Delaware
(State or other jurisdiction
of incorporation)
|
001-13615
(Commission File No.)
|
22-2423556
(IRS Employer
Identification No.)
|
601 Rayovac Drive
Madison, Wisconsin 53711
(Address of principal executive offices)
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 7.01.
|
Regulation FD Disclosure.
|
Item 9.01
|
Financial Statements and Exhibits.
|
Exhibit
No.
|
Description
|
|
SPECTRUM BRANDS, INC.
|
|||
|
By:
|
/s/ Nathan E. Fagre | |
Name: | Nathan E. Fagre | ||
Title: | Secretary and General Counsel | ||
1
|
|
2
|
|
3
|
|
4
|
|
5
|
December 31,
2011
|
January 1,
2011
|
|||||||
(In Millions)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 44.8 | $ | 47.7 | ||||
Accounts receivable, net
|
108.1 | 93.1 | ||||||
Inventories, net
|
171.2 | 158.1 | ||||||
Prepaid expenses
|
4.2 | 7.7 | ||||||
Deferred taxes
|
22.4 | 23.0 | ||||||
Other current assets
|
2.7 | 2.6 | ||||||
Total current assets
|
353.4 | 332.2 | ||||||
|
||||||||
Property, plant and equipment, net
|
110.7 | 107.3 | ||||||
Goodwill
|
573.6 | 583.3 | ||||||
Customer relationships, net
|
39.9 | 45.2 | ||||||
Trade names, net
|
110.7 | 119.5 | ||||||
Patents and technology, net
|
20.5 | 23.4 | ||||||
Affiliate notes receivable
|
33.5 | 21.6 | ||||||
Other assets
|
5.0 | 7.2 | ||||||
Total assets
|
$ | 1,247.3 | $ | 1,239.7 | ||||
|
||||||||
Liabilities and business equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 115.7 | $ | 74.4 | ||||
Current portion of affiliate debt
|
138.0 | 132.3 | ||||||
Accrued expenses
|
64.5 | 45.3 | ||||||
Total current liabilities
|
318.2 | 252.0 | ||||||
|
||||||||
Long-term affiliate debt
|
273.7 | 373.9 | ||||||
Deferred taxes
|
45.7 | 45.5 | ||||||
Post-retirement benefits
|
27.3 | 24.7 | ||||||
Other liabilities
|
41.3 | 34.7 | ||||||
|
||||||||
Commitments and contingencies (Notes Q and R)
|
||||||||
|
||||||||
Business equity:
|
||||||||
Parent Company’s net investment and accumulated earnings
|
514.5 | 466.6 | ||||||
Accumulated other comprehensive income
|
24.3 | 39.6 | ||||||
Parent Company’s net investment and accumulated earnings and accumulated other comprehensive income
|
538.8 | 506.2 | ||||||
Non-controlling interest
|
2.3 | 2.7 | ||||||
Total business equity
|
541.1 | 508.9 | ||||||
|
||||||||
Total liabilities and business equity
|
$ | 1,247.3 | $ | 1,239.7 |
Fiscal Years Ended
|
||||||||
December 31,
2011
|
January 1,
2011
|
|||||||
(In Millions)
|
||||||||
Net sales:
|
||||||||
Trade
|
$ | 942.9 | $ | 849.1 | ||||
Affiliate
|
32.1 | 15.1 | ||||||
Total net sales
|
975.0 | 864.2 | ||||||
|
||||||||
Costs and expenses:
|
||||||||
Cost of sales – trade
|
639.6 | 604.0 | ||||||
Cost of sales – affiliate
|
30.1 | 13.8 | ||||||
Selling, general and administrative
|
189.8 | 178.8 | ||||||
Provision for doubtful accounts
|
0.8 | 0.1 | ||||||
Other affiliate income
|
(1.0 | ) | (1.0 | ) | ||||
Other – net
|
21.7 | 14.6 | ||||||
Restructuring charges
|
3.2 | 11.9 | ||||||
Interest expense – affiliate, net
|
42.7 | 41.9 | ||||||
Interest (income) expense – trade, net
|
(0.6 | ) | 3.9 | |||||
Total costs and expenses
|
926.3 | 868.0 | ||||||
|
||||||||
Earnings (loss) before income taxes
|
48.7 | (3.8 | ) | |||||
Income taxes (benefit)
|
12.3 | (0.7 | ) | |||||
Net earnings (loss)
|
36.4 | (3.1 | ) | |||||
Net income attributable to non-controlling interests
|
(0.6 | ) | (0.4 | ) | ||||
Net earnings (loss) attributable to Parent Company
|
$ | 35.8 | $ | (3.5 | ) |
Fiscal Years Ended
|
||||||||
December 31,
2011
|
January 1,
2011
|
|||||||
(In Millions)
|
||||||||
Operating activities
|
||||||||
Net earnings (loss) attributable to Parent Company
|
$ | 35.8 | $ | (3.5 | ) | |||
Net income attributable to non-controlling interests
|
(0.6 | ) | (0.4 | ) | ||||
Net earnings (loss)
|
36.4 | (3.1 | ) | |||||
Adjustments to reconcile net earnings (loss) to cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization of property, plant and equipment
|
26.2 | 28.9 | ||||||
Asset impairment
|
– | 0.9 | ||||||
Amortization of intangibles
|
17.0 | 13.3 | ||||||
Inventory step-up amortization
|
– | 31.3 | ||||||
Provision for doubtful accounts
|
0.8 | 0.1 | ||||||
Deferred taxes
|
(6.2 | ) | (22.5 | ) | ||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(16.7 | ) | 0.7 | |||||
Inventories
|
(13.9 | ) | (4.3 | ) | ||||
Accounts payable
|
41.3 | 12.6 | ||||||
Prepaid expenses and other current assets
|
3.9 | (14.6 | ) | |||||
Other assets
|
2.0 | 2.7 | ||||||
Accrued expenses
|
19.0 | (22.5 | ) | |||||
Other liabilities
|
15.3 | (27.4 | ) | |||||
Net cash provided by (used in) operating activities
|
125.1 | (3.9 | ) | |||||
|
||||||||
Investing activities
|
||||||||
Capital expenditures
|
(22.6 | ) | (14.7 | ) | ||||
Proceeds from sales of assets
|
0.1 | 0.6 | ||||||
Net cash used in investing activities
|
(22.5 | ) | (14.1 | ) | ||||
|
||||||||
Financing activities
|
||||||||
Cash remitted to Parent
|
(749.7 | ) | (651.5 | ) | ||||
Cash received from Parent
|
751.0 | 755.4 | ||||||
Lending to affiliates through notes receivable
|
(11.8 | ) | – | |||||
Repayments on affiliate debt
|
(94.7 | ) | (77.7 | ) | ||||
Net cash (used in) provided by financing activities
|
(105.2 | ) | 26.2 | |||||
|
||||||||
Effect of exchange rate changes on cash
|
(0.3 | ) | 1.7 | |||||
(Decrease) increase in cash and cash equivalents
|
(2.9 | ) | 9.9 | |||||
Cash and cash equivalents, beginning of year
|
47.7 | 37.8 | ||||||
Cash and cash equivalents, end of year
|
$ | 44.8 | $ | 47.7 |
Parent Company’s Net Investment and Accumulated Earnings
|
Accumulated Other Comprehensive Income (Loss)
|
Non-Controlling Interest
|
Total
Business
Equity
|
|||||||||||||
|
||||||||||||||||
Balance at January 3, 2010
|
$ | 486.3 | $ | 16.7 | $ | 2.3 | $ | 505.3 | ||||||||
Comprehensive income:
|
||||||||||||||||
Net income (loss)
|
(3.5 | ) | – | 0.4 | (3.1 | ) | ||||||||||
Currency translation adjustment
|
– | 24.7 | – | 24.7 | ||||||||||||
Change in pension, net of tax
|
– | (1.8 | ) | – | (1.8 | ) | ||||||||||
Total comprehensive income
|
(3.5 | ) | 22.9 | 0.4 | 19.8 | |||||||||||
Net transfers to the Parent
|
(16.2 | ) | – | – | (16.2 | ) | ||||||||||
Balance at January 1, 2011
|
466.6 | 39.6 | 2.7 | 508.9 | ||||||||||||
Comprehensive income:
|
||||||||||||||||
Net income
|
35.8 | – | 0.6 | 36.4 | ||||||||||||
Currency translation adjustment
|
– | (13.2 | ) | – | (13.2 | ) | ||||||||||
Change in pension, net of tax
|
– | (2.1 | ) | – | (2.1 | ) | ||||||||||
Total comprehensive income
|
35.8 | (15.3 | ) | 0.6 | 21.1 | |||||||||||
Dividends declared
|
(10.3 | ) | – | (1.0 | ) | (11.3 | ) | |||||||||
Net transfers to the Parent
|
22.4 | – | – | 22.4 | ||||||||||||
Balance at December 31, 2011
|
$ | 514.5 | $ | 24.3 | $ | 2.3 | $ | 541.1 |
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Cost of sales – trade
|
$ | 5.0 | $ | 4.7 | ||||
Selling, general and administrative
|
24.4 | 21.8 | ||||||
Total corporate allocations
|
$ | 29.4 | $ | 26.5 |
Description
|
2011
|
2010
|
||||||
(In Millions)
|
||||||||
|
||||||||
Affiliate sales
|
$ | 32.1 | $ | 15.1 | ||||
Affiliate cost of sales
|
30.1 | 13.8 | ||||||
Net gross margin on affiliate sales
|
2.0 | 1.3 | ||||||
Cost of sales – trade, mark-up on affiliate purchases
|
10.9 | 9.7 | ||||||
Net interest expense – affiliate
|
42.7 | 41.9 | ||||||
Other affiliate income
|
(1.0 | ) | (1.0 | ) | ||||
Net affiliate loss before provision for income taxes
|
$ | (50.6 | ) | $ | (49.3 | ) |
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Cash funding from Parent
|
$ | 751.0 | $ | 755.4 | ||||
Cash remitted to Parent
|
(749.7 | ) | (651.5 | ) | ||||
Taxes paid by Parent
|
0.8 | 13.9 |
Interest Rate
|
2011
|
2010
|
||||||||||
|
||||||||||||
Affiliate notes payable due 2013
|
0.0% – 7.2% | $ | 58.8 | $ | 77.8 | |||||||
Affiliate notes payable due 2015
|
10.8% | 319.9 | 395.4 | |||||||||
Affiliate notes payable on demand
|
2.0% | 33.0 | 33.0 | |||||||||
Total affiliate debt, including current maturities
|
411.7 | 506.2 | ||||||||||
Less: affiliate notes payable on demand classified as current
|
(33.0 | ) | (33.0 | ) | ||||||||
Less: principle payments due within 1 year for other notes payable
|
(105.0 | ) | (99.3 | ) | ||||||||
Long-term related party debt
|
$ | 273.7 | $ | 373.9 | ||||||||
|
||||||||||||
Interest expense – affiliate, net
|
$ | 42.7 | $ | 41.9 |
B. Significant Accounting Policies
|
B. Significant Accounting Policies (continued)
|
Cash Equivalents
|
Accounts Receivable
|
Allowance for Doubtful Accounts
|
Inventories
|
B. Significant Accounting Policies (continued)
|
Property, Plant and Equipment
|
Useful Life (Years)
|
|
|
|
Land improvements
|
10 – 20
|
Buildings
|
40
|
Machinery and equipment
|
3 – 15
|
Computer software
|
3 – 5
|
B. Significant Accounting Policies (continued)
|
Goodwill and Intangible Assets
|
Interest Expense
|
B. Significant Accounting Policies (continued)
|
Financial Instruments
|
Stock Based Compensation
|
B. Significant Accounting Policies (continued)
|
Revenue Recognition
|
Cost of Sales and Selling, General and Administrative
|
Advertising Costs
|
B. Significant Accounting Policies (continued)
|
Sales Taxes
|
Shipping and Handling Costs
|
Postretirement Defined Benefit Plan
|
B. Significant Accounting Policies (continued)
|
Subsequent Events
|
B. Significant Accounting Policies (continued)
|
New Accounting Standards
|
C. Accounts Receivable
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Gross accounts receivable
|
$ | 110.2 | $ | 94.6 | ||||
Allowance for doubtful accounts
|
(2.1 | ) | (1.5 | ) | ||||
Accounts receivable, net
|
$ | 108.1 | $ | 93.1 |
C. Accounts Receivable (continued)
|
D. Inventories
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Finished products
|
$ | 130.2 | $ | 115.0 | ||||
Work in process
|
13.5 | 10.6 | ||||||
Raw materials
|
27.5 | 32.5 | ||||||
Total
|
$ | 171.2 | $ | 158.1 |
E. Property, Plant and Equipment
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Land
|
$ | 6.7 | $ | 5.9 | ||||
Land improvements
|
6.2 | 6.0 | ||||||
Buildings
|
50.2 | 32.6 | ||||||
Leasehold improvements
|
11.3 | 11.6 | ||||||
Machinery and equipment
|
116.2 | 105.2 | ||||||
Computer software
|
14.4 | 12.1 | ||||||
Property, plant and equipment, gross
|
205.0 | 173.4 | ||||||
|
||||||||
Less: accumulated depreciation and amortization
|
(94.3 | ) | (66.1 | ) | ||||
Property, plant and equipment, net
|
$ | 110.7 | $ | 107.3 |
F. Merger
|
F. Merger (continued)
|
(In Millions)
|
||||
Cash and cash equivalents
|
$ | 9.2 | ||
Accounts receivable, net
|
73.4 | |||
Inventories, net
|
142.3 | |||
Prepaid expenses and other current assets
|
11.0 | |||
Property, plant and equipment
|
82.2 | |||
Trade names
|
108.0 | |||
Customer relationships
|
43.0 | |||
Patents and technology
|
25.0 | |||
Other assets
|
0.3 | |||
Accounts payable
|
(33.4 | ) | ||
Accrued liabilities
|
(38.6 | ) | ||
Deferred tax liabilities
|
(75.6 | ) | ||
Other long term liabilities
|
(52.7 | ) | ||
Total identifiable net assets
|
294.1 | |||
|
||||
Goodwill
|
504.4 | |||
Total consideration transferred by the Parent and contributed to the Company
|
$ | 798.5 |
F. Merger (continued)
|
Actual and Pro-Forma Impact of the Merger
|
2010
|
||||
(In Millions)
|
||||
|
||||
Net sales
|
$ | 1,063.2 | ||
Net earnings
|
1.4 |
|
—
|
Elimination of the historical pre-Merger intangible asset amortization expense and the addition of intangible asset amortization expense related to intangibles valued as part of the Merger that would have been incurred from January 3, 2010 to March 12, 2010.
|
|
—
|
Additional depreciation related to property, plant and equipment fair value adjustments that would have been expensed from January 3, 2010 to March 12, 2010.
|
|
—
|
The modifications above were adjusted for the applicable tax impact.
|
G. Goodwill and Intangible Assets
|
Goodwill
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Beginning balance
|
$ | 583.3 | $ | 71.8 | ||||
Addition from the merger
|
– | 504.4 | ||||||
Foreign currency translation
|
(9.7 | ) | 7.1 | |||||
Ending balance
|
$ | 573.6 | $ | 583.3 |
Intangible Assets
|
2011
|
2010
|
|||||||||||||||
Gross Carrying Amount
|
Accumulated Amortization
|
Gross Carrying Amount
|
Accumulated
Amortization
|
|||||||||||||
(In Millions)
|
||||||||||||||||
Amortized intangible assets – definite lives:
|
||||||||||||||||
Patents and technology
|
$ | 25.0 | $ | (4.5 | ) | $ | 25.0 | $ | (1.6 | ) | ||||||
Trade names
|
108.0 | (15.4 | ) | 108.0 | (6.7 | ) | ||||||||||
Customer relationships
|
65.1 | (25.2 | ) | 65.6 | (20.4 | ) | ||||||||||
Total
|
$ | 198.1 | $ | (45.1 | ) | $ | 198.6 | $ | (28.7 | ) |
H. Accrued Expenses
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Payroll and related taxes
|
$ | 10.6 | $ | 11.4 | ||||
Customer rebates and sales returns
|
11.7 | 7.3 | ||||||
Accrued restructuring costs
|
7.8 | 8.9 | ||||||
Accrued freight
|
4.1 | 3.7 | ||||||
Insurance and benefits
|
5.9 | 5.1 | ||||||
Accrued litigation
|
5.0 | 2.5 | ||||||
ESOP
|
4.5 | 0.8 | ||||||
Warranty costs
|
4.4 | 4.3 | ||||||
Other
|
10.5 | 1.3 | ||||||
Total
|
$ | 64.5 | $ | 45.3 |
I. Fair Value Measurements and Commodity Contracts (continued)
|
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
|
Assets Recorded at Fair Value on a Nonrecurring Basis
|
|
Carrying Value January 1,
2011
|
Level 1
|
Level 2
|
Level 3
|
Impairment
|
|||||||||||||||
|
||||||||||||||||||||
Long-lived assets held and used
|
$ | 20.8 | $ | – | $ | – | $ | 20.8 | $ | (0.9 | ) |
Commodity Contracts
|
I. Fair Value Measurements and Commodity Contracts (continued)
|
Income Statement
Classification
|
2010 Loss
Recorded in Income on
Derivative
|
||||
|
|||||
Commodity Contracts
|
Other, net
|
$ | 1.3 |
J. Stock Based Compensation
|
J. Stock Based Compensation (continued)
|
K. Accumulated Other Comprehensive Income
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Currency translation adjustment
|
$ | 36.3 | $ | 49.5 | ||||
Pension loss, net of tax
|
(12.0 | ) | (9.9 | ) | ||||
Accumulated other comprehensive income
|
$ | 24.3 | $ | 39.6 |
L. Employee Benefit Plans
|
Employee Stock Ownership Plan (“ESOP”)
|
L. Employee Benefit Plans (continued)
|
Parent Sponsored Pension Plans
|
Defined Contribution Plans
|
L. Employee Benefit Plans (continued)
|
Defined Benefit Plans
|
U.S. Plan
|
Non-U.S. Plans
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In Millions)
|
||||||||||||||||
|
||||||||||||||||
Service cost
|
$ | 0.2 | $ | 0.3 | $ | 0.7 | $ | 0.4 | ||||||||
Interest cost
|
3.4 | 3.5 | 0.5 | 0.4 | ||||||||||||
Expected return on plan assets
|
(3.4 | ) | (3.7 | ) | – | – | ||||||||||
Amortization of actuarial loss
|
0.3 | 0.7 | 0.1 | – | ||||||||||||
Net periodic pension expense
|
$ | 0.5 | $ | 0.8 | $ | 1.3 | $ | 0.8 |
Other Benefit Plan
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Interest cost
|
$ | 0.2 | $ | 0.2 | ||||
Prior service credit amortization
|
(0.2 | ) | (0.1 | ) | ||||
Net periodic post-retirement benefit (income) expense
|
$ | – | $ | 0.1 |
L. Employee Benefit Plans (continued)
|
2011
|
||||
(In Millions)
|
||||
|
||||
Current year actuarial loss
|
$ | 3.1 | ||
Amortization of actuarial loss
|
(0.2 | ) | ||
Currency
|
(0.1 | ) | ||
Total loss recognized in other comprehensive income (pre-tax)
|
$ | 2.8 |
L. Employee Benefit Plans (continued)
|
U.S. Plan
|
Non-U.S. Plans
|
Other Benefits
|
||||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||
Change in benefit obligation
|
||||||||||||||||||||||||
Benefit obligation at end of prior year
|
$ | 67.3 | $ | 63.3 | $ | 7.2 | $ | 1.3 | $ | 4.4 | $ | 4.7 | ||||||||||||
Service cost
|
0.2 | 0.3 | 0.7 | 0.4 | – | – | ||||||||||||||||||
Interest cost
|
3.4 | 3.5 | 0.5 | 0.4 | 0.2 | 0.2 | ||||||||||||||||||
Settlements/curtailments
|
– | – | (0.1 | ) | – | – | – | |||||||||||||||||
Actuarial (gain) loss
|
6.8 | 3.9 | (1.4 | ) | 1.6 | (0.7 | ) | – | ||||||||||||||||
Foreign currency exchange rates
|
– | – | (0.7 | ) | 0.2 | – | – | |||||||||||||||||
Acquisitions, divestitures and other
|
(0.2 | ) | – | – | 3.7 | – | – | |||||||||||||||||
Benefits paid
|
(3.5 | ) | (3.7 | ) | (0.5 | ) | (0.4 | ) | (0.4 | ) | (0.5 | ) | ||||||||||||
Benefit obligation at end of year
|
$ | 74.0 | $ | 67.3 | $ | 5.7 | $ | 7.2 | $ | 3.5 | $ | 4.4 | ||||||||||||
|
||||||||||||||||||||||||
Change in plan assets
|
||||||||||||||||||||||||
Fair value of plan assets at end of prior year
|
$ | 53.3 | $ | 50.8 | $ | – | $ | – | $ | – | $ | – | ||||||||||||
Actual return on plan assets
|
5.1 | 6.2 | – | – | – | – | ||||||||||||||||||
Employer contributions
|
0.5 | – | 0.5 | 0.4 | 0.4 | 0.5 | ||||||||||||||||||
Acquisitions, divestitures and other
|
(0.2 | ) | – | – | – | – | – | |||||||||||||||||
Benefits paid
|
(3.5 | ) | (3.7 | ) | (0.5 | ) | (0.4 | ) | (0.4 | ) | (0.5 | ) | ||||||||||||
Fair value of plan assets at end of plan year
|
55.2 | 53.3 | – | – | – | – | ||||||||||||||||||
Funded status – assets less the benefit obligation
|
(18.8 | ) | (14.0 | ) | (5.7 | ) | (7.2 | ) | (3.5 | ) | (4.4 | ) | ||||||||||||
Unrecognized net actuarial loss (gain)
|
20.2 | 15.4 | 0.2 | 1.8 | (2.2 | ) | (1.7 | ) | ||||||||||||||||
Net amount recognized
|
$ | 1.4 | $ | 1.4 | $ | (5.5 | ) | $ | (5.4 | ) | $ | (5.7 | ) | $ | (6.1 | ) | ||||||||
|
||||||||||||||||||||||||
Amounts recognized in the Combined Balance Sheets
|
||||||||||||||||||||||||
Current benefit liability
|
$ | – | $ | – | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.5 | ) | $ | (0.6 | ) | ||||||||
Non-current benefit liability
|
(18.8 | ) | (14.0 | ) | (5.5 | ) | (7.0 | ) | (3.0 | ) | (3.8 | ) | ||||||||||||
Net liability recognized
|
$ | (18.8 | ) | $ | (14.0 | ) | $ | (5.7 | ) | $ | (7.2 | ) | $ | (3.5 | ) | $ | (4.4 | ) | ||||||
Accumulated other comprehensive loss (gain) (pre-tax):
|
||||||||||||||||||||||||
Actuarial loss (gain)
|
$ | 20.2 | $ | 15.4 | $ | 0.2 | $ | 1.8 | $ | (2.2 | ) | $ | (1.7 | ) | ||||||||||
Net amount recognized
|
$ | 1.4 | $ | 1.4 | $ | (5.5 | ) | $ | (5.4 | ) | (5.7 | ) | $ | (6.1 | ) |
L. Employee Benefit Plans (continued)
|
U.S. Plan
|
Non-U.S. Plans
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In Millions)
|
||||||||||||||||
|
||||||||||||||||
Projected benefit obligation
|
$ | 74.0 | $ | 67.3 | $ | 5.7 | $ | 7.2 | ||||||||
Accumulated benefit obligation
|
$ | 74.0 | $ | 67.3 | $ | 3.2 | $ | 3.8 | ||||||||
Fair value of plan assets
|
$ | 55.2 | $ | 53.3 | $ | – | $ | – |
Pension Benefits
|
Other Benefits
|
|||||||||||||||||||||||
U.S. Plans
|
Non-U.S. Plans
|
U.S. Plan
|
||||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||
Weighted-average assumptions used to determine benefit obligations at year end
|
||||||||||||||||||||||||
Discount rate
|
4.50 | % | 5.25 | % | 8.75 | % | 7.25 | % | 4.00 | % | 5.00 | % | ||||||||||||
Rate of compensation increase
|
– | % | – | % | 4.75 | % | 4.75 | % | – | % | – | % | ||||||||||||
|
||||||||||||||||||||||||
Weighted-average assumptions used to determine net periodic benefit cost
|
||||||||||||||||||||||||
Discount rate
|
5.25 | % | 5.75 | % | 7.25 | % | 9.00 | % | 5.00 | % | 5.50 | % | ||||||||||||
Rate of compensation increase
|
– | % | – | % | 4.75 | % | 4.75 | % | – | % | – | % | ||||||||||||
Expected return on plan assets
|
6.75 | % | 7.50 | % | – | % | – | % | – | % | – | % |
L. Employee Benefit Plans (continued)
|
Pension Plan Assets
|
2011
|
Level 1
|
Level 2
|
||||||||||
Asset Category
|
||||||||||||
Cash and cash equivalents
|
$ | 0.6 | $ | 0.2 | $ | 0.4 | ||||||
Equity securities
|
||||||||||||
U.S. equity securities
|
16.3 | 2.8 | 13.5 | |||||||||
Foreign equity securities
|
9.0 | 9.0 | – | |||||||||
Fixed income securities
|
||||||||||||
Government securities
|
15.3 | 14.4 | 0.9 | |||||||||
Corporate securities
|
13.7 | – | 13.7 | |||||||||
Other
|
0.3 | – | 0.3 | |||||||||
Total
|
$ | 55.2 | $ | 26.4 | $ | 28.8 |
2010
|
Level 1
|
Level 2
|
||||||||||
Asset Category
|
||||||||||||
Cash and cash equivalents
|
$ | 12.8 | $ | 5.4 | $ | 7.4 | ||||||
Equity securities
|
||||||||||||
U.S. equity securities
|
21.9 | 3.7 | 18.2 | |||||||||
Foreign equity securities
|
11.2 | 11.2 | – | |||||||||
Fixed income securities
|
||||||||||||
Government securities
|
3.2 | 3.0 | 0.2 | |||||||||
Corporate securities
|
1.6 | – | 1.6 | |||||||||
Other
|
2.6 | – | 2.6 | |||||||||
Total
|
$ | 53.3 | $ | 23.3 | $ | 30.0 |
L. Employee Benefit Plans (continued)
|
Contributions
|
Expected Future Benefit Payments
|
Total
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Years 6-10
|
||||||||||||||||||||||
(In Millions)
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Future payments
|
$ | 44.7 | $ | 4.2 | $ | 4.2 | $ | 4.2 | $ | 4.2 | $ | 4.2 | $ | 23.7 |
M. Other Costs and Expenses
|
N. Restructuring and Asset Impairments
|
January 1,
2011
|
Additions
|
Usage
|
December 31,
2011
|
|||||||||||||
2011 Actions
|
||||||||||||||||
Severance and related costs
|
$ | – | $ | 2.8 | $ | (0.4 | ) | $ | 2.4 | |||||||
Pre-2011 Actions
|
||||||||||||||||
Severance and related costs
|
8.9 | 0.4 | (3.9 | ) | 5.4 | |||||||||||
Total
|
$ | 8.9 | $ | 3.2 | $ | (4.3 | ) | $ | 7.8 |
N. Restructuring and Asset Impairments (continued)
|
January 3,
2010
|
Additions
|
Usage
|
January 1,
2011
|
|||||||||||||
2010 Actions
|
||||||||||||||||
Severance and related costs
|
$ | – | $ | 11.0 | $ | (2.1 | ) | $ | 8.9 | |||||||
Asset Impairment (facility closure)
|
– | 0.9 | (0.9 | ) | – | |||||||||||
Severance and related costs
|
– | 11.9 | (3.0 | ) | 8.9 | |||||||||||
Pre-2010 Actions
|
||||||||||||||||
Severance and related costs
|
0.2 | – | (0.2 | ) | – | |||||||||||
Total
|
$ | 0.2 | $ | 11.9 | $ | (3.2 | ) | $ | 8.9 |
O. Business Segments and Geographic Areas
|
Business Segments
|
O. Business Segments and Geographic Areas (continued)
|
Geographic Areas
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Net sales
|
||||||||
United States
|
$ | 743.1 | $ | 657.7 | ||||
Canada
|
105.3 | 107.7 | ||||||
Other Americas
|
91.4 | 71.2 | ||||||
Asia
|
35.2 | 27.6 | ||||||
Combined
|
$ | 975.0 | $ | 864.2 | ||||
|
||||||||
Property, plant and equipment
|
||||||||
United States
|
$ | 102.6 | $ | 98.5 | ||||
Canada
|
4.4 | 4.7 | ||||||
Other Americas
|
3.5 | 3.8 | ||||||
Asia
|
0.2 | 0.3 | ||||||
Combined
|
$ | 110.7 | $ | 107.3 |
P. Income Taxes
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Deferred tax liabilities:
|
||||||||
Amortization of intangibles
|
$ | 61.6 | $ | 66.4 | ||||
Depreciation
|
3.7 | – | ||||||
Other
|
2.3 | 2.7 | ||||||
Total deferred tax liabilities
|
$ | 67.6 | $ | 69.1 | ||||
|
||||||||
Deferred tax assets:
|
||||||||
Accruals
|
$ | 22.9 | $ | 20.2 | ||||
Employee benefit plans
|
9.6 | 9.6 | ||||||
Inventories
|
7.3 | 11.2 | ||||||
Operating loss and tax credit carry forwards
|
12.2 | 12.0 | ||||||
Restructuring charges
|
2.9 | 3.0 | ||||||
Allowance for doubtful accounts
|
1.2 | 1.8 | ||||||
Depreciation
|
– | 0.6 | ||||||
Other
|
3.1 | 2.8 | ||||||
Total deferred tax assets
|
$ | 59.2 | $ | 61.2 | ||||
|
||||||||
Net deferred tax liabilities before valuation allowance
|
$ | 8.4 | $ | 7.9 | ||||
Valuation allowance
|
12.2 | 11.9 | ||||||
Net deferred tax liabilities after valuation allowance
|
$ | 20.6 | $ | 19.8 |
P. Income Taxes (continued)
|
2011
|
2010
|
|||||||||||||||
Deferred
Tax Asset
|
Deferred
Tax Liability
|
Deferred
Tax Asset
|
Deferred
Tax
Liability
|
|||||||||||||
|
||||||||||||||||
Current
|
$ | 22.4 | $ | (0.7 | ) | $ | 23.0 | $ | (0.3 | ) | ||||||
Non-current
|
3.4 | (45.7 | ) | 3.0 | (45.5 | ) | ||||||||||
Total
|
$ | 25.8 | $ | (46.4 | ) | $ | 26.0 | $ | (45.8 | ) |
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Current:
|
||||||||
Federal
|
$ | (1.2 | ) | $ | 12.2 | |||
Foreign
|
18.0 | 8.6 | ||||||
State
|
1.7 | 1.0 | ||||||
Total current
|
18.5 | 21.8 | ||||||
|
||||||||
Deferred:
|
||||||||
Federal
|
(3.1 | ) | (22.7 | ) | ||||
Foreign
|
(3.2 | ) | 0.8 | |||||
State
|
0.1 | (0.6 | ) | |||||
Total deferred
|
(6.2 | ) | (22.5 | ) | ||||
Provision (benefit) for income taxes
|
$ | 12.3 | $ | (0.7 | ) |
P. Income Taxes (continued)
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Tax at statutory rate
|
$ | 17.1 | $ | (1.3 | ) | |||
State income taxes, net of federal benefits
|
0.3 | 0.3 | ||||||
Difference between foreign and federal income tax
|
(4.7 | ) | (2.1 | ) | ||||
NOL and valuation allowance items
|
0.9 | (0.2 | ) | |||||
Transfer price adjustments
|
(1.0 | ) | 2.1 | |||||
Other-net
|
(0.3 | ) | 0.5 | |||||
Income taxes
|
$ | 12.3 | $ | (0.7 | ) |
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
United States
|
$ | (9.5 | ) | $ | (37.3 | ) | ||
Foreign
|
58.2 | 33.5 | ||||||
Earnings (loss) before income taxes
|
$ | 48.7 | $ | (3.8 | ) |
P. Income Taxes (continued)
|
Q. Commitments and Guarantees
|
Commitments
|
Total
|
2012
|
2013
|
2014
|
2015
|
2016
|
Thereafter
|
||||||||||||||||||||||
(In Millions)
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Operating lease obligations
|
$ | 46.3 | $ | 8.8 | $ | 5.6 | $ | 5.2 | $ | 4.6 | $ | 3.4 | $ | 18.7 |
Q. Commitments and Guarantees (continued)
|
Guarantees
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Beginning balance
|
$ | 4.3 | $ | 0.2 | ||||
Warranties issued
|
8.1 | 2.8 | ||||||
Liability assumed in the merger
|
– | 3.7 | ||||||
Warranty payments
|
(8.0 | ) | (2.4 | ) | ||||
Ending balance
|
$ | 4.4 | $ | 4.3 |
R. Contingencies
|
R. Contingencies (continued)
|
R. Contingencies (continued)
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|
6
|
June 30,
2012 |
December 31, 2011
|
|||||||
(In Millions)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 48.5 | $ | 44.8 | ||||
Accounts receivable, net
|
121.4 | 108.1 | ||||||
Inventories, net
|
168.8 | 171.2 | ||||||
Prepaid expenses
|
4.7 | 4.2 | ||||||
Deferred taxes
|
25.3 | 22.4 | ||||||
Other current assets
|
3.9 | 2.7 | ||||||
Total current assets
|
372.6 | 353.4 | ||||||
|
||||||||
Property, plant and equipment, net
|
102.9 | 110.7 | ||||||
Goodwill
|
572.6 | 573.6 | ||||||
Customer relationships, net
|
37.1 | 39.9 | ||||||
Trade names, net
|
106.1 | 110.7 | ||||||
Patents and technology, net
|
18.6 | 20.5 | ||||||
Affiliate notes receivable
|
33.3 | 33.5 | ||||||
Other assets
|
7.5 | 5.0 | ||||||
Total assets
|
$ | 1,250.7 | $ | 1,247.3 | ||||
|
||||||||
Liabilities and business equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 122.1 | $ | 115.7 | ||||
Current portion of affiliate debt
|
132.5 | 138.0 | ||||||
Accrued expenses
|
49.8 | 64.5 | ||||||
Total current liabilities
|
304.4 | 318.2 | ||||||
|
||||||||
Long-term affiliate debt
|
227.9 | 273.7 | ||||||
Deferred taxes
|
46.9 | 45.7 | ||||||
Post-retirement benefits
|
27.1 | 27.3 | ||||||
Other liabilities
|
34.3 | 41.3 | ||||||
|
||||||||
Commitments and contingencies (Notes P and Q)
|
||||||||
|
||||||||
Business equity:
|
||||||||
Parent Company’s net investment and accumulated earnings
|
585.3 | 514.5 | ||||||
Accumulated other comprehensive income
|
22.0 | 24.3 | ||||||
Parent Company’s net investment and accumulated earnings and accumulated other comprehensive income
|
607.3 | 538.8 | ||||||
Non-controlling interest
|
2.8 | 2.3 | ||||||
Total business equity
|
610.1 | 541.1 | ||||||
|
||||||||
Total liabilities and business equity
|
$ | 1,250.7 | $ | 1,247.3 |
Six Months Ended
|
||||||||
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
Net sales:
|
||||||||
Trade
|
$ | 472.7 | $ | 475.7 | ||||
Affiliate
|
20.6 | 15.2 | ||||||
Total net sales
|
493.3 | 490.9 | ||||||
|
||||||||
Costs and expenses:
|
||||||||
Cost of sales – trade
|
318.9 | 315.6 | ||||||
Cost of sales – affiliate
|
19.8 | 14.6 | ||||||
Selling, general and administrative
|
91.1 | 96.4 | ||||||
Provision for doubtful accounts
|
0.1 | 0.4 | ||||||
Other affiliate income
|
(0.5 | ) | (0.6 | ) | ||||
Other – net
|
9.5 | 10.7 | ||||||
Restructuring charges
|
2.7 | 3.6 | ||||||
Interest expense – affiliate, net
|
17.6 | 22.6 | ||||||
Interest income – trade, net
|
(0.3 | ) | (0.3 | ) | ||||
Total costs and expenses
|
458.9 | 463.0 | ||||||
|
||||||||
Earnings before income taxes
|
34.4 | 27.9 | ||||||
Income taxes
|
10.6 | 8.6 | ||||||
Net earnings
|
23.8 | 19.3 | ||||||
Net income attributable to non-controlling interests
|
(0.5 | ) | (0.3 | ) | ||||
Net earnings attributable to Parent Company
|
$ | 23.3 | $ | 19.0 |
Six Months Ended
|
||||||||
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
Operating activities
|
||||||||
Net earnings
|
$ | 23.8 | $ | 19.3 | ||||
Net income attributable to non-controlling interests
|
(0.5 | ) | (0.3 | ) | ||||
Net earnings attributable to Parent Company
|
23.3 | 19.0 | ||||||
Adjustments to reconcile net earnings to cash provided by operating activities:
|
||||||||
Depreciation and amortization of property and equipment
|
12.7 | 14.2 | ||||||
Amortization of intangibles
|
9.0 | 8.5 | ||||||
Provision for doubtful accounts
|
0.1 | 0.4 | ||||||
Deferred taxes
|
(5.0 | ) | (1.1 | ) | ||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(13.2 | ) | (38.9 | ) | ||||
Inventories
|
2.1 | (12.6 | ) | |||||
Accounts payable
|
6.4 | 36.7 | ||||||
Prepaid expenses and other current assets
|
(4.7 | ) | (3.1 | ) | ||||
Other assets
|
(2.5 | ) | (0.7 | ) | ||||
Accrued expenses
|
(15.0 | ) | 14.6 | |||||
Other
|
37.9 | 32.9 | ||||||
Net cash provided by operating activities
|
51.1 | 69.9 | ||||||
|
||||||||
Investing activities
|
||||||||
Capital expenditures
|
(4.7 | ) | (14.6 | ) | ||||
Proceeds from sales of assets
|
– | 0.1 | ||||||
Net cash used in investing activities
|
(4.7 | ) | (14.5 | ) | ||||
|
||||||||
Financing activities
|
||||||||
Cash received from Parent
|
373.0 | 513.1 | ||||||
Cash remitted to Parent
|
(364.8 | ) | (526.5 | ) | ||||
Receipts from (lending to) affiliates through notes receivable
|
0.2 | (0.2 | ) | |||||
Repayments on affiliate debt
|
(51.3 | ) | (45.0 | ) | ||||
Net cash used in financing activities
|
(42.9 | ) | (58.6 | ) | ||||
|
||||||||
Effect of exchange rate changes on cash
|
0.2 | 0.5 | ||||||
Increase (decrease) in cash and cash equivalents
|
3.7 | (2.7 | ) | |||||
Cash and cash equivalents, beginning of period
|
44.8 | 47.7 | ||||||
Cash and cash equivalents, end of period
|
$ | 48.5 | $ | 45.0 |
Parent Company’s Net Investment and Accumulated Earnings
|
Accumulated Other Comprehensive Income
|
Non-Controlling Interest
|
Total
Business Equity
|
|||||||||||||
|
||||||||||||||||
Balance at January 1, 2011
|
$ | 466.6 | $ | 39.6 | $ | 2.7 | $ | 508.9 | ||||||||
Net income
|
19.0 | – | 0.3 | 19.3 | ||||||||||||
Currency translation adjustment
|
– | 21.3 | – | 21.3 | ||||||||||||
Change in pension, net of tax
|
– | 1.3 | – | 1.3 | ||||||||||||
Net transfers to the Parent
|
8.0 | – | – | 8.0 | ||||||||||||
Balance at July 2, 2011
|
493.6 | 62.2 | 3.0 | 558.8 | ||||||||||||
|
||||||||||||||||
Balance at December 31, 2011
|
514.5 | 24.3 | 2.3 | 541.1 | ||||||||||||
Net income
|
23.3 | – | 0.5 | 23.8 | ||||||||||||
Currency translation adjustment
|
– | (2.8 | ) | – | (2.8 | ) | ||||||||||
Change in pension, net of tax
|
– | 0.5 | – | 0.5 | ||||||||||||
Net transfers to Parent
|
47.5 | – | – | 47.5 | ||||||||||||
Balance at June 30, 2012
|
$ | 585.3 | $ | 22.0 | $ | 2.8 | $ | 610.1 |
Six Months Ended
|
||||||||
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Net earnings attributable to Parent Company
|
$ | 23.3 | $ | 19.0 | ||||
Other comprehensive income, net of tax
|
||||||||
Currency translation adjustment and other
|
(2.8 | ) | 21.3 | |||||
Pension
|
0.5 | 1.3 | ||||||
Total other comprehensive income, net of tax
|
(2.3 | ) | 22.6 | |||||
Comprehensive income attributable to Parent Company
|
$ | 21.0 | $ | 41.6 |
Six Months Ended
|
||||||||
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Cost of sales – trade
|
$ | 2.4 | $ | 2.5 | ||||
Selling, general and administrative
|
10.9 | 12.5 | ||||||
Total corporate allocations
|
$ | 13.3 | $ | 15.0 |
Six Months Ended
|
||||||||
June 30,
|
July 2,
|
|||||||
Description
|
2012
|
2011
|
||||||
(In Millions)
|
||||||||
|
||||||||
Affiliate sales
|
$ | 20.6 | $ | 15.2 | ||||
Affiliate cost of sales
|
19.8 | 14.6 | ||||||
Net gross margin on affiliate sales
|
0.8 | 0.6 | ||||||
Cost of sales – trade, mark-up on affiliate purchases
|
5.1 | 5.5 | ||||||
Net interest expense – affiliate
|
17.6 | 22.6 | ||||||
Other affiliate income
|
(0.5 | ) | (0.6 | ) | ||||
Net affiliate loss before provision for income taxes
|
$ | (21.4 | ) | $ | (26.9 | ) |
Six Months Ended
|
||||||||
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Cash received from Parent
|
$ | 373.0 | $ | 513.1 | ||||
Cash remitted to Parent
|
(364.8 | ) | (526.5 | ) | ||||
Taxes paid by Parent
|
6.7 | 0.4 |
June 30,
|
December 31,
|
|||||||||||
Interest Rate
|
2012
|
2011
|
||||||||||
|
||||||||||||
Affiliate notes payable due 2013
|
0.0% – 7.2% | $ | 48.4 | $ | 58.8 | |||||||
Affiliate notes payable due 2015
|
10.8% | 279.0 | 319.9 | |||||||||
Affiliate notes payable on demand
|
2.0% | 33.0 | 33.0 | |||||||||
Total affiliate debt, including current maturities
|
360.4 | 411.7 | ||||||||||
Less: affiliate notes payable on demand classified as current
|
(33.0 | ) | (33.0 | ) | ||||||||
Less: principle payments due within 1 year for other notes payable
|
(99.5 | ) | (105.0 | ) | ||||||||
Long-term related party debt
|
$ | 227.9 | $ | 273.7 |
Useful Life (Years)
|
|
|
|
Land improvements
|
10 – 20
|
Buildings
|
40
|
Machinery and equipment
|
3 – 15
|
Computer software
|
3 – 5
|
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Gross accounts receivable
|
$ | 123.5 | $ | 110.2 | ||||
Allowance for doubtful accounts
|
(2.1 | ) | (2.1 | ) | ||||
Accounts receivable, net
|
$ | 121.4 | $ | 108.1 |
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Finished products
|
$ | 124.8 | $ | 130.2 | ||||
Work in process
|
13.1 | 13.5 | ||||||
Raw materials
|
30.9 | 27.5 | ||||||
Total
|
$ | 168.8 | $ | 171.2 |
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Land
|
$ | 6.6 | $ | 6.7 | ||||
Land improvements
|
6.2 | 6.2 | ||||||
Buildings
|
50.2 | 50.2 | ||||||
Leasehold improvements
|
11.4 | 11.3 | ||||||
Machinery and equipment
|
117.6 | 116.2 | ||||||
Computer software
|
14.6 | 14.4 | ||||||
Property, plant and equipment, gross
|
206.6 | 205.0 | ||||||
Less: accumulated depreciation and amortization
|
(103.7 | ) | (94.3 | ) | ||||
Property, plant and equipment, net
|
$ | 102.9 | $ | 110.7 |
Six Months Ended
|
||||
June 30, 2012
|
||||
(In Millions)
|
||||
|
||||
Beginning balance
|
$ | 573.6 | ||
Foreign currency translation
|
(1.0 | ) | ||
Ending balance
|
$ | 572.6 |
June 30,
|
December 31,
|
|||||||||||||||
2012
|
2011
|
|||||||||||||||
Gross Carrying Amount
|
Accumulated Amortization
|
Gross Carrying Amount
|
Accumulated
Amortization
|
|||||||||||||
(In Millions)
|
||||||||||||||||
Amortized intangible assets – definite lives:
|
||||||||||||||||
Patents and technology
|
$ | 25.1 | $ | (6.5 | ) | $ | 25.0 | $ | (4.5 | ) | ||||||
Trade names
|
108.0 | (20.0 | ) | 108.0 | (15.4 | ) | ||||||||||
Customer relationships
|
64.9 | (27.8 | ) | 65.1 | (25.2 | ) | ||||||||||
Total
|
$ | 198.0 | $ | (54.3 | ) | $ | 198.1 | $ | (45.1 | ) |
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Payroll and related taxes
|
$ | 9.7 | $ | 10.6 | ||||
Customer rebates and sales returns
|
9.7 | 11.7 | ||||||
Accrued restructuring costs
|
7.0 | 7.8 | ||||||
Accrued freight
|
3.3 | 4.1 | ||||||
Insurance and benefits
|
5.3 | 5.9 | ||||||
Accrued litigation
|
– | 5.0 | ||||||
Accrued income taxes
|
2.3 | 3.0 | ||||||
ESOP
|
1.9 | 4.5 | ||||||
Warranty costs
|
4.2 | 4.4 | ||||||
Other
|
6.4 | 7.5 | ||||||
Total
|
$ | 49.8 | $ | 64.5 |
U.S. Plan
|
Non-U.S. Plans
|
|||||||||||||||
Six Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
2012
|
July 2,
2011
|
June 30,
2012
|
July 2,
2011
|
|||||||||||||
|
||||||||||||||||
Service cost
|
$ | 0.1 | $ | 0.1 | $ | 0.3 | $ | 0.3 | ||||||||
Interest cost
|
1.6 | 1.7 | 0.3 | 0.3 | ||||||||||||
Expected return on plan assets
|
(1.8 | ) | (1.7 | ) | – | – | ||||||||||
Amortization of actuarial loss
|
0.3 | 0.2 | – | – | ||||||||||||
Net periodic pension expense
|
$ | 0.2 | $ | 0.3 | $ | 0.6 | $ | 0.6 |
Other Benefit Plan
|
||||||||
Six Months Ended
|
||||||||
June 30,
2012
|
July 2,
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Interest cost
|
$ | – | $ | 0.1 | ||||
Prior service credit amortization
|
(0.1 | ) | (0.1 | ) | ||||
Net periodic post-retirement benefit (income) expense
|
$ | (0.1 | ) | $ | – |
Six Months Ended
|
||||
June 30, 2012
|
||||
(In Millions)
|
||||
|
||||
Current year actuarial loss
|
$ | 0.1 | ||
Amortization of actuarial gain
|
(0.2 | ) | ||
Total gain recognized in other comprehensive income (pre-tax)
|
$ | (0.1 | ) |
U.S. Plans
|
Non-U.S. Plans
|
Other Benefits
|
||||||||||||||||||||||
June 30,
2012 |
December 31, 2011
|
June 30,
2012
|
December 31, 2011
|
June 30,
2012
|
December 31, 2011
|
|||||||||||||||||||
Change in benefit obligation
|
||||||||||||||||||||||||
Benefit obligation at end of prior year
|
$ | 74.0 | $ | 67.3 | $ | 5.7 | $ | 7.2 | $ | 3.5 | $ | 4.4 | ||||||||||||
Service cost
|
0.1 | 0.2 | 0.2 | 0.7 | – | – | ||||||||||||||||||
Interest cost
|
1.7 | 3.4 | 0.3 | 0.5 | 0.1 | 0.2 | ||||||||||||||||||
Settlements/curtailments
|
– | – | – | (0.1 | ) | – | – | |||||||||||||||||
Actuarial (gain) loss
|
0.9 | 6.8 | – | (1.4 | ) | (0.9 | ) | (0.7 | ) | |||||||||||||||
Foreign currency exchange rates
|
– | – | 0.1 | (0.7 | ) | – | – | |||||||||||||||||
Acquisitions, divestitures and other
|
(0.1 | ) | (0.2 | ) | – | – | – | – | ||||||||||||||||
Benefits paid
|
(1.8 | ) | (3.5 | ) | (0.5 | ) | (0.5 | ) | (0.2 | ) | (0.4 | ) | ||||||||||||
Benefit obligation at end of period
|
$ | 74.8 | $ | 74.0 | $ | 5.8 | $ | 5.7 | $ | 2.5 | $ | 3.5 | ||||||||||||
|
||||||||||||||||||||||||
Change in plan assets
|
||||||||||||||||||||||||
Fair value of plan assets at end of prior year
|
$ | 55.2 | $ | 53.3 | $ | – | $ | – | $ | – | $ | – | ||||||||||||
Actual return on plan assets
|
1.7 | 5.1 | – | – | – | – | ||||||||||||||||||
Employer contributions
|
0.4 | 0.5 | 0.5 | 0.5 | 0.2 | 0.4 | ||||||||||||||||||
Acquisitions, divestitures and other
|
– | (0.2 | ) | – | – | – | – | |||||||||||||||||
Benefits paid
|
(1.8 | ) | (3.5 | ) | (0.5 | ) | (0.5 | ) | (0.2 | ) | (0.4 | ) | ||||||||||||
Fair value of plan assets at June 30, 2012
|
$ | 55.5 | $ | 55.2 | $ | – | $ | – | $ | – | $ | – | ||||||||||||
Funded status – assets less the benefit obligation
|
$ | (19.3 | ) | $ | (18.8 | ) | $ | (5.8 | ) | $ | (5.7 | ) | $ | (2.5 | ) | $ | (3.5 | ) | ||||||
Unrecognized net actuarial loss (gain)
|
20.9 | 20.2 | 0.2 | 0.2 | (2.9 | ) | (2.2 | ) | ||||||||||||||||
Net amount recognized
|
$ | 1.6 | $ | 1.4 | $ | (5.6 | ) | $ | (5.5 | ) | $ | (5.4 | ) | $ | (5.7 | ) | ||||||||
|
||||||||||||||||||||||||
Amounts recognized in the Unaudited Combined Balance Sheets
|
||||||||||||||||||||||||
Current benefit liability
|
$ | – | $ | – | $ | (0.3 | ) | $ | (0.2 | ) | $ | (0.3 | ) | $ | (0.5 | ) | ||||||||
Non-current benefit liability
|
(19.3 | ) | (18.8 | ) | (5.5 | ) | (5.5 | ) | (2.2 | ) | (3.0 | ) | ||||||||||||
Net liability recognized
|
$ | (19.3 | ) | $ | (18.8 | ) | $ | (5.8 | ) | $ | (5.7 | ) | $ | (2.5 | ) | $ | (3.5 | ) | ||||||
Accumulated other comprehensive loss (gain) (pre-tax):
|
||||||||||||||||||||||||
Actuarial loss (gain)
|
$ | 20.9 | $ | 20.2 | $ | 0.2 | $ | 0.2 | $ | (2.9 | ) | $ | (2.2 | ) | ||||||||||
Net amount recognized
|
$ | 1.6 | $ | 1.4 | $ | (5.6 | ) | $ | (5.5 | ) | $ | (5.4 | ) | $ | (5.7 | ) |
U.S. Plan
|
Non-U.S. Plans
|
|||||||||||||||
June 30,
2012
|
December 31,
2011
|
June 30,
2012
|
December 31,
2011
|
|||||||||||||
(In Millions)
|
||||||||||||||||
|
||||||||||||||||
Projected benefit obligation
|
$ | 74.8 | $ | 74.0 | $ | 5.8 | $ | 5.7 | ||||||||
Accumulated benefit obligation
|
$ | 74.8 | $ | 74.0 | $ | 3.5 | $ | 3.2 | ||||||||
Fair value of plan assets
|
$ | 55.5 | $ | 55.2 | $ | – | $ | – |
Pension Benefits
|
Other Benefits
|
|||||||||||||||||||||||
U.S. Plans
|
Non-U.S. Plans
|
U.S. Plan
|
||||||||||||||||||||||
June 30,
2012
|
December 31,
2011
|
June 30,
2012
|
December 31,
2011
|
June 30,
2012
|
December 31,
2011
|
|||||||||||||||||||
Weighted-average assumptions used to determine benefit obligations at year end
|
||||||||||||||||||||||||
Discount rate
|
4.50 | % | 4.50 | % | 8.75 | % | 8.75 | % | 4.00 | % | 4.00 | % | ||||||||||||
Rate of compensation increase
|
– | % | – | % | 4.75 | % | 4.75 | % | – | % | – | % | ||||||||||||
|
||||||||||||||||||||||||
Weighted-average assumptions used to determine net periodic benefit cost
|
||||||||||||||||||||||||
Discount rate
|
4.50 | % | 5.25 | % | 8.75 | % | 7.25 | % | 4.00 | % | 5.00 | % | ||||||||||||
Rate of compensation increase
|
– | % | – | % | 4.75 | % | 4.75 | % | – | % | – | % | ||||||||||||
Expected return on plan assets
|
6.50 | % | 6.75 | % | – | % | – | % | – | % | – | % |
June 30,
2012
|
Level 1
|
Level 2
|
||||||||||
Asset Category
|
||||||||||||
Cash and cash equivalents
|
$ | 1.1 | $ | 0.5 | $ | 0.6 | ||||||
Equity securities:
|
||||||||||||
U.S. equity securities
|
11.3 | 2.0 | 9.3 | |||||||||
Foreign equity securities
|
13.7 | 13.7 | – | |||||||||
Fixed income securities:
|
||||||||||||
Government securities
|
15.6 | 14.4 | 1.2 | |||||||||
Corporate securities
|
13.8 | – | 13.8 | |||||||||
Total
|
$ | 55.5 | $ | 30.6 | $ | 24.9 |
December 31, 2011
|
Level 1
|
Level 2
|
||||||||||
Asset Category
|
||||||||||||
Cash and cash equivalents
|
$ | 0.6 | $ | 0.2 | $ | 0.4 | ||||||
Equity securities:
|
||||||||||||
U.S. equity securities
|
16.3 | 2.8 | 13.5 | |||||||||
Foreign equity securities
|
9.0 | 9.0 | – | |||||||||
Fixed income securities:
|
||||||||||||
Government securities
|
15.3 | 14.4 | 0.9 | |||||||||
Corporate securities
|
13.7 | – | 13.7 | |||||||||
Other
|
0.3 | – | 0.3 | |||||||||
Total
|
$ | 55.2 | $ | 26.4 | $ | 28.8 |
Total
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Years 6-10
|
||||||||||||||||||||||
(In Millions)
|
||||||||||||||||||||||||||||
Future payments
|
$ | 44.7 | $ | 4.2 | $ | 4.2 | $ | 4.2 | $ | 4.2 | $ | 4.2 | $ | 23.7 |
June 30,
2012
|
December 31,
2011
|
|||||||
(In Millions)
|
||||||||
Currency translation adjustment
|
$ | 33.5 | $ | 36.3 | ||||
Pension loss, net of tax
|
(11.5 | ) | (12.0 | ) | ||||
Accumulated other comprehensive income
|
$ | 22.0 | $ | 24.3 |
December 31, 2011
|
Additions
|
Usage
|
June 30,
2012
|
|||||||||||||
2012 Actions
|
||||||||||||||||
Severance and related costs
|
$ | – | $ | 2.7 | $ | (0.3 | ) | $ | 2.4 | |||||||
Pre-2012 Actions
|
||||||||||||||||
Severance and related costs
|
7.8 | – | (3.2 | ) | 4.6 | |||||||||||
Total
|
$ | 7.8 | $ | 2.7 | $ | (3.5 | ) | $ | 7.0 |
Six Months Ended
|
||||||||
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
Net sales
|
||||||||
United States
|
$ | 376.3 | $ | 374.2 | ||||
Canada
|
52.8 | 52.7 | ||||||
Other America
|
45.3 | 49.0 | ||||||
Asia
|
18.9 | 15.0 | ||||||
Combined
|
$ | 493.3 | $ | 490.9 |
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
Property, plant and equipment
|
||||||||
United States
|
$ | 94.7 | $ | 102.6 | ||||
Canada
|
4.3 | 4.4 | ||||||
Other Americas
|
3.6 | 3.5 | ||||||
Asia
|
0.3 | 0.2 | ||||||
Combined
|
$ | 102.9 | $ | 110.7 |
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
Deferred tax liabilities:
|
||||||||
Amortization of intangibles
|
$ | 58.9 | $ | 61.6 | ||||
Depreciation
|
5.0 | 3.7 | ||||||
Other
|
3.3 | 2.3 | ||||||
Total deferred tax liabilities
|
$ | 67.2 | $ | 67.6 | ||||
Deferred tax assets:
|
||||||||
Accruals
|
$ | 23.7 | $ | 22.9 | ||||
Employee benefit plans
|
9.7 | 9.6 | ||||||
Inventories
|
8.5 | 7.3 | ||||||
Operating loss and tax credit carry forwards
|
13.2 | 12.2 | ||||||
Restructuring charges
|
2.8 | 2.9 | ||||||
Allowance for doubtful accounts
|
1.0 | 1.2 | ||||||
Other
|
3.3 | 3.1 | ||||||
Total deferred tax assets
|
$ | 62.2 | $ | 59.2 | ||||
Net deferred tax liabilities before valuation allowance
|
$ | 5.0 | $ | 8.4 | ||||
Valuation allowance
|
$ | 12.1 | $ | 12.2 | ||||
Net deferred tax liabilities after valuation allowance
|
$ | 17.1 | $ | 20.6 |
June 30, 2012
|
December 31, 2011
|
|||||||||||||||
Deferred Tax Asset
|
Deferred Tax Liability
|
Deferred Tax Asset
|
Deferred Tax Liability
|
|||||||||||||
Current
|
$ | 25.3 | $ | (0.7 | ) | $ | 22.4 | $ | (0.7 | ) | ||||||
Non-current
|
5.2 | (46.9 | ) | 3.4 | (45.7 | ) | ||||||||||
Total
|
$ | 30.5 | $ | (47.6 | ) | $ | 25.8 | $ | (46.4 | ) |
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
Current:
|
||||||||
Federal
|
$ | 6.3 | $ | (0.4 | ) | |||
Foreign
|
8.9 | 9.3 | ||||||
State
|
0.4 | 0.8 | ||||||
Total current
|
$ | 15.6 | $ | 9.7 | ||||
Deferred:
|
||||||||
Federal
|
$ | (2.5 | ) | $ | 0.9 | |||
Foreign
|
(2.5 | ) | (2.2 | ) | ||||
State
|
– | 0.2 | ||||||
Total deferred
|
(5.0 | ) | (1.1 | ) | ||||
Provision for income taxes
|
$ | 10.6 | $ | 8.6 |
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
Tax at statutory rate
|
$ | 12.0 | $ | 9.8 | ||||
State income taxes, net of federal benefits
|
0.4 | 0.2 | ||||||
Difference between foreign and federal income tax
|
(1.3 | ) | (0.9 | ) | ||||
NOL and valuation allowance items
|
(0.1 | ) | 0.5 | |||||
Other, net
|
(0.4 | ) | (1.0 | ) | ||||
Income taxes on continuing operations
|
$ | 10.6 | $ | 8.6 |
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
United States
|
$ | 11.1 | $ | 3.6 | ||||
Foreign
|
23.3 | 24.3 | ||||||
Earnings before income taxes
|
$ | 34.4 | $ | 27.9 |
Total
|
Remaining
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Operating lease obligations
|
$ | 23.8 | $ | 2.7 | $ | 5.6 | $ | 5.3 | $ | 4.7 | $ | 3.5 | $ | 2.0 |
June 30,
|
July 2,
|
|||||||
2012
|
2011
|
|||||||
(In Millions)
|
||||||||
|
||||||||
Beginning balance
|
$ | 4.4 | $ | 4.3 | ||||
Warranties issued
|
4.4 | 3.2 | ||||||
Warranty payments
|
(4.6 | ) | (2.9 | ) | ||||
Ending balance
|
$ | 4.2 | $ | 4.6 |