2019 Q1 Form 10-Q Financial Statement

#000162828019005806 Filed on May 03, 2019

View on sec.gov

Income Statement

Concept 2019 Q1 2018 Q1
Revenue $1.363B $1.216B
YoY Change 12.12% 28.05%
Cost Of Revenue $682.0M $622.4M
YoY Change 9.58% 32.73%
Gross Profit $681.2M $593.4M
YoY Change 14.78% 23.49%
Gross Profit Margin 49.97% 48.81%
Selling, General & Admin $384.8M $362.9M
YoY Change 6.01% 16.95%
% of Gross Profit 56.48% 61.16%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $313.2M $307.6M
YoY Change 1.82% 41.73%
% of Gross Profit 45.98% 51.83%
Operating Expenses $384.8M $362.9M
YoY Change 6.01% 16.95%
Operating Profit $279.5M $225.9M
YoY Change 23.74% 35.08%
Interest Expense $122.8M $126.3M
YoY Change -2.72% 13.07%
% of Operating Profit 43.95% 55.91%
Other Income/Expense, Net -$166.0K -$3.064M
YoY Change -94.58% -1009.2%
Pretax Income $160.3M $79.65M
YoY Change 101.27% 43.64%
Income Tax $42.57M $16.76M
% Of Pretax Income 26.55% 21.04%
Net Earnings $118.1M $62.89M
YoY Change 87.74% 49.53%
Net Earnings / Revenue 8.66% 5.17%
Basic Earnings Per Share $1.44 $0.79
Diluted Earnings Per Share $1.44 $0.79
COMMON SHARES
Basic Shares Outstanding 81.81M shares 79.24M shares
Diluted Shares Outstanding 82.09M shares 79.65M shares

Balance Sheet

Concept 2019 Q1 2018 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $1.648B $2.051B
YoY Change -19.65% -58.46%
Cash & Equivalents $1.634B $2.024B
Short-Term Investments $14.00M $27.00M
Other Short-Term Assets $258.9M $241.0M
YoY Change 7.42% 16.99%
Inventory
Prepaid Expenses
Receivables $630.1M $576.3M
Other Receivables $0.00 $0.00
Total Short-Term Assets $2.626B $2.943B
YoY Change -10.79% -47.19%
LONG-TERM ASSETS
Property, Plant & Equipment $10.73B $9.697B
YoY Change 10.69% 27.49%
Goodwill $4.808B $4.485B
YoY Change 7.2% 46.91%
Intangibles
YoY Change
Long-Term Investments $12.00M
YoY Change 100.0%
Other Assets $469.8M $421.3M
YoY Change 11.5% 79.56%
Total Long-Term Assets $19.87B $17.00B
YoY Change 16.87% 46.4%
TOTAL ASSETS
Total Short-Term Assets $2.626B $2.943B
Total Long-Term Assets $19.87B $17.00B
Total Assets $22.49B $19.94B
YoY Change 12.78% 16.04%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $747.0M $687.0M
YoY Change 8.73% 33.14%
Accrued Expenses $395.0M $258.0M
YoY Change 53.1% 35.79%
Deferred Revenue $73.14M $71.09M
YoY Change 2.89%
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $429.0M $157.0M
YoY Change 173.25% -12.78%
Total Short-Term Liabilities $1.685B $1.246B
YoY Change 35.21% 22.2%
LONG-TERM LIABILITIES
Long-Term Debt $10.52B $10.95B
YoY Change -3.9% 21.62%
Other Long-Term Liabilities $541.5M $598.7M
YoY Change -9.55% -7.24%
Total Long-Term Liabilities $541.5M $598.7M
YoY Change -9.55% -7.24%
TOTAL LIABILITIES
Total Short-Term Liabilities $1.685B $1.246B
Total Long-Term Liabilities $541.5M $598.7M
Total Liabilities $14.07B $12.80B
YoY Change 9.88% 20.01%
SHAREHOLDERS EQUITY
Retained Earnings $884.0M $522.5M
YoY Change 69.19% 745.84%
Common Stock $12.04B $10.19B
YoY Change 18.15% 6.16%
Preferred Stock
YoY Change
Treasury Stock (at cost) $144.8M $145.7M
YoY Change -0.61% -0.84%
Treasury Stock Shares 395.2K shares 399.4K shares
Shareholders Equity $8.425B $7.141B
YoY Change
Total Liabilities & Shareholders Equity $22.49B $19.94B
YoY Change 12.78% 16.04%

Cashflow Statement

Concept 2019 Q1 2018 Q1
OPERATING ACTIVITIES
Net Income $118.1M $62.89M
YoY Change 87.74% 49.53%
Depreciation, Depletion And Amortization $313.2M $307.6M
YoY Change 1.82% 41.73%
Cash From Operating Activities $421.1M $300.9M
YoY Change 39.96% 21.64%
INVESTING ACTIVITIES
Capital Expenditures -$364.0M $349.7M
YoY Change -204.08% 26.15%
Acquisitions $0.00 $0.00
YoY Change -100.0%
Other Investing Activities -$14.50M -$15.20M
YoY Change -4.61% -59.03%
Cash From Investing Activities -$378.5M -$364.9M
YoY Change 3.71% 16.09%
FINANCING ACTIVITIES
Cash Dividend Paid $204.6M $187.0M
YoY Change 9.41% 26.28%
Common Stock Issuance & Retirement, Net $1.213B $0.00
YoY Change -100.0%
Debt Paid & Issued, Net $18.33M $6.599M
YoY Change 177.83% -69.32%
Cash From Financing Activities $986.9M $674.0M
YoY Change 46.42% -84.05%
NET CHANGE
Cash From Operating Activities $421.1M $300.9M
Cash From Investing Activities -$378.5M -$364.9M
Cash From Financing Activities $986.9M $674.0M
Net Change In Cash $1.028B $617.9M
YoY Change 66.35% -85.18%
FREE CASH FLOW
Cash From Operating Activities $421.1M $300.9M
Capital Expenditures -$364.0M $349.7M
Free Cash Flow $785.1M -$48.82M
YoY Change -1708.17% 63.44%

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StockholdersEquity
8425112000 USD
CY2018Q4 us-gaap Stockholders Equity Including Portion Attributable To Noncontrolling Interest
StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest
7219279000 USD
CY2019Q1 us-gaap Stockholders Equity Including Portion Attributable To Noncontrolling Interest
StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest
8424788000 USD
CY2018Q1 us-gaap Translation Adjustment For Net Investment Hedge Increase Decrease Net Of Tax
TranslationAdjustmentForNetInvestmentHedgeIncreaseDecreaseNetOfTax
-72635000 USD
CY2019Q1 us-gaap Translation Adjustment For Net Investment Hedge Increase Decrease Net Of Tax
TranslationAdjustmentForNetInvestmentHedgeIncreaseDecreaseNetOfTax
76850000 USD
CY2018Q4 us-gaap Treasury Stock Shares
TreasuryStockShares
396859 shares
CY2019Q1 us-gaap Treasury Stock Shares
TreasuryStockShares
395153 shares
CY2018Q4 us-gaap Treasury Stock Value
TreasuryStockValue
145161000 USD
CY2019Q1 us-gaap Treasury Stock Value
TreasuryStockValue
144801000 USD
CY2018Q1 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
79649000 shares
CY2019Q1 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
82090000 shares
CY2018Q1 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
79241000 shares
CY2019Q1 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
81814000 shares
CY2019Q1 us-gaap Derivatives Methods Of Accounting Hedging Derivatives
DerivativesMethodsOfAccountingHedgingDerivatives
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:16px;padding-top:16px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Derivatives and Hedging Activities</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company uses derivative instruments, including foreign currency forwards and options and cross-currency interest rate swaps, to manage certain foreign currency exposures. Derivative instruments are viewed as risk management tools by the Company and are not used for speculative purposes. The Company recognizes all derivatives on the Company's condensed consolidated balance sheets at fair value. The accounting for changes in the value of a derivative depends on whether the contract qualifies and has been designated for hedge accounting. In order to qualify for hedge accounting, a derivative must be considered highly effective at reducing the risk associated with the exposure being hedged and there must be documentation of the risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, and the effectiveness assessment methodology. For cash flow hedges, the Company uses regression analysis at the time they are designated to assess their effectiveness. Hedge designations are reviewed on a quarterly basis to assess whether circumstances have changed that would disrupt the hedge instrument&#8217;s relationship to the forecasted transactions or net investment. </font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company uses the forward method to assess effectiveness of qualifying foreign currency forwards that are designated as cash flow hedges, whereby, the change in the fair value of the derivative is recorded in other comprehensive income (loss) and reclassified to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item when the hedged item affects earnings. The Company uses the spot method to assess effectiveness of qualifying foreign currency exchange options that are designated as cash flow hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and reclassified to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item when the hedged item affects earnings, and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized on a straight-line basis to the same line item in the condensed consolidated statement of operations that is used to present the earnings effect of the hedged item. When two or more derivative instruments in combination are jointly designated as a cash flow hedging instrument, as with foreign currency exchange option collars, they are treated as a single instrument. If the hedge relationship is terminated for any derivatives designated as cash flow hedges, then the change in fair value of the derivative recorded in other comprehensive income (loss) is recognized in earnings when the previously hedged item affects earnings, consistent with the original hedge strategy. For hedge relationships discontinued because the forecasted transaction is not expected to occur according to the original strategy, any related derivative amounts recorded in other comprehensive income (loss) are immediately recognized in earnings.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company uses the spot method to assess effectiveness of cross-currency interest rate swaps that are designated as net investment hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized to interest expense on a straight-line basis. </font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">From time to time, the Company also uses foreign exchange forward contracts to hedge against the effect of foreign exchange rate fluctuations on a portion of its net investment in the foreign subsidiaries.&#160;The Company uses the spot method to assess effectiveness of qualifying foreign currency forwards that are designated as net investment hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized to interest expense on a straight-line basis. </font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Foreign currency gains or losses associated with derivatives that are not designated as hedging instruments for accounting purposes are recorded within other income (expense) in the Company&#8217;s condensed consolidated statements of operations, with the exception of (i) foreign currency embedded derivatives contained in certain of the Company&#8217;s customer contracts and (ii) foreign exchange forward contracts that are entered into to hedge the accounting impact of the foreign currency embedded derivatives, which are recorded within revenues in the Company&#8217;s condensed consolidated statements of operations.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For further information on derivatives and hedging activities, see Note 5 below.</font></div></div><div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Cash Flow Hedges</font><font style="font-family:inherit;font-size:10pt;">. The Company hedges its foreign currency translation exposure for forecasted revenues and expenses in its EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona and Swiss Franc. The foreign currency forward contracts that the Company uses to hedge this exposure are designated as cash flow hedges. As of </font><font style="font-family:inherit;font-size:10pt;">March&#160;31, 2019</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">December&#160;31, 2018</font><font style="font-family:inherit;font-size:10pt;">, the total notional amounts of these foreign exchange contracts were </font><font style="font-family:inherit;font-size:10pt;">$874.4 million</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$760.9 million</font><font style="font-family:inherit;font-size:10pt;">, respectively. </font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company enters into intercompany hedging instruments ("intercompany derivatives") with wholly-owned subsidiaries of the Company in order to hedge certain forecasted revenues and expenses denominated in currencies other than the U.S. Dollar. Simultaneously, the Company enters into derivative contracts with unrelated third parties to externally hedge the net exposure created by such intercompany derivatives.</font></div></div><div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:12px;padding-top:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Derivatives Designated as Hedging Instruments</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Net Investment Hedges.</font><font style="font-family:inherit;font-size:10pt;"> The Company is exposed to the impact of foreign exchange rate fluctuations on the value of investments in its foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, the Company has entered into various foreign currency debt obligations, which are designated as hedges against the Company's net investments in foreign subsidiaries. As of </font><font style="font-family:inherit;font-size:10pt;">March&#160;31, 2019</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">December&#160;31, 2018</font><font style="font-family:inherit;font-size:10pt;">, the total principal amounts of foreign currency debt obligations designated as net investment hedges were </font><font style="font-family:inherit;font-size:10pt;">$4,113.0 million</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$4,139.8 million</font><font style="font-family:inherit;font-size:10pt;">, respectively.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company also uses cross-currency interest rate swaps to hedge a portion of its net investment in its European operations. As of </font><font style="font-family:inherit;font-size:10pt;">March&#160;31, 2019</font><font style="font-family:inherit;font-size:10pt;">, U.S. Dollar to Euro cross-currency interest rate swap contracts with a total notional amount of </font><font style="font-family:inherit;font-size:10pt;">$750.0 million</font><font style="font-family:inherit;font-size:10pt;"> were outstanding, with maturity dates in April 2022, January 2024 and January 2025. At maturity of each outstanding contract, the Company will receive U.S. Dollars from and pay Euros to the contract counterparty. During the term of each contract, the Company receives interest payments in U.S. Dollars and makes interest payments in Euros based on a notional amount and fixed interest rates determined at contract inception. The Company did not have any cross-currency interest rate swaps outstanding as of </font><font style="font-family:inherit;font-size:10pt;">December&#160;31, 2018</font><font style="font-family:inherit;font-size:10pt;">. </font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"></font></div></div>
CY2019Q1 us-gaap Derivatives Methods Of Accounting Nonhedging Derivatives
DerivativesMethodsOfAccountingNonhedgingDerivatives
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:12px;padding-top:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Derivatives Not Designated as Hedging Instruments</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Embedded Derivatives</font><font style="font-family:inherit;font-size:10pt;">. The Company is deemed to have foreign currency forward contracts embedded in certain of the Company's customer agreements that are priced in currencies different from the functional or local currencies of the parties involved.&#160;These embedded derivatives are separated from their host contracts and carried on the Company's balance sheet at their fair value. The majority of these embedded derivatives arise as a result of the Company's foreign subsidiaries pricing their customer contracts in U.S. Dollar.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Economic Hedges of Embedded Derivatives</font><font style="font-family:inherit;font-size:10pt;">. The Company uses foreign currency forward contracts to manage the foreign exchange risk associated with the Company's customer agreements that are priced in currencies different from the functional or local currencies of the parties involved ("economic hedges of embedded derivatives"). Foreign currency forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Foreign Currency Forward Contracts</font><font style="font-family:inherit;font-size:10pt;">. The Company also uses foreign currency forward contracts to manage the foreign exchange risk associated with certain foreign currency-denominated monetary assets and liabilities. As a result of foreign currency fluctuations, the U.S. Dollar equivalent values of its foreign currency-denominated monetary assets and liabilities change. Gains and losses on these contracts are included in other income (expense), on a net basis, along with the foreign currency gains and losses of the related foreign currency-denominated monetary assets and liabilities associated with these foreign currency forward contracts.</font></div></div>

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