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Segments | 9 Months Ended
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Sep. 30, 2017
Segment Reporting [Abstract] |
Segments | Segments As a result of the sale of Diversey, we have changed our segment reporting structure. The Food Care division now excludes the food hygiene and cleaning business, which is included in discontinued operations, and includes our Medical Applications and New Ventures businesses, which were previously reported in the “Other” category. The Other category also previously included “Corporate” which is now its own category. The Company’s segment reporting structure now consists of two reportable segments and a Corporate category as follows:
• | Food Care (including Medical Applications and New Ventures businesses);
• | Product Care; and
• | Corporate.
The Company’s Food Care and Product Care segments are considered reportable segments under FASB ASC Topic 280. Our reportable segments are aligned with similar groups of products and management team. Corporate 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. 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. As of January 1, 2017 we modified our calculation of Adjusted EBITDA to exclude interest income. The impact in this modification was $1.6 million and $5.3 million for the three and nine months ended September 30, 2016, respectively. We also disclose restructuring and other charges by segment, although these items are not included in the segment performance metric Adjusted EBITDA since restructuring and other charges are categorized as special items as outlined in the table reconciling U.S. GAAP net earnings from continuing operations to Non-U.S. GAAP Total Company Adjusted EBITDA set forth 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 Adjusted EBITDA by our segment reporting structure:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) |  | 2017 |  | 2016 |  | 2017 |  | 2016
Net Sales: |  |  |  |  |  |  |  |  |  |  |  |
Food Care |  | $ | 716.0 |  |  | $ | 676.2 |  |  | $ | 2,051.1 |  |  | $ | 1,979.2 |
As a % of Total Company net sales |  | 63.3 | % |  | 63.5 | % |  | 63.4 | % |  | 63.6 | %
Product Care |  | 415.3 |  |  | 388.9 |  |  | 1,182.7 |  |  | 1,130.7 |
As a % of Total Company net sales |  | 36.7 | % |  | 36.5 | % |  | 36.6 | % |  | 36.4 | %
Total Company Net Sales |  | $ | 1,131.3 |  |  | $ | 1,065.1 |  |  | $ | 3,233.8 |  |  | $ | 3,109.9 |
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) |  | 2017 |  | 2016 |  | 2017 |  | 2016
Adjusted EBITDA from continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Food Care |  | $ | 158.3 |  |  | $ | 155.6 |  |  | $ | 446.0 |  |  | $ | 440.7 |
Adjusted EBITDA Margin |  | 22.1 | % |  | 23.0 | % |  | 21.7 | % |  | 22.3 | %
Product Care |  | 86.5 |  |  | 88.0 |  |  | 237.7 |  |  | 243.8 |
Adjusted EBITDA Margin |  | 20.8 | % |  | 22.6 | % |  | 20.1 | % |  | 21.6 | %
Corporate(1) |  | (28.0) |  |  | (30.7) |  |  | (88.7) |  |  | (91.7) |
Non-U.S. GAAP Total Company Adjusted EBITDA from continuing operations |  | $ | 216.8 |  |  | $ | 212.9 |  |  | $ | 595.0 |  |  | $ | 592.8 |
Adjusted EBITDA Margin |  | 19.2 | % |  | 20.0 | % |  | 18.4 | % |  | 19.1 | %
(1) | Corporate includes costs previously allocated to the Diversey Care segment and food hygiene and cleaning business of our Food Care segment reported within discontinued operations of $2.8 million and $3.5 million for the three months ended September 30, 2017 and 2016, respectively, and $13.7 million and $10.4 million for the nine months ended September 30, 2017 and 2016, respectively.
The following table shows a reconciliation of U.S. GAAP net earnings from continuing operations to Non-U.S. GAAP Total Company Adjusted EBITDA from continuing operations:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) |  | 2017 |  | 2016 |  | 2017 |  | 2016(1)
Net earnings from continuing operations |  | $ | 62.4 |  |  | $ | 63.8 |  |  | $ | 37.8 |  |  | $ | 141.1 |
Interest expense |  | (54.0 | ) |  | (49.6 | ) |  | (153.7 | ) |  | (151.4 | )
Interest income |  | 4.9 |  |  | 1.7 |  |  | 10.3 |  |  | 5.3 |
Income tax provision |  | 43.7 |  |  | 54.1 |  |  | 236.5 |  |  | 124.7 |
Depreciation and amortization(3) |  | (42.7 | ) |  | (39.6 | ) |  | (116.3 | ) |  | (113.0 | )
Accelerated depreciation and amortization of fixed assets and intangible assets for Venezuelan subsidiaries |  | — |  |  | 0.1 |  |  | — |  |  | 0.8 |
Special Items: |  |  |  |  |  |  |  |
Restructuring and other charges(4) |  | (6.2 | ) |  | (1.3 | ) |  | (9.2 | ) |  | (1.1 | )
Other restructuring associated costs included in cost of sales and selling, general and administrative expenses |  | (2.9 | ) |  | (5.2 | ) |  | (12.7 | ) |  | (13.2 | )
SARs |  | — |  |  | 0.3 |  |  | — |  |  | (0.7 | )
Foreign currency exchange loss related to Venezuelan subsidiaries |  | — |  |  | — |  |  | — |  |  | (1.6 | )
Charges related to ceasing operations in Venezuela |  | — |  |  | — |  |  | — |  |  | (47.3 | )
Gain (loss) on sale of North American foam trays and absorbent pads business and European food trays business |  | 0.2 |  |  | — |  |  | 2.3 |  |  | (1.6 | )
(Loss) gain related to the sale of other businesses, investments and property, plant and equipment |  | (6.9 | ) |  | 2.1 |  |  | (7.1 | ) |  | — |
Charges incurred related to the sale of Diversey |  | (13.7 | ) |  | — |  |  | (47.6 | ) |  | — |
Settlement/curtailment benefits related to retained Diversey retirement plans |  | 13.5 |  |  | — |  |  | 13.5 |  |  | — |
Other special items(2) |  | (2.9 | ) |  | (3.5 | ) |  | (0.2 | ) |  | (3.2 | )
Pre-tax impact of Special items |  | (18.9 | ) |  | (7.6 | ) |  | (61.0 | ) |  | (68.7 | )
Non-U.S. GAAP Total Company Adjusted EBITDA from continuing operations |  | $ | 216.8 |  |  | $ | 212.9 |  |  | $ | 595.0 |  |  | $ | 592.8 |
(1) | Due to the ongoing challenging economic situation in Venezuela, the Company approved a program in the second quarter of 2016 to cease operations in the country. Refer to Note 1, "Organization and Basis of Presentation," of the Notes to the Condensed Consolidated Financial Statement for further details.
(2) | Other special items for the three and nine months ended September 30, 2017, primarily included transaction fees related to various divestitures and acquisitions. Other special items for the three and nine months ended September 30, 2016 primarily included a reduction in a non-income tax reserve following the completion of a governmental audit partially offset by legal fees associated with restructuring and acquisitions.
(3) | Depreciation and amortization by segment is as follows:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) |  | 2017 |  | 2016 |  | 2017 |  | 2016
Food Care |  | $ | 26.4 |  |  | $ | 23.1 |  |  | $ | 75.8 |  |  | $ | 68.3 |
Product Care |  | $ | 11.7 |  |  | $ | 9.6 |  |  | $ | 34.2 |  |  | $ | 28.6 |
Corporate |  | $ | 4.6 |  |  | $ | 6.9 |  |  | $ | 6.3 |  |  | $ | 16.1 |
Total Company depreciation and amortization(1) |  | $ | 42.7 |  |  | $ | 39.6 |  |  | $ | 116.3 |  |  | $ | 113.0 |
(1) | Includes share-based incentive compensation of $12.3 million and $31.2 million for the three and nine months ended September 30, 2017, respectively, and $12.2 million and $37.6 million for the three and nine months ended September 30, 2016, respectively.
(4) | Restructuring and other charges by segment were as follows:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) |  | 2017 |  | 2016 |  | 2017 |  | 2016
Food Care |  | $ | 3.9 |  |  | $ | 0.8 |  |  | $ | 5.8 |  |  | $ | 0.7 |
Product Care |  | 2.3 |  |  | 0.5 |  |  | 3.4 |  |  | 0.4 |
Total Company restructuring and other charges(1) |  | $ | 6.2 |  |  | $ | 1.3 |  |  | $ | 9.2 |  |  | $ | 1.1 |
(1) For the nine months ended September 30, 2016 restructuring and other charges excludes $0.3 million related to severance and termination benefits for employees in our Venezuelan subsidiaries. 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.”
(In millions) |  | September 30, 2017 |  | December 31, 2016
Assets: |  |  |  |  |  |
Trade receivables, net, and finished goods inventories, net |  |  |  |  |  |
Food Care |  | $ | 519.0 |  |  | $ | 459.8 |
Product Care |  | 334.0 |  |  | 261.5 |
Total segments |  | $ | 853.0 |  |  | $ | 721.3 |
Assets not allocated |  |  |  |
Cash and cash equivalents |  | $ | 1,304.7 |  |  | $ | 333.7 |
Property and equipment, net |  | 951.0 |  |  | 889.6 |
Goodwill |  | 1,898.3 |  |  | 1,882.9 |
Intangible assets, net |  | 44.8 |  |  | 40.1 |
Assets held for sale |  | 20.8 |  |  | 2,851.7 |
Other |  | 866.8 |  |  | 679.9 |
Total |  | $ | 5,939.4 |  |  | $ | 7,399.2 |

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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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&loc=d3e8906-108599 + Details
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