Notes to Condensed Consolidated Financial Statements (unaudited)
Note 1 Organization and Basis of Presentation
Organization
We are a leading global provider of packaging materials, equipment and systems, and services. Our portfolio of packaging solutions includes CRYOVAC® brand food packaging, SEALED AIR® brand protective packaging, AUTOBAG® brand automated packaging, BUBBLE WRAP® brand packaging and SEETM Automation solutions. Our packaging solutions are sold to an array of end markets including protein, foods, fluids, medical and life sciences, pet care, eCommerce and logistics, and industrials. Sealed Air provides solutions integrating packaging materials, automated equipment and systems, and services, which enable our customers to automate, reduce waste, simplify processes, and remove people from harm's way. We are investing in innovations that bring the industry toward a more sustainable future while providing food safety and security and product protection. We have established leading market positions through our differentiated packaging materials; automated equipment, systems and services; iconic brands; well-established customer relationships and global scale and market access.
We conduct substantially all of our business through two wholly-owned subsidiaries, Cryovac, LLC and Sealed Air Corporation (US). Throughout this report, when we refer to “Sealed Air,” the “Company,” “we,” “our,” or “us,” we are referring to Sealed Air Corporation and all of our subsidiaries, except where the context indicates otherwise.
Basis of Presentation
Our Condensed Consolidated Financial Statements include all of the accounts of the Company and our subsidiaries. We have eliminated all significant intercompany transactions and balances in consolidation. In management’s opinion, all adjustments, consisting only of normal recurring accruals, necessary for a fair statement of our Condensed Consolidated Balance Sheet as of June 30, 2021 and our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 have been made. The results set forth in our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and in our Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year. The Condensed Consolidated Balance Sheet as of December 31, 2020 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. Some prior period amounts, including the geographic regions described below, have been reclassified to conform to the current year presentation. These reclassifications, individually and in the aggregate, did not have a material impact on our condensed consolidated financial condition, results of operations or cash flows. All amounts are in millions, except per share amounts, and approximate due to rounding. All amounts are presented in U.S. dollar, unless otherwise specified.
Our Condensed Consolidated Financial Statements were prepared in accordance with the interim reporting requirements of the SEC. As permitted under those rules, annual footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ from these estimates.
We are responsible for the unaudited Condensed Consolidated Financial Statements and notes included in this report. As these are condensed financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“2020 Form 10-K”) and with the information contained in our other publicly-available filings with the SEC.
When we cross reference to a “Note,” we are referring to our “Notes to Condensed Consolidated Financial Statements,” unless the context indicates otherwise.
There were no significant changes to our significant accounting policies disclosed in “Note 2 – Summary of Significant Accounting Policies and Recently Issued Accounting Standards” of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 25, 2021.
As of January 1, 2021, we consolidated the reporting of the North America and South America geographic regions, which are now collectively presented as Americas within Note 3, “Revenue Recognition, Contracts with Customers” and Note 5, “Segments.” No changes were made to EMEA or APAC. This change has no impact on our prior period consolidated results
and is only the aggregation of the previously bifurcated continents. Where applicable, prior periods have been retrospectively adjusted to reflect the new geographic regions.
Impact of Inflation and Currency Fluctuation
Argentina
Economic and political events in Argentina have continued to expose us to heightened levels of foreign currency exchange risk. As of July 1, 2018, Argentina was designated as a highly inflationary economy under U.S. GAAP, and the U.S. dollar replaced the Argentine peso as the functional currency for our subsidiaries in Argentina. All Argentine peso-denominated monetary assets and liabilities were remeasured into U.S. dollars using the current exchange rate available to us. The impact of any changes in the exchange rate are reflected within Other (expense) income, net on the Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2021, the Company recorded a $0.5 million and $1.9 million remeasurement loss, respectively, and a $1.2 million and $2.1 million remeasurement loss for the three and six months ended June 30, 2020, respectively.
Note 2 Recently Adopted and Issued Accounting Standards
Recently Adopted Accounting Standards
In January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”). ASU 2021-01 provides temporary optional expedients and exceptions to certain guidance in U.S. GAAP to ease the financial reporting burdens related to the expected market transition from London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The guidance is effective upon issuance, on January 7, 2021, and can be applied through December 31, 2022. This update did not have a material impact on the Company's Condensed Consolidated Financial Statements.
In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323) and Derivatives and Hedging (Topic 815) - Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”). ASU 2020-01 makes improvements related to accounting for certain equity securities when the equity method of accounting is applied or discontinued and provides scope considerations related to forward contracts and purchased options on certain securities. The Company adopted ASU 2020-01 on January 1, 2021. The adoption did not have a material impact on the Company's Condensed Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 eliminates certain exceptions to the guidance in Topic 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes, enacted change in tax laws or rates and clarifies the accounting transactions that result in a step-up in the tax basis of goodwill. The Company adopted ASU 2019-12 on January 1, 2021. The adoption did not have a material impact on the Company's Condensed Consolidated Financial Statements.
Note 3 Revenue Recognition, Contracts with Customers
Description of Revenue Generating Activities
We employ sales, marketing and customer service personnel throughout the world who sell and market our systems, products and services to and/or through a large number of distributors, fabricators, converters, eCommerce and mail order fulfillment firms, and contract packaging firms as well as directly to end-users such as food processors, food service businesses, supermarket retailers, pharmaceutical companies, healthcare facilities, medical device manufacturers, and other manufacturers.
As discussed in Note 5, “Segments,” our reporting segments are Food and Protective. Our Food applications are largely sold directly to end customers, while our Protective products are sold through business supply distributors and directly to the end customer.
Food:
Food solutions are sold to perishable food processors in fresh red meat, smoked and processed meats, poultry, seafood, plant-based and dairy (solid and liquids) markets worldwide. Food offers integrated packaging materials and automated equipment solutions to increase food safety, extend shelf life, automate processes and optimize total cost. Its materials, automated equipment and service enables customers to reduce costs and enhance their brands in the marketplace.
Food solutions are utilized by food service businesses (such as restaurants and entertainment venues) (“food service”) and food retailers (such as grocery stores and supermarkets) (“food retail”), among others. Solutions serving the food service market include products such as barrier bags and pouches, and are primarily marketed under the CRYOVAC® trademark and other highly recognized trade names including CRYOVAC® brand Barrier Bags, CRYOVAC® brand Form-Fill-Seal Films, and CRYOVAC® brand Auto Pouch System. Solutions serving the food retail market include products such as barrier bags, film, and trays, and are primarily marketed under the CRYOVAC® trademark and other highly recognized trade names including CRYOVAC® brand Grip & TearTM, CRYOVAC® brand Darfresh®, OptiDure™, Simple Steps®, and CRYOVAC® brand Barrier Bags.
Protective:
Protective packaging solutions are utilized across many global markets to protect goods during transit and are especially valuable to eCommerce, consumer goods, pharmaceutical and medical devices and industrial manufacturing. Protective solutions are designed to increase our customers' packaging velocity, minimize packaging waste, reduce labor dependencies and address dimensional weight challenges.
Protective solutions are sold through a strategic network of distributors as well as directly to our customers, including, but not limited to, fabricators, original equipment manufacturers, contract manufacturers, logistics partners and eCommerce/fulfillment operations. Protective solutions are marketed under SEALED AIR® brand, BUBBLE WRAP® brand, AUTOBAG® brand and other highly recognized trade names and product families including BUBBLE WRAP® brand inflatable packaging, SEALED AIR® brand performance shrink films, AUTOBAG® brand bagging systems, Instapak® polyurethane foam packaging solutions and Korrvu® suspension and retention packaging. In addition, we provide temperature assurance packaging solutions under the KevothermalTM and TempGuardTM brands.
Revenue Recognition
Revenue from contracts with customers is recognized upon transfer of control to the customer. Revenue for materials and equipment sales is recognized based on shipping terms, which is the point in time the customer obtains control of the promised goods. Maintenance revenue is recognized straight-line on the basis that the level of effort is consistent over the term of the contract.
The transaction price is allocated to each standalone performance obligation in the contract based on observable selling prices or one of the following three methods: an adjusted market assessment approach, expected cost plus a margin approach, or residual approach. We include in the transaction price some or all of an amount of variable consideration estimated to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
Charges for rebates and other allowances are recognized as a deduction from revenue on an accrual basis in the period in which the associated revenue is recorded. Revenue recognized for the three and six months ended June 30, 2021 from performance obligations satisfied in previous reporting periods was $1.0 million and $0.8 million, respectively, and $1.2 million and $2.2 million for the three and six months ended June 30, 2020, respectively.
The Company does not adjust consideration in contracts with customers for the effects of a significant financing component if the Company expects that the period between transfer of a good or service and payment for that good or service will be one year or less. This is expected to be the case for the majority of the Company's contracts.
Lease components within contracts with customers are recognized in accordance with ASC 842.
Disaggregated Revenue
For the three and six months ended June 30, 2021 and 2020, revenues from contracts with customers summarized by Segment and Geography were as follows:
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Three Months Ended June 30, 2021
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Six Months Ended June 30, 2021
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(In millions)
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Food
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Protective
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Total
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Food
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Protective
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Total
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Americas
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$
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458.4
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$
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373.3
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$
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831.7
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$
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893.2
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$
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721.4
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$
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1,614.6
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EMEA
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168.1
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133.5
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301.6
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320.0
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262.0
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582.0
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APAC
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101.5
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83.5
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185.0
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211.4
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170.3
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381.7
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Topic 606 Segment Revenue
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728.0
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590.3
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1,318.3
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1,424.6
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1,153.7
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2,578.3
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Non-Topic 606 Revenue (Leasing: Sales-type and Operating)
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8.7
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1.5
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10.2
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14.3
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3.0
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17.3
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Total
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$
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736.7
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$
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591.8
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$
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1,328.5
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$
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1,438.9
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$
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1,156.7
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$
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2,595.6
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Three Months Ended June 30, 2020
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Six Months Ended June 30, 2020
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(In millions)
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Food
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Protective
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Total
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Food
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Protective
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Total
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Americas
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$
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424.5
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$
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311.6
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$
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736.1
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$
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875.1
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$
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623.5
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$
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1,498.6
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EMEA
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150.2
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87.9
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238.1
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291.9
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191.4
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483.3
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APAC
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92.3
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77.1
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169.4
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186.2
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143.8
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330.0
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Topic 606 Segment Revenue
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667.0
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476.6
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1,143.6
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1,353.2
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958.7
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2,311.9
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Non-Topic 606 Revenue (Leasing: Sales-type and Operating)
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6.2
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1.4
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7.6
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10.3
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2.9
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13.2
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Total
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$
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673.2
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$
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478.0
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$
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1,151.2
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$
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1,363.5
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$
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961.6
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$
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2,325.1
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Contract Balances
The time between when a performance obligation is satisfied and when billing and payment occur is closely aligned, with the exception of equipment accruals, which can be used to purchase both automated and standard range equipment. An equipment accrual is a contract offering, whereby a customer is incentivized to use a portion of the materials transaction price for future equipment purchases. Long-term contracts that include an equipment accrual create a timing difference between when cash is collected and when the performance obligation is satisfied, resulting in a contract liability (unearned revenue). The following contract assets and liabilities are included within Prepaid expenses and other current assets, Other current liabilities, or Other non-current liabilities in our Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020:
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(In millions)
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June 30, 2021
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December 31, 2020
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Contract assets
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$
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1.2
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$
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1.4
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Contract liabilities
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$
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19.0
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$
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20.3
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The contract liability balances represent deferred revenue, primarily related to equipment accruals. Revenue recognized in the three and six months ended June 30, 2021 that was included in the contract liability balance at the beginning of the period was $2.8 million and $8.6 million, respectively, and $0.4 million and $5.3 million in the three and six months ended June 30, 2020, respectively. This revenue was driven primarily by equipment performance obligations being satisfied.
Remaining Performance Obligations
The following table summarizes the estimated transaction price from contracts with customers allocated to performance obligations or portions of performance obligations that have not yet been satisfied as of June 30, 2021, as well as the expected timing of recognition of that transaction price.
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(In millions)
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June 30, 2021
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December 31, 2020
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Short-Term (12 months or less)(1)
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$
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16.2
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$
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7.3
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Long-Term
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2.8
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13.0
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Total transaction price
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$
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19.0
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$
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20.3
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(1) The table above does not include the transaction price of any remaining performance obligations that are part of the contracts with expected durations of one year or less.
Note 4 Leases
Lessor
Sealed Air has contractual obligations as a lessor with respect to some of our equipment solutions including 'free on loan' equipment and leased equipment, both sales-type and operating. The consideration in a contract that contains both lease and non-lease components is allocated based on the standalone selling price.
Our contractual obligations for operating leases can include termination and renewal options. Our contractual obligations for sales-type leases tend to have fixed terms and can include purchase options. We utilize the reasonably certain threshold criteria in determining which options our customers will exercise.
All lease payments are primarily fixed in nature and therefore captured in the lease receivable. Our lease receivable balances at June 30, 2021 and December 31, 2020 were as follows:
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(In millions)
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June 30, 2021
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December 31, 2020
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Short-Term (12 months or less)
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$
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5.8
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$
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5.4
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Long-Term
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12.8
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11.9
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Total lease receivables (Sales-type and Operating)
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$
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18.6
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$
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17.3
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Lessee
Sealed Air has contractual obligations as a lessee with respect to warehouses, offices, manufacturing facilities, IT equipment, automobiles, and material production equipment.
The following table details our lease obligations included in our Condensed Consolidated Balance Sheets.
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(In millions)
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June 30, 2021
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December 31, 2020
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Other non-current assets:
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Finance leases - ROU assets
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$
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58.5
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$
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58.2
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Finance leases - Accumulated depreciation
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(23.9)
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(22.6)
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Operating lease right-of-use-assets:
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Operating leases - ROU assets
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132.8
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127.4
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Operating leases - Accumulated depreciation
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(62.1)
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(51.3)
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Total lease assets
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$
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105.3
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$
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111.7
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Current portion of long-term debt:
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Finance leases
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$
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(11.2)
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(10.5)
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Current portion of operating lease liabilities:
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Operating leases
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(23.7)
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(24.3)
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Long-term debt, less current portion:
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Finance leases
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(21.8)
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(23.9)
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Long-term operating lease liabilities, less current portion:
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Operating leases
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(48.8)
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(53.2)
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Total lease liabilities
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$
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(105.5)
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$
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(111.9)
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At June 30, 2021, estimated future minimum annual rental commitments under non-cancelable real and personal property leases were as follows:
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(In millions)
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Finance leases
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Operating leases
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Remainder of 2021
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$
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6.7
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$
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14.0
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2022
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10.0
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22.1
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2023
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6.3
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15.8
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2024
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2.4
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10.3
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2025
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|
1.9
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7.0
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Thereafter
|
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11.8
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12.2
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Total lease payments
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39.1
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81.4
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Less: Interest
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(6.1)
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(8.9)
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Present value of lease liabilities
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$
|
33.0
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$
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72.5
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The following lease cost is included in our Condensed Consolidated Statements of Operations:
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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(In millions)
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2021
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2020
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2021
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|
2020
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Lease cost(1)
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Finance leases
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|
|
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Amortization of ROU assets
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$
|
2.6
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$
|
2.8
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$
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5.2
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$
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5.5
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Interest on lease liabilities
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0.4
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|
0.4
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|
|
0.8
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|
|
0.9
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Operating leases
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7.6
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|
|
7.8
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|
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15.3
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|
15.9
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Short-term lease cost
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1.4
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|
0.8
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2.5
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|
1.7
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Variable lease cost
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|
0.8
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1.2
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2.7
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|
2.8
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Total lease cost
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$
|
12.8
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$
|
13.0
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$
|
26.5
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|
$
|
26.8
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(1) With the exception of Interest on lease liabilities, we record lease costs to Cost of sales or Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations, depending on the use of the leased asset. Interest on lease liabilities is recorded to Interest expense, net on the Condensed Consolidated Statements of Operations.
The following table details cash paid related to operating and financing leases included in our Condensed Consolidated Statements of Cash Flows and new ROU assets included in our Condensed Consolidated Balance Sheets:
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Six Months Ended
June 30,
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(In millions)
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2021
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2020
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Other information:
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|
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Cash paid for amounts included in the measurement of lease liabilities:
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|
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Operating cash flows - finance leases
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$
|
2.4
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|
$
|
2.3
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Operating cash flows - operating leases
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$
|
15.5
|
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|
$
|
17.5
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Financing cash flows - finance leases
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$
|
5.1
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|
$
|
5.9
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|
|
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|
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ROU assets obtained in exchange for new finance lease liabilities
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$
|
4.2
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|
|
$
|
5.1
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ROU assets obtained in exchange for new operating lease liabilities
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|
$
|
9.2
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|
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$
|
9.0
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|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
Weighted average information:
|
|
|
|
|
Finance leases
|
|
|
|
|
Remaining lease term (in years)
|
|
5.9
|
|
6.1
|
Discount rate
|
|
4.6
|
%
|
|
4.8
|
%
|
Operating leases
|
|
|
|
|
Remaining lease term (in years)
|
|
4.5
|
|
4.8
|
Discount rate
|
|
4.8
|
%
|
|
5.1
|
%
|
Note 5 Segments
The Company’s segment reporting structure consists of two reportable segments as follows and a Corporate category:
•Food; and
•Protective.
The Company’s Food and Protective segments are considered reportable segments under ASC Topic 280. Our reportable segments are aligned with similar groups of products. Corporate includes certain costs that are not allocated to the reportable segments. The Company evaluates performance of the reportable segments based on the results of each segment. The performance metric used by the Company's chief operating decision maker to evaluate performance of our reportable segments is Segment Adjusted EBITDA. The Company allocates expense to each segment based on various factors including direct usage of resources, allocation of headcount, allocation of software licenses or, in cases where costs are not clearly delineated, costs may be allocated on portion of either net trade sales or an expense factor such as cost of sales.
We allocate and disclose depreciation and amortization expense to our segments, although depreciation and amortization are not included in the segment performance metric Segment Adjusted EBITDA. We also allocate and disclose restructuring charges and impairment of goodwill and other intangible assets by segment, although they are not included in the segment performance metric Segment Adjusted EBITDA since restructuring charges and impairment of goodwill and other intangible assets are categorized as Special Items (as identified below). The accounting policies of the reportable segments and Corporate are the same as those applied to the Condensed Consolidated Financial Statements.
The following tables show Net Sales and Segment Adjusted EBITDA by reportable segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net Sales:
|
|
|
|
|
|
|
|
|
Food
|
|
$
|
736.7
|
|
|
$
|
673.2
|
|
|
$
|
1,438.9
|
|
|
$
|
1,363.5
|
|
As a % of Total Company net sales
|
|
55.5
|
%
|
|
58.5
|
%
|
|
55.4
|
%
|
|
58.6
|
%
|
Protective
|
|
591.8
|
|
|
478.0
|
|
|
1,156.7
|
|
|
961.6
|
|
As a % of Total Company net sales
|
|
44.5
|
%
|
|
41.5
|
%
|
|
44.6
|
%
|
|
41.4
|
%
|
Total Company Net Sales
|
|
$
|
1,328.5
|
|
|
$
|
1,151.2
|
|
|
$
|
2,595.6
|
|
|
$
|
2,325.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Segment Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
Food Adjusted EBITDA
|
|
$
|
158.1
|
|
|
$
|
169.1
|
|
|
$
|
315.0
|
|
|
$
|
325.4
|
|
Food Adjusted EBITDA Margin
|
|
21.5
|
%
|
|
25.1
|
%
|
|
21.9
|
%
|
|
23.9
|
%
|
Protective Adjusted EBITDA
|
|
107.3
|
|
|
91.5
|
|
|
217.2
|
|
|
184.3
|
|
Protective Adjusted EBITDA Margin
|
|
18.1
|
%
|
|
19.1
|
%
|
|
18.8
|
%
|
|
19.2
|
%
|
Segment Adjusted EBITDA
|
|
$
|
265.4
|
|
|
$
|
260.6
|
|
|
$
|
532.2
|
|
|
$
|
509.7
|
|
|
|
|
|
|
|
|
|
|
The following table shows a reconciliation of Segment Adjusted EBITDA to Earnings before income tax provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Food Adjusted EBITDA
|
|
$
|
158.1
|
|
|
$
|
169.1
|
|
|
$
|
315.0
|
|
|
$
|
325.4
|
|
Protective Adjusted EBITDA
|
|
107.3
|
|
|
91.5
|
|
|
217.2
|
|
|
184.3
|
|
Corporate Adjusted EBITDA
|
|
(2.3)
|
|
|
(0.7)
|
|
|
(0.9)
|
|
|
3.4
|
|
Interest expense, net
|
|
(42.1)
|
|
|
(43.3)
|
|
|
(85.2)
|
|
|
(87.7)
|
|
Depreciation and amortization(1)
|
|
(58.2)
|
|
|
(53.4)
|
|
|
(115.1)
|
|
|
(104.9)
|
|
Special Items:
|
|
|
|
|
|
|
|
|
Restructuring charges(2)
|
|
(2.1)
|
|
|
(10.1)
|
|
|
(2.1)
|
|
|
(10.7)
|
|
Other restructuring associated costs(3)
|
|
(4.8)
|
|
|
(3.8)
|
|
|
(10.1)
|
|
|
(7.8)
|
|
Foreign currency exchange loss due to highly inflationary economies
|
|
(0.6)
|
|
|
(1.2)
|
|
|
(2.0)
|
|
|
(2.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges related to acquisition and divestiture activity
|
|
(0.8)
|
|
|
(1.2)
|
|
|
(1.1)
|
|
|
(4.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Special Items
|
|
(0.1)
|
|
|
(2.0)
|
|
|
(0.9)
|
|
|
(3.7)
|
|
Pre-tax impact of Special Items
|
|
(8.4)
|
|
|
(18.3)
|
|
|
(16.2)
|
|
|
(28.4)
|
|
Earnings before income tax provision
|
|
$
|
154.4
|
|
|
$
|
144.9
|
|
|
$
|
314.8
|
|
|
$
|
292.1
|
|
(1)Depreciation and amortization by segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Food
|
|
$
|
32.7
|
|
|
$
|
30.2
|
|
|
$
|
64.4
|
|
|
$
|
59.2
|
|
Protective
|
|
25.5
|
|
|
23.2
|
|
|
50.7
|
|
|
45.7
|
|
|
|
|
|
|
|
|
|
|
Total Company depreciation and amortization(i)
|
|
$
|
58.2
|
|
|
$
|
53.4
|
|
|
$
|
115.1
|
|
|
$
|
104.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Includes share-based incentive compensation of $12.3 million and $23.8 million for the three and six months ended June 30, 2021, respectively, and $10.5 million and $19.0 million for the three and six months ended June 30, 2020, respectively.
(2)Restructuring charges by segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Food
|
|
$
|
1.3
|
|
|
$
|
4.9
|
|
|
$
|
1.1
|
|
|
$
|
5.2
|
|
Protective
|
|
0.8
|
|
|
5.2
|
|
|
1.0
|
|
|
5.5
|
|
Total Company restructuring charges
|
|
$
|
2.1
|
|
|
$
|
10.1
|
|
|
$
|
2.1
|
|
|
$
|
10.7
|
|
(3)Restructuring associated costs for the three months ended June 30, 2021 primarily relate to fees paid to third-party consultants in support of the Reinvent SEE business transformation. Restructuring associated costs for the six months ended June 30, 2021 also includes a one-time, non-cash cumulative translation adjustment loss (CTA) recognized due to the wind-up of one of our legal entities. Restructuring associated costs for the three and six months ended June 30, 2020, primarily relate to fees paid to third-party consultants in support of the Reinvent SEE business transformation.
Assets by Reportable Segments
The following table shows assets allocated by reportable segment. Assets allocated by reportable segment include: trade receivables, net; inventory, net; property and equipment, net; goodwill; intangible assets, net; and leased systems, net.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30, 2021
|
|
December 31, 2020
|
Assets allocated to segments:
|
|
|
|
|
Food
|
|
$
|
2,147.1
|
|
|
$
|
2,019.1
|
|
Protective
|
|
2,891.7
|
|
|
2,795.4
|
|
Total segments
|
|
5,038.8
|
|
|
4,814.5
|
|
Assets not allocated:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
273.1
|
|
|
$
|
548.7
|
|
Assets held for sale
|
|
—
|
|
|
0.3
|
|
Income tax receivables
|
|
30.6
|
|
|
71.2
|
|
Other receivables
|
|
86.3
|
|
|
69.5
|
|
Deferred taxes
|
|
179.3
|
|
|
187.1
|
|
Other
|
|
398.5
|
|
|
392.5
|
|
Total
|
|
$
|
6,006.6
|
|
|
$
|
6,083.8
|
|
Note 6 Inventories, net
The following table details our inventories, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30, 2021
|
|
December 31, 2020
|
Raw materials
|
|
$
|
154.1
|
|
|
$
|
113.8
|
|
Work in process
|
|
162.2
|
|
|
139.7
|
|
Finished goods
|
|
414.4
|
|
|
343.2
|
|
Total
|
|
$
|
730.7
|
|
|
$
|
596.7
|
|
Note 7 Property and Equipment, net
The following table details our property and equipment, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30, 2021
|
|
December 31, 2020
|
Land and improvements
|
|
$
|
50.7
|
|
|
$
|
50.8
|
|
Buildings
|
|
788.6
|
|
|
786.5
|
|
Machinery and equipment
|
|
2,563.0
|
|
|
2,543.5
|
|
Other property and equipment
|
|
136.7
|
|
|
133.5
|
|
Construction-in-progress
|
|
171.3
|
|
|
150.1
|
|
Property and equipment, gross
|
|
3,710.3
|
|
|
3,664.4
|
|
Accumulated depreciation and amortization
|
|
(2,507.5)
|
|
|
(2,474.7)
|
|
Property and equipment, net
|
|
$
|
1,202.8
|
|
|
$
|
1,189.7
|
|
The following table details our interest cost capitalized and depreciation and amortization expense for property and equipment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Interest cost capitalized
|
|
$
|
1.7
|
|
|
$
|
1.3
|
|
|
$
|
3.2
|
|
|
$
|
3.2
|
|
Depreciation and amortization expense for property and equipment
|
|
$
|
36.0
|
|
|
$
|
33.6
|
|
|
$
|
71.9
|
|
|
$
|
67.6
|
|
Note 8 Goodwill and Identifiable Intangible Assets, net
Goodwill
The following table shows our goodwill balances by reportable segment. We review goodwill for impairment on a reporting unit basis annually during the fourth quarter of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Since the date of our last annual goodwill impairment assessment, we have not identified any changes in circumstances that would indicate the carrying value of goodwill is not recoverable.
Allocation of Goodwill to Reporting Segment
The following table shows our goodwill balances by reportable segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Food
|
|
Protective
|
|
Total
|
Gross Carrying Value at December 31, 2020
|
|
$
|
579.7
|
|
|
$
|
1,833.6
|
|
|
$
|
2,413.3
|
|
Accumulated impairment(1)
|
|
(49.5)
|
|
|
(141.2)
|
|
|
(190.7)
|
|
Carrying Value at December 31, 2020
|
|
$
|
530.2
|
|
|
$
|
1,692.4
|
|
|
$
|
2,222.6
|
|
|
|
|
|
|
|
|
Currency translation
|
|
0.7
|
|
|
(2.4)
|
|
|
(1.7)
|
|
|
|
|
|
|
|
|
Carrying Value at June 30, 2021
|
|
$
|
530.9
|
|
|
$
|
1,690.0
|
|
|
$
|
2,220.9
|
|
(1)There was no change to our accumulated impairment balance during the six months ended June 30, 2021.
Identifiable Intangible Assets, net
The following tables summarize our identifiable intangible assets, net with definite and indefinite useful lives. As of June 30, 2021, there were no impairment indicators present.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
(In millions)
|
Gross
Carrying Value
|
|
Accumulated Amortization
|
|
|
|
Net
|
|
Gross
Carrying Value
|
|
Accumulated Amortization
|
|
|
|
Net
|
Customer relationships
|
$
|
104.5
|
|
|
$
|
(40.0)
|
|
|
|
|
$
|
64.5
|
|
|
$
|
105.2
|
|
|
$
|
(37.2)
|
|
|
|
|
$
|
68.0
|
|
Trademarks and tradenames
|
31.3
|
|
|
(10.0)
|
|
|
|
|
21.3
|
|
|
31.3
|
|
|
(8.5)
|
|
|
|
|
22.8
|
|
Software
|
115.8
|
|
|
(80.7)
|
|
|
|
|
35.1
|
|
|
104.7
|
|
|
(69.7)
|
|
|
|
|
35.0
|
|
Technology
|
65.4
|
|
|
(35.5)
|
|
|
|
|
29.9
|
|
|
66.7
|
|
|
(33.0)
|
|
|
|
|
33.7
|
|
Contracts
|
13.6
|
|
|
(11.2)
|
|
|
|
|
2.4
|
|
|
13.6
|
|
|
(11.0)
|
|
|
|
|
2.6
|
|
Total intangible assets with definite lives
|
330.6
|
|
|
(177.4)
|
|
|
|
|
153.2
|
|
|
321.5
|
|
|
(159.4)
|
|
|
|
|
162.1
|
|
Trademarks and tradenames with indefinite lives
|
8.9
|
|
|
—
|
|
|
|
|
8.9
|
|
|
8.9
|
|
|
—
|
|
|
|
|
8.9
|
|
Total identifiable intangible assets, net
|
$
|
339.5
|
|
|
$
|
(177.4)
|
|
|
|
|
$
|
162.1
|
|
|
$
|
330.4
|
|
|
$
|
(159.4)
|
|
|
|
|
$
|
171.0
|
|
The following table shows the remaining estimated future amortization expense at June 30, 2021.
|
|
|
|
|
|
|
|
|
Year
|
|
Amount
(In millions)
|
Remainder of 2021
|
|
$
|
20.4
|
|
2022
|
|
29.1
|
|
2023
|
|
22.3
|
|
2024
|
|
15.6
|
|
2025
|
|
13.9
|
|
Thereafter
|
|
51.9
|
|
Total
|
|
$
|
153.2
|
|
Expected future cash flows associated with the Company's intangible assets are not expected to be materially affected by the Company's intent or ability to renew or extend the arrangements. Based on our experience with similar agreements, we expect to continue to renew contracts held as intangibles through the end of their remaining useful lives.
Note 9 Accounts Receivable Securitization Programs
U.S. Accounts Receivable Securitization Program
We and a group of our U.S. operating subsidiaries maintain an accounts receivable securitization program under which they sell eligible U.S. accounts receivable to a wholly-owned subsidiary that was formed for the sole purpose of entering into this program. The wholly-owned subsidiary in turn may sell an undivided fractional ownership interest in these receivables to two banks and issuers of commercial paper administered by these banks. The wholly-owned subsidiary retains the receivables it purchases from the operating subsidiaries. Any transfers of fractional ownership interests of receivables under the U.S. receivables securitization program to the two banks and issuers of commercial paper administered by these banks are considered secured borrowings with pledge of collateral and will be classified as short-term borrowings on our Condensed Consolidated Balance Sheets. These banks do not have any recourse against the general credit of the Company. The net trade receivables that served as collateral for these borrowings are reclassified from trade receivables, net to prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. There were no borrowings or corresponding net trade receivables maintained as collateral as of June 30, 2021 or December 31, 2020.
As of June 30, 2021, the maximum purchase limit for receivable interests was $50.0 million, subject to the availability limits described below.
The amounts available from time to time under this program may be less than $50.0 million due to a number of factors, including but not limited to our credit ratings, trade receivable balances, the creditworthiness of our customers and our receivables collection experience. As of June 30, 2021, the amount available to us under the program was $48.4 million. Although we do not believe restrictions under this program presently materially restrict our operations, if an additional event occurs that triggers one of these restrictive provisions, we could experience a decline in the amounts available to us under the program or termination of the program.
The program expires annually in the fourth quarter and is renewable.
European Accounts Receivable Securitization Program
We and a group of our European subsidiaries maintain an accounts receivable securitization program with a special purpose vehicle, or SPV, two banks, and issuers of commercial paper administered by these banks. The European program is structured to be a securitization of certain trade receivables that are originated by certain of our European subsidiaries. The SPV borrows funds from the banks to fund its acquisition of the receivables and provides the banks with a first priority perfected security interest in the accounts receivable. We do not have an equity interest in the SPV. We concluded the SPV is a variable interest entity because its total equity investment at risk is not sufficient to permit the SPV to finance its activities without additional subordinated financial support from the bank via loans or via the collections from accounts receivable already purchased. Additionally, we are considered the primary beneficiary of the SPV since we control the activities of the SPV and are exposed to the risk of uncollectible receivables held by the SPV. Therefore, the SPV is consolidated in our Condensed Consolidated Financial Statements. Any activity between the participating subsidiaries and the SPV is eliminated in consolidation. Loans from the banks to the SPV will be classified as short-term borrowings on our Condensed Consolidated Balance Sheets. The net trade receivables that served as collateral for these borrowings are reclassified from trade receivables, net to prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. There were no borrowings or corresponding net trade receivables maintained as collateral as of June 30, 2021 or December 31, 2020.
As of June 30, 2021, the maximum purchase limit for receivable interests was €80.0 million ($95.2 million equivalent at June 30, 2021), subject to availability limits. The terms and provisions of this program are similar to our U.S. program discussed above. As of June 30, 2021, the amount available under this program before utilization was €80.0 million ($95.2 million equivalent as of June 30, 2021).
This program expires annually in the third quarter and is renewable.
Utilization of Our Accounts Receivable Securitization Programs
As of June 30, 2021 and December 31, 2020, there were no outstanding borrowings under our U.S. or European programs. We continue to service the trade receivables supporting the programs, and the banks are permitted to re-pledge this collateral. There was no interest paid for these programs for the three and six months ended June 30, 2021 and $0.2 million and $0.3 million for the three and six months ended June 30, 2020, respectively.
Under limited circumstances, the banks and the issuers of commercial paper can end purchases of receivables interests before the above expiration dates. A failure to comply with debt leverage or various other ratios related to our receivables collection experience could result in termination of the receivables programs. We were in compliance with these ratios at June 30, 2021.
Note 10 Accounts Receivable Factoring Agreements
The Company has entered into factoring agreements and customers' supply chain financing arrangements to sell certain trade receivables to unrelated third-party financial institutions. These programs are entered into in the normal course of business. We account for these transactions in accordance with ASC Topic 860, "Transfers and Servicing" ("ASC 860"). ASC 860 allows for the ownership transfer of accounts receivable to qualify for true-sale treatment when the appropriate criteria is met, which permits the balances sold under the program to be excluded from Trade receivables, net on the Condensed Consolidated Balance Sheets. Receivables are considered sold when (i) they are transferred beyond the reach of the Company and its creditors, (ii) the purchaser has the right to pledge or exchange the receivables, and (iii) the Company has no continuing involvement in the transferred receivables. In addition, the Company provides no other forms of continued financial support to the purchaser of the receivables once the receivables are sold.
Gross amounts factored under this program for the six months ended June 30, 2021 and 2020 were $305.1 million and $222.0 million, respectively. The fees associated with the transfer of receivables for all programs were approximately $0.8 million and $1.7 million for the three and six months ended June 30, 2021 and $0.4 million and $1.0 million for the three and six months ended June 30, 2020, respectively.
Note 11 Restructuring Activities
For the three and six months ended June 30, 2021, the Company incurred $2.1 million of restructuring charges. The Company incurred $4.8 million and $10.1 million of other costs associated with our restructuring program for the three and six months ended June 30, 2021. These charges were incurred in connection with the Company’s Reinvent SEE business transformation.
The restructuring program (“Program”) is defined as the initiatives associated with our Reinvent SEE business transformation, which is a three-year program approved by the Board of Directors in December 2018. Spend associated with our previously existing restructuring programs at the time of Reinvent SEE’s approval was substantially completed as of December 31, 2020, and therefore these spend amounts are no longer included in the restructuring program totals below. The Company expects restructuring activities associated with the Program to be substantially completed by the end of 2021.
The Board of Directors has approved cumulative restructuring spend of $190 million to $220 million for the Program. Restructuring spend is estimated to be incurred as follows:
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|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Total Restructuring Program Range
|
|
Less Cumulative Spend to Date
|
|
Remaining Restructuring Spend
|
|
|
Low
|
|
High
|
|
|
|
Low
|
|
High
|
Costs of reduction in headcount as a result of reorganization
|
|
$
|
65
|
|
|
$
|
75
|
|
|
$
|
(62)
|
|
|
$
|
3
|
|
|
$
|
13
|
|
Other expenses associated with the Program
|
|
120
|
|
|
130
|
|
|
(93)
|
|
27
|
|
|
37
|
|
Total expense
|
|
$
|
185
|
|
|
$
|
205
|
|
|
$
|
(155)
|
|
|
$
|
30
|
|
|
$
|
50
|
|
Capital expenditures
|
|
5
|
|
|
15
|
|
|
(4)
|
|
|
1
|
|
|
11
|
|
Total estimated cash cost(1)
|
|
$
|
190
|
|
|
$
|
220
|
|
|
$
|
(159)
|
|
|
$
|
31
|
|
|
$
|
61
|
|
(1) Total estimated cash cost excludes the impact of proceeds expected from the sale of property and equipment and foreign currency impact.
The following table details our aggregate restructuring activities incurred under the Company's Program or prior restructuring programs at the time the expense was recorded as reflected in the Condensed Consolidated Statements of Operations:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
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(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
Other associated costs
|
|
$
|
4.8
|
|
|
$
|
3.8
|
|
|
$
|
10.1
|
|
|
$
|
7.8
|
|
Restructuring charges
|
|
2.1
|
|
|
10.1
|
|
|
2.1
|
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total charges
|
|
$
|
6.9
|
|
|
$
|
13.9
|
|
|
$
|
12.2
|
|
|
$
|
18.5
|
|
Capital expenditures
|
|
$
|
2.1
|
|
|
$
|
—
|
|
|
$
|
3.3
|
|
|
$
|
0.2
|
|
The aggregate restructuring accrual, spending and other activity for the six months ended June 30, 2021 and the accrual balance remaining at June 30, 2021 related to these programs were as follows:
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|
|
|
|
(In millions)
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|
|
|
|
|
|
|
|
|
|
|
Restructuring accrual at December 31, 2020
|
$
|
14.3
|
|
Accrual and accrual adjustments
|
2.1
|
|
Cash payments during 2021
|
(6.5)
|
|
|
|
Effect of changes in foreign currency exchange rates
|
(0.3)
|
|
Restructuring accrual at June 30, 2021(1)
|
$
|
9.6
|
|
(1) The restructuring accrual as of June 30, 2021 includes the balance related to the Reinvent SEE business transformation, as well as an accrual of $2.0 million for a restructuring program related to recent acquisitions. We did not incur any restructuring charges related to the program associated with recent acquisitions for the three and six months ended June 30, 2021 and 2020, respectively.
We expect to pay $7.8 million of the accrual balance remaining at June 30, 2021 within the next twelve months. This amount is included in accrued restructuring costs on the Condensed Consolidated Balance Sheets at June 30, 2021. The remaining accrual of $1.8 million, primarily related to restructuring for recent acquisitions, is expected to be paid in periods including, and beyond, 2022. These amounts are included in other non-current liabilities on our Condensed Consolidated Balance Sheets at June 30, 2021.
One of the components of the Reinvent SEE business transformation was to enhance the operational efficiency of the Company by acting as “One SEE”. The program was approved by our Board of Directors as a consolidated program benefiting both Food and Protective, and accordingly the expected program spend by reporting segment is not available. However, of the remaining restructuring accrual at $9.6 million as of June 30, 2021, $4.3 million was attributable to Food and $5.3 million was attributable to Protective.
Note 12 Debt and Credit Facilities
Our total debt outstanding consisted of the amounts set forth in the following table:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Interest rate
|
|
June 30, 2021
|
|
December 31, 2020
|
Short-term borrowings(1)
|
|
|
|
$
|
0.4
|
|
|
$
|
7.2
|
|
Current portion of long-term debt(2)
|
|
|
|
22.9
|
|
|
22.3
|
|
Total current debt
|
|
|
|
23.3
|
|
|
29.5
|
|
Term Loan A due August 2022
|
|
|
|
474.8
|
|
|
474.7
|
|
Term Loan A due July 2023
|
|
|
|
203.8
|
|
|
208.6
|
|
|
|
|
|
|
|
|
Senior Notes due December 2022
|
|
4.875
|
%
|
|
423.7
|
|
|
423.3
|
|
Senior Notes due April 2023
|
|
5.250
|
%
|
|
423.3
|
|
|
422.9
|
|
Senior Notes due September 2023
|
|
4.500
|
%
|
|
474.4
|
|
|
490.2
|
|
Senior Notes due December 2024
|
|
5.125
|
%
|
|
422.5
|
|
|
422.1
|
|
Senior Notes due September 2025
|
|
5.500
|
%
|
|
398.0
|
|
|
397.8
|
|
Senior Notes due December 2027
|
|
4.000
|
%
|
|
421.1
|
|
|
420.9
|
|
Senior Notes due July 2033
|
|
6.875
|
%
|
|
446.1
|
|
|
446.0
|
|
Other(2)
|
|
|
|
24.1
|
|
|
24.9
|
|
Total long-term debt, less current portion(3)
|
|
|
|
3,711.8
|
|
|
3,731.4
|
|
Total debt(4)
|
|
|
|
$
|
3,735.1
|
|
|
$
|
3,760.9
|
|
(1)Short-term borrowings of $0.4 million and $7.2 million at June 30, 2021 and December 31, 2020, respectively, were comprised of short-term borrowings from various lines of credit.
(2)Current portion of long-term debt includes finance lease liabilities of $11.2 million and $10.5 million at June 30, 2021 and December 31, 2020, respectively. Other debt includes long-term liabilities associated with our finance leases of $21.8 million and $23.9 million at June 30, 2021 and December 31, 2020, respectively. See Note 4, "Leases," for additional information on finance and operating lease liabilities.
(3)Amounts are shown net of unamortized discounts and issuance costs of $17.7 million as of June 30, 2021 and $20.1 million as of December 31, 2020.
(4)As of June 30, 2021, our weighted average interest rate on our short-term borrowings outstanding was 5.0% and on our long-term debt outstanding was 4.4%. As of December 31, 2020, our weighted average interest rate on our short-term borrowings outstanding was 2.2% and on our long-term debt outstanding was 4.4%.
Lines of Credit
The following table summarizes our available lines of credit and committed and uncommitted lines of credit, including our revolving credit facility, and the amounts available under our accounts receivable securitization programs.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30, 2021
|
|
December 31, 2020
|
Used lines of credit(1)
|
|
$
|
0.4
|
|
|
$
|
7.2
|
|
Unused lines of credit
|
|
1,308.6
|
|
|
1,312.0
|
|
Total available lines of credit(2)
|
|
$
|
1,309.0
|
|
|
$
|
1,319.2
|
|
(1)Includes total borrowings under the accounts receivable securitization programs, the revolving credit facility and borrowings under lines of credit available to several subsidiaries.
(2)Of the total available lines of credit, $1,143.6 million was committed as of June 30, 2021.
Covenants
Each issue of our outstanding senior notes imposes limitations on our operations and those of specified subsidiaries. Our senior secured credit facility contains customary affirmative and negative covenants for credit facilities of this type, including limitations on our indebtedness, liens, investments, restricted payments, mergers and acquisitions, dispositions of assets, transactions with affiliates, amendment of documents and sale leasebacks, and a covenant specifying a maximum leverage ratio to EBITDA. We were in compliance with the above financial covenants and limitations at June 30, 2021.
Note 13 Derivatives and Hedging Activities
We report all derivative instruments on our Condensed Consolidated Balance Sheets at fair value and establish criteria for designation and effectiveness of transactions entered into for hedging purposes.
As a global organization, we face exposure to market risks, such as fluctuations in foreign currency exchange rates and interest rates. To manage the volatility relating to these exposures, we enter into various derivative instruments from time to time under our risk management policies. We designate derivative instruments as hedges on a transaction basis to support hedge accounting. The changes in fair value of these hedging instruments offset in part or in whole corresponding changes in the fair value or cash flows of the underlying exposures being hedged. We assess the initial and ongoing effectiveness of our hedging relationships in accordance with our policy. We do not purchase, hold or sell derivative financial instruments for trading purposes. Our practice is to terminate derivative transactions if the underlying asset or liability matures or is sold or terminated, or if we determine the underlying forecasted transaction is no longer probable of occurring.
We record the fair value positions of all derivative financial instruments on a net basis by counterparty for which a master netting arrangement is utilized.
Foreign Currency Forward Contracts Designated as Cash Flow Hedges
The primary purpose of our cash flow hedging activities is to manage the potential changes in value associated with the amounts receivable or payable on equipment and raw material purchases that are denominated in foreign currencies in order to minimize the impact of the changes in foreign currencies. We record gains and losses on foreign currency forward contracts qualifying as cash flow hedges in Accumulated Other Comprehensive Loss (“AOCL”) to the extent that these hedges are effective and until we recognize the underlying transactions in net earnings, at which time we recognize these gains and losses in cost of sales, on our Condensed Consolidated Statements of Operations. Cash flows from derivative financial instruments designated as cash flow hedges are classified as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. These contracts generally have original maturities of less than 12 months.
Net unrealized after-tax gains/losses related to cash flow hedging activities that were included in AOCL were a $1.2 million gain and a $3.4 million gain for the three and six months ended June 30, 2021, respectively, and a $2.2 million loss and $2.8 million gain for the three and six months ended June 30, 2020, respectively. The unrealized amount in AOCL will fluctuate based on changes in the fair value of open contracts during each reporting period.
We estimate that $0.4 million of net unrealized gains related to cash flow hedging activities included in AOCL will be reclassified into earnings within the next twelve months.
Foreign Currency Forward Contracts Not Designated as Hedges
Our subsidiaries have foreign currency exchange exposure from buying and selling in currencies other than their functional currencies. The primary purposes of our foreign currency hedging activities are to manage the potential changes in value associated with the amounts receivable or payable on transactions denominated in foreign currencies and to minimize the impact of the changes in foreign currencies related to foreign currency-denominated interest-bearing intercompany loans and receivables and payables. The changes in fair value of these derivative contracts are recognized in other (expense) income, net, on our Condensed Consolidated Statements of Operations and are largely offset by the remeasurement of the underlying foreign currency-denominated items indicated above. Cash flows from derivative financial instruments not designated as hedges are
classified as cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows. These contracts generally have original maturities of less than 12 months.
Interest Rate Swaps
From time to time, we may use interest rate swaps to manage our fixed and floating interest rates on our outstanding indebtedness. At June 30, 2021 and December 31, 2020, we had no outstanding interest rate swaps.
Net Investment Hedge
The €400.0 million 4.50% notes issued in June 2015 are designated as a net investment hedge, hedging a portion of our net investment in a certain European subsidiary against fluctuations in foreign exchange rates. The decrease in the translated value of the debt was $26.0 million ($19.5 million, net of tax) as of June 30, 2021 and is reflected in AOCL on our Condensed Consolidated Balance Sheets.
For derivative instruments that are designated and qualify as hedges of net investments in foreign operations, changes in fair values of the derivative instruments are recognized in unrealized net gain or loss on derivative instruments for net investment hedge, a component of AOCL, net of taxes, to offset the changes in the values of the net investments being hedged. Any portion of the net investment hedge that is determined to be ineffective is recorded in other (expense) income, net on the Condensed Consolidated Statements of Operations.
Other Derivative Instruments
We may use other derivative instruments from time to time to manage exposure to foreign exchange rates and to access international financing transactions. These instruments can potentially limit foreign exchange exposure by swapping borrowings denominated in one currency for borrowings denominated in another currency.
Fair Value of Derivative Instruments
See Note 14, “Fair Value Measurements, Equity Investments and Other Financial Instruments,” for a discussion of the inputs and valuation techniques used to determine the fair value of our outstanding derivative instruments.
The following table details the fair value of our derivative instruments included on our Condensed Consolidated Balance Sheets.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedge
|
|
|
|
Non-Designated as Hedging Instruments
|
|
Total
|
(In millions)
|
June 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
June 30, 2021
|
|
December 31, 2020
|
Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts and options
|
$
|
1.3
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
1.8
|
|
|
$
|
7.3
|
|
|
$
|
3.1
|
|
|
$
|
7.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Derivative Assets
|
$
|
1.3
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
1.8
|
|
|
$
|
7.3
|
|
|
$
|
3.1
|
|
|
$
|
7.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
$
|
(0.3)
|
|
|
$
|
(2.8)
|
|
|
|
|
|
|
$
|
(1.0)
|
|
|
$
|
(4.2)
|
|
|
$
|
(1.3)
|
|
|
$
|
(7.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Derivative Liabilities(1)
|
$
|
(0.3)
|
|
|
$
|
(2.8)
|
|
|
|
|
|
|
$
|
(1.0)
|
|
|
$
|
(4.2)
|
|
|
$
|
(1.3)
|
|
|
$
|
(7.0)
|
|
Net Derivatives(2)
|
$
|
1.0
|
|
|
$
|
(2.8)
|
|
|
|
|
|
|
$
|
0.8
|
|
|
$
|
3.1
|
|
|
$
|
1.8
|
|
|
$
|
0.3
|
|
(1)Excludes €400.0 million of euro-denominated debt ($474.4 million equivalent at June 30, 2021 and $490.2 million equivalent at December 31, 2020), which is designated as a net investment hedge.
(2)The following table reconciles gross positions without the impact of master netting agreements to the balance sheet classification:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Current Assets
|
|
Other Current Liabilities
|
|
|
|
|
(In millions)
|
June 30, 2021
|
|
December 31, 2020
|
|
June 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
|
Gross position
|
$
|
3.1
|
|
|
$
|
7.3
|
|
|
$
|
(1.3)
|
|
|
$
|
(7.0)
|
|
|
|
|
|
|
|
|
|
Impact of master netting agreements
|
(1.2)
|
|
|
(2.3)
|
|
|
1.2
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
Net amounts recognized on the Condensed Consolidated Balance Sheets
|
$
|
1.9
|
|
|
$
|
5.0
|
|
|
$
|
(0.1)
|
|
|
$
|
(4.7)
|
|
|
|
|
|
|
|
|
|
The following table details the effect of our derivative instruments on our Condensed Consolidated Statements of Operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of (Loss) Gain Recognized in
Earnings on Derivatives
|
|
Location of (Loss) Gain Recognized on
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
Condensed Consolidated Statements of Operations
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges:
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
Cost of sales
|
|
$
|
(0.8)
|
|
|
$
|
2.0
|
|
|
$
|
(4.2)
|
|
|
$
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury locks
|
Interest expense, net
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
Sub-total cash flow hedges
|
|
|
(0.7)
|
|
|
2.1
|
|
|
(4.1)
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Foreign currency forward and option contracts
|
Other (expense) income, net
|
|
3.4
|
|
|
(1.6)
|
|
|
5.6
|
|
|
(2.4)
|
|
Total
|
|
|
$
|
2.7
|
|
|
$
|
0.5
|
|
|
$
|
1.5
|
|
|
$
|
0.8
|
|
Note 14 Fair Value Measurements, Equity Investments and Other Financial Instruments
Fair Value Measurements
Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels to the fair value hierarchy as follows:
Level 1 - observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly
Level 3 - unobservable inputs for which there is little or no market data, which may require the reporting entity to develop its own assumptions.
The fair value, measured on a recurring basis, of our financial instruments, using the fair value hierarchy under U.S. GAAP, are included in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
(In millions)
|
|
Total Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Cash equivalents
|
|
$
|
48.6
|
|
|
$
|
48.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Derivative financial and hedging instruments net asset:
|
|
|
|
|
|
|
|
|
Foreign currency forward and option contracts
|
|
$
|
1.8
|
|
|
$
|
—
|
|
|
$
|
1.8
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
(In millions)
|
|
Total Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Cash equivalents
|
|
$
|
235.1
|
|
|
$
|
235.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Derivative financial and hedging instruments net asset:
|
|
|
|
|
|
|
|
|
Foreign currency forward and option contracts
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents - Our cash equivalents consisted of bank time deposits. Since these are short-term highly liquid investments with remaining maturities of 3 months or less, they present negligible risk of changes in fair value due to changes in interest rates and are classified as Level 1 financial instruments.
Derivative financial instruments - Our foreign currency forward contracts, foreign currency options, interest rate swaps and cross-currency swaps are recorded at fair value on our Condensed Consolidated Balance Sheets using a discounted cash flow analysis that incorporates observable market inputs. These market inputs include foreign currency spot and forward rates, and various interest rate curves, and are obtained from pricing data quoted by various banks, third-party sources and foreign currency dealers involving identical or comparable instruments. Such financial instruments are classified as Level 2.
Counterparties to these foreign currency forward contracts have at least an investment grade rating. Credit ratings on some of our counterparties may change during the term of our financial instruments. We closely monitor our counterparties’ credit ratings and, if necessary, will make any appropriate changes to our financial instruments. The fair value generally reflects the estimated amounts that we would receive or pay to terminate the contracts at the reporting date.
Foreign currency forward contracts and options are included in Prepaid expenses and other current assets and Other current liabilities on the Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020.
Equity Investments
Sealed Air maintains equity investments in companies which are accounted for under the measurement alternative described in ASC 321-10-35-2 for equity investments that do not have readily determinable fair values. We do not exercise significant influence over these companies. The following carrying value of these investments were included within Other non-current assets in our Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30, 2021
|
|
December 31, 2020
|
Carrying value at the beginning of period
|
|
$
|
25.4
|
|
|
$
|
7.5
|
|
Purchases
|
|
14.7
|
|
|
2.6
|
|
Impairments or downward adjustments
|
|
—
|
|
|
—
|
|
Upward adjustments(1)
|
|
—
|
|
|
15.1
|
|
Currency translation on investments
|
|
(0.3)
|
|
|
0.2
|
|
Carrying value at the end of period
|
|
$
|
39.8
|
|
|
$
|
25.4
|
|
(1)The upward fair value adjustment in the year ended December 31, 2020 was recorded during the fourth quarter, based on the valuation of additional equity issued by the investee which was deemed to be an observable transaction of a similar investment under ASC 321.
There have been no cumulative impairments or downward adjustments on any of the equity investments above, as of June 30, 2021. The cumulative upward adjustments of the equity investments as of June 30, 2021 and December 31, 2020, was $15.1 million.
During the fourth quarter of 2020, Sealed Air made an additional investment in one of our investees of $5.7 million, based on the balance sheet foreign exchange rate as of December 31, 2020. The equity issuance by the investee was subject to customary regulatory and statutory approval which was received during the three months ended March 31, 2021. This investment has converted to equity and is held as an equity investment valued under the measurement alternative in ASC 321 as of June 30, 2021.Additionally, during the three months ended June 30, 2021, Sealed Air made an additional investment in a separate investee of $9.0 million. The investment continues to be accounted for under the measurement alternative of ASC 321 and Sealed Air did not gain significant influence over the investee with the subsequent investment.
Other Financial Instruments
The following financial instruments are recorded at fair value or at amounts that approximate fair value: (1) trade receivables, net, (2) certain other current assets, (3) accounts payable and (4) other current liabilities. The carrying amounts reported on our Condensed Consolidated Balance Sheets for the above financial instruments closely approximate their fair value due to the short-term nature of these assets and liabilities.
Other liabilities that are recorded at carrying value on our Condensed Consolidated Balance Sheets include our credit facilities and senior notes. We utilize a market approach to calculate the fair value of our senior notes. Due to their limited investor base and the face value of some of our senior notes, they may not be actively traded on the date we calculate their fair value. Therefore, we may utilize prices and other relevant information generated by market transactions involving similar securities, reflecting U.S. Treasury yields to calculate the yield to maturity and the price on some of our senior notes. These inputs are provided by an independent third party and are considered to be Level 2 inputs.
We derive our fair value estimates of our various other debt instruments by evaluating the nature and terms of each instrument, considering prevailing economic and market conditions, and examining the cost of similar debt offered at the balance sheet date. We also incorporated our credit default swap rates and currency specific swap rates in the valuation of each debt instrument, as applicable.
These estimates are subjective and involve uncertainties and matters of significant judgment, and therefore we cannot determine them with precision. Changes in assumptions could significantly affect our estimates.
The table below shows the carrying amounts and estimated fair values of our debt, excluding our lease liabilities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
(In millions)
|
|
Interest rate
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
Term Loan A Facility due August 2022
|
|
|
|
$
|
474.8
|
|
|
$
|
474.8
|
|
|
$
|
474.7
|
|
|
$
|
474.7
|
|
Term Loan A Facility due July 2023(1)
|
|
|
|
215.2
|
|
|
215.2
|
|
|
220.0
|
|
|
220.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Notes due December 2022
|
|
4.875
|
%
|
|
423.7
|
|
|
442.5
|
|
|
423.3
|
|
|
446.0
|
|
Senior Notes due April 2023
|
|
5.250
|
%
|
|
423.3
|
|
|
449.2
|
|
|
422.9
|
|
|
450.8
|
|
Senior Notes due September 2023(1)
|
|
4.500
|
%
|
|
474.4
|
|
|
514.0
|
|
|
490.2
|
|
|
537.5
|
|
Senior Notes due December 2024
|
|
5.125
|
%
|
|
422.5
|
|
|
463.2
|
|
|
422.1
|
|
|
466.8
|
|
Senior Notes due September 2025
|
|
5.500
|
%
|
|
398.0
|
|
|
446.2
|
|
|
397.8
|
|
|
446.7
|
|
Senior Notes due December 2027
|
|
4.000
|
%
|
|
421.1
|
|
|
451.2
|
|
|
420.9
|
|
|
453.6
|
|
Senior Notes due July 2033
|
|
6.875
|
%
|
|
446.1
|
|
|
573.5
|
|
|
446.0
|
|
|
594.4
|
|
Other borrowings(1)
|
|
|
|
3.0
|
|
|
3.0
|
|
|
8.8
|
|
|
9.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt(2)
|
|
|
|
$
|
3,702.1
|
|
|
$
|
4,032.8
|
|
|
$
|
3,726.7
|
|
|
$
|
4,099.6
|
|
(1)Includes borrowings denominated in currencies other than U.S. dollars.
(2)The carrying amount and estimated fair value of debt exclude lease liabilities.
Included among our non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis are inventories, property and equipment, goodwill, intangible assets and asset retirement obligations.
Note 15 Defined Benefit Pension Plans and Other Post-Employment Benefit Plans
The following tables show the components of net periodic benefit (income) cost for our defined benefit pension plans for the three and six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2021
|
|
Three Months Ended
June 30, 2020
|
(In millions)
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
Components of net periodic benefit (income) cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
0.1
|
|
|
$
|
1.3
|
|
|
$
|
1.4
|
|
|
$
|
0.1
|
|
|
$
|
1.1
|
|
|
$
|
1.2
|
|
Interest cost
|
|
0.8
|
|
|
2.2
|
|
|
3.0
|
|
|
1.4
|
|
|
2.9
|
|
|
4.3
|
|
Expected return on plan assets
|
|
(2.2)
|
|
|
(4.6)
|
|
|
(6.8)
|
|
|
(2.3)
|
|
|
(5.0)
|
|
|
(7.3)
|
|
Amortization of net prior service cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
Amortization of net actuarial loss
|
|
0.6
|
|
|
1.3
|
|
|
1.9
|
|
|
0.3
|
|
|
1.2
|
|
|
1.5
|
|
Net periodic (income) cost
|
|
(0.7)
|
|
|
0.2
|
|
|
(0.5)
|
|
|
(0.5)
|
|
|
0.3
|
|
|
(0.2)
|
|
Cost of settlement
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
Total benefit (income) cost
|
|
$
|
(0.7)
|
|
|
$
|
0.3
|
|
|
$
|
(0.4)
|
|
|
$
|
(0.5)
|
|
|
$
|
0.4
|
|
|
$
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2021
|
|
Six Months Ended
June 30, 2020
|
(In millions)
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
Components of net periodic benefit (income) cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
0.1
|
|
|
$
|
2.6
|
|
|
$
|
2.7
|
|
|
$
|
0.1
|
|
|
$
|
2.2
|
|
|
$
|
2.3
|
|
Interest cost
|
|
1.7
|
|
|
4.4
|
|
|
6.1
|
|
|
2.7
|
|
|
5.9
|
|
|
8.6
|
|
Expected return on plan assets
|
|
(4.4)
|
|
|
(9.3)
|
|
|
(13.7)
|
|
|
(4.5)
|
|
|
(10.0)
|
|
|
(14.5)
|
|
Amortization of net prior service cost
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
Amortization of net actuarial loss
|
|
1.2
|
|
|
2.6
|
|
|
3.8
|
|
|
0.7
|
|
|
2.4
|
|
|
3.1
|
|
Net periodic (income) cost
|
|
(1.4)
|
|
|
0.4
|
|
|
(1.0)
|
|
|
(1.0)
|
|
|
0.6
|
|
|
(0.4)
|
|
Cost of settlement
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
Total benefit (income) cost
|
|
$
|
(1.4)
|
|
|
$
|
0.6
|
|
|
$
|
(0.8)
|
|
|
$
|
(1.0)
|
|
|
$
|
0.7
|
|
|
$
|
(0.3)
|
|
The following table shows the components of net periodic benefit cost for our other post-retirement employee benefit plans for the three and six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest cost
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
0.5
|
|
Amortization of net prior service credit
|
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.2)
|
|
|
(0.2)
|
|
Amortization of net actuarial gain
|
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.1)
|
|
Net periodic benefit cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 16 Income Taxes
U.S. Legislation
In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs
Act of 2017 (“2017 Tax Act”). Taxpayers may generally deduct interest up to the sum of 50% (30% limit under the 2017 Tax Act) of adjusted taxable income plus business interest income for 2019 and 2020.
The American Rescue Plan Act of 2021 (“Rescue Act”) was signed into law on March 11, 2021 and includes additional COVID-19 related tax relief for some individuals and businesses.
The enactment of the Rescue Act and the CARES Act did not result in any material adjustments to our income tax provision for the three and six months ended June 30, 2021 or June 30, 2020.
In July 2020, the U.S. Department of Treasury issued final tax regulations with respect to the global intangible low-taxed income (“GILTI”) proposed tax regulations originally published in 2019. Among other changes, these regulations now permit an election to exclude from the GILTI calculation items of income which are subject to a high effective rate of foreign tax. We have adopted these final regulations and have reflected the 2021 benefit in the annual effective tax rate.
Effective Income Tax Rate and Income Tax Provision
For interim tax reporting, we estimate one annual effective tax rate for tax jurisdictions not subject to a valuation allowance and apply that rate to the year-to-date ordinary income/(loss). Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.
State income taxes, foreign earnings subject to higher tax rates and non-deductible expenses increase the Company's effective income tax rate compared to the U.S. statutory rate of 21.0%. Research and development credits decrease the Company's effective tax rate compared to the U.S. statutory rate of 21.0%.
Our effective income tax rate was 29.7% and 31.9%, respectively, for the three and six months ended June 30, 2021. In addition to the above referenced items, the Company's effective income tax rate for the three and six months ended June 30, 2021 was unfavorably impacted by legislative and administrative changes to enacted foreign statutes.
Our effective income tax rate was 30.8% and 26.5%, respectively, for the three and six months ended June 30, 2020. In addition to the above referenced items, the Company's effective income tax rate for the six months ended June 30, 2020 was positively impacted by the effective settlement of specific uncertain tax positions associated with the U.S. Internal Revenue Service (“IRS”) audit for the 2011 - 2014 tax years.
There was a negligible change in our valuation allowances for the three and six months ended June 30, 2021 and 2020.
We reported a net increase in unrecognized tax positions of $2.9 million and $7.9 million, respectively, for the three and six months ended June 30, 2021, primarily related to interest accruals on existing uncertain tax positions. We are not currently able to reasonably estimate the amount by which the liability for unrecognized tax positions may increase or decrease as a result of the remaining items under IRS audit for the 2011 - 2014 tax years. We reported a net increase in unrecognized tax positions in the three months ended June 30, 2020 of $4.4 million, primarily related to interest accruals on existing positions, and a net decrease in the six months ended June 30, 2020 of $5.6 million, primarily related to certain settlements with respect to the IRS audit for the 2011- 2014 tax years. Interest and penalties on tax assessments are included in income tax expense.
The IRS completed its field examination of the U.S. federal income tax returns for the 2011-2014 tax years in the third quarter of 2020. As previously disclosed, the IRS has proposed to disallow, for the 2014 taxable year, the entirety of the deduction of the approximately $1.49 billion settlement payment made pursuant to the Settlement agreement (as defined in Note 17, “Commitments and Contingencies”) and the resulting reduction of our U.S. federal tax liability by approximately $525 million. We continue to believe that we have meritorious defenses to the proposed disallowance and have filed a protest with the IRS. During the three months ended June 30, 2021, the matter was submitted to the IRS Independent Office of Appeals for review of the proposed disallowance. We cannot predict when such process will conclude, or the outcome of such process. It is possible that future developments in this matter could have a material impact to the Company's uncertain tax position balances and results of operations, including cash flow, within the next twelve months.
We have no outstanding liability with respect to the one-time mandatory tax on previously deferred foreign earnings of foreign subsidiaries provision (“Transition Tax”) associated with the 2017 Tax Act.
Note 17 Commitments and Contingencies
Settlement Agreement Tax Deduction
On March 31, 1998, the Company completed a multi-step transaction (the “Cryovac transaction”) involving W.R. Grace & Co. (“Grace”) which brought the Cryovac packaging business and the former Sealed Air’s business under the common ownership of the Company. As part of that transaction, Grace and its subsidiaries retained all liabilities arising out of their operations before the Cryovac transaction (including asbestos-related liabilities), other than liabilities relating to Cryovac’s operations, and agreed to indemnify the Company with respect to such retained liabilities. Beginning in 2000, we were served with a number of lawsuits alleging that the Cryovac transaction was a fraudulent transfer or gave rise to successor liability or both, and that, as a result, we were responsible for alleged asbestos liabilities of Grace and its subsidiaries. On April 2, 2001, Grace and a number of its subsidiaries filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). In connection with Grace’s Chapter 11 case, the Bankruptcy Court granted the official committees appointed to represent asbestos claimants in Grace’s Chapter 11 case (the “Committees”) permission to pursue against the Company and its subsidiary Cryovac, Inc. fraudulent transfer, successor liability, and other claims based upon the Cryovac transaction. In November 2002, we reached an agreement in principle with the Committees to resolve all current and future asbestos-related claims made against us and our affiliates, as well as indemnification claims by Fresenius Medical Care Holdings, Inc. and affiliated companies, in each case, in connection with the Cryovac transaction. A definitive settlement agreement was entered into in 2003 and approved by the Bankruptcy Court in 2005 (such agreement, the "Settlement agreement"). The Settlement agreement was subsequently incorporated into the plan of reorganization for Grace (the "Plan") and the Plan was confirmed by the Bankruptcy Court in 2011 and the U.S. District Court in 2012.
On February 3, 2014 (the “Effective Date”), the Plan implementing the Settlement agreement became effective with Grace emerging from bankruptcy and the injunctions and releases provided by the Plan becoming effective. On the Effective Date, the Company’s subsidiary, Cryovac, Inc., made the payments contemplated by the Settlement agreement, consisting of aggregate cash payments in the amount of $929.7 million to the WRG Asbestos PI Trust (the “PI Trust”) and the WRG Asbestos PD Trust (the “PD Trust”) and the transfer of 18 million shares of Sealed Air common stock (the “Settlement Shares”) to the PI Trust, in each case, reflecting adjustments made in accordance with the Settlement agreement.
The IRS completed its field examination of our U.S. federal income tax returns for the years 2011 through 2014 in the third quarter of 2020. As previously disclosed, the IRS has proposed to disallow for the 2014 taxable year the entirety of the deduction of the approximately $1.49 billion settlement payments made pursuant to the Settlement agreement and the resulting reduction of our U.S. federal tax liability by approximately $525 million. We continue to believe that we have meritorious defenses to the proposed disallowance and have filed a protest with the IRS. During the three months ended June 30, 2021, the matter was submitted to the IRS Independent Office of Appeals for review of the proposed disallowance. We cannot predict when such process will conclude, or the outcome of such process. It is possible that future developments in this matter could have a material impact on the Company's uncertain tax position balances and results of operations, including cash flows, within the next twelve months.
Environmental Matters
We are subject to loss contingencies resulting from environmental laws and regulations, and we accrue for anticipated costs associated with investigatory and remediation efforts when an assessment has indicated that a loss is probable and can be reasonably estimated. These accruals are not reduced by potential insurance recoveries, if any. We do not believe that it is reasonably possible that our liability in excess of the amounts that we have accrued for environmental matters will be material to our Condensed Consolidated Balance Sheets or Statements of Operations. Environmental liabilities are reassessed whenever circumstances become better defined or remediation efforts and their costs can be better estimated.
We evaluate these liabilities periodically based on available information, including the progress of remedial investigations at each site, the current status of discussions with regulatory authorities regarding the methods and extent of remediation and the apportionment of costs among potentially responsible parties. As some of these issues are decided (the outcomes of which are subject to uncertainties) or new sites are assessed and costs can be reasonably estimated, we adjust the recorded accruals, as necessary. We believe that these exposures are not material to our Condensed Consolidated Balance Sheets or Statements of Operations. We believe that we have adequately reserved for all probable and estimable environmental exposures.
Guarantees and Indemnification Obligations
We are a party to many contracts containing guarantees and indemnification obligations. These contracts primarily consist of:
•indemnities in connection with the sale of businesses, primarily related to the sale of Diversey in 2017. Our indemnity obligations under the relevant agreements may be limited in terms of time, amount or scope. As it relates to certain income tax related liabilities, the relevant agreements may not provide any cap for such liabilities, and the period in which we would be liable would lapse upon expiration of the statute of limitation for assessment of the underlying taxes. Because of the conditional nature of these obligations and the unique facts and circumstances involved in each particular agreement, we are unable to reasonably estimate the potential maximum exposure associated with these items;
•product warranties with respect to certain products sold to customers in the ordinary course of business. These warranties typically provide that products will conform to specifications. We generally do not establish a liability for product warranty based on a percentage of sales or other formula. We accrue a warranty liability on a transaction-specific basis depending on the individual facts and circumstances related to each sale. Both the liability and annual expense related to product warranties are immaterial to our consolidated financial position and results of operations; and
•licenses of intellectual property by us to third parties in which we have agreed to indemnify the licensee against third-party infringement claims.
As of June 30, 2021, the Company has no reason to believe a loss exceeding amounts already recognized would be incurred.
Other Matters
We are also involved in various other legal actions incidental to our business. We believe, after consulting with counsel, that the disposition of these other legal proceedings and matters will not have a material effect on our consolidated financial condition or results of operations including potential impact to cash flows.
Note 18 Stockholders’ Equity
Repurchase of Common Stock
On May 2, 2018, the Board of Directors increased the total authorization to repurchase the Company's issued and outstanding stock to $1.0 billion. As of June 30, 2021 the program in place had $375 million remaining authorization and had no expiration date. On August 2, 2021, the Board of Directors approved a new share repurchase program of $1.0 billion. This new program has no expiration date and replaces the previous authorizations.
During the three and six months ended June 30, 2021, we repurchased 2,133,020 and 6,058,054 shares, for approximately $122.4 million and $297.8 million, with an average share price of $57.36 and $49.16, respectively. Cash outlay for share repurchases during the six months ended June 30, 2021 also includes $1.6 million for 35,100 shares purchased in the fourth quarter 2020 and settled in the first quarter 2021.
These repurchases were made under open market transactions, including through plans complying with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, and pursuant to the share repurchase program previously authorized by our Board of Directors.
We did not repurchase any shares during the three and six months ended June 30, 2020.
Dividends
On February 11, 2021, our Board of Directors declared a quarterly cash dividend of $0.16 per common share, or $24.7 million, which was paid on March 19, 2021, to stockholders of record at the close of business on March 5, 2021.
On May 18, 2021, our Board of Directors declared a quarterly cash dividend of $0.20 per common share, or $30.3 million, which was paid on June 18, 2021, to stockholders of record at the close of business on June 4, 2021.
On July 12, 2021, our Board of Directors declared a quarterly cash dividend of $0.20 per common share, which will be paid on September 17, 2021 to stockholders of record at the close of business on September 3, 2021.
The dividends paid in the six months ended June 30, 2021 were recorded as a reduction to cash and cash equivalents and retained earnings on our Condensed Consolidated Balance Sheets. Our credit facility and our senior notes contain covenants that restrict our ability to declare or pay dividends. However, we do not believe these covenants are likely to materially limit the future payment of quarterly cash dividends on our common stock. From time to time, we may consider other means of returning value to our stockholders based on our Condensed Consolidated Statements of Operations. There is no guarantee that our Board of Directors will declare any future dividends.
Share-based Compensation
In 2014, the Board of Directors adopted, and our stockholders approved, the 2014 Omnibus Incentive Plan (“Omnibus Incentive Plan”). Under the Omnibus Incentive Plan, the maximum number of shares of Common Stock authorized was 4,250,000, plus total shares available to be issued as of May 22, 2014 under the 2002 Directors Stock Plan and the 2005 Contingent Stock Plan (collectively, the “Predecessor Plans”). The Omnibus Incentive Plan replaced the Predecessor Plans and no further awards were granted under the Predecessor Plans. The Omnibus Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, performance share units known as PSU awards, other stock awards and cash awards to officers, non-employee directors, key employees, consultants and advisors.
In 2018, the Board of Directors adopted, and at the 2018 Annual Stockholders' Meeting our shareholders approved, an amendment and restatement to the Omnibus Incentive Plan. The amended plan added 2,199,114 shares of common stock to the share pool previously available under the Omnibus Incentive Plan.
Additionally, in 2021, the Board of Directors adopted, and at the 2021 Annual Stockholders' Meeting our shareholders approved, an amendment and restatement to the Omnibus Incentive Plan. The amended plan added 2,999,054 shares of common stock to the share pool previously available under the Omnibus Incentive Plan.
We record share-based incentive compensation expense in selling, general and administrative expenses and cost of sales on our Condensed Consolidated Statements of Operations for both equity-classified and liability-classified awards. We record a corresponding credit to additional paid-in capital within stockholders’ equity for equity-classified awards, and to either current liabilities or non-current liabilities for liability-classified awards based on the fair value of the share-based incentive compensation awards at the date of grant. Total expense for the liability-classified awards continues to be remeasured to fair value at the end of each reporting period. We recognize an expense or credit reflecting the straight-line recognition, net of estimated forfeitures, of the expected cost of the program. The number of PSUs earned may equal, exceed or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed or not met.
The table below shows our total share-based incentive compensation expense:
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Total share-based incentive compensation expense(1)
|
|
$
|
12.3
|
|
|
$
|
10.5
|
|
|
$
|
23.8
|
|
|
$
|
19.0
|
|
(1)The amounts presented above do not include the expense related to our U.S. profit sharing contributions made in the form of our common stock, however, the amounts include the expense related to share based awards that are settled in cash.
Performance Share Units (“PSU”) Awards
During the first 90 days of each year, the Organization and Compensation (“O&C”) Committee of our Board of Directors approves PSU awards for our executive officers and other selected employees, which include for each participant a target number of shares of common stock and the performance goals and measures that will determine the percentage of the target award that is earned following the end of the three-year performance period. Following the end of the performance period, in addition to shares earned, participants will also receive a cash payment in the amount of the dividends (without interest) that would have been paid during the performance period on the number of shares that they have earned. Each PSU is subject to forfeiture if the recipient terminates employment with the Company prior to the end of the three-year award performance period for any reason other than death, disability or retirement. In the event of death, disability or retirement, a participant will receive a prorated payment based on such participant’s number of days of service during the award performance period, further adjusted based on the achievement of the performance goals during the award performance period. PSUs are classified as equity
in the Condensed Consolidated Balance Sheets, with the exception of awards that are required by local laws or regulations to be settled in cash. These are classified as either current or non-current liabilities in the Condensed Consolidated Balance Sheets.
2021 Three-year PSU Awards
During the first quarter 2021, the O&C Committee approved awards with a three-year performance period beginning January 1, 2021 and ending December 31, 2023 for executive officers and other selected employees. The O&C Committee established performance goals, which are (i) three-year cumulative average growth rate (“CAGR) of consolidated Adjusted EBITDA weighted at 50%, and (ii) Return on Invested Capital (“ROIC) weighted at 50%. Calculation of final achievement on each performance metric is subject to an upward or downward adjustment of up to 25% of the overall combined achievement percentage, based on the results of a relative total shareholder return (“TSR”) modifier. The comparator group for the relative TSR modifier is S&P 500 component companies as of the beginning of the performance period. Shareholder return in the top quartile of the comparator group increases overall achievement of performance metrics by 25%; while shareholder return in the bottom quartile of the comparator group decreases overall achievement of the performance metrics by 25%. The total number of shares to be issued, including the modifier, for these awards can range from zero to 250% of the target number of shares.
The target number of PSUs granted and the grant date fair value of the PSUs are shown in the following table:
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|
|
|
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|
|
|
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|
|
Adjusted EBITDA CAGR
|
|
ROIC
|
February 10, 2021 grant date
|
|
|
|
|
Number of units granted
|
|
41,729
|
|
|
41,729
|
|
Fair value on grant date (per unit)
|
|
$
|
45.26
|
|
|
$
|
45.26
|
|
February 11, 2021 grant date
|
|
|
|
|
Number of units granted
|
|
51,882
|
|
|
51,882
|
|
Fair value on grant date (per unit)
|
|
$
|
43.85
|
|
|
$
|
43.85
|
|
March 1, 2021 grant date
|
|
|
|
|
Number of units granted
|
|
29,762
|
|
|
29,762
|
|
Fair value on grant date (per unit)
|
|
$
|
43.02
|
|
|
$
|
43.02
|
|
The assumptions used to calculate the grant date fair value of the PSUs are shown in the following table:
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|
|
|
|
|
|
|
|
|
|
|
|
February 10, 2021
grant date
|
February 11, 2021
grant date
|
March 1, 2021
grant date
|
Expected price volatility
|
37.7
|
%
|
37.7
|
%
|
38.0
|
%
|
Risk-free interest rate
|
0.2
|
%
|
0.2
|
%
|
0.3
|
%
|
2018 Three-year PSU Awards
In February 2021, the O&C Committee reviewed the performance results for the 2018-2020 PSUs. Performance goals for these PSUs were based on Adjusted EBITDA margin, net trade sales CAGR and Relative TSR. Based on overall performance for 2018-2020 PSUs, these awards paid out at 54.6% of target or 84,696 units. Of this, 36,966 units were withheld for tax, resulting in net share issuances of 47,730.
Note 19 Accumulated Other Comprehensive Loss
The following table provides details of comprehensive (loss) income for the six months ended June 30, 2021 and 2020:
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
(In millions)
|
|
Unrecognized
Pension Items
|
|
Cumulative
Translation
Adjustment
|
|
Unrecognized
Losses on Derivative
Instruments for
net investment
hedge
|
|
Unrecognized
(Losses) Gains
on Derivative
Instruments
for cash flow hedge
|
|
|
|
Accumulated Other
Comprehensive
Loss, Net of
Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020
|
|
$
|
(172.5)
|
|
|
$
|
(721.7)
|
|
|
$
|
(67.5)
|
|
|
$
|
(1.8)
|
|
|
|
|
$
|
(963.5)
|
|
Other comprehensive (loss) income before reclassifications
|
|
(1.2)
|
|
|
2.0
|
|
|
12.1
|
|
|
0.2
|
|
|
|
|
13.1
|
|
Less: amounts reclassified from accumulated other comprehensive loss
|
|
2.7
|
|
|
—
|
|
|
—
|
|
|
2.9
|
|
|
|
|
5.6
|
|
Net current period other comprehensive income
|
|
1.5
|
|
|
2.0
|
|
|
12.1
|
|
|
3.1
|
|
|
|
|
18.7
|
|
Balance at June 30, 2021(1)
|
|
$
|
(171.0)
|
|
|
$
|
(719.7)
|
|
|
$
|
(55.4)
|
|
|
$
|
1.3
|
|
|
|
|
$
|
(944.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
$
|
(146.1)
|
|
|
$
|
(728.6)
|
|
|
$
|
(34.5)
|
|
|
$
|
0.2
|
|
|
|
|
$
|
(909.0)
|
|
Other comprehensive (loss) income before reclassifications
|
|
(0.1)
|
|
|
(87.1)
|
|
|
(1.3)
|
|
|
4.7
|
|
|
|
|
(83.8)
|
|
Less: amounts reclassified from accumulated other comprehensive loss
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|
(2.4)
|
|
|
|
|
(0.2)
|
|
Net current period other comprehensive income (loss)
|
|
2.1
|
|
|
(87.1)
|
|
|
(1.3)
|
|
|
2.3
|
|
|
|
|
(84.0)
|
|
Balance at June 30, 2020(1)
|
|
$
|
(144.0)
|
|
|
$
|
(815.7)
|
|
|
$
|
(35.8)
|
|
|
$
|
2.5
|
|
|
|
|
$
|
(993.0)
|
|
(1)The ending balance in AOCL includes gains and losses on intra-entity foreign currency transactions. The intra-entity currency translation adjustment was $(12.0) million and $4.5 million as of June 30, 2021 and 2020, respectively.
The following table provides detail of amounts reclassified from AOCL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
(In millions)
|
|
2021(1)
|
|
2020(1)
|
|
2021(1)
|
|
2020(1)
|
|
Location of Amount
Reclassified from AOCL
|
Defined benefit pension plans and other post-employment benefits:
|
|
|
|
|
|
|
|
|
|
|
Prior service credit
|
|
0.1
|
|
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
|
Actuarial losses
|
|
(1.8)
|
|
|
(1.4)
|
|
|
(3.7)
|
|
|
(3.0)
|
|
|
|
Total pre-tax amount
|
|
(1.7)
|
|
|
(1.4)
|
|
|
(3.6)
|
|
|
(2.9)
|
|
|
Other (expense) income, net
|
Tax benefit
|
|
0.4
|
|
|
0.3
|
|
|
0.9
|
|
|
0.7
|
|
|
|
Net of tax
|
|
(1.3)
|
|
|
(1.1)
|
|
|
(2.7)
|
|
|
(2.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (losses) gains on cash flow hedging derivatives:(2)
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
(0.8)
|
|
|
2.0
|
|
|
(4.2)
|
|
|
3.1
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
Treasury locks
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
Interest expense, net
|
Total pre-tax amount
|
|
(0.7)
|
|
|
2.1
|
|
|
(4.1)
|
|
|
3.2
|
|
|
|
Tax (expense) benefit
|
|
(0.1)
|
|
|
(0.5)
|
|
|
1.2
|
|
|
(0.8)
|
|
|
|
Net of tax
|
|
(0.8)
|
|
|
1.6
|
|
|
(2.9)
|
|
|
2.4
|
|
|
|
Total reclassifications for the period
|
|
$
|
(2.1)
|
|
|
$
|
0.5
|
|
|
$
|
(5.6)
|
|
|
$
|
0.2
|
|
|
|
(1)Amounts in parentheses indicate charges to earnings (loss).
(2)These accumulated other comprehensive components are included in our derivative and hedging activities. See Note 13, “Derivatives and Hedging Activities,” for additional details.
Note 20 Other (Expense) Income, net
The following table provides details of other (expense) income, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net foreign exchange transaction (loss) gain
|
|
$
|
(1.0)
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
6.6
|
|
Bank fee expense
|
|
(1.1)
|
|
|
(1.2)
|
|
|
(2.4)
|
|
|
(2.3)
|
|
Pension income other than service costs
|
|
1.4
|
|
|
0.4
|
|
|
2.6
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange loss due to highly inflationary economies
|
|
(0.6)
|
|
|
(1.2)
|
|
|
(2.0)
|
|
|
(2.1)
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
2.2
|
|
|
4.1
|
|
|
5.0
|
|
|
7.3
|
|
Other (expense)
|
|
(1.3)
|
|
|
(0.5)
|
|
|
(2.6)
|
|
|
(3.7)
|
|
Other (expense) income, net
|
|
$
|
(0.4)
|
|
|
$
|
2.2
|
|
|
$
|
0.6
|
|
|
$
|
7.0
|
|
Note 21 Net Earnings Per Common Share
The following table shows the calculation of basic and diluted net earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(In millions, except per share amounts)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Basic Net Earnings Per Common Share:
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
108.1
|
|
|
$
|
100.1
|
|
|
$
|
218.2
|
|
|
$
|
226.7
|
|
Distributed and allocated undistributed net earnings to unvested restricted stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
Net earnings available to common stockholders
|
|
$
|
108.1
|
|
|
$
|
100.1
|
|
|
$
|
218.2
|
|
|
$
|
226.6
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
151.4
|
|
|
155.6
|
|
|
152.8
|
|
|
155.1
|
|
Basic net earnings per common share:
|
|
|
|
|
|
|
|
|
Basic net earnings per common share
|
|
$
|
0.71
|
|
|
$
|
0.64
|
|
|
$
|
1.43
|
|
|
$
|
1.46
|
|
Diluted Net Earnings Per Common Share:
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net earnings available to common stockholders
|
|
$
|
108.1
|
|
|
$
|
100.1
|
|
|
$
|
218.2
|
|
|
$
|
226.6
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
151.4
|
|
|
155.6
|
|
|
152.8
|
|
|
155.1
|
|
Effect of dilutive stock shares and units
|
|
1.3
|
|
|
0.3
|
|
|
1.2
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - diluted under treasury stock
|
|
152.7
|
|
|
155.9
|
|
|
154.0
|
|
|
155.4
|
|
Diluted net earnings per common share
|
|
$
|
0.71
|
|
|
$
|
0.64
|
|
|
$
|
1.42
|
|
|
$
|
1.46
|
|