Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 28, 2019 | Oct. 26, 2019 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 28, 2019 | |
Entity File Number | 1-7685 | |
Entity Registrant Name | AVERY DENNISON CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 95-1492269 | |
Entity Address, Address Line One | 207 Goode Avenue | |
Entity Address, City or Town | Glendale | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91203 | |
City Area Code | 626 | |
Local Phone Number | 304-2000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 83,502,894 | |
Current Fiscal Year End Date | --12-28 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000008818 | |
Amendment Flag | false | |
Common stock, $1 par value | ||
Title of 12(b) Security | Common stock, $1 par value | |
Trading Symbol | AVY | |
Security Exchange Name | NYSE | |
Senior notes due 2025 at 1.25% | ||
Title of 12(b) Security | 1.25% Senior Notes due 2025 | |
Trading Symbol | AVY25 | |
Security Exchange Name | NYSE |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 224.2 | $ 232 |
Trade accounts receivable, less allowances of $25.0 and $21.1 at September 28, 2019 and December 29, 2018, respectively | 1,224.2 | 1,189.7 |
Inventories, net | 665 | 651.4 |
Other current assets | 220 | 224.9 |
Total current assets | 2,333.4 | 2,298 |
Property, plant and equipment, net | 1,142.1 | 1,137.4 |
Goodwill | 920.4 | 941.8 |
Other intangibles resulting from business acquisitions, net | 129.1 | 144 |
Non-current deferred income taxes | 195.8 | 205.3 |
Other assets | 617.9 | 451 |
Total assets | 5,338.7 | 5,177.5 |
Current liabilities: | ||
Short-term borrowings and current portion of long-term debt and finance leases | 514.2 | 194.6 |
Accounts payable | 1,041.2 | 1,030.5 |
Accrued payroll and employee benefits | 192 | 217.9 |
Other current liabilities | 520.5 | 551 |
Total current liabilities | 2,267.9 | 1,994 |
Long-term debt and finance leases | 1,483.7 | 1,771.6 |
Long-term retirement benefits and other liabilities | 427 | 334.7 |
Non-current deferred and payable income taxes | 102.7 | 122.1 |
Commitments and contingencies (see Note 13) | ||
Shareholders' equity: | ||
Common stock, $1 par value per share, authorized - 400,000,000 shares at September 28, 2019 and December 29, 2018; issued - 124,126,624 shares at September 28, 2019 and December 29, 2018; outstanding - 83,584,779 shares and 84,723,655 shares at September 28, 2019 and December 29, 2018, respectively | 124.1 | 124.1 |
Capital in excess of par value | 864.8 | 872 |
Retained earnings | 2,861.7 | 2,864.9 |
Treasury stock at cost, 40,541,845 shares and 39,402,969 shares at September 28, 2019 and December 29, 2018, respectively | (2,393.9) | (2,223.9) |
Accumulated other comprehensive loss | (399.3) | (682) |
Total shareholders' equity | 1,057.4 | 955.1 |
Total liabilities and shareholders' equity | $ 5,338.7 | $ 5,177.5 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Trade accounts receivable, allowances (in dollars) | $ 25 | $ 21.1 |
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 | 83,584,779 | 84,723,655 |
Treasury stock, shares | 40,541,845 | 39,402,969 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
Net sales | $ 1,761.4 | $ 1,759.7 | $ 5,297.2 | $ 5,390.3 |
Cost of products sold | 1,289.7 | 1,300.5 | 3,877.8 | 3,946.3 |
Gross profit | 471.7 | 459.2 | 1,419.4 | 1,444 |
Marketing, general and administrative expense | 265.3 | 270.5 | 807.3 | 853 |
Other expense (income), net | 6.7 | (3) | 21.7 | 66.9 |
Interest expense | 19 | 14.7 | 58 | 42.2 |
Other non-operating expense | 0.8 | 9 | 448.2 | 14.9 |
Income before taxes | 179.9 | 168 | 84.2 | 467 |
Provision for (benefit from) income taxes | 34.6 | 17.7 | (58.9) | 94.9 |
Equity method investment losses | (0.7) | (0.8) | (2) | (1.8) |
Net income | $ 144.6 | $ 149.5 | $ 141.1 | $ 370.3 |
Per share amounts: | ||||
Net income per common share (in dollars per share) | $ 1.72 | $ 1.71 | $ 1.68 | $ 4.22 |
Net income per common share, assuming dilution (in dollars per share) | $ 1.71 | $ 1.69 | $ 1.66 | $ 4.16 |
Weighted average number of shares outstanding: | ||||
Common shares (in shares) | 84 | 87.3 | 84.2 | 87.7 |
Common shares, assuming dilution (in shares) | 84.8 | 88.5 | 85.1 | 89.1 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 144.6 | $ 149.5 | $ 141.1 | $ 370.3 |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation | (28.7) | (32.1) | (17.1) | (83.7) |
Pension and other postretirement benefits | 0.5 | 11.8 | 301.4 | 23.5 |
Cash flow hedges | (1.3) | (0.4) | (1.6) | 0.3 |
Other comprehensive (loss) income, net of tax | (29.5) | (20.7) | 282.7 | (59.9) |
Total comprehensive income, net of tax | $ 115.1 | $ 128.8 | $ 423.8 | $ 310.4 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Operating Activities | ||
Net income | $ 141.1 | $ 370.3 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 105.3 | 106.2 |
Amortization | 28.1 | 29.8 |
Provision for doubtful accounts and sales returns | 42.4 | 34.3 |
Stock-based compensation | 25.5 | 24.8 |
Pension plan settlements and related charges | 446.9 | 7.4 |
Deferred income taxes and other non-cash taxes | (176.4) | (7.8) |
Other non-cash expense and loss (income and gain), net | 17.5 | 47.4 |
Changes in assets and liabilities and other adjustments | (163.4) | (424.7) |
Net cash provided by operating activities | 467 | 187.7 |
Investing Activities | ||
Purchases of property, plant and equipment | (132.9) | (132.7) |
Purchases of software and other deferred charges | (27.4) | (21.5) |
Proceeds from sales of property, plant and equipment | 7.7 | 9.4 |
Proceeds from insurance and (purchases) sales of investments, net | 3.5 | 17.6 |
Payments for investments in businesses | (6.5) | (0.2) |
Net cash used in investing activities | (155.6) | (127.4) |
Financing Activities | ||
Net increase in borrowings (maturities of three months or less) | 68.9 | 301.4 |
Repayments of long-term debt and finance leases | (17.7) | (4.4) |
Dividends paid | (141.3) | (130.6) |
Share repurchases | (204.3) | (175.1) |
Net (tax withholding) proceeds related to stock-based compensation | (17.4) | (31.9) |
Payments of contingent consideration | (1.6) | (17.3) |
Net cash used in financing activities | (313.4) | (57.9) |
Effect of foreign currency translation on cash balances | (5.8) | (9.2) |
Decrease in cash and cash equivalents | (7.8) | (6.8) |
Cash and cash equivalents, beginning of year | 232 | 224.4 |
Cash and cash equivalents, end of period | $ 224.2 | $ 217.6 |
General
General | 9 Months Ended |
Sep. 28, 2019 | |
General | |
General | Note 1. General The unaudited Condensed Consolidated Financial Statements and notes thereto 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 2018 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 contain all adjustments of a normal and recurring nature necessary for a fair statement of our interim results. Interim results of operations are not necessarily indicative of future results. Fiscal Periods The three and nine months ended September 28, 2019 and September 29, 2018 consisted of thirteen-week and thirty-nine week periods, respectively. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. Accounting Guidance Updates Leases In the first quarter of 2019, we adopted accounting guidance that requires lessees to recognize on their balance sheets the rights and obligations created by leases. This guidance also requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows from leases. As allowed by this guidance, we elected to apply it using a modified retrospective approach. This approach applies to all leases that existed at or commenced after the date of our initial application. As such, prior year comparative periods have not been adjusted. We elected the transition practical expedients allowed under this guidance. See Note 2, “Leases,” for more information. Hedge Accounting In the first quarter of 2019, we prospectively adopted amended accounting guidance issued 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 and simplifying the application of hedge accounting. As a result of adopting this guidance, our reclassification of gains and losses from cash flow hedges to earnings is included in the same financial statement line item as the hedged item. Our adoption of this guidance did not have a material impact on our financial position, results of operations, cash flows, or disclosures. Reclassification of certain tax effects from accumulated other comprehensive income In the first quarter of 2019, we adopted accounting guidance that provides entities with the option to reclassify certain tax effects of the U.S. Tax Cuts and Jobs Act (“TCJA”) in accumulated other comprehensive income (“AOCI”) to retained earnings. We elected not to reclassify the income tax effects stranded in AOCI to retained earnings. Our accounting policy is to release the income tax effects from AOCI to the income statement at the current statutory rate when the related pretax change is recognized. Furthermore, we release the disproportionate tax effects in AOCI through the income statement as a discrete tax adjustment in the period when the circumstances upon which they are premised cease to exist. |
Leases
Leases | 9 Months Ended |
Sep. 28, 2019 | |
Leases | |
Leases | Note 2. Leases Our leases primarily relate to office and warehouse space, machinery, transportation, and equipment for information technology. For lease accounting purposes, we do not separate lease and nonlease components, nor do we record operating or finance lease assets and liabilities for short-term leases. We determine if an arrangement is a lease or contains a lease at inception. We have options to renew or terminate some of our leases. We evaluate renewal and termination options based on considerations available at the lease commencement date and over the lease term to determine if we are reasonably certain to exercise these options. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments. We recognize expense for operating leases on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred. Supplemental cost information related to leases is shown below. Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 28, 2019 Operating lease cost $ 16.2 $ 48.7 Lease costs related to finance leases were immaterial for the three and nine months ended September 28, 2019. Supplemental balance sheet information related to leases is shown below. (In millions) Balance Sheet Location September 28, 2019 Assets Operating Other assets $ 143.3 Finance (1) Property, plant and equipment, net 30.1 Total leased assets $ 173.4 (1) Liabilities Current: Operating Other current liabilities $ 39.6 Finance Short-term borrowings and current portion of long-term debt and finance leases 3.7 Non-current: Operating Long-term retirement benefits and other liabilities 105.9 Finance Long-term debt and finance leases 19.4 Total lease liabilities $ 168.6 Supplemental cash flow information related to leases is shown below. Nine Months Ended (In millions) September 28, 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 40.8 Operating lease assets obtained in exchange for operating lease liabilities 22.9 Cash flows related to finance leases were immaterial for the nine months ended September 28, 2019. Weighted average remaining lease term and discount rate information related to leases is shown below. September 28, 2019 Weighted average remaining lease term (in years): Operating 6.1 Finance 4.7 Weighted average discount rate: Operating 5.0 % Finance 3.6 Operating and finance lease liabilities by maturity date from September 28, 2019 are shown below. (In millions) Operating Leases Finance Leases 2019 (remainder of year) $ 11.6 $ 1.3 2020 43.8 4.8 2021 33.4 7.9 2022 21.3 3.9 2023 14.4 3.6 2024 and thereafter 43.5 4.3 Total lease payments 168.0 25.8 Less: imputed interest (22.5) (2.7) Present value of lease liabilities $ 145.5 $ 23.1 As of September 28, 2019, we had no significant operating or finance leases that had not yet commenced. As of December 29, 2018, $184.8 million of minimum annual rental commitments on operating leases was payable as follows: $47.7 million in 2019, $38.9 million in 2020, $29.4 million in 2021, $18.8 million in 2022, $12.9 million in 2023, and $37.1 million in 2024 and thereafter. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill | |
Goodwill | Note 3. Goodwill Changes in the net carrying amount of goodwill for the nine months ended September 28, 2019 by reportable segment are shown below. Label and Retail Branding Industrial and Graphic and Information Healthcare (In millions) Materials Solutions Materials Total Goodwill as of December 29, 2018 $ 415.5 $ 349.7 $ 176.6 $ 941.8 Translation adjustments (14.0) (2.3) (5.1) (21.4) Goodwill as of September 28, 2019 $ 401.5 $ 347.4 $ 171.5 $ 920.4 The carrying amounts of goodwill at September 28, 2019 and December 29, 2018 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 | 9 Months Ended |
Sep. 28, 2019 | |
Debt | |
Debt | Note 4. Debt In the second quarter of 2019, we reclassified approximately $265 million of notes due in the second quarter of 2020 from long-term debt to current portion of long-term debt. 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 include commercial paper issuances and short-term lines of credit, approximates their carrying value given the short duration of these obligations. The fair value of our total debt was $2.12 billion at September 28, 2019 and $2 billion at December 29, 2018. Fair values 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”) that matures in November 2022 contains financial covenants requiring us to 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 September 28, 2019 or December 29, 2018. As of both September 28, 2019 and December 29, 2018, we were in compliance with our financial covenants. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 9 Months Ended |
Sep. 28, 2019 | |
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 accrual of benefits under some of which has 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 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, these costs are not included in the disclosures below. The table below shows the components of net periodic benefit cost (credit), which are recorded in income, for our defined benefit plans. Pension Benefits Three Months Ended Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 (In millions) U.S. Int’l U.S. Int’l U.S. Int’l U.S. Int’l Service cost $ — $ 3.9 $ — $ 4.7 $ — $ 11.8 $ — $ 14.5 Interest cost .7 3.7 8.6 3.8 2.1 11.1 25.9 11.8 Actuarial (gain) loss — — (.6) — — — (1.3) — Expected return on plan assets — (5.2) (10.6) (5.8) — (15.8) (31.9) (18.0) Recognized net actuarial loss 1.4 .9 5.2 1.9 2.8 2.9 15.9 6.1 Amortization of prior service (credit) cost — (.1) .2 (.1) — (.3) .6 (.4) Recognized loss on settlements(1) — — 6.7 .1 446.9 — 7.4 .1 Net periodic benefit cost $ 2.1 $ 3.2 $ 9.5 $ 4.6 $ 451.8 $ 9.7 $ 16.6 $ 14.1 (1) U.S. Postretirement Health Benefits Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Interest cost $ .1 $ — $ .1 $ — Recognized net actuarial loss .3 .4 .9 1.1 Amortization of prior service credit (.9) (.8) (2.5) (2.4) Net periodic benefit credit $ (.5) $ (.4) $ (1.5) $ (1.3) Service cost and components of net periodic benefit cost (credit) other than service cost were included in “Marketing, general and administrative expense” and “Other non-operating expense,” respectively, in the unaudited Condensed Consolidated Statements of Income. In July 2018, our Board of Directors (“Board”) approved the termination of the Avery Dennison Pension Plan (the “ADPP”), a U.S. defined benefit plan, effective as of September 28, 2018. In connection with the termination, we contributed $200 million to the ADPP in August 2018 using U.S. commercial paper borrowings (subsequently repaid by our issuance of long-term debt); settled approximately $152 million of ADPP liabilities during the fourth quarter of 2018 through lump-sum payments from existing plan assets to eligible participants who elected to receive them; and recorded approximately $85 million of non-cash charges associated with these settlements. On March 21, 2019, we effectively settled the remaining ADPP liabilities through the execution of an agreement to purchase annuities from American General Life Insurance Company (“AGL”), a subsidiary of American International Group, Inc. Under the agreement, we settled approximately $750 million of ADPP pension obligations for approximately 8,500 active and former employees and their beneficiaries, with AGL assuming the future annuity payments for these individuals, commencing at April 1, 2019. This settlement resulted in approximately $447 million of pretax charges, partially offset by related tax benefits of $180 million, which we recorded in March 2019. Refer to Note 9, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information. We contributed approximately $9 million of cash during the first nine months of 2019 to the ADPP to cover costs associated with the settlement of these liabilities. |
Long-Term Incentive Compensatio
Long-Term Incentive Compensation | 9 Months Ended |
Sep. 28, 2019 | |
Long-Term Incentive Compensation | |
Long-Term Incentive Compensation | Note 6. Long-Term Incentive Compensation Stock-Based Awards Stock-based compensation expense was $9 million and $25.5 million for the three and nine months ended September 28, 2019, respectively, and $8.4 million and $24.8 million for the three and nine months ended September 29, 2018, respectively. This expense was included in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Statements of Income. As of September 28, 2019, we had approximately $52 million of unrecognized compensation expense related to unvested stock-based awards, which we expect to recognize over the remaining weighted average requisite service period of approximately two years. Cash-Based Awards The compensation expense related to long-term incentive units was $2.4 million and $13.6 million for the three and nine months ended September 28, 2019, respectively, and $3.9 million and $12.7 million for the three and nine months ended September 29, 2018, 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 | 9 Months Ended |
Sep. 28, 2019 | |
Cost Reduction Actions | |
Cost Reduction Actions | Note 7. Cost Reduction Actions 2018/2019 Actions In April 2018, we approved a restructuring plan (the “2018 Plan”) to consolidate the European footprint of our Label and Graphic Materials (“LGM”) reportable segment, which is expected to reduce headcount by approximately 400 positions from 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. The cumulative charges associated with the 2018 Plan through the third quarter of 2019 consisted of severance and related costs for the reduction of approximately 345 positions, as well as asset impairment charges. During the nine months ended September 28, 2019, we recorded a net $.8 million in restructuring reversals related to the 2018 Plan. The activities related to the 2018 Plan were substantially completed as of the end of the second quarter of 2019. In addition to the net restructuring reversals recorded under the 2018 Plan, we recorded $23 million in restructuring charges during the nine months ended September 28, 2019 related to other 2018/2019 Actions. These charges consisted of severance and related costs for the reduction of approximately 320 positions, as well as asset impairment charges and lease cancellation costs. During the nine months ended September 28, 2019, restructuring charges and payments were as follows: Accrual at Charges, Foreign Accrual at December 29, Net of Cash Non-cash Currency September 28, (In millions) 2018 Reversals Payments Impairment Translation 2019 2018/2019 Actions Severance and related costs $ 40.8 $ 20.4 $ (45.9) $ — $ (1.2) $ 14.1 Asset impairment charges — 1.5 — (1.5) — — Lease cancellation costs — .3 (.1) — — .2 Total $ 40.8 $ 22.2 $ (46.0) $ (1.5) $ (1.2) $ 14.3 2015/2016 Actions During the nine months ended September 28, 2019, we recorded $.7 million in restructuring reversals related to restructuring actions initiated during the third quarter of 2015. The activities and related charges and payments related to the 2015/2016 Actions were substantially completed in 2018. 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 (income), net” in the unaudited Condensed Consolidated Statements of Income. The table below shows the total amount of restructuring charges, net of reversals, incurred by reportable segment. Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Restructuring charges, net of reversals, by reportable segment Label and Graphic Materials $ 1.2 $ (9.4) $ 13.9 $ 55.9 Retail Branding and Information Solutions 1.2 3.0 3.4 9.6 Industrial and Healthcare Materials .9 — 4.2 .2 Total $ 3.3 $ (6.4) $ 21.5 $ 65.7 |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 28, 2019 | |
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 September 28, 2019, the aggregate U.S. dollar equivalent notional value of our outstanding commodity contracts and foreign exchange contracts was $3.7 million and $1.1 billion, respectively. We recognize derivative instruments as either assets or liabilities at fair value in the unaudited Condensed Consolidated Balance Sheets. The following tables show the fair values and balance sheet locations of cash flow hedges as of September 28, 2019 and December 29, 2018: Asset (In millions) Balance Sheet Location September 28, 2019 December 29, 2018 Foreign exchange contracts Other current assets $ .6 $ .5 Commodity contracts Other current assets — .1 $ .6 $ .6 Liability (In millions) Balance Sheet Location September 28, 2019 December 29, 2018 Foreign exchange contracts Other current liabilities $ 2.4 $ .8 The following tables show the fair values and balance sheet locations of other derivatives as of September 28, 2019 and December 29, 2018: Asset (In millions) Balance Sheet Location September 28, 2019 December 29, 2018 Foreign exchange contracts Other current assets $ 7.1 $ 3.0 Liability (In millions) Balance Sheet Location September 28, 2019 December 29, 2018 Foreign exchange contracts Other current liabilities $ 5.7 $ 7.9 Cash Flow Hedges We designate commodity forward contracts on forecasted purchases of commodities and foreign exchange contracts on forecasted transactions as 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 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 Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign exchange contracts $ (1.5) $ .7 $ (.6) $ 1.2 Commodity contracts (.1) — (.6) — Total $ (1.6) $ .7 $ (1.2) $ 1.2 Neither the amount recognized in income related to the ineffective portion of, nor the amount excluded from effectiveness testing for, cash flow hedges was material for the three and nine months ended September 28, 2019 or September 29, 2018. As of September 28, 2019, we expected a net loss of approximately $2 million to be reclassified from “Accumulated other comprehensive loss” to earnings within the next 12 months. Other Derivatives For other derivative instruments that 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 arising from foreign exchange rate fluctuations. The following table shows the components of the net gains (losses) recognized in income related to these derivative instruments: Three Months Ended Nine Months Ended (In millions) Statements of Income Location September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign exchange contracts Cost of products sold $ .3 $ 1.6 $ (.3) $ 2.9 Foreign exchange contracts Marketing, general and administrative expense .1 2.7 1.8 (13.4) Total $ .4 $ 4.3 $ 1.5 $ (10.5) Net Investment Hedge In March 2017, we designated the entire €500 million of our 1.25% senior notes due 2025 as a net investment hedge of our investment in foreign operations. In January 2018, we reduced the amount we designated as a net investment hedge to €255 million. In May 2019, we de-designated the remaining net investment hedge as a result of changes in our intercompany capital structure. Through the time preceding de-designation, the net assets from our investment in foreign operations were greater than the amount designated as a net investment hedge, and, as such, the net investment hedge was effective. Gains (losses), before tax, recognized in “Accumulated other comprehensive loss” (effective portion) related to the net investment hedge were as follows: Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign currency denominated debt $ — $ (3.1) $ 6.8 $ (6.7) We recorded no ineffectiveness from our net investment hedge in net (loss) income during the three or nine months ended September 28, 2019 and September 29, 2018. |
Taxes Based on Income
Taxes Based on Income | 9 Months Ended |
Sep. 28, 2019 | |
Taxes Based on Income | |
Taxes Based on Income | Note 9. Taxes Based on Income The following table summarizes our income before taxes, provision for (benefit from) income taxes, and effective tax rate: Three Months Ended Nine Months Ended (In millions, except percentages) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Income before taxes $ 179.9 $ 168.0 $ 84.2 $ 467.0 Provision for (benefit from) income taxes 34.6 17.7 (58.9) 94.9 Effective tax rate 19.2 % 10.5 % (70.0) % 20.3 % Our provision for (benefit from) income taxes for the three and nine months ended September 28, 2019 included $4.6 million and $15 million, respectively, of net tax charges related to the tax on global intangible low-taxed income (“GILTI”) of our foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from foreign-derived intangible income (“FDII”). Effective in 2019, we implemented certain operational structure changes to better align with our business strategies, one benefit of which was to reduce our base erosion payments below the statutory threshold. As a result, our provision for (benefit from) income taxes for the three and nine months ended September 28, 2019 did not include tax charges related to Base Erosion Antiabuse Tax (“BEAT”). Furthermore, our effective tax rate for the three and nine months ended September 28, 2019 reflected the impact from the loss of benefits associated with a concessionary tax rate in a foreign jurisdiction. Our provision for (benefit from) income taxes for the three and nine months ended September 28, 2019 also reflected an $8.4 million discrete tax benefit due to the effective settlement of certain German tax audits for tax years 2011-2014. Additionally, our benefit from income taxes for the nine months ended September 28, 2019 included the following discrete items: (i) $8 million of tax benefits related to excess tax benefits associated with stock-based payments and (ii) $180 million of tax benefits related to the effective settlement of the ADPP, $103 million of which was the related tax effect on the pretax charge of $447 million and $77 million of which was related to the release of stranded tax effects in AOCI through the income statement. The tax effects were stranded primarily as a result of the U.S. federal tax rate change under the TCJA. Refer to Note 1, “General,” and Note 5, “Pension and Other Postretirement Benefits,” to the unaudited Condensed Consolidated Financial Statements for more information. Our provision for income taxes for the three and nine months ended September 29, 2018 included net tax charges related to the tax on GILTI of our foreign subsidiaries, BEAT, and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from FDII. Our provision for income taxes for the nine months ended September 29, 2018 reflected net discrete tax benefits primarily related to excess tax benefits associated with stock-based payments and changes in our uncertain tax positions. Our provision for income taxes for the three and nine months ended September 29, 2018 also included the following: (i) net discrete tax benefits of $36.6 million and $37.3 million, respectively, reflecting return-to-provision adjustments recognized in the third quarter primarily related to an incremental $31 million tax benefit from our U.S. pension plan contributions and (ii) an $8.6 million tax benefit from recognition of a net foreign currency loss. Both of these items related to deductions taken at a tax rate higher than 21%, concurrent with the completion of our 2017 U.S. federal income tax return. The $31 million tax benefit was related to the ADPP termination approved by our Board in July 2018, as well as lump-sum payments associated with two U.S. nonqualified benefit plans. Refer to Note 5, “Pension and Other Postretirement Benefits,” to the unaudited Condensed Consolidated Financial Statements for more information. The $8.6 million tax benefit was related to our election of a mark-to-market method of accounting on our 2017 U.S. federal income tax return to realize certain fair value adjustments. Additionally, our provision for income taxes for the three and nine months ended September 29, 2018 included certain measurement period adjustments to our 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 of up to one year from the enactment of the TCJA within which we must complete our final assessment of the legislation’s impact. For the nine months ended September 29, 2018, we adjusted our provisional amounts by recognizing net tax charges of $2.7 million. This amount included: (i) $3.6 million of charges for changes in our indefinite reinvestment assertions related to our investments in certain foreign subsidiaries after information required to make such determinations was obtained; (ii) an $8.5 million charge for adjustments made to the one-time transition tax, primarily due to a change in filing position and regulatory guidance subsequently issued by the Internal Revenue Service (“IRS”); and (iii) a $9.4 million benefit from releasing a previously recorded uncertain tax position after the position was not included on our 2017 U.S. federal income tax return. 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. The final determination of tax audits and any related legal proceedings could materially differ from amounts reflected in our tax provision and the related liabilities. In 2019, we anticipate completing the IRS Compliance Assurance Process Program through 2017. With limited exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2009. 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 $13 million, primarily as a result of audit settlements and closing tax years. |
Net Income Per Common Share
Net Income Per Common Share | 9 Months Ended |
Sep. 28, 2019 | |
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 Nine Months Ended (In millions, except per share amounts) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 (A) Net income $ 144.6 $ 149.5 $ 141.1 $ 370.3 (B) Weighted average number of common shares outstanding 84.0 87.3 84.2 87.7 Dilutive shares (additional common shares issuable under stock-based awards) .8 1.2 .9 1.4 (C) Weighted average number of common shares outstanding, assuming dilution 84.8 88.5 85.1 89.1 Net income per common share: (A) ÷ (B) $ 1.72 $ 1.71 $ 1.68 $ 4.22 Net income per common share, assuming dilution: (A) ÷ (C) $ 1.71 $ 1.69 $ 1.66 $ 4.16 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 either the nine months ended September 29, 2018 or the nine months ended September 28, 2019. No stock-based compensation awards were anti-dilutive for the three months ended September 29, 2018. |
Supplemental Equity and Compreh
Supplemental Equity and Comprehensive Income Information | 9 Months Ended |
Sep. 28, 2019 | |
Supplemental Equity and Comprehensive Income Information | |
Supplemental Equity and Comprehensive Income Information | Note 11. Supplemental Equity and Comprehensive Income Information Consolidated Changes in Shareholders’ Equity Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Common stock issued, $1 par value per share $ 124.1 $ 124.1 $ 124.1 $ 124.1 Capital in excess of par value Beginning balance $ 857.7 $ 854.5 $ 872.0 $ 862.6 Issuance of shares under stock-based compensation plans (1) 7.1 7.9 (7.2) (.2) Ending balance $ 864.8 $ 862.4 $ 864.8 $ 862.4 Retained earnings Beginning balance $ 2,762.3 $ 2,702.1 $ 2,864.9 $ 2,596.7 Tax accounting for intra-entity asset transfers (2) — — — (13.8) Net income 144.6 149.5 141.1 370.3 Issuance of shares under stock-based compensation plans (1) — (.1) (13.4) (23.9) Contribution of shares to 401(k) Plan (1) 3.4 3.2 10.4 10.7 Dividends (48.6) (45.3) (141.3) (130.6) Ending balance $ 2,861.7 $ 2,809.4 $ 2,861.7 $ 2,809.4 Treasury stock at cost Beginning balance $ (2,311.8) $ (1,939.1) $ (2,223.9) $ (1,856.7) Repurchase of shares for treasury (87.7) (72.2) (204.3) (175.1) Issuance of shares under stock-based compensation plans 3.5 .9 27.6 17.4 Contribution of shares to 401(k) Plan (1) 2.1 2.0 6.7 6.0 Ending balance $ (2,393.9) $ (2,008.4) $ (2,393.9) $ (2,008.4) Accumulated other comprehensive loss Beginning balance $ (369.8) $ (719.7) $ (682.0) $ (680.5) Other comprehensive (loss) income, net of tax (3) (29.5) (20.7) 282.7 (59.9) Ending balance $ (399.3) $ (740.4) $ (399.3) $ (740.4) (1) (2) (3) Dividends per common share were as follows: Three Months Ended Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Dividends per common share $ .58 $ .52 $ 1.68 $ 1.49 In April 2019, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $650 million, exclusive of any fees, commissions or other expenses related to such purchases and in addition to the amount outstanding under our previous Board authorization. Board authorizations remain in effect until shares in the amount authorized thereunder have been repurchased. Changes in Accumulated Other Comprehensive Loss The changes in “Accumulated other comprehensive loss” (net of tax) for the nine-month period ended September 28, 2019 were as follows: Pension and Foreign Other Currency Postretirement Cash Flow (In millions) Translation Benefits Hedges Total Balance as of December 29, 2018 $ (247.4) $ (434.3) $ (.3) $ (682.0) Other comprehensive (loss) income before reclassifications, net of tax (1) (17.1) 36.0 (.9) 18.0 Reclassifications to net income, net of tax (2) — 265.4 (.7) 264.7 Net current-period other comprehensive (loss) income, net of tax (17.1) 301.4 (1.6) 282.7 Balance as of September 28, 2019 $ (264.5) $ (132.9) $ (1.9) $ (399.3) (1) (2) The changes in “Accumulated other comprehensive loss” (net of tax) for the nine-month period ended September 29, 2018 were as follows: Pension and Foreign Other Currency Postretirement Cash Flow (In millions) Translation Benefits Hedges Total Balance as of December 30, 2017 $ (156.2) $ (524.0) $ (.3) $ (680.5) Other comprehensive (loss) income before reclassifications, net of tax (83.7) 1.7 .9 (81.1) Reclassifications to net income, net of tax — 21.8 (.6) 21.2 Net current-period other comprehensive (loss) income, net of tax (83.7) 23.5 .3 (59.9) Balance as of September 29, 2018 $ (239.9) $ (500.5) $ — $ (740.4) The amounts reclassified from “Accumulated other comprehensive loss” to increase (decrease) net income were as follows: Amounts Reclassified from Accumulated Other Comprehensive Loss Three Months Ended Nine Months Ended Statements of Income (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Location Cash flow hedges: Foreign exchange contracts $ .2 $ 1.2 $ 1.0 $ .9 Cost of products sold Commodity contracts (.1) — (.1) (.1) Cost of products sold Total before tax .1 1.2 .9 .8 Tax — (.3) (.2) (.2) Provision for (benefit from) income taxes Net of tax .1 .9 .7 .6 Pension and other postretirement benefits (.5) (13.6) (444.7) (28.4) Other non-operating expense Tax — 3.5 179.3 6.6 Provision for (benefit from) income taxes Net of tax (.5) (10.1) (265.4) (21.8) Total reclassifications for the period $ (.4) $ (9.2) $ (264.7) $ (21.2) The following table sets forth the income tax expense (benefit) allocated to each component of other comprehensive income: Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign currency translation $ (11.9) $ .3 $ (11.6) $ (.5) Pension and other postretirement benefits — 4.0 190.0 7.1 Cash flow hedges (.4) (.1) (.5) .1 Income tax (benefit) expense allocated to components of other comprehensive income $ (12.3) $ 4.2 $ 177.9 $ 6.7 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 28, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | Note 12. Fair Value Measurements Recurring Fair Value Measurements The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of September 28, 2019: Fair Value Measurements Using Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) Assets Trading securities $ 31.9 $ 27.3 $ 4.6 $ — Derivative assets 7.7 — 7.7 — Bank drafts 14.3 14.3 — — Liabilities Derivative liabilities $ 8.1 $ — $ 8.1 $ — The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of December 29, 2018: Fair Value Measurements Using Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) Assets Trading securities $ 26.3 $ 21.5 $ 4.8 $ — Derivative assets 3.6 .1 3.5 — Bank drafts 23.0 23.0 — — Liabilities Derivative liabilities $ 8.7 $ — $ 8.7 $ — Contingent consideration liability 1.6 — — 1.6 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 September 28, 2019, trading securities of $.4 million and $31.5 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the unaudited Condensed Consolidated Balance Sheets. As of December 29, 2018, trading securities of $.2 million and $26.1 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 liability in 2018, which was included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets, was related to an estimated earn-out payment associated with an acquisition we completed in 2017 and was classified as Level 3. This liability was based on the acquired company’s achievement of the designated performance target in 2018 under the terms of the purchase agreement and paid in the first quarter of 2019. Non-Recurring Fair Value Measurements During the nine months ended September 29, 2018, long-lived assets with carrying amounts totaling $18.1 million were written down to their fair value of $10.6 million, resulting in an impairment charge of $7.5 million, which was included in “Other expense (income), 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 | 9 Months Ended |
Sep. 28, 2019 | |
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 that 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 the costs of complying 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 September 28, 2019, we have been designated by the U.S. Environmental Protection Agency (“EPA”) and/or other responsible state agencies as a PRP at eleven 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, our 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 related to our environmental liabilities for the nine months ended September 28, 2019 was as follows: (In millions) Balance at December 29, 2018 $ 20.0 Charges, net of reversals 6.5 Payments (4.1) Balance at September 28, 2019 $ 22.4 Approximately $11 million and $5 million, respectively, of the balance was classified as short-term and included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets as of September 28, 2019 and December 29, 2018. |
Segment and Disaggregated Reven
Segment and Disaggregated Revenue Information | 9 Months Ended |
Sep. 28, 2019 | |
Segment and Disaggregated Revenue Information | |
Segment and Disaggregated Revenue Information | Note 14. Segment and Disaggregated Revenue Information Disaggregated Revenue Information Disaggregated revenue information is shown below in the manner that 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 Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net sales to unaffiliated customers Label and Graphic Materials: U.S. $ 315.8 $ 315.6 $ 947.6 $ 948.5 Europe 429.5 441.5 1,331.6 1,416.6 Asia 266.8 266.4 790.1 804.5 Latin America 99.0 94.4 284.0 280.7 Other international 74.0 76.3 216.4 219.4 Total Label and Graphic Materials 1,185.1 1,194.2 3,569.7 3,669.7 Retail Branding and Information Solutions: Apparel 353.8 354.4 1,077.3 1,074.9 Printer Solutions 53.0 44.0 146.1 126.2 Total Retail Branding and Information Solutions 406.8 398.4 1,223.4 1,201.1 Industrial and Healthcare Materials 169.5 167.1 504.1 519.5 Net sales to unaffiliated customers $ 1,761.4 $ 1,759.7 $ 5,297.2 $ 5,390.3 Additional Segment Information Additional financial information by reportable segment is shown below. Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Intersegment sales Label and Graphic Materials $ 18.2 $ 20.9 $ 59.5 $ 59.6 Retail Branding and Information Solutions 5.6 1.3 14.8 2.9 Industrial and Healthcare Materials 1.5 2.6 7.0 6.8 Intersegment sales $ 25.3 $ 24.8 $ 81.3 $ 69.3 Income before taxes Label and Graphic Materials $ 159.0 $ 152.9 $ 460.6 $ 418.1 Retail Branding and Information Solutions 45.7 42.4 147.5 122.4 Industrial and Healthcare Materials 17.7 15.3 47.8 44.9 Corporate expense (22.7) (18.9) (65.5) (61.3) Interest expense (19.0) (14.7) (58.0) (42.2) Other non-operating expense (.8) (9.0) (448.2) (14.9) Income before taxes $ 179.9 $ 168.0 $ 84.2 $ 467.0 Other expense (income), net by reportable segment Label and Graphic Materials $ 1.2 $ (6.0) $ 13.2 $ 59.9 Retail Branding and Information Solutions 1.2 3.0 .9 9.1 Industrial and Healthcare Materials .9 — 4.2 .2 Corporate 3.4 — 3.4 (2.3) Other expense (income), net $ 6.7 $ (3.0) $ 21.7 $ 66.9 Other expense (income), net by type Restructuring charges: Severance and related costs, net of reversals $ 3.3 $ (7.1) $ 19.8 $ 56.0 Asset impairment charges and lease cancellation costs — .7 1.7 9.7 Other items: Legal settlement 3.4 — 3.4 — Argentine peso remeasurement transition loss — 3.4 — 3.4 Other restructuring-related charge — — — .5 Net gain on sales of assets — — (3.2) (2.7) Other expense (income), net $ 6.7 $ (3.0) $ 21.7 $ 66.9 |
Supplemental Financial Informat
Supplemental Financial Information | 9 Months Ended |
Sep. 28, 2019 | |
Supplemental Financial Information | |
Supplemental Financial Information | Note 15. Supplemental Financial Information Inventories Net inventories consisted of the following: (In millions) September 28, 2019 December 29, 2018 Raw materials $ 231.9 $ 236.2 Work-in-progress 204.7 196.7 Finished goods 228.4 218.5 Inventories, net $ 665.0 $ 651.4 Property, Plant and Equipment (In millions) September 28, 2019 December 29, 2018 Property, plant and equipment $ 3,082.7 $ 3,053.7 Accumulated depreciation (1,940.6) (1,916.3) Property, plant and equipment, net $ 1,142.1 $ 1,137.4 Deferred Revenue Deferred revenue relates to constrained variable consideration on supply agreements for sales of products, as well as to payments received in advance of performance under a contract. Deferred revenue is recognized as revenue as or when we satisfy our performance obligations under a contract. The following table shows the amounts and balance sheet locations of deferred revenue as of September 28, 2019 and December 29, 2018: (In millions) September 28, 2019 December 29, 2018 Other current liabilities $ 11.5 $ 11.5 Long-term retirement benefits and other liabilities .3 .3 Total deferred revenue $ 11.8 $ 11.8 Revenue recognized from amounts included in deferred revenue as of December 29, 2018 was $.8 million and $10.3 million for the three and nine months ended September 28, 2019, respectively. Revenue recognized from amounts included in deferred revenue as of December 30, 2017 was $1.1 million and $11.4 million for the three and nine months ended September 29, 2018, respectively. This revenue was included in "Net sales" in the unaudited Condensed Consolidated Statements of Income. Research and Development Research and development expense was $21.7 million and $71.2 million for the three and nine months ended September 28, 2019, respectively, and $24.5 million and $74.5 million for the three and nine months ended September 29, 2018, respectively. This expense was included in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Statements of Income. Equity Method Investment The carrying value of our equity method investment in PragmatIC Printing Limited was $8.8 million and $6.7 million as of September 28, 2019 and December 29, 2018, respectively, and was included in “Other assets” in the unaudited Condensed Consolidated Balance Sheets. In January 2019, we made an additional investment in that company of approximately $4 million. |
General (Policies)
General (Policies) | 9 Months Ended |
Sep. 28, 2019 | |
General | |
Fiscal Periods | Fiscal Periods The three and nine months ended September 28, 2019 and September 29, 2018 consisted of thirteen-week and thirty-nine week periods, respectively. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. |
Accounting Guidance Updates | Accounting Guidance Updates Leases In the first quarter of 2019, we adopted accounting guidance that requires lessees to recognize on their balance sheets the rights and obligations created by leases. This guidance also requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows from leases. As allowed by this guidance, we elected to apply it using a modified retrospective approach. This approach applies to all leases that existed at or commenced after the date of our initial application. As such, prior year comparative periods have not been adjusted. We elected the transition practical expedients allowed under this guidance. See Note 2, “Leases,” for more information. Hedge Accounting In the first quarter of 2019, we prospectively adopted amended accounting guidance issued 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 and simplifying the application of hedge accounting. As a result of adopting this guidance, our reclassification of gains and losses from cash flow hedges to earnings is included in the same financial statement line item as the hedged item. Our adoption of this guidance did not have a material impact on our financial position, results of operations, cash flows, or disclosures. Reclassification of certain tax effects from accumulated other comprehensive income In the first quarter of 2019, we adopted accounting guidance that provides entities with the option to reclassify certain tax effects of the U.S. Tax Cuts and Jobs Act (“TCJA”) in accumulated other comprehensive income (“AOCI”) to retained earnings. We elected not to reclassify the income tax effects stranded in AOCI to retained earnings. Our accounting policy is to release the income tax effects from AOCI to the income statement at the current statutory rate when the related pretax change is recognized. Furthermore, we release the disproportionate tax effects in AOCI through the income statement as a discrete tax adjustment in the period when the circumstances upon which they are premised cease to exist. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Leases | |
Supplemental cost information related to leases | Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 28, 2019 Operating lease cost $ 16.2 $ 48.7 |
Supplemental balance sheet information related to leases | (In millions) Balance Sheet Location September 28, 2019 Assets Operating Other assets $ 143.3 Finance (1) Property, plant and equipment, net 30.1 Total leased assets $ 173.4 (1) Liabilities Current: Operating Other current liabilities $ 39.6 Finance Short-term borrowings and current portion of long-term debt and finance leases 3.7 Non-current: Operating Long-term retirement benefits and other liabilities 105.9 Finance Long-term debt and finance leases 19.4 Total lease liabilities $ 168.6 |
Supplemental cash flow information related to leases | Nine Months Ended (In millions) September 28, 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 40.8 Operating lease assets obtained in exchange for operating lease liabilities 22.9 |
Schedule of weighted average remaining lease term and discount rate information | September 28, 2019 Weighted average remaining lease term (in years): Operating 6.1 Finance 4.7 Weighted average discount rate: Operating 5.0 % Finance 3.6 |
Schedule of operating and finance lease liabilities by maturity date | (In millions) Operating Leases Finance Leases 2019 (remainder of year) $ 11.6 $ 1.3 2020 43.8 4.8 2021 33.4 7.9 2022 21.3 3.9 2023 14.4 3.6 2024 and thereafter 43.5 4.3 Total lease payments 168.0 25.8 Less: imputed interest (22.5) (2.7) Present value of lease liabilities $ 145.5 $ 23.1 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill | |
Schedule of changes in net carrying amount of goodwill | Label and Retail Branding Industrial and Graphic and Information Healthcare (In millions) Materials Solutions Materials Total Goodwill as of December 29, 2018 $ 415.5 $ 349.7 $ 176.6 $ 941.8 Translation adjustments (14.0) (2.3) (5.1) (21.4) Goodwill as of September 28, 2019 $ 401.5 $ 347.4 $ 171.5 $ 920.4 |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefits (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Pension and Other Postretirement Benefits | |
Schedule of components of net periodic benefit cost (credit) | The table below shows the components of net periodic benefit cost (credit), which are recorded in income, for our defined benefit plans. Pension Benefits Three Months Ended Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 (In millions) U.S. Int’l U.S. Int’l U.S. Int’l U.S. Int’l Service cost $ — $ 3.9 $ — $ 4.7 $ — $ 11.8 $ — $ 14.5 Interest cost .7 3.7 8.6 3.8 2.1 11.1 25.9 11.8 Actuarial (gain) loss — — (.6) — — — (1.3) — Expected return on plan assets — (5.2) (10.6) (5.8) — (15.8) (31.9) (18.0) Recognized net actuarial loss 1.4 .9 5.2 1.9 2.8 2.9 15.9 6.1 Amortization of prior service (credit) cost — (.1) .2 (.1) — (.3) .6 (.4) Recognized loss on settlements(1) — — 6.7 .1 446.9 — 7.4 .1 Net periodic benefit cost $ 2.1 $ 3.2 $ 9.5 $ 4.6 $ 451.8 $ 9.7 $ 16.6 $ 14.1 (1) U.S. Postretirement Health Benefits Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Interest cost $ .1 $ — $ .1 $ — Recognized net actuarial loss .3 .4 .9 1.1 Amortization of prior service credit (.9) (.8) (2.5) (2.4) Net periodic benefit credit $ (.5) $ (.4) $ (1.5) $ (1.3) |
Cost Reduction Actions (Tables)
Cost Reduction Actions (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Cost Reduction Actions | |
Restructuring charges and payments | Accrual at Charges, Foreign Accrual at December 29, Net of Cash Non-cash Currency September 28, (In millions) 2018 Reversals Payments Impairment Translation 2019 2018/2019 Actions Severance and related costs $ 40.8 $ 20.4 $ (45.9) $ — $ (1.2) $ 14.1 Asset impairment charges — 1.5 — (1.5) — — Lease cancellation costs — .3 (.1) — — .2 Total $ 40.8 $ 22.2 $ (46.0) $ (1.5) $ (1.2) $ 14.3 |
Restructuring charges, net of reversals, by reportable segment | Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Restructuring charges, net of reversals, by reportable segment Label and Graphic Materials $ 1.2 $ (9.4) $ 13.9 $ 55.9 Retail Branding and Information Solutions 1.2 3.0 3.4 9.6 Industrial and Healthcare Materials .9 — 4.2 .2 Total $ 3.3 $ (6.4) $ 21.5 $ 65.7 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Components of the gains (losses), before taxes, recognized in Accumulated other comprehensive loss related to cash flow hedge contracts | Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign exchange contracts $ (1.5) $ .7 $ (.6) $ 1.2 Commodity contracts (.1) — (.6) — Total $ (1.6) $ .7 $ (1.2) $ 1.2 |
Components of net gains (losses) recognized in income related to the derivatives not designated as hedging instruments | Three Months Ended Nine Months Ended (In millions) Statements of Income Location September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign exchange contracts Cost of products sold $ .3 $ 1.6 $ (.3) $ 2.9 Foreign exchange contracts Marketing, general and administrative expense .1 2.7 1.8 (13.4) Total $ .4 $ 4.3 $ 1.5 $ (10.5) |
Components of the gain (loss), before tax, recognized in Accumulated other comprehensive loss related to the net investment hedge | Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign currency denominated debt $ — $ (3.1) $ 6.8 $ (6.7) |
Cash Flow Hedging | |
Fair value and balance sheet locations of derivatives | Asset (In millions) Balance Sheet Location September 28, 2019 December 29, 2018 Foreign exchange contracts Other current assets $ .6 $ .5 Commodity contracts Other current assets — .1 $ .6 $ .6 Liability (In millions) Balance Sheet Location September 28, 2019 December 29, 2018 Foreign exchange contracts Other current liabilities $ 2.4 $ .8 |
Other Derivatives | |
Fair value and balance sheet locations of derivatives | Asset (In millions) Balance Sheet Location September 28, 2019 December 29, 2018 Foreign exchange contracts Other current assets $ 7.1 $ 3.0 Liability (In millions) Balance Sheet Location September 28, 2019 December 29, 2018 Foreign exchange contracts Other current liabilities $ 5.7 $ 7.9 |
Taxes Based on Income (Tables)
Taxes Based on Income (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Taxes Based on Income | |
Summary of income before taxes, Provision for (benefit from) income taxes, and effective tax rate from continuing operations | Three Months Ended Nine Months Ended (In millions, except percentages) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Income before taxes $ 179.9 $ 168.0 $ 84.2 $ 467.0 Provision for (benefit from) income taxes 34.6 17.7 (58.9) 94.9 Effective tax rate 19.2 % 10.5 % (70.0) % 20.3 % |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Net Income Per Common Share | |
Schedule of net income per common share | Three Months Ended Nine Months Ended (In millions, except per share amounts) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 (A) Net income $ 144.6 $ 149.5 $ 141.1 $ 370.3 (B) Weighted average number of common shares outstanding 84.0 87.3 84.2 87.7 Dilutive shares (additional common shares issuable under stock-based awards) .8 1.2 .9 1.4 (C) Weighted average number of common shares outstanding, assuming dilution 84.8 88.5 85.1 89.1 Net income per common share: (A) ÷ (B) $ 1.72 $ 1.71 $ 1.68 $ 4.22 Net income per common share, assuming dilution: (A) ÷ (C) $ 1.71 $ 1.69 $ 1.66 $ 4.16 |
Schedule of stock-based compensation awards excluded from the computation of net income (loss) per common share, assuming dilution | Note 10. Net Income Per Common Share Net income per common share was computed as follows: Three Months Ended Nine Months Ended (In millions, except per share amounts) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 (A) Net income $ 144.6 $ 149.5 $ 141.1 $ 370.3 (B) Weighted average number of common shares outstanding 84.0 87.3 84.2 87.7 Dilutive shares (additional common shares issuable under stock-based awards) .8 1.2 .9 1.4 (C) Weighted average number of common shares outstanding, assuming dilution 84.8 88.5 85.1 89.1 Net income per common share: (A) ÷ (B) $ 1.72 $ 1.71 $ 1.68 $ 4.22 Net income per common share, assuming dilution: (A) ÷ (C) $ 1.71 $ 1.69 $ 1.66 $ 4.16 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 either the nine months ended September 29, 2018 or the nine months ended September 28, 2019. No stock-based compensation awards were anti-dilutive for the three months ended September 29, 2018. |
Supplemental Equity and Compr_2
Supplemental Equity and Comprehensive Income Information (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Supplemental Equity and Comprehensive Income Information | |
Schedule of Consolidated Statements of Shareholders' Equity | Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Common stock issued, $1 par value per share $ 124.1 $ 124.1 $ 124.1 $ 124.1 Capital in excess of par value Beginning balance $ 857.7 $ 854.5 $ 872.0 $ 862.6 Issuance of shares under stock-based compensation plans (1) 7.1 7.9 (7.2) (.2) Ending balance $ 864.8 $ 862.4 $ 864.8 $ 862.4 Retained earnings Beginning balance $ 2,762.3 $ 2,702.1 $ 2,864.9 $ 2,596.7 Tax accounting for intra-entity asset transfers (2) — — — (13.8) Net income 144.6 149.5 141.1 370.3 Issuance of shares under stock-based compensation plans (1) — (.1) (13.4) (23.9) Contribution of shares to 401(k) Plan (1) 3.4 3.2 10.4 10.7 Dividends (48.6) (45.3) (141.3) (130.6) Ending balance $ 2,861.7 $ 2,809.4 $ 2,861.7 $ 2,809.4 Treasury stock at cost Beginning balance $ (2,311.8) $ (1,939.1) $ (2,223.9) $ (1,856.7) Repurchase of shares for treasury (87.7) (72.2) (204.3) (175.1) Issuance of shares under stock-based compensation plans 3.5 .9 27.6 17.4 Contribution of shares to 401(k) Plan (1) 2.1 2.0 6.7 6.0 Ending balance $ (2,393.9) $ (2,008.4) $ (2,393.9) $ (2,008.4) Accumulated other comprehensive loss Beginning balance $ (369.8) $ (719.7) $ (682.0) $ (680.5) Other comprehensive (loss) income, net of tax (3) (29.5) (20.7) 282.7 (59.9) Ending balance $ (399.3) $ (740.4) $ (399.3) $ (740.4) (1) (2) (3) |
Schedule of dividends per common share | Three Months Ended Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Dividends per common share $ .58 $ .52 $ 1.68 $ 1.49 |
Schedule of changes in "Accumulated other comprehensive loss" (net of tax) | Pension and Foreign Other Currency Postretirement Cash Flow (In millions) Translation Benefits Hedges Total Balance as of December 29, 2018 $ (247.4) $ (434.3) $ (.3) $ (682.0) Other comprehensive (loss) income before reclassifications, net of tax (1) (17.1) 36.0 (.9) 18.0 Reclassifications to net income, net of tax (2) — 265.4 (.7) 264.7 Net current-period other comprehensive (loss) income, net of tax (17.1) 301.4 (1.6) 282.7 Balance as of September 28, 2019 $ (264.5) $ (132.9) $ (1.9) $ (399.3) (1) (2) Pension and Foreign Other Currency Postretirement Cash Flow (In millions) Translation Benefits Hedges Total Balance as of December 30, 2017 $ (156.2) $ (524.0) $ (.3) $ (680.5) Other comprehensive (loss) income before reclassifications, net of tax (83.7) 1.7 .9 (81.1) Reclassifications to net income, net of tax — 21.8 (.6) 21.2 Net current-period other comprehensive (loss) income, net of tax (83.7) 23.5 .3 (59.9) Balance as of September 29, 2018 $ (239.9) $ (500.5) $ — $ (740.4) |
Schedule of amounts reclassified from "Accumulated other comprehensive loss" to increase (decrease) net income | Amounts Reclassified from Accumulated Other Comprehensive Loss Three Months Ended Nine Months Ended Statements of Income (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Location Cash flow hedges: Foreign exchange contracts $ .2 $ 1.2 $ 1.0 $ .9 Cost of products sold Commodity contracts (.1) — (.1) (.1) Cost of products sold Total before tax .1 1.2 .9 .8 Tax — (.3) (.2) (.2) Provision for (benefit from) income taxes Net of tax .1 .9 .7 .6 Pension and other postretirement benefits (.5) (13.6) (444.7) (28.4) Other non-operating expense Tax — 3.5 179.3 6.6 Provision for (benefit from) income taxes Net of tax (.5) (10.1) (265.4) (21.8) Total reclassifications for the period $ (.4) $ (9.2) $ (264.7) $ (21.2) |
Schedule of income tax expense (benefit) allocated to each component of other comprehensive income | Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign currency translation $ (11.9) $ .3 $ (11.6) $ (.5) Pension and other postretirement benefits — 4.0 190.0 7.1 Cash flow hedges (.4) (.1) (.5) .1 Income tax (benefit) expense allocated to components of other comprehensive income $ (12.3) $ 4.2 $ 177.9 $ 6.7 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Fair Value Measurements | |
Assets and liabilities carried at fair value, measured on a recurring basis | The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of September 28, 2019: Fair Value Measurements Using Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) Assets Trading securities $ 31.9 $ 27.3 $ 4.6 $ — Derivative assets 7.7 — 7.7 — Bank drafts 14.3 14.3 — — Liabilities Derivative liabilities $ 8.1 $ — $ 8.1 $ — The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of December 29, 2018: Fair Value Measurements Using Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) Assets Trading securities $ 26.3 $ 21.5 $ 4.8 $ — Derivative assets 3.6 .1 3.5 — Bank drafts 23.0 23.0 — — Liabilities Derivative liabilities $ 8.7 $ — $ 8.7 $ — Contingent consideration liability 1.6 — — 1.6 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Commitments and Contingencies | |
Summary of costs of environmental liabilities with remediation | (In millions) Balance at December 29, 2018 $ 20.0 Charges, net of reversals 6.5 Payments (4.1) Balance at September 28, 2019 $ 22.4 |
Segment and Disaggregated Rev_2
Segment and Disaggregated Revenue Information (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Segment and Disaggregated Revenue Information | |
Summary of net sales to unaffiliated customers | Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net sales to unaffiliated customers Label and Graphic Materials: U.S. $ 315.8 $ 315.6 $ 947.6 $ 948.5 Europe 429.5 441.5 1,331.6 1,416.6 Asia 266.8 266.4 790.1 804.5 Latin America 99.0 94.4 284.0 280.7 Other international 74.0 76.3 216.4 219.4 Total Label and Graphic Materials 1,185.1 1,194.2 3,569.7 3,669.7 Retail Branding and Information Solutions: Apparel 353.8 354.4 1,077.3 1,074.9 Printer Solutions 53.0 44.0 146.1 126.2 Total Retail Branding and Information Solutions 406.8 398.4 1,223.4 1,201.1 Industrial and Healthcare Materials 169.5 167.1 504.1 519.5 Net sales to unaffiliated customers $ 1,761.4 $ 1,759.7 $ 5,297.2 $ 5,390.3 |
Summary of additional financial information by reportable segment | Three Months Ended Nine Months Ended (In millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Intersegment sales Label and Graphic Materials $ 18.2 $ 20.9 $ 59.5 $ 59.6 Retail Branding and Information Solutions 5.6 1.3 14.8 2.9 Industrial and Healthcare Materials 1.5 2.6 7.0 6.8 Intersegment sales $ 25.3 $ 24.8 $ 81.3 $ 69.3 Income before taxes Label and Graphic Materials $ 159.0 $ 152.9 $ 460.6 $ 418.1 Retail Branding and Information Solutions 45.7 42.4 147.5 122.4 Industrial and Healthcare Materials 17.7 15.3 47.8 44.9 Corporate expense (22.7) (18.9) (65.5) (61.3) Interest expense (19.0) (14.7) (58.0) (42.2) Other non-operating expense (.8) (9.0) (448.2) (14.9) Income before taxes $ 179.9 $ 168.0 $ 84.2 $ 467.0 Other expense (income), net by reportable segment Label and Graphic Materials $ 1.2 $ (6.0) $ 13.2 $ 59.9 Retail Branding and Information Solutions 1.2 3.0 .9 9.1 Industrial and Healthcare Materials .9 — 4.2 .2 Corporate 3.4 — 3.4 (2.3) Other expense (income), net $ 6.7 $ (3.0) $ 21.7 $ 66.9 Other expense (income), net by type Restructuring charges: Severance and related costs, net of reversals $ 3.3 $ (7.1) $ 19.8 $ 56.0 Asset impairment charges and lease cancellation costs — .7 1.7 9.7 Other items: Legal settlement 3.4 — 3.4 — Argentine peso remeasurement transition loss — 3.4 — 3.4 Other restructuring-related charge — — — .5 Net gain on sales of assets — — (3.2) (2.7) Other expense (income), net $ 6.7 $ (3.0) $ 21.7 $ 66.9 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Supplemental Financial Information | |
Schedule of net inventories | (In millions) September 28, 2019 December 29, 2018 Raw materials $ 231.9 $ 236.2 Work-in-progress 204.7 196.7 Finished goods 228.4 218.5 Inventories, net $ 665.0 $ 651.4 |
Schedule of property, plant and equipment | (In millions) September 28, 2019 December 29, 2018 Property, plant and equipment $ 3,082.7 $ 3,053.7 Accumulated depreciation (1,940.6) (1,916.3) Property, plant and equipment, net $ 1,142.1 $ 1,137.4 |
Contract with Customer, Asset and Liability | (In millions) September 28, 2019 December 29, 2018 Other current liabilities $ 11.5 $ 11.5 Long-term retirement benefits and other liabilities .3 .3 Total deferred revenue $ 11.8 $ 11.8 |
General (Details)
General (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 28, 2019 | Mar. 30, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
General | |||||
Length of fiscal period | 91 days | 91 days | 273 days | 273 days | |
Lease transition practical expedients | true |
Leases - Supplemental Cost Info
Leases - Supplemental Cost Information Related to Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Expense information related to leases | ||
Operating lease cost | $ 16.2 | $ 48.7 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information Related to Leases (Details) $ in Millions | Sep. 28, 2019USD ($) |
Balance sheet information related to leases | |
Operating Lease, Assets | $ 143.3 |
Operating Lease, Assets (Balance Sheet Location) | us-gaap:OtherAssetsNoncurrent |
Finance Lease, Assets | $ 30.1 |
Finance Lease, Assets (Balance Sheet Location) | us-gaap:PropertyPlantAndEquipmentNet |
Total leased assets | $ 173.4 |
Operating Lease, Current Liabilities | $ 39.6 |
Operating Lease, Current Liabilities (Balance Sheet Location) | us-gaap:OtherAccruedLiabilitiesCurrent |
Finance Lease, Current Liabilities | $ 3.7 |
Finance Lease, Current Liabilities (Balance Sheet Location) | us-gaap:DebtCurrent |
Operating Lease, Non-current Liabilities | $ 105.9 |
Operating Lease, Non-current Liabilities (Balance Sheet Location) | avy:LongTermRetirementBenefitsAndOtherLiabilities |
Finance Lease, Non-current Liabilities | $ 19.4 |
Finance Lease, Non-current Liabilities (Balance Sheet Location) | us-gaap:LongTermDebtAndCapitalLeaseObligations |
Total lease liabilities | $ 168.6 |
Finance lease assets, Accumulated amortization net | $ 5.7 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information Related to Leases (Details) $ in Millions | 9 Months Ended |
Sep. 28, 2019USD ($) | |
Leases | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 40.8 |
Operating lease assets obtained in exchange for operating lease liabilities | $ 22.9 |
Leases - Schedule of Weighted A
Leases - Schedule of Weighted Average Remaining Lease Term and Discount Rate Information (Details) | Sep. 28, 2019 |
Leases | |
Operating Lease, Weighted average remaining lease term (in years) | 6 years 1 month 6 days |
Finance Lease, Weighted average remaining lease term (in years) | 4 years 8 months 12 days |
Operating Lease, Weighted average discount rate (as a percent) | 5.00% |
Finance Lease, Weighted average discount rate (as a percent) | 3.60% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Operating Leases, Future Minimum Payments Due | ||
2019 | $ 47.7 | |
2020 | 38.9 | |
2021 | 29.4 | |
2022 | 18.8 | |
2023 | 12.9 | |
2024 and thereafter | 37.1 | |
Total lease payments | $ 184.8 | |
Operating Leases | ||
2019 (remainder of year) | $ 11.6 | |
2020 | 43.8 | |
2021 | 33.4 | |
2022 | 21.3 | |
2023 | 14.4 | |
2024 and thereafter | 43.5 | |
Total lease payments | 168 | |
Less: imputed interest | (22.5) | |
Present value of lease liabilities | 145.5 | |
Finance Leases | ||
2019 (remainder of year) | 1.3 | |
2020 | 4.8 | |
2021 | 7.9 | |
2022 | 3.9 | |
2023 | 3.6 | |
2024 and thereafter | 4.3 | |
Total lease payments | 25.8 | |
Less: imputed interest | (2.7) | |
Present value of lease liabilities | $ 23.1 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 28, 2019USD ($) | |
Changes in the net carrying amount of goodwill | |
Goodwill, Beginning Balance | $ 941.8 |
Translation adjustments | (21.4) |
Goodwill, Ending Balance | 920.4 |
Label and Graphic Materials | |
Changes in the net carrying amount of goodwill | |
Goodwill, Beginning Balance | 415.5 |
Translation adjustments | (14) |
Goodwill, Ending Balance | 401.5 |
Retail Branding and Information Solutions | |
Changes in the net carrying amount of goodwill | |
Goodwill, Beginning Balance | 349.7 |
Translation adjustments | (2.3) |
Goodwill, Ending Balance | 347.4 |
Accumulated impairment losses | 820 |
Industrial and Healthcare Materials | |
Changes in the net carrying amount of goodwill | |
Goodwill, Beginning Balance | 176.6 |
Translation adjustments | (5.1) |
Goodwill, Ending Balance | $ 171.5 |
Debt (Details)
Debt (Details) - USD ($) $ in Millions | Dec. 29, 2018 | Sep. 28, 2019 |
Debt | ||
Fair value of debt | $ 2,000 | $ 2,120 |
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 |
Notes due in second quarter of 2020 | ||
Debt | ||
Long-term debt, current | $ 265 |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefits (Details) $ in Millions | Mar. 21, 2019USD ($)employee | Mar. 30, 2019USD ($) | Aug. 31, 2018USD ($) | Sep. 28, 2019USD ($) | Dec. 29, 2018USD ($) | Sep. 29, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($)plan | Dec. 29, 2018plan |
Components of net periodic benefit cost (credit) | ||||||||||
Recognized loss on settlements | $ 446.9 | $ 7.4 | ||||||||
Number of nonqualified benefit plans | plan | 2 | |||||||||
ADPP | ||||||||||
Components of net periodic benefit cost (credit) | ||||||||||
Employer contributions | $ 200 | |||||||||
Settlements | $ 750 | $ 152 | ||||||||
Noncash charges associated with termination settlement of the plan, net of tax | $ 85 | |||||||||
Number of active and former employees and their beneficiaries | employee | 8,500 | |||||||||
Charges associated with termination settlement of the plan, pretax | $ 447 | 447 | ||||||||
Related tax benefits | $ 180 | |||||||||
Cash contribution | $ 9 | |||||||||
U.S. | ||||||||||
Components of net periodic benefit cost (credit) | ||||||||||
Interest cost | $ 0.7 | $ 8.6 | 2.1 | $ 25.9 | ||||||
Actuarial (gain) loss | (0.6) | (1.3) | ||||||||
Expected return on plan assets | (10.6) | (31.9) | ||||||||
Recognized net actuarial loss | 1.4 | 5.2 | 2.8 | 15.9 | ||||||
Amortization of prior service (credit) cost | 0.2 | 0.6 | ||||||||
Recognized loss on settlements | 6.7 | 446.9 | 7.4 | |||||||
Net periodic benefit cost | 2.1 | 9.5 | 451.8 | 16.6 | ||||||
Int'l | ||||||||||
Components of net periodic benefit cost (credit) | ||||||||||
Service cost | 3.9 | 4.7 | 11.8 | 14.5 | ||||||
Interest cost | 3.7 | 3.8 | 11.1 | 11.8 | ||||||
Expected return on plan assets | (5.2) | (5.8) | (15.8) | (18) | ||||||
Recognized net actuarial loss | 0.9 | 1.9 | 2.9 | 6.1 | ||||||
Amortization of prior service (credit) cost | (0.1) | (0.1) | (0.3) | (0.4) | ||||||
Recognized loss on settlements | 0.1 | 0.1 | ||||||||
Net periodic benefit cost | 3.2 | 4.6 | 9.7 | 14.1 | ||||||
U.S. Postretirement Health Benefits | ||||||||||
Components of net periodic benefit cost (credit) | ||||||||||
Interest cost | 0.1 | 0.1 | ||||||||
Recognized net actuarial loss | 0.3 | 0.4 | 0.9 | 1.1 | ||||||
Amortization of prior service (credit) cost | (0.9) | (0.8) | (2.5) | (2.4) | ||||||
Net periodic benefit cost | $ (0.5) | $ (0.4) | $ (1.5) | $ (1.3) | ||||||
U.S. | ||||||||||
Components of net periodic benefit cost (credit) | ||||||||||
Number of nonqualified benefit plans | plan | 2 |
Long-Term Incentive Compensat_2
Long-Term Incentive Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Marketing, general and administrative expense | ||||
Long-Term Incentive Compensation | ||||
Stock-based compensation expense | $ 9 | $ 8.4 | $ 25.5 | $ 24.8 |
Cash-based awards compensation expense | ||||
Cash-based awards compensation expense | 2.4 | $ 3.9 | 13.6 | $ 12.7 |
Stock-based awards | ||||
Long-Term Incentive Compensation | ||||
Unrecognized compensation cost related to share based compensation cost | $ 52 | $ 52 | ||
Unrecognized compensation cost weighted average recognition period | 2 years |
Cost Reduction Actions (Details
Cost Reduction Actions (Details) $ in Millions | 1 Months Ended | 9 Months Ended |
Apr. 28, 2018position | Sep. 28, 2019USD ($)position | |
2018 Plan | ||
Cost Reduction Actions | ||
Expected number of positions reduced as a result of Cost Reduction Actions | 400 | |
Net number of positions reduced as a result of Cost Reduction Actions | 150 | |
Restructuring and Related Cost, Number of Positions Eliminated, Inception to Date | 345 | |
Net restructuring reversals | $ | $ 0.8 | |
2018/2019 Actions | ||
Cost Reduction Actions | ||
Restructuring charges | $ | $ 23 | |
Restructuring and Related Cost, Number of Positions Eliminated, Inception to Date | 320 |
Cost Reduction Actions - Restru
Cost Reduction Actions - Restructuring Charges and Payments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Cost Reduction Actions | ||||
Beginning Balance | $ 40.8 | |||
Charges, Net of Reversals | 22.2 | |||
Cash Payments | (46) | |||
Non-cash Impairment | (1.5) | |||
Foreign Currency Translation | (1.2) | |||
Ending Balance | $ 14.3 | 14.3 | ||
Severance and related costs | ||||
Cost Reduction Actions | ||||
Charges, Net of Reversals | 3.3 | $ (7.1) | 19.8 | $ 56 |
2015/2016 Actions | ||||
Cost Reduction Actions | ||||
Net restructuring reversals | 0.7 | |||
2018/2019 Actions | Severance and related costs | ||||
Cost Reduction Actions | ||||
Beginning Balance | 40.8 | |||
Charges, Net of Reversals | 20.4 | |||
Cash Payments | (45.9) | |||
Foreign Currency Translation | (1.2) | |||
Ending Balance | 14.1 | 14.1 | ||
2018/2019 Actions | Asset impairment charges | ||||
Cost Reduction Actions | ||||
Beginning Balance | 0 | |||
Charges, Net of Reversals | 1.5 | |||
Non-cash Impairment | (1.5) | |||
2018/2019 Actions | Lease cancellation | ||||
Cost Reduction Actions | ||||
Beginning Balance | 0 | |||
Charges, Net of Reversals | 0.3 | |||
Cash Payments | (0.1) | |||
Ending Balance | $ 0.2 | $ 0.2 |
Cost Reduction Actions - Rest_2
Cost Reduction Actions - Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Restructuring charges: | ||||
Restructuring charges | $ 22.2 | |||
Other expense, net | ||||
Restructuring charges: | ||||
Restructuring charges | $ 3.3 | $ (6.4) | 21.5 | $ 65.7 |
Label and Graphic Materials | Other expense, net | ||||
Restructuring charges: | ||||
Restructuring charges | 1.2 | (9.4) | 13.9 | 55.9 |
Retail Branding and Information Solutions | Other expense, net | ||||
Restructuring charges: | ||||
Restructuring charges | 1.2 | $ 3 | 3.4 | 9.6 |
Industrial and Healthcare Materials | Other expense, net | ||||
Restructuring charges: | ||||
Restructuring charges | $ 0.9 | $ 4.2 | $ 0.2 |
Financial Instruments (Details)
Financial Instruments (Details) - Cash Flow Hedging $ in Millions | 9 Months Ended |
Sep. 28, 2019USD ($) | |
Financial Instruments | |
Maximum length of time hedged in cash flow hedge | 36 months |
Commodity contracts | |
Financial Instruments | |
Notional amount | $ 3.7 |
Foreign exchange contracts | |
Financial Instruments | |
Notional amount | $ 1,100 |
Financial Instruments - Cash Fl
Financial Instruments - Cash Flow Hedges and Other Derivatives, Fair Value (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Cash Flow Hedging | ||
Cash Flow Hedges, Fair Value | ||
Asset | $ 0.6 | $ 0.6 |
Cash Flow Hedging | Foreign exchange contracts | Other current assets | ||
Cash Flow Hedges, Fair Value | ||
Asset | 0.6 | 0.5 |
Cash Flow Hedging | Foreign exchange contracts | Other current liabilities | ||
Cash Flow Hedges, Fair Value | ||
Liability | 2.4 | 0.8 |
Cash Flow Hedging | Commodity contracts | Other current assets | ||
Cash Flow Hedges, Fair Value | ||
Asset | 0.1 | |
Other Derivatives | Foreign exchange contracts | Other current assets | ||
Cash Flow Hedges, Fair Value | ||
Asset | 7.1 | 3 |
Other Derivatives | Foreign exchange contracts | Other current liabilities | ||
Cash Flow Hedges, Fair Value | ||
Liability | $ 5.7 | $ 7.9 |
Financial Instruments - Gains (
Financial Instruments - Gains (Losses) Recognized in AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Gains (losses) recognized in current earnings | ||||
Cash Flow Hedge Loss to be Reclassified within Twelve Months | $ 2 | |||
Cash Flow Hedging | ||||
Gains (losses) recognized in current earnings | ||||
Gains (losses) recognized in accumulated other comprehensive loss | $ (1.6) | $ 0.7 | (1.2) | $ 1.2 |
Cash Flow Hedging | Foreign exchange contracts | ||||
Gains (losses) recognized in current earnings | ||||
Gains (losses) recognized in accumulated other comprehensive loss | (1.5) | $ 0.7 | (0.6) | $ 1.2 |
Cash Flow Hedging | Commodity contracts | ||||
Gains (losses) recognized in current earnings | ||||
Gains (losses) recognized in accumulated other comprehensive loss | $ (0.1) | $ (0.6) |
Financial Instruments - Net Los
Financial Instruments - Net Losses Recognized in Income (Details) - Other Derivatives - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Net losses recognized in income | ||||
Net Losses in Income | $ 0.4 | $ 4.3 | $ 1.5 | $ (10.5) |
Foreign exchange contracts | Cost of products sold | ||||
Net losses recognized in income | ||||
Net Losses in Income | 0.3 | 1.6 | (0.3) | 2.9 |
Foreign exchange contracts | Marketing, general and administrative expense | ||||
Net losses recognized in income | ||||
Net Losses in Income | $ 0.1 | $ 2.7 | $ 1.8 | $ (13.4) |
Financial Instruments - Net Inv
Financial Instruments - Net Investment Hedge (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Jan. 31, 2018EUR (€) | Mar. 31, 2017EUR (€) | |
Gains (losses) recognized in current earnings | ||||||
Amount of ineffectiveness from net investment hedge in net (loss) income | $ 0 | $ 0 | $ 0 | $ 0 | ||
Net Investment Hedge | Designated | ||||||
Gains (losses) recognized in current earnings | ||||||
Foreign currency denominated debt | $ (3.1) | $ 6.8 | $ (6.7) | |||
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) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($)plan | |
Income before taxes | $ 179.9 | $ 168 | $ 84.2 | $ 467 | |
Provision for (benefit from) income taxes | $ 34.6 | $ 17.7 | $ (58.9) | $ 94.9 | |
Effective tax rate (as a percent) | 19.20% | 10.50% | (70.00%) | 20.30% | |
U.S. federal statutory tax rate | 21.00% | ||||
Tax benefits on changes in certain tax reserves, including interest and penalties, resulting from settlements of audits | $ 8.4 | $ 8.4 | |||
Tax benefits related to excess tax benefits associated with stock-based payments | 8 | ||||
Tax cuts and jobs act of 2017, change in tax rate, income tax expense (benefit) on global intangible low-taxed income of our foreign subsidiaries | $ 4.6 | 15 | |||
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 | $ 13 | $ 13 | |||
Net discrete tax benefits from return to provision adjustments | 36.6 | 37.3 | |||
Tax benefit from recognition of a net foreign currency loss | $ 8.6 | $ 8.6 | |||
Nonqualified Benefit Plan Number of Plans | plan | 2 | ||||
Net tax expense by adjusting provision amount under TCJA 2017 | $ 2.7 | ||||
Tax expense associated with changes in indefinite reinvestment assertions related to our investments in certain foreign subsidiaries | 3.6 | ||||
Tax charge for adjustments made to the one-time transition tax, primarily due to a change in filing position and regulatory guidance subsequently issued by the Internal Revenue Service | 8.5 | ||||
Tax benefit from releasing a previously recorded uncertain tax position after the position was not included on our 2017 U.S. federal income tax return | 9.4 | ||||
ADPP | |||||
Discrete tax benefits related to the effective settlement | 180 | ||||
Tax benefits related to the effective settlement of the ADPP on the tax effect of the pretax charge | 103 | ||||
Charges associated with termination settlement of the plan, pretax | $ 447 | 447 | |||
Tax benefit related to release of stranded tax effects in AOCI through income statement | $ 77 | ||||
Tax benefit from US pension plan contributions | $ 31 |
Net Income Per Common Share (De
Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Net Income Per Common Share | ||||
Net income | $ 144.6 | $ 149.5 | $ 141.1 | $ 370.3 |
Weighted average number of common shares outstanding | 84 | 87.3 | 84.2 | 87.7 |
Dilutive shares (additional common shares issuable under stock-based awards) | 0.8 | 1.2 | 0.9 | 1.4 |
Weighted average number of common shares outstanding, assuming dilution | 84.8 | 88.5 | 85.1 | 89.1 |
Net income per common share (in dollars per share) | $ 1.72 | $ 1.71 | $ 1.68 | $ 4.22 |
Net income per common share, assuming dilution (in dollars per share) | $ 1.71 | $ 1.69 | $ 1.66 | $ 4.16 |
Antidilutive shares, share-based compensation awards | 0 |
Supplemental Equity and Compr_3
Supplemental Equity and Comprehensive Income Information - Consolidated Statements of Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Jun. 29, 2019 | Apr. 30, 2019 | Dec. 29, 2018 | Jun. 30, 2018 | |
Increase (Decrease) in Stockholders' Equity | ||||||||
Common stock issued, $1 par value per share | $ 124.1 | $ 124.1 | $ 124.1 | $ 124.1 | $ 124.1 | |||
Common stock, par value (in dollars per share) | $ 1 | $ 1 | $ 1 | $ 1 | $ 1 | |||
Beginning balance | $ 955.1 | |||||||
Net income | $ 144.6 | 149.5 | 141.1 | 370.3 | ||||
Other comprehensive (loss) income, net of tax | (29.5) | $ (20.7) | 282.7 | $ (59.9) | ||||
Ending balance | $ 1,057.4 | $ 1,057.4 | ||||||
Share repurchase authorized amount | $ 650 | |||||||
Dividends per common shares | ||||||||
Dividends per common share (in dollars per share) | $ 0.58 | $ 0.52 | $ 1.68 | $ 1.49 | ||||
Capital in excess of par value | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Beginning balance | $ 857.7 | $ 854.5 | $ 872 | $ 862.6 | ||||
Issuance of shares under stock-based compensation plans | 7.1 | 7.9 | (7.2) | (0.2) | ||||
Ending balance | 864.8 | 862.4 | 864.8 | 862.4 | ||||
Retained earnings | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Beginning balance | 2,762.3 | 2,702.1 | 2,864.9 | 2,596.7 | ||||
Tax accounting for intra-entity asset transfers | (13.8) | |||||||
Net income | 144.6 | 149.5 | 141.1 | 370.3 | ||||
Issuance of shares under stock-based compensation plans | (0.1) | (13.4) | (23.9) | |||||
Contribution of shares to 401(k) Plan | 3.4 | 3.2 | 10.4 | 10.7 | ||||
Dividends | (48.6) | (45.3) | (141.3) | (130.6) | ||||
Ending balance | 2,861.7 | 2,809.4 | 2,861.7 | 2,809.4 | ||||
Treasury stock at cost | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Beginning balance | (2,311.8) | (1,939.1) | (2,223.9) | (1,856.7) | ||||
Repurchase of shares for treasury | (87.7) | (72.2) | (204.3) | (175.1) | ||||
Issuance of shares under stock-based compensation plans | 3.5 | 0.9 | 27.6 | 17.4 | ||||
Contribution of shares to 401(k) Plan | 2.1 | 2 | 6.7 | 6 | ||||
Ending balance | (2,393.9) | (2,008.4) | (2,393.9) | (2,008.4) | ||||
Accumulated other comprehensive loss | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Beginning balance | (369.8) | (719.7) | (682) | (680.5) | ||||
Other comprehensive (loss) income, net of tax | (29.5) | (20.7) | 282.7 | (59.9) | ||||
Ending balance | $ (399.3) | $ (740.4) | $ (399.3) | $ (740.4) |
Supplemental Equity and Compr_4
Supplemental Equity and Comprehensive Income Information - Changes in AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Changes in Accumulated other comprehensive loss (net of tax) | ||||
Balance at beginning of the period | $ (682) | $ (680.5) | ||
Other comprehensive (loss) income before reclassifications, net of tax | 18 | (81.1) | ||
Reclassifications to net (loss) income, net of tax | 264.7 | 21.2 | ||
Net current-period other comprehensive (loss) income, net of tax | $ (29.5) | $ (20.7) | 282.7 | (59.9) |
Balance at end of the period | (399.3) | (740.4) | (399.3) | (740.4) |
Foreign Currency Translation | ||||
Changes in Accumulated other comprehensive loss (net of tax) | ||||
Balance at beginning of the period | (247.4) | (156.2) | ||
Other comprehensive (loss) income before reclassifications, net of tax | (17.1) | (83.7) | ||
Net current-period other comprehensive (loss) income, net of tax | (17.1) | (83.7) | ||
Balance at end of the period | (264.5) | (239.9) | (264.5) | (239.9) |
Pension and Other Postretirement Benefits | ||||
Changes in Accumulated other comprehensive loss (net of tax) | ||||
Balance at beginning of the period | (434.3) | (524) | ||
Other comprehensive (loss) income before reclassifications, net of tax | 36 | 1.7 | ||
Reclassifications to net (loss) income, net of tax | 265.4 | 21.8 | ||
Net current-period other comprehensive (loss) income, net of tax | 301.4 | 23.5 | ||
Balance at end of the period | (132.9) | $ (500.5) | (132.9) | (500.5) |
Cash Flow Hedges | ||||
Changes in Accumulated other comprehensive loss (net of tax) | ||||
Balance at beginning of the period | (0.3) | (0.3) | ||
Other comprehensive (loss) income before reclassifications, net of tax | (0.9) | 0.9 | ||
Reclassifications to net (loss) income, net of tax | (0.7) | (0.6) | ||
Net current-period other comprehensive (loss) income, net of tax | (1.6) | $ 0.3 | ||
Balance at end of the period | $ (1.9) | $ (1.9) |
Supplemental Equity and Compr_5
Supplemental Equity and Comprehensive Income Information - Reclassified from AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Amounts reclassified from Accumulated other comprehensive loss | ||||
Cost of products sold | $ (1,289.7) | $ (1,300.5) | $ (3,877.8) | $ (3,946.3) |
Other non-operating expense | (0.8) | (9) | (448.2) | (14.9) |
Income before taxes | 179.9 | 168 | 84.2 | 467 |
Provision for (benefit from) income taxes | 34.6 | 17.7 | (58.9) | 94.9 |
Net income | 144.6 | 149.5 | 141.1 | 370.3 |
Amounts Reclassified from Accumulated other comprehensive loss | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Net income | (0.4) | (9.2) | (264.7) | (21.2) |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Income before taxes | 0.1 | 1.2 | 0.9 | 0.8 |
Provision for (benefit from) income taxes | (0.3) | (0.2) | (0.2) | |
Net income | 0.1 | 0.9 | 0.7 | 0.6 |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Foreign exchange contracts | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Cost of products sold | 0.2 | 1.2 | 1 | 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) | (0.1) | (0.1) | |
Pension and Other Postretirement Benefits | Amounts Reclassified from Accumulated other comprehensive loss | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Other non-operating expense | (0.5) | (13.6) | (444.7) | (28.4) |
Provision for (benefit from) income taxes | 3.5 | 179.3 | 6.6 | |
Net income | $ (0.5) | $ (10.1) | $ (265.4) | $ (21.8) |
Supplemental Equity and Compr_6
Supplemental Equity and Comprehensive Income Information - Income tax expense (benefit) allocated (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Income tax expense (benefit) allocated to components of other comprehensive income | ||||
Foreign currency translation | $ (11.9) | $ 0.3 | $ (11.6) | $ (0.5) |
Pension and other postretirement benefits | 4 | 190 | 7.1 | |
Cash flow hedges | (0.4) | (0.1) | (0.5) | 0.1 |
Income tax (benefit) expense allocated to components of other comprehensive income | $ (12.3) | $ 4.2 | $ 177.9 | $ 6.7 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Assets | ||
Trading securities | $ 31.9 | $ 26.3 |
Derivative assets | 7.7 | 3.6 |
Bank drafts | 14.3 | 23 |
Liabilities | ||
Derivative liabilities | 8.1 | 8.7 |
Contingent consideration liability | 1.6 | |
Cash and cash equivalents | ||
Assets | ||
Trading securities | 0.4 | 0.2 |
Other current assets | ||
Assets | ||
Trading securities | 31.5 | 26.1 |
Quoted Prices in Active Markets (Level 1) | ||
Assets | ||
Trading securities | 27.3 | 21.5 |
Derivative assets | 0.1 | |
Bank drafts | 14.3 | 23 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Trading securities | 4.6 | 4.8 |
Derivative assets | 7.7 | 3.5 |
Liabilities | ||
Derivative liabilities | $ 8.1 | 8.7 |
Significant Other Observable Inputs (Level 3) | ||
Liabilities | ||
Contingent consideration liability | $ 1.6 |
Fair Value Measurements - Non-R
Fair Value Measurements - Non-Recurring Fair Value Measurements (Details) $ in Millions | 9 Months Ended |
Sep. 29, 2018USD ($) | |
Non-Recurring Fair Value Measurements | |
Carrying amount of long lived-assets | $ 18.1 |
Fair value of long-lived assets | 10.6 |
Other expense, net | |
Non-Recurring Fair Value Measurements | |
Impairment charges for long lived-assets | $ 7.5 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Millions | 9 Months Ended | |
Sep. 28, 2019USD ($)item | Dec. 29, 2018USD ($) | |
Environmental Liabilities Associated with Remediation | ||
Environmental site contingency number of sites | item | 11 | |
Balance at beginning of the period | $ 20 | |
Charges, net of reversals | 6.5 | |
Payments | (4.1) | |
Balance at end of the period | 22.4 | |
Short term environmental liabilities | $ 11 | $ 5 |
Segment and Disaggregated Rev_3
Segment and Disaggregated Revenue Information - Net Sales to Unaffiliated Customers (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | $ 1,761.4 | $ 1,759.7 | $ 5,297.2 | $ 5,390.3 |
Retail Branding and Information Solutions | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 406.8 | 398.4 | 1,223.4 | 1,201.1 |
Retail Branding and Information Solutions | Apparel | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 353.8 | 354.4 | 1,077.3 | 1,074.9 |
Retail Branding and Information Solutions | Printer Solutions | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 53 | 44 | 146.1 | 126.2 |
Label and Graphic Materials | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 1,185.1 | 1,194.2 | 3,569.7 | 3,669.7 |
Industrial and Healthcare Materials | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 169.5 | 167.1 | 504.1 | 519.5 |
U.S. | Label and Graphic Materials | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 315.8 | 315.6 | 947.6 | 948.5 |
Europe | Label and Graphic Materials | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 429.5 | 441.5 | 1,331.6 | 1,416.6 |
Asia | Label and Graphic Materials | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 266.8 | 266.4 | 790.1 | 804.5 |
Latin America | Label and Graphic Materials | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | 99 | 94.4 | 284 | 280.7 |
Other international | Label and Graphic Materials | ||||
Net sales to unaffiliated customers | ||||
Net sales to unaffiliated customers | $ 74 | $ 76.3 | $ 216.4 | $ 219.4 |
Segment and Disaggregated Rev_4
Segment and Disaggregated Revenue Information - Sales (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Segment Information | ||||
Net sales to unaffiliated customers | $ 1,761.4 | $ 1,759.7 | $ 5,297.2 | $ 5,390.3 |
Interest expense | (19) | (14.7) | (58) | (42.2) |
Other non-operating expense | (0.8) | (9) | (448.2) | (14.9) |
Income before taxes | 179.9 | 168 | 84.2 | 467 |
Other expense (income), net | 6.7 | (3) | 21.7 | 66.9 |
Intersegment sales | ||||
Segment Information | ||||
Net sales to unaffiliated customers | 25.3 | 24.8 | 81.3 | 69.3 |
Label and Graphic Materials | ||||
Segment Information | ||||
Net sales to unaffiliated customers | 1,185.1 | 1,194.2 | 3,569.7 | 3,669.7 |
Label and Graphic Materials | Intersegment sales | ||||
Segment Information | ||||
Net sales to unaffiliated customers | 18.2 | 20.9 | 59.5 | 59.6 |
Label and Graphic Materials | Operating segments | ||||
Segment Information | ||||
Income before taxes | 159 | 152.9 | 460.6 | 418.1 |
Other expense (income), net | 1.2 | (6) | 13.2 | 59.9 |
Retail Branding and Information Solutions | Intersegment sales | ||||
Segment Information | ||||
Net sales to unaffiliated customers | 5.6 | 1.3 | 14.8 | 2.9 |
Retail Branding and Information Solutions | Operating segments | ||||
Segment Information | ||||
Income before taxes | 45.7 | 42.4 | 147.5 | 122.4 |
Other expense (income), net | 1.2 | 3 | 0.9 | 9.1 |
Industrial and Healthcare Materials | ||||
Segment Information | ||||
Net sales to unaffiliated customers | 169.5 | 167.1 | 504.1 | 519.5 |
Industrial and Healthcare Materials | Intersegment sales | ||||
Segment Information | ||||
Net sales to unaffiliated customers | 1.5 | 2.6 | 7 | 6.8 |
Industrial and Healthcare Materials | Operating segments | ||||
Segment Information | ||||
Income before taxes | 17.7 | 15.3 | 47.8 | 44.9 |
Other expense (income), net | 0.9 | 4.2 | 0.2 | |
Corporate expense | ||||
Segment Information | ||||
Income before taxes | (22.7) | $ (18.9) | (65.5) | (61.3) |
Other expense (income), net | $ 3.4 | $ 3.4 | $ (2.3) |
Segment and Disaggregated Rev_5
Segment and Disaggregated Revenue Information - Other expense (income), Net by Type (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Restructuring charges: | ||||
Restructuring charges | $ 22.2 | |||
Other items: | ||||
Legal settlement | $ 3.4 | 3.4 | ||
Other restructuring-related charge | $ 0.5 | |||
Net gain on sales of assets | (3.2) | (2.7) | ||
Other expense (income), net | 6.7 | $ (3) | 21.7 | 66.9 |
Argentina | ||||
Other items: | ||||
Argentine peso remeasurement transition loss | 3.4 | 3.4 | ||
Severance and related costs | ||||
Restructuring charges: | ||||
Restructuring charges | $ 3.3 | (7.1) | 19.8 | 56 |
Asset impairment charges and lease cancellation costs | ||||
Restructuring charges: | ||||
Restructuring charges | $ 0.7 | $ 1.7 | $ 9.7 |
Supplemental Financial Inform_3
Supplemental Financial Information (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 29, 2018 |
Inventories | ||
Raw materials | $ 231.9 | $ 236.2 |
Work-in-progress | 204.7 | 196.7 |
Finished goods | 228.4 | 218.5 |
Inventories, net | 665 | 651.4 |
Property, Plant and Equipment | ||
Property, plant and equipment | 3,082.7 | 3,053.7 |
Accumulated depreciation | (1,940.6) | (1,916.3) |
Property, plant and equipment, net | $ 1,142.1 | $ 1,137.4 |
Supplemental Financial Inform_4
Supplemental Financial Information - Deferred Revenue, Research and Development and Equity Method Investment (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jan. 31, 2019 | Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 29, 2018 | |
Deferred Revenue | ||||||
Total deferred revenue | $ 11.8 | $ 11.8 | $ 11.8 | |||
Revenue recognized during the period | 0.8 | $ 1.1 | 10.3 | $ 11.4 | ||
Equity Method Investment | ||||||
Carrying value of equity method investment | 8.8 | 8.8 | 6.7 | |||
Addition to equity method investment | $ 4 | |||||
Marketing, general and administrative expense | ||||||
Research and Development | ||||||
Research and development expense | 21.7 | $ 24.5 | 71.2 | $ 74.5 | ||
Other current liabilities | ||||||
Deferred Revenue | ||||||
Total deferred revenue | 11.5 | 11.5 | 11.5 | |||
Long-term retirement benefits and other liabilities | ||||||
Deferred Revenue | ||||||
Total deferred revenue | $ 0.3 | $ 0.3 | $ 0.3 |