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Segments | 9 Months Ended
--- | ---
Sep. 30, 2015
Segment Reporting [Abstract] |
Segments | Note 4 Segments The Company’s segment reporting structure consists of three reportable segments and an “Other” category and is as follows:
| · | Food Care;
| · | Diversey Care;
| · | Product Care; and
| · | Other (includes Corporate, Medical Applications and New Ventures businesses)
The Company’s Food Care, Diversey Care and Product Care segments are considered reportable segments under FASB ASC Topic 280. Our reportable segments are aligned with similar groups of products. Other includes Corporate and the Medical Applications and New Ventures businesses. Other includes certain costs that are not allocated to the reportable segments, primarily consisting of unallocated corporate overhead costs, including administrative functions and cost recovery variances not allocated to the reportable segments from global functional expenses. Other also includes restructuring and other associated costs, expenses related to stock appreciation rights (“SARs”), which were issued in connection with the acquisition of Diversey in 2011, loss on debt redemptions and foreign currency exchange gains/losses related to Venezuelan subsidiaries and other one-time expenses and/or gains. We allocate and disclose depreciation and amortization expense to our segments, although property and equipment, net is not allocated to the segment assets, nor is depreciation and amortization included in the segment performance metric Adjusted EBITDA. We also disclose restructuring and other charges and impairment of goodwill and other intangible assets by segment, although these items are not included in the segment performance metric Adjusted EBITDA since restructuring and other charges and impairment of goodwill and other intangible assets are categorized as special items as discussed above. The accounting policies of the reportable segments and Other are the same as those applied to the consolidated financial statements. The following tables show Net Sales and Adjusted EBITDA by our segment reporting structure:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(In millions) |  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Net Sales: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Food Care |  | $ | 836.4 |  |  | $ | 983.5 |  |  | $ | 2,562.8 |  |  | $ | 2,849.9 |
As a % of Total Company net sales |  |  | 47.9 | % |  |  | 49.8 | % |  |  | 48.6 | % |  |  | 49.3 | %
Diversey Care |  |  | 501.8 |  |  |  | 550.8 |  |  |  | 1,504.7 |  |  |  | 1,637.2 |
As a % of Total Company net sales |  |  | 28.7 | % |  |  | 27.9 | % |  |  | 28.5 | % |  |  | 28.3 | %
Product Care |  |  | 384.7 |  |  |  | 420.7 |  |  |  | 1,142.8 |  |  |  | 1,223.2 |
As a % of Total Company net sales |  |  | 22.0 | % |  |  | 21.3 | % |  |  | 21.7 | % |  |  | 21.2 | %
Total Reportable Segments Net Sales |  |  | 1,722.9 |  |  |  | 1,955.0 |  |  |  | 5,210.3 |  |  |  | 5,710.3 |
Other |  |  | 23.3 |  |  |  | 20.5 |  |  |  | 67.3 |  |  |  | 66.5 |
Total Company Net Sales |  | $ | 1,746.2 |  |  | $ | 1,975.5 |  |  | $ | 5,277.6 |  |  | $ | 5,776.8 |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(In millions) |  | 2015 |  |  | 2014(1) |  |  | 2015 |  |  | 2014(1) |
Adjusted EBITDA: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Food Care |  | $ | 168.4 |  |  | $ | 181.2 |  |  | $ | 532.6 |  |  | $ | 498.0 |
Adjusted EBITDA Margin |  |  | 20.1 | % |  |  | 18.4 | % |  |  | 20.8 | % |  |  | 17.5 | %
Diversey Care |  |  | 66.4 |  |  |  | 69.9 |  |  |  | 176.5 |  |  | 186.7 |
Adjusted EBITDA Margin |  |  | 13.2 | % |  |  | 12.7 | % |  |  | 11.7 | % |  |  | 11.4 | %
Product Care |  |  | 81.0 |  |  |  | 74.4 |  |  | 235.6 |  |  | 215.5 |
Adjusted EBITDA Margin |  |  | 21.1 | % |  |  | 17.7 | % |  |  | 20.6 | % |  |  | 17.6 | %
Total Reportable Segments Adjusted EBITDA |  |  | 315.8 |  |  |  | 325.5 |  |  |  | 944.7 |  |  |  | 900.2 |
Other |  |  | (15.8 | ) |  |  | (23.2 | ) |  |  | (52.9 | ) |  |  | (63.4 | )
Non-U.S. GAAP Total Company Adjusted EBITDA |  | $ | 300.0 |  |  | $ | 302.3 |  |  | $ | 891.8 |  |  | $ | 836.8 |
Adjusted EBITDA Margin |  |  | 17.2 | % |  |  | 15.3 | % |  |  | 16.9 | % |  |  | 14.5 | %
(1) | During the fourth quarter of 2014, we changed the method of valuing our inventories that used the LIFO method to the FIFO method, so that all of our inventories are now valued at FIFO. We applied this change in accounting principle retrospectively. Accordingly certain previously reported financial information has been revised. See Note 1, “Organization and Basis of Presentation-Changes in Accounting/Retrospective Application” for additional details regarding this accounting policy change.
The following table shows a reconciliation of Total Company Adjusted EBITDA to Net earnings available to common stockholders:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(In millions) |  | 2015 |  |  | 2014(1) |  |  | 2015 |  |  | 2014(1) |
Total Company Adjusted EBITDA |  | $ | 300.0 |  |  | $ | 302.3 |  |  | $ | 891.8 |  |  | $ | 836.8 |
Depreciation and amortization (2) |  |  | (68.7 | ) |  |  | (77.3 | ) |  |  | (211.1 | ) |  |  | (241.7 | )
Special items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accelerated depreciation of non-strategic assets related to restructuring programs |  |  | (0.1 | ) |  |  | 0.3 |  |  |  | 0.2 |  |  |  | 0.2 |
Restructuring and other charges(3) |  |  | (38.4 | ) |  |  | (11.4 | ) |  |  | (68.0 | ) |  |  | (31.6 | )
Other restructuring associated costs included in cost of sales and selling, general and administrative expenses |  |  | (13.0 | ) |  |  | (8.4 | ) |  |  | (32.2 | ) |  |  | (22.8 | )
Development grant matter included in selling, general and administrative expenses |  |  | — |  |  |  | (14.0 | ) |  |  | — |  |  |  | (14.0 | )
SARs |  |  | 0.4 |  |  |  | (1.0 | ) |  |  | (4.1 | ) |  |  | (3.2 | )
Impairments of equity method investment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5.7 | )
Foreign currency exchange (loss) gains related to Venezuelan subsidiaries |  |  | (1.0 | ) |  |  | (4.1 | ) |  |  | (30.7 | ) |  |  | (18.9 | )
Loss on debt redemption and refinancing activities |  |  | 0.6 |  |  |  | (17.7 | ) |  |  | (110.7 | ) |  |  | (18.5 | )
Gain (loss) from Claims Settlement in 2014 and related costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 21.1 |
Gain (loss) from sale of North America foam trays and absorbent pads business |  |  | (0.5 | ) |  |  | — |  |  |  | 28.7 |  |  |  | — |
Non-operating charge for contingent guarantee included in other income (expense), net |  |  | — |  |  |  | (2.5 | ) |  |  | — |  |  |  | (2.5 | )
Other special items |  |  | 1.5 |  |  |  | 1.0 |  |  |  | 8.6 |  |  |  | (5.5 | )
Interest expense |  |  | (54.8 | ) |  |  | (69.7 | ) |  |  | (172.3 | ) |  |  | (222.1 | )
Income tax provision |  |  | 39.4 |  |  |  | 36.7 |  |  |  | 88.3 |  |  |  | 79.8 |
Net earnings available to common stockholders |  | $ | 86.6 |  |  | $ | 60.8 |  |  | $ | 211.9 |  |  | $ | 191.8 |
(1) | During the fourth quarter of 2014, we changed the method of valuing certain of our inventories that used the LIFO method to the FIFO method, so that all of our inventories are now valued at FIFO. We applied this change in accounting principle retrospectively. Accordingly certain previously reported financial information has been revised. See Note 1, “Organization and Basis of Presentation-Changes in Accounting/Retrospective Application” for additional details regarding this accounting policy change. The table below represents the impact to Earnings before income tax provision for the three month and nine month periods ended September 30, 2014 had we remained on the LIFO method of valuing those inventories:
|  | Three Months Ended |  |  | Nine Months Ended |
(In millions) |  | September 30, 2014 |  |  | September 30, 2014 |
Food Care |  | $ | 2.8 |  |  | $ | 0.7 |
Diversey Care |  |  | — |  |  |  | — |
Product Care |  |  | — |  |  |  | 0.1 |
Total reportable segments |  |  | 2.8 |  |  |  | 0.8 |
Other |  |  | — |  |  |  | — |
Total Company LIFO Adjustments |  | $ | 2.8 |  |  | $ | 0.8 |
(2) | Depreciation and amortization by segment is as follows:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(In millions) |  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Food Care |  | $ | 26.6 |  |  | $ | 30.6 |  |  | $ | 81.8 |  |  | $ | 92.1 |
Diversey Care |  |  | 25.7 |  |  |  | 31.9 |  |  |  | 77.0 |  |  |  | 98.9 |
Product Care |  |  | 9.3 |  |  |  | 9.8 |  |  |  | 28.8 |  |  |  | 30.7 |
Total reportable segments |  |  | 61.6 |  |  |  | 72.3 |  |  |  | 187.6 |  |  |  | 221.7 |
Other |  |  | 7.1 |  |  |  | 5.0 |  |  |  | 23.5 |  |  |  | 20.0 |
Total Company depreciation and amortization(1) |  | $ | 68.7 |  |  | $ | 77.3 |  |  | $ | 211.1 |  |  | $ | 241.7 |
(1) | Includes share-based incentive compensation.
(3) | Restructuring and other charges by segment were as follows:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(In millions) |  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Food Care |  | $ | 15.4 |  |  | $ | 1.8 |  |  | $ | 29.5 |  |  | $ | 12.9 |
Diversey Care |  |  | 16.0 |  |  |  | 8.2 |  |  |  | 25.5 |  |  |  | 12.0 |
Product Care |  |  | 6.7 |  |  |  | 1.3 |  |  |  | 12.6 |  |  |  | 6.3 |
Total reportable segments |  |  | 38.1 |  |  |  | 11.3 |  |  |  | 67.6 |  |  |  | 31.2 |
Other |  |  | 0.3 |  |  |  | 0.1 |  |  |  | 0.4 |  |  |  | 0.4 |
Total Company restructuring and other charges |  | $ | 38.4 |  |  | $ | 11.4 |  |  | $ | 68.0 |  |  | $ | 31.6 |
Assets by Reportable Segments The following table shows assets allocated by our segment reporting structure. Only assets identifiable by segment and reviewed by our chief operating decision maker by segment are allocated by the reportable segment assets, which are trade receivables, net, and finished goods inventory, net. All other assets are included in “Assets not allocated.”
|  | September 30, |  |  | December 31, |
(In millions) |  | 2015 |  |  | 2014 |
Assets: |  |  |  |  |  |  |  |
Trade receivables, net, and finished goods inventories, net |  |  |  |  |  |  |  |
Food Care |  | $ | 613.3 |  |  | $ | 682.1 |
Diversey Care |  |  | 519.9 |  |  |  | 514.5 |
Product Care |  |  | 251.9 |  |  |  | 279.1 |
Other |  |  | 16.7 |  |  |  | 14.0 |
Total segments and other |  |  | 1,401.8 |  |  |  | 1,489.7 |
Assets not allocated |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 334.3 |  |  |  | 322.6 |
Property and equipment, net |  |  | 905.9 |  |  |  | 970.6 |
Goodwill |  |  | 2,917.0 |  |  |  | 2,998.6 |
Intangible assets, net |  |  | 812.8 |  |  |  | 872.2 |
Assets held for sale |  |  | 5.5 |  |  |  | 69.3 |
Other |  |  | 1,209.0 |  |  |  | 1,318.7 |
Total |  | $ | 7,586.3 |  |  | $ | 8,041.7 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8906-108599 + Details
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