10-K 1 q4201710-kdocument.htm 10-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to          
Commission file number 1-12139
 
 
 
SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
65-0654331
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
2415 Cascade Pointe Boulevard,
Charlotte, North Carolina
 
28208
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (980)-221-3235
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of Each Exchange on Which Registered
Common Stock, par value $0.10 per share
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes      No  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes      No  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):




Large accelerated filer
 
  
Accelerated filer
 
 
Emerging growth company
 
 
 
 
 
 
 
 
Non-accelerated filer
 
☐  (Do not check if a smaller reporting company)
  
Smaller reporting company
 
 
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2017, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $8,368,000,000, based on the closing sale price as reported on the New York Stock Exchange.
There were 167,374,980 shares of the registrant’s common stock, par value $0.10 per share, issued and outstanding as of February 9, 2018.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant’s definitive proxy statement for its 2018 Annual Meeting of Stockholders, to be held on May 17, 2018, are incorporated by reference into Part II and Part III of this Form 10-K.
 





SEALED AIR CORPORATION AND SUBSIDIARIES
Table of Contents
 
PART I
Item 1.
 
Item 1A.
 
Item 1B.
 
Item 2.
 
Item 3.
 
Item 4.
 
 
 
 
 
 
 
PART II
 
 
 
Item 5.
 
Item 6.
 
Item 7.
 
Item 7A.
 
Item 8.
 
Item 9.
 
Item 9A.
 
Item 9B.
 
 
 
 
PART III
 
 
 
Item 10.
 
Item 11.
 
Item 12.
 
Item 13.
 
Item 14.
 
 
 
 
PART IV
 
 
 
Item 15.
 
 
 
 

1



Cautionary Notice Regarding Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 concerning our business, consolidated financial condition and results of operations. The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by such words as “anticipates,” “believes,” “plan,” “assumes,” “could,” “should,” “estimates,” “expects,” “intends,” “potential,” “seek,” “predict,” “may,” “will” and similar references to future periods. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, expectations regarding the results of restructuring and other programs, anticipated levels of capital expenditures and expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings.
Please refer to Part I, Item 1A, “Risk Factors” for important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
The following are important factors that we believe could cause actual results to differ materially from those in our forward-looking statements: global economic and political conditions, currency translation and devaluation effects, changes in raw material pricing and availability, competitive conditions, the success of new product offerings, consumer preferences, the effects of animal and food-related health issues, pandemics, changes in energy costs, environmental matters, the success of our restructuring activities, the success of our financial growth, profitability, cash generation and manufacturing strategies and our cost reduction and productivity efforts, changes in our credit ratings, the tax benefit associated with the Settlement agreement (as defined below), regulatory actions and legal matters, and the other information referenced in Part II, Item 1A, “Risk Factors.” Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made.
Non-U.S. GAAP Information
We present financial information that conforms to Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). We also present financial information that does not conform to U.S. GAAP, which we refer to as non-U.S. GAAP, as our management believes it is useful to investors. In addition, non-U.S. GAAP measures are used by management to review and analyze our operating performance and, along with other data, as internal measures for setting annual budgets and forecasts, assessing financial performance, providing guidance and comparing our financial performance with our peers. The non-U.S. GAAP information has limitations as an analytical tool and should not be considered in isolation from or as a substitute for U.S. GAAP information. It does not purport to represent any similarly titled U.S. GAAP information and is not an indicator of our performance under U.S. GAAP. Non-U.S. GAAP financial measures that we present may not be comparable with similarly titled measures used by others. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable U.S. GAAP financial measure to arrive at these non-U.S. GAAP financial measures. See Note 4, “Segments” of the Notes to Consolidated Financial Statements and our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for reconciliations of our U.S. GAAP financial measures to non-U.S. GAAP.  Information reconciling forward-looking U.S. GAAP measures to non-U.S. GAAP measures is not available without unreasonable effort.
Our management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. Non-U.S. GAAP financial measures provide management with additional means to understand and evaluate the core operating results and trends in our ongoing business by eliminating certain one-time expenses and/or gains (which may not occur in each period presented) and other items that management believes might otherwise make comparisons of our ongoing business with prior periods and peers more difficult, obscure trends in ongoing operations or reduce management’s ability to make useful forecasts.
Our non-U.S. GAAP financial measures may also be considered in calculations of our performance measures set by the Organization and Compensation Committee of our Board of Directors for purposes of determining incentive compensation. The non-U.S. GAAP financial metrics mentioned above exclude items that we consider to be certain specified items (“Special Items”), such as restructuring charges, charges related to the sale of Diversey, charges related to ceasing operations in Venezuela, cash-settled stock appreciation rights (“SARs”) granted as part of the original Diversey acquisition, special tax items (“Tax Special Items”) and certain other infrequent or one-time items. We evaluate unusual or Special Items on an individual basis. Our evaluation of whether to exclude an unusual or special item for purposes of determining our non-U.S. GAAP financial measures considers both the quantitative and qualitative aspects of the item, including among other things (i) its nature, (ii) whether or not it relates to our ongoing business operations, and (iii) whether or not we expect it to occur as part of our normal business on a regular basis.
The Company measures segment performance using Adjusted EBITDA (a non-U.S. GAAP financial measure). Adjusted EBITDA is defined as Earnings before Interest Expense, Taxes, Depreciation and Amortization, adjusted to exclude the impact of Special Items.

We also present our adjusted income tax rate (“Adjusted Tax Rate”). The Adjusted Tax Rate is a measure of our U.S. GAAP effective tax rate, adjusted to exclude the tax impact from the Special Items that are excluded from our Adjusted Net Earnings and Adjusted EPS metrics as well as expense or benefit from any special taxes or tax benefits (“Tax Special Items”). The Adjusted Tax Rate is an indicator of the taxes on our core business. The tax situation and effective tax rate in the specific countries where the excluded or Special Items occur will determine the impact (positive or negative) to the Adjusted Tax Rate.
In our “Net Sales by Geographic Region,” “Components of Change in Net Sales by Segment” and in some of the discussions and tables that follow, we exclude the impact of foreign currency translation when presenting net sales information, which we define as “constant dollar.” Changes in net sales excluding the impact of foreign currency translation are non-U.S. GAAP financial measures. As a worldwide business, it is important that we take into account the effects of foreign currency translation when we view our results and plan our strategies. Nonetheless, we cannot control changes in foreign currency exchange rates. Consequently, when our management looks at our financial results to measure the core performance of our business, we may exclude the impact of foreign currency translation by translating our current period results at prior period foreign currency exchange rates. We also may exclude the impact of foreign currency translation when making incentive compensation determinations. As a result, our management believes that these presentations are useful internally and may be useful to investors.
We have not provided guidance for the most directly comparable U.S. GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain Special Items, including gains and losses on the disposition of businesses, the ultimate outcome of certain legal or tax proceedings, foreign currency gains or losses resulting from the volatile currency market in Venezuela, and other unusual gains and losses.  These items are uncertain, depend on various factors, and could be material to our results computed in accordance with U.S. GAAP. 


2



PART I
Item 1.
Business
Sealed Air Corporation, a corporation organized under the laws of Delaware, is a global leader in food safety and security and product protection. We serve an array of end markets including food and beverage processing, food service, retail, and commercial and consumer applications. Our focus is on achieving quality sales growth through leveraging our geographic footprint, technological know-how and leading market positions to bring measurable, sustainable value to our customers and investors.
Sealed Air was founded in 1960. We conduct substantially all of our business through two wholly-owned subsidiaries, Cryovac, Inc. and Sealed Air Corporation (US). Throughout this Annual Report on Form 10-K, when we refer to “Sealed Air,” the “Company,” “we,” “us” or “our,” we are referring to Sealed Air Corporation and all of our subsidiaries, except where the context indicates otherwise. Please refer to Part II, Item 8, “Financial Statements and Supplementary Data” for financial information about the Company and its subsidiaries, which is incorporated herein by reference. Also, when we cross reference to a “Note,” we are referring to our “Notes to Consolidated Financial Statements,” unless the context indicates otherwise.
We are a leading global innovator in the applications we serve and we differentiate ourselves through our:
extensive global reach, by which we leverage our strengths across our operations in 58 countries/regions to reach customers in 122 countries/regions;
approximately 15,000 employees representing industry-leading expertise in package design, sales, service and engineering and in food science;
leading brands, such as Cryovac® packaging technology, Bubble Wrap® brand cushioning, Jiffy® protective mailers, Instapak® foam-in-place systems and I-Pack® and e-Cube™ automated packaging systems;
technology leadership with an emphasis on proprietary, patented and sustainable technologies;
high mix of automated solutions and services that eliminate waste;
total systems offering that includes specialty materials and formulations, equipment systems and services; and
solid cash flow generation from premium solutions to meet our customers’ needs, productivity improvements, working capital management and an asset-light business model.
In 2017, our operations generated approximately 49% of our revenue from outside the U.S. We generated net sales of $4.5 billion, net earnings from continuing operations of $63 million and Adjusted EBITDA of $833 million. Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” for reconciliation of U.S. GAAP net earnings to Non-U.S. GAAP total company Adjusted EBITDA.
Our Competitive Strengths
Leading Market Positions. We are a leading global provider of packaging solutions for the food, e-Commerce, consumer and industrial markets. We offer the food processing and food service industries extended shelf life and operational excellence by reducing down-time, waste generation, water use, effluent discharge, energy consumption and greenhouse gas emissions. We also offer business supply distributors and fulfillment operations a broad selection of premium packaging to maximize distribution efficiencies and customer reach.
Scale and Global Reach. We have approximately 15,000 employees globally and are present in 58 countries/regions with a sales and distribution network reaching 122 countries/regions. This scale and reach enables us to meet our customers’ needs as they expand their business on a global basis. We believe our geographic presence, extensive distribution network, and exposure to a variety of end markets help diversify our business, leverage our technology and our total systems solution model and position us to capitalize on growth opportunities in markets around the world.
Diversified Customer Base. Our customers include leading global food and beverage processors, business supply distributors, consumer products manufacturers, retailers, e-Commerce and logistics operators. Our customer base is diverse, with no single customer or affiliated group of customers representing more than 10% of net sales in 2017.
Keen Focus on Innovation. We believe we are a leading innovator in material science, equipment systems and manufacturing technologies, which deliver automation, productivity and sustainability enhancements in our customers’ operations. Our solutions are differentiated by proprietary, patented equipment and material technologies, as well as by trade secrets and trademarks. We have a global network of labs with an extensive team of scientists, engineers, designers and industry application experts. Our research and development strategy is focused on delivering innovative, sustainable solutions

3



that enhance our customers’ operational excellence, improve profitability and help them deliver outstanding customer experiences.
We partner with our Customers. We install and integrate our equipment into our customers’ facilities and operational processes. We leverage our extensive knowledge of our customer business and installed equipment base when innovating new materials and solutions and partner with customers to reduce waste and train their employees on how to effectively apply our solutions and operate our systems. We believe this provides customer “stickiness” and recurring revenue streams for our Company.
Solid Cash Flow Generation. The stability of our business, combined with the relatively low capital intensity of our operations and our solid working capital management, supports our ability to generate cash flow. We believe we are well positioned to benefit from attractive long-term global growth trends such as an increasing emphasis on food safety and security, sustainability, growth of e-Commerce, healthier consumer choices, digital technologies, cost competitiveness and performance, as well as our own geographic diversity, to drive additional cash flow.
Our Business Strategies
We seek to enhance our position as a leading global provider of innovative packaging solutions that our customers use to improve performance, cost competitiveness and sustainability and automation to enhance productivity within their operations and grow their businesses by focusing on six strategic priorities:
Maintaining and extending our technological leadership, expertise and our sustainability value proposition.
We continue to focus on becoming a knowledge-based, market-driven company centered on offering innovative solutions that enable our customers to meet their sustainability needs while growing their business, reducing costs and mitigating risk, including enhancing top line growth and conserving energy, water and other resources while reducing waste in their operations. Our product solution goals align with sustainable sourcing principles and new product development innovation processes, while providing greater transparency of our supply chain. We enhance our ability to position our product features and benefits using a sustainability lens and leverage these product strengths to differentiate our solutions in the market, with a view to this approach becoming the new business standard in the future.
Sustainability has been and will continue to be one of our key strategies to our business. Nearly everything we do for our customers has a sustainability value in the world, differentiates us from competitors and establishes our presence as a knowledge-based, solutions provider. Our 2020 sustainability objectives include significantly reducing our own footprint, re-imagining customer solutions and benefiting society.
Better aligning ourselves with the customers, markets and global macro forces.
As part of our ongoing business portfolio review, we are committed to identifying those customers and markets that offer us the best opportunity to deliver solutions and services that are sufficiently differentiated and valued in the marketplace. In addition, we are committed to aligning our business with key global macro forces, including e-commerce and the global movement of food. In particular, we will leverage our strengths to enhance our position with our food and beverage customers and, by doing so, we improve access to a more secure food supply chain. Our priorities are embodied in our four commitments: enhancing food security, creating healthy environments, conserving natural resources and driving livelihood programs in the communities where we do business.
Accelerating our penetration and rate of growth in developing regions.
With an international focus and extensive geographic footprint aligned to our growth opportunities, we will combine our local market knowledge with our broad portfolio and strengths in innovation and customer service to grow in developing regions. Urbanization, e-Commerce, increased protein consumption and the ongoing conversion to safer and hygienically packaged foods and goods are key secular trends that underpin our confidence in our ability to grow rapidly in these parts of the world.
Focusing on cash flow generation and improved return on assets.
We are focused on generating substantial operating cash flow from our existing business so that we can continue to invest in new products and technologies, strategic acquisitions, de-leverage our balance sheet, continue to pay dividends, and support growth in our share price. We believe our ongoing process of critically analyzing our business portfolio and

4



reallocating technical, human, and capital resources to the most promising market sectors from those sectors that are less strategic or have a lower level of financial performance will enhance our free cash flow generation performance and result in a higher return on assets, thus improving shareholder value.
Optimizing our cost base and operations to maximize efficiency and profitability.
The size and scale of our global operations affords us a continuing opportunity to derive greater supply chain efficiencies by leveraging our purchasing power, optimizing our manufacturing and logistics footprint, improving our internal operations and processes, and reducing complexity and cost. In addition to reducing the cost of our supply chain operations, we continue to focus on adapting the cost structure of our customer facing and back-office operations to the appropriate level required to adequately support our external customer base and run the business effectively. We also have sustainability goals to reduce the environmental impact of our global operations and deliver operational excellence while upholding the highest ethical standards in our business practices. Every year our facilities around the world develop improvement plans to meet environmental impact and cost-reduction goals. These align with corporate goals for energy, greenhouse gases, water, waste, efficiency targets and cost savings. In turn, the company’s impact on the environment is reduced while the ability to generate profits is enhanced.
Developing our people.
We recognize that a core strength of our business is our people. Therefore, we will continue to invest in the development of key skills in our diverse workforce while improving our ability to attract and retain talented new employees who are motivated by our company vision and the positive impact they can have on the world.
Segments
We report our segment information in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 280, “Segment Reporting,” (“FASB ASC Topic 280”). As a result of the sale of Diversey, we have changed our segment reporting structure. The Food Care division now excludes the Food Hygiene and Cleaning business, which is included in discontinued operations, and includes our Medical Applications and New Ventures businesses, which were previously reported in the “Other” category. The Other category also previously included “Corporate” which is now its own category.
Food Care (including Medical Applications and New Ventures businesses); and
Product Care.
See Note 4, “Segments” of the Notes to Consolidated Financial Statements for further information.
Descriptions of the Reportable Segments and Other
Food Care Segment
Food Care
The Food Care division focuses on providing processors, retailers and food service operators a broad range of integrated system solutions that improve the management of contamination risk during the food and beverage production process, extend product shelf life through packaging technologies, and improve merchandising, ease-of-use, and back-of-house preparation processes. Our systems are designed to be turn-key and reduce customers’ total operating costs through improved operational efficiencies and reduced food waste, as well as lower water and energy use. As a result, processors are able to produce and deliver their products more cost-effectively, safely, efficiently, and with greater confidence through their supply chain with a trusted partner.
The business largely serves perishable food and beverage processors, predominantly in fresh red meat, smoked and processed meats, beverages, poultry and dairy (solids and liquids) markets worldwide, and maintains a leading position in the applications it targets. Solutions are marketed under the Cryovac® trademark and under sub-brands such as Cryovac Grip & Tear®, Cryovac® Darfresh®, Cryovac Mirabella®, Simple Steps® and Optidure™.
Our solutions incorporate equipment systems that are frequently integrated into customers’ operations, along with consumables such as advanced flexible films and a variety of pre- and post-sale services. Packaging equipment systems can incorporate various options for loading, filling and dispensing, and will also accommodate certain retort and aseptic processing conditions. Equipment solutions supported include vacuum shrink bag systems, Cryovac®, Flow-Vac® (a U.S. registered

5



trademark of Ulma Packaging Technological Center) wrapping/vacuuming packaging systems, thermoforming, skin, tray/lid and vertical pouch packaging systems. Services include graphic design, printing, training, field quality assurance and remote diagnostics.
Food Care focuses on providing comprehensive systems which protect our customers’ products while adding value through increasing operational efficiency and reducing waste throughout the entire food and beverage supply chain. Food Care seeks to partner with customers to provide integrated packaging solutions that will consistently deliver food safety, shelf life extension, total cost optimization and innovative, sustainable packaging formats which will enable our customers to enhance their brands in the marketplace.
Medical Applications
The goal of our Medical Applications business is to provide solutions offering superior protection and reliability to the medical, pharmaceutical and medical device industries. We sell medical applications products directly to medical device manufacturers and pharmaceutical companies and to the contract packaging firms that supply them. Medical Applications is focused on growth in the medical device and pharmaceutical solutions packaging markets. Our core product lines include customer designed flexible packaging materials for medical and drug delivery devices, specialty component films for ostomy and colostomy bags and PVC free film to package pharmaceutical solutions.
New Ventures
Our New Ventures business includes several development and innovative programs that are focused on new technologies and opportunities that leverage our capabilities into core and non-core markets. These efforts include market focused exploration of both product, knowledge-based and sustainable solutions.
Product Care Segment

Product Care provides the industries we serve with an unmatched range of sustainable packaging solutions designed to reduce shipping and fulfillment costs, increase operational efficiency, reduce damage, and enhance customer and brand experience. While serving a broad range of industries and market sectors, Product Care solutions are especially valuable to the E-Commerce Fulfillment, General Manufacturing, Electronics and Transportation sectors. The breadth of the Product Care portfolio, extensive packaging engineering and technical services, and global reach supports the needs of multinational customers who require performance excellence, consistency and a reliability of supply.
Solutions are marketed under industry-leading brands that include Bubble Wrap® and AirCap® air cellular packaging, Cryovac® performance shrink films, Shanklin® FloWrap shrink packaging systems, Instapak® polyurethane foam packaging systems, Jiffy® mailers, Korrvu® suspension and retention packaging and Ethafoam® fabricated foam solutions. The Company’s I-Pack® system and newly introduced e-Cube™ system, both of which provide intelligent, automated, high-velocity fulfillment while optimizing the cube of shipping boxes, thus reducing shipping costs. Solutions are sold globally and supported by a network of 28 American Society for Testing and Materials International (“ASTM”) approved Product Care design and testing centers, and one of the industry’s largest sales and service teams.
Today, Product Care solutions are largely sold through business supply distribution that sells to business/industrial end-users representing over 400 SIC codes. Additionally, solutions are sold directly to fabricators, original equipment manufacturers/contract manufacturers, third party logistics partners, e-commerce/fulfillment operations, and at retail centers, where Product Care offers select products for consumer use on a global basis.
Product Care is focused on solving complex fulfillment problems, sustainability, automation, advancements in material science, and ease-of-use interface and features. It is also focused on expanding its business outside of the U.S. to further capitalize on the rapidly growing e-Commerce and fulfillment markets.
Corporate
Corporate includes certain costs that are not allocated to the reportable segments, primarily consisting of unallocated corporate overhead costs, including administrative functions and cost recovery variances not allocated to the reportable segments from global functional expenses.


6



Global Operations
We operate through our subsidiaries and have a presence in the U.S. and the 57 other countries/regions listed below, enabling us to distribute our products to our customers in 122 countries/regions.
 
Argentina
 
Egypt
 
Italy
 
Peru
 
Sweden
Australia
 
Finland
 
Jamaica
 
Philippines
 
Switzerland
Austria
 
France
 
Japan
 
Poland
 
Taiwan
Belgium
 
Germany
 
Kenya
 
Portugal
 
Thailand
Brazil
 
Greece
 
Luxembourg
 
Romania
 
Turkey
Canada
 
Guatemala
 
Malaysia
 
Russia
 
Ukraine
Chile
 
Hong Kong
 
Mexico
 
Saudi Arabia
 
United Arab Emirates
China
 
Hungary
 
Morocco
 
Singapore
 
United Kingdom
Colombia
 
India
 
Netherlands
 
Slovakia
 
Uruguay
Costa Rica
 
Indonesia
 
New Zealand
 
South Africa
 
 
Czech Republic
 
Ireland
 
Nigeria
 
South Korea
 
 
Denmark
 
Israel
 
Norway
 
Spain
 
 
 
In maintaining our foreign operations, we face risks inherent in these operations, such as currency fluctuations, inflation and political instability. Information on currency exchange risk appears in Part II, Item 7A of this Annual Report on Form 10-K, which information is incorporated herein by reference. Other risks attendant to our foreign operations are set forth in Part I, Item 1A “Risk Factors,” of this Annual Report on Form 10-K, which information is incorporated herein by reference. Information on the impact of currency exchange on our Consolidated Financial Statements appears in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Financial information showing net sales and total long-lived assets by geographic region for each of the two years ended December 31, 2017 appears in Note 4, “Segments,” which information is incorporated herein by reference. We maintain programs to comply with the various laws, rules and regulations related to the protection of the environment that we may be subject to in the many countries/regions in which we operate. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Environmental Matters.”
Employees
As of December 31, 2017, we had approximately 15,000 employees worldwide. Approximately 5,800 of these employees were in the U.S., with approximately 112 of these employees covered by collective bargaining agreements. Of the approximately 9,200 employees who were outside the U.S., approximately 5,400 were covered by collective bargaining agreements. Collective bargaining agreements related to 15% of our employees, primarily outside the U.S., will expire within the next year and we will be engaged in negotiations to attain new agreements.  Many of the covered employees are represented by works councils or industrial boards, as is customary in the jurisdictions in which they are employed. We believe that our employee relations are satisfactory.
Marketing, Distribution and Customers
At December 31, 2017, we employed approximately 2,300 sales, marketing and customer service personnel throughout the world who sell and market our products to and through a large number of distributors, fabricators, converters, e-commerce and mail order fulfillment firms, and contract packaging firms as well as directly to end-users such as food processors, foodservice businesses, supermarket retailers, lodging, retail, pharmaceutical companies, healthcare facilities, medical device manufacturers, and other manufacturers.
To support our Food Care and New Ventures customers, we operate three Packforum® innovation and learning centers that are located in the U.S., France, and China. At Packforum® Centers, we assist customers in identifying the appropriate packaging materials and systems to meet their needs. We also offer ideation services, educational seminars, employee training and customized graphic design services to our customers.
To assist our marketing efforts for our Product Care products and to provide specialized customer services, we operate 35 industrial Package Design Centers (PDCs) worldwide within our facilities. These PDCs are staffed with professional

7



packaging engineers and outfitted with drop-testing and other equipment used to develop, test and validate cost-effective package designs to meet each Product Care customer’s needs.
To support our equipment systems and the marketing of our totals systems solutions, we provide field technical services to our customers worldwide. These services include system installation, integration and monitoring systems, repair and upgrade, operator training in the efficient use of our systems, qualification of various consumable and system combinations, and equipment layout and design.
Our Food Care applications are largely sold direct, while most of our Product Care products are sold through business supply distributors.
We have no material long-term contracts for the distribution of our products. In 2017, no customer or affiliated group of customers accounted for 10% or more of our consolidated net sales.
Seasonality
Historically, net sales in our Food Care segment have tended to be slightly lower in the first quarter and slightly higher towards the end of the third quarter through the fourth quarter, due to holiday events. Net sales in our Product Care segment have also tended to be slightly lower in the first quarter and higher in the mid-third quarter and through the fourth quarter due to the holiday shopping season. On a consolidated basis, there is little seasonality in the business, with net sales slightly lower in the first quarter and slightly higher towards the end of the third quarter through the fourth quarter. Our consolidated net earnings typically trend directionally the same as our net sales seasonality. Cash flow from operations has tended to be lower in the first quarter and higher in the fourth quarter, reflecting seasonality of sales and working capital changes, including the timing of certain annual incentive compensation payments.
Other factors may outweigh the effects of seasonal changes in our net earnings results including, but not limited to, changes in raw materials and other costs, foreign exchange rates, interest rates, taxes and the timing and amount of acquisition synergies and restructuring and other non-recurring charges.
Competition
Competition for most of our packaging products is based primarily on packaging performance characteristics, service and price. There are also other companies producing competing products that are well-established. Since competition is also based upon innovations in packaging technology, we maintain ongoing research and development programs to enable us to maintain technological leadership. We invest approximately double the industry average on research and development as a percentage of net sales per year as compared with our packaging peers.
There are other manufacturers of food care products, some of which are companies offering similar products that operate across regions and others that operate in a single region or single country. Competing manufacturers produce a wide variety of food packaging based on plastic, metals and other materials. We believe that we are one of the leading suppliers of (i) flexible food packaging materials and related systems in the principal geographic areas in which we offer those products and (ii) barrier trays for case-ready meat products in the principal geographic areas in which we offers those trays.
Our Product Care products compete with similar products made by other manufacturers and with a number of other packaging materials that customers use to provide protection against damage to their products during shipment and storage. Among the competitive materials are various forms of paper packaging products, expanded plastics, corrugated die cuts, strapping, envelopes, reinforced bags, boxes and other containers, and various corrugated materials, as well as various types of molded foam plastics, fabricated foam plastics, mechanical shock mounts, wood blocking and bracing systems, and a portfolio of automated packaging and fulfillment systems. We believe that we are one of the leading suppliers of air cellular cushioning materials containing a barrier layer, inflatable packaging, suspension and retention packaging, shrink films for industrial and commercial applications, protective mailers, polyethylene foam and polyurethane foam packaging systems in the principal geographic areas in which we sell these products.  Additionally, due to internal technology development investments and the acquisition of B+ Equipment in 2015, we are a leader in automated void reduction systems technology and automated mailer technology. The recent acquisition of Fagerdala in 2017 enables us to cater to the top leading computer manufacturers through fabricated foam solutions.


8



Raw Materials and Purchasing
Suppliers provide raw materials, packaging components, contract manufactured goods, equipment and other direct materials, such as inks, films and paper. Our principal raw materials are polyolefin and other petrochemical-based resins, as well as, paper and wood pulp products. Raw materials represent approximately one-third of our consolidated cost of sales. We also purchase corrugated materials, cores for rolls of products such as films and Bubble Wrap® brand cushioning, inks for printed materials, and blowing agents used in the expansion of foam packaging products. In addition, we offer a wide variety of specialized packaging equipment, some of which we manufacture or have manufactured to our specifications, some of which we assemble and some of which we purchase from suppliers. Equipment and accessories include industrial and food packaging equipment.
The vast majority of the raw materials required for the manufacture of our products and all components related to our equipment and accessories generally have been readily available on the open market, in most cases are available from several suppliers and are available in amounts sufficient to meet our manufacturing requirements. However, we have some sole-source suppliers, and the lack of availability of supplies could have a material negative impact on our consolidated financial condition or results of operations. Natural disasters such as hurricanes, as well as political instability and terrorist activities, may negatively impact the production or delivery capabilities of refineries and natural gas and petrochemical suppliers and suppliers of other raw materials. Due to by-product/co-product chemical relationships to the automotive and housing markets, several materials may become difficult to source. These factors could lead to increased prices for our raw materials, curtailment of supplies and allocation of raw materials by our suppliers. We purchase some materials used in our packaging products from materials recycled in our manufacturing operations or obtained through participation in recycling programs. Although we purchase some raw materials under long-term supply arrangements with third parties, these arrangements follow market forces and are in line with our overall global purchasing strategy, which seeks to balance the cost of acquisition and availability of supply.
We have a centralized supply chain organization, which includes centralized management of purchasing and logistic activities. Our objective is to leverage our global scale to achieve purchasing efficiencies and reduce our total delivered cost across all our regions. We do this while adhering to strategic performance metrics and stringent purchasing practices.
Research and Development Activities

We are advancing the science and technology and creating new intellectual property which underpins the development of new solutions for our customers, including new, sustainable packaging materials, equipment automation and integration, applications knowledge, and support for our digital solutions. We maintain key external partnerships and are constantly searching for new partnerships that bring unique value, including licensing or acquiring new technologies developed by others. Our technical capabilities encompass a broad range of disciplines including the areas of food science, materials science, chemistry and chemical engineering, mechanical engineering, electrical and software engineering, microbiology, package design and equipment engineering. Our research and development expense was $92 million in 2017, $88 million in 2016 and $85 million in 2015.
Our research and development activities are focused on end-use application. As a result, we operate:
three comprehensive Packaging Development and Innovation laboratories located in the U.S. and Italy;
seven Equipment Design Centers in the U.S., France, Switzerland, Italy and Singapore targeting innovation in equipment and digital solutions;
four Customer Application laboratories in India, China, Singapore and Taipei; and
thirty-five Package Design and Applications Centers for Product Care globally.
Patents and Trademarks
We are the owner or licensee of an aggregate of over approximately 2,600 U.S. and foreign patents and patent applications, as well as an aggregate of approximately 4,200 U.S. and foreign trademark registrations and trademark applications that relate to many of our products, manufacturing processes and equipment. We believe that our patents and trademarks collectively provide a competitive advantage. We file annually an average of approximately 180 U.S. and foreign patent applications and approximately 100 U.S. and foreign trademark applications. None of our reportable segments is dependent upon any single patent or trademark alone. Rather, we believe that our success depends primarily on our sales and service, marketing, engineering and manufacturing skills and on our ongoing research and development efforts. We believe that

9



the expiration or unenforceability of any of our patents, applications, licenses or trademark registrations would not be material to our business or consolidated financial condition.
Environmental, Health and Safety Matters
As a manufacturer, we are subject to various laws, rules and regulations in the countries/regions, jurisdictions and localities in which we operate. These cover: the safe storage and use of raw materials and production chemicals; the release of materials into the environment; standards for the treatment, storage and disposal of solid and hazardous wastes; or otherwise relate to the protection of the environment. We review environmental, health and safety laws and regulations pertaining to our operations and believe that compliance with current environmental and workplace health and safety laws and regulations has not had a material effect on our capital expenditures or consolidated financial condition.
In some jurisdictions in which our packaging products are sold or used, laws and regulations have been adopted or proposed that seek to regulate, among other things, minimum levels of recycled or reprocessed content and, more generally, the sale or disposal of packaging materials. We maintain programs designed to comply with these laws and regulations and to monitor their evolution. Various federal, state, local and foreign laws and regulations regulate some of our products and require us to register certain products and comply with specified requirements. We are also subject to various federal, state, local and foreign laws and regulations that regulate products manufactured and sold by us for controlling microbial growth on humans, animals and processed foods. In the U.S., these requirements are generally administered by the U.S. Food and Drug Administration (“FDA”). To date, the cost of complying with product registration requirements and FDA compliance has not had a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.
Our emphasis on environmental, health and safety compliance provides us with risk reduction opportunities and cost savings through asset protection and protection of employees.
Available Information
Our Internet address is www.sealedair.com. We make available, free of charge, on or through our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports that we file or furnish pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the Securities and Exchange Commission.

Item 1A.    Risk Factors
Introduction
The risks described below should be carefully considered before making an investment decision. These are the most significant risk factors, but they are not the only risk factors that should be considered in making an investment decision. This Form 10-K also contains and may incorporate by reference forward-looking statements that involve risks and uncertainties. See the “Cautionary Notice Regarding Forward-Looking Statements,” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Form 10-K. Our business, consolidated financial condition or results of operations could be materially adversely affected by any of these risks. The trading price of our securities could decline due to any of these risks, and investors in our securities may lose all or part of their investment.
Uncertain global economic conditions have had and could continue to have an adverse effect on our consolidated financial condition and results of operations.
Uncertain global economic conditions have had and may continue to have an adverse impact on our business in the form of lower net sales due to weakened demand, unfavorable changes in product price/mix, or lower profit margins. For example, global economic downturns have adversely impacted some of our end-users and customers, such as food processors, distributors, supermarket retailers, hotels, restaurants, retail establishments, other retailers, business service contractors and e-commerce and mail order fulfillment firms, and other end-users that are particularly sensitive to business and consumer spending.
During economic downturns or recessions, there can be a heightened competition for sales and increased pressure to reduce selling prices as our customers may reduce their volume of purchases from us. If we lose significant sales volume or reduce selling prices significantly, then there could be a negative impact on our consolidated financial condition or results of operations, profitability and cash flows.

10



Also, reduced availability of credit may adversely affect the ability of some of our customers and suppliers to obtain funds for operations and capital expenditures. This could negatively impact our ability to obtain necessary supplies as well as our sales of materials and equipment to affected customers. This also could result in reduced or delayed collections of outstanding accounts receivable.
The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and results of operations.
We operate in 58 countries/regions, and our products are distributed to 122 countries/regions around the world. A large portion of our manufacturing operations are located outside of the U.S. and a majority of our net sales are generated outside of the U.S.  These operations, particularly in developing regions, are subject to various risks that may not be present or as significant for our U.S. operations. Economic uncertainty in some of the geographic regions in which we operate, including developing regions, could result in the disruption of commerce and negatively impact cash flows from our operations in those areas.
Risks inherent in our international operations include:
foreign currency exchange controls and tax rates;
foreign currency exchange rate fluctuations, including devaluations;
the potential for changes in regional and local economic conditions, including local inflationary pressures;
restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including antidumping duties, tariffs, embargoes and prohibitions or restrictions on acquisitions or joint ventures;
changes in laws and regulations, including the laws and policies of the U.S. affecting trade and foreign investment;
the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems;
variations in protection of intellectual property and other legal rights;
more expansive legal rights of foreign unions or works councils;
changes in labor conditions and difficulties in staffing and managing international operations;
import and export delays caused, for example, by an extended strike at the port of entry, could cause a delay in our supply chain operations;
social plans that prohibit or increase the cost of certain restructuring actions;
the potential for nationalization of enterprises or facilities; and
unsettled political conditions and possible terrorist attacks against U.S. or other interests.
In addition, there are potential tax inefficiencies and tax costs in repatriating funds from our non-U.S. subsidiaries.
These and other factors may have a material adverse effect on our international operations and, consequently, on our consolidated financial condition or results of operations.
Fluctuations between foreign currencies and the U.S. dollar could materially impact our consolidated financial condition or results of operations.
Approximately 49% of our net sales in 2017 were generated outside the U.S. We translate sales and other results denominated in foreign currency into U.S. dollars for our Consolidated Financial Statements.  As a result, the Company is exposed to currency fluctuations both in receiving cash from its international operations and in translating its financial results back to U.S. dollars.  During periods of a strengthening U.S. dollar, our reported international sales and net earnings could be reduced because foreign currencies may translate into fewer U.S. dollars. Foreign exchange rates can also impact the competitiveness of products produced in certain jurisdictions and exported for sale into other jurisdictions. These changes may impact the value received for the sale of our goods versus those of our competitors. The Company cannot predict the effects of exchange rate fluctuations on its future operating results. As exchange rates vary, the Company's results of operations and profitability may be harmed.  While we use financial instruments to hedge certain foreign currency exposures, this does not insulate us completely from foreign currency effects and exposes us to counterparty credit risk for non-performance. See Note 12, “Derivatives and Hedging Activities” of the Notes to Consolidated Financial Statements. Such hedging activities may be ineffective or may not offset more than a portion of the adverse financial effect resulting from foreign currency variations. The gains or losses associated with hedging activities may harm the Company's results of operations.
In all jurisdictions in which we operate, we are also subject to laws and regulations that govern foreign investment, foreign trade and currency exchange transactions. These laws and regulations may limit our ability to repatriate cash as dividends or otherwise to the U.S. and may limit our ability to convert foreign currency cash flows into U.S. dollars.

11



We have recognized foreign exchange gains and losses related to the currency devaluations in Venezuela and its designation as a highly inflationary economy under U.S. GAAP. See Note 2, “Summary of Significant Accounting Policies and Recently Issued Accounting Standards” of the Notes to Consolidated Financial Statements under the section “Impact of Inflation and Currency Fluctuation— Venezuela.”  
Raw material pricing, availability and allocation by suppliers as well as energy-related costs may negatively impact our results of operations, including our profit margins.
We use petrochemical-based raw materials to manufacture many of our products. The prices for these raw materials are cyclical, and increases in market demand or fluctuations in the global trade for petrochemical- based raw materials and energy could increase our costs. While, historically we have been able to successfully manage the impact of higher raw material costs by increasing our selling prices, if we are unable to minimize the effects of increased raw material costs through sourcing, pricing or other actions, our business, consolidated financial condition or results of operations may be materially adversely affected. We also have some sole-source suppliers, and the lack of availability of supplies could have a material adverse effect on our consolidated financial condition or results of operations.
Natural disasters such as hurricanes, as well as political instability and terrorist activities, may negatively impact the production or delivery capabilities of refineries and natural gas and petrochemical suppliers and suppliers of other raw materials in the future. These factors could lead to increased prices for our raw materials, curtailment of supplies and allocation of raw materials by our suppliers, which could reduce revenues and profit margins and harm relations with our customers and which could have a material adverse effect on our consolidated financial condition or results of operations.
Unfavorable customer responses to price increases could have a material adverse impact on our sales and earnings.
From time to time, and especially in periods of rising raw material costs, we increase the prices of our products. Significant price increases could impact our earnings depending on, among other factors, the pricing by competitors of similar products and the response by the customers to higher prices. Such price increases may result in lower volume of sales and a subsequent decrease in gross margin and adversely impact earnings.
Demand for our products could be adversely affected by changes in consumer preferences.
Our sales depend heavily on the volumes of sales by our customers in the food processing and food service industries. Consumer preferences for food and packaging formats of prepackaged food can influence our sales, as can consumer preferences for fresh and unpackaged foods. Changes in consumer behavior, including changes in consumer preferences driven by various health-related concerns and perceptions, could negatively impact demand for our products.
The consolidation of customers may adversely affect our business, consolidated financial condition or results of operations.
Customers in the food service, food and beverage processing sectors have been consolidating in recent years, and we believe this trend may continue. Such consolidation could have an adverse impact on the pricing of our products and services and our ability to retain customers, which could in turn adversely affect our business, consolidated financial condition or results of operations.
We experience competition in the markets for our products and services and in the geographic areas in which we operate.
Our packaging products compete with similar products made by other manufacturers and with a number of other types of materials or products. We compete on the basis of performance characteristics of our products, as well as service, price and innovations in technology. A number of competing domestic and foreign companies are well-established.
Our inability to maintain a competitive advantage could result in lower prices or lower sales volumes for our products. Additionally, we may not successfully implement our pricing actions. These factors may have an adverse impact on our consolidated financial condition or results of operations.
Cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business, could have a material adverse effect on our business, consolidated financial condition and results of operations.
We are subject to an increasing number of information technology vulnerabilities, threats and targeted computer crimes which pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.

12



Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber attacks or security breaches of our networks or systems, could result in the loss of customers and business opportunities, legal liability, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensatory costs, and additional compliance costs, any of which could materially adversely affect our business, consolidated financial condition and results of operations. While we attempt to mitigate these risks, our systems, networks, products, solutions and services remain potentially vulnerable to advanced and persistent threats.
We also maintain and have access to sensitive, confidential or personal data or information in certain of our businesses that is subject to privacy and security laws, regulations and customer controls. Despite our efforts to protect such sensitive, confidential or personal data or information, our facilities and systems and those of our customers and third-party service providers may be vulnerable to security breaches, theft, misplaced or lost data, programming and/or human errors that could lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions, which in turn could adversely affect our business, consolidated financial condition and results of operations.
The effects of animal and food-related health issues, such as Porcine Epidemic Diarrhea or “PED”, bovine spongiform encephalopathy, also known as “mad cow” disease, foot-and-mouth disease, avian influenza or “bird-flu”, as well as other health issues affecting the food industry, may lead to decreased revenues.
We manufacture and sell food packaging products, among other products. Various health issues affecting the food industry have in the past and may in the future have a negative effect on the sales of food packaging products. In recent years, occasional cases of PED and “mad cow” disease have been confirmed and incidents of bird-flu have surfaced in various countries/regions. Outbreaks of animal diseases may lead governments to restrict exports and imports of potentially affected animals and food products, leading to decreased demand for our products and possibly also to the culling or slaughter of significant numbers of the animal population otherwise intended for food supply. Also, consumers may change their eating habits as a result of perceived problems with certain types of food. These factors may lead to reduced sales of food packaging products, which could have a material adverse effect on our consolidated financial condition or results of operations.
Our performance and prospects for future growth could be adversely affected if new products do not meet sales or margin expectations.
Our competitive advantage is due in part to our ability to develop and introduce new products in a timely manner at favorable margins. The development and introduction cycle of new products can be lengthy and involve high levels of investment. New products may not meet sales or margin expectations due to many factors, including our inability to (i) accurately predict demand, end-user preferences and evolving industry standards; (ii) resolve technical and technological challenges in a timely and cost-effective manner; or (iii) achieve manufacturing efficiencies.
Product liability claims or regulatory actions could adversely affect our financial results or harm our reputation or the value of our brands.
Claims for losses or injuries purportedly caused by some of our products arise in the ordinary course of our business. In addition to the risk of substantial monetary judgments, product liability claims or regulatory actions could result in negative publicity that could harm our reputation in the marketplace or adversely impact the value of our brands or our ability to sell our products in certain jurisdictions. We could also be required to recall possibly defective products, or voluntarily do so, which could result in adverse publicity and significant expenses. Although we maintain product liability insurance coverage, potential product liabilities claims could be excluded or exceed coverage limits under the terms of our insurance policies or could result in increased costs for such coverage.
We may not achieve all of the expected benefits from our restructuring program.
We have implemented a number of restructuring programs in the last few years. These programs include various cost savings and reorganization initiatives, including the relocation of our corporate headquarters to Charlotte, North Carolina, the consolidation of certain facilities and the reduction of headcount. We have made certain assumptions in estimating the anticipated savings we expect to achieve under such programs, which include the estimated savings from the elimination of certain headcount and the consolidation of facilities. These assumptions may turn out to be incorrect due to a variety of factors. In addition, our ability to realize the expected benefits from these programs is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. If we are unsuccessful in implementing

13



these programs or if we do not achieve our expected results, our consolidated results of operations and cash flows could be adversely affected or our business operations could be disrupted.
Political and economic instability and risk of government actions affecting our business and our customers or suppliers may adversely impact our business, results of operations and cash flows.
We are exposed to risks inherent in doing business in each of the countries/regions or regions in which we or our customers or suppliers operate including: civil unrest, acts of terrorism, sabotage, epidemics, force majeure, war or other armed conflict and related government actions, including sanctions/embargoes, the deprivation of contract rights, the inability to obtain or retain licenses required by us to operate our plants or import or export our goods or raw materials, the expropriation or nationalization of our assets, and restrictions on travel, payments or the movement of funds. In particular, if additional restrictions on trade with Russia were adopted by the European Union or the U.S., and were applicable to our products, we could lose sales and experience lower growth rates in the future.​
A major loss of or disruption in our manufacturing and distribution operations or our information systems and telecommunication resources could adversely affect our business, consolidated financial condition or results of operations.
If we experienced a natural disaster, such as a hurricane, tornado, earthquake or other severe weather event, or a casualty loss from an event such as a fire or flood, at one of our larger strategic facilities or if such event affected a key supplier, our supply chain or our information systems and telecommunication resources, then there could be a material adverse effect on our consolidated financial condition or results of operations. We are dependent on internal and third party information technology networks and systems, including the Internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for fulfilling and invoicing customer orders, applying cash receipts, and placing purchase orders with suppliers, making cash disbursements, and conducting digital marketing activities, data processing and electronic communications among business locations.
We also depend on telecommunication systems for communications between company personnel and our customers and suppliers. Future system disruptions, security breaches or shutdowns could significantly disrupt our operations or result in lost or misappropriated information and may have a material adverse effect on our business, consolidated financial condition or results of operations.
If we are unable to retain key employees and other personnel, our consolidated financial condition or results of operations may be adversely affected.
Our success depends largely on the efforts and abilities of our management team and other key personnel. Their experience and industry contacts significantly benefit us, and we need their expertise to execute our business strategies. If any of our senior management or other key personnel cease to work for us and we are unable to successfully replace any departing senior management or key personnel, our business, consolidated financial condition or results of operations may be materially adversely affected.
We could experience disruptions in operations and/or increased labor costs.
In Europe and Latin America, most of our employees are represented by either labor unions or workers councils and are covered by collective bargaining agreements that are generally renewable on an annual basis. As is the case with any negotiation, we may not be able to negotiate acceptable new collective bargaining agreements, which could result in strikes or work stoppages by affected workers. Renewal of collective bargaining agreements could also result in higher wages or benefits paid to union members. A disruption in operations or higher ongoing labor costs could materially affect our business.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on time or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to affect

14



any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The credit agreement governing the senior secured credit facilities, the indentures that govern our senior notes and the agreements covering our accounts receivable securitization programs restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.
In addition, we conduct a substantial portion of our operations through our subsidiaries, certain of which are not guarantors of our indebtedness. Accordingly, repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of our indebtedness, our subsidiaries do not have any obligation to pay amounts due on indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the indenture governing certain of our senior notes, these notes and the credit agreement governing the senior secured credit facilities limit the ability of certain of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations.
If we cannot make scheduled payments on our debt, we will be in default, the lenders under the senior secured credit facilities could terminate their commitments to loan money, the lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
The terms of our credit agreement governing our senior secured credit facilities and accounts receivable securitization programs and the indentures governing our senior notes restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.
The indentures governing our senior notes and the credit agreement governing our senior secured credit facilities and accounts receivable securitization programs contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to:
incur additional indebtedness;
pay dividends or make other distributions or repurchase or redeem capital stock;
prepay, redeem or repurchase certain debt;
make loans and investments;
sell assets;
incur liens;
enter into transactions with affiliates;
alter the businesses we conduct;
enter into agreements restricting our subsidiaries’ ability to pay dividends; and
consolidate, merge or sell all or substantially all of our assets.
In addition, the restrictive covenants in the credit agreement governing our senior credit facilities require us to maintain a specified net leverage ratio. Our ability to meet this financial ratio can be affected by events beyond our control.
A breach of the covenants under the indenture governing our senior notes or under the credit agreement governing our senior secured credit facilities could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the credit agreement governing our senior secured credit facilities would permit the lenders under our senior secured credit facilities to terminate all commitments to extend further credit under those facilities. Furthermore, if we were unable to repay the amounts due and payable under our senior secured credit facilities, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our

15



lenders or note holders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:
limited in how we conduct our business;
unable to respond to changing market conditions;
unable to raise additional debt or equity financing to operate during general economic or business downturns or to repay other indebtedness when it becomes due; or
unable to compete effectively or to take advantage of new business opportunities.
In addition, amounts available under our accounts receivable securitization programs can be impacted by a number of factors, including but not limited to our credit ratings, accounts receivable balances, the creditworthiness of our customers and our receivables collection experience.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
Borrowings under our senior secured credit facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. As of December 31, 2017, we had $226 million of borrowings under our senior secured credit facilities at variable interest rates. A 1/8% increase or decrease in the assumed interest rates on the senior secured credit facilities would result in a $0.3 million increase or decrease in annual interest expense. In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.
The full realization of our deferred tax assets may be affected by a number of factors, including our earnings in the U.S.
We have deferred tax assets including state and foreign net operating loss carryforwards, foreign tax credits, accruals not yet deductible for tax purposes, employee benefit items and other items. We have established valuation allowances to reduce the deferred tax assets to an amount that is more likely than not to be realized. Our ability to utilize the deferred tax assets depends in part upon our ability to generate future taxable income within each respective jurisdiction during the periods in which these temporary differences reverse or our ability to carryback any losses created by the deduction of these temporary differences. We expect to realize the assets over an extended period. If we are unable to generate sufficient future taxable income in the U.S. and/or certain foreign jurisdictions, or if there is a significant change in the time period within which the underlying temporary differences become taxable or deductible, we could be required to increase our valuation allowances against our deferred tax assets. Our effective tax rate would increase if we were required to increase our valuation allowances against our deferred tax assets.
A significant deferred tax asset is our foreign tax credit carryforwards. The benefit from the amount carried forward may depend upon many factors, including the jurisdictional mix of our anticipated future earnings. A reduction in our anticipated U.S. earnings, or an unfavorable mix of domestic versus foreign-sourced U.S. earnings may change our foreign tax credit position which could result in a significant increase in our effective tax rate and could have a material adverse effect on our consolidated results of operations in the periods in which any such condition occurs. In addition, changes in statutory tax rates or other legislation or regulation may change our deferred tax assets or liability balances, with either favorable or unfavorable impacts on our effective tax rate.
Although the Settlement agreement (as defined in Note 17, “Commitments and Contingencies”) has been implemented and we have been released from the various asbestos-related, fraudulent transfer, successor liability, and indemnification claims made against us arising from a 1998 transaction with Grace (as defined below), if the courts were to refuse to enforce the injunctions or releases contained in the Plan (as defined below) and the Settlement agreement with respect to any claims and if Grace were unwilling or unable to defend and indemnify us for such claims, then we could be required to pay substantial damages, which could have a material adverse effect on our consolidated financial condition and results of operations. We were also a defendant in a number of asbestos-related actions in Canada arising from Grace’s activities in Canada prior to the 1998 transaction.
On March 31, 1998, Sealed Air completed a multi-step transaction (the “Cryovac transaction”) involving W.R. Grace & Co. (“Grace”) which brought the Cryovac packaging business and the former Sealed Air’s business under the common

16



ownership of the Company. As part of that transaction, Grace and its subsidiaries retained all liabilities arising out of their operations before the Cryovac transaction (including asbestos-related liabilities), other than liabilities relating to Cryovac’s operations, and agreed to indemnify the Company with respect to such retained liabilities. Since the beginning of 2000, we have been served with a number of lawsuits alleging that, as a result of the Cryovac transaction, we are responsible for alleged asbestos liabilities of Grace and its subsidiaries. While they vary, these suits all appeared to allege that the transfer of the Cryovac business was a fraudulent transfer or gave rise to successor liability. On April 2, 2001, Grace and a number of its subsidiaries filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). In connection with Grace’s Chapter 11 case, the Bankruptcy Court issued orders dated May 3, 2001 and January 22, 2002, staying all asbestos actions against the Company (the “Preliminary Injunction”). However, the official committees appointed to represent asbestos claimants in Grace’s Chapter 11 case (the “Committees”) received the court’s permission to pursue fraudulent transfer and other claims against the Company and its subsidiary Cryovac, Inc. based upon the Cryovac transaction. This proceeding was brought in the U.S. District Court for the District of Delaware (the “District Court”) (Adv. No. 02-02210).
On November 27, 2002, we reached an agreement in principle with the Committees to resolve all current and future asbestos-related claims made against us and our affiliates in connection with the Cryovac transaction. The Settlement agreement provided for the resolution of the fraudulent transfer claims and successor liability claims, as well as indemnification claims by Fresenius Medical Care Holdings, Inc. and affiliated companies in connection with the Cryovac transaction. The parties to the agreement in principle signed the definitive Settlement agreement as of November 10, 2003 consistent with the terms of the agreement in principle. On June 27, 2005, the Bankruptcy Court signed an order approving the Settlement agreement. Although Grace was not a party to the Settlement agreement, under the terms of the order, Grace was directed by the Bankruptcy Court to comply with the Settlement agreement subject to limited exceptions.
On September 19, 2008, Grace, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants’ Representative, and the Official Committee of Equity Security Holders filed, as co-proponents, a plan of reorganization (as filed and amended from time to time, the “Plan”) and several exhibits and associated documents, including a disclosure statement, with the Bankruptcy Court. The Plan provided for the establishment of two asbestos trusts under Section 524(g) of the U.S. Bankruptcy Code to which present and future asbestos-related personal injury and property damage claims are channeled. The Plan incorporated the Settlement agreement, including our payment of amounts contemplated by the Settlement agreement and the releases and injunctions contemplated by the Settlement agreement.
On February 3, 2014 (the “Effective Date”), the Plan implementing the Settlement agreement became effective with Grace emerging from bankruptcy. In accordance with the Plan and the Settlement agreement, on the Effective Date, Cryovac, Inc. made aggregate cash payments in the amount of $929.7 million to the WRG Asbestos PI Trust (the “PI Trust”) and the WRG Asbestos PD Trust (the “PD Trust”) and transferred 18 million shares of Sealed Air common stock to the PI Trust, in each case reflecting adjustments made in accordance with the Settlement agreement. Under the Plan, the Preliminary Injunction remained in place through the Effective Date and, on the Effective Date, the Plan and Settlement agreement injunctions and releases with respect to asbestos claims and certain other claims became effective. Following the Effective Date, the Bankruptcy Court issued an order dismissing the proceedings pursuant to which the Preliminary Injunction was issued. The Plan provides for the channeling of existing and future asbestos claims to the PI Trust or the PD Trust, as applicable. In addition, under the Plan and the Settlement agreement, Grace is required to indemnify us with respect to asbestos and certain other liabilities. Notwithstanding the foregoing, and although we believe the possibility to be remote, if any courts were to refuse to enforce the injunctions or releases contained in the Plan and the Settlement agreement with respect to any claims, and if, in addition, Grace were unwilling or unable to defend and indemnify us for such claims, then we could be required to pay substantial damages, which could have a material adverse effect on our consolidated financial condition and results of operations.
From November 2004, the Company and specified subsidiaries were named as defendants in a number of cases, including a number of putative class actions, brought in Canada as a result of Grace’s alleged marketing, manufacturing or distributing of asbestos or asbestos containing products in Canada prior to the Cryovac transaction in 1998. Grace agreed to defend and indemnify us and our subsidiaries in these cases. A global settlement of these Canadian claims to be funded by Grace has been approved by the Canadian court, and the Plan provides for payment of these claims. We do not have any positive obligations under the Canadian settlement, but we are a beneficiary of the release of claims. The release in favor of the Grace parties (including us) became operative upon the effective date of a plan of reorganization in Grace’s U.S. Chapter 11 bankruptcy proceeding. As filed, the Plan contemplates that the claims released under the Canadian settlement will be subject to injunctions under Section 524(g) of the Bankruptcy Code. As indicated above, the Bankruptcy Court entered the Bankruptcy Court Confirmation Order on January 31, 2011 and the Clarifying Order on February 15, 2011 and the District Court entered the Original District Court Confirmation Order on January 30, 2012 and the Amended District Court Confirmation Order on June 11, 2012. The Canadian Court issued an Order on April 8, 2011 recognizing and giving full effect to the Bankruptcy

17



Court’s Confirmation Order in all provinces and territories of Canada in accordance with the Bankruptcy Court Confirmation Order’s terms. As described above, the Plan became effective on February 3, 2014.  In accordance with an order of the Canadian court, on the Effective Date the actions became permanently stayed until they were amended to remove the Grace parties as named defendants. Two actions were dismissed by the Manitoba court as against the Grace parties on February 19, 2014.  The remaining actions were either dismissed or discontinued with prejudice by the Canadian courts as against the Grace parties in May and June 2015, but for two actions in the Province of Quebec, which were discontinued by order of the Quebec court in February 2016.  Notwithstanding the foregoing, and although we believe the possibility to be remote, if the Canadian courts refuse to enforce the final plan of reorganization in the Canadian courts, and if in addition Grace is unwilling or unable to defend and indemnify us and our subsidiaries in these cases, then we could be required to pay damages, which we cannot estimate at this time. For further information concerning these matters, see Note 17, “Commitments and Contingencies” of the Notes to Consolidated Financial Statements.
The U.S. Internal Revenue Service (the “IRS”) has indicated that it intends to disallow our deduction of the approximately $1.49 billion for the payments made pursuant to the Settlement agreement (as defined in Note 17, “Commitments and Contingencies”).
We are currently under examination by the IRS with respect to the deduction of the approximately $1.49 billion for the 2014 taxable year for the payments made pursuant to the Settlement agreement. The IRS has indicated that it intends to disallow this deduction in full. We strongly disagree with the IRS position and are protesting this finding with the IRS. The resolution of the IRS's challenge could take several years and the outcome cannot be predicted. Nevertheless, we believe that we have meritorious defenses for the deduction of the payments made pursuant to the Settlement agreement. If the IRS's disallowance of the deduction were sustained, in whole or in part, we would have to remit all or a portion of the refund of taxes previously received, which, in turn, could have a material adverse effect on our consolidated financial condition and results of operations. For further information concerning this matter, see Note 17, “Commitments and Contingencies” of the Notes to Consolidated Financial Statements.
Disruption and volatility of the financial and credit markets could affect our external liquidity sources.
Our principal sources of liquidity are accumulated cash and cash equivalents, short-term investments, cash flow from operations and amounts available under our lines of credit, including our senior secured credit facilities and our accounts receivable securitization programs. We may be unable to refinance any of our indebtedness, including our senior notes, our accounts receivable securitization programs and our senior secured credit facilities, on commercially reasonable terms or at all.
Additionally, conditions in financial markets could affect financial institutions with which we have relationships and could result in adverse effects on our ability to utilize fully our committed borrowing facilities. For example, a lender under the senior secured credit facilities may be unwilling or unable to fund a borrowing request, and we may not be able to replace such lender.
New and stricter legislation and regulations may affect our business and consolidated financial condition and results of operations.
Increased legislative and regulatory activity and burdens, and a more stringent manner in which they are applied (particularly in the U.S.), could significantly impact our business and the economy as a whole. This includes, among other things, interpretations and clarifications of recently enacted U.S. tax legislation, compliance costs and enforcement under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), and costs associated with complying with the Patient Protection and Affordable Care Act of 2010 and the regulations promulgated thereunder.
For example, under Section 1502 of the Dodd-Frank Act, the SEC has adopted additional disclosure requirements related to the source of certain “conflict minerals” for issuers for which such “conflict minerals” are necessary to the functionality or product manufactured, or contracted to be manufactured, by that issuer. The metals covered by the rules include tin, tantalum, tungsten and gold, commonly referred to as “3TG.” Our suppliers may use some or all of these materials in their production processes. The SEC's rules require us to perform due diligence on our suppliers. Global supply chains can have multiple layers, thus the costs of complying with these requirements could be substantial. These requirements may also reduce the number of suppliers who provide conflict free metals, and may affect our ability to obtain products in sufficient quantities or at competitive prices. Compliance costs and the unavailability of raw materials could have a material adverse effect on our consolidated results of operations.
As another example, the Affordable Care Act (the “ACA”), which was adopted in 2010 and is being phased in over several years, significantly affects the provision of both healthcare services and benefits in the U.S.; the ACA may impact our

18



cost of providing our employees and retirees with health insurance and/or benefits, and may also impact various other aspects of our business. We provide benefits to our employees which are competitive within the industries in which we operate. The ACA did not have a material impact on our consolidated financial position or results of operations in 2017, 2016 or 2015; however, we are continuing to assess the impact of the ACA on our healthcare benefit costs. The regulatory environment is still developing, and the potential exists for future legislation and regulations to be adopted. These developments, as well as the increasingly strict regulatory environment, may also adversely affect the customers to which, and the markets into which, we sell our products, and increase our costs and otherwise negatively affect our business, consolidated financial condition or results of operations, including in ways that cannot yet be foreseen.
Our annual effective income tax rate can change materially as a result of changes in our mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities.
Our overall effective income tax rate is equal to our total tax expense as a percentage of total earnings before tax. However, income tax expense and benefits are not recognized on a global basis but rather on a jurisdictional or legal entity basis. Losses in one jurisdiction may not be used to offset profits in other jurisdictions and may cause an increase in our tax rate. Changes in the mix of earnings (or losses) between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a significant effect on our overall effective income tax rate.  
We are subject to taxation in multiple jurisdictions. As a result, any adverse development in the tax laws of any of these jurisdictions or any disagreement with our tax positions could have a material adverse effect on our business, consolidated financial condition or results of operations.
We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. The U.S. recently enacted significant tax reform, and certain provisions of the new law may adversely affect us. Many countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business. Additional changes in tax laws could increase our overall taxes and our business, consolidated financial condition or results of operations could be adversely effected in a material way. In addition, the tax authorities in any applicable jurisdiction, including the U.S., may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions. If any applicable tax authorities, including U.S. tax authorities, were to successfully challenge the tax treatment or characterization of any of our transactions, it could have a material adverse effect on our business, consolidated financial condition or results of our operations.

U.S. federal income tax reform could adversely affect us.
The 2017 Tax Cuts and Jobs Act (the "TCJA"), which was enacted on December 22, 2017, significantly affects U.S. tax law by changing how the U.S. imposes income tax on multinational corporations. The TCJA, among other things, reduces the U.S. corporate income tax rate from 35% to 21%, creates a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries, and creates a new tax on certain foreign earnings. We continue to examine the impact the TCJA may have on our business. The TCJA requires complex computations not previously provided in U.S. tax law. As such, the application of accounting guidance for such items is currently uncertain. Further, compliance with the TCJA and the accounting for such provisions require the accumulation of information not previously required or regularly produced. As a result, and in conjunction with the complexity of the tax implications associated with the sale of Diversey, we are in the process of quantifying the mandatory tax on previously deferred foreign earnings of our U.S. subsidiaries. This amount could have a material adverse effect on our consolidated financial position, results of operations and/or statement of cash flows.
Concerns about greenhouse gas (“GHG”) emissions and climate change and the resulting governmental and market responses to these issues could increase costs that we incur and could otherwise affect our consolidated financial condition or results of operations.
Numerous legislative and regulatory initiatives have been enacted and proposed in response to concerns about GHG emissions and climate change. We are a manufacturing entity that utilizes petrochemical-based raw materials to produce many of our products, including plastic packaging materials. Increased environmental legislation or regulation could result in higher costs for us in the form of higher raw materials, freight and energy costs. We could also incur additional compliance costs for monitoring and reporting emissions and for maintaining permits. It is also possible that certain materials might cease to be permitted to be used in our processes.

19



We are subject to a variety of environmental and product registration laws that expose us to potential financial liability and increased operating costs.
Our operations are subject to a number of federal, state, local and foreign environmental, health and safety laws and regulations that govern, among other things, the manufacture of our products, the discharge of pollutants into the air, soil and water and the use, handling, transportation, storage and disposal of hazardous materials.
Many jurisdictions require us to have operating permits for our production and warehouse facilities and operations. Any failure to obtain, maintain or comply with the terms of these permits could result in fines or penalties, revocation or nonrenewal of our permits, or orders to cease certain operations, and may have a material adverse effect on our business, financial condition, results of operations and cash flows.
We generate, use and dispose of hazardous materials in our manufacturing processes. In the event our operations result in the release of hazardous materials into the environment, we may become responsible for the costs associated with the investigation and remediation of sites at which we have released pollutants, or sites where we have disposed or arranged for the disposal of hazardous wastes, even if we fully complied with environmental laws at the time of disposal. We have been, and may continue to be, responsible for the cost of remediation at some locations.
Some jurisdictions have laws and regulations that govern the registration and labeling of some of our products. We expect significant future environmental compliance obligations in our European operations as a result of a European Union (“EU”) Directive “Registration, Evaluation, Authorization, and Restriction of Chemicals” (EU Directive No. 2006/1907) enacted on December 18, 2006. The directive imposes several requirements related to the identification and management of risks related to chemical substances manufactured or marketed in Europe. The EU has also recently enacted a “Classification, Packaging and Labeling” regulation. Other jurisdictions may impose similar requirements.
We cannot predict with reasonable certainty the future cost to us of environmental compliance, product registration, or environmental remediation. Environmental laws have become more stringent and complex over time. Our environmental costs and operating expenses will be subject to evolving regulatory requirements and will depend on the scope and timing of the effectiveness of requirements in these various jurisdictions. As a result of such requirements, we may be subject to an increased regulatory burden, and we expect significant future environmental compliance obligations in our operations. Increased compliance costs, increasing risks and penalties associated with violations, or our inability to market some of our products in certain jurisdictions may have a material adverse effect on our business, consolidated financial condition or results of operations.
Our insurance policies may not cover all operating risks and a casualty loss beyond the limits of our coverage could adversely impact our business.
Our business is subject to operating hazards and risks relating to handling, storing, transporting and use of the products we sell. We maintain insurance policies in amounts and with coverage and deductibles that we believe are reasonable and prudent. Nevertheless, our insurance coverage may not be adequate to protect us from all liabilities and expenses that may arise from claims for personal injury or death or property damage arising in the ordinary course of business, and our current levels of insurance may not be maintained or available in the future at economical prices. If a significant liability claim is brought against us that are not adequately covered by insurance, we may have to pay the claim with our own funds, which could have a material adverse effect on our business, consolidated financial condition or results of operations.
If we are not able to protect our trade secrets or maintain our trademarks, patents and other intellectual property, we may not be able to prevent competitors from developing similar products or from marketing their products in a manner that capitalizes on our trademarks, and this loss of a competitive advantage could decrease our profitability and liquidity.
Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our owned and licensed intellectual property. If we were unable to maintain the proprietary nature of our intellectual property and our significant current or proposed products, this loss of a competitive advantage could result in decreased sales or increased operating costs, either of which could have a material adverse effect on our business, consolidated financial condition or results of operations.
We rely on trade secrets to maintain our competitive position, including protecting the formulation and manufacturing techniques of many of our products. As such, we have not sought U.S. or international patent protection for some of our principal product formulas and manufacturing processes. Accordingly, we may not be able to prevent others from developing products that are similar to or competitive with our products.

20



We own a large number of patents and pending patent applications on our products, aspects thereof, methods of use and/or methods of manufacturing. There is a risk that our patents may not provide meaningful protection and patents may never be issued for our pending patent applications.
We own, or have licenses to use, all of the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our major products both in the U.S. and in other countries/regions where our products are principally sold. Trademark and trade name protection is important to our business. Although most of our trademarks are registered in the U.S. and in the foreign countries/regions in which we operate, we may not be successful in asserting trademark or trade name protection. In addition, the laws of some foreign countries/regions may not protect our intellectual property rights to the same extent as the laws of the U.S. The costs required to protect our trademarks and trade names may be substantial.
We cannot be certain that we will be able to assert these intellectual property rights successfully in the future or that they will not be invalidated, circumvented or challenged. Other parties may infringe on our intellectual property rights and may thereby dilute the value of our intellectual property in the marketplace. Third parties, including competitors, may assert intellectual property infringement or invalidity claims against us that could be upheld. Intellectual property litigation, which could result in substantial cost to and diversion of effort by us, may be necessary to protect our trade secrets or proprietary technology or for us to defend against claimed infringement of the rights of others and to determine the scope and validity of others’ proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all.
Any failure by us to protect our trademarks and other intellectual property rights may have a material adverse effect on our business, consolidated financial condition or results of operations.
As a result of acquisitions we may record a significant amount of goodwill and other identifiable intangible assets and we may never realize the full carrying value of the related assets.
As a result of acquisitions we record a significant amount of goodwill and other identifiable intangible assets, including customer relationships, trademarks and developed technologies.
We test goodwill and intangible assets with indefinite useful lives for possible impairment annually during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. Amortizable intangible assets are periodically reviewed for possible impairment whenever there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment may result from, among other things, (i) a decrease in our expected net earnings; (ii) adverse equity market conditions; (iii) a decline in current market multiples; (iv) a decline in our common stock price; (v) a significant adverse change in legal factors or business climates; (vi) an adverse action or assessment by a regulator; (vii) heightened competition; (viii) strategic decisions made in response to economic or competitive conditions; or (ix) a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of. In the event that we determine that events or circumstances exist that indicate that the carrying value of goodwill or identifiable intangible assets may no longer be recoverable, we might have to recognize a non-cash impairment of goodwill or other identifiable intangible assets, which could have a material adverse effect on our consolidated financial condition or results of operations.
Item 1B.    Unresolved Staff Comments
None.


21



Item 2.
Properties
We manufacture products in 94 facilities, with 15 of those facilities serving more than one of our business segments and our Medical and Other categories of products. The geographic dispersion of our manufacturing facilities is as follows:
 
Geographic Region
Number of Manufacturing Facilities
North America
32

Europe, Middle East and Africa ("EMEA")
26

Latin America
10

Asia, Australia and New Zealand ("APAC")
26

Total
94

Manufacturing Facilities by Reportable Segment and Other
Food Care: We produce Food Care products in 37 manufacturing facilities, of which 8 are in North America, 12 in EMEA, 8 in Latin America, 9 in APAC.
Product Care: We produce Product Care products in 72 manufacturing facilities, of which 27 are in North America, 20 in EMEA, 3 in Latin America, 22 in APAC.
Other Property Information
We own the large majority of our manufacturing facilities. Some of these facilities are subject to secured or other financing arrangements. We lease the balance of our manufacturing facilities, which are generally smaller sites. Our manufacturing facilities are usually located in general purpose buildings that house our specialized machinery for the manufacture of one or more products. Because of the relatively low density of our air cellular, polyethylene foam and protective mailer products, we realize significant freight savings by locating our manufacturing facilities for these products near our customers and distributors.
We also occupy facilities containing sales, distribution, technical, warehouse or administrative functions at a number of locations in the U.S. and in many foreign countries/regions. Some of these facilities are located on the manufacturing sites that we own and some of these are leased. Stand-alone facilities of these types are generally leased. Our global headquarters is located in an owned property in Charlotte, North Carolina. For a list of those countries/regions outside of the U.S. where we have operations, see "Foreign Operations" above. Our website, www.sealedair.com, contains additional information about our worldwide business.
We believe that our manufacturing, warehouse, office and other facilities are well maintained, suitable for their purposes and adequate for our needs.
Item 3.        Legal Proceedings
The information set forth in Note 17, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements under the caption “Cryovac Transaction Commitments and Contingencies” is incorporated herein by reference.
At December 31, 2017, we were a party to, or otherwise involved in, several federal, state and foreign environmental proceedings and private environmental claims for the cleanup of “Superfund” sites under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and other sites. We may have potential liability for investigation and cleanup of some of these sites. It is our policy to accrue for environmental cleanup costs if it is probable that a liability has been incurred and if we can reasonably estimate an amount or range of costs associated with various alternative remediation strategies, without giving effect to any possible future insurance proceeds. As assessments and cleanups proceed, we review these liabilities periodically and adjust our reserves as additional information becomes available. At December 31, 2017, environmental related reserves were not material to our consolidated financial condition or results of operations. While it is often difficult to estimate potential liabilities and the future impact of environmental matters, based upon the information currently available to us and our experience in dealing with these matters, we believe that our potential future liability with respect to these sites is not material to our consolidated financial condition or results of operations.

22



We are also involved in various other legal actions incidental to our business. We believe, after consulting with counsel, that the disposition of these other legal proceedings and matters will not have a material effect on our consolidated financial condition or results of operations.
Item 4.        Mine Safety Disclosures.
Not applicable.


23



Executive Officers of the Registrant
The information appearing in the table below sets forth the current position or positions held by each of our executive officers, the officer’s age as of January 31, 2018, the year in which the officer was first elected to the position currently held with us or with the former Sealed Air Corporation, now known as Sealed Air Corporation (US) and a wholly-owned subsidiary of the Company, and the year in which such person was first elected an officer. All of our officers serve at the pleasure of the Board of Directors.
There are no family relationships among any of our officers or directors.
Name and Current Position
 
Age as of January 31, 2018
 
First Elected to Current Position
 
First Elected an Officer
Edward L. Doheny II
   President, Chief Executive Officer and Director
 
55

 
2018
 
2017
Emile Z. Chammas
   Senior Vice President
 
49

 
2010
 
2010
Kenneth P. Chrisman
   Senior Vice President
 
53

 
2014
 
2014
Karl R. Deily
   Senior Vice President
 
60

 
2006
 
2006
William G. Stiehl
   Acting Chief Financial Officer, Chief Accounting Officer and Controller
 
56

 
2013
 
2013

Mr. Doheny joined Sealed Air as Chief Operating Officer and CEO-Designate in September 2017 and was elected a Director of Sealed Air Corporation. He became President and CEO effective January 1, 2018.  Prior to joining the Company in September 2017, Mr. Doheny served as President and Chief Executive Officer and a Director of Joy Global Inc. from December 2013 through May 2017. Mr. Doheny also served as the Executive Vice President of Joy Global and President and Chief Operating Officer of its Underground Mining Machinery business from 2006 to 2013, where he had global responsibility for the company's underground mining machinery business. Prior to joining Joy Global, Mr. Doheny had a 21-year career with Ingersoll-Rand Corporation holding a series of senior executive positions of increasing responsibility, including President of Industrial Technologies from 2003 to 2005 and as President of the Air Solutions Group from 2000 to 2003.  
Before joining the Company in November 2010, Mr. Chammas was the Vice President, Worldwide Supply Chain, for the Wm. Wrigley Jr. Company, a confectionery company, from October 2008 through October 2010, and prior to that served in management positions of increasing responsibility in supply chain, operations and procurement with the Wm. Wrigley Jr. Company from January 2002 until October 2008.
Prior to being elected as an officer in August 2014, Mr. Chrisman served in a variety of management positions with the Company, including Global Vice President of Cushioning Solutions, Vice President and General Manager of Global Specialty Foams and Vice President of Customer Equipment. Mr. Chrisman has been an employee of the Company for 29 years.
Effective October 31, 2017, the Company appointed Mr. Stiehl as Acting Chief Financial Officer. Prior to joining the Company in January 2013, Mr. Stiehl was Vice President of Finance and Controller of the Aerostructures business unit of United Technologies Corporation from July 2012 through December 2012. Mr. Stiehl worked at Goodrich Corporation from 2006 through 2012. Mr. Stiehl also served as Senior Audit Manager with Deloitte and has worked in various accounting and finance positions for over twenty-five years with increasing levels of responsibilities.  


24



PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information
Our common stock is listed on the New York Stock Exchange under the trading symbol SEE. The table below shows the quarterly high and low closing sales prices of our common stock and cash dividends per share for 2017 and 2016.
 
2017
 
High
 
Low
 
Dividend
First Quarter
 
$
50.22

 
$
43.30

 
$
0.16

Second Quarter
 
46.41

 
42.30

 
0.16

Third Quarter
 
46.12

 
41.72

 
0.16

Fourth Quarter
 
49.66

 
43.01

 
0.16

 
2016
 
High
 
Low
 
Dividend
First Quarter
 
$
48.53

 
$
38.36

 
$
0.13

Second Quarter
 
52.68

 
43.55

 
0.16

Third Quarter
 
49.41

 
45.11

 
0.16

Fourth Quarter
 
48.84

 
42.45

 
0.16

As of February 9, 2018, there were approximately 4,261 holders of record of our common stock.
Dividends
Our Amended Credit Facility and the senior notes contain covenants that restrict our ability to declare or pay dividends. However, we do not believe these covenants are likely to materially limit the future payment of quarterly cash dividends on our common stock.
The following table shows our total cash dividends paid each year since 2010.
 
 
Total Cash
Dividends Paid
 
Total Cash Dividends Paid per
Common Share
 
 
(In millions)
 
 
2010
 
$
79.7

 
$
0.50

2011
 
87.4

 
0.52

2012
 
100.9

 
0.52

2013
 
102.0

 
0.52

2014
 
110.9

 
0.52

2015
 
106.8

 
0.52

2016
 
121.6

 
0.61

2017
 
119.7

 
0.64

Total
 
$
829.0

 
 

 
The dividend payments discussed above are recorded as reductions to cash and cash equivalents and retained earnings on our Consolidated Balance Sheets. From time to time, we may consider other means of returning value to our stockholders based on our consolidated financial condition and results of operations. There is no guarantee that our Board of Directors will declare any further dividends.


25



Common Stock Performance Comparisons
The following graph shows, for the five years ended December 31, 2017, the cumulative total return on an investment of $100 assumed to have been made on December 31, 2012 in our common stock. The graph compares this return (“SEE”) with that of comparable investments assumed to have been made on the same date in: (a) the Standard & Poor’s 500 Stock Index (“Composite S&P 500”) and (b) a self-constructed peer group (“Peer Group”).
The Peer Group includes us and the following companies: AptarGroup, Inc.; Ashland Global Holdings Inc.; Avery Dennison Corporation; Axalta Coating Systems Ltd.; Ball Corporation; Bemis Company, Inc; Berry Global Group, Inc.; Celanese Corporation; Crown Holdings, Inc.; Greif, Inc.; Graphic Packaging Holding Company; Maple Leaf Foods Inc.; Owens-Illinois, Inc.; Packaging Corporation of America; PolyOne Corporation; Silgan Holdings Inc.; and Sonoco Products Company.
Total return for each assumed investment assumes the reinvestment of all dividends on December 31 of the year in which the dividends were paid.

chart-dcd2c44040a97603ba2.jpg






26



Issuer Purchases of Equity Securities
The table below sets forth the total number of shares of our common stock, par value $0.10 per share, that we repurchased in each month of the quarter ended December 31, 2017, the average price paid per share and the maximum number of shares that may yet be purchased under our publicly announced plans or programs.
 
Period
 
Total Number of Shares Purchase(i)
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Announced Plans or Programs
 
Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
 
 
(a)
 
(b)
 
(c)
 
(d)
Balance as of September 30, 2017
 
 
 
 
 
 
 
$
1,490,004,316

October 1, 2017 through October 31, 2017
 
6,691

 

 

 
1,490,004,316

November 1, 2017 through November 30, 2017
 
9,580,524

 
44.99

 
9,575,792

 
1,057,017,974

December 1, 2017 through December 31, 2017
 
2,299,461

 
48.58

 
2,263,800

 
947,060,470

Total
 
11,886,676

 
 
 
11,839,592

 
$
947,060,470

(i)
We acquired shares by means of (i) a share trading plan we entered into with our brokers and pursuant to our publicly announced program (described below), (ii) accelerated share repurchase programs we entered into or terminated during the quarter, (iii) shares withheld from awards under our Omnibus Incentive Plan (the successor plan to our 2005 Contingent Stock Plan) pursuant to the provision thereof that permits minimum tax withholding obligations or other legally required charges to be satisfied by having us withhold shares from an award under that plan and (iv) shares reacquired pursuant to the forfeiture provision of our Omnibus Incentive Plan. We report price calculations in column (b) in the table above only for shares purchased as part of our publicly announced program, when applicable. For shares withheld for minimum tax withholding obligations or other legally required charges, we withhold shares at a price equal to their fair market value. We do not make payments for shares reacquired by the Company pursuant to the forfeiture provision of the Omnibus Incentive Plan as those shares are simply forfeited.

Period
 
Shares withheld for tax obligations and charges
 
Average withholding price for shares in column “a”
 
Forfeitures under Omnibus Incentive Plan
 
Total
 
 
(a)
 
(b)
 
(c)
 
(d)
October 2017
 
1,647

 
$
44.16

 
5,044

 
6,691

November 2017
 

 

 
4,732

 
4,732

December 2017
 
35,661

 
49.30

 

 
35,661

Total
 
37,308

 
 
 
9,776

 
47,084

 
On July 9, 2015, the Board of Directors authorized a new stock repurchase program to repurchase up to $1.5 billion of the Company’s issued and outstanding common stock. This new program replaced the previous stock repurchase program approved in August 2007. On March 25, 2017, the Board of Directors further authorized up to an additional $1.5 billion of repurchases of the Company’s outstanding common stock under such program. This program has no set expiration date.



27



Item 6.        Selected Financial Data
 
 
Year Ended December 31,
(In millions, except share data)
 
2017
 
2016
 
2015
 
2014
 
2013
Consolidated Statements of Operations Data(3):
 
 

 
 

 
 

 
 

 
 

Net sales
 
$
4,461.6

 
$
4,211.3

 
$
4,410.3

 
$
4,875.0

 
$
4,825.8

Gross profit
 
1,417.2

 
1,404.9

 
1,455.2

 
1,438.3

 
1,360.0

Operating profit
 
596.0

 
631.4

 
617.4

 
553.8

 
520.0

Loss on debt redemption
 

 
(0.1
)
 
(110.0
)
 
(102.5
)
 
(36.3
)
Earnings from continuing operations before income tax provision
 
393.3

 
387.9

 
291.4

 
186.4

 
104.1

Net earnings (loss) from continuing operations
 
62.8

 
292.3

 
158.8

 
164.6

 
13.4

Gain on sale of discontinued operations, net of taxes(1)(2)
 
640.7

 

 

 

 
22.9

Net earnings from discontinued operations, net of tax(1)(2)
 
111.4

 
194.1

 
176.6

 
93.5

 
89.5

Net earnings available to common stockholders
 
$
814.9

 
$
486.4

 
$
335.4

 
$
258.1

 
$
125.8

Basic and diluted net earnings (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.34

 
$
1.50

 
$
0.78

 
$
0.78

 
$
0.07

Discontinued operations(1)(2)
 
3.99

 
0.99

 
0.85

 
0.44

 
0.58

Net earnings per common share—basic
 
$
4.33

 
$
2.49

 
$
1.63

 
$
1.22

 
$
0.65

Diluted
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.33

 
$
1.48

 
$
0.77

 
$
0.77

 
$
0.06

Discontinued operations(1)(2)
 
3.96

 
0.98

 
0.85

 
0.43

 
0.52

Net earnings per common share—diluted
 
$
4.29

 
$
2.46

 
$
1.62

 
$
1.20

 
$
0.58

Dividends per common share
 
$
0.64

 
$
0.61

 
$
0.52

 
$
0.52

 
$
0.52

Consolidated Balance Sheets Data:
 
 

 
 

 
 

 
 

 
 

Total assets
 
$
5,280.3

 
$
7,415.5

 
$
7,395.1

 
$
7,912.0

 
$
9,132.3

Settlement agreement and related accrued interest
 

 

 

 

 
925.1

Long-term debt, less current portion(1)(2)
 
3,230.5

 
3,762.6

 
4,076.7

 
4,014.1

 
3,920.6

Total stockholders’ equity
 
152.3

 
609.7

 
527.0

 
1,162.8

 
1,416.3

Consolidated Cash Flows Data(3):
 
 

 
 

 
 

 
 

 
 

Net cash provided by (used in) operating activities
 
$
424.4

 
$
906.9

 
$
982.1

 
$
(218.8
)
 
$
640.4

Net cash provided by (used in) investing activities
 
1,813.6

 
(314.8
)
 
(60.0
)
 
(126.3
)
 
(113.9
)
Net cash used in financing activities
 
(1,864.3
)
 
(540.9
)
 
(788.7
)
 
(321.2
)
 
(319.9
)
Other Financial Data:
 
 

 
 

 
 

 
 

 
 

Depreciation and amortization
 
$
149.3

 
$
214.0

 
$
213.3

 
$
107.5

 
$
120.5

Share-based incentive compensation
 
44.9

 
59.9

 
61.2

 
46.4

 
24.1

Capital expenditures
 
(183.8
)
 
(275.7
)
 
(184.0
)
 
129.7

 
102.3

 
(1) 
Operating results for the Diversey Care division and the Food Hygiene and Cleaning business within our Food Care division were reclassified to discontinued operations in 2013 through the sale on September 6, 2017. The related assets and liabilities were reclassified to assets and liabilities held for sale as of December 31, 2013. See Note 3, "Discontinued Operations, Divestitures and Acquisitions," of the Notes to Consolidated Financial Statements for further information about the sale of the Diversey Care division and the Food Hygiene and Cleaning business within our Food Care division.
(2) 
Operating results for the rigid medical packaging business were reclassified to discontinued operations in 2013. See Note 3, “Discontinued Operations, Divestitures and Acquisitions,” of the Notes to Consolidated Financial Statements in our previously filed Form 10-K for the year ended December 31, 2013 for further information about the sale of our rigid medical packaging business in 2013.
(3) 
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for a discussion of the factors that contributed to our consolidated operating results and our consolidated cash flows for the three years ended December 31, 2017.


28



Item 7.        Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information in this MD&A should be read together with our Consolidated Financial Statements and related notes set forth in Part II, Item 8, as well as the discussion included in Part I, Item 1A, “Risk Factors,” of this Annual Report on Form 10-K. All amounts and percentages are approximate due to rounding and all dollars are in millions, except per share amounts.

On March 25, 2017, we entered into a definitive agreement to sell the Diversey Care division and the Food Hygiene and Cleaning business within the Food Care division (collectively "Diversey"). The sale of Diversey was completed on September 6, 2017. The net assets of Diversey met the criteria to be classified as “held for sale” for the period ended December 31, 2016. Results of operations for Diversey are reported as discontinued operations in all periods presented. See Note 3, “Discontinued Operations, Divestitures and Acquisitions” of the Notes to the Consolidated Financial Statements for further information.
The Company’s segment reporting structure now consists of two reportable segments and a Corporate category as follows:
Food Care (including Medical Applications and New Ventures businesses); and
Product Care.
The Company’s Food Care and Product Care segments are considered reportable segments under FASB ASC Topic 280. Our reportable segments are aligned with similar groups of products and management team. Corporate includes certain costs that are not allocated to the reportable segments, primarily consisting of unallocated corporate overhead costs, including administrative functions and cost recovery variances not allocated to the reportable segments from global functional expenses.
See Note 4, “Segments” of the Notes to the Consolidated Financial Statements for further information.
Overview
We are a global leader in food safety and security and product protection. We serve an array of end markets including food and beverage processing, food service, retail, healthcare and industrial, and commercial and consumer applications. Our focus is on achieving quality sales growth through leveraging our geographic footprint, technological know-how and leading market positions to bring measurable, sustainable value to our customers, employees and investors. We have widely recognized and inventive brands such as Cryovac® packaging technology, and our Bubble Wrap® brand cushioning, Jiffy® protective mailers, and Instapak® foam-in-place systems.
As of December 31, 2017, we employed approximately 2,300 sales, marketing and customer service personnel throughout the world who sell and market our products to and through a large number of distributors, fabricators, converters, e-commerce and mail order fulfillment firms, and contract packaging firms as well as directly to end-users such as food processors, food service businesses, supermarket retailers, lodging, retail pharmaceutical companies, healthcare facilities, medical device manufacturers, and other manufacturers. We have no material long-term contracts for the distribution of our products. In 2017, no customer or affiliated group of customers accounted for 10% or more of our consolidated net sales.
Historically, net sales in our Food Care segment have tended to be slightly lower in the first quarter and slightly higher towards the end of the third quarter through the fourth quarter, due to holiday events. Net sales in our Product Care segment have also tended to be slightly lower in the first quarter and higher in the mid-third quarter and through the fourth quarter due to the holiday shopping season. On a consolidated basis, there is little seasonality in the business with net sales slightly lower in the first quarter and slightly higher towards the end of the third quarter through the fourth quarter. Our consolidated net earnings typically trend directionally the same as our net sales seasonality. Cash flow from operations tends to be higher in the second half of the year, reflecting seasonality of sales and working capital changes, including the timing of certain annual incentive compensation payments.
Other factors may outweigh the effects of seasonal changes in our net earnings results including, but not limited to, changes in raw materials and other costs, foreign exchange rates, interest rates, taxes and the timing and amount of acquisition synergies and restructuring and other non-recurring charges.
Competition for most of our packaging products is based primarily on packaging performance characteristics, service and price. Since competition is also based upon innovations in packaging technology, we maintain ongoing research and development programs to enable us to maintain technological leadership. Competition is both global and regional in scope and

29



includes numerous small, local competitors with limited product portfolios and geographic reach. For more details, see “Competition” included in Part I, Item 1 “Business.”
Our net sales are sensitive to developments in our customers’ business or market conditions, changes in the global economy, and the effects of foreign currency translation. Our costs can vary materially due to changes in input costs, including petrochemical-related costs (primarily resin costs), which are not within our control. Consequently, our management focuses on reducing those costs that we can control and using petrochemical-based and other raw materials as efficiently as possible. We also believe that our global presence helps to insulate us from localized changes in business conditions.
We manage our businesses to generate substantial operating cash flow. We believe that our operating cash flow will permit us to continue to spend on innovative research and development and to invest in our business by means of capital expenditures for property and equipment and acquisitions. Moreover, we expect that our ability to generate substantial operating cash flow should provide us with the flexibility to repay debt and to return capital to our stockholders.
Recent Events and Trends

On October 2, 2017, the Product Care Division acquired Fagerdala Singapore Pte Ltd., a manufacturer and fabricator of polyethylene foam for approximately $100 million in cash. Refer to Note 3, “Discontinued Operations, Divestitures and Acquisitions,” of the Notes to the Consolidated Financial Statements for additional information on the acquisition.
    
On December 22, 2017, U.S. federal legislation, commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"), was signed into law, significantly reforming tax law by changing how the U.S. imposes income tax on multinational corporations. The TCJA, among other things, reduces the U.S. corporate income tax rate from 35% to 21%, creates a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries, and creates new taxes on certain foreign earnings. Refer to Note 16, “Income Taxes” of the Notes to the Consolidated Financial Statements for additional information on the TCJA.

The Company was a party in an anti-trust class-action litigation settlement that approved a distribution to the Company of net proceeds of approximately $13 to $15 million, with the majority expected to be received in early 2018, and any remaining balance upon subsequent Court order.

30



Highlights of Financial Performance
Below are the highlights of our financial performance for the three years ended December 31.
 
 
 
Year Ended December 31,
 
2017 vs. 2016
 
2016 vs. 2015
(In millions, except per share amounts)
 
2017
 
2016
 
2015
 
% Change
 
% Change
Net sales
 
$
4,461.6

 
$
4,211.3

 
$
4,410.3

 
5.9
 %
 
(4.5
)%
Gross profit
 
$
1,417.2

 
$
1,404.9

 
$
1,455.2

 
0.9
 %
 
(3.5
)%
As a % of net sales
 
31.8
%
 
33.4
%
 
33.0
%
 
 
 
 
Operating profit
 
$
596.0

 
$
631.4

 
$
617.4

 
(5.6
)%
 
2.3
 %
As a % of net sales
 
13.4
%
 
15.0
%
 
14.0
%
 
 
 
 
Net earnings from continuing operations
 
$
62.8

 
$
292.3

 
$
158.8

 
(78.5
)%
 
84.1
 %
Gain loss on discontinued operations, net of taxes
 
$
640.7

 
$

 
$

 
100.0
 %
 
 %
Net earnings from discontinued operations, net of taxes
 
$
111.4

 
$
194.1

 
$
176.6

 
(42.6
)%
 
9.9
 %
Net earnings available to common stockholders
 
$
814.9

 
$
486.4

 
$
335.4

 
67.5
 %
 
45.0
 %
Basic:
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.34

 
$
1.50

 
$
0.78

 
(77.3
)%
 
92.3
 %
Discontinued operations
 
3.99

 
0.99

 
0.85

 
303.0
 %
 
16.5
 %
Net earnings per common share - basic
 
$
4.33

 
$
2.49

 
$
1.63

 
73.9
 %
 
52.8
 %
Diluted:
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.33

 
$
1.48

 
$
0.77

 
(77.7
)%
 
92.2
 %
Discontinued operations
 
3.96

 
0.98

 
0.85

 
304.1
 %
 
15.3
 %
Net earnings per common share - diluted
 
$
4.29

 
$
2.46

 
$
1.62

 
74.4
 %
 
51.9
 %
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
186.9

 
194.3

 
203.9

 
 
 
 
Diluted
 
188.9

 
197.2

 
206.7

 
 
 
 
Non-U.S. GAAP Adjusted EBITDA from continuing operations(1)
 
$
833.3

 
$
809.2

 
$
850.1

 
3.0
 %
 
(4.8
)%
Non-U.S. GAAP Adjusted EPS from continuing operations(2)(3)
 
$
1.81

 
$
1.70

 
$
1.84

 
6.5
 %
 
(7.6
)%
 
(1) 
See Note 4, “Segments” of the Notes to Consolidated Financial Statements for a reconciliation of U.S. GAAP net earnings to Non-U.S. GAAP Adjusted EBITDA.
(2) 
See “Diluted Net Earnings per Common Share” below for a reconciliation of our U.S. GAAP EPS to our non-U.S. GAAP adjusted EPS.
(3) 
Represents U.S. GAAP EPS adjusted for the net effect of Special Items, which are certain specified infrequent, non-operational or one-time costs/credits.

31



Diluted Net Earnings per Common Share
The following table presents a reconciliation of our U.S. GAAP EPS to non-U.S. GAAP adjusted EPS from continuing operations.
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
(In millions, except per share data)
 
Net Earnings
 
EPS
 
Net Earnings
 
EPS
 
Net Earnings
 
EPS
U.S. GAAP net earnings and EPS available to common stockholders from continuing operations(1)
 
$
62.8

  
$
0.33

  
$
292.3

  
$
1.48

 
$
158.8

 
$
0.77

Special Items(2)
 
279.8

  
1.48

  
42.4

  
0.22

 
221.1

 
1.07

Non-U.S. GAAP adjusted net earnings and adjusted EPS available to common stockholders from continuing operations
 
$
342.6

  
$
1.81

  
$
334.7

  
$
1.70

 
$
379.9

  
$
1.84

Weighted average number of common shares outstanding – Diluted
 
 
 
188.9

  
 
 
197.2

 
 
  
206.7

 
 
(1) 
Net earnings per common share are calculated under the two-class method.
(2) 
Special Items include the following:
 
 
Year Ended December 31,
(In millions, except per share data)
 
2017
 
2016
 
2015
Special Items:
 
 
 
 
 
 
Restructuring and other charges(1)
 
$
(12.1
)
 
$
(2.5
)
 
$
(48.7
)
Other restructuring associated costs included in cost of sales and selling, general and administrative expenses
 
(14.3
)
 
(19.8
)
 
(25.7
)
SARs
 
2.6

 
(0.7
)
 
(3.9
)
Foreign currency exchange loss related to Venezuelan subsidiaries
 

 
(1.7
)
 
(27.2
)
Charges related to ceasing operations in Venezuela(1)
 

 
(48.5
)
 

Loss on debt redemption and refinancing activities
 

 
(0.1
)
 
(110.0
)
(Loss) gain on sale of North American foam trays and absorbent pads business and European food trays business
 

 
(1.8
)
 
13.4

Charges related to acquisitions and divestitures and the sale of property, plant and equipment
 
(15.5
)
 

 

Charges incurred related to the sale of Diversey
 
(68.6
)
 
(1.4
)
 

Settlement/curtailment benefits related to the sale of Diversey pension plans
 
13.5

 

 

Other Special Items(2)
 
(3.1
)
 
(0.6
)
 
(1.2
)
Pre-tax impact of Special Items
 
$
(97.5
)

$
(77.1
)

$
(203.3
)
Tax impact of Special Items and Tax Special Items(3)
 
(182.3
)
 
34.7

 
(17.8
)
Net impact of Special Items
 
$
(279.8
)

$
(42.4
)

$
(221.1
)
Weighted average number of common shares outstanding - Diluted
 
188.9

 
197.2

 
206.7

Earnings per share impact from Special Items
 
$
(1.48
)
 
$
(0.22
)
 
$
(1.07
)
 
 
(1) 
Due to the ongoing challenging economic situation in Venezuela, the Company approved a program in the second quarter of 2016 to cease operations in the country.  Refer to Note 2, “Summary of Significant Accounting Policies and Recently Issued Accounting Standards" of the Notes to the Consolidated Financial Statements for further details.
(2) 
Other Special Items for the year ended December 31, 2017 primarily included transaction costs related to reorganizations. Other Special Items for the year ended December 31, 2016 primarily included legal fees associated with restructuring and immaterial divestitures and acquisitions partially offset by a reduction in a non-income tax
reserve following the completion of a governmental audit. Other Special Items for the year ended December 31, 2015 primarily included legal fees associated with restructuring and acquisitions.
(3) 
Refer to Note 1 of the following table for a description of Tax Special Items.

32



Our U.S. GAAP and non-U.S. GAAP income taxes are as follows:
 
 
Year Ended December 31,
(In millions, except per share data)
 
2017
 
2016
 
2015
U.S. GAAP Earnings before income tax provision
 
$
393.3

 
$
387.9

 
$
291.4

Pre-tax impact of Special Items
 
(97.5
)
 
(77.1
)
 
(203.3
)
Non-U.S. GAAP Adjusted Earnings before income tax provision
 
$
490.8

 
$
465.0

 
$
494.7

 
 
 
 
 
 
 
U.S. GAAP Income tax provision
 
$
330.5

 
$
95.6

 
$
132.6

Tax Special Items(1)
 
(208.1
)
 
23.7

 
(73.6
)
Tax impact of Special Items(2)
 
25.8

 
11.0

 
55.8

Non-U.S. GAAP Adjusted Income tax provision
 
$
148.2

 
$
130.3

 
$
114.8

 
 
 
 
 
 
 
U.S. GAAP Effective income tax rate
 
84.0
%
 
24.6
%
 
45.5
%
Non-U.S. GAAP Adjusted income tax rate
 
30.2
%
 
28.0
%
 
23.2
%
 
  
(1) 
For the year ended December 31, 2017, the Tax Special Items include the impact of the sale of Diversey, the revaluation of deferred tax assets as a result of U.S. Tax Reform and an increase in unrecognized tax benefits in foreign jurisdictions. For the year ended December 31, 2016, the Tax Special Items included adjustments to foreign tax credits and a change in the permanent reinvestment assertion in some of our foreign jurisdictions (i.e. a change in our repatriation of foreign earnings strategy). For the year ended December 31, 2015, the Tax Special Items included an increase in unrecognized tax benefits related to the Settlement Agreement.
(2) 
The tax rate used to calculate the tax impact of Special Items is based on the jurisdiction in which the charge was recorded.
Foreign Currency Translation Impact on Consolidated Financial Results
Since we are a U.S. domiciled company, we translate our foreign currency-denominated financial results into U.S. dollars. Due to the changes in the value of foreign currencies relative to the U.S. dollar, translating our financial results from foreign currencies to U.S. dollars may result in a favorable or unfavorable impact. Historically, the most significant currencies that have impacted the translation of our consolidated financial results are the euro, the Australian dollar, the Brazilian real, the British pound, the Canadian dollar, the Mexican peso and the Venezuelan bolivar.
The following table presents the approximate favorable or (unfavorable) impact foreign currency translation had on some of our consolidated financial results:
 
(In millions)
 
2017 vs. 2016
 
2016 vs. 2015
Net sales
 
$
29.9

 
$
(124.9
)
Cost of sales
 
(22.5
)
 
85.6

Selling, general and administrative expenses
 
(4.9
)
 
20.8

Net earnings
 
(0.9
)
 
17.0

Adjusted EBITDA
 
4.9

 
(39.1
)

Net Sales by Geographic Region

The following tables present the components of the change in net sales by geographic region for the year ended December 31, 2017 compared with 2016 and for the year ended December 31, 2016 compared with 2015. We also present the change in net sales excluding the impact of foreign currency translation, a non-U.S. GAAP measure, which we define as “constant dollar.” We believe using constant dollar measures aids in the comparability between periods as it eliminates the volatility of changes in foreign currency exchange rates.
 

33



(In millions)
 
North America
 
EMEA
 
Latin America
 
APAC
 
Total
2016 net sales
 
$
2,237.8

 
53.1
%
 
$
962.7

 
22.9
 %
 
$
396.8

 
9.4
%
 
$
614.0

 
14.6
 %
 
$
4,211.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Volume – Units
 
161.4

 
7.2
%
 
12.9

 
1.3
 %
 
5.9

 
1.5
%
 
8.6

 
1.4
 %
 
188.8

 
4.5
%
Price/mix(1)
 
12.9

 
0.6
%
 
(7.9
)
 
(0.8
)%
 
4.0

 
1.0
%
 
(1.0
)
 
(0.2
)%
 
8.0

 
0.2
%
Acquisition
 

 
%
 

 
 %
 

 
%
 
23.6

 
3.8
 %
 
23.6

 
0.6
%
Total constant dollar change (Non-U.S. GAAP)
 
174.3

 
7.8
%
 
5.0

 
0.5
 %
 
9.9

 
2.5
%
 
31.2

 
5.0
 %
 
220.4

 
5.2
%
Foreign currency translation
 
2.9

 
0.1
%
 
17.0

 
1.8
 %
 
2.6

 
0.7
%
 
7.4

 
1.2
 %
 
29.9

 
0.7
%
Total change (U.S. GAAP)
 
177.2

 
7.9
%
 
22.0

 
2.3
 %
 
12.5

 
3.2
%
 
38.6

 
6.2
 %
 
250.3

 
5.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017 net sales
 
$
2,415.0

 
54.1
%
 
$
984.7

 
22.1
 %
 
$
409.3

 
9.2
%
 
$
652.6

 
14.6
 %
 
$
4,461.6

 
 
 
(In millions)
 
North America
 
EMEA
 
Latin America
 
APAC
 
Total
2015 net sales
 
$
2,315.3

 
52.5
 %
 
$
1,033.1

 
23.4
 %
 
$
423.3

 
9.6
 %
 
$
638.6

 
14.5
 %
 
$
4,410.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Volume – Units
 
68.8

 
3.0
 %
 
20.8

 
2.0
 %
 
(27.1
)
 
(6.4
)%
 
(15.7
)
 
(2.6
)%
 
46.8

 
1.2
 %
Price/mix(1)
 
(88.5
)
 
(3.8
)%
 
(0.4
)
 
 %
 
72.2

 
17.1
 %
 
(2.7
)
 
(0.4
)%
 
(19.4
)
 
(0.4
)%
Divestitures
 
(52.9
)
 
(2.3
)%
 
(48.6
)
 
(4.7
)%
 

 
 %
 

 
 %
 
(101.5
)
 
(2.3
)%
Total constant dollar change (Non-U.S. GAAP)
 
(72.6
)
 
(3.1
)%
 
(28.2
)
 
(2.6
)%
 
45.1

 
10.7
 %
 
(18.4
)
 
(2.9
)%
 
(74.1
)
 
(1.6
)%
Foreign currency translation
 
(4.9
)
 
(0.3
)%
 
(42.2
)
 
(4.2
)%
 
(71.6
)
 
(16.9
)%
 
(6.2
)
 
(1.0
)%
 
(124.9
)
 
(2.9
)%
Total change (U.S. GAAP)
 
(77.5
)
 
(3.3
)%
 
(70.4
)
 
(6.8
)%
 
(26.5
)
 
(6.2
)%
 
(24.6
)
 
(3.9
)%
 
(199.0
)
 
(4.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 net sales
 
$
2,237.8

 
53.1
 %
 
$
962.7

 
22.9
 %
 
$
396.8

 
9.4
 %
 
$
614.0

 
14.5
 %
 
$
4,211.3

 
 
 
  
(1) 
Our price/mix reported above includes the net impact of our pricing actions and rebates as well as the period-to-period change in the mix of products sold. Also included in our reported price/mix is the net effect of some of our customers purchasing our products in non-U.S. dollar or euro-denominated countries at selling prices denominated in U.S. dollars or euros. This primarily arises when we export products from the U.S. and euro-zone countries. The impact to our reported price/mix of these purchases in other countries at selling prices denominated in U.S. dollars or euros was not material in the periods included in the table above.
Net Sales by Segment
The following tables present the components of change in net sales by our segment reporting structure for 2017 compared with 2016 and 2016 compared with 2015. We also present the change in net sales excluding the impact of foreign currency translation, a non-U.S. GAAP measure, which we define as “constant dollar.” We believe using constant dollar measures aids in the comparability between periods as it eliminates the volatility of changes in foreign currency exchange rates.
 

34



(In millions)
 
Food Care
 
Product Care
 
Total Company
2016 Net Sales
 
$
2,686.8

 
63.8
%
 
$
1,524.5

 
36.2
%
 
$
4,211.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Volume – Units
 
102.6

 
3.8
%
 
86.2

 
5.7
%
 
188.8

 
4.5
%
Price/mix(1)
 
(0.7
)
 
%
 
8.7

 
0.6
%
 
8.0

 
0.2
%
Acquisition
 

 
%
 
23.6

 
1.5
%
 
23.6

 
0.6
%
Total constant dollar change (Non-U.S. GAAP)
 
101.9

 
3.8
%
 
118.5

 
7.8
%
 
220.4

 
5.2
%
Foreign currency translation
 
26.5

 
1.0
%
 
3.4

 
0.2
%
 
29.9

 
0.7
%
Total change (U.S. GAAP)
 
128.4

 
4.8
%
 
121.9

 
8.0
%
 
250.3

 
5.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
2017 Net Sales
 
$
2,815.2

 
63.1
%
 
$
1,646.4

 
36.9
%
 
$
4,461.6

 
 

(In millions)
 
Food Care
 
Product Care
 
Total Company
2015 Net Sales
 
$
2,856.1

 
64.8
 %
 
$
1,554.2

 
35.2
 %
 
4,410.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Volume – Units
 
25.5

 
0.9
 %
 
21.3

 
1.4
 %
 
$
46.8

 
1.2
 %
Price/mix(1)
 
9.3

 
0.3
 %
 
(28.7
)
 
(1.8
)%
 
(19.4
)
 
(0.4
)%
Divestitures
 
(101.5
)
 
(3.6
)%
 

 
 %
 
(101.5
)
 
(2.3
)%
Total constant dollar change (Non- U.S. GAAP)
 
(66.7
)
 
(2.3
)%
 
(7.4
)
 
(0.5
)%
 
(74.1
)
 
(1.6
)%
Foreign currency translation
 
(102.6
)
 
(3.6
)%
 
(22.3
)
 
(1.4
)%
 
(124.9
)
 
(2.9
)%
Total change (U.S. GAAP)
 
(169.3
)
 
(5.9
)%
 
(29.7
)
 
(1.9
)%
 
(199.0
)
 
(4.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 Net Sales
 
$
2,686.8

 
63.8
 %
 
$
1,524.5

 
36.2
 %
 
$
4,211.3

 
 
 
   
(1) 
Our price/mix reported above includes the net impact of our pricing actions and rebates as well as the period-to-period change in the mix of products sold. Also included in our reported product price/mix is the net effect of some of our customers purchasing our products in non-U.S. dollar or euro-denominated countries at selling prices denominated in U.S. dollars or euros. This primarily arises when we export products from the U.S. and euro-zone countries. The impact to our reported price/mix of these purchases in other countries at selling prices denominated in U.S. dollars or euros was not material in the periods included in the table above.
Food Care
2017 compared with 2016
As reported, net sales increased $128 million, or 5%, in 2017 compared with 2016, of which $27 million was due to positive currency impact. On a constant dollar basis, net sales increased $102 million, or 4%, in 2017 compared with 2016 primarily due to the following:
higher unit volumes of $117 million, reflecting an increase in North America on strong demand of protein packaging and more modest increases in EMEA and Latin America.
This was partially offset by:
lower unit volumes in APAC of $14 million primarily due to the continuation of historically low slaughter rates in Australia; and
unfavorable price/mix of $1 million.
2016 compared with 2015
As reported, net sales decreased $169 million, or 6%, in 2016 compared with 2015, of which $103 million was due to negative currency impact. On a constant dollar basis, net sales decreased $67 million, or 2%, in 2016 compared with 2015 primarily due to the following:
the divestiture of our North American foam trays and absorbent pads and European food trays businesses of $102 million; and

35



lower unit volumes of $39 million, reflecting continued economic uncertainty and social and political instability in Latin America, and lower demand in Asia Pacific driven by historically low slaughter rates in Australia.
These were partially offset by:
higher unit volumes of $64 million, in North America and EMEA combined with strong demand within our core product portfolio, adoption of new products and increased market penetration of advanced packaging solutions; and
favorable price/mix of $9 million reflecting an increase in Latin America and EMEA, primarily due to pricing initiatives implemented to offset currency devaluation, a favorable mix of new higher margin products and the implementation of value-added pricing initiatives and non-material inflationary costs, which was partially offset by unfavorable price/mix in North America primarily attributable to the timing of formula pricing adjustments at key customers.
Product Care
2017 compared with 2016
As reported, net sales increased $122 million, or 8%, in 2017 compared with 2016, of which $3 million was due to positive currency impact. On a constant dollar basis, net sales increased $119 million, or 8%, in 2017 compared with 2016 primarily due to the following:
incremental sales resulting from the acquisition of Fagerdala in Singapore of $24 million;
higher unit volumes of $86 million across all regions, primarily in North America due to ongoing strength in the e-Commerce and third party logistics markets as well as increased volume units in APAC; and
favorable price/mix of $9 million.
2016 compared with 2015
As reported, net sales decreased $30 million, or 2%, in 2016 compared with 2015, of which $22 million was due to negative currency impact. On a constant dollar basis, net sales decreased $7 million, or 1%, in 2016 compared with 2015 primarily due to the following:
lower unit volumes of $39 million primarily due to rationalization and weakness in the industrial sector, as well as declines in Latin America due to the political and economic environment; and
unfavorable price/mix of $29 million primarily in North America driven by targeted pricing incentives and an unfavorable product mix related to accelerated growth in e-Commerce and a shift in demand due to more innovative, resource-efficient solutions.
This was partially offset by:
higher unit volumes of $64 million, primarily in North America and EMEA due to ongoing strength in the e-Commerce and third party logistics markets.
Cost of Sales
Cost of sales for three years ended December 31, were as follows:
 
 
 
Year Ended December 31,
 
2017 vs. 2016
 
2016 vs. 2015
(In millions)
 
2017
 
2016
 
2015
 
% Change
 
% Change
Net sales
 
$
4,461.6

 
$
4,211.3

 
$
4,410.3

 
5.9
%
 
(4.5
)%
Cost of sales
 
3,044.4

 
2,806.4

 
2,955.1

 
8.5
%
 
(5.0
)%
As a % of net sales
 
68.2
%
 
66.6
%
 
67.0
%
 
 
 
 
 
2017 compared with 2016
As reported, cost of sales increased by $238 million, or 8%, in 2017 as compared to 2016. Cost of sales was impacted by unfavorable foreign currency translation of $23 million. On a constant dollar basis, cost of sales increased $215 million, or

36



8%, primarily due to higher raw material costs on increased sales volumes, non-material inflation and freight costs and increase costs due to acquisitions.
2016 compared with 2015
As reported, costs of sales decreased $149 million, or 5%, in 2016 as compared to 2015. Cost of sales was impacted by favorable foreign currency translation of $86 million. On a constant dollar basis, cost of sales decreased $63 million, or 2%, primarily due to the divestiture of the North American foam trays and absorbent pads business and European food trays business of $79 million. This was partially offset by an increase in expenses representing higher non-material manufacturing and direct costs, including salary and wage inflation, partially offset by restructuring savings and lower incentive based compensation.  
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses for three years ended December 31, are included in the table below.
 
 
 
Year Ended December 31,
 
2017 vs. 2016
 
2016 vs. 2015
(In millions)
 
2017
 
2016
 
2015
 
% Change
 
% Change
Selling, general and administrative expenses
 
$
796.0

 
$
755.7

 
$
778.0

 
5.3
%