Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 26, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | APTARGROUP INC | |
Entity Central Index Key | 896,622 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 62,293,828 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
Net Sales | $ 624,326 | $ 589,729 | $ 1,843,388 | $ 1,792,066 |
Operating Expenses: | ||||
Cost of sales (exclusive of depreciation and amortization shown below) | 408,081 | 381,041 | 1,192,967 | 1,145,107 |
Selling, research & development and administrative | 95,748 | 86,695 | 292,923 | 285,841 |
Depreciation and amortization | 40,087 | 39,667 | 114,660 | 115,944 |
Total Operating Expenses | 543,916 | 507,403 | 1,600,550 | 1,546,892 |
Operating Income | 80,410 | 82,326 | 242,838 | 245,174 |
Other (Expense) Income: | ||||
Interest expense | (9,733) | (8,753) | (25,707) | (26,547) |
Interest income | 1,113 | 715 | 2,086 | 1,759 |
Equity in results of affiliates | (72) | (15) | (142) | (187) |
Miscellaneous, net | (2,200) | 728 | (509) | (995) |
Total Other Income (Expense) | (10,892) | (7,325) | (24,272) | (25,970) |
Income before Income Taxes | 69,518 | 75,001 | 218,566 | 219,204 |
Provision for Income Taxes | 15,989 | 21,901 | 48,043 | 63,187 |
Net Income | 53,529 | 53,100 | 170,523 | 156,017 |
Net (Income) Loss Attributable to Noncontrolling Interests | (6) | (2) | (6) | (8) |
Net Income Attributable to AptarGroup, Inc. | $ 53,523 | $ 53,098 | $ 170,517 | $ 156,009 |
Net Income Attributable to AptarGroup, Inc. Per Common Share: | ||||
Basic (in dollars per share) | $ 0.86 | $ 0.84 | $ 2.73 | $ 2.48 |
Diluted (in dollars per share) | $ 0.83 | $ 0.82 | $ 2.64 | $ 2.40 |
Average number of shares outstanding: | ||||
Basic (in shares) | 62,592 | 62,858 | 62,527 | 62,878 |
Diluted (in shares) | 64,821 | 64,690 | 64,626 | 64,989 |
Dividends per Common Share (in dollars per share) | $ 0.32 | $ 0.30 | $ 0.96 | $ 0.90 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net Income | $ 53,529 | $ 53,100 | $ 170,523 | $ 156,017 |
Other Comprehensive Income (Loss): | ||||
Foreign currency translation adjustments | 17,903 | 13,792 | 69,505 | 44,239 |
Changes in treasury locks, net of tax | 7 | 6 | 21 | 19 |
Changes in derivative gains/losses, net of tax | (3,591) | (3,591) | ||
Defined benefit pension plan, net of tax | ||||
Amortization of prior service cost included in net income, net of tax | 74 | 58 | 210 | 174 |
Amortization of net loss included in net income, net of tax | 850 | 779 | 2,489 | 2,337 |
Total defined benefit pension plan, net of tax | 924 | 837 | 2,699 | 2,511 |
Total other comprehensive income (loss) | 15,243 | 14,635 | 68,634 | 46,769 |
Comprehensive Income (Loss) | 68,772 | 67,735 | 239,157 | 202,786 |
Comprehensive (Income) Loss Attributable to Noncontrolling Interests | (11) | (1) | (18) | |
Comprehensive Income Attributable to AptarGroup, Inc. | $ 68,761 | $ 67,734 | $ 239,139 | $ 202,786 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and equivalents | $ 1,018,666 | $ 466,287 |
Accounts and notes receivable, less allowance for doubtful accounts of $3,245 in 2017 and $2,989 in 2016 | 510,144 | 433,127 |
Inventories | 323,404 | 296,914 |
Prepaid and other | 89,181 | 73,842 |
Total Current Assets | 1,941,395 | 1,270,170 |
Property, Plant and Equipment: | ||
Buildings and improvements | 408,718 | 368,260 |
Machinery and equipment | 2,168,639 | 1,938,352 |
Property, Plant and Equipment, Gross | 2,577,357 | 2,306,612 |
Less: Accumulated depreciation | (1,744,586) | (1,545,384) |
Property, Plant and Equipment, Net | 832,771 | 761,228 |
Land | 25,668 | 23,093 |
Total Property, Plant and Equipment | 858,439 | 784,321 |
Other Assets: | ||
Investments in affiliates | 9,485 | 4,241 |
Goodwill | 439,147 | 407,522 |
Intangible assets | 96,760 | 94,489 |
Miscellaneous | 63,628 | 46,042 |
Total Other Assets | 609,020 | 552,294 |
Total Assets | 3,408,854 | 2,606,785 |
Current Liabilities: | ||
Notes payable | 109,910 | 169,213 |
Current maturities of long-term obligations, net of unamortized debt issuance costs | 136,330 | 4,603 |
Accounts payable and accrued liabilities | 458,797 | 369,139 |
Total Current Liabilities | 705,037 | 542,955 |
Long-term obligations, net of unamortized debt issuance costs | 1,271,530 | 772,737 |
Deferred Liabilities and Other: | ||
Deferred income taxes | 18,438 | 16,803 |
Retirement and deferred compensation plans | 87,223 | 94,545 |
Deferred and other non-current liabilities | 4,802 | 5,503 |
Commitments and contingencies | ||
Total Deferred Liabilities and Other | 110,463 | 116,851 |
AptarGroup, Inc. stockholders' equity | ||
Common stock, $.01 par value, 199 million shares authorized, 66.6 and 66.0 million shares issued as of September 30, 2017 and December 31, 2016, respectively | 666 | 660 |
Capital in excess of par value | 599,608 | 546,682 |
Retained earnings | 1,271,576 | 1,197,234 |
Accumulated other comprehensive (loss) | (251,087) | (319,709) |
Less treasury stock at cost, 4.3 and 3.9 million shares as of September 30, 2017 and December 31, 2016, respectively | (299,249) | (250,917) |
Total AptarGroup, Inc. Stockholders' Equity | 1,321,514 | 1,173,950 |
Noncontrolling interests in subsidiaries | 310 | 292 |
Total Stockholders' Equity | 1,321,824 | 1,174,242 |
Total Liabilities and Stockholders' Equity | $ 3,408,854 | $ 2,606,785 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands, shares in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts and notes receivable, allowance for doubtful accounts (in dollars) | $ 3,245 | $ 2,989 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 199 | 199 |
Common stock, shares issued | 66.6 | 66 |
Treasury stock, shares | 4.3 | 3.9 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Common Stock Par Value | Treasury Stock | Capital in Excess of Par Value | Non-Controlling Interest | Total |
Balance at Dec. 31, 2015 | $ 1,185,681 | $ (262,347) | $ 667 | $ (270,052) | $ 495,462 | $ 295 | $ 1,149,706 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net Income | 156,009 | 8 | 156,017 | ||||
Foreign currency translation adjustments | 44,247 | (8) | 44,239 | ||||
Changes in unrecognized pension gains/losses and related amortization, net of tax | 2,511 | 2,511 | |||||
Changes in treasury locks, net of tax | 19 | 19 | |||||
Stock awards and option exercises | 9 | 17,195 | 58,037 | 75,241 | |||
Cash dividends declared on common stock | (56,597) | (56,597) | |||||
Common stock repurchased and retired | (75,996) | (11) | (8,783) | (84,790) | |||
Balance at Sep. 30, 2016 | 1,209,097 | (215,570) | 665 | (252,857) | 544,716 | 295 | 1,286,346 |
Balance at Dec. 31, 2016 | 1,197,234 | (319,709) | 660 | (250,917) | 546,682 | 292 | 1,174,242 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net Income | 170,517 | 6 | 170,523 | ||||
Foreign currency translation adjustments | 69,493 | 12 | 69,505 | ||||
Changes in unrecognized pension gains/losses and related amortization, net of tax | 2,699 | 2,699 | |||||
Changes in treasury locks, net of tax | 21 | 21 | |||||
Changes in derivative gains/losses, net of tax | (3,591) | (3,591) | |||||
Stock awards and option exercises | 11 | 23,938 | 57,742 | 81,691 | |||
Cash dividends declared on common stock | (60,002) | (60,002) | |||||
Treasury stock purchased | (72,270) | (72,270) | |||||
Common stock repurchased and retired | (36,173) | (5) | (4,816) | (40,994) | |||
Balance at Sep. 30, 2017 | $ 1,271,576 | $ (251,087) | $ 666 | $ (299,249) | $ 599,608 | $ 310 | $ 1,321,824 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows from Operating Activities: | ||
Net income | $ 170,523 | $ 156,017 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation | 107,017 | 109,156 |
Amortization | 7,643 | 6,788 |
Stock based compensation | 15,005 | 17,823 |
Provision for doubtful accounts | 124 | 369 |
Deferred income taxes | (2,265) | (661) |
Defined benefit plan expense | 12,932 | 12,632 |
Equity in results of affiliates | 142 | 187 |
Changes in balance sheet items, excluding effects from foreign currency adjustments: | ||
Accounts and other receivables | (46,038) | (54,243) |
Inventories | (1,392) | (11,284) |
Prepaid and other current assets | (10,839) | (14,244) |
Accounts payable and accrued liabilities | 49,158 | 3,491 |
Income taxes payable | 2,061 | (595) |
Retirement and deferred compensation plan liabilities | (20,621) | (14,419) |
Other changes, net | (18,288) | (8,597) |
Net Cash Provided by Operations | 265,162 | 202,420 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (120,803) | (92,366) |
Proceeds from sale of property and equipment, including insurance proceeds | 2,345 | 2,049 |
Settlement for derivative | (66,155) | |
Maturity of short-term investments | 29,485 | |
Acquisition of business, net of cash acquired | (202,985) | |
Acquisition of intangible assets | (2,491) | |
Investment in unconsolidated affiliate | (5,000) | |
Notes receivable, net | 451 | 777 |
Net Cash Used by Investing Activities | (189,162) | (265,531) |
Cash Flows from Financing Activities: | ||
Proceeds from (repayments of) notes payable | (63,905) | 132,622 |
Proceeds from long-term obligations | 625,525 | 5,950 |
Repayments of long-term obligations | (4,836) | (53,512) |
Dividends paid | (60,002) | (56,597) |
Credit facility costs | (2,937) | |
Proceeds from stock option exercises | 66,686 | 49,457 |
Purchase of treasury stock | (72,270) | |
Common stock repurchased and retired | (40,994) | (84,790) |
Excess tax benefit from exercise of stock options | 7,960 | |
Net Cash Provided by Financing Activities | 447,267 | 1,090 |
Effect of Exchange Rate Changes on Cash | 29,112 | 4,857 |
Net Increase (Decrease) in Cash and Equivalents | 552,379 | (57,164) |
Cash and Equivalents at Beginning of Period | 466,287 | 489,901 |
Cash and Equivalents at End of Period | $ 1,018,666 | $ 432,737 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
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”, “Aptar” 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 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 disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. 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, 2016 but does not include all disclosures required by U.S. 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, 2016. 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 U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification. In May 2014, the FASB amended the guidance for recognition of revenue from customer contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB decided to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also decided to allow early adoption of the standard, but not before the original effective date of December 15, 2016. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. We continue to evaluate the impact the adoption of this standard will have on our Consolidated Financial Statements. The majority of our revenues are derived from product sales and tooling sales. We are also evaluating our service, license, exclusivity and royalty arrangements, which need to be reviewed individually to ensure proper accounting under the new standard. To date, our internal project team has reviewed a substantial portion of contracts. While we continue to assess the potential impacts of the new standard, we currently believe the pronouncement will affect the way we account for tooling contracts. We currently recognize revenue for these contracts when the title and risk of loss transfers to the customer. Under the new guidance, we expect we will be required to recognize revenue for certain contracts over the time required to build the tool. We also continue to progress in updating our internal controls along with reviewing and developing the additional disclosures required by the standard. We currently anticipate adopting the modified retrospective transition method for implementing this guidance on the standard’s effective date. In July 2015, the FASB issued new guidance for simplifying the measurement of inventory. The core principle of the guidance is that an entity should measure inventory at the lower of cost or net realizable value. This standard is effective for annual reporting periods beginning after December 15, 2016. The Company adopted the requirements of the standard and the impact was not material to our current year financial statements. In March 2016, the FASB issued guidance that eliminates the requirement that an investor retrospectively apply equity method accounting when an investment that it had accounted for by another method initially qualifies for the equity method. The guidance requires that an equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The new standard is effective for fiscal years and interim periods beginning after December 15, 2016. The adoption of the new rules did not have an impact on our financial statements. In March 2016, the FASB issued guidance that changes the accounting for certain aspects of share-based payments to employees. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The new standard is effective for fiscal years and interim periods beginning after December 15, 2016. The Company has prospectively adopted the standard resulting in $0.5 million and $8.8 million of additional tax deductions that would have been previously recorded in stockholders’ equity now being reported as a reduction in tax expense for the three and nine months ended September 30, 2017, respectively. The amount of excess tax benefits and deficiencies recognized in the provision for income taxes will fluctuate from period to period based on the price of the Company’s stock, the volume of share-based instruments settled or vested, and the value assigned to share-based instruments under U.S. GAAP. We have also prospectively adopted the standard for the presentation of the condensed consolidated statements of cash flows. The impact of excess tax benefits from exercise of stock options is now shown within cash flows from operating activities instead of cash flows from financing activities. In addition, the Company has elected to continue its current practice of estimating expected forfeitures. In August 2017, the FASB issued new guidance to improve the accounting for hedging activities. The guidance changes the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the guidance makes certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. However, early application is permitted in any interim period after the issuance of this guidance. The Company has chosen to adopt this standard in the current period. See details in Note 8 – Derivative Instruments and Hedging Activities. Other accounting standards that have been issued by the FASB or other standards-setting bodies did not have a material impact on our Consolidated Financial Statements. RETIREMENT OF COMMON STOCK During the first nine months of 2017, the Company repurchased 1.4 million shares of common stock, of which 512 thousand shares were immediately retired. During the first nine months of 2016, the Company repurchased and immediately retired 1.1 million shares of common stock. Common stock was reduced by the number of shares retired at $0.01 par value per share. The Company allocates the excess purchase price over par value between additional paid-in capital and retained earnings. 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 pre-tax 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. The Company considers numerous factors to determine which foreign earnings are permanently reinvested in foreign operations. These include 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 stockholder capital both within the U.S. and for non-U.S. operations. During 2016, the Company decided to repatriate a portion of our 2016 and 2017 foreign earnings. In the first quarter of 2017, the Company repatriated €250 million ($263 million) of foreign earnings, most of which was used to reduce existing debt levels and fund stock repurchases. To better balance our capital structure, the Company repatriated an additional €700 million ($751 million) of foreign earnings in the third quarter of 2017. The Company recognized a $5 million tax benefit for the nine months ended September 30, 2017 associated with these repatriation activities. The Company maintains its assertion that the approximately $614 million of remaining foreign earnings are permanently reinvested. As such, the Company does not provide for taxes on these earnings. The Company provides a liability for the amount of unrecognized tax benefits 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 - Income Taxes for more information. REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS During the second quarter of 2017, the Company determined that the impact of restricted stock unit (RSU) vesting was incorrectly presented in the Condensed Consolidated Statement of Cash Flows. The effect of correcting this error resulted in a reduction to Net Cash Provided by Operations with a corresponding increase to Net Cash (Used) Provided by Financing Activities. As this correction represented a reclassification between two accounts within the Condensed Consolidated Statement of Cash Flows, the Condensed Consolidated Statements of Income, the Condensed Consolidated Balance Sheet and the Condensed Consolidated Statements of Changes in Equity were not impacted by this change. The Company determined the correction was not material to previously issued financial statements but was significant enough to revise. Following is a summary of the previously issued financial statement line items impacted by this revision for all periods and statements included in this report: As Previously Reported Adjustment As Revised Revised Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 Retirement and deferred compensation plan liabilities $ (12,525) $ (1,894) $ (14,419) Net Cash Provided by Operations 204,314 (1,894) 202,420 Proceeds from stock option exercises 47,563 1,894 49,457 Net Cash (Used) Provided by Financing Activities (804) 1,894 1,090 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2017 | |
INVENTORIES | |
INVENTORIES | NOTE 2 - INVENTORIES Inventories, by component, consisted of: September 30, December 31, Raw materials $ 91,192 $ 98,014 Work in process 106,609 91,646 Finished goods 125,603 107,254 Total $ 323,404 $ 296,914 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
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, 2016 are as follows by reporting segment: Beauty + Food + Corporate Home Pharma Beverage & Other Total Goodwill $ 211,371 $ 180,050 $ 16,101 $ 1,615 $ 409,137 Accumulated impairment losses — — — (1,615) (1,615) Balance as of December 31, 2016 $ 211,371 $ 180,050 $ 16,101 $ — $ 407,522 Foreign currency exchange effects 10,887 20,064 674 — 31,625 Goodwill $ 222,258 $ 200,114 $ 16,775 $ 1,615 $ 440,762 Accumulated impairment losses — — — (1,615) (1,615) Balance as of September 30, 2017 $ 222,258 $ 200,114 $ 16,775 $ — $ 439,147 The table below shows a summary of intangible assets as of September 30, 2017 and December 31, 2016. September 30, 2017 December 31, 2016 Weighted Average Gross Gross Amortization Period Carrying Accumulated Net Carrying Accumulated Net (Years) Amount Amortization Value Amount Amortization Value Amortized intangible assets: Patents 0.2 $ 7,695 $ (7,680) $ 15 $ 6,859 $ (6,839) $ 20 Acquired technology 15.0 46,817 (13,610) 33,207 41,731 (10,040) 31,691 Customer relationships 12.2 68,126 (11,763) 56,363 63,006 (6,696) 56,310 License agreements and other 7.6 21,352 (14,177) 7,175 18,516 (12,048) 6,468 Total intangible assets 11.8 $ 143,990 $ (47,230) $ 96,760 $ 130,112 $ (35,623) $ 94,489 Aggregate amortization expense for the intangible assets above for the quarters ended September 30, 2017 and 2016 was $2,708 and $2,553, respectively. Aggregate amortization expense for the intangible assets above for the nine months ended September 30, 2017 and 2016 was $7,643 and $6,788, respectively. Future estimated amortization expense for the years ending December 31 is as follows: 2017 $ 2,572 (remaining estimated amortization for 2017) 2018 10,851 2019 10,667 2020 9,464 2021 and thereafter 63,206 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 September 30, 2017. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
INCOME TAXES | |
INCOME TAXES | NOTE 4 — INCOME TAXES The reported effective tax rate decreased to 23.0% for the three months ended September 30, 2017 compared to 29.2% for the same period ended September 30, 2016, resulting in a decrease to the Provision for Income Taxes of approximately $6 million. The reported effective tax rate decreased to 22.0% for the nine months ended September 30, 2017 compared to 28.8% for the same period ended September 30, 2016, resulting in a decrease to the Provision for Income Taxes of approximately $15 million. For the three months ended September 30, 2017, the decrease in the tax rate reflects a benefit of 4.5% recognized upon a foreign tax settlement. For the nine months ended September 30, 2017, the decrease in the tax rate reflects a 4.0% benefit from the new accounting standard for employee share-based compensation payments, which the Company adopted in 2017, a 1.6% benefit in connection with our repatriation activities, which was primarily related to tax benefits associated with the forward contracts discussed in Note 8 – Derivative Instruments and Hedging Activities and a 1.4% benefit from the foreign tax settlement previously mentioned. The Company had approximately $3.6 and $6.4 million recorded for income tax uncertainties as of September 30, 2017 and December 31, 2016, respectively. The change is primarily attributable to a $2.2 million reduction related to a foreign tax settlement, along with other settlements and currency fluctuations. The uncertain amounts, if recognized, that would impact the effective tax rate are $3.6 and $6.4 million, respectively. The Company estimates that it is reasonably possible that the liability for uncertain tax positions will decrease by no more than $1.9 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. |
LONG-TERM OBLIGATIONS
LONG-TERM OBLIGATIONS | 9 Months Ended |
Sep. 30, 2017 | |
LONG-TERM OBLIGATIONS | |
LONG-TERM OBLIGATIONS | NOTE 5 – LONG –TERM OBLIGATIONS During the third quarter of 2017, the Company entered into the borrowing arrangements summarized below through our wholly owned UK subsidiary to better balance our capital structure. Debt Type Amount Term/Maturity Interest Rate Bank term loan $ 280,000 5 year amortizing/July 2022 2.56% floating swapped to 1.36% fixed Bank revolver € 150,000 5 year/July 2022 1.10% floating Private placement € 100,000 6 year/July 2023 0.98% fixed Private placement € 200,000 7 year/July 2024 1.17% fixed The Company also maintains a 5-year revolving credit facility that provides for unsecured financing of up to $300 million and matures in July 2022. Our revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including: Requirement Level at September 30, 2017 Consolidated Leverage Ratio (a) Maximum of 3.50 to 1.00 1.17 to 1.00 Consolidated Interest Coverage Ratio (a) Minimum of 3.00 to 1.00 13.38 to 1.00 (a) Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements. At September 30, 2017, the Company’s long-term obligations consisted of the following: Unamortized Debt Issuance Principal Costs Net Notes payable 0.61% – 18.00%, due in monthly and annual installments through 2025 $ 17,103 $ — $ 17,103 Senior unsecured notes 6.0%, due in 2018 75,000 62 74,938 Senior unsecured notes 3.8%, due in 2020 84,000 138 83,862 Senior unsecured notes 3.2%, due in 2022 75,000 156 74,844 Senior unsecured debts 2.6% floating, equal annual installments through 2022 280,000 755 279,245 Senior unsecured notes 3.5%, due in 2023 125,000 291 124,709 Senior unsecured notes 1.0%, due in 2023 118,190 418 117,772 Senior unsecured notes 3.4%, due in 2024 50,000 118 49,882 Senior unsecured notes 3.5%, due in 2024 100,000 291 99,709 Senior unsecured notes 1.2%, due in 2024 236,380 835 235,545 Senior unsecured notes 3.6%, due in 2025 125,000 314 124,686 Senior unsecured notes 3.6%, due in 2026 125,000 314 124,686 Capital lease obligations 879 — 879 $ 1,411,552 $ 3,692 $ 1,407,860 Current maturities of long-term obligations (136,392) (62) (136,330) Total long-term obligations $ 1,275,161 $ 3,631 $ 1,271,530 At December 31, 2016, the Company’s long-term obligations consisted of the following: Unamortized Debt Issuance Principal Costs Net Notes payable 0.61% – 16.00%, due in monthly and annual installments through 2025 $ 18,246 $ — $ 18,246 Senior unsecured notes 6.0%, due in 2018 75,000 37 74,963 Senior unsecured notes 3.8%, due in 2020 84,000 119 83,881 Senior unsecured notes 3.2%, due in 2022 75,000 138 74,862 Senior unsecured notes 3.5%, due in 2023 125,000 256 124,744 Senior unsecured notes 3.4%, due in 2024 50,000 104 49,896 Senior unsecured notes 3.5%, due in 2024 100,000 256 99,744 Senior unsecured notes 3.6%, due in 2025 125,000 269 124,731 Senior unsecured notes 3.6%, due in 2026 125,000 269 124,731 Capital lease obligations 1,542 — 1,542 $ 778,788 $ 1,448 $ 777,340 Current maturities of long-term obligations (4,603) — (4,603) Total long-term obligations $ 774,185 $ 1,448 $ 772,737 Aggregate long-term maturities, excluding capital lease obligations, due annually from the current balance sheet date for the next five years are $136,105, $60,750, $57,909, $141,911 and $132,912 and $881,086 thereafter. |
RETIREMENT AND DEFERRED COMPENS
RETIREMENT AND DEFERRED COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2017 | |
RETIREMENT AND DEFERRED COMPENSATION PLANS | |
RETIREMENT AND DEFERRED COMPENSATION PLANS | NOTE 6 — RETIREMENT AND DEFERRED COMPENSATION PLANS Components of Net Periodic Benefit Cost: Domestic Plans Foreign Plans Three Months Ended September 30, Service cost $ 2,426 $ 2,261 $ 1,447 $ 1,148 Interest cost 1,752 1,694 459 477 Expected return on plan assets (2,470) (2,118) (627) (550) Amortization of net loss 801 820 493 388 Amortization of prior service cost — — 104 89 Net periodic benefit cost $ 2,509 $ 2,657 $ 1,876 $ 1,552 Domestic Plans Foreign Plans Nine Months Ended September 30, Service cost $ $ 6,781 $ 4,166 $ 3,449 Interest cost 5,082 1,321 1,432 Expected return on plan assets (6,353) (1,781) (1,651) Amortization of net loss 2,462 1,400 1,165 Amortization of prior service cost — — 296 265 Net periodic benefit cost $ 7,530 $ 7,972 $ 5,402 $ 4,660 EMPLOYER CONTRIBUTIONS Although the Company has no minimum funding requirement, we contributed $24.7 million to our domestic defined benefit plans during the nine months ended September 30, 2017. We also expect to contribute approximately $2.5 million to our foreign defined benefit plans in 2017, and as of September 30, 2017, we have contributed approximately $2.0 million of that amount. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 9 Months Ended |
Sep. 30, 2017 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | NOTE 7— ACCUMULATED OTHER COMPREHENSIVE INCOME Changes in Accumulated Other Comprehensive (Loss) Income by Component: Foreign Defined Benefit Currency Pension Plans Other Total Balance - December 31, 2015 $ (206,725) $ (55,550) $ (72) $ (262,347) Other comprehensive income before reclassifications 44,329 — — 44,329 Amounts reclassified from accumulated other comprehensive income (82) 2,511 19 2,448 Net current-period other comprehensive income 44,247 2,511 19 46,777 Balance - September 30, 2016 $ (162,478) $ (53,039) $ (53) $ (215,570) Balance - December 31, 2016 $ (259,888) $ (59,775) $ (46) $ (319,709) Other comprehensive income before reclassifications 69,493 — (9,237) 60,256 Amounts reclassified from accumulated other comprehensive income — 2,699 5,667 8,366 Net current-period other comprehensive income 69,493 2,699 (3,570) 68,622 Balance - September 30, 2017 $ (190,395) $ (57,076) $ (3,616) $ (251,087) Reclassifications Out of Accumulated Other Comprehensive (Loss) Income: Amount Reclassified from Details about Accumulated Other Accumulated Other Affected Line in the Statement Comprehensive Income Components Comprehensive Income Where Net Income is Presented Three Months Ended September 30, Defined Benefit Pension Plans Amortization of net loss $ 1,294 $ 1,208 (a) Amortization of prior service cost 104 89 (a) 1,398 1,297 Total before tax (474) (460) Tax benefit $ 924 $ 837 Net of tax Foreign Currency Foreign currency gain $ — $ (82) Miscellaneous, net — (82) Total before tax — — Tax benefit $ — $ (82) Net of tax Other Changes in treasury locks $ 11 $ 10 Interest Expense Changes in cross currency swap: interest component (678) — Interest Expense Changes in cross currency swap: foreign exchange component 7,481 — Miscellaneous, net 6,814 10 Total before tax (1,161) (4) Tax benefit $ 5,653 $ 6 Net of tax Total reclassifications for the period $ 6,577 $ 761 (a) These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 6 – Retirement and Deferred Compensation Plans for additional details). Amount Reclassified from Details about Accumulated Other Accumulated Other Affected Line in the Statement Comprehensive Income Components Comprehensive Income Where Net Income is Presented Nine Months Ended September 30, Defined Benefit Pension Plans Amortization of net loss $ 3,803 $ 3,627 (b) Amortization of prior service cost 296 265 (b) 4,099 3,892 Total before tax (1,400) (1,381) Tax benefit $ 2,699 $ 2,511 Net of tax Foreign Currency Foreign currency gain $ — $ (82) Miscellaneous, net — (82) Total before tax — — Tax benefit $ — $ (82) Net of tax Other Changes in treasury locks $ 32 $ 30 Interest Expense Changes in cross currency swap: interest component (678) — Interest Expense Changes in cross currency swap: foreign exchange component 7,481 — Miscellaneous, net 6,835 30 Total before tax (1,168) (11) Tax benefit $ 5,667 $ 19 Net of tax Total reclassifications for the period $ 8,366 $ 2,448 (b) These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 6 – Retirement and Deferred Compensation Plans for additional details). |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2017 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 8 — 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 at inception. Quarterly thereafter, the Company formally assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged item. 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. All derivative financial instruments used as hedges are recorded at fair value in the Consolidated Balance Sheets (See Note 9 - Fair Value). CASH FLOW HEDGE For derivative instruments that are designated and qualify as a cash flow hedge, the changes in fair values are recorded in accumulated other comprehensive loss and included in unrealized (losses) gains on cash flow hedges. The changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive loss to net income when the underlying hedged item is recognized in earnings. Cash flows from the settlement of derivative contracts designated as cash flow hedges offset cash flows from the underlying hedged items and are included in operating activities in the Consolidated Statements of Cash Flows. As disclosed in Note 5 – Long-Term Obligations, our wholly owned UK subsidiary borrowed $280 million in term loan borrowings under a new credit facility. In order to mitigate the currency risk of U.S. dollar debt on a Euro functional currency entity and to mitigate the risk of variability in interest rates, we entered into a EUR/USD floating-to-fixed cross currency swap on July 20, 2017 in the notional amount of $280 million to effectively hedge the foreign exchange and interest rate exposure on the $280 million term loan. Related to this hedge, approximately $3.6 million of net after-tax loss is included in accumulated other comprehensive earnings at September 30, 2017. The amount expected to be recognized into earnings during the next 12 months related to the interest component of our cross currency swap based on prevailing foreign exchange and interest rates at September 30, 2017 is $3.3 million. The amount expected to be recognized into earnings during the next 12 months related to the foreign exchange component of our cross currency swap is dependent on fluctuations in currency exchange rates. As of September 30, 2017, the fair value of the cross currency swap was a $12.1 million liability. The swap contract expires on July 20, 2022. 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 weakening U.S. dollar relative to foreign currencies has an additive translation effect on the Company’s financial condition and results of operations. Conversely, a strengthening U.S. dollar has a dilutive 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 September 30, 2017, the Company has recorded the fair value of foreign currency forward exchange contracts of $0.3 million in prepaid and other and $0.4 million in accounts payable and accrued liabilities in the balance sheet. All forward exchange contracts outstanding as of September 30, 2017 had an aggregate contract amount of $85.3 million. Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 September 30, 2017 December 31, 2016 Derivatives Derivatives Derivatives not Derivatives not Designated Designated Designated Designated Balance Sheet as Hedging as Hedging as Hedging as Hedging Location Instruments Instruments Instruments Instruments Derivative Assets Foreign Exchange Contracts Prepaid and other $ — $ 327 $ — $ 1,612 $ — $ 327 $ — $ 1,612 Derivative Liabilities Foreign Exchange Contracts Accounts payable and accrued liabilities $ — $ 375 $ — $ 2,881 Cross Currency Swap Contract (1) Accounts payable and accrued liabilities 12,097 — — — $ 12,097 $ 375 $ — $ 2,881 (1) This cross currency swap contract is composed of both an interest component and a foreign exchange component. The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Quarters Ended September 30, 2017 and September 30, 2016 Amount of Gain (Loss) Total Amount Amount of Gain (Loss) Location of (Loss) Reclassified from of Affected Derivatives in Cash Recognized in Gain Recognized Accumulated Income Flow Hedging Other Comprehensive in Income on Other Comprehensive Statement Relationships Income on Derivative Derivatives Income on Derivative Line Item Cross currency swap contract: Interest component $ (3,648) $ — Interest expense $ 678 $ — $ (9,733) Foreign exchange component (7,481) — Miscellaneous, net (7,481) — (2,200) $ (11,129) $ — $ (6,803) $ — $ (11,933) The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Nine Months Ended September 30, 2017 and September 30, 2016 Amount of Gain (Loss) Total Amount Amount of Gain (Loss) Location of (Loss) Reclassified from of Affected Derivatives in Cash Recognized in Gain Recognized Accumulated Income Flow Hedging Other Comprehensive in Income on Other Comprehensive Statement Relationships Income on Derivative Derivatives Income on Derivative Line Item Cross currency swap contract: Interest component $ (3,648) $ — Interest expense $ 678 $ — $ (25,707) Foreign exchange component (7,481) — Miscellaneous, net (7,481) — (509) $ (11,129) $ — $ (6,803) $ — $ (26,216) The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Quarters Ended September 30, 2017 and September 30, 2016 Amount of (Loss) Gain Derivatives Not Designated Location of (Loss) Gain Recognized Recognized in Income as Hedging Instruments in Income on Derivatives on Derivatives Foreign Exchange Contracts Other (Expense) Income: $ (15,534) $ 3,191 $ (15,534) $ 3,191 The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Nine Months Ended September 30, 2017 and September 30, 2016 Amount of (Loss) Gain Derivatives Not Designated Location of (Loss) Gain Recognized Recognized in Income as Hedging Instruments in Income on Derivatives on Derivatives Foreign Exchange Contracts Other (Expense) Income: $ (64,651) $ (1,875) $ (64,651) $ (1,875) Gross Amounts not Offset Gross Amounts Net Amounts in the Statement of Offset in the Presented in Financial Position Gross Statement of the Statement of Financial Cash Collateral Net Amount Financial Position Financial Position Instruments Received Amount Description September 30, 2017 Derivative Assets $ 327 — $ 327 — — $ 327 Total Assets $ 327 — $ 327 — — $ 327 Derivative Liabilities $ 12,472 — $ 12,472 — — $ 12,472 Total Liabilities $ 12,472 — $ 12,472 — — $ 12,472 December 31, 2016 Derivative Assets $ 1,612 — $ 1,612 — — $ 1,612 Total Assets $ 1,612 — $ 1,612 — — $ 1,612 Derivative Liabilities $ 2,881 — $ 2,881 — — $ 2,881 Total Liabilities $ 2,881 — $ 2,881 — — $ 2,881 As part of our repatriation activities, during the second quarter of 2017 we had a €700 million intercompany receivable balance on a U.S. Dollar functional subsidiary. In order to minimize the foreign currency risk, the Company executed foreign currency forward contracts to sell Euros and receive U.S. Dollars. These foreign currency forward contracts matured on July 27, 2017, which coincided with the date of the planned repatriation and resulted in the Company delivering €700 million in cash and receiving approximately $751 million in cash. At maturity, the foreign exchange transaction loss on the forward contract amounted to $66.2 million. This impact was offset by the revaluation of the €700 million intercompany accounts receivable balance that had $69.5 million gain during the same period. Therefore, the forward points on these forward contracts had a $3.3 million favorable impact on other (expense) income miscellaneous, net for the nine months ended September 30, 2017. |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE | |
FAIR VALUE | NOTE 9 — 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 September 30, 2017, the fair values of our financial assets and liabilities were categorized as follows: Total Level 1 Level 2 Level 3 Assets Foreign exchange contracts (a) $ 327 $ — $ 327 $ — Total assets at fair value $ 327 $ — $ 327 $ — Liabilities Foreign exchange contracts (a) $ 375 $ — $ 375 $ — Cross currency swap contract (a) 12,097 — 12,097 — Total liabilities at fair value $ 12,472 $ — $ 12,472 $ — As of December 31, 2016, the fair values of our financial assets and liabilities were categorized as follows: Total Level 1 Level 2 Level 3 Assets Foreign exchange contracts (a) $ 1,612 $ — $ 1,612 $ — Total assets at fair value $ 1,612 $ — $ 1,612 $ — Liabilities Foreign exchange contracts (a) $ 2,881 $ — $ 2,881 $ — Total liabilities at fair value $ 2,881 $ — $ 2,881 $ — (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, accounts and notes receivable, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instruments. 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 $1.2 billion as of September 30, 2017 and $739 million as of December 31, 2016. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 - 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 and 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 September 30, 2017 and December 31, 2016. An environmental investigation, undertaken to assess areas of possible contamination, was completed at the Company’s facility in Jundiaí, São Paulo, Brazil. The facility is primarily an internal supplier of anodized aluminum components for certain of our dispensing systems. The testing indicated that soil and groundwater in certain areas of the facility were impacted above acceptable levels established by local regulations. In March 2017, the Company reported the findings to the relevant environmental authority, the Environmental Company of the State of São Paulo – CETESB. The Company is in the preliminary stages of further assessing the affected areas to determine the full extent of the impact and the scope of any required remediation. Initial costs for further investigation and possible remediation, which are based on assumptions about the area of impact and customary remediation costs, are estimated to be in the range of $1.5 million to $3.0 million. The range of possible loss associated with this environmental contingency is subject to considerable uncertainty due to the incomplete status of the investigation and preliminary nature of our discussions with CETESB. We will continue to evaluate the range of likely costs as the investigation proceeds and we have further clarity on the nature and extent of remediation that will be required. We note that the contamination, or any failure to complete any required remediation in a timely manner, could potentially result in fines or penalties. We accrued $1.5 million (operating expense) in the first quarter of 2017 relating to this contingency. The amount is periodically reviewed, and adjusted as necessary, as the matter continues to evolve. Based on the current status of the investigation, no adjustment to the accrual was necessary for the quarter ended September 30, 2017. |
STOCK REPURCHASE PROGRAM
STOCK REPURCHASE PROGRAM | 9 Months Ended |
Sep. 30, 2017 | |
STOCK REPURCHASE PROGRAM | |
STOCK REPURCHASE PROGRAM | NOTE 11 — STOCK REPURCHASE PROGRAM On October 20, 2016, the Company announced a share repurchase authorization of up to $350 million of common stock. This authorization replaces previous authorizations and has no expiration date. Aptar may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions. During the three and nine months ended September 30, 2017, the Company repurchased approximately 546 thousand and 1.4 million shares for approximately $45.5 million and $113.3 million, respectively. During the three and nine months ended September 30, 2016, the Company repurchased approximately 463 thousand and 1.1 million shares for approximately $36.1 million and $84.8 million, respectively. As of September 30, 2017, there was $190.2 million of authorized share repurchases available to the Company. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2017 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 12 — STOCK-BASED COMPENSATION The Company issues stock options and restricted stock units (“RSUs”) to employees under Stock Awards Plans approved by stockholders. RSUs are issued to non-employee directors under a Director Restricted Stock Unit Plan and the 2016 Equity Incentive Plan, and stock options were formally issued to non-employee directors under a Director Stock Option Plan. 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. RSUs granted to employees generally vest over three years. Director RSUs generally vest over one year. Compensation expense attributable to employee stock options for the first nine months of 2017 was approximately $12.6 million ($8.6 million after tax). The income tax benefit related to this compensation expense was approximately $4.0 million. Approximately $11.0 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 attributable to stock options for the first nine months of 2016 was approximately $15.5 million ($10.4 million after tax). The income tax benefit related to this compensation expense was approximately $5.1 million. Approximately $13.7 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 $11.86 and $10.59 per share during the first nine months of 2017 and 2016, respectively. These values were estimated on the respective grant dates using the Black-Scholes option-pricing model with the following weighted-average assumptions: Stock Awards Plans: Nine Months Ended September 30, Dividend Yield 1.7 % 1.8 % Expected Stock Price Volatility 15.8 % 16.9 % Risk-free Interest Rate 2.2 % 1.6 % Expected Life of Option (years) 6.7 6.7 A summary of option activity under the Company’s stock plans during the nine months ended September 30, 2017 is presented below: Stock Awards Plans Director Stock Option Plans Weighted Average Weighted Average Options Exercise Price Options Exercise Price Outstanding, January 1, 2017 8,070,444 $ 56.36 281,334 $ 56.45 Granted 1,622,082 74.90 — — Exercised (1,345,252) 46.67 (66,367) 53.23 Forfeited or expired (122,282) 71.42 — — Outstanding at September 30, 2017 8,224,992 $ 61.38 214,967 $ 57.44 Exercisable at September 30, 2017 5,310,730 $ 55.44 214,967 $ 57.44 Weighted-Average Remaining Contractual Term (Years): Outstanding at September 30, 2017 6.3 5.3 Exercisable at September 30, 2017 5.0 5.3 Aggregate Intrinsic Value: Outstanding at September 30, 2017 $ 206,938 $ 6,255 Exercisable at September 30, 2017 $ 165,175 $ 6,255 Intrinsic Value of Options Exercised During the Nine Months Ended: September 30, 2017 $ 44,734 $ 1,995 September 30, 2016 $ 38,514 $ 536 The fair value of options vested during the nine months ended September 30, 2017 and 2016 was $16.9 million and $17.2 million, respectively. Cash received from option exercises was approximately $66.7 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $13.7 million in the nine months ended September 30, 2017. As of September 30, 2017, the remaining valuation of stock option awards to be expensed in future periods was $16.4 million and the related weighted-average period over which it is expected to be recognized is 2.0 years. The fair value of RSU grants is the market price of the underlying shares on the grant date. A summary of RSU activity as of September 30, 2017, and changes during the nine month period then ended, is presented below: Director Restricted Stock Awards Plans Stock Unit Plan Weighted Average Weighted Average RSUs Grant-Date Fair Value RSUs Grant-Date Fair Value Nonvested at January 1, 2017 72,127 $ 69.31 15,745 $ 75.56 Granted 89,110 74.43 14,793 80.45 Vested (51,963) 68.52 (15,745) 75.56 Nonvested at September 30, 2017 109,274 $ 73.86 14,793 $ 80.45 Compensation expense recorded attributable to RSUs for the first nine months of 2017 and 2016 was approximately $2.4 million and $2.3 million, respectively. The actual tax benefit realized for the tax deduction from RSUs was approximately $1.6 million in the nine months ended September 30, 2017. The fair value of units vested during the nine months ended September 30, 2017 and 2016 was $4.7 million and $1.9 million, respectively. The intrinsic value of units vested during the nine months ended September 30, 2017 and 2016 was $5.2 million and $2.3 million, respectively. As of September 30, 2017, there was $6.2 million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted-average period of 2.1 years. The Company has a long-term incentive program for certain employees. Each award is based on the cumulative total shareholder return of our common stock during a three year performance period compared to a peer group. The total expected expense related to this program for awards outstanding as of September 30, 2017 is approximately $4.0 million, of which $1.5 million and $973 thousand was recognized in the first nine months of 2017 and 2016, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 13 — EARNINGS PER SHARE Aptar’s authorized common stock consists of 199 million shares, having a par value of $0.01 each. Information related to the calculation of earnings per share is as follows: Three Months Ended September 30, 2017 September 30, 2016 Diluted Basic Diluted Basic Consolidated operations Income available to common stockholders $ 53,523 $ 53,523 $ 53,098 $ 53,098 Average equivalent shares Shares of common stock 62,592 62,592 62,858 62,858 Effect of dilutive stock based compensation Stock options 2,171 — 1,791 — Restricted stock 58 — 41 — Total average equivalent shares 64,821 62,592 64,690 62,858 Net income per share $ 0.83 $ 0.86 $ 0.82 $ 0.84 Nine Months Ended September 30, 2017 September 30, 2016 Diluted Basic Diluted Basic Consolidated operations Income available to common stockholders $ 170,517 $ 170,517 $ 156,009 $ 156,009 Average equivalent shares Shares of common stock 62,527 62,527 62,878 62,878 Effect of dilutive stock based compensation Stock options 2,046 — 2,059 — Restricted stock 53 — 52 — Total average equivalent shares 64,626 62,527 64,989 62,878 Net income per share $ 2.64 $ 2.73 $ 2.40 $ 2.48 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 14 — SEGMENT INFORMATION The Company is organized into three reporting segments. Operations that sell dispensing systems and sealing solutions primarily to the personal care, beauty and home care markets form the Beauty + Home segment. Operations that sell dispensing systems and sealing solutions primarily to the prescription drug, consumer health care and injectables markets form the Pharma segment. Operations that sell dispensing systems and sealing solutions 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, 2016. Financial information regarding the Company’s reportable segments is shown below: Three Months Ended September 30, Nine Months Ended September 30, Total Sales: Beauty + Home $ 338,068 $ 319,244 $ 992,476 $ 984,008 Pharma 199,551 191,190 598,168 565,363 Food + Beverage 91,852 82,952 269,159 257,435 Total Sales 629,471 593,386 1,859,803 1,806,806 Less: Intersegment Sales: Beauty + Home $ 4,320 $ 3,214 $ 14,163 $ 13,321 Pharma 4 (4) 7 — Food + Beverage 821 447 2,245 1,419 Total Intersegment Sales $ 5,145 $ 3,657 $ 16,415 $ 14,740 Net Sales: Beauty + Home $ 333,748 $ 316,030 $ 978,313 $ 970,687 Pharma 199,547 191,194 598,161 565,363 Food + Beverage 91,031 82,505 266,914 256,016 Net Sales $ 624,326 $ 589,729 $ 1,843,388 $ 1,792,066 Segment Income (1): Beauty + Home $ 21,837 $ 25,380 $ 69,248 $ 79,455 Pharma 55,426 55,037 174,288 166,870 Food + Beverage 11,668 10,101 31,385 32,977 Corporate & Other (10,793) (7,479) (32,734) (35,310) Interest Expense (9,733) (8,753) (25,707) (26,547) Interest Income 1,113 715 2,086 1,759 Income before Income Taxes $ 69,518 $ 75,001 $ 218,566 $ 219,204 (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 RECEIVABLE
INSURANCE SETTLEMENT RECEIVABLE | 9 Months Ended |
Sep. 30, 2017 | |
INSURANCE SETTLEMENT RECEIVABLE | |
INSURANCE SETTLEMENT RECEIVABLE | Note 15 – INSURANCE SETTLEMENT RECEIVABLE A fire caused damage to Aptar’s facility in Annecy, France in June 2016. The fire was contained to one of three production units and there were no reported injuries. Aptar Annecy supplies anodized aluminum components for certain Aptar dispensing systems. While repairs are underway, Aptar will source from its network of suppliers as well as from its anodizing facility in Brazil. The Company is insured for the damages caused by the fire, including business interruption insurance, and it does not expect this incident to have a material impact on its financial results. Losses related to the fire of $4.5 million and $14.4 million were incurred during the three and nine months ended September 30, 2017, respectively. During the three and nine months ended September 30, 2016, losses related to the fire of $4.9 million and $5.5 million were incurred, respectively. For the nine months ended September 30, 2017, we have received insurance proceeds of $12.0 million. As our cash receipts are in excess of costs incurred, we currently have a prepayment of $1.0 million at September 30, 2017, which is included in Accounts Payable and Accrued Liabilities in the Condensed Consolidated Balance Sheet. In many cases, our insurance coverage exceeds the amount of these recognized losses. No gain contingencies have been recognized as our ability to realize those gains remains uncertain. Profitability was negatively impacted by $1.4 million and $4.1 million related to the Annecy fire during the three and nine months ended September 30, 2017, respectively. During the three and nine months ended September 30, 2016, profitability was negatively impacted by $1.4 million. These costs are included in the Beauty + Home segment. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2017 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 16 – ACQUISITIONS On February 29, 2016, the Company completed its acquisition of MegaPlast GmbH and its subsidiaries along with Megaplast France S.a.r.l. and Mega Pumps L.P. (Mega Airless). Mega Airless is a leading provider of innovative all-plastic airless dispensing systems for the beauty, personal care and pharmaceutical markets and operates two manufacturing facilities in Germany and one in the United States. The purchase price paid for Mega Airless was approximately $223.2 million ($203.0 million net of cash received) and was funded by cash on hand and borrowings on our revolving line of credit. The following table summarizes the assets acquired and liabilities assumed as of the acquisition date at estimated fair value. February 29, 2016 Assets Cash and equivalents $ 20,197 Accounts receivable 8,275 Inventories 8,373 Prepaid and other 378 Property, plant and equipment 47,768 Goodwill 105,561 Intangible assets 72,106 Other miscellaneous assets 8 Liabilities Current maturities of long-term obligations 319 Accounts payable and accrued liabilities 7,398 Long-term obligations 13,402 Deferred income taxes 18,366 Net assets acquired $ 223,181 The following table is a summary of the fair value estimates of the acquired identifiable intangible assets and weighted-average useful lives as of the acquisition date: Weighted-Average Estimated Useful Life Fair Value (in years) of Asset Customer relationships $ 57,120 Technology 10,838 Trademark 4,148 Total $ 72,106 Goodwill in the amount of $105.6 million was recorded for the acquisition of Mega Airless, of which $49.8 million and $55.8 million is included in the Beauty + Home and Pharma segments, respectively. Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill largely consists of leveraging the Company’s commercial presence in selling the Mega Airless line of products in markets where Mega Airless did not previously operate and the ability of Mega Airless to maintain its competitive advantage from a technical viewpoint. Goodwill will not be amortized, but will be tested for impairment at least annually. We do not expect any of the goodwill will be deductible for tax purposes. The unaudited pro forma results presented below include the effects of the Mega Airless acquisition as if it had occurred as of January 1, 2015. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as the amortization associated with estimates for the acquired intangible assets and fair value adjustments for inventory. The 2016 pro forma earnings were adjusted to exclude $4.2 million after tax ($5.6 million pretax) of transaction costs, including consulting, legal and advisory fees. The 2016 pro forma earnings were also adjusted to exclude $1.7 million after tax ($2.6 million pretax) of nonrecurring expense related to the fair value adjustment to acquisition-date inventory. The pro forma results do not include any synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been completed on the date indicated. Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 Net Sales $ 589,729 $ 1,801,626 Net Income Attributable to AptarGroup Inc. 53,526 163,140 Net Income per common share — basic 0.85 2.59 Net Income per common share — diluted 0.83 2.51 In February 2017, the Company acquired a 20% minority investment in Kali Care, Inc. for $5.0 million. Kali Care, Inc. (“Kali Care”) is a Silicon Valley-based technology company, which provides digital monitoring systems for ophthalmic medication. Kali Care’s sensing technology allows clinicians to collect real time compliance data and is a powerful tool for ophthalmologists in managing the care of their patients and represents an additional investment into connected devices for our Pharma applications. This investment is being accounted for under the equity method of accounting from the date of acquisition. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
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”, “Aptar” 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 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 disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. 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, 2016 but does not include all disclosures required by U.S. 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, 2016. 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 U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification. In May 2014, the FASB amended the guidance for recognition of revenue from customer contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB decided to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also decided to allow early adoption of the standard, but not before the original effective date of December 15, 2016. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. We continue to evaluate the impact the adoption of this standard will have on our Consolidated Financial Statements. The majority of our revenues are derived from product sales and tooling sales. We are also evaluating our service, license, exclusivity and royalty arrangements, which need to be reviewed individually to ensure proper accounting under the new standard. To date, our internal project team has reviewed a substantial portion of contracts. While we continue to assess the potential impacts of the new standard, we currently believe the pronouncement will affect the way we account for tooling contracts. We currently recognize revenue for these contracts when the title and risk of loss transfers to the customer. Under the new guidance, we expect we will be required to recognize revenue for certain contracts over the time required to build the tool. We also continue to progress in updating our internal controls along with reviewing and developing the additional disclosures required by the standard. We currently anticipate adopting the modified retrospective transition method for implementing this guidance on the standard’s effective date. In July 2015, the FASB issued new guidance for simplifying the measurement of inventory. The core principle of the guidance is that an entity should measure inventory at the lower of cost or net realizable value. This standard is effective for annual reporting periods beginning after December 15, 2016. The Company adopted the requirements of the standard and the impact was not material to our current year financial statements. In March 2016, the FASB issued guidance that eliminates the requirement that an investor retrospectively apply equity method accounting when an investment that it had accounted for by another method initially qualifies for the equity method. The guidance requires that an equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The new standard is effective for fiscal years and interim periods beginning after December 15, 2016. The adoption of the new rules did not have an impact on our financial statements. In March 2016, the FASB issued guidance that changes the accounting for certain aspects of share-based payments to employees. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The new standard is effective for fiscal years and interim periods beginning after December 15, 2016. The Company has prospectively adopted the standard resulting in $0.5 million and $8.8 million of additional tax deductions that would have been previously recorded in stockholders’ equity now being reported as a reduction in tax expense for the three and nine months ended September 30, 2017, respectively. The amount of excess tax benefits and deficiencies recognized in the provision for income taxes will fluctuate from period to period based on the price of the Company’s stock, the volume of share-based instruments settled or vested, and the value assigned to share-based instruments under U.S. GAAP. We have also prospectively adopted the standard for the presentation of the condensed consolidated statements of cash flows. The impact of excess tax benefits from exercise of stock options is now shown within cash flows from operating activities instead of cash flows from financing activities. In addition, the Company has elected to continue its current practice of estimating expected forfeitures. In August 2017, the FASB issued new guidance to improve the accounting for hedging activities. The guidance changes the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the guidance makes certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. However, early application is permitted in any interim period after the issuance of this guidance. The Company has chosen to adopt this standard in the current period. See details in Note 8 – Derivative Instruments and Hedging Activities. Other accounting standards that have been issued by the FASB or other standards-setting bodies did not have a material impact on our Consolidated Financial Statements. |
RETIREMENT OF COMMON STOCK | RETIREMENT OF COMMON STOCK During the first nine months of 2017, the Company repurchased 1.4 million shares of common stock, of which 512 thousand shares were immediately retired. During the first nine months of 2016, the Company repurchased and immediately retired 1.1 million shares of common stock. Common stock was reduced by the number of shares retired at $0.01 par value per share. The Company allocates the excess purchase price over par value between additional paid-in capital and retained earnings. |
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 pre-tax 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. The Company considers numerous factors to determine which foreign earnings are permanently reinvested in foreign operations. These include 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 stockholder capital both within the U.S. and for non-U.S. operations. During 2016, the Company decided to repatriate a portion of our 2016 and 2017 foreign earnings. In the first quarter of 2017, the Company repatriated €250 million ($263 million) of foreign earnings, most of which was used to reduce existing debt levels and fund stock repurchases. To better balance our capital structure, the Company repatriated an additional €700 million ($751 million) of foreign earnings in the third quarter of 2017. The Company recognized a $5 million tax benefit for the nine months ended September 30, 2017 associated with these repatriation activities. The Company maintains its assertion that the approximately $614 million of remaining foreign earnings are permanently reinvested. As such, the Company does not provide for taxes on these earnings. The Company provides a liability for the amount of unrecognized tax benefits 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 - Income Taxes for more information. |
REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS | REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS During the second quarter of 2017, the Company determined that the impact of restricted stock unit (RSU) vesting was incorrectly presented in the Condensed Consolidated Statement of Cash Flows. The effect of correcting this error resulted in a reduction to Net Cash Provided by Operations with a corresponding increase to Net Cash (Used) Provided by Financing Activities. As this correction represented a reclassification between two accounts within the Condensed Consolidated Statement of Cash Flows, the Condensed Consolidated Statements of Income, the Condensed Consolidated Balance Sheet and the Condensed Consolidated Statements of Changes in Equity were not impacted by this change. The Company determined the correction was not material to previously issued financial statements but was significant enough to revise. Following is a summary of the previously issued financial statement line items impacted by this revision for all periods and statements included in this report: As Previously Reported Adjustment As Revised Revised Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 Retirement and deferred compensation plan liabilities $ (12,525) $ (1,894) $ (14,419) Net Cash Provided by Operations 204,314 (1,894) 202,420 Proceeds from stock option exercises 47,563 1,894 49,457 Net Cash (Used) Provided by Financing Activities (804) 1,894 1,090 |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of the previously issued line items | As Previously Reported Adjustment As Revised Revised Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 Retirement and deferred compensation plan liabilities $ (12,525) $ (1,894) $ (14,419) Net Cash Provided by Operations 204,314 (1,894) 202,420 Proceeds from stock option exercises 47,563 1,894 49,457 Net Cash (Used) Provided by Financing Activities (804) 1,894 1,090 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
INVENTORIES | |
Schedule of inventories, by component | September 30, December 31, Raw materials $ 91,192 $ 98,014 Work in process 106,609 91,646 Finished goods 125,603 107,254 Total $ 323,404 $ 296,914 |
GOODWILL AND OTHER INTANGIBLE27
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of changes in the carrying amount of goodwill | Beauty + Food + Corporate Home Pharma Beverage & Other Total Goodwill $ 211,371 $ 180,050 $ 16,101 $ 1,615 $ 409,137 Accumulated impairment losses — — — (1,615) (1,615) Balance as of December 31, 2016 $ 211,371 $ 180,050 $ 16,101 $ — $ 407,522 Foreign currency exchange effects 10,887 20,064 674 — 31,625 Goodwill $ 222,258 $ 200,114 $ 16,775 $ 1,615 $ 440,762 Accumulated impairment losses — — — (1,615) (1,615) Balance as of September 30, 2017 $ 222,258 $ 200,114 $ 16,775 $ — $ 439,147 |
Summary of amortized intangible assets | September 30, 2017 December 31, 2016 Weighted Average Gross Gross Amortization Period Carrying Accumulated Net Carrying Accumulated Net (Years) Amount Amortization Value Amount Amortization Value Amortized intangible assets: Patents 0.2 $ 7,695 $ (7,680) $ 15 $ 6,859 $ (6,839) $ 20 Acquired technology 15.0 46,817 (13,610) 33,207 41,731 (10,040) 31,691 Customer relationships 12.2 68,126 (11,763) 56,363 63,006 (6,696) 56,310 License agreements and other 7.6 21,352 (14,177) 7,175 18,516 (12,048) 6,468 Total intangible assets 11.8 $ 143,990 $ (47,230) $ 96,760 $ 130,112 $ (35,623) $ 94,489 |
Schedule of future estimated amortization expense | Future estimated amortization expense for the years ending December 31 is as follows: 2017 $ 2,572 (remaining estimated amortization for 2017) 2018 10,851 2019 10,667 2020 9,464 2021 and thereafter 63,206 |
LONG-TERM OBLIGATIONS (Tables)
LONG-TERM OBLIGATIONS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
LONG-TERM OBLIGATIONS | |
Schedule of borrowing arrangements through wholly owned UK subsidiary | Debt Type Amount Term/Maturity Interest Rate Bank term loan $ 280,000 5 year amortizing/July 2022 2.56% floating swapped to 1.36% fixed Bank revolver € 150,000 5 year/July 2022 1.10% floating Private placement € 100,000 6 year/July 2023 0.98% fixed Private placement € 200,000 7 year/July 2024 1.17% fixed |
Schedule of covenants on revolving credit facility and corporate long-term obligations | Requirement Level at September 30, 2017 Consolidated Leverage Ratio (a) Maximum of 3.50 to 1.00 1.17 to 1.00 Consolidated Interest Coverage Ratio (a) Minimum of 3.00 to 1.00 13.38 to 1.00 (a) Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements. |
Schedule of long-term obligations | At September 30, 2017, the Company’s long-term obligations consisted of the following: Unamortized Debt Issuance Principal Costs Net Notes payable 0.61% – 18.00%, due in monthly and annual installments through 2025 $ 17,103 $ — $ 17,103 Senior unsecured notes 6.0%, due in 2018 75,000 62 74,938 Senior unsecured notes 3.8%, due in 2020 84,000 138 83,862 Senior unsecured notes 3.2%, due in 2022 75,000 156 74,844 Senior unsecured debts 2.6% floating, equal annual installments through 2022 280,000 755 279,245 Senior unsecured notes 3.5%, due in 2023 125,000 291 124,709 Senior unsecured notes 1.0%, due in 2023 118,190 418 117,772 Senior unsecured notes 3.4%, due in 2024 50,000 118 49,882 Senior unsecured notes 3.5%, due in 2024 100,000 291 99,709 Senior unsecured notes 1.2%, due in 2024 236,380 835 235,545 Senior unsecured notes 3.6%, due in 2025 125,000 314 124,686 Senior unsecured notes 3.6%, due in 2026 125,000 314 124,686 Capital lease obligations 879 — 879 $ 1,411,552 $ 3,692 $ 1,407,860 Current maturities of long-term obligations (136,392) (62) (136,330) Total long-term obligations $ 1,275,161 $ 3,631 $ 1,271,530 At December 31, 2016, the Company’s long-term obligations consisted of the following: Unamortized Debt Issuance Principal Costs Net Notes payable 0.61% – 16.00%, due in monthly and annual installments through 2025 $ 18,246 $ — $ 18,246 Senior unsecured notes 6.0%, due in 2018 75,000 37 74,963 Senior unsecured notes 3.8%, due in 2020 84,000 119 83,881 Senior unsecured notes 3.2%, due in 2022 75,000 138 74,862 Senior unsecured notes 3.5%, due in 2023 125,000 256 124,744 Senior unsecured notes 3.4%, due in 2024 50,000 104 49,896 Senior unsecured notes 3.5%, due in 2024 100,000 256 99,744 Senior unsecured notes 3.6%, due in 2025 125,000 269 124,731 Senior unsecured notes 3.6%, due in 2026 125,000 269 124,731 Capital lease obligations 1,542 — 1,542 $ 778,788 $ 1,448 $ 777,340 Current maturities of long-term obligations (4,603) — (4,603) Total long-term obligations $ 774,185 $ 1,448 $ 772,737 |
RETIREMENT AND DEFERRED COMPE29
RETIREMENT AND DEFERRED COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
RETIREMENT AND DEFERRED COMPENSATION PLANS | |
Components of net periodic benefit cost | Domestic Plans Foreign Plans Three Months Ended September 30, Service cost $ 2,426 $ 2,261 $ 1,447 $ 1,148 Interest cost 1,752 1,694 459 477 Expected return on plan assets (2,470) (2,118) (627) (550) Amortization of net loss 801 820 493 388 Amortization of prior service cost — — 104 89 Net periodic benefit cost $ 2,509 $ 2,657 $ 1,876 $ 1,552 Domestic Plans Foreign Plans Nine Months Ended September 30, Service cost $ $ 6,781 $ 4,166 $ 3,449 Interest cost 5,082 1,321 1,432 Expected return on plan assets (6,353) (1,781) (1,651) Amortization of net loss 2,462 1,400 1,165 Amortization of prior service cost — — 296 265 Net periodic benefit cost $ 7,530 $ 7,972 $ 5,402 $ 4,660 |
ACCUMULATED OTHER COMPREHENSI30
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
Changes in Accumulated Other Comprehensive (Loss) Income by Component | Foreign Defined Benefit Currency Pension Plans Other Total Balance - December 31, 2015 $ (206,725) $ (55,550) $ (72) $ (262,347) Other comprehensive income before reclassifications 44,329 — — 44,329 Amounts reclassified from accumulated other comprehensive income (82) 2,511 19 2,448 Net current-period other comprehensive income 44,247 2,511 19 46,777 Balance - September 30, 2016 $ (162,478) $ (53,039) $ (53) $ (215,570) Balance - December 31, 2016 $ (259,888) $ (59,775) $ (46) $ (319,709) Other comprehensive income before reclassifications 69,493 — (9,237) 60,256 Amounts reclassified from accumulated other comprehensive income — 2,699 5,667 8,366 Net current-period other comprehensive income 69,493 2,699 (3,570) 68,622 Balance - September 30, 2017 $ (190,395) $ (57,076) $ (3,616) $ (251,087) |
Reclassifications Out of Accumulated Other Comprehensive (Loss) Income | Amount Reclassified from Details about Accumulated Other Accumulated Other Affected Line in the Statement Comprehensive Income Components Comprehensive Income Where Net Income is Presented Three Months Ended September 30, Defined Benefit Pension Plans Amortization of net loss $ 1,294 $ 1,208 (a) Amortization of prior service cost 104 89 (a) 1,398 1,297 Total before tax (474) (460) Tax benefit $ 924 $ 837 Net of tax Foreign Currency Foreign currency gain $ — $ (82) Miscellaneous, net — (82) Total before tax — — Tax benefit $ — $ (82) Net of tax Other Changes in treasury locks $ 11 $ 10 Interest Expense Changes in cross currency swap: interest component (678) — Interest Expense Changes in cross currency swap: foreign exchange component 7,481 — Miscellaneous, net 6,814 10 Total before tax (1,161) (4) Tax benefit $ 5,653 $ 6 Net of tax Total reclassifications for the period $ 6,577 $ 761 (a) These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 6 – Retirement and Deferred Compensation Plans for additional details). Amount Reclassified from Details about Accumulated Other Accumulated Other Affected Line in the Statement Comprehensive Income Components Comprehensive Income Where Net Income is Presented Nine Months Ended September 30, Defined Benefit Pension Plans Amortization of net loss $ 3,803 $ 3,627 (b) Amortization of prior service cost 296 265 (b) 4,099 3,892 Total before tax (1,400) (1,381) Tax benefit $ 2,699 $ 2,511 Net of tax Foreign Currency Foreign currency gain $ — $ (82) Miscellaneous, net — (82) Total before tax — — Tax benefit $ — $ (82) Net of tax Other Changes in treasury locks $ 32 $ 30 Interest Expense Changes in cross currency swap: interest component (678) — Interest Expense Changes in cross currency swap: foreign exchange component 7,481 — Miscellaneous, net 6,835 30 Total before tax (1,168) (11) Tax benefit $ 5,667 $ 19 Net of tax Total reclassifications for the period $ 8,366 $ 2,448 (b) These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 6 – Retirement and Deferred Compensation Plans for additional details). |
DERIVATIVE INSTRUMENTS AND HE31
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
Schedule of Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets | Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 September 30, 2017 December 31, 2016 Derivatives Derivatives Derivatives not Derivatives not Designated Designated Designated Designated Balance Sheet as Hedging as Hedging as Hedging as Hedging Location Instruments Instruments Instruments Instruments Derivative Assets Foreign Exchange Contracts Prepaid and other $ — $ 327 $ — $ 1,612 $ — $ 327 $ — $ 1,612 Derivative Liabilities Foreign Exchange Contracts Accounts payable and accrued liabilities $ — $ 375 $ — $ 2,881 Cross Currency Swap Contract (1) Accounts payable and accrued liabilities 12,097 — — — $ 12,097 $ 375 $ — $ 2,881 (1) This cross currency swap contract is composed of both an interest component and a foreign exchange component. |
Schedule of Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) | The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Quarters Ended September 30, 2017 and September 30, 2016 Amount of Gain (Loss) Total Amount Amount of Gain (Loss) Location of (Loss) Reclassified from of Affected Derivatives in Cash Recognized in Gain Recognized Accumulated Income Flow Hedging Other Comprehensive in Income on Other Comprehensive Statement Relationships Income on Derivative Derivatives Income on Derivative Line Item Cross currency swap contract: Interest component $ (3,648) $ — Interest expense $ 678 $ — $ (9,733) Foreign exchange component (7,481) — Miscellaneous, net (7,481) — (2,200) $ (11,129) $ — $ (6,803) $ — $ (11,933) The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Nine Months Ended September 30, 2017 and September 30, 2016 Amount of Gain (Loss) Total Amount Amount of Gain (Loss) Location of (Loss) Reclassified from of Affected Derivatives in Cash Recognized in Gain Recognized Accumulated Income Flow Hedging Other Comprehensive in Income on Other Comprehensive Statement Relationships Income on Derivative Derivatives Income on Derivative Line Item Cross currency swap contract: Interest component $ (3,648) $ — Interest expense $ 678 $ — $ (25,707) Foreign exchange component (7,481) — Miscellaneous, net (7,481) — (509) $ (11,129) $ — $ (6,803) $ — $ (26,216) |
Schedule of Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income | The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Quarters Ended September 30, 2017 and September 30, 2016 Amount of (Loss) Gain Derivatives Not Designated Location of (Loss) Gain Recognized Recognized in Income as Hedging Instruments in Income on Derivatives on Derivatives Foreign Exchange Contracts Other (Expense) Income: $ (15,534) $ 3,191 $ (15,534) $ 3,191 The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Nine Months Ended September 30, 2017 and September 30, 2016 Amount of (Loss) Gain Derivatives Not Designated Location of (Loss) Gain Recognized Recognized in Income as Hedging Instruments in Income on Derivatives on Derivatives Foreign Exchange Contracts Other (Expense) Income: $ (64,651) $ (1,875) $ (64,651) $ (1,875) |
Schedule of offsetting derivative assets and liabilities | Gross Amounts not Offset Gross Amounts Net Amounts in the Statement of Offset in the Presented in Financial Position Gross Statement of the Statement of Financial Cash Collateral Net Amount Financial Position Financial Position Instruments Received Amount Description September 30, 2017 Derivative Assets $ 327 — $ 327 — — $ 327 Total Assets $ 327 — $ 327 — — $ 327 Derivative Liabilities $ 12,472 — $ 12,472 — — $ 12,472 Total Liabilities $ 12,472 — $ 12,472 — — $ 12,472 December 31, 2016 Derivative Assets $ 1,612 — $ 1,612 — — $ 1,612 Total Assets $ 1,612 — $ 1,612 — — $ 1,612 Derivative Liabilities $ 2,881 — $ 2,881 — — $ 2,881 Total Liabilities $ 2,881 — $ 2,881 — — $ 2,881 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE | |
Schedule of fair values of financial assets and liabilities | As of September 30, 2017, the fair values of our financial assets and liabilities were categorized as follows: Total Level 1 Level 2 Level 3 Assets Foreign exchange contracts (a) $ 327 $ — $ 327 $ — Total assets at fair value $ 327 $ — $ 327 $ — Liabilities Foreign exchange contracts (a) $ 375 $ — $ 375 $ — Cross currency swap contract (a) 12,097 — 12,097 — Total liabilities at fair value $ 12,472 $ — $ 12,472 $ — As of December 31, 2016, the fair values of our financial assets and liabilities were categorized as follows: Total Level 1 Level 2 Level 3 Assets Foreign exchange contracts (a) $ 1,612 $ — $ 1,612 $ — Total assets at fair value $ 1,612 $ — $ 1,612 $ — Liabilities Foreign exchange contracts (a) $ 2,881 $ — $ 2,881 $ — Total liabilities at fair value $ 2,881 $ — $ 2,881 $ — (a) Market approach valuation technique based on observable market transactions of spot and forward rates. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
STOCK-BASED COMPENSATION | |
Weighted-average assumptions used to estimate fair value of stock options granted | Stock Awards Plans: Nine Months Ended September 30, Dividend Yield 1.7 % 1.8 % Expected Stock Price Volatility 15.8 % 16.9 % Risk-free Interest Rate 2.2 % 1.6 % Expected Life of Option (years) 6.7 6.7 |
Summary of option activity | Stock Awards Plans Director Stock Option Plans Weighted Average Weighted Average Options Exercise Price Options Exercise Price Outstanding, January 1, 2017 8,070,444 $ 56.36 281,334 $ 56.45 Granted 1,622,082 74.90 — — Exercised (1,345,252) 46.67 (66,367) 53.23 Forfeited or expired (122,282) 71.42 — — Outstanding at September 30, 2017 8,224,992 $ 61.38 214,967 $ 57.44 Exercisable at September 30, 2017 5,310,730 $ 55.44 214,967 $ 57.44 Weighted-Average Remaining Contractual Term (Years): Outstanding at September 30, 2017 6.3 5.3 Exercisable at September 30, 2017 5.0 5.3 Aggregate Intrinsic Value: Outstanding at September 30, 2017 $ 206,938 $ 6,255 Exercisable at September 30, 2017 $ 165,175 $ 6,255 Intrinsic Value of Options Exercised During the Nine Months Ended: September 30, 2017 $ 44,734 $ 1,995 September 30, 2016 $ 38,514 $ 536 |
Summary of restricted stock unit activity | Director Restricted Stock Awards Plans Stock Unit Plan Weighted Average Weighted Average RSUs Grant-Date Fair Value RSUs Grant-Date Fair Value Nonvested at January 1, 2017 72,127 $ 69.31 15,745 $ 75.56 Granted 89,110 74.43 14,793 80.45 Vested (51,963) 68.52 (15,745) 75.56 Nonvested at September 30, 2017 109,274 $ 73.86 14,793 $ 80.45 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
EARNINGS PER SHARE | |
Reconciliation of Basic and Diluted Earnings Per Share | Three Months Ended September 30, 2017 September 30, 2016 Diluted Basic Diluted Basic Consolidated operations Income available to common stockholders $ 53,523 $ 53,523 $ 53,098 $ 53,098 Average equivalent shares Shares of common stock 62,592 62,592 62,858 62,858 Effect of dilutive stock based compensation Stock options 2,171 — 1,791 — Restricted stock 58 — 41 — Total average equivalent shares 64,821 62,592 64,690 62,858 Net income per share $ 0.83 $ 0.86 $ 0.82 $ 0.84 Nine Months Ended September 30, 2017 September 30, 2016 Diluted Basic Diluted Basic Consolidated operations Income available to common stockholders $ 170,517 $ 170,517 $ 156,009 $ 156,009 Average equivalent shares Shares of common stock 62,527 62,527 62,878 62,878 Effect of dilutive stock based compensation Stock options 2,046 — 2,059 — Restricted stock 53 — 52 — Total average equivalent shares 64,626 62,527 64,989 62,878 Net income per share $ 2.64 $ 2.73 $ 2.40 $ 2.48 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENT INFORMATION | |
Financial information regarding the Company's reportable segments | Three Months Ended September 30, Nine Months Ended September 30, Total Sales: Beauty + Home $ 338,068 $ 319,244 $ 992,476 $ 984,008 Pharma 199,551 191,190 598,168 565,363 Food + Beverage 91,852 82,952 269,159 257,435 Total Sales 629,471 593,386 1,859,803 1,806,806 Less: Intersegment Sales: Beauty + Home $ 4,320 $ 3,214 $ 14,163 $ 13,321 Pharma 4 (4) 7 — Food + Beverage 821 447 2,245 1,419 Total Intersegment Sales $ 5,145 $ 3,657 $ 16,415 $ 14,740 Net Sales: Beauty + Home $ 333,748 $ 316,030 $ 978,313 $ 970,687 Pharma 199,547 191,194 598,161 565,363 Food + Beverage 91,031 82,505 266,914 256,016 Net Sales $ 624,326 $ 589,729 $ 1,843,388 $ 1,792,066 Segment Income (1): Beauty + Home $ 21,837 $ 25,380 $ 69,248 $ 79,455 Pharma 55,426 55,037 174,288 166,870 Food + Beverage 11,668 10,101 31,385 32,977 Corporate & Other (10,793) (7,479) (32,734) (35,310) Interest Expense (9,733) (8,753) (25,707) (26,547) Interest Income 1,113 715 2,086 1,759 Income before Income Taxes $ 69,518 $ 75,001 $ 218,566 $ 219,204 (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. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) - Mega Airless | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions | |
Summary of assets acquired and liabilities assumed at estimated fair value | February 29, 2016 Assets Cash and equivalents $ 20,197 Accounts receivable 8,275 Inventories 8,373 Prepaid and other 378 Property, plant and equipment 47,768 Goodwill 105,561 Intangible assets 72,106 Other miscellaneous assets 8 Liabilities Current maturities of long-term obligations 319 Accounts payable and accrued liabilities 7,398 Long-term obligations 13,402 Deferred income taxes 18,366 Net assets acquired $ 223,181 |
Summary of the fair value estimates of the acquired identifiable intangible assets and weighted-average useful lives as of the acquisition date | Weighted-Average Estimated Useful Life Fair Value (in years) of Asset Customer relationships $ 57,120 Technology 10,838 Trademark 4,148 Total $ 72,106 |
Schedule of unaudited pro forma financial information | Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 Net Sales $ 589,729 $ 1,801,626 Net Income Attributable to AptarGroup Inc. 53,526 163,140 Net Income per common share — basic 0.85 2.59 Net Income per common share — diluted 0.83 2.51 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, shares in Thousands, $ in Thousands, € in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($)$ / shares | Mar. 31, 2017EUR (€) | Mar. 31, 2017USD ($) | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2017USD ($)segment$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Dec. 31, 2016$ / shares | |
Number of reportable segments | segment | 3 | |||||||
RETIREMENT OF COMMON STOCK | ||||||||
Common stock repurchased (retired and held in treasury) (in shares) | shares | 1,400 | |||||||
Common stock repurchased and retired (in shares) | shares | 463 | 512 | 1,100 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||
INCOME TAXES | ||||||||
Repatriation of foreign earnings | € 700 | $ 751,000 | € 250 | $ 263,000 | ||||
Undistributed earnings attributable to foreign subsidiaries considered to be permanently reinvested | 614,000 | $ 614,000 | ||||||
Provision for income taxes from repatriation | (5,000) | |||||||
ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS | ||||||||
Provision for Income Taxes | 15,989 | $ 21,901 | 48,043 | $ 63,187 | ||||
Accounting Standards Update 2016-09 | ||||||||
ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS | ||||||||
Provision for Income Taxes | $ (500) | $ (8,800) |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Revision of Prior Period Financial Statements) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retirement and deferred compensation plan liabilities | $ (20,621) | $ (14,419) |
Net Cash Provided by Operations | 265,162 | 202,420 |
Proceeds from stock option exercises | 66,686 | 49,457 |
Net Cash Provided by Financing Activities | $ 447,267 | 1,090 |
As Previously Reported | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retirement and deferred compensation plan liabilities | (12,525) | |
Net Cash Provided by Operations | 204,314 | |
Proceeds from stock option exercises | 47,563 | |
Net Cash Provided by Financing Activities | (804) | |
Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retirement and deferred compensation plan liabilities | (1,894) | |
Net Cash Provided by Operations | (1,894) | |
Proceeds from stock option exercises | 1,894 | |
Net Cash Provided by Financing Activities | $ 1,894 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventories, by component | ||
Raw materials | $ 91,192 | $ 98,014 |
Work in process | 106,609 | 91,646 |
Finished goods | 125,603 | 107,254 |
Total | $ 323,404 | $ 296,914 |
GOODWILL AND OTHER INTANGIBLE40
GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Goodwill) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Changes in the carrying amount of goodwill | ||
Goodwill | $ 440,762 | $ 409,137 |
Accumulated impairment losses | (1,615) | (1,615) |
Goodwill, Total | 439,147 | 407,522 |
Foreign currency exchange effects | 31,625 | |
Operating segment | Beauty + Home | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 222,258 | 211,371 |
Goodwill, Total | 222,258 | 211,371 |
Foreign currency exchange effects | 10,887 | |
Operating segment | Pharma | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 200,114 | 180,050 |
Goodwill, Total | 200,114 | 180,050 |
Foreign currency exchange effects | 20,064 | |
Operating segment | Food + Beverage | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 16,775 | 16,101 |
Goodwill, Total | 16,775 | 16,101 |
Foreign currency exchange effects | 674 | |
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 INTANGIBLE41
GOODWILL AND OTHER INTANGIBLE ASSETS (Summary of Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Amortized intangible assets: | |||||
Gross Carrying Amount | $ 143,990 | $ 143,990 | $ 130,112 | ||
Accumulated Amortization | (47,230) | (47,230) | (35,623) | ||
Net Value | 96,760 | 96,760 | 94,489 | ||
Aggregate amortization expense | 2,708 | $ 2,553 | 7,643 | $ 6,788 | |
Future estimated amortization expense | |||||
2,017 | 2,572 | 2,572 | |||
2,018 | 10,851 | 10,851 | |||
2,019 | 10,667 | 10,667 | |||
2,020 | 9,464 | 9,464 | |||
2021 and thereafter | 63,206 | $ 63,206 | |||
Weighted Average | |||||
Amortized intangible assets: | |||||
Amortization Period | 11 years 9 months 18 days | ||||
Patents | |||||
Amortized intangible assets: | |||||
Gross Carrying Amount | 7,695 | $ 7,695 | 6,859 | ||
Accumulated Amortization | (7,680) | (7,680) | (6,839) | ||
Net Value | 15 | $ 15 | 20 | ||
Patents | Weighted Average | |||||
Amortized intangible assets: | |||||
Amortization Period | 2 months 12 days | ||||
Technology | |||||
Amortized intangible assets: | |||||
Gross Carrying Amount | 46,817 | $ 46,817 | 41,731 | ||
Accumulated Amortization | (13,610) | (13,610) | (10,040) | ||
Net Value | 33,207 | $ 33,207 | 31,691 | ||
Technology | Weighted Average | |||||
Amortized intangible assets: | |||||
Amortization Period | 15 years | ||||
Customer relationships | |||||
Amortized intangible assets: | |||||
Gross Carrying Amount | 68,126 | $ 68,126 | 63,006 | ||
Accumulated Amortization | (11,763) | (11,763) | (6,696) | ||
Net Value | 56,363 | $ 56,363 | 56,310 | ||
Customer relationships | Weighted Average | |||||
Amortized intangible assets: | |||||
Amortization Period | 12 years 2 months 12 days | ||||
License agreements and other | |||||
Amortized intangible assets: | |||||
Gross Carrying Amount | 21,352 | $ 21,352 | 18,516 | ||
Accumulated Amortization | (14,177) | (14,177) | (12,048) | ||
Net Value | $ 7,175 | $ 7,175 | $ 6,468 | ||
License agreements and other | Weighted Average | |||||
Amortized intangible assets: | |||||
Amortization Period | 7 years 7 months 6 days |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Effective income tax rate (as a percent) | 23.00% | 29.20% | 22.00% | 28.80% | |
Increase (decrease) in income taxes | $ (6) | $ (15) | |||
Increase (decrease) in effective tax rate from foreign tax settlement | (4.50%) | (1.40%) | |||
Increase (decrease) in effective tax rate from adoption of accounting standard | (4.00%) | ||||
Increase (decrease) in effective tax rate from repatriation | (1.60%) | ||||
Income tax uncertainties | $ 3.6 | $ 3.6 | $ 6.4 | ||
Amount of income tax uncertainties that, if recognized, would impact the effective tax rate | 3.6 | 3.6 | $ 6.4 | ||
Decrease in liability for uncertain tax positions, high end of range | $ 1.9 | 1.9 | |||
Ministry of Economic Affairs and Finance, Italy | |||||
Income tax uncertainties decrease resulting from settlements with taxing authorities | $ 2.2 |
LONG-TERM OBLIGATIONS (Details)
LONG-TERM OBLIGATIONS (Details) € in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Long-Term Obligations | ||||
Revolving credit facility maximum borrowing capacity | $ 300,000 | $ 300,000 | ||
Revolving credit facility maturity date | Jul. 1, 2022 | |||
Consolidated Leverage Ratio | 1.17 | 1.17 | ||
Consolidated Interest Coverage Ratio | 13.38 | 13.38 | ||
Long-term obligations gross including current maturities | $ 1,411,552 | $ 1,411,552 | $ 778,788 | |
Current maturities of long-term obligations | (136,392) | (136,392) | (4,603) | |
Total long-term obligations | 1,275,161 | 1,275,161 | 774,185 | |
Deferred Finance Costs, Net, Total | 3,692 | 3,692 | 1,448 | |
Deferred debt issuance costs current | (62) | (62) | ||
Deferred debt issuance costs noncurrent | 3,631 | 3,631 | 1,448 | |
Long-term obligations including current maturities | 1,407,860 | 1,407,860 | 777,340 | |
Current maturities of long-term obligations | (136,330) | (136,330) | (4,603) | |
Long-term obligations, net of unamortized debt issuance costs | 1,271,530 | 1,271,530 | 772,737 | |
Aggregate long-term maturities, excluding capital lease obligations | ||||
Sept 302,018 | 136,105 | 136,105 | ||
Sept 302,019 | 60,750 | 60,750 | ||
Sept 302,020 | 57,909 | 57,909 | ||
Sept 302,021 | 141,911 | 141,911 | ||
Sept 302,022 | 132,912 | 132,912 | ||
Thereafter | $ 881,086 | $ 881,086 | ||
Minimum | ||||
Long-Term Obligations | ||||
Consolidated Interest Coverage Ratio | 3 | 3 | ||
Maximum | ||||
Long-Term Obligations | ||||
Consolidated Leverage Ratio | 3.50 | 3.50 | ||
Revolving credit facility | ||||
Long-Term Obligations | ||||
Proceeds from debt | € | € 150,000 | |||
Term of debt | 5 years | 5 years | ||
Interest rate on notes (as a percent) | 1.10% | 1.10% | ||
Notes payable to banks | ||||
Long-Term Obligations | ||||
Proceeds from debt | $ 280,000 | |||
Term of debt | 5 years | 5 years | ||
Long-term obligations gross including current maturities | $ 280,000 | $ 280,000 | ||
Deferred Finance Costs, Net, Total | 755 | 755 | ||
Long-term obligations including current maturities | $ 279,245 | $ 279,245 | ||
Interest rate on notes (as a percent) | 1.36% | 1.36% | ||
Floating interest rate prior to conversion to a fixed interest rate | 2.56% | 2.56% | ||
Notes payable 0.61% - 18.00%, due in monthly and annual installments through 2025 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 17,103 | $ 17,103 | 18,246 | |
Long-term obligations including current maturities | $ 17,103 | $ 17,103 | $ 18,246 | |
Notes payable 0.61% - 18.00%, due in monthly and annual installments through 2025 | Minimum | ||||
Long-Term Obligations | ||||
Interest rate on notes (as a percent) | 0.61% | 0.61% | 0.61% | |
Notes payable 0.61% - 18.00%, due in monthly and annual installments through 2025 | Maximum | ||||
Long-Term Obligations | ||||
Interest rate on notes (as a percent) | 18.00% | 18.00% | 16.00% | |
Senior unsecured notes 6.0%, due in 2018 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 75,000 | $ 75,000 | $ 75,000 | |
Deferred Finance Costs, Net, Total | 62 | 62 | 37 | |
Long-term obligations including current maturities | $ 74,938 | $ 74,938 | $ 74,963 | |
Interest rate on notes (as a percent) | 6.00% | 6.00% | 6.00% | |
Senior unsecured notes 3.8%, due in 2020 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 84,000 | $ 84,000 | $ 84,000 | |
Deferred Finance Costs, Net, Total | 138 | 138 | 119 | |
Long-term obligations including current maturities | $ 83,862 | $ 83,862 | $ 83,881 | |
Interest rate on notes (as a percent) | 3.80% | 3.80% | 3.80% | |
Senior unsecured notes 3.2%, due in 2022 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 75,000 | $ 75,000 | $ 75,000 | |
Deferred Finance Costs, Net, Total | 156 | 156 | 138 | |
Long-term obligations including current maturities | $ 74,844 | $ 74,844 | $ 74,862 | |
Interest rate on notes (as a percent) | 3.20% | 3.20% | 3.20% | |
Senior unsecured notes 3.5%, due in 2023 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 125,000 | $ 125,000 | $ 125,000 | |
Deferred Finance Costs, Net, Total | 291 | 291 | 256 | |
Long-term obligations including current maturities | $ 124,709 | $ 124,709 | $ 124,744 | |
Interest rate on notes (as a percent) | 3.50% | 3.50% | 3.50% | |
Senior unsecured notes 0.98%, due in 2023 | ||||
Long-Term Obligations | ||||
Proceeds from private placement | € | € 100,000 | |||
Term of debt | 6 years | 6 years | ||
Long-term obligations gross including current maturities | $ 118,190 | $ 118,190 | ||
Deferred Finance Costs, Net, Total | 418 | 418 | ||
Long-term obligations including current maturities | $ 117,772 | $ 117,772 | ||
Interest rate on notes (as a percent) | 0.98% | 0.98% | ||
Senior unsecured notes 3.4%, due in 2024 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 50,000 | $ 50,000 | $ 50,000 | |
Deferred Finance Costs, Net, Total | 118 | 118 | 104 | |
Long-term obligations including current maturities | $ 49,882 | $ 49,882 | $ 49,896 | |
Interest rate on notes (as a percent) | 3.40% | 3.40% | 3.40% | |
Senior unsecured notes 3.5%, due in 2024 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 100,000 | $ 100,000 | $ 100,000 | |
Deferred Finance Costs, Net, Total | 291 | 291 | 256 | |
Long-term obligations including current maturities | $ 99,709 | $ 99,709 | $ 99,744 | |
Interest rate on notes (as a percent) | 3.50% | 3.50% | 3.50% | |
Senior unsecured notes 1.17%, due in 2024 | ||||
Long-Term Obligations | ||||
Proceeds from private placement | € | € 200,000 | |||
Term of debt | 7 years | 7 years | ||
Long-term obligations gross including current maturities | $ 236,380 | $ 236,380 | ||
Deferred Finance Costs, Net, Total | 835 | 835 | ||
Long-term obligations including current maturities | $ 235,545 | $ 235,545 | ||
Interest rate on notes (as a percent) | 1.17% | 1.17% | ||
Senior unsecured notes 3.6%, due in 2025 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 125,000 | $ 125,000 | $ 125,000 | |
Deferred Finance Costs, Net, Total | 314 | 314 | 269 | |
Long-term obligations including current maturities | $ 124,686 | $ 124,686 | $ 124,731 | |
Interest rate on notes (as a percent) | 3.60% | 3.60% | 3.60% | |
Senior unsecured notes 3.6%, due in 2026 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 125,000 | $ 125,000 | $ 125,000 | |
Deferred Finance Costs, Net, Total | 314 | 314 | 269 | |
Long-term obligations including current maturities | $ 124,686 | $ 124,686 | $ 124,731 | |
Interest rate on notes (as a percent) | 3.60% | 3.60% | 3.60% | |
Capital lease obligations | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 879 | $ 879 | $ 1,542 | |
Long-term obligations including current maturities | $ 879 | $ 879 | $ 1,542 |
RETIREMENT AND DEFERRED COMPE44
RETIREMENT AND DEFERRED COMPENSATION PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Domestic Plans | ||||
Change in benefit obligation: | ||||
Service cost | $ 2,426 | $ 2,261 | $ 7,279 | $ 6,781 |
Interest cost | 1,752 | 1,694 | 5,257 | 5,082 |
Change in plan assets: | ||||
Employer contribution | 24,700 | |||
Components of net periodic benefit cost: | ||||
Service cost | 2,426 | 2,261 | 7,279 | 6,781 |
Interest cost | 1,752 | 1,694 | 5,257 | 5,082 |
Expected return on plan assets | (2,470) | (2,118) | (7,409) | (6,353) |
Amortization of net loss | 801 | 820 | 2,403 | 2,462 |
Net periodic benefit cost | 2,509 | 2,657 | 7,530 | 7,972 |
Minimum funding requirements | 0 | |||
Foreign Plans | ||||
Change in benefit obligation: | ||||
Service cost | 1,447 | 1,148 | 4,166 | 3,449 |
Interest cost | 459 | 477 | 1,321 | 1,432 |
Change in plan assets: | ||||
Employer contribution | 2,000 | |||
Components of net periodic benefit cost: | ||||
Service cost | 1,447 | 1,148 | 4,166 | 3,449 |
Interest cost | 459 | 477 | 1,321 | 1,432 |
Expected return on plan assets | (627) | (550) | (1,781) | (1,651) |
Amortization of net loss | 493 | 388 | 1,400 | 1,165 |
Amortization of prior service cost | 104 | 89 | 296 | 265 |
Net periodic benefit cost | 1,876 | $ 1,552 | 5,402 | $ 4,660 |
Expected contribution in current fiscal year | $ 2,500 | $ 2,500 |
ACCUMULATED OTHER COMPREHENSI45
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | $ 1,173,950 | |
Balance at the end of the period | 1,321,514 | |
Foreign Currency | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | (259,888) | $ (206,725) |
Other comprehensive income (loss) before reclassifications | 69,493 | 44,329 |
Amounts reclassified from accumulated other comprehensive income | (82) | |
Net current-period other comprehensive income (loss) | 69,493 | 44,247 |
Balance at the end of the period | (190,395) | (162,478) |
Defined Benefit Pension Plans | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | (59,775) | (55,550) |
Amounts reclassified from accumulated other comprehensive income | 2,699 | 2,511 |
Net current-period other comprehensive income (loss) | 2,699 | 2,511 |
Balance at the end of the period | (57,076) | (53,039) |
Other | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | (46) | (72) |
Other comprehensive income (loss) before reclassifications | (9,237) | |
Amounts reclassified from accumulated other comprehensive income | 5,667 | 19 |
Net current-period other comprehensive income (loss) | (3,570) | 19 |
Balance at the end of the period | (3,616) | (53) |
Accumulated Other Comprehensive Income/(Loss) | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | (319,709) | (262,347) |
Other comprehensive income (loss) before reclassifications | 60,256 | 44,329 |
Amounts reclassified from accumulated other comprehensive income | 8,366 | 2,448 |
Net current-period other comprehensive income (loss) | 68,622 | 46,777 |
Balance at the end of the period | $ (251,087) | $ (215,570) |
ACCUMULATED OTHER COMPREHENSI46
ACCUMULATED OTHER COMPREHENSIVE INCOME (Reclassifications From Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Miscellaneous, net | $ (2,200) | $ 728 | $ (509) | $ (995) |
Interest expense | 9,733 | 8,753 | 25,707 | 26,547 |
Total before tax | (69,518) | (75,001) | (218,566) | (219,204) |
Tax benefit | 15,989 | 21,901 | 48,043 | 63,187 |
Total reclassifications for the period | (53,523) | (53,098) | (170,517) | (156,009) |
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Total reclassifications for the period | 6,577 | 761 | 8,366 | 2,448 |
Defined Benefit Pension Plans | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Amortization of net loss | 1,294 | 1,208 | 3,803 | 3,627 |
Amortization of prior service cost | 104 | 89 | 296 | 265 |
Total before tax | 1,398 | 1,297 | 4,099 | 3,892 |
Tax benefit | (474) | (460) | (1,400) | (1,381) |
Total reclassifications for the period | 924 | 837 | 2,699 | 2,511 |
Foreign Currency | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Miscellaneous, net | (82) | (82) | ||
Total before tax | (82) | (82) | ||
Total reclassifications for the period | (82) | (82) | ||
Other | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Total before tax | 6,814 | 10 | 6,835 | 30 |
Tax benefit | (1,161) | (4) | (1,168) | (11) |
Total reclassifications for the period | 5,653 | 6 | 5,667 | 19 |
Other | Treasury locks | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Interest expense | 11 | $ 10 | 32 | $ 30 |
Other | Cross Currency Swap Contract: Interest Component | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Interest expense | (678) | (678) | ||
Other | Cross Currency Swap Contract: Foreign Exchange Component | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Miscellaneous, net | $ 7,481 | $ 7,481 |
DERIVATIVE INSTRUMENTS AND HE47
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Cash Flow Hedge) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Jul. 20, 2017 | |
Derivatives in Cash Flow Hedging Relationships | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | $ (11,129) | $ (11,129) | |
Cross Currency Swap Contract | Derivatives in Cash Flow Hedging Relationships | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount hedged | $ 280,000 | ||
Fair value of derivative liability | 12,100 | 12,100 | |
Cross Currency Swap Contract: Interest Component | Derivatives in Cash Flow Hedging Relationships | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount expected to be recognized in earnings in next twelve months related to cross currency swap contract | 3,300 | $ 3,300 | |
Notes payable to banks | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Proceeds from debt | $ 280,000 |
DERIVATIVE INSTRUMENTS AND HE48
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Fair Value of Derivative Instruments in the Consolidated Balance Sheets) (Details) $ in Thousands, € in Millions | Jul. 27, 2017EUR (€) | Jul. 27, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017EUR (€) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Fair Value of Derivative Instruments | ||||||||
Derivative Assets | $ 327 | $ 327 | $ 1,612 | |||||
Derivative Liabilities | 12,472 | 12,472 | 2,881 | |||||
Intercompany receivable from repatriation activities | € | € 700 | |||||||
Cash delivered on foreign currency forward contract | 66,155 | |||||||
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | (15,534) | $ 3,191 | (64,651) | $ (1,875) | ||||
Foreign Exchange Contracts | ||||||||
Fair Value of Derivative Instruments | ||||||||
Aggregate amount of forward exchange contracts outstanding | 85,300 | 85,300 | ||||||
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | (15,534) | $ 3,191 | (64,651) | $ (1,875) | ||||
Foreign Exchange Forward Contract | ||||||||
Fair Value of Derivative Instruments | ||||||||
Cash delivered on foreign currency forward contract | € | € 700 | |||||||
Cash received from foreign currency forward contract | $ 751,000 | |||||||
Foreign exchange transaction loss on forward contract | 66,200 | |||||||
Gain on revaluation of intercompany accounts receivable | $ 69,500 | |||||||
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | 3,300 | |||||||
Derivative Contracts Not Designated as Hedging Instruments | ||||||||
Fair Value of Derivative Instruments | ||||||||
Derivative Assets | 327 | 327 | 1,612 | |||||
Derivative Liabilities | 375 | 375 | 2,881 | |||||
Derivative Contracts Not Designated as Hedging Instruments | Foreign Exchange Contracts | Prepaid and other | ||||||||
Fair Value of Derivative Instruments | ||||||||
Derivative Assets | 327 | 327 | 1,612 | |||||
Derivative Contracts Not Designated as Hedging Instruments | Foreign Exchange Contracts | Accounts payable and accrued liabilities | ||||||||
Fair Value of Derivative Instruments | ||||||||
Derivative Liabilities | 375 | 375 | $ 2,881 | |||||
Derivative Contracts Designated as Hedging Instruments | ||||||||
Fair Value of Derivative Instruments | ||||||||
Derivative Liabilities | 12,097 | 12,097 | ||||||
Derivative Contracts Designated as Hedging Instruments | Cross Currency Swap Contract | Accounts payable and accrued liabilities | ||||||||
Fair Value of Derivative Instruments | ||||||||
Derivative Liabilities | $ 12,097 | $ 12,097 |
DERIVATIVE INSTRUMENTS AND HE49
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Effect of Derivative Instruments on the Consolidated Statements of Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative instruments, gain or (loss) | ||||
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | $ (15,534) | $ 3,191 | $ (64,651) | $ (1,875) |
Derivatives in Cash Flow Hedging Relationships | ||||
Derivative instruments, gain or (loss) | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | (11,129) | (11,129) | ||
Amount of Gain (Loss) Reclassified from AOCI on Derivative | (6,803) | (6,803) | ||
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 | (15,534) | $ 3,191 | (64,651) | $ (1,875) |
Cross Currency Swap Contract: Interest Component | Interest expense | Derivatives in Cash Flow Hedging Relationships | ||||
Derivative instruments, gain or (loss) | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | (3,648) | (3,648) | ||
Amount of Gain (Loss) Reclassified from AOCI on Derivative | 678 | 678 | ||
Cross Currency Swap Contract: Foreign Exchange Component | Other Income (Expense): Miscellaneous, net | Derivatives in Cash Flow Hedging Relationships | ||||
Derivative instruments, gain or (loss) | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | (7,481) | (7,481) | ||
Amount of Gain (Loss) Reclassified from AOCI on Derivative | $ (7,481) | $ (7,481) |
DERIVATIVE INSTRUMENTS AND HE50
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Derivative Assets and Liabilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Derivative Assets | ||
Gross Amount | $ 327 | $ 1,612 |
Net Amounts Presented in the Statement of Financial Position | 327 | 1,612 |
Net Amount | 327 | 1,612 |
Derivative Liabilities | ||
Gross Amount | 12,472 | 2,881 |
Net Amounts Presented in the Statement of Financial Position | 12,472 | 2,881 |
Net Amount | $ 12,472 | $ 2,881 |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Liabilities | ||
Fair value of long-term obligations | $ 1,200,000 | $ 739,000 |
Assets and liabilities measured at fair value on recurring basis | ||
Assets | ||
Foreign exchange contracts, assets | 327 | 1,612 |
Total assets at fair value | 327 | 1,612 |
Liabilities | ||
Foreign exchange contracts, liabilities | 375 | 2,881 |
Cross currency swap contract, liability | 12,097 | |
Total liabilities at fair value | 12,472 | 2,881 |
Assets and liabilities measured at fair value on recurring basis | Level 2 | ||
Assets | ||
Foreign exchange contracts, assets | 327 | 1,612 |
Total assets at fair value | 327 | 1,612 |
Liabilities | ||
Foreign exchange contracts, liabilities | 375 | 2,881 |
Cross currency swap contract, liability | 12,097 | |
Total liabilities at fair value | $ 12,472 | $ 2,881 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | |
Commitments and contingencies | |||
Environmental Remediation Expense | $ 0 | $ 1,500,000 | |
Indemnification agreements | |||
Commitments and contingencies | |||
Liabilities recorded under indemnification agreements | 0 | $ 0 | |
Minimum | |||
Commitments and contingencies | |||
Environmental Loss Contingencies Estimate | 1,500,000 | ||
Maximum | |||
Commitments and contingencies | |||
Environmental Loss Contingencies Estimate | $ 3,000,000 |
STOCK REPURCHASE PROGRAM (Detai
STOCK REPURCHASE PROGRAM (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Oct. 20, 2016 | |
STOCK REPURCHASE PROGRAM | |||||
Share repurchases authorized amount | $ 350,000 | ||||
Common stock repurchased (in shares) | 546 | ||||
Aggregate amount of share repurchases (in dollars) | $ 45,500 | $ 72,270 | |||
Common stock repurchased (retired and held in treasury) (in shares) | 1,400 | ||||
Common stock repurchased (retired and held in treasury) | $ 113,300 | ||||
Common stock repurchased and retired (in shares) | 463 | 512 | 1,100 | ||
Common stock repurchased and retired | $ 36,100 | $ 40,994 | $ 84,790 | ||
Remaining authorized repurchase amount | $ 190,200 | $ 190,200 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
STOCK-BASED COMPENSATION | ||
Proceeds from stock option exercises | $ 66,686 | $ 49,457 |
Stock options | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 3 years | |
Expiration period | 10 years | |
Compensation expense | $ 12,600 | 15,500 |
Compensation expense, net of tax | 8,600 | 10,400 |
Income tax benefit related to compensation expense | 4,000 | 5,100 |
Fair value of shares vested | 16,900 | 17,200 |
Proceeds from stock option exercises | 66,700 | |
Actual tax benefit realized for the tax deduction from option exercises | 13,700 | |
Unrecognized compensation cost expected to be recognized in future periods | $ 16,400 | |
Weighted-average period over which compensation cost is expected to be recognized | 2 years | |
Stock options | Selling, research & development and administrative expenses | ||
STOCK-BASED COMPENSATION | ||
Compensation expense | $ 11,000 | 13,700 |
Restricted stock units | ||
STOCK-BASED COMPENSATION | ||
Compensation expense | 2,400 | 2,300 |
Actual tax benefit realized for the tax deduction from option exercises | 1,600 | |
Unrecognized compensation cost expected to be recognized in future periods | $ 6,200 | |
Weighted-average period over which compensation cost is expected to be recognized | 2 years 1 month 6 days | |
Weighted-Average Grant-Date Fair Value | ||
Fair value of units vested | $ 4,700 | 1,900 |
Intrinsic value of units vested | $ 5,200 | $ 2,300 |
Stock Awards Plans | Stock options | ||
STOCK-BASED COMPENSATION | ||
Weighted-average fair value of stock options granted (in dollars per share) | $ 11.86 | $ 10.59 |
Assumptions used to estimate fair value of stock options granted | ||
Dividend Yield (as a percent) | 1.70% | 1.80% |
Expected Stock Price Volatility (as a percent) | 15.80% | 16.90% |
Risk-free Interest Rate (as a percent) | 2.20% | 1.60% |
Expected Life of Option (years) | 6 years 8 months 12 days | 6 years 8 months 12 days |
Stock options activity | ||
Outstanding at the beginning of the period (in shares) | 8,070,444 | |
Granted (in shares) | 1,622,082 | |
Exercised (in shares) | (1,345,252) | |
Forfeited or expired (in shares) | (122,282) | |
Outstanding at the end of the period (in shares) | 8,224,992 | |
Exercisable at the end of the period (in shares) | 5,310,730 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 56.36 | |
Granted (in dollars per share) | 74.90 | |
Exercised (in dollars per share) | 46.67 | |
Forfeited or expired (in dollars per share) | 71.42 | |
Outstanding at the end of the period (in dollars per share) | 61.38 | |
Exercisable at the end of the period (in dollars per share) | $ 55.44 | |
Weighted-Average Remaining Contractual Term (Years): | ||
Outstanding at the end of the period | 6 years 3 months 18 days | |
Exercisable at the end of the period | 5 years | |
Aggregate Intrinsic Value: | ||
Outstanding at the end of the period | $ 206,938 | |
Exercisable at the end of the period | 165,175 | |
Intrinsic Value of Options Exercised | $ 44,734 | $ 38,514 |
Stock Awards Plans | Restricted stock units | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 3 years | |
Restricted stock unit activity | ||
Balance at the beginning of the period (in shares) | 72,127 | |
Granted (in shares) | 89,110 | |
Vested (in shares) | (51,963) | |
Balance at the end of the period (in shares) | 109,274 | |
Weighted-Average Grant-Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $ 69.31 | |
Granted (in dollars per share) | 74.43 | |
Vested (in dollars per share) | 68.52 | |
Nonvested at the end of the period (in dollars per share) | $ 73.86 | |
Director Stock Option Plans | Stock options | ||
Stock options activity | ||
Outstanding at the beginning of the period (in shares) | 281,334 | |
Exercised (in shares) | (66,367) | |
Outstanding at the end of the period (in shares) | 214,967 | |
Exercisable at the end of the period (in shares) | 214,967 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 56.45 | |
Exercised (in dollars per share) | 53.23 | |
Outstanding at the end of the period (in dollars per share) | 57.44 | |
Exercisable at the end of the period (in dollars per share) | $ 57.44 | |
Weighted-Average Remaining Contractual Term (Years): | ||
Outstanding at the end of the period | 5 years 3 months 18 days | |
Exercisable at the end of the period | 5 years 3 months 18 days | |
Aggregate Intrinsic Value: | ||
Outstanding at the end of the period | $ 6,255 | |
Exercisable at the end of the period | 6,255 | |
Intrinsic Value of Options Exercised | $ 1,995 | 536 |
Director Stock Option Plans | Restricted stock units | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 1 year | |
Restricted stock unit activity | ||
Balance at the beginning of the period (in shares) | 15,745 | |
Granted (in shares) | 14,793 | |
Vested (in shares) | (15,745) | |
Balance at the end of the period (in shares) | 14,793 | |
Weighted-Average Grant-Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $ 75.56 | |
Granted (in dollars per share) | 80.45 | |
Vested (in dollars per share) | 75.56 | |
Nonvested at the end of the period (in dollars per share) | $ 80.45 | |
New long-term incentive program | ||
STOCK-BASED COMPENSATION | ||
Compensation expense | $ 1,500 | $ 973 |
Performance period used to measure cumulative total shareholder return of common stock | 3 years | |
Expected total expense related to program over the performance period | $ 4,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Earning per share | |||||
Authorized common stock (in shares) | 199,000 | 199,000 | 199,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
Income (Numerator) | |||||
Income available to common stockholders, basic (in dollars) | $ 53,523 | $ 53,098 | $ 170,517 | $ 156,009 | |
Income available to common stockholders, diluted (in dollars) | $ 53,523 | $ 53,098 | $ 170,517 | $ 156,009 | |
Shares (Denominator) | |||||
Basic (in shares) | 62,592 | 62,858 | 62,527 | 62,878 | |
Total average equivalent shares | 64,821 | 64,690 | 64,626 | 64,989 | |
Per Share Amount | |||||
Net income per share, basic (in dollars per share) | $ 0.86 | $ 0.84 | $ 2.73 | $ 2.48 | |
Net income per share, diluted (in dollars per share) | $ 0.83 | $ 0.82 | $ 2.64 | $ 2.40 | |
Stock options | |||||
Shares (Denominator) | |||||
Effect of dilutive stock based compensation (in shares) | 2,171 | 1,791 | 2,046 | 2,059 | |
Restricted stock units | |||||
Shares (Denominator) | |||||
Effect of dilutive stock based compensation (in shares) | 58 | 41 | 53 | 52 |
SEGMENT INFORMATION (Summary of
SEGMENT INFORMATION (Summary of Reportable Segments) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | |
Financial information regarding the Company's reportable segments | ||||
Number of reportable segments | segment | 3 | |||
Net Sales | $ 624,326 | $ 589,729 | $ 1,843,388 | $ 1,792,066 |
Interest expense | (9,733) | (8,753) | (25,707) | (26,547) |
Interest income | 1,113 | 715 | 2,086 | 1,759 |
Income before Income Taxes | 69,518 | 75,001 | 218,566 | 219,204 |
Beauty + Home | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 333,748 | 316,030 | 978,313 | 970,687 |
Income before interest and taxes | 21,837 | 25,380 | 69,248 | 79,455 |
Pharma | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 199,547 | 191,194 | 598,161 | 565,363 |
Income before interest and taxes | 55,426 | 55,037 | 174,288 | 166,870 |
Food + Beverage | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 91,031 | 82,505 | 266,914 | 256,016 |
Income before interest and taxes | 11,668 | 10,101 | 31,385 | 32,977 |
Corporate & Other | ||||
Financial information regarding the Company's reportable segments | ||||
Income before interest and taxes | (10,793) | (7,479) | (32,734) | (35,310) |
Operating segment | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 629,471 | 593,386 | 1,859,803 | 1,806,806 |
Operating segment | Beauty + Home | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 338,068 | 319,244 | 992,476 | 984,008 |
Operating segment | Pharma | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 199,551 | 191,190 | 598,168 | 565,363 |
Operating segment | Food + Beverage | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 91,852 | 82,952 | 269,159 | 257,435 |
Intersegment | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 5,145 | 3,657 | 16,415 | 14,740 |
Intersegment | Beauty + Home | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 4,320 | 3,214 | 14,163 | 13,321 |
Intersegment | Pharma | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | 4 | (4) | 7 | |
Intersegment | Food + Beverage | ||||
Financial information regarding the Company's reportable segments | ||||
Net Sales | $ 821 | $ 447 | $ 2,245 | $ 1,419 |
INSURANCE SETTLEMENT RECEIVAB57
INSURANCE SETTLEMENT RECEIVABLE (Details) - Beauty + Home - France - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
INSURANCE SETTLEMENT RECEIVABLE | ||||
Costs incurred related to fire | $ 4.5 | $ 4.9 | $ 14.4 | $ 5.5 |
Advances on insurance proceeds received | 12 | 12 | ||
Insurance receivable | (1) | (1) | ||
Gain contingencies recognized | 0 | 0 | ||
Net expenses related to fire | $ 1.4 | $ 1.4 | $ 4.1 | $ 1.4 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands | Feb. 29, 2016USD ($)item | Feb. 28, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Acquisitions | |||||
Investment in unconsolidated affiliate | $ 5,000 | ||||
Acquisition of business, net of cash received | $ 202,985 | ||||
Assets | |||||
Goodwill | $ 439,147 | $ 407,522 | |||
Kali Care | |||||
Acquisitions | |||||
Percentage of interest acquired | 20.00% | ||||
Investment in unconsolidated affiliate | $ 5,000 | ||||
Mega Airless | |||||
Acquisitions | |||||
Acquisition of business, net of cash received | $ 203,000 | ||||
Cost of acquired entity | 223,200 | ||||
Assets | |||||
Cash and equivalents | 20,197 | ||||
Accounts receivable | 8,275 | ||||
Inventories | 8,373 | ||||
Prepaid and other | 378 | ||||
Property, plant and equipment | 47,768 | ||||
Goodwill | 105,561 | ||||
Intangible assets | 72,106 | ||||
Other miscellaneous assets | 8 | ||||
Liabilities | |||||
Current maturities of long-term obligations | 319 | ||||
Accounts payable and accrued liabilities | 7,398 | ||||
Long-term obligations | 13,402 | ||||
Deferred income taxes | 18,366 | ||||
Net assets acquired | $ 223,181 | ||||
Germany | Mega Airless | |||||
Acquisitions | |||||
Number of manufacturing plants acquired | item | 2 | ||||
United States | Mega Airless | |||||
Acquisitions | |||||
Number of manufacturing plants acquired | item | 1 | ||||
Beauty + Home | Mega Airless | |||||
Assets | |||||
Goodwill | $ 49,800 | ||||
Pharma | Mega Airless | |||||
Assets | |||||
Goodwill | $ 55,800 |
ACQUISITIONS (Acquired Intangib
ACQUISITIONS (Acquired Intangibles) (Details) - Mega Airless $ in Thousands | Feb. 29, 2016USD ($) |
Acquired finite-lived intangible assets | |
Estimated Fair Value of Asset | $ 72,106 |
Customer relationships | |
Acquired finite-lived intangible assets | |
Weighted average useful life | 11 years |
Estimated Fair Value of Asset | $ 57,120 |
Technology | |
Acquired finite-lived intangible assets | |
Weighted average useful life | 15 years |
Estimated Fair Value of Asset | $ 10,838 |
Trademark | |
Acquired finite-lived intangible assets | |
Weighted average useful life | 4 years |
Estimated Fair Value of Asset | $ 4,148 |
ACQUISITIONS (Pro Forma) (Detai
ACQUISITIONS (Pro Forma) (Details) - Mega Airless - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Unaudited pro forma financial information | ||
Net Sales | $ 589,729 | $ 1,801,626 |
Net Income Attributable to AptarGroup, Inc. | $ 53,526 | $ 163,140 |
Net Income per common share - basic | $ 0.85 | $ 2.59 |
Net Income per common share - diluted | $ 0.83 | $ 2.51 |
Acquisition Related Costs | ||
Acquisitions | ||
Transaction costs excluded from supplemental pro forma earnings (after tax) | $ 4,200 | |
Transaction costs excluded from supplemental pro forma earnings (before tax) | 5,600 | |
Fair Value Adjustment | ||
Acquisitions | ||
Nonrecurring expense related to the fair value adjustment to acquisition-date inventory excluded from supplemental pro forma earnings (after tax) | 1,700 | |
Nonrecurring expense related to the fair value adjustment to acquisition-date inventory excluded from supplemental pro form earnings (before tax) | $ 2,600 |