Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 26, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | APTARGROUP INC | |
Entity Central Index Key | 896,622 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
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 | 62,386,933 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Net sales | $ 703,350 | $ 601,316 |
Operating Expenses: | ||
Cost of sales (exclusive of depreciation and amortization shown below) | 455,822 | 384,684 |
Selling, research & development and administrative | 112,461 | 101,282 |
Depreciation and amortization | 41,175 | 37,331 |
Restructuring initiatives | 5,936 | |
Total Operating Expenses | 615,394 | 523,297 |
Operating Income | 87,956 | 78,019 |
Other (Expense) Income: | ||
Interest expense | (8,055) | (8,262) |
Interest income | 2,248 | 330 |
Equity in results of affiliates | (65) | (48) |
Miscellaneous, net | (867) | (559) |
Total Other Income (Expense) | (6,739) | (8,539) |
Income before Income Taxes | 81,217 | 69,480 |
Provision for Income Taxes | 21,929 | 17,675 |
Net Income | 59,288 | 51,805 |
Net (Income) Loss Attributable to Noncontrolling Interests | 12 | 15 |
Net Income Attributable to AptarGroup, Inc. | $ 59,300 | $ 51,820 |
Net Income Attributable to AptarGroup, Inc. Per Common Share: | ||
Basic (in dollars per share) | $ 0.95 | $ 0.83 |
Diluted (in dollars per share) | $ 0.92 | $ 0.81 |
Average number of shares outstanding: | ||
Basic (in shares) | 62,128 | 62,355 |
Diluted (in shares) | 64,414 | 64,234 |
Dividends per Common Share (in dollars per share) | $ 0.32 | $ 0.32 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net Income | $ 59,288 | $ 51,805 |
Other Comprehensive Income (Loss): | ||
Foreign currency translation adjustments | 22,935 | 23,186 |
Changes in treasury locks, net of tax | 7 | 7 |
Loss on derivatives, net of tax | 346 | |
Defined benefit pension plan, net of tax | ||
Amortization of prior service cost included in net income, net of tax | 96 | 67 |
Amortization of net loss included in net income, net of tax | 1,260 | 812 |
Total defined benefit pension plan, net of tax | 1,356 | 879 |
Total other comprehensive income (loss) | 24,644 | 24,072 |
Comprehensive Income (Loss) | 83,932 | 75,877 |
Comprehensive (Income) Loss Attributable to Noncontrolling Interests | 1 | 13 |
Comprehensive Income Attributable to AptarGroup, Inc. | $ 83,933 | $ 75,890 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and equivalents | $ 741,062 | $ 712,640 |
Accounts and notes receivable, less allowance for doubtful accounts of $3,125 in 2018 and $3,161 in 2017 | 586,592 | 510,426 |
Inventories | 347,791 | 337,216 |
Prepaid and other | 117,678 | 109,791 |
Total Current Assets | 1,793,123 | 1,670,073 |
Property, Plant and Equipment: | ||
Buildings and improvements | 428,269 | 416,241 |
Machinery and equipment | 2,304,892 | 2,237,655 |
Property, Plant and Equipment, Gross | 2,733,161 | 2,653,896 |
Less: Accumulated depreciation | (1,873,502) | (1,811,819) |
Property, Plant and Equipment, Net | 859,659 | 842,077 |
Land | 24,892 | 25,829 |
Total Property, Plant and Equipment | 884,551 | 867,906 |
Other Assets: | ||
Investments in affiliates | 9,554 | 9,444 |
Goodwill | 451,243 | 443,887 |
Intangible assets | 94,745 | 95,460 |
Miscellaneous | 50,478 | 51,053 |
Total Other Assets | 606,020 | 599,844 |
Total Assets | 3,283,694 | 3,137,823 |
Current Liabilities: | ||
Notes payable | 8,839 | 4,336 |
Current maturities of long-term obligations, net of unamortized debt issuance costs | 61,505 | 61,833 |
Accounts payable and accrued liabilities | 496,409 | 461,579 |
Total Current Liabilities | 566,753 | 527,748 |
Long-term obligations, net of unamortized debt issuance costs | 1,199,975 | 1,191,146 |
Deferred Liabilities and Other: | ||
Deferred income taxes | 20,578 | 20,995 |
Retirement and deferred compensation plans | 84,930 | 80,278 |
Deferred and other non-current liabilities | 6,682 | 5,608 |
Commitments and contingencies | ||
Total Deferred Liabilities and Other | 112,190 | 106,881 |
AptarGroup, Inc. stockholders' equity | ||
Common stock, $.01 par value, 199 million shares authorized, 67.1 and 66.7 million shares issued as of March 31, 2018 and December 31, 2017, respectively | 671 | 667 |
Capital in excess of par value | 638,223 | 609,471 |
Retained earnings | 1,332,218 | 1,301,147 |
Accumulated other comprehensive (loss) | (228,669) | (253,302) |
Less treasury stock at cost, 4.7 and 4.9 million shares as of March 31, 2018 and December 31, 2017, respectively | (337,976) | (346,245) |
Total AptarGroup, Inc. Stockholders' Equity | 1,404,467 | 1,311,738 |
Noncontrolling interests in subsidiaries | 309 | 310 |
Total Stockholders' Equity | 1,404,776 | 1,312,048 |
Total Liabilities and Stockholders' Equity | $ 3,283,694 | $ 3,137,823 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands, shares in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts and notes receivable, allowance for doubtful accounts (in dollars) | $ 3,125 | $ 3,161 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 199 | 199 |
Common stock, shares issued | 67.1 | 66.7 |
Treasury stock, shares | 4.7 | 4.9 |
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, 2016 | $ 1,197,234 | $ (319,709) | $ 660 | $ (250,917) | $ 546,682 | $ 292 | $ 1,174,242 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net Income | 51,820 | (15) | 51,805 | ||||
Foreign currency translation adjustments | 23,184 | 2 | 23,186 | ||||
Changes in unrecognized pension gains/losses and related amortization, net of tax | 879 | 879 | |||||
Changes in treasury locks, net of tax | 7 | 7 | |||||
Stock awards and option exercises | 4 | 7,538 | 18,912 | 26,454 | |||
Cash dividends declared on common stock | (19,937) | (19,937) | |||||
Common stock repurchased and retired | (14,080) | (2) | (1,937) | (16,019) | |||
Balance at Mar. 31, 2017 | 1,215,037 | (295,639) | 662 | (243,379) | 563,657 | 279 | 1,240,617 |
Balance at Dec. 31, 2017 | 1,301,147 | (253,302) | 667 | (346,245) | 609,471 | 310 | 1,312,048 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net Income | 59,300 | (12) | 59,288 | ||||
Adoption of accounting standards | 2,937 | 2,937 | |||||
Foreign currency translation adjustments | 22,924 | 11 | 22,935 | ||||
Changes in unrecognized pension gains/losses and related amortization, net of tax | 1,356 | 1,356 | |||||
Changes in treasury locks, net of tax | 7 | 7 | |||||
Changes in derivative gains/losses, net of tax | 346 | 346 | |||||
Stock awards and option exercises | 5 | 12,174 | 30,212 | 42,391 | |||
Cash dividends declared on common stock | (19,830) | (19,830) | |||||
Treasury stock purchased | (3,905) | (3,905) | |||||
Common stock repurchased and retired | (11,336) | (1) | (1,460) | (12,797) | |||
Balance at Mar. 31, 2018 | $ 1,332,218 | $ (228,669) | $ 671 | $ (337,976) | $ 638,223 | $ 309 | $ 1,404,776 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net income | $ 59,288 | $ 51,805 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation | 38,357 | 34,902 |
Amortization | 2,818 | 2,429 |
Stock based compensation | 7,511 | 7,748 |
Provision for (recovery of) doubtful accounts | 94 | 147 |
Deferred income taxes | (2,733) | (2,492) |
Defined benefit plan expense | 4,872 | 4,239 |
Equity in results of affiliates | 65 | 48 |
Changes in balance sheet items, excluding effects from foreign currency adjustments: | ||
Accounts and other receivables | (67,484) | (35,865) |
Inventories | (18,575) | (7,913) |
Prepaid and other current assets | 129 | (13,320) |
Accounts payable and accrued liabilities | 26,744 | 26,269 |
Income taxes payable | 3,255 | 1,981 |
Retirement and deferred compensation plan liabilities | (5,381) | (24,069) |
Other changes, net | 2,059 | (7,733) |
Net Cash Provided by Operations | 51,019 | 38,176 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (40,019) | (34,848) |
Proceeds from sale of property and equipment | 2,848 | 989 |
Insurance proceeds | 10,631 | |
Acquisition of intangible assets | (124) | |
Investment in unconsolidated affiliate | (5,000) | |
Notes receivable, net | 208 | 445 |
Net Cash Used by Investing Activities | (26,456) | (38,414) |
Cash Flows from Financing Activities: | ||
Proceeds from notes payable | 8,564 | |
Repayments of notes payable | (3,956) | |
Proceeds and repayments of short term credit facility, net | (163,665) | |
Proceeds from long-term obligations | 2,524 | |
Repayments of long-term obligations | (3,855) | (2,268) |
Dividends paid | (19,830) | (19,937) |
Proceeds from stock option exercises | 34,880 | 18,705 |
Purchase of treasury stock | (3,905) | |
Common stock repurchased and retired | (12,797) | (16,019) |
Net Cash Provided (Used) by Financing Activities | 1,625 | (183,184) |
Effect of Exchange Rate Changes on Cash | 5,930 | 1,862 |
Net Increase (Decrease) in Cash and Equivalents and Restricted Cash | 32,118 | (181,560) |
Cash and Equivalents and Restricted Cash at Beginning of Period | 712,640 | 466,287 |
Cash and Equivalents and Restricted Cash at End of Period | $ 744,758 | $ 284,727 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Restricted cash included in the line item prepaid and other on the Condensed Consolidated Balance Sheets as shown below represents amounts recorded into escrow. See details in Note 19 - Subsequent Events. | ||||
Cash and equivalents | $ 741,062 | $ 712,640 | $ 284,727 | |
Restricted cash included in prepaid and other | 3,696 | |||
Total Cash and Equivalents and Restricted Cash shown in the Statement of Cash Flows | $ 744,758 | $ 712,640 | $ 284,727 | $ 466,287 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
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 (the “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 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, 2017 but does not include all disclosures required by U.S. GAAP. Accordingly, these 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, 2017. 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. On January 1, 2018, we adopted this standard and all the related amendments (the “new revenue standard”) for all contracts. This adoption was accounted for using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the January 1, 2018 opening balance of retained earnings. Comparative information for the prior period has not been restated and continues to be reported under the accounting standards in effect prior to January 1, 2018. Balance at Balance at December 31, 2017 Adjustment January 1, 2018 Consolidated Balance Sheets Assets Inventories $ 337,216 $ (14,637) $ 322,579 Prepaid and other 109,791 13,984 123,775 Liabilities Accounts payable and accrued liabilities 461,579 (5,706) 455,873 Deferred income taxes 20,995 1,292 22,287 Deferred and other non-current liabilities 5,608 824 6,432 Stockholders’ Equity Retained earnings 1,301,147 2,937 1,304,084 A majority of our sales revenue continues to be recognized when products are shipped from our manufacturing facilities. For certain custom product and tooling sales where revenue was previously recognized when the products were shipped, we now recognize revenue over the time required to manufacture the product or build the tool in accordance with the new revenue standard. We also have certain extended warranty contracts, which under the new standard are considered a separate performance obligation and are required to be deferred and recognized into revenue over the life of the agreement. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statements of income and balance sheets is as follows: For the Three Months Ended March 31, 2018 Balances Without Effect of As Adoption of Change Reported ASC 606 Higher/(Lower) Consolidated Statements of Income Net Sales Beauty + Home $ 378,173 $ 376,868 $ (1,305) Pharma 230,127 230,462 335 Food + Beverage 95,050 95,100 50 Costs and Expenses Cost of sales 455,822 454,900 (922) Provision for income taxes 21,929 21,925 (4) Net income 59,288 59,294 6 March 31, 2018 Balances Without Effect of As Adoption of Change Reported ASC 606 Higher/(Lower) Consolidated Balance Sheets Assets Accounts and notes receivable $ 586,592 $ 600,576 $ 13,984 Inventories 347,791 348,713 922 Prepaid and other 117,678 104,193 (13,485) Liabilities Accounts payable and accrued liabilities 496,409 497,815 1,406 Deferred income taxes 20,578 20,574 (4) Deferred and other non-current liabilities 6,682 6,695 13 Stockholders’ Equity Retained earnings 1,332,218 1,332,224 6 In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments within the statement of cash flows. This guidance provides clarification for the following types of transactions: debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, distributions received from equity method investees and beneficial interest in securitization transactions. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. However, early adoption was permitted and an entity that elects early adoption must adopt all of the amendments on a retrospective basis in the period of adoption. The Company adopted this standard in the fourth quarter of 2017. In November 2016, the FASB issued guidance to address the diversity in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in this standard require that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018 and appropriate disclosures are included on the statement of cash flows. In March 2017, the FASB issued guidance to disaggregate the current service cost component from the other components of net periodic benefit costs. The service cost component should be presented within compensation costs while the other components should be presented outside of income from operations. The guidance also clarifies that only the service cost component is eligible for capitalization. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018 and the prior periods were restated as follows: Original Revised Balance Adjustment Balance Revised Condensed Consolidated Statements of Income Three Months Ended March 31, 2017 Cost of sales $ 384,932 $ (248) $ 384,684 Selling, research & development and administrative 101,516 (234) 101,282 Total Operating Expenses 523,779 (482) 523,297 Operating Income 77,537 482 78,019 Miscellaneous, net (77) (482) (559) Total Other (Expense) Income (8,057) (482) (8,539) Income before Income Taxes 69,480 — 69,480 In May 2017, the FASB issued clarification on applying the standards for stock compensation accounting. The new standard provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018. 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 U.S. 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 adopted this standard in the third quarter of 2017. See details in Note 9 – 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 Condensed Consolidated Financial Statements. RETIREMENT OF COMMON STOCK During the first quarter of 2018, the Company repurchased 189 thousand shares of common stock, of which 144 thousand shares were immediately retired. During the first quarter of 2017, the Company repurchased and immediately retired 210 thousand 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 temporary 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 Tax Cuts and Jobs Act (the “TCJA”) was enacted in the United States (“U.S.”) on December 22, 2017. The TCJA lowered the corporate tax rate from 35.0% to 21.0% and imposed a one-time transition tax on unremitted earnings as of the end of 2017, and featured many other tax law provisions. New provisions for 2018 include, most notably, a tax on global intangible low-taxed income (“GILTI”) and the base erosion anti-abuse tax (“BEAT”). The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the U.S. GAAP application of the TCJA. SAB 118 provides us up to a year to finalize accounting for the impacts of the TCJA. The Company estimated provisional tax amounts related to the transition tax and components of the revaluation of deferred tax assets and liabilities for the period ended December 31, 2017. We recognized a net tax charge of approximately $24.7 million, comprised of a provisional charge of $31.6 million for the transition tax and a provisional benefit of $6.8 million related to the corporate rate change. There have been no changes to those provisional amounts as of March 31, 2018. The Company expects these amounts to be finalized in the second half of 2018 when the 2017 tax return is filed. The Company has elected to account for the tax on GILTI as a period cost and not as a measure of deferred taxes in the current period. All of the Company’s non-U.S. earnings are subject to U.S. taxation, either from the TCJA transition tax on accumulated non-U.S. earnings as of the end of 2017 or the GILTI provisions on non-U.S. earnings going forward. The Company maintains its assertion that the cash and distributable reserves at its non-U.S. affiliates are indefinitely reinvested. The Company will provide for the necessary withholding and local income taxes when management decides that an affiliate should make a distribution. These decisions are made taking into consideration the financial requirements of the non-U.S. affiliates and the global cash management goals of the Company. 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 5 - 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 results in a reduction to Net Cash Provided by Operations with a corresponding increase to Net Cash (Used) Provided by Financing Activities. As this error represents 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 are not impacted by this change. The Company determined the error is 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 Three Months Ended March 31, 2017 Retirement and deferred compensation plan liabilities $ (21,272) $ (2,797) $ (24,069) Net Cash Provided by Operations 40,973 (2,797) 38,176 Proceeds from stock option exercises 15,908 2,797 18,705 Net Cash Provided (Used) by Financing Activities (185,981) 2,797 (183,184) |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2018 | |
REVENUE. | |
REVENUE | NOTE 2 – REVENUE At contract inception, Aptar assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all the goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. For a contract that has more than one performance obligation, the Company allocates the total contract consideration to each distinct performance obligation on a relative standalone selling price basis. Revenue is recognized when (or as) the performance obligations are satisfied (i.e. when the customer obtains control of the good or service). The majority of our revenues are derived from product and tooling sales, however we also receive revenues from service, license, exclusivity and royalty arrangements, which are considered insignificant. Revenue by segment and geography for the three months ended March 31, 2018 is as follows: North Latin March 31, 2018 Segment Europe America America Asia Total Beauty + Home $ 224,612 $ 83,074 $ 48,266 $ 22,221 $ 378,173 Pharma 175,675 39,096 6,245 9,111 230,127 Food + Beverage 29,811 48,215 7,763 9,261 95,050 Total $ 430,098 $ 170,385 $ 62,274 $ 40,593 $ 703,350 Aptar performs its obligations under a contract with a customer by transferring goods and/or services in exchange for consideration from the customer. The timing of performance will sometimes differ from the timing of the receipt of the associated consideration from the customer, thus resulting in the recognition of a contract asset or a contract liability. Aptar recognizes a contract asset when it transfers control of goods or services to a customer prior to invoicing for the related performance obligation. The contract asset is transferred to accounts receivable when the product is shipped and invoiced to the customer. Aptar recognizes a contract liability if the customer's payment of consideration precedes the entity's performance. The opening and closing balances of Aptar’s contract asset and contract liabilities are as follows: Balance as of Balance as of January 1, 2018 March 31, 2018 Increase/ (opening) (closing) (Decrease) Contract asset (current) $ 13,984 $ 13,485 $ (499) Contract liability (current) $ 15 $ 114 $ 99 Contract liability (long-term) $ 824 $ 811 $ (13) The difference in the opening and closing balances of the Company’s contract asset and contract liabilities are primarily the result of timing differences between the Company’s performance and the customer’s payment. The amount of revenue recognized in the current period that was included in the opening contract liability balance was $51 thousand. Product Sales Aptar primarily manufactures dispensing systems for our Beauty + Home, Pharma, and Food + Beverage customers. The amount of consideration is typically fixed for such customers. At the time of delivery, the customer is invoiced the agreed-upon price. Revenue from product sales is typically recognized upon manufacture or shipment, when control of the goods transfers to the customer. To determine when the control transfers, Aptar typically assesses, among other things, the shipping terms of the contract, shipping being one of the indicators of transfer of control. A majority of product sales are sold free on board (“FOB”) shipping point. For FOB shipping point shipments, control of the goods transfers to the customer at the time of shipment of the goods. Therefore, Aptar's performance obligation is satisfied at the time of shipment. Aptar has elected to account for shipping and handling costs that occur after the customer has obtained control of a good as fulfillment costs rather than as a promised service. We do not have any material significant payment terms as payment is typically received shortly after the point of sale. There also exist instances where Aptar manufactures highly customized products that have no alternative use to Aptar and for which Aptar has an enforceable right to payment for performance completed to date. For these products, the Company transfers control and recognizes revenue over time by measuring progress towards completion using the "Output Method“ based on the number of products produced. As we normally make our products to a customer’s order, the time between production and shipment of our products is typically within a few weeks. As a part of its customary business practice, Aptar offers a standard warranty that the products will materially comply with the technical specifications and will be free from material defects. Because such warranties are not sold separately and do not provide for any service beyond a guarantee of a product’s initial specifications, and are not required by law, there is no revenue deferral for these types of warranties. Tooling Sales Aptar also builds or contracts for molds and other tools (collectively defined as “tooling”) necessary to produce our products. As with product sales, Aptar recognizes revenue when control of the tool transfers to the customer. If the tooling is highly customized with no alternative use to Aptar and Aptar has an enforceable right to payment for performance completed to date, the Company transfers control and recognizes revenue over time by measuring progress towards completion using the “Input Method” based on costs incurred relative to total estimated costs to completion. Otherwise, revenue for the tooling is recognized at the point in time when the customer approves the tool. We do not have any material significant payment terms as payment is typically either received during the mold-build process or shortly after completion. In certain instances, Aptar offers extended warranties on our tools above and beyond the normal standard warranties. Aptar normally receives payment at the inception of the contract and recognizes revenue over the term of the contract. At January 1, 2018, $839 thousand of unearned revenue associated with outstanding contracts was reported in Accounts Payable and Other Liabilities. At March 31, 2018, the unearned amount was $925 thousand. We expect to recognize approximately $89 thousand of the unearned amount during the remainder of 2018, $161 thousand in 2019, and $675 thousand thereafter. Determining the Transaction Price In most cases, the transaction price for each performance obligation is stated in the contract. In determining the variable amounts of consideration within the transaction price (such as volume-based customer rebates), Aptar includes an estimate of the expected amount of consideration as revenue. The Company applies the method consistently throughout the contract when estimating the effect of an uncertainty on the amount of variable consideration to which it will be entitled. Aptar applies the expected value method based on all of the information (historical, current, and forecast) that is reasonably available and identifies reasonable estimates based on this information. Point in Time Performance Obligations For product and tooling sales considered to be point in time, Aptar typically assesses, among other things, the shipping terms of the contract, shipping being one of the indicators of transfer of control. For FOB shipping point terms, revenue is recognized at the time of shipment. The performance obligation with respect to the sale of goods is satisfied at the time of shipment because the customer gains control at that time. Once the goods are shipped, the Company is precluded from redirecting the shipment to another customer. With respect to FOB destination sales, shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfilment activities and are accounted for as fulfilment costs and revenue is recorded upon final delivery to the customer location. Over Time Performance Obligations For performance obligations related to manufacturing of highly customized products that have no alternative use to the Company and for which the Company has an enforceable right to payment for performance completed to date, the Company transfers control and recognizes revenue over time by measuring progress towards complete satisfaction using the "Output Method“ based on the number of products produced. For similar performance obligations related to our tooling sales, the Company transfers control and recognizes revenue over time by measuring progress towards complete satisfaction using the "Input Method“ based on costs incurred relative to total estimated costs to completion. We believe these measurements provide a faithful depiction of the transfer of goods as the costs incurred reflect the value of the products produced. Contract Costs Aptar does not incur material costs to obtain or fulfill revenue contracts. Practical Expedients Significant financing component: Aptar elected not to adjust the promised consideration for the time value of money for contracts where the difference between the time of payment and performance is one year or less. Remaining performance obligations: Aptar elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts that are one year or less, as the revenue is expected to be recognized within the next year. In addition, the Company has elected not to disclose the expected consideration related to performance obligations where the Company recognizes revenue in the amount it has a right to invoice (e.g., usage-based pricing terms). |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2018 | |
INVENTORIES | |
INVENTORIES | NOTE 3 - INVENTORIES Inventories, by component, consisted of: March 31, December 31, Raw materials $ 103,442 $ 99,196 Work in process 115,925 107,307 Finished goods 128,424 130,713 Total $ 347,791 $ 337,216 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS The changes in the carrying amount of goodwill by reporting segment since December 31, 2017 are as follows: Beauty + Food + Corporate Home Pharma Beverage & Other Total Goodwill $ 223,947 $ 203,069 $ 16,871 $ 1,615 $ 445,502 Accumulated impairment losses — — — (1,615) (1,615) Balance as of December 31, 2017 $ 223,947 $ 203,069 $ 16,871 $ — $ 443,887 Foreign currency exchange effects 2,346 4,851 159 — 7,356 Goodwill $ 226,293 $ 207,920 $ 17,030 $ 1,615 $ 452,858 Accumulated impairment losses — — — (1,615) (1,615) Balance as of March 31, 2018 $ 226,293 $ 207,920 $ 17,030 $ — $ 451,243 The table below shows a summary of intangible assets as of March 31, 2018 and December 31, 2017. March 31, 2018 December 31, 2017 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 $ 8,144 $ (8,015) $ 129 $ 7,819 $ (7,806) $ 13 Acquired technology 15.0 48,797 (15,816) 32,981 47,571 (14,624) 32,947 Customer relationships 12.2 70,120 (15,181) 54,939 68,886 (13,401) 55,485 License agreements and other 7.6 22,307 (15,611) 6,696 21,827 (14,812) 7,015 Total intangible assets 11.8 $ 149,368 $ (54,623) $ 94,745 $ 146,103 $ (50,643) $ 95,460 Aggregate amortization expense for the intangible assets above for the quarters ended March 31, 2018 and 2017 was $2,818 and $2,429, respectively. Future estimated amortization expense for the years ending December 31 is as follows: 2018 $ 8,448 (remaining estimated amortization for 2018) 2019 11,082 2020 9,840 2021 9,644 2022 and thereafter 55,731 Future amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of March 31, 2018. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | NOTE 5 – INCOME TAXES The TCJA was enacted in the U.S. on December 22, 2017. The TCJA lowered the corporate tax rate from 35.0% to 21.0%, imposed a one-time transition tax on unremitted earnings as of the end of 2017, and also featured many other tax law provisions. New provisions for 2018 include, most notably, a tax on GILTI and BEAT. The SEC issued SAB 118 to address the U.S. GAAP application of the TCJA. SAB 118 provides us up to a year to finalize accounting for the impacts of the TCJA. The Company estimated provisional tax amounts related to the transition tax and components of the revaluation of deferred tax assets and liabilities for the period ended December 31, 2017. We recognized a net tax charge of approximately $24.7 million, comprised of a provisional charge of $31.6 million for the transition tax and a provisional benefit of $6.8 million related to the corporate rate change. There have been no changes to those provisional amounts as of March 31, 2018. The Company expects these amounts to be finalized in the second half of 2018 when the 2017 tax return is filed. The Company has elected to account for the tax on GILTI as a period cost and not as a measure of deferred taxes in the current period. The reported effective tax rate increased to 27.0% for the quarter ended March 31, 2018 compared to 25.4% for the period ended March 31, 2017, resulting in an increase to the provision for income taxes of approximately $1.3 million. For the three months ended March 31, 2018, the increase in the effective tax rate reflects the amounts recognized for the GILTI and BEAT taxes (+4.3%) largely offset by an increased benefit from employee share-based compensation deductions (-2.1%) and tax settlements (-0.5%). The Company had approximately $3.2 and $3.1 million recorded for income tax uncertainties as of March 31, 2018 and December 31, 2017, respectively. The uncertain amounts, if recognized, that would impact the effective tax rate are $3.2 and $3.1 million, respectively. The Company estimates that it is reasonably possible that the liability for uncertain tax positions will decrease by no more than $1.4 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2018 | |
LONG-TERM OBLIGATIONS | |
DEBT | NOTE 6 – LONG–TERM OBLIGATIONS During the third quarter of 2017, the Company entered into the borrowing arrangements summarized below through our wholly-owned United Kingdom (“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 €150 million facility is available to the Company but was undrawn as of March 31, 2018. For the quarter ended March 31, 2018, the floating interest rate on the $280 million bank term loan was 3%. 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. We had no outstanding balance under the credit facility at March 31, 2018 and at December 31, 2017. At March 31, 2018, 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 $ 14,607 $ — $ 14,607 Senior unsecured notes 3.2%, due in 2022 75,000 107 74,893 Senior unsecured debts 3.0% floating, equal annual installments through 2022 280,000 654 279,346 Senior unsecured notes 3.5%, due in 2023 125,000 208 124,792 Senior unsecured notes 1.0%, due in 2023 123,190 503 122,687 Senior unsecured notes 3.4%, due in 2024 50,000 86 49,914 Senior unsecured notes 3.5%, due in 2024 100,000 208 99,792 Senior unsecured notes 1.2%, due in 2024 246,380 1,025 245,355 Senior unsecured notes 3.6%, due in 2025 125,000 230 124,770 Senior unsecured notes 3.6%, due in 2026 125,000 230 124,770 Capital lease obligations 554 — 554 $ 1,264,731 $ 3,251 $ 1,261,480 Current maturities of long-term obligations (61,505) — (61,505) Total long-term obligations $ 1,203,226 $ 3,251 $ 1,199,975 At December 31, 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 $ 15,349 $ — $ 15,349 Senior unsecured notes 3.2%, due in 2022 75,000 113 74,887 Senior unsecured debts 2.6% floating, equal annual installments through 2022 280,000 692 279,308 Senior unsecured notes 3.5%, due in 2023 125,000 217 124,783 Senior unsecured notes 1.0%, due in 2023 120,095 526 119,569 Senior unsecured notes 3.4%, due in 2024 50,000 89 49,911 Senior unsecured notes 3.5%, due in 2024 100,000 217 99,783 Senior unsecured notes 1.2%, due in 2024 240,190 1,066 239,124 Senior unsecured notes 3.6%, due in 2025 125,000 238 124,762 Senior unsecured notes 3.6%, due in 2026 125,000 238 124,762 Capital lease obligations 741 — 741 $ 1,256,375 $ 3,396 $ 1,252,979 Current maturities of long-term obligations (61,833) — (61,833) Total long-term obligations $ 1,194,542 $ 3,396 $ 1,191,146 Our revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including: Requirement Level at March 31, 2018 Consolidated Leverage Ratio (1) Maximum of 3.50 to 1.00 1.15 to 1.00 Consolidated Interest Coverage Ratio (1) Minimum of 3.00 to 1.00 12.12 to 1.00 (1) Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements. Aggregate long-term maturities, excluding capital lease obligations, due annually from the current balance sheet date for the next five years are $61,047, $59,105, $57,991, $57,993 and $132,823 and $895,218 thereafter. |
RETIREMENT AND DEFERRED COMPENS
RETIREMENT AND DEFERRED COMPENSATION PLANS | 3 Months Ended |
Mar. 31, 2018 | |
RETIREMENT AND DEFERRED COMPENSATION PLANS | |
RETIREMENT AND DEFERRED COMPENSATION PLANS | NOTE 7 – RETIREMENT AND DEFERRED COMPENSATION PLANS Components of Net Periodic Benefit Cost: Domestic Plans Foreign Plans Three Months Ended March 31, Service cost $ $ 2,420 $ 1,531 $ 1,337 Interest cost 1,748 472 424 Expected return on plan assets (2,464) (679) (568) Amortization of net loss 801 446 447 Amortization of prior service cost — — 129 94 Net periodic benefit cost $ 2,973 $ 2,505 $ 1,899 $ 1,734 The components of net periodic benefit cost, other than the service cost component, are included in the line “Miscellaneous, net” in the income statement. EMPLOYER CONTRIBUTIONS The Company has no minimum funding requirement and we do not expect to make any contribution to our domestic defined benefit plans in 2018. We expect to contribute approximately $3.1 million to our foreign defined benefit plans in 2018, and as of March 31, 2018, we have contributed approximately $0.8 million of that amount. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) | 3 Months Ended |
Mar. 31, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) | NOTE 8 – ACCUMULATED OTHER COMPREHENSIVE INCOME Changes in Accumulated Other Comprehensive (Loss) Income by Component: Foreign Defined Benefit Currency Pension Plans Derivatives Total Balance - December 31, 2016 $ (259,888) $ (59,775) $ (46) $ (319,709) Other comprehensive income before reclassifications 23,184 — — 23,184 Amounts reclassified from accumulated other comprehensive income — 879 7 886 Net current-period other comprehensive income 23,184 879 7 24,070 Balance - March 31, 2017 $ (236,704) $ (58,896) $ (39) $ (295,639) Balance - December 31, 2017 $ (185,503) $ (64,595) $ (3,204) $ (253,302) Other comprehensive income (loss) before reclassifications 22,924 — (4,715) 18,209 Amounts reclassified from accumulated other comprehensive income — 1,356 5,068 6,424 Net current-period other comprehensive income 22,924 1,356 353 24,633 Balance - March 31, 2018 $ (162,579) $ (63,239) $ (2,851) $ (228,669) 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 March 31, Defined Benefit Pension Plans Amortization of net loss $ 1,664 $ 1,248 (1) Amortization of prior service cost 129 94 (1) 1,793 1,342 Total before tax (437) (463) Tax benefit $ 1,356 $ 879 Net of tax Derivatives Changes in treasury locks $ 11 $ 10 Interest Expense Changes in cross currency swap: interest component (1,019) — Interest Expense Changes in cross currency swap: foreign exchange component 7,116 — Miscellaneous, net 6,108 10 Total before tax (1,040) (3) Tax benefit $ 5,068 $ 7 Net of tax Total reclassifications for the period $ 6,424 $ 886 (1) These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 7 – Retirement and Deferred Compensation Plans for additional details). |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Mar. 31, 2018 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 9 – 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 Condensed Consolidated Balance Sheets (see Note 10 - 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 changes in derivative gain/loss. 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 Condensed Consolidated Statements of Cash Flows. As disclosed in Note 6 – 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 $2.8 million of net after-tax loss is included in accumulated other comprehensive earnings at March 31, 2018. 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 March 31, 2018 is $3.7 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 March 31, 2018, the fair value of the cross currency swap was a $23.5 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 March 31, 2018, the Company has recorded the fair value of foreign currency forward exchange contracts of $0.3 million in prepaid and other and $1.1 million in accounts payable and accrued liabilities on the balance sheet. All forward exchange contracts outstanding as of March 31, 2018 had an aggregate contract amount of $104.8 million. Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 March 31, 2018 December 31, 2017 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 $ — $ 289 $ — $ 663 $ — $ 289 $ — $ 663 Derivative Liabilities Foreign Exchange Contracts Accounts payable and accrued liabilities $ — $ 1,106 $ — $ 1,604 Cross Currency Swap Contract (1) Accounts payable and accrued liabilities 23,530 — 16,309 — $ 23,530 $ 1,106 $ 16,309 $ 1,604 (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 March 31, 2018 and 2017 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 $ 1,435 $ — Interest expense $ 1,019 $ — $ (8,055) Foreign exchange component (7,116) — Miscellaneous, net (7,116) — (867) $ (5,681) $ — $ (6,097) $ — $ (8,922) The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Quarters Ended March 31, 2018 and 2017 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: $ 141 $ 645 $ 141 $ 645 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 March 31, 2018 Derivative Assets $ 289 — $ 289 — — $ 289 Total Assets $ 289 — $ 289 — — $ 289 Derivative Liabilities $ 24,636 — $ 24,636 — — $ 24,636 Total Liabilities $ 24,636 — $ 24,636 — — $ 24,636 December 31, 2017 Derivative Assets $ 663 — $ 663 — — $ 663 Total Assets $ 663 — $ 663 — — $ 663 Derivative Liabilities $ 17,913 — $ 17,913 — — $ 17,913 Total Liabilities $ 17,913 — $ 17,913 — — $ 17,913 |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Mar. 31, 2018 | |
FAIR VALUE | |
FAIR VALUE | NOTE 10 – FAIR VALUE Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows: · Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities. · Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. · Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. As of March 31, 2018, the fair values of our financial assets and liabilities were categorized as follows: Total Level 1 Level 2 Level 3 Assets Foreign exchange contracts (1) $ 289 $ — $ 289 $ — Total assets at fair value $ 289 $ — $ 289 $ — Liabilities Foreign exchange contracts (1) $ 1,106 $ — $ 1,106 $ — Cross currency swap contract (1) 23,530 — 23,530 — Total liabilities at fair value $ 24,636 $ — $ 24,636 $ — As of December 31, 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 (1) $ 663 $ — $ 663 $ — Total assets at fair value $ 663 $ — $ 663 $ — Liabilities Foreign exchange contracts (1) $ 1,604 $ — $ 1,604 $ — Cross currency swap contract (1) 16,309 — 16,309 — Total liabilities at fair value $ 17,913 $ — $ 17,913 $ — (1) 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 $1.1 billion as of March 31, 2018 and December 31, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 - 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 March 31, 2018 and December 31, 2017. 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 currently 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 ongoing review of the 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 March 31, 2018. |
STOCK REPURCHASE PROGRAM
STOCK REPURCHASE PROGRAM | 3 Months Ended |
Mar. 31, 2018 | |
STOCK REPURCHASE PROGRAM | |
STOCK REPURCHASE PROGRAM | NOTE 12 – 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 months ended March 31, 2018, the Company repurchased approximately 189 thousand shares for approximately $16.7 million. During the three months ended March 31, 2017, the Company repurchased approximately 210 thousand shares for approximately $16.0 million. As of March 31, 2018, there was $125.2 million of authorized share repurchases available to the Company. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2018 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 13 – STOCK-BASED COMPENSATION The Company issues stock options and restricted stock units (“RSUs”), which consist of time-based and performance-based awards, to employees under stock awards plans approved by stockholders. In addition, RSUs are issued to non-employee directors under a Director Restricted Stock Unit Plan and the 2016 Equity Incentive Plan. Previously, non-employee directors were issued stock options under a Director Stock Option Plan. Stock 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 vest according to a specified performance period and/or vesting period. Time-based RSUs generally vest over three years. Performance-based RSUs vest at the end of the specified performance period, generally three years, assuming required performance or market vesting conditions are met. Performance-based RSUs have one of two vesting conditions: 1) based on Aptar’s internal financial performance metrics and 2) based on Aptar’s total shareholder return (“TSR”) relative to total shareholder returns of an industrial peer group, subject to discretion if the overall TSR is negative at the conclusion of the performance period. At the time of vesting, Aptar will issue or cause to be issued in the employee’s name the vested shares of common stock. In addition, RSU awards are generally net settled (shares are withheld to cover the employee tax obligation). Director RSUs are only time-based, and generally vest over one year. Compensation expense attributable to employee stock options for the first three months of 2018 was approximately $4.9 million ($3.5 million after tax). The income tax benefit related to this compensation expense was approximately $1.4 million. Approximately $4.0 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 three months of 2017 was approximately $6.9 million ($4.6 million after tax). The income tax benefit related to this compensation expense was approximately $2.3 million. Approximately $6.0 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 $14.82 and $11.85 per share during the first three months of 2018 and 2017, 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: Three Months Ended March 31, Dividend Yield 1.5 % 1.7 % Expected Stock Price Volatility 14.2 % 15.8 % Risk-free Interest Rate 2.8 % 2.2 % Expected Life of Option (years) 6.6 6.7 A summary of option activity under the Company’s stock plans during the three months ended March 31, 2018 is presented below: Stock Awards Plans Director Stock Option Plans Weighted Average Weighted Average Options Exercise Price Options Exercise Price Outstanding, January 1, 2018 8,059,319 $ 61.67 214,967 $ 57.44 Granted 603,901 88.39 — — Exercised (613,913) 52.73 (44,000) 53.35 Forfeited or expired (26,738) 63.13 — — Outstanding at March 31, 2018 8,022,569 $ 64.36 170,967 $ 58.49 Exercisable at March 31, 2018 5,935,087 $ 59.55 170,967 $ 58.49 Weighted-Average Remaining Contractual Term (Years): Outstanding at March 31, 2018 6.4 4.9 Exercisable at March 31, 2018 5.5 4.9 Aggregate Intrinsic Value: Outstanding at March 31, 2018 $ 204,336 $ 5,358 Exercisable at March 31, 2018 $ 179,720 $ 5,358 Intrinsic Value of Options Exercised During the Three Months Ended: March 31, 2018 $ 22,804 $ 1,608 March 31, 2017 $ 15,289 $ — The grant date fair value of options vested during the three months ended March 31, 2018 and 2017 was $16.5 million and $16.9 million, respectively. Cash received from option exercises was approximately $34.9 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $6.0 million in the three months ended March 31, 2018. As of March 31, 2018, the remaining valuation of stock option awards to be expensed in future periods was $17.4 million and the related weighted-average period over which it is expected to be recognized is 2.0 years. The fair value of both time-based RSUs and performance-based RSUs pertaining to internal performance metrics is determined using the closing price of our common stock on the grant date. The fair value of performance-based RSUs pertaining to TSR is estimated using a Monte Carlo simulation. Inputs and assumptions used to calculate the fair value are shown in the table below. The fair value of these RSUs is expensed over the vesting period using the straight-line method or using the graded vesting method when an employee becomes eligible to retain the award at retirement. Three Months Ended March 31, Fair value per stock award $ 128.70 Grant date stock price $ 89.42 Assumptions: Aptar's stock price expected volatility 12.30 % Expected average volatility of peer companies 27.50 % Correlation assumption 20.20 % Risk-free interest rate 2.42 % Dividend yield assumption 1.43 % A summary of RSU activity as of March 31, 2018, and changes during the three month period then ended, is presented below: Time-Based RSUs Performance-Based RSUs Weighted Average Weighted Average Units Grant-Date Fair Value Units Grant-Date Fair Value Nonvested at January 1, 2018 124,067 $ 74.65 — $ — Granted 80,067 89.42 80,843 111.55 Vested (14,281) 71.72 — — Nonvested at March 31, 2018 189,853 $ 81.10 80,843 $ 111.55 Included in the March 31, 2018 time-based RSUs are 14,793 units awarded to non-employee directors. There were no grants or vesting activity for non-employee director awards. Compensation expense recorded attributable to RSUs for the first three months of 2018 and 2017 was approximately $2.6 million and $0.9 million, respectively. The actual tax benefit realized for the tax deduction from RSUs was approximately $383 thousand in the three months ended March 31, 2018. The fair value of units vested during the three months ended March 31, 2018 and 2017 was $1.0 million and $2.8 million, respectively. The intrinsic value of units vested during the three months ended March 31, 2018 and 2017 was $1.3 million and $3.0 million, respectively. As of March 31, 2018, there was $24.4 million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted-average period of 2.7 years. The Company has a long-term incentive program for certain employees. Each award is based on the cumulative TSR 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 March 31, 2018 is approximately $2.6 million, of which $409 thousand and $282 thousand was recognized in the first three months of 2018 and 2017, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2018 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 14 – EARNINGS PER SHARE Basic net income per share is calculated by dividing net income attributable to Aptar by the weighted-average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing the net income attributable to Aptar by the weighted-average number of common and common equivalent shares outstanding during the applicable period. The difference between basic and diluted earnings per share is attributable to stock-based compensation awards. Stock-based compensation awards for which total employee proceeds exceed the average market price over the applicable period would have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share. The reconciliation of basic and diluted earnings per share for the quarters ended March 31, 2018 and 2017 is as follows: Three Months Ended March 31, 2018 March 31, 2017 Diluted Basic Diluted Basic Consolidated operations Income available to common stockholders $ 59,300 $ 59,300 $ 51,820 $ 51,820 Average equivalent shares Shares of common stock 62,128 62,128 62,355 62,355 Effect of dilutive stock-based compensation Stock options 2,216 — 1,827 — Restricted stock 70 — 52 — Total average equivalent shares 64,414 62,128 64,234 62,355 Net income per share $ 0.92 $ 0.95 $ 0.81 $ 0.83 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2018 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 15 – 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, 2017. In order to more closely align with how the markets analyze our segment results, we have changed our non-U.S.GAAP segment measure of profitability from Segment Income to Adjusted EBITDA beginning in 2018. All internal segment reporting and discussions of results with our Chief Operating Decision Maker (CODM) are now based on segment Adjusted EBITDA. All references to segment profitability have been updated for this change. Financial information regarding the Company’s reporting segments is shown below: Three Months Ended March 31, Total Sales: Beauty + Home $ 383,463 $ 326,933 Pharma 230,132 196,914 Food + Beverage 95,645 82,349 Total Sales 709,240 606,196 Less: Intersegment Sales: Beauty + Home $ 5,290 $ 4,485 Pharma 5 2 Food + Beverage 595 393 Total Intersegment Sales $ 5,890 $ 4,880 Net Sales: Beauty + Home $ 378,173 $ 322,448 Pharma 230,127 196,912 Food + Beverage 95,050 81,956 Net Sales $ 703,350 $ 601,316 Adjusted EBITDA (1): Beauty + Home $ 53,135 $ 42,088 Pharma 79,840 68,841 Food + Beverage 12,739 12,946 Corporate & Other, unallocated (11,579) (9,132) Restructuring Initiatives (2) (5,936) — Depreciation and amortization (41,175) (37,331) Interest Expense (8,055) (8,262) Interest Income 2,248 330 Income before Income Taxes $ 81,217 $ 69,480 (1) The Company evaluates performance of our business units and allocates resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest expense, depreciation and amortization, unallocated corporate expenses, restructuring initiatives and income taxes. (2) Restructuring Initiatives includes expense items for the three months ended March 31, 2018 as follows (see Note 18 – Restructuring Initiatives for further details): Three Months Ended March 31, Business Transformation Employee Severance and Other Costs $ 5,936 Total Restructuring Initiatives $ 5,936 Restructuring Initiatives by Segment Beauty + Home $ 5,016 Pharma 364 Food + Beverage 315 Corporate & Other 241 Total Restructuring Initiatives $ 5,936 |
INSURANCE SETTLEMENT RECEIVABLE
INSURANCE SETTLEMENT RECEIVABLE | 3 Months Ended |
Mar. 31, 2018 | |
INSURANCE SETTLEMENT RECEIVABLE | |
INSURANCE SETTLEMENT RECEIVABLE | Note 16 – 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 sources 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 $5.9 million and $4.9 million were incurred during the three months ended March 31, 2018 and 2017, respectively. For the three months ended March 31, 2018, we received insurance proceeds of $18.9 million, and have no insurance receivable as of March 31, 2018. In many cases, our insurance coverage exceeds the amount of these recognized losses. However, no gain contingencies were recognized during the first quarter of 2018 as our ability to realize those gains remains uncertain. Profitability was negatively impacted by $1.5 million and $1.3 million related to the Annecy fire during the three months ended March 31, 2018 and 2017, respectively. These costs are included in the Beauty + Home segment. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Mar. 31, 2018 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 17 – ACQUISITIONS On May 1, 2018, the Company announced it has acquired Reboul SAS (“Reboul”). Further information about this transaction can be found in Note 19 – Subsequent Events. In February 2017, the Company acquired a 20% minority investment in Kali Care, Inc. (“Kali Care”) for $5.0 million. 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. |
RESTRUCTURING INITIATIVES
RESTRUCTURING INITIATIVES | 3 Months Ended |
Mar. 31, 2018 | |
RESTRUCTURING INITIATIVES. | |
RESTRUCTURING INITIATIVES | NOTE 18 – RESTRUCTURING INITIATIVES In late 2017, Aptar began a business transformation to drive profitable sales growth, increase operational excellence, enhance our approach to innovation and improve organizational effectiveness. The primary focus of the plan is the Beauty + Home segment; however, certain global general and administrative functions will also be addressed. For the three months ended March 31, 2018, we recognized $5.9 million of restructuring costs related to this plan. We estimate total implementation costs of approximately $90 million over the next three years. We also anticipate making capital investments related to the business transformation of approximately $45 million of which the majority will be in 2018. As of March 31, 2018 we have recorded the following activity associated with the business transformation: Beginning Net Charges for Ending Reserve at the Three Months Reserve at 12/31/2017 Ended 3/31/2018 Cash Paid FX Impact 3/31/2018 Employee severance $ 2,258 $ 221 $ (357) $ 58 $ 2,180 Other costs — 5,715 (4,214) (1) 1,500 Totals $ 2,258 $ 5,936 $ (4,571) $ 57 $ 3,680 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 19 – SUBSEQUENT EVENTS On May 1, 2018, the Company announced it has acquired 100% of Reboul from Vacheron Industries SAS. Reboul is a leading provider of high-quality metal components, metal-plastic subassemblies, next generation lipstick mechanisms, and complete color cosmetic packaging solutions. Under the terms of the agreement, the Company will acquire Reboul for an enterprise value of €14 million (approximately $17 million) in cash less the amount of net debt assumed at the closing date. The agreement also provides an earn-out provision based on Reboul’s 2018 financial results, which could increase the enterprise value to a maximum of €23 million (approximately $28 million). The purchase will be funded with available cash on hand. For the quarter ended March 31, 2018, we recognized $0.5 million in transaction costs related to the agreement. These costs are reflected in the selling, research & development and administrative section of the Condensed Consolidated Statements of Income. The Company also provided €3 million ($3.7 million) cash in escrow, which has been presented as restricted cash on the Consolidated Statements of Cash Flows for the three months ended March 31, 2018. |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 (the “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 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, 2017 but does not include all disclosures required by U.S. GAAP. Accordingly, these 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, 2017. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year. |
RETIREMENT OF COMMON STOCK | RETIREMENT OF COMMON STOCK During the first quarter of 2018, the Company repurchased 189 thousand shares of common stock, of which 144 thousand shares were immediately retired. During the first quarter of 2017, the Company repurchased and immediately retired 210 thousand 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 temporary 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 Tax Cuts and Jobs Act (the “TCJA”) was enacted in the United States (“U.S.”) on December 22, 2017. The TCJA lowered the corporate tax rate from 35.0% to 21.0% and imposed a one-time transition tax on unremitted earnings as of the end of 2017, and featured many other tax law provisions. New provisions for 2018 include, most notably, a tax on global intangible low-taxed income (“GILTI”) and the base erosion anti-abuse tax (“BEAT”). The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the U.S. GAAP application of the TCJA. SAB 118 provides us up to a year to finalize accounting for the impacts of the TCJA. The Company estimated provisional tax amounts related to the transition tax and components of the revaluation of deferred tax assets and liabilities for the period ended December 31, 2017. We recognized a net tax charge of approximately $24.7 million, comprised of a provisional charge of $31.6 million for the transition tax and a provisional benefit of $6.8 million related to the corporate rate change. There have been no changes to those provisional amounts as of March 31, 2018. The Company expects these amounts to be finalized in the second half of 2018 when the 2017 tax return is filed. The Company has elected to account for the tax on GILTI as a period cost and not as a measure of deferred taxes in the current period. All of the Company’s non-U.S. earnings are subject to U.S. taxation, either from the TCJA transition tax on accumulated non-U.S. earnings as of the end of 2017 or the GILTI provisions on non-U.S. earnings going forward. The Company maintains its assertion that the cash and distributable reserves at its non-U.S. affiliates are indefinitely reinvested. The Company will provide for the necessary withholding and local income taxes when management decides that an affiliate should make a distribution. These decisions are made taking into consideration the financial requirements of the non-U.S. affiliates and the global cash management goals of the Company. 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 5 - Income Taxes for more information. |
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. On January 1, 2018, we adopted this standard and all the related amendments (the “new revenue standard”) for all contracts. This adoption was accounted for using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the January 1, 2018 opening balance of retained earnings. Comparative information for the prior period has not been restated and continues to be reported under the accounting standards in effect prior to January 1, 2018. Balance at Balance at December 31, 2017 Adjustment January 1, 2018 Consolidated Balance Sheets Assets Inventories $ 337,216 $ (14,637) $ 322,579 Prepaid and other 109,791 13,984 123,775 Liabilities Accounts payable and accrued liabilities 461,579 (5,706) 455,873 Deferred income taxes 20,995 1,292 22,287 Deferred and other non-current liabilities 5,608 824 6,432 Stockholders’ Equity Retained earnings 1,301,147 2,937 1,304,084 A majority of our sales revenue continues to be recognized when products are shipped from our manufacturing facilities. For certain custom product and tooling sales where revenue was previously recognized when the products were shipped, we now recognize revenue over the time required to manufacture the product or build the tool in accordance with the new revenue standard. We also have certain extended warranty contracts, which under the new standard are considered a separate performance obligation and are required to be deferred and recognized into revenue over the life of the agreement. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statements of income and balance sheets is as follows: For the Three Months Ended March 31, 2018 Balances Without Effect of As Adoption of Change Reported ASC 606 Higher/(Lower) Consolidated Statements of Income Net Sales Beauty + Home $ 378,173 $ 376,868 $ (1,305) Pharma 230,127 230,462 335 Food + Beverage 95,050 95,100 50 Costs and Expenses Cost of sales 455,822 454,900 (922) Provision for income taxes 21,929 21,925 (4) Net income 59,288 59,294 6 March 31, 2018 Balances Without Effect of As Adoption of Change Reported ASC 606 Higher/(Lower) Consolidated Balance Sheets Assets Accounts and notes receivable $ 586,592 $ 600,576 $ 13,984 Inventories 347,791 348,713 922 Prepaid and other 117,678 104,193 (13,485) Liabilities Accounts payable and accrued liabilities 496,409 497,815 1,406 Deferred income taxes 20,578 20,574 (4) Deferred and other non-current liabilities 6,682 6,695 13 Stockholders’ Equity Retained earnings 1,332,218 1,332,224 6 In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments within the statement of cash flows. This guidance provides clarification for the following types of transactions: debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, distributions received from equity method investees and beneficial interest in securitization transactions. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. However, early adoption was permitted and an entity that elects early adoption must adopt all of the amendments on a retrospective basis in the period of adoption. The Company adopted this standard in the fourth quarter of 2017. In November 2016, the FASB issued guidance to address the diversity in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in this standard require that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018 and appropriate disclosures are included on the statement of cash flows. In March 2017, the FASB issued guidance to disaggregate the current service cost component from the other components of net periodic benefit costs. The service cost component should be presented within compensation costs while the other components should be presented outside of income from operations. The guidance also clarifies that only the service cost component is eligible for capitalization. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018 and the prior periods were restated as follows: Original Revised Balance Adjustment Balance Revised Condensed Consolidated Statements of Income Three Months Ended March 31, 2017 Cost of sales $ 384,932 $ (248) $ 384,684 Selling, research & development and administrative 101,516 (234) 101,282 Total Operating Expenses 523,779 (482) 523,297 Operating Income 77,537 482 78,019 Miscellaneous, net (77) (482) (559) Total Other (Expense) Income (8,057) (482) (8,539) Income before Income Taxes 69,480 — 69,480 In May 2017, the FASB issued clarification on applying the standards for stock compensation accounting. The new standard provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018. 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 U.S. 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 adopted this standard in the third quarter of 2017. See details in Note 9 – 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 Condensed Consolidated Financial Statements. |
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 results in a reduction to Net Cash Provided by Operations with a corresponding increase to Net Cash (Used) Provided by Financing Activities. As this error represents 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 are not impacted by this change. The Company determined the error is 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 Three Months Ended March 31, 2017 Retirement and deferred compensation plan liabilities $ (21,272) $ (2,797) $ (24,069) Net Cash Provided by Operations 40,973 (2,797) 38,176 Proceeds from stock option exercises 15,908 2,797 18,705 Net Cash Provided (Used) by Financing Activities (185,981) 2,797 (183,184) |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of the previously issued line items | As Previously Reported Adjustment As Revised Revised Consolidated Statements of Cash Flows Three Months Ended March 31, 2017 Retirement and deferred compensation plan liabilities $ (21,272) $ (2,797) $ (24,069) Net Cash Provided by Operations 40,973 (2,797) 38,176 Proceeds from stock option exercises 15,908 2,797 18,705 Net Cash Provided (Used) by Financing Activities (185,981) 2,797 (183,184) |
Accounting Standards Update 2014-09 | Restatement of beginning balances | |
Summary of impacts of adoption of recent accounting pronouncements | Balance at Balance at December 31, 2017 Adjustment January 1, 2018 Consolidated Balance Sheets Assets Inventories $ 337,216 $ (14,637) $ 322,579 Prepaid and other 109,791 13,984 123,775 Liabilities Accounts payable and accrued liabilities 461,579 (5,706) 455,873 Deferred income taxes 20,995 1,292 22,287 Deferred and other non-current liabilities 5,608 824 6,432 Stockholders’ Equity Retained earnings 1,301,147 2,937 1,304,084 |
Accounting Standards Update 2014-09 | Cumulative effect of change | |
Summary of impacts of adoption of recent accounting pronouncements | For the Three Months Ended March 31, 2018 Balances Without Effect of As Adoption of Change Reported ASC 606 Higher/(Lower) Consolidated Statements of Income Net Sales Beauty + Home $ 378,173 $ 376,868 $ (1,305) Pharma 230,127 230,462 335 Food + Beverage 95,050 95,100 50 Costs and Expenses Cost of sales 455,822 454,900 (922) Provision for income taxes 21,929 21,925 (4) Net income 59,288 59,294 6 March 31, 2018 Balances Without Effect of As Adoption of Change Reported ASC 606 Higher/(Lower) Consolidated Balance Sheets Assets Accounts and notes receivable $ 586,592 $ 600,576 $ 13,984 Inventories 347,791 348,713 922 Prepaid and other 117,678 104,193 (13,485) Liabilities Accounts payable and accrued liabilities 496,409 497,815 1,406 Deferred income taxes 20,578 20,574 (4) Deferred and other non-current liabilities 6,682 6,695 13 Stockholders’ Equity Retained earnings 1,332,218 1,332,224 6 |
Accounting Standards Update 2017-07 | |
Summary of impacts of adoption of recent accounting pronouncements | Original Revised Balance Adjustment Balance Revised Condensed Consolidated Statements of Income Three Months Ended March 31, 2017 Cost of sales $ 384,932 $ (248) $ 384,684 Selling, research & development and administrative 101,516 (234) 101,282 Total Operating Expenses 523,779 (482) 523,297 Operating Income 77,537 482 78,019 Miscellaneous, net (77) (482) (559) Total Other (Expense) Income (8,057) (482) (8,539) Income before Income Taxes 69,480 — 69,480 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
REVENUE. | |
Schedule of revenue by segment by geographic area | North Latin March 31, 2018 Segment Europe America America Asia Total Beauty + Home $ 224,612 $ 83,074 $ 48,266 $ 22,221 $ 378,173 Pharma 175,675 39,096 6,245 9,111 230,127 Food + Beverage 29,811 48,215 7,763 9,261 95,050 Total $ 430,098 $ 170,385 $ 62,274 $ 40,593 $ 703,350 |
Schedule of opening and closing balances of contract assets and contract liabilities | Balance as of Balance as of January 1, 2018 March 31, 2018 Increase/ (opening) (closing) (Decrease) Contract asset (current) $ 13,984 $ 13,485 $ (499) Contract liability (current) $ 15 $ 114 $ 99 Contract liability (long-term) $ 824 $ 811 $ (13) |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
INVENTORIES | |
Schedule of inventories, by component | March 31, December 31, Raw materials $ 103,442 $ 99,196 Work in process 115,925 107,307 Finished goods 128,424 130,713 Total $ 347,791 $ 337,216 |
GOODWILL AND OTHER INTANGIBLE32
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of changes in the carrying amount of goodwill | Beauty + Food + Corporate Home Pharma Beverage & Other Total Goodwill $ 223,947 $ 203,069 $ 16,871 $ 1,615 $ 445,502 Accumulated impairment losses — — — (1,615) (1,615) Balance as of December 31, 2017 $ 223,947 $ 203,069 $ 16,871 $ — $ 443,887 Foreign currency exchange effects 2,346 4,851 159 — 7,356 Goodwill $ 226,293 $ 207,920 $ 17,030 $ 1,615 $ 452,858 Accumulated impairment losses — — — (1,615) (1,615) Balance as of March 31, 2018 $ 226,293 $ 207,920 $ 17,030 $ — $ 451,243 |
Summary of amortized intangible assets | March 31, 2018 December 31, 2017 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 $ 8,144 $ (8,015) $ 129 $ 7,819 $ (7,806) $ 13 Acquired technology 15.0 48,797 (15,816) 32,981 47,571 (14,624) 32,947 Customer relationships 12.2 70,120 (15,181) 54,939 68,886 (13,401) 55,485 License agreements and other 7.6 22,307 (15,611) 6,696 21,827 (14,812) 7,015 Total intangible assets 11.8 $ 149,368 $ (54,623) $ 94,745 $ 146,103 $ (50,643) $ 95,460 |
Schedule of future estimated amortization expense | Future estimated amortization expense for the years ending December 31 is as follows: 2018 $ 8,448 (remaining estimated amortization for 2018) 2019 11,082 2020 9,840 2021 9,644 2022 and thereafter 55,731 |
LONG-TERM OBLIGATIONS (Tables)
LONG-TERM OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 long-term obligations | At March 31, 2018, 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 $ 14,607 $ — $ 14,607 Senior unsecured notes 3.2%, due in 2022 75,000 107 74,893 Senior unsecured debts 3.0% floating, equal annual installments through 2022 280,000 654 279,346 Senior unsecured notes 3.5%, due in 2023 125,000 208 124,792 Senior unsecured notes 1.0%, due in 2023 123,190 503 122,687 Senior unsecured notes 3.4%, due in 2024 50,000 86 49,914 Senior unsecured notes 3.5%, due in 2024 100,000 208 99,792 Senior unsecured notes 1.2%, due in 2024 246,380 1,025 245,355 Senior unsecured notes 3.6%, due in 2025 125,000 230 124,770 Senior unsecured notes 3.6%, due in 2026 125,000 230 124,770 Capital lease obligations 554 — 554 $ 1,264,731 $ 3,251 $ 1,261,480 Current maturities of long-term obligations (61,505) — (61,505) Total long-term obligations $ 1,203,226 $ 3,251 $ 1,199,975 At December 31, 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 $ 15,349 $ — $ 15,349 Senior unsecured notes 3.2%, due in 2022 75,000 113 74,887 Senior unsecured debts 2.6% floating, equal annual installments through 2022 280,000 692 279,308 Senior unsecured notes 3.5%, due in 2023 125,000 217 124,783 Senior unsecured notes 1.0%, due in 2023 120,095 526 119,569 Senior unsecured notes 3.4%, due in 2024 50,000 89 49,911 Senior unsecured notes 3.5%, due in 2024 100,000 217 99,783 Senior unsecured notes 1.2%, due in 2024 240,190 1,066 239,124 Senior unsecured notes 3.6%, due in 2025 125,000 238 124,762 Senior unsecured notes 3.6%, due in 2026 125,000 238 124,762 Capital lease obligations 741 — 741 $ 1,256,375 $ 3,396 $ 1,252,979 Current maturities of long-term obligations (61,833) — (61,833) Total long-term obligations $ 1,194,542 $ 3,396 $ 1,191,146 |
Schedule of covenants on revolving credit facility and corporate long-term obligations | Requirement Level at March 31, 2018 Consolidated Leverage Ratio (1) Maximum of 3.50 to 1.00 1.15 to 1.00 Consolidated Interest Coverage Ratio (1) Minimum of 3.00 to 1.00 12.12 to 1.00 (1) Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements. |
RETIREMENT AND DEFERRED COMPE34
RETIREMENT AND DEFERRED COMPENSATION PLANS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
RETIREMENT AND DEFERRED COMPENSATION PLANS | |
Components of net periodic benefit cost | Domestic Plans Foreign Plans Three Months Ended March 31, Service cost $ $ 2,420 $ 1,531 $ 1,337 Interest cost 1,748 472 424 Expected return on plan assets (2,464) (679) (568) Amortization of net loss 801 446 447 Amortization of prior service cost — — 129 94 Net periodic benefit cost $ 2,973 $ 2,505 $ 1,899 $ 1,734 |
ACCUMULATED OTHER COMPREHENSI35
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
Changes in Accumulated Other Comprehensive Income/(Loss) by Component | Foreign Defined Benefit Currency Pension Plans Derivatives Total Balance - December 31, 2016 $ (259,888) $ (59,775) $ (46) $ (319,709) Other comprehensive income before reclassifications 23,184 — — 23,184 Amounts reclassified from accumulated other comprehensive income — 879 7 886 Net current-period other comprehensive income 23,184 879 7 24,070 Balance - March 31, 2017 $ (236,704) $ (58,896) $ (39) $ (295,639) Balance - December 31, 2017 $ (185,503) $ (64,595) $ (3,204) $ (253,302) Other comprehensive income (loss) before reclassifications 22,924 — (4,715) 18,209 Amounts reclassified from accumulated other comprehensive income — 1,356 5,068 6,424 Net current-period other comprehensive income 22,924 1,356 353 24,633 Balance - March 31, 2018 $ (162,579) $ (63,239) $ (2,851) $ (228,669) |
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 March 31, Defined Benefit Pension Plans Amortization of net loss $ 1,664 $ 1,248 (1) Amortization of prior service cost 129 94 (1) 1,793 1,342 Total before tax (437) (463) Tax benefit $ 1,356 $ 879 Net of tax Derivatives Changes in treasury locks $ 11 $ 10 Interest Expense Changes in cross currency swap: interest component (1,019) — Interest Expense Changes in cross currency swap: foreign exchange component 7,116 — Miscellaneous, net 6,108 10 Total before tax (1,040) (3) Tax benefit $ 5,068 $ 7 Net of tax Total reclassifications for the period $ 6,424 $ 886 (1) These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 7 – Retirement and Deferred Compensation Plans for additional details). |
DERIVATIVE INSTRUMENTS AND HE36
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 and December 31, 2017 March 31, 2018 December 31, 2017 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 $ — $ 289 $ — $ 663 $ — $ 289 $ — $ 663 Derivative Liabilities Foreign Exchange Contracts Accounts payable and accrued liabilities $ — $ 1,106 $ — $ 1,604 Cross Currency Swap Contract (1) Accounts payable and accrued liabilities 23,530 — 16,309 — $ 23,530 $ 1,106 $ 16,309 $ 1,604 (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 March 31, 2018 and 2017 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 $ 1,435 $ — Interest expense $ 1,019 $ — $ (8,055) Foreign exchange component (7,116) — Miscellaneous, net (7,116) — (867) $ (5,681) $ — $ (6,097) $ — $ (8,922) |
Schedule of Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income | 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 $ 1,435 $ — Interest expense $ 1,019 $ — $ (8,055) Foreign exchange component (7,116) — Miscellaneous, net (7,116) — (867) $ (5,681) $ — $ (6,097) $ — $ (8,922) The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Quarters Ended March 31, 2018 and 2017 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: $ 141 $ 645 $ 141 $ 645 |
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 March 31, 2018 Derivative Assets $ 289 — $ 289 — — $ 289 Total Assets $ 289 — $ 289 — — $ 289 Derivative Liabilities $ 24,636 — $ 24,636 — — $ 24,636 Total Liabilities $ 24,636 — $ 24,636 — — $ 24,636 December 31, 2017 Derivative Assets $ 663 — $ 663 — — $ 663 Total Assets $ 663 — $ 663 — — $ 663 Derivative Liabilities $ 17,913 — $ 17,913 — — $ 17,913 Total Liabilities $ 17,913 — $ 17,913 — — $ 17,913 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
FAIR VALUE | |
Schedule of fair values of financial assets and liabilities | As of March 31, 2018, the fair values of our financial assets and liabilities were categorized as follows: Total Level 1 Level 2 Level 3 Assets Foreign exchange contracts (1) $ 289 $ — $ 289 $ — Total assets at fair value $ 289 $ — $ 289 $ — Liabilities Foreign exchange contracts (1) $ 1,106 $ — $ 1,106 $ — Cross currency swap contract (1) 23,530 — 23,530 — Total liabilities at fair value $ 24,636 $ — $ 24,636 $ — As of December 31, 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 (1) $ 663 $ — $ 663 $ — Total assets at fair value $ 663 $ — $ 663 $ — Liabilities Foreign exchange contracts (1) $ 1,604 $ — $ 1,604 $ — Cross currency swap contract (1) 16,309 — 16,309 — Total liabilities at fair value $ 17,913 $ — $ 17,913 $ — (1) Market approach valuation technique based on observable market transactions of spot and forward rates. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
STOCK-BASED COMPENSATION | |
Weighted-average assumptions used to estimate fair value of stock options granted | Stock Awards Plans: Three Months Ended March 31, Dividend Yield 1.5 % 1.7 % Expected Stock Price Volatility 14.2 % 15.8 % Risk-free Interest Rate 2.8 % 2.2 % Expected Life of Option (years) 6.6 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, 2018 8,059,319 $ 61.67 214,967 $ 57.44 Granted 603,901 88.39 — — Exercised (613,913) 52.73 (44,000) 53.35 Forfeited or expired (26,738) 63.13 — — Outstanding at March 31, 2018 8,022,569 $ 64.36 170,967 $ 58.49 Exercisable at March 31, 2018 5,935,087 $ 59.55 170,967 $ 58.49 Weighted-Average Remaining Contractual Term (Years): Outstanding at March 31, 2018 6.4 4.9 Exercisable at March 31, 2018 5.5 4.9 Aggregate Intrinsic Value: Outstanding at March 31, 2018 $ 204,336 $ 5,358 Exercisable at March 31, 2018 $ 179,720 $ 5,358 Intrinsic Value of Options Exercised During the Three Months Ended: March 31, 2018 $ 22,804 $ 1,608 March 31, 2017 $ 15,289 $ — |
Weighted-average assumptions used to estimate fair value of restricted stock units | Three Months Ended March 31, Fair value per stock award $ 128.70 Grant date stock price $ 89.42 Assumptions: Aptar's stock price expected volatility 12.30 % Expected average volatility of peer companies 27.50 % Correlation assumption 20.20 % Risk-free interest rate 2.42 % Dividend yield assumption 1.43 % |
Summary of restricted stock unit activity | Time-Based RSUs Performance-Based RSUs Weighted Average Weighted Average Units Grant-Date Fair Value Units Grant-Date Fair Value Nonvested at January 1, 2018 124,067 $ 74.65 — $ — Granted 80,067 89.42 80,843 111.55 Vested (14,281) 71.72 — — Nonvested at March 31, 2018 189,853 $ 81.10 80,843 $ 111.55 Included in the March 31, 2018 time-based RSUs are 14,793 units awarded to non-employee directors. There were no grants or vesting activity for non-employee director awards. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
EARNINGS PER SHARE | |
Reconciliation of Basic and Diluted Earnings Per Share | Three Months Ended March 31, 2018 March 31, 2017 Diluted Basic Diluted Basic Consolidated operations Income available to common stockholders $ 59,300 $ 59,300 $ 51,820 $ 51,820 Average equivalent shares Shares of common stock 62,128 62,128 62,355 62,355 Effect of dilutive stock-based compensation Stock options 2,216 — 1,827 — Restricted stock 70 — 52 — Total average equivalent shares 64,414 62,128 64,234 62,355 Net income per share $ 0.92 $ 0.95 $ 0.81 $ 0.83 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
SEGMENT INFORMATION | |
Financial information regarding the Company's reportable segments | Three Months Ended March 31, Total Sales: Beauty + Home $ 383,463 $ 326,933 Pharma 230,132 196,914 Food + Beverage 95,645 82,349 Total Sales 709,240 606,196 Less: Intersegment Sales: Beauty + Home $ 5,290 $ 4,485 Pharma 5 2 Food + Beverage 595 393 Total Intersegment Sales $ 5,890 $ 4,880 Net Sales: Beauty + Home $ 378,173 $ 322,448 Pharma 230,127 196,912 Food + Beverage 95,050 81,956 Net Sales $ 703,350 $ 601,316 Adjusted EBITDA (1): Beauty + Home $ 53,135 $ 42,088 Pharma 79,840 68,841 Food + Beverage 12,739 12,946 Corporate & Other, unallocated (11,579) (9,132) Restructuring Initiatives (2) (5,936) — Depreciation and amortization (41,175) (37,331) Interest Expense (8,055) (8,262) Interest Income 2,248 330 Income before Income Taxes $ 81,217 $ 69,480 (1) The Company evaluates performance of our business units and allocates resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest expense, depreciation and amortization, unallocated corporate expenses, restructuring initiatives and income taxes. (2) Restructuring Initiatives includes expense items for the three months ended March 31, 2018 as follows (see Note 18 – Restructuring Initiatives for further details): Three Months Ended March 31, Business Transformation Employee Severance and Other Costs $ 5,936 Total Restructuring Initiatives $ 5,936 Restructuring Initiatives by Segment Beauty + Home $ 5,016 Pharma 364 Food + Beverage 315 Corporate & Other 241 Total Restructuring Initiatives $ 5,936 |
Restructuring Initiatives | Three Months Ended March 31, Business Transformation Employee Severance and Other Costs $ 5,936 Total Restructuring Initiatives $ 5,936 Restructuring Initiatives by Segment Beauty + Home $ 5,016 Pharma 364 Food + Beverage 315 Corporate & Other 241 Total Restructuring Initiatives $ 5,936 |
RESTRUCTURING INITIATIVES (Tabl
RESTRUCTURING INITIATIVES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
RESTRUCTURING INITIATIVES. | |
Activity associated with the entity's restructuring initiatives | Beginning Net Charges for Ending Reserve at the Three Months Reserve at 12/31/2017 Ended 3/31/2018 Cash Paid FX Impact 3/31/2018 Employee severance $ 2,258 $ 221 $ (357) $ 58 $ 2,180 Other costs — 5,715 (4,214) (1) 1,500 Totals $ 2,258 $ 5,936 $ (4,571) $ 57 $ 3,680 |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Revenue Recognition, Adjustments to Opening Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets | |||
Inventories | $ 347,791 | $ 322,579 | $ 337,216 |
Prepaid and other | 117,678 | 123,775 | 109,791 |
Liabilities | |||
Accounts payable and accrued liabilities | 496,409 | 455,873 | 461,579 |
Deferred income taxes | 20,578 | 22,287 | 20,995 |
Deferred and other non-current liabilities | 6,682 | 6,432 | 5,608 |
Stockholders' Equity | |||
Retained earnings | 1,332,218 | 1,304,084 | $ 1,301,147 |
Adjustment/Effect of Change | Accounting Standards Update 2014-09 | |||
Assets | |||
Inventories | 922 | (14,637) | |
Prepaid and other | (13,485) | 13,984 | |
Liabilities | |||
Accounts payable and accrued liabilities | 1,406 | (5,706) | |
Deferred income taxes | (4) | 1,292 | |
Deferred and other non-current liabilities | 13 | 824 | |
Stockholders' Equity | |||
Retained earnings | $ 6 | $ 2,937 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Revenue Recognition, Balances Reported with and without Adoption of ASC 606 (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Income | ||||
Net sales | $ 703,350 | $ 601,316 | ||
Costs and Expenses | ||||
Cost of sales | 455,822 | 384,684 | ||
Provision for income taxes | 21,929 | 17,675 | ||
Net income | 59,288 | 51,805 | ||
Assets | ||||
Accounts and note receivable | 586,592 | $ 510,426 | ||
Inventories | 347,791 | $ 322,579 | 337,216 | |
Prepaid and other | 117,678 | 123,775 | 109,791 | |
Liabilities | ||||
Accounts payable and accrued liabilities | 496,409 | 455,873 | 461,579 | |
Deferred income taxes | 20,578 | 22,287 | 20,995 | |
Deferred and other non-current liabilities | 6,682 | 6,432 | 5,608 | |
Stockholders' Equity | ||||
Retained earnings | 1,332,218 | 1,304,084 | $ 1,301,147 | |
Beauty + Home | ||||
Consolidated Statements of Income | ||||
Net sales | 378,173 | 322,448 | ||
Pharma | ||||
Consolidated Statements of Income | ||||
Net sales | 230,127 | 196,912 | ||
Food + Beverage | ||||
Consolidated Statements of Income | ||||
Net sales | 95,050 | $ 81,956 | ||
Balances Without Adoption of ASC 606 | Accounting Standards Update 2014-09 | ||||
Costs and Expenses | ||||
Cost of sales | 454,900 | |||
Provision for income taxes | 21,925 | |||
Net income | 59,294 | |||
Assets | ||||
Accounts and note receivable | 600,576 | |||
Inventories | 348,713 | |||
Prepaid and other | 104,193 | |||
Liabilities | ||||
Accounts payable and accrued liabilities | 497,815 | |||
Deferred income taxes | 20,574 | |||
Deferred and other non-current liabilities | 6,695 | |||
Stockholders' Equity | ||||
Retained earnings | 1,332,224 | |||
Balances Without Adoption of ASC 606 | Accounting Standards Update 2014-09 | Beauty + Home | ||||
Consolidated Statements of Income | ||||
Net sales | 376,868 | |||
Balances Without Adoption of ASC 606 | Accounting Standards Update 2014-09 | Pharma | ||||
Consolidated Statements of Income | ||||
Net sales | 230,462 | |||
Balances Without Adoption of ASC 606 | Accounting Standards Update 2014-09 | Food + Beverage | ||||
Consolidated Statements of Income | ||||
Net sales | 95,100 | |||
Adjustment/Effect of Change | Accounting Standards Update 2014-09 | ||||
Costs and Expenses | ||||
Cost of sales | (922) | |||
Provision for income taxes | (4) | |||
Net income | 6 | |||
Assets | ||||
Accounts and note receivable | 13,984 | |||
Inventories | 922 | (14,637) | ||
Prepaid and other | (13,485) | 13,984 | ||
Liabilities | ||||
Accounts payable and accrued liabilities | 1,406 | (5,706) | ||
Deferred income taxes | (4) | 1,292 | ||
Deferred and other non-current liabilities | 13 | 824 | ||
Stockholders' Equity | ||||
Retained earnings | 6 | $ 2,937 | ||
Adjustment/Effect of Change | Accounting Standards Update 2014-09 | Beauty + Home | ||||
Consolidated Statements of Income | ||||
Net sales | (1,305) | |||
Adjustment/Effect of Change | Accounting Standards Update 2014-09 | Pharma | ||||
Consolidated Statements of Income | ||||
Net sales | 335 | |||
Adjustment/Effect of Change | Accounting Standards Update 2014-09 | Food + Beverage | ||||
Consolidated Statements of Income | ||||
Net sales | $ 50 |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Adoption of ASU 2017-07 (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cost of sales | $ 455,822 | $ 384,684 |
Selling, research & development and administrative | 112,461 | 101,282 |
Total Operating Expenses | 615,394 | 523,297 |
Operating Income | 87,956 | 78,019 |
Miscellaneous, net | (867) | (559) |
Total Other (Expense) Income | (6,739) | (8,539) |
Income before Income Taxes | $ 81,217 | 69,480 |
Original Balance | Accounting Standards Update 2017-07 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cost of sales | 384,932 | |
Selling, research & development and administrative | 101,516 | |
Total Operating Expenses | 523,779 | |
Operating Income | 77,537 | |
Miscellaneous, net | (77) | |
Total Other (Expense) Income | (8,057) | |
Income before Income Taxes | 69,480 | |
Adjustment | Accounting Standards Update 2017-07 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cost of sales | (248) | |
Selling, research & development and administrative | (234) | |
Total Operating Expenses | (482) | |
Operating Income | 482 | |
Miscellaneous, net | (482) | |
Total Other (Expense) Income | $ (482) |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018USD ($)segment$ / sharesshares | Mar. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / shares | |
Number of reportable segments | segment | 3 | ||
Total Restructuring Initiatives | $ 5,936 | ||
INVESTMENTS IN AFFILIATED COMPANIES | |||
Investment in unconsolidated affiliate | $ 5,000 | ||
RETIREMENT OF COMMON STOCK | |||
Common stock repurchased (retired and held in treasury) (in shares) | shares | 189 | ||
Common stock repurchased and retired (in shares) | shares | 144 | 210 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 |
INCOME TAXES | |||
Statutory federal income tax rate (as a percent) | 21.00% | 35.00% | |
Net tax charge | $ 24,700 | ||
Recognized charge representing provisional estimate of one-time transition tax | 31,600 | ||
Estimate of deferred income tax benefit related to corporate rate change | $ (6,800) | ||
ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS | |||
Provision for Income Taxes | $ 21,929 | $ 17,675 | |
Business Transformation | |||
Total Restructuring Initiatives | 5,936 | ||
Beauty + Home | |||
Total Restructuring Initiatives | 5,016 | ||
Pharma | |||
Total Restructuring Initiatives | 364 | ||
Food + Beverage | |||
Total Restructuring Initiatives | 315 | ||
Corporate & Other | |||
Total Restructuring Initiatives | $ 241 |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Revision of Prior Period Financial Statements) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retirement and deferred compensation plan liabilities | $ (5,381) | $ (24,069) |
Net Cash Provided by Operations | 51,019 | 38,176 |
Proceeds from stock option exercises | 34,880 | 18,705 |
Net Cash Provided (Used) by Financing Activities | $ 1,625 | (183,184) |
Original Balance | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retirement and deferred compensation plan liabilities | (21,272) | |
Net Cash Provided by Operations | 40,973 | |
Proceeds from stock option exercises | 15,908 | |
Net Cash Provided (Used) by Financing Activities | (185,981) | |
Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retirement and deferred compensation plan liabilities | (2,797) | |
Net Cash Provided by Operations | (2,797) | |
Proceeds from stock option exercises | 2,797 | |
Net Cash Provided (Used) by Financing Activities | $ 2,797 |
REVENUE - Revenue by Geographic
REVENUE - Revenue by Geographic Segment (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
REVENUE | |
Net revenue | $ 703,350 |
Beauty + Home | |
REVENUE | |
Net revenue | 378,173 |
Pharma | |
REVENUE | |
Net revenue | 230,127 |
Food + Beverage | |
REVENUE | |
Net revenue | 95,050 |
Europe | |
REVENUE | |
Net revenue | 430,098 |
Europe | Beauty + Home | |
REVENUE | |
Net revenue | 224,612 |
Europe | Pharma | |
REVENUE | |
Net revenue | 175,675 |
Europe | Food + Beverage | |
REVENUE | |
Net revenue | 29,811 |
North America | |
REVENUE | |
Net revenue | 170,385 |
North America | Beauty + Home | |
REVENUE | |
Net revenue | 83,074 |
North America | Pharma | |
REVENUE | |
Net revenue | 39,096 |
North America | Food + Beverage | |
REVENUE | |
Net revenue | 48,215 |
Latin America | |
REVENUE | |
Net revenue | 62,274 |
Latin America | Beauty + Home | |
REVENUE | |
Net revenue | 48,266 |
Latin America | Pharma | |
REVENUE | |
Net revenue | 6,245 |
Latin America | Food + Beverage | |
REVENUE | |
Net revenue | 7,763 |
Asia | |
REVENUE | |
Net revenue | 40,593 |
Asia | Beauty + Home | |
REVENUE | |
Net revenue | 22,221 |
Asia | Pharma | |
REVENUE | |
Net revenue | 9,111 |
Asia | Food + Beverage | |
REVENUE | |
Net revenue | $ 9,261 |
REVENUE - Contract Assets and C
REVENUE - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Jan. 01, 2018 | |
REVENUE. | ||
Contract asset (current) | $ 13,485 | $ 13,984 |
Increase / (decrease) in contract asset (current) | (499) | |
Contract liability (current) | 114 | 15 |
Increase / (decrease) in contract liability (current) | 99 | |
Contract liability (long-term) | 811 | 824 |
Increase / (decrease) in contract liability (long-term) | (13) | |
Revenue recognized previously included in current contract liabilities | 51 | |
Unearned revenue associated with outstanding contracts | 925 | $ 839 |
Estimated revenue to be recognized in 2018 | 89 | |
Estimated revenue to be recognized in 2019 | 161 | |
Estimated revenue to be recognized after 2019 | $ 675 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Inventories, by component | |||
Raw materials | $ 103,442 | $ 99,196 | |
Work in process | 115,925 | 107,307 | |
Finished goods | 128,424 | 130,713 | |
Total | $ 347,791 | $ 322,579 | $ 337,216 |
GOODWILL AND OTHER INTANGIBLE50
GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Goodwill) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Changes in the carrying amount of goodwill | ||
Goodwill | $ 452,858 | $ 445,502 |
Accumulated impairment losses | (1,615) | (1,615) |
Goodwill, Total | 451,243 | 443,887 |
Foreign currency exchange effects | 7,356 | |
Operating segment | Beauty + Home | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 226,293 | 223,947 |
Goodwill, Total | 226,293 | 223,947 |
Foreign currency exchange effects | 2,346 | |
Operating segment | Pharma | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 207,920 | 203,069 |
Goodwill, Total | 207,920 | 203,069 |
Foreign currency exchange effects | 4,851 | |
Operating segment | Food + Beverage | ||
Changes in the carrying amount of goodwill | ||
Goodwill | 17,030 | 16,871 |
Goodwill, Total | 17,030 | 16,871 |
Foreign currency exchange effects | 159 | |
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 INTANGIBLE51
GOODWILL AND OTHER INTANGIBLE ASSETS (Summary of Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Amortized intangible assets: | |||
Gross Carrying Amount | $ 149,368 | $ 146,103 | |
Accumulated Amortization | (54,623) | (50,643) | |
Net Value | 94,745 | 95,460 | |
Aggregate amortization expense | 2,818 | $ 2,429 | |
Future estimated amortization expense | |||
2,018 | 8,448 | ||
2,019 | 11,082 | ||
2,020 | 9,840 | ||
2,021 | 9,644 | ||
2022 and thereafter | $ 55,731 | ||
Weighted Average | |||
Amortized intangible assets: | |||
Amortization Period | 11 years 9 months 18 days | ||
Patents | |||
Amortized intangible assets: | |||
Gross Carrying Amount | $ 8,144 | 7,819 | |
Accumulated Amortization | (8,015) | (7,806) | |
Net Value | $ 129 | 13 | |
Patents | Weighted Average | |||
Amortized intangible assets: | |||
Amortization Period | 2 months 12 days | ||
Technology | |||
Amortized intangible assets: | |||
Gross Carrying Amount | $ 48,797 | 47,571 | |
Accumulated Amortization | (15,816) | (14,624) | |
Net Value | $ 32,981 | 32,947 | |
Technology | Weighted Average | |||
Amortized intangible assets: | |||
Amortization Period | 15 years | ||
Customer relationships | |||
Amortized intangible assets: | |||
Gross Carrying Amount | $ 70,120 | 68,886 | |
Accumulated Amortization | (15,181) | (13,401) | |
Net Value | $ 54,939 | 55,485 | |
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 | $ 22,307 | 21,827 | |
Accumulated Amortization | (15,611) | (14,812) | |
Net Value | $ 6,696 | $ 7,015 | |
License agreements and other | Weighted Average | |||
Amortized intangible assets: | |||
Amortization Period | 7 years 7 months 6 days |
INCOME TAXES QTR (Details)
INCOME TAXES QTR (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
INCOME TAXES | |||
Statutory federal income tax rate (as a percent) | 21.00% | 35.00% | |
Net tax charge | $ 24.7 | ||
Recognized charge representing provisional estimate of one-time transition tax | 31.6 | ||
Estimate of deferred income tax benefit related to corporate rate change | (6.8) | ||
Effective income tax rate (as a percent) | 27.00% | 25.40% | |
Increase (decrease) in income taxes | $ 1.3 | ||
Increase in effective tax rates due to GILTI and BEAT taxes | 4.30% | ||
Decrease in effective tax rate from employee share-based compensation deductions | (2.10%) | ||
Decrease in effective tax rate from tax settlements | (0.50%) | ||
Income tax uncertainties | $ 3.2 | 3.1 | |
Amount of income tax uncertainties that, if recognized, would impact the effective tax rate | 3.2 | $ 3.1 | |
Decrease in liability for uncertain tax positions, high end of range | $ 1.4 |
LONG-TERM OBLIGATIONS (Details)
LONG-TERM OBLIGATIONS (Details) € in Thousands, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018USD ($) | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Long-Term Obligations | ||||
Revolving credit facility maximum borrowing capacity | $ 300,000 | |||
Revolving credit facility maturity date | Jul. 1, 2022 | |||
Amount outstanding under line of credit | $ 0 | $ 0 | ||
Consolidated Leverage Ratio | 1.15 | |||
Consolidated Interest Coverage Ratio | 12.12 | |||
Long-term obligations gross including current maturities | $ 1,264,731 | 1,256,375 | ||
Current maturities of long-term obligations | (61,505) | (61,833) | ||
Total long-term obligations | 1,203,226 | 1,194,542 | ||
Deferred Finance Costs, Net, Total | 3,251 | 3,396 | ||
Deferred debt issuance costs noncurrent | 3,251 | 3,396 | ||
Long-term obligations including current maturities | 1,261,480 | 1,252,979 | ||
Current maturities of long-term obligations | (61,505) | (61,833) | ||
Long-term obligations, net of unamortized debt issuance costs | 1,199,975 | 1,191,146 | ||
Aggregate long-term maturities, excluding capital lease obligations | ||||
2,018 | 61,047 | |||
2,019 | 59,105 | |||
2,020 | 57,991 | |||
2,021 | 57,993 | |||
2,022 | 132,823 | |||
Thereafter | $ 895,218 | |||
Minimum | ||||
Long-Term Obligations | ||||
Consolidated Interest Coverage Ratio | 3 | |||
Maximum | ||||
Long-Term Obligations | ||||
Consolidated Leverage Ratio | 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 | 654 | 692 | ||
Long-term obligations including current maturities | 279,346 | 279,308 | ||
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 | 14,607 | 15,349 | ||
Long-term obligations including current maturities | $ 14,607 | $ 15,349 | ||
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% | ||
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% | ||
Senior unsecured notes 3.2%, due in 2022 | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 75,000 | $ 75,000 | ||
Deferred Finance Costs, Net, Total | 107 | 113 | ||
Long-term obligations including current maturities | $ 74,893 | $ 74,887 | ||
Interest rate on notes (as a percent) | 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 | ||
Deferred Finance Costs, Net, Total | 208 | 217 | ||
Long-term obligations including current maturities | $ 124,792 | $ 124,783 | ||
Interest rate on notes (as a percent) | 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 | $ 123,190 | $ 120,095 | ||
Deferred Finance Costs, Net, Total | 503 | 526 | ||
Long-term obligations including current maturities | 122,687 | 119,569 | ||
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 | ||
Deferred Finance Costs, Net, Total | 86 | 89 | ||
Long-term obligations including current maturities | $ 49,914 | $ 49,911 | ||
Interest rate on notes (as a percent) | 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 | ||
Deferred Finance Costs, Net, Total | 208 | 217 | ||
Long-term obligations including current maturities | $ 99,792 | $ 99,783 | ||
Interest rate on notes (as a percent) | 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 | $ 246,380 | $ 240,190 | ||
Deferred Finance Costs, Net, Total | 1,025 | 1,066 | ||
Long-term obligations including current maturities | 245,355 | 239,124 | ||
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 | ||
Deferred Finance Costs, Net, Total | 230 | 238 | ||
Long-term obligations including current maturities | $ 124,770 | $ 124,762 | ||
Interest rate on notes (as a percent) | 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 | ||
Deferred Finance Costs, Net, Total | 230 | 238 | ||
Long-term obligations including current maturities | $ 124,770 | $ 124,762 | ||
Interest rate on notes (as a percent) | 3.60% | 3.60% | ||
Capital lease obligations | ||||
Long-Term Obligations | ||||
Long-term obligations gross including current maturities | $ 554 | $ 741 | ||
Long-term obligations including current maturities | $ 554 | $ 741 |
RETIREMENT AND DEFERRED COMPE54
RETIREMENT AND DEFERRED COMPENSATION PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
United States | ||
Change in benefit obligation: | ||
Service cost | $ 2,849 | $ 2,420 |
Interest cost | 1,720 | 1,748 |
Components of net periodic benefit cost: | ||
Service cost | 2,849 | 2,420 |
Interest cost | 1,720 | 1,748 |
Expected return on plan assets | (2,814) | (2,464) |
Amortization of net loss | 1,218 | 801 |
Net periodic benefit cost | 2,973 | 2,505 |
Minimum funding requirements | 0 | |
Foreign Plans | ||
Change in benefit obligation: | ||
Service cost | 1,531 | 1,337 |
Interest cost | 472 | 424 |
Change in plan assets: | ||
Employer contribution | 800 | |
Components of net periodic benefit cost: | ||
Service cost | 1,531 | 1,337 |
Interest cost | 472 | 424 |
Expected return on plan assets | (679) | (568) |
Amortization of net loss | 446 | 447 |
Amortization of prior service cost | 129 | 94 |
Net periodic benefit cost | 1,899 | $ 1,734 |
Expected contribution in current fiscal year | $ 3,100 |
ACCUMULATED OTHER COMPREHENSI55
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | $ 1,311,738 | |
Balance at the end of the period | 1,404,467 | |
Foreign Currency | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | (185,503) | $ (259,888) |
Other comprehensive income (loss) before reclassifications | 22,924 | 23,184 |
Net current-period other comprehensive income (loss) | 22,924 | 23,184 |
Balance at the end of the period | (162,579) | (236,704) |
Defined Benefit Pension Plans | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | (64,595) | (59,775) |
Amounts reclassified from accumulated other comprehensive income | 1,356 | 879 |
Net current-period other comprehensive income (loss) | 1,356 | 879 |
Balance at the end of the period | (63,239) | (58,896) |
Derivatives | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | (3,204) | (46) |
Other comprehensive income (loss) before reclassifications | (4,715) | |
Amounts reclassified from accumulated other comprehensive income | 5,068 | 7 |
Net current-period other comprehensive income (loss) | 353 | 7 |
Balance at the end of the period | (2,851) | (39) |
Accumulated Other Comprehensive Income/(Loss) | ||
Accumulated other comprehensive income activity | ||
Balance at the beginning of the period | (253,302) | (319,709) |
Other comprehensive income (loss) before reclassifications | 18,209 | 23,184 |
Amounts reclassified from accumulated other comprehensive income | 6,424 | 886 |
Net current-period other comprehensive income (loss) | 24,633 | 24,070 |
Balance at the end of the period | $ (228,669) | $ (295,639) |
ACCUMULATED OTHER COMPREHENSI56
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Reclassifications From Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Miscellaneous, net | $ (867) | $ (559) |
Interest expense | 8,055 | 8,262 |
Total before tax | (81,217) | (69,480) |
Tax benefit | 21,929 | 17,675 |
Total reclassifications for the period | (59,300) | (51,820) |
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Total reclassifications for the period | 6,424 | 886 |
Defined Benefit Pension Plans | Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amortization of net loss | 1,664 | 1,248 |
Amortization of prior service cost | 129 | 94 |
Total before tax | 1,793 | 1,342 |
Tax benefit | (437) | (463) |
Total reclassifications for the period | 1,356 | 879 |
Derivatives | Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Total before tax | 6,108 | 10 |
Tax benefit | (1,040) | (3) |
Total reclassifications for the period | 5,068 | 7 |
Derivatives | Treasury locks | Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Interest expense | 11 | $ 10 |
Derivatives | Cross Currency Swap Contract: Interest Component | Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Interest expense | (1,019) | |
Derivatives | Cross Currency Swap Contract: Foreign Exchange Component | Amount Reclassified from Accumulated Other Comprehensive Income | ||
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Miscellaneous, net | $ 7,116 |
DERIVATIVE INSTRUMENTS AND HE57
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Cash Flow Hedge) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Sep. 30, 2017 | Jul. 20, 2017 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Net after-tax loss included in accumulated other comprehensive earnings | $ (346) | ||
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) | (5,681) | ||
Cross Currency Swap Contract | Derivatives in Cash Flow Hedging Relationships | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount hedged | $ 280,000 | ||
Net after-tax loss included in accumulated other comprehensive earnings | 2,800 | ||
Fair value of derivative liability | 23,500 | ||
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 | $ 3,700 | ||
Notes payable to banks | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Proceeds from debt | $ 280,000 |
DERIVATIVE INSTRUMENTS AND HE58
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Fair Value of Derivative Instruments in the Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Fair Value of Derivative Instruments | |||
Derivative Assets | $ 289 | $ 663 | |
Derivative Liabilities | 24,636 | 17,913 | |
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | 141 | $ 645 | |
Foreign Exchange Contracts | |||
Fair Value of Derivative Instruments | |||
Aggregate amount of forward exchange contracts outstanding | 104,800 | ||
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | 141 | $ 645 | |
Derivative Contracts Not Designated as Hedging Instruments | |||
Fair Value of Derivative Instruments | |||
Derivative Assets | 289 | 663 | |
Derivative Liabilities | 1,106 | 1,604 | |
Derivative Contracts Not Designated as Hedging Instruments | Foreign Exchange Contracts | Prepayments and other | |||
Fair Value of Derivative Instruments | |||
Derivative Assets | 289 | 663 | |
Derivative Contracts Not Designated as Hedging Instruments | Foreign Exchange Contracts | Accounts payable and accrued liabilities | |||
Fair Value of Derivative Instruments | |||
Derivative Liabilities | 1,106 | 1,604 | |
Derivative Contracts Designated as Hedging Instruments | |||
Fair Value of Derivative Instruments | |||
Derivative Liabilities | 23,530 | 16,309 | |
Derivative Contracts Designated as Hedging Instruments | Cross Currency Swap Contract | Accounts payable and accrued liabilities | |||
Fair Value of Derivative Instruments | |||
Derivative Liabilities | $ 23,530 | $ 16,309 |
DERIVATIVE INSTRUMENTS AND HE59
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Effect of Derivative Instruments on the Consolidated Statements of Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Derivative instruments, gain or (loss) | ||
Foreign Exchange Contract, Amount of Gain (Loss) Recognized in Income on Derivative, not designated as hedging instruments | $ 141 | $ 645 |
Derivatives in Cash Flow Hedging Relationships | ||
Derivative instruments, gain or (loss) | ||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | (5,681) | |
Amount of Gain (Loss) Reclassified from AOCI on Derivative | (6,097) | |
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 | 141 | $ 645 |
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) | 1,435 | |
Amount of Gain (Loss) Reclassified from AOCI on Derivative | 1,019 | |
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) | (7,116) | |
Amount of Gain (Loss) Reclassified from AOCI on Derivative | $ (7,116) |
DERIVATIVE INSTRUMENTS AND HE60
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Derivative Assets and Liabilities) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Derivative Assets | ||
Gross Amount | $ 289 | $ 663 |
Net Amounts Presented in the Statement of Financial Position | 289 | 663 |
Net Amount | 289 | 663 |
Derivative Liabilities | ||
Gross Amount | 24,636 | 17,913 |
Net Amounts Presented in the Statement of Financial Position | 24,636 | 17,913 |
Net Amount | $ 24,636 | $ 17,913 |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Liabilities | ||
Fair value of long-term obligations | $ 1,100,000 | $ 1,100,000 |
Assets and liabilities measured at fair value on recurring basis | ||
Assets | ||
Foreign exchange contracts, assets | 289 | 663 |
Total assets at fair value | 289 | 663 |
Liabilities | ||
Foreign exchange contracts, liabilities | 1,106 | 1,604 |
Cross currency swap contract, liability | 23,530 | 16,309 |
Total liabilities at fair value | 24,636 | 17,913 |
Assets and liabilities measured at fair value on recurring basis | Level 2 | ||
Assets | ||
Foreign exchange contracts, assets | 289 | 663 |
Total assets at fair value | 289 | 663 |
Liabilities | ||
Foreign exchange contracts, liabilities | 1,106 | 1,604 |
Cross currency swap contract, liability | 23,530 | 16,309 |
Total liabilities at fair value | $ 24,636 | $ 17,913 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
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 | ||
Mar. 31, 2018 | Mar. 31, 2017 | Oct. 20, 2016 | |
STOCK REPURCHASE PROGRAM | |||
Share repurchases authorized amount | $ 350,000 | ||
Common stock repurchased (in shares) | 189 | ||
Aggregate amount of share repurchases (in dollars) | $ 3,905 | ||
Common stock repurchased (retired and held in treasury) (in shares) | 189 | ||
Common stock repurchased (retired and held in treasury) | $ 16,700 | ||
Common stock repurchased and retired (in shares) | 144 | 210 | |
Common stock repurchased and retired | $ 12,797 | $ 16,019 | |
Remaining authorized repurchase amount | $ 125,200 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
STOCK-BASED COMPENSATION | ||
Proceeds from stock option exercises | $ 34,880 | $ 18,705 |
Stock options | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 3 years | |
Expiration period | 10 years | |
Compensation expense | $ 4,900 | 6,900 |
Compensation expense, net of tax | 3,500 | 4,600 |
Income tax benefit related to compensation expense | 1,400 | 2,300 |
Fair value of shares vested | 16,500 | 16,900 |
Proceeds from stock option exercises | 34,900 | |
Actual tax benefit realized for the tax deduction from option exercises | 6,000 | |
Unrecognized compensation cost expected to be recognized in future periods | $ 17,400 | |
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 | $ 4,000 | 6,000 |
Restricted stock units | ||
STOCK-BASED COMPENSATION | ||
Compensation expense | 2,600 | 900 |
Actual tax benefit realized for the tax deduction from option exercises | 383 | |
Unrecognized compensation cost expected to be recognized in future periods | $ 24,400 | |
Weighted-average period over which compensation cost is expected to be recognized | 2 years 8 months 12 days | |
Weighted-Average Grant-Date Fair Value | ||
Fair value of units vested | $ 1,000 | 2,800 |
Intrinsic value of units vested | $ 1,300 | $ 3,000 |
Restricted stock units (time-based) | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 3 years | |
Restricted stock unit activity | ||
Balance at the beginning of the period (in shares) | 124,067 | |
Granted (in shares) | 80,067 | |
Vested (in shares) | (14,281) | |
Balance at the end of the period (in shares) | 189,853 | |
Weighted-Average Grant-Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $ 74.65 | |
Granted (in dollars per share) | 89.42 | |
Vested (in dollars per share) | 71.72 | |
Nonvested at the end of the period (in dollars per share) | $ 81.10 | |
Restricted stock units (performance-based) | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 3 years | |
Assumptions used to estimate fair value of stock options granted | ||
Dividend Yield (as a percent) | 1.43% | |
Expected Stock Price Volatility (as a percent) | 12.30% | |
Risk-free Interest Rate (as a percent) | 2.42% | |
Assumptions used to estimate fair value of restricted stock units granted | ||
Fair value per stock award (in dollars per share) | $ 128.70 | |
Grant date stock price (in dollars per share) | $ 89.42 | |
Expected Stock Price Volatility (as a percent) | 12.30% | |
Expected average volatility of peer companies (as a percent) | 27.50% | |
Correlation assumption (as a percent) | 20.20% | |
Risk-free Interest Rate (as a percent) | 2.42% | |
Dividend Yield (as a percent) | 1.43% | |
Restricted stock unit activity | ||
Granted (in shares) | 80,843 | |
Balance at the end of the period (in shares) | 80,843 | |
Weighted-Average Grant-Date Fair Value | ||
Granted (in dollars per share) | $ 111.55 | |
Nonvested at the end of the period (in dollars per share) | 111.55 | |
Stock Awards Plans | Stock options | ||
STOCK-BASED COMPENSATION | ||
Weighted-average fair value of stock options granted (in dollars per share) | $ 14.82 | $ 11.85 |
Assumptions used to estimate fair value of stock options granted | ||
Dividend Yield (as a percent) | 1.50% | 1.70% |
Expected Stock Price Volatility (as a percent) | 14.20% | 15.80% |
Risk-free Interest Rate (as a percent) | 2.80% | 2.20% |
Expected Life of Option (years) | 6 years 7 months 6 days | 6 years 8 months 12 days |
Stock options activity | ||
Outstanding at the beginning of the period (in shares) | 8,059,319 | |
Granted (in shares) | 603,901 | |
Exercised (in shares) | (613,913) | |
Forfeited or expired (in shares) | (26,738) | |
Outstanding at the end of the period (in shares) | 8,022,569 | |
Exercisable at the end of the period (in shares) | 5,935,087 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 61.67 | |
Granted (in dollars per share) | 88.39 | |
Exercised (in dollars per share) | 52.73 | |
Forfeited or expired (in dollars per share) | 63.13 | |
Outstanding at the end of the period (in dollars per share) | 64.36 | |
Exercisable at the end of the period (in dollars per share) | $ 59.55 | |
Weighted-Average Remaining Contractual Term (Years): | ||
Outstanding at the end of the period | 6 years 4 months 24 days | |
Exercisable at the end of the period | 5 years 6 months | |
Aggregate Intrinsic Value: | ||
Outstanding at the end of the period | $ 204,336 | |
Exercisable at the end of the period | 179,720 | |
Intrinsic Value of Options Exercised | $ 22,804 | $ 15,289 |
Assumptions used to estimate fair value of restricted stock units granted | ||
Expected Stock Price Volatility (as a percent) | 14.20% | 15.80% |
Risk-free Interest Rate (as a percent) | 2.80% | 2.20% |
Dividend Yield (as a percent) | 1.50% | 1.70% |
Director Stock Option Plans | Stock options | ||
Stock options activity | ||
Outstanding at the beginning of the period (in shares) | 214,967 | |
Exercised (in shares) | (44,000) | |
Outstanding at the end of the period (in shares) | 170,967 | |
Exercisable at the end of the period (in shares) | 170,967 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 57.44 | |
Exercised (in dollars per share) | 53.35 | |
Outstanding at the end of the period (in dollars per share) | 58.49 | |
Exercisable at the end of the period (in dollars per share) | $ 58.49 | |
Weighted-Average Remaining Contractual Term (Years): | ||
Outstanding at the end of the period | 4 years 10 months 24 days | |
Exercisable at the end of the period | 4 years 10 months 24 days | |
Aggregate Intrinsic Value: | ||
Outstanding at the end of the period | $ 5,358 | |
Exercisable at the end of the period | 5,358 | |
Intrinsic Value of Options Exercised | $ 1,608 | |
Director Stock Option Plans | Restricted stock units | ||
STOCK-BASED COMPENSATION | ||
Award vesting period | 1 year | |
Director Stock Option Plans | Restricted stock units (time-based) | ||
Restricted stock unit activity | ||
Balance at the end of the period (in shares) | 14,793 | |
New long-term incentive program | ||
STOCK-BASED COMPENSATION | ||
Compensation expense | $ 409 | $ 282 |
Expected total expense related to program over the performance period | $ 2,600 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Earning per share | |||
Authorized common stock (in shares) | 199,000 | 199,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Income (Numerator) | |||
Income available to common stockholders, basic (in dollars) | $ 59,300 | $ 51,820 | |
Income available to common stockholders, diluted (in dollars) | $ 59,300 | $ 51,820 | |
Shares (Denominator) | |||
Basic (in shares) | 62,128 | 62,355 | |
Total average equivalent shares | 64,414 | 64,234 | |
Per Share Amount | |||
Net income per share, basic (in dollars per share) | $ 0.95 | $ 0.83 | |
Net income per share, diluted (in dollars per share) | $ 0.92 | $ 0.81 | |
Stock options | |||
Shares (Denominator) | |||
Effect of dilutive stock based compensation (in shares) | 2,216 | 1,827 | |
Restricted stock units | |||
Shares (Denominator) | |||
Effect of dilutive stock based compensation (in shares) | 70 | 52 |
SEGMENT INFORMATION (Summary of
SEGMENT INFORMATION (Summary of Reportable Segments) (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Financial information regarding the Company's reportable segments | |||
Number of reportable segments | segment | 3 | ||
Net sales | $ 703,350 | $ 601,316 | |
Depreciation and amortization | 41,175 | 37,331 | |
Interest expense | (8,055) | (8,262) | |
Interest income | 2,248 | 330 | |
Income before Income Taxes | 81,217 | 69,480 | |
Capital Expenditures | 40,019 | 34,848 | |
Total Assets | 3,283,694 | $ 3,137,823 | |
Restructuring Initiatives by Segment | |||
Total Restructuring Initiatives | 5,936 | ||
Employee severance | |||
Restructuring Initiatives by Segment | |||
Total Restructuring Initiatives | 221 | ||
Business Transformation | |||
Restructuring Initiatives by Segment | |||
Total Restructuring Initiatives | 5,936 | ||
Beauty + Home | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 378,173 | 322,448 | |
Adjusted EBITDA | 53,135 | 42,088 | |
Restructuring Initiatives by Segment | |||
Total Restructuring Initiatives | 5,016 | ||
Pharma | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 230,127 | 196,912 | |
Adjusted EBITDA | 79,840 | 68,841 | |
Restructuring Initiatives by Segment | |||
Total Restructuring Initiatives | 364 | ||
Food + Beverage | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 95,050 | 81,956 | |
Adjusted EBITDA | 12,739 | 12,946 | |
Restructuring Initiatives by Segment | |||
Total Restructuring Initiatives | 315 | ||
Corporate & Other | |||
Financial information regarding the Company's reportable segments | |||
Adjusted EBITDA | (11,579) | (9,132) | |
Restructuring Initiatives by Segment | |||
Total Restructuring Initiatives | 241 | ||
Operating segment | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 709,240 | 606,196 | |
Operating segment | Beauty + Home | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 383,463 | 326,933 | |
Operating segment | Pharma | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 230,132 | 196,914 | |
Operating segment | Food + Beverage | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 95,645 | 82,349 | |
Intersegment | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 5,890 | 4,880 | |
Intersegment | Beauty + Home | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 5,290 | 4,485 | |
Intersegment | Pharma | |||
Financial information regarding the Company's reportable segments | |||
Net sales | 5 | 2 | |
Intersegment | Food + Beverage | |||
Financial information regarding the Company's reportable segments | |||
Net sales | $ 595 | $ 393 |
INSURANCE SETTLEMENT RECEIVAB67
INSURANCE SETTLEMENT RECEIVABLE (Details) - Beauty + Home - France - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
INSURANCE SETTLEMENT RECEIVABLE | ||
Costs incurred related to fire | $ 5.9 | $ 4.9 |
Advances on insurance proceeds received | 18.9 | |
Insurance receivable | 0 | |
Gain contingencies recognized | 0 | |
Expenses related to fire | $ 1.5 | $ 1.3 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Feb. 28, 2017 | Mar. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
Acquisitions | ||||
Investment in unconsolidated affiliate | $ 5,000 | |||
Assets | ||||
Goodwill | $ 451,243 | $ 443,887 | ||
Kali Care | ||||
Acquisitions | ||||
Percentage of interest acquired | 20.00% | |||
Investment in unconsolidated affiliate | $ 5,000 |
RESTRUCTURING INITIATIVE (Detai
RESTRUCTURING INITIATIVE (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Restructuring reserve | |
Restructuring reserve, balance at the beginning of the period | $ 2,258 |
Expense recognized related to the plan | 5,936 |
Cash paid | (4,571) |
FX impact | 57 |
Restructuring reserve, balance at the end of the period | 3,680 |
Employee severance | |
Restructuring reserve | |
Restructuring reserve, balance at the beginning of the period | 2,258 |
Expense recognized related to the plan | 221 |
Cash paid | (357) |
FX impact | 58 |
Restructuring reserve, balance at the end of the period | 2,180 |
Other costs | |
Restructuring reserve | |
Expense recognized related to the plan | 5,715 |
Cash paid | (4,214) |
FX impact | (1) |
Restructuring reserve, balance at the end of the period | 1,500 |
Business Transformation | |
Restructuring initiatives | |
Expected future implementation costs | $ 90,000 |
Expected term of additional implementation costs | P3Y |
Expected future capital investments related to transformation plan | $ 45,000 |
Restructuring reserve | |
Expense recognized related to the plan | 5,936 |
Beauty + Home | |
Restructuring reserve | |
Expense recognized related to the plan | 5,016 |
Pharma | |
Restructuring reserve | |
Expense recognized related to the plan | 364 |
Food + Beverage | |
Restructuring reserve | |
Expense recognized related to the plan | 315 |
Corporate & Other | |
Restructuring reserve | |
Expense recognized related to the plan | $ 241 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Thousands, € in Millions | May 01, 2018EUR (€) | May 01, 2018USD ($) | Mar. 31, 2018EUR (€) | Mar. 31, 2018USD ($) |
Subsequent Event [Line Items] | ||||
Restricted cash included in prepaid and other | $ 3,696 | |||
Reboul Member | ||||
Subsequent Event [Line Items] | ||||
Transaction costs recognized | 500 | |||
Restricted cash included in prepaid and other | € 3 | $ 3,700 | ||
Subsequent Events | Reboul Member | ||||
Subsequent Event [Line Items] | ||||
Percentage of interest acquired | 100.00% | 100.00% | ||
Acquisition enterprise value in cash less amount of net debt assumed | € 14 | $ 17,000 | ||
Subsequent Events | Reboul Member | Maximum | ||||
Subsequent Event [Line Items] | ||||
Acquisition enterprise value in cash less amount of net debt assumed | € 23 | $ 28,000 |