Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 28, 2019 | Feb. 22, 2020 | Jun. 29, 2019 | |
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 28, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 1-7685 | ||
Entity Registrant Name | AVERY DENNISON CORPORATION | ||
Entity Central Index Key | 0000008818 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Amendment Flag | false | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 95-1492269 | ||
Entity Address, City or Town | Glendale | ||
Entity Address, State or Province | CA | ||
Entity Address, Address Line One | 207 Goode Avenue | ||
City Area Code | 626 | ||
Local Phone Number | 304-2000 | ||
Entity Address, Postal Zip Code | 91203 | ||
Current Fiscal Year End Date | --12-28 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 9,664,727,657 | ||
Entity Common Stock, Shares Outstanding | 83,297,552 | ||
Common stock, $1 par value | |||
Security Exchange Name | NYSE | ||
Title of 12(b) Security | Common stock, $1 par value | ||
Trading Symbol | AVY | ||
Senior notes due 2025 at 1.25% | |||
Security Exchange Name | NYSE | ||
Title of 12(b) Security | 1.25% Senior Notes due 2025 | ||
Trading Symbol | AVY25 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 253.7 | $ 232 |
Trade accounts receivable, less allowances of $27.1 and $21.1 at year-end 2019 and 2018, respectively | 1,212.2 | 1,189.7 |
Inventories, net | 663 | 651.4 |
Other current assets | 211.7 | 224.9 |
Total current assets | 2,340.6 | 2,298 |
Property, plant and equipment, net | 1,210.7 | 1,137.4 |
Goodwill | 930.8 | 941.8 |
Other intangibles resulting from business acquisitions, net | 126.5 | 144 |
Deferred tax assets | 225.4 | 205.3 |
Other assets | 654.8 | 451 |
Total assets | 5,488.8 | 5,177.5 |
Current liabilities: | ||
Short-term borrowings and current portion of long-term debt and finance leases | 440.2 | 194.6 |
Accounts payable | 1,066.1 | 1,030.5 |
Accrued payroll and employee benefits | 220.4 | 217.9 |
Accrued trade rebates | 132.4 | 129.8 |
Income taxes payable | 71.4 | 58.1 |
Other current liabilities | 323.3 | 363.1 |
Total current liabilities | 2,253.8 | 1,994 |
Long-term debt and finance leases | 1,499.3 | 1,771.6 |
Long-term retirement benefits and other liabilities | 421.4 | 334.7 |
Deferred tax liabilities and income taxes payable | 110.3 | 122.1 |
Commitments and contingencies (see Notes 7 and 8) | ||
Shareholders' equity: | ||
Common stock, $1 par value per share, authorized - 400,000,000 shares at year-end 2019 and 2018; issued - 124,126,624 shares at year-end 2019 and 2018; outstanding - 83,366,840 and 84,723,655 shares at year-end 2019 and 2018, respectively | 124.1 | 124.1 |
Capital in excess of par value | 874 | 872 |
Retained earnings | 2,979.1 | 2,864.9 |
Treasury stock at cost, 40,759,784 and 39,402,969 shares at year-end 2019 and 2018, respectively | (2,425.1) | (2,223.9) |
Accumulated other comprehensive loss | (348.1) | (682) |
Total shareholders' equity | 1,204 | 955.1 |
Total liabilities and shareholders' equity | $ 5,488.8 | $ 5,177.5 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Trade accounts receivable, allowances (in dollars) | $ 27.1 | $ 21.1 |
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 | 83,366,840 | 84,723,655 |
Treasury stock, shares | 40,759,784 | 39,402,969 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Net sales | $ 7,070.1 | $ 7,159 | $ 6,613.8 |
Cost of products sold | 5,166 | 5,243.5 | 4,801.6 |
Gross profit | 1,904.1 | 1,915.5 | 1,812.2 |
Marketing, general and administrative expense | 1,080.4 | 1,127.5 | 1,105.2 |
Other expense, net | 53.2 | 69.9 | 36.5 |
Interest expense | 75.8 | 58.5 | 63 |
Other non-operating expense, net | 445.2 | 104.8 | 18 |
Income before taxes | 249.5 | 554.8 | 589.5 |
(Benefit from) provision for income taxes | (56.7) | 85.4 | 307.7 |
Equity method investment losses | (2.6) | (2) | |
Net income | $ 303.6 | $ 467.4 | $ 281.8 |
Per share amounts: | |||
Net income per common share (in dollars per share) | $ 3.61 | $ 5.35 | $ 3.19 |
Net income per common share, assuming dilution (in dollars per share) | $ 3.57 | $ 5.28 | $ 3.13 |
Weighted average number of shares outstanding: | |||
Common shares (in shares) | 84 | 87.3 | 88.3 |
Common shares, assuming dilution (in shares) | 85 | 88.6 | 90.1 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Net income | $ 303.6 | $ 467.4 | $ 281.8 |
Foreign currency translation: | |||
Translation gain (loss) | 2.3 | (91.2) | 56.4 |
Pension and other postretirement benefits: | |||
Net gain (loss) recognized from actuarial gain/loss and prior service cost/credit | 66.4 | (4.1) | (3) |
Reclassifications to net income | 266.1 | 93.8 | 19.3 |
Cash flow hedges: | |||
Gains (losses) recognized on cash flow hedges | 0.5 | 1.1 | (2.2) |
Reclassifications to net income | (1.4) | (1.1) | 0.9 |
Other comprehensive income (loss), net of tax | 333.9 | (1.5) | 71.4 |
Total comprehensive income, net of tax | $ 637.5 | $ 465.9 | $ 353.2 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Millions | Common stock, $1 par value | Capital in excess of par value | Retained earnings | Treasury stock, at cost | Accumulated other comprehensive loss | Total |
Beginning balance at Dec. 31, 2016 | $ 124.1 | $ 852 | $ 2,473.3 | $ (1,772) | $ (751.9) | $ 925.5 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 281.8 | 281.8 | ||||
Other comprehensive income (loss), net of tax | 71.4 | 71.4 | ||||
Repurchase of 2,222,937, 3,951,215 and 1,488,890, shares for treasury for the years ended 2019, 2018, and 2017 respectively | (129.7) | (129.7) | ||||
Issuance of 665,380, 458,506 and 960,656 shares under stock-based compensation plans | 10.6 | (14.4) | 36.2 | 32.4 | ||
Contribution of 200,742, 204,823 and 230,915 shares to 401(k) Plan for the years ended 2019, 2018, and 2017, respectively | 11.5 | 8.8 | 20.3 | |||
Dividends of $2.26, $2.01 and $1.76 per share for the years ended 2019, 2018, and 2017, respectively | (155.5) | (155.5) | ||||
Ending balance at Dec. 30, 2017 | 124.1 | 862.6 | 2,596.7 | (1,856.7) | (680.5) | 1,046.2 |
Increase (Decrease) in Stockholders' Equity | ||||||
Tax accounting for intra-entity asset transfers | 0 | 0 | (13.8) | 0 | 0 | (13.8) |
Ending balance at Dec. 31, 2017 | 124.1 | 862.6 | 2,582.9 | (1,856.7) | (680.5) | 1,032.4 |
Beginning balance at Dec. 30, 2017 | 124.1 | 862.6 | 2,596.7 | (1,856.7) | (680.5) | 1,046.2 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 467.4 | 467.4 | ||||
Other comprehensive income (loss), net of tax | (1.5) | (1.5) | ||||
Repurchase of 2,222,937, 3,951,215 and 1,488,890, shares for treasury for the years ended 2019, 2018, and 2017 respectively | (392.9) | (392.9) | ||||
Issuance of 665,380, 458,506 and 960,656 shares under stock-based compensation plans | 9.4 | (24.1) | 17.6 | 2.9 | ||
Contribution of 200,742, 204,823 and 230,915 shares to 401(k) Plan for the years ended 2019, 2018, and 2017, respectively | 13.7 | 8.1 | 21.8 | |||
Dividends of $2.26, $2.01 and $1.76 per share for the years ended 2019, 2018, and 2017, respectively | (175) | (175) | ||||
Ending balance at Dec. 29, 2018 | 124.1 | 872 | 2,864.9 | (2,223.9) | (682) | 955.1 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 303.6 | 303.6 | ||||
Other comprehensive income (loss), net of tax | 333.9 | 333.9 | ||||
Repurchase of 2,222,937, 3,951,215 and 1,488,890, shares for treasury for the years ended 2019, 2018, and 2017 respectively | (237.7) | (237.7) | ||||
Issuance of 665,380, 458,506 and 960,656 shares under stock-based compensation plans | 2 | (13.6) | 28 | 16.4 | ||
Contribution of 200,742, 204,823 and 230,915 shares to 401(k) Plan for the years ended 2019, 2018, and 2017, respectively | 13.9 | 8.5 | 22.4 | |||
Dividends of $2.26, $2.01 and $1.76 per share for the years ended 2019, 2018, and 2017, respectively | (189.7) | (189.7) | ||||
Ending balance at Dec. 28, 2019 | $ 124.1 | $ 874 | $ 2,979.1 | $ (2,425.1) | $ (348.1) | $ 1,204 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Repurchase of shares for treasury (in shares) | 2,000,000 | 4,000,000 | |
Stock issued under stock-based compensation plans (in shares) | 665,380 | 458,506 | 960,656 |
Stock issued under 401(k) Plan (in shares) | 200,742 | 204,823 | 230,915 |
Dividends per common share (in dollars per share) | $ 2.26 | $ 2.01 | $ 1.76 |
Treasury stock, at cost | |||
Repurchase of shares for treasury (in shares) | 2,222,937 | 3,951,215 | 1,488,890 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Operating Activities | |||
Net income | $ 303.6 | $ 467.4 | $ 281.8 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 140.3 | 141.5 | 126.6 |
Amortization | 38.7 | 39.5 | 52.1 |
Provision for doubtful accounts and sales returns | 58.7 | 45.6 | 37.6 |
Stock-based compensation | 34.5 | 34.3 | 30.2 |
Pension plan settlements and related charges | 444.1 | 93.7 | |
Deferred income taxes and other non-cash taxes | (216.9) | (32.7) | 151.6 |
Other non-cash expense and loss (income and gain), net | 28.3 | 60.4 | 53.5 |
Changes in assets and liabilities and other adjustments: | |||
Trade accounts receivable | (42.2) | (62.5) | (141.2) |
Inventories | (18.1) | (70.5) | (14.9) |
Accounts payable | 46.4 | 43.6 | 83.4 |
Taxes on income | 5.4 | (35.5) | 29.6 |
Other assets | 38.4 | (11.6) | (20.9) |
Other liabilities | (114.7) | (255.3) | (23.7) |
Net cash provided by operating activities | 746.5 | 457.9 | 645.7 |
Investing Activities | |||
Purchases of property, plant and equipment | (219.4) | (226.7) | (190.5) |
Purchases of software and other deferred charges | (37.8) | (29.9) | (35.6) |
Proceeds from sales of property, plant and equipment | 7.8 | 9.4 | 6 |
Proceeds from insurance and (purchases) sales of investments, net | 4.9 | 18.5 | (3.9) |
Payments for investments in businesses and acquisitions, net of cash acquired | (6.5) | (3.8) | (319.3) |
Net cash used in investing activities | (251) | (232.5) | (543.3) |
Financing Activities | |||
Net decrease in borrowings (maturities of three months or less) | (5.3) | (77.6) | (89.2) |
Additional long-term borrowings | 493.3 | 542.9 | |
Repayments of long-term debt and finance leases | (18.6) | (6.4) | (253.8) |
Dividends paid | (189.7) | (175) | (155.5) |
Share repurchases | (237.7) | (392.9) | (129.7) |
Net (tax withholding) proceeds related to stock-based compensation | (17.4) | (32.2) | 1.4 |
Payments of contingent consideration | (1.6) | (17.3) | |
Net cash used in financing activities | (470.3) | (208.1) | (83.9) |
Effect of foreign currency translation on cash balances | (3.5) | (9.7) | 10.8 |
Increase in cash and cash equivalents | 21.7 | 7.6 | 29.3 |
Cash and cash equivalents, beginning of year | 232 | 224.4 | 195.1 |
Cash and cash equivalents, end of year | $ 253.7 | $ 232 | $ 224.4 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 28, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Our businesses include the production of pressure-sensitive materials and a variety of tickets, tags, labels and other converted products. We sell most of our pressure-sensitive materials to label printers and converters that convert the materials into labels and other products through embossing, printing, stamping and die-cutting. We sell other pressure-sensitive materials in converted form as tapes and reflective sheeting. We also manufacture and sell a variety of other converted products and items not involving pressure-sensitive components, such as fasteners, tickets, tags, radio-frequency identification (“RFID”) inlays and tags, and imprinting equipment and related solutions, which serve the apparel and other end markets. Principles of Consolidation Our Consolidated Financial Statements include the accounts of majority-owned and controlled subsidiaries. Intercompany accounts, transactions, and profits are eliminated in consolidation. We apply the equity method of accounting for investments in which we have significant influence but not a controlling interest. Reclassifications Certain amounts in the prior year’s Consolidated Financial Statements have been reclassified to conform to the current year presentation. Fiscal Year Normally, our fiscal years consist of 52 weeks, but every fifth or sixth fiscal year consists of 53 weeks. Our 2019, 2018, and 2017 fiscal years consisted of 52 -week periods ending December 28, 2019, December 29, 2018, and December 30, 2017, respectively. Accounting Guidance Updates Leases In the first quarter of 2019, we adopted accounting guidance that requires lessees to recognize on their balance sheets the rights and obligations created by leases. This guidance also requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows from leases. As allowed by this guidance, we elected to apply it using a modified retrospective approach. This approach applies to all leases that existed at or commenced after the date of our initial adoption. As such, prior year comparative amounts have not been adjusted. We elected the transition practical expedients allowed under this guidance. See Note 7, “Commitments and Leases,” for more information. Hedge accounting In the first quarter of 2019, we prospectively adopted amended accounting guidance issued to improve the financial reporting of hedging relationships by better reflecting the economic results of an entity’s risk management activities in its financial statements and simplifying the application of hedge accounting. As a result of adopting this guidance, our reclassification of gains and losses from cash flow hedges to earnings is included in the same financial statement line item as the hedged item. Our adoption of this guidance did not have a material impact on our financial position, results of operations, cash flows, or disclosures. Reclassification of certain tax effects from accumulated other comprehensive income In the first quarter of 2019, we adopted accounting guidance that provides entities with the option to reclassify certain tax effects of the U.S. Tax Cuts and Jobs Act (“TCJA”) in accumulated other comprehensive income (“AOCI”) to retained earnings. We elected not to reclassify the income tax effects stranded in AOCI to retained earnings. Our accounting policy is to release the income tax effects from AOCI to the income statement at the current statutory rate when the related pretax change is recognized. We also release the disproportionate tax effects in AOCI through the income statement as a discrete tax adjustment in the period when the circumstances upon which they are premised cease to exist. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions for the reporting period and as of the date of the financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expense. Actual results could differ from these estimates. Cash and Cash Equivalents Cash and cash equivalents generally consist of cash on hand, deposits in banks, cash-in-transit, and bank drafts and short-term investments with maturities of three months or less when purchased or received. The carrying value of these assets approximates fair value due to the short maturity of the instruments. Trade Accounts Receivable We record trade accounts receivable at the invoiced amount. The allowance for doubtful accounts reserve represents allowances for customer trade accounts receivable that are estimated to be partially or entirely uncollectible. These allowances are used to reduce gross trade receivables to their net realizable values. We record these allowances based on estimates related to the following: ● Customer-specific allowances; ● Amounts based on an aging schedule; and ● An amount based on our historical experience. No single customer represented 10% or more of our net sales in, or trade accounts receivable at, year-end 2019 or 2018. However, during 2019, 2018, and 2017, our ten largest customers by net sales in the aggregate represented approximately 16%, 15%, and 15% of our net sales, respectively. As of December 28, 2019 and December 29, 2018, our ten largest customers by trade accounts receivable in the aggregate represented approximately 12% and 14% of our trade accounts receivable, respectively. These customers were concentrated primarily in our Label and Graphic Materials reportable segment. We generally do not require our customers to provide collateral. Inventories Inventories are stated at the lower of cost or net realizable value and categorized as raw materials, work-in-progress, or finished goods. Cost is determined using the first-in, first-out method. Inventory reserves are recorded to cost of products sold for damaged, obsolete, excess and slow-moving inventory and we establish a lower cost basis for the inventory. We use estimates to record these reserves. Slow-moving inventory is reviewed by category and may be partially or fully reserved for depending on the type of product, level of usage, and the length of time the product has been included in inventory. Property, Plant and Equipment Depreciation is generally computed using the straight-line method over the estimated useful lives of the respective assets, ranging from ten to forty-five years for buildings and improvements and three to fifteen years for machinery and equipment. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the term of the associated leases. Maintenance and repair costs are expensed as incurred; renewals and improvements are capitalized. Upon the sale or retirement of assets, the accounts are relieved of the cost and the related accumulated depreciation, with any resulting gain or loss included in net income. Leases Our leases primarily relate to office and warehouse space, machinery, transportation, and equipment for information technology. For lease accounting purposes, we do not separate lease and nonlease components, nor do we record operating or finance lease assets and liabilities for short-term leases. We determine if an arrangement is a lease or contains a lease at inception. We have options to renew or terminate some of our leases. We evaluate renewal and termination options based on considerations available at the lease commencement date and over the lease term to determine if we are reasonably certain to exercise these options. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. We recognize expense for operating leases on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred. Software We capitalize software costs incurred during the application development stage of software development, including costs incurred for design, coding, installation to hardware, testing, and upgrades and enhancements that provide the software or hardware with additional functionalities and capabilities. Software costs, including internal and external training costs and maintenance costs, incurred during the preliminary project stage and the post-implementation and/or operation stage are expensed. In addition, we capitalize implementation costs incurred under a hosting arrangement that is a service contract. Capitalized software, which is included in “Other assets” in the Consolidated Balance Sheets, is amortized on a straight-line basis over the estimated useful life of the software, which is generally between five and ten years . Impairment of Long-lived Assets Impairment charges are recorded when the carrying amounts of long-lived assets are determined not to be recoverable. Recoverability is measured by comparing the undiscounted cash flows expected from the applicable asset or asset group’s use and eventual disposition to its carrying value. The amount of impairment loss is calculated as the excess of the carrying value over the fair value. Historically, changes in market conditions and management strategy have caused us to reassess the carrying amount of our long-lived assets. Goodwill and Other Intangibles Resulting from Business Acquisitions Business combinations are accounted for using the acquisition method, with the excess of the acquisition cost over the fair value of net tangible assets and identified intangible assets acquired considered goodwill. As a result, we disclose goodwill separately from other intangible assets. Other identifiable intangibles include customer relationships, patents and other acquired technology, and trade names and trademarks. We perform an annual impairment test of goodwill during the fourth quarter, unless certain factors indicate the need to perform an impairment assessment in addition to the annual test. In performing the required impairment tests, we have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for goodwill impairment. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed. A quantitative assessment primarily consists of a present value (discounted cash flow) method to determine the fair value of the reporting units with goodwill. Certain factors may result in the need to perform an impairment test prior to the fourth quarter, including significant underperformance of a business relative to expected operating results, significant adverse economic and industry trends, significant decline in our market capitalization for an extended period of time relative to net book value, or a decision to divest a portion of a reporting unit. We compare the fair value of each reporting unit to its carrying amount, and, to the extent the carrying amount exceeds the unit’s fair value, an impairment of goodwill is recognized for the excess up to the amount of goodwill of that reporting unit. In consultation with outside specialists, we estimate the fair value of our reporting units using various valuation techniques, with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires us to make various assumptions about the reporting units, including their respective forecasted sales, operating margins and growth rates, and discount rates. Assumptions about discount rates are based on a weighted average cost of capital for comparable companies. Assumptions about sales, operating margins, and growth rates are based on our forecasts, business plans, economic projections, anticipated future cash flows, and marketplace data. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period. We base our fair value estimates on projected financial information and assumptions that we believe are reasonable. However, actual future results may materially differ from these estimates and projections. The valuation methodology used to estimate the fair value of reporting units requires inputs and assumptions that reflect current market conditions, as well as the impact of planned business and operational strategies that require management judgment. The estimated fair value could increase or decrease depending on changes in the inputs and assumptions. We test indefinite-lived intangible assets, consisting of trade names and trademarks, for impairment in the fourth quarter or whenever events or circumstances indicate that it is more-likely-than-not that their carrying amounts exceed their fair values. Fair value is estimated as the discounted value of future revenues using a royalty rate that a third party would pay for use of the asset. Variation in the royalty rates could impact the estimate of fair value. If the carrying amount of an asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We amortize finite-lived intangible assets, consisting of customer relationships, patents and other acquired technology, trade names and trademarks, and other intangibles, on a straight-line basis over the estimated useful life of the assets. See Note 3, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” for more information. Foreign Currency Asset and liability accounts of international operations are translated into U.S. dollars at current rates. Revenues and expenses are translated at the weighted average currency rate for the fiscal year. Gains and losses resulting from hedging the value of investments in certain international operations and from the translation of balance sheet accounts are recorded directly as a component of other comprehensive income. On July 1, 2018, we began accounting for our operations in Argentina as highly inflationary, as the country’s three-year cumulative inflation rate exceeded 100%. As a result, the functional currency of our Argentine subsidiary became the U.S. dollar. Financial Instruments We enter into foreign exchange derivative 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. From time to time, 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. On the date we enter into a derivative contract, we determine whether the derivative will be designated as a hedge. Derivatives designated as hedges are classified as either (1) hedges of the fair value of a recognized asset or liability or an unrecognized firm commitment (“fair value” hedges) or (2) hedges of a forecasted transaction or the variability of cash flows that are to be received or paid in connection with a recognized asset or liability (“cash flow” hedges). Other derivatives not designated as hedges are recorded on the balance sheets at fair value, with changes in fair value recognized in earnings. Our policy is not to purchase or hold any foreign currency, interest rate or commodity contracts for trading purposes. We assess, both at the inception of any hedge and on an ongoing basis, whether our hedges are highly effective. If it is determined that a hedge is not highly effective, we prospectively discontinue hedge accounting. For cash flow hedges, gains and losses are recorded as components of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. In the event that the anticipated transaction is no longer likely to occur, we recognize the change in fair value of the instrument in current period earnings. Changes in fair value hedges are recognized in current period earnings. Changes in the fair value of underlying hedged items (such as recognized assets or liabilities) are also recognized in current period earnings and offset the changes in the fair value of the derivative. In the Consolidated Statements of Cash Flows, hedges are classified in the same category as the item hedged, primarily in operating activities. We also utilized certain foreign-currency-denominated debt to mitigate our foreign currency translation exposure from our net investment in foreign operations. See Note 5, “Financial Instruments,” for more information. Fair Value Measurements We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability. We determine fair value based on a three-tier fair value hierarchy, which we use to prioritize the inputs used in measuring fair value. These tiers consist of Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, which require us to develop our own assumptions to determine the best estimate of fair value. Revenue Recognition Sales are recognized when or as we satisfy a performance obligation by transferring control of a product or service to a customer, in an amount that reflects the consideration to which we expect to be entitled for the product or service. We consider a number of factors in determining when we have transferred control to a customer, including the following: (i) our present right to payment; (ii) the customer’s legal title to the asset; (iii) physical possession of the asset; (iv) the customer’s significant risks and rewards of ownership of the asset; and (v) the customer’s acceptance of the asset. Generally, payment terms with our customers are consistent with those used in our industries and the regions in which we operate. Sales returns are accepted in certain limited circumstances. We record an estimate for return liabilities and a corresponding reduction to sales, in the amount we expect to repay or credit customers, which we base on historical returns and outstanding customer claims. Changes in estimates are updated each reporting period. Sales rebates, discounts, and other customer concessions represent variable consideration and are common in the industries and regions in which we operate and are accounted for as a reduction to sales based on estimates at the time at which products are sold. These estimates are based on our historical experience, as well as current information such as sales forecasts. We review our estimates regularly and, as additional information becomes available, we adjust our sales and the respective accruals, as necessary. Sales tax, value-added tax, and other taxes we collect from customers are excluded from sales. Shipping and handling activities after control of a product is transferred to a customer are accounted for as fulfillment costs and not as separate performance obligations. As a practical expedient, we have elected not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of less than one year. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded in “Marketing, general and administrative expense” in the Consolidated Statements of Income. Research and Development Research and development costs are related to research, design, and testing of new products and applications and are expensed as incurred. Long-Term Incentive Compensation No long-term incentive compensation expense was capitalized in 2019, 2018, or 2017. Valuation of Stock-Based Awards Our stock-based compensation expense is based on the fair value of awards, adjusted for estimated forfeitures, and amortized on a straight-line basis over the requisite service period for stock options and restricted stock units (“RSUs”). Compensation expense for performance units (“PUs”) is based on the fair value of awards, adjusted for estimated forfeitures, and amortized on a straight-line basis as these awards cliff-vest at the end of the requisite service period. Compensation expense related to market-leveraged stock units (“MSUs”) is based on the fair value of awards, adjusted for estimated forfeitures, and amortized on a graded-vesting basis over their respective performance periods. Compensation expense for awards with a market condition as a performance objective, which includes PUs and MSUs, is not adjusted if the condition is not met, as long as the requisite service period is met. The fair value of stock options is estimated as of the date of grant using the Black-Scholes option-pricing model. This model requires input assumptions for our expected dividend yield, expected stock price volatility, risk-free interest rate, and the expected option term. The fair value of RSUs and the component of PUs that is subject to the achievement of a performance objective based on a financial performance condition is determined based on the fair market value of our common stock as of the date of grant, adjusted for foregone dividends. The fair value of stock-based awards that are subject to achievement of performance objectives based on a market condition, which includes MSUs and the other component of PUs, is determined using the Monte-Carlo simulation method, which utilizes multiple input variables, including expected stock price volatility and other assumptions appropriate for determining fair value, to estimate the probability of satisfying the target performance objectives established for the award. Certain of these assumptions are based on management’s estimates, in consultation with outside specialists. Significant changes in assumptions for future awards and actual forfeiture rates could materially impact stock-based compensation expense and our results of operations. Valuation of Cash-Based Awards Cash-based awards consist of long-term incentive units (“LTI Units”) granted to eligible employees. LTI Units are classified as liability awards and remeasured at each quarter-end over the applicable vesting or performance period. In addition to LTI Units with terms and conditions that mirror those of RSUs, we also grant certain employees LTI Units with terms and conditions that mirror those of PUs and MSUs. Forfeitures We estimate expected forfeitures in determining the compensation cost to be recognized each period, rather than accounting for forfeitures as they occur. Changes in estimated forfeiture rates are recorded as cumulative adjustments in the period estimates are revised. See Note 12, “Long-term Incentive Compensation,” for more information. Taxes Based on Income We are subject to income tax in the U.S. and multiple foreign jurisdictions, whereby judgment is required in evaluating and estimating our worldwide provision, accruals for taxes, deferred taxes and for evaluating our tax positions. Our provision for income taxes is determined using the asset and liability approach in accordance with GAAP. Under this approach, deferred taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities. We record a valuation allowance to reduce our deferred tax assets when uncertainty regarding their realizability exists. We recognize and measure our uncertain tax positions following the more-likely-than-not threshold for recognition and measurement for tax positions we take or expect to take on a tax return. See Note 14, “Taxes Based on Income,” for more information. Recent Accounting Requirements In November 2018, the Financial Accounting Standards Board ("FASB”) issued guidance that clarifies the interaction between guidance regarding collaborative arrangements and revenue from contracts with customers. This guidance is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. We do not anticipate that the adoption of this guidance will have a significant impact on our financial position, results of operations, cash flows, and disclosures. In June 2016, the FASB issued revised guidance on the measurement of credit losses on financial instruments. Credit losses on loans, trade and other receivables, held-to-maturity debt securities, and other instruments will reflect the current estimate of the expected credit losses. This guidance is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. We do not anticipate that our adoption of this guidance will have a significant impact on our financial position, results of operations, cash flows, and disclosures. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 28, 2019 | |
ACQUISITIONS | NOTE 2. ACQUISITIONS In November 2019, we announced our agreement to acquire Smartrac's Transponder (RFID Inlay) division, a manufacturer of RFID products, for a purchase price of approximately $250 million (€225 million), subject to customary adjustments. We expect to complete this acquisition in the first quarter of 2020. On June 23, 2017, we completed the stock acquisition of Yongle Tape Ltd. ("Yongle Tape"), a China-based manufacturer of specialty tapes and related products used in a variety of industrial markets, from Yongle Tape's management and Shaw Kwei & Partners. On May 19, 2017, we completed the stock acquisition of Finesse Medical Limited ("Finesse Medical"), an Ireland-based manufacturer of healthcare products used in the management of wound care and skin conditions, from Finesse Medical’s management. On March 1, 2017, we completed the net asset acquisition of Hanita Coatings Rural Cooperative Association Limited and stock acquisition of certain of its subsidiaries (“Hanita”), an Israel-based pressure-sensitive manufacturer of specialty films and laminates, from Kibbutz Hanita Coatings and Tene Investment Funds. The aggregate purchase consideration for the acquisitions we made in 2017 (the “2017 Acquisitions”) was approximately $340 million. The 2017 Acquisitions were funded through cash and existing credit facilities. The 2017 Acquisitions were not material, individually or in the aggregate, to our Consolidated Financial Statements. |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS | 12 Months Ended |
Dec. 28, 2019 | |
GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS | |
GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS | NOTE 3. GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS Goodwill Results from our annual goodwill impairment test in the fourth quarter of 2019 indicated that no impairment occurred during 2019. The assumptions used in our assessment of these assets were primarily based on Level 3 inputs. Changes in the net carrying amount of goodwill for 2019 and 2018 by reportable segment were as follows: Label and Retail Branding Industrial and Graphic and Information Healthcare (In millions) Materials Solutions Materials Total Goodwill as of December 30, 2017 $ 429.5 $ 355.4 $ 200.2 $ 985.1 Acquisition adjustments (1) — — (17.7) (17.7) Translation adjustments (14.0) (5.7) (5.9) (25.6) Goodwill as of December 29, 2018 415.5 349.7 176.6 941.8 Translation adjustments (7.7) (.4) (2.9) (11.0) Goodwill as of December 28, 2019 $ 407.8 $ 349.3 $ 173.7 $ 930.8 (1) Goodwill purchase price allocation adjustments and measurement period adjustments for contingent consideration liabilities related to the acquisition of Yongle Tape. The carrying amounts of goodwill at December 28, 2019 and December 29, 2018 were net of accumulated impairment losses of $820 million recognized in fiscal year 2009 by our Retail Branding and Information Solutions ("RBIS") reportable segment. Indefinite-Lived Intangible Assets Results from our annual indefinite-lived intangible assets impairment test in the fourth quarter indicated that no impairment occurred in 2019. The carrying value of indefinite-lived intangible assets resulting from business acquisitions, consisting of trade names and trademarks, was $20.8 million and $21.1 million at December 28, 2019 and December 29, 2018, respectively. Finite-Lived Intangible Assets In connection with the 2017 Acquisitions, we acquired approximately $107 million of identifiable intangible assets, which consisted of customer relationships, trade names and trademarks, and patents and other acquired technology. We utilized the income approach to estimate the fair values of the identifiable intangible assets associated with the 2017 Acquisitions, using primarily Level 3 inputs. The discount rates we used to value these assets were between 11% and 16.5%. The table below summarizes the amounts and weighted useful lives of these intangible assets at acquisition. Weighted average amortization Amount period (in millions) (in years) Customer relationships $ 70.9 16 Patents and other acquired technology 31.9 9 Trade names and trademarks 4.2 6 Refer to Note 2, “Acquisitions,” for more information. The following table sets forth our finite-lived intangible assets resulting from business acquisitions at December 28, 2019 and December 29, 2018, which continue to be amortized: 2019 2018 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying (In millions) Amount Amortization Amount Amount Amortization Amount Customer relationships $ 319.5 $ 238.7 $ 80.8 $ 322.2 $ 231.8 $ 90.4 Patents and other acquired technology 81.7 61.3 20.4 84.0 56.8 27.2 Trade names and trademarks 24.3 19.8 4.5 27.0 21.7 5.3 Other intangibles .2 .2 — 11.9 11.9 — Total $ 425.7 $ 320.0 $ 105.7 $ 445.1 $ 322.2 $ 122.9 Amortization expense for finite-lived intangible assets resulting from business acquisitions was $13.5 million for 2019, $15.2 million for 2018, and $18.6 million for 2017. The estimated amortization expense for finite-lived intangible assets resulting from business acquisitions for each of the next five fiscal years is expected to be as follows: Estimated Amortization (In millions) Expense 2020 $ 12.2 2021 11.6 2022 10.6 2023 9.6 2024 8.0 |
DEBT
DEBT | 12 Months Ended |
Dec. 28, 2019 | |
DEBT | NOTE 4. DEBT Short-Term Borrowings We had $83.2 million and $131 million of borrowings from U.S. commercial paper issuances outstanding at December 28, 2019 and December 29, 2018, respectively, with a weighted average interest rate of 1.98% and 2.75%, respectively. We have a Euro-Commercial Paper Program under 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 vary, but may not exceed 364 days from the date of issuance. Our payment obligations with respect to any notes issued under this program are backed by our revolving credit facility (the “Revolver”). There are no financial covenants under this program . We had a balance of $50.1 million outstanding under this program as of December 28, 2019. There was no balance outstanding as of December 29, 2018. Short-Term Credit Facilities In November 2017, we amended and restated the Revolver, increasing the amount available from certain domestic and foreign banks from $700 million to $800 million. The amendment also extended the Revolver’s maturity date to November 8, 2022. The Revolver is used as a back-up facility for our commercial paper program and can be used for other corporate purposes. No balance was outstanding under the Revolver as of December 28, 2019 or December 29, 2018. Commitment fees associated with the Revolver in 2019, 2018, and 2017 were $1.2 million, $1.2 million, and $1.1 million, respectively. Subsequent to our fiscal year-end 2019, in February 2020, we again amended and restated the Revolver, extending the maturity date to February 13, 2025. In addition to the Revolver, we have significant short-term lines of credit available in various countries of approximately $330 million in the aggregate at December 28, 2019. These lines may be cancelled at any time by us or the issuing banks. Short-term borrowings outstanding under our lines of credit were $37.4 million and $45.5 million at December 28, 2019 and December 29, 2018, respectively, with a weighted average interest rate of 6.4% and 7%, respectively. From time to time, certain of our subsidiaries provide guarantees on certain arrangements with banks. Our exposure to these guarantees is not material. Long-Term Borrowings In December 2018, we issued $500 million of senior notes, due December 2028. These senior notes bear an interest rate of 4.875% per year, payable semiannually in arrears. The net proceeds from this offering, after deducting underwriting discounts and offering expenses, were $493.3 million, which we used to repay commercial paper borrowings. Prior to the issuance of these senior notes, we used commercial paper borrowings in August 2018 to fund our $200 million contribution to the Avery Dennison Pension Plan in connection with its termination. Refer to Note 6, “Pension and Other Postretirement Benefits.” In March 2017, we issued €500 million of senior notes, due March 2025. These senior notes bear an interest rate of 1.25% per year, payable annually in arrears. The net proceeds from this offering, after deducting underwriting discounts and estimated offering expenses, were $526.6 million (€495.5 million), a portion of which we used to repay commercial paper borrowings used to finance a portion of our purchase price for the acquisition of Mactac, and the remainder of which we used for general corporate purposes and the 2017 Acquisitions. Refer to Note 5, "Financial Instruments," for more information. Long-term debt, including its respective interest rates, at year-end are shown below. (In millions) 2019 2018 Long-term debt Medium-term notes: Series 1995 due 2020 through 2025 $ 45.0 $ 45.0 Long-term notes: Senior notes due 2020 at 5.4% 250.0 249.7 Senior notes due 2023 at 3.4% 249.1 248.9 Senior notes due 2025 at 1.25% (1) 553.4 569.0 Senior notes due 2028 at 4.875% 493.9 493.3 Senior notes due 2033 at 6.0% 148.9 148.8 Other borrowings (2) — 14.4 Less amount classified as current (265.0) (18.2) Total long-term debt (3) $ 1,475.3 $ 1,750.9 (1) These senior notes are euro-denominated. (2) Other borrowings consisted of long-term bank borrowings by foreign subsidiaries. (3) Includes unamortized debt issuance cost and debt discount of $5.6 million and $5.7 million, respectively, as of year-end 2019 and $6.8 million and $6.3 million, respectively, as of year-end 2018. At year-end 2019 and 2018, our medium-term notes had maturities from 2020 through 2025 and accrued interest at a weighted average fixed rate of 7.5%. We expect maturities of our long-term debt for each of the next five fiscal years and thereafter to be as follows: Year (In millions) 2020 (classified as current) $ 265.0 2021 — 2022 — 2023 250.0 2024 — 2025 and thereafter 1,236.5 Refer to Note 7, “Commitments and Leases,” for information related to finance leases. Other 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 December 28, 2019 and December 29, 2018, we were in compliance with our financial covenants. Our total interest costs in 2019, 2018, and 2017 were $81.1 million, $63.8 million, and $67.9 million, respectively, of which $5.3 million, $5.3 million, and $4.9 million, respectively, was capitalized as part of the cost of assets. The estimated fair value of our long-term debt is primarily based on the credit spread above U.S. Treasury securities or euro government bond securities, as applicable, 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 $2.05 billion at December 28, 2019 and $2 billion at December 29, 2018. 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. Refer to Note 1 , “ . |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 28, 2019 | |
FINANCIAL INSTRUMENTS | NOTE 5. FINANCIAL INSTRUMENTS As of December 28, 2019, the aggregate U.S. dollar equivalent notional value of our outstanding commodity contracts and foreign exchange contracts was $3.2 million and $1.19 billion, respectively. We recognize derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. We designate commodity forward contracts on forecasted purchases of commodities and foreign exchange contracts on forecasted transactions as cash flow hedges. We also enter into foreign exchange contracts to offset certain of our economic exposures arising from foreign exchange rate fluctuations. The following table shows the fair value and balance sheet locations of cash flow hedges as of December 28, 2019 and December 29, 2018: Asset Liability (In millions) Balance Sheet Location 2019 2018 Balance Sheet Location 2019 2018 Foreign exchange contracts Other current assets $ .4 $ .5 Other current liabilities $ .9 $ .8 Commodity contracts Other current assets — .1 Other current liabilities .4 — $ .4 $ .6 $ 1.3 $ .8 The following table shows the fair value and balance sheet locations of other derivatives as of December 28, 2019 and December 29, 2018: Asset Liability (In millions) Balance Sheet Location 2019 2018 Balance Sheet Location 2019 2018 Foreign exchange contracts Other current assets $ 4.8 $ 3.0 Other current liabilities $ 4.7 $ 7.9 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 these derivatives, representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness, are recognized in current earnings. Gains (losses), before taxes, recognized in “Accumulated other comprehensive loss” (effective portion) on derivatives related to cash flow hedge contracts were as follows: (In millions) 2019 2018 2017 Foreign exchange contracts $ 1.4 $ 1.0 $ (2.2) Commodity contracts (.8) .4 (.6) $ .6 $ 1.4 $ (2.8) Neither the amount recognized in income related to the ineffective portion of, nor the amount excluded from effectiveness testing for, cash flow hedges was material in 2019, 2018, or 2017. As of December 28, 2019, we expected a net loss of approximately $.5 million to be reclassified from “Accumulated other comprehensive loss” to earnings within the next 12 months. Other Derivatives For other derivative instruments not designated as hedging instruments, the gain or loss is recognized in current earnings. The following table shows the components of the net gains (losses) recognized in income related to these derivative instruments: (In millions) Statements of Income Location 2019 2018 2017 Foreign exchange contracts Cost of products sold $ (1.5) $ 4.5 $ (1.2) Foreign exchange contracts Marketing, general and administrative expense 3.5 (27.0) (42.9) $ 2.0 $ (22.5) $ (44.1) Net Investment Hedge In March 2017, we designated €500 million of our 1.25% senior notes due 2025 as a net investment hedge of our investment in foreign operations. In January 2018, we reduced the amount we designated as a net investment hedge to €255 million. In May 2019, we de-designated the remaining net investment hedge as a result of changes in our intercompany capital structure. Through the period preceding the de-designation, the net assets from our investment in foreign operations were greater than the amount designated as a net investment hedge, and, as such, the net investment hedge was effective. Refer to Note 4, “Debt,” for more information. Gains (losses), before tax, recognized in “Accumulated other comprehensive loss” (effective portion) related to the net investment hedge were as follows: (In millions) 2019 2018 2017 Foreign currency denominated debt $ 6.8 $ 1.3 $ (63.7) We recorded no ineffectiveness from our net investment hedge to earnings during 2019, 2018 and 2017. |
PENSION AND OTHER POSTRETIREMEN
PENSION AND OTHER POSTRETIREMENT BENEFITS | 12 Months Ended |
Dec. 28, 2019 | |
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 have been included in the disclosures below. In July 2018, our Board of Directors (“Board”) approved the termination of the Avery Dennison Pension Plan (the “ADPP”), a U.S. defined benefit plan, effective as of September 28, 2018. In connection with the termination, we contributed $200 million to the ADPP in August 2018; settled approximately $152 million of ADPP liabilities during the fourth quarter of 2018 through lump-sum payments from existing plan assets to eligible participants who elected to receive them; and recorded approximately $85 million of non-cash charges associated with these settlements, Plan Assets Assets in our international plans are invested in accordance with locally accepted practices and primarily include equity securities, fixed income securities, insurance contracts and cash. Asset allocations and investments vary by country and plan. Our target plan asset investment allocation for our international plans in the aggregate is 32% in equity securities, 44% in fixed income securities and cash, and 24% in insurance contracts and other investments, subject to periodic fluctuations in these respective asset classes. Fair Value Measurements The valuation methodologies we use for assets measured at fair value are described below. Cash is valued at nominal value. Cash equivalents and mutual funds are valued at fair value as determined by quoted market prices, based upon the net asset value (“NAV”) of shares held at year-end. Fixed income treasury securities are valued at fair value as determined by quoted prices in active markets. The fixed income municipal and corporate bonds are valued at fair value based on quoted prices for similar instruments in active markets or other inputs that are observable or can be corroborated by observable market data. Pooled funds are structured as collective trusts, not publicly traded, and valued by calculating NAV per unit based on the NAV of the underlying funds/trusts as a practical expedient for the fair value of the pooled funds. Insurance contracts are valued at book value, which approximates fair value and is calculated using the prior year balance plus or minus investment returns and changes in cash flows. These methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe these valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table sets forth, by level within the fair value hierarchy (as applicable), international plan assets at fair value: Fair Value Measurements Using Quoted Significant Significant Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) 2019 Cash $ 1.2 $ 1.2 $ — $ — Insurance contracts 36.3 — — 36.3 Pooled funds – fixed income securities (1) 329.9 Pooled funds – equity securities (1) 268.8 Pooled funds – other investments (1) 98.2 Total international plan assets at fair value $ 734.4 2018 Cash $ 4.1 $ 4.1 $ — $ — Insurance contracts 36.9 — — 36.9 Pooled funds – fixed income securities (1) 300.4 Pooled funds – equity securities (1) 185.0 Pooled funds – other investments (1) 105.4 Total international plan assets at fair value $ 631.8 (1) Pooled funds that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to reconcile to total international plan assets. The following table presents a reconciliation of Level 3 international plan asset activity during the year ended December 28, 2019: Level 3 Assets (In millions) Insurance Contracts Balance at December 29, 2018 $ 36.9 Net realized and unrealized gain 1.5 Purchases 5.6 Settlements (7.0) Impact of changes in foreign currency exchange rates (.7) Balance at December 28, 2019 $ 36.3 As a result of the ADPP settlements, there were no U.S. plan assets as of December 28, 2019. The following table sets forth, by level within the fair value hierarchy (as applicable), U.S. plan assets (all in the ADPP) at fair value as of December 29, 2018. Fair Value Measurements Using Quoted Significant Significant Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) 2018 Cash and cash equivalents $ 27.1 $ 27.1 $ — $ — Equity securities .3 — .3 — Fixed income securities – government and municipal bonds 113.0 66.3 46.7 — Fixed income securities – corporate bonds 592.8 — 592.8 — Other 2.4 — 2.4 — Total U.S. plan assets $ 735.6 Plan Assumptions Discount Rate In consultation with our actuaries, we annually review and determine the discount rates used to value our postretirement obligations. The assumed discount rate for each pension plan reflects market rates for high quality corporate bonds currently available. Our discount rate is determined by evaluating yield curves consisting of large populations of high quality corporate bonds. The projected pension benefit payment streams are then matched with bond portfolios to determine a rate that reflects the liability duration unique to our plans. As of December 29, 2018, the discount rate for the ADPP, after reflecting the plan’s termination, was based on estimated insurer pricing. We use the full yield curve approach to estimate the service and interest cost components of net periodic benefit cost for our pension and other postretirement benefit plans. Under this approach, we apply multiple discount rates from a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date. We believe this approach provides a more precise measurement of service and interest cost by aligning the timing of a plans’ liability cash flows to its corresponding rates on the yield curve. Long-term Return on Assets We determine the long-term rate of return assumption for plan assets by reviewing the historical and expected returns of both the equity and fixed income markets, taking into account our asset allocation, the correlation between returns in our asset classes, and the mix of active and passive investments. Additionally, current market conditions, including interest rates, are evaluated and market data is reviewed for reasonableness and appropriateness. Measurement Date We measure the actuarial value of our benefit obligations and plan assets using the calendar month-end closest to our fiscal year-end and adjust for any contributions or other significant events between the measurement date and our fiscal year-end. Plan Balance Sheet Reconciliations The following table provides a reconciliation of benefit obligations, plan assets, funded status of the plans and accumulated other comprehensive loss for our defined benefit plans: Plan Benefit Obligations Pension Benefits 2019 2018 (In millions) U.S. Int’l U.S. Int’l Change in projected benefit obligations Projected benefit obligations at beginning of year $ 868.5 $ 755.8 $ 1,082.1 $ 836.7 Service cost — 15.6 — 19.2 Interest cost 9.0 14.8 34.5 15.7 Participant contribution — 4.1 — 3.8 Amendments — 1.8 — — Actuarial (gain) loss (27.1) 56.8 (13.2) (58.8) Benefits paid (20.7) (21.3) (61.8) (22.3) Settlements (1) (754.0) (4.5) (173.1) (9.5) Foreign currency translation — (11.4) — (29.0) Projected benefit obligations at end of year $ 75.7 $ 811.7 $ 868.5 $ 755.8 Accumulated benefit obligations at end of year $ 75.7 $ 754.0 $ 868.5 $ 696.7 (1) In 2019, settlements in the U.S. related to the ADPP termination. Settlements in our international plans related to lump-sum payments in Switzerland. In 2018, settlements in the U.S. related to lump-sum payments associated with the ADPP termination and two nonqualified benefit plans. Settlements in our international plans related to lump-sum payments in the UK and France. Plan Assets Pension Benefits 2019 2018 (In millions) U.S. Int’l U.S. Int’l Change in plan assets Plan assets at beginning of year $ 735.6 $ 631.8 $ 740.2 $ 683.7 Actual return on plan assets 20.7 118.5 (3.6) (13.3) Employer contributions (1) 18.4 13.6 233.9 14.7 Participant contributions — 4.1 — 3.8 Benefits paid (20.7) (21.3) (61.8) (22.3) Settlements (2) (754.0) (4.5) (173.1) (9.5) Foreign currency translation — (7.8) — (25.3) Plan assets at end of year $ — $ 734.4 $ 735.6 $ 631.8 (1) In 2019, an additional contribution of $10 million was made to the ADPP to cover the remaining liabilities associated with its termination. In August 2018, a contribution of $200 million had been made to the ADPP using commercial paper borrowings. (2) In 2019, settlements in the U.S. related to the ADPP termination. Settlements in our international plans related to lump-sum payments in Switzerland. In 2018, settlements in the U.S. related to lump-sum payments associated with the ADPP and two nonqualified benefit plans. Settlements in our international plans related to lump-sum payments in the UK and France. Funded Status Pension Benefits 2019 2018 (In millions) U.S. Int’l U.S. Int’l Funded status of the plans Other assets $ — $ 50.8 $ — $ 12.6 Other accrued liabilities (1) (7.5) (2.4) (65.1) (2.0) Long-term retirement benefits and other liabilities (2) (68.2) (125.7) (67.8) (134.6) Plan assets less than benefit obligations $ (75.7) $ (77.3) $ (132.9) $ (124.0) (1) In 2019, in connection with its termination, we settled ADPP’s 2018 underfunded benefit obligation of approximately $57 million. (2) In accordance with our funding strategy, we have the option to fund certain of these U.S. liabilities with proceeds from our corporate-owned life insurance policies. Pension Benefits 2019 2018 U.S. Int’l U.S. Int’l Weighted average assumptions used to determine year-end benefit obligations Discount rate 2.93 % 1.66 % 3.72 % 2.39 % Compensation rate increase — 2.21 — 2.23 For U.S. and international plans combined, the projected benefit obligations and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $263 million and $59 million, respectively, at year-end 2019 and $1.47 billion and $1.20 billion, respectively, at year-end 2018. For U.S. and international plans combined, the accumulated benefit obligations and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $237 million and $59 million, respectively, at year-end 2019 and $1.02 billion and $792 million, respectively, at year-end 2018. Accumulated Other Comprehensive Loss The following table sets forth the pre-tax amounts recognized in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets: Pension Benefits 2019 2018 (In millions) U.S. Int’l U.S. Int’l Net actuarial loss $ 15.5 $ 101.9 $ 487.5 $ 149.3 Prior service (credit) cost — (4.3) 15.9 (6.7) Net transition obligation — — — .1 Net amount recognized in accumulated other comprehensive loss $ 15.5 $ 97.6 $ 503.4 $ 142.7 The following table sets forth the pre-tax amounts recognized in “Other comprehensive loss (income)”: Pension Benefits 2019 2018 2017 (In millions) U.S. Int’l U.S. Int’l U.S. Int’l Net actuarial (gain) loss $ (44.6) $ (42.7) $ 33.5 $ (27.2) $ 21.8 $ (17.2) Prior service credit — 1.8 — — — (2.1) Amortization of unrecognized: Net actuarial gain (.5) (4.0) (21.2) (8.1) (18.7) (10.8) Prior service credit (cost) — .4 (.8) .5 (.9) .4 Settlements (442.8) (.6) (92.0) (1.7) — — Net amount recognized in other comprehensive (income) loss $ (487.9) $ (45.1) $ (80.5) $ (36.5) $ 2.2 $ (29.7) Plan Income Statement Reconciliations The following table sets forth the components of net periodic benefit cost, which are recorded in net income for our defined benefit plans: Pension Benefits 2019 2018 2017 (In millions) U.S. Int’l U.S. Int’l U.S. Int’l Service cost $ — $ 15.6 $ — $ 19.2 $ .5 $ 18.2 Interest cost 2.7 14.8 34.5 15.7 35.3 14.3 Actuarial loss (gain) 2.5 — (.6) — 1.7 — Expected return on plan assets — (21.0) (42.5) (23.8) (40.5) (21.1) Amortization of actuarial loss .5 4.0 21.2 8.1 18.7 10.8 Amortization of prior service (credit) cost — (.4) .8 (.5) .9 (.4) Recognized loss on settlements (1) 443.5 .6 92.0 1.7 — — Net periodic benefit cost (credit) $ 449.2 $ 13.6 $ 105.4 $ 20.4 $ 16.6 $ 21.8 (1) In 2019, settlements in the U.S. related to the ADPP termination. Settlements in our international plans related to lump-sum payments in Switzerland. In 2018, settlements in the U.S. related to lump-sum payments associated with the ADPP and two nonqualified benefit plans. Settlements in our international plans related to lump-sum payments in the UK and France. Service cost and components of net periodic benefit cost other than service cost were included in "Marketing, general and administrative expense" and "Other non-operating expense" in the Consolidated Statements of Income, respectively. The following table sets forth the weighted average assumptions used to determine net periodic cost: Pension Benefits 2019 2018 2017 U.S. Int’l U.S. Int’l U.S. Int’l Discount rate 3.73 % 2.39 % 3.72 % 2.25 % 4.18 % 2.12 % Expected return on assets — 3.38 7.00 3.78 7.00 3.77 Compensation rate increase — 2.23 — 2.26 — 2.24 Plan Contributions We make contributions to our defined benefit plans sufficient to meet the minimum funding requirements of applicable laws and regulations, plus additional amounts, if any, we determine to be appropriate. The following table sets forth our expected contributions in 2020: (In millions) U.S. pension plans $ 7.6 International pension plans 13.2 Future Benefit Payments The future benefit payments shown below reflect expected service periods for eligible participants. Pension Benefits (In millions) U.S. Int’l 2020 $ 7.6 $ 20.2 2021 8.0 22.0 2022 6.6 23.1 2023 6.4 22.6 2024 6.4 22.7 2025-2029 26.0 141.6 Postretirement Health Benefits We provide postretirement health benefits to certain of our retired U.S. employees up to the age of 65 under a cost-sharing arrangement and provide supplemental Medicare benefits to certain of our U.S. retirees over the age of 65. Our policy is to fund the cost of these postretirement benefits from operating cash flows. While we have not expressed any intent to terminate these postretirement health benefits, we may do so at any time, subject to applicable laws and regulations. At year-end 2019, our postretirement health benefits obligation and related loss recorded in “Accumulated other comprehensive loss” were approximately $3 million and approximately $8 million, respectively. At year-end 2018, our postretirement health benefits obligation and related loss recorded in “Accumulated other comprehensive loss” were approximately $4 million and approximately $6 million, respectively. Net periodic benefit cost was not material in 2019, 2018, or 2017. Defined Contribution Plans We sponsor various defined contribution plans worldwide, the largest of which is the Avery Dennison Corporation Employee Savings Plan (“Savings Plan”), a 401(k) plan for our U.S. employees. We recognized expense of $22.4 million, $21.8 million, and $20.2 million in 2019, 2018, and 2017, respectively, related to our employer contributions and employer match of participant contributions to the Savings Plan. Other Retirement Plans We have deferred compensation plans that permit eligible employees and directors to defer a portion of their compensation. The compensation voluntarily deferred by the participant, together with certain employer contributions, earns specified and variable rates of return. As of year-end 2019 and 2018, we had accrued $91.6 million and $84.3 million, respectively, for our obligations under these plans. A portion of the interest on certain of our contributions may be forfeited by participants if their employment terminates before age 55 other than by reason of death or disability. Our Directors Deferred Equity Compensation Program allows our non-employee directors to elect to receive their cash compensation in deferred stock units (“DSUs”) issued under our equity plan. Additionally, two legacy deferred compensation plans had DSUs that were issued under our then-active equity plans. Dividend equivalents, representing the value of dividends per share paid on shares of our common stock and calculated with reference to the number of DSUs held as of a quarterly dividend record date, are credited in the form of additional DSUs on the applicable payable date. DSUs are converted into shares of our common stock upon a director’s resignation or retirement. Approximately .2 million DSUs were outstanding as of year-end 2019 and 2018, respectively, with an aggregate value of $25 million and $17 million, respectively. We hold corporate-owned life insurance policies, the proceeds from which are payable to us upon the death of covered participants. The cash surrender values of these policies, net of outstanding loans, which are included in “Other assets” in the Consolidated Balance Sheets, were $236.9 million and $227.4 million at year-end 2019 and 2018, respectively. |
COMMITMENTS AND LEASES
COMMITMENTS AND LEASES | 12 Months Ended |
Dec. 28, 2019 | |
COMMITMENTS AND LEASES | |
COMMITMENTS AND LEASES | NOTE 7. COMMITMENTS AND LEASES Supplemental cost information related to leases is shown below. (In millions) 2019 Operating lease cost $ 65.4 Lease costs related to finance leases were immaterial in 2019. Supplemental balance sheet information related to leases is shown below. (In millions) Balance Sheet Location 2019 Assets Operating Other assets $ 138.1 Finance (1) Property, plant and equipment, net 36.1 Total leased assets $ 174.2 Liabilities Current: Operating Other current liabilities $ 41.4 Finance Short-term borrowings and current portion of long-term debt and finance leases 4.5 Non-current: Operating Long-term retirement benefits and other liabilities 98.9 Finance Long-term debt and finance leases 24.0 Total lease liabilities $ 168.8 (1) Finance lease assets are net of accumulated amortization of $5.7 million as of December 28, 2019. Supplemental cash flow information related to leases is shown below. (In millions) 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 53.1 Operating lease assets obtained in exchange for operating lease liabilities 32.6 Cash flows related to finance leases were immaterial in 2019. Weighted average remaining lease term and discount rate information related to leases is shown below. 2019 Weighted average remaining lease term (in years): Operating 5.5 Finance 4.1 Weighted average discount rate (percentage): Operating 4.9 % Finance 3.1 Operating and finance lease liabilities by maturity date from December 28, 2019 are shown below. (In millions) Operating Leases Finance Leases 2020 $ 46.0 $ 5.7 2021 35.2 12.5 2022 22.4 4.5 2023 15.2 4.1 2024 11.1 3.9 2025 and thereafter 29.8 .9 Total lease payments 159.7 31.6 Less: imputed interest (19.4) (3.1) Present value of lease liabilities $ 140.3 $ 28.5 As of December 28, 2019, we had no significant operating or finance leases that had not yet commenced. Rent expense for operating leases was approximately $66 million in 2018 and $64 million in 2017. |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Dec. 28, 2019 | |
CONTINGENCIES | NOTE 8. 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. When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. The ultimate resolution of these claims could affect future results of operations should our exposure be materially different from our estimates or should liabilities be incurred that were not previously accrued. Potential insurance reimbursements are not offset against potential liabilities. 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 Expenditures Environmental expenditures are generally expensed. However, environmental expenditures for newly acquired assets and those that extend or improve the economic useful life of existing assets are capitalized and amortized over the shorter of the estimated useful life of the acquired asset or the remaining life of the existing asset. We review our estimates of the costs of complying with environmental laws related to remediation and cleanup of various sites, including sites in which governmental agencies have designated us as a potentially responsible party (“PRP”). When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. Potential insurance reimbursements are not offset against potential liabilities. As of December 28, 2019, we have been designated by the U.S. Environmental Protection Agency (“EPA”) and/or other responsible state agencies as a PRP at eleven 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 these 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. 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, our 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 related to our environmental liabilities in 2019 and 2018 were as follows: (In millions) 2019 2018 Balance at beginning of year $ 20.0 $ 21.1 Charges, net of reversals 7.4 3.9 Payments (6.0) (5.0) Balance at end of year $ 21.4 $ 20.0 Approximately $10 million and $5 million, respectively, of the balance was classified as short-term and included in “Other current liabilities” in the Consolidated Balance Sheets as of December 28, 2019 and December 29, 2018 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 28, 2019 | |
Fair Value Measurements | NOTE 9. 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 December 28, 2019: Fair Value Measurements Using Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) Assets Trading securities $ 30.6 $ 26.0 $ 4.6 $ — Derivative assets 5.2 — 5.2 — Bank drafts 21.3 21.3 — — Liabilities Derivative liabilities $ 6.0 $ .4 $ 5.6 $ — The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of December 29, 2018: Fair Value Measurements Using Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) Assets Trading securities $ 26.3 $ 21.5 $ 4.8 $ — Derivative assets 3.6 .1 3.5 — Bank drafts 23.0 23.0 — — Liabilities Derivative liabilities $ 8.7 $ — $ 8.7 $ — Contingent consideration liabilities 1.6 — — 1.6 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 NAV. As of December 28, 2019, trading securities of $.4 million and $30.2 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the Consolidated Balance Sheets. As of December 29, 2018, trading securities of $.2 million and $26.1 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the 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 their short-term nature and were included in “Other current assets” in the Consolidated Balance Sheets. Contingent consideration liability in 2018, which was included in “Other current liabilities” in the Consolidated Balance Sheets, related to an estimated earn-out payment associated with an acquisition we completed in 2017 and was classified as Level 3. This liability was based on the acquired company’s achievement of the designated performance target in 2018 under the terms of the purchase agreement and paid in the first quarter of 2019. Non-Recurring Fair Value Measurements During the year ended December 29, 2018, long-lived assets with carrying amounts totaling $18.1 million were written down to their fair value of $10.6 million, resulting in an impairment charge of $7.5 million, which was included in “Other expense, net” in the Consolidated Statements of Income. The fair value was based on the estimated sale price of the assets, less estimated broker fees, which is primarily a Level 3 input. |
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE | 12 Months Ended |
Dec. 28, 2019 | |
NET INCOME PER COMMON SHARE | NOTE 10. NET INCOME PER COMMON SHARE Net income per common share was computed as follows: (In millions, except per share amounts) 2019 2018 2017 (A) Net income $ 303.6 $ 467.4 $ 281.8 (B) Weighted average number of common shares outstanding 84.0 87.3 88.3 Dilutive shares (additional common shares issuable under stock-based awards) 1.0 1.3 1.8 (C) Weighted average number of common shares outstanding, assuming dilution 85.0 88.6 90.1 Net income per common share: (A) ÷ (B) $ 3.61 $ 5.35 $ 3.19 Net income per common share, assuming dilution (A) ÷ (C) $ 3.57 $ 5.28 $ 3.13 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 were not significant in 2019, 2018 or 2017. |
SUPPLEMENTAL EQUITY AND COMPREH
SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION | 12 Months Ended |
Dec. 28, 2019 | |
SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION | NOTE 11. SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION Common Stock and Share Repurchase Program Our Amended and Restated Certificate of Incorporation authorizes five million shares of $1 par value preferred stock (of which no shares are outstanding), with respect to which our Board may fix the series and terms of issuance, and 400 million shares of $1 par value voting common stock. From time to time, our Board authorizes the repurchase of shares of our outstanding common stock. Repurchased shares may be reissued under our long-term incentive plan or used for other corporate purposes. In 2019, we repurchased approximately 2 million shares of our common stock at an aggregate cost of $237.7 million. In 2018, we repurchased approximately 4 million shares of our common stock at an aggregate cost of $392.9 million. In April 2019, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $650 million, exclusive of any fees, commissions or other expenses related to such purchases, in addition to the amount then outstanding under our previous Board authorization. Board authorizations remain in effect until shares in the amount authorized thereunder have been repurchased. Shares of our common stock in the aggregate amount of $644.7 million as of December 28, 2019 remained authorized for repurchase under this Board authorization. Treasury Shares Reissuance We fund a portion of our employee-related expenses using shares of our common stock held in treasury. We record net gains or losses associated with our use of treasury shares to retained earnings. Accumulated Other Comprehensive Loss The changes in “Accumulated other comprehensive loss” (net of tax) for 2019 and 2018 were as follows: Pension and Foreign Other Currency Postretirement Cash Flow (In millions) Translation Benefits Hedges Total Balance as of December 30, 2017 $ (156.2) $ (524.0) $ (.3) $ (680.5) Other comprehensive (loss) income before reclassifications, net of tax (91.2) (4.1) 1.1 (94.2) Reclassifications to net income, net of tax — 93.8 (1.1) 92.7 Net current-period other comprehensive (loss) income, net of tax (91.2) 89.7 — (1.5) Balance as of December 29, 2018 $ (247.4) $ (434.3) $ (.3) $ (682.0) Other comprehensive income before reclassifications, net of tax 2.3 66.4 .5 69.2 Reclassifications to net income, net of tax — 266.1 (1.4) 264.7 Net current-period other comprehensive income (loss), net of tax 2.3 332.5 (.9) 333.9 Balance as of December 28, 2019 $ (245.1) $ (101.8) $ (1.2) $ (348.1) The amounts reclassified from “Accumulated other comprehensive loss” to increase (decrease) net income were as follows: Statements of Income (In millions) 2019 2018 2017 Location Cash flow hedges: Foreign exchange contracts $ 2.1 $ 1.3 $ .2 Cost of products sold Commodity contracts (.2) .1 .2 Cost of products sold Interest rate contracts — — (1.8) Interest expense Total before tax 1.9 1.4 (1.4) Tax (.5) (.3) .5 (Benefit from) provision for income taxes Net of tax 1.4 1.1 (.9) Pension and other postretirement benefits (445.4) (121.4) (28.2) Other non-operating expense, net Tax 179.3 27.6 8.9 (Benefit from) provision for income taxes Net of tax (266.1) (93.8) (19.3) Total reclassifications for the period $ (264.7) $ (92.7) $ (20.2) The following table sets forth the income tax expense (benefit) allocated to each component of other comprehensive income (loss): (In millions) 2019 2018 2017 Foreign currency translation: Translation gain (loss) $ (5.5) $ (9.1) $ (25.1) Pension and other postretirement benefits: Net gain (loss) recognized from actuarial gain/loss and prior service cost/credit 19.4 (2.4) .5 Reclassifications to net income 179.3 27.6 8.9 Cash flow hedges: Gains (losses) recognized on cash flow hedges .2 .3 (.6) Reclassifications to net income (.5) (.3) .5 Income tax expense (benefit) allocated to components of other comprehensive income (loss) $ 192.9 $ 16.1 $ (15.8) |
LONG-TERM INCENTIVE COMPENSATIO
LONG-TERM INCENTIVE COMPENSATION | 12 Months Ended |
Dec. 28, 2019 | |
LONG TERM INCENTIVE COMPENSATION | NOTE 12. LONG-TERM INCENTIVE COMPENSATION Stock-Based Awards Stock-Based Compensation We grant our annual stock-based compensation awards to eligible employees in February and non-employee directors in May. Certain awards granted to retirement-eligible employees vest in full upon retirement; awards to these employees are accounted for as fully vested on the date of grant. In April 2017, our shareholders approved our 2017 Incentive Award Plan (the “Equity Plan”) to replace our Amended and Restated Stock Option and Incentive Plan. The Equity Plan, a long-term incentive plan for eligible employees and non-employee directors, allows us to grant stock-based compensation awards – including stock options, RSUs, PUs, MSUs and DSUs – or a combination of these and other awards. Under the Equity Plan, 5.4 million shares are available for issuance, and each full value award is counted as 1.5 shares for purposes of the number of shares authorized for issuance. Full value awards include RSUs, PUs, and MSUs. Stock-based compensation expense and the related recognized tax benefit were as follows: (In millions) 2019 2018 2017 Stock-based compensation expense $ 34.5 $ 34.3 $ 30.2 Tax benefit 4.3 4.7 4.3 This expense was included in “Marketing, general and administrative expense” in the Consolidated Statements of Income. As of December 28, 2019, we had approximately $42 million of unrecognized compensation expense related to unvested stock-based awards, which is expected to be recognized over the remaining weighted average requisite service period of approximately two years . Stock Options Stock options granted to employees and non-employee directors may be granted at no less than 100% of the fair market value of our common stock on the date of the grant and generally vest ratably over a four-year period. Options expire ten years from the date of grant. The fair value of stock options is estimated as of the date of grant using the Black-Scholes option-pricing model. This model requires input assumptions for our expected dividend yield, expected stock price volatility, risk-free interest rate and the expected option term. The following assumptions are used in estimating the fair value of granted stock options: Risk-free interest rate is based on the 52-week average of the Treasury-Bond rate that has a term corresponding to the expected option term. Expected stock price volatility represents an average of the implied and historical volatility. Expected dividend yield is based on the current annual dividend divided by the 12-month average of our monthly stock price prior to grant. Expected option term is determined based on historical experience under our long-term incentive plans. No stock options were granted in fiscal years 2019, 2018 or 2017. The following table summarizes information related to stock options: Weighted average Number of Weighted remaining Aggregate options average contractual life intrinsic value (in thousands) exercise price (in years) (in millions) Outstanding at December 29, 2018 511.6 $ 45.06 4.00 $ 22.4 Exercised (305.4) 33.56 Outstanding at December 28, 2019 206.2 $ 62.10 4.92 $ 14.3 Options vested and expected to vest at December 28, 2019 204.3 61.99 4.91 14.2 Options exercisable at December 28, 2019 135.7 $ 55.93 4.14 $ 10.3 The total intrinsic value of stock options exercised was $23.5 million in 2019, $2.7 million in 2018, and $26.8 million in 2017. We received approximately $10 million in 2019, $1 million in 2018, and $22 million in 2017 from the exercise of stock options. The tax benefit associated with these exercised options was $5.7 million in 2019, $.6 million in 2018, and $10.1 million in 2017. The intrinsic value of a stock option is based on the amount by which the market value of our stock exceeds the exercise price of the option. Performance Units (“PUs”) PUs are performance-based awards granted to eligible employees under our equity plans. PUs are payable in shares of our common stock at the end of a three -or four-year cliff vesting period provided that certain performance objectives are achieved at the end of the period. Over the performance period, the estimated number of shares of our common stock issuable upon vesting is adjusted upward or downward based upon the probability of the achievement of the performance objectives established for the award. The actual number of shares issued can range from 0% to 200% of the target shares at the time of grant. The weighted average grant date fair value for PUs was $104.43 , $120.25 , and $82.15 in 2019, 2018, and 2017, respectively. The following table summarizes information related to awarded PUs: Number of PUs Weighted average (in thousands) grant-date fair value Unvested at December 29, 2018 452.8 $ 86.20 Granted at target 182.6 104.43 Adjustment for above-target performance (1) 182.4 68.61 Vested (374.2) 68.42 Forfeited/cancelled (16.1) 97.58 Unvested at December 28, 2019 427.5 $ 101.61 (1) Reflects adjustments for the vesting of awards based on above-target performance for the 2016-2018 performance period. The fair value of vested PUs was $25.6 million in 2019, $11.9 million in 2018, and $11.2 million in 2017. Market-Leveraged Stock Units (“MSUs”) MSUs are performance-based awards granted to eligible employees under our equity plans. MSUs are payable in shares of our common stock over a four-year period provided that the performance objective is achieved as of the end of each vesting period. MSUs accrue dividend equivalents during the vesting period, which are earned and paid only at vesting provided that, at a minimum, threshold performance is achieved. The number of shares earned is based upon our absolute total shareholder return at each vesting date and can range from 0% to 200% of the target amount of MSUs subject to vesting. Each of the four vesting periods represents one tranche of MSUs and the fair value of each of these four tranches was determined using the Monte-Carlo simulation model, which utilizes multiple input variables, including expected stock price volatility and other assumptions, to estimate the probability of achieving the performance objective established for the award. The weighted average grant date fair value for MSUs was $135.85 , $117.75 , and $91.40 in 2019, 2018, and 2017, respectively. The following table summarizes information related to awarded MSUs: Number of MSUs Weighted average (in thousands) grant-date fair value Unvested at December 29, 2018 303.6 $ 90.33 Granted at target 104.6 135.85 Adjustments for above-target performance (1) 83.4 70.38 Vested (216.2) 73.60 Forfeited/cancelled (12.0) 114.11 Unvested at December 28, 2019 263.4 $ 115.71 (1) Reflects adjustments for the vesting of awards based on above-target performance for each of the tranches of awards vesting in 2019. The fair value of vested MSUs was $15.9 million in 2019, $24.0 million in 2018, and $19.3 million in 2017. Restricted Stock Units (“RSUs”) RSUs are service-based awards granted to eligible employees and non-employee directors under our equity plans. RSUs granted to employees generally vest ratably over a period of four years . Prior to 2017, RSUs granted to non-employee directors generally vested ratably over a period of three years . Beginning in 2017, RSUs granted to non-employee directors generally vest over a period of one year . The vesting of RSUs is subject to continued service through the applicable vesting date. If that condition is not met, unvested RSUs are generally forfeited. The weighted average grant date fair value for RSUs was $107.18 , $106.44 , and $82.77 in 2019, 2018, and 2017, respectively. The following table summarizes information related to awarded RSUs: Number of RSUs Weighted average (in thousands) grant-date fair value Unvested at December 29, 2018 88.7 $ 83.72 Granted 30.3 107.18 Vested (53.9) 81.71 Forfeited/cancelled (5.4) 82.51 Unvested at December 28, 2019 59.7 $ 97.56 The fair value of vested RSUs was $4.4 million, $5.1 million, and $2.7 million in 2019, 2018, and 2017, respectively. Cash-Based Awards Long-Term Incentive Units (“LTI Units”) LTI Units are cash-based awards granted to eligible employees under our long-term incentive unit plan. LTI Units are service-based awards that generally vest ratably over a four-year period. The settlement value equals the number of vested LTI Units multiplied by the average of the high and low market prices of our common stock on the vesting date. The compensation expense related to these awards is amortized on a straight-line basis and the fair value is remeasured using the estimated percentage of units expected to be earned multiplied by the average of the high and low market prices of our common stock at each quarter-end. We also grant performance-based, cash-based awards in the form of performance and market-leveraged LTI Units to eligible employees. Performance LTI Units are payable in cash at the end of a three-year cliff vesting period provided that certain performance objectives are achieved at the end of the performance period. Market-leveraged LTI Units are payable in cash and vest ratably over a period of four years . The number of performance and market-leveraged LTI Units earned at vesting is adjusted upward or downward based upon the probability of achieving the performance objectives established for the respective award and the actual number of units issued can range from 0% to 200% of the target units subject to vesting. Performance and market-leveraged LTI Units are remeasured using the estimated percentage of units expected to be earned multiplied by the average of the high and low market prices of our common stock at each quarter-end over their respective performance periods. The compensation expense related to performance LTI Units is amortized on a straight-line basis over their respective performance periods. The compensation expense related to market-leveraged LTI Units is amortized on a graded-vesting basis over their respective performance periods. The compensation expense related to LTI Units was $19.1 million in 2019, $12.4 million in 2018, and $36.6 million in 2017. This expense was included in “Marketing, general and administrative expense” in the Consolidated Statements of Income. The total recognized tax benefit related to LTI Units was $4.4 million in 2019, $2.9 million in 2018, and $8.3 million in 2017. |
COST REDUCTION ACTIONS
COST REDUCTION ACTIONS | 12 Months Ended |
Dec. 28, 2019 | |
COST REDUCTION ACTIONS | NOTE 13. COST REDUCTION ACTIONS Restructuring Charges We have plans that provide eligible employees with severance in the event of an involuntary termination. We calculate severance using the applicable benefit formulas under the respective plans. We record restructuring charges from qualifying cost reduction actions for severance and other exit costs (including asset impairment charges and lease and other contract cancellation costs) when they are probable and estimable. 2019/2020 Actions During fiscal year 2019, we recorded $25.2 million in restructuring charges related to our 2019/2020 actions. These charges consisted of severance and related costs for the reduction of approximately 370 positions, as well as asset impairment charges. 2018/2019 Actions In April 2018, we approved a restructuring plan (the “2018 Plan”) to consolidate the European footprint of our Label and Graphic Materials (“LGM”) reportable segment, which reduced headcount by approximately 390 positions, including temporary labor, from the closure of a manufacturing facility. This reduction was partially offset by headcount additions in other locations, resulting in a net reduction of approximately 150 positions. During fiscal year 2019, we recorded a net $2.3 million in restructuring reversals related to the 2018 Plan. During fiscal year 2018, we recorded $55.2 million in restructuring charges, net of reversals. The cumulative charges associated with the 2018 Plan consisted of severance and related costs for the headcount reduction, as well as asset impairment charges. The activities related to the 2018 Plan were substantially completed as of the end of the second quarter of 2019. In addition to restructuring charges recorded under the 2018 Plan, we recorded $28.2 million in restructuring charges during fiscal year 2019 related to other 2018/2019 actions. These charges consisted of severance and related costs for the reduction of approximately 490 positions, as well as asset impairment charges. In the fourth quarter 2018, we recorded $4.2 million in restructuring charges relating to these other 2018/2019 actions. These charges consisted of severance and related costs for the reduction of approximately 85 positions, as well as impairment charges. 2015/2016 Actions During fiscal year 2018, we recorded $14.3 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 625 positions, lease cancellation costs, and asset impairment charges. The activities and related charges and payments related to the 2015/2016 actions were substantially completed in 2018. Accruals for severance and related costs and lease cancellation costs were included in “Other current liabilities” in the 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 Consolidated Statements of Income. During 2019, restructuring charges and payments were as follows: Accrual at Charges, Foreign Accrual at December 29, Net of Cash Non-cash Currency December 28, (In millions) 2018 Reversals Payments Impairment Translation 2019 2019/2020 Actions Severance and related costs $ — $ 21.9 $ — $ — $ — $ 21.9 Asset impairment charges — 3.3 — (3.3) — — 2018/2019 Actions Severance and related costs 40.7 24.0 (57.1) — (1.1) 6.5 Lease cancellation costs — .3 — — — .3 Asset impairment charges — 1.6 — (1.6) — — Total $ 40.7 $ 51.1 $ (57.1) $ (4.9) $ (1.1) $ 28.7 During 2018, restructuring charges and payments were as follows: Accrual at Charges, Foreign Accrual at December 30, Net of Cash Non-cash Currency December 29, (In millions) 2017 Reversals Payments Impairment Translation 2018 2018/2019 Actions Severance and related costs $ — $ 51.8 $ (9.8) $ — $ (1.3) $ 40.7 Asset impairment charges — 7.6 — (7.6) — — Total $ — $ 59.4 $ (9.8) $ (7.6) $ (1.3) $ 40.7 The table below shows the total amount of restructuring charges incurred by reportable segment and Corporate. (In millions) 2019 2018 2017 Restructuring charges by reportable segment and Corporate Label and Graphic Materials $ 29.0 $ 57.8 $ 14.8 Retail Branding and Information Solutions 9.8 11.9 18.4 Industrial and Healthcare Materials 9.4 4.0 .2 Corporate 2.2 — — Total $ 50.4 $ 73.7 $ 33.4 |
TAXES BASED ON INCOME
TAXES BASED ON INCOME | 12 Months Ended |
Dec. 28, 2019 | |
TAXES BASED ON INCOME | NOTE 14. TAXES BASED ON INCOME Taxes based on income were as follows: (In millions) 2019 2018 2017 Current: U.S. federal tax $ 11.0 $ (19.7) $ 47.0 State taxes .5 .8 .2 International taxes 148.1 134.3 111.0 159.6 115.4 158.2 Deferred: U.S. federal tax (168.0) (6.3) 134.8 State taxes (8.9) 2.3 (3.7) International taxes (39.4) (26.0) 18.4 (216.3) (30.0) 149.5 (Benefit from) provision for income taxes $ (56.7) $ 85.4 $ 307.7 The principal items accounting for the difference between taxes computed at the U.S. federal statutory rate and taxes recorded were as follows: (In millions) 2019 2018 2017 Computed tax provision at U.S. federal statutory rate (1) $ 52.4 $ 116.5 $ 206.7 Increase (decrease) in taxes resulting from: State taxes, net of federal tax benefit (1) (12.8) 3.9 (3.2) U.S. pension plan settlements and related charges (1) (76.6) — — Tax Cuts and Jobs Act (2) — (34.7) 172.0 Foreign earnings taxed at different rates (3) 56.2 44.0 (40.2) Foreign tax structuring and planning transactions (4) (47.9) (31.0) — Excess tax benefits associated with stock-based payments (7.8) (7.7) (16.0) Valuation allowance 2.0 10.7 (1.4) Corporate-owned life insurance (4.0) (3.8) (6.7) U.S. federal research and development tax credits (6.1) (6.1) (4.9) Tax contingencies and audit settlements (11.8) (11.9) (1.9) Other items, net (.3) 5.5 3.3 (Benefit from) provision for income taxes $ (56.7) $ 85.4 $ 307.7 (1) Included in 2019 and 2018 are tax effects of the pension plan settlement charges associated with the termination of the ADPP. The tax benefits of $102 million and $19 million on the pretax charges were reflected in computed tax provision at U.S. federal statutory rate and state taxes, net of federal tax benefit for fiscal years 2019 and 2018, respectively. In 2019, the tax benefit of $77 million related to the release of stranded tax effects in AOCI through the income statement was reflected in U.S. pension plan settlements and related charges. (2) During 2018 and 2017, we recognized a net tax benefit of $34.7 million and a net tax charge of $172 million, respectively, as a result of the TCJA. These amounts included our TCJA provisional amount and subsequent adjustments, including items that would otherwise be separately disclosed as state taxes, net of federal tax benefit, tax effects of foreign earnings taxed at different rates, tax contingencies and audit settlements, and other items, net. We finalized our TCJA provisional amount as defined under SEC Staff Accounting Bulletin No. 118 in 2018. (3) Included in 2019 and 2018 are certain U.S. international tax provisions imposed by the TCJA; all years included foreign earnings taxed in the U.S., net of credits. (4) In 2019, we recognized a net tax benefit of $47.9 million related to a foreign structuring transaction. This net benefit resulted from the elimination of recapture conditions to which our previously recognized net operating losses were subject. By eliminating these conditions, our losses became permanent, and the offsetting deferred tax liability related to future recapture was released. In 2018, we recognized a net tax benefit of $31 million related to a foreign planning transaction. This net benefit resulted from the recognition of a deferred tax asset in a higher tax rate jurisdiction, partially offset by a taxable gain recognized in a lower effective tax rate jurisdiction. Income before taxes from our U.S. and international operations was as follows: (In millions) 2019 2018 2017 U.S. $ (355.4) $ (7.3) $ 49.0 International 604.9 562.1 540.5 Income before taxes $ 249.5 $ 554.8 $ 589.5 Our effective tax rate was (22.7)%, 15.4%, and 52.2% for fiscal years 2019, 2018, and 2017, respectively. Our 2019 provision for income taxes included $179 million of tax benefit related to the effective settlement of the ADPP, $102 million of which was the related tax effect on the pretax charge of $444 million and $77 million of which was related to the release of stranded tax effects in AOCI through the income statement. The tax effects were stranded primarily as a result of the U.S. federal tax rate change under the TCJA. Refer to Note 1, “Summary of Significant Accounting Policies,” and Note 6, “Pension and Other Postretirement Benefits,” for more information. Our 2019 provision for income taxes also included (i) $47.9 million of tax benefit from a foreign tax structuring transaction resulting in previously recognized tax losses becoming permanent; (ii) $24.7 million of net tax charge related to the tax on global intangible low-taxed income (“GILTI”) of our foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from foreign-derived intangible income (“FDII”); (iii) $11.8 million of net tax benefit from the effective settlement of certain German tax audits and decreases in reserves as a result of closing tax years, partially offset by additional interest and penalty accruals, and increases in reserves from our change in judgment; (iv) $7.8 million of tax benefit related to excess tax benefits associated with stock-based payments; and (v) $2 million of net tax benefit from an intellectual property tax incentive in a foreign jurisdiction having met the eligibility requirements. Effective in 2019, we implemented certain operational structure changes to more closely align with our business strategies, one benefit of which was to reduce our base erosion payments below the statutory threshold. As a result, our 2019 provision for income taxes did not include tax charges related to Base Erosion Antiabuse Tax (“BEAT”). Our 2018 provision for income taxes included (i) $34.7 million of tax benefit for measurement period adjustments to our 2017 TCJA provisional amount in accordance with guidance provided under SEC Staff Accounting Bulletin No. 118 (“SAB 118”); (ii) $31 million of net tax charge for GILTI and BEAT, and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from FDII; (iii) $11.9 million of net tax benefit from the effective settlement of our German tax audit and decreases in reserves as a result of closing tax years, partially offset by additional interest and penalty accruals, and increases in reserves from our change in judgment; and (iv) $31 million of net tax benefit primarily due to the recognition of a deferred tax asset in a higher tax rate jurisdiction, partially offset by a taxable gain recognized in a lower effective tax rate jurisdiction. Our 2018 provision for income taxes was not significantly impacted by the $10.7 million increase in valuation allowance primarily due to offsetting changes in deferred taxes and uncertain tax positions. Our 2017 provision for income taxes included (i) $172 million of net tax charge for our 2017 TCJA provisional amount; (ii) $5.1 million of tax benefit from the release of valuation allowance on certain state deferred tax assets; (iii) $16 million of tax benefit related to excess tax benefits associated with stock-based payments; and (iv) $1.9 million of net tax benefit from effective settlements and decreases in reserves as a result of closing tax years, partially offset by additional interest and penalty accruals, and increases in reserves from our change in judgment. U.S. Tax Reform The TCJA enacted in the U.S. in December 2017 significantly changed U.S. corporate income taxation by, among other things, reducing the federal corporate income tax rates to 21%; implementing a modified territorial tax system prospectively by providing a dividend received deduction on certain dividends from our foreign subsidiaries, loss of domestic manufacturing deductions, and limitations on the deductibility of our executive compensation; and interest expense, and imposing a one-time transition tax through a deemed repatriation of accumulated untaxed earnings and profits of foreign subsidiaries. In 2017, we included a provisional amount of $172 million as the estimated impact of the TCJA in our results for the fourth quarter and full year 2017. This provisional amount included (i) $147 million of tax charge related to the estimated transition tax; (ii) $49.2 million of tax charge resulting from the estimated remeasurement of net U.S. deferred tax assets at the lower corporate income tax rate; (iii) $9.3 million of tax charge related to potential uncertainties of our accumulated tax attributes that were used in our estimated transition tax calculation; (iv) $5.3 million of tax charge from the estimated reduction of previously recognized U.S. deferred tax assets that we no longer anticipated to benefit from due to changes in the future deductibility of executive compensation; and (v) $38.8 million of net tax benefit, primarily from the reversal of the deferred tax liability that we previously recorded for future tax costs associated with repatriations of certain foreign earnings and profits that we considered not to be indefinitely reinvested. As of December 29, 2018, we completed our accounting for the income tax effects of the TCJA following the guidance of SAB 118. Specifically, we included $34.7 million of net tax benefit as measurement period adjustments primarily related to (i) $9.5 million of tax charge as an adjustment to the transition tax, reflecting subsequent regulatory and administrative guidance issued by the Internal Revenue Service (“IRS”) and certain state taxing authorities and the finalization of our foreign earnings and profits as well as taxes; (ii) $39.6 million of tax benefit as an adjustment to the remeasurement of deferred taxes as a result of our decision to accelerate certain deductions in conjunction with the completion of our 2017 U.S. federal income tax return; (iii) $3.6 million of tax charge as an incremental accrual for foreign withholding taxes associated with changes in our indefinite reinvestment assertions after information required to make such determination was obtained; and (iv) $9.4 million of tax benefit from releasing a previously recorded uncertain tax position after we did not take the position on our 2017 U.S. federal income tax return. Consistent with the prior year, our accumulated earnings in foreign subsidiaries are not indefinitely reinvested. As a result of the one-time transition tax and the dividend received deduction prescribed by the TCJA, our accumulated earnings in foreign subsidiaries can generally be repatriated to the U.S. without material tax consequences. As of December 28, 2019, we recorded a deferred tax liability of $18.9 million related to future tax consequences from repatriating our accumulated earnings in foreign subsidiaries that are not indefinitely reinvested. Deferred Taxes Deferred taxes reflect the temporary differences between the amounts at which assets and liabilities are recorded for financial reporting purposes and the amounts utilized for tax purposes. The primary components of the temporary differences that gave rise to our deferred tax assets and liabilities were as follows: (In millions) 2019 2018 Accrued expenses not currently deductible $ 25.7 $ 18.4 Net operating loss carryforwards (1) 154.6 166.4 Tax credit carryforwards 46.5 69.0 Stock-based compensation 11.8 12.4 Pension and other postretirement benefits 57.8 79.8 Lease liabilities (2) 30.5 — Other assets 21.3 18.5 Valuation allowance (67.7) (71.8) Total deferred tax assets (3) 280.5 292.7 Depreciation and amortization (41.6) (45.1) Repatriation accrual (18.9) (21.3) Foreign operating loss recapture (1) (3.4) (56.5) Lease assets (2) (29.7) — Other liabilities — (1.6) Total deferred tax liabilities (3) (93.6) (124.5) Total net deferred tax assets $ 186.9 $ 168.2 (1) A portion of our net operating losses originated from prior impairments of investment value in foreign subsidiaries as recognized for foreign accounting and tax reporting purposes. As required by law, these impairment losses are subject to future recapture under certain conditions. In 2019, we executed a foreign tax structuring transaction that eliminated the conditions under which future recapture may occur. Consequently, our previously recognized impairment losses became permanent, and the deferred tax liability related to future recapture was released. (2) In 2019, we adopted the accounting guidance on leases using a modified retrospective approach. As such, the prior year period has not been adjusted. Refer to Note 1, “Summary of Significant Accounting Policies,” and Note 7, “Commitments and Leases,” to the Consolidated Financial Statements for more information. (3) Reflect gross amounts before jurisdictional netting of deferred tax assets and liabilities. We assess the available positive and negative evidence to estimate if sufficient future taxable income is expected to be generated to use existing deferred tax assets. On the basis of our assessment, we record valuation allowances only with respect to the portion of the deferred tax asset that is not more-likely-than-not to be realized. Our assessment of the future realizability of our deferred tax assets relies heavily on our forecasted earnings in certain jurisdictions, and such forecasted earnings are determined by the manner in which we operate our business. Any changes to our operations may affect our assessment of deferred tax assets considered realizable if the positive evidence no longer outweighs the negative evidence. Net operating loss carryforwards of foreign subsidiaries at December 28, 2019 and December 29, 2018 were $508 million and $538 million, respectively. Tax credit carryforwards of both domestic and foreign subsidiaries at December 28, 2019 and December 29, 2018 totaled $47 million and $69 million, respectively. If unused, foreign net operating losses and tax credit carryforwards will expire as follows: (In millions) Net Operating Year of Expiry Losses (1) Tax Credits 2020 $ 5.1 $ .3 2021 3.1 .5 2022 6.6 .6 2023 5.2 2.5 2024 5.2 .4 2025 - 2039 8.4 35.1 Indefinite life/no expiry 474.5 7.1 Total $ 508.1 $ 46.5 (1) Net operating losses are presented before tax effect and valuation allowance. Certain indefinite-lived foreign net operating losses may require decades to be fully utilized under our current business model. At December 28, 2019, we had net operating loss carryforwards in certain state jurisdictions of $635 million before tax effect. Based on our estimates of future state taxable income, it is more-likely-than-not that the majority of these carryforwards will not be realized before they expire. Accordingly, a valuation allowance has been recorded on $588 million of these carryforwards. As of December 28, 2019, our provision for income taxes did not materially benefit from applicable tax holidays in foreign jurisdictions. Unrecognized Tax Benefits As of December 28, 2019, our unrecognized tax benefits totaled $70 million, $61 million of which, if recognized, would reduce our annual effective income tax rate. As of December 29, 2018, our unrecognized tax benefits totaled $81 million, $72 million of which, if recognized, would reduce our annual effective income tax rate. Where applicable, we accrue potential interest and penalties related to unrecognized tax benefits in income tax expense. The interest and penalties we recognized during fiscal years 2019, 2018 and 2017 were not material, individually or in aggregate, to the Consolidated Statements of Income. We have accrued balances of $22 million and $25 million for interest and penalties, net of tax benefit, in the Consolidated Balance Sheets at December 28, 2019 and December 29, 2018, respectively. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is set forth below: (In millions) 2019 2018 Balance at beginning of year $ 80.8 $ 108.7 Additions for tax positions of the current year 7.5 11.5 Reductions for tax positions of prior years, net (6.7) (23.1) Settlements with tax authorities (1.9) (6.6) Expirations of statutes of limitations (8.0) (5.9) Changes due to translation of foreign currencies (1.8) (3.8) Balance at end of year $ 69.9 $ 80.8 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 $19 million, primarily as a result of audit settlements and closing tax years. 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. The final determination of tax audits and any related legal proceedings could materially differ from amounts reflected in our tax provision and the related liabilities. As of the date the 2019 Consolidated Financial Statements are being issued, we and our U.S. subsidiaries have completed the IRS’ Compliance Assurance Process Program through 2016. With some exceptions, we and our subsidiaries are no longer subject to income tax examinations by tax authorities for years prior to 2009. |
SEGMENT AND DISAGGREGATED REVEN
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | 12 Months Ended |
Dec. 28, 2019 | |
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | NOTE 15. SEGMENT AND DISAGGREGATED REVENUE INFORMATION Segment Reporting We have the following reportable segments: ● Label and Graphic Materials – manufactures and sells pressure-sensitive label and packaging materials and films for graphic and reflective products; ● Retail Branding and Information Solutions – designs, manufactures and sells a wide variety of branding and information solutions, including brand and price tickets, tags and labels (including RFID inlays), and related services, supplies and equipment; and ● Industrial and Healthcare Materials – manufactures and sells performance tapes and other adhesive products for industrial, medical and other applications as well as fastener solutions. Intersegment sales are recorded at or near market prices and are eliminated in determining consolidated sales. We evaluate our performance based on income from operations before interest expense and taxes. General corporate expenses are excluded from the computation of income from operations for the segments. We do not disclose total assets by reportable segment since we neither generate nor review such information internally. As our reporting structure is neither organized nor reviewed internally by country, results by individual country are not provided. Disaggregated Revenue Information Disaggregated revenue information is set forth below in the manner that best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Revenue from our LGM reportable segment is attributed to geographic areas based on the location from which products are shipped. Revenue from our RBIS reportable segment is shown by product group. (In millions) 2019 2018 2017 Net sales to unaffiliated customers Label and Graphic Materials: U.S. $ 1,246.6 $ 1,256.0 $ 1,198.4 Europe 1,767.9 1,851.3 1,689.3 Asia 1,065.0 1,081.2 1,002.6 Latin America 375.4 367.8 357.0 Other international 291.0 294.8 264.4 Total Label and Graphic Materials 4,745.9 4,851.1 4,511.7 Retail Branding and Information Solutions: Apparel 1,458.5 1,441.7 1,352.0 Printer Solutions 191.8 171.5 159.2 Total Retail Branding and Information Solutions 1,650.3 1,613.2 1,511.2 Industrial and Healthcare Materials 673.9 694.7 590.9 Net sales to unaffiliated customers $ 7,070.1 $ 7,159.0 $ 6,613.8 Revenue by geographic area is set forth below. Revenue is attributed to geographic areas based on the location from which the product is shipped. (In millions) 2019 2018 2017 Net sales to unaffiliated customers U.S. $ 1,638.8 $ 1,625.1 $ 1,557.8 Europe 2,160.2 2,251.4 2,041.6 Asia 2,458.5 2,473.2 2,250.5 Latin America 498.3 490.0 476.4 Other international 314.3 319.3 287.5 Net sales to unaffiliated customers $ 7,070.1 $ 7,159.0 $ 6,613.8 Net sales to unaffiliated customers in Asia included sales in China (including Hong Kong) of $1.38 billion in 2019, $1.43 billion in 2018, and $1.3 billion in 2017. Additional Segment Information Additional financial information by reportable segment is set forth below. (In millions) 2019 2018 2017 Intersegment sales Label and Graphic Materials $ 80.2 $ 78.7 $ 64.1 Retail Branding and Information Solutions 20.6 4.7 3.2 Industrial and Healthcare Materials 8.8 8.8 7.7 Intersegment sales $ 109.6 $ 92.2 $ 75.0 Income before taxes Label and Graphic Materials $ 601.5 $ 568.2 $ 577.4 Retail Branding and Information Solutions 196.6 170.4 126.7 Industrial and Healthcare Materials 60.0 62.9 52.6 Corporate expense (87.6) (83.4) (86.2) Interest expense (75.8) (58.5) (63.0) Other non-operating expense, net (445.2) (104.8) (18.0) Income before taxes $ 249.5 $ 554.8 $ 589.5 Capital expenditures Label and Graphic Materials $ 137.8 $ 151.5 $ 125.5 Retail Branding and Information Solutions 63.1 57.1 48.8 Industrial and Healthcare Materials 24.2 19.3 19.5 Capital expenditures $ 225.1 $ 227.9 $ 193.8 Depreciation and amortization expense Label and Graphic Materials $ 100.2 $ 104.7 $ 102.3 Retail Branding and Information Solutions 52.6 49.0 56.4 Industrial and Healthcare Materials 26.2 27.3 20.0 Depreciation and amortization expense $ 179.0 $ 181.0 $ 178.7 Other expense, net by reportable segment Label and Graphic Materials $ 28.3 $ 61.8 $ 14.5 Retail Branding and Information Solutions 9.9 11.4 18.1 Industrial and Healthcare Materials 9.4 (1.0) 3.7 Corporate 5.6 (2.3) .2 Other expense, net $ 53.2 $ 69.9 $ 36.5 Other expense, net by type Restructuring charges: Severance and related costs $ 45.3 $ 63.0 $ 31.2 Asset impairment charges and lease cancellation costs 5.1 10.7 2.2 Other items: Legal settlement 3.4 — — Transaction costs 2.6 — 5.2 Argentine peso remeasurement transition loss — 3.4 — Other restructuring-related charge — .5 — Reversal of acquisition-related contingent consideration — (5.0) — Net gain on sales of assets (3.2) (2.7) (2.1) Other expense, net $ 53.2 $ 69.9 $ 36.5 Property, plant and equipment, net, in our U.S. and international operations were as follows: (In millions) 2019 2018 2017 Property, plant and equipment, net U.S. $ 366.9 $ 317.3 $ 286.4 International 843.8 820.1 811.5 Property, plant and equipment, net $ 1,210.7 $ 1,137.4 $ 1,097.9 |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 12 Months Ended |
Dec. 28, 2019 | |
SUPPLEMENTAL FINANCIAL INFORMATION | NOTE 16. SUPPLEMENTAL FINANCIAL INFORMATION Inventories Net inventories at year-end were as follows: (In millions) 2019 2018 Raw materials $ 231.6 $ 236.2 Work-in-progress 201.0 196.7 Finished goods 230.4 218.5 Inventories, net $ 663.0 $ 651.4 Property, Plant and Equipment Major classes of property, plant and equipment, stated at cost, at year-end were as follows: (In millions) 2019 2018 Land $ 25.1 $ 28.0 Buildings and improvements 687.4 643.1 Machinery and equipment 2,316.9 2,231.1 Construction-in-progress 142.2 151.5 Property, plant and equipment 3,171.6 3,053.7 Accumulated depreciation (1,960.9) (1,916.3) Property, plant and equipment, net $ 1,210.7 $ 1,137.4 Software Capitalized software costs at year-end were as follows: (In millions) 2019 2018 Cost $ 487.2 $ 452.4 Accumulated amortization (334.4) (316.9) Software, net $ 152.8 $ 135.5 Software amortization expense was $20.8 million in 2019, $20.2 million in 2018, and $29.3 million in 2017. Equity Method Investment As of December 28, 2019, we held a 22.9% interest in PragmatIC Printing Limited (“PragmatIC”), a company that develops flexible electronics technology. The carrying value of this investment was $8.8 million and $6.7 million as of December 28, 2019 and December 29, 2018, respectively, and was included in “Other assets” in the Consolidated Balance Sheets. In January 2019, we made an additional investment in PragmatIC of approximately $4 million. Research and Development Research and development expense, which is included in “Marketing, general and administrative expense” in the Consolidated Statements of Income, was as follows: (In millions) 2019 2018 2017 Research and development expense $ 92.6 $ 98.2 $ 93.4 Supplemental Cash Flow Information Cash paid for interest and income taxes was as follows: (In millions) 2019 2018 2017 Interest $ 74.3 $ 54.9 $ 57.7 Income taxes, net of refunds 155.0 153.5 125.6 Foreign Currency Effects Gains and losses resulting from foreign currency transactions are included in income in the period incurred. Transactions in foreign currencies (including receivables, payables and loans denominated in currencies other than the functional currency), including hedging impacts, decreased net income by $9.7 million, $13.4 million, and $4.1 million in 2019, 2018, and 2017, respectively. Deferred Revenue Deferred revenue primarily relates to constrained variable consideration on supply agreements for sales of products, as well as to payments received in advance of performance under a contract. Deferred revenue is recognized as revenue as or when we perform under a contract. The following table shows the amounts and balance sheet locations of deferred revenue as of December 28, 2019 and December 29, 2018: (In millions) December 28, 2019 December 29, 2018 Other current liabilities $ 12.6 $ 11.5 Long-term retirement benefits and other liabilities .3 .3 Total deferred revenue $ 12.9 $ 11.8 Revenue recognized from amounts included in deferred revenue as of December 29, 2018 was $10.8 million in 2019. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (Unaudited) | 12 Months Ended |
Dec. 28, 2019 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | NOTE 17. QUARTERLY FINANCIAL INFORMATION (Unaudited) First Second Third Fourth (In millions, except per share data) Quarter Quarter Quarter Quarter 2019 Net sales $ 1,740.1 $ 1,795.7 $ 1,761.4 $ 1,772.9 Gross profit 465.4 482.3 471.7 484.7 Net (loss) income (1) (146.9) 143.4 144.6 162.5 Net (loss) income per common share (1.74) 1.70 1.72 1.95 Net (loss) income per common share, assuming dilution (1.74) 1.69 1.71 1.92 2018 Net sales $ 1,776.4 $ 1,854.2 $ 1,759.7 $ 1,768.7 Gross profit 483.4 501.4 459.2 471.5 Net income (2) 125.2 95.6 149.5 97.1 Net income per common share 1.42 1.09 1.71 1.13 Net income per common share, assuming dilution 1.40 1.07 1.69 1.11 (1) In the first quarter of 2019, we recognized final settlement charges associated with the termination of the ADPP. Refer to Note 6, “Pension and Other Postretirement Benefits,” for more information. (2) In the fourth quarter of 2018, we recognized settlement charges related to lump-sum payments associated with the ADPP. Refer to Note 6, "Pension and Other Postretirement Benefits," for more information. “Other expense (income), net” by type for each quarter is presented below. First Second Third Fourth (In millions) Quarter Quarter Quarter Quarter 2019 Restructuring charges: Severance and related costs $ 10.4 $ 6.1 $ 3.3 $ 25.5 Asset impairment charges and lease cancellation costs .3 1.4 — 3.4 Other items: Legal settlement — — 3.4 — Transaction costs — — — 2.6 Net gain on sales of assets (3.2) — — — Other expense, net $ 7.5 $ 7.5 $ 6.7 $ 31.5 2018 Restructuring charges: Severance and related costs, net of reversals $ 4.3 $ 58.8 $ (7.1) $ 7.0 Asset impairment charges and lease cancellation costs 8.4 .6 .7 1.0 Other items: Argentine peso remeasurement transition loss — — 3.4 — Other restructuring-related charge .5 — — — Reversal of acquisition-related contingent consideration — — — (5.0) Net gain on sales of assets (.4) (2.3) — — Other expense (income), net $ 12.8 $ 57.1 $ (3.0) $ 3.0 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 28, 2019 | |
Nature of Operations | Nature of Operations Our businesses include the production of pressure-sensitive materials and a variety of tickets, tags, labels and other converted products. We sell most of our pressure-sensitive materials to label printers and converters that convert the materials into labels and other products through embossing, printing, stamping and die-cutting. We sell other pressure-sensitive materials in converted form as tapes and reflective sheeting. We also manufacture and sell a variety of other converted products and items not involving pressure-sensitive components, such as fasteners, tickets, tags, radio-frequency identification (“RFID”) inlays and tags, and imprinting equipment and related solutions, which serve the apparel and other end markets. |
Principles of Consolidation | Principles of Consolidation Our Consolidated Financial Statements include the accounts of majority-owned and controlled subsidiaries. Intercompany accounts, transactions, and profits are eliminated in consolidation. We apply the equity method of accounting for investments in which we have significant influence but not a controlling interest. |
Reclassifications | Reclassifications Certain amounts in the prior year’s Consolidated Financial Statements have been reclassified to conform to the current year presentation. |
Fiscal Year | Fiscal Year Normally, our fiscal years consist of 52 weeks, but every fifth or sixth fiscal year consists of 53 weeks. Our 2019, 2018, and 2017 fiscal years consisted of 52 -week periods ending December 28, 2019, December 29, 2018, and December 30, 2017, respectively. |
Accounting Guidance Updates | Accounting Guidance Updates Leases In the first quarter of 2019, we adopted accounting guidance that requires lessees to recognize on their balance sheets the rights and obligations created by leases. This guidance also requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows from leases. As allowed by this guidance, we elected to apply it using a modified retrospective approach. This approach applies to all leases that existed at or commenced after the date of our initial adoption. As such, prior year comparative amounts have not been adjusted. We elected the transition practical expedients allowed under this guidance. See Note 7, “Commitments and Leases,” for more information. Hedge accounting In the first quarter of 2019, we prospectively adopted amended accounting guidance issued to improve the financial reporting of hedging relationships by better reflecting the economic results of an entity’s risk management activities in its financial statements and simplifying the application of hedge accounting. As a result of adopting this guidance, our reclassification of gains and losses from cash flow hedges to earnings is included in the same financial statement line item as the hedged item. Our adoption of this guidance did not have a material impact on our financial position, results of operations, cash flows, or disclosures. Reclassification of certain tax effects from accumulated other comprehensive income In the first quarter of 2019, we adopted accounting guidance that provides entities with the option to reclassify certain tax effects of the U.S. Tax Cuts and Jobs Act (“TCJA”) in accumulated other comprehensive income (“AOCI”) to retained earnings. We elected not to reclassify the income tax effects stranded in AOCI to retained earnings. Our accounting policy is to release the income tax effects from AOCI to the income statement at the current statutory rate when the related pretax change is recognized. We also release the disproportionate tax effects in AOCI through the income statement as a discrete tax adjustment in the period when the circumstances upon which they are premised cease to exist. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions for the reporting period and as of the date of the financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expense. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents generally consist of cash on hand, deposits in banks, cash-in-transit, and bank drafts and short-term investments with maturities of three months or less when purchased or received. The carrying value of these assets approximates fair value due to the short maturity of the instruments. |
Trade Accounts Receivable | Trade Accounts Receivable We record trade accounts receivable at the invoiced amount. The allowance for doubtful accounts reserve represents allowances for customer trade accounts receivable that are estimated to be partially or entirely uncollectible. These allowances are used to reduce gross trade receivables to their net realizable values. We record these allowances based on estimates related to the following: ● Customer-specific allowances; ● Amounts based on an aging schedule; and ● An amount based on our historical experience. No single customer represented 10% or more of our net sales in, or trade accounts receivable at, year-end 2019 or 2018. However, during 2019, 2018, and 2017, our ten largest customers by net sales in the aggregate represented approximately 16%, 15%, and 15% of our net sales, respectively. As of December 28, 2019 and December 29, 2018, our ten largest customers by trade accounts receivable in the aggregate represented approximately 12% and 14% of our trade accounts receivable, respectively. These customers were concentrated primarily in our Label and Graphic Materials reportable segment. We generally do not require our customers to provide collateral. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value and categorized as raw materials, work-in-progress, or finished goods. Cost is determined using the first-in, first-out method. Inventory reserves are recorded to cost of products sold for damaged, obsolete, excess and slow-moving inventory and we establish a lower cost basis for the inventory. We use estimates to record these reserves. Slow-moving inventory is reviewed by category and may be partially or fully reserved for depending on the type of product, level of usage, and the length of time the product has been included in inventory. |
Property, Plant and Equipment | Property, Plant and Equipment Depreciation is generally computed using the straight-line method over the estimated useful lives of the respective assets, ranging from ten to forty-five years for buildings and improvements and three to fifteen years for machinery and equipment. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the term of the associated leases. Maintenance and repair costs are expensed as incurred; renewals and improvements are capitalized. Upon the sale or retirement of assets, the accounts are relieved of the cost and the related accumulated depreciation, with any resulting gain or loss included in net income. |
Leases | Leases Our leases primarily relate to office and warehouse space, machinery, transportation, and equipment for information technology. For lease accounting purposes, we do not separate lease and nonlease components, nor do we record operating or finance lease assets and liabilities for short-term leases. We determine if an arrangement is a lease or contains a lease at inception. We have options to renew or terminate some of our leases. We evaluate renewal and termination options based on considerations available at the lease commencement date and over the lease term to determine if we are reasonably certain to exercise these options. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. We recognize expense for operating leases on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred. |
Software | Software We capitalize software costs incurred during the application development stage of software development, including costs incurred for design, coding, installation to hardware, testing, and upgrades and enhancements that provide the software or hardware with additional functionalities and capabilities. Software costs, including internal and external training costs and maintenance costs, incurred during the preliminary project stage and the post-implementation and/or operation stage are expensed. In addition, we capitalize implementation costs incurred under a hosting arrangement that is a service contract. Capitalized software, which is included in “Other assets” in the Consolidated Balance Sheets, is amortized on a straight-line basis over the estimated useful life of the software, which is generally between five and ten years . |
Impairment of Long-lived Assets | Impairment of Long-lived Assets Impairment charges are recorded when the carrying amounts of long-lived assets are determined not to be recoverable. Recoverability is measured by comparing the undiscounted cash flows expected from the applicable asset or asset group’s use and eventual disposition to its carrying value. The amount of impairment loss is calculated as the excess of the carrying value over the fair value. Historically, changes in market conditions and management strategy have caused us to reassess the carrying amount of our long-lived assets. |
Goodwill and Other Intangibles Resulting from Business Acquisitions | Goodwill and Other Intangibles Resulting from Business Acquisitions Business combinations are accounted for using the acquisition method, with the excess of the acquisition cost over the fair value of net tangible assets and identified intangible assets acquired considered goodwill. As a result, we disclose goodwill separately from other intangible assets. Other identifiable intangibles include customer relationships, patents and other acquired technology, and trade names and trademarks. We perform an annual impairment test of goodwill during the fourth quarter, unless certain factors indicate the need to perform an impairment assessment in addition to the annual test. In performing the required impairment tests, we have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for goodwill impairment. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed. A quantitative assessment primarily consists of a present value (discounted cash flow) method to determine the fair value of the reporting units with goodwill. Certain factors may result in the need to perform an impairment test prior to the fourth quarter, including significant underperformance of a business relative to expected operating results, significant adverse economic and industry trends, significant decline in our market capitalization for an extended period of time relative to net book value, or a decision to divest a portion of a reporting unit. We compare the fair value of each reporting unit to its carrying amount, and, to the extent the carrying amount exceeds the unit’s fair value, an impairment of goodwill is recognized for the excess up to the amount of goodwill of that reporting unit. In consultation with outside specialists, we estimate the fair value of our reporting units using various valuation techniques, with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires us to make various assumptions about the reporting units, including their respective forecasted sales, operating margins and growth rates, and discount rates. Assumptions about discount rates are based on a weighted average cost of capital for comparable companies. Assumptions about sales, operating margins, and growth rates are based on our forecasts, business plans, economic projections, anticipated future cash flows, and marketplace data. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period. We base our fair value estimates on projected financial information and assumptions that we believe are reasonable. However, actual future results may materially differ from these estimates and projections. The valuation methodology used to estimate the fair value of reporting units requires inputs and assumptions that reflect current market conditions, as well as the impact of planned business and operational strategies that require management judgment. The estimated fair value could increase or decrease depending on changes in the inputs and assumptions. We test indefinite-lived intangible assets, consisting of trade names and trademarks, for impairment in the fourth quarter or whenever events or circumstances indicate that it is more-likely-than-not that their carrying amounts exceed their fair values. Fair value is estimated as the discounted value of future revenues using a royalty rate that a third party would pay for use of the asset. Variation in the royalty rates could impact the estimate of fair value. If the carrying amount of an asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We amortize finite-lived intangible assets, consisting of customer relationships, patents and other acquired technology, trade names and trademarks, and other intangibles, on a straight-line basis over the estimated useful life of the assets. See Note 3, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” for more information. |
Foreign Currency | Foreign Currency Asset and liability accounts of international operations are translated into U.S. dollars at current rates. Revenues and expenses are translated at the weighted average currency rate for the fiscal year. Gains and losses resulting from hedging the value of investments in certain international operations and from the translation of balance sheet accounts are recorded directly as a component of other comprehensive income. On July 1, 2018, we began accounting for our operations in Argentina as highly inflationary, as the country’s three-year cumulative inflation rate exceeded 100%. As a result, the functional currency of our Argentine subsidiary became the U.S. dollar. |
Financial Instruments | Financial Instruments We enter into foreign exchange derivative 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. From time to time, 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. On the date we enter into a derivative contract, we determine whether the derivative will be designated as a hedge. Derivatives designated as hedges are classified as either (1) hedges of the fair value of a recognized asset or liability or an unrecognized firm commitment (“fair value” hedges) or (2) hedges of a forecasted transaction or the variability of cash flows that are to be received or paid in connection with a recognized asset or liability (“cash flow” hedges). Other derivatives not designated as hedges are recorded on the balance sheets at fair value, with changes in fair value recognized in earnings. Our policy is not to purchase or hold any foreign currency, interest rate or commodity contracts for trading purposes. We assess, both at the inception of any hedge and on an ongoing basis, whether our hedges are highly effective. If it is determined that a hedge is not highly effective, we prospectively discontinue hedge accounting. For cash flow hedges, gains and losses are recorded as components of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. In the event that the anticipated transaction is no longer likely to occur, we recognize the change in fair value of the instrument in current period earnings. Changes in fair value hedges are recognized in current period earnings. Changes in the fair value of underlying hedged items (such as recognized assets or liabilities) are also recognized in current period earnings and offset the changes in the fair value of the derivative. In the Consolidated Statements of Cash Flows, hedges are classified in the same category as the item hedged, primarily in operating activities. We also utilized certain foreign-currency-denominated debt to mitigate our foreign currency translation exposure from our net investment in foreign operations. See Note 5, “Financial Instruments,” for more information. |
Fair Value Measurements | Fair Value Measurements We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability. We determine fair value based on a three-tier fair value hierarchy, which we use to prioritize the inputs used in measuring fair value. These tiers consist of Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, which require us to develop our own assumptions to determine the best estimate of fair value. |
Revenue Recognition | Revenue Recognition Sales are recognized when or as we satisfy a performance obligation by transferring control of a product or service to a customer, in an amount that reflects the consideration to which we expect to be entitled for the product or service. We consider a number of factors in determining when we have transferred control to a customer, including the following: (i) our present right to payment; (ii) the customer’s legal title to the asset; (iii) physical possession of the asset; (iv) the customer’s significant risks and rewards of ownership of the asset; and (v) the customer’s acceptance of the asset. Generally, payment terms with our customers are consistent with those used in our industries and the regions in which we operate. Sales returns are accepted in certain limited circumstances. We record an estimate for return liabilities and a corresponding reduction to sales, in the amount we expect to repay or credit customers, which we base on historical returns and outstanding customer claims. Changes in estimates are updated each reporting period. Sales rebates, discounts, and other customer concessions represent variable consideration and are common in the industries and regions in which we operate and are accounted for as a reduction to sales based on estimates at the time at which products are sold. These estimates are based on our historical experience, as well as current information such as sales forecasts. We review our estimates regularly and, as additional information becomes available, we adjust our sales and the respective accruals, as necessary. Sales tax, value-added tax, and other taxes we collect from customers are excluded from sales. Shipping and handling activities after control of a product is transferred to a customer are accounted for as fulfillment costs and not as separate performance obligations. As a practical expedient, we have elected not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of less than one year. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded in “Marketing, general and administrative expense” in the Consolidated Statements of Income. |
Research and Development | Research and Development Research and development costs are related to research, design, and testing of new products and applications and are expensed as incurred. |
Long-Term Incentive Compensation | Long-Term Incentive Compensation No long-term incentive compensation expense was capitalized in 2019, 2018, or 2017. Valuation of Stock-Based Awards Our stock-based compensation expense is based on the fair value of awards, adjusted for estimated forfeitures, and amortized on a straight-line basis over the requisite service period for stock options and restricted stock units (“RSUs”). Compensation expense for performance units (“PUs”) is based on the fair value of awards, adjusted for estimated forfeitures, and amortized on a straight-line basis as these awards cliff-vest at the end of the requisite service period. Compensation expense related to market-leveraged stock units (“MSUs”) is based on the fair value of awards, adjusted for estimated forfeitures, and amortized on a graded-vesting basis over their respective performance periods. Compensation expense for awards with a market condition as a performance objective, which includes PUs and MSUs, is not adjusted if the condition is not met, as long as the requisite service period is met. The fair value of stock options is estimated as of the date of grant using the Black-Scholes option-pricing model. This model requires input assumptions for our expected dividend yield, expected stock price volatility, risk-free interest rate, and the expected option term. The fair value of RSUs and the component of PUs that is subject to the achievement of a performance objective based on a financial performance condition is determined based on the fair market value of our common stock as of the date of grant, adjusted for foregone dividends. The fair value of stock-based awards that are subject to achievement of performance objectives based on a market condition, which includes MSUs and the other component of PUs, is determined using the Monte-Carlo simulation method, which utilizes multiple input variables, including expected stock price volatility and other assumptions appropriate for determining fair value, to estimate the probability of satisfying the target performance objectives established for the award. Certain of these assumptions are based on management’s estimates, in consultation with outside specialists. Significant changes in assumptions for future awards and actual forfeiture rates could materially impact stock-based compensation expense and our results of operations. Valuation of Cash-Based Awards Cash-based awards consist of long-term incentive units (“LTI Units”) granted to eligible employees. LTI Units are classified as liability awards and remeasured at each quarter-end over the applicable vesting or performance period. In addition to LTI Units with terms and conditions that mirror those of RSUs, we also grant certain employees LTI Units with terms and conditions that mirror those of PUs and MSUs. Forfeitures We estimate expected forfeitures in determining the compensation cost to be recognized each period, rather than accounting for forfeitures as they occur. Changes in estimated forfeiture rates are recorded as cumulative adjustments in the period estimates are revised. See Note 12, “Long-term Incentive Compensation,” for more information. |
Taxes Based on Income | Taxes Based on Income We are subject to income tax in the U.S. and multiple foreign jurisdictions, whereby judgment is required in evaluating and estimating our worldwide provision, accruals for taxes, deferred taxes and for evaluating our tax positions. Our provision for income taxes is determined using the asset and liability approach in accordance with GAAP. Under this approach, deferred taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities. We record a valuation allowance to reduce our deferred tax assets when uncertainty regarding their realizability exists. We recognize and measure our uncertain tax positions following the more-likely-than-not threshold for recognition and measurement for tax positions we take or expect to take on a tax return. See Note 14, “Taxes Based on Income,” for more information. |
Recent Accounting Requirements | Recent Accounting Requirements In November 2018, the Financial Accounting Standards Board ("FASB”) issued guidance that clarifies the interaction between guidance regarding collaborative arrangements and revenue from contracts with customers. This guidance is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. We do not anticipate that the adoption of this guidance will have a significant impact on our financial position, results of operations, cash flows, and disclosures. In June 2016, the FASB issued revised guidance on the measurement of credit losses on financial instruments. Credit losses on loans, trade and other receivables, held-to-maturity debt securities, and other instruments will reflect the current estimate of the expected credit losses. This guidance is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. We do not anticipate that our adoption of this guidance will have a significant impact on our financial position, results of operations, cash flows, and disclosures. |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Schedule of changes in net carrying amount of goodwill | Label and Retail Branding Industrial and Graphic and Information Healthcare (In millions) Materials Solutions Materials Total Goodwill as of December 30, 2017 $ 429.5 $ 355.4 $ 200.2 $ 985.1 Acquisition adjustments (1) — — (17.7) (17.7) Translation adjustments (14.0) (5.7) (5.9) (25.6) Goodwill as of December 29, 2018 415.5 349.7 176.6 941.8 Translation adjustments (7.7) (.4) (2.9) (11.0) Goodwill as of December 28, 2019 $ 407.8 $ 349.3 $ 173.7 $ 930.8 (1) Goodwill purchase price allocation adjustments and measurement period adjustments for contingent consideration liabilities related to the acquisition of Yongle Tape. |
Summary of the amounts and weighted useful lives of finite-lived intangible assets at acquisition | Weighted average amortization Amount period (in millions) (in years) Customer relationships $ 70.9 16 Patents and other acquired technology 31.9 9 Trade names and trademarks 4.2 6 |
Schedule of finite-lived intangible assets | 2019 2018 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying (In millions) Amount Amortization Amount Amount Amortization Amount Customer relationships $ 319.5 $ 238.7 $ 80.8 $ 322.2 $ 231.8 $ 90.4 Patents and other acquired technology 81.7 61.3 20.4 84.0 56.8 27.2 Trade names and trademarks 24.3 19.8 4.5 27.0 21.7 5.3 Other intangibles .2 .2 — 11.9 11.9 — Total $ 425.7 $ 320.0 $ 105.7 $ 445.1 $ 322.2 $ 122.9 |
Estimated amortization expense for finite lived intangible assets | Estimated Amortization (In millions) Expense 2020 $ 12.2 2021 11.6 2022 10.6 2023 9.6 2024 8.0 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Schedule of long-term debt, including its respective interest rates, and capital lease obligations | (In millions) 2019 2018 Long-term debt Medium-term notes: Series 1995 due 2020 through 2025 $ 45.0 $ 45.0 Long-term notes: Senior notes due 2020 at 5.4% 250.0 249.7 Senior notes due 2023 at 3.4% 249.1 248.9 Senior notes due 2025 at 1.25% (1) 553.4 569.0 Senior notes due 2028 at 4.875% 493.9 493.3 Senior notes due 2033 at 6.0% 148.9 148.8 Other borrowings (2) — 14.4 Less amount classified as current (265.0) (18.2) Total long-term debt (3) $ 1,475.3 $ 1,750.9 (1) These senior notes are euro-denominated. (2) Other borrowings consisted of long-term bank borrowings by foreign subsidiaries. (3) Includes unamortized debt issuance cost and debt discount of $5.6 million and $5.7 million, respectively, as of year-end 2019 and $6.8 million and $6.3 million, respectively, as of year-end 2018. |
Schedule of maturities of long term debt for each of the next five fiscal years and thereafter | Year (In millions) 2020 (classified as current) $ 265.0 2021 — 2022 — 2023 250.0 2024 — 2025 and thereafter 1,236.5 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Components of the gains (losses), before taxes, recognized in Accumulated other comprehensive loss related to cash flow hedge contracts | (In millions) 2019 2018 2017 Foreign exchange contracts $ 1.4 $ 1.0 $ (2.2) Commodity contracts (.8) .4 (.6) $ .6 $ 1.4 $ (2.8) |
Components of the net gains (losses) recognized in income related to other derivative instruments, which are not designated as hedging instruments | (In millions) Statements of Income Location 2019 2018 2017 Foreign exchange contracts Cost of products sold $ (1.5) $ 4.5 $ (1.2) Foreign exchange contracts Marketing, general and administrative expense 3.5 (27.0) (42.9) $ 2.0 $ (22.5) $ (44.1) |
Components of the gain (loss), before tax, recognized in Accumulated other comprehensive loss related to the net investment hedge | (In millions) 2019 2018 2017 Foreign currency denominated debt $ 6.8 $ 1.3 $ (63.7) |
Cash Flow Hedging | |
Fair value and balance sheet locations of derivatives | Asset Liability (In millions) Balance Sheet Location 2019 2018 Balance Sheet Location 2019 2018 Foreign exchange contracts Other current assets $ .4 $ .5 Other current liabilities $ .9 $ .8 Commodity contracts Other current assets — .1 Other current liabilities .4 — $ .4 $ .6 $ 1.3 $ .8 |
Other Derivatives | |
Fair value and balance sheet locations of derivatives | Asset Liability (In millions) Balance Sheet Location 2019 2018 Balance Sheet Location 2019 2018 Foreign exchange contracts Other current assets $ 4.8 $ 3.0 Other current liabilities $ 4.7 $ 7.9 |
PENSION AND OTHER POSTRETIREM_2
PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Defined Benefit Plans | |
Schedule of plan benefit obligations | Pension Benefits 2019 2018 (In millions) U.S. Int’l U.S. Int’l Change in projected benefit obligations Projected benefit obligations at beginning of year $ 868.5 $ 755.8 $ 1,082.1 $ 836.7 Service cost — 15.6 — 19.2 Interest cost 9.0 14.8 34.5 15.7 Participant contribution — 4.1 — 3.8 Amendments — 1.8 — — Actuarial (gain) loss (27.1) 56.8 (13.2) (58.8) Benefits paid (20.7) (21.3) (61.8) (22.3) Settlements (1) (754.0) (4.5) (173.1) (9.5) Foreign currency translation — (11.4) — (29.0) Projected benefit obligations at end of year $ 75.7 $ 811.7 $ 868.5 $ 755.8 Accumulated benefit obligations at end of year $ 75.7 $ 754.0 $ 868.5 $ 696.7 (1) In 2019, settlements in the U.S. related to the ADPP termination. Settlements in our international plans related to lump-sum payments in Switzerland. In 2018, settlements in the U.S. related to lump-sum payments associated with the ADPP termination and two nonqualified benefit plans. Settlements in our international plans related to lump-sum payments in the UK and France. |
Schedule of plan assets | Pension Benefits 2019 2018 (In millions) U.S. Int’l U.S. Int’l Change in plan assets Plan assets at beginning of year $ 735.6 $ 631.8 $ 740.2 $ 683.7 Actual return on plan assets 20.7 118.5 (3.6) (13.3) Employer contributions (1) 18.4 13.6 233.9 14.7 Participant contributions — 4.1 — 3.8 Benefits paid (20.7) (21.3) (61.8) (22.3) Settlements (2) (754.0) (4.5) (173.1) (9.5) Foreign currency translation — (7.8) — (25.3) Plan assets at end of year $ — $ 734.4 $ 735.6 $ 631.8 (1) In 2019, an additional contribution of $10 million was made to the ADPP to cover the remaining liabilities associated with its termination. In August 2018, a contribution of $200 million had been made to the ADPP using commercial paper borrowings. (2) In 2019, settlements in the U.S. related to the ADPP termination. Settlements in our international plans related to lump-sum payments in Switzerland. In 2018, settlements in the U.S. related to lump-sum payments associated with the ADPP and two nonqualified benefit plans. Settlements in our international plans related to lump-sum payments in the UK and France. |
Schedule of funded status | Pension Benefits 2019 2018 (In millions) U.S. Int’l U.S. Int’l Funded status of the plans Other assets $ — $ 50.8 $ — $ 12.6 Other accrued liabilities (1) (7.5) (2.4) (65.1) (2.0) Long-term retirement benefits and other liabilities (2) (68.2) (125.7) (67.8) (134.6) Plan assets less than benefit obligations $ (75.7) $ (77.3) $ (132.9) $ (124.0) (1) In 2019, in connection with its termination, we settled ADPP’s 2018 underfunded benefit obligation of approximately $57 million. (2) In accordance with our funding strategy, we have the option to fund certain of these U.S. liabilities with proceeds from our corporate-owned life insurance policies. |
Schedule of weighted-average assumptions used to determine year-end benefit obligations | Pension Benefits 2019 2018 U.S. Int’l U.S. Int’l Weighted average assumptions used to determine year-end benefit obligations Discount rate 2.93 % 1.66 % 3.72 % 2.39 % Compensation rate increase — 2.21 — 2.23 |
Schedule of pre-tax amounts, recognized in "Accumulated other comprehensive loss" | Pension Benefits 2019 2018 (In millions) U.S. Int’l U.S. Int’l Net actuarial loss $ 15.5 $ 101.9 $ 487.5 $ 149.3 Prior service (credit) cost — (4.3) 15.9 (6.7) Net transition obligation — — — .1 Net amount recognized in accumulated other comprehensive loss $ 15.5 $ 97.6 $ 503.4 $ 142.7 |
Schedule of pretax amounts, including that of discontinued operations, recognized in "Other comprehensive loss (income)" | Pension Benefits 2019 2018 2017 (In millions) U.S. Int’l U.S. Int’l U.S. Int’l Net actuarial (gain) loss $ (44.6) $ (42.7) $ 33.5 $ (27.2) $ 21.8 $ (17.2) Prior service credit — 1.8 — — — (2.1) Amortization of unrecognized: Net actuarial gain (.5) (4.0) (21.2) (8.1) (18.7) (10.8) Prior service credit (cost) — .4 (.8) .5 (.9) .4 Settlements (442.8) (.6) (92.0) (1.7) — — Net amount recognized in other comprehensive (income) loss $ (487.9) $ (45.1) $ (80.5) $ (36.5) $ 2.2 $ (29.7) |
Schedule of components of net periodic benefit cost (credit) | Pension Benefits 2019 2018 2017 (In millions) U.S. Int’l U.S. Int’l U.S. Int’l Service cost $ — $ 15.6 $ — $ 19.2 $ .5 $ 18.2 Interest cost 2.7 14.8 34.5 15.7 35.3 14.3 Actuarial loss (gain) 2.5 — (.6) — 1.7 — Expected return on plan assets — (21.0) (42.5) (23.8) (40.5) (21.1) Amortization of actuarial loss .5 4.0 21.2 8.1 18.7 10.8 Amortization of prior service (credit) cost — (.4) .8 (.5) .9 (.4) Recognized loss on settlements (1) 443.5 .6 92.0 1.7 — — Net periodic benefit cost (credit) $ 449.2 $ 13.6 $ 105.4 $ 20.4 $ 16.6 $ 21.8 (1) In 2019, settlements in the U.S. related to the ADPP termination. Settlements in our international plans related to lump-sum payments in Switzerland. In 2018, settlements in the U.S. related to lump-sum payments associated with the ADPP and two nonqualified benefit plans. Settlements in our international plans related to lump-sum payments in the UK and France. |
Schedule of weighted-average assumptions used to determine net periodic cost | Pension Benefits 2019 2018 2017 U.S. Int’l U.S. Int’l U.S. Int’l Discount rate 3.73 % 2.39 % 3.72 % 2.25 % 4.18 % 2.12 % Expected return on assets — 3.38 7.00 3.78 7.00 3.77 Compensation rate increase — 2.23 — 2.26 — 2.24 |
Schedule of defined benefit plan contributions | (In millions) U.S. pension plans $ 7.6 International pension plans 13.2 |
Schedule of anticipated future benefit payments | Pension Benefits (In millions) U.S. Int’l 2020 $ 7.6 $ 20.2 2021 8.0 22.0 2022 6.6 23.1 2023 6.4 22.6 2024 6.4 22.7 2025-2029 26.0 141.6 |
U.S. | |
Defined Benefit Plans | |
Schedule of fair value of plan assets | Fair Value Measurements Using Quoted Significant Significant Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) 2018 Cash and cash equivalents $ 27.1 $ 27.1 $ — $ — Equity securities .3 — .3 — Fixed income securities – government and municipal bonds 113.0 66.3 46.7 — Fixed income securities – corporate bonds 592.8 — 592.8 — Other 2.4 — 2.4 — Total U.S. plan assets $ 735.6 |
International | |
Defined Benefit Plans | |
Schedule of fair value of plan assets | Fair Value Measurements Using Quoted Significant Significant Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) 2019 Cash $ 1.2 $ 1.2 $ — $ — Insurance contracts 36.3 — — 36.3 Pooled funds – fixed income securities (1) 329.9 Pooled funds – equity securities (1) 268.8 Pooled funds – other investments (1) 98.2 Total international plan assets at fair value $ 734.4 2018 Cash $ 4.1 $ 4.1 $ — $ — Insurance contracts 36.9 — — 36.9 Pooled funds – fixed income securities (1) 300.4 Pooled funds – equity securities (1) 185.0 Pooled funds – other investments (1) 105.4 Total international plan assets at fair value $ 631.8 (1) Pooled funds that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to reconcile to total international plan assets. |
Schedule of reconciliation of Level 3 assets | Level 3 Assets (In millions) Insurance Contracts Balance at December 29, 2018 $ 36.9 Net realized and unrealized gain 1.5 Purchases 5.6 Settlements (7.0) Impact of changes in foreign currency exchange rates (.7) Balance at December 28, 2019 $ 36.3 |
COMMITMENTS AND LEASES (Tables)
COMMITMENTS AND LEASES (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Supplemental cost information related to leases | (In millions) 2019 Operating lease cost $ 65.4 |
Supplemental balance sheet information related to leases | (In millions) Balance Sheet Location 2019 Assets Operating Other assets $ 138.1 Finance (1) Property, plant and equipment, net 36.1 Total leased assets $ 174.2 Liabilities Current: Operating Other current liabilities $ 41.4 Finance Short-term borrowings and current portion of long-term debt and finance leases 4.5 Non-current: Operating Long-term retirement benefits and other liabilities 98.9 Finance Long-term debt and finance leases 24.0 Total lease liabilities $ 168.8 (1) Finance lease assets are net of accumulated amortization of $5.7 million as of December 28, 2019. |
Supplemental cash flow information related to leases | (In millions) 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 53.1 Operating lease assets obtained in exchange for operating lease liabilities 32.6 |
Schedule of weighted average remaining lease term and discount rate information | 2019 Weighted average remaining lease term (in years): Operating 5.5 Finance 4.1 Weighted average discount rate (percentage): Operating 4.9 % Finance 3.1 |
Schedule of operating and finance lease liabilities by maturity date | (In millions) Operating Leases Finance Leases 2020 $ 46.0 $ 5.7 2021 35.2 12.5 2022 22.4 4.5 2023 15.2 4.1 2024 11.1 3.9 2025 and thereafter 29.8 .9 Total lease payments 159.7 31.6 Less: imputed interest (19.4) (3.1) Present value of lease liabilities $ 140.3 $ 28.5 |
CONTINGENCIES (Tables)
CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Costs of environmental liabilities with remediation | (In millions) 2019 2018 Balance at beginning of year $ 20.0 $ 21.1 Charges, net of reversals 7.4 3.9 Payments (6.0) (5.0) Balance at end of year $ 21.4 $ 20.0 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
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 December 28, 2019: Fair Value Measurements Using Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) Assets Trading securities $ 30.6 $ 26.0 $ 4.6 $ — Derivative assets 5.2 — 5.2 — Bank drafts 21.3 21.3 — — Liabilities Derivative liabilities $ 6.0 $ .4 $ 5.6 $ — The following table provides the assets and liabilities carried at fair value, measured on a recurring basis, as of December 29, 2018: Fair Value Measurements Using Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs (In millions) Total (Level 1) (Level 2) (Level 3) Assets Trading securities $ 26.3 $ 21.5 $ 4.8 $ — Derivative assets 3.6 .1 3.5 — Bank drafts 23.0 23.0 — — Liabilities Derivative liabilities $ 8.7 $ — $ 8.7 $ — Contingent consideration liabilities 1.6 — — 1.6 |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Schedule of net income per common share | (In millions, except per share amounts) 2019 2018 2017 (A) Net income $ 303.6 $ 467.4 $ 281.8 (B) Weighted average number of common shares outstanding 84.0 87.3 88.3 Dilutive shares (additional common shares issuable under stock-based awards) 1.0 1.3 1.8 (C) Weighted average number of common shares outstanding, assuming dilution 85.0 88.6 90.1 Net income per common share: (A) ÷ (B) $ 3.61 $ 5.35 $ 3.19 Net income per common share, assuming dilution (A) ÷ (C) $ 3.57 $ 5.28 $ 3.13 |
SUPPLEMENTAL EQUITY AND COMPR_2
SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Schedule of changes in "Accumulated other comprehensive loss" (net of tax) | Pension and Foreign Other Currency Postretirement Cash Flow (In millions) Translation Benefits Hedges Total Balance as of December 30, 2017 $ (156.2) $ (524.0) $ (.3) $ (680.5) Other comprehensive (loss) income before reclassifications, net of tax (91.2) (4.1) 1.1 (94.2) Reclassifications to net income, net of tax — 93.8 (1.1) 92.7 Net current-period other comprehensive (loss) income, net of tax (91.2) 89.7 — (1.5) Balance as of December 29, 2018 $ (247.4) $ (434.3) $ (.3) $ (682.0) Other comprehensive income before reclassifications, net of tax 2.3 66.4 .5 69.2 Reclassifications to net income, net of tax — 266.1 (1.4) 264.7 Net current-period other comprehensive income (loss), net of tax 2.3 332.5 (.9) 333.9 Balance as of December 28, 2019 $ (245.1) $ (101.8) $ (1.2) $ (348.1) |
Schedule of amounts reclassified from "Accumulated other comprehensive loss" to increase (decrease) net income | Statements of Income (In millions) 2019 2018 2017 Location Cash flow hedges: Foreign exchange contracts $ 2.1 $ 1.3 $ .2 Cost of products sold Commodity contracts (.2) .1 .2 Cost of products sold Interest rate contracts — — (1.8) Interest expense Total before tax 1.9 1.4 (1.4) Tax (.5) (.3) .5 (Benefit from) provision for income taxes Net of tax 1.4 1.1 (.9) Pension and other postretirement benefits (445.4) (121.4) (28.2) Other non-operating expense, net Tax 179.3 27.6 8.9 (Benefit from) provision for income taxes Net of tax (266.1) (93.8) (19.3) Total reclassifications for the period $ (264.7) $ (92.7) $ (20.2) |
Schedule of income tax expense (benefit) allocated to each component of other comprehensive income (loss) | (In millions) 2019 2018 2017 Foreign currency translation: Translation gain (loss) $ (5.5) $ (9.1) $ (25.1) Pension and other postretirement benefits: Net gain (loss) recognized from actuarial gain/loss and prior service cost/credit 19.4 (2.4) .5 Reclassifications to net income 179.3 27.6 8.9 Cash flow hedges: Gains (losses) recognized on cash flow hedges .2 .3 (.6) Reclassifications to net income (.5) (.3) .5 Income tax expense (benefit) allocated to components of other comprehensive income (loss) $ 192.9 $ 16.1 $ (15.8) |
LONG-TERM INCENTIVE COMPENSAT_2
LONG-TERM INCENTIVE COMPENSATION (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Long-Term Incentive Compensation | |
Summary of stock-based compensation expense from continuing operations and the related recognized tax benefit | (In millions) 2019 2018 2017 Stock-based compensation expense $ 34.5 $ 34.3 $ 30.2 Tax benefit 4.3 4.7 4.3 |
Schedule of stock option activity | Weighted average Number of Weighted remaining Aggregate options average contractual life intrinsic value (in thousands) exercise price (in years) (in millions) Outstanding at December 29, 2018 511.6 $ 45.06 4.00 $ 22.4 Exercised (305.4) 33.56 Outstanding at December 28, 2019 206.2 $ 62.10 4.92 $ 14.3 Options vested and expected to vest at December 28, 2019 204.3 61.99 4.91 14.2 Options exercisable at December 28, 2019 135.7 $ 55.93 4.14 $ 10.3 |
Performance Units (PS) | |
Long-Term Incentive Compensation | |
Information related to awarded PUs | Number of PUs Weighted average (in thousands) grant-date fair value Unvested at December 29, 2018 452.8 $ 86.20 Granted at target 182.6 104.43 Adjustment for above-target performance (1) 182.4 68.61 Vested (374.2) 68.42 Forfeited/cancelled (16.1) 97.58 Unvested at December 28, 2019 427.5 $ 101.61 (1) Reflects adjustments for the vesting of awards based on above-target performance for the 2016-2018 performance period. |
Market-leveraged stock units (MSUs) | |
Long-Term Incentive Compensation | |
Information related to awarded MSUs | Number of MSUs Weighted average (in thousands) grant-date fair value Unvested at December 29, 2018 303.6 $ 90.33 Granted at target 104.6 135.85 Adjustments for above-target performance (1) 83.4 70.38 Vested (216.2) 73.60 Forfeited/cancelled (12.0) 114.11 Unvested at December 28, 2019 263.4 $ 115.71 (1) Reflects adjustments for the vesting of awards based on above-target performance for each of the tranches of awards vesting in 2019. |
Restricted Stock Units (RSUs) | |
Long-Term Incentive Compensation | |
Summary of information related to awarded RSUs | Number of RSUs Weighted average (in thousands) grant-date fair value Unvested at December 29, 2018 88.7 $ 83.72 Granted 30.3 107.18 Vested (53.9) 81.71 Forfeited/cancelled (5.4) 82.51 Unvested at December 28, 2019 59.7 $ 97.56 |
COST REDUCTION ACTIONS (Tables)
COST REDUCTION ACTIONS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Restructuring charges and payments | During 2019, restructuring charges and payments were as follows: Accrual at Charges, Foreign Accrual at December 29, Net of Cash Non-cash Currency December 28, (In millions) 2018 Reversals Payments Impairment Translation 2019 2019/2020 Actions Severance and related costs $ — $ 21.9 $ — $ — $ — $ 21.9 Asset impairment charges — 3.3 — (3.3) — — 2018/2019 Actions Severance and related costs 40.7 24.0 (57.1) — (1.1) 6.5 Lease cancellation costs — .3 — — — .3 Asset impairment charges — 1.6 — (1.6) — — Total $ 40.7 $ 51.1 $ (57.1) $ (4.9) $ (1.1) $ 28.7 During 2018, restructuring charges and payments were as follows: Accrual at Charges, Foreign Accrual at December 30, Net of Cash Non-cash Currency December 29, (In millions) 2017 Reversals Payments Impairment Translation 2018 2018/2019 Actions Severance and related costs $ — $ 51.8 $ (9.8) $ — $ (1.3) $ 40.7 Asset impairment charges — 7.6 — (7.6) — — Total $ — $ 59.4 $ (9.8) $ (7.6) $ (1.3) $ 40.7 |
Total amount of restructuring charges incurred by reportable segment and Corporate | (In millions) 2019 2018 2017 Restructuring charges by reportable segment and Corporate Label and Graphic Materials $ 29.0 $ 57.8 $ 14.8 Retail Branding and Information Solutions 9.8 11.9 18.4 Industrial and Healthcare Materials 9.4 4.0 .2 Corporate 2.2 — — Total $ 50.4 $ 73.7 $ 33.4 |
TAXES BASED ON INCOME (Tables)
TAXES BASED ON INCOME (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Taxes based on income | (In millions) 2019 2018 2017 Current: U.S. federal tax $ 11.0 $ (19.7) $ 47.0 State taxes .5 .8 .2 International taxes 148.1 134.3 111.0 159.6 115.4 158.2 Deferred: U.S. federal tax (168.0) (6.3) 134.8 State taxes (8.9) 2.3 (3.7) International taxes (39.4) (26.0) 18.4 (216.3) (30.0) 149.5 (Benefit from) provision for income taxes $ (56.7) $ 85.4 $ 307.7 |
The principal items accounting for the difference between taxes | (In millions) 2019 2018 2017 Computed tax provision at U.S. federal statutory rate (1) $ 52.4 $ 116.5 $ 206.7 Increase (decrease) in taxes resulting from: State taxes, net of federal tax benefit (1) (12.8) 3.9 (3.2) U.S. pension plan settlements and related charges (1) (76.6) — — Tax Cuts and Jobs Act (2) — (34.7) 172.0 Foreign earnings taxed at different rates (3) 56.2 44.0 (40.2) Foreign tax structuring and planning transactions (4) (47.9) (31.0) — Excess tax benefits associated with stock-based payments (7.8) (7.7) (16.0) Valuation allowance 2.0 10.7 (1.4) Corporate-owned life insurance (4.0) (3.8) (6.7) U.S. federal research and development tax credits (6.1) (6.1) (4.9) Tax contingencies and audit settlements (11.8) (11.9) (1.9) Other items, net (.3) 5.5 3.3 (Benefit from) provision for income taxes $ (56.7) $ 85.4 $ 307.7 (1) Included in 2019 and 2018 are tax effects of the pension plan settlement charges associated with the termination of the ADPP. The tax benefits of $102 million and $19 million on the pretax charges were reflected in computed tax provision at U.S. federal statutory rate and state taxes, net of federal tax benefit for fiscal years 2019 and 2018, respectively. In 2019, the tax benefit of $77 million related to the release of stranded tax effects in AOCI through the income statement was reflected in U.S. pension plan settlements and related charges. (2) During 2018 and 2017, we recognized a net tax benefit of $34.7 million and a net tax charge of $172 million, respectively, as a result of the TCJA. These amounts included our TCJA provisional amount and subsequent adjustments, including items that would otherwise be separately disclosed as state taxes, net of federal tax benefit, tax effects of foreign earnings taxed at different rates, tax contingencies and audit settlements, and other items, net. We finalized our TCJA provisional amount as defined under SEC Staff Accounting Bulletin No. 118 in 2018. (3) Included in 2019 and 2018 are certain U.S. international tax provisions imposed by the TCJA; all years included foreign earnings taxed in the U.S., net of credits. (4) In 2019, we recognized a net tax benefit of $47.9 million related to a foreign structuring transaction. This net benefit resulted from the elimination of recapture conditions to which our previously recognized net operating losses were subject. By eliminating these conditions, our losses became permanent, and the offsetting deferred tax liability related to future recapture was released. In 2018, we recognized a net tax benefit of $31 million related to a foreign planning transaction. This net benefit resulted from the recognition of a deferred tax asset in a higher tax rate jurisdiction, partially offset by a taxable gain recognized in a lower effective tax rate jurisdiction. |
Income before taxes from our U.S. and international operations | (In millions) 2019 2018 2017 U.S. $ (355.4) $ (7.3) $ 49.0 International 604.9 562.1 540.5 Income before taxes $ 249.5 $ 554.8 $ 589.5 |
Components of the temporary differences | (In millions) 2019 2018 Accrued expenses not currently deductible $ 25.7 $ 18.4 Net operating loss carryforwards (1) 154.6 166.4 Tax credit carryforwards 46.5 69.0 Stock-based compensation 11.8 12.4 Pension and other postretirement benefits 57.8 79.8 Lease liabilities (2) 30.5 — Other assets 21.3 18.5 Valuation allowance (67.7) (71.8) Total deferred tax assets (3) 280.5 292.7 Depreciation and amortization (41.6) (45.1) Repatriation accrual (18.9) (21.3) Foreign operating loss recapture (1) (3.4) (56.5) Lease assets (2) (29.7) — Other liabilities — (1.6) Total deferred tax liabilities (3) (93.6) (124.5) Total net deferred tax assets $ 186.9 $ 168.2 (1) A portion of our net operating losses originated from prior impairments of investment value in foreign subsidiaries as recognized for foreign accounting and tax reporting purposes. As required by law, these impairment losses are subject to future recapture under certain conditions. In 2019, we executed a foreign tax structuring transaction that eliminated the conditions under which future recapture may occur. Consequently, our previously recognized impairment losses became permanent, and the deferred tax liability related to future recapture was released. (2) In 2019, we adopted the accounting guidance on leases using a modified retrospective approach. As such, the prior year period has not been adjusted. Refer to Note 1, “Summary of Significant Accounting Policies,” and Note 7, “Commitments and Leases,” to the Consolidated Financial Statements for more information. (3) Reflect gross amounts before jurisdictional netting of deferred tax assets and liabilities. |
Schedule of tax credit and net operating loss carryforwards | (In millions) Net Operating Year of Expiry Losses (1) Tax Credits 2020 $ 5.1 $ .3 2021 3.1 .5 2022 6.6 .6 2023 5.2 2.5 2024 5.2 .4 2025 - 2039 8.4 35.1 Indefinite life/no expiry 474.5 7.1 Total $ 508.1 $ 46.5 (1) Net operating losses are presented before tax effect and valuation allowance. |
Reconciliation of the beginning and ending amounts of unrecognized tax benefits | (In millions) 2019 2018 Balance at beginning of year $ 80.8 $ 108.7 Additions for tax positions of the current year 7.5 11.5 Reductions for tax positions of prior years, net (6.7) (23.1) Settlements with tax authorities (1.9) (6.6) Expirations of statutes of limitations (8.0) (5.9) Changes due to translation of foreign currencies (1.8) (3.8) Balance at end of year $ 69.9 $ 80.8 |
SEGMENT AND DISAGGREGATED REV_2
SEGMENT AND DISAGGREGATED REVENUE INFORMATION (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |
Schedule Of Revenue From External Customers By Geographic Area And Product Group Text Block | (In millions) 2019 2018 2017 Net sales to unaffiliated customers Label and Graphic Materials: U.S. $ 1,246.6 $ 1,256.0 $ 1,198.4 Europe 1,767.9 1,851.3 1,689.3 Asia 1,065.0 1,081.2 1,002.6 Latin America 375.4 367.8 357.0 Other international 291.0 294.8 264.4 Total Label and Graphic Materials 4,745.9 4,851.1 4,511.7 Retail Branding and Information Solutions: Apparel 1,458.5 1,441.7 1,352.0 Printer Solutions 191.8 171.5 159.2 Total Retail Branding and Information Solutions 1,650.3 1,613.2 1,511.2 Industrial and Healthcare Materials 673.9 694.7 590.9 Net sales to unaffiliated customers $ 7,070.1 $ 7,159.0 $ 6,613.8 Revenue by geographic area is set forth below. Revenue is attributed to geographic areas based on the location from which the product is shipped. (In millions) 2019 2018 2017 Net sales to unaffiliated customers U.S. $ 1,638.8 $ 1,625.1 $ 1,557.8 Europe 2,160.2 2,251.4 2,041.6 Asia 2,458.5 2,473.2 2,250.5 Latin America 498.3 490.0 476.4 Other international 314.3 319.3 287.5 Net sales to unaffiliated customers $ 7,070.1 $ 7,159.0 $ 6,613.8 |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | (In millions) 2019 2018 2017 Intersegment sales Label and Graphic Materials $ 80.2 $ 78.7 $ 64.1 Retail Branding and Information Solutions 20.6 4.7 3.2 Industrial and Healthcare Materials 8.8 8.8 7.7 Intersegment sales $ 109.6 $ 92.2 $ 75.0 Income before taxes Label and Graphic Materials $ 601.5 $ 568.2 $ 577.4 Retail Branding and Information Solutions 196.6 170.4 126.7 Industrial and Healthcare Materials 60.0 62.9 52.6 Corporate expense (87.6) (83.4) (86.2) Interest expense (75.8) (58.5) (63.0) Other non-operating expense, net (445.2) (104.8) (18.0) Income before taxes $ 249.5 $ 554.8 $ 589.5 Capital expenditures Label and Graphic Materials $ 137.8 $ 151.5 $ 125.5 Retail Branding and Information Solutions 63.1 57.1 48.8 Industrial and Healthcare Materials 24.2 19.3 19.5 Capital expenditures $ 225.1 $ 227.9 $ 193.8 Depreciation and amortization expense Label and Graphic Materials $ 100.2 $ 104.7 $ 102.3 Retail Branding and Information Solutions 52.6 49.0 56.4 Industrial and Healthcare Materials 26.2 27.3 20.0 Depreciation and amortization expense $ 179.0 $ 181.0 $ 178.7 Other expense, net by reportable segment Label and Graphic Materials $ 28.3 $ 61.8 $ 14.5 Retail Branding and Information Solutions 9.9 11.4 18.1 Industrial and Healthcare Materials 9.4 (1.0) 3.7 Corporate 5.6 (2.3) .2 Other expense, net $ 53.2 $ 69.9 $ 36.5 Other expense, net by type Restructuring charges: Severance and related costs $ 45.3 $ 63.0 $ 31.2 Asset impairment charges and lease cancellation costs 5.1 10.7 2.2 Other items: Legal settlement 3.4 — — Transaction costs 2.6 — 5.2 Argentine peso remeasurement transition loss — 3.4 — Other restructuring-related charge — .5 — Reversal of acquisition-related contingent consideration — (5.0) — Net gain on sales of assets (3.2) (2.7) (2.1) Other expense, net $ 53.2 $ 69.9 $ 36.5 |
Schedule of Entity Wide Disclosure on Geographic Areas Long Lived Assets in Individual Countries [Text Block] | (In millions) 2019 2018 2017 Property, plant and equipment, net U.S. $ 366.9 $ 317.3 $ 286.4 International 843.8 820.1 811.5 Property, plant and equipment, net $ 1,210.7 $ 1,137.4 $ 1,097.9 |
SUPPLEMENTAL FINANCIAL INFORM_2
SUPPLEMENTAL FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Schedule of net inventories | (In millions) 2019 2018 Raw materials $ 231.6 $ 236.2 Work-in-progress 201.0 196.7 Finished goods 230.4 218.5 Inventories, net $ 663.0 $ 651.4 |
Schedule of property, plant and equipment | (In millions) 2019 2018 Land $ 25.1 $ 28.0 Buildings and improvements 687.4 643.1 Machinery and equipment 2,316.9 2,231.1 Construction-in-progress 142.2 151.5 Property, plant and equipment 3,171.6 3,053.7 Accumulated depreciation (1,960.9) (1,916.3) Property, plant and equipment, net $ 1,210.7 $ 1,137.4 |
Capitalized software costs | (In millions) 2019 2018 Cost $ 487.2 $ 452.4 Accumulated amortization (334.4) (316.9) Software, net $ 152.8 $ 135.5 |
Schedule of research and development expense | (In millions) 2019 2018 2017 Research and development expense $ 92.6 $ 98.2 $ 93.4 |
Cash paid for interest and income taxes | (In millions) 2019 2018 2017 Interest $ 74.3 $ 54.9 $ 57.7 Income taxes, net of refunds 155.0 153.5 125.6 |
Schedule of amounts and balance sheet locations of deferred revenue | (In millions) December 28, 2019 December 29, 2018 Other current liabilities $ 12.6 $ 11.5 Long-term retirement benefits and other liabilities .3 .3 Total deferred revenue $ 12.9 $ 11.8 |
QUARTERLY FINANCIAL INFORMATI_2
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Quarterly financial information | First Second Third Fourth (In millions, except per share data) Quarter Quarter Quarter Quarter 2019 Net sales $ 1,740.1 $ 1,795.7 $ 1,761.4 $ 1,772.9 Gross profit 465.4 482.3 471.7 484.7 Net (loss) income (1) (146.9) 143.4 144.6 162.5 Net (loss) income per common share (1.74) 1.70 1.72 1.95 Net (loss) income per common share, assuming dilution (1.74) 1.69 1.71 1.92 2018 Net sales $ 1,776.4 $ 1,854.2 $ 1,759.7 $ 1,768.7 Gross profit 483.4 501.4 459.2 471.5 Net income (2) 125.2 95.6 149.5 97.1 Net income per common share 1.42 1.09 1.71 1.13 Net income per common share, assuming dilution 1.40 1.07 1.69 1.11 (1) In the first quarter of 2019, we recognized final settlement charges associated with the termination of the ADPP. Refer to Note 6, “Pension and Other Postretirement Benefits,” for more information. (2) In the fourth quarter of 2018, we recognized settlement charges related to lump-sum payments associated with the ADPP. Refer to Note 6, "Pension and Other Postretirement Benefits," for more information. |
Summary of other expense, net by type for each quarter | First Second Third Fourth (In millions) Quarter Quarter Quarter Quarter 2019 Restructuring charges: Severance and related costs $ 10.4 $ 6.1 $ 3.3 $ 25.5 Asset impairment charges and lease cancellation costs .3 1.4 — 3.4 Other items: Legal settlement — — 3.4 — Transaction costs — — — 2.6 Net gain on sales of assets (3.2) — — — Other expense, net $ 7.5 $ 7.5 $ 6.7 $ 31.5 2018 Restructuring charges: Severance and related costs, net of reversals $ 4.3 $ 58.8 $ (7.1) $ 7.0 Asset impairment charges and lease cancellation costs 8.4 .6 .7 1.0 Other items: Argentine peso remeasurement transition loss — — 3.4 — Other restructuring-related charge .5 — — — Reversal of acquisition-related contingent consideration — — — (5.0) Net gain on sales of assets (.4) (2.3) — — Other expense (income), net $ 12.8 $ 57.1 $ (3.0) $ 3.0 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Summary Of Significant Accounting Policies | |||
Length of Fiscal Period | 364 days | 364 days | 364 days |
Stock-based compensation expense capitalized | $ 0 | $ 0 | $ 0 |
Cash Flow Hedging | |||
Summary Of Significant Accounting Policies | |||
Maximum length of time hedged in cash flow hedge | 36 months | 36 months | 36 months |
Customer concentration risk | Net sales | Ten largest customers | |||
Summary Of Significant Accounting Policies | |||
Concentration risk percentage | 16.00% | 15.00% | 15.00% |
Customer concentration risk | Accounts Receivable | Ten largest customers | |||
Summary Of Significant Accounting Policies | |||
Concentration risk percentage | 12.00% | 14.00% | |
Minimum | |||
Summary Of Significant Accounting Policies | |||
Software estimated useful lives | 5 years | ||
Minimum | Argentina | |||
Summary Of Significant Accounting Policies | |||
Cumulative inflation rate | 100.00% | ||
Minimum | Buildings and improvements | |||
Summary Of Significant Accounting Policies | |||
Property and equipment estimated useful lives | 10 years | ||
Minimum | Machinery and equipment | |||
Summary Of Significant Accounting Policies | |||
Property and equipment estimated useful lives | 3 years | ||
Maximum | |||
Summary Of Significant Accounting Policies | |||
Software estimated useful lives | 10 years | ||
Maximum | Customer concentration risk | Accounts Receivable | |||
Summary Of Significant Accounting Policies | |||
Concentration risk percentage | 10.00% | 10.00% | |
Maximum | Buildings and improvements | |||
Summary Of Significant Accounting Policies | |||
Property and equipment estimated useful lives | 45 years | ||
Maximum | Machinery and equipment | |||
Summary Of Significant Accounting Policies | |||
Property and equipment estimated useful lives | 15 years |
ACQUISITIONS (Details)
ACQUISITIONS (Details) € in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | |
Nov. 30, 2019EUR (€) | Nov. 30, 2019USD ($) | Dec. 30, 2017USD ($) | |
2017 Acquisitions | |||
ACQUISITIONS | |||
Purchase price | $ 340 | ||
Smartrac Transponder Division | |||
ACQUISITIONS | |||
Purchase price | € 225 | $ 250 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Goodwill | |||
Impairment of goodwill | $ 0 | ||
Changes in the net carrying amount of goodwill | |||
Goodwill, Beginning Balance | 941.8 | $ 985.1 | |
Acquisition adjustments | (17.7) | ||
Translation adjustments | (11) | (25.6) | |
Goodwill, Ending Balance | 930.8 | 941.8 | $ 985.1 |
Indefinite-Lived Intangible Assets | |||
Indefinite-lived intangible assets, carrying value | 20.8 | 21.1 | |
Impairment of indefinite-lived intangible assets | 0 | ||
2017 Acquisitions | |||
Finite Lived Intangible Assets Acquired | |||
Intangible assets acquired | $ 107 | ||
2017 Acquisitions | Significant Other Observable Inputs (Level 3) | Minimum | |||
Finite Lived Intangible Assets Acquired | |||
Discount rate used to value the intangibles | 11.00% | ||
2017 Acquisitions | Significant Other Observable Inputs (Level 3) | Maximum | |||
Finite Lived Intangible Assets Acquired | |||
Discount rate used to value the intangibles | 16.50% | ||
Customer relationships | 2017 Acquisitions | |||
Finite Lived Intangible Assets Acquired | |||
Intangible assets acquired | $ 70.9 | ||
Weighted-average amortization period (in years) | 16 years | ||
Patents and other acquired technology | 2017 Acquisitions | |||
Finite Lived Intangible Assets Acquired | |||
Intangible assets acquired | $ 31.9 | ||
Weighted-average amortization period (in years) | 9 years | ||
Trade names and trademarks | 2017 Acquisitions | |||
Finite Lived Intangible Assets Acquired | |||
Intangible assets acquired | $ 4.2 | ||
Weighted-average amortization period (in years) | 6 years | ||
Label and Graphic Materials | |||
Changes in the net carrying amount of goodwill | |||
Goodwill, Beginning Balance | 415.5 | 429.5 | |
Acquisition adjustments | 0 | ||
Translation adjustments | (7.7) | (14) | |
Goodwill, Ending Balance | 407.8 | 415.5 | $ 429.5 |
Retail Branding and Information Solutions | |||
Changes in the net carrying amount of goodwill | |||
Goodwill, Beginning Balance | 349.7 | 355.4 | |
Acquisition adjustments | 0 | ||
Translation adjustments | (0.4) | (5.7) | |
Goodwill, Ending Balance | 349.3 | 349.7 | 355.4 |
Accumulated impairment losses | 820 | 820 | |
Industrial and Healthcare Materials | |||
Changes in the net carrying amount of goodwill | |||
Goodwill, Beginning Balance | 176.6 | 200.2 | |
Acquisition adjustments | (17.7) | ||
Translation adjustments | (2.9) | (5.9) | |
Goodwill, Ending Balance | $ 173.7 | $ 176.6 | $ 200.2 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS - Finite-Lived Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | $ 425.7 | $ 445.1 | |
Accumulated Amortization | 320 | 322.2 | |
Net Carrying Amount | 105.7 | 122.9 | |
Amortization expense on finite-lived intangible assets from business acquisition | $ 13.5 | 15.2 | 18.6 |
Customer relationships | |||
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | 319.5 | 322.2 | |
Accumulated Amortization | 238.7 | 231.8 | |
Net Carrying Amount | 80.8 | 90.4 | |
Patents and other acquired technology | |||
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | 81.7 | 84 | |
Accumulated Amortization | 61.3 | 56.8 | |
Net Carrying Amount | 20.4 | 27.2 | |
Trade names and trademarks | |||
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | 24.3 | 27 | |
Accumulated Amortization | 19.8 | 21.7 | |
Net Carrying Amount | 4.5 | 5.3 | |
Other intangibles | |||
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | 0.2 | 11.9 | |
Accumulated Amortization | 0.2 | 11.9 | |
Net Carrying Amount | $ 0 | $ 0 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS - Future Amortization Expense (Details) $ in Millions | Dec. 28, 2019USD ($) |
Future amortization expense for finite-lived intangible assets | |
2020 | $ 12.2 |
2021 | 11.6 |
2022 | 10.6 |
2023 | 9.6 |
2024 | $ 8 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Short Term Borrowings From Commercial Paper | ||
Short-term debt | ||
U.S. Commercial paper | $ 83.2 | $ 131 |
Euro-Commercial paper | $ 50.1 | $ 0 |
Weighted average interest rate | 1.98% | 2.75% |
Short-Term Borrowings from Euro-Commercial Paper | ||
Short-term debt | ||
Maximum borrowing capacity | $ 500 | |
Maturities of the notes | 364 days | |
Covenants compliance | There are no financial covenants under this program |
DEBT - Revolving Credit Facilit
DEBT - Revolving Credit Facility (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | Nov. 30, 2017 | Oct. 31, 2017 | |
Uncommitted lines of credit | |||||
Revolving credit facility | |||||
Uncommitted lines of credit | $ 330 | ||||
Short term borrowings outstanding | $ 37.4 | $ 45.5 | |||
Weighted average interest rate | 6.40% | 7.00% | |||
Revolving credit facility | |||||
Revolving credit facility | |||||
Maximum borrowing capacity | $ 800 | ||||
Commitment for increased borrowing | $ 400 | ||||
Amount outstanding | 0 | $ 0 | |||
Commitment fees | $ 1.2 | $ 1.2 | $ 1.1 | ||
Previous revolving credit facility | |||||
Revolving credit facility | |||||
Maximum borrowing capacity | $ 700 |
DEBT - Long-Term Debt and Respe
DEBT - Long-Term Debt and Respective Weighted-Average Interest Rate (Details) € in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2018USD ($) | Mar. 31, 2017EUR (€) | Mar. 31, 2017USD ($) | Dec. 29, 2018USD ($) | Dec. 28, 2019USD ($) | |
Long-term debt | |||||
Other borrowings | $ 14.4 | ||||
Less amount classified as current | (18.2) | $ (265) | |||
Total long-term debt | 1,750.9 | 1,475.3 | |||
Unamortized debt issuance cost | 6.8 | 5.6 | |||
Unamortized debt discount | 6.3 | 5.7 | |||
Series 1995 due 2015 through 2025 | |||||
Long-term debt | |||||
Senior notes | $ 45 | $ 45 | |||
Weighted-average interest rate | 7.50% | 7.50% | |||
Senior notes due 2020 at 5.4% | |||||
Long-term debt | |||||
Senior notes | $ 249.7 | $ 250 | |||
Interest rate of senior notes (as a percent) | 5.40% | 5.40% | |||
Senior notes due April 2023 at 3.4% | |||||
Long-term debt | |||||
Senior notes | $ 248.9 | $ 249.1 | |||
Interest rate of senior notes (as a percent) | 3.40% | 3.40% | |||
Senior notes due 2025 at 1.25% | |||||
Long-term debt | |||||
Senior notes | $ 569 | $ 553.4 | |||
Senior notes due 2028 at 4.875% | |||||
Long-term debt | |||||
Senior notes | 493.3 | $ 493.9 | |||
Interest rate of senior notes (as a percent) | 4.875% | ||||
Senior notes due 2033 at 6.0% | |||||
Long-term debt | |||||
Senior notes | $ 148.8 | $ 148.9 | |||
Interest rate of senior notes (as a percent) | 6.00% | 6.00% | |||
Senior notes due March 2025 at 1.25% | |||||
Long-term debt | |||||
Senior notes issued | € | € 500 | ||||
Interest rate of senior notes (as a percent) | 1.25% | ||||
Proceeds, net of underwriting discounts and estimated offering expenses | € 495.5 | $ 526.6 | |||
Senior notes due December 2028 at 4.875% | |||||
Long-term debt | |||||
Senior notes issued | $ 500 | ||||
Interest rate of senior notes (as a percent) | 4.875% | ||||
Proceeds, net of underwriting discounts and estimated offering expenses | $ 493.3 | ||||
ADPP | |||||
Long-term debt | |||||
Amount of contribution | $ 200 |
DEBT - Long-Term Debt and Capit
DEBT - Long-Term Debt and Capital Leases (Details) $ in Millions | Dec. 28, 2019USD ($) |
Maturities of Long-term debt and capital leases | |
2020 (classified as current) | $ 265 |
2023 | 250 |
2025 and thereafter | $ 1,236.5 |
DEBT - Debt issued and Capital
DEBT - Debt issued and Capital Lease Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Debt | |||
Interest costs | $ 81.1 | $ 63.8 | $ 67.9 |
Interest costs capitalized | 5.3 | 5.3 | $ 4.9 |
Fair value of debt | $ 2,050 | $ 2,000 |
FINANCIAL INSTRUMENTS (Details)
FINANCIAL INSTRUMENTS (Details) - Cash Flow Hedging $ in Millions | Dec. 28, 2019USD ($) |
Commodity contracts | |
Financial Instruments | |
Notional amount | $ 3.2 |
Foreign exchange contracts | |
Financial Instruments | |
Notional amount | $ 1,190 |
FINANCIAL INSTRUMENTS - Cash Fl
FINANCIAL INSTRUMENTS - Cash Flow Hedges and Other Derivatives, Fair Value (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Cash Flow Hedging | ||
Cash Flow Hedges, Fair Value | ||
Asset | $ 0.4 | $ 0.6 |
Liability | 1.3 | 0.8 |
Cash Flow Hedging | Foreign exchange contracts | Other current assets | ||
Cash Flow Hedges, Fair Value | ||
Asset | 0.4 | 0.5 |
Cash Flow Hedging | Foreign exchange contracts | Other current liabilities | ||
Cash Flow Hedges, Fair Value | ||
Liability | 0.9 | 0.8 |
Cash Flow Hedging | Commodity contracts | Other current assets | ||
Cash Flow Hedges, Fair Value | ||
Asset | 0.1 | |
Cash Flow Hedging | Commodity contracts | Other current liabilities | ||
Cash Flow Hedges, Fair Value | ||
Liability | 0.4 | |
Other Derivatives | Foreign exchange contracts | Other current assets | ||
Cash Flow Hedges, Fair Value | ||
Asset | 4.8 | 3 |
Other Derivatives | Foreign exchange contracts | Other current liabilities | ||
Cash Flow Hedges, Fair Value | ||
Liability | $ 4.7 | $ 7.9 |
FINANCIAL INSTRUMENTS - Gains (
FINANCIAL INSTRUMENTS - Gains (Losses) Recognized in AOCI (Details) - Cash Flow Hedging - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Gains (losses) recognized in current earnings | |||
Gains (losses) recognized in accumulated other comprehensive loss | $ 0.6 | $ 1.4 | $ (2.8) |
Cash Flow Hedge Loss to be Reclassified within Twelve Months | 0.5 | ||
Foreign exchange contracts | |||
Gains (losses) recognized in current earnings | |||
Gains (losses) recognized in accumulated other comprehensive loss | 1.4 | 1 | (2.2) |
Commodity contracts | |||
Gains (losses) recognized in current earnings | |||
Gains (losses) recognized in accumulated other comprehensive loss | $ (0.8) | $ 0.4 | $ (0.6) |
FINANCIAL INSTRUMENTS - Net Los
FINANCIAL INSTRUMENTS - Net Losses Recognized in Income (Details) - Other Derivatives - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Net losses recognized in income | |||
Net Losses in Income | $ 2 | $ (22.5) | $ (44.1) |
Foreign exchange contracts | Cost of products sold | |||
Net losses recognized in income | |||
Net Losses in Income | (1.5) | 4.5 | (1.2) |
Foreign exchange contracts | Marketing, general and administrative expense | |||
Net losses recognized in income | |||
Net Losses in Income | $ 3.5 | $ (27) | $ (42.9) |
FINANCIAL INSTRUMENTS - Net Inv
FINANCIAL INSTRUMENTS - Net Investment Hedge (Details) € in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | Dec. 30, 2017USD ($) | Jan. 31, 2018EUR (€) | Mar. 31, 2017EUR (€) | |
Gains (losses) recognized in current earnings | |||||
Amount of ineffectiveness from net investment hedge in net (loss) income | $ | $ 0 | $ 0 | $ 0 | ||
Senior notes due March 2025 at 1.25% | |||||
Gains (losses) recognized in current earnings | |||||
Senior notes issued | € | € 500 | ||||
Interest rate of senior notes (as a percent) | 1.25% | ||||
Net Investment Hedge | Designated | |||||
Gains (losses) recognized in current earnings | |||||
Foreign currency denominated debt | $ | $ 6.8 | $ 1.3 | $ (63.7) | ||
Net Investment Hedge | Designated | Senior notes due March 2025 at 1.25% | |||||
Gains (losses) recognized in current earnings | |||||
Senior notes issued | € | € 255 | € 500 | |||
Interest rate of senior notes (as a percent) | 1.25% |
PENSION AND OTHER POSTRETIREM_3
PENSION AND OTHER POSTRETIREMENT BENEFITS (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Aug. 31, 2018USD ($) | Aug. 31, 2018USD ($) | Dec. 29, 2018USD ($) | Dec. 28, 2019USD ($)employee | Dec. 29, 2018USD ($) | Dec. 30, 2017USD ($) | |
Components of net periodic benefit cost (credit) | ||||||
Recognized loss on settlements | $ 444.1 | $ 93.7 | ||||
ADPP | ||||||
Defined Benefit Plans | ||||||
Number of active and former employees and their beneficiaries | employee | 8,300 | |||||
Settlements | $ 152 | $ 749 | ||||
Additional Settlements | $ 4 | |||||
Number of remaining former employees and their beneficiaries | employee | 200 | |||||
Noncash charges associated with termination settlement of the plan, net of tax | 85 | |||||
Noncash charges associated with termination settlement of the plan, tax benefits | 19 | |||||
Employer contributions | $ 200 | |||||
Tax benefit associated with termination of pension plan | $ 179 | |||||
Cash contribution | 10 | |||||
Components of net periodic benefit cost (credit) | ||||||
Recognized loss on settlements | (444) | |||||
U.S. | ||||||
Defined Benefit Plans | ||||||
Settlements | 754 | 173.1 | ||||
Plan Assets | 735.6 | 0 | 735.6 | $ 740.2 | ||
Employer contributions | 18.4 | 233.9 | ||||
Components of net periodic benefit cost (credit) | ||||||
Actuarial loss (gain) | (27.1) | (13.2) | ||||
U.S. | ADPP | ||||||
Defined Benefit Plans | ||||||
Employer contributions | $ 200 | 10 | ||||
International | ||||||
Defined Benefit Plans | ||||||
Settlements | 4.5 | 9.5 | ||||
Plan Assets | $ 631.8 | 734.4 | 631.8 | $ 683.7 | ||
Employer contributions | 13.6 | 14.7 | ||||
Components of net periodic benefit cost (credit) | ||||||
Actuarial loss (gain) | $ 56.8 | $ (58.8) | ||||
International | Equity Securities | ||||||
Defined Benefit Plans | ||||||
Target assets allocation (as a percent) | 32.00% | |||||
International | Fixed income securities and cash | ||||||
Defined Benefit Plans | ||||||
Target assets allocation (as a percent) | 44.00% | |||||
International | Other investments | ||||||
Defined Benefit Plans | ||||||
Target assets allocation (as a percent) | 24.00% |
PENSION AND OTHER POSTRETIREM_4
PENSION AND OTHER POSTRETIREMENT BENEFITS - Defined Benefit Plans (Details) - International - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Defined Benefit Plans | |||
Total plan assets | $ 734.4 | $ 631.8 | $ 683.7 |
Total | |||
Defined Benefit Plans | |||
Total plan assets | 734.4 | 631.8 | |
Cash | Total | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 1.2 | 4.1 | |
Pooled funds - Fixed income securities | Total | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 329.9 | 300.4 | |
Insurance contracts | Total | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 36.3 | 36.9 | |
Equity Securities | Total | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 268.8 | 185 | |
Pooled funds - Other | Total | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 98.2 | 105.4 | |
Quoted Prices in Active Markets (Level 1) | Cash | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 1.2 | 4.1 | |
Significant Other Observable Inputs (Level 3) | Insurance contracts | |||
Defined Benefit Plans | |||
Total plan assets at fair value | $ 36.3 | $ 36.9 |
PENSION AND OTHER POSTRETIREM_5
PENSION AND OTHER POSTRETIREMENT BENEFITS - Reconciliation For Assets Measure At Fair Value Using Level 3 (Details) - International - USD ($) $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Reconciliation of Level 3 assets | ||
Impact of changes in foreign currency exchange rates | $ (7.8) | $ (25.3) |
Significant Other Observable Inputs (Level 3) | Insurance contracts | ||
Reconciliation of Level 3 assets | ||
Balance at the beginning of the year | 36.9 | |
Net realized and unrealized gain | 1.5 | |
Purchases | 5.6 | |
Settlements | (7) | |
Impact of changes in foreign currency exchange rates | (0.7) | |
Balance at the end of the year | $ 36.3 | $ 36.9 |
PENSION AND OTHER POSTRETIREM_6
PENSION AND OTHER POSTRETIREMENT BENEFITS - U.S. plan assets (all in the ADPP) at fair value (Details) - U.S. - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Defined Benefit Plans | |||
Total plan assets | $ 0 | $ 735.6 | $ 740.2 |
Quoted Prices in Active Markets (Level 1) | Cash | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 27.1 | ||
Quoted Prices in Active Markets (Level 1) | Fixed income securities - government and municipal bonds | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 66.3 | ||
Significant Other Observable Inputs (Level 2) | Equity Securities | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 0.3 | ||
Significant Other Observable Inputs (Level 2) | Fixed income securities - government and municipal bonds | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 46.7 | ||
Significant Other Observable Inputs (Level 2) | Fixed income securities - Corporate bonds | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 592.8 | ||
Significant Other Observable Inputs (Level 2) | Pooled funds - Other | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 2.4 | ||
Total | |||
Defined Benefit Plans | |||
Total plan assets | 735.6 | ||
Total | Cash | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 27.1 | ||
Total | Equity Securities | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 0.3 | ||
Total | Fixed income securities - government and municipal bonds | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 113 | ||
Total | Fixed income securities - Corporate bonds | |||
Defined Benefit Plans | |||
Total plan assets at fair value | 592.8 | ||
Total | Pooled funds - Other | |||
Defined Benefit Plans | |||
Total plan assets at fair value | $ 2.4 |
PENSION AND OTHER POSTRETIREM_7
PENSION AND OTHER POSTRETIREMENT BENEFITS - Change in Projected Benefit Obligations (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 29, 2018USD ($) | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($)item | |
ADPP | |||
Change in projected benefit obligations | |||
Settlements | $ (152) | $ (749) | |
U.S. | |||
Change in projected benefit obligations | |||
Projected benefit obligations at beginning of year | 868.5 | $ 1,082.1 | |
Interest cost | 9 | 34.5 | |
Actuarial (gain) loss | (27.1) | (13.2) | |
Benefits paid | (20.7) | (61.8) | |
Settlements | (754) | (173.1) | |
Projected benefit obligations at end of year | 868.5 | 75.7 | 868.5 |
Accumulated benefit obligations at end of year | 868.5 | 75.7 | $ 868.5 |
U.S. | ADPP | |||
Change in projected benefit obligations | |||
Number of nonqualified benefit plans | item | 2 | ||
International | |||
Change in projected benefit obligations | |||
Projected benefit obligations at beginning of year | 755.8 | $ 836.7 | |
Service cost | 15.6 | 19.2 | |
Interest cost | 14.8 | 15.7 | |
Participant contribution | 4.1 | 3.8 | |
Amendments | 1.8 | ||
Actuarial (gain) loss | 56.8 | (58.8) | |
Benefits paid | (21.3) | (22.3) | |
Settlements | (4.5) | (9.5) | |
Foreign currency translation | (11.4) | (29) | |
Projected benefit obligations at end of year | 755.8 | 811.7 | 755.8 |
Accumulated benefit obligations at end of year | $ 696.7 | $ 754 | $ 696.7 |
PENSION AND OTHER POSTRETIREM_8
PENSION AND OTHER POSTRETIREMENT BENEFITS - Change in Plan Assets (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2018USD ($) | Aug. 31, 2018USD ($) | Dec. 28, 2019USD ($)item | Dec. 29, 2018USD ($) | |
ADPP | ||||
Change in plan assets | ||||
Amount of contribution | $ 200 | |||
U.S. | ||||
Change in plan assets | ||||
Plan assets at beginning of year | $ 735.6 | $ 740.2 | ||
Actual return on plan assets | 20.7 | (3.6) | ||
Amount of contribution | 18.4 | 233.9 | ||
Benefits paid | (20.7) | (61.8) | ||
Settlements | (754) | (173.1) | ||
Plan assets at end of year | 0 | 735.6 | ||
U.S. | ADPP | ||||
Change in plan assets | ||||
Amount of contribution | $ 200 | $ 10 | ||
Number of plans | item | 2 | |||
International | ||||
Change in plan assets | ||||
Plan assets at beginning of year | $ 631.8 | 683.7 | ||
Actual return on plan assets | 118.5 | (13.3) | ||
Amount of contribution | 13.6 | 14.7 | ||
Participant contributions | 4.1 | 3.8 | ||
Benefits paid | (21.3) | (22.3) | ||
Settlements | (4.5) | (9.5) | ||
Foreign currency translation | (7.8) | (25.3) | ||
Plan assets at end of year | $ 734.4 | $ 631.8 |
PENSION AND OTHER POSTRETIREM_9
PENSION AND OTHER POSTRETIREMENT BENEFITS - Funded Status of the Plan (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
ADPP | ||
Funded status of the plans | ||
Net pension benefit obligation remaining underfunded amount | $ 57 | |
U.S. | ||
Pension plans with projected benefit obligations in excess of plan assets | ||
Projected benefit obligation in excess of plan assets | $ 263 | 1,470 |
Fair value of plan assets | 59 | 1,200 |
Pension plans with accumulated benefit obligations in excess of plan assets | ||
Accumulated benefit obligations | 237 | 1,020 |
Fair value of plan assets | 59 | 792 |
U.S. | ||
Funded status of the plans | ||
Other accrued liabilities | (7.5) | (65.1) |
Long-term retirement benefits and other liabilities | (68.2) | (67.8) |
Plan assets less than benefit obligations | $ (75.7) | $ (132.9) |
Weighted-average assumptions used to determine year-end benefit obligations | ||
Discount rate (as a percent) | 2.93% | 3.72% |
International | ||
Funded status of the plans | ||
Other assets | $ 50.8 | $ 12.6 |
Other accrued liabilities | (2.4) | (2) |
Long-term retirement benefits and other liabilities | (125.7) | (134.6) |
Plan assets less than benefit obligations | $ (77.3) | $ (124) |
Weighted-average assumptions used to determine year-end benefit obligations | ||
Discount rate (as a percent) | 1.66% | 2.39% |
Compensation rate increase | 2.21% | 2.23% |
PENSION AND OTHER POSTRETIRE_10
PENSION AND OTHER POSTRETIREMENT BENEFITS - Pre-tax Amount Recognized in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
U.S. | ||
Pretax amounts recognized in accumulated other comprehensive loss | ||
Net actuarial loss | $ 15.5 | $ 487.5 |
Prior service credit (cost) | 15.9 | |
Net amount recognized in accumulated other comprehensive loss | 15.5 | 503.4 |
International | ||
Pretax amounts recognized in accumulated other comprehensive loss | ||
Net actuarial loss | 101.9 | 149.3 |
Prior service credit (cost) | (4.3) | (6.7) |
Net transition obligation | 0.1 | |
Net amount recognized in accumulated other comprehensive loss | $ 97.6 | $ 142.7 |
PENSION AND OTHER POSTRETIRE_11
PENSION AND OTHER POSTRETIREMENT BENEFITS - Pre-tax Amount Recognized in Other Comprehensive Loss (Income) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
U.S. | |||
Defined Benefit Plans | |||
Net actuarial (gain) loss | $ (44.6) | $ 33.5 | $ 21.8 |
Amortization of unrecognized net actuarial Gain | (0.5) | (21.2) | (18.7) |
Amortization of prior service (credit) cost | (0.8) | (0.9) | |
Settlements | (442.8) | (92) | |
Net amount recognized in other comprehensive (income) loss | (487.9) | (80.5) | 2.2 |
International | |||
Defined Benefit Plans | |||
Net actuarial (gain) loss | (42.7) | (27.2) | (17.2) |
Prior service credit | 1.8 | (2.1) | |
Amortization of unrecognized net actuarial Gain | (4) | (8.1) | (10.8) |
Amortization of prior service (credit) cost | 0.4 | 0.5 | 0.4 |
Settlements | (0.6) | (1.7) | |
Net amount recognized in other comprehensive (income) loss | $ (45.1) | $ (36.5) | $ (29.7) |
PENSION AND OTHER POSTRETIRE_12
PENSION AND OTHER POSTRETIREMENT BENEFITS - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Components of net periodic benefit cost (credit) | |||
Recognized loss on settlements | $ 444.1 | $ 93.7 | |
U.S. | |||
Components of net periodic benefit cost (credit) | |||
Interest cost | 9 | 34.5 | |
Actuarial loss (gain) | (27.1) | (13.2) | |
U.S. | Continuing operations | |||
Components of net periodic benefit cost (credit) | |||
Service cost | $ 0.5 | ||
Interest cost | 2.7 | 34.5 | 35.3 |
Actuarial loss (gain) | 2.5 | (0.6) | 1.7 |
Expected return on plan assets | (42.5) | (40.5) | |
Amortization of actuarial loss | 0.5 | 21.2 | 18.7 |
Amortization of prior service cost (credit) | 0.8 | 0.9 | |
Recognized loss on settlements | 443.5 | 92 | |
Net periodic benefit cost (credit) | 449.2 | 105.4 | 16.6 |
International | |||
Components of net periodic benefit cost (credit) | |||
Service cost | 15.6 | 19.2 | |
Interest cost | 14.8 | 15.7 | |
Actuarial loss (gain) | 56.8 | (58.8) | |
International | Continuing operations | |||
Components of net periodic benefit cost (credit) | |||
Service cost | 15.6 | 19.2 | 18.2 |
Interest cost | 14.8 | 15.7 | 14.3 |
Expected return on plan assets | (21) | (23.8) | (21.1) |
Amortization of actuarial loss | 4 | 8.1 | 10.8 |
Amortization of prior service cost (credit) | (0.4) | (0.5) | (0.4) |
Recognized loss on settlements | 0.6 | 1.7 | |
Net periodic benefit cost (credit) | $ 13.6 | $ 20.4 | $ 21.8 |
PENSION AND OTHER POSTRETIRE_13
PENSION AND OTHER POSTRETIREMENT BENEFITS - Weighted-Average Assumptions for Determining Net Periodic Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
U.S. | |||
Weighted-average assumptions used for determining net periodic cost | |||
Discount rate | 3.73% | 3.72% | 4.18% |
Expected return on assets | 7.00% | 7.00% | |
Company's contribution to the defined benefit plan in the next fiscal year | $ 7.6 | ||
International | |||
Weighted-average assumptions used for determining net periodic cost | |||
Discount rate | 2.39% | 2.25% | 2.12% |
Expected return on assets | 3.38% | 3.78% | 3.77% |
Compensation rate increase | 2.23% | 2.26% | 2.24% |
Company's contribution to the defined benefit plan in the next fiscal year | $ 13.2 |
PENSION AND OTHER POSTRETIRE_14
PENSION AND OTHER POSTRETIREMENT BENEFITS - Future Benefit Payments (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
ADPP | |||
Future Benefit Payments | |||
Settlements | $ 152 | $ 749 | |
U.S. | |||
Future Benefit Payments | |||
Settlements | 754 | $ 173.1 | |
2020 | 7.6 | ||
2021 | 8 | ||
2022 | 6.6 | ||
2023 | 6.4 | ||
2024 | 6.4 | ||
2025 - 2029 | 26 | ||
International | |||
Future Benefit Payments | |||
Settlements | 4.5 | $ 9.5 | |
2020 | 20.2 | ||
2021 | 22 | ||
2022 | 23.1 | ||
2023 | 22.6 | ||
2024 | 22.7 | ||
2025 - 2029 | $ 141.6 |
PENSION AND OTHER POSTRETIRE_15
PENSION AND OTHER POSTRETIREMENT BENEFITS - Postretirement Health Benefits, Defined Contribution and Other Retirement Plans (Details) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 28, 2019USD ($)planshares | Dec. 29, 2018USD ($)shares | Dec. 30, 2017USD ($) | |
Defined contribution and other retirement plans | |||
Postretirement health benefits obligation | $ 3 | $ 4 | |
Accumulated other comprehensive loss relating to postretirement health benefits obligation | $ 8 | 6 | |
Other deferred compensation plans with DSUs issued under equity | plan | 2 | ||
Value of DSUs outstanding under deferred compensation plans | $ 25 | $ 17 | |
DSUs outstanding under deferred compensation plans | shares | 0.2 | 0.2 | |
Recognized defined contribution plan cost | $ 22.4 | $ 21.8 | $ 20.2 |
Deferred compensation plan accrued | $ 91.6 | 84.3 | |
Minimum age of participant for termination of employment to determine forfeiture of interest on contribution | 55 years | ||
Other assets | |||
Defined contribution and other retirement plans | |||
Cash surrender value included in other assets | $ 236.9 | $ 227.4 |
COMMITMENTS AND LEASES - Supple
COMMITMENTS AND LEASES - Supplemental Cost Information Related to Leases (Details) $ in Millions | 12 Months Ended |
Dec. 28, 2019USD ($) | |
COMMITMENTS AND LEASES | |
Operating lease cost | $ 65.4 |
COMMITMENTS AND LEASES - Supp_2
COMMITMENTS AND LEASES - Supplemental Balance Sheet Information Related to Leases (Details) $ in Millions | Dec. 28, 2019USD ($) |
Balance sheet information related to leases | |
Operating Lease, Assets | $ 138.1 |
Operating Lease, Assets (Balance Sheet Location) | us-gaap:OtherAssetsNoncurrent |
Finance Lease, Assets | $ 36.1 |
Finance Lease, Assets (Balance Sheet Location) | us-gaap:PropertyPlantAndEquipmentNet |
Total leased assets | $ 174.2 |
Operating Lease, Current Liabilities | $ 41.4 |
Operating Lease, Current Liabilities (Balance Sheet Location) | us-gaap:OtherAccruedLiabilitiesCurrent |
Finance Lease, Current Liabilities | $ 4.5 |
Finance Lease, Current Liabilities (Balance Sheet Location) | us-gaap:DebtCurrent |
Operating Lease, Non-current Liabilities | $ 98.9 |
Operating Lease, Non-current Liabilities (Balance Sheet Location) | avy:LongTermRetirementBenefitsAndOtherLiabilities |
Finance Lease, Non-current Liabilities | $ 24 |
Finance Lease, Non-current Liabilities (Balance Sheet Location) | us-gaap:LongTermDebtAndCapitalLeaseObligations |
Total lease liabilities | $ 168.8 |
Finance lease assets, Accumulated amortization net | $ 5.7 |
COMMITMENTS AND LEASES - Supp_3
COMMITMENTS AND LEASES - Supplemental Cash Flow Information Related to Leases (Details) $ in Millions | 12 Months Ended |
Dec. 28, 2019USD ($) | |
COMMITMENTS AND LEASES | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 53.1 |
Operating lease assets obtained in exchange for operating lease liabilities | $ 32.6 |
COMMITMENTS AND LEASES - Schedu
COMMITMENTS AND LEASES - Schedule of Weighted Average Remaining Lease Term and Discount Rate Information (Details) | Dec. 28, 2019 |
COMMITMENTS AND LEASES | |
Operating Lease, Weighted average remaining lease term (in years) | 5 years 6 months |
Finance Lease, Weighted average remaining lease term (in years) | 4 years 1 month 6 days |
Operating Lease, Weighted average discount rate (as a percent) | 4.90% |
Finance Lease, Weighted average discount rate (as a percent) | 3.10% |
COMMITMENTS AND LEASES - Sche_2
COMMITMENTS AND LEASES - Schedule of Maturities of Lease Liabilities (Details) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | Dec. 30, 2017USD ($) | |
Operating Leases | |||
2020 | $ 46 | ||
2021 | 35.2 | ||
2022 | 22.4 | ||
2023 | 15.2 | ||
2024 | 11.1 | ||
2025 and thereafter | 29.8 | ||
Total lease payments | 159.7 | ||
Less: imputed interest | (19.4) | ||
Present value of lease liabilities | $ 140.3 | ||
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:OtherAccruedLiabilitiesCurrent avy:LongTermRetirementBenefitsAndOtherLiabilities | ||
Finance Leases | |||
2020 | $ 5.7 | ||
2021 | 12.5 | ||
2022 | 4.5 | ||
2023 | 4.1 | ||
2024 | 3.9 | ||
2025 and thereafter | 0.9 | ||
Total lease payments | 31.6 | ||
Less: imputed interest | (3.1) | ||
Present value of lease liabilities | $ 28.5 | ||
Number of operating lease contracts not yet commenced | 0 | ||
Number of finance lease contract not yet commenced | 0 | ||
Operating leases, rent expense, net, total | $ 66 | $ 64 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) $ in Millions | 12 Months Ended | |
Dec. 28, 2019USD ($)item | Dec. 29, 2018USD ($) | |
Environmental Liabilities Associated with Remediation | ||
Environmental site contingency number of sites | item | 11 | |
Balance at beginning of the period | $ 20 | $ 21.1 |
Charges, net of reversals | 7.4 | 3.9 |
Payments | (6) | (5) |
Balance at end of the period | 21.4 | 20 |
Short term environmental liabilities | $ 10 | $ 5 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Recurring - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Assets | ||
Trading securities | $ 30.6 | $ 26.3 |
Derivative assets | 5.2 | 3.6 |
Bank drafts | 21.3 | 23 |
Liabilities | ||
Derivative liabilities | 6 | 8.7 |
Contingent consideration liability | 1.6 | |
Cash and cash equivalents | ||
Assets | ||
Trading securities | 0.4 | 0.2 |
Other current assets | ||
Assets | ||
Trading securities | 30.2 | 26.1 |
Quoted Prices in Active Markets (Level 1) | ||
Assets | ||
Trading securities | 26 | 21.5 |
Derivative assets | 0.1 | |
Bank drafts | 21.3 | 23 |
Liabilities | ||
Derivative liabilities | 0.4 | |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Trading securities | 4.6 | 4.8 |
Derivative assets | 5.2 | 3.5 |
Liabilities | ||
Derivative liabilities | $ 5.6 | 8.7 |
Significant Other Observable Inputs (Level 3) | ||
Liabilities | ||
Contingent consideration liability | $ 1.6 |
FAIR VALUE MEASUREMENTS - Non-R
FAIR VALUE MEASUREMENTS - Non-Recurring Fair Value Measurements (Details) $ in Millions | 12 Months Ended |
Dec. 29, 2018USD ($) | |
Non-Recurring Fair Value Measurements | |
Carrying amount of long lived-assets | $ 18.1 |
Fair value of long-lived assets | 10.6 |
Other expense, net | |
Non-Recurring Fair Value Measurements | |
Impairment charges for long lived-assets | $ 7.5 |
NET INCOME PER COMMON SHARE (De
NET INCOME PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Net Income Per Common Share | |||||||||||
Net (loss) income | $ 162.5 | $ 144.6 | $ 143.4 | $ (146.9) | $ 97.1 | $ 149.5 | $ 95.6 | $ 125.2 | $ 303.6 | $ 467.4 | $ 281.8 |
Weighted average number of common shares outstanding | 84 | 87.3 | 88.3 | ||||||||
Dilutive shares (additional common shares issuable under stock-based awards) | 1 | 1.3 | 1.8 | ||||||||
Weighted average number of common shares outstanding, assuming dilution | 85 | 88.6 | 90.1 | ||||||||
Net income per common share (in dollars per share) | $ 1.95 | $ 1.72 | $ 1.70 | $ (1.74) | $ 1.13 | $ 1.71 | $ 1.09 | $ 1.42 | $ 3.61 | $ 5.35 | $ 3.19 |
Net income per common share, assuming dilution (in dollars per share) | $ 1.92 | $ 1.71 | $ 1.69 | $ (1.74) | $ 1.11 | $ 1.69 | $ 1.07 | $ 1.40 | $ 3.57 | $ 5.28 | $ 3.13 |
SUPPLEMENTAL EQUITY AND COMPR_3
SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | Apr. 30, 2019 | |
Preferred stock, shares authorized | 5,000,000 | |||
Preferred stock, par value (in dollars per share) | $ 1 | |||
Preferred stock, outstanding shares | 0 | |||
Common stock, authorized shares | 400,000,000 | 400,000,000 | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 | ||
Repurchase of common stock | 2,000,000 | 4,000,000 | ||
Repurchase of common stock, value | $ 237.7 | $ 392.9 | $ 129.7 | |
Share repurchase authorized amount | $ 650 | |||
Share repurchase remained authorized amount | $ 644.7 |
SUPPLEMENTAL EQUITY AND COMPR_4
SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION - Change in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Changes in Accumulated other comprehensive loss (net of tax) | |||
Balance at beginning of the year | $ (682) | $ (680.5) | |
Other comprehensive (loss) income before reclassifications, net of tax | 69.2 | (94.2) | |
Reclassifications to net income, net of tax | 264.7 | 92.7 | |
Net current-period other comprehensive (loss) income, net of tax | 333.9 | (1.5) | $ 71.4 |
Balance at end of the year | (348.1) | (682) | (680.5) |
Foreign Currency Translation | |||
Changes in Accumulated other comprehensive loss (net of tax) | |||
Balance at beginning of the year | (247.4) | (156.2) | |
Other comprehensive (loss) income before reclassifications, net of tax | 2.3 | (91.2) | |
Net current-period other comprehensive (loss) income, net of tax | 2.3 | (91.2) | |
Balance at end of the year | (245.1) | (247.4) | (156.2) |
Pension and Other Postretirement Benefits | |||
Changes in Accumulated other comprehensive loss (net of tax) | |||
Balance at beginning of the year | (434.3) | (524) | |
Other comprehensive (loss) income before reclassifications, net of tax | 66.4 | (4.1) | |
Reclassifications to net income, net of tax | 266.1 | 93.8 | |
Net current-period other comprehensive (loss) income, net of tax | 332.5 | 89.7 | |
Balance at end of the year | (101.8) | (434.3) | (524) |
Cash Flow Hedges | |||
Changes in Accumulated other comprehensive loss (net of tax) | |||
Balance at beginning of the year | (0.3) | (0.3) | |
Other comprehensive (loss) income before reclassifications, net of tax | 0.5 | 1.1 | |
Reclassifications to net income, net of tax | (1.4) | (1.1) | |
Net current-period other comprehensive (loss) income, net of tax | (0.9) | ||
Balance at end of the year | $ (1.2) | $ (0.3) | $ (0.3) |
SUPPLEMENTAL EQUITY AND COMPR_5
SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION - Reclassification Adjustment Out of Accumulated Other Comprehensive loss (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Amounts reclassified from Accumulated other comprehensive loss | |||||||||||
Cost of products sold | $ (5,166) | $ (5,243.5) | $ (4,801.6) | ||||||||
Interest expense | (75.8) | (58.5) | (63) | ||||||||
Income before taxes | 249.5 | 554.8 | 589.5 | ||||||||
Other non-operating expense, net | (445.2) | (104.8) | (18) | ||||||||
(Benefit from) provision for income taxes | 56.7 | (85.4) | (307.7) | ||||||||
Net (loss) income | $ 162.5 | $ 144.6 | $ 143.4 | $ (146.9) | $ 97.1 | $ 149.5 | $ 95.6 | $ 125.2 | 303.6 | 467.4 | 281.8 |
Income tax (benefit) expense allocated - Foreign currency translation: | |||||||||||
Translation gain (loss) | (5.5) | (9.1) | (25.1) | ||||||||
Income tax (benefit) expense allocated - Pension and other postretirement benefits: | |||||||||||
Net loss (gain) recognized from actuarial gain/loss and prior service cost/credit | 19.4 | (2.4) | 0.5 | ||||||||
Reclassifications to net income | 179.3 | 27.6 | 8.9 | ||||||||
Income tax (benefit) expense allocated - Cash flow hedges: | |||||||||||
Gains (losses) recognized on cash flow hedges | 0.2 | 0.3 | (0.6) | ||||||||
Reclassifications to net income | (0.5) | (0.3) | 0.5 | ||||||||
Income tax expense (benefit) allocated to components of other comprehensive income (loss) | 192.9 | 16.1 | (15.8) | ||||||||
Amounts Reclassified from Accumulated other comprehensive loss | |||||||||||
Amounts reclassified from Accumulated other comprehensive loss | |||||||||||
Net (loss) income | (264.7) | (92.7) | (20.2) | ||||||||
Pension and Other Postretirement Benefits | Amounts Reclassified from Accumulated other comprehensive loss | |||||||||||
Amounts reclassified from Accumulated other comprehensive loss | |||||||||||
Other non-operating expense, net | (445.4) | (121.4) | (28.2) | ||||||||
(Benefit from) provision for income taxes | 179.3 | 27.6 | 8.9 | ||||||||
Net (loss) income | (266.1) | (93.8) | (19.3) | ||||||||
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | |||||||||||
Amounts reclassified from Accumulated other comprehensive loss | |||||||||||
Income before taxes | 1.9 | 1.4 | (1.4) | ||||||||
(Benefit from) provision for income taxes | (0.5) | (0.3) | 0.5 | ||||||||
Net (loss) income | 1.4 | 1.1 | (0.9) | ||||||||
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Foreign exchange contracts | |||||||||||
Amounts reclassified from Accumulated other comprehensive loss | |||||||||||
Cost of products sold | 2.1 | 1.3 | 0.2 | ||||||||
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Commodity contracts | |||||||||||
Amounts reclassified from Accumulated other comprehensive loss | |||||||||||
Cost of products sold | $ (0.2) | $ 0.1 | 0.2 | ||||||||
Cash Flow Hedges | Amounts Reclassified from Accumulated other comprehensive loss | Interest Rate Contracts | |||||||||||
Amounts reclassified from Accumulated other comprehensive loss | |||||||||||
Interest expense | $ (1.8) |
LONG-TERM INCENTIVE COMPENSAT_3
LONG-TERM INCENTIVE COMPENSATION (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2017shares | Dec. 28, 2019USD ($)itemshares | Dec. 29, 2018USD ($)shares | Dec. 30, 2017USD ($)shares | Dec. 31, 2016 | |
Long-Term Incentive Compensation | |||||
Stock option granted | shares | 0 | 0 | 0 | ||
Total intrinsic value of stock options exercised | $ 23.5 | $ 2.7 | $ 26.8 | ||
Proceeds from exercises of stock options | 10 | 1 | 22 | ||
Tax benefit associated with option exercises | 5.7 | 0.6 | 10.1 | ||
Marketing, general and administrative expense | |||||
Long-Term Incentive Compensation | |||||
Stock-based compensation expense | 34.5 | 34.3 | 30.2 | ||
Tax benefit | 4.3 | 4.7 | 4.3 | ||
Long-term incentive units | Marketing, general and administrative expense | |||||
Long-Term Incentive Compensation | |||||
Cash-based awards compensation expense | 19.1 | 12.4 | 36.6 | ||
Employee Service Cash Award Tax Benefit from Compensation Expense | $ 4.4 | $ 2.9 | $ 8.3 | ||
Stock Options | |||||
Long-Term Incentive Compensation | |||||
Option expiration period | 10 years | ||||
Stock Options | Ratable vesting | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 4 years | ||||
Stock Options | Minimum | |||||
Long-Term Incentive Compensation | |||||
Purchase price of common stock as a percentage of its fair market value granted to non-employee directors and employees | 100.00% | ||||
Market-leveraged stock units (MSUs) | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 4 years | ||||
Number of tranches represented by each vesting period | item | 1 | ||||
Number of tranches represented by the entire vesting period | item | 4 | ||||
Market-leveraged stock units (MSUs) | Ratable vesting | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 4 years | ||||
Market-leveraged stock units (MSUs) | Minimum | Ratable vesting | |||||
Long-Term Incentive Compensation | |||||
Shares issued (as a percent) | 0.00% | ||||
Market-leveraged stock units (MSUs) | Maximum | Ratable vesting | |||||
Long-Term Incentive Compensation | |||||
Shares issued (as a percent) | 200.00% | ||||
Market-leveraged long-term incentive units | Ratable vesting | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 4 years | ||||
Performance long-term incentive units | Cliff vesting | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 3 years | ||||
Performance long-term incentive units | Minimum | Cliff vesting | |||||
Long-Term Incentive Compensation | |||||
Shares issued (as a percent) | 0.00% | ||||
Performance long-term incentive units | Maximum | Cliff vesting | |||||
Long-Term Incentive Compensation | |||||
Shares issued (as a percent) | 200.00% | ||||
Performance Units (PS) | Minimum | Cliff vesting | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 3 years | ||||
Shares issued (as a percent) | 0.00% | ||||
Performance Units (PS) | Maximum | Cliff vesting | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 4 years | ||||
Shares issued (as a percent) | 200.00% | ||||
Restricted Stock Units (RSUs) | Ratable vesting | Peter W. Mullin | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 1 year | 3 years | |||
Restricted Stock Units (RSUs) | Ratable vesting | Employees | |||||
Long-Term Incentive Compensation | |||||
Vesting period | 4 years | ||||
Unvested Stock Options, Performance Units, Restricted Stock Units and Market-leveraged stock units (MSUs) | |||||
Long-Term Incentive Compensation | |||||
Unrecognized compensation cost related to share based compensation cost | $ 42 | ||||
Unrecognized compensation cost weighted average recognition period | 2 years | ||||
Equity Plan | |||||
Long-Term Incentive Compensation | |||||
Aggregate number of shares available under the plan | shares | 5,400,000 | ||||
Fungible share ratio | shares | 1.5 |
LONG-TERM INCENTIVE COMPENSAT_4
LONG-TERM INCENTIVE COMPENSATION - Stock Option Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Number of options | ||
Outstanding beginning balance, options | 511,600 | |
Exercised, options | (305,400) | |
Outstanding ending balance, options | 206,200 | 511,600 |
Options vested and expected to vest, options | 204,300 | |
Options exercisable | 135,700 | |
Weighted-average exercise price | ||
Outstanding, Weighted-average exercise price, beginning balance | $ 45.06 | |
Exercised, weighted-average exercise price | 33.56 | |
Outstanding, Weighted-average exercise price, ending balance | 62.10 | $ 45.06 |
Options vested and expected to vest, Weighted-average exercise price | 61.99 | |
Options exercisable ,Weighted-average exercise price | $ 55.93 | |
Weighted-average remaining contractual life | ||
Outstanding ,Weighted-average remaining contractual life beginning balance | 4 years 11 months 1 day | 4 years |
Outstanding ,Weighted-average remaining contractual life ending balance | 4 years 11 months 1 day | 4 years |
Options vested or expected to vest, Weighted-average remaining contractual life | 4 years 10 months 28 days | |
Options exercisable, Weighted-average remaining contractual life | 4 years 1 month 20 days | |
Aggregate intrinsic value | ||
Outstanding, Aggregate intrinsic value beginning balance | $ 22.4 | |
Outstanding, Aggregate intrinsic value ending balance | 14.3 | $ 22.4 |
Options vested and expected to vest, Aggregate Intrinsic Value | 14.2 | |
Options exercisable, Aggregate Intrinsic Value | $ 10.3 |
LONG-TERM INCENTIVE COMPENSAT_5
LONG-TERM INCENTIVE COMPENSATION - Number of Awards, Weighted-average Grant-date Fair Value (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Performance Units (PS) | |||
Number of awards | |||
Unvested at December 29, 2018 | 452,800 | ||
Granted at target | 182,600 | ||
Adjustments for above-target performance | 182,400 | ||
Vested | (374,200) | ||
Forfeited/cancelled | (16,100) | ||
Unvested at December 28, 2019 | 427,500 | 452,800 | |
Fair value | $ 25.6 | $ 11.9 | $ 11.2 |
Weighted-average grant-date fair value | |||
Weighted-average grant-date fair value unvested, beginning balance | $ 86.20 | ||
Weighted-average grant-date fair value, granted at target | 104.43 | $ 120.25 | $ 82.15 |
Weighted-average grant-date fair value, Adjustment for above-target performance | 68.61 | ||
Weighted-average grant-date fair value, vested | 68.42 | ||
Weighted-average grant-date fair value, forfeited/Cancelled | 97.58 | ||
Weighted-average grant-date fair value unvested, ending balance | $ 101.61 | $ 86.20 | |
Market-leveraged stock units (MSUs) | |||
Number of awards | |||
Unvested at December 29, 2018 | 303,600 | ||
Granted at target | 104,600 | ||
Adjustments for above-target performance | 83,400 | ||
Vested | (216,200) | ||
Forfeited/cancelled | (12,000) | ||
Unvested at December 28, 2019 | 263,400 | 303,600 | |
Fair value | $ 15.9 | $ 24 | $ 19.3 |
Weighted-average grant-date fair value | |||
Weighted-average grant-date fair value unvested, beginning balance | $ 90.33 | ||
Weighted-average grant-date fair value, granted at target | 135.85 | $ 117.75 | $ 91.40 |
Weighted-average grant-date fair value, Adjustment for above-target performance | 70.38 | ||
Weighted-average grant-date fair value, vested | 73.60 | ||
Weighted-average grant-date fair value, forfeited/Cancelled | 114.11 | ||
Weighted-average grant-date fair value unvested, ending balance | $ 115.71 | $ 90.33 | |
Restricted Stock Units (RSUs) | |||
Number of awards | |||
Unvested at December 29, 2018 | 88,700 | ||
Granted at target | 30,300 | ||
Vested | (53,900) | ||
Forfeited/cancelled | (5,400) | ||
Unvested at December 28, 2019 | 59,700 | 88,700 | |
Fair value | $ 4.4 | $ 5.1 | $ 2.7 |
Weighted-average grant-date fair value | |||
Weighted-average grant-date fair value unvested, beginning balance | $ 83.72 | ||
Weighted-average grant-date fair value, granted at target | 107.18 | $ 106.44 | $ 82.77 |
Weighted-average grant-date fair value, vested | 81.71 | ||
Weighted-average grant-date fair value, forfeited/Cancelled | 82.51 | ||
Weighted-average grant-date fair value unvested, ending balance | $ 97.56 | $ 83.72 |
COST REDUCTION ACTIONS (Details
COST REDUCTION ACTIONS (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 28, 2018item | Dec. 29, 2018USD ($)item | Dec. 28, 2019USD ($)item | Dec. 29, 2018USD ($)item | |
Restructuring charges: | ||||
Charges, Net of Reversals | $ | $ 51.1 | $ 59.4 | ||
2015/2016 Actions | ||||
Restructuring charges: | ||||
Number of position reduced as a result of Cost Reduction Actions | 625 | |||
Charges, Net of Reversals | $ | $ 14.3 | |||
2018 Plan | ||||
Restructuring charges: | ||||
Expected number of positions reduced as a result of Cost Reduction Actions | 390 | |||
Net number of positions reduced as a result of Cost Reduction Actions | 150 | |||
Charges, Net of Reversals | $ | $ 2.3 | $ 55.2 | ||
2018/2019 Actions | ||||
Restructuring charges: | ||||
Expected number of positions reduced as a result of Cost Reduction Actions | 490 | |||
Restructuring charges | $ | $ 4.2 | $ 28.2 | ||
Number of position reduced as a result of Cost Reduction Actions | 85 | |||
2019/2020 Actions | ||||
Restructuring charges: | ||||
Restructuring charges | $ | $ 25.2 | |||
Number of position reduced as a result of Cost Reduction Actions | 370 |
COST REDUCTION ACTIONS - Restru
COST REDUCTION ACTIONS - Restructuring Charges and Payments (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Cost Reduction Actions | |||||||||||
Beginning Balance | $ 40.7 | $ 0 | $ 40.7 | $ 0 | |||||||
Charges, Net of Reversals | 51.1 | 59.4 | |||||||||
Cash payments | (57.1) | (9.8) | |||||||||
Non-cash Impairment | (4.9) | (7.6) | |||||||||
Foreign Currency Translation | (1.1) | (1.3) | |||||||||
Ending Balance | $ 28.7 | $ 40.7 | 28.7 | 40.7 | $ 0 | ||||||
Severance and related costs | |||||||||||
Cost Reduction Actions | |||||||||||
Charges, Net of Reversals | 25.5 | $ 3.3 | $ 6.1 | 10.4 | 7 | $ (7.1) | $ 58.8 | 4.3 | 45.3 | 63 | 31.2 |
2015/2016 Actions | |||||||||||
Cost Reduction Actions | |||||||||||
Charges, Net of Reversals | 14.3 | ||||||||||
2018/2019 Actions | Severance and related costs | |||||||||||
Cost Reduction Actions | |||||||||||
Beginning Balance | $ 40.7 | 0 | 40.7 | 0 | |||||||
Charges, Net of Reversals | 24 | 51.8 | |||||||||
Cash payments | (57.1) | (9.8) | |||||||||
Foreign Currency Translation | (1.1) | (1.3) | |||||||||
Ending Balance | 6.5 | $ 40.7 | 6.5 | 40.7 | 0 | ||||||
2018/2019 Actions | Lease cancellation costs | |||||||||||
Cost Reduction Actions | |||||||||||
Charges, Net of Reversals | 0.3 | ||||||||||
Ending Balance | 0.3 | 0.3 | |||||||||
2018/2019 Actions | Asset impairment charges | |||||||||||
Cost Reduction Actions | |||||||||||
Beginning Balance | $ 0 | 0 | |||||||||
Charges, Net of Reversals | 1.6 | 7.6 | |||||||||
Non-cash Impairment | (1.6) | $ (7.6) | |||||||||
Ending Balance | $ 0 | ||||||||||
2019/2020 Actions | Severance and related costs | |||||||||||
Cost Reduction Actions | |||||||||||
Charges, Net of Reversals | 21.9 | ||||||||||
Ending Balance | $ 21.9 | 21.9 | |||||||||
2019/2020 Actions | Asset impairment charges | |||||||||||
Cost Reduction Actions | |||||||||||
Charges, Net of Reversals | 3.3 | ||||||||||
Non-cash Impairment | $ (3.3) |
COST REDUCTION ACTIONS - Rest_2
COST REDUCTION ACTIONS - Restructuring Charges (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Restructuring charges: | |||
Restructuring charges | $ 51.1 | $ 59.4 | |
Other expense, net | |||
Restructuring charges: | |||
Restructuring charges | 50.4 | 73.7 | $ 33.4 |
Label and Graphic Materials | Other expense, net | |||
Restructuring charges: | |||
Restructuring charges | 29 | 57.8 | 14.8 |
Retail Branding and Information Solutions | Other expense, net | |||
Restructuring charges: | |||
Restructuring charges | 9.8 | 11.9 | 18.4 |
Industrial and Healthcare Materials | Other expense, net | |||
Restructuring charges: | |||
Restructuring charges | 9.4 | $ 4 | $ 0.2 |
Corporate | Other expense, net | |||
Restructuring charges: | |||
Restructuring charges | $ 2.2 |
COST REDUCTION ACTIONS (Detai_2
COST REDUCTION ACTIONS (Details) $ in Millions | 12 Months Ended | |
Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($)item | |
Restructuring charges: | ||
Charges, Net of Reversals | $ 51.1 | $ 59.4 |
2015/2016 Actions | ||
Restructuring charges: | ||
Charges, Net of Reversals | $ 14.3 | |
Number of position reduced as a result of Cost Reduction Actions | item | 625 |
TAXES BASED ON INCOME (Details)
TAXES BASED ON INCOME (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Current: | |||
U.S. federal tax | $ 11 | $ (19.7) | $ 47 |
State taxes | 0.5 | 0.8 | 0.2 |
International taxes | 148.1 | 134.3 | 111 |
Total | 159.6 | 115.4 | 158.2 |
Deferred: | |||
U.S. federal tax | (168) | (6.3) | 134.8 |
State taxes | (8.9) | 2.3 | (3.7) |
International taxes | (39.4) | (26) | 18.4 |
Total | (216.3) | (30) | 149.5 |
(Benefit from) provision for income taxes | $ (56.7) | $ 85.4 | $ 307.7 |
TAXES BASED ON INCOME - Increas
TAXES BASED ON INCOME - Increase (Decrease) in Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Computed tax provision at U.S. federal statutory rate | $ 52.4 | $ 116.5 | $ 206.7 |
Increase (decrease) in taxes resulting from: | |||
State taxes, net of federal tax benefit | (12.8) | 3.9 | (3.2) |
U.S. pension plan settlements and related charges | (76.6) | ||
Tax Cuts and Jobs Act | (34.7) | 172 | |
Foreign earnings taxed at different rates | 56.2 | 44 | (40.2) |
Foreign tax structuring and planning transactions | (47.9) | (31) | |
Excess tax benefits associated with stock based payments | (7.8) | (7.7) | (16) |
Valuation allowance | 2 | 10.7 | (1.4) |
Corporate-owned life insurance | (4) | (3.8) | (6.7) |
U.S. federal research and development tax credits | (6.1) | (6.1) | (4.9) |
Tax contingencies and audit settlements | (11.8) | (11.9) | (1.9) |
Other items, net | (0.3) | 5.5 | 3.3 |
(Benefit from) provision for income taxes | (56.7) | 85.4 | 307.7 |
Tax effect on the pretax charge | 102 | 19 | |
Net tax charge (benefit) as a result of TCJA | $ (34.7) | $ 172 | |
ADPP | |||
Increase (decrease) in taxes resulting from: | |||
Tax effect on the pretax charge | 102 | ||
Release of stranded tax effects in AOCI through the income statement | $ 77 |
TAXES BASED ON INCOME - Income
TAXES BASED ON INCOME - Income (Loss) from Continuing Operations before Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
U.S. | $ (355.4) | $ (7.3) | $ 49 |
International | 604.9 | 562.1 | 540.5 |
Income before taxes | $ 249.5 | $ 554.8 | $ 589.5 |
TAXES BASED ON INCOME - Effecti
TAXES BASED ON INCOME - Effective Tax Rate (Details) - USD ($) $ in Millions | Dec. 22, 2017 | Dec. 30, 2017 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Effective tax rate (as a percent) | (22.70%) | 15.40% | 52.20% | ||
Net tax charge related to the tax on global intangible low-taxed income ("GILTI") of foreign subsidiaries | $ 24.7 | ||||
Net tax benefit from an intellectual property based tax incentive in foreign jurisdiction | 2 | ||||
Recognized loss on settlement | (444.1) | $ (93.7) | |||
Tax benefit as measurement period adjustments to 2017 TCJA provisional amount in accordance to SAB 118 | 34.7 | ||||
Net tax charge for GILTI and BEAT, and the recognition of foreign withholding taxes on current year earnings, offset by the benefit from FDII | 31 | ||||
Net tax benefit primarily due to the recognition of a deferred tax asset | 31 | ||||
Increase in Valuation allowance due to offsetting effects from changes in deferred taxes and uncertain tax positions | 10.7 | ||||
Net tax charge for 2017 TCJA provisional amount | $ 172 | $ 172 | |||
Tax benefit from release of valuation allowance on certain state deferred tax assets | 5.1 | ||||
Net tax benefit from effective setlements and decreases in reserves as a result of closing tax years | 1.9 | ||||
Tax charge related to the estimated transition tax | 147 | ||||
Estimated reduction of previously recognized U.S. deferred tax assets that no longer anticipate to benefit due to changes in future deductibility of executive compensation | 5.3 | ||||
Net benefit primarily from reversal of the deferred tax liability that are previously recorded for future tax costs with repatriations of certain foreign earnings that are not indefinitely reinvested | 38.8 | ||||
Tax charge as an adjustment to the transition tax | 9.5 | ||||
Tax benefit as an adjustment to the remeasurement of deferred taxes | 39.6 | ||||
Tax charge as an incremental accrual for foreign withholding taxes associated with changes in indefinate reinvestment assertion | 3.6 | ||||
Tax benefit from releasing a previously recorded uncertain tax position | 9.4 | ||||
Deferred tax liability relaetd to future tax consequences from repatriating accumulated earnings from foreign subsidiaries that are not indefinately reinvested | 18.9 | ||||
Tax charge related to potential uncertainties of accumulated tax attributes that were used in estimated transition tax calculation | 9.3 | ||||
Corporate income tax rates that was enacted in the U.S. by the TCJA | 21.00% | ||||
Tax charge of estimated remeasurement of net U.S. deferred tax assets at a lower enacted corporate income tax rate | 49.2 | ||||
ADPP | |||||
Tax benefit related to the effective settlement of the ADPP | 179 | ||||
Recognized loss on settlement | 444 | ||||
Tax benefit from a foreign structuring transaction resulting in previously recognized tax losses becoming permanent | 47.9 | ||||
Net tax benefit from the effective settlement of certain German tax audits | 11.8 | $ 11.9 | |||
Tax benefit related to excess tax benefits associated with stock-based payments | $ 7.8 | $ 16 |
TAXES BASED ON INCOME - Schedul
TAXES BASED ON INCOME - Schedule of Components of the Temporary Differences (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Schedule of components of the temporary differences | ||
Accrued expenses not currently deductible | $ 25.7 | $ 18.4 |
Net operating losses | 154.6 | 166.4 |
Tax credit carryforwards | 46.5 | 69 |
Stock-based compensation | 11.8 | 12.4 |
Pension and other postretirement benefits | 57.8 | 79.8 |
Lease liabilities | 30.5 | |
Other assets | 21.3 | 18.5 |
Valuation allowance | (67.7) | (71.8) |
Total deferred tax assets | 280.5 | 292.7 |
Depreciation and amortization | (41.6) | (45.1) |
Repatriation accrual | (18.9) | (21.3) |
Foreign operating loss recapture | (3.4) | (56.5) |
Lease assets | (29.7) | |
Other liabilities | (1.6) | |
Total deferred tax liabilities | (93.6) | (124.5) |
Total net deferred tax assets | $ 186.9 | $ 168.2 |
TAXES BASED ON INCOME - Net Ope
TAXES BASED ON INCOME - Net Operating Loss and Tax Carryforwards (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Net operating loss and tax carryforwards | ||
Tax credit carryforwards | $ 46.5 | $ 69 |
Net operating loss and credit carryforward | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 508.1 | |
Tax credit carryforwards | 46.5 | |
2020 | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 5.1 | |
2021 | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 3.1 | |
2022 | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 6.6 | |
2023 | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 5.2 | |
2024 | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 5.2 | |
2025 - 2039 | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 8.4 | |
Indefinite life/no expiry | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 474.5 | |
2020 | ||
Net operating loss and tax carryforwards | ||
Tax credit carryforwards | 0.3 | |
2021 | ||
Net operating loss and tax carryforwards | ||
Tax credit carryforwards | 0.5 | |
2022 | ||
Net operating loss and tax carryforwards | ||
Tax credit carryforwards | 0.6 | |
2023 | ||
Net operating loss and tax carryforwards | ||
Tax credit carryforwards | 2.5 | |
2024 | ||
Net operating loss and tax carryforwards | ||
Tax credit carryforwards | 0.4 | |
2025 - 2039 | ||
Net operating loss and tax carryforwards | ||
Tax credit carryforwards | 35.1 | |
Indefinite life/no expiry | ||
Net operating loss and tax carryforwards | ||
Tax credit carryforwards | 7.1 | |
Foreign subsidiaries | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 508 | $ 538 |
State | ||
Net operating loss and tax carryforwards | ||
Net operating loss carryforwards | 635 | |
Operating loss carryforwards, valuation allowance | $ 588 |
TAXES BASED ON INCOME - Unrecog
TAXES BASED ON INCOME - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Unrecognized tax benefits | $ 69.9 | $ 80.8 | $ 108.7 |
Unrecognized tax benefits, if recognized, would reduce annual effective income tax rate | 61 | 72 | |
Accrued interest and penalties for uncertain tax positions, net of tax benefit | $ 22 | $ 25 |
TAXES BASED ON INCOME - Reconci
TAXES BASED ON INCOME - Reconciliation of the Beginning and Ending Amounts of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ||
Balance at beginning of year | $ 80.8 | $ 108.7 |
Additions for tax positions of the current year | 7.5 | 11.5 |
Additions (reductions) for tax positions of prior years | (6.7) | (23.1) |
Settlements with tax authorities | (1.9) | (6.6) |
Expirations of statutes of limitations | (8) | (5.9) |
Changes due to translation of foreign currencies | (1.8) | (3.8) |
Balance at end of year | $ 69.9 | 80.8 |
Reasonably possible decrease in uncertain tax positions, including interest and penalties, during the next 12 months | $ 19 |
SEGMENT AND DISAGGREGATED REV_3
SEGMENT AND DISAGGREGATED REVENUE INFORMATION - Net Sales to Unaffiliated Customers (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | $ 1,772.9 | $ 1,761.4 | $ 1,795.7 | $ 1,740.1 | $ 1,768.7 | $ 1,759.7 | $ 1,854.2 | $ 1,776.4 | $ 7,070.1 | $ 7,159 | $ 6,613.8 |
Retail Branding and Information Solutions | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 1,650.3 | 1,613.2 | 1,511.2 | ||||||||
Retail Branding and Information Solutions | Apparel | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 1,458.5 | 1,441.7 | 1,352 | ||||||||
Retail Branding and Information Solutions | Printer Solutions | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 191.8 | 171.5 | 159.2 | ||||||||
Label and Graphic Materials | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 4,745.9 | 4,851.1 | 4,511.7 | ||||||||
U.S. | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 1,638.8 | 1,625.1 | 1,557.8 | ||||||||
U.S. | Label and Graphic Materials | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 1,246.6 | 1,256 | 1,198.4 | ||||||||
Europe | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 2,160.2 | 2,251.4 | 2,041.6 | ||||||||
Europe | Label and Graphic Materials | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 1,767.9 | 1,851.3 | 1,689.3 | ||||||||
Asia | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 2,458.5 | 2,473.2 | 2,250.5 | ||||||||
Asia | Label and Graphic Materials | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 1,065 | 1,081.2 | 1,002.6 | ||||||||
China (including Hong Kong) | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 1,380 | 1,430 | 1,300 | ||||||||
Latin America | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 498.3 | 490 | 476.4 | ||||||||
Latin America | Label and Graphic Materials | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 375.4 | 367.8 | 357 | ||||||||
Other international | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | 314.3 | 319.3 | 287.5 | ||||||||
Other international | Label and Graphic Materials | |||||||||||
Net sales to unaffiliated customers | |||||||||||
Net sales to unaffiliated customers | $ 291 | $ 294.8 | $ 264.4 |
SEGMENT AND DISAGGREGATED REV_4
SEGMENT AND DISAGGREGATED REVENUE INFORMATION - Additional Financial Information by Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Net sales to unaffiliated customers | $ 1,772.9 | $ 1,761.4 | $ 1,795.7 | $ 1,740.1 | $ 1,768.7 | $ 1,759.7 | $ 1,854.2 | $ 1,776.4 | $ 7,070.1 | $ 7,159 | $ 6,613.8 |
Interest expense | (75.8) | (58.5) | (63) | ||||||||
Other non-operating expense, net | (445.2) | (104.8) | (18) | ||||||||
Income before taxes | 249.5 | 554.8 | 589.5 | ||||||||
Capital expenditures | 225.1 | 227.9 | 193.8 | ||||||||
Depreciation and amortization expense | 179 | 181 | 178.7 | ||||||||
Other expense (income), net | $ 31.5 | $ 6.7 | $ 7.5 | $ 7.5 | $ 3 | $ (3) | $ 57.1 | $ 12.8 | 53.2 | 69.9 | 36.5 |
Intersegment sales | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Net sales to unaffiliated customers | 109.6 | 92.2 | 75 | ||||||||
Label and Graphic Materials | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Net sales to unaffiliated customers | 4,745.9 | 4,851.1 | 4,511.7 | ||||||||
Label and Graphic Materials | Operating segments | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Income before taxes | 601.5 | 568.2 | 577.4 | ||||||||
Capital expenditures | 137.8 | 151.5 | 125.5 | ||||||||
Depreciation and amortization expense | 100.2 | 104.7 | 102.3 | ||||||||
Other expense (income), net | 28.3 | 61.8 | 14.5 | ||||||||
Label and Graphic Materials | Intersegment sales | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Net sales to unaffiliated customers | 80.2 | 78.7 | 64.1 | ||||||||
Retail Branding and Information Solutions | Operating segments | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Income before taxes | 196.6 | 170.4 | 126.7 | ||||||||
Capital expenditures | 63.1 | 57.1 | 48.8 | ||||||||
Depreciation and amortization expense | 52.6 | 49 | 56.4 | ||||||||
Other expense (income), net | 9.9 | 11.4 | 18.1 | ||||||||
Retail Branding and Information Solutions | Intersegment sales | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Net sales to unaffiliated customers | 20.6 | 4.7 | 3.2 | ||||||||
Industrial and Healthcare Materials | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Net sales to unaffiliated customers | 673.9 | 694.7 | 590.9 | ||||||||
Industrial and Healthcare Materials | Operating segments | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Income before taxes | 60 | 62.9 | 52.6 | ||||||||
Capital expenditures | 24.2 | 19.3 | 19.5 | ||||||||
Depreciation and amortization expense | 26.2 | 27.3 | 20 | ||||||||
Other expense (income), net | 9.4 | (1) | 3.7 | ||||||||
Industrial and Healthcare Materials | Intersegment sales | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Net sales to unaffiliated customers | 8.8 | 8.8 | 7.7 | ||||||||
Corporate | |||||||||||
SEGMENT AND DISAGGREGATED REVENUE INFORMATION | |||||||||||
Income before taxes | (87.6) | (83.4) | (86.2) | ||||||||
Other expense (income), net | $ 5.6 | $ (2.3) | $ 0.2 |
SEGMENT AND DISAGGREGATED REV_5
SEGMENT AND DISAGGREGATED REVENUE INFORMATION - Other Expense, Net by Type (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Restructuring charges: | |||||||||||
Restructuring charges | $ 51.1 | $ 59.4 | |||||||||
Other items: | |||||||||||
Legal settlement | $ 3.4 | 3.4 | |||||||||
Other restructuring-related charge | $ 0.5 | 0.5 | |||||||||
Transaction costs | $ 2.6 | 2.6 | $ 5.2 | ||||||||
Reversal of acquisition-related contingent consideration | $ (5) | (5) | |||||||||
Net gain on sales of assets | $ (3.2) | $ (2.3) | (0.4) | (3.2) | (2.7) | (2.1) | |||||
Other expense (income), net | 31.5 | 6.7 | $ 7.5 | 7.5 | 3 | $ (3) | 57.1 | 12.8 | 53.2 | 69.9 | 36.5 |
Argentina | |||||||||||
Other items: | |||||||||||
Argentine peso remeasurement transition loss | 3.4 | 3.4 | |||||||||
Severance and related costs | |||||||||||
Restructuring charges: | |||||||||||
Restructuring charges | 25.5 | $ 3.3 | 6.1 | 10.4 | 7 | (7.1) | 58.8 | 4.3 | 45.3 | 63 | 31.2 |
Asset impairment charges and lease cancellation costs | |||||||||||
Restructuring charges: | |||||||||||
Restructuring charges | $ 3.4 | $ 1.4 | $ 0.3 | $ 1 | $ 0.7 | $ 0.6 | $ 8.4 | $ 5.1 | $ 10.7 | $ 2.2 |
SEGMENT AND DISAGGREGATED REV_6
SEGMENT AND DISAGGREGATED REVENUE INFORMATION - Property, Plant and Equipment (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Property, plant and equipment, net | |||
Property, plant and equipment, net | $ 1,210.7 | $ 1,137.4 | $ 1,097.9 |
U.S. | |||
Property, plant and equipment, net | |||
Property, plant and equipment, net | 366.9 | 317.3 | 286.4 |
International | |||
Property, plant and equipment, net | |||
Property, plant and equipment, net | $ 843.8 | $ 820.1 | $ 811.5 |
SUPPLEMENTAL FINANCIAL INFORM_3
SUPPLEMENTAL FINANCIAL INFORMATION - Inventories (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 |
Inventories | ||
Raw materials | $ 231.6 | $ 236.2 |
Work-in-progress | 201 | 196.7 |
Finished goods | 230.4 | 218.5 |
Inventories, net | $ 663 | $ 651.4 |
SUPPLEMENTAL FINANCIAL INFORM_4
SUPPLEMENTAL FINANCIAL INFORMATION - Property, Plant and Equipment (Details) - USD ($) $ in Millions | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Property, Plant and Equipment | |||
Property, plant and equipment | $ 3,171.6 | $ 3,053.7 | |
Accumulated depreciation | (1,960.9) | (1,916.3) | |
Property, plant and equipment, net | 1,210.7 | 1,137.4 | $ 1,097.9 |
Land | |||
Property, Plant and Equipment | |||
Property, plant and equipment | 25.1 | 28 | |
Buildings and improvements | |||
Property, Plant and Equipment | |||
Property, plant and equipment | 687.4 | 643.1 | |
Machinery and equipment | |||
Property, Plant and Equipment | |||
Property, plant and equipment | 2,316.9 | 2,231.1 | |
Construction-in-progress | |||
Property, Plant and Equipment | |||
Property, plant and equipment | $ 142.2 | $ 151.5 |
SUPPLEMENTAL FINANCIAL INFORM_5
SUPPLEMENTAL FINANCIAL INFORMATION (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Research and Development | ||||
Research and development expense | $ 92.6 | $ 98.2 | $ 93.4 | |
Cash paid for interest and income taxes | ||||
Interest | 74.3 | 54.9 | 57.7 | |
Income taxes, net of refunds | 155 | 153.5 | 125.6 | |
Foreign Currency Effects | ||||
Foreign currency transaction gains and losses | 9.7 | 13.4 | 4.1 | |
Deferred Revenue | ||||
Total deferred revenue | 12.9 | 11.8 | ||
Revenue recognized during the period | 10.8 | 12.2 | ||
Other current liabilities | ||||
Deferred Revenue | ||||
Total deferred revenue | 12.6 | 11.5 | ||
Long-term retirement benefits and other liabilities | ||||
Deferred Revenue | ||||
Total deferred revenue | $ 0.3 | 0.3 | ||
PragmatIC | ||||
Equity Method Investment | ||||
Interest of equity method investment | 22.90% | |||
Carrying value of equity method investment | $ 8.8 | 6.7 | ||
Addition to equity method investment | $ 4 | |||
Total software | ||||
Capitalized software costs | ||||
Software amortization expense from continuing operations | 20.8 | 20.2 | $ 29.3 | |
Total software | Other assets | ||||
Capitalized software costs | ||||
Cost | 487.2 | 452.4 | ||
Accumulated amortization | (334.4) | (316.9) | ||
Software, net | $ 152.8 | $ 135.5 |
QUARTERLY FINANCIAL INFORMATI_3
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Net sales | $ 1,772.9 | $ 1,761.4 | $ 1,795.7 | $ 1,740.1 | $ 1,768.7 | $ 1,759.7 | $ 1,854.2 | $ 1,776.4 | $ 7,070.1 | $ 7,159 | $ 6,613.8 |
Gross profit | 484.7 | 471.7 | 482.3 | 465.4 | 471.5 | 459.2 | 501.4 | 483.4 | 1,904.1 | 1,915.5 | 1,812.2 |
Net (loss) income | $ 162.5 | $ 144.6 | $ 143.4 | $ (146.9) | $ 97.1 | $ 149.5 | $ 95.6 | $ 125.2 | $ 303.6 | $ 467.4 | $ 281.8 |
Net income (loss) per common share: | |||||||||||
Net income (loss) per common share | $ 1.95 | $ 1.72 | $ 1.70 | $ (1.74) | $ 1.13 | $ 1.71 | $ 1.09 | $ 1.42 | $ 3.61 | $ 5.35 | $ 3.19 |
Net income (loss) per common share, assuming dilution: | |||||||||||
Net income (loss) per common share, assuming dilution | $ 1.92 | $ 1.71 | $ 1.69 | $ (1.74) | $ 1.11 | $ 1.69 | $ 1.07 | $ 1.40 | $ 3.57 | $ 5.28 | $ 3.13 |
QUARTERLY FINANCIAL INFORMATI_4
QUARTERLY FINANCIAL INFORMATION (Unaudited) - Other Expense, Net by Type (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 28, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Restructuring charges: | |||||||||||
Restructuring charges | $ 51.1 | $ 59.4 | |||||||||
Other items: | |||||||||||
Legal settlement | $ 3.4 | 3.4 | |||||||||
Transaction costs | $ 2.6 | 2.6 | $ 5.2 | ||||||||
Other restructuring-related charge | $ 0.5 | 0.5 | |||||||||
Reversal of acquisition-related contingent consideration | $ (5) | (5) | |||||||||
Net gain on sales of assets | $ (3.2) | $ (2.3) | (0.4) | (3.2) | (2.7) | (2.1) | |||||
Other expense (income), net | 31.5 | 6.7 | $ 7.5 | 7.5 | 3 | $ (3) | 57.1 | 12.8 | 53.2 | 69.9 | 36.5 |
Argentina | |||||||||||
Other items: | |||||||||||
Argentine peso remeasurement transition loss | 3.4 | 3.4 | |||||||||
Severance and related costs | |||||||||||
Restructuring charges: | |||||||||||
Restructuring charges | 25.5 | $ 3.3 | 6.1 | 10.4 | 7 | (7.1) | 58.8 | 4.3 | 45.3 | 63 | 31.2 |
Asset impairment charges and lease cancellation costs | |||||||||||
Restructuring charges: | |||||||||||
Restructuring charges | $ 3.4 | $ 1.4 | $ 0.3 | $ 1 | $ 0.7 | $ 0.6 | $ 8.4 | $ 5.1 | $ 10.7 | $ 2.2 |