Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2017shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | WEST PHARMACEUTICAL SERVICES INC |
Entity Central Index Key | 105,770 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 74,252,923 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q3 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2017 |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Net sales | $ 398.2 | $ 376.7 | $ 1,183.5 | $ 1,126.8 |
Cost of goods and services sold | 273.2 | 255.6 | 799.4 | 749.1 |
Gross profit | 125 | 121.1 | 384.1 | 377.7 |
Research and development | 9.1 | 9 | 29.4 | 27.2 |
Selling, general and administrative expenses | 61.5 | 58.3 | 183.7 | 178.9 |
Other (income) expense (Note 12) | (9.5) | 2.5 | 3.1 | 29.1 |
Operating profit | 63.9 | 51.3 | 167.9 | 142.5 |
Interest expense | 1.3 | 2.2 | 5.7 | 6.7 |
Interest income | 0.3 | 0.2 | 0.9 | 0.8 |
Income before income taxes | 62.9 | 49.3 | 163.1 | 136.6 |
Income tax expense | 14 | 14.4 | 19.1 | 38.3 |
Equity in net income of affiliated companies | 2.1 | 2.7 | 6.7 | 6.2 |
Net income | $ 51 | $ 37.6 | $ 150.7 | $ 104.5 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.69 | $ 0.51 | $ 2.04 | $ 1.43 |
Diluted (in dollars per share) | $ 0.67 | $ 0.50 | $ 1.99 | $ 1.40 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 74.2 | 73.3 | 73.8 | 73 |
Diluted (in shares) | 75.9 | 75 | 75.8 | 74.7 |
Dividends declared per share | $ 0.14 | $ 0.13 | $ 0.40 | $ 0.37 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 51 | $ 37.6 | $ 150.7 | $ 104.5 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | 22.5 | 5.9 | 64.7 | 15.9 |
Defined benefit pension and other postretirement plan adjustments, net of tax of $(0.3), $0.3, $(0.7) and $0.9, respectively | (0.7) | 0.6 | (1.6) | 2.2 |
Net loss on investment securities, net of tax of $(2.9) | 0 | 0 | (5.1) | 0 |
Net (loss) gain on derivatives, net of tax of $(0.2), $(0.1), $(0.5) and $0.4, respectively | (0.6) | 0 | (1.8) | 0.7 |
Other comprehensive income, net of tax | 21.2 | 6.5 | 56.2 | 18.8 |
Comprehensive income | $ 72.2 | $ 44.1 | $ 206.9 | $ 123.3 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Defined benefit pension and other postretirement plan adjustments, tax | $ (0.3) | $ 0.3 | $ (0.7) | $ 0.9 |
Net gain on investment securities, tax | 0 | 0 | (2.9) | 0 |
Net gains on derivatives, tax | $ (0.2) | $ (0.1) | $ (0.5) | $ 0.4 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 269.3 | $ 203 |
Accounts receivable, net | 251.8 | 200.5 |
Inventories | 215.8 | 199.3 |
Other current assets | 40 | 39.1 |
Total current assets | 776.9 | 641.9 |
Property, plant and equipment | 1,701.2 | 1,554.7 |
Less: accumulated depreciation and amortization | 865.8 | 776.4 |
Property, plant and equipment, net | 835.4 | 778.3 |
Investments in affiliated companies | 84.6 | 82.7 |
Goodwill | 107.1 | 103 |
Deferred income taxes | 87.2 | 66.2 |
Intangible assets, net | 22.5 | 23.3 |
Other noncurrent assets | 16.7 | 21.3 |
Total Assets | 1,930.4 | 1,716.7 |
Current liabilities: | ||
Notes payable and other current debt | 33.2 | 2.4 |
Accounts payable | 121.9 | 122 |
Pension and other postretirement benefits | 2.3 | 2.2 |
Accrued salaries, wages and benefits | 62.9 | 51.6 |
Income taxes payable | 7.4 | 4.5 |
Other current liabilities | 72.3 | 58.3 |
Total current liabilities | 300 | 241 |
Long-term debt | 196.6 | 226.2 |
Deferred income taxes | 8.9 | 9.2 |
Pension and other postretirement benefits | 62 | 75.6 |
Other long-term liabilities | 46 | 47.2 |
Total Liabilities | 613.5 | 599.2 |
Commitments and contingencies (Note 14) | ||
Equity: | ||
Preferred stock, 3.0 million shares authorized; 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.25 par value; 100.0 million shares authorized; issued: 75.1 million and 73.7 million; outstanding: 74.3 million and 73.1 million | 18.7 | 18.4 |
Capital in excess of par value | 302.9 | 260.4 |
Retained earnings | 1,188.6 | 1,071.6 |
Accumulated other comprehensive loss | (130.6) | (186.8) |
Treasury stock, at cost (0.8 million and 0.6 million shares) | (62.7) | (46.1) |
Total Equity | 1,316.9 | 1,117.5 |
Total Liabilities and Equity | $ 1,930.4 | $ 1,716.7 |
CONDENSED CONSOLIDATED BALANCE6
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares shares in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Balance Sheet Related Disclosures [Abstract] | ||
Preferred stock, shares authorized (in shares) | 3 | 3 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.25 | $ 0.25 |
Common stock, shares authorized (in shares) | 100 | 100 |
Common stock, shares issued (in shares) | 75.1 | 73.7 |
Common stock, shares outstanding (in shares) | 74.3 | 73.1 |
Treasury stock, at cost (in shares) | 0.8 | 0.6 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED) - 9 months ended Sep. 30, 2017 - USD ($) shares in Millions, $ in Millions | Total | Common Stock [Member] | Capital in Excess of Par Value [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] |
Balance at Dec. 31, 2016 | $ 1,117.5 | $ 18.4 | $ 260.4 | $ (46.1) | $ 1,071.6 | $ (186.8) |
Balance (in shares) at Dec. 31, 2016 | 73.7 | |||||
Increase (Decrease) in Equity [Roll Forward] | ||||||
Net income | 150.7 | 150.7 | ||||
Stock-based compensation | 11.8 | 4.3 | 7.5 | |||
Shares issued under stock plans (shares) | 1.4 | |||||
Shares issued under stock plans | 40.4 | $ 0.3 | 33.9 | 6.2 | ||
Shares repurchased under share repurchase program | (26.9) | (26.9) | ||||
Shares repurchased for employee tax withholdings (shares) | 0 | |||||
Shares repurchased for employee tax withholdings | (3.8) | (0.4) | (3.4) | |||
Dividends declared | (29.6) | (29.6) | ||||
Other adjustments to capital in excess of par value | (4.7) | (4.7) | ||||
Other comprehensive income, net of tax | 56.2 | 56.2 | ||||
Balance at Sep. 30, 2017 | 1,316.9 | $ 18.7 | $ 302.9 | $ (62.7) | 1,188.6 | $ (130.6) |
Balance (in shares) at Sep. 30, 2017 | 75.1 | |||||
Increase (Decrease) in Equity [Roll Forward] | ||||||
Effect of modified retrospective application of a new accounting standard | $ (4.1) | $ (4.1) |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 150.7 | $ 104.5 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 69.9 | 65.9 |
Amortization | 1.9 | 2 |
Stock-based compensation | 13.6 | 14.1 |
Non-cash restructuring charges | 0 | 15.9 |
Venezuela deconsolidation | 11.1 | 0 |
Other non-cash items, net | (3.2) | (3.7) |
Changes in assets and liabilities | (62.2) | (51.1) |
Net cash provided by operating activities | 181.8 | 147.6 |
Cash flows from investing activities: | ||
Capital expenditures | (101.3) | (122.7) |
Purchase of cost-method investment | 0 | 8.4 |
Cash related to deconsolidated Venezuela subsidiary | (6) | 0 |
Other, net | 3.1 | 2 |
Net cash used in investing activities | (104.2) | (129.1) |
Cash flows from financing activities: | ||
Repayments of long-term debt | (1.8) | (69.2) |
Dividend payments | (28.7) | (26.2) |
Excess tax benefit from employee stock plans | 0 | 13.9 |
Shares purchased under share repurchase program | (26.9) | (26.8) |
Shares repurchased for employee tax withholdings | (3.8) | (3.7) |
Proceeds from exercise of stock options and stock appreciation rights | 36 | 21.8 |
Employee stock purchase plan contributions | 3.2 | 2.8 |
Contingent consideration payments | (0.5) | (0.1) |
Net cash used in financing activities | (22.5) | (87.5) |
Effect of exchange rates on cash | 11.2 | 0.3 |
Net increase (decrease) in cash and cash equivalents | 66.3 | (68.7) |
Cash and cash equivalents at beginning of period | 203 | 274.6 |
Cash and cash equivalents at end of period | $ 269.3 | $ 205.9 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation : The condensed consolidated financial statements included in this report are unaudited and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and U.S. Securities and Exchange Commission (“SEC”) regulations. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, these financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair statement of the financial position, results of operations, cash flows and the change in equity for the periods presented. The condensed consolidated financial statements for the three and nine months ended September 30, 2017 should be read in conjunction with the consolidated financial statements and notes thereto of West Pharmaceutical Services, Inc. and its majority-owned subsidiaries (which may be referred to as “West”, the “Company”, “we”, “us” or “our”) appearing in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “ 2016 Annual Report”). The results of operations for any interim period are not necessarily indicative of results for the full year. As of April 1, 2017, our consolidated financial statements exclude the results of our Venezuelan subsidiary. Please refer to Note 12, Other (Income) Expense , for further discussion. |
New Accounting Standards
New Accounting Standards | 9 Months Ended |
Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards Recently Adopted Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance which removes the second step of the goodwill impairment test. A goodwill impairment charge will now be the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements. In January 2017, the FASB issued guidance which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements. In October 2016, the FASB issued guidance which requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We adopted this guidance as of January 1, 2017, on a modified retrospective basis. As a result of the adoption, a cumulative-effect adjustment of $4.1 million was recorded within retained earnings in our condensed consolidated balance sheet as of January 1, 2017, for unamortized tax expense previously deferred and previously unrecognized deferred tax assets. In March 2016, the FASB issued guidance that simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We adopted this guidance as of January 1, 2017, on a prospective basis as it relates to the timing or recognition and classification of share-based compensation award-related income tax effects. For the three and nine months ended September 30, 2017 , we recorded a tax benefit of $4.8 million and $30.3 million , respectively, within income tax expense in our condensed consolidated statement of income. These tax benefits were recorded within capital in excess of par value in our condensed consolidated balance sheet in the prior-year period. Also per the amended guidance, we classified the $30.3 million of excess tax benefits within net cash provided by operating activities in our condensed consolidated statement of cash flows, rather than net cash used in financing activities, which included the excess tax benefits for the nine months ended September 30, 2016 . The amended guidance allows entities to account for award forfeitures as they occur, however, we have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. We expect to record additional tax benefits throughout 2017 . In March 2016, the FASB issued guidance that simplifies the transition to the equity method of accounting. This guidance eliminates the requirement to retroactively adopt the equity method of accounting when there is an increase in the level of ownership interest or degree of influence. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements. In July 2015, the FASB issued guidance regarding the subsequent measurement of inventory. This guidance requires inventory measured using any method other than last-in, first-out or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value represents estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements. Standards Issued Not Yet Adopted In August 2017, the FASB issued guidance which expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating our adoption timing and the impact that this guidance will have on our financial statements. In May 2017, the FASB issued guidance which amends the scope of modification accounting for share-based payment arrangements. The guidance focuses on changes to the terms or conditions of share-based payment awards that would require the application of modification accounting and specifies that an entity would not apply modification accounting if its fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our financial statements. In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost). The guidance requires the bifurcation of net benefit cost. The service cost component will be presented with other employee compensation costs in operating income (or capitalized in assets) and the other components will be reported separately outside of operations, and will not be eligible for capitalization. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. Upon adoption, we will apply the income statement classification provisions of this guidance retrospectively, and will reclassify net benefit cost components other than service cost from operating income to outside of operations. Net periodic benefit cost for the three and nine months ended September 30, 2017 was $1.4 million and $5.3 million , respectively, of which $2.5 million and $7.8 million , respectively, related to service cost. This guidance has no impact on net income. In November 2016, the FASB issued guidance on the classification and presentation of restricted cash in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. As of September 30, 2017 , we had no restricted cash. In August 2016, the FASB issued guidance to reduce the diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our financial statements. In February 2016, the FASB issued guidance on the accounting for leases. This guidance requires lessees to recognize lease assets and lease liabilities on the balance sheet and to expand disclosures about leasing arrangements, both qualitative and quantitative. In terms of transition, the guidance requires adoption based upon a modified retrospective approach. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. We are currently evaluating the impact that this guidance will have on our financial statements. As of September 30, 2017 , future minimum rental payments under non-cancelable operating leases were $77.6 million . In January 2016, the FASB issued guidance that addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We believe that the adoption of this guidance will not have a material impact on our financial statements. In May 2014, the FASB issued guidance on the accounting for revenue from contracts with customers that will supersede most existing revenue recognition guidance, including industry-specific guidance. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the guidance requires enhanced disclosures regarding the nature, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. The FASB subsequently issued additional clarifying standards to address issues arising from implementation of the new revenue recognition standard. This guidance is effective for interim and annual reporting periods beginning on or after December 15, 2017. Early adoption is permitted as of one year prior to the current effective date. Entities can choose to apply the guidance using either a full retrospective approach or a modified retrospective approach. Based on the results of the procedures performed through September 30, 2017 , which has included a review of a representative sample of our contracts across our reportable segments and revenue streams, we believe that the adoption of this guidance will not have a material impact on our financial statements, particularly as the majority of our net sales relates to the sale of packaging components. We continue to review the impact that the adoption of this guidance will have on our other revenue streams, our financial statement disclosures, as well as our accounting policies, business processes, and internal controls. We expect to apply the guidance using the modified retrospective approach. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share The following table reconciles the shares used in the calculation of basic net income per share to those used for diluted net income per share: Three Months Ended Nine Months Ended (In millions) 2017 2016 2017 2016 Net income $ 51.0 $ 37.6 $ 150.7 $ 104.5 Weighted average common shares outstanding 74.2 73.3 73.8 73.0 Dilutive effect of equity awards, based on the treasury stock method 1.7 1.7 2.0 1.7 Weighted average shares assuming dilution 75.9 75.0 75.8 74.7 During the three months ended September 30, 2017 and 2016 , there were 0.5 million and 0.1 million shares, respectively, from stock-based compensation plans not included in the computation of diluted net income per share because their impact was antidilutive. There were 0.4 million and 0.1 million antidilutive shares outstanding during the nine months ended September 30, 2017 and 2016 , respectively. In December 2016, we announced a share repurchase program authorizing the repurchase of up to 800,000 shares of our common stock from time to time on the open market or in privately-negotiated transactions as permitted under the Securities Exchange Act of 1934 Rule 10b-18. The number of shares to be repurchased and the timing of such transactions will depend on a variety of factors, including market conditions. The program commenced on January 1, 2017 and is expected to be completed by December 31, 2017. There were no shares purchased during the three months ended September 30, 2017 . During the nine months ended September 30, 2017 , we purchased 325,000 shares of our common stock under the program at a cost of $26.9 million , or an average price of $82.84 per share. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are valued at the lower of cost (on a first-in, first-out basis) and net realizable value. Inventory balances were as follows: ($ in millions) September 30, December 31, Raw materials $ 89.2 $ 78.0 Work in process 33.7 28.9 Finished goods 92.9 92.4 $ 215.8 $ 199.3 |
Affiliated Companies
Affiliated Companies | 9 Months Ended |
Sep. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Affiliated Companies | Affiliated Companies At September 30, 2017 and December 31, 2016 , the aggregate carrying amount of investments in equity-method affiliates was $71.2 million and $69.3 million , respectively, and the aggregate carrying amount of cost-method investments, for which fair value was not readily determinable, was $13.4 million at both period-ends. We test our cost-method investments for impairment whenever circumstances indicate that the carrying value of the investments may not be recoverable. Please refer to Note 5, Affiliated Companies , to the consolidated financial statements in our 2016 Annual Report for additional details. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following table summarizes our long-term debt obligations, net of unamortized debt issuance costs and current maturities. The interest rates shown in parentheses are as of September 30, 2017. ($ in millions) September 30, December 31, Term loan, due January 1, 2018 (2.74%) $ 33.1 $ 34.9 Note payable, due December 31, 2019 0.1 0.2 Credit Facility, due October 15, 2020 (1.00%) 29.3 26.4 Series A notes, due July 5, 2022 (3.67%) 42.0 42.0 Series B notes, due July 5, 2024 (3.82%) 53.0 53.0 Series C notes, due July 5, 2027 (4.02%) 73.0 73.0 230.5 229.5 Less: unamortized debt issuance costs 0.7 0.9 Total debt 229.8 228.6 Less: current portion of long-term debt 33.2 2.4 Long-term debt, net $ 196.6 $ 226.2 Please refer to Note 8, Debt , to the consolidated financial statements in our 2016 Annual Report for additional details regarding our debt agreements. At September 30, 2017 , we had $29.3 million in outstanding long-term borrowings under our $300.0 million multi-currency revolving credit facility (the “Credit Facility”), of which $4.5 million was denominated in Japanese Yen (“Yen”) and $24.8 million was denominated in Euro. These borrowings, together with outstanding letters of credit of $3.0 million , resulted in an available borrowing capacity under the Credit Facility of $267.7 million at September 30, 2017 . Please refer to Note 7, Derivative Financial Instruments , for a discussion of the foreign currency hedges associated with this facility. In addition, at September 30, 2017 , we had $33.1 million outstanding under our five -year term loan due January 2018, all of which was classified as current. Please refer to Note 7, Derivative Financial Instruments , for a discussion of the interest-rate swap agreement associated with this loan, and please refer to Note 16, Subsequent Event , for additional details regarding this loan. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments Our ongoing business operations expose us to various risks such as fluctuating interest rates, foreign exchange rates and increasing commodity prices. To manage these market risks, we periodically enter into derivative financial instruments such as interest rate swaps, options and foreign exchange contracts for periods consistent with and for notional amounts equal to or less than the related underlying exposures. We do not purchase or hold any derivative financial instruments for investment or trading purposes. All derivatives are recorded in our condensed consolidated balance sheet at fair value. Interest Rate Risk At September 30, 2017 , we had a $33.1 million forward-start interest rate swap outstanding that hedges the variability in cash flows due to changes in the applicable interest rate of our variable-rate five -year term loan. Under this swap, we receive variable interest rate payments based on one-month London Interbank Offered Rate (“LIBOR”) plus a margin in return for making monthly fixed interest payments at 5.41% . We designated this swap as a cash flow hedge. Please refer to Note 16, Subsequent Event , for additional details regarding this forward-start interest rate swap agreement. Foreign Exchange Rate Risk We have entered into forward exchange contracts, designated as fair value hedges, to manage our exposure to fluctuating foreign exchange rates on cross-currency intercompany loans. As of September 30, 2017 , the total amount of these forward exchange contracts was €72.5 million and kr 83.4 million . As of December 31, 2016 , the total amount of these forward exchange contracts was €57.5 million . In addition, we have entered into several foreign currency contracts, designated as cash flow hedges, for periods of up to eighteen months, intended to hedge the currency risk associated with a portion of our forecasted transactions denominated in foreign currencies. As of September 30, 2017 , we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows: (in millions) Sell Currency Purchase U. S. Dollar ( “ USD ” ) Euro USD 46.3 — 41.8 Yen 5,255.3 28.3 16.6 Singapore Dollar 29.9 14.6 6.2 At September 30, 2017 , a portion of our debt consisted of borrowings denominated in currencies other than USD. We have designated our €21.0 million ( $24.8 million ) Euro-denominated borrowings under our Credit Facility as a hedge of our net investment in certain European subsidiaries. A cumulative foreign currency translation loss of $1.0 million pre-tax ( $0.6 million after tax) on this debt was recorded within accumulated other comprehensive loss as of September 30, 2017 . We have also designated our ¥500.0 million ( $4.5 million ) Yen-denominated borrowings under our Credit Facility as a hedge of our net investment in Daikyo Seiko, Ltd. (“Daikyo”). At September 30, 2017 , there was a cumulative foreign currency translation loss on this Yen-denominated debt of $0.3 million pre-tax ( $0.2 million after tax), which was also included within accumulated other comprehensive loss. Commodity Price Risk Many of our proprietary products are made from synthetic elastomers, which are derived from the petroleum refining process. We purchase the majority of our elastomers via long-term supply contracts, some of which contain clauses that provide for surcharges related to fluctuations in crude oil prices. The following economic hedges did not qualify for hedge accounting treatment since they did not meet the highly effective requirement at inception. In November 2016, we purchased a series of call options for a total of 96,525 barrels of crude oil to mitigate our exposure to such oil-based surcharges and protect operating cash flows with regards to a portion of our forecasted elastomer purchases through November 2017. With these contracts, we may benefit from an increase in crude oil prices, as there is no downward exposure other than the $0.2 million premium that we paid to purchase the contracts. During the three months ended September 30, 2017, the loss recorded in cost of goods and services sold related to these call options was less than $0.1 million . During the nine months ended September 30, 2017 , the loss recorded in cost of goods and services sold related to these call options was $0.2 million . As of September 30, 2017 , we had outstanding contracts to purchase 17,550 barrels of crude oil, at a strike price of $60 per barrel. Effects of Derivative Instruments on Financial Position and Results of Operations Please refer to Note 8, Fair Value Measurements , for the balance sheet location and fair values of our derivative instruments as of September 30, 2017 and December 31, 2016 . The following table summarizes the effects of derivative instruments designated as hedges on other comprehensive income (“OCI”) and earnings, net of tax: Amount of (Loss) Gain Recognized in OCI for the Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the Location of Loss (Gain) Reclassified from Accumulated OCI into Income Three Months Ended Three Months Ended ($ in millions) 2017 2016 2017 2016 Cash Flow Hedges: Foreign currency hedge contracts $ (0.7 ) $ — $ 0.4 $ — Net sales Foreign currency hedge contracts (0.9 ) (0.3 ) 0.3 — Cost of goods and services sold Interest rate swap contracts — — 0.2 0.2 Interest expense Forward treasury locks — — 0.1 0.1 Interest expense Total $ (1.6 ) $ (0.3 ) $ 1.0 $ 0.3 Net Investment Hedges: Foreign currency-denominated debt $ (0.5 ) $ (0.2 ) $ — $ — Other (income) expense Total $ (0.5 ) $ (0.2 ) $ — $ — Amount of (Loss) Gain Recognized in OCI for the Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the Location of Loss (Gain) Reclassified from Accumulated OCI into Income Nine Months Ended Nine Months Ended ($ in millions) 2017 2016 2017 2016 Cash Flow Hedges: Foreign currency hedge contracts $ (1.6 ) $ (0.3 ) $ 0.7 $ 0.1 Net sales Foreign currency hedge contracts (2.0 ) 0.3 0.4 — Cost of goods and services sold Interest rate swap contracts — (0.2 ) 0.5 0.6 Interest expense Forward treasury locks — — 0.2 0.2 Interest expense Total $ (3.6 ) $ (0.2 ) $ 1.8 $ 0.9 Net Investment Hedges: Foreign currency-denominated debt $ (1.7 ) $ (1.3 ) $ — $ — Other (income) expense Total $ (1.7 ) $ (1.3 ) $ — $ — For the three and nine months ended September 30, 2017 and 2016 , there was no material ineffectiveness related to our hedges. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels: • Level 1 : Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2 : Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3 : Unobservable inputs that reflect the reporting entity’s own assumptions. The following tables present the assets and liabilities recorded at fair value on a recurring basis: Balance at Basis of Fair Value Measurements ($ in millions) September 30, Level 1 Level 2 Level 3 Assets: Deferred compensation assets $ 8.5 $ 8.5 $ — $ — Foreign currency contracts 1.0 — 1.0 — $ 9.5 $ 8.5 $ 1.0 $ — Liabilities: Contingent consideration $ 8.0 $ — $ — $ 8.0 Deferred compensation liabilities 9.5 9.5 — — Interest rate swap contract 0.2 — 0.2 — Foreign currency contracts 4.7 — 4.7 — $ 22.4 $ 9.5 $ 4.9 $ 8.0 Balance at Basis of Fair Value Measurements ($ in millions) December 31, Level 1 Level 2 Level 3 Assets: Deferred compensation assets $ 7.4 $ 7.4 $ — $ — Foreign currency contracts 0.2 — 0.2 — $ 7.6 $ 7.4 $ 0.2 $ — Liabilities: Contingent consideration $ 8.0 $ — $ — $ 8.0 Deferred compensation liabilities 8.4 8.4 — — Interest rate swap contract 1.0 — 1.0 — Foreign currency contracts 1.6 — 1.6 — $ 19.0 $ 8.4 $ 2.6 $ 8.0 Deferred compensation assets are included within other noncurrent assets and are valued using a market approach based on quoted market prices in an active market. The fair value of our foreign currency contracts, included within other current assets and other current liabilities, is valued using an income approach based on quoted forward foreign exchange rates and spot rates at the reporting date. The fair value of our contingent consideration, included within other current and other long-term liabilities, is discussed further in the section related to Level 3 fair value measurements. The fair value of deferred compensation liabilities is based on quoted prices of the underlying employees’ investment selections and is included within other long-term liabilities. Our interest rate swap, included within other current and other long-term liabilities, is valued based on the terms of the contract and observable market inputs (i.e., LIBOR, Eurodollar synthetic forwards and swap spreads). Please refer to Note 7, Derivative Financial Instruments , for further discussion of our derivatives. Level 3 Fair Value Measurements The fair value of the contingent consideration liability related to the SmartDose ® technology platform (the “SmartDose contingent consideration”) was initially determined using a probability-weighted income approach, and is revalued at each reporting date or more frequently if circumstances dictate. Changes in the fair value of this obligation are recorded as income or expense within other (income) expense in our condensed consolidated statements of income. The significant unobservable inputs used in the fair value measurement of the SmartDose contingent consideration are the sales projections, the probability of success factors, and the discount rate. Significant increases or decreases in any of those inputs in isolation would result in a significantly lower or higher fair value measurement. As development and commercialization of the SmartDose technology platform progresses, we may need to update the sales projections, the probability of success factors, and the discount rate used. This could result in a material increase or decrease to the SmartDose contingent consideration. The following table provides a summary of changes in our Level 3 fair value measurements: ($ in millions) Balance, December 31, 2015 $ 6.0 Increase in fair value recorded in earnings 2.3 Payments (0.3 ) Balance, December 31, 2016 8.0 Increase in fair value recorded in earnings 0.5 Payments (0.5 ) Balance, September 30, 2017 $ 8.0 Other Financial Instruments We believe that the carrying amounts of our cash and cash equivalents and accounts receivable approximate their fair values due to their near-term maturities. The estimated fair value of long-term debt is based on quoted market prices for debt issuances with similar terms and maturities and is classified as Level 2 within the fair value hierarchy. At September 30, 2017 , the estimated fair value of long-term debt was $201.0 million compared to a carrying amount of $196.6 million . At December 31, 2016 , the estimated fair value of long-term debt was $228.3 million and the carrying amount was $226.2 million . |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The West Pharmaceutical Services, Inc. 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”) provides for the granting of stock options, stock appreciation rights, restricted stock awards and performance awards to employees and non-employee directors. A committee of the Board of Directors determines the terms and conditions of awards to be granted. Vesting requirements vary by award. At September 30, 2017 , there were 4,602,225 shares remaining in the 2016 Plan for future grants. During the nine months ended September 30, 2017 , we granted 443,936 stock options at a weighted average exercise price of $83.88 per share based on the grant-date fair value of our stock to key employees under the 2016 Plan. The weighted average grant date fair value of options granted was $18.04 per share as determined by the Black-Scholes option valuation model using the following weighted average assumptions: a risk-free interest rate of 2.04% ; expected life of 5.9 years based on prior experience; stock volatility of 19.9% based on historical data; and a dividend yield of 0.7% . Stock option expense is recognized over the vesting period, net of forfeitures. During the nine months ended September 30, 2017 , we granted 91,803 performance share unit (“PSU”) awards at a weighted average grant-date fair value of $83.97 per share to key employees under the 2016 Plan. Each PSU award entitles the holder to one share of our common stock if the annual growth rate of revenue and return on invested capital targets are achieved over a three -year performance period. Shares earned under PSU awards may vary from 0% to 200% of an employee’s targeted award. The fair value of PSU awards is based on the market price of our stock at the grant date and is recognized as expense over the performance period, adjusted for estimated target outcomes and net of forfeitures. Total stock-based compensation expense for both the three months ended September 30, 2017 and 2016 was $4.6 million . For the nine months ended September 30, 2017 and 2016 , stock-based compensation expense was $13.6 million and $14.1 million , respectively. |
Benefit Plans
Benefit Plans | 9 Months Ended |
Sep. 30, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Benefit Plans | Benefit Plans The components of net periodic benefit cost for the three months ended September 30 were as follows ($ in millions): Pension benefits Other retirement benefits Total 2017 2016 2017 2016 2017 2016 Service cost $ 2.5 $ 2.3 $ — $ 0.1 $ 2.5 $ 2.4 Interest cost 2.4 2.7 — 0.1 2.4 2.8 Expected return on assets (3.4 ) (3.1 ) — — (3.4 ) (3.1 ) Amortization of prior service credit (0.3 ) (0.3 ) (0.1 ) — (0.4 ) (0.3 ) Recognized actuarial losses (gains) 1.2 1.3 (0.9 ) (0.3 ) 0.3 1.0 Net periodic benefit cost $ 2.4 $ 2.9 $ (1.0 ) $ (0.1 ) $ 1.4 $ 2.8 Pension benefits Other retirement benefits Total 2017 2016 2017 2016 2017 2016 U.S. plans $ 1.7 $ 2.3 $ (1.0 ) $ (0.1 ) $ 0.7 $ 2.2 International plans 0.7 0.6 — — 0.7 0.6 Net periodic benefit cost $ 2.4 $ 2.9 $ (1.0 ) $ (0.1 ) $ 1.4 $ 2.8 The components of net periodic benefit cost for the nine months ended September 30 were as follows ($ in millions): Pension benefits Other retirement benefits Total 2017 2016 2017 2016 2017 2016 Service cost $ 7.8 $ 7.6 $ — $ 0.4 $ 7.8 $ 8.0 Interest cost 7.3 7.9 0.2 0.3 7.5 8.2 Expected return on assets (10.1 ) (9.5 ) — — (10.1 ) (9.5 ) Amortization of transition obligation — 0.1 — — — 0.1 Amortization of prior service credit (1.0 ) (1.0 ) (0.5 ) — (1.5 ) (1.0 ) Recognized actuarial losses (gains) 3.6 3.6 (2.0 ) (1.0 ) 1.6 2.6 Net periodic benefit cost $ 7.6 $ 8.7 $ (2.3 ) $ (0.3 ) $ 5.3 $ 8.4 Pension benefits Other retirement benefits Total 2017 2016 2017 2016 2017 2016 U.S. plans $ 5.5 $ 6.9 $ (2.3 ) $ (0.3 ) $ 3.2 $ 6.6 International plans 2.1 1.8 — — 2.1 1.8 Net periodic benefit cost $ 7.6 $ 8.7 $ (2.3 ) $ (0.3 ) $ 5.3 $ 8.4 During the nine months ended September 30, 2017 , we contributed $20.0 million to our U.S. qualified pension plan. Effective January 1, 2019, except for interest crediting, benefit accruals under our U.S. qualified and non-qualified defined benefit pension plans will cease. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table presents the changes in the components of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2017 : ($ in millions) Losses on cash flow hedges Unrealized gains on investment securities Defined benefit pension and other postretirement plans Foreign currency translation Total Balance, December 31, 2016 $ (3.2 ) $ 5.2 $ (45.4 ) $ (143.4 ) $ (186.8 ) Other comprehensive (loss) income before reclassifications (3.6 ) (5.1 ) (1.8 ) 64.7 54.2 Amounts reclassified out 1.8 — 0.2 — 2.0 Other comprehensive (loss) income, net of tax (1.8 ) (5.1 ) (1.6 ) 64.7 56.2 Balance, September 30, 2017 $ (5.0 ) $ 0.1 $ (47.0 ) $ (78.7 ) $ (130.6 ) A summary of the reclassifications out of accumulated other comprehensive loss is presented in the following table ($ in millions): Three Months Ended Nine Months Ended Location on Statement of Income Detail of components 2017 2016 2017 2016 Losses on cash flow hedges: Foreign currency contracts $ (0.5 ) $ — $ (0.8 ) $ — Net sales Foreign currency contracts (0.5 ) (0.1 ) (0.6 ) (0.2 ) Cost of goods and services sold Interest rate swap contracts (0.2 ) (0.3 ) (0.7 ) (1.0 ) Interest expense Forward treasury locks (0.1 ) (0.1 ) (0.3 ) (0.2 ) Interest expense Total before tax (1.3 ) (0.5 ) (2.4 ) (1.4 ) Tax expense 0.3 0.2 0.6 0.5 Net of tax $ (1.0 ) $ (0.3 ) $ (1.8 ) $ (0.9 ) Amortization of defined benefit pension and other postretirement plans: Transition obligation $ — $ — $ — $ (0.1 ) (a) Prior service credit 0.4 0.3 1.5 1.0 (a) Actuarial losses (0.3 ) (1.0 ) (1.6 ) (2.6 ) (a) Total before tax 0.1 (0.7 ) (0.1 ) (1.7 ) Tax expense (0.1 ) 0.2 (0.1 ) 0.6 Net of tax $ — $ (0.5 ) $ (0.2 ) $ (1.1 ) Total reclassifications for the period, net of tax $ (1.0 ) $ (0.8 ) $ (2.0 ) $ (2.0 ) (a) These components are included in the computation of net periodic benefit cost. Please refer to Note 10, Benefit Plans , for additional details. |
Other Expense
Other Expense | 9 Months Ended |
Sep. 30, 2017 | |
Other Income and Expenses [Abstract] | |
Other Expense | Other (Income) Expense Other (income) expense consists of: Three Months Ended Nine Months Ended ($ in millions) 2017 2016 2017 2016 Restructuring and related charges: Severance and post-employment benefits $ — $ 1.4 $ — $ 7.8 Asset-related charges — 0.9 — 15.9 Total restructuring and related charges — 2.3 — 23.7 Venezuela currency devaluation — — — 2.7 Venezuela deconsolidation — — 11.1 — Development and licensing income (9.5 ) (0.4 ) (10.3 ) (1.2 ) Contingent consideration costs (0.2 ) — 0.5 1.9 Other items 0.2 0.6 1.8 2.0 Total other (income) expense $ (9.5 ) $ 2.5 $ 3.1 $ 29.1 Restructuring and Related Charges On February 15, 2016, our Board of Directors approved a restructuring plan designed to repurpose several of our production facilities in support of growing high-value proprietary products and to realign operational and commercial activities to meet the needs of our new market-focused commercial organization. During the three months ended September 30, 2016 , we recorded $2.3 million in restructuring and related charges, consisting of $1.4 million for severance charges and $0.9 million for a non-cash asset write-down associated with the discontinued use of certain equipment. During the nine months ended September 30, 2016 , we incurred $23.7 million in restructuring and related charges, consisting of $7.8 million for severance charges, $10.0 million for a non-cash asset write-down associated with the discontinued use of a trademark, and $5.9 million for non-cash asset write-downs associated with the discontinued use of a patent and certain equipment. The following table presents activity related to our restructuring obligations: ($ in millions) Severance and benefits Asset-related charges Other charges Total Balance, December 31, 2015 $ — $ — $ — $ — Charges 8.9 17.3 0.2 26.4 Cash payments (3.0 ) — — (3.0 ) Non-cash asset write-downs — (17.3 ) (0.2 ) (17.5 ) Balance, December 31, 2016 5.9 — — 5.9 Cash payments (2.9 ) — — (2.9 ) Balance, 9/30/2017 $ 3.0 $ — $ — $ 3.0 The balance of the charges related to this plan will be recognized as incurred in 2017. Other Items On February 17, 2016, the Venezuelan government announced a devaluation of the Bolivar, from the previously-prevailing official exchange rate of 6.3 Bolivars to USD to 10.0 Bolivars to USD, and streamlined the previous three-tiered currency exchange mechanism into a dual currency exchange mechanism. As a result, during the nine months ended September 30, 2016 , we recorded a $2.7 million charge. During the nine months ended September 30, 2017 , as a result of the continued deterioration of conditions in Venezuela as well as our continued reduced access to USD settlement controlled by the Venezuelan government, we recorded a charge of $11.1 million related to the deconsolidation of our Venezuelan subsidiary, following our determination that we no longer met the U.S. GAAP criteria for control of that subsidiary. This charge included the derecognition of the carrying amounts of our Venezuelan subsidiary's assets and liabilities, as well as the write-off of our investment in our Venezuelan subsidiary, related unrealized translation adjustments and the elimination of intercompany accounts. As of April 1, 2017, our consolidated financial statements exclude the results of our Venezuelan subsidiary. We will continue to actively monitor the political and economic developments in Venezuela. In addition, during the three and nine months ended September 30, 2017 , we recognized development and licensing income of $9.5 million and $10.3 million , respectively, within Proprietary Products. During the three and nine months ended September 30, 2017 , we recorded income of $9.1 million attributable to the reimbursement of certain costs related to a technology that we subsequently licensed to a third party. The license of technology to the third party may result in additional income in the future, contingent on commercialization of the related product. During both the three and nine months ended September 30, 2017 and 2016 , we recorded income of $0.4 million and $1.2 million related to a nonrefundable customer payment of $20.0 million received in June 2013 in return for the exclusive use of the SmartDose technology platform within a specific therapeutic area. As of September 30, 2017 , there was $13.2 million of unearned income related to this payment, of which $1.5 million was included in other current liabilities and $11.7 million was included in other long-term liabilities. The unearned income is being recognized as income on a straight-line basis over the remaining term of the agreement. The agreement does not include a future minimum purchase commitment from the customer. Contingent consideration costs represent changes in the fair value of the SmartDose contingent consideration. Please refer to Note 8, Fair Value Measurements , for additional details. Other items consist of foreign exchange transaction gains and losses, gains and losses on the sale of fixed assets, and miscellaneous income and charges. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings before taxes, adjusted for the impact of discrete quarterly items. The provision for income taxes was $14.0 million and $14.4 million for the three months ended September 30, 2017 and 2016 , respectively, and the effective tax rate was 22.3% and 29.3% , respectively. The provision for income taxes was $19.1 million and $38.3 million for the nine months ended September 30, 2017 and 2016 , respectively, and the effective tax rate was 11.7% and 28.1% , respectively. The decrease in the effective tax rate for the three and nine months ended September 30, 2017 , as compared to the same periods in 2016 , reflects the impact of a tax benefit of $4.8 million and $30.3 million for the three and nine months ended September 30, 2017 , respectively, associated with our adoption of the guidance issued by the FASB regarding share-based payment transactions. Please refer to Note 2, New Accounting Standards , for further discussion of the new accounting guidance. The decrease in the effective tax rate for the nine months ended September 30, 2017 , as compared to the same period in 2016, also reflects the impact of a tax benefit of $3.5 million related to a planned repatriation of approximately $65.0 million of cash held by non-U.S. subsidiaries during 2017. During the three months ended September 30, 2017, we repatriated $55.3 million of cash held by non-U.S. subsidiaries. During the remainder of 2017, we intend to repatriate approximately $10.0 million of additional cash held by non-U.S. subsidiaries. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies From time to time, we are involved in product liability matters and other legal proceedings and claims generally incidental to our normal business activities. We accrue for loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. While the outcome of current proceedings cannot be accurately predicted, we believe their ultimate resolution should not have a material adverse effect on our business, financial condition, results of operations or liquidity. There have been no significant changes to the commitments and contingencies included in our 2016 Annual Report. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Our business operations are organized into two reportable segments, Proprietary Products and Contract-Manufactured Products. Our Proprietary Products reportable segment develops commercial, operational, and innovation strategies across our global network, with specific emphasis on product offerings to biotechnology, generics, and pharmaceutical customers. Our Contract-Manufactured Products reportable segment serves as a fully integrated business focused on the design, manufacture, and automated assembly of complex devices, primarily for pharmaceutical, diagnostic, and medical device customers. Segment operating profit excludes general corporate costs, which include executive and director compensation, stock-based compensation, adjustments to annual incentive plan expense for over- or under-attainment of targets, certain pension and other retirement benefit costs, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that we consider not representative of ongoing operations. Such items are referred to as other unallocated items and generally include restructuring and related charges, certain asset impairments and other specifically-identified income or expense items. The following table presents information about our reportable segments, reconciled to consolidated totals: Three Months Ended Nine Months Ended ($ in millions) 2017 2016 2017 2016 Net sales: Proprietary Products $ 308.9 $ 298.1 $ 930.5 $ 899.9 Contract-Manufactured Products 89.3 79.0 253.3 227.8 Intersegment sales elimination — (0.4 ) (0.3 ) (0.9 ) Consolidated net sales $ 398.2 $ 376.7 $ 1,183.5 $ 1,126.8 Operating profit (loss): Proprietary Products $ 67.0 $ 57.5 $ 188.2 $ 185.6 Contract-Manufactured Products 10.8 8.9 30.1 25.6 Corporate (13.9 ) (12.8 ) (39.3 ) (42.3 ) Other unallocated items — (2.3 ) (11.1 ) (26.4 ) Total operating profit $ 63.9 $ 51.3 $ 167.9 $ 142.5 Interest expense 1.3 2.2 5.7 6.7 Interest income 0.3 0.2 0.9 0.8 Income before income taxes $ 62.9 $ 49.3 $ 163.1 $ 136.6 The intersegment sales elimination, which is required for the presentation of consolidated net sales, represents the elimination of components sold between our segments. Other unallocated items, during the nine months ended September 30, 2017 , consisted of a charge of $11.1 million related to the deconsolidation of our Venezuelan subsidiary. Other unallocated items, during the three and nine months ended September 30, 2016 , consisted of $2.3 million and $23.7 million , respectively, in restructuring and related charges. In addition, during the nine months ended September 30, 2016 , other unallocated items included a charge of $2.7 million related to the devaluation of the Venezuelan Bolivar from the previously-prevailing official exchange rate of 6.3 Bolivars to USD to 10.0 Bolivars to USD. Please refer to Note 12, Other (Income) Expense , for further discussion of these items. |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | Subsequent Event On October 2, 2017, we paid our $33.1 million five -year term loan due January 2018 and terminated the associated interest-rate swap agreement. There was no material gain or loss on the extinguishment of this loan. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation : The condensed consolidated financial statements included in this report are unaudited and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and U.S. Securities and Exchange Commission (“SEC”) regulations. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, these financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair statement of the financial position, results of operations, cash flows and the change in equity for the periods presented. The condensed consolidated financial statements for the three and nine months ended September 30, 2017 should be read in conjunction with the consolidated financial statements and notes thereto of West Pharmaceutical Services, Inc. and its majority-owned subsidiaries (which may be referred to as “West”, the “Company”, “we”, “us” or “our”) appearing in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “ 2016 Annual Report”). The results of operations for any interim period are not necessarily indicative of results for the full year. As of April 1, 2017, our consolidated financial statements exclude the results of our Venezuelan subsidiary. Please refer to Note 12, Other (Income) Expense , for further discussion. |
New Accounting Standards | Recently Adopted Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance which removes the second step of the goodwill impairment test. A goodwill impairment charge will now be the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements. In January 2017, the FASB issued guidance which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements. In October 2016, the FASB issued guidance which requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We adopted this guidance as of January 1, 2017, on a modified retrospective basis. As a result of the adoption, a cumulative-effect adjustment of $4.1 million was recorded within retained earnings in our condensed consolidated balance sheet as of January 1, 2017, for unamortized tax expense previously deferred and previously unrecognized deferred tax assets. In March 2016, the FASB issued guidance that simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We adopted this guidance as of January 1, 2017, on a prospective basis as it relates to the timing or recognition and classification of share-based compensation award-related income tax effects. For the three and nine months ended September 30, 2017 , we recorded a tax benefit of $4.8 million and $30.3 million , respectively, within income tax expense in our condensed consolidated statement of income. These tax benefits were recorded within capital in excess of par value in our condensed consolidated balance sheet in the prior-year period. Also per the amended guidance, we classified the $30.3 million of excess tax benefits within net cash provided by operating activities in our condensed consolidated statement of cash flows, rather than net cash used in financing activities, which included the excess tax benefits for the nine months ended September 30, 2016 . The amended guidance allows entities to account for award forfeitures as they occur, however, we have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. We expect to record additional tax benefits throughout 2017 . In March 2016, the FASB issued guidance that simplifies the transition to the equity method of accounting. This guidance eliminates the requirement to retroactively adopt the equity method of accounting when there is an increase in the level of ownership interest or degree of influence. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements. In July 2015, the FASB issued guidance regarding the subsequent measurement of inventory. This guidance requires inventory measured using any method other than last-in, first-out or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value represents estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this guidance as of January 1, 2017, on a prospective basis. The adoption did not have a material impact on our financial statements. Standards Issued Not Yet Adopted In August 2017, the FASB issued guidance which expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating our adoption timing and the impact that this guidance will have on our financial statements. In May 2017, the FASB issued guidance which amends the scope of modification accounting for share-based payment arrangements. The guidance focuses on changes to the terms or conditions of share-based payment awards that would require the application of modification accounting and specifies that an entity would not apply modification accounting if its fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our financial statements. In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost). The guidance requires the bifurcation of net benefit cost. The service cost component will be presented with other employee compensation costs in operating income (or capitalized in assets) and the other components will be reported separately outside of operations, and will not be eligible for capitalization. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. Upon adoption, we will apply the income statement classification provisions of this guidance retrospectively, and will reclassify net benefit cost components other than service cost from operating income to outside of operations. Net periodic benefit cost for the three and nine months ended September 30, 2017 was $1.4 million and $5.3 million , respectively, of which $2.5 million and $7.8 million , respectively, related to service cost. This guidance has no impact on net income. In November 2016, the FASB issued guidance on the classification and presentation of restricted cash in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. As of September 30, 2017 , we had no restricted cash. In August 2016, the FASB issued guidance to reduce the diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our financial statements. In February 2016, the FASB issued guidance on the accounting for leases. This guidance requires lessees to recognize lease assets and lease liabilities on the balance sheet and to expand disclosures about leasing arrangements, both qualitative and quantitative. In terms of transition, the guidance requires adoption based upon a modified retrospective approach. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. We are currently evaluating the impact that this guidance will have on our financial statements. As of September 30, 2017 , future minimum rental payments under non-cancelable operating leases were $77.6 million . In January 2016, the FASB issued guidance that addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We believe that the adoption of this guidance will not have a material impact on our financial statements. In May 2014, the FASB issued guidance on the accounting for revenue from contracts with customers that will supersede most existing revenue recognition guidance, including industry-specific guidance. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the guidance requires enhanced disclosures regarding the nature, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. The FASB subsequently issued additional clarifying standards to address issues arising from implementation of the new revenue recognition standard. This guidance is effective for interim and annual reporting periods beginning on or after December 15, 2017. Early adoption is permitted as of one year prior to the current effective date. Entities can choose to apply the guidance using either a full retrospective approach or a modified retrospective approach. Based on the results of the procedures performed through September 30, 2017 , which has included a review of a representative sample of our contracts across our reportable segments and revenue streams, we believe that the adoption of this guidance will not have a material impact on our financial statements, particularly as the majority of our net sales relates to the sale of packaging components. We continue to review the impact that the adoption of this guidance will have on our other revenue streams, our financial statement disclosures, as well as our accounting policies, business processes, and internal controls. We expect to apply the guidance using the modified retrospective approach. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic to Diluted Net Income Per Share | The following table reconciles the shares used in the calculation of basic net income per share to those used for diluted net income per share: Three Months Ended Nine Months Ended (In millions) 2017 2016 2017 2016 Net income $ 51.0 $ 37.6 $ 150.7 $ 104.5 Weighted average common shares outstanding 74.2 73.3 73.8 73.0 Dilutive effect of equity awards, based on the treasury stock method 1.7 1.7 2.0 1.7 Weighted average shares assuming dilution 75.9 75.0 75.8 74.7 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories are valued at the lower of cost (on a first-in, first-out basis) and net realizable value. Inventory balances were as follows: ($ in millions) September 30, December 31, Raw materials $ 89.2 $ 78.0 Work in process 33.7 28.9 Finished goods 92.9 92.4 $ 215.8 $ 199.3 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long-term Debt Obligations, Net of Current Maturities | The following table summarizes our long-term debt obligations, net of unamortized debt issuance costs and current maturities. The interest rates shown in parentheses are as of September 30, 2017. ($ in millions) September 30, December 31, Term loan, due January 1, 2018 (2.74%) $ 33.1 $ 34.9 Note payable, due December 31, 2019 0.1 0.2 Credit Facility, due October 15, 2020 (1.00%) 29.3 26.4 Series A notes, due July 5, 2022 (3.67%) 42.0 42.0 Series B notes, due July 5, 2024 (3.82%) 53.0 53.0 Series C notes, due July 5, 2027 (4.02%) 73.0 73.0 230.5 229.5 Less: unamortized debt issuance costs 0.7 0.9 Total debt 229.8 228.6 Less: current portion of long-term debt 33.2 2.4 Long-term debt, net $ 196.6 $ 226.2 |
Derivative Financial Instrume29
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Foreign Currency Contracts | As of September 30, 2017 , we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows: (in millions) Sell Currency Purchase U. S. Dollar ( “ USD ” ) Euro USD 46.3 — 41.8 Yen 5,255.3 28.3 16.6 Singapore Dollar 29.9 14.6 6.2 |
Effects of Derivative Instruments on Other Comprehensive Income ('OCI') and Earnings | The following table summarizes the effects of derivative instruments designated as hedges on other comprehensive income (“OCI”) and earnings, net of tax: Amount of (Loss) Gain Recognized in OCI for the Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the Location of Loss (Gain) Reclassified from Accumulated OCI into Income Three Months Ended Three Months Ended ($ in millions) 2017 2016 2017 2016 Cash Flow Hedges: Foreign currency hedge contracts $ (0.7 ) $ — $ 0.4 $ — Net sales Foreign currency hedge contracts (0.9 ) (0.3 ) 0.3 — Cost of goods and services sold Interest rate swap contracts — — 0.2 0.2 Interest expense Forward treasury locks — — 0.1 0.1 Interest expense Total $ (1.6 ) $ (0.3 ) $ 1.0 $ 0.3 Net Investment Hedges: Foreign currency-denominated debt $ (0.5 ) $ (0.2 ) $ — $ — Other (income) expense Total $ (0.5 ) $ (0.2 ) $ — $ — Amount of (Loss) Gain Recognized in OCI for the Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the Location of Loss (Gain) Reclassified from Accumulated OCI into Income Nine Months Ended Nine Months Ended ($ in millions) 2017 2016 2017 2016 Cash Flow Hedges: Foreign currency hedge contracts $ (1.6 ) $ (0.3 ) $ 0.7 $ 0.1 Net sales Foreign currency hedge contracts (2.0 ) 0.3 0.4 — Cost of goods and services sold Interest rate swap contracts — (0.2 ) 0.5 0.6 Interest expense Forward treasury locks — — 0.2 0.2 Interest expense Total $ (3.6 ) $ (0.2 ) $ 1.8 $ 0.9 Net Investment Hedges: Foreign currency-denominated debt $ (1.7 ) $ (1.3 ) $ — $ — Other (income) expense Total $ (1.7 ) $ (1.3 ) $ — $ — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | The following tables present the assets and liabilities recorded at fair value on a recurring basis: Balance at Basis of Fair Value Measurements ($ in millions) September 30, Level 1 Level 2 Level 3 Assets: Deferred compensation assets $ 8.5 $ 8.5 $ — $ — Foreign currency contracts 1.0 — 1.0 — $ 9.5 $ 8.5 $ 1.0 $ — Liabilities: Contingent consideration $ 8.0 $ — $ — $ 8.0 Deferred compensation liabilities 9.5 9.5 — — Interest rate swap contract 0.2 — 0.2 — Foreign currency contracts 4.7 — 4.7 — $ 22.4 $ 9.5 $ 4.9 $ 8.0 Balance at Basis of Fair Value Measurements ($ in millions) December 31, Level 1 Level 2 Level 3 Assets: Deferred compensation assets $ 7.4 $ 7.4 $ — $ — Foreign currency contracts 0.2 — 0.2 — $ 7.6 $ 7.4 $ 0.2 $ — Liabilities: Contingent consideration $ 8.0 $ — $ — $ 8.0 Deferred compensation liabilities 8.4 8.4 — — Interest rate swap contract 1.0 — 1.0 — Foreign currency contracts 1.6 — 1.6 — $ 19.0 $ 8.4 $ 2.6 $ 8.0 |
Summary of Changes in Level 3 Fair Value Measurements | The following table provides a summary of changes in our Level 3 fair value measurements: ($ in millions) Balance, December 31, 2015 $ 6.0 Increase in fair value recorded in earnings 2.3 Payments (0.3 ) Balance, December 31, 2016 8.0 Increase in fair value recorded in earnings 0.5 Payments (0.5 ) Balance, September 30, 2017 $ 8.0 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Schedule of Components of Net Periodic Benefit Cost | The components of net periodic benefit cost for the three months ended September 30 were as follows ($ in millions): Pension benefits Other retirement benefits Total 2017 2016 2017 2016 2017 2016 Service cost $ 2.5 $ 2.3 $ — $ 0.1 $ 2.5 $ 2.4 Interest cost 2.4 2.7 — 0.1 2.4 2.8 Expected return on assets (3.4 ) (3.1 ) — — (3.4 ) (3.1 ) Amortization of prior service credit (0.3 ) (0.3 ) (0.1 ) — (0.4 ) (0.3 ) Recognized actuarial losses (gains) 1.2 1.3 (0.9 ) (0.3 ) 0.3 1.0 Net periodic benefit cost $ 2.4 $ 2.9 $ (1.0 ) $ (0.1 ) $ 1.4 $ 2.8 Pension benefits Other retirement benefits Total 2017 2016 2017 2016 2017 2016 U.S. plans $ 1.7 $ 2.3 $ (1.0 ) $ (0.1 ) $ 0.7 $ 2.2 International plans 0.7 0.6 — — 0.7 0.6 Net periodic benefit cost $ 2.4 $ 2.9 $ (1.0 ) $ (0.1 ) $ 1.4 $ 2.8 The components of net periodic benefit cost for the nine months ended September 30 were as follows ($ in millions): Pension benefits Other retirement benefits Total 2017 2016 2017 2016 2017 2016 Service cost $ 7.8 $ 7.6 $ — $ 0.4 $ 7.8 $ 8.0 Interest cost 7.3 7.9 0.2 0.3 7.5 8.2 Expected return on assets (10.1 ) (9.5 ) — — (10.1 ) (9.5 ) Amortization of transition obligation — 0.1 — — — 0.1 Amortization of prior service credit (1.0 ) (1.0 ) (0.5 ) — (1.5 ) (1.0 ) Recognized actuarial losses (gains) 3.6 3.6 (2.0 ) (1.0 ) 1.6 2.6 Net periodic benefit cost $ 7.6 $ 8.7 $ (2.3 ) $ (0.3 ) $ 5.3 $ 8.4 Pension benefits Other retirement benefits Total 2017 2016 2017 2016 2017 2016 U.S. plans $ 5.5 $ 6.9 $ (2.3 ) $ (0.3 ) $ 3.2 $ 6.6 International plans 2.1 1.8 — — 2.1 1.8 Net periodic benefit cost $ 7.6 $ 8.7 $ (2.3 ) $ (0.3 ) $ 5.3 $ 8.4 |
Accumulated Other Comprehensi32
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Loss | The following table presents the changes in the components of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2017 : ($ in millions) Losses on cash flow hedges Unrealized gains on investment securities Defined benefit pension and other postretirement plans Foreign currency translation Total Balance, December 31, 2016 $ (3.2 ) $ 5.2 $ (45.4 ) $ (143.4 ) $ (186.8 ) Other comprehensive (loss) income before reclassifications (3.6 ) (5.1 ) (1.8 ) 64.7 54.2 Amounts reclassified out 1.8 — 0.2 — 2.0 Other comprehensive (loss) income, net of tax (1.8 ) (5.1 ) (1.6 ) 64.7 56.2 Balance, September 30, 2017 $ (5.0 ) $ 0.1 $ (47.0 ) $ (78.7 ) $ (130.6 ) |
Reclassification out of Accumulated Other Comprehensive Loss | A summary of the reclassifications out of accumulated other comprehensive loss is presented in the following table ($ in millions): Three Months Ended Nine Months Ended Location on Statement of Income Detail of components 2017 2016 2017 2016 Losses on cash flow hedges: Foreign currency contracts $ (0.5 ) $ — $ (0.8 ) $ — Net sales Foreign currency contracts (0.5 ) (0.1 ) (0.6 ) (0.2 ) Cost of goods and services sold Interest rate swap contracts (0.2 ) (0.3 ) (0.7 ) (1.0 ) Interest expense Forward treasury locks (0.1 ) (0.1 ) (0.3 ) (0.2 ) Interest expense Total before tax (1.3 ) (0.5 ) (2.4 ) (1.4 ) Tax expense 0.3 0.2 0.6 0.5 Net of tax $ (1.0 ) $ (0.3 ) $ (1.8 ) $ (0.9 ) Amortization of defined benefit pension and other postretirement plans: Transition obligation $ — $ — $ — $ (0.1 ) (a) Prior service credit 0.4 0.3 1.5 1.0 (a) Actuarial losses (0.3 ) (1.0 ) (1.6 ) (2.6 ) (a) Total before tax 0.1 (0.7 ) (0.1 ) (1.7 ) Tax expense (0.1 ) 0.2 (0.1 ) 0.6 Net of tax $ — $ (0.5 ) $ (0.2 ) $ (1.1 ) Total reclassifications for the period, net of tax $ (1.0 ) $ (0.8 ) $ (2.0 ) $ (2.0 ) (a) These components are included in the computation of net periodic benefit cost. Please refer to Note 10, Benefit Plans , for additional details. |
Other Expense (Tables)
Other Expense (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Expense | Other (income) expense consists of: Three Months Ended Nine Months Ended ($ in millions) 2017 2016 2017 2016 Restructuring and related charges: Severance and post-employment benefits $ — $ 1.4 $ — $ 7.8 Asset-related charges — 0.9 — 15.9 Total restructuring and related charges — 2.3 — 23.7 Venezuela currency devaluation — — — 2.7 Venezuela deconsolidation — — 11.1 — Development and licensing income (9.5 ) (0.4 ) (10.3 ) (1.2 ) Contingent consideration costs (0.2 ) — 0.5 1.9 Other items 0.2 0.6 1.8 2.0 Total other (income) expense $ (9.5 ) $ 2.5 $ 3.1 $ 29.1 |
Schedule of Restructuring Reserve | The following table presents activity related to our restructuring obligations: ($ in millions) Severance and benefits Asset-related charges Other charges Total Balance, December 31, 2015 $ — $ — $ — $ — Charges 8.9 17.3 0.2 26.4 Cash payments (3.0 ) — — (3.0 ) Non-cash asset write-downs — (17.3 ) (0.2 ) (17.5 ) Balance, December 31, 2016 5.9 — — 5.9 Cash payments (2.9 ) — — (2.9 ) Balance, 9/30/2017 $ 3.0 $ — $ — $ 3.0 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | The following table presents information about our reportable segments, reconciled to consolidated totals: Three Months Ended Nine Months Ended ($ in millions) 2017 2016 2017 2016 Net sales: Proprietary Products $ 308.9 $ 298.1 $ 930.5 $ 899.9 Contract-Manufactured Products 89.3 79.0 253.3 227.8 Intersegment sales elimination — (0.4 ) (0.3 ) (0.9 ) Consolidated net sales $ 398.2 $ 376.7 $ 1,183.5 $ 1,126.8 Operating profit (loss): Proprietary Products $ 67.0 $ 57.5 $ 188.2 $ 185.6 Contract-Manufactured Products 10.8 8.9 30.1 25.6 Corporate (13.9 ) (12.8 ) (39.3 ) (42.3 ) Other unallocated items — (2.3 ) (11.1 ) (26.4 ) Total operating profit $ 63.9 $ 51.3 $ 167.9 $ 142.5 Interest expense 1.3 2.2 5.7 6.7 Interest income 0.3 0.2 0.9 0.8 Income before income taxes $ 62.9 $ 49.3 $ 163.1 $ 136.6 |
New Accounting Standards (Detai
New Accounting Standards (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Defined Benefit Plan, Service Cost | $ 2.5 | $ 2.4 | $ 7.8 | $ 8 |
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | 1.4 | 2.8 | 5.3 | 8.4 |
Tax expense (benefit) | 14 | $ 14.4 | 19.1 | $ 38.3 |
Accounting Standards Update 2016-09 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Excess tax benefit from share-based compensation, Operating activities | 30.3 | |||
Tax expense (benefit) | (4.8) | (30.3) | ||
Accounting Standards Update 2017-07 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Defined Benefit Plan, Service Cost | 2.5 | 7.8 | ||
Accounting Standards Update 2016-02 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating leases, Future minimum payments due | 77.6 | 77.6 | ||
Accounting Standards Update 2016-16 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
New accounting pronouncement cumulative effect of change on equity | $ (4.1) | $ (4.1) |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |||||
Net income | $ 51 | $ 37.6 | $ 150.7 | $ 104.5 | |
Weighted average common shares outstanding (in shares) | 74,200,000 | 73,300,000 | 73,800,000 | 73,000,000 | |
Dilutive effect of stock options, stock appreciation rights and performance share awards, based on the treasury stock method (in shares) | 1,700,000 | 1,700,000 | 2,000,000 | 1,700,000 | |
Weighted average shares assuming dilution (in shares) | 75,900,000 | 75,000,000 | 75,800,000 | 74,700,000 | |
Antidilutive options excluded from computation of diluted net income per share (in shares) | 500,000 | 100,000 | 400,000 | 100,000 | |
Stock repurchase program, shares authorized | 800,000 | ||||
Stock repurchase program, shares purchased | 0 | 325,000 | |||
Stock repurchase program, cost of shares purchased | $ 0 | $ 26.9 | |||
Stock repurchase program, average price per share | $ 0 | $ 82.84 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 89.2 | $ 78 |
Work in process | 33.7 | 28.9 |
Finished goods | 92.9 | 92.4 |
Total inventories | $ 215.8 | $ 199.3 |
Affiliated Companies (Details)
Affiliated Companies (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of Equity Method Investments [Line Items] | ||
Carrying amount, equity-method investments | $ 71.2 | $ 69.3 |
Carrying amount, cost-method investments | $ 13.4 | $ 13.4 |
Debt (Details)
Debt (Details) - USD ($) $ in Millions | Oct. 02, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 33.1 | $ 229.8 | $ 228.6 |
Less: unamortized debt issuance costs | 0.7 | 0.9 | |
Debt, current | 33.2 | 2.4 | |
Long-term debt, excluding current portion | 196.6 | 226.2 | |
Debt term | 5 years | ||
Revolving credit facility, Due 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 29.3 | 26.4 | |
Line of credit facility, current borrowing capacity | 300 | ||
Line of credit facility outstanding borrowings, Yen | 4.5 | ||
Line of credit facility outstanding borrowings, Euro | 24.8 | ||
Letters of credit outstanding | 3 | ||
Line of credit facility, remaining borrowing capacity | 267.7 | ||
Term Loan, Due 2018 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 33.1 | 34.9 | |
Debt term | 5 years | ||
Notes payable, Due 2019 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 0.1 | 0.2 | |
Series A Notes, Due 2022 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 42 | 42 | |
Series B Notes, Due 2024 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 53 | 53 | |
Series C Notes, Due 2027 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 73 | $ 73 |
Derivative Financial Instrume40
Derivative Financial Instruments (Textuals) (Details) € in Millions, ¥ in Millions, DKK in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017USD ($) | Sep. 30, 2017EUR (€)MBbls | Sep. 30, 2017JPY (¥) | Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($)MBbls | Sep. 30, 2017DKKMBbls | Dec. 31, 2016EUR (€)MBbls | |
Forward Start Interest Rate Swap [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | $ 33.1 | ||||||
Maximum term (in years) | 5 years | 5 years | 5 years | ||||
Derivative, underlying basis | one-month London Interbank Offered Rate (“LIBOR”) | one-month London Interbank Offered Rate (“LIBOR”) | one-month London Interbank Offered Rate (“LIBOR”) | ||||
Fixed interest rate | 5.41% | 5.41% | 5.41% | ||||
Debt EUR Denominated [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount, nonderivative instruments | € 21 | $ 24.8 | |||||
Cumulative foreign currency translation gain | $ 1 | ||||||
Cumulative foreign currency translation gain, net of tax | 0.6 | ||||||
Debt Yen Denominated [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount, nonderivative instruments | ¥ 500 | 4.5 | |||||
Cumulative foreign currency translation gain | 0.3 | ||||||
Cumulative foreign currency translation gain, net of tax | $ 0.2 | ||||||
Options Held [Member] | |||||||
Derivative [Line Items] | |||||||
Derivative, nonmonetary notional amount | MBbls | 17,550 | 17,550 | 17,550 | 96,525 | |||
Premium paid | 0.2 | ||||||
Loss related to call options | $ 0.1 | $ 0.2 | |||||
Euro Member Countries, Euro | Forward Contracts [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | € | € 72.5 | € 57.5 | |||||
Denmark, Kroner | Forward Contracts [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | DKK | DKK 83.4 | ||||||
Long [Member] | Designated as Hedging Instrument [Member] | Singapore, Dollars | Foreign Exchange Forward [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | $ 29.9 | ||||||
Long [Member] | Designated as Hedging Instrument [Member] | United States of America, Dollars | Foreign Exchange Forward [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | 46.3 | ||||||
Long [Member] | Designated as Hedging Instrument [Member] | Japan, Yen | Foreign Exchange Forward [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | 5,255.3 | ||||||
Short [Member] | Designated as Hedging Instrument [Member] | Singapore, Dollars | Foreign Exchange Forward [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | 6.2 | 14.6 | |||||
Short [Member] | Designated as Hedging Instrument [Member] | United States of America, Dollars | Foreign Exchange Forward [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | 41.8 | 0 | |||||
Short [Member] | Designated as Hedging Instrument [Member] | Japan, Yen | Foreign Exchange Forward [Member] | |||||||
Derivative [Line Items] | |||||||
Notional amount | € 16.6 | $ 28.3 |
Effects of Derivative Instrumen
Effects of Derivative Instruments on OCI and Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flow Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in OCI | $ (1.6) | $ (0.3) | $ (3.6) | $ (0.2) |
Amount of (gain) loss reclassified from accumulated OCI into income | 1 | 0.3 | 1.8 | 0.9 |
Net Investment Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in OCI | (0.5) | (0.2) | (1.7) | (1.3) |
Amount of (gain) loss reclassified from accumulated OCI into income | 0 | 0 | 0 | 0 |
Foreign Currency Hedge Contracts [Member] | Net sales [Member] | Cash Flow Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in OCI | (0.7) | 0 | (1.6) | (0.3) |
Amount of (gain) loss reclassified from accumulated OCI into income | 0.4 | 0 | 0.7 | 0.1 |
Foreign Currency Hedge Contracts [Member] | Cost of goods and services sold [Member] | Cash Flow Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in OCI | (0.9) | (0.3) | (2) | 0.3 |
Amount of (gain) loss reclassified from accumulated OCI into income | 0.3 | 0 | 0.4 | 0 |
Interest Rate Swap Contracts [Member] | Interest expense [Member] | Cash Flow Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in OCI | 0 | 0 | 0 | (0.2) |
Amount of (gain) loss reclassified from accumulated OCI into income | 0.2 | 0.2 | 0.5 | 0.6 |
Forward Treasury Locks [Member] | Interest expense [Member] | Cash Flow Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in OCI | 0 | 0 | 0 | 0 |
Amount of (gain) loss reclassified from accumulated OCI into income | 0.1 | 0.1 | 0.2 | 0.2 |
Foreign Currency - Denominated Debt [Member] | Other expense [Member] | Net Investment Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in OCI | (0.5) | (0.2) | (1.7) | (1.3) |
Amount of (gain) loss reclassified from accumulated OCI into income | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Deferred compensation assets | $ 8.5 | $ 7.4 |
Foreign currency contracts | 1 | 0.2 |
Total assets at fair value | 9.5 | 7.6 |
Liabilities: | ||
Contingent consideration | 8 | 8 |
Deferred compensation liabilities | 9.5 | 8.4 |
Interest rate swap contracts | 0.2 | 1 |
Foreign currency contracts | 4.7 | 1.6 |
Total liabilities at fair value | 22.4 | 19 |
Level 1 [Member] | ||
Assets: | ||
Deferred compensation assets | 8.5 | 7.4 |
Total assets at fair value | 8.5 | 7.4 |
Liabilities: | ||
Deferred compensation liabilities | 9.5 | 8.4 |
Total liabilities at fair value | 9.5 | 8.4 |
Level 2 [Member] | ||
Assets: | ||
Foreign currency contracts | 1 | 0.2 |
Total assets at fair value | 1 | 0.2 |
Liabilities: | ||
Interest rate swap contracts | 0.2 | 1 |
Foreign currency contracts | 4.7 | 1.6 |
Total liabilities at fair value | 4.9 | 2.6 |
Level 3 [Member] | ||
Liabilities: | ||
Contingent consideration | 8 | 8 |
Total liabilities at fair value | $ 8 | $ 8 |
Fair Value Measurements Level 3
Fair Value Measurements Level 3 (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Level 3 Fair Value Measurements [Roll Forward] | ||
Balance, beginning of period | $ 8 | $ 6 |
Increase in fair value recorded in earnings | 0.5 | 2.3 |
Payments | (0.5) | (0.3) |
Balance, end of period | $ 8 | $ 8 |
Fair Value Measurements Other F
Fair Value Measurements Other Financial Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Other Financial Instruments [Abstract] | ||
Long-term debt, fair value | $ 201 | $ 228.3 |
Long-term debt | $ 196.6 | $ 226.2 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available for issuance under the 2016 Plan (in shares) | 4,602,225 | 4,602,225 | ||
Stock options, granted (in shares) | 443,936 | |||
Stock options, weighted average exercise price (in dollars per share) | $ 83.88 | |||
Stock options, weighted average grant date fair value (in dollars per share) | $ 18.04 | |||
Risk-free interest rate (in hundredths) | 2.04% | |||
Expected life (in years) | 5 years 11 months | |||
Stock volatility (in hundredths) | 19.90% | |||
Dividend yield (in hundredths) | 0.70% | |||
Stock-based compensation expense | $ 4.6 | $ 4.6 | $ 13.6 | $ 14.1 |
Performance Share Unit [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 91,803 | |||
Grant date fair value (in dollars per share) | $ 83.97 | |||
Number of shares of common stock per PSU award (in shares) | 1 | 1 | ||
Performance period | 3 years | |||
PSU payout, Minimum (in hundredths) | 0.00% | 0.00% | ||
PSU payout, Maximum (in hundredths) | 200.00% | 200.00% |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||||
Defined Benefit Plan, Service Cost | $ 2.5 | $ 2.4 | $ 7.8 | $ 8 |
Interest cost | 2.4 | 2.8 | 7.5 | 8.2 |
Expected return on assets | (3.4) | (3.1) | (10.1) | (9.5) |
Defined Benefit Plan, Amortization of Transition Asset (Obligation) | 0.1 | |||
Amortization of prior service credit | (0.4) | (0.3) | (1.5) | (1) |
Recognized actuarial losses (gains) | 0.3 | 1 | 1.6 | 2.6 |
Net periodic benefit cost | 1.4 | 2.8 | 5.3 | 8.4 |
Domestic Plan [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||||
Net periodic benefit cost | 0.7 | 2.2 | 3.2 | 6.6 |
Foreign Plan [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||||
Net periodic benefit cost | 0.7 | 0.6 | 2.1 | 1.8 |
Pension Benefits [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||||
Defined Benefit Plan, Service Cost | 2.5 | 2.3 | 7.8 | 7.6 |
Interest cost | 2.4 | 2.7 | 7.3 | 7.9 |
Expected return on assets | (3.4) | (3.1) | (10.1) | (9.5) |
Defined Benefit Plan, Amortization of Transition Asset (Obligation) | 0.1 | |||
Amortization of prior service credit | (0.3) | (0.3) | (1) | (1) |
Recognized actuarial losses (gains) | 1.2 | 1.3 | 3.6 | 3.6 |
Net periodic benefit cost | 2.4 | 2.9 | 7.6 | 8.7 |
Pension Benefits [Member] | Domestic Plan [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||||
Net periodic benefit cost | 1.7 | 2.3 | 5.5 | 6.9 |
Defined benefit plan, contributions by employer | 20 | |||
Pension Benefits [Member] | Foreign Plan [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||||
Net periodic benefit cost | 0.7 | 0.6 | 2.1 | 1.8 |
Other Retirement Benefits [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||||
Defined Benefit Plan, Service Cost | 0 | 0.1 | 0 | 0.4 |
Interest cost | 0 | 0.1 | 0.2 | 0.3 |
Amortization of prior service credit | (0.1) | 0 | (0.5) | 0 |
Recognized actuarial losses (gains) | (0.9) | (0.3) | (2) | (1) |
Net periodic benefit cost | (1) | (0.1) | (2.3) | (0.3) |
Other Retirement Benefits [Member] | Domestic Plan [Member] | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | ||||
Net periodic benefit cost | $ (1) | $ (0.1) | $ (2.3) | $ (0.3) |
Accumulated Other Comprehensi47
Accumulated Other Comprehensive Loss Components (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Balance, beginning | $ (186.8) | |||
Other comprehensive income (loss) before reclassifications | 54.2 | |||
Amounts reclassified out | 2 | |||
Other comprehensive income, net of tax | $ 21.2 | $ 6.5 | 56.2 | $ 18.8 |
Balance, ending | (130.6) | (130.6) | ||
Gains (Losses) on Cash Flow Hedges [Member] | ||||
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Balance, beginning | (3.2) | |||
Other comprehensive income (loss) before reclassifications | (3.6) | |||
Amounts reclassified out | 1.8 | |||
Other comprehensive income, net of tax | (1.8) | |||
Balance, ending | (5) | (5) | ||
Unrealized Gains on Investment Securities [Member] | ||||
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Balance, beginning | 5.2 | |||
Other comprehensive income (loss) before reclassifications | (5.1) | |||
Amounts reclassified out | 0 | |||
Other comprehensive income, net of tax | (5.1) | |||
Balance, ending | 0.1 | 0.1 | ||
Defined Benefit Pension and Other Postretirement Plans [Member] | ||||
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Balance, beginning | (45.4) | |||
Other comprehensive income (loss) before reclassifications | (1.8) | |||
Amounts reclassified out | 0.2 | |||
Other comprehensive income, net of tax | (1.6) | |||
Balance, ending | (47) | (47) | ||
Foreign Currency Translation [Member] | ||||
Changes in the Components of Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Balance, beginning | (143.4) | |||
Other comprehensive income (loss) before reclassifications | 64.7 | |||
Amounts reclassified out | 0 | |||
Other comprehensive income, net of tax | 64.7 | |||
Balance, ending | $ (78.7) | $ (78.7) |
Accumulated Other Comprehensi48
Accumulated Other Comprehensive Loss Reclassifications (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||||
Reclassification out of Accumulated Other Comprehensive Loss [Line Items] | |||||||
Net sales | $ (398.2) | $ (376.7) | $ (1,183.5) | $ (1,126.8) | |||
Cost of goods and services sold | (273.2) | (255.6) | (799.4) | (749.1) | |||
Interest expense | (1.3) | (2.2) | (5.7) | (6.7) | |||
Prior service cost | 0.4 | 0.3 | 1.5 | 1 | |||
Actuarial losses | (0.3) | (1) | (1.6) | (2.6) | |||
Income before income taxes | 62.9 | 49.3 | 163.1 | 136.6 | |||
Tax expense (benefit) | (14) | (14.4) | (19.1) | (38.3) | |||
Net income | 51 | 37.6 | 150.7 | 104.5 | |||
Defined Benefit Plan, Amortization of Transition Asset (Obligation) | (0.1) | ||||||
Reclassification out of Accumulated Other Comprehensive Loss [Member] | |||||||
Reclassification out of Accumulated Other Comprehensive Loss [Line Items] | |||||||
Net income | (1) | (0.8) | (2) | (2) | |||
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Gains (Losses) on Cash Flow Hedges [Member] | |||||||
Reclassification out of Accumulated Other Comprehensive Loss [Line Items] | |||||||
Income before income taxes | (1.3) | (0.5) | (2.4) | (1.4) | |||
Tax expense (benefit) | 0.3 | 0.2 | 0.6 | 0.5 | |||
Net income | (1) | (0.3) | (1.8) | (0.9) | |||
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Defined Benefit Pension and Other Postretirement Plans [Member] | |||||||
Reclassification out of Accumulated Other Comprehensive Loss [Line Items] | |||||||
Prior service cost | [1] | 0.4 | 0.3 | 1.5 | 1 | ||
Actuarial losses | [1] | (0.3) | (1) | (1.6) | (2.6) | ||
Income before income taxes | 0.1 | (0.7) | (0.1) | (1.7) | |||
Tax expense (benefit) | (0.1) | 0.2 | (0.1) | 0.6 | |||
Net income | 0 | (0.5) | (0.2) | (1.1) | |||
Defined Benefit Plan, Amortization of Transition Asset (Obligation) | 0 | 0 | 0 | [1] | (0.1) | [1] | |
Foreign Currency Contract [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Gains (Losses) on Cash Flow Hedges [Member] | |||||||
Reclassification out of Accumulated Other Comprehensive Loss [Line Items] | |||||||
Net sales | (0.5) | 0 | (0.8) | 0 | |||
Cost of goods and services sold | (0.5) | (0.1) | (0.6) | (0.2) | |||
Interest Rate Swap Contracts [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Gains (Losses) on Cash Flow Hedges [Member] | |||||||
Reclassification out of Accumulated Other Comprehensive Loss [Line Items] | |||||||
Interest expense | (0.2) | (0.3) | (0.7) | (1) | |||
Forward Treasury Locks [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Gains (Losses) on Cash Flow Hedges [Member] | |||||||
Reclassification out of Accumulated Other Comprehensive Loss [Line Items] | |||||||
Interest expense | $ (0.1) | $ (0.1) | $ (0.3) | $ (0.2) | |||
[1] | These components are included in the computation of net periodic benefit cost. Please refer to Note 10, Benefit Plans, for additional details. |
Other Expense (Details)
Other Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |||||
Severance and post-employment benefits | $ 0 | $ 1.4 | $ 0 | $ 7.8 | |
Asset-related charges | 0 | 0.9 | 0 | 15.9 | |
Total restructuring and related charges | 0 | 2.3 | 0 | 23.7 | $ 26.4 |
Venezuela currency devaluation | 0 | 0 | 0 | 2.7 | |
Venezuela deconsolidation | 0 | 0 | 11.1 | 0 | |
Development and licensing income | (9.5) | (0.4) | (10.3) | (1.2) | |
Contingent consideration costs | (0.2) | 0 | 0.5 | 1.9 | |
Other items | 0.2 | 0.6 | 1.8 | 2 | |
Total other (income) expense | $ (9.5) | $ 2.5 | $ 3.1 | $ 29.1 |
Other Expense Items (Details)
Other Expense Items (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Feb. 17, 2016 | Dec. 31, 2015 | |
Summary of Investment Holdings [Line Items] | ||||||
Venezuela currency devaluation | $ 0 | $ 0 | $ 0 | $ 2.7 | ||
Venezuela deconsolidation | $ 0 | $ 0 | $ (11.1) | $ 0 | ||
VENEZUELA | ||||||
Summary of Investment Holdings [Line Items] | ||||||
Foreign Currency Exchange Rate, Remeasurement | 10 | 6.3 |
Other Expense Restructuring and
Other Expense Restructuring and Related Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||||
Severance charges | $ 0 | $ 1.4 | $ 0 | $ 7.8 | |
Asset impairment charges, trademark | 10 | ||||
Asset impairment charges, patent and equipment | 0.9 | 5.9 | |||
Restructuring and related charges | 2.3 | 23.7 | |||
Restructuring Reserve [Roll Forward] | |||||
Balance, December 31, 2016 | 5.9 | 0 | $ 0 | ||
Charges | 0 | $ 2.3 | 0 | 23.7 | 26.4 |
Cash payments | (2.9) | (3) | |||
Non-cash asset-write-downs | (17.5) | ||||
Balance, September 30, 2017 | 3 | 3 | 5.9 | ||
Severance and benefits [Member] | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance, December 31, 2016 | 5.9 | 0 | 0 | ||
Charges | 8.9 | ||||
Cash payments | (2.9) | (3) | |||
Non-cash asset-write-downs | 0 | ||||
Balance, September 30, 2017 | 3 | 3 | 5.9 | ||
Asset-related charges [Member] | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance, December 31, 2016 | 0 | 0 | 0 | ||
Charges | 17.3 | ||||
Cash payments | 0 | 0 | |||
Non-cash asset-write-downs | (17.3) | ||||
Balance, September 30, 2017 | 0 | 0 | 0 | ||
Other charges [Member] | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance, December 31, 2016 | 0 | $ 0 | 0 | ||
Charges | 0.2 | ||||
Cash payments | 0 | 0 | |||
Non-cash asset-write-downs | (0.2) | ||||
Balance, September 30, 2017 | $ 0 | $ 0 | $ 0 |
Other Expense Other (Income) De
Other Expense Other (Income) Development and Licensing Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2013 | |
Development and licensing income [Line Items] | |||||
Development and licensing income | $ 9.5 | $ 0.4 | $ 10.3 | $ 1.2 | |
SmartDose [Member] | |||||
Development and licensing income [Line Items] | |||||
Development and licensing income | 0.4 | $ 0.4 | 1.2 | $ 1.2 | |
Nonrefundable payment from customer | 13.2 | 13.2 | $ 20 | ||
Unearned income, current | 1.5 | 1.5 | |||
Unearned income, noncurrent | 11.7 | 11.7 | |||
Other [Member] | |||||
Development and licensing income [Line Items] | |||||
Development and licensing income | $ 9.1 | $ 9.1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Tax expense (benefit) | $ 14 | $ 14.4 | $ 19.1 | $ 38.3 | ||||
Cash and Cash Equivalents, at Carrying Value | 269.3 | $ 205.9 | 269.3 | $ 205.9 | $ 203 | $ 274.6 | ||
Effective Income Tax Rate Reconciliation, Repatriation of Foreign Earnings, Amount | $ 3.5 | |||||||
Foreign Earnings Repatriated | $ 10 | $ 55.3 | $ 65 | |||||
Effective tax rate | 22.30% | 29.30% | 11.70% | 28.10% | ||||
Accounting Standards Update 2016-09 [Member] | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Tax expense (benefit) | $ (4.8) | $ (30.3) |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 2 | |||
Venezuela deconsolidation | $ 0 | $ 0 | $ (11.1) | $ 0 |
Venezuela currency devaluation | 0 | 0 | 0 | 2.7 |
Restructuring and related charges | 2.3 | 23.7 | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | 398.2 | 376.7 | 1,183.5 | 1,126.8 |
Total operating (loss) profit | 63.9 | 51.3 | 167.9 | 142.5 |
Interest expense | 1.3 | 2.2 | 5.7 | 6.7 |
Interest income | 0.3 | 0.2 | 0.9 | 0.8 |
Income before income taxes | 62.9 | 49.3 | 163.1 | 136.6 |
Proprietary Products [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | 308.9 | 298.1 | 930.5 | 899.9 |
Total operating (loss) profit | 67 | 57.5 | 188.2 | 185.6 |
Contract-Manufactured Products [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | 89.3 | 79 | 253.3 | 227.8 |
Total operating (loss) profit | 10.8 | 8.9 | 30.1 | 25.6 |
Intersegment sales elimination [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | 0 | (0.4) | (0.3) | (0.9) |
Corporate [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total operating (loss) profit | (13.9) | (12.8) | (39.3) | (42.3) |
Other unallocated items [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total operating (loss) profit | $ 0 | $ (2.3) | $ (11.1) | $ (26.4) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Oct. 02, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Subsequent Event Disclosure [Abstract] | |||
Long-term Debt, Gross | $ 33.1 | $ 229.8 | $ 228.6 |
Debt Instrument, Term | 5 years |