|
Delaware
|
42-0991521
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
Title of each class
|
Name of each exchange on which registered
|
Common Stock, $.01 par value per share
|
New York Stock Exchange
|
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
|
|
|
ITEM 1.
|
||
ITEM 1A.
|
||
ITEM 1B.
|
||
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
|
|
|
PART II
|
|
|
ITEM 5.
|
||
ITEM 6.
|
||
ITEM 7.
|
||
ITEM 7A.
|
||
ITEM 8.
|
||
ITEM 9.
|
||
ITEM 9A.
|
||
ITEM 9B.
|
||
|
|
|
PART III
|
|
|
ITEM 10.
|
||
ITEM 11.
|
||
ITEM 12.
|
||
ITEM 13.
|
||
ITEM 14.
|
||
|
|
|
PART IV
|
|
|
ITEM 15.
|
||
|
|
|
|
||
|
||
|
Segment
|
|
Products & Services
|
|
Product and Brand Names
|
|
2018
Net Sales (in millions)
|
||
Residential Heating & Cooling
|
|
Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts and supplies
|
|
Lennox, Dave Lennox Signature, Armstrong Air, Ducane, Aire-Flo, Air-Ease, Concord, Magic-Pak, ADP Advanced Distributor Products, iComfort and Lennox PartsPlus
|
|
$
|
2,225.0
|
|
Commercial Heating & Cooling
|
|
Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, variable refrigerant flow commercial products
|
|
Lennox, Allied Commercial, Magic-Pak, Raider, Landmark, Prodigy, Strategos, Energence, Lennox VRF and Lennox National Account Services
|
|
1,043.5
|
|
|
Refrigeration
|
|
Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems
|
|
Heatcraft Worldwide Refrigeration, Bohn, Larkin, Climate Control, Chandler Refrigeration, Kysor/Warren, Friga-Bohn, HK Refrigeration, Hyfra, Kirby and Interlink
|
|
615.4
|
|
|
|
|
|
|
Total
|
|
$
|
3,883.9
|
|
•
|
Residential Heating & Cooling - United Technologies Corp. (Carrier, Bryant, Tempstar, Comfortmaker, Heil, Arcoaire, KeepRite, Day & Night); Ingersoll-Rand plc (Trane, American Standard); Paloma Industries, Inc. (Rheem, Ruud); Johnson Controls, Inc. (York); Daikin Industries, Ltd. (Goodman, Amana); and Melrose Industries PLC (Maytag, Westinghouse, Frigidaire, Tappan, Philco, Kelvinator, Gibson, Broan, NuTone).
|
•
|
Commercial Heating & Cooling - United Technologies Corp. (Carrier, ICP Commercial); Ingersoll-Rand plc (Trane); Paloma Industries, Inc. (Rheem, Ruud); Johnson Controls, Inc. (York); Daikin Industries, Ltd. (Goodman, McQuay); Melrose Industries PLC (Mammoth); and AAON, Inc.
|
•
|
Refrigeration - Hussmann Corporation; Paloma Industries, Inc. (Rheem Manufacturing Company (Heat Transfer Products Group)); Emerson Electric Co. (Copeland); United Technologies Corp. (Carrier); GEA Group (Kuba, Searle, Goedhart); Alfa Laval; Guntner GmbH; and Panasonic Corp. (Sanyo).
|
Name
|
Age
|
Position
|
Todd M. Bluedorn
|
55
|
Chairman of the Board and Chief Executive Officer
|
Joseph W. Reitmeier
|
54
|
Executive Vice President, Chief Financial Officer
|
Douglas L. Young
|
56
|
Executive Vice President, President and Chief Operating Officer, Residential Heating & Cooling
|
Terry L. Johnston
|
61
|
Executive Vice President, President and Chief Operating
Officer, North America Commercial Heating & Cooling
|
Gary S. Bedard
|
54
|
Executive Vice President, President and Chief Operating
Officer, Worldwide Refrigeration
|
Prakash Bedapudi
|
52
|
Executive Vice President, Chief Technology Officer
|
Daniel M. Sessa
|
54
|
Executive Vice President, Chief Human Resources Officer
|
John D. Torres
|
60
|
Executive Vice President, Chief Legal Officer and Secretary
|
Chris A. Kosel
|
51
|
Vice President, Chief Accounting Officer and Controller
|
Location
|
Segment
|
Type or Use of Facility
|
Approx. Sq. Ft.
(In thousands)
|
Owned/Leased
|
Marshalltown, IA
|
Residential Heating & Cooling
|
Manufacturing & Distribution
|
1,000
|
Owned & Leased
|
Orangeburg, SC
|
Residential Heating & Cooling
|
Manufacturing & Distribution
|
750
|
Owned & Leased
|
Saltillo, Mexico
|
Residential Heating & Cooling
|
Manufacturing & Distribution
|
638
|
Owned
|
Grenada, MS
|
Residential Heating & Cooling
|
Manufacturing & Distribution
|
395
|
Leased
|
Romeoville, IL
|
Residential Heating & Cooling
|
Distribution
|
312
|
Leased
|
McDonough, GA
|
Residential Heating & Cooling
|
Distribution
|
254
|
Leased
|
Columbus, OH
|
Residential Heating & Cooling
|
Distribution
|
144
|
Leased
|
Pittston, PA
|
Residential Heating & Cooling
|
Distribution
|
144
|
Leased
|
Concord, NC
|
Residential Heating & Cooling
|
Distribution
|
123
|
Leased
|
Harahan, LA
|
Residential Heating & Cooling
|
Distribution
|
83
|
Leased
|
Kansas City, MI
|
Residential Heating & Cooling
|
Distribution
|
59
|
Leased
|
Denver, CO
|
Residential Heating & Cooling
|
Distribution
|
49
|
Leased
|
St. Louis, MO
|
Residential Heating & Cooling
|
Distribution
|
48
|
Leased
|
Salt Lake City,UT
|
Residential Heating & Cooling
|
Distribution
|
45
|
Leased
|
Minneapolis, MN
|
Residential Heating & Cooling
|
Distribution
|
44
|
Leased
|
Eastvale, CA
|
Residential & Commercial Heating & Cooling
|
Distribution
|
377
|
Leased
|
Carrollton, TX
|
Residential & Commercial Heating & Cooling
|
Distribution
|
252
|
Leased
|
Brampton, Canada
|
Residential & Commercial Heating & Cooling
|
Distribution
|
251
|
Leased
|
Houston, TX
|
Residential & Commercial Heating & Cooling
|
Distribution
|
216
|
Leased
|
Orlando, FL
|
Residential & Commercial Heating & Cooling
|
Distribution
|
173
|
Leased
|
Middletown, PA
|
Residential & Commercial Heating & Cooling
|
Distribution
|
166
|
Leased
|
Lenexa, KS
|
Residential & Commercial Heating & Cooling
|
Distribution
|
147
|
Leased
|
East Fife, WA
|
Residential & Commercial Heating & Cooling
|
Distribution
|
112
|
Leased
|
Calgary, Canada
|
Residential & Commercial Heating & Cooling
|
Distribution
|
110
|
Leased
|
Stuttgart, AR
|
Commercial Heating & Cooling
|
Manufacturing
|
750
|
Owned
|
Longvic, France
|
Commercial Heating & Cooling
|
Manufacturing
|
142
|
Owned
|
Longvic, France
|
Commercial Heating & Cooling
|
Distribution
|
133
|
Owned
|
Dallas, TX
|
Commercial Heating & Cooling
|
Distribution
|
227
|
Leased
|
Norcross, GA
|
Commercial Heating & Cooling
|
Distribution
|
95
|
Leased
|
Burgos, Spain
|
Commercial Heating & Cooling & Refrigeration
|
Manufacturing
|
140
|
Owned
|
Mions, France
|
Commercial Heating & Cooling & Refrigeration
|
Research & Development
|
129
|
Owned
|
Genas, France
|
Commercial Heating & Cooling & Refrigeration
|
Manufacturing, Distribution & Offices
|
111
|
Owned
|
Tifton, GA
|
Refrigeration
|
Manufacturing & Distribution
|
738
|
Owned & Leased
|
Columbus, GA
|
Refrigeration
|
Manufacturing, Warehousing & Offices
|
523
|
Owned & Leased
|
Stone Mountain, GA
|
Refrigeration
|
Manufacturing & Business Unit Headquarters
|
139
|
Owned
|
Krunkel, Germany
|
Refrigeration
|
Manufacturing, Distribution & Offices
|
43
|
Owned
|
Richardson, TX
|
Corporate and other
|
Corporate Headquarters
|
356
|
Owned & Leased
|
Carrollton, TX
|
Corporate and other
|
Research & Development
|
294
|
Owned
|
|
|
||||||
|
2018
|
|
2017
|
||||
First Quarter
|
$
|
0.51
|
|
|
$
|
0.43
|
|
Second Quarter
|
0.64
|
|
|
0.51
|
|
||
Third Quarter
|
0.64
|
|
|
0.51
|
|
||
Fourth Quarter
|
0.64
|
|
|
0.51
|
|
||
Fiscal Year
|
$
|
2.43
|
|
|
$
|
1.96
|
|
|
Total Shares Purchased
(1)
|
|
Average Price Paid per Share (including fees)
|
|
Shares Purchased As Part of Publicly Announced Plans
|
|
Approximate Dollar Value of Shares that may yet be Purchased Under the Plans
(in millions)
(2)
|
|||||
October 1 through October 31
|
74,796
|
|
|
$
|
200.02
|
|
|
74,300
|
|
|
530.9
|
|
November 1 through November 30
|
423,374
|
|
|
204.95
|
|
|
415,434
|
|
|
445.8
|
|
|
December 1 through December 31
|
19,372
|
|
|
210.37
|
|
|
—
|
|
|
445.8
|
|
|
|
517,542
|
|
|
|
|
489,734
|
|
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
3,883.9
|
|
|
$
|
3,839.6
|
|
|
$
|
3,641.6
|
|
|
$
|
3,467.4
|
|
|
$
|
3,367.4
|
|
Operating Income
|
509.5
|
|
|
494.5
|
|
|
429.4
|
|
|
305.4
|
|
|
334.7
|
|
|||||
Income From Continuing Operations
|
360.3
|
|
|
307.1
|
|
|
278.6
|
|
|
187.2
|
|
|
208.1
|
|
|||||
Net Income
|
359.0
|
|
|
305.7
|
|
|
277.8
|
|
|
186.6
|
|
|
205.8
|
|
|||||
Basic Earnings Per Share From Continuing Operations
|
8.87
|
|
|
7.28
|
|
|
6.41
|
|
|
4.17
|
|
|
4.35
|
|
|||||
Diluted Earnings Per Share From Continuing Operations
|
8.77
|
|
|
7.17
|
|
|
6.34
|
|
|
4.11
|
|
|
4.28
|
|
|||||
Cash Dividends Declared Per Share
|
2.43
|
|
|
1.96
|
|
|
1.65
|
|
|
1.38
|
|
|
1.14
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital Expenditures
|
$
|
95.2
|
|
|
$
|
98.3
|
|
|
$
|
84.3
|
|
|
$
|
69.9
|
|
|
$
|
88.4
|
|
Research and Development Expenses
|
72.2
|
|
|
73.6
|
|
|
64.6
|
|
|
62.3
|
|
|
60.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data at Period End:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Assets
|
$
|
1,817.2
|
|
|
$
|
1,891.5
|
|
|
$
|
1,760.3
|
|
|
$
|
1,677.4
|
|
|
$
|
1,764.3
|
|
Total Debt
|
1,041.3
|
|
|
1,004.0
|
|
|
868.2
|
|
|
741.1
|
|
|
925.6
|
|
|||||
Stockholders’ (Deficit) Equity
|
(149.6
|
)
|
|
50.1
|
|
|
38.0
|
|
|
101.6
|
|
|
9.0
|
|
•
|
Net sales increased
$44 million
, or
1.2%
, to
$3,884 million
in 2018 from
$3,840 million
in 2017.
|
•
|
Operating income in 2018 was
$510 million
compared to
$495 million
in 2017. The increase was primarily due to increased sales, reductions in SG&A expenses, and insurance proceeds received for third-quarter lost profits, partially offset by lower gross profit.
|
•
|
Net income in 2018 increased to
$359 million
from
$306 million
in 2017.
|
•
|
Diluted earnings per share from continuing operations were
$8.77
per share in 2018 compared to
$7.17
per share in 2017.
|
•
|
We generated
$496 million
of cash flow from operating activities in 2018 compared to
$325 million
in 2017. The increase was primarily due to a decrease in working capital and an increase in net income.
|
•
|
In 2018, we returned
$94 million
to shareholders through dividend payments and we used $
450 million
to purchase 2.3 million shares of stock under our Share Repurchase Plans. We also received $115 million in net proceeds from the sale of our businesses in Australia, Asia and South America along with the sale of the related property.
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|||||||||
Net sales
|
$
|
3,883.9
|
|
|
100.0
|
%
|
|
$
|
3,839.6
|
|
|
100.0
|
%
|
|
$
|
3,641.6
|
|
|
100.0
|
%
|
Cost of goods sold
|
2,772.7
|
|
|
71.4
|
%
|
|
2,714.4
|
|
|
70.7
|
%
|
|
2,565.1
|
|
|
70.4
|
%
|
|||
Gross profit
|
1,111.2
|
|
|
28.6
|
%
|
|
1,125.2
|
|
|
29.3
|
%
|
|
1,076.5
|
|
|
29.6
|
%
|
|||
Selling, general and administrative expenses
|
608.2
|
|
|
15.7
|
%
|
|
637.7
|
|
|
16.6
|
%
|
|
621.0
|
|
|
17.1
|
%
|
|||
Losses (gains) and other expenses, net
|
13.4
|
|
|
0.3
|
%
|
|
7.1
|
|
|
0.2
|
%
|
|
11.3
|
|
|
0.3
|
%
|
|||
Restructuring charges
|
3.0
|
|
|
0.1
|
%
|
|
3.2
|
|
|
0.1
|
%
|
|
1.8
|
|
|
—
|
%
|
|||
Loss (gain), net on sale of businesses and related property
|
27.0
|
|
|
0.7
|
%
|
|
1.1
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Gain from insurance recoveries, net of losses incurred
|
(10.9
|
)
|
|
(0.3
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Insurance proceeds for lost profits
|
(27.4
|
)
|
|
(0.7
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Pension settlement
|
0.4
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
31.4
|
|
|
0.9
|
%
|
|||
Income from equity method investments
|
(12.0
|
)
|
|
(0.3
|
)%
|
|
(18.4
|
)
|
|
(0.5
|
)%
|
|
(18.4
|
)
|
|
(0.5
|
)%
|
|||
Operating income
|
$
|
509.5
|
|
|
13.1
|
%
|
|
$
|
494.5
|
|
|
12.9
|
%
|
|
$
|
429.4
|
|
|
11.8
|
%
|
Loss from discontinued operations
|
(1.3
|
)
|
|
—
|
%
|
|
(1.4
|
)
|
|
—
|
%
|
|
(0.8
|
)
|
|
—
|
%
|
|||
Net income
|
$
|
359.0
|
|
|
9.2
|
%
|
|
$
|
305.7
|
|
|
8.0
|
%
|
|
$
|
277.8
|
|
|
7.6
|
%
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|||||||||
Net Sales by Geographic Market:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S.
|
$
|
3,275.9
|
|
|
84.3
|
%
|
|
$
|
3,128.7
|
|
|
81.5
|
%
|
|
$
|
2,966.8
|
|
|
81.5
|
%
|
Canada
|
254.8
|
|
|
6.6
|
|
|
237.8
|
|
|
6.2
|
|
|
218.8
|
|
|
6.0
|
|
|||
International
|
353.2
|
|
|
9.1
|
|
|
473.1
|
|
|
12.3
|
|
|
456.0
|
|
|
12.5
|
|
|||
Total net sales
|
$
|
3,883.9
|
|
|
100.0
|
%
|
|
$
|
3,839.6
|
|
|
100.0
|
%
|
|
$
|
3,641.6
|
|
|
100.0
|
%
|
|
For the Years Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Realized gains, net on settled futures contracts
|
$
|
(0.4
|
)
|
|
$
|
(1.7
|
)
|
Foreign currency exchange losses (gains), net
|
1.7
|
|
|
(1.8
|
)
|
||
Losses on disposal of fixed assets
|
0.7
|
|
|
0.2
|
|
||
Net change in unrealized losses, net on unsettled futures contracts
|
1.5
|
|
|
0.9
|
|
||
Asbestos-related litigation
|
4.0
|
|
|
3.5
|
|
||
Special legal contingency charge
|
1.9
|
|
|
3.7
|
|
||
Environmental liabilities
|
2.2
|
|
|
2.2
|
|
||
Contractor tax payments
|
—
|
|
|
0.1
|
|
||
Other items, net
|
1.8
|
|
|
—
|
|
||
Losses (gains) and other expenses, net
|
$
|
13.4
|
|
|
$
|
7.1
|
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
2,225.0
|
|
|
$
|
2,140.4
|
|
|
$
|
84.6
|
|
|
4.0
|
%
|
Profit
|
$
|
399.4
|
|
|
$
|
373.9
|
|
|
$
|
25.5
|
|
|
6.8
|
%
|
% of net sales
|
18.0
|
%
|
|
17.5
|
%
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
1,043.5
|
|
|
$
|
973.8
|
|
|
$
|
69.7
|
|
|
7.2
|
%
|
Profit
|
$
|
159.5
|
|
|
$
|
157.3
|
|
|
$
|
2.2
|
|
|
1.4
|
%
|
% of net sales
|
15.3
|
%
|
|
16.2
|
%
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
615.4
|
|
|
$
|
725.4
|
|
|
$
|
(110.0
|
)
|
|
(15.2
|
)%
|
Profit
|
$
|
66.1
|
|
|
$
|
72.6
|
|
|
$
|
(6.5
|
)
|
|
(9.0
|
)%
|
% of net sales
|
10.7
|
%
|
|
10.0
|
%
|
|
|
|
|
|
For the Years Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Realized (gains) losses, net on settled futures contracts
|
$
|
(1.7
|
)
|
|
$
|
1.1
|
|
Foreign currency exchange (gains) losses, net
|
(1.8
|
)
|
|
2.2
|
|
||
Losses on disposal of fixed assets
|
0.2
|
|
|
0.5
|
|
||
Net change in unrealized losses (gains), net on unsettled futures contracts
|
0.9
|
|
|
(3.6
|
)
|
||
Asbestos-related litigation
|
3.5
|
|
|
6.3
|
|
||
Special legal contingency charge
|
3.7
|
|
|
1.9
|
|
||
Environmental liabilities
|
2.2
|
|
|
1.9
|
|
||
Contractor tax payments
|
0.1
|
|
|
0.6
|
|
||
Other items, net
|
—
|
|
|
0.4
|
|
||
Losses (gains) and other expenses, net
|
$
|
7.1
|
|
|
$
|
11.3
|
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
2,140.4
|
|
|
$
|
2,000.8
|
|
|
$
|
139.6
|
|
|
7.0
|
%
|
Profit
|
$
|
373.9
|
|
|
$
|
348.8
|
|
|
$
|
25.1
|
|
|
7.2
|
%
|
% of net sales
|
17.5
|
%
|
|
17.4
|
%
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
973.8
|
|
|
$
|
917.9
|
|
|
$
|
55.9
|
|
|
6.1
|
%
|
Profit
|
$
|
157.3
|
|
|
$
|
149.3
|
|
|
$
|
8.0
|
|
|
5.4
|
%
|
% of net sales
|
16.2
|
%
|
|
16.3
|
%
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Difference
|
|
% Change
|
|||||||
Net sales
|
$
|
725.4
|
|
|
$
|
722.9
|
|
|
$
|
2.5
|
|
|
0.3
|
%
|
Profit
|
$
|
72.6
|
|
|
$
|
68.9
|
|
|
$
|
3.7
|
|
|
5.4
|
%
|
% of net sales
|
10.0
|
%
|
|
9.5
|
%
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash provided by operating activities
|
$
|
495.5
|
|
|
$
|
325.1
|
|
|
$
|
373.9
|
|
Net cash provided by (used in) investing activities
|
30.5
|
|
|
(98.1
|
)
|
|
(84.1
|
)
|
|||
Net cash used in financing activities
|
$
|
(537.8
|
)
|
|
$
|
(218.3
|
)
|
|
$
|
(274.6
|
)
|
|
Outstanding Borrowings
|
||
Current maturities of long-term debt:
|
|
||
Asset Securitization Program
(1)
|
$
|
268.0
|
|
Capital lease obligations
|
3.5
|
|
|
Domestic credit facility
(2)
|
30.0
|
|
|
Debt issuance costs
|
(0.7
|
)
|
|
Total current maturities of long-term debt
|
$
|
300.8
|
|
Long-term debt:
|
|
||
Capital lease obligations
|
$
|
15.7
|
|
Domestic credit facility
(2)
|
378.0
|
|
|
Senior unsecured notes
|
350.0
|
|
|
Debt issuance costs
|
(3.2
|
)
|
|
Total long-term debt
|
740.5
|
|
|
Total debt
|
$
|
1,041.3
|
|
(1)
|
The maximum securitization amount ranges from $225.0 million to $380.0 million, depending on the period. The maximum capacity of the Asset Securitization Program (“ASP”) is the lesser of the maximum securitization amount or 100% of the net pool balance less reserves, as defined under the ASP.
|
(2)
|
The available future borrowings on our domestic credit facility are
$429.5 million
after being reduced by the outstanding borrowings and
$2.5 million
in outstanding standby letters of credit. We also had
$30.7 million
in outstanding standby letters of credit outside of the domestic credit facility as of
December 31, 2018
. In January 2019, we increased the maximum revolving credit commitments by $350 million as permitted under the Domestic Credit Facility bringing the total maximum revolving credit commitments to $1.0 billion.
|
Consolidated Indebtedness to Adjusted EBITDA Ratio no greater than
|
3.5 : 1.0
|
Cash Flow to 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 exceeding $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 exceeding $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.
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
1 Year or Less
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More than 5 Years
|
||||||||||
Total long-term debt obligations
(1)
|
$
|
1,045.2
|
|
|
$
|
301.5
|
|
|
$
|
381.9
|
|
|
$
|
350.1
|
|
|
$
|
11.7
|
|
Estimated interest payments on debt obligations
(2)
|
$
|
98.3
|
|
|
33.5
|
|
|
43.9
|
|
|
20.0
|
|
|
0.9
|
|
||||
Operating leases
|
159.7
|
|
|
47.4
|
|
|
65.6
|
|
|
30.6
|
|
|
16.1
|
|
|||||
Purchase obligations
(3)
|
27.2
|
|
|
27.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
1,330.4
|
|
|
$
|
409.6
|
|
|
$
|
491.4
|
|
|
$
|
400.7
|
|
|
$
|
28.7
|
|
Level 2 -
|
Quoted prices for
similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are
observable
in active markets at the measurement date and for the anticipated term of the instrument.
|
Level 3
-
|
Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are
unobservable
inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
|
Notional amount (pounds of aluminum and copper)
|
19.4
|
|
|
Carrying amount and fair value of net liability
|
$
|
(10.8
|
)
|
Change in fair value from 10% change in forward prices
|
$
|
8.6
|
|
•
|
Product warranties and product-related contingencies; and
|
•
|
Self-insurance expense.
|
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except shares and par values)
|
|||||||
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|||||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
46.3
|
|
|
$
|
68.2
|
|
Accounts and notes receivable, net of allowances of $6.3 and $5.9 in 2018 and 2017, respectively
|
472.7
|
|
|
506.5
|
|
||
Inventories, net
|
509.8
|
|
|
484.2
|
|
||
Other assets
|
60.6
|
|
|
78.4
|
|
||
Total current assets
|
1,089.4
|
|
|
1,137.3
|
|
||
Property, plant and equipment, net of accumulated depreciation of $778.5 and $774.2 in 2018 and 2017, respectively
|
408.3
|
|
|
397.8
|
|
||
Goodwill
|
186.6
|
|
|
200.5
|
|
||
Deferred income taxes
|
67.0
|
|
|
94.4
|
|
||
Other assets, net
|
65.9
|
|
|
61.5
|
|
||
Total assets
|
$
|
1,817.2
|
|
|
$
|
1,891.5
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|||||||
Current Liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
—
|
|
|
$
|
0.9
|
|
Current maturities of long-term debt
|
300.8
|
|
|
32.6
|
|
||
Accounts payable
|
433.3
|
|
|
348.6
|
|
||
Accrued expenses
|
272.3
|
|
|
270.3
|
|
||
Income taxes payable
|
2.1
|
|
|
2.1
|
|
||
Total current liabilities
|
1,008.5
|
|
|
654.5
|
|
||
Long-term debt
|
740.5
|
|
|
970.5
|
|
||
Pensions
|
82.8
|
|
|
84.5
|
|
||
Other liabilities
|
135.0
|
|
|
131.9
|
|
||
Total liabilities
|
1,966.8
|
|
|
1,841.4
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders' (deficit) 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
|
1,078.8
|
|
|
1,061.5
|
|
||
Retained earnings
|
1,855.0
|
|
|
1,575.9
|
|
||
Accumulated other comprehensive loss
|
(188.8
|
)
|
|
(157.4
|
)
|
||
Treasury stock, at cost, shares 47,312,248 and 45,361,145 shares for 2018 and 2017, respectively
|
(2,895.5
|
)
|
|
(2,430.8
|
)
|
||
Total stockholders' (deficit) equity
|
(149.6
|
)
|
|
50.1
|
|
||
Total liabilities and stockholders' (deficit) equity
|
$
|
1,817.2
|
|
|
$
|
1,891.5
|
|
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
|
|||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net sales
|
$
|
3,883.9
|
|
|
$
|
3,839.6
|
|
|
$
|
3,641.6
|
|
Cost of goods sold
|
2,772.7
|
|
|
2,714.4
|
|
|
2,565.1
|
|
|||
Gross profit
|
1,111.2
|
|
|
1,125.2
|
|
|
1,076.5
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
608.2
|
|
|
637.7
|
|
|
621.0
|
|
|||
Losses (gains) and other expenses, net
|
13.4
|
|
|
7.1
|
|
|
11.3
|
|
|||
Restructuring charges
|
3.0
|
|
|
3.2
|
|
|
1.8
|
|
|||
Pension settlement
|
0.4
|
|
|
—
|
|
|
31.4
|
|
|||
Loss (gain), net on sale of businesses and related property
|
27.0
|
|
|
1.1
|
|
|
—
|
|
|||
Insurance proceeds for lost profits
|
(27.4
|
)
|
|
—
|
|
|
—
|
|
|||
Gain from insurance recoveries, net of losses incurred
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
|||
Income from equity method investments
|
(12.0
|
)
|
|
(18.4
|
)
|
|
(18.4
|
)
|
|||
Operating income
|
509.5
|
|
|
494.5
|
|
|
429.4
|
|
|||
Interest expense, net
|
38.3
|
|
|
30.6
|
|
|
27.0
|
|
|||
Other expense (income), net
|
3.3
|
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|||
Income from continuing operations before income taxes
|
467.9
|
|
|
464.0
|
|
|
402.7
|
|
|||
Provision for income taxes
|
107.6
|
|
|
156.9
|
|
|
124.1
|
|
|||
Income from continuing operations
|
360.3
|
|
|
307.1
|
|
|
278.6
|
|
|||
Discontinued operations:
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations before income taxes
|
0.8
|
|
|
(2.2
|
)
|
|
(1.3
|
)
|
|||
Income tax expense (benefit)
|
2.1
|
|
|
(0.8
|
)
|
|
(0.5
|
)
|
|||
Loss from discontinued operations
|
(1.3
|
)
|
|
(1.4
|
)
|
|
(0.8
|
)
|
|||
Net income
|
$
|
359.0
|
|
|
$
|
305.7
|
|
|
$
|
277.8
|
|
|
|
|
|
|
|
||||||
Earnings per share – Basic:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
8.87
|
|
|
$
|
7.28
|
|
|
$
|
6.41
|
|
Loss from discontinued operations
|
(0.03
|
)
|
|
(0.03
|
)
|
|
(0.02
|
)
|
|||
Net income
|
$
|
8.84
|
|
|
$
|
7.25
|
|
|
$
|
6.39
|
|
|
|
|
|
|
|
||||||
Earnings per share – Diluted:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
8.77
|
|
|
$
|
7.17
|
|
|
$
|
6.34
|
|
Loss from discontinued operations
|
(0.03
|
)
|
|
(0.03
|
)
|
|
(0.02
|
)
|
|||
Net income
|
$
|
8.74
|
|
|
$
|
7.14
|
|
|
$
|
6.32
|
|
|
|
|
|
|
|
||||||
Weighted Average Number of Shares Outstanding - Basic
|
40.6
|
|
|
42.2
|
|
|
43.4
|
|
|||
Weighted Average Number of Shares Outstanding - Diluted
|
41.1
|
|
|
42.8
|
|
|
44.0
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends declared per share
|
$
|
2.43
|
|
|
$
|
1.96
|
|
|
$
|
1.65
|
|
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In millions)
|
|||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
359.0
|
|
|
305.7
|
|
|
277.8
|
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(16.9
|
)
|
|
33.9
|
|
|
(11.6
|
)
|
|||
Reclassification of foreign currency translation adjustments into earnings
|
27.9
|
|
|
—
|
|
|
—
|
|
|||
Net change in pension and post-retirement benefit liabilities
|
(13.8
|
)
|
|
(5.3
|
)
|
|
10.4
|
|
|||
Change in fair value of available-for-sale marketable equity securities
|
(1.8
|
)
|
|
(0.5
|
)
|
|
(2.1
|
)
|
|||
Net change in fair value of cash flow hedges
|
(13.6
|
)
|
|
16.1
|
|
|
9.8
|
|
|||
Reclassification of pension and post-retirement benefit losses into earnings
|
9.3
|
|
|
7.3
|
|
|
6.3
|
|
|||
Reclassification of cash flow hedge losses into earnings
|
(6.1
|
)
|
|
(13.7
|
)
|
|
12.3
|
|
|||
Other comprehensive (loss) income before taxes
|
$
|
(15.0
|
)
|
|
$
|
37.8
|
|
|
$
|
25.1
|
|
Tax expense
|
(16.4
|
)
|
|
(0.1
|
)
|
|
(15.5
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
(31.4
|
)
|
|
37.7
|
|
|
9.6
|
|
|||
Comprehensive income
|
$
|
327.6
|
|
|
$
|
343.4
|
|
|
$
|
287.4
|
|
|
|
Common Stock Issued
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury Stock at Cost
|
|
Non-controlling Interests
|
|
Total Stockholders’ (Deficit) Equity
|
|||||||||||||||||
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||||
Balance as of December 31, 2015
|
|
0.9
|
|
|
1,002.4
|
|
|
1,146.7
|
|
|
(204.7
|
)
|
|
42.5
|
|
|
(1,844.1
|
)
|
|
0.4
|
|
|
101.6
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
277.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
277.8
|
|
|||||||
Dividends, $1.65 per share
|
|
—
|
|
|
—
|
|
|
(71.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71.5
|
)
|
|||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.6
|
)
|
|||||||
Pension and post-retirement liability changes, net of tax benefit of $7.4
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.3
|
|
|||||||
Change in fair value of available-for-sale marketable equity securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
31.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31.7
|
|
|||||||
Change in cash flow hedges, net of tax benefit of $8.0
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.0
|
|
|||||||
Treasury shares reissued for common stock
|
|
—
|
|
|
(7.3
|
)
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
10.0
|
|
|
—
|
|
|
2.7
|
|
|||||||
Additional investment in subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Treasury stock purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
(333.3
|
)
|
|
—
|
|
|
(333.3
|
)
|
|||||||
Tax benefits of stock-based compensation
|
|
—
|
|
|
19.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19.4
|
|
|||||||
Balance as of December 31, 2016
|
|
0.9
|
|
|
1,046.2
|
|
|
1,353.0
|
|
|
(195.1
|
)
|
|
44.2
|
|
|
(2,167.4
|
)
|
|
0.4
|
|
|
38.0
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
305.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
305.7
|
|
|||||||
Dividends, $1.96 per share
|
|
—
|
|
|
—
|
|
|
(82.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(82.8
|
)
|
|||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33.9
|
|
|||||||
Pension and post-retirement liability changes, net of tax benefit of $0.5
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|||||||
Change in fair value of available-for-sale marketable equity securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
24.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24.9
|
|
|||||||
Change in cash flow hedges, net of tax expense of $0.6
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|||||||
Treasury shares reissued for common stock
|
|
—
|
|
|
(9.6
|
)
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
12.7
|
|
|
—
|
|
|
3.1
|
|
|||||||
Additional investment in subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|||||||
Treasury stock purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
(276.1
|
)
|
|
—
|
|
|
(276.1
|
)
|
|||||||
Balance as of December 31, 2017
|
|
0.9
|
|
|
1,061.5
|
|
|
1,575.9
|
|
|
(157.4
|
)
|
|
45.4
|
|
|
(2,430.8
|
)
|
|
—
|
|
|
50.1
|
|
|||||||
Cumulative effect adjustment upon adoption of new accounting standard (ASU 2016-16), (ASU 2018-02) and (ASC 606)
|
|
—
|
|
|
—
|
|
|
16.5
|
|
|
(22.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.2
|
)
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
359.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
359.0
|
|
|||||||
Dividends, $2.43 per share
|
|
—
|
|
|
—
|
|
|
(98.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98.2
|
)
|
|||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.0
|
|
|||||||
Pension and post-retirement liability changes, net of tax benefit of $1.6
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.8
|
)
|
|||||||
Sale of marketable equity securities
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
26.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26.3
|
|
|||||||
Change in cash flow hedges, net of tax benefit of $4.7
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.1
|
)
|
|||||||
Treasury shares reissued for common stock
|
|
—
|
|
|
(9.0
|
)
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
12.4
|
|
|
—
|
|
|
3.4
|
|
|||||||
Treasury stock purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|
(477.1
|
)
|
|
—
|
|
|
(477.1
|
)
|
|||||||
Balance as of December 31, 2018
|
|
$
|
0.9
|
|
|
$
|
1,078.8
|
|
|
$
|
1,855.0
|
|
|
$
|
(188.8
|
)
|
|
47.3
|
|
|
$
|
(2,895.5
|
)
|
|
$
|
—
|
|
|
$
|
(149.6
|
)
|
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2018, 2017 and 2016
(In millions)
|
|||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
359.0
|
|
|
$
|
305.7
|
|
|
$
|
277.8
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Gain on sale of real estate
|
(23.8
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment/loss on the sale of Australia business
|
13.3
|
|
|
—
|
|
|
—
|
|
|||
Impairment/loss on the sale of South America business
|
37.5
|
|
|
—
|
|
|
—
|
|
|||
Gain from insurance recoveries, net of losses incurred
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
|||
Income from equity method investments
|
(12.0
|
)
|
|
(18.4
|
)
|
|
(18.4
|
)
|
|||
Dividends from affiliates
|
9.6
|
|
|
14.7
|
|
|
14.9
|
|
|||
Restructuring expenses, net of cash paid
|
1.3
|
|
|
0.8
|
|
|
(0.8
|
)
|
|||
Provision for bad debts
|
4.7
|
|
|
3.9
|
|
|
2.4
|
|
|||
Unrealized losses (gains), net on derivative contracts
|
1.3
|
|
|
(2.0
|
)
|
|
(0.7
|
)
|
|||
Stock-based compensation expense
|
26.3
|
|
|
24.9
|
|
|
31.7
|
|
|||
Depreciation and amortization
|
66.0
|
|
|
64.6
|
|
|
58.1
|
|
|||
Deferred income taxes
|
25.2
|
|
|
43.3
|
|
|
(4.0
|
)
|
|||
Pension expense
|
8.8
|
|
|
5.3
|
|
|
37.7
|
|
|||
Pension contributions
|
(20.6
|
)
|
|
(3.5
|
)
|
|
(53.9
|
)
|
|||
Other items, net
|
5.1
|
|
|
1.3
|
|
|
0.9
|
|
|||
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
|
|
|
||||||
Accounts and notes receivable
|
(9.9
|
)
|
|
(28.4
|
)
|
|
(50.6
|
)
|
|||
Inventories
|
(84.2
|
)
|
|
(56.4
|
)
|
|
0.3
|
|
|||
Other current assets
|
(0.2
|
)
|
|
(6.1
|
)
|
|
0.1
|
|
|||
Accounts payable
|
102.2
|
|
|
(18.5
|
)
|
|
40.1
|
|
|||
Accrued expenses
|
5.9
|
|
|
0.3
|
|
|
36.2
|
|
|||
Income taxes payable and receivable
|
(5.5
|
)
|
|
(6.7
|
)
|
|
(0.1
|
)
|
|||
Other, net
|
(3.6
|
)
|
|
0.3
|
|
|
2.2
|
|
|||
Net cash provided by operating activities
|
495.5
|
|
|
325.1
|
|
|
373.9
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from the disposal of property, plant and equipment
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
|||
Purchases of property, plant and equipment
|
(95.2
|
)
|
|
(98.3
|
)
|
|
(84.3
|
)
|
|||
Net proceeds from sale of businesses and related property
|
114.7
|
|
|
—
|
|
|
—
|
|
|||
Insurance recoveries received for property damage incurred from natural disaster
|
10.9
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
30.5
|
|
|
(98.1
|
)
|
|
(84.1
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Short-term borrowings, net
|
—
|
|
|
(1.5
|
)
|
|
(2.4
|
)
|
|||
Asset securitization borrowings
|
155.0
|
|
|
315.0
|
|
|
145.0
|
|
|||
Asset securitization payments
|
(163.0
|
)
|
|
(89.0
|
)
|
|
(295.0
|
)
|
|||
Long-term debt borrowings
|
—
|
|
|
—
|
|
|
350.0
|
|
|||
Long-term debt payments
|
(33.0
|
)
|
|
(200.9
|
)
|
|
(58.8
|
)
|
|||
Borrowings from credit facility
|
2,435.9
|
|
|
2,376.5
|
|
|
2,336.5
|
|
|||
Payments on credit facility
|
(2,365.0
|
)
|
|
(2,265.5
|
)
|
|
(2,346.0
|
)
|
|||
Payments of deferred financing costs
|
—
|
|
|
(0.2
|
)
|
|
(4.2
|
)
|
|||
Proceeds from employee stock purchases
|
3.3
|
|
|
3.1
|
|
|
2.6
|
|
|||
Repurchases of common stock
|
(450.2
|
)
|
|
(250.0
|
)
|
|
(300.0
|
)
|
|||
Repurchases of common stock to satisfy employee withholding tax obligations
|
(26.9
|
)
|
|
(26.1
|
)
|
|
(33.3
|
)
|
|||
Cash dividends paid
|
(93.9
|
)
|
|
(79.7
|
)
|
|
(69.0
|
)
|
|||
Net cash used in financing activities
|
(537.8
|
)
|
|
(218.3
|
)
|
|
(274.6
|
)
|
|||
Increase in cash and cash equivalents
|
(11.8
|
)
|
|
8.7
|
|
|
15.2
|
|
|||
Effect of exchange rates on cash and cash equivalents
|
(10.1
|
)
|
|
9.3
|
|
|
(3.9
|
)
|
|||
Cash and cash equivalents, beginning of year
|
68.2
|
|
|
50.2
|
|
|
38.9
|
|
|||
Cash and cash equivalents, end of year
|
$
|
46.3
|
|
|
$
|
68.2
|
|
|
$
|
50.2
|
|
|
|
|
|
|
|
||||||
Supplementary disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest, net
|
$
|
38.7
|
|
|
$
|
32.4
|
|
|
$
|
26.3
|
|
Income taxes (net of refunds)
|
$
|
90.0
|
|
|
$
|
119.3
|
|
|
$
|
127.4
|
|
Insurance recoveries received
|
$
|
124.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Asset
|
Useful Life
|
Deferred financing costs
|
Effective interest method
|
Customer relationships
|
Straight-line method up to 12 years
|
Patents and others
|
Straight-line method up to 20 years
|
BALANCE SHEET
|
Balance at December 31, 2017
|
|
Adjustments Due to ASC 606
|
|
Balance at January 1, 2018
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Accounts and notes receivable, net
|
$
|
506.5
|
|
|
$
|
8.3
|
|
|
$
|
514.8
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
|
|
||||||
Accounts payable
|
348.6
|
|
|
9.3
|
|
|
357.9
|
|
|||
Retained earnings
|
1,575.9
|
|
|
(1.0
|
)
|
|
1,574.9
|
|
|
For the Year Ended December 31, 2018
|
||||||||||
|
As Reported
|
|
Activity Without Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower)
|
||||||
STATEMENT OF OPERATIONS
|
|
|
|
|
|
||||||
Net sales
|
$
|
3,883.9
|
|
|
$
|
3,884.1
|
|
|
$
|
(0.2
|
)
|
Net income
|
359.0
|
|
|
359.1
|
|
|
(0.1
|
)
|
|
For the Year Ended December 31, 2018
|
||||||||||||||
Primary Geographic Markets
|
Residential Heating & Cooling
|
|
Commercial Heating & Cooling
|
|
Refrigeration
|
|
Consolidated
|
||||||||
United States
|
$
|
2,066.7
|
|
|
$
|
806.0
|
|
|
$
|
403.2
|
|
|
$
|
3,275.9
|
|
Canada
|
158.3
|
|
|
92.1
|
|
|
4.4
|
|
|
254.8
|
|
||||
International
|
—
|
|
|
145.4
|
|
|
207.8
|
|
|
353.2
|
|
||||
Total
|
$
|
2,225.0
|
|
|
1,043.5
|
|
|
615.4
|
|
|
3,883.9
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
$ Change
|
|
% Change
|
|||||||
Contract assets
|
$
|
2.5
|
|
|
$
|
2.1
|
|
|
$
|
0.4
|
|
|
19.0
|
%
|
Contract liabilities - current
|
(13.0
|
)
|
|
(7.3
|
)
|
|
(5.7
|
)
|
|
78.1
|
%
|
|||
Contract liabilities - noncurrent
|
(5.9
|
)
|
|
(5.5
|
)
|
|
(0.4
|
)
|
|
7.3
|
%
|
|||
Total
|
$
|
(16.4
|
)
|
|
$
|
(10.7
|
)
|
|
$
|
(5.7
|
)
|
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Finished goods
|
$
|
330.5
|
|
|
$
|
331.9
|
|
Work in process
|
10.0
|
|
|
5.5
|
|
||
Raw materials and parts
|
229.1
|
|
|
199.2
|
|
||
Total
|
569.6
|
|
|
536.6
|
|
||
Excess of current cost over last-in, first-out cost
|
(59.8
|
)
|
|
(52.4
|
)
|
||
Total inventories, net
|
$
|
509.8
|
|
|
$
|
484.2
|
|
Segment:
|
Balance at December 31, 2016
(1)
|
|
Changes in foreign currency translation rates
|
|
Balance at December 31, 2017
|
|
Write-off due to divested businesses
|
|
Changes in foreign currency translation rates
|
|
Balance at December 31, 2018
|
||||||||||||
Residential Heating & Cooling
|
$
|
26.1
|
|
|
$
|
—
|
|
|
$
|
26.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26.1
|
|
Commercial Heating & Cooling
|
60.1
|
|
|
2.1
|
|
|
62.2
|
|
|
—
|
|
|
(0.8
|
)
|
|
61.4
|
|
||||||
Refrigeration
|
108.9
|
|
|
3.3
|
|
|
112.2
|
|
|
(11.5
|
)
|
|
(1.6
|
)
|
|
99.1
|
|
||||||
|
$
|
195.1
|
|
|
$
|
5.4
|
|
|
$
|
200.5
|
|
|
$
|
(11.5
|
)
|
|
$
|
(2.4
|
)
|
|
$
|
186.6
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Land
|
$
|
25.5
|
|
|
$
|
35.7
|
|
Buildings and improvements
|
210.9
|
|
|
234.4
|
|
||
Machinery and equipment
|
838.6
|
|
|
804.4
|
|
||
Capital leases
|
49.9
|
|
|
27.5
|
|
||
Construction in progress and equipment not yet in service
|
61.9
|
|
|
70.0
|
|
||
Total
|
1,186.8
|
|
|
1,172.0
|
|
||
Less accumulated depreciation
|
(778.5
|
)
|
|
(774.2
|
)
|
||
Property, plant and equipment, net
|
$
|
408.3
|
|
|
$
|
397.8
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Equity method investments
|
$
|
36.6
|
|
|
$
|
33.3
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Purchases of compressors from joint venture
|
$
|
103.1
|
|
|
$
|
106.4
|
|
|
$
|
97.7
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Accrued rebates and promotions
|
$
|
70.8
|
|
|
$
|
70.3
|
|
Accrued compensation and benefits
|
69.0
|
|
|
80.7
|
|
||
Accrued warranties
|
37.9
|
|
|
34.8
|
|
||
Accrued sales, use, property and VAT taxes
|
20.7
|
|
|
21.6
|
|
||
Deferred income
|
13.0
|
|
|
7.3
|
|
||
Derivative contracts
|
10.2
|
|
|
1.4
|
|
||
Accrued asbestos reserves
|
9.7
|
|
|
8.5
|
|
||
Self insurance reserves
|
6.0
|
|
|
7.3
|
|
||
Other
|
35.0
|
|
|
38.4
|
|
||
Total Accrued expenses
|
$
|
272.3
|
|
|
$
|
270.3
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Unrealized losses (gains) on unsettled contracts
|
$
|
8.4
|
|
|
$
|
(11.3
|
)
|
Income tax (benefit) expense
|
(2.2
|
)
|
|
3.9
|
|
||
Losses (Gains) included in AOCL, net of tax (1)
|
$
|
6.2
|
|
|
$
|
(7.4
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
59.5
|
|
|
$
|
86.1
|
|
|
$
|
106.0
|
|
State
|
17.8
|
|
|
12.5
|
|
|
14.5
|
|
|||
Foreign
|
4.6
|
|
|
15.0
|
|
|
9.7
|
|
|||
Total current
|
81.9
|
|
|
113.6
|
|
|
130.2
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
23.2
|
|
|
43.8
|
|
|
(4.5
|
)
|
|||
State
|
1.0
|
|
|
0.9
|
|
|
(1.2
|
)
|
|||
Foreign
|
1.5
|
|
|
(1.4
|
)
|
|
(0.4
|
)
|
|||
Total deferred
|
25.7
|
|
|
43.3
|
|
|
(6.1
|
)
|
|||
Total provision for income taxes
|
$
|
107.6
|
|
|
$
|
156.9
|
|
|
$
|
124.1
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Provision at the U.S. statutory rate of 21% (35% for 2017, 2016)
|
$
|
98.3
|
|
|
$
|
162.4
|
|
|
$
|
141.0
|
|
Increase (reduction) in tax expense resulting from:
|
|
|
|
|
|
||||||
State income tax, net of federal income tax benefit
|
15.5
|
|
|
9.2
|
|
|
12.8
|
|
|||
Domestic manufacturing deduction
|
—
|
|
|
(9.6
|
)
|
|
(9.2
|
)
|
|||
Tax credits, net of unrecognized tax benefits
|
(2.5
|
)
|
|
(8.6
|
)
|
|
(27.9
|
)
|
|||
Change in unrecognized tax benefits
|
0.4
|
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|||
Change in valuation allowance
|
5.0
|
|
|
6.4
|
|
|
(4.3
|
)
|
|||
Foreign taxes at rates other than U.S. statutory rate
|
(3.2
|
)
|
|
(9.0
|
)
|
|
(1.3
|
)
|
|||
Deemed inclusions
|
3.9
|
|
|
0.3
|
|
|
16.9
|
|
|||
Change in rates from the Tax Act & other law changes
|
1.9
|
|
|
31.8
|
|
|
(0.6
|
)
|
|||
Excess tax benefits from stock-based compensation
|
(10.5
|
)
|
|
(23.6
|
)
|
|
—
|
|
|||
Miscellaneous other
|
(1.2
|
)
|
|
(2.3
|
)
|
|
(3.0
|
)
|
|||
Total provision for income taxes
|
$
|
107.6
|
|
|
$
|
156.9
|
|
|
$
|
124.1
|
|
•
|
The Tax Act reduced the corporate tax rate to 21 percent, effective January 1, 2018. For our net federal deferred tax assets (“DTA”), we recorded a provisional decrease of
$32.1 million
, with a corresponding net adjustment to deferred income tax expense of
$32.1 million
for the year ended December 31, 2017. This adjustment was based on a reasonable estimate of the impact of the reduction in the corporate tax rate on our DTA’s as of December 22, 2017. Due to the Tax Act, several applications for changes in accounting method were filed with the IRS to accelerate deductions into the 2017 U.S. federal income tax return. Primarily on the basis of finalized calculations for accounting method changes that were completed during the reporting period, we recognized a deferred income tax benefit of
$4.5 million
for the year ended December 31, 2018.
|
•
|
The Deemed Repatriation Transition Tax (Transition Tax) is a tax on previously untaxed accumulated and current earnings and profits “(E&P)” of certain of our foreign subsidiaries. To assess the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We were able to make a reasonable estimate of the Transition Tax and determined that we would not have a Transition Tax obligation for the year ended December 31, 2017. However, on the basis of revised E&P computations that were completed during the reporting period, we recognized an additional measurement-period adjustment of
$2.8 million
of Transition Tax obligation for federal and state taxes. The Transition Tax has now been determined to be complete.
|
•
|
For the year ended December 31, 2017, we were able to reasonably assess whether our valuation allowance analyses were affected by various aspects of the Tax Act (e.g., deemed repatriation of deferred foreign income, global intangible low-taxed income (“GILTI”) inclusions, new categories of foreign tax credits (“FTCs”), and share-based compensation) and recorded provisional amounts related to certain portions of the Tax Act. Due to the limitation on the utilization of future foreign tax credits, we recorded a provisional valuation allowance against our FTC carryforwards of
$4.3 million
. On the basis of finalized calculations that were completed during the reporting period and 2018 divestiture activity, it is now expected that the foreign tax credits will be realized and no valuation allowance is needed. For the year ended December 31, 2018, the FTC carryforward valuation allowance is
zero
.
|
•
|
Based on the intent to fully expense all qualifying depreciable asset expenditures allowed under the Tax Act, we recorded a provisional benefit of
$4.1 million
for the year ended December 31, 2017. This resulted in a decrease of approximately
$1.4 million
to our current income tax payable and a corresponding increase in our deferred tax liabilities (“DTLs”) of approximately
$0.9 million
(after considering the effects of the reduction in income tax rates). On the basis of finalized
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Gross deferred tax assets:
|
|
|
|
||||
Warranties
|
$
|
27.8
|
|
|
$
|
27.3
|
|
Loss carryforwards (foreign, U.S. and state)
|
23.1
|
|
|
21.0
|
|
||
Post-retirement and pension benefits
|
21.3
|
|
|
23.3
|
|
||
Inventory reserves
|
9.3
|
|
|
7.5
|
|
||
Receivables allowance
|
3.4
|
|
|
3.5
|
|
||
Compensation liabilities
|
7.9
|
|
|
11.1
|
|
||
Insurance liabilities
|
2.9
|
|
|
5.1
|
|
||
Legal reserves
|
7.4
|
|
|
7.6
|
|
||
Tax credits, net of federal effect
|
11.0
|
|
|
21.3
|
|
||
Other
|
8.1
|
|
|
8.2
|
|
||
Total deferred tax assets
|
122.2
|
|
|
135.9
|
|
||
Valuation allowance
|
(25.4
|
)
|
|
(24.9
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
96.8
|
|
|
111.0
|
|
||
Gross deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
(22.1
|
)
|
|
(5.9
|
)
|
||
Intangibles
|
(5.4
|
)
|
|
(4.9
|
)
|
||
Other
|
(2.3
|
)
|
|
(5.8
|
)
|
||
Total deferred tax liabilities
|
(29.8
|
)
|
|
(16.6
|
)
|
||
Net deferred tax assets
|
$
|
67.0
|
|
|
$
|
94.4
|
|
|
Operating Leases
|
|
Capital Leases
|
||||
2019
|
$
|
47.4
|
|
|
$
|
6.6
|
|
2020
|
38.4
|
|
|
5.4
|
|
||
2021
|
27.2
|
|
|
3.8
|
|
||
2022
|
17.9
|
|
|
2.1
|
|
||
2023
|
12.7
|
|
|
0.9
|
|
||
Thereafter
|
16.1
|
|
|
12.8
|
|
||
Total minimum lease payments
|
$
|
159.7
|
|
|
$
|
31.6
|
|
Less amount representing interest
|
|
|
2.1
|
|
|||
Present value of minimum payments
|
|
|
$
|
29.5
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Accrued expenses
|
$
|
37.9
|
|
|
$
|
34.8
|
|
Other liabilities
|
73.7
|
|
|
75.1
|
|
||
Total product warranty liabilities
|
$
|
111.6
|
|
|
$
|
109.9
|
|
Total warranty liability as of December 31, 2016
|
$
|
101.1
|
|
Payments made in 2017
|
(28.8
|
)
|
|
Changes resulting from issuance of new warranties
|
41.1
|
|
|
Changes in estimates associated with pre-existing liabilities
|
(4.8
|
)
|
|
Changes in foreign currency translation rates and other
|
1.3
|
|
|
Total warranty liability as of December 31, 2017
|
$
|
109.9
|
|
Payments made in 2018
|
(31.6
|
)
|
|
Changes resulting from issuance of new warranties
|
36.8
|
|
|
Changes in estimates associated with pre-existing liabilities
|
(1.5
|
)
|
|
Changes in foreign currency translation rates and other
|
(0.8
|
)
|
|
Warranty liability from divestitures
|
(1.2
|
)
|
|
Total warranty liability as of December 31, 2018
|
$
|
111.6
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Accrued expenses
|
$
|
6.0
|
|
|
$
|
7.3
|
|
Other liabilities
|
19.5
|
|
|
21.6
|
|
||
Total self-insurance liabilities
|
$
|
25.5
|
|
|
$
|
28.9
|
|
(Amounts in millions)
|
For the Year Ended December 31, 2018
|
||
Insurance recoveries received
|
$
|
124.3
|
|
Less losses and expenses incurred:
|
|
||
Site clean-up and remediation
|
50.9
|
|
|
Factory inefficiencies due to lower productivity
|
7.4
|
|
|
Write-off of property, plant and equipment
|
4.2
|
|
|
Write-off of inventory
|
5.8
|
|
|
Other
|
17.7
|
|
|
Total losses and expenses
|
$
|
86.0
|
|
Gain from insurance recoveries
|
$
|
38.3
|
|
Presentation in the Consolidated Statements of Operations:
|
|
||
Gain from insurance recoveries, net of losses incurred
|
$
|
10.9
|
|
Insurance proceeds for lost profits
|
$
|
27.4
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Short-Term Debt:
|
|
|
|
||||
Foreign obligations
|
$
|
—
|
|
|
$
|
0.9
|
|
Total short-term debt
|
$
|
—
|
|
|
$
|
0.9
|
|
Current maturities of long-term debt:
|
|
|
|
||||
Asset Securitization Program
|
$
|
268.0
|
|
|
$
|
—
|
|
Capital lease obligations
|
3.5
|
|
|
3.2
|
|
||
Domestic credit facility
|
30.0
|
|
|
30.0
|
|
||
Debt issuance costs
|
(0.7
|
)
|
|
(0.6
|
)
|
||
Total current maturities of long-term debt
|
$
|
300.8
|
|
|
$
|
32.6
|
|
Long-Term Debt:
|
|
|
|
||||
Asset Securitization Program
|
$
|
—
|
|
|
$
|
276.0
|
|
Capital lease obligations
|
15.7
|
|
|
11.9
|
|
||
Domestic credit facility
|
378.0
|
|
|
337.0
|
|
||
Senior unsecured notes
|
350.0
|
|
|
350.0
|
|
||
Debt issuance costs
|
(3.2
|
)
|
|
(4.4
|
)
|
||
Total long-term debt
|
$
|
740.5
|
|
|
$
|
970.5
|
|
Total debt
|
$
|
1,041.3
|
|
|
$
|
1,004.0
|
|
2019
|
$
|
301.5
|
|
2020
|
32.6
|
|
|
2021
|
349.3
|
|
|
2022
|
0.1
|
|
|
2023
|
350.0
|
|
|
Thereafter
|
11.7
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Eligible amount available under the ASP on qualified accounts receivable
|
$
|
290.0
|
|
|
$
|
290.0
|
|
Less: Beneficial interest transferred
|
(268.0
|
)
|
|
(276.0
|
)
|
||
Remaining amount available
|
$
|
22.0
|
|
|
$
|
14.0
|
|
|
As of December 31,
|
||||
|
2018
|
|
2017
|
||
Weighted average borrowing rate
|
3.74
|
%
|
|
2.76
|
%
|
Consolidated Indebtedness to Adjusted EBITDA Ratio no greater than
|
3.5 : 1.0
|
Cash Flow to 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 exceeding
$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 exceeding
$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 Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Contributions to defined contribution plans
|
$
|
18.8
|
|
|
$
|
18.1
|
|
|
$
|
16.3
|
|
|
Pension Benefits
|
||||||
|
2018
|
|
2017
|
||||
Accumulated benefit obligation
|
$
|
368.0
|
|
|
$
|
401.5
|
|
|
|
|
|
||||
Changes in projected benefit obligation:
|
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
405.5
|
|
|
$
|
381.6
|
|
Service cost
|
5.3
|
|
|
5.0
|
|
||
Interest cost
|
12.3
|
|
|
12.6
|
|
||
Other
|
0.3
|
|
|
—
|
|
||
Actuarial (gain) loss
|
(26.4
|
)
|
|
22.1
|
|
||
Effect of exchange rates
|
(2.7
|
)
|
|
4.3
|
|
||
Settlements and curtailments
|
(1.3
|
)
|
|
(1.3
|
)
|
||
Benefits paid
|
(21.1
|
)
|
|
(18.8
|
)
|
||
Benefit obligation at end of year
|
$
|
371.9
|
|
|
$
|
405.5
|
|
|
|
|
|
||||
Changes in plan assets:
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
318.6
|
|
|
$
|
292.5
|
|
Actual (loss) gain return on plan assets
|
(23.3
|
)
|
|
39.8
|
|
||
Employer contribution
|
20.6
|
|
|
3.5
|
|
||
Effect of exchange rates
|
(2.5
|
)
|
|
2.9
|
|
||
Plan settlements
|
(1.3
|
)
|
|
(1.3
|
)
|
||
Benefits paid
|
(21.1
|
)
|
|
(18.8
|
)
|
||
Fair value of plan assets at end of year
|
291.0
|
|
|
318.6
|
|
||
Funded status / net amount recognized
|
$
|
(80.9
|
)
|
|
$
|
(86.9
|
)
|
|
|
|
|
||||
Net amount recognized consists of:
|
|
|
|
||||
Non-current assets
|
$
|
3.3
|
|
|
$
|
1.6
|
|
Current liability
|
(1.4
|
)
|
|
(4.0
|
)
|
||
Non-current liability
|
(82.8
|
)
|
|
(84.5
|
)
|
||
Net amount recognized
|
$
|
(80.9
|
)
|
|
$
|
(86.9
|
)
|
|
For the Years Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Pension plans with a benefit obligation in excess of plan assets:
|
|
|
|
||||
Projected benefit obligation
|
$
|
357.2
|
|
|
$
|
394.4
|
|
Accumulated benefit obligation
|
353.4
|
|
|
390.4
|
|
||
Fair value of plan assets
|
275.0
|
|
|
305.9
|
|
|
Pension Benefits
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Components of net periodic benefit cost as of December 31:
|
|
|
|
|
|
||||||
Service cost
|
$
|
5.3
|
|
|
$
|
5.0
|
|
|
$
|
4.4
|
|
Interest cost
|
12.3
|
|
|
12.6
|
|
|
15.3
|
|
|||
Expected return on plan assets
|
(18.8
|
)
|
|
(21.3
|
)
|
|
(21.5
|
)
|
|||
Amortization of prior service cost
|
0.1
|
|
|
0.2
|
|
|
0.3
|
|
|||
Recognized actuarial loss
|
9.2
|
|
|
8.1
|
|
|
7.6
|
|
|||
Settlements and curtailments
(1)
|
0.7
|
|
|
0.7
|
|
|
31.6
|
|
|||
Net periodic benefit cost
|
$
|
8.8
|
|
|
$
|
5.3
|
|
|
$
|
37.7
|
|
|
Pension Benefits
|
||||||
|
2018
|
|
2017
|
||||
Amounts recognized in AOCL:
|
|
|
|
||||
Prior service costs
|
$
|
(0.9
|
)
|
|
$
|
(0.8
|
)
|
Actuarial loss
|
(199.4
|
)
|
|
(194.6
|
)
|
||
Subtotal
|
(200.3
|
)
|
|
(195.4
|
)
|
||
Deferred taxes
|
49.5
|
|
|
71.2
|
|
||
Net amount recognized
|
$
|
(150.8
|
)
|
|
$
|
(124.2
|
)
|
Changes recognized in other comprehensive income (loss):
|
|
|
|
||||
Current year prior service costs
|
0.3
|
|
|
0.1
|
|
||
Current year actuarial (gain) loss
|
15.7
|
|
|
3.7
|
|
||
Effect of exchange rates
|
(1.1
|
)
|
|
1.7
|
|
||
Amortization of prior service (costs) credits
|
(0.1
|
)
|
|
(0.2
|
)
|
||
Amortization of actuarial loss
|
(9.9
|
)
|
|
(8.8
|
)
|
||
Total recognized in other comprehensive income (loss)
|
$
|
4.9
|
|
|
$
|
(3.5
|
)
|
Total recognized in net periodic benefit cost and other comprehensive income (loss)
|
$
|
13.7
|
|
|
$
|
1.8
|
|
|
Pension Benefits
|
||||
|
2018
|
|
2017
|
||
Weighted-average assumptions used to determine benefit obligations as of December 31:
|
|
|
|
||
Discount rate
|
4.32
|
%
|
|
3.66
|
%
|
Rate of compensation increase
|
4.23
|
%
|
|
4.23
|
%
|
|
Pension Benefits
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
|
|
|
|
|
|
|||
Discount rate - service cost
|
3.48
|
%
|
|
3.96
|
%
|
|
4.30
|
%
|
Discount rate - interest cost
|
3.22
|
%
|
|
3.51
|
%
|
|
3.76
|
%
|
Expected long-term return on plan assets
|
6.50
|
%
|
|
7.50
|
%
|
|
7.50
|
%
|
Rate of compensation increase
|
4.23
|
%
|
|
4.23
|
%
|
|
4.23
|
%
|
|
Pension Benefits
|
||||
|
2018
|
|
2017
|
||
Weighted-average assumptions used to determine benefit obligations as of December 31:
|
|
|
|
||
Discount rate
|
2.93
|
%
|
|
2.58
|
%
|
Rate of compensation increase
|
3.77
|
%
|
|
3.63
|
%
|
|
Pension Benefits
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
|
|
|
|
|
|
|||
Discount rate - service cost
|
1.32
|
%
|
|
1.34
|
%
|
|
2.04
|
%
|
Discount rate - interest cost
|
2.67
|
%
|
|
2.75
|
%
|
|
3.45
|
%
|
Expected long-term return on plan assets
|
4.19
|
%
|
|
4.40
|
%
|
|
4.87
|
%
|
Rate of compensation increase
|
3.62
|
%
|
|
3.78
|
%
|
|
3.70
|
%
|
|
2018
|
|
2017
|
||
Assumed health care cost trend rates as of December 31:
|
|
|
|
||
Health care cost trend rate assumed for next year
|
6.50
|
%
|
|
6.50
|
%
|
Rate to which the cost rate is assumed to decline (the ultimate trend rate)
|
5.00
|
%
|
|
5.00
|
%
|
Year that the rate reaches the ultimate trend rate
|
2022
|
|
|
2021
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024-2028
|
||||||||||||
Pension benefits
|
$
|
19.3
|
|
|
$
|
19.9
|
|
|
$
|
25.8
|
|
|
$
|
20.7
|
|
|
$
|
23.5
|
|
|
$
|
147.1
|
|
Asset Category:
|
Target
|
|
U.S. equity
|
25.0
|
%
|
International equity
|
15.0
|
%
|
Fixed income
|
60.0
|
%
|
|
Fair Value Measurements as of December 31, 2018
|
||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
||||||||
Asset Category:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
7.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7.2
|
|
Commingled pools / Collective Trusts:
|
|
|
|
|
|
|
|
||||||||
U.S. equity
(1)
|
—
|
|
|
62.7
|
|
|
—
|
|
|
62.7
|
|
||||
International equity
(2)
|
—
|
|
|
39.5
|
|
|
—
|
|
|
39.5
|
|
||||
Fixed income
(3)
|
—
|
|
|
146.2
|
|
|
—
|
|
|
146.2
|
|
||||
Balanced pension trust:
(4)
|
|
|
|
|
|
|
|
||||||||
International equity
|
—
|
|
|
4.0
|
|
|
—
|
|
|
4.0
|
|
||||
Fixed income
|
—
|
|
|
12.0
|
|
|
—
|
|
|
12.0
|
|
||||
Pension fund:
|
|
|
|
|
|
|
|
||||||||
International equity
(5)
|
—
|
|
|
2.7
|
|
|
—
|
|
|
2.7
|
|
||||
Fixed income
(6)
|
—
|
|
|
8.9
|
|
|
—
|
|
|
8.9
|
|
||||
Blend
(7)
|
—
|
|
|
7.8
|
|
|
—
|
|
|
7.8
|
|
||||
Total
|
$
|
7.2
|
|
|
$
|
283.8
|
|
|
$
|
—
|
|
|
$
|
291.0
|
|
|
Fair Value Measurements as of December 31, 2017
|
||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
||||||||
Asset Category:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
3.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.9
|
|
Commingled pools / Collective Trusts:
|
|
|
|
|
|
|
|
||||||||
U.S. equity
(1)
|
—
|
|
|
34.7
|
|
|
—
|
|
|
34.7
|
|
||||
International equity
(2)
|
—
|
|
|
42.2
|
|
|
—
|
|
|
42.2
|
|
||||
Fixed income
(3)
|
—
|
|
|
197.9
|
|
|
—
|
|
|
197.9
|
|
||||
Balanced pension trust:
(4)
|
|
|
|
|
|
|
|
||||||||
International equity
|
—
|
|
|
4.6
|
|
|
—
|
|
|
4.6
|
|
||||
Fixed income
|
—
|
|
|
13.6
|
|
|
—
|
|
|
13.6
|
|
||||
Pension fund:
|
|
|
|
|
|
|
|
||||||||
International equity
(5)
|
—
|
|
|
3.3
|
|
|
—
|
|
|
3.3
|
|
||||
Fixed income
(6)
|
—
|
|
|
5.9
|
|
|
—
|
|
|
5.9
|
|
||||
Blend
(7)
|
—
|
|
|
12.5
|
|
|
—
|
|
|
12.5
|
|
||||
Total
|
$
|
3.9
|
|
|
$
|
314.7
|
|
|
$
|
—
|
|
|
$
|
318.6
|
|
|
As of December 31, 2018
|
||||||
|
Fair Value
|
|
Redemption Frequency
(if currently eligible)
|
|
Redemption Notice Period
|
||
Asset Category:
|
|
|
|
|
|
||
Commingled pools / Collective Trusts:
|
|
|
|
|
|
||
U.S. equity
(1)
|
$
|
62.7
|
|
|
Daily
|
|
5 days
|
International equity
(2)
|
39.5
|
|
|
Daily
|
|
5 days
|
|
Fixed income
(3)
|
146.2
|
|
|
Daily
|
|
5-15 days
|
|
Balanced pension trust:
(4)
|
|
|
|
|
|
||
International equity
|
4.0
|
|
|
Daily
|
|
3-5 days
|
|
Fixed income
|
12.0
|
|
|
Daily
|
|
3-5 days
|
|
Pension fund:
|
|
|
|
|
|
||
International equity
(5)
|
2.7
|
|
|
Daily
|
|
1-3 days
|
|
Fixed income
(6)
|
8.9
|
|
|
Daily
|
|
1-3 days
|
|
Blend
(7)
|
7.8
|
|
|
Daily
|
|
1-3 days
|
|
Total
|
$
|
283.8
|
|
|
|
|
|
|
As of December 31, 2017
|
||||||
|
Fair Value
|
|
Redemption Frequency
(if currently eligible)
|
|
Redemption Notice Period
|
||
Asset Category:
|
|
|
|
|
|
||
Commingled pools / Collective Trusts:
|
|
|
|
|
|
||
U.S. equity
(1)
|
$
|
34.7
|
|
|
Daily
|
|
5 days
|
International equity
(2)
|
42.2
|
|
|
Daily
|
|
5 days
|
|
Fixed income
(3)
|
197.9
|
|
|
Daily
|
|
5-15 days
|
|
Balanced pension trust:
(4)
|
|
|
|
|
|
||
International equity
|
4.6
|
|
|
Daily
|
|
3-5 days
|
|
Fixed income
|
13.6
|
|
|
Daily
|
|
3-5 days
|
|
Pension fund:
|
|
|
|
|
|
||
International equity
(5)
|
3.3
|
|
|
Daily
|
|
1-3 days
|
|
Fixed income
(6)
|
5.9
|
|
|
Daily
|
|
1-7 days
|
|
Blend
(7)
|
12.5
|
|
|
Daily
|
|
1-3 days
|
|
Total
|
$
|
314.7
|
|
|
|
|
|
(1)
|
This category includes investments primarily in U.S. equity securities that include large, mid and small capitalization companies.
|
(2)
|
This category includes investments primarily in international equity securities that include large, mid and small capitalization companies in large developed markets as well as emerging markets equities.
|
(3)
|
This category includes investments in U.S. investment grade and high yield fixed income securities, international fixed income securities and emerging markets fixed income securities.
|
(4)
|
The investment objectives of the plan are to provide long-term capital growth and income by investing primarily in a well-diversified, balanced portfolio of Canadian common stocks, bonds and money market securities. The plan also holds a portion of its assets in international equities, a portion of which may be invested in U.S. securities.
|
(5)
|
This category includes investments in international equity securities, a portion of which may be invested in U.S. securities
and aims to provide returns consistent with the markets in which it invests and provide broad exposure to countries around the world.
|
(6)
|
This category includes investments in U.K. government index-linked securities (index-linked gilts) that have maturity periods of 5 years or longer with a derivatives overlay and investment grade corporate bonds denominated in sterling.
|
(7)
|
This category includes investments in pooled funds where the fund manager has discretion for the asset allocation and can invest in a wide range of international and US asset classes including equity, credit markets, sovereign debt and alternative assets (including derivative-based strategies).
|
|
|
For the Years Ended December 31,
|
|
|
||||||
AOCL Component
|
|
2018
|
|
2017
|
|
Affected Line Item(s) in the Consolidated Statements of Operations
|
||||
Gains/(Losses) on cash flow hedges:
|
|
|
|
|
|
|
||||
Commodity derivative contracts
|
|
$
|
6.1
|
|
|
$
|
13.7
|
|
|
Cost of goods sold
|
Income tax benefit
|
|
(1.4
|
)
|
|
(5.0
|
)
|
|
Provision for income taxes
|
||
Net of tax
|
|
$
|
4.7
|
|
|
$
|
8.7
|
|
|
|
|
|
|
|
|
|
|
||||
Defined Benefit Plan Items:
|
|
|
|
|
|
|
||||
Pension and Post-Retirement Benefits costs
|
|
$
|
(9.3
|
)
|
|
$
|
(7.3
|
)
|
|
Cost of goods sold; Selling, general and administrative expenses
|
Income tax benefit
|
|
2.3
|
|
|
2.8
|
|
|
Provision for income taxes
|
||
Net of tax
|
|
$
|
(7.0
|
)
|
|
$
|
(4.5
|
)
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments:
|
|
|
|
|
|
|
||||
Foreign currency adjustments upon sale of business
|
|
(27.9
|
)
|
|
—
|
|
|
Loss (gain), net on sale of businesses and related property
|
||
Net of tax
|
|
(27.9
|
)
|
|
—
|
|
|
|
||
|
|
|
|
|
|
|
||||
Total reclassifications from AOCL
|
|
$
|
(30.2
|
)
|
|
$
|
4.2
|
|
|
|
|
|
Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains (Losses) on Available-for-Sale Securities
|
|
Defined Benefit Plan Items
|
|
Foreign Currency Translation Adjustments
|
|
Total AOCL
|
||||||||||
Balance as of December 31, 2017
|
|
$
|
7.4
|
|
|
$
|
1.8
|
|
|
$
|
(127.5
|
)
|
|
$
|
(39.1
|
)
|
|
$
|
(157.4
|
)
|
Other comprehensive loss before reclassifications
|
|
(8.9
|
)
|
|
(1.8
|
)
|
|
(34.0
|
)
|
|
(16.9
|
)
|
|
(61.6
|
)
|
|||||
Amounts reclassified from AOCL
|
|
(4.7
|
)
|
|
—
|
|
|
7.0
|
|
|
27.9
|
|
|
30.2
|
|
|||||
Net other comprehensive (loss) income
|
|
(13.6
|
)
|
|
(1.8
|
)
|
|
(27.0
|
)
|
|
11.0
|
|
|
(31.4
|
)
|
|||||
Balance as of December 31, 2018
|
|
$
|
(6.2
|
)
|
|
$
|
—
|
|
|
$
|
(154.5
|
)
|
|
$
|
(28.1
|
)
|
|
$
|
(188.8
|
)
|
|
|
Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains (Losses) on Available-for-Sale Securities
|
|
Defined Benefit 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 (loss) income before reclassifications
|
|
10.5
|
|
|
(0.5
|
)
|
|
(2.0
|
)
|
|
33.9
|
|
|
41.9
|
|
|||||
Amounts reclassified from AOCI
|
|
(8.7
|
)
|
|
—
|
|
|
4.5
|
|
|
—
|
|
|
(4.2
|
)
|
|||||
Net other comprehensive (loss) income
|
|
1.8
|
|
|
(0.5
|
)
|
|
2.5
|
|
|
33.9
|
|
|
37.7
|
|
|||||
Balance as of December 31, 2017
|
|
$
|
7.4
|
|
|
$
|
1.8
|
|
|
$
|
(127.5
|
)
|
|
$
|
(39.1
|
)
|
|
$
|
(157.4
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Compensation expense
(1)
|
$
|
26.3
|
|
|
$
|
24.9
|
|
|
$
|
31.7
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Compensation expense for performance share units (in millions)
|
$
|
12.3
|
|
|
$
|
12.2
|
|
|
$
|
18.1
|
|
Weighted-average fair value of grants, per share
|
$
|
204.64
|
|
|
$
|
197.54
|
|
|
$
|
150.21
|
|
Payout ratio for shares paid
|
173.2
|
%
|
|
185.9
|
%
|
|
200.0
|
%
|
|
Shares
|
|
Weighted- Average Grant Date Fair Value per Share
|
|||
Undistributed performance share units as of December 31, 2017
|
0.3
|
|
|
$
|
123.80
|
|
Granted
|
0.1
|
|
|
204.64
|
|
|
Distributed
|
(0.2
|
)
|
|
88.26
|
|
|
Undistributed performance share units as of December 31, 2018
(1)
|
0.2
|
|
|
$
|
160.69
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Fair value of performance share units distributed
|
$
|
21.1
|
|
|
$
|
64.3
|
|
|
$
|
39.4
|
|
Realized tax benefits from tax deductions
|
$
|
5.3
|
|
|
$
|
24.5
|
|
|
$
|
15.0
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Compensation expense for restricted stock units
|
$
|
9.2
|
|
|
$
|
8.3
|
|
|
$
|
9.0
|
|
Weighted-average fair value of grants, per share
|
$
|
204.64
|
|
|
$
|
197.54
|
|
|
$
|
150.14
|
|
|
Shares
|
|
Weighted- Average Grant Date Fair Value per Share
|
|||
Non-vested restricted stock units as of December 31, 2017
|
0.2
|
|
|
$
|
156.16
|
|
Granted
|
0.1
|
|
|
204.64
|
|
|
Vested
|
(0.1
|
)
|
|
125.46
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Non-vested restricted stock units as of December 31, 2018
(1)
|
0.2
|
|
|
$
|
182.84
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Fair value of restricted stock units vested
|
$
|
9.7
|
|
|
$
|
19.0
|
|
|
$
|
17.0
|
|
Realized tax benefits from tax deductions
|
2.4
|
|
|
7.2
|
|
|
6.5
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Compensation expense for stock appreciation rights
|
$
|
4.8
|
|
|
$
|
4.4
|
|
|
$
|
4.6
|
|
Weighted-average fair value of grants, per share
|
35.57
|
|
|
32.32
|
|
|
22.93
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Expected dividend yield
|
1.76
|
%
|
|
1.47
|
%
|
|
1.62
|
%
|
Risk-free interest rate
|
2.71
|
%
|
|
2.02
|
%
|
|
1.66
|
%
|
Expected volatility
|
20.60
|
%
|
|
19.97
|
%
|
|
19.60
|
%
|
Expected life (in years)
|
3.93
|
|
|
3.95
|
|
|
3.99
|
|
|
Shares
(1)
|
|
Weighted-Average Exercise Price per Share
|
|||
Outstanding stock appreciation rights as of December 31, 2017
|
1.1
|
|
|
$
|
121.63
|
|
Granted
|
0.2
|
|
|
214.63
|
|
|
Exercised
|
(0.3
|
)
|
|
74.51
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Outstanding stock appreciation rights as of December 31, 2018
|
0.9
|
|
|
$
|
148.98
|
|
Exercisable stock appreciation rights as of December 31, 2018
|
0.6
|
|
|
$
|
120.52
|
|
|
|
Stock Appreciation Rights Outstanding
|
|
Stock Appreciation Rights Exercisable
|
||||||||||||||
Range of Exercise Prices
|
|
Shares
|
|
Weighted-Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value
|
|
Shares
|
|
Weighted-Average Remaining Contractual Life (in years)
|
|
Aggregate Intrinsic Value
|
||||||
$51.11 to $92.64
|
|
0.3
|
|
|
2.22
|
|
$
|
37.8
|
|
|
0.3
|
|
|
2.22
|
|
$
|
37.8
|
|
$124.97 to $156.94
|
|
0.3
|
|
|
4.58
|
|
$
|
24.1
|
|
|
0.3
|
|
|
4.48
|
|
$
|
20.2
|
|
$205.53 to $214.63
|
|
0.3
|
|
|
6.46
|
|
$
|
3.0
|
|
|
0.1
|
|
|
6.00
|
|
$
|
0.8
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Intrinsic value of stock appreciation rights exercised
|
$
|
35.9
|
|
|
$
|
25.1
|
|
|
$
|
36.9
|
|
Realized tax benefits from tax deductions
|
$
|
8.9
|
|
|
$
|
9.6
|
|
|
$
|
14.1
|
|
(Amounts in millions)
|
For the Year Ended December 31, 2018
|
||
Cash received from the buyer
|
$
|
82.9
|
|
Net assets sold
(1)
|
(87.2
|
)
|
|
AOCL reclassification adjustments, primarily foreign currency translation
|
(3.2
|
)
|
|
Direct costs to sell
|
(5.8
|
)
|
|
Loss on sale of business
|
$
|
(13.3
|
)
|
(Amounts in millions)
|
For the Year Ended December 31, 2018
|
||
Cash received from the buyer
|
$
|
4.2
|
|
Net assets sold
(2)
|
(14.1
|
)
|
|
AOCL reclassification adjustments, primarily foreign currency translation
|
(24.7
|
)
|
|
Direct costs to sell
|
(2.9
|
)
|
|
Loss on sale of business
|
$
|
(37.5
|
)
|
|
Incurred in 2018
|
|
Incurred to Date
|
|
Total Expected to be Incurred
|
||||||
Severance and related expense
|
$
|
1.7
|
|
|
$
|
13.0
|
|
|
$
|
13.8
|
|
Asset write-offs and accelerated depreciation
|
—
|
|
|
3.2
|
|
|
3.2
|
|
|||
Lease termination
|
0.7
|
|
|
0.9
|
|
|
0.9
|
|
|||
Other
|
0.6
|
|
|
4.7
|
|
|
4.7
|
|
|||
Total
|
$
|
3.0
|
|
|
$
|
21.8
|
|
|
$
|
22.6
|
|
|
Incurred in 2018
|
|
Incurred to Date
|
|
Total Expected to be Incurred
|
||||||
Residential Heating & Cooling
|
$
|
0.6
|
|
|
$
|
2.0
|
|
|
$
|
2.0
|
|
Commercial Heating & Cooling
|
1.1
|
|
|
3.1
|
|
|
3.1
|
|
|||
Refrigeration
|
1.3
|
|
|
14.4
|
|
|
15.2
|
|
|||
Corporate & Other
|
—
|
|
|
2.3
|
|
|
2.3
|
|
|||
Total
|
$
|
3.0
|
|
|
$
|
21.8
|
|
|
$
|
22.6
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
359.0
|
|
|
$
|
305.7
|
|
|
$
|
277.8
|
|
Add: Loss from discontinued operations
|
1.3
|
|
|
1.4
|
|
|
0.8
|
|
|||
Income from continuing operations
|
$
|
360.3
|
|
|
$
|
307.1
|
|
|
$
|
278.6
|
|
|
|
|
|
|
|
||||||
Weighted-average shares outstanding – basic
|
40.6
|
|
|
42.2
|
|
|
43.4
|
|
|||
Add: Potential effect of diluted securities attributable to stock-based payments
|
0.5
|
|
|
0.6
|
|
|
0.6
|
|
|||
Weighted-average shares outstanding – diluted
|
41.1
|
|
|
42.8
|
|
|
44.0
|
|
|||
|
|
|
|
|
|
||||||
Earnings per share - Basic:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
8.87
|
|
|
$
|
7.28
|
|
|
$
|
6.41
|
|
Loss from discontinued operations
|
(0.03
|
)
|
|
(0.03
|
)
|
|
(0.02
|
)
|
|||
Net income
|
$
|
8.84
|
|
|
$
|
7.25
|
|
|
$
|
6.39
|
|
|
|
|
|
|
|
||||||
Earnings per share - Diluted:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
8.77
|
|
|
$
|
7.17
|
|
|
$
|
6.34
|
|
Loss from discontinued operations
|
(0.03
|
)
|
|
(0.03
|
)
|
|
(0.02
|
)
|
|||
Net income
|
$
|
8.74
|
|
|
$
|
7.14
|
|
|
$
|
6.32
|
|
Segment
|
|
Products 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 and supplies
|
|
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, variable refrigerant flow commercial products
|
|
Light Commercial
|
|
United States
Canada
Europe
|
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 Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net Sales
(1)
|
|
|
|
|
|
||||||
Residential Heating & Cooling
|
$
|
2,225.0
|
|
|
$
|
2,140.4
|
|
|
$
|
2,000.8
|
|
Commercial Heating & Cooling
|
1,043.5
|
|
|
973.8
|
|
|
917.9
|
|
|||
Refrigeration
|
615.4
|
|
|
725.4
|
|
|
722.9
|
|
|||
|
$
|
3,883.9
|
|
|
$
|
3,839.6
|
|
|
$
|
3,641.6
|
|
Segment profit (loss)
(2)
|
|
|
|
|
|
||||||
Residential Heating & Cooling
|
$
|
399.4
|
|
|
$
|
373.9
|
|
|
$
|
348.8
|
|
Commercial Heating & Cooling
|
159.5
|
|
|
157.3
|
|
|
149.3
|
|
|||
Refrigeration
|
66.1
|
|
|
72.6
|
|
|
68.9
|
|
|||
Corporate and other
|
(84.4
|
)
|
|
(89.2
|
)
|
|
(97.4
|
)
|
|||
Total segment profit
|
540.6
|
|
|
514.6
|
|
|
469.6
|
|
|||
Reconciliation to Operating income:
|
|
|
|
|
|
||||||
Special inventory write down
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
Special product quality adjustments
|
—
|
|
|
5.4
|
|
|
(0.4
|
)
|
|||
Loss (gain), net on sale of businesses and related property
|
27.0
|
|
|
1.1
|
|
|
—
|
|
|||
Gain from insurance recoveries, net of losses incurred
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
|||
Pension settlement
|
0.4
|
|
|
—
|
|
|
31.4
|
|
|||
Items in (Gains) Losses and other expenses, net that are excluded from segment profit (loss)
(2)
|
11.4
|
|
|
10.4
|
|
|
7.4
|
|
|||
Restructuring charges
|
3.0
|
|
|
3.2
|
|
|
1.8
|
|
|||
Operating income
|
$
|
509.5
|
|
|
$
|
494.5
|
|
|
$
|
429.4
|
|
•
|
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,
|
◦
|
Environmental liabilities,
|
◦
|
Contractor tax payments,
|
◦
|
Other items, net,
|
•
|
Special inventory write down,
|
•
|
Loss (gain), net on sale of businesses and related property
,
|
•
|
Gain from insurance recoveries, net of losses incurred
|
•
|
Special product quality adjustment
,
|
•
|
Pension settlement
, and,
|
•
|
Restructuring charges.
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Total Assets:
|
|
|
|
|
|
||||||
Residential Heating & Cooling
|
$
|
837.4
|
|
|
$
|
771.3
|
|
|
$
|
673.4
|
|
Commercial Heating & Cooling
|
457.2
|
|
|
443.9
|
|
|
385.8
|
|
|||
Refrigeration
|
355.2
|
|
|
506.9
|
|
|
442.8
|
|
|||
Corporate and other
|
167.4
|
|
|
169.4
|
|
|
258.3
|
|
|||
Total assets
|
$
|
1,817.2
|
|
|
$
|
1,891.5
|
|
|
$
|
1,760.3
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Capital Expenditures:
|
|
|
|
|
|
||||||
Residential Heating & Cooling
|
$
|
45.2
|
|
|
$
|
38.9
|
|
|
$
|
36.7
|
|
Commercial Heating & Cooling
|
14.0
|
|
|
18.5
|
|
|
11.5
|
|
|||
Refrigeration
|
7.8
|
|
|
8.0
|
|
|
12.1
|
|
|||
Corporate and other
|
28.2
|
|
|
32.9
|
|
|
24.0
|
|
|||
Total capital expenditures
(1)
|
$
|
95.2
|
|
|
$
|
98.3
|
|
|
$
|
84.3
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Depreciation and Amortization:
|
|
|
|
|
|
||||||
Residential Heating & Cooling
|
$
|
26.6
|
|
|
$
|
24.9
|
|
|
$
|
21.0
|
|
Commercial Heating & Cooling
|
10.4
|
|
|
10.1
|
|
|
9.8
|
|
|||
Refrigeration
|
7.1
|
|
|
9.9
|
|
|
9.7
|
|
|||
Corporate and other
|
21.9
|
|
|
19.7
|
|
|
17.6
|
|
|||
Total depreciation and amortization
|
$
|
66.0
|
|
|
$
|
64.6
|
|
|
$
|
58.1
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Income from Equity Method Investments:
|
|
|
|
|
|
||||||
Refrigeration
|
$
|
2.1
|
|
|
$
|
3.9
|
|
|
$
|
4.0
|
|
Residential
|
8.5
|
|
|
11.7
|
|
|
11.5
|
|
|||
Commercial
|
1.4
|
|
|
2.8
|
|
|
2.9
|
|
|||
Total income from equity method investments
|
$
|
12.0
|
|
|
$
|
18.4
|
|
|
$
|
18.4
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net Sales to External Customers by Point of Shipment:
|
|
|
|
|
|
||||||
United States
|
$
|
3,275.9
|
|
|
$
|
3,128.7
|
|
|
$
|
2,966.8
|
|
Canada
|
254.8
|
|
|
237.8
|
|
|
218.8
|
|
|||
International
|
353.2
|
|
|
473.1
|
|
|
456.0
|
|
|||
Total net sales to external customers
|
$
|
3,883.9
|
|
|
$
|
3,839.6
|
|
|
$
|
3,641.6
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Property, Plant and Equipment, net:
|
|
|
|
|
|
||||||
United States
|
$
|
293.3
|
|
|
$
|
257.6
|
|
|
$
|
237.6
|
|
Mexico
|
86.7
|
|
|
79.8
|
|
|
69.4
|
|
|||
Canada
|
1.7
|
|
|
1.7
|
|
|
1.4
|
|
|||
International
|
26.6
|
|
|
58.7
|
|
|
53.0
|
|
|||
Total Property, plant and equipment, net
|
$
|
408.3
|
|
|
$
|
397.8
|
|
|
$
|
361.4
|
|
Level 2 -
|
Quoted prices for
similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are
observable
in active markets at the measurement date and for the anticipated term of the instrument.
|
Level 3
-
|
Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are
unobservable
inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Quoted Prices in Active Markets for Identical Assets (Level 1):
|
|
|
|
||||
Investment in marketable equity securities
|
$
|
—
|
|
|
$
|
4.1
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Quoted Prices in Active Markets for Similar Instruments (Level 2):
|
|
|
|
||||
Senior unsecured notes
|
$
|
302.9
|
|
|
$
|
308.1
|
|
|
Net Sales
(1)
|
|
Gross Profit
(1)
|
|
Net Income
(1)
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
First Quarter
|
$
|
834.8
|
|
|
$
|
793.4
|
|
|
$
|
223.2
|
|
|
$
|
210.9
|
|
|
$
|
37.9
|
|
|
$
|
43.5
|
|
Second Quarter
|
1,175.4
|
|
|
1,102.1
|
|
|
361.6
|
|
|
340.8
|
|
|
137.6
|
|
|
115.5
|
|
||||||
Third Quarter
|
1,030.2
|
|
|
1,052.3
|
|
|
301.9
|
|
|
313.7
|
|
|
108.0
|
|
|
103.5
|
|
||||||
Fourth Quarter
|
843.6
|
|
|
891.8
|
|
|
224.5
|
|
|
259.8
|
|
|
75.6
|
|
|
43.1
|
|
|
Basic Earnings
per Share
(2)
|
|
Diluted Earnings
per Share
(2)
|
|
Cash Dividends per Common Share
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
First Quarter
|
$
|
0.91
|
|
|
$
|
1.02
|
|
|
$
|
0.90
|
|
|
$
|
1.00
|
|
|
$
|
0.51
|
|
|
$
|
0.43
|
|
Second Quarter
|
3.38
|
|
|
2.73
|
|
|
3.35
|
|
|
2.69
|
|
|
0.64
|
|
|
0.51
|
|
||||||
Third Quarter
|
2.68
|
|
|
2.47
|
|
|
2.65
|
|
|
2.44
|
|
|
0.64
|
|
|
0.51
|
|
||||||
Fourth Quarter
|
1.89
|
|
|
1.03
|
|
|
1.87
|
|
|
1.02
|
|
|
0.64
|
|
|
0.51
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Realized (gains) losses on settled futures contracts
|
$
|
(0.4
|
)
|
|
$
|
(1.7
|
)
|
|
$
|
1.1
|
|
Foreign currency exchange losses (gains)
|
1.7
|
|
|
(1.8
|
)
|
|
2.2
|
|
|||
Losses on disposal of fixed assets
|
0.7
|
|
|
0.2
|
|
|
0.5
|
|
|||
Net change in unrealized losses (gains) on unsettled futures contracts
|
1.5
|
|
|
0.9
|
|
|
(3.6
|
)
|
|||
Asbestos-related litigation
|
4.0
|
|
|
3.5
|
|
|
6.3
|
|
|||
Special legal contingency charges
|
1.9
|
|
|
3.7
|
|
|
1.9
|
|
|||
Environmental liabilities
|
2.2
|
|
|
2.2
|
|
|
1.9
|
|
|||
Contractor tax payments
|
—
|
|
|
0.1
|
|
|
0.6
|
|
|||
Other items, net
|
1.8
|
|
|
—
|
|
|
0.4
|
|
|||
Losses (gains) and other expenses, net
|
$
|
13.4
|
|
|
$
|
7.1
|
|
|
$
|
11.3
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Research and development
|
$
|
72.2
|
|
|
$
|
73.6
|
|
|
$
|
64.6
|
|
Advertising, promotions and marketing
(1)
|
42.5
|
|
|
45.0
|
|
|
41.0
|
|
|||
Cooperative advertising expenditures
(2)
|
16.8
|
|
|
18.6
|
|
|
14.7
|
|
|||
Rent expense
|
58.5
|
|
|
57.7
|
|
|
57.9
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Interest expense, net of capitalized interest
|
$
|
39.1
|
|
|
$
|
32.1
|
|
|
$
|
28.1
|
|
Interest income
|
0.8
|
|
|
1.5
|
|
|
1.1
|
|
|||
Interest expense, net
|
$
|
38.3
|
|
|
$
|
30.6
|
|
|
$
|
27.0
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|||||||||||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1.8
|
|
|
$
|
15.4
|
|
|
$
|
29.1
|
|
|
$
|
—
|
|
|
$
|
46.3
|
|
Accounts and notes receivable, net
|
—
|
|
|
44.3
|
|
|
428.4
|
|
|
—
|
|
|
472.7
|
|
|||||
Inventories, net
|
—
|
|
|
411.4
|
|
|
103.9
|
|
|
(5.5
|
)
|
|
509.8
|
|
|||||
Other assets
|
3.3
|
|
|
36.2
|
|
|
54.7
|
|
|
(33.6
|
)
|
|
60.6
|
|
|||||
Total current assets
|
5.1
|
|
|
507.3
|
|
|
616.1
|
|
|
(39.1
|
)
|
|
1,089.4
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
293.3
|
|
|
118.6
|
|
|
(3.6
|
)
|
|
408.3
|
|
|||||
Goodwill
|
—
|
|
|
166.1
|
|
|
20.5
|
|
|
—
|
|
|
186.6
|
|
|||||
Investment in subsidiaries
|
1,311.9
|
|
|
357.8
|
|
|
(0.5
|
)
|
|
(1,669.2
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
1.4
|
|
|
54.4
|
|
|
23.4
|
|
|
(12.2
|
)
|
|
67.0
|
|
|||||
Other assets, net
|
1.5
|
|
|
48.1
|
|
|
17.8
|
|
|
(1.5
|
)
|
|
65.9
|
|
|||||
Intercompany (payables) receivables, net
|
(715.5
|
)
|
|
675.8
|
|
|
142.6
|
|
|
(102.9
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
604.4
|
|
|
$
|
2,102.8
|
|
|
$
|
938.5
|
|
|
$
|
(1,828.5
|
)
|
|
$
|
1,817.2
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current maturities of long-term debt
|
29.4
|
|
|
2.8
|
|
|
268.6
|
|
|
—
|
|
|
300.8
|
|
|||||
Accounts payable
|
25.5
|
|
|
295.7
|
|
|
112.1
|
|
|
—
|
|
|
433.3
|
|
|||||
Accrued expenses
|
12.1
|
|
|
213.8
|
|
|
46.4
|
|
|
—
|
|
|
272.3
|
|
|||||
Income taxes payable
|
(38.5
|
)
|
|
40.6
|
|
|
50.8
|
|
|
(50.8
|
)
|
|
2.1
|
|
|||||
Total current liabilities
|
28.5
|
|
|
552.9
|
|
|
477.9
|
|
|
(50.8
|
)
|
|
1,008.5
|
|
|||||
Long-term debt
|
724.9
|
|
|
15.0
|
|
|
0.6
|
|
|
—
|
|
|
740.5
|
|
|||||
Pensions
|
—
|
|
|
75.1
|
|
|
7.7
|
|
|
—
|
|
|
82.8
|
|
|||||
Other liabilities
|
0.6
|
|
|
126.4
|
|
|
8.0
|
|
|
—
|
|
|
135.0
|
|
|||||
Total liabilities
|
754.0
|
|
|
769.4
|
|
|
494.2
|
|
|
(50.8
|
)
|
|
1,966.8
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Total stockholders’ (deficit) equity
|
(149.6
|
)
|
|
1,333.4
|
|
|
444.3
|
|
|
(1,777.7
|
)
|
|
(149.6
|
)
|
|||||
Total liabilities and stockholders’ (deficit) equity
|
$
|
604.4
|
|
|
$
|
2,102.8
|
|
|
$
|
938.5
|
|
|
$
|
(1,828.5
|
)
|
|
$
|
1,817.2
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|||||||||||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1.6
|
|
|
$
|
28.0
|
|
|
$
|
38.6
|
|
|
$
|
—
|
|
|
$
|
68.2
|
|
Accounts and notes receivable, net
|
—
|
|
|
35.3
|
|
|
471.2
|
|
|
—
|
|
|
506.5
|
|
|||||
Inventories, net
|
—
|
|
|
355.7
|
|
|
131.9
|
|
|
(3.4
|
)
|
|
484.2
|
|
|||||
Other assets
|
16.2
|
|
|
23.1
|
|
|
67.5
|
|
|
(28.4
|
)
|
|
78.4
|
|
|||||
Total current assets
|
17.8
|
|
|
442.1
|
|
|
709.2
|
|
|
(31.8
|
)
|
|
1,137.3
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
257.6
|
|
|
144.4
|
|
|
(4.2
|
)
|
|
397.8
|
|
|||||
Goodwill
|
—
|
|
|
134.9
|
|
|
65.6
|
|
|
—
|
|
|
200.5
|
|
|||||
Investment in subsidiaries
|
1,257.7
|
|
|
365.8
|
|
|
(0.6
|
)
|
|
(1,622.9
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
3.9
|
|
|
69.1
|
|
|
33.6
|
|
|
(12.2
|
)
|
|
94.4
|
|
|||||
Other assets, net
|
2.1
|
|
|
41.3
|
|
|
19.6
|
|
|
(1.5
|
)
|
|
61.5
|
|
|||||
Intercompany (payables) receivables, net
|
(559.3
|
)
|
|
554.7
|
|
|
107.4
|
|
|
(102.8
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
722.2
|
|
|
$
|
1,865.5
|
|
|
$
|
1,079.2
|
|
|
$
|
(1,775.4
|
)
|
|
$
|
1,891.5
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
Current maturities of long-term debt
|
29.4
|
|
|
2.9
|
|
|
0.3
|
|
|
—
|
|
|
32.6
|
|
|||||
Accounts payable
|
21.3
|
|
|
228.0
|
|
|
99.3
|
|
|
—
|
|
|
348.6
|
|
|||||
Accrued expenses
|
3.1
|
|
|
209.4
|
|
|
57.8
|
|
|
—
|
|
|
270.3
|
|
|||||
Income taxes payable
|
(64.5
|
)
|
|
56.5
|
|
|
60.9
|
|
|
(50.8
|
)
|
|
2.1
|
|
|||||
Total current liabilities
|
(10.7
|
)
|
|
496.8
|
|
|
219.2
|
|
|
(50.8
|
)
|
|
654.5
|
|
|||||
Long-term debt
|
682.8
|
|
|
11.7
|
|
|
276.0
|
|
|
—
|
|
|
970.5
|
|
|||||
Pensions
|
—
|
|
|
74.7
|
|
|
9.8
|
|
|
—
|
|
|
84.5
|
|
|||||
Other liabilities
|
—
|
|
|
123.2
|
|
|
8.7
|
|
|
—
|
|
|
131.9
|
|
|||||
Total liabilities
|
672.1
|
|
|
706.4
|
|
|
513.7
|
|
|
(50.8
|
)
|
|
1,841.4
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Total stockholders’ equity (deficit)
|
50.1
|
|
|
1,159.1
|
|
|
565.5
|
|
|
(1,724.6
|
)
|
|
50.1
|
|
|||||
Total liabilities and stockholders’ equity (deficit)
|
$
|
722.2
|
|
|
$
|
1,865.5
|
|
|
$
|
1,079.2
|
|
|
$
|
(1,775.4
|
)
|
|
$
|
1,891.5
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
3,473.2
|
|
|
$
|
1,129.6
|
|
|
$
|
(718.9
|
)
|
|
$
|
3,883.9
|
|
Cost of goods sold
|
—
|
|
|
2,500.6
|
|
|
988.7
|
|
|
(716.6
|
)
|
|
2,772.7
|
|
|||||
Gross profit
|
—
|
|
|
972.6
|
|
|
140.9
|
|
|
(2.3
|
)
|
|
1,111.2
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
—
|
|
|
555.3
|
|
|
53.6
|
|
|
(0.7
|
)
|
|
608.2
|
|
|||||
Losses (gains) and other expenses, net
|
2.0
|
|
|
5.4
|
|
|
6.3
|
|
|
(0.3
|
)
|
|
13.4
|
|
|||||
Restructuring charges
|
—
|
|
|
1.1
|
|
|
1.9
|
|
|
—
|
|
|
3.0
|
|
|||||
Pension settlement
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|||||
Loss (gain), net on sale of businesses and related property
|
—
|
|
|
40.3
|
|
|
(13.3
|
)
|
|
—
|
|
|
27.0
|
|
|||||
Insurance proceeds for lost profits
|
—
|
|
|
(27.4
|
)
|
|
—
|
|
|
—
|
|
|
(27.4
|
)
|
|||||
Gain from insurance recoveries, net of losses incurred
|
—
|
|
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
|
(10.9
|
)
|
|||||
Income from equity method investments
|
(367.4
|
)
|
|
(70.3
|
)
|
|
(9.9
|
)
|
|
435.6
|
|
|
(12.0
|
)
|
|||||
Operating income
|
365.4
|
|
|
479.1
|
|
|
101.9
|
|
|
(436.9
|
)
|
|
509.5
|
|
|||||
Interest expense, net
|
9.0
|
|
|
18.5
|
|
|
10.8
|
|
|
—
|
|
|
38.3
|
|
|||||
Other expense (income), net
|
—
|
|
|
1.5
|
|
|
1.8
|
|
|
—
|
|
|
3.3
|
|
|||||
Income from continuing operations before income taxes
|
356.4
|
|
|
459.1
|
|
|
89.3
|
|
|
(436.9
|
)
|
|
467.9
|
|
|||||
Provision for income taxes
|
(2.6
|
)
|
|
92.1
|
|
|
18.0
|
|
|
0.1
|
|
|
107.6
|
|
|||||
Income from continuing operations
|
359.0
|
|
|
367.0
|
|
|
71.3
|
|
|
(437.0
|
)
|
|
360.3
|
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|
(1.3
|
)
|
|||||
Net income
|
$
|
359.0
|
|
|
$
|
367.0
|
|
|
$
|
70.0
|
|
|
$
|
(437.0
|
)
|
|
$
|
359.0
|
|
Other comprehensive (loss) income
|
$
|
(15.4
|
)
|
|
$
|
(15.3
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
—
|
|
|
$
|
(31.4
|
)
|
Comprehensive Income
|
$
|
343.6
|
|
|
$
|
351.7
|
|
|
$
|
69.3
|
|
|
$
|
(437.0
|
)
|
|
$
|
327.6
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
3,295.8
|
|
|
$
|
1,144.2
|
|
|
$
|
(600.4
|
)
|
|
$
|
3,839.6
|
|
Cost of goods sold
|
—
|
|
|
2,359.6
|
|
|
953.6
|
|
|
(598.8
|
)
|
|
2,714.4
|
|
|||||
Gross profit
|
—
|
|
|
936.2
|
|
|
190.6
|
|
|
(1.6
|
)
|
|
1,125.2
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
—
|
|
|
553.6
|
|
|
85.0
|
|
|
(0.9
|
)
|
|
637.7
|
|
|||||
Losses (gains) and other expenses, net
|
2.0
|
|
|
3.3
|
|
|
1.9
|
|
|
(0.1
|
)
|
|
7.1
|
|
|||||
Restructuring charges
|
—
|
|
|
2.1
|
|
|
1.1
|
|
|
—
|
|
|
3.2
|
|
|||||
Loss (gain), net on sale of businesses and related property
|
—
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|||||
(Income) loss from equity method investments
|
(324.3
|
)
|
|
(74.9
|
)
|
|
(14.5
|
)
|
|
395.3
|
|
|
(18.4
|
)
|
|||||
Operational income
|
322.3
|
|
|
451.0
|
|
|
117.1
|
|
|
(395.9
|
)
|
|
494.5
|
|
|||||
Interest expense, net
|
26.9
|
|
|
(2.7
|
)
|
|
6.4
|
|
|
—
|
|
|
30.6
|
|
|||||
Other income, net
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
Income from continuing operations before income taxes
|
295.4
|
|
|
453.7
|
|
|
110.8
|
|
|
(395.9
|
)
|
|
464.0
|
|
|||||
Provision for income taxes
|
(10.3
|
)
|
|
136.2
|
|
|
31.2
|
|
|
(0.2
|
)
|
|
156.9
|
|
|||||
Income from continuing operations
|
305.7
|
|
|
317.5
|
|
|
79.6
|
|
|
(395.7
|
)
|
|
307.1
|
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
(1.4
|
)
|
|||||
Net income
|
$
|
305.7
|
|
|
$
|
317.5
|
|
|
$
|
78.2
|
|
|
$
|
(395.7
|
)
|
|
$
|
305.7
|
|
Other comprehensive income
|
$
|
1.7
|
|
|
$
|
5.5
|
|
|
$
|
30.5
|
|
|
$
|
—
|
|
|
$
|
37.7
|
|
Comprehensive income
|
$
|
307.4
|
|
|
$
|
323.0
|
|
|
$
|
108.7
|
|
|
$
|
(395.7
|
)
|
|
$
|
343.4
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
3,117.6
|
|
|
$
|
728.0
|
|
|
$
|
(204.0
|
)
|
|
$
|
3,641.6
|
|
Cost of goods sold
|
—
|
|
|
2,203.8
|
|
|
564.5
|
|
|
(203.2
|
)
|
|
2,565.1
|
|
|||||
Gross profit
|
—
|
|
|
913.8
|
|
|
163.5
|
|
|
(0.8
|
)
|
|
1,076.5
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
—
|
|
|
524.3
|
|
|
96.7
|
|
|
—
|
|
|
621.0
|
|
|||||
(Gains) losses and other expenses, net
|
(3.3
|
)
|
|
9.7
|
|
|
5.1
|
|
|
(0.2
|
)
|
|
11.3
|
|
|||||
Restructuring charges
|
—
|
|
|
1.9
|
|
|
(0.1
|
)
|
|
—
|
|
|
1.8
|
|
|||||
Pension settlement
|
—
|
|
|
30.5
|
|
|
0.9
|
|
|
—
|
|
|
31.4
|
|
|||||
(Income) loss from equity method investments
|
(292.4
|
)
|
|
(40.7
|
)
|
|
(14.4
|
)
|
|
329.1
|
|
|
(18.4
|
)
|
|||||
Operational income
|
295.7
|
|
|
388.1
|
|
|
75.3
|
|
|
(329.7
|
)
|
|
429.4
|
|
|||||
Interest expense, net
|
24.4
|
|
|
(2.2
|
)
|
|
4.8
|
|
|
—
|
|
|
27.0
|
|
|||||
Other income, net
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||||
Income from continuing operations before income taxes
|
271.3
|
|
|
390.3
|
|
|
70.8
|
|
|
(329.7
|
)
|
|
402.7
|
|
|||||
Provision for income taxes
|
(6.5
|
)
|
|
108.2
|
|
|
22.6
|
|
|
(0.2
|
)
|
|
124.1
|
|
|||||
Income from continuing operations
|
277.8
|
|
|
282.1
|
|
|
48.2
|
|
|
(329.5
|
)
|
|
278.6
|
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
(0.8
|
)
|
|||||
Net income
|
$
|
277.8
|
|
|
$
|
282.1
|
|
|
$
|
47.4
|
|
|
$
|
(329.5
|
)
|
|
$
|
277.8
|
|
Other comprehensive income (loss)
|
$
|
14.0
|
|
|
$
|
8.5
|
|
|
$
|
(14.2
|
)
|
|
$
|
1.3
|
|
|
$
|
9.6
|
|
Comprehensive Income
|
$
|
291.8
|
|
|
$
|
290.6
|
|
|
$
|
33.2
|
|
|
$
|
(328.2
|
)
|
|
$
|
287.4
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
$
|
53.7
|
|
|
$
|
477.9
|
|
|
$
|
(36.1
|
)
|
|
$
|
—
|
|
|
$
|
495.5
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from the disposal of property, plant and equipment
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||||
Purchases of property, plant and equipment
|
—
|
|
|
(76.0
|
)
|
|
(19.2
|
)
|
|
—
|
|
|
(95.2
|
)
|
|||||
Net proceeds from sale of businesses and related property
|
—
|
|
|
2.7
|
|
|
112.0
|
|
|
—
|
|
|
114.7
|
|
|||||
Insurance recoveries received for property damage incurred from natural disaster
|
—
|
|
|
10.9
|
|
|
—
|
|
|
—
|
|
|
10.9
|
|
|||||
Net cash used in investing activities
|
—
|
|
|
(62.4
|
)
|
|
92.9
|
|
|
—
|
|
|
30.5
|
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Asset securitization borrowings
|
—
|
|
|
—
|
|
|
155.0
|
|
|
—
|
|
|
155.0
|
|
|||||
Asset securitization payments
|
—
|
|
|
—
|
|
|
(163.0
|
)
|
|
—
|
|
|
(163.0
|
)
|
|||||
Long-term debt payments
|
(30.0
|
)
|
|
(2.9
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(33.0
|
)
|
|||||
Borrowings from credit facility
|
2,435.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,435.9
|
|
|||||
Payments on credit facility
|
(2,365.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,365.0
|
)
|
|||||
Proceeds from employee stock purchases
|
3.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.3
|
|
|||||
Repurchases of common stock to satisfy employee withholding tax obligations
|
(26.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.9
|
)
|
|||||
Repurchases of common stock
|
(450.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(450.2
|
)
|
|||||
Intercompany debt
|
(14.5
|
)
|
|
83.3
|
|
|
(68.8
|
)
|
|
—
|
|
|
—
|
|
|||||
Intercompany financing activity
|
487.8
|
|
|
(508.5
|
)
|
|
20.7
|
|
|
—
|
|
|
—
|
|
|||||
Cash dividends paid
|
(93.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(93.9
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(53.5
|
)
|
|
(428.1
|
)
|
|
(56.2
|
)
|
|
—
|
|
|
(537.8
|
)
|
|||||
Increase (decrease) in cash and cash equivalents
|
0.2
|
|
|
(12.6
|
)
|
|
0.6
|
|
|
—
|
|
|
(11.8
|
)
|
|||||
Effect of exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(10.1
|
)
|
|
—
|
|
|
(10.1
|
)
|
|||||
Cash and cash equivalents, beginning of year
|
1.6
|
|
|
28.0
|
|
|
38.6
|
|
|
—
|
|
|
68.2
|
|
|||||
Cash and cash equivalents, end of year
|
$
|
1.8
|
|
|
$
|
15.4
|
|
|
$
|
29.1
|
|
|
$
|
—
|
|
|
$
|
46.3
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
$
|
467.4
|
|
|
$
|
31.1
|
|
|
$
|
(173.4
|
)
|
|
$
|
—
|
|
|
$
|
325.1
|
|
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
|
—
|
|
|
(70.7
|
)
|
|
(27.6
|
)
|
|
—
|
|
|
(98.3
|
)
|
|||||
Net cash used in investing activities
|
—
|
|
|
(70.6
|
)
|
|
(27.5
|
)
|
|
—
|
|
|
(98.1
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings, net
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
(1.5
|
)
|
|||||
Asset securitization borrowings
|
—
|
|
|
—
|
|
|
315.0
|
|
|
—
|
|
|
315.0
|
|
|||||
Asset securitization payments
|
—
|
|
|
—
|
|
|
(89.0
|
)
|
|
—
|
|
|
(89.0
|
)
|
|||||
Borrowings from credit facility
|
2,376.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,376.5
|
|
|||||
Long-term debt payments
|
(200.0
|
)
|
|
(0.3
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(200.9
|
)
|
|||||
Payments on credit facility
|
(2,265.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,265.5
|
)
|
|||||
Payments of deferred financing costs
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|||||
Proceeds from employee stock purchases
|
3.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.1
|
|
|||||
Repurchases of common stock to satisfy employee withholding tax obligations
|
(26.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.1
|
)
|
|||||
Repurchases of common stock
|
(250.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(250.0
|
)
|
|||||
Intercompany debt
|
56.4
|
|
|
(34.9
|
)
|
|
(21.5
|
)
|
|
—
|
|
|
—
|
|
|||||
Intercompany financing activity
|
(81.7
|
)
|
|
85.6
|
|
|
(3.9
|
)
|
|
—
|
|
|
—
|
|
|||||
Cash dividends paid
|
(79.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(79.7
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(467.0
|
)
|
|
50.4
|
|
|
198.3
|
|
|
—
|
|
|
(218.3
|
)
|
|||||
Increase (decrease) in cash and cash equivalents
|
0.4
|
|
|
10.9
|
|
|
(2.6
|
)
|
|
—
|
|
|
8.7
|
|
|||||
Effect of exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
9.3
|
|
|
—
|
|
|
9.3
|
|
|||||
Cash and cash equivalents, beginning of year
|
1.2
|
|
|
17.1
|
|
|
31.9
|
|
|
—
|
|
|
50.2
|
|
|||||
Cash and cash equivalents, end of year
|
$
|
1.6
|
|
|
$
|
28.0
|
|
|
$
|
38.6
|
|
|
$
|
—
|
|
|
$
|
68.2
|
|
(Amounts in millions)
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
$
|
17.8
|
|
|
$
|
218.5
|
|
|
$
|
137.6
|
|
|
$
|
—
|
|
|
$
|
373.9
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from the disposal of property, plant and equipment
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|||||
Purchases of property, plant and equipment
|
—
|
|
|
(71.5
|
)
|
|
(12.8
|
)
|
|
—
|
|
|
(84.3
|
)
|
|||||
Net cash used in investing activities
|
—
|
|
|
(71.5
|
)
|
|
(12.6
|
)
|
|
—
|
|
|
(84.1
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings, net
|
—
|
|
|
—
|
|
|
(2.4
|
)
|
|
—
|
|
|
(2.4
|
)
|
|||||
Asset securitization borrowings
|
—
|
|
|
—
|
|
|
145.0
|
|
|
—
|
|
|
145.0
|
|
|||||
Asset securitization payments
|
—
|
|
|
—
|
|
|
(295.0
|
)
|
|
—
|
|
|
(295.0
|
)
|
|||||
Long-term debt borrowings
|
350.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
350.0
|
|
|||||
Borrowings from credit facility
|
2,336.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,336.5
|
|
|||||
Long-term debt payments
|
(57.5
|
)
|
|
(0.9
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(58.8
|
)
|
|||||
Payments on credit facility
|
(2,346.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,346.0
|
)
|
|||||
Payments of deferred financing costs
|
(4.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.2
|
)
|
|||||
Proceeds from employee stock purchases
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|||||
Repurchases of common stock to satisfy employee withholding tax obligations
|
(33.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.3
|
)
|
|||||
Repurchases of common stock
|
(300.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300.0
|
)
|
|||||
Intercompany debt
|
30.0
|
|
|
(65.8
|
)
|
|
35.8
|
|
|
—
|
|
|
—
|
|
|||||
Intercompany financing activity
|
73.8
|
|
|
(71.0
|
)
|
|
(2.8
|
)
|
|
—
|
|
|
—
|
|
|||||
Cash dividends paid
|
(69.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69.0
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(17.1
|
)
|
|
(137.7
|
)
|
|
(119.8
|
)
|
|
—
|
|
|
(274.6
|
)
|
|||||
Increase (decrease) in cash and cash equivalents
|
0.7
|
|
|
9.3
|
|
|
5.2
|
|
|
—
|
|
|
15.2
|
|
|||||
Effect of exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|
—
|
|
|
(3.9
|
)
|
|||||
Cash and cash equivalents, beginning of year
|
0.5
|
|
|
7.8
|
|
|
30.6
|
|
|
—
|
|
|
38.9
|
|
|||||
Cash and cash equivalents, end of year
|
$
|
1.2
|
|
|
$
|
17.1
|
|
|
$
|
31.9
|
|
|
$
|
—
|
|
|
$
|
50.2
|
|
•
|
Report of Independent Registered Public Accounting Firm
|
•
|
Consolidated Balance Sheets as of
December 31, 2018
and
2017
|
•
|
Consolidated Statements of Operations for the Years Ended
December 31, 2018
,
2017
and
2016
|
•
|
Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 2018
,
2017
and
2016
|
•
|
Consolidated Statements of Stockholders’ (Deficit) Equity for the Years Ended
December 31, 2018
,
2017
and
2016
|
•
|
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2018
,
2017
and
2016
|
•
|
Notes to the Consolidated Financial Statements for the Years Ended
December 31, 2018
,
2017
and
2016
|
SIGNATURE
|
|
TITLE
|
DATE
|
|
|
|
|
/s/ TODD M. BLUEDORN
|
|
Chief Executive Officer and Chairman of the Board of Directors
|
February 19, 2019
|
Todd M. Bluedorn
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ JOSEPH W. REITMEIER
|
|
Executive Vice President and Chief Financial Officer
|
February 19, 2019
|
Joseph W. Reitmeier
|
|
(Principal Financial Officer)
|
|
|
|
|
|
/s/ CHRIS A. KOSEL
|
|
Vice President, Controller and Chief Accounting Officer
|
February 19, 2019
|
Chris A. Kosel
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
/s/ TODD J. TESKE
|
|
Lead Director
|
February 19, 2019
|
Todd J. Teske
|
|
|
|
|
|
|
|
/s/ JANET K. COOPER
|
|
Director
|
February 19, 2019
|
Janet K. Cooper
|
|
|
|
|
|
|
|
/s/ JOHN E. MAJOR
|
|
Director
|
February 19, 2019
|
John E. Major
|
|
|
|
|
|
|
|
/s/ JOHN W. NORRIS, III
|
|
Director
|
February 19, 2019
|
John W. Norris, III
|
|
|
|
|
|
|
|
/s/ KAREN H. QUINTOS
|
|
Director
|
February 19, 2019
|
Karen. H. Quintos
|
|
|
|
|
|
|
|
/s/ KIM K.W. RUCKER
|
|
Director
|
February 19, 2019
|
Kim K.W. Rucker
|
|
|
|
|
|
|
|
/s/ MAX H. MITCHELL
|
|
Director
|
February 19, 2019
|
Max H. Mitchell
|
|
|
|
|
|
|
|
/s/ PAUL W. SCHMIDT
|
|
Director
|
February 19, 2019
|
Paul W. Schmidt
|
|
|
|
|
|
|
|
/s/ GREGORY T. SWIENTON
|
|
Director
|
February 19, 2019
|
Gregory T. Swienton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
Additions charged to cost and expenses
|
|
Write-offs
|
|
Recoveries
|
|
Other
|
|
Balance at end of year
|
||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance for doubtful accounts
|
$
|
6.3
|
|
|
$
|
2.4
|
|
|
$
|
(2.7
|
)
|
|
$
|
0.9
|
|
|
$
|
(0.2
|
)
|
|
$
|
6.7
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance for doubtful accounts
|
$
|
6.7
|
|
|
$
|
3.9
|
|
|
$
|
(5.6
|
)
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
5.9
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance for doubtful accounts
|
$
|
5.9
|
|
|
$
|
4.8
|
|
|
$
|
(3.7
|
)
|
|
$
|
0.6
|
|
|
$
|
(1.3
|
)
|
|
$
|
6.3
|
|
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).
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4.2
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4.3
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4.4
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4.5
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4.6
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10.1
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10.2
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10.3
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10.4
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10.5
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10.6
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10.7
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10.8
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10.9
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10.10
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10.11
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10.12
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10.13
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10.14
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10.15
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10.16
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10.17*
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10.18*
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10.19*
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10.20*
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10.21*
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10.22*
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10.23*
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10.24*
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10.25*
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Form of Indemnification Agreement entered into between LII and certain executive officers and directors of LII (filed as Exhibit 10.15 to LII’s Registration Statement on Form S-1 (Registration No. 333-75725) filed on April 6, 1999 and incorporated herein by reference).
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10.26*
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10.27*
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10.28*
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10.29*
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10.30*
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21.1
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23.1
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31.1
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31.2
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32.1
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*
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Management contract or compensatory plan or arrangement.
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By:
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/s/ Richard A. Pelini
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Name: Richard A. Pelini
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Title: Vice President and Treasurer
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LENNOX INTERNATIONAL INC.
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By:
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/s/ Richard A. Pelini
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Name: Richard A. Pelini
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Title: Vice President and Treasurer
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LII MEXICO HOLDINGS LTD.
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By:
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/s/ Erik Eduard Hagethorn
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Name: Erik Eduard Hagethorn
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Title: Director
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U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE
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By:
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/s/ Kristel D. Richards
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Name: Kristel D. Richards
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Title: Vice President
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2.
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Conditions for Vesting
.
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PSU Award – Performance Goals
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|||
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Threshold
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Target
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Maximum
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Earned PSUs
Payout Levels
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50%
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100%
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200%
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Core Net Income: 3-year compound annual growth rate
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6%
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12%
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20%
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ROIC: 3-year weighted average*
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15%
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25%
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35%
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3.
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Method and Time of Payment
.
|
1.
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Purpose and Structure
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2.
|
Definitions
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3.
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Administration
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4.
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Post-Employment Restrictions
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5.
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Performance Criteria and Payout Opportunity
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6.
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Determination of Performance Cash Payment
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7.
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Revised Payout Opportunity and Performance Criteria
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8.
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Form of Payment
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9.
|
Timing of Payment
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10.
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Termination, Death, Disability or Retirement
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11.
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New Participants
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12.
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Miscellaneous
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(a)
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“Account” means the account maintained on the Company’s books as a bookkeeping entry for each Participant reflecting such Participant’s Restoration Benefit amounts under Article 3 and adjustments thereon under Article 4 and distributions under Article 5.
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(b)
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“Change in Control” means a change in ownership of the Company (as hereinafter defined), a change in effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, in each case within the meaning of Section 409A of the Code. Subject to the foregoing:
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(i)
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a change in ownership of the Company will occur on the date that any one person or persons acting as a group acquires ownership of stock of the Company that together with stock held by such person or persons constitutes more than 50% of the total fair market value or total voting power of the stock of the Company;
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(ii)
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a change in effective control of the Company will occur on the date that (A) any one person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of the stock of the Company possessing 30% or more of the total voting power of the stock of the Company or (B) a majority of members of the Board of Directors of the Company is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board prior to the date of such appointment or election; and
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(iii)
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a change in the ownership of a substantial portion of the assets of the Company will occur on the date that any one person or persons acting as a
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(c)
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“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, and includes any applicable regulations or other guidance relating to provisions of the Code published by the Internal Revenue Service or the U.S. Treasury Department.
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(d)
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“Company” means Lennox International Inc., a Delaware corporation.
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(e)
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“Compensation” shall have the meaning assigned to the term under the Lennox International Inc. Merged Profit Sharing and 401(k) Retirement Plan for Salaried Employees, without regard to the limitation in Section 401(a)(17) of the Code for any given Plan Year.
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(f)
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“Eligible Employee” means any Chief Executive Officer, Chief Operating Officer or Executive Vice President (EVP) of the Company who is hired or promoted into such position on or after January 1, 2019.
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(g)
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“Management Committee” means the committee described in Section 9.1.
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(h)
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“Participant” means an employee who is considered a Participant in the Plan under Article 2. The term “Participant” will include the beneficiary of a deceased Participant, unless the context clearly requires a different interpretation.
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(i)
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“Participating Employer” means the Company and any other trade or business which may adopt this Plan with the consent of the Chief Executive Officer of the Company.
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(j)
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“Plan” means the Lennox International Inc. Supplemental Restoration Retirement Plan, as set forth herein and as amended from time to time.
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(k)
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“Plan Year” means the calendar year.
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(l)
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“Restoration Benefit” means the benefit described in Article 3.
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(m)
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“Separation from Service” means with respect to Participant, such Participant’s separation from service (within the meaning of Section 409A of the Code and the regulations and other guidance issued thereunder) with the group of employers that includes the Company and each Affiliated Company (as hereinafter defined). A Participant’s Separation from Service shall be deemed to occur on the date as of which the Participant and his or her employer reasonably anticipate that no further services will be performed after such date or that the level of bona fide services the employee will perform after such date (whether as an employee or an independent contractor) will permanently decrease to no more than 20% of the
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(n)
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“Specified Employee” shall mean a “specified employee” with respect to the Company (or a controlled group member) determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code and Treasury Regulation Section 1.409A-1(i) or any successor provision.
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|
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Name
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Ownership
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|
|
Jurisdiction
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Allied Air Enterprises LLC
|
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100%
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|
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Delaware
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Lennox Global Ltd.
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100%
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Delaware
|
SEE ANNEX B
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|
|
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|
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LPAC Corp.
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100%
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|
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Delaware
|
|
|
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LGL Europe Holding Co
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43.2%
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|
|
Delaware
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SEE ANNEX C
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|
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Lennox National Account Services Inc.
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100%
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California
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Lennox National Account Services LLC
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100%
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Florida
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|
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Name
|
|
Ownership
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|
Jurisdiction
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Lennox (Shanghai) Refrigeration Technology Consulting Co Ltd.
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100%
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China
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|
|
|
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LGL Europe Holding Co.
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|
56.8%
|
|
Delaware
|
SEE ANNEX C
|
|
|
|
|
|
|
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LGL Australia (US) Inc.
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100%
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Delaware
|
|
|
|
|
|
|
|
|
|
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LII Comercial de Mexico, S. de R.L. de C.V.
|
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99.97%
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Mexico
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|
|
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Lennox India Technology Centre Private Ltd.
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0.0005%
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India
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|
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Name
|
|
Ownership
|
|
Jurisdiction
|
LGL Holland B.V.
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|
100%
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Netherlands
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Lennox Benelux N.V./S.A.
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|
0.024%
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|
Belgium
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Lennox Industries (Canada) Ltd.
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|
100%
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|
Canada
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LII Mexico Holdings Ltd.
|
|
100%
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UK
|
LII United Products, S. de R.L. de C.V.
|
|
99.99%
|
|
Mexico
|
LII Comercial de Mexico,S. de R.L. de C.V.
|
|
0.03%
|
|
Mexico
|
Lennox Mexico Minority Holdings LLC
|
|
100%
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|
Delaware
|
LII United Products, S. de R.L. de C.V.
|
|
0.01%
|
|
Mexico
|
|
|
|
|
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Lennox India Technology Centre Private Ltd.
|
|
99.9995%
|
|
India
|
|
|
|
|
|
Etablissements Brancher S.A.S.
|
|
100%
|
|
France
|
LGL France S.A.S.
|
|
100%
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|
France
|
Hyfra Ind. GmbH
|
|
0.1%
|
|
Germany
|
Lennox Refac, S.A.
|
|
0.02%
|
|
Spain
|
|
|
|
|
|
LGL Germany GmbH
|
|
100%
|
|
Germany
|
Hyfra Ind. GmbH
|
|
99.9%
|
|
Germany
|
Lennox Deutschland GmbH
|
|
100%
|
|
Germany
|
LGL Deutschland GmbH
|
|
100%
|
|
Germany
|
|
|
|
|
|
Lennox Global Spain S.L.
|
|
100%
|
|
Spain
|
LGL Refrigeration Spain S.A.
|
|
100%
|
|
Spain
|
Lennox Refac, S.A.
|
|
99.98%
|
|
Spain
|
Lennox Portugal Lda
|
|
100%
|
|
Portugal
|
|
|
|
|
|
Lennox Polska sp. z.o.o.
|
|
100%
|
|
Poland
|
|
|
|
|
|
Lennox Benelux B.V.
|
|
100%
|
|
Netherlands
|
Lennox Benelux N.V./S.A.
|
|
99.976%
|
|
Belgium
|
|
|
|
|
|
HCF-Lennox Limited
|
|
100%
|
|
United Kingdom
|
Lennox Industries
|
|
100%
|
|
United Kingdom
|
|
|
|
|
|
Lennox NAO
|
|
99.5%
|
|
Russia
|
1.
|
I have reviewed this annual report on Form 10-K 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;
|
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
|
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/ Todd M. Bluedorn
|
|
Todd M. Bluedorn
|
|
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K 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;
|
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
|
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
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
/s/ Todd M. Bluedorn
|
|
Todd M. Bluedorn
|
|
Chief Executive Officer
|
|
|
|
|
|
/s/ Joseph W. Reitmeier
|
|
Joseph W. Reitmeier
|
|
Chief Financial Officer
|
|