Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 28, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | Avery Dennison Corp | |
Entity Central Index Key | 8,818 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-29 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 88,030,887 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 187.5 | $ 224.4 |
Trade accounts receivable, less allowances of $29.2 and $36.2 at March 31, 2018 and December 30, 2017, respectively | 1,240 | 1,180.3 |
Inventories, net | 678.2 | 609.6 |
Assets held for sale | 1.1 | 6.3 |
Other current assets | 225.5 | 217.3 |
Total current assets | 2,332.3 | 2,237.9 |
Property, plant and equipment, net | 1,117.6 | 1,097.9 |
Goodwill | 1,005.1 | 985.1 |
Other intangibles resulting from business acquisitions, net | 167.2 | 166.3 |
Non-current deferred income taxes | 215.5 | 196.3 |
Other assets | 442.8 | 453.4 |
Total assets | 5,280.5 | 5,136.9 |
Current liabilities: | ||
Short-term borrowings and current portion of long-term debt and capital leases | 370.3 | 265.4 |
Accounts payable | 1,064.4 | 1,007.2 |
Accrued payroll and employee benefits | 173.1 | 248.5 |
Other current liabilities | 473.6 | 450.7 |
Total current liabilities | 2,081.4 | 1,971.8 |
Long-term debt and capital leases | 1,342.7 | 1,316.3 |
Long-term retirement benefits and other liabilities | 596.5 | 629.3 |
Non-current deferred and payable income taxes | 170.2 | 173.3 |
Commitments and contingencies (see Note 13) | ||
Shareholders' equity: | ||
Common stock, $1 par value per share, authorized - 400,000,000 shares at March 31, 2018 and December 30, 2017; issued - 124,126,624 shares at March 31, 2018 and December 30, 2017; outstanding - 88,015,267 shares and 88,011,541 shares at March 31, 2018 and December 30, 2017, respectively | 124.1 | 124.1 |
Capital in excess of par value | 848.4 | 862.6 |
Retained earnings | 2,647.8 | 2,596.7 |
Treasury stock at cost, 36,111,357 shares and 36,115,083 shares at March 31, 2018 and December 30, 2017, respectively | (1,891) | (1,856.7) |
Accumulated other comprehensive loss | (639.6) | (680.5) |
Total shareholders' equity | 1,089.7 | 1,046.2 |
Total liabilities and shareholders' equity | $ 5,280.5 | $ 5,136.9 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 30, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Trade accounts receivable, allowances (in dollars) | $ 29.2 | $ 36.2 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized shares | 400,000,000 | 400,000,000 |
Common stock, issued shares | 124,126,624 | 124,126,624 |
Common stock, outstanding shares | 88,015,267 | 88,011,541 |
Treasury stock, shares | 36,111,357 | 36,115,083 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Net sales | $ 1,776.4 | $ 1,572.1 |
Cost of products sold | 1,293 | 1,129.7 |
Gross profit | 483.4 | 442.4 |
Marketing, general and administrative expense | 295 | 279.8 |
Other expense, net | 12.8 | 6.5 |
Interest expense | 13.2 | 16.7 |
Other non-operating expense | 3.3 | 3.5 |
Income before taxes | 159.1 | 135.9 |
Provision for income taxes | 33.3 | 23.7 |
Equity method investment net losses | (0.6) | |
Net income | $ 125.2 | $ 112.2 |
Per share amounts: | ||
Net income per common share (in dollars per share) | $ 1.42 | $ 1.27 |
Net income per common share, assuming dilution (in dollars per share) | 1.40 | 1.25 |
Dividends per common share (in dollars per share) | $ 0.45 | $ 0.41 |
Weighted average number of shares outstanding: | ||
Common shares (in shares) | 88 | 88.4 |
Common shares, assuming dilution (in shares) | 89.6 | 90 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 125.2 | $ 112.2 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation | 34.3 | 35.5 |
Pension and other postretirement benefits | 5.7 | 4.7 |
Cash flow hedges | 0.9 | (0.8) |
Other comprehensive income, net of tax | 40.9 | 39.4 |
Total comprehensive income, net of tax | $ 166.1 | $ 151.6 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Operating Activities | ||
Net income | $ 125.2 | $ 112.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 34.3 | 28.8 |
Amortization | 10.2 | 15.8 |
Provision for doubtful accounts and sales returns | 12.9 | 11.5 |
Net losses from impairments, sales of assets, and investment settlements | 9.8 | 0.2 |
Stock-based compensation | 7.4 | 5.6 |
Loss from settlement of pension obligations | 0.5 | |
Deferred income taxes | (8) | 3.4 |
Other non-cash expense and loss | 14.2 | 15.2 |
Changes in assets and liabilities and other adjustments | (190.5) | (178.8) |
Net cash provided by operating activities | 16 | 13.9 |
Investing Activities | ||
Purchases of property, plant and equipment | (35.6) | (30.3) |
Purchases of software and other deferred charges | (7.3) | (6.9) |
Proceeds from sales of property, plant and equipment | 6.9 | |
Sales of investments and proceeds from insurance, net | 0.3 | 1.2 |
Payments for acquisitions, net of cash acquired, and investments in businesses | (0.1) | (74.6) |
Net cash used in investing activities | (35.8) | (110.6) |
Financing Activities | ||
Net increase (decrease) in borrowings (maturities of three months or less) | 104.3 | (256.8) |
Additional long-term borrowings | 526.7 | |
Repayments of long-term debt | (1) | (0.8) |
Dividends paid | (39.6) | (36.4) |
Share repurchases | (51.6) | (34.6) |
Proceeds from exercises of stock options, net | 0.2 | 16.4 |
Tax withholding for stock-based compensation | (31.6) | (19.8) |
Payments of contingent consideration | (2.5) | |
Net cash (used in) provided by financing activities | (21.8) | 194.7 |
Effect of foreign currency translation on cash balances | 4.7 | 1.8 |
(Decrease) increase in cash and cash equivalents | (36.9) | 99.8 |
Cash and cash equivalents, beginning of year | 224.4 | |
Cash and cash equivalents, end of period | $ 187.5 | $ 294.9 |
General
General | 3 Months Ended |
Mar. 31, 2018 | |
General | |
General | Note 1. General The unaudited Condensed Consolidated Financial Statements and notes in this Quarterly Report on Form 10-Q are presented as permitted by Article 10 of Regulation S-X and do not contain certain information included in the audited Consolidated Financial Statements and notes thereto in our 2017 Annual Report on Form 10-K, which should be read in conjunction with this Quarterly Report on Form 10-Q. The accompanying unaudited Condensed Consolidated Financial Statements include normal recurring adjustments necessary for a fair statement of our interim results. Interim results of operations are not necessarily indicative of future results. Fiscal Periods The first quarters of 2018 and 2017 consisted of thirteen-week periods ending March 31, 2018 and April 1, 2017, respectively. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. Accounting Guidance Updates Revenue Recognition In the first quarter of 2018, we adopted an accounting guidance update that provides a single comprehensive model on accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. We adopted this guidance using the modified retrospective method, which means that reporting periods beginning in 2018 are presented under this guidance, while prior period amounts continue to be reported under the previous guidance. As allowed under this guidance, we began to apply this guidance for contracts with customers that were not completed as of the beginning of 2018. As a result of the adoption of this guidance, the allowance for customer returns, presented as a reduction of trade accounts receivable in prior years, is now presented as a returns liability in “Other current liabilities.” As of March 31, 2018, the returns liability was $11.3 million. Our adoption of this guidance did not have a material impact on our financial position, results of operations, or cash flows. The applicable disclosures related to this guidance are included in Note 2, “Revenue Recognition,” and Note 14, “Segment and Disaggregated Revenue Information.” Presentation of Net Periodic Benefit Costs In the first quarter of 2018, we adopted an accounting guidance update that requires certain employers with defined benefit plans to present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income. Components other than the service cost component are no longer eligible for capitalization in assets. Employers are required to apply the portion of this guidance on the presentation of the components of net periodic benefit cost in the income statement retrospectively, while the portion of this guidance that limits the capitalization of net periodic benefit cost in assets to the service cost component must be applied prospectively. Prior year results have been reclassified as required by this guidance. The effects of our adoption of this guidance on our unaudited Condensed Consolidated Statements of Income for the prior year were as follows: Three Months Ended April 1, 2017 (In millions) As Previously Reclassification As Reclassified Marketing, general and administrative expense $ $ ) $ Other non-operating expense – Classification of Certain Cash Payments In the first quarter of 2018, we adopted an accounting guidance update that reduces the diversity in the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. Prior year results have been reclassified, as required by this guidance. The effects of our adoption of this guidance, which primarily relate to the classification of corporate-owned life insurance cash flows, on our unaudited Condensed Consolidated Statements of Cash Flows for the prior year were as follows: Three Months Ended April 1, 2017 (In millions) As Previously Reclassification As Reclassified Net cash provided by operating activities $ $ ) $ Net cash used in investing activities ) ) Intra-Entity Transfers of Assets Other Than Inventory In the first quarter of 2018, we adopted an accounting guidance update that requires companies to recognize the income tax effects of intra-entity sales and transfers of assets other than inventory in the period in which they occur. Upon adoption, we derecognized tax-related deferred charges and recognized deferred tax assets related to certain intra-entity asset transfers as a $14 million net reduction to retained earnings. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition | |
Revenue Recognition | Note 2. Revenue Recognition Sales are recognized when or as we satisfy a performance obligation by transferring control of a product or service to a customer, in an amount that reflects the consideration to which we expect to be entitled in exchange for the product or service. We consider a number of factors in determining when we have transferred control to a customer, including the following: (i) our present right to payment; (ii) the customer’s legal title to the asset; (iii) physical possession of the asset; (iv) the customer’s significant risks and rewards of ownership of the asset; and (v) the customer’s acceptance of the asset. Generally, payment terms with our customers are consistent with those used in our industries and the regions in which we operate. Sales returns are accepted under certain limited circumstances. We record an estimate for return liabilities, with a corresponding reduction in sales, in the amount we expect to repay or credit customers, which we base on historical actual returns and outstanding customer claims. Changes in estimates are updated each reporting period. Sales rebates, discounts, and other customer concessions are common practice in the industries in which we operate and are accounted for as a reduction in sales, based on estimates at the time products are sold. These estimates are based on our historical experience, as well as current information such as sales forecasts. We review estimates regularly and, as additional information becomes available, if necessary, adjust sales and the respective accruals accordingly. Sales tax, value-added tax, and other taxes we collect from customers are excluded from sales. Shipping and handling activities after control of a product is transferred to a customer are accounted for as a fulfillment cost and not a separate performance obligation. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of less than one year. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Income Statements. Deferred Revenue Deferred revenue primarily relates to constrained variable consideration on supply agreements for sales of products, as well as to payments received in advance of performance under the contract. Deferred revenue is recognized as revenue as or when we perform under the contract. The following table shows the amounts and balance sheet locations of deferred revenue as of March 31, 2018 and December 30, 2017: (In millions ) March 31, 2018 December 30, 2017 Other current liabilities $ $ Long-term retirement benefits and other liabilities .5 .4 Total deferred revenue $ $ Revenue recognized from amounts included in deferred revenue as of December 30, 2017 was $8.4 million for the three months ended March 31, 2018 and was included in “Net sales” in the unaudited Condensed Consolidated Statements of Income. |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill | |
Goodwill | Note 3. Goodwill Changes in the net carrying amount of goodwill for the three months ended March 31, 2018 by reportable segment were as follows: (In millions) Label and Retail Branding Industrial and Total Goodwill as of December 30, 2017 $ $ $ $ Translation adjustments .2 Goodwill as of March 31, 2018 $ $ $ $ The carrying amounts of goodwill at March 31, 2018 and December 30, 2017 were net of accumulated impairment losses of $820 million recognized in fiscal year 2009 by our Retail Branding and Information Solutions (“RBIS”) reportable segment. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt | |
Debt | Note 4. Debt In March 2017, we issued €500 million of senior notes, due March 2025. The senior notes bear an interest rate of 1.25% per year, payable annually in arrears. The net proceeds from the offering, after deducting underwriting discounts and estimated offering expenses, were $526.7 million (€495.6 million), a portion of which we used during the three months ended April 1, 2017 to repay commercial paper borrowings used to finance a portion of our acquisition of the European business of Mactac. We designate a portion of these senior notes as a net investment hedge of our investment in foreign operations. Refer to Note 8, “Financial Instruments,” for more information. The estimated fair value of our long-term debt is primarily based on the credit spread above U.S. Treasury securities or euro government bond securities, as applicable, on notes with similar rates, credit ratings, and remaining maturities. The fair value of short-term borrowings, which includes commercial paper issuances and short-term lines of credit, approximates the carrying value given the short duration of these obligations. The fair value of our total debt was $1.73 billion at March 31, 2018 and $1.6 billion at December 30, 2017. Fair value amounts were determined based primarily on Level 2 inputs, which are inputs other than quoted prices in active markets that are either directly or indirectly observable. Our $800 million revolving credit facility (the “Revolver”) contains financial covenants requiring that we maintain specified ratios, including total debt and interest expense in relation to certain measures of income. No balance was outstanding under the Revolver as of March 31, 2018 or December 30, 2017. As of March 31, 2018 and December 30, 2017, we were in compliance with our financial covenants. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 3 Months Ended |
Mar. 31, 2018 | |
Pension and Other Postretirement Benefits | |
Pension and Other Postretirement Benefits | Note 5. Pension and Other Postretirement Benefits Defined Benefit Plans We sponsor a number of defined benefit plans, the accruals of benefits under some of which have been frozen, covering eligible employees in the U.S. and certain other countries. Benefits payable to an employee are based primarily on years of service and the employee’s compensation during the course of his or her employment with us. We are also obligated to pay unfunded termination indemnity benefits to certain employees outside of the U.S., which are subject to applicable agreements, laws and regulations. We have not incurred significant costs related to these benefits, and, therefore, no related costs are included in the disclosures below. The following table sets forth the components of net periodic benefit cost (credit), which are recorded in income, for our defined benefit plans: Pension Benefits U.S. Postretirement Health Benefits Three Months Ended Three Months Ended March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 (In millions) U.S. Int’l U.S. Int’l Service cost $ – $ $ .1 $ $ – $ – Interest cost – – Expected return on plan assets ) ) ) ) – – Recognized net actuarial loss .4 .4 Amortization of prior service cost (credit) .2 (.1 ) .2 (.1 ) (.8 ) (.8 ) Recognized loss on settlements (1) .5 – – – – – Net periodic benefit cost (credit) $ $ $ $ $ (.4 ) $ (.4 ) (1) In 2018, settlements were related to lump-sum payments associated with a U.S. defined benefit pension plan. Service cost and components of net periodic benefit cost other than service cost were included in “Marketing, general and administrative expense” and “Other non-operating expense” in the unaudited Condensed Consolidated Statements of Income, respectively. Refer to Note 1, “General,” for more information. |
Long-Term Incentive Compensatio
Long-Term Incentive Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Long-Term Incentive Compensation | |
Long-Term Incentive Compensation | Note 6. Long-Term Incentive Compensation Stock-Based Awards Stock-based compensation expense was $7.4 million and $5.6 million for the three months ended March 31, 2018 and April 1, 2017, respectively. This expense was included in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Statements of Income. As of March 31, 2018, we had approximately $57 million of unrecognized compensation expense related to unvested stock-based awards, which is expected to be recognized over the remaining weighted-average requisite service period of approximately three years. Cash-Based Awards The compensation expense related to long-term incentive units was $5.6 million and $10.3 million for the three months ended March 31, 2018 and April 1, 2017, respectively. This expense was included in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Statements of Income. |
Cost Reduction Actions
Cost Reduction Actions | 3 Months Ended |
Mar. 31, 2018 | |
Cost Reduction Actions | |
Cost Reduction Actions | Note 7. Cost Reduction Actions 2018 Plan On April 19, 2018, we approved a restructuring plan (the “2018 Plan”) associated with the consolidation of the European footprint of our Label and Graphic Materials (“LGM”) reportable segment, which is expected to result in a headcount reduction of 350 to 400 positions related to the closure of a manufacturing facility. This reduction is expected to be partially offset by headcount additions in other locations, resulting in a net reduction of approximately 150 positions. We expect the 2018 Plan to be largely complete by the end of 2019. During the three months ended March 31, 2018, we recorded $6.9 million in non-cash asset impairment charges related to the 2018 Plan. Total pretax restructuring charges associated with the 2018 Plan are estimated at approximately $70 million. The remaining charges relate to cash costs primarily for severance, most of which are expected to be recognized during the second quarter of 2018. 2015/2016 Actions During the three months ended March 31, 2018, we recorded $5.8 million in restructuring charges, net of reversals, related to restructuring actions initiated during the third quarter of 2015 (“2015/2016 Actions”). These charges consisted of severance and related costs for the reduction of approximately 200 positions, lease cancellation costs, and asset impairment charges. Accruals for severance and related costs and lease cancellation costs were included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets. Asset impairment charges were based on the estimated market value of the assets, less selling costs, if applicable. Restructuring charges were included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Income. During the three months ended March 31, 2018, restructuring charges and payments were as follows: (In millions) Accrual at Charges Cash Non-cash Foreign Accrual at 2018 Plan Asset impairment charges $ – $ $ – $ ) $ – $ – 2015/2016 Actions Severance and related costs ) – .1 Lease cancellation costs .6 .7 (.6 ) – – .7 Asset impairment charges – .8 – (.8 ) – – Total $ $ $ ) $ ) $ .1 $ The table below shows the total amount of restructuring charges incurred by reportable segment: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Restructuring charges by reportable segment Label and Graphic Materials $ $ Retail Branding and Information Solutions Industrial and Healthcare Materials – .2 Total $ $ |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2018 | |
Financial Instruments | |
Financial Instruments | Note 8. Financial Instruments We enter into foreign exchange hedge contracts to reduce our risk from foreign exchange rate fluctuations associated with receivables, payables, loans and firm commitments denominated in certain foreign currencies that arise primarily as a result of our operations outside the U.S. We enter into interest rate contracts to help manage our exposure to certain interest rate fluctuations. We also enter into futures contracts to hedge certain price fluctuations for a portion of our anticipated domestic purchases of natural gas. The maximum length of time for which we hedge our exposure to the variability in future cash flows for forecasted transactions is 36 months. As of March 31, 2018, the aggregate U.S. dollar equivalent notional value of our outstanding commodity contracts and foreign exchange contracts was $4.5 million and $974.3 million, respectively. We recognize derivative instruments as either assets or liabilities at fair value in the unaudited Condensed Consolidated Balance Sheets. We designate commodity forward contracts on forecasted purchases of commodities and foreign exchange contracts on forecasted transactions as cash flow hedges. We also enter into foreign exchange contracts to offset risks arising from foreign exchange rate fluctuations. The following table shows the fair values and balance sheet locations of cash flow hedges as of March 31, 2018 and December 30, 2017: Asset (In millions) Balance Sheet Location March 31, 2018 December 30, 2017 Foreign exchange contracts Other current assets $ $ .4 Liability (In millions) Balance Sheet Location March 31, 2018 December 30, 2017 Foreign exchange contracts Other current liabilities $ $ .6 Commodity contracts Other current liabilities .1 – $ $ .6 The following table shows the fair values and balance sheet locations of other derivatives as of March 31, 2018 and December 30, 2017: Asset (In millions) Balance Sheet Location March 31, 2018 December 30, 2017 Foreign exchange contracts Other current assets $ $ Liability (In millions) Balance Sheet Location March 31, 2018 December 30, 2017 Foreign exchange contracts Other current liabilities $ $ Cash Flow Hedges For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of “Accumulated other comprehensive loss” and reclassified into earnings in the same period(s) during which the hedged transaction impacts earnings. Gains and losses on the derivatives, representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness, are recognized in current earnings. Gains (losses), before taxes, recognized in “Accumulated other comprehensive loss” (effective portion) on derivatives related to cash flow hedge contracts were as follows: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Foreign exchange contracts $ .9 $ ) Commodity contracts – (.2 ) $ .9 $ ) Neither the amount recognized in income related to the ineffective portion of, nor the amount excluded from, effectiveness testing for cash flow hedges and derivatives not designated as hedging instruments was material for the three months ended March 31, 2018 or April 1, 2017. As of March 31, 2018, we expected a net gain of approximately $.9 million to be reclassified from “Accumulated other comprehensive loss” to earnings within the next 12 months. Other Derivatives For other derivative instruments, which are not designated as hedging instruments, the gain or loss is recognized in current earnings. These derivatives are intended to offset certain of our economic exposures. The following table shows the components of the net gains (losses) recognized in income related to these derivative instruments. Three Months Ended (In millions) Location of Net Gains (Losses) in Income March 31, 2018 April 1, 2017 Foreign exchange contracts Cost of products sold $ (.8 ) $ ) Foreign exchange contracts Marketing, general and administrative expense ) $ ) $ .2 Net Investment Hedge In March 2017, we designated the €500 million of our euro-denominated 1.25% senior notes due 2025 as a net investment hedge of our investment in foreign operations. The net assets from the investment in foreign operations were greater than the senior notes, and as such, the net investment hedge was effective. In January 2018, we reduced the amount we designate as a net investment hedge to €255 million. Gains (losses), before tax, recognized in “Accumulated other comprehensive loss” (effective portion) related to the net investment hedge was as follows: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Foreign currency denominated debt $ ) $ ) We recorded no ineffectiveness from our net investment hedge in earnings during the three months ended March 31, 2018 and April 1, 2017. |
Taxes Based on Income
Taxes Based on Income | 3 Months Ended |
Mar. 31, 2018 | |
Taxes Based on Income | |
Taxes Based on Income | Note 9. Taxes Based on Income The following table summarizes our income before taxes, provision for income taxes, and effective tax rate: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Income before taxes $ $ Provision for income taxes Effective tax rate % % Our effective tax rate for the three months ended March 31, 2018 compared to the same period last year reflects a decrease in the U.S. federal statutory tax rate from 35% to 21%, offset by net tax charges related to certain U.S. international tax provisions, the loss of domestic manufacturing deductions and limitations on the deductibility of our executive compensation, all as a result of the Tax Cuts and Jobs Act (“TCJA”) enacted in December 2017. Our effective tax rate for the three months ended March 31, 2018 included $7.2 million of net tax charges related to the tax on global intangible low-taxed income of our foreign subsidiaries and the base-erosion anti-abuse tax on certain foreign earnings, partially offset by the benefit from foreign-derived intangible income; $2.8 million of tax charges resulting from recognizing foreign withholding taxes on current year earnings; and $4 million of tax benefit from the release of valuation allowances on certain state deferred tax assets primarily related to the impact of state conformity to certain TCJA provisions. These impacts were primarily a result of the TCJA. Additionally, the effective tax rate for the three months ended March 31, 2018 included a discrete tax benefit of $7.1 million related to excess tax benefits associated with stock-based payments and a discrete tax benefit of $7.1 million from decreases in certain tax reserves, including interest and penalties, as a result of closing tax years. Our effective tax rate for the three months ended April 1, 2017 included net discrete tax benefits of $12.7 million related to excess tax benefits associated with stock-based payments and $1.5 million from decreases in certain tax reserves, including interest and penalties, as a result of closing tax years. Our effective tax rate for the three months ended March 31, 2018 also included certain measurement period adjustments to the 2017 provisional amounts related to the enactment of the TCJA in accordance with guidance provided under SEC Staff Accounting Bulletin No. 118 (“SAB 118”). SAB 118 provides for a measurement period up to one year from the enactment of the TCJA within which we may complete our final assessment of the legislation’s impact. Measurement period adjustments determined during the first quarter of 2018 did not have a significant impact on our consolidated financial statements, either individually or in the aggregate. We did not finalize any aspects of the previously disclosed provisional amounts. Furthermore, we have not made a determination on our accounting policy choice related to our global intangible low-taxed income provision nor have we completed the assessment of our indefinite reinvestment assertions. We will continue to assess any future guidance and accounting interpretations on the effects of the TCJA and expect to complete our analysis within the measurement period afforded by SAB 118. The amount of income taxes we pay is subject to ongoing audits by taxing jurisdictions around the world. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. We believe that we have adequately provided for reasonably foreseeable outcomes related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate. We and our U.S. subsidiaries anticipate closing the Internal Revenue Service’s Compliance Assurance Process Program through 2016 in the second quarter of 2018. With some exceptions, our foreign subsidiaries are no longer subject to income tax examinations by tax authorities for years prior to 2006. It is reasonably possible that, during the next 12 months, we may realize a decrease in our uncertain tax positions, including interest and penalties, of approximately $23 million, primarily as a result of audit settlements and closing tax years. |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2018 | |
Net Income Per Common Share | |
Net Income Per Common Share | Note 10. Net Income Per Common Share Net income per common share was computed as follows: Three Months Ended (In millions, except per share amounts) March 31, 2018 April 1, 2017 (A) Net income available to common shareholders $ $ (B) Weighted average number of common shares outstanding Dilutive shares (additional common shares issuable under stock-based awards) (C) Weighted average number of common shares outstanding, assuming dilution Net income per common share: (A) ÷ (B) $ $ Net income per common share, assuming dilution: (A) ÷ (C) $ $ Certain stock-based compensation awards were not included in the computation of net income per common share, assuming dilution, because they would not have had a dilutive effect. Stock-based compensation awards excluded from the computation were not significant for the three months ended March 31, 2018. Stock-based compensation awards excluded from the computation totaled approximately .1 million shares for the three months ended April 1, 2017. |
Comprehensive Income
Comprehensive Income | 3 Months Ended |
Mar. 31, 2018 | |
Comprehensive Income | |
Comprehensive Income | Note 11. Comprehensive Income The changes in “Accumulated other comprehensive loss” (net of tax) for the three-month period ended March 31, 2018 were as follows: (In millions) Foreign Pension and Cash Flow Total Balance as of December 30, 2017 $ ) $ ) $ (.3 ) $ ) Other comprehensive income before reclassifications, net of tax – .7 Reclassifications to net income, net of tax – .2 Net current-period other comprehensive income, net of tax .9 Balance as of March 31, 2018 $ ) $ ) $ .6 $ ) The changes in “Accumulated other comprehensive loss” (net of tax) for the three-month period ended April 1, 2017 were as follows: (In millions) Foreign Pension and Cash Flow Total Balance as of December 31, 2016 $ ) $ ) $ $ ) Other comprehensive income (loss) before reclassifications, net of tax – ) Reclassifications to net income, net of tax – Net current-period other comprehensive income (loss), net of tax (.8 ) Balance as of April 1, 2017 $ ) $ ) $ .2 $ ) The amounts reclassified from “Accumulated other comprehensive loss” to increase (decrease) net income were as follows: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Affected Line Item in the Cash flow hedges: Foreign exchange contracts $ (.3 ) $ (.9 ) Cost of products sold Commodity contracts – .1 Cost of products sold Interest rate contracts – ) Interest expense (.3 ) ) Total before tax .1 .8 Provision for income taxes (.2 ) ) Net of tax Pension and other postretirement benefits ) ) Other non-operating expense Provision for income taxes ) ) Net of tax Total reclassifications for the period $ ) $ ) Total, net of tax The following table sets forth the income tax expense (benefit) allocated to each component of other comprehensive income: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Foreign currency translation $ ) $ ) Pension and other postretirement benefits Cash flow hedges .3 – Income tax benefit allocated to components of other comprehensive income $ ) $ ) |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | Note 12. Fair Value Measurements Recurring Fair Value Measurements The following table shows the assets and liabilities carried at fair value, measured on a recurring basis, as of March 31, 2018: Fair Value Measurements Using (In millions) Total Quoted Prices Significant (Level 2) Significant (Level 3) Assets Trading securities $ $ $ $ – Derivative assets – – Bank drafts – – Liabilities Derivative liabilities $ $ .1 $ $ – Contingent consideration liabilities – – The following table shows the assets and liabilities carried at fair value, measured on a recurring basis, as of December 30, 2017: Fair Value Measurements Using (In millions) Total Quoted Prices Significant (Level 2) Significant (Level 3) Assets Trading securities $ $ $ $ – Derivative assets – – Bank drafts – – Liabilities Derivative liabilities $ $ .1 $ $ – Contingent consideration liabilities – – Trading securities include fixed income securities (primarily U.S. government and corporate debt securities) measured at fair value using quoted prices/bids and a money market fund measured at fair value using net asset value. As of March 31, 2018, trading securities of $.4 million and $22.2 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the unaudited Condensed Consolidated Balance Sheets. As of December 30, 2017, trading securities of $.4 million and $22.3 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the unaudited Condensed Consolidated Balance Sheets. Derivatives that are exchange-traded are measured at fair value using quoted market prices and classified within Level 1 of the valuation hierarchy. Derivatives measured based on foreign exchange rate inputs that are readily available in public markets are classified within Level 2 of the valuation hierarchy. Bank drafts (maturities greater than three months) are valued at face value due to their short-term nature and were included in “Other current assets” in the unaudited Condensed Consolidated Balance Sheets. Contingent consideration liabilities relate to estimated earn-out payments associated with certain of our acquisitions completed in 2017. These payments are based on the achievement of certain performance targets in 2017 and 2018 based on the applicable terms of the purchase agreements, and our estimates are based on the expected payments related to these targets under the terms of their respective agreements. We have classified these liabilities as Level 3. As of March 31, 2018, contingent consideration liabilities were included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets. As of December 30, 2017, contingent consideration liabilities of approximately $18 million and $27 million were included in “Other current liabilities” and “Long-term retirement benefits and other liabilities,” respectively, in the unaudited Condensed Consolidated Balance Sheets. The following table presents a reconciliation of Level 3 contingent consideration liabilities activity for the three months ended March 31, 2018: Level 3 Liabilities (In millions) Contingent Consideration Balance at December 30, 2017 $ Payments ) Balance at March 31, 2018 $ Non-Recurring Fair Value Measurements During the first quarter of 2018, long lived-assets with carrying amounts totaling $17.2 million were written down to their fair value of $10.3 million, resulting in an impairment charge of $6.9 million, which was included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Income. The fair value was based on the estimated sale price of the assets, less estimated broker fees, which is primarily a Level 3 input. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 13. Commitments and Contingencies Legal Proceedings We are involved in various lawsuits, claims, inquiries, and other regulatory and compliance matters, most of which are routine to the nature of our business. When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. The ultimate resolution of these claims could affect future results of operations should our exposure be materially different from our estimates or should liabilities be incurred that were not previously accrued. Potential insurance reimbursements are not offset against potential liabilities. Because of the uncertainties associated with claims resolution and litigation, future expenses to resolve these matters could be higher than the liabilities we have accrued; however, we are unable to reasonably estimate a range of potential expenses. If information were to become available that allowed us to reasonably estimate a range of potential expenses in an amount higher or lower than what we have accrued, we would adjust our accrued liabilities accordingly. Additional lawsuits, claims, inquiries, and other regulatory and compliance matters could arise in the future. The range of expenses for resolving any future matters would be assessed as they arise; until then, a range of potential expenses for such resolution cannot be determined. Based upon current information, we believe that the impact of the resolution of these matters would not be, individually or in the aggregate, material to our financial position, results of operations or cash flows. Environmental Expenditures Environmental expenditures are generally expensed. However, environmental expenditures for newly acquired assets and those which extend or improve the economic useful life of existing assets are capitalized and amortized over the shorter of the estimated useful life of the acquired asset or the remaining life of the existing asset. We review our estimates of costs of compliance with environmental laws related to remediation and cleanup of various sites, including sites in which governmental agencies have designated us as a potentially responsible party (“PRP”). When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. Potential insurance reimbursements are not offset against potential liabilities. As of March 31, 2018, we have been designated by the U.S. Environmental Protection Agency (“EPA”) and/or other responsible state agencies as a PRP at thirteen waste disposal or waste recycling sites that are the subject of separate investigations or proceedings concerning alleged soil and/or groundwater contamination. No settlement of our liability related to any of these sites has been agreed upon. We are participating with other PRPs at these sites and anticipate that our share of remediation costs will be determined pursuant to agreements that we negotiate with the EPA or other governmental authorities. These estimates could change as a result of changes in planned remedial actions, remediation technologies, site conditions, the estimated time to complete remediation, environmental laws and regulations, and other factors. Because of the uncertainties associated with environmental assessment and remediation activities, future expenses to remediate these sites could be higher than the liabilities we have accrued; however, we are unable to reasonably estimate a range of potential expenses. If information were to become available that allowed us to reasonably estimate a range of potential expenses in an amount higher or lower than what we have accrued, we would adjust our environmental liabilities accordingly. In addition, we may be identified as a PRP at additional sites in the future. The range of expenses for remediation of any future-identified sites would be addressed as they arise; until then, a range of expenses for such remediation cannot be determined. The activity for the three months ended March 31, 2018 related to our environmental liabilities was as follows: (In millions) Balance at December 30, 2017 $ Charges (reversals), net (.7 ) Payments ) Balance at March 31, 2018 $ Approximately $4 million and $5 million of the balance was classified as short-term and included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets as of March 31, 2018 and December 30, 2017, respectively. |
Segment and Disaggregated Reven
Segment and Disaggregated Revenue Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment and Disaggregated Revenue Information | |
Segment and Disaggregated Revenue Information | Note 14. Segment and Disaggregated Revenue Information Disaggregated Revenue Information Disaggregated revenue information is set forth below in a manner which best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Revenue from our LGM reportable segment is attributed to geographic areas based on the location from which products are shipped. Revenue from our RBIS reportable segment is shown by product group. Three Months Ended (In millions) March 31, 2018 April 1, 2017 Net sales to unaffiliated customers Label and Graphic Materials: U.S. $ $ Europe Asia Latin America Other international Total Label and Graphic Materials Retail Branding and Information Solutions: Apparel Printer Solutions Total Retail Branding and Information Solutions Industrial and Healthcare Materials Net sales to unaffiliated customers $ $ Additional Segment Information Additional financial information by reportable segment is set forth below: Three Months Ended (In millions) March 31, 2018 April 1, 2017 Intersegment sales Label and Graphic Materials $ $ Retail Branding and Information Solutions .6 .9 Industrial and Healthcare Materials Intersegment sales $ $ Income before taxes Label and Graphic Materials $ $ Retail Branding and Information Solutions Industrial and Healthcare Materials Corporate expense ) ) Interest expense ) ) Other non-operating expense ) ) Income before taxes $ $ Other expense, net by reportable segment Label and Graphic Materials $ $ Retail Branding and Information Solutions Industrial and Healthcare Materials – .5 Other expense, net $ $ Other expense, net by type Restructuring charges: Severance and related costs $ $ Asset impairment charges and lease cancellation costs – Other items: Other restructuring related charge .5 – Net gain on sales of assets (.4 ) – Transaction costs – .8 Other expense, net $ $ |
Supplemental Financial Informat
Supplemental Financial Information | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Financial Information | |
Supplemental Financial Information | Note 15. Supplemental Financial Information Inventories Net inventories consisted of the following: (In millions) March 31, 2018 December 30, 2017 Raw materials $ $ Work-in-progress Finished goods Inventories, net $ $ Property, Plant and Equipment (In millions) March 31, 2018 December 30, 2017 Property, plant and equipment $ $ Accumulated depreciation ) ) Property, plant and equipment, net $ $ Research and Development Research and development expense was $24.8 million and $22.9 million for the three months ended March 31, 2018 and April 1, 2017, respectively. This expense was included in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Statements of Income. Equity Method Investment The carrying values of our equity method investment were $9 million and $9.1 million as of March 31, 2018 and December 30, 2017, respectively, and were included in “Other assets” in the unaudited Condensed Consolidated Balance Sheets. |
Recent Accounting Requirements
Recent Accounting Requirements | 3 Months Ended |
Mar. 31, 2018 | |
Recent Accounting Requirements | |
Recent Accounting Requirements | Note 16. Recent Accounting Requirements In August 2017, the Financial Accounting Standards Board (“FASB”) issued amended guidance to improve the financial reporting of hedging relationships by better reflecting the economic results of an entity’s risk management activities in its financial statements, as well as to simplify the application of hedge accounting. Adoption of this amended presentation and disclosure guidance is required prospectively. This guidance will be effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. We are currently assessing the timing of our adoption and the impact of this guidance on our financial position, results of operations, cash flows, and disclosures. In March 2016, and in subsequent updates, the FASB issued guidance on accounting for leases that requires lessees to recognize the rights and obligations created by leases on their balance sheets. This guidance also requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases and will be effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. Modified retrospective adoption is required with respect to all leases that exist at or commence after the date of initial application of this guidance, with the option to use certain practical expedients. We established a cross-functional team to manage the assessment, design, and implementation of this new guidance. While we are still assessing the impact of this guidance on our financial position, results of operations, cash flows, and disclosures, we currently expect the adoption of this guidance to have a significant impact on our financial position and disclosures. |
General (Policies)
General (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
General | |
Fiscal Periods | Fiscal Periods The first quarters of 2018 and 2017 consisted of thirteen-week periods ending March 31, 2018 and April 1, 2017, respectively. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. |
Accounting Guidance Update | Accounting Guidance Updates Revenue Recognition In the first quarter of 2018, we adopted an accounting guidance update that provides a single comprehensive model on accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. We adopted this guidance using the modified retrospective method, which means that reporting periods beginning in 2018 are presented under this guidance, while prior period amounts continue to be reported under the previous guidance. As allowed under this guidance, we began to apply this guidance for contracts with customers that were not completed as of the beginning of 2018. As a result of the adoption of this guidance, the allowance for customer returns, presented as a reduction of trade accounts receivable in prior years, is now presented as a returns liability in “Other current liabilities.” As of March 31, 2018, the returns liability was $11.3 million. Our adoption of this guidance did not have a material impact on our financial position, results of operations, or cash flows. The applicable disclosures related to this guidance are included in Note 2, “Revenue Recognition,” and Note 14, “Segment and Disaggregated Revenue Information.” Presentation of Net Periodic Benefit Costs In the first quarter of 2018, we adopted an accounting guidance update that requires certain employers with defined benefit plans to present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income. Components other than the service cost component are no longer eligible for capitalization in assets. Employers are required to apply the portion of this guidance on the presentation of the components of net periodic benefit cost in the income statement retrospectively, while the portion of this guidance that limits the capitalization of net periodic benefit cost in assets to the service cost component must be applied prospectively. Prior year results have been reclassified as required by this guidance. The effects of our adoption of this guidance on our unaudited Condensed Consolidated Statements of Income for the prior year were as follows: Three Months Ended April 1, 2017 (In millions) As Previously Reclassification As Reclassified Marketing, general and administrative expense $ $ ) $ Other non-operating expense – Classification of Certain Cash Payments In the first quarter of 2018, we adopted an accounting guidance update that reduces the diversity in the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. Prior year results have been reclassified, as required by this guidance. The effects of our adoption of this guidance, which primarily relate to the classification of corporate-owned life insurance cash flows, on our unaudited Condensed Consolidated Statements of Cash Flows for the prior year were as follows: Three Months Ended April 1, 2017 (In millions) As Previously Reclassification As Reclassified Net cash provided by operating activities $ $ ) $ Net cash used in investing activities ) ) Intra-Entity Transfers of Assets Other Than Inventory In the first quarter of 2018, we adopted an accounting guidance update that requires companies to recognize the income tax effects of intra-entity sales and transfers of assets other than inventory in the period in which they occur. Upon adoption, we derecognized tax-related deferred charges and recognized deferred tax assets related to certain intra-entity asset transfers as a $14 million net reduction to retained earnings. |
General (Tables)
General (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
General | |
Schedule of effects of the adoption of accounting guidance update of Presentation of Net Periodic Benefit Costs and Classification of Certain Cash Payments | Three Months Ended April 1, 2017 (In millions) As Previously Reclassification As Reclassified Marketing, general and administrative expense $ $ ) $ Other non-operating expense – Three Months Ended April 1, 2017 (In millions) As Previously Reclassification As Reclassified Net cash provided by operating activities $ $ ) $ Net cash used in investing activities ) ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition | |
Schedule of amounts and balance sheet locations of deferred revenue | (In millions ) March 31, 2018 December 30, 2017 Other current liabilities $ $ Long-term retirement benefits and other liabilities .5 .4 Total deferred revenue $ $ |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill | |
Changes in net carrying amount of goodwill | (In millions) Label and Retail Branding Industrial and Total Goodwill as of December 30, 2017 $ $ $ $ Translation adjustments .2 Goodwill as of March 31, 2018 $ $ $ $ |
Pension and Other Postretirem27
Pension and Other Postretirement Benefits (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Pension and Other Postretirement Benefits | |
Schedule of components of net periodic benefit cost (credit) | Pension Benefits U.S. Postretirement Health Benefits Three Months Ended Three Months Ended March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 (In millions) U.S. Int’l U.S. Int’l Service cost $ – $ $ .1 $ $ – $ – Interest cost – – Expected return on plan assets ) ) ) ) – – Recognized net actuarial loss .4 .4 Amortization of prior service cost (credit) .2 (.1 ) .2 (.1 ) (.8 ) (.8 ) Recognized loss on settlements (1) .5 – – – – – Net periodic benefit cost (credit) $ $ $ $ $ (.4 ) $ (.4 ) (1) In 2018, settlements were related to lump-sum payments associated with a U.S. defined benefit pension plan. |
Cost Reduction Actions (Tables)
Cost Reduction Actions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Cost Reduction Actions | |
Restructuring charges and payments | (In millions) Accrual at Charges Cash Non-cash Foreign Accrual at 2018 Plan Asset impairment charges $ – $ $ – $ ) $ – $ – 2015/2016 Actions Severance and related costs ) – .1 Lease cancellation costs .6 .7 (.6 ) – – .7 Asset impairment charges – .8 – (.8 ) – – Total $ $ $ ) $ ) $ .1 $ |
Schedule of total amount of restructuring charges incurred by reportable segment | Three Months Ended (In millions) March 31, 2018 April 1, 2017 Restructuring charges by reportable segment Label and Graphic Materials $ $ Retail Branding and Information Solutions Industrial and Healthcare Materials – .2 Total $ $ |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Components of the gains (losses), before taxes, recognized in Accumulated other comprehensive loss related to cash flow hedge contracts | Three Months Ended (In millions) March 31, 2018 April 1, 2017 Foreign exchange contracts $ .9 $ ) Commodity contracts – (.2 ) $ .9 $ ) |
Components of net gains (losses) recognized in income related to the derivative instruments | Three Months Ended (In millions) Location of Net Gains (Losses) in Income March 31, 2018 April 1, 2017 Foreign exchange contracts Cost of products sold $ (.8 ) $ ) Foreign exchange contracts Marketing, general and administrative expense ) $ ) $ .2 |
Components of the gain (loss), before tax, recognized in Accumulated other comprehensive loss related to the net investment hedge | Three Months Ended (In millions) March 31, 2018 April 1, 2017 Foreign currency denominated debt $ ) $ ) |
Cash Flow Hedging | |
Fair value and balance sheet locations of derivatives | Asset (In millions) Balance Sheet Location March 31, 2018 December 30, 2017 Foreign exchange contracts Other current assets $ $ .4 Liability (In millions) Balance Sheet Location March 31, 2018 December 30, 2017 Foreign exchange contracts Other current liabilities $ $ .6 Commodity contracts Other current liabilities .1 – $ $ .6 |
Not designated as hedging instruments | |
Fair value and balance sheet locations of derivatives | Asset (In millions) Balance Sheet Location March 31, 2018 December 30, 2017 Foreign exchange contracts Other current assets $ $ Liability (In millions) Balance Sheet Location March 31, 2018 December 30, 2017 Foreign exchange contracts Other current liabilities $ $ |
Taxes Based on Income (Tables)
Taxes Based on Income (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Taxes Based on Income | |
Income before taxes, provision for income taxes, and effective tax rate from continuing operations | Three Months Ended (In millions) March 31, 2018 April 1, 2017 Income before taxes $ $ Provision for income taxes Effective tax rate % % |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Net Income Per Common Share | |
Schedule of net income per common share | Three Months Ended (In millions, except per share amounts) March 31, 2018 April 1, 2017 (A) Net income available to common shareholders $ $ (B) Weighted average number of common shares outstanding Dilutive shares (additional common shares issuable under stock-based awards) (C) Weighted average number of common shares outstanding, assuming dilution Net income per common share: (A) ÷ (B) $ $ Net income per common share, assuming dilution: (A) ÷ (C) $ $ |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Comprehensive Income | |
Schedule of changes in "Accumulated other comprehensive loss" (net of tax) | (In millions) Foreign Pension and Cash Flow Total Balance as of December 30, 2017 $ ) $ ) $ (.3 ) $ ) Other comprehensive income before reclassifications, net of tax – .7 Reclassifications to net income, net of tax – .2 Net current-period other comprehensive income, net of tax .9 Balance as of March 31, 2018 $ ) $ ) $ .6 $ ) (In millions) Foreign Pension and Cash Flow Total Balance as of December 31, 2016 $ ) $ ) $ $ ) Other comprehensive income (loss) before reclassifications, net of tax – ) Reclassifications to net income, net of tax – Net current-period other comprehensive income (loss), net of tax (.8 ) Balance as of April 1, 2017 $ ) $ ) $ .2 $ ) |
Schedule of amounts reclassified from "Accumulated other comprehensive loss" to increase (decrease) income from continuing operations | Three Months Ended (In millions) March 31, 2018 April 1, 2017 Affected Line Item in the Cash flow hedges: Foreign exchange contracts $ (.3 ) $ (.9 ) Cost of products sold Commodity contracts – .1 Cost of products sold Interest rate contracts – ) Interest expense (.3 ) ) Total before tax .1 .8 Provision for income taxes (.2 ) ) Net of tax Pension and other postretirement benefits ) ) Other non-operating expense Provision for income taxes ) ) Net of tax Total reclassifications for the period $ ) $ ) Total, net of tax |
Schedule of income tax expense (benefit) allocated to each component of other comprehensive income | Three Months Ended (In millions) March 31, 2018 April 1, 2017 Foreign currency translation $ ) $ ) Pension and other postretirement benefits Cash flow hedges .3 – Income tax benefit allocated to components of other comprehensive income $ ) $ ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Assets and liabilities carried at fair value, measured on a recurring basis | The following table shows the assets and liabilities carried at fair value, measured on a recurring basis, as of March 31, 2018: Fair Value Measurements Using (In millions) Total Quoted Prices Significant (Level 2) Significant (Level 3) Assets Trading securities $ $ $ $ – Derivative assets – – Bank drafts – – Liabilities Derivative liabilities $ $ .1 $ $ – Contingent consideration liabilities – – The following table shows the assets and liabilities carried at fair value, measured on a recurring basis, as of December 30, 2017: Fair Value Measurements Using (In millions) Total Quoted Prices Significant (Level 2) Significant (Level 3) Assets Trading securities $ $ $ $ – Derivative assets – – Bank drafts – – Liabilities Derivative liabilities $ $ .1 $ $ – Contingent consideration liabilities – – |
Reconciliation of Level 3 contingent consideration liabilities | Level 3 Liabilities (In millions) Contingent Consideration Balance at December 30, 2017 $ Payments ) Balance at March 31, 2018 $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies | |
Costs of environmental liabilities with remediation | (In millions) Balance at December 30, 2017 $ Charges (reversals), net (.7 ) Payments ) Balance at March 31, 2018 $ |
Segment and Disaggregated Rev35
Segment and Disaggregated Revenue Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment and Disaggregated Revenue Information | |
Summary of net sales to unaffiliated customers | Three Months Ended (In millions) March 31, 2018 April 1, 2017 Net sales to unaffiliated customers Label and Graphic Materials: U.S. $ $ Europe Asia Latin America Other international Total Label and Graphic Materials Retail Branding and Information Solutions: Apparel Printer Solutions Total Retail Branding and Information Solutions Industrial and Healthcare Materials Net sales to unaffiliated customers $ $ |
Summary of additional financial information by reportable segment | Three Months Ended (In millions) March 31, 2018 April 1, 2017 Intersegment sales Label and Graphic Materials $ $ Retail Branding and Information Solutions .6 .9 Industrial and Healthcare Materials Intersegment sales $ $ Income before taxes Label and Graphic Materials $ $ Retail Branding and Information Solutions Industrial and Healthcare Materials Corporate expense ) ) Interest expense ) ) Other non-operating expense ) ) Income before taxes $ $ Other expense, net by reportable segment Label and Graphic Materials $ $ Retail Branding and Information Solutions Industrial and Healthcare Materials – .5 Other expense, net $ $ Other expense, net by type Restructuring charges: Severance and related costs $ $ Asset impairment charges and lease cancellation costs – Other items: Other restructuring related charge .5 – Net gain on sales of assets (.4 ) – Transaction costs – .8 Other expense, net $ $ |
Supplemental Financial Inform36
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Financial Information | |
Net inventories | (In millions) March 31, 2018 December 30, 2017 Raw materials $ $ Work-in-progress Finished goods Inventories, net $ $ |
Property, Plant and Equipment | (In millions) March 31, 2018 December 30, 2017 Property, plant and equipment $ $ Accumulated depreciation ) ) Property, plant and equipment, net $ $ |
General (Details)
General (Details) | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
General | ||
Length of fiscal period | 91 days | 91 days |
General - Accounting Guidance U
General - Accounting Guidance Update (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Accounting Guidance Update | ||
Marketing, general and administrative expense | $ 295 | $ 279.8 |
Other non-operating expense | 3.3 | 3.5 |
Net cash provided by operating activities | 16 | 13.9 |
Net cash used in investing activities | (35.8) | (110.6) |
Deferred taxes related to intra-entity transfers | 14 | |
Accounting Standards Update 2014-09 | ||
Accounting Guidance Update | ||
Returns liability | $ 11.3 | |
Accounting Standards Update 2017-07 | ||
Accounting Guidance Update | ||
Marketing, general and administrative expense | 279.8 | |
Other non-operating expense | 3.5 | |
Accounting Standards Update 2017-07 | As Previously Reported | ||
Accounting Guidance Update | ||
Marketing, general and administrative expense | 283.3 | |
Accounting Standards Update 2017-07 | Reclassifications | ||
Accounting Guidance Update | ||
Marketing, general and administrative expense | (3.5) | |
Other non-operating expense | 3.5 | |
Accounting Standards Update 2016-15 | ||
Accounting Guidance Update | ||
Net cash provided by operating activities | 13.9 | |
Net cash used in investing activities | (110.6) | |
Accounting Standards Update 2016-15 | As Previously Reported | ||
Accounting Guidance Update | ||
Net cash provided by operating activities | 15.3 | |
Net cash used in investing activities | (112) | |
Accounting Standards Update 2016-15 | Reclassifications | ||
Accounting Guidance Update | ||
Net cash provided by operating activities | (1.4) | |
Net cash used in investing activities | $ 1.4 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Dec. 30, 2017 | |
Deferred Revenue | ||
Deferred revenue | $ 19.4 | $ 15.7 |
Net sales | ||
Deferred Revenue | ||
Deferred revenue recognized | 8.4 | |
Other current liabilities | ||
Deferred Revenue | ||
Deferred revenue | 18.9 | 15.3 |
Long-term retirement benefits and other liabilities | ||
Deferred Revenue | ||
Deferred revenue | $ 0.5 | $ 0.4 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Dec. 30, 2017 | |
Changes in the net carrying amount of goodwill | ||
Goodwill, Beginning Balance | $ 985.1 | |
Translation adjustments | 20 | |
Goodwill, Ending Balance | 1,005.1 | |
Label and Graphic Materials | ||
Changes in the net carrying amount of goodwill | ||
Goodwill, Beginning Balance | 429.5 | |
Translation adjustments | 13.1 | |
Goodwill, Ending Balance | 442.6 | |
Retail Branding and Information Solutions | ||
Changes in the net carrying amount of goodwill | ||
Goodwill, Beginning Balance | 355.4 | |
Translation adjustments | 0.2 | |
Goodwill, Ending Balance | 355.6 | |
Accumulated impairment losses | 820 | $ 820 |
Industrial and Healthcare Materials | ||
Changes in the net carrying amount of goodwill | ||
Goodwill, Beginning Balance | 200.2 | |
Translation adjustments | 6.7 | |
Goodwill, Ending Balance | $ 206.9 |
Debt (Details)
Debt (Details) € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2018USD ($) | Apr. 01, 2017EUR (€) | Apr. 01, 2017USD ($) | Dec. 30, 2017USD ($) | Mar. 31, 2017EUR (€) | |
Debt | |||||
Fair value of debt | $ 1,730 | $ 1,600 | |||
Revolving credit facility | |||||
Debt | |||||
Maximum borrowing capacity | 800 | ||||
Amount outstanding | $ 0 | $ 0 | |||
Covenants compliance | we were in compliance with our financial covenants | we were in compliance with our financial covenants | |||
Senior notes due March 2025 at 1.25% | |||||
Debt | |||||
Senior notes issued | € | € 500 | ||||
Interest rate of senior notes (as a percent) | 1.25% | ||||
Proceeds, net of underwriting discounts and estimated offering expenses | € 495.6 | $ 526.7 |
Pension and Other Postretirem42
Pension and Other Postretirement Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Components of net periodic benefit cost (credit) | ||
Recognized loss on settlements | $ 0.5 | |
U.S. | ||
Components of net periodic benefit cost (credit) | ||
Service cost | $ 0.1 | |
Interest cost | 8.6 | 8.4 |
Expected return on plan assets | (10.6) | (10.1) |
Recognized net actuarial loss | 5.2 | 4.6 |
Amortization of prior service cost (credit) | 0.2 | 0.2 |
Recognized loss on settlements | 0.5 | |
Net periodic benefit cost (credit) | 3.9 | 3.2 |
Int'l | ||
Components of net periodic benefit cost (credit) | ||
Service cost | 4.9 | 4.3 |
Interest cost | 3.9 | 3.4 |
Expected return on plan assets | (6.1) | (5) |
Recognized net actuarial loss | 2.1 | 2.6 |
Amortization of prior service cost (credit) | (0.1) | (0.1) |
Net periodic benefit cost (credit) | 4.7 | 5.2 |
U.S. Postretirement Health Benefits | ||
Components of net periodic benefit cost (credit) | ||
Recognized net actuarial loss | 0.4 | 0.4 |
Amortization of prior service cost (credit) | (0.8) | (0.8) |
Net periodic benefit cost (credit) | $ (0.4) | $ (0.4) |
Long-Term Incentive Compensat43
Long-Term Incentive Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Marketing, general and administrative expense | ||
Long-Term Incentive Compensation | ||
Stock-based compensation expense | $ 7.4 | $ 5.6 |
Cash-based awards compensation expense | ||
Cash-based awards compensation expense | 5.6 | $ 10.3 |
Stock-based awards | ||
Long-Term Incentive Compensation | ||
Unrecognized compensation cost related to share based compensation cost | $ 57 | |
Unrecognized compensation cost weighted average recognition period | 3 years |
Cost Reduction Actions (Details
Cost Reduction Actions (Details) $ in Millions | Apr. 19, 2018item | Mar. 31, 2018USD ($)item |
Restructuring charges: | ||
Non-cash asset impairment charges | $ (7.7) | |
Charges (Reversals), net | 12.7 | |
2018 Plan | ||
Restructuring charges: | ||
Number of positions reduced as a result of Cost Reduction Actions | item | 150 | |
Non-cash asset impairment charges | (6.9) | |
Total pretax restructuring charges | $ 70 | |
2018 Plan | Minimum | ||
Restructuring charges: | ||
Number of positions reduced as a result of Cost Reduction Actions | item | 350 | |
2018 Plan | Maximum | ||
Restructuring charges: | ||
Number of positions reduced as a result of Cost Reduction Actions | item | 400 | |
2015/2016 Actions | ||
Restructuring charges: | ||
Number of positions reduced as a result of Cost Reduction Actions | item | 200 | |
Charges (Reversals), net | $ 5.8 |
Cost Reduction Actions - Restru
Cost Reduction Actions - Restructuring Charges and Payments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Cost Reduction Actions | ||
Beginning Balance | $ 4.9 | |
Charges (Reversals), net | 12.7 | |
Cash Payments | (6) | |
Non-cash asset impairment | (7.7) | |
Foreign Currency Translation | 0.1 | |
Ending Balance | 4 | |
Severance and related costs | ||
Cost Reduction Actions | ||
Charges (Reversals), net | 4.3 | $ 5.7 |
2018 Plan | ||
Cost Reduction Actions | ||
Non-cash asset impairment | (6.9) | |
2018 Plan | Asset impairment charges | ||
Cost Reduction Actions | ||
Charges (Reversals), net | 6.9 | |
Non-cash asset impairment | (6.9) | |
2015/2016 Actions | ||
Cost Reduction Actions | ||
Charges (Reversals), net | 5.8 | |
2015/2016 Actions | Severance and related costs | ||
Cost Reduction Actions | ||
Beginning Balance | 4.3 | |
Charges (Reversals), net | 4.3 | |
Cash Payments | (5.4) | |
Foreign Currency Translation | 0.1 | |
Ending Balance | 3.3 | |
2015/2016 Actions | Lease cancellation costs | ||
Cost Reduction Actions | ||
Beginning Balance | 0.6 | |
Charges (Reversals), net | 0.7 | |
Cash Payments | (0.6) | |
Ending Balance | 0.7 | |
2015/2016 Actions | Asset impairment charges | ||
Cost Reduction Actions | ||
Charges (Reversals), net | 0.8 | |
Non-cash asset impairment | $ (0.8) |
Cost Reduction Actions - Report
Cost Reduction Actions - Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Restructuring charges: | ||
Restructuring charges | $ 12.7 | |
Other expense, net | ||
Restructuring charges: | ||
Restructuring charges | 12.7 | $ 5.7 |
Label and Graphic Materials | Other expense, net | ||
Restructuring charges: | ||
Restructuring charges | 7.5 | 2 |
Retail Branding and Information Solutions | Other expense, net | ||
Restructuring charges: | ||
Restructuring charges | $ 5.2 | 3.5 |
Industrial and Healthcare Materials | Other expense, net | ||
Restructuring charges: | ||
Restructuring charges | $ 0.2 |
Financial Instruments (Details)
Financial Instruments (Details) - Cash Flow Hedging $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Financial Instruments | |
Maximum length of time hedged in cash flow hedge | 36 months |
Commodity contracts | |
Financial Instruments | |
Notional amount | $ 4.5 |
Foreign exchange contracts | |
Financial Instruments | |
Notional amount | $ 974,300 |
Financial Instruments - Cash Fl
Financial Instruments - Cash Flow Hedges and Other Derivatives, Fair Value (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 30, 2017 |
Cash Flow Hedging | ||
Cash Flow Hedges, Fair Value | ||
Liability | $ 1.1 | $ 0.6 |
Cash Flow Hedging | Foreign exchange contracts | Other current assets | ||
Cash Flow Hedges, Fair Value | ||
Asset | 2 | 0.4 |
Cash Flow Hedging | Foreign exchange contracts | Other current liabilities | ||
Cash Flow Hedges, Fair Value | ||
Liability | 1 | 0.6 |
Cash Flow Hedging | Commodity contracts | Other current liabilities | ||
Cash Flow Hedges, Fair Value | ||
Liability | 0.1 | |
Not designated as hedging instruments | Foreign exchange contracts | Other current assets | ||
Cash Flow Hedges, Fair Value | ||
Asset | 3 | 3.5 |
Not designated as hedging instruments | Foreign exchange contracts | Other current liabilities | ||
Cash Flow Hedges, Fair Value | ||
Liability | $ 4 | $ 5.6 |
Financial Instruments - Gains (
Financial Instruments - Gains (Losses) Recognized in AOCI (Details) - Cash Flow Hedging - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Gains (losses) recognized in current earnings | ||
Gains (losses) recognized in accumulated other comprehensive loss | $ 0.9 | $ (3.3) |
Cash flow net loss to be reclassified within the next 12 months | (0.9) | |
Foreign exchange contracts | ||
Gains (losses) recognized in current earnings | ||
Gains (losses) recognized in accumulated other comprehensive loss | $ 0.9 | (3.1) |
Commodity contracts | ||
Gains (losses) recognized in current earnings | ||
Gains (losses) recognized in accumulated other comprehensive loss | $ (0.2) |
Financial Instruments - Net Gai
Financial Instruments - Net Gains (Losses) Recognized in Income (Details) - Not designated as hedging instruments - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Gains (losses) recognized in current earnings | ||
Net Gains (Losses) in Income | $ (10.3) | $ 0.2 |
Foreign exchange contracts | Cost of products sold | ||
Gains (losses) recognized in current earnings | ||
Net Gains (Losses) in Income | (0.8) | (1) |
Foreign exchange contracts | Marketing, general and administrative expense | ||
Gains (losses) recognized in current earnings | ||
Net Gains (Losses) in Income | $ (9.5) | $ 1.2 |
Financial Instruments - Net Inv
Financial Instruments - Net Investment Hedge (Details) € in Millions, $ in Millions | 3 Months Ended | ||||
Mar. 31, 2018USD ($) | Apr. 01, 2017USD ($) | Jan. 31, 2018EUR (€) | Dec. 30, 2017EUR (€) | Mar. 31, 2017EUR (€) | |
Gains (losses) recognized in current earnings | |||||
Amount of ineffectiveness from net investment hedge in earnings | $ | $ 0 | $ 0 | |||
Senior notes due March 2025 at 1.25% | |||||
Gains (losses) recognized in current earnings | |||||
Senior notes issued | € | € 500 | ||||
Interest rate of senior notes (as a percent) | 1.25% | ||||
Net Investment Hedge | Designated | |||||
Gains (losses) recognized in current earnings | |||||
Foreign currency denominated debt | $ | $ (22.8) | $ (11.4) | |||
Net Investment Hedge | Designated | Senior notes due March 2025 at 1.25% | |||||
Gains (losses) recognized in current earnings | |||||
Senior notes issued | € | € 255 | € 500 | |||
Interest rate of senior notes (as a percent) | 1.25% |
Taxes Based on Income (Details)
Taxes Based on Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | Dec. 30, 2017 | |
Taxes Based on Income | |||
Income before taxes | $ 159.1 | $ 135.9 | |
Provision for income taxes | $ 33.3 | $ 23.7 | |
Effective tax rate (as a percent) | 20.90% | 17.40% | |
U.S. federal statutory tax rate | 21.00% | 35.00% | |
Net tax charges related to the tax on global intangible low-taxed income of our foreign subsidiaries and the base-erosion anti-abuse tax on certain foreign earnings, partially offset by the benefit from foreign-derived intangible income | $ 7.2 | ||
Tax charges resulting from recognizing foreign withholding taxes on current year earnings | 2.8 | ||
Tax benefit from release of valuation allowances on certain state deferred tax assets primarily related to the impact of state conformity to certain TCJA provisions | 4 | ||
Discrete tax benefit related to excess tax benefits associated with stock-based payments | 7.1 | $ 12.7 | |
Discrete tax benefit from decreases in certain tax reserves, including interest and penalties, as a result of closing tax years | 7.1 | $ 1.5 | |
Reasonably possible decrease in uncertain tax positions, including interest and penalties, primarily as a result of audit settlements and closing tax years during the next 12 months | $ 23 |
Net Income Per Common Share (De
Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Net Income Per Common Share | ||
Net income available to common shareholders | $ 125.2 | $ 112.2 |
Weighted average number of common shares outstanding | 88 | 88.4 |
Dilutive shares (additional common shares issuable under stock-based awards) | 1.6 | 1.6 |
Weighted average number of common shares outstanding, assuming dilution | 89.6 | 90 |
Net income per common share (in dollars per share) | $ 1.42 | $ 1.27 |
Net income per common share, assuming dilution (in dollars per share) | $ 1.40 | $ 1.25 |
Stock-based compensation awards excluded from the computation of net income per common share, assuming dilution | 0.1 |
Comprehensive Income - Changes
Comprehensive Income - Changes in AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Changes in Accumulated other comprehensive loss (net of tax) | ||
Balance at beginning of the period | $ (680.5) | $ (751.9) |
Other comprehensive income (loss) before reclassifications, net of tax | 35 | 32.9 |
Reclassifications to net income, net of tax | 5.9 | 6.5 |
Net current-period other comprehensive income (loss), net of tax | 40.9 | 39.4 |
Balance at end of the period | (639.6) | (712.5) |
Foreign Currency Translation | ||
Changes in Accumulated other comprehensive loss (net of tax) | ||
Balance at beginning of the period | (156.2) | (212.6) |
Other comprehensive income (loss) before reclassifications, net of tax | 34.3 | 35.5 |
Net current-period other comprehensive income (loss), net of tax | 34.3 | 35.5 |
Balance at end of the period | (121.9) | (177.1) |
Pension and Other Postretirement Benefits | ||
Changes in Accumulated other comprehensive loss (net of tax) | ||
Balance at beginning of the period | (524) | (540.3) |
Reclassifications to net income, net of tax | 5.7 | 4.7 |
Net current-period other comprehensive income (loss), net of tax | 5.7 | 4.7 |
Balance at end of the period | (518.3) | (535.6) |
Cash Flow Hedges | ||
Changes in Accumulated other comprehensive loss (net of tax) | ||
Balance at beginning of the period | (0.3) | 1 |
Other comprehensive income (loss) before reclassifications, net of tax | 0.7 | (2.6) |
Reclassifications to net income, net of tax | 0.2 | 1.8 |
Net current-period other comprehensive income (loss), net of tax | 0.9 | (0.8) |
Balance at end of the period | $ 0.6 | $ 0.2 |
Comprehensive Income - Reclassi
Comprehensive Income - Reclassified from AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Amounts reclassified from Accumulated other comprehensive loss | ||
Cost of products sold | $ (1,293) | $ (1,129.7) |
Interest expense | (13.2) | (16.7) |
Other non-operating expense | (3.3) | (3.5) |
Total before tax | 159.1 | 135.9 |
Provision for income taxes | (33.3) | (23.7) |
Net income | 125.2 | 112.2 |
Amounts Reclassified from Accumulated other comprehensive loss | ||
Amounts reclassified from Accumulated other comprehensive loss | ||
Net income | (5.9) | (6.5) |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | ||
Amounts reclassified from Accumulated other comprehensive loss | ||
Total before tax | (0.3) | (2.6) |
Provision for income taxes | 0.1 | 0.8 |
Net income | (0.2) | (1.8) |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Foreign exchange contracts | ||
Amounts reclassified from Accumulated other comprehensive loss | ||
Cost of products sold | (0.3) | (0.9) |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Commodity contracts | ||
Amounts reclassified from Accumulated other comprehensive loss | ||
Cost of products sold | 0.1 | |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Interest Rate Contracts | ||
Amounts reclassified from Accumulated other comprehensive loss | ||
Interest expense | (1.8) | |
Pension and Other Postretirement Benefits | Amounts Reclassified from Accumulated other comprehensive loss | ||
Amounts reclassified from Accumulated other comprehensive loss | ||
Other non-operating expense | 7.5 | 6.9 |
Provision for income taxes | 1.8 | 2.2 |
Net income | $ (5.7) | $ (4.7) |
Comprehensive Income - Income t
Comprehensive Income - Income tax expense (benefit) allocated (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Income tax benefit allocated to components of other comprehensive income | ||
Foreign currency translation | $ (5.3) | $ (4) |
Pension and other postretirement benefits | 1.8 | 2.2 |
Cash flow hedges | 0.3 | |
Income tax benefit allocated to components of other comprehensive income | $ (3.2) | $ (1.8) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 30, 2017 |
Assets | ||
Trading securities | $ 22.6 | $ 22.7 |
Derivative assets | 5 | 3.9 |
Bank drafts | 19.2 | 18.4 |
Liabilities | ||
Derivative liabilities | 5.1 | 6.2 |
Contingent consideration liabilities | 42.5 | 45 |
Cash and Cash Equivalents | ||
Assets | ||
Trading securities | 0.4 | 0.4 |
Other current assets | ||
Assets | ||
Trading securities | 22.2 | 22.3 |
Other current liabilities | ||
Liabilities | ||
Contingent consideration liabilities | 18 | |
Long-term retirement benefits and other liabilities | ||
Liabilities | ||
Contingent consideration liabilities | 27 | |
Quoted Prices in Active Markets (Level 1) | ||
Assets | ||
Trading securities | 17.7 | 17.7 |
Bank drafts | 19.2 | 18.4 |
Liabilities | ||
Derivative liabilities | 0.1 | 0.1 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Trading securities | 4.9 | 5 |
Derivative assets | 5 | 3.9 |
Liabilities | ||
Derivative liabilities | 5 | 6.1 |
Significant Other Unobservable Inputs (Level 3) | ||
Liabilities | ||
Contingent consideration liabilities | $ 42.5 | $ 45 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Level 3 Contingent Consideration Liabilities (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Fair Value Measurements | |
Beginning Balance | $ 45 |
Payments | (2.5) |
Ending Balance | $ 42.5 |
Fair Value Measurements - Non-R
Fair Value Measurements - Non-Recurring Fair Value Measurements (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Non-Recurring Fair Value Measurements | |
Carrying amount of long lived-assets | $ 17.2 |
Fair value of long-lived assets | 10.3 |
Other expense, net | |
Non-Recurring Fair Value Measurements | |
Impairment charges for long lived-assets | $ 6.9 |
Commitments and Contingencies60
Commitments and Contingencies (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2018USD ($)item | Dec. 30, 2017USD ($) | |
Environmental | ||
Environmental site contingency number of sites | item | 13 | |
Activity related to environmental liabilities | ||
Balance at beginning of the period | $ 21.1 | |
Charges (reversals), net | (0.7) | |
Payments | (1.5) | |
Balance at end of the period | 18.9 | |
Short term environmental liabilities | $ 4 | $ 5 |
Segment and Disaggregated Rev61
Segment and Disaggregated Revenue Information - Net Sales to Unaffiliated Customers (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | $ 1,776.4 | $ 1,572.1 |
Retail Branding and Information Solutions | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 386 | 366.8 |
Retail Branding and Information Solutions | Apparel | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 347.2 | 327.6 |
Retail Branding and Information Solutions | Printer Solutions | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 38.8 | 39.2 |
Label and Graphic Materials | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 1,218.2 | 1,089.6 |
Industrial and Healthcare Materials | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 172.2 | 115.7 |
U.S. | Label and Graphic Materials | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 309.8 | 299.7 |
Europe | Label and Graphic Materials | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 484.9 | 404.7 |
Asia | Label and Graphic Materials | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 267.3 | 237.9 |
Latin America | Label and Graphic Materials | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | 88.8 | 86.1 |
Other international | Label and Graphic Materials | ||
Net sales to unaffiliated customers | ||
Net sales to unaffiliated customers | $ 67.4 | $ 61.2 |
Segment and Disaggregated Rev62
Segment and Disaggregated Revenue Information - Sales (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Segment Information | ||
Net sales to unaffiliated customers | $ 1,776.4 | $ 1,572.1 |
Interest expense | (13.2) | (16.7) |
Other non-operating expense | (3.3) | (3.5) |
Income before taxes | 159.1 | 135.9 |
Other expense, net | 12.8 | 6.5 |
Intersegment sales | ||
Segment Information | ||
Net sales to unaffiliated customers | 21.2 | 17.7 |
Label and Graphic Materials | ||
Segment Information | ||
Net sales to unaffiliated customers | 1,218.2 | 1,089.6 |
Label and Graphic Materials | Intersegment sales | ||
Segment Information | ||
Net sales to unaffiliated customers | 18.9 | 15.2 |
Label and Graphic Materials | Operating segments | ||
Segment Information | ||
Income before taxes | 149.7 | 137.7 |
Other expense, net | 8.1 | 2.2 |
Retail Branding and Information Solutions | Intersegment sales | ||
Segment Information | ||
Net sales to unaffiliated customers | 0.6 | 0.9 |
Retail Branding and Information Solutions | Operating segments | ||
Segment Information | ||
Income before taxes | 34.7 | 27.3 |
Other expense, net | 4.7 | 3.8 |
Industrial and Healthcare Materials | ||
Segment Information | ||
Net sales to unaffiliated customers | 172.2 | 115.7 |
Industrial and Healthcare Materials | Intersegment sales | ||
Segment Information | ||
Net sales to unaffiliated customers | 1.7 | 1.6 |
Industrial and Healthcare Materials | Operating segments | ||
Segment Information | ||
Income before taxes | 13 | 13.2 |
Other expense, net | 0.5 | |
Corporate | ||
Segment Information | ||
Income before taxes | $ (21.8) | $ (22.1) |
Segment and Disaggregated Rev63
Segment and Disaggregated Revenue Information - Other Expense, Net by Type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Restructuring charges: | ||
Restructuring charges | $ 12.7 | |
Other items: | ||
Other restructuring related charge | 0.5 | |
Net gain on sales of assets | (0.4) | |
Transaction costs | $ 0.8 | |
Other expense, net | 12.8 | 6.5 |
Severance and related costs | ||
Restructuring charges: | ||
Restructuring charges | 4.3 | $ 5.7 |
Asset impairment charges and lease cancellation costs | ||
Restructuring charges: | ||
Restructuring charges | $ 8.4 |
SUPPLEMENTAL FINANCIAL INFORM64
SUPPLEMENTAL FINANCIAL INFORMATION (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 30, 2017 |
Inventories | ||
Raw materials | $ 248.3 | $ 214.6 |
Work-in-progress | 194.3 | 179.8 |
Finished goods | 235.6 | 215.2 |
Inventories, net | 678.2 | 609.6 |
Property, Plant and Equipment | ||
Property, plant and equipment | 3,032 | 3,000.9 |
Accumulated depreciation | (1,914.4) | (1,903) |
Property, plant and equipment, net | $ 1,117.6 | $ 1,097.9 |
SUPPLEMENTAL FINANCIAL INFORM65
SUPPLEMENTAL FINANCIAL INFORMATION - Software, Equity Method Investment and Research and Development (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Dec. 30, 2017 | |
Equity Method Investment | |||
Carrying value of equity method investment | $ 9 | $ 9.1 | |
Marketing, general and administrative expense | |||
Research and Development | |||
Research and development expense | $ 24.8 | $ 22.9 |