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December 31, | |||||||
2017 | 2016 | ||||||
Inventories: | |||||||
Manufacturing supplies | $36.3 | $37.9 | |||||
Raw materials | 31.9 | 16.9 | |||||
Work in process | 137.8 | 85.8 | |||||
Finished products | 82.9 | 76.3 | |||||
Gross inventory | 288.9 | 216.9 | |||||
Allowance for surplus and obsolete inventory | (7.8 | ) | (8.1 | ) | |||
LIFO reserve | (57.1 | ) | (44.6 | ) | |||
Total Inventories, net | $224.0 | $164.2 |
|
Standard | |
2015-11 | Inventory: Simplifying the Measurement of Inventory (Topic 330) |
2016-15 | Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force) |
2016-16 | Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740) |
2017-07 | Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715) |
2016 | 2015 | ||||||||||||||||||
As Reported | Adjustments | Adjusted | As Reported | Adjustments | Adjusted | ||||||||||||||
Cost of products sold | $896.6 | ($55.0 | ) | $841.6 | $1,060.0 | $31.5 | $1,091.5 | ||||||||||||
Selling, general and administrative expenses | $101.5 | ($11.3 | ) | $90.2 | $105.1 | $2.5 | $107.6 | ||||||||||||
Other income (expense), net | ($1.7 | ) | ($66.3 | ) | ($68.0 | ) | ($2.9 | ) | $34.0 | $31.1 |
|
December 31, | |||||||
2017 | 2016 | ||||||
Property, Plant and Equipment, net: | |||||||
Land | $13.4 | $13.3 | |||||
Buildings and improvements | 420.6 | 420.6 | |||||
Machinery and equipment | 1,387.4 | 1,352.0 | |||||
Construction in progress | 30.4 | 63.9 | |||||
Subtotal | 1,851.8 | 1,849.8 | |||||
Less allowances for depreciation | (1,145.1 | ) | (1,107.9 | ) | |||
Property, Plant and Equipment, net | $706.7 | $741.9 |
|
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Intangible Assets Subject to Amortization: | |||||||||||||||||||||||
Customer relationships | $6.3 | $4.1 | $2.2 | $6.3 | $3.7 | $2.6 | |||||||||||||||||
Technology use | 9.0 | 5.9 | 3.1 | 9.0 | 5.2 | 3.8 | |||||||||||||||||
Capitalized software | 59.1 | 44.5 | 14.6 | 58.9 | 40.3 | 18.6 | |||||||||||||||||
Total Intangible Assets | $74.4 | $54.5 | $19.9 | $74.2 | $49.2 | $25.0 |
Year | Amortization Expense | ||
2018 | $5.5 | ||
2019 | $4.4 | ||
2020 | $3.2 | ||
2021 | $2.3 | ||
2022 | $2.0 |
|
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Principal | $86.3 | $86.3 | |||||
Less: Debt issuance costs, net of amortization | (1.6 | ) | (2.1 | ) | |||
Less: Debt discount, net of amortization | (14.6 | ) | (17.8 | ) | |||
Convertible notes, net | $70.1 | $66.4 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Contractual interest expense | $5.2 | $3.0 | |||||
Amortization of debt issuance costs | 0.5 | 0.2 | |||||
Amortization of debt discount | 3.2 | 1.7 | |||||
Total | $8.9 | $4.9 |
December 31, | |||||||
2017 | 2016 | ||||||
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (1.58% as of December 31, 2017) | $12.2 | $12.2 | |||||
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (1.60% as of December 31, 2017) | 9.5 | 9.5 | |||||
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (1.60% as of December 31, 2017) | 8.5 | 8.5 | |||||
Credit Agreement, due 2019 (LIBOR plus applicable spread) | 65.0 | 40.0 | |||||
Total Other Long-Term Debt | $95.2 | $70.2 |
|
Foreign Currency Translation Adjustments | Pension and Postretirement Liability Adjustments | Total | |||||||||
Balance at December 31, 2015 | ($5.0 | ) | ($2.9 | ) | ($7.9 | ) | |||||
Other comprehensive loss before reclassifications, before income tax | (2.0 | ) | (0.9 | ) | (2.9 | ) | |||||
Amounts reclassified from accumulated other comprehensive loss, before income tax | — | 1.7 | 1.7 | ||||||||
Income tax expense | — | (0.3 | ) | (0.3 | ) | ||||||
Net current period other comprehensive (loss) income, net of income taxes | (2.0 | ) | 0.5 | (1.5 | ) | ||||||
Balance as of December 31, 2016 | ($7.0 | ) | ($2.4 | ) | ($9.4 | ) | |||||
Other comprehensive income before reclassifications, before income tax | 1.1 | — | 1.1 | ||||||||
Amounts reclassified from accumulated other comprehensive loss, before income tax | — | 1.5 | 1.5 | ||||||||
Income tax expense | — | (0.8 | ) | (0.8 | ) | ||||||
Net current period other comprehensive income, net of income taxes | 1.1 | 0.7 | 1.8 | ||||||||
Balance at December 31, 2017 | ($5.9 | ) | ($1.7 | ) | ($7.6 | ) |
|
Pension | Postretirement | ||||||||||||
Change in benefit obligation: | 2017 | 2016 | 2017 | 2016 | |||||||||
Benefit obligation at the beginning of year | $1,220.3 | $1,163.5 | $214.2 | $215.3 | |||||||||
Service cost | 18.2 | 15.6 | 1.6 | 1.5 | |||||||||
Interest cost | 49.1 | 52.4 | 8.4 | 9.4 | |||||||||
Actuarial losses | 65.4 | 81.1 | 13.5 | 6.6 | |||||||||
Benefits paid | (78.4 | ) | (79.1 | ) | (21.5 | ) | (19.5 | ) | |||||
Plan amendment | 0.5 | — | — | 0.9 | |||||||||
Foreign currency translation adjustment | 7.0 | (13.2 | ) | — | — | ||||||||
Benefit obligation at the end of year | $1,282.1 | $1,220.3 | $216.2 | $214.2 |
Pension | Postretirement | ||||||||||||
Change in plan assets: | 2017 | 2016 | 2017 | 2016 | |||||||||
Fair value of plan assets at the beginning of year | $1,131.7 | $1,144.3 | $113.9 | $137.9 | |||||||||
Actual return on plan assets | 123.6 | 78.7 | 9.5 | 6.1 | |||||||||
Company contributions / payments | 2.1 | 2.2 | 2.1 | 2.7 | |||||||||
Benefits paid | (78.4 | ) | (79.1 | ) | (21.5 | ) | (19.5 | ) | |||||
Reimbursement from postretirement plan assets | — | — | — | (13.3 | ) | ||||||||
Foreign currency translation adjustment | 7.6 | (14.4 | ) | — | — | ||||||||
Fair value of plan assets at end of year | $1,186.6 | $1,131.7 | $104.0 | $113.9 | |||||||||
Funded status at end of year | ($95.5 | ) | ($88.6 | ) | ($112.2 | ) | ($100.3 | ) |
Pension | Postretirement | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Non-current assets | $14.6 | $6.2 | $— | $— | |||||||||
Current liabilities | (9.0 | ) | (0.6 | ) | (2.5 | ) | (2.4 | ) | |||||
Non-current liabilities | (101.1 | ) | (94.2 | ) | (109.7 | ) | (97.9 | ) | |||||
($95.5 | ) | ($88.6 | ) | ($112.2 | ) | ($100.3 | ) |
Pension | Postretirement | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Unrecognized prior service cost | $1.5 | $1.5 | $1.1 | $2.1 |
Pension | Postretirement | ||||||
Prior service cost | $0.5 | $0.2 |
Pension | Postretirement | ||||||||
Assumptions: | 2017 | 2016 | 2017 | 2016 | |||||
Discount rate | 3.68 | % | 4.17 | % | 3.66 | % | 4.09 | % | |
Future compensation assumption | 2.37 | % | 3.09 | % | n/a | n/a |
Pension | Postretirement | ||||||||
Assumptions: | 2017 | 2016 | 2017 | 2016 | |||||
Discount rate | 4.17 | % | 4.67 | % | 4.09 | % | 4.51 | % | |
Future compensation assumption | 3.09 | % | 3.08 | % | n/a | n/a | |||
Expected long-term return on plan assets | 6.46 | % | 6.46 | % | 5.00 | % | 5.00 | % |
Pension | Postretirement | ||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
Components of net periodic benefit cost: | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |||||||||||||||||
Service cost | $18.2 | $15.6 | $16.8 | $1.6 | $1.5 | $1.7 | |||||||||||||||||
Interest cost | 49.1 | 52.4 | 51.3 | 8.4 | 9.4 | 9.4 | |||||||||||||||||
Expected return on plan assets | (70.7 | ) | (71.1 | ) | (82.8 | ) | (5.2 | ) | (5.8 | ) | (7.1 | ) | |||||||||||
Amortization of prior service cost | 0.5 | 0.6 | 0.6 | 1.0 | 1.1 | 1.1 | |||||||||||||||||
Net remeasurement losses (gains) | 12.5 | 73.4 | 5.7 | 9.3 | 6.3 | (12.2 | ) | ||||||||||||||||
Net Periodic Benefit Cost | $9.6 | $70.9 | ($8.4 | ) | $15.1 | $12.5 | ($7.1 | ) |
Level 1 - | Unadjusted quoted prices in active markets for identical assets or liabilities. |
Level 2 - | Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. |
Level 3 - | Unobservable inputs for the asset or liability. |
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $19.6 | $4.5 | $15.1 | $— | ||||||||
U.S government and agency securities | 240.7 | 234.6 | 6.1 | — | ||||||||
Corporate bonds | 110.0 | — | 110.0 | — | ||||||||
Equity securities | 50.8 | 50.8 | — | — | ||||||||
Mutual fund - fixed income | 35.2 | 35.2 | — | — | ||||||||
Mutual fund - real estate | 16.5 | 16.5 | — | — | ||||||||
Total Assets in the fair value hierarchy | $472.8 | $341.6 | $131.2 | $— | ||||||||
Assets measured at net asset value (1) | 713.8 | — | — | — | ||||||||
Total Assets | $1,186.6 | $341.6 | $131.2 | $— |
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $45.2 | $4.6 | $40.6 | $— | ||||||||
U.S government and agency securities | 220.3 | 214.2 | 6.1 | — | ||||||||
Corporate bonds | 105.2 | — | 105.2 | — | ||||||||
Equity securities | 52.2 | 52.2 | — | — | ||||||||
Mutual fund - equity | 15.3 | — | 15.3 | — | ||||||||
Mutual fund - real estate | 24.8 | 24.8 | — | — | ||||||||
Total Assets in the fair value hierarchy | $463.0 | $295.8 | $167.2 | $— | ||||||||
Assets measured at net asset value (1) | 668.7 | — | — | — | ||||||||
Total Assets | $1,131.7 | $295.8 | $167.2 | $— |
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $2.2 | $2.2 | $— | $— | ||||||||
Mutual fund - fixed income | 11.4 | 11.4 | — | — | ||||||||
Total Assets in the fair value hierarchy | $13.6 | $13.6 | $— | $— | ||||||||
Assets measured at net asset value (1) | 90.4 | — | — | — | ||||||||
Total Assets | $104.0 | $13.6 | $— | $— |
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $1.4 | $1.4 | $— | $— | ||||||||
Total Assets in the fair value hierarchy | $1.4 | $1.4 | $— | $— | ||||||||
Assets measured at net asset value (1) | 112.5 | — | — | — | ||||||||
Total Assets | $113.9 | $1.4 | $— | $— |
Postretirement | |||||||||||
Benefit Payments: | Pension | Gross | Medicare Part D Subsidy Receipts | ||||||||
2018 | $87.2 | $20.1 | $0.8 | ||||||||
2019 | 78.0 | 19.5 | 0.8 | ||||||||
2020 | 78.5 | 18.7 | 0.9 | ||||||||
2021 | 77.3 | 17.9 | 0.9 | ||||||||
2022 | 81.7 | 17.2 | 1.0 | ||||||||
2023-2027 | 369.9 | 75.5 | 5.3 |
|
• | Vested and unvested stock options were adjusted so that the grantee holds options to purchase both The Timken Company and TimkenSteel common shares. |
• | The adjustment to the The Timken Company and TimkenSteel stock options, when combined, were intended to generally preserve the intrinsic value of each original option grant and the ratio of the exercise price to the fair market value of The Timken Company common shares on June 30, 2014. |
• | Unvested restricted stock awards were replaced with adjusted, substitute awards for restricted shares or units, as applicable, of The Timken Company and TimkenSteel common shares. The new awards of restricted stock were intended to generally preserve the intrinsic value of the original award determined as of June 30, 2014. |
• | Vesting periods of awards were unaffected by the adjustment and substitution. |
2017 | 2016 | 2015 | |||
Weighted-average fair value per option | $7.68 | $3.32 | $11.21 | ||
Risk-free interest rate | 2.21% | 1.34% | 1.47% | ||
Dividend yield | —% | —% | 1.93% | ||
Expected stock volatility | 43.23% | 41.71% | 47.10% | ||
Expected life - years | 6 | 6 | 6 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (millions) | ||||
Outstanding as of December 31, 2016 | 2,219,397 | $22.64 | |||||
Granted | 353,808 | $17.46 | |||||
Exercised | (38,592 | ) | $8.94 | ||||
Canceled, forfeited or expired | (196,258 | ) | $23.34 | ||||
Outstanding as of December 31, 2017 | 2,338,355 | $22.03 | 6.00 | $4.9 | |||
Options expected to vest | 944,403 | $15.00 | 8.25 | $3.5 | |||
Options exercisable | 1,393,952 | $26.80 | 4.47 | $1.4 |
Number of Shares | Weighted Average Grant Date Fair Value | ||||
Outstanding as of December 31, 2016 | 696,153 | $17.57 | |||
Granted | 323,132 | $16.92 | |||
Vested | (286,732 | ) | $23.97 | ||
Canceled, forfeited or expired | (18,237 | ) | $24.53 | ||
Outstanding as of December 31, 2017 | 714,316 | $14.53 |
|
Years Ended December 31, | |||||||
2017 | 2016 | ||||||
Net Sales: | |||||||
United States | $1,207.7 | $763.4 | |||||
Foreign | 121.5 | 106.1 | |||||
$1,329.2 | $869.5 |
December 31, | ||||||
2017 | 2016 | |||||
Long-lived Assets, net: | ||||||
United States | $726.4 | $766.6 | ||||
Foreign | 0.2 | 0.3 | ||||
$726.6 | $766.9 |
|
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
United States | ($49.5 | ) | ($136.2 | ) | ($82.2 | ) | |||||
Non-United States | 7.2 | (5.8 | ) | 10.5 | |||||||
Loss income from operations before income taxes | ($42.3 | ) | ($142.0 | ) | ($71.7 | ) |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current: | |||||||||||
Federal | $1.1 | $— | $— | ||||||||
State and local | 0.1 | 0.1 | (1.2 | ) | |||||||
Foreign | 0.6 | 0.2 | 0.1 | ||||||||
$1.8 | $0.3 | ($1.1 | ) | ||||||||
Deferred: | |||||||||||
Federal | ($0.4 | ) | ($32.9 | ) | ($28.7 | ) | |||||
State and local | — | (3.6 | ) | 0.2 | |||||||
Foreign | 0.1 | (0.3 | ) | 2.9 | |||||||
(0.3 | ) | (36.8 | ) | (25.6 | ) | ||||||
U.S. and foreign tax expense (benefit) on loss from operations before income taxes | $1.5 | ($36.5 | ) | ($26.7 | ) |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Tax at the U.S. federal statutory rate | ($14.8 | ) | ($49.7 | ) | ($25.2 | ) | |||||
Adjustments: | |||||||||||
State and local income taxes, net of federal tax benefit | (0.7 | ) | (3.5 | ) | (2.2 | ) | |||||
Foreign earnings taxed at different rates | (0.2 | ) | (0.1 | ) | — | ||||||
U.S. research tax credit | (0.2 | ) | (0.4 | ) | (0.5 | ) | |||||
Valuation allowance | 6.3 | 15.6 | — | ||||||||
Tax Reform impact - transition tax and rate change | 10.2 | — | — | ||||||||
Other items, net | 0.9 | 1.6 | 1.2 | ||||||||
Provision (benefit) for income taxes | $1.5 | ($36.5 | ) | ($26.7 | ) | ||||||
Effective income tax rate | (3.7 | )% | 25.7 | % | 37.2 | % |
December 31, | |||||||
2017 | 2016 | ||||||
Deferred tax liabilities: | |||||||
Depreciation | ($103.4 | ) | ($156.8 | ) | |||
Inventory | ($5.4 | ) | ($9.7 | ) | |||
Convertible debt | ($3.5 | ) | ($6.6 | ) | |||
Other, net | ($0.3 | ) | ($0.2 | ) | |||
Deferred tax liabilities subtotal | ($112.6 | ) | ($173.3 | ) | |||
Deferred tax assets: | |||||||
Pension and postretirement benefits | $50.6 | $70.3 | |||||
Other employee benefit accruals | 6.6 | 9.1 | |||||
Tax loss carryforwards | 80.9 | 107.4 | |||||
Foreign tax credit | 0.6 | — | |||||
Intangible assets | 1.4 | 2.5 | |||||
Inventory | 1.8 | 2.9 | |||||
State decoupling | 5.4 | 0.5 | |||||
Other, net | 2.0 | 5.3 | |||||
Deferred tax assets subtotal | $149.3 | $198.0 | |||||
Valuation allowances | (36.6 | ) | (24.4 | ) | |||
Deferred tax assets | 112.7 | 173.6 | |||||
Net deferred tax assets | $0.1 | $0.3 |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Beginning balance, January 1 | $— | $— | $— | ||||||||
Tax positions related to prior years: | |||||||||||
Reductions | — | — | — | ||||||||
Ending balance, December 31 | $— | $— | $— |
|
Beginning balance, January 1, 2016 | $0.8 | ||
Expenses | — | ||
Payments | (0.2 | ) | |
Ending balance, December 31, 2016 | $0.6 | ||
Expenses | 0.2 | ||
Payments | (0.3 | ) | |
Ending balance, December 31, 2017 | $0.5 |
|
Beginning balance, January 1, 2016 | $2.3 | ||
Expenses | 0.3 | ||
Payments | (2.5 | ) | |
Ending balance, December 31, 2016 | $0.1 | ||
Expenses | — | ||
Payments | (0.1 | ) | |
Ending balance, December 31, 2017 | $— |
|
|
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Quarters Ended | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | ||||||||||||
2017 | |||||||||||||||
Net Sales | $341.4 | $339.1 | $339.3 | $309.4 | |||||||||||
Gross Profit | 8.5 | 18.5 | 23.8 | 17.0 | |||||||||||
Net (Loss) Income | (33.9 | ) | (5.9 | ) | 1.3 | (5.3 | ) | ||||||||
Per Share Data: (1) | |||||||||||||||
Basic (loss) earnings per share | ($0.76 | ) | ($0.13 | ) | $0.03 | ($0.12 | ) | ||||||||
Diluted (loss) earnings per share | ($0.76 | ) | ($0.13 | ) | $0.03 | ($0.12 | ) |
Quarters Ended | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | ||||||||||||
2016 | |||||||||||||||
Net Sales | $214.7 | $213.8 | $223.1 | $217.9 | |||||||||||
Gross Profit | 2.7 | 7.5 | 12.3 | 5.4 | |||||||||||
Net Income | (67.0 | ) | (22.2 | ) | (6.6 | ) | (9.7 | ) | |||||||
Per Share Data: (1) | |||||||||||||||
Basic earnings per share | ($1.52 | ) | ($0.50 | ) | ($0.15 | ) | ($0.22 | ) | |||||||
Diluted earnings per share | ($1.52 | ) | ($0.50 | ) | ($0.15 | ) | ($0.22 | ) |
|
Standard | |
2015-11 | Inventory: Simplifying the Measurement of Inventory (Topic 330) |
2016-15 | Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force) |
2016-16 | Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740) |
2017-07 | Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715) |
2016 | 2015 | ||||||||||||||||||
As Reported | Adjustments | Adjusted | As Reported | Adjustments | Adjusted | ||||||||||||||
Cost of products sold | $896.6 | ($55.0 | ) | $841.6 | $1,060.0 | $31.5 | $1,091.5 | ||||||||||||
Selling, general and administrative expenses | $101.5 | ($11.3 | ) | $90.2 | $105.1 | $2.5 | $107.6 | ||||||||||||
Other income (expense), net | ($1.7 | ) | ($66.3 | ) | ($68.0 | ) | ($2.9 | ) | $34.0 | $31.1 |
|
December 31, | |||||||
2017 | 2016 | ||||||
Inventories: | |||||||
Manufacturing supplies | $36.3 | $37.9 | |||||
Raw materials | 31.9 | 16.9 | |||||
Work in process | 137.8 | 85.8 | |||||
Finished products | 82.9 | 76.3 | |||||
Gross inventory | 288.9 | 216.9 | |||||
Allowance for surplus and obsolete inventory | (7.8 | ) | (8.1 | ) | |||
LIFO reserve | (57.1 | ) | (44.6 | ) | |||
Total Inventories, net | $224.0 | $164.2 |
|
2016 | 2015 | ||||||||||||||||||
As Reported | Adjustments | Adjusted | As Reported | Adjustments | Adjusted | ||||||||||||||
Cost of products sold | $896.6 | ($55.0 | ) | $841.6 | $1,060.0 | $31.5 | $1,091.5 | ||||||||||||
Selling, general and administrative expenses | $101.5 | ($11.3 | ) | $90.2 | $105.1 | $2.5 | $107.6 | ||||||||||||
Other income (expense), net | ($1.7 | ) | ($66.3 | ) | ($68.0 | ) | ($2.9 | ) | $34.0 | $31.1 |
Standard | |
2015-11 | Inventory: Simplifying the Measurement of Inventory (Topic 330) |
2016-15 | Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force) |
2016-16 | Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740) |
2017-07 | Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715) |
|
December 31, | |||||||
2017 | 2016 | ||||||
Property, Plant and Equipment, net: | |||||||
Land | $13.4 | $13.3 | |||||
Buildings and improvements | 420.6 | 420.6 | |||||
Machinery and equipment | 1,387.4 | 1,352.0 | |||||
Construction in progress | 30.4 | 63.9 | |||||
Subtotal | 1,851.8 | 1,849.8 | |||||
Less allowances for depreciation | (1,145.1 | ) | (1,107.9 | ) | |||
Property, Plant and Equipment, net | $706.7 | $741.9 |
|
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Intangible Assets Subject to Amortization: | |||||||||||||||||||||||
Customer relationships | $6.3 | $4.1 | $2.2 | $6.3 | $3.7 | $2.6 | |||||||||||||||||
Technology use | 9.0 | 5.9 | 3.1 | 9.0 | 5.2 | 3.8 | |||||||||||||||||
Capitalized software | 59.1 | 44.5 | 14.6 | 58.9 | 40.3 | 18.6 | |||||||||||||||||
Total Intangible Assets | $74.4 | $54.5 | $19.9 | $74.2 | $49.2 | $25.0 |
Year | Amortization Expense | ||
2018 | $5.5 | ||
2019 | $4.4 | ||
2020 | $3.2 | ||
2021 | $2.3 | ||
2022 | $2.0 |
|
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Principal | $86.3 | $86.3 | |||||
Less: Debt issuance costs, net of amortization | (1.6 | ) | (2.1 | ) | |||
Less: Debt discount, net of amortization | (14.6 | ) | (17.8 | ) | |||
Convertible notes, net | $70.1 | $66.4 |
December 31, | |||||||
2017 | 2016 | ||||||
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (1.58% as of December 31, 2017) | $12.2 | $12.2 | |||||
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (1.60% as of December 31, 2017) | 9.5 | 9.5 | |||||
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (1.60% as of December 31, 2017) | 8.5 | 8.5 | |||||
Credit Agreement, due 2019 (LIBOR plus applicable spread) | 65.0 | 40.0 | |||||
Total Other Long-Term Debt | $95.2 | $70.2 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Contractual interest expense | $5.2 | $3.0 | |||||
Amortization of debt issuance costs | 0.5 | 0.2 | |||||
Amortization of debt discount | 3.2 | 1.7 | |||||
Total | $8.9 | $4.9 |
|
Foreign Currency Translation Adjustments | Pension and Postretirement Liability Adjustments | Total | |||||||||
Balance at December 31, 2015 | ($5.0 | ) | ($2.9 | ) | ($7.9 | ) | |||||
Other comprehensive loss before reclassifications, before income tax | (2.0 | ) | (0.9 | ) | (2.9 | ) | |||||
Amounts reclassified from accumulated other comprehensive loss, before income tax | — | 1.7 | 1.7 | ||||||||
Income tax expense | — | (0.3 | ) | (0.3 | ) | ||||||
Net current period other comprehensive (loss) income, net of income taxes | (2.0 | ) | 0.5 | (1.5 | ) | ||||||
Balance as of December 31, 2016 | ($7.0 | ) | ($2.4 | ) | ($9.4 | ) | |||||
Other comprehensive income before reclassifications, before income tax | 1.1 | — | 1.1 | ||||||||
Amounts reclassified from accumulated other comprehensive loss, before income tax | — | 1.5 | 1.5 | ||||||||
Income tax expense | — | (0.8 | ) | (0.8 | ) | ||||||
Net current period other comprehensive income, net of income taxes | 1.1 | 0.7 | 1.8 | ||||||||
Balance at December 31, 2017 | ($5.9 | ) | ($1.7 | ) | ($7.6 | ) |
|
Pension | Postretirement | ||||||||||||
Change in benefit obligation: | 2017 | 2016 | 2017 | 2016 | |||||||||
Benefit obligation at the beginning of year | $1,220.3 | $1,163.5 | $214.2 | $215.3 | |||||||||
Service cost | 18.2 | 15.6 | 1.6 | 1.5 | |||||||||
Interest cost | 49.1 | 52.4 | 8.4 | 9.4 | |||||||||
Actuarial losses | 65.4 | 81.1 | 13.5 | 6.6 | |||||||||
Benefits paid | (78.4 | ) | (79.1 | ) | (21.5 | ) | (19.5 | ) | |||||
Plan amendment | 0.5 | — | — | 0.9 | |||||||||
Foreign currency translation adjustment | 7.0 | (13.2 | ) | — | — | ||||||||
Benefit obligation at the end of year | $1,282.1 | $1,220.3 | $216.2 | $214.2 |
Pension | Postretirement | ||||||||||||
Change in plan assets: | 2017 | 2016 | 2017 | 2016 | |||||||||
Fair value of plan assets at the beginning of year | $1,131.7 | $1,144.3 | $113.9 | $137.9 | |||||||||
Actual return on plan assets | 123.6 | 78.7 | 9.5 | 6.1 | |||||||||
Company contributions / payments | 2.1 | 2.2 | 2.1 | 2.7 | |||||||||
Benefits paid | (78.4 | ) | (79.1 | ) | (21.5 | ) | (19.5 | ) | |||||
Reimbursement from postretirement plan assets | — | — | — | (13.3 | ) | ||||||||
Foreign currency translation adjustment | 7.6 | (14.4 | ) | — | — | ||||||||
Fair value of plan assets at end of year | $1,186.6 | $1,131.7 | $104.0 | $113.9 | |||||||||
Funded status at end of year | ($95.5 | ) | ($88.6 | ) | ($112.2 | ) | ($100.3 | ) |
Pension | Postretirement | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Non-current assets | $14.6 | $6.2 | $— | $— | |||||||||
Current liabilities | (9.0 | ) | (0.6 | ) | (2.5 | ) | (2.4 | ) | |||||
Non-current liabilities | (101.1 | ) | (94.2 | ) | (109.7 | ) | (97.9 | ) | |||||
($95.5 | ) | ($88.6 | ) | ($112.2 | ) | ($100.3 | ) |
Pension | Postretirement | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Unrecognized prior service cost | $1.5 | $1.5 | $1.1 | $2.1 |
Pension | Postretirement | ||||||
Prior service cost | $0.5 | $0.2 |
Pension | Postretirement | ||||||||
Assumptions: | 2017 | 2016 | 2017 | 2016 | |||||
Discount rate | 3.68 | % | 4.17 | % | 3.66 | % | 4.09 | % | |
Future compensation assumption | 2.37 | % | 3.09 | % | n/a | n/a |
Pension | Postretirement | ||||||||
Assumptions: | 2017 | 2016 | 2017 | 2016 | |||||
Discount rate | 4.17 | % | 4.67 | % | 4.09 | % | 4.51 | % | |
Future compensation assumption | 3.09 | % | 3.08 | % | n/a | n/a | |||
Expected long-term return on plan assets | 6.46 | % | 6.46 | % | 5.00 | % | 5.00 | % |
Pension | Postretirement | ||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
Components of net periodic benefit cost: | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |||||||||||||||||
Service cost | $18.2 | $15.6 | $16.8 | $1.6 | $1.5 | $1.7 | |||||||||||||||||
Interest cost | 49.1 | 52.4 | 51.3 | 8.4 | 9.4 | 9.4 | |||||||||||||||||
Expected return on plan assets | (70.7 | ) | (71.1 | ) | (82.8 | ) | (5.2 | ) | (5.8 | ) | (7.1 | ) | |||||||||||
Amortization of prior service cost | 0.5 | 0.6 | 0.6 | 1.0 | 1.1 | 1.1 | |||||||||||||||||
Net remeasurement losses (gains) | 12.5 | 73.4 | 5.7 | 9.3 | 6.3 | (12.2 | ) | ||||||||||||||||
Net Periodic Benefit Cost | $9.6 | $70.9 | ($8.4 | ) | $15.1 | $12.5 | ($7.1 | ) |
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $19.6 | $4.5 | $15.1 | $— | ||||||||
U.S government and agency securities | 240.7 | 234.6 | 6.1 | — | ||||||||
Corporate bonds | 110.0 | — | 110.0 | — | ||||||||
Equity securities | 50.8 | 50.8 | — | — | ||||||||
Mutual fund - fixed income | 35.2 | 35.2 | — | — | ||||||||
Mutual fund - real estate | 16.5 | 16.5 | — | — | ||||||||
Total Assets in the fair value hierarchy | $472.8 | $341.6 | $131.2 | $— | ||||||||
Assets measured at net asset value (1) | 713.8 | — | — | — | ||||||||
Total Assets | $1,186.6 | $341.6 | $131.2 | $— |
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $45.2 | $4.6 | $40.6 | $— | ||||||||
U.S government and agency securities | 220.3 | 214.2 | 6.1 | — | ||||||||
Corporate bonds | 105.2 | — | 105.2 | — | ||||||||
Equity securities | 52.2 | 52.2 | — | — | ||||||||
Mutual fund - equity | 15.3 | — | 15.3 | — | ||||||||
Mutual fund - real estate | 24.8 | 24.8 | — | — | ||||||||
Total Assets in the fair value hierarchy | $463.0 | $295.8 | $167.2 | $— | ||||||||
Assets measured at net asset value (1) | 668.7 | — | — | — | ||||||||
Total Assets | $1,131.7 | $295.8 | $167.2 | $— |
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $2.2 | $2.2 | $— | $— | ||||||||
Mutual fund - fixed income | 11.4 | 11.4 | — | — | ||||||||
Total Assets in the fair value hierarchy | $13.6 | $13.6 | $— | $— | ||||||||
Assets measured at net asset value (1) | 90.4 | — | — | — | ||||||||
Total Assets | $104.0 | $13.6 | $— | $— |
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $1.4 | $1.4 | $— | $— | ||||||||
Total Assets in the fair value hierarchy | $1.4 | $1.4 | $— | $— | ||||||||
Assets measured at net asset value (1) | 112.5 | — | — | — | ||||||||
Total Assets | $113.9 | $1.4 | $— | $— |
Postretirement | |||||||||||
Benefit Payments: | Pension | Gross | Medicare Part D Subsidy Receipts | ||||||||
2018 | $87.2 | $20.1 | $0.8 | ||||||||
2019 | 78.0 | 19.5 | 0.8 | ||||||||
2020 | 78.5 | 18.7 | 0.9 | ||||||||
2021 | 77.3 | 17.9 | 0.9 | ||||||||
2022 | 81.7 | 17.2 | 1.0 | ||||||||
2023-2027 | 369.9 | 75.5 | 5.3 |
|
2017 | 2016 | 2015 | |||
Weighted-average fair value per option | $7.68 | $3.32 | $11.21 | ||
Risk-free interest rate | 2.21% | 1.34% | 1.47% | ||
Dividend yield | —% | —% | 1.93% | ||
Expected stock volatility | 43.23% | 41.71% | 47.10% | ||
Expected life - years | 6 | 6 | 6 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (millions) | ||||
Outstanding as of December 31, 2016 | 2,219,397 | $22.64 | |||||
Granted | 353,808 | $17.46 | |||||
Exercised | (38,592 | ) | $8.94 | ||||
Canceled, forfeited or expired | (196,258 | ) | $23.34 | ||||
Outstanding as of December 31, 2017 | 2,338,355 | $22.03 | 6.00 | $4.9 | |||
Options expected to vest | 944,403 | $15.00 | 8.25 | $3.5 | |||
Options exercisable | 1,393,952 | $26.80 | 4.47 | $1.4 |
Number of Shares | Weighted Average Grant Date Fair Value | ||||
Outstanding as of December 31, 2016 | 696,153 | $17.57 | |||
Granted | 323,132 | $16.92 | |||
Vested | (286,732 | ) | $23.97 | ||
Canceled, forfeited or expired | (18,237 | ) | $24.53 | ||
Outstanding as of December 31, 2017 | 714,316 | $14.53 |
|
Years Ended December 31, | |||||||
2017 | 2016 | ||||||
Net Sales: | |||||||
United States | $1,207.7 | $763.4 | |||||
Foreign | 121.5 | 106.1 | |||||
$1,329.2 | $869.5 |
December 31, | ||||||
2017 | 2016 | |||||
Long-lived Assets, net: | ||||||
United States | $726.4 | $766.6 | ||||
Foreign | 0.2 | 0.3 | ||||
$726.6 | $766.9 |
|
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
United States | ($49.5 | ) | ($136.2 | ) | ($82.2 | ) | |||||
Non-United States | 7.2 | (5.8 | ) | 10.5 | |||||||
Loss income from operations before income taxes | ($42.3 | ) | ($142.0 | ) | ($71.7 | ) |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current: | |||||||||||
Federal | $1.1 | $— | $— | ||||||||
State and local | 0.1 | 0.1 | (1.2 | ) | |||||||
Foreign | 0.6 | 0.2 | 0.1 | ||||||||
$1.8 | $0.3 | ($1.1 | ) | ||||||||
Deferred: | |||||||||||
Federal | ($0.4 | ) | ($32.9 | ) | ($28.7 | ) | |||||
State and local | — | (3.6 | ) | 0.2 | |||||||
Foreign | 0.1 | (0.3 | ) | 2.9 | |||||||
(0.3 | ) | (36.8 | ) | (25.6 | ) | ||||||
U.S. and foreign tax expense (benefit) on loss from operations before income taxes | $1.5 | ($36.5 | ) | ($26.7 | ) |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Tax at the U.S. federal statutory rate | ($14.8 | ) | ($49.7 | ) | ($25.2 | ) | |||||
Adjustments: | |||||||||||
State and local income taxes, net of federal tax benefit | (0.7 | ) | (3.5 | ) | (2.2 | ) | |||||
Foreign earnings taxed at different rates | (0.2 | ) | (0.1 | ) | — | ||||||
U.S. research tax credit | (0.2 | ) | (0.4 | ) | (0.5 | ) | |||||
Valuation allowance | 6.3 | 15.6 | — | ||||||||
Tax Reform impact - transition tax and rate change | 10.2 | — | — | ||||||||
Other items, net | 0.9 | 1.6 | 1.2 | ||||||||
Provision (benefit) for income taxes | $1.5 | ($36.5 | ) | ($26.7 | ) | ||||||
Effective income tax rate | (3.7 | )% | 25.7 | % | 37.2 | % |
December 31, | |||||||
2017 | 2016 | ||||||
Deferred tax liabilities: | |||||||
Depreciation | ($103.4 | ) | ($156.8 | ) | |||
Inventory | ($5.4 | ) | ($9.7 | ) | |||
Convertible debt | ($3.5 | ) | ($6.6 | ) | |||
Other, net | ($0.3 | ) | ($0.2 | ) | |||
Deferred tax liabilities subtotal | ($112.6 | ) | ($173.3 | ) | |||
Deferred tax assets: | |||||||
Pension and postretirement benefits | $50.6 | $70.3 | |||||
Other employee benefit accruals | 6.6 | 9.1 | |||||
Tax loss carryforwards | 80.9 | 107.4 | |||||
Foreign tax credit | 0.6 | — | |||||
Intangible assets | 1.4 | 2.5 | |||||
Inventory | 1.8 | 2.9 | |||||
State decoupling | 5.4 | 0.5 | |||||
Other, net | 2.0 | 5.3 | |||||
Deferred tax assets subtotal | $149.3 | $198.0 | |||||
Valuation allowances | (36.6 | ) | (24.4 | ) | |||
Deferred tax assets | 112.7 | 173.6 | |||||
Net deferred tax assets | $0.1 | $0.3 |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Beginning balance, January 1 | $— | $— | $— | ||||||||
Tax positions related to prior years: | |||||||||||
Reductions | — | — | — | ||||||||
Ending balance, December 31 | $— | $— | $— |
|
Beginning balance, January 1, 2016 | $0.8 | ||
Expenses | — | ||
Payments | (0.2 | ) | |
Ending balance, December 31, 2016 | $0.6 | ||
Expenses | 0.2 | ||
Payments | (0.3 | ) | |
Ending balance, December 31, 2017 | $0.5 |
|
Beginning balance, January 1, 2016 | $2.3 | ||
Expenses | 0.3 | ||
Payments | (2.5 | ) | |
Ending balance, December 31, 2016 | $0.1 | ||
Expenses | — | ||
Payments | (0.1 | ) | |
Ending balance, December 31, 2017 | $— |
|
Quarters Ended | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | ||||||||||||
2017 | |||||||||||||||
Net Sales | $341.4 | $339.1 | $339.3 | $309.4 | |||||||||||
Gross Profit | 8.5 | 18.5 | 23.8 | 17.0 | |||||||||||
Net (Loss) Income | (33.9 | ) | (5.9 | ) | 1.3 | (5.3 | ) | ||||||||
Per Share Data: (1) | |||||||||||||||
Basic (loss) earnings per share | ($0.76 | ) | ($0.13 | ) | $0.03 | ($0.12 | ) | ||||||||
Diluted (loss) earnings per share | ($0.76 | ) | ($0.13 | ) | $0.03 | ($0.12 | ) |
Quarters Ended | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | ||||||||||||
2016 | |||||||||||||||
Net Sales | $214.7 | $213.8 | $223.1 | $217.9 | |||||||||||
Gross Profit | 2.7 | 7.5 | 12.3 | 5.4 | |||||||||||
Net Income | (67.0 | ) | (22.2 | ) | (6.6 | ) | (9.7 | ) | |||||||
Per Share Data: (1) | |||||||||||||||
Basic earnings per share | ($1.52 | ) | ($0.50 | ) | ($0.15 | ) | ($0.22 | ) | |||||||
Diluted earnings per share | ($1.52 | ) | ($0.50 | ) | ($0.15 | ) | ($0.22 | ) |
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