(Mark One) | |
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) | |
Title of each class | Trading Symbol | Name of exchange on which registered | ||
☒ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||
Cost of goods sold | |||||||||||||||
Gross profit | |||||||||||||||
Percent to net sales | % | % | % | % | |||||||||||
Selling, general and administrative expenses | |||||||||||||||
Percent to net sales | % | % | % | % | |||||||||||
Other general expense - net | |||||||||||||||
Amortization | |||||||||||||||
Interest expense | |||||||||||||||
Interest and net investment income | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
California litigation expense | ( | ) | ( | ) | |||||||||||
Other expense (income) - net | ( | ) | |||||||||||||
Income before income taxes | |||||||||||||||
Income taxes | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income per share - basic | $ | $ | $ | $ | |||||||||||
Net income per share - diluted | $ | $ | $ | $ | |||||||||||
Average shares outstanding - basic | |||||||||||||||
Average shares and equivalents outstanding - diluted | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Other comprehensive loss, net of tax: | ||||||||||||||||
Foreign currency translation adjustments (1) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Pension and other postretirement benefit adjustments: | ||||||||||||||||
Amounts reclassified from Other comprehensive loss (2) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Unrealized net gains on cash flow hedges: | ||||||||||||||||
Amounts reclassified from Other comprehensive loss (3) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Total | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Comprehensive income | $ | $ | $ | $ | ||||||||||||
September 30, 2019 | December 31, 2018 | September 30, 2018 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||
Accounts receivable, less allowance | |||||||||||
Inventories: | |||||||||||
Finished goods | |||||||||||
Work in process and raw materials | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment: | |||||||||||
Land | |||||||||||
Buildings | |||||||||||
Machinery and equipment | |||||||||||
Construction in progress | |||||||||||
Less allowances for depreciation | |||||||||||
Goodwill | |||||||||||
Intangible assets | |||||||||||
Operating lease right-of-use assets | |||||||||||
Deferred pension assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | $ | ||||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Short-term borrowings | $ | $ | $ | ||||||||
Accounts payable | |||||||||||
Compensation and taxes withheld | |||||||||||
Accrued taxes | |||||||||||
Current portion of long-term debt | |||||||||||
California litigation accrual | |||||||||||
Current portion of operating lease liabilities | |||||||||||
Other accruals | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Postretirement benefits other than pensions | |||||||||||
Deferred income taxes | |||||||||||
Long-term operating lease liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Shareholders’ equity: | |||||||||||
Common stock—$1.00 par value: | |||||||||||
92,309,240, 93,116,762 and 93,626,317 shares outstanding | |||||||||||
at September 30, 2019, December 31, 2018 and September 30, 2018, respectively | |||||||||||
Other capital | |||||||||||
Retained earnings | |||||||||||
Treasury stock, at cost | ( | ) | ( | ) | ( | ) | |||||
Cumulative other comprehensive loss | ( | ) | ( | ) | ( | ) | |||||
Total shareholders' equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ | $ | ||||||||
Nine Months Ended | |||||||
September 30, 2019 | September 30, 2018 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net operating cash: | |||||||
Depreciation | |||||||
Amortization of intangible assets | |||||||
Stock-based compensation expense | |||||||
Loss on extinguishment of debt | |||||||
Amortization of credit facility and debt issuance costs | |||||||
Provisions for qualified exit costs | |||||||
Provisions for environmental-related matters | |||||||
Defined benefit pension plans net cost | ( | ) | |||||
Net change in postretirement liability | |||||||
Deferred income taxes | ( | ) | |||||
Other | ( | ) | |||||
Change in working capital accounts - net | ( | ) | ( | ) | |||
Costs incurred for environmental-related matters | ( | ) | ( | ) | |||
Costs incurred for qualified exit costs | ( | ) | ( | ) | |||
Other | ( | ) | |||||
Net operating cash | |||||||
INVESTING ACTIVITIES | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Acquisitions of businesses, net of cash acquired | ( | ) | |||||
Proceeds from sale of assets | |||||||
Decrease in other investments | |||||||
Net investing cash | ( | ) | ( | ) | |||
FINANCING ACTIVITIES | |||||||
Net increase in short-term borrowings | |||||||
Proceeds from long-term debt | |||||||
Payments of long-term debt | ( | ) | ( | ) | |||
Payments for credit facility and debt issuance costs | ( | ) | ( | ) | |||
Payments of cash dividends | ( | ) | ( | ) | |||
Proceeds from stock options exercised | |||||||
Treasury stock purchased | ( | ) | ( | ) | |||
Proceeds from real estate financing transactions | |||||||
Other | ( | ) | ( | ) | |||
Net financing cash | ( | ) | ( | ) | |||
Effect of exchange rate changes on cash | ( | ) | |||||
Net increase (decrease) in cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents at beginning of year | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Income taxes paid | $ | $ | |||||
Interest paid | |||||||
(Thousands of dollars) | |||||||||||||||||||
Accounts Receivable, Less Allowance | Contract Assets (Current) | Contract Assets (Long-Term) | Contract Liabilities (Current) | Contract Liabilities (Long-Term) | |||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | $ | ||||||||||||||
Balance at September 30, 2019 | |||||||||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Common Stock | Other Capital | Retained Earnings | Treasury Stock | Cumulative Other Comprehensive Loss | Total | ||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Net income | |||||||||||||||||||||||
Other comprehensive loss | ( | ) | ( | ) | |||||||||||||||||||
Treasury stock purchased | ( | ) | ( | ) | |||||||||||||||||||
Stock-based compensation activity | ( | ) | |||||||||||||||||||||
Other adjustments | |||||||||||||||||||||||
Cash dividends | ( | ) | ( | ) | |||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Common Stock | Other Capital | Retained Earnings | Treasury Stock | Cumulative Other Comprehensive Loss | Total | ||||||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Net income | |||||||||||||||||||||||
Other comprehensive loss | ( | ) | ( | ) | |||||||||||||||||||
Treasury stock purchased | ( | ) | ( | ) | |||||||||||||||||||
Stock-based compensation activity | ( | ) | |||||||||||||||||||||
Other adjustments | ( | ) | ( | ) | |||||||||||||||||||
Cash dividends | ( | ) | ( | ) | |||||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Common Stock | Other Capital | Retained Earnings | Treasury Stock | Cumulative Other Comprehensive Loss | Total | ||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Net income | |||||||||||||||||||||||
Other comprehensive loss | ( | ) | ( | ) | |||||||||||||||||||
Adjustment to initially adopt ASU 2016-02 | ( | ) | ( | ) | |||||||||||||||||||
Adjustment to initially adopt ASU 2018-02 | ( | ) | — | ||||||||||||||||||||
Treasury stock purchased | ( | ) | ( | ) | |||||||||||||||||||
Treasury stock transferred from defined benefit pension plan | ( | ) | ( | ) | |||||||||||||||||||
Stock-based compensation activity | ( | ) | |||||||||||||||||||||
Other adjustments | |||||||||||||||||||||||
Cash dividends | ( | ) | ( | ) | |||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Common Stock | Other Capital | Retained Earnings | Treasury Stock | Cumulative Other Comprehensive Loss | Total | ||||||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Net income | |||||||||||||||||||||||
Other comprehensive loss | ( | ) | ( | ) | |||||||||||||||||||
Adjustment to initially adopt ASU 2016-01 | ( | ) | — | ||||||||||||||||||||
Treasury stock purchased | ( | ) | ( | ) | |||||||||||||||||||
Stock-based compensation activity | ( | ) | |||||||||||||||||||||
Other adjustments | |||||||||||||||||||||||
Cash dividends | ( | ) | ( | ) | |||||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
(Thousands of dollars) | |||||||
2019 | 2018 | ||||||
Balance at January 1 | $ | $ | |||||
Charges to expense | |||||||
Settlements | ( | ) | ( | ) | |||
Acquisition, divestiture and other adjustments | ( | ) | |||||
Balance at September 30 | $ | $ | |||||
(Thousands of dollars) | |||||||
2019 | 2018 | ||||||
Balance at January 1 | $ | $ | |||||
Provisions in Cost of goods sold or SG&A | |||||||
Actual expenditures charged to accrual | ( | ) | ( | ) | |||
Balance at September 30 | $ | $ | |||||
(Thousands of dollars) | Domestic Defined Benefit Pension Plans | Foreign Defined Benefit Pension Plans | Postretirement Benefits Other than Pensions | ||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Three Months Ended September 30: | |||||||||||||||||||||||
Net periodic benefit cost (credit): | |||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Recognition of: | |||||||||||||||||||||||
Unrecognized prior service cost (credit) | ( | ) | ( | ) | |||||||||||||||||||
Unrecognized actuarial loss | |||||||||||||||||||||||
Net periodic benefit cost (credit) | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||
Nine Months Ended September 30: | |||||||||||||||||||||||
Net periodic benefit cost (credit): | |||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Recognition of: | |||||||||||||||||||||||
Unrecognized prior service cost (credit) | ( | ) | ( | ) | |||||||||||||||||||
Unrecognized actuarial loss | |||||||||||||||||||||||
Ongoing pension cost (credit) | ( | ) | |||||||||||||||||||||
Curtailment expense | |||||||||||||||||||||||
Settlement expense | |||||||||||||||||||||||
Net periodic benefit cost (credit) | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||
(Thousands of dollars) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Provisions for environmental matters - net | $ | $ | $ | $ | ||||||||||||
Loss on sale or disposition of assets | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
(Thousands of dollars) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Dividend and royalty income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Loss on extinguishment of debt (see Note 15) | |||||||||||||||
Expense from banking activities | |||||||||||||||
Foreign currency transaction related losses | |||||||||||||||
Domestic pension plan settlement expense | |||||||||||||||
Miscellaneous pension expense (income) | ( | ) | ( | ) | |||||||||||
Other income | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other expense | |||||||||||||||
Total | $ | $ | $ | $ | ( | ) | |||||||||
(Thousands of dollars except per share data) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Basic | |||||||||||||||
Average shares outstanding | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Basic net income per share | $ | $ | $ | $ | |||||||||||
Diluted | |||||||||||||||
Average shares outstanding | |||||||||||||||
Stock options and other contingently issuable shares (1) | |||||||||||||||
Non-vested restricted stock grants | |||||||||||||||
Average shares outstanding assuming dilution | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Diluted net income per share | $ | $ | $ | $ | |||||||||||
(1) | There were |
(Thousands of dollars) | Three Months Ended September 30, 2019 | ||||||||||||||||||
The Americas Group | Consumer Brands Group | Performance Coatings Group | Administrative | Consolidated Totals | |||||||||||||||
Net external sales | $ | $ | $ | $ | $ | ||||||||||||||
Intersegment transfers | ( | ) | ( | ) | |||||||||||||||
Total net sales and intersegment transfers | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Segment profit | $ | $ | $ | $ | |||||||||||||||
California litigation expense adjustment | $ | ||||||||||||||||||
Interest expense | ( | ) | ( | ) | |||||||||||||||
Administrative expenses and other | ( | ) | ( | ) | |||||||||||||||
Income before income taxes | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
(Thousands of dollars) | Three Months Ended September 30, 2018 | ||||||||||||||||||
The Americas Group | Consumer Brands Group | Performance Coatings Group | Administrative | Consolidated Totals | |||||||||||||||
Net external sales | $ | $ | $ | $ | $ | ||||||||||||||
Intersegment transfers | ( | ) | |||||||||||||||||
Total net sales and intersegment transfers | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Segment profit | $ | $ | $ | $ | |||||||||||||||
California litigation expense | $ | ( | ) | ( | ) | ||||||||||||||
Interest expense | ( | ) | ( | ) | |||||||||||||||
Administrative expenses and other | ( | ) | ( | ) | |||||||||||||||
Income before income taxes | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
(Thousands of dollars) | Nine Months Ended September 30, 2019 | ||||||||||||||||||
The Americas Group | Consumer Brands Group | Performance Coatings Group | Administrative | Consolidated Totals | |||||||||||||||
Net external sales | $ | $ | $ | $ | $ | ||||||||||||||
Intersegment transfers | ( | ) | |||||||||||||||||
Total net sales and intersegment transfers | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Segment profit | $ | $ | $ | $ | |||||||||||||||
California litigation expense adjustment | $ | ||||||||||||||||||
Interest expense | ( | ) | ( | ) | |||||||||||||||
Administrative expenses and other | ( | ) | ( | ) | |||||||||||||||
Income before income taxes | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
(Thousands of dollars) | Nine Months Ended September 30, 2018 | ||||||||||||||||||
The Americas Group | Consumer Brands Group | Performance Coatings Group | Administrative | Consolidated Totals | |||||||||||||||
Net external sales | $ | $ | $ | $ | $ | ||||||||||||||
Intersegment transfers | ( | ) | |||||||||||||||||
Total net sales and intersegment transfers | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Segment profit | $ | $ | $ | $ | |||||||||||||||
California litigation expense | $ | ( | ) | ( | ) | ||||||||||||||
Interest expense | ( | ) | ( | ) | |||||||||||||||
Administrative expenses and other | ( | ) | ( | ) | |||||||||||||||
Income before income taxes | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
(Thousands of dollars) | |||||||||||||
Quoted Prices | |||||||||||||
in Active | Significant | ||||||||||||
Fair Value at | Markets for | Significant Other | Unobservable | ||||||||||
September 30, | Identical Assets | Observable Inputs | Inputs | ||||||||||
2019 | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: | |||||||||||||
Deferred compensation plan assets (1) | $ | $ | $ | ||||||||||
Net investment hedge asset (2) | |||||||||||||
$ | $ | $ | |||||||||||
Liabilities: | |||||||||||||
Deferred compensation plan liabilities (3) | $ | $ | |||||||||||
(1) | The deferred compensation plan assets consist of the investment funds maintained for the future payments under the Company’s executive deferred compensation plans, which are structured as rabbi trusts. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. The cost basis of the investment funds is $ |
(Thousands of dollars) | |||||||||||||||
September 30, 2019 | September 30, 2018 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Publicly traded debt | $ | $ | $ | $ | |||||||||||
Non-publicly traded debt | |||||||||||||||
(Thousands of dollars) | |||||||
Three Months | Nine Months | ||||||
Ended | Ended | ||||||
September 30, 2019 | September 30, 2019 | ||||||
Operating lease cost | $ | $ | |||||
Short-term lease cost | |||||||
Variable lease cost | |||||||
Operating cash outflows from operating leases | |||||||
(Thousands of dollars) | |||
Year Ending December 31, | |||
2019 (excluding the nine months ended September 30, 2019) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total lease payments | |||
Amount representing interest | ( | ) | |
Present value of operating lease liabilities | $ | ||
(Thousands of dollars) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
Net Sales: | |||||||||||||||||||||
The Americas Group | $ | 2,898,158 | $ | 2,665,663 | 8.7 | % | $ | 7,809,059 | $ | 7,371,135 | 5.9 | % | |||||||||
Consumer Brands Group | 678,473 | 770,543 | -11.9 | % | 2,137,447 | 2,204,668 | -3.0 | % | |||||||||||||
Performance Coatings Group | 1,290,247 | 1,294,579 | -0.3 | % | 3,838,002 | 3,891,678 | -1.4 | % | |||||||||||||
Administrative | 772 | 685 | 12.7 | % | 1,863 | 2,791 | -33.2 | % | |||||||||||||
Total | $ | 4,867,650 | $ | 4,731,470 | 2.9 | % | $ | 13,786,371 | $ | 13,470,272 | 2.3 | % | |||||||||
(Thousands of dollars) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
Income Before Income Taxes: | |||||||||||||||||||||
The Americas Group | $ | 663,671 | $ | 577,738 | 14.9 | % | $ | 1,607,143 | $ | 1,485,027 | 8.2 | % | |||||||||
Consumer Brands Group | 114,891 | 83,941 | 36.9 | % | 343,482 | 249,072 | 37.9 | % | |||||||||||||
Performance Coatings Group | 137,432 | 104,868 | 31.1 | % | 386,452 | 339,828 | 13.7 | % | |||||||||||||
Administrative | (206,161 | ) | (350,594 | ) | 41.2 | % | (652,689 | ) | (816,302 | ) | 20.0 | % | |||||||||
Total | $ | 709,833 | $ | 415,953 | 70.7 | % | $ | 1,684,388 | $ | 1,257,625 | 33.9 | % | |||||||||
(Thousands of dollars) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 576,438 | $ | 354,027 | $ | 1,292,678 | $ | 1,007,758 | |||||||
Interest expense | 85,282 | 92,281 | 265,474 | 277,335 | |||||||||||
Income taxes | 133,395 | 61,926 | 391,710 | 249,867 | |||||||||||
Depreciation | 65,209 | 67,381 | 194,957 | 211,514 | |||||||||||
Amortization | 77,548 | 80,077 | 234,400 | 239,019 | |||||||||||
EBITDA | $ | 937,872 | $ | 655,692 | $ | 2,379,219 | $ | 1,985,493 | |||||||
• | general business conditions, strengths of retail and manufacturing economies and growth in the coatings industry; |
• | changes in general domestic economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions, and changing government policies, laws and regulations; |
• | changes in raw material and energy supplies and pricing; |
• | changes in our relationships with customers and suppliers; |
• | our ability to successfully integrate past and future acquisitions into our existing operations, including Valspar, as well as the performance of the businesses acquired; |
• | risks inherent in the achievement of additional anticipated cost synergies resulting from the Valspar acquisition and the timing thereof; |
• | competitive factors, including pricing pressures and product innovation and quality; |
• | our ability to attain cost savings from productivity initiatives; |
• | risks and uncertainties associated with our expansion into and our operations in Asia, Europe, South America and other foreign markets, including general economic conditions, inflation rates, recessions, foreign currency exchange rates, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest and other external economic and political factors; |
• | the achievement of growth in foreign markets, such as Asia, Europe and South America; |
• | increasingly stringent domestic and foreign governmental regulations, including those affecting health, safety and the environment; |
• | inherent uncertainties involved in assessing our potential liability for environmental-related activities; |
• | other changes in governmental policies, laws and regulations, including changes in tariff policies, as well as changes in accounting policies and standards and taxation requirements (such as new tax laws and new or revised tax law interpretations); |
• | the nature, cost, quantity and outcome of pending and future litigation and other claims, including the lead pigment and lead-based paint litigation, and the effect of any legislation and administrative regulations relating thereto; and |
• | adverse weather conditions and natural disasters. |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Number of Shares Purchased as Part of a Publicly Announced Plan | Number of Shares That May Yet Be Purchased Under the Plan | ||||||||||
July 1 - July 31 | ||||||||||||||
Share repurchase program (1) | 100,000 | $ | 509.46 | 100,000 | 8,950,000 | |||||||||
Employee transactions (2) | 3,583 | $ | 465.22 | N/A | ||||||||||
August 1 - August 31 | ||||||||||||||
Share repurchase program (1) | 150,000 | $ | 508.83 | 150,000 | 8,800,000 | |||||||||
Employee transactions (2) | N/A | |||||||||||||
September 1 - September 30 | ||||||||||||||
Share repurchase program (1) | 8,800,000 | |||||||||||||
Employee transactions (2) | 2,802 | $ | 545.48 | N/A | ||||||||||
Total | ||||||||||||||
Share repurchase program (1) | 250,000 | $ | 509.08 | 250,000 | 8,800,000 | |||||||||
Employee transactions (2) | 6,385 | $ | 500.44 | N/A | ||||||||||
(1) | Shares were purchased through the Company’s publicly announced share repurchase program. There is no expiration date specified for the program. The Company had remaining authorization at September 30, 2019 to purchase 8,800,000 shares. |
(2) | Shares were delivered to satisfy the exercise price and/or tax withholding obligations by employees who exercised stock options or had restricted stock units vest. |
4.1 | |
4.2 | |
10.1* | |
31(a) | |
31(b) | |
32(a) | |
32(b) | |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL and contained in Exhibit 101. |
THE SHERWIN-WILLIAMS COMPANY | ||
October 22, 2019 | By: | /s/ Jane M. Cronin |
Jane M. Cronin | ||
Senior Vice President - | ||
Corporate Controller | ||
October 22, 2019 | By: | /s/ Allen J. Mistysyn |
Allen J. Mistysyn | ||
Senior Vice President - Finance | ||
and Chief Financial Officer | ||
1. | I have reviewed this quarterly report on Form 10-Q of The Sherwin-Williams Company; |
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: | October 22, 2019 | /s/ John G. Morikis | |
John G. Morikis | |||
Chairman, President and Chief Executive Officer | |||
1. | I have reviewed this quarterly report on Form 10-Q of The Sherwin-Williams Company; |
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: | October 22, 2019 | /s/ Allen J. Mistysyn | |
Allen J. Mistysyn | |||
Senior Vice President - Finance and | |||
Chief Financial Officer | |||
Dated: | October 22, 2019 | /s/ John G. Morikis | |
John G. Morikis | |||
Chairman, President and Chief Executive Officer | |||
Dated: | October 22, 2019 | /s/ Allen J. Mistysyn | |
Allen J. Mistysyn | |||
Senior Vice President - Finance and Chief Financial Officer | |||
Non-Traded Investments (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Sep. 30, 2018 |
|---|---|---|
| Non-Traded Investments [Abstract] | ||
| Carrying amount of investments included in other assets | $ 225.4 | $ 214.4 |
| Liability for estimated future capital contributions to the investments | $ 162.4 | $ 160.5 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
|---|---|---|---|
| Statement of Financial Position [Abstract] | |||
| Common stock, par value (in dollars per share) | $ 1 | $ 1 | $ 1 |
| Common stock, shares outstanding (in shares) | 92,309,240 | 93,116,762 | 93,626,317 |
Revenue |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| REVENUE | REVENUE The Company manufactures and sells paint, stains, supplies, equipment and floor covering through Company-operated stores, branded and private label products through retailers, and a broad range of industrial coatings directly to global manufacturing customers through company-operated branches. A large portion of the Company’s revenue is recognized at a point in time and made to customers who are not engaged in a long-term supply agreement or any form of contract with the Company. These sales are paid for at the time of sale in cash, credit card, or may be on account with the vast majority of customers having terms between 30 and 60 days, not to exceed one year. Many customers who purchase on account take advantage of early payment discounts offered by paying within 30 days of being invoiced. The Company estimates variable consideration for these sales on the basis of both historical information and current trends to estimate the expected amount of discounts to which customers are likely to be entitled. The remaining revenue is governed by long-term supply agreements and related purchase orders (“contracts”) that specify shipping terms and aspects of the transaction price including rebates, discounts and other sales incentives, such as advertising support. Contracts are at standalone pricing. The performance obligation in these contracts is determined by each of the individual purchase orders and the respective stated quantities, with revenue being recognized at a point in time when obligations under the terms of the agreement are satisfied. This generally occurs with the transfer of control of our products to the customer. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Refer to Note 13 for the Company's disaggregation of Net sales by reportable segment. As the reportable segments are aligned by similar economic factors, trends and customers, this disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company has made payments or credits for rebates or incentives at the beginning of a long-term contract where future revenue is expected and before satisfaction of performance obligations. Under these circumstances, the Company recognizes a contract asset and amortizes these prepayments over the expected benefit life of the long-term contract typically on a straight-line basis. Management judgment is required when estimating sales-based variable consideration, determining whether it is constrained, measuring obligations for returns, refunds, and determining amortization periods for prepayments. The majority of variable consideration in the Company’s contracts include a form of volume rebate, discounts, and other incentives, where the customer receives a retrospective percentage rebate based on the amount of their purchases. In these situations, the rebates are accrued as a fixed percentage of sales and recorded as a reduction of net sales until paid to the customer per the terms of the supply agreement. Forms of variable consideration such as tiered rebates, whereby a customer receives a retrospective price decrease dependent on the volume of their purchases, are calculated using a forecasted percentage to determine the most likely amount to accrue. Management creates a baseline calculation using historical sales and then utilizing forecast information, estimates the anticipated sales volume each quarter to calculate the expected reduction to sales. The remainder of the transaction price is fixed as agreed upon with the customer, limiting estimation of revenues including constraints. The Company’s Accounts receivable and current and long-term contract assets and liabilities are summarized in the following table.
The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. Provisions for estimated returns are established and the expected costs continue to be recognized as contra-revenue per ASC 606 when the products are sold. The Company only offers an assurance type warranty on products sold, and there is no material service to the customer beyond fixing defects that existed at the time of sale and no warranties are sold separately. Warranty liabilities are excluded from the table above and discussed in Note 5. Amounts recognized during the quarter from deferred liabilities to revenue were not material. The Company records a right of return liability within each of its operations to accrue for expected customer returns. Historical actual returns are used to estimate future returns as a percentage of current sales. Obligations for returns and refunds were not material individually or in the aggregate.
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Other - Other General Expense - Net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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| Other Income and Expenses [Abstract] | ||||
| Provisions for environmental matters - net | $ 10,602 | $ 2,299 | $ 17,874 | $ 34,317 |
| Loss on sale or disposition of assets | 1,430 | 9,227 | 822 | 7,178 |
| Total | $ 12,032 | $ 11,526 | $ 18,696 | $ 41,495 |
Product Warranties (Tables) |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in the Company's Accrual for Product Warranty Claims | Changes in the Company’s accrual for product warranty claims during the first nine months of 2019 and 2018, including customer satisfaction settlements, were as follows:
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Non-Traded Investments |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Non-Traded Investments [Abstract] | |
| NON-TRADED INVESTMENTS | NON-TRADED INVESTMENTS The Company has invested in the U.S. affordable housing and historic renovation real estate markets. These non-traded investments have been identified as variable interest entities. However, because the Company does not have the power to direct the day-to-day operations of the investments and the risk of loss is limited to the amount of contributed capital, the Company is not considered the primary beneficiary. In accordance with the Consolidation Topic of the ASC, the investments are not consolidated. For affordable housing investments entered into prior to the January 1, 2015 adoption of ASU 2014-01, the Company uses the effective yield method to determine the carrying value of the investments. Under the effective yield method, the initial cost of the investments is amortized to income tax expense over the period that the tax credits are recognized. For affordable housing investments entered into on or after the January 1, 2015 adoption of ASU 2014-01, the Company uses the proportional amortization method. Under the proportional amortization method, the initial cost of the investments is amortized to income tax expense in proportion to the tax credits and other tax benefits received. The carrying amount of the affordable housing and historic renovation investments, included in other assets, was $225.4 million and $214.4 million at September 30, 2019 and 2018, respectively. The liability for estimated future capital contributions to the investments was $162.4 million and $160.5 million at September 30, 2019 and 2018, respectively.
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Fair Value Measurements |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Fair Value Measurements and Disclosures Topic of the ASC applies to the Company’s financial and non-financial assets and liabilities. The guidance applies when other standards require or permit the fair value measurement of assets and liabilities. The Company did not have any fair value measurements for its non-financial assets and liabilities during the third quarter. The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy:
(2) The net investment hedge asset is the fair value of the cross currency swap (see Note 16). The fair value is based on a valuation model that uses observable inputs, including interest rate curves and foreign currency rates. (3) The deferred compensation plan liabilities are the Company’s liabilities under its deferred compensation plans. The liabilities represent the fair value of the participant shadow accounts, and the value is based on quoted market prices in active markets for identical assets.
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Other (Tables) |
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| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other General Expense - Net | Included in Other general expense - net were the following:
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| Other (Income) Expense - Net | Included in Other expense (income) - net were the following:
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Debt (Tables) |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Carrying Amount and Fair Value of Debt | The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-publicly traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-publicly traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy.
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Revenue (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
|---|---|---|---|
| Revenue from Contract with Customer [Abstract] | |||
| Accounts Receivable, Less Allowance | $ 2,479,043 | $ 2,018,768 | $ 2,584,280 |
| Contract Assets (Current) | 60,545 | 56,598 | |
| Contract Assets (Long-Term) | 184,686 | 213,954 | |
| Contract Liabilities (Current) | 224,916 | 272,857 | |
| Contract Liabilities (Long-Term) | $ 8,745 | $ 8,745 |
Other |
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| Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHER | OTHER Other general expense - net Included in Other general expense - net were the following:
Provisions for environmental matters - net represent site-specific increases or decreases to environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. Environmental-related accruals are not recorded net of insurance proceeds in accordance with the Offsetting Subtopic of the Balance Sheet Topic of the ASC. See Note 8 for further details on the Company’s environmental-related activities. The loss on sale or disposition of assets represents net realized losses associated with the sale or disposal of fixed assets previously used in the conduct of the primary business of the Company. Other expense (income) - net Included in Other expense (income) - net were the following:
Foreign currency transaction related losses represent net realized losses on U.S. dollar-denominated liabilities of foreign subsidiaries and net realized and unrealized losses from foreign currency option and forward contracts. There were no material foreign currency option and forward contracts outstanding at September 30, 2019 and 2018. Miscellaneous pension expense (income) consists of the non-service components of net pension costs (credits). See Note 7 for information on Miscellaneous pension expense (income) and the Domestic pension plan settlement expense. Other income and Other expense included items of revenue, gains, expenses and losses that were unrelated to the primary business purpose of the Company. There were no other items within the Other income or Other expense caption that were individually significant.
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Exit or Disposal Activities |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EXIT OR DISPOSAL ACTIVITIES | EXIT OR DISPOSAL ACTIVITIES Liabilities associated with exit or disposal activities are recognized as incurred in accordance with the Exit or Disposal Cost Obligations Topic of the ASC. Qualified exit costs primarily include post-closure rent expenses, incremental post-closure costs and costs of employee terminations. Adjustments may be made to liabilities accrued for qualified exit costs if information becomes available upon which more accurate amounts can be reasonably estimated. Concurrently, property, plant and equipment is tested for impairment in accordance with the Property, Plant and Equipment Topic of the ASC, and if impairment exists, the carrying value of the related assets is reduced to estimated fair value. Additional impairment may be recorded for subsequent revisions in estimated fair value. In the nine months ended September 30, 2019, twenty-one stores in The Americas Group and three branches in the Performance Coatings Group were closed due to lower demand or redundancy. The Company continues to evaluate all legacy operations in response to the Valspar acquisition in order to optimize restructured operations. These acquisition-related restructuring charges to date are recorded in the Administrative segment. The following table summarizes the activity and remaining liabilities associated with qualified exit costs at September 30, 2019 and 2018. The provisions and expenditures relate primarily to acquisition-related restructuring.
For further details on the Company’s exit or disposal activities, see Note 6 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
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Debt - Narrative (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|---|
Jul. 19, 2018 |
Aug. 31, 2019 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2019 |
|
| Debt Instrument [Line Items] | |||||||
| Loss on extinguishment of debt | $ 14,754,000 | $ 14,754,000 | |||||
| Credit Agreement | |||||||
| Debt Instrument [Line Items] | |||||||
| Credit agreement extend maturity | 5 years | ||||||
| Senior Notes | 2.25% Senior Notes due May 2020 | |||||||
| Debt Instrument [Line Items] | |||||||
| Debt instrument, repurchase amount | $ 1,010,000,000.000 | $ 60,900,000 | |||||
| Interest rate | 2.25% | ||||||
| Loss on extinguishment of debt | $ 14,800,000 | ||||||
| Senior Notes | 2.75% Senior Notes Due June 2022 | |||||||
| Debt Instrument [Line Items] | |||||||
| Debt instrument, repurchase amount | $ 490,000,000.0 | ||||||
| Interest rate | 2.75% | ||||||
| Senior Notes | 2.95% Senior Notes Due 2029 | |||||||
| Debt Instrument [Line Items] | |||||||
| Interest rate | 2.95% | ||||||
| Debt instrument, face amount | $ 800,000,000.0 | ||||||
| Senior Notes | 3.80% Senior Notes Due 2049 | |||||||
| Debt Instrument [Line Items] | |||||||
| Interest rate | 3.80% | ||||||
| Debt instrument, face amount | $ 550,000,000.0 | ||||||
Reportable Segment Information - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
|
Sep. 30, 2019
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2019
USD ($)
segment
|
Sep. 30, 2018
USD ($)
|
|
| Segment Reporting Information [Line Items] | ||||
| Number of reportable segments | segment | 3 | |||
| Net sales | $ 4,867,650 | $ 4,731,470 | $ 13,786,371 | $ 13,470,272 |
| Consolidated Foreign Subsidiaries | ||||
| Segment Reporting Information [Line Items] | ||||
| Net sales | 918,800 | 951,800 | 2,768,000 | 2,890,000 |
| Long-lived assets | $ 3,112,000 | $ 3,367,000 | $ 3,112,000 | $ 3,367,000 |
Other - Other (Income) Expense - Net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
| Other Income and Expenses [Abstract] | ||||
| Dividend and royalty income | $ (2,253) | $ (2,995) | $ (7,830) | $ (5,967) |
| Loss on extinguishment of debt (see Note 15) | 14,754 | 14,754 | ||
| Expense from banking activities | 2,622 | 2,694 | 7,973 | 7,380 |
| Foreign currency transaction related losses | 16,394 | 6,157 | 12,458 | 9,321 |
| Domestic pension plan settlement expense | 32,410 | |||
| Miscellaneous pension expense (income) | 1,767 | (3,902) | 5,916 | (11,349) |
| Other income | (5,957) | (7,652) | (21,385) | (21,760) |
| Other expense | 3,665 | 7,421 | 10,591 | 13,687 |
| Total | $ 30,992 | $ 1,723 | $ 54,887 | $ (8,688) |
Health Care, Pension and Other Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Net Periodic Benefit Costs (Credits) for Domestic Defined Benefit Pension Plans, Foreign Defined Benefit Pension Plans and Postretirement Benefits Other Than Pensions | Shown below are the components of the Company’s net periodic benefit cost (credit) for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Assets And Liabilities Measured At Fair Value On a Recurring Basis | The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy:
(2) The net investment hedge asset is the fair value of the cross currency swap (see Note 16). The fair value is based on a valuation model that uses observable inputs, including interest rate curves and foreign currency rates. (3) The deferred compensation plan liabilities are the Company’s liabilities under its deferred compensation plans. The liabilities represent the fair value of the participant shadow accounts, and the value is based on quoted market prices in active markets for identical assets.
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Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | INCOME TAXES The effective tax rate was 18.8% and 23.3% for the third quarter and first nine months of 2019, respectively, compared to 14.9% and 19.9% for the third quarter and first nine months of 2018, respectively. The increase in the effective tax rate for the third quarter of 2019 compared to 2018 was primarily due increased income before taxes in the third quarter of 2019 compared to 2018 and the non-recurrence of favorable tax benefits recognized by the Company in the third quarter of 2018 when completing its 2017 U.S. income tax return. The increase in the effective tax rate for the first nine months of 2019 compared to 2018 was primarily due to an increase to the tax provision of $74.3 million recorded in the second quarter of 2019 related to the reversal of net tax benefits recognized in previous tax years from federal renewable energy tax credit funds with DC Solar Solutions, Inc. and certain of its affiliates (“DC Solar”). During 2011 and 2013 through 2017, the Company invested in legal entities ("Funds") that purchased mobile solar generators from DC Solar. In December 2018, the Company became aware of an ongoing investigation by federal authorities, which included the seizure of DC Solar's assets. The Company promptly initiated an investigation. Based on information available during the first quarter of 2019, it did not appear reasonably possible that a material loss had occurred as the Company believed its specific investments in the funds were not materially affected. The Company’s investigation continued during the second quarter of 2019, and based on additional information revealed during the course of the investigation, the Company determined that it is more likely than not that the tax benefits expected to be received by the Company related to its investments in the Funds will no longer be ultimately realizable. The facts relating to Company investments in the Funds continue to be developed and there are, and will continue to be, material differences in facts relevant to each Fund, as well as to funds owned by other investors. The ultimate tax results relating to the Company's investments continue to be uncertain. The Company’s management will continue to use its best judgment based upon the facts and circumstances related to the Company's investments in the Funds when determining the scope and timing of disclosures. The Company continues to participate with other fund investors to gather facts and obtain expert advice in assessing its tax position in these investments. At December 31, 2018, the Company had $89.5 million in unrecognized tax benefits, the recognition of which would have an effect of $83.0 million on the effective tax rate. Included in the balance of unrecognized tax benefits at December 31, 2018 was $14.5 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. The Company's balance of unrecognized tax benefits increased to $197.2 million at September 30, 2019 , the recognition of which would have an effect of $189.6 million on the effective tax rate. This increase is primarily due to the Company's investments in the Funds described above. The Company classifies all income tax related interest and penalties as income tax expense. At December 31, 2018, the Company had accrued $24.8 million for the potential payment of income tax interest and penalties. This amount has increased to $29.0 million at September 30, 2019. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The IRS is currently auditing the Company's 2013, 2014, 2015 and 2016 income tax returns. No significant adjustments have been proposed by the IRS. At September 30, 2019, the federal statute of limitations had not expired for the 2013 through 2018 tax years. At September 30, 2019, the Company is subject to non-U.S. income tax examinations for the tax years of 2010 through 2018. In addition, the Company is subject to state and local income tax examinations for the tax years 1998 through 2018.
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Health Care, Pension and Other Benefits |
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HEALTH CARE, PENSION AND OTHER BENEFITS | HEALTH CARE, PENSION AND OTHER BENEFITS Shown below are the components of the Company’s net periodic benefit cost (credit) for domestic defined benefit pension plans, foreign defined benefit pension plans and postretirement benefits other than pensions:
Service cost is recorded in Cost of goods sold and Selling, general and administrative expenses. All other components are recorded in Other expense (income) - net. During the first quarter of 2019, the Company purchased annuity contracts to settle the remaining liabilities of the domestic defined benefit pension plan that was terminated in 2018 (Terminated Plan). The annuity contract purchase resulted in a settlement charge of $32.4 million in the first quarter of 2019. The remaining surplus of the Terminated Plan will be used, as prescribed in the applicable regulations, to fund future Company contributions to a qualified replacement pension plan, which is the current domestic defined contribution plan (Qualified Replacement Plan). During the first quarter of 2019, the Company transferred $201.8 million of the surplus to a suspense account held within a trust for the Qualified Replacement Plan. This amount included $131.8 million of Company stock (300,000 shares). The shares are treated as treasury stock in accordance with ASC 715. The remainder of the surplus related to the Terminated Plan will be transferred to the Qualified Replacement Plan suspense account after the final expenses associated with the wind-up of the Terminated Plan have been settled. For further details on the Company’s health care, pension and other benefits, see Note 7 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
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Other - Narrative (Details) |
Sep. 30, 2019
option_plan
contract
|
Sep. 30, 2018
option_plan
contract
|
|---|---|---|
| Other Income and Expenses [Abstract] | ||
| Number of foreign currency options outstanding | option_plan | 0 | 0 |
| Number of foreign forward contracts outstanding | contract | 0 | 0 |
Derivatives And Hedging (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
May 09, 2019 |
|||
| Derivative [Line Items] | |||||||
| Gain on foreign currency translation adjustments recognized in AOCI | [1] | $ (131,867,000) | $ (66,366,000) | $ (120,561,000) | $ (218,662,000) | ||
| Cross Currency Swap Contract | |||||||
| Derivative [Line Items] | |||||||
| Notional amount | $ 400,000,000.0 | ||||||
| Gain on foreign currency translation adjustments recognized in AOCI | $ 13,900,000 | $ 8,900,000 | |||||
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Recently Issued Accounting Pronouncements |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Accounting Changes and Error Corrections [Abstract] | |
| RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Adopted in 2019 Effective January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, "Leases" (ASC 842). ASC 842 consists of a comprehensive lease accounting standard requiring most leases to be recognized on the balance sheet and significant new disclosures. The Company adopted ASC 842 using the modified retrospective optional transition method. Therefore, the standard was applied starting January 1, 2019 and prior periods were not restated. The adoption of ASC 842 did not result in a material cumulative-effect adjustment to the opening balance of retained earnings. The Company applied the package of practical expedients permitted under the ASC 842 transition guidance. As a result, the Company did not reassess the identification, classification and initial direct costs of leases commencing before the effective date. The Company also applied the practical expedient to not separate lease and non-lease components to all new leases as well as leases commencing before the effective date. As a result of the adoption of ASC 842, right-of-use assets, current liabilities and non-current liabilities related to operating leases of $1.7 billion, $.4 billion and $1.4 billion, respectively, were recognized on the balance sheet at September 30, 2019. In addition, the adoption of ASC 842 resulted in a transition adjustment reducing the opening balance of retained earnings by $8.4 million at January 1, 2019. The adoption of ASC 842 did not have a material impact on the Company's results of operations, cash flows or debt covenants. See Note 17 for additional information. Effective January 1, 2019, the Company adopted ASU 2018-02, "Reclassification of Certain Income Tax Effects from Accumulated Other Comprehensive Income." This standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. As a result of this standard, the Company recorded an $8.3 million reclassification from cumulative other comprehensive loss to retained earnings. See Note 4. The adoption of this standard did not have a significant impact on the Company's results of operations, financial condition or liquidity. Effective January 1, 2019, the Company adopted ASU 2017-12, "Targeted Improvements to Accounting for Hedging Activities." This standard better aligns hedging activities and financial reporting for hedging relationships. It eliminates the requirement to separately measure and report hedge ineffectiveness and reduces the complexity of applying certain aspects of hedge accounting. There were no outstanding hedges as of the adoption date. The prospective adoption of this standard did not have a significant impact on the Company's results of operations, financial condition or liquidity. The disclosures required by this standard are included in Note 16. Not Yet Adopted In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In addition, new disclosures are required. The ASU is effective for fiscal years beginning after December 15, 2019. The Company is evaluating the potential impact of the standard.
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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
|---|---|---|---|
| Current assets: | |||
| Cash and cash equivalents | $ 189,645 | $ 155,505 | $ 181,511 |
| Accounts receivable, less allowance | 2,479,043 | 2,018,768 | 2,584,280 |
| Inventories: | |||
| Finished goods | 1,474,835 | 1,426,366 | 1,369,689 |
| Work in process and raw materials | 350,134 | 388,909 | 432,729 |
| Total net inventory | 1,824,969 | 1,815,275 | 1,802,418 |
| Other current assets | 414,082 | 354,939 | 410,913 |
| Total current assets | 4,907,739 | 4,344,487 | 4,979,122 |
| Property, plant and equipment: | |||
| Land | 239,446 | 244,608 | 249,787 |
| Buildings | 1,006,718 | 979,140 | 955,203 |
| Machinery and equipment | 2,837,377 | 2,668,492 | 2,623,884 |
| Construction in progress | 179,516 | 147,931 | 143,955 |
| Total gross property, plant and equipment | 4,263,057 | 4,040,171 | 3,972,829 |
| Less allowances for depreciation | 2,464,756 | 2,263,332 | 2,206,475 |
| Total net property, plant and equipment | 1,798,301 | 1,776,839 | 1,766,354 |
| Goodwill | 6,958,681 | 6,956,702 | 6,963,198 |
| Intangible assets | 4,889,275 | 5,201,579 | 5,289,986 |
| Operating lease right-of-use assets | 1,659,010 | ||
| Deferred pension assets | 33,468 | 270,664 | 305,979 |
| Other assets | 617,865 | 584,008 | 617,147 |
| Total assets | 20,864,339 | 19,134,279 | 19,921,786 |
| Current liabilities: | |||
| Short-term borrowings | 435,699 | 328,403 | 650,134 |
| Accounts payable | 2,028,402 | 1,799,424 | 2,165,724 |
| Compensation and taxes withheld | 538,932 | 504,547 | 500,248 |
| Accrued taxes | 94,966 | 80,766 | 98,632 |
| Current portion of long-term debt | 429,569 | 307,191 | 310,561 |
| California litigation accrual | 12,000 | 136,333 | 136,333 |
| Current portion of operating lease liabilities | 364,379 | ||
| Other accruals | 961,843 | 1,141,083 | 980,433 |
| Total current liabilities | 4,865,790 | 4,297,747 | 4,842,065 |
| Long-term debt | 8,043,030 | 8,708,057 | 8,710,831 |
| Postretirement benefits other than pensions | 260,968 | 257,621 | 277,857 |
| Deferred income taxes | 1,096,854 | 1,130,872 | 1,356,566 |
| Long-term operating lease liabilities | 1,352,246 | ||
| Other long-term liabilities | 1,222,591 | 1,009,237 | 803,942 |
| Shareholders’ equity: | |||
| Common stock | 119,245 | 118,373 | 118,282 |
| Other capital | 3,079,342 | 2,896,448 | 2,851,983 |
| Retained earnings | 7,224,292 | 6,246,548 | 6,226,443 |
| Treasury stock, at cost | (5,632,812) | (4,900,690) | (4,655,587) |
| Cumulative other comprehensive loss | (767,207) | (629,934) | (610,596) |
| Total shareholders' equity | 4,022,860 | 3,730,745 | 3,930,525 |
| Total liabilities and shareholders’ equity | $ 20,864,339 | $ 19,134,279 | $ 19,921,786 |
Shareholders' Equity - Narrative (Details) - $ / shares |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
| Dividends paid on common stock per share (in dollars per share) | $ 1.13000 | $ 1.13000 | $ 1.13 | $ 0.86000 | $ 0.86000 | $ 0.86 | |
| Stock options exercised (in shares) | 725,147 | ||||||
| Weighted average price (in dollars per share) | $ 153.29 | $ 153.29 | |||||
| Restricted Stock Units (RSUs) | |||||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
| Restricted stock units vested (in shares) | 156,983 | ||||||
Exit or Disposal Activities - Summary of the Activity and Remaining Liabilities Associated with Qualified Exit Costs (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
| Summary of activity and remaining liabilities associated with qualified exit costs | ||
| Balance at January 1 | $ 7,052 | $ 13,385 |
| Provisions in Cost of goods sold or SG&A | 6,057 | 13,103 |
| Actual expenditures charged to accrual | (7,431) | (19,595) |
| Balance at September 30 | $ 5,678 | $ 6,893 |
Basis of Presentation (Policies) |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Accounting | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
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| Reclassifications | Accounting estimates were revised as necessary during the first nine months of 2019 based on new information and changes in facts and circumstances. Certain amounts in the 2018 condensed consolidated financial statements have been reclassified to conform to the 2019 presentation. |
| Inventory | The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation. In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors. |
| Recently Issued Accounting Pronouncements | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Adopted in 2019 Effective January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, "Leases" (ASC 842). ASC 842 consists of a comprehensive lease accounting standard requiring most leases to be recognized on the balance sheet and significant new disclosures. The Company adopted ASC 842 using the modified retrospective optional transition method. Therefore, the standard was applied starting January 1, 2019 and prior periods were not restated. The adoption of ASC 842 did not result in a material cumulative-effect adjustment to the opening balance of retained earnings. The Company applied the package of practical expedients permitted under the ASC 842 transition guidance. As a result, the Company did not reassess the identification, classification and initial direct costs of leases commencing before the effective date. The Company also applied the practical expedient to not separate lease and non-lease components to all new leases as well as leases commencing before the effective date. As a result of the adoption of ASC 842, right-of-use assets, current liabilities and non-current liabilities related to operating leases of $1.7 billion, $.4 billion and $1.4 billion, respectively, were recognized on the balance sheet at September 30, 2019. In addition, the adoption of ASC 842 resulted in a transition adjustment reducing the opening balance of retained earnings by $8.4 million at January 1, 2019. The adoption of ASC 842 did not have a material impact on the Company's results of operations, cash flows or debt covenants. See Note 17 for additional information. Effective January 1, 2019, the Company adopted ASU 2018-02, "Reclassification of Certain Income Tax Effects from Accumulated Other Comprehensive Income." This standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. As a result of this standard, the Company recorded an $8.3 million reclassification from cumulative other comprehensive loss to retained earnings. See Note 4. The adoption of this standard did not have a significant impact on the Company's results of operations, financial condition or liquidity. Effective January 1, 2019, the Company adopted ASU 2017-12, "Targeted Improvements to Accounting for Hedging Activities." This standard better aligns hedging activities and financial reporting for hedging relationships. It eliminates the requirement to separately measure and report hedge ineffectiveness and reduces the complexity of applying certain aspects of hedge accounting. There were no outstanding hedges as of the adoption date. The prospective adoption of this standard did not have a significant impact on the Company's results of operations, financial condition or liquidity. The disclosures required by this standard are included in Note 16. Not Yet Adopted In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In addition, new disclosures are required. The ASU is effective for fiscal years beginning after December 15, 2019. The Company is evaluating the potential impact of the standard.
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Debt |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBT | DEBT The table below summarizes the carrying amount and fair value of the Company’s publicly traded debt and non-publicly traded debt in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. The fair values of the Company’s publicly traded debt are based on quoted market prices. The fair values of the Company’s non-publicly traded debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-publicly traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy.
In June 2019, the Company repurchased $60.9 million of its 2.25% Senior Notes due May 2020. This repurchase resulted in an insignificant gain. In August 2019, the Company repurchased $1.010 billion of its 2.25% Senior Notes due May 2020 and $490.0 million of its 2.75% Senior Notes due June 2022. These repurchases resulted in a loss of $14.8 million recorded in other expense (income) - net. See Note 10. In August 2019, the Company issued $800.0 million of 2.95% Senior Notes due 2029 and $550.0 million of 3.80% Senior Notes due 2049 (collectively the "New Notes") in a public offering. The net proceeds from the issuance of the New Notes will be used for general corporate purposes. On October 8, 2019, the Company amended its five-year credit agreement entered into on July 19, 2018 to, among other things, extend the maturity date to October 8, 2024.
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Exit or Disposal Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of the Activity and Remaining Liabilities Associated with Qualified Exit Costs | The following table summarizes the activity and remaining liabilities associated with qualified exit costs at September 30, 2019 and 2018. The provisions and expenditures relate primarily to acquisition-related restructuring.
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Reportable Segment Information |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| REPORTABLE SEGMENT INFORMATION | REPORTABLE SEGMENT INFORMATION The Company reports its segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources in accordance with the Segment Reporting Topic of the ASC. The Company has determined that it has three reportable operating segments: The Americas Group, Consumer Brands Group and Performance Coatings Group (individually, a Reportable Segment and collectively, the Reportable Segments).
In the reportable segment financial information, Segment profit was total net sales and intersegment transfers less operating costs and expenses. Domestic intersegment transfers were accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs. International intersegment transfers were accounted for at values comparable to normal unaffiliated customer sales. The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site. Also included in the Administrative segment was interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters, and other expenses that were not directly associated with the reportable segments. The Administrative segment did not include any significant foreign operations. Also included in the Administrative segment was a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s headquarters site, and disposal of idle facilities. Sales of this segment represented external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its primary businesses. Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative segment. Net external sales of all consolidated foreign subsidiaries were $918.8 million and $951.8 million for the third quarter of 2019 and 2018, respectively. Net external sales of all consolidated foreign subsidiaries were $2.768 billion and $2.890 billion for the nine months ended September 30, 2019 and 2018, respectively. Long-lived assets of these subsidiaries totaled $3.112 billion and $3.367 billion at September 30, 2019 and 2018, respectively. Domestic operations accounted for the remaining net external sales and long-lived assets. No single geographic area outside the United States was significant relative to consolidated net external sales, income before taxes or consolidated long-lived assets. Export sales and sales to any individual customer were each less than 10% of consolidated sales during all periods presented. For further details on the Company's Reportable Segments, see Note 19 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
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Litigation |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| LITIGATION | LITIGATION In the course of its business, the Company is subject to a variety of claims and lawsuits, including, but not limited to, litigation relating to product liability and warranty, personal injury, environmental, intellectual property, commercial, contractual and antitrust claims that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. These uncertainties will ultimately be resolved when one or more future events occur or fail to occur confirming the incurrence of a liability or the reduction of a liability. In accordance with the Contingencies Topic of the ASC, the Company accrues for these contingencies by a charge to income when it is both probable that one or more future events will occur confirming the fact of a loss and the amount of the loss can be reasonably estimated. In the event that the Company’s loss contingency is ultimately determined to be significantly higher than currently accrued, the recording of the additional liability may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such additional liability is accrued. In those cases where no accrual is recorded because it is not probable that a liability has been incurred and the amount of any such loss cannot be reasonably estimated, any potential liability ultimately determined to be attributable to the Company may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued. In those cases where no accrual is recorded or exposure to loss exists in excess of the amount accrued, the Contingencies Topic of the ASC requires disclosure of the contingency when there is a reasonable possibility that a loss or additional loss may have been incurred. Lead pigment and lead-based paint litigation. The Company’s past operations included the manufacture and sale of lead pigments and lead-based paints. The Company, along with other companies, is and has been a defendant in a number of legal proceedings, including individual personal injury actions, purported class actions, and actions brought by various counties, cities, school districts and other government-related entities, arising from the manufacture and sale of lead pigments and lead-based paints. The plaintiffs’ claims have been based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practice and consumer protection laws, enterprise liability, market share liability, public nuisance, unjust enrichment and other theories. The plaintiffs seek various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others. The Company has also been a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints that seek recovery based upon various legal theories, including the failure to adequately warn of potential exposure to lead during surface preparation when using non-lead-based paint on surfaces previously painted with lead-based paint. The Company believes that the litigation brought to date is without merit or subject to meritorious defenses and is vigorously defending such litigation. The Company expects that additional lead pigment and lead-based paint litigation may be filed against the Company in the future asserting similar or different legal theories and seeking similar or different types of damages and relief. The Company will continue to vigorously defend against any additional lead pigment and lead-based paint litigation that may be filed, including utilizing all avenues of appeal, if necessary. Notwithstanding the Company’s views on the merits, litigation is inherently subject to many uncertainties, and the Company ultimately may not prevail. Adverse court rulings or determinations of liability, among other factors, could affect the lead pigment and lead-based paint litigation against the Company and encourage an increase in the number and nature of future claims and proceedings. In addition, from time to time, various legislation and administrative regulations have been enacted, promulgated or proposed to impose obligations on present and former manufacturers of lead pigments and lead-based paints respecting asserted health concerns associated with such products or to overturn the effect of court decisions in which the Company and other manufacturers have been successful. Due to the uncertainties involved, management is unable to predict the outcome of the lead pigment and lead-based paint litigation, the number or nature of possible future claims and proceedings or the effect that any legislation and/or administrative regulations may have on the litigation or against the Company. In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or resulting from any such legislation and regulations. Except with respect to the litigation in California discussed below, the Company has not accrued any amounts for such litigation because the Company does not believe it is probable that a loss has occurred, and the Company believes it is not possible to estimate the range of potential losses as there is no substantive information upon which an estimate could be based. In addition, any potential liability that may result from any changes to legislation and regulations cannot reasonably be estimated. In the event any significant liability is determined to be attributable to the Company relating to such litigation or any such liability is higher than any amount currently accrued for such litigation, the recording of the liability may result in a material impact on net income for the annual or interim period during which such liability is accrued. Additionally, due to the uncertainties associated with the amount of any such liability and/or the nature of any other remedy which may be imposed in such litigation, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition. An estimate of the potential impact on the Company’s results of operations, liquidity or financial condition cannot be made due to the aforementioned uncertainties. Public nuisance claim litigation. The Company and other companies are or were defendants in legal proceedings seeking recovery based on public nuisance liability theories, among other theories, brought by the State of Rhode Island; the City of St. Louis, Missouri; various cities and counties in the State of New Jersey; various cities in the State of Ohio and the State of Ohio; the City of Chicago, Illinois; the City of Milwaukee, Wisconsin; the County of Santa Clara, California, and other public entities in the State of California; and Lehigh and Montgomery Counties in Pennsylvania. Except for the Santa Clara County, California proceeding and the pending Pennsylvania proceedings, all of these legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings. Santa Clara County, California Proceeding. The Santa Clara County, California proceeding was initiated in March 2000 in the Superior Court of the State of California, County of Santa Clara. In the original complaint, the plaintiffs asserted various claims including fraud and concealment, strict product liability/failure to warn, strict product liability/design defect, negligence, negligent breach of a special duty, public nuisance, private nuisance, and violations of California’s Business and Professions Code. A number of the asserted claims were resolved in favor of the defendants through pre-trial proceedings. The named plaintiffs in the Fourth Amended Complaint, filed on March 16, 2011, are the Counties of Santa Clara, Alameda, Los Angeles, Monterey, San Mateo, Solano and Ventura, as well as the Cities of Oakland and San Diego and the City and County of San Francisco (individually, a Prosecuting Jurisdiction). The Fourth Amended Complaint asserted a sole claim for public nuisance, alleging that the presence of lead pigments for use in paint and coatings in, on and around residences in the plaintiffs’ jurisdictions constitutes a public nuisance. The plaintiffs sought the abatement of the alleged public nuisance that exists within the plaintiffs’ jurisdictions. A trial commenced on July 15, 2013 and ended on August 22, 2013. The court entered final judgment on January 27, 2014, finding in favor of the plaintiffs and against the Company and two other defendants (ConAgra Grocery Products Company and NL Industries, Inc.). The final judgment held the Company jointly and severally liable with the other two defendants to pay $1.15 billion into a fund to abate the public nuisance. The Company strongly disagrees with the judgment. On February 18, 2014, the Company filed a motion for new trial and a motion to vacate the judgment. The court denied these motions on March 24, 2014. On March 28, 2014, the Company filed a notice of appeal to the Sixth District Court of Appeal for the State of California. Oral argument before the Sixth District Court of Appeal was held on August 24, 2017. On November 14, 2017, the Sixth District Court of Appeal entered its decision, which affirmed the trial court’s judgment of liability with respect to residences built before 1951 and reversed and vacated the trial court’s judgment with respect to residences built after 1950. The Sixth District Court of Appeal directed the trial court to: (i) recalculate the amount of the abatement fund to limit the fund to the amount necessary to cover the cost of inspecting and remediating pre-1951 residences; and (ii) hold an evidentiary hearing to appoint a suitable receiver. On November 29, 2017, the Company and the two other defendants filed separate Petitions for Rehearing, which the Sixth District Court of Appeal denied on December 6, 2017. The Sixth District Court of Appeal’s decision became final on December 14, 2017. On December 22, 2017, the Company and the two other defendants submitted separate Petitions for Review to the California Supreme Court. On February 14, 2018, the California Supreme Court issued an order denying the Petitions for Review. On July 16, 2018, the Company filed a Petition for Writ of Certiorari with the Supreme Court of the United States seeking discretionary review. On October 15, 2018, the Supreme Court of the United States denied the Company's Petition for Writ of Certiorari. On April 17, 2018, the parties filed their briefs with the trial court regarding the recalculation of the amount of the abatement fund. The plaintiffs proposed $730.0 million as the amount of the abatement fund, and the Company and the other two defendants jointly proposed a maximum amount of no more than $409.1 million. On August 17, 2018, the trial court held a hearing regarding the recalculation of the amount of the abatement fund. On September 4, 2018, the trial court ruled that the amount of the abatement fund is $409.1 million. On March 8, 2019, the trial court approved a setoff of $8.0 million to the abatement fund reducing the abatement fund to $401.1 million. On May 17, 2018, NL Industries filed a Motion for Good Faith Settlement, which the Company and ConAgra opposed. The trial court held a hearing on NL Industries’ Motion for Good Faith Settlement on July 12, 2018 and subsequently denied NL Industries' Motion. NL Industries filed a petition for writ of mandate with the Sixth District Court of Appeal seeking to obtain immediate appellate review and reversal of the denial of its motion. On June 20, 2019, the Sixth District Court of Appeal denied the petition for writ of mandate. On April 8, 2019, the plaintiffs filed a motion to recover attorneys’ fees and litigation costs from the abatement fund. On May 10, 2019, the trial court issued a tentative ruling denying the plaintiffs’ motion for fees and costs. On July 17, 2019, the Company, ConAgra and NL Industries reached an agreement in principle with the plaintiffs to resolve the litigation. The agreement provides for a mutual release of all pending and related future claims and contribution rights in exchange for certain payments of money over time by the Company and the other two defendants to the plaintiffs. More specifically, the agreement provides that, in full and final satisfaction of any and all claims of the plaintiffs, the Company and the other two defendants collectively shall pay a total of $305.0 million, with the Company and the other two defendants each paying approximately $101.7 million as follows: (i) an initial payment of $25.0 million within sixty days after the entry of a dismissal order and judgment; (ii) subsequent annual payments of $12.0 million one year after the initial payment and for a period of four years thereafter; and (iii) a final payment of approximately $16.7 million on the sixth anniversary of the initial payment. Should NL Industries fail to make any of its payments required under the agreement, the Company has agreed to backstop and pay on behalf of NL Industries a maximum amount of $15.0 million. To implement the agreement, the Company and the other two defendants filed a joint motion to dismiss with prejudice and a motion to stay all proceedings, pending the trial court’s approval of the agreement. On July 24, 2019, the trial court approved the agreement, discharged the receiver, and granted a judgment of dismissal with prejudice in favor of the Company and the other two defendants. The Company made its initial payment of $25.0 million to the plaintiffs on September 23, 2019. The Company accrued $136.3 million for this litigation in the third quarter of 2018. During the third quarter of 2019, the Company reduced its accrual by $59.6 million as a result of the final court approved agreement to resolve the litigation and the initial payment of $25.0 million to the plaintiffs in accordance with the agreement. The next payment of $12.0 million is due within twelve months and is included in current liabilities, while the remaining $64.7 million is included in other long-term liabilities. Pennsylvania Proceedings. Two proceedings in Pennsylvania were initiated in October 2018. The County of Montgomery, Pennsylvania filed a Complaint against the Company and several other former lead-based paint and lead pigment manufacturers in the Court of Common Pleas of Montgomery County, Pennsylvania. The County of Lehigh, Pennsylvania also filed a Complaint against the Company and several other former lead-based paint and lead pigment manufacturers in the Court of Common Pleas of Lehigh County, Pennsylvania. The Company removed both actions to the United States District Court for the Eastern District of Pennsylvania on November 28, 2018. The plaintiffs filed a motion for remand in each action on January 7, 2019, which the defendants opposed. The federal trial court remanded each action on June 5, 2019. The defendants asked the federal court to stay the order of remand pending appeal, which the federal court granted on June 27, 2019, and the defendants filed a notice of appeal with the United States Court of Appeals for the Third Circuit. On August 12, 2019, the defendants filed their opening brief with the Third Circuit, to which the plaintiffs filed their opposition brief on September 11, 2019, and the defendants filed their reply brief on October 2, 2019. In both actions, the counties request declaratory relief establishing the existence of a public nuisance and the defendants' contribution to it, the abatement of an ongoing public nuisance arising from the presence of lead-based paint in housing throughout the applicable county, an injunction against future illicit conduct, and the costs of litigation and attorneys' fees. In October 2018, the Company filed a Complaint in the United States District Court for the Eastern District of Pennsylvania against the Pennsylvania Counties of Delaware, Erie and York seeking injunctive and declaratory relief to prevent the violation of the Company's rights under the First Amendment and Due Process Clause of the U.S. Constitution. The Company voluntarily dismissed defendant Erie County on November 9, 2018 and defendant York County on November 21, 2018. Defendant Delaware County filed a motion to dismiss the Complaint, which the federal trial court granted on October 4, 2019. The Company intends to appeal the federal trial court’s dismissal. Litigation seeking damages from alleged personal injury. The Company and other companies are defendants in a number of legal proceedings seeking monetary damages and other relief from alleged personal injuries. These proceedings include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint and claims for damages allegedly incurred by the children’s parents or guardians. These proceedings generally seek compensatory and punitive damages, and seek other relief including medical monitoring costs. These proceedings include purported claims by individuals, groups of individuals and class actions. The plaintiff in Thomas v. Lead Industries Association, et al., initiated an action in Wisconsin state court against the Company, other alleged former lead pigment manufacturers and the Lead Industries Association in September 1999. The claims against the Company and the other defendants included strict liability, negligence, negligent misrepresentation and omissions, fraudulent misrepresentation and omissions, concert of action, civil conspiracy and enterprise liability. Implicit within these claims is the theory of “risk contribution” liability (Wisconsin’s theory which is similar to market share liability, except that liability can be joint and several) due to the plaintiff’s inability to identify the manufacturer of any product that allegedly injured the plaintiff. The case ultimately proceeded to trial and, on November 5, 2007, the jury returned a defense verdict, finding that the plaintiff had ingested white lead carbonate, but was not brain damaged or injured as a result. The plaintiff appealed and, on December 16, 2010, the Wisconsin Court of Appeals affirmed the final judgment in favor of the Company and other defendants. Wisconsin is the only jurisdiction to date to apply a theory of liability with respect to alleged personal injury (i.e., risk contribution/market share liability) that does not require the plaintiff to identify the manufacturer of the product that allegedly injured the plaintiff in the lead pigment and lead-based paint litigation. Although the risk contribution liability theory was applied during the Thomas trial, the constitutionality of this theory as applied to the lead pigment cases has not been judicially determined by the Wisconsin state courts. However, in an unrelated action filed in the United States District Court for the Eastern District of Wisconsin, Gibson v. American Cyanamid, et al., on November 15, 2010, the District Court held that Wisconsin’s risk contribution theory as applied in that case violated the defendants’ right to substantive due process and is unconstitutionally retroactive. The District Court's decision in Gibson v. American Cyanamid, et al., was appealed by the plaintiff to the United States Court of Appeals for the Seventh Circuit. On July 24, 2014, the United States Court of Appeals for the Seventh Circuit reversed the judgment and remanded the case back to the District Court for further proceedings. On January 16, 2015, the defendants filed a petition for certiorari in the United States Supreme Court seeking that Court's review of the Seventh Circuit's decision, and on May 18, 2015, the United States Supreme Court denied the defendants' petition. The case is currently pending in the District Court. The United States District Court for the Eastern District of Wisconsin consolidated three cases (Ravon Owens v. American Cyanamid, et al., Cesar Sifuentes v. American Cyanamid, et al., and Glenn Burton, Jr. v. American Cyanamid, et al.) for purposes of trial. A trial commenced on May 6, 2019 and ended on May 31, 2019, with a jury verdict for the three plaintiffs in the amount of $2.0 million each for a total of $6.0 million against the Company and two other defendants (Armstrong Containers Inc. and E.I. du Pont de Nemours). The Company filed a motion for judgment in its favor based on public policy factors under Wisconsin law. On September 20, 2019, the trial court denied the motion and entered judgment in favor of the plaintiffs. On October 18, 2019, the Company filed post-trial motions for judgment as a matter of law and for a new trial. If the post-trial motions are denied, the Company intends to appeal the jury verdict. In Maniya Allen, et al. v. American Cyanamid, et al., also pending in the United States District Court for the Eastern District of Wisconsin, cases involving six of the 146 plaintiffs were selected for discovery. In Dijonae Trammell, et al. v. American Cyanamid, et al., also pending in the United States District Court for the Eastern District of Wisconsin, discovery for one of the three plaintiffs was consolidated with the six Allen cases referenced above. The parties have selected four of the cases to proceed to expert discovery and to prepare for trial. No dates for expert discovery, pretrial dispositive motions or trial have been set by the District Court in the Allen and Trammell cases. Other lead-based paint and lead pigment litigation. In Mary Lewis v. Lead Industries Association, et al. pending in the Circuit Court of Cook County, Illinois, parents seek to recover the cost of their children’s blood lead testing against the Company and three other defendants that made (or whose alleged corporate predecessors made) white lead pigments. The Circuit Court has certified a statewide class and a Chicago subclass of parents or legal guardians of children who lived in high-risk zip codes identified by the Illinois Department of Health and who were screened for lead toxicity between August 1995 and February 2008. Excluded from the class are those parents or guardians who have incurred no expense, liability or obligation to pay for the cost of their children’s blood lead testing. In 2017, the Company and other defendants moved for summary judgment on the grounds that the three named plaintiffs have not paid and have no obligation or liability to pay for their children’s blood lead testing because Medicaid paid for the children of two plaintiffs and private insurance paid for the third plaintiff without any evidence of a co-pay or deductible. The Circuit Court granted the motion, but on September 7, 2018, the Appellate Court reversed with respect to the two plaintiffs for whom Medicaid paid for their children’s testing. Defendants filed a petition with the Supreme Court of Illinois for discretionary review. By order entered January 31, 2019, that court has allowed defendants’ petition for leave to appeal. The defendants filed their opening brief in the Supreme Court of Illinois on April 11, 2019, to which the plaintiffs filed a response brief on June 17, 2019. The defendants filed their reply brief on July 15, 2019. On August 7, 2019, the Supreme Court of Illinois entered an order stating oral argument will be scheduled in due course. Insurance coverage litigation. The Company and its liability insurers, including certain underwriters at Lloyd’s of London, initiated legal proceedings against each other to determine, among other things, whether the costs and liabilities associated with the abatement of lead pigment are covered under certain insurance policies issued to the Company. The Company’s action, filed on March 3, 2006 in the Common Pleas Court, Cuyahoga County, Ohio, previously was stayed and inactive. On January 9, 2019, the Company filed an unopposed motion to lift the stay with the trial court, which was granted, allowing the case to proceed. On June 28, 2019, the Company and its liability insurers each filed separate motions for summary judgment seeking various forms of relief. Oral argument regarding those motions is scheduled to occur on October 24, 2019. The liability insurers’ action, which was filed on February 23, 2006 in the Supreme Court of the State of New York, County of New York, has been dismissed. An ultimate loss in the insurance coverage litigation would mean that insurance proceeds could be unavailable under the policies at issue to mitigate any ultimate abatement related costs and liabilities. The Company has not recorded any assets related to these insurance policies or otherwise assumed that proceeds from these insurance policies would be received in estimating any contingent liability accrual. Therefore, an ultimate loss in the insurance coverage litigation without a determination of liability against the Company in the lead pigment or lead-based paint litigation will have no impact on the Company’s results of operation, liquidity or financial condition. As previously stated, however, except with respect to the litigation in California discussed above, the Company has not accrued any amounts for the lead pigment or lead-based paint litigation and any significant liability ultimately determined to be attributable to the Company relating to such litigation may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued.
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Product Warranties |
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| Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PRODUCT WARRANTIES | PRODUCT WARRANTIES Changes in the Company’s accrual for product warranty claims during the first nine months of 2019 and 2018, including customer satisfaction settlements, were as follows:
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Net Income Per Share (Tables) |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic and Diluted Earnings Per Share | Basic and diluted earnings per share are calculated using the treasury stock method.
(1) There were no stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three months ended September 30, 2019. Stock options and other contingently issuable shares for the nine months ended September 30, 2019 excludes 9,853 shares due to their anti-dilutive effect. There were no stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three months ended September 30, 2018. Stock options and other contingently issuable shares for the nine months ended September 30, 2018 excludes 28,871 shares due to their anti-dilutive effect.
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Leases (Tables) |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional Lease Information | Additional lease information is summarized below:
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| Maturities of Operating Lease Liabilities | The following table reconciles the undiscounted cash flows for each of the next five years and thereafter to the operating lease liabilities recognized on the balance sheet. The reconciliation excludes short-term leases that are not recorded on the balance sheet.
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Debt - Carrying Amount and Fair Value of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Sep. 30, 2018 |
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| Publicly traded debt | Carrying Amount | ||
| Debt Instrument [Line Items] | ||
| Debt | $ 8,203,048 | $ 8,734,479 |
| Publicly traded debt | Fair Value | ||
| Debt Instrument [Line Items] | ||
| Debt | 8,693,801 | 8,512,513 |
| Non-publicly traded debt | Carrying Amount | ||
| Debt Instrument [Line Items] | ||
| Debt | 269,551 | 286,913 |
| Non-publicly traded debt | Fair Value | ||
| Debt Instrument [Line Items] | ||
| Debt | $ 263,138 | $ 276,440 |
Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
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| Basic | ||||
| Average shares outstanding (in shares) | 91,823,573 | 93,099,714 | 91,850,565 | 93,121,900 |
| Net income | $ 576,438 | $ 354,027 | $ 1,292,678 | $ 1,007,758 |
| Basic net income per share (in dollars per share) | $ 6.28 | $ 3.80 | $ 14.07 | $ 10.82 |
| Diluted | ||||
| Average shares outstanding (in shares) | 91,823,573 | 93,099,714 | 91,850,565 | 93,121,900 |
| Stock options and other contingently issuable shares (in shares) | 1,742,298 | 1,982,841 | 1,611,078 | 1,990,622 |
| Non-vested restricted stock grants (in shares) | 38,389 | 52,702 | 48,461 | 58,246 |
| Average shares outstanding assuming dilution (in shares) | 93,604,260 | 95,135,257 | 93,510,104 | 95,170,768 |
| Net income | $ 576,438 | $ 354,027 | $ 1,292,678 | $ 1,007,758 |
| Diluted net income per share (in dollars per share) | $ 6.16 | $ 3.72 | $ 13.82 | $ 10.59 |
| Stock options and other contingently issuable shares with anti-dilutive effects (in shares) | 0 | 0 | 9,853 | 28,871 |