Ohio | 34-1730488 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
33587 Walker Road, | 44012 | |
Avon Lake, Ohio | (Zip Code) | |
(Address of principal executive offices) |
Title of each class | Name of each exchange on which registered | |
Common Shares, par value $.01 per share | New York Stock Exchange |
Large accelerated filer þ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
Emerging growth company ¨ |
• | disruptions, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged and the availability and cost of credit in the future; |
• | the effect on foreign operations of currency fluctuations, tariffs and other political, economic and regulatory risks; |
• | changes in polymer consumption growth rates and laws and regulations regarding plastics in jurisdictions where we conduct business; |
• | changes in global industry capacity or in the rate at which anticipated changes in industry capacity come online; |
• | 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; |
• | an inability to raise or sustain prices for products or services; |
• | an inability to achieve or delays in achieving or achievement of less than the anticipated financial benefit from initiatives related to acquisition and integration, working capital reductions, cost reductions and employee productivity goals; |
• | our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; |
• | our ability to identify and evaluate acquisition targets and consummate and integrate acquisitions; |
• | information systems failures and cyberattacks; and |
• | other factors described in this Annual Report on Form 10-K under Item 1A, “Risk Factors.” |
• | economic downturns or other volatility in the significant end markets that we serve; |
• | product obsolescence or technological changes that unfavorably alter the value/cost proposition of our products and services; |
• | competition from existing and unforeseen polymer and non-polymer based products; |
• | declines in general economic conditions or reductions in industrial production growth rates, both domestically and globally, which could impact our customers’ ability to pay amounts owed to us; |
• | changes in environmental regulations that would limit our ability to sell our products and services in specific markets; |
• | changes in laws and regulations regarding plastic materials; and |
• | inability to obtain raw materials or supply products to customers due to factors such as supplier work stoppages, supply shortages, plant outages or regulatory changes that may limit or prohibit overland transportation of certain hazardous materials and exogenous factors, like severe weather. |
• | changes in local government regulations and policies including, but not limited to duty or tariff restrictions, foreign currency exchange controls or monetary policy, repatriation of earnings, expropriation of property, investment limitations and tax policies; |
• | risks associated with the withdrawal of the United Kingdom (UK) from the European Union (EU), commonly known as "Brexit"; |
• | political and economic instability and disruptions, including labor unrest, civil strife, acts of war, guerrilla activities, insurrection and terrorism; |
• | legislation that regulates the use of chemicals; |
• | disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act; |
• | compliance with international trade laws and regulations, including export control and economic sanctions; |
• | difficulties in staffing and managing multi-national operations; |
• | limitations on our ability to enforce legal rights and remedies; |
• | reduced protection of intellectual property rights; |
• | other risks arising out of foreign sovereignty over the areas where our operations are conducted; and |
• | increasingly complex laws and regulations concerning privacy and data security, including the European Union's General Data Protection Regulation. |
Performance Products and Solutions | Specialty Engineered Materials | Color, Additives and Inks | Distribution | |||||
1. Carson, California | 1. Birmingham, Alabama | 1. Glendale, Arizona | 25. Tianjin, China | 1. Rancho Cucamonga, | ||||
2. Terre Haute, Indiana | 2. Englewood, Colorado | 2. Phoenix, Arizona | 26. Tabor, Czech Republic | California | ||||
3. Louisville, Kentucky | 3. Montrose, Colorado | 3. Fort Smith, Arkansas | 27. Odkarby, Finland | 2. Chicago, Illinois | ||||
4. Lockport, New York | 4. North Haven, Connecticut | 4. Bethel, Connecticut | 28. Cergy, France | 3. Eagan, Minnesota | ||||
5. Avon Lake, Ohio | 5. McHenry, Illinois | 5. Kennesaw, Georgia | 29. Tossiat, France | 4. Edison, New Jersey | ||||
6. Clinton, Tennessee | 6. Winona, Minnesota | 6. Elk Grove Village, Illinois | 30. Diez, Germany | 5. Statesville, North | ||||
7. Dyersburg, Tennessee | 7. Hickory, North Carolina | 7. La Porte, Indiana | 31. Gyor, Hungary | Carolina | ||||
8. Pasadena, Texas | 8. Avon Lake, Ohio | 8. St. Louis, Missouri | 32. Pune, India | 6. Elyria, Ohio | ||||
9. Seabrook, Texas | 9. Hatfield, Pennsylvania | 9. Pineville, North Carolina | 33. Milan, Italy | 7. La Porte, Texas | ||||
10. Orangeville, Ontario, | 10. Changzhou, China | 10. Berea, Ohio | 34. Toluca, Mexico | 8. Brampton, Ontario, | ||||
Canada | 11. Shenzhen, China | 11. Massillon, Ohio | 35. Eindhoven, Netherlands | Canada | ||||
11. St. Remi de Napierville, | 12. Suzhou, China | 12. North Baltimore, Ohio | 36. Lima, Peru | (8 Distribution Facilities) | ||||
Quebec, Canada | 14. Gaggenau, Germany | 13. Norwalk, Ohio | 37. Kutno, Poland | |||||
12. Dongguan, China | 15. Melle, Germany | 14. Lehigh, Pennsylvania | 38. Jeddah, Saudi Arabia | |||||
13. Ramos Arizpe, Mexico | 16. Leeuwarden, Netherlands | 15. Mountain Top, | 39. Alicante, Spain | |||||
(13 Manufacturing Plants) | 17. Barbastro, Spain | Pennsylvania | 40. Barcelona, Spain | |||||
18. Istanbul, Turkey | 16. Vonore, Tennessee | 41. Pamplona, Spain | ||||||
19. Leek, United Kingdom | 17. Richland Hills, Texas | 42. Bangkok, Thailand | ||||||
Dyersburg, Tennessee (1) | 18. Assesse, Belgium | 43. Knowsley, United | ||||||
Seabrook, Texas (1) | 19. Itupeva, Brazil | Kingdom | ||||||
Shanghai, China (2) | 20. Novo Hamburgo, Brazil | Suwanee, Georgia (2) | ||||||
Pune, India (1) | 21. Pudong (Shanghai), | Shenzhen, China (1) | ||||||
(18 Manufacturing Plants) | China | Pamplona, Spain (2) | ||||||
22. & 23. Shanghai, China (3) | (43 Manufacturing Plants) | |||||||
24. Suzhou, China |
(1) | Facility is not included in manufacturing plants total as it is also included as part of another segment. |
(2) | Facility is not included in manufacturing plants total as it is a design center/lab. |
(3) | There are two manufacturing plants located at Shanghai, China |
Name | Age | Position | ||
Robert M. Patterson | 46 | Chairman, President and Chief Executive Officer | ||
Bradley C. Richardson | 60 | Executive Vice President, Chief Financial Officer | ||
Mark D. Crist | 60 | Senior Vice President, President of Color, Additives and Inks | ||
Michael A. Garratt | 55 | Senior Vice President, Chief Commercial Officer | ||
J. Scott Horn | 63 | Senior Vice President, President of Distribution | ||
Lisa K. Kunkle | 50 | Senior Vice President, General Counsel and Secretary | ||
M. John Midea, Jr. | 54 | Senior Vice President, Global Operations and Process Improvement | ||
Chris L. Pederson | 52 | Senior Vice President, President of Specialty Engineered Materials | ||
Joel R. Rathbun | 46 | Senior Vice President, Mergers & Acquisitions | ||
João José San Martin Neto | 58 | Senior Vice President, Chief Human Resources Officer | ||
Donald K. Wiseman | 51 | Senior Vice President, President of Performance Products and Solutions |
Period | Total Number of Shares Purchased | Weighted 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) | ||||||||
October 1 to October 31 | 792,446 | $ | 31.76 | 792,446 | 4,444,140 | |||||||
November 1 to November 30 | 1,336,668 | $ | 33.55 | 1,336,668 | 3,107,472 | |||||||
December 1 to December 31 | — | — | — | 3,107,472 | ||||||||
Total | 2,129,114 | $ | 32.91 | 2,129,114 |
(In millions, except per share data) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Sales | $ | 3,533.4 | $ | 3,229.9 | $ | 2,938.6 | $ | 2,928.8 | $ | 3,219.0 | ||||||||||
Operating income | 273.7 | 272.8 | 267.7 | 258.4 | 200.5 | |||||||||||||||
Net income from continuing operations | 160.8 | 173.6 | 166.2 | 148.5 | 74.7 | |||||||||||||||
Net income from continuing operations attributable to PolyOne shareholders | 161.1 | 173.5 | 166.4 | 148.4 | 75.5 | |||||||||||||||
Cash dividends declared per common share | $ | 0.720 | $ | 0.580 | $ | 0.495 | $ | 0.420 | $ | 0.340 | ||||||||||
Earnings per share from continuing operations attributable to PolyOne shareholders: | ||||||||||||||||||||
Basic | $ | 2.02 | $ | 2.13 | $ | 1.98 | $ | 1.69 | $ | 0.82 | ||||||||||
Diluted | $ | 2.00 | $ | 2.11 | $ | 1.96 | $ | 1.67 | $ | 0.81 | ||||||||||
Total assets | $ | 2,723.3 | $ | 2,705.3 | $ | 2,735.8 | $ | 2,620.3 | $ | 2,666.3 | ||||||||||
Long-term debt | $ | 1,336.2 | $ | 1,276.4 | $ | 1,239.4 | $ | 1,127.6 | $ | 948.5 |
(In millions) | 2018 | 2017 | 2016 | |||||||||
Sales | $ | 3,533.4 | $ | 3,229.9 | $ | 2,938.6 | ||||||
Operating income | 273.7 | 272.8 | 267.7 | |||||||||
Net income from continuing operations | 160.8 | 173.6 | 166.2 | |||||||||
Net income from continuing operations attributable to PolyOne common shareholders | 161.1 | 173.5 | 166.4 |
Results of Operations | Variances — Favorable (Unfavorable) | |||||||||||||||||||||||||
2018 versus 2017 | 2017 versus 2016 | |||||||||||||||||||||||||
(Dollars in millions, except per share data) | 2018 | 2017 | 2016 | Change | % Change | Change | % Change | |||||||||||||||||||
Sales | $ | 3,533.4 | $ | 3,229.9 | $ | 2,938.6 | $ | 303.5 | 9.4 | % | $ | 291.3 | 9.9 | % | ||||||||||||
Cost of sales | 2,788.5 | 2,511.0 | 2,262.2 | (277.5 | ) | (11.1 | )% | (248.8 | ) | (11.0 | )% | |||||||||||||||
Gross margin | 744.9 | 718.9 | 676.4 | 26.0 | 3.6 | % | 42.5 | 6.3 | % | |||||||||||||||||
Selling and administrative expense | 471.2 | 446.1 | 408.7 | (25.1 | ) | (5.6 | )% | (37.4 | ) | (9.2 | )% | |||||||||||||||
Operating income | 273.7 | 272.8 | 267.7 | 0.9 | 0.3 | % | 5.1 | 1.9 | % | |||||||||||||||||
Interest expense, net | (62.8 | ) | (60.8 | ) | (59.7 | ) | (2.0 | ) | (3.3 | )% | (1.1 | ) | (1.8 | )% | ||||||||||||
Debt extinguishment costs | (1.1 | ) | (0.3 | ) | (0.4 | ) | (0.8 | ) | nm | 0.1 | 25.0 | % | ||||||||||||||
Other (expense) income, net | (12.6 | ) | 0.6 | 19.0 | (13.2 | ) | nm | (18.4 | ) | 96.8 | % | |||||||||||||||
Income from continuing operations before income taxes | 197.2 | 212.3 | 226.6 | (15.1 | ) | (7.1 | )% | (14.3 | ) | (6.3 | )% | |||||||||||||||
Income tax expense | (36.4 | ) | (38.7 | ) | (60.4 | ) | 2.3 | 5.9 | % | 21.7 | 35.9 | % | ||||||||||||||
Net income from continuing operations | $ | 160.8 | $ | 173.6 | $ | 166.2 | $ | (12.8 | ) | (7.4 | )% | $ | 7.4 | 4.5 | % | |||||||||||
Loss from discontinued operations, net of income taxes | (1.3 | ) | (231.2 | ) | (1.2 | ) | 229.9 | nm | (230.0 | ) | nm | |||||||||||||||
Net income (loss) | 159.5 | (57.6 | ) | 165.0 | 217.1 | nm | (222.6 | ) | (134.9 | )% | ||||||||||||||||
Net loss (income) attributable to noncontrolling interests | 0.3 | (0.1 | ) | 0.2 | 0.4 | nm | 0.3 | 150.0 | % | |||||||||||||||||
Net income (loss) attributable to PolyOne common shareholders | $ | 159.8 | $ | (57.7 | ) | $ | 165.2 | $ | 217.5 | nm | $ | (222.9 | ) | (134.9 | )% | |||||||||||
Earnings (loss) per share attributable to PolyOne common shareholders - basic: | ||||||||||||||||||||||||||
Continuing operations | $ | 2.02 | $ | 2.13 | $ | 1.98 | ||||||||||||||||||||
Discontinued operations | (0.01 | ) | (2.84 | ) | (0.01 | ) | ||||||||||||||||||||
Total | $ | 2.01 | $ | (0.71 | ) | $ | 1.97 | |||||||||||||||||||
Earnings (loss) per share attributable to PolyOne common shareholders - diluted: | ||||||||||||||||||||||||||
Continuing operations | $ | 2.00 | $ | 2.11 | $ | 1.96 | ||||||||||||||||||||
Discontinued operations | (0.01 | ) | (2.81 | ) | (0.01 | ) | ||||||||||||||||||||
Total | $ | 1.99 | $ | (0.70 | ) | $ | 1.95 | |||||||||||||||||||
2018 | 2017 | 2016 | |||||||
Federal statutory income tax rate | 21.0 | % | 35.0 | % | 35.0 | % | |||
Foreign tax rate differential | (5.8 | ) | (11.1 | ) | (5.6 | ) | |||
State and local tax, net | 2.8 | 1.4 | 2.1 | ||||||
Tax on GILTI | 1.5 | — | — | ||||||
Repatriation on certain foreign earnings from prior and current periods | 5.7 | 0.4 | — | ||||||
Tax benefits on certain foreign investments | — | (6.8 | ) | (1.9 | ) | ||||
Domestic production activities deduction | (0.7 | ) | (1.9 | ) | (1.5 | ) | |||
Amended prior period tax returns and corresponding favorable audit adjustments | — | (3.6 | ) | (1.3 | ) | ||||
Net impact of uncertain tax positions | (0.4 | ) | 2.2 | (1.1 | ) | ||||
Changes in valuation allowances | (1.8 | ) | 0.7 | 0.4 | |||||
U.S. tax reform, transition tax | 0.8 | 11.3 | — | ||||||
U.S. tax reform, tax effect on net deferred tax liabilities | (3.5 | ) | (9.5 | ) | — | ||||
Other | (1.1 | ) | 0.1 | 0.6 | |||||
Effective income tax rate | 18.5 | % | 18.2 | % | 26.7 | % |
2018 versus 2017 | 2017 versus 2016 | |||||||||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | Change | % Change | Change | % Change | |||||||||||||||||||
Sales: | ||||||||||||||||||||||||||
Color, Additives and Inks | $ | 1,046.5 | $ | 893.2 | $ | 797.7 | $ | 153.3 | 17.2 | % | $ | 95.5 | 12.0 | % | ||||||||||||
Specialty Engineered Materials | 645.8 | 624.3 | 565.8 | 21.5 | 3.4 | % | 58.5 | 10.3 | % | |||||||||||||||||
Performance Products and Solutions | 735.8 | 720.6 | 668.5 | 15.2 | 2.1 | % | 52.1 | 7.8 | % | |||||||||||||||||
Distribution | 1,265.4 | 1,154.6 | 1,071.0 | 110.8 | 9.6 | % | 83.6 | 7.8 | % | |||||||||||||||||
Corporate and eliminations | (160.1 | ) | (162.8 | ) | (164.4 | ) | 2.7 | 1.7 | % | 1.6 | 1.0 | % | ||||||||||||||
Sales | $ | 3,533.4 | $ | 3,229.9 | $ | 2,938.6 | $ | 303.5 | 9.4 | % | $ | 291.3 | 9.9 | % | ||||||||||||
Operating income: | ||||||||||||||||||||||||||
Color, Additives and Inks | $ | 158.5 | $ | 138.6 | $ | 127.5 | $ | 19.9 | 14.4 | % | $ | 11.1 | 8.7 | % | ||||||||||||
Specialty Engineered Materials | 72.3 | 75.5 | 81.1 | (3.2 | ) | (4.2 | )% | (5.6 | ) | (6.9 | )% | |||||||||||||||
Performance Products and Solutions | 73.6 | 77.1 | 74.4 | (3.5 | ) | (4.5 | )% | 2.7 | 3.6 | % | ||||||||||||||||
Distribution | 71.5 | 72.6 | 68.2 | (1.1 | ) | (1.5 | )% | 4.4 | 6.5 | % | ||||||||||||||||
Corporate and eliminations | (102.2 | ) | (91.0 | ) | (83.5 | ) | (11.2 | ) | (12.3 | )% | (7.5 | ) | (9.0 | )% | ||||||||||||
Operating income | $ | 273.7 | $ | 272.8 | $ | 267.7 | $ | 0.9 | 0.3 | % | $ | 5.1 | 1.9 | % | ||||||||||||
Operating income as a percentage of sales: | ||||||||||||||||||||||||||
Color, Additives and Inks | 15.1 | % | 15.5 | % | 16.0 | % | (0.4)% points | (0.5)% points | ||||||||||||||||||
Specialty Engineered Materials | 11.2 | % | 12.1 | % | 14.3 | % | (0.9)% points | (2.2)% points | ||||||||||||||||||
Performance Products and Solutions | 10.0 | % | 10.7 | % | 11.1 | % | (0.7)% points | (0.4)% points | ||||||||||||||||||
Distribution | 5.7 | % | 6.3 | % | 6.4 | % | (0.6)% points | (0.1)% points | ||||||||||||||||||
Total | 7.7 | % | 8.4 | % | 9.1 | % | (0.7)% points | (0.7)% points | ||||||||||||||||||
(In millions) | |||
Cash and cash equivalents | $ | 170.9 | |
Revolving credit availability | 280.7 | ||
Liquidity | $ | 451.6 |
(In millions) | 2018 | 2017 | 2016 | |||||||||
Cash provided by (used by): | ||||||||||||
Operating Activities | $ | 253.7 | $ | 202.4 | $ | 227.6 | ||||||
Investing Activities | (170.3 | ) | (119.4 | ) | (235.4 | ) | ||||||
Financing Activities | (148.1 | ) | (72.7 | ) | (40.3 | ) | ||||||
Effect of exchange rate on cash | (8.0 | ) | 6.6 | (5.0 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | $ | (72.7 | ) | $ | 16.9 | $ | (53.1 | ) |
(In millions) | December 31, 2018 | December 31, 2017 | |||||
Senior secured revolving credit facility due 2022 | $ | 120.1 | $ | 56.5 | |||
Senior secured term loan due 2026 | 619.8 | 629.0 | |||||
5.250% senior notes due 2023 | 595.0 | 594.0 | |||||
Other debt (1) | 20.7 | 29.5 | |||||
Total debt | $ | 1,355.6 | $ | 1,309.0 | |||
Less short-term and current portion of long-term debt | 19.4 | 32.6 | |||||
Total long-term debt, net of current portion | $ | 1,336.2 | $ | 1,276.4 |
(1) | Other debt includes capital lease obligations of $3.4 million and $17.8 million as of December 31, 2018 and 2017, respectively. |
Payment Due by Period | ||||||||||||||||||||||
(In millions) | Total | 2019 | 2020 & 2021 | 2022 & 2023 | Thereafter | |||||||||||||||||
Total debt (1) | $ | 1,371.8 | $ | 19.4 | $ | 15.7 | $ | 734.3 | $ | 602.4 | ||||||||||||
Operating leases | 80.6 | 24.5 | 32.8 | 14.3 | 9.0 | |||||||||||||||||
Interest on long-term debt obligations (2) | 354.9 | 70.6 | 59 | 126.4 | 101.5 | 56.4 | ||||||||||||||||
Pension and post-retirement obligations (3) | 45.4 | 5.2 | 10.0 | 9.4 | 9.4 | 20.8 | ||||||||||||||||
Purchase obligations (4) | 19.4 | 16.7 | 2.2 | 0.5 | — | |||||||||||||||||
Total | $ | 1,872.1 | $ | 136.4 | $ | 187.1 | $ | 860.0 | $ | 688.6 |
(1) | Total debt includes both the current and long-term portions of debt and capital lease obligations. |
(2) | Represents estimated contractual interest payments for all outstanding debt. |
(3) | Pension and post-retirement obligations relate to our U.S. and international pension and other post-retirement plans. The expected payments associated with these plans represent an actuarial estimate of future assumed payments based upon retirement and payment patterns for a 10 year period. Due to uncertainties regarding the assumptions involved in estimating future required contributions to our pension and non-pension postretirement benefit plans, including: (i) interest rate levels, (ii) the amount and timing of asset returns and (iii) what, if any, changes may occur in pension funding legislation, the estimates in the table may differ materially from actual future payments. |
(4) | Purchase obligations are primarily comprised of service agreements related to telecommunication, information technology, utilities and other manufacturing plant services and certain capital commitments. |
Description | Judgments and Uncertainties | Effect if Actual Results Differ from Assumptions | ||
Environmental Liabilities | ||||
• Based upon our estimates, we have an undiscounted accrual of $114.1 million at December 31, 2018 for probable future environmental expenditures. Any such provision is recognized using the Company's best estimate of the amount of loss incurred, or at the lower end of an estimated range, when a single best estimate is not determinable. • With respect to the former Goodrich Corporation Calvert City site, the United States Environmental Protection Agency (USEPA) issued its Record of Decision (ROD) in September 2018, selecting a remedy consistent with our accrual assumptions. In October 2018, the USEPA sent a letter to the respondents inviting negotiation of an agreement to conduct the remedial design; that negotiation is ongoing. Our current reserve of $103.3 million is consistent with the USEPA's estimates contained in the ROD. • Based on currently available information as of December 31, 2018, we have not identified evidence that Franklin-Burlington contributed any of the primary contaminants of concern to the lower Passaic River and therefore have not accrued for costs of remediation to the lower Passaic River. • In some cases, the Company recovers a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts only when they are collected. | • This accrual represents our best estimate of the remaining probable costs based upon information and technology currently available. Depending upon the results of future testing, the ultimate remediation alternatives undertaken, changes in regulations, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued. However, such additional costs, if any, cannot currently be estimated. Our estimate of this liability may be revised as new regulations or technologies are developed or additional information is obtained. | • If further developments or resolution of these matters are not consistent with our assumptions and judgments, we may need to recognize a significant adjustment in a future period. • As we progress through certain benchmarks such as completion of the remedial investigation and feasibility study, issuance of a record of decision and remedial design, additional information will become available that may require an adjustment to our existing reserves. |
Description | Judgments and Uncertainties | Effect if Actual Results Differ from Assumptions | ||
Pension and Other Post-retirement Plans | ||||
• We account for our defined benefit pension plans and other post-retirement plans in accordance with FASB ASC Topic 715, Compensation — Retirement Benefits. We immediately recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur. In 2018, we recognized a $15.6 million charge as a result of the recognition of these actuarial losses, which unfavorably impacted net income (loss), comprehensive income (loss) and the funded status of our pension plans. This loss was mainly driven by lower than expected asset returns. | • Asset returns and interest rates significantly affect the value of future assets and liabilities of our pension and post-retirement plans and therefore the funded status of our plans. It is difficult to predict these factors due to the volatility of market conditions. • To develop our discount rate, we consider the yields of high-quality corporate bonds with maturities that correspond to the timing of our benefit obligations, referred to as the bond matching approach. • To develop our expected long-term return on plan assets, we consider historical and forward looking long-term asset returns and the expected investment portfolio mix of plan assets. The weighted-average expected long-term rate of return on plan assets was 5.09% for 2018, 6.08% for 2017 and 6.87% for 2016. • Life expectancy is a significant assumption that impacts our pension and other post-retirement benefits obligation. During 2018, we adopted the MP-2018 mortality improvement scale which was issued by the Society of Actuaries in October 2018. | • The weighted average discount rates used to value our pension liabilities as of December 31, 2018 and 2017 were 4.11% and 3.62%, respectively, post-retirement liabilities were 3.98% and 3.60%, respectively. As of December 31, 2018, an increase/decrease in the discount rate of 50 basis points, holding all other assumptions constant, would have increased or decreased pre-tax income and the related pension and post-retirement liability by approximately $19.7 million. An increase/decrease in the discount rate of 50 basis points as of December 31, 2018 would result in a change of approximately $1.3 million in the 2019 net periodic benefit cost. • The expected long-term return on plan assets utilized as of January 1, 2018 and 2017 was 5.09% and 6.08%, respectively. An increase/decrease in our expected long-term return on plan assets of 50 basis points as of December 31, 2018, would result in a change of approximately $2.1 million to 2019 net periodic benefit cost. |
Income Taxes | ||||
• We account for income taxes using the asset and liability method under ASC Topic 740. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, deferred tax assets are also recorded with respect to net operating losses and other tax attribute carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely than not. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. • We recognize net tax benefits under the recognition and measurement criteria of ASC Topic 740, Income Taxes, which prescribes requirements and other guidance for financial statement recognition and measurement of positions taken or expected to be taken on tax returns. We record interest and penalties related to uncertain tax positions as a component of income tax expense. • We have completed our accounting for the tax effects of the enactment of the TCJA as of December 31, 2018. We elected to recognize the resulting tax on GILTI as a period expense in the period the tax is incurred. | • The ultimate recovery of certain of our deferred tax assets is dependent on the amount and timing of taxable income that we will ultimately generate in the future and other factors such as the interpretation of tax laws. We have provided valuation allowances as of December 31, 2018, aggregating to $15.1 million primarily against certain foreign and state net operating loss carryforwards based on our current assessment of future operating results and other factors. At December 31, 2018, the gross liability for unrecognized income tax benefits, including interest and penalties, totaled $19.2 million. • Undistributed and indefinitely reinvested earnings for certain consolidated non-U.S. subsidiaries were approximately $350 million as of December 31, 2018. No provision was made on these earnings as APB 23 of ASC 740-30 provides guidance that U.S. companies do not need to recognize tax effects on foreign earnings that are indefinitely reinvested. Additionally, no deferred income taxes were recorded on outside basis differences as it was not practicable to determine the provision impact, if any, due to the complexities associated with this calculation. | • Although management believes that the estimates and judgments discussed herein are reasonable, actual results could differ, which could result in income tax expense or benefits that could be material. |
Description | Judgments and Uncertainties | Effect if Actual Results Differ from Assumptions | ||
Goodwill | ||||
• Goodwill represents the excess of the purchase price over the fair value of the net assets of acquired companies. We follow the guidance in ASC 350, Intangibles — Goodwill and Other, including subsequent updates, and test goodwill for impairment at least annually, absent a triggering event that would warrant an impairment assessment. On an ongoing basis, absent any impairment indicators, we perform our goodwill impairment testing as of the first day of October of each year. | • We have identified our reporting units at the operating segment level, or in most cases, one level below the operating segment level. Goodwill is allocated to the reporting units based on the estimated fair value at the date of acquisition. • We estimated fair value using the best information available to us, including market information and discounted cash flow projections using the income approach. • The income approach requires us to make assumptions and estimates regarding projected economic and market conditions, growth rates, operating margins and cash expenditures. Sensitivity analyses were performed around these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values. | • If actual results are not consistent with our assumptions and estimates, we may be exposed to goodwill impairment charges. • The fair value of the reporting unit is based on a number of subjective factors including: (a) appropriate consideration of valuation approaches, (b) the consideration of our business outlook and (c) weighted average cost of capital (discount rate), growth rates and market multiples for our estimated cash flows. • Based on our 2018 annual impairment test performed on October 1st, we determined there were no reporting units considered to be at risk of future impairment due to the fair value's proximity to the carrying value. We believe that the current assumptions and estimates are reasonable, supportable and appropriate. The business could be impacted by unforeseen changes in market factors or opportunities, which could impact our existing assumptions used in our impairment test. As such, there can be no assurance that these estimates and assumptions made for the purposes of the goodwill impairment test will prove to be accurate predictions of future performance. |
Indefinite-lived Intangible Assets | ||||
• Indefinite-lived intangible assets represent trade names associated with acquired companies. | • We estimate the fair value of trade names using a “relief from royalty payments” approach. This approach involves two steps: (1) estimating reasonable royalty rate for the trade name and (2) applying this royalty rate to a net sales stream and discounting the resulting cash flows to determine fair value. Fair value is then compared with the carrying value of the trade name. | • If actual results are not consistent with our assumptions and estimates, we may be exposed to impairment charges related to our indefinite lived trade name • Based on our 2018 annual impairment test, no trade names were considered at risk. |
Page | |
Management’s Report | |
Reports of Independent Registered Public Accounting Firm | |
Consolidated Financial Statements: | |
Consolidated Statements of Income (Loss) | |
Consolidated Statements of Comprehensive Income (Loss) | |
Consolidated Balance Sheets | |
Consolidated Statements of Cash Flows | |
Consolidated Statements of Shareholders’ Equity | |
Notes to Consolidated Financial Statements |
/s/ ROBERT M. PATTERSON | /s/ BRADLEY C. RICHARDSON | ||
Robert M. Patterson | Bradley C. Richardson | ||
Chairman, President and Chief Executive Officer | Executive Vice President, Chief Financial Officer | ||
Year Ended December 31, | ||||||||||||
(In millions, except per share data) | 2018 | 2017 | 2016 | |||||||||
Sales | $ | 3,533.4 | $ | 3,229.9 | $ | 2,938.6 | ||||||
Cost of sales | 2,788.5 | 2,511.0 | 2,262.2 | |||||||||
Gross margin | 744.9 | 718.9 | 676.4 | |||||||||
Selling and administrative expense | 471.2 | 446.1 | 408.7 | |||||||||
Operating income | 273.7 | 272.8 | 267.7 | |||||||||
Interest expense, net | (62.8 | ) | (60.8 | ) | (59.7 | ) | ||||||
Debt extinguishment costs | (1.1 | ) | (0.3 | ) | (0.4 | ) | ||||||
Other (expense) income, net | (12.6 | ) | 0.6 | 19.0 | ||||||||
Income from continuing operations before income taxes | 197.2 | 212.3 | 226.6 | |||||||||
Income tax expense | (36.4 | ) | (38.7 | ) | (60.4 | ) | ||||||
Net income from continuing operations | 160.8 | 173.6 | 166.2 | |||||||||
Loss from discontinued operations, net of income taxes | (1.3 | ) | (231.2 | ) | (1.2 | ) | ||||||
Net income (loss) | 159.5 | (57.6 | ) | 165.0 | ||||||||
Net loss (income) attributable to noncontrolling interests | 0.3 | (0.1 | ) | 0.2 | ||||||||
Net income (loss) attributable to PolyOne common shareholders | $ | 159.8 | $ | (57.7 | ) | $ | 165.2 | |||||
Earnings (loss) per share attributable to PolyOne common shareholders - Basic: | ||||||||||||
Continuing operations | $ | 2.02 | $ | 2.13 | $ | 1.98 | ||||||
Discontinued operations | (0.01 | ) | (2.84 | ) | (0.01 | ) | ||||||
Total | $ | 2.01 | $ | (0.71 | ) | $ | 1.97 | |||||
Earnings (loss) per share attributable to PolyOne common shareholders - Diluted: | ||||||||||||
Continuing operations | $ | 2.00 | $ | 2.11 | $ | 1.96 | ||||||
Discontinued operations | (0.01 | ) | (2.81 | ) | (0.01 | ) | ||||||
Total | $ | 1.99 | $ | (0.70 | ) | $ | 1.95 | |||||
Weighted-average shares used to compute earnings per common share: | ||||||||||||
Basic | 79.7 | 81.5 | 83.9 | |||||||||
Plus dilutive impact of share-based compensation | 0.7 | 0.6 | 0.7 | |||||||||
Diluted | 80.4 | 82.1 | 84.6 | |||||||||
Anti-dilutive shares not included in diluted common shares outstanding | — | 0.6 | 0.2 | |||||||||
Cash dividends declared per share of common stock | $ | 0.720 | $ | 0.580 | $ | 0.495 |
Year Ended December 31, | |||||||||||
(In millions) | 2018 | 2017 | 2016 | ||||||||
Net income (loss) | $ | 159.5 | $ | (57.6 | ) | $ | 165.0 | ||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Translation adjustments and related hedging instruments | (27.6 | ) | 41.2 | (23.0 | ) | ||||||
Cash flow hedges | (1.3 | ) | — | — | |||||||
Other | (0.4 | ) | — | 0.1 | |||||||
Total other comprehensive (loss) income | (29.3 | ) | 41.2 | (22.9 | ) | ||||||
Total comprehensive income (loss) | 130.2 | (16.4 | ) | 142.1 | |||||||
Comprehensive loss (income) attributable to noncontrolling interests | 0.3 | (0.1 | ) | 0.2 | |||||||
Comprehensive income (loss) attributable to PolyOne common shareholders | $ | 130.5 | $ | (16.5 | ) | $ | 142.3 |
Year Ended December 31, | |||||||
(In millions, except par value per share) | 2018 | 2017 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 170.9 | $ | 243.6 | |||
Accounts receivable, net | 413.4 | 392.4 | |||||
Inventories, net | 344.7 | 327.8 | |||||
Other current assets | 69.8 | 102.8 | |||||
Total current assets | 998.8 | 1,066.6 | |||||
Property, net | 495.4 | 461.6 | |||||
Goodwill | 650.3 | 610.5 | |||||
Intangible assets, net | 423.4 | 400.0 | |||||
Other non-current assets | 155.4 | 166.6 | |||||
Total assets | $ | 2,723.3 | $ | 2,705.3 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Short-term and current portion of long-term debt | $ | 19.4 | $ | 32.6 | |||
Accounts payable | 399.0 | 388.9 | |||||
Accrued expenses and other current liabilities | 139.2 | 149.1 | |||||
Total current liabilities | 557.6 | 570.6 | |||||
Non-current liabilities: | |||||||
Long-term debt | 1,336.2 | 1,276.4 | |||||
Pension and other post-retirement benefits | 54.3 | 62.3 | |||||
Deferred income taxes | 69.3 | 40.3 | |||||
Other non-current liabilities | 165.3 | 156.3 | |||||
Total non-current liabilities | 1,625.1 | 1,535.3 | |||||
SHAREHOLDERS' EQUITY | |||||||
Common Shares, $0.01 par, 400.0 shares authorized, 122.2 shares issued | 1.2 | 1.2 | |||||
Additional paid-in capital | 1,166.9 | 1,161.5 | |||||
Retained earnings | 472.9 | 387.1 | |||||
Common shares held in treasury, at cost, 44.5 shares in 2018 and 41.3 shares in 2017 | (1,018.7 | ) | (898.3 | ) | |||
Accumulated other comprehensive loss | (82.3 | ) | (53.0 | ) | |||
PolyOne shareholders' equity | 540.0 | 598.5 | |||||
Noncontrolling interest | 0.6 | 0.9 | |||||
Total equity | 540.6 | 599.4 | |||||
Total liabilities and equity | $ | 2,723.3 | $ | 2,705.3 |
Year Ended December 31, | |||||||||||
(In millions) | 2018 | 2017 | 2016 | ||||||||
Operating activities | |||||||||||
Net income (loss) | $ | 159.5 | $ | (57.6 | ) | $ | 165.0 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Loss on sale of business, net of tax | — | 227.7 | — | ||||||||
Depreciation and amortization | 88.5 | 97.4 | 100.5 | ||||||||
Accelerated depreciation and fixed asset charges associated with restructuring activities | 3.0 | 0.9 | 5.4 | ||||||||
Gain from sale of closed facilities | — | (3.6 | ) | — | |||||||
Deferred income tax (benefit) expense | (4.8 | ) | (1.4 | ) | 10.5 | ||||||
Debt extinguishment costs | 1.1 | 0.3 | 0.4 | ||||||||
Share-based compensation expense | 10.9 | 10.2 | 8.4 | ||||||||
Changes in assets and liabilities, net of the effect of acquisitions: | |||||||||||
Increase in accounts receivable | (11.3 | ) | (44.7 | ) | (17.6 | ) | |||||
(Increase) decrease in inventories | (10.6 | ) | (41.1 | ) | 0.8 | ||||||
Increase in accounts payable | 7.9 | 52.2 | 12.4 | ||||||||
Increase (decrease) in pension and other post-retirement benefits | 4.8 | (9.6 | ) | (43.2 | ) | ||||||
Increase (decrease) in accrued expenses and other assets and liabilities - net | 4.7 | (28.3 | ) | (15.0 | ) | ||||||
Net cash provided by operating activities | 253.7 | 202.4 | 227.6 | ||||||||
Investing activities | |||||||||||
Capital expenditures | (76.0 | ) | (79.6 | ) | (84.2 | ) | |||||
Business acquisitions, net of cash acquired | (98.6 | ) | (163.8 | ) | (164.2 | ) | |||||
Proceeds from the sale of business and other assets | 4.3 | 124.0 | 13.0 | ||||||||
Net cash used by investing activities | (170.3 | ) | (119.4 | ) | (235.4 | ) | |||||
Financing activities | |||||||||||
Borrowings under credit facilities | 1,152.9 | 1,472.9 | 1,031.9 | ||||||||
Repayments under credit facilities | (1,090.3 | ) | (1,417.0 | ) | (1,032.7 | ) | |||||
Purchase of common shares for treasury | (123.0 | ) | (70.7 | ) | (86.2 | ) | |||||
Cash dividends paid | (56.1 | ) | (44.1 | ) | (40.2 | ) | |||||
Repayment of other debt | (16.4 | ) | — | — | |||||||
Repayment of long-term debt | (6.5 | ) | (6.5 | ) | (6.0 | ) | |||||
Payments on withholding tax on share awards | (4.1 | ) | (4.7 | ) | (5.1 | ) | |||||
Debt financing costs | (4.6 | ) | (2.6 | ) | (2.0 | ) | |||||
Net proceeds from long-term debt | — | — | 100.0 | ||||||||
Net cash used by financing activities | (148.1 | ) | (72.7 | ) | (40.3 | ) | |||||
Effect of exchange rate changes on cash | (8.0 | ) | 6.6 | (5.0 | ) | ||||||
(Decrease) increase in cash and cash equivalents | (72.7 | ) | 16.9 | (53.1 | ) | ||||||
Cash and cash equivalents at beginning of year | 243.6 | 226.7 | 279.8 | ||||||||
Cash and cash equivalents at end of year | $ | 170.9 | $ | 243.6 | $ | 226.7 |
Common Shares | Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||
(In millions) | Common Shares | Common Shares Held in Treasury | Common Shares | Additional Paid-in Capital | Retained Earnings | Common Shares Held in Treasury | Accumulated Other Comprehensive Loss | Total PolyOne shareholders' equity | Non-controlling Interests | Total equity | ||||||||||||||||||||||||||||
Balance at January 1, 2016 | 122.2 | (36.9 | ) | $ | 1.2 | $ | 1,155.6 | $ | 367.1 | $ | (748.4 | ) | $ | (71.3 | ) | $ | 704.2 | $ | 1.0 | $ | 705.2 | |||||||||||||||||
Net income | 165.2 | 165.2 | (0.2 | ) | 165.0 | |||||||||||||||||||||||||||||||||
Other comprehensive loss | (22.9 | ) | (22.9 | ) | (22.9 | ) | ||||||||||||||||||||||||||||||||
Cash dividends declared | (41.1 | ) | (41.1 | ) | (41.1 | ) | ||||||||||||||||||||||||||||||||
Repurchase of common shares | (3.0 | ) | (86.2 | ) | (86.2 | ) | (86.2 | ) | ||||||||||||||||||||||||||||||
Share-based compensation and exercise of awards | 0.3 | 1.5 | 4.0 | 5.5 | 5.5 | |||||||||||||||||||||||||||||||||
Balance at December 31, 2016 | 122.2 | (39.6 | ) | $ | 1.2 | $ | 1,157.1 | $ | 491.2 | $ | (830.6 | ) | $ | (94.2 | ) | $ | 724.7 | $ | 0.8 | $ | 725.5 | |||||||||||||||||
Net (loss) income | (57.7 | ) | (57.7 | ) | 0.1 | (57.6 | ) | |||||||||||||||||||||||||||||||
Other comprehensive gain | 41.2 | 41.2 | 41.2 | |||||||||||||||||||||||||||||||||||
Cash dividends declared | (46.9 | ) | (46.9 | ) | (46.9 | ) | ||||||||||||||||||||||||||||||||
Repurchase of common shares | (2.0 | ) | (70.7 | ) | (70.7 | ) | (70.7 | ) | ||||||||||||||||||||||||||||||
Share-based compensation and exercise of awards | 0.3 | 4.4 | 3.0 | 7.4 | 7.4 | |||||||||||||||||||||||||||||||||
Other | 0.5 | $ | 0.5 | $ | 0.5 | |||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | 122.2 | (41.3 | ) | $ | 1.2 | $ | 1,161.5 | $ | 387.1 | $ | (898.3 | ) | $ | (53.0 | ) | $ | 598.5 | $ | 0.9 | $ | 599.4 | |||||||||||||||||
Net income | 159.8 | 159.8 | (0.3 | ) | 159.5 | |||||||||||||||||||||||||||||||||
Other comprehensive loss | (29.3 | ) | (29.3 | ) | (29.3 | ) | ||||||||||||||||||||||||||||||||
Cash dividends declared | (57.5 | ) | (57.5 | ) | (57.5 | ) | ||||||||||||||||||||||||||||||||
Repurchase of common shares | (3.4 | ) | (123.0 | ) | (123.0 | ) | (123.0 | ) | ||||||||||||||||||||||||||||||
Share-based compensation and exercise of awards | 0.2 | 5.4 | 2.6 | 8.0 | 8.0 | |||||||||||||||||||||||||||||||||
Other | (16.5 | ) | (16.5 | ) | (16.5 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 122.2 | (44.5 | ) | $ | 1.2 | $ | 1,166.9 | $ | 472.9 | $ | (1,018.7 | ) | $ | (82.3 | ) | $ | 540.0 | $ | 0.6 | $ | 540.6 |
(In millions) | Cumulative Translation Adjustment and Related Hedging Instruments | Pension and other post-retirement benefits | Cash Flow Hedges | Other | Total | |||||||||||||||
Balance at January 1, 2016 | $ | (76.8 | ) | $ | 5.2 | $ | — | $ | 0.3 | $ | (71.3 | ) | ||||||||
Translation adjustments | (23.0 | ) | — | — | — | (23.0 | ) | |||||||||||||
Unrealized gain | — | — | — | 0.1 | 0.1 | |||||||||||||||
Balance at December 31, 2016 | (99.8 | ) | 5.2 | — | 0.4 | (94.2 | ) | |||||||||||||
Translation adjustments | 41.2 | — | — | — | 41.2 | |||||||||||||||
Balance at December 31, 2017 | (58.6 | ) | 5.2 | — | 0.4 | (53.0 | ) | |||||||||||||
Translation adjustments | (25.6 | ) | — | — | — | (25.6 | ) | |||||||||||||
Unrealized losses | (2.0 | ) | — | (1.3 | ) | — | (3.3 | ) | ||||||||||||
Other | — | — | — | (0.4 | ) | (0.4 | ) | |||||||||||||
Balance at December 31, 2018 | $ | (86.2 | ) | $ | 5.2 | $ | (1.3 | ) | $ | — | $ | (82.3 | ) |
(in millions) | Fair Value | Useful Life | Valuation Method | |||||
Customer relationships | $ | 21.1 | 18 | Multi-period excess earnings | ||||
Patents, technology and other | 29.9 | 13 - 24 | Relief-from-royalty method | |||||
Total | $ | 51.0 |
(In millions) | 2018 | 2017 | 2016 | ||||||||
Sales | $ | — | $ | 222.1 | $ | 401.2 | |||||
Loss on sale | $ | (1.8 | ) | $ | (295.6 | ) | $ | — | |||
Loss from operations | — | (8.6 | ) | (4.3 | ) | ||||||
Loss before taxes | (1.8 | ) | (304.2 | ) | (4.3 | ) | |||||
Income tax benefit | 0.5 | 73.0 | 3.1 | ||||||||
Loss from discontinued operations, net of taxes | $ | (1.3 | ) | $ | (231.2 | ) | $ | (1.2 | ) |
(In millions) | Specialty Engineered Materials | Color, Additives and Inks | Performance Products and Solutions | PolyOne Distribution | Total | |||||||||||||||
Balance at January 1, 2017 | 173.5 | 346.4 | 11.2 | 1.6 | 532.7 | |||||||||||||||
Acquisition of businesses | — | 77.0 | — | — | 77.0 | |||||||||||||||
Currency translation | (0.3 | ) | 1.1 | — | — | 0.8 | ||||||||||||||
Balance at December 31, 2017 | 173.2 | 424.5 | 11.2 | 1.6 | 610.5 | |||||||||||||||
Acquisition of businesses | 16.3 | 25.8 | — | — | 42.1 | |||||||||||||||
Currency translation | (0.6 | ) | (1.7 | ) | — | — | (2.3 | ) | ||||||||||||
Balance at December 31, 2018 | $ | 188.9 | $ | 448.6 | $ | 11.2 | $ | 1.6 | $ | 650.3 |
As of December 31, 2018 | ||||||||||||||||
(In millions) | Acquisition Cost | Accumulated Amortization | Currency Translation | Net | ||||||||||||
Customer relationships | $ | 278.4 | $ | (75.0 | ) | $ | (0.7 | ) | $ | 202.7 | ||||||
Patents, technology and other | 188.1 | (66.8 | ) | (0.9 | ) | 120.4 | ||||||||||
Indefinite-lived trade names | 100.3 | — | — | 100.3 | ||||||||||||
Total | $ | 566.8 | $ | (141.8 | ) | $ | (1.6 | ) | $ | 423.4 |
As of December 31, 2017 | ||||||||||||||||
(In millions) | Acquisition Cost | Accumulated Amortization | Currency Translation | Net | ||||||||||||
Customer relationships | $ | 257.3 | $ | (61.5 | ) | $ | 0.1 | $ | 195.9 | |||||||
Patents, technology and other | 158.2 | (54.4 | ) | — | 103.8 | |||||||||||
Indefinite-lived trade names | 100.3 | — | — | 100.3 | ||||||||||||
Total | $ | 515.8 | $ | (115.9 | ) | $ | 0.1 | $ | 400.0 |
2019 | 2020 | 2021 | 2022 | 2023 | |||||
Expected amortization expense | $26.2 | $25.6 | $25.3 | $23.3 | $20.8 |
As of December 31, 2018 (In millions) | Principal Amount | Unamortized discount and debt issuance cost | Net debt | Weighted average interest rate | ||||||||||
Senior secured revolving credit facility due 2022 | $ | 120.1 | $ | — | $ | 120.1 | 3.35 | % | ||||||
Senior secured term loan due 2026 | 631.0 | 11.2 | 619.8 | 3.80 | % | |||||||||
5.25% senior notes due 2023 | 600.0 | 5.0 | 595.0 | 5.25 | % | |||||||||
Other debt (1) | 20.7 | — | 20.7 | |||||||||||
Total debt | $ | 1,371.8 | $ | 16.2 | $ | 1,355.6 | ||||||||
Less short-term and current portion of long-term debt | 19.4 | — | 19.4 | |||||||||||
Total long-term debt, net of current portion | $ | 1,352.4 | $ | 16.2 | $ | 1,336.2 |
As of December 31, 2017 (In millions) | Principal Amount | Unamortized discount and debt issuance cost | Net debt | Weighted average interest rate | ||||||||||
Senior secured revolving credit facility due 2022 | $ | 56.5 | $ | — | $ | 56.5 | 2.77 | % | ||||||
Senior secured term loan due 2026 | 637.5 | 8.5 | 629.0 | 3.27 | % | |||||||||
5.25% senior notes due 2023 | 600.0 | 6.0 | 594.0 | 5.25 | % | |||||||||
Other debt (1) | 29.5 | — | 29.5 | |||||||||||
Total debt | $ | 1,323.5 | $ | 14.5 | $ | 1,309.0 | ||||||||
Less short-term and current portion of long-term debt | 32.6 | — | 32.6 | |||||||||||
Total long-term debt, net of current portion | $ | 1,290.9 | $ | 14.5 | $ | 1,276.4 |
(1) | Other debt includes capital lease obligations of $3.4 million and $17.8 million as of December 31, 2018 and 2017, respectively. |
(In millions) | ||||
2019 | $ | 19.4 | ||
2020 | 8.1 | |||
2021 | 7.6 | |||
2022 | 127.3 | |||
2023 | 607.0 | |||
Thereafter | 602.4 | |||
Aggregate maturities | $ | 1,371.8 |
(In millions) | ||||
2019 | $ | 24.5 | ||
2020 | 20.4 | |||
2021 | 12.4 | |||
2022 | 8.5 | |||
2023 | 5.8 | |||
Thereafter | 9.0 | |||
Total | $ | 80.6 |
(In millions) | December 31, 2018 | December 31, 2017 | ||||||
Finished products | $ | 204.3 | $ | 203.3 | ||||
Work in process | 6.9 | 5.1 | ||||||
Raw materials and supplies | 133.5 | 119.4 | ||||||
Inventories, net | $ | 344.7 | $ | 327.8 |
(In millions) | December 31, 2018 | December 31, 2017 | ||||||
Land and land improvements (1) | $ | 48.8 | $ | 40.7 | ||||
Buildings (2) | 316.5 | 303.5 | ||||||
Machinery and equipment | 1,082.2 | 1,038.0 | ||||||
Property, gross | 1,447.5 | 1,382.2 | ||||||
Less accumulated depreciation and amortization | (952.1 | ) | (920.6 | ) | ||||
Property, net | $ | 495.4 | $ | 461.6 |
(1) | Land and land improvements include properties under capital leases of $0.1 million and $1.7 million as of December 31, 2018 and 2017, respectively. |
(2) | Buildings include properties under capital leases of $3.6 million and $16.5 million as of December 31, 2018 and 2017, respectively. |
Accrued expenses and other current liabilities | Other non-current liabilities | |||||||||||||||
December 31, | December 31, | |||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Employment costs | $ | 75.7 | $ | 87.5 | $ | 18.9 | $ | 20.1 | ||||||||
Environmental liabilities | 9.9 | 8.4 | 104.2 | 108.7 | ||||||||||||
Accrued taxes | 16.0 | 13.8 | — | — | ||||||||||||
Pension and other post-employment benefits | 4.9 | 5.4 | — | — | ||||||||||||
Accrued interest | 10.8 | 10.1 | — | — | ||||||||||||
Dividends payable | 15.6 | 14.2 | — | — | ||||||||||||
Unrecognized tax benefits | 1.7 | 3.3 | 16.1 | 18.1 | ||||||||||||
Other | 4.6 | 6.4 | 26.1 | 9.4 | ||||||||||||
Total | $ | 139.2 | $ | 149.1 | $ | 165.3 | $ | 156.3 |
Pension Benefits | Health Care Benefits | |||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Change in benefit obligation: | ||||||||||||||||
Projected benefit obligation — beginning of year | $ | 507.7 | $ | 503.0 | $ | 8.8 | $ | 10.8 | ||||||||
Service cost | 0.6 | 0.6 | — | — | ||||||||||||
Interest cost | 17.6 | 19.3 | 0.3 | 0.4 | ||||||||||||
Actuarial (gain) loss | (23.9 | ) | 21.3 | (0.6 | ) | (1.7 | ) | |||||||||
Benefits paid | (37.7 | ) | (38.8 | ) | (0.8 | ) | (0.9 | ) | ||||||||
Other | (1.6 | ) | 2.3 | (0.3 | ) | 0.2 | ||||||||||
Projected benefit obligation — end of year | $ | 462.7 | $ | 507.7 | $ | 7.4 | $ | 8.8 | ||||||||
Projected salary increases | (1.6 | ) | (2.0 | ) | — | — | ||||||||||
Accumulated benefit obligation | $ | 461.1 | $ | 505.7 | $ | 7.4 | $ | 8.8 | ||||||||
Change in plan assets: | ||||||||||||||||
Plan assets — beginning of year | $ | 484.7 | $ | 474.3 | $ | — | $ | — | ||||||||
Actual (loss) return on plan assets | (16.4 | ) | 44.0 | — | — | |||||||||||
Company contributions | 4.5 | 4.6 | 0.8 | 0.9 | ||||||||||||
Benefits paid | (37.7 | ) | (38.8 | ) | (0.8 | ) | (0.9 | ) | ||||||||
Other | (0.7 | ) | 0.6 | — | — | |||||||||||
Plan assets — end of year | $ | 434.4 | $ | 484.7 | $ | — | $ | — | ||||||||
Unfunded status at end of year | $ | (28.3 | ) | $ | (23.0 | ) | $ | (7.4 | ) | $ | (8.8 | ) |
Pension Benefits | Health Care Benefits | |||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Non-current assets | $ | 23.5 | $ | 35.9 | $ | — | $ | — | ||||||||
Accrued expenses and other liabilities | $ | 4.1 | $ | 4.4 | $ | 0.8 | $ | 1.0 | ||||||||
Other non-current liabilities | $ | 47.7 | $ | 54.5 | $ | 6.6 | $ | 7.8 |
Pension Benefits | Health Care Benefits | |||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Projected benefit obligation | $ | 56.4 | $ | 63.9 | $ | 7.4 | $ | 8.8 | ||||||||
Accumulated benefit obligation | $ | 54.8 | $ | 61.9 | $ | 7.4 | $ | 8.8 | ||||||||
Fair value of plan assets | $ | 4.6 | $ | 5.1 | $ | — | $ | — |
Pension Benefits | Health Care Benefits | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Discount rate | 4.11 | % | 3.62 | % | 3.98 | % | 3.60 | % | ||||
Assumed health care cost trend rates at December 31: | ||||||||||||
Health care cost trend rate assumed for next year | N/A | N/A | 6.09 | % | 6.29 | % | ||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | N/A | N/A | 4.50 | % | 4.50 | % | ||||||
Year that the rate reaches the ultimate trend rate | N/A | N/A | 2027 | 2027 |
Pension Benefits | Health Care Benefits | |||||||||||||||||||||||
(In millions) | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | ||||||||||||||||||
Components of net periodic benefit costs (gains): | ||||||||||||||||||||||||
Service cost | $ | 0.6 | $ | 0.6 | $ | 1.0 | $ | — | $ | — | $ | — | ||||||||||||
Interest cost | 17.6 | 19.3 | 20.7 | 0.3 | 0.4 | 0.5 | ||||||||||||||||||
Expected return on plan assets | (23.8 | ) | (27.7 | ) | (31.4 | ) | — | — | — | |||||||||||||||
Mark-to-market actuarial net losses (gains) | 16.2 | 5.0 | (7.8 | ) | (0.6 | ) | (1.7 | ) | (0.6 | ) | ||||||||||||||
Other | (0.1 | ) | — | — | — | — | — | |||||||||||||||||
Net periodic cost (benefit) | $ | 10.5 | $ | (2.8 | ) | $ | (17.5 | ) | $ | (0.3 | ) | $ | (1.3 | ) | $ | (0.1 | ) |
Pension Benefits | Health Care Benefits | |||||||||||||||||
2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |||||||||||||
Discount rate* | 3.62 | % | 3.97 | % | 4.10 | % | 3.60 | % | 4.04 | % | 4.12 | % | ||||||
Expected long-term return on plan assets* | 5.09 | % | 6.08 | % | 6.87 | % | — | % | — | % | — | % | ||||||
Assumed health care cost trend rates at December 31: | ||||||||||||||||||
Health care cost trend rate assumed for next year | N/A | N/A | N/A | 6.29 | % | 6.52 | % | 6.69 | % | |||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | N/A | N/A | N/A | 4.50 | % | 4.50 | % | 4.50 | % | |||||||||
Year that the rate reaches the ultimate trend rate | N/A | N/A | N/A | 2027 | 2027 | 2027 |
* | The mark-to-market component of net periodic costs is determined based on discount rates as of year-end and actual asset returns during the year. |
Fair Value of Plan Assets at December 31, 2018 | ||||||||||||||||
(In millions) | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Investments (at Fair Value) | ||||||||||||
Asset category | ||||||||||||||||
Cash | $ | 3.7 | $ | — | $ | — | $ | 3.7 | ||||||||
Other | — | — | 4.6 | 4.6 | ||||||||||||
Total | $ | 3.7 | $ | — | $ | 4.6 | 8.3 | |||||||||
Investments measured at NAV: | ||||||||||||||||
Common collective funds: | ||||||||||||||||
United States equity | 14.9 | |||||||||||||||
International equity | 14.9 | |||||||||||||||
Global equity | 8.5 | |||||||||||||||
Fixed income | 387.8 | |||||||||||||||
Total common collective funds | 426.1 | |||||||||||||||
Total investments at fair value | $ | 434.4 |
Fair Value of Plan Assets at December 31, 2017 | ||||||||||||||||
(In millions) | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Investments (at Fair Value) | ||||||||||||
Asset category | ||||||||||||||||
Cash | $ | 4.3 | $ | — | $ | — | $ | 4.3 | ||||||||
Other | — | — | 5.1 | 5.1 | ||||||||||||
Total | $ | 4.3 | $ | — | $ | 5.1 | 9.4 | |||||||||
Investments measured at NAV: | ||||||||||||||||
Common collective funds: | ||||||||||||||||
United States equity | 19.2 | |||||||||||||||
International equity | 19.4 | |||||||||||||||
Global equity | 9.6 | |||||||||||||||
Fixed income | 427.1 | |||||||||||||||
Total common collective funds | $ | 475.3 | ||||||||||||||
Total investments at fair value | $ | 484.7 |
(In millions) | Pension Benefits | Health Care Benefits | ||||||
2019 | $ | 38.3 | $ | 0.9 | ||||
2020 | 37.7 | 0.8 | ||||||
2021 | 38.2 | 0.8 | ||||||
2022 | 36.2 | 0.7 | ||||||
2023 | 35.9 | 0.7 | ||||||
2024 through 2028 | 162.4 | 2.5 |
(In millions) | 2018 | 2017 | 2016 | |||||||||
Retirement savings match | $ | 10.1 | $ | 9.1 | $ | 8.2 | ||||||
Retirement benefit contribution | — | 1.6 | 4.0 | |||||||||
Total contributions | $ | 10.1 | $ | 10.7 | $ | 12.2 |
(In millions) | 2018 | 2017 | 2016 | |||||||||
Balance at beginning of the year | $ | 117.1 | $ | 117.3 | $ | 119.9 | ||||||
Environmental expenses | 23.2 | 14.8 | 8.3 | |||||||||
Net cash payments | (26.0 | ) | (15.2 | ) | (11.0 | ) | ||||||
Currency translation and other | (0.2 | ) | 0.2 | 0.1 | ||||||||
Balance at end of year | $ | 114.1 | $ | 117.1 | $ | 117.3 |
(In millions) | 2018 | 2017 | 2016 | |||||||||
Domestic | $ | 86.3 | $ | 105.6 | $ | 129.1 | ||||||
Foreign | 110.9 | 106.7 | 97.5 | |||||||||
Income from continuing operations, before income taxes | $ | 197.2 | $ | 212.3 | $ | 226.6 |
(In millions) | 2018 | 2017 | 2016 | |||||||||
Current income tax expense (benefit): | ||||||||||||
Domestic - GILTI and U.S. tax reform transition tax | $ | 3.7 | $ | 24.0 | $ | — | ||||||
Domestic - other | 10.2 | (11.2 | ) | 27.8 | ||||||||
Foreign | 27.3 | 27.3 | 22.5 | |||||||||
Total current income tax expense | $ | 41.2 | $ | 40.1 | $ | 50.3 | ||||||
Deferred income tax (benefit) expense: | ||||||||||||
Domestic - U.S. tax reform, tax effect on net deferred tax liabilities | $ | (6.8 | ) | $ | (20.1 | ) | $ | — | ||||
Domestic - other | 22.1 | 27.4 | 6.0 | |||||||||
Foreign | (20.1 | ) | (8.7 | ) | 4.1 | |||||||
Total deferred income tax (benefit) expense | $ | (4.8 | ) | $ | (1.4 | ) | $ | 10.1 | ||||
Total income tax expense | $ | 36.4 | $ | 38.7 | $ | 60.4 |
2018 | 2017 | 2016 | |||||||
Federal statutory income tax rate | 21.0 | % | 35.0 | % | 35.0 | % | |||
Foreign tax rate differential: | |||||||||
Asia | 0.2 | (1.2 | ) | (1.2 | ) | ||||
Europe | (6.0 | ) | (8.6 | ) | (2.7 | ) | |||
Canada and Mexico | — | (1.3 | ) | (1.7 | ) | ||||
Total foreign tax rate differential: | (5.8 | ) | (11.1 | ) | (5.6 | ) | |||
State and local tax, net | 2.8 | 1.4 | 2.1 | ||||||
Tax on GILTI | 1.5 | — | — | ||||||
Repatriation on certain foreign earnings from prior and current periods | 5.7 | 0.4 | — | ||||||
Tax benefits on certain foreign investments | — | (6.8 | ) | (1.9 | ) | ||||
Domestic production activities deduction | (0.7 | ) | (1.9 | ) | (1.5 | ) | |||
Amended prior period tax returns and corresponding favorable audit adjustments | — | (3.6 | ) | (1.3 | ) | ||||
Net impact of uncertain tax positions | (0.4 | ) | 2.2 | (1.1 | ) | ||||
Changes in valuation allowances | (1.8 | ) | 0.7 | 0.4 | |||||
U.S. tax reform, transition tax | 0.8 | 11.3 | — | ||||||
U.S. tax reform, tax effect on net deferred tax liabilities | (3.5 | ) | (9.5 | ) | — | ||||
Other | (1.1 | ) | 0.1 | 0.6 | |||||
Effective income tax rate | 18.5 | % | 18.2 | % | 26.7 | % |
(In millions) | 2018 | 2017 | ||||||
Deferred tax assets: | ||||||||
Pension and other post-retirement benefits | $ | 8.2 | $ | 7.3 | ||||
Employment costs | 20.1 | 22.0 | ||||||
Environmental reserves | 29.0 | 29.4 | ||||||
Net operating loss carryforwards | 48.8 | 42.3 | ||||||
Other, net | 39.8 | 20.0 | ||||||
Gross deferred tax assets | $ | 145.9 | $ | 121.0 | ||||
Valuation allowances | (15.2 | ) | (21.4 | ) | ||||
Total deferred tax assets, net of valuation allowances | $ | 130.7 | $ | 99.6 | ||||
Deferred tax liabilities: | ||||||||
Property, plant and equipment | $ | (33.9 | ) | $ | (20.7 | ) | ||
Goodwill and intangibles | (101.5 | ) | (98.7 | ) | ||||
Other, net | (14.4 | ) | (1.0 | ) | ||||
Total deferred tax liabilities | $ | (149.8 | ) | $ | (120.4 | ) | ||
Net deferred tax (liabilities) assets | $ | (19.1 | ) | $ | (20.8 | ) | ||
Consolidated Balance Sheets: | ||||||||
Non-current deferred income tax assets | $ | 50.2 | $ | 19.5 | ||||
Non-current deferred income tax liabilities | $ | (69.3 | ) | $ | (40.3 | ) |
Unrecognized Tax Benefits | ||||||||||||
(In millions) | 2018 | 2017 | 2016 | |||||||||
Balance as of January 1, | $ | 18.6 | $ | 7.9 | $ | 11.3 | ||||||
Increases as a result of positions taken during current year | 1.3 | 9.2 | 0.3 | |||||||||
Increases as a result of positions taken for prior years | 1.1 | 1.8 | 1.2 | |||||||||
Balance related to acquired businesses | — | — | — | |||||||||
Reductions for tax positions of prior years | (2.8 | ) | (0.3 | ) | — | |||||||
Decreases as a result of lapse of statute of limitations | (0.2 | ) | (0.2 | ) | (4.2 | ) | ||||||
Decreases relating to settlements with taxing authorities | (1.4 | ) | — | (0.3 | ) | |||||||
Other, net | 0.1 | 0.2 | (0.4 | ) | ||||||||
Balance as of December 31, | $ | 16.7 | $ | 18.6 | $ | 7.9 |
(In millions) | 2018 | 2017 | 2016 | |||||||||
Stock appreciation rights | $ | 4.4 | $ | 4.2 | $ | 3.3 | ||||||
Performance shares | 0.6 | 0.6 | — | |||||||||
Restricted stock units | 5.9 | 5.3 | 4.4 | |||||||||
Total share-based compensation | $ | 10.9 | $ | 10.1 | $ | 7.7 |
2018 | 2017 | 2016 | ||||
Expected volatility | 41.0% | 41.0% | 41.0% | |||
Expected dividends | 1.67% | 1.58% | 1.92% | |||
Expected term (in years) | 6.5 | 6.5 | 6.7 | |||
Risk-free rate | 3.06% | 2.72% | 1.90% | |||
Value of SARs granted | $14.82 | $12.01 | $8.29 |
Stock Appreciation Rights (In millions, except per share data) | Shares | Weighted-Average Exercise Price Per Share | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||
Outstanding as of January 1, 2018 | 1.8 | $ | 28.62 | 6.85 | $ | 27.0 | |||||||
Granted | 0.3 | 41.89 | |||||||||||
Exercised | (0.3 | ) | 21.83 | ||||||||||
Forfeited or expired | — | 37.31 | |||||||||||
Outstanding as of December 31, 2018 | 1.8 | $ | 32.14 | 6.77 | $ | 4.0 | |||||||
Vested and exercisable as of December 31, 2018 | 1.0 | $ | 28.83 | 5.67 | $ | 3.5 |
Year Ended December 31, 2018 (In millions) | Sales to External Customers | Intersegment Sales | Total Sales | Operating Income | Depreciation and Amortization | Capital Expenditures | Total Assets | |||||||||||||||||||||
Color, Additives and Inks | $ | 1,040.6 | $ | 5.9 | $ | 1,046.5 | $ | 158.5 | $ | 44.3 | $ | 22.9 | $ | 1,235.1 | ||||||||||||||
Specialty Engineered Materials | 593.6 | 52.2 | 645.8 | 72.3 | 23.2 | 25.2 | 596.2 | |||||||||||||||||||||
Performance Products and Solutions | 652.4 | 83.4 | 735.8 | 73.6 | 15.9 | 19.5 | 275.4 | |||||||||||||||||||||
Distribution | 1,246.8 | 18.6 | 1,265.4 | 71.5 | 0.7 | 0.1 | 249.0 | |||||||||||||||||||||
Corporate and eliminations | — | (160.1 | ) | (160.1 | ) | (102.2 | ) | 4.4 | 8.3 | 367.6 | ||||||||||||||||||
Total | $ | 3,533.4 | $ | — | $ | 3,533.4 | $ | 273.7 | $ | 88.5 | $ | 76.0 | $ | 2,723.3 |
Year Ended December 31, 2017 (In millions) | Sales to External Customers | Intersegment Sales | Total Sales | Operating Income | Depreciation and Amortization | Capital Expenditures | Total Assets | |||||||||||||||||||||
Color, Additives and Inks | $ | 877.7 | $ | 15.5 | $ | 893.2 | $ | 138.6 | $ | 41.2 | $ | 21.2 | $ | 1,146.8 | ||||||||||||||
Specialty Engineered Materials | 574.8 | 49.5 | 624.3 | 75.5 | 21.1 | 23.4 | 545.1 | |||||||||||||||||||||
Performance Products and Solutions | 639.6 | 81.0 | 720.6 | 77.1 | 15.5 | 17.2 | 275.8 | |||||||||||||||||||||
Distribution | 1,137.8 | 16.8 | 1,154.6 | 72.6 | 0.8 | 0.5 | 250.9 | |||||||||||||||||||||
Corporate and eliminations | — | (162.8 | ) | (162.8 | ) | (91.0 | ) | 4.2 | 9.3 | 486.7 | ||||||||||||||||||
Total | $ | 3,229.9 | $ | — | $ | 3,229.9 | $ | 272.8 | $ | 82.8 | $ | 71.6 | $ | 2,705.3 |
Year Ended December 31, 2016 (In millions) | Sales to External Customers | Intersegment Sales | Total Sales | Operating Income | Depreciation and Amortization | Capital Expenditures | Total Assets | |||||||||||||||||||||
Color, Additives and Inks | $ | 778.9 | $ | 18.8 | $ | 797.7 | $ | 127.5 | $ | 40.2 | $ | 20.6 | $ | 923.8 | ||||||||||||||
Specialty Engineered Materials | 516.4 | 49.4 | 565.8 | 81.1 | 18.3 | 19.4 | 542.8 | |||||||||||||||||||||
Performance Products and Solutions | 589.2 | 79.3 | 668.5 | 74.4 | 15.0 | 12.4 | 241.8 | |||||||||||||||||||||
Distribution | 1,054.1 | 16.9 | 1,071.0 | 68.2 | 0.7 | 0.2 | 207.0 | |||||||||||||||||||||
Corporate and eliminations | — | (164.4 | ) | (164.4 | ) | (83.5 | ) | 4.0 | 13.0 | 386.5 | ||||||||||||||||||
Assets Held for Sale | — | — | — | — | 25.8 | 18.6 | 433.9 | |||||||||||||||||||||
Total | $ | 2,938.6 | $ | — | $ | 2,938.6 | $ | 267.7 | $ | 104.0 | $ | 84.2 | $ | 2,735.8 |
(In millions) | 2018 | 2017 | 2016 | |||||||||
Sales: | ||||||||||||
United States | $ | 2,030.4 | $ | 1,910.8 | $ | 1,767.8 | ||||||
Europe | 549.9 | 455.7 | 415.2 | |||||||||
Canada | 255.0 | 251.1 | 237.7 | |||||||||
Asia | 346.4 | 313.4 | 266.9 | |||||||||
Mexico | 331.7 | 279.8 | 233.7 | |||||||||
South America | 20.0 | 19.1 | 17.3 | |||||||||
Total Sales | $ | 3,533.4 | $ | 3,229.9 | $ | 2,938.6 | ||||||
Long lived assets: | ||||||||||||
United States | $ | 290.0 | $ | 279.7 | $ | 268.3 | ||||||
Europe | 116.4 | 97.0 | 86.6 | |||||||||
Canada | 10.7 | 8.2 | 7.2 | |||||||||
Asia | 58.9 | 56.2 | 44.6 | |||||||||
Mexico | 17.7 | 18.5 | 18.5 | |||||||||
South America | 1.7 | 2.0 | 1.1 | |||||||||
Total Long lived assets | $ | 495.4 | $ | 461.6 | $ | 426.3 |
(In millions) | Balance Sheet Location | December 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||||
Cross Currency Swaps (Net Investment Hedge) | Other non-current assets | $ | 2.6 | $ | — | ||||
Liabilities | |||||||||
Interest Rate Swap (Fair Value Hedge) | Other non-current liabilities | $ | 1.7 | $ | — |
2018 Quarters | 2017 Quarters | |||||||||||||||||||||||||||||||
(In millions, except per share data) | Fourth (2) | Third (3) | Second (4) | First (5) | Fourth(6) | Third (7) | Second (8) | First (9) | ||||||||||||||||||||||||
Sales | $ | 834.0 | $ | 883.0 | $ | 914.8 | $ | 901.6 | $ | 800.6 | $ | 818.5 | $ | 814.1 | $ | 796.7 | ||||||||||||||||
Gross Margin | 165.0 | 184.9 | 196.5 | 198.5 | 169.3 | 179.5 | 187.9 | 182.2 | ||||||||||||||||||||||||
Operating income | 47.0 | 70.5 | 77.4 | 78.8 | 47.1 | 65.7 | 78.0 | 82.0 | ||||||||||||||||||||||||
Net income from continuing operations | 11.4 | 50.2 | 51.5 | 47.7 | 35.5 | 40.2 | 49.6 | 48.3 | ||||||||||||||||||||||||
Net income from continuing operations attributable to PolyOne shareholders | $ | 11.6 | $ | 50.2 | $ | 51.6 | $ | 47.7 | $ | 35.4 | $ | 40.2 | $ | 49.6 | $ | 48.3 | ||||||||||||||||
Net income from continuing operations per common share attributable to PolyOne common shareholders: (1) | ||||||||||||||||||||||||||||||||
Basic earnings per share | $ | 0.15 | $ | 0.63 | $ | 0.65 | $ | 0.59 | $ | 0.44 | $ | 0.50 | $ | 0.61 | $ | 0.58 | ||||||||||||||||
Diluted earnings per share | $ | 0.15 | $ | 0.62 | $ | 0.64 | $ | 0.59 | $ | 0.43 | $ | 0.49 | $ | 0.60 | $ | 0.58 |
(1) | Per share amounts for the quarter and the full year have been computed separately. The sum of the quarterly amounts may not equal the annual amounts presented because of differences in the average shares outstanding during each period. |
(2) | Included for the fourth quarter 2018 are: 1) mark-to-market pension and other post-retirement charge of $15.6 million, 2) environmental remediation costs of $3.9 million and 3) acquisition related costs and adjustments of $2.0 million. |
(3) | Included for the third quarter 2018 are: 1) environmental remediation costs of $7.5 million and 2) a gain related to the reimbursement of previously incurred environmental costs of $1.5 million. |
(4) | Included for the second quarter 2018 are: 1) environmental remediation costs of $8.7 million, 2) acquisition related costs and adjustments of $1.9 million and 3) a gain related to the reimbursement of previously incurred environmental costs of $1.6 million. |
(5) | Included for the first quarter 2018 are: 1) environmental remediation costs of $3.1 million and 2) acquisition related costs and adjustments of $1.9 million. |
(6) | Included for the fourth quarter 2017 are: 1) tax adjustments primarily associated with the Tax Cuts and Jobs Act of $10.7 million and 2) a mark-to-market pension and other post-retirement charge of $3.3 million. |
(7) | Included for the third quarter 2017 are: 1) acquisition related costs and adjustments of $2.6 million, 2) environmental remediation costs of $4.9 million and 3) a gain related to the reimbursement of previously incurred environmental costs of $2.5 million. |
(8) | Included for the second quarter 2017 are: 1) environmental remediation costs of $5.0 million and 2) a gain related to the reimbursement of previously incurred environmental costs of $3.8 million. |
(9) | Included for the first quarter 2017 are environmental remediation costs of $2.2 million. |
1. | PolyOne’s management is responsible for establishing and maintaining adequate internal control over financial reporting. |
2. | Under the supervision of and with participation of PolyOne’s management, including the Chief Executive Officer and the Chief Financial Officer, we conducted an evaluation of the effectiveness of internal control over financial reporting as of December 31, 2018 based on the guidelines established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 Framework). Management believes that the COSO framework is a suitable framework for its evaluation of financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative measurements of PolyOne’s internal control over financial reporting, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of PolyOne’s internal control over financial reporting are not omitted and is relevant to an evaluation of internal control over financial reporting. |
3. | Based on the results of our evaluation, management has concluded that such internal control over financial reporting was effective as of December 31, 2018. There were no material weaknesses in internal control over financial reporting identified by management. The results of management's assessment were reviewed with our Audit Committee. |
4. | Ernst & Young LLP, who audited the consolidated financial statements of PolyOne for the year ended December 31, 2018, also issued an attestation report on PolyOne’s internal control over financial reporting under Auditing Standard No. 2201 of the Public Company Accounting Oversight Board. This attestation report is set forth on page 31 of this Annual Report on Form 10-K and is incorporated by reference into this Item 9A. |
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||
Plan category | (a) | (b) | (c) | |||
Equity compensation plans approved by security holders | 1,797,702 | $32.14 | 2,020,629 | |||
Equity compensation plans not approved by security holders | — | — | — | |||
Total | 1,797,702 | $32.14 | 2,020,629 |
(1) | In addition to options, warrants and rights, the PolyOne Corporation 2017 Equity and Incentive Compensation Plan (the 2017 EICP) authorizes the issuance of restricted stock, RSUs, performance shares and awards to Non-Employee Directors. The 2017 EICP limits the total number of shares that may be issued as one or more of these types of awards to 2.5 million. |
Exhibit No. | Exhibit Description |
Exhibit No. | Exhibit Description |
101 .INS** | XBRL Instance Document |
101 .SCH** | XBRL Taxonomy Extension Schema Document |
101 .CAL** | XBRL Taxonomy Extension Calculation Linkbase Document |
101 .LAB** | XBRL Taxonomy Extension Label Linkbase Document |
101 .PRE** | XBRL Taxonomy Extension Presentation Linkbase Document |
101 .DEF** | XBRL Taxonomy Definition Linkbase Document |
+ | Indicates management contract or compensatory plan, contract or arrangement in which one or more directors or executive officers of the Registrant may be participants |
† | The exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the Securities and Exchange Commission upon request. |
** | Filed herewith. |
POLYONE CORPORATION | |||||
February 19, 2019 | BY: | /S/ BRADLEY C. RICHARDSON | |||
Bradley C. Richardson Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) |
Signature and Title | ||||
/S/ ROBERT M. PATTERSON | Chairman, President and Chief Executive Officer and Director (Principal Executive Officer) | Date: February 19, 2019 | ||
Robert M. Patterson | ||||
/S/ BRADLEY C. RICHARDSON | Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) | Date: February 19, 2019 | ||
Bradley C. Richardson | ||||
/S/ ROBERT E. ABERNATHY | Director | Date: February 19, 2019 | ||
Robert E. Abernathy | ||||
/S/ RICHARD H. FEARON | Director | Date: February 19, 2019 | ||
Richard H. Fearon | ||||
/S/ GREGORY J. GOFF | Director | Date: February 19, 2019 | ||
Gregory J. Goff | ||||
/S/ WILLIAM R. JELLISON | Director | Date: February 19, 2019 | ||
William R. Jellison | ||||
/S/ SANDRA BEACH LIN | Director | Date: February 19, 2019 | ||
Sandra Beach Lin | ||||
/S/ KIM ANN MINK | Director | Date: February 19, 2019 | ||
Kim Ann Mink | ||||
/S/ WILLIAM H. POWELL | Director | Date: February 19, 2019 | ||
William H. Powell | ||||
/S/ KERRY J. PREETE | Director | Date: February 19, 2019 | ||
Kerry J. Preete | ||||
/S/ WILLIAM A. WULFSOHN | Director | Date: February 19, 2019 | ||
William A. Wulfsohn |
Exhibit 10.17 | ||||||
SCHEDULE OF EXECUTIVES WITH MANAGEMENT CONTINUITY AGREEMENTS | ||||||
Title | Name | Years / Comp* | Excise Tax Gross Up? | |||
Chairman, President and Chief Executive Officer | Robert M. Patterson | 3 | Y | |||
Executive Vice President, Chief Financial Officer | Bradley C. Richardson | 2 | N | |||
Senior Vice President, President of Color, Additives and Inks | Mark D. Crist | 2 | N | |||
Senior Vice President, Chief Commercial Officer | Michael A. Garratt | 2 | N | |||
Senior Vice President, President of Distribution | Scott J. Horn | 2 | N | |||
Senior Vice President, General Counsel and Secretary | Lisa K. Kunkle | 3 | Y | |||
Senior Vice President, Global Operations and Process Improvement | M. John Midea, Jr. | 2 | N | |||
Senior Vice President, President of Specialty Engineered Materials | Chris L. Pederson | 2 | N | |||
Senior Vice President, Mergers & Acquisitions | Joel R. Rathbun | 2 | N | |||
Senior Vice President, Chief Human Resources Officer | João José San Martin Neto | 2 | N | |||
Senior Vice President, President of Performance Products and Solutions | Donald K. Wiseman | 2 | N |
Exhibit 21.1 | ||
SUBSIDIARIES OF THE COMPANY | ||
Name | Formation Jurisdiction | |
Altona Properties Pty Ltd. (37.4% owned) | Australia | |
Auseon Limited | Australia | |
Braspenco Indústria de Compostos de Plásticos Ltda. | Brazil | |
Burton Rubber Company | Delaware | |
Butler Brothers, Inc. (49% owned) | Minnesota | |
Chromatics, Inc. | Connecticut | |
Colorant Chromatics AB | Finland | |
Colorant Chromatics AG | Switzerland | |
Colorant Chromatics Europe B.V. | Netherlands | |
Colorant Chromatics Trading Shanghai, Ltd. | China | |
Colorant GmbH | Germany | |
ColorMatrix Argentina S.A. | Argentina | |
ColorMatrix Asia Limited | Hong Kong | |
ColorMatrix-Brazil, LLC | Ohio | |
ColorMatrix Corporation, The | Ohio | |
ColorMatrix do Brasil Indústria e Comércio de Pigmentos e Aditivos Ltda. | Brazil | |
ColorMatrix Europe BV | Netherlands | |
ColorMatrix Europe Limited | United Kingdom | |
ColorMatrix Group, Inc. | Delaware | |
ColorMatrix Holdings, Inc. | Delaware | |
ColorMatrix Plastic Colorant (Suzhou) Co. Ltd. | China | |
ColorMatrix Russia LLC | Russia | |
ColorMatrix South Africa (Pty) Ltd. | South Africa | |
ColorMatrix UK Holdings Limited | United Kingdom | |
ColorMatrix UK Limited | United Kingdom | |
COMPTEK Kunststoffverarbeitung GmbH | Germany | |
Conexus, LLC | Nevada | |
Franklin-Burlington Plastics, Inc. | Delaware | |
Geon Company Australia Limited, The | Australia | |
Geon Development, Inc. | Ohio | |
Glasforms, Inc. | California | |
GLS Hong Kong Limited | Hong Kong | |
GLS International, Inc. | Illinois | |
GLS Thermoplastic Alloys (Suzhou) Co., Ltd. | China | |
GLS Trading (Suzhou) Co., Ltd. | China | |
GSDI Specialty Dispersions, Inc. | Ohio | |
Hanna France S.à.r.l. | France | |
Hanna-Itasca Company | Delaware | |
Hanna Proprietary Limited | Delaware | |
Hansand Steamship Company (33% owned) | Delaware | |
IQAP Czech, s.r.o. | Czech Republic | |
IQAP Masterbatch Group, S.L. | Spain | |
Juffali-PolyOne Master Batches Company (51% owned) | Saudi Arabia | |
Kimberly Iron (14% owned) | Michigan | |
Laconian Holding Company (f/k/a Spartech Mexico Holding Company) | Missouri | |
L.E. Carpenter & Company | Delaware |
Name | Formation Jurisdiction | |
MAG International (50% owned) | Delaware | |
Magenta Master Fibers S.r.l. | Italy | |
Magenta Master Fibers Co., Ltd. | China | |
M.A. Hanna Asia Holding Company | Delaware | |
M.A. Hanna Export Services Corp. | Barbados | |
M.A. Hanna Plastics Group, Inc. | Michigan | |
NEU Specialty Engineered Materials, LLC | Ohio | |
Orangeville-Brampton Rail Access Group, Inc. (16.6% owned) | Canada | |
O'Sullivan Plastics, LLC | Nevada | |
Paramount Coal Company (50% owned) | Virginia | |
Pilot Knob Pellet Co. (50% owned) | Missouri | |
PlastiComp Europe GmbH | Germany | |
PlastiComp, Inc. | Minnesota | |
POL Laconian de Mexico Holding Company, S de R.L. de C.V. (f/k/a Spartech de Mexico Holding Company, S de R.L. de C.V.) | Mexico | |
POL Luxembourg Holding Company, S.a r.l (f/k/a Spartech Luxembourg Holding Co. S.à r.l) | Luxembourg | |
POL Mexico HoldingsPOL, LLC (f/k/a Spartech Mexico Holdings, LLC) | Missouri | |
Polymer Diagnostics, Inc. | Ohio | |
PolyOne Belgium S.A. | Belgium | |
PolyOne Canada Inc. | Canada | |
PolyOne Color and Additives Germany, GmbH | Germany | |
PolyOne Corporation UK Limited | United Kingdom | |
PolyOne Corporation (Shanghai) Limited (a/k/a PolyOne Shangahi, China) | China | |
PolyOne Costa Rica S.A. | Costa Rica | |
PolyOne CR s.r.o. | Czech Republic | |
PolyOne de Mexico Distribution, S. de R.L. de C.V. | Mexico | |
PolyOne de Mexico Manufacturing, S. de R.L. de C.V. | Mexico | |
PolyOne de Mexico S.A. de C.V. | Mexico | |
PolyOne Deutschland, GmbH | Germany | |
PolyOne Distribution Canada Inc. (f/k/a POL Canada Inc.) | New Brunswick | |
PolyOne Distribution Trading (Shanghai) Co. Ltd. | China | |
PolyOne (Dongguan) Vinyl Compounds Company Ltd. | China | |
PolyOne Engineered Films, LLC | Virginia | |
PolyOne España, S.L. | Spain | |
PolyOne Europe Finance S.à.r.l. | Luxembourg | |
PolyOne Europe Logistics S.A. | Belgium | |
PolyOne Europe S.à.r.l. | Luxembourg | |
PolyOne France S.A.S. | France | |
PolyOne Funding Corporation | Delaware | |
PolyOne Global S.à.r.l. | Luxembourg | |
PolyOne Hong Kong Holding Limited | Hong Kong | |
PolyOne Hungary, Ltd. | Hungary | |
PolyOne Intellectual Property Ltd. | Cyprus | |
PolyOne International Finance Unlimited Company | Ireland | |
PolyOne International Ltd. | British Virgin Islands | |
PolyOne International Real Estate Corporation | Ohio |
Name | Formation Jurisdiction | |
PolyOne International Trading (Shanghai) Co., Ltd. | China | |
PolyOne Italy S.r.l. | Italy | |
PolyOne Japan K.K. | Japan | |
PolyOne Korea, Ltd. | Korea | |
PolyOne Limited | Cyprus | |
PolyOne LLC | Delaware | |
PolyOne Luxembourg S.à.r.l. | Luxembourg | |
PolyOne Management (Shanghai) Co. Ltd. | China | |
PolyOne Manufacturing S.à.r.l. | Luxembourg | |
PolyOne Poland Manufacturing, Sp.z.o.o. | Poland | |
PolyOne Polimeks Plastik Tic. ve San. A.S. | Turkey | |
PolyOne Polymers India Pvt. Ltd. | India | |
PolyOne Puerto Rico, LLC | Puerto Rico | |
PolyOne S.à r.l. | Luxembourg | |
PolyOne Shenzhen Co. Ltd. | China | |
PolyOne Singapore Pte Ltd | Singapore | |
PolyOne Suzhou, China | China | |
PolyOne Sweden, A.B. | Sweden | |
PolyOne Tekno Polimer Mühendislik Plastikleri San. ve Tic. A.S. | Turkey | |
PolyOne Tekno Ticaret Mühendislik Plastikleri San. ve Tic. A.S. | Turkey | |
PolyOne Termoplásticos do Brasil Ltda. | Brazil | |
PolyOne Th. Bergmann GmbH | Germany | |
PolyOne (Thailand) Co., Ltd. | Thailand | |
PolyOne UK Finance Limited | United Kingdom | |
PolyOne Vinyl Compounds Asia Holdings Limited | British Virgin Islands | |
RA Products, Inc. | Michigan | |
Regalite Plastics, LLC | Massachusetts | |
Rutland DCC Inc Manufacturing Private Limited (50% owned) | India | |
Rutland Europe Limited | United Kingdom | |
Rutland Group, Inc. | Delaware | |
Rutland Holding Company | Delaware | |
Rutland Intermediate Holding Company | Delaware | |
Rutland International Limited | United Kingdom | |
Rutland Plastics, Inc. | Florida | |
Seola ApS | Denmark | |
Shanghai Colorant Chromatics Co., Ltd. | China | |
Shawnee Holdings, LLC | Virginia | |
SilCoTec, Inc. | Indiana | |
Sociedad Quimica Alemana S.A. | Peru | |
Spartech, S.A.S. | France | |
Uniplen Indústria de Polimeros Ltda. | Brazil |
(1) | Registration Statement (Form S-8 No. 333-217879) pertaining to the PolyOne Corporation 2017 Equity and Incentive Compensation Plan; | ||
(2) | Registration Statement (Form S-8 No. 333-205919) pertaining to the amended and restated PolyOne Corporation 2010 Equity and Performance Incentive Plan; | ||
(3) | Registration Statement (Form S-8 No. 333-181787) pertaining to the PolyOne Corporation 2010 Equity and Performance Incentive Plan; | ||
(4) | Registration Statement (Form S-8 No. 333-166775) pertaining to the PolyOne Corporation 2010 Equity and Performance Incentive Plan; | ||
(5) | Registration Statement (Form S-8 No. 333-157486) pertaining to the PolyOne Retirement Savings Plan; | ||
(6) | Registration Statement (Form S-8 No. 333-47796) pertaining to Post Effective Amendment No. 3 on Form S-8 to Form S-4 pertaining to the Geon Company 1993 Incentive Stock Plan, the Geon Company 1995 Incentive Stock Plan, the Geon Company 1998 Interim Stock Award Plan, the Geon Company 1999 Incentive Stock Plan, the PolyOne Corporation Deferred Compensation Plan for Non-Employee Directors and the M.A. Hanna Company Long-Term Incentive Plan; and | ||
(7) | Registration Statement (Form S-8 No. 333-141029) pertaining to the PolyOne Retirement Savings Plan and the DH Compounding Company Savings and Retirement Plan and Trust. |
/s/ Robert M. Patterson | |
Robert M. Patterson Chairman, President and Chief Executive Officer |
/s/ Bradley C. Richardson | |
Bradley C. Richardson Executive Vice President, Chief Financial Officer |
/s/ Robert M. Patterson | |
Robert M. Patterson Chairman, President and Chief Executive Officer |
/s/ Bradley C. Richardson | |
Bradley C. Richardson Executive Vice President, Chief Financial Officer |
Document And Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 01, 2019 |
Jun. 29, 2018 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | POLYONE CORP | ||
Entity Central Index Key | 0001122976 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Common Stock, Shares Outstanding | 77,722,398 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Public Float | $ 3.5 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 159.5 | $ (57.6) | $ 165.0 |
Other comprehensive (loss) income, net of tax: | |||
Translation adjustments and related hedging instruments | (27.6) | 41.2 | (23.0) |
Cash flow hedges | (1.3) | 0.0 | 0.0 |
Other | (0.4) | 0.0 | 0.1 |
Total other comprehensive (loss) income | (29.3) | 41.2 | (22.9) |
Total comprehensive income (loss) | 130.2 | (16.4) | 142.1 |
Comprehensive loss (income) attributable to noncontrolling interests | 0.3 | (0.1) | 0.2 |
Comprehensive income (loss) attributable to PolyOne common shareholders | $ 130.5 | $ (16.5) | $ 142.3 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common shares, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common shares, authorized (in shares) | 400,000,000 | 400,000,000 |
Common shares, issued (in shares) | 122,200,000 | 122,200,000 |
Treasury stock, shares (in shares) | 44,500,000 | 41,300,000 |
Description of Business and Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Business and Summary of Significant Accounting Policies | Note 1 — DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business We are a premier provider of specialized polymer materials, services and solutions with operations in specialty engineered materials, advanced composites, color and additive systems and polymer distribution. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants, and fluoropolymer and silicone colorants. Headquartered in Avon Lake, Ohio, we have employees at manufacturing sites and distribution facilities in North America, South America, Europe and Asia. We provide value to our customers through our ability to link our knowledge of polymers and formulation technology with our manufacturing and supply chain to provide value added solutions to designers, assemblers and processors of plastics (our customers). When used in these notes to the consolidated financial statements, the terms “we,” “us,” “our”, “PolyOne” and the “Company” mean PolyOne Corporation and its consolidated subsidiaries. Our operations are located primarily in North America, South America, Europe and Asia. Our operations are reported in four reportable segments: Color, Additives and Inks; Specialty Engineered Materials; Performance Products and Solutions; and Distribution. See Note 14, Segment Information, for more information. Accounting Standards Adopted On January 1, 2018, the Company adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers and all related amendments (the Standard), for all contracts using the modified retrospective method. The Standard implements a five-step process for revenue recognition that focuses on transfer of control and defines a contract as “an agreement between two or more parties that creates legally enforceable rights and obligations.” The adoption of the Standard did not materially impact the timing and measurement of revenue recognition. Additionally, we concluded that the methodology for which we historically estimated and recognized variable consideration (e.g., rebates) is consistent with the requirements of the Standard. As a result, we did not recognize a cumulative effect adjustment to the opening balance of retained earnings. At contract inception, PolyOne assesses the goods and services promised to a customer and identifies a performance obligation for each promised good or service that is distinct. Our contracts, generally in the form of purchase orders or written contracts, specify the product or service that is promised to the customer. The typical contract life is less than 12 months and contains only one performance obligation, to provide conforming goods or services to the customer. Revenue is recognized at the point in time when control of the product is transferred to the customer, which typically occurs when products are shipped from our facilities with the exception of certain contract manufacturing arrangements. The revenue streams within the Company are consistent with those disclosed for our reportable segments, within Note 14, Segment Information. For descriptions of our product offerings and segments see Note 14, Segment Information. We offer more than 35,000 polymer solutions to over 10,000 customers across the world. No customer accounts for more than 3% of our consolidated revenues and we do not have a high concentration of business in one particular end market. In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07). This standard requires the presentation of the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. All other components of net periodic benefit cost must be presented below operating income. The Company has adopted ASU 2017-07 on January 1, 2018. ASU 2017-07 provides a practical expedient to utilize previously disclosed components of net periodic benefit costs as an estimate for retrospective presentation. Utilizing this practical expedient, the Company reclassified non-service components of net periodic benefit cost from Cost of sales and Selling and administrative expense into Other income, net on the Consolidated Statements of Income. The adoption of ASU 2017-07 resulted in $9.6 million of costs for the year ended December 31, 2018 and gains of $4.7 million, and $18.6 million for the years ended December 31, 2017 and 2016, respectively, of the non-service components of net periodic benefit presented in Other income, net. For additional detail on the components of our annual net periodic benefit cost, see Note 10, Employee Benefit Plans. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other than Inventory (ASU 2016-16), which requires companies to recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the income statement as income tax expense or benefit in the period the sale or transfer occurs. We recognized an adjustment of $17.0 million to beginning retained earnings upon adoption of this standard on January 1, 2018 from transactions completed as of December 31, 2017. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). This amendment to the hedge accounting model better aligns an entity's risk management activities with its financial reporting by expanding an entity's ability to hedge risk components, eliminating the separate measurement and reporting of hedge ineffectiveness and reducing the complexity of applying certain aspects of hedge accounting. The Company has early adopted ASU 2017-12 as of July 1, 2018. For additional disclosure and detail on the hedge relationships entered into by the Company, see Note 15, Derivatives and Hedging. Accounting Standards Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 was issued to increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. ASU 2016-02 is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We will adopt the new standard on the required effective date of January 1, 2019 using the transition option, “Comparatives Under 840 Option,” established by ASU 2018-11, Leases (Topic 842), Targeted Improvements (ASU 2018-11). This transition option was released by the FASB to reduce the cost and complexity associated with reflecting the new standard in prior periods presented. We will also elect the practical expedient package related to the identification, classification and accounting for initial direct costs whereby prior conclusions do not have to be reassessed for leases that commenced before the effective date. As we will not reassess such conclusions, the Company does not plan to adopt the practical expedient to use hindsight to determine the likelihood of whether a lease will be extended, terminated or whether a purchase option will be exercised. A cross-functional implementation team is finalizing policy elections, the discount rate to be used based on January 1, 2019 data, and business processes and controls to support recognition and disclosure under the new standard. The primary impact upon adoption will be the recognition of right of use assets and lease obligations, on a discounted basis, of our minimum lease obligations, as disclosed in Note 6, Leasing Arrangements. We currently do not expect ASU 2016-12 to have a material effect on our Consolidated Statements of Income. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 changes the impairment model for most financial instruments. Current guidance requires the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. Under ASU 2016-13, the Company will be required to use a current expected credit loss model (CECL) that will immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. This guidance becomes effective for the Company on January 1, 2020, including the interim periods in the year. The Company is currently evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures. Consolidation and Basis of Presentation The consolidated financial statements include the accounts of PolyOne and its subsidiaries. All majority-owned affiliates over which we have control are consolidated. Transactions with related parties, including joint ventures, are in the ordinary course of business. Historical information has been retrospectively adjusted to reflect the classification of discontinued operations. Discontinued operations are further discussed in Note 3, Discontinued Operations. Reclassifications Certain reclassifications of the prior period amounts and presentation have been made to conform to the presentation for the current period for the adoption of ASU 2017-07 as further described in the Accounting Standards Adopted section of this Note. Use of Estimates Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from these estimates. Cash and Cash Equivalents We consider all highly liquid investments purchased with a maturity of less than three months to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. Allowance for Doubtful Accounts We evaluate the collectability of receivables based on a combination of factors, each of which are adjusted if specific circumstances change. We reserve for amounts determined to be uncollectible based on a specific customer’s inability to meet its financial obligation to us. We also record a general reserve based on the age of receivables past due, economic conditions and historical experience. In estimating the allowance, we take into consideration the existence of credit insurance. The allowance for doubtful accounts was $2.4 million and $2.8 million as of December 31, 2018 and 2017, respectively. Inventories External purchases of raw materials and finished goods are valued at weighted average cost. Raw materials and finished goods are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Long-lived Assets Property, plant and equipment is carried at cost, net of depreciation and amortization that is computed using the straight-line method over the estimated useful lives of the assets, which generally ranges from 3 to 15 years for machinery and equipment and up to 40 years for buildings. We depreciate certain assets associated with closing manufacturing locations over a shortened life (through the cease-use date). Software is amortized over periods not exceeding 10 years. Property, plant and equipment is generally depreciated on accelerated methods for income tax purposes. We expense repair and maintenance costs as incurred. We capitalize replacements and betterments that increase the estimated useful life of an asset. We retain fully depreciated assets in property and accumulated depreciation accounts until we remove them from service. In the case of sale, retirement or disposal, the asset cost and related accumulated depreciation balance is removed from the respective account, and the resulting net amount, less any proceeds, is included as a component of income from continuing operations in the accompanying Consolidated Statements of Income (Loss). We account for operating and capital leases under the provisions of FASB Accounting Standards Codification (ASC) Topic 840, Leases. Finite-lived intangible assets, which consist primarily of customer relationships, patents and technology are amortized over their estimated useful lives. The remaining useful lives range up to 20 years. We assess the recoverability of long-lived assets when events or changes in circumstances indicate that we may not be able to recover the assets’ carrying amount. We measure the recoverability of assets to be held and used by a comparison of the carrying amount of the asset to the expected future undiscounted cash flows associated with the asset. We measure the amount of impairment of long-lived assets as the amount by which the carrying value of the asset exceeds the fair value of the asset, which is generally determined based on projected discounted future cash flows or appraised values. No such impairments were recognized during 2018, 2017 or 2016. Goodwill and Indefinite Lived Intangible Assets In accordance with the provisions of FASB ASC Topic 350, Intangibles — Goodwill and Other, we assess the fair value of goodwill, quantitatively or qualitatively, on an annual basis or at an interim date if potential impairment indicators are present. Goodwill is the excess of the purchase price paid over the fair value of the net assets of the acquired business. Goodwill is tested for impairment, quantitatively or qualitatively, at the reporting unit level. Our reporting units have been identified at the operating segment level, or in most cases, one level below the operating segment level. Goodwill is allocated to the reporting units based on the estimated fair value at the date of acquisition. Our annual measurement date for testing impairment of goodwill and indefinite-lived intangibles is October 1. We completed our testing of impairment as of October 1, noting no impairment in 2018, 2017 or 2016. There are no reporting units identified as at-risk of future impairment. The future occurrence of a potential indicator of impairment would require an interim assessment for some or all of the reporting units prior to the next required annual assessment on October 1, 2019. We test our goodwill either quantitatively or qualitatively for impairment. For our quantitative approach, we use an income approach to estimate the fair value of our reporting units. The income approach uses a reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that is determined based on current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs and number of units, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, terminal value margin rates, future capital expenditures and changes in future working capital requirements. We validate our estimates of fair value under the income approach by considering the implied control premium and conclude whether the implied control premium is reasonable based on other recent market transactions. A qualitative approach for both goodwill and indefinite-lived intangible assets is performed if the last quantitative test exceeded certain thresholds. During our qualitative approach, we assess whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we determine it is more likely than not that the fair value is less than carrying value, a quantitative impairment test is performed for each asset, as described above. Indefinite-lived intangible assets primarily consist of the GLS, ColorMatrix and Gordon Composites trade names. Indefinite-lived intangible assets are tested, quantitatively or qualitatively, for impairment annually at the same time we test goodwill for impairment. For our quantitative approach, the implied fair value of indefinite-lived intangible assets is determined based on significant unobservable inputs, as summarized below. The fair value of the trade names is calculated using a “relief from royalty” methodology. This approach involves two steps (1) estimating reasonable royalty rates for the trade name and (2) applying this royalty rate to a net sales stream and discounting the resulting cash flows to determine fair value using a weighted-average cost of capital that is determined based on current market conditions. This fair value is then compared with the carrying value of the trade name. Litigation Reserves FASB ASC Topic 450, Contingencies, requires that we accrue for loss contingencies associated with outstanding litigation, claims and assessments for which management has determined it is probable that a loss contingency exists and the amount of loss can be reasonably estimated. We recognize expense associated with professional fees related to litigation claims and assessments as incurred. Refer to Note 11, Commitments and Contingencies, for further information. Derivative Financial Instruments FASB ASC Topic 815, Derivative and Hedging, requires that all derivative financial instruments, such as foreign exchange contracts, be recognized in the financial statements and measured at fair value, regardless of the purpose or intent in holding them. We are exposed to foreign currency changes and to changes in cash flows due to changes in our contractually specified interest rates (e.g, LIBOR) in the normal course of business. We have established policies and procedures that manage this exposure through the use of financial instruments. By policy, we do not enter into these instruments for trading purposes or speculation. We formally assess, designate and document, as a hedge of an underlying exposure, the qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, in accordance with ASU 2017-12, we assess at inception whether the financial instruments used in the hedging transaction are highly effective at offsetting changes in either the fair values or cash flows of the underlying exposures. If highly effective, any subsequent test may be done qualitatively. The net interest payments accrued each month for effective instruments designated as a hedge are reflected in net income as adjustments of interest expense and the remaining change in the fair value of the derivatives is recorded as a component of Accumulated Other Comprehensive Income (AOCI). Instruments not designated as hedges are adjusted to fair value at each period end, with the resulting gains and losses recognized in the accompanying Consolidated Statements of Income (Loss) immediately. Refer to Note 15, Derivatives and Hedging, for more information. Pension and Other Post-retirement Plans We account for our pensions and other post-retirement benefits in accordance with FASB ASC Topic 715, Compensation — Retirement Benefits. We immediately recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur. Refer to Note 10, Employee Benefit Plans, for more information. Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss in 2018, 2017 and 2016 were as follows:
Fair Value of Financial Instruments FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosures of the fair value of financial instruments. The estimated fair values of financial instruments were principally based on market prices where such prices were available and, where unavailable, fair values were estimated based on market prices of similar instruments. Foreign Currency Translation Revenues and expenses are translated at average currency exchange rates during the related period. Assets and liabilities of foreign subsidiaries are translated using the exchange rate at the end of the period. The resulting translation adjustments are recorded as accumulated other comprehensive income or loss. Gains and losses resulting from foreign currency transactions, including intercompany transactions that are not considered long-term investments, are included in Other income (expense), net in the accompanying Consolidated Statements of Income (Loss). Revenue Recognition We recognize revenue once control of the product is transferred to the customer, which typically occurs when products are shipped from our facilities. Shipping and Handling Costs Shipping and handling costs are included in cost of sales. Research and Development Expense Research and development costs of $56.3 million in 2018, $52.1 million in 2017 and $50.4 million in 2016 are charged to expense as incurred. Environmental Costs We expense costs that are associated with managing hazardous substances and pollution in ongoing operations on a current basis. Costs associated with environmental contamination are accrued when it becomes probable that a liability has been incurred and our proportionate share of the cost can be reasonably estimated. Any such provision is recognized using the Company's best estimate of the amount of loss incurred, or at the lower end of an estimated range, when a single best estimate is not determinable. In some cases, the Company may be able to recover a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts only when they are collected. Share-Based Compensation We account for share-based compensation under the provisions of FASB ASC Topic 718, Compensation - Stock Compensation, which requires us to estimate the fair value of share-based awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying Consolidated Statements of Income (Loss). As of December 31, 2018, we had one active share-based employee compensation plan, which is described more fully in Note 13, Share-Based Compensation. Income Taxes Deferred income tax liabilities and assets are determined based upon the differences between the financial reporting and tax basis of assets and liabilities and are measured using the tax rate and laws currently in effect. In accordance with FASB ASC Topic 740, Income Taxes, we evaluate our deferred income taxes to determine whether a valuation allowance should be established against the deferred tax assets or whether the valuation allowance should be reduced based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. See Note 12, Income Taxes, for additional detail. |
Business Combinations |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Note 2 — BUSINESS COMBINATIONS On January 2, 2018, the Company completed the acquisition of IQAP Masterbatch Group S.L. (IQAP), an innovative provider of specialty colorants and additives based in Spain with customers primarily throughout Europe. Goodwill recognized as a result of this acquisition is not deductible for tax purposes. The results of IQAP are reported in the Color, Additives and Inks segment. On May 31, 2018, the Company completed the acquisition of PlastiComp, Inc. (PlastiComp), who specializes in long-fiber reinforced thermoplastics. Goodwill recognized as a result of this acquisition is not deductible for tax purposes. The results of PlastiComp are reported in the Specialty Engineered Materials segment. The combined total consideration of IQAP and PlastiComp of $118.5 million, net of cash acquired, is inclusive of contingent earn-out consideration for PlastiComp that will be finalized two years from the date of acquisition. The preliminary purchase price allocation for IQAP and PlastiComp resulted in intangible assets of $51.0 million, goodwill of $41.5 million, property, plant and equipment of $30.8 million, net working capital of $19.4 million, deferred tax liabilities of $13.1 million and other liabilities of $11.1 million. The total combined sales of IQAP and PlastiComp for the ended December 31, 2018 were $71.0 million. The fair value of intangible assets acquired during the year ended December 31, 2018, including their estimated useful lives and valuation methodology are as follows:
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Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Note 3 — DISCONTINUED OPERATIONS On July 19, 2017, PolyOne divested its Designed Structures and Solutions segment (DSS) to an affiliate of Arsenal Capital Partners (Arsenal) for $115.0 million cash. The sale resulted in the recognition of an after-tax loss of $229.0 million that was primarily recognized during the second quarter of 2017. The following table summarizes the discontinued operations associated with DSS for the years ended December 31, 2018, 2017 and 2016, which is reflected within the Loss from discontinued operations, net of income taxes line of the Consolidated Statements of Income (Loss):
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Goodwill And Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets | Note 4 — GOODWILL AND INTANGIBLE ASSETS The total purchase price associated with acquisitions is allocated to the fair value of assets acquired and liabilities assumed based on their fair values at the acquisition date, with excess amounts recorded as goodwill. Goodwill as of December 31, 2018 and 2017 and changes in the carrying amount of goodwill by segment were as follows:
Indefinite and finite-lived intangible assets consisted of the following:
Amortization of finite-lived intangible assets included in continuing operations for the years ended December 31, 2018, 2017 and 2016 was $25.9 million, $21.6 million and $17.9 million, respectively. We expect finite-lived intangibles amortization expense for the next five years as follows:
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Financing Arrangements |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Arrangements | Note 5 — FINANCING ARRANGEMENTS Total debt consisted of the following:
On April 11, 2018, the Company entered into a fifth amendment to its senior secured term loan. Under the terms of the amended senior secured term loan, the margin was reduced by 25 basis points to 175 basis points. At the Company's discretion, interest is based upon (i) a margin rate of 175 basis points plus the 1-, 2-, 3-, or 6-month LIBOR, subject to a floor of 75 basis points, or (ii) a margin rate of 75 basis points plus a Prime Rate, subject to a floor of 175 basis points. On November 9, 2018, the Company entered into a sixth amendment to its senior secured term loan, which extended the maturity to 2026. Repayments in the amount of one percent of the aggregate principal amount as of August 3, 2016 are payable annually, while the remaining balance matures on January 30, 2026. The total principal repayments for the year ended December 31, 2018 were $6.5 million. The Company maintains a senior secured revolving credit facility, which matures on February 24, 2022 and provides a maximum borrowing facility size of $450.0 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. The 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. As of December 31, 2018, we had borrowings of $120.1 million under our revolving credit facility, which had remaining availability of $279.4 million. As of December 31, 2017, we had borrowings of $56.5 million under our revolving credit facility, which had remaining availability of $326.2 million. The agreements governing our revolving credit facility and our senior secured term loan, and the indentures and credit agreements governing other debt, contain a number of customary financial and restrictive covenants that, among other things, limit our ability to: sell or otherwise transfer assets, including in a spin-off, 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 December 31, 2018, we were in compliance with all covenants. As of December 31, 2018 and 2017, the Company maintained a credit line of $12.0 million and $16.0 million, respectively, 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 the credit line were primarily used to fund capital expenditures related to the manufacturing facility in Jeddah, Saudi Arabia. As of December 31, 2018, letters of credit under the credit line were immaterial and borrowings were $10.7 million with a weighted average annual interest rate of 3.35%. As of December 31, 2017, letters of credit under the credit line were $0.2 million and borrowings were $11.7 million with a weighted average annual interest rate of 2.69%. As of December 31, 2018 and 2017, there was remaining availability on the credit line of $1.3 million and $4.1 million, respectively. The estimated fair value of PolyOne’s debt instruments at December 31, 2018 and 2017 was $1,316.8 million and $1,343.3 million, respectively, compared to carrying values of $1,355.6 million and $1,309.0 million as of December 31, 2018 and 2017, 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. Aggregate maturities of the principal amount of debt for the next five years and thereafter are as follows:
Included in Interest expense, net for the years ended December 31, 2018, 2017 and 2016 was interest income of $3.1 million, $0.7 million and $0.8 million, respectively. Total interest paid on debt was $61.0 million in 2018, $59.4 million in 2017 and $56.3 million in 2016. |
Leasing Arrangements |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leasing Arrangements | Note 6 — LEASING ARRANGEMENTS We lease certain manufacturing facilities, warehouse space, machinery and equipment, automobiles, railcars, computers and software under operating leases. Lease expense from continuing operations was $25.9 million in 2018, $25.2 million in 2017 and $23.0 million in 2016. Future minimum lease payments under non-cancelable operating leases with initial lease terms longer than one year as of December 31, 2018 are as follows:
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Inventories, Net |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, Net | Note 7 — 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 8 — PROPERTY, NET Components of Property, net are as follows:
Depreciation expense from continuing operations was $62.6 million in 2018, $61.2 million in 2017 and $57.8 million in 2016. |
Other Balance Sheet Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Balance Sheet Liabilities | Note 9 — OTHER BALANCE SHEET LIABILITIES Other liabilities at December 31, 2018 and 2017 consist of the following:
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Employee Benefit Plans |
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Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Note 10 — EMPLOYEE BENEFIT PLANS We recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur. These gains and losses are generally only measured annually as of December 31 and, accordingly, are recorded during the fourth quarter of each year. We recognized a charge of $15.6 million and $3.3 million in the fourth quarter of 2018 and 2017, respectively, related to the actuarial losses during the year. We recognized a benefit of $8.4 million in the fourth quarter of 2016, related to the actuarial gain during the year. All U.S. qualified defined benefit pension plans are frozen, no longer accrue benefits and are closed to new participants. We have foreign pension plans that accrue benefits. The plans generally provide benefit payments using a formula that is based upon employee compensation and length of service. The following tables present the change in benefit obligation, change in plan assets and components of funded status for defined benefit pension and post-retirement health care benefit plans.
Amounts included in the accompanying Consolidated Balance Sheets as of December 31 are as follows:
As of December 31, 2018 and 2017, we had plans with total projected and accumulated benefit obligations in excess of the related plan assets as follows:
Weighted-average assumptions used to determine benefit obligations at December 31:
The following table summarizes the components of net periodic benefit cost or gain that was recognized during each of the years in the three-year period ended December 31, 2018.
In 2018, we recognized a $15.6 million mark-to-market charge that was primarily a result of actual asset returns that were lower than our assumed returns. Partially offsetting the lower asset returns was the increase in our year end discount rates from 3.62% to 4.11%. In 2017, we recognized a $3.3 million mark-to-market charge that was primarily a result of the decrease in our year end discount rates, from 3.97% to 3.62%, and updated mortality assumptions, partially offset by a higher than expected return on assets. In 2016, we recognized an $8.4 million mark-to-market gain that was primarily a result of actual asset returns that were $5.7 million higher than our assumed returns and updated mortality assumptions. Partially offsetting these gains was the decrease in our year end discounts rates, from 4.10% to 3.97%. Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
The expected long-term rate of return on pension assets was determined after considering the historical and forward looking long-term asset returns by asset category and the expected investment portfolio mix. Our pension investment strategy is to diversify the portfolio among asset categories to enhance the portfolio’s risk-adjusted return as well as insulate it from exposure to changes in interest rates. Our asset mix considers the duration of plan liabilities, historical and expected returns of the investments, and the funded status of the plan. The pension asset allocation is reviewed and actively managed based on the funded status of the plan. Based on the current funded status of the plan, our pension asset investment allocation guidelines are to invest 83% in fixed income securities and 17% in equity securities. The plan keeps a minimal amount of cash available to fund benefit payments. These investments may include funds of multiple asset investment strategies and funds of hedge funds. The fair values of pension plan assets at December 31, 2018 and 2017, by asset category, are as follows:
Pension Plan Assets Other assets are primarily insurance contracts for international plans. The U.S. equity common collective funds are predominately invested in equity securities actively traded in public markets. The international and global equity common collective funds have broadly diversified investments across economic sectors and focus on low volatility, long-term investments. The fixed income common collective funds consist primarily of publicly traded United States fixed interest obligations (principally investment grade bonds and government securities). Level 1 assets are valued based on quoted market prices. Level 2 investments are valued based on quoted market prices and/or other market data for the same or comparable instruments and transactions of the underlying fixed income investments. The insurance contracts included in the other asset category are valued at the transacted price. Common collective funds are valued at the net asset value of units held by the fund at year end. The unit value is determined by the total value of fund assets divided by the total number of units of the fund owned. The estimated future benefit payments for our pension and health care plans are as follows:
We currently estimate that 2019 employer contributions will be $4.3 million to all qualified and non-qualified pension plans and $0.9 million to all healthcare benefit plans. PolyOne sponsors various voluntary retirement savings plans (RSP). Under the provisions of the plans, eligible employees receive defined Company contributions and are eligible for Company matching contributions based on their eligible earnings contributed to the plan. In addition, we may make discretionary contributions to the plans for eligible employees based on a specific percentage of each employee’s compensation. Following are our contributions to the RSP:
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Commitments And Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments And Contingencies | Note 11 — 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, the United States District Court for the Western District of Kentucky in the case of Westlake Vinyls, Inc. v. Goodrich Corporation, et al., 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. Following the Court rulings, the parties to the litigation 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. We will adjust our accrual, in the future, consistent with any such future allocation of costs. Additionally, we continue to pursue available insurance coverage related to this matter and recognize gains as we receive reimbursement. 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. Under the agreement, The Geon Company agreed to indemnify Goodrich Corporation for certain environmental costs at the site. Neither PolyOne nor The Geon Company ever operated the facility. Since 2009, PolyOne, along with respondents Westlake Vinyls, Inc., and Goodrich Corporation, have worked with the United States Environmental Protection Agency (USEPA) on the investigation of contamination at the site as well as evaluation of potential remedies to address the contamination. The USEPA issued its Record of Decision (ROD) in September 2018, selecting a remedy consistent with our accrual assumptions. In October 2018, the USEPA sent a letter to the respondents inviting negotiation of an agreement to conduct the remedial design; that negotiation is ongoing. Our current reserve of $103.3 million is consistent with the USEPA's estimates contained in the ROD. On March 13, 2013, PolyOne acquired Spartech Corporation (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 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 Study Area (the LPRSA). 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 Remedial Investigation and Feasibility Study of the LPRSA. Franklin-Burlington has not admitted to any liability or agreed to bear any other costs for remediation or natural resource damage. In 2015, the Cooperating Parties submitted to the USEPA a remedial investigation report and feasibility study for the LPRSA, and are currently engaged in technical discussions with the USEPA to revise and finalize those documents. Neither of those documents contemplates who is responsible for remediation or how such costs might be allocated to PRPs. In March 2016, the USEPA issued a ROD selecting a remedy for an eight-mile portion of the LPRSA at an estimated and discounted cost of $1.4 billion. On March 31, 2016, the USEPA sent a Notice of Potential Liability to over 100 companies, including Franklin-Burlington, and several municipalities for this eight-mile portion. In September 2016, the USEPA reached an agreement with Occidental Chemical Corporation (OCC), which orders OCC to perform the remedial design for the lower eight mile portion of the Passaic River. In September 2017, the USEPA sent a letter to over 80 companies, including Franklin-Burlington, indicating that the USEPA would engage the recipients in an allocation process for the lower eight miles of the LPRSA, and has engaged a third-party allocator as part of that process. Along with other parties, Franklin-Burlington is participating in the development of this allocation process with the allocator retained by the USEPA, and this process is expected to continue into at least 2019. On June 30, 2018, OCC, independent of the USEPA, filed suit against over 100 named entities, including Franklin-Burlington, seeking contribution for past and future costs associated with the remediation of the lower eight-mile portion of the LPRSA. Based on the currently available information, we have not identified evidence that Franklin-Burlington contributed any of the primary contaminants of concern to the lower Passaic River. A timeline as to when an allocation of the remedial costs may be determined is not yet known and any allocation to Franklin-Burlington has not been determined. As a result of these uncertainties, we are unable to estimate a liability related to this matter and, as of December 31, 2018, we have not accrued for costs of remediation related to the lower Passaic River. The Consolidated Balance Sheets include accruals totaling $114.1 million and $117.1 million as of December 31, 2018 and 2017, 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 current 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 December 31, 2018. However, such additional costs, if any, cannot be currently estimated. The following table details the changes in the environmental accrued liabilities:
The environmental expenses noted in the table above are included in Cost of sales in the accompanying Consolidated Statements of Income (Loss), as are insurance recoveries received for previously incurred environmental costs. We received insurance recoveries of $4.3 million, $9.1 million and $6.1 million in 2018, 2017 and 2016, respectively. Such insurance recoveries are recognized as a gain when received. Other Litigation — We are involved in various pending or threatened claims, lawsuits and administrative proceedings, all arising from the ordinary course of business concerning commercial, product liability, employment and environmental matters that seek remedies or damages. We believe that the probability is remote that losses in excess of the amounts we have accrued would be materially adverse to our financial position, results of operations or cash flows. |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Note 12 — INCOME TAXES Income from continuing operations, before income taxes is summarized below based on the geographic location of the operation to which such earnings are attributable. Income from continuing operations, before income taxes consists of the following:
A summary of income tax expense from continuing operations is as follows:
Within the Total deferred income tax benefit, Foreign, was a benefit of $9.3 million and $9.5 million for the year ended December 31, 2018 and 2017, respectively. These benefits related to a 2017 European legal entity realignment. The Tax Cuts and Jobs Act (TCJA) was enacted on December 22, 2017. Among other things, effective in 2018, the TCJA reduced the US federal corporate tax rate from 35% to 21%, exempts from U.S. federal income taxation dividends from certain foreign corporations to their U.S. shareholders, eliminates or reduces the effect of various federal tax deductions and creates new taxes on certain outbound payments and future foreign earnings generated after 2017. The TCJA required U.S. companies to pay a one-time transition tax on earnings of foreign corporate subsidiaries that were at least ten-percent owned by such U.S. companies and that were previously deferred from U.S. taxation. As of December 31, 2018, we had completed our accounting for the tax effects of the enactment of the TCJA. In compliance with the one-year measurement period of the SEC's Staff Accounting Bulletin 118 (SAB 118) (issued December 22, 2017), we have finalized the effects of the TCJA on our existing deferred income tax balances, the one-time transition tax and, as discussed below, the impact the TCJA had on our indefinite reinvestment assertion pursuant to Accounting Principles Board 23 (APB 23). These finalized effects are included as components of income tax expense from continuing operations and are noted in the following tabular reconciliation. As of December 31, 2018, we had completed our analysis with respect to the impact of the TCJA on our continuing assertion that our foreign earnings are indefinitely reinvested pursuant to APB 23 of Accounting Standards Codification 740-30 (ASC 740-30). APB 23 provides guidance that US companies do not need to recognize tax effects on foreign earnings that are indefinitely reinvested. Our assertion has changed with respect to certain earnings of foreign affiliates in certain countries, which resulted in a recognition of tax liabilities. As of December 31, 2018, and noted in the Repatriation of certain foreign earnings from prior and current periods line in the following tabular reconciliation, we recognized an impact of 4.5% to our provision from a decision to repatriate prior year earnings after completing our analysis with respect to the TCJA and 1.2% pertaining to our decision to repatriate certain current year earnings. The rest of our foreign earnings are indefinitely reinvested pursuant to APB 23 and our policy. No deferred income taxes were recorded on outside basis differences as it was not practicable to determine the provision impact, if any, due to the complexities associated with this calculation. We elected to recognize the resulting tax on the global intangible low-taxed income (GILTI) as a period expense in the period the tax is incurred. A reconciliation of the applicable U.S. federal statutory tax rate to the consolidated effective income tax rate from continuing operations along with a description of significant or unusual reconciling items is included below.
The effective tax rates for all periods differed from the applicable U.S. federal statutory tax rate as a result of permanent items, state and local income taxes, differences in foreign tax rates and certain unusual items. Permanent items primarily consist of income or expense not taxable or deductible. Significant or unusual items impacting the effective income tax rate are described below. 2018 Significant items The increase in the Repatriation on certain foreign earnings from prior and current periods line item resulted from a decision to repatriate certain foreign earnings from current and prior periods. The benefit reflected in the Changes in valuation allowances line resulted from the realizability of a deferred tax asset for one of our foreign entities. 2017 Significant items The increase in the Foreign tax rate differential line item in the table above, compared to 2016, primarily related to a European legal entity realignment. Tax benefits on certain foreign investments decreased the effective tax rate by 6.8% ($14.4 million) related to distributions from foreign subsidiaries with net foreign tax credits. Components of our deferred tax assets (liabilities) as of December 31, 2018 and 2017 were as follows:
As of December 31, 2018, we had gross state net operating loss carryforwards of $151.7 million that expire between 2019 and 2033. Various foreign subsidiaries have gross net operating loss carryforwards totaling $152.3 million that expire between 2019 and 2037 with limited exceptions that have indefinite carryforward periods. Total tax valuation allowances decreased $6.2 million from the prior year primarily due to the ability to realize net operating loss carryforwards at a certain foreign entity based on expected future profitability. We have provided valuation allowances of $15.1 million against certain foreign and state net operating loss carryforwards that are expected to expire prior to utilization. We decided to repatriate certain current and prior year foreign earnings, which we have received in 2018 or will receive in the future, for which the provision impact (5.7%) has been included in the tabular rate reconciliation and in Other, net deferred tax liabilities ($8.2 million) above. No provision has been made for income taxes on the undistributed earnings of certain consolidated non-U.S. subsidiaries, primarily in Europe, of approximately $350 million as of December 31, 2018 as these amounts, consistent with our policy, continue to be indefinitely reinvested. We made worldwide income tax payments of $46.5 million and received refunds of $29.9 million in 2018. We made worldwide income tax payments of $56.5 million and $50.3 million in 2017 and 2016, respectively, and received refunds of $6.7 million and $2.4 million in 2017 and 2016, respectively. The Company records provisions for uncertain tax positions in accordance with ASC Topic 740, Income Taxes. A reconciliation of unrecognized tax benefits is as follows:
We recognize interest and penalties related to uncertain tax positions in the provision for income taxes. As of December 31, 2018 and 2017, we had $2.5 million and $3.9 million accrued for interest and penalties, respectively. Although the timing and outcome of tax settlements are uncertain, it is reasonably possible that during the next twelve months a reduction in unrecognized tax benefits may occur up to $1.2 million based on the outcome of tax examinations and the expiration of statutes of limitations. If all unrecognized tax benefits were recognized, the net impact on the provision for income tax expense would be a benefit of $10.9 million. The Company is currently being audited by federal, state and foreign taxing jurisdictions. With the exception of amended tax returns for 2004 to 2012, which are limited in scope to foreign tax credits, we are no longer subject to U.S. federal income tax examinations for periods preceding 2013. With limited exceptions, we are no longer subject to state tax and foreign tax examinations for periods preceding 2013. For the income tax benefit associated with the July 19, 2017 sale of DSS, refer to Note 3, Discontinued Operations. |
Share-Based Compensation |
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Share-Based Compensation | Note 13 — SHARE-BASED COMPENSATION Share-based compensation cost is based on the value of the portion of share-based payment awards that are ultimately expected to vest during the period. Share-based compensation cost recognized in the accompanying Consolidated Statements of Income (Loss) includes compensation cost for share-based payment awards based on the grant date fair value estimated in accordance with the provision of FASB ASC Topic 718, Compensation — Stock Compensation. Share-based compensation expense is based on awards expected to vest and therefore has been reduced for estimated forfeitures. Equity and Performance Incentive Plans The PolyOne Corporation 2017 Equity and Incentive Compensation Plan reserved 2.5 million common shares for the award of a variety of share-based compensation alternatives, including non-qualified stock options, incentive stock options, restricted stock, restricted stock units (RSUs), performance shares, performance units and stock appreciation rights (SARs). It is anticipated that all share-based grants and awards that are earned and exercised will be issued from PolyOne common shares that are held in treasury. Share-based compensation is included in Selling and administrative expense in the accompanying Consolidated Statements of Income (Loss). A summary of compensation expense by type of award follows:
Stock Appreciation Rights During the years ended December 31, 2018, 2017 and 2016, the total number of SARs granted were 0.3 million, 0.5 million and 0.5 million, respectively. Awards vest in one-third increments upon the later of the attainment of time-based vesting over a three-year service period and stock price targets. Awards granted in 2018, 2017 and 2016 are subject to an appreciation cap of 200% of the base price. SARs have contractual terms of ten years from the date of the grant. The SARs were valued using a Monte Carlo simulation method as the vesting is dependent on the achievement of certain stock price targets. The SARs have time and market-based vesting conditions but vest no earlier than their three year graded vesting schedule. The expected term is an output from the Monte Carlo model, and are derived from employee exercise assumptions that are based on PolyOne historical exercise experience. The expected volatility was determined based on the average weekly volatility for our common shares for the contractual life of the awards. The expected dividend assumption was determined based upon PolyOne's dividend yield at the time of grant. The risk-free rate of return was based on available yields on U.S. Treasury bills of the same duration as the contractual life of the awards. Forfeitures were estimated at 3% per year based on our historical experience. The following is a summary of the weighted average assumptions related to the grants issued during 2018, 2017 and 2016:
A summary of SAR activity for 2018 is presented below:
The total intrinsic value of SARs exercised during 2018, 2017 and 2016 was $6.5 million, $7.6 million and $2.8 million, respectively. As of December 31, 2018, there was $2.7 million of total unrecognized compensation cost related to SARs, which is expected to be recognized over the weighted average remaining vesting period of 23 months. Restricted Stock Units RSUs represent contingent rights to receive one common share at a future date provided certain vesting criteria are met. During 2018, 2017 and 2016, the total number of RSUs granted were 0.2 million, 0.3 million and 0.2 million, respectively. These RSUs, which vest on the third anniversary of the grant date, were granted to executives and other key employees. Compensation expense is measured on the grant date using the quoted market price of our common shares and is recognized on a straight-line basis over the requisite service period. As of December 31, 2018, 0.6 million RSUs remain unvested with a weighted-average grant date fair value of $34.80. Unrecognized compensation cost for RSUs at December 31, 2018 was $8.1 million, which is expected to be recognized over the weighted average remaining vesting period of 21 months. |
Segment Information |
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Segment Information | Note 14 — SEGMENT INFORMATION Operating income is the primary measure that is reported to our chief operating decision maker (CODM) 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 closure and phase-in costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs, along with related gains from insurance recoveries, 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 CODM. These costs are included in Corporate and eliminations. Segment assets are primarily customer receivables, inventories, net property, plant and equipment, intangible assets and goodwill. Intersegment sales are generally accounted for at prices that approximate those for similar transactions with unaffiliated customers. Corporate and eliminations assets and liabilities primarily include cash, debt, pension and other employee benefits, environmental liabilities, retained assets and liabilities of discontinued operations, and other unallocated corporate assets and liabilities. The accounting policies of each segment are consistent with those described in Note 1, Description of Business and Summary of Significant Accounting Policies. PolyOne has four reportable segments. Previously, PolyOne had five reportable segments. However, as a result of the divestiture of DSS, we have removed DSS as a separate operating segment and its results are presented as a discontinued operation. Historical information has been retrospectively adjusted to reflect these changes. The following is a description of each of our four reportable segments. Color, Additives and Inks Color, Additives and Inks is a leading provider of specialized custom color and additive concentrates in solid and liquid form for thermoplastics, dispersions for thermosets, as well as specialty inks, plastisols, and vinyl slush molding solutions. Color and additive solutions include an innovative array of colors, special effects and performance-enhancing and eco-friendly solutions. When combined with polymer resins, our solutions help customers achieve differentiated specialized colors and effects targeted at the demands of today’s highly design-oriented consumer and industrial end markets. Our additive concentrates encompass a wide variety of performance and process enhancing characteristics and are commonly categorized by the function that they perform, including UV light stabilization and blocking, antimicrobial, anti-static, blowing or foaming, antioxidant, lubricant, oxygen and visible light blocking and productivity enhancement. Our colorant and additives concentrates are used in a broad range of polymers, including those used in medical and pharmaceutical devices, food packaging, personal care and cosmetics, transportation, building products, wire and cable markets. We also provide custom-formulated liquid systems that meet a variety of customer needs and chemistries, including polyester, vinyl, natural rubber and latex, polyurethane and silicone. Our offerings also include proprietary inks and latexes for diversified markets such as recreational and athletic apparel, construction and filtration, outdoor furniture and healthcare. Our liquid polymer coatings and additives are largely based on vinyl and are used in a variety of markets, including building and construction, consumer, healthcare, industrial, packaging, textiles, appliances, transportation, and wire and cable. Color, Additives and Inks has manufacturing, sales and service facilities located throughout North America, South America, Europe and Asia. Specialty Engineered Materials Specialty Engineered Materials is a leading provider of specialty polymer formulations, services and solutions for designers, assemblers and processors of thermoplastic materials across a wide variety of markets and end-use applications. Our product portfolio, which we believe to be one of the most diverse in our industry, includes specialty formulated high-performance polymer materials that are manufactured using thermoplastic resins and elastomers, which are then combined with advanced polymer additives, reinforcement, filler, colorant and/or biomaterial technologies. We also have what we believe is the broadest composite platform of solutions, which include a full range of products from long glass and carbon fiber technology to thermoset and thermoplastic composites. These solutions meet a wide variety of unique customer requirements for light weighting. Our technical and market expertise enables us to expand the performance range and structural properties of traditional engineering-grade thermoplastic resins to meet evolving customer needs. Specialty Engineered Materials has manufacturing, sales and service facilities located throughout North America, Europe, and Asia. Our product development and application reach is further enhanced by the capabilities of our Innovation Centers in the United States, Germany and China, which produce and evaluate prototype and sample parts to help assess end-use performance and guide product development. Our manufacturing capabilities are targeted at meeting our customers’ demand for speed, flexibility and critical quality. Performance Products and Solutions Performance Products and Solutions is comprised of the Geon Performance Materials (Geon) and Producer Services business units. The Geon business delivers an array of products and services for vinyl molding and extrusion processors located in North America and Asia. The GeonTM brand name carries strong recognition globally. Geon's products are sold to manufacturers of durable plastic parts and consumer-oriented products. We also offer a wide range of services including materials testing, component analysis, custom formulation development, colorant and additive services, part design assistance, structural analysis, process simulations, mold design and flow analysis and extruder screw design. Vinyl is used across a broad range of markets and applications, including, but not limited to: healthcare, wire and cable, building and construction, consumer and recreational products and transportation and packaging. The Producer Services business unit offers contract manufacturing and outsourced polymer manufacturing services to resin producers and polymer marketers, primarily in the United States and Mexico, as well as its own proprietary formulations for certain applications. As a strategic and integrated supply chain partner, Producer Services offers resin producers a capital-efficient way to effectively develop custom products for niche markets by leveraging its extensive process technology expertise, broad manufacturing capabilities and geographic locations. Distribution The Distribution business distributes more than 4,000 grades of engineering and commodity grade resins, including PolyOne-produced solutions, principally to the North American, Central American and Asian markets. These products are sold to over 6,500 custom injection molders and extruders who, in turn, convert them into plastic parts that are sold to end-users in a wide range of industries. Representing over 25 major suppliers, we offer our customers a broad product portfolio, just-in-time delivery from multiple stocking locations and local technical support. Expansion in Central America and Asia have bolstered Distribution's ability to serve the specialized needs of customers globally. Financial information by reportable segment is as follows:
Our sales are primarily to customers in the United States, Canada, Mexico, Europe, South America and Asia, and the majority of our assets are located in these same geographic areas. The following is a summary of sales and long-lived assets based on the geographic areas where the sales originated and where the assets are located:
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Derivatives and Hedging |
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Derivatives and Hedging | Note 15 — DERIVATIVES AND HEDGING We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures we may enter into various derivative transactions. As of December 31, 2018, we had derivatives designated as net investment hedging and cash flow hedging instruments. Net Investment Hedge During October and December of 2018, as a means of mitigating the impact of currency fluctuations on our Euro investments in foreign entities, we executed a total of six cross currency swaps, in which we will pay fixed-rate interest in Euros and receive fixed-rate interest in U.S. dollars with a combined notional amount of 250.0 million Euros and which mature in March 2023. This effectively converts a portion of our U.S. Dollar denominated fixed-rate debt to Euro denominated fixed-rate debt. That conversion resulted in a benefit of $2.0 million for the year ended December 31, 2018, which was recognized within Interest expense, net within the Condensed Consolidated Statements of Income. We designated the swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. For the year ended December 31, 2018, a $2.0 million gain was recognized within translation adjustments in AOCI, net of tax. Cash Flow Hedging Instruments In August 2018, we entered into two interest rate swaps with a combined notional amount of $150.0 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $150.0 million of our floating rate debt to a fixed rate. We began to receive floating rate interest payments based upon one month U.S. dollar LIBOR and in return are obligated to pay interest at a fixed rate of 2.732% until November 2022. We have designated these swap contracts as cash flow hedges pursuant to ASC 815, Derivatives and Hedging. For the year ended December 31, 2018, the amount of expense recognized within Interest expense, net in our Consolidated Statements of Income (Loss) was $0.3 million and $1.3 million of loss was recognized in AOCI, net of tax. All of our derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. We determine the fair value of our derivatives based on valuation methods, which project future cash flows and discount the future amounts present value using market based observable inputs, including interest rate curves and foreign currency rates. The fair value of derivative financial instruments recognized in the Condensed Consolidated Balance Sheets is as follows:
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Selected Quarterly Financial Data (Unaudited) |
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Selected Quarterly Financial Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) | Note 16 — SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 17 — SUBSEQUENT EVENTS On January 2, 2019, the Company completed the acquisition of Fiber-Line for $120.2 million, subject to a working capital adjustment and contingent earn-out consideration over a two-year period. The Fiber-Line results will be reported in the Specialty Engineered Materials segment. |
Description of Business and Summary of Significant Accounting Policies (Policy) |
12 Months Ended |
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Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounting Standards Adopted and Accounting Standards Not Yet Adopted | Accounting Standards Adopted On January 1, 2018, the Company adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers and all related amendments (the Standard), for all contracts using the modified retrospective method. The Standard implements a five-step process for revenue recognition that focuses on transfer of control and defines a contract as “an agreement between two or more parties that creates legally enforceable rights and obligations.” The adoption of the Standard did not materially impact the timing and measurement of revenue recognition. Additionally, we concluded that the methodology for which we historically estimated and recognized variable consideration (e.g., rebates) is consistent with the requirements of the Standard. As a result, we did not recognize a cumulative effect adjustment to the opening balance of retained earnings. At contract inception, PolyOne assesses the goods and services promised to a customer and identifies a performance obligation for each promised good or service that is distinct. Our contracts, generally in the form of purchase orders or written contracts, specify the product or service that is promised to the customer. The typical contract life is less than 12 months and contains only one performance obligation, to provide conforming goods or services to the customer. Revenue is recognized at the point in time when control of the product is transferred to the customer, which typically occurs when products are shipped from our facilities with the exception of certain contract manufacturing arrangements. The revenue streams within the Company are consistent with those disclosed for our reportable segments, within Note 14, Segment Information. For descriptions of our product offerings and segments see Note 14, Segment Information. We offer more than 35,000 polymer solutions to over 10,000 customers across the world. No customer accounts for more than 3% of our consolidated revenues and we do not have a high concentration of business in one particular end market. In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07). This standard requires the presentation of the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. All other components of net periodic benefit cost must be presented below operating income. The Company has adopted ASU 2017-07 on January 1, 2018. ASU 2017-07 provides a practical expedient to utilize previously disclosed components of net periodic benefit costs as an estimate for retrospective presentation. Utilizing this practical expedient, the Company reclassified non-service components of net periodic benefit cost from Cost of sales and Selling and administrative expense into Other income, net on the Consolidated Statements of Income. The adoption of ASU 2017-07 resulted in $9.6 million of costs for the year ended December 31, 2018 and gains of $4.7 million, and $18.6 million for the years ended December 31, 2017 and 2016, respectively, of the non-service components of net periodic benefit presented in Other income, net. For additional detail on the components of our annual net periodic benefit cost, see Note 10, Employee Benefit Plans. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other than Inventory (ASU 2016-16), which requires companies to recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the income statement as income tax expense or benefit in the period the sale or transfer occurs. We recognized an adjustment of $17.0 million to beginning retained earnings upon adoption of this standard on January 1, 2018 from transactions completed as of December 31, 2017. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). This amendment to the hedge accounting model better aligns an entity's risk management activities with its financial reporting by expanding an entity's ability to hedge risk components, eliminating the separate measurement and reporting of hedge ineffectiveness and reducing the complexity of applying certain aspects of hedge accounting. The Company has early adopted ASU 2017-12 as of July 1, 2018. For additional disclosure and detail on the hedge relationships entered into by the Company, see Note 15, Derivatives and Hedging. Accounting Standards Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 was issued to increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. ASU 2016-02 is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We will adopt the new standard on the required effective date of January 1, 2019 using the transition option, “Comparatives Under 840 Option,” established by ASU 2018-11, Leases (Topic 842), Targeted Improvements (ASU 2018-11). This transition option was released by the FASB to reduce the cost and complexity associated with reflecting the new standard in prior periods presented. We will also elect the practical expedient package related to the identification, classification and accounting for initial direct costs whereby prior conclusions do not have to be reassessed for leases that commenced before the effective date. As we will not reassess such conclusions, the Company does not plan to adopt the practical expedient to use hindsight to determine the likelihood of whether a lease will be extended, terminated or whether a purchase option will be exercised. A cross-functional implementation team is finalizing policy elections, the discount rate to be used based on January 1, 2019 data, and business processes and controls to support recognition and disclosure under the new standard. The primary impact upon adoption will be the recognition of right of use assets and lease obligations, on a discounted basis, of our minimum lease obligations, as disclosed in Note 6, Leasing Arrangements. We currently do not expect ASU 2016-12 to have a material effect on our Consolidated Statements of Income. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 changes the impairment model for most financial instruments. Current guidance requires the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. Under ASU 2016-13, the Company will be required to use a current expected credit loss model (CECL) that will immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. This guidance becomes effective for the Company on January 1, 2020, including the interim periods in the year. The Company is currently evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures. |
Consolidation And Basis Of Presentation | Consolidation and Basis of Presentation The consolidated financial statements include the accounts of PolyOne and its subsidiaries. All majority-owned affiliates over which we have control are consolidated. Transactions with related parties, including joint ventures, are in the ordinary course of business. Historical information has been retrospectively adjusted to reflect the classification of discontinued operations. |
Reclassifications | Reclassifications Certain reclassifications of the prior period amounts and presentation have been made to conform to the presentation for the current period for the adoption of ASU 2017-07 as further described in the Accounting Standards Adopted section of this Note. |
Use Of Estimates | Use of Estimates Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from these estimates. |
Cash And Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments purchased with a maturity of less than three months to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. |
Allowance For Doubtful Accounts | Allowance for Doubtful Accounts We evaluate the collectability of receivables based on a combination of factors, each of which are adjusted if specific circumstances change. We reserve for amounts determined to be uncollectible based on a specific customer’s inability to meet its financial obligation to us. We also record a general reserve based on the age of receivables past due, economic conditions and historical experience. In estimating the allowance, we take into consideration the existence of credit insurance. |
Inventories | Inventories External purchases of raw materials and finished goods are valued at weighted average cost. Raw materials and finished goods are stated at the lower of cost or market using the first-in, first-out (FIFO) method. |
Long-lived Assets | Long-lived Assets Property, plant and equipment is carried at cost, net of depreciation and amortization that is computed using the straight-line method over the estimated useful lives of the assets, which generally ranges from 3 to 15 years for machinery and equipment and up to 40 years for buildings. We depreciate certain assets associated with closing manufacturing locations over a shortened life (through the cease-use date). Software is amortized over periods not exceeding 10 years. Property, plant and equipment is generally depreciated on accelerated methods for income tax purposes. We expense repair and maintenance costs as incurred. We capitalize replacements and betterments that increase the estimated useful life of an asset. We retain fully depreciated assets in property and accumulated depreciation accounts until we remove them from service. In the case of sale, retirement or disposal, the asset cost and related accumulated depreciation balance is removed from the respective account, and the resulting net amount, less any proceeds, is included as a component of income from continuing operations in the accompanying Consolidated Statements of Income (Loss). |
Leases | We account for operating and capital leases under the provisions of FASB Accounting Standards Codification (ASC) Topic 840, Leases. |
Intangible Assets | Finite-lived intangible assets, which consist primarily of customer relationships, patents and technology are amortized over their estimated useful lives. The remaining useful lives range up to 20 years. |
Impairment or Disposal of Long-Lived Assets | We assess the recoverability of long-lived assets when events or changes in circumstances indicate that we may not be able to recover the assets’ carrying amount. We measure the recoverability of assets to be held and used by a comparison of the carrying amount of the asset to the expected future undiscounted cash flows associated with the asset. We measure the amount of impairment of long-lived assets as the amount by which the carrying value of the asset exceeds the fair value of the asset, which is generally determined based on projected discounted future cash flows or appraised values. |
Goodwill And Indefinite Lived Intangible Assets | Goodwill and Indefinite Lived Intangible Assets In accordance with the provisions of FASB ASC Topic 350, Intangibles — Goodwill and Other, we assess the fair value of goodwill, quantitatively or qualitatively, on an annual basis or at an interim date if potential impairment indicators are present. Goodwill is the excess of the purchase price paid over the fair value of the net assets of the acquired business. Goodwill is tested for impairment, quantitatively or qualitatively, at the reporting unit level. Our reporting units have been identified at the operating segment level, or in most cases, one level below the operating segment level. Goodwill is allocated to the reporting units based on the estimated fair value at the date of acquisition. Our annual measurement date for testing impairment of goodwill and indefinite-lived intangibles is October 1. We completed our testing of impairment as of October 1, noting no impairment in 2018, 2017 or 2016. There are no reporting units identified as at-risk of future impairment. The future occurrence of a potential indicator of impairment would require an interim assessment for some or all of the reporting units prior to the next required annual assessment on October 1, 2019. We test our goodwill either quantitatively or qualitatively for impairment. For our quantitative approach, we use an income approach to estimate the fair value of our reporting units. The income approach uses a reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that is determined based on current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs and number of units, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, terminal value margin rates, future capital expenditures and changes in future working capital requirements. We validate our estimates of fair value under the income approach by considering the implied control premium and conclude whether the implied control premium is reasonable based on other recent market transactions. A qualitative approach for both goodwill and indefinite-lived intangible assets is performed if the last quantitative test exceeded certain thresholds. During our qualitative approach, we assess whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we determine it is more likely than not that the fair value is less than carrying value, a quantitative impairment test is performed for each asset, as described above. Indefinite-lived intangible assets primarily consist of the GLS, ColorMatrix and Gordon Composites trade names. Indefinite-lived intangible assets are tested, quantitatively or qualitatively, for impairment annually at the same time we test goodwill for impairment. For our quantitative approach, the implied fair value of indefinite-lived intangible assets is determined based on significant unobservable inputs, as summarized below. The fair value of the trade names is calculated using a “relief from royalty” methodology. This approach involves two steps (1) estimating reasonable royalty rates for the trade name and (2) applying this royalty rate to a net sales stream and discounting the resulting cash flows to determine fair value using a weighted-average cost of capital that is determined based on current market conditions. This fair value is then compared with the carrying value of the trade name. |
Litigation Reserves | Litigation Reserves FASB ASC Topic 450, Contingencies, requires that we accrue for loss contingencies associated with outstanding litigation, claims and assessments for which management has determined it is probable that a loss contingency exists and the amount of loss can be reasonably estimated. We recognize expense associated with professional fees related to litigation claims and assessments as incurred. |
Derivative Financial Instruments | Derivative Financial Instruments FASB ASC Topic 815, Derivative and Hedging, requires that all derivative financial instruments, such as foreign exchange contracts, be recognized in the financial statements and measured at fair value, regardless of the purpose or intent in holding them. We are exposed to foreign currency changes and to changes in cash flows due to changes in our contractually specified interest rates (e.g, LIBOR) in the normal course of business. We have established policies and procedures that manage this exposure through the use of financial instruments. By policy, we do not enter into these instruments for trading purposes or speculation. We formally assess, designate and document, as a hedge of an underlying exposure, the qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, in accordance with ASU 2017-12, we assess at inception whether the financial instruments used in the hedging transaction are highly effective at offsetting changes in either the fair values or cash flows of the underlying exposures. If highly effective, any subsequent test may be done qualitatively. The net interest payments accrued each month for effective instruments designated as a hedge are reflected in net income as adjustments of interest expense and the remaining change in the fair value of the derivatives is recorded as a component of Accumulated Other Comprehensive Income (AOCI). Instruments not designated as hedges are adjusted to fair value at each period end, with the resulting gains and losses recognized in the accompanying Consolidated Statements of Income (Loss) immediately. |
Pension And Other Post-Retirement Plans | Pension and Other Post-retirement Plans We account for our pensions and other post-retirement benefits in accordance with FASB ASC Topic 715, Compensation — Retirement Benefits. We immediately recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosures of the fair value of financial instruments. The estimated fair values of financial instruments were principally based on market prices where such prices were available and, where unavailable, fair values were estimated based on market prices of similar instruments. |
Foreign Currency Translation | Foreign Currency Translation Revenues and expenses are translated at average currency exchange rates during the related period. Assets and liabilities of foreign subsidiaries are translated using the exchange rate at the end of the period. The resulting translation adjustments are recorded as accumulated other comprehensive income or loss. Gains and losses resulting from foreign currency transactions, including intercompany transactions that are not considered long-term investments, are included in Other income (expense), net in the accompanying Consolidated Statements of Income (Loss). |
Revenue Recognition | Revenue Recognition We recognize revenue once control of the product is transferred to the customer, which typically occurs when products are shipped from our facilities. |
Shipping And Handling Costs | Shipping and Handling Costs Shipping and handling costs are included in cost of sales. |
Research And Development Expense | Research and Development Expense Research and development costs of $56.3 million in 2018, $52.1 million in 2017 and $50.4 million in 2016 are charged to expense as incurred. |
Environmental Costs | Environmental Costs We expense costs that are associated with managing hazardous substances and pollution in ongoing operations on a current basis. Costs associated with environmental contamination are accrued when it becomes probable that a liability has been incurred and our proportionate share of the cost can be reasonably estimated. Any such provision is recognized using the Company's best estimate of the amount of loss incurred, or at the lower end of an estimated range, when a single best estimate is not determinable. In some cases, the Company may be able to recover a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts only when they are collected. |
Share-Based Compensation | Share-Based Compensation We account for share-based compensation under the provisions of FASB ASC Topic 718, Compensation - Stock Compensation, which requires us to estimate the fair value of share-based awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying Consolidated Statements of Income (Loss). |
Income Taxes | Income Taxes Deferred income tax liabilities and assets are determined based upon the differences between the financial reporting and tax basis of assets and liabilities and are measured using the tax rate and laws currently in effect. In accordance with FASB ASC Topic 740, Income Taxes, we evaluate our deferred income taxes to determine whether a valuation allowance should be established against the deferred tax assets or whether the valuation allowance should be reduced based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. |
Description of Business and Summary of Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Changes in accumulated other comprehensive loss in 2018, 2017 and 2016 were as follows:
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Business Combinations (Tables) |
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Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The fair value of intangible assets acquired during the year ended December 31, 2018, including their estimated useful lives and valuation methodology are as follows:
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Discontinued Operations (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations | The following table summarizes the discontinued operations associated with DSS for the years ended December 31, 2018, 2017 and 2016, which is reflected within the Loss from discontinued operations, net of income taxes line of the Consolidated Statements of Income (Loss):
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Goodwill And Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill By Operating Segment | Goodwill as of December 31, 2018 and 2017 and changes in the carrying amount of goodwill by segment were as follows:
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Carrying Value And Accumulated Amortization Of 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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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | We expect finite-lived intangibles amortization expense for the next five years as follows:
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Financing Arrangements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Total debt consisted of the following:
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Schedule of Maturities of Long-term Debt | Aggregate maturities of the principal amount of debt for the next five years and thereafter are as follows:
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Leasing Arrangements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under non-cancelable operating leases with initial lease terms longer than one year as of December 31, 2018 are as follows:
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Inventories (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Inventories | Components of Inventories, net are as follows:
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Property, Net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Property, Net | Components of Property, net are as follows:
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Other Balance Sheet Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Other Liabilities | Other liabilities at December 31, 2018 and 2017 consist of the following:
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Employee Benefit Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change In Benefit Obligation, Change In Plan Assets And Components Of Funded Status | The following tables present the change in benefit obligation, change in plan assets and components of funded status for defined benefit pension and post-retirement health care benefit plans.
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Amounts Included In Consolidated Balance Sheets | Amounts included in the accompanying Consolidated Balance Sheets as of December 31 are as follows:
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Schedule Of Projected And Accumulated Benefit Obligations In Excess Of Plan Assets | As of December 31, 2018 and 2017, we had plans with total projected and accumulated benefit obligations in excess of the related plan assets as follows:
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Weighted Average Assumptions Used To Determine Net Periodic Benefit Cost and Benefit Obligation | Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Weighted-average assumptions used to determine benefit obligations at December 31:
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Components Of Net Period Benefit Cost | The following table summarizes the components of net periodic benefit cost or gain that was recognized during each of the years in the three-year period ended December 31, 2018.
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Fair Values Of Pension Plan Assets | The fair values of pension plan assets at December 31, 2018 and 2017, by asset category, are as follows:
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Estimated Future Benefit Payments | The estimated future benefit payments for our pension and health care plans are as follows:
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Schedule Of Contributions To The Retirement Savings Plan | Following are our contributions to the RSP:
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Commitments And Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Changes In Environmental Accrued Liabilities | The following table details the changes in the environmental accrued liabilities:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Income (Loss) Before Income Taxes | Income from continuing operations, before income taxes consists of the following:
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Summary Of Income Tax (Expense) Benefit | A summary of income tax expense from continuing operations is as follows:
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Difference Between Effective Income Tax Rate And U.S. Statutory Rate | A reconciliation of the applicable U.S. federal statutory tax rate to the consolidated effective income tax rate from continuing operations along with a description of significant or unusual reconciling items is included below.
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Components Of Deferred Tax Liabilities And Assets | Components of our deferred tax assets (liabilities) as of December 31, 2018 and 2017 were as follows:
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Changes In Unrecognized Tax Benefits | The Company records provisions for uncertain tax positions in accordance with ASC Topic 740, Income Taxes. A reconciliation of unrecognized tax benefits is as follows:
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Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Compensation Expense | Share-based compensation is included in Selling and administrative expense in the accompanying Consolidated Statements of Income (Loss). A summary of compensation expense by type of award follows:
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Summary Of Assumptions Related To Grants | The following is a summary of the weighted average assumptions related to the grants issued during 2018, 2017 and 2016:
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Summary Of Stock Appreciation Rights | A summary of SAR activity for 2018 is presented below:
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Financial information by reportable segment is as follows:
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Schedule Of Revenue And Long-Lived Assets | Our sales are primarily to customers in the United States, Canada, Mexico, Europe, South America and Asia, and the majority of our assets are located in these same geographic areas. The following is a summary of sales and long-lived assets based on the geographic areas where the sales originated and where the assets are located:
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Derivatives and Hedging (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair value of derivative financial instruments recognized in the Condensed Consolidated Balance Sheets is as follows:
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Selected Quarterly Financial Data (Unaudited) (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Quarterly Financial Data |
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Discontinued Operations - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Jul. 19, 2017 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Loss on sale of business, net of tax | $ 0.0 | $ (227.7) | $ 0.0 | |
Designed Structures and Solutions | Discontinued Operations, Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Sales price of business | $ 115.0 | |||
Loss on sale of business, net of tax | $ (229.0) |
Discontinued Operations - Schedule of Discontinued Operations (Details) - Designed Structures and Solutions - Discontinued Operations, Disposed of by Sale - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||
Sales | $ 0.0 | $ 222.1 | $ 401.2 |
Loss on sale | (1.8) | (295.6) | 0.0 |
Loss from operations | 0.0 | (8.6) | (4.3) |
Loss before taxes | (1.8) | (304.2) | (4.3) |
Income tax benefit | 0.5 | 73.0 | 3.1 |
Loss from discontinued operations, net of taxes | $ (1.3) | $ (231.2) | $ (1.2) |
Goodwill And Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of other finite-lived intangible assets | $ 25.9 | $ 21.6 | $ 17.9 |
Goodwill And Intangible Assets - Carrying Value And Accumulated Amortization Of Intangible Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (141.8) | $ (115.9) |
Currency Translation | (1.6) | 0.1 |
Acquisition Cost | 566.8 | 515.8 |
Net | 423.4 | 400.0 |
Indefinite-lived trade names | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived other intangible assets | 100.3 | 100.3 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquisition Cost | 278.4 | 257.3 |
Accumulated Amortization | (75.0) | (61.5) |
Currency Translation | (0.7) | 0.1 |
Net | 202.7 | 195.9 |
Patents, technology and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquisition Cost | 188.1 | 158.2 |
Accumulated Amortization | (66.8) | (54.4) |
Currency Translation | (0.9) | 0.0 |
Net | $ 120.4 | $ 103.8 |
Goodwill And Intangible Assets - Schedule of Future Amortization (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 26.2 |
2020 | 25.6 |
2021 | 25.3 |
2022 | 23.3 |
2023 | $ 20.8 |
Financing Arrangements - Long-Term Debt Maturity Schedule (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
2019 | $ 19.4 | |
2020 | 8.1 | |
2021 | 7.6 | |
2022 | 127.3 | |
2023 | 607.0 | |
Thereafter | 602.4 | |
Aggregate maturities | $ 1,371.8 | $ 1,323.5 |
Leasing Arrangements - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Leases [Abstract] | |||
Lease expense | $ 25.9 | $ 25.2 | $ 23.0 |
Leasing Arrangements - Schedule of Future Minimum Lease Payments, Operating Leases (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 24.5 |
2020 | 20.4 |
2021 | 12.4 |
2022 | 8.5 |
2023 | 5.8 |
Thereafter | 9.0 |
Total | $ 80.6 |
Inventories, Net - Components Of Inventories (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished products | $ 204.3 | $ 203.3 |
Work in process | 6.9 | 5.1 |
Raw materials and supplies | 133.5 | 119.4 |
Inventories, net | $ 344.7 | $ 327.8 |
Property, Net - Components of Property, Net (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Property, Plant and Equipment [Line Items] | |||
Property, gross | $ 1,447.5 | $ 1,382.2 | |
Less accumulated depreciation and amortization | (952.1) | (920.6) | |
Property, net | 495.4 | 461.6 | $ 426.3 |
Land and land improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, gross | 48.8 | 40.7 | |
Properties under capital leases | 0.1 | 1.7 | |
Building | |||
Property, Plant and Equipment [Line Items] | |||
Property, gross | 316.5 | 303.5 | |
Properties under capital leases | 3.6 | 16.5 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, gross | $ 1,082.2 | $ 1,038.0 |
Property, Net - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 62.6 | $ 61.2 | $ 57.8 |
Employee Benefit Plans - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Defined Benefit Plan Disclosure [Line Items] | |||||||
Mark-to-market actuarial net (losses) gains | $ (15.6) | $ (3.3) | $ 8.4 | $ (15.6) | $ 3.3 | $ (8.4) | |
Discount rate | 4.11% | 3.62% | 3.97% | 4.11% | 3.62% | 3.97% | 4.10% |
Actual (loss) return on plan assets | $ 5.7 | ||||||
Fixed income securities | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Percentage of equity securities | 83.00% | 83.00% | |||||
Equity Securities | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Percentage of equity securities | 17.00% | 17.00% | |||||
Pension Benefits | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Actual (loss) return on plan assets | $ (16.4) | $ 44.0 | |||||
Employer contributions to defined benefit plans | $ 4.3 | 4.3 | |||||
Health Care Benefits | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Employer contributions to defined benefit plans | $ 0.9 | $ 0.9 |
Employee Benefit Plans - Amounts Included In Consolidated Balance Sheets (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Pension Benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Non-current assets | $ 23.5 | $ 35.9 |
Accrued expenses and other liabilities | 4.1 | 4.4 |
Other non-current liabilities | 47.7 | 54.5 |
Health Care Benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Non-current assets | 0.0 | 0.0 |
Accrued expenses and other liabilities | 0.8 | 1.0 |
Other non-current liabilities | $ 6.6 | $ 7.8 |
Employee Benefit Plans - Schedule Of Projected And Accumulated Benefit Obligations In Excess Of Plan Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Pension Benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Projected benefit obligation | $ 56.4 | $ 63.9 |
Accumulated benefit obligation | 54.8 | 61.9 |
Fair value of plan assets | 4.6 | 5.1 |
Health Care Benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Projected benefit obligation | 7.4 | 8.8 |
Accumulated benefit obligation | 7.4 | 8.8 |
Fair value of plan assets | $ 0.0 | $ 0.0 |
Employee Benefit Plans - Weighted Average Assumptions Used To Determine Benefit Obligation (Details) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Weighted-average assumptions used to determine benefit obligations at December 31: | ||||
Discount rate | 4.11% | 3.62% | 3.97% | 4.10% |
Health Care Benefits | ||||
Weighted-average assumptions used to determine benefit obligations at December 31: | ||||
Discount rate | 3.98% | 3.60% | ||
Assumed health care cost trend rates at December 31: | ||||
Health care cost trend rate assumed for next year | 6.09% | 6.29% | ||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 4.50% | 4.50% | ||
Year that the rate reaches the ultimate trend rate | 2027 | 2027 |
Employee Benefit Plans - Components Of Net Period Benefit Cost (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Pension Benefits | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | |||
Service cost | $ 0.6 | $ 0.6 | $ 1.0 |
Interest cost | 17.6 | 19.3 | 20.7 |
Expected return on plan assets | (23.8) | (27.7) | (31.4) |
Mark-to-market actuarial net losses (gains) | 16.2 | 5.0 | (7.8) |
Other | (0.1) | 0.0 | 0.0 |
Net periodic cost (benefit) | 10.5 | (2.8) | (17.5) |
Health Care Benefits | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | |||
Service cost | 0.0 | 0.0 | 0.0 |
Interest cost | 0.3 | 0.4 | 0.5 |
Expected return on plan assets | 0.0 | 0.0 | 0.0 |
Mark-to-market actuarial net losses (gains) | (0.6) | (1.7) | (0.6) |
Other | 0.0 | 0.0 | 0.0 |
Net periodic cost (benefit) | $ (0.3) | $ (1.3) | $ (0.1) |
Employee Benefit Plans - Weighted Average Assumptions Used To Determine Net Periodic Benefit Cost (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Pension Benefits | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||
Discount rate | 3.62% | 3.97% | 4.10% |
Expected long-term return on plan assets | 5.09% | 6.08% | 6.87% |
Health Care Benefits | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||
Discount rate | 3.60% | 4.04% | 4.12% |
Expected long-term return on plan assets | 0.00% | 0.00% | 0.00% |
Assumed health care cost trend rates at December 31: | |||
Health care cost trend rate assumed for next year | 6.29% | 6.52% | 6.69% |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 4.50% | 4.50% | 4.50% |
Year that the rate reaches the ultimate trend rate | 2027 | 2027 | 2027 |
Employee Benefit Plans - Estimated Future Benefit Payments (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Pension Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
2019 | $ 38.3 |
2020 | 37.7 |
2021 | 38.2 |
2022 | 36.2 |
2023 | 35.9 |
2024 through 2028 | 162.4 |
Health Care Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
2019 | 0.9 |
2020 | 0.8 |
2021 | 0.8 |
2022 | 0.7 |
2023 | 0.7 |
2024 through 2028 | $ 2.5 |
Employee Benefit Plans - Schedule Of Contributions To The Retirement Savings Plan (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Defined Benefit Plan [Abstract] | |||
Retirement savings match | $ 10.1 | $ 9.1 | $ 8.2 |
Retirement benefit contribution | 0.0 | 1.6 | 4.0 |
Total contributions | $ 10.1 | $ 10.7 | $ 12.2 |
Income Taxes - Schedule Of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Domestic | $ 86.3 | $ 105.6 | $ 129.1 |
Foreign | 110.9 | 106.7 | 97.5 |
Income from continuing operations, before income taxes | $ 197.2 | $ 212.3 | $ 226.6 |
Commitments And Contingencies - Schedule Of Changes In Environmental Accrued Liabilities (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accrual for Environmental Loss Contingencies [Roll Forward] | |||
Balance at beginning of the year | $ 117.1 | $ 117.3 | $ 119.9 |
Environmental expenses | 23.2 | 14.8 | 8.3 |
Net cash payments | (26.0) | (15.2) | (11.0) |
Currency translation and other | (0.2) | 0.2 | 0.1 |
Balance at end of year | $ 114.1 | $ 117.1 | $ 117.3 |
Income Taxes - Summary Of Income Tax (Expense) Benefit (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Current income tax expense (benefit): | |||
Domestic - GILTI and U.S. tax reform transition tax | $ 3.7 | $ 24.0 | $ 0.0 |
Domestic - other | 10.2 | (11.2) | 27.8 |
Foreign | 27.3 | 27.3 | 22.5 |
Total current income tax expense | 41.2 | 40.1 | 50.3 |
Deferred income tax (benefit) expense: | |||
Domestic - U.S. tax reform, tax effect on net deferred tax liabilities | (6.8) | (20.1) | 0.0 |
Domestic - other | 22.1 | 27.4 | 6.0 |
Foreign | (20.1) | (8.7) | 4.1 |
Total deferred income tax (benefit) expense | (4.8) | (1.4) | 10.1 |
Total income tax expense | $ 36.4 | $ 38.7 | $ 60.4 |
Income Taxes - Components Of Deferred Tax Liabilities And Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Pension and other post-retirement benefits | $ 8.2 | $ 7.3 |
Employment costs | 20.1 | 22.0 |
Environmental reserves | 29.0 | 29.4 |
Net operating loss carryforwards | 48.8 | 42.3 |
Other, net | 39.8 | 20.0 |
Gross deferred tax assets | 145.9 | 121.0 |
Valuation allowances | (15.2) | (21.4) |
Total deferred tax assets, net of valuation allowances | 130.7 | 99.6 |
Deferred tax liabilities: | ||
Property, plant and equipment | (33.9) | (20.7) |
Goodwill and intangibles | (101.5) | (98.7) |
Other, net | (14.4) | (1.0) |
Total deferred tax liabilities | (149.8) | (120.4) |
Net deferred tax (liabilities) assets | (19.1) | (20.8) |
Consolidated Balance Sheets: | ||
Non-current deferred income tax assets | 50.2 | 19.5 |
Non-current deferred income tax liabilities | $ (69.3) | $ (40.3) |
Income Taxes - Changes In Unrecognized Tax Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance as of January 1 | $ 18.6 | $ 7.9 | $ 11.3 |
Additions based on tax positions related to the current year | 1.3 | 9.2 | 0.3 |
Additions for tax positions of prior years | 1.1 | 1.8 | 1.2 |
Balance related to acquired businesses | 0.0 | 0.0 | 0.0 |
Reductions for tax positions of prior years | (2.8) | (0.3) | 0.0 |
Decreases as a result of lapse of statute of limitations | (0.2) | (0.2) | (4.2) |
Settlements and other | (1.4) | 0.0 | (0.3) |
Other, net | 0.1 | 0.2 | (0.4) |
Balance as of December 31 | $ 16.7 | $ 18.6 | $ 7.9 |
Share-Based Compensation - Summary Of Compensation Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-Based Compensation Arrangement By Share-based Payment Award [Line Items] | |||
Total share-based compensation | $ 10.9 | $ 10.1 | $ 7.7 |
Stock appreciation rights | |||
Share-Based Compensation Arrangement By Share-based Payment Award [Line Items] | |||
Total share-based compensation | 4.4 | 4.2 | 3.3 |
Performance shares | |||
Share-Based Compensation Arrangement By Share-based Payment Award [Line Items] | |||
Total share-based compensation | 0.6 | 0.6 | 0.0 |
Restricted stock units | |||
Share-Based Compensation Arrangement By Share-based Payment Award [Line Items] | |||
Total share-based compensation | $ 5.9 | $ 5.3 | $ 4.4 |
Share-Based Compensation - Summary Of Assumptions Related To Grants (Details) - Stock appreciation rights - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-Based Compensation Arrangement By Share-based Payment Award [Line Items] | |||
Expected volatility | 41.00% | 41.00% | 41.00% |
Expected dividends | 1.67% | 1.58% | 1.92% |
Expected term (in years) | 6 years 6 months | 6 years 6 months | 6 years 8 months 12 days |
Risk-free rate | 3.06% | 2.72% | 1.90% |
Value of SARs granted (in dollars per share) | $ 14.82 | $ 12.01 | $ 8.29 |
Segment Information - Narrative (Details) grade_resin in Thousands |
7 Months Ended | 12 Months Ended |
---|---|---|
Jul. 19, 2017
segment
|
Dec. 31, 2018
segment
grade_resin
supplier
injection_molder_extruder
|
|
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 5 | 4 |
Number of grades of resins sold by polyone distribution (more than) | grade_resin | 4 | |
Number of products sold | injection_molder_extruder | 6,500 | |
Number of suppliers represented by PolyOne distribution (more than) | supplier | 25 |
Segment Information - Schedule Of Revenue And Long-Lived Assets (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Segment Reporting Information [Line Items] | |||||||||||
Sales | $ 834.0 | $ 883.0 | $ 914.8 | $ 901.6 | $ 800.6 | $ 818.5 | $ 814.1 | $ 796.7 | $ 3,533.4 | $ 3,229.9 | $ 2,938.6 |
Long lived assets | 495.4 | 461.6 | 495.4 | 461.6 | 426.3 | ||||||
UNITED STATES | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 2,030.4 | 1,910.8 | 1,767.8 | ||||||||
Long lived assets | 290.0 | 279.7 | 290.0 | 279.7 | 268.3 | ||||||
Europe | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 549.9 | 455.7 | 415.2 | ||||||||
Long lived assets | 116.4 | 97.0 | 116.4 | 97.0 | 86.6 | ||||||
Canada | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 255.0 | 251.1 | 237.7 | ||||||||
Long lived assets | 10.7 | 8.2 | 10.7 | 8.2 | 7.2 | ||||||
Asia | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 346.4 | 313.4 | 266.9 | ||||||||
Long lived assets | 58.9 | 56.2 | 58.9 | 56.2 | 44.6 | ||||||
Mexico | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 331.7 | 279.8 | 233.7 | ||||||||
Long lived assets | 17.7 | 18.5 | 17.7 | 18.5 | 18.5 | ||||||
South America | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 20.0 | 19.1 | 17.3 | ||||||||
Long lived assets | $ 1.7 | $ 2.0 | $ 1.7 | $ 2.0 | $ 1.1 |
Derivatives and Hedging (Narrative) (Details) € in Millions, $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Aug. 24, 2018
USD ($)
swap
|
Jul. 25, 2018
EUR (€)
swap
|
|
Derivative [Line Items] | |||||
Unrealized gains (losses), cash flow hedge | $ (1.3) | $ 0.0 | $ 0.0 | ||
Net Investment Hedging | Cross Currency Swaps | |||||
Derivative [Line Items] | |||||
Notional amount | € | € 250.0 | ||||
Unrealized gains | 2.0 | ||||
Cash Flow Hedging | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Notional amount | $ 150.0 | ||||
Number of interest rate swaps | swap | 2 | ||||
Floating rate debt | $ 150.0 | ||||
Floating rate | 2.732% | ||||
Unrealized gains (losses), cash flow hedge | (1.3) | ||||
Interest Expense, Net | Net Investment Hedging | Cross Currency Swaps | |||||
Derivative [Line Items] | |||||
Number of cross currency swaps | swap | 6 | ||||
Conversion benefit | 2.0 | ||||
Interest Expense, Net | Cash Flow Hedging | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Expense recognized | $ 0.3 |
Derivatives and Hedging (Fair Value Of Derivatives) (Details) - Designated as Hedging Instrument - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Hedging | Cross Currency Swaps | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | $ 1.7 | $ 0.0 |
Net Investment Hedging | Interest Rate Swap | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Assets | $ 2.6 | $ 0.0 |
Selected Quarterly Financial Data (Unaudited) - Schedule Of Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Selected Quarterly Financial Information [Abstract] | ||||||||||||
Sales | $ 834.0 | $ 883.0 | $ 914.8 | $ 901.6 | $ 800.6 | $ 818.5 | $ 814.1 | $ 796.7 | $ 3,533.4 | $ 3,229.9 | $ 2,938.6 | |
Gross Margin | 165.0 | 184.9 | 196.5 | 198.5 | 169.3 | 179.5 | 187.9 | 182.2 | 744.9 | 718.9 | 676.4 | |
Operating income | 47.0 | 70.5 | 77.4 | 78.8 | 47.1 | 65.7 | 78.0 | 82.0 | $ 273.7 | $ 272.8 | $ 267.7 | |
Net income from continuing operations | 11.4 | 50.2 | 51.5 | 47.7 | 35.5 | 40.2 | 49.6 | 48.3 | ||||
Net income from continuing operations attributable to PolyOne shareholders | $ 11.6 | $ 50.2 | $ 51.6 | $ 47.7 | $ 35.4 | $ 40.2 | $ 49.6 | $ 48.3 | ||||
Net income from continuing operations per common share attributable to PolyOne common shareholders: | ||||||||||||
Basic net income - continuing operations (in usd per share) | $ 0.15 | $ 0.63 | $ 0.65 | $ 0.59 | $ 0.44 | $ 0.50 | $ 0.61 | $ 0.58 | $ 2.02 | $ 2.13 | $ 1.98 | |
Diluted net income - continuing operations (in usd per share) | $ 0.15 | $ 0.62 | $ 0.64 | $ 0.59 | $ 0.43 | $ 0.49 | $ 0.60 | $ 0.58 | $ 2.00 | $ 2.11 | $ 1.96 | |
Mark-to-market actuarial net (losses) gains | $ (15.6) | $ (3.3) | $ 8.4 | $ (15.6) | $ 3.3 | $ (8.4) | ||||||
Environmental remediation expense | 3.9 | $ 7.5 | $ 8.7 | $ 3.1 | $ 4.9 | $ 5.0 | $ 2.2 | |||||
Acquisition related costs and adjustments | $ 2.0 | 1.9 | $ 1.9 | 2.6 | ||||||||
Reimbursement of previously incurred environmental costs | $ 1.5 | $ 1.6 | $ 2.5 | $ 3.8 | $ 4.3 | $ 9.1 | $ 6.1 | |||||
Tax adjustments from Tax Cuts and Jobs Act | $ 10.7 |
Subsequent Events - Narrative (Details) - USD ($) $ in Millions |
5 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jan. 02, 2019 |
May 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Subsequent Event [Line Items] | |||||
Business acquisitions, net of cash acquired | $ 118.5 | $ 98.6 | $ 163.8 | $ 164.2 | |
Contingent consideration, earn-out period | 2 years | ||||
Fiber-Line | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Business acquisitions, net of cash acquired | $ 120.2 | ||||
Contingent consideration, earn-out period | 2 years |
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