x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ENGLAND AND WALES | 98-1386780 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Interface House, Interface Business Park Bincknoll Lane Royal Wootton Bassett Swindon SN4 8SY United Kingdom | +1 (508) 236 3800 | |
(Address of Principal Executive Offices, including Zip Code) | (Registrant’s Telephone Number, Including Area Code) |
Title of each class | Name of each exchange on which registered | |
Ordinary Shares—nominal value €0.01 per share | New York Stock Exchange |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
Emerging growth company o |
• | instability and changes in the global markets, including regulatory, political, economic, and military matters, such as the impending exit of the United Kingdom (the "U.K.") from the European Union (the "EU"); |
• | adverse conditions or competition in the industries upon which we are dependent, including the automotive industry; |
• | pressure from customers to reduce prices; |
• | supplier interruption or non-performance, limiting our access to manufactured components or raw materials; |
• | we may not realize all of the revenue or achieve anticipated gross margins from products subject to existing purchase orders for which we are currently engaged in development; |
• | risks related to the acquisition or disposition of businesses, or the restructuring of our business; |
• | market acceptance of new product introductions and product innovations; |
• | losses and costs as a result of intellectual property, product liability, warranty, and recall claims; |
• | business disruptions due to natural disasters or other disasters outside our control; |
• | labor disruptions or increased labor costs; |
• | security breaches, cyber theft of our intellectual property, and other disruptions to our information technology infrastructure, or improper disclosure of confidential, personal, or proprietary data; |
• | foreign currency risks, changes in socio-economic conditions, or changes to monetary and fiscal policies; |
• | our level of indebtedness, or our inability to meet debt service obligations or comply with the covenants contained in the credit agreement and indentures; |
• | risks related to the potential for goodwill impairment; |
• | the impact of United States ("U.S.") federal income tax reform, or taxing authorities challenging our historical and future tax positions or our allocation of taxable income among our subsidiaries, and challenges to the sovereign taxation regimes of EU member states by the European Commission; |
• | changes to current policies, such as trade tariffs, by the U.S. government; |
• | changes to, or inability to comply with, various regulations, including tax laws, import/export regulations, anti-bribery laws, environmental, health, and safety laws, and other governmental regulations; and |
• | risks related to our domicile in the U.K. |
ITEM 1. | BUSINESS |
Segment | ||||||||||
Date | Acquired Entity | Performance Sensing | Sensing Solutions | Purchase Price (in millions) | ||||||
January 2, 2014 | Wabash Worldwide Holding Corp. ("Wabash") | X | $ | 59.6 | ||||||
May 29, 2014 | Magnum Energy Incorporated ("Magnum") | X | $ | 60.6 | ||||||
August 4, 2014 | CoActive U.S. Holdings Inc. ("DeltaTech Controls") | X | $ | 177.8 | ||||||
October 14, 2014 | August Cayman Company, Inc. ("Schrader") | X | $ | 1,004.7 | ||||||
December 1, 2015 | Custom Sensors & Technologies Ltd. ("CST") (1) | X | X | $ | 1,000.8 |
(1) | Included the acquisition of all of the outstanding shares of certain subsidiaries of Custom Sensors & Technologies Ltd. in the U.S., the U.K., and France, as well as certain assets in China. |
Key Products/Solutions | Key Applications/Systems | Key End Markets | ||
Pressure sensors Microfused strain gage Ceramic capacitive Micro-electromechanical Speed and position sensors Magnetic speed and position sensors Mechanical/electrical control systems High temperature sensors | Thermal management and air conditioning systems Transmission Engine oil Suspension Fuel delivery Braking Tire pressure monitoring Exhaust after-treatment | Automotive HVOR Motorcycle |
For the year ended December 31, | |||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Net revenue: | |||||||||||
Sensors | $ | 2,532,631 | $ | 2,341,017 | $ | 2,261,633 | |||||
Other | 95,020 | 119,583 | 123,747 | ||||||||
Performance Sensing net revenue | $ | 2,627,651 | $ | 2,460,600 | $ | 2,385,380 |
Key Products/Solutions | Key Applications/Systems | Key End Markets | ||
Product category: Controls | ||||
Bimetal electromechanical controls Motor protectors Motor starters Thermostats Switches Circuit breakers Thermal circuit breakers Magnetic-hydraulic circuit breakers | HVAC/R Industrial equipment Small/large appliances Lighting DC motors Commercial and military aircraft Marine/industrial Data and telecom equipment Medical equipment Recreational vehicles | Aerospace and defense HVAC/R Industrial Medical Marine Energy/solar Automotive | ||
Product category: Sensors | ||||
Linear and rotary position sensors Linear variable differential transformers Pressure sensors Temperature sensors Aircraft controls | HVAC/R Air compressors Hydraulic machinery Motion control systems Pumps and storage tanks Commercial and military aircraft | Aerospace and defense HVAC/R Industrial equipment Energy Agriculture Construction Marine Motors |
For the year ended December 31, | |||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Net revenue: | |||||||||||
Controls | $ | 508,745 | $ | 497,853 | $ | 486,207 | |||||
Sensors | 222,649 | 201,846 | 193,843 | ||||||||
Other | 162,582 | 146,434 | 136,858 | ||||||||
Sensing Solutions net revenue | $ | 893,976 | $ | 846,133 | $ | 816,908 |
U.S. | Non-U.S. | |||||
Patents | 324 | 450 | ||||
Pending patent applications, filed within the last five years | 34 | 209 |
For the year ended December 31, | ||||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | |||||||||
Net revenue: | ||||||||||||
Manufactured by Sensata | $ | 424.6 | $ | 348.4 | $ | 247.1 | ||||||
Manufactured by MEAS | 8.8 | 64.8 | 150.6 | |||||||||
Total net revenue subject to License Agreement | $ | 433.4 | $ | 413.2 | $ | 397.7 |
ITEM 1A. | RISK FACTORS |
• | trade regulations, including customs, import, and export matters; |
• | tariffs, trade barriers, and disputes; |
• | local employment costs, regulations, and conditions; |
• | difficulties with, and costs for, protecting our intellectual property; |
• | challenges in collecting accounts receivable; |
• | tax laws and regulatory changes, including examinations by taxing authorities, variations in tax laws from country to country, changes to the terms of income tax treaties, and difficulties in the tax-efficient repatriation of earnings generated or held in a number of jurisdictions; |
• | natural disasters; |
• | instability in economic or political conditions, inflation, recession, actual or anticipated military or political conflicts, and potential impact due to the upcoming exit of the United Kingdom (the "U.K.") from the European Union (the "EU"); and |
• | impact of each of the foregoing on our outsourcing and procurement arrangements. |
• | make it more difficult for us to satisfy our debt obligations; |
• | restrict us from making strategic acquisitions; |
• | limit our flexibility in planning for, or reacting to, changes in our business and future business opportunities, thereby placing us at a competitive disadvantage if our competitors are not as highly-leveraged; |
• | increase our vulnerability to general adverse economic and market conditions; or |
• | require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness if we do not maintain specified financial ratios or are not able to refinance our indebtedness as it comes due, thereby reducing the availability of our cash flows for other purposes. |
• | the U.S. court having had jurisdiction over the original proceedings according to English conflicts of laws principles and rules of English private international law at the time when proceedings were initiated; |
• | the U.S. proceedings not having been brought in breach of a jurisdiction or arbitration clause except with the agreement of the defendant or the defendant’s subsequent submission to the jurisdiction of the court; |
• | the U.S. judgment being final and conclusive on the merits in the sense of being final and unalterable in the court which pronounced it and being for a definite sum of money; |
• | the recognition or enforcement, as the case may be, of the U.S. judgment not contravening English public policy in a sufficiently significant way or contravening the Human Rights Act 1998 (or any subordinate legislation made thereunder, to the extent applicable); |
• | the U.S. judgment not being for a sum payable in respect of taxes, or other charges of a like nature, or in respect of a penalty or fine, or otherwise based on a U.S. law that an English court considers to be a penal or revenue law; |
• | the U.S. judgment not having been arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damages sustained, and not otherwise being a judgment contrary to section 5 of the Protection of Trading Interests Act 1980 or is a judgment based on measures designated by the Secretary of State under Section 1 of that Act; |
• | the U.S. judgment not having been obtained by fraud or in breach of English principles of natural justice; |
• | the U.S. judgment not being a judgment on a matter previously determined by an English court, or another court whose judgment is entitled to recognition (or enforcement as the case may be) in England, in proceedings involving the same parties that conflicts with an earlier judgment of such court; |
• | the party seeking enforcement (being a party who is not ordinarily resident in some part of the U.K. or resident in an EU Member State) providing security for costs, if ordered to do so by the English courts; and |
• | the English enforcement proceedings being commenced within the relevant limitation period. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
Operating Segment | Approximate Square Footage (in thousands) | |||||||||
Performance Sensing | Sensing Solutions | |||||||||
Country | Location | Owned | Leased | |||||||
Bulgaria | Botevgrad | X | 137 | — | ||||||
Bulgaria | Plovdiv | X | 125 | — | ||||||
Bulgaria | Sofia | X | — | 108 | ||||||
China | Baoying (1) | X | X | 296 | 385 | |||||
China | Changzhou (2) | X | X | 252 | 236 | |||||
Germany | Berlin | X | — | 33 | ||||||
Malaysia | Subang Jaya | X | 135 | — | ||||||
Mexico | Aguascalientes | X | X | 453 | — | |||||
Mexico | Tijuana | X | X | — | 287 | |||||
Netherlands | Hengelo | X | X | — | 94 | |||||
United Kingdom | Antrim | X | — | 117 | ||||||
United Kingdom | Carrickfergus | X | 63 | — | ||||||
United Kingdom | Swindon (3) | X | — | 34 | ||||||
United States | Attleboro, MA (4) | X | X | — | 433 | |||||
United States | Carpinteria, CA (5) | X | X | — | 50 | |||||
United States | Thousand Oaks, CA | X | X | — | 115 | |||||
1,461 | 1,892 |
(1) | The owned portion of the properties in this location serves the Sensing Solutions segment only. |
(2) | In June 2018, ownership of a portion of this property that was previously leased was transferred to us. |
(3) | Our United Kingdom headquarters is located in this facility. |
(4) | This location includes our United States headquarters. The lease agreement relating to approximately 222 thousand square feet at this location was renegotiated in 2018, lowering our rental payments and extending the term to 2033. |
(5) | Facilities at this location were added as part of our acquisition of GIGAVAC, LLC. Refer to Note 17, "Acquisitions and Divestitures," of our audited consolidated financial statements and accompanying notes thereto (our "Financial Statements") included elsewhere in this Annual Report on Form 10-K for additional details on this acquisition. |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
Total Shareholder Return of $100.00 Investment from December 31, 2013 | ||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||||||||||
Sensata | $ | 100.00 | $ | 135.18 | $ | 118.80 | $ | 100.46 | $ | 131.83 | $ | 115.66 | ||||||||||||
S&P 500 | $ | 100.00 | $ | 113.68 | $ | 115.24 | $ | 129.02 | $ | 157.17 | $ | 150.27 | ||||||||||||
S&P 500 Industrial | $ | 100.00 | $ | 109.80 | $ | 106.99 | $ | 127.16 | $ | 153.88 | $ | 133.38 |
ITEM 6. | SELECTED FINANCIAL DATA |
Sensata Technologies Holding plc (Consolidated) (a) | |||||||||||||||||||
For the year ended December 31, | |||||||||||||||||||
(Amounts in thousands, except per share data) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||
Statement of operations data: (b) | |||||||||||||||||||
Net revenue | $ | 3,521,627 | $ | 3,306,733 | $ | 3,202,288 | $ | 2,974,961 | $ | 2,409,803 | |||||||||
Operating costs and expenses: | |||||||||||||||||||
Cost of revenue(c) | 2,266,863 | 2,138,898 | 2,084,159 | 1,976,845 | 1,567,527 | ||||||||||||||
Research and development(c) | 147,279 | 130,127 | 126,656 | 123,603 | 82,188 | ||||||||||||||
Selling, general and administrative(c) | 305,558 | 301,896 | 293,506 | 270,773 | 220,272 | ||||||||||||||
Amortization of intangible assets | 139,326 | 161,050 | 201,498 | 186,632 | 146,704 | ||||||||||||||
Restructuring and other charges, net | (47,818 | ) | 18,975 | 4,113 | 21,919 | 21,893 | |||||||||||||
Total operating costs and expenses | 2,811,208 | 2,750,946 | 2,709,932 | 2,579,772 | 2,038,584 | ||||||||||||||
Profit from operations | 710,419 | 555,787 | 492,356 | 395,189 | 371,219 | ||||||||||||||
Interest expense, net | (153,679 | ) | (159,761 | ) | (165,818 | ) | (137,626 | ) | (106,104 | ) | |||||||||
Other, net(c)(d) | (30,365 | ) | 6,415 | (5,093 | ) | (51,934 | ) | (11,689 | ) | ||||||||||
Income before taxes | 526,375 | 402,441 | 321,445 | 205,629 | 253,426 | ||||||||||||||
(Benefit from)/provision for income taxes(e) | (72,620 | ) | (5,916 | ) | 59,011 | (142,067 | ) | (30,323 | ) | ||||||||||
Net income | $ | 598,995 | $ | 408,357 | $ | 262,434 | $ | 347,696 | $ | 283,749 | |||||||||
Basic net income per share | $ | 3.55 | $ | 2.39 | $ | 1.54 | $ | 2.05 | $ | 1.67 | |||||||||
Diluted net income per share | $ | 3.53 | $ | 2.37 | $ | 1.53 | $ | 2.03 | $ | 1.65 | |||||||||
Weighted-average ordinary shares outstanding—basic | 168,570 | 171,165 | 170,709 | 169,977 | 170,113 | ||||||||||||||
Weighted-average ordinary shares outstanding—diluted | 169,859 | 172,169 | 171,460 | 171,513 | 172,217 | ||||||||||||||
Other financial data: (b) | |||||||||||||||||||
Net cash provided by/(used in): | |||||||||||||||||||
Operating activities | $ | 620,563 | $ | 557,646 | $ | 521,525 | $ | 533,131 | $ | 382,568 | |||||||||
Investing activities | $ | (237,606 | ) | $ | (140,722 | ) | $ | (174,778 | ) | $ | (1,166,369 | ) | $ | (1,430,065 | ) | ||||
Financing activities | $ | (406,213 | ) | $ | (15,263 | ) | $ | (337,582 | ) | $ | 764,172 | $ | 940,930 | ||||||
Additions to property, plant and equipment and capitalized software | $ | (159,787 | ) | $ | (144,584 | ) | $ | (130,217 | ) | $ | (177,196 | ) | $ | (144,211 | ) |
As of December 31, | |||||||||||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||
Balance sheet data: (b) | |||||||||||||||||||
Cash and cash equivalents | $ | 729,833 | $ | 753,089 | $ | 351,428 | $ | 342,263 | $ | 211,329 | |||||||||
Working capital(f) | $ | 1,277,211 | $ | 1,218,796 | $ | 758,189 | $ | 412,748 | $ | 441,258 | |||||||||
Total assets | $ | 6,797,687 | $ | 6,641,525 | $ | 6,240,976 | $ | 6,298,910 | $ | 5,087,507 | |||||||||
Total debt, net including capital lease and other financing obligations | $ | 3,264,941 | $ | 3,270,269 | $ | 3,273,594 | $ | 3,600,991 | $ | 2,812,734 | |||||||||
Total shareholders’ equity | $ | 2,608,434 | $ | 2,345,626 | $ | 1,942,007 | $ | 1,668,576 | $ | 1,302,892 |
(a) | On March 28, 2018, the cross-border merger of Sensata Technologies Holding N.V. ("Sensata N.V.") and Sensata Technologies Holding plc ("Sensata plc") was completed, with Sensata plc being the surviving entity (the "Merger"). On the date of the Merger, Sensata plc became the publicly-traded parent of the subsidiary companies that were previously controlled by Sensata N.V., with no changes made to the business being conducted by Sensata N.V. prior to the Merger. Due to the various legal aspects of the Merger, Sensata plc retains the historical data of Sensata N.V., and no recasting or adjustment is required as a result of the Merger. |
(b) | We acquired Wabash Worldwide Holding Corp. ("Wabash"), Magnum Energy Incorporated ("Magnum"), CoActive US Holdings, Inc. ("DeltaTech Controls"), and August Cayman Company, Inc. ("Schrader") in 2014, certain assets and subsidiaries of Custom Sensors & Technologies Ltd. ("CST") in 2015, and GIGAVAC, LLC ("GIGAVAC") in 2018. Pro forma amounts are not shown. We sold the capital stock of Schrader Bridgeport International, Inc. and August France Holding Company SAS (collectively, the "Valves Business") in 2018. Prior year amounts have not been recast. Refer to Note 17, "Acquisitions and Divestitures," of our Financial Statements for further details on the acquisition of GIGAVAC and the sale of the Valves Business. |
(c) | For the fiscal years ended December 31, 2017, 2016, 2015, and 2014, cost of revenue, research and development expense, selling, general and administrative expense, and other, net have been recast to reflect our adoption of the guidance in FASB ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost on January 1, 2018. Refer to Note 6, "Other, Net," and Note 13, "Pension and Other Post-Retirement Benefits," of our Financial Statements for further discussion of this new guidance and the amounts recast for the years ended December 31, 2017 and 2016. |
(d) | Other, net for the years ended December 31, 2018, 2017, 2016, 2015, and 2014 consisted of the following: |
For the year ended December 31, | |||||||||||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||
(Loss)/gain related to foreign currency exchange rates(i) | $ | (16,835 | ) | $ | 2,423 | $ | (12,471 | ) | $ | (6,007 | ) | $ | (1,443 | ) | |||||
(Loss)/gain on commodity forward contracts | (8,481 | ) | 9,989 | 7,399 | (18,468 | ) | (9,017 | ) | |||||||||||
Loss on debt financing | (2,350 | ) | (2,670 | ) | — | (25,538 | ) | (1,875 | ) | ||||||||||
Net periodic benefit (cost)/credit, excluding service cost(ii) | (3,585 | ) | (3,402 | ) | (192 | ) | (1,605 | ) | 370 | ||||||||||
Other | 886 | 75 | 171 | (316 | ) | 276 | |||||||||||||
Other, net | $ | (30,365 | ) | $ | 6,415 | $ | (5,093 | ) | $ | (51,934 | ) | $ | (11,689 | ) |
(i) | Includes foreign currency remeasurement (loss)/gain, net and gain/(loss), net on foreign currency forward contracts. Refer to Note 6, "Other, Net," of our Financial Statements for details. |
(ii) | Refer to footnote (c) above for further discussion. |
(e) | For the year ended December 31, 2018, the benefit from income taxes includes a net benefit of $122.1 million related to the realization of United States ("U.S.") deferred tax assets previously offset by a valuation allowance. For the year ended December 31, 2017, the benefit from income taxes includes a net benefit of $73.7 million related to the enactment of U.S. tax legislation in the fourth quarter of 2017. For the year ended December 31, 2015, the benefit from income taxes includes a net benefit of $180.0 million, primarily related to the release of a portion of our U.S. valuation allowance in connection with the acquisition of CST. For the year ended December 31, 2014, the benefit from income taxes includes a net benefit of $71.1 million related to the release of a portion of our U.S. valuation allowance in connection with certain 2014 acquisitions. Refer to Note 7, "Income Taxes," of our Financial Statements for additional information. |
(f) | We define working capital as current assets less current liabilities. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
For the year ended December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||
(Dollars in millions) | Amount | Percent of Total Net Revenue | Amount | Percent of Total Net Revenue | Amount | Percent of Total Net Revenue | ||||||||||||||
Net revenue: | ||||||||||||||||||||
Performance Sensing | $ | 2,627.7 | 74.6 | % | $ | 2,460.6 | 74.4 | % | $ | 2,385.4 | 74.5 | % | ||||||||
Sensing Solutions | 894.0 | 25.4 | 846.1 | 25.6 | 816.9 | 25.5 | ||||||||||||||
Total net revenue | $ | 3,521.6 | 100.0 | % | $ | 3,306.7 | 100.0 | % | $ | 3,202.3 | 100.0 | % |
For the year ended December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||
(Dollars in millions) | Amount | Percent of Segment Net Revenue | Amount | Percent of Segment Net Revenue | Amount | Percent of Segment Net Revenue | ||||||||||||||
Segment profit: | ||||||||||||||||||||
Performance Sensing | $ | 712.7 | 27.1 | % | $ | 664.2 | 27.0 | % | $ | 615.5 | 25.8 | % | ||||||||
Sensing Solutions | 293.0 | 32.8 | % | 277.5 | 32.8 | % | 261.9 | 32.1 | % | |||||||||||
Total segment profit | $ | 1,005.7 | $ | 941.6 | $ | 877.4 |
PP&E, net as of December 31, | Net revenue for the year ended December 31, | |||||||||||||
2018 | 2017 | 2018 | 2017 | 2016 | ||||||||||
Americas | 37.2 | % | 39.6 | % | 42.0 | % | 41.3 | % | 42.7 | % | ||||
Asia and rest of world | 39.3 | % | 35.5 | % | 28.8 | % | 27.3 | % | 25.3 | % | ||||
Europe | 23.5 | % | 24.9 | % | 29.2 | % | 31.4 | % | 32.0 | % |
For the year ended December 31, | ||||||||
(Percentage of total) | 2018 | 2017 | 2016 | |||||
Automotive | 60.4 | % | 61.7 | % | 63.1 | % | ||
HVOR | 15.6 | % | 14.3 | % | 12.9 | % | ||
Industrial | 9.6 | % | 9.4 | % | 9.0 | % | ||
Appliance and heating, ventilation and air conditioning ("HVAC") | 5.9 | % | 6.3 | % | 5.9 | % | ||
Aerospace | 4.7 | % | 4.6 | % | 4.7 | % | ||
Other | 3.8 | % | 3.7 | % | 4.4 | % |
• | fluctuations in overall economic activity within the geographic regions in which we operate; |
• | underlying growth in one or more of our core end markets, either worldwide or in particular geographies in which we operate; |
• | the number of sensors and/or controls used within existing applications, or the development of new applications requiring sensors and/or controls, due to regulations or other factors; |
• | the "mix" of products sold, including the proportion of new or upgraded products and their pricing relative to existing products; |
• | changes in product sales prices (including quantity discounts, rebates, and cash discounts for prompt payment); |
• | changes in the level of competition faced by our products, including the launch of new products by competitors; and |
• | our ability to successfully develop, launch, and sell new products and applications. |
• | fluctuations in foreign currency exchange rates; and |
• | acquisitions and divestitures. |
• | Production Materials Costs. We purchase much of the materials used in production on a global best-cost basis, but we are still impacted by global and local market conditions. A portion of our production materials contains certain commodities, resins and rare earth metals, and the cost of these materials may vary with underlying pricing. However, we enter into forward contracts to economically hedge a portion of our exposure to the potential change in prices associated with certain of these commodities. The terms of these contracts fix the price at a future date for various notional amounts associated with these commodities. Gains and losses recognized on these derivatives are recorded in other, net and are not included in cost of revenue (refer to Note 6, "Other, Net"). |
• | Employee Costs. Employee costs include wages and benefits for employees involved in our manufacturing operations. A significant portion of these costs can fluctuate on an aggregate basis in direct correlation with changes in production volumes. As a percentage of net revenue, these costs may decline as a result of economies of scale associated with higher production volumes, and conversely, may increase with lower production volumes. These costs also will fluctuate based on local market conditions. We rely on contract workers for direct labor in certain geographies. As of December 31, 2018, we had approximately 1,855 direct labor contract workers on a worldwide basis. |
• | Sustaining Engineering Activity Costs. These costs relate to modifications of existing products for use by new and existing customers in familiar applications. |
• | Other. Our remaining cost of revenue primarily consists of: |
• | gains and losses on certain foreign currency forward contracts that are designated as cash flow hedges; |
• | costs to import raw materials, such as tariffs; |
• | depreciation of fixed assets used in the manufacturing process; |
• | freight costs; |
• | warehousing expenses; |
• | maintenance and repair expenses; |
• | operating supplies; and |
• | other general manufacturing expenses, such as expenses for energy consumption and operating lease expense. |
• | changes in the price of raw materials, including the impact of changes in costs to import such raw materials, such as tariffs; |
• | price reductions provided to our customers; |
• | implementation of cost improvement measures aimed at increasing productivity, including reduction of fixed production costs, refinements in inventory management, design and process driven changes, and the coordination of procurement within each subsidiary and at the business level; |
• | changes in production volumes – production costs are capitalized in inventory based on normal production volumes, as revenue increases, the fixed portion of these costs does not; |
• | transfer of production to our lower-cost manufacturing facilities; |
• | product lifecycles, as we typically incur higher cost of revenue associated with excess manufacturing capacity during the initial stages of product launches and during the phase-out of discontinued products; |
• | the increase in the carrying value of inventory that is adjusted to fair value as a result of the application of purchase accounting associated with acquisitions; |
• | changes in depreciation expense, including those arising from the adjustment of PP&E to fair value associated with acquisitions; |
• | fluctuations in foreign currency exchange rates; |
• | changes in product mix; and |
• | acquisitions and divestitures – acquired and divested businesses may generate higher or lower cost of revenue as a percentage of net revenue than our core business. |
• | salary and benefit costs for sales and marketing personnel and administrative staff, including cash and share-based incentive compensation expense; |
• | charges related to the use and maintenance of administrative offices, including depreciation expense; |
• | other administrative costs, including expenses relating to information systems, human resources, and legal and accounting services; |
• | other selling and marketing related costs, such as expenses incurred in connection with travel and communications; and |
• | transaction costs associated with acquisitions. |
• | changes in sales volume, as higher volumes enable us to spread the fixed portion of our selling, marketing, and administrative expense over higher revenue (e.g. expenses relating to our sales and marketing personnel can fluctuate due to prolonged trends in sales volume, while expenses relating to administrative personnel generally do not increase or decrease directly with changes in sales volume); |
• | price reductions provided to our customers; |
• | changes in the mix of products we sell, as some products may require more customer support and sales effort than others; |
• | changes in our customer base, as new customers may require different levels of sales and marketing attention; |
• | new product launches in existing and new markets, as these launches typically involve a more intense sales and marketing activity before they are integrated into customer applications and systems; |
• | fluctuations in foreign currency exchange rates; and |
• | acquisitions and divestitures - acquired and divested businesses may require different levels of SG&A expense as a percentage of net revenue than our core business. |
• | current tax expense, which relates primarily to our profitable operations in non-U.S. tax jurisdictions and withholding taxes related to interest, royalties, and repatriation of foreign earnings; and |
• | deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to the step-up in fair value of fixed and intangible assets, including goodwill, acquired in connection with business combination transactions, the utilization of net operating losses, changes in tax rates, and changes in our assessment of the realizability of our deferred tax assets. |
• | establishing or releasing a portion of the valuation allowance related to our gross deferred tax assets; |
• | we operate in locations outside the U.S., including Bermuda, Bulgaria, China, Malaysia, the Netherlands, South Korea, and the U.K., that historically have had statutory tax rates different than the U.S. statutory rate. This can result in a foreign tax rate differential that may reflect a tax benefit or detriment. This foreign rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates, tax holidays, and favorable tax regimes available to certain of our foreign subsidiaries; |
• | changes in tax laws, including the U.S. Tax Cuts and Jobs Act ("Tax Reform" or "the Act"), enacted in 2017; |
• | losses incurred, in certain jurisdictions, which cannot be currently benefited, as it is not more likely than not that the associated deferred tax asset will be realized in the foreseeable future; |
• | unrealized foreign exchanges gains and losses; |
• | as income tax audits related to our subsidiaries are closed, either as a result of negotiated settlements, final assessments, or lapse of the applicable statute of limitations related to unrecognized tax benefits, we may recognize a tax expense or benefit, including a benefit from the reversal of interest and penalties; and |
• | in certain jurisdictions, we record withholding and other taxes on intercompany payments, including dividends. |
For the year ended December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||
(Dollars in millions) | Amount | Percent of Net Revenue | Amount | Percent of Net Revenue | Amount | Percent of Net Revenue | ||||||||||||||
Net revenue: | ||||||||||||||||||||
Performance Sensing | $ | 2,627.7 | 74.6 | % | $ | 2,460.6 | 74.4 | % | $ | 2,385.4 | 74.5 | % | ||||||||
Sensing Solutions | 894.0 | 25.4 | 846.1 | 25.6 | 816.9 | 25.5 | ||||||||||||||
Total net revenue | 3,521.6 | 100.0 | % | 3,306.7 | 100.0 | % | 3,202.3 | 100.0 | % | |||||||||||
Operating costs and expenses: | ||||||||||||||||||||
Cost of revenue | 2,266.9 | 64.4 | 2,138.9 | 64.7 | 2,084.2 | 65.1 | ||||||||||||||
Research and development | 147.3 | 4.2 | 130.1 | 3.9 | 126.7 | 4.0 | ||||||||||||||
Selling, general and administrative | 305.6 | 8.7 | 301.9 | 9.1 | 293.5 | 9.2 | ||||||||||||||
Amortization of intangible assets | 139.3 | 4.0 | 161.1 | 4.9 | 201.5 | 6.3 | ||||||||||||||
Restructuring and other charges, net | (47.8 | ) | (1.4 | ) | 19.0 | 0.6 | 4.1 | 0.1 | ||||||||||||
Total operating costs and expenses | 2,811.2 | 79.8 | 2,750.9 | 83.2 | 2,709.9 | 84.6 | ||||||||||||||
Profit from operations | 710.4 | 20.2 | 555.8 | 16.8 | 492.4 | 15.4 | ||||||||||||||
Interest expense, net | (153.7 | ) | (4.4 | ) | (159.8 | ) | (4.8 | ) | (165.8 | ) | (5.2 | ) | ||||||||
Other, net | (30.4 | ) | (0.9 | ) | 6.4 | 0.2 | (5.1 | ) | (0.2 | ) | ||||||||||
Income before taxes | 526.4 | 14.9 | 402.4 | 12.2 | 321.4 | 10.0 | ||||||||||||||
(Benefit from)/provision for income taxes | (72.6 | ) | (2.1 | ) | (5.9 | ) | (0.2 | ) | 59.0 | 1.8 | ||||||||||
Net income | $ | 599.0 | 17.0 | % | $ | 408.4 | 12.3 | % | $ | 262.4 | 8.2 | % |
Fiscal Year 2018 Compared to Prior Year | Fiscal Year 2017 Compared to Prior Year | |||||||||||||||||
Total | Performance Sensing | Sensing Solutions | Total | Performance Sensing | Sensing Solutions | |||||||||||||
Reported net revenue growth | 6.5 | % | 6.8 | % | 5.7 | % | 3.3 | % | 3.2 | % | 3.6 | % | ||||||
Percent impact of: | ||||||||||||||||||
Acquisition and divestiture, net (1) | (0.8 | ) | (1.3 | ) | 0.7 | — | — | — | ||||||||||
Foreign currency remeasurement (2) | 1.3 | 1.5 | 0.8 | (0.7 | ) | (0.7 | ) | (0.5 | ) | |||||||||
Organic revenue growth | 6.0 | % | 6.6 | % | 4.2 | % | 4.0 | % | 3.9 | % | 4.1 | % |
(1) | Represents the percentage change in net revenue attributed to the effect of acquisitions and divestitures for the 12 months immediately following the respective transaction dates. The percentage amounts presented for fiscal year 2018 relate to the sale of the Valves Business and the acquisition of GIGAVAC, each of which is discussed in Note 17, "Acquisitions and Divestitures," of our Financial Statements. |
(2) | Represents the percentage change in net revenue between the comparative periods attributed to differences in exchange rates used to remeasure foreign denominated revenue transactions into U.S. dollars, which is the functional currency of the |
For the year ended December 31, | ||||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | |||||||||
Severance costs, net (1) | $ | 7.6 | $ | 11.1 | $ | 0.8 | ||||||
Facility and other exit costs (2) | 0.9 | 7.9 | 3.3 | |||||||||
Gain on sale of Valves Business (3) | (64.4 | ) | — | — | ||||||||
Other (4) | 8.2 | — | — | |||||||||
Restructuring and other charges, net | $ | (47.8 | ) | $ | 19.0 | $ | 4.1 |
(1) | Severance costs for the year ended December 31, 2018 were attributable to limited workforce reductions of manufacturing, engineering, and administrative positions as well as the elimination of redundant roles in connection with site consolidations. Severance costs, net recognized during the year ended December 31, 2017 included $8.4 million of charges related to the closure of our facility in Minden, Germany, a site we obtained in connection with the acquisition of certain subsidiaries of Custom Sensors & Technologies Ltd. ("CST"). Severance costs for the year ended December 31, 2016 primarily related to charges recorded in connection with acquired businesses and the termination of a limited number of employees in various locations throughout the world. |
(2) | Facility and other exit costs for the year ended December 31, 2017 included $3.2 million of costs related to the closure of our facility in Minden, Germany and the transfer of equipment to alternate operating sites as well as $3.1 million of costs associated with the consolidation of two other manufacturing sites in Europe. Facility and other exit costs for the year ended December 31, 2016 primarily related to the relocation of manufacturing lines from our facility in the Dominican Republic to a manufacturing facility in Mexico. We completed the cessation of manufacturing in our Dominican Republic facility in the third quarter of 2016. |
(3) | In fiscal year 2018 we completed the sale of the Valves Business to Pacific. The gain on this sale is included in restructuring and other charges, net. Refer to Note 17, "Acquisitions and Divestitures," for further discussion of the sale of the Valves Business. |
(4) | In the year ended December 31, 2018, we incurred $5.9 million of incremental direct costs in order to transact the sale of the Valves Business and $2.2 million of deferred compensation incurred in connection with the acquisition of GIGAVAC. Refer to Note 17, "Acquisitions and Divestitures," for further discussion. |
For the year ended December 31, | |||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | ||||||||
Currency remeasurement (loss)/gain on net monetary assets (1) | $ | (18.9 | ) | $ | 18.0 | $ | (10.6 | ) | |||
Gain/(loss) on foreign currency forward contracts (2) | 2.1 | (15.6 | ) | (1.9 | ) | ||||||
(Loss)/gain on commodity forward contracts (2) | (8.5 | ) | 10.0 | 7.4 | |||||||
Loss on debt financing | (2.4 | ) | (2.7 | ) | — | ||||||
Net periodic benefit cost, excluding service cost (3) | (3.6 | ) | (3.4 | ) | (0.2 | ) | |||||
Other | 0.9 | 0.1 | 0.2 | ||||||||
Other, net | $ | (30.4 | ) | $ | 6.4 | $ | (5.1 | ) |
(1) | Relates to the remeasurement of non-U.S. dollar denominated monetary assets and liabilities into U.S. dollars. |
(2) | Relates to changes in the fair value of derivative financial instruments that are not designated as hedges. Refer to Note 19, "Derivative Instruments and Hedging Activities," of our Financial Statements for additional discussion of gains and losses related to our commodity and foreign exchange forward contracts. Refer to Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," included elsewhere in this Report for an analysis of the sensitivity of other, net to changes in foreign currency exchange rates and commodity prices. |
(3) | On January 1, 2018, we adopted FASB ASU No. 2017-07, which requires the non-service cost components of net periodic benefit cost to be presented apart from the service cost component and outside of profit from operations. Refer to Note 2, "Significant Accounting Policies," and Note 13, "Pension and Other Post-Retirement Benefits," of our Financial Statements for additional details. |
For the year ended December 31, | |||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | ||||||||
Tax computed at statutory rate of 21% in 2018 and 35% in 2017 and 2016 (1) | $ | 110.5 | $ | 140.9 | $ | 112.5 | |||||
Change in valuation allowances (2) | (123.4 | ) | (3.4 | ) | 30.6 | ||||||
Foreign tax rate differential (3) | (41.2 | ) | (112.0 | ) | (86.3 | ) | |||||
Change in tax laws or rates | (22.3 | ) | 3.9 | 2.5 | |||||||
Research and development incentives (4) | (19.5 | ) | (5.9 | ) | (11.0 | ) | |||||
Reserve for tax exposure | 10.8 | 38.0 | 11.2 | ||||||||
U.S. Tax Reform impact (5) | — | (73.7 | ) | — | |||||||
Other (6) | 12.4 | 6.3 | (0.5 | ) | |||||||
(Benefit from)/provision for income taxes | $ | (72.6 | ) | $ | (5.9 | ) | $ | 59.0 |
(1) | Represents the product of the applicable statutory tax rate and income before taxes, as reported on our consolidated statements of operations. In fiscal year 2018 the statutory rate declined to 21% (i.e., compared to 35% in previous years) due to the effect of Tax Reform. |
(2) | During the years ended December 31, 2018, 2017, and 2016, we released a portion of our valuation allowance and recognized a deferred tax benefit. The remaining valuation allowance as of December 31, 2018 and 2017 was $157.0 million and $277.3 million, respectively. The remaining valuation allowance mainly relates to foreign tax credit and capital loss carryforwards and suspended interest deductions. It is more likely than not that these attributes will not be utilized in the foreseeable future. However, any future release of all or a portion of this valuation allowance resulting from a change in this assessment will impact our future (benefit from)/provision for income taxes. |
(3) | We operate in locations outside the U.S., including Bermuda, Bulgaria, China, Malaysia, the Netherlands, South Korea, and the U.K., that historically have had statutory tax rates different than the U.S. statutory rate. This can result in a foreign tax rate differential that may reflect a tax benefit or detriment. This foreign rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates. Certain of our subsidiaries are currently eligible, or have been eligible, for tax exemptions or holidays in their respective jurisdictions. |
(4) | Certain income of our U.K. subsidiaries is eligible for lower tax rates under the "patent box" regime, resulting in certain of our intellectual property income being taxed at a rate lower than the U.K. statutory tax rate. Certain R&D expenses are eligible for a bonus deduction under China’s R&D super deduction regime. In 2018, we substantially completed an assessment of our ability to claim an R&D credit in the U.S. As a result of this assessment, we recorded a tax benefit of $10.0 million. Prior to fiscal year 2018, the deferred tax asset related to these R&D credits would have been offset by the valuation allowance. |
(5) | Relates to the enactment of Tax Reform during the fourth quarter of 2017, which required us to remeasure our U.S. deferred tax assets and liabilities associated with indefinite lived intangible assets, including goodwill, from a rate of 35% to 21%. Absent this deferred tax liability, the U.S. operation was in a net deferred tax asset position that was offset by a full valuation allowance at December 31, 2017. |
(6) | Refer to Note 7, "Income Taxes," of our Financial Statements for more details regarding other components of our rate reconciliation. |
• | Restructuring related and other - includes charges, net related to certain restructuring actions as well as other costs (or income) that we believe are either unique or unusual to the identified reporting period, and that we believe impact comparisons to prior period operating results. Such amounts are excluded from internal financial statements and analyses that management uses in connection with financial planning, and in its review and assessment of our operating and financial performance, including the performance of our segments. Restructuring related and other does not, however, include charges related to the integration of acquired businesses, including such charges that are recognized as restructuring and other charges, net in our consolidated statements of operations. |
• | Financing and other transaction costs – includes losses/(gains) related to debt financing transactions and third-party transaction costs, including for legal, accounting, and other professional services that are directly related to equity transactions, acquisitions, or divestitures. |
• | Deferred losses/(gains) on other hedges. |
• | Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory. |
• | Deferred income tax and other tax expense/(benefit) – includes adjustments for book-to-tax basis differences due primarily to the step-up in fair value of fixed and intangible assets and goodwill, the utilization of net operating losses, and adjustments to our U.S. valuation allowance. Other tax expense/(benefit) includes certain adjustments to unrecognized tax positions and withholding tax on repatriation of foreign earnings. |
• | Amortization of debt issuance costs. |
For the year ended December 31, | |||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | ||||||||
Net income | $ | 599.0 | $ | 408.4 | $ | 262.4 | |||||
Non-GAAP adjustments: | |||||||||||
Restructuring related and other(a)(f) | 28.0 | 21.3 | 15.0 | ||||||||
Financing and other transaction costs(b) | (40.3 | ) | 9.3 | 1.5 | |||||||
Loss/(gain) on commodity and other hedges(c) | 12.5 | (7.4 | ) | (19.3 | ) | ||||||
Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory(d)(f) | 141.2 | 165.0 | 210.8 | ||||||||
Deferred income tax and other tax (benefit)/expense, net(e) | (128.3 | ) | (55.2 | ) | 17.1 | ||||||
Amortization of debt issuance costs | 7.3 | 7.2 | 7.3 | ||||||||
Total adjustments | 20.4 | 140.4 | 232.4 | ||||||||
Adjusted net income | $ | 619.4 | $ | 548.7 | $ | 494.8 |
(a) | The following table presents the components of our restructuring related and other non-GAAP adjustment for fiscal years 2018, 2017, and 2016 (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not sum due to the effect of rounding): |
For the year ended December 31, | |||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | ||||||||
Severance costs(i) | $ | 9.2 | $ | 3.0 | $ | 0.0 | |||||
Facility related costs(ii) | 8.2 | 14.0 | 10.9 | ||||||||
Other(iii) | 10.6 | 4.3 | 4.0 | ||||||||
Total non-GAAP restructuring related and other | $ | 28.0 | $ | 21.3 | $ | 15.0 |
i. | Represents severance charges recognized and presented in restructuring and other charges, net, other than those charges, net of reversals, associated with the integration of an acquired business. |
ii. | Consists primarily of costs associated with line moves and the closing or relocation of various facilities throughout the world. Fiscal year 2018 includes $4.0 million of costs related to the consolidation of two manufacturing sites in Europe and $2.1 million of costs related to the move of a distribution center in Germany. Fiscal year 2017 includes $6.0 million of costs related to transitioning certain of our distribution centers within Europe, $3.7 million of costs related to the consolidation of two manufacturing sites in Europe, and $3.0 million of costs associated with the closing of our Schrader Brazil manufacturing facility. Fiscal year 2016 includes $3.7 million of costs associated with the relocation of manufacturing lines from our facility in the Dominican Republic to a manufacturing facility in Mexico, $1.1 million in non-severance related costs associated with the closing of our Schrader Brazil manufacturing facility, and $3.8 million of costs associated with other exited product lines. |
iii. | Consists of amounts that do not fall within one of the other specific categories. Fiscal year 2018 primarily includes $6.6 million of charges related to certain of our manufacturing facilities in Mexico and $1.9 million of losses upon settlement of certain preacquisition loss contingencies. The charges related to certain of our manufacturing facilities in Mexico include operating inefficiencies, in part as a result of line moves, and repositioning actions, which include settlement losses related to our pension plans in Mexico. |
(b) | Includes losses related to debt financing transactions, costs incurred in connection with secondary offering or other equity transactions, costs associated with acquisition activity, and gains, losses, and transaction costs related to the divestiture of businesses. In fiscal year 2018, includes a $64.4 million gain on the sale of the Valves Business, $5.9 million of transaction costs, and $2.3 million of deferred compensation incurred in connection with the acquisition of GIGAVAC, which were recorded in restructuring and other charges, net on our consolidated statements of operations. Costs associated with debt financing transactions, which include losses of $2.4 million and $2.7 million in fiscal years 2018 and 2017, respectively, were recognized in other, net on our consolidated statements of operations. Costs associated with equity transactions, which include $4.1 million and $6.6 million of costs to complete the Merger in fiscal years 2018 and 2017, respectively, were recognized in SG&A expense on our consolidated statements of operations. Costs associated with acquisition activity, including $2.5 million of transaction costs related to the acquisition of GIGAVAC in fiscal year 2018, are generally recorded in SG&A expense on our consolidated statements of operations. |
(c) | Includes deferred losses/(gains), net recognized on derivative instruments that are not designated as hedges. |
(d) | Represents depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory related to acquisitions. |
(e) | Represents deferred income tax and other tax expense/(benefit), including provisions for, and interest expense and penalties related to, certain unrecognized tax benefits (or benefits from their release). Our deferred income tax includes adjustments for measuring book-to-tax basis differences primarily related to the step-up in fair value of fixed and intangible assets and goodwill, utilization of net operating losses and adjustments to our U.S. valuation allowance in connection with certain acquisitions. Other tax expense/(benefit) includes certain adjustments to unrecognized tax positions. Fiscal year 2018 includes a $122.1 million deferred tax benefit related to the release of a portion of our U.S. valuation allowance as discussed in Note 7, "Income Taxes," of our Financial Statements. Also included in our fiscal year 2018 results is $10.0 million of current tax expense related to the repatriation of profits from certain subsidiaries in China to their parent companies in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure, and corresponding earnings volatility, related to the Chinese Renminbi as well as fund our deployment of capital. Fiscal year 2017 includes $73.7 million of income tax benefits related to the remeasurement of the deferred tax liabilities associated with indefinite-lived intangible assets due to the reduction of the U.S. corporate income tax rate from 35% to 21% as a part of Tax Reform. Fiscal year 2016 includes $1.9 million of deferred income tax benefits related to the release of a portion of our U.S. valuation allowance in connection with our 2015 acquisition of CST. For this acquisition, deferred |
(f) | The current income tax (benefit)/expense associated with the reconciling items presented above, which is included in adjusted net income, is shown below for each period presented. The current income tax (benefit)/expense was calculated by applying the relevant jurisdictional tax rate to the reconciling items that relate to jurisdictions where such items would provide current tax (benefit)/expense. |
For the year ended December 31, | |||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | ||||||||
Restructuring related and other | $ | (1.2 | ) | $ | (0.5 | ) | $ | (1.0 | ) | ||
Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory | 0.0 | 0.0 | (0.1 | ) | |||||||
Total current income tax (benefit)/expense associated with non-GAAP adjustments above | $ | (1.2 | ) | $ | (0.5 | ) | $ | (1.1 | ) |
As of December 31, | |||||||
(Dollars in millions) | 2018 | 2017 | |||||
Cash and cash equivalents: | |||||||
U.K. | $ | 8.8 | $ | 13.7 | |||
U.S. | 4.6 | 9.0 | |||||
Netherlands | 482.1 | 260.9 | |||||
China | 125.2 | 383.0 | |||||
Other | 109.1 | 86.5 | |||||
Cash and cash equivalents | $ | 729.8 | $ | 753.1 |
For the year ended December 31, | |||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | ||||||||
Net cash provided by/(used in): | |||||||||||
Operating activities: | |||||||||||
Net income adjusted for non-cash items | $ | 687.5 | $ | 652.5 | $ | 615.5 | |||||
Changes in operating assets and liabilities, net | (66.9 | ) | (94.8 | ) | (93.9 | ) | |||||
Operating activities | 620.6 | 557.6 | 521.5 | ||||||||
Investing activities | (237.6 | ) | (140.7 | ) | (174.8 | ) | |||||
Financing activities | (406.2 | ) | (15.3 | ) | (337.6 | ) | |||||
Net change | $ | (23.3 | ) | $ | 401.7 | $ | 9.2 |
(Dollars in millions) | Balance as of December 31, 2018 | Interest Expense, net for the year ended December 31, 2018 | |||||
Term Loan | $ | 917.8 | $ | 34.8 | |||
4.875% Senior Notes | 500.0 | 24.4 | |||||
5.625% Senior Notes | 400.0 | 22.5 | |||||
5.0% Senior Notes | 700.0 | 35.0 | |||||
6.25% Senior Notes | 750.0 | 46.9 | |||||
Capital lease and other financing obligations | 35.5 | 2.9 | |||||
Total gross outstanding indebtedness | $ | 3,303.3 | |||||
Other interest expense, net (1) | (12.7 | ) | |||||
Interest expense, net | $ | 153.7 |
(1) | Other interest expense, net includes interest income, amortization of debt issuance costs, and interest costs capitalized in accordance with FASB Accounting Standards Codification ("ASC") Subtopic 835-20, Capitalization of Interest. |
Payments Due by Period | |||||||||||||||||||
(Dollars in millions) | Total | One Year or Less | One to Three Years | Three to Five Years | More than Five Years | ||||||||||||||
Debt obligations principal(1) | $ | 3,267.8 | $ | 9.7 | $ | 908.1 | $ | 500.0 | $ | 1,850.0 | |||||||||
Debt obligations interest(2) | 966.4 | 171.0 | 328.1 | 257.4 | 209.9 | ||||||||||||||
Capital lease obligations principal(3) | 32.7 | 2.6 | 3.6 | 3.0 | 23.5 | ||||||||||||||
Capital lease obligations interest(3) | 24.4 | 2.1 | 5.0 | 4.5 | 12.7 | ||||||||||||||
Other financing obligations principal(4) | 2.8 | 2.2 | 0.5 | — | — | ||||||||||||||
Other financing obligations interest(4) | 0.4 | 0.3 | 0.1 | — | — | ||||||||||||||
Operating lease obligations(5) | 79.4 | 16.6 | 22.0 | 14.2 | 26.6 | ||||||||||||||
Non-cancelable purchase obligations(6) | 79.8 | 24.0 | 42.7 | 13.0 | 0.0 | ||||||||||||||
Total contractual obligations(7)(8) | $ | 4,453.7 | $ | 228.5 | $ | 1,310.1 | $ | 792.1 | $ | 2,122.7 |
(1) | Represents the contractually required principal payments, in accordance with the required payment schedule, on our debt obligations in existence as of December 31, 2018. |
(2) | Represents the contractually required interest payments, in accordance with the required payment schedule, on our debt obligations in existence as of December 31, 2018. Cash flows associated with the next interest payment to be made on our variable rate debt subsequent to December 31, 2018 were calculated using the interest rates in effect as of the latest interest rate reset date prior to December 31, 2018, plus the applicable spread. |
(3) | Represents the contractually required payments, in accordance with the required payment schedule, under our capital lease obligations in existence as of December 31, 2018. Certain leases were assumed to extend beyond their current terms because it was probable that such an extension would occur. |
(4) | Represents the contractually required payments, in accordance with the required payment schedule, under our financing obligations in existence as of December 31, 2018. No assumptions were made with respect to renewing these financing arrangements beyond their current terms. |
(5) | Represents the contractually required payments, in accordance with the required payment schedule, under our operating lease obligations in existence as of December 31, 2018. No assumptions were made with respect to renewing these leases beyond their current terms. |
(6) | Represents the contractually required payments under our various purchase obligations in existence as of December 31, 2018. No assumptions were made with respect to renewing the purchase obligations at the expiration date of their initial terms, and no amounts were assumed to be prepaid. |
(7) | Contractual obligations denominated in a foreign currency were calculated utilizing the U.S. dollar to local currency exchange rates in effect as of December 31, 2018. |
(8) | This table does not include the contractual obligations associated with our defined benefit and other post-retirement benefit plans. As of December 31, 2018, we had recognized a net benefit liability of $37.1 million, representing the net unfunded benefit obligations of the defined benefit and retiree healthcare plans. Refer to Note 13, "Pension and Other Post-Retirement Benefits," of our Financial Statements for additional information on pension and other post-retirement benefits, including expected benefit payments for the next 10 years. This table also does not include $11.5 million of unrecognized tax benefits as of December 31, 2018, as we are unable to make reasonably reliable estimates of when cash settlement, if any, will occur with a tax authority, as the timing and the ultimate resolution of the examination is uncertain. Refer to Note 7, "Income Taxes," of our Financial Statements for additional information on our unrecognized tax benefits. |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
(Decrease)/Increase to Future Pre-tax Earnings Due to: | ||||||||||||
(Dollars in millions) | Net Asset/(Liability) Balance as of December 31, 2018 | 10% Strengthening of the Value of the Foreign Currency Relative to the U.S. Dollar | 10% Weakening of the Value of the Foreign Currency Relative to the U.S. Dollar | |||||||||
Euro | $ | 14.5 | $ | (45.1 | ) | $ | 45.1 | |||||
Chinese Renminbi | $ | (0.3 | ) | $ | (4.1 | ) | $ | 4.1 | ||||
Korean Won | $ | 0.3 | $ | (2.8 | ) | $ | 2.8 | |||||
Malaysian Ringgit | $ | 0.1 | $ | 0.6 | $ | (0.6 | ) | |||||
Mexican Peso | $ | 0.7 | $ | 14.2 | $ | (14.2 | ) | |||||
British Pound Sterling | $ | (2.6 | ) | $ | 6.2 | $ | (6.2 | ) |
(Decrease)/Increase to Future Pre-tax Earnings Due to: | ||||||||||||
(Dollars in millions) | Net (Liability)/Asset Balance as of December 31, 2017 | 10% Strengthening of the Value of the Foreign Currency Relative to the U.S. Dollar | 10% Weakening of the Value of the Foreign Currency Relative to the U.S. Dollar | |||||||||
Euro | $ | (30.6 | ) | $ | (61.5 | ) | $ | 61.5 | ||||
Chinese Renminbi | $ | (3.6 | ) | $ | (24.4 | ) | $ | 24.4 | ||||
Korean Won | $ | (2.3 | ) | $ | (3.9 | ) | $ | 3.9 | ||||
Malaysian Ringgit | $ | 0.2 | $ | 0.5 | $ | (0.5 | ) | |||||
Mexican Peso | $ | (2.6 | ) | $ | 13.4 | $ | (13.4 | ) | ||||
British Pound Sterling | $ | 2.0 | $ | 4.8 | $ | (4.8 | ) | |||||
Japanese Yen | $ | 0.0 | $ | 0.2 | $ | (0.2 | ) |
Net (Liability)/Asset Balance as of December 31, 2018 | Average Forward Price Per Unit as of December 31, 2018 | Increase/(Decrease) to Pre-tax Earnings Due to | ||||||||||||||
(Dollars in millions, except per unit amounts) | 10% Increase in the Forward Price | 10% Decrease in the Forward Price | ||||||||||||||
Silver | $ | (0.8 | ) | $ | 15.72 | $ | 1.7 | $ | (1.7 | ) | ||||||
Gold | $ | (0.0 | ) | $ | 1,303.51 | $ | 1.3 | $ | (1.3 | ) | ||||||
Nickel | $ | (0.2 | ) | $ | 4.93 | $ | 0.1 | $ | (0.1 | ) | ||||||
Aluminum | $ | (0.3 | ) | $ | 0.86 | $ | 0.2 | $ | (0.2 | ) | ||||||
Copper | $ | (1.3 | ) | $ | 2.71 | $ | 0.8 | $ | (0.8 | ) | ||||||
Platinum | $ | (0.9 | ) | $ | 805.38 | $ | 0.7 | $ | (0.7 | ) | ||||||
Palladium | $ | 0.2 | $ | 1,175.96 | $ | 0.1 | $ | (0.1 | ) |
Net (Liability)/Asset Balance as of December 31, 2017 | Average Forward Price Per Unit as of December 31, 2017 | Increase/(Decrease) to Pre-tax Earnings Due to | ||||||||||||||
(Dollars in millions, except per unit amounts) | 10% Increase in the Forward Price | 10% Decrease in the Forward Price | ||||||||||||||
Silver | $ | (0.6 | ) | $ | 17.20 | $ | 1.9 | $ | (1.9 | ) | ||||||
Gold | $ | 0.4 | $ | 1,322.24 | $ | 1.6 | $ | (1.6 | ) | |||||||
Nickel | $ | 0.3 | $ | 5.83 | $ | 0.2 | $ | (0.2 | ) | |||||||
Aluminum | $ | 0.9 | $ | 1.04 | $ | 0.6 | $ | (0.6 | ) | |||||||
Copper | $ | 4.4 | $ | 3.30 | $ | 2.4 | $ | (2.4 | ) | |||||||
Platinum | $ | (0.3 | ) | $ | 943.94 | $ | 0.8 | $ | (0.8 | ) | ||||||
Palladium | $ | 0.4 | $ | 1,022.19 | $ | 0.2 | $ | (0.2 | ) |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
1. | Financial Statements |
2. | Financial Statement Schedules |
/s/ ERNST & YOUNG LLP |
As of December 31, | |||||||
2018 | 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 729,833 | $ | 753,089 | |||
Accounts receivable, net of allowances of $13,762 and $12,947 as of December 31, 2018 and 2017, respectively | 581,769 | 556,541 | |||||
Inventories | 492,319 | 446,129 | |||||
Prepaid expenses and other current assets | 113,234 | 92,532 | |||||
Total current assets | 1,917,155 | 1,848,291 | |||||
Property, plant and equipment, net | 787,178 | 750,049 | |||||
Goodwill | 3,081,302 | 3,005,464 | |||||
Other intangible assets, net | 897,191 | 920,124 | |||||
Deferred income tax assets | 27,971 | 33,003 | |||||
Other assets | 86,890 | 84,594 | |||||
Total assets | $ | 6,797,687 | $ | 6,641,525 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt, capital lease and other financing obligations | $ | 14,561 | $ | 15,720 | |||
Accounts payable | 379,824 | 322,671 | |||||
Income taxes payable | 27,429 | 31,544 | |||||
Accrued expenses and other current liabilities | 218,130 | 259,560 | |||||
Total current liabilities | 639,944 | 629,495 | |||||
Deferred income tax liabilities | 225,694 | 338,228 | |||||
Pension and other post-retirement benefit obligations | 33,958 | 40,055 | |||||
Capital lease and other financing obligations, less current portion | 30,618 | 28,739 | |||||
Long-term debt, net | 3,219,762 | 3,225,810 | |||||
Other long-term liabilities | 39,277 | 33,572 | |||||
Total liabilities | 4,189,253 | 4,295,899 | |||||
Commitments and contingencies (Note 15) | |||||||
Shareholders’ equity: | |||||||
Ordinary shares, €0.01 nominal value per share, 177,069 and 400,000 shares authorized and 171,719 and 178,437 shares issued as of December 31, 2018 and 2017, respectively | 2,203 | 2,289 | |||||
Treasury shares, at cost, 7,571 and 7,076 shares as of December 31, 2018 and 2017, respectively | (399,417 | ) | (288,478 | ) | |||
Additional paid-in capital | 1,691,190 | 1,663,367 | |||||
Retained earnings | 1,340,636 | 1,031,612 | |||||
Accumulated other comprehensive loss | (26,178 | ) | (63,164 | ) | |||
Total shareholders’ equity | 2,608,434 | 2,345,626 | |||||
Total liabilities and shareholders’ equity | $ | 6,797,687 | $ | 6,641,525 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net revenue | $ | 3,521,627 | $ | 3,306,733 | $ | 3,202,288 | |||||
Operating costs and expenses: | |||||||||||
Cost of revenue | 2,266,863 | 2,138,898 | 2,084,159 | ||||||||
Research and development | 147,279 | 130,127 | 126,656 | ||||||||
Selling, general and administrative | 305,558 | 301,896 | 293,506 | ||||||||
Amortization of intangible assets | 139,326 | 161,050 | 201,498 | ||||||||
Restructuring and other charges, net | (47,818 | ) | 18,975 | 4,113 | |||||||
Total operating costs and expenses | 2,811,208 | 2,750,946 | 2,709,932 | ||||||||
Profit from operations | 710,419 | 555,787 | 492,356 | ||||||||
Interest expense, net | (153,679 | ) | (159,761 | ) | (165,818 | ) | |||||
Other, net | (30,365 | ) | 6,415 | (5,093 | ) | ||||||
Income before taxes | 526,375 | 402,441 | 321,445 | ||||||||
(Benefit from)/provision for income taxes | (72,620 | ) | (5,916 | ) | 59,011 | ||||||
Net income | $ | 598,995 | $ | 408,357 | $ | 262,434 | |||||
Basic net income per share | $ | 3.55 | $ | 2.39 | $ | 1.54 | |||||
Diluted net income per share | $ | 3.53 | $ | 2.37 | $ | 1.53 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income | $ | 598,995 | $ | 408,357 | $ | 262,434 | |||||
Other comprehensive income/(loss), net of tax: | |||||||||||
Cash flow hedges | 37,363 | (28,202 | ) | (3,829 | ) | ||||||
Defined benefit and retiree healthcare plans | (377 | ) | (895 | ) | (4,248 | ) | |||||
Other comprehensive income/(loss) | 36,986 | (29,097 | ) | (8,077 | ) | ||||||
Comprehensive income | $ | 635,981 | $ | 379,260 | $ | 254,357 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 598,995 | $ | 408,357 | $ | 262,434 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation | 106,014 | 109,321 | 106,903 | ||||||||
Amortization of debt issuance costs | 7,317 | 7,241 | 7,334 | ||||||||
Gain on sale of business | (64,423 | ) | — | — | |||||||
Share-based compensation | 23,825 | 19,819 | 17,425 | ||||||||
Loss on debt financing | 2,350 | 2,670 | — | ||||||||
Amortization of intangible assets | 139,326 | 161,050 | 201,498 | ||||||||
Deferred income taxes | (144,068 | ) | (56,757 | ) | 8,344 | ||||||
Unrealized loss on hedges and other | 18,176 | 781 | 11,517 | ||||||||
Changes in operating assets and liabilities, net of the effects of acquisitions and divestitures: | |||||||||||
Accounts receivable, net | (34,877 | ) | (56,330 | ) | (33,013 | ) | |||||
Inventories | (55,445 | ) | (57,119 | ) | (37,500 | ) | |||||
Prepaid expenses and other current assets | (11,891 | ) | (12,412 | ) | 6,956 | ||||||
Accounts payable and accrued expenses | 48,371 | 23,841 | (21,432 | ) | |||||||
Income taxes payable | (353 | ) | 7,655 | (1,938 | ) | ||||||
Other | (12,754 | ) | (471 | ) | (7,003 | ) | |||||
Net cash provided by operating activities | 620,563 | 557,646 | 521,525 | ||||||||
Cash flows from investing activities: | |||||||||||
Acquisitions, net of cash received | (228,307 | ) | — | 4,688 | |||||||
Additions to property, plant and equipment and capitalized software | (159,787 | ) | (144,584 | ) | (130,217 | ) | |||||
Investment in equity securities | — | — | (50,000 | ) | |||||||
Proceeds from sale of business, net of cash sold | 149,777 | — | — | ||||||||
Other | 711 | 3,862 | 751 | ||||||||
Net cash used in investing activities | (237,606 | ) | (140,722 | ) | (174,778 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of stock options and issuance of ordinary shares | 6,093 | 7,450 | 3,944 | ||||||||
Payment of employee restricted stock tax withholdings | (3,674 | ) | (2,910 | ) | (4,752 | ) | |||||
Proceeds from issuance of debt | — | 927,794 | — | ||||||||
Payments on debt | (15,653 | ) | (943,554 | ) | (336,256 | ) | |||||
Payments to repurchase ordinary shares | (399,417 | ) | — | — | |||||||
Payments of debt and equity issuance costs | (9,931 | ) | (4,043 | ) | (518 | ) | |||||
Other | 16,369 | — | — | ||||||||
Net cash used in financing activities | (406,213 | ) | (15,263 | ) | (337,582 | ) | |||||
Net change in cash and cash equivalents | (23,256 | ) | 401,661 | 9,165 | |||||||
Cash and cash equivalents, beginning of year | 753,089 | 351,428 | 342,263 | ||||||||
Cash and cash equivalents, end of year | $ | 729,833 | $ | 753,089 | $ | 351,428 | |||||
Supplemental cash flow items: | |||||||||||
Cash paid for interest | $ | 163,478 | $ | 164,370 | $ | 155,925 | |||||
Cash paid for income taxes | $ | 72,924 | $ | 48,482 | $ | 43,152 |
Ordinary Shares | Treasury Shares | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||||||||||||
Number | Amount | Number | Amount | ||||||||||||||||||||||||||
Balance as of December 31, 2015 | 178,437 | $ | 2,289 | (8,038 | ) | $ | (324,994 | ) | $ | 1,626,024 | $ | 391,247 | $ | (25,990 | ) | $ | 1,668,576 | ||||||||||||
Surrender of shares for tax withholding | — | — | (62 | ) | (2,295 | ) | — | — | — | (2,295 | ) | ||||||||||||||||||
Stock options exercised | — | — | 358 | 13,698 | — | (9,754 | ) | — | 3,944 | ||||||||||||||||||||
Vesting of restricted securities | — | — | 185 | 7,086 | — | (7,086 | ) | — | — | ||||||||||||||||||||
Share-based compensation | — | — | — | — | 17,425 | — | — | 17,425 | |||||||||||||||||||||
Net income | — | — | — | — | — | 262,434 | — | 262,434 | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (8,077 | ) | (8,077 | ) | |||||||||||||||||||
Balance as of December 31, 2016 | 178,437 | 2,289 | (7,557 | ) | (306,505 | ) | 1,643,449 | 636,841 | (34,067 | ) | 1,942,007 | ||||||||||||||||||
Surrender of shares for tax withholding | — | — | (67 | ) | (2,910 | ) | — | — | — | (2,910 | ) | ||||||||||||||||||
Stock options exercised | — | — | 326 | 12,465 | 99 | (5,114 | ) | — | 7,450 | ||||||||||||||||||||
Vesting of restricted securities | — | — | 222 | 8,472 | — | (8,472 | ) | — | — | ||||||||||||||||||||
Share-based compensation | — | — | — | — | 19,819 | — | — | 19,819 | |||||||||||||||||||||
Net income | — | — | — | — | — | 408,357 | — | 408,357 | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (29,097 | ) | (29,097 | ) | |||||||||||||||||||
Balance as of December 31, 2017 | 178,437 | 2,289 | (7,076 | ) | (288,478 | ) | 1,663,367 | 1,031,612 | (63,164 | ) | 2,345,626 | ||||||||||||||||||
Surrender of shares for tax withholding | — | — | (71 | ) | (3,674 | ) | — | — | — | (3,674 | ) | ||||||||||||||||||
Stock options exercised | 114 | 1 | 58 | 2,250 | 3,998 | (156 | ) | — | 6,093 | ||||||||||||||||||||
Vesting of restricted securities | 257 | 3 | — | — | — | (3 | ) | — | — | ||||||||||||||||||||
Retirement of treasury shares due to Merger | (7,018 | ) | (89 | ) | 7,018 | 286,228 | — | (286,139 | ) | — | — | ||||||||||||||||||
Repurchase of ordinary shares | — | — | (7,571 | ) | (399,417 | ) | — | — | — | (399,417 | ) | ||||||||||||||||||
Other retirements of treasury shares | (71 | ) | (1 | ) | 71 | 3,674 | — | (3,673 | ) | — | — | ||||||||||||||||||
Share-based compensation | — | — | — | — | 23,825 | — | — | 23,825 | |||||||||||||||||||||
Net income | — | — | — | — | — | 598,995 | — | 598,995 | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 36,986 | 36,986 | |||||||||||||||||||||
Balance as of December 31, 2018 | 171,719 | $ | 2,203 | (7,571 | ) | $ | (399,417 | ) | $ | 1,691,190 | $ | 1,340,636 | $ | (26,178 | ) | $ | 2,608,434 |
• | The fair value of the underlying ordinary shares. This is determined as the closing price of our ordinary shares on the New York Stock Exchange (the "NYSE") on the grant date. |
• | The expected term. This is determined based upon our own historical average term of exercised and outstanding options. |
• | Expected volatility. We consider our own historical volatility, as well as the historical and implied volatilities of publicly-traded companies within our industry, in estimating expected volatility for options. Implied volatility provides a forward-looking indication and may offer insight into expected industry volatility. |
• | Risk-free interest rate. The risk-free interest rate is based on the yield for a U.S. Treasury security having a maturity similar to the expected term of the related option grant. |
• | Expected dividend yield. The dividend yield of 0% is based on our history of having never declared or paid any dividends on our ordinary shares, and our current intention of not declaring any such dividends in the foreseeable future. See Item 5, "Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities," included elsewhere in this Report for further discussion of limitations on our ability to pay dividends. |
Buildings and improvements | 2 – 40 years |
Machinery and equipment | 2 – 15 years |
Performance Sensing | Sensing Solutions | Total | |||||||||||||||||||||||||||||||||
For the year ended December 31, | For the year ended December 31, | For the year ended December 31, | |||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||||
Net revenue: | |||||||||||||||||||||||||||||||||||
Automotive | $ | 2,076,834 | $ | 1,989,152 | $ | 1,973,264 | $ | 49,961 | $ | 50,463 | $ | 47,972 | $ | 2,126,795 | $ | 2,039,615 | $ | 2,021,236 | |||||||||||||||||
HVOR | 550,817 | 471,448 | 412,116 | — | — | — | 550,817 | 471,448 | 412,116 | ||||||||||||||||||||||||||
Industrial | — | — | — | 336,617 | 312,137 | 289,045 | 336,617 | 312,137 | 289,045 | ||||||||||||||||||||||||||
Appliance and HVAC | — | — | — | 208,482 | 209,958 | 187,815 | 208,482 | 209,958 | 187,815 | ||||||||||||||||||||||||||
Aerospace | — | — | — | 164,294 | 150,782 | 151,802 | 164,294 | 150,782 | 151,802 | ||||||||||||||||||||||||||
Other | — | — | — | 134,622 | 122,793 | 140,274 | 134,622 | 122,793 | 140,274 | ||||||||||||||||||||||||||
Net revenue | $ | 2,627,651 | $ | 2,460,600 | $ | 2,385,380 | $ | 893,976 | $ | 846,133 | $ | 816,908 | $ | 3,521,627 | $ | 3,306,733 | $ | 3,202,288 |
Number of Options (thousands) | Weighted-Average Exercise Price Per Option | Weighted-Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||
Balance as of December 31, 2015 | 3,361 | $ | 32.89 | 6.2 | $ | 47,967 | ||||||
Granted (1) | 654 | $ | 37.89 | |||||||||
Forfeited or expired | (111 | ) | $ | 43.95 | ||||||||
Exercised | (358 | ) | $ | 11.05 | $ | 9,501 | ||||||
Balance as of December 31, 2016 | 3,546 | $ | 35.67 | 6.3 | $ | 19,844 | ||||||
Granted | 387 | $ | 43.67 | |||||||||
Forfeited or expired | (1 | ) | $ | 32.03 | ||||||||
Exercised | (326 | ) | $ | 22.86 | $ | 7,175 | ||||||
Balance as of December 31, 2017 | 3,606 | $ | 37.69 | 6.0 | $ | 50,130 | ||||||
Granted | 307 | $ | 51.83 | |||||||||
Forfeited or expired | (39 | ) | $ | 45.59 | ||||||||
Exercised | (172 | ) | $ | 35.31 | $ | 3,143 | ||||||
Balance as of December 31, 2018 | 3,702 | $ | 38.89 | 5.3 | $ | 27,846 | ||||||
Options vested and exercisable as of December 31, 2018 | 2,625 | $ | 36.75 | 4.2 | $ | 24,224 | ||||||
Vested and expected to vest as of December 31, 2018 | 3,556 | $ | 38.65 | 5.2 | $ | 27,407 |
(1) | Includes 257 performance-based options. |
Number of Options (thousands) | Weighted-Average Grant-Date Fair Value | |||||
Balance as of December 31, 2017 | 1,184 | $ | 13.72 | |||
Granted during the year | 307 | $ | 15.70 | |||
Vested during the year | (383 | ) | $ | 14.49 | ||
Forfeited or expired during the year | (31 | ) | $ | 14.26 | ||
Balance as of December 31, 2018 | 1,077 | $ | 13.98 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Expected dividend yield | 0.00 | % | 0.00 | % | 0.00 | % | |||||
Expected volatility | 25.00 | % | 30.00 | % | 30.00 | % | |||||
Risk-free interest rate | 2.62 | % | 2.08 | % | 1.48 | % | |||||
Expected term (years) | 6.0 | 6.0 | 6.0 | ||||||||
Fair value per share of underlying ordinary shares | $ | 51.83 | $ | 43.67 | $ | 37.89 |
Percentage Range of Units That May Vest (1) | |||||||||||||||||||||||||||
0.0% to 150.0% | 0.0% to 172.5% | 0.0% to 200.0% | |||||||||||||||||||||||||
(Awards in thousands) | RSU Awards Granted | Weighted-Average Grant-Date Fair Value | PRSU Awards Granted | Weighted-Average Grant-Date Fair Value | PRSU Awards Granted | Weighted-Average Grant-Date Fair Value | PRSU Awards Granted | Weighted-Average Grant-Date Fair Value | |||||||||||||||||||
2018 | 218 | $ | 51.05 | 63 | $ | 51.83 | 118 | $ | 51.83 | — | $ | — | |||||||||||||||
2017 | 182 | $ | 43.24 | — | $ | — | 183 | $ | 43.67 | 53 | $ | 43.33 | |||||||||||||||
2016 | 319 | $ | 38.33 | — | $ | — | 180 | $ | 38.96 | — | $ | — |
(1) | Represents the percentage range of PRSU award units granted that may vest according to the terms of the awards, The amounts presented within this table do not reflect our current assessment of the probable outcome of vesting based on the achievement or expected achievement of performance conditions. |
Restricted Securities (thousands) | Weighted-Average Grant-Date Fair Value | |||||
Balance as of December 31, 2015 | 654 | $ | 45.87 | |||
Granted | 499 | $ | 38.56 | |||
Forfeited | (48 | ) | $ | 47.01 | ||
Vested | (185 | ) | $ | 33.41 | ||
Balance as of December 31, 2016 | 920 | $ | 44.35 | |||
Granted | 418 | $ | 43.44 | |||
Forfeited | (35 | ) | $ | 43.94 | ||
Vested | (222 | ) | $ | 42.24 | ||
Balance as of December 31, 2017 | 1,081 | $ | 44.43 | |||
Granted | 399 | $ | 51.40 | |||
Forfeited | (121 | ) | $ | 48.28 | ||
Vested | (240 | ) | $ | 53.01 | ||
Balance as of December 31, 2018 | 1,119 | $ | 44.66 |
As of December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Outstanding | $ | 50,161 | $ | 55,271 | $ | 35,845 | |||||
Expected to vest | $ | 44,203 | $ | 42,106 | $ | 26,937 |
As of December 31, | |||||
(Amounts in years) | 2018 | 2017 | 2016 | ||
Outstanding | 1.2 | 1.3 | 1.5 | ||
Expected to vest | 1.2 | 1.4 | 1.5 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Options | $ | 5,739 | $ | 6,046 | $ | 7,094 | |||||
Restricted securities | 18,086 | 13,773 | 10,331 | ||||||||
Total share-based compensation expense | $ | 23,825 | $ | 19,819 | $ | 17,425 |
Unrecognized Compensation Expense | Expected Recognition (years) | ||||
Options | $ | 9,329 | 2.1 | ||
Restricted securities | 23,168 | 1.6 | |||
Total unrecognized compensation expense | $ | 32,497 |
For the year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Severance costs, net (1) | $ | 7,566 | $ | 11,125 | $ | 813 | ||||||
Facility and other exit costs (2) | 877 | 7,850 | 3,300 | |||||||||
Gain on sale of Valves Business (3) | (64,423 | ) | — | — | ||||||||
Other (4) | 8,162 | — | — | |||||||||
Restructuring and other charges, net | $ | (47,818 | ) | $ | 18,975 | $ | 4,113 |
(1) | Severance costs for the year ended December 31, 2018 were primarily related to limited workforce reductions of manufacturing, engineering, and administrative positions as well as the elimination of certain positions related to site consolidations. Severance costs, net recognized during the year ended December 31, 2017 included $8.4 million of charges related to the closure of our facility in Minden, Germany, a site we obtained in connection with the acquisition of certain subsidiaries of Custom Sensors & Technologies Ltd. ("CST"). Severance costs for the year ended December 31, 2016 primarily related to charges recorded in connection with acquired businesses and the termination of a limited number of employees in various locations throughout the world. |
(2) | Facility and other exit costs for the year ended December 31, 2017 included $3.2 million of costs related to the closure of our facility in Minden, Germany and the transfer of equipment to alternate operating sites as well as $3.1 million of costs associated with the consolidation of two other manufacturing sites in Europe. Facility and other exit costs for the year ended December 31, 2016 primarily related to the relocation of manufacturing lines from our facility in the Dominican Republic to a manufacturing facility in Mexico. |
(3) | In fiscal year 2018 we completed the sale of the the capital stock of Schrader Bridgeport International, Inc. and August France Holding Company SAS (collectively, the "Valves Business"). The gain on this sale is included in restructuring and other charges, net. Refer to Note 17, "Acquisitions and Divestitures," for further discussion of the sale of the Valves Business. |
(4) | In the year ended December 31, 2018, we incurred $5.9 million of incremental direct costs in order to transact the sale of the Valves Business and $2.2 million of deferred compensation incurred in connection with the acquisition of GIGAVAC. Refer to Note 17, "Acquisitions and Divestitures," for further discussion. |
Severance | ||||
Balance as of December 31, 2016 | $ | 17,350 | ||
Charges, net of reversals | 11,125 | |||
Payments | (22,511 | ) | ||
Foreign currency remeasurement | 1,619 | |||
Balance as of December 31, 2017 | 7,583 | |||
Charges, net of reversals | 7,566 | |||
Payments | (8,341 | ) | ||
Foreign currency remeasurement | (217 | ) | ||
Balance as of December 31, 2018 | $ | 6,591 |
As of December 31, | ||||||||
2018 | 2017 | |||||||
Accrued expenses and other current liabilities | $ | 6,591 | $ | 4,184 | ||||
Other long-term liabilities | — | 3,399 | ||||||
Total severance liability | $ | 6,591 | $ | 7,583 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Currency remeasurement (loss)/gain on net monetary assets(1) | $ | (18,905 | ) | $ | 18,041 | $ | (10,621 | ) | |||
Gain/(loss) on foreign currency forward contracts(2) | 2,070 | (15,618 | ) | (1,850 | ) | ||||||
(Loss)/gain on commodity forward contracts(2) | (8,481 | ) | 9,989 | 7,399 | |||||||
Loss on debt financing(3) | (2,350 | ) | (2,670 | ) | — | ||||||
Net periodic benefit cost, excluding service cost(4) | (3,585 | ) | (3,402 | ) | (192 | ) | |||||
Other | 886 | 75 | 171 | ||||||||
Other, net | $ | (30,365 | ) | $ | 6,415 | $ | (5,093 | ) |
(1) | Relates to the remeasurement of non-U.S. dollar denominated net monetary assets and liabilities into U.S. dollars. Refer to the Foreign Currency section of Note 2, "Significant Accounting Policies," for discussion. |
(2) | Relates to changes in the fair value of derivative financial instruments not designated as cash flow hedges. Refer to Note 19, "Derivative Instruments and Hedging Activities," for a more detailed discussion. |
(3) | Refer to Note 14, "Debt," for a more detailed discussion of our debt financing transactions. |
(4) | On January 1, 2018, we adopted FASB ASU No. 2017-07, which requires the non-service cost components to be presented apart from the service cost component and outside of profit from operations. Refer to the Pension and Other Post-Retirement Benefits section of Note 2, "Significant Accounting Policies," and Note 13, "Pension and Other Post-Retirement Benefits," for additional details. |
U.S. | Non-U.S. | Total | |||||||||
2018 | $ | 68,027 | $ | 458,348 | $ | 526,375 | |||||
2017 | $ | (11,425 | ) | $ | 413,866 | $ | 402,441 | ||||
2016 | $ | (43,842 | ) | $ | 365,287 | $ | 321,445 |
U.S. Federal | Non-U.S. | U.S. State | Total | ||||||||||||
2018 | |||||||||||||||
Current | $ | 5,700 | $ | 64,666 | $ | 1,082 | $ | 71,448 | |||||||
Deferred | (109,663 | ) | (18,770 | ) | (15,635 | ) | (144,068 | ) | |||||||
Total | $ | (103,963 | ) | $ | 45,896 | $ | (14,553 | ) | $ | (72,620 | ) | ||||
2017 | |||||||||||||||
Current | $ | — | $ | 50,601 | $ | 240 | $ | 50,841 | |||||||
Deferred | (56,956 | ) | (1,104 | ) | 1,303 | (56,757 | ) | ||||||||
Total | $ | (56,956 | ) | $ | 49,497 | $ | 1,543 | $ | (5,916 | ) | |||||
2016 | |||||||||||||||
Current | $ | 464 | $ | 49,977 | $ | 226 | $ | 50,667 | |||||||
Deferred | 10,036 | 2,010 | (3,702 | ) | 8,344 | ||||||||||
Total | $ | 10,500 | $ | 51,987 | $ | (3,476 | ) | $ | 59,011 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Tax computed at statutory rate of 21% in 2018 and 35% in 2017 and 2016 | $ | 110,539 | $ | 140,854 | $ | 112,506 | |||||
Change in valuation allowances | (123,426 | ) | (3,368 | ) | 30,565 | ||||||
Foreign tax rate differential | (41,200 | ) | (111,990 | ) | (86,339 | ) | |||||
Change in tax laws or rates | (22,264 | ) | 3,912 | 2,542 | |||||||
Research and development incentives | (19,475 | ) | (5,922 | ) | (10,961 | ) | |||||
U.S. state taxes, net of federal benefit | (11,499 | ) | 1,087 | (2,166 | ) | ||||||
Unrealized foreign exchange losses, net | 11,346 | 830 | 3,829 | ||||||||
Reserve for tax exposure | 10,775 | 38,013 | 11,227 | ||||||||
Withholding taxes not creditable | 8,734 | 3,896 | 6,014 | ||||||||
U.S. Tax Reform impact | — | (73,668 | ) | — | |||||||
Other | 3,850 | 440 | (8,206 | ) | |||||||
(Benefit from)/provision for income taxes | $ | (72,620 | ) | $ | (5,916 | ) | $ | 59,011 |
As of December 31, | |||||||
2018 | 2017 | ||||||
Deferred tax assets: | |||||||
Inventories and related reserves | $ | 14,171 | $ | 17,287 | |||
Prepaid and accrued expenses | 71,004 | 25,920 | |||||
Property, plant and equipment | 14,571 | 13,396 | |||||
Intangible assets | 27,122 | 22,050 | |||||
Unrealized exchange loss | 4,255 | 12,265 | |||||
Net operating loss, interest expense, and other carryforwards | 296,255 | 349,244 | |||||
Pension liability and other | 8,701 | 8,880 | |||||
Share-based compensation | 11,332 | 12,195 | |||||
Other | 10,151 | 7,028 | |||||
Total deferred tax assets | 457,562 | 468,265 | |||||
Valuation allowance | (157,043 | ) | (277,315 | ) | |||
Net deferred tax asset | 300,519 | 190,950 | |||||
Deferred tax liabilities: | |||||||
Property, plant and equipment | (15,795 | ) | (23,222 | ) | |||
Intangible assets and goodwill | (440,348 | ) | (428,028 | ) | |||
Unrealized exchange gain | (6,912 | ) | (6,031 | ) | |||
Tax on undistributed earnings of subsidiaries | (35,187 | ) | (38,894 | ) | |||
Total deferred tax liabilities | (498,242 | ) | (496,175 | ) | |||
Net deferred tax liability | $ | (197,723 | ) | $ | (305,225 | ) |
Balance as of December 31, 2015 | $ | 38,057 | |
Increases related to prior year tax positions | 6,390 | ||
Increases related to current year tax positions | 8,462 | ||
Decreases related to lapse of applicable statute of limitations | (256 | ) | |
Decreases related to settlements with tax authorities | (6,755 | ) | |
Balance as of December 31, 2016 | 45,898 | ||
Increases related to prior year tax positions | 7,968 | ||
Increases related to current year tax positions | 14,585 | ||
Decreases related to lapse of applicable statute of limitations | (1,356 | ) | |
Decreases related to settlements with tax authorities | (7,211 | ) | |
Balance as of December 31, 2017 | 59,884 | ||
Increases related to prior year tax positions | 14,609 | ||
Increases related to current year tax positions | 15,676 | ||
Increases related to business combination | 1,000 | ||
Decreases related to prior year tax positions | (1,144 | ) | |
Decreases related to foreign currency exchange rate fluctuations | (416 | ) | |
Balance as of December 31, 2018 | $ | 89,609 |
Statements of Operations | Balance Sheets | |||||||||||||||||||
For the year ended December 31, | As of December 31, | |||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | 2016 | 2018 | 2017 | |||||||||||||||
Interest | $ | (0.2 | ) | $ | 0.2 | $ | 0.1 | $ | 0.4 | $ | 0.7 | |||||||||
Penalties | $ | (0.2 | ) | $ | (0.1 | ) | $ | 0.1 | $ | 0.4 | $ | 0.5 |
For the year ended December 31, | ||||||||
(Shares in thousands) | 2018 | 2017 | 2016 | |||||
Basic weighted-average ordinary shares outstanding | 168,570 | 171,165 | 170,709 | |||||
Dilutive effect of stock options | 822 | 616 | 489 | |||||
Dilutive effect of unvested restricted securities | 467 | 388 | 262 | |||||
Diluted weighted-average ordinary shares outstanding | 169,859 | 172,169 | 171,460 |
For the year ended December 31, | ||||||||
(Shares in thousands) | 2018 | 2017 | 2016 | |||||
Anti-dilutive shares excluded | 930 | 1,410 | 1,401 | |||||
Contingently issuable shares excluded | 687 | 871 | 606 |
As of December 31, | |||||||
2018 | 2017 | ||||||
Finished goods | $ | 187,095 | $ | 195,089 | |||
Work-in-process | 104,405 | 92,678 | |||||
Raw materials | 200,819 | 158,362 | |||||
Inventories | $ | 492,319 | $ | 446,129 |
As of December 31, | ||||||||
2018 | 2017 | |||||||
Land | $ | 22,021 | $ | 23,077 | ||||
Buildings and improvements | 259,182 | 250,475 | ||||||
Machinery and equipment | 1,220,285 | 1,132,461 | ||||||
Total PP&E | 1,501,488 | 1,406,013 | ||||||
Accumulated depreciation | (714,310 | ) | (655,964 | ) | ||||
PP&E, net | $ | 787,178 | $ | 750,049 |
As of December 31, | |||||||
2018 | 2017 | ||||||
Assets under capital leases in PP&E | $ | 49,714 | $ | 45,249 | |||
Accumulated depreciation | (22,508 | ) | (20,631 | ) | |||
Assets under capital leases in PP&E, net | $ | 27,206 | $ | 24,618 |
Performance Sensing | Sensing Solutions | Total | |||||||||||||||||||||||||||||||||
Gross Goodwill | Accumulated Impairment | Net Goodwill | Gross Goodwill | Accumulated Impairment | Net Goodwill | Gross Goodwill | Accumulated Impairment | Net Goodwill | |||||||||||||||||||||||||||
Balance as of December 31, 2016 and 2017 | $ | 2,148,135 | $ | — | $ | 2,148,135 | $ | 875,795 | $ | (18,466 | ) | $ | 857,329 | $ | 3,023,930 | $ | (18,466 | ) | $ | 3,005,464 | |||||||||||||||
Divestiture of Valves Business | (38,800 | ) | — | (38,800 | ) | — | — | — | (38,800 | ) | — | (38,800 | ) | ||||||||||||||||||||||
Acquisition of GIGAVAC | 46,298 | — | 46,298 | 68,340 | — | 68,340 | 114,638 | — | 114,638 | ||||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | 2,155,633 | $ | — | $ | 2,155,633 | $ | 944,135 | $ | (18,466 | ) | $ | 925,669 | $ | 3,099,768 | $ | (18,466 | ) | $ | 3,081,302 |
As of December 31, | |||||||||||||||||||||||||||||||||
Weighted- Average Life (years) | 2018 | 2017 | |||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Accumulated Impairment | Net Carrying Value | Gross Carrying Amount | Accumulated Amortization | Accumulated Impairment | Net Carrying Value | ||||||||||||||||||||||||||
Completed technologies | 14 | $ | 759,008 | $ | (475,295 | ) | $ | (2,430 | ) | $ | 281,283 | $ | 727,968 | $ | (418,987 | ) | $ | (2,430 | ) | $ | 306,551 | ||||||||||||
Customer relationships | 11 | 1,825,698 | (1,352,189 | ) | (12,144 | ) | 461,365 | 1,771,198 | (1,287,581 | ) | (12,144 | ) | 471,473 | ||||||||||||||||||||
Non-compete agreements | 8 | 23,400 | (23,400 | ) | — | — | 23,400 | (23,400 | ) | — | — | ||||||||||||||||||||||
Tradenames | 21 | 66,154 | (13,468 | ) | — | 52,686 | 50,754 | (11,094 | ) | — | 39,660 | ||||||||||||||||||||||
Capitalized software and other(1) | 7 | 65,896 | (32,509 | ) | — | 33,387 | 59,909 | (25,939 | ) | — | 33,970 | ||||||||||||||||||||||
Total | 12 | $ | 2,740,156 | $ | (1,896,861 | ) | $ | (14,574 | ) | $ | 828,721 | $ | 2,633,229 | $ | (1,767,001 | ) | $ | (14,574 | ) | $ | 851,654 |
(1) | During the years ended December 31, 2018 and 2017, we wrote-off approximately $0.2 million and $1.1 million, respectively, of fully-amortized capitalized software that was not in use. |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Acquisition-related definite-lived intangible assets | $ | 132,235 | $ | 153,729 | $ | 194,208 | |||||
Capitalized software | 7,091 | 7,321 | 7,290 | ||||||||
Amortization of intangible assets | $ | 139,326 | $ | 161,050 | $ | 201,498 |
For the year ended December 31, | |||
2019 | $ | 142,198 | |
2020 | $ | 127,046 | |
2021 | $ | 110,203 | |
2022 | $ | 95,029 | |
2023 | $ | 81,055 |
As of December 31, | |||||||
2018 | 2017 | ||||||
Accrued compensation and benefits | $ | 68,936 | $ | 89,816 | |||
Accrued interest | 40,550 | 36,919 | |||||
Foreign currency and commodity forward contracts | 7,710 | 35,094 | |||||
Accrued severance | 6,591 | 4,184 | |||||
Current portion of pension and post-retirement benefit obligations | 3,176 | 3,342 | |||||
Other accrued expenses and current liabilities | 91,167 | 90,205 | |||||
Accrued expenses and other current liabilities | $ | 218,130 | $ | 259,560 |
For the year ended December 31, | |||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | |||||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Defined Benefit | Retiree Healthcare | Defined Benefit | Defined Benefit | Retiree Healthcare | Defined Benefit | |||||||||||||||||||||||||||
Service cost | $ | — | $ | 50 | $ | 3,122 | $ | — | $ | 74 | $ | 2,582 | $ | — | $ | 83 | $ | 2,716 | |||||||||||||||||
Interest cost | 1,473 | 272 | 1,310 | 1,604 | 325 | 1,053 | 1,461 | 364 | 1,179 | ||||||||||||||||||||||||||
Expected return on plan assets | (1,710 | ) | — | (929 | ) | (2,151 | ) | — | (905 | ) | (2,684 | ) | — | (952 | ) | ||||||||||||||||||||
Amortization of net loss | 1,080 | 5 | 407 | 1,149 | 54 | 287 | 707 | 143 | 488 | ||||||||||||||||||||||||||
Amortization of net prior service (credit)/cost | — | (1,728 | ) | 6 | — | (1,335 | ) | (4 | ) | — | (1,335 | ) | (20 | ) | |||||||||||||||||||||
Loss on settlement | 1,047 | — | 1,461 | 3,225 | — | 100 | 1,293 | — | 34 | ||||||||||||||||||||||||||
Loss/(gain) on curtailment | — | — | 891 | — | — | — | — | — | (486 | ) | |||||||||||||||||||||||||
Net periodic benefit cost/(credit) | $ | 1,890 | $ | (1,401 | ) | $ | 6,268 | $ | 3,827 | $ | (882 | ) | $ | 3,113 | $ | 777 | $ | (745 | ) | $ | 2,959 |
For the year ended December 31, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
As Reported | Adjustment | As Adjusted | As Reported | Adjustment | As Adjusted | ||||||||||||||||||
Net revenue | $ | 3,306,733 | $ | — | $ | 3,306,733 | $ | 3,202,288 | $ | — | $ | 3,202,288 | |||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
Cost of revenue | 2,141,308 | (2,410 | ) | 2,138,898 | 2,084,261 | (102 | ) | 2,084,159 | |||||||||||||||
Research and development | 130,204 | (77 | ) | 130,127 | 126,665 | (9 | ) | 126,656 | |||||||||||||||
Selling, general and administrative | 302,811 | (915 | ) | 301,896 | 293,587 | (81 | ) | 293,506 | |||||||||||||||
Amortization of intangible assets | 161,050 | — | 161,050 | 201,498 | — | 201,498 | |||||||||||||||||
Restructuring and other charges, net | 18,975 | — | 18,975 | 4,113 | — | 4,113 | |||||||||||||||||
Total operating costs and expenses | 2,754,348 | (3,402 | ) | 2,750,946 | 2,710,124 | (192 | ) | 2,709,932 | |||||||||||||||
Profit from operations | 552,385 | 3,402 | 555,787 | 492,164 | 192 | 492,356 | |||||||||||||||||
Interest expense, net | (159,761 | ) | — | (159,761 | ) | (165,818 | ) | — | (165,818 | ) | |||||||||||||
Other, net | 9,817 | (3,402 | ) | 6,415 | (4,901 | ) | (192 | ) | (5,093 | ) | |||||||||||||
Income before taxes | $ | 402,441 | $ | — | $ | 402,441 | $ | 321,445 | $ | — | $ | 321,445 |
For the year ended December 31, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Defined Benefit | Retiree Healthcare | Defined Benefit | ||||||||||||||||||
Change in benefit obligation: | |||||||||||||||||||||||
Beginning balance | $ | 48,615 | $ | 9,692 | $ | 67,413 | $ | 57,679 | $ | 10,296 | $ | 59,056 | |||||||||||
Service cost | — | 50 | 3,122 | — | 74 | 2,582 | |||||||||||||||||
Interest cost | 1,473 | 272 | 1,310 | 1,604 | 325 | 1,053 | |||||||||||||||||
Plan participants’ contributions | — | 475 | 60 | — | 519 | 120 | |||||||||||||||||
Plan amendment | — | (3,243 | ) | — | — | — | (6 | ) | |||||||||||||||
Actuarial (gain)/loss | (519 | ) | (124 | ) | 2,777 | 2,936 | (197 | ) | 2,692 | ||||||||||||||
Curtailments | — | — | 931 | — | — | — | |||||||||||||||||
Benefits paid | (4,400 | ) | (1,105 | ) | (6,262 | ) | (13,604 | ) | (1,325 | ) | (2,572 | ) | |||||||||||
Divestiture | — | — | (3,310 | ) | — | — | — | ||||||||||||||||
Foreign currency remeasurement | — | — | (350 | ) | — | — | 4,488 | ||||||||||||||||
Ending balance | $ | 45,169 | $ | 6,017 | $ | 65,691 | $ | 48,615 | $ | 9,692 | $ | 67,413 | |||||||||||
Change in plan assets: | |||||||||||||||||||||||
Beginning balance | $ | 41,101 | $ | — | $ | 41,222 | $ | 52,042 | $ | — | $ | 37,361 | |||||||||||
Actual return on plan assets | (811 | ) | — | (1,308 | ) | 2,319 | — | 1,241 | |||||||||||||||
Employer contributions | 3,985 | 630 | 5,992 | 344 | 1,325 | 2,586 | |||||||||||||||||
Plan participants’ contributions | — | 475 | 60 | — | — | 120 | |||||||||||||||||
Benefits paid | (4,400 | ) | (1,105 | ) | (6,262 | ) | (13,604 | ) | (1,325 | ) | (2,572 | ) | |||||||||||
Foreign currency remeasurement | — | — | 164 | — | — | 2,486 | |||||||||||||||||
Ending balance | $ | 39,875 | $ | — | $ | 39,868 | $ | 41,101 | $ | — | $ | 41,222 | |||||||||||
Funded status at end of year | $ | (5,294 | ) | $ | (6,017 | ) | $ | (25,823 | ) | $ | (7,514 | ) | $ | (9,692 | ) | $ | (26,191 | ) | |||||
Accumulated benefit obligation at end of year | $ | 45,169 | NA | $ | 59,948 | $ | 48,615 | NA | $ | 60,588 |
As of December 31, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Defined Benefit | Retiree Healthcare | Defined Benefit | ||||||||||||||||||
Noncurrent assets | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Current liabilities | (595 | ) | (1,116 | ) | (1,465 | ) | (638 | ) | (1,210 | ) | (1,494 | ) | |||||||||||
Noncurrent liabilities | (4,699 | ) | (4,901 | ) | (24,358 | ) | (6,876 | ) | (8,482 | ) | (24,697 | ) | |||||||||||
Funded status | $ | (5,294 | ) | $ | (6,017 | ) | $ | (25,823 | ) | $ | (7,514 | ) | $ | (9,692 | ) | $ | (26,191 | ) |
As of December 31, | |||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | |||||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Defined Benefit | Retiree Healthcare | Defined Benefit | Defined Benefit | Retiree Healthcare | Defined Benefit | |||||||||||||||||||||||||||
Net prior service credit | $ | — | $ | (692 | ) | $ | (10 | ) | $ | — | $ | 823 | $ | (220 | ) | $ | — | $ | (512 | ) | $ | (218 | ) | ||||||||||||
Net loss | $ | 20,759 | $ | 880 | $ | 14,425 | $ | 20,884 | $ | 1,009 | $ | 12,489 | $ | 22,490 | $ | 1,260 | $ | 11,070 |
As of December 31, | |||||||||||||||
2018 | 2017 | ||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||
Projected benefit obligation | $ | 45,169 | $ | 65,691 | $ | 48,615 | $ | 31,680 | |||||||
Accumulated benefit obligation | $ | 45,169 | $ | 59,948 | $ | 48,615 | $ | 26,609 | |||||||
Plan assets | $ | 39,875 | $ | 39,868 | $ | 41,101 | $ | 5,759 |
As of December 31, | |||||||||||||||
2018 | 2017 | ||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||
Projected benefit obligation | $ | 51,186 | $ | 65,691 | $ | 58,307 | $ | 63,153 | |||||||
Plan assets | $ | 39,875 | $ | 39,868 | $ | 41,101 | $ | 36,990 |
For the year ended December 31, | |||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | |||||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Defined Benefit | Retiree Healthcare | Defined Benefit | Defined Benefit | Retiree Healthcare | Defined Benefit | |||||||||||||||||||||||||||
Net loss/(gain) | $ | 2,002 | $ | (124 | ) | $ | 3,669 | $ | 2,768 | $ | (197 | ) | $ | 1,618 | $ | 5,368 | $ | (984 | ) | $ | 2,505 | ||||||||||||||
Amortization of net loss | (1,080 | ) | (5 | ) | (298 | ) | (1,149 | ) | (54 | ) | (130 | ) | (707 | ) | (143 | ) | (436 | ) | |||||||||||||||||
Amortization of net prior service credit/(cost) | — | 1,728 | (4 | ) | — | 1,335 | 3 | — | 1,335 | 15 | |||||||||||||||||||||||||
Divestiture | — | — | (228 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
Plan amendment | — | (3,243 | ) | — | — | — | (5 | ) | — | — | (73 | ) | |||||||||||||||||||||||
Settlement effect | (1,047 | ) | — | (1,023 | ) | (3,225 | ) | — | (69 | ) | (1,293 | ) | — | (67 | ) | ||||||||||||||||||||
Curtailment effect | — | — | 30 | — | — | — | — | — | (1,272 | ) | |||||||||||||||||||||||||
Total in other comprehensive (income)/loss | $ | (125 | ) | $ | (1,644 | ) | $ | 2,146 | $ | (1,606 | ) | $ | 1,084 | $ | 1,417 | $ | 3,368 | $ | 208 | $ | 672 |
As of December 31, | ||||||||||||
2018 | 2017 | |||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Retiree Healthcare | |||||||||
U.S. assumed discount rate | 3.79 | % | 3.90 | % | 3.00 | % | 3.10 | % | ||||
Non-U.S. assumed discount rate | 2.17 | % | NA | 2.07 | % | NA | ||||||
Non-U.S. average long-term pay progression | 2.66 | % | NA | 2.66 | % | NA |
For the year ended December 31, | |||||||||||||||||
2018 | 2017 | 2016 | |||||||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Retiree Healthcare | Defined Benefit | Retiree Healthcare | ||||||||||||
U.S. assumed discount rate | 3.45 | % | 3.10 | % | 3.20 | % | 3.30 | % | 3.10 | % | 3.50 | % | |||||
Non-U.S. assumed discount rate | 5.87 | % | NA | 3.90 | % | NA | 3.83 | % | NA | ||||||||
U.S. average long-term rate of return on plan assets | 4.57 | % | NA | 4.50 | % | NA | 5.00 | % | NA | ||||||||
Non-U.S. average long-term rate of return on plan assets | 2.26 | % | NA | 2.29 | % | NA | 2.60 | % | NA | ||||||||
Non-U.S. average long-term pay progression | 4.82 | % | NA | 3.75 | % | NA | 3.78 | % | NA |
As of December 31, | ||||||||
2018 | 2017 | 2016 | ||||||
Assumed healthcare trend rate for next year: | ||||||||
Attributed to less than age 65 | 6.60 | % | 6.90 | % | 7.10 | % | ||
Attributed to age 65 or greater | 7.10 | % | 7.50 | % | 7.80 | % | ||
Ultimate trend rate | 4.50 | % | 4.50 | % | 4.50 | % | ||
Year in which ultimate trend rate is reached: | ||||||||
Attributed to less than age 65 | 2038 | 2038 | 2038 | |||||
Attributed to age 65 or greater | 2038 | 2038 | 2038 |
One Percentage Point: | |||||||
Increase | Decrease | ||||||
Effect on total service and interest cost components | $ | 6 | $ | (5 | ) | ||
Effect on post-retirement benefit obligations | $ | 200 | $ | (248 | ) |
Expected Benefit Payments | |||||||||||
For the year ended December 31, | U.S. Defined Benefit | U.S. Retiree Healthcare | Non-U.S. Defined Benefit | ||||||||
2019 | $ | 6,466 | $ | 1,116 | $ | 2,959 | |||||
2020 | $ | 5,826 | $ | 738 | $ | 3,232 | |||||
2021 | $ | 5,313 | $ | 696 | $ | 3,228 | |||||
2022 | $ | 4,128 | $ | 634 | $ | 3,829 | |||||
2023 | $ | 3,677 | $ | 523 | $ | 3,528 | |||||
2024 - 2027 | $ | 10,498 | $ | 1,905 | $ | 21,700 |
Target Allocation | Actual Allocation as of December 31, 2018 | ||||
U.S. large cap equity | 7 | % | 7 | % | |
U.S. small / mid cap equity | 2 | % | 2 | % | |
Globally managed volatility fund | 3 | % | 3 | % | |
International (non-U.S.) equity | 4 | % | 4 | % | |
Fixed income (U.S. investment and non-investment grade) | 68 | % | 67 | % | |
High-yield fixed income | 2 | % | 2 | % | |
International (non-U.S.) fixed income | 1 | % | 1 | % | |
Money market funds | 13 | % | 13 | % |
As of December 31, | |||||||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
U.S. large cap equity | $ | 2,960 | $ | — | $ | — | $ | 2,960 | $ | 3,288 | $ | — | $ | — | $ | 3,288 | |||||||||||||||
U.S. small / mid cap equity | 833 | — | — | 833 | 942 | — | — | 942 | |||||||||||||||||||||||
Global managed volatility fund | 1,214 | — | — | 1,214 | 1,288 | — | — | 1,288 | |||||||||||||||||||||||
International (non-U.S.) equity | 1,493 | — | — | 1,493 | 1,788 | — | — | 1,788 | |||||||||||||||||||||||
Total equity mutual funds | 6,500 | — | — | 6,500 | 7,306 | — | — | 7,306 | |||||||||||||||||||||||
Fixed income (U.S. investment grade) | 26,884 | — | — | 26,884 | 27,507 | — | — | 27,507 | |||||||||||||||||||||||
High-yield fixed income | 792 | — | — | 792 | 821 | — | — | 821 | |||||||||||||||||||||||
International (non-U.S.) fixed income | 402 | — | — | 402 | 398 | — | — | 398 | |||||||||||||||||||||||
Total fixed income mutual funds | 28,078 | — | — | 28,078 | 28,726 | — | — | 28,726 | |||||||||||||||||||||||
Money market funds | 5,297 | — | — | 5,297 | 5,069 | — | — | 5,069 | |||||||||||||||||||||||
Total plan assets | $ | 39,875 | $ | — | $ | — | $ | 39,875 | $ | 41,101 | $ | — | $ | — | $ | 41,101 |
Target Allocation | Actual Allocation as of December 31, 2018 | |||
Equity securities | 10%-90% | 25 | % | |
Fixed income securities, cash, and cash equivalents | 10%-90% | 75 | % |
As of December 31, | |||||||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
U.S. equity | $ | 2,212 | $ | — | $ | — | $ | 2,212 | $ | 2,461 | $ | — | $ | — | $ | 2,461 | |||||||||||||||
International (non-U.S.) equity | 5,158 | — | — | 5,158 | 6,567 | — | — | 6,567 | |||||||||||||||||||||||
Total equity securities | 7,370 | — | — | 7,370 | 9,028 | — | — | 9,028 | |||||||||||||||||||||||
U.S. fixed income | 3,076 | 269 | — | 3,345 | 2,968 | 268 | — | 3,236 | |||||||||||||||||||||||
International (non-U.S.) fixed income | 8,811 | — | — | 8,811 | 11,046 | — | — | 11,046 | |||||||||||||||||||||||
Total fixed income securities | 11,887 | 269 | — | 12,156 | 14,014 | 268 | — | 14,282 | |||||||||||||||||||||||
Cash and cash equivalents | 10,339 | — | — | 10,339 | 7,921 | — | — | 7,921 | |||||||||||||||||||||||
Total plan assets | $ | 29,596 | $ | 269 | $ | — | $ | 29,865 | $ | 30,963 | $ | 268 | $ | — | $ | 31,231 |
As of December 31, | |||||||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Insurance policies | $ | — | $ | — | $ | 8,897 | $ | 8,897 | $ | — | $ | — | $ | 9,059 | $ | 9,059 | |||||||||||||||
Total plan assets | $ | — | $ | — | $ | 8,897 | $ | 8,897 | $ | — | $ | — | $ | 9,059 | $ | 9,059 |
Insurance Policies | |||
Balance as of December 31, 2016 | $ | 8,014 | |
Actual return on plan assets still held at reporting date | (597 | ) | |
Purchases, sales, settlements, and exchange rate changes | 1,642 | ||
Balance as of December 31, 2017 | 9,059 | ||
Actual return on plan assets still held at reporting date | 177 | ||
Purchases, sales, settlements, and exchange rate changes | (339 | ) | |
Balance as of December 31, 2018 | $ | 8,897 |
As of December 31, | ||||||||
Maturity Date | 2018 | 2017 | ||||||
Term Loan | October 14, 2021 | $ | 917,794 | $ | 927,794 | |||
4.875% Senior Notes | October 15, 2023 | 500,000 | 500,000 | |||||
5.625% Senior Notes | November 1, 2024 | 400,000 | 400,000 | |||||
5.0% Senior Notes | October 1, 2025 | 700,000 | 700,000 | |||||
6.25% Senior Notes | February 15, 2026 | 750,000 | 750,000 | |||||
Less: discount | (15,169 | ) | (14,424 | ) | ||||
Less: deferred financing costs | (23,159 | ) | (27,758 | ) | ||||
Less: current portion | (9,704 | ) | (9,802 | ) | ||||
Long-term debt, net | $ | 3,219,762 | $ | 3,225,810 | ||||
Capital lease and other financing obligations | $ | 35,475 | $ | 34,657 | ||||
Less: current portion | (4,857 | ) | (5,918 | ) | ||||
Capital lease and other financing obligations, less current portion | $ | 30,618 | $ | 28,739 |
Period beginning February 15, | Price |
2021 | 103.125% |
2022 | 102.083% |
2023 | 101.042% |
2024 and thereafter | 100.000% |
• | incur indebtedness or liens, prepay subordinated debt, or amend the terms of our subordinated debt; |
• | make loans and investments (including acquisitions), make capital expenditures, or sell assets; |
• | change our business or accounting policies, merge, consolidate, dissolve or liquidate, or amend the terms of our organizational documents; |
• | enter into affiliate transactions; |
• | pay dividends and make other restricted payments; or |
• | enter into certain burdensome contractual obligations. |
• | at the conclusion of certain periods when outstanding loans and letters of credit that are not cash collateralized for the full face amount thereof exceed 10% of the commitments under the Revolving Credit Facility; and |
• | on a pro forma basis, in connection with any new borrowings (including any letter of credit issuances) under the Revolving Credit Facility as of the time of such borrowings. |
• | incur additional indebtedness or liens, prepay subordinated indebtedness, or guarantee indebtedness; |
• | make certain investments or certain other restricted payments or sell certain kinds of assets; |
• | effect mergers or consolidations; |
• | enter into certain types of transactions with affiliates; |
• | pay dividends or make other distributions in respect of STBV's and its subsidiaries' capital stock; |
• | create restrictions on STBV's subsidiaries' ability to make payments to STBV; |
• | issue preferred stock; |
• | redeem or repurchase STBV's capital stock, our capital stock, or the capital stock of any other direct or indirect parent company of STBV; or |
• | designate unrestricted subsidiaries. |
• | customary and reasonable operating expenses, legal and accounting fees and expenses, and overhead of such parent companies incurred in the ordinary course of business, provided that such amounts, in the aggregate, do not exceed $20.0 million in any fiscal year; |
• | dividends and other distributions in an aggregate amount not to exceed $100.0 million plus certain amounts, including the retained portion of excess cash flow, but only insofar as no default or event of default exists and the senior secured net leverage ratio is less than 2.0:1.0 calculated on a pro forma basis; |
• | dividends and other distributions in an aggregate amount not to exceed $50.0 million in any calendar year (subject to increase upon the achievement of certain ratios); and |
• | dividends and other distributions in an aggregate amount not to exceed $150.0 million, so long as no default or event of default exists. |
For the year ended December 31, | Aggregate Maturities | |||
2019 | $ | 9,704 | ||
2020 | 9,901 | |||
2021 | 898,189 | |||
2022 | — | |||
2023 | 500,000 | |||
Thereafter | 1,850,000 | |||
Total long-term debt principal payments | $ | 3,267,794 |
Future Minimum Payments | |||||||||||||||
Capital Leases | Other Financing Obligations | Operating Leases | Total | ||||||||||||
For the year ending December 31, | |||||||||||||||
2019 | $ | 4,672 | $ | 2,541 | $ | 16,621 | $ | 23,834 | |||||||
2020 | 4,540 | 459 | 12,319 | 17,318 | |||||||||||
2021 | 4,062 | 178 | 9,688 | 13,928 | |||||||||||
2022 | 3,712 | — | 7,707 | 11,419 | |||||||||||
2023 | 3,771 | — | 6,471 | 10,242 | |||||||||||
2024 and thereafter | 36,327 | — | 26,580 | 62,907 | |||||||||||
Net minimum rentals | 57,084 | 3,178 | 79,386 | 139,648 | |||||||||||
Less: interest portion | (24,395 | ) | (392 | ) | — | (24,787 | ) | ||||||||
Present value of future minimum rentals | $ | 32,689 | $ | 2,786 | $ | 79,386 | $ | 114,861 |
Purchase Commitments | |||
For the year ending December 31, | |||
2019 | $ | 23,983 | |
2020 | 24,202 | ||
2021 | 18,525 | ||
2022 | 8,065 | ||
2023 | 4,952 | ||
2024 and thereafter | 39 | ||
Total purchase commitments | $ | 79,766 |
Cash Flow Hedges | Defined Benefit and Retiree Healthcare Plans | Accumulated Other Comprehensive Loss | |||||||||
Balance as of December 31, 2015 | $ | 3,852 | $ | (29,842 | ) | $ | (25,990 | ) | |||
Pre-tax current period change | (5,106 | ) | (4,934 | ) | (10,040 | ) | |||||
Tax effect | 1,277 | 686 | 1,963 | ||||||||
Balance as of December 31, 2016 | 23 | (34,090 | ) | (34,067 | ) | ||||||
Pre-tax current period change | (37,603 | ) | (1,445 | ) | (39,048 | ) | |||||
Tax effect | 9,401 | 550 | 9,951 | ||||||||
Balance as of December 31, 2017 | (28,179 | ) | (34,985 | ) | (63,164 | ) | |||||
Pre-tax current period change | 49,817 | (1,183 | ) | 48,634 | |||||||
Tax effect | (12,454 | ) | 806 | (11,648 | ) | ||||||
Balance as of December 31, 2018 | $ | 9,184 | $ | (35,362 | ) | $ | (26,178 | ) |
For the year ended December 31, | ||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||||||||||||||||||
Cash Flow Hedges | Defined Benefit and Retiree Healthcare Plans | Total | Cash Flow Hedges | Defined Benefit and Retiree Healthcare Plans | Total | Cash Flow Hedges | Defined Benefit and Retiree Healthcare Plans | Total | ||||||||||||||||||||||||||||
Other comprehensive income/(loss) before reclassifications | $ | 26,859 | $ | (2,120 | ) | $ | 24,739 | $ | (39,387 | ) | $ | (4,184 | ) | $ | (43,571 | ) | $ | (6,356 | ) | $ | (6,816 | ) | $ | (13,172 | ) | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | 10,504 | 1,743 | 12,247 | 11,185 | 3,289 | 14,474 | 2,527 | 2,568 | 5,095 | |||||||||||||||||||||||||||
Other comprehensive income/(loss) | $ | 37,363 | $ | (377 | ) | $ | 36,986 | $ | (28,202 | ) | $ | (895 | ) | $ | (29,097 | ) | $ | (3,829 | ) | $ | (4,248 | ) | $ | (8,077 | ) |
Amount of Loss/(Gain) Reclassified from Accumulated Other Comprehensive Loss | ||||||||||||||
For the year ended December 31, | Affected Line in Consolidated Statements of Operations | |||||||||||||
2018 | 2017 | 2016 | ||||||||||||
Derivative instruments designated and qualifying as cash flow hedges: | ||||||||||||||
Foreign currency forward contracts | $ | 18,072 | $ | 916 | $ | (17,720 | ) | Net revenue (1) | ||||||
Foreign currency forward contracts | (5,442 | ) | 13,997 | 21,089 | Cost of revenue (1) | |||||||||
Foreign currency forward contracts | 1,376 | — | — | Other, net (1) | ||||||||||
Total, before taxes | 14,006 | 14,913 | 3,369 | Income before taxes | ||||||||||
Income tax effect | (3,502 | ) | (3,728 | ) | (842 | ) | (Benefit from)/provision for income taxes | |||||||
Total, net of taxes | $ | 10,504 | $ | 11,185 | $ | 2,527 | Net income | |||||||
Defined benefit and retiree healthcare plans | $ | 1,993 | $ | 3,476 | $ | 2,975 | Other, net (2) | |||||||
Defined benefit and retiree healthcare plans | 228 | — | — | Restructuring and other charges, net (3) | ||||||||||
Total, before taxes | 2,221 | 3,476 | 2,975 | Income before taxes | ||||||||||
Income tax effect | (478 | ) | (187 | ) | (407 | ) | (Benefit from)/provision for income taxes | |||||||
Total, net of taxes | $ | 1,743 | $ | 3,289 | $ | 2,568 | Net income |
(1) | See Note 19, "Derivative Instruments and Hedging Activities," for details on amounts to be reclassified in the future from accumulated other comprehensive loss. |
(2) | See Note 13, "Pension and Other Post-Retirement Benefits," for details of net periodic benefit cost. |
(3) | Amount represents an equity component of the Valves Business. Refer to Note 5, "Restructuring and Other Charges, Net," and Note 17, "Acquisitions and Divestitures," for information related to the sale of the Valves Business. |
Net working capital, excluding cash | $ | 16,980 | ||
Property, plant and equipment | 4,384 | |||
Goodwill | 114,638 | |||
Other intangible assets | 122,742 | |||
Other assets | 63 | |||
Deferred income tax liabilities | (27,000 | ) | ||
Other long-term liabilities | (1,000 | ) | ||
Fair value of net assets acquired, excluding cash and cash equivalents | 230,807 | |||
Cash and cash equivalents | 359 | |||
Fair value of net assets acquired | $ | 231,166 |
Acquisition Date Fair Value | Weighted-Average Lives (years) | ||||
Acquired definite-lived intangible assets: | |||||
Customer relationships | $ | 74,500 | 10 | ||
Completed technologies | 31,040 | 13 | |||
Tradenames | 15,400 | 15 | |||
Other | 1,802 | 6 | |||
Total definite-lived intangible assets acquired | $ | 122,742 | 12 |
• | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access at the measurement date. |
• | Level 2 inputs utilize inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. |
• | Level 3 inputs are unobservable inputs for the asset or liability, allowing for situations where there is little, if any, market activity for the asset or liability. |
As of December 31, | ||||||||
2018 | 2017 | |||||||
Assets measured at fair value: | ||||||||
Foreign currency forward contracts | $ | 17,871 | $ | 3,955 | ||||
Commodity forward contracts | 831 | 6,458 | ||||||
Total assets measured at fair value | $ | 18,702 | $ | 10,413 | ||||
Liabilities measured at fair value: | ||||||||
Foreign currency forward contracts | $ | 5,165 | $ | 40,969 | ||||
Commodity forward contracts | 4,137 | 1,104 | ||||||
Total liabilities measured at fair value | $ | 9,302 | $ | 42,073 |
As of December 31, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Carrying Value (1) | Fair Value | Carrying Value (1) | Fair Value | ||||||||||||
Term Loan | $ | 917,794 | $ | 904,027 | $ | 927,794 | $ | 930,114 | |||||||
4.875% Senior Notes | $ | 500,000 | $ | 491,875 | $ | 500,000 | $ | 521,875 | |||||||
5.625% Senior Notes | $ | 400,000 | $ | 400,500 | $ | 400,000 | $ | 439,000 | |||||||
5.0% Senior Notes | $ | 700,000 | $ | 660,625 | $ | 700,000 | $ | 741,125 | |||||||
6.25% Senior Notes | $ | 750,000 | $ | 751,875 | $ | 750,000 | $ | 813,750 |
(1) | Excluding any related debt discounts and deferred financing costs. |
Notional (in millions) | Effective Date | Maturity Date | Index | Weighted- Average Strike Rate | Hedge Designation (1) | |||||
44.0 EUR | December 27, 2018 | January 31, 2019 | Euro to U.S. Dollar Exchange Rate | 1.14 USD | None | |||||
341.5 EUR | Various from February 2017 to December 2018 | Various from January 2019 to November 2020 | Euro to U.S. Dollar Exchange Rate | 1.22 USD | Cash flow hedge | |||||
285.0 CNY | December 26, 2018 | January 31, 2019 | U.S. Dollar to Chinese Renminbi Exchange Rate | 6.91 CNY | None | |||||
31,275.0 KRW | Various from February 2017 to December 2018 | Various from January 2019 to November 2020 | U.S. Dollar to Korean Won Exchange Rate | 1,093.49 KRW | Cash flow hedge | |||||
26.8 MYR | December 26, 2018 | January 31, 2019 | U.S. Dollar to Malaysian Ringgit Exchange Rate | 4.18 MYR | None | |||||
195.0 MXN | December 27, 2018 | January 31, 2019 | U.S. Dollar to Mexican Peso Exchange Rate | 19.86 MXN | None | |||||
2,713.2 MXN | Various from February 2017 to December 2018 | Various from January 2019 to November 2020 | U.S. Dollar to Mexican Peso Exchange Rate | 20.72 MXN | Cash flow hedge | |||||
48.5 GBP | Various from February 2017 to December 2018 | Various from January 2019 to November 2020 | British Pound Sterling to U.S. Dollar Exchange Rate | 1.34 USD | Cash flow hedge |
(1) | Derivative financial instruments not designated as hedges are used to manage our exposure to currency exchange rate risk. They are intended to preserve the economic value and not for trading or speculative purposes. |
Notional | Remaining Contracted Periods | Weighted-Average Strike Price Per Unit | ||||||
Silver | 1,093,907 troy oz. | January 2019 - November 2020 | $ | 16.42 | ||||
Gold | 9,859 troy oz. | January 2019 - November 2020 | $ | 1,307.90 | ||||
Nickel | 287,681 pounds | January 2019 - November 2020 | $ | 5.75 | ||||
Aluminum | 2,350,172 pounds | January 2019 - November 2020 | $ | 0.97 | ||||
Copper | 2,904,061 pounds | January 2019 - November 2020 | $ | 3.17 | ||||
Platinum | 9,095 troy oz. | January 2019 - November 2020 | $ | 912.29 | ||||
Palladium | 1,001 troy oz. | January 2019 - November 2020 | $ | 966.21 |
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Balance Sheet Location | As of December 31, | Balance Sheet Location | As of December 31, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | $ | 14,608 | $ | 3,576 | Accrued expenses and other current liabilities | $ | 3,615 | $ | 32,806 | |||||||||
Foreign currency forward contracts | Other assets | 3,168 | 373 | Other long-term liabilities | 1,134 | 6,881 | |||||||||||||
Total | $ | 17,776 | $ | 3,949 | $ | 4,749 | $ | 39,687 | |||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||
Commodity forward contracts | Prepaid expenses and other current assets | $ | 524 | $ | 5,403 | Accrued expenses and other current liabilities | $ | 3,679 | $ | 1,006 | |||||||||
Commodity forward contracts | Other assets | 307 | 1,055 | Other long-term liabilities | 458 | 98 | |||||||||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | 95 | 6 | Accrued expenses and other current liabilities | 416 | 1,282 | |||||||||||||
Total | $ | 926 | $ | 6,464 | $ | 4,553 | $ | 2,386 |
Derivatives designated as hedging instruments | Amount of Deferred Gain/(Loss) Recognized in Other Comprehensive Income/(Loss) | Location of Net (Loss)/Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income | Amount of Net (Loss)/Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income | |||||||||||||||
For the year ended December 31, | For the year ended December 31, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Foreign currency forward contracts | $ | 30,752 | $ | (68,071 | ) | Net revenue | $ | (18,072 | ) | $ | (916 | ) | ||||||
Foreign currency forward contracts | $ | 5,059 | $ | 15,555 | Cost of revenue | $ | 5,442 | $ | (13,997 | ) | ||||||||
Foreign currency forward contracts | $ | — | $ | — | Other, net | $ | (1,376 | ) | $ | — |
Derivatives not designated as hedging instruments | Amount of (Loss)/Gain Recognized in Net Income | Location of Gain/(Loss) | ||||||||
For the year ended December 31, | ||||||||||
2018 | 2017 | |||||||||
Commodity forward contracts | $ | (8,481 | ) | $ | 9,989 | Other, net | ||||
Foreign currency forward contracts | $ | 3,446 | $ | (15,618 | ) | Other, net |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net revenue: | |||||||||||
Performance Sensing | $ | 2,627,651 | $ | 2,460,600 | $ | 2,385,380 | |||||
Sensing Solutions | 893,976 | 846,133 | 816,908 | ||||||||
Total net revenue | $ | 3,521,627 | $ | 3,306,733 | $ | 3,202,288 | |||||
Segment profit (as defined above): | |||||||||||
Performance Sensing | $ | 712,682 | $ | 664,186 | $ | 615,526 | |||||
Sensing Solutions | 293,009 | 277,450 | 261,914 | ||||||||
Total segment profit | 1,005,691 | 941,636 | 877,440 | ||||||||
Corporate and other | (203,764 | ) | (205,824 | ) | (179,473 | ) | |||||
Amortization of intangible assets | (139,326 | ) | (161,050 | ) | (201,498 | ) | |||||
Restructuring and other charges, net | 47,818 | (18,975 | ) | (4,113 | ) | ||||||
Profit from operations | 710,419 | 555,787 | 492,356 | ||||||||
Interest expense, net | (153,679 | ) | (159,761 | ) | (165,818 | ) | |||||
Other, net | (30,365 | ) | 6,415 | (5,093 | ) | ||||||
Income before taxes | $ | 526,375 | $ | 402,441 | $ | 321,445 |
Performance Sensing | Sensing Solutions | For the year ended December 31, | |||||||||||||
2018 | 2017 | 2016 | |||||||||||||
Net revenue: | |||||||||||||||
Sensors | X | X | $ | 2,755,280 | $ | 2,542,863 | $ | 2,455,476 | |||||||
Controls | X | X | 508,745 | 497,853 | 486,207 | ||||||||||
Other | X | X | 257,602 | 266,017 | 260,605 | ||||||||||
Net revenue | $ | 3,521,627 | $ | 3,306,733 | $ | 3,202,288 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Depreciation and amortization: | |||||||||||
Performance Sensing | $ | 72,067 | $ | 68,910 | $ | 68,837 | |||||
Sensing Solutions | 16,798 | 17,179 | 14,095 | ||||||||
Corporate and other (1) | 156,475 | 184,282 | 225,469 | ||||||||
Total depreciation and amortization | $ | 245,340 | $ | 270,371 | $ | 308,401 |
(1) | Included within Corporate and other is depreciation and amortization expense associated with the fair value step-up recognized in prior acquisitions and accelerated depreciation recorded in connection with restructuring actions. We do not allocate the additional depreciation and amortization expense associated with the step-up in the fair value of the PP&E and intangible assets associated with these acquisitions or accelerated depreciation related to restructuring actions to our segments. This treatment is consistent with the financial information reviewed by our chief operating decision maker. |
As of December 31, | |||||||
2018 | 2017 | ||||||
Assets: | |||||||
Performance Sensing | $ | 1,490,310 | $ | 1,396,565 | |||
Sensing Solutions | 468,131 | 424,237 | |||||
Corporate and other(1) | 4,839,246 | 4,820,723 | |||||
Total assets | $ | 6,797,687 | $ | 6,641,525 |
(1) | Included within Corporate and other as of December 31, 2018 and 2017 is $3,081.3 million and $3,005.5 million, respectively, of goodwill, as well as $897.2 million and $920.1 million, respectively, of other intangible assets, net, $729.8 million and $753.1 million, respectively, of cash and cash equivalents, and $36.5 million and $36.1 million, respectively, of PP&E, net. This treatment is consistent with the financial information reviewed by our chief operating decision maker. |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Additions to property, plant and equipment and capitalized software: | |||||||||||
Performance Sensing | $ | 130,234 | $ | 106,520 | $ | 99,299 | |||||
Sensing Solutions | 12,492 | 13,980 | 11,947 | ||||||||
Corporate and other | 17,061 | 24,084 | 18,971 | ||||||||
Total additions to property, plant and equipment and capitalized software | $ | 159,787 | $ | 144,584 | $ | 130,217 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net revenue: | |||||||||||
Americas | $ | 1,480,567 | $ | 1,367,113 | $ | 1,367,860 | |||||
Asia and rest of world | 1,012,526 | 903,118 | 810,094 | ||||||||
Europe | 1,028,534 | 1,036,502 | 1,024,334 | ||||||||
Net revenue | $ | 3,521,627 | $ | 3,306,733 | $ | 3,202,288 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net revenue: | |||||||||||
United States | $ | 1,360,590 | $ | 1,276,304 | $ | 1,322,206 | |||||
Netherlands | 585,036 | 571,735 | 550,937 | ||||||||
China | 560,938 | 478,713 | 412,460 | ||||||||
Korea | 188,114 | 184,101 | 182,464 | ||||||||
United Kingdom | 163,963 | 174,376 | 171,206 | ||||||||
All other | 662,986 | 621,504 | 563,015 | ||||||||
Net revenue | $ | 3,521,627 | $ | 3,306,733 | $ | 3,202,288 |
As of December 31, | |||||||
2018 | 2017 | ||||||
PP&E, net: | |||||||
Americas | $ | 292,625 | $ | 296,863 | |||
Asia | 309,542 | 266,524 | |||||
Europe | 185,011 | 186,662 | |||||
PP&E, net | $ | 787,178 | $ | 750,049 |
As of December 31, | |||||||
2018 | 2017 | ||||||
PP&E, net: | |||||||
United States | $ | 83,664 | $ | 95,603 | |||
China | 239,315 | 211,566 | |||||
Mexico | 204,552 | 196,813 | |||||
Bulgaria | 119,477 | 97,562 | |||||
United Kingdom | 51,404 | 63,310 | |||||
Malaysia | 65,688 | 50,783 | |||||
All other | 23,078 | 34,412 | |||||
PP&E, net | $ | 787,178 | $ | 750,049 |
For the three months ended | |||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||
Net revenue | $ | 847,922 | $ | 873,552 | $ | 913,860 | $ | 886,293 | |||||||
Gross profit | $ | 304,359 | $ | 315,218 | $ | 331,351 | $ | 303,836 | |||||||
Net income | $ | 254,099 | $ | 149,118 | $ | 105,288 | $ | 90,490 | |||||||
Basic net income per share | $ | 1.55 | $ | 0.89 | $ | 0.61 | $ | 0.53 | |||||||
Diluted net income per share | $ | 1.54 | $ | 0.88 | $ | 0.61 | $ | 0.52 |
For the three months ended | |||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | ||||||||||||
Net revenue | $ | 840,534 | $ | 819,054 | $ | 839,874 | $ | 807,271 | |||||||
Gross profit (1) | $ | 301,799 | $ | 291,815 | $ | 299,369 | $ | 274,852 | |||||||
Net income | $ | 169,129 | $ | 88,035 | $ | 79,457 | $ | 71,736 | |||||||
Basic net income per share (2) | $ | 0.99 | $ | 0.51 | $ | 0.46 | $ | 0.42 | |||||||
Diluted net income per share | $ | 0.98 | $ | 0.51 | $ | 0.46 | $ | 0.42 |
(1) | On January 1, 2018, we adopted FASB ASU No. 2017-07, which requires the service cost component of net periodic benefit cost to be presented separately on the consolidated statements of operations from the other components of net periodic benefit cost. Accordingly, a portion of cost of revenue (a component of Gross profit) has been recast to other, net for each quarter in the year ended December 31, 2017. Refer to Note 13, "Pension and Other Post-Retirement Benefits," for additional details. |
(2) | The sum of basic net income per share for the four quarters does not equal the full year basic net income per share due to rounding. |
For the three months ended | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||||
2018 | $ | 373 | $ | (4,233 | ) | $ | (1,426 | ) | $ | (3,195 | ) | ||||
2017 | $ | 3,550 | $ | 2,956 | $ | (1,957 | ) | $ | 5,440 |
For the three months ended | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||||
2018 | $ | 870 | $ | (52,698 | ) | $ | 244 | $ | 3,766 | ||||||
2017 | $ | 207 | $ | 1,329 | $ | 6,389 | $ | 11,050 |
For the three months ended | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||||
2018 | $ | — | $ | — | $ | 1,766 | $ | 2,352 | |||||||
2017 | $ | 2,059 | $ | 3,518 | $ | 1,020 | $ | — |
As of December 31, | |||||||
2018 | 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,089 | $ | 2,150 | |||
Intercompany receivables from subsidiaries | — | 94,094 | |||||
Prepaid expenses and other current assets | 528 | 643 | |||||
Total current assets | 1,617 | 96,887 | |||||
Investment in subsidiaries | 2,932,218 | 2,258,559 | |||||
Total assets | $ | 2,933,835 | $ | 2,355,446 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 58 | $ | 608 | |||
Intercompany payables to subsidiaries | 323,561 | 7,465 | |||||
Accrued expenses and other current liabilities | 1,782 | 1,219 | |||||
Total current liabilities | 325,401 | 9,292 | |||||
Pension obligations | — | 528 | |||||
Total liabilities | 325,401 | 9,820 | |||||
Total shareholders’ equity | 2,608,434 | 2,345,626 | |||||
Total liabilities and shareholders’ equity | $ | 2,933,835 | $ | 2,355,446 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net revenue | $ | — | $ | — | $ | — | |||||
Operating costs and expenses: | |||||||||||
Selling, general and administrative | 10,153 | 6,894 | 104 | ||||||||
Total operating costs and expenses | 10,153 | 6,894 | 104 | ||||||||
Loss from operations | (10,153 | ) | (6,894 | ) | (104 | ) | |||||
Intercompany interest (expense)/income, net | (4,709 | ) | 8 | 72 | |||||||
Other, net | 474 | (169 | ) | 107 | |||||||
(Loss)/income before income taxes and equity in net income of subsidiaries | (14,388 | ) | (7,055 | ) | 75 | ||||||
Equity in net income of subsidiaries | 613,383 | 415,412 | 262,359 | ||||||||
Provision for income taxes | — | — | — | ||||||||
Net income | $ | 598,995 | $ | 408,357 | $ | 262,434 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income | $ | 598,995 | $ | 408,357 | $ | 262,434 | |||||
Other comprehensive income/(loss), net of tax: | |||||||||||
Defined benefit plan | 535 | 77 | 515 | ||||||||
Subsidiaries' other comprehensive income/(loss) | 36,451 | (29,174 | ) | (8,592 | ) | ||||||
Other comprehensive income/(loss) | 36,986 | (29,097 | ) | (8,077 | ) | ||||||
Comprehensive income | $ | 635,981 | $ | 379,260 | $ | 254,357 |
For the year ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net cash used in operating activities | $ | (14,253 | ) | $ | (9,109 | ) | $ | (4,756 | ) | ||
Cash flows from investing activities: | |||||||||||
Return of capital from subsidiaries | — | 5,000 | 6,000 | ||||||||
Net cash provided by investing activities | — | 5,000 | 6,000 | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of stock options and issuance of ordinary shares | 6,093 | 7,450 | 3,944 | ||||||||
Proceeds from intercompany borrowings | 410,190 | — | — | ||||||||
Payments to repurchase ordinary shares | (399,417 | ) | — | — | |||||||
Payment of employee restricted stock tax withholdings | (3,674 | ) | (2,910 | ) | (4,752 | ) | |||||
Net cash provided by/(used in) financing activities | 13,192 | 4,540 | (808 | ) | |||||||
Net change in cash and cash equivalents | (1,061 | ) | 431 | 436 | |||||||
Cash and cash equivalents, beginning of year | 2,150 | 1,719 | 1,283 | ||||||||
Cash and cash equivalents, end of year | $ | 1,089 | $ | 2,150 | $ | 1,719 |
Balance at the Beginning of the Period | Additions | Deductions | Balance at the End of the Period | ||||||||||||
Charged, Net of Reversals, to Expenses/Against Revenue | |||||||||||||||
For the year ended December 31, 2018 | |||||||||||||||
Accounts receivable allowances | $ | 12,947 | $ | 2,194 | $ | (1,379 | ) | $ | 13,762 | ||||||
For the year ended December 31, 2017 | |||||||||||||||
Accounts receivable allowances | $ | 11,811 | $ | 2,205 | $ | (1,069 | ) | $ | 12,947 | ||||||
For the year ended December 31, 2016 | |||||||||||||||
Accounts receivable allowances | $ | 9,535 | $ | 3,072 | $ | (796 | ) | $ | 11,811 |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management of the Company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. |
/s/ ERNST & YOUNG LLP |
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
1. | Financial Statements — See "Financial Statements" under Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. |
2. | Financial Statement Schedules — See "Financial Statement Schedules" under Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. |
3. | Exhibits |
2.1 | ||
2.2 | ||
3.1 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
4.8 | ||
4.9 | ||
4.10 | ||
4.11 | ||
4.12 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
10.13 | ||
10.14 | ||
10.15 | ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
10.20 | ||
10.21 | ||
10.22 | ||
10.23 | ||
10.24 | ||
10.25 | ||
10.26 | ||
10.27 | ||
10.28 | ||
10.29 | ||
10.30 | ||
10.31 | ||
10.32 | ||
10.33 | ||
10.34 | ||
10.35 | ||
10.36 | ||
10.37 | ||
10.38 | ||
10.39 | ||
10.40 | ||
21.1 | ||
23.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
101 | The following materials from Sensata's Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Statements of Operations for the years ended December 31, 2018, 2017, and 2016, (ii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017, and 2016, (iii) Consolidated Balance Sheets at December 31, 2018 and 2017, (iv) Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2018, 2017, and 2016, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017, and 2016, (vi) the Notes to Consolidated Financial Statements, (vii) Schedule I — Condensed Financial Information of the Registrant and (viii) Schedule II — Valuation and Qualifying Accounts. |
* | Filed herewith. |
SENSATA TECHNOLOGIES HOLDING PLC | ||
/s/ MARTHA SULLIVAN | ||
By: | Martha Sullivan | |
Its: | Chief Executive Officer |
SIGNATURE | TITLE | DATE | ||
/S/ MARTHA SULLIVAN | Chief Executive Officer and Director (Principal Executive Officer) | February 6, 2019 | ||
Martha Sullivan | ||||
/S/ PAUL VASINGTON | Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | February 6, 2019 | ||
Paul Vasington | ||||
/S/ PAUL EDGERLEY | Chairman of the Board of Directors | February 6, 2019 | ||
Paul Edgerley | ||||
/S/ JAMES HEPPELMANN | Director | February 6, 2019 | ||
James Heppelmann | ||||
/S/ CHARLES PEFFER | Director | February 6, 2019 | ||
Charles Peffer | ||||
/S/ KIRK POND | Director | February 6, 2019 | ||
Kirk Pond | ||||
/S/ CONSTANCE SKIDMORE | Director | February 6, 2019 | ||
Constance Skidmore | ||||
/S/ ANDREW TEICH | Director | February 6, 2019 | ||
Andrew Teich | ||||
/S/ THOMAS WROE | Director | February 6, 2019 | ||
Thomas Wroe | ||||
/S/ STEPHEN ZIDE | Director | February 6, 2019 | ||
Stephen Zide | ||||
/S/ MARTHA SULLIVAN | Authorized Representative in the United States | February 6, 2019 | ||
Martha Sullivan |
Name | Jurisdiction of Incorporation | |
Sensata Technologies B.V. | The Netherlands | |
Sensata Technologies Intermediate Holding B.V. | The Netherlands | |
Sensata Technologies Intermediate UK Limited | United Kingdom | |
Sensata Technologies Japan Limited | Japan | |
Sensata Technologies Malaysia Sdn. Bhd. | Malaysia | |
Sensata Technologies Korea Limited | Korea | |
Sensata Technologies Holland B.V. | The Netherlands | |
Sensata Technologies Holding Company Mexico, B.V. | The Netherlands | |
Sensata Technologies de México, S. de R.L. de C.V. | Mexico | |
Sensata Technologies Finance Company, LLC | United States | |
Sensata Technologies, Inc. | United States | |
Sensata Technologies India Private Limited | India | |
Sensata Technologies Singapore Pte. Ltd. | Singapore | |
Sensata Technologies Taiwan Co., Ltd. | Taiwan | |
Sensata Technologies Hong Kong, Limited | Hong Kong | |
Sensata Technologies Baoying Co., Ltd. | China | |
Sensata Technologies Spain, S.L. | Spain | |
Sensata Technologies Sensores e Controles do Brasil Ltda. | Brazil | |
Sensata Technologies Changzhou Co., Ltd. | China | |
Sensata Technologies China Co., Ltd. | China | |
Sensata Technologies Italia S.r.L. | Italy | |
Control Devices, Inc. | United States | |
CDI Netherlands B.V. | The Netherlands | |
Sensata Technologies France SAS | France | |
Sensata Technologies Holding Company UK | United Kingdom | |
Sensata Technologies Limited | United Kingdom | |
FTCP Bermuda Ltd. | Bermuda | |
Sensata Technologies Dominicana, S.r.L. | Dominican Republic | |
Gigavac LLC | United States | |
Sensata Technologies US, LLC | United States | |
Sensata Technologies US II, LLC | United States | |
Sensata Technologies US Cooperatief U.A. | The Netherlands | |
Sensata Technologies Bermuda Ltd. | Bermuda | |
Sensata Technologies (Europe) Limited | United Kingdom | |
Sensata Technologies Mex Distribution, S.A. de C.V. | Mexico | |
Airpax Electronics (Shanghai) Co., Ltd. | China |
Name | Jurisdiction of Incorporation | |
Sensata Technologies Automotive Sensors (Shanghai) Co., Ltd. | China | |
Sensor-Nite N.V. | Belgium | |
Sensata Technologies Bulgaria EOOD | Bulgaria | |
Sensata Technologies Management China Co., Ltd. | China | |
Wabash Technologies Limited | United Kingdom | |
Wabash Technologies Mexico S. de R.L. de C.V. | Mexico | |
Sensata Technologies GmbH | Germany | |
DeltaTech Controls (Shanghai) Company Limited | China | |
DeltaTech Controls (Hong Kong) Company Limited | Hong Kong | |
ST Schrader Holding Company UK Limited | United Kingdom | |
ST August Lux Company S.á.r.l. | Luxembourg | |
ST August Lux Intermediate Holdco S.á.r.l. | Luxembourg | |
August Lux Holding Company S.á.r.l. | Luxembourg | |
August Lux UK Holding Company S.á.r.l. | Luxembourg | |
August Brazil Holding Company S.á.r.l. | Luxembourg | |
August UK HoldCo Limited | United Kingdom | |
Schrader International Brasil Ltda. | Brazil | |
Schrader, LLC | United States | |
Sensata Canada, Inc. | Canada | |
Schrader Electronics Limited | United Kingdom | |
Swindon Silicon Systems Limited | United Kingdom | |
Schrader Engineered Products (Kunshan) Co. Ltd. | China | |
Schrader International GmbH | Germany | |
Sensata Finance Ireland Limited | Ireland | |
Sensata Technologies Poland Sp, z.o.o | Poland | |
STI Holdco, Inc. | United States | |
Sensata Technologies Sensors (Changzhou) Co., Ltd | China | |
Sensata Finance Ireland Limited II | Ireland | |
Sensata Technologies UK Financing Co., plc | United Kingdom | |
BEI North America, LLC | United States | |
BEI Sensors SAS | France | |
Crydom SSR Limited | United Kingdom | |
Crydom, Inc. | United States | |
Custom Sensors & Technologies de Mexico S.A. de C.V. | Mexico | |
Custom Sensors & Technologies Newco Ltd. | United Kingdom | |
Custom Sensors & Technologies Transportation de Mexico S.A. de C.V. | Mexico | |
Custom Sensors & Technologies US Corp. | United States | |
Custom Sensors & Technologies US LLC | United States | |
Custom Sensors & Technologies Inc. | United States | |
Kavlico Corporation | United States | |
Sensata Germany GmbH | Germany | |
Sensata Technologies Germany GmbH | Germany | |
Name | Jurisdiction of Incorporation | |
Newall Electronics Inc. | United States | |
Newall Measurement Systems LTD | United Kingdom | |
(1) | Registration Statement (Form S-4 No. 333-220735) pertaining to Sensata Technologies Holding plc; |
(2) | Post-Effective Amendment No. 1 to the Registration Statement (Form S-3 No. 333-212676) of Sensata Technologies Holding plc; |
(3) | Post-Effective Amendment No. 1 to the Registration Statement (Form S-8 No. 333-166336) pertaining to the Sensata Technologies Holding plc Second Amended and Restated 2006 Management Option Plan and the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan; and |
(4) | Post-Effective Amendment No. 1 to the Registration Statement (Form S-8 No. 333-191999) pertaining to the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan; |
/s/ ERNST & YOUNG LLP | |||
1. | I have reviewed this Annual Report on Form 10-K of Sensata Technologies Holding plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | February 6, 2019 | |
/S/ MARTHA SULLIVAN | ||
Martha Sullivan | ||
Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of Sensata Technologies Holding plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | February 6, 2019 | |
/S/ PAUL VASINGTON | ||
Paul Vasington | ||
Executive Vice President and Chief Financial Officer |
/S/ MARTHA SULLIVAN | |
Martha Sullivan | |
Chief Executive Officer | |
Date: | February 6, 2019 |
/S/ PAUL VASINGTON | |
Paul Vasington | |
Executive Vice President and Chief Financial Officer | |
Date: | February 6, 2019 |
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Document and Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Jan. 15, 2019 |
Jun. 30, 2018 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Sensata Technologies Holding plc | ||
Entity Central Index Key | 0001477294 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Common Stock, Shares Outstanding | 164,158,929 | ||
Entity Public Float | $ 8.1 | ||
Entity Shell Company | false |
Consolidated Balance Sheets (Parentheticals) $ in Thousands |
Dec. 31, 2018
USD ($)
shares
|
Dec. 31, 2018
€ / shares
|
Dec. 31, 2017
USD ($)
shares
|
Dec. 31, 2017
€ / shares
|
---|---|---|---|---|
Assets, Current [Abstract] | ||||
Allowance for doubtful accounts receivable, current | $ | $ 13,762 | $ 12,947 | ||
Stockholders' Equity Attributable to Parent [Abstract] | ||||
Ordinary shares nominal value per share (in euros per share) | € / shares | € 0.01 | € 0.01 | ||
Ordinary shares authorized (in shares) | 177,069,000 | 400,000,000 | ||
Ordinary shares issued (in shares) | 171,719,000 | 178,437,000 | ||
Treasury shares (in shares) | 7,571,000 | 7,076,000 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
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 |
|
Income Statement [Abstract] | |||||||||||
Net revenue | $ 847,922 | $ 873,552 | $ 913,860 | $ 886,293 | $ 840,534 | $ 819,054 | $ 839,874 | $ 807,271 | $ 3,521,627 | $ 3,306,733 | $ 3,202,288 |
Operating costs and expenses: | |||||||||||
Cost of revenue | 2,266,863 | 2,138,898 | 2,084,159 | ||||||||
Research and development | 147,279 | 130,127 | 126,656 | ||||||||
Selling, general and administrative | 305,558 | 301,896 | 293,506 | ||||||||
Amortization of intangible assets | 139,326 | 161,050 | 201,498 | ||||||||
Restructuring and other charges, net | (47,818) | 18,975 | 4,113 | ||||||||
Total operating costs and expenses | 2,811,208 | 2,750,946 | 2,709,932 | ||||||||
Profit from operations | 710,419 | 555,787 | 492,356 | ||||||||
Interest expense, net | (153,679) | (159,761) | (165,818) | ||||||||
Other, net | (30,365) | 6,415 | (5,093) | ||||||||
Income before taxes | 526,375 | 402,441 | 321,445 | ||||||||
(Benefit from)/provision for income taxes | (72,620) | (5,916) | 59,011 | ||||||||
Net income | $ 254,099 | $ 149,118 | $ 105,288 | $ 90,490 | $ 169,129 | $ 88,035 | $ 79,457 | $ 71,736 | $ 598,995 | $ 408,357 | $ 262,434 |
Basic net income per share (in dollars per share) | $ 1.55 | $ 0.89 | $ 0.61 | $ 0.53 | $ 0.99 | $ 0.51 | $ 0.46 | $ 0.42 | $ 3.55 | $ 2.39 | $ 1.54 |
Diluted net income per share (in dollars per share) | $ 1.54 | $ 0.88 | $ 0.61 | $ 0.52 | $ 0.98 | $ 0.51 | $ 0.46 | $ 0.42 | $ 3.53 | $ 2.37 | $ 1.53 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract] | |||
Net income | $ 598,995 | $ 408,357 | $ 262,434 |
Other comprehensive income/(loss), net of tax: | |||
Cash flow hedges | 37,363 | (28,202) | (3,829) |
Defined benefit and retiree healthcare plans | (377) | (895) | (4,248) |
Other comprehensive income/(loss) | 36,986 | (29,097) | (8,077) |
Comprehensive income | $ 635,981 | $ 379,260 | $ 254,357 |
Business Description and Basis of Presentation |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description and Basis of Presentation | Business Description and Basis of Presentation Description of Business The accompanying consolidated financial statements reflect the financial position, results of operations, comprehensive income, cash flows, and changes in shareholders' equity of Sensata Technologies Holding plc ("Sensata plc"), the successor issuer to Sensata Technologies Holding N.V. ("Sensata N.V."), and its wholly-owned subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," or "us." On September 28, 2017, the Board of Directors of Sensata N.V. unanimously approved a plan to change our location of incorporation from the Netherlands to the United Kingdom (the "U.K."). To effect this change, on February 16, 2018 the shareholders of Sensata N.V. approved a cross-border merger between Sensata N.V. and Sensata plc, a newly formed, public limited company incorporated under the laws of England and Wales, with Sensata plc being the surviving entity (the "Merger"). We received approval of the Merger by the U.K. High Court of Justice, and the Merger was completed, on March 28, 2018. As a result thereof, Sensata plc became the publicly-traded parent of the subsidiary companies that were previously controlled by Sensata N.V., with no changes made to the business being conducted by us prior to the Merger. Due to the fact that the Merger was a business combination between entities under common control, the assets and liabilities exchanged were accounted for at their carrying values. Sensata, a global industrial technology company, develops, manufactures, and sells a wide range of customized sensors and controls that address increasingly complex engineering requirements for specific customer applications and systems such as air conditioning, braking, exhaust, fuel oil, tire, operator controls, and transmission in automotive and heavy vehicle and off-road ("HVOR") systems, and temperature and electrical protection and control in numerous industrial applications, including aircraft, refrigeration, material handling, telecommunications, and heating, ventilation, and air conditioning ("HVAC") systems. Our sensors are devices that translate a physical phenomenon, such as pressure, temperature, or position, into electronic signals that microprocessors or computer-based control systems can act upon. Our controls are devices embedded within systems to protect them from excessive heat or current. We conduct our operations through subsidiary companies that operate business and product development centers primarily in Belgium, Bulgaria, China, Germany, Japan, the Netherlands, South Korea, the U.K., and the United States (the "U.S."); and manufacturing operations primarily in Bulgaria, China, Germany, Malaysia, Mexico, the U.K., and the U.S. We organize our business into two segments, Performance Sensing and Sensing Solutions. Refer to Note 20, "Segment Reporting," for a general description of each of our segments. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The accompanying consolidated financial statements present separately our financial position, results of operations, comprehensive income, cash flows, and changes in shareholders’ equity. All intercompany balances and transactions have been eliminated. All U.S. dollar and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated. Certain reclassifications have been made to prior periods to conform to current period presentation. |
Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to exercise our judgment in the process of applying our accounting policies. It also requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies at the date of the financial statements and the reported amounts of net revenue and expense during the reporting periods. Estimates are used when accounting for certain items such as allowances for doubtful accounts and sales returns, depreciation and amortization, inventory obsolescence, asset impairments (including goodwill and other intangible assets), contingencies, the value of share-based compensation, the determination of accrued expenses, certain asset valuations including deferred tax asset valuations, the useful lives of plant and equipment, post-retirement obligations, and business combinations. The accounting estimates used in the preparation of the consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as the operating environment changes. Actual results could differ from those estimates. Revenue Recognition On January 1, 2018, we adopted FASB ASC Topic 606, Revenue from Contracts with Customers. This standard replaced previous revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. Upon adoption, we applied the pertinent transition provisions to contracts that were not completed as of January 1, 2018 using the modified retrospective method. Accordingly, periods presented prior to January 1, 2018 are presented under the previous revenue recognition guidance (i.e., FASB ASC Topic 605, Revenue Recognition). We recognize revenue to depict the transfer of promised goods to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods. In order to achieve this, we use the five step model outlined in FASB ASC Topic 606. Specifically, we (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) we satisfy a performance obligation. The vast majority of our contracts (as defined in FASB ASC Topic 606) are customer purchase orders ("P.O.s"), which explicitly require that we transfer a specified quantity of products to our customers, for which performance is generally satisfied in a short amount of time. We do not consider there to be a significant financing component of our contracts, as our terms generally provide for payment in a short time (that is, less than a year) after shipment to the customer. Our performance obligations are satisfied when control of the product is transferred to the customer (at a point in time), which is generally when the product is shipped from our warehouse or, in limited instances, when it is received by the customer, depending on the specific terms of the arrangement. Many of our products are designed and engineered to meet customer specifications. These activities, and the testing of our products to determine compliance with those specifications, occur prior to any revenue being recognized. Products are then manufactured and sold to customers. However, in certain cases, pre-production activities are a performance obligation in a customer P.O., and revenue is recognized when the performance obligation is satisfied. Customer arrangements do not involve post-installation or post-sale testing and acceptance. In determining the transaction price related to a contract, we determine whether the amount promised in a contract includes a variable amount (variable consideration). Variable consideration may be specified in the customer P.O., in another agreement that identifies terms and conditions of the transaction, or based on our customary practices. We have identified certain types of variable consideration that are included in the transaction price related to our contracts, including sales returns (which generally include a right of return for defective or non-conforming product) and trade discounts (including retrospective volume discounts and early payment incentives). Such variable consideration has not historically been material in relation to our net revenue and have been within our estimates. The transaction price excludes value-added tax and similar taxes. Amounts billed to our customers for shipping and handling are recognized as revenue, and the related costs that we incur are presented in cost of revenue. We do not provide separately priced warranties to our customers. Our standard terms of sale provide our customers with a warranty against faulty workmanship and the use of defective materials, which is not considered a distinct performance obligation in accordance with FASB ASC Topic 606. Refer to Note 3, "Revenue Recognition," for additional information on our net revenue recognized in the consolidated statements of operations. Share-Based Compensation FASB ASC Topic 718, Compensation—Stock Compensation, requires that a company measure at fair value any new or modified share-based compensation arrangements with employees, such as stock options and restricted securities, and recognize as compensation expense that fair value over the requisite service period. Share-based compensation cost is generally recognized as a component of selling, general and administrative ("SG&A") expense, which is consistent with where the related employee costs are presented, however, such cost, or a portion thereof, may be capitalized provided certain criteria are met. Share-based awards may be subject to either cliff vesting (i.e., the entire award vests on a particular date) or graded vesting (i.e., portions of the award vest at different points in time). In accordance with FASB ASC Topic 718, compensation cost associated with share-based awards subject to cliff vesting must be recognized on a straight-line basis. However, for awards subject to graded vesting, companies have the option to recognize compensation cost on either a straight–line or accelerated basis. We have elected to recognize compensation costs for these awards using the straight-line method. We estimate the fair value of options on the grant date using the Black-Scholes-Merton option-pricing model. Key inputs and assumptions used in this model are as follows:
Restricted securities are valued using the closing price of our ordinary shares on the NYSE on the grant date. Certain of our restricted securities include performance conditions that require us to estimate the probable outcome of the performance condition. Compensation cost is recorded if it is probable that the performance condition will be achieved. Under the fair value recognition provisions of FASB ASC Topic 718, we recognize share-based compensation net of estimated forfeitures. Accordingly, we only recognize compensation cost for those awards expected to vest over the requisite service period. Compensation expense recognized for each award ultimately reflects the number of units that actually vest. Refer to Note 4, "Share-Based Payment Plans," for additional information on share-based compensation. Financial Instruments Our financial instruments include derivative instruments, debt instruments, equity investments, and trade accounts receivable. Derivative financial instruments: We account for our derivative financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures and FASB ASC Topic 815, Derivatives and Hedging. In accordance with FASB ASC Topic 815, we recognize all derivatives on the balance sheet at fair value. The fair value of our derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. These analyses utilize observable market-based inputs, including foreign currency exchange rates and commodity forward curves, and reflect the contractual terms of these instruments, including the period to maturity. Derivative instruments that are designated and qualify as hedges of the exposure to changes in the fair value of an asset, liability, or commitment, and that are attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments that are designated and qualify as hedges of the exposure to variability in expected future cash flows are considered cash flow hedges. Derivative instruments may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Currently, our derivative instruments that are designated as accounting hedges are all cash flow hedges. We also hold derivative instruments that are not designated as accounting hedges. The accounting for changes in the fair value of our cash flow hedges depends on whether we have elected to designate the derivative as a hedging instrument for accounting purposes and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. In accordance with FASB ASC Topic 815, the effective portion of changes in the fair value of cash flow hedges is recognized in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. The ineffective portion of changes in the fair value of cash flow hedges is immediately recognized in earnings. Changes in the fair value of derivative instruments that are not designated as accounting hedges are recognized immediately in other, net. We present the cash flows arising from our derivative financial instruments in a manner consistent with the presentation of cash flows that relate to the underlying hedged items. We incorporate credit valuation adjustments to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of non-performance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. We do not offset the fair value amounts recognized for derivative instruments against fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral. We maintain derivative instruments with major financial institutions of investment grade credit rating and monitor the amount of credit exposure to any one issuer. We believe there are no significant concentrations of risk associated with our derivative instruments. Refer to Note 19, "Derivative Instruments and Hedging Activities," for further discussion of our derivative instruments. Debt Instruments: A premium or discount on a debt instrument is recognized on the balance sheet as an adjustment to the carrying amount of the debt liability. In general, amounts paid to creditors are considered a reduction in the proceeds received from the issuance of the debt and are accounted for as a component of the premium or discount on the issuance, not as an issuance cost. Direct and incremental costs associated with the issuance of debt instruments such as legal fees, printing costs, and underwriters' fees, among others, paid to parties other than creditors, are also reported and presented as a reduction of debt on the consolidated balance sheets. Debt issuance costs and premiums or discounts are amortized over the term of the respective financing arrangement using the effective interest method. Amortization of these amounts is included as a component of interest expense, net in the consolidated statements of operations. In accounting for debt refinancing transactions, we apply the provisions of FASB ASC Subtopic 470-50, Modifications and Extinguishments. Our evaluation of the accounting under FASB ASC Subtopic 470-50 is done on a creditor by creditor basis in order to determine if the terms of the debt are substantially different and, as a result, whether to apply modification or extinguishment accounting. In the event that an individual holder of existing debt did not invest in new debt, we apply extinguishment accounting. Borrowings associated with individual holders of new debt that are not holders of existing debt are accounted for as new issuances. Refer to Note 14, "Debt," for further details of our debt instruments and transactions. Equity Investments: On January 1, 2018, we adopted FASB Accounting Standards Update ("ASU") No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities. In accordance with this guidance, we measure equity investments (other than those accounted for under the equity method, those that result in consolidation of the investee, and certain other investments) either at fair value, with changes to fair value recognized in net income, or in certain instances, by use of a measurement alternative. Under the measurement alternative, such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Refer to Note 18, "Fair Value Measures," for further discussion of our measurement of financial instruments. Trade accounts receivable: Trade accounts receivable are recognized at invoiced amounts and do not bear interest. Trade accounts receivable are reduced by an allowance for losses on receivables, as described elsewhere in this Note 2. Concentrations of risk with respect to trade accounts receivable are generally limited due to the large number of customers in various industries and their dispersion across several geographic areas. Although we do not foresee that credit risk associated with these receivables will deviate from historical experience, repayment is dependent upon the financial stability of these individual customers. Our largest customer accounted for approximately 8% of our net revenue for the year ended December 31, 2018. Allowance for Losses on Receivables The allowance for losses on receivables is used to present accounts receivable, net at an amount that represents our estimate of the related transaction price recognized as revenue in accordance with FASB ASC Topic 606. The allowance represents an estimate of probable but unconfirmed losses in the receivable portfolio. We estimate the allowance on the basis of specifically identified receivables that are evaluated individually for impairment and a statistical analysis of the remaining receivables determined by reference to past default experience. Customers are generally not required to provide collateral for purchases. The allowance for losses on receivables also includes an allowance for sales returns (variable consideration). Management judgments are used to determine when to charge off uncollectible trade accounts receivable. We base these judgments on the age of the receivable, credit quality of the customer, current economic conditions, and other factors that may affect a customer’s ability and intent to pay. Losses on receivables have not historically been significant. Goodwill and Other Intangible Assets Businesses acquired are recorded at their fair value on the date of acquisition, with the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed recognized as goodwill. Intangible assets acquired may include either definite-lived or indefinite-lived intangible assets, or both. In accordance with the requirements of FASB ASC Topic 350, Intangibles—Goodwill and Other, goodwill and intangible assets determined to have an indefinite useful life are not amortized. Instead these assets are evaluated for impairment on an annual basis, and whenever events or business conditions change that could indicate that the asset is impaired. We evaluate goodwill and indefinite-lived intangible assets for impairment in the fourth quarter of each fiscal year, unless events occur which trigger the need for an earlier impairment review. Goodwill: We have identified six reporting units: Performance Sensing, Electrical Protection, Industrial Sensing, Aerospace, Power Management, and Interconnection. These reporting units have been identified based on the definitions and guidance provided in FASB ASC Topic 350. We periodically review these reporting units to ensure that they continue to reflect the manner in which the business is operated. Certain assets and liabilities relate to the operations of multiple reporting units. We allocate these assets and liabilities to the related reporting units based on methods that we believe are reasonable and supportable, and we apply that allocation method on a consistent basis from year to year. Other assets and liabilities, such as cash and cash equivalents, property, plant and equipment associated with our corporate offices, and debt, we view as being corporate in nature. Accordingly, we do not assign these assets and liabilities to our reporting units. In the event we reorganize our business, we reassign the assets and liabilities among the affected reporting units using a reasonable and supportable methodology. As businesses are acquired, we assign assets acquired and liabilities assumed to a new or existing reporting unit as of the date of the acquisition. Goodwill generated by the acquisition of GIGAVAC, LLC ("GIGAVAC") in October 2018 has been allocated between our Performance Sensing and Industrial Sensing reporting units as of December 31, 2018, subject to changes prior to the end of the measurement period. Refer to Note 11, "Goodwill and Other Intangible Assets, Net," and Note 17, "Acquisitions and Divestitures," for additional information regarding the acquisition of GIGAVAC. In the event a disposal group meets the definition of a business, goodwill is allocated to the disposal group based on the relative fair value of the disposal group to the retained portion of the related reporting unit. We have the option to first assess qualitative factors to determine whether a quantitative analysis must be performed. The objective of a qualitative analysis is to determine whether it is more likely than not that the fair value of a reporting unit is less than its net book value. If we elect not to use this option, or if we determine that it is more likely than not that the fair value of a reporting unit is less than its net book value, then we perform the first step of the quantitative analysis prescribed by FASB ASC Topic 350. In this step we compare the estimated fair values of our reporting units to their respective net book values, including goodwill, to determine whether there is an indicator of potential impairment. If the net book value of a reporting unit exceeds its estimated fair value, we conduct a second step in which we calculate the implied fair value of goodwill. If the carrying value of the reporting unit’s goodwill exceeds its calculated implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of its identifiable assets and liabilities as if the reporting unit had been acquired in a business combination at the date of assessment, and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the sum of the fair values of each of its identifiable assets and liabilities is the implied fair value of goodwill. The fair value measurements of our reporting units are categorized in level 3 of the fair value hierarchy. Indefinite-lived intangible assets: Similar to goodwill, we perform an annual impairment review of our indefinite-lived intangible assets in the fourth quarter of each fiscal year, unless events occur that trigger the need for an earlier impairment review. We have the option to first assess qualitative factors in determining whether it is more likely than not that an indefinite-lived intangible asset is impaired. If we elect not to use this option, or we determine that it is more likely than not that the asset is impaired, we perform a quantitative impairment review that requires us to estimate the fair value of the indefinite-lived intangible asset and compare that amount to its carrying value. We estimate the fair value by using the relief-from-royalty method, which requires us to make assumptions about future conditions impacting the value of the indefinite-lived intangible assets, including projected growth rates, cost of capital, effective tax rates, and royalty rates. Impairment, if any, is based on the excess of the carrying value over the fair value of these assets. Definite-lived intangible assets: Definite-lived, acquisition-related intangible assets are amortized on an economic-benefit basis according to the useful lives of the assets, or on a straight-line basis if a pattern of economic benefits cannot be reliably determined. Capitalized software and capitalized software licenses are presented on the consolidated balance sheets as intangible assets. Capitalized software licenses are amortized on a straight-line basis over the lesser of the term of the license or the estimated useful life of the software. Capitalized software is amortized on a straight-line basis over its estimated useful life. Reviews are regularly performed to determine whether facts or circumstances exist that indicate that the carrying values of our definite-lived intangible assets are impaired. If we determine that such facts or circumstances exist, we estimate the recoverability of these assets by comparing the projected undiscounted net cash flows associated with these assets to their respective carrying values. If the sum of the projected undiscounted net cash flows is less than the carrying value of an asset, the impairment charge is measured as the excess of the carrying value over the fair value of that asset. We determine fair value by using the appropriate income approach valuation methodology, depending on the nature of the intangible asset. Refer to Note 11, "Goodwill and Other Intangible Assets, Net," for further details of our goodwill and other intangible assets. Income Taxes We estimate our provision for income taxes in each of the jurisdictions in which we operate. The provision for income taxes includes both our current and deferred tax exposure. Our deferred tax exposure is measured using the asset and liability method, under which deferred income taxes are recorded to reflect the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to reverse or settle. The effect on deferred tax assets and liabilities of a change in statutory tax rates is recognized in the consolidated statements of operations as an adjustment to income tax expense in the period that includes the enactment date. In measuring our deferred tax assets, we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or some portion of the deferred tax assets. If it is determined that it is more likely than not that future tax benefits associated with a deferred tax asset will not be realized, a valuation allowance is provided. As a result, we maintain valuation allowances against the deferred tax assets in jurisdictions that have incurred losses in recent periods and in which it is more likely than not that such deferred tax assets will not be utilized in the foreseeable future. The U.S. Tax Reform Act includes two new U.S. tax base erosion provisions, the global intangible low-taxed income ("GILTI") provisions and the base-erosion and anti-abuse tax ("BEAT") provisions. The GILTI provisions require our U.S. operations to include in our U.S. income tax return, earnings of subsidiaries held by our U.S. group to the extent that these subsidiaries have earnings in excess of an allowable return on their tangible assets. We have elected to account for GILTI in the period in which it is incurred, and therefore have not adjusted our deferred tax assets for any future impacts this provision may have. The Act subjects a U.S. taxpayer to pay a BEAT if it is greater than the taxpayer's regular tax liability. The BEAT provision eliminates the deduction of certain payments made to foreign affiliates (referred to as base erosion payments) but applies a lower tax rate on the resulting BEAT income. The FASB Staff Q&A, Topic 740, No. 4, Accounting for the Base Erosion Anti-Abuse Tax, states that the incremental effect of BEAT should be recognized in the year the BEAT is incurred as a period expense only, and an entity would not need to evaluate the effect of potentially paying the BEAT in future years on the realization of deferred tax assets recognized under the regular tax system, because the realization of the deferred tax asset would reduce its regular tax liability, even when an incremental BEAT liability would be owed in that period. We have followed this guidance in our current tax calculation and evaluation of the realizability of our deferred tax assets. In accordance with FASB ASC Topic 740, Income Taxes, penalties and interest related to unrecognized tax benefits may be classified as either income taxes or another expense line item in the consolidated statements of operations. We classify interest and penalties related to unrecognized tax benefits within the (benefit from)/provision for income taxes line of the consolidated statements of operations. Refer to Note 7, "Income Taxes," for further details on our income taxes. Pension and Other Post-Retirement Benefits We sponsor various pension and other post-retirement benefit plans covering our current and former employees in several countries. The funded status of pension and other post-retirement benefit plans, recognized on our consolidated balance sheets as an asset, current liability, or long-term liability, is measured as the difference between the fair value of plan assets and the benefit obligation at the measurement date. In general, the measurement date coincides with our fiscal year end, however, certain significant events, such as (1) plan amendments, (2) business combinations, (3) settlements or curtailments, or (4) plan mergers, may trigger the need for an interim measurement of both the plan assets and benefit obligations. Benefit obligations represent the actuarial present value of all benefits attributed by the pension formula as of the measurement date to employee service rendered before that date. The value of benefit obligations takes into consideration various financial assumptions, including assumed discount rate and the rate of increase in healthcare costs, and demographic assumptions, including compensation rate increases, retirement patterns, employee turnover rates, and mortality rates. We review these assumptions annually. Our review of demographic assumptions includes analyzing historical patterns and/or referencing industry standard tables, combined with our expectations around future compensation and staffing strategies. The difference between these assumptions and our actual experience results in the recognition of an actuarial gain or loss. Actuarial gains and losses are recorded directly to other comprehensive income or loss. If the total net actuarial gain or loss included in accumulated other comprehensive loss exceeds a threshold of 10% of the greater of the projected benefit obligation or the market related value of plan assets, it is subject to amortization and recorded as a component of net periodic pension cost over the average remaining service lives of the employees participating in the pension or post-retirement benefit plan. The discount rate reflects the current rate at which the pension and other post-retirement liabilities could be effectively settled, considering the timing of expected payments for plan participants. It is used to discount the estimated future obligations of the plans to the present value of the liability reflected in the financial statements. In estimating this rate in countries that have a market of high-quality, fixed-income investments, we consider rates of return on these investments included in various bond indices, adjusted to eliminate the effects of call provisions and differences in the timing and amounts of cash outflows related to the bonds. In other countries where a market of high-quality, fixed-income investments does not exist, we estimate the discount rate using government bond yields or long-term inflation rates. The expected return on plan assets reflects the average rate of earnings expected on the funds invested to provide for the benefits included in the projected benefit obligation. To determine the expected return on plan assets, we use the fair value of plan assets and consider the historical returns earned by similarly invested assets, the rates of return expected on plan assets in the future, and our investment strategy and asset mix with respect to the plans’ funds. Changes to benefit obligations may also be initiated by a settlement or curtailment. A settlement of a defined benefit obligation is an irrevocable transaction that relieves us (or the plan) of primary responsibility for the defined benefit obligation and eliminates significant risks related to the obligation and the assets used to effect the settlement. The settlement of all or more than a minor portion of the pension obligation constitutes an event that requires recognition of all or part of the net actuarial gains (or) losses deferred in accumulated other comprehensive loss. Our policy is to apply settlement accounting to the extent our year-to date settlements for a given plan exceed the sum of our forecasted full year service cost and interest cost for that particular plan. A curtailment is an event that significantly reduces the expected years of service of active employees or eliminates for a significant number of employees the accrual of defined benefits for some or all of their future service. The curtailment accounting provisions are applied on a plan-by-plan basis. The total gain or loss resulting from a curtailment is the sum of two distinct elements: (1) prior service cost write-off (see discussion in "amortization of net prior service cost/credit" above) and (2) curtailment gain or loss. Our policy is that a curtailment event represents one for which we expect a 10% (or greater) reduction in future years of service or an elimination of the accrual of defined benefits for some or all of the future services of 10% (or greater) of the plan's participants. Contributions made to pension and other post-retirement benefit plans are presented as cash used in operations within our consolidated statements of cash flows. On January 1, 2018, we adopted FASB ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. FASB ASU No. 2017-07 requires that entities must present the service cost components of net periodic benefit cost in the same financial statement line item(s) as other compensation costs arising from services rendered by the related employees during the period, whereas the non-service components of net periodic benefit cost must be presented separately from the financial statement line item(s) that include service cost and outside of operating income. In accordance with this guidance, we present the service cost component of net periodic benefit cost in the cost of revenue, research and development ("R&D"), and SG&A expense line items, and we present the non–service components of net periodic benefit cost in other, net. Prior periods have been recast to reflect this implementation. Refer to Note 13, "Pension and Other Post-Retirement Benefits," for further information on our pension and other post-retirement benefit plans. Inventories Inventories are stated at the lower of cost or estimated net realizable value. The cost of raw materials, work-in-process, and finished goods is determined based on a first-in, first-out basis and includes material, labor, and applicable manufacturing overhead. We conduct quarterly inventory reviews for salability and obsolescence, and inventory considered unlikely to be sold is adjusted to net realizable value. Refer to Note 9, "Inventories," for details of our inventory balances. Property, Plant and Equipment and Other Capitalized Costs PP&E is stated at cost, and in the case of plant and equipment, is depreciated on a straight-line basis over its estimated economic useful life. The depreciable lives of plant and equipment are as follows:
Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated economic useful lives of the improvements. Amortization of leasehold improvements is included in depreciation expense. Assets held under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Depreciation expense associated with capital leases is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease, unless ownership is transferred by the end of the lease or there is a bargain purchase option, in which case the asset is depreciated, normally on a straight-line basis, over the useful life that would be assigned if the asset were owned. Expenditures for maintenance and repairs are charged to expense as incurred, whereas major improvements that increase asset values and extend useful lives are capitalized. Refer to Note 10, "Property, Plant and Equipment," for details of our PP&E balances. Foreign Currency We derive a significant portion of our net revenue from markets outside of the U.S. For financial reporting purposes, the functional currency of all of our subsidiaries is the U.S. dollar because of the significant influence of the U.S. dollar on our operations. In certain instances, we enter into transactions that are denominated in a currency other than the U.S. dollar. At the date that such transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured and recorded in U.S. dollars using the exchange rate in effect at that date. At each balance sheet date, recorded monetary balances denominated in a currency other than U.S. dollar are adjusted to U.S. dollars using the exchange rate at the balance sheet date, with gains or losses recognized in other, net in the consolidated statements of operations. Cash and Cash Equivalents Cash comprises cash on hand. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of change in value, and have original maturities of three months or less. Recently issued accounting standards adopted in the current period: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which modifies how all entities recognize revenue, and consolidates into one FASB ASC Topic (that is FASB ASC Topic 606) the guidance found in FASB ASC Topic 605 and various other revenue accounting standards for specialized transactions and industries. Refer to the Revenue Recognition section of the significant accounting policies discussed elsewhere in this Note 2 for further discussion of this guidance. We adopted FASB ASC Topic 606 on January 1, 2018 using the modified retrospective transition method. Refer to Note 3, "Revenue Recognition," for additional details on this implementation. In January 2016, the FASB issued ASU No. 2016-01, which addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. Refer to the Financial Instruments section of the significant accounting policies discussed elsewhere in this Note 2 for further discussion of this guidance. We adopted FASB ASU No. 2016-01 on January 1, 2018, which resulted in no impact on our consolidated financial position or results of operations. Refer to Note 18, "Fair Value Measures," for further discussion of the application of the measurement alternative to our $50.0 million equity investment in Series B Preferred Stock of Quanergy, Inc ("Quanergy"). In March 2017, the FASB issued ASU No. 2017-07, which requires a change in the presentation of net periodic benefit cost on the consolidated statements of operations. Refer to the Pension and Other Post-Retirement Benefit Plans section of the significant accounting policies discussed elsewhere in this Note 2 for further discussion of this guidance. We adopted this guidance on January 1, 2018 and, as a result, we present the service cost component of net periodic benefit cost in the cost of revenue, R&D, and SG&A expense line items, and we present the non-service components of net periodic benefit cost in other, net. Refer to Note 6, "Other, Net," for the total other components of net periodic benefit cost. All prior period amounts have been recast in our consolidated statements of operations to reflect the revised presentation, with the adjustments presented in Note 13, "Pension and Other Post-Retirement Benefits." Other recently issued accounting standards adopted in the current period did not have a material impact on our consolidated financial position or results of operations. Recently issued accounting standards to be adopted in a future period: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes new accounting and disclosure requirements for leases. FASB ASU No. 2016-02 requires lessees to classify most leases as either finance or operating leases and to initially recognize a lease liability and right-of-use asset. Entities may elect to account for certain short-term leases (with a term of one year or less) using a method similar to the current operating lease model. The statements of operations will include, for finance leases, separate recognition of interest on the lease liability and amortization of the right-of-use asset and for operating leases, a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis. FASB ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods therein, with early adoption permitted. We have developed an implementation plan to adopt this new guidance, which included an assessment of the impact of the new guidance on our financial position and results of operation. Through our implementation efforts, we have decided that we will elect to apply the package of practical expedients, and we will not elect to apply the hindsight practical expedient. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements, which creates an optional transition expedient that allows an entity to apply the transition provisions of the new standard, including its disclosure requirements, at its adoption date instead of at the beginning of the earliest comparative period presented as originally required by FASB ASU No. 2016-02. We adopted FASB ASU No. 2016-02 on January 1, 2019 using this transition expedient. We have determined that adoption of this standard will result in the recognition of a lease liability and right-of-use asset for certain operating leases that are currently not recognized on our consolidated balance sheets, which we expect to be recorded using an incremental borrowing rate, however the amount recorded will not be material in relation to our consolidated balance sheets. At December 31, 2018, we are contractually obligated to make future payments of $79.4 million under our operating lease obligations in existence as of that date, primarily related to long-term facility leases. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), which changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results, in order to better align an entity’s risk management activities and financial reporting for hedging relationships. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. FASB ASU No. 2017-12 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, with early adoption permitted. We will adopt FASB ASU No. 2017-12 on January 1, 2019, which will not have a material impact on our consolidated financial position or results of operations. Other recently issued accounting standards to be adopted in future periods are not expected to have a material impact on our consolidated financial position or results of operations. |
Revenue Recognition |
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Revenue from Contract with Customer [Text Block] | Revenue Recognition We adopted FASB ASC Topic 606 on January 1, 2018, and we applied the pertinent transition provisions to contracts that were not completed as of January 1, 2018 using the modified retrospective method. Accordingly, periods presented prior to January 1, 2018 are presented under the previous revenue recognition guidance, including FASB ASC Topic 605. Refer to Note 2, "Significant Accounting Policies," for detailed discussion of the accounting policies related to revenue recognition. Because (1) the vast majority of our revenue is derived from the sale of tangible products for which we recognize revenue at a point in time and (2) the contracts that relate to these product shipments are purchase orders that have firm purchase commitments (generally over a short period of time), the adoption of FASB ASC Topic 606 did not have a material effect on our financial statements or results of operations, and no cumulative catch-up adjustment was required. We are electing to apply certain practical expedients that allow for more limited disclosures than those that would otherwise be required by FASB ASC Topic 606, including (1) the disclosure of transaction price allocated to the remaining unsatisfied performance obligations at the end of the period and (2) an explanation of when we expect to recognize the related revenue. We believe that our end markets are the categories that best depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following table presents net revenue disaggregated by segment and end market for the years ended December 31, 2018, 2017, and 2016:
In addition, refer to Note 20, "Segment Reporting," for a presentation of net revenue disaggregated by product category and geographic region. Performance Obligations Our net revenue and related cost of revenue are primarily the result of promises to transfer products to our customers. Revenue is recognized when control of the product is transferred to the customer, which is generally when the product is shipped from our warehouse or, in limited instances, when it is received by the customer, depending on the specific terms of the arrangement. Payment for products is generally due a short time (that is, less than a year) after shipment to the customer. Sales to customers generally include a right of return for defective or non-conforming product. Sales returns have not historically been significant in relation to our net revenue and have been within our estimates. Product sales are recorded net of variable consideration, such as sales returns and trade discounts (including volume and early payment incentives), as well as value-added tax and similar taxes. Amounts billed to our customers for shipping and handling are recorded in net revenue. Shipping and handling costs are included in cost of revenue. Warranties Our standard terms of sale provide our customers with a warranty against faulty workmanship and the use of defective materials, which, depending on the product, generally exists for a period of twelve to eighteen months after the date we ship the product to our customer or for a period of twelve months after the date the customer resells our product, whichever comes first. Our liability associated with this warranty is, at our option, to repair the product, replace the product, or provide the customer with a credit. We do not offer separately priced extended warranty or product maintenance contracts. We also sell products to customers under negotiated agreements or where we have accepted the customer’s terms of purchase. In these instances, we may provide additional warranties for longer durations, consistent with differing end market practices, and where our liability is not limited. In addition, many sales take place in situations where commercial or civil codes, or other laws, would imply various warranties and restrict limitations on liability. Contract Assets and Liabilities Our contract assets consist of accounts receivable. Contract liabilities, whereby we receive payment from customers related to our promise to satisfy performance obligations in the future, are not material. |
Share-Based Payment Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Plans | Share-Based Payment Plans In connection with the Merger we adopted the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan (the "2010 Equity Incentive Plan"). The purpose of the 2010 Equity Incentive Plan is to promote long-term growth and profitability by providing our present and future eligible directors, officers, and employees with incentives to contribute to, and participate in, our success. There are 10.0 million ordinary shares authorized for grants of awards under the 2010 Equity Incentive Plan, of which 3.3 million were available as of December 31, 2018. Refer to Note 2, "Significant Accounting Policies," for detailed discussion of the accounting policies related to share-based compensation. Share-Based Compensation Awards We grant option, restricted stock unit ("RSU"), and performance restricted stock unit ("PRSU") awards under the 2010 Equity Incentive Plan. For option and RSU awards vesting is typically subject only to continued employment and the passage of time. For PRSU awards vesting is also subject to continued employment and the passage of time, however the number of awarded units that ultimately vest also depends on the attainment of certain predefined performance criteria. Throughout this Annual Report on Form 10–K RSU and PRSU awards are often referred to collectively as "restricted securities." Options A summary of stock option activity for the years ended December 31, 2018, 2017, and 2016 is presented in the table below (amounts have been calculated based on unrounded shares):
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A summary of the status of our unvested options as of December 31, 2018, and of the changes during the year then ended, is presented in the table below (amounts have been calculated based on unrounded shares):
The fair value of stock options that vested during the years ended December 31, 2018, 2017, and 2016 was $5.5 million, $5.6 million, and $7.1 million, respectively. Option awards granted to employees under the 2010 Equity Incentive Plan generally vest 25% per year over four years from the grant date. We recognize compensation expense for options on a straight-line basis over the requisite service period, which is generally the same as the vesting period. The options expire ten years from the date of grant. Except as otherwise provided in specific option award agreements, if a participant ceases to be employed by us, options not yet vested expire and are forfeited at the termination date, and options that are fully vested expire 60 days after termination of the participant’s employment for any reason other than termination for cause (in which case the options expire on the participant’s termination date) or due to death or disability (in which case the options expire six months after the participant’s termination date). The weighted-average grant-date fair value per option granted during the years ended December 31, 2018, 2017, and 2016 was $15.70, $14.50, and $12.08, respectively. The fair value of options was estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The weighted-average key assumptions used in estimating the grant-date fair value of options for the years ended December 31, 2018, 2017, and 2016 are as follows:
Restricted Securities We grant RSU awards that cliff vest between one and three years from the grant date, and we grant PRSU awards that cliff vest three years after the grant date. For PRSU awards, the number of units that ultimately vest depends on the extent to which certain performance criteria are met, as described in the table below. A summary of restricted securities granted in the years ended December 31, 2018, 2017, and 2016 is presented below:
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Compensation cost for the year ended December 31, 2018 reflects our estimate of the probable outcome of the performance conditions associated with the PRSU awards granted in fiscal years 2018, 2017, and 2016. A summary of activity related to outstanding restricted securities for fiscal years 2018, 2017, and 2016 is presented in the table below (amounts have been calculated based on unrounded shares):
Aggregate intrinsic value information for restricted securities as of December 31, 2018, 2017, and 2016 is presented below:
The weighted-average remaining periods over which the restrictions will lapse as of December 31, 2018, 2017, and 2016 are as follows:
The expected to vest restricted securities are calculated based on the application of a forfeiture rate assumption to all outstanding restricted securities as well as our assessment of the probability of meeting the required performance conditions that pertain to the PRSU awards. Share-Based Compensation Expense The table below presents non-cash compensation expense related to our equity awards, which is recorded within SG&A expense in the consolidated statements of operations, during the identified periods:
In 2018, we recognized a $3.0 million income tax benefit associated with share-based compensation expense. We recognized no such tax benefit in either fiscal year 2017 or 2016. The table below presents unrecognized compensation expense at December 31, 2018 for each class of award, and the remaining expected term for this expense to be recognized:
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Charges, Net | Restructuring and Other Charges, Net Restructuring and other charges, net for the years ended December 31, 2018, 2017, and 2016 were as follows:
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Changes to our severance liability during the years ended December 31, 2018 and 2017 were as follows:
The following table outlines the current and long-term components of our severance liability recognized in the consolidated balance sheets as of December 31, 2018 and 2017.
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Effective April 27, 2006 (inception), and concurrent with the completion of the acquisition of the Sensors & Controls business ("S&C") of Texas Instruments Incorporated ("TI") (the "2006 Acquisition"), we commenced filing tax returns in the Netherlands as a stand-alone entity. On March 28, 2018, the Company reincorporated its headquarters in the U.K. Several of our Dutch resident subsidiaries continue to be taxable entities in the Netherlands and file tax returns under Dutch fiscal unity (i.e., consolidation). Prior to April 30, 2008, we filed one consolidated tax return in the U.S. On April 30, 2008, our U.S. subsidiaries executed a separation and distribution agreement that divided our U.S. businesses, resulting in two separate U.S. consolidated federal income tax returns. On January 1, 2016, our U.S. subsidiaries resumed filing one consolidated tax return. Our remaining subsidiaries will file income tax returns in the countries in which they are incorporated and/or operate, including Belgium, Bulgaria, China, France, Germany, Japan, Malaysia, Mexico, the Netherlands, South Korea, and the U.K. The 2006 Acquisition purchase accounting and the related debt and equity capitalization of the various subsidiaries of the consolidated company, and the realignment of the functions performed and risks assumed by the various subsidiaries, are of significant consequence to the determination of future book and taxable income of the respective subsidiaries and Sensata as a whole. Refer to Note 2, "Significant Accounting Policies," for detailed discussion of the accounting policies related to income taxes. Effects of the Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act of 2017 ("Tax Reform" or "the Act") was signed into law. The Act reduced the U.S. federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign sourced earnings. Given the significance of the legislation, the U.S. Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 ("SAB 118"). In fiscal year 2017 and the first nine months of 2018, we recorded provisional amounts for certain enactment-date effects of the Act by applying the guidance in SAB 118 because we had not yet completed our enactment-date accounting for these effects. In fiscal years 2018 and 2017 we recorded tax expense related to the enactment-date effects of the Act that included recording the one-time transition tax liability related to undistributed earnings of certain foreign subsidiaries which were not previously taxed, and adjusting deferred tax assets and liabilities. We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Act in 2017 and throughout 2018. At December 31, 2017, we had not completed our accounting for all of the enactment-date income tax effects of the Act under FASB ASC Topic 740 for the following aspects: impact on assessment on the measurement of deferred tax assets and liabilities, including the potential impact of the tax on global intangible low-taxed income, and the one-time transition tax. As of December 31, 2018, we have completed our accounting for all of the enactment-date income tax effects of the Act. As further discussed below, during fiscal year 2018 we did not record an adjustment to the provisional amounts recorded as of December 31, 2017. Deferred tax assets and liabilities In the year ended December 31, 2017, we remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%, by recording a tax benefit of $73.7 million, which was principally associated with indefinite lived intangible assets. Absent this deferred tax liability, we would have been in a net deferred tax asset position that was offset by a valuation allowance at December 31, 2017. Upon further analysis of certain aspects of the Act and refinement of our calculations during the year ended December 31, 2018, we determined that no further adjustment was necessary. One-time transition tax The one-time transition tax is based on our total post-1986 earnings and profits (E&P) of subsidiaries held by our U.S. companies that we previously deferred from U.S. income taxes. Due to tax attributes available, which had a full valuation allowance, to offset the anticipated transition tax, we provisionally did not record an income tax expense related to this tax at December 31, 2017. Upon further analyses of the Act and Notices and regulations issued and proposed by the U.S. Department of the Treasury and the Internal Revenue Service, we finalized our calculations of the transition tax liability during 2018. The transition tax was fully offset by tax losses incurred in 2017, resulting in no additional tax liability. Global intangible low-taxed income (GILTI) The Act subjects a U.S. shareholder to tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI in the year the tax is incurred. Income before taxes Income/(loss) before taxes for the years ended December 31, 2018, 2017, and 2016 was categorized by jurisdiction as follows:
(Benefit from)/provision for income taxes (Benefit from)/provision for income taxes for the years ended December 31, 2018, 2017, and 2016 was categorized by jurisdiction as follows:
Effective tax rate reconciliation The principal reconciling items from income tax computed at the U.S. statutory tax rate for the years ended December 31, 2018, 2017, and 2016 were as follows:
Change in valuation allowances During the years ended December 31, 2018, 2017, and 2016 we released a portion of our valuation allowance, recognizing a deferred tax benefit. Refer to the discussion below related to the release of the valuation allowance. U.S. Tax Reform Impact As a result of Tax Reform, the U.S. statutory tax rate was lowered from 35% to 21%, effective on January 1, 2018. We were required to remeasure our U.S. deferred tax assets and liabilities to the new tax rate. For the year ended December 31, 2017 we recorded $73.7 million of income tax benefit for the remeasurement of the deferred tax liabilities associated with indefinite-lived intangible assets that will reverse at the new 21% rate. Absent this deferred tax liability, the U.S. operation was in a net deferred tax asset position that was offset by a full valuation allowance at December 31, 2017. We reduced our net deferred tax assets excluding the indefinite-lived intangible assets and the corresponding valuation allowance by $120.0 million. Foreign tax rate differential We operate in locations outside the U.S., including Bermuda, Bulgaria, China, Malaysia, the Netherlands, South Korea, and the U.K., that historically have had statutory tax rates different than the U.S. statutory rate. This can result in a foreign tax rate differential that may reflect a tax benefit or detriment. This foreign rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates. Certain of our subsidiaries are currently eligible, or have been eligible, for tax exemptions or holidays in their respective jurisdictions. From 2016 through 2018, a subsidiary in Changzhou, China was eligible for a reduced tax rate of 15%. The impact on current tax expense of the tax holidays and exemptions is included in the foreign tax rate differential line in the reconciliation of the statutory rate to effective rate. The remeasurement of the deferred tax assets and liabilities is included in the change in tax laws or rates line. Research and development incentives Certain income of our U.K. subsidiaries is eligible for lower tax rates under the "patent box" regime, resulting in certain of our intellectual property income being taxed at a rate lower than the U.K. statutory tax rate. Certain R&D expenses are eligible for a bonus deduction under China’s R&D super deduction regime. In 2018, we substantially completed an assessment of our ability to claim an R&D credit in the U.S. As a result of this assessment, we recorded a tax benefit of $10.0 million. Annually, we expect our R&D credit to result in a net benefit of approximately $2.5 million per year. Prior to fiscal year 2018, the deferred tax asset related to these R&D credits would have been offset by the valuation allowance. Withholding taxes not creditable Withholding taxes may apply to intercompany interest, royalty, management fees, and certain payments to third parties. Such taxes are expensed if they cannot be credited against the recipient’s tax liability in its country of residence. Additional consideration also has been given to the withholding taxes associated with the remittance of presently unremitted earnings and the recipient's ability to obtain a tax credit for such taxes. Earnings are not considered to be indefinitely reinvested in the jurisdictions in which they were earned. In certain jurisdictions we record withholding and other taxes on intercompany payments including dividends. Deferred income tax assets and liabilities The primary components of deferred income tax assets and liabilities as of December 31, 2018 and 2017 were as follows:
Valuation allowance and net operating loss carryforwards In measuring our deferred tax assets, we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or some portion of the deferred tax assets. Significant judgment is required in considering the relative impact of the negative and positive evidence, and weight given to each category of evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary, and the more difficult it is to support a conclusion that a valuation allowance is not needed. Additionally, we utilize the "more likely than not" criteria established in FASB ASC Topic 740 to determine whether the future tax benefit from the deferred tax assets should be recognized. As a result, we have established valuation allowances on the deferred tax assets in jurisdictions that have incurred net operating losses and in which it is more likely than not that such losses will not be utilized in the foreseeable future. As of each reporting date, we consider new evidence, both positive and negative, that could impact our view with regard to future realization of deferred tax assets. In the fourth quarter of 2018, based on reversals of existing taxable differences, projections of future taxable income, and taxable income in the current year, we have determined that sufficient positive evidence exists as of December 31, 2018, to conclude that it is more likely than not the additional deferred taxes of $122.1 million are realizable, and therefore, reduced the valuation allowance accordingly. One of the provisions of the Tax Act limits the deduction for net interest expense incurred by U.S. corporations to 30% of adjusted taxable income. As a result of this provision, we have determined that certain of our interest carryforwards may be subject to limitation, and as result, determined that it was appropriate to retain the valuation allowance on a significant portion of these carryforwards. For tax purposes, certain goodwill and indefinite-lived intangible assets are generally amortizable over 6 to 20 years. For book purposes, goodwill and indefinite-lived intangible assets are not amortized, but are tested for impairment annually. The tax amortization of goodwill and indefinite-lived intangible assets will result in a taxable temporary difference, which will not reverse unless the related book goodwill or intangible asset is impaired or written off. This liability may not be used to support deductible temporary differences, such as net operating loss carryforwards, which may expire within a definite period. The total valuation allowance for the years ended December 31, 2018 and 2017 decreased $120.3 million and $22.4 million, respectively. Subsequently reported tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2018 will be allocated to income tax benefit recognized in the consolidated statements of operations. As of December 31, 2018, we have U.S. federal net operating loss carryforwards of $416.0 million and suspended interest expense carryforwards of $460.2 million. U.S. federal net operating loss carryforwards will expire from 2027 to 2037, state net operating loss carryforwards will expire from 2019 to 2037, and the interest carryovers have an unlimited life. It is more likely than not that these net operating losses will not be utilized in the foreseeable future. We also have non-U.S. net operating loss carryforwards of $238.0 million, which will begin to expire in 2019. Unrecognized tax benefits A reconciliation of the amount of unrecognized tax benefits is as follows:
We record interest and penalties related to unrecognized tax benefits in the consolidated statements of operations and the consolidated balance sheets. The table that follows presents the (income)/expense related to such interest and penalties recognized in the consolidated statements of operations during the years ended December 31, 2018, 2017, and 2016, and the amount of interest and penalties recorded on the consolidated balance sheets as of December 31, 2018 and 2017:
The liability for unrecognized tax benefits generally relates to the allocation of taxable income to the various jurisdictions where we are subject to tax. At December 31, 2018, we anticipate that the liability for unrecognized tax benefits could decrease by up to $0.5 million within the next twelve months due to the expiration of certain statutes of limitation or the settlement of examinations or issues with tax authorities. The amount of unrecognized tax benefits as of December 31, 2018 and 2017 that if recognized, would impact our effective tax rate are $11.5 million and $5.4 million, respectively. Our major tax jurisdictions include Belgium, Bulgaria, China, France, Germany, Japan, Malaysia, Mexico, the Netherlands, South Korea, the U.K., and the U.S. These jurisdictions generally remain open to examination by the relevant tax authority for the tax years 2006 through 2018. Indemnifications We have various indemnification provisions in place with parties including TI, Honeywell, William Blair, Tomkins Limited, and Custom Sensors & Technologies Ltd. These provisions provide for the reimbursement of future tax liabilities paid by us that relate to the pre-acquisition periods of the acquired businesses including S&C, First Technology Automotive and Special Products, Airpax Holdings, Inc., August Cayman Company, Inc. ("Schrader"), CST, and GIGAVAC. |
Other, Net |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other, Net | Other, Net Other, net consisted of the following for the years ended December 31, 2018, 2017, and 2016:
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Net Income Per Share |
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Net Income Per Share | Net Income per Share Basic and diluted net income per share are calculated by dividing net income by the number of basic and diluted weighted-average ordinary shares outstanding during the period. For the years ended December 31, 2018, 2017, and 2016, the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:
Net income and net income per share are presented in the consolidated statements of operations. Certain potential ordinary shares were excluded from our calculation of diluted weighted-average ordinary shares outstanding because either they would have had an anti-dilutive effect on net income per share or they related to equity awards that were contingently issuable for which the contingency had not been satisfied. Refer to Note 4, "Share-Based Payment Plans," for further discussion of our equity awards. These potential ordinary shares are as follows:
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Inventories |
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Inventories | Inventories The components of inventories as of December 31, 2018 and 2017 were as follows:
Refer to Note 2, "Significant Accounting Policies," for a discussion of our accounting policies related to inventories. |
Property, Plant and Equipment, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net PP&E, net as of December 31, 2018 and 2017 consisted of the following:
Depreciation expense for PP&E, including amortization of leasehold improvements and depreciation of assets under capital leases, totaled $106.0 million, $109.3 million, and $106.9 million for the years ended December 31, 2018, 2017, and 2016, respectively. PP&E, net as of December 31, 2018 and 2017 included the following assets under capital leases:
Refer to Note 2, "Significant Accounting Policies," for a discussion of our accounting policies related to PP&E, net. |
Goodwill and Other Intangible Assets, Net |
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Goodwill and Other Intangible Assets, Net | Goodwill and Other Intangible Assets, Net The following table outlines the changes in goodwill by segment for the year ended December 31, 2018. There were no acquisitions or other changes to goodwill during the year ended December 31, 2017.
Goodwill attributed to the acquisition of GIGAVAC reflects our allocation of purchase price to the estimated fair value of certain assets acquired and liabilities assumed. Preliminary goodwill attributed to the acquisition of GIGAVAC has been assigned to our segments in the above table based on a methodology using anticipated future earnings of the components of business. The allocation is preliminary and is subject to change prior to the end of the measurement period. Goodwill attributed to the sale of the Valves Business is based on the relative fair value of the Valves Business to the Performance Sensing reporting unit. Refer to Note 17, "Acquisitions and Divestitures," for further discussion of the acquisition of GIGAVAC and the sale of the Valves Business. In connection with the sale of the Valves Business, as required by FASB ASC Topic 350, we evaluated the goodwill of the retained portion of the Performance Sensing reporting unit for impairment using the quantitative method and determined that it was not impaired. In addition, we evaluated our goodwill for impairment as of October 1, 2018 using a combination of the qualitative and quantitative methods. Refer to Note 2, "Significant Accounting Policies," for discussion of these methods. Based on these analyses, we have determined that, for the Performance Sensing reporting unit, which was subject to the qualitative method, it was more likely than not that its fair value was greater than its carrying value at that date, and the Electrical Protection, Industrial Sensing, Aerospace, Power Management, and Interconnection reporting units, which were subject to the quantitative method, that their fair values exceeded their carrying values at that date. We evaluated our other indefinite-lived intangible assets for impairment as of October 1, 2018, using the quantitative method, and we determined that the fair value of each indefinite–lived intangible asset exceeded its respective carrying value on that date. The following table outlines the components of definite-lived intangible assets as of December 31, 2018 and 2017:
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Refer to Note 17, "Acquisitions and Divestitures," for details of definite-lived intangible assets recognized as a result of the acquisition of GIGAVAC. The following table outlines amortization of intangible assets for the years ended December 31, 2018, 2017, and 2016:
The table below presents estimated amortization of intangible assets for each of the next five years:
In addition to the above, we own the Klixon® and Airpax® tradenames, which are indefinite-lived intangible assets, as they have each been in continuous use for over 65 years, and we have no plans to discontinue using them. We have recorded $59.1 million and $9.4 million, respectively, on the consolidated balance sheets related to these tradenames. |
Accrued Expenses and Other Current Liabilities |
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Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities as of December 31, 2018 and 2017 consisted of the following:
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Pension and Other Post-Retirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Post-Retirement Benefits | Pension and Other Post-Retirement Benefits We provide various pension and other post-retirement plans for current and former employees, including defined benefit, defined contribution, and retiree healthcare benefit plans. Refer to Note 2, "Significant Accounting Policies," for a detailed discussion of the accounting policies related to our pension and other post-retirement benefit plans. U.S. Benefit Plans The principal retirement plans in the U.S. include a qualified defined benefit pension plan and a defined contribution plan. In addition, we provide post-retirement medical coverage and non-qualified benefits to certain employees. Defined Benefit Pension Plans The benefits under the qualified defined benefit pension plan are determined using a formula based upon years of service and the highest five consecutive years of compensation. TI closed the qualified defined benefit pension plan to participants hired after November 1997. In addition, participants eligible to retire under the TI plan as of April 26, 2006 were given the option of continuing to participate in the qualified defined benefit pension plan or retiring under the qualified defined benefit pension plan and thereafter participating in an enhanced defined contribution plan. We intend to contribute amounts to the qualified defined benefit pension plan in order to meet the minimum funding requirements of federal laws and regulations, plus such additional amounts as we deem appropriate. During the year ended December 31, 2018, we contributed $4.0 million to the qualified defined benefit plan. We do not expect to contribute to the qualified defined benefit pension plan in fiscal year 2019. We also sponsor a non-qualified defined benefit pension plan, which is closed to new participants and is unfunded. Effective January 31, 2012, we froze the defined benefit pension plans and eliminated future benefit accruals. Defined Contribution Plans As of 2018, we have one defined contribution plan for U.S. employees, which provides for an employer matching contribution of up to 4% of the employee's annual eligible earnings. The aggregate expense related to the defined contribution plan was $5.7 million, $5.9 million, and $5.8 million for the years ended December 31, 2018, 2017, and 2016, respectively. Retiree Healthcare Benefit Plan We offer access to group medical coverage during retirement to some of our U.S. employees. We make contributions toward the cost of those retiree medical benefits for certain retirees. The contribution rates are based upon varying factors, the most important of which are an employee’s date of hire, date of retirement, years of service, and eligibility for Medicare benefits. The balance of the cost is borne by the participants in the plan. For the year ended December 31, 2018, we did not, and do not expect to, receive any amount of Medicare Part D Federal subsidy. Our projected benefit obligation as of December 31, 2018 and 2017 did not include an assumption for a Federal subsidy. In the fourth quarter of 2013, we amended the retiree healthcare benefit plan to eliminate supplemental medical coverage offered to Medicare eligible retirees, effective January 1, 2014. As a result of the amendment, we recognized a gain of $7.2 million that was recorded in other comprehensive income/(loss) in the fourth quarter of 2013, which is being amortized as a component of net periodic benefit cost over a period of approximately 5 years from the date of recognition, which represents the remaining average service period to the full eligibility dates of the active plan participants. Non-U.S. Benefit Plans Retirement coverage for non-U.S. employees is provided through separate defined benefit and defined contribution plans. Retirement benefits are generally based on an employee’s years of service and compensation. Funding requirements are determined on an individual country and plan basis and are subject to local country practices and market circumstances. We do not expect to contribute to the non-U.S. defined benefit plans during 2019. Impact on Financial Statements The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the years ended December 31, 2018, 2017, and 2016 were as follows:
On January 1, 2018 we adopted the guidance in FASB ASU No. 2017-07, which requires that entities present the non–service components of net periodic benefit cost separately from the financial statement line item(s) that include service cost, outside of operating income. As a result of this adoption, the components of net periodic benefit cost, excluding service cost, were reclassified in our consolidated statements of operations from various operating cost and expense line items to other, net for the years ended December 31, 2017 and 2016. The table below presents the effects of this adjustment.
The following table outlines the rollforward of the benefit obligation and plan assets for the defined benefit and retiree healthcare benefit plans for the years ended December 31, 2018 and 2017:
The following table outlines the funded status amounts recognized in the consolidated balance sheets as of December 31, 2018 and 2017:
Balances recognized within accumulated other comprehensive loss that have not been recognized as components of net periodic benefit cost, net of tax, as of December 31, 2018, 2017, and 2016 are as follows:
We expect to amortize a loss of $0.5 million from accumulated other comprehensive loss to net periodic benefit cost during 2019. Information for plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2018 and 2017 is as follows:
Information for plans with a projected benefit obligation in excess of plan assets as of December 31, 2018 and 2017 is as follows:
Other changes in plan assets and benefit obligations, net of tax, recognized in other comprehensive income/(loss) for the years ended December 31, 2018, 2017, and 2016 are as follows:
Assumptions and Investment Policies Weighted-average assumptions used to calculate the projected benefit obligations of our defined benefit and retiree healthcare benefit plans as of December 31, 2018 and 2017 are as follows:
Weighted-average assumptions used to calculate the net periodic benefit cost of our defined benefit and retiree healthcare benefit plans for the years ended December 31, 2018, 2017, and 2016 are as follows:
Assumed healthcare cost trend rates for the U.S. retiree healthcare benefit plan as of December 31, 2018, 2017, and 2016 are as follows:
Assumed healthcare trend rates could have a significant effect on the amounts reported for retiree healthcare plans. A one percentage point change in the assumed healthcare trend rates for the year ended December 31, 2018 would have the following effect:
The table below outlines the benefits expected to be paid to participants in each of the following years, taking into consideration expected future service, as appropriate. The majority of the payments will be paid from plan assets and not company assets.
Plan Assets We hold assets for our defined benefit plans in the U.S., Japan, the Netherlands, and Belgium. Information about the assets for each of these plans is detailed below. Refer to Note 18, "Fair Value Measures," for descriptions of the levels of the fair value hierarchy in accordance with FASB ASC Topic 820. U.S. Plan Assets Our target asset allocation for the U.S. defined benefit plan is 83% fixed income and 17% equity securities. To arrive at the targeted asset allocation, we and our investment adviser reviewed market opportunities using historical data, as well as the actuarial valuation for the plan, to ensure that the levels of acceptable return and risk are well-defined and monitored. The following table presents information about the plan’s target and actual asset allocation, as of December 31, 2018:
The portfolio is monitored for automatic rebalancing on a monthly basis. The following table presents information about the plan assets measured at fair value as of December 31, 2018 and 2017:
Investments in mutual funds are based on the publicly-quoted final net asset values on the last business day of the year. Permitted asset classes include U.S. and non-U.S. equity, U.S. and non-U.S. fixed income, cash, and cash equivalents. Fixed income includes both investment grade and non-investment grade. Permitted investment vehicles include mutual funds, individual securities, derivatives, and long-duration fixed income securities. While investments in individual securities, derivatives, long-duration fixed income securities, cash, and cash equivalents are permitted, the plan did not hold these types of investments as of December 31, 2018 or 2017. Prohibited investments include direct investments in real estate, commodities, unregistered securities, uncovered options, currency exchange contracts, and natural resources (such as timber, oil, and gas). Japan Plan Assets The target asset allocation of the Japan defined benefit plan is 50% equity securities and 50% fixed income securities, cash, and cash equivalents, with allowance for a 40% deviation in either direction. We, along with the trustee of the plan's assets, minimize investment risk by thoroughly assessing potential investments based on indicators of historical returns and current credit ratings. Additionally, investments are diversified by type and geography. The following table presents information about the plan’s target asset allocation, as well as the actual allocation, as of December 31, 2018:
The following table presents information about the plan assets measured at fair value as of December 31, 2018 and 2017:
The fair values of equity and fixed income securities are based on publicly-quoted closing stock and bond values on the last business day of the year. Permitted asset classes include equity securities that are traded on the official stock exchange(s) of the respective countries, fixed income securities with certain credit ratings, cash, and cash equivalents. The Netherlands Plan Assets The assets of the Netherlands defined benefit plan are insurance policies. The contributions we make to the plan are used to purchase insurance policies that provide for specific benefit payments to plan participants. The benefit formula is determined independently by us. Upon retirement of an individual plan participant, the insurance contracts purchased are converted to provide specific benefits for the participant. The contributions paid by us are commingled with contributions paid to the insurance provider by other employers for investment purposes and to reduce plan administration costs. However, this defined benefit plan is not considered a multi-employer plan. The following table presents information about the plan assets measured at fair value as of December 31, 2018 and 2017:
The following table presents a rollforward of the Level 3 assets in our Netherlands' defined plan for the years ended December 31, 2018 and 2017:
The fair values of the insurance contracts are measured based on the future benefit payments that would be made by the insurance company to vested plan participants if we were to switch to another insurance company without actually surrendering our policy. In this case, the insurance company would guarantee to pay the vested benefits at retirement accrued under the plan based on current salaries and service to date (i.e., with no allowance for future salary increases or pension increases). The cash flows of the future benefit payments are discounted using the same discount rate that is applied to value the related defined benefit plan liability. Belgium Plan Assets The assets of the Belgium defined benefit plan are insurance policies. As of December 31, 2018 and 2017 the fair values of these assets were $1.1 million and $0.9 million, respectively. These fair value measurements are categorized in level 3 of the fair value hierarchy. |
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Debt | Debt Long-term debt, net and capital lease and other financing obligations as of December 31, 2018 and 2017 consisted of the following:
Senior Secured Credit Facilities In May 2011, we completed a series of transactions designed to refinance our then existing indebtedness. These transactions included the execution of a credit agreement (as amended, the "Credit Agreement"), which provided for senior secured credit facilities (the "Senior Secured Credit Facilities") consisting of a term loan facility, a revolving credit facility, and incremental availability under which additional secured credit facilities could be issued under certain circumstances. Currently outstanding under the Senior Secured Credit Facilities are a term loan facility (the "Term Loan"), a $420.0 million revolving credit facility (the "Revolving Credit Facility"), and $1.0 billion incremental availability (the "Accordion") under which, subject to certain limitations as defined in the indentures (the "Senior Notes Indentures") under which the Senior Notes (as defined below) were issued, additional secured debt may be issued or the capacity of the Revolving Credit Facility may be increased. All obligations under the Senior Secured Credit Facilities are unconditionally guaranteed by certain of our subsidiaries (the "Guarantors") and collateralized by substantially all present and future property and assets of Sensata Technologies B.V. ("STBV"), Sensata Technologies Finance Company, LLC, and the Guarantors. The Credit Agreement stipulates certain events and conditions that may require us to use excess cash flow, as defined in the Credit Agreement, generated by operating, investing, or financing activities, to prepay some or all of the outstanding borrowings under the Senior Secured Credit Facilities. The Credit Agreement also requires mandatory prepayments of the outstanding borrowings under the Senior Secured Credit Facilities upon certain asset dispositions and casualty events, in each case subject to certain reinvestment rights, and the incurrence of certain indebtedness (excluding any permitted indebtedness). These provisions were not triggered during the year ended December 31, 2018. Term Loan On November 7, 2017, we entered into the eighth amendment of the Credit Agreement, which resulted in a "Repricing Transaction" as that term is defined in the Credit Agreement. As a result, the Term Loan replaced the term loan provided under the sixth amendment of the Credit Agreement (the "Sixth Amendment"). Pursuant to the Eighth Amendment, changes from the previously issued term loan included the following: (i) the applicable interest rate margins were reduced as discussed below; (ii) the senior secured net leverage ratio threshold that triggers the excess cash flow mandatory prepayment requirement was increased; (iii) the Accordion was re-set to $1.0 billion as of the effective date of the Eighth Amendment; (iv) various baskets, permissions and other provisions under certain of the affirmative and negative covenants were increased or otherwise amended for our benefit; and (v) certain other changes were made to the Credit Agreement that are not considered material. The Term Loan retains all other provisions of the Sixth Amendment, including original principal amount and maturity, amongst others. In accordance with the Credit Agreement, the Term Loan may, at our option, be maintained from time to time as a Base Rate loan or a Eurodollar Rate loan (each as defined in the Credit Agreement), with each representing a different determination of interest rates. The principal amount of the Term Loan amortizes in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the term loan provided under the Sixth Amendment, with the balance due at maturity. The applicable margins for the Term Loan as of December 31, 2018 were 0.75% and 1.75% for Base Rate loans and Eurodollar Rate loans, respectively, (a decrease from 1.25% and 2.25%, respectively, pursuant to the Sixth Amendment) subject to floors of 1.00% and 0.00% for Base Rate loans and Eurodollar Rate loans, respectively (a decrease from 1.75% and 0.75%, respectively, pursuant to the Sixth Amendment). As of December 31, 2018, we maintained the Term Loan as a Eurodollar Rate loan. Revolving Credit Facility At our option, the Revolving Credit Facility may be maintained from time to time as a Base Rate loan or a Eurodollar Rate loan, each with a different determination of interest rates. Interest rates and fees on the Revolving Credit Facility are as follows (each depending on the achievement of certain senior secured net leverage ratios) (i) the index rate spread for Eurodollar Rate loans is 1.75% or 1.50%; (ii) the index rate spread for Base Rate loans is 0.75% or 0.50%; and (iii) the letter of credit fees are 1.625% or 1.375%. We are required to pay to our revolving credit lenders, on a quarterly basis, a commitment fee on the unused portion of the Revolving Credit Facility. The commitment fee is subject to a pricing grid based on our leverage ratio. The spreads on the commitment fee currently range from 0.25% to 0.375%. As of December 31, 2018, there was $416.1 million of availability under the Revolving Credit Facility, net of $3.9 million in letters of credit. Outstanding letters of credit are issued primarily for the benefit of certain operating activities. As of December 31, 2018, no amounts had been drawn against these outstanding letters of credit. Availability under the Revolving Credit Facility may be borrowed, repaid, and re-borrowed to fund our working capital needs and for other general corporate purposes. Senior Notes At December 31, 2018 we had various tranches of senior notes outstanding, including $500.0 million aggregate principal amount of 4.875% senior notes due 2023 (the "4.875% Senior Notes"), $400.0 million aggregate principal amount of 5.625% senior notes due 2024 (the "5.625% Senior Notes"), $700.0 million aggregate principal amount of 5.0% senior notes due 2025 (the "5.0% Senior Notes"), and $750.0 million aggregate principal amount of 6.25% senior notes due 2026 (the "6.25% Senior Notes" and together with each tranche of senior notes outstanding, the "Senior Notes"). With the exception of the 6.25% Senior Notes, we may redeem the Senior Notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed plus accrued and unpaid interest, if any, to the date of redemption, plus the Applicable Premium (also known as the "make-whole premium") set forth in the Senior Notes Indentures. Upon the occurrence of certain change in control events, we will be required to make an offer to purchase the Senior Notes then outstanding at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase. In addition, if certain changes in the law of any relevant taxing jurisdiction become effective that would impose withholding taxes or other deductions on the payments of the Senior Notes or the guarantees, we may redeem the Senior Notes in whole, but not in part, at any time, at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, and additional amounts, if any, to the date of redemption. The Senior Notes Indentures provide for events of default that include, among others, nonpayment of principal or interest when due, breach of covenants or other provisions in the Senior Notes Indentures, defaults in payment of certain other indebtedness, certain events of bankruptcy or insolvency, failure to pay certain judgments, and the cessation of the full force and effect of the guarantees of significant subsidiaries. Generally, if an event of default occurs, the trustee or the holders of at least 25% in principal amount of the then outstanding Senior Notes may declare the principal of, and accrued but unpaid interest on, all of the Senior Notes to be due and payable immediately. All provisions regarding remedies in an event of default are subject to the Senior Notes Indentures. Our obligations under the 4.875% Senior Notes, the 5.625% Senior Notes, and the 5.0% Senior Notes are guaranteed by all of STBV’s existing and future wholly-owned subsidiaries that guarantee our obligations under the Senior Secured Credit Facilities. The 4.875% Senior Notes, the 5.625% Senior Notes, and the 5.0% Senior Notes and the related guarantees are the senior unsecured obligations of STBV and the Guarantors, respectively and rank equally in right of payment to all existing and future senior unsecured indebtedness of STBV or the Guarantors. Our obligations under the 6.25% Senior Notes are guaranteed by STBV and all of STBV’s existing and future wholly-owned subsidiaries (other than Sensata Technologies UK Financing Co. plc ("STUK")) that guarantee our obligations under the Senior Secured Credit Facilities. The 6.25% Senior Notes and the related guarantees are the senior unsecured obligations of STUK and the Guarantors, respectively. The 6.25% Senior Notes and the guarantees rank equally in right of payment to all existing and future senior unsecured indebtedness of STUK, STBV, or the Guarantors. 4.875% Senior Notes In April 2013 we completed the issuance and sale of the 4.875% Senior Notes, which were issued under an indenture dated April 17, 2013 among STBV, as issuer, The Bank of New York Mellon, as trustee, and the Guarantors. The 4.875% Senior Notes were offered at par. Interest on the 4.875% Senior Notes is payable semi-annually on April 15 and October 15 of each year. 5.625% Senior Notes In October 2014 we completed the issuance and sale of the 5.625% Senior Notes, which were issued under an indenture dated October 14, 2014, among STBV, as issuer, The Bank of New York Mellon, as trustee, and the Guarantors. The 5.625% Senior Notes were offered at par. Interest on the 5.625% Senior Notes is payable semi-annually on May 1 and November 1 of each year. 5.0% Senior Notes In March 2015 we completed the issuance and sale of the 5.0% Senior Notes, which were issued under an indenture dated March 26, 2015, among STBV, as issuer, The Bank of New York Mellon, as trustee, and the Guarantors. The 5.0% Senior Notes were offered at par. Interest on the 5.0% Senior Notes is payable semi-annually on April 1 and October 1 of each year. 6.25% Senior Notes In November 2015, we completed the issuance and sale of the 6.25% Senior Notes, which were issued under an indenture dated November 27, 2015 (the "6.25% Senior Notes Indenture") among STUK, as issuer, The Bank of New York Mellon, as trustee, and the Guarantors. The 6.25% Senior Notes were offered at par. Interest on the 6.25% Senior Notes is payable semi-annually on February 15 and August 15 of each year. We may redeem the 6.25% Senior Notes, in whole or in part, at any time prior to February 15, 2021, at a redemption price equal to 100% of the principal amount of the 6.25% Senior Notes redeemed plus accrued and unpaid interest to the date of redemption, if any, plus the Applicable Premium set forth in the 6.25% Senior Notes Indenture. Thereafter, we may redeem the 6.25% Senior Notes, in whole or in part, at the following prices (plus accrued and unpaid interest to the date of redemption, if any):
Restrictions and Covenants As of December 31, 2018, all of the subsidiaries of STBV were subject to certain restrictive covenants. Under certain circumstances, STBV will be permitted to designate a subsidiary as "unrestricted," in which case the restrictive covenants will not apply to that subsidiary. STBV has not designated any subsidiaries as unrestricted. The net assets of STBV subject to these restrictions totaled $2,932.2 million at December 31, 2018. Credit Agreement The Credit Agreement contains non-financial covenants (subject to important exceptions and qualifications set forth in the Credit Agreement) that limit our ability to:
In addition, under the Credit Agreement, STBV and its subsidiaries are required to maintain a senior secured net leverage ratio not to exceed 5.0:1.0 under the following circumstances:
Senior Notes Indentures The Senior Notes Indentures contain restrictive covenants (subject to important exceptions and qualifications set forth in the Senior Notes Indentures) that limit the ability of STBV and its subsidiaries to, among other things:
Certain of these covenants will be suspended if the Senior Notes are assigned an investment grade rating by Standard & Poor's Rating Services or Moody's Investors Service, Inc. and provided no default has occurred and is continuing at such time. The suspended covenants will be reinstated if the Senior Notes are no longer assigned an investment grade rating by either rating agency and an event of default has occurred and is continuing at such time. As of December 31, 2018, none of the Senior Notes were assigned an investment grade rating by either rating agency. Restrictions on Payment of Dividends The Guarantors are generally not restricted in their ability to pay dividends or otherwise distribute funds to STBV, except for restrictions imposed under applicable corporate law. STBV, however, is limited in its ability to pay dividends or otherwise make distributions to its immediate parent company and, ultimately, to Sensata plc, under the Credit Agreement and the Senior Notes Indentures. Specifically, the Credit Agreement prohibits STBV from paying dividends or making distributions to its parent companies except for purposes that include, but are not limited to, the following:
The Senior Notes Indentures generally provide that STBV can pay dividends and make other distributions to its parent companies upon the achievement of certain conditions and in an amount as determined in accordance with the Senior Notes Indentures. Compliance with Financial and Non-Financial Covenants We were in compliance with all of the financial and non–financial covenants and default provisions associated with our indebtedness as of December 31, 2018 and for the fiscal year then ended. Accounting for Debt Financing Transactions Refer to Note 2, "Significant Accounting Policies," for discussion of our accounting policies regarding debt financing transactions. In connection with the Merger, we paid $5.8 million of creditor fees and related third-party costs in order to obtain consents to the transaction from our existing lenders. As a result, and based on application of the provisions in FASB ASC Subtopic 470-50, we recognized a $3.5 million adjustment to the carrying value of long-term debt, net and a $2.4 million loss in other, net. During the year ended December 31, 2017, as a result and based on application of the provisions of ASC Subtopic 470–50, Modifications and Extinguishments, we recognized a $0.2 million adjustment to the carrying value of long–term debt, net and a $2.7 million loss in other, net. Leases We occupy leased facilities with initial terms ranging up to 20 years. The lease agreements frequently include options to renew for additional periods or to purchase the leased assets and generally require that we pay taxes, insurance, and maintenance costs. Depending on the specific terms of the leases, our obligations are in two forms: capital leases and operating leases. Rent expense for the years ended December 31, 2018, 2017, and 2016 was $21.0 million, $19.7 million, and $18.1 million, respectively. We have material capital leases for facilities in Baoying, China and Attleboro, Massachusetts. As of December 31, 2018 and 2017, the combined capital lease obligation outstanding for these facilities was $30.4 million and $26.2 million, respectively. The increase in the capital lease obligation relates to a renegotiation of the terms of our lease in Attleboro. Other Financing Obligations In 2013, we entered into an agreement with one of our suppliers, Measurement Specialties, Inc., under which we acquired the rights to certain intellectual property in exchange for fixed royalty payments, payable quarterly through the fourth quarter of 2019. As of December 31, 2018 and 2017, we had recognized a liability related to this agreement of $1.8 million and $3.5 million, respectively. Debt Maturities The aggregate principal amount of each tranche of our Senior Notes is due in full at its maturity date. The Term Loan must be repaid in full on or prior to its final maturity date. Loans made pursuant to the Revolving Credit Facility must be repaid in full at its maturity date and can be repaid prior to then at par. All letters of credit issued thereunder will terminate at the final maturity of the Revolving Credit Facility unless cash collateralized prior to such time. The following table presents the remaining mandatory principal repayments of long-term debt, excluding capital lease payments, other financing obligations, and discretionary repurchases of debt, in each of the years ended December 31, 2019 through 2023 and thereafter.
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Commitments and Contingencies |
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Commitments and Contingencies | Commitments and Contingencies Future minimum payments for capital leases, other financing obligations, and non-cancelable operating leases in effect as of December 31, 2018 are as follows:
Non-cancelable purchase agreements exist with various suppliers, primarily for services such as information technology support. The terms of these agreements are fixed and determinable. As of December 31, 2018, we had the following purchase commitments:
Collaborative Arrangements On March 4, 2016, we entered into a strategic partnership agreement (the "SPA") with Quanergy to jointly develop, manufacture, and sell solid state Light Detection and Ranging ("LiDAR") sensors. Under the terms of the SPA, we are exclusive partners with Quanergy for component level solid state LiDAR sensors in the transportation end market. We are accounting for the SPA under the provisions of FASB ASC Topic 808, Collaborative Arrangements, under which the accounting for certain transactions is determined using principal versus agent considerations. Using the guidance in FASB ASC Topic 606, we have determined that we are the principal with respect to the SPA. During the years ended December 31, 2018, 2017, and 2016, there were no material amounts recorded to earnings related to the SPA. Off-Balance Sheet Commitments From time to time, we execute contracts that require us to indemnify the other parties to the contracts. These indemnification obligations generally arise in two contexts. First, in connection with certain transactions, such as the sale of a business or the issuance of debt or equity securities, the agreement typically contains standard provisions requiring us to indemnify the purchaser against breaches by us of representations and warranties contained in the agreement. These indemnities are generally subject to time and liability limitations. Second, we enter into agreements in the ordinary course of business, such as customer contracts, that might contain indemnification provisions relating to product quality, intellectual property infringement, governmental regulations and employment related matters, and other typical indemnities. In certain cases, indemnification obligations arise by law. We believe that our indemnification obligations are consistent with other companies in the markets in which we compete. Performance under any of these indemnification obligations would generally be triggered by a breach of the terms of the contract or by a third-party claim. Historically, we have experienced only immaterial and irregular losses associated with these indemnifications. Consequently, any future liabilities brought about by these indemnifications cannot reasonably be estimated or accrued. Indemnifications Provided As Part of Contracts and Agreements We are party to the following types of agreements pursuant to which we may be obligated to indemnify a third party with respect to certain matters. Officers and Directors: Our articles of association provide for indemnification of directors and officers by us to the fullest extent permitted by applicable law, as it now exists or may hereinafter be amended (but, in the case of an amendment, only to the extent such amendment permits broader indemnification rights than permitted prior thereto), against any and all liabilities, including all expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit, or proceeding, provided he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful or outside of his or her mandate. The articles do not provide a limit to the maximum future payments, if any, under the indemnification. No indemnification is provided for in respect of any claim, issue, or matter as to which such person has been adjudged to be liable for gross negligence or willful misconduct in the performance of his or her duty on our behalf. In addition, we have a liability insurance policy that insures directors and officers against the cost of defense, settlement, or payment of claims and judgments under some circumstances. Certain indemnification payments may not be covered under our directors’ and officers’ insurance coverage. Initial Purchasers of Senior Notes: Pursuant to the terms of the purchase agreements entered into in connection with our private placement senior note offerings, we are obligated to indemnify the initial purchasers of the Senior Notes against certain liabilities caused by any untrue statement or alleged untrue statement of a material fact in various documents relied upon by such initial purchasers, or to contribute to payments the initial purchasers may be required to make in respect thereof. The purchase agreements do not provide a limit to the maximum future payments, if any, under these indemnifications. Intellectual Property and Product Liability Indemnification: We routinely sell products with a limited intellectual property and product liability indemnification included in the terms of sale. Historically, we have had only immaterial and irregular losses associated with these indemnifications. Consequently, any future liabilities resulting from these indemnifications cannot reasonably be estimated or accrued. Product Warranty Liabilities Refer to Note 3, "Revenue Recognition," for a description of warranties we provide to customers. In the event a warranty claim based on defective materials exists, we may be able to recover some of the cost of the claim from the vendor from whom the materials were purchased. Our ability to recover some of the costs will depend on the terms and conditions to which we agreed when the materials were purchased. When a warranty claim is made, the only collateral available to us is the return of the inventory from the customer making the warranty claim. Historically, when customers make a warranty claim, we either replace the product or provide the customer with a credit. We generally do not rework the returned product. Our policy is to accrue for warranty claims when a loss is both probable and estimable. This is accomplished by accruing for estimated returns and estimated costs to replace the product at the time the related revenue is recognized. Liabilities for warranty claims have historically not been material. In some instances, customers may make claims for costs they incurred or other damages related to a claim. Environmental Remediation Liabilities Our operations and facilities are subject to U.S. and non-U.S. laws and regulations governing the protection of the environment and our employees, including those governing air emissions, water discharges, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites. We could incur substantial costs, including cleanup costs, fines, civil or criminal sanctions, or third-party property damage or personal injury claims, in the event of violations or liabilities under these laws and regulations, or non-compliance with the environmental permits required at our facilities. Potentially significant expenditures could be required in order to comply with environmental laws that may be adopted or imposed in the future. We are, however, not aware of any threatened or pending material environmental investigations, lawsuits, or claims involving us or our operations. Legal Proceedings and Claims We are regularly involved in a number of claims and litigation matters in the ordinary course of business. Most of our litigation matters are third-party claims related to patent infringement allegations or for property damage allegedly caused by our products, but some involve allegations of personal injury or wrongful death. Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial position, or cash flows. We account for litigation and claims losses in accordance with FASB ASC Topic 450, Contingencies. Under FASB ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined each accounting period as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the minimum amount, which could be an immaterial amount, is recorded. As information becomes known, either the minimum loss amount is increased, or a best estimate can be made, generally resulting in additional loss provisions. A best estimate amount may be changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected. Pending Litigation and Claims: We are a defendant in a lawsuit, Wasica Finance Gmbh et al v. Schrader International Inc. et al, Case No. 13-1353-CPS, U.S.D.C., Delaware, in which the claimant alleges infringement of their patent (US 5,602,524) in connection with our tire pressure monitoring system products. The patent in question has expired, and as a result, the claimant only seeks damages for past infringement with interest and costs. Should the claimant prevail, these amounts could be material. We have denied liability and have been defending the litigation, which is in discovery. The court held a claims construction hearing on December 3, 2018 and is expected to issue a ruling in February 2019. Trial is currently expected in February 2020. We do not believe a loss related to this matter is probable. As of December 31, 2018, we have not recorded an accrual related to this matter. We are a defendant in a lawsuit, Metal Seal Precision, Ltd. v. Sensata Technologies Inc., Case No. 2017-0518-BCSI, MA Superior Court (Suffolk County), in which the claimant ("Metal Seal"), a supplier of metal parts used in the manufacture of our products, alleges breach of contract, misrepresentation, and unfair trade practices under Massachusetts general laws. The dispute arises out of a long-term supply agreement under which Metal Seal alleges certain minimum purchase requirements were not met, resulting in lost profits and loss of future revenues. If the claimant prevails additionally under the unfair trade practices claims, it could obtain additional treble damages and attorney's fees. Plaintiff’s damage expert claims that Metal Seal has losses ranging up to $51.0 million. We are defending the lawsuit, which is currently scheduled for trial on March 11, 2019 through March 19, 2019. We do not believe a loss related to this matter is probable. As of December 31, 2018, we have not recorded an accrual related to this matter. |
Shareholders' Equity |
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Shareholders' Equity | Shareholders’ Equity Prior to the Merger, Sensata N.V.’s articles of association authorized it to issue up to 400.0 million ordinary shares. However, entities incorporated under the laws of England and Wales are limited in the number of shares they can issue to those shares that have been authorized for "allotment" by their shareholders. In connection with the Merger, our Board of Directors asked shareholders to approve an allotment of ordinary shares equal to the total ordinary shares then issued and outstanding plus the maximum number of ordinary shares that could be reasonably expected to be issued under our equity plans within the next year, which resulted in an allotment of 177.1 million ordinary shares. Treasury Shares Ordinary shares repurchased by us are recognized, measured at cost, and presented as treasury shares on our consolidated balance sheets, resulting in a reduction of shareholders' equity. In connection with the Merger, all then outstanding treasury shares were canceled in accordance with U.K. law. Accordingly, we (1) derecognized the total purchase price of these treasury shares, (2) recognized a reduction to ordinary shares at an amount equal to the total par value of such shares, and (3) recognized a reduction to retained earnings at an amount equal to the excess of the total repurchase price over the total par value of the then outstanding treasury shares, or $286.1 million. Also, upon completion of the Merger, the $250.0 million share repurchase program previously authorized by the Board of Directors of Sensata N.V. lapsed, and our ability to repurchase shares as a company incorporated in England and Wales became contingent upon the completion of certain court proceedings in the U.K. (which were completed in the second quarter of 2018), approval of our shareholders (which occurred at our May 31, 2018 annual general meeting of shareholders), and authorization by our Board of Directors. On May 31, 2018, we announced that our Board of Directors had authorized a $400.0 million share repurchase program. Under this program, we may repurchase ordinary shares at such times and in amounts to be determined by our management, based on market conditions, legal requirements, and other corporate considerations, on the open market or in privately negotiated transactions, provided that such transactions were completed pursuant to an agreement and with a third party approved by our shareholders at the annual general meeting. The authorized amount of our share repurchase program could be modified or terminated by our Board of Directors at any time. We repurchased 7,571 ordinary shares under this program during the year ended December 31, 2018, for a total purchase price of approximately $399.4 million, which are now held as treasury shares. In October 2018, our Board of Directors authorized a new $250.0 million share repurchase program, subject to the same conditions that applied to the previously authorized $400.0 million share repurchase program. We did not make any repurchases under this program during fiscal year 2018. As a result of certain aspects of U.K. law, we discontinued the practice of reissuing treasury shares as part of our share-based compensation programs upon completion of the Merger. The number of treasury shares reissued prior to completion of the Merger was not material. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss were as follows:
The details of the components of other comprehensive income/(loss), net of tax, for the years ended December 31, 2018, 2017, and 2016 are as follows:
The details of the amounts reclassified from accumulated other comprehensive loss for the years ended December 31, 2018, 2017, and 2016 are as follows:
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Acquisitions and Divestitures |
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Acquisitions and Divestitures | Acquisitions and Divestitures GIGAVAC merger On September 24, 2018, we entered into an agreement and plan of merger with GIGAVAC, whereby GIGAVAC would merge with one of our wholly-owned subsidiaries, thereby becoming a wholly-owned subsidiary of Sensata. On October 31, 2018, we completed the acquisition of GIGAVAC for $233.0 million of cash consideration, subject to working capital and other adjustments, approximately $12.0 million of which related to certain compensation arrangements with certain GIGAVAC employees and shareholders. Based in Carpinteria, California, GIGAVAC has more than 270 employees and is a leading provider of solutions that enable electrification in demanding environments within the automotive, battery storage, industrial, and HVOR end markets. We acquired GIGAVAC to increase our content and capabilities for electrification, including products such as cars, delivery trucks, buses, material handling equipment, and charging stations. Portions of GIGAVAC will be integrated into each of our operating segments. The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed:
The allocation of purchase price related to the GIGAVAC Merger is preliminary, and is based on management’s judgments after evaluating several factors, including preliminary valuation assessments of tangible and intangible assets. The final allocation of the purchase price to the assets acquired will be completed when the final valuations are completed. The preliminary goodwill recognized as a result of this acquisition was approximately $114.6 million, which represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships. The amount of goodwill recorded that is expected to be deductible for tax purposes is not material. In connection with the allocation of purchase price to the assets acquired and liabilities assumed, we identified certain definite-lived intangible assets. The following table presents the acquired intangible assets, their estimated fair values, and weighted average lives:
The definite-lived intangible assets were valued using the income approach. We used the relief-from-royalty method to value completed technologies and tradenames, and we used the multi-period excess earnings method to value customer relationships. These valuation methods incorporate assumptions including expected discounted future cash flows resulting from either the future estimated after-tax royalty payments avoided as a result of owning the completed technologies or the future earnings related to existing customer relationships. Valves Business Divestiture On August 31, 2018 we completed the sale of the Valves Business to Pacific Industrial Co. Ltd. (together with its affiliates, "Pacific"). Contemporaneous with the closing of the sale, Sensata and Pacific entered into a long-term supply agreement, which imposes an obligation on us to purchase minimum quantities of product from Pacific over a period of nearly five years. In exchange for selling the Valves Business and entering into the long-term supply agreement, we received cash consideration from Pacific of approximately $165.5 million, net of $11.8 million of cash and cash equivalents sold. We recognized a (pre-tax) gain on sale of $64.4 million, which is presented in restructuring and other charges, net. In addition, we recognized $5.9 million of costs to sell the Valves Business, which are also presented in restructuring and other charges, net. Refer to Note 5, "Restructuring and Other Charges, Net," for additional information. We determined that the terms of the long-term supply agreement entered into concurrent with the sale of the Valves Business were not at market. Accordingly, we recognized a liability of $16.4 million, measured at fair value, which represented the fair value of the off-market component of the supply agreement. The Valves Business, which we acquired in 2014 as part of our acquisition of Schrader, manufactures mechanical valves for pressure applications in tires and fluid controls and assembles tire hardware aftermarket products. The Valves Business has manufacturing locations in the U.S. and Europe. The Valves Business was included in our Performance Sensing segment (and reporting unit). We allocated goodwill to the Valves Business based on its fair value relative to the fair value of the retained Performance Sensing reporting unit. |
Fair Value Measures |
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Fair Value Measures | Fair Value Measures Our assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with FASB ASC Topic 820. The levels of the fair value hierarchy are described below:
Measured on a Recurring Basis The fair values of our assets and liabilities measured at fair value on a recurring basis as of as of December 31, 2018 and 2017 are as shown in the below table. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.
Refer to Note 2, "Significant Accounting Policies," for a discussion of the methods used to estimate the fair value of our financial instruments, and refer Note 19, "Derivative Instruments and Hedging Activities," for further discussion of the inputs used to determine these fair value measurements and the nature of the risks that these derivative instruments are intended to mitigate. Although we have determined that the majority of the inputs used to value our derivative instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to appropriately reflect both our own non-performance risk and the respective counterparties' non-performance risk in the fair value measurement. As of December 31, 2018 and 2017, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivatives in their entirety are classified in Level 2 in the fair value hierarchy. Measured on a Nonrecurring Basis In connection with the sale of the Valves Business, as required by FASB ASC Topic 350, we evaluated the goodwill of the retained portion of the Performance Sensing reporting unit for impairment and determined that it was not impaired. In addition, we evaluated our goodwill for impairment as of October 1, 2018 using a combination of qualitative and quantitative methods. Refer to Note 2, "Significant Accounting Policies," for further discussion of this process. Based on these analyses, we determined that their fair values exceeded their carrying values at that date. As of October 1, 2018, we evaluated our other indefinite-lived intangible assets for impairment (using the quantitative method) and determined that the fair values of those assets exceeded their carrying values on that date. The fair values of our other indefinite-lived intangible assets are considered Level 3 fair value measurements. As of December 31, 2018, no events or changes in circumstances occurred that would have triggered the need for an additional impairment review of goodwill or other indefinite-lived intangible assets. On January 1, 2018, we adopted FASB ASU No. 2016-01, which requires measurement of certain equity instruments at fair value, with changes to fair value recognized in net income, or in certain instances, by use of a measurement alternative. Refer to Note 2, "Significant Accounting Policies," for detailed discussion of this guidance. As of December 31, 2018, our only equity investment is the Series B Preferred Stock of Quanergy, for which we elected to use the measurement alternative. There was no change to the $50.0 million carrying value of this investment as a result of application of the measurement alternative. Financial Instruments Not Measured at Fair Value The following table presents the carrying values and fair values of financial instruments not measured at fair value in the consolidated balance sheets as of December 31, 2018 and 2017. All fair value measures presented are categorized within Level 2 of the fair value hierarchy.
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The fair values of the Term Loan and the Senior Notes are determined primarily using observable prices in markets where these instruments are generally not traded on a daily basis. Cash and cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates fair value because of their short-term nature. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities We utilize derivative instruments that are designated and qualify as hedges of the exposure to variability in expected future cash flows. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on these hedging instruments with the earnings effect of the hedged forecasted transactions. We may enter into other derivative contracts that are intended to economically hedge certain risks, even though we elect not to apply hedge accounting under FASB ASC Topic 815. Derivative financial instruments not designated as hedges are used to manage our exposure to certain risks, not for trading or speculative purposes. Refer to Note 2, "Significant Accounting Policies," for detailed discussion of the valuation techniques and accounting policies related to derivative instruments and hedging activities. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. The ineffective portion of such derivatives’ change in fair value is immediately recognized in earnings. Changes in the fair value of contracts that are not designated as accounting hedges are recognized immediately in other, net. Refer to Note 16, "Shareholders' Equity," and elsewhere in this Note 19, for more details on the reclassification of amounts from accumulated other comprehensive loss into earnings. Hedges of Foreign Currency Risk We are exposed to fluctuations in various foreign currencies against our functional currency, the U.S. dollar (the "USD"). We enter into forward contracts for certain of these foreign currencies to manage this exposure. We currently have outstanding foreign currency forward contracts that qualify as cash flow hedges intended to offset the effect of exchange rate fluctuations on forecasted sales and certain manufacturing costs. We also have outstanding foreign currency forward contracts that are intended to preserve the economic value of foreign currency denominated monetary assets and liabilities, which are not designated for hedge accounting treatment in accordance with FASB ASC Topic 815. For each of the years ended December 31, 2018, 2017, and 2016, amounts excluded from the assessment of effectiveness and the ineffective portion of the changes in the fair value of our foreign currency forward agreements that are designated as cash flow hedges were not material. As of December 31, 2018, we estimate that $11.4 million in net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve month period ending December 31, 2019. As of December 31, 2018, we had the following outstanding foreign currency forward contracts:
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Hedges of Commodity Risk We enter into commodity forward contracts in order to limit our exposure to variability in raw material costs that is caused by movements in the price of underlying metals. The terms of these forward contracts fix the price at a future date for various notional amounts associated with these commodities. These instruments are not designated for hedge accounting treatment in accordance with FASB ASC Topic 815. As of December 31, 2018, we had the following outstanding commodity forward contracts, none of which were designated as derivatives in qualifying hedging relationships:
Financial Instrument Presentation The following table presents the fair values of our derivative financial instruments and their classification in the consolidated balance sheets as of December 31, 2018 and 2017:
These fair value measurements are all categorized within Level 2 of the fair value hierarchy. Refer to Note 18, "Fair Value Measures," for further discussion regarding the categorization of these fair value measurements within the fair value hierarchy. The following tables present the effect of our derivative financial instruments on the consolidated statements of operations and the consolidated statements of comprehensive income for the years ended December 31, 2018 and 2017:
Credit risk related contingent features We have agreements with certain of our derivative counterparties that contain a provision whereby if we default on our indebtedness, and where repayment of the indebtedness has been accelerated by the lender, then we could also be declared in default on our derivative obligations. As of December 31, 2018, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $9.4 million. As of December 31, 2018, we have not posted any cash collateral related to these agreements. If we breach any of the default provisions on any of our indebtedness as described above, we could be required to settle our obligations under the derivative agreements at their termination values. |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting We organize our business into two reportable segments, Performance Sensing and Sensing Solutions, each of which is also an operating segment. Our operating segments are businesses that we manage as components of an enterprise, for which separate financial information is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and assess performance. An operating segment’s performance is primarily evaluated based on Segment profit, which excludes amortization of intangible assets, restructuring and other charges, net, and certain corporate costs/credits not associated with the operations of the segment, including share-based compensation expense and a portion of depreciation expense associated with assets recorded in connection with acquisitions. In addition, an operating segment’s performance excludes results from discontinued operations, if any. Corporate and other costs excluded from an operating segment’s performance are separately stated below and also include costs that are related to functional areas such as finance, information technology, legal, and human resources. We believe that Segment profit, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, this measure should be considered in addition to, and not as a substitute for, or superior to, profit from operations or other measures of financial performance prepared in accordance with U.S. GAAP. The accounting policies of each of our reportable segments are materially consistent with those described in Note 2, "Significant Accounting Policies." Performance Sensing is a developer and manufacturer of pressure sensors, speed and position sensors, and temperature sensors used in subsystems of automobiles (e.g., powertrain, air conditioning, tire pressure monitoring, and ride stabilization) and HVOR. These products help improve operating performance, for example, by making an automobile's heating and air conditioning systems work more efficiently, thereby improving gas mileage. These products are also used in systems that address environmental or safety concerns, for example, by reducing vehicle emissions or improving the stability control of the vehicle. Sensing Solutions is a developer and manufacturer of various control products used in industrial, aerospace, military, commercial, medical device, and residential end markets, and sensor products used in aerospace and industrial applications such as HVAC systems and military and commercial aircraft. These products include motor and compressor protectors, motor starters, temperature sensors and switches/thermostats, pressure sensors and switches, electronic HVAC sensors and controls, charge controllers, solid state relays, linear and rotary position sensors, circuit breakers, and semiconductor burn-in test sockets. These products help prevent damage from overheating and fires in a wide variety of applications, including commercial HVAC systems, refrigerators, aircraft, lighting, and other industrial applications, and help optimize performance by using sensors that provide feedback to control systems. Sensing Solutions also designs and manufactures direct current to alternating current power inverters, which enable the operation of electronic equipment when grid power is not available. The following table presents net revenue and Segment profit for the reported segments and other operating results not allocated to the reported segments for the years ended December 31, 2018, 2017, and 2016:
No customer exceeded 10% of our net revenue in any of the periods presented. Prior to fiscal year 2018, we presented four significant product categories in Performance Sensing (pressure sensors, speed and position sensors, temperature sensors, and pressure switches), and five significant product categories in Sensing Solutions (bimetal electromechanical controls, industrial and aerospace sensors, power conversion and control, thermal and magnetic-hydraulic circuit breakers, and interconnection). Beginning in fiscal year 2018, we are categorizing our products more broadly, as sensors, controls, or other, to better reflect how we view our products. The following table presents net revenue by product category for the years ended December 31, 2018, 2017, and 2016 (prior periods have been recast to reflect current period presentation):
The following table presents depreciation and amortization expense for our reportable segments for the years ended December 31, 2018, 2017 and 2016:
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The following table presents total assets for our reportable segments as of December 31, 2018 and 2017:
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The following table presents additions to property, plant and equipment and capitalized software for our reportable segments for the years ended December 31, 2018, 2017, and 2016:
Geographic Area Information The following tables present net revenue by geographic area and by significant country for the years ended December 31, 2018, 2017, and 2016. In these tables, net revenue is aggregated based on an internal methodology that considers both the location of our subsidiaries and the primary location of each subsidiary's customers.
The following tables present PP&E, net, by geographic area and by significant country as of December 31, 2018 and 2017. In these tables, PP&E, net is aggregated based on the location of our subsidiaries.
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Unaudited Quarterly Data |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Quarterly Data | Unaudited Quarterly Data A summary of the unaudited quarterly results of operations for the years ended December 31, 2018 and 2017 is as follows:
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Acquisitions and Divestitures On August 31, 2018 we completed the sale of the Valves Business. As a result, in the third quarter of 2018, we recognized a (pre-tax) gain of $64.4 million and costs of $5.9 million in restructuring and other charges, net in our consolidated statement of operations. Refer to Note 17, "Acquisitions and Divestitures," for further discussion of the sale of the Valves Business. Our consolidated results presented above only include the results of this business before August 31, 2018. On October 31, 2018 we completed the acquisition of GIGAVAC. Refer to Note 17, "Acquisitions and Divestitures," for further discussion if this merger. Net revenue of GIGAVAC included in our consolidated statement of operations in the fourth quarter of 2018 was $12.6 million. In the fourth quarter of 2018, we recorded related transaction costs of $2.5 million, which are included in SG&A expense in our consolidated statements of operations. Income taxes In the fourth quarter of 2018, we recorded an income tax benefit of $122.1 million related to the realization of U.S. deferred tax assets previously offset by a valuation allowance. In the fourth quarter of 2017, we recorded an income tax benefit of $73.7 million to remeasure deferred tax liabilities associated with indefinite-lived intangible assets that are deemed to reverse as a result of changes in applicable U.S. tax law set forth in the Act. Refer to Note 7, "Income Taxes," for further discussion of tax related matters. Commodity forward contracts Gains and losses related to our commodity forward contracts, which are not designated for hedge accounting treatment in accordance with FASB ASC Topic 815, are recorded in other, net in the consolidated statements of operations. Refer to Note 19, "Derivative Instruments and Hedging Activities," for further discussion of our commodity forward contracts, and Note 6, "Other, Net," for a detail of other, net for the years ended December 31, 2018 and 2017. The below table presents gains/(losses) recognized related to these contracts in the periods presented:
Restructuring and other charges The below table presents charges/(gains) recorded to restructuring and other charges, net in the periods presented:
The amount presented as restructuring and other charges, net in the third quarter of 2018 relates in large part to the gain on sale of the Valves Business, net of transaction costs. Refer to Note 5, "Restructuring and Other Charges, Net," for further discussion of our restructuring charges. Charges related to the Merger On March 28, 2018, we completed the Merger. Refer for Note 1, "Business Description and Basis of Presentation," for further discussion of the Merger. The table below presents expenses recorded related to the Merger in the periods presented:
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Schedule I - Condensed Financial Information of the Registrant |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule I - Condensed Financial Information of the Registrant | SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT SENSATA TECHNOLOGIES HOLDING PLC (Parent Company Only) Balance Sheets (Dollars in thousands)
The accompanying notes are an integral part of these condensed financial statements. SENSATA TECHNOLOGIES HOLDING PLC (Parent Company Only) Statements of Operations (Dollars in thousands)
The accompanying notes are an integral part of these condensed financial statements. SENSATA TECHNOLOGIES HOLDING PLC (Parent Company Only) Statements of Comprehensive Income (Dollars in thousands)
The accompanying notes are an integral part of these condensed financial statements. SENSATA TECHNOLOGIES HOLDING PLC (Parent Company Only) Statements of Cash Flows (Dollars in thousands)
The accompanying notes are an integral part of these condensed financial statements. Basis of Presentation and Description of Business Sensata Technologies Holding plc (Parent Company)—Schedule I—Condensed Financial Information of Sensata Technologies Holding plc ("Sensata plc"), included in this Annual Report on Form 10-K, provides all parent company information that is required to be presented in accordance with the United States ("U.S.") Securities and Exchange Commission ("SEC") rules and regulations for financial statement schedules. The accompanying condensed financial statements have been prepared in accordance with the reduced disclosure requirements permitted by the SEC. Sensata plc and subsidiaries' audited consolidated financial statements are included elsewhere in this Annual Report on Form 10-K (this "Report"). On September 28, 2017, the Board of Directors of Sensata Technologies Holding N.V. ("Sensata N.V.") unanimously approved a plan to change our location of incorporation from the Netherlands to the United Kingdom (the "U.K."). To effect this change, on February 16, 2018 the shareholders of Sensata N.V. approved a cross-border merger between Sensata N.V. and Sensata plc, a newly formed, public limited company incorporated under the laws of England and Wales, with Sensata plc being the surviving entity (the "Merger"). We received approval of the Merger by the U.K. High Court of Justice, and the Merger was completed, on March 28, 2018. As a result thereof, Sensata plc became the publicly-traded parent of the subsidiary companies that were previously controlled by Sensata N.V., with no changes made to the business being conducted by us prior to the Merger. Due to the fact that the Merger was a business combination between entities under common control, the assets and liabilities exchanged were accounted for at their carrying values. Sensata plc conducts limited separate operations and acts primarily as a holding company. Sensata plc has no direct outstanding debt obligations. However, Sensata Technologies B.V, an indirect, wholly-owned subsidiary of Sensata plc, is limited in its ability to pay dividends or otherwise make other distributions to its immediate parent company and, ultimately, to Sensata plc, under its senior secured credit facilities and the indentures governing its senior notes. For a discussion of the debt obligations of the subsidiaries of Sensata plc, see Note 14, "Debt," of Sensata plc and subsidiaries' audited consolidated financial statements included elsewhere in this Report. All U.S. dollar amounts presented except per share amounts are stated in thousands, unless otherwise indicated. Commitments and Contingencies For a discussion of the commitments and contingencies of the subsidiaries of Sensata plc, see Note 15, "Commitments and Contingencies," of Sensata plc and subsidiaries' audited consolidated financial statements and accompanying notes thereto included elsewhere in this Report. |
Schedule II - Valuation and Qualifying Accounts |
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Schedule II - Valuation and Qualifying Accounts | SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands)
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||
Basis of Accounting | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The accompanying consolidated financial statements present separately our financial position, results of operations, comprehensive income, cash flows, and changes in shareholders’ equity. All intercompany balances and transactions have been eliminated. All U.S. dollar and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated. |
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Reclassification | Certain reclassifications have been made to prior periods to conform to current period presentation. |
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Use of Estimates | Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to exercise our judgment in the process of applying our accounting policies. It also requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies at the date of the financial statements and the reported amounts of net revenue and expense during the reporting periods. Estimates are used when accounting for certain items such as allowances for doubtful accounts and sales returns, depreciation and amortization, inventory obsolescence, asset impairments (including goodwill and other intangible assets), contingencies, the value of share-based compensation, the determination of accrued expenses, certain asset valuations including deferred tax asset valuations, the useful lives of plant and equipment, post-retirement obligations, and business combinations. The accounting estimates used in the preparation of the consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as the operating environment changes. Actual results could differ from those estimates. |
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Revenue Recognition | Revenue Recognition On January 1, 2018, we adopted FASB ASC Topic 606, Revenue from Contracts with Customers. This standard replaced previous revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. Upon adoption, we applied the pertinent transition provisions to contracts that were not completed as of January 1, 2018 using the modified retrospective method. Accordingly, periods presented prior to January 1, 2018 are presented under the previous revenue recognition guidance (i.e., FASB ASC Topic 605, Revenue Recognition). We recognize revenue to depict the transfer of promised goods to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods. In order to achieve this, we use the five step model outlined in FASB ASC Topic 606. Specifically, we (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) we satisfy a performance obligation. The vast majority of our contracts (as defined in FASB ASC Topic 606) are customer purchase orders ("P.O.s"), which explicitly require that we transfer a specified quantity of products to our customers, for which performance is generally satisfied in a short amount of time. We do not consider there to be a significant financing component of our contracts, as our terms generally provide for payment in a short time (that is, less than a year) after shipment to the customer. Our performance obligations are satisfied when control of the product is transferred to the customer (at a point in time), which is generally when the product is shipped from our warehouse or, in limited instances, when it is received by the customer, depending on the specific terms of the arrangement. Many of our products are designed and engineered to meet customer specifications. These activities, and the testing of our products to determine compliance with those specifications, occur prior to any revenue being recognized. Products are then manufactured and sold to customers. However, in certain cases, pre-production activities are a performance obligation in a customer P.O., and revenue is recognized when the performance obligation is satisfied. Customer arrangements do not involve post-installation or post-sale testing and acceptance. In determining the transaction price related to a contract, we determine whether the amount promised in a contract includes a variable amount (variable consideration). Variable consideration may be specified in the customer P.O., in another agreement that identifies terms and conditions of the transaction, or based on our customary practices. We have identified certain types of variable consideration that are included in the transaction price related to our contracts, including sales returns (which generally include a right of return for defective or non-conforming product) and trade discounts (including retrospective volume discounts and early payment incentives). Such variable consideration has not historically been material in relation to our net revenue and have been within our estimates. The transaction price excludes value-added tax and similar taxes. Amounts billed to our customers for shipping and handling are recognized as revenue, and the related costs that we incur are presented in cost of revenue. We do not provide separately priced warranties to our customers. Our standard terms of sale provide our customers with a warranty against faulty workmanship and the use of defective materials, which is not considered a distinct performance obligation in accordance with FASB ASC Topic 606. |
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Share-Based Compensation | Share-Based Compensation FASB ASC Topic 718, Compensation—Stock Compensation, requires that a company measure at fair value any new or modified share-based compensation arrangements with employees, such as stock options and restricted securities, and recognize as compensation expense that fair value over the requisite service period. Share-based compensation cost is generally recognized as a component of selling, general and administrative ("SG&A") expense, which is consistent with where the related employee costs are presented, however, such cost, or a portion thereof, may be capitalized provided certain criteria are met. Share-based awards may be subject to either cliff vesting (i.e., the entire award vests on a particular date) or graded vesting (i.e., portions of the award vest at different points in time). In accordance with FASB ASC Topic 718, compensation cost associated with share-based awards subject to cliff vesting must be recognized on a straight-line basis. However, for awards subject to graded vesting, companies have the option to recognize compensation cost on either a straight–line or accelerated basis. We have elected to recognize compensation costs for these awards using the straight-line method. We estimate the fair value of options on the grant date using the Black-Scholes-Merton option-pricing model. Key inputs and assumptions used in this model are as follows:
Restricted securities are valued using the closing price of our ordinary shares on the NYSE on the grant date. Certain of our restricted securities include performance conditions that require us to estimate the probable outcome of the performance condition. Compensation cost is recorded if it is probable that the performance condition will be achieved. Under the fair value recognition provisions of FASB ASC Topic 718, we recognize share-based compensation net of estimated forfeitures. Accordingly, we only recognize compensation cost for those awards expected to vest over the requisite service period. Compensation expense recognized for each award ultimately reflects the number of units that actually vest. |
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Financial Instruments | Financial Instruments Our financial instruments include derivative instruments, debt instruments, equity investments, and trade accounts receivable. Derivative financial instruments: We account for our derivative financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures and FASB ASC Topic 815, Derivatives and Hedging. In accordance with FASB ASC Topic 815, we recognize all derivatives on the balance sheet at fair value. The fair value of our derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. These analyses utilize observable market-based inputs, including foreign currency exchange rates and commodity forward curves, and reflect the contractual terms of these instruments, including the period to maturity. Derivative instruments that are designated and qualify as hedges of the exposure to changes in the fair value of an asset, liability, or commitment, and that are attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments that are designated and qualify as hedges of the exposure to variability in expected future cash flows are considered cash flow hedges. Derivative instruments may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Currently, our derivative instruments that are designated as accounting hedges are all cash flow hedges. We also hold derivative instruments that are not designated as accounting hedges. The accounting for changes in the fair value of our cash flow hedges depends on whether we have elected to designate the derivative as a hedging instrument for accounting purposes and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. In accordance with FASB ASC Topic 815, the effective portion of changes in the fair value of cash flow hedges is recognized in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. The ineffective portion of changes in the fair value of cash flow hedges is immediately recognized in earnings. Changes in the fair value of derivative instruments that are not designated as accounting hedges are recognized immediately in other, net. We present the cash flows arising from our derivative financial instruments in a manner consistent with the presentation of cash flows that relate to the underlying hedged items. We incorporate credit valuation adjustments to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of non-performance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. We do not offset the fair value amounts recognized for derivative instruments against fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral. We maintain derivative instruments with major financial institutions of investment grade credit rating and monitor the amount of credit exposure to any one issuer. We believe there are no significant concentrations of risk associated with our derivative instruments. Refer to Note 19, "Derivative Instruments and Hedging Activities," for further discussion of our derivative instruments. Debt Instruments: A premium or discount on a debt instrument is recognized on the balance sheet as an adjustment to the carrying amount of the debt liability. In general, amounts paid to creditors are considered a reduction in the proceeds received from the issuance of the debt and are accounted for as a component of the premium or discount on the issuance, not as an issuance cost. Direct and incremental costs associated with the issuance of debt instruments such as legal fees, printing costs, and underwriters' fees, among others, paid to parties other than creditors, are also reported and presented as a reduction of debt on the consolidated balance sheets. Debt issuance costs and premiums or discounts are amortized over the term of the respective financing arrangement using the effective interest method. Amortization of these amounts is included as a component of interest expense, net in the consolidated statements of operations. In accounting for debt refinancing transactions, we apply the provisions of FASB ASC Subtopic 470-50, Modifications and Extinguishments. Our evaluation of the accounting under FASB ASC Subtopic 470-50 is done on a creditor by creditor basis in order to determine if the terms of the debt are substantially different and, as a result, whether to apply modification or extinguishment accounting. In the event that an individual holder of existing debt did not invest in new debt, we apply extinguishment accounting. Borrowings associated with individual holders of new debt that are not holders of existing debt are accounted for as new issuances. Refer to Note 14, "Debt," for further details of our debt instruments and transactions. Equity Investments: On January 1, 2018, we adopted FASB Accounting Standards Update ("ASU") No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities. In accordance with this guidance, we measure equity investments (other than those accounted for under the equity method, those that result in consolidation of the investee, and certain other investments) either at fair value, with changes to fair value recognized in net income, or in certain instances, by use of a measurement alternative. Under the measurement alternative, such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Refer to Note 18, "Fair Value Measures," for further discussion of our measurement of financial instruments. Trade accounts receivable: Trade accounts receivable are recognized at invoiced amounts and do not bear interest. Trade accounts receivable are reduced by an allowance for losses on receivables, as described elsewhere in this Note 2. Concentrations of risk with respect to trade accounts receivable are generally limited due to the large number of customers in various industries and their dispersion across several geographic areas. Although we do not foresee that credit risk associated with these receivables will deviate from historical experience, repayment is dependent upon the financial stability of these individual customers. |
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Allowance for Losses on Receivables | Allowance for Losses on Receivables The allowance for losses on receivables is used to present accounts receivable, net at an amount that represents our estimate of the related transaction price recognized as revenue in accordance with FASB ASC Topic 606. The allowance represents an estimate of probable but unconfirmed losses in the receivable portfolio. We estimate the allowance on the basis of specifically identified receivables that are evaluated individually for impairment and a statistical analysis of the remaining receivables determined by reference to past default experience. Customers are generally not required to provide collateral for purchases. The allowance for losses on receivables also includes an allowance for sales returns (variable consideration). Management judgments are used to determine when to charge off uncollectible trade accounts receivable. We base these judgments on the age of the receivable, credit quality of the customer, current economic conditions, and other factors that may affect a customer’s ability and intent to pay. |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Businesses acquired are recorded at their fair value on the date of acquisition, with the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed recognized as goodwill. Intangible assets acquired may include either definite-lived or indefinite-lived intangible assets, or both. In accordance with the requirements of FASB ASC Topic 350, Intangibles—Goodwill and Other, goodwill and intangible assets determined to have an indefinite useful life are not amortized. Instead these assets are evaluated for impairment on an annual basis, and whenever events or business conditions change that could indicate that the asset is impaired. We evaluate goodwill and indefinite-lived intangible assets for impairment in the fourth quarter of each fiscal year, unless events occur which trigger the need for an earlier impairment review. |
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Goodwill | Goodwill: We have identified six reporting units: Performance Sensing, Electrical Protection, Industrial Sensing, Aerospace, Power Management, and Interconnection. These reporting units have been identified based on the definitions and guidance provided in FASB ASC Topic 350. We periodically review these reporting units to ensure that they continue to reflect the manner in which the business is operated. Certain assets and liabilities relate to the operations of multiple reporting units. We allocate these assets and liabilities to the related reporting units based on methods that we believe are reasonable and supportable, and we apply that allocation method on a consistent basis from year to year. Other assets and liabilities, such as cash and cash equivalents, property, plant and equipment associated with our corporate offices, and debt, we view as being corporate in nature. Accordingly, we do not assign these assets and liabilities to our reporting units. In the event we reorganize our business, we reassign the assets and liabilities among the affected reporting units using a reasonable and supportable methodology. As businesses are acquired, we assign assets acquired and liabilities assumed to a new or existing reporting unit as of the date of the acquisition. Goodwill generated by the acquisition of GIGAVAC, LLC ("GIGAVAC") in October 2018 has been allocated between our Performance Sensing and Industrial Sensing reporting units as of December 31, 2018, subject to changes prior to the end of the measurement period. Refer to Note 11, "Goodwill and Other Intangible Assets, Net," and Note 17, "Acquisitions and Divestitures," for additional information regarding the acquisition of GIGAVAC. In the event a disposal group meets the definition of a business, goodwill is allocated to the disposal group based on the relative fair value of the disposal group to the retained portion of the related reporting unit. We have the option to first assess qualitative factors to determine whether a quantitative analysis must be performed. The objective of a qualitative analysis is to determine whether it is more likely than not that the fair value of a reporting unit is less than its net book value. If we elect not to use this option, or if we determine that it is more likely than not that the fair value of a reporting unit is less than its net book value, then we perform the first step of the quantitative analysis prescribed by FASB ASC Topic 350. In this step we compare the estimated fair values of our reporting units to their respective net book values, including goodwill, to determine whether there is an indicator of potential impairment. If the net book value of a reporting unit exceeds its estimated fair value, we conduct a second step in which we calculate the implied fair value of goodwill. If the carrying value of the reporting unit’s goodwill exceeds its calculated implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of its identifiable assets and liabilities as if the reporting unit had been acquired in a business combination at the date of assessment, and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the sum of the fair values of each of its identifiable assets and liabilities is the implied fair value of goodwill. The fair value measurements of our reporting units are categorized in level 3 of the fair value hierarchy. |
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Intangible Assets | Indefinite-lived intangible assets: Similar to goodwill, we perform an annual impairment review of our indefinite-lived intangible assets in the fourth quarter of each fiscal year, unless events occur that trigger the need for an earlier impairment review. We have the option to first assess qualitative factors in determining whether it is more likely than not that an indefinite-lived intangible asset is impaired. If we elect not to use this option, or we determine that it is more likely than not that the asset is impaired, we perform a quantitative impairment review that requires us to estimate the fair value of the indefinite-lived intangible asset and compare that amount to its carrying value. We estimate the fair value by using the relief-from-royalty method, which requires us to make assumptions about future conditions impacting the value of the indefinite-lived intangible assets, including projected growth rates, cost of capital, effective tax rates, and royalty rates. Impairment, if any, is based on the excess of the carrying value over the fair value of these assets. Definite-lived intangible assets: Definite-lived, acquisition-related intangible assets are amortized on an economic-benefit basis according to the useful lives of the assets, or on a straight-line basis if a pattern of economic benefits cannot be reliably determined. Capitalized software and capitalized software licenses are presented on the consolidated balance sheets as intangible assets. Capitalized software licenses are amortized on a straight-line basis over the lesser of the term of the license or the estimated useful life of the software. Capitalized software is amortized on a straight-line basis over its estimated useful life. Reviews are regularly performed to determine whether facts or circumstances exist that indicate that the carrying values of our definite-lived intangible assets are impaired. If we determine that such facts or circumstances exist, we estimate the recoverability of these assets by comparing the projected undiscounted net cash flows associated with these assets to their respective carrying values. If the sum of the projected undiscounted net cash flows is less than the carrying value of an asset, the impairment charge is measured as the excess of the carrying value over the fair value of that asset. We determine fair value by using the appropriate income approach valuation methodology, depending on the nature of the intangible asset. |
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Income Taxes | Income Taxes We estimate our provision for income taxes in each of the jurisdictions in which we operate. The provision for income taxes includes both our current and deferred tax exposure. Our deferred tax exposure is measured using the asset and liability method, under which deferred income taxes are recorded to reflect the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to reverse or settle. The effect on deferred tax assets and liabilities of a change in statutory tax rates is recognized in the consolidated statements of operations as an adjustment to income tax expense in the period that includes the enactment date. In measuring our deferred tax assets, we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or some portion of the deferred tax assets. If it is determined that it is more likely than not that future tax benefits associated with a deferred tax asset will not be realized, a valuation allowance is provided. As a result, we maintain valuation allowances against the deferred tax assets in jurisdictions that have incurred losses in recent periods and in which it is more likely than not that such deferred tax assets will not be utilized in the foreseeable future. The U.S. Tax Reform Act includes two new U.S. tax base erosion provisions, the global intangible low-taxed income ("GILTI") provisions and the base-erosion and anti-abuse tax ("BEAT") provisions. The GILTI provisions require our U.S. operations to include in our U.S. income tax return, earnings of subsidiaries held by our U.S. group to the extent that these subsidiaries have earnings in excess of an allowable return on their tangible assets. We have elected to account for GILTI in the period in which it is incurred, and therefore have not adjusted our deferred tax assets for any future impacts this provision may have. The Act subjects a U.S. taxpayer to pay a BEAT if it is greater than the taxpayer's regular tax liability. The BEAT provision eliminates the deduction of certain payments made to foreign affiliates (referred to as base erosion payments) but applies a lower tax rate on the resulting BEAT income. The FASB Staff Q&A, Topic 740, No. 4, Accounting for the Base Erosion Anti-Abuse Tax, states that the incremental effect of BEAT should be recognized in the year the BEAT is incurred as a period expense only, and an entity would not need to evaluate the effect of potentially paying the BEAT in future years on the realization of deferred tax assets recognized under the regular tax system, because the realization of the deferred tax asset would reduce its regular tax liability, even when an incremental BEAT liability would be owed in that period. We have followed this guidance in our current tax calculation and evaluation of the realizability of our deferred tax assets. In accordance with FASB ASC Topic 740, Income Taxes, penalties and interest related to unrecognized tax benefits may be classified as either income taxes or another expense line item in the consolidated statements of operations. We classify interest and penalties related to unrecognized tax benefits within the (benefit from)/provision for income taxes line of the consolidated statements of operations. |
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Pension and Other Post-Retirement Benefits | Pension and Other Post-Retirement Benefits We sponsor various pension and other post-retirement benefit plans covering our current and former employees in several countries. The funded status of pension and other post-retirement benefit plans, recognized on our consolidated balance sheets as an asset, current liability, or long-term liability, is measured as the difference between the fair value of plan assets and the benefit obligation at the measurement date. In general, the measurement date coincides with our fiscal year end, however, certain significant events, such as (1) plan amendments, (2) business combinations, (3) settlements or curtailments, or (4) plan mergers, may trigger the need for an interim measurement of both the plan assets and benefit obligations. Benefit obligations represent the actuarial present value of all benefits attributed by the pension formula as of the measurement date to employee service rendered before that date. The value of benefit obligations takes into consideration various financial assumptions, including assumed discount rate and the rate of increase in healthcare costs, and demographic assumptions, including compensation rate increases, retirement patterns, employee turnover rates, and mortality rates. We review these assumptions annually. Our review of demographic assumptions includes analyzing historical patterns and/or referencing industry standard tables, combined with our expectations around future compensation and staffing strategies. The difference between these assumptions and our actual experience results in the recognition of an actuarial gain or loss. Actuarial gains and losses are recorded directly to other comprehensive income or loss. If the total net actuarial gain or loss included in accumulated other comprehensive loss exceeds a threshold of 10% of the greater of the projected benefit obligation or the market related value of plan assets, it is subject to amortization and recorded as a component of net periodic pension cost over the average remaining service lives of the employees participating in the pension or post-retirement benefit plan. The discount rate reflects the current rate at which the pension and other post-retirement liabilities could be effectively settled, considering the timing of expected payments for plan participants. It is used to discount the estimated future obligations of the plans to the present value of the liability reflected in the financial statements. In estimating this rate in countries that have a market of high-quality, fixed-income investments, we consider rates of return on these investments included in various bond indices, adjusted to eliminate the effects of call provisions and differences in the timing and amounts of cash outflows related to the bonds. In other countries where a market of high-quality, fixed-income investments does not exist, we estimate the discount rate using government bond yields or long-term inflation rates. The expected return on plan assets reflects the average rate of earnings expected on the funds invested to provide for the benefits included in the projected benefit obligation. To determine the expected return on plan assets, we use the fair value of plan assets and consider the historical returns earned by similarly invested assets, the rates of return expected on plan assets in the future, and our investment strategy and asset mix with respect to the plans’ funds. Changes to benefit obligations may also be initiated by a settlement or curtailment. A settlement of a defined benefit obligation is an irrevocable transaction that relieves us (or the plan) of primary responsibility for the defined benefit obligation and eliminates significant risks related to the obligation and the assets used to effect the settlement. The settlement of all or more than a minor portion of the pension obligation constitutes an event that requires recognition of all or part of the net actuarial gains (or) losses deferred in accumulated other comprehensive loss. Our policy is to apply settlement accounting to the extent our year-to date settlements for a given plan exceed the sum of our forecasted full year service cost and interest cost for that particular plan. A curtailment is an event that significantly reduces the expected years of service of active employees or eliminates for a significant number of employees the accrual of defined benefits for some or all of their future service. The curtailment accounting provisions are applied on a plan-by-plan basis. The total gain or loss resulting from a curtailment is the sum of two distinct elements: (1) prior service cost write-off (see discussion in "amortization of net prior service cost/credit" above) and (2) curtailment gain or loss. Our policy is that a curtailment event represents one for which we expect a 10% (or greater) reduction in future years of service or an elimination of the accrual of defined benefits for some or all of the future services of 10% (or greater) of the plan's participants. Contributions made to pension and other post-retirement benefit plans are presented as cash used in operations within our consolidated statements of cash flows. |
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Inventories | Inventories Inventories are stated at the lower of cost or estimated net realizable value. The cost of raw materials, work-in-process, and finished goods is determined based on a first-in, first-out basis and includes material, labor, and applicable manufacturing overhead. We conduct quarterly inventory reviews for salability and obsolescence, and inventory considered unlikely to be sold is adjusted to net realizable value. |
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Property, Plant and Equipment and Other Capitalized Costs | Property, Plant and Equipment and Other Capitalized Costs PP&E is stated at cost, and in the case of plant and equipment, is depreciated on a straight-line basis over its estimated economic useful life. The depreciable lives of plant and equipment are as follows:
Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated economic useful lives of the improvements. Amortization of leasehold improvements is included in depreciation expense. Assets held under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Depreciation expense associated with capital leases is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease, unless ownership is transferred by the end of the lease or there is a bargain purchase option, in which case the asset is depreciated, normally on a straight-line basis, over the useful life that would be assigned if the asset were owned. Expenditures for maintenance and repairs are charged to expense as incurred, whereas major improvements that increase asset values and extend useful lives are capitalized. |
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Foreign Currency | Foreign Currency We derive a significant portion of our net revenue from markets outside of the U.S. For financial reporting purposes, the functional currency of all of our subsidiaries is the U.S. dollar because of the significant influence of the U.S. dollar on our operations. In certain instances, we enter into transactions that are denominated in a currency other than the U.S. dollar. At the date that such transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured and recorded in U.S. dollars using the exchange rate in effect at that date. At each balance sheet date, recorded monetary balances denominated in a currency other than U.S. dollar are adjusted to U.S. dollars using the exchange rate at the balance sheet date, with gains or losses recognized in other, net in the consolidated statements of operations. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash comprises cash on hand. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of change in value, and have original maturities of three months or less. |
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Recently issued accounting standards adopted in the current period and to be adopted in a future period | Recently issued accounting standards adopted in the current period: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which modifies how all entities recognize revenue, and consolidates into one FASB ASC Topic (that is FASB ASC Topic 606) the guidance found in FASB ASC Topic 605 and various other revenue accounting standards for specialized transactions and industries. Refer to the Revenue Recognition section of the significant accounting policies discussed elsewhere in this Note 2 for further discussion of this guidance. We adopted FASB ASC Topic 606 on January 1, 2018 using the modified retrospective transition method. Refer to Note 3, "Revenue Recognition," for additional details on this implementation. In January 2016, the FASB issued ASU No. 2016-01, which addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. Refer to the Financial Instruments section of the significant accounting policies discussed elsewhere in this Note 2 for further discussion of this guidance. We adopted FASB ASU No. 2016-01 on January 1, 2018, which resulted in no impact on our consolidated financial position or results of operations. Refer to Note 18, "Fair Value Measures," for further discussion of the application of the measurement alternative to our $50.0 million equity investment in Series B Preferred Stock of Quanergy, Inc ("Quanergy"). In March 2017, the FASB issued ASU No. 2017-07, which requires a change in the presentation of net periodic benefit cost on the consolidated statements of operations. Refer to the Pension and Other Post-Retirement Benefit Plans section of the significant accounting policies discussed elsewhere in this Note 2 for further discussion of this guidance. We adopted this guidance on January 1, 2018 and, as a result, we present the service cost component of net periodic benefit cost in the cost of revenue, R&D, and SG&A expense line items, and we present the non-service components of net periodic benefit cost in other, net. Refer to Note 6, "Other, Net," for the total other components of net periodic benefit cost. All prior period amounts have been recast in our consolidated statements of operations to reflect the revised presentation, with the adjustments presented in Note 13, "Pension and Other Post-Retirement Benefits." Other recently issued accounting standards adopted in the current period did not have a material impact on our consolidated financial position or results of operations. Recently issued accounting standards to be adopted in a future period: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes new accounting and disclosure requirements for leases. FASB ASU No. 2016-02 requires lessees to classify most leases as either finance or operating leases and to initially recognize a lease liability and right-of-use asset. Entities may elect to account for certain short-term leases (with a term of one year or less) using a method similar to the current operating lease model. The statements of operations will include, for finance leases, separate recognition of interest on the lease liability and amortization of the right-of-use asset and for operating leases, a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis. FASB ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods therein, with early adoption permitted. We have developed an implementation plan to adopt this new guidance, which included an assessment of the impact of the new guidance on our financial position and results of operation. Through our implementation efforts, we have decided that we will elect to apply the package of practical expedients, and we will not elect to apply the hindsight practical expedient. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements, which creates an optional transition expedient that allows an entity to apply the transition provisions of the new standard, including its disclosure requirements, at its adoption date instead of at the beginning of the earliest comparative period presented as originally required by FASB ASU No. 2016-02. We adopted FASB ASU No. 2016-02 on January 1, 2019 using this transition expedient. We have determined that adoption of this standard will result in the recognition of a lease liability and right-of-use asset for certain operating leases that are currently not recognized on our consolidated balance sheets, which we expect to be recorded using an incremental borrowing rate, however the amount recorded will not be material in relation to our consolidated balance sheets. At December 31, 2018, we are contractually obligated to make future payments of $79.4 million under our operating lease obligations in existence as of that date, primarily related to long-term facility leases. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), which changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results, in order to better align an entity’s risk management activities and financial reporting for hedging relationships. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. FASB ASU No. 2017-12 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, with early adoption permitted. We will adopt FASB ASU No. 2017-12 on January 1, 2019, which will not have a material impact on our consolidated financial position or results of operations. Other recently issued accounting standards to be adopted in future periods are not expected to have a material impact on our consolidated financial position or results of operations. We adopted FASB ASC Topic 606 on January 1, 2018, and we applied the pertinent transition provisions to contracts that were not completed as of January 1, 2018 using the modified retrospective method. Accordingly, periods presented prior to January 1, 2018 are presented under the previous revenue recognition guidance, including FASB ASC Topic 605. Refer to Note 2, "Significant Accounting Policies," for detailed discussion of the accounting policies related to revenue recognition. Because (1) the vast majority of our revenue is derived from the sale of tangible products for which we recognize revenue at a point in time and (2) the contracts that relate to these product shipments are purchase orders that have firm purchase commitments (generally over a short period of time), the adoption of FASB ASC Topic 606 did not have a material effect on our financial statements or results of operations, and no cumulative catch-up adjustment was required. |
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Legal Proceedings and Claims | Legal Proceedings and Claims We are regularly involved in a number of claims and litigation matters in the ordinary course of business. Most of our litigation matters are third-party claims related to patent infringement allegations or for property damage allegedly caused by our products, but some involve allegations of personal injury or wrongful death. Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial position, or cash flows. We account for litigation and claims losses in accordance with FASB ASC Topic 450, Contingencies. Under FASB ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined each accounting period as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the minimum amount, which could be an immaterial amount, is recorded. As information becomes known, either the minimum loss amount is increased, or a best estimate can be made, generally resulting in additional loss provisions. A best estimate amount may be changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected. |
Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||
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Dec. 31, 2018 | |||||||||
Accounting Policies [Abstract] | |||||||||
Property, Plant and Equipment, Schedule of Useful Lives | The depreciable lives of plant and equipment are as follows:
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Revenue Recognition (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table presents net revenue disaggregated by segment and end market for the years ended December 31, 2018, 2017, and 2016:
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Share-Based Payment Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | A summary of stock option activity for the years ended December 31, 2018, 2017, and 2016 is presented in the table below (amounts have been calculated based on unrounded shares):
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Schedule of Nonvested Share Activity | A summary of the status of our unvested options as of December 31, 2018, and of the changes during the year then ended, is presented in the table below (amounts have been calculated based on unrounded shares):
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average key assumptions used in estimating the grant-date fair value of options for the years ended December 31, 2018, 2017, and 2016 are as follows:
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Schedule of Nonvested Restricted Stock Units Activity | A summary of restricted securities granted in the years ended December 31, 2018, 2017, and 2016 is presented below:
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A summary of activity related to outstanding restricted securities for fiscal years 2018, 2017, and 2016 is presented in the table below (amounts have been calculated based on unrounded shares):
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Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest | Aggregate intrinsic value information for restricted securities as of December 31, 2018, 2017, and 2016 is presented below:
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Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Weighted Average Remaining Period | The weighted-average remaining periods over which the restrictions will lapse as of December 31, 2018, 2017, and 2016 are as follows:
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Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | The table below presents non-cash compensation expense related to our equity awards, which is recorded within SG&A expense in the consolidated statements of operations, during the identified periods:
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Schedule of Unrecognized Compensation Cost, Nonvested Awards | The table below presents unrecognized compensation expense at December 31, 2018 for each class of award, and the remaining expected term for this expense to be recognized:
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Restructuring and Other Charges, Net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | Restructuring and other charges, net for the years ended December 31, 2018, 2017, and 2016 were as follows:
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Schedule of Restructuring Reserve by Type of Cost | Changes to our severance liability during the years ended December 31, 2018 and 2017 were as follows:
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Schedule of Restructuring Reserve by Balance Sheet Location | The following table outlines the current and long-term components of our severance liability recognized in the consolidated balance sheets as of December 31, 2018 and 2017.
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign | Income/(loss) before taxes for the years ended December 31, 2018, 2017, and 2016 was categorized by jurisdiction as follows:
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Schedule of Components of Income Tax Expense (Benefit) | (Benefit from)/provision for income taxes for the years ended December 31, 2018, 2017, and 2016 was categorized by jurisdiction as follows:
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Schedule of Effective Income Tax Rate Reconciliation | The principal reconciling items from income tax computed at the U.S. statutory tax rate for the years ended December 31, 2018, 2017, and 2016 were as follows:
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Schedule of Deferred Tax Assets and Liabilities | The primary components of deferred income tax assets and liabilities as of December 31, 2018 and 2017 were as follows:
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Summary of Income Tax Contingencies | A reconciliation of the amount of unrecognized tax benefits is as follows:
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Summary of Income Tax Examinations | The table that follows presents the (income)/expense related to such interest and penalties recognized in the consolidated statements of operations during the years ended December 31, 2018, 2017, and 2016, and the amount of interest and penalties recorded on the consolidated balance sheets as of December 31, 2018 and 2017:
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Other, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other, net | Other, net consisted of the following for the years ended December 31, 2018, 2017, and 2016:
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Net Income Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares | For the years ended December 31, 2018, 2017, and 2016, the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | These potential ordinary shares are as follows:
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Inventories (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | The components of inventories as of December 31, 2018 and 2017 were as follows:
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Property, Plant and Equipment, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | PP&E, net as of December 31, 2018 and 2017 consisted of the following:
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Schedule of Capital Leased Assets | PP&E, net as of December 31, 2018 and 2017 included the following assets under capital leases:
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Goodwill and Other Intangible Assets, Net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following table outlines the changes in goodwill by segment for the year ended December 31, 2018. There were no acquisitions or other changes to goodwill during the year ended December 31, 2017.
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Schedule of Finite-Lived Intangible Assets by Major Class | The following table outlines the components of definite-lived intangible assets as of December 31, 2018 and 2017:
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Schedule of Amortization Expense | The following table outlines amortization of intangible assets for the years ended December 31, 2018, 2017, and 2016:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The table below presents estimated amortization of intangible assets for each of the next five years:
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Accrued Expenses and Other Current Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses and other current liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities as of December 31, 2018 and 2017 consisted of the following:
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Pension and Other Post-Retirement Benefits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the years ended December 31, 2018, 2017, and 2016 were as follows:
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Schedule of Error Corrections and Prior Period Adjustments [Table Text Block] | The table below presents the effects of this adjustment.
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Schedule of Changes in Fair Value of Plan Assets and Projected Benefit Obligations | The following table outlines the rollforward of the benefit obligation and plan assets for the defined benefit and retiree healthcare benefit plans for the years ended December 31, 2018 and 2017:
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Schedule of Amounts Recognized in Balance Sheet | The following table outlines the funded status amounts recognized in the consolidated balance sheets as of December 31, 2018 and 2017:
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Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year | Balances recognized within accumulated other comprehensive loss that have not been recognized as components of net periodic benefit cost, net of tax, as of December 31, 2018, 2017, and 2016 are as follows:
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Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets | Information for plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2018 and 2017 is as follows:
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Schedule of Accumulated and Projected Benefit Obligations | Information for plans with a projected benefit obligation in excess of plan assets as of December 31, 2018 and 2017 is as follows:
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Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | Other changes in plan assets and benefit obligations, net of tax, recognized in other comprehensive income/(loss) for the years ended December 31, 2018, 2017, and 2016 are as follows:
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Schedule of Assumptions Used | Weighted-average assumptions used to calculate the projected benefit obligations of our defined benefit and retiree healthcare benefit plans as of December 31, 2018 and 2017 are as follows:
Weighted-average assumptions used to calculate the net periodic benefit cost of our defined benefit and retiree healthcare benefit plans for the years ended December 31, 2018, 2017, and 2016 are as follows:
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Schedule of Health Care Cost Trend Rates | Assumed healthcare cost trend rates for the U.S. retiree healthcare benefit plan as of December 31, 2018, 2017, and 2016 are as follows:
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Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates | A one percentage point change in the assumed healthcare trend rates for the year ended December 31, 2018 would have the following effect:
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Schedule of Expected Benefit Payments | The table below outlines the benefits expected to be paid to participants in each of the following years, taking into consideration expected future service, as appropriate. The majority of the payments will be paid from plan assets and not company assets.
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Schedule of Allocation of Plan Assets | The following table presents information about the plan’s target and actual asset allocation, as of December 31, 2018:
The following table presents information about the plan’s target asset allocation, as well as the actual allocation, as of December 31, 2018:
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Schedule of Defined Benefit Plans Disclosures | The following table presents information about the plan assets measured at fair value as of December 31, 2018 and 2017:
The following table presents information about the plan assets measured at fair value as of December 31, 2018 and 2017:
The following table presents information about the plan assets measured at fair value as of December 31, 2018 and 2017:
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Schedule of Effect of Significant Unobservable Inputs, Changes in Plan Assets | The following table presents a rollforward of the Level 3 assets in our Netherlands' defined plan for the years ended December 31, 2018 and 2017:
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Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | ong-term debt, net and capital lease and other financing obligations as of December 31, 2018 and 2017 consisted of the following:
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Debt Instrument Redemption | Thereafter, we may redeem the 6.25% Senior Notes, in whole or in part, at the following prices (plus accrued and unpaid interest to the date of redemption, if any):
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Schedule of Maturities of Long-term Debt | The following table presents the remaining mandatory principal repayments of long-term debt, excluding capital lease payments, other financing obligations, and discretionary repurchases of debt, in each of the years ended December 31, 2019 through 2023 and thereafter.
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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 Future Minimum Payments for Leases and Other Financing Obligations | Future minimum payments for capital leases, other financing obligations, and non-cancelable operating leases in effect as of December 31, 2018 are as follows:
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Long-term Purchase Commitment | As of December 31, 2018, we had the following purchase commitments:
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Shareholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive loss were as follows:
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Comprehensive Income (Loss) | The details of the components of other comprehensive income/(loss), net of tax, for the years ended December 31, 2018, 2017, and 2016 are as follows:
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Reclassification out of Accumulated Other Comprehensive Income | The details of the amounts reclassified from accumulated other comprehensive loss for the years ended December 31, 2018, 2017, and 2016 are as follows:
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Acquisitions and Divestitures (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed:
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Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The following table presents the acquired intangible assets, their estimated fair values, and weighted average lives:
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Fair Value Measures (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair values of our assets and liabilities measured at fair value on a recurring basis as of as of December 31, 2018 and 2017 are as shown in the below table. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.
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Fair Value, by Balance Sheet Grouping | The following table presents the carrying values and fair values of financial instruments not measured at fair value in the consolidated balance sheets as of December 31, 2018 and 2017. All fair value measures presented are categorized within Level 2 of the fair value hierarchy.
__________________________________________
|
Derivative Instruments and Hedging Activities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | As of December 31, 2018, we had the following outstanding commodity forward contracts, none of which were designated as derivatives in qualifying hedging relationships:
As of December 31, 2018, we had the following outstanding foreign currency forward contracts:
______________________________________
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Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location | The following table presents the fair values of our derivative financial instruments and their classification in the consolidated balance sheets as of December 31, 2018 and 2017:
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The following tables present the effect of our derivative financial instruments on the consolidated statements of operations and the consolidated statements of comprehensive income for the years ended December 31, 2018 and 2017:
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Segment Reporting (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table presents net revenue and Segment profit for the reported segments and other operating results not allocated to the reported segments for the years ended December 31, 2018, 2017, and 2016:
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Revenue from External Customers by Products and Services | The following table presents net revenue by product category for the years ended December 31, 2018, 2017, and 2016 (prior periods have been recast to reflect current period presentation):
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Schedule of Depreciation and Amortization, by Segment | The following table presents depreciation and amortization expense for our reportable segments for the years ended December 31, 2018, 2017 and 2016:
__________________________________________
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Reconciliation of Assets from Segment to Consolidated | The following table presents total assets for our reportable segments as of December 31, 2018 and 2017:
__________________________________________
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Schedule of Capital Expenditures by Segment | The following table presents additions to property, plant and equipment and capitalized software for our reportable segments for the years ended December 31, 2018, 2017, and 2016:
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Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The following tables present net revenue by geographic area and by significant country for the years ended December 31, 2018, 2017, and 2016. In these tables, net revenue is aggregated based on an internal methodology that considers both the location of our subsidiaries and the primary location of each subsidiary's customers.
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Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country | The following tables present PP&E, net, by geographic area and by significant country as of December 31, 2018 and 2017. In these tables, PP&E, net is aggregated based on the location of our subsidiaries.
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Unaudited Quarterly Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Unaudited Quarterly Data | The table below presents expenses recorded related to the Merger in the periods presented:
A summary of the unaudited quarterly results of operations for the years ended December 31, 2018 and 2017 is as follows:
__________________________________________
The below table presents gains/(losses) recognized related to these contracts in the periods presented:
The below table presents charges/(gains) recorded to restructuring and other charges, net in the periods presented:
|
Business Description and Basis of Presentation (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of segments | 2 |
Significant Accounting Policies - Share-Based Compensation (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield | 0.00% |
Significant Accounting Policies - Financial Instruments (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Largest Customer | Customer Concentration Risk | Net revenue | |
Concentration Risk [Line Items] | |
Percent of net revenue | 8.00% |
Significant Accounting Policies - Goodwill and Other Intangible Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
reporting_unit
| |
Accounting Policies [Abstract] | |
Number of reporting units | 6 |
Significant Accounting Policies - Property, Plant and Equipment and Other Capitalized Costs (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 2 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 2 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 15 years |
Significant Accounting Policies - Recently Issued Accounting Standards Adopted In The Current Period (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Investment [Line Items] | |
Future operating lease payments | $ 79,386 |
Series B Preferred Stock | Quanergy Systems, Inc. | |
Investment [Line Items] | |
Equity investment | $ 50,000 |
Share-Based Payment Plans - Weighted Average Key Assumptions in Estimating Grant Date Fair Value of Options (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value per share of underlying ordinary shares (in dollars per share) | $ 51.83 | $ 43.67 | $ 37.89 |
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 25.00% | 30.00% | 30.00% |
Risk-free interest rate | 2.62% | 2.08% | 1.48% |
Expected term (years) | 6 years | 6 years | 6 years |
Share-Based Payment Plans - Outstanding Restricted Securities (Details) - Restricted Stock - $ / shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Restricted Securities | |||
Beginning Balance (in shares) | 1,081 | 920 | 654 |
Granted (in shares) | 399 | 418 | 499 |
Forfeited (in shares) | (121) | (35) | (48) |
Vested (in shares) | (240) | (222) | (185) |
Ending Balance (in shares) | 1,119 | 1,081 | 920 |
Weighted-Average Grant-Date Fair Value | |||
Beginning Balance (in dollars per share) | $ 44.43 | $ 44.35 | $ 45.87 |
Granted (in dollars per share) | 51.40 | 43.44 | 38.56 |
Forfeited (in dollars per share) | 48.28 | 43.94 | 47.01 |
Vested (in dollars per share) | 53.01 | 42.24 | 33.41 |
Ending Balance (in dollars per share) | $ 44.66 | $ 44.43 | $ 44.35 |
Share-Based Payment Plans - Aggregate Intrinsic Value and Weighted-Average Remaining Periods On Restricted Stock (Details) - Restricted Stock - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding, Aggregate intrinsic value | $ 50,161 | $ 55,271 | $ 35,845 |
Expected to vest, Aggregate intrinsic value | $ 44,203 | $ 42,106 | $ 26,937 |
Outstanding, Weighted-average remaining period | 1 year 2 months 18 days | 1 year 3 months 18 days | 1 year 6 months |
Expected to vest, Weighted-average remaining period | 1 year 2 months 18 days | 1 year 4 months 24 days | 1 year 6 months |
Share-Based Payment Plans - Share Based Compensation Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 23,825 | $ 19,819 | $ 17,425 |
Unrecognized Compensation Expense | 32,497 | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 5,739 | 6,046 | 7,094 |
Unrecognized Compensation Expense | $ 9,329 | ||
Expected Recognition (years) | 2 years 1 month 9 days | ||
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 18,086 | $ 13,773 | $ 10,331 |
Unrecognized Compensation Expense | $ 23,168 | ||
Expected Recognition (years) | 1 year 7 months 23 days |
Restructuring and Other Charges, Net - Schedule of Restructuring Liabilities (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | $ 7,583 | |||
Restructuring reserve, ending balance | 6,591 | $ 7,583 | ||
Restructuring Reserve [Abstract] | ||||
Accrued expenses and other current liabilities | $ 6,591 | $ 4,184 | ||
Other long-term liabilities | 0 | 3,399 | ||
Restructuring reserve | 7,583 | 7,583 | 6,591 | 7,583 |
Employee Severance | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 7,583 | 17,350 | ||
Charges, net of reversals | 7,566 | 11,125 | ||
Payments | (8,341) | (22,511) | ||
Foreign currency remeasurement | (217) | 1,619 | ||
Restructuring reserve, ending balance | 6,591 | 7,583 | ||
Restructuring Reserve [Abstract] | ||||
Restructuring reserve | $ 7,583 | $ 17,350 | $ 6,591 | $ 7,583 |
Other, Net (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Other Income and Expenses [Abstract] | |||
Currency remeasurement (loss)/gain on net monetary assets | $ (18,905) | $ 18,041 | $ (10,621) |
Gain/(loss) on foreign currency forward contracts | 2,070 | (15,618) | (1,850) |
(Loss)/gain on commodity forward contracts | (8,481) | 9,989 | 7,399 |
Loss on debt financing | (2,350) | (2,670) | 0 |
Net periodic benefit cost, excluding service cost | (3,585) | (3,402) | (192) |
Other | 886 | 75 | 171 |
Other, net | $ (30,365) | $ 6,415 | $ (5,093) |
Income Taxes - Income Before Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
U.S. | $ 68,027 | $ (11,425) | $ (43,842) |
Non-U.S. | 458,348 | 413,866 | 365,287 |
Income before taxes | $ 526,375 | $ 402,441 | $ 321,445 |
Income Taxes - (Benefit from)/Provision for Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
U.S. Federal | |||
U.S. Federal, Current | $ 5,700 | $ 0 | $ 464 |
U.S. Federal, Deferred | (109,663) | (56,956) | 10,036 |
U.S. Federal, Total | (103,963) | (56,956) | 10,500 |
Non-U.S. | |||
Non-U.S., Current | 64,666 | 50,601 | 49,977 |
Non-U.S., Deferred | (18,770) | (1,104) | 2,010 |
Non-U.S., Total | 45,896 | 49,497 | 51,987 |
U.S. State | |||
U.S. State, Current | 1,082 | 240 | 226 |
U.S. State, Deferred | (15,635) | 1,303 | (3,702) |
U.S. State, Total | (14,553) | 1,543 | (3,476) |
Total, Current | 71,448 | 50,841 | 50,667 |
Total, Deferred | (144,068) | (56,757) | 8,344 |
(Benefit from)/provision for income taxes | $ (72,620) | $ (5,916) | $ 59,011 |
Income Taxes - Effective Tax Rate Reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Federal statutory tax rate | 21.00% | 35.00% | 35.00% | |
Tax computed at statutory rate of 21% in 2018 and 35% in 2017 and 2016 | $ 110,539 | $ 140,854 | $ 112,506 | |
Change in valuation allowances | (123,426) | (3,368) | 30,565 | |
Foreign tax rate differential | (41,200) | (111,990) | (86,339) | |
Change in tax laws or rates | (22,264) | 3,912 | 2,542 | |
Research and development incentives | (19,475) | (5,922) | (10,961) | |
U.S. state taxes, net of federal benefit | (11,499) | 1,087 | (2,166) | |
Unrealized foreign exchange losses, net | 11,346 | 830 | 3,829 | |
Reserve for tax exposure | 10,775 | 38,013 | 11,227 | |
Withholding taxes not creditable | 8,734 | 3,896 | 6,014 | |
U.S. Tax Reform impact | $ (73,700) | 0 | (73,668) | 0 |
Other | 3,850 | 440 | (8,206) | |
(Benefit from)/provision for income taxes | $ (72,620) | $ (5,916) | $ 59,011 |
Income Taxes - Deferred Income Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Inventories and related reserves | $ 14,171 | $ 17,287 |
Prepaid and accrued expenses | 71,004 | 25,920 |
Property, plant and equipment | 14,571 | 13,396 |
Intangible assets | 27,122 | 22,050 |
Unrealized exchange loss | 4,255 | 12,265 |
Net operating loss, interest expense, and other carryforwards | 296,255 | 349,244 |
Pension liability and other | 8,701 | 8,880 |
Share-based compensation | 11,332 | 12,195 |
Other | 10,151 | 7,028 |
Total deferred tax assets | 457,562 | 468,265 |
Valuation allowance | (157,043) | (277,315) |
Net deferred tax asset | 300,519 | 190,950 |
Deferred tax liabilities: | ||
Property, plant and equipment | (15,795) | (23,222) |
Intangible assets and goodwill | (440,348) | (428,028) |
Unrealized exchange gain | (6,912) | (6,031) |
Tax on undistributed earnings of subsidiaries | (35,187) | (38,894) |
Total deferred tax liabilities | (498,242) | (496,175) |
Net deferred tax liability | $ (197,723) | $ (305,225) |
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
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] | |||
Unrecognized Tax Benefits, Beginning of Period | $ 59,884 | $ 45,898 | $ 38,057 |
Increases related to prior year tax positions | 14,609 | 7,968 | 6,390 |
Increases related to current year tax positions | 15,676 | 14,585 | 8,462 |
Increases related to business combination | 1,000 | ||
Decreases related to prior year tax positions | (1,144) | ||
Decreases related to lapse of applicable statute of limitations | (1,356) | (256) | |
Decreases related to foreign currency exchange rate fluctuations | (416) | ||
Decreases related to lapse of applicable statute of limitations | (7,211) | (6,755) | |
Unrecognized Tax Benefits, End of Period | $ 89,609 | $ 59,884 | $ 45,898 |
Income Taxes - Interest and Penalties (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Statements of Operations | |||
Interest | $ (0.2) | $ 0.2 | $ 0.1 |
Penalties | (0.2) | (0.1) | $ 0.1 |
Balance Sheets | |||
Interest | 0.4 | 0.7 | |
Penalties | $ 0.4 | $ 0.5 |
Net Income Per Share - Weighted-average Ordinary Shares Outstanding for Basic and Diluted Net Income Per Share (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | |||
Basic weighted-average ordinary shares outstanding (in shares) | 168,570 | 171,165 | 170,709 |
Dilutive effect of stock options (in shares) | 822 | 616 | 489 |
Dilutive effect of unvested restricted securities (in shares) | 467 | 388 | 262 |
Diluted weighted-average ordinary shares outstanding (in shares) | 169,859 | 172,169 | 171,460 |
Net Income Per Share - Anti-dilutive Shares (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Anti-dilutive shares excluded | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Shares excluded (in shares) | 930 | 1,410 | 1,401 |
Contingently issuable shares excluded | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Shares excluded (in shares) | 687 | 871 | 606 |
Inventories (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory, Net [Abstract] | ||
Finished goods | $ 187,095 | $ 195,089 |
Work-in-process | 104,405 | 92,678 |
Raw materials | 200,819 | 158,362 |
Inventories | $ 492,319 | $ 446,129 |
Goodwill and Other Intangible Assets, Net - Schedule of Changes in Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill [Line Items] | ||
Gross Goodwill | $ 3,099,768 | $ 3,023,930 |
Accumulated Impairment | (18,466) | (18,466) |
Goodwill [Roll Forward] | ||
Net Goodwill, Beginning Balance | 3,005,464 | |
Divestiture of Valves Business | (38,800) | |
Acquisition of GIGAVAC | 114,638 | |
Net Goodwill, Ending Balance | 3,081,302 | |
Performance Sensing | ||
Goodwill [Line Items] | ||
Gross Goodwill | 2,155,633 | 2,148,135 |
Accumulated Impairment | 0 | 0 |
Goodwill [Roll Forward] | ||
Net Goodwill, Beginning Balance | 2,148,135 | |
Divestiture of Valves Business | (38,800) | |
Acquisition of GIGAVAC | 46,298 | |
Net Goodwill, Ending Balance | 2,155,633 | |
Sensing Solutions | ||
Goodwill [Line Items] | ||
Gross Goodwill | 944,135 | 875,795 |
Accumulated Impairment | (18,466) | $ (18,466) |
Goodwill [Roll Forward] | ||
Net Goodwill, Beginning Balance | 857,329 | |
Acquisition of GIGAVAC | 68,340 | |
Net Goodwill, Ending Balance | $ 925,669 |
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accrued expenses and other current liabilities [Abstract] | ||
Accrued compensation and benefits | $ 68,936 | $ 89,816 |
Accrued interest | 40,550 | 36,919 |
Foreign currency and commodity forward contracts | 7,710 | 35,094 |
Accrued severance | 6,591 | 4,184 |
Current portion of pension and post-retirement benefit obligations | 3,176 | 3,342 |
Other accrued expenses and current liabilities | 91,167 | 90,205 |
Accrued expenses and other current liabilities | $ 218,130 | $ 259,560 |
Pension and Other Post-Retirement Benefits - Defined Benefit Pension Plans (Details) - Pension Plan - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
United States | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer contributions | $ 3,985,000 | $ 344,000 | |
Defined Benefit Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer contributions | $ 4,000,000 | ||
Defined Benefit Pension Plans | United States | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Number of consecutive years of compensation | 5 years | ||
Defined Benefit Pension Plans | Forecast | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer contributions | $ 0 |
Pension and Other Post-Retirement Benefits - Defined Contribution Plans (Details) - Pension Plan - United States - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2012 |
|
Defined Contribution Plan Disclosure [Line Items] | ||||
Percent of annual eligible earnings | 4.00% | |||
Aggregate expense | $ 5.7 | $ 5.9 | $ 5.8 |
Pension and Other Post-Retirement Benefits - Retiree Healthcare Benefit Plan and Non-U.S. Benefit Plans (Details) - Postemployment Retirement Benefits - United States - Retiree Healthcare Benefit Plans $ in Millions |
3 Months Ended |
---|---|
Dec. 31, 2013
USD ($)
| |
Defined Benefit Plan Disclosure [Line Items] | |
Gain from amendment | $ 7.2 |
Number of years from date of recognition | 5 years |
Pension and Other Post-Retirement Benefits - Funded Status Amounts Recognized on Balance Sheets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Defined Benefit Plan Disclosure [Line Items] | ||
Current liabilities | $ (3,176) | $ (3,342) |
Noncurrent liabilities | (33,958) | (40,055) |
Pension Plan | United States | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Noncurrent assets | 0 | 0 |
Current liabilities | (595) | (638) |
Noncurrent liabilities | (4,699) | (6,876) |
Funded status | (5,294) | (7,514) |
Pension Plan | Foreign Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Noncurrent assets | 0 | 0 |
Current liabilities | (1,465) | (1,494) |
Noncurrent liabilities | (24,358) | (24,697) |
Funded status | (25,823) | (26,191) |
Postemployment Retirement Benefits | United States | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Noncurrent assets | 0 | 0 |
Current liabilities | (1,116) | (1,210) |
Noncurrent liabilities | (4,901) | (8,482) |
Funded status | $ (6,017) | $ (9,692) |
Pension and Other Post-Retirement Benefits - Balances Included within Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Amortized loss | $ 500 | ||
Pension Plan | United States | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Net prior service credit | 0 | $ 0 | $ 0 |
Net loss | 20,759 | 20,884 | 22,490 |
Pension Plan | Foreign Plan | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Net prior service credit | (10) | (220) | (218) |
Net loss | 14,425 | 12,489 | 11,070 |
Postemployment Retirement Benefits | United States | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Net prior service credit | (692) | 823 | (512) |
Net loss | $ 880 | $ 1,009 | $ 1,260 |
Pension and Other Post-Retirement Benefits - Accumulated and Projected Benefit Obligation (Details) - Pension Plan - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
United States | ||
Defined Benefit Plan, Plan with Accumulated Benefit Obligation in Excess of Plan Assets [Abstract] | ||
Projected benefit obligation | $ 45,169 | $ 48,615 |
Accumulated benefit obligation | 45,169 | 48,615 |
Plan assets | 39,875 | 41,101 |
Defined Benefit Plan, Pension Plan with Project Benefit Obligation in Excess of Plan Assets [Abstract] | ||
Projected benefit obligation | 51,186 | 58,307 |
Plan assets | 39,875 | 41,101 |
Foreign Plan | ||
Defined Benefit Plan, Plan with Accumulated Benefit Obligation in Excess of Plan Assets [Abstract] | ||
Projected benefit obligation | 65,691 | 31,680 |
Accumulated benefit obligation | 59,948 | 26,609 |
Plan assets | 39,868 | 5,759 |
Defined Benefit Plan, Pension Plan with Project Benefit Obligation in Excess of Plan Assets [Abstract] | ||
Projected benefit obligation | 65,691 | 63,153 |
Plan assets | $ 39,868 | $ 36,990 |
Debt - Debt Instrument Redemption (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
2021 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price percent | 103.125% |
2022 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price percent | 102.083% |
2023 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price percent | 101.042% |
2024 and thereafter | |
Debt Instrument, Redemption [Line Items] | |
Redemption price percent | 100.00% |
Debt - Restrictions and Covenants (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Maximum allowable leverage ratio | 5 | |
Maximum percent of commitment | 10.00% | |
Parent Company | ||
Debt Instrument [Line Items] | ||
Investment in subsidiaries | $ 2,932,218,000 | $ 2,258,559,000 |
STBV | Senior Secured Credit Facilities and Senior Notes | ||
Debt Instrument [Line Items] | ||
Maximum allowable leverage ratio | 2 | |
Maximum costs | $ 20,000,000 | |
Maximum amount for distributions | 100,000,000 | |
Maximum amount for dividends and distributions | 50,000,000 | |
Maximum amount for aggregate dividends and other distributions | $ 150,000,000 |
Debt - Accounting for Debt Transactions (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Mar. 28, 2018 |
Dec. 31, 2017 |
|
Extinguishment of Debt [Line Items] | ||
Payments for merger related costs | $ 5.8 | |
Deferred financing cost | $ 0.2 | |
Other, net | ||
Extinguishment of Debt [Line Items] | ||
Loss on debt financing | 2.4 | $ 2.7 |
Long-term Debt | ||
Extinguishment of Debt [Line Items] | ||
Payments for merger related costs | $ 3.5 |
Debt - Leases and Other Financing Obligations (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Disclosure [Abstract] | |||
Lease term (in years) | 20 years | ||
Rent expense | $ 21.0 | $ 19.7 | $ 18.1 |
Capital lease obligation | 30.4 | 26.2 | |
Other financing obligation | $ 1.8 | $ 3.5 |
Debt - Maturities (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2019 | $ 9,704 |
2020 | 9,901 |
2021 | 898,189 |
2022 | 0 |
2023 | 500,000 |
Thereafter | 1,850,000 |
Total long-term debt principal payments | $ 3,267,794 |
Commitments and Contingencies - Future Minimum Payments (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Capital Leases | |
2019 | $ 4,672 |
2020 | 4,540 |
2021 | 4,062 |
2022 | 3,712 |
2023 | 3,771 |
2024 and thereafter | 36,327 |
Net minimum rentals | 57,084 |
Less: interest portion | (24,395) |
Present value of future minimum rentals | 32,689 |
Other Financing Obligations | |
2019 | 2,541 |
2020 | 459 |
2021 | 178 |
2022 | 0 |
2023 | 0 |
2024 and thereafter | 0 |
Net minimum rentals | 3,178 |
Less: interest portion | (392) |
Present value of future minimum rentals | 2,786 |
Operating Leases | |
2019 | 16,621 |
2020 | 12,319 |
2021 | 9,688 |
2022 | 7,707 |
2023 | 6,471 |
2024 and thereafter | 26,580 |
Net minimum rentals | 79,386 |
Less: interest portion | 0 |
Present value of future minimum rentals | 79,386 |
Total | |
2019 | 23,834 |
2020 | 17,318 |
2021 | 13,928 |
2022 | 11,419 |
2023 | 10,242 |
2024 and thereafter | 62,907 |
Net minimum rentals | 139,648 |
Less: interest portion | (24,787) |
Present value of future minimum rentals | $ 114,861 |
Commitments and Contingencies - Purchase Commitments (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 23,983 |
2020 | 24,202 |
2021 | 18,525 |
2022 | 8,065 |
2023 | 4,952 |
2024 and thereafter | 39 |
Total purchase commitments | $ 79,766 |
Commitments and Contingencies - Litigation (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Metal Seal Precision, Ltd. v. Sensata Technologies Inc. | Maximum | |
Loss Contingencies [Line Items] | |
Estimate of possible loss | $ 51.0 |
Shareholders' Equity - Narrative (Details) - USD ($) |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Feb. 16, 2018 |
Dec. 31, 2018 |
Oct. 31, 2018 |
May 31, 2018 |
Mar. 28, 2018 |
Mar. 27, 2018 |
Dec. 31, 2017 |
|
Stockholders' Equity Note [Abstract] | |||||||
Ordinary shares authorized (in shares) | 177,069,000 | 177,069,000 | 400,000,000 | 400,000,000 | |||
Reduction in retained earnings due to cancellation of treasury shares | $ 286,100,000 | ||||||
Authorized share repurchase amount | $ 250,000,000.0 | $ 400,000,000.0 | $ 250,000,000.0 | ||||
Shares repurchased (in shares) | 7,571 | ||||||
Purchase of treasury shares | $ 399,417,000 | $ 288,478,000 |
Acquisitions and Divestitures - Divestitures (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Disposal group, costs | $ 8,162 | $ 0 | $ 0 | ||
Valves Business | Disposal Group, Held-for-sale, Not Discontinued Operations | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Period of continuing involvement after disposal | 5 years | ||||
Disposal group, consideration | $ 165,500 | ||||
Disposal group, cash and cash equivalents | 11,800 | ||||
Gain on sale | (64,400) | $ (64,400) | |||
Disposal group, costs | 5,900 | $ 5,900 | |||
Disposal group, liabilities | $ 16,400 |
Fair Value Measures - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Measurements, Recurring - Significant Other Observable Inputs (Level 2) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | $ 18,702 | $ 10,413 |
Liabilities | 9,302 | 42,073 |
Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 17,871 | 3,955 |
Liabilities | 5,165 | 40,969 |
Commodity forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 831 | 6,458 |
Liabilities | $ 4,137 | $ 1,104 |
Fair Value Measures - Narrative (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Series B Preferred Stock | Quanergy Systems, Inc. | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Equity investment | $ 50.0 |
Derivative Instruments and Hedging Activities - Credit Risk Related Contingent Features (Details) |
Dec. 31, 2018
USD ($)
|
---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Termination value | $ 9,400,000 |
Cash collateral posted | $ 0 |
Segment Reporting - Schedules of Segment Reporting (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Mar. 31, 2017
USD ($)
|
Dec. 31, 2018
USD ($)
segment
product_category
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Segment Reporting Information [Line Items] | ||||||||||||
Number of segments | segment | 2 | |||||||||||
Number of product categories | product_category | 4 | |||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | $ 847,922 | $ 873,552 | $ 913,860 | $ 886,293 | $ 840,534 | $ 819,054 | $ 839,874 | $ 807,271 | $ 3,521,627 | $ 3,306,733 | $ 3,202,288 | |
Amortization of intangible assets | (139,326) | (161,050) | (201,498) | |||||||||
Restructuring and other charges, net | (207) | $ (1,329) | $ (6,389) | $ (11,050) | (18,975) | (4,113) | ||||||
Profit from operations | 710,419 | 555,787 | 492,356 | |||||||||
Interest expense, net | (153,679) | (159,761) | (165,818) | |||||||||
Other, net | (30,365) | 6,415 | (5,093) | |||||||||
Income before taxes | 526,375 | 402,441 | 321,445 | |||||||||
Depreciation and amortization: | 245,340 | 270,371 | 308,401 | |||||||||
Assets: | 6,797,687 | 6,641,525 | 6,797,687 | 6,641,525 | ||||||||
Goodwill | 3,081,302 | 3,005,464 | 3,081,302 | 3,005,464 | ||||||||
Other intangible assets, net | 897,191 | 920,124 | 897,191 | 920,124 | ||||||||
Cash and cash equivalents | 729,833 | 753,089 | 729,833 | 753,089 | 351,428 | $ 342,263 | ||||||
Property, plant and equipment, net | 787,178 | 750,049 | 787,178 | 750,049 | ||||||||
Additions to property, plant and equipment and capitalized software: | 159,787 | 144,584 | 130,217 | |||||||||
Performance Sensing | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | 2,627,651 | 2,460,600 | 2,385,380 | |||||||||
Goodwill | 2,155,633 | 2,148,135 | 2,155,633 | 2,148,135 | ||||||||
Sensing Solutions | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | 893,976 | 846,133 | 816,908 | |||||||||
Goodwill | 925,669 | 857,329 | 925,669 | 857,329 | ||||||||
Sensors | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | 2,755,280 | 2,542,863 | 2,455,476 | |||||||||
Controls | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | 508,745 | 497,853 | 486,207 | |||||||||
Other | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | 257,602 | 266,017 | 260,605 | |||||||||
Operating Segments | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | 3,521,627 | 3,306,733 | 3,202,288 | |||||||||
Profit from operations | 1,005,691 | 941,636 | 877,440 | |||||||||
Operating Segments | Performance Sensing | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | 2,627,651 | 2,460,600 | 2,385,380 | |||||||||
Profit from operations | 712,682 | 664,186 | 615,526 | |||||||||
Depreciation and amortization: | 72,067 | 68,910 | 68,837 | |||||||||
Assets: | 1,490,310 | 1,396,565 | 1,490,310 | 1,396,565 | ||||||||
Additions to property, plant and equipment and capitalized software: | 130,234 | 106,520 | 99,299 | |||||||||
Operating Segments | Sensing Solutions | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Net revenue | 893,976 | 846,133 | 816,908 | |||||||||
Profit from operations | 293,009 | 277,450 | 261,914 | |||||||||
Depreciation and amortization: | 16,798 | 17,179 | 14,095 | |||||||||
Assets: | 468,131 | 424,237 | 468,131 | 424,237 | ||||||||
Additions to property, plant and equipment and capitalized software: | 12,492 | 13,980 | 11,947 | |||||||||
Corporate and other | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Profit from operations | (203,764) | (205,824) | (179,473) | |||||||||
Depreciation and amortization: | 156,475 | 184,282 | 225,469 | |||||||||
Assets: | 4,839,246 | 4,820,723 | 4,839,246 | 4,820,723 | ||||||||
Goodwill | 3,081,300 | 3,005,500 | 3,081,300 | 3,005,500 | ||||||||
Other intangible assets, net | 897,200 | 920,100 | 897,200 | 920,100 | ||||||||
Property, plant and equipment, net | $ 36,500 | $ 36,100 | 36,500 | 36,100 | ||||||||
Additions to property, plant and equipment and capitalized software: | 17,061 | 24,084 | 18,971 | |||||||||
Segment Reconciling Items | ||||||||||||
Segment Reconciliation [Abstract] | ||||||||||||
Amortization of intangible assets | (139,326) | (161,050) | (201,498) | |||||||||
Restructuring and other charges, net | $ 47,818 | $ (18,975) | $ (4,113) |
Schedule II - Valuation and Qualifying Accounts (Details) - Accounts receivable allowances - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at the Beginning of the Period | $ 12,947 | $ 11,811 | $ 9,535 |
Additions, Charged to expenses/against revenue | 2,194 | 2,205 | 3,072 |
Deductions | (1,379) | (1,069) | (796) |
Balance at the End of the Period | $ 13,762 | $ 12,947 | $ 11,811 |
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