Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 28, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | APTARGROUP INC | |
Entity Central Index Key | 896622 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 62,599,783 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Net Sales | $589,811 | $676,051 |
Operating Expenses: | ||
Cost of sales (exclusive of depreciation and amortization shown below) | 385,979 | 453,411 |
Selling, research & development and administrative | 96,187 | 106,674 |
Depreciation and amortization | 34,060 | 37,247 |
Total Operating Expenses | 516,226 | 597,332 |
Operating Income | 73,585 | 78,719 |
Other (Expense) Income: | ||
Interest expense | -7,303 | -4,881 |
Interest income | 1,731 | 1,016 |
Equity in results of affiliates | -119 | -1,546 |
Miscellaneous, net | -199 | 372 |
Total Other Income (Expense) | -5,890 | -5,039 |
Income before Income Taxes | 67,695 | 73,680 |
Provision for Income Taxes | 22,596 | 25,272 |
Net Income | 45,099 | 48,408 |
Net Loss (Income) Attributable to Noncontrolling Interests | 72 | -19 |
Net Income Attributable to AptarGroup, Inc. | $45,171 | $48,389 |
Net Income Attributable to AptarGroup, Inc. Per Common Share: | ||
Basic (in dollars per share) | $0.73 | $0.74 |
Diluted (in dollars per share) | $0.70 | $0.71 |
Average Number of Shares Outstanding: | ||
Basic (in shares) | 62,292 | 65,468 |
Diluted (in shares) | 64,494 | 68,232 |
Dividends per Common Share (in dollars per share) | $0.28 | $0.25 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net Income | $45,099 | $48,408 |
Other Comprehensive (Loss) Income: | ||
Foreign currency translation adjustments | -139,246 | 563 |
Changes in treasury locks, net of tax | 6 | 6 |
Defined benefit pension plan, net of tax | ||
Amortization of prior service cost included in net income, net of tax | 43 | 53 |
Amortization of net loss included in net income, net of tax | 1,126 | 665 |
Total defined benefit pension plan, net of tax | 1,169 | 718 |
Total other comprehensive (loss) income | -138,071 | 1,287 |
Comprehensive (Loss) Income | -92,972 | 49,695 |
Comprehensive Loss (Income) Attributable to Noncontrolling Interests | 72 | -9 |
Comprehensive (Loss) Income Attributable to AptarGroup, Inc. | ($92,900) | $49,686 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current Assets: | ||
Cash and equivalents | $385,693 | $399,762 |
Accounts and notes receivable, less allowance for doubtful accounts of $3,719 in 2015 and $4,251 in 2014 | 421,560 | 406,976 |
Inventories | 284,579 | 311,072 |
Prepaid and other | 103,494 | 96,128 |
Total Current Assets | 1,195,326 | 1,213,938 |
Property, Plant and Equipment: | ||
Buildings and improvements | 331,573 | 353,683 |
Machinery and equipment | 1,805,608 | 1,919,507 |
Property, Plant and Equipment, Gross | 2,137,181 | 2,273,190 |
Less: Accumulated depreciation | -1,402,011 | -1,484,546 |
Property, Plant and Equipment, Net | 735,170 | 788,644 |
Land | 21,318 | 23,011 |
Total Property, Plant and Equipment | 756,488 | 811,655 |
Other Assets: | ||
Investments in affiliates | 5,146 | 5,760 |
Goodwill | 309,396 | 329,741 |
Intangible assets, net | 35,210 | 40,045 |
Miscellaneous | 33,460 | 36,051 |
Total Other Assets | 383,212 | 411,597 |
Total Assets | 2,335,026 | 2,437,190 |
Current Liabilities: | ||
Notes payable | 3,993 | 233,284 |
Current maturities of long-term obligations | 18,594 | 18,692 |
Accounts payable and accrued liabilities | 340,334 | 352,762 |
Total Current Liabilities | 362,921 | 604,738 |
Long-term obligations | 812,232 | 588,892 |
Deferred Liabilities and Other: | ||
Deferred income taxes | 21,655 | 25,521 |
Retirement and deferred compensation plans | 107,157 | 109,517 |
Deferred and other non-current liabilities | 4,263 | 4,606 |
Commitments and contingencies (Note 9) | ||
Total Deferred Liabilities and Other | 133,075 | 139,644 |
AptarGroup, Inc. stockholders' equity | ||
Common stock, $.01 par value, 199 million shares authorized; 86.8 and 86.3 million shares issued as of March 31, 2015 and December 31, 2014, respectively | 867 | 862 |
Capital in excess of par value | 540,563 | 507,313 |
Retained earnings | 1,767,774 | 1,740,005 |
Accumulated other comprehensive (loss) | -248,116 | -110,045 |
Less: Treasury stock at cost, 24.3 million shares as of March, 31, 2015 and December 31, 2014 | -1,034,727 | -1,034,728 |
Total AptarGroup, Inc. Stockholders' Equity | 1,026,361 | 1,103,407 |
Noncontrolling interests in subsidiaries | 437 | 509 |
Total Stockholders' Equity | 1,026,798 | 1,103,916 |
Total Liabilities and Stockholders' Equity | $2,335,026 | $2,437,190 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data in Millions, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts and notes receivable, allowance for doubtful accounts (in dollars) | $3,719 | $4,251 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 199 | 199 |
Common stock, shares issued | 86.8 | 86.3 |
Treasury stock, shares | 24.3 | 24.3 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Common Stock Par Value | Treasury Stock | Capital in Excess of Par Value | Non-Controlling Interest | Total |
In Thousands, unless otherwise specified | |||||||
Balance at Dec. 31, 2013 | $1,619,419 | $109,751 | $853 | ($744,213) | $493,947 | $551 | $1,480,308 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net Income | 48,389 | 19 | 48,408 | ||||
Foreign currency translation adjustments | 573 | -10 | 563 | ||||
Changes in unrecognized pension gains/losses and related amortization, net of tax | 718 | 718 | |||||
Changes in treasury locks, net of tax | 6 | 6 | |||||
Stock option exercises & restricted stock vestings | 2 | 1 | 18,245 | 18,248 | |||
Cash dividends declared on common stock | -16,366 | -16,366 | |||||
Treasury stock purchased | -12,999 | -12,999 | |||||
Balance at Mar. 31, 2014 | 1,651,442 | 111,048 | 855 | -757,211 | 512,192 | 560 | 1,518,886 |
Balance at Dec. 31, 2014 | 1,740,005 | -110,045 | 862 | -1,034,728 | 507,313 | 509 | 1,103,916 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net Income | 45,171 | -72 | 45,099 | ||||
Foreign currency translation adjustments | -139,246 | -139,246 | |||||
Changes in unrecognized pension gains/losses and related amortization, net of tax | 1,169 | 1,169 | |||||
Changes in treasury locks, net of tax | 6 | 6 | |||||
Stock option exercises & restricted stock vestings | 5 | 1 | 33,250 | 33,256 | |||
Cash dividends declared on common stock | -17,402 | -17,402 | |||||
Balance at Mar. 31, 2015 | $1,767,774 | ($248,116) | $867 | ($1,034,727) | $540,563 | $437 | $1,026,798 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash Flows from Operating Activities: | ||
Net income | $45,099 | $48,408 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation | 32,979 | 35,849 |
Amortization | 1,081 | 1,398 |
Stock based compensation | 8,803 | 8,396 |
(Recovery of) Provision for doubtful accounts | -156 | 716 |
Deferred income taxes | -1,001 | -2,048 |
Defined benefit plan expense | 5,161 | 4,226 |
Equity in results of affiliates in excess of cash distributions received | 119 | 1,546 |
Changes in balance sheet items, excluding effects from foreign currency adjustments: | ||
Accounts receivable | -44,798 | -67,150 |
Inventories | 1,040 | -6,007 |
Prepaid and other current assets | -12,975 | -5,666 |
Accounts payable and accrued liabilities | 12,691 | 6,320 |
Income taxes payable | -2,879 | -5,097 |
Retirement and deferred compensation plans | -4,567 | -3,174 |
Other changes, net | -1,522 | 14,329 |
Net Cash Provided by Operations | 39,075 | 32,046 |
Cash Flows from Investing Activities: | ||
Capital expenditures | -26,885 | -42,914 |
Proceeds from sale of property and equipment, including insurance proceeds | 1,840 | 2,378 |
Notes receivable, net | 151 | |
Net Cash Used by Investing Activities | -24,894 | -40,536 |
Cash Flows from Financing Activities: | ||
(Repayments of) Proceeds from notes payable | -229,294 | 35,609 |
Proceeds from long-term obligations | 225,000 | |
Repayments of long-term obligations | -791 | -293 |
Dividends paid | -17,402 | -16,366 |
Credit facility costs | -399 | -299 |
Proceeds from stock option exercises | 20,398 | 7,770 |
Purchase of treasury stock | -12,999 | |
Excess tax benefit from exercise of stock options | 3,421 | 1,590 |
Net Cash Provided by Financing Activities | 933 | 15,012 |
Effect of Exchange Rate Changes on Cash | -29,183 | 794 |
Net (Decrease) Increase in Cash and Equivalents | -14,069 | 7,316 |
Cash and Equivalents at Beginning of Period | 399,762 | 309,861 |
Cash and Equivalents at End of Period | $385,693 | $317,177 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION | |
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of AptarGroup, Inc. and our subsidiaries. The terms “AptarGroup” or “Company” as used herein refer to AptarGroup, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. | |
In the opinion of management, the Unaudited Condensed Consolidated Financial Statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of consolidated financial position, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Also, certain financial position data included herein was derived from the Audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 but does not include all disclosures required by GAAP. Accordingly, these Unaudited Condensed Consolidated Financial Statements and related notes should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year. | |
ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS | |
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates to the FASB’s Accounting Standards Codification. During the first quarter of 2015, there have been no developments to the recently adopted accounting pronouncements from those disclosed in the Company’s 2014 Annual Report on Form 10-K that are considered to have a material impact on our Unaudited Condensed Consolidated Financial Statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies but are not yet effective are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations below. | |
INCOME TAXES | |
The Company computes taxes on income in accordance with the tax rules and regulations of the many taxing authorities where income is earned. The income tax rates imposed by these taxing authorities may vary substantially. Taxable income may differ from pretax income for financial accounting purposes. To the extent that these differences create differences between the tax basis of an asset or liability and our reported amount in the financial statements, an appropriate provision for deferred income taxes is made. | |
In our determination of which foreign earnings are permanently reinvested in foreign operations, the Company considers numerous factors, including the financial requirements of the U.S. parent company and those of our foreign subsidiaries, the U.S. funding needs for dividend payments and stock repurchases, and the tax consequences of remitting earnings to the U.S. From this analysis, current year repatriation decisions are made in an attempt to provide a proper mix of debt and shareholder capital both within the U.S. and for non-U.S. operations. The Company’s policy is to permanently reinvest our accumulated foreign earnings and the Company will only make a distribution out of current year earnings to meet the cash needs at the parent company. As such, the Company does not provide for taxes on earnings that are deemed to be permanently reinvested. Since no distribution to the U.S. of foreign earnings is expected in 2015, the effective tax rate for 2015 includes no tax cost of repatriation. | |
The Company provides a liability for the amount of tax benefits realized from uncertain tax positions. This liability is provided whenever the Company determines that a tax benefit will not meet a more-likely-than-not threshold for recognition. See Note 4 of the Unaudited Notes to the Condensed Consolidated Financial Statements for more information. | |
INVENTORIES
INVENTORIES | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
INVENTORIES | ||||||||
INVENTORIES | ||||||||
NOTE 2 - INVENTORIES | ||||||||
At March 31, 2015 and December 31, 2014, approximately 19% of the total inventories are accounted for by the LIFO method. Inventories, by component, consisted of: | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Raw materials | $ | 94,966 | $ | 108,618 | ||||
Work in process | 90,354 | 94,414 | ||||||
Finished goods | 106,686 | 115,809 | ||||||
Total | 292,006 | 318,841 | ||||||
Less LIFO reserve | (7,427 | ) | (7,769 | ) | ||||
Total | $ | 284,579 | $ | 311,072 | ||||
GOODWILL_AND_OTHER_INTANGIBLE_
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended | |||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||||||||||||||||||||||
NOTE 3 – GOODWILL AND OTHER INTANGIBLE ASSETS | ||||||||||||||||||||||
The changes in the carrying amount of goodwill since December 31, 2014 are as follows by reporting segment: | ||||||||||||||||||||||
Beauty + | Food + | Corporate | ||||||||||||||||||||
Home | Pharma | Beverage | & Other | Total | ||||||||||||||||||
Goodwill | $ | 171,149 | $ | 141,592 | $ | 17,000 | $ | 1,615 | $ | 331,356 | ||||||||||||
Accumulated impairment losses | -- | -- | -- | (1,615 | ) | (1,615 | ) | |||||||||||||||
Balance as of December 31, 2014 | $ | 171,149 | $ | 141,592 | $ | 17,000 | $ | -- | $ | 329,741 | ||||||||||||
Acquisition | -- | -- | -- | -- | -- | |||||||||||||||||
Foreign currency exchange effects | (6,174 | ) | (13,449 | ) | (722 | ) | -- | (20,345 | ) | |||||||||||||
Goodwill | $ | 164,975 | $ | 128,143 | $ | 16,278 | $ | 1,615 | $ | 311,011 | ||||||||||||
Accumulated impairment losses | -- | -- | -- | (1,615 | ) | (1,615 | ) | |||||||||||||||
Balance as of March 31, 2015 | $ | 164,975 | $ | 128,143 | $ | 16,278 | $ | -- | $ | 309,396 | ||||||||||||
The table below shows a summary of intangible assets as of March 31, 2015 and December 31, 2014. | ||||||||||||||||||||||
31-Mar-15 | December 31, 2014 | |||||||||||||||||||||
Weighted Average | Gross | Gross | ||||||||||||||||||||
Amortization | Carrying | Accumulated | Net | Carrying | Accumulated | Net | ||||||||||||||||
Period (Years) | Amount | Amortization | Value | Amount | Amortization | Value | ||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||||
Patents | 7 | $ | 15,216 | $ | (15,135 | ) | $ | 81 | $ | 17,001 | $ | (16,852 | ) | $ | 149 | |||||||
Acquired Technology | 15 | 31,712 | (6,871 | ) | 24,841 | 35,701 | (5,950 | ) | 29,751 | |||||||||||||
License agreements and other | 5 | 30,597 | (20,309 | ) | 10,288 | 32,804 | (22,659 | ) | 10,145 | |||||||||||||
Total intangible assets | 9 | $ | 77,525 | $ | (42,315 | ) | $ | 35,210 | $ | 85,506 | $ | (45,461 | ) | $ | 40,045 | |||||||
Aggregate amortization expense for the intangible assets above for the quarters ended March 31, 2015 and 2014 was $1,081 and $1,398, respectively. | ||||||||||||||||||||||
Future estimated amortization expense for the years ending December 31 is as follows: | ||||||||||||||||||||||
2015 | $ | 3,055 | (remaining estimated amortization for 2015) | |||||||||||||||||||
2016 | 3,554 | |||||||||||||||||||||
2017 | 3,132 | |||||||||||||||||||||
2018 | 3,133 | |||||||||||||||||||||
2019 and thereafter | 22,336 | |||||||||||||||||||||
Future amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of March 31, 2015. | ||||||||||||||||||||||
INCOME_TAX_UNCERTAINTIES
INCOME TAX UNCERTAINTIES | 3 Months Ended |
Mar. 31, 2015 | |
INCOME TAX UNCERTAINITIES | |
INCOME TAX UNCERTAINTIES | |
NOTE 4 – INCOME TAX UNCERTAINTIES | |
The Company had approximately $5.8 and $6.4 million recorded for income tax uncertainties as of March 31, 2015 and December 31, 2014, respectively. The $0.6 million decrease in income tax uncertainties was primarily the result of change in foreign currency rates. The amount, if recognized, that would impact the effective tax rate is $5.7 and $6.3 million, respectively. The Company estimates that it is reasonably possible that the liability for uncertain tax positions will decrease by no more than $5.4 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions. | |
RETIREMENT_AND_DEFERRED_COMPEN
RETIREMENT AND DEFERRED COMPENSATION PLANS | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
RETIREMENT AND DEFERRED COMPENSATION PLANS | ||||||||||||||
RETIREMENT AND DEFERRED COMPENSATION PLANS | ||||||||||||||
NOTE 5 – RETIREMENT AND DEFERRED COMPENSATION PLANS | ||||||||||||||
Components of Net Periodic Benefit Cost: | ||||||||||||||
Domestic Plans | Foreign Plans | |||||||||||||
Three months ended March 31, | 2015 | 2014 | 2015 | 2014 | ||||||||||
Service cost | $ | 2,504 | $ | 2,011 | $ | 1,160 | $ | 1,079 | ||||||
Interest cost | 1,589 | 1,482 | 420 | 699 | ||||||||||
Expected return on plan assets | (1,898 | ) | (1,646 | ) | (455 | ) | (510 | ) | ||||||
Amortization of net loss | 1,351 | 717 | 425 | 313 | ||||||||||
Amortization of prior service cost | -- | -- | 65 | 81 | ||||||||||
Net periodic benefit cost | $ | 3,546 | $ | 2,564 | $ | 1,615 | $ | 1,662 | ||||||
EMPLOYER CONTRIBUTIONS | ||||||||||||||
Although the Company has no minimum funding requirement, we plan to contribute approximately $10 million to our domestic defined benefit plans in 2015. No 2015 contributions were made as of March 31, 2015. The Company also expects to contribute approximately $12.8 million to our foreign defined benefit plans in 2015, and as of March 31, 2015, we have contributed approximately $0.6 million. | ||||||||||||||
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||||||||
NOTE 6 – ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||||||||
Changes in Accumulated Other Comprehensive Income by Component: | ||||||||||||||
Foreign | Defined Benefit | Other | Total | |||||||||||
Currency | Pension Plans | |||||||||||||
Balance – December 31, 2013 | $ | 149,965 | $ | (40,093 | ) | $ | (121 | ) | $ | 109,751 | ||||
Other comprehensive income before reclassifications | 913 | -- | -- | 913 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | (340 | ) | 718 | 6 | 384 | |||||||||
Net current-period other comprehensive income | 573 | 718 | 6 | 1,297 | ||||||||||
Balance - March 31, 2014 | $ | 150,538 | $ | (39,375 | ) | $ | (115 | ) | $ | 111,048 | ||||
Balance – December 31, 2014 | $ | (42,851 | ) | $ | (67,097 | ) | $ | (97 | ) | $ | (110,045 | ) | ||
Other comprehensive income before reclassifications | (139,246 | ) | -- | -- | (139,246 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income | -- | 1,169 | 6 | 1,175 | ||||||||||
Net current-period other comprehensive income | (139,246 | ) | 1,169 | 6 | (138,071 | ) | ||||||||
Balance - March 31, 2015 | $ | (182,097 | ) | $ | (65,928 | ) | $ | (91 | ) | $ | (248,116 | ) | ||
Reclassifications Out of Accumulated Other Comprehensive Income: | ||||||||||||||
Details about Accumulated Other | Amount Reclassified from Accumulated | Affected Line in the Statement | ||||||||||||
Comprehensive Income Components | Other Comprehensive Income | Where Net Income is Presented | ||||||||||||
Three months ended March 31, | 2015 | 2014 | ||||||||||||
Defined Benefit Pension Plans | ||||||||||||||
Amortization of net loss | $ | 1,776 | $ | 1,030 | (a) | |||||||||
Amortization of prior service cost | 65 | 81 | (a) | |||||||||||
1,841 | 1,111 | Total before tax | ||||||||||||
(672 | ) | (393 | ) | Tax benefit | ||||||||||
$ | 1,169 | $ | 718 | Net of tax | ||||||||||
Foreign Currency | ||||||||||||||
Foreign Currency Gain | -- | (340 | ) | Miscellaneous, net | ||||||||||
-- | (340 | ) | Total before tax | |||||||||||
-- | -- | Tax benefit | ||||||||||||
$ | -- | $ | (340 | ) | Net of tax | |||||||||
Other | ||||||||||||||
Changes in treasury locks | 10 | 9 | Interest Expense | |||||||||||
10 | 9 | Total before tax | ||||||||||||
(4 | ) | (3 | ) | Tax benefit | ||||||||||
$ | 6 | $ | 6 | Net of tax | ||||||||||
Total reclassifications for the period | $ | 1,175 | $ | 384 | ||||||||||
(a) | These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 5 – Retirement and Deferred Compensation Plans for additional details). | |||||||||||||
DERIVATIVE_INSTRUMENTS_AND_HED
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |||||||||||||||||
NOTE 7 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |||||||||||||||||
The Company maintains a foreign exchange risk management policy designed to establish a framework to protect the value of the Company’s non-functional denominated transactions from adverse changes in exchange rates. Sales of the Company’s products can be denominated in a currency different from the currency in which the related costs to produce the product are denominated. Changes in exchange rates on such inter-country sales or intercompany loans can impact the Company’s results of operations. The Company’s policy is not to engage in speculative foreign currency hedging activities, but to minimize our net foreign currency transaction exposure, defined as firm commitments and transactions recorded and denominated in currencies other than the functional currency. The Company may use foreign currency forward exchange contracts, options and cross currency swaps to economically hedge these risks. | |||||||||||||||||
For derivative instruments designated as hedges, the Company formally documents the nature and relationships between the hedging instruments and the hedged items, as well as the risk management objectives, strategies for undertaking the various hedge transactions, and the method of assessing hedge effectiveness. Additionally, in order to designate any derivative instrument as a hedge of an anticipated transaction, the significant characteristics and expected terms of any anticipated transaction must be specifically identified, and it must be probable that the anticipated transaction will occur. | |||||||||||||||||
HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS | |||||||||||||||||
A significant number of the Company’s operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of the Company’s foreign subsidiaries. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on the Company’s financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive effect. The Company in some cases maintains debt in these subsidiaries to offset the net asset exposure. The Company does not otherwise actively manage this risk using derivative financial instruments. In the event the Company plans on a full or partial liquidation of any of our foreign subsidiaries where the Company’s net investment is likely to be monetized, the Company will consider hedging the currency exposure associated with such a transaction. | |||||||||||||||||
OTHER | |||||||||||||||||
As of March 31, 2015, the Company has recorded the fair value of foreign currency forward exchange contracts of $7.4 million in prepaid and other, $4.4 million in accounts payable and accrued liabilities, and $0.2 million in deferred and other non-current liabilities in the balance sheet. All forward exchange contracts outstanding as of March 31, 2015 had an aggregate contract amount of $152.8 million. | |||||||||||||||||
Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of March 31, 2015 | |||||||||||||||||
and December 31, 2014 | |||||||||||||||||
Derivative Contracts Not Designated as | Balance Sheet | March 31, | December | ||||||||||||||
Hedging Instruments | Location | 2015 | 31, 2014 | ||||||||||||||
Derivative Assets | |||||||||||||||||
Foreign Exchange Contracts | Prepaid and other | $ | 7,443 | $ | 1,037 | ||||||||||||
Foreign Exchange Contracts | Miscellaneous Other Assets | -- | 7 | ||||||||||||||
$ | 7,443 | $ | 1,044 | ||||||||||||||
Derivative Liabilities | |||||||||||||||||
Foreign Exchange Contracts | Accounts payable and accrued liabilities | $ | 4,449 | $ | 2,378 | ||||||||||||
Foreign Exchange Contracts | Deferred and other non-current liabilities | 152 | 115 | ||||||||||||||
$ | 4,601 | $ | 2,493 | ||||||||||||||
The Effect of Derivative Instruments on the Condensed Consolidated Statements of Income | |||||||||||||||||
for the Quarters Ended March 31, 2015 and March 31, 2014 | |||||||||||||||||
Derivatives Not Designated as | Location of Gain or (Loss) Recognized in | Amount of Gain or (Loss) | |||||||||||||||
Hedging Instruments | Income on Derivative | Recognized in Income on | |||||||||||||||
Derivative | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Foreign Exchange Contracts | Other Income (Expense) Miscellaneous, net | $ | 3,253 | $ | (159 | ) | |||||||||||
$ | 3,253 | $ | (159 | ) | |||||||||||||
Net Amounts | Gross Amounts not Offset in the | ||||||||||||||||
Gross Amounts | Presented in | Statement of Financial Position | |||||||||||||||
Gross | Offset in the | the Statement of | Financial | Cash Collateral | Net | ||||||||||||
Amount | Financial Position | Financial Position | Instruments | Received | Amount | ||||||||||||
Description | |||||||||||||||||
31-Mar-15 | |||||||||||||||||
Derivative Assets | $ | 7,443 | -- | $ | 7,443 | -- | -- | $ | 7,443 | ||||||||
Total Assets | $ | 7,443 | -- | $ | 7,443 | -- | -- | $ | 7,443 | ||||||||
Derivative Liabilities | $ | 4,601 | -- | $ | 4,601 | -- | -- | $ | 4,601 | ||||||||
Total Liabilities | $ | 4,601 | -- | $ | 4,601 | -- | -- | $ | 4,601 | ||||||||
December 31, 2014 | |||||||||||||||||
Derivative Assets | $ | 1,044 | -- | $ | 1,044 | -- | -- | $ | 1,044 | ||||||||
Total Assets | $ | 1,044 | -- | $ | 1,044 | -- | -- | $ | 1,044 | ||||||||
Derivative Liabilities | $ | 2,493 | -- | $ | 2,493 | -- | -- | $ | 2,493 | ||||||||
Total Liabilities | $ | 2,493 | -- | $ | 2,493 | -- | -- | $ | 2,493 | ||||||||
FAIR_VALUE
FAIR VALUE | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
FAIR VALUE | ||||||||||||||
FAIR VALUE | ||||||||||||||
NOTE 8 – FAIR VALUE | ||||||||||||||
Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows: | ||||||||||||||
· | Level 1:Unadjusted quoted prices in active markets for identical assets and liabilities. | |||||||||||||
· | Level 2:Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. | |||||||||||||
· | Level 3:Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. | |||||||||||||
As of March 31, 2015, the fair values of our financial assets and liabilities were categorized as follows: | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Forward exchange contracts (a) | $ | 7,443 | $ | -- | $ | 7,443 | $ | -- | ||||||
Total assets at fair value | $ | 7,443 | $ | -- | $ | 7,443 | $ | -- | ||||||
Liabilities | ||||||||||||||
Forward exchange contracts (a) | $ | 4,601 | $ | -- | $ | 4,601 | $ | -- | ||||||
Total liabilities at fair value | $ | 4,601 | $ | -- | $ | 4,601 | $ | -- | ||||||
As of December 31, 2014, the fair values of our financial assets and liabilities were categorized as follows: | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Forward exchange contracts (a) | $ | 1,044 | $ | -- | $ | 1,044 | $ | -- | ||||||
Total assets at fair value | $ | 1,044 | $ | -- | $ | 1,044 | $ | -- | ||||||
Liabilities | ||||||||||||||
Forward exchange contracts (a) | $ | 2,493 | $ | -- | $ | 2,493 | $ | -- | ||||||
Total liabilities at fair value | $ | 2,493 | $ | -- | $ | 2,493 | $ | -- | ||||||
(a) Market approach valuation technique based on observable market transactions of spot and forward rates. | ||||||||||||||
The carrying amounts of the Company’s other current financial instruments such as cash and equivalents, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instrument. The Company considers our long-term obligations a Level 2 liability and utilizes the market approach valuation technique based on interest rates that are currently available to the Company for issuance of debt with similar terms and maturities. The estimated fair value of the Company’s long-term obligations was $846 million as of March 31, 2015 and $606 million as of December 31, 2014. | ||||||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | |
NOTE 9 – COMMITMENTS AND CONTINGENCIES | |
The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature. While management believes the resolution of these claims and lawsuits will not have a material adverse effect on the Company’s financial position or results of operations or cash flows, claims and legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur that could include amounts in excess of any accruals which management has established. Were such unfavorable final outcomes to occur, it is possible that they could have a material adverse effect on our financial position, results of operations and cash flows. | |
Under our Certificate of Incorporation, the Company has agreed to indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a directors and officers liability insurance policy that covers a portion of our exposure. As a result of our insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. The Company has no liabilities recorded for these agreements as of March 31, 2015. | |
STOCK_REPURCHASE_PROGRAM
STOCK REPURCHASE PROGRAM | 3 Months Ended |
Mar. 31, 2015 | |
STOCK REPURCHASE PROGRAM | |
STOCK REPURCHASE PROGRAM | |
NOTE 10 – STOCK REPURCHASE PROGRAM | |
On October 30, 2014, the Company announced a new share repurchase authorization of up to $350 million of common stock. This new authorization replaces previous authorizations and has no expiration date. AptarGroup may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions. | |
On December 16, 2014, the Company entered into an agreement to repurchase approximately $250 million of its Common Stock under an accelerated share repurchase program (the “ASR program”). The ASR program is part of the Company’s $350 million share repurchase authorization. On December 17, 2014, the Company paid $250 million to Wells Fargo Bank N.A. (“Wells Fargo”) in exchange for approximately 3.1 million shares, estimated to represent approximately 80% of the total number of shares expected to be purchased in the ASR program based on current market prices. The ultimate number of shares to be repurchased under the ASR program will be based on the volume-weighted average price of the Company’s common stock during the term of the ASR program, less a discount. Final settlement of the ASR program is expected to be completed by the end of September 2015, although the settlement may be accelerated at Wells Fargo’s option. | |
During the three months ended March 31, 2015, the Company did not repurchase any shares. During the three months ended March 31, 2014, the Company repurchased approximately 200 thousand shares for approximately $13.0 million. Shares repurchased are returned to Treasury Stock. | |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||
NOTE 11 – STOCK-BASED COMPENSATION | ||||||||||||||
The Company issues stock options and restricted stock units to employees under Stock Awards Plans approved by shareholders. Stock options are issued to non-employee directors under Director Stock Option Plans approved by shareholders. Options are awarded with the exercise price equal to the market price on the date of grant and generally become exercisable over three years and expire 10 years after grant. Restricted stock units generally vest over three years. | ||||||||||||||
Compensation expense recorded attributable to stock options for the first three months of 2015 was approximately $8.8 million ($5.7 million after tax). The income tax benefit related to this compensation expense was approximately $3.1 million. Approximately $8.0 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. Compensation expense recorded attributable to stock options for the first three months of 2014 was approximately $8.4 million ($5.5 million after tax). The income tax benefit related to this compensation expense was approximately $2.9 million. Approximately $7.6 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. | ||||||||||||||
The Company uses historical data to estimate expected life and volatility. The weighted-average fair value of stock options granted under the Stock Awards Plans was $12.83 and $14.84 per share during the first three months of 2015 and 2014, respectively. These values were estimated on the respective dates of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: | ||||||||||||||
Stock Option Plans: | ||||||||||||||
Three months ended March 31, | 2015 | 2014 | ||||||||||||
Dividend Yield | 1.7 | % | 1.7 | % | ||||||||||
Expected Stock Price Volatility | 21.9 | % | 22.2 | % | ||||||||||
Risk-free Interest Rate | 1.6 | % | 2.3 | % | ||||||||||
Expected Life of Option (years) | 6.9 | 6.9 | ||||||||||||
There were no grants under the Director Stock Option Plan during the three months ended March 31, 2015 and 2014. | ||||||||||||||
A summary of option activity under the Company’s stock plans as of March 31, 2015, and changes during the three months then ended is presented below: | ||||||||||||||
Stock Option Plans | Director Stock Option Plans | |||||||||||||
Weighted Average | Weighted Average | |||||||||||||
Shares | Exercise Price | Shares | Exercise Price | |||||||||||
Outstanding, January 1, 2015 | 8,107,806 | $ | 46.74 | 368,668 | $ | 53.52 | ||||||||
Granted | 1,391,355 | 64.6 | -- | -- | ||||||||||
Exercised | (604,717 | ) | 33.56 | (32,167 | ) | 36.74 | ||||||||
Forfeited or expired | (11,319 | ) | 59.34 | -- | -- | |||||||||
Outstanding at March 31, 2015 | 8,883,125 | $ | 50.42 | 336,501 | $ | 55.12 | ||||||||
Exercisable at March 31, 2015 | 6,109,859 | $ | 44.44 | 155,992 | $ | 47.89 | ||||||||
Weighted-Average Remaining Contractual Term (Years): | ||||||||||||||
Outstanding at March 31, 2015 | 6.6 | 7.4 | ||||||||||||
Exercisable at March 31, 2015 | 5.4 | 6.3 | ||||||||||||
Aggregate Intrinsic Value ($000): | ||||||||||||||
Outstanding at March 31, 2015 | $ | 123,889 | $ | 3,118 | ||||||||||
Exercisable at March 31, 2015 | $ | 118,581 | $ | 2,438 | ||||||||||
Intrinsic Value of Options Exercised ($000) During the Three Months Ended: | ||||||||||||||
March 31, 2015 | $ | 18,824 | $ | 874 | ||||||||||
March 31, 2014 | $ | 6,912 | $ | -- | ||||||||||
The fair value of shares vested during the three months ended March 31, 2015 and 2014 was $14.8 million and $13.0 million, respectively. Cash received from option exercises was approximately $20.4 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $5.2 million in the three months ended March 31, 2015. As of March 31, 2015, the remaining valuation of stock option awards to be expensed in future periods was $21.8 million and the related weighted-average period over which it is expected to be recognized is 1.6 years. | ||||||||||||||
The fair value of restricted stock unit grants is the market price of the underlying shares on the grant date. A summary of restricted stock unit activity as of March 31, 2015, and changes during the period then ended is presented below: | ||||||||||||||
Weighted-Average | ||||||||||||||
Shares | Grant-Date Fair Value | |||||||||||||
Nonvested at January 1, 2015 | 61,750 | $ | 64.09 | |||||||||||
Granted | 11,448 | 65.87 | ||||||||||||
Vested | (11,083 | ) | 57.13 | |||||||||||
Nonvested at March 31, 2015 | 62,115 | $ | 65.65 | |||||||||||
Compensation expense recorded attributable to restricted stock unit grants for the first three months of 2015 and 2014 was approximately $727 thousand and $733 thousand, respectively. The fair value of units vested during the three months ended March 31, 2015 and 2014 was $633 thousand and $491 thousand, respectively. The intrinsic value of units vested during the three months ended March 31, 2015 and 2014 was $732 thousand and $613 thousand, respectively. As of March 31, 2015 there was $2.0 million of total unrecognized compensation cost relating to restricted stock unit awards which is expected to be recognized over a weighted-average period of 1.5 years. | ||||||||||||||
The Company has a long-term incentive program for certain employees. The program is based on the cumulative total shareholder return of our common stock during a three year performance period. Total expense related to this program is expected to be approximately $2.3 million over the performance period, of which $227 thousand and $159 thousand was recognized in the first quarter of 2015 and 2014, respectively. | ||||||||||||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
EARNINGS PER SHARE | ||||||||||||||
EARNINGS PER SHARE | ||||||||||||||
NOTE 12 – EARNINGS PER SHARE | ||||||||||||||
AptarGroup’s authorized common stock consists of 199 million shares, having a par value of $.01 each. Information related to the calculation of earnings per share is as follows: | ||||||||||||||
31-Mar-15 | 31-Mar-14 | |||||||||||||
Diluted | Basic | Diluted | Basic | |||||||||||
Consolidated operations | ||||||||||||||
Income available to common shareholders | $ | 45,171 | $ | 45,171 | $ | 48,389 | $ | 48,389 | ||||||
Average equivalent shares | ||||||||||||||
Shares of common stock | 62,292 | 62,292 | 65,468 | 65,468 | ||||||||||
Effect of dilutive stock based compensation | ||||||||||||||
Stock options | 2,182 | -- | 2,738 | -- | ||||||||||
Restricted stock | 20 | -- | 26 | -- | ||||||||||
Total average equivalent shares | 64,494 | 62,292 | 68,232 | 65,468 | ||||||||||
Net income per share | $ | 0.7 | $ | 0.73 | $ | 0.71 | $ | 0.74 | ||||||
SEGMENT_INFORMATION
SEGMENT INFORMATION | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
SEGMENT INFORMATION | ||||||||
SEGMENT INFORMATION | ||||||||
NOTE 13 – SEGMENT INFORMATION | ||||||||
The Company operates in the packaging components industry, which includes the development, manufacture and sale of consumer product dispensing solutions. The Company is organized into three reporting segments. Operations that sell dispensing systems primarily to the personal care, beauty and home care markets form the Beauty + Home segment. Operations that sell dispensing systems primarily to the prescription drug, consumer health care and injectables markets form the Pharma segment. Operations that sell dispensing systems primarily to the food and beverage markets form the Food + Beverage segment. | ||||||||
The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Segment income is defined as earnings before net interest expense, certain corporate expenses and income taxes. | ||||||||
Financial information regarding the Company’s reportable segments is shown below: | ||||||||
Three months ended March 31, | 2015 | 2014 | ||||||
Total Revenue: | ||||||||
Beauty + Home | $ | 334,794 | $ | 398,540 | ||||
Pharma | 178,669 | 194,349 | ||||||
Food + Beverage | 81,920 | 90,626 | ||||||
Total Revenue | $ | 595,383 | $ | 683,515 | ||||
Less: Intersegment Sales: | ||||||||
Beauty + Home | $ | 5,380 | $ | 7,304 | ||||
Pharma | -- | -- | ||||||
Food + Beverage | 192 | 160 | ||||||
Total Intersegment Sales | $ | 5,572 | $ | 7,464 | ||||
Net Sales: | ||||||||
Beauty + Home | $ | 329,414 | $ | 391,236 | ||||
Pharma | 178,669 | 194,349 | ||||||
Food + Beverage | 81,728 | 90,466 | ||||||
Net Sales | $ | 589,811 | $ | 676,051 | ||||
Segment Income (1): | ||||||||
Beauty + Home | $ | 23,375 | $ | 27,781 | ||||
Pharma | 52,001 | 52,482 | ||||||
Food + Beverage | 9,050 | 9,080 | ||||||
Corporate & Other | (11,159 | ) | (11,798 | ) | ||||
Income before interest and taxes | $ | 73,267 | $ | 77,545 | ||||
Interest expense, net | (5,572 | ) | (3,865 | ) | ||||
Income before income taxes | $ | 67,695 | $ | 73,680 | ||||
-1 | The Company evaluates performance of our business units and allocates resources based upon segment income. Segment income is defined as earnings before net interest expense, certain corporate expenses and income taxes. | |||||||
INSURANCE_SETTLEMENT_RECEIVABL
INSURANCE SETTLEMENT RECEIVABLE | 3 Months Ended |
Mar. 31, 2015 | |
INSURANCE SETTLEMENT RECEIVABLE | |
INSURANCE SETTLEMENT RECEIVABLE | |
NOTE 14 – INSURANCE SETTLEMENT RECEIVABLE | |
A fire caused damage to the roof and production area of a facility owned by an AptarGroup subsidiary in Brazil on September 1, 2014. There were no injuries. The facility is primarily an internal supplier to AptarGroup of anodized aluminum components for certain dispensing systems sold to the regional beauty and personal care markets. Repairs of the facility continue to progress as planned. AptarGroup is insured for the damages caused by the fire, including business interruption insurance. While the Company is still in the process of reviewing claims with our insurance carriers, we have currently recognized a $2.0 million receivable related to costs incurred but not yet reimbursed, which is included in Prepaid and Other in the Condensed Consolidated Balance Sheet. This incident did not have a material impact on our financial results during the first quarter of 2015 and we expect to reach a final insurance settlement during the second half of 2015. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | |
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of AptarGroup, Inc. and our subsidiaries. The terms “AptarGroup” or “Company” as used herein refer to AptarGroup, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. | |
In the opinion of management, the Unaudited Condensed Consolidated Financial Statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of consolidated financial position, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Also, certain financial position data included herein was derived from the Audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 but does not include all disclosures required by GAAP. Accordingly, these Unaudited Condensed Consolidated Financial Statements and related notes should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year. | |
ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS | |
ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS | |
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates to the FASB’s Accounting Standards Codification. During the first quarter of 2015, there have been no developments to the recently adopted accounting pronouncements from those disclosed in the Company’s 2014 Annual Report on Form 10-K that are considered to have a material impact on our Unaudited Condensed Consolidated Financial Statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies but are not yet effective are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations below. | |
INCOME TAXES | |
INCOME TAXES | |
The Company computes taxes on income in accordance with the tax rules and regulations of the many taxing authorities where income is earned. The income tax rates imposed by these taxing authorities may vary substantially. Taxable income may differ from pretax income for financial accounting purposes. To the extent that these differences create differences between the tax basis of an asset or liability and our reported amount in the financial statements, an appropriate provision for deferred income taxes is made. | |
In our determination of which foreign earnings are permanently reinvested in foreign operations, the Company considers numerous factors, including the financial requirements of the U.S. parent company and those of our foreign subsidiaries, the U.S. funding needs for dividend payments and stock repurchases, and the tax consequences of remitting earnings to the U.S. From this analysis, current year repatriation decisions are made in an attempt to provide a proper mix of debt and shareholder capital both within the U.S. and for non-U.S. operations. The Company’s policy is to permanently reinvest our accumulated foreign earnings and the Company will only make a distribution out of current year earnings to meet the cash needs at the parent company. As such, the Company does not provide for taxes on earnings that are deemed to be permanently reinvested. Since no distribution to the U.S. of foreign earnings is expected in 2015, the effective tax rate for 2015 includes no tax cost of repatriation. | |
The Company provides a liability for the amount of tax benefits realized from uncertain tax positions. This liability is provided whenever the Company determines that a tax benefit will not meet a more-likely-than-not threshold for recognition. See Note 4 of the Unaudited Notes to the Condensed Consolidated Financial Statements for more information. | |
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
INVENTORIES | ||||||||
Schedule of inventories, by component | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Raw materials | $ | 94,966 | $ | 108,618 | ||||
Work in process | 90,354 | 94,414 | ||||||
Finished goods | 106,686 | 115,809 | ||||||
Total | 292,006 | 318,841 | ||||||
Less LIFO reserve | (7,427 | ) | (7,769 | ) | ||||
Total | $ | 284,579 | $ | 311,072 | ||||
GOODWILL_AND_OTHER_INTANGIBLE_1
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended | |||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||||||||||||||||||||||
Schedule of changes in the carrying amount of goodwill | ||||||||||||||||||||||
Beauty + | Food + | Corporate | ||||||||||||||||||||
Home | Pharma | Beverage | & Other | Total | ||||||||||||||||||
Goodwill | $ | 171,149 | $ | 141,592 | $ | 17,000 | $ | 1,615 | $ | 331,356 | ||||||||||||
Accumulated impairment losses | -- | -- | -- | (1,615 | ) | (1,615 | ) | |||||||||||||||
Balance as of December 31, 2014 | $ | 171,149 | $ | 141,592 | $ | 17,000 | $ | -- | $ | 329,741 | ||||||||||||
Acquisition | -- | -- | -- | -- | -- | |||||||||||||||||
Foreign currency exchange effects | (6,174 | ) | (13,449 | ) | (722 | ) | -- | (20,345 | ) | |||||||||||||
Goodwill | $ | 164,975 | $ | 128,143 | $ | 16,278 | $ | 1,615 | $ | 311,011 | ||||||||||||
Accumulated impairment losses | -- | -- | -- | (1,615 | ) | (1,615 | ) | |||||||||||||||
Balance as of March 31, 2015 | $ | 164,975 | $ | 128,143 | $ | 16,278 | $ | -- | $ | 309,396 | ||||||||||||
Summary of amortized intangible assets | ||||||||||||||||||||||
31-Mar-15 | December 31, 2014 | |||||||||||||||||||||
Weighted Average | Gross | Gross | ||||||||||||||||||||
Amortization | Carrying | Accumulated | Net | Carrying | Accumulated | Net | ||||||||||||||||
Period (Years) | Amount | Amortization | Value | Amount | Amortization | Value | ||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||||
Patents | 7 | $ | 15,216 | $ | (15,135 | ) | $ | 81 | $ | 17,001 | $ | (16,852 | ) | $ | 149 | |||||||
Acquired Technology | 15 | 31,712 | (6,871 | ) | 24,841 | 35,701 | (5,950 | ) | 29,751 | |||||||||||||
License agreements and other | 5 | 30,597 | (20,309 | ) | 10,288 | 32,804 | (22,659 | ) | 10,145 | |||||||||||||
Total intangible assets | 9 | $ | 77,525 | $ | (42,315 | ) | $ | 35,210 | $ | 85,506 | $ | (45,461 | ) | $ | 40,045 | |||||||
Schedule of future estimated amortization expense | ||||||||||||||||||||||
Future estimated amortization expense for the years ending December 31 is as follows: | ||||||||||||||||||||||
2015 | $ | 3,055 | (remaining estimated amortization for 2015) | |||||||||||||||||||
2016 | 3,554 | |||||||||||||||||||||
2017 | 3,132 | |||||||||||||||||||||
2018 | 3,133 | |||||||||||||||||||||
2019 and thereafter | 22,336 | |||||||||||||||||||||
RETIREMENT_AND_DEFERRED_COMPEN1
RETIREMENT AND DEFERRED COMPENSATION PLANS (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
RETIREMENT AND DEFERRED COMPENSATION PLANS | ||||||||||||||
Components of net periodic benefit cost | ||||||||||||||
Domestic Plans | Foreign Plans | |||||||||||||
Three months ended March 31, | 2015 | 2014 | 2015 | 2014 | ||||||||||
Service cost | $ | 2,504 | $ | 2,011 | $ | 1,160 | $ | 1,079 | ||||||
Interest cost | 1,589 | 1,482 | 420 | 699 | ||||||||||
Expected return on plan assets | (1,898 | ) | (1,646 | ) | (455 | ) | (510 | ) | ||||||
Amortization of net loss | 1,351 | 717 | 425 | 313 | ||||||||||
Amortization of prior service cost | -- | -- | 65 | 81 | ||||||||||
Net periodic benefit cost | $ | 3,546 | $ | 2,564 | $ | 1,615 | $ | 1,662 | ||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||||||||
Changes in Accumulated Other Comprehensive Income by Component | ||||||||||||||
Foreign | Defined Benefit | Other | Total | |||||||||||
Currency | Pension Plans | |||||||||||||
Balance – December 31, 2013 | $ | 149,965 | $ | (40,093 | ) | $ | (121 | ) | $ | 109,751 | ||||
Other comprehensive income before reclassifications | 913 | -- | -- | 913 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | (340 | ) | 718 | 6 | 384 | |||||||||
Net current-period other comprehensive income | 573 | 718 | 6 | 1,297 | ||||||||||
Balance - March 31, 2014 | $ | 150,538 | $ | (39,375 | ) | $ | (115 | ) | $ | 111,048 | ||||
Balance – December 31, 2014 | $ | (42,851 | ) | $ | (67,097 | ) | $ | (97 | ) | $ | (110,045 | ) | ||
Other comprehensive income before reclassifications | (139,246 | ) | -- | -- | (139,246 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income | -- | 1,169 | 6 | 1,175 | ||||||||||
Net current-period other comprehensive income | (139,246 | ) | 1,169 | 6 | (138,071 | ) | ||||||||
Balance - March 31, 2015 | $ | (182,097 | ) | $ | (65,928 | ) | $ | (91 | ) | $ | (248,116 | ) | ||
Reclassifications Out of Accumulated Other Comprehensive Income | ||||||||||||||
Details about Accumulated Other | Amount Reclassified from Accumulated | Affected Line in the Statement | ||||||||||||
Comprehensive Income Components | Other Comprehensive Income | Where Net Income is Presented | ||||||||||||
Three months ended March 31, | 2015 | 2014 | ||||||||||||
Defined Benefit Pension Plans | ||||||||||||||
Amortization of net loss | $ | 1,776 | $ | 1,030 | (a) | |||||||||
Amortization of prior service cost | 65 | 81 | (a) | |||||||||||
1,841 | 1,111 | Total before tax | ||||||||||||
(672 | ) | (393 | ) | Tax benefit | ||||||||||
$ | 1,169 | $ | 718 | Net of tax | ||||||||||
Foreign Currency | ||||||||||||||
Foreign Currency Gain | -- | (340 | ) | Miscellaneous, net | ||||||||||
-- | (340 | ) | Total before tax | |||||||||||
-- | -- | Tax benefit | ||||||||||||
$ | -- | $ | (340 | ) | Net of tax | |||||||||
Other | ||||||||||||||
Changes in treasury locks | 10 | 9 | Interest Expense | |||||||||||
10 | 9 | Total before tax | ||||||||||||
(4 | ) | (3 | ) | Tax benefit | ||||||||||
$ | 6 | $ | 6 | Net of tax | ||||||||||
Total reclassifications for the period | $ | 1,175 | $ | 384 | ||||||||||
(a) | These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 5 – Retirement and Deferred Compensation Plans for additional details). | |||||||||||||
DERIVATIVE_INSTRUMENTS_AND_HED1
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |||||||||||||||||
Schedule of Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets | |||||||||||||||||
Derivative Contracts Not Designated as | Balance Sheet | March 31, | December | ||||||||||||||
Hedging Instruments | Location | 2015 | 31, 2014 | ||||||||||||||
Derivative Assets | |||||||||||||||||
Foreign Exchange Contracts | Prepaid and other | $ | 7,443 | $ | 1,037 | ||||||||||||
Foreign Exchange Contracts | Miscellaneous Other Assets | -- | 7 | ||||||||||||||
$ | 7,443 | $ | 1,044 | ||||||||||||||
Derivative Liabilities | |||||||||||||||||
Foreign Exchange Contracts | Accounts payable and accrued liabilities | $ | 4,449 | $ | 2,378 | ||||||||||||
Foreign Exchange Contracts | Deferred and other non-current liabilities | 152 | 115 | ||||||||||||||
$ | 4,601 | $ | 2,493 | ||||||||||||||
Schedule of Effect of Derivative Instruments on the Condensed Consolidated Statements of Income | |||||||||||||||||
The Effect of Derivative Instruments on the Condensed Consolidated Statements of Income | |||||||||||||||||
for the Quarters Ended March 31, 2015 and March 31, 2014 | |||||||||||||||||
Derivatives Not Designated as | Location of Gain or (Loss) Recognized in | Amount of Gain or (Loss) | |||||||||||||||
Hedging Instruments | Income on Derivative | Recognized in Income on | |||||||||||||||
Derivative | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Foreign Exchange Contracts | Other Income (Expense) Miscellaneous, net | $ | 3,253 | $ | (159 | ) | |||||||||||
$ | 3,253 | $ | (159 | ) | |||||||||||||
Schedule of offsetting derivative assets and liabilities | |||||||||||||||||
Net Amounts | Gross Amounts not Offset in the | ||||||||||||||||
Gross Amounts | Presented in | Statement of Financial Position | |||||||||||||||
Gross | Offset in the | the Statement of | Financial | Cash Collateral | Net | ||||||||||||
Amount | Financial Position | Financial Position | Instruments | Received | Amount | ||||||||||||
Description | |||||||||||||||||
31-Mar-15 | |||||||||||||||||
Derivative Assets | $ | 7,443 | -- | $ | 7,443 | -- | -- | $ | 7,443 | ||||||||
Total Assets | $ | 7,443 | -- | $ | 7,443 | -- | -- | $ | 7,443 | ||||||||
Derivative Liabilities | $ | 4,601 | -- | $ | 4,601 | -- | -- | $ | 4,601 | ||||||||
Total Liabilities | $ | 4,601 | -- | $ | 4,601 | -- | -- | $ | 4,601 | ||||||||
December 31, 2014 | |||||||||||||||||
Derivative Assets | $ | 1,044 | -- | $ | 1,044 | -- | -- | $ | 1,044 | ||||||||
Total Assets | $ | 1,044 | -- | $ | 1,044 | -- | -- | $ | 1,044 | ||||||||
Derivative Liabilities | $ | 2,493 | -- | $ | 2,493 | -- | -- | $ | 2,493 | ||||||||
Total Liabilities | $ | 2,493 | -- | $ | 2,493 | -- | -- | $ | 2,493 | ||||||||
FAIR_VALUE_Tables
FAIR VALUE (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
FAIR VALUE | ||||||||||||||
Schedule of fair values of financial assets and liabilities | ||||||||||||||
As of March 31, 2015, the fair values of our financial assets and liabilities were categorized as follows: | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Forward exchange contracts (a) | $ | 7,443 | $ | -- | $ | 7,443 | $ | -- | ||||||
Total assets at fair value | $ | 7,443 | $ | -- | $ | 7,443 | $ | -- | ||||||
Liabilities | ||||||||||||||
Forward exchange contracts (a) | $ | 4,601 | $ | -- | $ | 4,601 | $ | -- | ||||||
Total liabilities at fair value | $ | 4,601 | $ | -- | $ | 4,601 | $ | -- | ||||||
As of December 31, 2014, the fair values of our financial assets and liabilities were categorized as follows: | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Forward exchange contracts (a) | $ | 1,044 | $ | -- | $ | 1,044 | $ | -- | ||||||
Total assets at fair value | $ | 1,044 | $ | -- | $ | 1,044 | $ | -- | ||||||
Liabilities | ||||||||||||||
Forward exchange contracts (a) | $ | 2,493 | $ | -- | $ | 2,493 | $ | -- | ||||||
Total liabilities at fair value | $ | 2,493 | $ | -- | $ | 2,493 | $ | -- | ||||||
(a) Market approach valuation technique based on observable market transactions of spot and forward rates. | ||||||||||||||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||
Weighted-average assumptions used to estimate fair value of stock options granted | ||||||||||||||
Stock Option Plans: | ||||||||||||||
Three months ended March 31, | 2015 | 2014 | ||||||||||||
Dividend Yield | 1.7 | % | 1.7 | % | ||||||||||
Expected Stock Price Volatility | 21.9 | % | 22.2 | % | ||||||||||
Risk-free Interest Rate | 1.6 | % | 2.3 | % | ||||||||||
Expected Life of Option (years) | 6.9 | 6.9 | ||||||||||||
Summary of option activity | ||||||||||||||
Stock Option Plans | Director Stock Option Plans | |||||||||||||
Weighted Average | Weighted Average | |||||||||||||
Shares | Exercise Price | Shares | Exercise Price | |||||||||||
Outstanding, January 1, 2015 | 8,107,806 | $ | 46.74 | 368,668 | $ | 53.52 | ||||||||
Granted | 1,391,355 | 64.6 | -- | -- | ||||||||||
Exercised | (604,717 | ) | 33.56 | (32,167 | ) | 36.74 | ||||||||
Forfeited or expired | (11,319 | ) | 59.34 | -- | -- | |||||||||
Outstanding at March 31, 2015 | 8,883,125 | $ | 50.42 | 336,501 | $ | 55.12 | ||||||||
Exercisable at March 31, 2015 | 6,109,859 | $ | 44.44 | 155,992 | $ | 47.89 | ||||||||
Weighted-Average Remaining Contractual Term (Years): | ||||||||||||||
Outstanding at March 31, 2015 | 6.6 | 7.4 | ||||||||||||
Exercisable at March 31, 2015 | 5.4 | 6.3 | ||||||||||||
Aggregate Intrinsic Value ($000): | ||||||||||||||
Outstanding at March 31, 2015 | $ | 123,889 | $ | 3,118 | ||||||||||
Exercisable at March 31, 2015 | $ | 118,581 | $ | 2,438 | ||||||||||
Intrinsic Value of Options Exercised ($000) During the Three Months Ended: | ||||||||||||||
March 31, 2015 | $ | 18,824 | $ | 874 | ||||||||||
March 31, 2014 | $ | 6,912 | $ | -- | ||||||||||
Summary of restricted stock unit activity | ||||||||||||||
Weighted-Average | ||||||||||||||
Shares | Grant-Date Fair Value | |||||||||||||
Nonvested at January 1, 2015 | 61,750 | $ | 64.09 | |||||||||||
Granted | 11,448 | 65.87 | ||||||||||||
Vested | (11,083 | ) | 57.13 | |||||||||||
Nonvested at March 31, 2015 | 62,115 | $ | 65.65 | |||||||||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
EARNINGS PER SHARE | ||||||||||||||
Information related to the calculation of earnings per share | ||||||||||||||
31-Mar-15 | 31-Mar-14 | |||||||||||||
Diluted | Basic | Diluted | Basic | |||||||||||
Consolidated operations | ||||||||||||||
Income available to common shareholders | $ | 45,171 | $ | 45,171 | $ | 48,389 | $ | 48,389 | ||||||
Average equivalent shares | ||||||||||||||
Shares of common stock | 62,292 | 62,292 | 65,468 | 65,468 | ||||||||||
Effect of dilutive stock based compensation | ||||||||||||||
Stock options | 2,182 | -- | 2,738 | -- | ||||||||||
Restricted stock | 20 | -- | 26 | -- | ||||||||||
Total average equivalent shares | 64,494 | 62,292 | 68,232 | 65,468 | ||||||||||
Net income per share | $ | 0.7 | $ | 0.73 | $ | 0.71 | $ | 0.74 | ||||||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
SEGMENT INFORMATION | ||||||||
Financial information regarding the Company's reportable segments | ||||||||
Three months ended March 31, | 2015 | 2014 | ||||||
Total Revenue: | ||||||||
Beauty + Home | $ | 334,794 | $ | 398,540 | ||||
Pharma | 178,669 | 194,349 | ||||||
Food + Beverage | 81,920 | 90,626 | ||||||
Total Revenue | $ | 595,383 | $ | 683,515 | ||||
Less: Intersegment Sales: | ||||||||
Beauty + Home | $ | 5,380 | $ | 7,304 | ||||
Pharma | -- | -- | ||||||
Food + Beverage | 192 | 160 | ||||||
Total Intersegment Sales | $ | 5,572 | $ | 7,464 | ||||
Net Sales: | ||||||||
Beauty + Home | $ | 329,414 | $ | 391,236 | ||||
Pharma | 178,669 | 194,349 | ||||||
Food + Beverage | 81,728 | 90,466 | ||||||
Net Sales | $ | 589,811 | $ | 676,051 | ||||
Segment Income (1): | ||||||||
Beauty + Home | $ | 23,375 | $ | 27,781 | ||||
Pharma | 52,001 | 52,482 | ||||||
Food + Beverage | 9,050 | 9,080 | ||||||
Corporate & Other | (11,159 | ) | (11,798 | ) | ||||
Income before interest and taxes | $ | 73,267 | $ | 77,545 | ||||
Interest expense, net | (5,572 | ) | (3,865 | ) | ||||
Income before income taxes | $ | 67,695 | $ | 73,680 | ||||
-1 | The Company evaluates performance of our business units and allocates resources based upon segment income. Segment income is defined as earnings before net interest expense, certain corporate expenses and income taxes. | |||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
INCOME TAXES | |
Tax cost of repatriation included in effective tax rate | $0 |
Expected distribution of foreign earnings | $0 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
INVENTORIES | ||
Inventories accounted for by using the LIFO method (as a percent) | 19.00% | 19.00% |
Inventories, by component | ||
Raw materials | $94,966 | $108,618 |
Work in process | 90,354 | 94,414 |
Finished goods | 106,686 | 115,809 |
Total | 292,006 | 318,841 |
Less LIFO reserve | -7,427 | -7,769 |
Total | $284,579 | $311,072 |
GOODWILL_AND_OTHER_INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Changes in the carrying amount of goodwill | ||
Goodwill | $311,011 | $331,356 |
Accumulated impairment losses | -1,615 | -1,615 |
Goodwill, Total | 309,396 | |
Goodwill, balance at the beginning of the period | 329,741 | |
Foreign currency exchange effects | -20,345 | |
Goodwill, balance at the end of the period | 309,396 | |
Operating segment | Beauty + Home | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 164,975 | 171,149 |
Goodwill, Total | 164,975 | |
Goodwill, balance at the beginning of the period | 171,149 | |
Foreign currency exchange effects | -6,174 | |
Goodwill, balance at the end of the period | 164,975 | |
Operating segment | Pharma | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 128,143 | 141,592 |
Goodwill, Total | 128,143 | |
Goodwill, balance at the beginning of the period | 141,592 | |
Foreign currency exchange effects | -13,449 | |
Goodwill, balance at the end of the period | 128,143 | |
Operating segment | Food + Beverage | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 16,278 | 17,000 |
Goodwill, Total | 16,278 | |
Goodwill, balance at the beginning of the period | 17,000 | |
Foreign currency exchange effects | -722 | |
Goodwill, balance at the end of the period | 16,278 | |
Corporate Non-Segment | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 1,615 | 1,615 |
Accumulated impairment losses | ($1,615) | ($1,615) |
GOODWILL_AND_OTHER_INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Amortized intangible assets: | |||
Gross Carrying Amount | $77,525 | $85,506 | |
Accumulated Amortization | -42,315 | -45,461 | |
Net Value | 35,210 | 40,045 | |
Aggregate amortization expense | 1,081 | 1,398 | |
Future estimated amortization expense | |||
2016 | 3,554 | ||
2017 | 3,132 | ||
2018 | 3,133 | ||
2019 and thereafter | 22,336 | ||
2015 | 3,055 | ||
Weighted Average | |||
Amortized intangible assets: | |||
Amortization Period | 9 years | ||
Patents | |||
Amortized intangible assets: | |||
Gross Carrying Amount | 15,216 | 17,001 | |
Accumulated Amortization | -15,135 | -16,852 | |
Net Value | 81 | 149 | |
Patents | Weighted Average | |||
Amortized intangible assets: | |||
Amortization Period | 7 years | ||
Acquired technology | |||
Amortized intangible assets: | |||
Gross Carrying Amount | 31,712 | 35,701 | |
Accumulated Amortization | -6,871 | -5,950 | |
Net Value | 24,841 | 29,751 | |
Acquired technology | Weighted Average | |||
Amortized intangible assets: | |||
Amortization Period | 15 years | ||
License agreements and other | |||
Amortized intangible assets: | |||
Gross Carrying Amount | 30,597 | 32,804 | |
Accumulated Amortization | -20,309 | -22,659 | |
Net Value | $10,288 | $10,145 | |
License agreements and other | Weighted Average | |||
Amortized intangible assets: | |||
Amortization Period | 5 years |
INCOME_TAXES_UNCERTAINTIES_Det
INCOME TAXES UNCERTAINTIES (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
INCOME TAX UNCERTAINITIES | ||
Income tax uncertainties | $5.80 | $6.40 |
Change in income tax uncertainties | 0.6 | |
Amount of income tax uncertainties that, if recognized, would impact the effective tax rate | 5.7 | 6.3 |
Decrease in liability for uncertain tax positions, high end of range | $5.40 | |
Number of months, in which liability for uncertain tax positions will decrease | 12 months |
RETIREMENT_AND_DEFERRED_COMPEN2
RETIREMENT AND DEFERRED COMPENSATION PLANS (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Domestic Plans | ||
Components of net periodic benefit cost: | ||
Service cost | $2,504,000 | $2,011,000 |
Interest cost | 1,589,000 | 1,482,000 |
Expected return on plan assets | -1,898,000 | -1,646,000 |
Amortization of net loss | 1,351,000 | 717,000 |
Net periodic benefit cost | 3,546,000 | 2,564,000 |
Expected contribution in current fiscal year | 10,000,000 | |
Minimum funding requirement | 0 | |
Employer contributions | 0 | |
Foreign Plans | ||
Components of net periodic benefit cost: | ||
Service cost | 1,160,000 | 1,079,000 |
Interest cost | 420,000 | 699,000 |
Expected return on plan assets | -455,000 | -510,000 |
Amortization of net loss | 425,000 | 313,000 |
Amortization of prior service cost | 65,000 | 81,000 |
Net periodic benefit cost | 1,615,000 | 1,662,000 |
Expected contribution in current fiscal year | 12,800,000 | |
Employer contributions | $600,000 |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | ($110,045) | $109,751 |
Other comprehensive income/ (loss) before reclassifications | -139,246 | 913 |
Amounts reclassified from accumulated other comprehensive income | 1,175 | 384 |
Net current-period other comprehensive income / (loss) | -138,071 | 1,297 |
Balance at the end of the period | -248,116 | 111,048 |
Foreign Currency | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | -42,851 | 149,965 |
Other comprehensive income/ (loss) before reclassifications | -139,246 | 913 |
Amounts reclassified from accumulated other comprehensive income | -340 | |
Net current-period other comprehensive income / (loss) | -139,246 | 573 |
Balance at the end of the period | -182,097 | 150,538 |
Defined Benefit Pension Plans | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | -67,097 | -40,093 |
Amounts reclassified from accumulated other comprehensive income | 1,169 | 718 |
Net current-period other comprehensive income / (loss) | 1,169 | 718 |
Balance at the end of the period | -65,928 | -39,375 |
Other | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | -97 | -121 |
Amounts reclassified from accumulated other comprehensive income | 6 | 6 |
Net current-period other comprehensive income / (loss) | 6 | 6 |
Balance at the end of the period | ($91) | ($115) |
ACCUMULATED_OTHER_COMPREHENSIV3
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details 2) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Interest expense | $7,303 | $4,881 |
Miscellaneous, net | 199 | -372 |
Total before tax | -67,695 | -73,680 |
Tax benefit | 22,596 | 25,272 |
Total reclassifications for the period | -45,171 | -48,389 |
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Total reclassifications for the period | 1,175 | 384 |
Defined Benefit Pension Plans | Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amortization of net loss | 1,776 | 1,030 |
Amortization of prior service cost | 65 | 81 |
Total before tax | 1,841 | 1,111 |
Tax benefit | -672 | -393 |
Total reclassifications for the period | 1,169 | 718 |
Foreign Currency | Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Miscellaneous, net | -340 | |
Total before tax | -340 | |
Total reclassifications for the period | -340 | |
Other | Treasury locks | Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Interest expense | 10 | 9 |
Total before tax | 10 | 9 |
Tax benefit | -4 | -3 |
Total reclassifications for the period | $6 | $6 |
DERIVATIVE_INSTRUMENTS_AND_HED2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | ||
Aggregate amount of forward exchange contracts outstanding | $152,800,000 | |
Fair Value of Derivative Instruments | ||
Derivative Assets | 7,443,000 | 1,044,000 |
Derivative Liabilities | 4,601,000 | 2,493,000 |
Derivative Contracts Not Designated as Hedging Instruments | ||
Fair Value of Derivative Instruments | ||
Derivative Assets | 7,443,000 | 1,044,000 |
Derivative Liabilities | 4,601,000 | 2,493,000 |
Derivative Contracts Not Designated as Hedging Instruments | Foreign Exchange Contracts | Prepaid and other | ||
Fair Value of Derivative Instruments | ||
Derivative Assets | 7,443,000 | 1,037,000 |
Derivative Contracts Not Designated as Hedging Instruments | Foreign Exchange Contracts | Miscellaneous Other Assets | ||
Fair Value of Derivative Instruments | ||
Derivative Assets | 7,000 | |
Derivative Contracts Not Designated as Hedging Instruments | Foreign Exchange Contracts | Accounts payable and accrued liabilities | ||
Fair Value of Derivative Instruments | ||
Derivative Liabilities | 4,449,000 | 2,378,000 |
Derivative Contracts Not Designated as Hedging Instruments | Foreign Exchange Contracts | Deferred and other non-current liabilities | ||
Fair Value of Derivative Instruments | ||
Derivative Liabilities | $152,000 | $115,000 |
DERIVATIVE_INSTRUMENTS_AND_HED3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details 2) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Derivative instruments, gain or (loss) | ||
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | $3,253 | ($159) |
Foreign Exchange Contracts | ||
Derivative instruments, gain or (loss) | ||
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | $3,253 | ($159) |
DERIVATIVE_INSTRUMENTS_AND_HED4
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details 3) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Derivative Assets | ||
Gross Amount | $7,443 | $1,044 |
Net Amounts Presented in the Statement of Financial Position | 7,443 | 1,044 |
Net Amount | 7,443 | 1,044 |
Derivative Liabilities | ||
Gross Amount | 4,601 | 2,493 |
Net Amounts Presented in the Statement of Financial Position | 4,601 | 2,493 |
Net Amount | $4,601 | $2,493 |
FAIR_VALUE_Details
FAIR VALUE (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Liabilities | ||
Fair value of long-term obligations | $846,000,000 | $606,000,000 |
Assets and liabilities measured at fair value on recurring basis | Total | ||
Assets | ||
Forward exchange contracts, assets | 7,443,000 | 1,044,000 |
Total assets at fair value | 7,443,000 | 1,044,000 |
Liabilities | ||
Forward exchange contracts, liabilities | 4,601,000 | 2,493,000 |
Total liabilities at fair value | 4,601,000 | 2,493,000 |
Assets and liabilities measured at fair value on recurring basis | Level 2 | ||
Assets | ||
Forward exchange contracts, assets | 7,443,000 | 1,044,000 |
Total assets at fair value | 7,443,000 | 1,044,000 |
Liabilities | ||
Forward exchange contracts, liabilities | 4,601,000 | 2,493,000 |
Total liabilities at fair value | $4,601,000 | $2,493,000 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (Indemnification agreements, USD $) | Mar. 31, 2015 |
Indemnification agreements | |
Commitments and contingencies | |
Liabilities recorded under indemnification agreements | $0 |
STOCK_REPURCHASE_PROGRAM_Detai
STOCK REPURCHASE PROGRAM (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
Share data in Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 17, 2014 | Oct. 30, 2014 | Dec. 16, 2014 |
Stock repurchase program | ||||
Number of shares repurchased | 200 | |||
Aggregate amount of share repurchases (in dollars) | $12,999,000 | |||
Share repurchases authorized amount | 350,000,000 | |||
ASR Program | ||||
Stock repurchase program | ||||
Number of shares repurchased | 3,100 | |||
Aggregate amount of share repurchases (in dollars) | 250,000,000 | |||
Share repurchases authorized amount | $250,000,000 | |||
Percentage of the total number of shares expected to be purchased in the ASR | 80.00% |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
STOCK-BASED COMPENSATION | ||
Proceeds from stock option exercises | $20,398,000 | $7,770,000 |
Stock options | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 3 years | |
Expiration period | 10 years | |
Compensation expense | 8,800,000 | 8,400,000 |
Compensation expense, net of tax | 5,700,000 | 5,500,000 |
Income tax benefit related to compensation expense | 3,100,000 | 2,900,000 |
Weighted-average fair value of stock options granted (in dollars per share) | $12.83 | $14.84 |
Fair value of shares vested | 14,800,000 | 13,000,000 |
Proceeds from stock option exercises | 20,400,000 | |
Actual tax benefit realized for the tax deduction from option exercises | 5,200,000 | |
Unrecognized compensation cost expected to be recognized in future periods | 21,800,000 | |
Weighted-average period over which compensation cost is expected to be recognized | 1 year 7 months 6 days | |
Stock options | Selling, research & development and administrative expenses | ||
STOCK-BASED COMPENSATION | ||
Compensation expense | 8,000,000 | 7,600,000 |
Stock Option Plans | Stock options | ||
Assumptions used to estimate fair value of stock options granted | ||
Dividend Yield (as a percent) | 1.70% | 1.70% |
Expected Stock Price Volatility (as a percent) | 21.90% | 22.20% |
Risk-free Interest Rate (as a percent) | 1.60% | 2.30% |
Expected Life of Option (years) | 6 years 10 months 24 days | 6 years 10 months 24 days |
Stock options activity | ||
Outstanding at the beginning of the period (in shares) | 8,107,806 | |
Granted (in shares) | 1,391,355 | |
Exercised (in shares) | -604,717 | |
Forfeited or expired (in shares) | -11,319 | |
Outstanding at the end of the period (in shares) | 8,883,125 | |
Exercisable at the end of the period (in shares) | 6,109,859 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $46.74 | |
Granted (in dollars per share) | $64.60 | |
Exercised (in dollars per share) | $33.56 | |
Forfeited or expired (in dollars per share) | $59.34 | |
Outstanding at the end of the period (in dollars per share) | $50.42 | |
Exercisable at the end of the period (in dollars per share) | $44.44 | |
Weighted-Average Remaining Contractual Term (Years): | ||
Outstanding at the end of the period | 6 years 7 months 6 days | |
Exercisable at the end of the period | 5 years 4 months 24 days | |
Aggregate Intrinsic Value: | ||
Outstanding at the end of the period | 123,889,000 | |
Exercisable at the end of the period | 118,581,000 | |
Intrinsic Value of Options Exercised | 18,824,000 | 6,912,000 |
Stock Option Plans | Restricted stock units | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 3 years | |
Compensation expense | 727,000 | 733,000 |
Unrecognized compensation cost expected to be recognized in future periods | 2,000,000 | |
Weighted-average period over which compensation cost is expected to be recognized | 1 year 6 months | |
Restricted stock unit activity | ||
Balance at the beginning of the period (in shares) | 61,750 | |
Granted (in shares) | 11,448 | |
Vested (in shares) | -11,083 | |
Balance at the end of the period (in shares) | 62,115 | |
Weighted-Average Grant-Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $64.09 | |
Granted (in dollars per share) | $65.87 | |
Vested (in dollars per share) | $57.13 | |
Nonvested at the end of the period (in dollars per share) | $65.65 | |
Fair value of units vested | 633,000 | 491,000 |
Intrinsic value of units vested | 732,000 | 613,000 |
Director Stock Option Plans | Stock options | ||
Stock options activity | ||
Outstanding at the beginning of the period (in shares) | 368,668 | |
Exercised (in shares) | -32,167 | |
Outstanding at the end of the period (in shares) | 336,501 | |
Exercisable at the end of the period (in shares) | 155,992 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $53.52 | |
Exercised (in dollars per share) | $36.74 | |
Outstanding at the end of the period (in dollars per share) | $55.12 | |
Exercisable at the end of the period (in dollars per share) | $47.89 | |
Weighted-Average Remaining Contractual Term (Years): | ||
Outstanding at the end of the period | 7 years 4 months 24 days | |
Exercisable at the end of the period | 6 years 3 months 18 days | |
Aggregate Intrinsic Value: | ||
Outstanding at the end of the period | 3,118,000 | |
Exercisable at the end of the period | 2,438,000 | |
Intrinsic Value of Options Exercised | 874,000 | |
New long-term incentive program | ||
STOCK-BASED COMPENSATION | ||
Compensation expense | 227,000 | 159,000 |
Performance period used to measure cumulative total shareholder return of common stock | 3 years | |
Expected total expense related to program over the performance period | $2,300,000 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
EARNINGS PER SHARE | |||
Authorized common stock (in shares) | 199,000,000 | 199,000,000 | |
Common stock, par value (in dollars per share) | $0.01 | $0.01 | |
Diluted | |||
Income available to common stockholders (in dollars) | $45,171 | $48,389 | |
Shares of common stock | 62,292,000 | 65,468,000 | |
Total average equivalent shares | 64,494,000 | 68,232,000 | |
Net income per share, diluted (in dollars per share) | $0.70 | $0.71 | |
Basic | |||
Income available to common stockholders (in dollars) | $45,171 | $48,389 | |
Shares of common stock | 62,292,000 | 65,468,000 | |
Net income per share, basic (in dollars per share) | $0.73 | $0.74 | |
Stock options | |||
Diluted | |||
Effect of dilutive stock based compensation (in shares) | 2,182,000 | 2,738,000 | |
Restricted stock units | |||
Diluted | |||
Effect of dilutive stock based compensation (in shares) | 20,000 | 26,000 |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
segment | ||
SEGMENT INFORMATION | ||
Number of reportable segments | 3 | |
Financial information regarding the Company's reportable segments | ||
Net Sales | $589,811 | $676,051 |
Income before interest and taxes | 73,267 | 77,545 |
Interest expense, net | -5,572 | -3,865 |
Income before Income Taxes | 67,695 | 73,680 |
Beauty + Home | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | 329,414 | 391,236 |
Income before interest and taxes | 23,375 | 27,781 |
Pharma | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | 178,669 | 194,349 |
Income before interest and taxes | 52,001 | 52,482 |
Food + Beverage | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | 81,728 | 90,466 |
Income before interest and taxes | 9,050 | 9,080 |
Corporate & Other | ||
Financial information regarding the Company's reportable segments | ||
Income before interest and taxes | -11,159 | -11,798 |
Operating segment | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | 595,383 | 683,515 |
Operating segment | Beauty + Home | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | 334,794 | 398,540 |
Operating segment | Pharma | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | 178,669 | 194,349 |
Operating segment | Food + Beverage | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | 81,920 | 90,626 |
Intersegment | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | -5,572 | -7,464 |
Intersegment | Beauty + Home | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | -5,380 | -7,304 |
Intersegment | Food + Beverage | ||
Financial information regarding the Company's reportable segments | ||
Net Sales | ($192) | ($160) |
INSURANCE_SETTLEMENT_RECEIVABL1
INSURANCE SETTLEMENT RECEIVABLE (Details) (USD $) | Mar. 31, 2015 |
In Millions, unless otherwise specified | |
INSURANCE SETTLEMENT RECEIVABLE | |
Insurance receivable | $2 |