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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sensata Technologies Holding PLC | NYSE:ST | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 37.90 | 178 | 12:03:33 |
|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
England and Wales
|
|
98-1386780
|
||
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of exchange on which registered
|
Ordinary Shares - nominal value €0.01 per share
|
ST
|
New York Stock Exchange
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
|
|
||
|
|
|
|
||
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|
|
|
||
|
|
|
|
||
|
•
|
instability and changes in the global markets, including regulatory, political, economic, governmental, and military matters, such as the recent exit of the United Kingdom (the "U.K.") from the European Union (the "EU");
|
•
|
adverse conditions or competition in the industries upon which we are dependent, including the automotive industry;
|
•
|
competitive pressure from customers that could require us to reduce prices or result in reduced demand;
|
•
|
losses and costs as a result of intellectual property, product liability, warranty, and recall claims;
|
•
|
market acceptance of new product introductions and product innovations;
|
•
|
supplier interruption or non-performance, limiting our access to manufactured components or raw materials;
|
•
|
risks related to the acquisition or disposition of businesses, or the restructuring of our business;
|
•
|
business disruptions due to natural disasters or other disasters outside our control, such as the recent coronavirus outbreak;
|
•
|
labor disruptions or increased labor costs;
|
•
|
inability to realize all of the revenue or achieve anticipated gross margins from products subject to existing purchase orders for which we are currently engaged in development;
|
•
|
security breaches, cyber theft of our intellectual property, and other disruptions to our information technology infrastructure, or improper disclosure of confidential, personal, or proprietary data;
|
•
|
foreign currency risks, changes in socio-economic conditions, or changes to monetary and fiscal policies;
|
•
|
our level of indebtedness, or our inability to meet debt service obligations or comply with the covenants contained in the credit agreement and senior notes indentures;
|
•
|
changes to current policies, such as trade tariffs, by the United States (the "U.S.") government;
|
•
|
risks related to the potential for goodwill impairment;
|
•
|
the impact of challenges by taxing authorities of our historical and future tax positions or our allocation of taxable income among our subsidiaries, and challenges to the sovereign taxation regimes of EU member states by the European Commission and the Organization for Economic Co-operation and Development;
|
•
|
changes to, or inability to comply with, various regulations, including tax laws, import/export regulations, anti-bribery laws, environmental, health, and safety laws, and other governmental regulations; and
|
•
|
risks related to our domicile in the U.K.
|
ITEM 1.
|
BUSINESS
|
•
|
Clean & Efficient - our customers are facing ever increasing mandates to make their products cleaner and more efficient due to regulation and consumer demand. Our sensors are being used in mission-critical systems and applications including those that help: industrial customers to make more efficient pumps and boilers; automotive customers to meet the standards of emissions and pollution control legislation; and fleet managers to increase the fuel efficiency of heavy duty trucks.
|
•
|
Electrification - electrification provides a significant opportunity for us to expand the use of our sensors and electrical protection solutions within the automotive, industrial, and HVOR industries. For example, in the automotive industry as customers seek to extend the range of the battery and improve the efficiency of electric vehicles they are incorporating electrical subsystems, which require additional sensors to monitor, control, and optimize what is happening within the vehicle. Further, higher voltage battery systems are also driving increased needs for electrical protection. Sensors are also used in thermal management applications to help maintain batteries at optimal temperatures as well as electric motors and heat pumps.
|
•
|
Smart & Connected - we are developing smart, connected sensors that enable actionable insights for commercial vehicle operators. For example, our wireless sensors can collect information through a vehicle-area network and allow fleet managers to proactively monitor the health of their vehicles and conduct proactive maintenance, such as being able to identify when a tire is at high risk of bursting. Our leadership position in wireless sensing allows us to access new data sources that have historically been costly and difficult to gather using traditional wire harnesses.
|
•
|
Autonomy - we are developing sensors to enable light passenger cars, off-road vehicles, and material handling equipment to operate more autonomously. For example, we have recently launched a steer-by-wire application to enable worksite automation in the construction and agriculture industries. Within automotive, we are also developing a portfolio of sensors to actively monitor the health of a vehicle when it is not being operated by an active driver.
|
Key Products/Solutions
|
|
Key Applications/Systems
|
|
Key End Markets
|
Pressure sensors
Microfused strain gage
Ceramic capacitive
Micro-electromechanical
Speed and position sensors
Magnetic speed and position sensors
Mechanical/electrical control systems
High temperature sensors
|
|
Thermal management and air conditioning systems
Transmission
Engine oil
Suspension
Fuel delivery
Braking
Tire pressure monitoring
Exhaust after-treatment
|
|
Automotive
HVOR
|
|
For the year ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Net revenue:
|
|
|
|
|
|
||||||
Sensors
|
$
|
2,489,644
|
|
|
$
|
2,532,631
|
|
|
$
|
2,341,017
|
|
Other
|
56,372
|
|
|
95,020
|
|
|
119,583
|
|
|||
Performance Sensing net revenue
|
$
|
2,546,016
|
|
|
$
|
2,627,651
|
|
|
$
|
2,460,600
|
|
Key Products/Solutions
|
|
Key Applications/Systems
|
|
Key End Markets
|
Product category: Controls
|
||||
Bimetal electromechanical controls
Motor protectors
Motor starters
Thermostats
Switches
Circuit breakers
Thermal circuit breakers
Magnetic-hydraulic circuit breakers
|
|
HVAC/Refrigeration
Industrial equipment
Small/large appliances
Lighting DC motors Commercial and military aircraft Marine/industrial
Data and telecom equipment
Medical equipment
Recreational vehicles
|
|
Aerospace and defense
Industrial
HVAC/Refrigeration
Automotive
Marine
Medical
Energy/solar
|
Product category: Sensors
|
||||
Linear and rotary position sensors
Linear variable differential transformers
Pressure sensors
Temperature sensors
Aircraft controls
|
|
HVAC/Refrigeration
Air compressors
Hydraulic machinery
Motion control systems
Pumps and storage tanks
Commercial and military aircraft
|
|
Aerospace and defense
Industrial equipment
HVAC/Refrigeration
Motors
Marine
Energy
|
|
For the year ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Net revenue:
|
|
|
|
|
|
||||||
Controls
|
$
|
481,720
|
|
|
$
|
508,745
|
|
|
$
|
497,853
|
|
Sensors
|
223,282
|
|
|
222,649
|
|
|
201,846
|
|
|||
Other
|
199,613
|
|
|
162,582
|
|
|
146,434
|
|
|||
Sensing Solutions net revenue
|
$
|
904,615
|
|
|
$
|
893,976
|
|
|
$
|
846,133
|
|
|
U.S.
|
|
Non-U.S.
|
||
Patents
|
296
|
|
|
383
|
|
Pending patent applications, filed within the last five years
|
64
|
|
|
234
|
|
ITEM 1A.
|
RISK FACTORS
|
•
|
trade regulations, including customs, import, and export matters;
|
•
|
tariffs, trade barriers, and disputes, including recent disputes between the United States (the "U.S.") and China;
|
•
|
local employment costs, regulations, and conditions;
|
•
|
difficulties with, and costs for, protecting our intellectual property;
|
•
|
challenges in collecting accounts receivable;
|
•
|
tax laws and regulatory changes, including examinations by taxing authorities, variations in tax laws from country to country, changes to the terms of income tax treaties, and difficulties in the tax-efficient repatriation of earnings generated or held in a number of jurisdictions;
|
•
|
natural disasters;
|
•
|
instability in economic or political conditions, inflation, recession, actual or anticipated military or political conflicts, and potential impact due to the upcoming exit of the United Kingdom (the "U.K.") from the European Union (the "EU"); and
|
•
|
impact of each of the foregoing on our business operations, manufacturing, and supply chain.
|
•
|
make it more difficult for us to satisfy our debt obligations;
|
•
|
restrict us from making strategic acquisitions;
|
•
|
limit our ability to repurchase shares;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and future business opportunities, thereby placing us at a competitive disadvantage if our competitors are not as highly-leveraged;
|
•
|
increase our vulnerability to general adverse economic and market conditions; or
|
•
|
require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness if we do not maintain specified financial ratios or are not able to refinance our indebtedness as it comes due, thereby reducing the availability of our cash flows for other purposes.
|
•
|
the U.S. court having had jurisdiction over the original proceedings according to English conflicts of laws principles and rules of English private international law at the time when proceedings were initiated;
|
•
|
the U.S. proceedings not having been brought in breach of a jurisdiction or arbitration clause except with the agreement of the defendant or the defendant’s subsequent submission to the jurisdiction of the court;
|
•
|
the U.S. judgment being final and conclusive on the merits in the sense of being final and unalterable in the court which pronounced it and being for a definite sum of money;
|
•
|
the recognition or enforcement, as the case may be, of the U.S. judgment not contravening English public policy in a sufficiently significant way or contravening the Human Rights Act 1998 (or any subordinate legislation made thereunder, to the extent applicable);
|
•
|
the U.S. judgment not being for a sum payable in respect of taxes, or other charges of a like nature, or in respect of a penalty or fine, or otherwise based on a U.S. law that an English court considers to be a penal or revenue law;
|
•
|
the U.S. judgment not having been arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damages sustained, and not otherwise being a judgment contrary to section 5 of the Protection of Trading Interests Act 1980 or is a judgment based on measures designated by the Secretary of State under Section 1 of that Act;
|
•
|
the U.S. judgment not having been obtained by fraud or in breach of English principles of natural justice;
|
•
|
the U.S. judgment not being a judgment on a matter previously determined by an English court, or another court whose judgment is entitled to recognition (or enforcement as the case may be) in England, in proceedings involving the same parties that conflicts with an earlier judgment of such court;
|
•
|
the party seeking enforcement (being a party who is not ordinarily resident in some part of the U.K. or resident in an EU Member State) providing security for costs, if ordered to do so by the English courts; and
|
•
|
the English enforcement proceedings being commenced within the relevant limitation period.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
|
|
|
|
Operating Segment
|
|
Approximate Square Footage (in thousands)
|
||||
|
|
|
|
Performance Sensing
|
|
Sensing Solutions
|
|
|||
Country
|
|
Location
|
|
|
|
Owned
|
|
Leased
|
||
Bulgaria
|
|
Botevgrad
|
|
X
|
|
|
|
169
|
|
—
|
Bulgaria
|
|
Plovdiv
|
|
X
|
|
|
|
125
|
|
—
|
Bulgaria
|
|
Sofia
|
|
X
|
|
|
|
—
|
|
117
|
China
|
|
Baoying (1)
|
|
X
|
|
X
|
|
296
|
|
385
|
China
|
|
Changzhou
|
|
X
|
|
X
|
|
335
|
|
236
|
Malaysia
|
|
Subang Jaya
|
|
X
|
|
|
|
138
|
|
—
|
Mexico
|
|
Aguascalientes
|
|
X
|
|
X
|
|
489
|
|
—
|
Mexico
|
|
Tijuana
|
|
X
|
|
X
|
|
—
|
|
287
|
Netherlands
|
|
Hengelo
|
|
X
|
|
X
|
|
—
|
|
94
|
United Kingdom
|
|
Antrim
|
|
X
|
|
|
|
—
|
|
126
|
United Kingdom
|
|
Carrickfergus
|
|
X
|
|
|
|
63
|
|
—
|
United Kingdom
|
|
Swindon (2)
|
|
X
|
|
|
|
—
|
|
34
|
United States
|
|
Attleboro, MA (3)
|
|
X
|
|
X
|
|
—
|
|
443
|
United States
|
|
Carpinteria, CA
|
|
X
|
|
X
|
|
—
|
|
50
|
United States
|
|
Thousand Oaks, CA
|
|
X
|
|
X
|
|
—
|
|
115
|
|
|
|
|
|
|
|
|
1,615
|
|
1,887
|
(1)
|
The owned portion of the properties in this location serves the Sensing Solutions segment only.
|
(2)
|
Our United Kingdom headquarters is located in this facility.
|
(3)
|
Our United States headquarters is located in this facility.
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Period
|
|
Total
Number
of Shares Purchased (in shares) |
|
Weighted-Average
Price
Paid per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Plan or Programs |
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs
(in millions) (2)
|
||||||
October 1 through October 31, 2019
|
|
695,385
|
|
(1)
|
$
|
49.44
|
|
|
694,684
|
|
|
$
|
387.3
|
|
November 1 through November 30, 2019
|
|
564,412
|
|
|
$
|
52.44
|
|
|
564,412
|
|
|
$
|
357.7
|
|
December 1 through December 31, 2019
|
|
389,251
|
|
|
$
|
51.93
|
|
|
389,251
|
|
|
$
|
337.5
|
|
Quarter total
|
|
1,649,048
|
|
|
$
|
51.06
|
|
|
1,648,347
|
|
|
$
|
337.5
|
|
(1)
|
Upon the vesting of restricted securities, we collect and pay withholding tax for employees by withholding shares to cover such tax. The number of shares presented includes 701 shares withheld in this manner with an aggregate value of $35 thousand, based on the closing price of our ordinary shares on the date of withholding. These withholdings took place outside of a publicly announced repurchase plan.
|
(2)
|
Other than shares withheld to cover required tax withholding upon the vesting of restricted securities, all purchases during the three months ended December 31, 2019 were conducted pursuant to a $500.0 million share repurchase program authorized by our Board of Directors and publicly announced on July 30, 2019. This share repurchase program does not have an established expiration date.
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
Sensata Technologies Holding plc (Consolidated) (a)
|
||||||||||||||||||
|
For the year ended December 31,
|
||||||||||||||||||
(In thousands, except per share data)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Statement of operations data: (b)
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenue
|
$
|
3,450,631
|
|
|
$
|
3,521,627
|
|
|
$
|
3,306,733
|
|
|
$
|
3,202,288
|
|
|
$
|
2,974,961
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
2,267,433
|
|
|
2,266,863
|
|
|
2,138,898
|
|
|
2,084,159
|
|
|
1,976,845
|
|
|||||
Research and development
|
148,425
|
|
|
147,279
|
|
|
130,127
|
|
|
126,656
|
|
|
123,603
|
|
|||||
Selling, general and administrative
|
281,442
|
|
|
305,558
|
|
|
301,896
|
|
|
293,506
|
|
|
270,773
|
|
|||||
Amortization of intangible assets
|
142,886
|
|
|
139,326
|
|
|
161,050
|
|
|
201,498
|
|
|
186,632
|
|
|||||
Restructuring and other charges, net (c)
|
53,560
|
|
|
(47,818
|
)
|
|
18,975
|
|
|
4,113
|
|
|
21,919
|
|
|||||
Total operating costs and expenses
|
2,893,746
|
|
|
2,811,208
|
|
|
2,750,946
|
|
|
2,709,932
|
|
|
2,579,772
|
|
|||||
Operating income
|
556,885
|
|
|
710,419
|
|
|
555,787
|
|
|
492,356
|
|
|
395,189
|
|
|||||
Interest expense, net
|
(158,554
|
)
|
|
(153,679
|
)
|
|
(159,761
|
)
|
|
(165,818
|
)
|
|
(137,626
|
)
|
|||||
Other, net(d)
|
(7,908
|
)
|
|
(30,365
|
)
|
|
6,415
|
|
|
(5,093
|
)
|
|
(51,934
|
)
|
|||||
Income before taxes
|
390,423
|
|
|
526,375
|
|
|
402,441
|
|
|
321,445
|
|
|
205,629
|
|
|||||
Provision for/(benefit from) income taxes (e)
|
107,709
|
|
|
(72,620
|
)
|
|
(5,916
|
)
|
|
59,011
|
|
|
(142,067
|
)
|
|||||
Net income
|
$
|
282,714
|
|
|
$
|
598,995
|
|
|
$
|
408,357
|
|
|
$
|
262,434
|
|
|
$
|
347,696
|
|
Basic net income per share
|
$
|
1.76
|
|
|
$
|
3.55
|
|
|
$
|
2.39
|
|
|
$
|
1.54
|
|
|
$
|
2.05
|
|
Diluted net income per share
|
$
|
1.75
|
|
|
$
|
3.53
|
|
|
$
|
2.37
|
|
|
$
|
1.53
|
|
|
$
|
2.03
|
|
Weighted-average ordinary shares outstanding—basic
|
160,946
|
|
|
168,570
|
|
|
171,165
|
|
|
170,709
|
|
|
169,977
|
|
|||||
Weighted-average ordinary shares outstanding—diluted
|
161,968
|
|
|
169,859
|
|
|
172,169
|
|
|
171,460
|
|
|
171,513
|
|
|||||
Other financial data: (b)
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by/(used in):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
619,562
|
|
|
$
|
620,563
|
|
|
$
|
557,646
|
|
|
$
|
521,525
|
|
|
$
|
533,131
|
|
Investing activities
|
$
|
(208,777
|
)
|
|
$
|
(237,606
|
)
|
|
$
|
(140,722
|
)
|
|
$
|
(174,778
|
)
|
|
$
|
(1,166,369
|
)
|
Financing activities
|
$
|
(366,499
|
)
|
|
$
|
(406,213
|
)
|
|
$
|
(15,263
|
)
|
|
$
|
(337,582
|
)
|
|
$
|
764,172
|
|
Additions to property, plant and equipment and capitalized software
|
$
|
(161,259
|
)
|
|
$
|
(159,787
|
)
|
|
$
|
(144,584
|
)
|
|
$
|
(130,217
|
)
|
|
$
|
(177,196
|
)
|
|
As of December 31,
|
||||||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Balance sheet data: (b)
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
774,119
|
|
|
$
|
729,833
|
|
|
$
|
753,089
|
|
|
$
|
351,428
|
|
|
$
|
342,263
|
|
Working capital (f)
|
$
|
1,330,906
|
|
|
$
|
1,277,211
|
|
|
$
|
1,218,796
|
|
|
$
|
758,189
|
|
|
$
|
412,748
|
|
Total assets
|
$
|
6,834,519
|
|
|
$
|
6,797,687
|
|
|
$
|
6,641,525
|
|
|
$
|
6,240,976
|
|
|
$
|
6,298,910
|
|
Total debt, net including finance lease and other financing obligations
|
$
|
3,255,613
|
|
|
$
|
3,264,941
|
|
|
$
|
3,270,269
|
|
|
$
|
3,273,594
|
|
|
$
|
3,600,991
|
|
Total shareholders’ equity
|
$
|
2,573,755
|
|
|
$
|
2,608,434
|
|
|
$
|
2,345,626
|
|
|
$
|
1,942,007
|
|
|
$
|
1,668,576
|
|
(a)
|
On March 28, 2018, the cross-border merger of Sensata Technologies Holding N.V. ("Sensata N.V.") and Sensata Technologies Holding plc ("Sensata plc") was completed, with Sensata plc being the surviving entity (the "Merger"). On the date of the Merger, Sensata plc became the publicly-traded parent of the subsidiary companies that were previously controlled by Sensata N.V., with no changes made to the business being conducted by Sensata N.V. prior to the Merger. Due to the various legal aspects of the Merger, Sensata plc retains the historical data of Sensata N.V., and no recasting or adjustment is required as a result of the Merger.
|
(b)
|
We acquired certain assets and subsidiaries of Custom Sensors & Technologies Ltd. ("CST") in fiscal year 2015, and GIGAVAC, LLC ("GIGAVAC") in fiscal year 2018. Pro forma amounts are not shown. We sold the capital stock of Schrader Bridgeport International, Inc. and August France Holding Company SAS (collectively, the "Valves Business") in fiscal year 2018. Prior year amounts have not been recast. Refer to Note 17, "Acquisitions and Divestitures," of our Financial Statements for additional information related to the acquisition of GIGAVAC and the divestiture of the Valves Business.
|
(c)
|
Restructuring and other charges, net for the years ended December 31, 2019, 2018, 2017, 2016, and 2015 consisted of the following (refer also to Note 5, "Restructuring and Other Charges, Net," of our Financial Statements):
|
|
For the year ended December 31,
|
||||||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Severance costs, net (i)
|
$
|
29,240
|
|
|
$
|
7,566
|
|
|
$
|
11,125
|
|
|
$
|
813
|
|
|
$
|
19,829
|
|
Facility and other exit costs (ii)
|
808
|
|
|
877
|
|
|
7,850
|
|
|
3,300
|
|
|
798
|
|
|||||
Gain on sale of Valves Business (iii)
|
—
|
|
|
(64,423
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (iv)
|
23,512
|
|
|
8,162
|
|
|
—
|
|
|
—
|
|
|
1,292
|
|
|||||
Restructuring and other charges, net
|
$
|
53,560
|
|
|
$
|
(47,818
|
)
|
|
$
|
18,975
|
|
|
$
|
4,113
|
|
|
$
|
21,919
|
|
(i)
|
Includes termination benefits provided in connection with workforce reductions of manufacturing, engineering, and administrative positions. For the year ended December 31, 2019, these amounts also included $12.7 million of benefits provided under a voluntary retirement incentive program offered to a limited number of eligible employees in the United States (the "U.S.") and $6.5 million of termination benefits provided under a one-time benefit arrangement related to the shutdown and relocation of an operating site in Germany. For the year ended December 31, 2017, these amounts also included $8.4 million of charges related to the closure of our facility in Minden, Germany, a site we obtained in connection with the acquisition of certain subsidiaries of CST. For the year ended December 31, 2015, these amounts also included $7.6 million of severance charges incurred in order to integrate acquired businesses with ours and $4.0 million of severance charges related to the closure of our Schrader Brazil manufacturing facility.
|
(ii)
|
For the year ended December 31, 2017, these amounts included $3.2 million of costs related to the closure of our facility in Minden, Germany and $3.1 million of costs associated with the consolidation of two other manufacturing sites in Europe. For the year ended December 31, 2016 these amounts primarily related to the relocation of manufacturing lines from our facility in the Dominican Republic to a manufacturing facility in Mexico.
|
(iii)
|
In the year ended December 31, 2018, we completed the sale of the Valves Business.
|
(iv)
|
In the year ended December 31, 2019, these amounts included a $17.8 million loss related to the termination of a supply agreement in connection with the Metal Seal Precision, Ltd. ("Metal Seal") litigation and $6.1 million of expense related to the deferred compensation arrangement that we entered into in connection with the acquisition of GIGAVAC. Refer to Note 15, "Commitments and Contingencies," of our Financial Statements for additional information related to the supply agreement termination and litigation with Metal Seal. In the year ended December 31, 2018, we incurred $5.9 million of incremental direct costs in order to transact the sale of the Valves Business and $2.2 million of expense related to the deferred compensation arrangement that we entered into connection with the acquisition of GIGAVAC.
|
(d)
|
Other, net for the years ended December 31, 2019, 2018, 2017, 2016, and 2015 consisted of the following:
|
|
For the year ended December 31,
|
||||||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
(Loss)/gain related to foreign currency exchange rates(i)
|
$
|
(4,577
|
)
|
|
$
|
(16,835
|
)
|
|
$
|
2,423
|
|
|
$
|
(12,471
|
)
|
|
$
|
(6,007
|
)
|
Gain/(loss) on commodity forward contracts
|
4,888
|
|
|
(8,481
|
)
|
|
9,989
|
|
|
7,399
|
|
|
(18,468
|
)
|
|||||
Loss on debt financing
|
(4,364
|
)
|
|
(2,350
|
)
|
|
(2,670
|
)
|
|
—
|
|
|
(25,538
|
)
|
|||||
Net periodic benefit cost, excluding service cost
|
(3,186
|
)
|
|
(3,585
|
)
|
|
(3,402
|
)
|
|
(192
|
)
|
|
(1,605
|
)
|
|||||
Other
|
(669
|
)
|
|
886
|
|
|
75
|
|
|
171
|
|
|
(316
|
)
|
|||||
Other, net
|
$
|
(7,908
|
)
|
|
$
|
(30,365
|
)
|
|
$
|
6,415
|
|
|
$
|
(5,093
|
)
|
|
$
|
(51,934
|
)
|
(i)
|
Includes net losses and gains on foreign currency remeasurement and foreign currency forward contracts. Refer to Note 6, "Other, Net," of our Financial Statements for additional information.
|
(e)
|
For the year ended December 31, 2018, this amount included an income tax benefit of $122.1 million related to the realization of U.S. deferred tax assets previously offset by a valuation allowance. For the year ended December 31, 2017, this amount included an income tax benefit of $73.7 million related to the enactment of U.S. tax legislation in the fourth quarter of 2017. Refer to Note 7, "Income Taxes," of our Financial Statements for additional information. For the year ended December 31, 2015, this amount included an income tax benefit of $180.0 million, primarily related to the release of a portion of our U.S. valuation allowance in connection with the acquisition of CST.
|
(f)
|
We define working capital as current assets less current liabilities.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
For the year ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(Dollars in millions)
|
Amount
|
|
Percent of Total
|
|
Amount
|
|
Percent of Total
|
|
Amount
|
|
Percent of Total
|
|||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Performance Sensing
|
$
|
2,546.0
|
|
|
73.8
|
%
|
|
$
|
2,627.7
|
|
|
74.6
|
%
|
|
$
|
2,460.6
|
|
|
74.4
|
%
|
Sensing Solutions
|
904.6
|
|
|
26.2
|
|
|
894.0
|
|
|
25.4
|
|
|
846.1
|
|
|
25.6
|
|
|||
Total net revenue
|
$
|
3,450.6
|
|
|
100.0
|
%
|
|
$
|
3,521.6
|
|
|
100.0
|
%
|
|
$
|
3,306.7
|
|
|
100.0
|
%
|
|
For the year ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(Dollars in millions)
|
Amount
|
|
Percent of
Segment Net Revenue |
|
Amount
|
|
Percent of
Segment Net Revenue |
|
Amount
|
|
Percent of
Segment Net Revenue |
|||||||||
Segment operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Performance Sensing
|
$
|
648.7
|
|
|
25.5
|
%
|
|
$
|
712.7
|
|
|
27.1
|
%
|
|
$
|
664.2
|
|
|
27.0
|
%
|
Sensing Solutions
|
291.3
|
|
|
32.2
|
%
|
|
293.0
|
|
|
32.8
|
%
|
|
277.5
|
|
|
32.8
|
%
|
|||
Total segment operating income
|
$
|
940.0
|
|
|
|
|
$
|
1,005.7
|
|
|
|
|
$
|
941.6
|
|
|
|
|
PP&E, net as of December 31,
|
|
Net revenue for the year ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2017
|
|||||
Americas
|
34.8
|
%
|
|
37.2
|
%
|
|
42.3
|
%
|
|
42.0
|
%
|
|
41.3
|
%
|
Europe
|
23.2
|
%
|
|
23.5
|
%
|
|
28.1
|
%
|
|
29.2
|
%
|
|
31.4
|
%
|
Asia and rest of world
|
42.0
|
%
|
|
39.3
|
%
|
|
29.6
|
%
|
|
28.8
|
%
|
|
27.3
|
%
|
|
For the year ended December 31,
|
|||||||
(Percentage of total)
|
2019
|
|
2018
|
|
2017
|
|||
Automotive
|
58.8
|
%
|
|
60.4
|
%
|
|
61.7
|
%
|
HVOR
|
16.2
|
%
|
|
15.6
|
%
|
|
14.3
|
%
|
Industrial
|
10.2
|
%
|
|
9.6
|
%
|
|
9.4
|
%
|
Appliance and heating, ventilation and air conditioning ("HVAC")
|
5.8
|
%
|
|
5.9
|
%
|
|
6.3
|
%
|
Aerospace
|
5.1
|
%
|
|
4.7
|
%
|
|
4.6
|
%
|
Other
|
3.9
|
%
|
|
3.8
|
%
|
|
3.7
|
%
|
•
|
fluctuations in overall economic activity within the geographic regions in which we operate;
|
•
|
underlying growth in one or more of our core end markets, either worldwide or in particular geographies in which we operate;
|
•
|
the number of sensors, sensor-based solutions, and/or controls used within existing applications, or the development of new applications requiring sensors, sensor-based solutions, and/or controls, due to regulations or other factors;
|
•
|
the "mix" of products sold, including the proportion of new or upgraded products and their pricing relative to existing products;
|
•
|
changes in product sales prices (including quantity discounts, rebates, and cash discounts for prompt payment);
|
•
|
changes in the level of competition faced by our products, including the launch of new products by competitors; and
|
•
|
our ability to successfully develop, launch, and sell new products and applications.
|
•
|
fluctuations in foreign currency exchange rates; and
|
•
|
acquisitions and divestitures.
|
•
|
Production Materials Costs. We purchase much of the materials used in production on a global best-cost basis, but we are still impacted by global and local market conditions. A portion of our production materials contains certain commodities, resins, and rare earth metals, and the cost of these materials may vary with underlying pricing. However, we enter into forward contracts to economically hedge a portion of our exposure to the potential change in prices associated with certain of these commodities. The terms of these contracts fix the price at a future date for various notional amounts associated with these commodities. Gains and losses recognized on these derivatives are recorded in other, net and are not included in cost of revenue. Refer to Note 6, "Other, Net" of our Financial Statements for additional information.
|
•
|
Employee Costs. Employee costs include wages and benefits for employees involved in our manufacturing operations and certain engineering activities, including variable incentive compensation. A significant portion of these costs can fluctuate on an aggregate basis in direct correlation with changes in production volumes. As a percentage of net revenue, these costs may decline as a result of economies of scale associated with higher production volumes, and conversely, may increase with lower production volumes. These costs also fluctuate based on local market conditions. We rely on contract workers for direct labor in certain geographies. As of December 31, 2019, we had approximately 1,825 direct labor contract workers on a worldwide basis.
|
•
|
Sustaining Engineering Activity Costs. These costs relate to modifications of existing products for use by new and existing customers in familiar applications.
|
•
|
Other. Our remaining cost of revenue primarily consists of:
|
•
|
gains and losses on certain foreign currency forward contracts that are designated as cash flow hedges;
|
•
|
material yields;
|
•
|
costs to import raw materials, such as tariffs;
|
•
|
depreciation of fixed assets used in the manufacturing process;
|
•
|
freight costs;
|
•
|
warehousing expenses;
|
•
|
maintenance and repair expenses;
|
•
|
operating supplies; and
|
•
|
other general manufacturing expenses, such as expenses for energy consumption and operating lease expense.
|
•
|
changes in the price of raw materials, including the impact of changes in costs to import such raw materials, such as tariffs;
|
•
|
price reductions provided to our customers;
|
•
|
implementation of cost improvement measures aimed at increasing productivity, including reduction of fixed production costs, refinements in inventory management, design and process driven changes, and the coordination of procurement within each subsidiary and at the business level;
|
•
|
changes in production volumes – production costs are capitalized in inventory based on normal production volumes, as revenue increases, the fixed portion of these costs does not;
|
•
|
transfer of production to our lower-cost manufacturing facilities;
|
•
|
product lifecycles, as we typically incur higher cost of revenue associated with excess manufacturing capacity during the initial stages of product launches and during the phase-out of discontinued products;
|
•
|
the increase in the carrying value of inventory that is adjusted to fair value as a result of the application of purchase accounting associated with acquisitions;
|
•
|
changes in depreciation expense, including those arising from the adjustment of PP&E to fair value associated with acquisitions;
|
•
|
fluctuations in foreign currency exchange rates;
|
•
|
changes in product mix;
|
•
|
changes in logistics costs; and
|
•
|
acquisitions and divestitures – acquired and divested businesses may generate higher or lower cost of revenue as a percentage of net revenue than our core business.
|
•
|
salary and benefit costs for sales and marketing personnel and administrative staff, including cash and share-based incentive compensation expense;
|
•
|
charges related to the use and maintenance of administrative offices, including depreciation expense;
|
•
|
other administrative costs, including expenses relating to information systems, human resources, and legal and accounting services;
|
•
|
other selling and marketing related costs, such as expenses incurred in connection with travel and communications; and
|
•
|
transaction costs associated with acquisitions.
|
•
|
changes in sales volume, as higher volumes enable us to spread the fixed portion of our selling, marketing, and administrative expense over higher revenue (e.g. expenses relating to our sales and marketing personnel can fluctuate due to prolonged trends in sales volume, while expenses relating to administrative personnel generally do not increase or decrease directly with changes in sales volume);
|
•
|
price reductions provided to our customers;
|
•
|
changes in the mix of products we sell, as some products may require more customer support and sales effort than others;
|
•
|
new product launches in existing and new markets, as these launches typically involve a more intense sales and marketing activity before they are integrated into customer applications and systems;
|
•
|
changes in our customer base, as new customers may require different levels of sales and marketing attention;
|
•
|
fluctuations in foreign currency exchange rates; and
|
•
|
acquisitions and divestitures - acquired and divested businesses may require different levels of SG&A expense as a percentage of net revenue than our core business.
|
•
|
current tax expense, which relates primarily to our profitable operations in non-U.S. tax jurisdictions and withholding taxes related to interest, royalties, and repatriation of foreign earnings; and
|
•
|
deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to the step-up in fair value of fixed and intangible assets, including goodwill, acquired in connection with business combination transactions, the utilization of net operating losses, changes in tax rates, and changes in our assessment of the realizability of our deferred tax assets.
|
•
|
establishing or releasing a portion of the valuation allowance related to our gross deferred tax assets;
|
•
|
we operate in locations outside the U.S., including Bermuda, Bulgaria, China, Malaysia, the Netherlands, South Korea, and the U.K., that historically have had statutory tax rates different than the U.S. statutory tax rate. This can result in a foreign tax rate differential that may reflect a tax benefit or detriment. This foreign tax rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates, tax holidays, and favorable tax regimes available to certain of our foreign subsidiaries;
|
•
|
changes in tax laws, including emerging Organization for Economic Co-operation and Development guidelines and European Commission challenges to sovereign European Union member states;
|
•
|
losses incurred in certain jurisdictions, which cannot be currently benefited, as it is not more likely than not that the associated deferred tax asset will be realized in the foreseeable future;
|
•
|
foreign currency exchange gains and losses;
|
•
|
as a result of income tax audit settlements, final assessments, or lapse of applicable statutes of limitation, we may recognize an income tax expense or benefit including the reversal of previously accrued interest and penalties; and
|
•
|
in certain jurisdictions, we recognize withholding and other taxes on intercompany payments, including dividends.
|
|
For the year ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Amount
|
|
Percent of
Net Revenue
|
|
Amount
|
|
Percent of
Net Revenue
|
|
Amount
|
|
Percent of
Net Revenue
|
|||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Performance Sensing
|
$
|
2,546.0
|
|
|
73.8
|
%
|
|
$
|
2,627.7
|
|
|
74.6
|
%
|
|
$
|
2,460.6
|
|
|
74.4
|
%
|
Sensing Solutions
|
904.6
|
|
|
26.2
|
|
|
894.0
|
|
|
25.4
|
|
|
846.1
|
|
|
25.6
|
|
|||
Total net revenue
|
3,450.6
|
|
|
100.0
|
%
|
|
3,521.6
|
|
|
100.0
|
%
|
|
3,306.7
|
|
|
100.0
|
%
|
|||
Operating costs and expenses
|
2,893.7
|
|
|
83.9
|
|
|
2,811.2
|
|
|
79.8
|
|
|
2,750.9
|
|
|
83.2
|
|
|||
Operating income
|
556.9
|
|
|
16.1
|
|
|
710.4
|
|
|
20.2
|
|
|
555.8
|
|
|
16.8
|
|
|||
Interest expense, net
|
(158.6
|
)
|
|
(4.6
|
)
|
|
(153.7
|
)
|
|
(4.4
|
)
|
|
(159.8
|
)
|
|
(4.8
|
)
|
|||
Other, net
|
(7.9
|
)
|
|
(0.2
|
)
|
|
(30.4
|
)
|
|
(0.9
|
)
|
|
6.4
|
|
|
0.2
|
|
|||
Income before taxes
|
390.4
|
|
|
11.3
|
|
|
526.4
|
|
|
14.9
|
|
|
402.4
|
|
|
12.2
|
|
|||
Provision for/(benefit from) income taxes
|
107.7
|
|
|
3.1
|
|
|
(72.6
|
)
|
|
(2.1
|
)
|
|
(5.9
|
)
|
|
(0.2
|
)
|
|||
Net income
|
$
|
282.7
|
|
|
8.2
|
%
|
|
$
|
599.0
|
|
|
17.0
|
%
|
|
$
|
408.4
|
|
|
12.3
|
%
|
|
2019 compared to 2018
|
|
2018 compared to 2017
|
||||||||||||||
|
Total
|
|
Performance Sensing
|
|
Sensing Solutions
|
|
Total
|
|
Performance Sensing
|
|
Sensing Solutions
|
||||||
Reported net revenue (decline)/growth
|
(2.0
|
)%
|
|
(3.1
|
)%
|
|
1.2
|
%
|
|
6.5
|
%
|
|
6.8
|
%
|
|
5.7
|
%
|
Percent impact of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Acquisitions and divestitures, net (1)
|
(0.2
|
)
|
|
(1.9
|
)
|
|
4.6
|
|
|
(0.8
|
)
|
|
(1.3
|
)
|
|
0.7
|
|
Foreign currency remeasurement (2)
|
(0.7
|
)
|
|
(0.7
|
)
|
|
(0.7
|
)
|
|
1.3
|
|
|
1.5
|
|
|
0.8
|
|
Organic revenue (decline)/growth
|
(1.1
|
)%
|
|
(0.5
|
)%
|
|
(2.7
|
)%
|
|
6.0
|
%
|
|
6.6
|
%
|
|
4.2
|
%
|
(1)
|
Represents the percentage change in net revenue attributed to the effect of acquisitions and divestitures for the 12 months immediately following the respective transaction dates. The percentage amounts presented relate to the divestiture of the Valves Business in August 2018 and the acquisition of GIGAVAC in October 2018, each of which is discussed in Note 17, "Acquisitions and Divestitures," of our Financial Statements.
|
(2)
|
Represents the percentage change in net revenue between the comparative periods attributed to differences in exchange rates used to remeasure foreign denominated revenue transactions into USD, which is the functional currency of the Company and each of its subsidiaries. The USD to Chinese Renminbi exchange rate was a significant driver for both periods presented. The Euro to USD exchange rate was also a significant driver for fiscal year 2018 compared to fiscal year 2017.
|
|
For the year ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Amount
|
|
Percent of
Net Revenue
|
|
Amount
|
|
Percent of
Net Revenue
|
|
Amount
|
|
Percent of
Net Revenue
|
|||||||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of revenue
|
$
|
2,267.4
|
|
|
65.7
|
%
|
|
$
|
2,266.9
|
|
|
64.4
|
%
|
|
$
|
2,138.9
|
|
|
64.7
|
%
|
Research and development
|
148.4
|
|
|
4.3
|
|
|
147.3
|
|
|
4.2
|
|
|
130.1
|
|
|
3.9
|
|
|||
Selling, general and administrative
|
281.4
|
|
|
8.2
|
|
|
305.6
|
|
|
8.7
|
|
|
301.9
|
|
|
9.1
|
|
|||
Amortization of intangible assets
|
142.9
|
|
|
4.1
|
|
|
139.3
|
|
|
4.0
|
|
|
161.1
|
|
|
4.9
|
|
|||
Restructuring and other charges, net
|
53.6
|
|
|
1.6
|
|
|
(47.8
|
)
|
|
(1.4
|
)
|
|
19.0
|
|
|
0.6
|
|
|||
Total operating costs and expenses
|
$
|
2,893.7
|
|
|
83.9
|
%
|
|
$
|
2,811.2
|
|
|
79.8
|
%
|
|
$
|
2,750.9
|
|
|
83.2
|
%
|
|
For the year ended December 31,
|
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Severance costs, net (1)
|
$
|
29.2
|
|
|
$
|
7.6
|
|
|
$
|
11.1
|
|
Facility and other exit costs (2)
|
0.8
|
|
|
0.9
|
|
|
7.9
|
|
|||
Gain on sale of Valves Business (3)(5)
|
—
|
|
|
(64.4
|
)
|
|
—
|
|
|||
Other (4)(5)
|
23.5
|
|
|
8.2
|
|
|
—
|
|
|||
Restructuring and other charges, net
|
$
|
53.6
|
|
|
$
|
(47.8
|
)
|
|
$
|
19.0
|
|
(1)
|
Severance costs, net for the year ended December 31, 2019 included termination benefits provided in connection with workforce reductions of manufacturing, engineering, and administrative positions including the elimination of certain positions related to site consolidations, approximately $12.7 million of benefits provided under a voluntary retirement incentive program offered to a limited number of eligible employees in the U.S, and $6.5 million of termination benefits provided under a one-time benefit arrangement related to the shutdown and relocation of an operating site in Germany. Severance costs, net for the year ended December 31, 2018 were primarily related to termination benefits provided in connection with limited workforce reductions of manufacturing, engineering, and administrative positions including the elimination of certain positions related to site consolidations. Severance costs, net recognized during the year ended December 31, 2017 included $8.4 million of charges related to the closure of our facility in Minden, Germany, a site we obtained in connection with the acquisition of certain subsidiaries of Custom Sensors & Technologies Ltd.
|
(2)
|
Facility and other exit costs for the year ended December 31, 2017 included $3.2 million of costs related to the closure of our facility in Minden, Germany and $3.1 million of costs associated with the consolidation of two other manufacturing sites in Europe.
|
(3)
|
In the year ended December 31, 2018, we completed the sale of the Valves Business.
|
(4)
|
In the year ended December 31, 2019, these amounts include a $17.8 million loss related to the termination of a supply agreement in connection with the Metal Seal litigation and $6.1 million of expense related to the deferred compensation arrangement that we entered into in connection with the acquisition of GIGAVAC. Refer to Note 15, "Commitments and Contingencies," of our Financial Statements for additional information related to the supply agreement termination and litigation with Metal Seal. In the year ended December 31, 2018, we incurred $5.9 million of incremental direct costs in order to transact the sale of the Valves Business and $2.2 million of expense related to the deferred compensation arrangement that we entered into in connection with the acquisition of GIGAVAC.
|
(5)
|
Refer to Note 17, "Acquisitions and Divestitures," of our Financial Statements for additional information related to the acquisition of GIGAVAC and the divestiture of the Valves Business.
|
|
For the year ended December 31,
|
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Currency remeasurement (loss)/gain on net monetary assets (1)
|
$
|
(6.8
|
)
|
|
$
|
(18.9
|
)
|
|
$
|
18.0
|
|
Gain/(loss) on foreign currency forward contracts (2)
|
2.2
|
|
|
2.1
|
|
|
(15.6
|
)
|
|||
Gain/(loss) on commodity forward contracts (2)
|
4.9
|
|
|
(8.5
|
)
|
|
10.0
|
|
|||
Loss on debt financing (3)
|
(4.4
|
)
|
|
(2.4
|
)
|
|
(2.7
|
)
|
|||
Net periodic benefit cost, excluding service cost
|
(3.2
|
)
|
|
(3.6
|
)
|
|
(3.4
|
)
|
|||
Other
|
(0.7
|
)
|
|
0.9
|
|
|
0.1
|
|
|||
Other, net
|
$
|
(7.9
|
)
|
|
$
|
(30.4
|
)
|
|
$
|
6.4
|
|
(1)
|
Relates to the remeasurement of non-USD denominated monetary assets and liabilities into USD.
|
(2)
|
Relates to changes in the fair value of derivative financial instruments that are not designated as hedges. Refer to Note 19, "Derivative Instruments and Hedging Activities," of our Financial Statements for additional information related to gains and losses related to our commodity and foreign currency exchange forward contracts. Refer to Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," included elsewhere in this Report for an analysis of the sensitivity of other, net to changes in foreign currency exchange rates and commodity prices.
|
(3)
|
Refer to Note 14, "Debt," of our Financial Statements for additional information related to our debt financing transactions.
|
|
For the year ended December 31,
|
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Tax computed at statutory rate of 21% in 2019 and 2018 and 35% in 2017 (1)
|
$
|
82.0
|
|
|
$
|
110.5
|
|
|
$
|
140.9
|
|
Reserve for tax exposure
|
20.1
|
|
|
10.8
|
|
|
38.0
|
|
|||
Valuation allowances (2)
|
19.6
|
|
|
(123.4
|
)
|
|
(3.4
|
)
|
|||
Foreign tax rate differential (3)
|
(19.1
|
)
|
|
(41.2
|
)
|
|
(112.0
|
)
|
|||
Withholding taxes not creditable
|
9.5
|
|
|
8.7
|
|
|
3.9
|
|
|||
Research and development incentives (4)
|
(8.4
|
)
|
|
(19.5
|
)
|
|
(5.9
|
)
|
|||
Change in tax laws or rates
|
5.1
|
|
|
(22.3
|
)
|
|
3.9
|
|
|||
U.S. Tax Reform Act impact (5)
|
—
|
|
|
—
|
|
|
(73.7
|
)
|
|||
Other (6)
|
(1.1
|
)
|
|
3.7
|
|
|
2.4
|
|
|||
Provision for/(benefit from) income taxes
|
$
|
107.7
|
|
|
$
|
(72.6
|
)
|
|
$
|
(5.9
|
)
|
(1)
|
Represents the product of the applicable statutory tax rate and income before taxes, as reported in the consolidated statements of operations. In fiscal year 2018 the statutory tax rate declined to 21% (i.e., compared to 35% in previous fiscal years) due to the effect of the Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act").
|
(2)
|
During the years ended December 31, 2019, 2018, and 2017, we established/(released) a portion of our valuation allowance and recognized a deferred tax expense/(benefit). The valuation allowance as of December 31, 2019 and 2018 was $146.8 million and $157.0 million, respectively. The remaining valuation allowance mainly relates to foreign tax credit and capital loss carryforwards and suspended interest deductions. It is more likely than not that these attributes will not be utilized in the foreseeable future. However, any future release of all or a portion of this valuation allowance resulting from a change in this assessment will impact our future provision for/(benefit from) income taxes.
|
(3)
|
We operate in locations outside the U.S., including Bermuda, Bulgaria, China, Malaysia, the Netherlands, South Korea, and the U.K., that historically have had statutory tax rates different than the U.S. statutory tax rate. This can result in a foreign tax rate differential that may reflect a tax benefit or detriment. This foreign tax rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates. Certain of our subsidiaries are currently eligible, or have been eligible, for tax exemptions or holidays in their respective jurisdictions.
|
(4)
|
Certain income of our U.K. subsidiaries is eligible for lower tax rates under the "patent box" regime, resulting in certain of our intellectual property income being taxed at a rate lower than the U.K. statutory tax rate. Certain R&D expenses are eligible for a bonus deduction under China’s R&D super deduction regime. In fiscal year 2018, we substantially completed an assessment of our ability to claim an R&D credit in the U.S. As a result of this assessment, we recognized a tax benefit of $10.0 million. Prior to fiscal year 2018, the deferred tax asset related to these R&D credits would have been offset by the valuation allowance.
|
(5)
|
Relates to the enactment of the Tax Reform Act during the fourth quarter of 2017, which required us to remeasure our U.S. deferred tax assets and liabilities associated with indefinite-lived intangible assets, including goodwill, from a rate of 35% to 21%. Absent this deferred tax liability, the U.S. operation was in a net deferred tax asset position that was offset by a full valuation allowance at December 31, 2017.
|
(6)
|
Refer to Note 7, "Income Taxes," of our Financial Statements for additional information related to other components of our rate reconciliation.
|
•
|
Restructuring related and other - includes charges, net related to certain restructuring and other exit activities as well as other costs (or income) that we believe are either unique or unusual to the identified reporting period, and that we believe impact comparisons to prior period operating results. Such costs include charges related to optimization of our manufacturing processes to increase productivity. This type of activity occurs periodically, however each action is unique, discrete, and driven by various facts and circumstances. Such amounts are excluded from internal financial statements and analyses that management uses in connection with financial planning, and in its review and assessment of our operating and financial performance, including the performance of our segments. Restructuring related and other does not, however, include charges related to the integration of acquired businesses, including such charges that are recognized as restructuring and other charges, net in the consolidated statements of operations.
|
•
|
Financing and other transaction costs – includes losses or gains related to debt financing transactions, losses or gains related to the divestiture of a business, losses or gains related to the termination of a long-term unfavorable supply
|
•
|
Deferred loss or gain on commodities and other derivative instruments - includes unrealized losses or gains on derivative instruments that do not qualify for hedge accounting as well as the impact of commodity prices on our raw material costs relative to the strike price on our commodity forward contracts.
|
•
|
Step-up depreciation and amortization – includes depreciation and amortization expense associated with the step-up in fair value of assets acquired in connection with a business combination (e.g., PP&E, definite-lived intangible assets, and inventory). The current tax effect of step-up depreciation and amortization was not material, individually or in the aggregate, in any period presented.
|
•
|
Deferred income taxes and other tax related – includes adjustments for book-to-tax basis differences due primarily to the step-up in fair value of fixed and intangible assets and goodwill, the utilization of net operating losses, and adjustments to our U.S. valuation allowance in connection with certain acquisitions and U.S. tax law changes. Other tax related items include certain adjustments to unrecognized tax positions and withholding tax on repatriation of foreign earnings.
|
•
|
Amortization of debt issuance costs.
|
•
|
Where applicable, the current tax effect of non-GAAP adjustments.
|
|
|
For the year ended December 31, 2019
|
|||||||||||||
(Dollars in millions, except per share amounts)
|
|
Operating Income
|
|
Operating Margin
|
|
Net Income
|
|
Diluted EPS
|
|||||||
Reported (GAAP)
|
|
$
|
556.9
|
|
|
16.1
|
%
|
|
$
|
282.7
|
|
|
$
|
1.75
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|||||||
Restructuring related and other (a)
|
|
61.9
|
|
|
1.8
|
|
|
62.2
|
|
|
0.38
|
|
|||
Financing and other transaction costs (b)(c)
|
|
28.9
|
|
|
0.8
|
|
|
34.9
|
|
|
0.22
|
|
|||
Step-up depreciation and amortization (c)
|
|
139.6
|
|
|
4.0
|
|
|
139.6
|
|
|
0.86
|
|
|||
Deferred gain on derivative instruments (c)
|
|
(1.6
|
)
|
|
(0.0
|
)
|
|
(6.5
|
)
|
|
(0.04
|
)
|
|||
Amortization of debt issuance costs (c)
|
|
—
|
|
|
—
|
|
|
7.8
|
|
|
0.05
|
|
|||
Deferred taxes and other tax related (d)
|
|
—
|
|
|
—
|
|
|
55.2
|
|
|
0.34
|
|
|||
Total adjustments
|
|
228.8
|
|
|
6.6
|
|
|
293.2
|
|
|
1.81
|
|
|||
Adjusted (non-GAAP)
|
|
$
|
785.7
|
|
|
22.8
|
%
|
|
$
|
575.9
|
|
|
$
|
3.56
|
|
(a)
|
Refer to summary of restructuring related and other charges for each of the fiscal years 2019, 2018, and 2017 below.
|
(b)
|
Primarily included a $17.8 million loss related to the termination of a supply agreement in connection with the Metal Seal litigation and $6.1 million of deferred compensation incurred in connection with the acquisition of GIGAVAC, each of which were recorded in restructuring and other charges, net in the consolidated statements of operations. Also included a loss of $4.4 million associated with a debt financing transaction, recorded in other, net in the consolidated statement of operations.
|
(c)
|
There was no current tax effect related to the following categories of non-GAAP adjustments: financing and other transaction costs; deferred gain or loss on derivative instruments; and amortization of debt issuance costs. The current tax effect of step-up depreciation and amortization was not material, individually or in the aggregate.
|
(d)
|
A majority of this adjustment related to $27.6 million of deferred tax provision, $18.2 million of uncertain tax positions recorded in fiscal year 2019, and $9.4 million of current tax expense related to the repatriation of profits from certain
|
|
|
For the year ended December 31, 2018
|
|||||||||||||
(Dollars in millions, except per share amounts)
|
|
Operating Income
|
|
Operating Margin
|
|
Net Income
|
|
Diluted EPS
|
|||||||
Reported (GAAP)
|
|
$
|
710.4
|
|
|
20.2
|
%
|
|
$
|
599.0
|
|
|
$
|
3.53
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|||||||
Restructuring related and other (a)
|
|
25.4
|
|
|
0.7
|
|
|
28.0
|
|
|
0.17
|
|
|||
Financing and other transaction costs (b)(c)
|
|
(47.0
|
)
|
|
(1.3
|
)
|
|
(40.3
|
)
|
|
(0.24
|
)
|
|||
Step-up depreciation and amortization (c)
|
|
141.2
|
|
|
4.0
|
|
|
141.2
|
|
|
0.83
|
|
|||
Deferred loss on derivative instruments (c)
|
|
2.0
|
|
|
0.1
|
|
|
12.5
|
|
|
0.07
|
|
|||
Amortization of debt issuance costs (c)
|
|
—
|
|
|
—
|
|
|
7.3
|
|
|
0.04
|
|
|||
Deferred taxes and other tax related (d)
|
|
—
|
|
|
—
|
|
|
(128.3
|
)
|
|
(0.76
|
)
|
|||
Total adjustments
|
|
121.5
|
|
|
3.5
|
|
|
20.4
|
|
|
0.12
|
|
|||
Adjusted (non-GAAP)
|
|
$
|
832.0
|
|
|
23.6
|
%
|
|
$
|
619.4
|
|
|
$
|
3.65
|
|
(a)
|
Refer to summary of restructuring related and other charges for each of the fiscal years 2019, 2018, and 2017 below.
|
(b)
|
Primarily included a $64.4 million gain on the sale of the Valves Business, $5.9 million of transaction costs related to this sale, and $2.2 million of deferred compensation incurred in connection with the acquisition of GIGAVAC, all of which were recorded in restructuring and other charges, net in the consolidated statements of operations. Also included are: costs associated with debt financing transactions of $2.4 million, which were recorded in other, net in the consolidated statements of operations; costs to complete the Merger of $4.1 million, which were recorded in SG&A expense in the consolidated statements of operations; and costs associated with acquisition activity, including $2.5 million of transaction costs related to the acquisition of GIGAVAC in fiscal year 2018, which were recorded in SG&A expense in the consolidated statements of operations.
|
(c)
|
There was no current tax effect related to the following categories of non-GAAP adjustments: financing and other transaction costs; deferred gain or loss on derivative instruments; and amortization of debt issuance costs. The current tax effect of step-up depreciation and amortization was not material, individually or in the aggregate.
|
(d)
|
We recognized a deferred tax benefit of $144.1 million, which primarily included a $122.1 million deferred tax benefit related to the release of a portion of our U.S. valuation allowance as discussed in Note 7, "Income Taxes," of our Financial Statements. Also included in our fiscal year 2018 results is $10.0 million of current tax expense related to the repatriation of profits from certain subsidiaries in China to their parent companies, primarily in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure, and corresponding earnings volatility, related to the Chinese Renminbi as well as to fund our deployment of capital.
|
|
|
For the year ended December 31, 2017
|
|||||||||||||
(Dollars in millions, except per share amounts)
|
|
Operating Income
|
|
Operating Margin
|
|
Net Income
|
|
Diluted EPS
|
|||||||
Reported (GAAP)
|
|
$
|
555.8
|
|
|
16.8
|
%
|
|
$
|
408.4
|
|
|
$
|
2.37
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|||||||
Restructuring related and other (a)
|
|
21.3
|
|
|
0.6
|
|
|
21.3
|
|
|
0.12
|
|
|||
Financing and other transaction costs (b)(c)
|
|
6.6
|
|
|
0.2
|
|
|
9.3
|
|
|
0.05
|
|
|||
Step-up depreciation and amortization (c)
|
|
165.0
|
|
|
5.0
|
|
|
165.0
|
|
|
0.96
|
|
|||
Deferred loss/(gain) on derivative instruments (c)
|
|
2.6
|
|
|
0.1
|
|
|
(7.4
|
)
|
|
(0.04
|
)
|
|||
Amortization of debt issuance costs (c)
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|
0.04
|
|
|||
Deferred taxes and other tax related (d)
|
|
—
|
|
|
—
|
|
|
(55.2
|
)
|
|
(0.32
|
)
|
|||
Total adjustments
|
|
195.6
|
|
|
5.9
|
|
|
140.4
|
|
|
0.82
|
|
|||
Adjusted (non-GAAP)
|
|
$
|
751.4
|
|
|
22.7
|
%
|
|
$
|
548.7
|
|
|
$
|
3.19
|
|
(a)
|
Refer to summary of restructuring related and other charges for each of the fiscal years 2019, 2018, and 2017 below.
|
(b)
|
Primarily included $6.6 million of costs to complete the Merger and $2.7 million of costs associated with debt financing transactions.
|
(c)
|
There was no current tax effect related to the following categories of non-GAAP adjustments: financing and other transaction costs; deferred gain or loss on derivative instruments; and amortization of debt issuance costs. The current tax effect of step-up depreciation and amortization was not material, individually or in the aggregate.
|
(d)
|
Primarily included $73.7 million of income tax benefits related to the remeasurement of the deferred tax liabilities associated with indefinite-lived intangible assets due to the reduction of the U.S. corporate income tax rate from 35% to 21% as a part of the Tax Reform Act.
|
|
For the year ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Business and corporate repositioning (i)
|
$
|
40.1
|
|
|
$
|
8.8
|
|
|
$
|
3.9
|
|
Supply chain repositioning and transition (ii)
|
16.0
|
|
|
15.3
|
|
|
11.4
|
|
|||
Preacquisition legal matters (iii)
|
5.3
|
|
|
2.9
|
|
|
4.7
|
|
|||
Other
|
2.7
|
|
|
1.0
|
|
|
1.4
|
|
|||
Income tax effect (iv)
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|||
Total non-GAAP restructuring related and other (v)
|
$
|
62.2
|
|
|
$
|
28.0
|
|
|
$
|
21.3
|
|
i.
|
Fiscal year 2019 primarily includes approximately $12.7 million of benefits provided under a voluntary retirement incentive program, $10.2 million of costs associated with business and corporate workforce rationalization, and $9.5 million of costs (both termination and other costs) related to the shutdown and relocation of an operating site in Germany. Refer to Note 5, "Restructuring and Other Charges, Net," included in our Financial Statements for additional information about the voluntary retirement incentive program. Amounts presented in fiscal years 2018 and 2017 primarily represent costs related to business and corporate workforce rationalization.
|
ii.
|
Fiscal years 2019, 2018, and 2017 primarily include costs related to optimization of our manufacturing processes to increase productivity and rationalize our manufacturing footprint of $14.1 million, $14.0 million, and $10.0 million, respectively. The remaining amounts presented primarily represent costs related to supply chain workforce rationalization.
|
iii.
|
Represents charges incurred related to legal matters associated with an acquired business, for which new information is brought to light after the measurement period for the business combination is closed, but for which the liability relates to events or activities that occurred prior to our acquisition of the business. Fiscal year 2017 primarily includes $3.0 million of costs associated with the closing of our Schrader Brazil manufacturing facility.
|
iv.
|
We treat deferred taxes as a non-GAAP adjustment. Accordingly, the tax effect of the restructuring related and other non-GAAP adjustment refers only to the current tax effect. With respect to the years ended December 31, 2018 and 2017, the current tax effect was not material, individually or in the aggregate.
|
v.
|
Total presented is the non-GAAP adjustment to net income. Certain portions of these adjustments are non-operating and are excluded from the non-GAAP adjustments to operating income.
|
|
For the year ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by/(used in):
|
|
|
|
|
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income adjusted for non-cash items
|
$
|
630.3
|
|
|
$
|
687.5
|
|
|
$
|
652.5
|
|
Changes in operating assets and liabilities, net
|
(10.7
|
)
|
|
(66.9
|
)
|
|
(94.8
|
)
|
|||
Operating activities
|
619.6
|
|
|
620.6
|
|
|
557.6
|
|
|||
Investing activities
|
(208.8
|
)
|
|
(237.6
|
)
|
|
(140.7
|
)
|
|||
Financing activities
|
(366.5
|
)
|
|
(406.2
|
)
|
|
(15.3
|
)
|
|||
Net change
|
$
|
44.3
|
|
|
$
|
(23.3
|
)
|
|
$
|
401.7
|
|
(in millions)
|
Balance as of December 31, 2019
|
|
Interest Expense, net for the year ended December 31, 2019
|
||||
Term Loan
|
$
|
460.7
|
|
|
$
|
32.7
|
|
4.875% Senior Notes
|
500.0
|
|
|
24.4
|
|
||
5.625% Senior Notes
|
400.0
|
|
|
22.5
|
|
||
5.0% Senior Notes
|
700.0
|
|
|
35.0
|
|
||
6.25% Senior Notes
|
750.0
|
|
|
46.9
|
|
||
4.375% Senior Notes
|
450.0
|
|
|
5.5
|
|
||
Finance lease and other financing obligations
|
31.1
|
|
|
3.0
|
|
||
Total gross outstanding indebtedness
|
$
|
3,291.8
|
|
|
|
|
|
Other interest expense, net (1)
|
|
|
(11.4
|
)
|
|||
Interest expense, net
|
|
|
|
$
|
158.6
|
|
(1)
|
Other interest expense, net includes interest income, amortization of debt issuance costs, and interest costs capitalized in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 835-20, Capitalization of Interest.
|
|
Payments Due by Period
|
||||||||||||||||||
(In millions)
|
Total
|
|
Less than One Year
|
|
One to Three Years
|
|
Three to Five Years
|
|
More than
Five Years
|
||||||||||
Debt obligations principal(1)
|
$
|
3,260.7
|
|
|
$
|
4.6
|
|
|
$
|
9.3
|
|
|
$
|
909.3
|
|
|
$
|
2,337.6
|
|
Debt obligations interest(2)
|
1,040.7
|
|
|
164.7
|
|
|
328.4
|
|
|
304.8
|
|
|
242.8
|
|
|||||
Finance lease obligations principal(3)
|
30.6
|
|
|
2.0
|
|
|
3.0
|
|
|
3.3
|
|
|
22.4
|
|
|||||
Finance lease obligations interest(3)
|
21.7
|
|
|
2.6
|
|
|
4.8
|
|
|
4.3
|
|
|
10.1
|
|
|||||
Other financing obligations principal(4)
|
0.5
|
|
|
0.4
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|||||
Other financing obligations interest(4)
|
0.1
|
|
|
0.1
|
|
|
0.0
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations(5)
|
74.0
|
|
|
14.8
|
|
|
20.1
|
|
|
14.5
|
|
|
24.5
|
|
|||||
Non-cancelable purchase obligations(6)
|
61.5
|
|
|
26.6
|
|
|
29.4
|
|
|
5.2
|
|
|
0.3
|
|
|||||
Total contractual obligations(7)(8)
|
$
|
4,489.8
|
|
|
$
|
215.8
|
|
|
$
|
395.2
|
|
|
$
|
1,241.4
|
|
|
$
|
2,637.7
|
|
(1)
|
Represents the contractually required principal payments, in accordance with the required payment schedule, on our debt obligations in existence as of December 31, 2019.
|
(2)
|
Represents the contractually required interest payments, in accordance with the required payment schedule, on our debt obligations in existence as of December 31, 2019. Cash flows associated with the next interest payment to be made on our
|
(3)
|
Represents the contractually required payments, in accordance with the required payment schedule, under our finance lease obligations in existence as of December 31, 2019. No assumptions were made with respect to renewing these leases beyond their current terms.
|
(4)
|
Represents the contractually required payments, in accordance with the required payment schedule, under our financing obligations in existence as of December 31, 2019. No assumptions were made with respect to renewing these financing arrangements beyond their current terms.
|
(5)
|
Represents the contractually required payments, in accordance with the required payment schedule, under our operating lease obligations in existence as of December 31, 2019. No assumptions were made with respect to renewing these leases beyond their current terms.
|
(6)
|
Represents the contractually required payments under our various purchase obligations in existence as of December 31, 2019. No assumptions were made with respect to renewing the purchase obligations at the expiration date of their initial terms.
|
(7)
|
Contractual obligations denominated in a foreign currency were calculated utilizing the USD to local currency exchange rates in effect as of December 31, 2019.
|
(8)
|
This table does not include the contractual obligations associated with our pension and other post-retirement benefit plans. As of December 31, 2019, we had recognized a net benefit liability of $36.5 million, representing the net unfunded benefit obligations of the defined benefit and retiree healthcare plans. Refer to Note 13, "Pension and Other Post-Retirement Benefits," of our Financial Statements for additional information related to our pension and other post-retirement benefits, including expected benefit payments for the next 10 years. This table also does not include $26.0 million of unrecognized tax benefits as of December 31, 2019, as we are unable to make reasonably reliable estimates of when cash settlement, if any, will occur with a tax authority, as the timing and the ultimate resolution of the examination is uncertain. Refer to Note 7, "Income Taxes," of our Financial Statements for additional information related to our unrecognized tax benefits.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
|
|
(Decrease)/Increase to Future Pre-tax Earnings Due to:
|
||||||||
(In millions)
|
Net Asset/(Liability) Balance as of December 31, 2019
|
|
10% Strengthening of the Value of the Foreign Currency Relative to the United States ("U.S.") Dollar
|
|
10% Weakening of the Value of the Foreign Currency Relative to the U.S. Dollar
|
||||||
Euro
|
$
|
12.6
|
|
|
$
|
(41.2
|
)
|
|
$
|
41.2
|
|
Chinese Renminbi
|
$
|
(0.7
|
)
|
|
$
|
(10.7
|
)
|
|
$
|
10.7
|
|
Japanese Yen
|
$
|
0.0
|
|
|
$
|
0.5
|
|
|
$
|
(0.5
|
)
|
Korean Won
|
$
|
0.3
|
|
|
$
|
(2.1
|
)
|
|
$
|
2.1
|
|
Malaysian Ringgit
|
$
|
0.0
|
|
|
$
|
0.5
|
|
|
$
|
(0.5
|
)
|
Mexican Peso
|
$
|
8.5
|
|
|
$
|
15.5
|
|
|
$
|
(15.5
|
)
|
British Pound Sterling
|
$
|
0.8
|
|
|
$
|
6.7
|
|
|
$
|
(6.7
|
)
|
|
|
|
(Decrease)/Increase to Future Pre-tax Earnings Due to:
|
||||||||
(In millions)
|
Net Asset/(Liability) Balance as of December 31, 2018
|
|
10% Strengthening of the Value of the Foreign Currency Relative to the U.S. Dollar
|
|
10% Weakening of the Value of the Foreign Currency Relative to the U.S. Dollar
|
||||||
Euro
|
$
|
14.5
|
|
|
$
|
(45.1
|
)
|
|
$
|
45.1
|
|
Chinese Renminbi
|
$
|
(0.3
|
)
|
|
$
|
(4.1
|
)
|
|
$
|
4.1
|
|
Korean Won
|
$
|
0.3
|
|
|
$
|
(2.8
|
)
|
|
$
|
2.8
|
|
Malaysian Ringgit
|
$
|
0.1
|
|
|
$
|
0.6
|
|
|
$
|
(0.6
|
)
|
Mexican Peso
|
$
|
0.7
|
|
|
$
|
14.2
|
|
|
$
|
(14.2
|
)
|
British Pound Sterling
|
$
|
(2.6
|
)
|
|
$
|
6.2
|
|
|
$
|
(6.2
|
)
|
|
Net Asset/(Liability) Balance as of
December 31, 2019
|
|
Average Forward Price Per Unit as of December 31, 2019
|
|
Increase/(Decrease) to Pre-tax Earnings Due to
|
||||||||||
(In millions, except per unit amounts)
|
|
|
10% Increase
in the Forward Price
|
|
10% Decrease
in the Forward Price
|
||||||||||
Silver
|
$
|
1.2
|
|
|
$
|
18.15
|
|
|
$
|
1.6
|
|
|
$
|
(1.6
|
)
|
Gold
|
$
|
1.1
|
|
|
$
|
1,539.13
|
|
|
$
|
1.2
|
|
|
$
|
(1.2
|
)
|
Nickel
|
$
|
0.0
|
|
|
$
|
6.41
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
Aluminum
|
$
|
(0.2
|
)
|
|
$
|
0.84
|
|
|
$
|
0.3
|
|
|
$
|
(0.3
|
)
|
Copper
|
$
|
(0.0
|
)
|
|
$
|
2.81
|
|
|
$
|
0.7
|
|
|
$
|
(0.7
|
)
|
Platinum
|
$
|
0.6
|
|
|
$
|
986.68
|
|
|
$
|
0.7
|
|
|
$
|
(0.7
|
)
|
Palladium
|
$
|
0.4
|
|
|
$
|
1,873.95
|
|
|
$
|
0.2
|
|
|
$
|
(0.2
|
)
|
|
Net (Liability)/Asset Balance as of
December 31, 2018
|
|
Average Forward Price Per Unit as of December 31, 2018
|
|
Increase/(Decrease) to Pre-tax Earnings Due to
|
||||||||||
(In millions, except per unit amounts)
|
|
|
10% Increase
in the Forward Price
|
|
10% Decrease
in the Forward Price
|
||||||||||
Silver
|
$
|
(0.8
|
)
|
|
$
|
15.72
|
|
|
$
|
1.7
|
|
|
$
|
(1.7
|
)
|
Gold
|
$
|
(0.0
|
)
|
|
$
|
1,303.51
|
|
|
$
|
1.3
|
|
|
$
|
(1.3
|
)
|
Nickel
|
$
|
(0.2
|
)
|
|
$
|
4.93
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
Aluminum
|
$
|
(0.3
|
)
|
|
$
|
0.86
|
|
|
$
|
0.2
|
|
|
$
|
(0.2
|
)
|
Copper
|
$
|
(1.3
|
)
|
|
$
|
2.71
|
|
|
$
|
0.8
|
|
|
$
|
(0.8
|
)
|
Platinum
|
$
|
(0.9
|
)
|
|
$
|
805.38
|
|
|
$
|
0.7
|
|
|
$
|
(0.7
|
)
|
Palladium
|
$
|
0.2
|
|
|
$
|
1,175.96
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
1.
|
Financial Statements
|
2.
|
Financial Statement Schedules
|
Valuation of goodwill
|
|
Description of the Matter
|
As of December 31, 2019, the Company’s goodwill balance was $3.1 billion. The Company’s goodwill is initially assigned to its reporting units as of the acquisition date. As discussed in Note 2 of the consolidated financial statements, goodwill is tested for impairment at the reporting unit level. The Company evaluated goodwill for impairment as of October 1, 2019. A quantitative goodwill impairment assessment was completed for all reporting units.
|
|
|
/s/ Ernst & Young LLP
|
|
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
774,119
|
|
|
$
|
729,833
|
|
Accounts receivable, net of allowances of $15,129 and $13,762 as of December 31, 2019 and 2018, respectively
|
557,874
|
|
|
581,769
|
|
||
Inventories
|
506,678
|
|
|
492,319
|
|
||
Prepaid expenses and other current assets
|
126,981
|
|
|
113,234
|
|
||
Total current assets
|
1,965,652
|
|
|
1,917,155
|
|
||
Property, plant and equipment, net
|
830,998
|
|
|
787,178
|
|
||
Goodwill
|
3,093,598
|
|
|
3,081,302
|
|
||
Other intangible assets, net
|
770,904
|
|
|
897,191
|
|
||
Deferred income tax assets
|
21,150
|
|
|
27,971
|
|
||
Other assets
|
152,217
|
|
|
86,890
|
|
||
Total assets
|
$
|
6,834,519
|
|
|
$
|
6,797,687
|
|
Liabilities and shareholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt, finance lease and other financing obligations
|
$
|
6,918
|
|
|
$
|
14,561
|
|
Accounts payable
|
376,968
|
|
|
379,824
|
|
||
Income taxes payable
|
35,234
|
|
|
27,429
|
|
||
Accrued expenses and other current liabilities
|
215,626
|
|
|
218,130
|
|
||
Total current liabilities
|
634,746
|
|
|
639,944
|
|
||
Deferred income tax liabilities
|
251,033
|
|
|
225,694
|
|
||
Pension and other post-retirement benefit obligations
|
36,100
|
|
|
33,958
|
|
||
Finance lease and other financing obligations, less current portion
|
28,810
|
|
|
30,618
|
|
||
Long-term debt, net
|
3,219,885
|
|
|
3,219,762
|
|
||
Other long-term liabilities
|
90,190
|
|
|
39,277
|
|
||
Total liabilities
|
4,260,764
|
|
|
4,189,253
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized and 172,561 and 171,719 shares issued as of December 31, 2019 and 2018, respectively
|
2,212
|
|
|
2,203
|
|
||
Treasury shares, at cost, 14,733 and 7,571 shares as of December 31, 2019 and 2018, respectively
|
(749,421
|
)
|
|
(399,417
|
)
|
||
Additional paid-in capital
|
1,725,091
|
|
|
1,691,190
|
|
||
Retained earnings
|
1,616,357
|
|
|
1,340,636
|
|
||
Accumulated other comprehensive loss
|
(20,484
|
)
|
|
(26,178
|
)
|
||
Total shareholders’ equity
|
2,573,755
|
|
|
2,608,434
|
|
||
Total liabilities and shareholders’ equity
|
$
|
6,834,519
|
|
|
$
|
6,797,687
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net revenue
|
$
|
3,450,631
|
|
|
$
|
3,521,627
|
|
|
$
|
3,306,733
|
|
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of revenue
|
2,267,433
|
|
|
2,266,863
|
|
|
2,138,898
|
|
|||
Research and development
|
148,425
|
|
|
147,279
|
|
|
130,127
|
|
|||
Selling, general and administrative
|
281,442
|
|
|
305,558
|
|
|
301,896
|
|
|||
Amortization of intangible assets
|
142,886
|
|
|
139,326
|
|
|
161,050
|
|
|||
Restructuring and other charges, net
|
53,560
|
|
|
(47,818
|
)
|
|
18,975
|
|
|||
Total operating costs and expenses
|
2,893,746
|
|
|
2,811,208
|
|
|
2,750,946
|
|
|||
Operating income
|
556,885
|
|
|
710,419
|
|
|
555,787
|
|
|||
Interest expense, net
|
(158,554
|
)
|
|
(153,679
|
)
|
|
(159,761
|
)
|
|||
Other, net
|
(7,908
|
)
|
|
(30,365
|
)
|
|
6,415
|
|
|||
Income before taxes
|
390,423
|
|
|
526,375
|
|
|
402,441
|
|
|||
Provision for/(benefit from) income taxes
|
107,709
|
|
|
(72,620
|
)
|
|
(5,916
|
)
|
|||
Net income
|
$
|
282,714
|
|
|
$
|
598,995
|
|
|
$
|
408,357
|
|
Basic net income per share
|
$
|
1.76
|
|
|
$
|
3.55
|
|
|
$
|
2.39
|
|
Diluted net income per share
|
$
|
1.75
|
|
|
$
|
3.53
|
|
|
$
|
2.37
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
282,714
|
|
|
$
|
598,995
|
|
|
$
|
408,357
|
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
|
|
||||||
Cash flow hedges
|
7,362
|
|
|
37,363
|
|
|
(28,202
|
)
|
|||
Defined benefit and retiree healthcare plans
|
(1,668
|
)
|
|
(377
|
)
|
|
(895
|
)
|
|||
Other comprehensive income/(loss)
|
5,694
|
|
|
36,986
|
|
|
(29,097
|
)
|
|||
Comprehensive income
|
$
|
288,408
|
|
|
$
|
635,981
|
|
|
$
|
379,260
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
282,714
|
|
|
$
|
598,995
|
|
|
$
|
408,357
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
115,862
|
|
|
106,014
|
|
|
109,321
|
|
|||
Amortization of debt issuance costs
|
7,804
|
|
|
7,317
|
|
|
7,241
|
|
|||
Gain on sale of business
|
—
|
|
|
(64,423
|
)
|
|
—
|
|
|||
Share-based compensation
|
18,757
|
|
|
23,825
|
|
|
19,819
|
|
|||
Loss on debt financing
|
4,364
|
|
|
2,350
|
|
|
2,670
|
|
|||
Amortization of intangible assets
|
142,886
|
|
|
139,326
|
|
|
161,050
|
|
|||
Deferred income taxes
|
27,623
|
|
|
(144,068
|
)
|
|
(56,757
|
)
|
|||
Unrealized loss on derivative instruments and other
|
30,292
|
|
|
18,176
|
|
|
781
|
|
|||
Changes in operating assets and liabilities, net of the effects of acquisitions and divestitures:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
26,605
|
|
|
(34,877
|
)
|
|
(56,330
|
)
|
|||
Inventories
|
(10,924
|
)
|
|
(55,445
|
)
|
|
(57,119
|
)
|
|||
Prepaid expenses and other current assets
|
10,073
|
|
|
(11,891
|
)
|
|
(12,412
|
)
|
|||
Accounts payable and accrued expenses
|
(34,563
|
)
|
|
48,371
|
|
|
23,841
|
|
|||
Income taxes payable
|
2,308
|
|
|
(353
|
)
|
|
7,655
|
|
|||
Other
|
(4,239
|
)
|
|
(12,754
|
)
|
|
(471
|
)
|
|||
Net cash provided by operating activities
|
619,562
|
|
|
620,563
|
|
|
557,646
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisitions, net of cash received
|
(32,465
|
)
|
|
(228,307
|
)
|
|
—
|
|
|||
Additions to property, plant and equipment and capitalized software
|
(161,259
|
)
|
|
(159,787
|
)
|
|
(144,584
|
)
|
|||
Investment in debt and equity securities
|
(9,950
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of business, net of cash sold
|
—
|
|
|
149,777
|
|
|
—
|
|
|||
Other
|
(5,103
|
)
|
|
711
|
|
|
3,862
|
|
|||
Net cash used in investing activities
|
(208,777
|
)
|
|
(237,606
|
)
|
|
(140,722
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from exercise of stock options and issuance of ordinary shares
|
15,150
|
|
|
6,093
|
|
|
7,450
|
|
|||
Payment of employee restricted stock tax withholdings
|
(6,990
|
)
|
|
(3,674
|
)
|
|
(2,910
|
)
|
|||
Proceeds from issuance of debt
|
450,000
|
|
|
—
|
|
|
927,794
|
|
|||
Payments on debt
|
(464,605
|
)
|
|
(15,653
|
)
|
|
(943,554
|
)
|
|||
Payments to repurchase ordinary shares
|
(350,004
|
)
|
|
(399,417
|
)
|
|
—
|
|
|||
Payments of debt and equity issuance costs
|
(10,050
|
)
|
|
(9,931
|
)
|
|
(4,043
|
)
|
|||
Other
|
—
|
|
|
16,369
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(366,499
|
)
|
|
(406,213
|
)
|
|
(15,263
|
)
|
|||
Net change in cash and cash equivalents
|
44,286
|
|
|
(23,256
|
)
|
|
401,661
|
|
|||
Cash and cash equivalents, beginning of year
|
729,833
|
|
|
753,089
|
|
|
351,428
|
|
|||
Cash and cash equivalents, end of year
|
$
|
774,119
|
|
|
$
|
729,833
|
|
|
$
|
753,089
|
|
Supplemental cash flow items:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
169,543
|
|
|
$
|
163,478
|
|
|
$
|
164,370
|
|
Cash paid for income taxes
|
$
|
61,031
|
|
|
$
|
72,924
|
|
|
$
|
48,482
|
|
|
Ordinary Shares
|
|
Treasury Shares
|
|
Additional
Paid-In Capital |
|
Retained Earnings
|
|
Accumulated
Other Comprehensive Loss |
|
Total
Shareholders’ Equity |
||||||||||||||||||
|
Number
|
|
Amount
|
|
Number
|
|
Amount
|
|
|||||||||||||||||||||
Balance as of December 31, 2016
|
178,437
|
|
|
$
|
2,289
|
|
|
(7,557
|
)
|
|
$
|
(306,505
|
)
|
|
$
|
1,643,449
|
|
|
$
|
636,841
|
|
|
$
|
(34,067
|
)
|
|
$
|
1,942,007
|
|
Surrender of shares for tax withholding
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
(2,910
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,910
|
)
|
||||||
Stock options exercised
|
—
|
|
|
—
|
|
|
326
|
|
|
12,465
|
|
|
99
|
|
|
(5,114
|
)
|
|
—
|
|
|
7,450
|
|
||||||
Vesting of restricted securities
|
—
|
|
|
—
|
|
|
222
|
|
|
8,472
|
|
|
—
|
|
|
(8,472
|
)
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,819
|
|
|
—
|
|
|
—
|
|
|
19,819
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
408,357
|
|
|
—
|
|
|
408,357
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,097
|
)
|
|
(29,097
|
)
|
||||||
Balance as of December 31, 2017
|
178,437
|
|
|
2,289
|
|
|
(7,076
|
)
|
|
(288,478
|
)
|
|
1,663,367
|
|
|
1,031,612
|
|
|
(63,164
|
)
|
|
2,345,626
|
|
||||||
Surrender of shares for tax withholding
|
—
|
|
|
—
|
|
|
(71
|
)
|
|
(3,674
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,674
|
)
|
||||||
Stock options exercised
|
114
|
|
|
1
|
|
|
58
|
|
|
2,250
|
|
|
3,998
|
|
|
(156
|
)
|
|
—
|
|
|
6,093
|
|
||||||
Vesting of restricted securities
|
257
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
||||||
Retirement of ordinary shares due to Merger
|
(7,018
|
)
|
|
(89
|
)
|
|
7,018
|
|
|
286,228
|
|
|
—
|
|
|
(286,139
|
)
|
|
—
|
|
|
—
|
|
||||||
Repurchase of ordinary shares
|
—
|
|
|
—
|
|
|
(7,571
|
)
|
|
(399,417
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(399,417
|
)
|
||||||
Other retirements of ordinary shares
|
(71
|
)
|
|
(1
|
)
|
|
71
|
|
|
3,674
|
|
|
—
|
|
|
(3,673
|
)
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,825
|
|
|
—
|
|
|
—
|
|
|
23,825
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
598,995
|
|
|
—
|
|
|
598,995
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,986
|
|
|
36,986
|
|
||||||
Balance as of December 31, 2018
|
171,719
|
|
|
2,203
|
|
|
(7,571
|
)
|
|
(399,417
|
)
|
|
1,691,190
|
|
|
1,340,636
|
|
|
(26,178
|
)
|
|
2,608,434
|
|
||||||
Surrender of shares for tax withholding
|
—
|
|
|
—
|
|
|
(149
|
)
|
|
(6,990
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,990
|
)
|
||||||
Stock options exercised
|
537
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
15,144
|
|
|
—
|
|
|
—
|
|
|
15,150
|
|
||||||
Vesting of restricted securities
|
454
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||||
Repurchase of ordinary shares
|
—
|
|
|
—
|
|
|
(7,162
|
)
|
|
(350,004
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(350,004
|
)
|
||||||
Retirement of ordinary shares
|
(149
|
)
|
|
(2
|
)
|
|
149
|
|
|
6,990
|
|
|
—
|
|
|
(6,988
|
)
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,757
|
|
|
—
|
|
|
—
|
|
|
18,757
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
282,714
|
|
|
—
|
|
|
282,714
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,694
|
|
|
5,694
|
|
||||||
Balance as of December 31, 2019
|
172,561
|
|
|
$
|
2,212
|
|
|
(14,733
|
)
|
|
$
|
(749,421
|
)
|
|
$
|
1,725,091
|
|
|
$
|
1,616,357
|
|
|
$
|
(20,484
|
)
|
|
$
|
2,573,755
|
|
•
|
The fair value of the underlying ordinary shares. This is determined as the closing price of our ordinary shares on the New York Stock Exchange (the "NYSE") on the grant date.
|
•
|
The expected term. This is determined based upon our own historical average term of exercised and outstanding options.
|
•
|
Expected volatility. We consider our own historical volatility, as well as our implied volatility, in estimating expected volatility for stock options. Implied volatility provides a forward-looking indication and may offer insight into expected volatility.
|
•
|
Risk-free interest rate. The risk-free interest rate is based on the yield for a U.S. Treasury security having a maturity similar to the expected term of the related option grant.
|
•
|
Expected dividend yield. The dividend yield of 0% is based on our history of having never declared or paid any dividends on our ordinary shares, and our current intention of not declaring any such dividends in the foreseeable future.
|
Buildings and improvements
|
2 – 40 years
|
Machinery and equipment
|
2 – 15 years
|
|
Performance Sensing
|
|
Sensing Solutions
|
|
Total
|
||||||||||||||||||||||||||||||
|
For the year ended December 31,
|
|
For the year ended December 31,
|
|
For the year ended December 31,
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Automotive
|
$
|
1,986,537
|
|
|
$
|
2,076,834
|
|
|
$
|
1,989,152
|
|
|
$
|
42,446
|
|
|
$
|
49,961
|
|
|
$
|
50,463
|
|
|
$
|
2,028,983
|
|
|
$
|
2,126,795
|
|
|
$
|
2,039,615
|
|
HVOR (1)
|
559,479
|
|
|
550,817
|
|
|
471,448
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
559,479
|
|
|
550,817
|
|
|
471,448
|
|
|||||||||
Industrial
|
—
|
|
|
—
|
|
|
—
|
|
|
351,942
|
|
|
336,617
|
|
|
312,137
|
|
|
351,942
|
|
|
336,617
|
|
|
312,137
|
|
|||||||||
Appliance and HVAC (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
201,745
|
|
|
208,482
|
|
|
209,958
|
|
|
201,745
|
|
|
208,482
|
|
|
209,958
|
|
|||||||||
Aerospace
|
—
|
|
|
—
|
|
|
—
|
|
|
176,505
|
|
|
164,294
|
|
|
150,782
|
|
|
176,505
|
|
|
164,294
|
|
|
150,782
|
|
|||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
131,977
|
|
|
134,622
|
|
|
122,793
|
|
|
131,977
|
|
|
134,622
|
|
|
122,793
|
|
|||||||||
Net revenue
|
$
|
2,546,016
|
|
|
$
|
2,627,651
|
|
|
$
|
2,460,600
|
|
|
$
|
904,615
|
|
|
$
|
893,976
|
|
|
$
|
846,133
|
|
|
$
|
3,450,631
|
|
|
$
|
3,521,627
|
|
|
$
|
3,306,733
|
|
(1)
|
Heavy vehicle and off-road
|
(2)
|
Heating, ventilation and air conditioning
|
|
Number of Options (thousands)
|
|
Weighted-Average
Exercise Price Per Option
|
|
Weighted-Average
Remaining
Contractual Term
(years)
|
|
Aggregate
Intrinsic Value
|
|||||
Balance as of December 31, 2016
|
3,546
|
|
|
$
|
35.67
|
|
|
6.3
|
|
$
|
19,844
|
|
Granted
|
387
|
|
|
$
|
43.67
|
|
|
|
|
|
||
Forfeited or expired
|
(1
|
)
|
|
$
|
32.03
|
|
|
|
|
|
||
Exercised
|
(326
|
)
|
|
$
|
22.86
|
|
|
|
|
$
|
7,175
|
|
Balance as of December 31, 2017
|
3,606
|
|
|
$
|
37.69
|
|
|
6.0
|
|
$
|
50,130
|
|
Granted
|
307
|
|
|
$
|
51.83
|
|
|
|
|
|
||
Forfeited or expired
|
(39
|
)
|
|
$
|
45.59
|
|
|
|
|
|
||
Exercised
|
(172
|
)
|
|
$
|
35.31
|
|
|
|
|
$
|
3,143
|
|
Balance as of December 31, 2018
|
3,702
|
|
|
$
|
38.89
|
|
|
5.3
|
|
$
|
27,846
|
|
Granted
|
382
|
|
|
$
|
46.92
|
|
|
|
|
|
||
Forfeited or expired
|
(83
|
)
|
|
$
|
48.92
|
|
|
|
|
|
||
Exercised
|
(537
|
)
|
|
$
|
28.21
|
|
|
|
|
$
|
11,690
|
|
Balance as of December 31, 2019
|
3,464
|
|
|
$
|
41.19
|
|
|
5.0
|
|
$
|
44,696
|
|
Options vested and exercisable as of December 31, 2019
|
2,646
|
|
|
$
|
39.49
|
|
|
4.0
|
|
$
|
38,811
|
|
Vested and expected to vest as of December 31, 2019
|
3,385
|
|
|
$
|
41.05
|
|
|
4.9
|
|
$
|
44,145
|
|
|
Number of Options (thousands)
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Balance as of December 31, 2018
|
1,077
|
|
|
$
|
13.98
|
|
Granted during the year
|
382
|
|
|
$
|
13.90
|
|
Vested during the year
|
(579
|
)
|
|
$
|
13.41
|
|
Forfeited during the year
|
(62
|
)
|
|
$
|
14.39
|
|
Balance as of December 31, 2019
|
818
|
|
|
$
|
14.33
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Expected dividend yield
|
0.00
|
%
|
|
0.00
|
%
|
|
0.00
|
%
|
|||
Expected volatility
|
25.00
|
%
|
|
25.00
|
%
|
|
30.00
|
%
|
|||
Risk-free interest rate
|
2.35
|
%
|
|
2.62
|
%
|
|
2.08
|
%
|
|||
Expected term (years)
|
6.0
|
|
|
6.0
|
|
|
6.0
|
|
|||
Fair value per share of underlying ordinary shares
|
$
|
46.92
|
|
|
$
|
51.83
|
|
|
$
|
43.67
|
|
|
|
|
|
|
Percentage Range of Units That May Vest (1)
|
||||||||||||||||||||||
|
|
|
|
|
0.0% to 150.0%
|
|
0.0% to 172.5%
|
|
0.0% to 200.0%
|
||||||||||||||||||
(Awards in thousands)
|
RSU Awards Granted
|
|
Weighted-Average
Grant-Date Fair Value |
|
PRSU Awards Granted
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
PRSU Awards Granted
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
PRSU Awards Granted
|
|
Weighted-Average
Grant-Date
Fair Value
|
||||||||||||
2019
|
298
|
|
|
$
|
47.73
|
|
|
76
|
|
|
$
|
46.92
|
|
|
138
|
|
|
$
|
46.92
|
|
|
—
|
|
|
$
|
—
|
|
2018
|
218
|
|
|
$
|
51.05
|
|
|
63
|
|
|
$
|
51.83
|
|
|
118
|
|
|
$
|
51.83
|
|
|
—
|
|
|
$
|
—
|
|
2017
|
182
|
|
|
$
|
43.24
|
|
|
—
|
|
|
$
|
—
|
|
|
183
|
|
|
$
|
43.67
|
|
|
53
|
|
|
$
|
43.33
|
|
(1)
|
Represents the percentage range of PRSU award units granted that may vest according to the terms of the awards. The amounts presented within this table do not reflect our current assessment of the probable outcome of vesting based on the achievement or expected achievement of performance conditions.
|
|
Restricted Securities (thousands)
|
|
Weighted-Average
Grant-Date
Fair Value
|
|||
Balance as of December 31, 2016
|
920
|
|
|
$
|
44.35
|
|
Granted
|
418
|
|
|
$
|
43.44
|
|
Forfeited
|
(35
|
)
|
|
$
|
43.94
|
|
Vested
|
(222
|
)
|
|
$
|
42.24
|
|
Balance as of December 31, 2017
|
1,081
|
|
|
$
|
44.43
|
|
Granted
|
399
|
|
|
$
|
51.40
|
|
Forfeited
|
(121
|
)
|
|
$
|
48.28
|
|
Vested
|
(240
|
)
|
|
$
|
53.01
|
|
Balance as of December 31, 2018
|
1,119
|
|
|
$
|
44.66
|
|
Granted (1)
|
555
|
|
|
$
|
46.73
|
|
Forfeited
|
(115
|
)
|
|
$
|
47.07
|
|
Vested
|
(454
|
)
|
|
$
|
39.62
|
|
Balance as of December 31, 2019
|
1,105
|
|
|
$
|
47.51
|
|
(1)
|
Includes 43 thousand PRSU awards granted due to greater than 100% vesting.
|
|
As of December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Outstanding
|
$
|
59,526
|
|
|
$
|
50,161
|
|
|
$
|
55,271
|
|
Expected to vest
|
$
|
34,717
|
|
|
$
|
44,203
|
|
|
$
|
42,106
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Stock options
|
$
|
6,552
|
|
|
$
|
5,739
|
|
|
$
|
6,046
|
|
Restricted securities
|
12,205
|
|
|
18,086
|
|
|
13,773
|
|
|||
Share-based compensation expense
|
$
|
18,757
|
|
|
$
|
23,825
|
|
|
$
|
19,819
|
|
|
Unrecognized
Compensation Expense
|
|
Expected
Recognition (years)
|
||
Options
|
$
|
8,419
|
|
|
1.8
|
Restricted securities
|
14,789
|
|
|
1.5
|
|
Total unrecognized compensation expense
|
$
|
23,208
|
|
|
|
|
|
For the year ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Severance costs, net (1)
|
|
$
|
29,240
|
|
|
$
|
7,566
|
|
|
$
|
11,125
|
|
Facility and other exit costs (2)
|
|
808
|
|
|
877
|
|
|
7,850
|
|
|||
Gain on sale of Valves Business (3)(5)
|
|
—
|
|
|
(64,423
|
)
|
|
—
|
|
|||
Other (4)(5)
|
|
23,512
|
|
|
8,162
|
|
|
—
|
|
|||
Restructuring and other charges, net
|
|
$
|
53,560
|
|
|
$
|
(47,818
|
)
|
|
$
|
18,975
|
|
(1)
|
Severance costs, net for the year ended December 31, 2019 included termination benefits provided in connection with workforce reductions of manufacturing, engineering, and administrative positions including the elimination of certain positions related to site consolidations, approximately $12.7 million of benefits provided under a voluntary retirement incentive program offered to a limited number of eligible employees in the U.S, and $6.5 million of termination benefits provided under a one-time benefit arrangement related to the shutdown and relocation of an operating site in Germany. Severance costs, net for the year ended December 31, 2018 were primarily related to termination benefits provided in connection with limited workforce reductions of manufacturing, engineering, and administrative positions including the elimination of certain positions related to site consolidations. Severance costs, net recognized during the year ended December 31, 2017 included $8.4 million of charges related to the closure of our facility in Minden, Germany, a site we obtained in connection with the acquisition of certain subsidiaries of Custom Sensors & Technologies Ltd. ("CST").
|
(2)
|
Facility and other exit costs for the year ended December 31, 2017 included $3.2 million of costs related to the closure of our facility in Minden, Germany and $3.1 million of costs associated with the consolidation of two other manufacturing sites in Europe.
|
(3)
|
In the year ended December 31, 2018, we completed the sale of the capital stock of Schrader Bridgeport International, Inc. and August France Holding Company SAS (collectively, the "Valves Business").
|
(4)
|
In the year ended December 31, 2019, these amounts included a $17.8 million loss related to the termination of a supply agreement in connection with the Metal Seal Precision, Ltd. ("Metal Seal") litigation and $6.1 million of expense related to the deferred compensation arrangement that we entered into in connection with the acquisition of GIGAVAC, LLC ("GIGAVAC"). Refer to Note 15, "Commitments and Contingencies," for additional information related to the supply agreement termination and litigation with Metal Seal. In the year ended December 31, 2018, we incurred $5.9 million of incremental direct costs in order to transact the sale of the Valves Business and $2.2 million of expense related to the deferred compensation arrangement that we entered into connection with the acquisition of GIGAVAC.
|
(5)
|
Refer to Note 17, "Acquisitions and Divestitures," for additional information related to the acquisition of GIGAVAC and the divestiture of the Valves Business.
|
|
|
Severance
|
||
Balance as of December 31, 2017
|
|
$
|
7,583
|
|
Charges, net of reversals
|
|
7,566
|
|
|
Payments
|
|
(8,341
|
)
|
|
Foreign currency remeasurement
|
|
(217
|
)
|
|
Balance as of December 31, 2018
|
|
6,591
|
|
|
Charges, net of reversals
|
|
29,240
|
|
|
Payments
|
|
(21,095
|
)
|
|
Foreign currency remeasurement
|
|
43
|
|
|
Balance as of December 31, 2019
|
|
$
|
14,779
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Currency remeasurement (loss)/gain on net monetary assets(1)
|
$
|
(6,802
|
)
|
|
$
|
(18,905
|
)
|
|
$
|
18,041
|
|
Gain/(loss) on foreign currency forward contracts(2)
|
2,225
|
|
|
2,070
|
|
|
(15,618
|
)
|
|||
Gain/(loss) on commodity forward contracts(2)
|
4,888
|
|
|
(8,481
|
)
|
|
9,989
|
|
|||
Loss on debt financing(3)
|
(4,364
|
)
|
|
(2,350
|
)
|
|
(2,670
|
)
|
|||
Net periodic benefit cost, excluding service cost
|
(3,186
|
)
|
|
(3,585
|
)
|
|
(3,402
|
)
|
|||
Other
|
(669
|
)
|
|
886
|
|
|
75
|
|
|||
Other, net
|
$
|
(7,908
|
)
|
|
$
|
(30,365
|
)
|
|
$
|
6,415
|
|
(1)
|
Relates to the remeasurement of non-USD denominated net monetary assets and liabilities into USD. Refer to the Foreign Currency section of Note 2, "Significant Accounting Policies," for additional information.
|
(2)
|
Relates to changes in the fair value of derivative financial instruments not designated as cash flow hedges. Refer to Note 19, "Derivative Instruments and Hedging Activities," for additional information related to gains and losses on our commodity and foreign currency exchange forward contracts.
|
(3)
|
Refer to Note 14, "Debt," for additional information related to our debt financing transactions.
|
|
U.S.
|
|
Non-U.S.
|
|
Total
|
||||||
2019
|
$
|
13,183
|
|
|
$
|
377,240
|
|
|
$
|
390,423
|
|
2018
|
$
|
68,027
|
|
|
$
|
458,348
|
|
|
$
|
526,375
|
|
2017
|
$
|
(11,425
|
)
|
|
$
|
413,866
|
|
|
$
|
402,441
|
|
|
U.S. Federal
|
|
Non-U.S.
|
|
U.S. State
|
|
Total
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Current
|
$
|
5,643
|
|
|
$
|
73,947
|
|
|
$
|
496
|
|
|
$
|
80,086
|
|
Deferred
|
9,687
|
|
|
17,339
|
|
|
597
|
|
|
27,623
|
|
||||
Total
|
$
|
15,330
|
|
|
$
|
91,286
|
|
|
$
|
1,093
|
|
|
$
|
107,709
|
|
2018
|
|
|
|
|
|
|
|
||||||||
Current
|
$
|
5,700
|
|
|
$
|
64,666
|
|
|
$
|
1,082
|
|
|
$
|
71,448
|
|
Deferred
|
(109,663
|
)
|
|
(18,770
|
)
|
|
(15,635
|
)
|
|
(144,068
|
)
|
||||
Total
|
$
|
(103,963
|
)
|
|
$
|
45,896
|
|
|
$
|
(14,553
|
)
|
|
$
|
(72,620
|
)
|
2017
|
|
|
|
|
|
|
|
||||||||
Current
|
$
|
—
|
|
|
$
|
50,601
|
|
|
$
|
240
|
|
|
$
|
50,841
|
|
Deferred
|
(56,956
|
)
|
|
(1,104
|
)
|
|
1,303
|
|
|
(56,757
|
)
|
||||
Total
|
$
|
(56,956
|
)
|
|
$
|
49,497
|
|
|
$
|
1,543
|
|
|
$
|
(5,916
|
)
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Tax computed at statutory rate of 21% in 2019 and 2018, and 35% in 2017
|
$
|
81,989
|
|
|
$
|
110,539
|
|
|
$
|
140,854
|
|
Reserve for tax exposure
|
20,079
|
|
|
10,775
|
|
|
38,013
|
|
|||
Valuation allowances
|
19,640
|
|
|
(123,426
|
)
|
|
(3,368
|
)
|
|||
Foreign tax rate differential
|
(19,107
|
)
|
|
(41,200
|
)
|
|
(111,990
|
)
|
|||
Withholding taxes not creditable
|
9,509
|
|
|
8,734
|
|
|
3,896
|
|
|||
Research and development incentives
|
(8,410
|
)
|
|
(19,475
|
)
|
|
(5,922
|
)
|
|||
Change in tax laws or rates
|
5,121
|
|
|
(22,264
|
)
|
|
3,912
|
|
|||
U.S. state taxes, net of federal benefit
|
863
|
|
|
(11,499
|
)
|
|
1,087
|
|
|||
Unrealized foreign currency exchange losses, net
|
(43
|
)
|
|
11,346
|
|
|
830
|
|
|||
U.S. Tax Reform Act impact
|
—
|
|
|
—
|
|
|
(73,668
|
)
|
|||
Other
|
(1,932
|
)
|
|
3,850
|
|
|
440
|
|
|||
Provision for/(benefit from) income taxes
|
$
|
107,709
|
|
|
$
|
(72,620
|
)
|
|
$
|
(5,916
|
)
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss, interest expense, and other carryforwards
|
$
|
283,094
|
|
|
$
|
305,277
|
|
Prepaid and accrued expenses
|
67,143
|
|
|
72,093
|
|
||
Intangible assets
|
20,457
|
|
|
27,122
|
|
||
Inventories and related reserves
|
16,712
|
|
|
14,171
|
|
||
Property, plant and equipment
|
14,749
|
|
|
14,571
|
|
||
Share-based compensation
|
10,288
|
|
|
11,332
|
|
||
Pension liability and other
|
7,158
|
|
|
8,741
|
|
||
Unrealized exchange loss
|
1,959
|
|
|
4,255
|
|
||
Total deferred tax assets
|
421,560
|
|
|
457,562
|
|
||
Valuation allowance
|
(146,775
|
)
|
|
(157,043
|
)
|
||
Net deferred tax asset
|
274,785
|
|
|
300,519
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets and goodwill
|
(440,009
|
)
|
|
(440,348
|
)
|
||
Tax on undistributed earnings of subsidiaries
|
(31,636
|
)
|
|
(35,187
|
)
|
||
Property, plant and equipment
|
(13,762
|
)
|
|
(15,795
|
)
|
||
Operating lease right of use assets
|
(12,522
|
)
|
|
—
|
|
||
Unrealized exchange gain
|
(6,739
|
)
|
|
(6,912
|
)
|
||
Total deferred tax liabilities
|
(504,668
|
)
|
|
(498,242
|
)
|
||
Net deferred tax liability
|
$
|
(229,883
|
)
|
|
$
|
(197,723
|
)
|
|
|
For the year ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
|
$
|
89,609
|
|
|
$
|
59,884
|
|
|
$
|
45,898
|
|
Increases related to current year tax positions
|
|
17,378
|
|
|
15,676
|
|
|
14,585
|
|
|||
Increases related to prior year tax positions
|
|
15,356
|
|
|
14,609
|
|
|
7,968
|
|
|||
Decreases related to settlements with tax authorities
|
|
(3,515
|
)
|
|
—
|
|
|
(7,211
|
)
|
|||
Decreases related to prior year tax positions
|
|
(1,773
|
)
|
|
(1,144
|
)
|
|
—
|
|
|||
Increases related to business combinations
|
|
450
|
|
|
1,000
|
|
|
—
|
|
|||
Decreases related to lapse of applicable statute of limitations
|
|
(87
|
)
|
|
—
|
|
|
(1,356
|
)
|
|||
Increases/(decreases) related to foreign currency exchange rate
|
|
173
|
|
|
(416
|
)
|
|
—
|
|
|||
Balance at end of year
|
|
$
|
117,591
|
|
|
$
|
89,609
|
|
|
$
|
59,884
|
|
|
Statements of Operations
|
|
Balance Sheets
|
||||||||||||||||
|
For the year ended December 31,
|
|
As of December 31,
|
||||||||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||||||
Interest
|
$
|
0.9
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.2
|
|
|
$
|
1.3
|
|
|
$
|
0.4
|
|
Penalties
|
$
|
(0.1
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
For the year ended December 31,
|
|||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
|||
Basic weighted-average ordinary shares outstanding
|
160,946
|
|
|
168,570
|
|
|
171,165
|
|
Dilutive effect of stock options
|
600
|
|
|
822
|
|
|
616
|
|
Dilutive effect of unvested restricted securities
|
422
|
|
|
467
|
|
|
388
|
|
Diluted weighted-average ordinary shares outstanding
|
161,968
|
|
|
169,859
|
|
|
172,169
|
|
|
For the year ended December 31,
|
|||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
|||
Anti-dilutive shares excluded
|
1,170
|
|
|
930
|
|
|
1,410
|
|
Contingently issuable shares excluded
|
641
|
|
|
687
|
|
|
871
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
197,531
|
|
|
$
|
187,095
|
|
Work-in-process
|
104,007
|
|
|
104,405
|
|
||
Raw materials
|
205,140
|
|
|
200,819
|
|
||
Inventories
|
$
|
506,678
|
|
|
$
|
492,319
|
|
|
|
As of December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Land
|
|
$
|
17,880
|
|
|
$
|
22,021
|
|
Buildings and improvements
|
|
266,864
|
|
|
259,182
|
|
||
Machinery and equipment
|
|
1,367,293
|
|
|
1,220,285
|
|
||
Total property, plant and equipment
|
|
1,652,037
|
|
|
1,501,488
|
|
||
Accumulated depreciation
|
|
(821,039
|
)
|
|
(714,310
|
)
|
||
Property, plant and equipment, net
|
|
$
|
830,998
|
|
|
$
|
787,178
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets under finance leases in property, plant and equipment
|
$
|
49,714
|
|
|
$
|
49,714
|
|
Accumulated depreciation
|
(24,316
|
)
|
|
(22,508
|
)
|
||
Assets under finance leases in property, plant and equipment, net
|
$
|
25,398
|
|
|
$
|
27,206
|
|
|
Performance Sensing
|
|
Sensing Solutions
|
|
Total
|
||||||
Balance as of December 31, 2017
|
$
|
2,148,135
|
|
|
$
|
857,329
|
|
|
$
|
3,005,464
|
|
Divestiture of Valves Business
|
(38,800
|
)
|
|
—
|
|
|
(38,800
|
)
|
|||
Acquisition of GIGAVAC
|
46,298
|
|
|
68,340
|
|
|
114,638
|
|
|||
Balance as of December 31, 2018
|
2,155,633
|
|
|
925,669
|
|
|
3,081,302
|
|
|||
GIGAVAC purchase accounting adjustment
|
16,387
|
|
|
(16,564
|
)
|
|
(177
|
)
|
|||
Other acquisition
|
—
|
|
|
12,473
|
|
|
12,473
|
|
|||
Balance as of December 31, 2019
|
$
|
2,172,020
|
|
|
$
|
921,578
|
|
|
$
|
3,093,598
|
|
|
As of December 31, 2019
|
||||||||||||||||
Weighted-
Average Life (years) |
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Accumulated
Impairment
|
|
Net
Carrying
Value
|
|||||||||
Completed technologies
|
14
|
|
$
|
770,608
|
|
|
$
|
(529,926
|
)
|
|
$
|
(2,430
|
)
|
|
$
|
238,252
|
|
Customer relationships
|
11
|
|
1,827,998
|
|
|
(1,430,515
|
)
|
|
(12,144
|
)
|
|
385,339
|
|
||||
Non-compete agreements
|
8
|
|
23,400
|
|
|
(23,400
|
)
|
|
—
|
|
|
—
|
|
||||
Tradenames
|
21
|
|
66,654
|
|
|
(16,598
|
)
|
|
—
|
|
|
50,056
|
|
||||
Capitalized software and other(1)
|
7
|
|
67,784
|
|
|
(38,997
|
)
|
|
—
|
|
|
28,787
|
|
||||
Total
|
12
|
|
$
|
2,756,444
|
|
|
$
|
(2,039,436
|
)
|
|
$
|
(14,574
|
)
|
|
$
|
702,434
|
|
|
As of December 31, 2018
|
||||||||||||||||
Weighted-
Average Life (years) |
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Accumulated
Impairment
|
|
Net
Carrying
Value
|
|||||||||
Completed technologies
|
14
|
|
$
|
759,008
|
|
|
$
|
(475,295
|
)
|
|
$
|
(2,430
|
)
|
|
$
|
281,283
|
|
Customer relationships
|
11
|
|
1,825,698
|
|
|
(1,352,189
|
)
|
|
(12,144
|
)
|
|
461,365
|
|
||||
Non-compete agreements
|
8
|
|
23,400
|
|
|
(23,400
|
)
|
|
—
|
|
|
—
|
|
||||
Tradenames
|
21
|
|
66,154
|
|
|
(13,468
|
)
|
|
—
|
|
|
52,686
|
|
||||
Capitalized software and other(1)
|
7
|
|
65,896
|
|
|
(32,509
|
)
|
|
—
|
|
|
33,387
|
|
||||
Total
|
12
|
|
$
|
2,740,156
|
|
|
$
|
(1,896,861
|
)
|
|
$
|
(14,574
|
)
|
|
$
|
828,721
|
|
(1)
|
During the years ended December 31, 2019 and 2018, we wrote-off approximately $0.3 million and $0.2 million, respectively, of fully-amortized capitalized software that was not in use.
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Acquisition-related definite-lived intangible assets
|
$
|
136,087
|
|
|
$
|
132,235
|
|
|
$
|
153,729
|
|
Capitalized software
|
6,799
|
|
|
7,091
|
|
|
7,321
|
|
|||
Amortization of definite-lived intangible assets
|
$
|
142,886
|
|
|
$
|
139,326
|
|
|
$
|
161,050
|
|
For the year ended December 31,
|
|
||
2020
|
$
|
127,787
|
|
2021
|
$
|
111,177
|
|
2022
|
$
|
97,620
|
|
2023
|
$
|
83,802
|
|
2024
|
$
|
68,818
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrued compensation and benefits
|
$
|
52,394
|
|
|
$
|
68,936
|
|
Accrued interest
|
42,803
|
|
|
40,550
|
|
||
Accrued severance
|
14,779
|
|
|
6,591
|
|
||
Current portion of operating lease liabilities
|
11,543
|
|
|
—
|
|
||
Current portion of pension and post-retirement benefit obligations
|
3,220
|
|
|
3,176
|
|
||
Foreign currency and commodity forward contracts
|
1,925
|
|
|
7,710
|
|
||
Other accrued expenses and current liabilities
|
88,962
|
|
|
91,167
|
|
||
Accrued expenses and other current liabilities
|
$
|
215,626
|
|
|
$
|
218,130
|
|
|
For the year ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||||||
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
||||||||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
2,836
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
3,122
|
|
|
$
|
—
|
|
|
$
|
74
|
|
|
$
|
2,582
|
|
Interest cost
|
1,483
|
|
|
203
|
|
|
1,344
|
|
|
1,473
|
|
|
272
|
|
|
1,310
|
|
|
1,604
|
|
|
325
|
|
|
1,053
|
|
|||||||||
Expected return on plan assets
|
(1,694
|
)
|
|
—
|
|
|
(702
|
)
|
|
(1,710
|
)
|
|
—
|
|
|
(929
|
)
|
|
(2,151
|
)
|
|
—
|
|
|
(905
|
)
|
|||||||||
Amortization of net loss
|
946
|
|
|
—
|
|
|
766
|
|
|
1,080
|
|
|
5
|
|
|
407
|
|
|
1,149
|
|
|
54
|
|
|
287
|
|
|||||||||
Amortization of net prior service (credit)/cost
|
—
|
|
|
(1,306
|
)
|
|
9
|
|
|
—
|
|
|
(1,728
|
)
|
|
6
|
|
|
—
|
|
|
(1,335
|
)
|
|
(4
|
)
|
|||||||||
Loss on settlement
|
565
|
|
|
—
|
|
|
1,572
|
|
|
1,047
|
|
|
—
|
|
|
1,461
|
|
|
3,225
|
|
|
—
|
|
|
100
|
|
|||||||||
Loss on curtailment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
891
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Net periodic benefit cost/(credit)
|
$
|
1,300
|
|
|
$
|
(1,096
|
)
|
|
$
|
5,825
|
|
|
$
|
1,890
|
|
|
$
|
(1,401
|
)
|
|
$
|
6,268
|
|
|
$
|
3,827
|
|
|
$
|
(882
|
)
|
|
$
|
3,113
|
|
|
For the year ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
||||||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
$
|
45,169
|
|
|
$
|
6,017
|
|
|
$
|
65,691
|
|
|
$
|
48,615
|
|
|
$
|
9,692
|
|
|
$
|
67,413
|
|
Service cost
|
—
|
|
|
7
|
|
|
2,836
|
|
|
—
|
|
|
50
|
|
|
3,122
|
|
||||||
Interest cost
|
1,483
|
|
|
203
|
|
|
1,344
|
|
|
1,473
|
|
|
272
|
|
|
1,310
|
|
||||||
Plan participants’ contributions
|
—
|
|
|
474
|
|
|
31
|
|
|
—
|
|
|
475
|
|
|
60
|
|
||||||
Plan amendment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,243
|
)
|
|
—
|
|
||||||
Actuarial loss/(gain)
|
1,711
|
|
|
(92
|
)
|
|
9,344
|
|
|
(519
|
)
|
|
(124
|
)
|
|
2,777
|
|
||||||
Curtailments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
931
|
|
||||||
Benefits paid
|
(2,815
|
)
|
|
(1,021
|
)
|
|
(5,235
|
)
|
|
(4,400
|
)
|
|
(1,105
|
)
|
|
(6,262
|
)
|
||||||
Divestiture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,310
|
)
|
||||||
Foreign currency remeasurement
|
—
|
|
|
—
|
|
|
161
|
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
||||||
Ending balance
|
$
|
45,548
|
|
|
$
|
5,588
|
|
|
$
|
74,172
|
|
|
$
|
45,169
|
|
|
$
|
6,017
|
|
|
$
|
65,691
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
$
|
39,875
|
|
|
$
|
—
|
|
|
$
|
39,868
|
|
|
$
|
41,101
|
|
|
$
|
—
|
|
|
$
|
41,222
|
|
Actual return on plan assets
|
4,484
|
|
|
—
|
|
|
4,125
|
|
|
(811
|
)
|
|
—
|
|
|
(1,308
|
)
|
||||||
Employer contributions
|
3,326
|
|
|
547
|
|
|
4,889
|
|
|
3,985
|
|
|
630
|
|
|
5,992
|
|
||||||
Plan participants’ contributions
|
—
|
|
|
474
|
|
|
31
|
|
|
—
|
|
|
475
|
|
|
60
|
|
||||||
Benefits paid
|
(2,815
|
)
|
|
(1,021
|
)
|
|
(5,235
|
)
|
|
(4,400
|
)
|
|
(1,105
|
)
|
|
(6,262
|
)
|
||||||
Foreign currency remeasurement
|
—
|
|
|
—
|
|
|
228
|
|
|
—
|
|
|
—
|
|
|
164
|
|
||||||
Ending balance
|
$
|
44,870
|
|
|
$
|
—
|
|
|
$
|
43,906
|
|
|
$
|
39,875
|
|
|
$
|
—
|
|
|
$
|
39,868
|
|
Funded status at end of year
|
$
|
(678
|
)
|
|
$
|
(5,588
|
)
|
|
$
|
(30,266
|
)
|
|
$
|
(5,294
|
)
|
|
$
|
(6,017
|
)
|
|
$
|
(25,823
|
)
|
Accumulated benefit obligation at end of year
|
$
|
45,548
|
|
|
NA
|
|
|
$
|
65,633
|
|
|
$
|
45,169
|
|
|
NA
|
|
|
$
|
59,948
|
|
|
As of December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
||||||||||||
Noncurrent assets
|
$
|
2,788
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities
|
(952
|
)
|
|
(717
|
)
|
|
(1,551
|
)
|
|
(595
|
)
|
|
(1,116
|
)
|
|
(1,465
|
)
|
||||||
Noncurrent liabilities
|
(2,514
|
)
|
|
(4,871
|
)
|
|
(28,715
|
)
|
|
(4,699
|
)
|
|
(4,901
|
)
|
|
(24,358
|
)
|
||||||
Funded status
|
$
|
(678
|
)
|
|
$
|
(5,588
|
)
|
|
$
|
(30,266
|
)
|
|
$
|
(5,294
|
)
|
|
$
|
(6,017
|
)
|
|
$
|
(25,823
|
)
|
|
As of December 31,
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||||||
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
||||||||||||||||||
Net prior service cost/(credit)
|
$
|
—
|
|
|
$
|
306
|
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
(692
|
)
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
823
|
|
|
$
|
(220
|
)
|
Net loss
|
$
|
18,780
|
|
|
$
|
809
|
|
|
$
|
17,151
|
|
|
$
|
20,759
|
|
|
$
|
880
|
|
|
$
|
14,425
|
|
|
$
|
20,884
|
|
|
$
|
1,009
|
|
|
$
|
12,489
|
|
|
As of December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
Projected benefit obligation
|
$
|
3,465
|
|
|
$
|
74,020
|
|
|
$
|
45,169
|
|
|
$
|
65,691
|
|
Accumulated benefit obligation
|
$
|
3,465
|
|
|
$
|
65,633
|
|
|
$
|
45,169
|
|
|
$
|
59,948
|
|
Plan assets
|
$
|
—
|
|
|
$
|
43,754
|
|
|
$
|
39,875
|
|
|
$
|
39,868
|
|
|
As of December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
Projected benefit obligation
|
$
|
9,053
|
|
|
$
|
74,020
|
|
|
$
|
51,186
|
|
|
$
|
65,691
|
|
Plan assets
|
$
|
—
|
|
|
$
|
43,754
|
|
|
$
|
39,875
|
|
|
$
|
39,868
|
|
|
For the year ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||||||
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
||||||||||||||||||
Net (gain)/loss
|
$
|
(824
|
)
|
|
$
|
(71
|
)
|
|
$
|
4,365
|
|
|
$
|
2,002
|
|
|
$
|
(124
|
)
|
|
$
|
3,669
|
|
|
$
|
2,768
|
|
|
$
|
(197
|
)
|
|
$
|
1,618
|
|
Amortization of net loss
|
(723
|
)
|
|
—
|
|
|
(539
|
)
|
|
(1,080
|
)
|
|
(5
|
)
|
|
(298
|
)
|
|
(1,149
|
)
|
|
(54
|
)
|
|
(130
|
)
|
|||||||||
Amortization of net prior service credit/(cost)
|
—
|
|
|
998
|
|
|
(6
|
)
|
|
—
|
|
|
1,728
|
|
|
(4
|
)
|
|
—
|
|
|
1,335
|
|
|
3
|
|
|||||||||
Divestiture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(228
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Plan amendment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,243
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||||||
Settlement effect
|
(432
|
)
|
|
—
|
|
|
(1,100
|
)
|
|
(1,047
|
)
|
|
—
|
|
|
(1,023
|
)
|
|
(3,225
|
)
|
|
—
|
|
|
(69
|
)
|
|||||||||
Curtailment effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total in other comprehensive (income)/loss
|
$
|
(1,979
|
)
|
|
$
|
927
|
|
|
$
|
2,720
|
|
|
$
|
(125
|
)
|
|
$
|
(1,644
|
)
|
|
$
|
2,146
|
|
|
$
|
(1,606
|
)
|
|
$
|
1,084
|
|
|
$
|
1,417
|
|
|
As of December 31,
|
||||||||||
|
2019
|
|
2018
|
||||||||
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Retiree Healthcare
|
||||
U.S. assumed discount rate
|
2.60
|
%
|
|
2.80
|
%
|
|
3.79
|
%
|
|
3.90
|
%
|
Non-U.S. assumed discount rate
|
1.90
|
%
|
|
NA
|
|
|
2.17
|
%
|
|
NA
|
|
Non-U.S. average long-term pay progression
|
2.87
|
%
|
|
NA
|
|
|
2.66
|
%
|
|
NA
|
|
|
For the year ended December 31,
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Retiree Healthcare
|
|
Defined Benefit
|
|
Retiree Healthcare
|
||||||
U.S. assumed discount rate
|
3.79
|
%
|
|
3.90
|
%
|
|
3.45
|
%
|
|
3.10
|
%
|
|
3.20
|
%
|
|
3.30
|
%
|
Non-U.S. assumed discount rate
|
5.76
|
%
|
|
NA
|
|
|
5.87
|
%
|
|
NA
|
|
|
3.90
|
%
|
|
NA
|
|
U.S. average long-term rate of return on plan assets
|
4.53
|
%
|
|
NA
|
|
|
4.57
|
%
|
|
NA
|
|
|
4.50
|
%
|
|
NA
|
|
Non-U.S. average long-term rate of return on plan assets
|
1.77
|
%
|
|
NA
|
|
|
2.26
|
%
|
|
NA
|
|
|
2.29
|
%
|
|
NA
|
|
Non-U.S. average long-term pay progression
|
4.43
|
%
|
|
NA
|
|
|
4.82
|
%
|
|
NA
|
|
|
3.75
|
%
|
|
NA
|
|
|
As of December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Assumed healthcare trend rate for next year:
|
|
|
|
|
|
|||
Attributed to less than age 65
|
6.30
|
%
|
|
6.60
|
%
|
|
6.90
|
%
|
Attributed to age 65 or greater
|
6.70
|
%
|
|
7.10
|
%
|
|
7.50
|
%
|
Ultimate trend rate
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
Year in which ultimate trend rate is reached:
|
|
|
|
|
|
|||
Attributed to less than age 65
|
2038
|
|
|
2038
|
|
|
2038
|
|
Attributed to age 65 or greater
|
2038
|
|
|
2038
|
|
|
2038
|
|
|
One Percentage Point:
|
||||||
|
Increase
|
|
Decrease
|
||||
Effect on total service and interest cost components
|
$
|
8
|
|
|
$
|
(7
|
)
|
Effect on post-retirement benefit obligations
|
$
|
314
|
|
|
$
|
(287
|
)
|
|
Expected Benefit Payments
|
||||||||||
For the year ended December 31,
|
U.S. Defined Benefit
|
|
U.S. Retiree Healthcare
|
|
Non-U.S. Defined Benefit
|
||||||
2020
|
$
|
8,985
|
|
|
$
|
717
|
|
|
$
|
3,346
|
|
2021
|
$
|
7,868
|
|
|
$
|
653
|
|
|
$
|
3,299
|
|
2022
|
$
|
6,116
|
|
|
$
|
653
|
|
|
$
|
3,896
|
|
2023
|
$
|
5,219
|
|
|
$
|
534
|
|
|
$
|
3,499
|
|
2024
|
$
|
3,804
|
|
|
$
|
516
|
|
|
$
|
3,456
|
|
2025 - 2029
|
$
|
12,201
|
|
|
$
|
1,838
|
|
|
$
|
21,775
|
|
|
Target Allocation
|
|
Actual Allocation as of December 31, 2019
|
U.S. large cap equity
|
7%
|
|
5%
|
U.S. small / mid cap equity
|
2%
|
|
1%
|
Globally managed volatility fund
|
3%
|
|
2%
|
International (non-U.S.) equity
|
4%
|
|
3%
|
Fixed income (U.S. investment grade) (1)
|
68%
|
|
42%
|
High-yield fixed income
|
2%
|
|
1%
|
International (non-U.S.) fixed income
|
1%
|
|
1%
|
Money market funds (1)
|
13%
|
|
45%
|
(1)
|
As of December 31, 2019, our holdings in the Money market funds exceed the target allocation as we prepare to make payments resulting from the voluntary retirement incentive program. Refer to Note 5, "Restructuring and Other Charges, Net" for additional information about the voluntary retirement incentive program.
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
U.S. large cap equity
|
$
|
2,221
|
|
|
$
|
2,960
|
|
U.S. small / mid cap equity
|
637
|
|
|
833
|
|
||
Global managed volatility fund
|
849
|
|
|
1,214
|
|
||
International (non-U.S.) equity
|
1,195
|
|
|
1,493
|
|
||
Total equity mutual funds
|
4,902
|
|
|
6,500
|
|
||
Fixed income (U.S. investment grade)
|
18,830
|
|
|
26,884
|
|
||
High-yield fixed income
|
561
|
|
|
792
|
|
||
International (non-U.S.) fixed income
|
264
|
|
|
402
|
|
||
Total fixed income mutual funds
|
19,655
|
|
|
28,078
|
|
||
Money market funds
|
20,313
|
|
|
5,297
|
|
||
Total plan assets
|
$
|
44,870
|
|
|
$
|
39,875
|
|
|
Target Allocation
|
|
Actual Allocation as of December 31, 2019
|
Fixed income securities, cash, and cash equivalents
|
10%-90%
|
|
65%
|
Equity securities
|
10%-90%
|
|
35%
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
U.S. equity
|
$
|
2,413
|
|
|
$
|
2,212
|
|
International (non-U.S.) equity
|
6,343
|
|
|
5,158
|
|
||
Total equity securities
|
8,756
|
|
|
7,370
|
|
||
U.S. fixed income
|
3,835
|
|
|
3,345
|
|
||
International (non-U.S.) fixed income
|
9,716
|
|
|
8,811
|
|
||
Total fixed income securities
|
13,551
|
|
|
12,156
|
|
||
Cash and cash equivalents
|
9,726
|
|
|
10,339
|
|
||
Total plan assets
|
$
|
32,033
|
|
|
$
|
29,865
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Insurance policies
|
$
|
10,472
|
|
|
$
|
8,897
|
|
|
Insurance Policies
|
||
Balance as of December 31, 2017
|
$
|
9,059
|
|
Actual return on plan assets still held at reporting date
|
177
|
|
|
Purchases, sales, settlements, and exchange rate changes
|
(339
|
)
|
|
Balance as of December 31, 2018
|
8,897
|
|
|
Actual return on plan assets still held at reporting date
|
1,821
|
|
|
Purchases, sales, settlements, and exchange rate changes
|
(246
|
)
|
|
Balance as of December 31, 2019
|
$
|
10,472
|
|
|
|
As of December 31,
|
||||||
|
Maturity Date
|
2019
|
|
2018
|
||||
Term Loan
|
September 20, 2026
|
$
|
460,725
|
|
|
$
|
917,794
|
|
4.875% Senior Notes
|
October 15, 2023
|
500,000
|
|
|
500,000
|
|
||
5.625% Senior Notes
|
November 1, 2024
|
400,000
|
|
|
400,000
|
|
||
5.0% Senior Notes
|
October 1, 2025
|
700,000
|
|
|
700,000
|
|
||
6.25% Senior Notes
|
February 15, 2026
|
750,000
|
|
|
750,000
|
|
||
4.375% Senior Notes
|
February 15, 2030
|
450,000
|
|
|
—
|
|
||
Less: debt discount
|
|
(11,758
|
)
|
|
(15,169
|
)
|
||
Less: deferred financing costs
|
|
(24,452
|
)
|
|
(23,159
|
)
|
||
Less: current portion
|
|
(4,630
|
)
|
|
(9,704
|
)
|
||
Long-term debt, net
|
|
$
|
3,219,885
|
|
|
$
|
3,219,762
|
|
Finance lease and other financing obligations
|
|
$
|
31,098
|
|
|
$
|
35,475
|
|
Less: current portion
|
|
(2,288
|
)
|
|
(4,857
|
)
|
||
Finance lease and other financing obligations, less current portion
|
|
$
|
28,810
|
|
|
$
|
30,618
|
|
Period beginning February 15,
|
Price
|
|
2021
|
103.125
|
%
|
2022
|
102.083
|
%
|
2023
|
101.042
|
%
|
2024 and thereafter
|
100.000
|
%
|
•
|
incur indebtedness or liens, prepay subordinated debt, or amend the terms of our subordinated debt;
|
•
|
make loans and investments (including acquisitions) or sell assets;
|
•
|
change our business or accounting policies, merge, consolidate, dissolve or liquidate, or amend the terms of our organizational documents;
|
•
|
enter into affiliate transactions;
|
•
|
pay dividends and make other restricted payments; or
|
•
|
enter into certain burdensome contractual obligations.
|
•
|
incur liens;
|
•
|
incur or guarantee indebtedness without guaranteeing the Senior Notes;
|
•
|
engage in sale and leaseback transactions; or
|
•
|
effect mergers or consolidations, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of the assets of STBV and its subsidiaries.
|
•
|
customary and reasonable operating expenses, legal and accounting fees and expenses, and overhead of such parent companies incurred in the ordinary course of business, provided that such amounts, in the aggregate, do not exceed $20.0 million in any fiscal year;
|
•
|
dividends and other distributions in an aggregate amount not to exceed $200.0 million plus certain amounts, including the retained portion of excess cash flow, but only insofar as no default or event of default exists and the senior secured net leverage ratio is less than 2.0:1.0 calculated on a pro forma basis;
|
•
|
so long as no default or an event of default exists, dividends and other distributions in an aggregate amount not to exceed $50.0 million in any calendar year (with the unused portion in any year being carried over to succeeding years) plus unlimited additional amounts but only insofar as the senior secured net leverage ratio is less than 2.5:1.0 calculated on a pro forma basis; and
|
•
|
other dividends and other distributions in an aggregate amount not to exceed $150.0 million, so long as no default or event of default exists.
|
For the year ended December 31,
|
Aggregate Maturities
|
||
2020
|
$
|
4,630
|
|
2021
|
4,630
|
|
|
2022
|
4,630
|
|
|
2023
|
504,630
|
|
|
2024
|
404,630
|
|
|
Thereafter
|
2,337,575
|
|
|
Total long-term debt principal payments
|
$
|
3,260,725
|
|
For the year ending December 31,
|
|
||
2020
|
$
|
26,588
|
|
2021
|
19,726
|
|
|
2022
|
9,721
|
|
|
2023
|
5,060
|
|
|
2024
|
132
|
|
|
2025 and thereafter
|
272
|
|
|
Total purchase commitments
|
$
|
61,499
|
|
|
Cash Flow Hedges
|
|
Defined Benefit and Retiree Healthcare Plans
|
|
Accumulated Other Comprehensive Loss
|
||||||
Balance as of December 31, 2016
|
$
|
23
|
|
|
$
|
(34,090
|
)
|
|
$
|
(34,067
|
)
|
Pre-tax current period change
|
(37,603
|
)
|
|
(1,445
|
)
|
|
(39,048
|
)
|
|||
Tax effect
|
9,401
|
|
|
550
|
|
|
9,951
|
|
|||
Balance as of December 31, 2017
|
(28,179
|
)
|
|
(34,985
|
)
|
|
(63,164
|
)
|
|||
Pre-tax current period change
|
49,817
|
|
|
(1,183
|
)
|
|
48,634
|
|
|||
Tax effect
|
(12,454
|
)
|
|
806
|
|
|
(11,648
|
)
|
|||
Balance as of December 31, 2018
|
9,184
|
|
|
(35,362
|
)
|
|
(26,178
|
)
|
|||
Pre-tax current period change
|
9,816
|
|
|
(2,198
|
)
|
|
7,618
|
|
|||
Tax effect
|
(2,454
|
)
|
|
530
|
|
|
(1,924
|
)
|
|||
Balance as of December 31, 2019
|
16,546
|
|
|
(37,030
|
)
|
|
(20,484
|
)
|
|
|
For the year ended December 31,
|
||||||||||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
|
Cash Flow Hedges
|
|
Defined Benefit and Retiree Healthcare Plans
|
|
Total
|
|
Cash Flow Hedges
|
|
Defined Benefit and Retiree Healthcare Plans
|
|
Total
|
|
Cash Flow Hedges
|
|
Defined Benefit and Retiree Healthcare Plans
|
|
Total
|
||||||||||||||||||
Other comprehensive income/(loss) before reclassifications
|
|
$
|
28,795
|
|
|
$
|
(3,470
|
)
|
|
$
|
25,325
|
|
|
$
|
26,859
|
|
|
$
|
(2,120
|
)
|
|
$
|
24,739
|
|
|
$
|
(39,387
|
)
|
|
$
|
(4,184
|
)
|
|
$
|
(43,571
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
|
(21,433
|
)
|
|
1,802
|
|
|
(19,631
|
)
|
|
10,504
|
|
|
1,743
|
|
|
12,247
|
|
|
11,185
|
|
|
3,289
|
|
|
14,474
|
|
|||||||||
Other comprehensive income/(loss)
|
|
$
|
7,362
|
|
|
$
|
(1,668
|
)
|
|
$
|
5,694
|
|
|
$
|
37,363
|
|
|
$
|
(377
|
)
|
|
$
|
36,986
|
|
|
$
|
(28,202
|
)
|
|
$
|
(895
|
)
|
|
$
|
(29,097
|
)
|
|
|
Amount of (Gain)/Loss Reclassified from Accumulated Other Comprehensive Loss
|
|
|
||||||||||
|
|
For the year ended December 31,
|
|
Affected Line in Consolidated Statements of Operations
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|||||||
Derivative instruments designated and qualifying as cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||
Foreign currency forward contracts
|
|
$
|
(26,180
|
)
|
|
$
|
18,072
|
|
|
$
|
916
|
|
|
Net revenue (1)
|
Foreign currency forward contracts
|
|
(2,397
|
)
|
|
(5,442
|
)
|
|
13,997
|
|
|
Cost of revenue (1)
|
|||
Foreign currency forward contracts
|
|
—
|
|
|
1,376
|
|
|
—
|
|
|
Other, net (1)
|
|||
Total, before taxes
|
|
(28,577
|
)
|
|
14,006
|
|
|
14,913
|
|
|
Income before taxes
|
|||
Income tax effect
|
|
7,144
|
|
|
(3,502
|
)
|
|
(3,728
|
)
|
|
Provision for/(benefit from) income taxes
|
|||
Total, net of taxes
|
|
$
|
(21,433
|
)
|
|
$
|
10,504
|
|
|
$
|
11,185
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
||||||
Defined benefit and retiree healthcare plans
|
|
$
|
2,552
|
|
|
$
|
1,993
|
|
|
$
|
3,476
|
|
|
Other, net (2)
|
Defined benefit and retiree healthcare plans
|
|
—
|
|
|
228
|
|
|
—
|
|
|
Restructuring and other charges, net (3)
|
|||
Total, before taxes
|
|
2,552
|
|
|
2,221
|
|
|
3,476
|
|
|
Income before taxes
|
|||
Income tax effect
|
|
(750
|
)
|
|
(478
|
)
|
|
(187
|
)
|
|
Provision for/(benefit from) income taxes
|
|||
Total, net of taxes
|
|
$
|
1,802
|
|
|
$
|
1,743
|
|
|
$
|
3,289
|
|
|
Net income
|
(1)
|
Refer to Note 19, "Derivative Instruments and Hedging Activities," for additional information related to amounts to be reclassified from accumulated other comprehensive loss in future periods.
|
(2)
|
Refer to Note 13, "Pension and Other Post-Retirement Benefits," for additional information related to net periodic benefit cost.
|
(3)
|
Amount represents an equity component of the Valves Business, which was sold in fiscal year 2018. Refer to Note 5, "Restructuring and Other Charges, Net," and Note 17, "Acquisitions and Divestitures," for additional information related to the divestiture of the Valves Business.
|
Net working capital, excluding cash
|
$
|
17,132
|
|
Property, plant and equipment
|
4,384
|
|
|
Goodwill
|
114,461
|
|
|
Other intangible assets
|
122,742
|
|
|
Other assets
|
63
|
|
|
Deferred income tax liabilities
|
(27,072
|
)
|
|
Other long-term liabilities
|
(602
|
)
|
|
Fair value of net assets acquired, excluding cash and cash equivalents
|
231,108
|
|
|
Cash and cash equivalents
|
359
|
|
|
Fair value of net assets acquired
|
$
|
231,467
|
|
|
Acquisition Date Fair Value
|
|
Weighted-Average Lives (years)
|
||
Acquired definite-lived intangible assets:
|
|
|
|
||
Customer relationships
|
$
|
74,500
|
|
|
10
|
Completed technologies
|
31,040
|
|
|
13
|
|
Tradenames
|
15,400
|
|
|
15
|
|
Other
|
1,802
|
|
|
6
|
|
Total definite-lived intangible assets acquired
|
$
|
122,742
|
|
|
12
|
•
|
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access at the measurement date.
|
•
|
Level 2 inputs utilize inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
|
•
|
Level 3 inputs are unobservable inputs for the asset or liability, allowing for situations where there is little, if any, market activity for the asset or liability.
|
|
As of December 31,
|
|||||
|
2019
|
|
2018
|
|||
Assets measured at fair value:
|
|
|
|
|||
Foreign currency forward contracts
|
$
|
23,561
|
|
|
17,871
|
|
Commodity forward contracts
|
3,623
|
|
|
831
|
|
|
Total assets measured at fair value
|
$
|
27,184
|
|
|
18,702
|
|
Liabilities measured at fair value:
|
|
|
|
|||
Foreign currency forward contracts
|
$
|
1,959
|
|
|
5,165
|
|
Commodity forward contracts
|
462
|
|
|
4,137
|
|
|
Total liabilities measured at fair value
|
$
|
2,421
|
|
|
9,302
|
|
|
As of December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Carrying Value (1)
|
|
Fair Value
|
|
Carrying Value (1)
|
|
Fair Value
|
||||||||
Term Loan
|
$
|
460,725
|
|
|
$
|
464,181
|
|
|
$
|
917,794
|
|
|
$
|
904,027
|
|
4.875% Senior Notes
|
$
|
500,000
|
|
|
$
|
532,500
|
|
|
$
|
500,000
|
|
|
$
|
491,875
|
|
5.625% Senior Notes
|
$
|
400,000
|
|
|
$
|
444,000
|
|
|
$
|
400,000
|
|
|
$
|
400,500
|
|
5.0% Senior Notes
|
$
|
700,000
|
|
|
$
|
759,500
|
|
|
$
|
700,000
|
|
|
$
|
660,625
|
|
6.25% Senior Notes
|
$
|
750,000
|
|
|
$
|
808,125
|
|
|
$
|
750,000
|
|
|
$
|
751,875
|
|
4.375% Senior Notes
|
$
|
450,000
|
|
|
$
|
457,875
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Excluding any related debt discounts and deferred financing costs.
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Quanergy Systems, Inc
|
$
|
50,000
|
|
|
$
|
50,000
|
|
Lithium Balance (1)
|
3,700
|
|
|
—
|
|
||
Total
|
$
|
53,700
|
|
|
$
|
50,000
|
|
(1)
|
Our investment in Lithium Balance A/S ("Lithium Balance") was purchased in July 2019.
|
Notional
(in millions) |
|
Effective Date(s)
|
|
Maturity Date(s)
|
|
Index (Exchange Rates)
|
|
Weighted- Average Strike Rate
|
|
Hedge Designation (1)
|
22.0 EUR
|
|
December 27, 2019
|
|
January 31, 2020
|
|
Euro ("EUR") to USD
|
|
1.12 USD
|
|
Not designated
|
340.3 EUR
|
|
Various from March 2018 to December 2019
|
|
Various from January 2020 to November 2021
|
|
EUR to USD
|
|
1.17 USD
|
|
Cash flow hedge
|
425.0 CNY
|
|
December 23, 2019
|
|
January 31, 2020
|
|
USD to Chinese Renminbi ("CNY")
|
|
7.04 CNY
|
|
Not designated
|
326.0 CNY
|
|
December 13, 2019
|
|
Various from January to December 2020
|
|
USD to CNY
|
|
7.07 CNY
|
|
Cash flow hedge
|
594.0 JPY
|
|
December 23, 2019
|
|
January 31, 2020
|
|
USD to Japanese Yen ("JPY")
|
|
109.07 JPY
|
|
Not designated
|
24,046.6 KRW
|
|
Various from February 2018 to December 2019
|
|
Various from January 2020 to November 2021
|
|
USD to Korean Won ("KRW")
|
|
1,135.19 KRW
|
|
Cash flow hedge
|
22.0 MYR
|
|
December 23, 2019
|
|
January 31, 2020
|
|
USD to Malaysian Ringgit ("MYR")
|
|
4.12 MYR
|
|
Not designated
|
150.0 MXN
|
|
December 27, 2019
|
|
January 31, 2020
|
|
USD to Mexican Peso ("MXN")
|
|
19.00 MXN
|
|
Not designated
|
2,871.0 MXN
|
|
Various from February 2018 to December 2019
|
|
Various from January 2020 to November 2021
|
|
USD to MXN
|
|
20.81 MXN
|
|
Cash flow hedge
|
50.8 GBP
|
|
Various from March 2018 to December 2019
|
|
Various from January 2020 to November 2021
|
|
British Pound Sterling ("GBP") to USD
|
|
1.31 USD
|
|
Cash flow hedge
|
(1)
|
Derivative financial instruments not designated as hedges are used to manage our exposure to currency exchange rate risk. They are intended to preserve the economic value, and they are not used for trading or speculative purposes.
|
Commodity
|
|
Notional
|
|
Remaining Contracted Periods
|
|
Weighted-Average
Strike Price Per Unit
|
||
Silver
|
|
855,297 troy oz.
|
|
January 2020-November 2021
|
|
$
|
16.68
|
|
Gold
|
|
7,851 troy oz.
|
|
January 2020-November 2021
|
|
$
|
1,402.78
|
|
Nickel
|
|
225,599 pounds
|
|
January 2020-November 2021
|
|
$
|
6.25
|
|
Aluminum
|
|
3,054,791 pounds
|
|
January 2020-November 2021
|
|
$
|
0.89
|
|
Copper
|
|
2,336,790 pounds
|
|
January 2020-November 2021
|
|
$
|
2.81
|
|
Platinum
|
|
7,340 troy oz.
|
|
January 2020-November 2021
|
|
$
|
905.29
|
|
Palladium
|
|
892 troy oz.
|
|
January 2020-November 2021
|
|
$
|
1,441.81
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||
|
|
Balance Sheet
Location
|
|
As of December 31,
|
|
Balance Sheet
Location
|
|
As of December 31,
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
20,957
|
|
|
$
|
14,608
|
|
|
Accrued expenses and other current liabilities
|
|
$
|
1,055
|
|
|
$
|
3,615
|
|
Foreign currency forward contracts
|
|
Other assets
|
|
2,530
|
|
|
3,168
|
|
|
Other long-term liabilities
|
|
428
|
|
|
1,134
|
|
||||
Total
|
|
|
|
$
|
23,487
|
|
|
$
|
17,776
|
|
|
|
|
$
|
1,483
|
|
|
$
|
4,749
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity forward contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
3,069
|
|
|
$
|
524
|
|
|
Accrued expenses and other current liabilities
|
|
$
|
394
|
|
|
$
|
3,679
|
|
Commodity forward contracts
|
|
Other assets
|
|
554
|
|
|
307
|
|
|
Other long-term liabilities
|
|
68
|
|
|
458
|
|
||||
Foreign currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
74
|
|
|
95
|
|
|
Accrued expenses and other current liabilities
|
|
476
|
|
|
416
|
|
||||
Total
|
|
|
|
$
|
3,697
|
|
|
$
|
926
|
|
|
|
|
$
|
938
|
|
|
$
|
4,553
|
|
Derivatives designated as hedging instruments
|
|
Amount of Deferred Gain Recognized in Other Comprehensive Income
|
|
Location of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income
|
|
Amount of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income
|
||||||||||||
|
For the year ended December 31,
|
|
|
For the year ended December 31,
|
||||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
||||||||||
Foreign currency forward contracts
|
|
$
|
23,881
|
|
|
$
|
30,752
|
|
|
Net revenue
|
|
$
|
26,180
|
|
|
$
|
(18,072
|
)
|
Foreign currency forward contracts
|
|
$
|
14,512
|
|
|
$
|
5,059
|
|
|
Cost of revenue
|
|
$
|
2,397
|
|
|
$
|
5,442
|
|
Foreign currency forward contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other, net
|
|
$
|
—
|
|
|
$
|
(1,376
|
)
|
Derivatives not designated as hedging instruments
|
|
Amount of Gain/(Loss) Recognized in Net Income
|
|
Location of Gain/(Loss)
|
||||||
|
For the year ended December 31,
|
|
||||||||
|
2019
|
|
2018
|
|
||||||
Commodity forward contracts
|
|
$
|
4,888
|
|
|
$
|
(8,481
|
)
|
|
Other, net
|
Foreign currency forward contracts
|
|
$
|
2,225
|
|
|
$
|
3,446
|
|
|
Other, net
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net revenue:
|
|
|
|
|
|
||||||
Performance Sensing
|
$
|
2,546,016
|
|
|
$
|
2,627,651
|
|
|
$
|
2,460,600
|
|
Sensing Solutions
|
904,615
|
|
|
893,976
|
|
|
846,133
|
|
|||
Total net revenue
|
$
|
3,450,631
|
|
|
$
|
3,521,627
|
|
|
$
|
3,306,733
|
|
Segment operating income (as defined above):
|
|
|
|
|
|
||||||
Performance Sensing
|
$
|
648,744
|
|
|
$
|
712,682
|
|
|
$
|
664,186
|
|
Sensing Solutions
|
291,261
|
|
|
293,009
|
|
|
277,450
|
|
|||
Total segment operating income
|
940,005
|
|
|
1,005,691
|
|
|
941,636
|
|
|||
Corporate and other
|
(186,674
|
)
|
|
(203,764
|
)
|
|
(205,824
|
)
|
|||
Amortization of intangible assets
|
(142,886
|
)
|
|
(139,326
|
)
|
|
(161,050
|
)
|
|||
Restructuring and other charges, net
|
(53,560
|
)
|
|
47,818
|
|
|
(18,975
|
)
|
|||
Operating income
|
556,885
|
|
|
710,419
|
|
|
555,787
|
|
|||
Interest expense, net
|
(158,554
|
)
|
|
(153,679
|
)
|
|
(159,761
|
)
|
|||
Other, net
|
(7,908
|
)
|
|
(30,365
|
)
|
|
6,415
|
|
|||
Income before taxes
|
$
|
390,423
|
|
|
$
|
526,375
|
|
|
$
|
402,441
|
|
|
Performance Sensing
|
|
Sensing Solutions
|
|
For the year ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Sensors
|
X
|
|
X
|
|
$
|
2,712,926
|
|
|
$
|
2,755,280
|
|
|
$
|
2,542,863
|
|
Controls
|
|
|
X
|
|
481,720
|
|
|
508,745
|
|
|
497,853
|
|
|||
Other
|
X
|
|
X
|
|
255,985
|
|
|
257,602
|
|
|
266,017
|
|
|||
Net revenue
|
|
|
|
|
$
|
3,450,631
|
|
|
$
|
3,521,627
|
|
|
$
|
3,306,733
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
Performance Sensing
|
$
|
85,511
|
|
|
$
|
72,067
|
|
|
$
|
68,910
|
|
Sensing Solutions
|
16,678
|
|
|
16,798
|
|
|
17,179
|
|
|||
Corporate and other (1)
|
156,559
|
|
|
156,475
|
|
|
184,282
|
|
|||
Total depreciation and amortization
|
$
|
258,748
|
|
|
$
|
245,340
|
|
|
$
|
270,371
|
|
(1)
|
Included within Corporate and other is depreciation and amortization expense associated with the fair value step-up recognized in prior acquisitions and accelerated depreciation recognized in connection with restructuring actions. We do not allocate the additional depreciation and amortization expense associated with the step-up in the fair value of the PP&E and intangible assets associated with these acquisitions or accelerated depreciation related to restructuring actions to our segments. This treatment is consistent with the financial information reviewed by our chief operating decision maker.
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets:
|
|
|
|
||||
Performance Sensing
|
$
|
1,515,396
|
|
|
$
|
1,490,310
|
|
Sensing Solutions
|
479,455
|
|
|
468,131
|
|
||
Corporate and other(1)
|
4,839,668
|
|
|
4,839,246
|
|
||
Total assets
|
$
|
6,834,519
|
|
|
$
|
6,797,687
|
|
(1)
|
The following is included within corporate and other as of December 31, 2019 and 2018: goodwill of $3,093.6 million and $3,081.3 million, respectively; other intangible assets, net of $770.9 million and $897.2 million, respectively; cash and cash equivalents of $774.1 million and $729.8 million, respectively; and PP&E, net of $41.2 million and $36.5 million, respectively. This treatment is consistent with the financial information reviewed by our chief operating decision maker.
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Additions to property, plant and equipment and capitalized software:
|
|
|
|
|
|
||||||
Performance Sensing
|
$
|
125,412
|
|
|
$
|
130,234
|
|
|
$
|
106,520
|
|
Sensing Solutions
|
19,520
|
|
|
12,492
|
|
|
13,980
|
|
|||
Corporate and other
|
16,327
|
|
|
17,061
|
|
|
24,084
|
|
|||
Total additions to property, plant and equipment and capitalized software
|
$
|
161,259
|
|
|
$
|
159,787
|
|
|
$
|
144,584
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net revenue:
|
|
|
|
|
|
||||||
Americas
|
$
|
1,460,101
|
|
|
$
|
1,480,567
|
|
|
$
|
1,367,113
|
|
Europe
|
969,470
|
|
|
1,028,534
|
|
|
1,036,502
|
|
|||
Asia and rest of world
|
1,021,060
|
|
|
1,012,526
|
|
|
903,118
|
|
|||
Net revenue
|
$
|
3,450,631
|
|
|
$
|
3,521,627
|
|
|
$
|
3,306,733
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Property, plant and equipment, net:
|
|
|
|
||||
Americas
|
$
|
289,300
|
|
|
$
|
292,625
|
|
Europe
|
192,772
|
|
|
185,011
|
|
||
Asia and rest of world
|
348,926
|
|
|
309,542
|
|
||
Property, plant and equipment, net
|
$
|
830,998
|
|
|
$
|
787,178
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Property, plant and equipment, net:
|
|
|
|
||||
United States
|
$
|
97,226
|
|
|
$
|
83,664
|
|
China
|
266,161
|
|
|
239,315
|
|
||
Mexico
|
191,861
|
|
|
204,552
|
|
||
Bulgaria
|
138,644
|
|
|
119,477
|
|
||
United Kingdom
|
40,003
|
|
|
51,404
|
|
||
Malaysia
|
78,310
|
|
|
65,688
|
|
||
All other
|
18,793
|
|
|
23,078
|
|
||
Property, plant and equipment, net
|
$
|
830,998
|
|
|
$
|
787,178
|
|
|
December 31, 2018
|
|
Adjustment
|
|
January 1, 2019
|
||||||
Prepaid expenses and other current assets
|
$
|
113,234
|
|
|
$
|
(253
|
)
|
|
$
|
112,981
|
|
Other intangible assets, net
|
$
|
897,191
|
|
|
$
|
(1,510
|
)
|
|
$
|
895,681
|
|
Other assets
|
$
|
86,890
|
|
|
$
|
58,496
|
|
|
$
|
145,386
|
|
Accrued expenses and other current liabilities
|
$
|
218,130
|
|
|
$
|
12,119
|
|
|
$
|
230,249
|
|
Other long-term liabilities
|
$
|
39,277
|
|
|
$
|
44,614
|
|
|
$
|
83,891
|
|
|
December 31, 2019
|
||
Operating lease right-of-use assets:
|
|
||
Other assets
|
$
|
55,333
|
|
Total operating lease right-of-use assets
|
$
|
55,333
|
|
Operating lease liabilities:
|
|
||
Accrued expenses and other current liabilities
|
$
|
11,543
|
|
Other long-term liabilities
|
45,457
|
|
|
Total operating lease liabilities
|
$
|
57,000
|
|
Finance lease right-of-use assets:
|
|
||
Property, plant and equipment, at cost
|
$
|
49,714
|
|
Accumulated depreciation
|
(24,316
|
)
|
|
Property, plant and equipment, net
|
$
|
25,398
|
|
Finance lease liabilities:
|
|
||
Current portion of long-term debt, finance lease and other financing obligations
|
$
|
1,974
|
|
Finance lease and other financing obligations, less current portion
|
28,669
|
|
|
Total finance lease liabilities
|
$
|
30,643
|
|
|
For the year ended
|
||
|
December 31, 2019
|
||
Operating leases
|
$
|
5,423
|
|
Finance leases
|
$
|
—
|
|
|
For the year ended
|
||
|
December 31, 2019
|
||
Operating lease cost
|
$
|
16,124
|
|
|
|
||
Finance lease cost:
|
|
||
Amortization of right-of-use assets
|
$
|
1,808
|
|
Interest on lease liabilities
|
2,695
|
|
|
Total finance lease cost
|
$
|
4,503
|
|
|
For the year ended
|
||
|
December 31, 2019
|
||
Operating cash flows from operating leases
|
$
|
15,911
|
|
Operating cash flows from finance leases
|
$
|
2,731
|
|
Financing cash flows from finance leases
|
$
|
1,933
|
|
|
December 31, 2019
|
Operating leases
|
8.1
|
Finance leases
|
12.6
|
|
December 31, 2019
|
|
Operating leases
|
5.6
|
%
|
Finance leases
|
8.6
|
%
|
|
Operating Leases
|
|
Finance Leases
|
||||
Year ending December 31,
|
|
|
|
||||
2020
|
$
|
14,818
|
|
|
$
|
4,528
|
|
2021
|
11,199
|
|
|
4,050
|
|
||
2022
|
8,946
|
|
|
3,700
|
|
||
2023
|
7,470
|
|
|
3,759
|
|
||
2024
|
7,055
|
|
|
3,819
|
|
||
Thereafter
|
24,467
|
|
|
32,464
|
|
||
Total undiscounted cash flows related to lease liabilities
|
73,955
|
|
|
52,320
|
|
||
Less imputed interest
|
(16,955
|
)
|
|
(21,677
|
)
|
||
Total lease liabilities
|
$
|
57,000
|
|
|
$
|
30,643
|
|
|
For the three months ended
|
||||||||||||||
|
December 31, 2019
|
|
September 30, 2019
|
|
June 30, 2019
|
|
March 31, 2019
|
||||||||
Net revenue
|
$
|
846,691
|
|
|
$
|
849,715
|
|
|
$
|
883,726
|
|
|
$
|
870,499
|
|
Gross profit
|
$
|
290,209
|
|
|
$
|
294,805
|
|
|
$
|
308,491
|
|
|
$
|
289,693
|
|
Net income
|
$
|
53,538
|
|
|
$
|
70,675
|
|
|
$
|
73,436
|
|
|
$
|
85,065
|
|
Basic net income per share (1)
|
$
|
0.34
|
|
|
$
|
0.44
|
|
|
$
|
0.45
|
|
|
$
|
0.52
|
|
Diluted net income per share
|
$
|
0.34
|
|
|
$
|
0.44
|
|
|
$
|
0.45
|
|
|
$
|
0.52
|
|
|
For the three months ended
|
||||||||||||||
|
December 31, 2018
|
|
September 30, 2018
|
|
June 30, 2018
|
|
March 31, 2018
|
||||||||
Net revenue
|
$
|
847,922
|
|
|
$
|
873,552
|
|
|
$
|
913,860
|
|
|
$
|
886,293
|
|
Gross profit
|
$
|
304,359
|
|
|
$
|
315,218
|
|
|
$
|
331,351
|
|
|
$
|
303,836
|
|
Net income
|
$
|
254,099
|
|
|
$
|
149,118
|
|
|
$
|
105,288
|
|
|
$
|
90,490
|
|
Basic net income per share (1)
|
$
|
1.55
|
|
|
$
|
0.89
|
|
|
$
|
0.61
|
|
|
$
|
0.53
|
|
Diluted net income per share (1)
|
$
|
1.54
|
|
|
$
|
0.88
|
|
|
$
|
0.61
|
|
|
$
|
0.52
|
|
(1)
|
The sum of net income per share for the four quarters does not equal the full year net income per share due to rounding.
|
|
For the three months ended
|
||||||||||||||
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||
2019
|
$
|
2,081
|
|
|
$
|
1,786
|
|
|
$
|
(102
|
)
|
|
$
|
1,123
|
|
2018
|
$
|
373
|
|
|
$
|
(4,233
|
)
|
|
$
|
(1,426
|
)
|
|
$
|
(3,195
|
)
|
|
For the three months ended
|
||||||||||||||
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||
2019
|
$
|
25,520
|
|
|
$
|
6,421
|
|
|
$
|
16,310
|
|
|
$
|
5,309
|
|
2018
|
$
|
870
|
|
|
$
|
(52,698
|
)
|
|
$
|
244
|
|
|
$
|
3,766
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
238
|
|
|
$
|
1,089
|
|
Intercompany notes receivable from subsidiaries
|
43,673
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
1,246
|
|
|
528
|
|
||
Total current assets
|
45,157
|
|
|
1,617
|
|
||
Deferred income tax assets
|
570
|
|
|
—
|
|
||
Investment in subsidiaries
|
2,554,954
|
|
|
2,932,218
|
|
||
Total assets
|
$
|
2,600,681
|
|
|
$
|
2,933,835
|
|
Liabilities and shareholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
572
|
|
|
$
|
58
|
|
Intercompany accounts payable to subsidiaries
|
1,909
|
|
|
12,552
|
|
||
Intercompany notes payable to subsidiaries
|
23,216
|
|
|
311,009
|
|
||
Accrued expenses and other current liabilities
|
1,229
|
|
|
1,782
|
|
||
Total current liabilities
|
26,926
|
|
|
325,401
|
|
||
Total liabilities
|
26,926
|
|
|
325,401
|
|
||
Total shareholders’ equity
|
2,573,755
|
|
|
2,608,434
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,600,681
|
|
|
$
|
2,933,835
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating costs and expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
8,860
|
|
|
10,153
|
|
|
6,894
|
|
|||
Total operating costs and expenses
|
8,860
|
|
|
10,153
|
|
|
6,894
|
|
|||
Loss from operations
|
(8,860
|
)
|
|
(10,153
|
)
|
|
(6,894
|
)
|
|||
Intercompany dividend income
|
700,000
|
|
|
—
|
|
|
—
|
|
|||
Intercompany interest (expense)/income, net
|
(23,294
|
)
|
|
(4,709
|
)
|
|
8
|
|
|||
Other, net
|
(21
|
)
|
|
474
|
|
|
(169
|
)
|
|||
Income/(loss) before income taxes and equity in net income of subsidiaries
|
667,825
|
|
|
(14,388
|
)
|
|
(7,055
|
)
|
|||
Equity in net (loss)/income of subsidiaries
|
(401,715
|
)
|
|
613,383
|
|
|
415,412
|
|
|||
Benefit from income taxes
|
16,604
|
|
|
—
|
|
|
—
|
|
|||
Net income
|
$
|
282,714
|
|
|
$
|
598,995
|
|
|
$
|
408,357
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
282,714
|
|
|
$
|
598,995
|
|
|
$
|
408,357
|
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
|
|
||||||
Defined benefit plan
|
—
|
|
|
535
|
|
|
77
|
|
|||
Subsidiaries' other comprehensive income/(loss)
|
5,694
|
|
|
36,451
|
|
|
(29,174
|
)
|
|||
Other comprehensive income/(loss)
|
5,694
|
|
|
36,986
|
|
|
(29,097
|
)
|
|||
Comprehensive income
|
$
|
288,408
|
|
|
$
|
635,981
|
|
|
$
|
379,260
|
|
|
For the year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash used in operating activities
|
$
|
(14,989
|
)
|
|
$
|
(14,253
|
)
|
|
$
|
(9,109
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Return of capital from subsidiaries
|
—
|
|
|
—
|
|
|
5,000
|
|
|||
Dividends received from subsidiary
|
700,000
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by investing activities
|
700,000
|
|
|
—
|
|
|
5,000
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from exercise of stock options and issuance of ordinary shares
|
15,150
|
|
|
6,093
|
|
|
7,450
|
|
|||
(Payments on)/proceeds from intercompany borrowings
|
(344,018
|
)
|
|
410,190
|
|
|
—
|
|
|||
Payments to repurchase ordinary shares
|
(350,004
|
)
|
|
(399,417
|
)
|
|
—
|
|
|||
Payments of employee restricted stock tax withholdings
|
(6,990
|
)
|
|
(3,674
|
)
|
|
(2,910
|
)
|
|||
Net cash (used in)/provided by financing activities
|
(685,862
|
)
|
|
13,192
|
|
|
4,540
|
|
|||
Net change in cash and cash equivalents
|
(851
|
)
|
|
(1,061
|
)
|
|
431
|
|
|||
Cash and cash equivalents, beginning of year
|
1,089
|
|
|
2,150
|
|
|
1,719
|
|
|||
Cash and cash equivalents, end of year
|
$
|
238
|
|
|
$
|
1,089
|
|
|
$
|
2,150
|
|
|
Balance at the
Beginning of
the Period
|
|
Additions
|
|
Deductions
|
|
Balance at the End of
the Period
|
||||||||
Charged, Net of Reversals,
to Expenses/Against Revenue
|
|
||||||||||||||
For the year ended December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
|
$
|
13,762
|
|
|
$
|
3,005
|
|
|
$
|
(1,638
|
)
|
|
$
|
15,129
|
|
For the year ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
|
$
|
12,947
|
|
|
$
|
2,194
|
|
|
$
|
(1,379
|
)
|
|
$
|
13,762
|
|
For the year ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
|
$
|
11,811
|
|
|
$
|
2,205
|
|
|
$
|
(1,069
|
)
|
|
$
|
12,947
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management of the Company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
|
/s/ Ernst & Young LLP
|
|
|
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
1.
|
Financial Statements — See "Financial Statements" under Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
|
2.
|
Financial Statement Schedules — See "Financial Statement Schedules" under Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
|
3.
|
Exhibits
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
3.1
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26
|
|
|
|
|
|
10.27
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33
|
|
|
|
|
|
10.34
|
|
|
|
|
|
10.35
|
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
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
|
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
*
|
Filed herewith.
|
|
|
|
SENSATA TECHNOLOGIES HOLDING PLC
|
|
|
|
|
|
|
|
/s/ MARTHA SULLIVAN
|
|
By:
|
|
Martha Sullivan
|
|
Its:
|
|
Chief Executive Officer
|
|
|
|
|
|
Date:
|
|
February 11, 2020
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ MARTHA SULLIVAN
|
|
Chief Executive Officer and Director
|
|
February 11, 2020
|
Martha Sullivan
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ PAUL VASINGTON
|
|
Executive Vice President and Chief Financial Officer
|
|
February 11, 2020
|
Paul Vasington
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ ANDREW TEICH
|
|
Chairman of the Board of Directors
|
|
February 11, 2020
|
Andrew Teich
|
|
|
|
|
|
|
|
|
|
/s/ JOHN ABSMEIER
|
|
Director
|
|
February 11, 2020
|
John Absmeier
|
|
|
|
|
|
|
|
|
|
/s/ PAUL EDGERLEY
|
|
Director
|
|
February 11, 2020
|
Paul Edgerley
|
|
|
|
|
|
|
|
|
|
/s/ JAMES HEPPELMANN
|
|
Director
|
|
February 11, 2020
|
James Heppelmann
|
|
|
|
|
|
|
|
|
|
/s/ CHARLES PEFFER
|
|
Director
|
|
February 11, 2020
|
Charles Peffer
|
|
|
|
|
|
|
|
|
|
/s/ CONSTANCE SKIDMORE
|
|
Director
|
|
February 11, 2020
|
Constance Skidmore
|
|
|
|
|
|
|
|
|
|
/s/ THOMAS WROE
|
|
Director
|
|
February 11, 2020
|
Thomas Wroe
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN ZIDE
|
|
Director
|
|
February 11, 2020
|
Stephen Zide
|
|
|
|
|
|
|
|
|
|
/s/ MARTHA SULLIVAN
|
|
Authorized Representative in the United States
|
|
February 11, 2020
|
Martha Sullivan
|
|
|
|
|
1 Year Sensata Technologies Chart |
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