XML 40 R28.htm IDEA: XBRL DOCUMENT
v3.8.0.1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended
--- | ---
Mar. 31, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of AptarGroup, Inc. and our subsidiaries. The terms “AptarGroup”, “Aptar” or “Company” as used herein refer to AptarGroup, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the unaudited Condensed Consolidated Financial Statements (the “Condensed Consolidated Financial Statements”) include all normal recurring adjustments necessary for a fair statement of consolidated financial position, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. The accompanying Condensed Consolidated Financial Statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Also, certain financial position data included herein was derived from the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 but does not include all disclosures required by U.S. GAAP. Accordingly, these Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.
RETIREMENT OF COMMON STOCK | RETIREMENT OF COMMON STOCK During the first quarter of 2018, the Company repurchased 189 thousand shares of common stock, of which 144 thousand shares were immediately retired. During the first quarter of 2017, the Company repurchased and immediately retired 210 thousand shares of common stock. Common stock was reduced by the number of shares retired at $0.01 par value per share. The Company allocates the excess purchase price over par value between additional paid-in capital and retained earnings.
INCOME TAXES | INCOME TAXES The Company computes taxes on income in accordance with the tax rules and regulations of the many taxing authorities where income is earned. The income tax rates imposed by these taxing authorities may vary substantially. Taxable income may differ from pre-tax income for financial accounting purposes. To the extent that these differences create temporary differences between the tax basis of an asset or liability and our reported amount in the financial statements, an appropriate provision for deferred income taxes is made. The Tax Cuts and Jobs Act (the “TCJA”) was enacted in the United States (“U.S.”) on December 22, 2017. The TCJA lowered the corporate tax rate from 35.0% to 21.0% and imposed a one-time transition tax on unremitted earnings as of the end of 2017, and featured many other tax law provisions. New provisions for 2018 include, most notably, a tax on global intangible low-taxed income (“GILTI”) and the base erosion anti-abuse tax (“BEAT”). The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the U.S. GAAP application of the TCJA. SAB 118 provides us up to a year to finalize accounting for the impacts of the TCJA. The Company estimated provisional tax amounts related to the transition tax and components of the revaluation of deferred tax assets and liabilities for the period ended December 31, 2017. We recognized a net tax charge of approximately $24.7 million, comprised of a provisional charge of $31.6 million for the transition tax and a provisional benefit of $6.8 million related to the corporate rate change. There have been no changes to those provisional amounts as of March 31, 2018. The Company expects these amounts to be finalized in the second half of 2018 when the 2017 tax return is filed. The Company has elected to account for the tax on GILTI as a period cost and not as a measure of deferred taxes in the current period. All of the Company’s non-U.S. earnings are subject to U.S. taxation, either from the TCJA transition tax on accumulated non-U.S. earnings as of the end of 2017 or the GILTI provisions on non-U.S. earnings going forward. The Company maintains its assertion that the cash and distributable reserves at its non-U.S. affiliates are indefinitely reinvested. The Company will provide for the necessary withholding and local income taxes when management decides that an affiliate should make a distribution. These decisions are made taking into consideration the financial requirements of the non-U.S. affiliates and the global cash management goals of the Company. The Company provides a liability for the amount of unrecognized tax benefits from uncertain tax positions. This liability is provided whenever the Company determines that a tax benefit will not meet a more-likely-than-not threshold for recognition. See Note 5 - Income Taxes for more information.
ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS | ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (ASUs) to the FASB’s Accounting Standards Codification. In May 2014, the FASB amended the guidance for recognition of revenue from customer contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On January 1, 2018, we adopted this standard and all the related amendments (the “new revenue standard”) for all contracts. This adoption was accounted for using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the January 1, 2018 opening balance of retained earnings. Comparative information for the prior period has not been restated and continues to be reported under the accounting standards in effect prior to January 1, 2018.
|  |  | Balance at |  |  |  |  |  | Balance at |
|  |  | December 31, 2017 |  |  | Adjustment |  |  | January 1, 2018 |
Consolidated Balance Sheets |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Inventories |  | $ | 337,216 |  | $ | (14,637) |  | $ | 322,579 |
Prepaid and other |  |  | 109,791 |  |  | 13,984 |  |  | 123,775 |
Liabilities |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  |  | 461,579 |  |  | (5,706) |  |  | 455,873 |
Deferred income taxes |  |  | 20,995 |  |  | 1,292 |  |  | 22,287 |
Deferred and other non-current liabilities |  |  | 5,608 |  |  | 824 |  |  | 6,432 |
Stockholders’ Equity |  |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 1,301,147 |  |  | 2,937 |  |  | 1,304,084 |
A majority of our sales revenue continues to be recognized when products are shipped from our manufacturing facilities. For certain custom product and tooling sales where revenue was previously recognized when the products were shipped, we now recognize revenue over the time required to manufacture the product or build the tool in accordance with the new revenue standard. We also have certain extended warranty contracts, which under the new standard are considered a separate performance obligation and are required to be deferred and recognized into revenue over the life of the agreement. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statements of income and balance sheets is as follows:
|  | For the Three Months Ended March 31, 2018 |
|  |  |  |  |  | Balances |  |  |  |
|  |  |  |  |  | Without |  |  | Effect of |
|  |  | As |  |  | Adoption of |  |  | Change |
|  |  | Reported |  |  | ASC 606 |  |  | Higher/(Lower) |
Consolidated Statements of Income |  |  |  |  |  |  |  |  |  |
Net Sales |  |  |  |  |  |  |  |  |  |
Beauty + Home |  | $ | 378,173 |  | $ | 376,868 |  | $ | (1,305) |
Pharma |  |  | 230,127 |  |  | 230,462 |  |  | 335 |
Food + Beverage |  |  | 95,050 |  |  | 95,100 |  |  | 50 |
Costs and Expenses |  |  |  |  |  |  |  |  |  |
Cost of sales |  |  | 455,822 |  |  | 454,900 |  |  | (922) |
Provision for income taxes |  |  | 21,929 |  |  | 21,925 |  |  | (4) |
Net income |  |  | 59,288 |  |  | 59,294 |  |  | 6 |
|  | March 31, 2018 |
|  |  |  |  |  | Balances |  |  |  |
|  |  |  |  |  | Without |  |  | Effect of |
|  |  | As |  |  | Adoption of |  |  | Change |
|  |  | Reported |  |  | ASC 606 |  |  | Higher/(Lower) |
Consolidated Balance Sheets |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Accounts and notes receivable |  | $ | 586,592 |  | $ | 600,576 |  | $ | 13,984 |
Inventories |  |  | 347,791 |  |  | 348,713 |  |  | 922 |
Prepaid and other |  |  | 117,678 |  |  | 104,193 |  |  | (13,485) |
Liabilities |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  |  | 496,409 |  |  | 497,815 |  |  | 1,406 |
Deferred income taxes |  |  | 20,578 |  |  | 20,574 |  |  | (4) |
Deferred and other non-current liabilities |  |  | 6,682 |  |  | 6,695 |  |  | 13 |
Stockholders’ Equity |  |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 1,332,218 |  |  | 1,332,224 |  |  | 6 |
In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments within the statement of cash flows. This guidance provides clarification for the following types of transactions: debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, distributions received from equity method investees and beneficial interest in securitization transactions. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. However, early adoption was permitted and an entity that elects early adoption must adopt all of the amendments on a retrospective basis in the period of adoption. The Company adopted this standard in the fourth quarter of 2017. In November 2016, the FASB issued guidance to address the diversity in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in this standard require that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018 and appropriate disclosures are included on the statement of cash flows. In March 2017, the FASB issued guidance to disaggregate the current service cost component from the other components of net periodic benefit costs. The service cost component should be presented within compensation costs while the other components should be presented outside of income from operations. The guidance also clarifies that only the service cost component is eligible for capitalization. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018 and the prior periods were restated as follows:
|  | Original |  |  |  |  | Revised |
|  | Balance |  | Adjustment |  | Balance |
Revised Condensed Consolidated Statements of Income |  |  |  |  |  |  |  |  |  |
Three Months Ended March 31, 2017 |  |  |  |  |  |  |  |  |  |
Cost of sales |  | $ | 384,932 |  | $ | (248) |  | $ | 384,684 |
Selling, research & development and administrative |  |  | 101,516 |  |  | (234) |  |  | 101,282 |
Total Operating Expenses |  |  | 523,779 |  |  | (482) |  |  | 523,297 |
Operating Income |  |  | 77,537 |  |  | 482 |  |  | 78,019 |
Miscellaneous, net |  |  | (77) |  |  | (482) |  |  | (559) |
Total Other (Expense) Income |  |  | (8,057) |  |  | (482) |  |  | (8,539) |
Income before Income Taxes |  |  | 69,480 |  |  | — |  |  | 69,480 |
In May 2017, the FASB issued clarification on applying the standards for stock compensation accounting. The new standard provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company has adopted the requirements of this standard during the first quarter of 2018. In August 2017, the FASB issued new guidance to improve the accounting for hedging activities. The guidance changes the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the guidance makes certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. However, early application is permitted in any interim period after the issuance of this guidance. The Company adopted this standard in the third quarter of 2017. See details in Note 9 – Derivative Instruments and Hedging Activities. Other accounting standards that have been issued by the FASB or other standards-setting bodies did not have a material impact on our Condensed Consolidated Financial Statements.
REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS | REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS During the second quarter of 2017, the Company determined that the impact of restricted stock unit (RSU) vesting was incorrectly presented in the Condensed Consolidated Statement of Cash Flows. The effect of correcting this error results in a reduction to Net Cash Provided by Operations with a corresponding increase to Net Cash (Used) Provided by Financing Activities. As this error represents a reclassification between two accounts within the Condensed Consolidated Statement of Cash Flows, the Condensed Consolidated Statements of Income, the Condensed Consolidated Balance Sheet and the Condensed Consolidated Statements of Changes in Equity are not impacted by this change. The Company determined the error is not material to previously issued financial statements but was significant enough to revise. Following is a summary of the previously issued financial statement line items impacted by this revision for all periods and statements included in this report:
|  | As Previously |  |  |  |  |  |  |
|  | Reported |  | Adjustment |  | As Revised |
Revised Consolidated Statements of Cash Flows |  |  |  |  |  |  |  |  |  |
Three Months Ended March 31, 2017 |  |  |  |  |  |  |  |  |  |
Retirement and deferred compensation plan liabilities |  | $ | (21,272) |  | $ | (2,797) |  | $ | (24,069) |
Net Cash Provided by Operations |  |  | 40,973 |  |  | (2,797) |  |  | 38,176 |
Proceeds from stock option exercises |  |  | 15,908 |  |  | 2,797 |  |  | 18,705 |
Net Cash Provided (Used) by Financing Activities |  |  | (185,981) |  |  | 2,797 |  |  | (183,184) |

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for basis of accounting, or basis of presentation, used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). + References No definition available. + Details
Name: | us-gaap_BasisOfAccountingPolicyPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=84158767&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 19 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32840-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 05 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65884525&loc=d3e40913-109327 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 954 -SubTopic 740 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6491622&loc=d3e9504-115650 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 45 -Paragraph 25 -URI http://asc.fasb.org/extlink&oid=84176650&loc=d3e32247-109318 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 45 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=84176650&loc=d3e32280-109318 + Details
Name: | us-gaap_IncomeTaxPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy pertaining to new accounting pronouncements that may impact the entity's financial reporting. Includes, but is not limited to, quantification of the expected or actual impact. + References No definition available. + Details
Name: | us-gaap_NewAccountingPronouncementsPolicyPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for reclassifications that affects the comparability of the financial statements. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6359566&loc=d3e326-107755 + Details
Name: | us-gaap_PriorPeriodReclassificationAdjustmentDescription
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for its capital stock transactions, including dividends and accumulated other comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=84158767&loc=d3e18726-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21459-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=84158767&loc=d3e18780-107790 + Details
Name: | us-gaap_StockholdersEquityPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration