ý | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Ohio | 34-1730488 |
(State or other jurisdiction | (I.R.S. Employer Identification No.) |
of incorporation or organization) | |
33587 Walker Road, Avon Lake, Ohio | 44012 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Sales | $ | 843.6 | $ | 841.6 | $ | 2,552.1 | $ | 2,601.8 | |||||||
Cost of sales | 670.5 | 672.5 | 2,001.2 | 2,077.2 | |||||||||||
Gross margin | 173.1 | 169.1 | 550.9 | 524.6 | |||||||||||
Selling and administrative expense | 101.9 | 99.9 | 326.9 | 305.0 | |||||||||||
Operating income | 71.2 | 69.2 | 224.0 | 219.6 | |||||||||||
Interest expense, net | (15.1 | ) | (16.2 | ) | (44.3 | ) | (48.5 | ) | |||||||
Debt extinguishment costs | — | — | (0.4 | ) | — | ||||||||||
Other (expense) income, net | (0.2 | ) | (1.6 | ) | 0.2 | (3.0 | ) | ||||||||
Income before income taxes | 55.9 | 51.4 | 179.5 | 168.1 | |||||||||||
Income tax expense | (13.6 | ) | (6.9 | ) | (48.2 | ) | (26.4 | ) | |||||||
Net income | 42.3 | 44.5 | 131.3 | 141.7 | |||||||||||
Net loss (income) attributable to noncontrolling interests | — | — | 0.1 | (0.2 | ) | ||||||||||
Net income attributable to PolyOne common shareholders | $ | 42.3 | $ | 44.5 | $ | 131.4 | $ | 141.5 | |||||||
Earnings per common share attributable to PolyOne common shareholders - Basic: | $ | 0.50 | $ | 0.51 | $ | 1.56 | $ | 1.60 | |||||||
Earnings per common share attributable to PolyOne common shareholders - Diluted: | $ | 0.50 | $ | 0.50 | $ | 1.55 | $ | 1.58 | |||||||
Weighted-average shares used to compute earnings per common share: | |||||||||||||||
Basic | 83.9 | 87.5 | 84.2 | 88.5 | |||||||||||
Diluted | 84.5 | 88.4 | 84.8 | 89.4 | |||||||||||
Cash dividends declared per share of common stock | $ | 0.12 | $ | 0.10 | $ | 0.36 | $ | 0.30 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 42.3 | $ | 44.5 | $ | 131.3 | $ | 141.7 | |||||||
Other comprehensive income | |||||||||||||||
Translation adjustments | 0.7 | (9.2 | ) | (3.6 | ) | (23.8 | ) | ||||||||
Unrealized gain (loss) on available-for-sale securities | 0.2 | (0.4 | ) | 0.2 | — | ||||||||||
Total comprehensive income | 43.2 | 34.9 | 127.9 | 117.9 | |||||||||||
Comprehensive loss (income) attributable to noncontrolling interests | — | — | 0.1 | (0.2 | ) | ||||||||||
Comprehensive income attributable to PolyOne common shareholders | $ | 43.2 | $ | 34.9 | $ | 128.0 | $ | 117.7 |
(Unaudited) September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 212.2 | $ | 279.8 | |||
Accounts receivable, net | 418.3 | 347.0 | |||||
Inventories, net | 325.6 | 287.0 | |||||
Other current assets | 45.5 | 47.0 | |||||
Total current assets | 1,001.6 | 960.8 | |||||
Property, net | 605.0 | 583.5 | |||||
Goodwill | 672.9 | 597.7 | |||||
Intangible assets, net | 370.2 | 344.6 | |||||
Other non-current assets | 100.1 | 108.5 | |||||
Total assets | $ | 2,749.8 | $ | 2,595.1 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Short-term and current portion of long-term debt | $ | 19.3 | $ | 18.6 | |||
Accounts payable | 383.4 | 351.6 | |||||
Accrued expenses and other current liabilities | 124.8 | 127.9 | |||||
Total current liabilities | 527.5 | 498.1 | |||||
Non-current liabilities: | |||||||
Long-term debt | 1,240.2 | 1,128.0 | |||||
Pension and other post-retirement benefits | 48.3 | 77.5 | |||||
Deferred income taxes | 30.8 | 33.8 | |||||
Other non-current liabilities | 146.7 | 152.5 | |||||
Total non-current liabilities | 1,466.0 | 1,391.8 | |||||
Shareholders’ equity: | |||||||
PolyOne shareholders’ equity | 755.4 | 704.2 | |||||
Noncontrolling interests | 0.9 | 1.0 | |||||
Total equity | 756.3 | 705.2 | |||||
Total liabilities and shareholders’ equity | $ | 2,749.8 | $ | 2,595.1 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Operating Activities | |||||||
Net income | $ | 131.3 | $ | 141.7 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 74.7 | 73.8 | |||||
Accelerated depreciation and fixed asset charges associated with restructuring activities | 4.6 | 16.1 | |||||
Provision for doubtful accounts | 0.1 | 0.1 | |||||
Debt extinguishment costs | 0.4 | — | |||||
Share-based compensation expense | 6.5 | 6.0 | |||||
Change in assets and liabilities, net of the effect of acquisitions: | |||||||
Increase in accounts receivable | (67.4 | ) | (18.5 | ) | |||
(Increase) decrease in inventories | (10.4 | ) | 18.9 | ||||
Increase in accounts payable | 30.1 | 15.0 | |||||
Decrease in pension and other post-retirement benefits | (31.3 | ) | (32.1 | ) | |||
Decrease in accrued expenses and other assets and liabilities - net | (11.8 | ) | (92.4 | ) | |||
Net cash provided by operating activities | 126.8 | 128.6 | |||||
Investing Activities | |||||||
Capital expenditures | (58.0 | ) | (61.6 | ) | |||
Business acquisitions | (158.3 | ) | — | ||||
Sale of and proceeds from other assets | 9.8 | 1.9 | |||||
Net cash used by investing activities | (206.5 | ) | (59.7 | ) | |||
Financing Activities | |||||||
Proceeds from long-term debt | 100.0 | — | |||||
Borrowings under credit facilities | 805.9 | 781.7 | |||||
Repayments under credit facilities | (806.4 | ) | (705.7 | ) | |||
Purchase of common shares for treasury | (50.7 | ) | (117.8 | ) | |||
Cash dividends paid | (30.1 | ) | (26.8 | ) | |||
Repayment of long-term debt | (4.4 | ) | — | ||||
Exercise of share awards | 1.0 | 4.3 | |||||
Debt financing costs | (1.9 | ) | — | ||||
Net cash provided (used) by financing activities | 13.4 | (64.3 | ) | ||||
Effect of exchange rate changes on cash | (1.3 | ) | (7.5 | ) | |||
Decrease in cash and cash equivalents | (67.6 | ) | (2.9 | ) | |||
Cash and cash equivalents at beginning of period | 279.8 | 238.6 | |||||
Cash and cash equivalents at end of period | $ | 212.2 | $ | 235.7 |
(In millions) | Specialty Engineered Materials | Color, Additives and Inks | Designed Structures and Solutions | Performance Products and Solutions | PolyOne Distribution | Total | |||||||||||||||||
Balance December 31, 2015 | $ | 98.0 | $ | 342.2 | $ | 144.7 | $ | 11.2 | $ | 1.6 | $ | 597.7 | |||||||||||
Acquisitions of businesses | 74.3 | — | — | — | — | 74.3 | |||||||||||||||||
Currency translation and other adjustments | 0.6 | 0.3 | — | — | — | 0.9 | |||||||||||||||||
Balance September 30, 2016 | $ | 172.9 | $ | 342.5 | $ | 144.7 | $ | 11.2 | $ | 1.6 | $ | 672.9 |
As of September 30, 2016 | |||||||||||||||
(In millions) | Acquisition Cost | Accumulated Amortization | Currency Translation | Net | |||||||||||
Customer relationships | $ | 218.1 | $ | (49.6 | ) | $ | (0.1 | ) | $ | 168.4 | |||||
Patents, technology and other | 156.3 | (54.5 | ) | (0.3 | ) | 101.5 | |||||||||
Indefinite-lived trade names | 100.3 | — | — | 100.3 | |||||||||||
Total | $ | 474.7 | $ | (104.1 | ) | $ | (0.4 | ) | $ | 370.2 |
As of December 31, 2015 | |||||||||||||||
(In millions) | Acquisition Cost | Accumulated Amortization | Currency Translation | Net | |||||||||||
Customer relationships | $ | 199.4 | $ | (42.1 | ) | $ | — | $ | 157.3 | ||||||
Patents, technology and other | 137.0 | (45.7 | ) | (0.3 | ) | 91.0 | |||||||||
Indefinite-lived trade names | 96.3 | — | — | 96.3 | |||||||||||
Total | $ | 432.7 | $ | (87.8 | ) | $ | (0.3 | ) | $ | 344.6 |
(In millions) | September 30, 2016 | December 31, 2015 | |||||
Finished products | $ | 202.0 | $ | 172.7 | |||
Work in process | 6.6 | 5.0 | |||||
Raw materials and supplies | 117.0 | 109.3 | |||||
Inventories, net | $ | 325.6 | $ | 287.0 |
(In millions) | September 30, 2016 | December 31, 2015 | |||||
Land | $ | 48.6 | $ | 46.9 | |||
Buildings | 340.7 | 318.3 | |||||
Machinery and equipment | 1,155.5 | 1,104.7 | |||||
Property, gross | 1,544.8 | 1,469.9 | |||||
Less accumulated depreciation and amortization | (939.8 | ) | (886.4 | ) | |||
Property, net | $ | 605.0 | $ | 583.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Income tax expense at 35% | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | ||||
Foreign mix of earnings | (6.5 | )% | (5.0 | )% | (4.8 | )% | (3.9 | )% | ||||
Uncertain tax positions | (3.3 | )% | (14.6 | )% | (0.9 | )% | 0.4 | % | ||||
Foreign tax credits from amending prior period returns | — | % | (1.9 | )% | (1.7 | )% | (18.1 | )% | ||||
Other, net | (0.9 | )% | (0.1 | )% | (0.7 | )% | 2.3 | % | ||||
Effective Income Tax Rate | 24.3 | % | 13.4 | % | 26.9 | % | 15.7 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
(In millions) | 2016 | 2015 | 2016 | 2015 | |||||||
Weighted-average common shares outstanding – basic | 83.9 | 87.5 | 84.2 | 88.5 | |||||||
Plus dilutive impact of share-based compensation | 0.6 | 0.9 | 0.6 | 0.9 | |||||||
Weighted-average common shares – diluted | 84.5 | 88.4 | 84.8 | 89.4 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Service cost | $ | 0.2 | $ | 0.4 | $ | 0.7 | $ | 1.3 | |||||||
Interest cost | 5.0 | 5.3 | 15.4 | 16.0 | |||||||||||
Expected return on plan assets | (7.8 | ) | (8.2 | ) | (23.5 | ) | (24.6 | ) | |||||||
Net periodic benefit gains | $ | (2.6 | ) | $ | (2.5 | ) | $ | (7.4 | ) | $ | (7.3 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Interest cost | $ | 0.2 | $ | 0.1 | $ | 0.4 | $ | 0.4 | |||||||
Net periodic benefit costs | $ | 0.2 | $ | 0.1 | $ | 0.4 | $ | 0.4 |
As of September 30, 2016 (In millions) | Principal Amount | Unamortized discount and debt issuance cost | Net Debt | ||||||||
Senior secured term loan due 2022 | $ | 645.6 | $ | 8.9 | $ | 636.7 | |||||
5.25% senior notes due 2023 | 600.0 | 7.4 | 592.6 | ||||||||
Other debt | 30.2 | — | 30.2 | ||||||||
Total long-term debt | $ | 1,275.8 | $ | 16.3 | $ | 1,259.5 | |||||
Less short-term and current portion of long-term debt | 19.3 | — | 19.3 | ||||||||
Total long-term debt, net of current portion | $ | 1,256.5 | $ | 16.3 | $ | 1,240.2 |
As of December 31, 2015 (In millions) | Principal Amount | Unamortized discount and debt issuance cost | Net Debt | ||||||||
Senior secured term loan due 2022 | $ | 550.0 | $ | 8.6 | $ | 541.4 | |||||
5.25% senior notes due 2023 | 600.0 | 8.3 | 591.7 | ||||||||
Other debt | 13.5 | — | 13.5 | ||||||||
Total long-term debt | $ | 1,163.5 | $ | 16.9 | $ | 1,146.6 | |||||
Less short-term and current portion of long-term debt | 18.6 | — | 18.6 | ||||||||
Total long-term debt, net of current portion | $ | 1,144.9 | $ | 16.9 | $ | 1,128.0 |
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | ||||||||||||||||||||||
(In millions) | Sales to External Customers | Total Sales | Operating Income | Sales to External Customers | Total Sales | Operating Income | |||||||||||||||||
Color, Additives and Inks | $ | 191.3 | $ | 195.9 | $ | 31.4 | $ | 198.9 | $ | 199.9 | $ | 34.5 | |||||||||||
Specialty Engineered Materials | 132.6 | 146.2 | 20.5 | 123.6 | 136.0 | 20.0 | |||||||||||||||||
Designed Structures and Solutions | 96.9 | 97.0 | (0.5 | ) | 109.3 | 112.4 | 4.3 | ||||||||||||||||
Performance Products and Solutions | 152.4 | 171.3 | 18.0 | 154.3 | 175.2 | 16.1 | |||||||||||||||||
PolyOne Distribution | 270.4 | 274.8 | 18.2 | 255.5 | 259.5 | 17.6 | |||||||||||||||||
Corporate and eliminations | — | (41.6 | ) | (16.4 | ) | — | (41.4 | ) | (23.3 | ) | |||||||||||||
Total | $ | 843.6 | $ | 843.6 | $ | 71.2 | $ | 841.6 | $ | 841.6 | $ | 69.2 |
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||||||||||||||||||
(In millions) | Sales to External Customers | Total Sales | Operating Income | Sales to External Customers | Total Sales | Operating Income | |||||||||||||||||
Color, Additives and Inks | $ | 598.5 | $ | 613.0 | $ | 104.5 | $ | 618.7 | $ | 625.8 | $ | 107.9 | |||||||||||
Specialty Engineered Materials | 392.6 | 430.5 | 65.3 | 382.2 | 417.6 | 63.2 | |||||||||||||||||
Designed Structures and Solutions | 308.3 | 308.8 | 0.9 | 339.4 | 343.1 | 12.0 | |||||||||||||||||
Performance Products and Solutions | 449.6 | 510.3 | 59.0 | 480.7 | 541.4 | 43.9 | |||||||||||||||||
PolyOne Distribution | 803.1 | 816.2 | 53.5 | 780.8 | 792.0 | 52.4 | |||||||||||||||||
Corporate and eliminations | — | (126.7 | ) | (59.2 | ) | — | (118.1 | ) | (59.8 | ) | |||||||||||||
Total | $ | 2,552.1 | $ | 2,552.1 | $ | 224.0 | $ | 2,601.8 | $ | 2,601.8 | $ | 219.6 |
Total Assets | |||||||
(In millions) | September 30, 2016 | December 31, 2015 | |||||
Color, Additives and Inks | $ | 938.2 | $ | 939.5 | |||
Specialty Engineered Materials | 540.0 | 353.4 | |||||
Designed Structures and Solutions | 450.8 | 449.5 | |||||
Performance Products and Solutions | 252.7 | 237.4 | |||||
PolyOne Distribution | 231.5 | 200.0 | |||||
Corporate and eliminations | 336.6 | 415.3 | |||||
Total assets | $ | 2,749.8 | $ | 2,595.1 |
(In millions) | PolyOne Shareholders' Equity | Noncontrolling Interests | Total Equity | ||||||||
Balance at December 31, 2015 | $ | 704.2 | $ | 1.0 | $ | 705.2 | |||||
Net income (loss) | 131.4 | (0.1 | ) | 131.3 | |||||||
Other comprehensive income | |||||||||||
Translation adjustments | (3.6 | ) | — | (3.6 | ) | ||||||
Unrealized gain on available-for-sale securities | 0.2 | — | 0.2 | ||||||||
Total comprehensive income (loss) | 128.0 | (0.1 | ) | 127.9 | |||||||
Cash dividend declared | (29.7 | ) | — | (29.7 | ) | ||||||
Repurchase of common shares | (50.7 | ) | — | (50.7 | ) | ||||||
Share-based incentive plan activity | 3.6 | — | 3.6 | ||||||||
Balance at September 30, 2016 | $ | 755.4 | $ | 0.9 | $ | 756.3 | |||||
Balance at December 31, 2014 | $ | 776.3 | $ | 0.9 | $ | 777.2 | |||||
Net income | 141.5 | 0.2 | 141.7 | ||||||||
Other comprehensive income | |||||||||||
Translation adjustments | (23.8 | ) | — | (23.8 | ) | ||||||
Total comprehensive income | 117.7 | 0.2 | 117.9 | ||||||||
Cash dividend declared | (26.8 | ) | — | (26.8 | ) | ||||||
Repurchase of common shares | (121.5 | ) | — | (121.5 | ) | ||||||
Share-based incentive plan activity | 2.2 | — | 2.2 | ||||||||
Balance at September 30, 2015 | $ | 747.9 | $ | 1.1 | $ | 749.0 |
(In millions) | Cumulative Translation Adjustment | Pension and Other Post-Retirement Benefits | Unrealized Gain in Available-for-Sale Securities | Total | |||||||||||
Balance at January 1, 2016 | $ | (76.8 | ) | $ | 5.2 | $ | 0.3 | $ | (71.3 | ) | |||||
Translation adjustments | (3.6 | ) | — | — | (3.6 | ) | |||||||||
Unrealized gain on available-for-sale securities | — | — | 0.2 | 0.2 | |||||||||||
Balance at September 30, 2016 | $ | (80.4 | ) | $ | 5.2 | $ | 0.5 | $ | (74.7 | ) | |||||
Balance at January 1, 2015 | $ | (47.7 | ) | $ | 5.2 | $ | 0.2 | $ | (42.3 | ) | |||||
Translation adjustments | (23.8 | ) | — | — | (23.8 | ) | |||||||||
Balance at September 30, 2015 | $ | (71.5 | ) | $ | 5.2 | $ | 0.2 | $ | (66.1 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(In millions) | |||||||||||||||
Sales | $ | 843.6 | $ | 841.6 | $ | 2,552.1 | $ | 2,601.8 | |||||||
Operating income | 71.2 | 69.2 | 224.0 | 219.6 | |||||||||||
Net income | 42.3 | 44.5 | 131.3 | 141.7 | |||||||||||
Net income attributable to PolyOne common shareholders | 42.3 | 44.5 | 131.4 | 141.5 |
Three Months Ended September 30, | Variances — Favorable (Unfavorable) | Nine Months Ended September 30, | Variances — Favorable (Unfavorable) | ||||||||||||||||||||||||||
(Dollars in millions, except per share data) | 2016 | 2015 | Change | % Change | 2016 | 2015 | Change | % Change | |||||||||||||||||||||
Sales | $ | 843.6 | $ | 841.6 | $ | 2.0 | 0.2 | % | $ | 2,552.1 | $ | 2,601.8 | $ | (49.7 | ) | (1.9 | )% | ||||||||||||
Cost of sales | 670.5 | 672.5 | 2.0 | 0.3 | % | 2,001.2 | 2,077.2 | 76.0 | 3.7 | % | |||||||||||||||||||
Gross margin | 173.1 | 169.1 | 4.0 | 2.4 | % | 550.9 | 524.6 | 26.3 | 5.0 | % | |||||||||||||||||||
Selling and administrative expense | 101.9 | 99.9 | (2.0 | ) | (2.0 | )% | 326.9 | 305.0 | (21.9 | ) | (7.2 | )% | |||||||||||||||||
Operating income | 71.2 | 69.2 | 2.0 | 2.9 | % | 224.0 | 219.6 | 4.4 | 2.0 | % | |||||||||||||||||||
Interest expense, net | (15.1 | ) | (16.2 | ) | 1.1 | 6.8 | % | (44.3 | ) | (48.5 | ) | 4.2 | 8.7 | % | |||||||||||||||
Debt extinguishment costs | — | — | — | — | % | (0.4 | ) | — | (0.4 | ) | (100.0 | )% | |||||||||||||||||
Other (expense) income, net | (0.2 | ) | (1.6 | ) | 1.4 | 87.5 | % | 0.2 | (3.0 | ) | 3.2 | 106.7 | % | ||||||||||||||||
Income before income taxes | 55.9 | 51.4 | 4.5 | 8.8 | % | 179.5 | 168.1 | 11.4 | 6.8 | % | |||||||||||||||||||
Income tax expense | (13.6 | ) | (6.9 | ) | (6.7 | ) | 97.1 | % | (48.2 | ) | (26.4 | ) | (21.8 | ) | (82.6 | )% | |||||||||||||
Net income | 42.3 | 44.5 | (2.2 | ) | (4.9 | )% | 131.3 | 141.7 | (10.4 | ) | (7.3 | )% | |||||||||||||||||
Net loss (income) attributable to noncontrolling interests | — | — | — | — | % | 0.1 | (0.2 | ) | 0.3 | 150.0 | % | ||||||||||||||||||
Net income attributable to PolyOne common shareholders | $ | 42.3 | $ | 44.5 | $ | (2.2 | ) | (4.9 | )% | $ | 131.4 | $ | 141.5 | $ | (10.1 | ) | (7.1 | )% | |||||||||||
Earnings per common share attributable to PolyOne common shareholders - Basic: | $ | 0.50 | $ | 0.51 | $ | 1.56 | $ | 1.60 | |||||||||||||||||||||
Earnings per common share attributable to PolyOne common shareholders - Diluted: | $ | 0.50 | $ | 0.50 | $ | 1.55 | $ | 1.58 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Income tax expense at 35% | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | ||||
Foreign mix of earnings | (6.5 | )% | (5.0 | )% | (4.8 | )% | (3.9 | )% | ||||
Uncertain tax positions | (3.3 | )% | (14.6 | )% | (0.9 | )% | 0.4 | % | ||||
Foreign tax credits from amending prior period returns | — | % | (1.9 | )% | (1.7 | )% | (18.1 | )% | ||||
Other, net | (0.9 | )% | (0.1 | )% | (0.7 | )% | 2.3 | % | ||||
Effective Income Tax Rate | 24.3 | % | 13.4 | % | 26.9 | % | 15.7 | % |
Three Months Ended September 30, | Variances — Favorable (Unfavorable) | Nine Months Ended September 30, | Variances — Favorable (Unfavorable) | ||||||||||||||||||||||||||
(Dollars in millions) | 2016 | 2015 | Change | % Change | 2016 | 2015 | Change | % Change | |||||||||||||||||||||
Sales: | |||||||||||||||||||||||||||||
Color, Additives and Inks | $ | 195.9 | $ | 199.9 | $ | (4.0 | ) | (2.0 | )% | $ | 613.0 | $ | 625.8 | $ | (12.8 | ) | (2.0 | )% | |||||||||||
Specialty Engineered Materials | 146.2 | 136.0 | 10.2 | 7.5 | % | 430.5 | 417.6 | 12.9 | 3.1 | % | |||||||||||||||||||
Designed Structures and Solutions | 97.0 | 112.4 | (15.4 | ) | (13.7 | )% | 308.8 | 343.1 | (34.3 | ) | (10.0 | )% | |||||||||||||||||
Performance Products and Solutions | 171.3 | 175.2 | (3.9 | ) | (2.2 | )% | 510.3 | 541.4 | (31.1 | ) | (5.7 | )% | |||||||||||||||||
PolyOne Distribution | 274.8 | 259.5 | 15.3 | 5.9 | % | 816.2 | 792.0 | 24.2 | 3.1 | % | |||||||||||||||||||
Corporate and eliminations | (41.6 | ) | (41.4 | ) | (0.2 | ) | (0.5 | )% | (126.7 | ) | (118.1 | ) | (8.6 | ) | (7.3 | )% | |||||||||||||
Total Sales | $ | 843.6 | $ | 841.6 | $ | 2.0 | 0.2 | % | $ | 2,552.1 | $ | 2,601.8 | $ | (49.7 | ) | (1.9 | )% | ||||||||||||
Operating income: | |||||||||||||||||||||||||||||
Color, Additives and Inks | $ | 31.4 | $ | 34.5 | $ | (3.1 | ) | (9.0 | )% | $ | 104.5 | $ | 107.9 | $ | (3.4 | ) | (3.2 | )% | |||||||||||
Specialty Engineered Materials | 20.5 | 20.0 | 0.5 | 2.5 | % | 65.3 | 63.2 | 2.1 | 3.3 | % | |||||||||||||||||||
Designed Structures and Solutions | (0.5 | ) | 4.3 | (4.8 | ) | (111.6 | )% | 0.9 | 12.0 | (11.1 | ) | (92.5 | )% | ||||||||||||||||
Performance Products and Solutions | 18.0 | 16.1 | 1.9 | 11.8 | % | 59.0 | 43.9 | 15.1 | 34.4 | % | |||||||||||||||||||
PolyOne Distribution | 18.2 | 17.6 | 0.6 | 3.4 | % | 53.5 | 52.4 | 1.1 | 2.1 | % | |||||||||||||||||||
Corporate and eliminations | (16.4 | ) | (23.3 | ) | 6.9 | 29.6 | % | (59.2 | ) | (59.8 | ) | 0.6 | 1.0 | % | |||||||||||||||
Total Operating Income | $ | 71.2 | $ | 69.2 | $ | 2.0 | 2.9 | % | $ | 224.0 | $ | 219.6 | $ | 4.4 | 2.0 | % | |||||||||||||
Operating income as a percentage of sales: | |||||||||||||||||||||||||||||
Color, Additives and Inks | 16.0 | % | 17.3 | % | (1.3 | ) | % points | 17.0 | % | 17.2 | % | (0.2 | )% | % points | |||||||||||||||
Specialty Engineered Materials | 14.0 | % | 14.7 | % | (0.7 | ) | % points | 15.2 | % | 15.1 | % | 0.1 | % | % points | |||||||||||||||
Designed Structures and Solutions | (0.5 | )% | 3.8 | % | (4.3 | ) | % points | 0.3 | % | 3.5 | % | (3.2 | )% | % points | |||||||||||||||
Performance Products and Solutions | 10.5 | % | 9.2 | % | 1.3 | % points | 11.6 | % | 8.1 | % | 3.5 | % | % points | ||||||||||||||||
PolyOne Distribution | 6.6 | % | 6.8 | % | (0.2 | ) | % points | 6.6 | % | 6.6 | % | — | % | % points | |||||||||||||||
Total | 8.4 | % | 8.2 | % | 0.2 | % points | 8.8 | % | 8.4 | % | 0.4 | % | % points |
(In millions) | September 30, 2016 | December 31, 2015 | |||||
Cash and cash equivalents | $ | 212.2 | $ | 279.8 | |||
Revolving credit availability | 384.9 | 341.9 | |||||
Liquidity | $ | 597.1 | $ | 621.7 |
(In millions) | ||||
2016 | $ | 14.1 | ||
2017 | 6.1 | |||
2018 | 20.7 | |||
2019 | 6.4 | |||
2020 | 6.4 | |||
Thereafter | 1,222.1 | |||
Aggregate maturities | $ | 1,275.8 |
• | effects on foreign operations due to currency fluctuations, tariffs and other political, economic and regulatory risks; |
• | changes in polymer consumption growth rates and laws and regulations regarding the disposal of plastic materials where we conduct business; |
• | changes in global industry capacity or in the rate at which anticipated changes in industry capacity come online in the industries in which we participate; |
• | fluctuations in raw material prices, quality and supply, and in energy prices and supply; |
• | production outages or material costs associated with scheduled or unscheduled maintenance programs; |
• | unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters, including any developments that would require any increase in our costs and/or reserves for such contingencies; |
• | an inability to achieve or delays in achieving or achievement of less than the anticipated financial benefit from initiatives related to working capital reductions, cost reductions and employee productivity goals; |
• | an inability to raise or sustain prices for products or services; |
• | an inability to maintain appropriate relations with unions and employees; |
• | the strength and timing of economic recoveries; |
• | the financial condition of our customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; |
• | disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; |
• | other factors affecting our business beyond our control, including, without limitation, changes in the general economy, changes in interest rates and changes in the rate of inflation; |
• | the amount and timing of repurchases, if any, of PolyOne common shares; |
• | our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; |
• | our ability to realize anticipated savings and operational benefits from the realignment of assets, including the closure of manufacturing facilities; the timing of closings and shifts of production to new facilities related to asset realignments and any unforeseen loss of customers and/or disruptions of service or quality caused by such closings and/or production shifts; separation and severance amounts that differ from original estimates, amounts for non-cash charges related to asset write-offs and accelerated depreciation realignments of property, plant and equipment, that differ from original estimates; |
• | our ability to identify and evaluate acquisition targets and consummate acquisitions; |
• | the ability to successfully integrate acquired businesses into our operations, including whether such businesses will be accretive to our earnings, retain the management teams of acquired businesses, and retain relationships with customers of acquired businesses, including, without limitation, substantially all of the assets of Gordon Holdings, certain TPE assets from Kraton, Magenta and Spartech; |
• | information systems failures and cyberattacks; and |
• | other factors described in our annual report on Form 10-K for the year ended December 31, 2015 under Item 1A, “Risk Factors.” |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Number of Shares that May Yet be Purchased Under the Program (1) | ||||||||
July 1 to July 31 | 183,736 | $ | 35.47 | 183,736 | 9,816,264 | |||||||
August 1 to August 31 | 134,164 | 34.05 | 134,164 | 9,682,100 | ||||||||
September 1 to September 30 | — | — | — | 9,682,100 | ||||||||
Total | 317,900 | $ | 34.87 | 317,900 |
October 26, 2016 | POLYONE CORPORATION | |
/s/ Bradley C. Richardson | ||
Bradley C. Richardson Executive Vice President and Chief Financial Officer |
Exhibit No. | Exhibit Description | |
10.1 | Amendment Agreement No. 2, dated August 3, 2016, by and among PolyOne Corporation, the subsidiaries of PolyOne Corporation party thereto, Citibank, N.A, as administrative agent, and the lenders party thereto. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 5, 2016, SEC File No. 1-16091) | |
31.1 | Certification of Robert M. Patterson, President and Chief Executive Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Bradley C. Richardson, Executive Vice President and Chief Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Robert M. Patterson, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Bradley C. Richardson, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
1. | I have reviewed this quarterly report on Form 10-Q of PolyOne Corporation; |
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/ Robert M. Patterson |
Robert M. Patterson |
Chairman, President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of PolyOne Corporation; |
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/ Bradley C. Richardson |
Bradley C. Richardson |
Executive Vice President and 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 as of the dates and for the periods expressed in the Report. |
/s/ Robert M. Patterson |
Robert M. Patterson |
Chairman, President and Chief Executive 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 as of the dates and for the periods expressed in the Report. |
/s/ Bradley C. Richardson |
Bradley C. Richardson |
Executive Vice President and Chief Financial Officer |
Document And Entity Information |
9 Months Ended |
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Sep. 30, 2016
shares
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Document And Entity Information [Abstract] | |
Entity Registrant Name | POLYONE CORP |
Entity Central Index Key | 0001122976 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2016 |
Amendment Flag | false |
Document Fiscal Year Focus | 2016 |
Document Fiscal Period Focus | Q3 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Shares, Shares Outstanding | 83,779,955 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 42.3 | $ 44.5 | $ 131.3 | $ 141.7 |
Other comprehensive income | ||||
Translation adjustments | 0.7 | (9.2) | (3.6) | (23.8) |
Unrealized gain (loss) on available-for-sale securities | 0.2 | (0.4) | 0.2 | 0.0 |
Total comprehensive income | 43.2 | 34.9 | 127.9 | 117.9 |
Comprehensive loss (income) attributable to noncontrolling interests | 0.0 | 0.0 | 0.1 | (0.2) |
Comprehensive income attributable to PolyOne common shareholders | $ 43.2 | $ 34.9 | $ 128.0 | $ 117.7 |
Basis of Presentation |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 1 — BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the annual report on Form 10-K for the year ended December 31, 2015 of PolyOne Corporation. When used in this quarterly report on Form 10-Q, the terms “we,” “us,” “our”, "PolyOne" and the “Company” mean PolyOne Corporation and its consolidated subsidiaries. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be attained in subsequent periods or for the year ending December 31, 2016. Accounting Standards Not Yet Adopted In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), which requires the allowance recorded for trade receivables to be measured by expected loss rather than incurred loss. Expected loss measurement will be based on historical experience, current conditions and reasonable and supportable forecasts. The Company will adopt ASU 2016-13 no later than the required date of January 1, 2020. We do not expect this standard to have a material impact on our Consolidated Financial Statements. In March 2016, the FASB issued Accounting Standards Update 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09), which simplifies the accounting for share-based payment transactions. This update requires that excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the Consolidated Statements of Income rather than additional paid-in capital. Additionally, the excess tax benefits will be classified along with other income tax cash flows as an operating activity, rather than a financing activity, on the Statement of Cash Flows. Further, the update allows an entity to make a policy election to recognize forfeitures as they occur or estimate the number of awards expected to be forfeited. ASU 2016-09 is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively, with certain cumulative effect adjustments. The Company will adopt ASU 2016-09 no later than the required date of January 1, 2017. We do not expect this standard to have a material impact on our Consolidated Financial Statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases (Topic 842)" (ASU 2016-02), which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. The Company will adopt ASU 2016-02 no later than the required date of January 1, 2019. We are currently assessing the impact this standard will have on our Consolidated Financial Statements. In July 2015, the FASB issued Accounting Standards Update 2015-11, "Inventory (Topic 300): Simplifying the Measurement of Inventory" (ASU 2015-11), which applies to inventory measured using first-in, first out (FIFO) or average cost. This update requires that an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This update is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. We do not expect this standard to have a material impact on our Consolidated Financial Statements. In May 2014, the FASB issued Auditing Standards Update 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09). Under this standard, a company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard implements a five-step process for customer contract revenue recognition that focuses on transfer of control. The Company will adopt ASU 2014-09 no later than the required date of January 1, 2018. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact this standard, along with the subsequent updates and clarifications, will have on our Consolidated Financial Statements as well as the method by which we will adopt the new standard. |
Business Combinations |
9 Months Ended |
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Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Business Combinations | Note 2 — BUSINESS COMBINATIONS On July 26, 2016, the Company completed the acquisition of substantially all of the assets of Gordon Holdings, Inc. (Gordon Holdings) doing business as Gordon Composites, Inc. (Gordon Composites) and Polystrand, Inc. (Polystrand). Gordon Composites develops high strength profiles and laminates for use in vertical and crossbow archery, sports and recreation equipment, prosthetics and office furniture systems. Polystrand operates on the leading edge of continuous reinforced thermoplastic composite technology, a next generation material science that delivers the high strength and lightweight characteristics of composites, further enhanced with the design flexibility to form more complex shapes. The purchase price was $85.5 million and the results of operations of the acquired businesses are included in the Company's Consolidated Statements of Income for the period subsequent to the date of the acquisition and are reported in the Specialty Engineered Materials segment. The preliminary purchase price allocation is subject to change and not yet finalized. This preliminary allocation resulted in goodwill of $36.6 million and $30.0 million in intangible assets, of which $4.0 million represent indefinite-lived trade names. Goodwill recognized as a result of this acquisition is deductible for tax purposes. On January 29, 2016, the Company completed the acquisition of certain technologies and assets from Kraton Performance Polymers, Inc. (Kraton), to expand its global footprint and expertise in thermoplastic elastomer (TPE) innovation and design, for approximately $72.8 million. The results of operations of Kraton are included in the Company's Consolidated Statements of Income for the period subsequent to the date of the acquisition and are reported in the Specialty Engineered Materials segment. The preliminary purchase price allocation is subject to change and not yet finalized. This preliminary allocation resulted in goodwill of $37.7 million and $12.0 million in intangible assets. Goodwill recognized as a result of this acquisition is deductible for tax purposes. The definite-lived intangible assets that have been acquired with these recent acquisitions are being amortized over a period of seven to twenty years. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Note 3 — GOODWILL AND INTANGIBLE ASSETS Goodwill as of September 30, 2016 and December 31, 2015, and changes in the carrying amount of goodwill by segment were as follows:
Indefinite and finite-lived intangible assets consisted of the following:
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Employee Separation and Restructuring Costs |
9 Months Ended |
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Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Employee Separation and Restructuring Costs | Note 4 — EMPLOYEE SEPARATION AND RESTRUCTURING COSTS During the three months ended September 30, 2016, we recognized total employee separation and restructuring charges of $4.6 million, of which $1.1 million was recognized within Cost of goods sold and $3.5 million within Selling and administrative expenses. During the three months ended September 30, 2015, we recognized total employee separation and restructuring charges of $13.7 million, of which $11.6 million was recognized within Cost of goods sold and $2.1 million within Selling and administrative expenses. During the nine months ended September 30, 2016, we recognized total employee separation and restructuring charges of $16.5 million, of which $5.7 million was recognized within Cost of goods sold and $10.8 million within Selling and administrative expenses. During the nine months ended September 30, 2015, we recognized total employee separation and restructuring charges of $31.8 million, which included $24.8 million recognized within Cost of goods sold and $7.0 million recognized within Selling and administrative expenses. These charges are primarily associated with the current Designed Structures and Solutions (DSS) segment and the former Spartech Corporation (Spartech) businesses, which are further detailed below. In the second half of 2015, PolyOne determined it would close two manufacturing facilities within the DSS segment and take other corporate actions to reduce administrative costs. These actions were taken as a result of the declining DSS results and near-term outlook. During the three and nine months ended September 30, 2016, we recognized charges of $2.5 million and $9.3 million, respectively. During the three and nine months ended September 30, 2015, we recognized charges of $10.5 million. The costs recognized during 2016 and 2015 primarily related to severance and asset-related charges, including fixed asset and inventory write offs. Total costs for these actions to-date has been $26.4 million, which includes $8.7 million of severance costs, $13.3 million of asset-related charges, including accelerated depreciation of $9.1 million, and $4.4 million of other ongoing costs associated with exiting these plants and transferring equipment. Additional costs related to these actions are not expected to be material. In 2013, PolyOne determined it would close seven former Spartech manufacturing facilities and one administrative office and relocate operations to other PolyOne facilities. The closure of these manufacturing facilities was part of the Company’s efforts to improve service, on time delivery and quality as we align assets with our customers' needs. There were no charges related to the Spartech actions during the nine months ended September 30, 2016 as these actions were complete as of December 31, 2015. We recognized $2.0 million and $17.0 million related to these actions during the three and nine months ended September 30, 2015, respectively. |
Inventories, Net |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, Net | Note 5 — INVENTORIES, NET Components of Inventories, net are as follows:
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Property, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Net | Note 6 — PROPERTY, NET Components of Property, net are as follows:
Depreciation expense was $61.7 million for the nine months ended September 30, 2016 and $63.5 million for the nine months ended September 30, 2015. Included in depreciation expense is accelerated depreciation of $3.3 million and $4.6 million during the nine months ended September 30, 2016 and 2015, respectively, related to restructuring actions. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Note 7 — INCOME TAXES The income tax provision includes U.S. federal, state and local, and foreign income taxes. During the third quarter and first nine months of 2016, the Company’s effective tax rate was 24.3% and 26.9%, respectively, compared to 13.4% and 15.7%, respectively, for the comparable periods of 2015. A reconciliation of the U.S. federal statutory rate to the consolidated effective income tax rate is as follows:
The effective tax rates for all periods differed from the U.S. federal statutory rate primarily as a result of the significant items described below. 2016 Significant items The 3.3% and 0.9% benefits for uncertain tax positions for the three months and nine months ended September 30, 2016, respectively, primarily relate to the reversal of uncertain tax positions due to the expiration of the statute of limitations. For the nine months ended September 30, 2016, a 1.7% adjustment related to previously filed U.S. federal income tax returns and corresponding foreign tax credits resulted in the favorable impact to the effective tax rate. 2015 Significant items The 14.6% benefit for uncertain tax positions for the three months ended September 30, 2015 primarily related to the reversal of an uncertain tax position due to the expiration of the statute of limitations. The 0.4% expense for uncertain tax positions for the nine months ended September 30, 2015 is primarily due to an unfavorable foreign court ruling during the first quarter of 2015, which settled an uncertain tax position taken in a prior year, more than offsetting the benefit recognized during the three months ended September 30, 2015. For the three and nine months ended September 30, 2015, the 1.9% and 18.1% of respective benefits were a result of amending U.S. federal income tax returns from 2004 through 2012 to use foreign tax credits. |
Weighted-Average Shares Used in Computing Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Shares Used in Computing Earnings Per Common Share | Note 8 — WEIGHTED-AVERAGE SHARES USED IN COMPUTING EARNINGS PER COMMON SHARE
For the three months ended September 30, 2016 and 2015, 0.2 million equity-based awards were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive. For the nine months ended September 30, 2016, 0.2 million of equity-based awards were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. No equity-based awards were anti-dilutive for the computation of diluted earnings per common share for the nine months ended September 30, 2015. |
Employee Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Note 9 — EMPLOYEE BENEFIT PLANS Components of defined benefit pension plan net periodic gains are as follows:
Components of post-retirement health care plan benefit costs are as follows:
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Financing Arrangements |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Arrangements | Note 10 — FINANCING ARRANGEMENTS Debt consists of the following instruments:
On November 12, 2015, PolyOne entered into a senior secured term loan having an aggregate principal amount of $550.0 million. One percent of the principal amount is payable annually while the remaining balance matures on November 12, 2022. On June 15, 2016, the Company entered into an amendment to its senior secured term loan. Under the terms of the amended senior secured term loan, the interest rate was reduced by 25 basis points to 275 basis points plus the greater of (i) the 1-, 2-, 3-, or 6-month LIBOR, at the Company's discretion, or (ii) 75 basis points. In connection with the amendment, the Company recognized $0.4 million of Debt extinguishment costs in our Consolidated Statements of Income. On August 3, 2016, the Company increased the senior secured term loan due 2022 by $100.0 million in connection with the acquisition of substantially all of the assets of Gordon Holdings. The weighted average annual interest rate for the senior secured term loan for the three and nine months ended September 30, 2016 was 3.50% and 3.65%, respectively. The total aggregate principal repayments as of the nine months ended September 30, 2016 was $4.4 million. PolyOne has outstanding $600.0 million aggregate principal amount of senior notes, which mature on March 15, 2023. The senior notes bear an interest rate of 5.25% per year, payable semi-annually, in arrears, on March 15 and September 15 of each year. The Company maintains a senior secured revolving credit facility with a maturity date of March 1, 2018, which provides a maximum borrowing facility size of $400.0 million, subject to a borrowing base with advances against certain U.S. and Canadian accounts receivable, inventory and other assets as specified in the agreement. We have the option to increase the availability under the facility to $450.0 million, subject to meeting certain requirements and obtaining commitments for such increase. The senior secured revolving credit facility has a U.S. and a Canadian line of credit. Currently there are no borrowings on the Canadian portion of the facility. Advances under the U.S. portion of our revolving credit facility bear interest, at the Company’s option, at a Base Rate or a LIBOR Rate plus an applicable margin. The Base Rate is a fluctuating rate equal to the greater of (i) the Federal Funds Rate plus one-half percent, (ii) the prevailing LIBOR Rate plus one percent, and (iii) the prevailing Prime Rate. The applicable margins vary based on the Company’s daily average excess availability during the previous quarter. The weighted average annual interest rate under this facility for the three and nine months ended September 30, 2016 was 4.00% and 3.13%. As of September 30, 2016, we had no outstanding borrowings and had availability of $381.7 million under this facility. The agreements governing our revolving credit facility and our secured term loan, and the indentures and credit agreements governing other debt, contain a number of customary restrictive covenants that, among other things, limit our ability to: consummate asset sales, incur additional debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct. As of September 30, 2016, we were in compliance with all covenants. The Company also has a credit line of $16.0 million with Saudi Hollandi Bank. The credit line has an interest rate equal to the Saudi Arabia Interbank Offered Rate plus a fixed rate of 0.85% and is subject to annual renewal. Borrowings under this credit line were primarily used to fund capital expenditures related to the manufacturing facility in Jeddah, Saudi Arabia. As of September 30, 2016, letters of credit under the credit line were $0.2 million and borrowings were $12.6 million with an interest rate of 2.67%. The estimated fair value of PolyOne’s debt instruments at September 30, 2016 and December 31, 2015 was $1,279.9 million and $1,136.2 million, respectively, compared to carrying values of $1,259.5 million and $1,146.6 million as of September 30, 2016 and December 31, 2015, respectively. The fair value of PolyOne’s debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and represent Level 2 measurements within the fair value hierarchy. |
Segment Information |
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Segment Information | Note 11 — SEGMENT INFORMATION Operating income is the primary measure that is reported to our chief operating decision maker for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative expenses that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant realignment costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs and other liabilities for facilities no longer owned or closed in prior years; gains and losses on the divestiture of joint ventures and equity investments; actuarial gains and losses associated with our pension and other post-retirement benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our chief operating decision maker. These costs are included in Corporate and eliminations. PolyOne has five reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; (3) Designed Structures and Solutions; (4) Performance Products and Solutions; and (5) PolyOne Distribution. Segment information for the three and nine months ended September 30, 2016 and 2015 is as follows:
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12 — COMMITMENTS AND CONTINGENCIES Environmental — We have been notified by federal and state environmental agencies and by private parties that we may be a potentially responsible party (PRP) in connection with the environmental investigation and remediation of certain sites. While government agencies frequently assert that PRPs are jointly and severally liable at these sites, in our experience, the interim and final allocations of liability costs are generally made based on the relative contribution of waste. We may also initiate corrective and preventive environmental projects of our own to ensure safe and lawful activities at our operations. We believe that compliance with current governmental regulations at all levels will not have a material adverse effect on our financial position, results of operations or cash flows. In September 2007, we were informed of rulings by the United States District Court for the Western District of Kentucky on several pending motions in the case of Westlake Vinyls, Inc. v. Goodrich Corporation, et al., which had been pending since 2003. The Court held that PolyOne must pay the remediation costs at the former Goodrich Corporation Calvert City facility (now largely owned and operated by Westlake Vinyls), together with certain defense costs of Goodrich Corporation. The rulings also provided that PolyOne can seek indemnification for contamination attributable to Westlake Vinyls. The environmental obligation at the site arose as a result of an agreement between The B.F.Goodrich Company (n/k/a Goodrich Corporation) and our predecessor, The Geon Company, at the time of the initial public offering in 1993, by which The Geon Company became a public company, to indemnify Goodrich Corporation for environmental costs at the site. At the time, neither PolyOne nor The Geon Company ever owned or operated the facility. Following the Court rulings, the parties to the litigation entered into settlement negotiations and agreed to settle all claims regarding past environmental costs incurred at the site. The settlement agreement provides a mechanism to pursue allocation of future remediation costs at the Calvert City site to Westlake Vinyls. While we do not currently assume any allocation of costs in our current accrual, we will adjust our accrual, in the future, consistent with any such future allocation of costs. A remedial investigation and feasibility study (RIFS) is underway at Calvert City. During the third quarter of 2013, we submitted a remedial investigation report to the United States Environmental Protection Agency (USEPA). The USEPA required certain changes to the remedial investigation report and provided a final report in the third quarter of 2015. Additionally, in the third quarter of 2015, the USEPA assumed responsibility for the completion of the feasibility study. We continue to pursue available insurance coverage related to this matter and recognize gains as we receive reimbursement. No receivable has been recognized for future recoveries. On March 13, 2013, PolyOne acquired Spartech. One of Spartech's subsidiaries, Franklin-Burlington Plastics, Inc. (Franklin-Burlington), operated a plastic resin compounding facility in Kearny, New Jersey, located adjacent to the Passaic River. The USEPA has requested that companies located in the area of the lower Passaic River, including Franklin-Burlington, cooperate in an investigation of contamination of approximately 17 miles of the lower Passaic River (the lower Passaic River Study Area). In response, Franklin-Burlington and approximately 70 other companies (collectively, the Cooperating Parties) agreed, pursuant to an Administrative Order on Consent (AOC) with the USEPA, to assume responsibility for development of a RIFS of the lower Passaic River Study Area. The RIFS costs are exclusive of any costs that may ultimately be required to remediate the lower Passaic River Study Area or costs associated with natural resource damages that may be assessed. By agreeing to bear a portion of the cost of the RIFS, Franklin-Burlington did not admit to any liability or agree to bear any such remediation or natural resource damage costs. In February 2015, the Cooperating Parties submitted to the USEPA a remedial investigation report for the lower Passaic River Study Area. In March 2015, Franklin-Burlington, along with nine other PRPs, submitted a de minimis settlement petition to the USEPA, asserting the ten entities contributed little or no impact to the lower Passaic River and seeking a meeting to commence settlement discussions. In April 2015, the Cooperating Parties submitted a feasibility study to the USEPA. The feasibility study does not contemplate who is responsible for remediation nor does it determine how such costs will be allocated to PRPs. The Cooperating Parties are currently revising their RIFS, which has not yet been approved by the USEPA, as part of continuing technical discussions with the USEPA. On March 4, 2016, the USEPA issued a Record of Decision selecting a remedy for an eight-mile portion of the lower Passaic River Study Area at an estimated and discounted cost of $1.4 billion. On March 31, 2016, the USEPA sent a Notice of Potential Liability (the Notice) to over 100 companies, including Franklin-Burlington, and several municipalities for this eight-mile portion, in which the USEPA stated it intended to negotiate an AOC for Remedial Design with Occidental Chemical Corporation (OCC) and, upon signature, planned to negotiate a consent decree with other major PRPs to perform remedial actions. The Notice did not identify the “other major PRPs.” Further, the Notice communicated that the USEPA will provide to certain parties separate notice of the opportunity to discuss a cash-out settlement at a later date. On September 30, 2016, the USEPA reached an agreement with OCC, which orders OCC to perform the remedial design for the lower eight mile portion of the Passaic River. Based on the currently available information, we have found no evidence that Franklin-Burlington contributed any of the primary contaminants of concern to the lower Passaic River. Any allocation to Franklin-Burlington, including a final resolution of our de minimis petition or other opportunity for cash-out settlement, or further appropriate legal actions has not been determined. As a result of these uncertainties, we are unable to estimate a liability, if any, related to this matter. As of September 30, 2016, we have not accrued for costs of remediation related to the lower Passaic River. During the nine months ended September 30, 2016 and 2015, PolyOne recognized $6.1 million and $7.8 million, respectively, of expense related to environmental remediation activities. During the nine months ended September 30, 2016 and 2015, we received $5.3 million and $2.6 million, respectively, of insurance recoveries related to previously incurred environmental costs. These expenses and gains associated with these reimbursements are included within Cost of sales within our Condensed Consolidated Statements of Income. Our Consolidated Balance Sheet includes accruals totaling $118.2 million and $119.9 million as of September 30, 2016 and December 31, 2015, respectively, based on our estimates of probable future environmental expenditures relating to previously contaminated sites. These undiscounted amounts are included in Accrued expenses and other liabilities and Other non-current liabilities on the accompanying Consolidated Balance Sheets. The accruals represent our best estimate of probable future costs that we can reasonably estimate, based upon currently available information and technology and our view of the most likely remedy. Depending upon the results of future testing, completion and results of remedial investigation and feasibility studies, the ultimate remediation alternatives undertaken, changes in regulations, technology development, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued at September 30, 2016. However, such additional costs, if any, cannot be currently estimated. Further, we have not recorded receivables for future available insurance recoveries associated with these costs. Guarantee — On February 28, 2011, we sold our 50% equity interest in SunBelt Chlor Alkali Partnership (SunBelt) to Olin Corporation (Olin). As a result of the sale, Olin assumed our obligations under our guarantee of senior secured notes issued by SunBelt, which are $12.2 million as of September 30, 2016. Unless the guarantee is formally assigned to Olin, we remain obligated under the guarantee, although Olin has agreed to indemnify us for amounts that we may be obligated to pay under the guarantee. The senior secured notes mature in December 2017. |
Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Note 13 — EQUITY Changes in equity for the nine months ended September 30, 2016 and September 30, 2015 are as follows:
Changes in accumulated other comprehensive loss year-to-date as of September 30, 2016 and 2015 were as follows:
|
Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the annual report on Form 10-K for the year ended December 31, 2015 of PolyOne Corporation. When used in this quarterly report on Form 10-Q, the terms “we,” “us,” “our”, "PolyOne" and the “Company” mean PolyOne Corporation and its consolidated subsidiaries. |
Accounting Standards Not Yet Adopted | In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), which requires the allowance recorded for trade receivables to be measured by expected loss rather than incurred loss. Expected loss measurement will be based on historical experience, current conditions and reasonable and supportable forecasts. The Company will adopt ASU 2016-13 no later than the required date of January 1, 2020. We do not expect this standard to have a material impact on our Consolidated Financial Statements. In March 2016, the FASB issued Accounting Standards Update 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09), which simplifies the accounting for share-based payment transactions. This update requires that excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the Consolidated Statements of Income rather than additional paid-in capital. Additionally, the excess tax benefits will be classified along with other income tax cash flows as an operating activity, rather than a financing activity, on the Statement of Cash Flows. Further, the update allows an entity to make a policy election to recognize forfeitures as they occur or estimate the number of awards expected to be forfeited. ASU 2016-09 is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively, with certain cumulative effect adjustments. The Company will adopt ASU 2016-09 no later than the required date of January 1, 2017. We do not expect this standard to have a material impact on our Consolidated Financial Statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases (Topic 842)" (ASU 2016-02), which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. The Company will adopt ASU 2016-02 no later than the required date of January 1, 2019. We are currently assessing the impact this standard will have on our Consolidated Financial Statements. In July 2015, the FASB issued Accounting Standards Update 2015-11, "Inventory (Topic 300): Simplifying the Measurement of Inventory" (ASU 2015-11), which applies to inventory measured using first-in, first out (FIFO) or average cost. This update requires that an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This update is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. We do not expect this standard to have a material impact on our Consolidated Financial Statements. In May 2014, the FASB issued Auditing Standards Update 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09). Under this standard, a company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard implements a five-step process for customer contract revenue recognition that focuses on transfer of control. The Company will adopt ASU 2014-09 no later than the required date of January 1, 2018. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact this standard, along with the subsequent updates and clarifications, will have on our Consolidated Financial Statements as well as the method by which we will adopt the new standard. |
Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Changes in Carrying Amount of Goodwill by Operating Segment | Goodwill as of September 30, 2016 and December 31, 2015, and changes in the carrying amount of goodwill by segment were as follows:
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Schedule of Finite-Lived Intangible Assets | Indefinite and finite-lived intangible assets consisted of the following:
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Schedule of Indefinite-Lived Intangible Assets | Indefinite and finite-lived intangible assets consisted of the following:
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Inventories, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventories, Net | Components of Inventories, net are as follows:
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Property, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Property, Net | Components of Property, net are as follows:
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Federal Statutory Rate to Consolidated Effective Income Tax Rate | A reconciliation of the U.S. federal statutory rate to the consolidated effective income tax rate is as follows:
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Weighted-Average Shares Used in Computing Earnings Per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted-Average Shares Used in Computing Earnings Per Share |
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Employee Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Period Benefit Costs | Components of defined benefit pension plan net periodic gains are as follows:
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Post-retirement Health Care Plan Benefit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Period Benefit Costs | Components of post-retirement health care plan benefit costs are as follows:
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Financing Arrangements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Debt | Debt consists of the following instruments:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information | Segment information for the three and nine months ended September 30, 2016 and 2015 is as follows:
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Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Equity | Changes in equity for the nine months ended September 30, 2016 and September 30, 2015 are as follows:
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Schedule of Accumulated Other Comprehensive Loss | Changes in accumulated other comprehensive loss year-to-date as of September 30, 2016 and 2015 were as follows:
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Business Combinations (Narrative) (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Jul. 26, 2016 |
Jan. 29, 2016 |
Sep. 30, 2016 |
|
Gordon Holdings | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 85.5 | ||
Goodwill acquired | 36.6 | ||
Intangible assets acquired | 30.0 | ||
Kraton | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 72.8 | ||
Goodwill acquired | 37.7 | ||
Intangible assets acquired, finite-lived | $ 12.0 | ||
Indefinite-lived trade names | Gordon Holdings | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired, indefinite-lived | $ 4.0 | ||
Minimum | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired, amortization period | 7 years | ||
Maximum | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired, amortization period | 20 years |
Goodwill and Intangible Assets (Schedule of Indefinite and Finite-Lived Intangible Assets) (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Intangible Assets [Line Items] | ||
Acquisition Cost | $ 474.7 | $ 432.7 |
Accumulated Amortization | (104.1) | (87.8) |
Currency Translation | (0.4) | (0.3) |
Net | 370.2 | 344.6 |
Indefinite-lived trade names | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 100.3 | 96.3 |
Customer relationships | ||
Intangible Assets [Line Items] | ||
Acquisition Cost | 218.1 | 199.4 |
Accumulated Amortization | (49.6) | (42.1) |
Currency Translation | (0.1) | 0.0 |
Net | 168.4 | 157.3 |
Patents, technology and other | ||
Intangible Assets [Line Items] | ||
Acquisition Cost | 156.3 | 137.0 |
Accumulated Amortization | (54.5) | (45.7) |
Currency Translation | (0.3) | (0.3) |
Net | $ 101.5 | $ 91.0 |
Inventories, Net (Components of Inventories) (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished products | $ 202.0 | $ 172.7 |
Work in process | 6.6 | 5.0 |
Raw materials and supplies | 117.0 | 109.3 |
Inventories, net | $ 325.6 | $ 287.0 |
Property, Net (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | |||
Property, gross | $ 1,544.8 | $ 1,469.9 | |
Less accumulated depreciation and amortization | (939.8) | (886.4) | |
Property, net | 605.0 | 583.5 | |
Depreciation expense | 61.7 | $ 63.5 | |
Accelerated depreciation costs | 3.3 | $ 4.6 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property, gross | 48.6 | 46.9 | |
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Property, gross | 340.7 | 318.3 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, gross | $ 1,155.5 | $ 1,104.7 |
Income Taxes (Narrative) (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 24.30% | 13.40% | 26.90% | 15.70% |
(Benefit) expense for uncertain tax positions | (3.30%) | (14.60%) | (0.90%) | 0.40% |
Foreign tax credits from amending prior period returns | 0.00% | 1.90% | 1.70% | 18.10% |
Income Taxes (Effective Income Tax Rate Reconciliation) (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense at 35% | 35.00% | 35.00% | 35.00% | 35.00% |
Foreign mix of earnings | (6.50%) | (5.00%) | (4.80%) | (3.90%) |
Uncertain tax positions | (3.30%) | (14.60%) | (0.90%) | 0.40% |
Foreign tax credits from amending prior period returns | (0.00%) | (1.90%) | (1.70%) | (18.10%) |
Other, net | (0.90%) | (0.10%) | (0.70%) | 2.30% |
Effective Income Tax Rate | 24.30% | 13.40% | 26.90% | 15.70% |
Weighted-Average Shares Used in Computing Earnings Per Common Share (Schedule of Weighted-Average Shares Used in Computing Earnings Per Share) (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Weighted-average common shares outstanding - basic (in shares) | 83.9 | 87.5 | 84.2 | 88.5 |
Plus dilutive impact of share-based compensation (in shares) | 0.6 | 0.9 | 0.6 | 0.9 |
Weighted-average common shares - diluted (in shares) | 84.5 | 88.4 | 84.8 | 89.4 |
Weighted-Average Shares Used in Computing Earnings Per Common Share (Narrative) (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Equity-based awards excluded (in shares) | 0.2 | 0.2 | 0.2 | 0.0 |
Employee Benefit Plans (Components of Net Period Benefit Costs) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Defined Benefit Pension Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 0.2 | $ 0.4 | $ 0.7 | $ 1.3 |
Interest cost | 5.0 | 5.3 | 15.4 | 16.0 |
Expected return on plan assets | (7.8) | (8.2) | (23.5) | (24.6) |
Net periodic benefit gains | (2.6) | (2.5) | (7.4) | (7.3) |
Post-retirement Health Care Plan Benefit | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | 0.2 | 0.1 | 0.4 | 0.4 |
Net periodic benefit gains | $ 0.2 | $ 0.1 | $ 0.4 | $ 0.4 |
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