|
Large Accelerated Filer
|
[X]
|
|
Accelerated Filer
|
[ ]
|
Non-Accelerated Filer
|
[ ]
|
|
Smaller Reporting Company
|
[ ]
|
|
|
|
Emerging growth company
|
[ ]
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
|
|
|
|
Page
|
Part I
|
|
|
|
|
|
|
Consolidated Balance Sheets - September 30, 2017 (Unaudited) and December 31, 2016
|
|
|
Consolidated Statements of Operations (Unaudited) - Three and Nine Months Ended September 30, 2017 and 2016
|
|
|
Consolidated Statements of Comprehensive Income (Unaudited) - Three and Nine Months Ended September 30, 2017 and 2016
|
|
|
Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2017 and 2016
|
|
|
||
|
||
|
||
|
||
Part II
|
|
|
|
||
|
||
|
||
|
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Balance Sheets
|
|||||||
(Amounts in millions, except shares and par values)
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
60.7
|
|
|
$
|
50.2
|
|
Accounts and notes receivable, net of allowances of $6.9 and $6.7 in 2017 and 2016, respectively
|
598.1
|
|
|
469.8
|
|
||
Inventories, net
|
530.9
|
|
|
418.5
|
|
||
Other assets
|
80.9
|
|
|
67.4
|
|
||
Total current assets
|
1,270.6
|
|
|
1,005.9
|
|
||
Property, plant and equipment, net of accumulated depreciation of $767.8 and $717.2 in 2017 and 2016, respectively
|
374.6
|
|
|
361.4
|
|
||
Goodwill
|
200.6
|
|
|
195.1
|
|
||
Deferred income taxes
|
143.3
|
|
|
136.7
|
|
||
Other assets, net
|
66.6
|
|
|
61.2
|
|
||
Total assets
|
$
|
2,055.7
|
|
|
$
|
1,760.3
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
326.0
|
|
|
$
|
52.4
|
|
Current maturities of long-term debt
|
22.4
|
|
|
200.1
|
|
||
Accounts payable
|
394.5
|
|
|
361.2
|
|
||
Accrued expenses
|
278.4
|
|
|
265.9
|
|
||
Income taxes payable
|
2.4
|
|
|
9.0
|
|
||
Total current liabilities
|
1,023.7
|
|
|
888.6
|
|
||
Long-term debt
|
775.7
|
|
|
615.7
|
|
||
Post-retirement benefits, other than pensions
|
1.9
|
|
|
2.8
|
|
||
Pensions
|
90.2
|
|
|
87.5
|
|
||
Other liabilities
|
131.7
|
|
|
127.7
|
|
||
Total liabilities
|
2,023.2
|
|
|
1,722.3
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $.01 par value, 25,000,000 shares authorized, no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value, 200,000,000 shares authorized, 87,170,197 shares issued
|
0.9
|
|
|
0.9
|
|
||
Additional paid-in capital
|
1,048.0
|
|
|
1,046.2
|
|
||
Retained earnings
|
1,554.4
|
|
|
1,353.0
|
|
||
Accumulated other comprehensive loss
|
(157.0
|
)
|
|
(195.1
|
)
|
||
Treasury stock, at cost, 45,401,841 shares and 44,195,250 shares as of September 30, 2017 and December 31, 2016, respectively
|
(2,414.2
|
)
|
|
(2,167.4
|
)
|
||
Noncontrolling interests
|
0.4
|
|
|
0.4
|
|
||
Total stockholders’ equity
|
32.5
|
|
|
38.0
|
|
||
Total liabilities and stockholders' equity
|
$
|
2,055.7
|
|
|
$
|
1,760.3
|
|
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
|
|||||||||||||||
(Amounts in millions, except per share data)
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net sales
|
$
|
1,052.3
|
|
|
$
|
1,010.0
|
|
|
$
|
2,947.9
|
|
|
$
|
2,744.4
|
|
Cost of goods sold
|
738.6
|
|
|
699.7
|
|
|
2,082.4
|
|
|
1,935.5
|
|
||||
Gross profit
|
313.7
|
|
|
310.3
|
|
|
865.5
|
|
|
808.9
|
|
||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
158.7
|
|
|
156.5
|
|
|
479.6
|
|
|
456.2
|
|
||||
Losses and other expenses, net
|
3.0
|
|
|
0.7
|
|
|
8.5
|
|
|
5.5
|
|
||||
Restructuring charges
|
1.9
|
|
|
0.6
|
|
|
2.1
|
|
|
1.2
|
|
||||
Income from equity method investments
|
(4.5
|
)
|
|
(4.4
|
)
|
|
(15.5
|
)
|
|
(15.3
|
)
|
||||
Operating income
|
154.6
|
|
|
156.9
|
|
|
390.8
|
|
|
361.3
|
|
||||
Interest expense, net
|
7.6
|
|
|
7.0
|
|
|
23.3
|
|
|
19.6
|
|
||||
Other income, net
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||
Income from continuing operations before income taxes
|
147.0
|
|
|
149.9
|
|
|
367.7
|
|
|
341.9
|
|
||||
Provision for income taxes
|
43.0
|
|
|
48.2
|
|
|
103.8
|
|
|
104.0
|
|
||||
Income from continuing operations
|
104.0
|
|
|
101.7
|
|
|
263.9
|
|
|
237.9
|
|
||||
Discontinued Operations:
|
|
|
|
|
|
|
|
||||||||
Loss from discontinued operations before income taxes
|
(0.8
|
)
|
|
—
|
|
|
(2.3
|
)
|
|
(0.9
|
)
|
||||
Benefit from income taxes
|
(0.3
|
)
|
|
—
|
|
|
(0.9
|
)
|
|
(0.3
|
)
|
||||
Loss from discontinued operations
|
(0.5
|
)
|
|
—
|
|
|
(1.4
|
)
|
|
(0.6
|
)
|
||||
Net income
|
$
|
103.5
|
|
|
$
|
101.7
|
|
|
$
|
262.5
|
|
|
$
|
237.3
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share – Basic:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
2.48
|
|
|
$
|
2.35
|
|
|
$
|
6.23
|
|
|
$
|
5.46
|
|
Loss from discontinued operations
|
(0.01
|
)
|
|
—
|
|
|
(0.03
|
)
|
|
(0.01
|
)
|
||||
Net income
|
$
|
2.47
|
|
|
$
|
2.35
|
|
|
$
|
6.20
|
|
|
$
|
5.45
|
|
Earnings per share – Diluted:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
2.45
|
|
|
$
|
2.33
|
|
|
$
|
6.15
|
|
|
$
|
5.39
|
|
Loss from discontinued operations
|
(0.01
|
)
|
|
—
|
|
|
(0.03
|
)
|
|
(0.01
|
)
|
||||
Net income
|
$
|
2.44
|
|
|
$
|
2.33
|
|
|
$
|
6.12
|
|
|
$
|
5.38
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Number of Shares Outstanding - Basic
|
41.9
|
|
|
43.2
|
|
|
42.3
|
|
|
43.6
|
|
||||
Weighted Average Number of Shares Outstanding - Diluted
|
42.4
|
|
|
43.7
|
|
|
42.9
|
|
|
44.2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per share
|
$
|
0.51
|
|
|
$
|
0.43
|
|
|
$
|
1.45
|
|
|
$
|
1.22
|
|
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
|
|||||||||||||||
(Amounts in millions)
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
103.5
|
|
|
$
|
101.7
|
|
|
$
|
262.5
|
|
|
$
|
237.3
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
10.2
|
|
|
(3.1
|
)
|
|
39.4
|
|
|
11.3
|
|
||||
Net change in pension and post-retirement liabilities
|
(2.7
|
)
|
|
(0.4
|
)
|
|
(8.1
|
)
|
|
(4.5
|
)
|
||||
Reclassification of pension and post-retirement benefit losses into earnings
|
1.8
|
|
|
1.6
|
|
|
5.5
|
|
|
4.8
|
|
||||
Change in fair value of available-for-sale marketable equity securities
|
0.1
|
|
|
(1.2
|
)
|
|
0.2
|
|
|
(1.8
|
)
|
||||
Net change in fair value of cash flow hedges
|
3.4
|
|
|
2.0
|
|
|
10.5
|
|
|
1.4
|
|
||||
Reclassification of cash flow hedge (gains) losses into earnings
|
(3.5
|
)
|
|
2.4
|
|
|
(9.4
|
)
|
|
10.6
|
|
||||
Other comprehensive income before income taxes
|
9.3
|
|
|
1.3
|
|
|
38.1
|
|
|
21.8
|
|
||||
Income tax benefit (expense)
|
0.1
|
|
|
(1.7
|
)
|
|
—
|
|
|
(4.1
|
)
|
||||
Other comprehensive income, net of tax
|
9.4
|
|
|
(0.4
|
)
|
|
38.1
|
|
|
17.7
|
|
||||
Comprehensive income
|
$
|
112.9
|
|
|
$
|
101.3
|
|
|
$
|
300.6
|
|
|
$
|
255.0
|
|
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
|
|||||||
(Amounts in millions)
|
For the Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
262.5
|
|
|
$
|
237.3
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Income from equity method investments
|
(15.5
|
)
|
|
(15.3
|
)
|
||
Dividends from affiliates
|
7.8
|
|
|
3.9
|
|
||
Restructuring charges (gains), net of cash paid
|
1.0
|
|
|
(0.8
|
)
|
||
Provision for bad debts
|
3.2
|
|
|
3.4
|
|
||
Unrealized gains on derivative contracts
|
(0.7
|
)
|
|
(2.2
|
)
|
||
Stock-based compensation expense
|
18.8
|
|
|
24.8
|
|
||
Depreciation and amortization
|
48.1
|
|
|
43.4
|
|
||
Deferred income taxes
|
(3.9
|
)
|
|
(2.6
|
)
|
||
Pension expense
|
4.1
|
|
|
4.7
|
|
||
Pension contributions
|
(1.4
|
)
|
|
(52.5
|
)
|
||
Other items, net
|
1.0
|
|
|
0.4
|
|
||
Changes in assets and liabilities, net of effects of divestitures:
|
|
|
|
||||
Accounts and notes receivable
|
(118.3
|
)
|
|
(146.2
|
)
|
||
Inventories
|
(102.6
|
)
|
|
(49.9
|
)
|
||
Other current assets
|
(7.3
|
)
|
|
(6.6
|
)
|
||
Accounts payable
|
31.0
|
|
|
56.4
|
|
||
Accrued expenses
|
7.6
|
|
|
40.7
|
|
||
Income taxes payable and receivable
|
(9.9
|
)
|
|
(15.0
|
)
|
||
Other
|
3.5
|
|
|
3.0
|
|
||
Net cash provided by operating activities
|
129.0
|
|
|
126.9
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from the disposal of property, plant and equipment
|
0.2
|
|
|
—
|
|
||
Purchases of property, plant and equipment
|
(60.5
|
)
|
|
(59.4
|
)
|
||
Net cash used in investing activities
|
(60.3
|
)
|
|
(59.4
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Short-term borrowings, net
|
(1.4
|
)
|
|
(2.1
|
)
|
||
Asset securitization borrowings
|
275.0
|
|
|
145.0
|
|
||
Asset securitization payments
|
—
|
|
|
(20.0
|
)
|
||
Long-term debt payments
|
(200.8
|
)
|
|
(30.9
|
)
|
||
Borrowings from credit facility
|
1,883.0
|
|
|
1,715.0
|
|
||
Payments on credit facility
|
(1,701.0
|
)
|
|
(1,493.0
|
)
|
||
Payments of deferred financing costs
|
—
|
|
|
(0.9
|
)
|
||
Proceeds from employee stock purchases
|
2.3
|
|
|
1.9
|
|
||
Repurchases of common stock
|
(250.0
|
)
|
|
(300.0
|
)
|
||
Repurchases of common stock to satisfy employee withholding tax obligations
|
(16.0
|
)
|
|
(26.3
|
)
|
||
Cash dividends paid
|
(58.4
|
)
|
|
(50.5
|
)
|
||
Net cash used in financing activities
|
(67.3
|
)
|
|
(61.8
|
)
|
||
Increase in cash and cash equivalents
|
1.4
|
|
|
5.7
|
|
||
Effect of exchange rates on cash and cash equivalents
|
9.1
|
|
|
3.2
|
|
||
Cash and cash equivalents, beginning of period
|
50.2
|
|
|
38.9
|
|
||
Cash and cash equivalents, end of period
|
$
|
60.7
|
|
|
$
|
47.8
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
22.5
|
|
|
$
|
17.0
|
|
Income taxes paid (net of refunds)
|
$
|
115.5
|
|
|
$
|
120.9
|
|
•
|
We recognized discrete tax benefits of
$1.5 million
and
$9.6 million
in the income taxes line item of our consolidated statements of operations for the three and nine months ended September 30, 2017 respectively, related to excess tax benefits upon vesting or settlement in that period.
|
•
|
We elected to adopt the cash flow presentation of the excess tax benefits retrospectively where these benefits are classified along with other income tax cash flows as operating cash flows.
|
•
|
We have elected to continue to estimate the number of stock-based awards expected to vest, rather than electing to account for forfeitures as they occur to determine the amount of compensation cost to be recognized in each period.
|
•
|
We excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the three and nine months ended September 30, 2017.
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||
Finished goods
|
$
|
369.1
|
|
|
$
|
287.2
|
|
Work in process
|
8.6
|
|
|
5.1
|
|
||
Raw materials and parts
|
209.4
|
|
|
183.4
|
|
||
Subtotal
|
587.1
|
|
|
475.7
|
|
||
Excess of current cost over last-in, first-out cost
|
(56.2
|
)
|
|
(57.2
|
)
|
||
Total inventories, net
|
$
|
530.9
|
|
|
$
|
418.5
|
|
|
Balance at December 31, 2016
|
|
Changes in foreign currency translation rates
|
|
Balance at September 30, 2017
|
||||||
Residential Heating & Cooling
|
$
|
26.1
|
|
|
$
|
—
|
|
|
$
|
26.1
|
|
Commercial Heating & Cooling
|
60.1
|
|
|
1.8
|
|
|
61.9
|
|
|||
Refrigeration
|
108.9
|
|
|
3.7
|
|
|
112.6
|
|
|||
Total Goodwill
|
$
|
195.1
|
|
|
$
|
5.5
|
|
|
$
|
200.6
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||
Unrealized (gains) losses on unsettled contracts
|
$
|
(9.9
|
)
|
|
$
|
(8.9
|
)
|
Income tax expense
|
3.6
|
|
|
3.3
|
|
||
Gains included in AOCL, net of tax
(1)
|
$
|
(6.3
|
)
|
|
$
|
(5.6
|
)
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||
Copper
|
18.9
|
|
|
30.4
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||
Notional Amounts (in local currency):
|
|
|
|
||
Mexican Peso
|
69.8
|
|
|
310.1
|
|
Canadian Dollar
|
83.1
|
|
|
24.9
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||
Copper
|
1.8
|
|
|
2.4
|
|
Aluminum
|
1.9
|
|
|
2.6
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||
Notional Amounts (in local currency):
|
|
|
|
||
Chinese Yuan
|
52.3
|
|
|
10.5
|
|
Mexican Peso
|
35.7
|
|
|
64.5
|
|
Euro
|
60.7
|
|
|
46.9
|
|
Canadian Dollar
|
31.0
|
|
|
—
|
|
British Pound
|
4.9
|
|
|
1.3
|
|
Singapore Dollar
|
6.5
|
|
|
—
|
|
Australian Dollar
|
40.0
|
|
|
—
|
|
New Zealand Dollar
|
6.5
|
|
|
—
|
|
Indian Rupee
|
169.4
|
|
|
584.6
|
|
|
Fair Values of Derivative Instruments
(1)
|
||||||||||||||
|
Derivatives Designated as Hedging Instruments
|
|
Derivatives Not Designated as Hedging Instruments
|
||||||||||||
|
As of September 30, 2017
|
|
As of December 31, 2016
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||||||
Current Assets:
|
|
|
|
|
|
|
|
||||||||
Other Assets
|
|
|
|
|
|
|
|
||||||||
Commodity futures contracts
|
$
|
9.7
|
|
|
$
|
8.7
|
|
|
$
|
1.0
|
|
|
$
|
0.7
|
|
Foreign currency forward contracts
|
0.4
|
|
|
0.5
|
|
|
0.2
|
|
|
0.2
|
|
||||
Non-Current Assets:
|
|
|
|
|
|
|
|
||||||||
Other Assets, net
|
|
|
|
|
|
|
|
||||||||
Commodity futures contracts
|
0.3
|
|
|
1.9
|
|
|
—
|
|
|
0.2
|
|
||||
Total Assets
|
$
|
10.4
|
|
|
$
|
11.1
|
|
|
$
|
1.2
|
|
|
$
|
1.1
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accrued Expenses
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
0.4
|
|
|
$
|
0.8
|
|
|
$
|
1.5
|
|
|
$
|
3.2
|
|
Total Liabilities
|
$
|
0.4
|
|
|
$
|
0.8
|
|
|
$
|
1.5
|
|
|
$
|
3.2
|
|
Derivatives Not Designated as Hedging Instruments
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Amount of (Gain)/Loss Recognized in Net Income:
|
|
|
|
|
|
|
|
|
||||||||
Commodity futures contracts
(2)
|
|
$
|
(0.2
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
(0.2
|
)
|
Foreign currency forward contracts
(2)
|
|
(0.4
|
)
|
|
0.4
|
|
|
(4.3
|
)
|
|
0.3
|
|
||||
|
|
$
|
(0.6
|
)
|
|
$
|
0.1
|
|
|
$
|
(5.6
|
)
|
|
$
|
0.1
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||
Accrued expenses
|
$
|
34.9
|
|
|
$
|
30.0
|
|
Other liabilities
|
72.7
|
|
|
71.1
|
|
||
Total warranty liability
|
$
|
107.6
|
|
|
$
|
101.1
|
|
Total warranty liability as of December 31, 2016
|
$
|
101.1
|
|
Warranty claims paid
|
(21.6
|
)
|
|
Changes resulting from issuance of new warranties
|
32.2
|
|
|
Changes in estimates associated with pre-existing liabilities
|
(4.7
|
)
|
|
Changes in foreign currency translation rates and other
|
0.6
|
|
|
Total warranty liability as of September 30, 2017
|
$
|
107.6
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||
Short-Term Debt:
|
|
|
|
||||
Asset Securitization Program
|
$
|
325.0
|
|
|
$
|
50.0
|
|
Foreign obligations
|
1.0
|
|
|
2.4
|
|
||
Total short-term debt
|
$
|
326.0
|
|
|
$
|
52.4
|
|
Current maturities of long-term debt:
|
|
|
|
||||
Capital lease obligations
|
$
|
0.5
|
|
|
$
|
0.8
|
|
Domestic credit facility
|
22.5
|
|
|
—
|
|
||
Senior unsecured notes
|
—
|
|
|
200.0
|
|
||
Debt issuance costs
|
(0.6
|
)
|
|
(0.7
|
)
|
||
Total current maturities of long-term debt
|
$
|
22.4
|
|
|
$
|
200.1
|
|
Long-Term Debt:
|
|
|
|
||||
Capital lease obligations
|
$
|
14.7
|
|
|
$
|
15.0
|
|
Domestic credit facility
|
415.5
|
|
|
256.0
|
|
||
Senior unsecured notes
|
350.0
|
|
|
350.0
|
|
||
Debt issuance costs
|
(4.5
|
)
|
|
(5.3
|
)
|
||
Total long-term debt
|
$
|
775.7
|
|
|
$
|
615.7
|
|
Total debt
|
$
|
1,124.1
|
|
|
$
|
868.2
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||
Eligible amount available under the ASP on qualified accounts receivable
|
$
|
325.0
|
|
|
$
|
250.0
|
|
Less: Beneficial interest sold
|
325.0
|
|
|
50.0
|
|
||
Remaining amount available
|
$
|
—
|
|
|
$
|
200.0
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||
Weighted average borrowing rate
|
2.47
|
%
|
|
2.00
|
%
|
Consolidated Indebtedness to Adjusted EBITDA Ratio no greater than
|
3.5 : 1.0
|
Cash Flow to Net Interest Expense Ratio no less than
|
3.0 : 1.0
|
•
|
We fail to pay any principal or interest when due on any other indebtedness or receivables securitization of at least
$75.0 million
; or
|
•
|
We are in default in the performance of, or compliance with any term of any other indebtedness or receivables securitization in an aggregate principal amount of at least
$75.0 million
or any other condition exists which would give the holders the right to declare such indebtedness due and payable prior to its stated maturity.
|
|
For the Three Months Ended September 30,
|
||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
Service cost
|
$
|
1.3
|
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
3.2
|
|
|
3.8
|
|
|
—
|
|
|
—
|
|
||||
Expected return on plan assets
|
(5.3
|
)
|
|
(5.4
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost
|
—
|
|
|
0.1
|
|
|
(0.6
|
)
|
|
(0.8
|
)
|
||||
Recognized actuarial loss
|
2.0
|
|
|
1.9
|
|
|
0.4
|
|
|
0.4
|
|
||||
Settlements and curtailments
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
||||
Net periodic benefit cost
(1)
|
$
|
1.2
|
|
|
$
|
1.7
|
|
|
$
|
(0.2
|
)
|
|
$
|
(0.4
|
)
|
|
For the Nine Months Ended September 30,
|
||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
Service cost
|
$
|
3.8
|
|
|
$
|
3.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
9.5
|
|
|
11.5
|
|
|
—
|
|
|
0.1
|
|
||||
Expected return on plan assets
|
(16.0
|
)
|
|
(16.2
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost
|
0.1
|
|
|
0.2
|
|
|
(1.8
|
)
|
|
(2.3
|
)
|
||||
Recognized actuarial loss
|
6.1
|
|
|
5.7
|
|
|
1.1
|
|
|
1.1
|
|
||||
Settlements and curtailments
|
0.6
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
||||
Net periodic benefit cost
(1)
|
$
|
4.1
|
|
|
$
|
4.7
|
|
|
$
|
(0.7
|
)
|
|
$
|
(1.1
|
)
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Stock-based compensation expense
(1)
|
$
|
6.3
|
|
|
$
|
9.9
|
|
|
$
|
18.8
|
|
|
$
|
24.8
|
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
|
Affected Line Item(s) in the Consolidated Statements of Operations
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|||||||||
Gains/(Losses) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity futures contracts
|
|
$
|
3.5
|
|
|
$
|
(2.4
|
)
|
|
$
|
9.4
|
|
|
$
|
(10.6
|
)
|
|
Cost of goods sold
|
Income tax (expense)/benefit
|
|
(1.3
|
)
|
|
0.8
|
|
|
(3.4
|
)
|
|
3.7
|
|
|
Provision for income taxes
|
||||
Net of tax
|
|
$
|
2.2
|
|
|
$
|
(1.6
|
)
|
|
$
|
6.0
|
|
|
$
|
(6.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Defined Benefit Plan items:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pension and post-retirement benefit costs
|
|
$
|
(1.8
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
(5.5
|
)
|
|
$
|
(4.8
|
)
|
|
Cost of goods sold; Selling, general and administrative expenses
|
Income tax benefit
|
|
0.7
|
|
|
0.6
|
|
|
2.0
|
|
|
1.7
|
|
|
Provision for income taxes
|
||||
Net of tax
|
|
$
|
(1.1
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
(3.5
|
)
|
|
$
|
(3.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total reclassifications from AOCL
|
|
$
|
1.1
|
|
|
$
|
(2.6
|
)
|
|
$
|
2.5
|
|
|
$
|
(10.0
|
)
|
|
|
|
|
Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains on Available-for-Sale Securities
|
|
Defined Benefit Pension Plan Items
|
|
Foreign Currency Translation Adjustments
|
|
Total AOCL
|
||||||||||
Balance as of December 31, 2016
|
|
$
|
5.6
|
|
|
$
|
2.3
|
|
|
$
|
(130.0
|
)
|
|
$
|
(73.0
|
)
|
|
$
|
(195.1
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
6.7
|
|
|
0.2
|
|
|
(5.7
|
)
|
|
39.4
|
|
|
40.6
|
|
|||||
Amounts reclassified from AOCL
|
|
(6.0
|
)
|
|
—
|
|
|
3.5
|
|
|
—
|
|
|
(2.5
|
)
|
|||||
Net other comprehensive income (loss)
|
|
0.7
|
|
|
0.2
|
|
|
(2.2
|
)
|
|
39.4
|
|
|
38.1
|
|
|||||
Balance as of September 30, 2017
|
|
$
|
6.3
|
|
|
$
|
2.5
|
|
|
$
|
(132.2
|
)
|
|
$
|
(33.6
|
)
|
|
$
|
(157.0
|
)
|
|
Charges Incurred in 2017
|
|
Charges Incurred to Date
|
|
Total Charges Expected to be Incurred
|
||||||
Severance and related
expense
|
$
|
1.3
|
|
|
$
|
10.6
|
|
|
$
|
11.0
|
|
Asset write-offs and accelerated depreciation
|
0.7
|
|
|
3.1
|
|
|
3.1
|
|
|||
Lease termination
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|||
Other
|
0.1
|
|
|
3.8
|
|
|
4.1
|
|
|||
Total restructuring charges
|
$
|
2.1
|
|
|
$
|
17.7
|
|
|
$
|
18.4
|
|
|
Charges Incurred in 2017
|
|
Charges Incurred to Date
|
|
Total Charges Expected to be Incurred
|
||||||
Residential Heating & Cooling
|
$
|
0.5
|
|
|
$
|
1.4
|
|
|
$
|
1.6
|
|
Commercial Heating & Cooling
|
0.7
|
|
|
1.8
|
|
|
1.9
|
|
|||
Refrigeration
|
0.4
|
|
|
12.3
|
|
|
12.3
|
|
|||
Corporate & Other
|
0.5
|
|
|
2.2
|
|
|
2.6
|
|
|||
Total restructuring charges
|
$
|
2.1
|
|
|
$
|
17.7
|
|
|
$
|
18.4
|
|
|
Balance as of
December 31, 2016 |
|
Included in
Earnings |
|
Cash
Utilization |
|
Non-Cash Utilization and Other
|
|
Balance as of September 30, 2017
|
||||||||||
Severance and related expense
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
(0.9
|
)
|
|
$
|
—
|
|
|
$
|
0.4
|
|
Asset write-offs and accelerated depreciation
|
—
|
|
|
0.7
|
|
|
(0.1
|
)
|
|
(0.6
|
)
|
|
—
|
|
|||||
Lease termination
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||||
Total restructuring accruals
|
$
|
—
|
|
|
$
|
2.1
|
|
|
$
|
(1.1
|
)
|
|
$
|
(0.6
|
)
|
|
$
|
0.4
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
103.5
|
|
|
$
|
101.7
|
|
|
$
|
262.5
|
|
|
$
|
237.3
|
|
Add: Loss from discontinued operations
|
0.5
|
|
|
—
|
|
|
1.4
|
|
|
0.6
|
|
||||
Income from continuing operations
|
$
|
104.0
|
|
|
$
|
101.7
|
|
|
$
|
263.9
|
|
|
$
|
237.9
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding – basic
|
41.9
|
|
|
43.2
|
|
|
42.3
|
|
|
43.6
|
|
||||
Add: Potential effect of dilutive securities attributable to stock-based payments
|
0.5
|
|
|
0.5
|
|
|
0.6
|
|
|
0.6
|
|
||||
Weighted-average shares outstanding – diluted
|
42.4
|
|
|
43.7
|
|
|
42.9
|
|
|
44.2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share – Basic:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
2.48
|
|
|
$
|
2.35
|
|
|
$
|
6.23
|
|
|
$
|
5.46
|
|
Loss from discontinued operations
|
(0.01
|
)
|
|
—
|
|
|
(0.03
|
)
|
|
(0.01
|
)
|
||||
Net income
|
$
|
2.47
|
|
|
$
|
2.35
|
|
|
$
|
6.20
|
|
|
$
|
5.45
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share – Diluted:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
2.45
|
|
|
$
|
2.33
|
|
|
$
|
6.15
|
|
|
$
|
5.39
|
|
Loss from discontinued operations
|
(0.01
|
)
|
|
—
|
|
|
(0.03
|
)
|
|
(0.01
|
)
|
||||
Net income
|
$
|
2.44
|
|
|
$
|
2.33
|
|
|
$
|
6.12
|
|
|
$
|
5.38
|
|
Segment
|
|
Product or Services
|
|
Markets Served
|
|
Geographic Areas
|
Residential Heating & Cooling
|
|
Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts
|
|
Residential Replacement;
Residential New Construction
|
|
United States
Canada
|
Commercial Heating & Cooling
|
|
Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment
|
|
Light Commercial
|
|
United States
Canada
Europe
Central America
|
Refrigeration
|
|
Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems
|
|
Light Commercial;
Food Preservation;
Non-Food/Industrial
|
|
United States
Canada
Europe
Asia Pacific
South America
Central America
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net sales
|
|
|
|
|
|
|
|
||||||||
Residential Heating & Cooling
|
$
|
590.5
|
|
|
$
|
572.7
|
|
|
$
|
1,663.8
|
|
|
$
|
1,524.5
|
|
Commercial Heating & Cooling
|
269.4
|
|
|
251.4
|
|
|
723.5
|
|
|
674.7
|
|
||||
Refrigeration
|
192.4
|
|
|
185.9
|
|
|
560.6
|
|
|
545.2
|
|
||||
|
$
|
1,052.3
|
|
|
$
|
1,010.0
|
|
|
$
|
2,947.9
|
|
|
$
|
2,744.4
|
|
|
|
|
|
|
|
|
|
||||||||
Segment profit (loss)
(1)
|
|
|
|
|
|
|
|
||||||||
Residential Heating & Cooling
|
$
|
114.7
|
|
|
$
|
112.7
|
|
|
$
|
297.6
|
|
|
$
|
266.9
|
|
Commercial Heating & Cooling
|
50.0
|
|
|
48.9
|
|
|
113.8
|
|
|
110.6
|
|
||||
Refrigeration
|
20.0
|
|
|
22.9
|
|
|
55.7
|
|
|
53.2
|
|
||||
Corporate and other
|
(23.7
|
)
|
|
(27.3
|
)
|
|
(58.5
|
)
|
|
(65.7
|
)
|
||||
Total segment profit
|
161.0
|
|
|
157.2
|
|
|
408.6
|
|
|
365.0
|
|
||||
Reconciliation to Operating income:
|
|
|
|
|
|
|
|
||||||||
Special product quality adjustments
|
0.5
|
|
|
—
|
|
|
5.7
|
|
|
(0.4
|
)
|
||||
Items in Losses and other expenses, net that are excluded from segment profit (loss)
(1)
|
4.0
|
|
|
(0.3
|
)
|
|
10.0
|
|
|
2.9
|
|
||||
Restructuring charges
|
1.9
|
|
|
0.6
|
|
|
2.1
|
|
|
1.2
|
|
||||
Operating income
|
$
|
154.6
|
|
|
$
|
156.9
|
|
|
$
|
390.8
|
|
|
$
|
361.3
|
|
•
|
Special product quality adjustments;
|
•
|
The following items in Losses (gains) and other expenses, net:
|
◦
|
Net change in unrealized losses (gains) on unsettled futures contracts,
|
◦
|
Special legal contingency charges,
|
◦
|
Asbestos-related litigation,
|
◦
|
Contractor tax payments,
|
◦
|
Environmental liabilities,
|
◦
|
Acquisition costs,
|
◦
|
Other items, net; and
|
•
|
Restructuring charges.
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||
Investment in marketable equity securities
|
$
|
4.7
|
|
|
$
|
4.4
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||
Senior unsecured notes
|
$
|
316.9
|
|
|
$
|
499.3
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|||||||||||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1.2
|
|
|
$
|
22.4
|
|
|
$
|
37.1
|
|
|
$
|
—
|
|
|
$
|
60.7
|
|
Accounts and notes receivable, net
|
—
|
|
|
35.5
|
|
|
562.6
|
|
|
—
|
|
|
598.1
|
|
|||||
Inventories, net
|
—
|
|
|
392.2
|
|
|
143.5
|
|
|
(4.8
|
)
|
|
530.9
|
|
|||||
Other assets
|
14.2
|
|
|
34.3
|
|
|
60.7
|
|
|
(28.3
|
)
|
|
80.9
|
|
|||||
Total current assets
|
15.4
|
|
|
484.4
|
|
|
803.9
|
|
|
(33.1
|
)
|
|
1,270.6
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
243.7
|
|
|
135.2
|
|
|
(4.3
|
)
|
|
374.6
|
|
|||||
Goodwill
|
—
|
|
|
117.8
|
|
|
65.7
|
|
|
17.1
|
|
|
200.6
|
|
|||||
Investment in subsidiaries
|
1,212.8
|
|
|
383.7
|
|
|
—
|
|
|
(1,596.5
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
11.0
|
|
|
112.0
|
|
|
32.5
|
|
|
(12.2
|
)
|
|
143.3
|
|
|||||
Other assets, net
|
1.8
|
|
|
42.1
|
|
|
24.1
|
|
|
(1.4
|
)
|
|
66.6
|
|
|||||
Intercompany (payables) receivables, net
|
(453.9
|
)
|
|
461.3
|
|
|
95.1
|
|
|
(102.5
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
787.1
|
|
|
$
|
1,845.0
|
|
|
$
|
1,156.5
|
|
|
$
|
(1,732.9
|
)
|
|
$
|
2,055.7
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
326.0
|
|
|
$
|
—
|
|
|
$
|
326.0
|
|
Current maturities of long-term debt
|
21.9
|
|
|
0.3
|
|
|
0.2
|
|
|
—
|
|
|
22.4
|
|
|||||
Accounts payable
|
21.3
|
|
|
252.7
|
|
|
120.5
|
|
|
—
|
|
|
394.5
|
|
|||||
Accrued expenses
|
5.7
|
|
|
216.6
|
|
|
56.1
|
|
|
—
|
|
|
278.4
|
|
|||||
Income taxes (receivable) payable
|
(55.7
|
)
|
|
60.4
|
|
|
48.5
|
|
|
(50.8
|
)
|
|
2.4
|
|
|||||
Total current liabilities
|
(6.8
|
)
|
|
530.0
|
|
|
551.3
|
|
|
(50.8
|
)
|
|
1,023.7
|
|
|||||
Long-term debt
|
761.1
|
|
|
14.3
|
|
|
0.3
|
|
|
—
|
|
|
775.7
|
|
|||||
Post-retirement benefits, other than pensions
|
—
|
|
|
1.9
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|||||
Pensions
|
—
|
|
|
77.1
|
|
|
13.1
|
|
|
—
|
|
|
90.2
|
|
|||||
Other liabilities
|
0.3
|
|
|
119.9
|
|
|
11.5
|
|
|
—
|
|
|
131.7
|
|
|||||
Total liabilities
|
754.6
|
|
|
743.2
|
|
|
576.2
|
|
|
(50.8
|
)
|
|
2,023.2
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Total stockholders' equity
|
32.5
|
|
|
1,101.8
|
|
|
580.3
|
|
|
(1,682.1
|
)
|
|
32.5
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
787.1
|
|
|
$
|
1,845.0
|
|
|
$
|
1,156.5
|
|
|
$
|
(1,732.9
|
)
|
|
$
|
2,055.7
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|||||||||||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1.2
|
|
|
$
|
17.1
|
|
|
$
|
31.9
|
|
|
$
|
—
|
|
|
$
|
50.2
|
|
Accounts and notes receivable, net
|
—
|
|
|
30.6
|
|
|
439.2
|
|
|
—
|
|
|
469.8
|
|
|||||
Inventories, net
|
—
|
|
|
314.7
|
|
|
108.9
|
|
|
(5.1
|
)
|
|
418.5
|
|
|||||
Other assets
|
12.8
|
|
|
48.8
|
|
|
67.5
|
|
|
(61.7
|
)
|
|
67.4
|
|
|||||
Total current assets
|
14.0
|
|
|
411.2
|
|
|
647.5
|
|
|
(66.8
|
)
|
|
1,005.9
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
237.6
|
|
|
123.8
|
|
|
—
|
|
|
361.4
|
|
|||||
Goodwill
|
—
|
|
|
134.9
|
|
|
60.2
|
|
|
—
|
|
|
195.1
|
|
|||||
Investment in subsidiaries
|
1,166.9
|
|
|
524.7
|
|
|
(0.5
|
)
|
|
(1,691.1
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
6.8
|
|
|
113.5
|
|
|
31.1
|
|
|
(14.7
|
)
|
|
136.7
|
|
|||||
Other assets, net
|
3.6
|
|
|
40.0
|
|
|
19.0
|
|
|
(1.4
|
)
|
|
61.2
|
|
|||||
Intercompany (payables) receivables, net
|
(382.4
|
)
|
|
375.2
|
|
|
80.4
|
|
|
(73.2
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
808.9
|
|
|
$
|
1,837.1
|
|
|
$
|
961.5
|
|
|
$
|
(1,847.2
|
)
|
|
$
|
1,760.3
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52.4
|
|
|
$
|
—
|
|
|
$
|
52.4
|
|
Current maturities of long-term debt
|
199.3
|
|
|
0.4
|
|
|
0.4
|
|
|
—
|
|
|
200.1
|
|
|||||
Accounts payable
|
18.5
|
|
|
248.5
|
|
|
94.2
|
|
|
—
|
|
|
361.2
|
|
|||||
Accrued expenses
|
6.3
|
|
|
206.3
|
|
|
53.3
|
|
|
—
|
|
|
265.9
|
|
|||||
Income taxes (receivable) payable
|
(54.0
|
)
|
|
89.8
|
|
|
52.5
|
|
|
(79.3
|
)
|
|
9.0
|
|
|||||
Total current liabilities
|
170.1
|
|
|
545.0
|
|
|
252.8
|
|
|
(79.3
|
)
|
|
888.6
|
|
|||||
Long-term debt
|
600.9
|
|
|
14.5
|
|
|
0.3
|
|
|
—
|
|
|
615.7
|
|
|||||
Post-retirement benefits, other than pensions
|
—
|
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|||||
Pensions
|
—
|
|
|
75.5
|
|
|
12.0
|
|
|
—
|
|
|
87.5
|
|
|||||
Other liabilities
|
—
|
|
|
119.1
|
|
|
11.1
|
|
|
(2.5
|
)
|
|
127.7
|
|
|||||
Total liabilities
|
771.0
|
|
|
756.9
|
|
|
276.2
|
|
|
(81.8
|
)
|
|
1,722.3
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Total stockholders' equity
|
37.9
|
|
|
1,080.2
|
|
|
685.3
|
|
|
(1,765.4
|
)
|
|
38.0
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
808.9
|
|
|
$
|
1,837.1
|
|
|
$
|
961.5
|
|
|
$
|
(1,847.2
|
)
|
|
$
|
1,760.3
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
905.6
|
|
|
$
|
300.0
|
|
|
$
|
(153.3
|
)
|
|
$
|
1,052.3
|
|
Cost of goods sold
|
—
|
|
|
644.8
|
|
|
249.0
|
|
|
(155.2
|
)
|
|
738.6
|
|
|||||
Gross profit
|
—
|
|
|
260.8
|
|
|
51.0
|
|
|
1.9
|
|
|
313.7
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
—
|
|
|
140.7
|
|
|
18.8
|
|
|
(0.8
|
)
|
|
158.7
|
|
|||||
Losses and other expenses, net
|
0.2
|
|
|
1.9
|
|
|
0.9
|
|
|
—
|
|
|
3.0
|
|
|||||
Restructuring charges
|
—
|
|
|
1.2
|
|
|
0.7
|
|
|
—
|
|
|
1.9
|
|
|||||
Income from equity method investments
|
(108.2
|
)
|
|
(21.7
|
)
|
|
(3.5
|
)
|
|
128.9
|
|
|
(4.5
|
)
|
|||||
Operating income
|
108.0
|
|
|
138.7
|
|
|
34.1
|
|
|
(126.2
|
)
|
|
154.6
|
|
|||||
Interest expense, net
|
6.2
|
|
|
(0.6
|
)
|
|
2.0
|
|
|
—
|
|
|
7.6
|
|
|||||
Other expense, net
|
—
|
|
|
—
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
—
|
|
|||||
Income from continuing operations before income taxes
|
101.8
|
|
|
139.3
|
|
|
31.9
|
|
|
(126.0
|
)
|
|
147.0
|
|
|||||
Provision for income tax (benefit) expense
|
(1.7
|
)
|
|
30.5
|
|
|
13.5
|
|
|
0.7
|
|
|
43.0
|
|
|||||
Income from continuing operations
|
103.5
|
|
|
108.8
|
|
|
18.4
|
|
|
(126.7
|
)
|
|
104.0
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|||||
Net income
|
$
|
103.5
|
|
|
$
|
108.8
|
|
|
$
|
17.9
|
|
|
$
|
(126.7
|
)
|
|
$
|
103.5
|
|
Other comprehensive income, net of tax
|
0.4
|
|
|
2.1
|
|
|
6.9
|
|
|
—
|
|
|
9.4
|
|
|||||
Comprehensive income (loss)
|
$
|
103.9
|
|
|
$
|
110.9
|
|
|
$
|
24.8
|
|
|
$
|
(126.7
|
)
|
|
$
|
112.9
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
2,560.6
|
|
|
$
|
869.7
|
|
|
$
|
(482.4
|
)
|
|
$
|
2,947.9
|
|
Cost of goods sold
|
—
|
|
|
1,830.8
|
|
|
731.1
|
|
|
(479.5
|
)
|
|
2,082.4
|
|
|||||
Gross profit
|
—
|
|
|
729.8
|
|
|
138.6
|
|
|
(2.9
|
)
|
|
865.5
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
—
|
|
|
419.2
|
|
|
61.6
|
|
|
(1.2
|
)
|
|
479.6
|
|
|||||
Losses (gains) and other expenses, net
|
1.1
|
|
|
5.8
|
|
|
1.7
|
|
|
(0.1
|
)
|
|
8.5
|
|
|||||
Restructuring charges
|
—
|
|
|
1.3
|
|
|
0.8
|
|
|
—
|
|
|
2.1
|
|
|||||
Income from equity method investments
|
(277.5
|
)
|
|
(52.0
|
)
|
|
(12.7
|
)
|
|
326.7
|
|
|
(15.5
|
)
|
|||||
Operating income
|
276.4
|
|
|
355.5
|
|
|
87.2
|
|
|
(328.3
|
)
|
|
390.8
|
|
|||||
Interest expense, net
|
20.9
|
|
|
(2.3
|
)
|
|
4.7
|
|
|
—
|
|
|
23.3
|
|
|||||
Other expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||||
Income from continuing operations before income taxes
|
255.5
|
|
|
357.8
|
|
|
82.5
|
|
|
(328.1
|
)
|
|
367.7
|
|
|||||
Provision for income tax (benefit) expense
|
(7.0
|
)
|
|
84.8
|
|
|
26.2
|
|
|
(0.2
|
)
|
|
103.8
|
|
|||||
Income from continuing operations
|
262.5
|
|
|
273.0
|
|
|
56.3
|
|
|
(327.9
|
)
|
|
263.9
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
(1.4
|
)
|
|||||
Net income
|
$
|
262.5
|
|
|
$
|
273.0
|
|
|
$
|
54.9
|
|
|
$
|
(327.9
|
)
|
|
$
|
262.5
|
|
Other comprehensive income, net of tax
|
$
|
0.5
|
|
|
$
|
9.7
|
|
|
$
|
27.9
|
|
|
$
|
—
|
|
|
$
|
38.1
|
|
Comprehensive income (loss)
|
$
|
263.0
|
|
|
$
|
282.7
|
|
|
$
|
82.8
|
|
|
$
|
(327.9
|
)
|
|
$
|
300.6
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
870.5
|
|
|
$
|
186.9
|
|
|
$
|
(47.4
|
)
|
|
$
|
1,010.0
|
|
Cost of goods sold
|
—
|
|
|
603.4
|
|
|
143.7
|
|
|
(47.4
|
)
|
|
699.7
|
|
|||||
Gross profit
|
—
|
|
|
267.1
|
|
|
43.2
|
|
|
—
|
|
|
310.3
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
—
|
|
|
135.9
|
|
|
20.6
|
|
|
—
|
|
|
156.5
|
|
|||||
(Gains) losses and other expenses, net
|
(1.1
|
)
|
|
1.1
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
|||||
Restructuring charges
|
—
|
|
|
0.5
|
|
|
0.1
|
|
|
—
|
|
|
0.6
|
|
|||||
Income from equity method investments
|
(105.0
|
)
|
|
(10.0
|
)
|
|
(3.2
|
)
|
|
113.8
|
|
|
(4.4
|
)
|
|||||
Operating income
|
106.1
|
|
|
139.6
|
|
|
25.0
|
|
|
(113.8
|
)
|
|
156.9
|
|
|||||
Interest expense, net
|
6.1
|
|
|
(0.5
|
)
|
|
1.4
|
|
|
—
|
|
|
7.0
|
|
|||||
Other expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income from continuing operations before income taxes
|
100.0
|
|
|
140.1
|
|
|
23.6
|
|
|
(113.8
|
)
|
|
149.9
|
|
|||||
Provision for income tax (benefit) expense
|
(1.7
|
)
|
|
42.3
|
|
|
7.6
|
|
|
—
|
|
|
48.2
|
|
|||||
Income from continuing operations
|
101.7
|
|
|
97.8
|
|
|
16.0
|
|
|
(113.8
|
)
|
|
101.7
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
101.7
|
|
|
$
|
97.8
|
|
|
$
|
16.0
|
|
|
$
|
(113.8
|
)
|
|
$
|
101.7
|
|
Other comprehensive income (loss), net of tax
|
2.7
|
|
|
(0.4
|
)
|
|
(2.3
|
)
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|||||
Comprehensive income (loss)
|
$
|
104.4
|
|
|
$
|
97.4
|
|
|
$
|
13.7
|
|
|
$
|
(114.2
|
)
|
|
$
|
101.3
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
2,368.8
|
|
|
$
|
514.1
|
|
|
$
|
(138.5
|
)
|
|
$
|
2,744.4
|
|
Cost of goods sold
|
—
|
|
|
1,675.6
|
|
|
396.3
|
|
|
(136.4
|
)
|
|
1,935.5
|
|
|||||
Gross profit
|
—
|
|
|
693.2
|
|
|
117.8
|
|
|
(2.1
|
)
|
|
808.9
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
—
|
|
|
394.6
|
|
|
61.6
|
|
|
—
|
|
|
456.2
|
|
|||||
(Gains) losses and other expenses, net
|
(1.7
|
)
|
|
4.3
|
|
|
3.0
|
|
|
(0.1
|
)
|
|
5.5
|
|
|||||
Restructuring charges (gains)
|
—
|
|
|
1.5
|
|
|
(0.3
|
)
|
|
—
|
|
|
1.2
|
|
|||||
Income from equity method investments
|
(248.5
|
)
|
|
(19.5
|
)
|
|
(12.4
|
)
|
|
265.1
|
|
|
(15.3
|
)
|
|||||
Operating income
|
250.2
|
|
|
312.3
|
|
|
65.9
|
|
|
(267.1
|
)
|
|
361.3
|
|
|||||
Interest expense, net
|
17.7
|
|
|
(1.5
|
)
|
|
3.4
|
|
|
—
|
|
|
19.6
|
|
|||||
Other expense, net
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|||||
Income from continuing operations before income taxes
|
232.5
|
|
|
313.8
|
|
|
62.7
|
|
|
(267.1
|
)
|
|
341.9
|
|
|||||
Provision for income tax (benefit) expense
|
(4.9
|
)
|
|
89.1
|
|
|
20.5
|
|
|
(0.7
|
)
|
|
104.0
|
|
|||||
Income from continuing operations
|
237.4
|
|
|
224.7
|
|
|
42.2
|
|
|
(266.4
|
)
|
|
237.9
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|||||
Net income
|
$
|
237.4
|
|
|
$
|
224.7
|
|
|
$
|
41.6
|
|
|
$
|
(266.4
|
)
|
|
$
|
237.3
|
|
Other comprehensive income, net of tax
|
7.7
|
|
|
2.0
|
|
|
6.7
|
|
|
1.3
|
|
|
17.7
|
|
|||||
Comprehensive income (loss)
|
$
|
245.1
|
|
|
$
|
226.7
|
|
|
$
|
48.3
|
|
|
$
|
(265.1
|
)
|
|
$
|
255.0
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities
|
$
|
411.6
|
|
|
$
|
(2.4
|
)
|
|
$
|
(279.6
|
)
|
|
$
|
(0.6
|
)
|
|
$
|
129.0
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from the disposal of property, plant and equipment
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
0.2
|
|
|||||
Purchases of property, plant and equipment
|
—
|
|
|
(48.3
|
)
|
|
(12.2
|
)
|
|
—
|
|
|
(60.5
|
)
|
|||||
Net cash used in investing activities
|
—
|
|
|
(48.2
|
)
|
|
(12.2
|
)
|
|
0.1
|
|
|
(60.3
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings, net
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
(1.4
|
)
|
|||||
Asset securitization borrowings
|
—
|
|
|
—
|
|
|
275.0
|
|
|
—
|
|
|
275.0
|
|
|||||
Asset securitization payments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Long-term debt payments
|
(200.0
|
)
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|
(200.8
|
)
|
|||||
Long-term borrowings
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||||
Borrowings from credit facility
|
1,883.0
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
0.4
|
|
|
1,883.0
|
|
|||||
Payments on credit facility
|
(1,701.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,701.0
|
)
|
|||||
Proceeds from employee stock purchases
|
2.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|||||
Repurchases of common stock
|
(250.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(250.0
|
)
|
|||||
Repurchases of common stock to satisfy employee withholding tax obligations
|
(16.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16.0
|
)
|
|||||
Intercompany debt
|
102.8
|
|
|
(34.8
|
)
|
|
(68.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Intercompany financing activity
|
(174.3
|
)
|
|
91.0
|
|
|
82.7
|
|
|
0.6
|
|
|
—
|
|
|||||
Cash dividends paid
|
(58.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58.4
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(411.6
|
)
|
|
55.9
|
|
|
287.9
|
|
|
0.5
|
|
|
(67.3
|
)
|
|||||
Increase (decrease) in cash and cash equivalents
|
—
|
|
|
5.3
|
|
|
(3.9
|
)
|
|
—
|
|
|
1.4
|
|
|||||
Effect of exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
9.1
|
|
|
—
|
|
|
9.1
|
|
|||||
Cash and cash equivalents, beginning of period
|
1.2
|
|
|
17.1
|
|
|
31.9
|
|
|
—
|
|
|
50.2
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
1.2
|
|
|
$
|
22.4
|
|
|
$
|
37.1
|
|
|
$
|
—
|
|
|
$
|
60.7
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|||||||||||
Cash flows from operating activities
|
$
|
15.5
|
|
|
$
|
262.2
|
|
|
$
|
(150.8
|
)
|
|
$
|
—
|
|
|
$
|
126.9
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Purchases of property, plant and equipment
|
—
|
|
|
(52.4
|
)
|
|
(7.0
|
)
|
|
—
|
|
|
(59.4
|
)
|
||||||
Net cash used in investing activities
|
—
|
|
|
(52.4
|
)
|
|
(7.0
|
)
|
|
—
|
|
|
(59.4
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Short-term borrowings, net
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
(2.1
|
)
|
||||||
Asset securitization borrowings
|
—
|
|
|
—
|
|
|
145.0
|
|
|
—
|
|
|
145.0
|
|
||||||
Asset securitization payments
|
—
|
|
|
—
|
|
|
(20.0
|
)
|
|
—
|
|
|
(20.0
|
)
|
||||||
Long-term debt payments
|
(30.0
|
)
|
|
(0.6
|
)
|
|
(0.3
|
)
|
|
—
|
|
|
(30.9
|
)
|
||||||
Borrowings from credit facility
|
1,715.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,715.0
|
|
||||||
Payments on credit facility
|
(1,493.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,493.0
|
)
|
||||||
Proceeds from employee stock purchases
|
1.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
||||||
Payments of deferred financing costs
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
||||||
Repurchases of common stock
|
(300.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300.0
|
)
|
||||||
Repurchases of common stock to satisfy employee withholding tax obligations
|
(26.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.3
|
)
|
||||||
Intercompany debt
|
(6.6
|
)
|
|
(5.1
|
)
|
|
11.7
|
|
|
—
|
|
|
—
|
|
||||||
Intercompany financing activity
|
178.9
|
|
|
(196.0
|
)
|
|
17.1
|
|
|
—
|
|
|
—
|
|
||||||
Intercompany investments
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash dividends paid
|
(50.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.5
|
)
|
||||||
Net cash (used in) provided by financing activities
|
(11.5
|
)
|
|
(201.7
|
)
|
|
151.4
|
|
|
—
|
|
|
(61.8
|
)
|
||||||
Increase (decrease) in cash and cash equivalents
|
4.0
|
|
|
8.1
|
|
|
(6.4
|
)
|
|
—
|
|
|
5.7
|
|
||||||
Effect of exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
|
3.2
|
|
||||||
Cash and cash equivalents, beginning of period
|
0.5
|
|
|
7.8
|
|
|
30.6
|
|
|
—
|
|
|
38.9
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
4.5
|
|
|
$
|
15.9
|
|
|
$
|
27.4
|
|
|
$
|
—
|
|
|
$
|
47.8
|
|
•
|
Net sales increased
$42 million
, or
4%
, to
$1,052 million
in the third quarter of 2017 compared to the third quarter of 2016.
|
•
|
Operating income in the third quarter of 2017 decreased
$2 million
to
$155 million
.
|
•
|
Net income for the third quarter of 2017 increased
$2 million
to
$104 million
, including the benefit of $1.5 million of discrete tax benefits in the third quarter of 2017 related to excess tax benefits from share-based compensation.
|
•
|
Diluted earnings per share from continuing operations were
$2.45
per share in the third quarter of 2017 compared to
$2.33
per share in the third quarter of 2016.
|
•
|
During the nine months ended
September 30, 2017
, we returned
$58 million
to shareholders through dividend payments and entered into agreements to repurchase
$250 million
of common stock that will be completed in the fourth quarter of 2017.
|
|
For the Three Months Ended September 30,
|
|||||||||||||||
|
Dollars (in millions)
|
|
Percent
Change Fav/(Unfav) |
|
Percent of Sales
|
|||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Net sales
|
$
|
1,052.3
|
|
|
$
|
1,010.0
|
|
|
4.2
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
738.6
|
|
|
699.7
|
|
|
(5.6
|
)
|
|
70.2
|
|
|
69.3
|
|
||
Gross profit
|
313.7
|
|
|
310.3
|
|
|
1.1
|
|
|
29.8
|
|
|
30.7
|
|
||
Selling, general and administrative expenses
|
158.7
|
|
|
156.5
|
|
|
(1.4
|
)
|
|
15.1
|
|
|
15.5
|
|
||
Losses and other expenses, net
|
3.0
|
|
|
0.7
|
|
|
(328.6
|
)
|
|
0.3
|
|
|
0.1
|
|
||
Restructuring charges
|
1.9
|
|
|
0.6
|
|
|
(216.7
|
)
|
|
0.2
|
|
|
0.1
|
|
||
Income from equity method investments
|
(4.5
|
)
|
|
(4.4
|
)
|
|
2.3
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||
Operating income
|
$
|
154.6
|
|
|
$
|
156.9
|
|
|
(1.5
|
)%
|
|
14.7
|
%
|
|
15.5
|
%
|
|
For the Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Realized (gains) losses on settled future contracts
|
$
|
(0.5
|
)
|
|
$
|
0.3
|
|
Foreign currency exchange (gains) losses
|
(0.6
|
)
|
|
0.5
|
|
||
Loss on disposal of fixed assets
|
0.1
|
|
|
0.2
|
|
||
Net change in unrealized losses (gains) on unsettled futures contracts
|
0.2
|
|
|
(1.2
|
)
|
||
Special legal contingency charges
|
1.5
|
|
|
0.5
|
|
||
Asbestos-related litigation
|
1.5
|
|
|
0.4
|
|
||
Environmental liabilities
|
0.5
|
|
|
—
|
|
||
Other items, net
|
0.3
|
|
|
—
|
|
||
Losses and other expenses, net (pre-tax)
|
$
|
3.0
|
|
|
$
|
0.7
|
|
|
For the Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
590.5
|
|
|
$
|
572.7
|
|
|
$
|
17.8
|
|
|
3.1
|
%
|
Profit
|
$
|
114.7
|
|
|
$
|
112.7
|
|
|
$
|
2.0
|
|
|
1.8
|
%
|
% of net sales
|
19.4
|
%
|
|
19.7
|
%
|
|
|
|
|
|
For the Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
269.4
|
|
|
$
|
251.4
|
|
|
$
|
18.0
|
|
|
7.2
|
%
|
Profit
|
$
|
50.0
|
|
|
$
|
48.9
|
|
|
$
|
1.1
|
|
|
2.2
|
%
|
% of net sales
|
18.6
|
%
|
|
19.5
|
%
|
|
|
|
|
|
For the Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
192.4
|
|
|
$
|
185.9
|
|
|
$
|
6.5
|
|
|
3.5
|
%
|
Profit
|
$
|
20.0
|
|
|
$
|
22.9
|
|
|
$
|
(2.9
|
)
|
|
(12.7
|
)%
|
% of net sales
|
10.4
|
%
|
|
12.3
|
%
|
|
|
|
|
|
For the Nine Months Ended September 30,
|
|||||||||||||||
|
Dollars (in millions)
|
|
Percent
Change Fav/(Unfav) |
|
Percent of Sales
|
|||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Net sales
|
$
|
2,947.9
|
|
|
$
|
2,744.4
|
|
|
7.4
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
2,082.4
|
|
|
1,935.5
|
|
|
(7.6
|
)
|
|
70.6
|
|
|
70.5
|
|
||
Gross profit
|
865.5
|
|
|
808.9
|
|
|
7.0
|
|
|
29.4
|
|
|
29.5
|
|
||
Selling, general and administrative expenses
|
479.6
|
|
|
456.2
|
|
|
(5.1
|
)
|
|
16.3
|
|
|
16.6
|
|
||
Losses and other expenses, net
|
8.5
|
|
|
5.5
|
|
|
(54.5
|
)
|
|
0.3
|
|
|
0.2
|
|
||
Restructuring charges
|
2.1
|
|
|
1.2
|
|
|
(75.0
|
)
|
|
0.1
|
|
|
—
|
|
||
Income from equity method investments
|
(15.5
|
)
|
|
(15.3
|
)
|
|
1.3
|
|
|
(0.5
|
)
|
|
(0.6
|
)
|
||
Operating income
|
$
|
390.8
|
|
|
$
|
361.3
|
|
|
8.2
|
|
|
13.3
|
%
|
|
13.2
|
%
|
|
For the Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Realized (gains) losses on settled future contracts
|
$
|
(1.3
|
)
|
|
$
|
1.2
|
|
Foreign currency exchange (gains) losses
|
(0.3
|
)
|
|
1.1
|
|
||
Loss on disposal of fixed assets
|
0.1
|
|
|
0.3
|
|
||
Net change in unrealized losses (gains) on unsettled futures contracts
|
1.0
|
|
|
(1.9
|
)
|
||
Special legal contingency charges
|
3.6
|
|
|
0.5
|
|
||
Asbestos-related litigation
|
3.9
|
|
|
2.3
|
|
||
Environmental liabilities
|
1.2
|
|
|
1.1
|
|
||
Contractor tax payments
|
—
|
|
|
0.5
|
|
||
Acquisition costs
|
—
|
|
|
0.4
|
|
||
Other items, net
|
0.3
|
|
|
—
|
|
||
Losses and other expenses, net (pre-tax)
|
$
|
8.5
|
|
|
$
|
5.5
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
1,663.8
|
|
|
$
|
1,524.5
|
|
|
$
|
139.3
|
|
|
9.1
|
%
|
Profit
|
$
|
297.6
|
|
|
$
|
266.9
|
|
|
$
|
30.7
|
|
|
11.5
|
%
|
% of net sales
|
17.9
|
%
|
|
17.5
|
%
|
|
|
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
723.5
|
|
|
$
|
674.7
|
|
|
$
|
48.8
|
|
|
7.2
|
%
|
Profit
|
$
|
113.8
|
|
|
$
|
110.6
|
|
|
$
|
3.2
|
|
|
2.9
|
%
|
% of net sales
|
15.7
|
%
|
|
16.4
|
%
|
|
|
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
560.6
|
|
|
$
|
545.2
|
|
|
$
|
15.4
|
|
|
2.8
|
%
|
Profit
|
$
|
55.7
|
|
|
$
|
53.2
|
|
|
$
|
2.5
|
|
|
4.7
|
%
|
% of net sales
|
9.9
|
%
|
|
9.8
|
%
|
|
|
|
|
|
For the Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
129.0
|
|
|
$
|
126.9
|
|
Net cash used in investing activities
|
(60.3
|
)
|
|
(59.4
|
)
|
||
Net cash used in financing activities
|
(67.3
|
)
|
|
(61.8
|
)
|
|
Outstanding Borrowings
|
||
Short-term debt:
|
|
||
Foreign obligations
|
$
|
1.0
|
|
Asset Securitization Program
(1)
|
325.0
|
|
|
Total short-term debt
|
$
|
326.0
|
|
Current maturities of long-term debt:
|
|
||
Capital lease obligations
|
0.5
|
|
|
Domestic credit facility
(2)
|
22.5
|
|
|
Debt issuance costs
|
(0.6
|
)
|
|
Total current maturities of long-term debt
|
$
|
22.4
|
|
Long-term debt:
|
|
||
Capital lease obligations
|
14.7
|
|
|
Domestic credit facility
(2)
|
415.5
|
|
|
Senior unsecured notes
|
350.0
|
|
|
Debt issuance costs
|
(4.5
|
)
|
|
Total long-term debt
|
775.7
|
|
|
Total debt
|
$
|
1,124.1
|
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share (including fees)
|
|
Total Number of Shares Purchased As Part of Publicly Announced Plans
|
|
Approximate Dollar Value of Shares that may yet be Purchased under our Share Repurchase Plans
(in millions)
(2)
|
|||||
July 1 through July 29
|
432,400
|
|
|
$
|
172.71
|
|
|
432,179
|
|
|
396.0
|
|
July 30 through August 26
|
9,129
|
|
|
173.24
|
|
|
—
|
|
|
396.0
|
|
|
August 26 through September 30
|
1,628
|
|
|
158.63
|
|
|
—
|
|
|
396.0
|
|
|
|
443,157
|
|
|
|
|
432,179
|
|
|
|
3.1
|
Restated Certificate of Incorporation of Lennox International Inc. (“LII”) (filed as Exhibit 3.1 to LII’s Registration Statement on Form S-1 (Registration Statement No. 333-75725) filed on April 6, 1999 and incorporated herein by reference).
|
3.2
|
|
4.1
|
Specimen Stock Certificate for the Common Stock, par value $.01 per share, of LII (filed as Exhibit 4.1 to LII’s Amendment to Registration Statement on Form S-1/A (Registration No. 333-75725) filed on June 16, 1999 and incorporated herein by reference).
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.7
|
|
4.8
|
|
10.1
|
|
31.1
|
|
31.2
|
|
32.1
|
LGL EUROPE HOLDING CO.
By: |
/s/ Richard A. Pelini
____
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Lennox International Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Todd M. Bluedorn
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Todd M. Bluedorn
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Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Lennox International Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Joseph W. Reitmeier
|
|
Joseph W. Reitmeier
|
|
Chief Financial Officer
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(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
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/s/ Todd M. Bluedorn
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|
Todd M. Bluedorn
|
|
Chief Executive Officer
|
|
|
|
|
|
/s/ Joseph W. Reitmeier
|
|
Joseph W. Reitmeier
|
|
Chief Financial Officer
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