66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in tables in millions, except share and per share data) (continued)
Staff Accounting Bulletin No. 108
In September 2006, the SEC released SAB 108, which provides
guidance on how to evaluate prior period financial statement
misstatements for purposes of assessing their materiality in the
current period. There are two widely recognized methods for
quantifying the effects of financial statement misstatements: the
“rollover” or income statement method and the “iron curtain”
or balance sheet method. Prior to 2006, the Company used the
“rollover” method. Under this method, the Company quantified
its financial statement misstatements based on the amount of
errors originating in the current-year income statement and as a
result did not consider the effects of correcting the portion of the
current-year balance sheet misstatement that originated in prior
years. SAB 108 now requires that the Company must consider
both the rollover and iron curtain methods (“dual method”)
when quantifying misstatements in the financial statements.
The iron curtain method quantifies a misstatement based on the
effects of correcting the misstatement existing in the balance
sheet at the end of the current year, irrespective of the misstatement’s origination. Upon initial application, SAB 108 permits
the Company to adjust for the cumulative effect of errors that
were previously considered immaterial under the rollover method
that are now considered material under the dual method. This
SAB 108 adjustment affects the carrying amount of assets and
liabilities with an offsetting adjustment to the opening balance
of retained earnings.
The Company adopted the provisions of SAB 108 in 2006 and
adjusted its retained earnings balance as of January 1, 2006 for a
cumulative effect of $31.8 million, net of taxes. The errors had
previously been considered immaterial to the Company’s consolidated financial position and results of operations using the rollover method.
NOTE 3. BUSINESS SEGMENT INFORMATION
The following tables show net sales, depreciation and amortization, operating profit and assets by the Company’s segment
reporting structure:
Net sales
Food Packaging
Food Solutions
Protective Packaging
Other
Total
2008
2007
2006
$1,969.4
988.3
1,480.3
405.5
$1,882.9
944.7
1,506.9
316.7
$1,740.6
843.0
1,476.1
268.2
$4,843.5
$4,651.2
$4,327.9
Sealed Air Corporation 2008 Annual Report
2008
Depreciation and amortization
Food Packaging
Food Solutions
Protective Packaging
Other
Total
$
74.1
32.7
45.9
18.8
2007
$
77.1
32.1
44.5
12.6
2006
$
76.2
32.6
48.4
10.8
$ 171.5
$ 166.3
$ 168.0
$ 217.5
80.0
169.1
15.0
$ 228.2
86.1
208.6
28.0
$ 214.6
87.3
206.7
30.4
481.6
550.9
539.0
85.1
1.6
12.9
$ 396.5
$ 549.3
$ 526.1
Assets
Trade receivables, net and
finished goods inventory, net
Food Packaging
Food Solutions
Protective Packaging
Other
$ 443.1
216.6
281.2
72.5
$ 476.4
215.1
337.5
69.5
$ 431.2
187.9
321.5
58.8
Total segments and other
Assets not allocated(3)
1,013.4
3,972.6
1,098.5
4,339.8
999.4
4,021.5
$4,986.0
$5,438.3
$5,020.9
(1)
Operating profit
Food Packaging
Food Solutions
Protective Packaging
Other
Total segments and other
Restructuring and other
charges(2)
Total
(3)
Total
(1) Operating profit for the Company’s segment structure is shown before restructuring and other charges.
(2) The restructuring and other charges by the Company’s segment reporting
structure were as follows:
2008
2007
2006
Food Packaging
Food Solutions
Protective Packaging
Other
$46.2
15.1
18.8
5.0
$0.5
0.1
1.0
—
$13.0
—
(0.1)
—
Total
$85.1
$1.6
$12.9
In 2008, the Company implemented a cost reduction and productivity program. The restructuring charges related to this program were $65.8 million in
2008. The remaining $19.3 million of restructuring and other charges in 2008
was related to the Company’s global manufacturing strategy. Restructuring
and other charges in 2007 related to the consolidation of the Company’s customer service activities in North America. See Note 4, “Cost Reduction and
Productivity Program and Global Manufacturing Strategy,” for further
discussion.
(3) Only assets that are identifiable and reviewed by the Company’s chief operating decision maker by segment are allocated to the reportable segment assets.
Allocated assets include trade accounts receivable, net, and finished goods
inventories, net. All other assets are included in “Assets not allocated.” Assets
not allocated include goodwill of $1,938.1 million at December 31, 2008 and
$1,969.7 million at December 31, 2007 and total property and equipment, net,
of $1,051.4 million at December 31, 2008 and $1,080.1 million at December
31, 2007.