WATTS WATER TECHNOLOGIES INC, 10-Q filed on 5/6/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 29, 2015
May 4, 2015
Class A
May 4, 2015
Class B
Entity Registrant Name
WATTS WATER TECHNOLOGIES INC 
 
 
Entity Central Index Key
0000795403 
 
 
Document Type
10-Q 
 
 
Document Period End Date
Mar. 29, 2015 
 
 
Amendment Flag
false 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
28,389,517 
6,479,290 
Document Fiscal Year Focus
2015 
 
 
Document Fiscal Period Focus
Q1 
 
 
CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Mar. 29, 2015
Dec. 31, 2014
CURRENT ASSETS:
 
 
Cash and cash equivalents
$ 261.8 
$ 301.1 
Trade accounts receivable, less allowance for doubtful accounts of $10.3 million at March 29, 2015 and $10.6 million at December 31, 2014
220.5 
207.8 
Inventories, net:
 
 
Raw materials
101.3 
104.8 
Work in process
15.9 
16.7 
Finished goods
165.5 
170.1 
Total Inventories
282.7 
291.6 
Prepaid expenses and other assets
25.9 
27.4 
Deferred income taxes
45.6 
45.3 
Asset held for sale
2.1 
1.1 
Total Current Assets
838.6 
874.3 
PROPERTY, PLANT AND EQUIPMENT:
 
 
Property, plant and equipment, at cost
503.2 
526.7 
Accumulated depreciation
(313.7)
(323.4)
Property, plant and equipment, net
189.5 
203.3 
OTHER ASSETS:
 
 
Goodwill
612.0 
639.0 
Intangible assets, net
199.4 
210.1 
Deferred income taxes
4.5 
4.7 
Other, net
15.9 
16.6 
TOTAL ASSETS
1,859.9 
1,948.0 
CURRENT LIABILITIES:
 
 
Accounts payable
113.0 
120.8 
Accrued expenses and other liabilities
133.8 
138.8 
Accrued pension plan settlements
40.4 
40.0 
Accrued compensation and benefits
39.7 
44.2 
Current portion of long-term debt
1.7 
1.9 
Total Current Liabilities
328.6 
345.7 
LONG-TERM DEBT, NET OF CURRENT PORTION
577.2 
577.8 
DEFERRED INCOME TAXES
73.2 
77.4 
OTHER NONCURRENT LIABILITIES
33.5 
34.7 
STOCKHOLDERS' EQUITY:
 
 
Preferred Stock, $0.10 par value; 5,000,000 shares authorized; no shares issued or outstanding
   
   
Additional paid-in capital
501.0 
497.4 
Retained earnings
497.0 
500.6 
Accumulated other comprehensive loss
(154.0)
(89.1)
Total Stockholders' Equity
847.4 
912.4 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
1,859.9 
1,948.0 
Class A
 
 
STOCKHOLDERS' EQUITY:
 
 
Common Stock
2.8 
2.9 
Class B
 
 
STOCKHOLDERS' EQUITY:
 
 
Common Stock
$ 0.6 
$ 0.6 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Mar. 29, 2015
Dec. 31, 2014
Trade accounts receivable, allowance for doubtful accounts (in dollars)
$ 10.3 
$ 10.6 
Preferred Stock, par value (in dollars per share)
$ 0.10 
$ 0.10 
Preferred Stock, shares authorized
5,000,000 
5,000,000 
Preferred Stock, shares issued
Preferred Stock, shares outstanding
Class A
 
 
Common Stock, par value (in dollars per share)
$ 0.10 
$ 0.10 
Common Stock, shares authorized
80,000,000 
80,000,000 
Common Stock, votes per share (Number of votes)
Common Stock, issued shares
28,411,252 
28,552,065 
Common Stock, outstanding shares
28,411,252 
28,552,065 
Class B
 
 
Common Stock, par value (in dollars per share)
$ 0.10 
$ 0.10 
Common Stock, shares authorized
25,000,000 
25,000,000 
Common Stock, votes per share (Number of votes)
10 
10 
Common Stock, issued shares
6,479,290 
6,479,290 
Common Stock, outstanding shares
6,479,290 
6,479,290 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 29, 2015
Mar. 30, 2014
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
Net sales
$ 356.2 
$ 365.2 
Cost of goods sold
225.7 
231.9 
GROSS PROFIT
130.5 
133.3 
Selling, general and administrative expenses
105.7 
103.3 
Restructuring and other charges, net
2.0 
4.2 
OPERATING INCOME
22.8 
25.8 
Other (income) expense:
 
 
Interest income
(0.2)
(0.1)
Interest expense
5.9 
4.9 
Other (income) expense, net
(0.2)
0.4 
Total other expense
5.5 
5.2 
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
17.3 
20.6 
Provision for income taxes
5.7 
6.5 
NET INCOME
$ 11.6 
$ 14.1 
Net income per share:
 
 
NET INCOME (in dollars per share)
$ 0.33 
$ 0.40 
Weighted average number of shares (in shares)
35.1 
35.4 
Net income per share:
 
 
NET INCOME (in dollars per share)
$ 0.33 
$ 0.40 
Weighted average number of shares (in shares)
35.2 
35.5 
Dividends per share (in dollars per share)
$ 0.15 
$ 0.13 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 29, 2015
Mar. 30, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
Net income
$ 11.6 
$ 14.1 
Other comprehensive income (loss):
 
 
Foreign currency translation adjustments
(65.1)
(4.3)
Defined benefit pension plans, net of tax:
 
 
Amortization of net losses included in net periodic pension cost
0.2 
0.2 
Other comprehensive loss, net of tax
(64.9)
(4.1)
Comprehensive (loss) income
$ (53.3)
$ 10.0 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 29, 2015
Mar. 30, 2014
OPERATING ACTIVITIES
 
 
Net income from continuing operations
$ 11.6 
$ 14.1 
Adjustments to reconcile net income from continuing operations to net cash provided by (used in) continuing operating activities:
 
 
Depreciation
7.9 
8.2 
Amortization of intangibles
5.1 
3.7 
Loss on disposal and impairment of goodwill, property, plant and equipment and other
1.1 
0.1 
Stock-based compensation
2.3 
1.7 
Deferred income tax benefit
(1.8)
(0.4)
Changes in operating assets and liabilities, net of effects from business acquisitions and divestures:
 
 
Accounts receivable
(21.6)
(11.8)
Inventories
(0.4)
(15.3)
Prepaid expenses and other assets
0.4 
(1.3)
Accounts payable, accrued expenses and other liabilities
(3.8)
(17.7)
Net cash provided by (used in) continuing operations
0.8 
(18.7)
INVESTING ACTIVITIES
 
 
Additions to property, plant and equipment
(5.6)
(5.0)
Proceeds from the sale of property, plant and equipment
 
0.1 
Net cash used in investing activities
(5.6)
(4.9)
FINANCING ACTIVITIES
 
 
Payments of long-term debt
(0.3)
(0.4)
Payment of capital leases and other
(0.8)
(2.5)
Proceeds from share transactions under employee stock plans
0.5 
0.4 
Tax benefit of stock awards exercised
0.1 
0.5 
Payments to repurchase common stock
(9.4)
(9.4)
Debt issue costs
 
(2.0)
Dividends
(5.3)
(4.6)
Net cash used in financing activities
(15.2)
(18.0)
Effect of exchange rate changes on cash and cash equivalents
(19.3)
(1.3)
DECREASE IN CASH AND CASH EQUIVALENTS
(39.3)
(42.9)
Cash and cash equivalents at beginning of year
301.1 
267.9 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
261.8 
225.0 
NON-CASH INVESTING AND FINANCING ACTIVITIES
 
 
Issuance of stock under management stock purchase plan
0.3 
0.2 
CASH PAID FOR:
 
 
Interest
1.2 
0.3 
Income taxes
$ 5.8 
$ 8.0 
Basis of Presentation
Basis of Presentation

 

1.Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the Watts Water Technologies, Inc. (the Company) Consolidated Balance Sheet as of March 29, 2015, the Consolidated Statements of Operations for the first quarters ended March 29, 2015 and March 30, 2014, the Consolidated Statements of Comprehensive Income (Loss) for the first quarters ended March 29, 2015 and March 30, 2014, and the Consolidated Statements of Cash Flows for the first quarters ended March 29, 2015 and March 30, 2014.

 

The consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated financial statements at that date. The accounting policies followed by the Company are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.  The financial statements included in this report should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2014. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2015.

 

The Company operates on a 52-week fiscal year ending on December 31st.  Any quarterly data contained in this Quarterly Report on Form 10-Q generally reflect the results of operations for a 13-week period.

 

Accounting Policies
Accounting Policies

 

2.Accounting Policies

 

Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Goodwill and Long-Lived Assets

 

The changes in the carrying amount of goodwill by geographic segment are as follows:

 

 

 

March 29, 2015

 

 

 

Gross Balance

 

Accumulated Impairment Losses

 

Net Goodwill

 

 

 

Balance
January 1,
2015

 

Acquired
During
the
Period

 

Foreign
Currency
Translation
and Other

 

Balance
March 29,
2015

 

Balance
January 1,
2015

 

Impairment
Loss
During the
Period

 

Balance
March 29,
2015

 

March 29,
2015

 

 

 

(in millions )

 

Americas

 

$

398.0

 

$

 

$

(0.7

)

$

397.3

 

$

(24.5

)

$

 

$

(24.5

)

$

372.8

 

Europe, Middle East and Africa (EMEA)

 

265.5

 

 

(26.3

)

239.2

 

 

 

 

239.2

 

Asia-Pacific

 

12.9

 

 

 

12.9

 

(12.9

)

 

(12.9

)

 

Total

 

$

676.4

 

$

 

$

(27.0

)

$

649.4

 

$

(37.4

)

$

 

$

(37.4

)

$

612.0

 

 

 

 

March 30, 2014

 

 

 

Gross Balance

 

Accumulated Impairment Losses

 

Net Goodwill

 

 

 

Balance
January 1,
2014

 

Acquired
During the
Period

 

Foreign
Currency
Translation
and Other

 

Balance
March 30,
2014

 

Balance
January 1,
2014

 

Impairment
Loss During
the Period

 

Balance
March 30,
2014

 

March 30,
2014

 

 

 

(in millions)

 

Americas

 

$

224.7

 

$

 

$

(0.4

)

$

224.3

 

$

(24.5

)

$

 

$

(24.5

)

$

199.8

 

EMEA

 

301.3

 

 

(0.1

)

301.2

 

 

 

 

301.2

 

Asia-Pacific

 

13.3

 

 

(0.4

)

12.9

 

 

 

 

12.9

 

Total

 

$

539.3

 

$

 

$

(0.9

)

$

538.4

 

$

(24.5

)

$

 

$

(24.5

)

$

513.9

 

 

Goodwill and indefinite-lived intangible assets are tested for impairment at least annually or more frequently if events or circumstances indicate that it is “more likely than not” that they might be impaired, such as from a change in business conditions. The Company performs its annual goodwill and indefinite-lived intangible assets impairment assessment in the fourth quarter of each year.

 

On December 1, 2014, the Company completed the acquisition of AERCO International, Inc. (“AERCO”), in a share purchase transaction.  The aggregate purchase price, including an estimated working capital adjustment, was approximately $272.2 million and as of March 29, 2015 was subject to a final post-closing working capital adjustment. The Company accounted for the transaction as a business combination.  The Company completed a preliminary purchase price allocation that resulted in the recognition of $174.3 million in goodwill and $102.4 million in intangible assets.

 

As of the end of the fourth quarter of 2014, management determined that it was “more likely than not” that a significant portion of the Asia-Pacific reporting unit’s third party and intersegment net sales were expected to decline as a result of the initial phase of the Americas and Asia-Pacific transformation and restructuring program. Based on this factor, the Company performed a quantitative impairment analysis for the Asia-Pacific reporting unit. The Company completed a fair value assessment of the net assets of the reporting unit and recorded an impairment of $12.9 million in the fourth quarter of 2014.  The Company estimated the fair value of the reporting unit using the present value of expected future cash flows that reflect the impact of certain product line rationalization efforts associated with the initial phase of the Americas and Asia-Pacific transformation and restructuring program, including the sale of certain assets.  In the second step of the impairment test, the carrying value of the goodwill exceeded the implied fair value of goodwill, resulting in a full impairment. There was no tax benefit associated with the impairment and the $12.9 million charge eliminated all goodwill on the Asia-Pacific reporting unit.

 

Intangible assets with estimable lives and other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of intangible assets with estimable lives and other long-lived assets are measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted pretax cash flows expected to be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the related estimated fair value. Estimated fair value is based on either discounted future pretax operating cash flows or appraised values, depending on the nature of the asset. The Company determines the discount rate for this analysis based on the weighted average cost of capital based on the market and guideline public companies for the related business, and does not allocate interest charges to the asset or asset group being measured.  Judgment is required to estimate future operating cash flows.

 

Intangible assets include the following:

 

 

 

March 29, 2015

 

December 31, 2014

 

 

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

 

 

(in millions)

 

Patents

 

$

16.1

 

$

(13.5

)

$

2.6

 

$

16.2

 

$

(13.3

)

$

2.9

 

Customer relationships

 

203.5

 

(91.1

)

112.4

 

206.7

 

(87.5

)

119.2

 

Technology

 

41.8

 

(13.8

)

28.0

 

42.1

 

(12.9

)

29.2

 

Trade Names

 

20.3

 

(4.6

)

15.7

 

20.6

 

(4.2

)

16.4

 

Other

 

9.5

 

(5.7

)

3.8

 

9.5

 

(5.7

)

3.8

 

Total amortizable intangibles

 

291.2

 

(128.7

)

162.5

 

295.1

 

(123.6

)

171.5

 

Indefinite-lived intangible assets

 

36.9

 

 

36.9

 

38.6

 

 

38.6

 

Total

 

$

328.1

 

$

(128.7

)

$

199.4

 

$

333.7

 

$

(123.6

)

$

210.1

 

 

The Company acquired $102.4 million in intangible assets as part of the AERCO acquisition, consisting primarily of customer and manufacturing representative relationships valued at $78.5 million, developed technology of $15.8 million and the trade name of $7.4 million.  The weighted-average remaining life of total amortizable intangible assets is 15 years and by asset category of customer relationships, developed technology and trade name are 16 years, 10 years and 20 years, respectively.

 

Aggregate amortization expense for amortizable intangible assets for the first quarters of 2015 and 2014 was $5.1 million and $3.7 million, respectively.  Additionally, future amortization expense for the next five years on amortizable intangible assets is expected to be approximately $14.7 million for the remainder of 2015, $19.2 million for 2016, $18.9 million for 2017, $15.7 million for 2018 and $11.9 million for 2019. Amortization expense is recorded on a straight-line basis over the estimated useful lives of the intangible assets. The weighted-average remaining life of total amortizable intangible assets is 12.3 years. Patents, customer relationships, technology, trade names and other amortizable intangibles have weighted-average remaining lives of 4.9 years, 12.0 years, 10.2 years, 14.4 years and 33.2 years, respectively. Indefinite-lived intangible assets primarily include trademarks and trade names.

 

Stock-Based Compensation

 

The Company maintains one stock incentive plan, the Second Amended and Restated 2004 Stock Incentive Plan (the “2004 Stock Incentive Plan”).  Under this plan, key employees have been granted nonqualified stock options to purchase the Company’s Class A common stock. Options typically become exercisable over a four-year period at the rate of 25% per year and expire ten years after the grant date. However, most options granted in 2014 become exercisable over a three-year period at the rate of one-third per year.  Options granted under the plan may have exercise prices of not less than 100% of the fair market value of the Class A common stock on the date of grant. The Company’s current practice is to grant all options at fair market value on the grant date. The Company did not issue any stock options in the first three months of 2015 and issued 4,808 stock options during the first three months of 2014.

 

The Company grants shares of restricted stock and deferred shares to key employees and stock awards to non-employee members of the Company’s Board of Directors under the 2004 Stock Incentive Plan.  Stock awards to non-employee members of the Company’s Board of Directors are fully vested upon grant.  Employees’ restricted stock awards and deferred shares typically vest over a three-year period at the rate of one-third per year, except that most restricted stock awards and deferred shares granted in 2014 vest over a two-year period at the rate of 50% per year. The restricted stock awards and deferred shares are amortized to expense on a straight-line basis over the vesting period. The Company issued 1,262 and 1,747 shares of restricted stock in the first three months of 2015 and 2014, respectively.

 

Beginning in 2014, the Company also granted performance stock units to key employees under the 2004 Stock Incentive Plan.  Performance stock units vest at the end of a three-year performance period.  Upon vesting, the number of shares of the Company’s Class A common stock awarded to each performance stock unit recipient will be determined based on the Company’s performance relative to certain performance goals set at the time the performance stock units were granted.  The performance goals for the 2014 performance stock units are based on the compound annual growth rate of the Company’s revenue over the three-year performance period and the Company’s return on invested capital (“ROIC”) for the third year of the performance period.  The performance period for the 2014 performance stock units is January 1, 2014 through December 31, 2016.  The 2014 performance stock units also provide an overall minimum ROIC threshold, which the Company must exceed in order for any shares of the Company’s Class A common stock to be earned. The number of shares of Class A common stock that may be earned by a performance stock unit recipient ranges from 0% to 200% of a target number of shares designated for each recipient at the time of grant.  The performance stock units are amortized to expense over the vesting period, and based on the Company’s performance relative to the performance goals, may be adjusted.  If such goals are not met, no awards are earned and previously recognized compensation expense is reversed. The Company issued 117,619 shares of performance stock units in 2014 under the 2004 Stock Incentive Plan.  No shares of performance stock units were issued in the first three months of 2015.

 

The Company has a Management Stock Purchase Plan that allows for the purchase of restricted stock units (RSUs) by key employees.  On an annual basis, key employees may elect to receive a portion of their annual incentive compensation in RSUs instead of cash.  Each RSU represents one share of Class A common stock and is purchased by the employee at 67% of the fair market value of the Company’s Class A common stock on the date of grant.  RSUs vest either annually over a three-year period from the grant date or upon the third anniversary of the grant date and receipt of the shares underlying RSUs is deferred for a minimum of three years or such greater number of years as is chosen by the employee.  An aggregate of 2,000,000 shares of Class A common stock may be issued under the Management Stock Purchase Plan. The Company granted 59,995 RSUs and 30,561 RSUs in the first three months of 2015 and 2014, respectively.

 

The fair value of each RSU issued under the Management Stock Purchase Plan is estimated on the date of grant using the Black-Scholes-Merton Model based on the following weighted average assumptions:

 

 

 

2015

 

2014

 

Expected life (years)

 

3.0 

 

3.0 

 

Expected stock price volatility

 

23.4 

%

31.2 

%

Expected dividend yield

 

1.2 

%

0.9 

%

Risk-free interest rate

 

1.1 

%

0.7 

%

 

The above assumptions were used to determine the weighted average grant-date fair value of RSUs of $19.04 and $22.57 in 2015 and 2014, respectively.

 

A more detailed description of each of these plans can be found in Note 12 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

 

Shipping and Handling

 

The Company’s shipping and handling costs included in selling, general and administrative expenses were $14.4 million and $14.7 million for the first quarters of 2015 and 2014, respectively.

 

Research and Development

 

Research and development costs included in selling, general and administrative expenses were $6.4 million and $6.3 million for the first quarters of 2015 and 2014, respectively.

 

Taxes, Other than Income Taxes

 

Taxes assessed by governmental authorities on sale transactions are recorded on a net basis and excluded from sales in the Company’s consolidated statements of operations.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

New Accounting Standards

 

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Interest — Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs”. Under ASU 2015- 03, debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts.  The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. ASU 2015-03 is effective in the first quarter of 2016 for public companies with calendar year ends, with early adoption permitted. The ASU requires retrospective application to all prior periods presented in the financial statements. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

 

In January 2015, the FASB issued ASU 2015-01, “Income Statement—Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items”. ASU 2015- 01 eliminates from U.S. GAAP the concept of extraordinary items as part of its initiative to reduce complexity in accounting standards. ASU 2015-01 is effective in the first quarter of 2016 for public companies with calendar year ends, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The ASU may be applied prospectively or retrospectively to all prior periods presented. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

 

Acquisitions
Acquisitions

 

3.Acquisitions

 

On December 1, 2014, the Company completed the acquisition of AERCO in a share purchase transaction. The aggregate purchase price was approximately $272.2 million and was financed from a borrowing under the Company’s Credit Agreement. The purchase price includes an estimated working capital adjustment of $7.7 million, and as of March 29, 2015, was subject to a final post-closing working capital adjustment.

 

The Company accounted for the transaction as a business combination. The Company completed a preliminary purchase price allocation that resulted in the recognition of $174.3 million in goodwill and $102.4 million in intangible assets. Intangible assets consist primarily of customer relationships valued at $78.5 million with estimated lives of 16 years, developed technology valued at $15.8 million with estimated lives of 10 years and trade name valued at $7.4 million with a 20 year life. The goodwill is attributable to the workforce of AERCO and the strategic platform adjacency that will allow Watts to extend its product offerings as a result of the acquisition. Approximately $19.4 million of the goodwill is deductible for tax purposes. The following table summarizes the value of the assets and liabilities acquired (in millions):

 

Accounts receivable

 

$

16.7

 

Inventory

 

16.4

 

Fixed assets

 

7.6

 

Deferred tax assets

 

8.0

 

Other assets

 

7.6

 

Intangible assets

 

102.4

 

Goodwill

 

174.3

 

Accounts payable

 

(6.7

)

Accrued expenses and other

 

(18.1

)

Deferred tax liability

 

(36.0

)

Purchase price

 

$

272.2

 

 

The consolidated statement of operations for the first quarter ended March 29, 2015 includes the results of AERCO.  The results include $22.2 million of revenues and $1.2 million of operating income, respectively, which includes $0.9 million of purchase accounting charges.

 

Supplemental pro-forma information

 

Had the Company completed the acquisition of AERCO at the beginning of 2014, net sales, net income from continuing operations and earnings per share from continuing operations would have been as follows:

 

 

 

First Quarter Ended

 

Amounts in millions (except per share information)

 

March 29, 2015

 

March 30, 2014

 

Net sales

 

$

356.2 

 

$

383.7 

 

Net income from continuing operations

 

$

12.3 

 

$

13.3 

 

Net income per share:

 

 

 

 

 

Basic EPS—continuing operations

 

$

0.35 

 

$

0.38 

 

Diluted EPS—continuing operations

 

$

0.35 

 

$

0.38 

 

 

Net income from continuing operations for the quarter ended March 30, 2014 was adjusted to include $0.7 million of net interest expense related to the financing and $1.1 million of net amortization expense resulting from the estimated allocation of purchase price to amortizable tangible and intangible assets. Net income from continuing operations for the quarter ended March 29, 2015 was also adjusted to exclude $0.7 million of net acquisition-related charges and third-party costs.

 

Financial Instruments and Derivative Instruments
Financial Instruments and Derivative Instruments

 

4.Financial Instruments and Derivative Instruments

 

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including deferred compensation plan assets and related liability, and contingent consideration. There were no designated cash flow hedges as of March 29, 2015 and December 31, 2014. The fair values of these certain financial assets and liabilities were determined using the following inputs at March 29, 2015 and December 31, 2014:

 

 

 

Fair Value Measurements at March 29, 2015 Using:

 

 

 

 

 

Quoted Prices in
Active
Markets for Identical
Assets

 

Significant Other
Observable
Inputs

 

Significant
Unobservable
Inputs

 

 

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

(in millions)

 

Assets

 

 

 

 

 

 

 

 

 

Plan asset for deferred compensation(1)

 

$

3.7 

 

$

3.7 

 

$

 

$

 

Total assets

 

$

3.7 

 

$

3.7 

 

$

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

Plan liability for deferred compensation(2)

 

$

3.7 

 

$

3.7 

 

$

 

$

 

Contingent consideration(3)

 

2.3 

 

 

 

2.3 

 

Total liabilities

 

$

6.0 

 

$

3.7 

 

$

 

$

2.3 

 

 

 

 

Fair Value Measurements at December 31, 2014 Using:

 

 

 

 

 

Quoted Prices in
Active
Markets for Identical
Assets

 

Significant Other
Observable
Inputs

 

Significant
Unobservable
Inputs

 

 

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

(in millions)

 

Assets

 

 

 

 

 

 

 

 

 

Plan asset for deferred compensation(1)

 

$

4.0 

 

$

4.0 

 

$

 

$

 

Total assets

 

$

4.0 

 

$

4.0 

 

$

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

Plan liability for deferred compensation(2)

 

$

4.0 

 

$

4.0 

 

$

 

$

 

Contingent consideration(3)

 

2.5 

 

 

 

2.5 

 

Total liabilities

 

$

6.5 

 

$

4.0 

 

$

 

$

2.5 

 

 

 

(1)

Included on the Company’s consolidated balance sheet in other assets (other, net).

(2)

Included on the Company’s consolidated balance sheet in accrued compensation and benefits.

(3)

Included on the Company’s consolidated balance sheet in accrued expenses and other liabilities as of March 29, 2015 and December 31, 2014.

 

The table below provides a summary of the changes in fair value of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period December 31, 2014 to March 29, 2015.

 

 

 

Balance

 

 

 

Total realized and
unrealized (gains)
losses included in:

 

Balance

 

 

 

December 31,
2014

 

Settlements

 

Net earnings
adjustments

 

Comprehensive
income

 

March 29,
2015

 

 

 

(in millions)

 

Contingent consideration

 

$

2.5

 

$

 

$

 

$

(0.2

)

$

2.3

 

 

In connection with the tekmar Control Systems acquisition in 2012, a contingent liability of $5.1 million was recognized as the estimate of the acquisition date fair value of the contingent consideration. This liability was classified as Level 3 under the fair value hierarchy as it was based on the probability of achievement of a future performance metric as of the date of the acquisition, which was not observable in the market. The contingent liability was increased by $0.5 million during 2014 and by $1.0 million during 2013 based on revised estimates of the fair value of the contingent consideration. Portions of the contingent consideration were paid out during the first quarter of 2014 and the second quarter of 2013, in the amount of $2.2 million and $1.2 million, respectively, based on performance metrics achieved.  The final contingent consideration payment of $2.3 million was completed in the second quarter of 2015 based on fiscal year 2014 earnings.

 

Cash equivalents consist of instruments with remaining maturities of three months or less at the date of purchase and consist primarily of certificates of deposit and money market funds, for which the carrying amount is a reasonable estimate of fair value.

 

The Company uses financial instruments from time to time to enhance its ability to manage risk, including foreign currency and commodity pricing exposures, which exist as part of its ongoing business operations. The use of derivatives exposes the Company to counterparty credit risk for nonperformance and to market risk related to changes in currency exchange rates and commodity prices. The Company manages its exposure to counterparty credit risk through diversification of counterparties. The Company’s counterparties in derivative transactions are substantial commercial banks with significant experience using such derivative instruments. The impact of market risk on the fair value and cash flows of the Company’s derivative instruments is monitored and the Company restricts the use of derivative financial instruments to hedging activities. The Company does not enter into contracts for trading purposes nor does the Company enter into any contracts for speculative purposes. The use of derivative instruments is approved by senior management under written guidelines.

 

The Company has exposure to a number of foreign currency rates, including the Canadian dollar, the euro, the Chinese yuan and the British pound. To manage this risk, the Company generally uses a layering methodology whereby at the end of any quarter, the Company has generally entered into forward exchange contracts which hedge approximately 50% of the projected intercompany purchase transactions for the next twelve months. The Company presently does not have any open forward exchange contracts.

 

Fair Value

 

The carrying amounts of cash and cash equivalents, trade receivables and trade payables approximate fair value because of the short maturity of these financial instruments.

 

The fair value of the Company’s 5.85% senior notes due 2016 and 5.05% senior notes due 2020 is based on quoted market prices of similar notes (level 2).  The fair value of the Company’s borrowings outstanding under the Credit Agreement and the Company’s variable rate debt approximates its carrying value. The carrying amount and the estimated fair market value of the Company’s long-term debt, including the current portion, are as follows:

 

 

 

March 29,

 

December 31,

 

 

 

2015

 

2014

 

 

 

(in millions)

 

Carrying amount

 

$

578.9 

 

$

579.7 

 

Estimated fair value

 

$

597.2 

 

$

599.3 

 

 

Restructuring and Other Charges, Net
Restructuring and Other Charges, Net

 

5.Restructuring and Other Charges, Net

 

The Company’s Board of Directors approves all major restructuring programs that involve the discontinuance of significant product lines or the shutdown of significant facilities. From time to time, the Company takes additional restructuring actions, including involuntary terminations that are not part of a major program. The Company accounts for these costs in the period that the individual employees are notified or the liability is incurred. These costs are included in restructuring and other charges in the Company’s consolidated statements of operations.

 

A summary of the pre-tax cost by restructuring program is as follows:

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Restructuring costs:

 

 

 

 

 

2015 Actions

 

$

1.3 

 

$

 

2013 Actions

 

0.5 

 

0.4 

 

Other Actions

 

0.2 

 

3.8 

 

Total restructuring and other charges, net

 

$

2.0 

 

$

4.2 

 

 

The Company recorded pre-tax restructuring and other charges, net in its business segments as follows:

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Americas

 

$

1.3

 

$

1.9

 

EMEA

 

0.8

 

1.5

 

Corporate

 

(0.1

)

0.8

 

Total

 

$

2.0

 

$

4.2

 

 

2015 Actions

 

On February 17, 2015, the Board of Directors of the Company approved the initial phase of a restructuring program relating to the transformation of the Company’s Americas and Asia-Pacific businesses, which primarily involves product line rationalization efforts relating to low margin, non-core products. The Company expects to ultimately eliminate between $175 million to $200 million of the combined Americas and Asia-Pacific net sales primarily within the Company’s do-it-yourself (DIY) distribution channel (the “program”). Assuming that the Company would wind-down the affected product lines, the program was initially expected to include a pre-tax charge to earnings of approximately $40 million to $50 million, of which $25 million to $30 million was expected to consist of non-cash charges. Recently, the Company received interest from prospective buyers, which may allow the Company to exit these product lines at a reduced cost.  While it is still too early to determine the final method of disposition, the Company has revised the low end of the range of expected pre-tax charges to $27 million, of which $17 million consists of non-cash charges, to reflect the possibility that the product lines may be sold.  As of March 29, 2015, the assets have not been classified as ‘Held for Sale’ as not all of the required criteria had been met.

 

In connection with the preparation of the financial statements, during the fourth quarter and year ended December 31, 2014, the Company recorded a $15.2 million pre-tax charge relating to the program consisting of goodwill impairment of $12.9 million, an indefinite-lived intangible asset impairment of $0.5 million, and other transformation and deployment costs of $1.8 million recorded in SG&A. The goodwill impairment charge was based on a quantitative assessment of the Asia-Pacific reporting unit goodwill performed as a result of it being more likely than not that the Asia-Pacific reporting unit’s third party and intersegment net sales would be significantly reduced as a result of the program.

 

During the first quarter ended March 29, 2015, the Company recorded a $1.3 million pre-tax restructuring charge and liability relating to facility site clean-up costs at one of the affected locations in the Americas and other transformation and deployment costs in SG&A of $1.5 million.

 

Additional costs expected to be incurred relating to the program include costs of severance benefits of $1.6 million to $10 million, facility decommissioning, clean-up and other related exit costs of $1.7 million to $2.7 million, accelerated depreciation and amortization of long-lived assets of $1 million to $10 million, and other transformation and deployment costs including inventory charges, consulting fees, and other associated costs of $4.7 million to $9.3 million. The total net after-tax charge for this program is expected to be $22 million to $40 million, inclusive of the Asia-Pacific charges that are expected to have no tax benefit. The remaining costs are expected to be incurred in 2015.

 

2013 Actions

 

On July 30, 2013, the Board of Directors authorized a restructuring program with respect to the Company’s EMEA segment to reduce its European manufacturing footprint, improve organizational and operational efficiency and better align costs with expected revenues in response to changing market conditions. Total pre-tax costs for the program were $8.4 million and were incurred from the third quarter of 2013 to the first quarter of 2015. The total charges for this program included costs for severance benefits, relocation, site clean-up, professional fees and certain asset write-downs. The total net after-tax charge for the restructuring program was approximately $5.9 million. The net after-tax charges incurred in the first quarter of 2015 and 2014 were $0.4 million and $0.3 million, respectively.

 

Details of the Company’s 2013 European footprint program reserve, which for the first quarter ended March 29, 2015 relates only to severance, is as follows:

 

 

 

First Quarter Ended

 

 

 

March 29, 2015

 

 

 

(in millions)

 

Balance at December 31, 2014

 

$

1.5

 

Net pre-tax restructuring charges 

 

0.2

 

Utilization and foreign currency impact 

 

(1.2

)

Balance at March 29, 2015 

 

$

0.5

 

 

The following table summarizes total expected, incurred and remaining pre-tax costs for 2013 European footprint program actions by type, and all attributable to the EMEA reportable segment:

 

 

 

Severance

 

Legal and
consultancy

 

Asset
write-downs

 

Facility
exit
and other

 

Total

 

 

 

(in millions)

 

Expected costs

 

$

7.5

 

$

0.2

 

$

0.2

 

$

0.5

 

$

8.4

 

Costs incurred—2013

 

(4.1

)

 

 

 

(4.1

)

Costs incurred—2014

 

(3.2

)

(0.2

)

(0.2

)

(0.2

)

(3.8

)

Costs incurred—first quarter 2015 

 

(0.2

)

 

 

(0.3

)

(0.5

)

Remaining costs at March 29, 2015 

 

$

 

$

 

$

 

$

 

$

 

 

Other Actions

 

The Company also periodically initiates other actions which are not part of a major program.  Total “Other Actions” pre-tax restructuring expense was $0.2 million and $3.8 million for the first quarters of 2015 and 2014, respectively.

 

In the fourth quarter of 2014, management initiated certain restructuring actions and strategic initiatives with respect to the Company’s EMEA segment in response to the ongoing economic challenges in Europe and additional product rationalization. The restructuring actions primarily include expected severance benefits and limited costs relating to asset write offs, professional fees and relocation.  The total pre-tax charge for these restructuring initiatives is expected to be approximately $9.9 million, of which approximately $7.2 million of pre-tax charges were incurred as of the first quarter of 2015 for the program to date. The remaining expected costs relate to severance, asset write-offs and relocation costs and are expected to be completed by the end of the fourth quarter of fiscal 2016.  The restructuring reserve for these actions as of March 29, 2015 relates to the severance recorded in the prior year.

 

The following table summarizes total expected, incurred and remaining pre-tax costs for the EMEA restructuring actions and strategic initiatives:

 

 

 

Severance

 

Legal and
consultancy

 

Asset
write-downs

 

Facility
exit
and other

 

Total

 

 

 

(in millions)

 

Expected costs

 

$

8.8

 

$

0.2

 

$

0.8

 

$

0.1

 

$

9.9

 

Costs incurred—2014

 

(6.9

)

 

 

 

(6.9

)

Costs incurred—first quarter 2015 

 

 

(0.2

)

(0.1

)

 

(0.3

)

Remaining costs at March 29, 2015 

 

$

1.9

 

$

 

$

0.7

 

$

0.1

 

$

2.7

 

 

In 2014, the Company initiated restructuring activities in the Americas and Corporate to reduce costs through reductions-in-force.  Total pre-tax restructuring expense of $2.7 million was incurred in the first quarter of 2014 relating to these initiatives. A final adjustment reducing restructuring expense by $0.1 million was recorded in the first quarter of 2015. There are no remaining expected costs associated with these activities.

 

Earnings per Share
Earnings per Share

 

6.Earnings per Share

 

The following tables set forth the reconciliation of the calculation of earnings per share:

 

 

 

For the First Quarter Ended March 29, 2015

 

For the First Quarter Ended March 30, 2014

 

 

 

Income
(Numerator)

 

Shares
(Denominator)

 

Per Share
Amount

 

Income
(Numerator)

 

Shares
(Denominator)

 

Per Share
Amount

 

 

 

(amounts in millions, except per share amounts)

 

Basic EPS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

11.6 

 

35.1 

 

$

0.33 

 

$

14.1 

 

35.4 

 

$

0.40 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock equivalents

 

 

 

0.1 

 

 

 

 

 

0.1 

 

 

 

Diluted EPS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

11.6 

 

35.2 

 

$

0.33 

 

$

14.1 

 

35.5 

 

$

0.40 

 

 

Options to purchase 0.3 million shares of Class A common stock were outstanding during the first quarters of 2015 and 2014, respectively, but were not included in the computation of diluted EPS because to do so would be anti-dilutive.

 

On April 30, 2013, the Company’s Board of Directors authorized the repurchase of up to $90 million of the Company’s Class A common stock from time to time on the open market or in privately negotiated transactions.  In connection with this repurchase program, the Company entered into a Rule 10b5-1 plan, which permits shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.  The repurchase program may be suspended or discontinued at any time, subject to the terms of the Rule 10b5-1 plan with respect to the repurchase program.  During the first quarter ended March 29, 2015, the Company repurchased approximately 164,000 shares of Class A common stock at a cost of approximately $9.4 million.  As of March 29, 2015, there was approximately $18 million remaining authorized for share repurchase under this program.

 

Segment Information
Segment Information

 

7.Segment Information

 

The Company operates in three geographic segments: Americas, EMEA, and Asia-Pacific. AERCO is included in the Americas segment results for the first quarter ended March 29, 2015.  Each of these segments is managed separately and has separate financial results that are reviewed by the Company’s chief operating decision-maker. All intercompany sales transactions have been eliminated. Sales by region are based upon location of the entity recording the sale. The accounting policies for each segment are the same as those described in the summary of significant accounting policies.

 

The following is a summary of the Company’s significant accounts and balances by segment, reconciled to the consolidated totals:

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Net sales

 

 

 

 

 

Americas

 

$

237.4

 

$

219.1

 

EMEA

 

109.0

 

139.1

 

Asia-Pacific

 

9.8

 

7.0

 

Consolidated net sales

 

$

356.2

 

$

365.2

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

Americas

 

$

24.2

 

$

22.6

 

EMEA

 

5.4

 

8.9

 

Asia-Pacific

 

1.5

 

0.9

 

Subtotal reportable segments

 

31.1

 

32.4

 

 

 

 

 

 

 

Corporate (*)

 

(8.3

)

(6.6

)

Consolidated operating income

 

22.8

 

25.8

 

 

 

 

 

 

 

Interest income

 

0.2

 

0.1

 

Interest expense

 

(5.9

)

(4.9

)

Other income (expense), net

 

0.2

 

(0.4

)

Income from continuing operations before income taxes

 

$

17.3

 

$

20.6

 

Capital expenditures

 

 

 

 

 

Americas

 

$

4.1

 

$

2.2

 

EMEA

 

1.2

 

2.5

 

Asia-Pacific

 

0.3

 

0.3

 

Consolidated capital expenditures

 

$

5.6

 

$

5.0

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

Americas

 

$

7.0

 

$

4.9

 

EMEA

 

5.4

 

6.6

 

Asia-Pacific

 

0.6

 

0.4

 

Consolidated depreciation and amortization

 

$

13.0

 

$

11.9

 

 

 

 

 

 

 

Identifiable assets (at end of period)

 

 

 

 

 

Americas

 

$

1,060.2

 

$

767.9

 

EMEA

 

714.8

 

875.9

 

Asia-Pacific

 

84.9

 

71.4

 

Consolidated identifiable assets

 

$

1,859.9

 

$

1,715.2

 

 

 

 

 

 

 

Property, plant and equipment, net (at end of period)

 

 

 

 

 

Americas

 

$

90.1

 

$

84.5

 

EMEA

 

86.6

 

117.7

 

Asia-Pacific

 

12.8

 

13.8

 

Consolidated property, plant and equipment, net

 

$

189.5

 

$

216.0

 

 

 

*   Corporate expenses are primarily for administrative compensation expense, internal controls costs, professional fees, including corporate-related legal and audit expenses, shareholder services and benefit administration costs.

 

The above operating segments are presented on a basis consistent with the presentation included in the Company’s December 31, 2014 consolidated financial statements included in its Annual Report on Form 10-K. The EMEA segment was significantly impacted by foreign currency translation in the first quarter of 2015 compared to the first quarter of 2014.

 

The U.S. property, plant and equipment of the Company’s Americas segment was $86.3 million and $80.0 million at March 29, 2015 and March 30, 2014, respectively.  The following includes U.S. net sales of the Company’s Americas segment:

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

 

 

 

 

 

 

U.S. net sales

 

$

221.4 

 

$

201.6 

 

 

The following includes intersegment sales for Americas, EMEA and Asia-Pacific:

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Intersegment Sales

 

 

 

 

 

Americas

 

$

1.8 

 

$

1.2 

 

EMEA

 

2.7 

 

3.6 

 

Asia-Pacific

 

30.5 

 

39.0 

 

Intersegment sales

 

$

35.0 

 

$

43.8 

 

 

Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)

 

8.Accumulated Other Comprehensive (Loss) Income

 

Accumulated other comprehensive (loss) income consists of the following:

 

 

 

Foreign
Currency
Translation

 

Pension
Adjustment

 

Accumulated Other
Comprehensive
Income (Loss)

 

 

 

(in millions)

 

 

 

 

 

 

 

 

 

Balance December 31, 2014 

 

$

(53.0

)

$

(36.1

)

$

(89.1

)

Change in period 

 

(65.1

)

0.2

 

(64.9

)

Balance March 29, 2015 

 

$

(118.1

)

$

(35.9

)

$

(154.0

)

 

 

 

 

 

 

 

 

Balance December 31, 2013

 

$

37.9

 

$

(25.9

)

$

12.0

 

Change in period

 

(4.3

)

0.2

 

(4.1

)

Balance March 30, 2014

 

$

33.6

 

$

(25.7

)

$

7.9

 

 

Debt
Debt

 

9.Debt

 

On February 18, 2014, the Company terminated its prior credit agreement and entered into a new Credit Agreement (the Credit Agreement) among the Company, certain subsidiaries of the Company who become borrowers under the Credit Agreement, JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender and Letter of Credit Issuer, and the other lenders referred to therein. The Credit Agreement provides for a $500 million, five-year, senior unsecured revolving credit facility which may be increased by an additional $500 million under certain circumstances and subject to the terms of the Credit Agreement. The Credit Agreement has a sublimit of up to $100 million in letters of credit. The Credit Agreement matures on February 18, 2019.

 

Borrowings outstanding under the Credit Agreement bear interest at a fluctuating rate per annum equal to an applicable percentage equal to (1) in the case of Eurocurrency rate loans, the British Bankers Association LIBOR rate plus an applicable percentage, ranging from 0.975% to 1.45%, determined by reference to the Company’s consolidated leverage ratio, or (2) in the case of base rate loans and swing line loans, the highest of (a) the federal funds rate plus 0.5%, (b) the rate of interest in effect for such day as announced by JPMorgan Chase Bank, N.A. as its “prime rate,” and (c) the British Bankers Association LIBOR rate plus 1.0%, plus an applicable percentage, ranging from 0.00% to 0.45%, determined by reference to the Company’s consolidated leverage ratio. In addition to paying interest under the Credit Agreement, the Company is also required to pay certain fees in connection with the credit facility, including, but not limited to, an unused facility fee and letter of credit fees.  Under the Credit Agreement, the Company is required to satisfy and maintain specified financial ratios and other financial condition tests.  The Company may repay loans outstanding under the Credit Agreement from time to time without premium or penalty, other than customary breakage costs, if any, and subject to the terms of the Credit Agreement. As of March 29, 2015, the Company was in compliance with all covenants related to the Credit Agreement and had $200.1 million of unused and available credit under the Credit Agreement and $24.9 million of stand-by letters of credit outstanding on the Credit Agreement. The Company had $275 million of borrowings outstanding under the Credit Agreement at March 29, 2015.

 

The Company is a party to several note agreements as further detailed in Note 10 of Notes to Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2014.  These note agreements require the Company to maintain a fixed charge coverage ratio of consolidated EBITDA plus consolidated rent expense during the period to consolidated fixed charges.  Consolidated fixed charges are the sum of consolidated interest expense for the period and consolidated rent expense.  As of March 29, 2015, the Company was in compliance with all covenants regarding these note agreements.

 

Contingencies and Environmental Remediation
Contingencies and Environmental Remediation

 

10.Contingencies and Environmental Remediation

 

Accrual and Disclosure Policy

 

The Company is a defendant in numerous legal matters arising from its ordinary course of operations, including those involving product liability, environmental matters and commercial disputes.

 

The Company reviews its lawsuits and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions.  The Company establishes accruals for matters when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.  The Company’s assessment of whether a loss is probable is based on its assessment of the ultimate outcome of the matter following all appeals.

 

Under the FASB-issued ASC 450 “Contingencies”, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight”.  Thus, references to the upper end of the range of reasonably possible loss for cases in which the Company is able to estimate a range of reasonably possible loss mean the upper end of the range of loss for cases for which the Company believes the risk of loss is more than slight.

 

There may continue to be exposure to loss in excess of any amount accrued.  When it is possible to estimate the reasonably possible loss or range of loss above the amount accrued for the matters disclosed, that estimate is aggregated and disclosed.  The Company records legal costs associated with its legal contingencies as incurred, except for legal costs associated with product liability claims which are included in the actuarial estimates used in determining the product liability accrual.

 

As of March 29, 2015, the Company estimates that the aggregate amount of reasonably possible loss in excess of the amount accrued for its legal contingencies is approximately $6.4 million pre-tax. With respect to the estimate of reasonably possible loss, management has estimated the upper end of the range of reasonably possible loss based on (i) the amount of money damages claimed, where applicable, (ii) the allegations and factual development to date, (iii) available defenses based on the allegations, and/or (iv) other potentially liable parties. This estimate is based upon currently available information and is subject to significant judgment and a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimate will change from time to time, and actual results may vary significantly from the current estimate. In the event of an unfavorable outcome in one or more of the matters described below, the ultimate liability may be in excess of amounts currently accrued, if any, and may be material to the Company’s operating results or cash flows for a particular quarterly or annual period. However, based on information currently known to it, management believes that the ultimate outcome of all matters, as they are resolved over time, is not likely to have a material adverse effect on the financial condition of the Company, though the outcome could be material to the Company’s operating results for any particular period depending, in part, upon the operating results for such period.

 

Connector Class Actions

 

In November and December 2014, Watts Water Technologies, Inc. and Watts Regulator Co. were named as defendants in three separate putative nationwide class action complaints (Meyers v. Watts Water Technologies, Inc., United States District Court for the Southern District of Ohio; Ponzo v. Watts Regulator Co., United States District Court for the District of Massachusetts; Sharp v. Watts Regulator Co., United States District Court for the District of Massachusetts) seeking to recover damages and other relief based on the alleged failure of water heater connectors.  The complaints seek among other items, damages in an unspecified amount, replacement costs, injunctive relief, declaratory relief, and attorneys’ fees and costs.

 

In February 2015, Watts Water Technologies, Inc. and Watts Regulator Co. were named as defendants in a putative nationwide class action complaint (Klug v. Watts Water Technologies, Inc., et  al., United States District Court for the District of Nebraska) seeking to recover damages and other relief based on the alleged failure of the Company’s Floodsafe connectors.  The complaint seeks among other items, damages in an unspecified amount, injunctive relief, declaratory relief, and attorneys’ fees and costs.

 

The Company is unable to estimate a range of reasonably possible loss for the above matters in which damages have not been specified because: (i) the proceedings are in the early stages; (ii) there is uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (iii) there is uncertainty as to the resolution of certain legal and procedural motions; (iv) there are significant factual issues to be resolved; and (v) there are novel legal issues presented.

 

Product Liability

 

The Company is subject to a variety of potential liabilities in connection with product liability cases.  The Company maintains high-deductible product liability and other insurance coverage, which the Company believes to be generally in accordance with industry practices.  For product liability cases in the U.S., management establishes its product liability accrual, which includes legal costs associated with accrued claims, by utilizing third-party actuarial valuations which incorporate historical trend factors and the Company’s specific claims experience derived from loss reports provided by third-party claims administrators.

 

Changes in the nature of product liability claims, legal costs, or the actual settlement amounts could affect the adequacy of the estimates and require changes to the accrual.  Because the liability is an estimate, the ultimate liability may be more or less than reported.

 

Environmental Remediation

 

The Company has been named as a potentially responsible party with respect to a limited number of identified contaminated sites.  The levels of contamination vary significantly from site to site as do the related levels of remediation efforts.  Environmental liabilities are recorded based on the most probable cost, if known, or on the estimated minimum cost of remediation.  Accruals are not discounted to their present value, unless the amount and timing of expenditures are fixed and reliably determinable.  The Company accrues estimated environmental liabilities based on assumptions, which are subject to a number of factors and uncertainties.  Circumstances that can affect the reliability and precision of these estimates include identification of additional sites, environmental regulations, level of clean-up required, technologies available, number and financial condition of other contributors to remediation and the time period over which remediation may occur.  The Company recognizes changes in estimates as new remediation requirements are defined or as new information becomes available.

 

Asbestos Litigation

 

The Company is defending approximately 250 lawsuits in different jurisdictions, alleging injury or death as a result of exposure to asbestos.  The complaints in these cases typically name a large number of defendants and do not identify any particular Company products as a source of asbestos exposure.  To date, discovery has failed to yield evidence of substantial exposure to any Company products and no judgments have been entered against the Company.

 

Other Litigation

 

Other lawsuits and proceedings or claims, arising from the ordinary course of operations, are also pending or threatened against the Company.

 

Defined Benefit Plans
Defined Benefit Plans

 

11.Defined Benefit Plans

 

For the majority of its U.S. employees, the Company sponsors a funded non-contributing defined benefit pension plan, the Watts Water Technologies, Inc. Pension Plan (the “Pension Plan”), and an unfunded non-contributing defined benefit pension plan, the Watts Water Technologies, Inc. Supplemental Employees Retirement Plan (the “SERP”). Benefits are based primarily on years of service and employees’ compensation. The funding policy of the Company for these plans is to contribute an annual amount that does not exceed the maximum amount that can be deducted for federal income tax purposes. On October 31, 2011, the Company’s Board of Directors voted to cease accruals effective December 31, 2011 under both the Company’s Pension Plan and the SERP. On April 28, 2014, the Company’s Board of Directors voted to terminate the Company’s Pension Plan and the SERP.

 

The Pension Plan was terminated effective July 31, 2014. Distribution of plan assets pursuant to the termination will not be made until the plan termination satisfies the regulatory requirements prescribed by the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation, which is expected to occur in late 2015. The SERP was terminated effective May 15, 2014. The Company will settle all liabilities under the SERP in accordance with Section 409A of the Internal Revenue Code by paying lump sums to plan participants at least twelve and no more than twenty four months following the termination date. The Board of Directors authorized the Company to make such contributions to the Pension Plan and SERP as may be necessary to make the plans sufficient to settle all plan liabilities. During the third quarter ended September 28, 2014, the Company re-measured its pension liability and net loss in accumulated other comprehensive income to reflect the plan termination basis for both the Pension Plan and SERP. As a result, the pension liability increased $17.1 million and the net loss increased by $10.5 million, net of tax benefits of $6.6 million.

 

The Company expects the distributions for the two plans to be completed by December 31, 2015. Except for retirees receiving payments under the Pension Plan (or “in pay status”), participants in the Pension Plan will have the choice of receiving either a single lump sum payment or an annuity. Retirees in pay status will continue to receive payments of their pension plan benefits pursuant to their current annuity elections. The Company plans to purchase annuity contracts from an insurance company for all retirees and participants that choose annuities as a payment option under the Pension Plan. All participants under the SERP will be paid a lump sum. The lump sum payments paid to participants will represent the actuarial equivalent value of the participants’ remaining accrued benefits under the Pension Plan and SERP as of the applicable distribution dates, calculated in accordance with the terms of the plans and based on the participants’ ages on the distribution dates.

 

The components of net periodic benefit cost are as follows:

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Service cost — administrative costs

 

$

0.4

 

$

0.2

 

Interest costs on benefits obligation

 

1.4

 

1.5

 

Expected return on assets

 

(1.2

)

(1.5

)

Net actuarial loss amortization

 

0.4

 

0.3

 

Net periodic benefit cost

 

$

1.0

 

$

0.5

 

 

The information related to the Company’s pension funds cash flow is as follows:

 

 

 

First Quarter Ended

 

 

 

March 29, 2015

 

March 30, 2014

 

 

 

(in millions)

 

Employer contributions

 

$

0.3 

 

$

0.2 

 

 

The Company expects to contribute approximately $40 million to $45 million to its pension plans for the remainder of 2015.  The expected contribution considers the expected shortfall based on a plan termination basis as of December 31, 2015.  The expected contribution is subject to change based on the distribution date, fair value of the plan assets at distribution, market interest rates and annuity purchase rates at distribution, demographic experience after 2014 and elected forms of payment.

 

Subsequent Events
Subsequent Events

 

12.Subsequent Events

 

Dividend Declared

 

On April 28, 2015, the Company declared a quarterly dividend of seventeen cents ($0.17) per share on each outstanding share of Class A common stock and Class B common stock payable on May 29, 2015 to stockholders of record at the close of business on May 18, 2015.

 

Accounting Policies (Policies)

 

Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

 

Goodwill and Long-Lived Assets

 

The changes in the carrying amount of goodwill by geographic segment are as follows:

 

 

 

March 29, 2015

 

 

 

Gross Balance

 

Accumulated Impairment Losses

 

Net Goodwill

 

 

 

Balance
January 1,
2015

 

Acquired
During
the
Period

 

Foreign
Currency
Translation
and Other

 

Balance
March 29,
2015

 

Balance
January 1,
2015

 

Impairment
Loss
During the
Period

 

Balance
March 29,
2015

 

March 29,
2015

 

 

 

(in millions )

 

Americas

 

$

398.0

 

$

 

$

(0.7

)

$

397.3

 

$

(24.5

)

$

 

$

(24.5

)

$

372.8

 

Europe, Middle East and Africa (EMEA)

 

265.5

 

 

(26.3

)

239.2

 

 

 

 

239.2

 

Asia-Pacific

 

12.9

 

 

 

12.9

 

(12.9

)

 

(12.9

)

 

Total

 

$

676.4

 

$

 

$

(27.0

)

$

649.4

 

$

(37.4

)

$

 

$

(37.4

)

$

612.0

 

 

 

 

March 30, 2014

 

 

 

Gross Balance

 

Accumulated Impairment Losses

 

Net Goodwill

 

 

 

Balance
January 1,
2014

 

Acquired
During the
Period

 

Foreign
Currency
Translation
and Other

 

Balance
March 30,
2014

 

Balance
January 1,
2014

 

Impairment
Loss During
the Period

 

Balance
March 30,
2014

 

March 30,
2014

 

 

 

(in millions)

 

Americas

 

$

224.7

 

$

 

$

(0.4

)

$

224.3

 

$

(24.5

)

$

 

$

(24.5

)

$

199.8

 

EMEA

 

301.3

 

 

(0.1

)

301.2

 

 

 

 

301.2

 

Asia-Pacific

 

13.3

 

 

(0.4

)

12.9

 

 

 

 

12.9

 

Total

 

$

539.3

 

$

 

$

(0.9

)

$

538.4

 

$

(24.5

)

$

 

$

(24.5

)

$

513.9

 

 

Goodwill and indefinite-lived intangible assets are tested for impairment at least annually or more frequently if events or circumstances indicate that it is “more likely than not” that they might be impaired, such as from a change in business conditions. The Company performs its annual goodwill and indefinite-lived intangible assets impairment assessment in the fourth quarter of each year.

 

On December 1, 2014, the Company completed the acquisition of AERCO International, Inc. (“AERCO”), in a share purchase transaction.  The aggregate purchase price, including an estimated working capital adjustment, was approximately $272.2 million and as of March 29, 2015 was subject to a final post-closing working capital adjustment. The Company accounted for the transaction as a business combination.  The Company completed a preliminary purchase price allocation that resulted in the recognition of $174.3 million in goodwill and $102.4 million in intangible assets.

 

As of the end of the fourth quarter of 2014, management determined that it was “more likely than not” that a significant portion of the Asia-Pacific reporting unit’s third party and intersegment net sales were expected to decline as a result of the initial phase of the Americas and Asia-Pacific transformation and restructuring program. Based on this factor, the Company performed a quantitative impairment analysis for the Asia-Pacific reporting unit. The Company completed a fair value assessment of the net assets of the reporting unit and recorded an impairment of $12.9 million in the fourth quarter of 2014.  The Company estimated the fair value of the reporting unit using the present value of expected future cash flows that reflect the impact of certain product line rationalization efforts associated with the initial phase of the Americas and Asia-Pacific transformation and restructuring program, including the sale of certain assets.  In the second step of the impairment test, the carrying value of the goodwill exceeded the implied fair value of goodwill, resulting in a full impairment. There was no tax benefit associated with the impairment and the $12.9 million charge eliminated all goodwill on the Asia-Pacific reporting unit.

 

Intangible assets with estimable lives and other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of intangible assets with estimable lives and other long-lived assets are measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted pretax cash flows expected to be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the related estimated fair value. Estimated fair value is based on either discounted future pretax operating cash flows or appraised values, depending on the nature of the asset. The Company determines the discount rate for this analysis based on the weighted average cost of capital based on the market and guideline public companies for the related business, and does not allocate interest charges to the asset or asset group being measured.  Judgment is required to estimate future operating cash flows.

 

Intangible assets include the following:

 

 

 

March 29, 2015

 

December 31, 2014

 

 

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

 

 

(in millions)

 

Patents

 

$

16.1

 

$

(13.5

)

$

2.6

 

$

16.2

 

$

(13.3

)

$

2.9

 

Customer relationships

 

203.5

 

(91.1

)

112.4

 

206.7

 

(87.5

)

119.2

 

Technology

 

41.8

 

(13.8

)

28.0

 

42.1

 

(12.9

)

29.2

 

Trade Names

 

20.3

 

(4.6

)

15.7

 

20.6

 

(4.2

)

16.4

 

Other

 

9.5

 

(5.7

)

3.8

 

9.5

 

(5.7

)

3.8

 

Total amortizable intangibles

 

291.2

 

(128.7

)

162.5

 

295.1

 

(123.6

)

171.5

 

Indefinite-lived intangible assets

 

36.9

 

 

36.9

 

38.6

 

 

38.6

 

Total

 

$

328.1

 

$

(128.7

)

$

199.4

 

$

333.7

 

$

(123.6

)

$

210.1

 

 

The Company acquired $102.4 million in intangible assets as part of the AERCO acquisition, consisting primarily of customer and manufacturing representative relationships valued at $78.5 million, developed technology of $15.8 million and the trade name of $7.4 million.  The weighted-average remaining life of total amortizable intangible assets is 15 years and by asset category of customer relationships, developed technology and trade name are 16 years, 10 years and 20 years, respectively.

 

Aggregate amortization expense for amortizable intangible assets for the first quarters of 2015 and 2014 was $5.1 million and $3.7 million, respectively.  Additionally, future amortization expense for the next five years on amortizable intangible assets is expected to be approximately $14.7 million for the remainder of 2015, $19.2 million for 2016, $18.9 million for 2017, $15.7 million for 2018 and $11.9 million for 2019. Amortization expense is recorded on a straight-line basis over the estimated useful lives of the intangible assets. The weighted-average remaining life of total amortizable intangible assets is 12.3 years. Patents, customer relationships, technology, trade names and other amortizable intangibles have weighted-average remaining lives of 4.9 years, 12.0 years, 10.2 years, 14.4 years and 33.2 years, respectively. Indefinite-lived intangible assets primarily include trademarks and trade names.

 

 

Stock-Based Compensation

 

The Company maintains one stock incentive plan, the Second Amended and Restated 2004 Stock Incentive Plan (the “2004 Stock Incentive Plan”).  Under this plan, key employees have been granted nonqualified stock options to purchase the Company’s Class A common stock. Options typically become exercisable over a four-year period at the rate of 25% per year and expire ten years after the grant date. However, most options granted in 2014 become exercisable over a three-year period at the rate of one-third per year.  Options granted under the plan may have exercise prices of not less than 100% of the fair market value of the Class A common stock on the date of grant. The Company’s current practice is to grant all options at fair market value on the grant date. The Company did not issue any stock options in the first three months of 2015 and issued 4,808 stock options during the first three months of 2014.

 

The Company grants shares of restricted stock and deferred shares to key employees and stock awards to non-employee members of the Company’s Board of Directors under the 2004 Stock Incentive Plan.  Stock awards to non-employee members of the Company’s Board of Directors are fully vested upon grant.  Employees’ restricted stock awards and deferred shares typically vest over a three-year period at the rate of one-third per year, except that most restricted stock awards and deferred shares granted in 2014 vest over a two-year period at the rate of 50% per year. The restricted stock awards and deferred shares are amortized to expense on a straight-line basis over the vesting period. The Company issued 1,262 and 1,747 shares of restricted stock in the first three months of 2015 and 2014, respectively.

 

Beginning in 2014, the Company also granted performance stock units to key employees under the 2004 Stock Incentive Plan.  Performance stock units vest at the end of a three-year performance period.  Upon vesting, the number of shares of the Company’s Class A common stock awarded to each performance stock unit recipient will be determined based on the Company’s performance relative to certain performance goals set at the time the performance stock units were granted.  The performance goals for the 2014 performance stock units are based on the compound annual growth rate of the Company’s revenue over the three-year performance period and the Company’s return on invested capital (“ROIC”) for the third year of the performance period.  The performance period for the 2014 performance stock units is January 1, 2014 through December 31, 2016.  The 2014 performance stock units also provide an overall minimum ROIC threshold, which the Company must exceed in order for any shares of the Company’s Class A common stock to be earned. The number of shares of Class A common stock that may be earned by a performance stock unit recipient ranges from 0% to 200% of a target number of shares designated for each recipient at the time of grant.  The performance stock units are amortized to expense over the vesting period, and based on the Company’s performance relative to the performance goals, may be adjusted.  If such goals are not met, no awards are earned and previously recognized compensation expense is reversed. The Company issued 117,619 shares of performance stock units in 2014 under the 2004 Stock Incentive Plan.  No shares of performance stock units were issued in the first three months of 2015.

 

The Company has a Management Stock Purchase Plan that allows for the purchase of restricted stock units (RSUs) by key employees.  On an annual basis, key employees may elect to receive a portion of their annual incentive compensation in RSUs instead of cash.  Each RSU represents one share of Class A common stock and is purchased by the employee at 67% of the fair market value of the Company’s Class A common stock on the date of grant.  RSUs vest either annually over a three-year period from the grant date or upon the third anniversary of the grant date and receipt of the shares underlying RSUs is deferred for a minimum of three years or such greater number of years as is chosen by the employee.  An aggregate of 2,000,000 shares of Class A common stock may be issued under the Management Stock Purchase Plan. The Company granted 59,995 RSUs and 30,561 RSUs in the first three months of 2015 and 2014, respectively.

 

The fair value of each RSU issued under the Management Stock Purchase Plan is estimated on the date of grant using the Black-Scholes-Merton Model based on the following weighted average assumptions:

 

 

 

2015

 

2014

 

Expected life (years)

 

3.0 

 

3.0 

 

Expected stock price volatility

 

23.4 

%

31.2 

%

Expected dividend yield

 

1.2 

%

0.9 

%

Risk-free interest rate

 

1.1 

%

0.7 

%

 

The above assumptions were used to determine the weighted average grant-date fair value of RSUs of $19.04 and $22.57 in 2015 and 2014, respectively.

 

A more detailed description of each of these plans can be found in Note 12 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

 

 

Shipping and Handling

 

The Company’s shipping and handling costs included in selling, general and administrative expenses were $14.4 million and $14.7 million for the first quarters of 2015 and 2014, respectively.

 

 

Research and Development

 

Research and development costs included in selling, general and administrative expenses were $6.4 million and $6.3 million for the first quarters of 2015 and 2014, respectively.

 

 

Taxes, Other than Income Taxes

 

Taxes assessed by governmental authorities on sale transactions are recorded on a net basis and excluded from sales in the Company’s consolidated statements of operations.

 

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

 

New Accounting Standards

 

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Interest — Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs”. Under ASU 2015- 03, debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts.  The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. ASU 2015-03 is effective in the first quarter of 2016 for public companies with calendar year ends, with early adoption permitted. The ASU requires retrospective application to all prior periods presented in the financial statements. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

 

In January 2015, the FASB issued ASU 2015-01, “Income Statement—Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items”. ASU 2015- 01 eliminates from U.S. GAAP the concept of extraordinary items as part of its initiative to reduce complexity in accounting standards. ASU 2015-01 is effective in the first quarter of 2016 for public companies with calendar year ends, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The ASU may be applied prospectively or retrospectively to all prior periods presented. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

 

Accounting Policies (Tables)

 

 

 

 

March 29, 2015

 

 

 

Gross Balance

 

Accumulated Impairment Losses

 

Net Goodwill

 

 

 

Balance
January 1,
2015

 

Acquired
During
the
Period

 

Foreign
Currency
Translation
and Other

 

Balance
March 29,
2015

 

Balance
January 1,
2015

 

Impairment
Loss
During the
Period

 

Balance
March 29,
2015

 

March 29,
2015

 

 

 

(in millions )

 

Americas

 

$

398.0

 

$

 

$

(0.7

)

$

397.3

 

$

(24.5

)

$

 

$

(24.5

)

$

372.8

 

Europe, Middle East and Africa (EMEA)

 

265.5

 

 

(26.3

)

239.2

 

 

 

 

239.2

 

Asia-Pacific

 

12.9

 

 

 

12.9

 

(12.9

)

 

(12.9

)

 

Total

 

$

676.4

 

$

 

$

(27.0

)

$

649.4

 

$

(37.4

)

$

 

$

(37.4

)

$

612.0

 

 

 

 

March 30, 2014

 

 

 

Gross Balance

 

Accumulated Impairment Losses

 

Net Goodwill

 

 

 

Balance
January 1,
2014

 

Acquired
During the
Period

 

Foreign
Currency
Translation
and Other

 

Balance
March 30,
2014

 

Balance
January 1,
2014

 

Impairment
Loss During
the Period

 

Balance
March 30,
2014

 

March 30,
2014

 

 

 

(in millions)

 

Americas

 

$

224.7

 

$

 

$

(0.4

)

$

224.3

 

$

(24.5

)

$

 

$

(24.5

)

$

199.8

 

EMEA

 

301.3

 

 

(0.1

)

301.2

 

 

 

 

301.2

 

Asia-Pacific

 

13.3

 

 

(0.4

)

12.9

 

 

 

 

12.9

 

Total

 

$

539.3

 

$

 

$

(0.9

)

$

538.4

 

$

(24.5

)

$

 

$

(24.5

)

$

513.9

 

 

 

 

 

 

March 29, 2015

 

December 31, 2014

 

 

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

 

 

(in millions)

 

Patents

 

$

16.1

 

$

(13.5

)

$

2.6

 

$

16.2

 

$

(13.3

)

$

2.9

 

Customer relationships

 

203.5

 

(91.1

)

112.4

 

206.7

 

(87.5

)

119.2

 

Technology

 

41.8

 

(13.8

)

28.0

 

42.1

 

(12.9

)

29.2

 

Trade Names

 

20.3

 

(4.6

)

15.7

 

20.6

 

(4.2

)

16.4

 

Other

 

9.5

 

(5.7

)

3.8

 

9.5

 

(5.7

)

3.8

 

Total amortizable intangibles

 

291.2

 

(128.7

)

162.5

 

295.1

 

(123.6

)

171.5

 

Indefinite-lived intangible assets

 

36.9

 

 

36.9

 

38.6

 

 

38.6

 

Total

 

$

328.1

 

$

(128.7

)

$

199.4

 

$

333.7

 

$

(123.6

)

$

210.1

 

 

 

 

 

 

2015

 

2014

 

Expected life (years)

 

3.0 

 

3.0 

 

Expected stock price volatility

 

23.4 

%

31.2 

%

Expected dividend yield

 

1.2 

%

0.9 

%

Risk-free interest rate

 

1.1 

%

0.7 

%

 

Acquisitions (Tables)

 

The following table summarizes the value of the assets and liabilities acquired (in millions):

 

Accounts receivable

 

$

16.7

 

Inventory

 

16.4

 

Fixed assets

 

7.6

 

Deferred tax assets

 

8.0

 

Other assets

 

7.6

 

Intangible assets

 

102.4

 

Goodwill

 

174.3

 

Accounts payable

 

(6.7

)

Accrued expenses and other

 

(18.1

)

Deferred tax liability

 

(36.0

)

Purchase price

 

$

272.2

 

 

 

 

 

 

First Quarter Ended

 

Amounts in millions (except per share information)

 

March 29, 2015

 

March 30, 2014

 

Net sales

 

$

356.2 

 

$

383.7 

 

Net income from continuing operations

 

$

12.3 

 

$

13.3 

 

Net income per share:

 

 

 

 

 

Basic EPS—continuing operations

 

$

0.35 

 

$

0.38 

 

Diluted EPS—continuing operations

 

$

0.35 

 

$

0.38 

 

 

Financial Instruments and Derivative Instruments (Tables)

 

 

 

 

Fair Value Measurements at March 29, 2015 Using:

 

 

 

 

 

Quoted Prices in
Active
Markets for Identical
Assets

 

Significant Other
Observable
Inputs

 

Significant
Unobservable
Inputs

 

 

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

(in millions)

 

Assets

 

 

 

 

 

 

 

 

 

Plan asset for deferred compensation(1)

 

$

3.7 

 

$

3.7 

 

$

 

$

 

Total assets

 

$

3.7 

 

$

3.7 

 

$

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

Plan liability for deferred compensation(2)

 

$

3.7 

 

$

3.7 

 

$

 

$

 

Contingent consideration(3)

 

2.3 

 

 

 

2.3 

 

Total liabilities

 

$

6.0 

 

$

3.7 

 

$

 

$

2.3 

 

 

 

 

Fair Value Measurements at December 31, 2014 Using:

 

 

 

 

 

Quoted Prices in
Active
Markets for Identical
Assets

 

Significant Other
Observable
Inputs

 

Significant
Unobservable
Inputs

 

 

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

(in millions)

 

Assets

 

 

 

 

 

 

 

 

 

Plan asset for deferred compensation(1)

 

$

4.0 

 

$

4.0 

 

$

 

$

 

Total assets

 

$

4.0 

 

$

4.0 

 

$

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

Plan liability for deferred compensation(2)

 

$

4.0 

 

$

4.0 

 

$

 

$

 

Contingent consideration(3)

 

2.5 

 

 

 

2.5 

 

Total liabilities

 

$

6.5 

 

$

4.0 

 

$

 

$

2.5 

 

 

 

(1)

Included on the Company’s consolidated balance sheet in other assets (other, net).

(2)

Included on the Company’s consolidated balance sheet in accrued compensation and benefits.

(3)

Included on the Company’s consolidated balance sheet in accrued expenses and other liabilities as of March 29, 2015 and December 31, 2014.

 

 

 

 

 

Balance

 

 

 

Total realized and
unrealized (gains)
losses included in:

 

Balance

 

 

 

December 31,
2014

 

Settlements

 

Net earnings
adjustments

 

Comprehensive
income

 

March 29,
2015

 

 

 

(in millions)

 

Contingent consideration

 

$

2.5

 

$

 

$

 

$

(0.2

)

$

2.3

 

 

 

 

 

 

March 29,

 

December 31,

 

 

 

2015

 

2014

 

 

 

(in millions)

 

Carrying amount

 

$

578.9 

 

$

579.7 

 

Estimated fair value

 

$

597.2 

 

$

599.3 

 

 

Restructuring and Other Charges, Net (Tables)

 

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Restructuring costs:

 

 

 

 

 

2015 Actions

 

$

1.3 

 

$

 

2013 Actions

 

0.5 

 

0.4 

 

Other Actions

 

0.2 

 

3.8 

 

Total restructuring and other charges, net

 

$

2.0 

 

$

4.2 

 

 

 

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Americas

 

$

1.3

 

$

1.9

 

EMEA

 

0.8

 

1.5

 

Corporate

 

(0.1

)

0.8

 

Total

 

$

2.0

 

$

4.2

 

 

 

 

 

 

First Quarter Ended

 

 

 

March 29, 2015

 

 

 

(in millions)

 

Balance at December 31, 2014

 

$

1.5

 

Net pre-tax restructuring charges 

 

0.2

 

Utilization and foreign currency impact 

 

(1.2

)

Balance at March 29, 2015 

 

$

0.5

 

 

 

 

 

 

Severance

 

Legal and
consultancy

 

Asset
write-downs

 

Facility
exit
and other

 

Total

 

 

 

(in millions)

 

Expected costs

 

$

7.5

 

$

0.2

 

$

0.2

 

$

0.5

 

$

8.4

 

Costs incurred—2013

 

(4.1

)

 

 

 

(4.1

)

Costs incurred—2014

 

(3.2

)

(0.2

)

(0.2

)

(0.2

)

(3.8

)

Costs incurred—first quarter 2015 

 

(0.2

)

 

 

(0.3

)

(0.5

)

Remaining costs at March 29, 2015 

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

Severance

 

Legal and
consultancy

 

Asset
write-downs

 

Facility
exit
and other

 

Total

 

 

 

(in millions)

 

Expected costs

 

$

8.8

 

$

0.2

 

$

0.8

 

$

0.1

 

$

9.9

 

Costs incurred—2014

 

(6.9

)

 

 

 

(6.9

)

Costs incurred—first quarter 2015 

 

 

(0.2

)

(0.1

)

 

(0.3

)

Remaining costs at March 29, 2015 

 

$

1.9

 

$

 

$

0.7

 

$

0.1

 

$

2.7

 

 

Earnings per Share (Tables)
Summary of reconciliation of the calculation of earnings per share

 

 

 

 

For the First Quarter Ended March 29, 2015

 

For the First Quarter Ended March 30, 2014

 

 

 

Income
(Numerator)

 

Shares
(Denominator)

 

Per Share
Amount

 

Income
(Numerator)

 

Shares
(Denominator)

 

Per Share
Amount

 

 

 

(amounts in millions, except per share amounts)

 

Basic EPS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

11.6 

 

35.1 

 

$

0.33 

 

$

14.1 

 

35.4 

 

$

0.40 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock equivalents

 

 

 

0.1 

 

 

 

 

 

0.1 

 

 

 

Diluted EPS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

11.6 

 

35.2 

 

$

0.33 

 

$

14.1 

 

35.5 

 

$

0.40 

 

 

Segment Information (Tables)

 

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Net sales

 

 

 

 

 

Americas

 

$

237.4

 

$

219.1

 

EMEA

 

109.0

 

139.1

 

Asia-Pacific

 

9.8

 

7.0

 

Consolidated net sales

 

$

356.2

 

$

365.2

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

Americas

 

$

24.2

 

$

22.6

 

EMEA

 

5.4

 

8.9

 

Asia-Pacific

 

1.5

 

0.9

 

Subtotal reportable segments

 

31.1

 

32.4

 

 

 

 

 

 

 

Corporate (*)

 

(8.3

)

(6.6

)

Consolidated operating income

 

22.8

 

25.8

 

 

 

 

 

 

 

Interest income

 

0.2

 

0.1

 

Interest expense

 

(5.9

)

(4.9

)

Other income (expense), net

 

0.2

 

(0.4

)

Income from continuing operations before income taxes

 

$

17.3

 

$

20.6

 

Capital expenditures

 

 

 

 

 

Americas

 

$

4.1

 

$

2.2

 

EMEA

 

1.2

 

2.5

 

Asia-Pacific

 

0.3

 

0.3

 

Consolidated capital expenditures

 

$

5.6

 

$

5.0

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

Americas

 

$

7.0

 

$

4.9

 

EMEA

 

5.4

 

6.6

 

Asia-Pacific

 

0.6

 

0.4

 

Consolidated depreciation and amortization

 

$

13.0

 

$

11.9

 

 

 

 

 

 

 

Identifiable assets (at end of period)

 

 

 

 

 

Americas

 

$

1,060.2

 

$

767.9

 

EMEA

 

714.8

 

875.9

 

Asia-Pacific

 

84.9

 

71.4

 

Consolidated identifiable assets

 

$

1,859.9

 

$

1,715.2

 

 

 

 

 

 

 

Property, plant and equipment, net (at end of period)

 

 

 

 

 

Americas

 

$

90.1

 

$

84.5

 

EMEA

 

86.6

 

117.7

 

Asia-Pacific

 

12.8

 

13.8

 

Consolidated property, plant and equipment, net

 

$

189.5

 

$

216.0

 

 

*   Corporate expenses are primarily for administrative compensation expense, internal controls costs, professional fees, including corporate-related legal and audit expenses, shareholder services and benefit administration costs.

 

 

 

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

 

 

 

 

 

 

U.S. net sales

 

$

221.4 

 

$

201.6 

 

 

 

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Intersegment Sales

 

 

 

 

 

Americas

 

$

1.8 

 

$

1.2 

 

EMEA

 

2.7 

 

3.6 

 

Asia-Pacific

 

30.5 

 

39.0 

 

Intersegment sales

 

$

35.0 

 

$

43.8 

 

 

Accumulated Other Comprehensive Income (Loss) (Tables)
Schedule of amounts recognized in accumulated other comprehensive income (loss)

 

 

 

 

Foreign
Currency
Translation

 

Pension
Adjustment

 

Accumulated Other
Comprehensive
Income (Loss)

 

 

 

(in millions)

 

 

 

 

 

 

 

 

 

Balance December 31, 2014 

 

$

(53.0

)

$

(36.1

)

$

(89.1

)

Change in period 

 

(65.1

)

0.2

 

(64.9

)

Balance March 29, 2015 

 

$

(118.1

)

$

(35.9

)

$

(154.0

)

 

 

 

 

 

 

 

 

Balance December 31, 2013

 

$

37.9

 

$

(25.9

)

$

12.0

 

Change in period

 

(4.3

)

0.2

 

(4.1

)

Balance March 30, 2014

 

$

33.6

 

$

(25.7

)

$

7.9

 

 

Defined Benefit Plans (Tables)

 

 

 

 

 

First Quarter Ended

 

 

 

March 29,
2015

 

March 30,
2014

 

 

 

(in millions)

 

Service cost — administrative costs

 

$

0.4

 

$

0.2

 

Interest costs on benefits obligation

 

1.4

 

1.5

 

Expected return on assets

 

(1.2

)

(1.5

)

Net actuarial loss amortization

 

0.4

 

0.3

 

Net periodic benefit cost

 

$

1.0

 

$

0.5

 

 

 

 

 

 

First Quarter Ended

 

 

 

March 29, 2015

 

March 30, 2014

 

 

 

(in millions)

 

Employer contributions

 

$

0.3 

 

$

0.2 

 

 

Basis of Presentation (Details)
3 Months Ended
Mar. 29, 2015
Basis of Presentation
 
Length of fiscal year
364 days 
Length of fiscal quarter
91 days 
Accounting Policies (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 0 Months Ended 3 Months Ended
Mar. 29, 2015
Dec. 31, 2014
Mar. 30, 2014
Dec. 1, 2014
Aerco
Dec. 1, 2014
Aerco
Mar. 29, 2015
Americas
Mar. 30, 2014
Americas
Mar. 29, 2015
EMEA
Mar. 30, 2014
EMEA
Mar. 30, 2014
Asia Pacific
Mar. 29, 2015
Asia Pacific
Dec. 31, 2014
Asia Pacific
Gross Balance
 
 
 
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
$ 676.4 
 
$ 539.3 
 
 
$ 398.0 
$ 224.7 
$ 265.5 
$ 301.3 
$ 13.3 
$ 12.9 
$ 12.9 
Foreign Currency Translation and Other
(27.0)
 
(0.9)
 
 
(0.7)
(0.4)
(26.3)
(0.1)
(0.4)
 
 
Balance at the end of the period
649.4 
676.4 
538.4 
 
 
397.3 
224.3 
239.2 
301.2 
12.9 
12.9 
12.9 
Accumulated Impairment Losses
 
 
 
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
(37.4)
 
(24.5)
 
 
(24.5)
(24.5)
 
 
 
(12.9)
(12.9)
Impairment Loss During the Period
 
12.9 
 
 
 
 
 
 
 
 
 
 
Balance at the end of the period
(37.4)
(37.4)
(24.5)
 
 
(24.5)
(24.5)
 
 
 
(12.9)
(12.9)
Net Goodwill
612.0 
639.0 
513.9 
 
174.3 
372.8 
199.8 
239.2 
301.2 
12.9 
 
 
Business combination
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate consideration, net
 
 
 
272.2 
 
 
 
 
 
 
 
 
Purchase price allocated to goodwill
612.0 
639.0 
513.9 
 
174.3 
372.8 
199.8 
239.2 
301.2 
12.9 
 
 
Purchase price allocated to intangible assets
 
 
 
 
102.4 
 
 
 
 
 
 
 
Tax benefit on Impairment charge
$ 0 
 
 
 
 
 
 
 
 
 
 
 
Accounting Policies (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 29, 2015
Mar. 30, 2014
Dec. 31, 2014
Intangible assets subject to amortization
 
 
 
Gross Carrying Amount
$ 291.2 
 
$ 295.1 
Accumulated Amortization
(128.7)
 
(123.6)
Net Carrying Amount
162.5 
 
171.5 
Indefinite-lived intangible assets
 
 
 
Indefinite-lived intangible assets
36.9 
 
38.6 
Intangible assets
 
 
 
Gross Carrying Amount
328.1 
 
333.7 
Net Carrying Amount
199.4 
 
210.1 
Weighted-average amortization
12 years 3 months 18 days 
 
 
Aggregate amortization expense for amortized intangible assets
5.1 
3.7 
 
Future amortization expense
 
 
 
Future amortization expense for remainder of 2015
14.7 
 
 
Future amortization expense, 2016
19.2 
 
 
Future amortization expense, 2017
18.9 
 
 
Future amortization expense, 2018
15.7 
 
 
Future amortization expense, 2019
11.9 
 
 
Aerco
 
 
 
Intangible assets
 
 
 
Net Carrying Amount
102.4 
 
 
Weighted-average amortization
15 years 
 
 
Patents
 
 
 
Intangible assets subject to amortization
 
 
 
Gross Carrying Amount
16.1 
 
16.2 
Accumulated Amortization
(13.5)
 
(13.3)
Net Carrying Amount
2.6 
 
2.9 
Intangible assets
 
 
 
Weighted-average amortization
4 years 10 months 24 days 
 
 
Customer relationships
 
 
 
Intangible assets subject to amortization
 
 
 
Gross Carrying Amount
203.5 
 
206.7 
Accumulated Amortization
(91.1)
 
(87.5)
Net Carrying Amount
112.4 
 
119.2 
Intangible assets
 
 
 
Weighted-average amortization
12 years 
 
 
Customer relationships |
Aerco
 
 
 
Intangible assets
 
 
 
Gross Carrying Amount
78.5 
 
 
Weighted-average amortization
16 years 
 
 
Technology
 
 
 
Intangible assets subject to amortization
 
 
 
Gross Carrying Amount
41.8 
 
42.1 
Accumulated Amortization
(13.8)
 
(12.9)
Net Carrying Amount
28.0 
 
29.2 
Intangible assets
 
 
 
Weighted-average amortization
10 years 2 months 12 days 
 
 
Technology |
Aerco
 
 
 
Intangible assets
 
 
 
Gross Carrying Amount
15.8 
 
 
Weighted-average amortization
10 years 
 
 
Trade name
 
 
 
Intangible assets subject to amortization
 
 
 
Gross Carrying Amount
20.3 
 
20.6 
Accumulated Amortization
(4.6)
 
(4.2)
Net Carrying Amount
15.7 
 
16.4 
Intangible assets
 
 
 
Weighted-average amortization
14 years 4 months 24 days 
 
 
Trade name |
Aerco
 
 
 
Intangible assets
 
 
 
Gross Carrying Amount
7.4 
 
 
Weighted-average amortization
20 years 
 
 
Other
 
 
 
Intangible assets subject to amortization
 
 
 
Gross Carrying Amount
9.5 
 
9.5 
Accumulated Amortization
(5.7)
 
(5.7)
Net Carrying Amount
$ 3.8 
 
$ 3.8 
Intangible assets
 
 
 
Weighted-average amortization
33 years 2 months 12 days 
 
 
Accounting Policies (Details 3) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended
Mar. 29, 2015
Mar. 30, 2014
Dec. 31, 2014
Performance stock units
Class A
Minimum
Dec. 31, 2014
Performance stock units
Class A
Maximum
Mar. 29, 2015
Second Amended and Restated 2004 Stock Incentive Plan
item
Mar. 29, 2015
Second Amended and Restated 2004 Stock Incentive Plan
Stock options
Mar. 30, 2014
Second Amended and Restated 2004 Stock Incentive Plan
Stock options
Mar. 29, 2015
Second Amended and Restated 2004 Stock Incentive Plan
Stock options
Class A
Mar. 29, 2015
Second Amended and Restated 2004 Stock Incentive Plan
Restricted stock
Mar. 30, 2014
Second Amended and Restated 2004 Stock Incentive Plan
Restricted stock
Mar. 29, 2015
Second Amended and Restated 2004 Stock Incentive Plan
Deferred shares
Dec. 31, 2014
Second Amended and Restated 2004 Stock Incentive Plan
Deferred shares
Mar. 29, 2015
Second Amended and Restated 2004 Stock Incentive Plan
Deferred shares
Maximum
Dec. 31, 2014
Second Amended and Restated 2004 Stock Incentive Plan
Deferred shares
Maximum
Sep. 30, 2014
Second Amended and Restated 2004 Stock Incentive Plan
Performance stock units
Dec. 31, 2014
Second Amended and Restated 2004 Stock Incentive Plan
Performance stock units
Mar. 29, 2015
Management Stock Purchase Plan
Class A
Mar. 29, 2015
Management Stock Purchase Plan
Restricted stock units (RSUs)
Mar. 30, 2014
Management Stock Purchase Plan
Restricted stock units (RSUs)
Mar. 29, 2015
Management Stock Purchase Plan
Restricted stock units (RSUs)
Minimum
Mar. 29, 2015
Management Stock Purchase Plan
Restricted stock units (RSUs)
Maximum
Mar. 29, 2015
Management Stock Purchase Plan
Restricted stock units (RSUs)
Class A
Stock-based compensation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of stock incentive plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vesting period
 
 
 
 
 
4 years 
 
 
 
 
 
 
3 years 
2 years 
 
3 years 
 
 
 
3 years 
3 years 
 
Percentage of stock options becoming exercisable
 
 
 
 
 
25.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiration period
 
 
 
 
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum exercise price as percentage of fair market value of common stock on grant date
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options granted (in shares)
 
 
 
 
 
 
4,808 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vesting rate per year for maximum vesting period
 
 
 
 
 
 
 
 
 
 
0.33 
50 
 
 
 
 
 
 
 
 
 
 
Granted (in shares)
 
 
 
 
 
 
 
 
1,262 
1,747 
 
 
 
 
117,619 
 
 
59,995 
30,561 
 
 
 
Percentage of stock earned by stock unit recipient
 
 
0.00% 
200.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of common shares for each unit of award held
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise price as percentage of fair market value of common stock on grant date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
67.00% 
Shares authorized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,000,000 
 
 
 
 
 
Fair value assumptions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected life
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
3 years 
 
 
 
Expected stock price volatility (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23.40% 
31.20% 
 
 
 
Expected dividend yield (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.20% 
0.90% 
 
 
 
Risk-free interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.10% 
0.70% 
 
 
 
Weighted average grant-date fair value (in dollars per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 19.04 
$ 22.57 
 
 
 
Shipping and Handling
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shipping and handling costs included in selling, general and administrative expense
$ 14.4 
$ 14.7 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and Development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development costs included in selling, general, and administrative expense
$ 6.4 
$ 6.3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended
Mar. 29, 2015
Dec. 31, 2014
Mar. 30, 2014
Mar. 29, 2015
Technology
Mar. 29, 2015
Customer relationships
Mar. 29, 2015
Trade name
Dec. 1, 2014
Aerco
Mar. 29, 2015
Aerco
Mar. 30, 2014
Aerco
Dec. 1, 2014
Aerco
Dec. 1, 2014
Aerco
Technology
Dec. 1, 2014
Aerco
Technology
Dec. 1, 2014
Aerco
Customer relationships
Dec. 1, 2014
Aerco
Customer relationships
Dec. 1, 2014
Aerco
Trade name
Dec. 1, 2014
Aerco
Trade name
Jun. 28, 2015
Tekmar
Mar. 30, 2014
Tekmar
Jun. 30, 2013
Tekmar
Dec. 31, 2012
Tekmar
Acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short term working capital escrow
 
 
 
 
 
 
$ 7.7 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate consideration, net
 
 
 
 
 
 
272.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase price allocated to goodwill
612.0 
639.0 
513.9 
 
 
 
 
 
 
174.3 
 
 
 
 
 
 
 
 
 
 
Purchase price allocated to intangible assets
 
 
 
 
 
 
 
 
 
102.4 
 
15.8 
 
78.5 
 
7.4 
 
 
 
 
Estimated useful lives
12 years 3 months 18 days 
 
 
10 years 2 months 12 days 
12 years 
14 years 4 months 24 days 
 
 
 
 
10 years 
 
16 years 
 
20 years 
 
 
 
 
 
Contingent liability of the acquisition date fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.1 
Contingent consideration payment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.3 
2.2 
1.2 
 
Revenues
 
 
 
 
 
 
 
22.2 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
 
 
 
 
 
 
 
1.2 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition accounting charges
 
 
 
 
 
 
 
0.9 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill deductible for tax purposes
 
 
 
 
 
 
 
 
 
19.4 
 
 
 
 
 
 
 
 
 
 
Value of the assets and liabilities acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
 
 
 
 
 
 
 
 
16.7 
 
 
 
 
 
 
 
 
 
 
Inventory
 
 
 
 
 
 
 
 
 
16.4 
 
 
 
 
 
 
 
 
 
 
Fixed assets
 
 
 
 
 
 
7.6 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax assets
 
 
 
 
 
 
 
 
 
8.0 
 
 
 
 
 
 
 
 
 
 
Other assets
 
 
 
 
 
 
 
 
 
7.6 
 
 
 
 
 
 
 
 
 
 
Intangible assets
 
 
 
 
 
 
 
 
 
102.4 
 
15.8 
 
78.5 
 
7.4 
 
 
 
 
Goodwill
612.0 
639.0 
513.9 
 
 
 
 
 
 
174.3 
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
 
 
 
 
 
 
 
 
(6.7)
 
 
 
 
 
 
 
 
 
 
Accrued expenses and other
 
 
 
 
 
 
 
 
 
(18.1)
 
 
 
 
 
 
 
 
 
 
Deferred tax liability
 
 
 
 
 
 
 
 
 
(36.0)
 
 
 
 
 
 
 
 
 
 
Purchase price
 
 
 
 
 
 
272.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental pro-forma information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income from continuing operations
 
 
 
 
 
 
 
12.3 
13.3 
 
 
 
 
 
 
 
 
 
 
 
Net interest expense related to the financing
 
 
 
 
 
 
 
 
0.7 
 
 
 
 
 
 
 
 
 
 
 
Net amortization expense
 
 
 
 
 
 
 
 
1.1 
 
 
 
 
 
 
 
 
 
 
 
Net acquisition-related charges and third-party costs
 
 
 
 
 
 
 
$ 0.7 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS - continuing operations
 
 
 
 
 
 
 
$ 0.35 
$ 0.38 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS - continuing operations
 
 
 
 
 
 
 
$ 0.35 
$ 0.38 
 
 
 
 
 
 
 
 
 
 
 
Financial Instruments and Derivative Instruments (Details) (Fair value measured on a recurring basis, USD $)
In Millions, unless otherwise specified
Mar. 29, 2015
Dec. 31, 2014
Fair Value Measurements at Reporting Date
 
 
Financial assets, cash flow hedges
$ 0 
$ 0 
Financial liabilities, cash flow hedges
Total
 
 
Assets
 
 
Plan asset for deferred compensation
3.7 
4.0 
Total assets
3.7 
4.0 
Liabilities
 
 
Plan liability for deferred compensation
3.7 
4.0 
Contingent consideration
2.3 
2.5 
Total liabilities
6.0 
6.5 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Assets
 
 
Plan asset for deferred compensation
3.7 
4.0 
Total assets
3.7 
4.0 
Liabilities
 
 
Plan liability for deferred compensation
3.7 
4.0 
Total liabilities
3.7 
4.0 
Significant Unobservable Inputs (Level 3)
 
 
Liabilities
 
 
Contingent consideration
2.3 
2.5 
Total liabilities
$ 2.3 
$ 2.5 
Financial Instruments and Derivative Instruments (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended
Jun. 28, 2015
Tekmar
Mar. 30, 2014
Tekmar
Jun. 30, 2013
Tekmar
Dec. 31, 2014
Tekmar
Dec. 31, 2013
Tekmar
Dec. 31, 2012
Tekmar
Mar. 29, 2015
Contingent consideration
Reconciliation of changes in fair value of all financial assets and liabilities
 
 
 
 
 
 
 
Balance at the beginning of the period
 
 
 
 
 
 
$ 2.5 
Total realized and unrealized (gains) losses included in Comprehensive income
 
 
 
 
 
 
(0.2)
Balance at the ending of the period
 
 
 
 
 
 
2.3 
Contingent liability of the acquisition date fair value
 
 
 
 
 
5.1 
 
Contingent consideration payment
2.3 
2.2 
1.2 
 
 
 
 
Increase in fair value of contingent liability based on a revised estimate of the fair value of the contingent consideration
 
 
 
$ 0.5 
$ 1.0 
 
 
Financial Instruments and Derivative Instruments (Details 3)
3 Months Ended
Mar. 29, 2015
Derivative instruments
 
Percentage of projected intercompany purchases hedged by forward exchange contracts
50.00% 
Period of projected intercompany purchase transactions
12 months 
Financial Instruments and Derivative Instruments (Details 4) (USD $)
In Millions, unless otherwise specified
Mar. 29, 2015
Dec. 31, 2014
Long-term debt
 
 
Gross carrying amount
$ 578.9 
$ 579.7 
Estimated fair value
$ 597.2 
$ 599.3 
5.85% Senior notes due 2016
 
 
Senior notes
 
 
Interest rate (as a percent)
5.85% 
 
5.05% Senior notes due 2020
 
 
Senior notes
 
 
Interest rate (as a percent)
5.05% 
 
Restructuring and Other Charges, Net (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 3 Months Ended
Mar. 29, 2015
Mar. 30, 2014
Mar. 29, 2015
Corporate
Mar. 30, 2014
Corporate
Mar. 29, 2015
EMEA
Mar. 30, 2014
EMEA
Mar. 29, 2015
Americas
Mar. 30, 2014
Americas
Mar. 29, 2015
2015 Actions
Dec. 31, 2014
2015 Actions
Dec. 31, 2014
2015 Actions
Mar. 29, 2015
2015 Actions
SG&A
Dec. 31, 2014
2015 Actions
SG&A
Dec. 31, 2014
2015 Actions
SG&A
Feb. 17, 2015
2015 Actions
Minimum
Mar. 29, 2015
2015 Actions
Minimum
Feb. 17, 2015
2015 Actions
Minimum
Feb. 17, 2015
2015 Actions
Maximum
Mar. 29, 2015
2015 Actions
Maximum
Feb. 17, 2015
2015 Actions
Maximum
Mar. 29, 2015
2015 Actions
Americas
Mar. 29, 2015
2013 Actions
Mar. 30, 2014
2013 Actions
Mar. 29, 2015
Other Actions
Mar. 30, 2014
Other Actions
Mar. 29, 2015
Other Actions
EMEA
Mar. 30, 2014
Other Actions
Americas
Corporate
Restructuring and other charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net pre-tax restructuring charges
 
 
 
 
 
 
 
 
$ 1.3 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.5 
$ 0.4 
$ 0.2 
$ 3.8 
 
$ 2.7 
Total restructuring and other charges, net
2.0 
4.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.4 
0.3 
 
 
 
 
Total pre-tax charge relating to the program
 
 
 
 
 
 
 
 
 
15.2 
15.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax restructuring and other charges, net
2.0 
4.2 
(0.1)
0.8 
0.8 
1.5 
1.3 
1.9 
 
 
 
 
 
 
 
 
 
 
 
 
1.3 
 
 
 
 
 
 
Elimination of sales
356.2 
365.2 
 
 
 
 
 
 
 
 
 
 
 
 
175.0 
 
 
200.0 
 
 
 
 
 
 
 
 
 
pre-tax charge to earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40 
 
 
50 
 
 
 
 
 
 
 
Non-cash charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25 
 
 
30 
 
 
 
 
 
 
 
Reduced expected costs of the planned actions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27 
 
 
 
 
 
 
 
 
 
 
 
Reduced expected non-cash charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17 
 
 
 
 
 
 
 
 
 
 
 
Other transformation and deployment costs
 
 
 
 
 
 
 
 
 
 
 
1.5 
1.8 
1.8 
 
4.7 
 
 
9.3 
 
 
 
 
 
 
 
 
Goodwill impairment
 
 
 
 
 
 
 
 
 
12.9 
12.9 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible asset impairment
 
 
 
 
 
 
 
 
 
0.5 
0.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs of severance benefits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.6 
 
 
10.0 
 
 
 
 
 
 
 
 
Facility decommissioning, clean-up and other related exit costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.7 
 
 
2.7 
 
 
 
 
 
 
 
 
Accelerated depreciation and amortization of long-lived assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 
 
 
 
 
 
 
 
 
Total expected restructuring and related costs (after tax)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22.0 
 
 
40.0 
 
 
5.9 
 
 
 
9.9 
 
Asia Pacific tax benefit on after tax restructuring charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net pre-tax restructuring charges, expected to be recorded through fiscal 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.4 
 
 
 
 
 
Remaining costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax restructuring and other charges incurred
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 7.2 
 
Restructuring and Other Charges, Net (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended
Mar. 29, 2015
Mar. 30, 2014
Mar. 29, 2015
EMEA
2013 Actions
Dec. 31, 2014
EMEA
2013 Actions
Dec. 31, 2013
EMEA
2013 Actions
Mar. 29, 2015
EMEA
Other Actions
Dec. 31, 2014
EMEA
Other Actions
Mar. 29, 2015
Severance
Europe
2013 Actions
Mar. 29, 2015
Severance
EMEA
2013 Actions
Dec. 31, 2014
Severance
EMEA
2013 Actions
Dec. 31, 2013
Severance
EMEA
2013 Actions
Mar. 29, 2015
Severance
EMEA
Other Actions
Dec. 31, 2014
Severance
EMEA
Other Actions
Dec. 31, 2014
Legal and consultancy
EMEA
2013 Actions
Mar. 29, 2015
Legal and consultancy
EMEA
2013 Actions
Mar. 29, 2015
Legal and consultancy
EMEA
Other Actions
Dec. 31, 2014
Legal and consultancy
EMEA
Other Actions
Dec. 31, 2014
Asset write-downs
EMEA
2013 Actions
Mar. 29, 2015
Asset write-downs
EMEA
2013 Actions
Mar. 29, 2015
Asset write-downs
EMEA
Other Actions
Dec. 31, 2014
Asset write-downs
EMEA
Other Actions
Mar. 29, 2015
Facility exit and other
EMEA
2013 Actions
Dec. 31, 2014
Facility exit and other
EMEA
2013 Actions
Mar. 29, 2015
Facility exit and other
EMEA
Other Actions
Dec. 31, 2014
Facility exit and other
EMEA
Other Actions
Restructuring reserve
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
 
 
 
 
 
 
 
$ 1.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring expense
2.0 
4.2 
0.5 
3.8 
4.1 
0.3 
6.9 
0.2 
0.2 
3.2 
4.1 
 
6.9 
0.2 
 
0.2 
 
0.2 
 
0.1 
 
0.3 
0.2 
 
 
Utilization and foreign currency impact
 
 
 
 
 
 
 
(1.2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at the ending of the period
 
 
 
 
 
 
 
0.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summary of total expected, incurred and remaining pre-tax costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected costs
 
 
8.4 
 
 
 
9.9 
 
7.5 
 
 
 
8.8 
 
0.2 
 
0.2 
 
0.2 
 
0.8 
0.5 
 
 
0.1 
Costs incurred
(2.0)
(4.2)
(0.5)
(3.8)
(4.1)
(0.3)
(6.9)
(0.2)
(0.2)
(3.2)
(4.1)
 
(6.9)
(0.2)
 
(0.2)
 
(0.2)
 
(0.1)
 
(0.3)
(0.2)
 
 
Remaining costs
 
 
 
 
 
$ 2.7 
 
 
 
 
 
$ 1.9 
 
 
 
 
 
 
 
$ 0.7 
 
 
 
$ 0.1 
 
Earnings per Share (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 29, 2015
Mar. 30, 2014
Apr. 30, 2013
Net income:
 
 
 
NET INCOME
$ 11.6 
$ 14.1 
 
Shares
 
 
 
Shares
35,100,000 
35,400,000 
 
Per Share Amount
 
 
 
NET INCOME (in dollars per share)
$ 0.33 
$ 0.40 
 
Dilutive securities, principally common stock options
 
 
 
Common stock equivalents (in shares)
100,000 
100,000 
 
Net Income
 
 
 
Net income
11.6 
14.1 
 
Weighted average number of shares:
 
 
 
Weighted average number of shares
35,200,000 
35,500,000 
 
Per Share Amount
 
 
 
Net income (in dollars per share)
$ 0.33 
$ 0.40 
 
Securities not included in the computation of diluted EPS
 
 
 
Options to purchase shares of Class A common stock
300,000 
300,000 
 
Number of shares of the entity's Class A common stock authorized to be repurchased
 
 
90 
Remaining authorized repurchase amount
18 
 
 
Number of shares of Class A common stock repurchased
164,000 
 
 
Cost of shares of Class A common stock repurchased
$ 9.4 
$ 9.4 
 
Segment Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 29, 2015
item
Mar. 30, 2014
Dec. 31, 2014
Segment Information
 
 
 
Number of geographic segments
 
 
Segment information
 
 
 
Net sales
$ 356.2 
$ 365.2 
 
Operating income (loss)
22.8 
25.8 
 
Interest income
0.2 
0.1 
 
Interest expense
(5.9)
(4.9)
 
Other (income) expense, net
0.2 
(0.4)
 
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
17.3 
20.6 
 
Identifiable assets (at end of period)
1,859.9 
1,715.2 
1,948.0 
Property, plant and equipment, net (at end of period)
189.5 
216.0 
203.3 
Capital expenditures
5.6 
5.0 
 
Depreciation and amortization
13.0 
11.9 
 
Reportable segments
 
 
 
Segment information
 
 
 
Operating income (loss)
31.1 
32.4 
 
Corporate
 
 
 
Segment information
 
 
 
Operating income (loss)
(8.3)
(6.6)
 
Intersegment sales
 
 
 
Segment information
 
 
 
Net sales
35.0 
43.8 
 
Americas
 
 
 
Segment information
 
 
 
Net sales
237.4 
219.1 
 
Identifiable assets (at end of period)
1,060.2 
767.9 
 
Property, plant and equipment, net (at end of period)
90.1 
84.5 
 
Capital expenditures
4.1 
2.2 
 
Depreciation and amortization
7.0 
4.9 
 
Americas |
U.S.
 
 
 
Segment information
 
 
 
Net sales
221.4 
201.6 
 
Property, plant and equipment, net (at end of period)
86.3 
80.0 
 
Americas |
Reportable segments
 
 
 
Segment information
 
 
 
Operating income (loss)
24.2 
22.6 
 
Americas |
Intersegment sales
 
 
 
Segment information
 
 
 
Net sales
1.8 
1.2 
 
EMEA
 
 
 
Segment information
 
 
 
Net sales
109.0 
139.1 
 
Identifiable assets (at end of period)
714.8 
875.9 
 
Property, plant and equipment, net (at end of period)
86.6 
117.7 
 
Capital expenditures
1.2 
2.5 
 
Depreciation and amortization
5.4 
6.6 
 
EMEA |
Reportable segments
 
 
 
Segment information
 
 
 
Operating income (loss)
5.4 
8.9 
 
EMEA |
Intersegment sales
 
 
 
Segment information
 
 
 
Net sales
2.7 
3.6 
 
Asia Pacific
 
 
 
Segment information
 
 
 
Net sales
9.8 
7.0 
 
Identifiable assets (at end of period)
84.9 
71.4 
 
Property, plant and equipment, net (at end of period)
12.8 
13.8 
 
Capital expenditures
0.3 
0.3 
 
Depreciation and amortization
0.6 
0.4 
 
Asia Pacific |
Reportable segments
 
 
 
Segment information
 
 
 
Operating income (loss)
1.5 
0.9 
 
Asia Pacific |
Intersegment sales
 
 
 
Segment information
 
 
 
Net sales
$ 30.5 
$ 39.0 
 
Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 29, 2015
Dec. 31, 2014
Mar. 29, 2015
Foreign Currency Translation
Mar. 30, 2014
Foreign Currency Translation
Mar. 29, 2015
Pension Adjustment
Mar. 30, 2014
Pension Adjustment
Mar. 29, 2015
Accumulated Other Comprehensive Income (Loss)
Mar. 30, 2014
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss)
 
 
 
 
 
 
 
 
Balance at the beginning of the period
$ (154.0)
$ (89.1)
$ (53.0)
$ 37.9 
$ (36.1)
$ (25.9)
$ (89.1)
$ 12.0 
Change in period
 
 
(65.1)
(4.3)
0.2 
0.2 
(64.9)
(4.1)
Balance at the end of the period
$ (154.0)
$ (89.1)
$ (118.1)
$ 33.6 
$ (35.9)
$ (25.7)
$ (154.0)
$ 7.9 
Debt (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 29, 2015
Credit Agreement
 
Credit Agreement
 
Multi-currency borrowing capacity
$ 500 
Term of senior unsecured revolving credit facility
5 years 
Potential additional borrowing capacity
500 
Sublimit on letters of credit
100 
Unused and available credit under the credit agreement
200.1 
Stand-by letters of credit outstanding
24.9 
Long-term Line of Credit
$ 275 
Eurocurrency rate loans |
LIBOR
 
Credit Agreement
 
Variable interest rate basis
LIBOR 
Eurocurrency rate loans |
LIBOR |
Minimum
 
Credit Agreement
 
Interest rate added to base rate (as a percent)
0.975% 
Eurocurrency rate loans |
LIBOR |
Maximum
 
Credit Agreement
 
Interest rate added to base rate (as a percent)
1.45% 
Base rate loans and swing line loans |
LIBOR
 
Credit Agreement
 
Interest rate added to base rate (as a percent)
1.00% 
Variable interest rate basis
LIBOR 
Base rate loans and swing line loans |
LIBOR |
Minimum
 
Credit Agreement
 
Interest rate added to base rate (as a percent)
0.00% 
Base rate loans and swing line loans |
LIBOR |
Maximum
 
Credit Agreement
 
Interest rate added to base rate (as a percent)
0.45% 
Base rate loans and swing line loans |
Federal funds
 
Credit Agreement
 
Interest rate added to base rate (as a percent)
0.50% 
Variable interest rate basis
federal funds rate 
Base rate loans and swing line loans |
Prime Rate
 
Credit Agreement
 
Variable interest rate basis
prime rate 
Contingencies and Environmental Remediation (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 29, 2015
item
Litigation contingencies
 
Reasonably possible loss in excess of the amount accrued for its legal contingencies
$ 6.4 
Asbestos Litigation
 
Litigation contingencies
 
Number of lawsuits the entity is defending in different jurisdictions
250 
Defined Benefit Plans (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended
Mar. 29, 2015
item
Sep. 28, 2014
Mar. 30, 2014
May 15, 2014
Minimum
Mar. 29, 2015
Minimum
May 15, 2014
Maximum
Mar. 29, 2015
Maximum
Term for settlement of liabilities to plan participants under SERP
 
 
 
12 months 
 
24 months 
 
Increase in pension liability
 
$ 17.1 
 
 
 
 
 
Increase in net loss
 
10.5 
 
 
 
 
 
Net loss, tax benefits
 
6.6 
 
 
 
 
 
Distribution plans
 
 
 
 
 
 
Components of net periodic benefit cost
 
 
 
 
 
 
 
Service cost - administrative costs
0.4 
 
0.2 
 
 
 
 
Interest costs on benefits obligation
1.4 
 
1.5 
 
 
 
 
Expected return on assets
(1.2)
 
(1.5)
 
 
 
 
Net actuarial loss amortization
0.4 
 
0.3 
 
 
 
 
Net periodic benefit cost
1.0 
 
0.5 
 
 
 
 
Defined Benefit Plan, Contributions by Employer
0.3 
 
0.2 
 
 
 
 
Expected employer contributions in remainder of fiscal year
 
 
 
 
$ 40.0 
 
$ 45.0 
Subsequent Events (Details) (Subsequent event, USD $)
0 Months Ended
Apr. 28, 2015
Class A
 
Subsequent events
 
Quarterly dividend declared (in dollars per share)
$ 0.17 
Class B
 
Subsequent events
 
Quarterly dividend declared (in dollars per share)
$ 0.17