# Table	of	Contents

# UNITED	STATES	SECURITIES	AND	EXCHANGE	COMMISSION

# (Mark	One)

X ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

# For	the	fiscal	year	ended	December	31,	2015

— TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

# ALLEGION	PUBLIC	LIMITED	COMPANY

(Exact	name	of	registrant	as	specified	in	its	charter)

# Ireland

(State	or	other	jurisdiction	of	incorporation	or	organization)

(I.R.S.	Employer

Identification	No.)

Block	D

Iveagh	Court

Harcourt	Road

Dublin	2,	Ireland

(Address	of	principal	executive	offices)

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

# Title	of	each	class

# Name	of	each	exchange	on	which	registered

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	None

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.	YES		X							NO Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.	YES												NO		X

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90 days.	YES		X						NO

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be submitted	and	posted	pursuant	to	Rule	405	of	Regulation	S-T	(§232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was required	to	submit	and	post	such	files).	YES		X						NO

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§229.405	of	this	chapter)	is	not	contained	herein,	and	will	not	be contained,	to	the	best	of	registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment to	this	Form	10-K.	[	]

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	See	the	definitions of	"large	accelerated	filer,"	"accelerated	filer"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.:

Large	accelerated	filer				X

Non-accelerated	filer	___

Accelerated	filer

Smaller	reporting	company

(Do	not	check	if	a	smaller	reporting	company)

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act).	YES													NO		X

The	aggregate	market	value	of	ordinary	shares	held	by	nonaffiliates	on	June	30,	2015	was	approximately	$7.6	billion	based	on	the	closing	price	of	such	stock	on	the	New York	Stock	Exchange.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Portions	of	the	registrant's	definitive	proxy	statement	to	be	filed	within	120	days	of	the	close	of	the	registrant's	fiscal	year	in	connection	with	the	registrant's	Annual General	Meeting	of	Shareholders	to	be	held	June	8,	2016	(the	"Proxy	Statement")	are	incorporated	by	reference	into	Part	II	and	Part	III	of	this	Form	10-K.

# ALLEGION	PLC

| Part	I | Item	1. | Business | 3 |
| :--- | :--- | :--- | :--- |
|  | Item\t1A. | Risk\tFactors | 11 |
|  | Item\t1B. | Unresolved\tStaff\tComments | 20 |
|  | Item\t2. | Properties | 20 |
|  | Item\t3. | Legal\tProceedings | 20 |
|  | Item\t4. | Mine\tSafety\tDisclosures | 21 |
| Part\tII | Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 22 |
|  | Item\t6. | Selected\tFinancial\tData | 24 |
|  | Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 25 |
|  | Item\t7A. | Quantitative\tand\tQualitative\tDisclosure\tAbout\tMarket\tRisk | 44 |
|  | Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 46 |
|  | Item\t9. | Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 47 |
|  | Item\t9A. | Controls\tand\tProcedures | 47 |
|  | Item\t9B. | Other\tInformation | 48 |
| Part\tIII | Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 49 |
|  | Item\t11. | Executive\tCompensation | 49 |
|  | Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 49 |
|  | Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 49 |
|  | Item\t14. | Principal\tAccountant\tFees\tand\tServices | 49 |
| Part\tIV | Item\t15. | Exhibits\tand\tFinancial\tStatement\tSchedules | 50 |
|  | Signatures |  | 55 |

# CAUTIONARY	STATEMENT	FOR	FORWARD	LOOKING	STATEMENTS

Certain	statements	in	this	report,	other	than	purely	historical	information,	are	"forward-looking	statements"	within	the	meaning	of	the	Private	Securities	Litigation Reform	Act	of	1995,	Section	27A	of	the	Securities	Act	of	1933	and	Section	21E	of	the	Securities	Exchange	Act	of	1934.	These	forward-looking	statements	generally	are identified	by	the	words	"believe,"	"project,"	"expect,"	"anticipate,"	"estimate,"	"forecast,"	"outlook,"	"intend,"	"strategy,"	"plan,"	"may,"	"should,"	"will,"	"would," "will	be,"	"will	continue,"	"will	likely	result,"	or	the	negative	thereof	or	variations	thereon	or	similar	terminology	generally	intended	to	identify	forward-looking statements.

Forward-looking	statements	may	relate	to	such	matters	as	projections	of	revenue,	margins,	expenses,	tax	provisions,	earnings,	cash	flows,	benefit	obligations,	dividends, share	purchases	or	other	financial	items;	any	statements	of	the	plans,	strategies	and	objectives	of	management	for	future	operations,	including	those	relating	to	any statements	concerning	expected	development,	performance	or	market	share	relating	to	our	products	and	services;	any	statements	regarding	future	economic	conditions	or our	performance;	any	statements	regarding	pending	investigations,	claims	or	disputes;	any	statements	of	expectation	or	belief;	and	any	statements	of	assumptions underlying	any	of	the	foregoing.	These	statements	are	based	on	currently	available	information	and	our	current	assumptions,	expectations	and	projections	about	future events.	While	we	believe	that	our	assumptions,	expectations	and	projections	are	reasonable	in	view	of	the	currently	available	information,	you	are	cautioned	not	to	place undue	reliance	on	our	forward-looking	statements.	You	are	advised	to	review	any	further	disclosures	we	make	on	related	subjects	in	materials	we	file	with	or	furnish	to the	SEC.	Forward-looking	statements	speak	only	as	of	the	date	they	are	made	and	are	not	guarantees	of	future	performance.	They	are	subject	to	future	events,	risks	and uncertainties	-	many	of	which	are	beyond	our	control	-	as	well	as	potentially	inaccurate	assumptions,	that	could	cause	actual	results	to	differ	materially	from	our expectations	and	projections.	We	do	not	undertake	to	update	any	forward-looking	statements.

Factors	that	might	affect	our	forward-looking	statements	include,	among	other	things:

•economic,	political	and	business	conditions	in	the	markets	in	which	we	operate;

•the	 demand for our products and services;

•competitive factors in the industry in which we compete;

•the	 ability to protect and use intellectual property;

•fluctuations in currency exchange rates;

•the ability to complete and integrate any acquisitions;

•our ability to operate efficiently and productively;

•our	 ability to manage risks related to our information technology;

•changes	 in	 tax requirements (including tax rate changes, new tax laws and revised tax law interpretations);

•the	 outcome of any litigation, governmental investigations or proceedings;

•interest rate fluctuations and other changes in borrowing costs;

•other	 capital	 market conditions, including availability of funding sources and currency exchange rate fluctuations;

•availability	of	and	fluctuations	in	the	prices	of	key	commodities	and	the	impact	of	higher	energy prices;

•potential further impairment	 of	 our	 goodwill, indefinite-lived intangible	 assets	 and/or	 our long-lived assets;

•the	possible	effects	on	us	of	future	legislation	in	the	U.S.	that	may	limit	or	eliminate	potential	U.S.	tax	benefits	resulting	from	our	incorporation	in	a	non-U.S. jurisdiction,	such	as	Ireland,	or	deny	U.S.	government	contracts	to	us	based	upon	our	incorporation	in	such	non-U.S.	jurisdiction;	and

•the	 impact our substantial leverage	 may have on our business and operations

Some	of	the	significant	risks	and	uncertainties	that	could	cause	actual	results	to	differ	materially	from	our	expectations	and	projections	are	described	more	fully	in Item	 1A	 "Risk	 Factors."	You	 should	 read	 that	 information	 in	 conjunction	 with	 "Management's	 Discussion	 and	Analysis	 of	 Financial	 Condition	 and	 Results	 of Operations"	in	Item	7	of	this	report	and	our	Consolidated	Financial	Statements	and	related	notes	in	Item	8	of	this	report.	We	note	such	information	for	investors	as permitted	by	the	Private	Securities	Litigation	Reform	Act	of	1995.

# PART	I

# Overview

Allegion	plc	("Allegion,"	"we,"	"us"	or	"the	Company")	is	a	leading	global	provider	of	security	products	and	solutions	that	keep	people	safe,	secure	and	productive.	We make	the	world	safer	as	a	company	of	experts,	securing	the	places	where	people	thrive	and	we	create	peace	of	mind	by	pioneering	safety	and	security.	We	offer	an extensive	and	versatile	portfolio	of	mechanical	and	electronic	security	products	across	a	range	of	market-leading	brands.	Our	experts	across	the	globe	deliver	high- quality	security	products,	services	and	systems	and	we	use	our	deep	expertise	to	serve	as	trusted	partners	to	end-users	who	seek	customized	solutions	to	their	security needs.

Access	control	security	products	and	solutions	are	critical	elements	in	every	building.	Most	door	openings	are	custom-configured	to	maximize	a	room's	particular	form and	function	while	also	meeting	local	and	national	building	and	safety	code	requirements	and	end-user	security	needs.	Most	buildings	have	multiple	door	openings,	each serving	its	own	purpose	and	requiring	different	specific	access-control	solutions.	Each	door	must	fit	exactly	within	its	frame,	be	prepared	precisely	for	its	hinges, synchronize	with	its	specific	lockset	and	corresponding	latch	and	align	with	a	specific	key	to	secure	the	door.	Moreover,	security	products	are	increasingly	linked electronically,	creating	additional	functionality	and	complexity.

We	believe	our	ability	to	deliver	a	wide	range	of	solutions	that	can	be	custom-configured	to	meet	end-users'	security	needs	is	a	key	driver	of	our	success.	We	accomplish this	with:

•Our	extensive	and	versatile	product	portfolio,	combined	with	our	deep	expertise,	which	enables	us	to	deliver	the	right	products	and	solutions	to	meet	diverse security	and	functional	specifications;

•Our	consultative	approach	and	expertise,	which	enables	us	to	develop	the	most	efficient	and	appropriate	building	security	and	access-control	specifications	to fulfill	the	unique	needs	of	our	end-users	and	their	partners,	including	architects,	contractors,	home-builders	and	engineers;	and

•Our	enterprise	excellence	capabilities,	including	our	global	manufacturing	operations	and	agile	supply	chain,	which	facilitate	our	ability	to	deliver	specific product	and	system	configurations	to	end-users	worldwide,	quickly	and	efficiently.

Based	on	third	party	sources,	we	estimate	that	the	size	of	the	global	markets	we	serve	was	approximately	$30	billion	in	revenue	in	2015	with	compound	annual	growth	of about	2	to	4%	per	year	over	the	past	three	years.	We	believe	that	the	security	products	industry	will	benefit	from	several	global	macroeconomic	and	long-term demographic	trends,	including:

•stabilization	of	construction	markets	in	key	North	American markets;

•the	convergence	of	mechanical	and	electronic	security products;

•heightened awareness of security requirements;

•increased global urbanization; and

•the shift to a digital, interconnected environment.

We	believe	slowly	improving	institutional	and	cautious	growth	in	commercial	industrial	markets	and	continued	recovery	in	residential	markets	in	the	United	States	and slight	growth	in	Europe	will	offset	unfavorable	foreign	currency	exchange	rates	overseas.	Additionally,	we	expect	growth	in	the	global	electronic	product	categories	we serve	to	outperform	the	security	products	industry	as	end-users	adopt	newer	technologies	in	their	facilities.	Two	of	our	acquisitions	in	2015	(SimonsVoss	Technologies GmbH	and	Milre	Systek	Co.,	Ltd.)	were	made	to	capitalize	on	this	trend.

We	operate	in	three	geographic	regions:	Americas;	Europe,	Middle	East,	India	and	Africa	("EMEIA");	and	Asia	Pacific.	We	sell	our	products	and	solutions	under	the following	brands:

# Allegion	Brands

# (listed	alphabetically	for	each	region)

# Locks/Locksets/Key	Systems

Door	Closers	and	Controls/Exit	Devices

# Electronic	Products	and	Access	Control	Systems,	including	Time,

# Attendance	and	Workforce	Productivity

# Product	Category

# Americas EMEIA Asia	Pacific

# Doors	and	Door	Frames

# Other	Accessories

We	sell	a	wide	range	of	security	products	and	solutions	for	end-users	in	commercial,	institutional	and	residential	facilities	worldwide,	including	into	the	education, healthcare,	government,	hospitality,	commercial	office	and	single	and	multi-family	residential	markets.	Our	corporate	brands	are	Schlage®,	Von	Duprin®,	LCN®, CISA®,	Interflex®	and	SimonsVoss®.	We	believe	Schlage,	Von	Duprin	and	LCN	hold	the	No.	1	position	in	their	primary	product	categories	in	North	America	and CISA	and	Interflex	hold	the	No.1	or	No.	2	position	in	their	primary	product	categories	in	certain	European	markets.

For	the	year	ended	December	31,	2015,	we	generated	revenues	of	$2,068.1	million	and	operating	income	of	$358.6	million.

# Revenue	By	Geographic	Destination

# Revenue	By	Product	Category

# History	and	Developments

Allegion	plc	was	incorporated	in	Ireland	on	May	9,	2013,	to	hold	the	commercial	and	residential	security	businesses	of	Ingersoll	Rand	plc	("Ingersoll	Rand").	On December	1,	2013,	Allegion	became	a	stand-alone	public	company	after	Ingersoll	Rand	completed	the	separation	of	these	businesses	from	the	rest	of	Ingersoll	Rand	via the	transfer	of	these	businesses	from	Ingersoll	Rand	to	Allegion	and	the	issuance	by	Allegion	of	ordinary	shares	directly	to	Ingersoll	Rand's	shareholders	(the	"Spin- off").	Our	security	businesses	have	long	and	distinguished	operating	histories.	Several	of	our	brands	were	established	more	than	75	years	ago	and	many	of	our	brands originally	created	their	categories:

•Von	 Duprin,	 established in	 1908,	 was	 awarded the first	 exit	 device patent;

•Schlage,	established	in	1920,	was	awarded	the	first	patents	granted	for	the	cylindrical	lock	and	the	push	button lock;

•LCN, established in 1926, created the first door closure;

•CISA,	established in	1926,	devised the	first	electronically	controlled lock; and

•Steelcraft	Doors,	established in	1927,	developed the	first	mass-produced	hollow	metal	door in 1942.

We	have	built	upon	these	founding	legacies	since	our	entry	into	the	security	products	market	through	the	acquisition	of	Schlage,	Von	Duprin	and	LCN	in	1974.	Today, we	continue	to	develop	and	introduce	innovative	and	market-leading	products.	Recent	examples	of	successful	product	launches	are	illustrated	in	the	table	below:

# Industry	and	Competition

Based	on	third	party	sources,	we	estimate	that	the	size	of	the	global	markets	we	serve	was	approximately	$30	billion	in	revenue	in	2015	with	compound	annual	growth	of about	2	to	4%	per	year	over	the	past	three	years.	This	growth	rate	primarily	reflects	cyclical	challenges	in	the	commercial,	institutional	and	residential	construction markets	throughout	North	America	and	Europe	as	certain	developing	economies	experienced	higher	growth	rates	during	this	period.	Additionally,	growth	in	electronic security	products	and	solutions	continues	to	outperform	the	industry	as	a	whole	as	end-users	adopt	newer	technologies	in	their	facilities.

We	expect	the	security	products	industry	will	benefit	from	favorable	long-term	demographic	trends	such	as	continued	urbanization	of	the	global	population,	increased concerns	about	safety	and	security	and	technology-driven	innovation.

The	security	products	markets	are	highly	competitive	and	fragmented	throughout	the	world,	with	a	number	of	large	multi-national	companies	and	thousands	of	smaller regional	and	local	companies.	This	high	fragmentation	primarily	reflects	local	regulatory	requirements	and	highly	variable	end-user	needs.	We	believe	our	principal global	competitors	are	Assa	Abloy	AB,	dorma+kaba	Group,	and	Stanley	Black	&	Decker	Inc.	We	also	face	competition	in	various	markets	and	product	categories throughout	the	world,	including	from	Spectrum	Brands	Holdings,	Inc.	in	the	North	American	residential	market.	As	we	move	into	more	technologically-advanced product	categories,	we	may	also	compete	against	smaller,	more	specialized	competitors.

Our	success	depends	on	a	variety	of	factors,	including	brand	and	reputation,	product	breadth,	quality	and	delivery	capabilities,	price	and	service	capabilities.	As	many	of our	businesses	sell	through	wholesale	distribution,	our	success	also	depends	on	building	and	partnering	with	a	strong	channel	network.	Although	price	often	serves	as	an important	customer	decision	criterion,	we	also	compete	based	on	the	breadth	and	quality	of	our	products	and	solutions,	our	ability	to	custom-configure	solutions	to	meet individual	end-user	requirements	and	our	global	supply	chain.

# Our	Reporting	Segments

We	manufacture	and	sell	mechanical	and	electronic	security	products	and	solutions	in	approximately	130	countries.	Approximately	95%	of	our	2015	revenues	were	to customers	in	the	North	America,	Western	Europe	and	the	Asia-Pacific	regions.

The	following	table	presents	the	relative	percentages	of	total	segment	revenue	attributable	to	each	reporting	segment	for	each	of	the	last	three	fiscal	years.	See	Note	23, "Business	 Segment	 Information,"	 to	 our	 annual	 consolidated	 financial	 statements	 for	 information	 regarding	 net	 revenues,	 operating	 income,	 and	 total	 assets	 by reportable	segment:

# For	the	Years	Ended	December	31,

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Americas | 75% | 74% | 73% |
| EMEIA | 19% | 18% | 19% |
| Asia\tPacific | 6% | 8% | 8% |

Our	Americas	segment	provides	security	products	and	solutions	in	approximately	30	countries	throughout	North	America	and	South	America.	The	segment	offers	a broad	range	of	products	and	solutions	including	locks,	locksets,	key	systems,	door	closers,	exit	devices,	doors	and	door	frames,	electronic	product	and	access	control systems	to	end-users	in	the	commercial,	institutional	and	residential	markets,	including	into	the	education,	healthcare,	government,	commercial	office	and	single	and multi-family	residential	markets.	This	segment's	primary	brands	are	Schlage,	Von	Duprin	and	LCN.

Our	EMEIA	segment	provides	security	products	and	solutions	in	approximately	85	countries	throughout	Europe,	the	Middle	East,	India	and	Africa.	The	segment	offers the	same	portfolio	of	products	as	the	Americas	segment,	as	well	as	time	and	attendance	and	workforce	productivity	solutions.	This	segment's	primary	brands	are Bricard,	CISA,	Interflex	and	SimonsVoss.	This	segment	also	resells	Schlage,	Von	Duprin	and	LCN	products,	primarily	in	the	Middle	East.

Our	Asia	Pacific	segment	provides	security	products	and	solutions	in	approximately	14	countries	throughout	Asia	Pacific.	The	segment	offers	the	same	portfolio	of products	as	the	Americas	segment.	This	segment's	primary	brands	are	Milre,	Schlage,	CISA,	Von	Duprin	and	LCN.

# Products	and	Services

We	offer	an	extensive	and	versatile	portfolio	of	mechanical	and	electronic	security	products	across	a	range	of	market-leading	brands:

•Locks,	locksets	and	key	systems:	A	broad	array	of	cylindrical,	tubular	and	mortise	door	locksets,	security	levers,	and	master	key	systems	that	are	used	to protect	and	control	access.	We	also	offer	a	range	of	portable	security	products,	including	bicycle,	small	vehicle	and	travel	locks.

•Door	closers	and	exit	devices:	An	extensive	portfolio	of	life-safety	products	generally	installed	on	fire	doors	and	facility	entrances	and	exits.	Door	closers are	devices	that	automatically	close	doors	after	they	are	opened.	Exit	devices	are	generally	horizontal	attachments	to	doors	and	enable	rapid	exit	from	the premises.

•Electronic	Security	Products	and	Access	Control	Systems:	A	broad	range	of	electrified	locks,	access	control	systems,	biometric	hand	reader	systems,	key card	and	reader	systems	and	accessories.

•Time,	Attendance	and	Workforce	Productivity	Systems:	Products	and	services	designed	to	help	business	customers	manage	and	monitor	workforce	access control	parameters,	attendance	and	employee	scheduling.	We	offer	ongoing	aftermarket	services	in	addition	to	design	and	installation	offerings.

•Doors	and	Door	Frames:	A	portfolio	of	hollow	metal	doors	and	door	frames.	In	select	geographies,	we	also	provide	installation	and	service	maintenance services.

•Other	Accessories:	A	variety	of	additional	security	and	product	components,	including	hinges,	door	levers,	door	stops,	lites,	louvers	and	other	accessories, as	well	as	certain	bathroom	fittings	products.

# Customers

We	sell	most	of	our	products	and	solutions	through	distribution	and	retail	channels,	ranging	from	specialty	distribution	to	wholesalers.	We	have	built	a	network	of channel	partners	that	help	our	customers	choose	the	right	solution	to	meet	their	security	needs	and	help	commercial	and	institutional	end-users	fulfill	and	install	orders. We	also	sell	through	a	variety	of	retail	channels,	ranging	from	large	do-it-yourself	home	improvement	centers	to	small,	specialty	showroom	outlets.	We	work	with	our retail	partners	on	developing	marketing	and	merchandising	strategies	to	maximize	their	sales	per	square	foot	of	shelf	space.	Through	our	Interflex	business,	we	provide products	and	solutions	directly	to	end-users.

Our	10	largest	customers	represented	approximately	24%	of	our	total	revenues	in	2015.	No	single	customer	represented	10%	or	more	of	our	total	revenues	in	2015.

# Sales	and	Marketing

In	markets	where	we	sell	through	commercial	and	institutional	distribution	channels,	we	employ	sales	professionals	around	the	world	who	work	with	a	combination	of end-users,	security	professionals,	architects,	contractors,	engineers	and	distribution	partners	to	develop	specific	custom-configured	solutions	for	our	end-users'	needs. Our	field	sales	professionals	are	assisted	by	specification	writers	who	work	with	architects,	engineers	and	consultants	to	help	design	door	openings	and	security	systems to	meet	end-users'	functional,	aesthetic	and	regulatory	requirements.	Both	groups	are	supported	by	dedicated	customer	care	and	technical	sales-support	specialists worldwide.	We	also	support	our	sales	efforts	with	a	variety	of	marketing	efforts,	including	trade-specific	advertising,	cooperative	distributor	merchandising,	digital marketing,	and	marketing	at	a	variety	of	industry	trade	shows.

In	markets	in	which	we	sell	through	retail	and	home-builder	distribution	channels,	we	have	teams	of	sales,	merchandising	and	marketing	professionals	who	help	drive brand	and	product	awareness	through	our	channel	partners	and	to	consumers.	We	utilize	a	variety	of	advertising	and	marketing	strategies,	including	traditional	consumer media,	retail	merchandising,	digital	marketing,	retail	promotions,	and	builder	and	consumer	trade	shows,	to	support	these	teams.

We	also	work	actively	with	several	regulatory	bodies	around	the	world	to	help	promote	effective	and	consistent	safety	and	security	standards.	For	example,	we	are members	of	Builders	Hardware	Manufacturers	Association,	Security	Industry	Association,	Smart	Card	Alliance,	American	Society	of	Healthcare	Engineering,	American Institute	of	Architects,	Construction	Specification	Institute,	ASSOFERMA	(Italy),	BHE	(Germany)	and	UNIQ	(France).	We	also	have	established	the	Safety	and Security	Institute	in	China,	which	helps	to	educate	government	officials,	architects	and	builders	and	advocates	for	consistent	building	codes	and	standards	that	address end-users'	safety	and	security.

# Production	and	Distribution

We	manufacture	our	products	in	our	geographic	markets	around	the	world.	We	operate	27	production	facilities,	including	twelve	in	the	Americas	region,	ten	in	EMEIA and	five	in	Asia	Pacific.	We	own	13	of	these	facilities	and	lease	the	others.	Our	strategy	is	to	produce	in	the	region	of	use,	wherever	appropriate,	to	allow	us	to	be	closer to	the	end-user	and	increase	efficiency	and	timely	product	delivery.

In	managing	our	network	of	production	facilities,	we	focus	on	eliminating	excess	capacity,	reducing	cycle	time	through	productivity,	and	harmonizing	production practices	and	safety	procedures.

We	distribute	our	products	through	a	broad	network	of	channel	partners.	In	addition,	third-party	logistics	providers	perform	storage	and	distribution	services	for	us	to support	certain	parts	of	our	distribution	network.

# Raw	Materials

We	support	our	region-of-use	production	strategy	with	corresponding	region-of-use	supplier	partners,	where	available.	Our	global	and	regional	commodity	teams	work with	production	leadership,	product	management	and	materials	management	teams	to	ensure	adequate	materials	are	available	for	production.

We	purchase	a	wide	range	of	raw	materials,	including	steel,	zinc,	brass	and	other	non-ferrous	metals,	to	support	our	production	facilities.	Where	appropriate,	we	may enter	into	fixed-cost	contracts	to	lower	overall	costs.	We	do	not	believe	the	loss	of	any	particular	supplier	would	be	material	to	our	business.

# Intellectual	Property

Intellectual	property,	inclusive	of	certain	patents,	trademarks,	copyrights,	know-how,	trade	secrets	and	other	proprietary	rights,	is	important	to	our	business.		We	create, protect	and	enforce	our	intellectual	property	investments	in	a	variety	of	ways.	We	work	actively	in	the	U.S.	and	internationally	to	try	to	ensure	the	protection	and enforcement	of	our	intellectual	property	rights.	We	use	trademarks	on	nearly	all	of	our	products	and	believe	that	such	distinctive	marks	are	an	important	factor	in creating	a	market	for	our	goods,	in	identifying	us	and	in	distinguishing	our	products	from	others.	We	consider	our	Schlage,	Von	Duprin,	CISA	and	other	associated trademarks	to	be	among	our	most	valuable	assets,	and	we	have	registered	these	trademarks	in	a	number	of	countries.	Although	certain	proprietary	intellectual	property rights	are	important	to	our	success,	we	do	not	believe	we	are	materially	dependent	on	any	particular	patent	or	license,	or	any	particular	group	of	patents	or	licenses.

# Facilities

We	operate	through	a	broad	network	of	sales	offices,	27	production	facilities	and	several	distribution	centers	throughout	the	world.	Our	active	properties	represent approximately	5.5	million	square	feet,	of	which	approximately	45%	is	leased.

The	following	table	shows	the	location	of	our	worldwide	production	facilities:

Tecate,	Mexico

Tijuana,	Mexico

# Research	and	Development

We	are	committed	to	investing	in	highly	productive	research	and	development	capabilities,	particularly	in	electro-mechanical	systems.	Our	research	and	development ("R&D")	expenditures	were	approximately	$45.2	million,	$43.3	million	and	$39.6	million	for	the	years	ended	December	31,	2015,	2014	and	2013,	respectively.

We	concentrate	on	developing	technology	innovations	that	will	deliver	growth	through	the	introduction	of	new	products	and	solutions,	and	also	on	driving	continuous improvements	in	product	cost,	quality,	safety	and	sustainability.

We	manage	our	R&D	team	as	a	global	group	with	an	emphasis	on	a	global	collaborative	approach	to	identify	and	develop	new	technologies	and	worldwide	product platforms.	We	are	organized	on	a	regional	basis	to	leverage	expertise	in	local	standards	and	configurations.	In	addition	to	regional	engineering	centers	in	each	geographic region,	we	also	operate	a	global	engineering	center	of	excellence	in	Bangalore,	India.

# Seasonality

Our	business	experiences	seasonality	that	varies	by	product	line.	Because	more	construction	and	do-it-yourself	projects	occur	during	the	second	and	third	calendar quarters	of	each	year	in	the	Northern	Hemisphere,	our	security	product	sales,	typically,	are	higher	in	those	quarters	than	in	the	first	and	fourth	calendar	quarters. However,	our	Interflex	business	 typically	experiences	higher	sales	 in	 the	fourth	calendar	quarter	due	 to	project	 timing.	Revenue	by	quarter	for	 the	years	ended December	31,	2015,	2014	and	2013	are	as	follows:

|  | First	Quarter | Second	Quarter | Third	Quarter | Fourth	Quarter |
| :--- | :--- | :--- | :--- | :--- |
| 2015 | 22% | 25% | 26% | 27% |
| 2014 | 22% | 25% | 26% | 27% |
| 2013 | 23% | 26% | 26% | 25% |

2015	fourth	quarter	revenue	includes	the	full-quarter	impact	of	the	acquisitions	of	SimonsVoss,	AXA	and	Milre.

# Employees

As	of	December	31,	2015,	we	had	more	than	9,400	employees,	approximately	26%	of	whom	have	the	terms	of	their	employment	covered	under	collective	bargaining agreements.	This	includes	non-management	European	employees	who	are	represented	by	national	and	local	works	councils.

# Environmental	Regulation

We	have	a	dedicated	environmental	program	that	is	designed	to	reduce	the	utilization	and	generation	of	hazardous	materials	during	the	manufacturing	process	as	well	as to	remediate	identified	environmental	concerns.	As	to	the	latter,	we	are	currently	engaged	in	site	investigations	and	remediation	activities	to	address	environmental cleanup	from	past	operations	at	current	and	former	manufacturing	facilities.

We	are	sometimes	a	party	to	environmental	lawsuits	and	claims	and	have	received	notices	of	potential	violations	of	environmental	laws	and	regulations	from	the	U.S. Environmental	Protection	Agency	(the	"EPA")	and	similar	state	authorities.	We	have	also	been	identified	as	a	potentially	responsible	party	("PRP")	for	cleanup	costs associated	with	off-site	waste	disposal	at	federal	Superfund	and	state	remediation	sites.	For	all	such	sites,	there	are	other	PRPs	and,	in	most	instances,	our	involvement	is minimal.

In	estimating	our	liability,	we	have	assumed	that	we	will	not	bear	the	entire	cost	of	remediation	of	any	site	to	the	exclusion	of	other	PRPs	who	may	be	jointly	and severally	liable.	The	ability	of	other	PRPs	to	participate	has	been	taken	into	account,	based	on	our	understanding	of	the	parties'	financial	condition	and	probable contributions	on	a	per	site	basis.	Additional	lawsuits	and	claims	involving	environmental	matters	are	likely	to	arise	from	time	to	time	in	the	future.

We	incurred	$4.4	million,	$2.9	million,	 and	$2.1	million	of	expenses	during	 the	years	ended	December	31,	2015,	2014,	 and	2013,	respectively,	for	environmental remediation	at	sites	presently	or	formerly	owned	or	leased	by	us.	As	of	December	31,	2015	and	2014,	we	have	recorded	reserves	for	environmental	matters	of	$15.2 million	and	$8.8	million.	Of	these	amounts	$2.8	million	and	$2.4	million,	respectively,	relate	to	remediation	of	sites	previously	disposed	by	us.	Given	the	evolving nature	of	environmental	laws,	regulations	and	technology,	the	ultimate	cost	of	future	compliance	is	uncertain.

# Available	Information

We	are	required	to	file	annual,	quarterly,	and	current	reports,	proxy	statements,	and	other	documents	with	the	U.S.	Securities	and	Exchange	Commission	("SEC").	The public	may	read	and	copy	any	materials	filed	with	the	SEC	at	the	SEC's	Public	Reference	Room	at	100	F	Street,	N.E.,	Washington,	D.C.	20549.	The	public	may	obtain information	on	the	operation	of	the	Public	Reference	Room	by	calling	the	SEC	at	1-800-SEC-0330.	Also,	the	SEC	maintains	an	Internet	website	that	contains	reports, proxy	and	information	statements,	and	other	information	regarding	issuers	that	file	electronically	with	the	SEC.	The	public	can	obtain	any	documents	that	are	filed	by	us at	http://www.sec.gov.

In	addition,	this	Annual	Report	on	Form	10-K,	as	well	as	future	quarterly	reports	on	Form	10-Q,	current	reports	on	Form	8-K	and	any	amendments	to	all	of	the	foregoing reports,	are	made	available	free	of	charge	on	our	Internet	website	(http://www.allegion.com)	as	soon	as	reasonably	practicable	after	such	reports	are	electronically	filed with	or	furnished	to	the	SEC.	The	contents	of	our	website	are	not	incorporated	by	reference	in	this	report.

# Item	1A.	RISK	FACTORS

You	should	carefully	consider	the	risks	below,	together	with	all	the	other	information	included	in	this	Form	10-K,	in	evaluating	us	and	our	ordinary	shares.	If	any	of	the risks	below	actually	occurs,	our	business,	financial	conditions,	results	of	operations	and	cash	flows	could	be	materially	and	adversely	affected.	Any	such	adverse	effect may	cause	the	trading	price	of	our	ordinary	shares	to	decline,	and	as	a	result,	you	could	lose	all	or	part	of	your	investment	in	us.	Our	business	may	also	be	adversely affected	by	risks	and	uncertainties	not	known	to	us	or	risks	that	we	currently	believe	to	be	immaterial.

# Risks	Related	to	Our	Business

# Our	global	operations	subject	us	to	economic	risks.

We	are	incorporated	in	Ireland	and	operate	in	countries	worldwide.	Our	global	operations	depend	on	products	manufactured,	purchased	and	sold	in	the	U.S.	and internationally,	including	in	Australia,	China,	Europe,	Korea,	Mexico,	New	Zealand	and	Turkey.	Accordingly,	we	are	subject	to	risks	that	are	inherent	in	operating globally,	including:

•changes	in	laws	and	regulations	or	imposition	of	currency	restrictions	and	other	restraints	in	various

jurisdictions;

•limitation	of	ownership	rights,	including	expropriation	of	assets	by	a	local	government,	and	limitation	on	the	ability	to	repatriate earnings;

•sovereign	debt	crises	and	currency	instability	in	developed	and	developing

countries;

•imposition	of	burdensome	tariffs	and	quotas;

•difficulty	in	staffing	and	managing	global

operations;

•difficulty	in	enforcing	agreements,	collecting	receivables	and	protecting	assets	through	non-U.S.	legal systems;

•national	and	international	conflict,	including	war,	civil	disturbances	and	terrorist	acts;	and

•economic	downturns	and	social	and	political

instability.

These	risks	could	increase	our	cost	of	doing	business	internationally,	increase	our	counterparty	risk,	disrupt	our	operations,	disrupt	the	ability	of	suppliers	and	customers to	fulfill	their	obligations	and	limit	our	ability	to	sell	products	in	certain	markets.

# Our	business	relies	on	the	commercial	and	residential	construction	and	remodeling	markets.

We	primarily	rely	on	the	commercial	and	residential	construction	and	remodeling	markets,	which	are	marked	by	cyclicality	based	on	overall	economic	conditions. Weakness	or	instability	in	these	markets	may	cause	current	and	potential	customers	to	delay	or	choose	not	to	make	purchases,	which	could	negatively	impact	the	demand for	our	products	and	services.

# We	operate	in	highly	competitive	markets.

The	markets	in	which	we	operate	include	a	large	number	of	participants,	including	multi-national	companies,	regional	companies	and	small	local	companies.	We primarily	compete	on	the	basis	of	quality,	innovation,	expertise,	breadth	of	product	offering	and	price.	We	may	be	unable	to	effectively	compete	on	all	these	bases.	If	we are	unable	to	anticipate	evolving	trends	in	the	market	or	the	timing	and	scale	of	our	competitors'	activities	and	initiatives,	the	demand	for	our	products	and	services	could be	negatively	impacted.

In	addition,	we	compete	in	a	market	that	is	experiencing	the	convergence	of	the	mechanical	and	electronic	products.	This	may	lead	to	increased	competition,	including with	companies	with	greater	financial	and	other	resources	than	we	have.	To	remain	competitive,	we	must	develop	new	products	and	respond	to	new	technologies	in	a timely	manner.

# Our	growth	is	dependent,	in	part,	on	the	development,	commercialization	and	acceptance	of	new	products	and	services.

We	must	develop	and	commercialize	new	products	and	services	in	order	to	remain	competitive	in	our	current	and	future	markets	and	in	order	to	continue	to	grow	our business.	We	cannot	provide	any	assurance	that	any	new	product	or	service	will	be	successfully	commercialized	in	a	timely	manner,	if	ever,	or,	if	commercialized,	will result	 in	returns	greater	 than	our	 investment.	Investment	 in	a	product	or	service	could	divert	our	attention	and	resources	from	other	projects	 that	become	more commercially	viable	in	the	market.	We	also	cannot	provide	any	assurance	that	any	new	product	or	service	will	be	accepted	by	the	market.

# Changes	in	customer	preferences	and	the	inability	to	maintain	beneficial	relationships	with	large	customers	could	adversely	affect	our	business.

We	have	significant	customers,	particularly	major	retailers,	although	no	one	customer	represented	10%	or	more	of	our	total	revenues	in	any	of	the	past	three	fiscal	years. The	loss	or	material	reduction	of	business,	the	lack	of	success	of	sales	initiatives	or	changes	in	customer	preferences	or	loyalties	for	our	products	related	to	any	such significant	customer	could	have	a	material	adverse	impact	on	our	business.	In	addition,	major	customers	who	are	volume	purchasers	are	much	larger	than	us	and	have strong	bargaining	power	with	suppliers.	This	limits	our	ability	to	recover	cost	increases	through	higher	selling	prices.	Furthermore,	unanticipated	inventory	adjustments by	these	customers	can	have	a	negative	impact	on	sales.

# Our	brands	are	important	assets	of	our	businesses	and	violation	of	our	trademark	rights	by	imitators	could	negatively	impact	revenues	and	brand	reputation.

Our	brands	and	trademarks	enjoy	a	reputation	for	quality	and	value	and	are	important	to	our	success	and	competitive	position.	Unauthorized	use	of	our	trademarks	may not	only	erode	sales	of	our	products,	but	may	also	cause	significant	damage	to	our	brand	name	and	reputation,	interfere	with	relationships	with	our	customers	and increase	litigation	costs.	There	can	be	no	assurance	that	our	on-going	effort	to	protect	our	brand	and	trademark	rights	will	prevent	all	violations.

# Currency	exchange	rate	fluctuations	may	adversely	affect	our	results.

We	are	exposed	to	a	variety	of	market	risks,	including	the	effects	of	changes	in	currency	exchange	rates.	See	"Management's	Discussion	and	Analysis	of	Financial Condition	and	Results	of	Operations	-	Quantitative	and	Qualitative	Disclosure	About	Market	Risk."

Approximately	30%	of	our	2015	net	revenues	were	derived	outside	the	U.S.,	and	we	expect	sales	to	non-U.S.	customers	to	continue	to	represent	a	significant	portion	of our	consolidated	net	revenues.	Although	we	may	enter	into	currency	exchange	contracts	to	reduce	our	risk	related	to	currency	exchange	fluctuations,	changes	in	the relative	fair	values	of	currencies	occur	from	time	to	time	and	may,	in	some	instances,	have	a	material	impact	on	our	results	of	operations.	Because	we	do	not	hedge against	all	of	our	currency	exposure	our	business	will	continue	to	be	susceptible	to	currency	fluctuations.

We	also	translate	assets,	liabilities,	revenues	and	expenses	denominated	in	non-U.S.	dollar	currencies	into	U.S.	dollars	for	our	consolidated	financial	statements	based	on applicable	exchange	rates.	Consequently,	fluctuations	in	the	value	of	the	U.S.	dollar	compared	to	other	currencies	will	have	a	material	impact	on	the	value	of	these	items in	our	consolidated	financial	statements,	even	if	their	value	has	not	changed	in	their	original	currency.

# Our	 business	 strategy	 includes	 making	 acquisitions	 and	 investments	 that	 complement	 our	 existing	 business.	 These	 acquisitions	 and investments	 could	 be unsuccessful	or	consume	significant	resources,	which	could	adversely	affect	our	operating	results.

We	will	continue	to	analyze	and	evaluate	the	acquisition	of	strategic	businesses	or	product	lines	with	the	potential	to	strengthen	our	industry	position	or	enhance	our existing	set	of	products	and	services	offerings.	We	cannot	assure	you	that	we	will	identify	or	successfully	complete	transactions	with	suitable	acquisition	candidates	in the	future,	nor	can	we	assure	you	that	completed	acquisitions	will	be	successful.

Acquisitions	and	investments	may	involve	significant	cash	expenditures,	debt	incurrence,	operating	losses	and	expenses.	Acquisitions	involve	numerous	other	risks, including:

•diversion of management time and attention from daily operations;

•difficulties integrating acquired businesses, technologies and personnel into our business;

•difficulties in obtaining and verifying the financial statements and other business information of acquired businesses;

•inability to	 obtain regulatory	 approvals	 and/or required financing	 on favorable terms;

•potential	loss	of	key	employees,	key	contractual	relationships	or	key	customers	of	acquired	companies	or	of

•assumption	of	the	liabilities	and	exposure	to	unforeseen	liabilities	of	acquired	companies; and

•dilution	 of interests	 of	 holders	 of	 our	 ordinary	 shares through the issuance	 of	 equity	 securities	 or	 equity-linked securities.

We	may	also	expand	through	acquisitions	or	investments	into	international	markets	in	which	we	may	have	limited	experience	or	are	required	to	rely	on	business	partners. In	addition	to	the	risks	outlined	above,	expansion	into	international	markets	may	require	us	to	compete	with	local	businesses	with	greater	knowledge	of	the	market, including	the	tastes	and	preferences	of	customers,	and	businesses	with	dominant	market	shares.

It	may	be	difficult	for	us	to	complete	transactions	quickly,	integrate	acquired	operations	efficiently	into	our	current	business	operations	or	effectively	compete	in	new markets	we	enter.	Any	acquisitions	or	investments	may	ultimately	harm	our	business	or	financial	condition,	as	such	acquisitions	may	not	be	successful	and	may ultimately	result	in	impairment	charges.

# Our	enterprise	excellence	efforts	may	not	achieve	the	improvements	we	expect.

We	utilize	a	number	of	tools	to	improve	operational	efficiency	and	productivity.	Implementation	of	new	processes	to	our	operations	could	cause	disruptions	and	there	is no	assurance	that	all	of	our	planned	enterprise	excellence	projects	will	be	fully	implemented,	or	if	implemented	will	realize	the	expected	improvements.

# Our	EMEIA	restructuring	plans	may	not	be	successful.

We	have	implemented	a	plan	to	restructure	our	EMEIA	segment	to	improve	efficiencies	and	regional	cost	structure.	If	we	are	unable	to	successfully	implement	our restructuring	plan,	we	may	not	be	able	to	improve	profitability	or	effectively	compete	in	the	region.	In	addition,	our	restructuring	plans	could	result	in	significant restructuring	charges	and	impairment	charges.

# Material	adverse	legal	judgments,	fines,	penalties	or	settlements	could	adversely	affect	our	business.

We	are	currently	and	may	in	the	future	become	involved	in	legal	proceedings	and	disputes	incidental	to	the	operation	of	our	business.	Our	business	may	be	adversely affected	by	the	outcome	of	these	proceedings	and	other	contingencies	(including,	without	limitation,	environmental	matters)	that	cannot	be	predicted	with	certainty.	As required	by	U.S.	generally	accepted	accounting	principles	("GAAP"),	we	establish	reserves	based	on	our	assessment	of	contingencies.	Subsequent	developments	in	legal proceedings	and	other	contingencies	may	affect	our	assessment	and	estimates	of	the	loss	contingency	recorded	as	a	reserve	and	we	may	be	required	to	make	additional material	payments.

# Allegations	that	we	have	infringed	the	intellectual	property	rights	of	third	parties	could	negatively	affect	us.

We	may	be	subject	to	claims	of	infringement	of	intellectual	property	rights	by	third	parties.	In	particular,	we	often	compete	in	areas	having	extensive	intellectual property	rights	owned	by	others	and	we	have	become	subject	to	claims	alleging	infringement	of	intellectual	property	rights	of	others.	In	general,	if	it	is	determined	that one	or	more	of	our	technologies,	products	or	services	infringes	the	intellectual	property	rights	owned	by	others,	we	may	be	required	to	cease	marketing	those	services,	to obtain	licenses	from	the	holders	of	the	intellectual	property	at	a	material	cost	or	to	take	other	actions	to	avoid	infringing	the	intellectual	property	rights.	The	litigation process	is	costly	and	subject	to	inherent	uncertainties,	and	we	may	not	prevail	in	litigation	matters	regardless	of	the	merits	of	our	position.	Adverse	intellectual	property litigation	or	claims	of	infringement	against	us	may	become	extremely	disruptive	if	the	plaintiffs	succeed	in	blocking	the	trade	of	our	products	and	services	and	may	have a	material	adverse	effect	on	our	business.

# Our	reputation,	ability	to	do	business	and	results	of	operations	could	be	impaired	by	improper	conduct	by	any	of	our	employees,	agents	or	business	partners.

We	are	subject	to	regulation	under	a	variety	of	U.S.	federal	and	state	and	non-U.S.	laws,	regulations	and	policies	including	laws	related	to	anti-corruption,	export	and import	compliance,	anti-trust	and	money	laundering,	due	to	our	global	operations.	We	cannot	provide	assurance	our	internal	controls	will	always	protect	us	from	the improper	conduct	of	our	employees,	agents	and	business	partners.	Any	improper	conduct	could	damage	our	reputation	and	subject	us	to,	among	other	things,	civil	and criminal	penalties,	material	fines,	equitable	remedies	(including	profit	disgorgement	and	injunctions	on	future	conduct),	securities	litigation	and	a	general	loss	of	investor confidence.

# We	may	be	subject	to	risks	relating	to	our	information	technology	systems.

We	rely	extensively	on	information	technology	systems	to	manage	and	operate	our	business.	There	can	be	no	assurance	that	our	current	information	technology	systems will	function	properly.		We	have	invested	and	will	continue	to	invest	in	improving	our	information	technology	systems.	Some	of	these	investments	are	significant	and impact	many	important	operational	processes	and	procedures.		There	is	no	assurance	that	any	newly	implemented	information	technology	systems	will	improve	our current	systems,	will	improve	our	operations,	or	will	yield	the	expected	returns	on	the	investments.		In	addition,	the	implementation	of	new	information	technology systems	may	cause	disruptions	in	our	operations	and,	if	not	properly	implemented,	negatively	impact	our	business.		If	our	information	technology	systems	cease	to function	properly	or	if	these	systems	do	not	provide	the	anticipated	benefits,	our	ability	to	manage	our	operations	could	be	impaired.

# We	currently	rely	on	a	single	vendor	for	many	of	the	critical	elements	of	our	global	information	technology	infrastructure	and	its	failure	to	provide	effective	support for	such	infrastructure	could	negatively	impact	our	business	and	financial	results.

We	have	outsourced	many	of	the	critical	elements	of	our	global	information	technology	infrastructure	to	a	third-party	service	provider	in	order	to	achieve	efficiencies.	If the	service	provider	does	not	perform	or	does	not	perform	effectively,	we	may	not	be	able	to	achieve	the	expected	efficiencies	and	may	have	to	incur	additional	costs	to address	failures	in	providing	service	by	the	service	provider.	Depending	on	the	function	involved,	such	non-performance,	ineffective	performance	or	failures	of	service may	lead	to	business	disruptions,	processing	inefficiencies	or	security	breaches.

# Our	information	technology	infrastructure	is	important	to	our	business	and	data	security	breaches	or	disruptions	of	such	infrastructure	could	negatively	impact	our business	and	financial	results.

Our	information	technology	infrastructure	is	subject	to	cyber-attacks	and	unauthorized	security	intrusions.	Despite	instituting	security	policies	and	business	continuity plans,	our	systems	and	networks	may	be	vulnerable	to	system	damage,	malicious	attacks	from	hackers,	employee	errors	or	misconduct,	viruses,	power	and	utility outages,	and	other	catastrophic	events	that	could	cause	significant	harm	to	our	business	by	negatively	impacting	our	business	operations,	compromising	the	security	of our	proprietary	information	and	exposing	us	to	litigation	that	could	adversely	affect	our	reputation.

# Commodity	shortages	and	price	increases	could	negatively	affect	our	financial	results.

We	rely	on	suppliers	to	secure	commodities,	including	steel,	zinc,	brass	and	other	non-ferrous	metals,	required	for	the	manufacture	of	our	products.	A	disruption	of deliveries	from	our	suppliers	or	decreased	availability	of	commodities	could	have	an	adverse	effect	on	our	ability	to	meet	our	commitments	to	customers	or	increase	our operating	costs.	We	believe	that	available	sources	of	supply	will	generally	be	sufficient	for	our	needs	for	the	foreseeable	future.	Nonetheless,	the	unavailability	of	some commodities	could	have	a	material	adverse	impact	on	our	business.

Volatility	in	the	prices	of	these	commodities	could	increase	the	costs	of	our	products	and	services,	and	we	may	not	be	able	to	pass	on	these	costs	to	our	customers.	We	do not	currently	use	financial	derivatives	to	hedge	against	this	volatility,	however,	we	utilize	firm	purchase	commitments	to	mitigate	risk.	The	pricing	of	some	commodities we	use	is	based	on	market	prices.	To	mitigate	this	exposure,	we	may	use	annual	price	contracts	to	minimize	the	impact	of	inflation	and	to	benefit	from	deflation.

# We	may	be	required	to	recognize	impairment	charges	for	our	goodwill	and	other	indefinite-lived	intangible	assets.

At	December	31,	2015,	the	net	carrying	value	of	our	goodwill	and	other	indefinite-lived	intangible	assets	totaled	approximately	$714.1	million	 and	$62.1	million.	In accordance	with	GAAP,	we	periodically	assess	these	assets	to	determine	whether	they	are	impaired.	Negative	industry	or	economic	trends,	disruptions	to	our	business, unexpected	changes	or	planned	changes	in	use	of	assets,	divestitures	and	market	capitalization	declines	may	result	in	recognition	of	impairment	charges.

# Successful	sales	and	marketing	efforts	depend	on	our	ability	to	recruit	and	retain	qualified	employees.

Our	ability	to	successfully	grow	our	business	depends	on	the	contributions	and	abilities	of	key	executives,	our	sales	force	and	other	personnel,	including	the	ability	of	our sales	force	to	adapt	to	any	changes	made	in	the	sales	organization	and	achieve	adequate	customer	coverage.	We	must	therefore	continue	to	recruit,	retain	and	motivate management,	sales	and	other	personnel	sufficiently	to	maintain	our	current	business	and	support	our	projected	growth.	A	shortage	of	these	key	employees	might jeopardize	our	ability	to	grow	and	expand	our	business.

# Our	operations	are	subject	to	regulatory	risks.

Our	U.S.	and	non-U.S.	operations	are	subject	to	a	number	of	laws	and	regulations,	including	fire	and	building	codes	and	standards,	environmental	and	health	and	safety. We	have	incurred,	and	will	be	required	to	continue	to	incur,	significant	expenditures	to	comply	with	these	laws	and	regulations.	Changes	to,	or	changes	in	interpretations of,	current	laws	and	regulations	could	require	us	to	increase	our	compliance	expenditures,	cause	us	to	significantly	alter	or	discontinue	offering	existing	products	and services	or	cause	us	to	develop	new	products	and	services.	Altering	current	products	and	services	or	developing	new	products	and	services	to	comply	with	changes	in	the applicable	laws	and	regulations	could	require	significant	research	and	development	investments,	increase	the	cost	of	providing	the	products	and	services	and	adversely affect	the	demand	for	our	products	and	services.

We	may	not	have	been,	or	we	may	not	at	all	times	be,	in	full	compliance	with	these	laws	and	regulations.	In	the	event	a	regulatory	authority	concludes	that	we	are	not	or have	not	at	all	times	been	in	full	compliance	with	these	laws,	we	could	be	fined,	criminally	charged	or	otherwise	sanctioned.

Certain	environmental	laws	assess	liability	on	current	or	previous	owners	of	real	property	or	operators	of	manufacturing	facilities	for	the	costs	of	investigation,	removal or	 remediation	 of	 hazardous	 substances	 or	 materials	 at	 such	 properties	 or	 at	 properties	 at	 which	 parties	 have	 disposed	 of	 hazardous	 substances.	 Liability	 for investigative,	removal	and	remedial	costs	under	certain	U.S.	federal	and	state	laws	and	certain	non-U.S.	laws	are	retroactive,	strict	and	joint	and	several.	In	addition	to cleanup	actions	brought	by	governmental	authorities,	private	parties	could	bring	personal	injury	or	other	claims	due	to	the	presence	of,	or	exposure	to,	hazardous substances.	We	have	received	notification	from	U.S.	and	non-U.S.	governmental	agencies,	including	the	EPA	and	similar	state	environmental	agencies,	that	conditions	at a	number	of	current	and	formerly	owned	sites	where	we	and	others	have	disposed	of	hazardous	substances	require	investigation,	cleanup	and	other	possible	remedial action.	These	agencies	may	require	that	we	reimburse	the	government	for	its	costs	incurred	at	these	sites	or	otherwise	pay	for	the	costs	of	investigation	and	cleanup	of these	sites,	including	by	providing	compensation	for	natural	resource	damage	claims	from	such	sites.	For	more	information,	see	"Business	-	Environmental	Regulation."

While	we	have	planned	for	future	capital	and	operating	expenditures	to	maintain	compliance	with	environmental	laws	and	have	accrued	for	costs	related	to	current remedial	efforts,	our	costs	of	compliance,	or	our	liabilities	arising	from	past	or	future	releases	of,	or	exposures	to,	hazardous	substances	may	exceed	our	estimates.	We may	also	be	subject	to	additional	environmental	claims	for	personal	injury	or	cost	recovery	actions	for	remediation	of	facilities	in	the	future	based	on	our	past,	present	or future	business	activities.

# The	capital	and	credit	markets	are	important	to	our	business.

Instability	in	U.S.	and	global	capital	and	credit	markets,	including	market	disruptions,	limited	liquidity	and	interest	rate	volatility,	or	reductions	in	the	credit	ratings assigned	to	us	by	independent	ratings	agencies	could	reduce	our	access	to	capital	markets	or	increase	the	cost	of	funding	our	short	and	long	term	credit	requirements.	In particular,	if	we	are	unable	to	access	capital	and	credit	markets	on	terms	that	are	acceptable	to	us,	we	may	not	be	able	to	make	certain	investments	or	fully	execute	our business	plans	and	strategy.

Our	suppliers	and	customers	are	also	dependent	upon	the	capital	and	credit	markets.	Limitations	on	the	ability	of	customers,	suppliers	or	financial	counterparties	to access	credit	could	lead	to	insolvencies	of	key	suppliers	and	customers,	limit	or	prevent	customers	from	obtaining	credit	to	finance	purchases	of	our	products	and services	and	cause	delays	in	the	delivery	of	key	products	from	suppliers.

# We	may	not	be	able	to	sustain	a	competitive	worldwide	effective	corporate	tax	rate.

We	cannot	give	any	assurance	as	to	what	our	effective	tax	rate	will	be	in	future	years,	because	of,	among	other	things,	uncertainty	regarding	the	geographic	mix	of income	and	the	tax	policies	of	the	jurisdictions	where	we	operate.	Our	actual	effective	tax	rate	may	vary	from	our	expectation	and	that	variance	may	be	material. Additionally,	the	tax	laws	of	Ireland	and	other	jurisdictions	could	change	in	the	future,	and	such	changes	could	cause	a	material	change	in	our	effective	tax	rate.

# Risks	Related	to	Our	Indebtedness

Our	substantial	leverage	could	harm	our	business	by	limiting	our	available	cash	and	our	access	to	additional	capital	and,	to	the	extent	of	our	variable	rate indebtedness,	exposing	us	to	interest	rate	risk.

We	have	approximately	$1.5	billion	of	outstanding	indebtedness	at	December	31,	2015.	In	addition,	we	have	a	senior	secured	revolving	credit	facility	that	permits borrowings	of	up	to	an	additional	$500	million.	Volatility	in	the	credit	markets	could	adversely

impact	our	ability	to	obtain	favorable	terms	on	financing	in	the	future.	In	addition,	a	substantial	portion	of	our	cash	flows	from	operations	is	dedicated	to	the	payment	of principal	and	interest	on	our	indebtedness	and	will	not	be	available	for	other	purposes,	including	our	operations,	capital	expenditures,	payment	of	dividends,	share repurchase	programs	and	future	business	opportunities.	We	may	be	more	vulnerable	than	a	less	leveraged	company	to	a	downturn	in	the	general	economic	conditions	or in	our	business,	or	we	may	be	unable	to	carry	out	capital	spending	that	is	important	to	our	growth.	We	may	be	vulnerable	to	interest	rate	increases,	as	certain	of	our borrowings,	including	those	under	our	senior	secured	credit	facilities,	are	at	variable	rates.

# We	may	not	be	able	to	generate	sufficient	cash	to	service	all	of	our	indebtedness	and	may	be	forced	to	take	other	actions	to	satisfy	our	obligations	under	our indebtedness,	which	actions	may	not	be	successful.

Our	ability	to	make	scheduled	payments	or	to	refinance	our	debt	obligations	depends	on	our	financial	and	operating	performance,	which	is	subject	to	prevailing economic	and	competitive	conditions	and	to	certain	financial,	business	and	other	factors	beyond	our	control.	We	may	not	be	able	to	maintain	a	level	of	cash	flow	from operating	activities	sufficient	to	permit	us	to	pay	the	principal	and	interest	on	our	indebtedness.	For	more	information	see	"Management's	Discussion	and	Analysis	of Financial	Condition	and	Results	of	Operations	-	Liquidity	and	Capital	Resources."

If	our	cash	flows	and	capital	resources	are	insufficient	to	fund	our	debt	service	obligations,	we	may	be	forced	to	reduce	or	delay	capital	expenditures,	reduce	or	eliminate the	payment	of	dividends,	sell	assets,	seek	additional	capital	or	seek	to	restructure	or	refinance	our	indebtedness.	These	alternative	measures	may	not	be	successful	and may	not	permit	us	to	meet	our	scheduled	debt	service	obligations.	In	the	absence	of	such	operating	results	and	resources,	we	could	face	substantial	liquidity	problems and	might	be	required	to	sell	material	assets	or	operations	to	attempt	to	meet	our	debt	service	and	other	obligations.	The	terms	of	the	credit	agreement	governing	our senior	secured	credit	facilities	and	the	indentures	governing	our	senior	notes	contain	customary	financial	covenants	that	may	restrict	our	ability	to	use	the	proceeds	from asset	sales	and	therefore	may	not	be	adequate	to	meet	any	debt	service	obligations	then	due.

# Despite	our	levels	of	indebtedness,	we	may	still	be	able	to	incur	substantially	more	debt,	which	could	further	exacerbate	the	risks	associated	with	our	substantial leverage.

We	may	be	able	to	incur	substantial	additional	indebtedness	in	the	future.	Although	the	terms	of	the	credit	agreement	governing	our	senior	secured	credit	facilities	and the	indentures	governing	our	senior	notes	contain	customary	restrictions	on	the	incurrence	of	additional	indebtedness,	these	restrictions	are	subject	to	a	number	of qualifications	and	exceptions,	and	the	indebtedness	incurred	in	compliance	with	these	restrictions	could	be	substantial.	In	addition,	our	senior	secured	revolving	credit facility	permits	borrowings	of	up	to	$500	million.	If	we	incur	additional	debt	above	the	levels	we	currently	have,	the	risks	associated	with	our	leverage,	including	those described	above,	would	increase.

# The	terms	of	our	debt	covenants	could	limit	how	we	conduct	our	business	and	our	ability	to	raise	additional	funds.

The	terms	of	the	credit	agreement	governing	our	senior	secured	credit	facilities	and	the	indentures	governing	our	senior	notes	may	restrict	us	from	taking	certain	actions that	we	may	think	are	in	the	best	interests	of	our	shareholders.	A	breach	of	the	covenants	or	restrictions	could	result	in	a	default	under	the	applicable	indebtedness.	As	a result	of	these	restrictions,	we	may	be:

•limited in how we conduct our business;

•limited	 in	 our ability to pay dividends or	 make other distributions to our shareholders;

•unable	to	raise	additional	debt	or	equity	financing	to	operate	during	general	economic	or	business	downturns;

•unable	to	compete	effectively	or	to	take	advantage	of	new	business	opportunities.

These	restrictions	may	affect	our	ability	to	grow	in	accordance	with	our	plans.

These	covenants	and	restrictions	could	affect	our	ability	to	operate	our	business,	and	may	limit	our	ability	to	react	to	market	conditions	or	take	advantage	of	potential business	opportunities	as	they	arise.	Additionally,	our	ability	to	comply	with	these	covenants	may	be	affected	by	events	beyond	our	control,	including	general	economic and	credit	conditions	and	industry	downturns,	and	the	other	factors	described	in	these	"risk	factors."

# Our	variable	rate	indebtedness	may	expose	us	to	interest	rate	risk,	which	could	cause	our	debt	costs	to	increase	significantly.

A	portion	of	our	borrowings	at	December	31,	2015	include	a	term	loan	with	a	variable	rate	of	interest	which	exposes	us	to	interest	rate	risk.	We	are	exposed	to	the	risk	of rising	interest	rates	to	the	extent	that	we	fund	our	operations	with	short-term	or	variable-rate	borrowings.	At	December	31,	2015,	we	have	approximately	$1.5	billion	of aggregate	debt	outstanding,	and	this	amount	includes	$927	million	of	floating-rate	term	loans	and	$600	million	of	our	fixed-rate	senior	notes.	We	have	the	ability	to incur	up

to	$500	million	of	additional	floating-rate	debt	under	our	senior	secured	revolving	credit	facility.	We	entered	into	forward	starting	interest	rate	swaps	for	$300.0	million of	our	floating-rate	term	loans	to	manage	our	interest	rate	risk.	A	100	basis	point	increase	in	LIBOR	would	have	resulted	in	incremental	2015	interest	expense	of approximately	$6.5	million.	If	the	LIBOR	or	other	applicable	base	rates	under	our	senior	secured	credit	facilities	increase	in	the	future	then	the	floating-rate	debt	could have	a	material	effect	on	our	interest	expense.

# Risks	Relating	to	the	Spin-off

In	connection	with	the	Spin-off,	Ingersoll	Rand	indemnified	us	for	certain	liabilities	and	we	indemnified	Ingersoll	Rand	for	certain	liabilities.	If	we	are	required	to act	on	these	indemnities	to	Ingersoll	Rand,	we	may	need	to	divert	cash	to	meet	those	obligations	and	our	financial	results	could	be	negatively	impacted.	The Ingersoll	Rand	indemnity	may	not	be	sufficient	to	insure	us	against	the	full	amount	of	liabilities	for	which	it	will	be	allocated	responsibility,	and	Ingersoll	Rand may	not	be	able	to	satisfy	its	indemnification	obligations	in	the	future.

Pursuant	to	the	Separation	and	Distribution	Agreement,	the	Employee	Matters	Agreement	and	the	Tax	Matters	Agreement	with	Ingersoll	Rand,	Ingersoll	Rand	agreed	to indemnify	us	for	certain	liabilities,	and	we	agreed	to	indemnify	Ingersoll	Rand	for	certain	liabilities,	in	each	case	for	uncapped	amounts.	Such	indemnities	may	be significant	and	could	negatively	impact	our	business,	particularly	indemnities	relating	to	our	actions	that	could	impact	the	tax-free	nature	of	the	Spin-off.	Third	parties could	also	seek	to	hold	us	responsible	for	any	of	the	liabilities	that	Ingersoll	Rand	retained.	Further,	the	indemnity	from	Ingersoll	Rand	may	not	be	sufficient	to	protect us	against	the	full	amount	of	such	liabilities,	and	Ingersoll	Rand	may	not	be	able	to	fully	satisfy	its	indemnification	obligations.	Moreover,	even	if	we	ultimately	succeed in	recovering	from	Ingersoll	Rand	any	amounts	for	which	we	are	held	liable,	we	may	be	temporarily	required	to	bear	these	losses	ourselves.

If	the	distribution	or	certain	internal	transactions	undertaken	in	anticipation	of	the	spin-off	are	determined	to	be	taxable	for	U.S.	federal	income	tax	purposes,	we, our	shareholders	that	are	subject	to	U.S.	federal	income	tax	and/or	Ingersoll	Rand	could	incur	significant	U.S.	federal	income	tax	liabilities	and,	in	certain circumstances,	we	could	be	required	to	indemnify	Ingersoll	Rand	for	material	taxes	pursuant	to	indemnification	obligations	under	the	Tax	Matters	Agreement.

Ingersoll	Rand	has	received	an	IRS	ruling	substantially	to	the	effect	that,	among	other	things,	the	distribution	of	our	ordinary	shares,	together	with	certain	related transactions,	qualify	under	Sections	355	and	368(a)	of	the	Internal	Revenue	Code	("the	Code"),	with	the	result	that	Ingersoll	Rand	and	Ingersoll	Rand's	shareholders	will not	recognize	any	taxable	income,	gain	or	loss	for	U.S.	federal	income	tax	purposes	as	a	result	of	the	Spin-off,	except	to	the	extent	of	cash	received	in	lieu	of	fractional shares	(the	"IRS	Ruling").	The	IRS	Ruling	also	provided	that	certain	internal	transactions	undertaken	in	anticipation	of	the	distribution	qualify	for	favorable	treatment under	the	Code.	In	addition	to	obtaining	the	IRS	Ruling,	Ingersoll	Rand	received	opinions	from	the	law	firm	of	Simpson	Thacher	&	Bartlett	LLP	substantially	to	the effect	that	certain	requirements,	including	certain	requirements	that	the	IRS	did	not	rule	on,	necessary	to	obtain	tax-free	treatment	have	been	satisfied,	such	that	the distribution	for	U.S.	federal	income	tax	purposes	and	certain	other	matters	relating	to	the	distribution,	including	certain	internal	transactions	undertaken	in	anticipation	of the	distribution,	received	tax-free	treatment	under	Section	355	of	the	Code.	The	receipt	and	effectiveness	of	the	IRS	Ruling	and	the	opinions	were	conditions	to	the distribution	that	were	satisfied	or	waived	by	Ingersoll	Rand.	The	IRS	Ruling	and	the	opinions	rely	on	certain	facts	and	assumptions	and	certain	representations	and undertakings	from	us	and	Ingersoll	Rand	regarding	the	past	and	future	conduct	of	our	respective	businesses	and	other	matters.	Notwithstanding	the	IRS	Ruling	and	the opinions,	the	IRS	could	determine	on	audit	that	the	distribution	or	the	internal	transactions	should	be	treated	as	taxable	transactions	if	it	determines	that	any	of	these facts,	assumptions,	representations	or	undertakings	is	not	correct	or	has	been	violated,	or	that	the	distribution	or	the	internal	transactions	should	be	taxable	for	other reasons,	including	as	a	result	of	significant	changes	in	shares	or	asset	ownership	after	the	distribution.	A	legal	opinion	represents	the	tax	adviser's	best	legal	judgment,	is not	binding	on	the	IRS	or	the	courts,	and	the	IRS	or	the	courts	may	not	agree	with	the	opinion.	In	addition,	the	opinion	will	be	based	on	current	law,	and	cannot	be	relied upon	if	current	law	changes	with	retroactive	effect.	If	the	distribution	is	determined	to	be	taxable,	the	distribution	could	be	treated	as	a	taxable	dividend	or	capital	gain for	U.S.	federal	income	tax	purposes,	and	our	shareholders	could	incur	significant	U.S.	federal	income	tax	liabilities.	In	addition,	we	or	Ingersoll	Rand	could	incur significant	U.S.	federal	income	tax	liabilities	if	it	is	ultimately	determined	that	certain	internal	transactions	undertaken	in	anticipation	of	the	distribution	are	taxable.

In	addition,	under	the	terms	of	the	Tax	Matters	Agreement,	in	the	event	the	distribution	or	the	internal	transactions	were	determined	to	be	taxable	as	a	result	of	actions taken	after	the	distribution	by	us	or	Ingersoll	Rand,	the	party	responsible	for	such	failure	would	be	responsible	for	all	taxes	imposed	on	us	or	Ingersoll	Rand	as	a	result thereof.	If	such	failure	is	not	the	result	of	actions	taken	after	the	distribution	by	us	or	Ingersoll	Rand,	then	we	would	be	responsible	for	any	taxes	imposed	on	us	or Ingersoll	Rand	as	a	result	of	such	determination.	Such	tax	amounts	could	be	significant.

# If	the	distribution	is	determined	to	be	taxable	for	Irish	tax	purposes,	significant	Irish	tax	liabilities	may	arise.

Ingersoll	Rand	has	received	an	opinion	of	the	Irish	Revenue	regarding	the	Irish	tax	consequences	of	the	distribution	to	the	effect	that	certain	reliefs	and	exemptions	for corporate	reorganizations	apply.	In	addition	 to	obtaining	 the	opinion	from	Irish	Revenue,	Ingersoll	Rand	received	an	opinion	from	 the	 law	 firm	 of	Arthur	 Cox confirming	the	applicability	of	the	relevant	exemptions	and	reliefs	to	the	distribution	and	that	certain	internal	transactions	will	not	trigger	tax	costs.	These	opinions	rely on	certain	facts	and	assumptions	and	certain	representations	and	undertakings	from	us	and	Ingersoll	Rand	regarding	the	past	and	future	conduct	of	our	respective businesses	and	other	matters.	Notwithstanding	the	opinions,	Irish	Revenue	could	determine	on	audit	that	the	distribution	or	the	internal	transactions	do	not	qualify	for	the relevant	exemptions	or	reliefs	if	it	determines	that	any	of	these	facts,	assumptions,	representations	or	undertakings	is	not	correct	or	has	been	violated.	A	legal	opinion represents	the	tax	adviser's	best	legal	judgment,	is	not	binding	on	Irish	Revenue	or	the	courts	and	Irish	Revenue	or	the	courts	may	not	agree	with	the	legal	opinion.	In addition,	the	legal	opinion	was	based	on	current	law,	and	cannot	be	relied	upon	if	current	law	changes	with	retroactive	effect.	If	the	distribution	ultimately	is	determined not	to	fall	within	certain	exemptions	or	reliefs,	the	distribution	could	result	in	our	shareholders	having	an	Irish	tax	liability	as	a	result	of	the	distribution	(if	a	shareholder is	an	Irish	resident	or	holds	shares	in	Ingersoll	Rand	in	an	Irish	branch	or	agency),	or	we	or	Ingersoll	Rand	could	incur	Irish	tax	liabilities.

In	addition,	under	the	terms	of	the	Tax	Matters	Agreement,	in	the	event	the	distribution	does	not	qualify	for	certain	reliefs	or	exemptions,	then	we	would	be	responsible for	any	taxes	imposed	on	us	or	Ingersoll	Rand	as	a	result	of	such	determination.	Such	tax	amounts	could	be	significant.

# Risks	Related	to	Our	Incorporation	in	Ireland

# Irish	law	differs	from	the	laws	in	effect	in	the	United	States	and	may	afford	less	protection	to	holders	of	our	securities.

The	United	States	currently	does	not	have	a	treaty	with	Ireland	providing	for	the	reciprocal	recognition	and	enforcement	of	judgments	in	civil	and	commercial	matters. As	such,	there	is	some	uncertainty	as	to	whether	the	courts	of	Ireland	would	recognize	or	enforce	judgments	of	U.S.	courts	obtained	against	us	or	our	directors	or	officers based	on	U.S.	federal	or	state	civil	liability	laws,	including	the	civil	liability	provisions	of	the	U.S.	federal	or	state	securities	laws,	or	hear	actions	against	us	or	those persons	based	on	those	laws.

As	an	Irish	company,	we	are	governed	by	the	Irish	Companies	Act,	which	differs	in	some	material	respects	from	laws	generally	applicable	to	U.S.	corporations	and shareholders,	including,	among	others,	differences	relating	to	interested	director	and	officer	transactions	and	shareholder	lawsuits.	Likewise,	the	duties	of	directors	and officers	of	an	Irish	company	generally	are	owed	to	the	company	only.	Shareholders	of	Irish	companies	generally	do	not	have	a	personal	right	of	action	against	directors or	officers	of	the	company	and	may	exercise	such	rights	of	action	on	behalf	of	the	company	only	in	limited	circumstances.	Accordingly,	holders	of	our	securities	may have	more	difficulty	protecting	their	interests	than	would	holders	of	securities	of	a	corporation	incorporated	in	a	jurisdiction	of	the	United	States.

In	addition,	Irish	law	allows	shareholders	to	authorize	share	capital	which	then	can	be	issued	by	a	board	of	directors	without	shareholder	approval.	Also,	subject	to specified	exceptions,	Irish	law	grants	statutory	preemptive	rights	to	existing	shareholders	to	subscribe	for	new	issuances	of	shares	for	cash.	However,	we	have	opted	out of	these	preemption	rights	in	our	Articles	of	Association	as	permitted	under	Irish	company	law.	Irish	law	provides	that	this	opt-out	expires	after	five	years	unless renewed	by	a	special	resolution	of	the	shareholders.	These	authorizations	must	be	renewed	by	the	shareholders	every	five	years	and	we	cannot	guarantee	that	these authorizations	will	always	be	approved.

# Changes	in	tax	laws,	regulations	or	treaties,	changes	in	our	status	under	the	tax	laws	of	many	jurisdictions	or	adverse	determinations	by	taxing	authorities	could increase	our	tax	burden	or	otherwise	affect	our	financial	condition	or	operating	results,	as	well	as	subject	our	shareholders	to	additional	taxes.

The	realization	of	any	tax	benefit	related	to	our	incorporation	and	tax	residence	in	Ireland	could	be	impacted	by	changes	in	tax	laws,	tax	treaties	or	tax	regulations	or	the interpretation	or	enforcement	thereof	by	the	tax	authorities	of	many	jurisdictions.	From	time	to	time,	proposals	have	been	made	and/or	legislation	has	been	introduced	to change	the	tax	laws	of	various	jurisdictions	or	limit	tax	treaty	benefits	that	if	enacted	could	materially	increase	our	tax	burden	and/or	effective	tax	rate.	For	instance, recent	U.S.	legislative	proposals	could	modify	or	eliminate	the	tax	deductibility	of	various	currently	deductible	payments,	which	could	materially	and	adversely	affect our	effective	tax	rate	and	cash	tax	position.	Moreover,	other	U.S.	legislative	proposals	could	have	a	material	adverse	impact	on	us	by	overriding	certain	tax	treaties	and limiting	the	treaty	benefits	on	certain	payments	by	our	U.S.	subsidiaries	to	our	non-U.S.	affiliates,	which	could	increase	our	tax	liability.	We	cannot	predict	the	outcome of	any	specific	legislation	in	any	jurisdiction.

While	we	monitor	proposals	that	would	materially	impact	our	tax	burden	and/or	effective	tax	rate	and	investigate	our	options,	we	could	still	be	subject	to	increased taxation	 on	 a	 going	 forward	 basis	 no	 matter	 what	 action	 we	 undertake	 if	 certain	 legislative	 proposals	 are	 enacted,	 certain	 tax	 treaties	 are	 amended	 and/or	 our interpretation	of	applicable	tax	law	is	challenged	and	determined	to	be	incorrect.	In	particular,	any	changes	and/or	differing	interpretations	of	applicable	tax	law	that have	the	effect	of	disregarding	our	incorporation	in	Ireland,	limiting	our	ability	to	take	advantage	of	tax	treaties	between	jurisdictions,	modifying	or	eliminating	the deductibility	of	various	currently	deductible	payments,	or	increasing	the	tax	burden	of	operating	or	being	resident	in	a	particular	country,	could	subject	us	to	increased taxation.

# Dividends	received	by	our	shareholders	may	be	subject	to	Irish	dividend	withholding	tax.

In	certain	circumstances,	we	are	required	to	deduct	Irish	dividend	withholding	tax	(currently	at	the	rate	of	20%)	from	dividends	paid	to	our	shareholders.	In	the	majority of	cases,	shareholders	resident	in	the	United	States	will	not	be	subject	to	Irish	withholding	tax,	and	shareholders	resident	in	a	number	of	other	countries	will	not	be subject	to	Irish	withholding	tax	provided	that	they	complete	certain	Irish	dividend	withholding	tax	forms.	However,	some	shareholders	may	be	subject	to	withholding tax,	which	could	discourage	the	investment	in	our	stock	and	adversely	impact	on	the	price	of	our	shares.

# Dividends	received	by	our	shareholders	could	be	subject	to	Irish	income	tax.

Dividends	paid	in	respect	of	our	shares	generally	are	not	subject	to	Irish	income	tax	where	the	beneficial	owner	of	these	dividends	is	exempt	from	Irish	dividend withholding	tax,	unless	the	beneficial	owner	of	the	dividend	has	some	connection	with	Ireland	other	than	his	or	her	shareholding	in	Allegion.

Our	shareholders	who	receive	their	dividends	subject	to	Irish	dividend	withholding	tax	will	generally	have	no	further	liability	to	Irish	income	tax	on	the	dividends	unless the	beneficial	owner	of	the	dividend	has	some	connection	with	Ireland	other	than	his	or	her	shareholding	in	Allegion.

# Certain	provisions	in	our	Articles	of	Association,	among	other	things,	could	prevent	or	delay	an	acquisition	of	us,	which	could	decrease	the	trading	price	of	our ordinary	shares.

Our	Memorandum	and	Articles	of	Association	contain	provisions	to	deter	takeover	practices,	inadequate	takeover	bids	and	unsolicited	offers.	These	provisions	include, amongst	others:

•a	provision	of	our	Articles	of	Association	which	generally	prohibits	us	from	engaging	in	a	business	combination	with	an	interested	shareholder	(being	(i) the	beneficial	owner	of	the	relevant	percentage	of	our	voting	shares	or	(ii)	an	affiliate	or	associate	of	us	that	has	at	any	time	within	the	last	five	years	been the	beneficial	owner	of	the	relevant	percentage	of	our	voting	shares),	subject	to	certain	exceptions;

•rules	 regarding	 how	 shareholders	 may	 present	 proposals	 or	 nominate	 directors	 for	 election at shareholder meetings;

•the	right	of	our	Board	of	Directors	to	issue	preferred	shares	without	shareholder	approval	in	certain	circumstances,	subject	to	applicable	law; and

•the	 ability	 of our	 Board of	 Directors to fill vacancies on our	 Board of	 Directors in certain circumstances.

We	believe	these	provisions	will	provide	some	protection	to	our	shareholders	from	coercive	or	otherwise	unfair	takeover	tactics.	These	provisions	are	not	intended	to make	us	immune	from	takeovers.	However,	these	provisions	will	apply	even	if	the	offer	may	be	considered	beneficial	by	some	shareholders	and	could	delay	or	prevent an	acquisition	that	our	Board	of	Directors	determines	is	in	our	best	interests	and	our	shareholders'	best	interests.	These	provisions	may	also	prevent	or	discourage attempts	to	remove	and	replace	incumbent	directors.

In	addition,	several	mandatory	provisions	of	Irish	law	could	prevent	or	delay	an	acquisition	of	us.	For	example,	Irish	law	does	not	permit	shareholders	of	an	Irish	public limited	company	to	take	action	by	written	consent	with	less	than	unanimous	consent.	We	also	will	be	subject	to	various	provisions	of	Irish	law	relating	to	mandatory bids,	voluntary	bids,	requirements	to	make	a	cash	offer	and	minimum	price	requirements,	as	well	as	substantial	acquisition	rules	and	rules	requiring	the	disclosure	of interests	in	our	shares	in	certain	circumstances.	Also,	Irish	companies,	including	us,	may	alter	their	Memorandum	of	Association	and	Articles	of	Association	only	with the	approval	of	at	least	75%	of	the	votes	of	the	company's	shareholders	cast	in	person	or	by	proxy	at	a	general	meeting	of	the	company.

The	agreements	that	we	entered	into	with	Ingersoll	Rand	in	connection	with	the	spin-off	generally	require	Ingersoll	Rand's	consent	to	any	assignment	by	us	of	our	rights and	obligations	under	the	agreements.	The	consent	and	termination	rights	set	forth	in	these	agreements	might	discourage,	delay	or	prevent	a	change	of	control	that shareholders	may	consider	favorable.

# Item	1B.				UNRESOLVED	STAFF	COMMENTS

None.

# Item	2.				PROPERTIES

We	operate	through	a	broad	network	of	sales	offices,	27	production	facilities	and	several	distribution	centers	throughout	the	world.	Our	active	properties	represent	about 5.5	million	square	feet,	of	which	approximately	45%	is	leased.

The	majority	of	our	plant	facilities	are	owned	by	us	with	the	remainder	under	long-term	lease	arrangements.	We	believe	that	our	plants	have	been	well	maintained,	are generally	in	good	condition	and	are	suitable	for	the	conduct	of	our	business.

# Item	3.	LEGAL	PROCEEDINGS

In	the	normal	course	of	business,	we	are	involved	in	a	variety	of	lawsuits,	claims	and	legal	proceedings,	including	commercial	and	contract	disputes,	employment matters,	product	liability	claims,	environmental	liabilities,	intellectual	property	disputes,	and	tax-related	matters.	In	our	opinion,	pending	legal	matters	are	not	expected	to have	a	material	adverse	impact	on	our	results	of	operations,	financial	condition,	liquidity	or	cash	flows.

# Executive	Officers	of	the	Registrant

The	following	is	a	list	of	executive	officers	of	the	Company	as	of	February	26,	2016.

David	D.	Petratis,	age	58,	is	our	Chairman,	President	and	Chief	Executive	Officer.	Mr.	Petratis	served	as	the	Chairman,	President	and	Chief	Executive	Officer	of Quanex	Building	Products	Corporation	(a	manufacturer	of	engineered	material	and	components	for	the	building	products	markets)	from	2008	to	July	2013.

Patrick	S.	Shannon,	age	53,	is	our	Senior	Vice	President	and	Chief	Financial	Officer.	Mr.	Shannon	served	as	the	Vice	President	and	Treasurer	of	Ingersoll-Rand	plc	(a global	diversified	company)	from	August	2012	to	August	2013.	Mr.	Shannon	previously	served	as	Ingersoll	Rand's	Vice	President,	Audit	Services	from	February	2010 to	August	2012.

Jeffrey	N.	Braun,	age	56,	is	our	Senior	Vice	President	and	General	Counsel.	Mr.	Braun	served	as	our	Deputy	General	Counsel	and	Chief	Compliance	Officer	from September	 2013	 to	 June	 2014.	 Mr.	 Braun	 previously	 served	 as	 General	 Counsel	 of	 General	 Motors	 China,	 a	 subsidiary	 of	 General	 Motors	 Company	 (a	 global automotive	company)	from	April	2010	to	June	2013.

Timothy	P.	Eckersley,	age	54,	is	our	Senior	Vice	President	-	Americas.	Mr.	Eckersley	served	as	Ingersoll	Rand's	President,	Security	Technologies	-	Americas	from November	2007	to	November	2013.

Todd	V.	Graves,	age	49,	is	our	Senior	Vice	President	-	Technology	and	Engineering.	Mr.	Graves	served	as	our	Vice	President	-	Technology	and	Engineering	from December	2013	to	January	2016.		Mr.	Graves	served	as	Ingersoll	Rand's	Vice	President	-	Technology	and	Engineering,	Security	Technologies,	from	February	2012	to December	2013.		He	also	served	as	Vice	President	of	ClearEdge	Power	(a	fuel	cell	manufacturer)	from	May	2011	to	January	2012	and	as	Division	Vice	President	of Textron	Inc.	(a	multi-industry	manufacturer)	from	December	2008	to	February	2011.

Tracy	L.	Kemp,	age	47,	is	our	Senior	Vice	President	and	Chief	Information	Officer.		Ms.	Kemp	served	as	our	Vice	President	and	Chief	Information	Officer	from December	2013	to	February	2015.		Prior	to	that,	Ms.	Kemp	served	as	Ingersoll	Rand's	Vice	President	-	Chief	Information	Officer,	Security	Technologies	and	Residential Solutions	sectors	from	September	2011	to	December	2013	and	Vice	President	-	Chief	Information	Officer,	Residential	Solutions	sector	from	2009	to	September	2011.

Raymond	H.	Lewis	Jr.,	age	51,	is	our	Senior	Vice	President	-	Human	Resources	and	Communications.	Mr.	Lewis	served	as	Ingersoll	Rand's	Vice	President	-	Human Resources	and	Communications,	Industrial	Technologies	from	October	2010	to	October	2013.

Lucia	Veiga	Moretti,	age	51,	is	our	Senior	Vice	President-EMEIA.	Ms.	Moretti	previously	served	as	Senior	Vice	President	and	President,	Delphi	Product	and	Service Solutions	for	Delphi	Automotive	(a	supplier	of	automotive	technologies)	from	August	2011	to	February	2014	and	Vice	President,	Global	Independent	Aftermarket	from December	2010	to	July	2011.

Chris	E.	Muhlenkamp,	age	58,	is	our	Senior	Vice	President	-	Global	Operations	and	Integrated	Supply	Chain.	Mr.	Muhlenkamp	served	as	our	Vice	President	-	Global operations	and	Integrated	Supply	Chain	from	December	2013	to	February	2014.	Mr.	Muhlenkamp	served	as	Ingersoll	Rand's	Vice	President	-	Operations	and	Global Integrated	Supply	Chain,	Security	Technologies,	from	March	2011	to	December	2013	and	served	as	General	Director,	Global	Supply	Management	and	Production Control	and	Logistics	of	Delphi	Automotive	(a	vehicle	components	manufacturer)	from	January	2009	to	March	2011.

Douglas	P.	Ranck,	age	57,	is	our	Vice	President	and	Controller.	Mr.	Ranck	served	as	Ingersoll	Rand's	Global	Controller	and	Financial	Planning	and	Analysis	Leader	- Climate	Solutions	from	June	2008	to	October	2013.

Feng	(William)	Yu,	age	51,	is	our	Senior	Vice	President	-	Asia	Pacific.	Mr.	Yu	served	as	Ingersoll	Rand's	President,	Security	Technologies	-	Asia	Pacific	from	February 2011	to	November	2013.	Mr.	Yu	previously	served	as	Ingersoll	Rand's	Vice	President,	Thermo	King	-	Asia	Pacific	from	2008	to	February	2011.

No	family	relationship	exists	between	any	of	the	above-listed	executive	officers	of	the	Company.	All	officers	are	elected	to	hold	office	for	one	year	or	until	their successors	are	elected	and	qualified.

# Item	4.	MINE	SAFETY	DISCLOSURES

Not	applicable.

# PART	II

# Item	5.	MARKET	FOR	REGISTRANT'S	COMMON	EQUITY,	RELATED	STOCKHOLDER	MATTERS	AND

# ISSUER	PURCHASES	OF	EQUITY	SECURITIES

Information	regarding	the	principal	market	for	our	ordinary	shares	and	related	shareholder	matters	is	as	follows:

Our	ordinary	shares	are	traded	on	the	NYSE	under	the	symbol	ALLE.	As	of	February	22,	2016,	the	number	of	record	holders	of	ordinary	shares	was	3,447.	The	high	and low	sales	price	per	share	and	the	dividend	declared	per	share	for	the	following	periods	were	as	follows:

Information	regarding	equity	compensation	plans	required	to	be	disclosed	pursuant	to	this	Item	is	incorporated	by	reference	from	our	Proxy	Statement.

# Dividend	Policy

Our	Board	of	Directors	declared	dividends	of	$0.10	per	ordinary	share	on	March	31,	2015,	June	30,	2015,	September	30,	2015	and	December	30,	2015.	On	February	4, 2016	our	Board	of	Directors	declared	a	dividend	of	$0.12	per	ordinary	share	payable	on	March	31,	2016.	We	paid	a	total	of	$38.3	million	in	cash	for	dividends	to ordinary	shareholders	during	the	year	ended	December	31,	2015.	Future	dividends	on	our	ordinary	shares,	if	any,	will	be	at	the	discretion	of	our	Board	of	Directors	and will	depend	on,	among	other	things,	our	results	of	operations,	cash	requirements	and	surplus,	financial	condition,	contractual	restrictions	and	other	factors	that	the	Board of	Directors	may	deem	relevant,	as	well	as	our	ability	to	pay	dividends	in	compliance	with	the	Irish	Companies	Act.	Under	the	Irish	Companies	Act,	dividends	and distributions	may	only	be	made	from	distributable	reserves.	Distributable	reserves,	broadly,	means	the	accumulated	realized	profits	of	Allegion	plc	(ALLE-Ireland).	In addition,	no	distribution	or	dividend	may	be	made	unless	the	net	assets	of	ALLE-Ireland	are	equal	to,	or	in	excess	of,	the	aggregate	of	ALLE-Ireland's	called	up	share capital	plus	undistributable	reserves	and	the	distribution	does	not	reduce	ALLE-Ireland's	net	assets	below	such	aggregate.

We	did	not	repurchase	any	of	our	ordinary	shares	during	the	fourth	quarter	of	2015.	In	February	2014,	our	Board	of	Directors	authorized	the	repurchase	of	up	to	$200 million	of	our	ordinary	shares.	We	paid	a	total	of	$30.0	million	to	repurchase	0.5	million	ordinary	shares	during	the	year	ended	December	31,	2015.	At	December	31, 2015	we	have	approximately	$120	million	available	under	the	authorized	share	repurchase	plan.

# Performance	Graph

The	annual	changes	for	the	period	shown	November	18,	2013	(when	our	ordinary	shares	began	trading	in	the	"when-issued"	market)	to	December	31,	2015	in	the	graph on	this	page	are	based	on	the	assumption	that	$100	had	been	invested	in	Allegion	plc	ordinary	shares,	the	Standard	&	Poor's	500	Stock	Index	("S&P	500")	and	the Standard	&	Poor's	400	Capital	Goods	Index	("S&P	400	Capital	Goods")	on	November	18,	2013,	and	that	all	quarterly	dividends	were	reinvested.	The	total	cumulative dollar	returns	shown	on	the	graph	represent	the	value	that	such	investments	would	have	had	on	December	31,	2015.

|  | November	18,<br>2013 | December	31,<br>2013 | December	31,<br>2014 | December	31,<br>2015 |
| :--- | :--- | :--- | :--- | :--- |
| Allegion\tplc | 100.00 | 91.16 | 115.11 | 137.71 |
| S&amp;P\t500 | 100.00 | 103.44 | 117.59 | 119.22 |
| S&amp;P\t400\tCapital\tGoods | 100.00 | 105.46 | 105.72 | 99.90 |

# Item	6.					SELECTED	FINANCIAL	DATA

In	millions,	except	per	share	amounts:

| At	and	for	the	years	ended	December	31, | 2015 |  | 2014 |  | 2013 |  | 2012 | 2011 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\trevenues | $2,068.1 |  | $2,118.3 |  | $2,069.6 |  | $2,023.3 | $1,998.3 |
| Net\tearnings\t(loss)\tattributable\tto\tAllegion\tplc\tordinary\nshareholders: |  |  |  |  |  |  |  |  |
| Continuing\toperations\t(d) | 154.3 | (a) | 186.3 | (b) | 35.9 | (c) | 224.3 | 231.6 |
| Discontinued\toperations | (0.4) |  | (11.1) |  | (3.6) |  | (4.2) | (6.3) |
| Total\tassets | 2,285.3 |  | 2,015.9 |  | 2,000.6 |  | 2,003.2 | 2,055.2 |
| Total\tdebt | 1,545.4 |  | 1,264.6 |  | 1,343.9 |  | 5.0 | 4.9 |
| Total\tAllegion\tplc\tshareholders'\tequity\t(deficit) | 25.6 |  | (4.8) |  | (66.1) |  | 1,362.6 | 1,432.8 |
| Earnings\t(loss)\tper\tshare\tattributable\tto\tAllegion\tplc\tordinary\nshareholders: |  |  |  |  |  |  |  |  |
| Basic: |  |  |  |  |  |  |  |  |
| Continuing\toperations | $1.61 |  | $1.94 |  | $0.37 |  | $2.34 | $2.41 |
| Discontinued\toperations | (0.01) |  | (0.12) |  | (0.03) |  | (0.04) | (0.07) |
| Diluted: |  |  |  |  |  |  |  |  |
| Continuing\toperations | $1.59 |  | $1.92 |  | $0.37 |  | $2.34 | $2.41 |
| Discontinued\toperations | — |  | (0.12) |  | (0.03) |  | (0.04) | (0.07) |
| Dividends\tdeclared\tper\tordinary\tshare | $0.40 |  | $0.32 |  | $— |  | $— | $— |

(a) Net	earnings	from	continuing	operations	for	the	year	ended	December	31,	2015	includes	$104.2	million	of	losses	related	to	the	divestitures	of	our	Venezuelan operations	and	our	majority	stake	in	Bocom	Wincent	Technologies	Co.,	Ltd.	("Bocom").

(b) Net	earnings	from	continuing	operations	for	the	year	ended	December	31,	2014	includes	an	after-tax,	non-cash	inventory	impairment	charge	of	$18.7	million and	a	$9.1	million	after-tax,	non-cash	charge	related	to	the	devaluation	of	the	Venezuelan	bolivar.

(c) Net	earnings	from	continuing	operations	for	the	year	ended	December	31,	2013	includes	an	after-tax,	non-cash	goodwill	impairment	charge	of	$131.2	million and	$44.8	million	of	discrete	tax	adjustments	consisting	of	$31.5	million	of	expense	related	to	valuation	allowances	on	deferred	tax	assets	that	are	no	longer expected	to	be	utilized	and	$13.3	million	of	net	tax	expense	resulting	primarily	from	transactions	occurring	to	effect	the	Spin-off.

# Item	7.	MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS	OF	OPERATIONS

The	following	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	contains	forward-looking	statements	that	involve	risks	and uncertainties.	Our	actual	results	may	differ	materially	from	the	results	discussed	in	the	forward-looking	statements.	Factors	that	might	cause	a	difference	include,	but are	not	limited	to,	those	discussed	under	Item	1A.	Risk	Factors	in	this	Annual	Report	on	Form	10-K.	The	following	section	is	qualified	in	its	entirety	by	the	more detailed	information,	including	our	consolidated	financial	statements	and	the	notes	thereto,	which	appears	elsewhere	in	this	Annual	Report.

# Organization

We	are	a	leading	global	provider	of	security	products	and	solutions	operating	in	three	geographic	regions:	Americas;	EMEIA;	and	Asia	Pacific.	We	sell	a	wide	range	of security	products	and	solutions	for	end-users	in	commercial,	institutional	and	residential	markets	worldwide,	including	into	the	education,	healthcare,	government, commercial	office	and	single	and	multi-family	residential	markets.	Our	corporate	brands	include	Schlage,	Von	Duprin,	LCN,	CISA,	Interflex	and	SimonsVoss.

# Trends	and	Economic	Events

Current	market	conditions,	including	challenges	in	international	markets,	continue	to	impact	our	financial	results.	Uneven	global	commercial	new	construction	activity is	negatively	impacting	our	results,	however	U.S.	residential	and	consumer	markets	have	begun	to	improve,	and	we	are	seeing	improvements	in	the	U.S.	new	builder	and replacement	markets.

Based	on	third	party	sources,	we	estimate	that	the	size	of	the	global	markets	we	serve	was	approximately	$30	billion	in	revenue	in	2015	with	compound	annual	growth	of about	2	 to	4%	per	year	over	 the	past	 three	years.	We	believe	that	the	security	products	industry	will	benefit	from	several	global	macroeconomic	and	long-term demographic	 trends,	 which	 include	 heightened	 awareness	 of	 security	 requirements,	 increased	 global	 urbanization	 and	 the	 shift	 to	 a	 digital,	 interconnected environment.We	believe	slowly	improving	institutional	and	cautious	growth	in	commercial	industrial	markets	and	continued	recovery	in	residential	markets	in	the United	States	and	slight	growth	in	Europe	will	offset	unfavorable	foreign	currency	exchange	rates	overseas.	Additionally,	we	expect	growth	in	the	global	electronic product	categories	we	serve	to	outperform	the	security	products	industry	as	end-users	adopt	newer	technologies	in	their	facilities.	Two	of	our	acquisitions	in	2015 (SimonsVoss	Technologies	GmbH	and	Milre	Systek	Co.,	Ltd.)	were	made	to	capitalize	on	this	trend.

The	economic	conditions	discussed	above	and	a	number	of	other	challenges	and	uncertainties	that	could	affect	our	business	are	described	under	"Risk	Factors."

# 2015	Significant	Events

# Acquisitions

During	the	year	ended	December	31,	2015,	we	completed	six	acquisitions	or	investments:

| Business | Month | Primary	business	segment | Description	of	business |  |  |  |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| iDevices | February | Americas |  |  |  |  |  |  |  |  |  |
|  |  |  | accounted\tfor\tusing\tthe\tequity\tmethod. | accounted\tfor\tusing\tthe\tequity\tmethod. |  |  |  |  |  |  |  |
| Zero | April | Americas | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include | Manufactures\tdoor\tand\twindow\tproducts\tfor\tcommercial\tspaces\tand\tproducts\t include |
|  |  |  | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, | sealing\tsystems,\tsuch\tas\tsound\tcontrol,\tfire\tand\tsmoke\tprotection,\tthreshold\tapplications, |
| Brio | May | Asia-Pacific | Designs\t and\t manufactures | sliding | and | folding | door | hardware | for | commercial | and |
|  |  |  | residential\tspaces. |  |  |  |  |  |  |  |  |
| Milre | July | Asia-Pacific | Produces\thigh-quality\tand\tinnovative\telectronic\tdoor\tlocks. | Produces\thigh-quality\tand\tinnovative\telectronic\tdoor\tlocks. | Produces\thigh-quality\tand\tinnovative\telectronic\tdoor\tlocks. | Produces\thigh-quality\tand\tinnovative\telectronic\tdoor\tlocks. | Produces\thigh-quality\tand\tinnovative\telectronic\tdoor\tlocks. |  |  |  |  |
| SimonsVoss | September | EMEIA | Designs\tand\tmanufactures\telectronic\tlocks. | Designs\tand\tmanufactures\telectronic\tlocks. | Designs\tand\tmanufactures\telectronic\tlocks. |  |  |  |  |  |  |
| AXA | September | EMEIA | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide | Manufactures\tand\tsells\ta\tbranded\tportfolio\tof\tportable\tlocks\tand\tlights\tas\twell\tas\ta\twide |

Total	consideration	paid	for	these	acquisitions	was	$511.3	million	(net	of	cash	acquired),	paid	through	cash	on	hand	and	borrowings	under	our	Senior	Secured	Revolving Credit	Facility	("Revolver").

For	the	year	ended	December	31,	2015,	we	incurred	$17.9	million	of	costs	related	to	these	acquisitions.

# Divestitures

In	the	third	quarter	of	2015,	we	sold	our	majority	ownership	in	our	Venezuelan	operation	to	Venezuelan	investors.	As	a	result	of	the	sale,	we	recorded	a	non-cash	charge of	$26.1	million,	which	primarily	represents	cumulative	currency	translation	adjustments	that	were	deferred	in	equity	and	were	reclassified	to	a	loss	in	our	Consolidated Statement	of	Comprehensive	Income.

Prior	to	the	divestiture,	we	recorded	charges	totaling	$7.0	million	(before	tax	and	non-controlling	interest)	in	2015	related	to	the	devaluation	of	the	Venezuelan	bolivar. The	charges	included	remeasurement	of	net	monetary	assets	($2.8	million)	and	a	non-cash	impairment	charge	to	adjust	Venezuelan	inventory	balances	($4.2	million).	As a	result	of	the	divestiture,	we	no	longer	have	foreign	currency	exposures	in	Venezuela.	The	assets	and	liabilities	of	the	Venezuela	operation	were	reclassified	to	assets and	liabilities	held	for	sale	within	the	Consolidated	Balance	Sheets	for	prior	periods.

We	completed	the	sale	of	our	majority	stake	of	Bocom	in	the	fourth	quarter	of	2015.	Bocom	operates	a	security	system	integration	business	exclusively	in	China.	Under the	terms	of	the	transaction,	we	may	receive	up	to	$75	million	based	on	future	performance	and	additional	payments	of	approximately	$8.3	million	related	to	working capital	transferred	with	the	sale.	Additionally,	we	will	retain	15%	of	the	shares	of	Bocom.	We	estimate	the	fair	value	of	the	consideration	to	be	$75.3	million.	We currently	estimate	payment	to	be	completed	in	approximately	2	years;	however	repayment	may	be	delayed	depending	on	the	timing	of	future	cash	collections.	We	may incur	additional	charges	if	it	is	determined	that	future	cash	collections	will	no	longer	occur.

As	a	result	of	the	sale,	the	Company	recorded	a	pre-tax	charge	of	$78.1	million	($82.4	million	after	tax	charges)	during	the	year	ended	December	31,	2015	to	write	the carrying	value	of	Bocom's	assets	and	liabilities	down	to	their	estimated	fair	value	less	costs	to	complete	the	transaction.	Bocom's	assets	and	liabilities	were	reclassified to	assets	and	liabilities	held	for	sale	within	the	Consolidated	Balance	Sheets	for	prior	periods.

# Restructuring	charges

In	the	second	quarter	of	2015,	management	committed	to	a	restructuring	plan	in	Italy	to	improve	our	competitive	position,	ensure	long-term	viability	and	enhance customer	experience.	In	conjunction	with	this	plan,	we	incurred	severance	and	other	restructuring	charges	of	$14.7	million	and	other	charges	of	$0.5	million	for	the	year ended	December	31,	2015.

# Financing	activities

In	September	2015,	we	issued	$300.0	million	of	Senior	Notes	due	2023	(the	"2023	Senior	Notes").	We	used	the	net	proceeds	of	the	offering	to	repay	a	portion	of	the borrowings	under	our	Revolver	that	were	used	to	fund	the	acquisitions	of	SimonsVoss	and	AXA.	The	2023	Senior	Notes	accrue	interest	at	the	rate	of	5.875%	per	annum, payable	semi-annually	on	March	15	and	September	15	of	each	year,	beginning	March	15,	2016.	The	2023	Senior	Notes	mature	on	September	15,	2023.

In	September	2015,	we	completed	the	Second	Amendment	and	Restatement	Agreement	to	our	Credit	Agreement.	The	Second	Amendment	and	Restatement,	among other	things,	reduced	the	applicable	margin	for	LIBOR	rate	borrowings	to	range	from	1.375%	to	1.875%	(from	1.50%	to	2.00%)	and	the	applicable	margin	for	base	rate borrowings	to	range	from	0.375%	to	0.875%	(from	0.50%	to	1.00%)	and	extended	the	maturity	date	of	the	Revolver	and	the	Term	Loan	Facility	due	in	2020	(the	"Term Loan	A	Facility")	from	October	15,	2019	to	October	15,	2020.

# Results	of	Operations	-	For	the	years	ended	December	31

|  |  | %	of |  | %	of |  | %	of |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Dollar\tamounts\tin\tmillions,\texcept\tper\tshare\tdata | 2015 | Revenues | 2014 | Revenues | 2013 | Revenues |
| Net\trevenues | $2,068.1 |  | $2,118.3 |  | $2,069.6 |  |
| Cost\tof\tgoods\tsold | 1,199.0 | 58.0% | 1,264.6 | 59.7% | 1,208.1 | 58.4% |
| Selling\tand\tadministrative\texpenses | 510.5 | 24.7% | 527.4 | 24.9% | 483.1 | 23.3% |
| Asset\timpairment | — | —% | — | —% | 137.6 | 6.6% |
| Operating\tincome | 358.6 | 17.3% | 326.3 | 15.4% | 240.8 | 11.6% |
| Interest\texpense | 52.9 |  | 53.8 |  | 10.2 |  |
| Loss\ton\tdivestitures | 104.2 |  | — |  | — |  |
| Other\texpense\t(income),\tnet | (7.8) |  | 4.6 |  | 7.2 |  |
| Earnings\tbefore\tincome\ttaxes | 209.3 |  | 267.9 |  | 223.4 |  |
| Provision\tfor\tincome\ttaxes | 54.6 |  | 84.2 |  | 175.0 |  |
| Earnings\tfrom\tcontinuing\toperations | 154.7 |  | 183.7 |  | 48.4 |  |
| Discontinued\toperations,\tnet\tof\ttax | (0.4) |  | (11.1) |  | (3.6) |  |
| Net\tearnings | 154.3 |  | 172.6 |  | 44.8 |  |
| Less:\tNet\tearnings\tattributable\tto\nnoncontrolling\tinterests | 0.4 |  | (2.6) |  | 12.5 |  |
| Net\tearnings\tattributable\tto\tAllegion\tplc | $153.9 |  | $175.2 |  | $32.3 |  |
| Diluted\tnet\tearnings\tper\tordinary\tshare |  |  |  |  |  |  |
| attributable\tto\tAllegion\tplc\tordinary |  |  |  |  |  |  |
| shareholders: |  |  |  |  |  |  |
| Continuing\toperations | $1.59 |  | $1.92 |  | $0.37 |  |
| Discontinued\toperations | — |  | (0.12) |  | (0.03) |  |
| Net\tearnings | $1.59 |  | $1.80 |  | $0.34 |  |
| Net\tRevenues |  |  |  |  |  |  |
| Pricing | Pricing | Pricing | Pricing | Pricing | Pricing | 0.6\t% |
| Volume |  |  |  |  |  | 4.8\t% |
| Acquisitions\t/\tDivestitures | Acquisitions\t/\tDivestitures | Acquisitions\t/\tDivestitures | Acquisitions\t/\tDivestitures | Acquisitions\t/\tDivestitures | Acquisitions\t/\tDivestitures | (1.0)% |
| Currency\texchange\trates |  |  |  |  |  | (6.8)% |
| Total | Total | Total | Total | Total | Total | (2.4)% |

# Net	Revenues

Net	revenues	for	the	year	ended	December	31,	2015	decreased	by	2.4%	($50.2	million)	compared	to	the	same	period	in	2014	due	to	the	following:

The	decrease	 in	net	revenues	was	primarily	driven	by	unfavorable	foreign	currency	exchange	rate	movements	due	 to	 the	strengthening	of	 the	US	dollar	against currencies	 in	Canada,	EMEIA	and	Asia-Pacific,	 the	devaluation	of	 the	Venezuelan	bolivar	and	 the	divestitures	of	our	Venezuelan	operations	and	Bocom.	These decreases	were	partially	offset	by	higher	volumes	and	improved	pricing	in	our	Americas	and	EMEIA	segments	and	revenue	from	the	acquisitions	discussed	above.

Net	revenues	for	the	year	ended	December	31,	2014	increased	by	2.4%	($48.7	million)	compared	to	the	same	period	in	2013	due	to	the	following:

| Pricing | 2.2	% |
| :--- | :--- |
| Volume | 2.8\t% |
| Acquisitions | 0.4\t% |
| Impact\tof\tconsolidated\tAsia\tjoint\tventure\torder\tflow\tchange | (2.5)% |
| Currency\texchange\trates | (0.5)% |
| Total | 2.4\t% |

The	increase	in	net	revenues	was	primarily	driven	by	higher	volumes,	improved	pricing	and	the	impact	of	acquisitions	in	2014.	The	pricing	improvements	were	primarily driven	by	our	consolidated	joint	venture	in	Venezuela	and	were	largely	offset	by	material	inflation	and	other	inflation	in	Venezuela.	These	increases	were	partially	offset by	the	impact	of	the	change	in	order	flow	through	our	consolidated	joint	venture	in	Asia	in	2013.

# Cost	of	Goods	Sold

For	the	year	ended	December	31,	2015,	cost	of	goods	sold	as	a	percentage	of	revenue	decreased	to	58.0%	from	59.7%	due	to	the	following:

| Pricing	and	productivity	in	excess	of	inflation | (1.1)% |
| :--- | :--- |
| Acquisitions\t/\tDivestitures | (0.6)% |
| Investment\tspending | 0.3\t% |
| Currency\texchange\trates | 0.2\t% |
| Non-cash\tinventory\timpairment | (1.4)% |
| Restructuring\t/\tSpin-off\tcosts\t/\tacquisition\texpenses | 0.9\t% |
| Total | (1.7)% |

Costs	of	goods	sold	as	a	percentage	of	revenue	for	the	year	ended	December	31,	2015	decreased	primarily	due	to	a	$4.2	million	non-cash	inventory	impairment	charge related	to	the	devaluation	of	the	Venezuelan	bolivar	in	the	current	year	compared	to	a	$33.3	million	charge	in	the	prior	year,	productivity	benefits	in	excess	of	inflation and	the	divestitures	of	our	Venezuelan	operations	and	Bocom.	These	decreases	were	offset	by	increased	restructuring	costs	primarily	in	our	EMEIA	segment,	increased investment	spending,	the	impact	of	the	acquisitions	discussed	above	and	unfavorable	foreign	currency	exchange	rate	movements.

For	the	year	ended	December	31,	2014,	cost	of	goods	sold	as	a	percentage	of	revenue	increased	to	59.7%	from	58.4%	due	to	the	following:

| Productivity	in	excess	of	inflation | (0.6)% |
| :--- | :--- |
| Volume/product\tmix | 0.3\t% |
| Investment\tspending | 0.2\t% |
| Currency\texchange\trates | (0.2)% |
| Non-cash\tinventory\timpairment | 1.6\t% |
| Total | 1.3\t% |

Costs	of	goods	sold	as	a	percentage	of	revenue	for	the	year	ended	December	31,	2014	increased	primarily	due	to	a	$33.3	million	non-cash	inventory	impairment	charge related	to	the	devaluation	of	the	Venezuelan	bolivar,	unfavorable	channel/region	mix	offset	by	volume	and	increased	investments/other	items.	These	increases	were partially	offset	by	productivity	benefits	in	excess	of	inflation	and	unfavorable	foreign	currency	exchange	rate	movements.

# Selling	and	Administrative	Expenses

For	the	year	ended	December	31,	2015,	selling	and	administrative	expenses	as	a	percentage	of	revenue	decreased	to	24.7%	from	24.9%	due	to	the	following:

| Other	inflation	in	excess	of	productivity | 0.1	% |
| :--- | :--- |
| Volume\tleverage | (1.2)% |
| Acquisitions\t/\tDivestitures | 1.0\t% |
| Investment\tspending | 0.7\t% |
| Currency\texchange\trates | 0.2\t% |
| Restructuring\t/\tSpin-off\tcosts\t/\tacquisition\texpenses | (1.0)% |
| Total | (0.2)% |

Selling	and	administrative	expenses	as	a	percentage	of	revenue	for	the	year	ended	December	31,	2015	improved	primarily	due	to	favorable	leverage	due	to	increased volume,	lower	restructuring	costs	compared	to	the	prior	year	and	spin-related	costs	in	the	prior	year	that	did	not	recur	in	the	current	year.	These	decreases	were	offset	by increased	costs	related	to	the	acquisitions	in	the	current	year,	increased	investment	spending,	unfavorable	foreign	currency	exchange	rate	movements	and	other	inflation in	excess	of	productivity.

For	the	year	ended	December	31,	2014,	selling	and	administrative	expenses	as	a	percentage	of	revenue	increased	to	24.9%	from	23.3%	due	to	the	following:

| Restructuring	/	Spin-off	costs | 1.4	% |
| :--- | :--- |
| Investment\tspending | 1.0\t% |
| Impact\tof\tconsolidated\tAsia\tjoint\tventure\torder\tflow\tchange | 0.8\t% |
| Productivity\tin\texcess\tof\tother\tinflation | (0.8)% |
| Volume\tleverage | (0.9)% |
| Currency\texchange\trates | 0.1\t% |
| Total | 1.6\t% |

Selling	and	administrative	expenses	as	a	percentage	of	revenue	for	the	year	ended	December	31,	2014	was	negatively	impacted	by	increased	restructuring	charges, separation	costs	incurred	in	connection	with	the	Spin-off,	increased	investment	spending	and	the	impact	of	the	change	in	the	order	flow	through	our	consolidated	joint venture	in	Asia.	These	increases	were	partially	offset	by	favorable	leverage	due	to	increased	volume	and	productivity	in	excess	of	other	inflation.

# Operating	Income/Margin

Operating	income	for	the	year	ended	December	31,	2015	increased	$32.3	million	from	the	same	period	in	2014	and	operating	margin	increased	to	17.3%	from	15.4%	for the	same	period	in	2014	due	to	the	following:

| in	millions | Operating	Income | Operating	Margin |
| :--- | :--- | :--- |
| December\t31,\t2014 | $326.3 | 15.4\t% |
| Pricing\tand\tproductivity\tin\texcess\tof\tinflation | 22.2 | 1.0\t% |
| Volume/product\tmix | 40.1 | 1.1\t% |
| Non-cash\tinventory\timpairment | 29.1 | 1.4\t% |
| Currency\texchange\trates | (29.8) | (0.4)% |
| Investment\tspending\tand\tother\titems | (19.7) | (0.9)% |
| Acquisitions\t/\tdivestitures | (12.1) | (0.4)% |
| Restructuring\t/\tspin\tcosts\t/\tacquisition\tcosts | 2.5 | 0.1\t% |
| December\t31,\t2015 | $358.6 | 17.3\t% |

Operating	income	and	operating	margin	increased	primarily	due	to	favorable	volume/product	mix	primarily	in	our	Americas	segment,	lower	inventory	impairment charges	in	Venezuela	in	the	current	year,	pricing	improvements	and	productivity	in	excess	of	inflation,	the	impact	of	acquisitions	in	the	current	year	and	Spin-off	related costs	in	the	prior	year	that	did	not	recur	in	the	current	year.	These	increases	were	partially	offset	by	unfavorable	foreign	currency	exchange	rate	movements,	the divestitures	 of	 our	 Venezuelan	 operations	 and	 Bocom,	 increased	 investment	 spending	 primarily	 for	 new	 product	 development	 and	 channel	 development,	 higher restructuring	costs	compared	to	the	prior	year	and	costs	incurred	related	to	acquisitions	in	the	current	year.

Operating	income	for	the	year	ended	December	31,	2014	increased	$85.5	million	and	operating	margin	increased	to	15.4%	from	11.6%	for	the	same	period	in	2013	due to	the	following:

| in	millions | Operating	Income | Operating	Margin |
| :--- | :--- | :--- |
| December\t31,\t2013 | $240.8 | 11.6\t% |
| 2013\tgoodwill\timpairment\tcharge | 137.6 | 6.7\t% |
| 2013\tgain\ton\tsale\tof\tproperty | (21.5) | (0.8)% |
| Pricing\tand\tproductivity\tin\texcess\tof\tinflation | 36.9 | 1.5\t% |
| Volume/product\tmix | 17.1 | 0.5\t% |
| Non-cash\tinventory\timpairment | (33.3) | (1.6)% |
| Restructuring\t/\tspin\tcosts | (24.8) | (1.2)% |
| Investment\tspending\tand\tother\titems | (26.5) | (1.3)% |
| December\t31,\t2014 | $326.3 | 15.4\t% |

Operating	income	and	operating	margin	in	2013	included	a	$137.6	million	goodwill	impairment	charge	as	well	as	a	$21.5	million	gain	on	the	sale	of	property	in	China. Neither	of	these	items	recurred	in	2014.	Operating	income	in	2014	included	a	$33.3	million	non-cash	inventory	impairment	related	to	the	devaluation	of	the	Venezuelan bolivar.	The	remaining	increase	in	operating	income	and	operating	margin	was	primarily	due	to	pricing	improvements	and	productivity	in	excess	of	inflation	and favorable	volume/product	mix.	These	increases	were	partially	offset	by	increased	restructuring	charges	and	non-recurring	separation	costs	incurred	in	connection	with the	Spin-off	and	increased	investments	and	other	items.

# Interest	Expense

Interest	expense	for	the	year	ended	December	31,	2015	decreased	$0.9	million	compared	to	the	same	period	in	2014.	Interest	expense	in	2014	included	a	non-cash	charge of	approximately	$4.5	million	for	the	write-off	of	unamortized	Term	Loan	B	Facility	debt	issuance	costs.	Excluding	this	charge,	interest	expense	increased	primarily	due to	issuing	the	2023	Senior	Notes,	partially	offset	by	the	impact	of	refinancing	the	Senior	Secured	Credit	Facilities	in	the	fourth	quarter	of	2014	and	third	quarter	of	2015.

Interest	expense	for	the	year	ended	December	31,	2014	increased	$43.6	million	compared	with	the	same	period	of	2013	as	a	result	of	the	full	year	impact	resulting	from entering	into	$1.0	billion	Senior	Secured	Credit	Facilities,	issuing	$300	million	of	senior	notes	in	the	fourth	quarter	of	2013	in	conjunction	with	the	Spin-off	a	non-cash charge	of	approximately	$4.5	million	for	the	write-off	of	unamortized	Term	Loan	B	Facility	debt	issuance	costs.

# Other	(income)	expense,	net

The	components	of	Other	expense,	net,	for	the	year	ended	December	31	were	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Interest\tincome | $(1.5) | $(1.1) | $(0.8) |
| Exchange\tloss | 4.9 | 7.6 | 8.0 |
| Other | (11.2) | (1.9) | — |
| Other\t(income)\texpense,\tnet | $(7.8) | $4.6 | $7.2 |

For	 the	 year	 ended	December	31,	2015,	 Other	 (income)	 expense,	 net	 increased	 by	 $12.4	million	 compared	 to	 the	 same	 period	 in	2014.	 During	 the	 year	 ended December	31,	2015	we	recorded	gains	from	the	sale	of	marketable	securities	of	$11.0	million,	which	is	included	within	Other	in	the	table	above.	These	gains	were partially	offset	by	a	$2.8	million	loss	related	to	the	write	down	of	our	Venezuelan	bolivar-denominated	net	monetary	assets	to	reflect	the	SIMADI	rate	recorded	in	the first	quarter	of	2015.	This

loss	is	within	Exchange	loss	in	the	table	above.	The	remaining	decrease	in	Other	(income)	expense,	net	was	primarily	due	to	unfavorable	currency	impacts.

For	the	year	ended	December	31,	2014,	Other	expense,	net	decreased	by	$2.6	million	compared	with	the	same	period	in	2013.	In	the	fourth	quarter	of	2014,	we	recorded a	$12.1	million	loss	related	to	write	down	our	Venezuelan	bolivar-denominated	net	monetary	assets.	This	loss	is	reflected	as	Exchange	loss	in	the	table	above.	In	the prior	year,	we	recorded	a	$6.2	million	loss	resulting	from	the	official	devaluation	of	the	bolivar	from	4.3	bolivars	per	U.S.	dollar	to	6.3	bolivars	per	U.S.	dollar.	The remaining	decrease	in	Other	expense,	net	for	the	year	ended	December	31,	2014	was	primarily	due	to	other	foreign	currency	gains	in	2014.

# Provision	for	Income	Taxes

For	the	year	ended	December	31,	2015,	our	effective	tax	rate	decreased	to	26.1%	from	31.4%	for	the	year	ended	December	31,	2014.	The	effective	income	tax	rate	for the	year	ended	December	31,	2015	was	negatively	impacted	by	$111.3	million	($115.0	million	after-tax)	of	charges	related	to	the	divestiture	of	Bocom,	the	divestiture	of our	business	in	Venezuela	and	the	devaluation	of	the	Venezuelan	bolivar.	Excluding	these	charges,	the	effective	tax	rate	for	the	year	ended	December	31,	2015	decreased primarily	due	to	favorable	changes	in	the	mix	of	income	earned	in	lower	rate	jurisdictions,	the	favorable	resolution	of	uncertain	tax	positions	in	2015	and	the	continued execution	of	our	tax	strategies.

For	the	year	ended	December	31,	2014,	our	effective	tax	rate	was	31.4%	compared	to	78.3%	for	the	year	ended	December	31,	2013.	The	effective	tax	rate	for	the	year ended	December	31,	2013	included	the	impact	of	a	non-cash	pre-tax	goodwill	impairment	charge	of	$137.6	million	($131.2	million	after-tax).	Additionally,	the	effective tax	rate	included	$44.8	million	of	discrete	tax	adjustments	consisting	of	$31.5	million	of	expense	related	to	valuation	allowances	on	deferred	tax	assets	that	are	no longer	expected	to	be	utilized	and	$13.3	million	of	net	tax	expense	resulting	primarily	from	transactions	occurring	to	effect	the	Spin-off.	Excluding	these	items,	the effective	tax	rate	was	37.8%.	The	decrease	in	our	effective	tax	rate	for	the	year	ended	December	31,	2014	compared	to	2013	was	primarily	due	to	favorable	changes	in the	mix	of	pre-tax	income	earned	in	lower	rate	jurisdictions	as	well	as	favorable	discrete	tax	benefits.

Our	2013	tax	rate	was	above	the	U.S.	statutory	rate	of	35.0%	primarily	due	to	U.S.	state	and	local	taxes	and	net	increases	in	our	liability	for	unrecognized	tax	benefits partially	offset	by	earnings	in	non-U.S.	jurisdictions,	which,	in	aggregate,	had	a	lower	effective	rate.

# Discontinued	Operations

Discontinued	operations	recognized	a	loss	of	$0.4	million,	$11.1	million	and	$3.6	million	for	the	years	ended	December	31,	2015,	2014	and	2013,	respectively.	These losses	were	mainly	related	to	the	sale	of	the	United	Kingdom	(UK)	Door	Business	in	the	third	quarter	of	2014	in	addition	to	non-cancelable	lease	expense	and	other miscellaneous	expenses	from	previously	sold	businesses.

# Review	of	Business	Segments

We	operate	in	and	report	financial	results	for	three	segments:	Americas,	EMEIA,	and	Asia	Pacific.	These	segments	represent	the	level	at	which	our	chief	operating decision	maker	reviews	company	financial	performance	and	makes	operating	decisions.

Segment	operating	income	is	the	measure	of	profit	and	loss	that	our	chief	operating	decision	maker	uses	to	evaluate	the	financial	performance	of	the	business	and	as	the basis	for	resource	allocation,	performance	reviews,	and	compensation.	For	these	reasons,	we	believe	that	Segment	operating	income	represents	the	most	relevant measure	of	segment	profit	and	loss.	Our	chief	operating	decision	maker	may	exclude	certain	charges	or	gains,	such	as	corporate	charges	and	other	special	charges,	from Operating	income	to	arrive	at	a	Segment	operating	income	that	is	a	more	meaningful	measure	of	profit	and	loss	upon	which	to	base	our	operating	decisions.	We	define Segment	operating	margin	as	Segment	operating	income	as	a	percentage	of	Net	revenues.

The	segment	discussions	that	follow	describe	the	significant	factors	contributing	to	the	changes	in	results	for	each	segment	included	in	continuing	operations.

# Segment	Results	of	Operations	-	For	the	years	ended	December	31

| in	millions | 2015 | 2014 | %	Change | 2014 | 2013 | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\trevenues |  |  |  |  |  |  |
| Americas | $1,558.4 | $1,560.0 | (0.1)% | $1,560.0 | $1,514.7 | 3.0\t% |
| EMEIA | 386.3 | 393.4 | (1.8)% | 393.4 | 401.4 | (2.0)% |
| Asia\tPacific | 123.4 | 164.9 | (25.2)% | 164.9 | 153.5 | 7.4\t% |
| Total | $2,068.1 | $2,118.3 |  | $2,118.3 | $2,069.6 |  |
| Segment\toperating\tincome\t(loss) |  |  |  |  |  |  |
| Americas | $418.0 | $387.3 | 7.9\t% | $387.3 | $392.1 | (1.2)% |
| EMEIA | 8.6 | 4.9 | 75.5\t% | 4.9 | (0.3) | (1,733.3)% |
| Asia\tPacific | (3.4) | 2.3 | (247.8)% | 2.3 | 25.4 | (90.9)% |
| Total | $423.2 | $394.5 |  | $394.5 | $417.2 |  |
| Segment\toperating\tmargin |  |  |  |  |  |  |
| Americas | 26.8\t% | 24.8% |  | 24.8% | 25.9\t% |  |
| EMEIA | 2.2\t% | 1.2% |  | 1.2% | (0.1)% |  |
| Asia\tPacific | (2.8)% | 1.4% |  | 1.4% | 16.5\t% |  |

# Americas

Our	Americas	segment	is	a	leading	provider	of	security	products	and	solutions	in	approximately	30	countries	throughout	North	America	and	South	America.	The segment	sells	a	broad	range	of	products	and	solutions	including,	locks,	locksets,	key	systems,	door	closers,	exit	devices,	doors	and	door	frames,	electronic	product	and access	control	systems	to	end-users	in	commercial,	institutional	and	residential	facilities,	including	into	the	education,	healthcare,	government,	commercial	office	and single	and	multi-family	residential	markets.	This	segment's	primary	brands	are	Schlage,	Von	Duprin	and	LCN.

The	decrease	in	revenues	was	primarily	due	to	unfavorable	foreign	currency	exchange	rate	movements	and	the	divestiture	of	our	Venezuelan	operation,	partially	offset by	higher	volumes,	improved	pricing	and	revenue	from	acquisitions	in	the	current	year.	Net	revenues	from	non-residential	products	for	the	year	ended	December	31, 2015	increased	mid-single	digits	compared	to	the	same	period	in	the	prior	year	due	to	new	market	growth,	product	launches	and	channel	initiatives.	Net	revenues	from residential	products	for	the	year	ended	December	31,	2015	increased	upper	single	digits	compared	to	the	same	period	in	the	prior	year	primarily	due	to	domestic	market growth.

Segment	operating	income	for	the	year	ended	December	31,	2015	increased	$30.7	million	and	segment	operating	margin	increased	to	26.8%	from	24.8%	compared	to the	same	period	in	2014	due	to	the	following:

| in	millions | Operating	Income | Operating	Margin |
| :--- | :--- | :--- |
| December\t31,\t2014 | $387.3 | 24.8\t% |
| Pricing\tand\tproductivity\tin\texcess\tof\tinflation | 9.1 | 0.4\t% |
| Volume/product\tmix | 40.8 | 0.9\t% |
| Non-cash\tinventory\timpairment | 29.1 | 1.9\t% |
| Currency\texchange\trates | (21.4) | (0.1)% |
| Investment\tspending | (13.0) | (0.8)% |
| Acquisitions\t/\tdivestitures | (13.8) | (0.3)% |
| Restructuring\t/\tSpin-off\tcosts\t/\tacquisition\texpenses | (0.1) | —\t% |
| December\t31,\t2015 | $418.0 | 26.8\t% |

The	increase	was	primarily	due	to	favorable	volume/product	mix,	lower	inventory	impairment	charges	in	Venezuela	in	the	current	year	and	pricing	improvements	and productivity	in	excess	of	inflation.	These	increases	were	partially	offset	by	unfavorable	foreign	currency	exchange	rate	movements,	the	divestiture	of	our	Venezuelan operations	and	increased	investment	spending	primarily	for	new	product	development	and	channel	development.

Net	revenues	for	the	year	ended	December	31,	2014	increased	by	3.0%	($45.3	million)	compared	to	the	same	period	in	2013	due	to	the	following:

| Pricing | 2.7	% |
| :--- | :--- |
| Volume | 3.5\t% |
| Acquisitions | 0.8\t% |
| Impact\tof\tconsolidated\tjoint\tventure\torder\tflow\tchange | (3.4)% |
| Currency\texchange\trates/other | (0.6)% |
| Total | 3.0\t% |

The	increase	in	revenues	was	primarily	due	to	increased	residential	and	commercial	volumes	as	well	as	new	products,	acquisitions	in	2014	and	price	increases	in Venezuela,	partially	offset	by	unfavorable	foreign	currency	exchange	rate	movements	and	the	impact	of	the	change	in	order	flow	through	our	consolidated	joint	venture in	Asia	in	2013.

Segment	operating	income	for	the	year	ended	December	31,	2014	decreased	$4.8	million	and	segment	operating	margin	decreased	to	24.8%	from	25.9%	compared	to	the same	period	in	2013	due	to	the	following:

| in	millions | Operating	Income | Operating	Margin |
| :--- | :--- | :--- |
| December\t31,\t2013 | $392.1 | 25.9\t% |
| Impact\tof\tconsolidated\tjoint\tventure\torder\tflow\tchange | — | 0.9\t% |
| Pricing\tand\tproductivity\tin\texcess\tof\tinflation | 23.2 | 0.8\t% |
| Volume/product\tmix | 17.0 | (0.1)% |
| Non-cash\tinventory\timpairment | (33.3) | (2.1)% |
| Currency\texchange\trates | 1.4 | 0.3\t% |
| Investment\tspending | (13.1) | (0.9)% |
| December\t31,\t2014 | $387.3 | 24.8\t% |

The	decrease	was	primarily	due	to	the	$33.3	million	non-cash	inventory	impairment	charge	related	to	the	devaluation	of	the	Venezuelan	bolivar	,	increased	investment spending	primarily	for	new	product	development	and	the	impact	of	the	change	in	order	flow	through	our	consolidated	joint	venture	in	Asia.	These	decreases	were partially	offset	by	pricing	improvements	and	productivity	in	excess	of	inflation,	favorable	volume/product	mix	and	favorable	foreign	currency	exchange	rate	movements.

# EMEIA

Our	EMEIA	segment	provides	security	products	and	solutions	in	approximately	85	countries	throughout	Europe,	the	Middle	East,	India	and	Africa.	The	segment	offers end-users	a	broad	range	of	products,	services	and	solutions	including,	locks,	locksets,	key	systems,	door	closers,	exit	devices,	doors	and	door	frames,	electronic	product and	access	control	systems,	as	well	as	time	and	attendance	and	workforce	productivity	solutions.	This	segment's	primary	brands	are	Bricard,	CISA,	Interflex	and SimonsVoss.	This	segment	also	resells	Schlage,	Von	Duprin	and	LCN	products,	primarily	in	the	Middle	East.

Effective	September	1,	2014	we	sold	our	United	Kingdom	(UK)	Door	businesses	to	an	unrelated	third	party.	Historical	results	of	the	component	have	been	reclassified to	discontinued	operations	for	all	periods	presented.

During	the	year	ended	December	31,	2013,	we	recorded	a	non-cash	pre-tax	goodwill	impairment	charge	of	$137.6	million,	which	has	been	excluded	from	these	results.

Net	revenues	for	the	year	ended	December	31,	2015	decreased	by	1.8%	($7.1	million)	compared	to	the	same	period	in	2014	due	to	the	following:

| Pricing | 1.1	% |
| :--- | :--- |
| Volume | 0.3\t% |
| Acquisitions\t/\tDivestitures | 11.8\t% |
| Currency\texchange\trates | (15.0)% |
| Total | (1.8)% |

The	decrease	in	revenues	was	primarily	due	to	unfavorable	foreign	currency	exchange	rate	movements,	partially	offset	by	revenue	from	acquisitions	in	the	current	year, improved	pricing	and	slightly	higher	volumes.

Segment	operating	income	for	the	year	ended	December	31,	2015	increased	$3.7	million	and	operating	margin	increased	to	2.2%	from	1.2%	compared	to	the	same	period in	2014	due	to	the	following:

| in	millions | Operating	Income | Operating	Margin |
| :--- | :--- | :--- |
| December\t31,\t2014 | $4.9 | 1.2\t% |
| Pricing\tand\tproductivity\tin\texcess\tof\tinflation | 16.3 | 4.5\t% |
| Volume/product\tmix | (0.7) | (0.2)% |
| Currency\texchange\trates | (6.2) | (1.6)% |
| Investment\tspending\tand\tother\titems | (2.2) | (0.5)% |
| Acquisitions\t/\tdivestitures | 7.1 | 1.5\t% |
| Restructuring\t/\tSpin-off\tcosts\t/\tacquisition\texpenses | (10.6) | (2.7)% |
| December\t31,\t2015 | $8.6 | 2.2\t% |

The	increase	was	primarily	due	to	pricing	improvements	and	productivity	in	excess	of	inflation	and	the	impact	of	acquisitions	in	the	current	year.	These	increases	were partially	offset	by	unfavorable	foreign	currency	exchange	rate	movements,	increased	investment	spending,	unfavorable	volume/product	mix	and	the	year-over-year change	in	restructuring	charges,	acquisition	expenses	and	separation	costs	incurred	in	connection	with	the	Spin-off.

# Net	revenue

Net	revenues	for	the	year	ended	December	31,	2014	decreased	by	2.0%	($8.0	million)	compared	to	the	same	period	in	2013	due	to	following:

| Volume/product	mix | (1.3)% |
| :--- | :--- |
| Pricing | 1.0\t% |
| Currency\texchange\trates | 0.1\t% |
| Restructuring\tactions | (1.8)% |
| Total | (2.0)% |

The	decrease	in	revenues	was	primarily	due	to	decreased	volumes	due	to	economic	weakness	in	certain	markets	as	well	as	lower	revenue	as	a	result	of	managements' actions	to	exit	unprofitable	businesses.	These	decreases	were	partially	offset	by	improved	pricing	and	favorable	foreign	currency	exchange	rate	movements.

Segment	operating	income	for	the	year	ended	December	31,	2014	increased	$5.2	million	and	operating	margin	increased	to	1.2%	from	(0.1)%	compared	to	the	same period	in	2013	due	to	the	following:

| in	millions | Operating	Income | Operating	Margin |
| :--- | :--- | :--- |
| December\t31,\t2013 | $(0.3) | (0.1)% |
| Pricing\tand\tproductivity\tin\texcess\tof\tinflation | 14.4 | 3.6\t% |
| Volume/product\tmix | (3.7) | (0.9)% |
| Investment\tspending | (3.0) | (0.8)% |
| Currency\texchange\trates | 0.5 | 0.2\t% |
| Restructuring\t/\tSpin-off\tcosts | (3.0) | (0.8)% |
| December\t31,\t2014 | $4.9 | 1.2\t% |

The	increase	was	primarily	due	to	pricing	improvements	and	productivity	in	excess	of	inflation	and	favorable	foreign	currency	exchange	rate	movements	and	other items.	These	increases	were	partially	offset	by	unfavorable	volume/product	mix,	increased	investment	spending	and	the	year-over-year	change	in	restructuring	charges and	separation	costs	incurred	in	connection	with	the	Spin-off.

# Asia	Pacific

Our	Asia	Pacific	segment	provides	security	products	and	solutions	in	approximately	14	countries	throughout	the	Asia	Pacific	region.	The	segment	offers	end-users	a broad	range	of	products,	services	and	solutions	including,	locks,	locksets,	key	systems,	door	closers,	exit	devices,	electronic	product	and	access	control	systems.	This segment's	primary	brands	are	Milre,	Schlage,	CISA,	Von	Duprin	and	LCN.

| Pricing | 0.2	% |
| :--- | :--- |
| Volume | (1.5)% |
| Acquisitions\t/\tDivestitures | (19.6)% |
| Currency\texchange\trates | (4.3)% |
| Total | (25.2)% |

The	decrease	in	revenues	was	primarily	due	to	the	divestiture	of	Bocom,	unfavorable	foreign	currency	exchange	rate	movements,	and	lower	volume	partially	offset	by improved	pricing	and	revenue	from	acquisitions.	Bocom	historically	generated	the	majority	of	its	revenue	in	the	fourth	quarter	and,	as	a	result	of	the	sale	in	November 2015,	revenue	was	lower	by	approximately	$51.3	million	compared	to	2014.	This	decrease	is	reflected	in	the	Acquisitions	/	Divestitures	line	above.	Bocom	also experienced	a	decline	in	revenue	prior	to	the	sale	compared	to	the	prior	year,	which	is	reflected	in	the	Volume	line	above.	The	decline	in	volume	due	to	Bocom	was partially	offset	by	increased	volume	in	our	remaining	business.

Segment	operating	income	for	the	year	ended	December	31,	2015	decreased	$5.7	million	and	segment	operating	margin	decreased	to	(2.8)%	from	1.4%	compared	with the	same	period	in	2014	due	to	the	following:

| in	millions | Operating	Income | Operating	Margin |
| :--- | :--- | :--- |
| December\t31,\t2014 | $2.3 | 1.4\t% |
| Pricing\tand\tproductivity\tin\texcess\tof\tinflation | 2.4 | 1.2\t% |
| Adjustment\tto\tallowance\tfor\tdoubtful\taccounts | 1.2 | 0.7\t% |
| Currency\texchange\trates | (2.2) | (1.3)% |
| Investment\tspending\tand\tother\titems | (0.2) | (0.1)% |
| Acquisitions\t/\tDivestitures | (5.5) | (3.8)% |
| Restructuring\t/\tSpin-off\tcosts\t/\tacquisition\texpenses | (1.4) | (0.9)% |
| December\t31,\t2015 | $(3.4) | (2.8)% |

The	decrease	was	primarily	related	to	the	divestiture	of	Bocom,	unfavorable	foreign	currency	exchange	rate	movements	and	the	year-over-year	change	in	restructuring charges,	acquisition	expenses	and	separation	costs	incurred	in	connection	with	the	Spin-off	.	These	decreases	were	partially	offset	by	the	impact	of	the	acquisitions discussed	above,	pricing	improvements	and	productivity	in	excess	of	inflation.	Additionally,	operating	income	in	the	prior	year	included	a	$2.5	million	charge	to increase	the	allowance	for	doubtful	accounts	compared	to	a	$1.3	million	charge	in	the	current	year.

Net	revenues	for	the	year	ended	December	31,	2014	increased	by	7.4%,	($11.4	million)	compared	with	the	same	period	of	2013,	which	primarily	resulted	from	the following:

| Pricing | 5.6	% |
| :--- | :--- |
| Volume | 0.3\t% |
| Acquisitions | 2.8\t% |
| Currency\texchange\trates | (1.3)% |
| Total | 7.4\t% |

The	increase	in	revenues	was	mainly	due	to	improved	pricing,	revenue	from	acquisitions	in	2014	and	favorable	volume,	partially	offset	by	unfavorable	foreign	currency exchange	rate	movements.

| in	millions | Operating	Income | Operating	Margin |
| :--- | :--- | :--- |
| December\t31,\t2013 | $25.4 | 16.5\t% |
| 2013\tnon-recurring\titems | (25.4) | (16.3)% |
| 2014\tincrease\tto\tallowance\tfor\tdoubtful\taccounts | (2.5) | (1.6)% |
| Investment\tspending\tand\tSpin-off\tcosts | (2.2) | (1.4)% |
| Currency\texchange\trates | (0.7) | (0.5)% |
| Volume/product\tmix | 3.7 | 2.2\t% |
| Pricing\tand\tproductivity\tin\texcess\tof\tinflation | 2.6 | 1.7\t% |
| Acquisitions | 1.4 | 0.8\t% |
| December\t31,\t2014 | $2.3 | 1.4\t% |

The	decrease	was	primarily	related	to	the	$25.4	million	of	items	in	2013	that	did	not	recur	in	2014	including	a	$21.5	million	gain	on	the	sale	of	a	property	in	China,	a $1.9	million	one-time	benefit	related	to	the	closure	of	our	Asia	joint	venture	manufacturing	facility,	and	$2.0	million	of	non-recurring	favorable	items	in	2013.	The decrease	was	also	due	to	a	$2.5	million	charge	to	increase	the	allowance	for	doubtful	accounts	in	the	second	quarter	of	2014,	increased	investment	spending,	unfavorable foreign	currency	exchange	rate	movements	and	increased	separation	costs	incurred	in	connection	with	the	Spin-off.	These	decreases	were	partially	offset	by	favorable volume/product	mix,	pricing	improvements	and	productivity	in	excess	of	inflation	and	revenue	from	acquisitions	in	2014.

# Liquidity	and	Capital	Resources

# Sources	and	uses	of	liquidity

Our	primary	source	of	liquidity	is	cash	provided	by	operating	activities.	Cash	provided	by	operating	activities	is	used	to	invest	in	new	product	development,	fund	capital expenditures	and	fund	working	capital	requirements	and	 is	expected	 to	be	adequate	 to	service	any	future	debt,	pay	any	declared	dividends	and	potentially	fund acquisitions	and	share	repurchases.	Our	ability	to	fund	these	capital	needs	depends	on	our	ongoing	ability	to	generate	cash	provided	by	operating	activities,	and	to	access our	borrowing	facilities	(including	unused	availability	under	our	Revolver)	and	capital	markets.	We	believe	that	our	future	cash	provided	by	operating	activities, availability	under	our	Revolver	and	access	to	funds	on	hand	and	capital	markets,	will	provide	adequate	resources	to	fund	our	operating	and	financing	needs.

The	following	table	reflects	the	major	categories	of	cash	flows	for	the	years	ended	December	31.	For	additional	details,	please	see	the	Consolidated	Statements	of	Cash Flows	in	the	Consolidated	Financial	Statements.

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Cash\tprovided\tby\tcontinuing\toperating\tactivities | $257.4 | $259.0 | $229.3 |
| Cash\tused\tin\tinvesting\tactivities | (533.8) | (34.8) | (18.7) |
| Cash\tprovided\tby\t(used\tin)\tfinancing\tactivities | 195.0 | (150.0) | (292.4) |

# Operating	activities

Net	cash	provided	by	continuing	operating	activities	for	the	year	ended	December	31,	2015	decreased	$1.6	million	compared	to	the	same	period	in	2014.	Operating	cash flows	for	2015	reflect	lower	earnings	from	continuing	operations	compared	to	the	same	period	in	the	prior	year	as	well	as	increased	use	of	working	capital.

Net	cash	provided	by	continuing	operating	activities	for	the	year	ended	December	31,	2014	increased	$29.7	million	compared	to	the	same	period	in	2013.	Operating	cash flows	for	2014	reflect	higher	earnings	from	continuing	operations	compared	to	the	same	period	in	2013	as	well	as	lower	working	capital.

# Investing	activities

Net	cash	used	in	investing	activities	for	the	year	ended	December	31,	2015	increased	$499.0	million	compared	to	the	same	period	in	the	prior	year.	During	the	year ended	December	31,	2015,	we	paid	$511.3	million	of	cash	for	the	acquisitions	described	above.	This	was	offset	by	a	decrease	in	capital	expenditures	and	cash	received from	the	sale	of	marketable	securities.

Net	cash	used	in	investing	activities	for	the	year	ended	December	31,	2014	 increased	$16.1	million	compared	to	the	same	period	in	2013.	Cash	used	in	investing activities	for	the	year	ended	December	31,	2014	included	$51.5	million	of	capital	expenditures,	an	increase	of	$31.3	million	from	2013,	as	we	invested	in	information technology	systems,	new	product	development	and	manufacturing	plant	investments	to	support	our	growth	initiatives.	In	addition,	we	spent	$25.2	million	of	cash	for acquisitions	in	2014.

Net	cash	provided	by	financing	activities	for	the	year	ended	December	31,	2015	increased	$345.0	million	compared	to	the	same	period	in	the	prior	year.	We	borrowed $400.0	million	under	the	Revolver	to	partially	finance	the	purchases	of	Simons	Voss	and	AXA	in	the	third	quarter	of	2015.	Net	proceeds	from	the	issuance	of	our	$300.0 million	2023	Senior	Notes	were	used	to	repay	a	portion	of	the	borrowings	under	the	Revolver	and	the	remaining	borrowings	were	repaid	with	cash	on-hand	by December	31,	2015.	Net	repayments	of	other	debt	totaled	$21.7	million	for	the	year	ended	December	31,	2015	primarily	associated	with	required	amortization	payments of	our	Term	Loan	A	facility.	Cash	used	in	other	financing	activities	increased	$11.3	million	for	the	year	ended	 December	31,	2015	compared	to	the	same	period	in	the prior	year	primarily	due	to	higher	dividend	payments	and	higher	debt	issuance	costs	partially	offset	by	lower	repurchases	of	our	ordinary	shares.

Net	cash	used	in	financing	activities	for	the	year	ended	December	31,	2014	decreased	$142.4	million	compared	to	the	same	period	in	2013.	In	the	2013,	$1,300.0	million of	proceeds	from	the	issuance	of	the	Senior	Notes	and	the	Senior	Secured	Credit	facilities	as	well	as	additional	cash	generated	throughout	the	year	were	distributed	to Ingersoll	Rand	in	connection	with	the	Spin-off,	net	of	debt	issuance	costs.	In	2014,	we	made	$37.2	million,	net	repayments	on	the	Senior	Secured	Credit	Facilities	and $40.8	million	of	repayments	of	other	borrowings,	we	paid	$30.0	million	of	dividends	to	our	ordinary	shareholders	and	we	repurchased	$50.3	million	of	our	ordinary shares.

# Capitalization

Borrowings	at	December	31	consisted	of	the	following:

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Term\tLoan\tA\tFacility | $926.7 | \t $962.8 |
| 5.75%\tSenior\tNotes\tdue\t2021 | 300.0 | 300.0 |
| 5.875%\tSenior\tNotes\tdue\t2023 | 300.0 | — |
| Other\tdebt,\tincluding\tcapital\tleases,\tmaturing\tin\tvarious\tamounts\tthrough\t2016 | 18.7 | 1.8 |
| Total\tdebt | $1,545.4 | \t $1,264.6 |
| Less\tcurrent\tportion\tof\tlong\tterm\tdebt | 65.6 | 49.6 |
| Total\tlong-term\tdebt | $1,479.8 | \t $1,215.0 |

We	have	a	5-year,	$500.0	million	revolving	credit	facility	maturing	on	October	15,	2020.	During	August	2015,	we	borrowed	$400.0	million	under	the	Revolver	and repaid	the	borrowed	amount	in	full	as	of	the	year	ended	December	31,	2015.	At	December	31,	2015	and	2014,	we	did	not	have	any	borrowings	outstanding	under	the Revolver.	We	had	$26.6	million	and	$28.5	million	of	letters	of	credit	outstanding	at	December	31,	2015	 and	2014,	respectively,	which	reduce	availability	under	the Revolver.

We	are	required	to	comply	with	certain	covenants	under	our	Senior	Secured	Credit	Facility.	We	are	required	to	comply	with	a	maximum	leverage	ratio	of	4.00	to	1.00 based	on	a	ratio	of	total	consolidated	indebtedness,	net	of	unrestricted	cash	up	to	$150	million,	to	consolidated	EBITDA.	Additionally,	we	are	required	to	have	a minimum	interest	expense	coverage	ratio	of	4.00	to	1.00	based	on	a	ratio	of	consolidated	EBITDA	to	consolidated	interest	expense,	net	of	interest	income.	As	of December	31,	2015,	we	were	in	compliance	with	these	covenants.	The	indentures	to	our	senior	notes	and	the	senior	secured	credit	facilities	contain	affirmative	and negative	covenants	that,	among	other	things,	limit	or	restrict	our	ability	to	enter	into	certain	transactions.	For	further	details	on	these	covenants,	see	Note	10	to	the Consolidated	Financial	Statements.

The	majority	of	our	earnings	are	considered	to	be	permanently	reinvested	in	jurisdictions	where	we	have	made,	and	intend	to	continue	to	make,	substantial	investments to	support	the	ongoing	development	and	growth	of	our	global	operations.	Accordingly,	applicable	income	taxes	have	not	been	accrued	on	the	portion	of	our	earnings that	is	considered	to	be	permanently	reinvested.		At	December	31,	2015,	we	had	cash	and	cash	equivalents	of	$199.7	million.	Approximately	62%	of	our	cash	and	cash equivalents	was	located	outside	the	U.S.

# Pension	Plans

Our	investment	objective	in	managing	defined	benefit	plan	assets	is	to	ensure	that	all	present	and	future	benefit	obligations	are	met	as	they	come	due.	We	seek	to	achieve this	goal	while	trying	to	mitigate	volatility	in	plan	funded	status,	contribution	and	expense	by	better	matching	the	characteristics	of	the	plan	assets	to	that	of	the	plan liabilities.	Global	asset	allocation	decisions	are	based	on	a	dynamic	approach	whereby	a	plan's	allocation	to	fixed	income	assets	as	the	funded	status	increases.	We monitor	plan	funded	status	and	asset	allocation	regularly	in	addition	to	investment	manager	performance.

We	monitor	the	impact	of	market	conditions	on	our	defined	benefit	plans	on	a	regular	basis.	In	December	31,	2015,	the	funded	status	of	our	qualified	pension	plan	for U.S.	employees	declined	to	70.9%	from	77.6%	at	December	31,	2014	primarily	due	to	benefit	accruals	in	excess	of	contributions.	The	funded	status	for	our	non-U.S. pension	plans	decreased	to	91.6%	at	December	31,	2015	from	95.8%	at	December	31,	2014.	The	decrease	in	funded	status	for	the	non-U.S.	was	primarily	due	to	benefit accruals	in	excess	of	contributions.	Funded	status	for	all	of	our	pension	plans	at	December	31,	2015	decreased	to	81.7%	from	87.2%	at	December	31,	2014.	For	further details	on	pension	plan	activity,	see	Note	12	to	the	Consolidated	Financial	Statements.

# Contractual	Obligations

The	following	table	summarizes	our	contractual	cash	obligations	by	required	payment	periods,	in	millions:

|  | Less	than | 1	-	3 | 3	-	5 | More	than |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 1\tyear | years | years | 5\tyears | Total |
| Short-term\tdebt | $65.6 | $— | $— | $— | $65.6 |
| Long-term\tdebt | — | 93.8 | 786.0 | 600.0 | 1,479.8 |
| Interest\tpayments\ton\tlong-term\tdebt | 56.3 | 106.2 | 95.3 | 61.4 | 319.2 |
| Purchase\tobligations | 125.1 | — | — | — | 125.1 |
| Operating\tleases | 18.7 | 22.8 | 10.8 | 2.8 | 55.1 |
| Total\tcontractual\tcash\tobligations | $265.7 | $222.8 | $892.1 | $664.2 | $2,044.8 |

Future	expected	obligations	under	our	pension	and	postretirement	benefit	plans,	income	taxes,	environmental	and	product	liability	matters	have	not	been	included	in	the contractual	cash	obligations	table	above.

# Pensions

At	December	31,	2015,	we	had	net	pension	liabilities	of	$119.3	million,	which	consist	of	pension	plan	assets	of	$533.1	million	and	pension	plan	obligations	of	$652.4 million.	It	is	our	objective	to	contribute	to	the	pension	plans	to	ensure	adequate	funds	are	available	in	the	plans	to	make	benefit	payments	to	plan	participants	and beneficiaries	when	required.	We	currently	project	that	we	will	contribute	approximately	$10.8	million	to	our	plans	worldwide	in	2016.	Because	the	timing	and	amounts of	long-term	funding	requirements	for	pension	obligations	are	uncertain,	they	have	been	excluded	from	the	preceding	table.	See	Note	12	to	the	Consolidated	Financial Statements	for	additional	information.

# Postretirement	Benefits	Other	than	Pensions

At	December	31,	2015,	we	had	postretirement	benefit	obligations	of	$12.9	million.	We	fund	postretirement	benefit	costs	principally	on	a	pay-as-you-go	basis	as	medical costs	are	incurred	by	covered	retiree	populations.	Benefit	payments,	which	are	net	of	expected	plan	participant	contributions	and	Medicare	Part	D	subsidy,	are	expected to	be	approximately	$1.1	million	in	2016.	Because	the	timing	and	amounts	of	long-term	funding	requirements	for	postretirement	obligations	are	uncertain,	they	have been	excluded	from	the	preceding	table.	See	Note	12	to	the	Consolidated	Financial	Statements	for	additional	information.

# Income	Taxes

At	December	31,	2015,	we	have	total	unrecognized	tax	benefits	for	uncertain	tax	positions	of	$23.8	million	and	$5.3	million	of	related	accrued	interest	and	penalties,	net of	tax.	The	liability	has	been	excluded	from	the	preceding	table	as	we	are	unable	to	reasonably	estimate	the	amount	and	period	in	which	these	liabilities	might	be	paid. See	Note	18	to	the	Consolidated	Financial	Statements	for	additional	information	regarding	matters	relating	to	income	taxes,	including	unrecognized	tax	benefits	and	tax authority	disputes.

# Contingent	Liabilities

We	are	involved	in	various	litigations,	claims	and	administrative	proceedings,	including	those	related	to	environmental,	asbestos-related,	and	product	liability	matters. We	believe	that	these	liabilities	are	subject	to	the	uncertainties	inherent	in	estimating	future	costs	for	contingent	liabilities,	and	will	likely	be	resolved	over	an	extended period	of	time.	Because	the	timing	and	amounts	of	potential	future	cash	flows	are	uncertain,	they	have	been	excluded	from	the	preceding	table.	See	Note	22	to	the Consolidated	Financial	Statements	for	additional	information.

# Critical	Accounting	Policies

Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	are	based	upon	our	Consolidated	Financial	Statements,	which	have	been prepared	in	accordance	with	GAAP.	The	preparation	of	financial	statements	in	conformity	with	those	accounting	principles	requires	management	to	use	judgment	in making	estimates	and	assumptions	based	on	the	relevant	information	available	at	the	end	of	each	period.	These	estimates	and	assumptions	have	a	significant	effect	on reported	amounts	of	assets	and	liabilities,	revenue	and	expenses	as	well	as	the	disclosure	of	contingent	assets	and	liabilities	because	they	result	primarily	from	the	need to	make	estimates	and	assumptions	on	matters	that	are	inherently	uncertain.	Actual	results	may	differ	from	estimates.	If	updated	information	or	actual	amounts	are different	from	previous	estimates,	the	revisions	are	included	in	our	results	for	the	period	in	which	they	become	known.

The	following	is	a	summary	of	certain	accounting	estimates	and	assumptions	made	by	management	that	we	consider	critical.

•Allowance	for	doubtful	accounts	–	We	have	provided	an	allowance	for	doubtful	accounts	receivable,	which	represents	our	best	estimate	of	probable	loss	inherent in	our	accounts	receivable	portfolio.	This	estimate	is	based	upon	our	policy,	derived	from	our	knowledge	of	our	end	markets,	customer	base	and	products.

•Goodwill	and	indefinite-lived	intangible	assets	–	We	have	significant	goodwill	and	indefinite-lived	intangible	assets	on	our	balance	sheet	related	to	acquisitions. Our	goodwill	and	other	indefinite-lived	intangible	assets	are	tested	and	reviewed	annually	during	the	fourth	quarter	for	impairment	or	when	there	is	a	significant change	in	events	or	circumstances	that	indicate	that	the	fair	value	of	an	asset	is	more	likely	than	not	less	than	the	carrying	amount	of	the	asset.

Recoverability	of	goodwill	is	measured	at	the	reporting	unit	level	and	begins	with	a	qualitative	assessment	to	determine	if	it	is	more	likely	than	not	that	the	fair value	of	each	reporting	unit	is	less	than	its	carrying	amount	as	a	basis	for	determining	whether	it	is	necessary	to	perform	the	two-step	goodwill	impairment	test prescribed	by	GAAP.	For	those	reporting	units	where	it	is	required,	the	first	step	compares	the	carrying	amount	of	the	reporting	unit	to	its	estimated	fair	value.	If the	estimated	fair	value	of	a	reporting	unit	exceeds	its	carrying	amount,	goodwill	of	the	reporting	unit	is	not	impaired	and	the	second	step	of	the	impairment	test	is not	necessary.	To	the	extent	that	the	carrying	value	of	the	reporting	unit	exceeds	its	estimated	fair	value,	a	second	step	is	performed,	wherein	the	reporting	unit's carrying	value	of	goodwill	is	compared	to	the	implied	fair	value	of	goodwill.	To	the	extent	that	the	carrying	value	exceeds	the	implied	fair	value,	impairment exists	and	must	be	recognized.

As	quoted	market	prices	are	not	available	for	our	reporting	units,	the	calculation	of	their	estimated	fair	value	in	step	one	is	based	on	two	valuation	techniques,	a discounted	cash	flow	model	(income	approach)	and	a	market	adjusted	multiple	of	earnings	and	revenues	(market	approach),	with	each	method	being	weighted	in the	calculation.	The	income	approach	relies	on	the	Company's	estimates	of	future	cash	flows	and	explicitly	addresses	factors	such	as	timing,	growth	and	margins, with	due	consideration	given	to	forecasting	risk.	The	market	approach	reflects	the	market's	expectations	for	future	growth	and	risk,	with	adjustments	to	account for	differences	between	the	guideline	publicly-traded	companies	and	the	subject	reporting	units.

In	step	2,	the	implied	fair	value	of	goodwill	is	determined	in	the	same	manner	as	the	amount	of	goodwill	recognized	in	a	business	combination.	The	estimated	fair value	of	the	reporting	unit	is	allocated	to	all	of	the	assets	and	liabilities	of	the	reporting	unit	(including	any	unrecognized	intangible	assets)	as	if	the	reporting	unit had	been	acquired	in	a	business	combination	and	the	fair	value	of	the	reporting	unit,	as	determined	in	the	first	step	of	the	goodwill	impairment	test,	was	the	price paid	to	acquire	that	reporting	unit.

Recoverability	of	other	intangible	assets	with	indefinite	useful	lives	is	determined	on	a	relief	from	royalty	methodology	(income	approach),	which	is	based	on	the implied	royalty	paid,	at	an	appropriate	discount	rate,	to	license	the	use	of	an	asset	rather	than	owning	the	asset.	The	present	value	of	the	after-tax	cost	savings	(i.e. royalty	relief)	indicates	the	estimated	fair	value	of	the	asset.	Any	excess	of	the	carrying	value	over	the	estimated	fair	value	is	recognized	as	an	impairment	loss equal	to	that	excess.

The	determination	of	the	estimated	fair	value	and	the	implied	fair	value	of	goodwill	and	other	indefinite-lived	intangible	assets	requires	us	to	make	assumptions about	estimated	cash	flows	including	profit	margins,	long-term	forecasts,	discount	rates	and	terminal	growth	rates.	We	developed	these	assumptions	based	on	the market	and	geographic	risks	unique	to	each	reporting	unit.

The	estimated	fair	values	for	each	of	our	reporting	units	exceeded	their	carrying	values	by	more	than	10%	for	the	2015	goodwill	impairment	test.	Additionally,	a 1%	increase	in	the	discount	rate	used	or	a	1%	decrease	in	the	terminal	growth	rate	would	not	result	in	any	reporting	unit	failing	step	1.

Assessing	the	fair	value	of	goodwill	includes,	among	other	things,	making	key	assumptions	for	estimating	future	cash	flows	and	appropriate	market	multiples. These	assumptions	are	subject	to	a	high	degree	of	judgment	and	complexity.	We	make	every	effort	to	estimate	future	cash	flows	as	accurately	as	possible	with	the information	available	at	the	time	the	forecast	is	developed.	However,	changes	in	assumptions	and	estimates	may	affect	the	estimated	fair	value	of	the	reporting unit,	and	could	result	in	impairment	charges	in	future	periods.	Factors	that	have	the	potential	to	create	variances	in	the	estimated	fair	value	of	the	reporting	unit include	but	are	not	limited	to	the	following:

•Decreases in	 estimated	 market	 sizes	 or	 market	 growth rates	 due to	 greater-than-expected	 declines in	 volumes,	pricing	 pressures	 or	 disruptive technology;

•Declines in	our	market	share	and	penetration	assumptions	due to increased	competition	or	an inability to	develop	or launch	new products;

•The	impacts	of	the	market	volatility,	including	greater-than-expected	declines	in	pricing,	reductions	in	volumes,	or	fluctuations	in	foreign	exchange rates;

•The	level	of	success	of	on-going	and	future	research	and	development	efforts,	including	those	related	to	recent	acquisitions,	and	increases	in	the research	and	development	costs	necessary	to	obtain	regulatory	approvals	and	launch	new	products;

•Increase	in	the	price	or	decrease	in	the	availability	of	key	commodities	and	the	impact	of	higher	energy	prices;

•Increases in our	 market-participant risk-adjusted	 weighted-average cost of capital;

2013	Goodwill	Impairment	Test	-	In	the	third	quarter	of	2013,	we	determined	that	we	were	required	to	complete	the	first	step	of	the	two-step	impairment	test.	The results	of	our	impairment	test	indicated	that	the	estimated	fair	value	of	our	EMEIA	reporting	unit	was	less	than	its	carrying	value;	consequently,	we	performed	the second	step	of	the	impairment	test	to	quantify	the	amount	of	the	non-cash,	goodwill	impairment	charge.	In	the	third	quarter	of	2013	we	recorded	a	non-cash	pre- tax	goodwill	impairment	charge	of	$137.6	million	($131.2	million	after-tax).	This	charge	had	no	impact	on	our	cash	flows	or	our	compliance	with	debt	covenants. For	our	annual	goodwill	impairment	test	performed	during	the	fourth	quarter	of	2013,	the	fair	value	of	our	EMEIA	reporting	unit	exceeded	its	carrying	value	by approximately	24%.

During	2013,	we	renegotiated	a	significant	joint	venture	contract	within	our	Asia	Pacific	-	Other	reporting	unit	and	moved	the	related	product	line	to	our Americas	segment.	As	a	result	of	these	business	changes,	we	completed	the	first	step	of	the	two-step	impairment	test.

Other	Indefinite-lived	intangible	assets	-	We	performed	our	annual	indefinite-lived	intangible	impairment	testing	in	2015	and	determined	our	indefinite-lived intangible	assets	were	not	impaired.	All	indefinite-lived	intangible	assets	had	a	fair	value	that	exceeded	their	carrying	value	by	more	than	15%.

A	significant	increase	in	the	discount	rate,	decrease	in	the	long-term	growth	rate,	decrease	in	the	royalty	rate	or	substantial	reductions	in	our	end	markets	and volume	assumptions	could	have	a	negative	impact	on	the	estimated	fair	values	of	any	of	our	trade	names.	The	estimates	of	fair	value	are	based	on	the	best information	available	as	of	the	date	of	the	assessment,	which	primarily	incorporates	management	assumptions	about	expected	future	cash	flows.

•Long-lived	assets	and	finite-lived	intangibles	–	Long-lived	assets	and	finite-lived	intangibles	are	reviewed	for	impairment	whenever	events	or	changes	in	business circumstances	indicate	that	the	carrying	amount	of	an	asset	may	not	be	fully	recoverable.	Assets	are	grouped	with	other	assets	and	liabilities	at	the	lowest	level for	which	identifiable	cash	flows	can	be	generated.	Impairment	in	the	carrying	value	of	an	asset	could	be	recognized	whenever	anticipated	future	undiscounted cash	flows	from	an	asset	are	less	than	its	carrying	value.	The	impairment	is	measured	as	the	amount	by	which	the	carrying	value	exceeds	the	fair	value	of	the	asset as	determined	by	an	estimate	of	discounted	cash	flows.	We	believe	that	our	use	of	estimates	and	assumptions	are	reasonable	and	comply	with	generally	accepted accounting	principles.	Changes	in	business	conditions	could	potentially	require	future	adjustments	to	these	valuations.

•Loss	 contingencies	 –	 Liabilities	 are	 recorded	 for	 various	 contingencies	 arising	 in	 the	 normal	 course	 of	 business,	 including	 litigation	 and	 administrative proceedings,	environmental	and	asbestos	matters	and	product	liability,	product	warranty,	worker's	compensation	and	other	claims.	We	have	recorded	reserves	in the	consolidated	financial	statements	related	to	these	matters,	which	are	developed	using	input	derived	from	actuarial	estimates	and	historical	and	anticipated experience	data	depending	on	the	nature	of	the	reserve,	and	in	certain	instances	with	consultation	of	legal	counsel,	internal	and	external	consultants	and	engineers. Subject	to	the	uncertainties	inherent	in	estimating	future	costs	for	these	types	of	liabilities,	we	believe	our	estimated	reserves	are	reasonable	and	do	not	believe	the final	determination	of	the	liabilities	with	respect	to	these	matters	would	have	a	material	effect	on	our	financial	condition,	results	of	operations,	liquidity	or	cash flows	for	any	year.

•Revenue	recognition	–	Revenue	is	recognized	and	earned	when	all	of	the	following	criteria	are	satisfied:	(a)	persuasive	evidence	of	a	sales	arrangement	exists;	(b) the	price	is	fixed	or	determinable;	(c)	collectability	is	reasonably	assured;	and	(d)	delivery	has	occurred	or	service	has	been	rendered.	Delivery	generally	occurs when	the	title	and	the	risks	and	rewards	of	ownership	have	transferred	to	the	customer.	Both	the	persuasive	evidence	of	a	sales	arrangement	and	fixed	or determinable	price	criteria	are	deemed	to	be	satisfied	upon	receipt	of	an	executed	and	legally	binding	sales	agreement	or	contract	that	clearly	defines	the	terms and	conditions	of	the	transaction	including	the	respective	obligations	of	the	parties.	If	the	defined	terms	and	conditions	allow	variability	in	all	or	a	component	of the	price,	revenue	is	not	recognized	until	such	time	that	the	price	becomes	fixed	or	determinable.	At	the	point	of	sale,	we	validate	that	existence	of	an	enforceable claim	that	requires	payment	within	a	reasonable	amount	of	time	and	assesses	the	collectability	of	that	claim.	If	collectability	is	not	deemed	to	be	reasonably assured,	then	revenue	recognition	is	deferred	until	such	time	that	collectability	becomes	probable	or	cash	is

received.	Delivery	is	not	considered	to	have	occurred	until	the	customer	has	taken	title	and	assumed	the	risks	and	rewards	of	ownership.	Service	and	installation revenue	are	recognized	when	earned.	In	some	instances,	customer	acceptance	provisions	are	included	in	sales	arrangements	to	give	the	buyer	the	ability	to	ensure the	delivered	product	or	service	meets	the	criteria	established	in	the	order.	In	these	instances,	revenue	recognition	is	deferred	until	the	acceptance	terms	specified in	the	arrangement	are	fulfilled	through	customer	acceptance	or	a	demonstration	that	established	criteria	have	been	satisfied.	If	uncertainty	exists	about	customer acceptance,	revenue	is	not	recognized	until	acceptance	has	occurred.

We	offer	various	sales	incentive	programs	to	our	customers,	dealers,	and	distributors.	Sales	incentive	programs	do	not	preclude	revenue	recognition,	but	do require	an	accrual	for	our	best	estimate	of	expected	activity.	Examples	of	the	sales	incentives	that	are	accrued	for	as	a	contra	receivable	and	sales	deduction	at	the point	of	sale	include,	but	are	not	limited	to,	discounts	(i.e.	net	30	type),	coupons,	and	rebates	where	the	customer	does	not	have	to	provide	any	additional requirements	to	receive	the	discount.	Sales	returns	and	customer	disputes	involving	a	question	of	quantity	or	price	are	also	accounted	for	as	a	reduction	in	revenue and	a	contra	receivable.	At	December	31,	2015	and	2014,	we	had	a	customer	claim	accrual	(contra	receivable)	of	$24.5	million	and	$23.5	million,	respectively. All	other	incentives	or	incentive	programs	where	the	customer	is	required	to	reach	a	certain	sales	level,	remain	a	customer	for	a	certain	period,	provide	a	rebate form	or	is	subject	to	additional	requirements	are	accounted	for	as	a	reduction	of	revenue	and	establishment	of	a	liability.	At	December	31,	2015	and	2014,	we	had a	 sales	 incentive	 accrual	 of	$26.6	million	 and	$23.2	million,	respectively.	Each	of	 these	accruals	represents	our	best	estimate	we	expect	 to	pay	related	 to previously	sold	units	based	on	historical	claim	experience.	These	estimates	are	reviewed	regularly	for	accuracy.	If	updated	information	or	actual	amounts	are different	from	previous	estimates,	the	revisions	are	included	in	our	results	for	the	period	in	which	they	become	known.	Historically,	the	aggregate	differences,	if any,	between	our	estimates	and	actual	amounts	in	any	year	have	not	had	a	material	impact	on	our	consolidated	financial	statements.

•Income	 taxes	–	Deferred	 tax	assets	and	 liabilities	are	determined	based	on	 temporary	differences	between	financial	reporting	and	 tax	bases	of	assets	and liabilities,	applying	enacted	tax	rates	expected	to	be	in	effect	for	the	year	in	which	the	differences	are	expected	to	reverse.	We	recognize	future	tax	benefits,	such as	net	operating	losses	and	non-U.S.	tax	credits,	to	the	extent	that	realizing	these	benefits	is	considered	in	our	judgment	to	be	more	likely	than	not.	We	regularly review	the	recoverability	of	our	deferred	tax	assets	considering	our	historic	profitability,	projected	future	taxable	income,	timing	of	the	reversals	of	existing temporary	differences	and	the	feasibility	of	our	tax	planning	strategies.	Where	appropriate,	we	record	a	valuation	allowance	with	respect	to	a	future	tax	benefit.

The	provision	for	income	taxes	involves	a	significant	amount	of	management	judgment	regarding	interpretation	of	relevant	facts	and	laws	in	the	jurisdictions	in which	we	operate.	Future	changes	in	applicable	laws,	projected	levels	of	taxable	income,	and	tax	planning	could	change	the	effective	tax	rate	and	tax	balances recorded	by	us.	In	addition,	tax	authorities	periodically	review	income	tax	returns	filed	by	us	and	can	raise	issues	regarding	our	filing	positions,	timing	and amount	of	income	or	deductions,	and	the	allocation	of	income	among	the	jurisdictions	in	which	we	operate.	A	significant	period	of	time	may	elapse	between	the filing	of	an	income	tax	return	and	the	ultimate	resolution	of	an	issue	raised	by	a	revenue	authority	with	respect	to	that	return.	We	believe	that	we	have	adequately provided	for	any	reasonably	foreseeable	resolution	of	these	matters.	We	will	adjust	our	estimate	if	significant	events	so	dictate.	To	the	extent	that	the	ultimate results	differ	from	our	original	or	adjusted	estimates,	the	effect	will	be	recorded	in	the	provision	for	income	taxes	in	the	period	that	the	matter	is	finally	resolved.

•Employee	benefit	plans	–	We	provide	a	range	of	benefits	to	eligible	employees	and	retirees,	including	pensions,	postretirement	and	postemployment	benefits. Determining	the	cost	associated	with	such	benefits	is	dependent	on	various	actuarial	assumptions	including	discount	rates,	expected	return	on	plan	assets, compensation	 increases,	 employee	 mortality,	 turnover	 rates	 and	 healthcare	 cost	 trend	 rates.	Actuarial	 valuations	 are	 performed	 to	 determine	 expense	 in accordance	with	GAAP.	Actual	results	may	differ	from	the	actuarial	assumptions	and	are	generally	accumulated	and	amortized	into	earnings	over	future	periods.

We	review	our	actuarial	assumptions	at	each	measurement	date	and	make	modifications	to	the	assumptions	based	on	current	rates	and	trends,	if	appropriate.	The discount	rate,	the	rate	of	compensation	increase	and	the	expected	long-term	rates	of	return	on	plan	assets	are	determined	as	of	each	measurement	date.	A	discount rate	reflects	a	rate	at	which	pension	benefits	could	be	effectively	settled.	Discount	rates	for	all	plans	are	established	using	hypothetical	yield	curves	based	on	the yields	of	corporate	bonds	rated	AA	quality.	Spot	rates	are	developed	from	the	yield	curve	and	used	to	discount	future	benefit	payments.	The	rate	of	compensation increase	is	dependent	on	expected	future	compensation	levels.	The	expected	long-term	rate	of	return	on	plan	assets	reflects	the	average	rate	of	returns	expected	on the	funds	invested	or	to	be	invested	to	provide	for	the	benefits	included	in	the	projected	benefit	obligation.	The	expected	long-term	rate	of	return	on	plan	assets	is based	on	what	is	achievable	given	the	plan's	investment	policy,	the	types	of	assets	held	and	the	target	asset	allocation.	The	expected	long-term	rate	of	return	is determined	as	of	each	measurement	date.

We	believe	that	the	assumptions	utilized	in	recording	our	obligations	under	our	plans	are	reasonable	based	on	input	from	our	actuaries,	outside	investment advisors	and	information	as	to	assumptions	used	by	plan	sponsors.

Changes	in	any	of	the	assumptions	can	have	an	impact	on	the	net	periodic	pension	cost	or	postretirement	benefit	cost.	Estimated	sensitivities	to	the	expected	2015 net	periodic	pension	cost	of	a	0.25%	rate	decline	in	the	two	basic	assumptions	are	as	follows:	the	decline	in	the	discount	rate	would	increase	expense	by approximately	$0.7	million	and	the	decline	in	the	estimated	return	on	assets	would	increase	expense	by	approximately	$0.5	million.	A	1.0%	increase	in	the healthcare	cost	trend	rate	would	have	no	impact	on	expense	as	we	have	capped	the	annual	maximum	amount	we	will	pay	for	retiree	healthcare	costs,	therefore	any additional	costs	would	be	assumed	by	the	retiree.

•Business	combinations	–	The	fair	value	of	the	consideration	paid	in	a	business	combination	is	allocated	to	tangible	assets	and	identifiable	intangible	assets, liabilities	assumed	and	goodwill.	The	accounting	for	acquisitions	involves	a	considerable	amount	of	judgment	and	estimate,	including	the	fair	value	of	acquired intangible	assets	involving	projections	of	future	revenues	and	cash	flows	that	are	either	discounted	at	an	estimated	discount	rate	or	measured	at	an	estimated royalty	rate;	fair	value	of	other	acquired	assets	and	assumed	 liabilities,	 including	potential	contingencies;	and	 the	useful	 lives	of	 the	acquired	assets.	The assumptions	used	are	determined	at	the	time	of	the	acquisition	in	accordance	with	accepted	valuation	models.	Projections	are	developed	using	internal	forecasts, available	industry	and	market	data	and	estimates	of	long-term	growth	rates.	The	impact	of	prior	or	future	acquisitions	on	our	financial	condition	or	results	of operations	may	be	materially	impacted	by	the	change	in	or	initial	selection	of	assumptions	and	estimates.

# Recent	Accounting	Pronouncements

See	Note	2	to	our	consolidated	financial	statements	included	in	Item	15	herein	for	a	discussion	of	recently	issued	and	adopted	accounting	pronouncements.

# Item	7A.				QUANTITATIVE	AND	QUALITATIVE	DISCLOSURE	ABOUT	MARKET	RISK

We	are	exposed	to	fluctuations	in	currency	exchange	rates,	interest	rates	and	commodity	prices	which	could	impact	our	results	of	operations	and	financial	condition.

# Foreign	Currency	Exposures

We	have	operations	throughout	the	world	that	manufacture	and	sell	products	in	various	international	markets.	As	a	result,	we	are	exposed	to	movements	in	exchange rates	of	various	currencies	against	the	U.S.	dollar	as	well	as	against	other	currencies	throughout	the	world.	We	actively	manage	material	currency	exposures	that	are associated	with	purchases	and	sales	and	other	assets	and	liabilities	at	the	legal	entity	level,	however	we	do	not	hedge	currency	translation	risk.	We	attempt	to	hedge exposures	that	cannot	be	naturally	offset	to	an	insignificant	amount	with	foreign	currency	derivatives.	Derivative	instruments	utilized	by	us	in	our	hedging	activities	are viewed	as	risk	management	tools,	involve	little	complexity	and	are	not	used	for	trading	or	speculative	purposes.	To	minimize	the	risk	of	counter	party	non-performance, derivative	instrument	agreements	are	made	only	through	major	financial	institutions	with	significant	experience	in	such	derivative	instruments.

We	 evaluate	 our	 exposure	 to	 changes	 in	 currency	 exchange	 rates	 on	 our	 foreign	 currency	 derivatives	 using	 a	 sensitivity	 analysis.	 The	 sensitivity	 analysis	 is	 a measurement	of	the	potential	loss	in	fair	value	based	on	a	percentage	change	in	exchange	rates.	Based	on	the	firmly	committed	currency	derivative	instruments	in	place at	December	31,	2015,	a	hypothetical	change	in	fair	value	of	those	derivative	instruments	assuming	a	10%	adverse	change	in	exchange	rates	would	result	in	an	additional unrealized	loss	of	approximately	$15.9	million.	This	amount,	when	realized,	would	be	partially	offset	by	changes	in	the	fair	value	of	the	underlying	transactions.

# Commodity	Price	Exposures

We	are	exposed	to	volatility	in	the	prices	of	commodities	used	in	some	of	our	products	and	we	use	fixed	price	contracts	to	manage	this	exposure.	We	do	not	have committed	commodity	derivative	instruments	in	place	at	December	31,	2015.

# Interest	Rate	Exposure

Outstanding	borrowings	under	our	Senior	Secured	Credit	Facilities	accrue	interest	at	variable	rates	and	expose	us	to	interest	rate	risks.	A	100	basis	point	increase	in LIBOR	would	have	resulted	in	incremental	2015	interest	expense	of	approximately	$6.5	million.

In	June	2014,	we	entered	into	forward	starting	interest	rate	swaps	for	$300.0	million	of	our	variable	rate	Term	Loan	A	Facility.	Swaps	with	notional	amounts	totaling $275.0	million	effective	January	2015	expire	in	September	2017	and	swaps	with	notional	amounts	totaling	$25.0	million	effective	January	2015	expire	in	December 2016.	If	the	base	interest	rate	in	our	credit	facilities	increases	in	the	future	then	the	floating-rate	debt	could	have	a	material	effect	on	our	interest	expense.

# Item	8.						FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA

(a) The	following	Consolidated	Financial	Statements	and	Financial	Statement	Schedules	and	the	report	thereon	of	PricewaterhouseCoopers	LLP	dated	February	26, 2016,	are	presented	following	Item	15	of	this	Annual	Report	on	Form	10-K.

# Consolidated	Financial	Statements:

Report	of	independent	registered	public	accounting	firm

Consolidated	statements	of	comprehensive	income	for	the	years	ended	December	31,	2015,	2014	and	2013 Consolidated	balance	sheets	at	December	31,	2015	and	2014

# Consolidated	statements	of	equity

Consolidated	statements	of	cash	flows Notes	to	Consolidated	Financial	Statements

# Financial	Statement	Schedule:

Schedule	II	–	Valuation	and	Qualifying	Accounts	for	the	years	ended	December	31,	2015,	2014	and	2013

(b) The	 unaudited selected	 quarterly financial	 data for the two	 years	 ended	December	 31, is	 as follows:

|  | First<br>Quarter | Second<br>Quarter | Third<br>Quarter | Fourth<br>Quarter |
| :--- | :--- | :--- | :--- | :--- |
| Net\trevenues | $458.7 | $519.5 | $544.5 | $545.4 |
| Cost\tof\tgoods\tsold | 271.6 | 297.7 | 304.5 | 325.2 |
| Operating\tincome | 71.0 | 95.7 | 110.4 | 81.5 |
| Net\tearnings\t(loss) | 43.7 | 65.0 | (26.4) | 72.0 |
| Net\tearnings\t(loss)\tattributable\tto\tAllegion\tplc | 45.4 | 63.9 | (27.3) | 71.9 |
| Earnings\t(loss)\tper\tshare\tattributable\tto\tAllegion\tplc\tordinary\nshareholders: |  |  |  |  |
| Basic | $0.47 | $0.67 | $(0.28) | $0.75 |
| Diluted | $0.47 | $0.66 | $(0.28) | $0.74 |

|  | First<br>Quarter | Second<br>Quarter | Third<br>Quarter | Fourth<br>Quarter |
| :--- | :--- | :--- | :--- | :--- |
| Net\trevenues | $466.6 | $531.5 | $546.7 | $573.5 |
| Cost\tof\tgoods\tsold | 274.4 | 305.5 | 310.1 | 374.6 |
| Operating\tincome | 67.8 | 89.4 | 106.1 | 63.0 |
| Net\tearnings | 37.7 | 46.7 | 66.0 | 22.2 |
| Net\tearnings\tattributable\tto\tAllegion\tplc | 35.9 | 43.2 | 60.7 | 35.4 |
| Earnings\tper\tshare\tattributable\tto\tAllegion\tplc\tordinary\tshareholders: |  |  |  |  |
| Basic | $0.37 | $0.45 | $0.63 | $0.37 |
| Diluted | $0.37 | $0.44 | $0.63 | $0.37 |

# Item	9.						CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL

# DISCLOSURE

# Item	9A.				CONTROLS	AND	PROCEDURES

# (a) Evaluation	of	Disclosure	Controls	and	Procedures

The	Company's	management,	including	its	Chief	Executive	Officer	and	Chief	Financial	Officer,	have	conducted	an	evaluation	of	the	effectiveness	of	the	Company's disclosure	controls	and	procedures	(as	such	term	is	defined	in	Rules	13a-15(e)	and	15d-15(e)	under	the	Securities	Exchange	Act	of	1934,	as	amended	(the	Exchange Act)),	as	of	the	end	of	the	period	covered	by	this	Annual	Report	on	Form	10-K.	Based	on	that	evaluation,	the	Chief	Executive	Officer	and	Chief	Financial	Officer concluded	as	of	December	31,	2015,	that	the	Company's	disclosure	controls	and	procedures	were	effective	in	ensuring	that	information	required	to	be	disclosed	by	the Company	in	reports	that	it	files	or	submits	under	the	Exchange	Act	has	been	recorded,	processed,	summarized	and	reported,	within	the	time	periods	specified	in	the Commission's	rules	and	forms,	and	that	such	information	has	been	accumulated	and	communicated	to	the	Company's	management	including	its	Chief	Executive	Officer and	Chief	Financial	Officer,	as	appropriate,	to	allow	timely	decisions	regarding	required	disclosure.

# (b) Management's	Report	on	Internal	Control	Over	Financial	Reporting

Our	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting,	as	defined	under	Exchange	Act	Rules	13a-15(f)	and 15d-15(f).	Our	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	Internal	control	over	financial	reporting	includes those	policies	and	procedures	that:

•pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	Company's assets;

•provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally	accepted accounting	principles,	and	that	the	Company's	receipts	and	expenditures	are	being	made	only	in	accordance	with	authorizations	of	the	Company's	management and	directors;	and

•provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the	Company's	assets	that	could	have a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of	effectiveness to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or procedures	may	deteriorate.

Management	assessed	the	effectiveness	of	our	internal	control	over	financial	reporting	as	of	December	31,	2015.	In	making	this	assessment,	management	used	the criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO)	in	Internal	Control-Integrated	Framework	(2013).	We	concluded that	our	internal	control	over	financial	reporting	was	effective	as	of	December	31,	2015.

We	have	excluded	Zero	International,	Inc.,	Brio,	Milre	Systek	Co.,Ltd.,	SimonsVoss	Technologies	GmbH,	and	AXA	Stenman	Holding	from	our	assessment	of	internal control	over	financial	reporting	as	of	December	31,	2015	because	they	were	acquired	by	us	in	purchase	business	combinations	in	2015.	Zero	International,	Inc.,	Brio, Milre	Systek	Co.,Ltd.,	SimonsVoss	Technologies	GmbH,	and	AXA	Stenman	Holding	are	wholly-owned	subsidiaries	whose	total	assets	and	total	revenues	represent	5% and	4%,	respectively,	of	the	related	consolidated	financial	statement	amounts	as	of	and	for	the	year	ended	December	31,	2015.	We	are	currently	integrating	these	entities into	our	compliance	programs	and	internal	control	processes.

The	effectiveness	of	our	internal	control	over	financial	reporting	has	been	audited	by	PricewaterhouseCoopers	LLP,	the	independent	registered	public	accounting	firm, as	stated	in	their	report	herein.

# (c) Changes	in	Internal	Control	Over	Financial	Reporting

Other	than	the	exceptions	noted	above,	there	were	no	changes	in	the	Company's	 internal	control	over	financial	reporting	 that	occurred	during the	quarter	ended December	31,	2015	that	have	materially	affected,	or	are	reasonably	likely	to	materially	affect,	our	internal	control	over	financial	reporting.

# Item	9B.				OTHER	INFORMATION

# PART	III

# Item	10.					DIRECTORS,	EXECUTIVE	OFFICERS	AND	CORPORATE	GOVERNANCE

The	information	regarding	our	executive	officers	is	included	in	Part	I	under	the	caption	"Executive	Officers	of	Registrant."

The	other	information	required	by	this	item	is	incorporated	herein	by	reference	to	the	information	contained	under	the	headings	"Item	1.	Election	of	Directors",	"Section 16(a)	Beneficial	Ownership	Reporting	Compliance"	and	"Corporate	Governance"	in	Proxy	Statement.

# Item	11.					EXECUTIVE	COMPENSATION

The	other	 information	required	by	 this	 item	 is	 incorporated	herein	by	reference	 to	 the	 information	contained	under the	headings	"Compensation	Discussion	and Analysis",	"Executive	Compensation"	and	"Compensation	Committee	Report"	in	our	Proxy	Statement.

# Item	12.					SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT	AND	RELATED

# STOCKHOLDER	MATTERS

The	other	information	required	by	this	item	is	incorporated	herein	by	reference	to	the	information	contained	under	the	headings	"Security	Ownership	of	Certain Beneficial	Owners	and	Management"	and	"Equity	Compensation	Plan	Information"	of	our	Proxy	Statement.

# Item	13.					CERTAIN	RELATIONSHIPS	AND	RELATED	TRANSACTIONS,	AND	DIRECTOR	INDEPENDENCE

The	other	information	required	by	this	item	is	incorporated	herein	by	reference	to	the	information	contained	under	the	headings	"Corporate	Governance"	and	"Certain Relationships	and	Related	Person	Transactions"	of	our	Proxy	Statement.

# Item	14.				PRINCIPAL	ACCOUNTANT	FEES	AND	SERVICES

The	information	required	by	this	item	is	incorporated	herein	by	reference	to	the	information	contained	under	the	caption	"Fees	of	the	Independent	Auditors"	in	our Proxy	Statement.

# PART	IV

# Item	15.				EXHIBITS	AND	FINANCIAL	STATEMENT	SCHEDULES

# 3. Exhibits

The	exhibits	listed	on	the	accompanying	index	to	exhibits	are	filed	as	part	of	this	Annual	Report	on	Form	10-K.

# INDEX	TO	EXHIBITS

# Description

Pursuant	to	the	rules	and	regulations	of	the	SEC,	we	have	filed	certain	agreements	as	exhibits	to	this	Annual	Report	on	Form	10-K.	These	agreements	may	contain representations	and	warranties	by	the	parties.	These	representations	and	warranties	have	been	made	solely	for	the	benefit	of	the	other	party	or	parties	to	such	agreements and	(i)	may	have	been	qualified	by	disclosures	made	to	such	other	party	or	parties,	(ii)	were	made	only	as	of	the	date	of	such	agreements	or	such	other	date(s)	as	may	be specified	in	such	agreements	and	are	subject	to	more	recent	developments,	which	may	not	be	fully	reflected	in	our	public	disclosure,	(iii)	may	reflect	the	allocation	of risk	among	the	parties	to	such	agreements	and	(iv)	may	apply	materiality	standards	different	from	what	may	be	viewed	as	material	to	investors.	Accordingly,	these representations	and	warranties	may	not	describe	our	actual	state	of	affairs	at	the	date	hereof	and	should	not	be	relied	upon.

# (a)	Exhibits

# 101 The	following	materials	from	the	Company's	Annual	Report	on

# Filed	herewith.

# Form	10-K	for	the	year	ended	December	31,	2015,	formatted	in

# XBRL	(Extensible	Business	Reporting	Language):	(i)	the

# Consolidated	Statements	of	Comprehensive	Income,	(ii)	the

# Consolidated	Balance	Sheets,	(iii)	the	Consolidated	Statement	of

Cash	Flows,	(iv)	the	Consolidated	Statements	of	Equity	and	(v)

Notes	to	Consolidated	Financial	Statements.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf	by	the undersigned,	thereunto	duly	authorized.

(Registrant)

/s/	David	D.	Petratis

Date:

David	D.	Petratis Chief	Executive	Officer February	26,	2016

Pursuant	to	the	requirement	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	by	the	following	persons	on	behalf	of	the	registrant	and	in	the	capacities and	on	the	dates	indicated.

# Index	to	Consolidated	Financial	Statements

# To	the	Shareholders	and	Board	of	Directors	of	Allegion	plc:

In	our	opinion,	the	accompanying	consolidated	balance	sheets	and	the	related	consolidated	statements	of	comprehensive	income,	of	equity	and	of	cash	flows	present fairly,	in	all	material	respects,	the	financial	position	of	Allegion	plc	and	its	subsidiaries	at	December	31,	2015	and	2014,	and	the	results	of	their	operations	and	their	cash flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2015	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	of	America.	In addition,	in	our	opinion,	the	financial	statement	schedule	listed	in	the	accompanying	index	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein	when read	in	conjunction	with	the	related	financial	statements.	Also	in	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial reporting	 as	 of	 December	 31,	 2015,	 based	 on	 criteria	 established	 in	 Internal	 Control	 -	 Integrated	 Framework	 (2013)	 issued	 by	 the	 Committee	 of	 Sponsoring Organizations	of	the	Treadway	Commission	(COSO).	The	Company's	management	is	responsible	for	these	financial	statements	and	financial	statement	schedule,	for maintaining	effective	 internal	control	over	financial	reporting	and	for	 its	assessment	of	 the	effectiveness	of	 internal	control	over	financial	reporting,	 included	 in Management's	Report	on	Internal	Control	Over	Financial	Reporting	appearing	under	Item	9A.	Our	responsibility	is	to	express	opinions	on	these	financial	statements,	on the	financial	statement	schedule,	and	on	the	Company's	internal	control	over	financial	reporting	based	on	our	integrated	audits.	We	conducted	our	audits	in	accordance with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and	perform	the	audits	to	obtain	reasonable assurance	about	whether	the	financial	statements	are	free	of	material	misstatement	and	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all material	respects.	Our	audits	of	the	financial	statements	included	examining,	on	a	test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements, assessing	the	accounting	principles	used	and	significant	estimates	made	by	management,	and	evaluating	the	overall	financial	statement	presentation.	Our	audit	of	internal control	over	financial	reporting	included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and testing	and	evaluating	the	design	and	operating	effectiveness	of	internal	control	based	on	the	assessed	risk.	Our	audits	also	included	performing	such	other	procedures	as we	considered	necessary	in	the	circumstances.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinions.

As	discussed	in	Note	2	to	the	financial	statements,	the	Company	changed	the	manner	in	which	it	classifies	deferred	tax	assets	and	liabilities	in	2015.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(ii)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	 and	 directors	 of	 the	 company;	 and	 (iii)	 provide	 reasonable	 assurance	 regarding	 prevention	 or	 timely	 detection	 of	 unauthorized	 acquisition,	 use,	 or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

As	described	in	Management's	Report	on	Internal	Control	Over	Financial	Reporting,	management	has	excluded	Zero	International,	Inc.,	Brio,	Milre	Systek	Co.,Ltd., SimonsVoss	Technologies	GmbH,	and	AXA	Stenman	Holding	from	its	assessment	of	internal	control	over	financial	reporting	as	of	December	31,	2015	because	they were	acquired	by	the	Company	in	purchase	business	combinations	in	2015.	We	have	also	excluded	Zero	International,	Inc.,	Brio,	Milre	Systek	Co.,Ltd.,	SimonsVoss Technologies	GmbH,	and	AXA	Stenman	Holding	from	our	audit	of	internal	control	over	financial	reporting.	 Zero	International,	Inc.,	Brio,	Milre	Systek	Co.,Ltd., SimonsVoss	Technologies	GmbH,	and	AXA	Stenman	Holding	are	wholly	owned	subsidiaries	whose	total	assets	and	total	revenues	represent	5%	and	4%,	respectively, of	the	related	consolidated	financial	statement	amounts	as	of	and	for	the	year	ended	December	31,	2015.

/s/	PricewaterhouseCoopers	LLP

Indianapolis,	Indiana

# Consolidated	Statements	of	Comprehensive	Income

# In	millions,	except	share	amounts

| For	the	years	ended	December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Net\trevenues | $2,068.1 | $2,118.3 | $2,069.6 |
| Cost\tof\tgoods\tsold | 1,199.0 | 1,264.6 | 1,208.1 |
| Selling\tand\tadministrative\texpenses | 510.5 | 527.4 | 483.1 |
| Goodwill\timpairment\tcharge | — | — | 137.6 |
| Operating\tincome | 358.6 | 326.3 | 240.8 |
| Interest\texpense | 52.9 | 53.8 | 10.2 |
| Loss\ton\tdivestitures | 104.2 | — | — |
| Other\t(income)\texpense,\tnet | (7.8) | 4.6 | 7.2 |
| Earnings\tbefore\tincome\ttaxes | 209.3 | 267.9 | 223.4 |
| Provision\tfor\tincome\ttaxes | 54.6 | 84.2 | 175.0 |
| Earnings\tfrom\tcontinuing\toperations | 154.7 | 183.7 | 48.4 |
| Discontinued\toperations,\tnet\tof\ttax | (0.4) | (11.1) | (3.6) |
| Net\tearnings | 154.3 | 172.6 | 44.8 |
| Less:\tNet\tearnings\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 0.4 | (2.6) | 12.5 |
| Net\tearnings\tattributable\tto\tAllegion\tplc | $153.9 | $175.2 | $32.3 |
| Amounts\tattributable\tto\tAllegion\tplc\tordinary\tshareholders: |  |  |  |
| Continuing\toperations | $154.3 | $186.3 | $35.9 |
| Discontinued\toperations | (0.4) | (11.1) | (3.6) |
| Net\tearnings | $153.9 | $175.2 | $32.3 |
| Earnings\t(loss)\tper\tshare\tattributable\tto\tAllegion\tplc\tordinary\tshareholders: |  |  |  |
| Basic: |  |  |  |
| Continuing\toperations | $1.61 | $1.94 | $0.37 |
| Discontinued\toperations | (0.01) | (0.12) | (0.03) |
| Net\tearnings | $1.60 | $1.82 | $0.34 |
| Diluted: |  |  |  |
| Continuing\toperations | $1.59 | $1.92 | $0.37 |
| Discontinued\toperations | — | (0.12) | (0.03) |
| Net\tearnings | $1.59 | $1.80 | $0.34 |

# Consolidated	Statements	of	Comprehensive	Income	(continued)

| For	the	years	ended	December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Net\tearnings | $154.3 | $172.6 | $44.8 |
| Other\tcomprehensive\tincome\t(loss) |  |  |  |
| Currency\ttranslation | (60.5) | (66.4) | (58.4) |
| Cash\tflow\thedges\tand\tmarketable\tsecurities |  |  |  |
| Unrealized\tnet\tgains\tarising\tduring\tperiod | 15.8 | 2.0 | 7.0 |
| Net\tgains\treclassified\tinto\tearnings | (17.5) | (2.5) | (0.9) |
| Tax\texpense | — | (0.5) | (0.3) |
| Total\tcash\tflow\thedges\tand\tmarketable\tsecurities,\tnet\tof\ttax | (1.7) | (1.0) | 5.8 |
| Pension\tand\tOPEB\tadjustments: |  |  |  |
| Prior\tservice\tgains\t(costs)\tfor\tthe\tperiod | (0.1) | 0.3 | (2.3) |
| Net\tactuarial\tgains\t(losses)\tfor\tthe\tperiod | (37.6) | (9.9) | 34.1 |
| Amortization\treclassified\tinto\tearnings | 5.4 | 4.3 | 4.2 |
| Settlements/curtailments\treclassified\tto\tearnings | 1.1 | — | (0.1) |
| Net\tloss\tresulting\tfrom\tSpin-off | — | — | (42.9) |
| Currency\ttranslation\tand\tother | 5.0 | 4.8 | (0.4) |
| Tax\t(expense)\tbenefit | 3.0 | 15.7 | (28.2) |
| Total\tpension\tand\tOPEB\tadjustments,\tnet\tof\ttax | (23.2) | 15.2 | (35.6) |
| Other\tcomprehensive\tloss,\tnet\tof\ttax | (85.4) | (52.2) | (88.2) |
| Total\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | $68.9 | $120.4 | $(43.4) |
| Less:\tTotal\tcomprehensive\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | (0.9) | (3.3) | 13.3 |
| Total\tcomprehensive\tincome\t(loss)\tattributable\tto\tAllegion\tplc | $69.8 | $123.7 | $(56.7) |

See	accompanying	notes	to	consolidated	financial	statements.

# Consolidated	Balance	Sheets

| As	of	December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $199.7 | $290.5 |
| Accounts\tand\tnotes\treceivable,\tnet | 303.4 | 230.4 |
| Inventories | 204.1 | 169.3 |
| Current\ttax\treceivable\tand\tdeferred\ttaxes | 10.5 | 32.7 |
| Other\tcurrent\tassets | 17.4 | 22.9 |
| Assets\theld\tfor\tsale | — | 255.9 |
| Total\tcurrent\tassets | 735.1 | 1,001.7 |
| Property,\tplant\tand\tequipment,\tnet | 224.8 | 207.2 |
| Goodwill | 714.1 | 484.4 |
| Intangible\tassets,\tnet | 372.4 | 125.4 |
| Deferred\ttaxes | 91.9 | 72.2 |
| Other\tnoncurrent\tassets | 147.0 | 125.0 |
| Total\tassets | $2,285.3 | $2,015.9 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Accounts\tpayable | $175.1 | $175.6 |
| Accrued\tcompensation\tand\tbenefits | 72.4 | 71.5 |
| Accrued\texpenses\tand\tother\tcurrent\tliabilities | 124.9 | 98.8 |
| Current\ttax\tpayable\tand\tdeferred\ttaxes | 9.1 | 33.5 |
| Short-term\tborrowings\tand\tcurrent\tmaturities\tof\tlong-term\tdebt | 65.6 | 49.6 |
| Liabilities\theld\tfor\tsale | — | 103.5 |
| Total\tcurrent\tliabilities | 447.1 | 532.5 |
| Long-term\tdebt | 1,479.8 | 1,215.0 |
| Postemployment\tand\tother\tbenefit\tliabilities | 145.4 | 122.0 |
| Deferred\tand\tnoncurrent\tincome\ttaxes | 120.0 | 57.0 |
| Other\tnoncurrent\tliabilities | 63.3 | 70.9 |
| Total\tliabilities | 2,255.6 | 1,997.4 |
| Equity: |  |  |
| Allegion\tplc\tshareholders'\tequity\t(deficit) |  |  |
|  | 1.0 | 1.0 |
| Capital\tin\texcess\tof\tpar\tvalue\nRetained\tearnings | 24.4 | — |
|  | 232.4 | 142.4 |
| Accumulated\tother\tcomprehensive\tloss | (232.2) | (148.2) |
| Total\tAllegion\tplc\tshareholders'\tequity\t(deficit) | 25.6 | (4.8) |
| Noncontrolling\tinterest | 4.1 | 23.3 |
| Total\tequity | 29.7 | 18.5 |
| Total\tliabilities\tand\tequity | $2,285.3 | $2,015.9 |

|  |  |  |  | Allegion	plc	Shareholders'	equity | Allegion	plc	Shareholders'	equity |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Ordinary\tShares | Ordinary\tShares |  |  | Accumulated |  |  |
|  | Total |  |  | Capital\tin |  | other | Parent | Non- |
|  | equity |  |  | excess\tof | Retained | comprehensive | company's\tnet | controlling |
| In\tmillions | (deficit) | Amount | Shares | par\tvalue | earnings | income\t(loss) | investment | Interest |
| Balance\tat\tDecember\t31,\t2012 | $1,385.7 | $— | — | $— | $— | $(7.7) | $1,370.4 | $23.0 |
| Net\tearnings | 44.8 | — | — | — | 5.4 | — | 26.9 | 12.5 |
| Other\tcomprehensive\tincome | (88.2) | — | — | — | — | (89.0) | — | 0.8 |
| Shares\tissued\tunder\tincentive\tstock\tplans | 1.3 | — | — | 1.3 | — | — | — | — |
| Share-based\tcompensation | 5.5 | — | — | 0.8 | — | — | 4.7 | — |
| Dividends\tdeclared\tto\tnoncontrolling\tinterest | (5.2) | — | — | — | — | — | — | (5.2) |
| Distribution/contribution\tto/from\tParent\nCompany | (1,378.9) | — | — | — | — | — | (1,378.9) | — |
| Conversion\tof\tParent\tCompany\tinvestment | — | 1.0 | 96.0 | 26.4 | (4.3) | — | (23.1) | — |
| Balance\tat\tDecember\t31,\t2013 | (35.0) | 1.0 | 96.0 | 28.5 | 1.1 | (96.7) | — | 31.1 |
| Net\tearnings | 172.6 | — | — | — | 175.2 | — | — | (2.6) |
| Other\tcomprehensive\tincome\t(loss) | (52.2) | — | — | — | — | (51.5) | — | (0.7) |
| Shares\tissued\tunder\tincentive\tstock\tplans | 18.5 | — | — | 18.5 | — | — | — | — |
| Repurchase\tof\tordinary\tshares | (50.3) | — | (1.0) | (48.8) | (1.5) | — | — | — |
| Share-based\tcompensation | 13.1 | — | 0.8 | 13.1 | — | — | — | — |
| Dividends\tdeclared\tto\tnoncontrolling\tinterest | (4.5) | — | — | — | — | — | — | (4.5) |
| Cash\tdividends\tdeclared\t($0.32\tper\tshare) | (30.7) | — | — | — | (30.7) | — | — | — |
| Other | (13.0) | — | — | (11.3) | (1.7) | — | — | — |
| Balance\tat\tDecember\t31,\t2014 | 18.5 | 1.0 | 95.8 | — | 142.4 | (148.2) | — | 23.3 |
| Net\tearnings | 154.3 | — | — | — | 153.9 | — | — | 0.4 |
| Other\tcomprehensive\tloss | (85.4) | — | — | — | — | (84.0) | — | (1.4) |
| Shares\tissued\tunder\tincentive\tstock\tplans | 14.3 | — | — | 14.3 | — | — | — | — |
| Repurchase\tof\tordinary\tshares | (30.0) | — | (0.5) | (4.5) | (25.5) | — | — | — |
| Share-based\tcompensation | 14.6 | — | 0.7 | 14.6 | — | — | — | — |
| Acquisition/divestiture\tof\tnoncontrolling\tinterest | 1.7 | — | — | — | — | — | — | 1.7 |
| Dividends\tdeclared\tto\tnoncontrolling\tinterest | (19.9) | — | — | — | — | — | — | (19.9) |
| Cash\tdividends\tdeclared\t($0.40\tper\tshare) | (38.4) | — | — | — | (38.4) | — | — | — |
| Balance\tat\tDecember\t31,\t2015 | $29.7 | $1.0 | 96.0 | $24.4 | $232.4 | $(232.2) | $— | $4.1 |

# Consolidated	Statements	of	Cash	Flows

In	millions

| For	the	years	ended	December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tearnings | $154.3 | $172.6 | $44.8 |
| Loss\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 0.4 | 11.1 | 3.6 |
| Adjustments\tto\tarrive\tat\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Goodwill\timpairment\tcharge | — | — | 137.6 |
| Write-off\tof\tdebt\tissuance\tcosts | — | 4.5 | — |
| Depreciation\tand\tamortization | 53.2 | 48.8 | 46.1 |
| Share\tbased\tcompensation | 14.6 | 13.1 | 0.8 |
| Excess\ttax\tbenefit\tfrom\tshare\tbased\tawards | (3.3) | (4.5) | — |
| Loss\ton\tsale\tof\tbusiness | 102.8 | — | — |
| Gain\ton\tsale\tof\tmarketable\tsecurities | (11.0) | — | — |
| (Gain)\tloss\ton\tsale\tof\tproperty,\tplant\tand\tequipment | 0.9 | 0.1 | (21.8) |
| Equity\tearnings,\tnet\tof\tdividends | 0.3 | (0.5) | — |
| Deferred\tincome\ttaxes | (2.0) | 17.2 | 17.7 |
| Other\titems | (11.3) | 10.9 | (30.1) |
| Changes\tin\tother\tassets\tand\tliabilities |  |  |  |
| (Increase)\tdecrease\tin: |  |  |  |
| Accounts\tand\tnotes\treceivable | (13.5) | (8.0) | 27.9 |
| Inventories | (5.8) | 3.4 | 3.9 |
| Other\tcurrent\tand\tnoncurrent\tassets | (5.0) | (24.2) | 80.3 |
| Increase\t(decrease)\tin: |  |  |  |
| Accounts\tpayable | (14.7) | 43.4 | (16.7) |
| Other\tcurrent\tand\tnoncurrent\tliabilities | (2.5) | (28.9) | (64.8) |
| Net\tcash\tprovided\tby\tcontinuing\toperating\tactivities | 257.4 | 259.0 | 229.3 |
| Net\tcash\tused\tin\tdiscontinued\toperating\tactivities | (0.4) | (3.1) | (5.4) |
| Net\tcash\tprovided\tby\toperating\tactivities | 257.0 | 255.9 | 223.9 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Capital\texpenditures | (35.2) | (51.5) | (20.2) |
| Restricted\tcash | — | 40.2 | (40.2) |
| Acquisition\tof\tbusinesses,\tnet\tof\tcash\tacquired | (511.3) | (25.2) | — |
| Proceeds\tfrom\tsale\tof\tproperty,\tplant\tand\tequipment | 0.3 | 0.5 | 41.7 |
| Proceeds\tfrom\tbusiness\tdispositions,\tnet\tof\tcash\tsold | 0.1 | 1.2 | — |
| Proceeds\tfrom\tsale\tof\tmarketable\tsecurities | 12.3 | — | — |
| Net\tcash\tused\tin\tinvesting\tactivities | $(533.8) | $(34.8) | $(18.7) |

# Consolidated	Statements	of	Cash	Flows	-	(Continued)

| For	the	years	ended	December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Short-term\tborrowings,\tnet | 18.8 | (22.0) | 38.9 |
| Proceeds\tfrom\trevolving\tcredit\tfacility | 400.0 | — | — |
| Proceeds\tfrom\tlong-term\tdebt | 300.0 | 956.3 | 1,300.0 |
| Payments\tof\tlong-term\tdebt | (440.5) | (1,012.3) | — |
| Net\tproceeds\t(repayments)\tof\tdebt | 278.3 | (78.0) | 1,338.9 |
| Debt\tissuance\tcosts | (9.0) | (5.8) | (29.1) |
| Excess\ttax\tbenefit\tfrom\tshare-based\tcompensation | 3.3 | 4.5 | — |
| Dividends\tpaid\tto\tordinary\tshareholders | (38.3) | (30.0) | — |
| Dividends\tpaid\tto\tnoncontrolling\tinterests | (20.0) | (4.5) | (5.2) |
| Repurchase\tof\tordinary\tshares | (30.0) | (50.3) | — |
| Net\ttransfers\tto\tParent\tand\taffiliates | — | — | (1,598.3) |
| Proceeds\tfrom\tshares\tissued\tunder\tincentive\tplans | 11.0 | 14.1 | 1.3 |
| Other,\tnet | (0.3) | — | — |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | 195.0 | (150.0) | (292.4) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (9.0) | (8.0) | (2.9) |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | (90.8) | 63.1 | (90.1) |
| Cash\tand\tcash\tequivalents\t–\tbeginning\tof\tperiod | 290.5 | 227.4 | 317.5 |
| Cash\tand\tcash\tequivalents\t–\tend\tof\tperiod | $199.7 | $290.5 | $227.4 |

# NOTE	1	–	DESCRIPTION	OF	COMPANY	AND	BASIS	OF	PRESENTATION

Allegion	plc,	an	Irish	public	limited	company,	and	its	consolidated	subsidiaries	("Allegion"	or	"the	Company")	are	a	leading	global	company	that	creates	peace	of	mind by	pioneering	safety	and	security.	The	Company	offers	an	extensive	and	versatile	portfolio	of	mechanical	and	electronic	security	products	across	a	range	of	market- leading	brands	including	CISA®,	Interflex®,	LCN®,	Schlage®	and	Von	Duprin®.

On	December	1,	2013,	Allegion	became	a	stand-alone	public	company	after	Ingersoll-Rand	plc	("Ingersoll	Rand")	completed	the	separation	of	its	commercial	and residential	security	businesses	(the	"Business")	from	the	rest	of	Ingersoll	Rand,	via	the	transfer	of	the	Business	from	Ingersoll	Rand	to	Allegion	and	the	issuance	by Allegion	of	ordinary	shares	directly	to	Ingersoll	Rand's	shareholders	(the	"Spin-off").	As	part	of	the	Spin-off,	Allegion	issued	one	ordinary	share	for	every	three	ordinary shares	of	Ingersoll	Rand	held	of	record	as	of	5:00	p.m.,	New	York	City	time	on	November	22,	2013.	Allegion	ordinary	shares	trade	under	the	symbol	''ALLE''	on	the New	York	Stock	Exchange.	Allegion	issued	a	total	of	approximately	96.0	million	ordinary	shares	in	the	Spin-off.

Basis	 of	 presentation:	The	Consolidated	Financial	Statements	were	prepared	in	accordance	with	generally	accepted	accounting	principles	in	the	United	States	of America	("GAAP")	as	defined	by	the	Financial	Accounting	Standards	Board	("FASB")	within	the	FASB	Accounting	Standards	Codification	("ASC").

Prior	to	the	Spin-off,	the	Company's	consolidated	financial	statements	were	prepared	on	a	stand-alone	basis	derived	from	the	consolidated	financial	statements	and accounting	records	of	Ingersoll	Rand	and	included	allocations	for	direct	costs	and	indirect	costs	attributable	to	the	operations	of	the	Company.	Subsequent	to	the	Spin- off,	the	Company's	financial	statements	as	of	and	for	the	years	ended	December	31,	2015,	2014	and	2013	are	presented	on	a	consolidated	basis	as	the	Company	became a	separate	consolidated	group.

The	Company's	Consolidated	Statements	of	Comprehensive	Income	for	the	year	ended	December	31,	2013	includes	allocations	of	general	corporate	expenses	for	certain support	functions	that	were	provided	on	a	centralized	basis	by	Ingersoll	Rand,	such	as	expenses	related	to	finance,	human	resources,	information	technology,	facilities, and	legal,	among	others.	The	Company	used	certain	underlying	activity	drivers	as	a	basis	of	allocation	including	revenue,	assets,	head-count	utilization	and	other	factors. Note	21	provides	information	regarding	general	overhead	allocations.	The	Company	believes	such	allocations	are	reasonable,	however	these	Consolidated	Financial Statements	do	not	purport	to	reflect	what	the	results	of	operations,	comprehensive	income	(loss),	financial	position,	equity	or	cash	flows	would	have	been	had	the Company	operated	as	a	stand-alone	public	company	for	all	periods	presented.

# NOTE	2	–	SUMMARY	OF	SIGNIFICANT	ACCOUNTING	POLICIES

A	summary	of	significant	accounting	policies	used	in	the	preparation	of	the	accompanying	Consolidated	Financial	Statements	follows:

Principles	of	Consolidation:	The	Consolidated	Financial	Statements	include	all	majority-owned	subsidiaries	of	the	Company.	A	noncontrolling	interest	in	a	subsidiary is	considered	an	ownership	interest	in	a	majority-owned	subsidiary	that	is	not	attributable	to	the	parent.	The	Company	includes	noncontrolling	interest	as	a	component	of Total	equity	in	the	Consolidated	Balance	Sheet	and	the	Net	earnings	attributable	to	noncontrolling	interests	are	presented	as	an	adjustment	from	Net	earnings	used	to arrive	at	Net	earnings	attributable	to	Allegion	in	the	Consolidated	Statement	of	Comprehensive	Income.

Partially-owned	equity	affiliates	generally	represent	20-50%	ownership	interests	in	investments	and	where	we	demonstrate	significant	influence	in	investments,	but	do not	have	a	controlling	financial	interest.	Partially-owned	equity	affiliates	are	accounted	for	under	the	equity	method.	The	Company	is	also	required	to	consolidate variable	interest	entities	in	which	it	bears	a	majority	of	the	risk	to	the	entities'	potential	losses	or	stands	to	gain	from	a	majority	of	the	entities'	expected	returns. Transactions	between	the	Company	and	Ingersoll	Rand	and	its	affiliates	are	herein	referred	to	as	"related	party"	or	"affiliated"	transactions.	The	assets,	liabilities,	results of	operations	and	cash	flows	of	all	discontinued	operations	have	been	separately	reported	as	discontinued	operations.

Use	of	Estimates:		The	preparation	of	financial	statements	in	conformity	with	GAAP	requires	management	to	make	estimates	and	assumptions	that	affect	the	reported amounts	of	assets	and	liabilities	and	the	disclosures	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements	as	well	as	the	reported	amounts	of	revenues and	expenses	during	the	reporting	period.	Estimates	are	based	on	several	factors	including	the	facts	and	circumstances	available	at	the	time	the	estimates	are	made, historical	experience,

risk	of	loss,	general	economic	conditions	and	trends,	and	the	assessment	of	the	probable	future	outcome.	Some	of	the	more	significant	estimates	include	accounting	for doubtful	accounts,	useful	lives	of	property,	plant	and	equipment	and	intangible	assets,	purchase	price	allocations	of	acquired	businesses,	valuation	of	assets	including goodwill	and	other	intangible	assets,	product	warranties,	sales	allowances,	pension	plans,	postretirement	benefits	other	than	pensions,	taxes,	environmental	costs,	product liability	and	other	contingencies.	Actual	results	could	differ	from	those	estimates.	Estimates	and	assumptions	are	reviewed	periodically,	and	the	effects	of	changes,	if any,	are	reflected	in	the	Consolidated	Statement	of	Comprehensive	Income	in	the	period	that	they	are	determined.

Currency	Translation:		Assets	and	liabilities	where	the	functional	currency	is	not	the	U.S.	dollar,	have	been	translated	at	year-end	exchange	rates,	and	income	and expense	accounts	have	been	translated	using	average	exchange	rates	throughout	the	year.	Adjustments	resulting	from	the	process	of	translating	an	entity's	financial statements	into	the	U.S.	dollar	have	been	recorded	in	the	Equity	section	of	the	Consolidated	Balance	Sheet	within	Accumulated	other	comprehensive	income	(loss).

Cash	and	Cash	Equivalents:		Cash	and	cash	equivalents	include	cash	on	hand,	demand	deposits	and	all	highly	liquid	investments	with	original	maturities	at	the	time	of purchase	of	three	months	or	less.

Marketable	Securities:		The	Company	has	classified	its	marketable	securities	as	available-for-sale	in	accordance	with	GAAP.	Available-for-sale	marketable	securities are	accounted	for	at	fair	value,	with	the	unrealized	gain	or	loss,	less	applicable	deferred	income	taxes,	recorded	within	Accumulated	other	comprehensive	income	(loss). If	any	of	the	Company's	marketable	securities	experience	other	than	temporary	declines	in	value	as	defined	by	GAAP,	a	loss	is	recorded	in	the	Consolidated	Statement of	Comprehensive	Income	in	the	period	determined.

Inventories:	Inventories	are	stated	at	the	lower	of	cost	or	net	realizable	value	using	the	first-in	first-out	(FIFO)	method.

Allowance	for	Doubtful	Accounts:		The	Company	has	provided	an	allowance	for	doubtful	accounts	reserve,	which	represents	the	best	estimate	of	probable	loss inherent	in	the	Company's	account	receivables	portfolio.	Changes	in	the	financial	condition	of	customers	or	other	unanticipated	events,	which	may	affect	their	ability	to make	payments,	could	result	 in	charges	for	additional	allowances	exceeding	 the	Company's	estimates.	The	Company's	estimates	are	 influenced	by	 the	following considerations:	a	continuing	credit	evaluation	of	our	customers'	financial	condition;	trade	accounts	receivable	aging;	and	historical	loss	experience.	The	Company reserved	$3.8	million	and	$3.2	million	for	doubtful	accounts	as	of	December	31,	2015	and	2014,	respectively.

Property,	Plant	and	Equipment:		Property,	plant	and	equipment	are	stated	at	cost,	less	accumulated	depreciation.	Assets	placed	in	service	are	recorded	at	cost	and depreciated	using	the	straight-line	method	over	the	estimated	useful	life	of	the	asset	except	for	leasehold	improvements,	which	are	depreciated	over	the	shorter	of	their economic	useful	life	or	their	lease	term.	The	range	of	useful	lives	used	to	depreciate	property,	plant	and	equipment	is	as	follows:

Buildings 10 to 50 years Machinery	and	equipment 2 to 12 years Software 2 to 7 years

Repair	and	maintenance	costs	that	do	not	extend	the	useful	life	of	the	asset	are	charged	against	earnings	as	incurred.	Major	replacements	and	significant	improvements that	increase	asset	values	and	extend	useful	lives	are	capitalized.

The	Company	assesses	the	recoverability	of	the	carrying	value	of	its	property,	plant	and	equipment	whenever	events	or	changes	in	circumstances	indicate	that	the carrying	amount	of	the	asset	may	not	be	recoverable.	Recoverability	is	measured	by	a	comparison	of	the	carrying	amount	of	an	asset	to	the	future	net	undiscounted	cash flows	expected	to	be	generated	by	the	asset.	If	the	undiscounted	cash	flows	are	less	than	the	carrying	amount	of	the	asset,	an	impairment	loss	is	recognized	for	the amount	by	which	the	carrying	value	of	the	asset	exceeds	the	fair	value	of	the	assets.

Goodwill	and	Intangible	Assets:		The	Company	records	as	goodwill	the	excess	of	the	purchase	price	over	the	fair	value	of	the	net	assets	acquired.	Once	the	final valuation	has	been	performed	for	each	acquisition,	adjustments	may	be	recorded.

In	accordance	with	GAAP,	goodwill	and	other	indefinite-lived	intangible	assets	are	tested	and	reviewed	annually	for	impairment	during	the	fourth	quarter	or	whenever there	is	a	significant	change	in	events	or	circumstances	that	indicate	that	the	fair	value	of	the	asset	is	more	likely	than	not	less	than	the	carrying	amount	of	the	asset.

The	calculation	of	estimated	fair	value	is	based	on	two	valuation	techniques,	a	discounted	cash	flow	model	(income	approach)	and	a	market	adjusted	multiple	of earnings	and	revenues	(market	approach),	with	each	method	being	weighted	in	the	calculation.	The	implied	fair	value	of	goodwill	is	determined	in	the	same	manner	as the	amount	of	goodwill	recognized	in	a	business	combination.	The	estimated	fair	value	of	the	reporting	unit	is	allocated	to	all	of	the	assets	and	liabilities	of	the	reporting unit	(including	any	unrecognized	intangible	assets)	as	if	the	reporting	unit	had	been	acquired	in	a	business	combination	and	the	fair	value	of	the	reporting	unit,	as determined	in	the	first	step	of	the	goodwill	impairment	test,	was	the	price	paid	to	acquire	that	reporting	unit.

Recoverability	of	other	intangible	assets	with	indefinite	useful	lives	(i.e.	Trademarks)	is	determined	on	a	relief	from	royalty	methodology	(income	approach),	which	is based	on	the	implied	royalty	paid,	at	an	appropriate	discount	rate,	to	license	the	use	of	an	asset	rather	than	owning	the	asset.	The	present	value	of	the	after-tax	cost savings	(i.e.	royalty	relief)	indicates	the	estimated	fair	value	of	the	asset.	Any	excess	of	the	carrying	value	over	the	estimated	fair	value	is	recognized	as	an	impairment loss	equal	to	that	excess.

Intangible	assets	such	as	patents,	customer-related	intangible	assets	and	other	intangible	assets	with	finite	useful	lives	are	amortized	on	a	straight-line	basis	over	their estimated	economic	lives.	The	weighted-average	useful	lives	approximate	the	following:

Customer	relationships 25  years Trademarks 25 years

Completed	technology/patents 10  years Other 25 years

Recoverability	of	intangible	assets	with	finite	useful	lives	is	assessed	in	the	same	manner	as	property,	plant	and	equipment	as	described	above.

Income	Taxes:		For	purposes	of	the	Company's	Consolidated	Financial	Statements	for	periods	prior	to	the	Spin-off,	income	tax	expense	has	been	recorded	as	if	the Company	filed	tax	returns	on	a	stand-alone	basis	separate	from	Ingersoll	Rand.	This	separate	return	methodology	applies	the	accounting	guidance	for	income	taxes	to	the stand-alone	financial	statements	as	if	the	Company	was	a	stand-alone	enterprise	for	the	periods	prior	to	the	Spin-off.	Therefore,	cash	tax	payments	and	items	of	current and	deferred	taxes	may	not	be	reflective	of	the	Company's	actual	tax	balances	prior	to	or	subsequent	to	the	Spin-off.	Cash	paid	for	income	taxes	for	the	year	ended December	31,	2015	was	$80.6	million.

The	income	tax	accounts	reflected	in	the	Consolidated	Balance	Sheets	as	of	December	31,	2015	and	2014	include	income	taxes	payable	and	deferred	taxes	allocated	to the	Company	at	the	time	of	the	Spin-off.	The	calculation	of	the	Company's	income	taxes	involves	considerable	judgment	and	the	use	of	both	estimates	and	allocations.

Deferred	tax	assets	and	liabilities	are	determined	based	on	temporary	differences	between	financial	reporting	and	tax	bases	of	assets	and	liabilities,	applying	enacted	tax rates	expected	to	be	in	effect	for	the	year	in	which	the	differences	are	expected	to	reverse.	The	Company	recognizes	future	tax	benefits,	such	as	net	operating	losses	and tax	credits,	to	the	extent	that	realizing	these	benefits	is	considered	in	its	judgment	to	be	more	likely	than	not.	The	Company	regularly	reviews	the	recoverability	of	its deferred	tax	assets	considering	its	historic	profitability,	projected	future	taxable	income,	timing	of	the	reversals	of	existing	temporary	differences	and	the	feasibility	of	its tax	planning	strategies.	Where	appropriate,	the	Company	records	a	valuation	allowance	with	respect	to	a	future	tax	benefit.

Product	 Warranties:		Standard	product	warranty	accruals	are	recorded	at	 the	 time	of	sale	and	are	estimated	based	upon	product	warranty	 terms	and	historical experience.	The	Company	assesses	the	adequacy	of	its	liabilities	and	will	make	adjustments	as	necessary	based	on	known	or	anticipated	warranty	claims,	or	as	new information	becomes	available.

Revenue	Recognition:		Revenue	is	recognized	and	earned	when	all	of	the	following	criteria	are	satisfied:	(a)	persuasive	evidence	of	a	sales	arrangement	exists;	(b)	the price	is	fixed	or	determinable;	(c)	collectability	is	reasonably	assured;	and	(d)	delivery	has	occurred	or	service	has	been	rendered.	Delivery	generally	occurs	when	the title	and	the	risks	and	rewards	of	ownership	have	transferred	to	the	customer.	Both	the	persuasive	evidence	of	a	sales	arrangement	and	fixed	or	determinable	price	criteria are	deemed	to	be	satisfied	upon	receipt	of	an	executed	and	legally	binding	sales	agreement	or	contract	that	clearly	defines	the	terms	and	conditions	of	the	transaction including	the	respective	obligations	of	the	parties.	If	the	defined	terms	and	conditions	allow	variability	in	all	or	a	component	of	the	price,	revenue	is	not	recognized	until such	time	that	the	price	becomes	fixed	or	determinable.	At	the	point	of	sale,	the	Company	validates	the	existence	of	an	enforceable	claim	that	requires	payment	within	a reasonable	amount	of	time	and	assesses	the	collectability	of	that	claim.	If	collectability	is	not	deemed	to	be	reasonably	assured,	then	revenue	recognition	is	deferred	until such	time	that	collectability	becomes	probable	or	cash	is	received.	Delivery	is	not	considered	to	have	occurred	until	the	customer	has	taken	title	and	assumed	the	risks and	rewards	of	ownership.	Service	and	installation	revenue	are	recognized	when	earned.	In	some	instances,	customer	acceptance	provisions	are	included	in	sales arrangements	to	give	the	buyer	the	ability	to	ensure	the	delivered	product	or	service	meets	the	criteria	established	in	the	order.	In	these	instances,	revenue	recognition	is deferred	until	the	acceptance	terms	specified	in	the	arrangement	are	fulfilled	through	customer	acceptance	or	a	demonstration	that	established	criteria	have	been satisfied.	If	uncertainty	exists	about	customer	acceptance,	revenue	is	not	recognized	until	acceptance	has	occurred.

The	Company	offers	various	sales	incentive	programs	to	our	customers,	dealers,	and	distributors.	Sales	incentive	programs	do	not	preclude	revenue	recognition,	but	do require	an	accrual	for	the	Company's	best	estimate	of	expected	activity.	Examples	of	the	sales	incentives	that	are	accrued	for	as	a	contra	receivable	and	sales	deduction at	the	point	of	sale	include,	but	are	not	limited	to,	discounts	(i.e.	net	30	type),	coupons,	and	rebates	where	the	customer	does	not	have	to	provide	any	additional requirements	to	receive	the	discount.	Sales	returns	and	customer	disputes	involving	a	question	of	quantity	or	price	are	also	accounted	for	as	a	reduction	in	revenue	and	a contra	receivable.	At	December	31,	2015	and	2014,	the	Company	had	a	customer	claim	accrual	(contra	receivable)	of	$24.5	million	and	$23.5	million,	respectively.	All other	incentives	or	incentive	programs	where	the	customer	is	required	to	reach	a	certain	level	of	purchases,	remain	a	customer	for	a	certain	period,	provide	a	rebate form	or	is	subject	to	additional	requirements	are	accounted	for	as	a	reduction	of	revenue	and	establishment	of	a	liability.	At	December	31,	2015	and	2014,	the	Company had	a	sales	incentive	accrual	of	$26.6	million	and	$23.2	million,	respectively.	Each	of	these	accruals	represents	the	Company's	best	estimate	it	expects	to	pay	related	to previously	sold	units	based	on	historical	claim	experience.	These	estimates	are	reviewed	regularly	for	accuracy.	If	updated	information	or	actual	amounts	are	different from	previous	estimates,	the	revisions	are	included	in	the	Company's	results	for	the	period	in	which	they	become	known.	Historically,	the	aggregate	differences,	if	any, between	the	Company's	estimates	and	actual	amounts	in	any	year	have	not	had	a	material	impact	on	the	Consolidated	Financial	Statements.

Environmental	Costs: 	The	 Company	 is	 subject	 to	 laws	 and	 regulations	 relating	 to	 protecting	 the	 environment.	 Environmental	 expenditures	 relating	 to	 current operations	are	expensed	or	capitalized	as	appropriate.	Expenditures	relating	to	existing	conditions	caused	by	past	operations,	which	do	not	contribute	to	current	or	future revenues,	are	expensed.	Liabilities	for	remediation	costs	are	recorded	when	they	are	probable	and	can	be	reasonably	estimated,	generally	no	later	than	the	completion	of feasibility	studies	or	the	Company's	commitment	to	a	plan	of	action.	The	assessment	of	this	liability,	which	is	calculated	based	on	existing	technology,	does	not	reflect any	offset	for	possible	recoveries	from	insurance	companies,	and	is	not	discounted.	Refer	to	Note	22	for	further	details	of	environmental	matters.

Research	and	Development	Costs:		The	Company	conducts	research	and	development	activities	for	the	purpose	of	developing	and	improving	new	products	and services.	These	expenditures	are	expensed	when	incurred.	For	the	years	ended	December	31,	2015,	2014	and	2013,	these	expenditures	amounted	to	approximately	$45.2 million,	$43.3	million	and	$39.6	million,	respectively	and	consist	of	salaries,	wages,	benefits,	building	costs	and	other	overhead	expenses.

Software	Costs:		The	Company	capitalizes	certain	qualified	internal-use	software	costs	during	the	application	development	stage	and	subsequently	amortizes	those	costs over	the	software's	useful	life,	which	ranges	from	2	to	7	years.

Employee	Benefit	Plans:	The	Company	provides	a	range	of	benefits,	including	pensions,	postretirement	and	postemployment	benefits	to	eligible	current	and	former employees.	Determining	the	cost	associated	with	such	benefits	is	dependent	on	various	actuarial	assumptions,	including	discount	rates,	expected	return	on	plan	assets, compensation	 increases,	employee	mortality,	 turnover	rates,	and	healthcare	cost	 trend	rates.	Actuaries	perform	 the	required	calculations	 to	determine	expense	 in accordance	with	GAAP.	Actual	results	may	differ	from	the	actuarial	assumptions	and	are	generally	accumulated	into	Accumulated	other	comprehensive	income	(loss) and	amortized	 into	Net	earnings	over	future	periods.	The	Company	reviews	 its	actuarial	assumptions	at	each	measurement	date	and	makes	modifications	 to	 the assumptions	based	on	current	rates	and	trends,	if	appropriate.	Refer	to	Note	12	for	further	details	on	employee	benefit	plans.

Loss	 Contingencies:		Liabilities	are	recorded	for	various	contingencies	arising	in	the	normal	course	of	business,	including	litigation	and	administrative	proceedings, environmental	matters,	product	liability,	product	warranty,	worker's	compensation	and	other	claims.	The	Company	has	recorded	reserves	in	the	financial	statements related	to	these	matters,	which	are	developed	using	inputs	derived	from	actuarial	estimates	and	historical	and	anticipated	experience	data	depending	on	the	nature	of	the reserve	and,	in	certain	instances,	with	consultation	of	legal	counsel,	internal	and	external	consultants	and	engineers.	Subject	to	the	uncertainties	inherent	in	estimating future	costs	for	these	types	of	liabilities,	the	Company	believes	its	estimated	reserves	are	reasonable	and	does	not	believe	the	final	determination	of	the	liabilities	with respect	to	these	matters	would	have	a	material	effect	on	the	financial	condition,	results	of	operations,	liquidity	or	cash	flows	of	the	Company	for	any	year.	Refer	to	Note 22	for	further	details	on	loss	contingencies.

Derivative	 Instruments:		The	Company	periodically	enters	into	cash	flow	and	other	derivative	transactions	to	specifically	hedge	exposure	to	various	risks	related	to currency	and	interest	rates.	The	Company	recognizes	all	derivatives	on	the	Consolidated	Balance	Sheet	at	their	fair	value	as	either	assets	or	liabilities.	For	cash	flow designated	hedges,	the	effective	portion	of	the	changes	in	fair	value	of	the	derivative	contract	are	recorded	in	Accumulated	other	comprehensive	income	(loss),	net	of taxes,	and	are	recognized	in	Net	earnings	at	the	time	earnings	are	affected	by	the	hedged	transaction.	For	other	derivative	transactions,	the	changes	in	the	fair	value	of	the derivative	contract	are	immediately	recognized	in	Net	earnings.	Refer	to	Note	11	for	further	details	on	derivative	instruments.

# Recently	Adopted	Accounting	Pronouncements:

In	April	2014,	the	FASB	issued	ASU	2014-08,	"Reporting	Discontinued	Operations	and	Disclosures	of	Disposals	of	Components	of	an	Entity,"	which	amends	the definition	of	a	discontinued	operation	in	Accounting	Standards	Codification	Topic	205-20	(Presentation	of	Financial	Statements	—	Discontinued	Operations)	and requires	 entities	 to	 disclose	 additional	 information	 about	 disposal	 transactions	 that	 do	 not	 meet	 the	 discontinued	 operations	 criteria.	ASU	 2014-08	 redefines	 a discontinued	operation	as	a	component	or	group	of	components	of	an	entity	that	(1)	has	been	disposed	of	by	sale	or	other	than	by	sale	or	is	classified	as	held	for	sale	and (2)	represents	a	strategic	shift	that	has	(or	will	have)	a	major	effect	on	an	entity's	operations	and	financial	results.	According	to	the	ASU,	a	strategic	shift	that	has	(or	will have)	a	major	effect	on	an	entity's	operations	and	results	includes	the	disposal	of	a	major	geographical	area,	a	major	line	of	business,	a	major	equity	investment,	or	other major	parts	of	an	entity.	The	ASU	is	effective	prospectively	for	disposals	or	components	classified	as	held	for	sale	in	periods	on	or	after	December	15,	2014.	As	a	result of	the	adoption	of	ASU	2014-08,	the	Company's	divestiture	of	its	operation	in	Venezuela	and	of	its	systems	integration	business	in	China	did	not	qualify	as	discontinued operations.	See	Note	9	for	more	information.

In	November	2015,	the	FASB	issued	ASU	2015-17,	"Income	Taxes	(Topic	740):	Balance	Sheet	Classification	of	Deferred	Taxes."	ASU	2015-17	requires	that	deferred tax	liabilities	and	assets	be	classified	as	noncurrent	in	a	classified	statement	of	financial	position.	Prior	to	the	issuance	of	the	standard,	entities	were	required	to	separate deferred	income	tax	liabilities	and	assets	into	current	and	noncurrent	amounts	in	a	classified	statement	of	financial	position.	The	ASU	is	effective	for	financial	statements issued	for	annual	periods	beginning	after	December	15,	2017,	and	interim	periods	within	annual	periods	beginning	after	December	15,	2018,	however	early	adoption was	permitted.	The	Company	adopted	the	provisions	of	ASU	2015-17	on	a	prospective	basis	at	December	31,	2015.

In	May	2015,	the	FASB	issued	ASU	2015-07,	"Disclosures	for	Investments	in	Certain	Entities	That	Calculate	Net	Asset	Value	per	Share	(or	Its	Equivalent)."	ASU	2015- 07	removes	the	requirement	to	categorize	within	the	fair	value	hierarchy	all	investments	for	which	fair	value	is	measured	using	the	net	asset	value	per	share	practical expedient	and	removes	the	requirement	to	make	certain	disclosures	for	these	investments.	The	ASU	will	be	effective	for	annual	reporting	periods	beginning	after December	15,	2015,	however,	early	adoption	was	permitted.	The	Company	adopted	the	provisions	of	ASU	2015-07	on	a	retrospective	basis	at	December	31,	2015.

# Recently	Issued	Accounting	Pronouncements:

In	May	2014,	 the	FASB	 issued	ASU	2014-09,	"Revenue	from	Contracts	with	Customers."	ASU	2014-09	 is	 the	result	of	a	 joint	project	between	 the	FASB	and International	Accounting	 Standards	 Board	 ("IASB")	to	clarify	 the	principles	for	recognizing	revenue	and	 to	develop	a	common	revenue	standard	for	GAAP	and International	Financial	Reporting	Standards	("IFRS")	that	would	remove	inconsistencies	and	weaknesses	in	revenue	requirements,	provide	a	more	robust	framework	for addressing	revenue	issues,	improve	comparability	of	revenue	recognition	practices	across	entities,	industries,	jurisdictions,	and	capital	markets,	provide	more	useful information	to	users	of	financial	statements	through	improved	disclosure	requirements	and	simplify	the	preparation	of	financial	statements	by	reducing	the	number	of requirements	to	which	an	entity	must	refer.	On	July	9,	2015,	the	FASB	voted	to	defer	the	effective	date	by	one	year	to	the	interim	and	annual	periods	beginning	on	or after	December	15,	2017.	Early	adoption	is	permitted

for	periods	beginning	on	or	after	December	15,	2016.	The	Company	is	assessing	the	impact	ASU	2014-09	will	have	on	the	Consolidated	Financial	Statements.

In	June	2014,	the	FASB	issued	ASU	2014-12,	"Accounting	for	Share-Based	Payments	When	the	Terms	of	an	Award	Provide	That	a	Performance	Target	Could	Be Achieved	after	the	Requisite	Service	Period."	ASU	2014-12	requires	that	a	performance	target	that	affects	vesting,	and	that	could	be	achieved	after	the	requisite	service period,	be	treated	as	a	performance	condition.	As	such,	the	performance	target	should	not	be	reflected	in	estimating	the	grant	date	fair	value	of	the	award.	This	update further	clarifies	that	compensation	cost	should	be	recognized	in	the	period	in	which	it	becomes	probable	that	the	performance	target	will	be	achieved	and	should represent	the	compensation	cost	attributable	to	the	period(s)	for	which	the	requisite	service	has	already	been	rendered.	The	ASU	is	effective	for	annual	and	interim reporting	periods	beginning	after	December	15,	2015,	including	interim	periods	within	that	reporting	period.	Early	adoption	is	permitted.	The	requirements	of	ASU 2014-12	are	not	expected	to	have	a	significant	impact	on	the	Consolidated	Financial	Statements.

In	August	2014,	the	FASB	issued	ASU	2014-15,	"Disclosure	of	Uncertainties	about	an	Entity's	Ability	to	Continue	as	a	Going	Concern."	ASU	2014-15	provides guidance	on	management's	responsibility	in	evaluating	whether	there	is	substantial	doubt	about	a	company's	ability	to	continue	as	a	going	concern	and	to	provide	related footnote	disclosures.	The	ASU	will	be	effective	in	the	fourth	quarter	of	2016.	Early	adoption	is	permitted.	The	requirements	of	ASU	2014-15	are	not	expected	to	have	a significant	impact	on	the	Consolidated	Financial	Statements.

In	April	2015,	the	FASB	issued	ASU	2015-03,	"Interest	-	Imputation	of	Interest	(Subtopic	835-30):	Simplifying	the	Presentation	of	Debt	Issuance	Costs."	ASU	2015-03 amends	existing	guidance	to	require	the	presentation	of	debt	issuance	costs	in	the	balance	sheet	as	a	deduction	from	the	carrying	amount	of	the	related	debt	liability instead	of	as	an	asset.	The	ASU	is	effective	for	annual	reporting	periods	beginning	after	December	15,	2015.	Early	adoption	is	permitted.	As	of	December	31,	2015,	the Company	had	$29.2	million	in	unamortized	debt	issuance	costs.

In	July	2015,	the	FASB	issued	ASU	2015-11,	"Inventory	(Topic	330):	Simplifying	the	Measurement	of	Inventory."	ASU	2015-11	changes	the	measurement	principle for	inventory	from	the	lower	of	cost	or	market	to	the	lower	of	cost	and	net	realizable	value.	The	standard	defines	net	realizable	value	as	estimated	selling	prices	in	the ordinary	course	of	business	less	reasonably	predictable	costs	of	completion,	disposal	and	transportation.	The	ASU	is	effective	for	annual	and	interim	reporting	periods beginning	after	December	15,	2016,	including	interim	periods	within	that	reporting	period.	Early	adoption	is	permitted.	The	requirements	of	ASU	2015-11	are	not expected	to	have	a	significant	impact	on	the	Consolidated	Financial	Statements.

In	September	2015,	the	FASB	issued	ASU	2015-16,	"Business	Combinations	(Topic	802):	Simplifying	the	Accounting	for	Measurement-Period	Adjustments."	ASU 2015-16	requires	that	an	acquirer	recognize	adjustments	to	provisional	amounts	that	are	identified	during	the	measurement	period	in	the	reporting	period	in	which	the adjustment	amounts	are	determined.	Prior	to	the	issuance	of	the	standard,	entities	were	required	to	retrospectively	apply	adjustments	made	to	provisional	amounts recognized	in	a	business	combination.	The	ASU	is	effective	for	fiscal	years,	and	interim	periods	within	those	years,	beginning	after	December	15,	2015.	Early	adoption is	permitted.	The	requirements	of	ASU	2015-16	are	not	expected	to	have	a	significant	impact	on	the	Consolidated	Financial	Statements.

# NOTE	3	–	MARKETABLE	SECURITIES

At	December	31,	marketable	securities	included	within	Other	noncurrent	assets	in	the	Consolidated	Balance	Sheets	were	as	follows:

|  |  | 2015 |  |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Amortized\tcost\tor\ncost | Unrealized\ngains | Fair\nvalue | Amortized\tcost\tor\ncost | Unrealized\ngains | Fair\nvalue |
| Equity\tsecurities | $1.2 | $13.0 | $14.2 | $5.2 | $12.7 | $17.9 |

# NOTE	4	–	INVENTORIES

At	December	31,	the	major	classes	of	inventory	were	as	follows:

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Raw\tmaterials | $58.9 | $52.7 |
| Work-in-process | 30.0 | 26.0 |
| Finished\tgoods | 115.2 | 90.6 |
| Total | $204.1 | $169.3 |

Inventories	are	stated	at	the	lower	of	cost	or	net	realizable	value	using	the	first-in,	first-out	(FIFO)	method.

# NOTE	5	–	PROPERTY,	PLANT	AND	EQUIPMENT

At	December	31,	the	major	classes	of	property,	plant	and	equipment	were	as	follows:

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Land | $14.5 | $13.7 |
| Buildings | 125.9 | 117.4 |
| Machinery\tand\tequipment | 340.1 | 330.9 |
| Software | 101.9 | 96.8 |
| Construction\tin\tprogress | 34.1 | 21.0 |
|  | 616.5 | 579.8 |
| Accumulated\tdepreciation | (391.7) | (372.6) |
| Total | $224.8 | $207.2 |

# NOTE	6	–	GOODWILL

The	Company	records	as	goodwill	the	excess	of	the	purchase	price	over	the	fair	value	of	the	net	assets	acquired.	Once	the	final	valuation	has	been	performed	for	each acquisition,	adjustments	may	be	recorded.	The	changes	in	the	carrying	amount	of	Goodwill	are	as	follows:

| In	millions | Americas | EMEIA | Asia	Pacific | Total |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013\t(gross) | $362.8 | \t $540.0 | \t $65.6 | \t $968.4 |
| Accumulated\timpairment\t* | — | (478.6) | (6.9) | (485.5) |
| December\t31,\t2013\t(net) | 362.8 | 61.4 | 58.7 | 482.9 |
| Acquisitions | 2.3 | — | 10.3 | 12.6 |
| Currency\ttranslation | (0.3) | (7.0) | (3.8) | (11.1) |
| December\t31,\t2014\t(net) | 364.8 | 54.4 | 65.2 | 484.4 |
| Acquisitions | 9.2 | 219.3 | 27.9 | 256.4 |
| Write-off | (0.8) | — | — | (0.8) |
| Currency\ttranslation | (0.4) | (18.9) | (6.6) | (25.9) |
| December\t31,\t2015\t(net) | $372.8 | \t $254.8 | \t $86.5 | \t $714.1 |

*	Accumulated	impairment	consists	of	charges	of	$137.6	million	(EMEIA),	$341.0	million	(EMEIA)	and	$6.9	million	(Asia	Pacific)	recorded	in	2013,	2008	and	2007, respectively,	as	a	result	of	the	Company's	impairment	testing.	During	the	third	quarter	of	2013	the	Company	performed	an	interim	impairment	test	on	goodwill	of	its EMEIA	reporting	unit.	The	results	of	the	third

quarter	2013	interim	impairment	test	indicated	that	the	estimated	fair	value	of	the	EMEIA	reporting	unit	was	less	than	its	carrying	value;	consequently,	the	Company completed	the	second	step	of	the	interim	impairment	test,	which	resulted	in	a	$137.6	million	non-cash	pre-tax	goodwill	impairment	charge.

As	discussed	in	Note	9	-	Divestitures	in	2015	the	assets	of	Bocom	within	the	Asia	Pacific	segment	were	reclassified	to	assets	held	for	sale	within	the	December	31,	2014 Consolidated	Balance	Sheet.	Goodwill	allocated	to	this	business	was	$21.6	million	at	December	31,	2014.	In	conjunction	with	determining	the	fair	value	of	the	assets held	for	sale,	the	Company	determined	that	the	goodwill	assigned	to	this	business	was	impaired.	As	a	result,	approximately	$21.0	million	of	the	$78.1	million	pre-tax charge	related	to	the	divestiture	recorded	in	2015	related	to	the	write-off	of	goodwill.

The	estimated	fair	values	for	each	of	the	Company's	reporting	units	exceeded	their	carrying	values	by	more	than	10%	for	the	2015	goodwill	impairment	test.

# NOTE	7	–	INTANGIBLE	ASSETS

The	following	table	sets	forth	the	gross	amount	and	related	accumulated	amortization	of	the	Company's	intangible	assets	at	December	31:

|  |  | 2015 |  |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Gross\tcarrying\namount | Accumulated\namortization | Net\tcarrying\namount | Gross\tcarrying\namount | Accumulated\namortization | Net\tcarrying\namount |
| Completed\ttechnologies/patents | $49.0 | $(23.1) | $25.9 | $27.1 | $(22.8) | $4.3 |
| Customer\trelationships | 278.7 | (40.2) | 238.5 | 94.7 | (37.0) | 57.7 |
| Trademarks\t(finite-lived) | 81.2 | (35.3) | 45.9 | 89.3 | (36.0) | 53.3 |
| Other | 9.0 | (9.0) | — | 10.2 | (10.2) | — |
| Total\tfinite-lived\tintangible\tassets | 417.9 | $(107.6) | 310.3 | 221.3 | $(106.0) | 115.3 |
| Trademarks\t(indefinite-lived) | 62.1 |  | 62.1 | 10.1 |  | 10.1 |
| Total | $480.0 |  | $372.4 | $231.4 |  | $125.4 |

The	Company	amortizes	intangible	assets	with	finite	useful	lives	on	a	straight-line	basis	over	their	estimated	economic	lives	in	accordance	with	GAAP.	Indefinite-lived intangible	assets	are	not	subject	to	amortization,	but	instead,	are	tested	for	impairment	at	least	annually	(more	frequently	if	certain	indicators	are	present).

In	accordance	with	the	Company's	indefinite-lived	intangible	asset	impairment	testing	policy	outlined	in	Note	2,	the	Company	performed	its	annual	impairment	test	in the	fourth	quarter	of	each	year.	In	each	year,	the	Company	determined	the	fair	value	of	all	indefinite-lived	intangible	assets	exceeded	their	respective	carrying	values. Therefore,	no	impairment	charges	were	recorded	during	2015,	2014	and	2013.

# NOTE	8	-	ACQUISITIONS

In	February	2015,	the	Company	made	an	investment	in	iDevices,	a	brand	and	development	partner	in	the	Internet	of	Things	industry.	The	investment	is	accounted	for using	the	equity	method.

In	April	 2015,	 the	 Company	 completed	 the	 acquisition	 of	 certain	 assets	 of	 Zero	 International,	 Inc.	 ("Zero").	 Zero	 manufactures	 door	 and	 window	 products	 for commercial	spaces	and	products	include	sealing	systems,	such	as	sound	control,	fire	and	smoke	protection,	threshold	applications,	lites,	door	louvers,	intumescent products,	photo-luminescent	and	flood	barrier	for	doors.

In	May	2015,	the	Company	completed	the	acquisition	of	the	assets	of	Brio,	a	division	of	RMD	Industries	Pty	Ltd	("Brio").	Brio	is	a	designer	and	manufacturer	of	sliding and	folding	door	hardware	for	commercial	and	residential	spaces	in	Australia,	New	Zealand,	the	United	Kingdom	and	the	United	States.

In	July	2015,	the	Company	completed	the	acquisition	of	Milre	Systek	Co.,	Ltd.	("Milre").	Milre	is	a	leading	security	solutions	manufacturer	in	South	Korea,	focused	on producing	high-quality	and	innovative	electronic	door	locks.

In	September	2015,	 the	Company	completed	 the	acquisition	of	SimonsVoss	Technologies	GmbH	("SimonsVoss")	for	approximately	$230.0	million.	 SimonsVoss, headquartered	in	Munich,	Germany,	is	an	electronic	lock	company	in	the	European	electronic	market	segment.	SimonsVoss	generated	sales	of	approximately	$69.2 million	in	2014.

In	September	2015,	the	Company	completed	the	acquisition	of	AXA	Stenman	Holding	("AXA")	for	approximately	$208.0	million.	AXA	is	a	European	residential	and portable	security	provider	headquartered	in	Veenendaal,	the	Netherlands,	with	production	facilities	in	the	Netherlands,	France	and	Poland.	AXA	manufactures	and	sells	a branded	 portfolio	 of	 portable	 locks	 and	 lights	 as	 well	 as	 a	 wide	 variety	 of	 window	 and	 door	 hardware.	 The	 products	 are	 sold	 throughout	 Europe	 to	 bicycle manufacturers,	retail	distributors	and	property	builders.	AXA	generated	sales	of	approximately	$79.8	million	in	2014.

Total	consideration	paid	for	the	acquisitions	was	$511.3	million	(net	of	cash	acquired).	The	preliminary	allocation	of	the	aggregate	purchase	price	to	assets	acquired	and liabilities	assumed	for	the	acquisitions	described	above	is	as	follows:

| In	millions |  |
| :--- | :--- |
| Accounts\tand\tnotes\treceivable,\tnet | $23.3 |
| Inventories | 34.8 |
| Other\tcurrent\tassets | 2.0 |
| Property,\tplant\tand\tequipment,\tnet | 27.2 |
| Goodwill | 256.4 |
| Intangible\tassets,\tnet | 273.8 |
| Other\tnoncurrent\tassets | 12.5 |
| Accounts\tpayable | (12.2) |
| Accrued\texpenses\tand\tother\tcurrent\tliabilities | (30.1) |
| Deferred\ttax\tliabilities\tand\tother\tnoncurrent\tliabilities | (76.4) |

Intangible	assets	are	primarily	comprised	of	acquired	customer	lists	and	completed	technologies.	Goodwill	results	from	several	factors	including	Allegion-specific synergies	that	were	excluded	from	the	cash	flow	projections	used	in	the	valuation	of	intangible	assets	and	intangible	assets	that	do	not	qualify	for	separate	recognition (i.e.,	assembled	workforce).	The	majority	of	the	goodwill	is	not	deductible.	The	purchase	price	allocations	for	the	acquisitions	are	pending	completion	of	valuations	for certain	assumed	liabilities	and	calculation	of	deferred	tax	balances.	These	acquisitions	are	accounted	for	as	business	combinations.

The	following	unaudited	pro	forma	financial	information	for	the	years	ended	December	31,	2015	and	2014	reflects	the	consolidated	results	of	operations	of	the	Company as	if	the	acquisitions	had	taken	place	on	January	1,	2014.

|  | December	31, | December	31, |
| :--- | :--- | :--- |
| In\tmillions,\texcept\tper\tshare\tamounts | 2015 | 2014 |
| Net\trevenues | $2,170.2 | $2,305.2 |
| Net\tearnings\t(loss)\tattributable\tto\tAllegion\tplc | $167.0 | $155.6 |
| Basic\tincome\t(loss)\tper\tshare | $1.74 | $1.62 |
| Diluted\tincome\t(loss)\tper\tshare | $1.72 | $1.60 |

During	the	year	ended	December	31,	2015	the	Company	incurred	$17.9	million	of	acquisition	related	costs.	These	expenses	are	included	in	Selling	and	administrative expenses	in	the	Consolidated	Statement	of	Comprehensive	Income.	For	pro	forma	purposes,	these	expenses	were	assumed	to	have	been	incurred	on	January	1,	2014.	Pro forma	Net	earnings	(loss)	attributable	to	Allegion	plc	in	the	table	above	has	been	adjusted	to	reflect	the	costs	in	the	assumed	acquisition	period.

The	Company's	historical	financial	information	was	adjusted	to	give	effect	to	the	pro	forma	events	that	were	directly	attributable	to	the	acquisitions.	This	unaudited	pro forma	financial	information	has	been	presented	for	informational	purposes	only	and	does	not	purport	to	be	indicative	of	results	of	operations	that	would	have	occurred had	the	pro	forma	events	taken	place	on	the	date	indicated	or	the	future	consolidated	results	of	operations	of	the	combined	company.

The	unaudited	pro	forma	financial	information	has	been	calculated	after	applying	the	Company's	accounting	policies	and	adjusting	the	results	of	the	acquired	companies to	reflect	the	additional	amortization	that	would	have	been	charged	assuming	the	fair	value	adjustments	to	intangible	assets	had	been	applied	from	January	1,	2014	with the	consequential	tax	effects.	Additionally,	interest	related	to	the	issuance	of	$300	million	of	senior	notes	and	the	borrowing	of	$100	million	on	the	revolving	facility	has been	included	in	the	pro	forma	results	above	as	if	the	debt	was	outstanding	as	of	January	1,	2014.	For	purposes	of	calculating	interest	on	the	additional	debt	amounts,	the Company	has	assumed	the	total	amount	is	outstanding	for	all	pro	forma	periods	presented.

The	following	financial	information	reflects	the	revenue	and	earnings	of	the	acquired	companies	since	their	respective	acquisition	dates	included	in	the	Consolidated Statement	of	Comprehensive	Income	as	of	the	year	ended	December	31,	2015.

| In	millions | 2015 |
| :--- | :--- |
| Net\trevenues | $74.5 |
| Earnings\tbefore\tincome\ttax | $2.2 |

Earnings	before	income	tax	includes	$7.1	million	of	expenses	related	to	the	step-up	of	acquired	inventory	to	fair	value.

# NOTE	9	-	DIVESTITURES

As	previously	disclosed,	the	Company	sold	its	majority	ownership	in	its	Venezuelan	operation	to	Venezuelan	investors.	As	a	result	of	the	sale	in	the	third	quarter	of 2015,	the	Company	recorded	a	non-cash	charge	of	$26.1	million,	which	primarily	represents	cumulative	currency	translation	adjustments	that	were	previously	deferred in	equity	and	were	reclassified	to	a	loss	in	the	Consolidated	Statement	of	Comprehensive	Income	upon	sale.	$16.2	million	of	assets	and	$3.5	million	of	liabilities	related to	the	Venezuela	operation	were	reclassified	to	assets	and	liabilities	held	for	sale	within	the	Consolidated	Balance	Sheets	for	all	periods	presented.

As	previously	disclosed,	the	Company	sold	a	majority	stake	of	Bocom	Wincent	Technologies	Co.,	Ltd.	("Bocom")	in	the	fourth	quarter	of	2015.	Bocom	operates	a security	system	integration	business	exclusively	in	China	and	provides	services	primarily	to	Chinese	governments	and	government	agencies.	Under	the	terms	of	the transaction,	the	Company	may	receive	consideration	of	up	to	$75	million	based	on	the	future	cash	collection	performance	of	Bocom	and	additional	payments	of approximately	$8.3	million	related	to	working	capital	transferred	with	the	sale.	Additionally,	the	Company	will	retain	15%	of	the	shares	of	Bocom.	The	Company currently	estimates	the	fair	value	of	the	consideration	to	be	$75.3	million,	of	which	$51.2	million	is	classified	in	Accounts	and	notes	receivable,	net	and	the	remaining amount	is	classified	within	Other	assets	within	the	Consolidated	Balance	Sheet.	The	Company	currently	estimates	payment	to	be	completed	in	approximately	2	years; however	repayment	may	be	delayed

depending	on	the	timing	of	future	cash	collections.	The	Company	may	incur	additional	charges	if	it	is	determined	that	future	cash	collections	will	no	longer	occur.

The	consideration	has	been	accounted	for	as	a	receivable	and	recorded	net	of	an	unamortized	discount.	A	nominal	discount	was	amortized	and	recognized	in	Interest income	on	the	Consolidated	Statement	of	Comprehensive	Income	based	on	the	expected	term	of	the	receivable.	The	fair	value	of	the	receivable	was	estimated	by discounting	the	expected	future	cash	flows.	The	assumptions	used	in	this	estimate	are	considered	unobservable	inputs.	Fair	value	measurements	that	utilize	significant unobservable	inputs	are	categorized	as	Level	3	measurements	under	the	accounting	guidance.

As	a	result	of	the	sale,	the	Company	recorded	a	non-cash,	pre-tax	charge	of	$78.1	million	($82.4	million	after	tax	charges)	during	the	year	ended	December	31,	2015	to write	the	carrying	value	of	Bocom's	assets	and	liabilities	down	to	their	estimated	fair	value	less	costs	to	complete	the	transaction.	Bocom's	assets	and	liabilities	were reclassified	to	assets	and	liabilities	held	for	sale	within	the	Consolidated	Balance	Sheets	for	all	periods	presented.

Bocom's	assets	and	liabilities	held	for	sale	at	December	31,	2014	were	comprised	of	the	following:

| in	millions | December	31,<br>2014 |
| :--- | :--- |
| Accounts\treceivable,\tnet | $26.8 |
| Costs\tin\texcess\tof\tbillings\ton\tuncompleted\tcontracts | 181.1 |
| Inventory | 1.3 |
| Other\tcurrent\tassets | 4.0 |
| Other\tnoncurrent\tassets | 24.2 |
| Total\tassets\theld\tfor\tsale | $237.4 |
| Accounts\tpayable | $72.9 |
| Accrued\texpenses\t&amp;\tother\tcurrent\tliabilities | 24.8 |
| Other\tnoncurrent\tliabilities | 0.8 |
| Total\tliabilities\theld\tfor\tsale | $98.5 |

Net	revenues	and	loss	before	income	taxes	of	Bocom	for	the	year	ended	December	31	were	as	follows:

|  | Twelve	months	ended | Twelve	months	ended |
| :--- | :--- | :--- |
| In\tmillions | 2015 | 2014 |
| Net\tRevenues | \t $38.5 | \t $97.3 |
| Earnings\t(loss)\tbefore\tincome\ttaxes | \t $(63.4) | \t $3.6 |

Net	revenues	and	earnings	for	Bocom	were	historically	weighted	to	the	second	half	of	the	year,	reflecting	typical	seasonality	of	contract	awards.

# NOTE	10	–	DEBT	AND	CREDIT	FACILITIES

At	December	31,	long-term	debt	and	other	borrowings	consisted	of	the	following:

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Term\tLoan\tA\tFacility | $926.7 | \t $962.8 |
| 5.75%\tSenior\tNotes\tdue\t2021 | 300.0 | 300.0 |
| 5.875%\tSenior\tNotes\tdue\t2023 | 300.0 | — |
| Other\tdebt,\tincluding\tcapital\tleases,\tmaturing\tin\tvarious\tamounts\tthrough\t2016 | 18.7 | 1.8 |
| Total\tdebt | $1,545.4 | \t $1,264.6 |
| Less\tcurrent\tportion\tof\tlong\tterm\tdebt | 65.6 | 49.6 |
| Total\tlong-term\tdebt | $1,479.8 | \t $1,215.0 |

# Senior	Secured	Credit	Facilities

In	September	2015,	the	Company	entered	into	a	Second	Amendment	and	Restatement	Agreement	(the	"Second	Amendment	and	Restatement	Agreement")	to	amend	and restate	its	existing	Amended	and	Restated	Credit	Agreement	(the	"Credit	Agreement"),	dated	as	of	November	26,	2013	and	amended	and	restated	on	October	15,	2014. The	Second	Amended	and	Restated	Agreement	provides	for	(i)	$1.438	billion	of	Senior	Secured	Facilities,	consisting	of	a$938.4	million	Term	Loan	Facility	due	in	2020 (the	"Term	Loan	A	Facility")	and	(ii)	a	$500.0	million	Senior	Secured	Revolving	Credit	Facility	(the	"Revolver")	maturing	in	2020.	The	Company	refers	to	these	credit facilities	as	its	"Senior	Secured	Credit	Facilities."

The	terms	of	the	Second	Amendment	and	Restatement	Agreement	are	substantially	consistent	with	the	terms	of	the	previous	agreements,	subject	to	certain	changes, including:(i)	a	reduction	of	the	applicable	margin	for	LIBOR	rate	borrowings	to	range	from	1.375%	to	1.875%	(down	from	1.50%	to	2.00%)	and	the	applicable	margin for	base	rate	borrowings	to	range	from	0.375%	to	0.875%	(down	from	0.50%	to	1.00%),	in	each	case	depending	on	the	corporate	credit	or	family	rating,	(ii)	an	extension of	the	maturity	date	of	the	Revolver	and	the	Term	Loan	Facility	from	October	15,	2019	to	October	15,	2020;	and	(iii)	changes	to	certain	other	terms	of	the	Credit Agreement,	including	the	restrictive	covenants,	to	provide	the	Company	with	additional	flexibility.

The	Company	repaid	$36.1	million	of	principal	on	its	Term	Loan	A	Facility	during	the	year	ended	December	31,	2015.	Borrowings	outstanding	under	the	Term	Loan	A Facility	were	$926.7	million	on	December	31,	2015.	Allegion	plc	remains	the	primary	borrower	under	the	Second	Amended	and	Restated	Credit	Agreement.

Term	Facilities.	The	Term	Loan	A	Facility	amortizes	in	quarterly	installments	at	the	following	rates	per	year:	5%	in	2016;	5%	in	2017;	5%	in	2018	and	10%	in	each	year thereafter,	with	the	final	installment	due	on	October	15,	2020.

Revolver.	The	five-year	Senior	Secured	Revolving	Credit	Facility	permits	borrowings	of	up	to	$500.0	million.	The	Revolver	is	comprised	of	two	tranches:	a	$400	million tranche	available	in	U.S.	Dollars	and	a	multi-currency	tranche	capped	at	$100	million.	The	Revolver	also	includes	$100.0	million	available	for	the	issuance	of	letters	of credit,	however	outstanding	letters	of	credit	reduce	availability	under	the	Revolver.	The	Revolver	matures	and	the	commitments	thereunder	will	terminate	on	October 15,	2020.	The	Company	pays	certain	fees	with	respect	to	the	Revolver,	including	a	commitment	fee	on	the	undrawn	portion	of	the	Revolver	of	0.25%	per	year.

During	August	2015,	the	Company	borrowed	$400.0	million	under	the	Revolver	in	order	to	fund	a	portion	of	the	acquisitions	of	SimonsVoss	and	AXA.	The	Company used	the	proceeds	of	the	2023	Senior	Notes	offering,	discussed	below,	and	cash	on	hand	to	repay	the	$400.0	million	outstanding	between	September	and	December.	At December	31,	2015,	the	Company	did	not	have	any	borrowings	outstanding	under	the	Revolver	and	had	$26.6	million	of	letters	of	credit	outstanding.

Guarantees	and	Collateral.	The	indebtedness,	obligations	and	liabilities	under	the	Senior	Secured	Credit	Facilities	are	unconditionally	guaranteed	jointly	and	severally on	a	senior	secured	basis	by	certain	of	Allegion	plc's	subsidiaries,	and	will	be	secured,	subject	to	permitted	liens	and	other	exceptions	and	exclusions,	by	a	first-priority lien	on	substantially	all	tangible	and	intangible	assets	of	the	borrowers	and	each	U.S.	guarantor	(including	(i)	a	perfected	pledge	of	all	of	the	capital	stock	of	the borrower	and	each	direct,	wholly-owned	material	subsidiary	held	by	the	borrowers	or	any	guarantor	(subject	to	certain	limitations	with	respect	to	non	U.S.	subsidiaries) and	(ii)	perfected	security	interests	in,	and	mortgages	on,	accounts,	inventory,	equipment,	general	intangibles,	commercial	tort	claims,	investment	property,	intellectual property,	material	fee-owned	real	property,	letter-of-credit	rights,	intercompany	notes	and	proceeds	of	the	foregoing,	except	for	certain	excluded	assets.

Mandatory	Prepayments.	In	accordance	with	the	Senior	Secured	Credit	Facility,	net	cash	proceeds	of	non-recourse	asset	sales	and	proceeds	received	from	certain additional	indebtedness	will	require	prepayment	of	the	Term	Loan	with	proceeds	received.	In	addition,	starting	with	the	year	ended	December	31,	2016	the	Company may	be	required	to	apply	between	0%-50%	of	its	annual

excess	cash	flow	(as	defined	in	the	Senior	Secured	Credit	Facility)	to	the	prepayment	of	the	Senior	Secured	Credit	Facility.	However,	this	percentage	reduces	to	certain levels	and	eventually	to	zero	upon	achievement	of	certain	leverage	ratios.

Voluntary	Prepayments.	The	Company	may	voluntarily	prepay	the	outstanding	Term	Facility	in	whole	or	in	part	at	any	time	without	premium	or	penalty.	Optional prepayments	of	the	Term	Facility	will	be	applied	to	the	remaining	installments	at	the	direction	of	the	borrower.

Commitments	under	the	Revolver	may	be	reduced	in	whole	or	in	part	at	any	time	without	premium	or	penalty.

Covenants.	The	Senior	Secured	Credit	Facility	contains	certain	customary	covenants	that,	among	other	things,	limit	or	restrict	(subject	 to	certain	exceptions) the Company's	ability	to	incur	certain	indebtedness,	grant	certain	liens,	make	certain	investments,	declare	or	pay	certain	dividends	or	redeem	or	repurchase	capital	stock.

In	addition,	the	Senior	Secured	Credit	Facility	contains	certain	financial	covenants,	which	include	a	maximum	leverage	ratio	and	an	interest	expense	coverage	ratio.	As of	December	31,	2015,	the	Company	is	required	to	comply	with	a	maximum	leverage	ratio	of	4.00	to	1.00	based	on	a	ratio	of	total	consolidated	indebtedness,	net	of unrestricted	cash	up	to	$150	million,	to	consolidated	EBITDA.	Additionally,	the	Company	is	required	to	have	a	minimum	interest	expense	coverage	ratio	of	4.00	to	1.00 based	on	a	ratio	of	consolidated	EBITDA	to	consolidated	interest	expense,	net	of	interest	income.	As	of	December	31,	2015	the	Company	was	in	compliance	with	all	of these	covenants.

Interest	Rates	and	Fees.	Outstanding	borrowings	under	the	Senior	Secured	Credit	Facilities	accrue	interest,	at	the	option	of	the	borrower,	at	a	per	annum	rate	of (i)	LIBOR	plus	the	applicable	margin	or	(ii)	a	base	rate	plus	the	applicable	margin.	As	of	December	31,	2015,	the	Company	elected	to	borrow	utilizing	LIBOR.	The applicable	margin	for	borrowings	under	the	Revolver	and	the	Term	Loan	A	Facility	is	subject	to	a	credit	facility	rating-based	pricing	grid	with	the	LIBOR	ranging	from 1.375%	to	1.875%.	The	margin	for	Term	Loan	A	Facility	borrowings	was	1.625%	as	of	December	31,	2015.

To	manage	the	Company's	exposure	to	fluctuations	in	LIBOR	rates,	the	Company	has	interest	rate	swaps	for	$300.0	million	of	the	Company's	variable	rate	Term	Loan Facility.	Swaps	with	notional	amounts	totaling	$275.0	million	were	effective	in	January	2015	and	expire	in	September	2017	and	swaps	with	notional	amounts	totaling $25.0	million	were	effective	in	January	2015	and	expire	in	December	2016.

# Senior	Notes

In	October	2013,	Allegion	US	Holding	Company	Inc.,	the	Company's	wholly-owned	subsidiary	("Allegion	US"),	issued	$300	million	of	5.75%	senior	notes	due	2021 (the	"2021	Senior	Notes").	The	2021	Senior	Notes	have	been	registered	under	the	Securities	Act	of	1933,	as	amended.	The	2021	Senior	Notes	accrue	interest	at	the	rate of	5.75%	per	annum,	payable	semi-annually	on	April	1	and	October	1	of	each	year.	The	2021	Senior	Notes	mature	on	October	1,	2021.	The	terms	of	the	indenture governing	the	2021	Senior	Notes	(the	"Indenture")	provide	that,	among	other	things,	the	2021	Senior	Notes	rank	equally	in	right	of	payment	to	all	of	Allegion	US's	and Allegion	plc's	existing	and	future	senior	unsecured	indebtedness	and	effectively	junior	to	all	of	the	issuer's	and	the	guarantors'	existing	and	future	secured	indebtedness (including	indebtedness	with	respect	to	the	Senior	Secured	Credit	Facility)	to	the	extent	of	the	value	of	the	assets	securing	such	indebtedness.	The	2021	Senior	Notes	are structurally	subordinated	to	all	of	the	existing	and	future	liabilities	of	the	Company's	subsidiaries	that	do	not	guarantee	the	2021	Senior	Notes.	The	net	proceeds	of	this indebtedness	were	distributed	to	Ingersoll	Rand	in	connection	with	the	Spin-off.

In	September	2015,	Allegion	plc	issued	$300.0	million	of	5.875%	senior	notes	due	2023	(the	"2023	Senior	Notes").	The	2023	Senior	Notes	have	been	registered	under the	Securities	Act	of	1933,	as	amended.	The	2023	Senior	Notes	accrue	interest	at	the	rate	of	5.875%	per	annum,	payable	semi-annually	on	March	15	and	September	15 of	each	year,	beginning	March	15,	2016.	The	2023	Senior	Notes	mature	on	September	15,	2023.	The	2023	Senior	Notes	are	pursuant	to	an	indenture	(the	"Second Indenture"),	which	provides	that,	among	other	things,	the	2023	Senior	Notes	rank	equally	in	right	of	payment	to	all	of	Allegion	plc's	existing	and	future	senior unsecured	indebtedness	and	effectively	junior	to	all	of	Allegion	plc's	and	the	guarantors'	existing	and	future	secured	indebtedness	(including	indebtedness	with	respect	to the	Senior	Secured	Credit	Facility)	to	the	extent	of	the	value	of	the	assets	securing	such	indebtedness.	The	2023	Senior	Notes	are	structurally	subordinated	to	all	of	the existing	and	future	liabilities	of	Allegion	plc's	subsidiaries	that	do	not	guarantee	the	2023	Senior	Notes.	The	Company	used	the	net	proceeds	of	the	offering	to	repay approximately	$300.0	million	under	Allegion's	revolving	credit	facility.

Guarantees.	Allegion	plc	and	certain	of	its	subsidiaries	jointly	and	severally	guarantee	Allegion	US's	obligations	under	the	2021	Senior	Notes	on	a	senior	unsecured basis.	Allegion	US	and	certain	of	its	subsidiaries	jointly	and	severally	guarantee	Allegion	plc's	obligations	under	the	2023	Senior	Notes.

Covenants.	The	2021	Senior	Notes	and	 the	2023	Senior	Notes	contain	certain	customary	covenants	 that,	among	other	 things,	 limit	or	restrict	(subject	 to	certain exceptions)	the	Company's	ability	to	incur	certain	indebtedness,	grant	certain	liens,	make	certain	investments,	declare	or	pay	certain	dividends	or	redeem	or	repurchase capital	stock.

At	December	31,	2015,	future	retirements	of	the	amounts	outstanding	under	the	Senior	Secured	Credit	Facilities,	the	2021	Senior	Notes	and	the	2023	Senior	Notes	are	as follows:

| In	millions |  |
| :--- | :--- |
| 2016 | $46.9 |
| 2017 | 46.9 |
| 2018 | 46.9 |
| 2019 | 93.9 |
| 2020 | 692.1 |
| Thereafter | 600.0 |
| Total | $1,526.7 |

The	weighted-average	interest	rate	for	borrowings	was	2.4%	under	the	Term	Loan	Facility	(including	the	effect	of	interest	rate	swaps)	at	December	31,	2015,	5.75% under	the	2021	Senior	Notes	and	5.875%	under	the	2023	Senior	Notes.	Cash	paid	for	interest	for	the	year	ended	December	31,	2015	was	approximately	$39.0	million.

# NOTE	11	–	FINANCIAL	INSTRUMENTS

In	the	normal	course	of	business,	the	Company	uses	various	financial	instruments,	including	derivative	instruments,	to	manage	the	risks	associated	with	currency	rate exposures.	These	financial	instruments	are	not	used	for	trading	or	speculative	purposes.

On	the	date	a	derivative	contract	is	entered	into,	the	Company	designates	the	derivative	instrument	as	a	cash	flow	hedge	of	a	forecasted	transaction,	a	cash	flow	hedge	of a	recognized	asset	or	liability,	or	as	an	undesignated	derivative.	The	Company	formally	documents	its	hedge	relationships,	including	identification	of	the	derivative instruments	and	 the	hedged	 items,	as	well	as	 its	risk	management	objectives	and	strategies	for	undertaking	 the	hedge	 transaction.	This	process	 includes	 linking derivative	instruments	that	are	designated	as	hedges	to	specific	assets,	liabilities	or	forecasted	transactions.

The	fair	market	value	of	derivative	instruments	is	determined	through	market-based	valuations	and	may	not	be	representative	of	the	actual	gains	or	losses	that	will	be recorded	when	these	instruments	mature	due	to	future	fluctuations	in	the	markets	in	which	they	are	traded.

The	Company	assesses	at	inception	and	at	least	quarterly	thereafter,	whether	the	derivatives	used	in	cash	flow	hedging	transactions	are	highly	effective	in	offsetting	the changes	in	the	cash	flows	of	the	hedged	item.	To	the	extent	the	derivative	is	deemed	to	be	a	highly	effective	hedge,	the	fair	market	value	changes	of	the	instrument	are recorded	to	accumulated	other	comprehensive	income	(AOCI).

Any	ineffective	portion	of	a	derivative	instrument's	change	in	fair	value	is	recorded	in	Net	earnings	in	the	period	of	change.	If	the	hedging	relationship	ceases	to	be highly	effective,	or	it	becomes	probable	that	a	forecasted	transaction	is	no	longer	expected	to	occur,	the	hedging	relationship	will	be	undesignated	and	any	future	gains and	losses	on	the	derivative	instrument	will	be	recorded	in	Net	earnings.

# Currency	Hedging	Instruments

The	gross	notional	amount	of	the	Company's	currency	derivatives	were	$269.4	million	and	$494.5	million	at	December	31,	2015	and	2014.	At	December	31,	2015	and 2014,	gains	of	$1.7	million	and	$1.6	million,	net	of	tax,	were	included	in	Accumulated	other	comprehensive	loss	related	to	the	fair	value	of	the	Company's	currency derivatives	designated	as	accounting	hedges.	The	amount	expected	to	be	reclassified	into	Net	earnings	over	the	next	twelve	months	is	a	gain	of	$1.7	million.	The	actual amounts	that	will	be	reclassified	to	Net	earnings	may	vary	from	this	amount	as	a	result	of	changes	in	market	conditions.	Gains	and	losses	associated	with	the	Company's currency	derivatives	not	designated	as	hedges	are	recorded	in	Net	earnings	as	changes	in	fair	value	occur.	At	December	31,	2015,	the	maximum	term	of	the	Company's currency	derivatives	was	less	than	one	year.

# Interest	Rate	Swaps

The	Company	has	forward	starting	interest	rate	swaps	to	fix	interest	rate	paid	during	the	contract	period	for	$300.0	million	of	the	Company's	variable	rate	Term	Loan Facility.	Swaps	with	notional	amounts	totaling	$275.0	million	expire	in	September	2017	and	swaps	with	notional	amounts	totaling	$25.0	million	expire	in	December 2016.	These	interest	rate	swaps	met	the	criteria	to	be	accounted	for	as	cash	flow	hedges	of	variable	rate	interest	payments.	Consequently,	the	changes	in	fair	value	of	the interest	rate	swaps	were	recognized	in	Accumulated	other	comprehensive	loss.	At	December	31,	2015,	$1.2	million	of	losses	were	recorded	in	Accumulated	other comprehensive	loss	related	to	these	interest	rate	swaps.	The	amount	expected	to	be	reclassified	into	Net	earnings	over	the	next	twelve	months	is	a	loss	of	$0.1	million. The	actual	amounts	that	will	be	reclassified	to	Net	earnings	may	vary	from	this	amount	as	a	result	of	changes	in	market	conditions.

The	fair	values	of	derivative	instruments	included	within	the	Consolidated	Balance	Sheets	as	of	December	31	were	as	follows:

|  | Asset	derivatives |  | Liability	derivatives |  |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | 2015 | 2014 | 2015 | 2014 |
| Derivatives\tdesignated\tas\thedges: |  |  |  |  |
| Currency\tderivatives | $1.8 | $2.1 | $— | $— |
| Interest\trate\tswaps | — | — | 1.2 | 0.9 |
| Derivatives\tnot\tdesignated\tas\thedges: |  |  |  |  |
| Currency\tderivatives | 1.0 | 2.2 | 4.5 | 13.9 |
| Total\tderivatives | $2.8 | $4.3 | $5.7 | $14.8 |

Asset	and	liability	derivatives	included	in	the	table	above	are	recorded	within	Other	current	assets	and	Accrued	expenses	and	other	current	liabilities,	respectively.

The	amounts	associated	with	derivatives	designated	as	hedges	affecting	Net	earnings	and	Accumulated	other	comprehensive	loss	for	the	years	ended	December	31	were as	follows:

|  |  | Amount	of	gain	(loss) |  | Location	of	gain	(loss) | Amount	of	gain	(loss)	reclassified	from	AOCI	and | Amount	of	gain	(loss)	reclassified	from	AOCI	and | Amount	of	gain	(loss)	reclassified	from	AOCI	and |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | recognized\tin\tAOCI |  | reclassified\tfrom\tAOCI\tand |  | recognized\tinto\tNet\tearnings |  |
| In\tmillions | 2015 | 2014 | 2013 | recognized\tinto\tNet\tearnings | 2015 | 2014 | 2013 |
| Currency\tderivatives | $6.6 | $1.6 | $1.1 | \t Cost\tof\tgoods\tsold | $6.5 | $2.5 | $0.9 |
| Interest\trate\tswaps | (0.3) | (0.9) | — | Interest\texpense | — | — | — |
| Total | $6.3 | $0.7 | $1.1 |  | $6.5 | $2.5 | $0.9 |

# Concentration	of	Credit	Risk

The	counterparties	to	the	Company's	forward	contracts	and	swaps	consist	of	a	number	of	investment	grade	major	international	financial	institutions.	The	Company	could be	exposed	to	losses	in	the	event	of	nonperformance	by	the	counterparties.	However,	the	credit	ratings	and	the	concentration	of	risk	in	these	financial	institutions	are monitored	on	a	continuous	basis	and	present	no	significant	credit	risk	to	the	Company.

# NOTE	12	–	PENSIONS	AND	POSTRETIREMENT	BENEFITS	OTHER	THAN	PENSIONS

The	Company	sponsors	several	U.S.	defined	benefit	and	defined	contribution	plans	covering	substantially	all	of	our	U.S.	employees.	Additionally,	the	Company	has non-U.S.	defined	benefit	and	defined	contribution	plans	covering	eligible	non-U.S.	employees.	Postretirement	benefits,	other	than	pensions,	provide	healthcare	benefits, and	in	some	instances,	life	insurance	benefits	for	certain	eligible	employees.

The	noncontributory	defined	benefit	pension	plans	covering	non-collectively	bargained	U.S.	employees	provide	benefits	on	an	average	pay	formula	while	most	plans	for collectively	bargained	U.S.	employees	provide	benefits	on	a	flat	dollar	benefit	formula.	The	non-U.S.	pension	plans	generally	provide	benefits	based	on	earnings	and years	of	service.	The	Company	also	maintains	additional	other	supplemental	plans	for	officers	and	other	key	employees.

# The	following	table	details	information	regarding	the	Company's	pension	plans	at	December	31:

| In	millions | 2015 | 2014 |  | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Change\tin\tbenefit\tobligations: |  |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $282.9 | $231.3 |  | $388.4 | $397.9 |
| Service\tcost | 9.5 | 7.3 |  | 3.3 | 4.6 |
| Interest\tcost | 11.0 | 11.5 |  | 13.7 | 17.3 |
| Employee\tcontributions | — | — |  | 0.3 | 0.4 |
| Amendments | — | — |  | 0.1 | (0.3) |
| Actuarial\t(gains)\tlosses | (6.1) | 60.1 | (a) | 6.6 | 12.3 |
| Benefits\tpaid | (14.3) | (25.2) |  | (15.0) | (14.6) |
| Currency\ttranslation | — | — |  | (22.2) | (26.0) |
| Curtailments\tand\tsettlements | — | — |  | (1.2) | (1.7) |
| Other,\tincluding\texpenses\tpaid | (2.3) | (2.1) |  | (2.3) | (1.5) |
| Benefit\tobligation\tat\tend\tof\tyear | $280.7 | $282.9 |  | $371.7 | $388.4 |
| Change\tin\tplan\tassets: |  |  |  |  |  |
| Fair\tvalue\tat\tbeginning\tof\tyear | $213.2 | $208.5 |  | $372.0 | $337.6 |
| Actual\treturn\ton\tassets | (6.3) | 31.9 |  | (0.9) | 56.4 |
| Company\tcontributions | — | — |  | 6.5 | 17.5 |
| Employee\tcontributions | — | — |  | 0.3 | 0.4 |
| Benefits\tpaid | (11.9) | (25.1) |  | (15.0) | (14.6) |
| Currency\ttranslation | — | — |  | (19.0) | (23.3) |
| Settlements | — | — |  | (1.2) | (0.5) |
| Other,\tincluding\texpenses\tpaid | (2.3) | (2.1) |  | (2.3) | (1.5) |
| Fair\tvalue\tof\tassets\tend\tof\tyear | $192.7 | $213.2 |  | $340.4 | $372.0 |
| Funded\tstatus: |  |  |  |  |  |
| Plan\tassets\tless\tthan\tthe\tbenefit\tobligations | $(88.0) | $(69.7) |  | $(31.3) | $(16.4) |
| Amounts\tincluded\tin\tthe\tbalance\tsheet: |  |  |  |  |  |
| Other\tnoncurrent\tassets | $— | $— |  | $— | $11.4 |
| Accrued\tcompensation\tand\tbenefits | — | (2.3) |  | (1.0) | (1.2) |
| Postemployment\tand\tother\tbenefit\tliabilities | (88.0) | (67.4) |  | (30.3) | (26.6) |
| Net\tamount\trecognized | $(88.0) | $(69.7) |  | $(31.3) | $(16.4) |

(a) During	2014,	the	Society	of	Actuaries	released	a	new	mortality	table,	referred	to	as	RP-2014,	which	is	believed	to	better	reflect	mortality	improvements.	The Company	used	the	RP-2014	mortality	table	to	measure	its	U.S.	pension	obligation	as	of	December	31,	2014.	The	impact	of	the	new	mortality	tables	as	well	as the	decline	in	discount	rates	from	December	31,	2013	to	December	31,	2014	is	included	in	actuarial	losses.

It	is	the	Company's	objective	to	contribute	to	the	pension	plans	to	ensure	adequate	funds	are	available	in	the	plans	to	make	benefit	payments	to	plan	participants	and beneficiaries	when	required.	However,	certain	plans	are	not	funded	due	to	either	legal,	accounting,	or	tax	requirements	in	certain	jurisdictions.	As	of	December	31,	2015, approximately	5%	of	our	projected	benefit	obligation	relates	to	plans	that	are	not	funded	of	which	the	majority	are	Non-U.S.	plans.

The	pretax	amounts	recognized	in	Accumulated	other	comprehensive	loss	were	as	follows:

| In	millions | Prior	service	cost | Net	actuarial	losses | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2013 | $(4.2) | $(46.2) | $(50.4) |
| Current\tyear\tchanges\trecorded\tto\tAccumulated\tother\tcomprehensive\tloss | — | (39.0) | (39.0) |
| Amortization\treclassified\tto\tearnings | 0.7 | 2.3 | 3.0 |
| December\t31,\t2014 | $(3.5) | $(82.9) | $(86.4) |
| Current\tyear\tchanges\trecorded\tto\tAccumulated\tother\tcomprehensive\tloss | — | (11.8) | (11.8) |
| Amortization\treclassified\tto\tearnings | 0.7 | 4.9 | 5.6 |
| Settlements/curtailments\treclassified\tto\tearnings | — | 0.9 | 0.9 |
| Other | — | — | — |
| December\t31,\t2015 | $(2.8) | $(88.9) | $(91.7) |

| In	millions | Prior	service	cost | Net	actuarial	losses | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2013 | $(0.3) | $(109.2) | $(109.5) |
| Current\tyear\tchanges\trecorded\tto\tAccumulated\tother\tcomprehensive\tloss | 0.3 | 28.1 | 28.4 |
| Amortization\treclassified\tto\tearnings | 0.1 | 2.8 | 2.9 |
| Currency\ttranslation\tand\tother | — | 4.8 | 4.8 |
| December\t31,\t2014 | $0.1 | $(73.5) | $(73.4) |
| Current\tyear\tchanges\trecorded\tto\tAccumulated\tother\tcomprehensive\tloss | (0.1) | (25.3) | (25.4) |
| Amortization\treclassified\tto\tearnings | — | 1.4 | 1.4 |
| Settlements/curtailments\treclassified\tto\tearnings | — | 0.2 | 0.2 |
| Currency\ttranslation\tand\tother | — | 5.0 | 5.0 |
| December\t31,\t2015 | $— | $(92.2) | $(92.2) |

| Benefit	obligations	at	December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Discount\trate: |  |  |
| U.S.\tplans | 4.3% | 4.0% |
| Non-U.S.\tplans | 3.6% | 3.8% |
| Rate\tof\tcompensation\tincrease: |  |  |
| U.S.\tplans | 3.5% | 3.5% |
| Non-U.S.\tplans | 2.9% | 3.0% |

The	accumulated	benefit	obligation	for	all	U.S.	defined	benefit	pension	plans	was	$265.5	million	and	$264.3	million	at	December	31,	2015	and	2014.	The	accumulated benefit	obligation	for	all	Non-U.S.	defined	benefit	pension	plans	was	$363.8	million	and	$380.0	million	at	December	31,	2015	and	2014.

Effective	December	31,	2015,	the	Company	adopted	a	full	yield-curve	approach	in	the	estimation	of	benefit	obligations	and	the	service	and	interest	cost	components	of net	periodic	benefit	costs,	which	applies	individual	spot	rates	to	each	year's	cash	flows	to	determine	the	year	end	benefit	obligation.	Historically,	the	Company	estimated benefit	obligations	and	the	service	and	interest	cost	components	by	applying	a	single	weighted	average	discount	rate,	rounded	to	the	nearest	25	basis	points,	derived	from this	yield	curve.	This	change	is	being	made	to	better	align	the	projected	benefit	cash	flows	and	the	corresponding	yield	curve	spot	rates	to	provide	a	better	estimate	of service	and	interest	cost	components	of	net	periodic	benefit	costs.	This	change	will	not	have	a	material	impact	on	2016	pension	expense.

Information	regarding	pension	plans	with	accumulated	benefit	obligations	more	than	plan	assets	were:

| In	millions | 2015 | 2014 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- |
| Projected\tbenefit\tobligation | $280.7 | $282.9 | $371.7 | $35.4 |
| Accumulated\tbenefit\tobligation | 265.5 | 264.3 | 363.8 | 30.4 |
| Fair\tvalue\tof\tplan\tassets | 192.7 | 213.2 | 340.4 | 7.6 |

Future	pension	benefit	payments	are	expected	to	be	paid	as	follows:

| In	millions | U.S. | NON-U.S. |
| :--- | :--- | :--- |
| 2016 | $13.6 | $14.9 |
| 2017 | 14.6 | 15.2 |
| 2018 | 15.5 | 15.7 |
| 2019 | 15.6 | 16.5 |
| 2020 | 21.3 | 17.3 |
| 2021\t-\t2025 | 104.5 | 94.2 |

The	components	of	the	Company's	net	periodic	pension	benefit	costs	for	the	years	ended	December	31	include	the	following:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Service\tcost | $9.5 | $7.3 | $7.8 |
| Interest\tcost | 11.0 | 11.5 | 10.1 |
| Expected\treturn\ton\tplan\tassets | (11.2) | (11.2) | (10.6) |
| Net\tamortization\tof: |  |  |  |
| Prior\tservice\tcosts | 0.7 | 0.7 | 0.6 |
| Plan\tnet\tactuarial\tlosses | 4.9 | 2.3 | 3.8 |
| Net\tperiodic\tpension\tbenefit\tcost | 14.9 | 10.6 | 11.7 |
| Net\tcurtailment\tand\tsettlement\tlosses | 0.9 | — | — |
| Net\tperiodic\tpension\tbenefit\tcost\tafter\tnet\tcurtailment\tand\tsettlement\tlosses | $15.8 | $10.6 | $11.7 |

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Service\tcost | \t $3.3 | \t $4.6 | \t $3.5 |
| Interest\tcost | 13.7 | 17.3 | 10.7 |
| Expected\treturn\ton\tplan\tassets | (17.8) | (17.3) | (10.0) |
| Other\tadjustments | — | — | 2.1 |
| Net\tamortization\tof: |  |  |  |
| Prior\tservice\tcosts | — | 0.1 | 0.1 |
| Plan\tnet\tactuarial\tlosses | 1.4 | 2.8 | 1.8 |
| Net\tperiodic\tpension\tbenefit\tcost | 0.6 | 7.5 | 8.2 |
| Net\tcurtailment\tand\tsettlement\t(gains)\tlosses | 0.2 | — | (0.2) |
| Net\tperiodic\tpension\tbenefit\tcost\tafter\tnet\tcurtailment\tand\tsettlement\tlosses | \t $0.8 | \t $7.5 | \t $8.0 |

Pension	expense	for	2016	is	projected	to	be	approximately	$17.6	million,	utilizing	the	assumptions	for	calculating	the	pension	benefit	obligations	at	the	end	of	2015.	The amounts	expected	to	be	recognized	in	net	periodic	pension	cost	during	the	year	ended	December	31,	2016	for	prior	service	cost	and	plan	net	actuarial	losses	are	$0.7 million	and	$7.6	million,	respectively.

# Weighted-average	assumptions	used:

| Net	periodic	pension	cost	for	the	year	ended	December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Discount\trate: |  |  |  |
| U.S.\tplans | 4.0% | 5.0% | 4.8% |
| Non-U.S.\tplans | 3.7% | 4.5% | 4.5% |
| Rate\tof\tcompensation\tincrease: |  |  |  |
| U.S.\tplans | 3.5% | 3.5% | 4.0% |
| Non-U.S.\tplans | 2.9% | 4.8% | 4.3% |
| Expected\treturn\ton\tplan\tassets: |  |  |  |
| U.S.\tplans | 5.5% | 5.5% | 4.8% |
| Non-U.S.\tplans | 5.0% | 5.3% | 5.3% |

The	expected	long-term	rate	of	return	on	plan	assets	reflects	the	average	rate	of	returns	expected	on	the	funds	invested	or	to	be	invested	to	provide	for	the	benefits included	in	the	projected	benefit	obligation.	The	expected	long-term	rate	of	return	on	plan	assets	is	based	on	what	is	achievable	given	the	plan's	investment	policy,	the types	of	assets	held	and	target	asset	allocations.	The	expected	long-term	rate	of	return	is	determined	as	of	the	measurement	date.	Each	plan	is	reviewed	and	its	historical returns	and	target	asset	allocations	to	determine	the	appropriate	expected	long-term	rate	of	return	on	plan	assets	to	be	used.

The	overall	objective	in	managing	defined	benefit	plan	assets	is	to	ensure	that	all	present	and	future	benefit	obligations	are	met	as	they	come	due.	The	goal	is	to	achieve this	while	trying	to	mitigate	volatility	in	plan	funded	status,	contribution,	and	expense	by	better	matching	the	characteristics	of	the	plan	assets	to	that	of	the	plan liabilities.	Each	plan's	funded	status	and	asset	allocation	is	monitored	regularly	in	addition	to	investment	manager	performance.

Effective	December	31,	2015,	the	Company	adopted	new	accounting	guidance	for	investments	that	calculate	net	asset	value	per	share	(or	its	equivalent).	As	a	result	of the	adoption	of	this	new	guidance,	certain	investments	that	are	measured	at	fair	value	using	the	net	asset	value	per	share	(or	its	equivalent)	as	a	practical	expedient	are not	required	to	be	classified	in	the	fair	value	hierarchy.	At	December	31,	2015	and	2014,	the	net	asset	values	of	these	investments,	were	$56.5	million	and	$52.9	million, which	had	been	previously	classified	in	level	2	at	December	31,	2014.	These	investments	are	included	within	Assets	valued	using	net	asset	value	per	share	in	the	fair value	tables	below.	The	guidance	was	required	to	be	applied	retrospectively,	and	accordingly,	prior	period	amounts	have	been	revised	to	conform	with	the	current	period presentation.

The	fair	values	of	the	Company's	U.S.	pension	plan	assets	at	December	31,	2015	by	asset	category	are	as	follows:

|  |  | Fair	value	measurements |  | Total |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Level\t1 | Level\t2 | Level\t3 | fair\tvalue |
| Cash\tand\tcash\tequivalents | $— | $2.7 | $— | $2.7 |
| Fixed\tincome\tinvestments: |  |  |  |  |
| U.S.\tgovernment\tand\tagency\tobligations | — | 49.2 | — | 49.2 |
| Corporate\tand\tnon-U.S.\tbonds(a) | — | 82.6 | — | 82.6 |
|  | — | 131.8 | — | 131.8 |
| Total\tassets\tat\tfair\tvalue | $— | $134.5 | $— | $134.5 |
| Receivables\tand\tpayables,\tnet |  |  |  | 1.7 |
| Assets\tvalued\tusing\tnet\tasset\tvalue\tper\tshare |  |  |  | 56.5 |
| Net\tassets\tavailable\tfor\tbenefits |  |  |  | $192.7 |

|  |  | Fair	value	measurements |  | Total |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Level\t1 | Level\t2 | Level\t3 | fair\tvalue |
| Cash\tand\tcash\tequivalents | $— | $3.1 | $— | $3.1 |
| Fixed\tincome\tinvestments: |  |  |  |  |
| U.S.\tgovernment\tand\tagency\tobligations | — | 69.7 | — | 69.7 |
| Corporate\tand\tnon-U.S.\tbonds(a) | — | 85.6 | — | 85.6 |
|  | — | 155.3 | — | 155.3 |
| Total\tassets\tat\tfair\tvalue | $— | $158.4 | $— | $158.4 |
| Receivables\tand\tpayables,\tnet |  |  |  | 1.9 |
| Assets\tvalued\tusing\tnet\tasset\tvalue\tper\tshare |  |  |  | 52.9 |
| Net\tassets\tavailable\tfor\tbenefits |  |  |  | $213.2 |

bonds.

The	Company	determines	the	fair	value	of	its	US	plan	assets	using	the	following	methodologies:

•Cash,	cash	equivalents	and	short	term	investments	–The	investments	are	valued	at	the	closing	price	or	amount	held	on	deposit	by	the	custodian	bank	or	at	fair value	by	discounting	the	related	cash	flows	based	on	current	yields	of	similar	instruments	with	comparable	durations	considering	the	credit-worthiness	of	the issuer.	As	these	investments	are	not	traded	on	active	markets,	these	investments	are	classified	as	Level	2.

•U.S.	government	and	agency	obligations	–Quoted	market	prices	are	not	available	for	these	securities.	Fair	values	are	estimated	using	pricing	models	and/or quoted	prices	of	securities	with	similar	characteristics	or	discounted	cash	flows.	Such	securities	are	classified	as	Level	2.

•Corporate	and	Non-US	bonds	–	Quoted	market	prices	are	not	available	for	these	securities.	Fair	values	are	estimated	by	using	pricing	models	and/or	quoted prices	of	securities	with	similar	characteristics	or	discounted	cash	flows.	Such	securities	are	classified	as	Level	2.

The	fair	values	of	the	Company's	Non-U.S.	pension	plan	assets	at	December	31,	2015	by	asset	category	are	as	follows:

|  |  | Fair	value	measurements |  | Total |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Level\t1 | Level\t2 | Level\t3 | fair\tvalue |
| Cash\tand\tcash\tequivalents | $20.2 | $— | $— | $20.2 |
| Equity\tmutual\tfunds | — | 121.6 | — | 121.6 |
| Corporate\tand\tnon-U.S.\tbonds | — | 130.7 | — | 130.7 |
| Real\testate(a) | — | 12.3 | 0.8 | 13.1 |
| Other(b) | — | 52.9 | 1.9 | 54.8 |
| Total\tassets\tat\tfair\tvalue | $20.2 | $317.5 | $2.7 | $340.4 |

(a) Includes	several	private	equity	funds	that	invest	in	real	estate.	It	includes	both	direct	investment	funds	and	funds-of- funds.

(b) Primarily	includes	insurance

contracts.

|  |  | Fair	value	measurements |  | Total |
| :--- | :--- | :--- | :--- | :--- |
| In\tmillions | Level\t1 | Level\t2 | Level\t3 | fair\tvalue |
| Cash\tand\tcash\tequivalents | $8.8 | $— | $— | $8.8 |
| Equity\tmutual\tfunds | — | 118.0 | — | 118.0 |
| Corporate\tand\tnon-U.S.\tbonds | — | 164.3 | — | 164.3 |
| Real\testate(a) | — | 11.8 | 0.8 | 12.6 |
| Other(b) | — | 65.8 | 2.5 | 68.3 |
| Total\tassets\tat\tfair\tvalue | $8.8 | $359.9 | $3.3 | $372.0 |

(a) Includes	several	private	equity	funds	that	invest	in	real	estate.	It	includes	both	direct	investment	funds	and	funds-of-

funds.

Cash	equivalents	are	valued	using	a	market	approach	with	inputs	including	quoted	market	prices	for	either	identical	or	similar	instruments.	Fixed	income	securities	are valued	through	a	market	approach	with	inputs	including,	but	not	limited	to,	benchmark	yields,	reported	trades,	broker	quotes	and	issuer	spreads.	Equity	funds	are	valued at	their	net	asset	value.	Net	asset	values	are	calculated	by	the	investment	manager	or	sponsor	of	the	fund.	Private	real	estate	fund	values	are	reported	by	the	fund	manager and	are	based	on	valuation	or	appraisal	of	the	underlying	investments.

The	Company	did	not	make	any	required	or	discretionary	contributions	to	the	U.S.	pension	plans	in	2015,	2014	or	2013.	The	Company	made	required	and	discretionary contributions	 to	 its	 Non-U.S.	 pension	 plans	 of	$6.5	 million	 in	2015,	$17.5	 million	 in	2014,	 and	$11.6	 million	 in	2013.	 The	 Company	 currently	 projects	 that approximately	$10.8	million	will	be	contributed	to	its	U.S	and	Non-U.S.	plans	in	2016.	The	Company's	policy	allows	it	to	fund	an	amount,	which	could	be	in	excess	of or	less	than	the	pension	cost	expensed,	subject	to	the	limitations	imposed	by	current	tax	regulations.	The	Company	anticipates	funding	the	plans	in	2016	in	accordance with	contributions	required	by	funding	regulations	or	the	laws	of	each	jurisdiction.

Most	of	the	Company's	U.S.	employees	are	covered	by	defined	contribution	plans.	Employer	contributions	are	determined	based	on	criteria	specific	to	the	individual plans	and	amounted	to	approximately	$12.1	million,	$10.2	million,	and	$14.5	million	in	2015,	2014	and	2013.	The	Company's	contributions	relating	to	non-U.S.	defined contribution	plans	and	other	non-U.S.	benefit	plans	were	$6.2	million,	$7.0	million	and	$4.7	million	in	2015,	2014	and	2013.

# Deferred	Compensation	Plan

The	Company	maintains	an	Executive	Deferred	Compensation	Plan	("EDCP"),	which	is	an	unfunded,	nonqualified	plan	that	permits	certain	employees	to	defer	receipt of	 up	 to	 50%	 of	 their	 annual	 salary	 and	 up	 to	 100%	 of	 their	 annual	 bonus	 awards,	 performance	 share	 plan	 awards,	 and	 restricted	 stock	 units	 received	 upon commencement	of	employment.	As	of	December	31,	2015	the	deferred	compensation	liability	balance	was	$15.5	million.

The	Company	sponsors	a	postretirement	plan	that	provides	for	healthcare	benefits,	and	in	some	instances,	life	insurance	benefits	that	cover	certain	eligible	employees. The	Company	funds	postretirement	benefit	obligations	principally	on	a	pay-as-you-go	basis.	Generally,	postretirement	health	benefits	are	contributory	with	contributions adjusted	annually.	Life	insurance	plans	for	retirees	are	primarily	noncontributory.

The	following	table	details	information	regarding	the	Company's	postretirement	plans	at	December	31:

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Change\tin\tbenefit\tobligations: |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $13.6 | $14.2 |
| Service\tcost | 0.1 | 0.1 |
| Interest\tcost | 0.5 | 0.5 |
| Actuarial\tgains | (0.3) | (0.2) |
| Benefits\tpaid,\tnet\tof\tMedicare\tPart\tD\tsubsidy | (1.0) | (1.0) |
| Benefit\tobligations\tat\tend\tof\tyear | $12.9 | $13.6 |
| Funded\tstatus: |  |  |
| Plan\tassets\tless\tthan\tbenefit\tobligations | $(12.9) | $(13.6) |
| Amounts\tincluded\tin\tthe\tbalance\tsheet: |  |  |
| Accrued\tcompensation\tand\tbenefits | $(1.1) | $(1.0) |
| Postemployment\tand\tother\tbenefit\tliabilities | (11.8) | (12.6) |
| Total | $(12.9) | $(13.6) |

| In	millions | Prior	service	gains | Net	actuarial	losses | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2013 | $7.1 | $(1.7) | $5.4 |
| Current\tyear\tchanges\trecorded\tto\tAccumulated\tother\tcomprehensive\tloss | — | 1.0 | 1.0 |
| Amortization\treclassified\tto\tearnings | (1.6) | — | (1.6) |
| Balance\tat\tDecember\t31,\t2014 | $5.5 | $(0.7) | $4.8 |
| Current\tyear\tchanges\trecorded\tto\tAccumulated\tother\tcomprehensive\tloss | — | (0.5) | (0.5) |
| Amortization\treclassified\tto\tearnings | (1.6) | — | (1.6) |
| Balance\tat\tDecember\t31,\t2015 | $3.9 | $(1.2) | $2.7 |

The	components	of	net	periodic	postretirement	benefit	cost	(income)	for	the	years	ended	December	31	were	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Service\tcost | $0.1 | $0.1 | $0.3 |
| Interest\tcost | 0.5 | 0.5 | 0.5 |
| Net\tamortization\tof: |  |  |  |
| Prior\tservice\tgains | (1.6) | (1.6) | (2.2) |
| Net\tactuarial\tlosses | — | — | 0.1 |
| Net\tperiodic\tpostretirement\tbenefit\tcost\t(income) | $(1.0) | $(1.0) | $(1.3) |

Postretirement	income	for	2016	is	projected	to	be	$1.1	million.	Amounts	expected	to	be	recognized	in	net	periodic	postretirement	benefits	cost	in	2016	for	prior	service gains	is	$1.6	million	and	no	plan	net	actuarial	losses	are	expected.

| Assumptions: | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Weighted-average\tdiscount\trate\tassumption\tto\tdetermine: |  |  |  |
| Benefit\tobligations\tat\tDecember\t31 | 3.5% | 3.5% | 4.0% |
| Net\tperiodic\tbenefit\tcost | 3.5% | 4.0% | 3.3% |
| Assumed\thealth-care\tcost\ttrend\trates\tat\tDecember\t31: |  |  |  |
| Current\tyear\tmedical\tinflation\t(a) | —% | 7.3% | 7.7% |
| Ultimate\tinflation\trate\t(a) | —% | 5.0% | 5.0% |
| Year\tthat\tthe\trate\treaches\tthe\tultimate\ttrend\trate\t(a) | n/a | 2021 | 2021 |

(a) The	current	year	medical	inflation	rate,	ultimate	inflation	rate	and	year	of	ultimate	trend	rate	is	no	longer	applicable	as	the	Company	has	capped	the	annual maximum	amount	it	will	pay	for	retiree	healthcare	costs.

A	1%	change	in	the	medical	trend	rate	assumed	for	postretirement	benefits	would	have	no	effect	on	the	postretirement	benefit	obligation	as	the	Company	has	capped	the annual	maximum	amount	it	will	pay	for	retiree	healthcare	costs,	therefore	any	additional	costs	would	be	assumed	by	the	retiree.

Benefit	payments	for	postretirement	benefits,	which	are	net	of	expected	plan	participant	contributions	and	Medicare	Part	D	subsidy,	are	expected	to	be	paid	as	follows:

| In	millions |  |
| :--- | :--- |
| 2016 | $1.1 |
| 2017 | 1.2 |
| 2018 | 1.2 |
| 2019 | 1.2 |
| 2020 | 1.2 |
| 2021\t-\t2025 | 5.3 |

# NOTE	13	–	FAIR	VALUE	MEASUREMENTS

Fair	value	is	defined	as	the	exchange	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	(an	exit	price)	in	the	principal	or	most	advantageous market	for	the	asset	or	liability	in	an	orderly	transaction	between	market	participants	on	the	measurement	date.	Fair	value	measurements	are	based	on	a	framework	that utilizes	the	inputs	market	participants	use	to	determine	the	fair	value	of	an	asset	or	liability	and	establishes	a	fair	value	hierarchy	to	prioritize	those	inputs.	The	fair	value hierarchy	is	comprised	of	three	levels	that	are	described	below:

•Level	 1	 – Inputs	 based	 on	 quoted	 prices in active	 markets for identical assets	 or liabilities.

•Level	2	–	Inputs	other	than	Level	1	quoted	prices,	such	as	quoted	prices	for	similar	assets	or	liabilities;	quoted	prices	in	markets	that	are	not	active;	or	other inputs	that	are	observable	or	can	be	corroborated	by	observable	market	data	for	substantially	the	full	term	of	the	asset	or	liability.

•Level	3	–	Unobservable	inputs	based	on	little	or	no	market	activity	and	that	are	significant	to	the	fair	value	of	the	assets	and liabilities.

The	fair	value	hierarchy	requires	an	entity	to	maximize	the	use	of	observable	inputs	and	minimize	the	use	of	unobservable	inputs	when	measuring	fair	value.	Observable inputs	are	obtained	from	independent	sources	and	can	be	validated	by	a	third	party,	whereas	unobservable	inputs	reflect	assumptions	regarding	what	a	third	party	would use	in	pricing	an	asset	or	liability	based	on	the	best	information	available	under	the	circumstances.	A	financial	instrument's	categorization	within	the	fair	value	hierarchy is	based	upon	the	lowest	level	of	input	that	is	significant	to	the	fair	value	measurement.

Assets	and	liabilities	measured	at	fair	value	at	December	31,	2015	are	as	follows:

| In	millions | Quoted	Prices	in<br>Active	Markets	for<br>Identical	Assets<br>(Level	1) | Significant	Other<br>Observable<br>Inputs	(Level	2) | Significant<br>Unobservable	Inputs<br>(Level	3) | Total<br>fair	value |
| :--- | :--- | :--- | :--- | :--- |
| Recurring\tfair\tvalue\tmeasurements |  |  |  |  |
| Assets: |  |  |  |  |
| Marketable\tsecurities | $14.2 | $— | $— | $14.2 |
| Foreign\tcurrency\tcontracts | — | 2.8 | — | 2.8 |
| Total\tasset\trecurring\tfair\tvalue\tmeasurements | $14.2 | $2.8 | $— | $17.0 |
| Liabilities: |  |  |  |  |
| Foreign\tcurrency\tcontracts | $— | $4.5 | $— | $4.5 |
| Interest\trate\tswap | — | 1.2 | — | 1.2 |
| Deferred\tcompensation\tplans | — | 15.5 | — | 15.5 |
| Total\tliability\trecurring\tfair\tvalue\tmeasurements | $— | $21.2 | $— | $21.2 |
| Financial\tinstruments\tnot\tcarried\tat\tfair\tvalue: |  |  |  |  |
| Total\tdebt | $— | $1,556.6 | $— | $1,556.6 |
| Total\tfinancial\tinstruments\tnot\tcarried\tat\tfair\tvalue | $— | $1,556.6 | $— | $1,556.6 |

| In	millions | Quoted	Prices	in<br>Active	Markets	for<br>Identical	Assets<br>(Level	1) | Significant	Other<br>Observable<br>Inputs	(Level	2) | Significant<br>Unobservable	Inputs<br>(Level	3) | Total<br>fair	value |
| :--- | :--- | :--- | :--- | :--- |
| Recurring\tfair\tvalue\tmeasurements |  |  |  |  |
| Assets: |  |  |  |  |
| Marketable\tsecurities | $17.9 | $— | $— | $17.9 |
| Foreign\tcurrency\tcontracts | — | 4.3 | — | 4.3 |
| Total\tasset\trecurring\tfair\tvalue\tmeasurements | $17.9 | $4.3 | $— | $22.2 |
| Liabilities: |  |  |  |  |
| Foreign\tcurrency\tcontracts | $— | $13.9 | $— | $13.9 |
| Interest\trate\tswap | — | 0.9 | — | 0.9 |
| Deferred\tcompensation\tplans | — | 14.9 | — | 14.9 |
| Total\tliability\trecurring\tfair\tvalue\tmeasurements | $— | $29.7 | $— | $29.7 |
| Financial\tinstruments\tnot\tcarried\tat\tfair\tvalue: |  |  |  |  |
| Total\tdebt | $— | $1,279.4 | $— | $1,279.4 |
| Total\tfinancial\tinstruments\tnot\tcarried\tat\tfair\tvalue | $— | $1,279.4 | $— | $1,279.4 |

The	Company	determines	the	fair	value	of	its	financial	assets	and	liabilities	using	the	following	methodologies:

•Marketable	securities	–	These	securities	include	investments	in	publicly	traded	stock	of	non-U.S.	companies	held	by	non-U.S.	subsidiaries	of	the	Company. The	fair	value	is	obtained	for	the	securities	based	on	observable	market	prices	quoted	on	public	stock	exchanges.

•Foreign	currency	contracts	–	These	instruments	include	foreign	currency	contracts	for	non-functional	currency	balance	sheet	exposures.	The	fair	value	of	the foreign	currency	contracts	are	determined	based	on	a	pricing	model	that	uses	spot	rates	and	forward	prices	from	actively	quoted	currency	markets	that	are readily	accessible	and	observable.

•Interest	rate	swaps	–	These	instruments	include	forward-starting	interest	rate	swap	contracts	for	$300.0	million	of	the	Company's	variable	rate	debt.	The	fair value	of	the	derivative	instruments	are	determined	based	on	quoted	prices	for	the	Company's	swaps,	which	are	not	considered	an	active	market.

•Deferred	compensation	plans	-	These	include	obligations	related	to	deferred	compensation	adjusted	for	market	performance.	The	fair	value	is	obtained	based	on observable	market	prices	quoted	on	public	exchanges	for	similar	instruments.

•Debt	–	These	securities	are	recorded	at	cost	and	include	senior	notes	maturing	through	2023.	The	fair	value	of	the	long-term	debt	instruments	is	obtained	based on	observable	market	prices	quoted	on	public	exchanges	for	similar	instruments.

The	carrying	values	of	cash	and	cash	equivalents,	accounts	receivable,	accounts	payable	and	short-term	borrowings	are	a	reasonable	estimate	of	their	fair	value	due	to the	short-term	nature	of	these	instruments.

The	 methodology	 used	 by	 the	 Company	 to	 determine	 the	 fair	 value	 of	 its	 financial	 assets	 and liabilities	 at	December	 31,	 2015	 are the	 same	 as those	 used	 at December	31,	2014.	There	have	been	no	significant	transfers	between	Level	1	and	Level	2	categories.

# Ordinary	Shares

The	reconciliation	of	Ordinary	shares	is	as	follows:

| In	millions | Total |
| :--- | :--- |
| December\t31,\t2014 | 95.8 |
| Shares\tissued\tunder\tincentive\tplans | 0.7 |
| Repurchase\tof\tordinary\tshares | (0.5) |
| December\t31,\t2015 | 96.0 |

Allegion	had	400.0	million	ordinary	shares	authorized	and	10.0	million	$0.001	par	value	preferred	shares	authorized	(with	none	outstanding)	at	December	31,	2015. During	the	year	ended	December	31,	2015,	the	Company	paid	$30.0	million	to	repurchase	0.5	million	ordinary	shares	on	the	open	market	under	a	share	repurchase program	previously	approved	by	its	Board	of	Directors.

# Other	Comprehensive	Income	(Loss)

The	changes	in	Accumulated	other	comprehensive	income	(loss)	are	as	follows:

| In	millions | Cash	flow	hedges<br>and	marketable<br>securities | Pension	and	OPEB<br>Items | Foreign	Currency<br>Items | Total |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2012 | $10.9 | $(95.7) | $77.1 | $(7.7) |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | 5.8 | (35.6) | (59.2) | (89.0) |
| December\t31,\t2013 | $16.7 | $(131.3) | $17.9 | $(96.7) |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (1.0) | 15.2 | (65.7) | (51.5) |
| December\t31,\t2014 | $15.7 | $(116.1) | $(47.8) | $(148.2) |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (1.7) | (23.2) | (59.1) | (84.0) |
| December\t31,\t2015 | $14.0 | $(139.3) | $(106.9) | $(232.2) |

The	amounts	of	Other	comprehensive	income	(loss)	attributable	to	noncontrolling	interests	are	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Foreign\tcurrency\titems | $(1.4) | $(0.7) | $0.8 |
| Total\tother\tcomprehensive\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | $(1.4) | $(0.7) | $0.8 |

Included	in	equity	for	the	year	ended	December	31,	2014	were	$13.0	million	of	adjustments	related	to	the	completion	of	the	allocation	of	taxable	income	and	the completion	of	the	allocation	of	tax	basis	in	certain	assets	between	Ingersoll	Rand	and	Allegion	at	the	Spin-off.

# NOTE	15	–	SHARE-BASED	COMPENSATION

The	Company	records	share-based	compensation	awards	using	a	fair	value	method	and	recognizes	compensation	expense	for	an	amount	equal	to	the	fair	value	of	the share-based	payment	issued	in	its	financial	statements.	The	Company's	share-based	compensation	plans	include	programs	for	stock	options,	restricted	stock	units ("RSUs"),	performance	stock	units	("PSUs"),	and	deferred	compensation.

Under	the	Company's	incentive	stock	plan,	the	total	number	of	ordinary	shares	authorized	by	the	shareholders	is	8.0	million,	of	which	4.1	million	remains	available	as	of December	31,	2015	for	future	incentive	awards.

# Compensation	Expense

Share-based	compensation	expense	is	included	in	Selling	and	administrative	expenses.	The	following	table	summarizes	the	expenses	recognized	for	the	years	ended December	31:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Stock\toptions | $3.7 | $3.3 | $2.4 |
| RSUs | 5.8 | 6.0 | 3.3 |
| PSUs | 5.0 | 3.9 | 1.0 |
| Deferred\tcompensation | 0.3 | 0.8 | 1.7 |
| Pre-tax\texpense | 14.8 | 14.0 | 8.4 |
| Tax\tbenefit | (4.4) | (4.7) | (3.2) |
| Total | $10.4 | $9.3 | $5.2 |

# Stock	Options	/	RSUs

Eligible	participants	may	receive	(i)	stock	options,	(ii)	RSUs	or	(iii)	a	combination	of	both	stock	options	and	RSUs.	The	fair	value	of	each	of	the	Company's	stock option	and	RSU	awards	is	expensed	on	a	straight-line	basis	over	the	required	service	period,	which	is	generally	the	3-year	vesting	period.	However,	for	stock	options and	RSUs	granted	to	retirement	eligible	employees,	the	Company	recognizes	expense	for	the	fair	value	at	the	grant	date.

The	average	fair	value	of	the	stock	options	granted	for	the	year	ended	December	31,	2015	 and	2014	was	estimated	to	be	$17.88	per	share	and	$19.54	per	share, respectively,	using	the	Black-Scholes	option-pricing	model.	The	weighted	average	assumptions	used	were	the	following:

|  | 2015 | 2014 |
| :--- | :--- | :--- |
| Dividend\tyield | 0.69% | 0.60% |
| Volatility | 31.37% | 36.55% |
| Risk-free\trate\tof\treturn | 1.78% | 1.94% |
| Expected\tlife | 6.0\tyears | 6.0\tyears |

For	grants	issued	on	or	after	December	1,	2013,	expected	volatility	is	based	on	the	weighted	average	of	the	implied	volatility	of	a	group	of	the	Company's	peers.	The risk-free	rate	of	return	is	based	on	the	yield	curve	of	a	zero-coupon	U.S.	Treasury	bond	on

the	date	the	award	is	granted	with	a	maturity	equal	to	the	expected	term	of	the	award.	Historical	peer	data	is	used	to	estimate	forfeitures	within	the	Company's	valuation model.	The	expected	life	of	the	Company's	stock	option	awards	granted	post	separation	is	derived	from	the	simplified	approach	based	on	the	weighted	average	time	to vest	and	the	remaining	contractual	term,	and	represents	the	period	of	time	that	awards	are	expected	to	be	outstanding.

Changes	in	options	outstanding	under	the	plans	for	the	years	ended	December	31,	2015,	2014	and	2013	are	as	follows:

|  | Shares<br>subject<br>to	option | Weighted-<br>average<br>exercise	price	(a) | Aggregate<br>intrinsic<br>value	(millions) | Weighted-<br>average<br>remaining	life	(years) |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2012 | 1,102,129 | $37.77 |  |  |
| Granted | 321,808 | 47.35 |  |  |
| Exercised | (611,792) | 33.78 |  |  |
| Impact\tof\tspin-off | 1,669,911 | — |  |  |
| December\t31,\t2013 | 2,482,056 | 25.21 |  |  |
| Granted | 188,817 | 54.07 |  |  |
| Exercised | (683,383) | 24.18 |  |  |
| Canceled | (25,462) | 43.89 |  |  |
| December\t31,\t2014 | 1,962,028 | 28.11 |  |  |
| Granted | 220,679 | 57.85 |  |  |
| Exercised | (575,564) | 22.98 |  |  |
| Canceled | (14,976) | 47.28 |  |  |
| Outstanding\tDecember\t31,\t2015 | 1,592,167 | $33.91 | $51.0 | 5.2 |
| Exercisable\tDecember\t31,\t2015 | 1,053,687 | $25.64 | $42.4 | 3.6 |

(a) The	weighted	average	exercise	price	for	periods	ending	prior	to	December	1,	2013	represents	the	exercise	price	of	awards	prior	to	conversion	to	awards	of	the Company.	The	weighted	average	exercise	price	of	awards	on	or	after	December	1,	2013	represents	the	exercise	price	of	the	awards	on	the	grant	date	converted to	ordinary	shares	of	the	Company.

The	following	table	summarizes	information	concerning	currently	outstanding	and	exercisable	options:

|  |  |  |  | Options	outstanding |  |  | Options	exercisable |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Range\tof\nexercise\tprice |  | Number\noutstanding\tat\nDecember\t31,\n2015 | Weighted-\naverage\nremaining\nlife\t(years) | Weighted-\naverage\nexercise\nprice | Number\noutstanding\tat\nDecember\t31,\n2015 | Weighted-\naverage\nremaining\nlife\t(years) | Weighted-\naverage\nexercise\nprice |
| 10.01 | — | 20.00 | 239,563 | 3.2 | $15.26 | 239,563 | 3.2 | $15.26 |
| 20.01 | — | 30.00 | 628,033 | 3.0 | 25.47 | 628,033 | 3.0 | 25.47 |
| 30.01 | — | 40.00 | 180,154 | 6.0 | 32.30 | 121,392 | 5.5 | 32.28 |
| 40.01 | — | 50.00 | 161,601 | 8.0 | 43.37 | 5,098 | 8.0 | 43.58 |
| 50.01 | — | 60.00 | 382,816 | 8.5 | 56.18 | 59,601 | 7.1 | 54.08 |
|  |  |  | 1,592,167 | 5.2 | $33.91 | 1,053,687 | 3.6 | $25.64 |

At	December	31,	2015,	there	was	$4.1	million	of	total	unrecognized	compensation	cost	from	stock	option	arrangements	granted	under	the	plan,	which	is	primarily related	to	unvested	shares	of	non-retirement	eligible	employees.	The	aggregate	intrinsic	value	of	the	Company's	options	exercised	during	the	year	ended	December	31, 2015	and	2014	was	$21.5	million	and	$19.3	million,	respectively.	Generally,	stock	options	expire	ten	years	from	their	date	of	grant.

The	following	table	summarizes	RSU	activity	for	the	years	ended	December	31,	2015,	2014	and	2013:

|  | RSUs | Weighted-<br>average	grant<br>date	fair	value	(a) |
| :--- | :--- | :--- |
| Outstanding\tand\tunvested\tat\tDecember\t31,\t2012 | 144,053 | $40.02 |
| Granted | 195,590 | 48.42 |
| Vested | (71,776) | 38.94 |
| Impact\tof\tspin-off | 110,350 | — |
| Outstanding\tand\tunvested\tat\tDecember\t31,\t2013 | 378,217 | 33.59 |
| Granted | 101,654 | 54.29 |
| Vested | (149,392) | 28.68 |
| Canceled | (5,319) | 43.66 |
| Outstanding\tand\tunvested\tat\tDecember\t31,\t2014 | 325,160 | 42.15 |
| Granted | 121,153 | 59.69 |
| Vested | (92,029) | 36.63 |
| Canceled | (9,354) | 49.32 |
| Outstanding\tand\tunvested\tat\tDecember\t31,\t2015 | 344,930 | $49.59 |

(a) The	weighted	average	grant	date	fair	value	for	periods	ending	prior	to	December	1,	2013	represents	the	fair	value	of	awards	granted	with	respect	to	Ingersoll Rand	ordinary	shares,	prior	to	conversion	to	awards	of	the	Company.	The	weighted	average	grant	date	fair	value	of	awards	on	or	after	December	1,	2013 represents	the	fair	value	of	the	awards	on	the	grant	date	converted	to	ordinary	shares	of	the	Company.

At	December	31,	2015,	there	was	$7.9	million	of	total	unrecognized	compensation	cost	from	RSU	arrangements	granted	under	the	plan,	which	is	related	to	unvested shares	of	non-retirement	eligible	employees.

# Performance	Shares

The	Company	has	a	Performance	Share	Program	("PSP")	for	key	employees.	The	program	provides	awards	in	the	form	of	Performance	Share	Units	("PSU")	based	on performance	against	pre-established	objectives.	The	annual	target	award	level	is	expressed	as	a	number	of	the	Company's	ordinary	shares.	All	PSUs	are	settled	in	the form	of	ordinary	shares	unless	deferred.

In	December	2013,	the	Company's	Compensation	Committee	granted	PSUs	that	are	earned	based	upon	the	Company's	total	shareholder	return	("TSR")	performance compared	to	the	TSR	of	the	41	companies	currently	comprising	the	S&P	400	Capital	Goods	Index	over	the	three-year	performance	period	based	on	the	change	in	the	30 day	average	price	for	the	index	from	December	2013	to	the	30	day	average	price	for	the	index	in	December	2016.	The	fair	value	of	the	market	condition	is	estimated using	a	Monte	Carlo	simulation	approach	in	a	risk-neutral	framework	to	model	future	stock	price	movements	based	upon	the	risk-free	rate	of	return,	the	volatility	of	each entity,	and	the	pair-wise	correlations	between	each	entity.	The	model	utilizes	a	peer	group	of	41	members.

Beginning	with	the	2014	grant	year,	PSUs	are	earned	based	upon	a	50%	performance	condition,	measured	at	each	reporting	period	by	EPS	performance	in	relation	to pre-established	targets	set	by	the	Compensation	Committee,	and	upon	a	50%	market	condition,	measured	by	the	Company's	relative	TSR	against	the	S&P	400	Capital Goods	Index	over	a	three-year	performance	period	based	on	the	change	in	the	30	day	average	price	for	the	grant	year	index	to	the	30	day	average	price	for	the	index	over the	performance	period.	The	fair	values	of	the	market	conditions	are	estimated	using	a	Monte	Carlo	simulation	approach	in	a	risk-neutral	framework	to	model	future stock	price	movements	based	upon	the	risk-free	rate	of	return,	the	volatility	of	each	entity,	and	the	pair-wise	correlations	between	each	entity.	The	model	utilizes	a	peer group	of	41	members.

The	following	table	summarizes	PSU	activity	for	the	maximum	number	of	shares	that	may	be	issued	for	the	years	ended	December	31,	2015,	2014	and	2013:

|  | PSUs | Weighted-average	grant	date	fair<br>value	(a) |
| :--- | :--- | :--- |
| Outstanding\tand\tunvested\tat\tDecember\t31,\t2012 | 142,456 | $39.13 |
| Granted | 75,172 | 34.90 |
| Vested | (34,701) | 34.94 |
| Impact\tof\tspin-off | (120,044) | — |
| Outstanding\tand\tunvested\tat\tDecember\t31,\t2013 | 62,883 | 29.27 |
| Granted | 110,387 | 72.70 |
| Forfeited | (12,138) | 50.96 |
| Outstanding\tand\tunvested\tat\tDecember\t31,\t2014 | 161,132 | 57.39 |
| Granted | 58,323 | 66.47 |
| Vested | (17,327) | 75.05 |
| Forfeited | (85) | 75.05 |
| Outstanding\tand\tunvested\tat\tDecember\t31,\t2015 | 202,043 | $64.92 |

At	December	31,	2015,	there	was	$4.4	million	of	total	unrecognized	compensation	cost	from	the	PSP	based	on	current	performance,	which	is	related	to	unvested	shares. This	compensation	will	be	recognized	over	the	required	service	period,	which	is	generally	the	three-year	vesting	period.

# Deferred	Compensation

The	Company	allows	key	employees	to	defer	a	portion	of	their	eligible	compensation	into	a	number	of	investment	choices,	including	its	ordinary	share	equivalents.	Any amounts	invested	in	ordinary	share	equivalents	will	be	settled	in	ordinary	shares	of	the	Company	at	the	time	of	distribution.

# NOTE	16	–	RESTRUCTURING

During	2015,	2014,	and	2013,	the	Company	incurred	costs	of	$15.1	million,	$7.1	million,	and	$5.8	million	respectively,	associated	with	ongoing	restructuring	actions. These	actions	included	workforce	reductions	as	well	as	the	closure	and	consolidation	of	manufacturing	facilities	in	an	effort	to	increase	efficiencies	across	multiple	lines of	business.

# 2015	Italy	Restructuring	Plan

In	the	second	quarter	of	2015,	management	committed	to	a	restructuring	plan	in	Italy.		The	plan	aims	to	improve	competitive	position,	ensure	long-term	viability	and enhance	customer	experience.	Expenses	incurred	for	this	plan	for	the	year	ended	December	31	were	as	follows:

| In	millions | 2015 |
| :--- | :--- |
| EMEIA | $14.7 |
| Total | 14.7 |
| Cost\tof\tgoods\tsold | $13.6 |
| Selling\tand\tadministrative\texpenses | 1.1 |
| Total | $14.7 |

# The	above	expenses	primarily	related	to	severance	charges.

The	Company	incurred	other	non-qualified	restructuring	charges	of	$0.5	million	during	the	year	ended	December	31,	2015	in	conjunction	with	the	other	restructuring plans,	which	represent	costs	that	are	directly	attributable	to	restructuring	activities,	but	do	not	fall	into	the	severance,	exit	or	disposal	category.

# Other	Restructuring	Plans

Restructuring	charges	recorded	during	the	years	ended	December	31	as	part	of	other	restructuring	plans	were	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Americas | $— | $0.1 | $0.1 |
| EMEIA | — | 7.0 | 5.7 |
| Asia\tPacific | 0.4 | — | — |
| Total | $0.4 | $7.1 | $5.8 |
| Cost\tof\tgoods\tsold | $— | $1.4 | $3.1 |
| Selling\tand\tadministrative\texpenses | 0.4 | 5.7 | 2.7 |
| Total | $0.4 | $7.1 | $5.8 |

These	charges	primarily	related	to	workforce	reductions	in	an	effort	to	increase	efficiencies	across	multiple	lines	of	business.

The	changes	in	the	restructuring	reserve	during	the	years	ended	December	31,	2015	and	2014	were	as	follows:

| In	millions | EMEIA | Asia	Pacific | Total |
| :--- | :--- | :--- | :--- |
| December\t31,\t2013 | \t $2.8 | \t $— \t $ | 2.8 |
| Additions | 7.1 | — | 7.1 |
| Cash\tand\tnon-cash\tuses | (7.6) | — | (7.6) |
| Currency\ttranslation | (0.4) | — | (0.4) |
| December\t31,\t2014 | 1.9 | — | 1.9 |
| Additions | 14.7 | 0.4 | 15.1 |
| Cash\tand\tnon-cash\tuses | (6.0) | (0.2) | (6.2) |
| Currency\ttranslation | (0.6) | — | (0.6) |
| December\t31,\t2015 | \t $10.0 | \t $0.2 | \t $10.2 |

The	majority	of	the	costs	accrued	as	of	December	31,	2015	will	be	paid	within	one	year.

# NOTE	17	–	OTHER	EXPENSE,	NET

At	December	31,	the	components	of	Other	expense,	net	were	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Interest\tincome | $(1.5) | $(1.1) | $(0.8) |
| Exchange\tloss | 4.9 | 7.6 | 8.0 |
| Other | (11.2) | (1.9) | — |
| Other\t(income)\texpense,\tnet | $(7.8) | $4.6 | $7.2 |

During	the	year	ended	December	31,	2015	the	Company	recorded	gains	from	the	sale	of	marketable	securities	of	$11.0	million,	which	is	included	within	Other	in	the table	above.	In	February	2015,	the	Venezuelan	government	announced	changes	to	its	exchange

rate	system	that	included	the	launch	of	a	new,	market-based	system	called	the	Marginal	Currency	System,	or	"SIMADI."	During	the	year	ended	December	31,	2015	the Company	recorded	a	charge	of	$2.8	million	in	order	to	remeasure	net	monetary	assets	at	the	SIMADI	rate	and	other	unfavorable	currency	impacts.	These	losses	are within	Exchange	loss	in	the	table	above.

In	March	2014,	the	Venezuelan	government	launched	a	SICAD	II	rate	to	provide	a	greater	supply	of	U.S.	dollars	from	sources	other	than	the	Venezuelan	government. Given	accelerated	deterioration	in	economic	conditions	driven	by	a	significant	drop	in	the	price	of	oil	and	no	expectation	of	improvement	for	the	foreseeable	future,	the Company	concluded	that	the	SICAD	II	exchange	rate	was	the	most	appropriate	rate	at	which	to	value	bolivar	denominated	assets	and	liabilities.	As	a	result,	on December	31,	2014,	the	Company	moved	the	exchange	rate	applied	to	bolivars	from	the	official	rate	to	the	SICAD	II	rate.	The	Company	recorded	a	charge	of	$12.1 million	in	order	to	remeasure	net	monetary	assets	to	the	SICAD	II	rate.

Included	within	Exchange	loss	for	the	year	ended	December	31,	2013	is	a	$6.2	million	realized	foreign	currency	loss	related	to	the	devaluation	of	the	Venezuelan	bolivar from	the	pre-existing	exchange	rate	of	4.3	bolivars	per	U.S.	dollar	to	6.3	bolivars	per	U.S.	dollar.

# NOTE	18	–	INCOME	TAXES

The	Company	and	its	subsidiaries,	prior	to	the	Spin-off,	were	included	in	Ingersoll	Rand's	income	tax	returns	in	certain	taxing	jurisdictions.	In	preparing	the	consolidated financial	statements,	the	Company	has	determined	the	tax	provision	for	those	jurisdictions	on	a	separate	return	basis.

Earnings	(loss)	before	income	taxes	for	the	years	ended	December	31	were	taxed	within	the	following	jurisdictions:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| United\tStates | $123.1 | $162.2 | $320.1 |
| Non-U.S. | 86.2 | 105.7 | (96.7) |
| Total | $209.3 | $267.9 | $223.4 |

The	components	of	the	Provision	for	income	taxes	for	the	years	ended	December	31	were	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Current\ttax\texpense\t(benefit): |  |  |  |
| United\tStates | $53.4 | $52.9 | $118.5 |
| Non-U.S. | 3.5 | 14.1 | 37.6 |
| Total: | 56.9 | 67.0 | 156.1 |
| Deferred\ttax\texpense\t(benefit): |  |  |  |
| United\tStates | 2.1 | 15.6 | 7.7 |
| Non-U.S. | (4.4) | 1.6 | 11.2 |
| Total: | (2.3) | 17.2 | 18.9 |
| Total\ttax\texpense\t(benefit): |  |  |  |
| United\tStates | 55.5 | 68.5 | 126.2 |
| Non-U.S. | (0.9) | 15.7 | 48.8 |
| Total | $54.6 | $84.2 | $175.0 |

The	Provision	for	income	taxes	differs	from	the	amount	of	income	taxes	determined	by	applying	the	applicable	U.S.	statutory	income	tax	rate	to	pretax	income,	as	a result	of	the	following	differences:

# Percent	of	pretax	income

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Statutory\tU.S.\trate | 35.0\t% | 35.0\t% | 35.0\t% |
| Increase\t(decrease)\tin\trates\tresulting\tfrom: |  |  |  |
| Non-U.S.\ttax\trate\tdifferential\t(1) | (11.1) | (9.6) | 13.0 |
| State\tand\tlocal\tincome\ttaxes\t(1) | 2.8 | 3.0 | 5.5 |
| Goodwill\timpairment\tcharge | — | — | 18.2 |
| Reserves\tfor\tuncertain\ttax\tpositions | (3.4) | (2.1) | 4.4 |
| Tax\ton\tunremitted\tearnings | 1.5 | 0.3 | 3.3 |
| Tax\ton\tremitted\tearnings | — | 2.5 | — |
| Venezuela\tdevaluation | 0.9 | 4.0 | — |
| Production\tincentives | (1.0) | (2.4) | (2.2) |
| Other\tadjustments | 1.4 | 0.7 | 1.1 |
| Effective\ttax\trate | 26.1\t% | 31.4\t% | 78.3\t% |

# allowances

At	December	31,	a	summary	of	the	deferred	tax	accounts	were	as	follows:

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Inventory\tand\taccounts\treceivable | $10.2 | $10.8 |
| Fixed\tassets\tand\tintangibles | 14.5 | 22.3 |
| Postemployment\tand\tother\tbenefit\tliabilities | 65.5 | 63.3 |
| Other\treserves\tand\taccruals | 12.7 | 11.1 |
| Net\toperating\tlosses,\ttax\tcredits\tand\tother\tcarryforwards | 133.4 | 45.2 |
| Investment\tand\tother\tasset\tbasis\tdifferences | 1.1 | 1.3 |
| Other | 6.2 | 1.0 |
| Gross\tdeferred\ttax\tassets | 243.6 | 155.0 |
| Less:\tdeferred\ttax\tvaluation\tallowances | (133.3) | (50.8) |
| Deferred\ttax\tassets\tnet\tof\tvaluation\tallowances | $110.3 | $104.2 |
| Deferred\ttax\tliabilities: |  |  |
| Fixed\tassets\tand\tintangibles | $(96.7) | $(34.6) |
| Unremitted\tearnings\tof\tforeign\tsubsidiaries | (3.9) | (0.8) |
| Other | (6.7) | (2.2) |
| Gross\tdeferred\ttax\tliabilities | (107.3) | (37.6) |
| Net\tdeferred\ttax\tassets | $3.0 | $66.6 |

At	December	31,	2015,	$3.9	million	of	deferred	tax	was	recorded	for	certain	undistributed	earnings	of	foreign	subsidiaries.	No	deferred	taxes	have	been	provided	for	any portion	of	the	remaining	undistributed	earnings	of	the	Company's	subsidiaries	since	these	earnings	have	been,	and	will	continue	to	be,	permanently	reinvested	in	these subsidiaries.	For	many	reasons,	including	the	number	of	legal	entities	and	jurisdictions	involved,	the	complexity	of	the	Company's	legal	entity	structure,	the	complexity of	tax	laws	in	the	relevant	jurisdictions	and	the	impact	of	projections	of	income	for	future	years	to	any	calculations,	the	Company	believes	it	is	not	practicable	to estimate,	within	any	reasonable	range,	the	amount	of	additional	taxes	which	may	be	payable	upon	the	distribution	of	earnings.

At	December	31,	2015,	the	Company	had	the	following	tax	losses	and	tax	credit	carryforwards	available	to	offset	taxable	income	in	prior	and	future	years:

The	U.S.	state	loss	carryforwards	were	incurred	in	various	jurisdictions.	The	non-U.S.	loss	carryforwards	were	incurred	in	various	jurisdictions,	predominantly	in	China, Ireland,	Luxembourg	and	the	United	Kingdom.

The	Company	evaluates	its	deferred	income	tax	assets	to	determine	if	valuation	allowances	are	required	or	should	be	adjusted.	U.S.	GAAP	requires	that	companies assess	whether	valuation	allowances	should	be	established	against	their	deferred	tax	assets	based	on	consideration	of	all	available	evidence,	both	positive	and	negative, using	a	"more	likely	than	not"	standard.	This	assessment	considers	the	nature,	frequency	and	amount	of	recent	losses,	the	duration	of	statutory	carryforward	periods	and tax	planning	strategies.	In	making	such	judgments,	significant	weight	is	given	to	evidence	that	can	be	objectively	verified.

Activity	associated	with	the	Company's	valuation	allowance	is	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Beginning\tbalance | $50.8 | $46.9 | $5.8 |
| Increase\tto\tvaluation\tallowance | 82.2 | 28 | 44.9 |
| Decrease\tto\tvaluation\tallowance | (3.0) | (15.8) | (0.5) |
| Foreign\texchange\ttranslation | (1.6) | (1.7) | — |
| Net\tequity\twith\tparent | — | — | (4.0) |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | 4.9 | (6.6) | 0.7 |
| Ending\tbalance | $133.3 | $50.8 | $46.9 |

During	2015,	the	valuation	allowance	increased	by	$82.5	million.	This	increase	is	the	result	of	changes	in	jurisdictional	profitability,	country	specific	tax	laws	and changes	in	judgment	and	facts	regarding	the	realizability	of	deferred	tax	assets.

The	Company	has	total	unrecognized	tax	benefits	of	$23.8	million	and	$25.4	million	as	of	December	31,	2015,	and	December	31,	2014.	The	amount	of	unrecognized	tax benefits	that,	if	recognized,	would	affect	the	continuing	operations	effective	tax	rate	are	$23.8	million	as	of	December	31,	2015.	A	reconciliation	of	the	beginning	and ending	amount	of	unrecognized	tax	benefits	is	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Beginning\tbalance | $25.4 | $40.6 | $63.6 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 3.9 | 3.1 | 9.0 |
| Net\tequity\tadjustment\twith\tformer\tparent\tcompany | — | — | (25.4) |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tprior\tyears | 1.6 | 11.8 | 0.5 |
| Reductions\tbased\ton\ttax\tpositions\trelated\tto\tprior\tyears | (3.0) | (23.9) | (6.9) |
| Reductions\trelated\tto\tsettlements\twith\ttax\tauthorities | — | (0.7) | — |
| Reductions\trelated\tto\tlapses\tof\tstatute\tof\tlimitations | (1.4) | (2.7) | (0.7) |
| Translation\t(gain)/loss | (2.7) | (2.8) | 0.5 |
| Ending\tbalance | $23.8 | $25.4 | $40.6 |

The	Company	records	interest	and	penalties	associated	with	the	uncertain	tax	positions	within	its	Provision	for	income	taxes.	The	Company	had	reserves	associated	with interest	and	penalties,	net	of	tax,	of	$5.3	million	and	$6.2	million	at	December	31,	2015	and	2014.	For	the	year	ended	December	31,	2013,	the	Company	recognized	a $15.2	million	reduction	in	the	reserve	related	to	interest	and	penalties,	net	of	tax,	through	Parent	Company	Investment	in	the	Consolidated	Balance	Sheet.	For	the	year ended

December	31,	2015	the	Company	did	not	recognize	interest	and	penalties	in	continuing	operations	and	recognized	$(2.2)	million	in	net	interest	and	penalties,	net	of	tax, in	continuing	operations	for	the	year	ended	December	31,	2014	related	to	these	uncertain	tax	positions.

The	total	amount	of	unrecognized	tax	benefits	relating	to	the	Company's	tax	positions	is	subject	to	change	based	on	future	events	including,	but	not	limited	to,	the settlements	of	ongoing	audits	and/or	the	expiration	of	applicable	statutes	of	limitations.	Although	the	outcomes	and	timing	of	such	events	are	highly	uncertain,	it	is reasonably	possible	that	the	balance	of	gross	unrecognized	tax	benefits,	excluding	interest	and	penalties,	could	potentially	be	reduced	by	up	to	approximately	$2.2 million	during	the	next	12	months.

The	provision	for	income	taxes	involves	a	significant	amount	of	management	judgment	regarding	interpretation	of	relevant	facts	and	laws	in	the	jurisdictions	in	which the	Company	operates.	Future	changes	in	applicable	laws,	projected	levels	of	taxable	income	and	tax	planning	could	change	the	effective	tax	rate	and	tax	balances recorded	by	the	Company.	In	addition,	tax	authorities	periodically	review	income	tax	returns	filed	by	the	Company	and	can	raise	issues	regarding	its	filing	positions, timing	and	amount	of	income	or	deductions,	and	the	allocation	of	income	among	the	jurisdictions	in	which	the	Company	operates.	A	significant	period	of	time	may elapse	between	the	filing	of	an	income	tax	return	and	the	ultimate	resolution	of	an	issue	raised	by	a	tax	authority	with	respect	to	that	return.	In	the	normal	course	of business,	the	Company	is	subject	to	examination	by	taxing	authorities	throughout	the	world,	including	such	major	jurisdictions	as	Canada,	France,	Germany,	Italy, Mexico	and	the	United	States.	In	general,	the	examination	of	the	material	tax	returns	of	subsidiaries	of	the	Company	is	complete	for	the	years	prior	to	2003,	with	certain matters	being	resolved	through	appeals	and	litigation.

In	connection	with	the	Spin-off,	the	Company	and	Ingersoll	Rand	entered	into	a	Tax	Matters	Agreement	for	the	allocation	of	taxes.	As	of	December	31,	2015,	the Company	agreed	to	indemnify	Ingersoll	Rand	$0.6	million	for	various	tax	matters,	exclusive	of	interest	and	penalties	of	$0.6	million,	which	is	reflected	as	an	Other noncurrent	liability	($2.4	million	and	$1.8	million	at	December	31,	2014).	In	addition,	the	Company	has	recorded	a	$36.4	million	indemnity	payable	to	Ingersoll	Rand related	to	a	filing	for	competent	authority	relief,	which	is	reflected	as	an	Other	noncurrent	liability	($43.4	million	at	December	31,	2014).	As	part	of	this	competent authority	filing,	the	Company	has	also	recorded	$36.4	million	as	an	Other	noncurrent	asset.	The	$36.4	million	is	exclusive	of	interest	in	the	amount	of	$5.6	million ($43.4	million	and	$6.4	million	at	December	31,	2014).	Furthermore,	the	Company	has	booked	an	additional	tax	recoverable	in	the	amount	of	$5.3	million	related	to	the competent	authority	filing.	The	Company	also	has	an	indemnity	receivable	from	Ingersoll	Rand	in	the	amount	of	$5.0	million	reflected	as	an	Other	noncurrent	asset ($5.6	million	at	December	31,	2014).	The	indemnity	receivable	is	primarily	related	to	additional	competent	authority	relief	filings.

# NOTE	19	–	DISCONTINUED	OPERATIONS

# NOTE	20	–	EARNINGS	PER	SHARE	(EPS)

Basic	EPS	is	calculated	by	dividing	Net	earnings	attributable	to	Allegion	plc	by	the	weighted-average	number	of	ordinary	shares	outstanding	for	the	applicable	period. Diluted	EPS	is	calculated	after	adjusting	the	denominator	of	the	basic	EPS	calculation	for	the	effect	of	all	potentially	dilutive	ordinary	shares,	which	in	the	Company's case,	includes	shares	issuable	under	share-based	compensation	plans.

Basic	and	Diluted	EPS	for	all	periods	prior	to	the	Spin-off	reflect	the	number	of	distributed	shares	on	December	1,	2013,	or	96.0	million	shares.	For	2013	year	to	date calculations,	these	shares	are	treated	as	issued	and	outstanding	from	January	1,	2013	for	purposes	of	calculating	historical	basic	EPS.	At	the	time	of	the	Spin-off,	stock options	and	restricted	stock	awards	were	converted	to	awards	of	Allegion,	and	therefore	there	were	no	dilutive	securities	outstanding	for	historical	periods.	For	2013,	the Company	determined	its	weighted	average	dilutive	share	outstanding	assuming	that	the	date	of	our	separation	from	Ingersoll	Rand	was	the	beginning	of	the	period.	The following	table	summarizes	the	weighted-average	number	of	ordinary	shares	outstanding	for	basic	and	diluted	earnings	per	share	calculations.

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Weighted-average\tnumber\tof\tbasic\tshares | 95.9 | 96.1 | 96.0 |
| Shares\tissuable\tunder\tincentive\tstock\tplans | 1.0 | 1.1 | 0.1 |
| Weighted-average\tnumber\tof\tdiluted\tshares | 96.9 | 97.2 | 96.1 |

At	December	31,	2015,	0.3	million	stock	options	were	excluded	from	the	computation	of	weighted	average	diluted	shares	outstanding	because	the	effect	of	including these	shares	would	have	been	anti-dilutive.

# NOTE	21	–	RELATED	PARTY	TRANSACTIONS

Ingersoll	Rand	provided	 the	Company's	subsidiaries	with	certain	centrally	managed	services	and	corporate	function	support in the	areas	of	finance, information technology,	employee	benefits,	legal,	human	resources,	integrated	supply	chain	and	marketing	through	November	30,	2013.

The	Company's	subsidiaries	use	of	these	services	and	its	participation	in	these	employee	benefit	plans	generated	both	direct	and	indirect	costs.	These	direct	and	indirect costs	and	benefits	relating	to	the	services	and	benefit	plans	were	charged	to	the	Company's	subsidiaries	and	were	included	in	Cost	of	goods	sold	and	Selling	and administrative	expenses.

Costs	 associated	 with	 centrally	 managed	 services	 were	 billed	 to	 the	 Company's	 subsidiaries	 on	 the	 basis	 of	 direct	 usage.	 Historically,	 Ingersoll	 Rand	 corporate allocations	were	generally	allocated	to	the	Company's	subsidiaries	on	the	basis	of	revenue,	assets,	payroll	expense,	and	selling	and	administrative	expenses.	Incremental corporate	costs	were	allocated	to	the	Company's	subsidiaries	on	a	similar	basis.	Costs	were	allocated	to	the	Company's	subsidiaries	using	allocation	methods	that management	believed	were	reasonable.

The	Consolidated	Financial	Statements	reflect	these	direct	and	indirect	costs	through	a	corporate	overhead	allocation.	For	the	years	ended	December	31,	these	allocated Ingersoll	Rand	costs	amount	to:

|  | 2013 |
| :--- | :--- |
| Centrally\tmanaged\tservice\tcosts | $104.6 |
| Historical\tIngersoll\tRand\tcorporate\toverhead\tallocations | 36.6 |
| Incremental\tcorporate\tcosts\tnot\tpreviously\tallocated\tto\tbusinesses | 33.3 |
| Total | $174.5 |

The	Company	entered	into	a	Transition	Services	Agreement	with	Ingersoll	Rand,	under	which	Ingersoll	Rand	provides	certain	services	for	a	limited	time	after	the	Spin- off	to	help	ensure	an	orderly	transition.	Under	the	Transition	Services	Agreement,	the	Company	receives	certain	services,	including	services	for	information	technology, human	resources	and	labor	and	finance	and	accounting	support	as	well	as	other	corporate	support	services,	from	Ingersoll	Rand	and/or	third	party	providers	at	specified prices.	The	Company	paid	$1.5	million	and	$2.9	million	in	2015	and	2014	and	$0.5	million	in	the	fourth	quarter	of	2013	to	Ingersoll	Rand	for	services	provided	under transition	services	agreements.

# NOTE	22	–	COMMITMENTS	AND	CONTINGENCIES

The	Company	is	involved	in	various	litigations,	claims	and	administrative	proceedings,	including	those	related	to	environmental	and	product	warranty	matters.	Amounts recorded	for	identified	contingent	liabilities	are	estimates,	which	are	reviewed	periodically	and	adjusted	to	reflect	additional	information	when	it	becomes	available. Subject	to	the	uncertainties	inherent	in	estimating	future	costs	for	contingent	liabilities,	except	as	expressly	set	forth	in	this	note,	management	believes	that	any	liability which	may	result	from	these	legal	matters	would	not	have	a	material	adverse	effect	on	the	financial	condition,	results	of	operations,	liquidity	or	cash	flows	of	the Company.

# Environmental	Matters

The	Company	is	dedicated	to	an	environmental	program	to	reduce	the	utilization	and	generation	of	hazardous	materials	during	the	manufacturing	process	and	to remediate	identified	environmental	concerns.	As	to	the	latter,	the	Company	is	currently	engaged	in	site	investigations	and	remediation	activities	to	address	environmental cleanup	from	past	operations	at	current	and	former	production	facilities.

The	Company	is	sometimes	a	party	to	environmental	lawsuits	and	claims	and	has	received	notices	of	potential	violations	of	environmental	laws	and	regulations	from	the U.S.	Environmental	Protection	Agency	and	similar	state	authorities.	It	has	also	been	identified	as	a	potentially	responsible	party	("PRP")	for	cleanup	costs	associated with	off-site	waste	disposal	at	federal	Superfund	and	state	remediation	sites.	For	all	such	sites,	there	are	other	PRPs	and,	in	most	instances,	the	Company's	involvement is	minimal.

In	estimating	its	liability,	the	Company	has	assumed	it	will	not	bear	the	entire	cost	of	remediation	of	any	site	to	the	exclusion	of	other	PRPs	who	may	be	jointly	and severally	liable.	The	ability	of	other	PRPs	to	participate	has	been	taken	into	account,	based	on	our	understanding	of	the	parties'	financial	condition	and	probable contributions	on	a	per	site	basis.	Additional	lawsuits	and	claims	involving	environmental	matters	are	likely	to	arise	from	time	to	time	in	the	future.

The	 Company	 incurred	 $4.4	 million,	 $2.9	 million,	 and	 $2.1	 million	 of	 expenses	 during	 the	 years	 ended	December	 31,	 2015,	2014	 and	2013,	 respectively,	 for environmental	remediation	at	sites	presently	or	formerly	owned	or	leased	by	us.	Environmental	remediation	costs	are	recorded	in	Costs	of	goods	sold	within	the Consolidated	Statements	of	Comprehensive	Income.	As	of	December	31,	2015	and	2014,	the	Company	has	recorded	reserves	for	environmental	matters	of	$15.2	million and	$8.8	million.	The	increase	in	the	reserve	is	primarily	due	to	estimated	environmental	liabilities	assumed	in	the	acquisition	of	AXA.	Of	the	total	reserve,	$2.8	million (2015)	and	$2.4	million	(2014)	relate	to	remediation	of	sites	previously	disposed	by	the	Company.	Environmental	reserves	are	classified	as	Accrued	expenses	and	other current	liabilities	or	Other	noncurrent	liabilities	based	on	their	expected	term.	The	Company's	total	current	environmental	reserve	at	December	31,	2015	and	2014	was $3.7	million	and	$2.2	million	and	the	remainder	is	classified	as	noncurrent.	Given	the	evolving	nature	of	environmental	laws,	regulations	and	technology,	the	ultimate cost	of	future	compliance	is	uncertain.

# Warranty	Liability

Standard	product	warranty	accruals	are	recorded	at	the	time	of	sale	and	are	estimated	based	upon	product	warranty	terms	and	historical	experience.	The	Company assesses	the	adequacy	of	its	liabilities	and	will	make	adjustments	as	necessary	based	on	known	or	anticipated	warranty	claims,	or	as	new	information	becomes	available.

The	changes	in	the	standard	product	warranty	liability	for	the	year	ended	December	31,	were	as	follows:

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tperiod | $9.8 | $9.4 |
| Reductions\tfor\tpayments | (5.4) | (4.9) |
| Accruals\tfor\twarranties\tissued\tduring\tthe\tcurrent\tperiod | 7.1 | 6.1 |
| Changes\tto\taccruals\trelated\tto\tpreexisting\twarranties | 0.5 | (0.6) |
| Translation | (0.3) | (0.2) |
| Balance\tat\tend\tof\tperiod | $11.7 | $9.8 |

Standard	product	warranty	liabilities	are	classified	as	Accrued	expenses	and	other	current	liabilities.

# Other	Commitments	and	Contingencies

Certain	office	and	warehouse	facilities,	transportation	vehicles	and	data	processing	equipment	are	leased	by	the	Company.	Total	rental	expense	was	$30.3	million	in 2015,	$32.5	million	in	2014	and	$35.3	million	in	2013.	Minimum	lease	payments	required	under	non-cancelable	operating	leases	with	terms	in	excess	of	one	year	for	the next	five	years	are	as	follows:	$18.7	million	in	2016,	$13.4	million	in	2017,	$9.4	million	in	2018,	$6.4	million	in	2019,	and	$4.4	million	in	2020.

# NOTE	23	–	BUSINESS	SEGMENT	INFORMATION

The	accounting	policies	of	the	operating	segments	are	the	same	as	those	described	in	the	summary	of	significant	accounting	policies	except	that	the	operating	segments' results	are	prepared	on	a	management	basis	that	is	consistent	with	the	manner	in	which	the	Company	disaggregates	financial	information	for	internal	review	and decision	making.	The	Company	largely	evaluates	performance	based	on	Segment	operating	income	and	Segment	operating	margins.

Segment	operating	income	is	the	measure	of	profit	and	loss	that	the	Company's	chief	operating	decision	maker	uses	to	evaluate	the	financial	performance	of	the	business and	as	the	basis	for	resource	allocation,	performance	reviews,	and	compensation.	For	these	reasons,	the	Company	believes	that	Segment	operating	income	represents	the most	relevant	measure	of	segment	profit	and	loss.	The	Company's	chief	operating	decision	maker	may	exclude	certain	charges	or	gains,	such	as	corporate	charges	and other	special	charges,	from	Operating	income	to	arrive	at	a	Segment	operating	income	that	is	a	more	meaningful	measure	of	profit	and

loss	upon	which	to	base	its	operating	decisions.	The	Company	defines	Segment	operating	margin	as	Segment	operating	income	as	a	percentage	of	Net	revenues.

Each	reportable	segment	is	based	primarily	on	the	geography	in	which	it	operates.	A	description	of	the	Company's	reportable	segments	is	as	follows:

The	Americas	segment	provides	security	products	and	solutions	in	approximately	30	countries	throughout	North	America	and	parts	of	South	America.	The	segment	sells a	broad	range	of	products	and	solutions	including,	locks,	locksets,	key	systems,	door	closers,	exit	devices,	doors	and	door	frames,	electronic	product	and	access	control systems	to	end-users	in	commercial,	institutional	and	residential	facilities,	including	into	the	education,	healthcare,	government,	commercial	office	and	single-	and	multi- family	residential	markets.	This	segment's	primary	brands	are	Schlage,	Von	Duprin	and	LCN.

The	EMEIA	segment	provides	security	products	and	solutions	throughout	Europe,	the	Middle	East,	India	and	Africa	in	approximately	85	countries.	The	segment	offers customers	the	same	portfolio	of	products	as	the	Americas	segment,	as	well	as	time	and	attendance	and	workforce	productivity	solutions.	This	segment's	primary	brands are	Bricard,	CISA,	Interflex	and	SimonsVoss.	This	segment	also	resells	Schlage,	Von	Duprin	and	LCN	products,	primarily	in	the	Middle	East.

The	Asia	Pacific	segment	provides	security	products	and	solutions	throughout	Asia	Pacific	in	approximately	14	countries.	The	segment	offers	customers	the	same portfolio	of	products	as	the	Americas	segment.	This	segment's	primary	brands	are	Milre,	Schlage,	CISA,	Von	Duprin	and	LCN.

Effective	September	1,	2014	the	Company	completed	the	sale	of	its	United	Kingdom	(UK)	Door	businesses	to	an	unrelated	third	party.	The	businesses	sold	included	the Dor-o-Matic™	branded	automatic	door	business,	the	Martin	Roberts™	branded	performance	steel	doorset	business	and	the	UK	service	organization.	Historical	results	of the	component	have	been	reclassified	to	discontinued	operations	for	all	periods	presented.	See	Note	19	-	Discontinued	Operations	for	more	information.

A	summary	of	operations	and	balance	sheet	information	by	reportable	segments	as	of	and	for	the	years	ended	December	31	were	as	follows:

| Dollar	amounts	in	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Americas |  |  |  |
| Net\trevenues | $1,558.4 | $1,560.0 | $1,514.7 |
| Segment\toperating\tincome | 418.0 | 387.3 | 392.1 |
| Segment\toperating\tmargin | 26.8\t% | 24.8% | 25.9\t% |
| Depreciation\tand\tamortization | 26.4 | 24.8 | 26.5 |
| Capital\texpenditures | 18.9 | 23.6 | 10.5 |
| Total\tsegment\tassets | 878.4 | 990.7 | 890.4 |
| EMEIA |  |  |  |
| Net\trevenues | 386.3 | 393.4 | 401.4 |
| Segment\toperating\tincome\t(loss)\t(a) | 8.6 | 4.9 | (0.3) |
| Segment\toperating\tmargin | 2.2\t% | 1.2% | (0.1)% |
| Depreciation\tand\tamortization | 17.2 | 16.4 | 18.2 |
| Capital\texpenditures | 5.6 | 4.9 | 5.6 |
| Total\tsegment\tassets | 899.4 | 457.7 | 525.6 |
| Asia\tPacific |  |  |  |
| Net\trevenues | 123.4 | 164.9 | 153.5 |
| Segment\toperating\tincome\t(loss)\t(b) | (3.4) | 2.3 | 25.4 |
| Segment\toperating\tmargin | (2.8)% | 1.4% | 16.5\t% |
| Depreciation\tand\tamortization | 2.1 | 1.1 | 0.9 |
| Capital\texpenditures | 2.0 | 1.5 | 0.8 |
| Total\tsegment\tassets | 237.1 | 442.2 | 403.2 |
| Total\tnet\trevenues | $2,068.1 | $2,118.3 | $2,069.6 |
| Reconciliation\tto\tearnings\tbefore\tincome\ttaxes |  |  |  |
| Segment\toperating\tincome\tfrom\treportable\tsegments | $423.2 | $394.5 | $417.2 |
| Goodwill\timpairment\tcharge | — | — | 137.6 |
| Unallocated\tcorporate\texpense | 64.6 | 68.2 | 38.8 |
| Interest\texpense | 52.9 | 53.8 | 10.2 |
| Loss\ton\tdivestitures | 104.2 | — | — |
| Other\texpense\t(income),\tnet | (7.8) | 4.6 | 7.2 |
| Total\tearnings\tbefore\tincome\ttaxes |  |  |  |
|  | $209.3 | $267.9 | $223.4 |
| Depreciation\tand\tamortization\tfrom\treportable\tsegments | $45.7 | $42.3 | $45.6 |
| Unallocated\tdepreciation\tand\tamortization | 3.1 | 1.9 | 0.1 |
| Total\tdepreciation\tand\tamortization | $48.8 | $44.2 | $45.7 |
| Capital\texpenditures\tfrom\treportable\tsegments | $26.5 | $30.0 | $16.9 |
| Corporate\tcapital\texpenditures | 8.7 | 21.5 | 3.3 |
| Total\tcapital\texpenditures | $35.2 | $51.5 | $20.2 |
| Assets\tfrom\treportable\tsegments | $2,014.9 | $1,890.6 | $1,819.2 |
| Unallocated\tassets\t(c) | 270.4 | 125.3 | 181.4 |
| Total\tassets | $2,285.3 | $2,015.9 | $2,000.6 |

(a) During	the	year	ended	December	31,	2013,	the	Company	recorded	a	non-cash	pre-tax	goodwill	impairment	charge	of	$137.6	million.	This	amount	has	been excluded	from	Segment	operating	income	of	the	EMEIA	segment	as	management	excludes	these	charges	from	Operating	income	when	making	operating decisions	about	the	business.

(b) Results	for	the	year	ended	December	31,	2013,	include	a	$21.5	million	gain	on	a	property	sale	in China.

(c) Unallocated	assets	consists	of	debt issuance	costs,	deferred income tax	balances	and cash.

Revenues	by	destination	and	product	as	well	as	long-lived	assets	by	geographic	area	for	the	years	ended	December	31	were	as	follows:

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Revenues |  |  |  |
| United\tStates | $1,425.1 | $1,332.0 | $1,331.7 |
| Non-U.S. | 643.0 | 786.3 | 737.9 |
| Total | $2,068.1 | $2,118.3 | $2,069.6 |

| In	millions | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Revenues |  |  |  |
| Mechanical\tproducts | $1,661.4 | $1,685.0 | $1,647.7 |
| All\tother | 406.7 | 433.3 | 421.9 |
| Total | $2,068.1 | $2,118.3 | $2,069.6 |

Less	than	10%	of	the	Company's	net	revenues	come	from	the	sale	of	services.

| In	millions | 2015 | 2014 |
| :--- | :--- | :--- |
| Long-lived\tassets |  |  |
| United\tStates | $134.9 | $126.4 |
| Non-U.S. | 400.2 | 196.1 |
| Total | $535.1 | $322.5 |

# NOTE	24	–	SUBSEQUENT	EVENTS

On	February	4,	2016,	the	Company's	Board	of	Directors	declared	a	quarterly	dividend	of	$0.12	cents	per	ordinary	share.	The	dividend	is	payable	March	31,	2016	to shareholders	of	record	on	March	16,	2016.

# NOTE	25	–	GUARANTOR	FINANCIAL	INFORMATION

Allegion	US	Holding	Company,	Inc.	("Allegion	US	Holding")	is	the	issuer	of	the	2021	Senior	Notes	and	a	guarantor	of	the	2023	Senior	Notes.	Allegion	plc	is	the	issuer of	the	2023	Senior	Notes	and	a	guarantor	of	the	2023	Senior	Notes.	Schlage	Lock	Company	LLC	and	Von	Duprin	LLC	(together,	the	"Other	Subsidiary	Guarantors") are	guarantors	of	the	2021	Senior	Notes	and	the	2023	Senior	Notes.	The	following	condensed	and	consolidated	financial	information	of	Allegion	plc,	Allegion	US Holding,	the	Subsidiary	Guarantors	and	the	other	Allegion	subsidiaries	that	are	not	guarantors	(the	"Other	Subsidiaries")	on	a	combined	basis	as	of	December	31,	2015 and	for	the	years	ended	December	31,	2015,	2014	and	2013,	is	being	presented	in	order	to	meet	the	reporting	requirements	under	the	Senior	Notes	indenture	and	Rule	3- 10	of	Regulation	S-X.	In	accordance	with	Rule	3-10(d)	of	Regulation	S-X,	separate	financial	statements	for	the	Issuer,	the	Parent	and	the	Subsidiary	Guarantors	are	not required	to	be	filed	with	the	SEC	as	the	subsidiary	debt	issuer	and	the	guarantors	are	directly	or	indirectly	100%	owned	by	the	Parent	and	the	guarantees	are	full	and unconditional	and	joint	and	several.

# Condensed	and	Consolidated	Statement	of	Comprehensive	Income

| In	millions | Allegion<br>plc | Allegion<br>US<br>Holding | Other<br>Subsidiary<br>Guarantors | Other<br>Subsidiaries | Consolidating<br>Adjustments | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\trevenues | $— \t $ | — | \t $1,506.0 | \t $761.6 | \t $(199.5) | \t $ 2,068.1 |
| Cost\tof\tgoods\tsold | — | — | 859.2 | 539.3 | (199.5) | 1,199.0 |
| Selling\tand\tadministrative\texpenses | 4.7 | (0.1) | 307.1 | 198.8 | — | 510.5 |
| Operating\tincome\t(loss) | (4.7) | 0.1 | 339.7 | 23.5 | — | 358.6 |
| Equity\tearnings\t(loss)\tin\taffiliates,\tnet\tof\ttax | 190.6 | 167.2 | 3.8 | 291.6 | (653.2) | — |
| Interest\texpense | 31.2 | 21.1 | — | 0.6 | — | 52.9 |
| Intercompany\tinterest\tand\tfees | (0.4) | 95.0 | (140.0) | 45.4 | — | — |
| Loss\ton\tdivestitures | — | — | — | 104.2 | — | 104.2 |
| Other\t(gain)\tloss,\tnet | (0.2) | — | 0.9 | (8.5) | — | (7.8) |
| Earnings\t(loss)\tbefore\tincome\ttaxes | 155.3 | 51.2 | 482.6 | 173.4 | (653.2) | 209.3 |
| Provision\t(benefit)\tfor\tincome\ttaxes | 1.2 | (44.7) | 187.1 | (89.0) | — | 54.6 |
| Earnings\t(loss)\tfrom\tcontinuing\toperations | 154.1 | 95.9 | 295.5 | 262.4 | (653.2) | 154.7 |
| Discontinued\toperations,\tnet\tof\ttax | — | — | (0.1) | (0.3) | — | (0.4) |
| Net\tearnings\t(loss) | 154.1 | 95.9 | 295.4 | 262.1 | (653.2) | 154.3 |
| Less:\tNet\tearnings\tattributable\tto\nnoncontrolling\tinterests | — | — | — | 0.4 | — | 0.4 |
| Net\tearnings\t(loss)\tattributable\tto\tAllegion\tplc | $154.1 | \t $95.9 | \t $295.4 | \t $261.7 | \t $(653.2) | \t $153.9 |
| Total\tcomprehensive\tincome\t(loss) | $69.8 | \t $95.6 | \t $290.2 | \t $183.7 | \t $(570.4) | \t $68.9 |
| Less:\tTotal\tcomprehensive\tincome\tattributable\nto\tnoncontrolling\tinterests | — | — | — | (0.9) | — | (0.9) |
| Total\tcomprehensive\tincome\t(loss)\nattributable\tto\tAllegion\tplc | $69.8 | \t $95.6 | \t $290.2 | \t $184.6 | \t $(570.4) | \t $69.8 |

| In	millions | Allegion<br>plc | Allegion<br>US<br>Holding | Other<br>Subsidiary<br>Guarantors | Other<br>Subsidiaries | Consolidating<br>Adjustments | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\trevenues | $— \t $ | — | \t $1,399.9 | \t $916.4 | \t $(198.0) | \t $ 2,118.3 |
| Cost\tof\tgoods\tsold | — | — | 803.1 | 659.5 | (198.0) | 1,264.6 |
| Selling\tand\tadministrative\texpenses | 4.5 | 0.2 | 304.4 | 218.3 | — | 527.4 |
| Operating\tincome\t(loss) | (4.5) | (0.2) | 292.4 | 38.6 | — | 326.3 |
| Equity\tearnings\t(loss)\tin\taffiliates,\tnet\tof\ttax | 182.0 | 170.8 | 6.9 | 351.5 | (711.2) | — |
| Interest\texpense | 5.6 | 58.0 | — | 1.0 | (10.8) | 53.8 |
| Intercompany\tinterest\tand\tfees | (3.2) | 63.0 | (285.5) | 225.7 | — | — |
| Other\t(gain)\tloss,\tnet | (0.1) | — | (0.2) | 4.9 | — | 4.6 |
| Earnings\t(loss)\tbefore\tincome\ttaxes | 175.2 | 49.6 | 585.0 | 158.5 | (700.4) | 267.9 |
| Provision\t(benefit)\tfor\tincome\ttaxes | — | (46.7) | 222.6 | (95.7) | 4.0 | 84.2 |
| Earnings\t(loss)\tfrom\tcontinuing\toperations | 175.2 | 96.3 | 362.4 | 254.2 | (704.4) | 183.7 |
| Discontinued\toperations,\tnet\tof\ttax | — | — | — | (11.1) | — | (11.1) |
| Net\tearnings\t(loss) | 175.2 | 96.3 | 362.4 | 243.1 | (704.4) | 172.6 |
| Less:\tNet\tearnings\tattributable\tto\nnoncontrolling\tinterests | — | — | — | (2.6) | — | (2.6) |
| Net\tearnings\t(loss)\tattributable\tto\tAllegion\tplc | $175.2 | \t $96.3 | \t $362.4 | \t $245.7 | \t $(704.4) | \t $175.2 |
| Total\tcomprehensive\tincome\t(loss) | $123.7 | \t $96.3 | \t $362.4 | \t $242.4 | \t $(704.4) | \t $120.4 |
| Less:\tTotal\tcomprehensive\tincome\tattributable\nto\tnoncontrolling\tinterests | — | — | — | (3.3) | — | (3.3) |
| Total\tcomprehensive\tincome\t(loss)\nattributable\tto\tAllegion\tplc | $123.7 | \t $96.3 | \t $362.4 | \t $245.7 | \t $(704.4) | \t $123.7 |

| In	millions | Allegion<br>plc | Allegion<br>US<br>Holding | Other<br>Subsidiary<br>Guarantors | Other<br>Subsidiaries | Consolidating<br>Adjustments | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\trevenues | $— \t $ | — | \t $1,395.0 | \t $880.0 | \t $(205.4) | \t $ 2,069.6 |
| Cost\tof\tgoods\tsold | — | — | 800.1 | 613.4 | (205.4) | 1,208.1 |
| Selling\tand\tadministrative\texpenses | 0.9 | — | 239.4 | 242.8 | — | 483.1 |
| Goodwill\timpairment\tcharge | — | — | — | 137.6 | — | 137.6 |
| Operating\tincome\t(loss) | (0.9) | — | 355.5 | (113.8) | — | 240.8 |
| Equity\tearnings\t(loss)\tin\taffiliates,\tnet\tof\ttax | 33.2 | 95.2 | 6.7 | 233.6 | (368.7) | — |
| Interest\texpense | — | 8.4 | — | 1.8 | — | 10.2 |
| Intercompany\tinterest\tand\tfees | — | 4.6 | (21.0) | 16.4 | — | — |
| Other\t(gain)\tloss,\tnet | — | — | 16.6 | (9.4) | — | 7.2 |
| Earnings\t(loss)\tbefore\tincome\ttaxes | 32.3 | 82.2 | 366.6 | 111.0 | (368.7) | 223.4 |
| Provision\tfor\tincome\ttaxes | — | (4.6) | 126.3 | 53.3 | — | 175.0 |
| Earnings\t(loss)\tfrom\tcontinuing\toperations | 32.3 | 86.8 | 240.3 | 57.7 | (368.7) | 48.4 |
| Discontinued\toperations,\tnet\tof\ttax | — | — | — | (3.6) | — | (3.6) |
| Net\tearnings\t(loss) | 32.3 | 86.8 | 240.3 | 54.1 | (368.7) | 44.8 |
| Less:\tNet\tearnings\tattributable\tto\nnoncontrolling\tinterests | — | — | — | 12.5 | — | 12.5 |
| Net\tearnings\t(loss)\tattributable\tto\tAllegion\tplc | $32.3 | \t $86.8 | \t $240.3 | \t $41.6 | \t $(368.7) | \t $32.3 |
| Total\tcomprehensive\tincome\t(loss) | $(56.7) | \t $86.8 | \t $240.3 | \t $54.9 | \t $(368.7) | \t $(43.4) |
| Less:\tTotal\tcomprehensive\tincome\tattributable\nto\tnoncontrolling\tinterests | — | — | — | 13.3 | — | 13.3 |
| Total\tcomprehensive\tincome\t(loss)\nattributable\tto\tAllegion\tplc | $(56.7) | \t $86.8 | \t $240.3 | \t $41.6 | \t $(368.7) | \t $(56.7) |

# Consolidated	Balance	Sheet

| In	millions | Allegion	plc | Allegion	US<br>Holding | Other<br>Subsidiary<br>Guarantors | Other<br>Subsidiaries | Consolidating<br>Adjustments | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Current\tassets: |  |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | $3.3 | \t $0.3 | \t $73.8 | \t $122.3 | \t $— \t $ | 199.7 |
| Accounts\tand\tnotes\treceivable,\tnet | — | — | 121.6 | 181.8 | — | 303.4 |
| Inventories | — | — | 106.7 | 97.4 | — | 204.1 |
| Other\tcurrent\tassets | 0.5 | 44.7 | 9.9 | (27.2) | — | 27.9 |
| Assets\theld\tfor\tsale | — | — | — | — | — | — |
| Accounts\tand\tnotes\treceivable\taffiliates | 248.6 | 356.4 | 375.9 | 324.5 | (1,305.4) | — |
| Total\tcurrent\tassets | 252.4 | 401.4 | 687.9 | 698.8 | (1,305.4) | 735.1 |
| Investment\tin\taffiliates | 986.2 | 3,001.4 | 192.9 | 4,660.2 | (8,840.7) | — |
| Property,\tplant\tand\tequipment,\tnet | — | — | 147.6 | 77.2 | — | 224.8 |
| Intangible\tassets,\tnet | — | — | 181.4 | 905.1 | — | 1,086.5 |
| Notes\treceivable\taffiliates | — | 1,144.2 | 3,549.9 | 1,726.3 | (6,420.4) | — |
| Other\tnoncurrent\tassets | 22.2 | 12.4 | 82.1 | 122.2 | — | 238.9 |
| Total\tassets | $1,260.8 | \t $4,559.4 | \t $4,841.8 | \t $8,189.8 | \t $(16,566.5) | \t $2,285.3 |
| Current\tliabilities: |  |  |  |  |  |  |
| Accounts\tpayable\tand\taccruals | $8.2 | \t $4.3 | \t $356.7 | \t $12.3 | \t $— \t $ | 381.5 |
| Short-term\tborrowings\tand\tcurrent\nmaturities\tof\tlong-term\tdebt | 46.9 | — | 0.1 | 18.6 | — | 65.6 |
| Liabilities\theld\tfor\tsale | — | — | — | — | — | — |
| Accounts\tand\tnote\tpayable\taffiliates | 0.3 | 57.5 | 636.4 | 611.2 | (1,305.4) | — |
| Total\tcurrent\tliabilities | 55.4 | 61.8 | 993.2 | 642.1 | (1,305.4) | 447.1 |
| Long-term\tdebt | 1,179.8 | 300.0 | — | — | — | 1,479.8 |
| Note\tpayable\taffiliate | — | 2,750.8 | — | 3,669.6 | (6,420.4) | — |
| Other\tnoncurrent\tliabilities | — | 1.2 | 124.7 | 202.8 | — | 328.7 |
| Total\tliabilities | 1,235.2 | 3,113.8 | 1,117.9 | 4,514.5 | (7,725.8) | 2,255.6 |
| Equity: |  |  |  |  |  |  |
| Total\tshareholders\tequity\t(deficit) | 25.6 | 1,445.6 | 3,723.9 | 3,671.2 | (8,840.7) | 25.6 |
| Noncontrolling\tinterests | — | — | — | 4.1 | — | 4.1 |
| Total\tequity\t(deficit) | 25.6 | 1,445.6 | 3,723.9 | 3,675.3 | (8,840.7) | 29.7 |
| Total\tliabilities\tand\tequity | $1,260.8 | \t $4,559.4 | \t $4,841.8 | \t $8,189.8 | \t $(16,566.5) | \t $2,285.3 |

| In	millions | Allegion	plc | Allegion	US<br>Holding | Other<br>Subsidiary<br>Guarantors | Other<br>Subsidiaries | Consolidating<br>Adjustments | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Current\tassets: |  |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | $27.1 | \t $0.5 | \t $126.3 | \t $136.6 | \t $— \t $ | 290.5 |
| Restricted\tcash |  |  |  |  |  | — |
| Accounts\tand\tnotes\treceivable,\tnet | — | — | 115.7 | 114.7 | — | 230.4 |
| Inventories | — | — | 101.1 | 68.2 | — | 169.3 |
| Other\tcurrent\tassets | 0.4 | 46.6 | 15.6 | (7.0) | — | 55.6 |
| Assets\theld\tfor\tsale | — | — | — | 255.9 | — | 255.9 |
| Accounts\tand\tnotes\treceivable\naffiliates | 0.1 | 15.2 | 256.4 | 259.4 | (531.1) | — |
| Total\tcurrent\tassets | 27.6 | 62.3 | 615.1 | 827.8 | (531.1) | 1,001.7 |
| Investment\tin\taffiliates | 917.4 | 2,336.7 | 90.6 | 4,774.7 | (8,119.4) | — |
| Property,\tplant\tand\tequipment,\tnet | — | — | 147.3 | 59.9 | — | 207.2 |
| Intangible\tassets,\tnet | — | — | 161.1 | 448.7 | — | 609.8 |
| Notes\treceivable\taffiliates | — | 1,191.9 | 3,731.2 | 1,762.9 | (6,686.0) | — |
| Other\tnoncurrent\tassets | 16.3 | 10.6 | 62.3 | 108.0 | — | 197.2 |
| Total\tassets | $961.3 | \t $3,601.5 | \t $4,807.6 | \t $7,982.0 | \t $(15,336.5) | \t $2,015.9 |
| Current\tliabilities: |  |  |  |  |  |  |
| Accounts\tpayable\tand\taccruals | $2.8 | \t $51.3 | \t $380.8 | \t $(55.5) | \t $— \t $ | 379.4 |
| Short-term\tborrowings\tand\tcurrent\nmaturities\tof\tlong-term\tdebt | 48.8 | — | 0.1 | 0.7 | — | 49.6 |
| Liabilities\theld\tfor\tsale | — | — | — | 103.5 | — | 103.5 |
| Accounts\tand\tnote\tpayable\taffiliates | 0.4 | 101.1 | 245.0 | 184.6 | (531.1) | — |
| Total\tcurrent\tliabilities | 52.0 | 152.4 | 625.9 | 233.3 | (531.1) | 532.5 |
| Long-term\tdebt | 914.1 | 300.0 | 0.1 | 0.8 | — | 1,215.0 |
| Note\tpayable\taffiliate | — | 2,778.4 | — | 3,907.6 | (6,686.0) | — |
| Estimated\tloss\ton\tinvestment | — | — | — | — | — | — |
| Other\tnoncurrent\tliabilities | — | 5.8 | 206.2 | 37.9 | — | 249.9 |
| Total\tliabilities | 966.1 | 3,236.6 | 832.2 | 4,179.6 | (7,217.1) | 1,997.4 |
| Equity: |  |  |  |  |  |  |
| Total\tshareholders\tequity\t(deficit) | (4.8) | 364.9 | 3,975.4 | 3,779.1 | (8,119.4) | (4.8) |
| Noncontrolling\tinterests | — | — | — | 23.3 | — | 23.3 |
| Total\tequity\t(deficit) | (4.8) | 364.9 | 3,975.4 | 3,802.4 | (8,119.4) | 18.5 |
| Total\tliabilities\tand\tequity | $961.3 | \t $3,601.5 | \t $4,807.6 | \t $7,982.0 | \t $(15,336.5) | \t $2,015.9 |

# Consolidated	Statement	of	Cash	Flows

| In	millions | Allegion<br>plc | Allegion<br>US<br>Holding | Other<br>Subsidiary<br>Guarantors | Other<br>Subsidiaries | Consolidating<br>Adjustments | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tcash\tprovided\tby\t(used\tin)\tcontinuing\noperating\tactivities | $(23.4) | \t $125.8 | \t $484.7 | \t $682.1 | \t $(1,011.8) | \t $257.4 |
| Net\tcash\tused\tin\tdiscontinued\toperating\nactivities |  |  | (0.1) | (0.3) |  | (0.4) |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\nactivities | (23.4) | 125.8 | 484.6 | 681.8 | (1,011.8) | 257.0 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |  |  |  |
| Capital\texpenditures | — | — | (27.2) | (8.0) | — | (35.2) |
| Acquisition\tof\tbusinesses,\tnet\tof\tcash\tacquired | — | — | (31.3) | (480.0) | — | (511.3) |
| Proceeds\tfrom\tsales\tand\tmaturities\tof\nmarketable\tsecurities | — | — | — | 12.3 | — | 12.3 |
| Proceeds\tfrom\tbusiness\tdisposition,\tnet\tof\tcash\nsold | — | — | 4.4 | (4.3) | — | 0.1 |
| Other\tinvesting\tactivities,\tnet | — | — | 0.1 | 0.2 | — | 0.3 |
| Net\tcash\tused\tin\tinvesting\tactivities | — | — | (54.0) | (479.8) | — | (533.8) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |  |  |  |
| Net\tdebt\tproceeds | 263.8 | — | — | 14.5 | — | 278.3 |
| Debt\tissuance\tcosts | (9.0) | — | — | — | — | (9.0) |
| Net\tinter-company\tproceeds\t(payments) | (200.9) | (126.0) | 230.6 | 96.3 | — | — |
| Dividends\tpaid\tto\tshareholders | (38.3) | — | — | — | — | (38.3) |
| Dividends\tpaid\tto\tnoncontrolling\tinterests | — | — | — | (20.0) | — | (20.0) |
| Dividends\tpaid | — | — | (713.7) | (298.1) | 1,011.8 | — |
| Repurchase\tof\tordinary\tshares | (30.0) | — | — | — | — | (30.0) |
| Other\tfinancing\tactivities,\tnet | 14.0 | — | — | — | — | 14.0 |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\nactivities | (0.4) | (126.0) | (483.1) | (207.3) | 1,011.8 | 195.0 |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\ncash\tequivalents | — | — | — | (9.0) | — | (9.0) |
| Net\tdecrease\tin\tcash\tand\tcash\tequivalents | (23.8) | (0.2) | (52.5) | (14.3) | — | (90.8) |
| Cash\tand\tcash\tequivalents\t-\tbeginning\tof\nperiod | 27.1 | 0.5 | 126.3 | 136.6 | — | 290.5 |
| Cash\tand\tcash\tequivalents\t-\tend\tof\tperiod | $3.3 | \t $0.3 | \t $73.8 | \t $122.3 | \t $— \t $ | 199.7 |

| In	millions | Allegion<br>plc | Allegion	US<br>Holding | Other<br>Subsidiary<br>Guarantors | Other<br>Subsidiaries | Consolidating<br>Adjustments | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tcash\tprovided\tby\t(used\tin)\tcontinuing\noperating\tactivities | $105.4 | \t $(847.5) | \t $567.2 | \t $1,172.4 | \t $(738.5) | \t $259.0 |
| Net\tcash\tused\tin\tdiscontinued\toperating\nactivities | — | — | — | (3.1) | — | (3.1) |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\nactivities | 105.4 | (847.5) | 567.2 | 1,169.3 | (738.5) | 255.9 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |  |  |  |
| Capital\texpenditures | — | — | (41.6) | (9.9) | — | (51.5) |
| Acquisition\tof\tbusinesses,\tnet\tof\tcash\nacquired | — | — | — | (25.2) | — | (25.2) |
| Capital\tcontributions\tto\tsubsidiaries | (975.0) | (135.0) | — | (160.7) | 1,270.7 | — |
| Proceeds\tfrom\tbusiness\tdisposition,\tnet\tof\ncash\tsold | — | — | — | 1.2 | — | 1.2 |
| Other\tinvesting\tactivities,\tnet | — | — | 0.5 | 40.2 | — | 40.7 |
| Net\tcash\tprovided\tby\t(used\tin)\tinvesting\nactivities | (975.0) | (135.0) | (41.1) | (154.4) | 1,270.7 | (34.8) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |  |  |  |
| Net\tdebt\t(repayments)\tproceeds | 962.8 | (1,000.0) | — | (40.8) | — | (78.0) |
| Debt\tissuance\tcosts | (5.8) | — | — | — | — | (5.8) |
| Net\tinter-company\tproceeds\t(payments) | — | 1,822.3 | (44.1) | (1,778.2) | — | — |
| Capital\tcontributions\treceived | — | 160.7 | 7.0 | 1,103.0 | (1,270.7) | — |
| Dividends\tpaid\tto\tshareholders | (30.0) | — | — | — | — | (30.0) |
| Dividends\tpaid\tto\tnoncontrolling\tinterests | — | — | — | (4.5) | — | (4.5) |
| Dividends\tpaid | — | — | (441.5) | (297.0) | 738.5 | — |
| Repurchase\tof\tordinary\tshares |  |  |  |  |  |  |
|  | (50.3) | — | — | — | — | (50.3) |
| Other\tfinancing\tactivities,\tnet | 18.6 | — | — | — | — | 18.6 |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\nactivities | 895.3 | 983.0 | (478.6) | (1,017.5) | (532.2) | (150.0) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\ncash\tequivalents | — | — | — | (8.0) | — | (8.0) |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\nequivalents | 25.7 | 0.5 | 47.5 | (10.6) | — | 63.1 |
| Cash\tand\tcash\tequivalents\t-\tbeginning\tof\nperiod | 1.4 | — | 78.8 | 147.2 | — | 227.4 |
| Cash\tand\tcash\tequivalents\t-\tend\tof\tperiod | $27.1 | \t $0.5 | \t $126.3 | \t $136.6 | \t $— \t $ | 290.5 |

| In	millions | Allegion<br>plc | Allegion	US<br>Holding | Other<br>Subsidiary<br>Guarantors | Other<br>Subsidiaries | Consolidating<br>Adjustments | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tcash\tprovided\tby\t(used\tin)\tcontinuing\noperating\tactivities | $0.1 | \t $— | \t $346.8 | \t $(117.6) | \t $— \t $ | 229.3 |
| Net\tcash\tused\tin\tdiscontinued\toperating\nactivities | — | — | — | (5.4) | — | (5.4) |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\nactivities | 0.1 | — | 346.8 | (123.0) | — | 223.9 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |  |  |  |
| Capital\texpenditures | — | — | (12.5) | (7.7) | — | (20.2) |
| Proceeds\tfrom\tsale\tof\tproperty,\tplant\tand\nequipment | — | — | 4.5 | 37.2 | — | 41.7 |
| Capital\tcontributions\tto\tsubsidiaries | — | (2,384.7) | (462.4) | (5,997.8) | 8,844.9 | — |
| Other\tinvesting\tactivities,\tnet | — | — | — | (40.2) | — | (40.2) |
| Net\tcash\tused\tin\tinvesting\tactivities | — | (2,384.7) | (470.4) | (6,008.5) | 8,844.9 | (18.7) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |  |  |  |
| Net\tdebt\trepayments | — | 1,300.0 | — | 38.9 | — | 1,338.9 |
| Debt\tissuance\tcosts | — | (29.1) | — | — | — | (29.1) |
| Net\tinter-company\tproceeds\t(payments) | — | 619.0 | (3,746.4) | 3,127.4 | — | — |
| Capital\tcontributions\treceived | — | 1,769.0 | 4,228.7 | 2,847.1 | (8,844.9) | — |
| Dividends\tpaid\tto\tnoncontrolling\tinterests | — | — | — | (5.2) | — | (5.2) |
| Net\ttransfers\tto\tParent\tand\taffiliates | — | (1,274.2) | (281.6) | (42.5) | — | (1,598.3) |
| Other\tfinancing\tactivities,\tnet | 1.3 | — | — | — | — | 1.3 |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\nactivities | 1.3 | 2,384.7 | 200.7 | 5,965.7 | (8,844.9) | (292.4) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\ncash\tequivalents | — | — | — | (2.9) | — | (2.9) |
| Net\tdecrease\tin\tcash\tand\tcash\tequivalents | 1.4 | — | 77.1 | (168.6) | — | (90.1) |
| Cash\tand\tcash\tequivalents\t-\tbeginning\tof\nperiod | — | — | 1.7 | 315.8 | — | 317.5 |
| Cash\tand\tcash\tequivalents\t-\tend\tof\tperiod | $1.4 | \t $— | \t $78.8 | \t $147.2 | \t $— \t $ | 227.4 |

# SCHEDULE	II

# VALUATION	AND	QUALIFYING	ACCOUNTS

(Amounts	in	millions)

# Allowances	for	Doubtful	Accounts:

| Balance	December	31,	2012 | $2.8 |
| :--- | :--- |
| Additions\tcharged\tto\tcosts\tand\texpenses | 1.5 |
| Deductions* | (1.9) |
| Balance\tDecember\t31,\t2013 | 2.4 |
| Additions\tcharged\tto\tcosts\tand\texpenses | 2.1 |
| Deductions* | (1.1) |
| Currency\ttranslation | (0.2) |
| Balance\tDecember\t31,\t2014 | 3.2 |
| Additions\tcharged\tto\tcosts\tand\texpenses | 1.6 |
| Deductions* | (1.5) |
| Business\tacquisitions\tand\tdivestitures,\tnet | 0.9 |
| Currency\ttranslation | (0.4) |
| Balance\tDecember\t31,\t2015 | $3.8 |



Question: considering the year 2014 , what are the variation between the expenses for environmental remediation at sites and the reserves environmental matters , in millions?
Calculation:   reserves_2014 = 8.8
 reserves_2015 = 2.9
 answer = reserves_2014 - reserves_2015 
Answer: 5.9