Allegion (ALLE) 10-K risk factor changes: FY2018 vs FY2017

You should carefully consider the [removed: risks] [added: risk factors discussed] below, together with all the other information included in this Form 10-K, in evaluating us, our ordinary shares and our senior notes.

If any of the risks below actually occurs, our business, financial [removed: conditions,] [added: condition,] results of operations and cash flows could be materially and adversely affected.

Our global operations depend on products manufactured, purchased and sold in the U.S. and internationally, including in Australia, China, [added: Colombia,] Europe, Korea, Mexico, New [removed: Zealand] [added: Zealand, Turkey] and [removed: Turkey.][added: the United Arab Emirates.]

These risks could increase our cost of doing business in the U.S. and internationally, increase our counterparty risk, disrupt our operations, disrupt the ability of suppliers and customers to fulfill their obligations, increase our effective tax rate, increase the cost of our products, limit our ability to sell products in certain markets, reduce our operating [removed: margin] [added: margin, reduce cash flow] and negatively impact our ability to compete.

Our business relies on the [added: institutional,] commercial and residential construction and remodeling markets.

We primarily rely on the [added: institutional,] commercial and residential construction and remodeling markets, which are marked by cyclicality based on overall economic conditions.

We primarily compete on the basis of quality, innovation, expertise, [added: effective channels to market,] breadth of product offering and price.

In addition, we compete in [removed: a market] [added: an industry] that is experiencing the convergence of [removed: the] mechanical, [removed: electronic,] [added: electronic] and digital products.

Our success depends, in part, upon the research, [removed: development,] [added: development] and implementation of new technologies and [removed: products.][added: products including obtaining, maintaining and enforcing necessary intellectual property protections.]

Securing [added: and maintaining] key partnerships and [removed: alliances as well as] [added: alliances, recruiting and retaining highly skilled and qualified] employee [removed: talent, including] [added: talent and] having access to technologies, services, intellectual [removed: property,] [added: property] and solutions developed by others [removed: will play a significant role in our ability to effectively compete.]

We have significant customers, particularly major retailers, although no one customer represented 10% or more of our total [added: Net] revenues in any of the past three fiscal years.

Our brands are important assets of our [removed: businesses] [added: businesses,] and violation of our trademark rights by imitators could negatively impact revenues and brand reputation.

Unauthorized use of our trademarks may not only erode sales of our [removed: products,] [added: products] but may also cause significant damage to our brand name and reputation, interfere with relationships with our customers and increase litigation costs.

Approximately 30% of our [removed: 2017 net] [added: 2018 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 [removed: net] [added: Net] revenues.

[removed: Because we] [added: We] do not hedge against all of our currency exposure [added: and therefore,] our business will continue to be susceptible to currency fluctuations.

Consequently, fluctuations in the value of the U.S. dollar compared to other currencies [removed: will] [added: may] have a material impact on the value of these items in our [removed: consolidated financial statements,] [added: Consolidated Financial Statements,] even if their value has not changed in their original currency.

We cannot [removed: assure you] [added: provide assurance] that we will identify or successfully complete transactions with suitable acquisition candidates in the future, nor can we [removed: assure you] [added: provide assurance] that completed acquisitions will be successful.

[removed: We] may not be successful in this regard and we may encounter other difficulties in integrating acquired businesses into our existing operations.

| • | difficulty in integrating financial reporting systems and implementing controls, procedures and policies, including disclosure controls and procedures and internal control over financial reporting, appropriate for public companies of our size at companies that, prior [added: to] the acquisition, had lacked such controls, procedures and policies. |

In [removed: other] [added: some] instances, we may rely on the efforts and abilities of foreign business partners in such markets.

Certain international markets may be slower than [removed: domestic] [added: U.S.] markets in adopting our services and products, and our operations in [removed: international] [added: such] markets may not develop at a rate that supports our level of investment.

In addition to the risks outlined above, expansion into [added: certain] international markets may require us to compete with local businesses with greater knowledge of the market, including the tastes and preferences of [removed: customers,] [added: customers] and businesses with dominant market shares.

Any acquisitions or investments may ultimately harm our business or financial [removed: condition,] [added: condition;] as [removed: such] [added: such,] acquisitions may not be successful and may ultimately result in impairment charges.

We may pursue business opportunities that diverge from our core business, including expanding our products or service offerings, investing in new and unproven [removed: technologies,] [added: technologies] and forming new alliances with companies to distribute our products and services.

[removed: Implementation of new processes to our operations could cause disruptions and there] [added: There] is no assurance that all of our planned enterprise excellence projects will be fully implemented, or if [removed: implemented] [added: implemented,] will realize the expected improvements.

We have in the past restructured or made other adjustments to our workforce and manufacturing footprint in response to market changes, product changes, performance issues, [removed: change] [added: changes] in [removed: strategies, acquisitions,] [added: strategy, acquisitions] and other internal and external considerations.

Historically, these types of restructuring [added: activities] have resulted in increased restructuring costs and [removed: temporary] [added: temporarily] reduced productivity.

In addition, we may not achieve or sustain the expected growth or cost savings benefits of these [removed: restructurings,] [added: restructurings] or do so within the expected timeframe.

These effects could recur in connection with future acquisitions and other restructurings and our [added: Net] revenues and other results of operations could be negatively affected.

Our business may be adversely affected by the outcome of these proceedings and other contingencies (including, without [removed: limitation, environmental matters) that cannot be predicted with certainty.]

[added: Subsequent developments in legal] proceedings and other contingencies may affect our assessment and estimates of the loss contingency recorded as a [removed: reserve] [added: reserve,] and we may be required to make additional material payments.

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 [removed: the] [added: such] intellectual property rights.

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 [removed: laundering,] [added: laundering] due to our global operations.

We cannot provide assurance [added: that] our internal controls will always protect us from the improper conduct of our employees, agents and business partners.

Our reliance on these third parties reduces our control over the manufacturing and delivery process, exposing us to [removed: risks,] [added: risks] including reduced control over quality assurance, product costs, product supply and delivery delays.

If we are unable to [added: effectively] manage these relationships, or if these third parties experience delays, disruptions, capacity constraints, regulatory issues or quality control problems in their operations or [added: otherwise] fail to meet our future requirements for timely delivery, our ability to ship and deliver certain of our [removed: hardware] products to our customers could be impaired and our [removed: hardware] business could be harmed.

We may be subject to risks relating to our information technology [added: and operational technology] systems.

There can be no assurance that our current [removed: information technology systems] [added: IT Systems] will function properly.

We have invested and will continue to invest in improving our [removed: information technology systems.][added: IT Systems.]

There is no assurance that any newly implemented [removed: information technology systems] [added: IT Systems] will improve our current systems, [removed: will] improve our [removed: operations,] [added: operations] or [removed: will] yield the expected returns on the investments.

We discuss our expectations regarding future performance, events and outcomes in this Form 10-K, quarterly and annual reports, press releases and other written and oral communications.

All statements except for historical and present factual information are “forward-looking statements” and are based on financial data and business plans available only as of the time the statements are made, which may become outdated or incomplete.

Forward-looking statements are inherently uncertain, and investors must recognize that events could significantly differ from our expectations.

We assume no obligation to update any forward-looking statements as a result of new information, future events or other factors.

| • | changes to trade agreements, sanctions, import and export regulations, including imposition of burdensome tariffs and quotas, and customs duties; |

will play a significant role in our ability to effectively compete.

The speed of development by our competitors and new market entrants is increasing.

We

| • | difficulties completing the transaction in a timely manner; |

| • | difficulties competing in the new markets we enter; |

Implementation of new processes to our operations could cause disruptions and may prove to be more difficult, costly or time consuming than expected.

limitation, environmental, product liability, intellectual property, data protection and labor and employment matters) that cannot be predicted with certainty.

We rely extensively on information technology and operational technology systems, networks and services including hardware, software, firmware and technological applications and platforms (collectively, "IT Systems") to manage and operate our business from end-to-end, including ordering and managing materials from suppliers, design and development, manufacturing, marketing, selling and shipping to customers, invoicing and billing, managing our banking and cash liquidity systems, managing our enterprise resource planning and other accounting and financial systems and complying with regulatory, legal and tax requirements.

Our ability to successfully grow and expand our business depends on our ability to recruit and retain a highly qualified and diverse workforce.

We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities.

Our future effective tax rate and cash tax obligations could be adversely affected by shifts in our mix of earnings in countries with varying statutory tax rates, changes in the valuation of our deferred tax assets or liabilities or changes in tax laws, regulations, interpretations or accounting principles, as well as certain discrete items.

In addition, we are subject to regular review and audit by both U.S. and non-U.S. tax authorities.

As a result, we have received, and may in the future receive, assessments in multiple jurisdictions on various tax-related assertions.

Any adverse outcome of such a review or audit could have a negative effect on our operating results and financial condition.

In addition, the determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax determination is uncertain.

Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.

For example, the 2017 Tax Cuts and Jobs Act (the “Tax Reform Act”) enacted in December 2017 in the U.S. had a significant impact on our cash tax obligations and the issuance of additional regulatory guidance related to the Tax Reform Act could materially affect our cash tax obligations and effective tax rate.

In addition, many countries in Europe, as well as a number of other countries and organizations, have recently proposed or recommended changes to existing tax laws or have enacted new laws that could significantly increase our effective tax rate or cash tax obligations in many countries where we do business or require us to change the manner in which we operate our business.

A substantial portion of our cash flows from operations is

the IRS or the courts may not agree with the opinion.

At our annual meeting of shareholders, our shareholders authorized our Board of Directors to issue up to 33% of our issued ordinary shares and further authorized our Board of Directors to issue up to 5% of such shares for cash without first offering them to our existing shareholders.

is in our best interests and our shareholders' best interests.

| | |

| --- | --- |

| • | imposition of burdensome tariffs and quotas; |

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.

Subsequent developments in legal

We rely extensively on information technology systems to manage and operate our business.

of the goodwill or other intangible assets and the fair value of the goodwill or other intangible assets in the period the determination is made.

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

We may not have been, or we may not at all times be, in full compliance with these laws and regulations.

Changes in our effective income tax rate may have an adverse effect on our results of operations.

We are subject to taxes in Ireland, the U.S. and numerous other jurisdictions.

Our future effective tax rate may be adversely affected by a number of additional factors including:

| • | the jurisdictions in which profits are determined to be earned and taxed; |

| • | the resolution of issues arising from tax audits with various tax authorities; |

| • | changes in the enforcement environment; |

| • | changes in the valuation of our deferred tax assets and liabilities; |

| • | changes in jurisdictional mix of profits; |

| • | changes in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles; |

| • | changes in foreign tax rates or agreed upon foreign taxable base; and/or |

| • | the repatriation of earnings from outside Ireland for which we have not previously provided for taxes. |

or variable-rate borrowings.

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.

We are a leading global provider of security products and solutions operating in three geographic regions: Americas, [removed: EMEIA,] [added: 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 [removed: into] the education, healthcare, government, commercial office and single and multi-family residential markets.

Our [removed: corporate] [added: leading] brands include [removed: Schlage, Von Duprin, LCN,] CISA, [added: Interflex, LCN, Schlage,] SimonsVoss and [removed: Interflex.][added: Von Duprin.]

In recent years, growth in electronic security products and solutions continues to outperform [removed: the industry,] [added: mechanical products,] and we expect growth in the global electronic product categories we serve to continue to outperform [removed: the security products industry as a whole] [added: growth in mechanical products,] as end-users adopt newer technologies in their [removed: facilities.][added: facilities and homes.]

The economic conditions discussed above and a number of other challenges and uncertainties that could affect our business are described under [added: Part I, Item 1A,] "Risk Factors."

[removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] Significant Events

We completed [added: six business acquisitions in 2018 and] one business acquisition in [removed: both 2017 and 2016:][added: 2017:]

| Acquisitions | [added: 6.6] | [added: % |]

| Republic [added: Doors & Frames, LLC ("Republic")] | [added: |] January 2017 |

The incremental impact of [removed: the] acquisitions for the twelve months ended December 31, 2017 was [removed: a net] [added: an] increase in [added: Net] revenues of approximately $32.3 million and a [removed: net] decrease to [removed: operating] [added: Operating] income of approximately $0.6 [removed: million compared to the same period in the prior year.][added: million.]

The incremental impact of the [added: 2018] acquisitions [removed: and divestitures] for the twelve months ended December 31, [removed: 2016] [added: 2018] was [removed: a net] [added: an] increase in [added: Net] revenues of approximately [removed: $63.6] [added: $160.2] million and [removed: a net] [added: an] increase [removed: in operating] [added: to Operating] income of approximately [removed: $7.3 million compared to the same period in the prior year.][added: $2.8 million.]

During the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, we incurred [added: $10.0 million and] $4.7 million of [removed: due diligence and] acquisition and integration [removed: costs.][added: related expenses, respectively.]

We paid quarterly dividends of [removed: $0.16] [added: $0.21] per ordinary share to shareholders on record as of March [removed: 13, 2017,] [added: 15, 2018,] June [removed: 13, 2017, September] 15, [removed: 2017,] [added: 2018, September 17, 2018,] and December [removed: 15, 2017.][added: 17, 2018.]

We paid a total of [removed: $60.9] [added: $79.4] million in cash for dividends to ordinary shareholders during the year ended December 31, [removed: 2017.][added: 2018.]

We also incurred [removed: $1.5 million of] other non-qualified restructuring charges [removed: during] [added: of $1.6 million and $1.5 million for] the [removed: year] [added: years] ended December 31, [removed: 2017] [added: 2018 and 2017, respectively,] related to costs directly attributable to restructuring [removed: activities,] [added: activities] but [added: that] do not fall into the severance, [removed: exit,] [added: exit] or disposal category.

[removed: We] [added: In 2017, we] entered into a new $1.2 billion unsecured credit agreement (the "Credit Agreement"), consisting of a $700.0 million term loan facility (the “Term Facility”) and a $500.0 million revolving credit facility (the “Revolving Facility”, and together with the Term Facility, the “Credit [removed: Facilities”).][added: Facilities”), and repaid in full our previously outstanding secured credit facility, the Second Amended and Restated Credit Agreement, dated as of September 30, 2015.]

[removed: On October 2,] [added: Also in] 2017, we issued $400.0 million of 3.200% Senior Notes due 2024 (the “3.200% Senior Notes”) and $400.0 million of 3.550% Senior Notes due 2027 (the “3.550% Senior Notes” and, together with the 3.200% Senior Notes, the “Notes”).

[removed: On October 3, 2017 we] [added: We] used [added: a portion of] the net proceeds from the Notes to redeem in full [removed: the] [added: our previously outstanding] $300.0 million Senior Notes due 2021 and [removed: the] $300.0 million Senior Notes due [removed: 2023, as well as to repay in full the $165.0 million of borrowings under the Revolving Facility and other costs associated with the refinancing.][added: 2023.]

| Dollar amounts in millions, except per share [removed: data] [added: amounts] | | [removed: 2017] [added: 2018] | | | | % of [added: Net] Revenues | | | [removed: 2016] [added: 2017] | | | | % of [added: Net] Revenues | | | [removed: 2015] [added: 2016] | | | | % of [added: Net] Revenues | |

| Net revenues | | $ | [removed: 2,408.2] [added: 2,731.7] | | | | | | $ | [removed: 2,238.0] [added: 2,408.2] | | | | | | $ | [removed: 2,068.1] [added: 2,238.0] | | | | |

| Interest expense | | [removed: 105.7] [added: 54.0] | | | | | | | [removed: 64.3] [added: 105.7] | | | | | | | [removed: 52.9] [added: 64.3] | | | | | |

| Loss on divestitures | | — | | | | | | | [removed: 84.4] [added: —] | | | | | | | [removed: 104.2] [added: 84.4] | | | | | |

| Earnings before income taxes | | [removed: 395.7] [added: 475.2] | | | | | | | [removed: 295.0] [added: 395.7] | | | | | | | [removed: 209.3] [added: 295.0] | | | | | |

| Provision for income taxes | | [removed: 119.0] [added: 39.8] | | | | | | | [removed: 63.8] [added: 119.0] | | | | | | | [removed: 54.6] [added: 63.8] | | | | | |

| Net earnings | | [removed: 276.7] [added: 435.4] | | | | | | | [removed: 231.2] [added: 276.7] | | | | | | | [removed: 154.3] [added: 231.2] | | | | | |

| Less: Net earnings attributable to noncontrolling interests | | [removed: 3.4] [added: 0.5] | | | | | | | [removed: 2.1] [added: 3.4] | | | | | | | [removed: 0.4] [added: 2.1] | | | | | |

| Net earnings attributable to Allegion plc | | $ | [removed: 273.3] [added: 434.9] | | | | | | $ | [removed: 229.1] [added: 273.3] | | | | | | $ | [removed: 153.9] [added: 229.1] | | | | |

| Diluted net earnings per ordinary share attributable to Allegion plc ordinary shareholders: | | [added: $] | [added: 4.54] | | | | | | [added: $] | [added: 2.85] | | | | | | [added: $] | [added: 2.36] | | | | |

The increase in [removed: net] [added: Net] revenues was primarily driven by higher volumes [removed: and improved pricing] in all segments, [added: improved pricing,] incremental [removed: revenue] [added: Net revenues] from the acquisitions discussed [removed: above,] [added: above] and favorable foreign currency exchange rate movements relative to the [removed: US] [added: U.S.] Dollar.

Net revenues for the year ended December 31, [removed: 2016] [added: 2017] increased by [removed: 8.2%,] [added: 7.7%,] or [removed: $169.9] [added: $37.6] million, compared to the same period in [removed: 2015] [added: 2016] due to [removed: the] following:

| Acquisitions / divestitures | [removed: 3.0] [added: 1.6] | % |

| Currency exchange rates | (0.6 | [added: | ) | | (0.4 |] )% |

The increase in [removed: net] [added: Net] revenues was primarily driven by higher volumes and improved pricing in all [removed: segments and] [added: segments,] incremental [removed: revenue] [added: Net revenues] from acquisitions [removed: in our EMEIA segment, offset by unfavorable] [added: and favorable] foreign currency exchange rate movements [removed: due] [added: relative] to the [removed: strengthening of the US dollar against currencies in EMEIA, primarily the British pound.][added: U.S. Dollar.]

For the year ended December 31, 2017, [removed: cost] [added: Cost] of goods sold as a percentage of [removed: revenue] [added: Net revenues] decreased to [removed: 55.5%] [added: 55.4%] from [removed: 56.0%] [added: 55.8%] due to the following:

| [removed: Pricing and productivity] [added: Inflation] in excess of [removed: inflation] [added: pricing and productivity] | [removed: (0.5] [added: 0.1] | [removed: )%] [added: %] |

| [removed: Volume/product] [added: Volume / product] mix | 0.4 | % |

Costs of goods sold as a percentage of [removed: revenue] [added: Net revenues] for the year ended December 31, 2017 decreased primarily due to pricing and productivity benefits in excess of inflation, favorable foreign currency exchange rate movements, a decrease related to an environmental remediation charge in [removed: the prior year,] [added: 2016] and decreased restructuring [added: and acquisition] costs.

These decreases were [added: partially] offset by unfavorable product mix and volume and the impact of acquisitions.

For the year ended December 31, [removed: 2016, cost] [added: 2018, Cost] of goods sold as a percentage of [removed: revenue decreased] [added: Net revenues increased] to [removed: 56.0%] [added: 57.0%] from [removed: 58.0%] [added: 55.4%] due to the following:

| Pricing and productivity in excess of inflation | [removed: (1.3] [added: 1.3] | [removed: )%] | [added: | | 1.1 | % |]

The security products industry has benefited from accelerated growth in institutional, commercial and residential end-markets in recent years.

| Business | | Date |

| Technical Glass Products, Inc. ("TGP") | | January 2018 |

| Hammond Enterprises, Inc. ("Hammond") | | January 2018 |

| Qatar Metal Industries LLC ("QMI") | | February 2018 |

| AD Systems, Inc. ("AD Systems") | | March 2018 |

| Gainsborough Hardware and API Locksmiths ("Door and Access Systems") | | July 2018 |

| ISONAS Security Systems, Inc. ("ISONAS") | | July 2018 |

Republic provides hollow metal doors and frames throughout the U.S. and in select non-U.S. markets, complementing our Steelcraft® brand and core business in the Americas segment.

Republic has been integrated into our Americas segment.

TGP provides fire-rated architectural glass and framing solutions for commercial buildings, as well as non-fire rated architectural glass and framing, including channel glass systems and curtain walls throughout the U.S., Canada and select markets in the Middle East.

TGP has been integrated into our Americas and EMEIA segments.

We acquired 100% of the machinery, equipment and intellectual property of a division of Hammond.

The assets acquired have been integrated into our existing production facilities and are specific to our Schlage-branded products.

QMI specializes in fire rated and non-fire rated steel and wooden doors, acoustic doors, wooden cabinets and access panels in the Middle East and Africa.

QMI has been integrated into our EMEIA segment.

AD Systems designs and manufactures high-performance interior and storefront door systems, specializing in sliding and acoustic solutions for the U.S. market.

AD Systems' portfolio includes sliding and swinging doors, perimeter frames, door hardware, gasketing, seals and sidelite panels.

AD Systems has been integrated into our Americas segment.

Door and Access Systems, based in Australia, includes the brands Gainsborough Hardware, the market-leading residential door hardware brand in Australia, and API Locksmiths, which serves the Australian market with its keying, installation and access control services.

Door and Access Systems has been integrated into our Asia Pacific segment.

ISONAS designs and manufactures edge-computing technology that produces Power over Ethernet access control solutions for non-residential end-markets in the U.S. ISONAS has been integrated into our Americas segment.

2018 Dividends

We incurred charges of $4.9 million and $12.3 million for the years ended December 31, 2018 and 2017, respectively, in conjunction with ongoing restructuring actions.

| Cost of goods sold | | 1,558.4 | | | | 57.0 | % | | 1,335.3 | | | | 55.4 | % | | 1,248.3 | | | | 55.8 | % |

| Selling and administrative expenses | | 647.5 | | | | 23.7 | % | | 580.4 | | | | 24.1 | % | | 555.4 | | | | 24.8 | % |

| Operating income | | 525.8 | | | | 19.2 | % | | 492.5 | | | | 20.5 | % | | 434.3 | | | | 19.4 | % |

| Other income, net | | (3.4 | | ) | | | | | (8.9 | | ) | | | | | (9.4 | | ) | | | |

| Volume | 4.4 | % |

| Total | 13.4 | % |

| Acquisitions | 1.5 | % |

| Total | 1.6 | % |

These increases were partially offset by favorable currency exchange rate movements, favorable product mix and volume and decreased restructuring and acquisition costs.

| Total | (0.4 | )% |

| Acquisitions | (0.4 | )% |

| Total | (0.4 | )% |

These decreases were partially offset by inflation in excess of productivity benefits and increased investment spending.

| Total | (0.7 | )% |

| December 31, 2017 | $ | 492.5 | | | 20.5 | % |

| Investment spending | (13.5 | | ) | | (0.5 | )% |

Current market conditions have improved over the past few years, and we believe the security products industry will also benefit from continued growth in institutional, commercial, and residential end-markets.

| | |

| --- | --- |

| Business | Month |

| Trelock | June 2016 |

Acquisition related costs were not material to the 2016 Consolidated Statement of Comprehensive Income.

2017 Dividends

In conjunction with ongoing restructuring actions throughout the year primarily related to workforce reductions and the closure and consolidation of manufacturing facilities in an effort to increase efficiencies, we incurred charges of $12.3 million for the year ended December 31, 2017.

The initial proceeds of $700.0 million from the Term Facility, along with initial borrowings of $165.0 million under the Revolving Facility, were used primarily to repay in full our previously outstanding secured credit facility, the Second Amended and Restated Credit Agreement, dated as of September 30, 2015.

All obligations under the Second Amended and Restated Credit Agreement were satisfied, all commitments thereunder were terminated, and all guarantees and security interests that had been granted in connection therewith were released.

| Cost of goods sold | | 1,337.5 | | | | 55.5 | % | | 1,252.7 | | | | 56.0 | % | | 1,199.0 | | | | 58.0 | % |

| Selling and administrative expenses | | 582.5 | | | | 24.2 | % | | 559.8 | | | | 25.0 | % | | 510.5 | | | | 24.7 | % |

| Operating income | | 488.2 | | | | 20.3 | % | | 425.5 | | | | 19.0 | % | | 358.6 | | | | 17.3 | % |

| Other income, net | | (13.2 | | ) | | | | | (18.2 | | ) | | | | | (7.8 | | ) | | | |

| Earnings from continuing operations | | 276.7 | | | | | | | 231.2 | | | | | | | 154.7 | | | | | |

| Discontinued operations, net of tax | | — | | | | | | | — | | | | | | | (0.4 | | ) | | | |

| Continuing operations | | $ | 2.85 | | | | | | $ | 2.36 | | | | | | $ | 1.59 | | | | |

| Discontinued operations | | — | | | | | | | — | | | | | | | — | | | | | |

| Net earnings | | $ | 2.85 | | | | | | $ | 2.36 | | | | | | $ | 1.59 | | | | |

| Pricing | 1.0 | % |

| Volume | 4.8 | % |

| Total | 8.2 | % |

| Total | (0.5 | )% |

| Acquisitions / divestitures | (0.5 | )% |

| Non-cash inventory impairment | (0.2 | )% |

| Environmental remediation charge | 0.7 | % |

| Total | (2.0 | )% |

These decreases were offset by increased investment spending and a charge for a change in approach for environmental remediation related to two sites in the Americas.

| Total | (0.8 | )% |

| Acquisitions / divestitures | 0.7 | % |

| Total | 0.3 | % |

| December 31, 2016 | $ | 425.5 | | | 19.0 | % |

| December 31, 2017 | $ | 488.2 | | | 20.3 | % |

| December 31, 2015 | $ | 358.6 | | | 17.3 | % |

| Non-cash inventory impairment | 4.2 | | | | 0.2 | % |

| Acquisitions / divestitures | 7.3 | | | | (0.2 | )% |

| Environmental remediation charge | (15.0 | | ) | | (0.7 | )% |

These increases were partially offset by investment spending and a charge for a change in approach for environmental remediation related to two sites in the Americas.

Interest expense increased primarily due to increased debt balances from the September 2015 issuance of the Senior Notes due 2023.

Loss on Divestitures

We actively manage material currency exposures that are associated with purchases and sales and other assets and liabilities at the legal entity [removed: level, however] [added: level; however,] we do not hedge currency translation risk.

Based on the firmly committed currency derivative instruments in place at December 31, [removed: 2017,] [added: 2018,] 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 [removed: $7.4] [added: $6.8] million.

We do not have committed commodity derivative instruments in place at December 31, [removed: 2017.][added: 2018.]

Outstanding borrowings under [removed: our unsecured] [added: the] Credit Facilities accrue [removed: interest,] [added: interest] at the option of the [removed: Company, at a per annum rate] [added: Company] of (i) a LIBOR rate plus the applicable margin or (ii) a base rate plus the applicable margin.

The applicable margin [removed: for borrowings under the Credit Facilities is subject to a ratings-based pricing grid with the margin ranging] [added: ranges] from 1.125% to 1.500% depending on the Company's credit ratings.

[removed: Outstanding] [added: At December 31, 2018, the outstanding] borrowings under the Term Facility [removed: as of December 31, 2017,] accrue interest at LIBOR plus [removed: an applicable] [added: a] margin [removed: and expose us to interest rate risks.][added: of 1.250%.]

A 100 [removed: basis point] [added: basis-point] increase in LIBOR would have resulted in incremental [removed: 2017] [added: 2018] interest expense of approximately [removed: $5.6] [added: $4.3] million.

To manage the Company's exposure to fluctuations in LIBOR rates, the Company has interest rate swaps to fix the interest rate for $250.0 million of the outstanding borrowings.

The Company has entered into interest rate swaps to fix the interest rate paid during the contract period for $250 million of the Company's variable rate Term Facility.

| Electronic security products | [removed: Electronic and] [added: Electronic,] biometric [added: and mobile] access control systems |

| Exit devices | Locks, locksets, portable [removed: locks and] [added: locks,] key systems [added: and services] |

Moreover, security products are increasingly linked electronically, [added: integrated into software and popular consumer technology platforms and controlled with mobile applications,] creating additional functionality and complexity.

| • | 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 [removed: specifications;] [added: specifications and to successfully and securely integrate into leading technology and systems;] |

| • | 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 [added: and consumers] worldwide, quickly and efficiently. |

We believe the security products industry will also benefit from continued growth in institutional, [removed: commercial,] [added: commercial] and residential end-markets.

[removed: We] [added: As end-users adopt newer technologies in their facilities and homes, we] also expect growth in the global electronic product categories we serve to outperform [removed: the security products industry as end-users adopt newer technologies] [added: growth] in [removed: their facilities.][added: mechanical products.]

| [removed: ] [added: ] | | | |

| [removed: ] [added: ] | | | |

We sell a wide range of security products and solutions for end-users in commercial, institutional and residential facilities worldwide, including [removed: into] the education, healthcare, government, hospitality, commercial office and single and multi-family residential markets.

Our [removed: corporate] [added: leading] brands [removed: are] [added: include] CISA®, Interflex®, LCN®, Schlage®, [removed: SimonsVoss®,] [added: SimonsVoss®] and Von Duprin®.

We believe LCN, [removed: Schlage,] [added: Schlage] and Von Duprin hold the No. 1 position in their primary product categories in North America [removed: and] [added: while] CISA, [removed: Interflex,] [added: Interflex] and [removed: SimonVoss] [added: SimonsVoss] hold the No.1 or No. 2 position in their primary product categories in certain European markets.

For the year ended December 31, [removed: 2017,] [added: 2018,] we generated [added: Net] revenues of [removed: $2,408.2] [added: $2,731.7] million and operating income of [removed: $488.2] [added: $525.8] million.

[removed: ][added: ]

Several of our brands were established [removed: more than 75] [added: nearly 100] years [removed: ago] [added: ago,] and many [removed: of our brands] originally created their categories:

| Residential [removed: Locks] [added: Locks, Cylinders] and Levers | | Schlage [removed: Touch,] [added: (Touch,] Connect, Sense, Control, [added: Encode, Custom,] SEL, [removed: Custom] [added: Q6, X7), Bricard, Milre] | | [removed: 2015/2016/ 2017] [added: 2016/2017/ 2018] | | [removed: New] [added: Updates to] single and multi-family residential electronic locking platforms that provide for keyless entry [removed: (Touch),] [added: (Touch);] connected locking [removed: (Connect),] [added: (Connect);] integration with the Internet of Things [removed: (IoT) and] [added: (IoT),] Apple HomeKit, Amazon Alexa, Google Assistant and Android platforms [removed: (Sense),] [added: (Sense);] multi-family interconnected locking [removed: (Control),] [added: (Control); next-generation smart lock that is the first-ever WiFi enabled deadbolt to work with Key by Amazon and Ring devices with built-in connectivity (Encode); and] 4-in-1 [removed: locks,] [added: lock with] fingerprint sensors, [removed: and] smart [removed: card or] [added: card,] code access [added: or a physical key] (SEL). [removed: A] [added: Expanded handlesets for Schlage’s] new [removed: range with] universal functionality [removed: (Custom)] [added: solution that] allows homeowners to change from a doorknob to a lever and convert a non-locking door to lockable in [removed: minutes.] [added: minutes (Custom) and expanded ranges of cylinders and new aluminum trims for DIY customers (Bricard). Continual technology upgrades include Z-Wave Plus and Zigbee Certified to improve battery life and range, improve the user experience and enable partnerships with leading providers like Key by Amazon (Connect). New residential e-locks for Asia Pacific and improved biometric sensors, new designs and push-pull electronic locks with Bluetooth modules (Q6, X7, Milre).] |

| Bike Lighting and Portable Locking Solutions | | AXA, Kryptonite, Trelock | | [removed: 2017] [added: 2017/2018] | | [removed: Innovation] [added: Broad range of innovation] in bike safety [removed: and security] from each of our Global Portable Security brands (AXA, Kryptonite and Trelock), ranging from compact dynamo lights and e-bike lights to [removed: USB and] [added: USB,] battery powered [removed: lights, as well as new] [added: and rechargeable lights. New and expanded] lines of folding locks, integrated chains and [removed: electronic] ring locks and [removed: mobile] applications for bikes and [removed: motorcycles.] [added: motorcycles (AXA, Kryptonite, Trelock) and expanded track-and-trace services (AXA).] |

The global markets we serve encompass commercial, institutional and residential construction markets throughout North America, [removed: Europe, the Middle East] [added: EMEIA] and [removed: Asia-Pacific.][added: Asia Pacific.]

In recent years, [added: as end-users adopt newer technologies in their facilities and single and multi-family homes,] growth in electronic security products and solutions continues to outperform [removed: the industry as a whole as end-users adopt newer technologies] [added: growth] in [removed: their facilities.][added: mechanical security products and solutions.]

We believe our principal global competitors are Assa Abloy AB and [removed: dorma+kaba] [added: dormakaba] Group.

Our success depends on a variety of factors, including brand and reputation, product breadth, [added: integration with popular technology platforms,] quality and delivery capabilities, price and service capabilities.

| • | Locks, locksets, portable locks and key [removed: systems:] [added: systems and services:] A broad array of cylindrical and mortise door locksets, security [removed: levers,] [added: levers] and master key systems that are used to protect and control [removed: access. We also offer] [added: access and] a range of portable security products, including bicycle, small vehicle and travel locks. [added: We also offer locksmith services in select locations;] |

| • | Door [removed: closers] [added: closers, controls] 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 [removed: egress.] [added: egress;] |

| • | Electronic security products and access control systems: A broad range of electrified locks, access control systems, [removed: biometric hand reader systems,] key card and reader systems and accessories, including Internet of Things [removed: (IoT)] [added: (IoT), Bluetooth Low Energy (BLE), Power over Ethernet] and cloud-based [removed: solutions.] [added: solutions;] |

| • | 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 [removed: offerings.] [added: offerings;] |

| • | Doors and door systems: A portfolio of hollow metal, glass, [removed: wood,] [added: wood] and specialty doors and door [removed: systems.] [added: systems; and] |

| • | Other accessories: A variety of additional security and product components, including hinges, door levers, door stops, [added: bike] lights, louvers, weather stripping, [removed: thresholds,] [added: thresholds] and other accessories, as well as certain bathroom [removed: fittings.] [added: fittings and accessibility aids.] |

We sell most of our products and solutions through distribution and retail channels, [removed: ranging from] [added: including] specialty [removed: distribution to] [added: distribution, e-commerce and] wholesalers.

We also sell through a variety of retail channels, [removed: ranging from] [added: including] large do-it-yourself home improvement [removed: centers to] [added: centers, multiple on-line and e-commerce platforms, as well as] small, specialty showroom outlets.

Through our Interflex [removed: business] and [added: API Locksmiths businesses and] Global Portable Security brands, we also provide products and solutions directly to end-users.

Our 10 largest customers represented approximately 25% of our total [added: Net] revenues in [removed: 2017.][added: 2018.]

No single customer represented 10% or more of our total [added: Net] revenues in [removed: 2017.][added: 2018.]

We also support our sales efforts with a variety of marketing efforts, including trade-specific advertising, cooperative distributor merchandising, digital [removed: marketing,] [added: marketing] and marketing at a variety of industry trade shows.

We utilize a variety of advertising and marketing strategies, including traditional consumer media, retail merchandising, digital marketing, retail [removed: promotions,] [added: promotions] and builder and consumer trade shows, to support these teams.

We operate [removed: 31] [added: 34] production and assembly facilities, including [removed: 14] [added: 16] in [removed: the Americas region,] [added: Americas,] 12 in EMEIA and [removed: 5] [added: 6] in Asia Pacific.

We own [removed: 15] [added: 17] of these facilities and lease the others.

[added: 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.

Much of our [removed: United States (U.S.)] [added: U.S.] based residential portfolio is manufactured in the Baja [removed: Region] [added: region] of Mexico under a NAFTA Maquiladora.

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

In addition, third-party [added: manufacturing and] logistics providers perform [added: certain manufacturing,] storage and distribution services for us to support certain parts of our [added: manufacturing and] distribution network.

In 2018, product innovation spanned:

| • | Improvements to the user experience, product design and ergonomics; |

| • | New technology solutions, software, mobile applications and integration with leading platforms; and |

| • | Improved locks and lights for portable security. |

| Commercial Locks, Cylinders, Levers and Electronic Access Platforms | | Schlage (AD, CO, LE, NDE, S-series), Bricard, Briton, SimonsVoss, CISA | | 2016/2017/ 2018 | | Enhancements to the comprehensive portfolio of globally available mechanical, wired electrified and wireless electronic solutions to give a common aesthetic and consistent user experience throughout a building; wireless locks can be managed with Allegion’s ENGAGE web and mobile apps or with Software Alliance Member systems (AD, CO, LE, NDE). New rim and mortice locks for Southeast Asia (S-series), expanded cylinders for the European locksmith channel and multipoint mortise locks (Bricard), new stainless-steel trims (Bricard, Briton) and enhancements to the electronic Smart Handle (SimonsVoss). Firmware releases for the U.S. channel-partner readers to give new functionality and USB communication mode for readers (Schlage). Mobile credentials, new Bluetooth Low Energy and RFID technology and integrations between electronic locks and exit devices (CISA). |

| Exit Devices and Closers | | Von Duprin, Falcon, CISA | | 2018 | | New award-winning and cost-effective retrofit exit device that allows for remote undogging and monitoring with partner software (Von Duprin). New fire-rated retrofit series (Falcon), quiet exit solutions (Von Duprin) and a new range of asymmetric rack-and-pinion door closers (CISA). |

| Software, Mobile and Web Applications | | Allegion (Overtur, ENGAGE), Interflex | | 2018 | | Introduction of a new cloud-based suite of tools for project teams to collaborate on specifications and the security design of doors and openings, which provides a centralized place to capture and maintain door hardware requirements and decisions with easy options to push information back to the design tools (Overtur). Multiple enhancements to the user experience include biometric login for the mobile app, simplified account and site set-up and gateway site survey (ENGAGE). New modules for visitor management, encouraging self-service and Microsoft Outlook functionality (Interflex). |

In addition, in 2018 we announced the formation of Allegion Ventures, a corporate venture fund that aims to supplement Allegion innovation by investing in innovative technologies and companies.

| | |

| --- | --- |

| | |

| --- | --- |

| Boulder, Colorado | | Durchhausen, Germany | | Bucheon, South Korea |

| Everett, Washington | | Feuquieres, France | | Sydney, Australia |

| Irving, Texas | | Muenster, Germany | | |

| McKenzie, Tennessee | | Osterfeld, Germany | | |

| Mississauga, Ontario | | Renchen, Germany | | |

| Perrysburg, Ohio | | Veenendaal, Netherlands | | |

| Princeton, Illinois | | Zawiercie, Poland | | |

| 2018 | 22% | 26% | 26% | 26% |

As of December 31, 2018, we had approximately 11,000 employees.

| • | stabilization of construction markets in key North American markets; |


| Commercial Locks and Electronic Access Platforms | | Schlage, CISA, SimonsVoss | | 2015/2016/ 2017 | | Access control platforms and proximity readers and smart credentials upgraded for improved strength and durability (Schlage). Comprehensive offerings featuring mechanical, wired electrified and wireless electronic solutions for common aesthetic and consistent user experience throughout a building. Wireless locks able to be managed with ENGAGE™ web and mobile apps or with our Software Alliance Member (SAM) systems (Schlage LE and NDE). Multipoint locking line (CISA) designed for high security European applications, correcting for heat distortion. MobileKey (SimonsVoss) provides facility managers highly secure and sophisticated access control with mobile phone technology. |

| Closers | | LCN, Briton, CISA, ITO Kilit | | 2015/2016/ 2017 | | Cast Aluminum Series closers (LCN) were specially designed to deliver consistent, dependable and long-term performance. New closers (Briton, CISA, ITO Kilit) significantly expanded the European standard portfolio in 2017, offering affordable quality and specialty applications. |

| Exit Devices | | Von Duprin, CISA | | 2016/2017 | | Concealed vertical cables (Von Duprin) give doors aesthetics, strength and security in an exit device system that is easy to install and maintain. e-Fast motorized push bars (CISA) now include lighting features. |

Our Reporting Segments

We manufacture and sell mechanical and electronic security products and solutions in approximately 130 countries.

Approximately 96% of our 2017 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 20, "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 | | | | |

| | 2017 | | 2016 | | 2015 |

| Americas | 73% | | 74% | | 75% |

| EMEIA | 22% | | 21% | | 19% |

| Asia Pacific | 5% | | 5% | | 6% |

Our Americas segment provides security products and solutions in approximately 30 countries throughout North America, Central America, the Caribbean and South America.

The segment offers a broad range of products and solutions including locks, locksets, portable locks, key systems, door closers, exit devices, doors and door systems, electronic products, and access control and time and attendance 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 LCN, Schlage, and Von Duprin.

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 workforce productivity solutions.

This segment’s primary brands are AXA, Bricard, CISA, Interflex and SimonsVoss.

This segment also resells North American LCN, Schlage, and Von Duprin products, primarily in the Middle East.

Our Asia Pacific segment provides security products and solutions in approximately 15 countries throughout Asia Pacific.

The segment offers the same portfolio of products as the Americas segment.

This segment’s primary brands are Brio, FSH, Legge, Milre, and Schlage.

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.

Our

| Irving, Texas | | Feuquieres, France | | |

| McKenzie, Tennessee | | Monsampolo, Italy | | |

| Perrysburg, Ohio | | Muenster, Germany | | |

| Princeton, Illinois | | Osterfeld, Germany | | |

| Toronto, Ontario | | | | |

Our research and development ("R&D") expenditures were approximately $48.3 million, $47.3 million and $45.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.

| 2015 | 22% | 25% | 26% | 27% |

We currently have approximately 10,000 employees.

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.

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 [removed: disputes,] [added: disputes] and tax-related matters.

This item should be read in conjunction with the Company's Risk Factors in Part I, Item 1A for additional information.

Executive Officers of the Registrant

The following is a list of executive officers of the Company as of February 20, 2018.

David D.

Petratis, age 60, 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 55, 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 2012 to October 2013.

Jeffrey N.

Braun, age 58, 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 2010 to 2013.

Timothy P.

Eckersley, age 56, is our Senior Vice President - Americas.

Mr. Eckersley served as Ingersoll Rand’s President, Security Technologies - Americas from 2007 to November 2013.

Todd V.

Graves, age 51, is our Senior Vice President - Engineering and Technology.

Mr. Graves served as our Vice President - Technology and Engineering from 2013 to January 2016.

Mr. Graves served as Ingersoll Rand's Vice President - Technology and Engineering, Security Technologies, from 2012 to 2013.

Tracy L.

Kemp, age 49, is our Senior Vice President and Chief Information Officer.

Ms. Kemp served as our Vice President and Chief Information Officer from 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 2011 to 2013.

Shelley A.

Meador, age 46, is our Senior Vice President - Human Resources and Communications.

Ms. Meador served as our Vice President - Tax from 2013 to August 2016.

Ms. Meador previously served as Vice President - Tax at Hillenbrand, Inc. (a global diversified industrial company) from 2011 to 2013.

Lucia Veiga Moretti, age 53, 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 2011 to February 2014.

Chris E.

Muhlenkamp, age 60, 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 2013 to February 2014.

Mr. Muhlenkamp served as Ingersoll Rand's Vice President - Operations and Global Integrated Supply Chain, Security Technologies, from 2011 to 2013.

Douglas P.

Ranck, age 59, is our Vice President, Controller and Chief Accounting Officer.

Mr. Ranck served as Ingersoll Rand’s Global Controller and Financial Planning and Analysis Leader - Climate Solutions from 2008 to October 2013.

Jeffrey M.

Wood, age 47, is our Senior Vice President - Asia Pacific.

Mr. Wood previously served as our Vice President, Global Supply Management from 2013 to January 2017.

Mr. Wood also served as Senior Vice President, Supply Chain for the Buildings division of Schneider Electric SE (an energy management and automation company) from 2011 to 2013.

For the fiscal year ended December 31, [removed: 2017][added: 2018]

[removed: ][added: ]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: 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 [removed: and post] such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of "large accelerated filer," "accelerated [removed: filer" and] [added: filer,"] "smaller reporting [added: company," and "emerging growth] company" in Rule 12b-2 of the Exchange Act.:

The aggregate market value of ordinary shares held by non-affiliates on June 30, [removed: 2017] [added: 2018] was approximately [removed: $7.7] [added: $7.3] billion based on the closing price of such stock on the New York Stock Exchange.

The number of ordinary shares outstanding as of February [removed: 16, 2018] [added: 14, 2019] was [removed: 95,185,418.][added: 94,458,335.]

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 5, [removed: 2018] [added: 2019] (the "Proxy Statement") are incorporated by reference into Part II and Part III of this Form 10-K.

| Part I | Item 1. | [removed: [Business](#s3BF93757CC3051CF8576BDBB7B11DB46)] [added: [Business](#s0258D51C850D590DA60100286E70445A)] | [removed: [3](#s3BF93757CC3051CF8576BDBB7B11DB46)] [added: [4](#s0258D51C850D590DA60100286E70445A)] |

| | Item 1A. | [Risk [removed: Factors](#sF84A27786B445AE5ADE5DC9A1C440859)] [added: Factors](#s8C136B813E2C5C28B6892F0BCEB85A10)] | [removed: [13](#sF84A27786B445AE5ADE5DC9A1C440859)] [added: [13](#s8C136B813E2C5C28B6892F0BCEB85A10)] |

| | Item 1B. | [Unresolved Staff [removed: Comments](#s645C447C30355BF791FF277C3EAB9481)] [added: Comments](#s89C7D3E59B49587F992BF836E1C60F0C)] | [removed: [23](#s645C447C30355BF791FF277C3EAB9481)] [added: [24](#s89C7D3E59B49587F992BF836E1C60F0C)] |

| | Item 2. | [removed: [Properties](#s7218439D856B5CFDB00BA283FF7D3F9E)] [added: [Properties](#sA9F1BEDF602A5D1FAE23D24E1ACD082B)] | [removed: [23](#s7218439D856B5CFDB00BA283FF7D3F9E)] [added: [24](#sA9F1BEDF602A5D1FAE23D24E1ACD082B)] |

| | Item 3. | [Legal [removed: Proceedings](#s0C012DE0B027598E91334352549C36CF)] [added: Proceedings](#sE4DBA0F03BB3539497436EA36EC2E7ED)] | [removed: [23](#s0C012DE0B027598E91334352549C36CF)] [added: [24](#sE4DBA0F03BB3539497436EA36EC2E7ED)] |

| | Item 4. | [Mine Safety [removed: Disclosures](#s1351FAD3066D557EA74AD5F387397663)] [added: Disclosures](#s6508912DE2C5541380439635D93AE817)] | [removed: [24](#s1351FAD3066D557EA74AD5F387397663)] [added: [24](#s6508912DE2C5541380439635D93AE817)] |

| Part II | Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s40D6FE626CF65EA8904A2C9FF98E67C0)] [added: Securities](#s1F898A5FAB08502B922D8053E24B9370)] | [removed: [25](#s40D6FE626CF65EA8904A2C9FF98E67C0)] [added: [26](#s1F898A5FAB08502B922D8053E24B9370)] |

| | Item 6. | [Selected Financial [removed: Data](#s52AB467552E25BB1924FB71FE195D5E9)] [added: Data](#sED2DE7D6C0E558EA92E717466EAAB919)] | [removed: [27](#s52AB467552E25BB1924FB71FE195D5E9)] [added: [28](#sED2DE7D6C0E558EA92E717466EAAB919)] |

| | Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s9A093AAEAE6757A7AD19F4B914D0E70F)] [added: Operations](#s85B3A1CE5C2C5A26BBC66267AE861247)] | [removed: [28](#s9A093AAEAE6757A7AD19F4B914D0E70F)] [added: [29](#s85B3A1CE5C2C5A26BBC66267AE861247)] |

| | Item 7A. | [Quantitative and Qualitative Disclosure About Market [removed: Risk](#sABF31A5516B15F3FBEA20075C618D1BB)] [added: Risk](#s413528ED5AB45248A3DE4BA9B5745151)] | [removed: [47](#sABF31A5516B15F3FBEA20075C618D1BB)] [added: [47](#s413528ED5AB45248A3DE4BA9B5745151)] |

| | Item 8. | [Financial Statements and Supplementary [removed: Data](#s58EB6CF36A9C5A27804A3622A02DC8AE)] [added: Data](#sEB95146C4ACF5EF6B18C5128B9057BCB)] | [removed: [48](#s58EB6CF36A9C5A27804A3622A02DC8AE)] [added: [48](#sEB95146C4ACF5EF6B18C5128B9057BCB)] |

| | Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s128B7F2E9EB95351B7FDFCCCC13E365E)] [added: Disclosure](#s2423F176725F546C809A1085D8303239)] | [removed: [49](#s128B7F2E9EB95351B7FDFCCCC13E365E)] [added: [49](#s2423F176725F546C809A1085D8303239)] |

| | Item 9A. | [Controls and [removed: Procedures](#sAE53B1EF8DBA5BE4A9ADAB546E1CF416)] [added: Procedures](#s4C73076690D250E0B72C8ED0C4860894)] | [removed: [49](#sAE53B1EF8DBA5BE4A9ADAB546E1CF416)] [added: [49](#s4C73076690D250E0B72C8ED0C4860894)] |

| | Item 9B. | [Other [removed: Information](#s16A120FE6B5A5C57A92F1A934BA4EAE4)] [added: Information](#sC819614F8CB6509881F490F354EEA970)] | [removed: [49](#s16A120FE6B5A5C57A92F1A934BA4EAE4)] [added: [49](#sC819614F8CB6509881F490F354EEA970)] |

| Part III | Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s910BFEA281255A15AACB256E55F4F20B)] [added: Governance](#s52C717F7AFA4522DA6417B604F2AD4C9)] | [removed: [51](#s910BFEA281255A15AACB256E55F4F20B)] [added: [51](#s52C717F7AFA4522DA6417B604F2AD4C9)] |

| | Item 11. | [Executive [removed: Compensation](#sA6F518ED726B5C05AABD8D9BD2370C25)] [added: Compensation](#sE0FDD4FE51215DDD98349FAC8AC3E0B0)] | [removed: [51](#sA6F518ED726B5C05AABD8D9BD2370C25)] [added: [51](#sE0FDD4FE51215DDD98349FAC8AC3E0B0)] |

| | Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s00A6109E43D65C75A1D9DE6BD2113991)] [added: Matters](#s71FB095112C85835830B1FA2A60B03BA)] | [removed: [51](#s00A6109E43D65C75A1D9DE6BD2113991)] [added: [51](#s71FB095112C85835830B1FA2A60B03BA)] |

| | Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s6D032C6729B05A8C8BC02A90D600D6D1)] [added: Independence](#s75C41A6EFA6C5288AAC12794658F74D0)] | [removed: [51](#s6D032C6729B05A8C8BC02A90D600D6D1)] [added: [51](#s75C41A6EFA6C5288AAC12794658F74D0)] |

| | Item 14. | [Principal Accountant Fees and [removed: Services](#sC039404A21675A118D7D2B9ED4A3D29F)] [added: Services](#sFE05163E84385565AA8736F21D96E1EC)] | [removed: [51](#sC039404A21675A118D7D2B9ED4A3D29F)] [added: [51](#sFE05163E84385565AA8736F21D96E1EC)] |

| Part IV | Item 15. | [Exhibits, Financial Statement [removed: Schedules](#s903BE7D858BB512C9B192FB3ED317AEF)] [added: Schedules](#sF1F2A6B6DE6D53B8A9DF2B6B69C44440)] | [removed: [52](#s903BE7D858BB512C9B192FB3ED317AEF)] [added: [52](#sF1F2A6B6DE6D53B8A9DF2B6B69C44440)] |

| | Item 16. | [Form 10-K [removed: Summary](#s8D45B21F4B28565790E895297615098A)] [added: Summary](#s17D46B031D1152AFA13F2CCB68C591DB)] | [removed: [57](#s8D45B21F4B28565790E895297615098A)] [added: [57](#s17D46B031D1152AFA13F2CCB68C591DB)] |

These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "forecast," "outlook," "intend," "strategy," [added: "future", "opportunity",] "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," or the negative thereof or variations thereon or similar [removed: terminology] [added: expressions] generally intended to identify 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 [removed: SEC.][added: United States Securities and Exchange Commission (SEC).]

| • | competitive factors in the industry in which we [removed: compete;] [added: compete, including new technical developments;] |

| • | changes in tax [removed: requirements (including] [added: requirements, including] tax rate changes, [added: the adoption of] new [added: United States (U.S.) or non-U.S.] tax [removed: laws] [added: legislation or exposure to additional tax liabilities] and revised tax law [removed: interpretations);] [added: interpretations;] |

| • | interest rate fluctuations and other changes in borrowing [removed: costs;] [added: costs, in addition to risks associated with our outstanding and future indebtedness;] |

10-K 1 alle10k12312018doc.htm 10-K DATED FEBRUARY 19, 2019

For the Fiscal Year Ended December 31, 2018

| | | | |

| | [Signatures](#sF1954E0778715CD0BC9B3CF08203D213) | | [58](#sF1954E0778715CD0BC9B3CF08203D213) |

| • | the demand for our products and services, including changes in customer preferences, conditions of the commercial and residential construction and remodeling markets and our ability to maintain beneficial relationships with large customers; |

| • | the development, commercialization and acceptance of new products and services; |

| • | results of investments made to complement our existing businesses and our pursuit of business opportunities that may diverge from our core businesses; |

| • | disruptions in our global supply chain, including product manufacturing and logistical services provided by outsourcing partners; |

| • | improper conduct by any of our employees, agents or business partners; |

| • | our ability to manage risks related to our information technology and operational technology systems and cyber-security, including disruption and breaches of our information systems and implementation of new processes that may cause disruptions and be more difficult, costly or time consuming than expected; |

| • | our reliance on third-party vendors for many of the critical elements of our global information and operational technology infrastructure and their failure to provide effective support for such infrastructure; |

| • | changes to trade agreements, sanctions, import and export regulations and custom duties; |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| • | ability to recruit and retain a highly qualified and diverse workforce; |

| | |

| --- | --- |

| • | risks related to our spin-off from Ingersoll Rand plc; |

| | |

| --- | --- |

| | |

| --- | --- |

10-K 1 alle10k12312017doc.htm 10-K DATED FEBRUARY 20, 2018

| (Do not check if a smaller reporting company) | | | |

| | [Signatures](#s60370860CEF15098B86CDE9066141589) | | [58](#s60370860CEF15098B86CDE9066141589) |

| • | the demand for our products and services; |

| • | our ability to manage risks related to our information technology and cyber-security; |

We operate through a broad network of sales offices, engineering centers, [removed: 31] [added: 34] production [added: and assembly] facilities and several distribution centers throughout the world.

Our active properties represent about [removed: 7.0] [added: 6.9] million square feet, of which approximately [removed: 47%] [added: 37%] is leased.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following is a list of executive officers of the Company as of February 19, 2019.

David D.

Petratis, age 61, has served as our Chairman, President and Chief Executive Officer since 2013.

Patrick S.

Shannon, age 56, has served as our Senior Vice President and Chief Financial Officer since 2013.

Jeffrey N.

Braun, age 59, has served as our Senior Vice President, General Counsel and Chief Compliance Officer since 2014, and Secretary since 2018.

Mr. Braun served as our Deputy General Counsel and Chief Compliance Officer from 2013 to 2014.

Timothy P.

Eckersley, age 57, has served as our Senior Vice President and President - Americas since 2013.

Tracy L.

Kemp, age 50, has served as our Senior Vice President and Chief Information Officer since 2015.

Ms. Kemp served as our Vice President and Chief Information Officer from 2013 to 2015.

Shelley A.

Meador, age 47, has served as our Senior Vice President and Chief Human Resources Officer since 2016.

Ms. Meador served as our Vice President - Tax from 2013 to 2016.

Lucia Veiga Moretti, age 54, has served as our Senior Vice President and President - EMEIA since 2014.

Previously, Ms. Moretti served as Senior Vice President and President, Delphi Product and Service Solutions for Delphi Automotive (a supplier of automotive technologies) from 2011 to 2014.

Chris E.

Muhlenkamp, age 61, has served as our Senior Vice President - Global Operations and Integrated Supply Chain since 2014.

Mr. Muhlenkamp served as our Vice President - Global Operations and Integrated Supply Chain from 2013 to 2014.

Douglas P.

Ranck, age 60, has served as our Vice President, Controller and Chief Accounting Officer since 2013.

Vincent Wenos, age 52, has served as our Vice President - Global Technology and Engineering since 2018.

Mr. Wenos served as both our Vice President - Americas Engineering and Vice President - Global Mechanical Products from 2016 to 2018.

Mr. Wenos

previously served as Vice President - Global Product Development and Technology at Stanley Black & Decker, Inc. (a global diversified consumer and industrial products company).

Jeffrey M.

Wood, age 48, has served as our Senior Vice President and President - Asia Pacific since 2017.

Mr. Wood served as our Vice President, Global Supply Management from 2013 to 2017.

All above-listed officers except for Ms. Moretti and Mr. Wenos have been employed by the Company for more than the past five years.

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.

As of February [removed: 16, 2018,] [added: 14, 2019,] the number of record holders of ordinary shares was [removed: 3,010.][added: 2,648.]

Our Board of Directors declared dividends of [removed: $0.16] [added: $0.21] per ordinary share on February [removed: 2, 2017,] [added: 8, 2018,] April 5, [removed: 2017,] [added: 2018,] September 6, [removed: 2017] [added: 2018] and December 6, [removed: 2017.][added: 2018.]

On February [removed: 7, 2018,] [added: 5, 2019,] our Board of Directors declared a dividend of [removed: $0.21] [added: $0.27] per ordinary share payable March 29, [removed: 2018.][added: 2019.]

We paid a total of [removed: $60.9] [added: $79.4] million in cash for dividends to ordinary shareholders during the year ended December 31, [removed: 2017.][added: 2018.]

We paid a total of [removed: $60.0] [added: $67.3] million to repurchase [removed: 0.8] [added: 0.9] million ordinary shares during the year ended December 31, [removed: 2017] [added: 2018] and [removed: $85.1] [added: $60.0] million to repurchase [removed: 1.3] [added: 0.8] million ordinary shares during the year ended December 31, [removed: 2016 under the previous authorized share repurchase plan that was established in 2014.][added: 2017.]

At December 31, [removed: 2017,] [added: 2018,] we have approximately [removed: $440.0] [added: $372.7] million available under the 2017 Share Repurchase Authorization.

The annual changes for the period shown December 1, 2013 (when our ordinary shares began trading) to December 31, [removed: 2017] [added: 2018] 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 December 1, 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, [removed: 2017.][added: 2018.]

[removed: ][added: ]

| | | December 1, 2013 | | December 31, 2013 | | December 31, 2014 | | December 31, 2015 | | December 31, 2016 | | December 31, 2017 | [added: | December 31, 2018 |]

| Allegion plc | | 100.00 | | 102.20 | | 129.03 | | 154.37 | | 150.97 | | 189.19 | [added: | 191.42 |]

| S&P 500 | | 100.00 | | 102.53 | | 116.57 | | 118.18 | | 132.31 | | 161.20 | [added: | 154.13 |]

| S&P 400 Capital Goods | | 100.00 | | 104.58 | | 104.84 | | 99.07 | | 130.70 | | 162.97 | [added: | 140.14 |]

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

The high and low sales price per share and the dividend declared per share for the following periods were as follows:

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Ordinary shares | | | | | | | | | | |

| 2017 | | High | | | | Low | | | | Dividend | | |

| First quarter | | $ | 76.29 | | | $ | 63.81 | | | $ | 0.16 | |

| Second quarter | | 82.77 | | | | 73.93 | | | | 0.16 | | |

| Third quarter | | 86.89 | | | | 76.79 | | | | 0.16 | | |

| Fourth quarter | | $ | 89.81 | | | $ | 78.63 | | | $ | 0.16 | |

| 2016 | | High | | | | Low | | | | Dividend | | |

| First quarter | | $ | 65.40 | | | $ | 52.95 | | | $ | 0.12 | |

| Second quarter | | 69.69 | | | | 63.08 | | | | 0.12 | | |

| Third quarter | | 73.49 | | | | 65.83 | | | | 0.12 | | |

| Fourth quarter | | $ | 69.95 | | | $ | 61.47 | | | $ | 0.12 | |

| [removed: At] [added: As of] and for the years ended December 31, | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | |

| Net revenues | | $ | [removed: 2,408.2] [added: 2,731.7] | | | $ | [removed: 2,238.0] [added: 2,408.2] | | | $ | [removed: 2,068.1] [added: 2,238.0] | | | $ | [removed: 2,118.3] [added: 2,068.1] | | | $ | [removed: 2,069.6] [added: 2,118.3] | | |

| Continuing operations | | [removed: 273.3] [added: 434.9] | | | (a) | [removed: 229.1] [added: 273.3] | | | (b) | [removed: 154.3] [added: 229.1] | | | (c) | [removed: 186.3] [added: 154.3] | | | (d) | [removed: 35.9] [added: 186.3] | | | [removed: (e), (f)] [added: (e)] |

| Discontinued operations | | — | | | | — | | | | [removed: (0.4] [added: —] | | [removed: )] | | [removed: (11.1] [added: (0.4] | | ) | | [removed: (3.6] [added: (11.1] | | ) | |

| Total assets | | [removed: 2,542.0] [added: 2,810.2] | | | | [removed: 2,247.4] [added: 2,542.0] | | | | [removed: 2,263.0] [added: 2,247.4] | | | | [removed: 2,015.9] [added: 2,263.0] | | | | [removed: 2,000.6] [added: 2,015.9] | | | |

| Total debt | | [removed: 1,477.3] [added: 1,444.8] | | | | [removed: 1,463.8] [added: 1,477.3] | | | | [removed: 1,523.1] [added: 1,463.8] | | | | [removed: 1,264.6] [added: 1,523.1] | | | | [removed: 1,343.9] [added: 1,264.6] | | | |

| Total Allegion plc shareholders’ equity (deficit) | | [removed: 401.6] [added: 651.0] | | | | [removed: 113.3] [added: 401.6] | | | | [removed: 25.6] [added: 113.3] | | | | [removed: (4.8] [added: 25.6] | | [removed: )] | | [removed: (66.1] [added: (4.8] | | ) | |

| Continuing operations | | $ | [removed: 2.87] [added: 4.58] | | | $ | [removed: 2.39] [added: 2.87] | | | $ | [removed: 1.61] [added: 2.39] | | | $ | [removed: 1.94] [added: 1.61] | | | $ | [removed: 0.37] [added: 1.94] | | |

| Discontinued operations | | — | | | | — | | | | [removed: (0.01] [added: —] | | [removed: )] | | [removed: (0.12] [added: (0.01] | | ) | | [removed: (0.03] [added: (0.12] | | ) | |

| Continuing operations | | $ | [removed: 2.85] [added: 4.54] | | | $ | [removed: 2.36] [added: 2.85] | | | $ | [removed: 1.59] [added: 2.36] | | | $ | [removed: 1.92] [added: 1.59] | | | $ | [removed: 0.37] [added: 1.92] | | |

| Discontinued operations | | — | | | | — | | | | — | | | | [removed: (0.12] [added: —] | | [removed: )] | | [removed: (0.03] [added: (0.12] | | ) | |

| Dividends declared per ordinary share | | $ | [removed: 0.64] [added: 0.84] | | | $ | [removed: 0.48] [added: 0.64] | | | $ | [removed: 0.40] [added: 0.48] | | | $ | [removed: 0.32] [added: 0.40] | | | $ | [removed: —] [added: 0.32] | | |

| [removed: (a)] [added: (b)] | Net earnings [removed: from continuing operations] for the year ended December 31, 2017 includes $44.7 million of costs related to the refinancing of our credit facilities and senior notes and a net tax charge of $53.5 million related to the U.S. Tax Reform Act. |

| [removed: (b)] [added: (c)] | Net earnings [removed: from continuing operations] for the year ended December 31, 2016 includes $84.4 million of losses related to our previously divested [removed: systems integration] [added: Systems Integration] business. |

| [removed: (c)] [added: (d)] | 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 our [removed: systems integration] [added: Systems Integration] business. |

| [removed: (d)] [added: (e)] | 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. |

[removed: (1)] The Company has [added: also] not restated [removed: 2015, 2014,] [added: 2015] or [removed: 2013] [added: 2014] for the impact of the adoption of ASU 2016-09 in the fourth quarter of [removed: 2016.][added: 2016, nor 2014 for the impact of the adoption of ASU 2015-17 and ASU 2015-03 as of December 31, 2015.]

[added: (1)] The Company has not restated 2014 [removed: or 2013] [added: - 2017] for the impact of the adoption of [removed: ASU 2015-17 and ASU 2015-03] [added: ASC 606] as of [removed: December 31, 2015.][added: January 1, 2018.]

| (a) | Net earnings for the year ended December 31, 2018 includes a $21.9 million tax benefit related to an adjustment to the provisional amounts previously recognized related to the enactment of the U.S. Tax Reform Act. |

| | |

| --- | --- |

| (e) | 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. |

| (f) | Net earnings from continuing operations includes $174.5 million of centrally managed service costs and corporate allocations from Ingersoll Rand for the year ended December 31, 2013. |

| (a) | The following Consolidated Financial Statements and Financial Statement Schedule and the report thereon of PricewaterhouseCoopers LLP dated February [removed: 20, 2018,] [added: 19, 2019,] are presented following Item [removed: 15] [added: 16] of this Annual Report on Form 10-K. |

Consolidated [removed: statements] [added: Statements] of [removed: comprehensive income] [added: Comprehensive Income] for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

Consolidated [removed: balance sheets] [added: Balance Sheets] at December 31, [removed: 2017] [added: 2018] and [removed: 2016][added: 2017]

For the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015:][added: 2016:]

Schedule II – Valuation and Qualifying Accounts for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

| In millions, except per share amounts | | [removed: 2017] [added: 2018] | | | | | | | | | | | | | | |

| Net revenues | | $ | 613.1 | | | $ | 704.7 | | | $ | 711.5 | | | $ | 702.4 | |

| Cost of goods sold | | 355.3 | | | | 399.1 | | | | 402.1 | | | | 401.9 | | |

| Operating income | | 98.7 | | | | 143.4 | | | | 142.3 | | | | 141.4 | | |

| Net earnings | | 72.4 | | | | 114.0 | | | | 116.1 | | | | 132.9 | | |

| Net earnings attributable to Allegion plc | | 72.2 | | | | 113.9 | | | | 116.0 | | | | 132.8 | | |

| Basic | | $ | 0.76 | | | $ | 1.20 | | | $ | 1.22 | | | $ | 1.40 | |

| Diluted | | $ | 0.75 | | | $ | 1.19 | | | $ | 1.21 | | | $ | 1.39 | |

| | | 2017 | | | | | | | | | | | | | | |

| Cost of goods sold | | 307.6 | | | | 345.7 | | | | 335.0 | | | | 347.0 | | |

| Operating income | | 99.5 | | | | 135.0 | | | | 127.1 | | | | 130.9 | | |

Net earnings from the fourth quarter of 2018 includes a net tax benefit of $18.6 million related to an adjustment to the provisional accounting related to the U.S. Tax Reform Act.

| Cost of goods sold | | 308.0 | | | | 346.0 | | | | 335.5 | | | | 348.0 | | |

| Operating income | | 98.8 | | | | 134.1 | | | | 126.1 | | | | 129.2 | | |

| In millions, except per share amounts | | 2016 | | | | | | | | | | | | | | |

| Net revenues | | $ | 502.3 | | | $ | 584.9 | | | $ | 581.1 | | | $ | 569.7 | |

| Cost of goods sold | | 286.0 | | | | 317.5 | | | | 317.6 | | | | 331.6 | | |

| Operating income | | 82.5 | | | | 124.3 | | | | 121.5 | | | | 97.2 | | |

| Net earnings | | 58.8 | | | | 95.4 | | | | 2.0 | | | | 75.0 | | |

| Net earnings attributable to Allegion plc | | 57.7 | | | | 95.0 | | | | 1.6 | | | | 74.8 | | |

| Basic | | $ | 0.60 | | | $ | 0.99 | | | $ | 0.02 | | | $ | 0.78 | |

| Diluted | | $ | 0.60 | | | $ | 0.98 | | | $ | 0.02 | | | $ | 0.77 | |

Net earnings from the third quarter of 2016 includes an after tax $84.4 million loss on divestiture related to the write-down of the carrying value of consideration receivable related to the 2015 divestiture of our systems integration business in China.

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of December 31, [removed: 2017,] [added: 2018,] 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.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2017.][added: 2018.]

We concluded that our internal control over financial reporting was effective as of December 31, [removed: 2017.][added: 2018.]

There were no changes in the Company's internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2017] [added: 2018] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As discussed in Item 7, we have completed six business acquisitions during 2018.

Because they were acquired by us in 2018, we have excluded these businesses, AD Systems, Door and Access Systems, Hammond, Isonas, QMI and TGP, from our assessment of internal control over financial reporting as of December 31, 2018.

These entities are wholly-owned subsidiaries whose total assets and total revenues represent approximately 3% and 6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2018.

We are currently integrating these entities into our compliance programs and internal control processes.

Election of Directors", "Section 16(a) Beneficial Ownership Reporting Compliance" and "Corporate Governance" in [added: our] Proxy Statement.

| Exhibit Number | | [removed: |] Exhibit Description | | Method of Filing |

| [2.1](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000031/exhibit21sda.htm) | | [removed: |] Separation and Distribution Agreement between Ingersoll-Rand plc and Allegion plc, dated November 29, 2013. | | Incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed with the SEC on December 2, 2013 (File No. 001-35971). |

| [removed: [4.1](http://www.sec.gov/Archives/edgar/data/1579241/000157924116000072/amendedandrestatedmemorand.htm) |] [added: [3.1](http://www.sec.gov/Archives/edgar/data/1579241/000157924116000072/amendedandrestatedmemorand.htm)] | | Amended and Restated Memorandum and Articles of Association of Allegion [removed: plc] [added: plc.] | | Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on June 13, 2016 (File No. 001-35971). |

| [removed: [4.2](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000010/exhibit32allegioncertifica.htm) |] [added: [10.17](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1021formofallegionplcdeed.htm)] | | [removed: Certificate of Incorporation] [added: Form] of Allegion plc [added: Deed Poll Indemnity.] | | Incorporated by reference to Exhibit [removed: 3.2] [added: 10.21] to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [4.1](http://www.sec.gov/Archives/edgar/data/1579241/000119312517300970/d461934dex41.htm) | | [removed: |] Indenture, dated as of October 2, 2017, among Allegion US Holding Company Inc., Allegion plc and Wells Fargo Bank, National Association. | | Incorporated by reference to Exhibit 4.1 of Allegion plc's Current Report on Form 8-K filed October 2, 2017. |

| [4.2](http://www.sec.gov/Archives/edgar/data/1579241/000119312517300970/d461934dex42.htm) | | [removed: |] First Supplemental Indenture, dated as of October 2, 2017, among Allegion US Holding Company Inc., Allegion plc and Wells Fargo Bank, National Association. | | Incorporated by reference to Exhibit 4.2 of Allegion plc's Current Report on Form 8-K filed October 2, 2017. |

| [4.3](http://www.sec.gov/Archives/edgar/data/1579241/000119312517300970/d461934dex42.htm) | | [removed: |] Form of Global Note representing the 3.200% Senior Notes due 2024. | | Incorporated by reference to Exhibit 4.3 of Allegion plc's Current Report on Form 8-K filed October 2, 2017 (included in Exhibit 4.2). |

| [4.4](http://www.sec.gov/Archives/edgar/data/1579241/000119312517300970/d461934dex44.htm) | | [removed: |] Second Supplemental Indenture, dated as of October 2, 2017, among Allegion US Holding Company Inc., Allegion plc and Wells Fargo Bank, National Association. | | Incorporated by reference to Exhibit 4.4 of Allegion plc's Current Report on Form 8-K filed October 2, 2017. |

| [4.5](http://www.sec.gov/Archives/edgar/data/1579241/000119312517300970/d461934dex44.htm) | | [removed: |] Form of Global Note representing the 3.550% Senior Notes due 2027. | | Incorporated by reference to Exhibit 4.5 of Allegion plc's Current Report on Form 8-K filed October 2, 2017 (included in Exhibit 4.4). |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000031/exhibit101taxmattersagreem.htm) |] [added: [10.2](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000031/exhibit101taxmattersagreem.htm)] | | Tax Matters Agreement between Ingersoll-Rand plc and Allegion [removed: plc] [added: plc.] | | Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on December 2, 2013 (File No. 001-35971). |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1579241/000119312517286345/d399218dex101.htm) |] [added: [10.3](http://www.sec.gov/Archives/edgar/data/1579241/000119312517286345/d399218dex101.htm)] | | Credit Agreement, dated as of September 12, 2017. | | Incorporated by reference to Exhibit 10.1 of Allegion plc's Current Report on Form 8-K filed September 15, 2017. |

| [removed: [10.2](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000031/exhibit102employeemattersa.htm) |] [added: [10.4](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000031/exhibit102employeemattersa.htm)] | | Employee Matters Agreement between Ingersoll-Rand plc and Allegion [removed: plc] [added: plc.] | | Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on December 2, 2013 (File No. 001-35971). |

| [removed: [10.4](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a105allegion2013incentives.htm) |] [added: [10.5](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a105allegion2013incentives.htm)] | | 2013 Incentive Stock [removed: Plan] [added: Plan. *] | | Incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.5](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a106executivedeferredcompe.htm) |] [added: [10.6](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a106executivedeferredcompe.htm)] | | Executive Deferred Compensation [removed: Plan] [added: Plan. *] | | Incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.6](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a107supplementalemployeesa.htm) |] [added: [10.7](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a107supplementalemployeesa.htm)] | | Supplemental Employee Savings [removed: Plan] [added: Plan. *] | | Incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.7](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a108electedofficerssupplem.htm) |] [added: [10.8](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a108electedofficerssupplem.htm)] | | Elected Officer Supplemental [removed: Program] [added: Program. *] | | Incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.8](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a109keymanagementsupplemen.htm) |] [added: [10.9](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a109keymanagementsupplemen.htm)] | | Key Management Supplemental [removed: Program] [added: Program. *] | | Incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.9](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1010supplementalpensionpl.htm) |] [added: [10.10](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1010supplementalpensionpl.htm)] | | Supplemental Pension [removed: Plan] [added: Plan. *] | | Incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.10](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1011seniorexecutiveperfor.htm) |] [added: [10.11](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1011seniorexecutiveperfor.htm)] | | Senior Executive Performance [removed: Plan] [added: Plan. *] | | Incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.11](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1014petratisofferletter.htm) |] [added: [10.12](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1014petratisofferletter.htm)] | | David D. Petratis Offer Letter, dated June 19, [removed: 2013] [added: 2013. *] | | Incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.12](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1015shannonofferletter.htm) |] [added: [10.13](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1015shannonofferletter.htm)] | | Patrick S. Shannon Offer Letter, dated April 9, [removed: 2013] [added: 2013. *] | | Incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.13](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000019/a1016eckersleyofferletter.htm) |] [added: [10.14](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000019/a1016eckersleyofferletter.htm)] | | Timothy P. Eckersley Offer Letter, dated October 3, [removed: 2013] [added: 2013. *] | | Incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.14](http://www.sec.gov/Archives/edgar/data/1579241/000157924116000056/0001579241-16-000056-index.htm) |] [added: [10.15](http://www.sec.gov/Archives/edgar/data/1579241/000157924116000056/exhibit101luciamorettioffe.htm)] | | Lucia V. Moretti, Offer Letter, dated February 19, [removed: 2014] [added: 2014. *] | | Incorporated by reference to Exhibit 10.1 to the Company's Form 10-K filed with the SEC on February 26, 2016 (File No. 001-35971). |

| [removed: [10.15](http://www.sec.gov/Archives/edgar/data/1579241/000157924117000009/exhibit10150jeffreybraunof.htm) |] [added: [10.16](http://www.sec.gov/Archives/edgar/data/1579241/000157924117000009/exhibit10150jeffreybraunof.htm)] | | Jeffrey N. Braun Offer Letter, dated June 13, [removed: 2014] [added: 2014. *] | | Incorporated by reference to Exhibit 10.15 to the Company's Form 10-K filed with the SEC on February 17, 2017 (File No. 001-35971). |

| [removed: [10.16](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1021formofallegionplcdeed.htm) |] [added: [10.18](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1022formofallegionusholdi.htm)] | | Form of Allegion [removed: plc] [added: US Holding Company, Inc.] Deed Poll [removed: Indemnity] [added: Indemnity.] | | Incorporated by reference to Exhibit [removed: 10.21] [added: 10.22] to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.17](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1022formofallegionusholdi.htm) |] [added: [10.19](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1023formofallegionirishho.htm)] | | Form of Allegion [removed: US] [added: Irish] Holding [removed: Company, Inc.] [added: Company Limited] Deed Poll [removed: Indemnity] [added: Indemnity.] | | Incorporated by reference to Exhibit [removed: 10.22] [added: 10.23] to the Company’s Registration Statement on Form 10 filed with the SEC on June 17, 2013, as amended (File No. 001-35971). |

| [removed: [10.18](http://www.sec.gov/Archives/edgar/data/1579241/000157924113000015/a1023formofallegionirishho.htm) |] [added: [10.20](http://www.sec.gov/Archives/edgar/data/1579241/000157924114000007/exhibit101annualincentivep.htm)] | | [removed: Form of Allegion Irish Holding Company Limited Deed Poll Indemnity] [added: Annual Incentive Plan. *] | | Incorporated by reference to Exhibit [removed: 10.23] [added: 10.1] to the [removed: Company’s Registration Statement on] [added: Company's] Form [removed: 10] [added: 10-K] filed with the SEC on [removed: June 17, 2013, as amended] [added: March 10, 2014] (File No. 001-35971). |

| [removed: [10.19](http://www.sec.gov/Archives/edgar/data/1579241/000157924114000007/exhibit101annualincentivep.htm) |] [added: [10.21](http://www.sec.gov/Archives/edgar/data/1579241/000157924114000007/exhibit102changeinctrlseve.htm)] | | [removed: Annual Incentive Plan] [added: Change in Control Severance Plan. *] | | Incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to the Company's Form 10-K filed with the SEC on March 10, 2014 (File No. 001-35971). |

| [removed: [10.20](http://www.sec.gov/Archives/edgar/data/1579241/000157924114000007/exhibit102changeinctrlseve.htm) |] [added: [10.25](http://www.sec.gov/Archives/edgar/data/1579241/000157924116000052/allegionspecialrsuagreement.htm)] | | [removed: Change in Control Severance Plan] [added: Form of Special Restricted Stock Unit Award Agreement. *] | | Incorporated by reference to Exhibit [removed: 10.2] [added: 10.4] to the Company's Form [removed: 10-K] [added: 8-K] filed with the SEC on [removed: March 10, 2014] [added: February 9, 2016] (File No. 001-35971). |

| [removed: [10.22](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit1022formofrestricte.htm) |] [added: [10.22](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit1022formofrestricte.htm)] | | Form of Restricted Stock Unit Award [removed: Agreement] [added: Agreement. *] | | Filed [removed: herewith] [added: herewith.] |

| [removed: [10.23](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit1023formofstockopti.htm) |] [added: [10.23](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit1023formofstockopti.htm)] | | Form of Stock Option Award [removed: Agreement] [added: Agreement. *] | | Filed [removed: herewith] [added: herewith.] |

| [removed: [10.24](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit1024formofperforman.htm) |] [added: [10.24](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit1024formofperforman.htm)] | | Form of Performance Share Unit Award [removed: Agreement] [added: Agreement. *] | | Filed [removed: herewith] [added: herewith.] |

| [removed: [10.25](http://www.sec.gov/Archives/edgar/data/1579241/000157924116000052/allegionspecialrsuagreement.htm) |] [added: [10.26](http://www.sec.gov/Archives/edgar/data/1579241/000157924115000013/exhibit101formofnon-employ.htm)] | | Form of [removed: Special] [added: Non-Employee Director] Restricted Stock Unit Award [removed: Agreement] [added: Agreement. *] | | Incorporated by reference to Exhibit [removed: 10.4] [added: 10.1] to the Company's Form [removed: 8-K] [added: 10-Q] filed with the SEC on [removed: February 9, 2016] [added: April 30, 2015] (File No. 001-35971). |

| [10.27](http://www.sec.gov/Archives/edgar/data/1579241/000157924115000033/exhibit101simonsvosssharep.htm) | | [removed: |] Share Purchase Agreement dated June 26, 2015 between SimonsVoss Luxco S.à r.l., SimonsVoss Co-Invest GmbH & Co. KG, Mr Frank Rövekamp and Allegion Luxembourg Holding & Financing S.à r.l. | | Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed with the SEC on July 30, 2015 (File No. 001-35971). |

| [removed: [21.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit2112017subsidiaries.htm) |] [added: [21.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit2112018subsidiaries.htm)] | | List of subsidiaries of Allegion [removed: plc] [added: plc.] | | Filed [removed: herewith] [added: herewith.] |

| [removed: [23.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit2312017consentofind.htm) |] [added: [23.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit2312018consentofind.htm)] | | Consent of Independent Registered Public Accounting [removed: Firm] [added: Firm.] | | Filed [removed: herewith] [added: herewith.] |

| [removed: [31.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit3112017ceocertifica.htm) |] [added: [31.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit3112018ceocertifica.htm)] | | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | Filed [removed: herewith] [added: herewith.] |

| [removed: [31.2](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit3122017cfocertifica.htm) |] [added: [31.2](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit3122018cfocertifica.htm)] | | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | Filed [removed: herewith] [added: herewith.] |

| [removed: [32.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit3212017ceocfo906cer.htm) |] [added: [32.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit3212018ceocfo906cer.htm)] | | Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | Furnished [removed: herewith] [added: herewith.] |

| 101 | | [removed: |] The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2017,] [added: 2018,] formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Comprehensive Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated [removed: Statement] [added: Statements] of Cash Flows, (iv) the Consolidated Statements of Equity and (v) Notes to Consolidated Financial Statements. | | Filed [removed: herewith] [added: herewith.] |

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| [10.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924119000006/exhibit101formofseparation.htm) | | Form of Separation Agreement and Release. * | | Filed herewith. |

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| [10.26](http://www.sec.gov/Archives/edgar/data/1579241/000157924115000013/exhibit101formofnon-employ.htm) | | | Form of Non-Employee Director Restricted Stock Unit Award Agreement | | Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed with the SEC on April 30, 2015 (File No. 001-35971). |

| [12.1](https://www.sec.gov/Archives/edgar/data/1579241/000157924118000007/exhibit121201710kratioofea.htm) | | | Ratio of Earnings to Fixed Charges | | Filed herewith |

| Date: | | February [removed: 20, 2018] [added: 19, 2019] |

| /s/ David D. Petratis | | Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) | | February [removed: 20, 2018] [added: 19, 2019] |

| /s/ Patrick S. Shannon | | Senior Vice President and Chief Financial Officer (Principal Financial Officer) | | February [removed: 20, 2018] [added: 19, 2019] |

| /s/ Douglas P. Ranck | | Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) | | February [removed: 20, 2018] [added: 19, 2019] |

| /s/ Carla Cico | | Director | | February [removed: 20, 2018] [added: 19, 2019] |

| /s/ Kirk S. Hachigian | | Director | | February [removed: 20, 2018] [added: 19, 2019] |

| /s/ Nicole Parent Haughey | | Director | | February [removed: 20, 2018] [added: 19, 2019] |

| /s/ Dean Schaffer | | Director | | February [removed: 20, 2018] [added: 19, 2019] |

| /s/ Martin E. Welch III | | Director | | February [removed: 20, 2018] [added: 19, 2019] |

| [Report of Independent Registered Public Accounting [removed: Firm](#s8EE1EFF3A13951AF885FAF78C23F7718)] [added: Firm](#s0E5DE5097EF553CDBCC3CF827EFA992D)] | [removed: [F-2](#s8EE1EFF3A13951AF885FAF78C23F7718)] [added: [F-2](#s0E5DE5097EF553CDBCC3CF827EFA992D)] |

| [Consolidated Statements of Comprehensive [removed: Income](#s60632121DF9E59EA98F116FF69D3A455)] [added: Income](#s4CC8020708CD5C9298E62FB6ED30EB0F)] | [removed: [F-4](#s60632121DF9E59EA98F116FF69D3A455)] [added: [F-4](#s4CC8020708CD5C9298E62FB6ED30EB0F)] |

| [Consolidated Balance [removed: Sheets](#sAA0325342A075DDC8770BCB2118721B2)] [added: Sheets](#s676422673CDD5177B9220656DDE98BA4)] | [removed: [F-6](#sAA0325342A075DDC8770BCB2118721B2)] [added: [F-5](#s676422673CDD5177B9220656DDE98BA4)] |

| [Consolidated Statements of [removed: Equity](#sACC59346BAE95289ADBA5DB797AECBA8)] [added: Equity](#s53BD9E228FAC5441BC4520DCB00A647A)] | [removed: [F-7](#sACC59346BAE95289ADBA5DB797AECBA8)] [added: [F-6](#s53BD9E228FAC5441BC4520DCB00A647A)] |

| [Consolidated Statements of Cash [removed: Flows](#s8DC94677F49B59DC886222401C1ECB52)] [added: Flows](#sD4D7B11B760B59068E8CD3D88AE6382E)] | [removed: [F-8](#s8DC94677F49B59DC886222401C1ECB52)] [added: [F-7](#sD4D7B11B760B59068E8CD3D88AE6382E)] |

| [Notes to Consolidated Financial [removed: Statements](#sBEF548F923A65F5F97A1BDA0EE438D15)] [added: Statements](#s1F411DD5B30956B39D8604BD51F4903A)] | [removed: [F-10](#sBEF548F923A65F5F97A1BDA0EE438D15)] [added: [F-9](#s1F411DD5B30956B39D8604BD51F4903A)] |

| [Financial Statement Schedule: Schedule II – Valuation and Qualifying Accounts for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#sD820F3626279531DB286356CEA1E1E5C)] [added: 2016](#s658FF2297C4F5C92A5C8479B70874D93)] | [removed: [F-54](#sD820F3626279531DB286356CEA1E1E5C)] [added: [F-54](#s658FF2297C4F5C92A5C8479B70874D93)] |

We have audited the accompanying consolidated balance sheets of Allegion plc and its subsidiaries [added: (the “Company”)] as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the related consolidated statements of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, [removed: 2017,] [added: 2018,] including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended December 31, [removed: 2017] [added: 2018] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

The Company's management is responsible for these consolidated financial statements, 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 [removed: appearing] under Item 9A.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) [removed: ("PCAOB")] [added: (PCAOB)] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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 [removed: accounting principles.]

| For the years ended December 31, | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Net revenues | | $ | [removed: 2,408.2] [added: 2,731.7] | | | $ | [removed: 2,238.0] [added: 2,408.2] | | | $ | [removed: 2,068.1] [added: 2,238.0] | |

| Cost of goods sold | [added: —] | [removed: 1,337.5] | | | [added: —] | [removed: 1,252.7] | | | [added: 1,558.4] | [removed: 1,199.0] | | | [added: — | | | | 1,558.4 | | |]

| Selling and administrative expenses | | [removed: 582.5] [added: 647.5] | | | | [removed: 559.8] [added: 580.4] | | | | [removed: 510.5] [added: 555.4] | | |

| Interest expense | | [removed: 105.7] [added: 54.0] | | | | [removed: 64.3] [added: 105.7] | | | | [removed: 52.9] [added: 64.3] | | |

| Loss on divestitures | | — | | | | [removed: 84.4] [added: —] | | | | [removed: 104.2] [added: 84.4] | | |

| Earnings before income taxes | | [removed: 395.7] [added: 475.2] | | | | [removed: 295.0] [added: 395.7] | | | | [removed: 209.3] [added: 295.0] | | |