumulated deficit
 
$
(761.5
)
 
$
(762.6
)
 
$
1.1


In March 2017, the FASB issued ASU 2017-07 “Compensation - Retirement Benefits” (Topic 715) - “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” On January 1, 2018, the Company adopted the amendments to ASC Topic 715 that improves the presentation of net periodic pension and postretirement benefit costs, by separating the presentation of service costs from other components of net periodic costs. The interest cost, expected return on assets, and amortization of prior service costs have been reclassified from warehousing, selling, and administrative expenses to other expense, net. The mark to market, curtailment, and settlement expenses have been reclassified from other operating expenses, net to other expense, net.
Adoption of ASU 2017-07 resulted in a retrospective presentation change to the net periodic cost for the defined benefit pension and other postretirement employee benefits (“OPEB”) plans within the consolidated income statement as follows:
 
 
Year ended December 31, 2017
(in millions)
 
As revised
 
Previously reported
 
Effect of change higher/(lower)
Warehousing, selling and administrative
 
$
919.7

 
$
909.8

 
$
9.9

Other operating expenses, net
 
55.4

 
49.5

 
5.9

Other expense, net
 
(17.4
)
 
(33.2
)
 
(15.8
)

In August 2016, the FASB issued ASU 2016-15 “Statement of Cash Flows” (Topic 230) - “Classification of Certain Cash Receipts and Cash Payments.” The ASU clarifies and provides specific guidance on eight cash flow classification issues that were not addressed within the previous guidance. The Company adopted the ASU as of January 1, 2018 and accordingly restated the consolidated statement of cash flows for the year ended December 31, 2017 to conform with the current period presentation under this new guidance. As a result of the adoption, the Company reclassified $3.7 million of cash outflows previously reported as operating activities to financing activities within the consolidated statement of cash flows related to contingent consideration payments for the year ended December 31, 2017.
The Company also adopted the following standards during 2018, none of which had a material impact to the financial statements or financial statement disclosures:
Standard
 
Effective date
2018-07
Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting
July 1, 2018
2017-09
Compensation - Stock Compensation - Scope of Modification Accounting
January 1, 2018
2017-04
Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment
January 1, 2018
2017-01
Business Combinations - Clarifying the Definition of a Business
January 1, 2018
2016-18
Statement of Cash Flows - Restricted Cash
January 1, 2018
2016-16
Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory
January 1, 2018
2016-01
Financial Instrument - Recognition and Measurement of Financial Assets and Financial Liabilities
January 1, 2018

Accounting pronouncements issued but not yet adopted
In February 2016, the FASB issued ASU 2016-02 “Leases” (Topic 842), which supersedes the lease recognition requirements in ASC Topic 840, “Leases.” The core principal of the guidance is that an entity should recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within such fiscal years. The guidance is to be applied using a modified retrospective transition method with the option to elect a package of practical expedients. The Company has established a project team to evaluate and implement the standard. The project team is in the final stages of implementing the standard to meet the ASU’s reporting and disclosure requirements.
Upon the January 1, 2019 adoption of this standard, the consolidated balance sheet will include a right of use asset and liability related to certain operating lease arrangements. The Company has elected to apply the transition requirements at the January 1, 2019, effective date rather than at the beginning of the earliest comparative period presented. This approach allows for a cumulative effect adjustment in the period of adoption, and prior periods will not be restated. The Company will elect the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carryforward the historical lease classification. The Company will make an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. The Company will recognize those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. The Company estimates the impact of the additional lease assets and liabilities to range from $140 million to $190 million.
In January 2018, the FASB issued ASU 2018-02 “Income Statement - Reporting Comprehensive Income” (Topic 220)  “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“AOCI”), which gives entities the option to reclassify certain tax effects, that the FASB refers to as having been stranded, resulting from the Tax Cuts and Jobs Act from AOCI to retained earnings. The new guidance may be applied retrospectively to each period in which the effect of the Tax Cuts and Jobs Act is recognized, or in the period of adoption. The Company must adopt this guidance for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company expects to record an adjustment to the accumulated deficit and accumulated other comprehensive loss financial statement line items in the range of $3.0 million to $4.0 million on the January 1, 2019 adoption of the ASU.
In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement” (Topic 820) - “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The ASU amends the requirements related to fair value disclosures to include new disclosure requirements and eliminates or modifies certain historic disclosures. The ASU amendment was part of the FASB’s disclosure framework project that is designed to increase the effectiveness of companies’ disclosures to the users of the financial statements and footnotes. This guidance will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. Early adoption is permitted. The Company is currently determining the impact to the Company’s disclosure requirements, which will be reflected in the footnote disclosures subsequent to the ASU adoption on January 1, 2020.
In August 2018, the FASB issued ASU 2018-14 “Compensation - Retirement Benefits - Defined Benefit Plans - General” (Subtopic 715-20) - “Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans.” The ASU amends the requirements related to defined benefit pension and other postretirement plan disclosures to include new disclosure requirements and eliminates or clarifies certain historic disclosures. The ASU amendment was part of the FASB’s disclosure framework project that is designed to increase the effectiveness of companies’ disclosures to the users of the financial statements and footnotes. This guidance will be effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently determining the impact to the Company’s disclosure requirements, which will be reflected in the footnote disclosures subsequent to the ASU adoption on January 1, 2021.
The Company has not yet adopted the following standards, none of which is expected to have a material impact to the financial statements or financial statement disclosures:
Standard
 
Expected adoption date
2018-18
Collaborative Arrangements (Topic 808) - Clarifying the Interaction between Topic 808 and Topic 606
January 1, 2020
2018-17
Consolidation (Topic 810) - Targeted Improvements to Related Party Guidance for Variable Interest Entities
January 1, 2020
2018-16
Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes
January 1, 2019
2018-15
Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)
January 1, 2020
2016-13
Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
January 1, 2020

Cash and cash equivalents
Cash and cash equivalents include highly-liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash. Cash at banks earn interest at floating rates based on daily bank deposit rates.
Trade accounts receivable, net
Trade accounts receivable are stated at the invoiced amount, net of an allowance for doubtful accounts.
In the normal course of business, the Company provides credit to its customers, performs ongoing credit evaluations of these customers and maintains reserves for potential credit losses. In certain situations, the Company will require up-front cash payment, collateral and/or personal guarantees based on the credit worthiness of the customer.
The allowance for doubtful accounts was $11.2 million and $13.0 million at December 31, 2018 and 2017, respectively. The allowance for doubtful accounts is estimated based on an individual assessment of collectability based on factors that include current ability to pay, bankruptcy and payment history, as well as a general reserve related to prior experience.
Inventories
Inventories consist primarily of products purchased for resale and are stated at the lower of cost or net realizable value. Inventory cost is determined based on the weighted average cost method. Inventory cost includes purchase price from producers net of rebates received, inbound freight and handling, and direct labor and other costs incurred to blend and repackage product and excludes depreciation expense. The Company recognized $1.9 million, $3.3 million and $6.6 million of lower of cost or net realizable value adjustments to certain of its inventories in the years ended December 31, 2018, 2017 and 2016, respectively. The expense related to these adjustments is included in cost of goods sold in the consolidated statements of operations.
Producer incentives
The Company has arrangements with certain producers that provide discounts when certain measures are achieved, generally related to purchasing volume. Volume rebates are generally earned and realized when the related products are purchased during the year. The reduction in cost of goods sold is recorded when the related products, on which the rebate was earned, are sold. As the right to receive discount incentives is contingent on purchases during the entire year, the Company's accounting estimates for producer incentives is dependent on the ability to accurately forecast annual purchases. Discretionary rebates are recorded when received. The unpaid portion of rebates from producers is recorded in prepaid expenses and other current assets in the consolidated balance sheets.
Property, plant and equipment, net
Property, plant and equipment are carried at historical cost, net of accumulated depreciation. Expenditures for improvements that add functionality and/or extend useful life are capitalized. The Company capitalizes interest costs on significant capital projects, as an increase to property, plant and equipment. Repair and maintenance costs are expensed as incurred. Depreciation is recorded on a straight-line basis over the estimated useful life of each asset from the time the asset is ready for its intended purpose, with consideration of expected residual values. Depreciation expense is recorded to depreciation within the consolidated statement of operations.
The estimated useful lives of property, plant and equipment are as follows:
Buildings
10-50 years
Main components of tank farms
5-40 years
Containers
2-15 years
Machinery and equipment
5-20 years
Furniture, fixtures and others
5-20 years
Information technology
3-10 years

The Company evaluates the useful life and carrying value of property, plant and equipment for impairment if an event occurs or circumstances change that would indicate the carrying value may not be recoverable. If an asset is tested for possible impairment, the Company compares the carrying amount of the related asset group to future undiscounted net cash flows expected to be generated by that asset group. If the carrying amount of the asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent that the carrying amount exceeds its estimated fair value.
Leasehold improvements are capitalized and amortized over the lesser of the term of the applicable lease, including renewable periods if reasonably assured, or the useful life of the improvement.
Assets under capital leases where ownership transfers to the Company at the end of the lease term or the lease agreement contains a bargain purchase option are depreciated over the useful life of the asset. For remaining assets under capital leases, the assets are depreciated over the lesser of the term of the applicable lease, including renewable periods if reasonably assured, or the useful life of the asset with consideration of any expected residual value.
Refer to “Note 12: Property, plant and equipment, net” for further information.
Goodwill and intangible assets
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in business combinations.
Goodwill is tested for impairment annually on October 1, or between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill is tested for impairment at a reporting unit level using either a qualitative assessment, commonly referred to as a “step zero” test, or a quantitative assessment, commonly referred to as a “step one” test. For each of the reporting units, the Company has the option to perform either the step zero or the step one test. The Company’s reporting units are identical to the identified four operating segments: USA, Canada, EMEA, and Rest of World.
The Company elected the step one test to evaluate goodwill for impairment for each of the reporting units during 2018 and the step zero test in 2017. The step one goodwill impairment test compares the estimated fair value of each reporting unit with the reporting unit’s carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, the reporting unit will recognize an impairment for the lesser of either the amount by which the reporting unit's carrying amount exceeds the fair value of the reporting unit or the reporting unit’s goodwill carrying value.
The step zero goodwill impairment test utilizes qualitative factors to determine whether it is more likely than not that the fair value of the reporting units is less than its carrying value. Qualitative factors include: macroeconomic conditions; legal and regulatory environment; industry and market considerations; overall financial performance and cost factors to determine whether a reporting unit is at risk for goodwill impairment. In the event a reporting unit fails the step zero goodwill impairment test, it is necessary to perform the step one goodwill impairment test.
Intangible assets consist of customer and producer relationships and contracts, intellectual property trademarks, trade names, non-compete agreements and exclusive distribution rights. Intangible assets have finite lives and are amortized over their respective useful lives of 2 to 20 years. Amortization of intangible assets is based on the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up; which is based on the undiscounted cash flows, or when not reliably determined, on a straight-line basis. Intangible assets are tested for impairment if an event occurs or circumstances change that indicates the carrying value may not be recoverable. Refer to “Note 14: Impairment charges” for further information.
Customer relationship intangible assets represent the fair value allocated in purchase price accounting for the ongoing relationships with an existing customer base acquired in a business combination. The fair value of customer relationships is determined using the excess earnings methodology, an income based approach. The excess earnings methodology provides an estimate of the fair value of customer relationship assets by deducting economic costs, including operating expenses and contributory asset charges, from revenue expected to be generated by the assets. These estimated cash flows are then discounted to the present value equivalent.
Refer to “Note 13: Goodwill and intangible assets” for further information.
Short-term financing
Short-term financing includes bank overdrafts and short-term lines of credit. Refer to “Note 16: Debt” for further information.
Long-term debt
Long-term debt consists of loans with original maturities greater than one year. Fees paid in connection with the execution of line-of-credit arrangements are included in other assets and fees paid in connection with the execution of a recognized debt liability as a direct deduction from the carrying amount of that debt liability. These fees are amortized using the effective interest method over the term of the related debt or expiration of the line-of-credit arrangement. Refer to “Note 16: Debt” for further information.
Income taxes
The Company is subject to income taxes in the US and numerous foreign jurisdictions. Significant judgment in the forecasting of taxable income using historical and projected future operating results is required in determining the Company’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred.
On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The legislation significantly changes US tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Act permanently reduces the US corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The SAB 118 measurement period ends when a company has obtained, prepared, and analyzed the information needed to complete the accounting requirements under ASC 740, "Income Taxes", but no later than one year from the enactment date of December 22, 2017. In 2017 and the first nine months of 2018, the Company recorded provisional amounts for certain enactment-date effects of the Act by applying the guidance in SAB 118 because the Company had not yet completed its enactment-date accounting for these effects. At December 31, 2018, the Company has now completed its accounting for all the enactment-date income tax effects of the Act. As further discussed in “Note 7: Income taxes”, during 2018 the Company recognized adjustments of $6.8 million to the provisional amounts recorded at December 31, 2017 and included these adjustments as a component of income tax expense from continuing operations.
Effective in 2018, the Company is subject to global intangible low tax income (“GILTI”) which is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Due to the complexity of the GILTI tax rules, companies are allowed to make an accounting policy choice of either (1) treating taxes due on future US inclusions in taxable income related to GILTI as a current-period expense when incurred or (2) factoring such amounts into a company’s measurement of its deferred taxes. The Company is electing to treat taxes due on future US inclusions in taxable income related to GILTI as a current-period expense when incurred and, therefore, there is no impact to the deferred tax rate in 2018.
In the event that the actual outcome of future tax consequences differs from the Company’s estimates and assumptions due to changes or future events such as tax legislation, geographic mix of the earnings, completion of tax audits or earnings repatriation plans, the resulting change to the provision for income taxes could have a material effect on the consolidated statement of operations and consolidated balance sheets.
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax loss carryforwards. The effect on deferred taxes of changes in tax rates is recognized in the period in which the revised tax rate is enacted.
The Company records valuation allowances to reduce deferred tax assets to the extent it believes it is more likely than not that a portion of such assets will not be realized. In making such determinations, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and the ability to carry back losses to prior years. Realization is dependent upon generating sufficient taxable income prior to expiration of tax attribute carryforwards. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized, or if not, a valuation allowance has been recorded. The Company continues to monitor the value of its deferred tax assets, as the amount of the deferred tax assets considered realizable, could be reduced in the near term if estimates of future taxable income during the carryforward periods are reduced, or current tax planning strategies are not implemented.
US GAAP prescribes a recognition threshold and measurement attribute for the accounting and financial statement disclosure of tax positions taken or expected to be taken in a tax return. The evaluation of a tax position is a two-step process. The first step requires the Company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. The second step requires the Company to recognize in the financial statements each tax position that meets the more likely than not criteria, measured at the amount of benefit that has a greater than fifty percent likelihood of being realized.
The Company recognizes interest and penalties related to unrecognized tax benefits within interest expense and warehousing, selling and administrative, respectively, in the accompanying consolidated statements of operations. Accrued interest and penalties are included within either other accrued expenses or other long-term liabilities in the consolidated balance sheets.
Refer to “Note 7: Income taxes” for further information.
Pension and other postretirement benefit plans
The Company sponsors several defined benefit and defined contribution plans. The Company’s contributions to defined contribution plans are charged to income during the period of the employee’s service.
The benefit obligation and cost of defined benefit pension plans and other postretirement benefits are calculated based on actuarial valuations, which involves making assumptions about discount rates, expected rates of return on assets, future salary increases, future health care costs, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.
The projected benefit obligation is calculated separately for each plan based on the estimated future benefit employees have earned in return for their service based on the employee’s expected date of retirement. Those benefits are discounted to determine the present value of the benefit obligations using the projected unit-credit method. A liability is recognized on the balance sheet for each plan to the extent the projected benefit obligation is in excess of the fair value of plan assets. An asset is recorded for each plan to the extent the fair value of plan assets is in excess of the projected benefit obligation.
The Company recognizes actuarial gains or losses, known as “mark to market” adjustments, at each December 31. The mark to market adjustments primarily include gains and losses resulting from changes in discount rates and the difference between the expected rate of return on plan assets and actual plan asset returns. Curtailment losses must be recognized in the statement of operations when it is probable that a curtailment will occur and its effects are reasonably estimable. However, a curtailment gain is recognized in the statement of operations when the related employees terminate or the plan suspension or amendment is adopted, whichever is applicable. Settlement gains and losses are recognized in the period in which the settlement occurs, regardless of how probable it is at an earlier date that the settlement will occur and despite the fact that the probable gain or loss may be reasonably estimable before the settlement actually takes place. The Company recognizes prior service costs or credits in other comprehensive loss during the period of occurrence, and subsequently amortizes these items over the remaining service period as components of net periodic benefit cost within other expense, net in the consolidated statement of operations.
Service costs are recognized within warehousing, selling, and administrative expenses in the consolidated statement of operations. All other components of net periodic benefit cost are classified as other expense, net.
The fair value of plan assets is used to calculate the expected return on assets component of the net periodic benefit cost.
Refer to “Note 9: Employee benefit plans” for further information.
Leases
All leases that are determined not to meet any of the capital lease criteria are classified as operating leases. Operating lease costs are recognized as an expense in the statement of operations on a straight-line basis over the lease term.
The Company leases certain vehicles and equipment that qualify for capital lease classification. Assets under capital leases are carried at historical cost, net of accumulated depreciation and are included in property, plant and equipment, net in the consolidated balance sheets. Depreciation expense related to the capital lease assets is included in depreciation expense in the consolidated statement of operations. Refer to “Note 12: Property, plant and equipment, net” for further information.
The present value of minimum lease payments under a capital lease is included in current portion of long-term debt and long-term debt in the consolidated balance sheets. The capital lease obligation is accreted utilizing the effective interest method and interest expense related to the capital lease obligation is included in interest expense in the consolidated statement of operations. Refer to “Note 20: Commitments and contingencies” for further information.
Contingencies
A loss contingency is recorded if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. The Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the ultimate loss. Changes in these factors and related estimates could materially affect the Company’s financial position and results of operations. Legal expenses are recorded as legal services are provided. Refer to “Note 20: Commitments and contingencies” for further information.
Environmental liabilities
Environmental contingencies are recognized for probable and reasonably estimable losses associated with environmental remediation. Incremental direct costs of the investigation, remediation effort and post-remediation monitoring are included in the estimated environmental contingencies. Expected cash outflows related to environmental remediation for the next 12 months and amounts for which the timing is uncertain are reported as current within other accrued expenses in the consolidated balance sheets. The long-term portion of environmental liabilities is reported within other long-term liabilities in the consolidated balance sheets on an undiscounted basis, except for sites for which the amount and timing of future cash payments are fixed or reliably determinable. Environmental remediation expenses are included within warehousing, selling and administrative expenses in the consolidated statements of operations, unless associated with disposed operations, in which case such expenses are included in other operating expenses, net.
Environmental costs are capitalized if the costs extend the life of the property, increase its capacity and/or mitigate or prevent contamination from future operations.
Refer to “Note 20: Commitments and contingencies” for further information.
Revenue recognition
Revenue is recognized when performance obligations under the terms of the contract are satisfied, which generally occurs when goods are transferred to a customer or as services are provided to a customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services to customers. Net sales includes product sales, billings for freight and handling charges and fees earned for services provided, net of discounts, expected returns, customer rebates, variable consideration and sales or other revenue-based taxes. The Company recognizes product sales and billings for freight and handling charges when products are considered delivered to the customer under the terms of the sale.
Refer to “Note 3: Revenue” for further information.
Foreign currency translation
The functional currency of the Company’s subsidiaries is the local currency, unless the primary economic environment requires the use of another currency. Transactions denominated in foreign currencies are recorded in the functional currency of each subsidiary at the rate of exchange on the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are remeasured into the functional currency of each subsidiary at period-end exchange rates. These foreign currency transaction gains and losses are recognized in other (expense) income, net in the consolidated statements of operations.
Foreign currency gains and losses relating to intercompany borrowings that are considered a part of the Company’s investment in a foreign subsidiary are reflected as a component of currency translation within accumulated other comprehensive loss in stockholders’ equity. The following table provides information pertaining to total foreign currency gains or losses related to such intercompany borrowings:
(in millions)
 
Foreign Currency Gains / (Losses)
Year ended December 31, 2018
 
$

Year ended December 31, 2017
 
4.8

Year ended December 31, 2016
 
(34.8
)

Assets and liabilities of foreign subsidiaries are translated into US dollars at period-end exchange rates. Income and expense accounts of foreign subsidiaries are translated into US dollars at the average exchange rates for the period. The net exchange gains and losses arising on this translation are reflected as a component of currency translation within accumulated other comprehensive loss in stockholders’ equity. Refer to “Note 11: Accumulated other comprehensive loss” for further information.
Stock-based compensation plans
The Company measures the total amount of employee stock-based compensation expense for a grant based on the grant date fair value of each award and recognizes the stock-based compensation expense for each separately vesting tranche of an award on a straight-line basis over the requisite service period. Stock-based compensation is based on unvested outstanding awards. The Company has elected to recognize forfeitures when realized. Stock-based compensation expense is classified within other operating expenses, net in the consolidated statements of operations. Refer to “Note 10: Stock-based compensation” for further information.
Share repurchases
The Company does not hold any treasury shares, as all shares of common stock are retired upon repurchase. Furthermore, when share repurchases occur and the common stock is retired, the excess of the repurchase price over par is allocated between additional paid-in capital and accumulated deficit such that the portion allocated to additional paid-in-capital is limited to the additional paid-in-capital created from that particular share issuance (i.e. the book value of those shares) plus any resulting leftover additional paid-in-capital from previous share repurchases in instances where the repurchase price was lower than the original issuance price.
Fair value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. US GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:
 
Level 1
Quoted prices for identical instruments in active markets.
 
 
 
 
Level 2
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuation in which all significant inputs and significant value drivers are observable in active markets.
 
 
 
 
Level 3
Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
When available, the Company uses quoted market prices to determine fair value and classifies such items as Level 1. In cases where a market price is not available, the Company will make use of observable market-based inputs to calculate fair value, in which case the items are classified as Level 2. If quoted or observable market prices are not available, fair value is based on internally developed valuation techniques that use, where possible, current market-based or independently sourced market information. Items valued using internally generated valuation techniques are classified according to the lowest level input that is significant to the valuation, and may be classified as Level 3 even though there may be significant inputs that are readily observable. Refer to “Note 17: Fair value measurements” for further information.
Certain financial instruments, such as derivative financial instruments, are required to be measured at fair value on a recurring basis. Other financial instruments, such as the Company’s own debt, are not required to be measured at fair value on a recurring basis. The Company elected to not make an irrevocable election to measure financial instruments and certain other items at fair value.
Derivatives
The Company uses derivative financial instruments, such as foreign currency contracts, interest rate swaps and interest rate caps, to manage its risks associated with foreign currency and interest rate fluctuations. Derivative financial instruments are recorded in either prepaid expenses and other current assets, other assets, other accrued expenses or other long-term liabilities in the consolidated balance sheets at fair value. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swaps is determined by estimating the net present value of amounts to be paid under the agreement offset by the net present value of the expected cash inflows based on market rates and associated yield curves. For derivative contracts with the same counterparty where the Company has a master netting arrangement with the counterparty, the fair value of the asset/liability is presented on a net basis within the consolidated balance sheets. Refer to “Note 17: Fair value measurements” for additional information relating to the gross and net balances of derivative contracts. Changes in the fair value of derivative financial instruments are recognized in the consolidated statements of operations, unless specific hedge accounting criteria are met. Cash flows associated with derivative financial instruments are recognized in the operating section of the consolidated statements of cash flows.
For the purpose of hedge accounting, derivatives are classified as either fair value hedges, where the instrument hedges the exposure to changes in the fair value of a recognized asset or liability; or cash flow hedges, where the instrument hedges the exposure to variability in cash flows that are either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction. Gains and losses on derivatives that meet the conditions for fair value hedge accounting are recognized immediately in the consolidated statements of operations, along with the offsetting gain or loss on the related hedged item. For derivatives that meet the conditions for cash flow hedge accounting, the effective and ineffective portion of the gain or loss on the derivative is recognized in accumulated other comprehensive loss on the consolidated balance sheets. Amounts in accumulated other comprehensive loss are reclassified to the consolidated statement of operations in the same period in which the hedged transactions affect earnings. For both fair value hedges and cash flow hedges, the gains and losses related to the derivative instruments are recognized within the same financial statement line item within the consolidated statement of operations as the gains and losses associated with the hedged items.
For derivative instruments designated as hedges, the Company formally documents the hedging relationship to the hedged item and its risk management strategy. The Company assesses the effectiveness of its hedging instruments at inception and on an ongoing basis. Hedge accounting is discontinued when the hedging instrument is sold, expired, terminated or exercised, or no longer qualifies for hedge accounting.
Refer to “Note 18: Derivatives” for further information.
Earnings per share
Basic earnings per share is based on the weighted average number of common shares outstanding during each period, which excludes non-vested restricted stock units, non-vested restricted stock and stock options. Diluted earnings per share is based on the weighted average number of common shares and dilutive common share equivalents outstanding during each period. The Company reflects common share equivalents relating to stock options, non-vested restricted stock and non-vested restricted stock units in its computation of diluted weighted average shares outstanding, unless the effect of inclusion is anti-dilutive. The effect of dilutive securities is calculated using the treasury stock method.
The Company has issued certain restricted stock awards, which are unvested stock-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents. These restricted shares are considered participating securities. Accordingly, the Company calculates net income applicable to common stock using the two-class method, whereby net income is allocated between common stock and participating securities.
Refer to “Note 8: Earnings per share” for further information.
v3.10.0.1
Revenue Revenue
12 Months Ended
Dec. 31, 2018
Revenue from Contract with Customer [Abstract]  
Revenue
On January 1, 2018, the Company adopted the new revenue standard using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting under ASC Topic 605. The Company recorded a net decrease to the opening accumulated deficit of $0.8 million as of January 1, 2018 due to the cumulative impact of adopting the new revenue standard.
The Company disaggregates revenues from contracts with customers by both geographic segments and revenue contract types. Geographic reportable segmentation is pertinent to understanding Univar’s revenues, as it aligns to how the Company reviews the financial performance of its operations. Revenue contract types are differentiated by the type of good or service Univar offers customers, since the contractual terms necessary for revenue recognition are unique to each of the identified revenue contract types.
The following table disaggregates external customer net sales by major stream:
(in millions)
 
USA
 
Canada
 
EMEA
 
Rest of
World
 
Consolidated
 
 
Year Ended December 31, 2018
Chemical Distribution
 
$
4,775.2

 
$
877.6

 
$
1,974.4

 
$
383.8

 
$
8,011.0

Crop Sciences
 

 
381.6

 

 

 
381.6

Services
 
185.8

 
43.1

 
1.3

 
9.7

 
239.9

Total external customer net sales
 
$
4,961.0

 
$
1,302.3

 
$
1,975.7

 
$
393.5

 
$
8,632.5



Revenue is recognized when performance obligations under the terms of the contract are satisfied, which generally occurs when goods or services are transferred to a customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Payment terms and conditions vary by regions where the Company performs business and contract types. The term between invoicing and when payment is due is generally one year or less. As of December 31, 2018, none of the Company’s contracts contained a significant financing component.
Revenue for bill-and-hold arrangements is recognized if the Company has a substantive customer request, the materials are properly segregated and designated as belonging to the customer, materials are ready to be transferred to the customer and Univar is unable to direct the materials to service another customer. The Company has certain contractual relationships designated as an agency relationship, which requires the Company to recognize revenues on a net basis.
Chemical Distribution
The Company generates revenue when control for products is transferred to customers. Certain customers may receive discounts off the transaction price, primarily due to price and volume incentives, or return product for non-conformance, which are accounted for as variable consideration. The Company estimates the change in the transaction price that is expected to be provided to customers based on historical experience, which impacts revenues recognized.
Crop Sciences
The Company generates revenue when control for products is transferred to customers. The amount of consideration recorded varies due to price movements and rights granted to customers to return product. Customer payment terms often extend through a growing season, which may be up to six months.
Transaction prices may move during an agricultural growing season and changes may affect the amount of consideration the Company will receive. Transaction prices are also affected by special offers or volume discounts. The Company estimates the expected changes in the transaction price based on the combination of historical experience and the impact of weather on the current agriculture season. The adjustments to the transaction price are recognized as variable consideration and impacts revenues recognized.
When customers are provided rights to return eligible products, the Company estimates the expected returns based on the combination of historical experience and the impact of weather on the current agriculture season, which affects the revenues recognized.
Services
The Company generates revenue from services as they are performed and economic value is transferred to customers. Univar's services provided to customers are primarily related to waste management services and warehousing services. Waste management services is primarily related to plant maintenance, environmental contracting, environmental consulting and the collection and disposal of both hazardous and non-hazardous waste products. Warehousing services is primarily inclusive of blending, warehousing, logistics and distribution services for customers. Waste management and warehousing services are recognized over time as the performance obligations are satisfied.
Costs to obtain or fulfill contracts with customers
Univar expenses costs to obtain contracts when the contract term and benefit period is expected to be one year or less. Contract costs where the contract term and benefit period is expected to be more than a year are capitalized and amortized over the performance obligation period. Capitalized contract costs of $1.2 million and $5.9 million are included in other current assets and other assets as of December 31, 2018.
Deferred revenue
Deferred revenues are recognized as a contract liability when customers provide Univar with consideration prior to the Company satisfying a performance obligation. The following table provides information pertaining to the deferred revenue balance and account activity:
(in millions)
 
 
Deferred revenue as of January 1, 2018
 
$
100.9

Deferred revenue as of December 31, 2018
 
45.6

Revenue recognized that was included in the deferred revenue balance at the beginning of the period
 
100.3


The deferred revenue balances are all expected to have a duration of one year or less and are recorded within the other accrued expenses line item of the consolidated balance sheet.
v3.10.0.1
Other operating expenses, net
12 Months Ended
Dec. 31, 2018
Other Income and Expenses [Abstract]  
Other operating expenses, net
Other operating expenses, net consisted of the following items:
 
Year ended December 31,
(in millions)
2018
 
2017
 
2016
Stock-based compensation expense
$
20.7

 
$
19.7

 
$
10.4

Business transformation costs

 
23.4

 
5.4

Restructuring charges
4.8

 
5.5

 
6.5

Other employee termination costs
16.4

 
8.1

 
1.5

Loss (gain) on sale of property, plant and equipment and other assets
2.0

 
(11.3
)
 
(0.7
)
Acquisition and integration related expenses
22.0

 
3.1

 
5.5

Other
7.6

 
6.9

 
8.6

Total other operating expenses, net
$
73.5

 
$
55.4

 
$
37.2

v3.10.0.1
Restructuring charges
12 Months Ended
Dec. 31, 2018
Restructuring and Related Activities [Abstract]  
Restructuring charges
Restructuring charges relate to the implementation of several regional strategic initiatives aimed at streamlining the Company’s cost structure and improving its operations. These actions primarily resulted in workforce reductions, lease termination costs and other facility rationalization costs. Restructuring charges are recorded in other operating expenses, net in the consolidated statement of operations.
2018 Restructuring
During the year ended December 31, 2018, the Company recorded restructuring charges of $3.2 million in USA, consisting of $3.1 million in employee termination costs and $0.1 million in other exit costs for employees impacted by a decision to consolidate departments. Additionally, the Company recorded restructuring charges of $0.9 million in Other, relating to employee termination costs. The Company expects to incur approximately $4.7 million of additional employee termination and other exit costs over the next two years and expects this program to be substantially completed by 2020.
Also during the year ended December 31, 2018, the Company recorded restructuring charges of $0.9 million in EMEA relating to employee termination costs. The Company does not expect to incur material costs in the future related to this restructuring program. The actions associated with this program are expected to be completed by the end of 2019.
During the year ended December 31, 2018, the Company recorded restructuring charges of $0.7 million for the Rest of World segment, consisting of $0.4 million in employee termination costs, $0.2 million in facility exit costs and $0.1 million in other exit costs. The actions associated with this program were completed as of December 31, 2018.
The cost information above does not contain any estimates for programs that may be developed and implemented in future periods.
2014 to 2017 Restructuring
Between 2014 through 2017, management implemented several regional strategic initiatives aimed at streamlining the Company’s cost structure and improving its operations. Total cumulative charges recorded through December 31, 2018 for USA related to these restructuring programs were $39.5 million, which included $16.5 million in employee termination costs, $21.3 million in facility exit costs, and $1.7 million in other exit costs. The Company did not record restructuring charges for the programs during 2018. The actions associated with the restructuring programs were completed as of June 30, 2018, although administratively cash payments will be made into the future. During the year ended December 31, 2018, the Company reduced its estimate in the amount of $0.9 million within facility exit costs relating to a favorable lease buyout for USA.
Total cumulative charges recorded through December 31, 2018 for Canada were $5.7 million related to employee termination costs. There were no restructuring charges recorded for the programs during 2018. As of June 30, 2018, the actions associated with the restructuring programs were completed.
Total cumulative charges recorded through December 31, 2018 for EMEA were $32.8 million, which included $22.5 million in employee termination costs, $3.7 million in facility exit costs, and $6.6 million in other exit costs. During 2018, the Company did not record restructuring charges for the programs. The actions associated with the restructuring programs were completed as of June 30, 2018.
Total cumulative charges recorded through December 31, 2018 for ROW were $6.4 million, which included $6.2 million in employee termination costs and $0.2 million in facility exit costs. The Company did not record restructuring charges for these programs during 2018. As of June 30, 2018, the Company completed this program.
Total cumulative charges recorded through December 31, 2018 for Other were $6.6 million, which included $5.8 million in employee termination costs and $0.8 million in other exit costs. There were no restructuring charges recorded for these programs during 2018. As of June 30, 2018, the Company completed this program.
The following tables summarize activity related to accrued liabilities associated with redundancy and restructuring:
(in millions)
January 1,
2018
 
Charge to
earnings
 
Cash paid
 
Non-cash
and other
 
December 31, 2018
Employee termination costs
$
3.0

 
$
5.3

 
$
(3.4
)
 
$
(0.7
)
 
$
4.2

Facility exit costs
10.2

 
(0.7
)
 
(4.4
)
 
(0.1
)
 
5.0

Other exit costs
(0.5
)
 
0.2

 
(0.1
)
 
0.6

 
0.2

Total
$
12.7

 
$
4.8

 
$
(7.9
)
 
$
(0.2
)
 
$
9.4

 
(in millions)
January 1,
2017
 
Charge to
earnings
 
Cash paid
 
Non-cash
and other
 
December 31, 2017
Employee termination costs
$
6.9

 
$
2.9

 
$
(7.2
)
 
$
0.4

 
$
3.0

Facility exit costs
13.2

 
2.8

 
(5.5
)
 
(0.3
)
 
10.2

Other exit costs

 
(0.2
)
 
(0.3
)
 

 
(0.5
)
Total
$
20.1

 
$
5.5

 
$
(13.0
)
 
$
0.1

 
$
12.7


Restructuring liabilities of $5.9 million and $5.8 million were classified as current in other accrued expenses in the consolidated balance sheets as of December 31, 2018 and 2017, respectively. The long-term portion of restructuring liabilities of $3.5 million and $6.9 million were recorded in other long-term liabilities in the consolidated balance sheets as of December 31, 2018 and 2017, respectively and primarily consists of facility exit costs that are expected to be paid within the next five years.
While the Company believes the recorded restructuring liabilities are adequate, revisions to current estimates may be recorded in future periods based on new information as it becomes available.
v3.10.0.1
Other expense, net
12 Months Ended
Dec. 31, 2018
Other Income and Expenses [Abstract]  
Other expense, net
Other expense, net consisted of the following (losses) gains:
 
Year ended December 31,
(in millions)
2018
 
2017
 
2016
Pension mark to market loss (1)(2)
$
(34.2
)
 
$
(3.8
)
 
$
(68.6
)
Pension curtailment and settlement gains (1)

 
9.7

 
1.3

Non-operating retirement benefits (1)
11.0

 
9.9

 
15.3

Foreign currency transactions
(6.7
)
 
(4.6
)
 
(0.6
)
Foreign currency denominated loans revaluation
(0.8
)
 
(17.9
)
 
(13.7
)
Undesignated foreign currency derivative instruments (3)
1.1

 
0.3

 
(1.8
)
Undesignated interest rate swap contracts (3)

 
(2.2
)
 
10.1

Debt refinancing costs (4)

 
(5.3
)
 

Other
(3.1
)
 
(3.5
)
 
(0.1
)
Total other expense, net
$
(32.7
)
 
$
(17.4
)
 
$
(58.1
)
 
 
 
 
 
 
 
(1)
Refer to “Note 9: Employee benefit plans” for more information.
(2)
Includes mark to market loss related to defined benefit pension plans and other postretirement benefit plan.
(3)
Refer to “Note 18: Derivatives” for more information.
(4)
Refer to “Note 16: Debt” for more information.
v3.10.0.1
Income taxes
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income taxes
Current income tax expense represents the amounts expected to be reported on the Company’s income tax returns, and deferred tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized.
On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The legislation significantly changes US tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Act permanently reduces the US corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The SAB 118 measurement period ends when a company has obtained, prepared, and analyzed the information needed to complete the accounting requirements under ASC 740, "Income Taxes", but no later than one year from the enactment date of December 22, 2017. In 2017 and the first nine months of 2018, the Company recorded provisional amounts for certain enactment-date effects of the Act by applying the guidance in SAB 118 because the Company had not yet completed its enactment-date accounting for these effects. At December 31, 2018, the Company has now completed its accounting for all the enactment-date income tax effects of the Act. As further discussed below, during 2018 the Company recognized adjustments of $6.8 million related to the provisional amounts recorded at December 31, 2017 and included these adjustments as a component of income tax expense from continuing operations. The main components of the SAB 118 adjustment of $6.8 million are increases due to additional transition tax of $13.0 million and deemed dividends of $9.2 million (tax) offset by a benefit for additional foreign tax credits utilized of $1.3 million (increase in foreign tax credit generated of $26.3 million offset by an increase in valuation allowance of $25.0 million), and a decrease in the valuation allowance on deferred interest expense of $13.8 million due to an increase in interest expense deduction.
Effective in 2018, the Company is subject to global intangible low tax income (“GILTI”) which is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Due to the complexity of the GILTI tax rules, companies are allowed to make an accounting policy choice of either (1) treating taxes due on future US inclusions in taxable income related to GILTI as a current-period expense when incurred or (2) factoring such amounts into a company’s measurement of its deferred taxes. The Company is electing to treat taxes due on future US inclusions in taxable income related to GILTI as a current-period expense when incurred and, therefore, there is no impact to the deferred tax rate in 2018.
For financial reporting purposes, income (loss) before income taxes includes the following components:
 
Year ended December 31,
(in millions)
2018
 
2017
 
2016
Income (loss) before income taxes
 
 
 
 
 
United States
$
36.6

 
$
1.5

 
$
(131.3
)
Foreign
185.6

 
167.3

 
51.7

Total income (loss) before income taxes
$
222.2

 
$
168.8

 
$
(79.6
)

The expense (benefit) for income taxes is summarized as follows:
 
Year ended December 31,
(in millions)
2018
 
2017
 
2016
Current:
 
 
 
 
 
Federal
$
13.8

 
$
6.8

 
$
(0.1
)
State
2.1

 
2.0

 
0.1

Foreign
31.2

 
28.5

 
20.4

Total current
$
47.1

 
$
37.3

 
$
20.4

Deferred:
 
 
 
 
 
Federal
$
6.5

 
$
26.5

 
$
(15.1
)
State
(0.5
)
 

 
(3.0
)
Foreign
(3.2
)
 
(14.8
)
 
(13.5
)
Total deferred
$
2.8

 
$
11.7

 
$
(31.6
)
Total income tax expense (benefit)
$
49.9

 
$
49.0

 
$
(11.2
)

The reconciliation between the US statutory tax rate and the Company’s effective tax rate is presented as follows:
 
Year ended December 31,
(in millions)
2018
 
2017
 
2016
US federal statutory income tax expense (benefit) applied to income (loss) before income taxes
$
46.7

 
$
59.1

 
$
(27.8
)
State income taxes, net of federal benefit
1.1

 
1.4

 
(2.9
)
Foreign tax rate differential
8.1

 
(18.0
)
 
(5.8
)
Non-taxable interest income
(0.7
)
 
(11.4
)
 
(10.8
)
Valuation allowance, net
(11.6
)
 
(18.1
)
 
(24.7
)
Expiration of tax attributes

 
0.1

 
4.4

Foreign losses not benefited

 
0.7

 
8.0

Effect of flow-through entities
(0.6
)
 
8.9

 
(9.0
)
Net stock-based compensation

 
(3.7
)
 
1.7

Non-deductible expense
4.8

 
3.5

 
3.4

Unrecognized tax benefits
(2.7
)
 
(1.7
)
 
(1.4
)
Change in statutory income tax rates

 
(17.5
)
 
2.7

Deemed dividends from foreign subsidiaries
9.0

 
17.6

 
1.4

Global intangible low-taxed income
19.9

 

 

Non-deductible interest expense

 
0.1

 
2.6

Revaluation due to Section 987 tax law change

 

 
45.0

Section 965 repatriation tax
13.0

 
76.5

 

Foreign tax credit
(38.3
)
 
(47.6
)
 

Other
1.2

 
(0.9
)
 
2.0

Total income tax expense (benefit)
$
49.9

 
$
49.0

 
$
(11.2
)







The consolidated deferred tax assets and liabilities are detailed as follows:
 
December 31,
(in millions)
2018
 
2017
Deferred tax assets:
 
 
 
Net operating loss carryforwards
$
49.4

 
$
68.6

Environmental reserves
22.9

 
25.3

Interest
25.9

 
35.7

Tax credit and capital loss carryforwards
57.8

 
37.2

Pension
66.3

 
68.2

Flow-through entities
2.7

 
2.5

Compensation
12.2

 
13.7

Inventory
4.5

 
4.2

Property, plant and equipment, net
4.8

 
3.3

Other temporary differences
17.0

 
15.1

Gross deferred tax assets
$
263.5

 
$
273.8

Valuation allowance
(106.3
)
 
(117.2
)
Deferred tax assets, net of valuation allowance
$
157.2

 
$
156.6

Deferred tax liabilities:
 
 
 
Property, plant and equipment, net
$
(102.3
)
 
$
(98.7
)
Intangible assets
(63.6
)
 
(64.6
)
Other temporary differences
(9.4
)
 
(5.9
)
Deferred tax liabilities
$
(175.3
)
 
$
(169.2
)
Net deferred tax liability
$
(18.1
)
 
$
(12.6
)

The changes in the valuation allowance were as follows:
 
December 31,
(in millions)
2018
 
2017
Beginning balance
$
117.2

 
$
167.9

Change related to current net operating losses generated

 
0.7

Change related to current utilization of net operating loss carryforwards
(3.7
)
 
(12.3
)
Change related to future utilization of net operating loss carryforwards
(17.4
)
 
(17.8
)
Change related to generation/expiration of tax attributes
21.3

 
29.9

Change related to foreign currency
(1.3
)
 
7.1

Change related to utilization of deferred interest expense
(9.7
)
 
(26.3
)
Change related to tax rate change
0.1

 
(31.6
)
Change related to other items
(0.2
)
 
(0.4
)
Ending balance
$
106.3

 
$
117.2


As of December 31, 2018, the total remaining tax benefit of available federal, state and foreign net operating loss carryforwards recognized on the balance sheet amounted to $33.4 million (tax benefit of operating losses of $49.4 million reduced by a valuation allowance of $16.0 million). Total net operating losses at December 31, 2018 and 2017 amounted to $186.4 million and $261.9 million, respectively. If not utilized, $19.0 million of the available loss carryforwards will expire between 2019 and 2023; subsequent to 2023, $0.1 million will expire. The remaining losses of $167.3 million have an unlimited life. As of December 31, 2018, the Company also has foreign tax credit carryforwards of $55.3 million that if not utilized will expire in 2027.
The Tax Act provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Company reported $577.2 million of undistributed foreign E&P subject to the deemed mandatory repatriation and recognized $89.5 million of income tax expense in the 2017 US Company tax return. As a result of the one-time deemed mandatory repatriation, the Company generated foreign income tax credit (“FTC”) previously paid and allocable to the deemed repatriated foreign source income of $166.4 million. These income taxes were required to be reduced in the same proportion as the foreign source income generating the deemed income taxes paid as required under the Tax Act, resulting in a net deemed income tax paid of $73.7 million. In addition, $0.3 million of withholding taxes incurred during the period were creditable. As such, the Company is eligible to claim a foreign tax credit relating to the foreign source income that generated the deemed income taxes paid and, accordingly, reported $74.0 million as a deferred tax asset generated at filing of the 2017 US tax return.
The FTC of $74.0 million generated in 2017 was not fully utilized due to adjustments required to be made against the foreign source income and an overall domestic loss, which limited the amount of the overall FTC utilization to $14.9 million in 2017. After the utilization of a net operating loss carry forward, general business credits and $14.9 million of foreign tax credits, the Company will pay additional US federal cash tax of approximately $14.9 million on the deemed mandatory repatriation, payable over eight years. At year ended December 31, 2018, the provisional FTC carryforward and related valuation allowance is estimated to be $55.3 million down from $59.1 million ($74.0 million generated in 2017 less $14.9 million utilization in 2017) reported with the filing of 2017 US tax return. The net change of $3.8 million in FTC balance is a combination of 2018 FTC utilization of $5.4 million (overall domestic loss recapture) less $1.6 million increase in FTC due to additional cash tax payments support collected from foreign tax authorities. The Company does not expect future earnings of the appropriate character of taxable income which would allow it to utilize its excess FTC balance in future tax years, in addition to other required adjustments which reduce the amount of future foreign source income available to be offset by an FTC. Therefore, the Company will maintain a valuation allowance on the remaining provisional $55.3 million FTC.
Difference Attributable to Foreign Investments
As a result of the deemed mandatory repatriation provisions in the Tax Act, the Company has $493.2 million of undistributed earnings that has either been previously taxed or would qualify for the 100 percent dividends received deduction provided for in the Tax Act, and earnings that would not result in any significant foreign taxes. As a result, the Company does not intend to distribute earnings in a taxable manner. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries.
Tax Contingencies
The changes in unrecognized tax benefits included in other long-term liabilities, excluding interest and penalties, are as follows:
 
Year ended
December 31,
(in millions)
2018
 
2017
Beginning balance
$
3.1

 
$
4.3

Increase for tax positions of prior years

 

Reductions due to the statute of limitations expiration
(2.7
)
 
(1.5
)
Foreign exchange

 
0.3

Ending balance
$
0.4

 
$
3.1


The Company has net $0.4 million and $3.1 million of unrecognized tax benefits at December 31, 2018 and 2017, respectively. As of December 31, 2018, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate for continuing operations was $0.4 million. No remaining unrecognized tax benefits relate to tax positions for which ultimate deductibility is highly certain, but for which there is uncertainty as to the timing of such deductibility. Recognition of these tax benefits, if any, would not have an impact on the effective tax rate.
The total liability included in other long-term liabilities associated with the interest and penalties was $0.5 million and $0.4 million at December 31, 2018 and 2017, respectively. The Company recorded $0.1 million, $0.4 million and $0.3 million in interest expense related to unrecognized tax benefits in the consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016, respectively.
The Company files income tax returns in the US and various state and foreign jurisdictions. As of December 31, 2018, the Company is subject to various local or foreign examinations by the tax authorities.
v3.10.0.1
Earnings per share
12 Months Ended
Dec. 31, 2018
Earnings Per Share [Abstract]  
Earnings per share
The following table presents the basic and diluted earnings per share computations:
 
Year ended December 31,
(in millions, except per share data)
2018
 
2017
 
2016
Basic:
 
 
 
 
 
Net income (loss)
$
172.3

 
$
119.8

 
$
(68.4
)
Less: earnings allocated to participating securities
0.3

 
0.2

 

Earnings allocated to common shares outstanding
$
172.0

 
$
119.6

 
$
(68.4
)
Weighted average common shares outstanding
141.2

 
140.2

 
137.8

Basic income (loss) per common share
$
1.22

 
$
0.85

 
$
(0.50
)
Diluted:
 
 
 
 
 
Net income (loss)
$
172.3

 
$
119.8

 
$
(68.4
)
Less: earnings allocated to participating securities

 

 

Earnings allocated to common shares outstanding
$
172.3

 
$
119.8

 
$
(68.4
)
Weighted average common shares outstanding
141.2

 
140.2

 
137.8

Effect of dilutive securities:
 
 
 
 
 
Stock compensation plans (1)
1.0

 
1.2

 

Weighted average common shares outstanding – diluted
142.2

 
141.4

 
137.8

Diluted income (loss) per common share (2)
$
1.21

 
$
0.85

 
$
(0.50
)
 
 
 
 
 
 
(1)
Stock options to purchase approximately 1.6 million, 0.8 million, and 3.3 million shares of common stock were outstanding during the years ended December 31, 2018, 2017 and 2016, respectively, but were not included in the calculation of diluted income (loss) per share as the impact of these stock options would have been anti-dilutive.
(2)
As a result of changes in the number of shares outstanding during the year and rounding, the sum of the quarters’ earnings per share may not equal the earnings per share for any year-to-date period.
v3.10.0.1
Employee benefit plans
12 Months Ended
Dec. 31, 2018
Retirement Benefits [Abstract]  
Employee benefit plans
Defined benefit pension plans
The Company sponsors defined benefit plans that provide pension benefits for employees upon retirement in certain jurisdictions including the US, Canada, United Kingdom and several other European countries.
The US, Canada and United Kingdom defined benefit pension plans are closed to new entrants. On July 1, 2015, the accrual of future service credits ceased in Canada although future salary increases continue for remaining participants. Benefits accrued by participants in the United Kingdom plan were frozen as of December 1, 2010 and benefits accrued by participants in the US plans were frozen as of December 31, 2009. These amendments to freeze benefits were made in conjunction with a benefit plan review which provides for enhanced benefits under defined contribution plans available to all employees in the US, Canada and United Kingdom.
The following summarizes the Company’s defined benefit pension plans’ projected benefit obligations, plan assets and funded status:
 
Domestic
 
Foreign
 
Total
 
Year ended
December 31,
 
Year ended
December 31,
 
Year ended
December 31,
(in millions)
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Change in projected benefit obligations:
 
 
 
 
 
 
 
 
 
 
 
Actuarial present value of benefit obligations at beginning of year
$
721.9

 
$
719.7

 
$
612.0

 
$
555.5

 
$
1,333.9

 
$
1,275.2

Service cost

 

 
2.7

 
2.5

 
2.7

 
2.5

Interest cost
27.3

 
30.8

 
15.4

 
16.2