ALLEAllegion

Reference is made to your disclosure on page F-37 that your income tax valuation allowance decreased $118.6 million in fiscal 2019. Please tell us the impact this decrease had on net earnings and explain to us why it isn't discussed in Item 7.

No reply letter found.

Reference is made to the first paragraph on page F-17 where you disclose that the Credit Facilities require you to comply with a maximum leverage ratio. Please tell us your consideration of disclosing the maximum ratio, your ratio as of December 31, 2019 and the amount of retained earnings or net income restricted or free of restrictions.

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Further, please tell us your consideration of providing disclosure about the dividend restrictions imposed by the Irish Companies Act as discussed on page 24. Refer to Rule 4-08(e)(1) of Regulation S-X.

No reply letter found.

Reference is made to your disclosure of 2020 expected earnings per share as adjusted. In future filings, please provide a reconciliation (by schedule or other clearly understandable method), which shall be quantitative, to the extent available without unreasonable efforts of the differences between the non-GAAP financial measure with the most directly comparable financial measure or measures calculated and presented

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in accordance with GAAP. Refer to Item 10(e)(i)(B) of Regulation S-K.

No reply letter found.

You state on page 8 of the 10-K that your EMEIA segment provides products and solutions in countries located in regions including the Middle East and Africa, areas that include Sudan and Syria. You stated in a letter to us dated May 9, 2014 that your non-US subsidiaries had sold mechanical door locks and cylinders and related parts and hardware items and services to Syria.

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As you know, Sudan and Syria are designated by the Department of State as state sponsors of terrorism, and are subject to U.S. economic sanctions and export controls. Please describe to us the nature and extent of any past, current, and anticipated contacts with Sudan and Syria, whether through subsidiaries, affiliates, distributors, partners or other direct or indirect arrangements. You should describe any services, products, information or technology you have provided to Sudan or Syria, directly or indirectly, and any agreements, commercial arrangements, or other contacts you have had with the governments of those countries or entities they control.

Our response is based primarily on information supplied by non-U.S. subsidiaries in reply to inquiries we initiated for this purpose.

The Company has had no sales into Sudan or Syria since its response to the staff dated May 9, 2014. The Company has no subsidiaries in Sudan or Syria. To its knowledge, the Company also does not have any agreements, commercial arrangements or other contacts with agencies or departments of the governments of Sudan or Syria or entities that are owned or controlled by agencies of the governments of Sudan or Syria.

The Company is committed to conducting business

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in compliance with all applicable laws, rules and regulations, including but not limited to the provisions of the U.S. Export Administration Regulations and the U.S. Foreign Assets Control Regulations. The Company has a dedicated Trade Compliance organization that is responsible for implementing and monitoring global policies and procedures to ensure compliance with export control laws, as well train its foreign subsidiaries and personnel regarding U.S. legal requirements. The Company has a global policy in place that prohibits transactions with Syria and Sudan. Even though certain transactions are now permissible with Sudan pursuant to an OFAC general license, the Company continues to prohibit trade with Sudan until the U.S. government officially revokes the U.S. Sudan Sanctions Regulations.

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Please discuss the materiality of any contacts with Sudan and Syria you describe in response to the comment above, and whether those contacts constitute a material investment risk for your security holders. You should address materiality in quantitative terms, including the approximate dollar amounts of any associated revenues, assets, and liabilities for the last three fiscal years and the subsequent interim

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period. Also, address materiality in terms of qualitative factors that a reasonable investor would deem important in making an investment decision, including the potential impact of corporate activities upon a company's reputation and share value. Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment in companies that do business with U.S.- designated state sponsors of terrorism. You should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operations associated with Sudan and Syria.

As discussed above, the Company has had no sales to Sudan or Syria since its letter to the staff dated May 9, 2014. Read in the reply ↗

We note you impaired the consideration receivable balance related to your divestiture of Bocom Wincent Technologies Co. Ltd (“Bocom”). Please tell us your basis for recording an asset at divestiture related to the portion of the consideration that is based on the future cash collection performance of Bocom.

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Please include whether the consideration was contingent in nature and, if contingent, what part of the contingency was satisfied at December 31, 2015.

A substantial portion of the consideration from the November 13, 2015 Bocom divestiture was a $75.0 million note receivable. Under the terms of the note receivable, payment was based on a percentage of the cash collected of the outstanding trade accounts receivables and unbilled receivables ("Receivables") in excess of ordinary and necessary operating expenses of the Bocom business (“Excess Cash Payments”).

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The repayment of the note receivable was not contingent on the satisfaction of any other performance metrics; the only contingency related to the collectability of the underlying Receivables. Also, there were no indications from the Company's previous ownership of the Receivables that would indicate that it would not collect on the note receivable. Based on the estimated timing of the collection of the Receivables, the Company expected the collection to occur over an approximate two year period with the first payments starting in 2016. Additionally, the sales agreement identified a substantially completed government project as a Receivable, which was subject to customer acceptance in 2016. This project represented the largest individual project in the Receivables and approximately 25% of the note receivable balance. The Company was to receive 100% of the cash collected (not to exceed the remaining balance of the note receivable) after customer acceptance. The Company’s basis for recording the note receivable at the November 13, 2015 divestiture date was that there were no indications from its previous ownership of the Receivables that would indicate that it would not collect on the note receivable.

The Company considered the guidance in ASC 835-30 in order to determine the fair value of the note receivable. ASC 835-30 is the primary source of guidance on when interest must be imputed on receivables. ASC 835-30-25-10 requires that each party to the transaction record both the note and the sales price or the cost of the property, goods, or services acquired at the "fair value" of the property, goods, or services, or at an amount that reasonably approximates the market value of the note, whichever is more clearly determinable. The Company estimated the fair value of its $75 million note receivable from the buyer to approximate $70.4 million. Given the nature of the Receivables and the related collection history, the Company determined the $70.4 million fair value of the note receivable using a discounted cash flows approach based on the estimated timing of the receipt of Excess Cash Payments using an appropriate discount rate.

Finally, in connection with our assessment at December 31, 2015, we noted no additional events, facts or circumstances from the November 13, 2015 divestiture date that indicated the note receivable balance could be impaired.

If you should have any further questions or comments, please contact me at 317-810-3372.

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We note your response to our prior comment 3. Please tell us about your evaluation of the collectability of the note receivable on the date of the Bocom divestiture and again at December 31, 2015 when you determined the note receivable was fully collectible.

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Please also tell us about your subsequent evaluation of the collectability of the note receivable for the period ended September 30, 2016 when you determined the amounts were fully impaired.

As discussed with the Staff, the Company has included within its response below our evaluation of the collectability of the note receivable for the period ended September 30, 2016. For the response to the Company’s evaluation of the collectability at both the divestiture date and again at December 31, 2015, the Company refers to its response letter dated July 11, 2017.

Under the terms of the Bocom divestiture agreement, the Company was to be paid based on an excess operational cash flows computation, as well as 100% of the cash collected from a specific Chinese government project that

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represented approximately 25% of the note receivable balance. The Company maintained 15% ownership of the divested Bocom business, as well as a board seat, which provided the Company access to Bocom financial information and an understanding of the business post divestiture.

Following the divestiture, the buyer began a process to obtain local financing from third party financial institutions in order to 1) accelerate the pay down of the note payable due to the Company, and 2) provide additional borrowing capacity to fund the future operations of Bocom. While the Company viewed the buyer’s process of obtaining financing as a positive indicator of collection on its note receivable, the Company’s assessment of determining whether the note receivable was probable of collection was not solely based on the buyer securing financing. The Company monitored the financing status through regular updates from the buyer following the divestiture.

Beginning in mid-2016, the Company, in connection with its monitoring efforts, began to note adverse trends in the actual operational results of the Bocom business, potentially impacting the collectability of its note receivable from the Bocom. These trends included both a reduction in revenue, partially due to the loss of the rights of the Bocom name, as well as delays in customer acceptances of projects and collections of accounts receivable. As a result, Bocom was not able to bid on projects that required significant up front financing. The Company also began seeing a reduction in the second half forecast of revenue and cash flow of the Bocom business due to the factors noted above as well as certain other events that included a change in senior leadership and business restructuring activities initiated by the buyer. Even considering the above and based on our updates surrounding the process to obtain financing, the Company still believed it was probable the buyer would secure financing and that it was probable the note receivable was collectible.

Through our updates from the buyer related to the financing, the Company understood the buyer remained in ongoing negotiations with various third party financial institutions to provide financing for Bocom. The Company noted through those updates that the credit markets in China were tightening for companies with Bocom's credit profile, making it more difficult for the buyer to obtain financing. However, active talks continued with third party financial institutions. In August 2016, the buyer received preliminary financing offers that were at unreasonable terms to pursue for the buyer as well as unacceptable to the Company as the financial institutions were requiring a guarantee from the Company. The buyer’s failure to obtain financing was a result of multiple events which included tightening of overall credit markets in China for companies with Bocom's credit profile, changes in the mix of financial institutions involved with the buyer on obtaining financing, and the financial institutions requiring buyer and parent guarantees on potential financing. The buyer also communicated to the Company that they were exploring a sale of the legacy accounts receivable and unbilled receivables at a significant discount as well as a potential sale of Bocom, which the Company believed would have been at a significant discount.

Immediately following the end of the third quarter 2016, the Company obtained an updated next twelve months' cash flow projection for Bocom from the buyer. The projection was net of the required monthly operating costs to run the business and also assumed both the continued decline in revenue and cash flow and the inability to obtain financing. The projection also took into account a delay in customer acceptance for the Chinese government project noted above. The projection showed Bocom would not have excess cash flows available to pay the Company on collected receivables per the terms of the divestiture agreement during the next twelve months.

As a result of the combination of the significant events summarized below, the Company concluded during the third quarter of 2016 that it was probable that it would be unable to collect all amounts due according to the terms of the divestiture agreement and that there was a need to assess the note receivable for impairment.

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A delay in customer acceptance and ultimately collection of the substantially completed Chinese government project referred to above;

Decline in actual operational performance and forecast of the business, including revenue and cash flow;

Failure to secure financing from third party financial institutions; and

The buyer exploring a potential sale of Bocom

Based on this conclusion, the Company performed a revised discounted cash flow analysis to assess the fair value of the note receivable as of September 30, 2016 using the updated cash flow projections from the buyer and the Company’s consideration of operating cash flow needs of the business from its previous ownership. In determining its basis for the measurement of impairment in accordance with ASC 310-10-35-25 and 26, the Company updated its estimates of expected future cash flows in the discounted cash flow analysis to be reflective of the updated financial performance of the Bocom business and the current status of the legacy accounts receivable and unbilled receivables previously owned by the Company.

The revised cash flow analysis resulted in an impairment charge as disclosed in our Form 10-Q filed with the SEC on October 27, 2016, resulting in a remaining note receivable balance of $4.5 million as of September 30, 2016. The Company concluded that the remaining $4.5 million was collectible which was primarily supported by certain specific receivable balances. No additional impairment charges have been recorded subsequent to September 30, 2016.

If you should have any further questions or comments, please contact me at 317-810-3372.

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