SEALED AIR COR : DE Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The information in our Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") should be read together with our
Condensed Consolidated Financial Statements and related notes set forth in
Item 1 of Part I of this Quarterly Report on Form 10-Q, our MD&A set forth in
Item 7 of Part II of our 2019 Form 10-K and our Consolidated Financial
Statements and related notes set forth in Item 8 of Part II of our 2019 Form
10-K. See Part II, Item 1A, "Risk Factors," below and "Cautionary Notice
Regarding Forward-Looking Statements," above, and the information referenced
therein, for a description of risks that we face and important factors that we
believe could cause actual results to differ materially from those in our
forward-looking statements. All amounts and percentages are approximate due to
rounding and all dollars are in millions, except per share amounts or where
otherwise noted. When we cross-reference to a "Note," we are referring to our
"Notes to Condensed Consolidated Financial Statements," unless the context
indicates otherwise.
Starting in the second quarter 2020, we have renamed our reporting segments from
Food Care to Food and from Product Care to Protective. This segment reporting
name change aligns with our use internally and in the markets we serve. There
has been no change in the composition of the segments and no impact on prior
period results of our reporting segments.
Recent Events and Trends

Impact of COVID-19
On March 11, 2020, the World Health Organization declared the Coronavirus
Disease 2019 ("COVID-19") outbreak to be a global pandemic. Additionally, many
international heads of state, including the President of the United States,
declared the COVID-19 outbreak to be a national emergency in their respective
countries. In response to these declarations and the rapid spread of COVID-19
across many countries, including the United States, governmental agencies around
the world (including federal, state and local governments in the United States)
implemented varying degrees of restrictions on social and commercial activities
to promote social distancing in an effort to slow the spread of the illness.
While the initial restrictions have been lifted or revised in many parts of the
world and the United States, the measures, as well as future measures, had and
will continue to create a significant adverse impact upon many sectors of the
global economy. Additionally, the spread of the virus continues to accelerate in
some parts of the world, including the United States.
We continue to monitor the impact of COVID-19 on all aspects of our business and
geographies, including the impact on our employees, customers, suppliers,
business partners and distribution channels. Our established crisis management
teams, which are comprised of cross function and regional leaders, continue to
assess the evolving situation and implement business continuity plans at both
the regional and headquarter levels. See Part II, Item 1A, "Risk Factors," below
for additional risks related to the COVID-19 pandemic.
Employee Health and Safety and Business Continuity
The health and safety of Sealed Air's global employees, suppliers and customers
continue to be the Company's top priority. Safety measures remain in place at
Sealed Air sites such as: enhanced cleaning procedures, employee temperature
checks, use of personal protective equipment for location-dependent workers,
social distancing measures within operating sites, remote work arrangements for
non-location dependent employees, visitor access restrictions and significant
limitations on travel, particularly in regions with high transmission of
COVID-19.
Remote work arrangements will remain in place for some of our non-location
dependent employees as appropriate. In a remote working environment, we continue
our efforts to mitigate information technology risks including failures in the
physical infrastructure or operating systems that support our businesses and
customers, or cyber attacks and security breaches of our networks or systems.
Additionally, we continue to execute all activities related to our internal
control over financial reporting in our remote environment. There has not been
any change in our internal control over financial reporting during the six
months ended June 30, 2020 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting.
While we continue to practice enhanced employee safety and other precautionary
measures during this pandemic, there are significant uncertainties regarding the
future impact of COVID-19, which we cannot predict.
Supply Chain and Operations
Sealed Air's global operations continue to operate and serve customers' needs.
We experienced limited facility closures as a result of government orders in
response to the pandemic. Additionally, in some jurisdictions, we have at times
reduced
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production capacity due to local social distancing requirements which limit the
number of employees in our facility. These instances have not had a material
impact on our operations to date. We continue to closely monitor our
location-dependent operations.
The impact of COVID-19 has resulted in approximately $9 million in unanticipated
net expenses for the six months ended June 30, 2020. These costs included
additional personal protective gear, cleaning and other health and hygiene
supplies and related expenses; higher employment costs; and incremental freight
due to sourcing changes along with other higher manufacturing related costs.
We cannot predict the impact on our operations of continued spread or worsening
of the COVID-19 pandemic or future restrictions on commercial activities by
governmental agencies to limit future spread of the virus. The health of our
workforce, and our ability to meet staffing needs in our manufacturing
facilities, distribution of our products and other critical functions are key to
our operations.

Markets We Serve
Early during the implementation of initial commercial and social restrictions,
employees within "Food and Agriculture" and "Transportation and Logistics,"
including their respective supply chains such as packaging material providers,
were deemed "Essential Critical Infrastructure Workers" by the U.S. Department
of Homeland Security and similarly by other international governmental agencies.
These designations covered the majority of Sealed Air employees and allowed us
to continue operations in order to serve our customers.
Late in the first quarter and early in the second quarter, as the initial impact
of COVID-19 intensified around the world, we experienced an increase in demand
for packaging solutions for essential materials including all proteins, frozen
foods, pantry items, medical equipment and pharmaceuticals. However, demand
contracted mid-second quarter as some of our customers, including certain meat
processors and industrial manufacturers, had to temporarily suspend production
or were unable to fully staff their operations due to COVID-19 outbreaks. As
these customers returned to operation, demand and volume increased late in the
second quarter. Subsequent disruption in our customers' operations could
negatively impact our future results of operations.
Some sectors, such as industrial goods, capital-intensive equipment and parts of
the food industry including food service and restaurants have experienced
significant adverse impacts. Capital-intensive equipment that serves food market
segments has been negatively impacted due to customer's re-evaluation of
investments and delays due to restrictions on third-party visitors and
installations in light of current social distancing measures.
Overall, organic sales volume declined $49 million or 4% during the second
quarter, with Food down 2% and Protective down 8%.
Liquidity and Financial Position
As of June 30, 2020, Sealed Air had approximately $1.3 billion of liquidity
available, comprised of $290 million in cash and undrawn, committed credit
facilities of $1,052 million. The Company does not have long-term debt maturing
until August 2022. See Note 10, "Accounts Receivable Securitization Programs"
and Note 14, "Debt and Credit Facilities" for further details.
Each issue of our outstanding senior notes imposes limitations on our operations
and those of specified subsidiaries. Our Credit Facility contains customary
affirmative and negative covenants for credit facilities of this type, including
limitations on our indebtedness, liens, investments, restricted payments,
mergers and acquisitions, dispositions of assets, transactions with affiliates,
amendment of documents and sale leasebacks, and a covenant specifying a maximum
leverage ratio of debt to EBITDA. As a result of our acquisition of Automated,
the maximum covenant leverage ratio of debt to EBITDA has temporarily increased
to 5.00 to 1.00 through September 30, 2020. The maximum covenant leverage ratio
will return to 4.50 to 1.00 after September 30, 2020. At June 30, 2020, our
leverage ratio of debt to EBITDA, as calculated under the covenant, is 2.92 to
1.00. We expect continued compliance with our debt covenants including the
covenant leverage ratio over the next 12 months. See Note 14, "Debt and Credit
Facilities" for further details.
Non-U.S. GAAP Information

We present financial information that conforms to U.S. GAAP. We also present financial information that does not conform to U.S. GAAP, as our management believes it is useful to investors. In addition, non-U.S. GAAP financial measures

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are used by management to review and analyze our operating performance and,
along with other data, as internal measures for setting annual budgets and
forecasts, assessing financial performance, providing guidance and comparing our
financial performance with our peers. Non-U.S. GAAP financial measures also
provide management with additional means to understand and evaluate the core
operating results and trends in our ongoing business by eliminating certain
expenses and/or gains (which may not occur in each period presented) and other
items that management believes might otherwise make comparisons of our ongoing
business with prior periods and peers more difficult, obscure trends in ongoing
operations or reduce management's ability to make useful forecasts. Non-U.S.
GAAP information does not purport to represent any similarly titled U.S. GAAP
information and is not an indicator of our performance under U.S. GAAP.
Investors are cautioned against placing undue reliance on these non-U.S. GAAP
financial measures. Further, investors are urged to review and consider
carefully the adjustments made by management to the most directly comparable
U.S. GAAP financial measure to arrive at these non-U.S. GAAP financial measures,
described below.
The non-U.S. GAAP financial metrics exclude certain specified items ("Special
Items"), including restructuring charges and restructuring associated costs,
certain transaction and other charges related to acquisitions and divestitures,
gains and losses related to acquisitions and divestitures, special tax items or
tax benefits (collectively, "Tax Special Items") and certain other items. We
evaluate unusual or Special Items on an individual basis. Our evaluation of
whether to exclude an unusual or special item for purposes of determining our
non-U.S. GAAP financial measures considers both the quantitative and qualitative
aspects of the item, including among other things (i) its nature, (ii) whether
or not it relates to our ongoing business operations, and (iii) whether or not
we expect it to occur as part of our normal business on a regular basis.
When we present forward-looking guidance, we do not also provide guidance for
the most directly comparable U.S. GAAP financial measures, as they are not
available without unreasonable effort due to the high variability, complexity,
and low visibility with respect to certain Special Items, including gains and
losses on the disposition of businesses, the ultimate outcome of certain legal
or tax proceedings, foreign currency gains or losses resulting from the volatile
currency market in Argentina, and other unusual gains and losses. These items
are uncertain, depend on various factors, and could be material to our results
computed in accordance with U.S. GAAP.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA is defined as Earnings before Interest Expense, Taxes,
Depreciation and Amortization, adjusted to exclude the impact of Special Items.
Management uses Adjusted EBITDA as one of many measures to assess the
performance of the business. Additionally, Adjusted EBITDA is the performance
metric used by the Company's chief operating decision maker to evaluate
performance of our reportable segments. Adjusted EBITDA is also a metric used to
determine performance in the Company's Annual Incentive Plan. We do not believe
there are estimates underlying the calculation of Adjusted EBITDA, other than
those inherent in our U.S. GAAP results of operations, which would render the
use and presentation of Adjusted EBITDA misleading. While the nature and amount
of individual Special Items vary from period to period, we believe our
calculation of Adjusted EBITDA is applied consistently to all periods and, in
conjunction with other U.S. GAAP and non-U.S. GAAP financial measures, Adjusted
EBITDA provides a useful and consistent comparison of our Company's performance
to other periods.
The following table shows a reconciliation of U.S. GAAP Net Earnings from
continuing operations to non-U.S. GAAP Total Company Adjusted EBITDA from
continuing operations:
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                                                          Three Months Ended                               Six Months Ended
                                                               June 30,                                        June 30,
(In millions)                                            2020              2019             2020              2019
Net earnings from continuing operations                  100.3             25.5            214.8              89.8
Interest expense, net                                     43.3             43.2             87.7              88.1
Income tax provision                                      44.6             12.3             77.3              42.7
Depreciation and amortization, net of
adjustments(1)                                            53.4             38.0            104.9              78.2
Special Items:
Restructuring charges                                     10.1             29.3             10.7              36.7
Other restructuring associated costs(2)                    3.8             21.3              7.8              38.0
Foreign currency exchange loss due to highly
inflationary economies                                     1.2              1.3              2.1               2.1

Charges related to the Novipax settlement
agreement                                                    -             59.0                -              59.0
Charges (income) related to acquisition and
divestiture activity                                       1.2             (0.5)             4.1               3.2

Other Special Items(3)                                     2.0              7.3              3.7              14.7
Pre-tax impact of Special Items                           18.3            117.7             28.4             153.7
Non-U.S. GAAP Total Company Adjusted EBITDA
from continuing operations                           $   259.9          $ 236.7          $ 513.1          $  452.5





(1)Includes depreciation and amortization adjustments of $(0.1) million and
$(1.0) million for the three and six months ended June 30, 2019, respectively.
(2)Other restructuring associated costs for the three and six months ended
June 30, 2020 primarily relate to fees paid to third-party consultants in
support of Reinvent SEE. Other restructuring associated costs for the three and
six months ended June 30, 2019 primarily relate to fees paid to third-party
consultants in support of Reinvent SEE and costs associated with property
consolidations and machinery and equipment relocations resulting from Reinvent
SEE. See Note 13, "Restructuring Activities," for additional information related
to our Reinvent SEE and our restructuring program.
(3)Other Special Items for the three and six months ended June 30, 2019,
primarily included fees related to professional services, mainly legal fees,
directly associated with Special Items or events that are considered one-time or
infrequent in nature.
The Company may also assess performance using Adjusted EBITDA Margin. Adjusted
EBITDA Margin is calculated as Adjusted EBITDA divided by net trade sales. We
believe that Adjusted EBITDA Margin is a useful measure to assess the
profitability of sales made to third parties and the efficiency of our core
operations.
Adjusted Net Earnings and Adjusted Earnings Per Share
Adjusted Net Earnings and Adjusted Earnings Per Share ("Adjusted EPS") are also
used by the Company to measure total company performance. Adjusted Net Earnings
is defined as U.S. GAAP net earnings from continuing operations excluding the
impact of Special Items. Adjusted EPS is defined as our Adjusted Net Earnings
divided by the number of diluted shares outstanding. We believe that Adjusted
Net Earnings and Adjusted EPS are useful measurements of Company performance,
along with other U.S. GAAP and non-U.S. GAAP financial measures, because they
incorporate non-cash items of depreciation and amortization, including
stock-based compensation, which impact the overall performance and Net Earnings
of our business. Additionally, Adjusted Net Earnings and Adjusted EPS reflect
the impact of our Adjusted Tax Rate and interest expense on a net and per share
basis. While the nature and amount of individual Special Items vary from period
to period, we believe our calculation of Adjusted Net Earnings and Adjusted EPS
is applied consistently to all periods and, in conjunction with other U.S. GAAP
and non-U.S. GAAP financial measures, Adjusted Net Earnings and Adjusted EPS
provide a useful and consistent comparison of our Company's performance to other
periods.
The following table shows a reconciliation of U.S. GAAP Net Earnings and Diluted
Earnings per Share from continuing operations to Non-U.S. GAAP Adjusted Net
Earnings and Adjusted EPS from continuing operations.
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                                                                 Three Months Ended June 30,                                                                                                   Six Months Ended June 30,
                                                        2020                                                          2019                                                          2020                              2019
(In millions, except per share
data)                                     Net Earnings         Diluted EPS  

Net Earnings Diluted EPS Net Earnings Diluted EPS Net Earnings Diluted EPS U.S. GAAP net earnings and diluted EPS from continuing operations(1) $ 100.3 $ 0.64

$      25.5          $     0.16          $     214.8          $     1.38          $      89.8          $    0.58
Special Items(2)                                18.0                0.12                 99.8                0.64                 16.9                0.11                127.7               0.82
Non-U.S. GAAP adjusted net
earnings and adjusted diluted EPS
from continuing operations               $     118.3          $     0.76          $     125.3          $     0.80          $     231.7          $     1.49          $     217.5          $    1.40
Weighted average number of common
shares outstanding - Diluted                                       155.9                                    155.3                                    155.4                                   155.3





(1)Net earnings per common share are calculated under the two-class method.
(2)Includes pre-tax Special Items, less Tax Special Items and the tax impact of
Special Items as seen in the following calculation of non-U.S. GAAP Adjusted
income tax rate.
Adjusted Tax Rate
We also present our adjusted income tax rate ("Adjusted Tax Rate"). The Adjusted
Tax Rate is a measure of our U.S. GAAP effective tax rate, adjusted to exclude
the tax impact from the Special Items that are excluded from our Adjusted Net
Earnings and Adjusted EPS metrics as well as expense or benefit from any special
taxes or Tax Special Items. The Adjusted Tax Rate is an indicator of the taxes
on our core business. The tax circumstances and effective tax rate in the
specific countries where the Special Items occur will determine the impact
(positive or negative) to the Adjusted Tax Rate. While the nature and amount of
Tax Special Items vary from period to period, we believe our calculation of the
Adjusted Tax Rate is applied consistently to all periods and, in conjunction
with our U.S. GAAP effective income tax rate, the Adjusted Tax Rate provides a
useful and consistent comparison of the impact that tax expense has on our
Company's performance.
The following table shows our calculation of the non-U.S. GAAP Adjusted income
tax rate:

                                                            Three Months Ended                               Six Months Ended
                                                                 June 30,                                        June 30,
(In millions)                                              2020              2019             2020              2019
U.S. GAAP Earnings before income tax provision
from continuing operations                             $   144.9          $  37.8          $ 292.1          $  132.5
Pre-tax impact of Special Items                             18.3            117.7             28.4             153.7
Non-U.S. GAAP Adjusted Earnings before income
tax provision from continuing operations               $   163.2          $ 

155.5 $ 320.5 $ 286.2

U.S. GAAP Income tax provision from continuing
operations                                             $    44.6          $  12.3          $  77.3          $   42.7
Tax Special Items                                           (3.2)           (10.9)             5.4             (11.7)
Tax impact of Special Items                                  3.5             28.8              6.1              37.7
Non-U.S. GAAP Adjusted Income tax provision from
continuing operations                                  $    44.9          $ 

30.2 $ 88.8 $ 68.7

U.S. GAAP Effective income tax rate                         30.8  %          32.5  %          26.5  %           32.2   %
Non-U.S. GAAP Adjusted income tax rate                      27.5  %          19.4  %          27.7  %           24.0   %


Organic and Constant Dollar Measures
In our "Net Sales by Geographic Region," "Net Sales by Segment" and in some of
the discussions and tables that follow, we exclude the impact of foreign
currency translation when presenting net sales information, which we define as
"constant
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dollar" and we exclude acquisitions in the first year after closing, divestiture
activity and the impact of foreign currency translation when presenting net
sales information, which we define as "organic." Changes in net sales excluding
the impact of foreign currency translation and/or acquisition and divestiture
activity are non-U.S. GAAP financial measures. As a worldwide business, it is
important that we consider the effects of foreign currency translation when we
view our results and plan our strategies. Nonetheless, we cannot control changes
in foreign currency exchange rates. Consequently, when our management analyzes
our financial results including performance metrics such as sales, cost of goods
sold or selling, general and administrative expense, to measure the core
performance of our business, we may exclude the impact of foreign currency
translation by translating our current period results at prior period foreign
currency exchange rates. We also may exclude the impact of foreign currency
translation when making incentive compensation determinations. As a result, our
management believes that these presentations are useful internally and may be
useful to investors.
Refer to these specific tables presented later in our Management's Discussion
and Analysis of Financial Condition and Results of Operations for
reconciliations of these non-U.S. GAAP financial measures to their most directly
comparable U.S. GAAP measures.
Free Cash Flow
In addition to net cash provided by operating activities, we use free cash flow
as a useful measure of performance and an indication of the strength and ability
of our operations to generate cash. We define free cash flow as cash provided by
operating activities less capital expenditures (which is classified as an
investing activity). Free cash flow is not defined under U.S. GAAP. Therefore,
free cash flow should not be considered a substitute for net income or cash flow
data prepared in accordance with U.S. GAAP and may not be comparable to
similarly titled measures used by other companies. Free cash flow does not
represent residual cash available for discretionary expenditures, including
certain debt servicing requirements or non-discretionary expenditures that are
not deducted from this measure.
Refer to these specific tables presented later in our Management's Discussion
and Analysis of Historical Cash Flow Analysis for reconciliations of these
non-U.S. GAAP financial measures to their most directly comparable U.S. GAAP
measures.
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Highlights of Financial Performance Below are the highlights of our financial performance for the three and six months ended June 30, 2020 and 2019:

                                             Three Months Ended                                                               Six Months Ended
                                                  June 30,                                            %                           June 30,                          %
(In millions, except per share             2020                                                      2020
amounts)                                                      2019              Change                                    2019                 Change
Net sales                              $ 1,151.2          $ 1,161.0                (0.8) %       $ 2,325.1          $      2,273.7                 2.3  %
Gross profit                           $   389.9          $   378.3                 3.1  %       $   780.4          $        743.5                 5.0  %
As a % of net sales                         33.9  %            32.6  %                                33.6  %                 32.7  %
Operating profit                       $   186.0          $    78.4                      #       $   372.8          $        219.5                69.8  %
As a % of net sales                         16.2  %             6.8  %                                16.0  %                  9.7  %
Net earnings from continuing
operations                             $   100.3          $    25.5                      #       $   214.8          $         89.8                      #
(Loss) Gain on sale of
discontinued operations, net of
tax                                         (0.2)               7.7                      #            11.9                     0.9                      #

Net earnings                           $   100.1          $    33.2                      #       $   226.7          $         90.7                      #
Basic:
Continuing operations                  $    0.64          $    0.16                      #       $    1.38          $         0.58                      #
Discontinued operations                        -               0.06                      #            0.08                    0.01                      #
Net earnings per common share -
basic                                  $    0.64          $    0.22                      #       $    1.46          $         0.59                      #
Diluted:
Continuing operations                  $    0.64          $    0.16                      #       $    1.38          $         0.58                      #
Discontinued operations                        -               0.05                      #            0.08                       -                      #
Net earnings per common share -
diluted                                $    0.64          $    0.21                      #       $    1.46          $         0.58                      #
Weighted average numbers of
common shares outstanding:
Basic                                      155.6              154.5                                  155.1                   154.6
Diluted                                    155.9              155.3                                  155.4                   155.3
Non-U.S. GAAP Adjusted EBITDA
from continuing operations(1)          $   259.9          $   236.7                 9.8  %       $   513.1          $        452.5                13.4  %
Non-U.S. GAAP Adjusted EPS from
continuing operations(2)               $    0.76          $    0.80                (5.0) %       $    1.49          $         1.40                 6.4  %





#  Denotes a variance greater or equal to 100% or equal to or less than (100)%.
(1)See "Non-U.S. GAAP Information" for a reconciliation of U.S. GAAP net
earnings from continuing operations to non-U.S. GAAP Total Company Adjusted
EBITDA from continuing operations.
(2)See "Non-U.S. GAAP Information" for a reconciliation of U.S. GAAP net
earnings and diluted earnings per share from continuing operations to our
non-U.S. GAAP Adjusted Net Earnings and Adjusted EPS from continuing operations.
Foreign Currency Translation Impact on Condensed Consolidated Financial Results
Since we are a U.S.-domiciled company, we translate our foreign
currency-denominated financial results into U.S. dollars. Due to the changes in
the value of foreign currencies relative to the U.S. dollar, translating our
financial results from foreign currencies to U.S. dollars may result in a
favorable or unfavorable impact. Historically, the most significant currencies
that have impacted the translation of our Condensed Consolidated Financial
Results are the euro, the Australian dollar, the Mexican peso, the British
pound, the Canadian dollar, the Brazilian real and the Chinese Renminbi.
The following table presents the approximate favorable or (unfavorable) impact
that foreign currency translation had on our Condensed Consolidated Financial
Results from continuing operations:

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(In millions)                                       Three Months Ended June 30,
                                                                2020                    Six Months Ended June 30, 2020
Net sales                                           $                (41.9)            $                     (72.0)
Cost of sales                                                         30.0                                    52.0
Selling, general and administrative expenses                           3.9                                     7.2
Net earnings                                                          (5.8)                                  (10.3)
Adjusted EBITDA                                                       (7.9)                                  (14.5)



Net Sales by Geographic Region
The following table presents the components of the change in net sales by
geographic region for the three and six months ended June 30, 2020 compared with
the same periods in 2019. We also present the change in net sales excluding the
impact of foreign currency translation, a non-U.S. GAAP measure, which we define
as "constant dollar", and the change in net sales excluding acquisitions and
divestitures and the impact of foreign currency translation, a non-U.S. GAAP
measure, which we define as "organic." We believe using constant dollar and
organic measures aids in the comparability between periods as it eliminates the
volatility of changes in foreign currency exchange rates and large fluctuations
due to acquisitions or divestitures.
                                                                                                         Three Months Ended June 30,
(In millions)                             North America                                            EMEA                                              APAC                                        South America                 Total
2019 Net Sales                    $     688.6            59.3  %       $ 246.6            21.2  %       $ 169.6             14.6  %       $ 56.2               4.8  %       $ 1,161.0

Price                                    (1.5)           (0.2) %          (0.7)           (0.3) %          (0.6)            (0.4) %         10.6              18.8  %             7.8                0.6  %
Volume(1)                               (42.7)           (6.2) %         (11.9)           (4.8) %           5.9              3.5  %         (0.4)             (0.7) %           (49.1)              (4.2) %
Total organic change
(non-U.S. GAAP)                         (44.2)           (6.4) %         (12.6)           (5.1) %           5.3              3.1  %         10.2              18.1  %           (41.3)              (3.6) %
Acquisitions                             58.2             8.4  %          13.4             5.4  %           1.6              1.0  %          0.2               0.4  %            73.4                6.4  %
Total constant dollar
change (non-U.S. GAAP)                   14.0             2.0  %           0.8             0.3  %           6.9              4.1  %         10.4              18.5  %            32.1                2.8  %
Foreign currency
translation                              (9.3)           (1.3) %          (8.1)           (3.3) %          (5.8)            (3.5) %        (18.7)            (33.3) %           (41.9)              (3.6) %
Total change (U.S. GAAP)                  4.7             0.7  %          (7.3)           (3.0) %           1.1              0.6  %         (8.3)            (14.8) %            (9.8)              (0.8) %

2020 Net Sales                    $     693.3            60.2  %       $ 239.3            20.8  %       $ 170.7             14.8  %       $ 47.9               4.2  %       $ 1,151.2



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                                                                                                            Six Months Ended June 30,
(In millions)                              North America                                             EMEA                                                APAC                                         South America                 Total
2019 Net Sales                    $    1,340.8             59.0  %       $ 482.4             21.2  %       $ 339.5             14.9  %       $ 111.0               4.9  %       $ 2,273.7

Price                                    (14.7)            (1.1) %          (1.3)            (0.3) %          (1.1)            (0.3) %          19.6              17.7  %             2.5                 0.1  %
Volume(1)                                (23.3)            (1.7) %          (9.4)            (1.9) %           1.8              0.5  %           3.5               3.1  %           (27.4)               (1.2) %
Total organic change
(non-U.S. GAAP)                          (38.0)            (2.8) %         (10.7)            (2.2) %           0.7              0.2  %          23.1              20.8  %           (24.9)               (1.1) %
Acquisitions                             114.5              8.5  %          28.4              5.9  %           5.1              1.5  %           0.3               0.3  %           148.3                 6.5  %
Total constant dollar
change (non-U.S. GAAP)                    76.5              5.7  %          17.7              3.7  %           5.8              1.7  %          23.4              21.1  %           123.4                 5.4  %
Foreign currency
translation                              (11.0)            (0.8) %         (14.7)            (3.1) %         (13.1)            (3.9) %         (33.2)            (29.9) %           (72.0)               (3.1) %
Total change (U.S. GAAP)                  65.5              4.9  %           3.0              0.6  %          (7.3)            (2.2) %          (9.8)             (8.8) %            51.4                 2.3  %

2020 Net Sales                    $    1,406.3             60.5  %       $ 485.4             20.9  %       $ 332.2             14.3  %       $ 101.2               4.4  %       $ 2,325.1

(1)Our volume reported above includes the net impact of changes in unit volume as well as the period-to-period change in the mix of products sold.

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Net Sales by Segment
The following table presents the components of change in net sales by reportable
segment for the three and six months ended June 30, 2020 compared with the same
periods in 2019. We also present the change in net sales excluding the impact of
foreign currency translation, a non-U.S. GAAP measure, which we define as
"constant dollar", and the change in net sales excluding the impact of foreign
currency translation and acquisitions and divestitures, a non-U.S. GAAP measure,
which we define as "organic." We believe using constant dollar and organic
measures aids in the comparability between periods as it eliminates the
volatility of changes in foreign currency exchange rates and large fluctuations
due to acquisitions or divestitures.
                                                                            Three Months Ended June 30,
(In millions)                                         Food                                            Protective                                 Total Company
2019 Net Sales                             $ 711.0            61.2  %       $ 450.0            38.8  %       $ 1,161.0
Price                                         10.4             1.5  %          (2.6)           (0.6) %             7.8             0.6  %
Volume(1)                                    (13.2)           (1.9) %         (35.9)           (8.0) %           (49.1)           (4.2) %
Total organic change (non-U.S. GAAP)          (2.8)           (0.4) %         (38.5)           (8.6) %           (41.3)           (3.6) %
Acquisitions                                   0.9             0.1  %          72.5            16.2  %            73.4             6.4  %
Total constant dollar change
(non-U.S.GAAP)                                (1.9)           (0.3) %          34.0             7.6  %            32.1             2.8  %
Foreign currency translation                 (35.9)           (5.0) %          (6.0)           (1.4) %           (41.9)           (3.6) %
Total change (U.S. GAAP)                     (37.8)           (5.3) %          28.0             6.2  %            (9.8)           (0.8) %

2020 Net Sales                             $ 673.2            58.5  %       $ 478.0            41.5  %       $ 1,151.2



                                                                             Six Months Ended June 30,
(In millions)                                         Food                                             Protective                                 Total Company
2019 Net Sales                            $ 1,391.0            61.2  %       $ 882.7            38.8  %       $ 2,273.7

Price                                           8.7             0.6  %          (6.2)           (0.7) %             2.5             0.1  %
Volume(1)                                      18.2             1.3  %         (45.6)           (5.2) %           (27.4)           (1.2) %
Total organic change (non-U.S.
GAAP)                                          26.9             1.9  %         (51.8)           (5.9) %           (24.9)           (1.1) %
Acquisitions                                    6.5             0.5  %         141.8            16.1  %           148.3             6.5  %
Total constant dollar change
(non-U.S.GAAP)                                 33.4             2.4  %          90.0            10.2  %           123.4             5.4  %
Foreign currency translation                  (60.9)           (4.4) %         (11.1)           (1.3) %           (72.0)           (3.1) %
Total change (U.S. GAAP)                      (27.5)           (2.0) %          78.9             8.9  %            51.4             2.3  %

2020 Net Sales                            $ 1,363.5            58.6  %       $ 961.6            41.4  %       $ 2,325.1






(1)Our volume reported above includes the net impact of changes in unit volume
as well as the period-to-period change in the mix of products sold.
The following net sales discussion is on a reported and constant dollar basis.
Food
Three Months Ended June 30, 2020 Compared with the Same Period in 2019
As reported, net sales decreased $38 million, or 5% in 2020 compared with 2019.
Foreign currency had a negative impact of $36 million. On a constant dollar
basis, net sales decreased $2 million, or 0.3% in 2020 compared with 2019
primarily due to the following:
•lower volume of $13 million, primarily due to a decline in the global food
service industry and certain meat processing plant closures in North America
during the quarter as a result of COVID-19.
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These were partially offset by:
•favorable price of $10 million, primarily in South America driven by US
dollar-based indexed pricing; and
•sales from acquisitions within the first twelve months of ownership
contributing $1 million.
Six Months Ended June 30, 2020 Compared with the Same Period of 2019
As reported, net sales decreased $28 million, or 2%, in 2020 compared to 2019.
Foreign currency had a negative impact of $61 million. On a constant dollar
basis, net sales increased $33 million, or 2%, in 2020 compared with 2019
primarily due to the following:
•higher volume of $18 million, driven in the first quarter by increased demand
for protein packaging at the retail level due to COVID-19. Volume increased in
North America, EMEA and South America, and was partially offset in APAC;
•favorable price of $9 million, primarily in South America on US dollar-based
indexed pricing, partially offset by formula-based pricing in North America; and
•contributions from acquisitions made in the second quarter of 2019 of
approximately $6 million.
Protective
Three Months Ended June 30, 2020 Compared with the Same Period in 2019
As reported, net sales increased $28 million, or 6%, in 2020 as compared to
2019. Foreign currency had a negative impact of $6 million. On a constant dollar
basis, net sales increased $34 million, or 8%, in 2020 compared with 2019
primarily due to the following:
•the contribution of $73 million of sales from the Automated acquisition.
These were partially offset by:
•lower organic volume of $36 million, primarily in North America and EMEA.
Decreased volumes were due to deteriorating global industrial manufacturing,
partially offset by the increase in e-commerce demand for consumer staples and
medical supplies, both of which were driven by the impact of COVID-19; and
•unfavorable pricing of $3 million, primarily in North America.
Six Months Ended June 30, 2020 Compared with the Same Period of 2019
As reported, net sales increased $79 million, or 9%, in 2020 as compared to
2019. Foreign currency had a negative impact of $11 million. On a constant
dollar basis, net sales increased $90 million, or 10%, in 2020 compared with
2019 primarily due to the following:
•the contribution of $142 million of sales from the Automated acquisition.
These were partially offset by:
•lower organic volume of $46 million, primarily in North America and EMEA.
Decreased volumes were due to deteriorating global industrial manufacturing,
partially offset by the increase in e-commerce demand for consumer staples and
medical supplies, both of which were driven by the impact of COVID-19; and
•unfavorable price of $6 million, primarily in North America.
Cost of Sales
Cost of sales for the three and six months ended June 30, 2020 and 2019 were as
follows:
                               Three Months Ended                                           Six Months Ended
                                    June 30,                               %                    June 30,                      %
 (In millions)                2020            2019         Change         2020              2019            Change
 Net sales                $ 1,151.2       $ 1,161.0        (0.8) %    $ 2,325.1       $      2,273.7         2.3  %
 Cost of sales                761.3           782.7        (2.7) %      1,544.7              1,530.2         0.9  %

 As a % of net sales           66.1  %         67.4  %                     66.4  %              67.3  %



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Three Months Ended June 30, 2020 Compared with the Same Period in 2019
As reported, cost of sales decreased by $21 million, or 2.7%, in 2020 compared
to 2019. Cost of sales was impacted by favorable foreign currency translation of
$30 million. As a percentage of net sales, cost of sales decreased by 130 basis
points, from 67.4% for the three months ended June 30, 2019 to 66.1% for the
three months ended June 30, 2020, primarily due to productivity improvements
resulting from our Reinvent SEE initiatives and lower input costs during the
quarter. Improvements were partially offset by inflationary cost increases
including non-material and labor and additional expenses related to COVID-19
(including personal protective gear, cleaning and other health and hygiene
supplies and expenses), higher employment costs and incremental freight due to
sourcing changes along with other higher manufacturing related costs.
Six Months Ended June 30, 2020 Compared with the Same Period of 2019
As reported, cost of sales increased by $15 million, or 0.9%, in 2020 as
compared to 2019. Cost of sales was impacted by favorable foreign currency
translation of $52 million. As a percentage of net sales, cost of sales
decreased by 90 basis points, from 67.3% for the six months ended June 30, 2019
to 66.4% for the six months ended June 30, 2020, primarily due to productivity
improvements resulting from our Reinvent SEE initiatives and lower input costs
during the year. Improvements were partially offset by inflationary cost
increases including non-material and labor and additional expenses related to
COVID-19.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") for the three and six
months ended June 30, 2020 and 2019 are included in the table below.
                                              Three Months Ended                                                            Six Months Ended
                                                   June 30,                                          %                          June 30,                          %
(In millions)                                2020              2019             Change              2020                2019                 Change
Selling, general and
administrative expenses                  $   184.5          $ 266.2               (30.7) %       $ 378.6          $       478.3                (20.8) %

As a % of net sales                           16.0  %          22.9  %                              16.3  %                21.0   %


Three Months Ended June 30, 2020 Compared with the Same Period in 2019
As reported, SG&A expenses decreased by $82 million, or 31%, in 2020 compared to
2019. SG&A expenses were impacted by favorable foreign currency translation of
$4 million. On a constant dollar basis, SG&A expenses decreased $78 million, or
29%. The decrease is primarily driven by the charge associated with the Novipax
settlement incurred in 2019 as well as lower restructuring associated costs and
lower professional service fees, including legal fees, associated with Special
Items.
Six Months Ended June 30, 2020 Compared with the Same Period of 2019
As reported, SG&A expenses decreased by $100 million, or 21%, in 2020 as
compared to 2019. SG&A expenses were impacted by favorable foreign currency
translation of $7 million. On a constant dollar basis, SG&A expenses decreased
$93 million, or 19%. The decrease is primarily driven by the charge associated
with the Novipax settlement incurred in 2019 as well as lower restructuring
associated costs and lower professional service fees, including legal fees,
associated with Special Items. SG&A has also benefited from reductions driven by
our Reinvent SEE transformation, including restructuring associated savings.
Amortization Expense of Intangible Assets Acquired
Amortization expense of intangible assets acquired for the three and six months
ended June 30, 2020 and 2019 were as follows:

                                             Three Months Ended                                                               Six Months Ended
                                                  June 30,                                             %                          June 30,                           %
(In millions)                             2020                  2019              Change             2020                 2019                  Change
Amortization expense of
intangible assets acquired            $    9.3                $  4.4                111.4  %       $ 18.3          $         9.0                  103.3  %

As a % of net sales                        0.8   %               0.4  %                               0.8  %                 0.4    %



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The increase in amortization expense of intangibles for the three and six months ended June 30, 2020 was primarily related to our August 2019 acquisition of Automated and an increase in amortization for capitalized software. Reinvent SEE Strategy and Restructuring Activities

See Note 13, "Restructuring Activities" for additional details regarding the
Company's restructuring programs discussed below.
In December 2018 the Sealed Air Board of Directors approved a three-year
restructuring program as part of the Reinvent Strategy.
Sealed Air has combined the program associated with Reinvent SEE with its
previously existing restructuring program (as combined, "the Program") that was
largely related to the elimination of stranded costs following the sale of
Diversey. For the six months ended June 30, 2020, the Program generated
incremental cost savings of $59 million related to reductions in operating
costs, including $21 million from restructuring actions. In addition, savings
realized related to actions impacting price cost spread were $9 million. We
expect the Program to generate incremental cost savings of approximately $330
million by the end of 2021. We expect full year Program spend for 2020 and 2021
to be in the range of $80 to $110 million.
We also recorded $4 million and $8 million in restructuring associated costs for
the three and six months ended June 30, 2020, respectively. Restructuring
associated costs primarily relate to fees paid to third-party consultants in
support of Reinvent SEE.
The actual timing of future costs and cash payments related to the Program
described above are subject to change due to a variety of factors that may cause
a portion of the costs, spending and benefits to occur later than expected. In
addition, changes in foreign exchange rates may impact future costs, spending,
benefits and cost synergies.
Interest Expense, net
Interest expense, net includes the stated interest rate on our outstanding debt,
as well as the net impact of capitalized interest, interest income, the effects
of interest rate swaps and the amortization of capitalized senior debt issuance
costs and credit facility fees, bond discounts, and terminated treasury locks.
Interest expense, net for the three and six months ended June 30, 2020 and 2019
was as follows:

                                             Three Months Ended                                                  Six Months Ended
                                                  June 30,                                                           June 30,
(In millions)                               2020              2019           Change           2020             2019            Change
Interest expense on our various
debt instruments:
Term Loan A due August 2022(1)          $     2.0           $    -          

$ 2.0 $ 5.6 $ - $ 5.6 Term Loan A due July 2023

                     1.2              2.1            (0.9)            3.1               4.3            (1.2)
Revolving credit facility due
July 2023                                     0.3              0.3               -             0.7               0.7               -
6.50% Senior Notes due December
2020(2)                                         -              7.1            (7.1)              -              14.1           (14.1)
4.875% Senior Notes due December
2022                                          5.4              5.4               -            10.8              10.8               -
5.25% Senior Notes due April 2023             5.8              5.8               -            11.6              11.6               -
4.50% Senior Notes due September
2023                                          5.1              5.2            (0.1)           10.2              10.4            (0.2)
5.125% Senior Notes due December
2024                                          5.6              5.6               -            11.2              11.2               -
5.50% Senior Notes due September
2025                                          5.6              5.6               -            11.2              11.2               -
4.00% Senior Notes due December
2027(2)                                       4.3                -             4.3             8.7                 -             8.7
6.875% Senior Notes due July 2033             7.7              7.7               -            15.5              15.5               -
Other interest expense                        3.7              4.6            (0.9)            7.8               9.0            (1.2)
Less: capitalized interest                   (1.3)            (2.1)            0.8            (3.2)             (3.9)            0.7
Less: interest income                        (2.1)            (4.1)            2.0            (5.5)             (6.8)            1.3
Total                                   $    43.3           $ 43.2          $  0.1          $ 87.7          $   88.1          $ (0.4)



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(1)On August 1, 2019, Sealed Air Corporation, on behalf of itself and certain of
its subsidiaries, and Sealed Air Corporation (US) entered into an amendment to
its existing senior secured credit facility with Bank of America, N.A., as
agent, and the other financial institutions party thereto. The amendment
provided for a new incremental term facility in an aggregate principal amount of
up to $475 million, to be used, in part, to finance our acquisition of Automated
Packaging Systems. See Note 14, "Debt and Credit Facilities" for further
details.
(2)In November 2019, the Company issued $425 million of 4.00% Senior Notes due
2027 and used the proceeds to retire the existing $425 million of 6.50% Senior
Notes due 2020. See Note 14, "Debt and Credit Facilities" for further details.
Other Income, net
Net foreign exchange transaction gain
For the six months ended June 30, 2020, we recorded $7 million in net foreign
exchange transaction gain within Other Income, net in the Condensed Consolidated
Statements of Operations. This income was primarily recognized in March as a
result of volatile foreign currencies, particularly in emerging markets relative
to the US Dollar due to macroeconomic conditions resulting from COVID-19. For
the three months ended June 30, 2020, we recorded less than $1 million in net
foreign exchange transaction gain, within Other Income, net in the Condensed
Consolidated Statements of Operations. While we use financial instruments to
hedge certain foreign currency exposures, this does not insulate us completely
from foreign currency effects and exposes us to counterparty credit risk for
non-performance.
See Note 22, "Other Income, net," for the remaining components of other income,
net.
Income Taxes
Our effective income tax rate for the three and six months ended June 30, 2020
was 31% and 27% respectively. The Company expects its annual effective tax rate
related to continuing operations for 2020 to be approximately 27% based on its
projected mix of earnings, although the actual effective tax rate could vary
from the anticipated rate as a result of many factors, including but not limited
to the following:

•The actual mix of earnings by jurisdiction, which could fluctuate from the
Company's projection;
•The tax effects of other discrete items, including accruals related to tax
contingencies, the resolution of worldwide tax matters, tax audit settlements,
statute of limitations expirations and changes in tax regulations, which are
reflected in the period in which they occur; and
•Any future legislative changes, and any related additional tax optimization to
address these changes.
Due to the uncertainty in predicting these items, it is possible that the actual
effective tax rate used for financial reporting purposes will change in future
periods. For the six months ended June 30, 2020, the rate is positively impacted
by adjustments associated with the effective settlement of specific uncertain
tax positions with the IRS.
Our effective income tax rate for the three and six months ended June 30, 2019
was 33% and 32%, respectively. In comparison to the U.S. statutory rate of 21%,
the Company's effective tax rate was negatively impacted by the mix of earnings,
the effect of GILTI and other foreign inclusions in the U.S. tax base and state
taxes.
Our effective income tax rate depends upon the realization of our net deferred
tax assets. We have deferred tax assets related to accruals not yet deductible
for tax purposes, state and foreign net operating loss carryforwards and
investment tax allowances, employee benefit items, and other items.
The Internal Revenue Service is currently auditing the 2011-2014 consolidated
U.S. federal income tax returns of the Company. Included in the audit of the
2014 return is the examination by the IRS with respect to the Settlement
agreement deduction and the related carryback to tax years 2004-2012. The
outcome of the examination may require us to make a significant payment.
We have established valuation allowances to reduce our deferred tax assets to an
amount that is more likely than not to be realized. Our ability to utilize our
deferred tax assets depends in part upon our ability to carry back any losses
created by the deduction of these temporary differences, the future income from
existing temporary differences, and the ability to generate future taxable
income within the respective jurisdictions during the periods in which these
temporary differences reverse. If we are unable to generate sufficient future
taxable income in the U.S. and certain foreign jurisdictions, or if there is a
significant change in the time period within which the underlying temporary
differences become taxable or deductible, we could be
                                       56
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required to increase our valuation allowances against our deferred tax assets.
Conversely, if we have sufficient future taxable income in jurisdictions where
we have valuation allowances, we may be able to reverse those valuation
allowances.
There was a negligible change in our valuation allowances for the three and six
months ended June 30, 2020. For the six months ending June 30, 2019, there was
an $8 million decrease in the valuation allowance in Brazil related to improved
profitability from our Reinvent SEE initiatives.
We reported a net $4 million increase in unrecognized tax benefits during the
three months ended June 30, 2020 primarily related to interest accruals on
existing positions. During the six months ended June 30, 2020, we recorded a $6
million decrease in unrecognized tax benefits primarily related to settlements
with tax authorities. We reported a net increase of $8 million and $10 million,
respectively during the three and six months ended June 30, 2019, primarily
related to an audit assessment in the U.S and interest accruals on existing
positions. Interest and penalties on tax assessments are included in income tax
expense.
Net Earnings from Continuing Operations
Net earnings for the three and six months ended June 30, 2020 and 2019 are
included in the table below.

                                           Three Months Ended                                                            Six Months Ended
                                                June 30,                                          %                          June 30,                         %
(In millions)                             2020              2019             Change              2020                2019                Change
Net earnings from continuing
operations                            $    100.3          $ 25.5               293.3  %       $ 214.8          $       89.8                139.2  %



Three Months Ended June 30, 2020 Compared with the Same Period in 2019
For the three months ended June 30, 2020, net earnings was unfavorably impacted
by $18 million of Special Items. Special Items were primarily the result of
restructuring and other restructuring associated costs of $14 million ($11
million net of taxes).
For the three months ended June 30, 2019, net earnings was unfavorably impacted
by $100 million of Special Items, net of tax. Special Items were primarily the
result of a $59 million ($44 million net of taxes) charge related to the Novipax
settlement as well as $51 million ($36 million net of taxes) in restructuring
and restructuring associated costs primarily with our Reinvent SEE program.
Six Months Ended June 30, 2020 Compared with the Same Period of 2019
For the six months ended June 30, 2020, net earnings was unfavorably impacted by
$17 million of Special Items, primarily related to restructuring and other
restructuring associated costs of $19 million ($14 million net of taxes) and
charges related to acquisition and divestiture activities of $4 million ($3
million net of taxes).
For the six months ended June 30, 2019, net earnings was unfavorably impacted by
$128 million of Special Items after tax, which were primarily the result of a
$59 million ($44 million net of taxes) charge related to the Novipax settlement
as well as $74 million ($55 million net of taxes) in restructuring and
restructuring associated costs primarily with our Reinvent SEE program.
Adjusted EBITDA by Segment
The Company evaluates performance of the reportable segments based on the
results of each segment. The performance metric used by the Company's chief
operating decision maker to evaluate the performance of our reportable segments
is Adjusted EBITDA. We allocate and disclose depreciation and amortization
expense to our segments, although depreciation and amortization are not included
in the segment performance metric Adjusted EBITDA. We also allocate and disclose
restructuring and other charges and impairment of goodwill and other intangible
assets by segment, although they are not included in the segment performance
metric Adjusted EBITDA since restructuring and other charges and impairment of
goodwill and other intangible assets are categorized as Special Items. The
accounting policies of the reportable segments and Corporate are the same as
those applied to the Condensed Consolidated Financial Statements.

See "Non-U.S. GAAP Information" for a reconciliation of U.S. GAAP net earnings
from continuing operations to non-U.S. GAAP Total Company Adjusted EBITDA from
continuing operations.

                                       57
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                                             Three Months Ended                                                             Six Months Ended
                                                  June 30,                                          %                           June 30,                          %
(In millions)                               2020              2019             Change              2020                2019                  Change
Food                                    $   169.1          $ 155.6                 8.7  %       $ 325.4          $       298.5                   9.0  %
Adjusted EBITDA Margin                       25.1  %          21.9  %                              23.9  %                21.5   %
Protective                                   91.5             84.0                 8.9  %         184.3                  159.0                  15.9  %
Adjusted EBITDA Margin                       19.1  %          18.7  %                              19.2  %                18.0   %
Corporate                                    (0.7)            (2.9)              (75.9) %           3.4                   (5.0)               (168.0) %
Non-U.S. GAAP Total Company
Adjusted EBITDA from continuing
operations                              $   259.9          $ 236.7                 9.8  %       $ 513.1          $       452.5                  13.4  %
Adjusted EBITDA Margin                       22.6  %          20.4  %                              22.1  %                19.9   %


The following is a discussion of the factors that contributed to the change in
Adjusted EBITDA by segment during the three and six months ended June 30, 2020,
as compared to the same periods in the prior year.
Food

Three Months Ended June 30, 2020 Compared with the Same Period in 2019

On a reported basis, Adjusted EBITDA increased $14 million in 2020 as compared
to the same period in 2019. Adjusted EBITDA was impacted by unfavorable foreign
currency translation of approximately $8 million. On a constant dollar basis,
Adjusted EBITDA increased approximately $22 million, or 14%, in 2020 compared
with the same period in 2019 primarily due to the impact of:
•Reinvent SEE benefits of $27 million driven by actions reducing operating costs
by $24 million, including restructuring savings of $5 million, and improvements
to price/cost spread of $3 million; and
•favorable price/cost spread of $13 million.
These increases were partially offset by:
•lower volume of $10 million due to certain meat processing plant closures in
the second quarter as well as the slowdown in the food service industry;
•inflationary impact resulting in higher labor costs and non-material
manufacturing costs and higher costs related to COVID-19, partially offset by
tighter spend control, including lower travel costs resulting in a net
unfavorable impact of approximately $5 million; and
•higher incentive compensation of approximately $3 million.
Six Months Ended June 30, 2020 Compared with the Same Period of 2019
On a reported basis, Adjusted EBITDA increased $27 million in 2020 as compared
to the same period in 2019. Adjusted EBITDA was impacted by unfavorable foreign
currency translation of $13 million. On a constant dollar basis, Adjusted EBITDA
increased $40 million, or 14%, in 2020 compared with the same period in 2019
primarily due to the impact of:
•Reinvent SEE benefits of $47 million driven by actions reducing operating costs
by $40 million, including restructuring savings of $13 million, and improvements
to price/cost spread of $7 million;
•favorable price/cost spread of $14 million; and
•business growth including $2 million from higher volumes.
These increases were partially offset by:
•inflationary impact resulting in higher labor costs and non-material
manufacturing costs and higher costs related to COVID-19, partially offset by
tighter spend control, including lower travel costs, resulting in a net
unfavorable impact of approximately $20 million; and
•higher incentive compensation of approximately $3 million.
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Protective

Three Months Ended June 30, 2020 Compared with the Same Period in 2019
On a reported basis, Adjusted EBITDA increased $8 million in 2020 compared to
the same period in 2019. Adjusted EBITDA was impacted by unfavorable foreign
currency translation of $1 million. On a constant dollar basis, Adjusted EBITDA
increased $9 million, or 10%, in 2020 compared with the same period in 2019
primarily as a result of:
•Contributions from Automated of $14 million;
•Reinvent SEE benefits of $11 million driven by actions reducing operating costs
by $10 million, including restructuring savings of $2 million, and improvements
to price/cost spread of $1 million; and
•favorable price/cost spread of $1 million.
These increases were partially offset by:
•organic volume decline resulting from the deteriorating industrial market of
approximately $18 million.
Six Months Ended June 30, 2020 Compared with the Same Period of 2019
On a reported basis, Adjusted EBITDA increased $25 million in 2020 as compared
to the same period in 2019. Adjusted EBITDA was impacted by unfavorable foreign
currency translation of $2 million. On a constant dollar basis, Adjusted EBITDA
increased $27 million, or 17%, in 2020 compared with the same period in 2019
primarily as a result of:
•Contributions from Automated of $27 million;
•Reinvent SEE benefits of $21 million driven by actions reducing operating costs
by $19 million, including restructuring savings of $8 million and improvements
to price/cost spread of $2 million; and
•favorable price/cost spread of $3 million.
These increases were partially offset by:
•organic volume decline resulting from the deteriorating industrial market of
approximately $20 million;
•inflationary impact resulting in higher labor costs and non-material
manufacturing costs and higher costs related to COVID-19, partially offset by
tighter spend control, including lower travel costs resulting in a net
unfavorable impact of approximately $4 million.
Corporate
Three Months Ended June 30, 2020 Compared with the Same Period in 2019
The $2 million decrease in Corporate expenses during the three months ended
June 30, 2020 compared to the same period in 2019 was primarily driven by modest
foreign currency transaction gains recorded to the statement of operations in
2020 compared to foreign currency transaction losses in 2019.
Six Months Ended June 30, 2020 Compared with the Same Period of 2019

The decrease in Corporate expenses by $8 million in the six months ended
June 30, 2020 was primarily driven by foreign currency transaction gains
recorded to the statement of operations in 2020 compared to foreign currency
transaction losses in 2019.
Liquidity and Capital Resources
Principal Sources of Liquidity
Our primary sources of cash are the collection of trade receivables generated
from the sales of our products and services to our customers and amounts
available under our existing lines of credit, under the Third Amended and
Restated Syndicated Facility Agreement (as amended, the "Credit Facility"), and
our accounts receivable securitization programs. Our primary uses of cash are
payments for operating expenses, investments in working capital, capital
expenditures, interest, taxes, stock repurchases, dividends, debt obligations,
restructuring expenses and other long-term liabilities.
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COVID-19 has had a significant impact on global economic conditions, including
volatile global equity markets and the availability of credit and liquidity. We
currently believe that our current liquidity position and future cash flows from
operations will enable us to fund our operations, including all of the items
mentioned above, over the next twelve months.
As of June 30, 2020, we had cash and cash equivalents of $290 million, of which
approximately $251 million, or 87%, was located outside of the U.S. As of
June 30, 2020, cash trapped outside of the U.S. was not material. Our U.S. cash
balances and committed liquidity facilities available to U.S. borrowers are
sufficient to fund our U.S. operating requirements, capital expenditures,
current debt obligations and dividends. In the near term, we do not expect cash
located outside of the U.S. will be needed to satisfy our obligations, dividends
and other demands for cash in the U.S.
Cash and Cash Equivalents

The following table summarizes our accumulated cash and cash equivalents:

(In millions)                   June 30, 2020      December 31, 2019
Cash and cash equivalents      $      289.7       $          262.4



See "Analysis of Historical Cash Flow" below.
Accounts Receivable Securitization Programs
At June 30, 2020 we had $125 million available to us under our U.S. and European
accounts receivable securitization programs, of which we had $50 million
borrowed under the European program. At December 31, 2019, we had $127 million
available to us under our U.S. and Europeans programs of which we had no
borrowings under the European or U.S. programs. See Note 10, "Accounts
Receivable Securitization Programs" for information concerning these programs.
Our trade receivable securitization program represents a borrowing against
outstanding customer receivables. Therefore, the use or repayment of borrowings
under this program is classified as a financing activity within our Condensed
Consolidated Statement of Cash Flows. We do not recognize the cash flow within
operating activities until the outstanding invoice has been paid by our
customer. The net trade receivables that served as collateral for these
borrowings are reclassified from trade receivables, net to prepaid expenses and
other current assets on the Condensed Consolidated Balance Sheets. See Note 10,
"Accounts Receivables Securitization Programs" for further details.
Accounts Receivable Factoring Programs
We account for our participation in our customers' supply chain arrangements or
our trade receivable factoring program in accordance with ASC 860 which allows
the ownership transfer of accounts receivable to qualify for sale treatment when
the appropriate criteria is met. As such, the Company excludes the balances sold
under the programs from accounts receivable, net on the Condensed Consolidated
Balance Sheets. The sale of outstanding receivables through these programs
increases our cash flow from operating activities at the point they are
factored. See Note 11, "Accounts Receivable Factoring Programs," of the Notes to
Condensed Consolidated Financial Statements for further details.
Gross amounts received under these programs for the six months ended June 30,
2020 were $222 million, of which $108 million was received in the second
quarter. If these programs had not been in effect for the six months ended June
30, 2020, we would have been required to collect the invoice amounts directly
from the relevant customers in accordance with the agreed payment terms.
Approximately $47 million in incremental accounts receivable would have been
outstanding at June 30, 2020 if collection on such invoice amounts were made
directly from our customers on the invoice due date and not through our
customers' supply chain arrangements or our factoring program.
Lines of Credit
At June 30, 2020 and December 31, 2019, we had a $1.0 billion revolving credit
facility and $23 million and $89 million of outstanding borrowings under the
facility, respectively. There was $9 million and $10 million outstanding under
various lines of credit extended to our subsidiaries at June 30, 2020 and
December 31, 2019, respectively. See Note 14, "Debt and Credit Facilities" for
further details.
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LIBOR Phase Out
In July 2017, the United Kingdom's Financial Conduct Authority, which regulates
LIBOR, announced that it intends to phase out LIBOR by the end of 2021. An
alternative to LIBOR has been contemplated in many of our LIBOR-linked
instruments and other financial obligations, including our Credit Facility. We
do not expect the phase-out of LIBOR to have a material disruption or impact on
our financing or liquidity.
Covenants
At June 30, 2020, we were in compliance with our financial covenants and
limitations, as discussed in "Covenants" of Note 14, "Debt and Credit
Facilities". As a result of our acquisition of Automated, the maximum covenant
leverage ratio of debt to EBITDA under our Credit Facility has temporarily
increased to 5.00 to 1.00 through September 30, 2020. The maximum covenant
leverage ratio will return to 4.50 to 1.00 after September 30, 2020. At June 30,
2020, our leverage ratio of debt to EBITDA, as calculated under the covenant, is
2.92 to 1.00. We expect to be in continued compliance with our debt covenants
including the covenant leverage ratio over the next 12 months.
Supply Chain Financing Programs
As part of our ongoing efforts to manage our working capital and improve our
cash flow, we work with suppliers to optimize our purchasing terms and
conditions, including extending payment terms. We also facilitate a voluntary
supply chain financing program to provide some of our suppliers with the
opportunity to sell receivables due from us (our trade payables) to
participating financial institutions at the sole discretion of both the
suppliers and the financial institutions. These programs are administered by
participating financial institutions. Should the supplier choose to participate
in the program, it will receive payment from the financial institution in
advance of agreed payment terms; our responsibility is limited to making
payments to the respective financial institutions on the terms originally
negotiated with our supplier. The range of payment terms is consistent
regardless of a vendor's participation in the program. We monitor our days
payable outstanding relative to our peers and industry trends in order to assess
our conclusion that these programs continue to be trade payable programs and not
indicative of borrowing arrangements. The liabilities continue to be presented
as trade payables in our consolidated balance sheets until they are paid, and
they are reflected as cash flows from operating activities when settled.
These programs did not significantly improve our cash provided by operating
activities or free cash flow for the six months ended June 30, 2020 as compared
to prior periods.
Debt Ratings

Our cost of capital and ability to obtain external financing may be affected by
our debt ratings, which the credit rating agencies review periodically. Below is
a table that sets forth our credit ratings by the various types of debt.

                                              Moody's Investor        Standard
                                                  Services            & Poor's
Corporate Rating                                             Ba2             BB+
Senior Unsecured Rating                                      Ba3             BB+
Senior Secured Credit Facility Rating                       Baa3            BBB-
Outlook                                                   Stable          Stable



These credit ratings are considered to be below investment grade (with the
exception of the Baa3 and BBB- Senior Secured Credit Facility Rating from
Moody's Investor Services and Standard & Poor's, respectively, which are
classified as investment grade). If our credit ratings are downgraded, there
could be a negative impact on our ability to access capital markets and
borrowing costs could increase. A credit rating is not a recommendation to buy,
sell or hold securities and may be subject to revision or withdrawal at any time
by the rating organization. Each rating should be evaluated independently of any
other rating.

Outstanding Indebtedness

At June 30, 2020 and December 31, 2019, our total debt outstanding consisted of the amounts set forth in the following table.

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(In millions)                                       June 30, 2020       December 31, 2019
Short-term borrowings                              $        81.7       $    

98.9

Current portion of long-term debt                           21.8            

16.7

Total current debt                                         103.5            

115.6

Total long-term debt, less current portion(1)            3,692.7            

3,698.6

Total debt                                               3,796.2            

3,814.2

Less: Cash and cash equivalents                           (289.7)                (262.4)
Net Debt                                           $     3,506.5       $        3,551.8





(1)Amounts shown are net of unamortized discounts and debt issuance costs of $23
million as June 30, 2020 and $25 million as of December 31, 2019. See Note 14,
"Debt and Credit Facilities" for further details.
Analysis of Historical Cash Flow

The following table shows the changes in our Condensed Consolidated Statements of Cash Flows during the six months ended June 30, 2020 and 2019.

                                                                    Six Months Ended
                                                                        June 30,
(In millions)                                                    2020              2019             Change
Net cash provided by operating activities                     $  213.0          $  169.3          $   43.7
Net cash used in investing activities                            (67.2)           (124.4)             57.2
Net cash used in financing activities                            (88.2)            (98.2)             10.0

Effect of foreign currency exchange rate changes on cash and cash equivalents

                                        (30.3)              3.8             (34.1)



In addition to net cash provided by operating activities, we use free cash flow
as a useful measure of performance and an indication of the strength and ability
of our operations to generate cash. We define free cash flow as cash provided by
operating activities less capital expenditures (which is classified as an
investing activity). Free cash flow is not defined under U.S. GAAP. Therefore,
free cash flow should not be considered a substitute for net income or cash flow
data prepared in accordance with U.S. GAAP and may not be comparable to
similarly titled measures used by other companies. Free cash flow does not
represent residual cash available for discretionary expenditures, including
certain debt servicing requirements or non-discretionary expenditures that are
not deducted from this measure. We historically have generated the majority of
our annual free cash flow in the second half of the year. Below are the details
of free cash flow for the six months ended June 30, 2020 and 2019:
                                                    Six Months Ended
                                                        June 30,
(In millions)                                      2020          2019       

Change

Cash flow provided by operating activities      $ 213.0       $ 169.3       $ 43.7
Capital expenditures                              (83.6)        (94.5)        10.9
Free cash flow                                  $ 129.4       $  74.8       $ 54.6


Operating Activities
Six Months Ended June 30, 2020 Compared with the Same Period in 2019
Net cash provided by operating activities was $213 million in the six months
ended June 30, 2020, compared to $169 million in 2019. The increase in cash
provided by operating activities was primarily driven by higher earnings and
adjustments to reconcile net earnings to net cash provided by operating
activities ("non-cash adjustments") recorded in 2020 compared to the same period
in 2019. Net earnings plus non-cash adjustments was a source of cash of $349
million in 2020 compared to $180 million in the six months ended June 30, 2019.
Depreciation and amortization, including share-based incentive compensation, and
profit sharing expense was $119 million in the current year compared to $90
million in the prior year due to higher depreciation and amortization from our
Automated acquisition and higher incentive compensation on performance-based
metrics. In addition to higher net earnings and non-cash adjustments, customer
advanced payments on equipment purchases provided $12 million in cash flow
during the six months ended June 30, 2020. Payroll taxes deferred under the
CARES Act
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were approximately $8 million for the six months ended June 30, 2020.
Additionally, activity in our customer volume rebate accruals relative to prior
year activity provided $6 million to cash flow from operations.
Year over year favorability was partially offset by the $59 million Novipax
settlement reserve which had been accrued but not yet paid as of June 30, 2019
and a $49 million increase in cash used by working capital accounts
(inventories, trade receivables and accounts payable), as compared to six months
ended June 30, 2019. The largest increase in working capital was inventory
driven by a purposeful build in the second quarter 2020 for contingency planning
against the risk of raw material shortages or supply disruptions resulting from
the COVID-19 pandemic. Additionally, prior year activity in our restructuring
accrual and uncertain tax position liability as of June 30, 2019, compared to
movement during the current year, had a negative impact on year over year cash
flow from operations of $24 million and $19 million, respectively.
Investing Activities
Six Months Ended June 30, 2020 Compared with the Same Period in 2019
Net cash used in investing activities was $67 million in the six months ended
June 30, 2020 compared to $124 million used in the six months ended June 30,
2019. The change was primarily due to a $27 million decrease in cash outflow for
business acquisitions representing the payment of $23 million in the second
quarter 2019 for two Food acquisitions, offset by $4 million received in the
first quarter 2020 as a purchase price adjustment on our acquisition of
Automated. Additionally, receipts associated with sale of property and equipment
and associated with the sale of Diversey increased by $8 million compared to the
six months ended June 30, 2019.
The maturity of cash deposits with maturities greater than 90 days (marketable
securities) and subsequent conversion to cash equivalents generated $13 million
in the current year.
Capital expenditures were down $11 million in the six months ended June 30, 2020
compared to 2019 as the Company prioritized investments in light of the current
macro-economic environment.
Financing Activities
Six Months Ended June 30, 2020 Compared with the Same Period in 2019
Net cash used in financing activities was $88 million in the six months ended
June 30, 2020, compared to $98 million used in 2019. The change was primarily
due to prior year repurchases of common stock of $67 million partially offset by
a $54 million decrease in net proceeds from short-term borrowings. The decrease
in short-term borrowings represents a reduction in the use of our revolver
partially offset by an increase in amounts outstanding under the European
accounts receivable securitization program during the current year.
Changes in Working Capital

(In millions)                                          June 30, 2020         December 31, 2019          Change
Working capital (current assets less current
liabilities)                                          $      277.4          $          127.8          $  149.6
Current ratio (current assets divided by
current liabilities)                                             1.2x                      1.1x
Quick ratio (current assets, less inventories
divided by current liabilities)                                  0.7x                      0.7x



The $150 million, or 117%, increase in working capital in the six months ended
June 30, 2020 was primarily due to a $78 million decrease in other current
liabilities, a $68 million increase in inventory and a $27 million increase in
cash, partially offset by a $31 million increase in taxes payable primarily on
the US income tax accrual. The decrease in other current liabilities reflects
the settlement of performance-based compensation, profit sharing, volume rebate
accruals and certain claims, partially offset by current period accruals. The
inventory increase was driven by a purposeful build in the second quarter 2020
for contingency planning against the risk of raw material shortages or supply
disruptions resulting from the COVID-19 pandemic.
Changes in Stockholders' Deficit
The $126 million, or 64%, decrease in stockholders' deficit in the six months
ended June 30, 2020 was primarily due to the following:
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•net earnings of $227 million;
•stock issued for profit sharing contribution paid in stock of $24 million;
•the effect of share-based incentive compensation of $9 million, including the
impact of share-based compensation expense and netting of shares to cover the
employee tax withholding amounts; and
•recognition of pension items and unrealized gains on derivative instruments of
$2 million and $1 million, respectively.
These increases were partially offset by:
•cumulative translation adjustment of $87 million; and
•dividends paid on our common stock of $50 million.
We did not repurchase any shares of our common stock during the six months ended
June 30, 2020. See Note 20, "Stockholders' Deficit," of the Notes to Condensed
Consolidated Financial Statements for further details.
Derivative Financial Instruments

Interest Rate Swaps
The information set forth in Part I, Item 1 of this Quarterly Report on
Form 10-Q in Note 15, "Derivatives and Hedging Activities" under the caption
"Interest Rate Swaps" is incorporated herein by reference.
Net Investment Hedge
The information set forth in Part I, Item 1 of this Quarterly Report on
Form 10-Q in Note 15, "Derivatives and Hedging Activities" under the caption
"Net Investment Hedge" is incorporated herein by reference.
Other Derivative Instruments
The information set forth in Part I, Item 1 of this Quarterly Report on
Form 10-Q in Note 15, "Derivatives and Hedging Activities" under the caption
"Other Derivative Instruments" is incorporated herein by reference.
Foreign Currency Forward Contracts
At June 30, 2020, we were party to foreign currency forward contracts, which did
not have a significant impact on our liquidity.
The information set forth in Part I, Item 1 of this Quarterly Report on
Form 10-Q in Note 15, "Derivatives and Hedging Activities" under the caption
"Foreign Currency Forward Contracts Designated as Cash Flow Hedges" and "Foreign
Currency Forward Contracts Not Designated as Hedges" is incorporated herein by
reference. For further discussion about these contracts and other financial
instruments, see Part I, Item 3, "Quantitative and Qualitative Disclosures about
Market Risk."
Recently Issued Statements of Financial Accounting Standards, Accounting
Guidance and Disclosure Requirements
We are subject to numerous recently issued statements of financial accounting
standards, accounting guidance and disclosure requirements. Note 2, "Recently
Adopted and Issued Accounting Standards" which is contained in Part I, Item 1 of
this Quarterly Report on Form 10-Q, describes these new accounting standards and
is incorporated herein by reference.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and
estimates from those disclosed in our 2019 Form 10-K. For a discussion of our
critical accounting policies and estimates, refer to "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Critical
Accounting Policies and Estimates" in Part II, Item 7 of our 2019 Form 10-K.
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