Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 02, 2016 | Jul. 30, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Avery Dennison Corp | |
Entity Central Index Key | 8,818 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 2, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 88,857,084 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jul. 02, 2016 | Jan. 02, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 216.1 | $ 158.8 |
Trade accounts receivable, less allowances of $34.2 and $31.5 at July 2, 2016 and January 2, 2016, respectively | 1,028.3 | 964.7 |
Inventories, net | 524.1 | 478.7 |
Assets held for sale | 4.4 | 2.5 |
Other current assets | 169.6 | 170.7 |
Total current assets | 1,942.5 | 1,775.4 |
Property, plant and equipment | 2,600.8 | 2,599.9 |
Accumulated depreciation | (1,762.1) | (1,752) |
Property, plant and equipment, net | 838.7 | 847.9 |
Goodwill | 691 | 686.2 |
Other intangibles resulting from business acquisitions, net | 36.4 | 45.8 |
Non-current deferred income taxes | 390.4 | 372.2 |
Other assets | 395.8 | 406.2 |
Total assets | 4,294.8 | 4,133.7 |
Current liabilities: | ||
Short-term borrowings and current portion of long-term debt and capital leases | 199 | 95.3 |
Accounts payable | 867.9 | 814.6 |
Other current liabilities | 525.3 | 549.2 |
Total current liabilities | 1,592.2 | 1,459.1 |
Long-term debt and capital leases | 962.9 | 963.6 |
Long-term retirement benefits and other liabilities | 674.5 | 637.4 |
Non-current deferred and payable income taxes | 108.7 | 107.9 |
Commitments and contingencies (see Note 15) | ||
Shareholders' equity: | ||
Common stock, $1 par value per share, authorized - 400,000,000 shares at July 2, 2016 and January 2, 2016; issued - 124,126,624 shares at July 2, 2016 and January 2, 2016; outstanding - 88,927,397 shares and 89,967,697 shares at July 2, 2016 and January 2, 2016, respectively | 124.1 | 124.1 |
Capital in excess of par value | 834.4 | 834 |
Retained earnings | 2,385.5 | 2,277.6 |
Treasury stock at cost, 35,199,227 shares and 34,158,927 shares at July 2, 2016 and January 2, 2016, respectively | (1,698.7) | (1,587) |
Accumulated other comprehensive loss | (688.8) | (683) |
Total shareholders' equity | 956.5 | 965.7 |
Total liabilities and shareholders' equity | $ 4,294.8 | $ 4,133.7 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jul. 02, 2016 | Jan. 02, 2016 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Trade accounts receivable, allowances (in dollars) | $ 34.2 | $ 31.5 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized shares | 400,000,000 | 400,000,000 |
Common stock, issued shares | 124,126,624 | 124,126,624 |
Common stock, outstanding shares | 88,927,397 | 89,967,697 |
Treasury stock, shares | 35,199,227 | 34,158,927 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
Net sales | $ 1,541.5 | $ 1,516 | $ 3,027 | $ 3,044 |
Cost of products sold | 1,107.4 | 1,098.4 | 2,170.3 | 2,196.4 |
Gross profit | 434.1 | 417.6 | 856.7 | 847.6 |
Marketing, general and administrative expense | 269.2 | 273.3 | 547.4 | 573.7 |
Interest expense | 15.4 | 15.3 | 30.7 | 30.6 |
Other expense, net | 50.2 | 27.7 | 55.8 | 42 |
Income from continuing operations before taxes | 99.3 | 101.3 | 222.8 | 201.3 |
Provision for income taxes | 19.3 | 36.6 | 53.2 | 64.7 |
Income from continuing operations | 80 | 64.7 | 169.6 | 136.6 |
Loss from discontinued operations | (1) | (1) | ||
Net income | $ 80 | $ 63.7 | $ 169.6 | $ 135.6 |
Net income (loss) per common share: | ||||
Continuing operations (in dollars per share) | $ 0.90 | $ 0.71 | $ 1.90 | $ 1.50 |
Discontinued operations (in dollars per share) | (0.01) | (0.01) | ||
Net income per common share (in dollars per share) | 0.90 | 0.70 | 1.90 | 1.49 |
Net income (loss) per common share, assuming dilution: | ||||
Continuing operations (in dollars per share) | 0.88 | 0.69 | 1.87 | 1.47 |
Discontinued operations (in dollars per share) | (0.01) | (0.01) | ||
Net income per common share, assuming dilution (in dollars per share) | 0.88 | 0.68 | 1.87 | 1.46 |
Dividends per common share (in dollars per share) | $ 0.41 | $ 0.37 | $ 0.78 | $ 0.72 |
Weighted average number of shares outstanding: | ||||
Common shares (in shares) | 89.1 | 91.2 | 89.3 | 90.9 |
Common shares, assuming dilution (in shares) | 90.7 | 93 | 90.9 | 92.8 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 80 | $ 63.7 | $ 169.6 | $ 135.6 |
Other Comprehensive (loss) income, net of tax | ||||
Foreign currency translation | (13.3) | 2.9 | 5.6 | (69.1) |
Pension and other postretirement benefits | (15.5) | 7.2 | (11.3) | 12.6 |
Cash flow hedges | 1.2 | 0.1 | (0.1) | (0.6) |
Other comprehensive (loss) income, net of tax | (27.6) | 10.2 | (5.8) | (57.1) |
Total comprehensive income, net of tax | $ 52.4 | $ 73.9 | $ 163.8 | $ 78.5 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2016 | Jul. 04, 2015 | |
Operating Activities | ||
Net income | $ 169.6 | $ 135.6 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 58.6 | 64.9 |
Amortization | 30.8 | 31.8 |
Provision for doubtful accounts and sales returns | 21.3 | 24.9 |
Net losses from asset impairments and sales/disposals of assets | 3.2 | 11.1 |
Stock-based compensation | 14.1 | 13.2 |
Loss from settlement of pension obligations | 41.4 | |
Other non-cash expense and loss | 24.1 | 26.7 |
Changes in assets and liabilities and other adjustments | (147.1) | (137.8) |
Net cash provided by operating activities | 216 | 170.4 |
Investing Activities | ||
Purchases of property, plant and equipment | (61.3) | (56.4) |
Purchases of software and other deferred charges | (6.1) | (4) |
Proceeds from sales of property, plant and equipment | 3.2 | 2.8 |
Purchases of investments, net | (0.3) | |
Other | 1.5 | |
Net cash used in by investing activities | (64.2) | (56.4) |
Financing Activities | ||
Net increase (decrease) in borrowings (maturities of 3 months or less) | 104.6 | (15.8) |
Payments of debt (maturities greater than 3 months) | (1.2) | (5.5) |
Dividends paid | (69.6) | (65.7) |
Share repurchases | (160.1) | (61.5) |
Proceeds from exercises of stock options, net | 41.4 | 61.3 |
Other | (8.4) | (4) |
Net cash used in financing activities | (93.3) | (91.2) |
Effect of foreign currency translation on cash balances | (1.2) | (4.3) |
Increase in cash and cash equivalents | 57.3 | 18.5 |
Cash and cash equivalents, beginning of year | 158.8 | 207.2 |
Cash and cash equivalents, end of period | $ 216.1 | $ 225.7 |
General
General | 6 Months Ended |
Jul. 02, 2016 | |
General | |
General | Note 1. General The unaudited Condensed Consolidated Financial Statements and notes in this Quarterly Report on Form 10-Q are presented as permitted by Article 10 of Regulation S-X and do not contain certain information included in the audited Consolidated Financial Statements and notes thereto in our 2015 Annual Report on Form 10-K, which should be read in conjunction with this Quarterly Report on Form 10-Q. The accompanying unaudited Condensed Consolidated Financial Statements include normal recurring adjustments necessary for a fair statement of our interim results. Interim results of operations are not necessarily indicative of future results. Fiscal Periods The second quarters of 2016 and 2015 consisted of thirteen-week periods ending July 2, 2016 and July 4, 2015, respectively. The six months ended July 2, 2016 and July 4, 2015 each consisted of twenty-six-week periods. Prior Period Financial Statement Revision In 2015, we determined that certain of our benefit plans (that were frozen between 1994 and 2003) were not properly accounted for since their inception between 1984 and 1988. This resulted in an understatement of long-term retirement benefits and other liabilities and the cumulative historical expenses related to these benefit plans. Additionally, we identified certain liquid short-term bank drafts with maturities greater than three months that were improperly classified as cash and cash equivalents instead of other current assets, which resulted in an overstatement of operating cash flows, and tax effects related to certain foreign pension plans that were not properly accounted for on our consolidated financial statements. We assessed the materiality of these errors on our financial statements for prior periods in accordance with United States Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 99, Materiality , codified in Accounting Standards Codification (“ASC”) 250, Presentation of Financial Statements , and concluded that they were not material to any prior annual or interim periods. However, the aggregate amount of the prior period revisions of approximately $24 million would have been material to our Condensed Consolidated Statements of Income in the period that the errors were identified. Consequently, in accordance with ASC 250 (SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ), we have corrected these errors for all prior periods presented by revising the unaudited Condensed Consolidated Financial Statements and other financial information included herein. We also corrected the timing of immaterial previously recorded out-of-period adjustments and reflected them in the revised prior period financial statements, where applicable. Periods not presented herein will be revised, as applicable, in future filings. The effects of this revision on our unaudited Condensed Consolidated Statements of Income were as follows: Three Months Ended Six Months Ended July 4, 2015 July 4, 2015 (In millions) As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised Marketing, general and administrative expense $ $ (.5 ) $ $ $ ) $ Income from continuing operations before taxes .5 Provision for income taxes .1 .3 Income from continuing operations .4 .7 Loss from discontinued operations ) – ) ) – ) Net income .4 .7 Per share amounts: Net income per common share: Continuing operations $ .70 $ .01 $ .71 $ $ .01 $ Discontinued operations (.01 ) – (.01 ) (.01 ) – (.01 ) Net income per common share $ .69 $ .01 $ .70 $ $ .01 $ Net income (loss) per common share, assuming dilution: Continuing operations $ .69 $ – $ .69 $ $ .01 $ Discontinued operations (.01 ) – (.01 ) (.01 ) – (.01 ) Net income per common share, assuming dilution $ .68 $ – $ .68 $ $ .01 $ The effects of the revision on our unaudited Condensed Consolidated Statements of Comprehensive Income were as follows: Three Months Ended Six Months Ended July 4, 2015 July 4, 2015 (In millions) As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised Net income $ $ .4 $ $ $ .7 $ Foreign currency translation (.1 ) ) – ) Pension and other postretirement benefits – ) Other comprehensive income (loss), net of tax (.1 ) ) ) ) Total comprehensive income, net of tax .3 (.3 ) The effects of the revision on our unaudited Condensed Consolidated Statements of Cash Flows were as follows: Six Months Ended July 4, 2015 (In millions) As Previously Reported Adjustment As Revised Net cash provided by operating activities $ $ (.5 ) $ Increase in cash and cash equivalents (.5 ) Cash and cash equivalents, beginning of year ) Cash and cash equivalents, end of period ) Sale of Product Line In May 2015, we sold certain assets and transferred certain liabilities associated with a product line in our Retail Branding and Information Solutions (“RBIS”) reportable segment for $1.5 million. The pre-tax loss from the sale, when combined with exit costs related to the sale, totaled $7.7 million in the second quarter of 2015. In the first quarter of 2015, we recorded an impairment charge of approximately $2 million related to certain long-lived assets of this product line, as well as $.6 million of other costs related to this sale. This loss and these costs were included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Income. Discontinued Operations Loss from discontinued operations during the second quarter and six months ended July 4, 2015 included $1 million of tax expense related to the completion of certain tax return filings related to the sale of our former Office and Consumer Products (“OCP”) and Designed and Engineered Solutions (“DES”) businesses. We continue to be subject to certain indemnification obligations under the terms of the purchase agreement. In addition, the tax liability associated with the sale is subject to completion of remaining tax return filings in certain foreign jurisdictions where we formerly operated the OCP and DES businesses. |
Acquisition
Acquisition | 6 Months Ended |
Jul. 02, 2016 | |
Acquisition | |
Acquisition | Note 2. Acquisition In April 2016, we entered into an agreement to acquire the European business of MACtac (“Mactac”) from Platinum Equity for a purchase price of €200 million, including assumed debt. Mactac manufactures pressure-sensitive materials that complement our existing graphics portfolio. The purchase price is subject to certain adjustments in accordance with the terms of the agreement. On August 1, 2016, we completed this acquisition, which we funded with cash and through existing credit facilities. |
Inventories
Inventories | 6 Months Ended |
Jul. 02, 2016 | |
Inventories | |
Inventories | Note 3. Inventories Net inventories consisted of: (In millions) July 2, 2016 January 2, 2016 Raw materials $ $ Work-in-progress Finished goods Inventories, net $ $ |
Goodwill
Goodwill | 6 Months Ended |
Jul. 02, 2016 | |
Goodwill. | |
Goodwill | Note 4. Goodwill Changes in the net carrying amount of goodwill for the six months ended July 2, 2016, by reportable segment, were as follows: (In millions) Pressure-sensitive Materials Retail Branding and Information Solutions Total Goodwill as of January 2, 2016 $ $ $ Translation adjustments Goodwill as of July 2, 2016 $ $ $ The carrying amounts of goodwill at July 2, 2016 and January 2, 2016 were net of accumulated impairment losses of $820 million, which were included in our RBIS reportable segment. There was no goodwill associated with our Vancive Medical Technologies reportable segment. |
Debt and Capital Leases
Debt and Capital Leases | 6 Months Ended |
Jul. 02, 2016 | |
Debt and Capital Leases | |
Debt and Capital Leases | Note 5. Debt and Capital Leases The estimated fair value of our long-term debt is primarily based on the credit spread above U.S. Treasury securities on notes with similar rates, credit ratings, and remaining maturities. The fair value of short-term borrowings, which includes commercial paper issuances and short-term lines of credit, approximates carrying value given the short duration of these obligations. The fair value of our total debt was $1.22 billion at July 2, 2016 and $1.08 billion at January 2, 2016. Fair value amounts were determined based primarily on Level 2 inputs, which are inputs other than quoted prices in active markets that are either directly or indirectly observable. Our $700 million revolving credit facility (the “Revolver”) contains financial covenants requiring that we maintain specified ratios of total debt and interest expense in relation to certain measures of income. As of July 2, 2016 and January 2, 2016, we were in compliance with our financial covenants. In March 2016, we entered into an agreement with three commercial paper dealers to establish a Euro-Commercial Paper Program pursuant to which we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $500 million. Proceeds from issuances under this program may be used for general corporate purposes. The maturities of the notes may vary, but may not exceed 364 days from the date of issuance. Our payment obligations with respect to any notes issued under this program would be backed by the Revolver. There are no financial covenants under this program. As of July 2, 2016, there were no balances outstanding under this program. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 6 Months Ended |
Jul. 02, 2016 | |
Pension and Other Postretirement Benefits | |
Pension and Other Postretirement Benefits | Note 6. Pension and Other Postretirement Benefits Defined Benefit Plans We sponsor a number of defined benefit plans, the accrual of benefits under some of which has been frozen, covering eligible employees in the U.S. and certain other countries. Benefits payable to an employee are based primarily on years of service and the employee’s compensation during the course of his or her employment with us. We are also obligated to pay unfunded termination indemnity benefits to certain employees outside of the U.S., which are subject to applicable agreements, laws and regulations. We have not incurred significant costs related to these benefits, and therefore, no related costs are included in the disclosures below. In December 2015, we offered eligible former employees who were vested participants in the Avery Dennison Pension Plan (“ADPP”), a U.S. pension plan, the opportunity to receive their benefits immediately as either a lump-sum payment or an annuity, rather than waiting until they are retirement eligible under the terms of the plan. In the second quarter of 2016, approximately $70 million of pension obligations related to this plan were settled out of existing plan assets and a non-cash pre-tax settlement charge of $41.4 million was recorded in “Other expense, net” in the unaudited Condensed Consolidated Statements of Income. This settlement required us to remeasure the remaining net pension obligations of the ADPP. As a result, approximately $72 million of additional net pension obligations with a corresponding increase in actuarial losses recorded in “Accumulated other comprehensive loss” was recognized primarily due to lower discount rates that were in effect when the plan was remeasured. The following table sets forth the components of net periodic benefit cost (credit), which are recorded in income from continuing operations, for our defined benefit plans: Pension Benefits Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 (In millions) U.S. Int’l U.S. Int’l U.S. Int’l U.S. Int’l Service cost $ .1 $ $ .1 $ $ .2 $ $ .2 $ Interest cost Actuarial loss – – – – – – Expected return on plan assets ) ) ) ) ) ) ) ) Recognized net actuarial loss Amortization of prior service cost (credit) .3 (.1 ) .3 – .6 (.2 ) .6 (.1 ) Recognized loss on settlements (1) – – – – Net periodic benefit cost $ $ $ $ $ $ $ $ (1) In 2016, recognized loss on settlements related to our U.S. pension plan as a result of the lump-sum pension payments described above; in 2015, recognized loss on settlements related to pension plans in Germany and France as a result of the sale of a product line in our RBIS reportable segment. These losses on settlements were recorded in “Other expense, net” in the unaudited Condensed Consolidated Statements of Income. U.S. Postretirement Health Benefits Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Interest cost $ – $ – $ .1 $ .1 Recognized net actuarial loss .3 .5 .8 Amortization of prior service credit (.8 ) (.8 ) ) ) Net periodic benefit credit $ (.5 ) $ (.3 ) $ (.7 ) $ (.4 ) |
Research and Development
Research and Development | 6 Months Ended |
Jul. 02, 2016 | |
Research and Development | |
Research and Development | Note 7. Research and Development Research and development expense from continuing operations was $22.7 million and $45.0 million for the three and six months ended July 2, 2016, respectively, and $22.8 million and $48.4 million for the three and six months ended July 4, 2015, respectively. This expense was included in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Statements of Income. |
Long-Term Incentive Compensatio
Long-Term Incentive Compensation | 6 Months Ended |
Jul. 02, 2016 | |
Long-Term Incentive Compensation | |
Long-Term Incentive Compensation | Note 8. Long-Term Incentive Compensation Equity Awards Stock-based compensation expense from continuing operations was $6.6 million and $14.1 million for the three and six months ended July 2, 2016, respectively, and $5.8 million and $13.2 million for the three and six months ended July 4, 2015, respectively. This expense was included in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Statements of Income. As of July 2, 2016, we had approximately $54 million of unrecognized compensation expense from continuing operations related to unvested stock-based awards, which is expected to be recognized over the remaining weighted-average period of approximately three years. Cash Awards Compensation expense from continuing operations related to long-term incentive units was $5.2 million and $14.7 million for the three and six months ended July 2, 2016, respectively, and $10.1 million and $15.3 million for the three and six months ended July 4, 2015, respectively. This expense was included in “Marketing, general and administrative expense” in the unaudited Condensed Consolidated Statements of Income. |
Cost Reduction Actions
Cost Reduction Actions | 6 Months Ended |
Jul. 02, 2016 | |
Cost Reduction Actions | |
Cost Reduction Actions | Note 9. Cost Reduction Actions 2015/2016 Actions During the six months ended July 2, 2016, we recorded $12.4 million in restructuring charges, net of reversals, related to restructuring actions initiated during the third quarter of 2015 that we expect to continue through 2016 (“2015/2016 Actions”). These charges consisted of severance and related costs for the reduction of approximately 230 positions, lease cancellation costs, and asset impairment charges. During fiscal year 2015, we recorded $26.1 million in restructuring charges, net of reversals, related to our 2015/2016 Actions. These charges consisted of severance and related costs for the reduction of approximately 430 positions, lease cancellation costs, and asset impairment charges. No employees impacted by our 2015/2016 Actions taken through July 2, 2016 remained employed with us as of such date. We expect charges and payments related to these actions to be substantially completed in 2016. 2014/2015 Actions During fiscal year 2015, we recorded $33.4 million in restructuring charges, net of reversals, related to restructuring actions we initiated in 2014 that continued through the second quarter of 2015 (“2014/2015 Actions”). These charges consisted of severance and related costs for the reduction of approximately 605 positions, lease cancellation costs, and asset impairment charges. Approximately 55 employees impacted by our 2014/2015 Actions remained employed with us as of July 2, 2016. We expect charges and payments related to these actions to be substantially completed in 2016. Accruals for severance and related costs and lease cancellation costs were included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets. Asset impairment charges were based on the estimated market value of the assets, less selling costs, if applicable. Restructuring charges were included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Income. During the six months ended July 2, 2016, restructuring charges and payments were as follows: (In millions) Accrual at January 2, 2016 Charges (Reversals), net Cash Payments Non-cash Impairment Foreign Currency Translation Accrual at July 2, 2016 2015/2016 Actions Severance and related costs $ $ $ ) $ – $ .1 $ .7 Asset impairment charges – – ) – – Lease cancellation costs .2 .8 (.5 ) – – .5 2014/2015 Actions Severance and related costs (.3 ) ) – – Prior actions Severance and related costs .7 (.1 ) – – – .6 Total $ $ $ ) $ ) $ .1 $ The table below shows the total amount of restructuring charges incurred by reportable segment and Corporate: Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Restructuring charges by reportable segment and Corporate Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions Vancive Medical Technologies – .6 .1 Corporate – – – $ $ $ $ |
Financial Instruments
Financial Instruments | 6 Months Ended |
Jul. 02, 2016 | |
Financial Instruments | |
Financial Instruments | Note 10. Financial Instruments We enter into foreign exchange hedge contracts to reduce our risk from exchange rate fluctuations associated with receivables, payables, loans and firm commitments denominated in certain foreign currencies that arise primarily as a result of our operations outside the U.S. We enter into interest rate contracts to help manage our exposure to certain interest rate fluctuations. We also enter into futures contracts to hedge certain price fluctuations for a portion of our anticipated domestic purchases of natural gas. The maximum length of time for which we hedge our exposure to the variability in future cash flows for forecasted transactions is 36 months. As of July 2, 2016, the aggregate U.S. dollar equivalent notional value of our outstanding commodity contracts and foreign exchange contracts was $2.7 million and $1.53 billion, respectively. We recognize all derivative instruments as either assets or liabilities at fair value in the unaudited Condensed Consolidated Balance Sheets. We designate commodity forward contracts on forecasted purchases of commodities and foreign exchange contracts on forecasted transactions as cash flow hedges and designate foreign exchange contracts on existing balance sheet items as fair value hedges. The following table provides the fair value and balance sheet locations of derivatives as of July 2, 2016: Asset Liability (In millions) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign exchange contracts Other current assets $ Other current liabilities $ Commodity contracts Other current assets .1 Other current liabilities – $ $ The following table provides the fair value and balance sheet locations of derivatives as of January 2, 2016: Asset Liability (In millions) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign exchange contracts Other current assets $ Other current liabilities $ Commodity contracts Other current assets – Other current liabilities .7 $ $ Fair Value Hedges For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings, resulting in no material net impact to income. The following table provides the components of net gains (losses) recognized in income related to fair value hedge contracts. The corresponding gains or losses on the underlying hedged items approximated the net gains (losses) on these fair value hedge contracts. Location of Net Gains Three Months Ended Six Months Ended (In millions) (Losses) in Income July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Foreign exchange contracts Cost of products sold $ .7 $ (.4 ) $ $ Foreign exchange contracts Marketing, general and administrative expense ) $ $ ) $ $ Cash Flow Hedges For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of “Accumulated other comprehensive loss” and reclassified into earnings in the same period(s) during which the hedged transaction impacts earnings. Gains and losses on the derivative, representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness, are recognized in current earnings. Gains (losses) recognized in “Accumulated other comprehensive loss” (effective portion) on derivatives related to cash flow hedge contracts were as follows: Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Foreign exchange contracts $ (.3 ) $ ) $ ) $ ) Commodity contracts .5 .3 $ .2 $ (.3 ) $ ) $ (.3 ) The amount of gain or loss recognized in income related to the ineffective portion of, and the amount excluded from, effectiveness testing for cash flow hedges and derivatives not designated as hedging instruments was not material for the three and six months ended July 2, 2016 and July 4, 2015, respectively. As of July 2, 2016, we expected a net loss of approximately $2 million to be reclassified from “Accumulated other comprehensive loss” to earnings within the next 12 months. See Note 13, “Comprehensive Income,” for more information. |
Taxes Based on Income
Taxes Based on Income | 6 Months Ended |
Jul. 02, 2016 | |
Taxes Based on Income | |
Taxes Based on Income | Note 11. Taxes Based on Income The following table summarizes our income from continuing operations before taxes, provision for income taxes from continuing operations, and effective tax rate: Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Income from continuing operations before taxes $ $ $ $ Provision for income taxes Effective tax rate % % % % The effective tax rate for the three and six months ended July 2, 2016 included $6.7 million of tax benefit from the release of valuation allowances against certain deferred tax assets in a foreign jurisdiction associated with a structural simplification approved by the tax authority; $5 million and $6 million of tax benefits, respectively, from our change in judgment about tax filing positions in certain foreign jurisdictions as a result of new information gained from our interactions with tax authorities ; and $.7 million and $3.3 million of tax benefits, respectively, due to decreases in certain tax reserves as a result of closing tax years . The effective tax rate for the six months ended July 2, 2016 compared to the effective tax rate for the six months ended July 4, 2015 was also favorably impacted by a change in the geographic mix of income before taxes. The effective tax rate for the three and six months ended July 4, 2015 included $5.3 million of tax expense associated with the repatriation of non-permanently reinvested 2015 earnings of certain foreign subsidiaries; $.5 million of tax expense due to non-deductible employee-related expenses; and $.7 million and $4.1 million of tax benefits, respectively, due to decreases in certain tax reserves as a result of closing tax years. Additionally, the effective tax rate for the six months ended July 4, 2015 included $1.6 million of net tax benefit related to changes in the effective tax rates in certain foreign municipalities. The amount of income taxes we pay is subject to ongoing audits by taxing jurisdictions around the world. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. We believe that we have adequately provided for reasonably foreseeable outcomes related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate. With some exceptions, we and our subsidiaries are no longer subject to income tax examinations by tax authorities for years prior to 2006. It is reasonably possible that, during the next 12 months, we may realize a decrease in our uncertain tax positions, including interest and penalties, of approximately $12 million, primarily as a result of closing tax years. |
Net Income Per Common Share
Net Income Per Common Share | 6 Months Ended |
Jul. 02, 2016 | |
Net Income Per Common Share | |
Net Income Per Common Share | Note 12. Net Income Per Common Share Net income per common share was computed as follows: Three Months Ended Six Months Ended (In millions, except per share amounts) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 (A) Income from continuing operations $ $ $ $ (B) Loss from discontinued operations – ) – ) (C) Net income available to common shareholders $ $ $ $ (D) Weighted average number of common shares outstanding Dilutive shares (additional common shares issuable under stock-based awards) (E) Weighted average number of common shares outstanding, assuming dilution Net income (loss) per common share: Continuing operations (A) ÷ (D) $ .90 $ .71 $ $ Discontinued operations (B) ÷ (D) – (.01 ) – (.01 ) Net income per common share (C) ÷ (D) $ .90 $ .70 $ $ Net income (loss) per common share, assuming dilution: Continuing operations (A) ÷ (E) $ .88 $ .69 $ $ Discontinued operations (B) ÷ (E) – (.01 ) – (.01 ) Net income per common share, assuming dilution (C) ÷ (E) $ .88 $ .68 $ $ Certain stock-based compensation awards were not included in the computation of net income per common share, assuming dilution, because they would not have had a dilutive effect. Stock-based compensation awards excluded from the computation totaled approximately .1 million shares and .2 million shares for the three and six months ended July 2, 2016, respectively, and approximately 1 million shares for both the three and six months ended July 4, 2015. |
Comprehensive Income
Comprehensive Income | 6 Months Ended |
Jul. 02, 2016 | |
Comprehensive Income | |
Comprehensive Income | Note 13. Comprehensive Income The changes in “Accumulated other comprehensive loss” (net of tax) for the six-month period ended July 2, 2016 were as follows: (In millions) Foreign Currency Translation Pension and Other Postretirement Benefits Cash Flow Hedges Total Balance as of January 2, 2016 $ ) $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications, net of tax ) ) ) Reclassifications to net income, net of tax – Net current-period other comprehensive income (loss), net of tax ) (.1 ) ) Balance as of July 2, 2016 $ ) $ ) $ ) $ ) The changes in “Accumulated other comprehensive loss” (net of tax) for the six-month period ended July 4, 2015 were as follows: (In millions) Foreign Currency Translation Pension and Other Postretirement Benefits Cash Flow Hedges Total Balance as of January 3, 2015 $ ) $ ) $ – $ ) Other comprehensive loss before reclassifications, net of tax ) (.5 ) (.2 ) ) Reclassifications to net income, net of tax – (.4 ) Net current-period other comprehensive (loss) income, net of tax ) (.6 ) ) Balance as of July 4, 2015 $ ) $ ) $ (.6 ) $ ) The amounts reclassified from “Accumulated other comprehensive loss” to increase (decrease) income from continuing operations were as follows: Amounts Reclassified from Accumulated Other Comprehensive Loss Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Affected Line Item in the Statements Where Net Income is Presented Cash flow hedges: Foreign exchange contracts $ ) $ (.2 ) $ (.9 ) $ Cost of products sold Commodity contracts (.3 ) (.3 ) (.6 ) (.8 ) Cost of products sold ) (.5 ) ) .5 Total before tax .4 .2 .4 (.1 ) Provision for income taxes ) (.3 ) ) .4 Net of tax Pension and other postretirement benefits (1) ) ) ) ) Provision for income taxes ) ) ) ) Net of tax Total reclassifications for the period $ ) $ ) $ ) $ ) Total, net of tax (1) See Note 6, “Pension and Other Postretirement Benefits,” for more information . The following table sets forth the income tax (benefit) expense allocated to each component of other comprehensive (loss) income: Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Pension and other postretirement benefits $ ) $ $ ) $ Cash flow hedges .5 .2 .1 (.1 ) Income tax (benefit) expense related to components of other comprehensive (loss) income $ ) $ $ ) $ |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 02, 2016 | |
Fair Value Measurements | |
Fair Value Measurements | Note 14. Fair Value Measurements Recurring Fair Value Measurements The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of July 2, 2016: Fair Value Measurements Using (In millions) Total Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Assets Trading securities $ $ $ $ – Derivative assets – Bank drafts – – Liabilities Derivative liabilities $ $ – $ $ – The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of January 2, 2016: Fair Value Measurements Using (In millions) Total Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Assets Trading securities $ $ $ $ – Derivative assets – – Bank drafts – – Liabilities Derivative liabilities $ $ .7 $ $ – Trading securities include fixed income securities (primarily U.S. government and corporate debt securities) measured at fair value using quoted prices/bids and a money market fund measured at fair value using net asset value. As of July 2, 2016, trading securities of $.5 million and $17.8 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the unaudited Condensed Consolidated Balance Sheets. As of January 2, 2016, trading securities of $.3 million and $17.6 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the unaudited Condensed Consolidated Balance Sheets. Derivatives that are exchange-traded are measured at fair value using quoted market prices and classified within Level 1 of the valuation hierarchy. Derivatives measured based on foreign exchange rate inputs that are readily available in public markets are classified within Level 2 of the valuation hierarchy. Bank drafts (maturities greater than three months) are valued at face value due to the short-term nature of these instruments and were included in “Other current assets” in the unaudited Condensed Consolidated Balance Sheets. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 02, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 15. Commitments and Contingencies Legal Proceedings We are involved in various lawsuits, claims, inquiries, and other regulatory and compliance matters, most of which are routine to the nature of our business. We have accrued liabilities for matters where it is probable that a loss will be incurred and the amount of loss can be reasonably estimated. Because of the uncertainties associated with claims resolution and litigation, future expenses to resolve these matters could be higher than the liabilities we have accrued; however, we are unable to reasonably estimate a range of potential expenses. If information were to become available that allowed us to reasonably estimate a range of potential expenses in an amount higher or lower than what we have accrued, we would adjust our accrued liabilities accordingly. Additional lawsuits, claims, inquiries, and other regulatory and compliance matters could arise in the future. The range of expenses for resolving any future matters would be assessed as they arise; until then, a range of potential expenses for such resolution cannot be determined. Based upon current information, we believe that the impact of the resolution of these matters would not be, individually or in the aggregate, material to our financial position, results of operations or cash flows. Environmental As of July 2, 2016, we have been designated by the U.S. Environmental Protection Agency (“EPA”) and/or other responsible state agencies as a potentially responsible party (“PRP”) at thirteen waste disposal or waste recycling sites that are the subject of separate investigations or proceedings concerning alleged soil and/or groundwater contamination. No settlement of our liability related to any of the sites has been agreed upon. We are participating with other PRPs at these sites and anticipate that our share of remediation costs will be determined pursuant to agreements that we negotiate with the EPA or other governmental authorities. We have accrued liabilities for sites where it is probable that a loss or cost will be incurred and the amount of loss or cost can be reasonably estimated. These estimates could change as a result of changes in planned remedial actions, remediation technologies, site conditions, the estimated time to complete remediation, environmental laws and regulations, and other factors. Because of the uncertainties associated with environmental assessment and remediation activities, future expenses to remediate these sites could be higher than the liabilities we have accrued; however, we are unable to reasonably estimate a range of potential expenses. If information were to become available that allowed us to reasonably estimate a range of potential expenses in an amount higher or lower than what we have accrued, we would adjust our environmental liabilities accordingly. In addition, we may be identified as a PRP at additional sites in the future. The range of expenses for remediation of any future-identified sites would be addressed as they arise; until then, a range of expenses for such remediation cannot be determined. The activity for the six months ended July 2, 2016 related to our environmental liabilities was as follows: (In millions) Balance at January 2, 2016 $ Charges (reversals), net Payments ) Balance at July 2, 2016 $ As of July 2, 2016 and January 2, 2016, approximately $9 million and $7 million of the balance was classified as short-term and included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets, respectively. |
Segment Information
Segment Information | 6 Months Ended |
Jul. 02, 2016 | |
Segment Information | |
Segment Information | Note 16. Segment Information Financial information from continuing operations by reportable segment is set forth below: Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Net sales to unaffiliated customers Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions Vancive Medical Technologies Net sales to unaffiliated customers $ $ $ $ Intersegment sales Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions .5 .6 Vancive Medical Technologies .1 .3 Intersegment sales $ $ $ $ Income from continuing operations before taxes Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions Vancive Medical Technologies ) .7 ) Corporate expense ) ) ) ) Interest expense ) ) ) ) Income from continuing operations before taxes $ $ $ $ Other expense, net by reportable segment Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions Vancive Medical Technologies – .6 .1 Corporate – Other expense, net $ $ $ $ Other expense, net by type Restructuring charges: Severance and related costs $ $ $ $ Asset impairment charges and lease cancellation costs Other items: Loss from settlement of pension obligations – – Transaction costs – – Loss (gain) on sale of assets .3 – .3 ) Loss on sale of product line and related transaction and exit costs .4 .4 Legal settlement – – – (.5 ) Other expense, net $ $ $ $ |
Recent Accounting Requirements
Recent Accounting Requirements | 6 Months Ended |
Jul. 02, 2016 | |
Recent Accounting Requirements | |
Recent Accounting Requirements | Note 17. Recent Accounting Requirements In March 2016, the Financial Accounting Standards Board (“FASB”) issued guidance to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2016, and early adoption is permitted. Different components of the guidance require prospective, retrospective and/or modified retrospective adoption. We are currently assessing the timing of our adoption and the impact of this guidance on our financial position, results of operations, cash flows, and disclosures. In March 2016, the FASB issued guidance on accounting for leases that requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. This guidance also requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases and will be effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective approach is required for adoption with respect to all leases that exist at or commence after the date of initial application with an option to use certain practical expedients. We are currently assessing the impact of this guidance on our financial position, results of operations, cash flows, and disclosures. In July 2015, the FASB issued amended guidance to simplify the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. We elected to early adopt this amended guidance in the first quarter of 2016 prospectively. The adoption of this guidance did not have an impact on our financial position, results of operations, cash flows, or disclosures. In August 2014, the FASB issued a new standard that requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. Under this new standard, substantial doubt exists when it is probable that the entity will be unable to meet its obligations as they become due within one year of the date the financial statements are issued. If applicable, certain disclosures are required, including management’s plans to mitigate those relevant conditions or events to alleviate the substantial doubt. This standard is effective for annual periods and interim periods within those annual periods ending after December 15, 2016. Early adoption is permitted. We do not expect that adoption of this standard will have an impact on our financial position, results of operations, cash flows, or disclosures. In May 2014, and in subsequent updates, the FASB issued revised guidance on revenue recognition. This revised guidance provides a single comprehensive model for accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This revised guidance will require an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. This revised guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This revised guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and can be applied retrospectively either to each prior reporting period presented or with the cumulative effect of adoption recognized at the date of initial application. Early adoption is permitted for fiscal periods beginning after December 15, 2016. We are currently evaluating which transition method to elect. We expect to adopt this guidance in the first quarter of 2018. Based on the information we have evaluated to date, we do not anticipate that the adoption of this revised guidance will have a significant impact on our financial position, results of operations, or cash flows. |
General (Policies)
General (Policies) | 6 Months Ended |
Jul. 02, 2016 | |
General | |
Fiscal Periods | Fiscal Periods The second quarters of 2016 and 2015 consisted of thirteen-week periods ending July 2, 2016 and July 4, 2015, respectively. The six months ended July 2, 2016 and July 4, 2015 each consisted of twenty-six-week periods. |
General (Tables)
General (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
General | |
Summary of Previously Stated and Corrected Balances of Condensed Consolidated Statements of Income, Condensed Consolidated Statement of Comprehensive Income and Condensed Consolidated Statements of Cash Flows | The effects of this revision on our unaudited Condensed Consolidated Statements of Income were as follows: Three Months Ended Six Months Ended July 4, 2015 July 4, 2015 (In millions) As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised Marketing, general and administrative expense $ $ (.5 ) $ $ $ ) $ Income from continuing operations before taxes .5 Provision for income taxes .1 .3 Income from continuing operations .4 .7 Loss from discontinued operations ) – ) ) – ) Net income .4 .7 Per share amounts: Net income per common share: Continuing operations $ .70 $ .01 $ .71 $ $ .01 $ Discontinued operations (.01 ) – (.01 ) (.01 ) – (.01 ) Net income per common share $ .69 $ .01 $ .70 $ $ .01 $ Net income (loss) per common share, assuming dilution: Continuing operations $ .69 $ – $ .69 $ $ .01 $ Discontinued operations (.01 ) – (.01 ) (.01 ) – (.01 ) Net income per common share, assuming dilution $ .68 $ – $ .68 $ $ .01 $ The effects of the revision on our unaudited Condensed Consolidated Statements of Comprehensive Income were as follows: Three Months Ended Six Months Ended July 4, 2015 July 4, 2015 (In millions) As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised Net income $ $ .4 $ $ $ .7 $ Foreign currency translation (.1 ) ) – ) Pension and other postretirement benefits – ) Other comprehensive income (loss), net of tax (.1 ) ) ) ) Total comprehensive income, net of tax .3 (.3 ) The effects of the revision on our unaudited Condensed Consolidated Statements of Cash Flows were as follows: Six Months Ended July 4, 2015 (In millions) As Previously Reported Adjustment As Revised Net cash provided by operating activities $ $ (.5 ) $ Increase in cash and cash equivalents (.5 ) Cash and cash equivalents, beginning of year ) Cash and cash equivalents, end of period ) |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Inventories | |
Net inventories | (In millions) July 2, 2016 January 2, 2016 Raw materials $ $ Work-in-progress Finished goods Inventories, net $ $ |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Goodwill. | |
Changes in net carrying amount of goodwill | (In millions) Pressure-sensitive Materials Retail Branding and Information Solutions Total Goodwill as of January 2, 2016 $ $ $ Translation adjustments Goodwill as of July 2, 2016 $ $ $ |
Pension and Other Postretirem28
Pension and Other Postretirement Benefits (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Pension and Other Postretirement Benefits | |
Schedule of components of net periodic benefit cost (credit) | Pension Benefits Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 (In millions) U.S. Int’l U.S. Int’l U.S. Int’l U.S. Int’l Service cost $ .1 $ $ .1 $ $ .2 $ $ .2 $ Interest cost Actuarial loss – – – – – – Expected return on plan assets ) ) ) ) ) ) ) ) Recognized net actuarial loss Amortization of prior service cost (credit) .3 (.1 ) .3 – .6 (.2 ) .6 (.1 ) Recognized loss on settlements (1) – – – – Net periodic benefit cost $ $ $ $ $ $ $ $ (1) In 2016, recognized loss on settlements related to our U.S. pension plan as a result of the lump-sum pension payments described above; in 2015, recognized loss on settlements related to pension plans in Germany and France as a result of the sale of a product line in our RBIS reportable segment. These losses on settlements were recorded in “Other expense, net” in the unaudited Condensed Consolidated Statements of Income. U.S. Postretirement Health Benefits Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Interest cost $ – $ – $ .1 $ .1 Recognized net actuarial loss .3 .5 .8 Amortization of prior service credit (.8 ) (.8 ) ) ) Net periodic benefit credit $ (.5 ) $ (.3 ) $ (.7 ) $ (.4 ) |
Cost Reduction Actions (Tables)
Cost Reduction Actions (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Cost Reduction Actions | |
Restructuring charges and payments | (In millions) Accrual at January 2, 2016 Charges (Reversals), net Cash Payments Non-cash Impairment Foreign Currency Translation Accrual at July 2, 2016 2015/2016 Actions Severance and related costs $ $ $ ) $ – $ .1 $ .7 Asset impairment charges – – ) – – Lease cancellation costs .2 .8 (.5 ) – – .5 2014/2015 Actions Severance and related costs (.3 ) ) – – Prior actions Severance and related costs .7 (.1 ) – – – .6 Total $ $ $ ) $ ) $ .1 $ |
Total amount of restructuring charges incurred by reportable segment and Corporate | Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Restructuring charges by reportable segment and Corporate Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions Vancive Medical Technologies – .6 .1 Corporate – – – $ $ $ $ |
Financial Instruments (Tables)
Financial Instruments (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Financial Instruments | |
Fair value and balance sheet locations of derivatives | The following table provides the fair value and balance sheet locations of derivatives as of July 2, 2016: Asset Liability (In millions) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign exchange contracts Other current assets $ Other current liabilities $ Commodity contracts Other current assets .1 Other current liabilities – $ $ The following table provides the fair value and balance sheet locations of derivatives as of January 2, 2016: Asset Liability (In millions) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign exchange contracts Other current assets $ Other current liabilities $ Commodity contracts Other current assets – Other current liabilities .7 $ $ |
Components of net gains (losses) recognized in income related to fair value hedge contracts | Location of Net Gains Three Months Ended Six Months Ended (In millions) (Losses) in Income July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Foreign exchange contracts Cost of products sold $ .7 $ (.4 ) $ $ Foreign exchange contracts Marketing, general and administrative expense ) $ $ ) $ $ |
Components of the gains (losses) recognized in Accumulated other comprehensive loss related to cash flow hedges | Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Foreign exchange contracts $ (.3 ) $ ) $ ) $ ) Commodity contracts .5 .3 $ .2 $ (.3 ) $ ) $ (.3 ) |
Taxes Based on Income (Tables)
Taxes Based on Income (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Taxes Based on Income | |
Income before taxes, provision for income taxes, and effective tax rate from continuing operations | Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Income from continuing operations before taxes $ $ $ $ Provision for income taxes Effective tax rate % % % % |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Net Income Per Common Share | |
Schedule of net income per common share | Three Months Ended Six Months Ended (In millions, except per share amounts) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 (A) Income from continuing operations $ $ $ $ (B) Loss from discontinued operations – ) – ) (C) Net income available to common shareholders $ $ $ $ (D) Weighted average number of common shares outstanding Dilutive shares (additional common shares issuable under stock-based awards) (E) Weighted average number of common shares outstanding, assuming dilution Net income (loss) per common share: Continuing operations (A) ÷ (D) $ .90 $ .71 $ $ Discontinued operations (B) ÷ (D) – (.01 ) – (.01 ) Net income per common share (C) ÷ (D) $ .90 $ .70 $ $ Net income (loss) per common share, assuming dilution: Continuing operations (A) ÷ (E) $ .88 $ .69 $ $ Discontinued operations (B) ÷ (E) – (.01 ) – (.01 ) Net income per common share, assuming dilution (C) ÷ (E) $ .88 $ .68 $ $ |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Comprehensive Income | |
Schedule of changes in "Accumulated other comprehensive loss" (net of tax) | (In millions) Foreign Currency Translation Pension and Other Postretirement Benefits Cash Flow Hedges Total Balance as of January 2, 2016 $ ) $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications, net of tax ) ) ) Reclassifications to net income, net of tax – Net current-period other comprehensive income (loss), net of tax ) (.1 ) ) Balance as of July 2, 2016 $ ) $ ) $ ) $ ) (In millions) Foreign Currency Translation Pension and Other Postretirement Benefits Cash Flow Hedges Total Balance as of January 3, 2015 $ ) $ ) $ – $ ) Other comprehensive loss before reclassifications, net of tax ) (.5 ) (.2 ) ) Reclassifications to net income, net of tax – (.4 ) Net current-period other comprehensive (loss) income, net of tax ) (.6 ) ) Balance as of July 4, 2015 $ ) $ ) $ (.6 ) $ ) |
Schedule of amounts reclassified from "Accumulated other comprehensive loss" to increase (decrease) income from continuing operations | Amounts Reclassified from Accumulated Other Comprehensive Loss Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Affected Line Item in the Statements Where Net Income is Presented Cash flow hedges: Foreign exchange contracts $ ) $ (.2 ) $ (.9 ) $ Cost of products sold Commodity contracts (.3 ) (.3 ) (.6 ) (.8 ) Cost of products sold ) (.5 ) ) .5 Total before tax .4 .2 .4 (.1 ) Provision for income taxes ) (.3 ) ) .4 Net of tax Pension and other postretirement benefits (1) ) ) ) ) Provision for income taxes ) ) ) ) Net of tax Total reclassifications for the period $ ) $ ) $ ) $ ) Total, net of tax (1) See Note 6, “Pension and Other Postretirement Benefits,” for more information . |
Income tax (benefit) expense allocated to each component of other comprehensive (loss) income | Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Pension and other postretirement benefits $ ) $ $ ) $ Cash flow hedges .5 .2 .1 (.1 ) Income tax (benefit) expense related to components of other comprehensive (loss) income $ ) $ $ ) $ |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Fair Value Measurements | |
Assets and liabilities carried at fair value, measured on a recurring basis | The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of July 2, 2016: Fair Value Measurements Using (In millions) Total Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Assets Trading securities $ $ $ $ – Derivative assets – Bank drafts – – Liabilities Derivative liabilities $ $ – $ $ – The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of January 2, 2016: Fair Value Measurements Using (In millions) Total Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Assets Trading securities $ $ $ $ – Derivative assets – – Bank drafts – – Liabilities Derivative liabilities $ $ .7 $ $ – |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Commitments and Contingencies | |
Costs of environmental liabilities with remediation | (In millions) Balance at January 2, 2016 $ Charges (reversals), net Payments ) Balance at July 2, 2016 $ |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jul. 02, 2016 | |
Segment Information | |
Financial information, by reportable segment from continuing operations | Three Months Ended Six Months Ended (In millions) July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Net sales to unaffiliated customers Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions Vancive Medical Technologies Net sales to unaffiliated customers $ $ $ $ Intersegment sales Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions .5 .6 Vancive Medical Technologies .1 .3 Intersegment sales $ $ $ $ Income from continuing operations before taxes Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions Vancive Medical Technologies ) .7 ) Corporate expense ) ) ) ) Interest expense ) ) ) ) Income from continuing operations before taxes $ $ $ $ Other expense, net by reportable segment Pressure-sensitive Materials $ $ $ $ Retail Branding and Information Solutions Vancive Medical Technologies – .6 .1 Corporate – Other expense, net $ $ $ $ Other expense, net by type Restructuring charges: Severance and related costs $ $ $ $ Asset impairment charges and lease cancellation costs Other items: Loss from settlement of pension obligations – – Transaction costs – – Loss (gain) on sale of assets .3 – .3 ) Loss on sale of product line and related transaction and exit costs .4 .4 Legal settlement – – – (.5 ) Other expense, net $ $ $ $ |
General (Details)
General (Details) | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
General | ||||
Length of fiscal period | 91 days | 91 days | 182 days | 182 days |
General - Condensed Consolidate
General - Condensed Consolidated Statements of Income (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | Jan. 02, 2016 | |
Accounting Changes and Error Corrections | |||||
Addition to long-term retirement benefits and other liabilities | $ 24 | ||||
Marketing, general and administrative expense | $ 269.2 | $ 273.3 | $ 547.4 | $ 573.7 | |
Income from continuing operations before taxes | 99.3 | 101.3 | 222.8 | 201.3 | |
Provision for income taxes | 19.3 | 36.6 | 53.2 | 64.7 | |
Income from continuing operations | 80 | 64.7 | 169.6 | 136.6 | |
Loss from discontinued operations | (1) | (1) | |||
Net income | $ 80 | $ 63.7 | $ 169.6 | $ 135.6 | |
Net income (loss) per common share: | |||||
Continuing operations (in dollars per share) | $ 0.90 | $ 0.71 | $ 1.90 | $ 1.50 | |
Discontinued operations (in dollars per share) | (0.01) | (0.01) | |||
Net income per common share (in dollars per share) | 0.90 | 0.70 | 1.90 | 1.49 | |
Net income (loss) per common share, assuming dilution: | |||||
Continuing operations (in dollars per share) | 0.88 | 0.69 | 1.87 | 1.47 | |
Discontinued operations (in dollars per share) | (0.01) | (0.01) | |||
Net income per common share, assuming dilution (in dollars per share) | $ 0.88 | $ 0.68 | $ 1.87 | $ 1.46 | |
As Previously Reported | |||||
Accounting Changes and Error Corrections | |||||
Marketing, general and administrative expense | $ 273.8 | $ 574.7 | |||
Income from continuing operations before taxes | 100.8 | 200.3 | |||
Provision for income taxes | 36.5 | 64.4 | |||
Income from continuing operations | 64.3 | 135.9 | |||
Loss from discontinued operations | (1) | (1) | |||
Net income | $ 63.3 | $ 134.9 | |||
Net income (loss) per common share: | |||||
Continuing operations (in dollars per share) | $ 0.70 | $ 1.49 | |||
Discontinued operations (in dollars per share) | (0.01) | (0.01) | |||
Net income per common share (in dollars per share) | 0.69 | 1.48 | |||
Net income (loss) per common share, assuming dilution: | |||||
Continuing operations (in dollars per share) | 0.69 | 1.46 | |||
Discontinued operations (in dollars per share) | (0.01) | (0.01) | |||
Net income per common share, assuming dilution (in dollars per share) | $ 0.68 | $ 1.45 | |||
Adjustment | |||||
Accounting Changes and Error Corrections | |||||
Marketing, general and administrative expense | $ (0.5) | $ (1) | |||
Income from continuing operations before taxes | 0.5 | 1 | |||
Provision for income taxes | 0.1 | 0.3 | |||
Income from continuing operations | 0.4 | 0.7 | |||
Net income | $ 0.4 | $ 0.7 | |||
Net income (loss) per common share: | |||||
Continuing operations (in dollars per share) | $ 0.01 | $ 0.01 | |||
Net income per common share (in dollars per share) | $ 0.01 | 0.01 | |||
Net income (loss) per common share, assuming dilution: | |||||
Continuing operations (in dollars per share) | 0.01 | ||||
Net income per common share, assuming dilution (in dollars per share) | $ 0.01 |
General - Condensed Consolida39
General - Condensed Consolidated Statements of Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Accounting Changes and Error Corrections | ||||
Net income | $ 80 | $ 63.7 | $ 169.6 | $ 135.6 |
Foreign currency translation | (13.3) | 2.9 | 5.6 | (69.1) |
Pension and other postretirement benefits | (15.5) | 7.2 | (11.3) | 12.6 |
Other comprehensive income (loss), net of tax | (27.6) | 10.2 | (5.8) | (57.1) |
Total comprehensive income, net of tax | $ 52.4 | 73.9 | $ 163.8 | 78.5 |
As Previously Reported | ||||
Accounting Changes and Error Corrections | ||||
Net income | 63.3 | 134.9 | ||
Foreign currency translation | 3 | (69.1) | ||
Pension and other postretirement benefits | 7.2 | 13.6 | ||
Other comprehensive income (loss), net of tax | 10.3 | (56.1) | ||
Total comprehensive income, net of tax | 73.6 | 78.8 | ||
Adjustment | ||||
Accounting Changes and Error Corrections | ||||
Net income | 0.4 | 0.7 | ||
Foreign currency translation | (0.1) | |||
Pension and other postretirement benefits | (1) | |||
Other comprehensive income (loss), net of tax | (0.1) | (1) | ||
Total comprehensive income, net of tax | $ 0.3 | $ (0.3) |
General - Condensed Consolida40
General - Condensed Consolidated Statements of Cash Flows (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2016 | Jul. 04, 2015 | |
Accounting Changes and Error Corrections | ||
Net cash provided by operating activities | $ 216 | $ 170.4 |
Increase in cash and cash equivalents | 57.3 | 18.5 |
Cash and cash equivalents, beginning of year | 158.8 | 207.2 |
Cash and cash equivalents, end of period | $ 216.1 | 225.7 |
As Previously Reported | ||
Accounting Changes and Error Corrections | ||
Net cash provided by operating activities | 170.9 | |
Increase in cash and cash equivalents | 19 | |
Cash and cash equivalents, beginning of year | 227 | |
Cash and cash equivalents, end of period | 246 | |
Adjustment | ||
Accounting Changes and Error Corrections | ||
Net cash provided by operating activities | (0.5) | |
Increase in cash and cash equivalents | (0.5) | |
Cash and cash equivalents, beginning of year | (19.8) | |
Cash and cash equivalents, end of period | $ (20.3) |
General - Sale of Product Line
General - Sale of Product Line and Discontinued Operations (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
May 31, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | Apr. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Discontinued Operations | ||||||
Loss on sale of product line and related exit costs | $ 0.4 | $ 7.7 | $ 0.4 | $ 10.3 | ||
Retail Branding and Information Solutions | ||||||
Discontinued Operations | ||||||
Proceeds from sale of product line | $ 1.5 | |||||
Loss on sale of product line and related exit costs | 7.7 | |||||
Impairment of long-lived assets of product line | $ 2 | |||||
Other costs related to sale of product line | $ 0.6 | |||||
OCP and DES businesses | ||||||
Discontinued Operations | ||||||
Tax-expenses related to the completion of certain tax return filings | $ 1 | $ 1 |
Acquisition (Details)
Acquisition (Details) € in Millions | 1 Months Ended |
Apr. 30, 2016EUR (€) | |
MACtac Acquisition | |
Business Acquisition | |
Purchase price | € 200 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jul. 02, 2016 | Jan. 02, 2016 |
Inventories | ||
Raw materials | $ 197.4 | $ 180.5 |
Work-in-progress | 162 | 143 |
Finished goods | 164.7 | 155.2 |
Inventories, net | $ 524.1 | $ 478.7 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2016 | Jan. 02, 2016 | |
Changes in net carrying amount of goodwill | ||
Goodwill, Beginning Balance | $ 686.2 | |
Translation adjustments | 4.8 | |
Goodwill, Ending Balance | 691 | |
Pressure-sensitive Materials | ||
Changes in net carrying amount of goodwill | ||
Goodwill, Beginning Balance | 277.9 | |
Translation adjustments | 3.2 | |
Goodwill, Ending Balance | 281.1 | |
Retail Branding and Information Solutions | ||
Changes in net carrying amount of goodwill | ||
Goodwill, Beginning Balance | 408.3 | |
Translation adjustments | 1.6 | |
Goodwill, Ending Balance | 409.9 | |
Accumulated impairment losses | 820 | $ 820 |
Vancive Medical Technologies | ||
Changes in net carrying amount of goodwill | ||
Goodwill, Ending Balance | $ 0 |
Debt and Capital Leases (Detail
Debt and Capital Leases (Details) - USD ($) $ in Millions | Jul. 02, 2016 | Jan. 02, 2016 | Apr. 02, 2016 |
Debt | |||
Fair value of debt | $ 1,220 | $ 1,080 | |
Revolving credit facility | |||
Debt | |||
Maximum borrowing capacity | $ 700 | ||
Covenants compliance | we were in compliance with our financial covenants. | we were in compliance with our financial covenants. | |
Commercial Paper | |||
Debt | |||
Maximum borrowing capacity | $ 500 |
Pension and Other Postretirem46
Pension and Other Postretirement Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Components of net periodic benefit cost (credit) | ||||
Recognized loss on settlements | $ 41.4 | $ 41.4 | ||
Additional net pension plan obligations | 72 | |||
U.S. | ||||
Defined Benefit Plans | ||||
Settled pension obligation | 70 | 70 | ||
Components of net periodic benefit cost (credit) | ||||
Recognized loss on settlements | (41.4) | |||
U.S. | Continuing operations | ||||
Components of net periodic benefit cost (credit) | ||||
Service cost | 0.1 | $ 0.1 | 0.2 | $ 0.2 |
Interest cost | 8.5 | 11.6 | 18.3 | 22.9 |
Actuarial loss | (1.7) | (1.7) | ||
Expected return on plan assets | (10.5) | (12.9) | (21.9) | (25.8) |
Recognized net actuarial loss | 4.8 | 5.1 | 9.2 | 10.2 |
Amortization of prior service cost (credit) | 0.3 | 0.3 | 0.6 | 0.6 |
Recognized loss on settlements | 41.4 | 41.4 | ||
Net periodic benefit cost (credit) | 46.3 | 4.2 | 49.5 | 8.1 |
Int'l | Continuing operations | ||||
Components of net periodic benefit cost (credit) | ||||
Service cost | 3.5 | 3.3 | 6.9 | 7 |
Interest cost | 4.2 | 4.3 | 8.3 | 8.8 |
Expected return on plan assets | (5.4) | (5.3) | (10.7) | (10.8) |
Recognized net actuarial loss | 1.8 | 2.3 | 3.6 | 4.8 |
Amortization of prior service cost (credit) | (0.1) | (0.2) | (0.1) | |
Recognized loss on settlements | 3.8 | 3.8 | ||
Net periodic benefit cost (credit) | 4 | 8.4 | 7.9 | 13.5 |
U.S. Postretirement Health Benefits | Continuing operations | ||||
Components of net periodic benefit cost (credit) | ||||
Interest cost | 0.1 | 0.1 | ||
Recognized net actuarial loss | 0.3 | 0.5 | 0.8 | 1.1 |
Amortization of prior service cost (credit) | (0.8) | (0.8) | (1.6) | (1.6) |
Net periodic benefit cost (credit) | $ (0.5) | $ (0.3) | $ (0.7) | $ (0.4) |
Research and Development (Detai
Research and Development (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Marketing, general and administrative expense | ||||
Research and development expense | $ 22.7 | $ 22.8 | $ 45 | $ 48.4 |
Long-Term Incentive Compensat48
Long-Term Incentive Compensation (Details) - Continuing operations - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Marketing, general and administrative expense | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 6.6 | $ 5.8 | $ 14.1 | $ 13.2 |
Cash-based LTI awards compensation expense | 5.2 | $ 10.1 | 14.7 | $ 15.3 |
Stock-based awards | ||||
Stock-Based Compensation | ||||
Unrecognized compensation cost related to share based compensation cost | $ 54 | $ 54 | ||
Unrecognized compensation cost weighted average recognition period | 3 years |
Cost Reduction Actions (Details
Cost Reduction Actions (Details) $ in Millions | 6 Months Ended | 12 Months Ended |
Jul. 02, 2016USD ($)item | Jan. 02, 2016USD ($)item | |
Restructuring Charges | ||
Charges (Reversals), net | $ | $ 12 | |
2015/2016 Actions | ||
Restructuring Charges | ||
Charges (Reversals), net | $ | $ 12.4 | $ 26.1 |
Number of positions reduced as a result of Cost Reduction Actions | 230 | 430 |
Number of positions remaining | 0 | |
2014/2015 Actions | ||
Restructuring Charges | ||
Charges (Reversals), net | $ | $ 33.4 | |
Number of positions reduced as a result of Cost Reduction Actions | 605 | |
Number of positions remaining | 55 |
Cost Reduction Actions - Restru
Cost Reduction Actions - Restructuring Charges and Payments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | Jan. 02, 2016 | |
Cost Reduction Actions | |||||
Beginning Balance | $ 14.1 | ||||
Charges (Reversals), net | 12 | ||||
Cash payments | (19.8) | ||||
Non-cash Impairment | (2.4) | ||||
Foreign Currency translation | 0.1 | ||||
Ending Balance | $ 4 | 4 | $ 14.1 | ||
Severance and related costs | |||||
Cost Reduction Actions | |||||
Charges (Reversals), net | 3.6 | $ 16.8 | 8.8 | $ 30.3 | |
2015/2016 Actions | |||||
Cost Reduction Actions | |||||
Charges (Reversals), net | 12.4 | 26.1 | |||
2015/2016 Actions | Severance and related costs | |||||
Cost Reduction Actions | |||||
Beginning Balance | 8.4 | ||||
Charges (Reversals), net | 9.2 | ||||
Cash payments | (17) | ||||
Foreign Currency translation | 0.1 | ||||
Ending Balance | 0.7 | 0.7 | 8.4 | ||
2015/2016 Actions | Asset impairment charges | |||||
Cost Reduction Actions | |||||
Charges (Reversals), net | 2.4 | ||||
Non-cash Impairment | (2.4) | ||||
2015/2016 Actions | Lease cancellation costs | |||||
Cost Reduction Actions | |||||
Beginning Balance | 0.2 | ||||
Charges (Reversals), net | 0.8 | ||||
Cash payments | (0.5) | ||||
Ending Balance | 0.5 | 0.5 | 0.2 | ||
2014/2015 Actions | |||||
Cost Reduction Actions | |||||
Charges (Reversals), net | 33.4 | ||||
2014/2015 Actions | Severance and related costs | |||||
Cost Reduction Actions | |||||
Beginning Balance | 4.8 | ||||
Charges (Reversals), net | (0.3) | ||||
Cash payments | (2.3) | ||||
Ending Balance | 2.2 | 2.2 | 4.8 | ||
Prior actions | Severance and related costs | |||||
Cost Reduction Actions | |||||
Beginning Balance | 0.7 | ||||
Charges (Reversals), net | (0.1) | ||||
Ending Balance | $ 0.6 | $ 0.6 | $ 0.7 |
Cost Reduction Actions - Report
Cost Reduction Actions - Reportable Segment and Corporate (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Restructuring Charges | ||||
Restructuring charges | $ 12 | |||
Other expense, net. | ||||
Restructuring Charges | ||||
Restructuring charges | $ 6.4 | $ 20 | 12 | $ 33.9 |
Pressure-sensitive Materials | Other expense, net. | ||||
Restructuring Charges | ||||
Restructuring charges | 4.7 | 7.1 | 6.8 | 14.4 |
Retail Branding and Information Solutions | Other expense, net. | ||||
Restructuring Charges | ||||
Restructuring charges | $ 1.7 | 12.3 | 5.1 | 15.7 |
Vancive Medical Technologies | Other expense, net. | ||||
Restructuring Charges | ||||
Restructuring charges | $ 0.6 | $ 0.1 | 1.7 | |
Corporate | Other expense, net. | ||||
Restructuring Charges | ||||
Restructuring charges | $ 2.1 |
Financial Instruments (Details)
Financial Instruments (Details) - Cash Flow Hedging $ in Millions | 6 Months Ended |
Jul. 02, 2016USD ($) | |
Financial Instruments | |
Maximum length of time hedged in cash flow hedge | 36 months |
Cash Flow Hedge Loss to be Reclassified within Twelve Months | $ 2 |
Foreign exchange contracts | |
Financial Instruments | |
Notional amount | 1,530 |
Commodity contracts | |
Financial Instruments | |
Notional amount | $ 2.7 |
Financial Instruments - Fair Va
Financial Instruments - Fair Value (Details) - USD ($) $ in Millions | Jul. 02, 2016 | Jan. 02, 2016 |
Derivatives, Fair Value | ||
Asset | $ 2.7 | $ 5.6 |
Liability | 5 | 5.2 |
Foreign exchange contracts | Other current assets | ||
Derivatives, Fair Value | ||
Asset | 2.6 | 5.6 |
Foreign exchange contracts | Other current liabilities | ||
Derivatives, Fair Value | ||
Liability | 5 | 4.5 |
Commodity contracts | Other current assets | ||
Derivatives, Fair Value | ||
Asset | $ 0.1 | |
Commodity contracts | Other current liabilities | ||
Derivatives, Fair Value | ||
Liability | $ 0.7 |
Financial Instruments - Net Gai
Financial Instruments - Net Gain (Loss) Recognized in Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Fair Value Hedges | ||||
Gain (loss) in income | $ 7.6 | $ (8.1) | $ 4.1 | $ 5 |
Foreign exchange contracts | Cost of products sold | ||||
Fair Value Hedges | ||||
Gain (loss) in income | 0.7 | (0.4) | 1.7 | 1 |
Foreign exchange contracts | Marketing, general and administrative expense | ||||
Fair Value Hedges | ||||
Gain (loss) in income | $ 6.9 | $ (7.7) | $ 2.4 | $ 4 |
Financial Instruments - Gains (
Financial Instruments - Gains (Losses) Recognized in AOCI (Details) - Cash Flow Hedging - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Derivative Instruments, Gains (Losses) | ||||
Gains (losses) recognized in accumulated other comprehensive loss on derivatives | $ 0.2 | $ (0.3) | $ (1.5) | $ (0.3) |
Foreign exchange contracts | ||||
Derivative Instruments, Gains (Losses) | ||||
Gains (losses) recognized in accumulated other comprehensive loss on derivatives | (0.3) | (1.8) | (1.8) | (1.5) |
Commodity contracts | ||||
Derivative Instruments, Gains (Losses) | ||||
Gains (losses) recognized in accumulated other comprehensive loss on derivatives | $ 0.5 | $ 1.5 | $ 0.3 | $ 1.2 |
Taxes Based on Income (Details)
Taxes Based on Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Taxes Based on Income | ||||
Income from continuing operations before taxes | $ 99.3 | $ 101.3 | $ 222.8 | $ 201.3 |
Provision for income taxes | $ 19.3 | $ 36.6 | $ 53.2 | $ 64.7 |
Effective tax rate (as a percent) | 19.40% | 36.10% | 23.90% | 32.10% |
Tax benefit from the release of valuation allowances against certain deferred tax assets in certain foreign jurisdiction associated with a structural simplification | $ 6.7 | $ 6.7 | ||
Tax benefits from our change in judgment about tax filing positions in certain foreign jurisdictions | 5 | 6 | ||
Tax benefits due to decreases in certain tax reserves as a result of closing tax years | 0.7 | $ 0.7 | 3.3 | $ 4.1 |
Tax expense associated with the repatriation of non-permanently reinvested 2015 earnings of certain foreign subsidiaries | 5.3 | 5.3 | ||
Tax expense due to non-deductible employee-related expenses | $ 0.5 | 0.5 | ||
Net benefit from continuing operations related to changes in the effective tax rates in certain foreign municipalities | $ 1.6 | |||
Reasonably possible decrease in unrecognized tax benefits from continuing operations during next 12 months | $ 12 | $ 12 |
Net Income Per Common Share (De
Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Net income per common share amounts | ||||
Income from continuing operations | $ 80 | $ 64.7 | $ 169.6 | $ 136.6 |
Loss from discontinued operations | (1) | (1) | ||
Net income available to common shareholders | $ 80 | $ 63.7 | $ 169.6 | $ 135.6 |
Weighted average number of common shares outstanding | 89.1 | 91.2 | 89.3 | 90.9 |
Dilutive shares (additional common shares issuable under stock-based awards) | 1.6 | 1.8 | 1.6 | 1.9 |
Weighted average number of common shares outstanding, assuming dilution | 90.7 | 93 | 90.9 | 92.8 |
Net income (loss) per common share: | ||||
Continuing operations (in dollars per share) | $ 0.90 | $ 0.71 | $ 1.90 | $ 1.50 |
Discontinued operations (in dollars per share) | (0.01) | (0.01) | ||
Net income per common share ( in dollars per share) | 0.90 | 0.70 | 1.90 | 1.49 |
Net income (loss) per common share, assuming dilution: | ||||
Continuing operations (in dollars per share) | 0.88 | 0.69 | 1.87 | 1.47 |
Discontinued operations (in dollars per share) | (0.01) | (0.01) | ||
Net income per common share, assuming dilution (in dollars per share) | $ 0.88 | $ 0.68 | $ 1.87 | $ 1.46 |
Stock-based compensation awards excluded from the computation of net income per common share, assuming dilution | 0.1 | 1 | 0.2 | 1 |
Comprehensive Income - Changes
Comprehensive Income - Changes AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Changes in Accumulated other comprehensive loss (net of tax) | ||||
Balance at beginning of the period | $ (683) | $ (545.5) | ||
Other comprehensive income (loss) before reclassifications, net of tax | (42.3) | (69.8) | ||
Reclassifications to net income, net of tax | 36.5 | 12.7 | ||
Net current-period other comprehensive income (loss), net of tax | $ (27.6) | $ 10.2 | (5.8) | (57.1) |
Balance at end of the period | (688.8) | (602.6) | (688.8) | (602.6) |
Foreign Currency Translation | ||||
Changes in Accumulated other comprehensive loss (net of tax) | ||||
Balance at beginning of the period | (158.9) | (19.9) | ||
Other comprehensive income (loss) before reclassifications, net of tax | 5.6 | (69.1) | ||
Net current-period other comprehensive income (loss), net of tax | 5.6 | (69.1) | ||
Balance at end of the period | (153.3) | (89) | (153.3) | (89) |
Pension and Other Postretirement Benefits | ||||
Changes in Accumulated other comprehensive loss (net of tax) | ||||
Balance at beginning of the period | (521.6) | (525.6) | ||
Other comprehensive income (loss) before reclassifications, net of tax | (46.7) | (0.5) | ||
Reclassifications to net income, net of tax | 35.4 | 13.1 | ||
Net current-period other comprehensive income (loss), net of tax | (11.3) | 12.6 | ||
Balance at end of the period | (532.9) | (513) | (532.9) | (513) |
Cash Flow Hedges | ||||
Changes in Accumulated other comprehensive loss (net of tax) | ||||
Balance at beginning of the period | (2.5) | |||
Other comprehensive income (loss) before reclassifications, net of tax | (1.2) | (0.2) | ||
Reclassifications to net income, net of tax | 1.1 | (0.4) | ||
Net current-period other comprehensive income (loss), net of tax | (0.1) | (0.6) | ||
Balance at end of the period | $ (2.6) | $ (0.6) | $ (2.6) | $ (0.6) |
Comprehensive Income - Reclassi
Comprehensive Income - Reclassified from AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Amounts reclassified from Accumulated other comprehensive loss | ||||
Cost of products sold | $ (1,107.4) | $ (1,098.4) | $ (2,170.3) | $ (2,196.4) |
Income from continuing operations before taxes | 99.3 | 101.3 | 222.8 | 201.3 |
Provision for income taxes | (19.3) | (36.6) | (53.2) | (64.7) |
Income from continuing operations | 80 | 64.7 | 169.6 | 136.6 |
Amounts Reclassified from Accumulated other comprehensive loss | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Income from continuing operations | (32.3) | (7) | (36.5) | (12.7) |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Income from continuing operations before taxes | (1.5) | (0.5) | (1.5) | 0.5 |
Provision for income taxes | 0.4 | 0.2 | 0.4 | (0.1) |
Income from continuing operations | (1.1) | (0.3) | (1.1) | 0.4 |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Foreign exchange contracts | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Cost of products sold | (1.2) | (0.2) | (0.9) | 1.3 |
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Commodity contracts | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Cost of products sold | (0.3) | (0.3) | (0.6) | (0.8) |
Pension and Other Postretirement Benefits | Amounts Reclassified from Accumulated other comprehensive loss | ||||
Amounts reclassified from Accumulated other comprehensive loss | ||||
Pension and other postretirement benefits | (47.7) | (11.2) | (53.8) | (18.8) |
Provision for income taxes | 16.5 | 4.5 | 18.4 | 5.7 |
Income from continuing operations | $ (31.2) | $ (6.7) | $ (35.4) | $ (13.1) |
Comprehensive Income - Income t
Comprehensive Income - Income tax expense (benefit) allocated (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Income tax (benefit) expense allocated to other comprehensive (loss) income | ||||
Pension and other postretirement benefits | $ (8.6) | $ 4.5 | $ (6.7) | $ 6.7 |
Cash flow hedges | 0.5 | 0.2 | 0.1 | (0.1) |
Income tax (benefit) expense related to components of other comprehensive (loss) income | $ (8.1) | $ 4.7 | $ (6.6) | $ 6.6 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Jul. 02, 2016 | Jan. 02, 2016 |
Assets | ||
Derivative assets | $ 2.7 | $ 5.6 |
Liabilities | ||
Derivative liabilities | 5 | 5.2 |
Recurring | ||
Assets | ||
Trading securities | 18.3 | 17.9 |
Derivative assets | 2.7 | 5.6 |
Bank drafts | 12.7 | 24.8 |
Liabilities | ||
Derivative liabilities | 5 | 5.2 |
Recurring | Cash and Cash Equivalents | ||
Assets | ||
Trading securities | 0.5 | 0.3 |
Recurring | Other current assets | ||
Assets | ||
Trading securities | 17.8 | 17.6 |
Quoted Prices in Active Markets (Level 1) | Recurring | ||
Assets | ||
Trading securities | 11.4 | 11.3 |
Derivative assets | 0.1 | |
Bank drafts | 12.7 | 24.8 |
Liabilities | ||
Derivative liabilities | 0.7 | |
Significant Other Observable Inputs (Level 2) | Recurring | ||
Assets | ||
Trading securities | 6.9 | 6.6 |
Derivative assets | 2.6 | 5.6 |
Liabilities | ||
Derivative liabilities | $ 5 | $ 4.5 |
Commitments and Contingencies62
Commitments and Contingencies (Details) $ in Millions | 6 Months Ended | |
Jul. 02, 2016USD ($)item | Jan. 02, 2016USD ($) | |
Environmental | ||
Environmental site contingency number of sites | item | 13 | |
Activity related to environmental liabilities | ||
Balance at beginning of year | $ 17.7 | |
Charges (reversals), net | 4.9 | |
Payments | (3.7) | |
Balance at end of year | 18.9 | |
Short term environmental liabilities | $ 9 | $ 7 |
Segment Information - Sales (De
Segment Information - Sales (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Segment Reporting Information | ||||
Net sales | $ 1,541.5 | $ 1,516 | $ 3,027 | $ 3,044 |
Interest expense | (15.4) | (15.3) | (30.7) | (30.6) |
Income from continuing operations before taxes | 99.3 | 101.3 | 222.8 | 201.3 |
Other expense, net | 50.2 | 27.7 | 55.8 | 42 |
Intersegment | ||||
Segment Reporting Information | ||||
Net sales | 16.6 | 18.4 | 34.1 | 36.3 |
Pressure-sensitive Materials | Operating segments | ||||
Segment Reporting Information | ||||
Net sales | 1,145.1 | 1,114.1 | 2,237.1 | 2,234.7 |
Income from continuing operations before taxes | 148.4 | 129.8 | 286.9 | 252.7 |
Other expense, net | 6.4 | 7.1 | 8.5 | 12.7 |
Pressure-sensitive Materials | Intersegment | ||||
Segment Reporting Information | ||||
Net sales | 16 | 16.2 | 32.7 | 31.9 |
Retail Branding and Information Solutions | Operating segments | ||||
Segment Reporting Information | ||||
Net sales | 378 | 383.8 | 756.1 | 771.9 |
Income from continuing operations before taxes | 28.3 | 10 | 54.4 | 29.2 |
Other expense, net | 2.4 | 20 | 5.8 | 25.5 |
Retail Branding and Information Solutions | Intersegment | ||||
Segment Reporting Information | ||||
Net sales | 0.5 | 0.6 | 1.1 | 1.2 |
Vancive Medical Technologies | Operating segments | ||||
Segment Reporting Information | ||||
Net sales | 18.4 | 18.1 | 33.8 | 37.4 |
Income from continuing operations before taxes | 1.6 | (1.4) | 0.7 | (3.5) |
Other expense, net | 0.6 | 0.1 | 1.7 | |
Vancive Medical Technologies | Intersegment | ||||
Segment Reporting Information | ||||
Net sales | 0.1 | 1.6 | 0.3 | 3.2 |
Corporate | ||||
Segment Reporting Information | ||||
Income from continuing operations before taxes | (63.6) | $ (21.8) | (88.5) | (46.5) |
Other expense, net | $ 41.4 | $ 41.4 | $ 2.1 |
Segment Information - Expense (
Segment Information - Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2016 | Jul. 04, 2015 | Jul. 02, 2016 | Jul. 04, 2015 | |
Restructuring charges | ||||
Restructuring charges | $ 12 | |||
Other items: | ||||
Loss from settlement of pension obligations | $ 41.4 | 41.4 | ||
Transaction costs | 1.7 | 1.7 | ||
Loss (gain) on sale of assets | 0.3 | 0.3 | $ (1.7) | |
Loss on sale of product line and related transaction and exit costs | 0.4 | $ 7.7 | 0.4 | 10.3 |
Legal settlement | (0.5) | |||
Other expense, net | 50.2 | 27.7 | 55.8 | 42 |
Severance and related costs | ||||
Restructuring charges | ||||
Restructuring charges | 3.6 | 16.8 | 8.8 | 30.3 |
Asset impairment charges and lease cancellation costs | ||||
Restructuring charges | ||||
Restructuring charges | $ 2.8 | $ 3.2 | $ 3.2 | $ 3.6 |