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Discontinued Operations, Divestitures and Acquisitions | 12 Months Ended
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Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations, Divestitures and Acquisitions | Discontinued Operations, Divestitures and Acquisitions Discontinued Operations On March 25, 2017, we entered into a definitive agreement to sell our Diversey Care division and the food hygiene and cleaning business within our Food Care division (collectively, "Diversey") for gross proceeds of USD equivalent of $3.2 billion, subject to customary closing conditions. The transaction was completed on September 6, 2017. We recorded a net gain on the sale of Diversey of $640.7 million, net of taxes of $197.5 million. During 2019 and 2018, we recorded an additional net loss and net gain on the sale of Diversey of $30.7 million and $42.8 million, net of taxes, respectively. The net loss recorded in 2019 on the sale of Diversey relates primarily to changes in balance sheet positions associated with the sale including tax-related indemnification reserves and other receivable or payable positions arising from the sale. The net gain recorded in 2018 was related to the final net working capital settlement as well as the release of tax indemnity reserves upon expiration of the statutes of limitations. We have classified the operating results of Diversey, together with certain costs related to the divestiture transaction, as discontinued operations, net of tax, in the Consolidated Statements of Operations for the year ended December 31, 2017. Summary operating results of Diversey were as follows:
(In millions) |  | Year Ended December 31, 2017
Net sales |  | $ | 1,669.0 |
Cost of sales |  | 950.4 |
Gross profit |  | 718.6 |
Selling, general and administrative expenses |  | 538.3 |
Amortization expense of intangible assets acquired |  | 23.9 |
Operating profit |  | 156.4 |
Other expense, net |  | (17.0 | )
Earnings from discontinued operations before income tax provision |  | 139.4 |
Income tax provision from discontinued operations(1) |  | 28.0 |
Net earnings from discontinued operations |  | $ | 111.4 |
(1) | For the year ended December 31, 2017, net earnings from discontinued operations included tax expense of $28.0 million, primarily driven by a change in our repatriation strategy and offset by a favorable earnings mix in jurisdictions with lower rates.
The following table presents selected financial information regarding cash flows of Diversey in the Consolidated Statements of Cash Flows but are within discontinued operations in the Consolidated Statements of Operations:
(In millions) |  | Year Ended December 31, 2017
Non-cash items included in net earnings from discontinued operations: |  |  |
Depreciation and amortization |  | $ | 29.3 |
Share-based incentive compensation |  | 10.2 |
Profit sharing expense |  | 3.0 |
Provision for bad debt |  | 2.3 |
Capital expenditures |  | 11.9 |
On April 1, 2017, the Diversey Care division acquired the UVC disinfection portfolio of Daylight Medical, a manufacturer of innovative medical devices. The preliminary fair value of the consideration transferred was approximately $25.2 million. Divestitures Divestiture of Embalagens Ltda. On August 1, 2017, we entered into an agreement to sell our polystyrene food tray business in Guarulhos, Brazil for a gross purchase price of R$26.9 million (or $8.2 million as of closing date of March 19, 2018). The purchase price was subject to working capital, cash and debt adjustments, which were finalized in the fourth quarter of 2018 for R$1.6 million (or $0.4 million). For the year ended December 31, 2018, the Company recognized a net gain on the sale of $1.4 million, on the Consolidated Statements of Operations. Acquisitions Automated Packaging Systems, LLC On August 1, 2019 the Company acquired 100% of the limited liability company interest in Automated Packaging Systems, LLC, formerly Automated Packaging Systems, Inc., a manufacturer of automated bagging systems. The acquisition is included in our Product Care reporting segment. Automated offers opportunities to expand the Company's automated solutions as well as expand into adjacent markets. Consideration exchanged for Automated was $445.7 million in cash. The preliminary opening balance sheet includes $58.2 million of assumed liabilities in connection with a deferred incentive compensation plan for Automated's European employees. Of this amount $19.7 million was paid as of December 31, 2019. Sealed Air will make the remaining payments to deferred incentive compensation plan participants in approximately equal installments over the next two years. The purchase price was primarily funded with proceeds from the incremental term facility provided for under an amendment to our Credit Agreement, as described in Note 14, "Debt and Credit Facilities," of the Notes to Consolidated Financial Statements. For the year ended December 31, 2019, transaction expenses recognized for the Automated acquisition was $3.3 million. These expenses are included within selling, general and administrative expenses in the Consolidated Statements of Operations. The following table summarizes the consideration transferred to acquire Automated and the preliminary allocation of the purchase price among the assets acquired and liabilities assumed. The allocation of purchase price is still preliminary as the Company finalizes the final purchase price adjustment with the seller and finalizes other aspects of the valuation including deferred taxes and intangible valuations. P reliminary estimates will be finalized within one year of the date of acquisition.
|  | Revised Preliminary Allocation |  | Measurement Period |  | Revised Preliminary Allocation
(In millions) |  | As of August 1, 2019 |  | Adjustments |  | As of December 31, 2019
Total consideration transferred |  | $ | 445.7 |  |  | $ | — |  |  | $ | 445.7 |
Assets: |  |  |  |  |  |
Cash and cash equivalents(1) |  | 16.0 |  |  | (0.2 | ) |  | 15.8 |
Trade receivables, net |  | 37.3 |  |  | — |  |  | 37.3 |
Other receivables(1) |  | 0.3 |  |  | — |  |  | 0.3 |
Inventories, net |  | 40.7 |  |  | (0.7 | ) |  | 40.0 |
Prepaid expenses and other current assets |  | 2.3 |  |  | — |  |  | 2.3 |
Property and equipment, net |  | 79.3 |  |  | 9.3 |  |  | 88.6 |
Identifiable intangible assets, net |  | 78.7 |  |  | (1.4 | ) |  | 77.3 |
Goodwill |  | 261.3 |  |  | (7.4 | ) |  | 253.9 |
Operating lease right-of-use-assets |  | — |  |  | 4.3 |  |  | 4.3 |
Other non-current assets |  | 24.7 |  |  | 1.3 |  |  | 26.0 |
Total assets |  | $ | 540.6 |  |  | $ | 5.2 |  |  | $ | 545.8 |
Liabilities: |  |  |  |  |  |
Accounts Payable |  | 12.0 |  |  | — |  |  | 12.0 |
Current portion of long-term debt |  | 2.6 |  |  | — |  |  | 2.6 |
Current portion of operating lease liabilities |  | — |  |  | 1.5 |  |  | 1.5 |
Other current liabilities(2) |  | 56.2 |  |  | (1.1 | ) |  | 55.1 |
Long-term debt, less current portion |  | 4.3 |  |  | — |  |  | 4.3 |
Long-term operating lease liabilities, less current portion |  | — |  |  | 2.8 |  |  | 2.8 |
Deferred taxes |  | — |  |  | 0.4 |  |  | 0.4 |
Other non-current liabilities(2) |  | 19.8 |  |  | 1.6 |  |  | 21.4 |
Total liabilities |  | $ | 94.9 |  |  | $ | 5.2 |  |  | $ | 100.1 |
(1) | On August 1, 2019, $8.6 million in cash was initially recorded as Other receivables in our preliminary opening balance sheet as disclosed in the table included in our third quarter 2019 Form 10-Q filing. The Company determined this balance should be reflected in Cash as the amount was settled to Automated on the day of purchase. This change had no impact on consideration paid or on our Consolidated Balance Sheets as of September 30, 2019.
(2) | On August 1, 2019, $19.4 million was initially recorded within Other non-current liabilities in our preliminary opening balance sheet as disclosed in the table included in our third quarter 2019 Form 10-Q filing. This amount was related to the second installment payment of the deferred incentive compensation plan for Automated's European employees. As two payments were expected to be made within the first twelve months after acquisition, the amount related to the second payment should have been reflected in other current liabilities. The preliminary allocation as of August 1, 2019 now shows the second installment within other current liabilities.
The following table summarizes the identifiable intangible assets, net and their useful lives.
|  | Amount |  | Useful life
|  | (in millions) |  | (in years)
Customer relationships |  | $ | 28.2 |  |  | 13
Trademarks and tradenames |  | 15.6 |  |  | 9.1
Technology |  | 29.6 |  |  | 6.4
Backlog |  | 3.9 |  |  | 0.4
Total intangible assets with definite lives |  | $ | 77.3 |  |  |
Goodwill is a result of the expected synergies and cross-selling opportunities this acquisition is expected to bring as well as the expected growth potential in Automated Packaging Systems' automated and sustainable solutions. Goodwill allocated to U.S. entities is deductible for tax purposes. Goodwill allocated to foreign entities is not deductible for tax purposes. The allocation between U.S. and non-U.S. entities is being finalized. The goodwill balance has been recorded to the Product Care reportable segment. Other non-current assets includes the net overfunded position of a closed defined benefit pension plan in the United Kingdom. The plan does not have any material impact on the Company's overall defined benefit pension plans. Refer to Note 17, "Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans," of the Notes to Consolidated Financial Statements for more detail on the Company's other defined benefit pension plans. In conjunction with the acquisition and subsequent integration, the Company expects to incur restructuring charges. No restructuring accrual is included in our opening balance sheet as the liability did not exist at the time of acquisition. Refer to Note 12, "Restructuring Activities," of the Notes to Consolidated Financial Statements for more detail on the Company's Restructuring activity. The inclusion of Automated in our consolidated financial statements is not deemed material with respect to the requirement to provide pro forma results of operations in ASC 805. As such, pro forma information is not presented. Other 2019 Acquisition Activity During the second quarter of 2019, Food Care had acquisition activity resulting in a total purchase price paid of $23.4 million. The Company allocated the consideration transferred to the fair value of assets acquired and liabilities assumed, resulting in an allocation to goodwill of $6.0 million. The final purchase price adjustments resulting in an increase to goodwill of $0.3 million were recorded in the third quarter of 2019. Identifiable intangible assets acquired were not material. Acquisition of AFP On August 1, 2018, the Company acquired AFP, Inc., a privately held fabricator of foam, corrugated, molded pulp and wood packaging solutions, to join its Product Care division. This acquisition expands our protective packaging offerings in the electronic, transportation and industrial markets with custom engineered applications. We acquired 100% of AFP shares for an estimated consideration of $74.1 million, excluding $3.3 million of cash acquired. The following table summarizes the consideration transferred to acquire AFP and the final allocation of the purchase price among the assets acquired and liabilities assumed.
|  | Preliminary Allocation |  | Measurement Period |  | Final Allocation
(In millions) |  | As of August 1, 2018 |  | Adjustments |  | As of September 30, 2019
Total consideration transferred |  | $ | 70.8 |  |  | $ | 3.3 |  |  | $ | 74.1 |
Assets: |  |  |  |  |  |
Cash and cash equivalents |  | 2.9 |  |  | 0.4 |  |  | 3.3 |
Trade receivables, net |  | 30.8 |  |  | — |  |  | 30.8 |
Inventories, net |  | 7.1 |  |  | — |  |  | 7.1 |
Prepaid expenses and other current assets |  | 0.7 |  |  | — |  |  | 0.7 |
Property and equipment, net |  | 3.5 |  |  | (0.4 | ) |  | 3.1 |
Identifiable intangible assets, net |  | 18.6 |  |  | 0.7 |  |  | 19.3 |
Goodwill |  | 21.6 |  |  | 1.0 |  |  | 22.6 |
Other non-current assets |  | 0.7 |  |  | (0.4 | ) |  | 0.3 |
Total assets |  | $ | 85.9 |  |  | $ | 1.3 |  |  | $ | 87.2 |
Liabilities: |  |  |  |  |  |
Current portion of long-term debt |  | — |  |  | 0.1 |  |  | 0.1 |
Accounts payable |  | 13.8 |  |  | (2.2 | ) |  | 11.6 |
Other current liabilities |  | 1.3 |  |  | (0.1 | ) |  | 1.2 |
Long-term debt, less current portion |  | — |  |  | 0.2 |  |  | 0.2 |
Total liabilities |  | $ | 15.1 |  |  | $ | (2.0 | ) |  | $ | 13.1 |
The following table summarizes the identifiable intangible assets, net and their useful lives.
|  | Amount |  | Useful life
|  | (in millions) |  | (in years)
Customer relationships |  | $ | 14.9 |  |  | 11
Trademarks and tradenames |  | 4.4 |  |  | 5
Total intangible assets with definite lives |  | $ | 19.3 |  |  |
Acquisition of Fagerdala On October 2, 2017, the Company acquired Fagerdala Singapore Pte Ltd., a manufacturer and fabricator of polyethylene foam based in Singapore, to join its Product Care division. We acquired 100% of Fagerdala shares for estimated consideration of S$144.7 million, or $106.2 million, net of cash acquired of $13.3 million, inclusive of purchase price adjustments which were finalized in the third quarter of 2018. We acquired Fagerdala to leverage its manufacturing footprint in Asia, experience in foam manufacturing and fabrication and commercial organization to expand our presence across multiple industries utilizing fulfillment to distribute goods. The following table summarizes the consideration transferred to acquire Fagerdala and the final allocation of the purchase price among the assets acquired and liabilities assumed.
|  | Preliminary Allocation |  | Measurement Period |  | Final Allocation
(In millions) |  | As of October 2, 2017 |  | Adjustments |  | As of December 31, 2018
Total consideration transferred |  | $ | 106.6 |  |  | $ | (0.4 | ) |  | $ | 106.2 |
Assets: |  |  |  |  |  |
Cash and cash equivalents |  | 13.3 |  |  | — |  |  | 13.3 |
Trade receivables, net |  | 22.4 |  |  | — |  |  | 22.4 |
Inventories, net |  | 10.0 |  |  | 0.1 |  |  | 10.1 |
Prepaid expenses and other current assets |  | 8.4 |  |  | — |  |  | 8.4 |
Property and equipment, net |  | 23.3 |  |  | — |  |  | 23.3 |
Identifiable intangible assets, net |  | 41.4 |  |  | 0.7 |  |  | 42.1 |
Goodwill |  | 39.3 |  |  | (1.5 | ) |  | 37.8 |
Total assets |  | $ | 158.1 |  |  | $ | (0.7 | ) |  | $ | 157.4 |
Liabilities: |  |  |  |  |  |
Short-term borrowings |  | 14.0 |  |  | — |  |  | 14.0 |
Accounts payable |  | 6.9 |  |  | — |  |  | 6.9 |
Other current liabilities |  | 15.1 |  |  | (0.1 | ) |  | 15.0 |
Long-term debt, less current portion |  | 3.8 |  |  | — |  |  | 3.8 |
Non-current deferred taxes |  | 11.7 |  |  | (0.2 | ) |  | 11.5 |
Total liabilities |  | $ | 51.5 |  |  | $ | (0.3 | ) |  | $ | 51.2 |
The following table summarizes the identifiable intangible assets, net and their useful lives.
|  | Amount |  | Useful life
|  | (in millions) |  | (in years)
Customer relationships |  | $ | 25.4 |  |  | 17
Trademarks and tradenames |  | 10.6 |  |  | 15
Technology |  | 6.1 |  |  | 13
Total intangible assets with definite lives |  | $ | 42.1 |  |  |
Acquisition of Deltaplam On August 1, 2017, the Company acquired Deltaplam Embalagens Indústria e Comércio Ltda ("Deltaplam"), a family owned and operated Brazilian flexible packaging manufacturer, to join its Food Care division. The preliminary fair value of consideration transferred was approximately $25.8 million. We recorded the fair value of the assets acquired and liabilities assumed on the acquisition date, which included a preliminary allocation of $8.1 million of goodwill and $7.4 million of intangible assets. The final fair value of consideration transferred was $25.3 million, which included $9.7 million of goodwill and $5.9 million of intangible assets.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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