ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-8737688 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
14 Schoolhouse Road, Somerset, NJ | 08873 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer x | Accelerated filer ¨ | |||
Non-accelerated filer ¨ | (Do not check if a smaller reporting company) | Smaller reporting company ¨ |
Item | Page | |
Part I. | ||
Item 1. | Financial Statements (unaudited) | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
• | We participate in a highly competitive market, and increased competition may adversely affect our business. |
• | The demand for our offerings depends in part on our customers’ research and development and the clinical and market success of their products. Our business, financial condition and results of operations may be harmed if our customers spend less on, or are less successful in, these activities. |
• | We are subject to product and other liability risks that could adversely affect our results of operations, financial condition, liquidity, and cash flows. |
• | Failure to comply with existing and future regulatory requirements could adversely affect our results of operations and financial condition or result in claims from customers. |
• | Failure to provide quality offerings to our customers could have an adverse effect on our business and subject us to regulatory actions or costly litigation. |
• | The services and offerings we provide are highly exacting and complex, and if we encounter problems providing the services or support required, our business could suffer. |
• | Our global operations are subject to economic, political and regulatory risks, including the risks of changing regulatory standards or changing interpretations of existing standards that could affect the profitability of our operations or require costly changes to our procedures. |
• | The referendum in the U.K. and resulting decision of the U.K. government to consider exiting from the European Union could have future adverse effects on our revenues and costs, and therefore our profitability. |
• | If we do not enhance our existing or introduce new technology or service offerings in a timely manner, our offerings may become obsolete or uncompetitive over time, customers may not buy our offerings and our revenue and profitability may decline. |
• | We and our customers depend on patents, copyrights, trademarks, trade secrets and other forms of intellectual property protections, but these protections may not be adequate. |
• | Our future results of operations are subject to fluctuations in the costs, availability, and suitability of the components of the products we manufacture, including active pharmaceutical ingredients, excipients, purchased components, and raw materials. |
• | Changes in market access or healthcare reimbursement for our customers’ products in the United States or internationally could adversely affect our results of operations and financial condition by affecting demand for our offerings. |
• | As a global enterprise, fluctuations in the exchange rate of the U.S. dollar against foreign currencies could have a material adverse effect on our financial performance and results of operations. |
• | Tax legislation or regulatory initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition. |
• | Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. |
• | Changes to the estimated future profitability of the business may require that we establish an additional valuation allowance against all or some portion of our net U.S. deferred tax assets. |
• | We are dependent on key personnel. |
• | We use advanced information and communication systems to run our operations, compile and analyze financial and operational data and communicate among our employees, customers and counter-parties, so the risks generally associated with information and communications systems could adversely affect our results of operations. |
• | We engage from time to time in acquisitions and other transactions that may complement or expand our business or divest of non-strategic businesses or assets. We may not be able to complete such transactions, and such transactions, if executed, pose significant risks and could have a negative effect on our operations. |
• | Our offerings or our customers’ products may infringe on the intellectual property rights of third parties. |
• | We are subject to environmental, health and safety laws and regulations, which could increase our costs and restrict our operations in the future. |
• | We are subject to labor and employment laws and regulations, which could increase our costs and restrict our operations in the future. |
• | Certain of our pension plans are underfunded, and additional cash contributions we may make will reduce the cash available for our business or to discharge our financial obligations. |
• | Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or in our industry or to deploy capital to grow our business, expose us to interest-rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our indebtedness. |
Item 1. | FINANCIAL STATEMENTS |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net revenue | $ | 483.7 | $ | 454.9 | $ | 925.9 | $ | 877.9 | |||||||
Cost of sales | 335.8 | 302.8 | 653.9 | 604.3 | |||||||||||
Gross margin | 147.9 | 152.1 | 272.0 | 273.6 | |||||||||||
Selling, general and administrative expenses | 96.2 | 93.0 | 194.4 | 175.2 | |||||||||||
Impairment charges and (gain)/loss on sale of assets | 0.5 | (0.1 | ) | 0.5 | 1.1 | ||||||||||
Restructuring and other | 3.3 | 0.6 | 4.4 | 1.6 | |||||||||||
Operating earnings | 47.9 | 58.6 | 72.7 | 95.7 | |||||||||||
Interest expense, net | 22.8 | 22.3 | 44.9 | 45.0 | |||||||||||
Other (income)/expense, net | (1.8 | ) | (3.5 | ) | (3.9 | ) | (2.9 | ) | |||||||
Earnings from continuing operations before income taxes | 26.9 | 39.8 | 31.7 | 53.6 | |||||||||||
Income tax expense/(benefit) | 9.5 | 9.2 | 9.7 | 11.2 | |||||||||||
Net earnings | 17.4 | 30.6 | 22.0 | 42.4 | |||||||||||
Less: Net (loss) attributable to noncontrolling interest, net of tax | — | (0.1 | ) | — | (0.3 | ) | |||||||||
Net earnings attributable to Catalent | $ | 17.4 | $ | 30.7 | $ | 22.0 | $ | 42.7 | |||||||
Amounts attributable to Catalent: | |||||||||||||||
Net earnings attributable to Catalent | 17.4 | 30.7 | 22.0 | 42.7 | |||||||||||
Earnings per share attributable to Catalent: | |||||||||||||||
Basic | |||||||||||||||
Net earnings | 0.14 | 0.25 | 0.18 | 0.34 | |||||||||||
Diluted | |||||||||||||||
Net earnings | 0.14 | 0.24 | 0.17 | 0.34 |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net earnings | $ | 17.4 | $ | 30.6 | $ | 22.0 | $ | 42.4 | |||||||
Other comprehensive income/(loss), net of tax | |||||||||||||||
Foreign currency translation adjustments | (64.4 | ) | (24.0 | ) | (63.8 | ) | (66.4 | ) | |||||||
Pension and other post-retirement adjustments | 0.7 | 0.5 | 1.5 | 1.0 | |||||||||||
Available for sale investments | 15.3 | — | 15.3 | — | |||||||||||
Deferred compensation | — | 0.5 | — | (0.2 | ) | ||||||||||
Other comprehensive income/(loss), net of tax | (48.4 | ) | (23.0 | ) | (47.0 | ) | (65.6 | ) | |||||||
Comprehensive income/(loss) | (31.0 | ) | 7.6 | (25.0 | ) | (23.2 | ) | ||||||||
Comprehensive income/(loss) attributable to noncontrolling interest | — | (0.1 | ) | — | (0.3 | ) | |||||||||
Comprehensive income/(loss) attributable to Catalent | $ | (31.0 | ) | $ | 7.7 | $ | (25.0 | ) | $ | (22.9 | ) |
December 31, 2016 | June 30, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 255.8 | $ | 131.6 | |||
Trade receivables, net | 366.3 | 414.8 | |||||
Inventories | 169.8 | 154.8 | |||||
Prepaid expenses and other | 90.7 | 89.0 | |||||
Total current assets | 882.6 | 790.2 | |||||
Property, plant, and equipment, net | 905.0 | 905.8 | |||||
Other assets: | |||||||
Goodwill | 1,008.5 | 996.5 | |||||
Other intangibles, net | 283.9 | 294.0 | |||||
Deferred income taxes | 51.2 | 37.5 | |||||
Other | 23.1 | 67.1 | |||||
Total assets | $ | 3,154.3 | $ | 3,091.1 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term obligations and other short-term borrowings | $ | 23.1 | $ | 27.7 | |||
Accounts payable | 127.6 | 143.7 | |||||
Other accrued liabilities | 184.1 | 219.8 | |||||
Total current liabilities | 334.8 | 391.2 | |||||
Long-term obligations, less current portion | 2,001.3 | 1,832.8 | |||||
Pension liability | 141.0 | 151.0 | |||||
Deferred income taxes | 48.9 | 41.4 | |||||
Other liabilities | 40.3 | 38.8 | |||||
Commitment and contingencies (see Note 12) | |||||||
Shareholders' equity/(deficit): | |||||||
Common stock $0.01 par value; 1.0 billion and 1.0 billion shares authorized on December 31, 2016 and June 30, 2016, 124,770,928 and 124,712,240 issued and outstanding on December 31, 2016 and June 30, 2016, respectively. | 1.2 | 1.2 | |||||
Preferred stock $0.01 par value; 100 million and 100 million authorized on December 31, 2016 and June 30, 2016, respectively, 0 issued and outstanding on December 31, 2016 and June 30, 2016. | — | — | |||||
Additional paid in capital | 1,987.8 | 1,976.5 | |||||
Accumulated deficit | (1,048.3 | ) | (1,036.1 | ) | |||
Accumulated other comprehensive income/(loss) | (352.7 | ) | (305.7 | ) | |||
Total shareholders' equity | 588.0 | 635.9 | |||||
Total liabilities and shareholders' equity | $ | 3,154.3 | $ | 3,091.1 |
Shares of Common Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income/(Loss) | Total Shareholders' Equity/ (Deficit) | |||||||||||||||||
Balance at June 30, 2016 | 124,712.2 | $ | 1.2 | $ | 1,976.5 | $ | (1,036.1 | ) | $ | (305.7 | ) | $ | 635.9 | |||||||||
Cumulative effect of a change in accounting for income taxes (Note 1) | (34.2 | ) | (34.2 | ) | ||||||||||||||||||
Share issuances related to equity based compensation | 58.7 | |||||||||||||||||||||
Equity compensation | 11.8 | 11.8 | ||||||||||||||||||||
Cash paid, in lieu of equity, for tax withholding | (0.5 | ) | (0.5 | ) | ||||||||||||||||||
Net earnings/(loss) | 22.0 | 22.0 | ||||||||||||||||||||
Other comprehensive income/(loss), net of tax | (47.0 | ) | (47.0 | ) | ||||||||||||||||||
Balance at December 31, 2016 | 124,770.9 | $ | 1.2 | $ | 1,987.8 | $ | (1,048.3 | ) | $ | (352.7 | ) | $ | 588.0 |
Six Months Ended December 31, | |||||||
2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net earnings | $ | 22.0 | $ | 42.4 | |||
Adjustments to reconcile earnings from continued operations to net cash from operations: | |||||||
Depreciation and amortization | 71.3 | 70.7 | |||||
Non-cash foreign currency transaction (gain)/loss, net | (3.4 | ) | (3.6 | ) | |||
Amortization and write off of debt financing costs | 4.3 | 2.3 | |||||
Asset impairments and (gain)/loss on sale of assets | 0.5 | 1.1 | |||||
Equity compensation | 11.8 | 5.1 | |||||
Provision/(benefit) for deferred income taxes | 0.9 | (2.4 | ) | ||||
Provision for bad debts and inventory | 3.3 | 7.1 | |||||
Change in operating assets and liabilities: | |||||||
Decrease/(increase) in trade receivables | 41.4 | 29.7 | |||||
Decrease/(increase) in inventories | (17.9 | ) | (36.4 | ) | |||
Increase/(decrease) in accounts payable | (14.6 | ) | 5.4 | ||||
Other assets/accrued liabilities, net - current and non-current | (23.6 | ) | (49.9 | ) | |||
Net cash provided by/(used in) operating activities | 96.0 | 71.5 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Acquisition of property and equipment and other productive assets | (54.1 | ) | (82.5 | ) | |||
Proceeds from sale of property and equipment | 1.3 | — | |||||
Payment for acquisitions, net of cash acquired | (85.7 | ) | — | ||||
Net cash provided by/(used in) investing activities | (138.5 | ) | (82.5 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net change in other borrowings | (5.6 | ) | (0.2 | ) | |||
Proceeds from borrowing, net | 397.4 | — | |||||
Payments related to long-term obligations | (209.2 | ) | (9.3 | ) | |||
Financing fees paid | (6.4 | ) | — | ||||
Purchase of redeemable noncontrolling interest shares | — | (5.8 | ) | ||||
Cash paid, in lieu of equity, for tax withholding obligations | (0.5 | ) | (5.6 | ) | |||
Net cash provided by/(used in) financing activities | 175.7 | (20.9 | ) | ||||
Effect of foreign currency on cash | (9.0 | ) | (3.9 | ) | |||
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS | 124.2 | (35.8 | ) | ||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 131.6 | 151.3 | |||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 255.8 | $ | 115.5 | |||
SUPPLEMENTARY CASH FLOW INFORMATION: | |||||||
Interest paid | $ | 39.4 | $ | 41.0 | |||
Income taxes paid, net | $ | 19.7 | $ | 20.0 |
1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Six Months Ended | |||||||
December 31, 2015 | |||||||
(Dollars in millions, except per share amounts) | As Reported | As Adjusted | |||||
Income tax expense/(benefit) | $ | 14.1 | $ | 11.2 | |||
Net earnings | 39.5 | 42.4 | |||||
Net earnings attributable to Catalent | $ | 39.8 | $ | 42.7 | |||
Amounts attributable to Catalent: | |||||||
Net earnings attributable to Catalent | 39.8 | 42.7 | |||||
Earnings per share attributable to Catalent: | |||||||
Basic | |||||||
Net earnings | 0.32 | 0.34 | |||||
Diluted | |||||||
Net earnings | 0.32 | 0.34 |
2. | GOODWILL |
(Dollars in millions) | Softgel Technologies | Drug Delivery Solutions | Clinical Supply Services | Total | |||||||||||
Balance at June 30, 2016 | $ | 405.9 | $ | 435.1 | $ | 155.5 | $ | 996.5 | |||||||
Additions/(impairments) | — | 48.7 | — | 48.7 | |||||||||||
Foreign currency translation adjustments | (12.9 | ) | (13.8 | ) | (10.0 | ) | (36.7 | ) | |||||||
Balance at December 31, 2016 | $ | 393.0 | $ | 470.0 | $ | 145.5 | $ | 1,008.5 |
3. | DEFINITE LIVED LONG-LIVED ASSETS |
(Dollars in millions) | Weighted Average Life | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
December 31, 2016 | |||||||||||||
Amortized intangibles: | |||||||||||||
Core technology | 18 years | $ | 165.2 | $ | (67.3 | ) | $ | 97.9 | |||||
Customer relationships | 14 years | 242.6 | (95.0 | ) | 147.6 | ||||||||
Product relationships | 12 years | 200.4 | (162.0 | ) | 38.4 | ||||||||
Total intangible assets | $ | 608.2 | $ | (324.3 | ) | $ | 283.9 |
(Dollars in millions) | Weighted Average Life | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
June 30, 2016 | |||||||||||||
Amortized intangibles: | |||||||||||||
Core technology | 18 years | $ | 170.6 | $ | (64.9 | ) | $ | 105.7 | |||||
Customer relationships | 14 years | 230.3 | (90.9 | ) | 139.4 | ||||||||
Product relationships | 12 years | 208.6 | (159.7 | ) | 48.9 | ||||||||
Total intangible assets | $ | 609.5 | $ | (315.5 | ) | $ | 294.0 |
(Dollars in millions) | Remainder Fiscal 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||||
Amortization expense | $ | 22.1 | $ | 44.1 | $ | 38.6 | $ | 25.1 | $ | 25.1 | $ | 25.1 |
4. | LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS |
(Dollars in millions) | Maturity | December 31, 2016 | June 30, 2016 | ||||||
Senior Secured Credit Facilities | |||||||||
Term loan facility dollar-denominated | May 2021 | $ | 1,250.3 | $ | 1,454.2 | ||||
Term loan facility euro-denominated | May 2021 | 326.1 | 345.2 | ||||||
4.75% Senior Euro-denominated Notes | December 2024 | 391.0 | — | ||||||
$200 million Revolving Credit Facility | May 2019 | — | — | ||||||
Capital lease obligations | 2020 to 2032 | 52.2 | 51.4 | ||||||
Other obligations | 2017 to 2018 | 4.8 | 9.7 | ||||||
Total | 2,024.4 | 1,860.5 | |||||||
Less: Current portion of long-term obligations and other short-term borrowings | 23.1 | 27.7 | |||||||
Long-term obligations, less current portion | $ | 2,001.3 | $ | 1,832.8 |
December 31, 2016 | June 30, 2016 | ||||||||||||||
(Dollars in millions) | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||
Long-term debt and other | $ | 2,024.4 | $ | 2,049.8 | $ | 1,860.5 | $ | 1,868.8 |
5. | EARNINGS PER SHARE |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net earnings attributable to Catalent | $ | 17.4 | $ | 30.7 | $ | 22.0 | $ | 42.7 | |||||||
Weighted average shares outstanding | 124,889,681 | 124,818,241 | 124,870,327 | 124,785,737 | |||||||||||
Dilutive securities issuable-stock plans | 1,524,963 | 1,008,439 | 1,470,476 | 1,157,119 | |||||||||||
Total weighted average diluted shares outstanding | 126,414,644 | 125,826,680 | 126,340,803 | 125,942,856 | |||||||||||
Basic earnings per share of common stock: | |||||||||||||||
Net earnings attributable to Catalent | $ | 0.14 | $ | 0.25 | $ | 0.18 | $ | 0.34 | |||||||
Diluted earnings per share of common stock - assuming dilution: | |||||||||||||||
Net earnings attributable to Catalent | $ | 0.14 | $ | 0.24 | $ | 0.17 | $ | 0.34 |
6. | OTHER (INCOME) / EXPENSE, NET |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Other (income) / expense, net | |||||||||||||||
Debt refinancing costs (1) | $ | 4.3 | $ | — | $ | 4.3 | $ | — | |||||||
Foreign currency (gains) and losses | (5.3 | ) | (3.9 | ) | (7.5 | ) | (3.9 | ) | |||||||
Other | (0.8 | ) | 0.4 | (0.7 | ) | 1.0 | |||||||||
Total Other (Income) / Expense, net | $ | (1.8 | ) | $ | (3.5 | ) | $ | (3.9 | ) | $ | (2.9 | ) |
7. | RESTRUCTURING AND OTHER COSTS |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Restructuring costs: | |||||||||||||||
Employee-related reorganization | $ | (0.1 | ) | $ | 0.4 | $ | 0.7 | $ | 1.5 | ||||||
Facility exit and other costs | 0.2 | 0.2 | 0.5 | 0.1 | |||||||||||
Total restructuring costs | $ | 0.1 | $ | 0.6 | $ | 1.2 | $ | 1.6 | |||||||
Other - Beinheim customer claims | 3.2 | — | 3.2 | — | |||||||||||
Total restructuring and other costs | $ | 3.3 | $ | 0.6 | $ | 4.4 | $ | 1.6 |
8. | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Unrealized foreign exchange gain/(loss) within other comprehensive income | $ | 13.6 | $ | 2.5 | $ | 10.0 | $ | 2.5 | |||||||
Unrealized foreign exchange gain/(loss) within statement of operations | $ | 10.2 | $ | 4.3 | $ | 7.6 | $ | 4.3 |
9. | INCOME TAXES |
(Dollars in millions) | |||
Balance at June 30, 2016 | $ | 61.5 | |
Additions for tax positions of current year | 1.6 | ||
Reductions for tax positions of prior years | (1.7 | ) | |
Lapse of the applicable statute of limitations | (0.1 | ) | |
Balance at December 31, 2016 | $ | 61.3 |
10. | EMPLOYEE RETIREMENT BENEFIT PLANS |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Components of net periodic benefit cost: | |||||||||||||||
Service cost | $ | 0.8 | $ | 0.7 | $ | 1.6 | $ | 1.4 | |||||||
Interest cost | 1.6 | 2.7 | 3.3 | 5.4 | |||||||||||
Expected return on plan assets | (2.6 | ) | (2.5 | ) | (5.4 | ) | (5.1 | ) | |||||||
Amortization (1) | 1.0 | 0.7 | 2.1 | 1.4 | |||||||||||
Net amount recognized | $ | 0.8 | $ | 1.6 | $ | 1.6 | $ | 3.1 |
(1) | Amount represents the amortization of unrecognized actuarial gains/(losses). |
11. | EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Foreign currency translation adjustments: | |||||||||||||||
Net investment hedge | $ | 13.6 | $ | 2.5 | $ | 10.0 | $ | 2.5 | |||||||
Long-term intercompany loans | (13.3 | ) | (5.6 | ) | (20.9 | ) | (19.8 | ) | |||||||
Translation adjustments | (59.8 | ) | (20.0 | ) | (49.2 | ) | (48.2 | ) | |||||||
Total foreign currency translation adjustment, pretax | (59.5 | ) | (23.1 | ) | (60.1 | ) | (65.5 | ) | |||||||
Tax expense/(benefit) | 4.9 | 0.9 | 3.7 | 0.9 | |||||||||||
Total foreign currency translation adjustment, net of tax | $ | (64.4 | ) | $ | (24.0 | ) | $ | (63.8 | ) | $ | (66.4 | ) | |||
Net change in minimum pension liability | |||||||||||||||
Net gain/(loss) recognized during the period | 1.0 | 0.7 | 2.1 | 1.4 | |||||||||||
Total pension, pretax | 1.0 | 0.7 | 2.1 | 1.4 | |||||||||||
Tax expense/(benefit) | 0.3 | 0.2 | 0.6 | 0.4 | |||||||||||
Net change in minimum pension liability, net of tax | $ | 0.7 | $ | 0.5 | $ | 1.5 | $ | 1.0 | |||||||
Net change in available for sale investment: | |||||||||||||||
Net gain/(loss) recognized during the period | 24.5 | — | 24.5 | — | |||||||||||
Total available for sale investment, pretax | 24.5 | — | 24.5 | — | |||||||||||
Tax expense/(benefit) | 9.2 | — | 9.2 | — | |||||||||||
Net change in available for sale investment, net of tax | $ | 15.3 | $ | — | $ | 15.3 | $ | — | |||||||
(Dollars in millions) | Foreign Exchange Translation Adjustments | Pension and Other Post-Retirement Adjustments | Available for Sale investment Adjustments | Total | |||||||||||
Balance at September 30, 2016 | $ | (248.2 | ) | $ | (56.1 | ) | $ | — | $ | (304.3 | ) | ||||
Other comprehensive income/(loss) before reclassifications | (64.4 | ) | — | 15.3 | (49.1 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | — | 0.7 | — | 0.7 | |||||||||||
Net current period other comprehensive income (loss) | (64.4 | ) | 0.7 | 15.3 | (48.4 | ) | |||||||||
Balance at December 31, 2016 | $ | (312.6 | ) | $ | (55.4 | ) | $ | 15.3 | $ | (352.7 | ) |
(Dollars in millions) | Foreign Exchange Translation Adjustments | Pension and Other Post-Retirement Adjustments | Available for Sale investment Adjustments | Total | |||||||||||
Balance at June 30, 2016 | $ | (248.8 | ) | $ | (56.9 | ) | $ | — | $ | (305.7 | ) | ||||
Other comprehensive income/(loss) before reclassifications | (63.8 | ) | — | 15.3 | (48.5 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | — | 1.5 | — | 1.5 | |||||||||||
Net current period other comprehensive income (loss) | (63.8 | ) | 1.5 | 15.3 | (47.0 | ) | |||||||||
Balance at December 31, 2016 | $ | (312.6 | ) | $ | (55.4 | ) | $ | 15.3 | $ | (352.7 | ) |
12. | COMMITMENTS AND CONTINGENCIES |
13. | SEGMENT INFORMATION |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Softgel Technologies | |||||||||||||||
Net revenue | $ | 201.9 | $ | 181.1 | $ | 388.3 | $ | 365.1 | |||||||
Segment EBITDA | 43.4 | 34.8 | 73.9 | 69.4 | |||||||||||
Drug Delivery Solutions | |||||||||||||||
Net revenue | 214.0 | 204.1 | 405.3 | 377.7 | |||||||||||
Segment EBITDA | 50.0 | 62.1 | 92.0 | 99.6 | |||||||||||
Clinical Supply Services | |||||||||||||||
Net revenue | 77.0 | 76.9 | 152.0 | 154.5 | |||||||||||
Segment EBITDA | 11.6 | 13.4 | 22.1 | 27.4 | |||||||||||
Inter-segment revenue elimination | (9.2 | ) | (7.2 | ) | (19.7 | ) | (19.4 | ) | |||||||
Unallocated Costs (1) | (19.8 | ) | (12.9 | ) | (40.1 | ) | (26.8 | ) | |||||||
Combined Totals: | |||||||||||||||
Net revenue | $ | 483.7 | $ | 454.9 | $ | 925.9 | $ | 877.9 | |||||||
EBITDA from continuing operations | $ | 85.2 | $ | 97.4 | $ | 147.9 | $ | 169.6 |
(1) | Unallocated costs includes equity-based compensation, certain acquisition-related costs, impairment charges, certain other corporate directed costs, certain customer claim expenses related to the Beinheim facility suspension and other costs that are not allocated to the segments as follows: |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Impairment charges and gain/(loss) on sale of assets | $ | (0.5 | ) | $ | 0.1 | $ | (0.5 | ) | $ | (1.1 | ) | ||||
Equity compensation | (4.9 | ) | (2.6 | ) | (11.8 | ) | (5.1 | ) | |||||||
Restructuring and other special items (2) | (7.2 | ) | (4.2 | ) | (13.1 | ) | (6.2 | ) | |||||||
Noncontrolling interest | — | 0.1 | — | 0.3 | |||||||||||
Other income/(expense), net (3) | 1.8 | 3.5 | 3.9 | 2.9 | |||||||||||
Non-allocated corporate costs, net | (9.0 | ) | (9.8 | ) | (18.6 | ) | (17.6 | ) | |||||||
Total unallocated costs | $ | (19.8 | ) | $ | (12.9 | ) | $ | (40.1 | ) | $ | (26.8 | ) |
(2) | Segment results do not include restructuring and other costs associated with certain customer claim expenses related to the Beinheim facility suspension and certain acquisition-related costs. |
(3) | Amounts primarily relate to foreign currency translation gains and losses during all periods presented. |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Earnings from continuing operations | $ | 17.4 | $ | 30.6 | $ | 22.0 | $ | 42.4 | |||||||
Depreciation and amortization | 35.5 | 35.2 | 71.3 | 70.7 | |||||||||||
Interest expense, net | 22.8 | 22.3 | 44.9 | 45.0 | |||||||||||
Income tax (benefit)/expense | 9.5 | 9.2 | 9.7 | 11.2 | |||||||||||
Noncontrolling interest | — | 0.1 | — | 0.3 | |||||||||||
EBITDA from continuing operations | $ | 85.2 | $ | 97.4 | $ | 147.9 | $ | 169.6 |
(Dollars in millions) | December 31, 2016 | June 30, 2016 | |||||
Assets | |||||||
Softgel Technologies | $ | 1,292.9 | $ | 1,446.4 | |||
Drug Delivery Solutions | 1,574.9 | 1,475.7 | |||||
Clinical Supply Services | 538.3 | 578.9 | |||||
Corporate and eliminations | (251.8 | ) | (409.9 | ) | |||
Total assets | $ | 3,154.3 | $ | 3,091.1 |
14. | SUPPLEMENTAL BALANCE SHEET INFORMATION |
(Dollars in millions) | December 31, 2016 | June 30, 2016 | |||||
Raw materials and supplies | $ | 102.9 | $ | 88.7 | |||
Work-in-process | 30.2 | 30.7 | |||||
Finished goods | 52.9 | 55.2 | |||||
Total inventories, gross | 186.0 | 174.6 | |||||
Inventory reserve | (16.2 | ) | (19.8 | ) | |||
Inventories | $ | 169.8 | $ | 154.8 |
(Dollars in millions) | December 31, 2016 | June 30, 2016 | |||||
Prepaid expenses | $ | 22.8 | $ | 29.3 | |||
Spare parts supplies | 11.1 | 10.8 | |||||
Short term investments | — | 7.0 | |||||
Long term tax asset (current portion) (1) | — | 6.8 | |||||
Other current assets | 56.8 | 35.1 | |||||
Prepaid expenses and other | $ | 90.7 | $ | 89.0 |
(Dollars in millions) | December 31, 2016 | June 30, 2016 | |||||
Land, buildings, and improvements | $ | 678.0 | $ | 649.6 | |||
Machinery, equipment, and capitalized software | 764.2 | 757.1 | |||||
Furniture and fixtures | 9.5 | 9.9 | |||||
Construction in progress | 123.4 | 134.1 | |||||
Property, plant, and equipment, at cost | 1,575.1 | 1,550.7 | |||||
Accumulated depreciation | (670.1 | ) | (644.9 | ) | |||
Property, plant, and equipment, net | $ | 905.0 | $ | 905.8 |
(Dollars in millions) | December 31, 2016 | June 30, 2016 | |||||
Accrued employee-related expenses | $ | 60.4 | $ | 82.8 | |||
Restructuring accrual | 4.7 | 6.1 | |||||
Accrued interest | 1.2 | 0.1 | |||||
Deferred revenue and fees | 46.6 | 46.2 | |||||
Accrued income tax | 24.6 | 38.8 | |||||
Other accrued liabilities and expenses | 46.6 | 45.8 | |||||
Other accrued liabilities | $ | 184.1 | $ | 219.8 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended December 31, | FX impact | Constant Currency Increase/(Decrease) | ||||||||||||||||
(Dollars in millions) | 2016 | 2015 | Change $ | Change % | ||||||||||||||
Net revenue | $ | 483.7 | $ | 454.9 | $ | (16.0 | ) | $ | 44.8 | 10 | % | |||||||
Cost of sales | 335.8 | 302.8 | (9.2 | ) | 42.2 | 14 | % | |||||||||||
Gross margin | 147.9 | 152.1 | (6.8 | ) | 2.6 | 2 | % | |||||||||||
Selling, general and administrative expenses | 96.2 | 93.0 | (1.8 | ) | 5.0 | 5 | % | |||||||||||
Impairment charges and (gain)/loss on sale of assets | 0.5 | (0.1 | ) | — | 0.6 | * | ||||||||||||
Restructuring and other | 3.3 | 0.6 | (0.1 | ) | 2.8 | * | ||||||||||||
Operating earnings | 47.9 | 58.6 | (4.9 | ) | (5.8 | ) | (10 | )% | ||||||||||
Interest expense, net | 22.8 | 22.3 | (0.9 | ) | 1.4 | 6 | % | |||||||||||
Other (income)/expense, net | (1.8 | ) | (3.5 | ) | (1.2 | ) | 2.9 | (83 | )% | |||||||||
Earnings from continuing operations before income taxes | 26.9 | 39.8 | (2.8 | ) | (10.1 | ) | (25 | )% | ||||||||||
Income tax expense/(benefit) | 9.5 | 9.2 | (0.8 | ) | 1.1 | 12 | % | |||||||||||
Earnings from continuing operations | 17.4 | 30.6 | (2.0 | ) | (11.2 | ) | (37 | )% | ||||||||||
Net earnings from discontinued operations, net of tax | — | — | — | — | * | |||||||||||||
Net earnings | 17.4 | 30.6 | (2.0 | ) | (11.2 | ) | (37 | )% | ||||||||||
Less: Net earnings/(loss) attributable to noncontrolling interest, net of tax | — | (0.1 | ) | — | 0.1 | * | ||||||||||||
Net earnings attributable to Catalent | $ | 17.4 | $ | 30.7 | $ | (2.0 | ) | $ | (11.3 | ) | (37 | )% |
Three Months Ended December 31, | FX impact | Constant Currency Increase/(Decrease) | ||||||||||||||||
(Dollars in millions) | 2016 | 2015 | Change $ | Change % | ||||||||||||||
Softgel Technologies | ||||||||||||||||||
Net revenue | $ | 201.9 | $ | 181.1 | $ | (3.8 | ) | $ | 24.6 | 14 | % | |||||||
Segment EBITDA | 43.4 | 34.8 | (2.4 | ) | 11.0 | 32 | % | |||||||||||
Drug Delivery Solutions | ||||||||||||||||||
Net revenue | 214.0 | 204.1 | (6.1 | ) | 16.0 | 8 | % | |||||||||||
Segment EBITDA | 50.0 | 62.1 | (2.4 | ) | (9.7 | ) | (16 | )% | ||||||||||
Clinical Supply Services | ||||||||||||||||||
Net revenue | 77.0 | 76.9 | (6.4 | ) | 6.5 | 8 | % | |||||||||||
Segment EBITDA | 11.6 | 13.4 | (1.5 | ) | (0.3 | ) | (2 | )% | ||||||||||
Inter-segment revenue elimination | (9.2 | ) | (7.2 | ) | 0.3 | (2.3 | ) | 32 | % | |||||||||
Unallocated Costs (1) | (19.8 | ) | (12.9 | ) | 1.1 | (8.0 | ) | 62 | % | |||||||||
Combined Total | ||||||||||||||||||
Net revenue | $ | 483.7 | $ | 454.9 | $ | (16.0 | ) | $ | 44.8 | 10 | % | |||||||
EBITDA from continuing operations | $ | 85.2 | $ | 97.4 | $ | (5.2 | ) | $ | (7.0 | ) | (7 | )% |
Three Months Ended December 31, | |||||||
(Dollars in millions) | 2016 | 2015 | |||||
Impairment charges and gain/(loss) on sale of assets | $ | (0.5 | ) | $ | 0.1 | ||
Equity compensation | (4.9 | ) | (2.6 | ) | |||
Restructuring and other special items (2) | (7.2 | ) | (4.2 | ) | |||
Noncontrolling interest | — | 0.1 | |||||
Other income/(expense), net (3) | 1.8 | 3.5 | |||||
Non-allocated corporate costs, net | (9.0 | ) | (9.8 | ) | |||
Total unallocated costs | $ | (19.8 | ) | $ | (12.9 | ) |
Three Months Ended December 31, | |||||||
(Dollars in millions) | 2016 | 2015 | |||||
Earnings from continuing operations | $ | 17.4 | $ | 30.6 | |||
Depreciation and amortization | 35.5 | 35.2 | |||||
Interest expense, net | 22.8 | 22.3 | |||||
Income tax (benefit)/expense | 9.5 | 9.2 | |||||
Noncontrolling interest | — | 0.1 | |||||
EBITDA from continuing operations | $ | 85.2 | $ | 97.4 |
2016 vs. 2015 | |||||
Factors Contributing to Year-Over-Year Change | Three Months Ended December 31, | ||||
Net Revenue | Segment EBITDA | ||||
Organic revenue / Segment EBITDA | 14 | % | 32 | % | |
Impact of acquisitions | — | % | — | % | |
Constant currency change | 14 | % | 32 | % | |
Foreign currency translation impact on reporting | (3 | )% | (7 | )% | |
Total % Change | 11 | % | 25 | % |
2016 vs. 2015 | |||||
Factors Contributing to Year-Over-Year Change | Three Months Ended December 31, | ||||
Net Revenue | Segment EBITDA | ||||
Organic revenue / Segment EBITDA | 4 | % | (18 | )% | |
Impact of acquisitions | 4 | % | 2 | % | |
Constant currency change | 8 | % | (16 | )% | |
Foreign currency translation impact on reporting | (3 | )% | (3 | )% | |
Total % Change | 5 | % | (19 | )% |
2016 vs. 2015 | |||||
Factors Contributing to Year-Over-Year Change | Three Months Ended December 31, | ||||
Net Revenue | Segment EBITDA | ||||
Organic revenue / Segment EBITDA | 8 | % | (2 | )% | |
Impact of acquisitions | — | % | — | % | |
Constant currency change | 8 | % | (2 | )% | |
Foreign currency translation impact on reporting | (8 | )% | (11 | )% | |
Total % Change | — | % | (13 | )% |
Six Months Ended December 31, | FX impact | Constant Currency Increase/(Decrease) | ||||||||||||||||
(Dollars in millions) | 2016 | 2015 | Change $ | Change % | ||||||||||||||
Net revenue | $ | 925.9 | $ | 877.9 | $ | (27.3 | ) | $ | 75.3 | 9 | % | |||||||
Cost of sales | 653.9 | 604.3 | (14.8 | ) | 64.4 | 11 | % | |||||||||||
Gross margin | 272.0 | 273.6 | (12.5 | ) | 10.9 | 4 | % | |||||||||||
Selling, general and administrative expenses | 194.4 | 175.2 | (3.3 | ) | 22.5 | 13 | % | |||||||||||
Impairment charges and (gain)/loss on sale of assets | 0.5 | 1.1 | — | (0.6 | ) | (55 | )% | |||||||||||
Restructuring and other | 4.4 | 1.6 | (0.2 | ) | 3.0 | * | ||||||||||||
Operating earnings | 72.7 | 95.7 | (9.0 | ) | (14.0 | ) | (15 | )% | ||||||||||
Interest expense, net | 44.9 | 45.0 | (1.6 | ) | 1.5 | 3 | % | |||||||||||
Other (income)/expense, net | (3.9 | ) | (2.9 | ) | (1.3 | ) | 0.3 | (10 | )% | |||||||||
Earnings from continuing operations before income taxes | 31.7 | 53.6 | (6.1 | ) | (15.8 | ) | (29 | )% | ||||||||||
Income tax expense/(benefit) | 9.7 | 11.2 | (1.5 | ) | — | * | ||||||||||||
Earnings from continuing operations | 22.0 | 42.4 | (4.6 | ) | (15.8 | ) | (37 | )% | ||||||||||
Net earnings from discontinued operations, net of tax | — | — | — | — | * | |||||||||||||
Net earnings | 22.0 | 42.4 | (4.6 | ) | (15.8 | ) | (37 | )% | ||||||||||
Less: Net earnings/(loss) attributable to noncontrolling interest, net of tax | — | (0.3 | ) | — | 0.3 | * | ||||||||||||
Net earnings attributable to Catalent | $ | 22.0 | $ | 42.7 | $ | (4.6 | ) | $ | (16.1 | ) | (38 | )% |
Six Months Ended December 31, | FX impact | Constant Currency Increase/(Decrease) | ||||||||||||||||
(Dollars in millions) | 2016 | 2015 | Change $ | Change % | ||||||||||||||
Softgel Technologies | ||||||||||||||||||
Net revenue | $ | 388.3 | $ | 365.1 | $ | (5.7 | ) | $ | 28.9 | 8 | % | |||||||
Segment EBITDA | 73.9 | 69.4 | (4.0 | ) | 8.5 | 12 | % | |||||||||||
Drug Delivery Solutions | ||||||||||||||||||
Net revenue | 405.3 | 377.7 | (10.6 | ) | 38.2 | 10 | % | |||||||||||
Segment EBITDA | 92.0 | 99.6 | (4.9 | ) | (2.7 | ) | (3 | )% | ||||||||||
Clinical Supply Services | ||||||||||||||||||
Net revenue | 152.0 | 154.5 | (11.3 | ) | 8.8 | 6 | % | |||||||||||
Segment EBITDA | 22.1 | 27.4 | (2.6 | ) | (2.7 | ) | (10 | )% | ||||||||||
Inter-segment revenue elimination | (19.7 | ) | (19.4 | ) | 0.3 | (0.6 | ) | 3 | % | |||||||||
Unallocated Costs (1) | (40.1 | ) | (26.8 | ) | 1.2 | (14.5 | ) | 54 | % | |||||||||
Combined Total | ||||||||||||||||||
Net revenue | $ | 925.9 | $ | 877.9 | $ | (27.3 | ) | $ | 75.3 | 9 | % | |||||||
EBITDA from continuing operations | $ | 147.9 | $ | 169.6 | $ | (10.3 | ) | $ | (11.4 | ) | (7 | )% |
(1) | Unallocated costs includes equity-based compensation, certain acquisition-related costs, impairment charges, certain other corporate directed costs, certain customer claim expenses related to the temporary Beinheim facility suspension and other costs that are not allocated to the segments as follows: |
Six Months Ended December 31, | |||||||
(Dollars in millions) | 2016 | 2015 | |||||
Impairment charges and gain/(loss) on sale of assets | $ | (0.5 | ) | $ | (1.1 | ) | |
Equity compensation | (11.8 | ) | (5.1 | ) | |||
Restructuring and other special items (2) | (13.1 | ) | (6.2 | ) | |||
Noncontrolling interest | — | 0.3 | |||||
Other income/(expense), net (3) | 3.9 | 2.9 | |||||
Non-allocated corporate costs, net | (18.6 | ) | (17.6 | ) | |||
Total unallocated costs | $ | (40.1 | ) | $ | (26.8 | ) |
(2) | Segment results do not include restructuring and other costs associated with certain customer claim expenses related to the temporary Beinheim facility suspension and certain acquisition-related costs. |
(3) | Amounts primarily relate to foreign currency translation gains and losses during all periods presented. |
Six Months Ended December 31, | |||||||
(Dollars in millions) | 2016 | 2015 | |||||
Earnings from continuing operations | $ | 22.0 | $ | 42.4 | |||
Depreciation and amortization | 71.3 | 70.7 | |||||
Interest expense, net | 44.9 | 45.0 | |||||
Income tax (benefit)/expense | 9.7 | 11.2 | |||||
Noncontrolling interest | — | 0.3 | |||||
EBITDA from continuing operations | $ | 147.9 | $ | 169.6 |
2016 vs. 2015 | |||||
Factors Contributing to Year-Over-Year Change | Six Months Ended December 31, | ||||
Net Revenue | Segment EBITDA | ||||
Organic revenue / Segment EBITDA | 8 | % | 12 | % | |
Impact of acquisitions | — | % | — | % | |
Constant currency change | 8 | % | 12 | % | |
Foreign currency translation impact on reporting | (2 | )% | (6 | )% | |
Total % Change | 6 | % | 6 | % |
2016 vs. 2015 | |||||
Factors Contributing to Year-Over-Year Change | Six Months Ended December 31, | ||||
Net Revenue | Segment EBITDA | ||||
Organic revenue / Segment EBITDA | 8 | % | (4 | )% | |
Impact of acquisitions | 2 | % | 1 | % | |
Constant currency change | 10 | % | (3 | )% | |
Foreign currency translation impact on reporting | (3 | )% | (5 | )% | |
Total % Change | 7 | % | (8 | )% |
2016 vs. 2015 | |||||
Factors Contributing to Year-Over-Year Change | Six Months Ended December 31, | ||||
Net Revenue | Segment EBITDA | ||||
Organic revenue / Segment EBITDA | 6 | % | (10 | )% | |
Impact of acquisitions | — | % | — | % | |
Constant currency change | 6 | % | (10 | )% | |
Foreign currency translation impact on reporting | (8 | )% | (9 | )% | |
Total % Change | (2 | )% | (19 | )% |
Six Months Ended December 31, | |||||||||||
(Dollars in millions) | 2016 | 2015 | Difference | ||||||||
Net cash provided by/(used in): | |||||||||||
Operating activities | $ | 96.0 | $ | 71.5 | $ | 24.5 | |||||
Investing activities | $ | (138.5 | ) | $ | (82.5 | ) | $ | (56.0 | ) | ||
Financing activities | $ | 175.7 | $ | (20.9 | ) | $ | 196.6 |
• | a pledge of 100% of the capital stock of the borrower and 100% of the equity interests directly held by the borrower and each guarantor in any wholly owned material subsidiary of the borrower or any guarantor (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of such non-U.S. subsidiary); and |
• | a security interest in, and mortgages on, substantially all tangible and intangible assets of the borrower and of each guarantor, subject to certain limited exceptions. |
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item 4. | CONTROLS AND PROCEDURES |
Item 1. | LEGAL PROCEEDINGS |
Item 1A. | RISK FACTORS |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Item 3. | DEFAULTS UPON SENIOR SECURITIES |
Item 4. | MINE SAFETY DISCLOSURES |
Item 5. | OTHER INFORMATION |
Item 6. | EXHIBITS |
4.1 | Indenture dated December 9, 2016, by and among Catalent Pharma Solutions, Inc., the subsidiary guarantors named therein, Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London Branch, as principal paying agent, and Deutsche Bank Luxembourg S.A., as transfer agent and registrar (incorporated by reference to exhibit 4.1 to the Company's Current Report on Form 8-K filed on December 12, 2016, File No. 001-36587). | |
10.1 | Amendment No. 2 to Amended and Restated Credit Agreement, dated as of December 9, 2016, by and among Catalent Pharma Solutions, Inc., PTS Intermediate Holdings LLC, Morgan Stanley Senior Funding, Inc. as administrative agent, collateral agent and swing line lender and the lenders party thereto, which amends that certain Amended and Restated Credit Agreement, dated as of May 20, 2014 (as amended), by and among Catalent Pharma Solutions, Inc. PTS Intermediate Holdings LLC, Morgan Stanley Senior Funding, Inc. and JP Morgan Chase Bank, N.A. as L/C Issuers, the other lenders party thereto and the other agents party thereto (incorporated by reference to exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 12, 2016, File No. 001-36587). | |
31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended* | |
31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended* | |
32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
101.1 | The following financial information from Catalent, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2016 formatted in XBRL: (i) Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2016 and 2015; (ii) Consolidated Statements of Comprehensive Income/(Loss) for the Three and Six Months Ended December 31, 2016 and 2015 (iii) Consolidated Balance Sheets as of December 31, 2016 and June 30, 2016; (iv) Consolidated Statement of Changes in Shareholders’ Equity/(Deficit) as of December 31, 2016; (v) Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2016 and 2015; and (vi) Notes to Unaudited Consolidated Financial Statements. |
* | Filed herewith |
** | Furnished herewith. |
CATALENT, INC. (Registrant) | ||||
Date: | February 6, 2017 | By: | /s/ John R. Chiminski | |
John R. Chiminski | ||||
President & Chief Executive Officer | ||||
Date: | February 6, 2017 | By: | /s/ Matthew M. Walsh | |
Matthew M. Walsh | ||||
Executive Vice President & Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended December 31, 2016 of Catalent, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ JOHN R. CHIMINSKI |
John R. Chiminski |
President and Chief Executive Officer |
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended December 31, 2016 of Catalent, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MATTHEW M. WALSH |
Matthew M. Walsh |
Executive Vice President and |
Chief Financial Officer |
(Principal Financial Officer) |
/s/ JOHN R. CHIMINSKI |
John R. Chiminski |
President and |
Chief Executive Officer |
/s/ MATTHEW M. WALSH |
Matthew M. Walsh |
Executive Vice President and |
Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Jan. 31, 2017 |
|
Document Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2016 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | Catalent, Inc. | |
Entity Central Index Key | 0001596783 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding (shares) | 124,776,012 |
Consolidated Statements of Comprehensive Income / (Loss) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Other comprehensive income/(loss), net of tax | ||||
Net earnings | $ 17.4 | $ 30.6 | $ 22.0 | $ 42.4 |
Foreign currency translation adjustments | (64.4) | (24.0) | (63.8) | (66.4) |
Pension and other post-retirement adjustments | 0.7 | 0.5 | 1.5 | 1.0 |
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax | 15.3 | 0.0 | 15.3 | 0.0 |
Deferred compensation | 0.0 | 0.5 | 0.0 | (0.2) |
Net current period other comprehensive income (loss) | (48.4) | (23.0) | (47.0) | (65.6) |
Comprehensive income/(loss) | (31.0) | 7.6 | (25.0) | (23.2) |
Comprehensive income/(loss) attributable to noncontrolling interest | 0.0 | (0.1) | 0.0 | (0.3) |
Comprehensive income/(loss) attributable to Catalent | $ (31.0) | $ 7.7 | $ (25.0) | $ (22.9) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (shares) | 124,770,928.000 | 124,712,240 |
Common Stock, Shares, Outstanding | 124,770,928.000 | 124,712,240 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Consolidated Statement of Changes in Shareholder's Equity - 6 months ended Dec. 31, 2016 - USD ($) $ in Millions |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Accumulated Other Comprehensive Income (Loss) [Member] |
---|---|---|---|---|---|
Beginning Balance at Jun. 30, 2016 | $ 635.9 | $ 1.2 | $ 1,976.5 | $ (1,036.1) | $ (305.7) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Equity compensation | 11.8 | 11.8 | |||
Payments Related to Tax Withholding for Share-based Compensation | 0.5 | 0.5 | |||
Net Income (Loss) Attributable to Parent | 22.0 | 22.0 | |||
Other comprehensive income/(loss), net of tax | (47.0) | (47.0) | |||
Ending Balance at Dec. 31, 2016 | 588.0 | $ 1.2 | $ 1,987.8 | (1,048.3) | $ (352.7) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative Effect of New Accounting Principle in Period of Adoption | Accounting Standards Update 2016-16 [Member] | $ (34.2) | $ (34.2) |
Consolidated Statement of Changes in Shareholder's Equity Consolidated Statement of Changes in Shareholders' Equity (Parenthetical) |
6 Months Ended |
---|---|
Dec. 31, 2016
shares
| |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Beginning Balance - Common Stock Outstanding (shares) | 124,712,240 |
Ending Balance - Common Stock Outstanding (shares) | 124,770,928.000 |
Common Stock [Member] | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Beginning Balance - Common Stock Outstanding (shares) | 124,712,200 |
Stock Issued During Period, Shares, New Issues | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 58,700 |
Ending Balance - Common Stock Outstanding (shares) | 124,770,900 |
Basis of Presentation and Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Catalent, Inc. (“Catalent” or the “Company”) directly and wholly owns PTS Intermediate Holdings LLC (“Intermediate Holdings”). Intermediate Holdings directly and wholly owns Catalent Pharma Solutions, Inc. (“Operating Company”). The financial results of Catalent are comprised of the financial results of Operating Company and its subsidiaries on a consolidated basis. On July 31, 2014, the Company commenced an initial public offering of its common stock (the “IPO”) and its common stock began trading on the New York Stock Exchange (the “NYSE”) under the symbol “CTLT.” On March 9, 2015, an affiliate of The Blackstone Group, L.P. that owned shares in the Company (“Blackstone”), Genstar Capital and Aisling Capital (collectively, the “selling stockholders”) completed a secondary offering of 27.3 million shares of the Company’s common stock, including 3.6 million shares sold pursuant to an over-allotment option, at a price of $29.50 per share before underwriting discounts and commissions. On June 2, 2015, the selling stockholders completed an additional secondary offering of 16.1 million shares, including 2.1 million shares sold pursuant to the over-allotment option, at a price of $29.00 per share before underwriting discounts and commissions. On June 6, 2016, the selling stockholders completed a secondary offering of 10.0 million shares of the Company's common stock at a price of $24.85 per share before underwriting discounts and commissions. On September 6, 2016, two of the selling stockholders completed a secondary offering of their remaining shares totaling approximately 19.0 million shares, at a price of $23.85 per share before underwriting discounts and commissions. The Company did not sell stock in any of the secondary offerings and did not receive any proceeds of the sales. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the year ending June 30, 2017. The consolidated balance sheet at June 30, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information on the Company's accounting policies and footnotes, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2016 filed with the Securities and Exchange Commission ("SEC"). In the fourth quarter of fiscal 2016, we engaged in a business reorganization to better align our internal business unit structure with our "Follow the Molecule" strategy. Under the revised structure, we have created a Drug Delivery Solutions ("DDS") operating segment, which encompasses all of our modified release technologies; prefilled syringes and other injectable formats; blow-fill-seal unit dose development and manufacturing; biologic cell line development; analytical services; micronization technologies; and other conventional oral dose forms under a single DDS management team. Additionally, as part of the re-alignment, we have created a stand-alone Clinical Supply Services ("CSS") operating segment and management team with a sole focus on providing global clinical supply chain management services that aim to speed our customers' drugs to market. Further, as a result of the business unit re-alignment, our Softgel Technologies business now reports as a distinct operating segment. Our operating segments are the same as our reporting segments. All prior period comparative segment information has been restated to reflect the current reportable segments in accordance with Accounting Standard Codification (“ASC”) 280 Segment Reporting. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, allowance for doubtful accounts, inventory and long-lived asset valuation, goodwill and other intangible asset valuation and impairment, equity-based compensation, income taxes, and pension plan asset and liability valuation. Actual amounts may differ from these estimated amounts. Foreign Currency Translation The financial statements of the Company’s operations outside the U.S. are generally measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of these foreign operations into U.S. dollars are accumulated as a component of other comprehensive income/(loss) utilizing period-end exchange rates. The currency fluctuations related to certain long-term inter-company loans deemed to not be repayable in the foreseeable future have been recorded within cumulative translation adjustment, a component of other comprehensive income/(loss). In addition, the currency fluctuation associated with the portion of the Company’s euro-denominated debt designated as a net investment hedge is included as a component of other comprehensive income/(loss). Foreign currency transaction gains and losses calculated by utilizing weighted average exchange rates for the period are included in the consolidated statements of operations in the other (income) expense, net line item. Foreign currency translation gains and losses generated from inter-company loans that are long-term in nature, but may be repayable in the foreseeable future, are also recorded within the other (income)/expense, net line item on the consolidated statements of operations. Revenue Recognition In accordance with ASC 605 Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. In cases where the Company has multiple contracts with the same customer, the Company evaluates those contracts to assess if the contracts are linked or are separate arrangements. Factors the Company considers include the timing of negotiation, interdependency with other contracts or elements and payment terms. The Company and its customers generally view each contract discussion as a separate arrangement. Manufacturing and packaging service revenue is recognized upon delivery of the product in accordance with the terms of the contract, which specify when transfer of title and risk of loss occurs. Some of the Company’s manufacturing contracts with its customers have annual minimum purchase requirements. At the end of the contract year, revenue is recognized for the unfilled purchase obligation in accordance with the contract terms. Development service contracts generally take the form of a fee-for-service arrangement. After the Company has evidence of an arrangement, the price is determinable and there is a reasonable expectation regarding payment, the Company recognizes revenue at the point in time the service obligation is completed and accepted by the customer. Examples of output measures include a formulation report, analytical and stability testing, clinical batch production or packaging and the storage and distribution of a customer’s clinical trial material. Development service revenue is primarily driven by the Company’s DDS segment. Arrangements containing multiple elements, including service arrangements, are accounted for in accordance with the provisions of ASC 605-25 Revenue Recognition—Multiple-Element Arrangements. The Company determines the separate units of account in accordance with ASC 605-25. If the deliverable meets the criteria of a separate unit of accounting, the arrangement consideration is allocated to each element based upon its relative selling price. In determining the best evidence of selling price of a unit of account, the Company utilizes vendor-specific objective evidence (“VSOE”), which is the price the Company charges when the deliverable is sold separately. When VSOE is not available, management uses relevant third-party evidence (“TPE”) of selling price, if available. When neither VSOE nor TPE of selling price exists, management uses its best estimate of selling price. Goodwill The Company accounts for purchased goodwill and intangible assets with indefinite lives in accordance with ASC 350 Goodwill, Intangible and Other Assets. Under ASC 350, goodwill and intangible assets with indefinite lives are not amortized, but instead are tested for impairment at least annually. The Company's annual goodwill impairment test was conducted as of April 1, 2016. The Company assesses goodwill for possible impairment by comparing the carrying value of its reporting units to their fair values. The Company determines the fair value of its reporting units utilizing estimated future discounted cash flows and incorporates assumptions that it believes marketplace participants would utilize. In addition, the Company uses comparative market information and other factors to corroborate the discounted cash flow results. Property and Equipment and Other Definite Lived Intangible Assets Property and equipment are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets, including capital lease assets that are amortized over the shorter of their useful lives or the terms of the respective leases. The Company generally uses the following ranges of useful lives for its property and equipment categories: buildings and improvements — 5 to 50 years; machinery and equipment — 3 to 10 years; and furniture and fixtures — 3 to 7 years. Depreciation expense was $24.4 million and $49.2 million for the three and six months ended December 31, 2016, respectively, and $23.5 million and $47.1 million for the three and six months ended December 31, 2015, respectively. Depreciation expense includes amortization of assets related to capital leases. The Company charges repairs and maintenance costs to expense as incurred. The amount of capitalized interest was immaterial for all periods presented. Intangible assets with finite lives, primarily including customer relationships and patents and trademarks continue to be amortized over their useful lives. The Company evaluates the recoverability of its other long-lived assets, including amortizing intangible assets, if circumstances indicate impairment may have occurred pursuant to ASC 360 Property, Plant and Equipment. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an un-discounted basis, to be generated from such assets. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to the consolidated statements of operations. Fair value is determined based on assumptions the Company believes marketplace participants would utilize and comparable marketplace information in similar arm's length transactions. Research and Development Costs The Company expenses research and development costs as incurred. Costs incurred in connection with the development of new offerings and manufacturing process improvements are recorded within selling, general and administrative expenses. Such research and development costs included in selling, general and administrative expenses amounted to $1.5 million and $3.0 million for the three and six months ended December 31, 2016, respectively, and $2.1 million and $3.7 million for the three and six months ended December 31, 2015, respectively. Costs incurred in connection with research and development services the Company provides to customers and services performed in support of the commercial manufacturing process for customers are recorded within cost of sales. Such research and development costs included in cost of sales amounted to $11.0 million and $21.3 million for the three and six months ended December 31, 2016, respectively, and $12.3 million and $24.1 million for the three and six months ended December 31, 2015, respectively. Earnings / (Loss) Per Share The Company reports net earnings/(loss) per share pursuant to ASC 260 Earnings per Share. Under ASC 260, basic earnings per share, which excludes dilution, is computed by dividing net earnings or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution caused by securities that could be exercised or converted into common shares, and is computed by dividing net earnings or loss available to common stockholders by the weighted average of common shares outstanding plus the dilutive potential common shares. Diluted earnings per share includes in-the-money stock options, restricted stock units, and unvested restricted stock using the treasury stock method. During a loss period, the assumed exercise of in-the-money stock options has an anti-dilutive effect, and, therefore, these instruments are excluded from the computation of diluted earnings per share. Equity-Based Compensation The Company accounts for its equity-based compensation awards pursuant to ASC 718 Compensation—Stock Compensation. ASC 718 requires companies to recognize compensation expense using a fair value based method for costs related to share-based payments including stock options and restricted stock units. The expense is measured based on the grant date fair value of the awards that are expected to vest, and the expense is recorded over the applicable requisite service period using the accelerated attribution method. In the absence of an observable market price for a share-based award, the fair value is based upon a valuation methodology that takes into consideration various factors, including the exercise price of the award, the expected term of the award, the current price of the underlying shares, the expected volatility of the underlying share price based on peer companies, the expected dividends on the underlying shares and the risk-free interest rate. The terms of the Company’s equity-based compensation plans permit shares that are issued upon an employee's exercise of an option to be withheld through a net settlement transaction as a means of meeting tax withholding requirements. Marketable Securities Marketable securities consist of investments that have a readily determinable fair value based on quoted market price of the investment, which is considered a Level 1 fair value measurement. Under ASC 320, Investments—Debt and Equity Securities, these investments are classified as available-for-sale and are reported at fair value in other current assets on the Company's consolidated balance sheet. Unrealized holding gains and losses are reported within accumulated other comprehensive income. Under the Company's accounting policy, a decline in the fair value of marketable securities is deemed to be "other than temporary" and such marketable securities are generally considered to be impaired if their fair value is less than the Company's cost basis for a period based on the particular facts and circumstances surrounding the investment. If a decline in the fair value of a marketable security below the Company's cost basis is determined to be other than temporary, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. Recent Financial Accounting Standards In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provided additional guidance on the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The ASU will be effective for public reporting entities in fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory, which reduces the complexity in accounting for income taxes by requiring the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, the income tax consequence of these transactions was not recognized until the asset was sold to an outside party. The guidance will be applied on a modified retrospective basis with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The ASU will be effective for publicly reporting entities in fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted only in the first interim period of a fiscal year. The Company elected to adopt ASU 2016-16 effective July 1, 2016, which resulted in a cumulative-effect adjustment of $34.2 million charged to the opening balance of the accumulated deficit, reduction to other non-current and current assets of $45.6 million and $6.6 million, respectively, increase in deferred tax assets of $14.7 million, and reduction of deferred tax liabilities of $3.2 million. The impact on net earnings and earnings per share in the current period was not material. In August 2016, the FASB issued ASU 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides clarification on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The guidance will be effective for publicly reporting entities in fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09 Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting for share-based payment transactions, requiring all excess tax benefits and deficiencies to be recognized in income tax expense or benefit in earnings. An entity can make an accounting policy election to either estimate the expected future forfeiture of awards or account for the cost or benefit as forfeitures occur. The guidance will be effective for publicly reporting entities in fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company early-adopted ASU 2016-09 during the fourth quarter of fiscal 2016 on a modified retrospective basis, which had an effect on the consolidated statements of operations, comprehensive income/(loss), and cash flows for the six months ended December 31, 2015. The consolidated statements of comprehensive income/(loss) and cash flows for the six months ended December 31, 2015 have been adjusted to reflect the changes in net earnings during that period as a result of the adoption of the new guidance. The following table summarizes the Company's As Reported and As Adjusted changes to the consolidated statement of operations for the six months ended December 31, 2015 (in millions):
In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842), which will supersede ASC 840 Leases. The new guidance requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leases and will be effective for publicly reporting entities in annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In May 2015, the FASB issued ASU No. 2015-07 Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. This guidance also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, such disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. This guidance is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. The Company has adopted ASU 2015-07 effective July 1, 2016, the beginning of its fiscal year ending June 30, 2017, in accordance with the FASB's disclosure simplification initiatives. The adoption did not have a material impact on the Company's financial statements. In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers, which will supersede nearly all existing revenue recognition guidance. The new guidance’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, the new guidance creates a five-step model that requires a company to exercise judgment when considering the terms of the contracts and all relevant facts and circumstances. The five steps require a company to identify customer contracts, identify the separate performance obligations, determine the transaction price, allocate the transaction price to the separate performance obligations and recognize revenue when each performance obligation is satisfied. On July 9, 2015, the FASB approved a one-year deferral of the effective date so that the new guidance is effective for public entities for annual and interim periods beginning after December 15, 2017. The new guidance allows for either full retrospective adoption, where the standard is applied to all periods presented, or modified retrospective adoption where the standard is applied only to the most current period presented in the financial statements. Early adoption is permitted. The Company has identified its revenue streams, reviewed the initial impacts of adopting of the new standard on those revenue streams, and appointed a governance committee and project management leader. The Company continues to evaluate the quantitative and qualitative impacts of the standard. In August 2014, the FASB issued ASU No. 2014-15 Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. This standard is not expected to have any impact on current disclosures in the financial statements. |
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Goodwill | GOODWILL The following table summarizes the changes between June 30, 2016 and December 31, 2016 in the carrying amount of goodwill in total and by reporting segment:
The $48.7 million addition in goodwill within DDS is associated with the acquisition of Pharmatek Laboratories, Inc. in September 2016 and the preliminary fair value allocation. The Company is in the process of finalizing the valuation of the individual assets acquired and liabilities assumed. The goodwill addition reported above is based on the best current estimate of management. The fair value allocation is expected to be completed upon finalization of an independent appraisal over the next several months, but no later than one year from the acquisition date. No goodwill impairment charge was required during the current or comparable prior year period. When required, impairment charges are recorded within the consolidated statements of operations as impairment charges and (gain)/loss on sale of assets. |
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Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Definite Lived Long-Lived Assets | DEFINITE LIVED LONG-LIVED ASSETS The Company’s definite-lived long-lived assets include property, plant and equipment as well as other intangible assets with definite lives. Refer to Note 14 Supplemental Balance Sheet Information for details related to property, plant and equipment. The details of other intangible assets subject to amortization as of December 31, 2016 and June 30, 2016, are as follows:
The increase in customer relationships is associated with the acquisition of Pharmatek Laboratories, Inc. in September 2016 and the preliminary fair value allocation.
Amortization expense was $11.1 million and $22.1 million for the three and six months ended December 31, 2016, respectively, and $11.7 million and $23.6 million for the three and six months ended December 31, 2015, respectively. Future amortization expense for the next five years is estimated to be:
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Long-Term Obligations and Other Short-Term Borrowings |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Obligations and Other Short-Term Borrowings | LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS Long-term obligations and other short-term borrowings consist of the following at December 31, 2016 and June 30, 2016:
Senior Secured Credit Facilities and Second Amendment Borrowings under the term loan facilities and the revolving credit facility originally bore interest, at the Company’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the rate of interest published by The Wall Street Journal as its “prime lending rate” and (2) the federal funds rate plus one-half of 1% or (b) a LIBOR rate determined by reference to the London Interbank Offered Rate set by ICE Benchmark Administration (or any successor thereto). The applicable margin for the term loans and borrowings under the revolving credit facility may be reduced subject to the Company attaining a certain total net leverage ratio. The applicable margin for borrowings was originally 3.25% for loans based on a LIBOR rate and 2.50% for loans based on a base rate. The LIBOR rate for term loans is subject to a floor of 1.00% and the base rate for term loans is subject to a floor of 2.00%. On December 9, 2016, Operating Company completed the Second Amendment (the "Amendment") to the Amended and Restated Credit Agreement, dated as of May 20, 2014, governing all term loan facilities (as amended, the "Credit Agreement") to lower the interest rate on its U.S. dollar denominated and euro-denominated term loans. The new applicable rate for the U.S. dollar-denominated term loan is LIBOR (subject to a floor of 1.00%) plus 2.75%, which is 0.50% lower than the previous rate, and the new applicable rate for the euro-denominated term loans is LIBOR (subject to a floor of 1.00%) plus 2.50%, which is 0.75% lower than the previous rate. The Amendment further eliminates “step” pricing based on a measure of Operating Company's total leverage ratio. The Amendment also includes a prepayment premium of 1.0% in the event of another repricing event on or before the six-month anniversary of the Amendment. There is no change to maturities or covenants as a result of this repricing Amendment. In connection with the Amendment, the Company incurred $1.7 million of associated fees which were expensed in Other (Income) / Expense, net in the consolidated statement of operations. 4.75% Senior Euro-denominated Notes On December 9, 2016, Operating Company, a wholly owned subsidiary of the Company, completed a private offering of €380.0 million aggregate principal of 4.75% Senior Notes due 2024 (the “Notes”). The Notes are fully and unconditionally guaranteed, jointly and severally, by all of the wholly owned U.S. subsidiaries of Operating Company that guarantee its senior secured credit facilities. The Notes were offered in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States only to non-U.S. investors pursuant to Regulation S under the Securities Act. The Notes will mature on December 15, 2024 and bear interest at the rate of 4.75% per annum and are payable semi-annually in arrears on June 15 and December 15 of each year. The proceeds of the Notes were used to repay $200 million of outstanding borrowings on the U.S. dollar denominated term loan, pay the $81 million then outstanding under the revolving credit facility, pay accrued and unpaid interest and certain fees and expenses associated with the offering, fund a previously announced pending acquisition, and finally provide cash for general corporate purposes. In connection with the Notes offering and subsequent payment of the U.S. term loan, Operating Company incurred $6.9 million of third-party financing costs, of which $0.6 million was expensed, and a $2.0 million expense related to unamortized debt discount and deferred financing costs, respectively, both recorded in Other (Income) / Expense, net in the consolidated statement of operations. Debt Covenants Senior Secured Credit Facilities The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s (and the Company’s restricted subsidiaries’) ability to incur additional indebtedness or issue certain preferred shares; create liens on assets; engage in mergers and consolidations; sell assets; pay dividends and distributions or repurchase capital stock; repay subordinated indebtedness; engage in certain transactions with affiliates; make investments, loans or advances; make certain acquisitions; enter into sale and leaseback transactions, amend material agreements governing the Company’s subordinated indebtedness and change the Company’s lines of business. The Credit Agreement also contains change of control provisions and certain customary affirmative covenants and events of default. The revolving credit facility requires compliance with a net leverage covenant when there is a 30% or more draw outstanding at a period end. As of December 31, 2016, the Company was in compliance with all material covenants related to its senior-secured obligations. Subject to certain exceptions, the Credit Agreement permits the Company and its restricted subsidiaries to incur certain additional indebtedness, including secured indebtedness. None of the Company’s non-U.S. subsidiaries or Puerto Rico subsidiaries is a guarantor of the loans. Under the Credit Agreement, the Company’s ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is tied to ratios based on Adjusted EBITDA (which is defined as “Consolidated EBITDA” in the Credit Agreement). Adjusted EBITDA is based on the definitions in the Credit Agreement and is not defined under U.S. GAAP, and is subject to important limitations. 4.75% Senior Euro-denominated Notes The Indenture governing the Notes contains certain covenants that, among other things, limit the ability of Operating Company and its restricted subsidiaries to incur or guarantee more debt or issue certain preferred shares, pay dividends on, repurchase or make distributions in respect of their capital stock or make other restricted payments, make certain investments, sell certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets, enter into certain transactions with their affiliates, and designate their subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions, limitations and qualifications as set forth in the Indenture. The Indenture also contains customary events of default including, but not limited to, nonpayment, breach of covenants, and payment or acceleration defaults in certain other indebtedness of Operating Company or certain of its subsidiaries. Upon an event of default, either the holders of at least 30% in principal amount of the then-outstanding Notes or the Trustee may declare the Notes immediately due and payable, or in certain circumstances, the Notes automatically will become immediately due and payable. As of December 31, 2016, the Company was in compliance with all material covenants related to the Notes. Fair Value of Debt Measurements The estimated fair value of the senior secured credit facility, which is considered a Level 2 liability, is based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities and considers collateral, if any. While the estimated fair value of the Notes, which is considered a Level 1 liability, is based on the quoted market prices of the instrument. The carrying amounts and the estimated fair values of financial instruments as of December 31, 2016 and June 30, 2016 are as follows:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE The reconciliations between basic and diluted earnings per share attributable to Catalent common shareholders for the three and six months ended December 31, 2016 and 2015, respectively, are as follows (dollars in millions, except per share data):
The computation of diluted earnings per share for the three and six months ended December 31, 2016 excludes the effect of 0.5 million shares potentially issuable pursuant to awards granted under the 2007 Stock Incentive Plan, because the vesting provisions of those awards specify performance-based conditions that had not been met as of the period end. The computation of diluted earnings per share for the three and six months ended December 31, 2015 excludes the effect of 1.9 million shares potentially issuable pursuant to awards granted under the 2007 Stock Incentive Plan and the 2014 Omnibus Incentive Plan, because the vesting provisions of those awards specify performance- or market-based conditions that had not been met as of the period end. Further, the computation of diluted earnings per share for the three months ended December 31, 2016 and 2015 excludes the effect of potential common shares issuable under the employee stock option plan and restricted stock units of approximately 0.9 million and 0.8 million shares, respectively, because they are anti-dilutive. The computation of diluted earnings per share for the six months ended December 31, 2016 and 2015 excludes the effect of potential common shares issuable under the employee stock option plan and restricted stock units of approximately 1.1 million and 1.0 million shares, respectively, because they are anti-dilutive. |
Other Income and Expense Other Income / Expense |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Other Expense Disclosure [Text Block] | OTHER (INCOME) / EXPENSE, NET The components of Other (Income) / Expense, net for the three and six months ended December 31, 2016 and 2015 are as follows:
(1) Refer to Note 4 for further discussions on the December 2016 re-financing activity. |
Restructuring and Other Restructuring and Other Costs (Notes) |
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Restructuring and Related Activities Disclosure [Text Block] | RESTRUCTURING AND OTHER COSTS Restructuring Costs The Company has implemented plans to restructure certain operations, both domestically and internationally. The restructuring plans focused on various aspects of operations, including closing and consolidating certain manufacturing operations, rationalizing headcount and aligning operations in a strategic and more cost-efficient structure. In addition, the Company may incur restructuring charges in the future in cases where a material change in the scope of operation with its business occurs. Employee-related costs consist primarily of severance costs and also include outplacement services provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods. Facility exit and other costs consist of accelerated depreciation, equipment relocation costs and costs associated with planned facility expansions and closures to streamline Company operations. Other Costs Other costs include settlement charges, net of any insurance recoveries related to the probable resolution of certain customer claims related to the temporary suspension of operations at our softgel manufacturing facility in Beinheim, France. Refer to Note 12 Commitments and Contingencies for further discussions of such claims. The following table summarizes the significant costs recorded within restructuring costs:
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Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to fluctuations in the applicable exchange rate on its investments in foreign operations. While the Company does not actively hedge against changes in foreign currency, the Company has mitigated its exposure from its investments in its European operations by denominating a portion of its debt in euros. At December 31, 2016, the Company had euro-denominated debt outstanding of $717.1 million that is designated and qualifies as a hedge of a net investment in foreign operations. For non-derivatives designated and qualifying as net investment hedges, the effective portions of the translation gains or losses are reported in accumulated other comprehensive income/(loss) as part of the cumulative translation adjustment. The ineffective portions of the translation gains or losses are reported in the statement of operations. The following table includes net investment hedge activity during the three and six months ended December 31, 2016 and December 31, 2015.
The net accumulated gain of the instrument designated as the hedge as of December 31, 2016 within other comprehensive income/(loss) was approximately $91.4 million. Amounts are reclassified out of accumulated other comprehensive income/(loss) into earnings when the entity to which the gains and losses relate is either sold or substantially liquidated. |
Income Taxes |
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Income Taxes | INCOME TAXES The Company accounts for income taxes in accordance with ASC 740 Income Taxes. Generally, fluctuations in the effective tax rate are primarily due to changes in U.S. and non-U.S. pretax income resulting from the Company’s business mix and changes in the tax impact of special items and other discrete tax items, which may have unique tax implications depending on the nature of the item. Such discrete items include, but are not limited to, changes in foreign statutory tax rates, the amortization of certain assets, and the tax impact of changes in its ASC 740 unrecognized tax benefit reserves. In the normal course of business, the Company is subject to examination by taxing authorities around the world, including such major jurisdictions as the United States, Germany, France, and the United Kingdom. The Company is no longer subject to new non-U.S. income tax examinations for years prior to fiscal year 2007. Under the terms of the 2007 purchase agreement by which the selling stockholders acquired their interest in the Company, the Company is indemnified by its former owner for tax liabilities that may arise after the 2007 purchase that relate to tax periods prior to April 10, 2007. The indemnification agreement applies to, among other taxes, any and all federal, state and international income-based taxes as well as related interest and penalties. As of December 31, 2016 and June 30, 2016, approximately $0.8 million and $1.7 million, respectively, of unrecognized tax benefit is subject to indemnification by the Company's former owner. ASC 740 includes guidance on the accounting for uncertainty in income taxes recognized in the financial statements. This standard provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeal or litigation process, based on the technical merits. As of December 31, 2016, the Company had a total of $61.3 million of unrecognized tax benefits. A reconciliation of its reserves for uncertain tax positions, excluding accrued interest and penalties, for December 31, 2016 is as follows:
As of December 31, 2016 and June 30, 2016, the Company had a total of $66.8 million and $67.1 million, respectively, of uncertain tax positions (including accrued interest and penalties). As of these dates, $45.7 million and $45.7 million, respectively, represent the amount of unrecognized tax benefits, which, if recognized, would favorably affect the effective income tax rate. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2016 and June 30, 2016, the Company has approximately $5.5 million and $5.6 million, respectively, of accrued interest and penalties related to uncertain tax positions. As of these dates, the portion of such interest and penalties subject to indemnification by its former owner is $1.7 million and $2.1 million, respectively. |
Employee Retirement Benefit Plans |
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Retirement Benefit Plans | EMPLOYEE RETIREMENT BENEFIT PLANS Components of the Company’s net periodic benefit costs are as follows:
As previously disclosed with regard to the Company’s participation in a multi-employer pension plan, the Company notified the plan trustees of its withdrawal from such plan in fiscal 2012. The actuarial review process, which is administered by the plan trustees, was completed during the third quarter of fiscal 2015. The liability reported reflects the present value of the Company's expected future long-term obligations. The estimated discounted value of the projected contributions related to these plans is $39.1 million as of December 31, 2016 and $39.3 million as of June 30, 2016 and is included within pension liability on the consolidated balance sheets. The annual cash impact associated with the Company's obligation in the multi-employer pension plan approximates $1.7 million per year. |
Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) Description of Capital Stock The Company is authorized to issue 1,000,000,000 shares of common stock, par value $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share. In accordance with the Company's amended and restated certificate of incorporation, each share of common stock has one vote, and the common stock votes together as a single class. On October 29, 2015, the Company’s Board of Directors authorized a share repurchase program to use up to $100.0 million to repurchase shares of its outstanding common stock. Under the program, the Company is authorized to repurchase shares through open market purchases, privately negotiated transactions or otherwise as permitted by applicable federal securities laws. There has been no purchase pursuant to this program as of December 31, 2016. Accumulated other comprehensive income/(loss) The components of the changes in the cumulative translation adjustment and minimum pension liability for the three and six months ended December 31, 2016 and December 31, 2015 are presented below.
For the three months ended December 31, 2016, the changes in accumulated other comprehensive income, net of tax by component are as follows:
For the six months ended December 31, 2016, the changes in accumulated other comprehensive income, net of tax by component are as follows:
The Company held an investment in a specialty pharmaceutical company whose securities were not publicly traded, which was previously accounted for as cost method investment. In the second quarter of fiscal 2017, the specialty pharmaceutical company became publicly traded after an initial public offering and as a result the Company recognized an unrealized gain on the investment of $15.3 million, net of tax. This amount is reflected in other comprehensive income. |
Commitments and Contingencies |
6 Months Ended |
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Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Changes to the operations of the Company’s Beinheim, France facility to address the issues leading to a temporary suspension of operations imposed by French authorities during November 2015-April 2016 have increased the cost and therefore may affect the profitability of its operation. In addition, more than 25 customers of the facility have presented claims against the Company for alleged losses, including lost profits and other types of indirect or consequential damages, that they have allegedly suffered due to the temporary suspension or have reserved their right to do so subsequently. The Company is unable to estimate at this time either the total value of claims that are reasonably possible to be asserted with respect to this matter or the likely cost to resolve them, although (a) during the second quarter of fiscal 2017, the Company settled or otherwise acknowledged claims relating to this matter totaling $1.7 million, $1.3 million of which has been or is expected to be reimbursed by insurance, (b) the Company recorded an additional $3.2 million for claim amounts that the Company deemed to be both probable and reasonably estimable but is not currently in a position to record under GAAP any insurance recovery with respect to such costs, and (c) certain customers have presented the Company with support for other claims having an aggregate claim value of approximately $35 million. It is noteworthy that, to date, none of the asserted claims takes into account limitations of liability in the contracts governing these claims or any other defense that the Company may assert. In addition, the Company may have insurance for additional costs it may incur as a result of such claims, subject to various deductibles and other limitations, but there can be no assurance as to the aggregate amount or timing of insurance recoveries against any such costs. The Company previously recorded $1.5 million of expense for this matter in fiscal 2016 with respect to amounts to be applied against insurance deductibles. From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of which could be significant. The Company intends to vigorously defend itself against any such litigation and does not currently believe that the outcome of any such litigation will have a material adverse effect on the Company’s financial statements. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise. From time to time, the Company receives subpoenas or requests for information relating to the business practices and activities of customers or suppliers from various governmental agencies or private parties, including from state attorneys general, the U.S. Department of Justice, and private parties engaged in patent infringement, antitrust, tort, and other litigation. The Company generally responds to such subpoenas and requests in a timely and thorough manner, which responses sometimes require considerable time and effort and can result in considerable costs being incurred. The Company expects to incur costs in future periods in connection with future requests. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION As discussed in Note 1, the Company conducts its business within the following operating segments: Softgel Technologies, Drug Delivery Solutions, and Clinical Supply Services. The Company evaluates the performance of its segments based on segment earnings before noncontrolling interest, other (income) expense, impairments, restructuring costs, interest expense, income tax (benefit)/expense, and depreciation and amortization (“Segment EBITDA”). EBITDA from continuing operations is consolidated earnings from continuing operations before interest expense, income tax (benefit)/expense, depreciation and amortization and is adjusted for the income or loss attributable to noncontrolling interest. The Company’s presentation of Segment EBITDA and EBITDA from continuing operations are not prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies. All prior period comparative segment information has been restated to reflect the current reportable segments in accordance with ASC 280 Segment Reporting. The following tables include net revenue and Segment EBITDA during the three and six months ended December 31, 2016 and December 31, 2015:
Provided below is a reconciliation of EBITDA from continuing operations to earnings/(loss) from continuing operations, the closest related measure prepared in accordance with GAAP:
The following table includes total assets for each segment, as well as reconciling items necessary to total the amounts reported in the consolidated financial statements:
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Supplemental Balance Sheet Information |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information | SUPPLEMENTAL BALANCE SHEET INFORMATION Supplementary balance sheet information at December 31, 2016 and June 30, 2016 is detailed in the following tables. Inventories Work-in-process and finished goods inventories include raw materials, labor, and overhead. Total inventories consist of the following:
Prepaid expenses and other Prepaid expenses and other current assets consist of the following:
(1) The company transferred certain intellectual property assets between jurisdictions in the year ended June 30, 2016, resulting in a deferred tax charge which will be amortized over the remaining 10-year useful life of the assets. The Company adopted ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory effective July 1, 2016 and subsequently adjusted the long-term tax asset. Refer to Note 1 for further information. Property, plant, and equipment, net Property, plant, and equipment, net consist of the following:
Other accrued liabilities Other accrued liabilities consist of the following:
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Subsequent Events Subsequent Events |
6 Months Ended |
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Dec. 31, 2016 | |
Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS [Remove footnote if no subsequent events] |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the year ending June 30, 2017. The consolidated balance sheet at June 30, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information on the Company's accounting policies and footnotes, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2016 filed with the Securities and Exchange Commission ("SEC"). In the fourth quarter of fiscal 2016, we engaged in a business reorganization to better align our internal business unit structure with our "Follow the Molecule" strategy. Under the revised structure, we have created a Drug Delivery Solutions ("DDS") operating segment, which encompasses all of our modified release technologies; prefilled syringes and other injectable formats; blow-fill-seal unit dose development and manufacturing; biologic cell line development; analytical services; micronization technologies; and other conventional oral dose forms under a single DDS management team. Additionally, as part of the re-alignment, we have created a stand-alone Clinical Supply Services ("CSS") operating segment and management team with a sole focus on providing global clinical supply chain management services that aim to speed our customers' drugs to market. Further, as a result of the business unit re-alignment, our Softgel Technologies business now reports as a distinct operating segment. Our operating segments are the same as our reporting segments. All prior period comparative segment information has been restated to reflect the current reportable segments in accordance with Accounting Standard Codification (“ASC”) 280 Segment Reporting. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, allowance for doubtful accounts, inventory and long-lived asset valuation, goodwill and other intangible asset valuation and impairment, equity-based compensation, income taxes, and pension plan asset and liability valuation. Actual amounts may differ from these estimated amounts. |
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Translation and Transaction of Foreign Currencies | Foreign Currency Translation The financial statements of the Company’s operations outside the U.S. are generally measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of these foreign operations into U.S. dollars are accumulated as a component of other comprehensive income/(loss) utilizing period-end exchange rates. The currency fluctuations related to certain long-term inter-company loans deemed to not be repayable in the foreseeable future have been recorded within cumulative translation adjustment, a component of other comprehensive income/(loss). In addition, the currency fluctuation associated with the portion of the Company’s euro-denominated debt designated as a net investment hedge is included as a component of other comprehensive income/(loss). Foreign currency transaction gains and losses calculated by utilizing weighted average exchange rates for the period are included in the consolidated statements of operations in the other (income) expense, net line item. Foreign currency translation gains and losses generated from inter-company loans that are long-term in nature, but may be repayable in the foreseeable future, are also recorded within the other (income)/expense, net line item on the consolidated statements of operations. |
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Revenue Recognition | Revenue Recognition In accordance with ASC 605 Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. In cases where the Company has multiple contracts with the same customer, the Company evaluates those contracts to assess if the contracts are linked or are separate arrangements. Factors the Company considers include the timing of negotiation, interdependency with other contracts or elements and payment terms. The Company and its customers generally view each contract discussion as a separate arrangement. Manufacturing and packaging service revenue is recognized upon delivery of the product in accordance with the terms of the contract, which specify when transfer of title and risk of loss occurs. Some of the Company’s manufacturing contracts with its customers have annual minimum purchase requirements. At the end of the contract year, revenue is recognized for the unfilled purchase obligation in accordance with the contract terms. Development service contracts generally take the form of a fee-for-service arrangement. After the Company has evidence of an arrangement, the price is determinable and there is a reasonable expectation regarding payment, the Company recognizes revenue at the point in time the service obligation is completed and accepted by the customer. Examples of output measures include a formulation report, analytical and stability testing, clinical batch production or packaging and the storage and distribution of a customer’s clinical trial material. Development service revenue is primarily driven by the Company’s DDS segment. Arrangements containing multiple elements, including service arrangements, are accounted for in accordance with the provisions of ASC 605-25 Revenue Recognition—Multiple-Element Arrangements. The Company determines the separate units of account in accordance with ASC 605-25. If the deliverable meets the criteria of a separate unit of accounting, the arrangement consideration is allocated to each element based upon its relative selling price. In determining the best evidence of selling price of a unit of account, the Company utilizes vendor-specific objective evidence (“VSOE”), which is the price the Company charges when the deliverable is sold separately. When VSOE is not available, management uses relevant third-party evidence (“TPE”) of selling price, if available. When neither VSOE nor TPE of selling price exists, management uses its best estimate of selling price. |
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Goodwill | Goodwill The Company accounts for purchased goodwill and intangible assets with indefinite lives in accordance with ASC 350 Goodwill, Intangible and Other Assets. Under ASC 350, goodwill and intangible assets with indefinite lives are not amortized, but instead are tested for impairment at least annually. The Company's annual goodwill impairment test was conducted as of April 1, 2016. The Company assesses goodwill for possible impairment by comparing the carrying value of its reporting units to their fair values. The Company determines the fair value of its reporting units utilizing estimated future discounted cash flows and incorporates assumptions that it believes marketplace participants would utilize. In addition, the Company uses comparative market information and other factors to corroborate the discounted cash flow results. |
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Property and Equipment | Property and equipment are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets, including capital lease assets that are amortized over the shorter of their useful lives or the terms of the respective leases. The Company generally uses the following ranges of useful lives for its property and equipment categories: buildings and improvements — 5 to 50 years; machinery and equipment — 3 to 10 years; and furniture and fixtures — 3 to 7 years. Depreciation expense was $24.4 million and $49.2 million for the three and six months ended December 31, 2016, respectively, and $23.5 million and $47.1 million for the three and six months ended December 31, 2015, respectively. Depreciation expense includes amortization of assets related to capital leases. The Company charges repairs and maintenance costs to expense as incurred. The amount of capitalized interest was immaterial for all periods presented. |
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Intangible Assets, Finite-Lived, Policy | Intangible assets with finite lives, primarily including customer relationships and patents and trademarks continue to be amortized over their useful lives. The Company evaluates the recoverability of its other long-lived assets, including amortizing intangible assets, if circumstances indicate impairment may have occurred pursuant to ASC 360 Property, Plant and Equipment. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an un-discounted basis, to be generated from such assets. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to the consolidated statements of operations. Fair value is determined based on assumptions the Company believes marketplace participants would utilize and comparable marketplace information in similar arm's length transactions. |
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Research and Development Expense, Policy | Research and Development Costs The Company expenses research and development costs as incurred. Costs incurred in connection with the development of new offerings and manufacturing process improvements are recorded within selling, general and administrative expenses. Such research and development costs included in selling, general and administrative expenses amounted to $1.5 million and $3.0 million for the three and six months ended December 31, 2016, respectively, and $2.1 million and $3.7 million for the three and six months ended December 31, 2015, respectively. Costs incurred in connection with research and development services the Company provides to customers and services performed in support of the commercial manufacturing process for customers are recorded within cost of sales. Such research and development costs included in cost of sales amounted to $11.0 million and $21.3 million for the three and six months ended December 31, 2016, respectively, and $12.3 million and $24.1 million for the three and six months ended December 31, 2015 |
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Earnings Per Share, Policy | Earnings / (Loss) Per Share The Company reports net earnings/(loss) per share pursuant to ASC 260 Earnings per Share. Under ASC 260, basic earnings per share, which excludes dilution, is computed by dividing net earnings or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution caused by securities that could be exercised or converted into common shares, and is computed by dividing net earnings or loss available to common stockholders by the weighted average of common shares outstanding plus the dilutive potential common shares. Diluted earnings per share includes in-the-money stock options, restricted stock units, and unvested restricted stock using the treasury stock method. During a loss period, the assumed exercise of in-the-money stock options has an anti-dilutive effect, and, therefore, these instruments are excluded from the computation of diluted earnings per share. |
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Share-based Compensation, Option and Incentive Plans Policy | Equity-Based Compensation The Company accounts for its equity-based compensation awards pursuant to ASC 718 Compensation—Stock Compensation. ASC 718 requires companies to recognize compensation expense using a fair value based method for costs related to share-based payments including stock options and restricted stock units. The expense is measured based on the grant date fair value of the awards that are expected to vest, and the expense is recorded over the applicable requisite service period using the accelerated attribution method. In the absence of an observable market price for a share-based award, the fair value is based upon a valuation methodology that takes into consideration various factors, including the exercise price of the award, the expected term of the award, the current price of the underlying shares, the expected volatility of the underlying share price based on peer companies, the expected dividends on the underlying shares and the risk-free interest rate. The terms of the Company’s equity-based compensation plans permit shares that are issued upon an employee's exercise of an option to be withheld through a net settlement transaction as a means of meeting tax withholding requirements. |
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Marketable Securities, Policy | Marketable Securities Marketable securities consist of investments that have a readily determinable fair value based on quoted market price of the investment, which is considered a Level 1 fair value measurement. Under ASC 320, Investments—Debt and Equity Securities, these investments are classified as available-for-sale and are reported at fair value in other current assets on the Company's consolidated balance sheet. Unrealized holding gains and losses are reported within accumulated other comprehensive income. Under the Company's accounting policy, a decline in the fair value of marketable securities is deemed to be "other than temporary" and such marketable securities are generally considered to be impaired if their fair value is less than the Company's cost basis for a period based on the particular facts and circumstances surrounding the investment. If a decline in the fair value of a marketable security below the Company's cost basis is determined to be other than temporary, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. |
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Recent Financial Accounting Standards | Recent Financial Accounting Standards In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provided additional guidance on the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The ASU will be effective for public reporting entities in fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory, which reduces the complexity in accounting for income taxes by requiring the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, the income tax consequence of these transactions was not recognized until the asset was sold to an outside party. The guidance will be applied on a modified retrospective basis with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The ASU will be effective for publicly reporting entities in fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted only in the first interim period of a fiscal year. The Company elected to adopt ASU 2016-16 effective July 1, 2016, which resulted in a cumulative-effect adjustment of $34.2 million charged to the opening balance of the accumulated deficit, reduction to other non-current and current assets of $45.6 million and $6.6 million, respectively, increase in deferred tax assets of $14.7 million, and reduction of deferred tax liabilities of $3.2 million. The impact on net earnings and earnings per share in the current period was not material. In August 2016, the FASB issued ASU 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides clarification on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The guidance will be effective for publicly reporting entities in fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09 Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting for share-based payment transactions, requiring all excess tax benefits and deficiencies to be recognized in income tax expense or benefit in earnings. An entity can make an accounting policy election to either estimate the expected future forfeiture of awards or account for the cost or benefit as forfeitures occur. The guidance will be effective for publicly reporting entities in fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company early-adopted ASU 2016-09 during the fourth quarter of fiscal 2016 on a modified retrospective basis, which had an effect on the consolidated statements of operations, comprehensive income/(loss), and cash flows for the six months ended December 31, 2015. The consolidated statements of comprehensive income/(loss) and cash flows for the six months ended December 31, 2015 have been adjusted to reflect the changes in net earnings during that period as a result of the adoption of the new guidance. The following table summarizes the Company's As Reported and As Adjusted changes to the consolidated statement of operations for the six months ended December 31, 2015 (in millions):
In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842), which will supersede ASC 840 Leases. The new guidance requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leases and will be effective for publicly reporting entities in annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In May 2015, the FASB issued ASU No. 2015-07 Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. This guidance also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, such disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. This guidance is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. The Company has adopted ASU 2015-07 effective July 1, 2016, the beginning of its fiscal year ending June 30, 2017, in accordance with the FASB's disclosure simplification initiatives. The adoption did not have a material impact on the Company's financial statements. In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers, which will supersede nearly all existing revenue recognition guidance. The new guidance’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, the new guidance creates a five-step model that requires a company to exercise judgment when considering the terms of the contracts and all relevant facts and circumstances. The five steps require a company to identify customer contracts, identify the separate performance obligations, determine the transaction price, allocate the transaction price to the separate performance obligations and recognize revenue when each performance obligation is satisfied. On July 9, 2015, the FASB approved a one-year deferral of the effective date so that the new guidance is effective for public entities for annual and interim periods beginning after December 15, 2017. The new guidance allows for either full retrospective adoption, where the standard is applied to all periods presented, or modified retrospective adoption where the standard is applied only to the most current period presented in the financial statements. Early adoption is permitted. The Company has identified its revenue streams, reviewed the initial impacts of adopting of the new standard on those revenue streams, and appointed a governance committee and project management leader. The Company continues to evaluate the quantitative and qualitative impacts of the standard. In August 2014, the FASB issued ASU No. 2014-15 Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. This standard is not expected to have any impact on current disclosures in the financial statements. |
Goodwill (Tables) |
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Goodwill - Rollforward | The following table summarizes the changes between June 30, 2016 and December 31, 2016 in the carrying amount of goodwill in total and by reporting segment:
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Definite Lived Long-Lived Assets (Tables) |
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Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Intangible Assets Subject to Amortization | The details of other intangible assets subject to amortization as of December 31, 2016 and June 30, 2016, are as follows:
The increase in customer relationships is associated with the acquisition of Pharmatek Laboratories, Inc. in September 2016 and the preliminary fair value allocation.
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Future Amortization Expense | Future amortization expense for the next five years is estimated to be:
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Long-Term Obligations and Other Short-Term Borrowings (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Obligations, Presented Net of Issue Discounts and Fees Paid to Lenders, and Other Short-Term Borrowings | Long-term obligations and other short-term borrowings consist of the following at December 31, 2016 and June 30, 2016:
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Long-Term Obligations and Other Short-Term Borrowings Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Carrying And Fair Value Of Financial Instruments Table | The carrying amounts and the estimated fair values of financial instruments as of December 31, 2016 and June 30, 2016 are as follows:
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Earnings Per Share Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The reconciliations between basic and diluted earnings per share attributable to Catalent common shareholders for the three and six months ended December 31, 2016 and 2015, respectively, are as follows (dollars in millions, except per share data):
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Other Income and Expense (Tables) |
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Other Nonoperating Income and Expense [Text Block] | The components of Other (Income) / Expense, net for the three and six months ended December 31, 2016 and 2015 are as follows:
(1) Refer to Note 4 for further discussions on the December 2016 re-financing activity. |
Restructuring and Other Restructuring and Other Costs (Tables) |
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Restructuring and Related Costs [Table Text Block] | The following table summarizes the significant costs recorded within restructuring costs:
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Derivative Instruments and Hedging Activities Net Investment Hedge Activity (Tables) |
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Schedule of Net Investment Hedge in Accumulated Other Comprehensive Income (Loss) and Statement of Financial Performance | The following table includes net investment hedge activity during the three and six months ended December 31, 2016 and December 31, 2015.
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Income Taxes Income Taxes (Tables) |
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Schedule of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns Roll Forward | A reconciliation of its reserves for uncertain tax positions, excluding accrued interest and penalties, for December 31, 2016 is as follows:
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Employee Retirement Benefit Plans (Tables) |
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Company's Net Periodic Benefit Costs | Components of the Company’s net periodic benefit costs are as follows:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comprehensive Income (Loss) | The components of the changes in the cumulative translation adjustment and minimum pension liability for the three and six months ended December 31, 2016 and December 31, 2015 are presented below.
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Schedule of Accumulated Other Comprehensive Income (Loss) | For the three months ended December 31, 2016, the changes in accumulated other comprehensive income, net of tax by component are as follows:
For the six months ended December 31, 2016, the changes in accumulated other comprehensive income, net of tax by component are as follows:
The Company held an investment in a specialty pharmaceutical company whose securities were not publicly traded, which was previously accounted for as cost method investment. In the second quarter of fiscal 2017, the specialty pharmaceutical company became publicly traded after an initial public offering and as a result the Company recognized an unrealized gain on the investment of $15.3 million, net of tax. This amount is reflected in other comprehensive income. |
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Revenue and Segment EBITDA | The following tables include net revenue and Segment EBITDA during the three and six months ended December 31, 2016 and December 31, 2015:
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Reconciliation of Earnings/(Loss) from Continuing Operations to EBITDA | Provided below is a reconciliation of EBITDA from continuing operations to earnings/(loss) from continuing operations, the closest related measure prepared in accordance with GAAP:
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Total Assets for Each Segment and Reconciling in Consolidated Financial Statements | The following table includes total assets for each segment, as well as reconciling items necessary to total the amounts reported in the consolidated financial statements:
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Supplemental Balance Sheet Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Work-in-process and finished goods inventories include raw materials, labor, and overhead. Total inventories consist of the following:
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Prepaid and Other Assets | Prepaid expenses and other current assets consist of the following:
(1) The company transferred certain intellectual property assets between jurisdictions in the year ended June 30, 2016, resulting in a deferred tax charge which will be amortized over the remaining 10-year useful life of the assets. The Company adopted ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory effective July 1, 2016 and subsequently adjusted the long-term tax asset. Refer to Note 1 for further information. |
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Property and Equipment | Property, plant, and equipment, net consist of the following:
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Other Accrued Liabilities | Other accrued liabilities consist of the following:
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Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Summary of Significant Accounting Policies - Business (Details) - $ / shares shares in Millions |
Sep. 06, 2016 |
Jun. 06, 2016 |
Jun. 02, 2015 |
Mar. 09, 2015 |
---|---|---|---|---|
Sale of Stock, Number of Shares, Underwriters Option to Purchase | 2.1 | 3.6 | ||
Blackstone [Member] | ||||
Share Price | $ 23.85 | $ 24.85 | $ 29.00 | $ 29.50 |
Sale of Stock, Number of Shares Sold by Entity | 19.0 | 10.0 | 16.1 | 27.3 |
Basis of Presentation and Summary of Significant Accounting Policies Research and Development Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Selling, General and Administrative Expenses [Member] | ||||
Research and Development Expense [Line Items] | ||||
Research and Development Expense | $ 1.5 | $ 2.1 | $ 3.0 | $ 3.7 |
Cost of Sales [Member] | ||||
Research and Development Expense [Line Items] | ||||
Research and Development Expense | $ 11.0 | $ 12.3 | $ 21.3 | $ 24.1 |
Goodwill - Rollforward (Detail) $ in Millions |
6 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 996.5 |
Additions/(impairments) | 48.7 |
Foreign currency translation adjustments | (36.7) |
Ending balance | 1,008.5 |
Softgel Technologies [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 405.9 |
Additions/(impairments) | 0.0 |
Foreign currency translation adjustments | (12.9) |
Ending balance | 393.0 |
Drug Delivery Solutions [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 435.1 |
Additions/(impairments) | 48.7 |
Foreign currency translation adjustments | (13.8) |
Ending balance | 470.0 |
Clinical Supply Services [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 155.5 |
Additions/(impairments) | 0.0 |
Foreign currency translation adjustments | (10.0) |
Ending balance | $ 145.5 |
Definite Lived Long-Lived Assets - Future Amortization Expense (Detail) $ in Millions |
Dec. 31, 2016
USD ($)
|
---|---|
Intangible Assets Disclosure [Abstract] | |
Remainder Fiscal 2017 | $ 22.1 |
2018 | 44.1 |
2019 | 38.6 |
2020 | 25.1 |
2021 | 25.1 |
2022 | $ 25.1 |
Long-Term Obligations and Other Short-Term Borrowings Fair Value Measurements of Financial Instruments - Carrying Amounts and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Millions |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Carrying Value [Member] | ||
Fair Value Measurements Of Financial Instruments [Line Items] | ||
Debt and Capital Lease Obligations | $ 2,024.4 | $ 1,860.5 |
Estimate of Fair Value Measurement [Member] | ||
Fair Value Measurements Of Financial Instruments [Line Items] | ||
Debt Instrument, Fair Value Disclosure | $ 2,049.8 | $ 1,868.8 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Earnings Per Share [Abstract] | ||||
Net Income (Loss) Attributable to Parent | $ 17.4 | $ 30.7 | $ 22.0 | $ 42.7 |
Weighted Average Number of Shares Outstanding, Basic | 124,889,681 | 124,818,241 | 124,870,327 | 124,785,737 |
Weighted Average Number Diluted Shares Outstanding Adjustment | 1,524,963 | 1,008,439 | 1,470,476 | 1,157,119 |
Weighted Average Number of Shares Outstanding, Diluted | 126,414,644 | 125,826,680 | 126,340,803 | 125,942,856 |
Earnings Per Share, Basic | $ 0.14 | $ 0.25 | $ 0.18 | $ 0.34 |
Earnings Per Share, Diluted | $ 0.14 | $ 0.24 | $ 0.17 | $ 0.34 |
Earnings Per Share Earnings Per Share - Additional Details (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Stock Compensation Plan [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.5 | 1.9 | 0.5 | 1.9 |
Employee Stock Options and RSUs [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.9 | 0.8 | 1.1 | 1.0 |
Other Income and Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Other Income and Expenses [Abstract] | ||||
Debt refinancing costs | $ 4.3 | $ 0.0 | $ 4.3 | $ 0.0 |
Foreign Currency Transaction Gain (Loss), Unrealized | (5.3) | (3.9) | (7.5) | (3.9) |
Other Nonoperating Income (Expense) | (0.8) | 0.4 | (0.7) | 1.0 |
Nonoperating Income (Expense) | $ (1.8) | $ (3.5) | $ (3.9) | $ (2.9) |
Restructuring and Other Restructuring and Other Costs (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Severance Costs | $ 0.4 | $ 0.7 | $ 1.5 | |
Business Exit Costs | $ 0.2 | 0.2 | 0.5 | 0.1 |
Restructuring Charges | 0.1 | 0.6 | 1.2 | 1.6 |
Gain (Loss) Related to Litigation Settlement | 3.2 | 0.0 | 3.2 | 0.0 |
Restructuring, Settlement and Impairment Provisions | 3.3 | $ 0.6 | $ 4.4 | $ 1.6 |
Employee Severance [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other Restructuring Costs | $ (0.1) |
Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Derivative [Line Items] | ||||
Derivatives used in Net Investment Hedge, Increase (Decrease), Gross of Tax | $ 13.6 | $ 2.5 | $ 10.0 | $ 2.5 |
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | 10.2 | $ 4.3 | 7.6 | $ 4.3 |
Net accumulated gain related to investment hedges | 91.4 | |||
Euro Denominated Debt Outstanding [Member] | ||||
Derivative [Line Items] | ||||
Total long-term debt | $ 717.1 | $ 717.1 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Income Tax Contingency [Line Items] | ||
Unrecognized Tax Benefits | $ 61.3 | $ 61.5 |
Unrecognized Tax Benefits, Including Income Tax Penalties and Interest Accrued | 66.8 | 67.1 |
Unrecognized tax benefits that impact the effective income tax rate | 45.7 | 45.7 |
Accrued interest related to uncertain tax positions | 5.5 | 5.6 |
Interest and penalties subject to indemnification | 1.7 | 2.1 |
Former Owner [Member] | ||
Income Tax Contingency [Line Items] | ||
Unrecognized Tax Benefits Subject to Indemnification | $ 0.8 | $ 1.7 |
Income Taxes Income Tax Disclosure (Details) $ in Millions |
6 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Beginning Balance | $ 61.5 |
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions | 1.6 |
Unrecognized Tax Benefits, Decreases Resulting from Prior Period Tax Positions | (1.7) |
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | (0.1) |
Ending Balance | $ 61.3 |
Employee Retirement Benefit Plans - Components of Company's Net Periodic Benefit Costs (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Jun. 30, 2016 |
|||
Components of net periodic benefit cost: | |||||||
Service cost | $ 0.8 | $ 0.7 | $ 1.6 | $ 1.4 | |||
Interest cost | 1.6 | 2.7 | 3.3 | 5.4 | |||
Expected return on plan assets | (2.6) | (2.5) | (5.4) | (5.1) | |||
Amortization | [1] | 1.0 | 0.7 | 2.1 | 1.4 | ||
Net amount recognized | 0.8 | $ 1.6 | 1.6 | $ 3.1 | |||
Estimated discounted value of future employer contributions | 39.1 | 39.1 | $ 39.3 | ||||
Estimated annual cash contribution | $ 1.7 | $ 1.7 | |||||
|
Equity and Accumulated Other Comprehensive Income (Loss) Equity (Details) - USD ($) $ / shares in Units, $ in Millions |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Equity [Abstract] | ||
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Stock Repurchase Program, Authorized Amount | $ 100.0 |
Commitments and Contingencies Commitments and Contingencies Disclosure (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2016 |
Jun. 30, 2016 |
|
Loss Contingencies [Line Items] | ||
Litigation Settlement, Amount | $ 1.7 | $ 1.5 |
Gain (Loss) Related to Litigation Settlement | 3.2 | |
Loss Contingency, Range of Possible Loss, Maximum | 35.0 | |
Insurance Claims [Member] | ||
Loss Contingencies [Line Items] | ||
Litigation Settlement, Amount | $ 1.3 |
Segment Information - Net Revenue and Segment Ebitda (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Net revenue | $ 483.7 | $ 454.9 | $ 925.9 | $ 877.9 | |||||||
Segment EBITDA | 85.2 | 97.4 | 147.9 | 169.6 | |||||||
Inter-segment revenue elimination | (9.2) | (7.2) | (19.7) | (19.4) | |||||||
Unallocated Costs | [1] | (19.8) | (12.9) | (40.1) | (26.8) | ||||||
Impairment Charges And Gain Loss On Sale Of Assets | 0.5 | (0.1) | 0.5 | 1.1 | |||||||
Equity compensation | (4.9) | (2.6) | (11.8) | (5.1) | |||||||
Restructuring and other special items | [2] | (7.2) | (4.2) | (13.1) | (6.2) | ||||||
Noncontrolling interest | 0.0 | 0.1 | 0.0 | 0.3 | |||||||
Other income (expense), net | [3] | 1.8 | 3.5 | 3.9 | 2.9 | ||||||
Non-allocated corporate costs, net | (9.0) | (9.8) | (18.6) | (17.6) | |||||||
Total unallocated costs | [1] | (19.8) | (12.9) | (40.1) | (26.8) | ||||||
Softgel Technologies [Member] | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Net revenue | 201.9 | 181.1 | 388.3 | 365.1 | |||||||
Segment EBITDA | 43.4 | 34.8 | 73.9 | 69.4 | |||||||
Drug Delivery Solutions [Member] | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Net revenue | 214.0 | 204.1 | 405.3 | 377.7 | |||||||
Segment EBITDA | 50.0 | 62.1 | 92.0 | 99.6 | |||||||
Clinical Supply Services [Member] | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||
Net revenue | 77.0 | 76.9 | 152.0 | 154.5 | |||||||
Segment EBITDA | $ 11.6 | $ 13.4 | $ 22.1 | $ 27.4 | |||||||
|
Segment Information - Reconciliation of Earnings / (Loss) from Continuing Operations to Ebitda (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting [Abstract] | ||||
Earnings from continuing operations | $ 17.4 | $ 30.6 | $ 22.0 | $ 42.4 |
Depreciation and amortization | 35.5 | 35.2 | 71.3 | 70.7 |
Interest expense, net | 22.8 | 22.3 | 44.9 | 45.0 |
Income tax (benefit)/expense | 9.5 | 9.2 | 9.7 | 11.2 |
Noncontrolling interest | 0.0 | 0.1 | 0.0 | 0.3 |
EBITDA from continuing operations | $ 85.2 | $ 97.4 | $ 147.9 | $ 169.6 |
Segment Information - Total Assets for Each Segment and Reconciling in Consolidated Financial Statements (Detail) - USD ($) $ in Millions |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 3,154.3 | $ 3,091.1 |
Softgel Technologies [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 1,292.9 | 1,446.4 |
Drug Delivery Solutions [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 1,574.9 | 1,475.7 |
Clinical Supply Services [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 538.3 | 578.9 |
Corporate and Eliminations [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ (251.8) | $ (409.9) |
Supplemental Balance Sheet Information - Inventory (Detail) - USD ($) $ in Millions |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Inventory, Net [Abstract] | ||
Raw materials and supplies | $ 102.9 | $ 88.7 |
Work-in-process | 30.2 | 30.7 |
Finished goods | 52.9 | 55.2 |
Total inventories, gross | 186.0 | 174.6 |
Inventory reserve | (16.2) | (19.8) |
Inventories | $ 169.8 | $ 154.8 |
Supplemental Balance Sheet Information - Prepaid and Other Assets (Detail) - USD ($) $ in Millions |
Dec. 31, 2016 |
Jun. 30, 2016 |
||
---|---|---|---|---|
Prepaid Expense and Other Assets, Current [Abstract] | ||||
Prepaid Expense, Current | $ 22.8 | $ 29.3 | ||
Spare parts supplies | 11.1 | 10.8 | ||
Short-term Investments | 0.0 | 7.0 | ||
Other Prepaid Expense, Current | [1] | 0.0 | 6.8 | |
Other current assets | 56.8 | 35.1 | ||
Prepaid expenses and other | $ 90.7 | $ 89.0 | ||
|
Supplemental Balance Sheet Information - Property and Equipment (Detail) - USD ($) $ in Millions |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Property, Plant and Equipment, Net [Abstract] | ||
Land Buildings And Improvements | $ 678.0 | $ 649.6 |
Machinery, equipment, and capitalized software | 764.2 | 757.1 |
Furniture and fixtures | 9.5 | 9.9 |
Construction in progress | 123.4 | 134.1 |
Property, plant, and equipment, at cost | 1,575.1 | 1,550.7 |
Accumulated depreciation | (670.1) | (644.9) |
Property, plant, and equipment, net | $ 905.0 | $ 905.8 |
Supplemental Balance Sheet Information - Other Accrued Liabilities (Detail) - USD ($) $ in Millions |
Dec. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Accrued employee-related expenses | $ 60.4 | $ 82.8 |
Restructuring accrual | 4.7 | 6.1 |
Accrued interest | 1.2 | 0.1 |
Deferred revenue and fees | 46.6 | 46.2 |
Accrued income tax | 24.6 | 38.8 |
Other accrued liabilities and expenses | 46.6 | 45.8 |
Other accrued liabilities | $ 184.1 | $ 219.8 |
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