ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ENGLAND AND WALES | 98-1386780 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Interface House, Interface Business Park Bincknoll Lane Royal Wootton Bassett Swindon SN4 8SY United Kingdom | +1 (508) 236 3800 | |
(Address of Principal Executive Offices, including Zip Code) | (Registrant’s Telephone Number, Including Area Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
PART I | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 6. | |||
Item 1. | Financial Statements. |
June 30, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 863,380 | $ | 753,089 | |||
Accounts receivable, net of allowances of $11,824 and $12,947 as of June 30, 2018 and December 31, 2017, respectively | 604,859 | 556,541 | |||||
Inventories | 462,006 | 446,129 | |||||
Prepaid expenses and other current assets | 99,861 | 92,532 | |||||
Assets held for sale | 118,813 | — | |||||
Total current assets | 2,148,919 | 1,848,291 | |||||
Property, plant and equipment, net | 741,987 | 750,049 | |||||
Goodwill | 2,967,964 | 3,005,464 | |||||
Other intangible assets, net of accumulated amortization of $1,827,719 and $1,767,001 as of June 30, 2018 and December 31, 2017, respectively | 840,477 | 920,124 | |||||
Deferred income tax assets | 26,058 | 33,003 | |||||
Other assets | 81,530 | 84,594 | |||||
Total assets | $ | 6,806,935 | $ | 6,641,525 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt, capital lease and other financing obligations | $ | 11,044 | $ | 15,720 | |||
Accounts payable | 348,484 | 322,671 | |||||
Income taxes payable | 17,234 | 31,544 | |||||
Accrued expenses and other current liabilities | 210,785 | 259,560 | |||||
Liabilities held for sale | 47,889 | — | |||||
Total current liabilities | 635,436 | 629,495 | |||||
Deferred income tax liabilities | 341,745 | 338,228 | |||||
Pension and other post-retirement benefit obligations | 35,653 | 40,055 | |||||
Capital lease and other financing obligations, less current portion | 26,098 | 28,739 | |||||
Long-term debt, net | 3,221,039 | 3,225,810 | |||||
Other long-term liabilities | 24,157 | 33,572 | |||||
Total liabilities | 4,284,128 | 4,295,899 | |||||
Commitments and contingencies (Note 10) | |||||||
Shareholders’ equity: | |||||||
Ordinary shares, €0.01 nominal value per share, 177,069 and 400,000 shares authorized, and 171,634 and 178,437 shares issued, as of June 30, 2018 and December 31, 2017, respectively | 2,202 | 2,289 | |||||
Treasury shares, at cost, 1,137 and 7,076 shares as of June 30, 2018 and December 31, 2017, respectively | (60,105 | ) | (288,478 | ) | |||
Additional paid-in capital | 1,676,172 | 1,663,367 | |||||
Retained earnings | 937,452 | 1,031,612 | |||||
Accumulated other comprehensive loss | (32,914 | ) | (63,164 | ) | |||
Total shareholders’ equity | 2,522,807 | 2,345,626 | |||||
Total liabilities and shareholders’ equity | $ | 6,806,935 | $ | 6,641,525 |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||
Net revenue | $ | 913,860 | $ | 839,874 | $ | 1,800,153 | $ | 1,647,145 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of revenue | 582,509 | 540,505 | 1,164,966 | 1,072,924 | |||||||||||
Research and development | 37,980 | 31,203 | 73,981 | 63,007 | |||||||||||
Selling, general and administrative | 80,473 | 80,805 | 161,795 | 150,919 | |||||||||||
Amortization of intangible assets | 34,594 | 41,003 | 69,663 | 81,261 | |||||||||||
Restructuring and other charges, net | 244 | 6,389 | 4,010 | 17,439 | |||||||||||
Total operating costs and expenses | 735,800 | 699,905 | 1,474,415 | 1,385,550 | |||||||||||
Profit from operations | 178,060 | 139,969 | 325,738 | 261,595 | |||||||||||
Interest expense, net | (38,321 | ) | (40,038 | ) | (76,750 | ) | (80,315 | ) | |||||||
Other, net | (11,053 | ) | (1,863 | ) | (15,686 | ) | 2,856 | ||||||||
Income before taxes | 128,686 | 98,068 | 233,302 | 184,136 | |||||||||||
Provision for income taxes | 23,398 | 18,611 | 37,524 | 32,943 | |||||||||||
Net income | $ | 105,288 | $ | 79,457 | $ | 195,778 | $ | 151,193 | |||||||
Basic net income per share: | $ | 0.61 | $ | 0.46 | $ | 1.14 | $ | 0.88 | |||||||
Diluted net income per share: | $ | 0.61 | $ | 0.46 | $ | 1.13 | $ | 0.88 |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||
Net income | $ | 105,288 | $ | 79,457 | $ | 195,778 | $ | 151,193 | |||||||
Other comprehensive income/(loss), net of tax: | |||||||||||||||
Cash flow hedges | 22,673 | (11,168 | ) | 29,212 | (11,036 | ) | |||||||||
Defined benefit and retiree healthcare plans | 61 | 735 | 1,038 | 1,215 | |||||||||||
Other comprehensive income/(loss) | 22,734 | (10,433 | ) | 30,250 | (9,821 | ) | |||||||||
Comprehensive income | $ | 128,022 | $ | 69,024 | $ | 226,028 | $ | 141,372 |
For the six months ended | |||||||
June 30, 2018 | June 30, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 195,778 | $ | 151,193 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 53,445 | 54,802 | |||||
Amortization of debt issuance costs | 3,643 | 3,693 | |||||
Gain on sale of assets | — | (1,180 | ) | ||||
Share-based compensation | 11,502 | 10,009 | |||||
Loss on debt financing | 2,350 | — | |||||
Amortization of intangible assets | 69,663 | 81,261 | |||||
Deferred income taxes | 12,266 | 9,004 | |||||
Unrealized loss on hedges and other | 8,432 | 8,229 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | (70,295 | ) | (65,425 | ) | |||
Inventories | (35,132 | ) | (22,341 | ) | |||
Prepaid expenses and other current assets | (6,045 | ) | (18,469 | ) | |||
Accounts payable and accrued expenses | 23,430 | 27,120 | |||||
Income taxes payable | (12,040 | ) | 1,223 | ||||
Other | (3,084 | ) | (5,270 | ) | |||
Net cash provided by operating activities | 253,913 | 233,849 | |||||
Cash flows from investing activities: | |||||||
Additions to property, plant and equipment and capitalized software | (66,301 | ) | (67,192 | ) | |||
Proceeds from the sale of assets | — | 7,151 | |||||
Other | 5,000 | (1,500 | ) | ||||
Net cash used in investing activities | (61,301 | ) | (61,541 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from exercise of stock options and issuance of ordinary shares | 3,397 | 2,947 | |||||
Payments on debt | (12,404 | ) | (12,341 | ) | |||
Payments to repurchase ordinary shares | (63,746 | ) | (2,721 | ) | |||
Payments of debt issuance costs | (5,813 | ) | (137 | ) | |||
Other | (3,755 | ) | — | ||||
Net cash used in financing activities | (82,321 | ) | (12,252 | ) | |||
Net change in cash and cash equivalents | 110,291 | 160,056 | |||||
Cash and cash equivalents, beginning of period | 753,089 | 351,428 | |||||
Cash and cash equivalents, end of period | $ | 863,380 | $ | 511,484 |
June 30, 2018 | December 31, 2017 | ||||||
Finished goods | $ | 183,870 | $ | 195,089 | |||
Work-in-process | 101,036 | 92,678 | |||||
Raw materials | 177,100 | 158,362 | |||||
Inventories | $ | 462,006 | $ | 446,129 |
Cash Flow Hedges | Defined Benefit and Retiree Healthcare Plans | Accumulated Other Comprehensive Loss | ||||||||||
Balance as of December 31, 2017 | $ | (28,179 | ) | $ | (34,985 | ) | $ | (63,164 | ) | |||
Other comprehensive income before reclassifications, net of tax | 15,346 | 578 | 15,924 | |||||||||
Reclassifications from accumulated other comprehensive loss, net of tax | 13,866 | 460 | 14,326 | |||||||||
Other comprehensive income | 29,212 | 1,038 | 30,250 | |||||||||
Balance as of June 30, 2018 | $ | 1,033 | $ | (33,947 | ) | $ | (32,914 | ) |
Loss/(Gain) Reclassified from Accumulated Other Comprehensive Loss | Affected Line in Condensed Consolidated Statements of Operations | |||||||||||||||||
For the three months ended | For the six months ended | |||||||||||||||||
Component | June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||||
Derivative instruments designated and qualifying as cash flow hedges: | ||||||||||||||||||
Foreign currency forward contracts | $ | 8,064 | $ | (2,368 | ) | $ | 18,948 | $ | (7,753 | ) | Net revenue (1) | |||||||
Foreign currency forward contracts | (2,662 | ) | 4,835 | (1,836 | ) | 11,403 | Cost of revenue (1) | |||||||||||
Foreign currency forward contracts | — | — | 1,376 | — | Other, net (1) | |||||||||||||
Total, before taxes | 5,402 | 2,467 | 18,488 | 3,650 | Income before taxes | |||||||||||||
Income tax effect | (1,350 | ) | (618 | ) | (4,622 | ) | (913 | ) | Provision for income taxes | |||||||||
Total, net of taxes | $ | 4,052 | $ | 1,849 | $ | 13,866 | $ | 2,737 | Net income | |||||||||
Defined benefit and retiree healthcare plans | $ | 93 | $ | 758 | $ | 317 | $ | 1,260 | Other, net (2) | |||||||||
Income tax effect | (32 | ) | (23 | ) | 143 | (45 | ) | Provision for income taxes | ||||||||||
Total, net of taxes | $ | 61 | $ | 735 | $ | 460 | $ | 1,215 | Net income |
(1) | See Note 12, "Derivative Instruments and Hedging Activities," for additional details on amounts to be reclassified in the future from Accumulated other comprehensive loss. |
(2) | See Note 8, "Pension and Other Post-Retirement Benefits," for additional details of net periodic benefit cost. |
Severance | ||||
Balance at December 31, 2017 | $ | 7,583 | ||
Charges, net of reversals | 3,320 | |||
Payments | (5,631 | ) | ||
Impact of changes in foreign currency exchange rates | (96 | ) | ||
Balance at June 30, 2018 | $ | 5,176 |
Maturity Date | June 30, 2018 | December 31, 2017 | ||||||||
Term Loan | October 14, 2021 | $ | 917,794 | $ | 927,794 | |||||
4.875% Senior Notes | October 15, 2023 | 500,000 | 500,000 | |||||||
5.625% Senior Notes | November 1, 2024 | 400,000 | 400,000 | |||||||
5.0% Senior Notes | October 1, 2025 | 700,000 | 700,000 | |||||||
6.25% Senior Notes | February 15, 2026 | 750,000 | 750,000 | |||||||
Less: discount | (16,545 | ) | (14,424 | ) | ||||||
Less: deferred financing costs | (25,457 | ) | (27,758 | ) | ||||||
Less: current portion | (4,753 | ) | (9,802 | ) | ||||||
Long-term debt, net | $ | 3,221,039 | $ | 3,225,810 | ||||||
Capital lease and other financing obligations | $ | 32,389 | $ | 34,657 | ||||||
Less: current portion | (6,291 | ) | (5,918 | ) | ||||||
Capital lease and other financing obligations, less current portion | $ | 26,098 | $ | 28,739 |
U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Total | ||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Service cost | $ | — | $ | — | $ | 19 | $ | 22 | $ | 804 | $ | 654 | $ | 823 | $ | 676 | |||||||||||||||
Interest cost | 364 | 409 | 70 | 79 | 332 | 262 | 766 | 750 | |||||||||||||||||||||||
Expected return on plan assets | (408 | ) | (537 | ) | — | — | (235 | ) | (226 | ) | (643 | ) | (763 | ) | |||||||||||||||||
Amortization of net loss | 300 | 278 | — | 16 | 110 | 67 | 410 | 361 | |||||||||||||||||||||||
Amortization of prior service (credit)/cost | — | — | (334 | ) | (334 | ) | 2 | (1 | ) | (332 | ) | (335 | ) | ||||||||||||||||||
Loss on settlement | 15 | 732 | — | — | — | — | 15 | 732 | |||||||||||||||||||||||
Net periodic benefit cost/(credit) | $ | 271 | $ | 882 | $ | (245 | ) | $ | (217 | ) | $ | 1,013 | $ | 756 | $ | 1,039 | $ | 1,421 |
U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||||||
Defined Benefit | Retiree Healthcare | Defined Benefit | Total | ||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Service cost | $ | — | $ | — | $ | 38 | $ | 43 | $ | 1,635 | $ | 1,256 | $ | 1,673 | $ | 1,299 | |||||||||||||||
Interest cost | 691 | 829 | 140 | 159 | 674 | 511 | 1,505 | 1,499 | |||||||||||||||||||||||
Expected return on plan assets | (836 | ) | (1,090 | ) | — | — | (472 | ) | (447 | ) | (1,308 | ) | (1,537 | ) | |||||||||||||||||
Amortization of net loss | 600 | 563 | — | 24 | 135 | 138 | 735 | 725 | |||||||||||||||||||||||
Amortization of prior service (credit)/cost | — | — | (668 | ) | (667 | ) | 1 | (2 | ) | (667 | ) | (669 | ) | ||||||||||||||||||
Loss on settlement | 545 | 1,204 | — | — | — | — | 545 | 1,204 | |||||||||||||||||||||||
Gain on curtailment | — | — | — | — | (296 | ) | — | (296 | ) | — | |||||||||||||||||||||
Net periodic benefit cost/(credit) | $ | 1,000 | $ | 1,506 | $ | (490 | ) | $ | (441 | ) | $ | 1,677 | $ | 1,456 | $ | 2,187 | $ | 2,521 |
For the three months ended June 30, 2017 | For the six months ended June 30, 2017 | ||||||||||||||||||||||
As reported | ASU No. 2017-07 Adjustment | As Adjusted | As reported | ASU No. 2017-07 Adjustment | As Adjusted | ||||||||||||||||||
Net revenue | $ | 839,874 | $ | — | $ | 839,874 | $ | 1,647,145 | $ | — | $ | 1,647,145 | |||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
Cost of revenue | 541,032 | (527 | ) | 540,505 | 1,073,758 | (834 | ) | 1,072,924 | |||||||||||||||
Research and development | 31,216 | (13 | ) | 31,203 | 63,030 | (23 | ) | 63,007 | |||||||||||||||
Selling, general and administrative | 81,010 | (205 | ) | 80,805 | 151,284 | (365 | ) | 150,919 | |||||||||||||||
Amortization of intangible assets | 41,003 | — | 41,003 | 81,261 | — | 81,261 | |||||||||||||||||
Restructuring and other charges, net | 6,389 | — | 6,389 | 17,439 | — | 17,439 | |||||||||||||||||
Total operating costs and expenses | 700,650 | (745 | ) | 699,905 | 1,386,772 | (1,222 | ) | 1,385,550 | |||||||||||||||
Profit from operations | 139,224 | 745 | 139,969 | 260,373 | 1,222 | 261,595 | |||||||||||||||||
Interest expense, net | (40,038 | ) | — | (40,038 | ) | (80,315 | ) | — | (80,315 | ) | |||||||||||||
Other, net | (1,118 | ) | (745 | ) | (1,863 | ) | 4,078 | (1,222 | ) | 2,856 | |||||||||||||
Income before taxes | $ | 98,068 | $ | — | $ | 98,068 | $ | 184,136 | $ | — | $ | 184,136 |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||
Stock options | $ | 1,789 | $ | 2,055 | $ | 3,078 | $ | 3,480 | |||||||
Restricted securities | 4,623 | 4,002 | 8,424 | 6,529 | |||||||||||
Share-based compensation expense | $ | 6,412 | $ | 6,057 | $ | 11,502 | $ | 10,009 |
Options Granted to | Number of Options Granted (in thousands) | Weighted- Average Grant Date Fair Value | Vesting Period | ||||||
Various executives and employees | 307 | $ | 15.70 | 25% per year over four years |
Awards Granted to | Type of Award | Number of Units Granted (in thousands) | Percentage of PRSUs Awarded That May Vest | Weighted- Average Grant Date Fair Value | |||||||
Various executives and employees | RSU (1) | 146 | N/A | $ | 52.04 | ||||||
Directors | RSU (1) | 23 | N/A | $ | 52.47 | ||||||
Various executives and employees | PRSU (2) | 118 | 0.0% - 172.5% | $ | 51.83 | ||||||
Various executives and employees | PRSU (2) | 63 | 0.0% - 150.0% | $ | 51.83 |
(1) | RSUs granted during the six months ended June 30, 2018 vest on various dates between June 2019 and May 2021. |
(2) | PRSUs granted during the six months ended June 30, 2018 vest on April 1, 2021, with the amount ultimately vesting within the range shown in the table above, depending on the extent to which certain performance criteria are met. |
June 30, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Foreign currency forward contracts | $ | 13,179 | $ | 3,955 | |||
Commodity forward contracts | 1,599 | 6,458 | |||||
Total | $ | 14,778 | $ | 10,413 | |||
Liabilities | |||||||
Foreign currency forward contracts | $ | 11,977 | $ | 40,969 | |||
Commodity forward contracts | 2,925 | 1,104 | |||||
Total | $ | 14,902 | $ | 42,073 |
June 30, 2018 | December 31, 2017 | ||||||||||||||
Carrying Value (1) | Fair Value | Carrying Value (1) | Fair Value | ||||||||||||
Liabilities | |||||||||||||||
Term Loan | $ | 917,794 | $ | 917,794 | $ | 927,794 | $ | 930,114 | |||||||
4.875% Senior Notes | $ | 500,000 | $ | 502,500 | $ | 500,000 | $ | 521,875 | |||||||
5.625% Senior Notes | $ | 400,000 | $ | 416,000 | $ | 400,000 | $ | 439,000 | |||||||
5.0% Senior Notes | $ | 700,000 | $ | 703,500 | $ | 700,000 | $ | 741,125 | |||||||
6.25% Senior Notes | $ | 750,000 | $ | 778,125 | $ | 750,000 | $ | 813,750 |
Notional (in millions) | Effective Date(s) | Maturity Date(s) | Index | Weighted- Average Strike Rate | Hedge Designation | |||||
45.0 EUR | June 27, 2018 | July 31, 2018 | Euro to U.S. Dollar Exchange Rate | 1.16 USD | Not designated | |||||
360.2 EUR | Various from August 2016 to June 2018 | Various from July 2018 to May 2020 | Euro to U.S. Dollar Exchange Rate | 1.19 USD | Designated | |||||
756.0 CNY | June 26, 2018 | July 31, 2018 | U.S. Dollar to Chinese Renminbi Exchange Rate | 6.59 CNY | Not designated | |||||
540.7 CNY | Various from October 2017 to January 2018 | Various from July to December 2018 | U.S. Dollar to Chinese Renminbi Exchange Rate | 6.72 CNY | Designated | |||||
114.0 JPY | June 27, 2018 | July 31, 2018 | U.S. Dollar to Japanese Yen Exchange Rate | 110.15 JPY | Not designated | |||||
411.8 JPY | January 25, 2018 | Various from July to December 2018 | U.S. Dollar to Japanese Yen Exchange Rate | 106.90 JPY | Designated | |||||
32,237.0 KRW | Various from August 2016 to June 2018 | Various from July 2018 to May 2020 | U.S. Dollar to Korean Won Exchange Rate | 1,106.11 KRW | Designated | |||||
21.0 MYR | June 26, 2018 | July 31, 2018 | U.S. Dollar to Malaysian Ringgit Exchange Rate | 4.03 MYR | Not Designated | |||||
3.5 MYR | Various from August to November 2016 | Various from July to October 2018 | U.S. Dollar to Malaysian Ringgit Exchange Rate | 4.33 MYR | Designated | |||||
250.0 MXN | June 27, 2018 | July 31, 2018 | U.S. Dollar to Mexican Peso Exchange Rate | 20.14 MXN | Not designated | |||||
2,621.0 MXN | Various from August 2016 to June 2018 | Various from July 2018 to May 2020 | U.S. Dollar to Mexican Peso Exchange Rate | 20.58 MXN | Designated | |||||
6.8 GBP | June 27, 2018 | July 31, 2018 | British Pound Sterling to U.S. Dollar Exchange Rate | 1.32 USD | Not Designated | |||||
38.2 GBP | Various from July 2016 to June 2018 | Various from July 2018 to May 2020 | British Pound Sterling to U.S. Dollar Exchange Rate | 1.34 USD | Designated |
Commodity | Notional | Remaining Contracted Periods | Weighted-Average Strike Price Per Unit | |||
Silver | 974,890 troy oz. | July 2018 - April 2020 | $17.54 | |||
Gold | 10,389 troy oz. | July 2018 - April 2020 | $1,318.67 | |||
Nickel | 258,668 pounds | July 2018 - April 2020 | $5.46 | |||
Aluminum | 4,615,267 pounds | July 2018 - April 2020 | $0.94 | |||
Copper | 6,160,002 pounds | July 2018 - April 2020 | $2.95 | |||
Platinum | 7,093 troy oz. | July 2018 - April 2020 | $972.54 | |||
Palladium | 1,602 troy oz. | July 2018 - April 2020 | $905.37 |
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||
Balance Sheet Location | June 30, 2018 | December 31, 2017 | Balance Sheet Location | June 30, 2018 | December 31, 2017 | ||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | $ | 8,729 | $ | 3,576 | Accrued expenses and other current liabilities | $ | 10,557 | $ | 32,806 | |||||||||
Foreign currency forward contracts | Other assets | 3,367 | 373 | Other long-term liabilities | 1,123 | 6,881 | |||||||||||||
Total | $ | 12,096 | $ | 3,949 | $ | 11,680 | $ | 39,687 | |||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||
Commodity forward contracts | Prepaid expenses and other current assets | $ | 1,551 | $ | 5,403 | Accrued expenses and other current liabilities | $ | 2,364 | $ | 1,006 | |||||||||
Commodity forward contracts | Other assets | 48 | 1,055 | Other long-term liabilities | 561 | 98 | |||||||||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | 1,083 | 6 | Accrued expenses and other current liabilities | 297 | 1,282 | |||||||||||||
Total | $ | 2,682 | $ | 6,464 | $ | 3,222 | $ | 2,386 |
Derivatives designated as hedging instruments | Amount of Deferred Gain/(Loss) Recognized in Other Comprehensive Income/(Loss) | Location of Net (Loss)/Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income | Amount of Net (Loss)/Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income | |||||||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||||||||||
Foreign currency forward contracts | $ | 33,641 | $ | (26,480 | ) | Net revenue | $ | (8,064 | ) | $ | 2,368 | |||||||
Foreign currency forward contracts | $ | (8,813 | ) | $ | 9,124 | Cost of revenue | $ | 2,662 | $ | (4,835 | ) |
Derivatives not designated as hedging instruments | Amount of (Loss)/Gain Recognized in Net Income | Location of (Loss)/Gain Recognized in Net Income | ||||||||
June 30, 2018 | June 30, 2017 | |||||||||
Commodity forward contracts | $ | (1,426 | ) | $ | (1,957 | ) | Other, net | |||
Foreign currency forward contracts | $ | 5,776 | $ | (4,141 | ) | Other, net |
Derivatives designated as hedging instruments | Amount of Deferred Gain/(Loss) Recognized in Other Comprehensive Income/(Loss) | Location of Net (Loss)/Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income | Amount of Net (Loss)/Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income | |||||||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||||||||||
Foreign currency forward contracts | $ | 15,803 | $ | (39,791 | ) | Net revenue | $ | (18,948 | ) | $ | 7,753 | |||||||
Foreign currency forward contracts | $ | 4,658 | $ | 21,427 | Cost of revenue | $ | 1,836 | $ | (11,403 | ) | ||||||||
Foreign currency forward contracts | $ | — | $ | — | Other, net | $ | (1,376 | ) | $ | — |
Derivatives not designated as hedging instruments | Amount of (Loss)/Gain Recognized in Net Income | Location of (Loss)/Gain Recognized in Net Income | ||||||||
June 30, 2018 | June 30, 2017 | |||||||||
Commodity forward contracts | $ | (4,621 | ) | $ | 3,483 | Other, net | ||||
Foreign currency forward contracts | $ | 826 | $ | (6,677 | ) | Other, net |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||
Currency remeasurement (loss)/gain on net monetary assets | $ | (15,677 | ) | $ | 4,830 | $ | (8,929 | ) | $ | 7,021 | |||||
Gain/(loss) on foreign currency forward contracts | 5,776 | (4,141 | ) | (550 | ) | (6,677 | ) | ||||||||
(Loss)/gain on commodity forward contracts | (1,426 | ) | (1,957 | ) | (4,621 | ) | 3,483 | ||||||||
Loss on debt financing | — | — | (2,350 | ) | — | ||||||||||
Net periodic benefit cost, excluding service cost (1) | (216 | ) | (745 | ) | (514 | ) | (1,222 | ) | |||||||
Other | 490 | 150 | 1,278 | 251 | |||||||||||
Other, net | $ | (11,053 | ) | $ | (1,863 | ) | $ | (15,686 | ) | $ | 2,856 |
(1) | On January 1, 2018, we adopted FASB ASU No. 2017-07, which requires the service cost component and other components of net periodic benefit cost to be presented separately on the condensed consolidated statements of operations. Refer to Note 2, "New Accounting Standards," and Note 8, "Pension and Other Post-Retirement Benefits," for additional details. |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||
Net revenue: | |||||||||||||||
Performance Sensing | $ | 676,217 | $ | 621,829 | $ | 1,339,046 | $ | 1,221,972 | |||||||
Sensing Solutions | 237,643 | 218,045 | 461,107 | 425,173 | |||||||||||
Total net revenue | $ | 913,860 | $ | 839,874 | $ | 1,800,153 | $ | 1,647,145 | |||||||
Segment profit (as defined above): | |||||||||||||||
Performance Sensing | $ | 187,365 | $ | 169,100 | $ | 356,775 | $ | 320,836 | |||||||
Sensing Solutions | 79,070 | 70,101 | 150,954 | 137,539 | |||||||||||
Total segment profit | 266,435 | 239,201 | 507,729 | 458,375 | |||||||||||
Corporate and other | (53,537 | ) | (51,840 | ) | (108,318 | ) | (98,080 | ) | |||||||
Amortization of intangible assets | (34,594 | ) | (41,003 | ) | (69,663 | ) | (81,261 | ) | |||||||
Restructuring and other charges, net | (244 | ) | (6,389 | ) | (4,010 | ) | (17,439 | ) | |||||||
Profit from operations | 178,060 | 139,969 | 325,738 | 261,595 | |||||||||||
Interest expense, net | (38,321 | ) | (40,038 | ) | (76,750 | ) | (80,315 | ) | |||||||
Other, net | (11,053 | ) | (1,863 | ) | (15,686 | ) | 2,856 | ||||||||
Income before taxes | $ | 128,686 | $ | 98,068 | $ | 233,302 | $ | 184,136 |
For the three months ended | For the six months ended | ||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||
Basic weighted-average ordinary shares outstanding | 171,439 | 171,132 | 171,422 | 171,040 | |||||||
Dilutive effect of stock options | 883 | 518 | 905 | 542 | |||||||
Dilutive effect of unvested restricted securities | 371 | 270 | 448 | 331 | |||||||
Diluted weighted-average ordinary shares outstanding | 172,693 | 171,920 | 172,775 | 171,913 |
For the three months ended | For the six months ended | ||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||
Anti-dilutive shares excluded | 989 | 2,040 | 849 | 1,660 | |||||||
Contingently issuable shares excluded | 808 | 947 | 798 | 732 |
For the three months ended June 30, 2018 | For the three months ended June 30, 2017 | |||||||||||||||||||||||
Performance Sensing | Sensing Solutions | Total | Performance Sensing | Sensing Solutions | Total | |||||||||||||||||||
Automotive | $ | 532,586 | $ | 13,002 | $ | 545,588 | $ | 498,848 | $ | 12,667 | $ | 511,515 | ||||||||||||
HVOR | 143,631 | — | 143,631 | 122,981 | — | 122,981 | ||||||||||||||||||
Appliance and HVAC | — | 56,610 | 56,610 | — | 56,084 | 56,084 | ||||||||||||||||||
Industrial | — | 86,847 | 86,847 | — | 80,597 | 80,597 | ||||||||||||||||||
Aerospace | — | 40,500 | 40,500 | — | 37,414 | 37,414 | ||||||||||||||||||
Other | — | 40,684 | 40,684 | — | 31,283 | 31,283 | ||||||||||||||||||
Total | $ | 676,217 | $ | 237,643 | $ | 913,860 | $ | 621,829 | $ | 218,045 | $ | 839,874 |
For the six months ended June 30, 2018 | For the six months ended June 30, 2017 | |||||||||||||||||||||||
Performance Sensing | Sensing Solutions | Total | Performance Sensing | Sensing Solutions | Total | |||||||||||||||||||
Automotive | $ | 1,062,379 | $ | 26,858 | $ | 1,089,237 | $ | 986,061 | $ | 26,334 | $ | 1,012,395 | ||||||||||||
HVOR | 276,667 | — | 276,667 | 235,911 | — | 235,911 | ||||||||||||||||||
Appliance and HVAC | — | 110,927 | 110,927 | — | 109,153 | 109,153 | ||||||||||||||||||
Industrial | — | 169,232 | 169,232 | — | 157,429 | 157,429 | ||||||||||||||||||
Aerospace | — | 82,206 | 82,206 | — | 75,056 | 75,056 | ||||||||||||||||||
Other | — | 71,884 | 71,884 | — | 57,201 | 57,201 | ||||||||||||||||||
Total | $ | 1,339,046 | $ | 461,107 | $ | 1,800,153 | $ | 1,221,972 | $ | 425,173 | $ | 1,647,145 |
June 30, 2018 | |||
Assets | |||
Accounts receivable, net | $ | 21,977 | |
Inventory | 19,255 | ||
Prepaid and other current assets | 6,207 | ||
Property, plant and equipment, net | 22,952 | ||
Goodwill | 37,500 | ||
Other intangible assets, net | 10,922 | ||
Total assets held for sale | $ | 118,813 | |
Liabilities | |||
Accounts payable | $ | 14,495 | |
Income tax payable | 2,270 | ||
Accrued expenses and other current liabilities | 13,275 | ||
Deferred income tax liabilities | 11,467 | ||
Pension and other post-retirement benefit obligations | 3,252 | ||
Other long term liabilities | 3,130 | ||
Total liabilities held for sale | $ | 47,889 |
• | instability and changes in the global markets, including regulatory, political, economic, and military matters; |
• | changes to current policies, such as trade tariffs, by the U.S. government; |
• | adverse conditions in the automotive industry; |
• | competition in our industry; |
• | pressure from customers to reduce prices; |
• | supplier interruption or non-performance limiting our access to manufactured components or raw materials; |
• | business disruptions due to natural disasters or other disasters outside our control; |
• | labor disruptions or increased labor costs; |
• | difficulties or failures to integrate businesses we acquire; |
• | disruptions from any future acquisitions dispositions, joint ventures, collaborative arrangements, or other investments that either require significant resources, result in significant unanticipated losses, costs, or liabilities, or a combination thereof; |
• | market acceptance of new product introductions and product innovations; |
• | changes to, or our inability to comply with, various regulations, including tax laws, import/export regulations, anti-bribery laws, environmental and safety laws, and other governmental regulations; |
• | foreign currency risks, changes in socio-economic conditions, or changes to monetary and fiscal policies, including as a result of the impending exit of the U.K. from the European Union; |
• | losses and costs as a result of intellectual property, product liability, warranty, and recall claims that may be brought against us; |
• | taxing authorities challenging our historical and future tax positions or our allocation of taxable income among our subsidiaries, and challenges to the sovereign taxation regimes of European Union member states by the European Commission; |
• | our level of indebtedness, or our inability to meet debt service obligations or comply with the covenants contained in the credit agreement and indentures; and |
• | security breaches and other disruptions to our information technology infrastructure. |
For the three months ended | |||||||||||||
June 30, 2018 | June 30, 2017 | ||||||||||||
($ in millions) | Amount | Percent of Net Revenue | Amount | Percent of Net Revenue | |||||||||
Net revenue: | |||||||||||||
Performance Sensing | $ | 676.2 | 74.0 | % | $ | 621.8 | 74.0 | % | |||||
Sensing Solutions | 237.6 | 26.0 | 218.0 | 26.0 | |||||||||
Net revenue | 913.9 | 100.0 | 839.9 | 100.0 | |||||||||
Operating costs and expenses: | |||||||||||||
Cost of revenue | 582.5 | 63.7 | 540.5 | 64.4 | |||||||||
Research and development | 38.0 | 4.2 | 31.2 | 3.7 | |||||||||
Selling, general and administrative | 80.5 | 8.8 | 80.8 | 9.6 | |||||||||
Amortization of intangible assets | 34.6 | 3.8 | 41.0 | 4.9 | |||||||||
Restructuring and other charges, net | 0.2 | 0.0 | 6.4 | 0.8 | |||||||||
Total operating costs and expenses | 735.8 | 80.5 | 699.9 | 83.3 | |||||||||
Profit from operations | 178.1 | 19.5 | 140.0 | 16.7 | |||||||||
Interest expense, net | (38.3 | ) | (4.2 | ) | (40.0 | ) | (4.8 | ) | |||||
Other, net | (11.1 | ) | (1.2 | ) | (1.9 | ) | (0.2 | ) | |||||
Income before taxes | 128.7 | 14.1 | 98.1 | 11.7 | |||||||||
Provision for income taxes | 23.4 | 2.6 | 18.6 | 2.2 | |||||||||
Net income | $ | 105.3 | 11.5 | % | $ | 79.5 | 9.5 | % |
For the six months ended | |||||||||||||
June 30, 2018 | June 30, 2017 | ||||||||||||
($ in millions) | Amount | Percent of Net Revenue | Amount | Percent of Net Revenue | |||||||||
Net revenue: | |||||||||||||
Performance Sensing | $ | 1,339.0 | 74.4 | % | $ | 1,222.0 | 74.2 | % | |||||
Sensing Solutions | 461.1 | 25.6 | 425.2 | 25.8 | |||||||||
Net revenue | 1,800.2 | 100.0 | 1,647.1 | 100.0 | |||||||||
Operating costs and expenses: | |||||||||||||
Cost of revenue | 1,165.0 | 64.7 | 1,072.9 | 65.1 | |||||||||
Research and development | 74.0 | 4.1 | 63.0 | 3.8 | |||||||||
Selling, general and administrative | 161.8 | 9.0 | 150.9 | 9.2 | |||||||||
Amortization of intangible assets | 69.7 | 3.9 | 81.3 | 4.9 | |||||||||
Restructuring and other charges, net | 4.0 | 0.2 | 17.4 | 1.1 | |||||||||
Total operating costs and expenses | 1,474.4 | 81.9 | 1,385.6 | 84.1 | |||||||||
Profit from operations | 325.7 | 18.1 | 261.6 | 15.9 | |||||||||
Interest expense, net | (76.8 | ) | (4.3 | ) | (80.3 | ) | (4.9 | ) | |||||
Other, net | (15.7 | ) | (0.9 | ) | 2.9 | 0.2 | |||||||
Income before taxes | 233.3 | 13.0 | 184.1 | 11.2 | |||||||||
Provision for income taxes | 37.5 | 2.1 | 32.9 | 2.0 | |||||||||
Net income | $ | 195.8 | 10.9 | % | $ | 151.2 | 9.2 | % |
(in millions) | June 30, 2018 | December 31, 2017 | |||||
United Kingdom | $ | 12.5 | $ | 13.7 | |||
United States | 7.8 | 9.0 | |||||
The Netherlands | 395.8 | 260.9 | |||||
China | 358.9 | 383.0 | |||||
Other | 88.4 | 86.5 | |||||
Total | $ | 863.4 | $ | 753.1 |
For the six months ended | |||||||
(in millions) | June 30, 2018 | June 30, 2017 | |||||
Net cash provided by/(used in): | |||||||
Operating activities: | |||||||
Net income adjusted for non-cash items | $ | 357.1 | $ | 317.0 | |||
Changes in operating assets and liabilities, net of effects of acquisitions | (103.2 | ) | (83.2 | ) | |||
Operating activities | 253.9 | 233.8 | |||||
Investing activities | (61.3 | ) | (61.5 | ) | |||
Financing activities | (82.3 | ) | (12.3 | ) | |||
Net change | $ | 110.3 | $ | 160.1 |
(in thousands) | Maturity Date | June 30, 2018 | |||
Term Loan | October 14, 2021 | $ | 917,794 | ||
4.875% Senior Notes | October 15, 2023 | 500,000 | |||
5.625% Senior Notes | November 1, 2024 | 400,000 | |||
5.0% Senior Notes | October 1, 2025 | 700,000 | |||
6.25% Senior Notes | February 15, 2026 | 750,000 | |||
Less: discount | (16,545 | ) | |||
Less: deferred financing costs | (25,457 | ) | |||
Less: current portion | (4,753 | ) | |||
Long-term debt, net | $ | 3,221,039 | |||
Capital lease and other financing obligations | $ | 32,389 | |||
Less: current portion | (6,291 | ) | |||
Capital lease and other financing obligations, less current portion | $ | 26,098 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Period | Total Number of Shares Purchased (in shares) | Weighted-Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs (in millions) | ||||||||||
April 1 through April 30, 2018 | 67,244 | (1) | $ | 51.83 | — | $ | — | |||||||
May 1 through May 31, 2018 | 3,020 | (1) | $ | 51.62 | — | $ | 400.0 | |||||||
June 1 through June 30, 2018 | — | $ | 52.87 | 1,136,741 | $ | 339.9 | ||||||||
Total | 70,264 | $ | 52.81 | 1,136,741 | $ | 339.9 |
(1) | Pursuant to the "withhold to cover" method for collecting and paying withholding taxes for our employees upon the vesting of restricted securities, we withheld from certain employees the shares noted in the table above to cover such tax withholdings. These transactions took place outside of a publicly-announced repurchase plan. The weighted-average price per share listed in the above table is the weighted-average of the fair market prices at which we calculated the number of shares withheld to cover tax for the employees. |
Item 3. | Defaults Upon Senior Securities. |
Item 6. | Exhibits. |
Exhibit No. | Description | |
31.1 | ||
31.2 | ||
32.1 | ||
101 | The following materials from the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements. | |
/s/ Martha Sullivan |
(Martha Sullivan) President and Chief Executive Officer (Principal Executive Officer) |
/s/ Paul Vasington |
(Paul Vasington) Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
/s/ Martha Sullivan |
Martha Sullivan President and Chief Executive Officer |
/s/ Paul Vasington |
Paul Vasington Executive Vice President and Chief Financial Officer |
/s/ Martha Sullivan | ||
Martha Sullivan President and Chief Executive Officer | ||
Date: | July 24, 2018 | |
/s/ Paul Vasington | ||
Paul Vasington Executive Vice President and Chief Financial Officer | ||
Date: | July 24, 2018 |
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 13, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Sensata Technologies Holding plc | |
Entity Central Index Key | 0001477294 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 169,687,754 |
Condensed Consolidated Balance Sheets (Parenthetical) $ in Thousands |
Jun. 30, 2018
€ / shares
|
Jun. 30, 2018
USD ($)
shares
|
Dec. 31, 2017
€ / shares
|
Dec. 31, 2017
USD ($)
shares
|
---|---|---|---|---|
Current assets: | ||||
Accounts receivable, allowances | $ | $ 11,824 | $ 12,947 | ||
Accumulated amortization | $ | $ 1,827,719 | $ 1,767,001 | ||
Shareholders’ equity: | ||||
Ordinary shares, nominal value per share (in euros per share) | € / shares | € 0.01 | € 0.01 | ||
Ordinary shares, shares authorized (in shares) | 177,069,000 | 400,000,000 | ||
Ordinary shares, shares issued (in shares) | 171,634,000 | 178,437,000 | ||
Treasury stock, shares (in shares) | 1,137,000 | 7,076,000 |
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Net revenue | $ 913,860 | $ 839,874 | $ 1,800,153 | $ 1,647,145 |
Operating costs and expenses: | ||||
Cost of revenue | 582,509 | 540,505 | 1,164,966 | 1,072,924 |
Research and development | 37,980 | 31,203 | 73,981 | 63,007 |
Selling, general and administrative | 80,473 | 80,805 | 161,795 | 150,919 |
Amortization of intangible assets | 34,594 | 41,003 | 69,663 | 81,261 |
Restructuring and other charges, net | 244 | 6,389 | 4,010 | 17,439 |
Total operating costs and expenses | 735,800 | 699,905 | 1,474,415 | 1,385,550 |
Profit from operations | 178,060 | 139,969 | 325,738 | 261,595 |
Interest expense, net | (38,321) | (40,038) | (76,750) | (80,315) |
Other, net | (11,053) | (1,863) | (15,686) | 2,856 |
Income before taxes | 128,686 | 98,068 | 233,302 | 184,136 |
Provision for income taxes | 23,398 | 18,611 | 37,524 | 32,943 |
Net income | $ 105,288 | $ 79,457 | $ 195,778 | $ 151,193 |
Basic net income per share (in dollars per share) | $ 0.61 | $ 0.46 | $ 1.14 | $ 0.88 |
Diluted net income per share (in dollars per share) | $ 0.61 | $ 0.46 | $ 1.13 | $ 0.88 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract] | ||||
Net income | $ 105,288 | $ 79,457 | $ 195,778 | $ 151,193 |
Other comprehensive income/(loss), net of tax: | ||||
Cash flow hedges | 22,673 | (11,168) | 29,212 | (11,036) |
Defined benefit and retiree healthcare plans | 61 | 735 | 1,038 | 1,215 |
Other comprehensive income/(loss) | 22,734 | (10,433) | 30,250 | (9,821) |
Comprehensive income | $ 128,022 | $ 69,024 | $ 226,028 | $ 141,372 |
Business Description and Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description and Basis of Presentation | Business Description and Basis of Presentation Description of Business The accompanying unaudited condensed consolidated financial statements reflect the financial position, results of operations, comprehensive income, and cash flows of Sensata Technologies Holding plc ("Sensata plc"), the successor issuer to Sensata Technologies Holding N.V. ("Sensata N.V."), and its wholly-owned subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," or "us." On September 28, 2017, the board of directors of Sensata N.V. unanimously approved a plan to change our location of incorporation from the Netherlands to the United Kingdom (the "U.K."). To effect this change, on February 16, 2018, the shareholders of Sensata N.V. approved a cross-border merger between Sensata N.V. and Sensata plc, a newly formed, public limited company incorporated under the laws of England and Wales, with Sensata plc being the surviving entity (the "Merger"). We received approval of the transaction by the U.K. High Court of Justice, and the Merger was completed on March 28, 2018, on which date Sensata plc became the publicly-traded parent of the subsidiary companies that were previously controlled by Sensata N.V., with no changes made to the business being conducted by us prior to the Merger. Due to the fact that the Merger was a business combination between entities under common control in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 805, Business Combinations, the assets and liabilities exchanged were accounted for at their carrying values. Sensata plc conducts its operations through subsidiary companies that operate business and product development centers primarily in the United States (the "U.S."), the Netherlands, Belgium, Bulgaria, China, Germany, Japan, South Korea, and the U.K.; and manufacturing operations primarily in China, Malaysia, Mexico, Bulgaria, France, Germany, the U.K., and the U.S. We organize our operations into two segments, Performance Sensing and Sensing Solutions. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and the instructions to Form 10-Q. Accordingly, these interim financial statements do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The accompanying financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year, nor were the results of operations of the comparable periods in 2017 necessarily representative of those actually experienced for the full year 2017. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017. All intercompany balances and transactions have been eliminated. All U.S. dollar and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated. |
New Accounting Standards |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Standards | New Accounting Standards Adopted in the current year In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), which modifies how all entities recognize revenue, and consolidates into one ASC Topic (FASB ASC Topic 606, Revenue from Contracts with Customers) the guidance found in FASB ASC Topic 605, Revenue Recognition, and various other revenue accounting standards for specialized transactions and industries. FASB ASC Topic 606 outlines a comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted FASB ASC Topic 606 on January 1, 2018 using the modified retrospective transition method. Refer to Note 16, "Revenue Recognition," for additional details on this implementation and the required disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The new recognition and measurement guidance requires entities to measure equity investments (except those accounted for under the equity method, those that result in consolidation of the investee, and certain other investments) either at fair value, with changes to fair value recognized in net income, or, in certain instances, by use of a measurement alternative. Under the measurement alternative, such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. We adopted this guidance on January 1, 2018, which resulted in no impact on our consolidated financial position or results of operations. Refer to Note 11, "Fair Value Measures," for further detail regarding the application of the measurement alternative to our $50.0 million equity investment in Series B Preferred Stock of Quanergy, Inc ("Quanergy"), which does not have a readily determinable fair value. In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires a change in the presentation of net periodic benefit cost on the consolidated statements of operations. Specifically, entities must present the service cost component of net periodic benefit cost in the same financial statement line item(s) as other compensation costs arising from services rendered by the related employees during the period, whereas the non–service components of net periodic benefit cost must be presented separately from the financial statement line item(s) that include service cost and outside of operating income. We adopted this guidance on January 1, 2018 and, as a result, we present the service cost component of net periodic benefit cost in the Cost of revenue, Research and development, and Selling, general, and administrative ("SG&A") expense line items, and we present the non–service components of net periodic benefit cost in Other, net. Refer to Note 13, "Other, Net," for the total other components of net periodic benefit cost. All prior period amounts have been recast to reflect the revised presentation, and the adjustments made to revise the presentation of our prior year condensed consolidated statement of operations are presented in Note 8, "Pension and Other Post–Retirement Benefits." To be adopted in a future period In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes new accounting and disclosure requirements for leases. FASB ASU No. 2016-02 requires lessees to classify most leases as either finance or operating leases and to initially recognize a lease liability and right-of-use asset. Entities may elect to account for certain short-term leases (with a term of one year or less) using a method similar to the current operating lease model. The statement of operations will include, for finance leases, separate recognition of interest on the lease liability and amortization of the right-of-use asset and for operating leases, a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis. FASB ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods therein, with early adoption permitted. FASB ASU No. 2016-02 currently must be applied using a modified retrospective approach, which requires the recognition and measurement of leases at the beginning of the earliest period presented, with certain practical expedients available. However, in January 2018, the FASB issued a proposed ASU that would amend certain aspects of FASB ASU No. 2016-02. The proposed amendments create an additional practical expedient that would allow an entity to apply the transition provisions of the new standard, including its disclosure requirements, at its adoption date instead of at the beginning of the earliest comparative period presented. We are monitoring the status of this proposed ASU, and we will adopt FASB ASU No. 2016-02 on January 1, 2019. We are in the process of implementing a plan for the adoption of FASB ASU No. 2016-02. Through our implementation efforts, we have determined that we intend to elect to apply the package of practical expedients, and we do not intend to elect to apply the hindsight practical expedient. While we have not yet determined the impact of FASB ASU No. 2016-02 on our consolidated financial position or results of operations, at December 31, 2017, we were contractually obligated to make future payments of $68.6 million under our operating lease obligations in existence as of that date, primarily related to long-term facility leases. Under FASB ASU No. 2016-02 these operating leases would potentially be required to be presented on our consolidated balance sheets. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), which changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results, in order to better align an entity’s risk management activities and financial reporting for hedging relationships. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. FASB ASU No. 2017-12 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, with early adoption permitted. The adoption of FASB ASU No. 2017-12 will not have a material impact on our consolidated financial position or results of operations. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Refer to Note 2, "New Accounting Standards," for additional detail of this standard. We adopted FASB ASC Topic 606 on January 1, 2018, only for contracts that were not completed as of January 1, 2018, using the modified retrospective method. Because (1) the vast majority of our revenue is derived from the sale of tangible products for which we recognize revenue at a point in time and (2) the contracts that relate to these product shipments are purchase orders that have firm purchase commitments (generally over a short period of time), the adoption of FASB ASC Topic 606 did not have a material effect on our financial statements or results of operations, and no cumulative catch-up adjustment was required. We are electing to apply certain practical expedients that allow for more limited disclosures than those that would otherwise be required by FASB ASC Topic 606, including (1) the disclosure of transaction price allocated to the remaining unsatisfied performance obligations at the end of the period and (2) an explanation of when we expect to recognize the related revenue. The following tables present revenue by segment, further disaggregated by end-market:
Performance Obligations Our revenue and related cost of revenue are primarily the result of promises to transfer products to our customers. Revenue is recognized when control of the product is transferred to the customer (i.e. when our performance obligation has been satisfied), which is generally when the product is shipped from our warehouse or, in limited instances, when it is received by the customer, depending on the specific terms of the arrangement. Payment for products is generally due a short time (less than a year) after shipment to the customer. Sales to customers generally include a right of return for defective or non-conforming product. Sales returns have not historically been significant in relation to our net revenue and have been within our estimates. Product sales are recorded net of variable consideration, such as sales returns and trade discounts (including volume and early payment incentives), as well as value-added tax and similar taxes. Amounts billed to our customers for shipping and handling are recorded in revenue. Shipping and handling costs are included in cost of revenue. Warranties Our standard terms of sale provide our customers with a warranty against faulty workmanship and the use of defective materials, which, depending on the product, generally exists for a period of twelve to eighteen months after the date we ship the product to our customer or for a period of twelve months after the date the customer resells our product, whichever comes first. We do not offer separately priced extended warranty or product maintenance contracts. Our liability associated with this warranty is, at our option, to repair the product, replace the product, or provide the customer with a credit. We also sell products to customers under negotiated agreements or where we have accepted the customer’s terms of purchase. In these instances, we may provide additional warranties for longer durations, consistent with differing end market practices, and where our liability is not limited. In addition, many sales take place in situations where commercial or civil codes, or other laws, would imply various warranties and restrict limitations on liability. Contract Assets and Liabilities Our contract assets consist of Accounts receivable. Contract liabilities, whereby we receive payment by customers related to our promise to satisfy performance obligations in the future, are not material. |
Inventories |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories The components of inventories as of June 30, 2018 and December 31, 2017 were as follows:
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Shareholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' Equity Prior to the Merger, Sensata N.V.’s articles of association authorized it to issue up to 400.0 million ordinary shares. Entities incorporated under the laws of England and Wales are limited in the number of shares they can issue to those shares that have been authorized for "allotment" by their shareholders. In connection with the Merger, our board of directors asked shareholders to approve an allotment of ordinary shares equal to the total ordinary shares issued and outstanding plus the maximum number of ordinary shares that could be reasonably expected to be issued under our equity plans within the next year, which resulted in an allotment of 177.1 million ordinary shares. Treasury Shares Ordinary shares repurchased by us are recorded as treasury shares, at cost, resulting in a reduction of shareholders' equity. In connection with the Merger, all then outstanding treasury shares were cancelled in accordance with U.K. law. Accordingly, we (1) derecognized the total purchase price of these treasury shares, (2) recognized a reduction to ordinary shares at an amount equal to the total par value of such shares, and (3) recognized a reduction to Retained earnings at an amount equal to the excess of the total repurchase price over the total par value of the then outstanding treasury shares, or $286.1 million. Also, upon completion of the Merger, the $250.0 million share repurchase program previously authorized by the board of directors of Sensata N.V. lapsed, and our ability to repurchase shares as a company incorporated in England and Wales became contingent upon the completion of certain court proceedings in the U.K. (which were completed in the second quarter of 2018), approval of our shareholders (which occurred at our May 31, 2018 annual general meeting of shareholders), and authorization by our board of directors. On May 31, 2018, we announced that our board of directors had authorized a $400.0 million share repurchase program. Under this program, we may repurchase ordinary shares at such times and in amounts to be determined by our management, based on market conditions, legal requirements, and other corporate considerations, on the open market or in privately negotiated transactions, provided that such transactions are completed pursuant to an agreement and with a third party approved by our shareholders at the annual general meeting. The authorized amount of our share repurchase program may be modified or terminated by our board of directors at any time. We repurchased 1,137 ordinary shares under this program during the three months ended June 30, 2018, for a total purchase price of approximately $60.1 million, which are now held as treasury shares. At June 30, 2018, $339.9 million remained available under this program for future repurchases of our ordinary shares. As a result of certain aspects of U.K. law, we discontinued the practice of reissuing treasury shares as part of our share-based compensation programs upon completion of the Merger. The number of treasury shares reissued in the first quarter of 2018, prior to the Merger, was not material. Accumulated Other Comprehensive Loss The following is a roll forward of the components of Accumulated other comprehensive loss for the six months ended June 30, 2018:
The details of the amounts reclassified from Accumulated other comprehensive loss for the three and six months ended June 30, 2018 and 2017 are as follows:
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Restructuring and Other Charges, Net |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Charges, Net | Restructuring and Other Charges, Net Restructuring and other charges, net for the three and six months ended June 30, 2018 were $0.2 million and $4.0 million, respectively. In the first quarter of 2018, we recognized a $3.8 million restructuring charge, which consisted primarily of severance related to limited workforce reductions in manufacturing, engineering, and administrative positions as well as the transfer of certain positions to more cost-effective locations. The expected payback period for these actions is approximately two years, and they are expected to generate incremental pre-tax savings of approximately $3 million on an annual basis once fully implemented. Restructuring and other charges, net for the three and six months ended June 30, 2017 were $6.4 million and $17.4 million, respectively, which related primarily to the closing of our facility in Minden, Germany that was part of the acquisition of CST, a limited number of other line moves and exit activities, and the termination of a limited number of employees. Charges related to the closing of our facility in Minden, Germany for the three and six months ended June 30, 2017 consisted of (i) severance charges of $2.6 million and $8.4 million, respectively; and (ii) facility exit costs of $0.8 million and $1.1 million, respectively. Changes to the severance portion of our restructuring liability during the six months ended June 30, 2018 were as follows:
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Debt |
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Debt | Debt Our long-term debt and capital lease and other financing obligations as of June 30, 2018 and December 31, 2017 consisted of the following:
In connection with the Merger, in the first quarter of 2018, we paid $5.8 million of creditor fees and related third party costs in order to obtain consents to the transaction from our existing lenders. We applied the provisions of FASB ASC Subtopic 470-50, Modifications and Extinguishments, in accounting for the amounts paid. As a result, we recorded an adjustment of $3.5 million to the carrying amount of Long-term debt, and we recognized a loss of $2.4 million in Other, net. As of June 30, 2018, we had $415.4 million available under our $420.0 million revolving credit facility, net of $4.6 million in letters of credit. Outstanding letters of credit are issued primarily for the benefit of certain operating activities. As of June 30, 2018, no amounts had been drawn against these outstanding letters of credit. Accrued Interest Accrued interest associated with our outstanding debt is included as a component of Accrued expenses and other current liabilities in the condensed consolidated balance sheets. As of June 30, 2018 and December 31, 2017, accrued interest totaled $37.0 million and $36.9 million, respectively. |
Income Taxes |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Provision for income taxes for the three months ended June 30, 2018 and 2017 totaled $23.4 million and $18.6 million, respectively, and for the six months ended June 30, 2018 and 2017 totaled $37.5 million and $32.9 million, respectively. The Provision for income taxes consists of current tax expense, which relates primarily to our profitable operations in non-U.S. tax jurisdictions, and deferred tax expense, which relates to adjustments in book-to-tax basis differences primarily due to the step-up in fair value of fixed and intangible assets, including goodwill, acquired in connection with business combination transactions, and the utilization of net operating losses. On December 22, 2017, President Trump signed into U.S. law the Tax Cuts and Jobs Act of 2017 ("Tax Reform" or "the Act"). FASB ASC Topic 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017. Given the significance of the legislation, the U.S. Securities and Exchange Commission (the "SEC") staff issued Staff Accounting Bulletin No.118 ("SAB 118"), which allows registrants to record provisional amounts during a one-year "measurement period" similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared, and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared, or analyzed. As of June 30, 2018, we have not recorded incremental accounting adjustments related to the Act as we continue to consider interpretations of its application. In measuring the related deferred tax assets, we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or some portion of the deferred tax assets. Significant judgment is required in considering the relative impact of the negative and positive evidence, and weight given to each category of evidence is commensurate with the extent to which it can be objectively verified. The greater negative evidence that exists, more positive evidence is necessary to support a conclusion that a valuation allowance is not needed. Additionally, we utilize the "more likely than not" criteria established in FASB ASC Topic 740, Income Taxes, to determine whether the future tax benefit from the deferred tax assets should be recognized. As a result, we maintain a full valuation allowance on the deferred tax assets in jurisdictions that have incurred net operating losses and in which it is more likely than not that such losses will not be utilized in the foreseeable future. We have concluded that a valuation allowance is required on our deferred tax assets in the U.S., in large part due to the cumulative losses that our U.S. operations have experienced in recent years. Such cumulative losses are negative evidence that is difficult to overcome in concluding whether a valuation allowance is required. We continue to assess both positive and negative evidence surrounding our U.S. operations, and to evaluate the impact of Tax Reform on our tax attributes and related valuation allowance implications. As a consequence of our assessment, at June 30, 2018, we have concluded that maintaining the U.S. valuation allowance is appropriate. |
Pension and Other Post-Retirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Post-Retirement Benefits | Pension and Other Post-Retirement Benefits We provide various pension and other post-retirement benefit plans for current and former employees, including defined benefit, defined contribution, and retiree healthcare benefit plans. The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the three months ended June 30, 2018 and 2017 were as follows:
The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the six months ended June 30, 2018 and 2017 were as follows:
On January 1, 2018, we adopted the guidance in FASB ASU No. 2017-07. Refer to Note 2, "New Accounting Standards," for further discussion. As a result of this adoption, the components of net periodic benefit cost, excluding service cost, were reclassified in our condensed consolidated statements of operations from various operating cost and expense line items to Other, net for the three and six months ended June 30, 2017. The table below presents the effects of this adjustment.
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Share-Based Payment Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Plans | Share-Based Payment Plans Share-Based Compensation Expense The table below presents non-cash compensation expense related to our equity awards, which is recognized within SG&A expense in the condensed consolidated statements of operations, during the identified periods:
Equity Awards We grant options and restricted stock units ("RSUs") for which vesting is subject only to continued employment and the passage of time. In addition, we grant performance–based options and performance–based restricted stock units ("PRSUs") for which vesting also depends on the attainment of certain performance criteria. We granted the following options under the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan (the "2010 Equity Plan") during the six months ended June 30, 2018:
We granted the following RSUs and PRSUs under the 2010 Equity Plan during the six months ended June 30, 2018
Option Exercises During the six months ended June 30, 2018, 88 stock options were exercised. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are the defendant in a lawsuit, Wasica Finance Gmbh et al v. Schrader International Inc. et al, Case No. 13-1353-CPS, U.S.D.C., Delaware, in which the claimant alleges infringement of their patent (US 5,602,524) in connection with our TPMS products. The patent in question has expired, and as a result, the claimant only seeks damages for past infringement with interest and costs. Should the claimant prevail, these amounts could be material. We have denied liability and have been defending the litigation, which is in discovery. The court has currently scheduled a claims construction hearing for December 2018 and trial for February 2020. We do not believe a loss related to this matter is probable. As of June 30, 2018, we have not recorded an accrual for this matter. We are regularly involved in a number of claims and litigation matters in the ordinary course of business, primarily related to allegations of intellectual property infringement and property damage or personal injury caused by our products. Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial position, or cash flows. |
Fair Value Measures |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measures | Fair Value Measures Our assets and liabilities recorded at fair value have been categorized based upon the fair value hierarchy in accordance with FASB ASC Topic 820, Fair Value Measurement. Measured on a Recurring Basis The fair values of our assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017 are as shown in the below table. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.
Measured on a Nonrecurring Basis We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, 2017 and determined that they were not impaired. In connection with the proposed sale of all of the outstanding shares of Schrader-Bridgeport International, Inc. and August France Holding Company SAS (collectively the "Valves Business") as discussed in Note 17, "Disposal Group," we evaluated the goodwill of the Performance Sensing reporting unit (excluding the Valves Business) for impairment and determined it was not impaired. As of June 30, 2018, no other events or changes in circumstances occurred that would have triggered the need for an additional impairment review of our goodwill and other indefinite-lived intangible assets. We periodically re-evaluate the carrying values and estimated useful lives of long-lived assets whenever events or changes in circumstances indicate that the carrying values of these assets may not be recoverable. On January 1, 2018, we adopted FASB ASU No. 2016-01, which requires that equity investments (except those accounted for under the equity method, those that result in consolidation of the investee, and certain other investments) be measured at either fair value, with changes to fair value recognized in net income, or, in certain instances, by use of a measurement alternative. Under the measurement alternative, such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. As it relates to our $50.0 million equity investment in Quanergy, we elected to use the measurement alternative. As of June 30, 2018, we noted no material observable price changes as a result of orderly transactions for an identical or similar investment of the same issuer, nor did we note any indicators of impairment that would require us to measure the fair value of the asset. Financial Instruments Not Recorded at Fair Value The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.
(1) Carrying value excludes discounts and deferred financing costs. The fair values of the Term Loan and senior notes are determined primarily using observable prices in markets where these instruments are generally not traded on a daily basis. Cash and cash equivalents, accounts receivable, and accounts payable are carried at their cost, which approximates fair value, because of their short-term nature. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Hedges of Foreign Currency Risk We are exposed to fluctuations in various foreign currencies against our functional currency, the U.S. dollar. We use foreign currency forward agreements to manage this exposure. We currently have outstanding foreign currency forward contracts that qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales and certain manufacturing costs. We also have outstanding foreign currency forward contracts that are not designated for hedge accounting treatment in accordance with FASB ASC Topic 815, Derivatives and Hedging, and are intended to preserve the economic value of foreign currency denominated monetary assets and liabilities. For the three and six months ended June 30, 2018 and 2017, amounts excluded from the assessment of effectiveness and the ineffective portion of the changes in the fair value of our foreign currency forward agreements that are designated as cash flows were not material. As of June 30, 2018, we estimate that $0.4 million of net gains will be reclassified from Accumulated other comprehensive loss to earnings during the twelve-month period ending June 30, 2019. As of June 30, 2018, we had the following outstanding foreign currency forward contracts:
Hedges of Commodity Risk Our objective in using commodity forward contracts is to offset a portion of our exposure to the potential change in prices associated with certain commodities used in the manufacturing of our products, including silver, gold, nickel, aluminum, copper, platinum, and palladium. The terms of these forward contracts fix the price at a future date for various notional amounts associated with these commodities. These instruments are not designated for hedge accounting treatment in accordance with FASB ASC Topic 815. As of June 30, 2018, we had the following outstanding commodity forward contracts, none of which were designated as derivatives in qualifying hedging relationships:
Financial Instrument Presentation The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017:
These fair value measurements are all categorized within Level 2 of the fair value hierarchy. The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive income for the three months ended June 30, 2018 and 2017:
The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations for the six months ended June 30, 2018 and 2017:
Credit Risk Related Contingent Features We have agreements with certain of our derivative counterparties that contain a provision whereby if we default on our indebtedness, and where repayment of the indebtedness has been accelerated by the lender, then we could also be declared in default on our derivative obligations. As of June 30, 2018, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $15.0 million. As of June 30, 2018, we have not posted any cash collateral related to these agreements. If we breach any of the default provisions on any of our indebtedness, as described above, we could be required to settle our obligations under the derivative agreements at their termination values. |
Other, Net |
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Other, Net | Other, Net Other, net consisted of the following for the three and six months ended June 30, 2018 and 2017:
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting We organize our business into two reportable segments, Performance Sensing and Sensing Solutions, each of which is also an operating segment. Our operating segments are businesses that we manage as components of an enterprise for which separate financial information is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and assess performance. An operating segment’s performance is primarily evaluated based on Segment profit, which excludes amortization expense, Restructuring and other charges, net, and certain corporate costs/credits not associated with the operations of the segment, including share-based compensation expense and a portion of depreciation expense associated with assets recorded in connection with acquisitions. In addition, an operating segment’s performance excludes results from discontinued operations, if any. Corporate and other costs excluded from an operating segment’s performance are separately stated below and also include costs that are related to functional areas, such as finance, information technology, legal, and human resources. We believe that Segment profit, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, this measure should be considered in addition to, and not as a substitute for, or superior to, profit from operations or other measures of financial performance prepared in accordance with U.S. GAAP. The accounting policies of each of our reporting segments are materially consistent with those in the summary of significant accounting policies as described in Note 2, "Significant Accounting Policies," included in our Annual Report on Form 10-K for the year ended December 31, 2017. The following table presents Net revenue and Segment profit for the reported segments and other operating results not allocated to the reported segments for the three and six months ended June 30, 2018 and 2017:
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Net Income per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Share | Net Income per Share Basic and diluted net income per share are calculated by dividing Net income by the number of basic and diluted weighted-average ordinary shares outstanding during the period. For the three and six months ended June 30, 2018 and 2017, the weighted-average ordinary shares outstanding for basic and diluted net income per share were as follows:
Net income and net income per share are presented in the condensed consolidated statements of operations. Certain potential ordinary shares were excluded from our calculation of diluted weighted-average ordinary shares outstanding because either they would have had an anti–dilutive effect on net income per share or they related to equity awards that were contingently issuable for which the contingency had not been satisfied. These potential ordinary shares are as follows:
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Revenue Recognition |
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Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | New Accounting Standards Adopted in the current year In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), which modifies how all entities recognize revenue, and consolidates into one ASC Topic (FASB ASC Topic 606, Revenue from Contracts with Customers) the guidance found in FASB ASC Topic 605, Revenue Recognition, and various other revenue accounting standards for specialized transactions and industries. FASB ASC Topic 606 outlines a comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted FASB ASC Topic 606 on January 1, 2018 using the modified retrospective transition method. Refer to Note 16, "Revenue Recognition," for additional details on this implementation and the required disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The new recognition and measurement guidance requires entities to measure equity investments (except those accounted for under the equity method, those that result in consolidation of the investee, and certain other investments) either at fair value, with changes to fair value recognized in net income, or, in certain instances, by use of a measurement alternative. Under the measurement alternative, such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. We adopted this guidance on January 1, 2018, which resulted in no impact on our consolidated financial position or results of operations. Refer to Note 11, "Fair Value Measures," for further detail regarding the application of the measurement alternative to our $50.0 million equity investment in Series B Preferred Stock of Quanergy, Inc ("Quanergy"), which does not have a readily determinable fair value. In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires a change in the presentation of net periodic benefit cost on the consolidated statements of operations. Specifically, entities must present the service cost component of net periodic benefit cost in the same financial statement line item(s) as other compensation costs arising from services rendered by the related employees during the period, whereas the non–service components of net periodic benefit cost must be presented separately from the financial statement line item(s) that include service cost and outside of operating income. We adopted this guidance on January 1, 2018 and, as a result, we present the service cost component of net periodic benefit cost in the Cost of revenue, Research and development, and Selling, general, and administrative ("SG&A") expense line items, and we present the non–service components of net periodic benefit cost in Other, net. Refer to Note 13, "Other, Net," for the total other components of net periodic benefit cost. All prior period amounts have been recast to reflect the revised presentation, and the adjustments made to revise the presentation of our prior year condensed consolidated statement of operations are presented in Note 8, "Pension and Other Post–Retirement Benefits." To be adopted in a future period In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes new accounting and disclosure requirements for leases. FASB ASU No. 2016-02 requires lessees to classify most leases as either finance or operating leases and to initially recognize a lease liability and right-of-use asset. Entities may elect to account for certain short-term leases (with a term of one year or less) using a method similar to the current operating lease model. The statement of operations will include, for finance leases, separate recognition of interest on the lease liability and amortization of the right-of-use asset and for operating leases, a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis. FASB ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods therein, with early adoption permitted. FASB ASU No. 2016-02 currently must be applied using a modified retrospective approach, which requires the recognition and measurement of leases at the beginning of the earliest period presented, with certain practical expedients available. However, in January 2018, the FASB issued a proposed ASU that would amend certain aspects of FASB ASU No. 2016-02. The proposed amendments create an additional practical expedient that would allow an entity to apply the transition provisions of the new standard, including its disclosure requirements, at its adoption date instead of at the beginning of the earliest comparative period presented. We are monitoring the status of this proposed ASU, and we will adopt FASB ASU No. 2016-02 on January 1, 2019. We are in the process of implementing a plan for the adoption of FASB ASU No. 2016-02. Through our implementation efforts, we have determined that we intend to elect to apply the package of practical expedients, and we do not intend to elect to apply the hindsight practical expedient. While we have not yet determined the impact of FASB ASU No. 2016-02 on our consolidated financial position or results of operations, at December 31, 2017, we were contractually obligated to make future payments of $68.6 million under our operating lease obligations in existence as of that date, primarily related to long-term facility leases. Under FASB ASU No. 2016-02 these operating leases would potentially be required to be presented on our consolidated balance sheets. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), which changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results, in order to better align an entity’s risk management activities and financial reporting for hedging relationships. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. FASB ASU No. 2017-12 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, with early adoption permitted. The adoption of FASB ASU No. 2017-12 will not have a material impact on our consolidated financial position or results of operations. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Refer to Note 2, "New Accounting Standards," for additional detail of this standard. We adopted FASB ASC Topic 606 on January 1, 2018, only for contracts that were not completed as of January 1, 2018, using the modified retrospective method. Because (1) the vast majority of our revenue is derived from the sale of tangible products for which we recognize revenue at a point in time and (2) the contracts that relate to these product shipments are purchase orders that have firm purchase commitments (generally over a short period of time), the adoption of FASB ASC Topic 606 did not have a material effect on our financial statements or results of operations, and no cumulative catch-up adjustment was required. We are electing to apply certain practical expedients that allow for more limited disclosures than those that would otherwise be required by FASB ASC Topic 606, including (1) the disclosure of transaction price allocated to the remaining unsatisfied performance obligations at the end of the period and (2) an explanation of when we expect to recognize the related revenue. The following tables present revenue by segment, further disaggregated by end-market:
Performance Obligations Our revenue and related cost of revenue are primarily the result of promises to transfer products to our customers. Revenue is recognized when control of the product is transferred to the customer (i.e. when our performance obligation has been satisfied), which is generally when the product is shipped from our warehouse or, in limited instances, when it is received by the customer, depending on the specific terms of the arrangement. Payment for products is generally due a short time (less than a year) after shipment to the customer. Sales to customers generally include a right of return for defective or non-conforming product. Sales returns have not historically been significant in relation to our net revenue and have been within our estimates. Product sales are recorded net of variable consideration, such as sales returns and trade discounts (including volume and early payment incentives), as well as value-added tax and similar taxes. Amounts billed to our customers for shipping and handling are recorded in revenue. Shipping and handling costs are included in cost of revenue. Warranties Our standard terms of sale provide our customers with a warranty against faulty workmanship and the use of defective materials, which, depending on the product, generally exists for a period of twelve to eighteen months after the date we ship the product to our customer or for a period of twelve months after the date the customer resells our product, whichever comes first. We do not offer separately priced extended warranty or product maintenance contracts. Our liability associated with this warranty is, at our option, to repair the product, replace the product, or provide the customer with a credit. We also sell products to customers under negotiated agreements or where we have accepted the customer’s terms of purchase. In these instances, we may provide additional warranties for longer durations, consistent with differing end market practices, and where our liability is not limited. In addition, many sales take place in situations where commercial or civil codes, or other laws, would imply various warranties and restrict limitations on liability. Contract Assets and Liabilities Our contract assets consist of Accounts receivable. Contract liabilities, whereby we receive payment by customers related to our promise to satisfy performance obligations in the future, are not material. |
Disposal Group |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Group | Disposal Group On May 22, 2018, we entered into a stock purchase agreement (the "SPA") with Pacific Industrial Co., Ltd. ("Pacific") to sell the Valves Business for cash consideration of approximately $173.0 million, subject to working capital and other adjustments. The transaction is subject to customary regulatory approvals and is expected to close in the third quarter of 2018. Also on May 22, 2018, we entered into an agreement to purchase components manufactured by the Valves Business from Pacific for an initial term of five years, beginning on the date of the closing of the sale. The Valves Business, which we acquired in 2014 as part of our acquisition of Schrader, manufactures mechanical valves for pressure applications in tires and fluid controls and assembles tire hardware aftermarket products. The Valves Business has manufacturing locations in the United States and Europe. Prior to entering into the SPA, we determined that the assets and liabilities of the Valves Business constituted a disposal group that met the held for sale criteria described in FASB ASC Topic 360, Property, Plant and Equipment. Accordingly, as of June 30, 2018, such assets and liabilities are presented separately on our balance sheet as assets held for sale and liabilities held for sale, respectively. The table below presents the individual assets and liabilities that comprise these balance sheet amounts.
The Valves Business was included in our Performance Sensing segment (and reporting unit). We allocated goodwill to the Valves Business based on its fair value relative to the fair value of the remaining Performance Sensing reporting unit. We determined that the fair value of the Valves Business, less costs to sell, exceeded the carrying amount of the related disposal group. |
New Accounting Standards (Policies) |
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Jun. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and the instructions to Form 10-Q. Accordingly, these interim financial statements do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The accompanying financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year, nor were the results of operations of the comparable periods in 2017 necessarily representative of those actually experienced for the full year 2017. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017. All intercompany balances and transactions have been eliminated. All U.S. dollar and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated. |
New Accounting Standards | New Accounting Standards Adopted in the current year In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), which modifies how all entities recognize revenue, and consolidates into one ASC Topic (FASB ASC Topic 606, Revenue from Contracts with Customers) the guidance found in FASB ASC Topic 605, Revenue Recognition, and various other revenue accounting standards for specialized transactions and industries. FASB ASC Topic 606 outlines a comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted FASB ASC Topic 606 on January 1, 2018 using the modified retrospective transition method. Refer to Note 16, "Revenue Recognition," for additional details on this implementation and the required disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The new recognition and measurement guidance requires entities to measure equity investments (except those accounted for under the equity method, those that result in consolidation of the investee, and certain other investments) either at fair value, with changes to fair value recognized in net income, or, in certain instances, by use of a measurement alternative. Under the measurement alternative, such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. We adopted this guidance on January 1, 2018, which resulted in no impact on our consolidated financial position or results of operations. Refer to Note 11, "Fair Value Measures," for further detail regarding the application of the measurement alternative to our $50.0 million equity investment in Series B Preferred Stock of Quanergy, Inc ("Quanergy"), which does not have a readily determinable fair value. In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires a change in the presentation of net periodic benefit cost on the consolidated statements of operations. Specifically, entities must present the service cost component of net periodic benefit cost in the same financial statement line item(s) as other compensation costs arising from services rendered by the related employees during the period, whereas the non–service components of net periodic benefit cost must be presented separately from the financial statement line item(s) that include service cost and outside of operating income. We adopted this guidance on January 1, 2018 and, as a result, we present the service cost component of net periodic benefit cost in the Cost of revenue, Research and development, and Selling, general, and administrative ("SG&A") expense line items, and we present the non–service components of net periodic benefit cost in Other, net. Refer to Note 13, "Other, Net," for the total other components of net periodic benefit cost. All prior period amounts have been recast to reflect the revised presentation, and the adjustments made to revise the presentation of our prior year condensed consolidated statement of operations are presented in Note 8, "Pension and Other Post–Retirement Benefits." To be adopted in a future period In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes new accounting and disclosure requirements for leases. FASB ASU No. 2016-02 requires lessees to classify most leases as either finance or operating leases and to initially recognize a lease liability and right-of-use asset. Entities may elect to account for certain short-term leases (with a term of one year or less) using a method similar to the current operating lease model. The statement of operations will include, for finance leases, separate recognition of interest on the lease liability and amortization of the right-of-use asset and for operating leases, a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis. FASB ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods therein, with early adoption permitted. FASB ASU No. 2016-02 currently must be applied using a modified retrospective approach, which requires the recognition and measurement of leases at the beginning of the earliest period presented, with certain practical expedients available. However, in January 2018, the FASB issued a proposed ASU that would amend certain aspects of FASB ASU No. 2016-02. The proposed amendments create an additional practical expedient that would allow an entity to apply the transition provisions of the new standard, including its disclosure requirements, at its adoption date instead of at the beginning of the earliest comparative period presented. We are monitoring the status of this proposed ASU, and we will adopt FASB ASU No. 2016-02 on January 1, 2019. We are in the process of implementing a plan for the adoption of FASB ASU No. 2016-02. Through our implementation efforts, we have determined that we intend to elect to apply the package of practical expedients, and we do not intend to elect to apply the hindsight practical expedient. While we have not yet determined the impact of FASB ASU No. 2016-02 on our consolidated financial position or results of operations, at December 31, 2017, we were contractually obligated to make future payments of $68.6 million under our operating lease obligations in existence as of that date, primarily related to long-term facility leases. Under FASB ASU No. 2016-02 these operating leases would potentially be required to be presented on our consolidated balance sheets. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), which changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results, in order to better align an entity’s risk management activities and financial reporting for hedging relationships. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. FASB ASU No. 2017-12 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, with early adoption permitted. The adoption of FASB ASU No. 2017-12 will not have a material impact on our consolidated financial position or results of operations. |
Inventories (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of inventories | The components of inventories as of June 30, 2018 and December 31, 2017 were as follows:
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Shareholders' Equity (Tables) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roll forward of components of Accumulated other comprehensive loss, net of tax | The following is a roll forward of the components of Accumulated other comprehensive loss for the six months ended June 30, 2018:
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Summary of amounts reclassified from Accumulated other comprehensive loss | The details of the amounts reclassified from Accumulated other comprehensive loss for the three and six months ended June 30, 2018 and 2017 are as follows:
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Restructuring and Other Charges, Net (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Changes to restructuring liability | Changes to the severance portion of our restructuring liability during the six months ended June 30, 2018 were as follows:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt and capital lease and other financing obligations | Our long-term debt and capital lease and other financing obligations as of June 30, 2018 and December 31, 2017 consisted of the following:
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Pension and Other Post-Retirement Benefits (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic benefit cost | The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the three months ended June 30, 2018 and 2017 were as follows:
The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the six months ended June 30, 2018 and 2017 were as follows:
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Schedule of adjustment impact | The table below presents the effects of this adjustment.
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Share-Based Payment Plans (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of non-cash compensation expense related to equity awards | The table below presents non-cash compensation expense related to our equity awards, which is recognized within SG&A expense in the condensed consolidated statements of operations, during the identified periods:
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Summary of Options, RSU's and PRSUs granted under 2010 equity plan | We granted the following options under the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan (the "2010 Equity Plan") during the six months ended June 30, 2018:
We granted the following RSUs and PRSUs under the 2010 Equity Plan during the six months ended June 30, 2018
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Fair Value Measures (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis | The fair values of our assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017 are as shown in the below table. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.
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Information about carrying values and fair values of financial instruments not recorded at fair value | The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.
(1) Carrying value excludes discounts and deferred financing costs. |
Derivative Instruments and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding derivative instruments | As of June 30, 2018, we had the following outstanding foreign currency forward contracts:
As of June 30, 2018, we had the following outstanding commodity forward contracts, none of which were designated as derivatives in qualifying hedging relationships:
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Schedule of fair values of derivative financial instruments and their classification in balance sheets | The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017:
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Schedule of effect of derivative financial instruments on statements of operations | The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive income for the three months ended June 30, 2018 and 2017:
The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations for the six months ended June 30, 2018 and 2017:
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Other, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other, net | Other, net consisted of the following for the three and six months ended June 30, 2018 and 2017:
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information by segment | The following table presents Net revenue and Segment profit for the reported segments and other operating results not allocated to the reported segments for the three and six months ended June 30, 2018 and 2017:
|
Net Income per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted-average ordinary shares outstanding | For the three and six months ended June 30, 2018 and 2017, the weighted-average ordinary shares outstanding for basic and diluted net income per share were as follows:
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Schedule of antidilutive securities | These potential ordinary shares are as follows:
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Revenue Recognition (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following tables present revenue by segment, further disaggregated by end-market:
|
Disposal Group (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets and Liabilities of Disposal Group | The table below presents the individual assets and liabilities that comprise these balance sheet amounts.
|
Business Description and Basis of Presentation (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of businesses | 2 |
New Accounting Standards (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Investment [Line Items] | ||
Future payments | $ 68.6 | |
Series B Preferred Stock | Quanergy | ||
Investment [Line Items] | ||
Equity investment | $ 50.0 |
Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory, Net [Abstract] | ||
Finished goods | $ 183,870 | $ 195,089 |
Work-in-process | 101,036 | 92,678 |
Raw materials | 177,100 | 158,362 |
Inventories | $ 462,006 | $ 446,129 |
Shareholders' Equity - Narrative (Details) - USD ($) |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Feb. 16, 2018 |
Jun. 30, 2018 |
Mar. 27, 2018 |
May 31, 2018 |
Mar. 28, 2018 |
Dec. 31, 2017 |
|
Equity [Abstract] | ||||||
Ordinary shares, shares authorized (in shares) | 177,069,000 | 400,000,000.0 | 177,100,000 | 400,000,000 | ||
Reduction in retained earnings | $ 286,100,000 | |||||
Share repurchase program, authorized amount | $ 250,000,000 | $ 400,000,000.0 | ||||
Share repurchase program, number of shares repurchased (in shares) | 1,137,000 | |||||
share repurchase program, total purchase price | $ 60,105,000 | $ 288,478,000 | ||||
Share repurchase program, remaining authorized repurchase amount | $ 339,900,000 | |||||
Share reissued prior to merger (in shares) | 0 |
Restructuring and Other Charges, Net - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Restructuring and Related Activities [Abstract] | |||||
Restructuring and other charges, net | $ 244 | $ 3,800 | $ 6,389 | $ 4,010 | $ 17,439 |
Payback period | 2 years | ||||
Pre-tax savings | $ 3,000 | ||||
Severance charges | 2,600 | 8,400 | |||
Facility exit costs | $ 800 | $ 1,100 |
Restructuring and Other Charges, Net - Schedule of Changes to Restructuring Liability (Details) - Severance $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Balance at December 31, 2017 | $ 7,583 |
Charges, net of reversals | 3,320 |
Payments | (5,631) |
Impact of changes in foreign currency exchange rates | (96) |
Balance at June 30, 2018 | $ 5,176 |
Debt - Debt Schedule (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Less: discount | $ (16,545) | $ (14,424) |
Less: deferred financing costs | (25,457) | (27,758) |
Less: current portion | (4,753) | (9,802) |
Long-term debt, net | 3,221,039 | 3,225,810 |
Capital lease and other financing obligations | 32,389 | 34,657 |
Less: current portion | (6,291) | (5,918) |
Capital lease and other financing obligations, less current portion | 26,098 | 28,739 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Gross long-term debt | $ 917,794 | 927,794 |
4.875% Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.875% | |
Gross long-term debt | $ 500,000 | 500,000 |
5.625% Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.625% | |
Gross long-term debt | $ 400,000 | 400,000 |
5.0% Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.00% | |
Gross long-term debt | $ 700,000 | 700,000 |
6.25% Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 6.25% | |
Gross long-term debt | $ 750,000 | $ 750,000 |
Debt - Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Debt Instrument [Line Items] | |||
Payments for merger costs | $ 5,800,000 | ||
Accrued interest | $ 37,000,000 | $ 36,900,000 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Amount available under revolving credit facility | 415,400,000 | ||
Maximum borrowing capacity | 420,000,000.0 | ||
Letters of credit outstanding, amount | 4,600,000 | ||
Letter of Credit | |||
Debt Instrument [Line Items] | |||
Letters of credit outstanding, amount | $ 0 | ||
Other, net | |||
Debt Instrument [Line Items] | |||
Payments for merger costs | 2,400,000 | ||
Long-term Debt | |||
Debt Instrument [Line Items] | |||
Payments for merger costs | $ 3,500,000 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 23,398 | $ 18,611 | $ 37,524 | $ 32,943 |
Share-Based Payment Plans - Share-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 6,412 | $ 6,057 | $ 11,502 | $ 10,009 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 1,789 | 2,055 | 3,078 | 3,480 |
Restricted securities | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 4,623 | $ 4,002 | $ 8,424 | $ 6,529 |
Share-Based Payment Plans - Option Exercises (Details) shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
shares
| |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Option exercised (in shares) | 88 |
Fair Value Measures - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - Level 2 - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets | ||
Total | $ 14,778 | $ 10,413 |
Liabilities | ||
Total | 14,902 | 42,073 |
Foreign currency forward contracts | ||
Assets | ||
Total | 13,179 | 3,955 |
Liabilities | ||
Total | 11,977 | 40,969 |
Commodity forward contracts | ||
Assets | ||
Total | 1,599 | 6,458 |
Liabilities | ||
Total | $ 2,925 | $ 1,104 |
Fair Value Measures - Narrative (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Quanergy | Series B Preferred Stock | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Equity investment | $ 50.0 |
Derivative Instruments and Hedging Activities - Narrative (Details) |
Jun. 30, 2018
USD ($)
|
---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Foreign currency cash flow gain to be reclassified during next 12 months | $ 400,000 |
Termination value of outstanding derivatives in a liability position | 15,000,000 |
Collateral already posted, aggregate fair value | $ 0 |
Other, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Other Income and Expenses [Abstract] | ||||
Currency remeasurement (loss)/gain on net monetary assets | $ (15,677) | $ 4,830 | $ (8,929) | $ 7,021 |
Gain/(loss) on foreign currency forward contracts | 5,776 | (4,141) | (550) | (6,677) |
(Loss)/gain on commodity forward contracts | (1,426) | (1,957) | (4,621) | 3,483 |
Loss on debt financing | 0 | 0 | (2,350) | 0 |
Net periodic benefit cost, excluding service cost | (216) | (745) | (514) | (1,222) |
Other | 490 | 150 | 1,278 | 251 |
Other, net | $ (11,053) | $ (1,863) | $ (15,686) | $ 2,856 |
Net Income per Share - Schedule of Weighted Average Number of Shares (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||||
Basic weighted-average ordinary shares outstanding (in shares) | 171,439 | 171,132 | 171,422 | 171,040 |
Dilutive effect of stock options (in shares) | 883 | 518 | 905 | 542 |
Dilutive effect of unvested restricted securities (in shares) | 371 | 270 | 448 | 331 |
Diluted weighted-average ordinary shares outstanding (in shares) | 172,693 | 171,920 | 172,775 | 171,913 |
Net Income per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Anti-dilutive shares excluded | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 989 | 2,040 | 849 | 1,660 |
Contingently issuable shares excluded | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 808 | 947 | 798 | 732 |
Disposal Group (Details) - Valves Business - Disposal Group, Held-for-sale, Not Discontinued Operations - USD ($) $ in Thousands |
May 22, 2018 |
Jun. 30, 2018 |
---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Disposal group, consideration | $ 173,000 | |
Period of continuing involvement after disposal | 5 years | |
Assets | ||
Accounts receivable, net | $ 21,977 | |
Inventory | 19,255 | |
Prepaid and other current assets | 6,207 | |
Property, plant and equipment, net | 22,952 | |
Goodwill | 37,500 | |
Other intangible assets, net | 10,922 | |
Total assets held for sale | 118,813 | |
Liabilities | ||
Accounts payable | 14,495 | |
Income tax payable | 2,270 | |
Accrued expenses and other current liabilities | 13,275 | |
Deferred income tax liabilities | 11,467 | |
Pension and other post-retirement benefit obligations | 3,252 | |
Other long term liabilities | 3,130 | |
Total liabilities held for sale | $ 47,889 |
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